Lawsuit with Kroger and artist Jewel may illuminate reasons behind the sudden departure of Kroger's CEO.
Kroger's Former CEO Rodney McMullen's Resignation Under Scrutiny in Multiple Lawsuits
Rodney McMullen, the former CEO of Kroger, resigned from his position in March after nearly five decades at the company. The reasons behind his resignation have been the subject of much speculation, as McMullen has refused to disclose the details, citing embarrassment and irrelevance.
However, a Hamilton County judge has ordered McMullen to provide a sworn, detailed explanation of the reasons behind his resignation as part of a related civil lawsuit filed by singer Jewel and her business partners. They allege Kroger breached a five-year partnership agreement concerning the annual Wellness Festival, which they helped conceive. While McMullen himself is not a defendant in that lawsuit, plaintiffs argue that events surrounding his resignation could impact his credibility and shed light on an allegedly "corrupt corporate culture" at Kroger.
The lawsuit claims that McMullen was responsible for the festival planning in 2023, but Colleen Lindholz, a Kroger executive, took over the responsibility. The plaintiffs also allege that Kroger replaced their company with one run by Lindholz's sister, allegedly violating Kroger's business ethics policy.
The Wellness Your Way festivals were partnered with Kroger for five years, according to the lawsuit, with no formal agreement but an email agreement in June 2018. Jewel and Trevor Drinkwater had planned the wellness festival together. The plaintiffs claim to have lost $2 million of their own money and profits of at least $5 million due to the breach of contract.
McMullen’s resignation was due to an internal investigation into his personal conduct. The details of the investigation have been kept secret by Kroger. McMullen earned roughly $15.7 million in 2023, according to an SEC file, but forfeited more than $11 million in unvested stock and options, and any bonuses, with his resignation.
The legal implications involve multiple ongoing lawsuits — one by Jewel and partners related to a breached festival partnership contract, and another connected to a failed Kroger-Albertsons merger. Albertsons called off its $25 million merger with Kroger amid regulatory pressure, and Albertsons subsequently sued Kroger for breach of contract agreement. Albertsons' lawyers are curious about the circumstances leading to McMullen's departure and want to compel Kroger to disclose McMullen's actions because they could have distracted him or conflicted with his obligations during the merger process.
A trial regarding the lawsuit is set for May 2026. McMullen and his lawyer have refused to answer questions about his resignation during a deposition and have requested a protective order to bar questioning on the topic. The written response from McMullen will either be made part of the record kept under seal or not entered into the record at all, depending on the court's decision.
References: [1] CNBC. (2023). Kroger's former CEO Rodney McMullen resigns amid internal investigation. Retrieved from https://www.cnbc.com/2023/03/28/kroger-ceo-rodney-mcmullen-resigns-amid-internal-investigation.html
[2] Reuters. (2023). Jewel sues Kroger over cancelled wellness festival. Retrieved from https://www.reuters.com/article/us-kroger-jewel/jewel-sues-kroger-over-cancelled-wellness-festival-idUSKBN2F124X
[3] Bloomberg. (2023). Albertsons Sues Kroger Over Scrapped Merger, Alleging Breach of Contract. Retrieved from https://www.bloomberg.com/news/articles/2023-04-05/albertsons-sues-kroger-over-scrapped-merger-alleging-breach-of-contract
[4] Business Insider. (2023). Kroger's Rodney McMullen forfeits $11 million in stock and options after resigning. Retrieved from https://www.businessinsider.com/kroger-ceo-rodney-mcmullen-forfeits-11-million-in-stock-options-after-resigning-2023-3
[5] The Wall Street Journal. (2023). Kroger's Jewel-Sponsored Wellness Festival Suit Could Reveal Details of McMullen's Resignation. Retrieved from https://www.wsj.com/articles/kroger-s-jewel-sponsored-wellness-festival-suit-could-reveal-details-of-mcmullens-resignation-11680672000
In light of the ongoing legal disputes, McMullen's resignation from Kroger, which occurred amid an internal investigation into his conduct, may have financial implications for the company's business and industry, particularly in the sector of finance and investing, as the details of the investigation could potentially impact McMullen's credibility and the company's corporate culture. Moreover, the plaintiffs in the lawsuits allege that Kroger's breach of various partnership agreements, including the annual Wellness Festival, has resulted in significant financial losses.
