The Board of Directors of Market Basket issues a statement--what it really means

 

One of my favorite Winston Churchill quotes is "Some see private enterprise as a predatory target to be shot, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon."  When I think of Market Basket, it's the sturdy horse pulling a wagon loaded with food at great prices. My favorite quote from Winston is at the end of this article.

Sometimes there is a lot more to things than meets the eye. Below is the statement from the Board of Directors of Demoulas Super Markets, followed by a line by line interpretation of what it might be saying. Statements such as these aren’t just written up by the person taking the minutes at the meeting. Each word, sentence, and paragraph is weighed to deliver the message intended. Here is what I believe they are saying, and what it means.

 

Statement from the Board of Directors of Demoulas Super Markets, Inc. July 25, 2014

For Immediate Release:

“The Board of Directors of Demoulas Super Markets met today and confirmed that the Company has received an offer from Arthur T. Demoulas and the other “B” shareholders to acquire the remaining 50.5% of the shares of the Company. The Board said that the offer was received prior to the deadline for the “B” shareholders to present a proposal. Consistent with its fiduciary obligations, the Board will evaluate and seriously consider this proposal, along with any other offers previously received and to be received. Following its evaluation of all of the offers, it will convey its recommendations to the Company’s shareholders.

The Board acknowledges that it has heard from many stakeholders. The negative behavior of certain current and former associates is at variance with the Company’s culture of putting the needs of the Market Basket customers first. It is now clear that it is in the interests of all members of the Market Basket community for normal business operations to resume immediately. Furthermore, the Board reaffirmed its election of Co-CEOs Felicia Thornton and James Gooch to manage the Company in accordance with the Company’s bylaws.”


So what does this mean? We know what it says, but what does it imply? It’s a short statement that must have taken a long time to write. It was probably painstakingly put together to deliver a specific statement without saying too much, during what might well have been an acrimonious meeting since both sides of the family are represented almost equally on the board. Let’s look at it sentence by sentence. All the following is my opinion only.

 

The Board of Directors of Demoulas Super Markets met today and confirmed that the Company has received an offer from Arthur T. Demoulas and the other “B” shareholders to acquire the remaining 50.5% of the shares of the Company.

On the surface this certainly doesn’t convey any new information, since it’s been all over the news. What it really does is provide a lead in to the third statement, which is the main sentence of the first paragraph. The other “B” shareholders are Arthur T.‘s sisters.

 

The Board said that the offer was received prior to the deadline for the “B” shareholders to present a proposal. 

This sentence seems extraneous, and serves only to convey that the Board sets the rules and deadlines, not Arthur T. and his side of the family or the associates. I'm sure there was a deadline, but it didn’t seem to be widely known or a factor in this.

 

Consistent with its fiduciary obligations, the Board will evaluate and seriously consider this proposal, along with any other offers previously received and to be received.

This is meant to say, perhaps for legal reasons, that despite the fact Market Basket is hemorrhaging cash and customers, the Board takes its fiduciary responsibility seriously, so all offers must be evaluated. And, by the way, there might be other offers so just because Arthur T.’s side of the family made an offer doesn’t mean we’re going to accept that particular offer.

 

Following its evaluation of all of the offers, it will convey its recommendations to the Company’s shareholders.

This sentence repeats that there are other offers, and points out that the Board only recommends to the shareholders (which consist of nine Demoulas family members). Perhaps most importantly, this statement confirms that the Board of Directors is seriously considering selling the company.

The Board has the choice to sell now or not to sell now. Current events are forcing the issue, because unless the new CEOs can get the situation under control, not selling will become an expensive proposition, and selling to anyone other than Arthur T. and his sisters will be harder and less lucrative—who’d want to have this mess to deal with? And, if the Board were to vote to sell to someone other than Arthur T. for less than his group is offering, they would not only be taking a financial hit, but also run the risk of the new owners simply selling to Arthur T. at a substantial profit, or hiring him back under workable circumstances.

 

The Board acknowledges that it has heard from many stakeholders.

