New Co-Op Chairman To Donate Pay To Charity

The businessman being lined up as the Co-operative Group's first independent chairman is to donate his six-figure pay package to charitable causes linked to the mutual.

Sky News has learnt that Allan Leighton is expected to declare his intention to give away his salary if he is confirmed in the role as expected in the coming days.

The gesture, which has yet to be formally agreed, would reflect Mr Leighton's commitment to the role, according to insiders.

Another option said to have been raised by board members was to pay Mr Leighton a token annual salary of £1.

Discussions about his appointment are understood to have been held by Co-op board members on Tuesday, with the group keen to finalise his appointment as soon as possible, a source added.

If Mr Leighton does take the role, it would represent a major coup for the UK's biggest mutual as it strives to rebuild its reputation after two years of crisis.

The size of the salary which Mr Leighton would accept on a nominal basis was unclear but is understood to run to six figures.

Sky News revealed on Monday that he was in pole position to take the role , with board members attracted to his track record at running organisations with large numbers of employees and reputation for shaking up troubled institutions.

A former chief executive of Asda, Mr Leighton became a prominent figure during talks over the future of Royal Mail (LSE: RMG.L - news) during a stint as its chairman several years ahead of the postal operator’s privatisation.

His current roles include the chairmanships of Entertainment One (Other OTC: ENTMF - news) , the media group, the set-top box manufacturer Pace (Other OTC: PCMXF - news) and the retail chain Matalan.

Joining the Co-op would represent an important personal step for Mr Leighton, who has frequently cited his father’s career as a Co-op store manager in media interviews during recent years.

During his time at Royal Mail, Mr Leighton advocated transforming the business into a mutually owned organisation, and he is understood to have sought a number of assurances about potential reforms at the Co-op during talks with board members.

The Co-op has been seeking a new chairman to succeed Ursula Lidbetter, who took on the role temporarily last year, for several months.

The group was left reeling in 2013 when it emerged that its banking arm was facing a £1.5bn black hole as it tried to acquire more than 630 branches from Lloyds Banking Group.

The Co-op Bank's chairman, Paul Flowers, was subsequently exposed by a tabloid newspaper as a serial drug-user, plunging the Co-op name deeper into crisis even as it surrendered control of the high street lender to American hedge funds.

Separate independent inquiries led by Lord Myners, the former City Minister, and Sir Christopher Kelly, a former civil servant, concluded that there was a need for an urgent overhaul of the Co-op’s governance, board structure and array of commercial activities.

There was further turmoil at the top last year when Euan Sutherland quit as the group’s chief executive after details of his pay package were leaked to the media.

Mr Sutherland was replaced by Richard Pennycook, a former director of Wm Morrison, the supermarket chain.

Since then, Co-op members have voted to approve reforms including reducing the number of lay directors on its board and the appointment of a majority of independent directors.

Last year, the Co-op Group - which boasts annual turnover of £11bn from businesses ranging from food retailing to funeral-care - returned to the black following a £2.5bn loss in 2013.

The group’s seven million members will have the opportunity to vote this year on whether it should end decades of financial support for the Labour Party.

A Co-op spokeswoman declined to comment on Tuesday.