Scandal-linked resignation of Australian retail company’s CEO sends share price diving

Australian retail CEO quits amid scandal

SYDNEY — The chief executive of upmarket Australian department store company David Jones abruptly resigned on Friday after revealing he had acted inappropriately toward a female staff member.

Although leaving under a cloud, David Jones chairman Robert Savage said CEO Mark McInnes would receive almost Australian dollars 2 million ($1.7 million) in salary and a settlement payment.

The retailer’s share price dived more than 3 percent after McInnes announced to the stock exchange he had ended his employment with the company, effective immediately. They recovered to close the day’s trading 0.44 percent lower than Thursday’s close.

Neither the company nor a statement released by McInnes gave details of his misconduct, but McInnes said he had behaved toward a female staff member “in a manner unbecoming” a CEO.

“I have committed serious errors of judgment and have inexcusably let down the female staff member … my partner, my family, all my staff, the board and our shareholders,” McInnes said in the statement. “I apologize to everyone I have let down.”

Paul Zahra, the company’s general manger for stores and operations, was named as new CEO.

The Australian equivalent of New York’s Bloomingdale’s or Harrod’s in London, the David Jones Group has tony department stores in all major cities in Australia, stocking items from designer clothes to white goods, televisions and gourmet meat and cheeses.

At a news conference, chairman Robert Savage agreed the circumstances of McInnes’ departure were a bad look for a company that has a mostly female clientele and whose work force is some 70 percent women.

“Clearly our brand suffers as a result of this,” Savage said.

McInnes’ resignation was prompted by a formal complaint to the company from the employee, but no complaint has been made to the police, Savage said.

McInnes, who was 37 when promoted to CEO of David Jones in 2003, was considered a young gun in Australian corporate circles, and one of the country’s most effective and respected executives.

A career retailer who started out on the shop floor, McInnes was credited with doubling David Jones’ share price within a few years of taking over management of the company.

McInnes said he would be “overseas for the foreseeable future.”