Co-operative Group accepts Euan Sutherland's resignation
The announcement follows reports this week that Sutherland had written to The Co-operative Group’s board offering to resign saying that he believed the group was "ungovernable" after details of his £3.6 million pay deal were leaked.
The Co-operative Group's board had apparently agreed to restructure in an attempt to persuade Sutherland to stay but yesterday it was announced that he would be leaving the business and would be replaced by Pennycook on an interim basis.
The news comes as The Co-operative Group is expected to reveal later this month that it made big losses last year. The losses will stem mainly from the group’s troubled bank where a £1.5 billion black hole was discovered.
It also follows a drugs scandal surrounding Paul Flowers, the bank’s former chairman.
Sutherland said last month that 2013 had been "perhaps the worst year" in The Co-operative Group’s history and that it had "lost its way".
In statement issued by The Co-operative Group yesterday, 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.
“I would like to thank all of the Co-op's hard working colleagues for the support they have given me during my time. I wish them all well. The Co-operative has some wonderful people who deserve a great future."
Ursula Lidbetter, chair of The Co-operative Group, added: “It is with deep regret that I accept Euan’s resignation. Last year, Euan and his team saved the The Co-operative Bank, without recourse to the taxpayer, and in doing so rescued the group from the biggest crisis in its 150-year history. They have worked night and day to renew the organisation and to give it a sustainable future.
“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.
“I would also like to thank Richard for stepping up to lead the organisation at this critical juncture. We will start the process to appoint a permanent successor and urgently reform our governance."
Meanwhile Pennycook said the group would continue to follow “the clear commercial plans” put in place by Sutherland and that the team would “plot a steady course” in the coming months.
