NAB CEO Ross McEwan’s call-up to UK defence play Qinetiq is too close for comfort

The banking boss plans to join the board of UK laser defence and weapons play Qinetiq. He should finish up his current job first.

NAB chief executive Ross McEwan will join UK defence tech play Qinetiq. Picture Dean Martin

What’s the rush? National Australia Bank shareholders have a right to start putting this question to their outgoing chief executive, Ross McEwan.

It emerged overnight Tuesday the well-regarded banking boss plans to join the board of $5bn UK defence tech and weapons play Qinetiq.

The FTSE 250 company specialises in robotics and laser weapons and more recently has been moving into cyber defence. The 66-year-old McEwan starts his new board posting in March and that means there are a couple of months of crossover before his official end-June exit date from the bank.

After a four years as NAB chief executive, surely Qinetiq can wait.

Running a bank is as demanding as ever, and shareholders should expect McEwan to be fully focused on his day job, even if it is in the few months of a leadership transition. It’s not unusual for a CEO to have an outside board role but it is increasingly rare. For a serving bank CEO to join a board is even rarer. Last week, NAB named its business banking boss Andrew Irvine as McEwan’s replacement.

Given the demands of the job it is increasingly rare for CEOs to take on outside board roles. Picture: NCA NewsWire/Morgan Sette

NAB chairman Phil Chronican needs to consider there’s the very real reputational issue of having the bank’s most senior officer drawing a director’s fee from a business best known for building lethal lasers and robotic vehicles for the battlefield. Non-executive directors at Qineteq are paid just over $100,000 a year. This is spare change for McEwan who last year was paid $6.1m.

NAB has no public position about lending to weapons manufacturers, however it has issued so-called social bonds that has rules around lending to companies involved in alcohol, gambling, tobacco and military weapons.

In retirement McEwan can do what he wants, however that makes the appointment even more perplexing. The former Royal Bank of Scotland and Commonwealth Bank boss will literally be able to do what he wants, with many trophy board offers set to come his way. By going with a defence outfit so quickly, this may keep some other offers at bay.

The $4bn Qinetiq was spun out of the UK’s Defence Ministry nearly two decades ago and has grappled with the changing nature of defence spending. Now, with wars and weapons moving to higher tech fields, Qinetiq is finding momentum. It has a strategy of doubling revenues to £3bn ($5.8bn) in the next three years as it eyes a role in the multi-billion AUKUS submarine project, particularly on the Australia leg. Indeed, it wants to more than double the scale of its businesses in Australia under local boss Gary Stewart where it employs 1000 people. Last year, it paid $58m for the Nowra, NSW-based defence services company Air Affairs.

Qinetiq chairman Neil Johnson said McEwan’s knowledge and understanding of the Australian market “will be particularly advantageous”.

In a series of briefings last week, McEwan said when he finished up at NAB he had planned to split his time between New Zealand and Melbourne. He also said he would be considering board roles following his retirement. Few had it expected it to be so soon.

[e-mail]

Originally published as NAB CEO Ross McEwan’s call-up to UK defence play Qinetiq is too close for comfort