EXHIBIT
4.42


 


Non-executive
director appointment letter – Mr Michael Chaney


 





















 


	
   

  	
  Graham Kraehe AO

  
	
   

  	
   

  
	
   

  	
  500 Bourke Street

  
	
   

  	
  Melbourne

  
	
   

  	
  Victoria  3000

  
	
   

  	
  Australia

  



 


 


17 January 2005


 


Mr MA Chaney


3 Riley Road


CLAREMONT   WA   6010


 


Dear


 


Letter of appointment


 


I am pleased to advise you that at Meeting of the Board of Directors of
National Australia Bank Limited (the “National”) held on 2 -3 December 2004,
the Board approved your appointment as a Non-Executive Director of the National
and National Equities Limited (the holding company for the major offshore
assets) with effect from 6 December 2004. 
Your signed Consent to Act as a Director & Disclosures on
Appointment form was received and tabled at the Meeting.  We look forward to your contribution during
this period of renewal for the National.


 


Enclosed is a form headed Staff in Confidence which I would ask you to
complete and return.  Through this you
authorise the National to undertake a police check on you as required by the
National’s internal policies and by the regulators.


 


In addition to expressing our delight that you have agreed to join the
Board of the National, this letter sets out the terms of your appointment to
the office of Non-Executive Director of the National and National Equities
Limited.  It should be read in
conjunction with, and is subject to, the National’s Constitution (a copy of
which is attached to this letter), and the Charters and policies approved from
time to time by the Board, including the Board Charter (a copy of which is attached
to this letter).  Charters and policies
may be changed by the Board from time to time.


 


Upon appointment as a Director, you will hold office until the next
Annual General Meeting of the National which will be held on 31 January 2005,
at which time you will be entitled to stand for election by the shareholders as
a Director of the National.


 


Please acknowledge that you have read,
understood and accept the contents of this letter by signing the enclosed copy
and returning it to the Company Secretary.


 


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1                                          Board members


 


The Chairman of the Board is Mr Graham Kraehe, a
Non-Executive Director.


 


The other Non-Executive Directors, at present, are:


 


•                                           Mr Peter Duncan;


 


•                                           Mr Robert Elstone


 


•                                           Mr Danny Gilbert;


 


•                                           Mr Paul Rizzo;


 


•                                           Ms Jillian Segal


 


•                                           Mr John Thorn;


 


•                                           Mr Geoff Tomlinson; and


 


•                                           Mr Malcolm Williamson.


 


Mr John Stewart is the Managing Director & Group
Chief Executive .


 


The other executive directors, at present, are:


 


•                                           Mr Ahmed Fahour


 


•                                           Mr Michael Ullmer


 


The Company Secretary is Mr Garry Nolan.  Mr Nolan can be contacted on (03) 8641 3505.


 


Further details of Board members can be obtained from
the Company Secretary.


 


2                                          Terms of appointment


 


2.1                                Qualifications


 


To qualify for the office of Director of the National,
you must:


 


•                                           be under 70 years of age; [Article 10.9]


 


•                                           not be disqualified or suspended from managing corporations and must
otherwise be permitted by law to act as a director of a company; [s203B Corporations Act and Part 2D.6]


 


•                                           sign a Confidentiality Deed which prohibits you from disclosing any
matters, affairs or concerns of the National; [to comply
with Article 11.8 of the National’s Constitution] and


 


•                                           hold at least 2,000 fully paid shares in the National in your own
right within two months after your appointment. 
[Article 10.8] See 3.4 below for restrictions.


