Paul Zahra’s decision to quit David Jones makes sense, but the way that he and the board have handled it leaves a lot to be desired.
Photo: Michele Mossop
Way, way, way back in January, BRW listed five CEOs who we thought would be under pressure in 2013. Greg Robinson at Newcrest and James Warbuton are long gone – and yesterday a third name on the list departed when Paul Zahra made the shock decision to resign.
But Zahra didn’t resign because he’s had a terrible year. Indeed, David Jones shares are up 20 per cent in the last 12 months, albeit off a relatively low base.
Instead, Zahra has decided that he’s simply had enough.
“For many CEOs the hours are relentless – you’re working around the clock seven days of the week – on Sunday I had the Caulfield Cup and today a board meeting. I need a break,” he told The Australian Financial Review on Monday night.
The headline of that story suggested Zahra had “wilted’ under the pressure of being the CEO of one Australia’s most prominent retailers.
There may well be many business leaders who see it that way. But Zahra makes a good argument that the last three years have seen a level of structural change that is unprecedented.
Zahra’s first job was dealing with the incredible fallout from the shock departure of his predecessor Mark McInnes, who was forced to resign after a staff member’s sexual harassment allegation.
“It was horrible in anyone’s language to have to handle that and to have the public scrutiny – it sticks in your mind,” Zahra told the AFR.
When he’d got through that drama, Zahra had the equally difficult job of trying to drag David Jones into the internet age in a period that most retailers have described as the worst in a lifetime.
‘‘I think three-and-a-half years in the department store is a long time and if you think about our restructuring post the global financial crisis, us not being ready for the digital world – it has taken its toll and I’m just simply tired,” Zahra admitted to Business Day.
To me, that’s a credible argument. Zahra’s example may suggest that we need to reset our expectations of just how much the modern CEO can take. We’ve thought that it was investor expectations that were leading to shorter CEO tenures, but maybe shorter is better – or at least more reasonable.
But there is still one thing that will grate with David Jones investors about Zahra’s decision – the complete and utter lack of a succession plan.
Given Zahra has promised to work as hard as he can for the next few months, the question must be asked why he couldn’t delay his announcement until the board was a little further down the track of finding a successor, particularly given chairman Peter Mason admitted Zahra has been discussing the move with him “for some time”.
Zahra deserves some credit for going when he believed he was spent. But he and the board surely could have handled this transition better.