David Jones CEO Should Stay as Directors Quit, Ausbil Dexia Says

David Jones Ltd. Chief Executive Officer Paul Zahra should reverse his decision to resign in the light of this week’s boardroom turmoil, according to the department store’s third-largest shareholder Ausbil Dexia Ltd.

“I’d support him staying on,” said Paul Xiradis, who helps manage about A$10 billion ($8.9 billion) as CEO of Sydney-based Ausbil Dexia. The fund holds a 5.1 percent stake in David Jones, according to data compiled by Bloomberg.

Chairman Peter Mason and non-executive directors Leigh Clapham and Steve Vamos announced their intention to resign yesterday. Vamos and Clapham respectively bought 12,500 shares and 20,000 shares in David Jones the day after larger rival Myer Holdings Ltd. made a merger proposal on Oct. 28. Zahra announced his intention to resign last year, before Myer made the approach.

“Given the lead-up of circumstances and the events that occurred, it’s obvious what had to happen” to the directors and Mason, Xiradis said in a phone interview. Mason, the chairman of AMP Ltd. since 2006, took over in the same role at David Jones last January.

David Jones fell 0.6 percent to A$3.09 at 11:23 a.m. in Sydney trading, trailing a 0.1 percent increase in the local benchmark S&P/ASX 200 index.

Mason will resign within three months along with Clapham. Vamos will resign immediately, the company said in a regulatory statement yesterday. Zahra announced Oct. 21 that he would quit the company citing personal reasons.

The Australian Securities and Investments Commission, the country’s corporate regulator, hasn’t pursued action over Vamos and Clapham’s share purchases.

“There is not sufficient evidence to take enforcement action at this time,” Commissioner John Price said in a video statement Feb. 4. “This decision is not an exoneration or a tick of approval.”

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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