Perks adding up to lucrative pay deal
THE incoming chief executive of QBE Insurance will be in the running to pick up $9 million a year in pay and perks.
QBE chief John Neal will stand down from the underperforming insurance heavyweight at the end of the year and be replaced by the head of its Australia and New Zealand division, Pat Regan.
It follows Mr Neal being docked $550,000 in pay for failing to tell the board he had started a relationship with his personal assistant and the group issuing a shock profit downgrade earlier this year.
The downgrade was linked to higher-than-expected claims in its emerging markets
division. Investors are also waiting to see how much the $14 billion group will have to pay out in the wake of Hurricane Irma, which has caused death and destruction throughout the Caribbean and the US.
Mr Regan will start on a base salary of $2 million but has the potential to earn 350 per cent of that again in short and long-term incentive payments, according to documents lodged with the stock exchange.
The package means Mr Regan is in the running to earn $9 million a year, although the bulk of his incentive payments will be granted as shares that vest over a four-year period.
The pay deal is likely to draw the ire of the Australian Shareholders’ Association, which last year voted against the QBE remuneration report, saying it was excessively generous and too focused on short-term hurdles.
Mr Regan’s remuneration is on par with that granted to Mr Neal, who collected $5.9 million in remuneration for the year to June.
It is more generous than that awarded to the chief of QBE’s key rival, Insurance Australia Group, which has a bigger market value.
IAG chief Peter Harmer takes home a base salary of $1.7 million and can earn 300 per cent of that again in incentive payments.
The package is theoretically worth $6.8 million a year, or a third less than that available to Mr Regan.
Shares in QBE have lost 20 per cent of their value over the past five years while IAG’s share price has risen 45 per cent over the same time frame.
Mr Neal will leave after five years as chief executive, during which time he has struggled to integrate a string of historical acquisitions.
QBE chair Marty Becker said Mr Neal had lead the insurer “through a significant transformation and a challenging period in the insurance industry globally”.
Mr Becker said the appointment of Mr Regan followed a detailed two-year succession planning process, although the insurer did not announce a new head for its Australia and New Zealand division.
Mr Regan joined QBE in 2014 as its chief financial officer and took over its Australia and New Zealand arm in August last year.
Shares in QBE closed 2.5 per cent higher at $10.50.