NAB FINALLY GETS THE BIGGEST THING RIGHT

THE board of directors of the National Australia Bank finally got something right and it was a big – indeed, in its circumstances, arguably the biggest – thing. Appointing Phil Chronican chairman and appointing him that now.

My initial further reaction was, though, that the board erred in not having him move into the chair immediately.

I saw that as desirable both in terms of him taking the chair and equally that the current ‘defrocked’ chair Ken Henry would exit it.

That is to say, that Chronican would become both acting CEO – until of course the board he now led found their new CEO – and permanent chairman.

But after talking to him, I am persuaded that would have been too onerous and run the risk of producing bad outcomes – that’s bad outcomes in terms of the fundamental changes needed at NAB and bad outcomes in terms of its functional business performance.

NAB has some big tasks ahead and the CEO will sit at the very centre not just of taking responsibility for what is done but driving it all both in big-picture terms and at the operating coalfaces.

It’s got to respond to the royal commission; it’s got to reframe its functional culture, it’s got to find a new CEO and it’s got to reframe its entire executive remuneration structure after the 88 per cent rejection vote at last year’s AGM.

Much of that falls on the board, but Chronican will be a big part of that both as acting-CEO and chairmanin-waiting; and in which the continuing chairman Henry really can’t play a full-on leadership role.

That said, it’s both appropriate and can work for Henry to broadly manage the board process through this year until the new CEO arrives or is appointed from within the bank.

Let’s not forget Chronican has to do all that

and still do his day job – actually running the bank. And even that’s a more than usual full-time job, quite apart from the RC issues, given the fundamental restructuring program initiated by his predecessor Andrew Thorburn.

As I’ve argues NAB had to appoint its next chairman first, then find the CEO. So it’s doing that.

The messy bit is that the CEO-selection process will still be ‘chaired’ not by the chairman – either the existing one or the one in waiting – but by board member Anne Sherry.

I presume that Chronican will still be the key, if unofficial, selector.

The big thing is that he combines a calming presence with a steely resolve – and should take NAB off the front page.