QBE has been hit by an institutional investor backlash over a multimillion-dollar payout to former chief executive Frank O'Halloran, as the insurer vows to improve its performance after a disappointing year.
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.