Sydney view: Time to clean up blood on NRMA floor

By GILES PARKINSON

It's hard to remember when the NRMA board was taken seriously.

The directors of the Sydney-based insurer, which in February bought New Zealand insurance company State, have always been a fractious lot. As a motoring group and mutual, the petty politicking that goes with democratically elected bodies was to be expected, even if some of the antics were simply ludicrous.

As a public company, the NRMA board seems hardly to have evolved.

In the past six months its chairman, Nicholas Whitlam, the son of Gough, and chief executive Eric Dodd have fought a public battle fuelled and orchestrated by separate public relations firms hired by the protagonists.

The public feud has finally claimed both men. Whitlam stood down as chairman just over a week ago after discussions with some senior board members, and quit as a director this week after the directors approved a retirement package.

On Tuesday, Dodd was finally given his marching orders after several days of negotiations failed to achieve a severance package. He has been talking to his lawyers.

There will likely be at least one more departure from the board: Anne Keating, sister of Paul, who has been a staunch and public defender of Dodd and a critic of Whitlam, and stands accused of leaking confidential board information to the press. Her fate is likely to be decided by shareholders at the annual meeting if she does not go sooner.

Investors, including the few fund managers of any size that are on the register, have been appalled by the events. Dodd, whatever his political abilities, was seen as an effective and respected chief executive who had led the company through demutualisation and listing and had also secured the purchase of SGIO. His departure is considered to be a waste of talent.

Perhaps it is a transitional event. Despite the discipline required of a publicly listed company, it may have been too optimistic to think that the NRMA could have rid itself of its political factionalism so quickly after demutualisation.

After all, the Members First faction that allowed Whitlam to sweep to power and push the demutualisation and stock exchange listing remains on the board. Their actions will be closely scrutinised in the coming months, particularly as they meet with the newer "corporate" members of the board to choose a new chairman and chief executive.

Investors are simply worried about the value of their investments, which have shown negligible gains since the listing eight months ago. The brawling is not helping.

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One of the litmus tests of a chief executive's use-by date is the market reaction to news of his or her impending or actual demise. Dennis Eck, once the golden boy of Australian retailing, would hardly have been reassured by yesterday's reaction to news that he will likely leave his post at Australia's biggest retailer earlier than planned.

The Coles board was unstinting in its praise of Eck in a press release on Tuesday, and so it should have been. He took the company forward from the disastrous Yannon affair and made Coles Supermarkets one of the most dynamic businesses in the country. His problem lay in the fact that he could not repeat that magic with the Coles department stores such as K-Mart, Myer and Target.

With the share price struggling and lagging far behind the rejuvenated Woolworths, the Coles Myer board had no choice but to make a tough decision to praise Eck for his time and efforts and set the wheels in motion to find a successor.

* Giles Parkinson is editor of AFR.comINSIDE