Euan Sutherland quits the Co-op Group

THE Co-operative Group has accepted chief executive Euan Sutherland’s resignation.

In a statement he said he would waive the £1.5m retention bonus and some other incentives that led to a backlash after the pay details were leaked.

Richard Pennycook, chief financial officer, has been appointed as interim group chief executive.

Mr Sutherland tendered his resignation on Monday night. He was aleady enraged over a leaks by a ‘fifth column’ within the organisation regarding his, and other executives’ pay awards, and argued at a board meeting that the organisation was “ungovernable”.

The former Kingfisher executive, who has been with the Co-operative since last May, wanted the organisation to adopt a flatter structure, making governance easier. His plan was for the current 20-strong board to be disbanded and replaced by two differing structures – one to represent members’ interests – and the other would be like a plc board, but this met with some resistance.
 
Mr Sutherland said: “It is with great sadness that I have resigned as chief executive. I have given my all to the business and had hoped to be able to lead its revival. However, I now feel that until the group adopts professional and commercial governance it will be impossible to implement what my team and I believe are the necessary changes and reforms to renew the group and give it a relevant and sustainable future.
 
“Saving The Co-operative Bank and with it The Co-operative Group from administration was a huge task, but the changes required do not stop there, with fundamental modernisation needed to safeguard the future for our 90,000 colleagues and millions of members.
 
“The group must reduce its significant debt and drive major efficiencies and growth in all of its businesses, but to do so also urgently needs fundamental governance reform and a revitalised membership. I will not accept the retention payments and long term incentive payments previously agreed for the delivery and protection of value in the group and the bank, even though this was successfully delivered.

“I would like to thank all of the Co-op’s hard working colleagues for the support they have given me during my time. I wish them all well. The Co-operative has some wonderful people who deserve a great future.”

Ursula Lidbetter, chair of The Co-operative Group, said: “It is with deep regret that I accept Euan’s resignation. Last year, Euan and his team saved the The Co-operative Bank, without recourse to the taxpayer, and in doing so rescued the group from the biggest crisis in its 150-year history. They have worked night and day to renew the organisation and to give it a sustainable future.
 
“Euan’s resignation must now act as a catalyst for the real and necessary change which the group must go through. I would like to thank Euan for his hard work and leadership and to wish him the very best for the future.”

The revelations come after a turbulent year for the group, which saw its bank nearly collapse. Annual losses of £2bn are expected to be announced later this month, while the group has put its farms and pharmacies divisions up for sale to raise funds for other parts of the business.