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Lord Myners quits Co-operative Group Lord Myners quits Co-operative Group
(about 2 hours later)
The Co-operative Group was in disarray after Lord Myners quit from the board of the troubled chain of supermarkets, funeral homes and pharmacies. The Co-operative Group was in chaos on Wednesday night after the man brought in only four months ago to reform the troubled chain of supermarkets, funeral homes and pharmacies quit the board.
His sudden departure followed days of sustained criticism of his plan to reform the beleaguered mutual which is on course to report a £2bn loss next week. Lord Myners tendered his resignation in the face of mounting opposition to his plan to reform the way the country's biggest mutual is run.
Myners' departure came soon after the members of the Co-op voted to remove the three directors who approved the controversial £6.6m pay packet for the chief executive Euan Sutherland who quit last month after it was leaked to the Observer. On course to report a £2bn loss next week, the Co-op has been mired in turmoil since it emerged its bank had a £1.5bn hole in its balance sheet last May and its former chairman, the Reverend Paul Flowers was embroiled in a scandal involving class A drugs.
Myners faced overwhelming opposition for his plans to reform the group, which included tearing up the existing boardroom structure and replacing it with a plc style model. Myners, who was chairman of the Guardian Media Group until 2008 when the joined the Labour government at the height of the financial crisis, was brought in in the aftermath Flowers scandal with a mandate to draw up a blue print for a new-look Co-op.
He had referred to bullying tactics he had faced since joining the board in December and a warning from one influential member of the board that they could block his plans to reform the group which need the backing of two-thirds of the votes. His resignation came just hours after the members of the Co-op voted to remove the three directors who approved the controversial £6.6m pay packet for chief executive Euan Sutherland who quit last month after it was leaked to the Observer.
The former City minister is thought to be staying on to complete his controversial review which is unlikely to be accepted by the regional boards and independent societies which run the organisation. Myners has faced overwhelming oppositon for his plans to reform the Group – which include tearing up the existing boardroom structure and replacing it with a plc style model.
The boardroom shakeout came at a crucial time for the troubled chain which is on course to report losses of more than £2bn in a week's time. Its banking arm, of which it owns just 30% following last year's rescue by bondholders, is also preparing to explain, no later than Friday, how it lost as much as £1.3bn last year. He has referred to "bullying" tactics he has faced since joining the board in December and a warning from one influential member of the board that they could block his plans to reform the Group which need the backing of two thirds of the votes.
The three directors who are losing their seats are Liz Moyle, Steven Bayes and Patrick Grange who all had seats on the remuneration committee which approved the £6.6m two year pay deal for Sutherland, who was appointed boss of the group 10 months ago but quit after his pay package was leaked to the Observer last month. The former City minister is thought to be staying on to complete his controversial review that is unlikely to be accepted by the regional boards and independent societies which run the organisation.
The three who lost their seats are also representatives of the regional boards which control 78% of the votes at annual meetings and will also have a major role in approving the reforms being proposed by Myners who is the only independent director on the board. The three directors who were voted off were Liz Moyle, Steven Bayes and Patrick Grange who all had seats on the remuneration committee which approved the £6.6m two year pay deal for Euan Sutherland, who was appointed boss of the group 10 months ago but quit after his pay package was leaked to the Observer.
The changes to the board are thought be the result of a vote by the 900 members who sit on the influential area committees which represent the views of the 7 million owner-members of the UK's largest mutual and in turn feed in to the regional boards. The three who lost their seats are also representatives of the regional boards which control 78% of the votes at annual meetings and will also have a major role in approving the reforms being proposed by Lord Myners who is the only independent director on the board.
The changes to the board are thought be the result of a vote by the 900 members who sit on the influential area committees which represent the views of the seven million owner-members of the UK's largest mutual and in turn feed in to the regional boards.
