S Poddar
Rodney McMullen resigned as CEO of Kroger following an independent inquiry that concluded his private behavior was not in line with Kroger’s ethics policies. The supermarket chain explained that the behavior had nothing to do with its business and did not include any Kroger staff members.
The firm was informed of the allegations on February 21 and hired outside counsel to carry out the investigation. In response to the findings, Kroger’s board quickly named lead director Ronald Sargent interim CEO. Sargent, who joined Kroger’s board in 2006 and became lead director in 2017, spent 27 years at Staples before that, where he was CEO from 2002 to 2016.
In his announcement, Sargent assured the stakeholders that he intends to ensure stability while closely monitoring the strategic direction of the company. Meanwhile, Kroger and McMullen have not released further information about the reasons for his exit.
McMullen’s tenure at Kroger spanned over four decades, beginning in 1978 when he took a part-time stock clerk position in Lexington, Kentucky. Over the years, he rose through the ranks, serving in leadership roles such as vice president of planning and capital management, chief financial officer, and chief operating officer before becoming CEO in 2014. A year later, he was named chairman.
By resigning, McMullen stands to lose his 2024 bonus and outstanding equity awards that are not yet vested, as per the company filings. His total compensation in 2023 amounted to $15.7 million, made up of stock and option grants, dividend payments, and other benefits.
Under his tenure, Kroger grew dramatically through acquisitions to become the largest conventional supermarket chain in the United States. It now has more than 2,700 stores across 35 states and Washington, D.C., operating under names like Ralphs, King Soopers, Harris Teeter, and Fred Meyer. The company generated $150 billion in revenue in fiscal 2023 and is set to report its fourth-quarter and fiscal 2024 earnings on Thursday.
McMullen also spearheaded the major cultural shifts at Kroger. In 2017, he reframed the company’s organizational purpose, and in 2020, he implemented diversity, equity, and inclusion (DEI) policies. Spencer Harrison, associate professor at INSEAD and scholar at the Academy of Management, attributed McMullen with redefining the company’s corporate culture.
His resignation comes after a significant business and legal setback. Last month, a federal judge in December halted Kroger’s planned merger with Albertsons, following in the footsteps of the Federal Trade Commission’s apprehensions that the merger would prevent competition and contribute to increased costs. Another injunction by a judge in Washington state also suspended the merger after an attorney general court challenge. Had the $24.6 billion acquisition been permitted, it would have been the biggest supermarket tie-up in United States history.
After the collapse of the deal, Albertsons terminated the merger plan and sued Kroger for not complying with regulatory necessities. The lawsuit demands billions of dollars in compensation, adding to the company’s woes.
S&P Global Ratings retail director Pablo Garces noted that Sargent is now under tremendous pressure to realign Kroger’s strategic path as economic prospects remain uncertain and the effects of the collapsed merger settle in.
McMullen’s exit is part of a wider trend of CEOs leaving office. Figures from leadership advisory firm Russell Reynolds Associates indicated that 202 CEOs resigned in 2024 as a result of changing corporate environments, pressures from investors, and economic uncertainty. This is likely to persist in 2025, with CEO resignations already having risen by 50% from the same time last year.
Cary Cooper, a Manchester Business School professor and Academy of Management scholar, explained that the majority of CEO resignations are the result of internal power struggles, poor performance, or differences with the board on key strategic matters such as mergers and acquisitions.
As Kroger is changing hands with new leadership, it is experiencing a critical moment of uncertainty. The process of finding a full-time CEO will be instrumental in determining the company’s future as it weathers legal battles, economic downturns, and shifting market trends.
