Sir Ralph Norris effectively fired himself as chairman at Fletcher Building, taking accountability for the billion-dollar fiasco with troubled construction projects.
Norris had not expected to be confronted with the huge explosion in the projected losses at Fletcher Building since he fronted shareholders at their annual meeting last October.
But new projections that Fletcher's construction arm will lose almost a $1 billion over a two-year period on his watch prompted his decision to resign.
The company had recognised losses in the Buildings + Interiors division of $292 million in the June 30, 2017 year but a further $660m of losses is now projected in the current June, 2018 year.
Norris informed the board on Sunday that he would stand down as chairman when it became clear just how large the projected losses had become, telling his board colleagues he should be the one to take accountability for the debacle.
"The company really has to close this off and get it behind us," he later told me, maintaining the new provisions were the result of a "very realistic approach" by incoming chief executive Ross Taylor and independent advisers.
He made the right choice.
Norris had already found the task of finding first-class directors to fill vacancies on the Fletcher board difficult. He confirmed yesterday that the board is still looking for three new directors.
But given the current composition of the board it would appear likely that his own replacement as chairman will have to come from outside the existing directors.
Apart from Norris — who expects to depart no later than the 2018 annual shareholders meeting — the five other existing directors include Bruce Hassall, who chairs the pivotal audit and risk committee and joined the board in March, 2017; Steve Vamos (July 2015), Cecilia Tarrant (October 2011); Tony Carter (September 2010) and Alan Jackson who joined in September 2009.
The obvious question is why Norris was the only one of the five to effectively tender a resignation. Particularly, given that Carter (also chair of Fisher & Paykel Healthcare and Air New Zealand), Tarrant and Jackson were all directors during the period when the company entered the problematic contracts for the loss-making construction projects.
Norris' contention is that Fletcher Building is in a situation where further destabilising the company is not a sensible option. "As you can imagine when a company is in a state of flux, people don't know what they're walking into," he said.
But he expected that situation to ease now that Fletcher had drawn a line and "cleared the decks" through yesterday's provisioning exercise.
Norris was appointed to the Fletcher board in April 2014 and became chairman in October 2014.
He was not in the chair when Fletcher entered into the contract to build the Justice Precinct in Christchurch. But he was certainly there when Fletchers bid for the NZ International Convention Centre.
According to yesterday's trading update the NZICC faces projected losses at February 2018 totalling $410m — up from the $156m which was projected in October 2017. For a project where the approximate contract value was also put at between $400m and $500m this is a disastrous outcome.
The Justice Precinct and the NZICC remain the largest overall exposures in the B+I portfolio. But a range of other projects have been brought into scope, including Auckland's Commercial Bay, after Taylor launched a review of 16 major projects being undertaken by Fletcher's Building + Interior's division which account for 90 per cent of the construction backlog.
A range of contributing factors have been attributed to the fiasco, including quantity surveyor estimates as much as 100 per cent wrong, rising building costs and the flow of communication from management to the board.
While Norris has not laboured the point — unless asked directly — incompetence has also been at play, as has loose management by former chief executive Mark Adamson.
In truth, the directors also took their eye off the ball, to some degree.
Norris admitted as much when he said the competency of Fletcher since its inception was its building arm. It was seen as a very strong stable business and the least of Fletcher's problems which had to be dealt with when he took on the chairmanship.
Not only is Norris standing down but he will also discuss with directors at Contact Energy whether he should stake in his other high-profile chairmanship.
He is confident in Taylor's ability to get the business on the right track, describing him as the "iron fist in the velvet glove".
Some analysts have been sceptical over the level of provisioning. But Norris made the point: "We don't know what is going to happen over the next 18 to 24 months so have had to build in a contingency.
"The team is going to be incented to ensure we don't use all of those provisions."
He stressed the underlying strength of the overall company remains.
The banks — with which Fletcher is now negotiating after breaching its debt covenants — had not requested the company to raise new capital. There was significant headroom and a high degree of solvency.
But make no mistake, this is the end of what Fletcher's has long billed as its core business — building — at least when it comes to what it calls "vertical construction" such as the NZICC, Commercial Bay and the Justice Precinct.
For a company that could boast 20 years ago that it had completed building the Sky Tower (at that stage the tallest free-standing structure in the southern hemisphere) six months ahead of schedule — yesterday's announcement was a watershed moment.
Taylor said the B+I business would be refocused solely on the delivery of the remaining projects and bidding for all vertical construction projects would cease.
When I pressed him at the press conference he confirmed — "we're out."