Last-ditch boardroom negotiations at the Co-op have failed to convince Euan Sutherland to remain as chief executive of the mutual he described as 'ungovernable' in his resignation letter.
A leak in Sunday's Observer on his pay package is understood to have prompted the letter. 'Disaffected people who are determined to make life difficult and embarrassing for The Co-operative,' he wrote on his Facebook page 9 March.
The Co-op board was said be trying to convince Sutherland (pictured) to change his mind this morning but an announcement on the London Stock Exchange confirmed it had lost the battle.
'It is with deep regret that I accept Euan's resignation,' chairman Ursula Lidbetter said in a statement to the stockmarket.
'Last year, Euan and his team saved the The Co-operative Bank, without recourse to the taxpayer, and in doing so rescued the Group from the biggest crisis in its 150-year history. They have worked night and day to renew the organisation and to give it a sustainable future.'
Chief operating officer Richard Pennycook has been appointed as interim chief executive.
Sutherland said in a statement: 'It is with great sadness that I have resigned as chief executive. I have given my all to the business and had hoped to be able to lead its revival.
'However, I now feel that until the group adopts professional and commercial governance it will be impossible to implement what my team and I believe are the necessary changes and reforms to renew the group and give it a relevant and sustainable future.'
The Co-op has been rocked by a series of scandals in recent months, including the discovery of a £1.5 billion black hole in its banking arm and the drugs controversy of its ex-chairman and Methodist minister Paul Flowers.
Sutherland said the Co-op said while the firm avoided administration, it still had a long way to travel on the path to recovery, with 'fundamental modernisation' needed to safeguard the future of the firm's 90,000 employees.
'The group must reduce its significant debt and drive major efficiencies and growth in all of its businesses, but to do so also urgently needs fundamental governance reform and a revitalised membership,' he said.
Sutherland also said he would not accept any of the performance rewards within his contract.
'I will not accept the retention payments and long term incentive payments previously agreed for the delivery and protection of value in the group and the bank, even though this was successfully delivered,' he said.
Lidbetter said Sutherland's resignation should act as the trigger for important changes.
'Euan's resignation must now act as a catalyst for the real and necessary change which the group must go through. I would like to thank Euan for his hard work and leadership and to wish him the very best for the future,' Lidbetter said.
'I also like to thank Richard for stepping up to lead the organisation at this critical juncture. We will start the process to appoint a permanent successor and urgently to reform our governance.'