UPDATE: Since this blog was written, Co-op CEO Euan Sutherland has “offered his resignation”, according to the BBC

In December we dubbed 2013 an ‘annus horribilis’ for The Co-operative Group. But it doesn’t look as if 2014, so far, is going much better.

The news that CEO Euan Sutherland may be in line for a £3.6m pay package this year – plus generous salaries and retention payments for six other directors – has the press, public and (perhaps most damaging of all) Co-op members and staff baying for blood.

“He’s not going to bring down The Co-op, he’s going to sell it off bit by bit”; “The rich heritage of The Rochdale Pioneers is being lost”; “He’s upset about the leak, not the content, which he hasn’t denied”, were some of the comments posted on The Co-op’s employee Facebook page in response to Sutherland’s defence of the news (it was a curious move indeed from Sutherland to use a public forum to address the leak).

Another staff member simply asked, “What’s a ‘bonus’?!” – perhaps looking enviously across the way at the likes of John Lewis, enjoying contrasting fortunes.

The press was even more savage. The Observer’s Will Hutton wrote that bonuses of this type “drive a coach and horses through any system that attempts calibrated reward proportional to performance”. In The Mirror, Kevin Maguire said The Co-op was “infected by the grasping practice of soaring salaries and perks that are symptom of a rotten business culture”.

Indeed, The Co-op’s defence of its executive pay echoed the sort of language we hear from high street banks all the time: “The remuneration packages of our executives are in the middle of a range of comparable companies,” said Co-op Group chair Ursula Lidbetter, who added that Sutherland and his team had the expertise to guide The Co-op at this crucial time.

In a nutshell, The Co-op is arguing that the extraordinary challenges it faces, following the failure of Project Verde, the discovery of a £1.5bn black hole, and the saga of Rev Flowers, mean that the current team deserves to be remunerated more than their predecessors (Sutherland’s forebear, Peter Marks, was paid £1.3m).

All of which may be true – and there’s a case to be made that Sutherland didn’t know quite what he was signing up for when he took the job (the extent of The Co-op’s financial fall from grace is still playing out, with it expected to report historic losses later this month).

But pay of this scale – if true – is a spectacular own goal for The Co-op, which is still working to rebuild trust with members after cancelling the divi last year.

Sutherland will probably be less troubled by the brickbats thrown his way than by the fact it was leaked by someone at Board level – an extraordinary admission to make. “We seem to have an individual, or individuals, determined to undermine me personally, my team and the rest of the Group Board,” he said in his note to staff.

The Co-op’s turnaround strategy has started to bear some fruit – with food sales up over Christmas, and bright new store concepts shown off last week in Shoreditch. What a pity, then, that infighting and bad press threaten to keep it stuck in the mire.

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