Investors unimpressed as NAB plays it safe
NATIONAL Australia Bank has taken the "steady as she goes" option, handing the chief executive's role to the head of its New Zealand business, Cameron Clyne.
NATIONAL Australia Bank has taken the "steady as she goes" option, handing the chief executive's role to the head of its New Zealand business, Cameron Clyne.Mr Clyne, who has taken the top job on a $2.5 million-a-year base salary, with the chance at least to treble that through bonuses and share awards, will be the bank's youngest chief executive at 40, when he officially takes over from John Stewart on January 1.In a break with tradition, Mr Clyne will not move to Melbourne, but will take his wife and two young children back to his home town of Sydney, and commuting "three or four days a week".The well-telegraphed appointment received an inauspicious welcome from the sharemarket, which sliced 76 a share, or more than $1.2billion in market value, from NAB. The shares closed at $24.70.However, about 30 of that fall came in the last 10 minutes of trading as NAB, its competitors and many other large members of the S&P/ASX 200 Index suffered solid falls as investors closed off their books for July. The index slipped more than 25 points in the final 10minutes.Argo Investments managing director Rob Patterson said the NAB share reaction was unlikely to be directly linked to Mr Clyne's appointment."I think there are lingering concerns that there may be further provisioning required at NAB - that's probably a bigger issue," he said.Mr Patterson said Mr Clyne was a new face to many market watchers."I think it's fair to say that Cameron Clyne is not overly well known to the analyst community but, from my point of view, I'll back the board's judgement," he said.Wilson HTM banking analyst Brett Le Mesurier said Mr Stewart was out of ideas and it was time for him to move on."You compare the profitability of the business in 2003, immediately before he arrived, and 2007 before the market went pear-shaped, there was no improvement," Mr Le Mesurier said.In a tightly orchestrated series of presentations, first to analysts and later to the media, NAB chairman Michael Chaney, along with Mr Stewart and Mr Clyne, pushed the message of orderly transition to safe hands in troubled financial times.While Mr Stewart strayed a little from his early metaphor to analysts, about being the team captain hanging up his boots at the end of the season, Mr Clyne's words to both gatherings were almost identical.He said his immediate focus would be to continue running the New Zealand business until October 1, and that "I really joined the bank to work with John".Mr Clyne's promotion comes almost four years to the day since Mr Stewart recruited him from accountants PricewaterhouseCoopers. For NAB, Mr Clyne is the chief executive equivalent of a government bond - a virtually risk-free investment.Mr Chaney also pooh-poohed any suggestion that Mr Stewart's departure was being accelerated to cauterise damage to the share price after the bank confessed a week ago that it had another $830 million of exposures to risky lending.He said the announcement was working to a timetable begun 18months earlier with an international search to replace the man who joined NAB at the start of 2004 to rebuild a reputation shattered by a $360 million foreign exchange trading scandal.Mr Chaney said that within six months of beginning the search for Mr Stewart's replacement, the board concluded none of the external candidates surpassed those already working for the bank. He said external candidates were a riskier option, and no cultural shake-up was needed this time around.Mr Clyne's appointment in August 2004 was followed a week later by those of Ahmed Fahour, head of the bank's Australian arm, and Michael Ullmer, Mr Stewart's deputy.Both were passed over for the chief executive's job.Mr Fahour was already named this week as a possible replacement for Geoff Dixon at Qantas, and close observers expect he may take his career ambitions elsewhere. Mr Clyne said his management style embraced "collegiality and collaboration".Mr Chaney said this was a benefit because "a large ego" could be a burden for chief executives, who might make decisions to satisfy that ego, rather than in stakeholders' best interests.Mr Stewart will leave NAB with a mixed legacy, having stabilised the bank but conceding the crown of the country's largest bank to Commonwealth.He will go with a large payout. Last year he picked up a package worth $8.8 million, including cash and share bonuses. Under his contract, he will receive a 12-month package of $3 million on top of his salary, and any bonuses, for this financial year.Mr Clyne jumps from being one of the least-remunerated senior executives at NAB last year (on a total of $2.58 million) to a base salary of $1.3 million while he is CEO designate, and then up to $2.5million from January plus short-term and long-term incentive plans potentially worth $3.75million and $2.5million each. ON CAMERON CLYNE "I think it's fair to say that Cameron Clyne is not overly well known to the analyst community but, from my point of view, I'll back the board's judgement."Argo Investments managing director Rob Patterson ON JOHN STEWART "You compare the profitability of the business in 2003, immediately before he arrived, and 2007 before the market went pear-shaped, there was no improvement."Wilson HTM banking analyst Brett Le Mesurier
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