There’s nothing like big losses, a series of earnings downgrades and finally the omission of a dividend to concentrate the minds of shareholders.
And so it was at the annual shareholders meeting of QBE yesterday.
Despite a long attempt by the board and senior management to argue against a strike on its remuneration report at Thursday’s annual meeting, QBE took a big hit with an embarrassing 45% vote against its remuneration report.
QBE revealed last Friday that its’s newish CEO, Pat Regan would be taking a $420,000 pay cut, but that didn’t soften the opposition to no avail.
Nor did an appeal to the meeting by chair, Marty Becker that the rejection of the report would not be in the best thing.
“Your board is firmly of the view that passing this resolution would not be in the interests of all shareholders. Indeed, we believe this amendment would impact the board’s ability to make decisions effectively and confuse the role of board and shareholders,” he told the meeting.
That fell on deaf ears judging by the size of the no vote (which was almost double the 25% level to register a ‘hit’ against the report). The proxy vote received before the meeting produced a first strike of 25% alone, so the remaining 25% was cast at the meeting.
Investors were upset at the size of the sign on bonus for Mr Regan – $8.5 million over a number of years. the fial portion of that package vested in march and last Friday’s announcement of the pay reduction for the CEO seems to have been an attempt to mollify shareholder concerns.
“Naturally, we are very disappointed by this, however, we have heard your concerns,” QBE chairman told the meeting after the vote.
At the same time there was a surprisingly high vote in favour of resolutions pushed by climate change activists who were seeking greater disclosure on climate risk. The board had argued to shareholders to reject that contentious motion. It was not put to the vote, but chair, Marty Becker had revealed at 18.6% of votes cast by shareholders were in favour.
Mr Becker told the meeting that climate change activists wanting greater disclosure on climate risks were trying to influence strategy without considering the nature of the insurer’s global business.
"There would be a real risk that amending the constitution would provide an opportunity for special interest groups to seek to influence your company’s strategy and direction without taking into account the integrated nature of QBE’s global business," he said.
The resolution, put up by environmental lobby group Market Forces and industry super fund Local Government Super.
And shareholders did not hear anything firm on when the dividend (suspended for the final for 2017 after the bing losses in the US market from a series of hurricanes and wildfires in California in the December half year) might be resumed.
But there was a hint of better times with premium rises are running around 4%, but the recent volatility in financial markets had meant QBE investment returns are running below 2018 target of 2.5% to 3% (3.2% in 2017).
Despite that the company remains confident it will reach its combined ratio target for the year of 95% tp 97.5% – against the nasty 103.6% in 2017.
Mr Becker did tell the meeting that the company remained committed to its three year buyback announced in February 2017
QBE shares rose 1.4% to $10.32 yesterday.