Five new directorships were up for election, which included filling the seat vacated by the former chairman Len Wardle who quit at the height of the Group's troubles last year after Paul Flowers, the former chairman of the bank, was filmed handing over cash for illegal drugs. One position was vacant because Stuart Ramsay retired.Five new directorships were up for election, which included filling the seat vacated by the former chairman Len Wardle who quit at the height of the Group's troubles last year after Paul Flowers, the former chairman of the bank, was filmed handing over cash for illegal drugs. One position was vacant because Stuart Ramsay retired.
Myners was proposing scrapping the current boardroom structure which involves 15 representatives from the regions and five from the independent societies. Myners is proposing scrapping the current boardroom structure which currently comprises 15 representatives from the regions – including a farmer, a university lecturer and a nurse – and five from the independent societies. Until last night it also included, Myners who only took on the role – for a salary of £1 – in December. He was first the non-executive independent director and is accustomed to financial crises, playing a key role at the time of the banking crisis and was a key figure in the removal of Fred Goodwin from the top of Royal Bank of Scotland when the bank was facing collapse.
The largest independent, the Midcounties, said it would not back the reform package being drawn up by the former City minister. The chair of the Co-op is also from an independent society, Ursula Lidbetter, who runs the Lincolnshire Co-operative. The largest independent Co-op, the Midcounties, had on Monday night voted against the reform package being drawn up by the former City minister. The chair of the Co-op is also from an independent society, Ursula Lidbetter, who runs the Lincolnshire Co-operative.
Other independent societies were not speaking publicly on whether they backed the stance of the influential Midcounties. Other independent societies were not speaking publicly yesterday on whether they backed the stance of the influential Midcounties.
But Myners, who chaired Guardian Media Group until 2008 when he joined the Labour government, was under pressure to rewrite his reform plans following the intervention of Midcounties and the seven regional boards which held meetings last weekend at which concerns were raised about the proposals. But Myners remains under pressure to rewrite his reform plans following the intervention of Midcounties and the seven regional boards which held meetings last weekend at which concerns were raised about the proposals.
Under his proposals – rushed out in the wake of Sutherland's resignation and not yet finalised – the members of the Co-op would no longer sit on the board but be represented by a members council.Under his proposals – rushed out in the wake of Sutherland's resignation and not yet finalised – the members of the Co-op would no longer sit on the board but be represented by a members council.
Sutherland was one of eight members of the executive team to be handed "retention payments" equivalent to the size of their salaries. Sutherland was on a £1.5m salary and had been promised two retention payments of £1.5m for 2013 and 2014. His current stand-in, former WM Morrison's finance director Richard Pennycook, has a £900,000 salary and a retention package for 2013 and 2014. He is under pressure to reject the payouts.Sutherland was one of eight members of the executive team to be handed "retention payments" equivalent to the size of their salaries. Sutherland was on a £1.5m salary and had been promised two retention payments of £1.5m for 2013 and 2014. His current stand-in, former WM Morrison's finance director Richard Pennycook, has a £900,000 salary and a retention package for 2013 and 2014. He is under pressure to reject the payouts.
The bank is preparing to reveal the pay deal of the boss of its bank Niall Booker who was part of the team assembled by Sutherland when the financial problems in the bank were uncovered last May. Last month Booker admitted the bank needed another £400m to cover the cost of misselling scandals. But this means the debt-laden group needs to find another £120m if it is to prevent its stake in the bank falling below 30%. But it is not yet clear if it will put up the cash as next week its expected to report losses of at least £2bn. The bank is preparing to reveal the pay deal of the boss of its bank Niall Booker who was part of the team assembled by Sutherland when the financial problems in the bank were uncovered last May. Last month Booker admitted the bank needed another £400m to cover the cost of misselling scandals. But this means the debt-laden Co-op Group needs to find another £120m if it is to prevent its stake in the bank falling below 30%.
But it is not yet clear if it will put up the cash as next week its expected to report losses of at least £2bn.