Malcolm Walker, executive chairman and founder of UK frozen food retailer Iceland, abruptly resigned yesterday, quitting ahead of a crisis board meeting that was to discuss his future amid growing controversy surrounding his £13.5m share sale.
In a statement, he revealed: “In view of the intense media interest and speculation of the last few days, I have decided that it would be in the best interests of the company, its employees and its shareholders for me now to retire completely.”
The pressure has mounted on Walker recently, and the Financial Services Authority (FSA) is now investigating his sale of four million shares in December for an average of 339p each, just five weeks before the company announced a severe profits warning (22 January).
Company directors are not allowed to trade shares within two months of a price sensitive announcement and since Walker’s sale, Iceland’s stock value has plummeted by around 45%. Like-for-like sales at the group fell a massive 5.5% for the four weeks leading up to 29 December, a sales slowdown it blamed on the switch to organic.
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Walker, who virtually pioneered Internet trading at Iceland.co.uk, has retained 165m shares but sparked much criticism by maintaining that he knew nothing of the deterioration in Christmas trading. For a man who, according to one source, “lived and breathed Iceland” since he founded the chain over thirty years ago, it does indeed seem unlikely that he did not check trading figures on a daily basis.
The Iceland spin-doctors are out in force however, adamant that the departure was merely a pragmatic decision, and not a diplomatic one to appease shareholders: “What is the point of carrying on? Bill [Grimsey] is extremely capable. It was Malcolm’s decision to go.”
Grimsey became CEO of Iceland at the beginning of this month, and has been reported to be horrified at the company’s poor financial controls and systems. He remains optimistic about the benefits to be gained through a merger with Booker, co-engineered by Stuart Rose before he left the group to head Arcadia at the end of last year. An update on the merger expected today is expected to reveal that £20m in savings have still not materialised.
It was unclear yesterday whether Walker would gain compensation for the loss of his £550,000 a year current office and the potential for the non-executive role of chairman, which he hoped to gain in March.
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By GlobalDataWas the organics policy really to blame for Iceland’s poor results? Find out here.