 


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2.2                                Term


 


Following your appointment by the Board, you hold
office until the first Annual General Meeting of the National after the date of
your appointment.  You are then eligible
for election to the position of Director by resolution of the shareholders of
the National at that Annual General Meeting. 
[Articles 10.12 and 10.13]


 


Once you have been elected to the office of Director
by resolution of the shareholders of the National in General Meeting, you will
be subject to the rotation of Directors provided for in Articles 10.3 to 10.7
of the National’s Constitution.  Broadly,
these Articles provide that at each Annual General Meeting one-third of the
Directors for the time being and any other Director not in such one-third who
has held office for three years or more must retire from the office and is
eligible for re-election.  Please refer
to the clause 3.8 – Performance evaluation, concerning the process undertaken
by the Board to determine if the Board will recommend to shareholders that a
Director be re-elected to office.


 


The National may remove a Director from office as a
Director at any time by a resolution passed at a General Meeting.  [Articles 10.3-10.7 and
10.14]


 


2.3                                Vacation
of office


 


Your office as a Director becomes vacant if any of the
circumstances prescribed under the Corporations Act 2001
(Cth) or the National’s Constitution arise, including the following:


 


•                                           you are disqualified from managing corporations; [s203B Corporations Act and Part 2D.6]


 


•                                           you resign from office or refuse to act; [Article 10.28(b)]


 


•                                           you are removed from office by resolution passed at a General
Meeting of the National; [Article 10.28(d)]


 


•                                           you are not present personally or by an alternate director or proxy
at meetings for a continuous period of two months without a leave of absence
from the Board; [Article 10.28(d)]


 


•                                           you accept or hold any office in another bank without the consent of
the Board.  [Article 10.28(f)]


 


Article 10.28 of the National’s Constitution
contains a list of circumstances that, in addition to those prescribed by the
Corporations Act, will result in the office of a Director becoming vacant.


 


Appointment and removal of Directors is a matter for
shareholders.  However, the Board has set
a policy limit of 10 years for individual service as a Director, subject to an
annual review thereafter.  The Board
regards this as an appropriate period of service.  This provided an opportunity for renewal of
the Board whilst recognising that Directors who have served on the Board for an
extended period of time have gained valuable experiences, insights and
historical perspectives regarding the National that would not be easily replaced.  [Clause 7.5 of the Board
Charter]


 


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2.4                                Relationship
with the National


 


Once appointed, you hold office as a Director of the
National.  You are not appointed or
designated as an employee of the National nor are you an Executive Director
within the meaning of the National’s Constitution.


 


3                                          Expectation


 


3.1                                Overview


 


The National’s expectations of you as a Director are
listed in this section.  In many cases,
you are obliged to meet these expectations because of your legal duties to the
National.  You are encouraged to seek
independent legal advice to assist you in the performance of these duties.


 


3.2                                Time
commitment


 


You must
contribute sufficient time to your directorship to enable you to effectively
fulfil your duties to the National.  You
may also be expected to spend additional time if you are a Board Committee
Member or if you are the Chairman, or a director of a subsidiary of the
National.


 


While most
Board and Board committee meetings are held in Melbourne, the Board does visit
and hold meetings at interstate and international venues from time to time.


 


You should
inform the Board of any change in circumstances that could affect your ability
to commit time to the position.


 


3.3                                Board
meetings


 


Board meetings are scheduled ten times a year and
normally have a duration of two days, with the exception of the annual Board
Meeting in the United Kingdom, which usually has a duration of five days.  A list of the Board Meeting dates for 2005 is
attached.  It is necessary from time to
time to convene an unscheduled meeting. 
The National endeavours to keep such meetings to a minimum, however, a
Director may convene additional Board Meetings at any time.  [Article 12.2]


 


You are expected to:


 


•                                           attend Board Meetings and ensure that you have fully read all papers
relating to agenda items;


 


•                                           apply your mind to the matters before you and bring your own special
skills and experience to your position;


 


•                                           raise questions and make enquiries when you need more information;


 


•                                           make sure that any of the Board’s delegates are qualified, reliable
and competent to carry out the duties given to them; and


 


•                                           make sure that you have been provided with accurate, relevant and
timely information to reach any decision that will affect the National.  You should not make a decision, and you may
refuse to consider any matter, until appropriate information has been provided
to you.


