Protest vote at O'Halloran payout
Mr O'Halloran, who last year ended a 14-year stint at the company's helm, is to receive a retirement payment worth $2.34 million on top of his other entitlements, with the potential to make more if the company performs well during the next few years.
Although Mr O'Halloran is credited with turning QBE into a global force in insurance, a string of acquisitions made under his watch have also come back to bite the company in recent years.
In a sign of the widespread frustration among big investors, 39 per cent of votes cast at Wednesday's annual meeting were against QBE's move to pay Mr O'Halloran the $2.34 million "retirement allowance".
A resolution to grant Mr O'Halloran long-term performance rights received a 34 per cent "against" vote, despite the company this month toughening up certain performance hurdles for the package.
The chairwoman of QBE, Belinda Hutchinson, defended the retirement payment saying the company was honouring a contract signed with Mr O'Halloran in the 1990s.
"The arrangement was part of his overall remuneration," Ms Hutchinson said.
"It's important to be aware that these payments are no longer made to our senior executives."
Ms Hutchinson also said the performance rights approved on Wednesday would not be paid until 2016 or 2017, despite Mr O'Halloran retiring in August last year.
The company's remuneration report was backed by more than 90 per cent of shareholders - a sign investor frustration is targeted at the former chief executive.
The protest vote over the payments to Mr O'Halloran come after a disappointing year in which QBE's struggling US arm was battered by hefty claims from superstorm Sandy. After-tax profits rose by a weaker-than-expected 8 per cent to $US761 million ($727 million) in the year to December, and the final dividend was cut to 10¢ a share, from 25¢ a year earlier
Mr O'Halloran's replacement, John Neal, has sought to curb expenses and run existing businesses more efficiently after years of acquisition-fuelled growth. He is shedding staff in Australia and replacing with them with workers in the Philippines.
Ms Hutchinson said she was "disappointed" with the result, but QBE was on track to hit its growth targets for this year.
In a move that was attacked by retail shareholders at the meeting, the company last year slashed the share of profits it pays as dividends from 70 per cent to 50 per cent.
Ms Hutchinson defended the move, saying it was needed to satisfy regulators and credit rating agencies.
"We share your disappointment in having to reduce the dividend," Ms Hutchinson said.
QBE shares rose 48¢, or 3.7 per cent, to $13.42.
Frequently Asked Questions about this Article…
Investors were upset that QBE planned a $2.34 million retirement payment to former CEO Frank O'Halloran on top of his other entitlements, and a separate grant of long-term performance rights. The protest reflected frustration after a disappointing year for QBE, including heavy claims from Superstorm Sandy that hit its US arm.
The retirement payment was $2.34 million in addition to other entitlements. He could also receive more through long-term performance rights if the company meets performance hurdles in the coming years.
About 39% of votes cast were against the $2.34 million retirement allowance, and a resolution to grant long-term performance rights received a 34% 'against' vote. In contrast, the company's remuneration report was backed by more than 90% of shareholders.
QBE said the performance rights approved at the meeting would not be paid until 2016 or 2017, even though O'Halloran retired in August of the previous year.
After-tax profits rose 8% to US$761 million (A$727 million) in the year to December, but the final dividend was cut from 25 cents a share a year earlier to 10 cents a share.
QBE said the reduction in the dividend payout ratio was needed to satisfy regulators and credit rating agencies, a move that attracted criticism from retail shareholders.
John Neal has focused on curbing expenses and running existing businesses more efficiently after years of acquisition-driven growth. The company is shedding staff in Australia and replacing some roles with workers in the Philippines.
Belinda Hutchinson said the $2.34 million retirement payment honored a contract signed with O'Halloran in the 1990s and noted that such payments are no longer made to senior executives. She also pointed out the performance rights had tougher performance hurdles and would only be paid in 2016 or 2017.
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