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Co-operative Group chief executive Euan Sutherland offers to resign Co-operative Group chief executive Euan Sutherland offers to resign
(about 1 hour later)
The Co-operative Group was thrown deeper into crisis on Tuesday after the new boss Euan Sutherland threatened to resign in the face of opposition to his reforms for the mutually owned chain of supermarkets, funeral homes and banks.The Co-operative Group was thrown deeper into crisis on Tuesday after the new boss Euan Sutherland threatened to resign in the face of opposition to his reforms for the mutually owned chain of supermarkets, funeral homes and banks.
Sutherland offered to resign in a letter to the chair Ursula Lidbetter – herself promoted once the bank's problems were exposed – on a point of principle that the group was too difficult to govern.Sutherland offered to resign in a letter to the chair Ursula Lidbetter – herself promoted once the bank's problems were exposed – on a point of principle that the group was too difficult to govern.
The board convened a late night telephone conference call to agree to recommend changes to its management structure to give Sutherland a seat on the board in a more conventional style for a major company.The board convened a late night telephone conference call to agree to recommend changes to its management structure to give Sutherland a seat on the board in a more conventional style for a major company.
Currently the board is made up of 20 elected members from the Co-operative movement and an independent member – Lord Myners, the former City minister – appointed last year when the scale of the problems at its bank first emerged.Currently the board is made up of 20 elected members from the Co-operative movement and an independent member – Lord Myners, the former City minister – appointed last year when the scale of the problems at its bank first emerged.
Myners is in the process of drawing up a series of proposed changes to the governance of the group and is due to publish them next month while a review by Sir Christopher Kelly into the group's problems is also to be published shortly.Myners is in the process of drawing up a series of proposed changes to the governance of the group and is due to publish them next month while a review by Sir Christopher Kelly into the group's problems is also to be published shortly.
Sutherland threatened to quit after using Facebook to criticise leaks of his £3.6m pay deal to the Observer last weekend. Sutherland, who took the helm on 1 May after leaving B&Q owner Kingfisher, said that "an individual or individuals" were determined to undermine him.Sutherland threatened to quit after using Facebook to criticise leaks of his £3.6m pay deal to the Observer last weekend. Sutherland, who took the helm on 1 May after leaving B&Q owner Kingfisher, said that "an individual or individuals" were determined to undermine him.
While the group board may have voted to make changes to its structure, the regional board of the complex organisation also need to approve any changes, which could still be difficult to achieve.While the group board may have voted to make changes to its structure, the regional board of the complex organisation also need to approve any changes, which could still be difficult to achieve.
At a meeting two weeks ago in Manchester, where Co-op is headquartered, the group's 100 senior regional elected members are thought to have been briefed by Myners. He is said to have criticised the board, frustrating many of those present.
When he was appointed senior independent director last year, there was speculation Myners was being lined up to be the next chairman – an independent one rather than one from within the co-operative movement.
He is thought to have considered recommending that the board comprise an independent chair and also include executive directors – but also looked at the idea of a German-style supervisory board and management board set-up.
There is thought to be resistance among some members to reducing the influence of "democrats" from a group that can trace its roots back to the Rochdale pioneers in 1774.
Sutherland and seven of his top managers are to controversially receive retention deals – essentially guaranteed bonuses – for 2012 and 2013. He has been planning to announce changes to his top management team on Monday.Sutherland and seven of his top managers are to controversially receive retention deals – essentially guaranteed bonuses – for 2012 and 2013. He has been planning to announce changes to his top management team on Monday.
Sutherland joined as the bank's capital shortfall was uncovered, sparking a battle with bondholders, including US hedge funds, which has left the group with just a 30% stake in the bank. The Co-op's reputation was further damaged when Paul Flowers, chairman of the bank and deputy chairman of the group, was alleged filmed buying illegal drugs.Sutherland joined as the bank's capital shortfall was uncovered, sparking a battle with bondholders, including US hedge funds, which has left the group with just a 30% stake in the bank. The Co-op's reputation was further damaged when Paul Flowers, chairman of the bank and deputy chairman of the group, was alleged filmed buying illegal drugs.
The group, which is on track to report £2bn of losses on 26 March, declined to comment.The group, which is on track to report £2bn of losses on 26 March, declined to comment.