Kroger Ex-CEO Ordered to Disclose Reasons for Resignation Amid Lawsuit Over $7 Million Festival Dispute

A Hamilton County judge has ordered former Kroger CEO Rodney McMullen to disclose reasons for his March resignation following a “personal conduct” investigation. McMullen forfeited $11.2 million in bonus and stock payments when he resigned after over 10 years as CEO. The ruling stems from a 2023 contract breach lawsuit filed by 90s pop star Jewel and her business partners, who seek over $7 million in damages.

A Hamilton County judge has ordered former Kroger Co. CEO Rodney McMullen to disclose reasons for his March resignation following a "personal conduct" investigation. The ruling stems from a 2023 contract breach lawsuit filed by 90s pop star Jewel and her business partners, who seek over $7 million in damages. McMullen forfeited $11.2 million in bonus and stock payments when he resigned after over 10 years as CEO.

The lawsuit centers on allegations that Kroger breached a five-year partnership agreement for its annual Wellness Festival in Cincinnati. Jewel, born Jewel Kilcher and business partner Trevor Drinkwater, claim they conceived the festival concept, which ran in 2018, 2019, and 2021. Court papers allege Kroger "unilaterally terminated the partnership" then produced "highly profitable" events in 2022 and 2023 using plaintiffs’ materials and contacts. The plaintiffs seek over $7 million in damages [1].

The case emerges amid broader scrutiny of grocery consolidation. The Federal Trade Commission recently blocked Kroger’s proposed $24.6 billion merger with Albertsons Companies Inc. ACI, citing competition concerns in worker markets and consumer pricing [1].

McMullen's departure has become a focal point in the lawsuit. His attorneys contended the resignation questioning was "aimed at annoying and embarrassing" their client and had "absolutely nothing to do" with the breach lawsuit. However, the judge found plaintiff’s arguments for relevance "plausible" [1].

McMullen's resignation caused him to forfeit $11.2 million worth of unvested stock and options and any eligibility for a bonus for the fiscal year that ended on February 1, reported the Cincinnati Enquirer [2]. According to SEC filings, McMullen's total compensation from Kroger in 2023 was $15.7 million. He was allowed to keep $14.7 million worth of stock and options that were vested as of his March 3 resignation [2].

The ruling doesn't mean that his testimony will be made public. McMullen has sought to seal his testimony which is currently under consideration [2]. The lawsuit from Jewel was filed in 2023 and claims she lost over $2 million in out-of-pocket costs and at least $5 million in profits. It adds that this loss was a direct result of Kroger's "corporate bullying mentality that led to its breach of the partnership agreement and theft of the festival" [2].

Kroger has filed a motion to have the lawsuit thrown out, saying that there was no enforceable contract in place [2]. The company insisted the scandal "is not related to the company's financial performance, operations or reporting" [2].

Price action: Kroger Co. closed at $70.33 on Wednesday, down 4.38% for the day. Pre-market trading on Thursday showed a 0.24% rise to $70.50. Year to date, shares are up 13.55%, according to data from Benzinga Pro [1].

References:
[1] https://www.benzinga.com/markets/equities/25/08/47115984/judge-orders-ex-kroger-ceo-to-disclose-why-he-quit-after-personal-conduct-probe-in-90s-pop-star-jewels-7-million-festival-lawsuit
[2] https://www.dailymail.co.uk/news/article-14998221/CEO-Kroger-bombshell-lawsuit-Rodney-McMullen.html