Chapter 4Why We Need a Leadership Contract

It would be hard to imagine a CEO more loved by employees than Arthur T. Demoulas of Market Basket, an iconic 71-store chain of New England grocery stores. In August of 2014, several hundred workers at family-owned Market Basket walked off their jobs in protest after Demoulas was ousted by his cousin, Arthur S. Demoulas, and other family members. Thousands more employees attended rallies and protests to demand Arthur T.'s return to the helm of the chain.

How did Arthur T. Demoulas become so popular? In addition to earning a reputation as a fair-minded CEO, Demoulas insisted his employees be paid 20 to 30 percent more than industry rates. And he spearheaded a 100 percent company-funded profit-sharing retirement program that was the envy of employees in the grocery industry.

When other shareholders demanded a change in management, in large part to ready the company to be bought out by a private equity firm, the board took Arthur T. and his executive team out. This prompted the nonunionized employees to walk off the job. The impasse, which also included a widespread customer boycott, ended with an announcement that Arthur T. had bought out his rival family members for $1.5 billion—a deal that would allow him to resume day-to-day operations of the company.

I have tried to imagine being a leader so beloved that my employees would walk off the job to support me in a time of need. It's a remarkable expression of loyalty and affection. Although ...

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