The chairman of David Jones has used the company's annual general meeting to defend a payout of almost $2 million made to the company's former chief executive.

Robert Savage says the retailer was focusing on the stability of the company when it made the payment to former CEO Mark McInnes after he resigned over sexual harassment allegations.

Mr McInnes stood down in June after acknowledging he had behaved in a manner that was unbecoming of the high standard expected of a chief executive officer.

Mr Savage says the board considered all the facts before reaching the mutual termination agreement.

"In making the termination payment, the board was focused on stability for the company, and the best interests of our shareholders were at the forefront of our decision making," he said.

Mr Savage says some shareholders have questioned why David Jones settled the matter with former employee Kristy Fraser-Kirk.

He says it was in the best interests of the company.

"It was a straight risk-return decision which was made after taking into consideration the interests of the company, its shareholders, its brand and its employees," he said.

Ms Fraser-Kirk dropped her $37 million claim against the company, Mr McInnes and nine directors in October after the retailer settled for $850,000.

Mr McInnes made a "smaller contribution" to that amount, Mr Savage said.