The former CEO of Market Basket is suing the company, saying its board of directors illegally removed him from his position.
Arthur T. Demoulas filed the countersuit in Delaware court on Wednesday, five months after he was initially placed on paid leave and three weeks after he was officially fired.
In the complaint, attorneys representing Demoulas wrote that the termination was “not motivated by any rational business purpose or to advance the company’s best interests, but instead [was] at the behest of Mr. Demoulas’s three sisters and their family members.”
The board of directors said at the time that Demoulas had failed to cooperate with the board on fundamental business interests and succession planning for the 70-year-old CEO’s eventual retirement, and claimed that he had been secretly planning to instigate an employee walkout and customer boycott similar to the one that made headlines in 2014.
“The director defendants’ accusations that Mr. Demoulas would do anything to harm Market Basket are not credible given that Mr. Demoulas is the long-term leader who has devoted his professional career to the Company, and that he controls more than 28% of [Demoulas Supermarkets’] shares,” his attorneys wrote in the documents filed Wednesday.
Instead, the board “had been scheming to remove Mr. Demoulas for months before he was placed on leave, with indifference to any negative impact that removing Mr. Demoulas would have on Market Basket’s business,” they added.
Demoulas and other company executives were placed on leave in May at the same time that the board launched an investigation, which Demoulas called “contrived” and a “witch hunt” in his lawsuit. Shortly after his suspension, Demoulas denied the board’s claims, calling it a facade for a “hostile takeover” of the grocery store chain.
The former CEO’s attorneys claim in court documents that Demoulas’ three sisters removed his allies from the board and instead stacked it with their own allies because of their resentment over his success and recognition as the head of the company.
In a statement Wednesday, the board said it was “unfortunate” that Demoulas had decided to “lash out … with personal attacks” against board members and his sisters.
“Far from conflicts or bias, the Board has displayed respect for Mr. Demoulas’s accomplishments, but the Board simply could not do its job without Mr. Demoulas’s cooperation, which he has indicated throughout this process that he was unwilling to give,” they wrote. “A CEO cannot stay at the helm of a company if he refuses to be accountable to the Board. And that was and continues to be Mr. Demoulas’s failing.”
They reiterated their claims that Demoulas insisted unequivocally that his children, Madeline and T.A. Demoulas, take over the company from him, refusing to discuss any other options.
In the complaint, Demoulas’ attorneys disputed this allegation, saying he had wanted Madeline and T.A. Demoulas to take over. However, he suggested that if the board found they were not fit to do so, they should explore internal candidates before looking outside of the company.
“The accusations conjured against the Board and the majority stockholders in court papers and PR statements are outlandish and dramatic and they’re not true,” the Board continued Wednesday. “The directors are committed to preserving Market Basket’s vitality, culture and service to customers and associates.”
Market Basket named CFO Donald Mulligan as interim CEO on Sept. 15.
The company filed its own lawsuit against Demoulas on Sept. 9, the same day he was fired, asking the Delaware court to uphold the decision. The case is scheduled for a trial in December.