Co-operative Group sets out governance reform proposals
The move follows a governance review conducted by Lord Myners who recommended that the group’s boardroom should undergo a major overhaul.
Earlier this year, the Co-operative Group admitted to having a “disastrous” 2013 when heavy losses at its bank led to a group loss of £2.5 billion.
The new proposals, which follow a consultation with society members, include cutting the number of board members from 18 to nine and moving to the concept of ‘one member one vote’.
In addition, the board will be composed of a majority of independent directors including an independent chair, five independent non-executive directors, two executive directors, including the group chief executive, and three member nominated directors.
The group said that all board directors will be expected to meet the high standards of competence commensurate with "the needs of a business of the scale and complexity of the group”. They will also need to demonstrate a commitment to The Co-operative Group's values and principles.
Other proposals include the creation of a council “to represent members and to act as guardian of the group’s purpose, values and principles and the society’s constitution” with the power to hold the group board to account. The council will be composed of a maximum of 100 members and will be led by a president who will be elected for a term of two years.
A senate, elected by the council, will help co-ordinate the activities of the council and act as a nexus for interactions between the council, the board, the executive and members.
The Co-operative Group said the proposals will also include the necessary provisions to protect the group against de-mutualisation.
The proposals have been reflected in a proposed new rule book for the society which will be put to a vote at a Special General Meeting on 30 August 2014.
Interim chief executive Richard Pennycook said: "This is a significant step towards meaningful reform and, if accepted by members at the forthcoming SGM, will mark the end of the rescue phase for the group, following the necessary balance sheet repair that we have recently completed. We look forward to the support and challenge that will be provided by the highly competent and independent board that is proposed, and to working closely with the new Council to ensure that the group once again becomes a champion of its members.
“We will publish our half year results on 4 September, a few days after the SGM. I look forward to setting out the priorities for the rebuild phase of our turnaround. These will be designed to begin the delivery of our new purpose - "championing a better way of doing business for you and your communities" - and to once again make membership meaningful for the largest co-operative in the UK.”
Ursula Lidbetter, chair of the Co-operative Group, added: "These governance reforms represent the final crucial step in delivering the necessary change to restore the group and return it to health.
"This has been a process built on co-operation, focusing above all on creating a society where every member has a voice in shaping the group's future."
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