 


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3.4                                Board
Committees and Subsidiaries


 


Currently there are four standing Board
Committees:  the Audit Committee, Risk
Committee, Human Resources Committee and the Nomination Committee.  The Board may, from time to time, convene other
Board Committees.


 


At present, all Directors are members of the Nomination
Committee.


 


Directors are generally expected to serve on one
additional committee, and may be asked to serve on more than one, of these
Board Committees in accordance with the written Charters of those
Committees.  Charters for all Board
Committees are approved by the Board.


 


You may also be appointed as a director of a
subsidiary, or subsidiaries, of the National.


 


3.5                                Independence


 


Non-Executive Directors are appointed on the basis
that they remain independent of management and free from any business or other
relationship that could materially interfere with, or could reasonably be
perceived to materially interfere with, the exercise of their unfettered and
independent judgement.


 


The Board has approved the definition of ‘independence’
which is set out in the Board Charter.


 


The Board regularly reviews Director
independence.  You should immediately
report to the Board any change in your relationship or the relationship of your
associates with the National, or with its management team, which could affect your
independence.


 


3.6                                Insider
Trading Policy and Code of Conduct


 


Directors are expected to comply with the corporate
policies approved from time to time by the Board, including:


 


•                                           The National’s Insider Trading Policy;


 


•                                           The National’s Code of Conduct; and


 


•                                           The Corporate Governance Guide entitled “Role, Duties,
Responsibilities and Rights of the Directors of Category A Company”.


 


Copies of these key policies and codes are attached to
this letter.


 


The Insider Trading Policy restricts dealings in National
securities by Directors as well as other officers and employees of the
National.  Directors may only deal in
such securities in the eight-week periods immediately following either the
release of the half-year and full-year profit announcements (currently made in
May and November) or following the release of a qualifying prospectus.  However, even during such periods, Directors
may not deal in National securities if they are aware of any share price
sensitive information that has not been released to the market.  An example of this may be any merger,
acquisition or significant disposal activity occurring during the window
period.  Further, under the Insider
Trading Policy, Directors must not deal in National securities for short-term
gain and, therefore, dealing in the same National securities within a 12-month
period is prohibited.  Directors must
also discuss their intention to deal in National securities with the Chairman
before undertaking any such dealings.


 


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Given these restrictions, a new Director appointed to
the Board, who does not already meet the Director share qualification
requirement set out in the National’s Constitution and clause 2.1 of this
letter, should acquire such shares as soon as possible before s/he acquires any
share price sensitive information.


 


3.7                                Confidentiality


 


You are expected to maintain the confidentiality of
all materials and information you obtain in connection with your position.  You are also expected to ensure that your
representative/personal assistant, if applicable, maintains the confidentiality
of such materials and information.


 


You must comply with the Confidentiality Deed you
execute in accordance with Article 11.8 of the National’s Constitution.


 


3.8                                Performance evaluation


 


The Board regularly conducts an assessment of its
effectiveness using an external facilitator. 
This review may include an assessment of individual Director
performance.


 


In addition, in advance of you being presented to
shareholders for re-election in accordance with the retirement by rotation
provisions in the National’s Constitution, a peer review process is
undertaken.  That is, the Board (in your
absence) will consider whether the Board will make a recommendation to
shareholders in support of your re-election as a Director of the National.


 


The Nomination Committee will oversee the
implementation of this process.


 


4                                          Duties and powers


 


4.1                                Duties


 


At the most
general level, your role is to oversee management on behalf of the National, to
monitor the National’s  business results
and to set goals and formulate strategy. 
In performing this role, you are subject to a number of legal duties to
the National.


 


A detailed
explanation of your duties is provided in the Corporate Governance Guide entitled
“Role, Duties, Responsibilities and Rights of the Directors of Category A
Company” referred to earlier and attached to this letter.


