CINCINNATI — Kroger Chairman and CEO Rodney McMullen has resigned from the company following a Board investigation of his conduct. The company announced McMullen was stepping down in a news release on Monday.
Kroger said McMullen’s conduct was unrelated to the business but was “inconsistent” with the company’s policy on business ethics.
On Feb. 21, the board discovered certain personal conduct by McMullen and immediately began an investigation with outside independent counsel.
According to the news release, McMullen’s conduct did not involve any Kroger associates and was unrelated to the company’s financial performance, operations or reporting.
Watch more about the CEO's resignation below:
Cincinnati business leaders were stunned by the resignation.
"He’s a first-rate citizen of this city in every way," said John Barrett, CEO of Western & Southern Financial Group. "His presence and his influence will be missed."
Barrett praised McMullen for his leadership on the Cincinnati Business Community, the Cincinnati Center City Development Corp. and for making Kroger a "cornerstone partner" in the effort to keep the Cincinnati Open tennis tournament from leaving town last year. Kroger, Western-Southern and three other companies pledged $10 million in sponsorship as part of a public-private investment in the Mason tournament.
Greater Cincinnati Chamber of Commerce President Eric Kearney said McMullen "seemed to be genuinely caring about the small business community and about Cincinnat's growth and prosperity."
Kearney said he called McMullen several years ago because a chamber member was having trouble getting his barbeque sauce into Kroger stores. Instead of passing the call to a subordinate, McMullen patiently explained Kroger's purchasing process to the entrepreneur himself.
"Someone of that stature, taking time to talk to my small business owners, I was blown away by it," Kearney said.
Union leaders in a dozen states cheered the news of McMullen's departure, after spending the last two years opposing Kroger's proposed acquisition of the Albertsons grocery chain and criticizing McMullen's compensation package. It was $15.5 million in 2023, roughly 500 times Kroger's median employee.
“Now is the time for the changes we have been pushing for: Kroger should stop investing in failed tech and mergers and instead invest in stores and communities with lower prices, more stores, and workers with better staffing and better wages,” said Faye Guenther, President of UFCW 3000 in Washington State. “These changes, especially addressing the staffing crisis in our stores, are what our locals are calling for in our contract negotiations this spring in Colorado, California and Washington.”
Investors reacted to McMullen's resignation by selling off shares, which closed down 3% Monday at $62.89.
"The CEO resignation comes at a pretty tumultuous time for the company," Morningstar analyst Noah Rohr said. "We've also seen some other members of the executive suite leave the company."
Kroger Chief Financial Gary Millerchip left Kroger for Costco last February, while Chief Marketing Officer Stuart Aitken left to become CEO of Circana.
"We're still pretty comfortable with the 2.5 or 2.5% same-store sales forecast, roughly 3% operating margin," Rohr said. "So, no real changes to our long-term outlook. But it does create a little bit of uncertainty at least near-term as far as leadership goes."
Kroger's board appointed Lead Director Ronald "Ron" Sargent as Chairman of the Board of Directors and interim Chief Executive Officer. Mark Sutton will serve as lead independent director. The changes will immediately take effect.
"As interim CEO, I am committed to working alongside our proven and experienced management team and dedicated associates to ensure Kroger continues providing exceptional value for our customers," said Sargent in a news release. "Kroger has been a special place throughout my retail career after spending summers in college working in stores, as well as my first ten years after business school at corporate headquarters, before more recently serving as lead independent director. My decades here have given me a full appreciation of what makes Kroger unique, and I am excited to work even more closely with this talented team. I plan to be a steady but active hand in the execution of our strategy."
Sargent, who has 35 years of retail experience, has served as a Kroger director since 2006 and as lead director since 2017. He spent the first decade of his career with the company, working in various roles across stores, sales, marketing, manufacturing and strategy.
The board has formed a search committee and hired a nationally recognized firm to find Kroger’s next CEO.
