QBE Excellent At Insuring Failed Execs

QBE's costly failures include $7m termination pay for departed execs
By Colin Kruger

26 February 2018 — 8:55pm

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Illustration: John Shakespeare
On Monday it was the task of new QBE chief, Pat Regan, to unveil the $1.2 billion loss, a slashed dividend, and make the obligatory promise to ensure there are no more financial bombs - from the acquisition sprees of the Frank O’Halloran era - to deal with.
But there were other costs hidden in the insurer's annual report.
Last financial year it spent $7 million terminating the careers of executives who produced a string of profit downgrades, or encountered other career-ending disasters.
Topping this list is Regan’s predecessor John Neal, who left the top job on New Year's Eve - just weeks before QBE handed down yet another profit downgrade.
QBE reports Neal’s final remuneration package totalling $7 million, including $5.1 million in "termination benefits".
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And the good news for anyone lamenting Neal’s departure is, he has not actually left the building. Not officially, anyway.
His termination benefits include the fact that he will remain a QBE employee until December 31 this year while serving out his notice period, otherwise known as being on gardening leave.
He will also receive $1.725 million of official termination benefits, plus vesting performance rights and bonuses, on top of being paid his former CEO salary for the year.
Also on the list is QBE’s David Fried, who fell on his sword in August after one too many disasters on his emerging markets patch. He received $1.2 million worth of termination benefits.
And we can’t forget Colin Fagen, the man who – as late as February last year – was still a favourite to replace Neal.
Just over a year has passed since he departed with immediate effect generating all sorts of speculation.
After a year of mediation, QBE reported that Fagen walked with $776,000 worth of termination benefits.
He was also paid $836,000 last year for bonuses which related to the previous financial year - taking his total payout in 2017 to more than $1.7 million.
QBE is till not offering any explanation for Fegan’s departure but CBD has been told the insurer is no longer in dispute with Fegan.
Isn’t that a relief.
So QBE spent $8.5 million on Regan before he’d even started – in form of sign-on bonuses – and $7 million getting rid of talent.
It makes you wonder what riches are on offer for a QBE executive who actually manages to make some money for investors.