Co-op Group’s chief executive Euan Sutherland has penned a letter of resignation, reports the BBC’s Robert Peston.
Sutherland says in the letter that he believes the group to be “ungovernable”. Sky News understands he's resigned on a point of principle.
Speaking on Radio 4, Peston said the group's board are trying to persuade him to stay.
Having joined Co-op last May, Sutherland announced last month that 2013 has been “perhaps the worst year” in the group’s history, and that it’s “lost its way”.
Reports that he's set to receive a £3.6m pay packet broke over the weekend - a deal that’ll see him get a base salary of £1.5m, plus a £1.5m retention payment.
The Guardian's Jill Treanor reports that the mutual's board held a late night telephone conference to agree on changes on its management structure, including giving Sutherland a seat on the board.
But Sutherland tendered his resignation in a letter to chair Ursula Lidbetter.
Speaking on BBC News this morning, City A.M. editor Allister Heath explained that a board as big as Co-op's - which has 21 directors - is just too big for an organisation of that size; it's very easy for sensitive information to be leaked, and things can quickly become dysfunctional.
Heath said of Sutherland: “Clearly, the CEO’s very frustrated…unless there are some major changes, he doesn’t want to be part of it anymore.”
He added that an organisation's got to want to change - it's no good just paying someone a lot of money and hope changes will come about: "If you don’t want to change, trouble lies ahead."
The struggling group, which is currently working through a comprehensive restructuring programme, has seen deep financial issues in its banking arm - facing a £2bn loss - along with the scandal involving ex-chairman Paul Flowers, who was arrested for alleged drug offences.