Co-operative Group chief executive Euan Sutherland has resigned, claiming the mutual is “ungovernable”.
Sutherland cited the structural organisation of the Co-operative group, as well as internal resistance, in a resignation letter to chairman Ursula Lidbetter on Monday.
The mutual has confirmed Richard Pennycook will succeed Sutherland as interim chief executive.
In a statement today (11 March), 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.”
A proposal to restructure the organisation was put forward at a meeting of the group’s board following Sutherland’s offer of resignation.
The proposal would see the current board broken up and replaced with two different structures – one PLC-type board and another to represent mutual members.
Any restructuring would first need to be agreed by both the board and members of the Co-op.
A statement from chairman Lidbetter said: “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.”
Reports were made on Sunday that the Co-op was planning to increase pay and bonuses for senior staff, with Sutherland reportedly in line for a pay package worth £3.66m.
Sutherland, who replaced ex-chairman Paul Flowers in May 2013, condemned the reports in a post to the Co-operative’s employee Facebook group.
Sutherland said in the post: “I’m very sorry to have to report that we have had yet another leak to the media.
“This time it is to the Observer newspaper and concerns levels of annual executive remuneration, including my salary, and also proposed changes to the Group executive team. It appears that, once again, the leak has come from our Group boardroom.
“The executive and board directors are working our way through significant changes made necessary by very poor decision making in the past.”