The Co-Operative Group Ltd., the British customer-owned retailer, plans to the number of board members in half in an overhaul of its corporate governance after posting a £2.5 billion ($4.2 billion) loss in 2013.
Under the proposals, the board will be cut to nine members from 18, with a majority of independent directors including the chairman, the Manchester, England-based company said in a statement today. The plan needs approval of two thirds of votes at a special general meeting on 30 August.
“These governance reforms represent the final crucial step in delivering the necessary change to restore the group and return it to health,” Co-Op Group Chairman Ursula Lidbetter said in the statement. The changes will improve “member engagement and our unique democracy.”
The proposals had been recommended in a report by former U.K. Treasury Minister Paul Myners that warned Co-Op Group needed to change its governance structure or risk running out of capital. The mutual, whose businesses range from supermarkets to pharmacies and funeral parlors, has been hurt by souring loans and mounting restructuring costs.
Members in May approved proposals at a special meeting to create an elected board of directors, a system of “one member, one vote” and stronger rules to protect against de-mutualisation after a bailout of the banking unit spurred the worst crisis in the group’s 150-year history.
“This is a significant step toward meaningful reform and, if accepted by members at the forthcoming SGM, will mark the end of the rescue phase for the group,” interim Chief Executive Officer Richard Pennycook said in the statement.
The “recruitment of the new board members will begin immediately,” according to the statement.
The Co-Operative Group is scheduled to publish its first- half year results on 4 September.