 


4.2                                Disclosure
of conflicts and material personal interests


 


If a conflict
of interest arises in relation to a matter that will be considered by the
Board, you must give the other Directors notice of the conflict, and, if the
conflict is a material personal interest in the matter (as defined by section 191(2)
of the Corporations Act), you must not be present while the matter is being
considered at a Board Meeting or vote on the matter.


 


Further
guidance in relation to conflicts and material personal interests is given in
the Corporate Governance Guide attached.


 


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4.3                                Powers


 


The Board has the power to exercise all of the
National’s powers, other than the powers which the Constitution and the
Corporations Act require to be exercised by the National in General
Meeting.  [Article 11.1
and s198A(2) of Corporations Act]


 


Decisions of the Board are decided by a majority of
votes of Directors present and entitled to vote.  Each Director has one vote.  [Articles 12.3 and 12.4]


 


4.4                                Appointment
of Alternate Director


 


Articles 12.6 - 12.14 of the National’s Constitution
provides for a Director to appoint an Alternate Director to act in his / her
place, subject to the approval of the majority of the other Directors.  However, it has not been the practice in the
National to appoint Alternate Directors.


 


5                                          Remuneration


 


5.1                                Remuneration


 


Non-Executive Directors do not participate in schemes
designed to remunerate executives and do not receive share options, performance
rights, bonuses or other types of performance based remuneration.


 


The National does not provide retirement benefits to
Non-Executive Directors, other than the superannuation payments described
below.


 


Each Non-Executive Director will receive the fees set
out in Schedule 1 of this letter for their directorship.


 


Additional fees are payable for membership of any
Board committees, subsidiary directorships and for the position of Chairman, in
accordance with the National’s Constitution.


 


The Board approves these fees within the limits set by
the shareholders of the National in General Meeting.


 


Shares


 


Under the National’s Non-Executive Director Share
Plan, you will be provided at least 10% of your annual remuneration in the form
of National shares, except in limited, unusual circumstances.  There is flexibility to provide a maximum of
40% of your annual emoluments in the form of National shares.  Details of the Non-Executive Director Share
Plan are enclosed.


 


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Superannuation


 


Directors may elect to receive part of their
remuneration in the form of superannuation contributions.  As a minimum, in accordance with the relevant
superannuation guarantee (“SG”) legislation, the National is generally obliged
to pay into an approved superannuation fund, superannuation guarantee
contributions on behalf of Directors at the rate of 9% of the fees (and any
other amounts which fall within the description of “ordinary time earnings” for
SG purposes) paid to you.


 


Other non-cash benefits


 


If required, the National will provide Directors with
a laptop computer to facilitate the electronic receipt of Board papers and
receipt of electronic communication material to enable Directors to effectively
perform their duties to the National. 
Subject to applicable law, financial services may also be provided by
the National to Directors under terms and conditions that would normally apply
to the public.  [Clause 13.5
of the Board Charter]


 


The Company Secretary will assist you to make
arrangements in this regard.


 


5.2                                Expenses


 


You are entitled to be reimbursed out of the funds of
the National such reasonable travelling, accommodation and other expenses as
you may incur when travelling to or from Board Meetings or Board Committee
Meetings or when you are otherwise engaged in the business of the
National.  [Article 10.18]  I should mention that it is the National’s policy
that no more than two Directors should travel by air together at any time.


 


5.3                                Insurance
and indemnity


 


You have the benefit of the indemnity provided to you
in the National’s Constitution.  This
indemnity is broad; however, it does not provide protection if the National is
prohibited from indemnifying you, for example, where liability is owed to the
National.  [Article 21.1
and s199A(2) of the Corporations Act]


 


You are invited to enter into a Deed of Access,
Indemnity and Insurance which mirrors the protection afforded to you under the
National’s Constitution.  That deed also
includes an undertaking by the National to effect and maintain an appropriate
Directors’ and Officers’ Insurance Policy. 
A copy of that deed is attached. 
Could you please sign the deed and return it at your convenience.


