Moves to reform Co-op in wake of annus horribilis

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.
Co-op chairwoman Ursula Lidbetter said that the governance reforms were crucial in restoring the group and returning it to health. Picture: ContributedCo-op chairwoman Ursula Lidbetter said that the governance reforms were crucial in restoring the group and returning it to health. Picture: Contributed
Co-op chairwoman Ursula Lidbetter said that the governance reforms were crucial in restoring the group and returning it to health. Picture: Contributed

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.

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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.

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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.

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