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Former City minister Myners joins Co-op Group board on £1 salary Former City minister Myners joins Co-op Group board on £1 salary
(about 5 hours later)
The troubled Co-operative Group has brought in former City minister Lord Myners on an annual salary of just £1 to help turn around the bank after its reputation was left in tatters by the Paul Flowers scandal. Former City minister Lord Myners is to lead the overhaul of the management structure of the Co-operative Group after scandals at its banking arm that have seen control ceded to its bondholders and its former chairman accused of using illegal drugs.
The bank said Myners, a financial services minister under the previous Labour government and a former chairman of Marks & Spencer and Guardian Media Group, has joined the board with immediate effect as senior independent director and will oversee the bank's governance review. Taking on the high profile role at the mutual for the token sum of £1 a year, Myners indicated that the 20-strong board is likely to be slimmed down as part of his review.
His appointment comes as the bank attempts to move on from allegations of drugs use by its disgraced former chairman Paul Flowers, a 63-year-old Methodist minister. With the outflow of current accounts from the Co-op bank following the allegations about former chairman and methodist minister Paul Flowers stabilising, the complex restructuring of the bank should be completed next week.
The Co-op did not release details of Myners's salary but it is understood he will be paid a token £1 a year for his efforts to restore the bank's reputation, and will also be entitled to claim expenses. A non-executive director at the group would typically be paid an annual salary of £60,000. The bank is racing to plug a £1.5bn capital shortfall in an intricate deal that will leave the group of supermarkets, pharmacies and funeral homes losing control of the bank and being left with just a 30% stake, with the remainder owned by bondholders, including hedge funds. The changing ownership structure has raised concerns about its ability to retain its ethical stance.
In a statement Myners acknowledged the struggle facing the bank and said he would work with the rest of the board to ensure the group realised its potential. Myners, who was City minister in the Labour government from October 2008 until the 2010 general election, refused to pre-empt the outcome of an ongoing review into the group's donations to the Labour Party.
Himself a Methodist and a member of the Co-op, Myners is a former high profile fund manager but has a wide range of business interests including chairing an activist shareholder group Cevian as well as having a seat on the board of the controversial Russian mobile phone company MegaFon.
His appointment as senior independent director is the latest attempt by country's biggest mutual to rebuild its reputation. He will be joined by two other independent non-executives which will already represent a change in the structure of the board, which is usually made up of 20 elected members from the co-operative movement.
"The board of the Co-op is larger than most company boards but this reflects the democratic tradition of the Co-op. Questions will clearly be raised about how you get the right competency and boardroom skills," said Myners.
The chairman Len Wardle quit in the wake of the allegations about the private life of Flowers and even before he did so had already suggested his successor should be appointed from outside the movement. But Wardle's sudden departure meant his deputy, Ursula Lidbetter, was named chairman. "We have made it clear that we need to modernise and to embed the very best standards of corporate governance – while also ensuring that the voices of all our members and customers resonate through the business," she said.
Myners' review will look at how the board is "constituted and chaired" and is likely to be completed before the next annual meeting in May.
The board is already braced for heavy criticism from the review by Sir Christopher Kelly into the events that led to the Co-op bank's £1.5bn capital shortfall – one of a number of investigations into the bank. City regulators and accountancy regulators are also considering whether to launch inquiries.
Euan Sutherland, the chief executive of the Co-op group, said Myners' "leadership on the governance review will be crucial".
The Co-op did not release details of Myners's salary but it is understood he will be paid a token £1 a year, and will also be entitled to claim expenses. A non-executive director at the group would typically be paid an annual salary of £60,000.
Myners – regarded as a potential next chairman of the overall group – acknowledged the struggle facing the bank and said he would work with the rest of the board to ensure the group realised its potential.
"Right now it faces serious challenges in terms of business performance and ensuring that the right governance is in place to deliver in the interests of all its members and customers.""Right now it faces serious challenges in terms of business performance and ensuring that the right governance is in place to deliver in the interests of all its members and customers."
Euan Sutherland, the Co-op's chief executive, said Myners would bring "significant and valuable experience" to the group as it attempts to regain the trust of its customers.
He added: "His leadership on the governance review will be crucial. What our customers, colleagues and wider membership base needs is an organisation and a business that they can be proud of again and I believe that Paul has a key role to play in helping us deliver that."
The Co-op is seeking two additional independent non-executive directors to strengthen the board.
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