Rodney McMullen, the now-former CEO of supermarket giant Kroger who stepped down following an investigation into his personal conduct, had to forfeit $11.2 million in unvested stock and options, according to government filings.
McMullen also had to give up any bonus eligibility for the fiscal year that ended on Feb. 1, according to recent disclosures with the Securities and Exchange Commission.
Kroger did not elaborate on the specific nature of McMullen’s conduct but emphasized that it was unrelated to the company’s “financial performance, operations or reporting, and it did not involve any Kroger associates.”
McMullen, 64, earned $15.7 million in 2023.
The compensation included nearly $673,000 in performance-based incentive pay, according to Kroger’s proxy filings.
Throughout his tenure, he accumulated nearly 6.6 million shares in the company, representing approximately 0.9% of Kroger’s total 727.6 million outstanding shares as of last April.
This stake accounted for the majority of the total stock ownership held by the company’s executives and board members, which collectively represented 1.4% of Kroger’s overall stock.
Based on Wednesday’s stock price of around $63 a share, McMullen’s holdings were valued at approximately $409 million.
In the wake of McMullen’s departure, Ronald Sargent, a Kroger board member since 2006, has been appointed interim CEO while the company searches for a permanent replacement.
Sargent addressed the transition in a statement, saying, “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.”
McMullen’s career at Kroger spanned nearly five decades, beginning in 1978 when he joined the company as a part-time stock clerk at a Kentucky location.
Over the years, he advanced through the ranks, holding key leadership roles, including chief financial officer, before being elected to the company’s board in 2003.
In 2014, he ascended to the role of CEO, leading the grocery chain through significant expansions and industry shifts.
His resignation comes at a pivotal moment for Kroger, following the recent collapse of its planned $25 billion merger with Albertsons.
The deal was abandoned due to regulatory obstacles under the Biden administration.
In response, Albertsons has filed a lawsuit against Kroger, accusing the company of breaching their contract agreement by failing to use “best efforts” and take “any and all actions” to secure regulatory approval for the merger.
“I think McMullen was let go for a relatively minor offense,” business strategy consultant Brittain Ladd told The Post, adding that McMullen hasn’t challenged the decision.
“What company would reward a CEO who wasted $1 billion on a merger with Albertson that never went through and now Albertson is suing Kroger for $6 billion.”
As Kroger moves forward, the company is expected to focus on stabilizing its leadership and reinforcing its strategic direction, while navigating the legal challenges stemming from the failed merger.
“Everyone knew that the merger wouldn’t go through,” added Steve Johnson, chief executive of Food Service Solutions consultancy.
“Kroger was misguided and misdirected, and [getting rid of McMullen] was a good excuse to shake up the board.”
Johnson also pointed out that competitor and discount grocery chain, Aldi with more than 2,000 stores has grown at Kroger’s expense.
“The only way Kroger has grown is through acquisitions,” Johnson said.
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