By Pamela Swanson
After firing its CEO in the summer of 2014, Market Basket Inc. (“Market Basket”) found itself in a rare situation that exposed the relatively unknown, but potentially disastrous consequences of focusing solely on the short-term increase of shareholder value. In the wake of employees and customers effectively bringing a $3.7 billion corporation’s operations to a standstill, there is an opportunity to question what boards of directors should consider when making decisions that are in the best interest for the company. The concern for and interest in the “Main Street” understandings may become more relevant to a corporation as it contemplates profit-making strategies. Thus, if the key to corporate success may no longer exclusively be increasing shareholder value, then what is the best approach?
The reactions of many non-shareholder constituents following the contentious decision of Market Basket’s board of directors provide an opportunity to examine the necessary elements of corporate profit maximization and the presence of narrative in corporate law. The current landscape of corporate law, corporate governance, and the focus on shareholder value can be analyzed using the events surrounding Market Basket as an illustration of what may happen more regularly in the future if corporations do not adjust their priorities.