Disgraced David Jones CEO McInnes exits with $2m

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This was published 13 years ago

Disgraced David Jones CEO McInnes exits with $2m

By Eli Greenblat

Dumped David Jones chief executive Mark McInnes has forfeited several millions of dollars worth of shares and entitlements but will still receive almost $2 million in the wake of a scandal rocking the upmarket retailer.

A clearly disappointed and shocked David Jones chairman Robert Savage fronted a hastily convened media conference after today's surprise resignation of Mr McInnes following inappropriate behaviour involving a female employee.

Mr Savage said neither he nor other board members had any prior indications of issues involving Mr McInnes.

''I was very surprised when this (issue) was brought to my attention,'' Mr Savage said.

David Jones CEO Mark McInnes has quit over an incident involving a female staff member.

David Jones CEO Mark McInnes has quit over an incident involving a female staff member.Credit: Nic Walker

Mr McInnes, 45, had been one of Australia's most prominent business executives, leading a turnaround at the upmarket retailer that raised its market value four-fold during his seven-year tenure in charge.

Mr Savage declined to detail the nature of the complaint, saying ''it was unreasonable for him to speculate'' on what had taken place, and that the employee was entitled to her privacy.

Mr Savage said to the best of his knowledge the matter had not been raised with police, and that there had been no formal complaint from the female employee's solicitors. He learned of the issue last Friday, he said.

He also said he was unaware of Mr McInnes's whereabouts, adding only that ''I know he was in Australia last night.''

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Flashback ... Mark McInnes with David Jones' model Megan Gale, pictured in 2003.

Flashback ... Mark McInnes with David Jones' model Megan Gale, pictured in 2003.Credit: Peter Morris

Mr Savage told the media conference that the complainant remains an employee at David Jones: ''She is still an employee and it is our hope that she will wish to remain an employee.''

David Jones had ''absolutely'' not paid any money to the employee at this stage or made any offers, Mr Savage said.

Zahra takes over

The media conference include Mr McInnes's replacement, new chief executive Paul Zahra. Mr Zahra brings 28 years retailing experience, including 12 years at David Jones.

I formally acknowledge that I have committed serious errors of judgment and have inexcusably let down the female staff member

Mr Savage told the press that an allegation was made by a current female staff member against Mr McInnes last week involving improper behaviour. Mr Savage said the complaint had come to light through normal human resources ''line management'' processes.

The female employee had made the matter known to the company's human resources management, who had gone directly to Mr McInnes. Mr McInnes then had gone directly to Mr Savage, as chairman of the board, to inform him of the matter.

The two incidents involved the same female employee, believed to a 25 year-old marketing staffer, one at a function in late and then 10 days later on June 8.

Mr Savage said Mr McInnes had immediately offered his resignation and had been away from work since the recent Queen's Birthday public holiday.

Mr Savage admitted the incident may cause anger among David Jones’s 10,000 staff, 70 per cent of whom are female.

''I would suspect the female staff at David Jones will be very disappointed and angry about the whole situation,'' Mr Savage said.

''I hope that, through our processes of talking to each and every employee (as to) why the board reached its decision, that they will agree that this is the best decision for the long term benefit of the company.''

Mr Savage denied the incident indicated the retailer had a culture of harassment and bullying.

Shares rocked

Shares in David Jones fell as much as 4.6 per cent in early trading, lopping more than $100 million from its market value. The stock recovered most of the losses, though, to end the day down just 2 cents, or 0.4 per cent, at $4.49.

Earlier this morning Mr Savage held a briefing with analysts to inform them off the shock resignation of Mr McInnes and introduce the new chief executive, Mr Zahra.

He said Mr McInnes was entitled to particular termination benefits but would be given 1 million shares for hitting particular profit hurdles. At the current share price that parcel of stock is worth $4.4 million. He will also keep other performance shares which have already been vested but Mr McInnes will miss out on other payments worth millions of dollars.

Earlier today, Mr McInnes issued a statement today admitting he had behaved in "a manner unbecoming of the high standard expected of a chief executive officer to a female staff member".

"As a result of this conduct I have offered my resignation to the David Jones board and we have agreed on the mutual termination of my employment with the company, effective immediately," Mr McInnes said.

"As a chief executive officer and as a person I have a responsibility to many, and today I formally acknowledge that I have committed serious errors of judgment and have inexcusably let down the female staff member. I have also let down my partner, my family, all my staff, the board and our shareholders. I apologise to everyone I have let down. "

Mr McInnes's resignation is effective immediately and he said he hoped this would "minimise the impact of my errors of judgment on all and on David Jones". Mr McInnes and his partner would spend the foreseeable future overseas, the company said in its statement.

All other members of the company's executive management team remain in place and committed to their roles, the company said.

The Sydney-based corporate high-flyer had been employed by the company for 13 years.

"I would like to thank my colleagues for their support during my time with the company. I am very sorry to be leaving in these circumstances and wish all involved with David Jones continued success," Mr McInnes said.

Mr McInnes will receive $1.9 million in severance pay including entitlements - less than the amount his contract entitled him to after 13 years with the retailer, the company said.

In 2009, McInnes took home salary of $1.78 million and a bonus of $2.68 million. He also owns just under 1.5 million David Jones shares, worth about $6.6 million at today's price.

David Jones chairman Robert Savage said: "We have offered all appropriate support to the affected employee whose solicitors have made a complaint to the board about Mr McInnes' conduct."

"The board takes her allegations extremely seriously."

'Question mark'

When Mr McInnes took over as CEO on February 3, 2003, shares in David Jones were worth $1.08. At today's share price of $4.40 the company's market capitalisation was about $2.2 billion.

Speaking before the briefing, RBS Morgans investment adviser Todd Kerslake said, ''One of the shining lights about David Jones was always its management."

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The resignation of Mr McInnes "puts a question mark over where the company is going''.

- with Andrew Hornery, Chris Zappone and AAP

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