Co-op ex-chief walks away with £1.9m as retailer reels from cyberattack
Just weeks after reports surfaced of a toxic culture at the top, Shirine Khoury-Haq, former CEO of The Co-op Group, has departed the mutual with a remuneration package totaling £1.9 million – a sum that has already drawn scrutiny given the company’s recent financial struggles and the fallout from a devastating cyberattack.
A bonus amidst the losses
The staggering payout, detailed in the Co-op’s annual report, includes a £165,000 “rewarding growth” bonus approved by the board despite a £125 million underlying loss and falling sales. While Khoury-Haq and other executives forfeited their regular annual bonus due to the company failing to meet an “affordability underpin,” a long-term performance bonus tied to previous years significantly bolstered her final package. The board, in a move that will likely ignite debate, opted to distribute a 10% payout from the “rewarding growth” incentive plan to all 53,000 eligible colleagues, justifying the decision as recognition of their resilience during a tumultuous year.
The rationale, as stated in the report, centers on the extraordinary efforts of employees amidst the cyber incident. Frontline workers received a modest £100 each, a gesture juxtaposed against the substantial sum received by the outgoing CEO. The report cautiously avoids mentioning any severance package related to Khoury-Haq’s departure, though it notes she remains eligible for a further £682,000 performance bonus next May, contingent on meeting unspecified conditions – a detail that will undoubtedly fuel further criticism.
Culture concerns and a convenient exit
Khoury-Haq’s exit follows four years at the helm of the Co-op and nearly seven years with the Business. She has consistently denied any link between her departure and allegations of a toxic work environment, dismissing it as a “very much a personal decision.” However, the timing is undeniably awkward, particularly given February’s defense by the Co-op against claims of a dysfunctional leadership culture. The group maintained that the criticisms did not reflect the broader sentiment among its employees.
The retailer attributed its recent struggles to a loss of “trading momentum” while navigating the aftermath of the cyberattack and a shrinking convenience market, compounded by a staggering £150 million in “layered cost headwinds” including increased employer national insurance, pay, and packaging taxes. The sheer scale of these financial pressures makes Khoury-Haq’s departure package all the more contentious.
Kate Allum, a board member and former head of First Milk, has been appointed as interim CEO while the search for a permanent replacement continues. The Co-op's attempt to frame the payouts as a shared reward for employee fortitude rings hollow when set against the backdrop of substantial losses and a lingering sense of instability within the organization. It appears the Co-op is facing a long road to recovery, one complicated by questions about leadership accountability and the optics of executive compensation.