Co-Operative Group Ltd. members voted to overhaul the British retailer’s corporate governance structure following the worst crisis in the 150-year history of the customer-owned company.
Members approved proposals at a special meeting today in Manchester to create an elected board of directors, a system of “one member, one vote” and stronger rules to protect against de-mutualization after the Co-Op slumped to a £2.5 billion ($4.2 billion) annual loss.
“This is a highly significant moment,” Ursula Lidbetter, chairwoman of Co-Op Group, said in a statement on the unanimous vote. “There is a huge task ahead of us if we are to deliver the reforms necessary to restore the group’s reputation and return it to health but the board will work hand-in-hand with our members to ensure that we seize this opportunity.”
The proposals backed today had been recommended in a report by former UK. Treasury Minister Paul Myners that warned Co-Op Group needed to urgently change its governance or risk running out of capital. Co-Op Group, whose businesses range from supermarkets to pharmacies and funeral parlors, has slumped since bailing out its former banking unit after it was hurt by souring loans, compensation, restructuring and other costs.
The company, with about 8 million members and 80,000 employees, ditched a plan last year to buy about 630 branches from Lloyds Banking Group Plc as the capital woes emerged and Myners’s report said the board lacked experience. According to the Press Association, the Co-Op’s current board includes an engineer, a plasterer and a retired deputy head teacher.
Following the vote, a board sub-committee will write new rules for the Co-Op based on the newly adopted principles.
Bloomberg