They probably struggled about how to word this. They certainly didn’t want to over-emphasize it—that they’d gotten a huge signed petition from Market Basket customers and all the associates are essentially on strike. “Many” is the key word here, as there is the implication of other stakeholders besides the associates--i.e. customers and shareholders, and it allows the board to not completely ignore in this statement everything that’s going on. “Many” is also a more generic number—hearing from “many” customers doesn’t convey the same urgency as “hearing from 100,000 customers” does.

 

The negative behavior of certain current and former associates is at variance with the Company’s culture of putting the needs of the Market Basket customers first.

This is an interesting statement with a lot of implications, and the key is to look at the word choices. The best one is “certain”. It’s almost funny to think how much effort had to go into coming up with just the right word. The Board couldn’t very well be accurate and say “all” or “most”, but also couldn’t say “a few” without looking like idiots, so they said “certain”, which implies no particular amount.

Next comes “current and former associates”…….they didn’t mess up the word “associates” this time, and “former” conveys an implied threat. Then there is the attempt to link the current actions with going against the Market Basket culture of “putting the customer first”.  If there were ever an illustration of “the pot calling the kettle black”, this is it.

 

It is now clear that it is in the interests of all members of the Market Basket community for normal business operations to resume immediately.

This statement draws a conclusion without supplying a reason. It simply states that “it is now clear”, although it doesn’t say why the situation has suddenly cleared up.

 

Furthermore, the Board reaffirmed its election of Co-CEOs Felicia Thornton and James Gooch to manage the Company in accordance with the Company’s bylaws.” 

This had to be stated, as no mention of the co-CEOS in this statement would be seen as a lack of support or an implication Arthur T. is coming back, or that a mistake was made. This also is saying, just like the previous statement, that things have changed, we did it by the rules, accept it, and get back to work.

 

All in all, it’s a short and not very sweet statement, but far more informative than it appears at first glance. It must have been quite the board meeting.

 

Shoppers waiting to check out at Hannaford, where the employees were struggling to keep up because it was so busy

 

In the meantime the new co-CEOs issued this statement:


“We welcome back associates who are committed to Market Basket’s customers. There will be no penalty or discipline for any associate who joins in what will be a significant effort to return to the unparalleled level of performance and customer service that have been hallmarks of the Market Basket brand.”


 

This appears to be a dual pronged approach—good cop/bad cop. The Board is strict while the new CEOs are forgiving and dedicated to restoring the Market Basket brand by serving customers.

 

So how is this going to work out? It's looking much better for the associates than anyone could have expected, but never underestimate the power of events and animosities to overwhelm logic.

 

One hundred years ago, almost to the day, on July 28, 1914, the first shots of World War 1 were fired. This was largely a European war, and the main protagonists were Kaiser Wilhelm (Germany), Czar Nicolas II (Russia), and King George V (Great Britain). These three men were all cousins, each a grandson of Queen Victoria of Great Britain.

World War 1 led directly into World War 2, and taken together these events constituted the greatest calamity of the 20th Century. This time period also gave rise to some great men, and brought out greatness in average people.

The famous photograph of Winston Churchill by Yousuf Karsh. Rumor is that Karsh obtained this scowling expression by pulling a cigar from Winston's mouth.

 

My favorite quote from Winston Churchill is:

 “Never give in–never, never, never, never, in nothing great or small, large or petty, never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy.”

 

An unusual sight at Hannaford, which was packed this Saturday afternoon.

 

We know someone who typically works a 40 hours per week shift in the Leominster Market Basket. Her hours have just been cut in half. Anything anyone can do to help any associates they know in this situation would no doubt be greatly appreciated...cash, a gas card, etc. It would be extremely helpful, for instance, if landlords could be a little more tolerant to tenant-Market Basket-employees. 

On a humorous note, our in-laws are fiercely loyal Market Basket shoppers. This has really put them in a bind, which they solved by simply not shopping for food. Their cupboards are becoming more bare by the day, and they are eating out more. Pretty soon it will be Hamburger Helper without the burger for breakfast.


About the author: Jay Shenk, currently an IT and Operations consultant, previously worked for a private equity funded company (which acquired other companies), where he ran distribution, IT, and other operational departments. He has also published a humorous novel about his personal experiences with private equity buyouts, Keeping Up, which is available online from Amazon. He can be reached at  This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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