Co-op culls management in governance overhaul
Group cuts Board from 18 directors to just seven, as part of sweeping structural and personnel reforms
Troubled company the Co-operative Group has streamlined its boardroom team, with 11 directors leaving and plans in place to hire a new chair and independent director. The cull suggests the Group’s intention to keep senior leadership trim as a means of ensuring a quick implementation of governance reforms recommended by Lord Myners. Remaining on the Co-op’s Transitional Board are Ursula Lidbetter, Marc Bicknell, Duncan Bowdler, Eric Calderwood, Martyn Cheatle, Michael Harriott and Frank Nelson.
Expected to be named on 15 October, the new independent director will be picked from one of three Boards overseeing the Co-op’s food business, its funeral homes division, and also the retail bank operation – in which the group now retains a stake of just 20%. At present, British Cambers of Commerce director general John Longworth, former Hamleys chief Simon Burke, former Manchester Airports Group COO Penny Coates and former Thomas Cook group HR director Michael Cutt are the independent directors sitting on those boards.
Co-op’s banking arm has also confirmed the promotion of John Baines to the role of finance director from his previous interim status in the post, but no details have been given as to when a new chair will be named to the board.
The moves come just a few weeks after former interim Group Chief Executive Richard Pennycook’s promotion to the permanent version of that role, as Co-op strive to rebuild its reputation after a series of scandals. In September, a £3.6 billion black hole was found in the company’s finances, which led the bank to seek an urgent rescue from US hedge funds Aurelius Capital Management, Beach Point Capital Management, and Silver Point Capital. The combined £1.5bn deal handed those firms a majority stake in the firm. Following that, former Co-op bank boss Paul Flowers was found in possession of drugs, including cocaine and crystal meth, during a newspaper sting.
New governance rules for the Co-op were devised by Lord Myners in his recent report on the company’s woes. As the leadership team sets about enforcing those measures, Pennycook says that the coming years will be a key, transitional period for the Group. “I am delighted to have the chance to lead the Co-operative Group through the crucial job of rebuilding the business,” he said. “We have taken major steps forward over the last six months, securing governance reform and repairing our balance sheet, but we have much to do to return the Group to full financial health and improve the performance of our businesses.”
He added: “I lead a talented executive team that has started this vital process and together we will continue our work to restore the Group to its rightful place at the heart of communities. With our members’ continued help and the ongoing support of our customers and colleagues, I am confident that the Co-operative Group has a strong and exciting future ahead of it.”
For more on the issue of governance, read this recent CMI blog.
Image of Richard Pennycook courtesy of the Co-operative Group.