Kroger Co. announced on Monday that Chief Executive Officer Rodney McMullen has resigned after a board investigation determined his personal conduct was inconsistent with the company’s “policy on business ethics,” according to a new report.
As reported by Reuters, the company stressed that the conduct in question did not affect its financial performance, operations, or reporting, and did not involve any Kroger employees.
Board investigation and stock impact
According to Kroger, the board became aware of McMullen’s conduct on February 21 and immediately retained outside independent counsel to investigate the matter. The investigation was overseen by a special board committee. Following the announcement, Kroger’s shares fell 1% in pre-market trading.
Leadership transition
The board has appointed lead director Ronald Sargent as interim CEO, effective immediately. Additionally, Mark Sutton has been named Kroger’s lead independent director. The company has initiated a search for a permanent CEO and has engaged a recruiting firm to assist in the process.
Fallout from the Albertsons deal collapse
McMullen’s departure comes just months after Kroger terminated its $25 billion merger plan with Albertsons. The failed deal resulted in a lawsuit from Albertsons, which alleged a breach of contract by Kroger that contributed to the deal’s collapse.
No bonus payout for McMullen
Kroger confirmed that McMullen, who served as CEO for over a decade and had been with the company since 1978, will not be eligible to receive a bonus payout for 2024.
Financial outlook and upcoming earnings report
Despite the leadership change, Kroger expects full-year adjusted earnings per share to be slightly above the high end of its forecast range. The company is scheduled to report its fourth-quarter results on Thursday.
Kroger declined to provide additional details regarding McMullen’s departure or the nature of the conduct that led to his resignation.
