Dive Brief:
- Kroger announced Monday that Rodney McMullen resigned, ending his 11-year career as the grocer’s CEO, following an investigation by the company’s board that found his personal conduct was “inconsistent” with its ethics policy.
- Kroger has appointed Lead Director Ronald Sargent as chairman of the board of directors and as interim CEO, effective immediately.
- McMullen’s exit comes days before the grocer is set to report its fourth-quarter earnings results.
Dive Insight:
McMullen’s sudden exit is another blow for Kroger, which has weathered a tumultuous few years that also saw its high-profile effort to combine with Albertsons end in failure.
In a Monday regulatory filing, Kroger said its board was alerted to personal conduct issues by McMullen on Feb. 21 and immediately hired independent counsel to conduct an investigation, which was overseen by a special board committee. “Mr. McMullen’s conduct is not related to the Company’s financial performance, operations or reporting, and it did not involve any Kroger associates,” Kroger told the Securities and Exchange Commission.
The board found that McMullen’s conduct, while “unrelated to the business,” was inconsistent with the grocer’s business ethics policy. Because of his resignation, McMullen will not be eligible to receive a 2024 bonus and will give up all unvested equity awards outstanding under Kroger's 2019 Long-Term Incentive Plan, the SEC filing noted. He will retain equity awards that had fully vested as of Monday, however.
McMullen joined Kroger in 1978 as a part-time stock clerk and over his nearly five-decade career at the company, worked his way up the corporate ladder to become president and chief operating officer in 2009 and then CEO in 2014. McMullen also became board chairman in 2015.
During McMullen’s time helming Kroger, the company expanded its store fleet with a string of acquisitions, including Harris Teeter, Mariano’s and Roundy’s, and the company’s share price has tripled. But several recent ambitious moves by the grocery company have proven challenging.
Kroger’s partnership with British company Ocado to build a fleet of e-commerce fulfillment centers hasn’t scaled the way the companies initially envisioned. Meanwhile, Kroger’s proposed merger with Albertsons fell apart when, two years after the $24.6 billion deal was first announced, state and federal judges blocked the transaction. Albertsons then called off the merger and is now suing Kroger for alleged breach of contract.
McMullen’s exit adds to the list of C-suite executive turnover for Kroger. Last month, Kroger named former PepsiCo executive David Kennerley to replace interim CFO Todd Foley, who moved into that role following Gary Millerchip’s departure for Costco in early 2024. At the end of 2024, Stuart Aitken stepped down from his role as Kroger’s chief merchandising officer to become president and CEO of retail data analytics firm Circana.
Kroger’s board has formed a committee and started working with a firm to search for its next CEO.
While Sargent serves as interim CEO, he will step down from his role as lead director. Sargent has been a Kroger director since 2006 and served as lead director since 2017. The company appointed director Mark Sutton to serve as lead director.
Kroger said Monday it expects its full-year identical sales without fuel to be at the high end of its guidance while its adjusted earnings per share will surpass its guidance. The grocer reports its fourth-quarter and full-year 2024 results on Thursday.
