Kroger, the U.S.’s largest grocer on Monday announced the resignation of CEO, Rodney McMullen. The resignation of Kroger CEO comes after investigation into his personal conduct. Rodney McMullen resignation was confirmed after Kroger board found his personal conduct was “inconsistent” with certain company policies.
Though Kroger said the investigation had nothing to do with business, financial performance, operations or reporting, and it did not involve any Kroger associates, as per the company. Effective immediately, Ronald Sargent, the board member will serve as chairman and interim CEO. Kroger said the board has formed a search committee and appointed a firm to conduct a search for its next CEO.
Kroger’s CEO resigns
In December Kroger terminated a two-year effort to buy rival Albertsons in a $25 billion deal, an attempt McMullen had staunchly defended as a way to fight higher prices and better compete with Walmart and Costco. Meanwhile, Albertsons has sued Kroger for an alleged breach of contract that led to the demise of the deal.
“McMullen stepping down certainly puts Kroger in a vulnerable position. The company is already dealing with the aftermath of its abandoned Albertsons merger, and a leadership change at this stage can complicate things,” said Riley Beam, managing attorney at Douglas R. Beam, a personal injury law firm based in Melbourne, Florida.
“For investors, the risk is obvious — uncertainty.”
Kroger CEO’s scandal
After the merger plan failed, few of the United Food and Commercial Workers local unions stated that McMullen was trying to “distract attention from his multiple failures as CEO by announcing a massive one-time giveaway to shareholders,” and urged the board to replace McMullen. This was just after Kroger announced a $7.5B stock buyback plan.
On Monday, the Kroger’s board was made aware of certain personal conduct by McMullen that was not as per the company’s policies. On an immediate basis, the board retained an outside independent counsel to conduct an investigation overseen by a special board committee.
Kroger on Rodney McMullen’s resignation
Kroger declined to comment and did not provide any more details on McMullen’s resignation or the nature of the conduct that led to his ouster.
Rodney McMullen was the CEO of Kroger for more than a decade and has been a part of the company since 1978.
Kroger stock
The stock of Kroger was down by about 1.4% in early trading on Monday. However, since McMullen taking over as CEO in 2014, the Kroger stock has more than tripled in value.
Kroger’s earnings
Kroger, scheduled to report its Q4 earnings report on Thursday. It expects full-year adjusted earnings per share to be slightly above the high end of its forecast range.
