MOVES to radically reform the Co-op in the wake of the worst financial year in its 150-year history have been described as a step in the right direction by Lord Myners, the former City minister asked to review how the mutual is run.
Although he said the proposals do not go as far as he recommended in his review of governance, they represented significant progress.
Under the proposed changes, the Co-op will recruit a smaller board of nine directors – half the current 18 – with “high standards of competence” as part of radical governance reforms announced yesterday.
The mutual, which received the backing of members to begin the changes at a landmark meeting in May, will also establish a 100-member council to act as guardian of the group’s values and to hold the board to account.
Other changes include a move to one-member-one-vote on significant matters such as the election of directors and major transactions.
The Co-op, which last year racked up a £2.5 billion loss, said the reforms will be put to a vote at a special meeting on 30 August.
Co-op chairwoman Ursula Lidbetter, pictured, said: “These governance reforms represent the final crucial step in delivering the necessary change to restore the group and return it to health.”
Under a transitional structure, the Co-op’s board will reduce in size as soon as the rules are agreed.
It will then look to appoint a new board consisting of a chairman and five independent non-executive directors, plus two executive directors, including the chief executive, and three member nominated directors.
The Co-op said: “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 and a demonstrated commitment to Co-operative values and principles.”
The changes are based on the four-point resolution proposed by Myners and voted on by members at the special meeting in May.
The former City minister previously warned that the Co-op, which has around eight million members and a 90,000-strong workforce, faced a bleak future unless it took urgent steps to replace its “dysfunctional” board structure.
Myners, who has since stepped down from the Co-op board after he was appointed a director in December, said it was apparent from the first time he attended a board meeting that not one of its members had the ability to address the complex issues faced by a group with £1.4bn of debt.
His “plc and beyond” structure met an initially hostile response from some parts of the movement but then won unanimous support at the vote.