What the Heck Is Happening at Market Basket?

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Employees were fired after regular operations at many Market Basket stores were slowed by dwindling inventories on store shelves. Perishable items like produce and seafood, as well as other items, were noticeably thinning at stores across the region.

Why the thinning inventories?

At a rally in support of Demoulas Friday, which most employees who work at the company's Tewksbury headquarters and in its warehouse attended by not working, employees said they would halt deliveries to stores until Demoulas was fired. Several Market Basket stores featured notes to customers on display apologizing for the lack of inventory, and explaining the reasons employees are protesting.

Market Basket apparently hired replacement drivers, but it is unclear how many deliveries were made over the weekend and how stores handled them.

And that amounts to a fireable offense?

Employees were told in a letter last week that any employee who does not do their normal job functions as a result of this movement would be canned. Neither side blinked, and now both have seen consequences.

Market Basket said in a statement that the fired employees' 'actions continued to harm the company, negatively impacted customers, and inhibited associates' ability to perform their jobs.'

I heard something about politicians...

Yes. Seventeen state lawmakers signed a letter calling for a boycott of Market Basket on Friday and expressing support for employees. Attorney General and candidate for governor Martha Coakley issued a statement Sunday calling employees' actions 'inspiring.'

Why are employees protesting, anyway?

OK, the long answer goes back decades. In the very short-term, Market Basket employees are extremely loyal to the former CEO, Demoulas, who was fired last month and replaced with Jim Gooch and Felicia Thornton. Two other executives were fired at the time, and seven more resigned the next day.

A couple weeks back, employees outright demanded Demoulas be re-instated as CEO. When they didn't hear an answer by the middle of last week, they issued an ultimatum to the board, saying they needed an answer by 4:30 p.m. Thursday. When they received an answer saying some employees would get a chance to meet with the board in a meeting this week, they said that wasn't good enough and organized Friday's rally, which drew more than 2,500 employees and supporters.

Why the loyalty?

Employees at Market Basket receive very strong benefits, including participation in a profit sharing program. They are worried that new leadership wants to operate the company in a way that stresses profits-Market Basket is already profitable, and does billions of dollars in revenue. This could, theoretically, threaten their livelihood. Employees also worry new leadership aims to sell the company; Thornton's expertise historically has been in mergers and acquisitions. They say they are fighting for the preservation of the company. Moreover, they say it's also about Demoulas himself, whom they hold in extremely high regard.

It is indeed unusual that management and rank-and-file employees would be participating in a movement together in support of an ousted executive, which might be one reason why employees have resisted the idea of unionizing.

Why was Demoulas fired?

Again, going way back here. But the board has held that Demoulas spends money unwisely-including through business deals that could be seen to be self-interested. Much of the story stems from resentment between Demoulas and his similarly-named cousin Arthur S. Demoulas. The two sides of the families hate each other, partially as a result of Arthur T.'s side having stripped control of the company away from Arthur S.'s many years ago. The courts, several years ago, said they agreed with that allegation and helped restore Arthur S.'s stake in the company.

Arthur S. gained control of the board of directors last year by swaying a shareholding family member to his side. The board then tried to fire Arthur T., but employee action delayed that action. The board next acted to take hundreds of millions of dollars out of cash reserves and give it back to shareholders, to Arthur T.'s objections, before firing him on June 23.

And today?

Employees are rallying again, this time at a Tewksbury store at Stadium Plaza. That store is not owned by Market Basket-in fact, it's owned by a company owned by Arthur T.'s brother-in-law, and the company leases from it-so the decision to hold it there rather than at company headquarters probably helps to hush any demands from Thornton and Gooch that employees stay off company property.

Before the weekend, the board had said they were going to do a meeting by phone today to discuss employees' demands. That would not have been a regularly scheduled meeting, and it is unclear if it will happen.

Adam can be reached at adam.vaccaro@globe.com. Follow him on Twitter at @adamtvaccaro.

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