David Jones Ltd says settling the sexual harassment lawsuit brought by former publicist Kristy Fraser-Kirk was “the right thing to do”.
The retailer held its annual general meeting in Sydney on Friday, the first since former chief executive Mark McInnes had his contract terminated due to the sexual assault allegations.
Chairman Robert Savage described the drama as “a major disruption” in the retailer’s financial year.
Ms Fraser-Kirk dropped her $37 million claim against David Jones, Mr McInnes and nine directors in October after the retailer settled for $850,000. Mr McInnes made a “smaller contribution” to that amount, Mr Savage said on Friday.
The decision by David Jones to settle was a “straight risk/return decision” made after considering the interests of the company, its shareholders, its brand and its employees, he said. It meant the company could provide certainty of the outcome without “the burden of a final hearing”, Mr Savage said.
It also eliminated the burden of ongoing legal fees, and the need for key executives to commit time to the case during the busiest time of the year for retailers. “In short, all things considered, it was the right thing to do,” Mr Savage said.
Shareholders at the AGM were broadly supportive of the retailer’s handling of the situation.
However, questions were raised by some investors about the $1.5 million termination payment made to Mr McInnes.
“ASA and many retail shareholders associate this $1.5 million ex-gratia payment with the board rewarding inappropriate behaviour unbecoming of an icon brand chief executive,” Australian Shareholders Association (ASA) representative Stephen Matthews said.
“We have difficulty believing that this was the best outcome for shareholders.”
Mr Savage said David Jones had negotiated the mutual termination to reach a quick resolution and a “more robust non-compete clause”, preventing McInnes from working for a rival for 12 months.
He said the concerns raised by shareholders were not unexpected, but it was time David Jones “as a company were allowed to get on with the job of serving our customers.”
Mr Savage said an external consultant hired in June to review internal policies on ethics and codes of conduct “found there was no culture of bullying or harassment in the workplace at David Jones.”
Shares in David Jones ended the day down three cents at $4.39.