Here’s Why Grocery Workers in New England Are Rallying Around Their Millionaire Ex-CEO

Commentary about business and finance.
July 29 2014 4:26 PM

Sympathy for the Overdog

Why are grocery workers in New England rallying around their millionaire ex-CEO?

Customers look at limited options inside the produce section at the Market Basket in Tewksbury, Mass. on July 21, 2014.
Customers look at limited options inside the produce section at the Market Basket in Tewksbury, Massachusetts, on July 21, 2014.

Photo by Jessica Rinaldi/The Boston Globe via Getty Images

It sounds like the plot of an uplifting PG–rated family comedy: A dastardly board of directors pushes out a beloved CEO, whose loyal workers rally in support of the man who’s treated them fairly. That’s the story of Market Basket, the low-priced grocery chain of 71 stores with some 25,000 employees throughout the Northeast, where rallies, strikes, and protests have continued into yet another week over the ouster of Arthur T. Demoulas, its former CEO. Demoulas was replaced in June by a board now controlled by his cousin, Arthur S. Demoulas, a rival heir to the company built by their Greek immigrant grandparents, who opened their first store in Lowell, Massachusetts, in 1916. So far eight other senior management employees have been dismissed for their role in fomenting the protests—in some cases, encouraging employees not to come to work. Although the stores remain open, central warehouse workers have disrupted shipping, and the company is losing millions of dollars a day. This week the board of directors met to discuss offers to buy the grocery chain, valued between $3 billion and $3.5 billion, including one from former CEO “Arthur T.,” as he’s known.

Last Friday, at a Market Basket in Tewksbury, Massachusetts, more than 6,000 workers gathered in a show of solidarity with Arthur T. (Video footage of these pro–Arthur T. gatherings can feel like a celebratory parade for a local sports team, with chanting, sign-waving, and music blaring—check out this Sox bro rocking out to “Eye of the Tiger.”) On Monday, at a Market Basket in Somerville, Massachusetts, a much smaller group of protesters danced and cheered to encouraging horn blasts of passing cars. Inside was a more somber setting, a little like a scene of an apocalypse film: shelves stripped clean of most perishables and produce and a few confused-looking customers navigating empty aisles. “It's like the day after a snowstorm in here,” one produce worker told me. I used to shop at this store when I lived around the corner, whenever the throngs and long lines didn’t dissuade me from the reduced prices. Back then, though, there weren’t any pro–Arthur T. posters on the walls. “Our only CEO is Arthur T. Demoulas. Our true leader,” reads one posted at the customer service window.

Such an outpouring of goodwill for a millionaire CEO from hourly wage workers confounds our sense of how business in America works today. We’re much more accustomed to workers protesting their company’s policies, as we’ve seen with the spate of recent fast-food-worker strikes. So why has Arthur T. inspired such fervent support? “The new owners, they want to close the stores and raise the prices,” said one Somerville worker who declined to give her name. “They want to take away our benefits. Arthur T. has been supporting us more.”

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The affection for Arthur T. goes beyond the personal touch he brings to the CEO role (for example, he remembers the names of low-level employees, and the names of their sick relatives). Under Arthur T.’s stewardship, employees have been relatively well-compensated. Manager pay often climbs above six figures after years of service. Cashiers with experience can make over $40,000, and full-time clerks start at $12 an hour, the Boston Globe reports.  According to U.S. Department of Labor numbers, the annual mean wage for grocery store cashiers throughout the country is $21,370. In Massachusetts, the minimum wage is currently $8 an hour (though a bill was recently approved to raise it gradually to $11 by 2017).

In addition, the company matches about 15 percent of annual pay to a retirement fund, and regular, substantial bonuses are awarded throughout the course of the year—which is a significant boon to their quality of life, workers tell me. Outside the Somerville store, one employee said she’s worried about what she'll do if those bonuses disappear under new Market Basket leadership, particularly around Christmastime. Another Somerville employee named Jessica, who works behind the customer service window, said she’s anxious that the board of directors might take away her $1,000-per-semester stipend to University Massachusetts Boston, which three of her co-workers also receive.

“We've been overwhelmed with phone calls from people asking if we’re still open,” Jessica says. As if on cue, the phone rings. “We don’t have produce, dairy, or milk,” she tells the caller.

Considering the board’s decision last year, led by Arthur S., to funnel an extra $250 million of Market Basket takings to its nine family shareholders, it’s easy to see why workers are concerned that they may get short shrift in the shakeup. (The We Are Market Basket website and Facebook page has been compiling a steady list of evidence to that effect.)

This isn’t the first time Arthur S. has tried wresting control of Market Basket from his same-named cousin. An ugly legal battle raged last year in which Arthur S.’s side of the family, who control 50.5 percent of the company, tried to grab some $1.5 billion in payouts on top of the $500 million they’d made in the past decade, according to Globe columnist Adrian Walker. These intra-family fights go back decades. Back in 2000, Massachusetts Lawyers Weekly described the Demoulas vs. Demoulas saga as follows: “One family. Ten years. $800 million. More than a dozen lawyers. One witness on the stand for 17 days. One case that wouldn’t end. … [It] was a monster, a modern-day Hydra: every time one evil head would be severed, two more would sprout in its place.”

What has helped endear Arthur T. to workers proved to be a sticking point for shareholders, as he apparently hasn’t been running the company at the expected level of ruthless corporate efficiency. As the Globe’s Walker wrote, the generosity of Market Basket’s profit-sharing program particularly irked some board members. In one instance back in 2008, Arthur T. made sure the company made up for a loss of $46 million that the profit-sharing fund suffered during the economic crisis.

It’s no wonder that employees such as Tom Trainor, a district manager of 37 stores who was fired on Sunday, have taken to thinking of Arthur T. as a storybook character. “He’s George Bailey,” Trainor told the Washington Post, invoking the hero of It’s a Wonderful Life. “He cares more about people than he does about money.”

The longest-serving employee at the Somerville location, who declined to provide her name, has been out on the sidewalk protesting during her spare time for nearly two weeks, all while keeping her shifts. “He really cares,” she says of Arthur T. “He has a big heart. He comes in, asks how everyone is, shakes hands, and talks to customers.

“I have a friend who works at Walmart,” she adds, “and I asked her, would they ever do this for their CEO?” She laughs.

Luke O'Neil is a journalist in Boston. Follow him on Twitter at @lukeoneil47.