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Marsh defense: Travel was integral to company success

February 7, 2013
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Don Marsh, in 2003, opening a new grocery store. (IBJ file photo)

Without membership in certain international business organizations, Don Marsh says he could not have built his grocery chain into a billion-dollar company.

His frequent trips overseas were so integral to the success of Marsh Supermarkets Inc., he claimed in testimony Thursday morning, that when his lawyer in his civil trial asked him to rate the meetings on a scale of 1 to 10, Marsh didn’t hesitate when replying “10.”

“I couldn’t have run the company without them,” he said.

Marsh’s testimony on cross-examination in his civil trial revealed part of his lawyers’ strategy to convince jurors that the frequent trips the former CEO of the locally based grocery chain took on the company jet were for business and not pleasure.

Marsh Supermarkets is suing Marsh, 75, alleging that he used company funds to pay more than $3 million in personal expenses during part of his time as CEO until after the company he led was acquired in 2006.

Don Marsh belonged to several global organizations, including the World Presidents Organization, Chief Executives Organization, World Economic Forum, American Arbitration Association and American Management Association.

One such organization took him to Berlin for a speech he gave in 1989 at the time the Berlin Wall fell, he told the jury.

While Marsh Supermarkets never operated stores outside of Indiana, Ohio or Illinois, Don Marsh traveled around the world to such wide-ranging destinations as Cuba, India, Libya, Russia and Venezuela in hopes that the Marsh brand could gain market share in those countries.

In Russia, for instance, Marsh private-label products were sold in Russian grocery stores for a short time until Don Marsh said he “pulled the plug” after he couldn’t compete with cheaper, Chinese products.

Russia is where he met the director of the Russian ice ballet, with whom he had an affair. Marsh put her up in a New York City apartment as he considered sponsoring the tour in the United States.

When asked by his lawyer what bearing his physical relationship had on his idea to bring the ballet to the United States, Marsh replied: “None.”

The affair was one of four extra-marital relationships Marsh has admitted to during this week's ongoing testimony.

He also flew to Libya a handful of times in an attempt to open a distribution center in the country to serve “mom and pop” stores, he said. Marsh’s sale to Sun Capital Partners in 2006 interrupted the project, which Don Marsh said had the support of former U.S. Sen. Richard Lugar.

Florida-based Sun Capital Partners terminated Don Marsh’s contract “without cause” after it took over, then stopped paying his $4.2 million severance in early 2008, after it claims it discovered personal expenses charged to the company.   
 
Don Marsh is countersuing Sun Capital, claiming it still owes him about half of his severance.

Meanwhile, Don Marsh’s attorney, Andrew McNeil, presented evidence Thursday morning regarding the various condominiums either Don Marsh or the company owned or leased.

A rental agreement for a condominium in the Dominican Republican, documented in a 1996 company directors meeting, showed the condo registered to the company.

Marsh said he used it as motivation for employees who “hit certain incentives” to vacation there. He also would take workers, as well as customers, who won contests, on cruises to tropical destinations such as Tahiti.

Less glamorous were plane flights to his condo in Saugatuck, Mich., along the eastern shore of Lake Michigan, where he would take various employees every year to pick their brains about the company in a relaxed atmosphere.

“I would try to get information from the bottom up,” Marsh told the jury. “Every company should do it. Instead they go from the top down. It was so effective it was unbelievable.”

Marsh was one of Indiana’s highest-profile executives for decades and frequently appeared in the company’s TV advertising. Proud of his community involvement, Marsh told the jury that in Indianapolis only Eli Lilly and Co. gave more to charity.

Don Marsh is expected to continue testifying on cross-examination Thursday afternoon.

The trial in federal court is expected to last two weeks and feature 40 witnesses.


 

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