Market Basket CEO Arthur T. Demoulas and other so-called "B" shareholders in his camp are asking a court to put on hold a $300 million shareholder payout until a judge decides whether the company's interim board chairman is independent as mandated by a 1998 court ruling.
Because chairman Keith O. Cowan had served since 2012 as one of the "A" shareholders led by Arthur S. Demoulas — who's been trying to remove his cousin as CEO of the Tewksbury-based grocery chain — Cowan cannot be considered independent, the court documents argue.
Although Cowan's designation has changed to an independent "A/B" director, "his marching orders certainly had not," according to a lawsuit filed yesterday in Suffolk Superior Court. He has "continued to take directions from, and execute the agenda of, the family that originally selected him and now has elected him," the lawsuit filed against Arthur S. Demoulas, the other "A" shareholders and Cowan states.
"Mr. Cowan is pursuing in a rapid, almost frantic, fashion, the agenda and interests of the "A" shareholders, including … their hunt for extreme liquidity in the form of large distributions," a slowing of company growth and removal of the CEO at the "expense of a very successful business model," according to the lawsuit.
The lawsuit notes that Cowan voted the same way as Arthur S. Demoulas on 19 of 22 votes at July board meetings — and was the deciding vote in August on the $300 million payout that "B" directors opposed.
"At the meetings, it is very clear that Mr. Cowan's conduct, and votes, are being directed by Arthur S. Demoulas," the lawsuit states.
A spokeswoman for Arthur T. Demoulas declined comment. Cowan and the board's spokeswoman could not be reached.
Under a 1998 Middlesex Superior Court ruling, three members of the seven-member Market Basket Board must be "disinterested, independent" directors meeting New York Stock Exchange standards. The ruling was intended to balance the interests of the two long-warring factions of the Demoulas family.
The "A" shareholders have wielded new power after a June election shifted a board majority to their favor. This allowed them to elect all three independent directors and Cowan as chairman.
The lawsuit is the latest volley in a string of lawsuits between the two factions of the Demoulas family since 1990. A hearing is set for Sept. 19.
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