Allan Leighton, chairman of the Co-operative Group, has told the independent societies which own 22% of the supermarkets and funeral home business that elections to the board will be run differently next year.
The promise by Leighton – and Lesley Reznicek, president of the members council which represents the 7 million individual members who own the rest of the Co-op – comes amid mounting controversy over the way three member-nominated directors have been put forward for election to the board. The three were selected from a shortlist of six and are standing for three boardroom seats – avoiding contested elections that some veteran Co-op activists had hoped for.
In a letter also sent to the 100 or so representatives on the members council, Leighton and Reznicek wrote: “The first election is taking place now with three strong candidates standing for these inaugural roles. Opportunities to strengthen this new process have been identified.”
Leighton was appointed as the first independent chair of the Co-op in February as part of a series of corporate governance changes following the record £2.5bn loss in 2014 caused by the crisis in its banking arm and an over-expansion of its supermarkets. He will chair his first AGM on Saturday – the first under a new one-member one-vote system under which about 2.7m members are eligible to participate.
The letter added: “The board and council have committed to work together to develop enhanced arrangements for future elections. Work to improve the process will begin immediately after the AGM and a key outcome will be to maximise the potential for contested elections, with strong candidates who meet the required criteria.”
The letter promises a wide-ranging review which will include “a development programme for potential candidates, an improved nominations process, and selection and assessment to be conducted jointly by the board and council”.
The three member-nominated directors will join a new board being built by Leighton, the former Royal Mail chairman who is best known for turning around Asda.
Leighton and Richard Pennycook, the chief executive, met the board of the Midcounties – the largest of the independent societies – on Monday night and made clear there was no intention of changing the current process.
The Midcounties has a legal opinion that argues that the board would be void if the election takes place. It is also considering a possible injunction against the process. After the meeting with Leighton and Pennycook, Ruth FitzJohn, president of the Midcounties, repeated her demand for the three selected candidates to step down.
The letter from Leighton was sent before the Midcounties’ intervention.
The three candidates for member-nominated directors are: former Labour cabinet minister Hazel Blears; the chief executive of the Workers’ Educational Association, Ruth Spellman; and the former head of Traidcraft, Paul Chandler. None were available for comment.
Votes for the member-nominated directors must be received by Wednesday. At the AGM, members are also being asked whether to maintain £1m donations to the Co-operative party, which is aligned to Labour.