 


You may also be protected under the National’s
Directors & Officers Insurance Policy. 
Details of the insurance policy are provided in the brochure attached.


 


It is important that, if you become aware of any matter
that may give rise to an actual or potential claim, or of any circumstances
that may lead to such a claim, you contact Global Operational Risk, Insurance
& Compliance (Melbourne).


 


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6                                          Induction and Training


 


6.1                                Induction


 


The National’s
Induction Program for Non-Executive Directors is designed to assist them to
participate fully and actively in Board decision-making from the date of
appointment.


 


The program
enables appointees to gain an understanding of:


 


•                                           the National’s financial,
strategic, operational and risk management position;


 


•                                           their rights, duties and
responsibilities; and


 


•                                           the role of Board Committees.


 


That National’s
Induction Program involves the supply of reading material, informal discussions
with the Group Chief Executive and Executive General Managers, and technical
workshops.


 


From time to
time, the Nominations Committee reviews the effectiveness of the Induction
Program.


 


Continuing
Education


 


The National
is committed to providing its Directors with opportunities to update and
enhance their skills and knowledge. 
Directors are regularly provided with updates from management and
external advisers about key developments in the company and the banking and
fund management industries.


 


Directors are
also entitled to attend external seminars, workshops and other training
programs that are relevant to your directorship.  The National will reimburse you for any
reasonable costs of such additional training.


 


7                                          Access to information


 


7.1                                Access to
financial records and company books


 


Under the
Corporations Act, a Director has rights of access to the National’s financial
records and, for the purposes of legal proceedings to which the Director is a
party, the National’s books, at all reasonable times.  [Section 198F and section 290
of the Corporations Act]


 


The Deed of
Access, Indemnity and Insurance grants you access to Board papers and related
material.


 


7.2                                Access to
the Company Secretary


 


The Company
Secretary is responsible for providing advice and support to the Board and for
ensuring that Directors have sufficient information to make decisions at
meetings of the Board.  The Company
Secretary also prepares minutes of all Board meetings.


 


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Directors have
direct access to, and are entitled to request additional assistance and
information from, the Company Secretary.


 


7.3                                Authority
to appoint independent professional advisers


 


Directors are entitled to seek independent
professional advice in relation to your duties and powers as a Director of the
National.  The National will reimburse
Directors for all reasonable expenses incurred in obtaining such advice,
provided that the expenses have been approved by the Chairman and, where
appropriate, a copy of the advice is made available to the Board.


 


8                                          Further guidance and information


 


If you have any queries about your appointment, please
contact the Company Secretary.


 


Michael, my other Board colleagues and I are looking
forward to working with you in the future.


 


Yours sincerely


 


 


GRAHAM J KRAEHE AO


CHAIRMAN


 


 


I acknowledge that I have read and understood and I
hereby accept the contents of this letter.


 


 


	
  Signed:

  	
  [SIGNED]

  	
   

  
	
   

  	
   

  
	
  Name: Michael Chaney

  
	
   

  	
   

  
	
  Date:

  	
  17 January 2005

  
				



 


 


When you have signed the attached copy of this letter,
please return the signed copy, and signed copies of the other documents
attached to this letter which require your signature, to:


 


Mr GF Nolan


Company Secretary


National Australia Bank Limited


Level 24


500 Bourke Street


MELBOURNE  
VIC   3000


 


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Schedule 1:                                Directors’ Fees as at 6 December 2004:


 


	
  BOARD/COMMITTEE

  	
   

  	
  CHAIRMAN

  	
   

  	
  MEMBER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal Board & Board Nomination Committee

  	
   

  	
   

  	
   

  	
  A$150,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal Board Audit Committee

  	
   

  	
   

  	
   

  	
  A$20,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal Board Risk Committee

  	
   

  	
   

  	
   

  	
  A$20,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Compensation Committee

  	
   

  	
   

  	
   

  	
  A$12,500

  



 


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