The Scoop: How Kroger is handling abrupt resignation of CEO after investigation

Longtime Kroger Chairman and CEO Rodney McMullen resigned Monday following an investigation, the company announced.

According to the statement posted to the company website:

On February 21, the Board was made aware of certain personal conduct by Mr. McMullen and immediately retained outside independent counsel to conduct an investigation, which was overseen by a special Board committee. Mr. McMullen’s conduct is not related to the Company’s financial performance, operations or reporting, and it did not involve any Kroger associates.

Elsewhere, the statement clarified that “while unrelated to the business, (McMullen’s behavior) was inconsistent with Kroger’s Policy on Business Ethics.”

McMullen started his career with Kroger in 1978 as a part-time stock clerk. He had held the top executive seat since 2014, according to the Cincinnati Enquirer.

The statement went on to announce that Lead Board Director Ron Sargent will act as interim CEO. Sargent has extensive experience in the retail space, including acting as chairman and CEO of Staples for 14 years.

“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,” Sargent said in the statement. Sargent said he intends to “be a steady, but active hand in the execution of our strategy.”

Why it matters: CEO transitions are delicate situations under the best of circumstances, and a hurried resignation after an investigation is far from that. Because this is a personnel matter that does not apparently involve legal wrongdoing or corporate malfeasance, the communications team (surely working in lockstep with the legal team and investor relations) was and will continue to be extremely constrained in what they can say. But they did their best to calm fears by saying that McMullen’s alleged misbehavior did not materially impact business operations. They walked through the steps the company took to investigate and, by the time they went public, already had a familiar interim CEO in place, removing any frightening power vacuum.

Moving on from such a long-tenured CEO under a cloud of suspicion won’t be easy. As of 10:20 a.m. Eastern time, Kroger’s stock price had already dipped 1.2% Further complicating matters is an earnings call in just three days’ time. While this leaves little prep time, it also offers an opportunity to address the situation as clearly as possible and give Sargent a chance to stand up and introduce himself, hopefully injecting calm and stability.

This will be a long-term communications challenge, with a national candidate search and new CEO integration on the horizon. Measured, transparent communications like this one will help ease internal and external anxieties over the future of one of America’s largest grocery chains.

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Allison Carter is editorial director of PR Daily and Ragan.com. Follow her on LinkedIn.