Co-op urges members to embrace slimmed down board

THE Co-operative Group is to move towards a smaller plc-style board – if the plan is approved a meeting later this month.

Members of the mutual approved governance reforms at an annual meeting in May and now senior executives have put forward more detailed proposals, shaped by a review carried out by Lord Myners.

The plan strips away the 18-strong board populated by elected lay representatives from its regional boards, which represent its eight million members, and its independent societies.

Instead there will be nine on the board intially, consisting of non-executive and executive directors – with three nominated by members. There will eventually be 11. Members will also be able to make their voices heard through a 100-strong council and a “one member, one vote” system which will give them a say on big decisions such as significant transactions and the election of directors.

The board has approved the proposals and recommends members follow suit. It is hoped the changes will help prevent some of the mistakes which led to a £2.5bn loss last year and the near-collapse of the Co-op Bank. Former chief executive Euan Sutherland resigned after saying the organisation was “ungovernable” and Lord Myners said the existing board structure meant executives did not have the experience to keep senior managers in check and had overseen “breathtakingly value-destructive” decisions.

Co-op Group chair Ursula Lidbetter said: “These governance reforms represent the final crucial step in delivering the necessary change to restore the group and return it to health. This has been a process built on co-operation, focusing above all on creating a society where every member has a voice in shaping the group’s future. I would like to thank our members for their engagement in building a governance structure that strengthens the society and enhances member engagement and our unique democracy.”

The proposed reforms are not as radical as those propsed earlier this year by former independent non-executive Lord Myners, who joined the board to review the mutual’s governance practices at the height of its crisis last year.

Lord Myners recommended a board comprising of independed professionals, including Co-operative executives, but the Co-op is proposing that three of its grass roots members be elected to the new slimmed-down board

A vote will be held on August 30. Law firm DWF advised Co-op.