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DAVID Jones boss Mark McInnes shocked the company and the market today by quitting in the wake of a sexual harassment complaint from a 25-year-old female staff member. The unidentified staff member works in the head office marketing department for the retailer.

In a statement, Mr McInnes said: "At two recent company functions I behaved in a manner unbecoming of the high standard expected of a chief executive officer to a female staff member. "As a result of this conduct I have offered my resignation to the David Jones board and we have agreed on the mutual termination of my employment with the company, effective immediately. As a chief executive officer and as a person I have a responsibility to many, and today I formally acknowledge that I have committed serious errors of judgment and have inexcusably let down the female staff member. I have also let down my partner, my family, all my staff, the board and our shareholders. I apologise to everyone I have let down ...”

David Jones chairman Bob Savage slashed Mr McInnes's payout by at least $4 million, with the former chief getting his statutory pay of $450,000 plus a "mutually agreed" $1.5m.According to the terms of his contract, he could have picked up $3.6m in termination pay plus a bonus of $2.5m along with other long term, incentives.

The resignation and the reasons given are unprecedented in corporate Australia and analysts this morning expressed surprise at the company's willingness to disclose the full details. Some said the alleged offence "wasn't even a kiss" but clearly to protect the brand the decision was made to come clean on the details from the start.  Mr McInnes's personality was outgoing and some would say flirty but the news shocked those who knew him well saying he was very straight.

The complaint against Mr McInnes came after a function in late May. The fact that Mr McInnes would settle for a bit under $2m when he was due some seven times that amount suggested he, too, realised his actions were careless. The complainant in the Mr McInnes case went to Sydney plaintiff law firm Harmers, which also handled Christina Rich's case against PWC in which she received a big settlement.