6 questions asked at 2024 QBE AGM

May 11, 2024

Here is the text of the 6 questions asked at the 2024 QBE Insurance hybrid AGM held on May 10 in Sydney, plus a summary of the answers. There were no material protest votes at the 75 minute meeting and the proxies were displayed at the start of the meeting, rather than earlier with these formal addresses lodged with the ASX.

Q1. Australia is currently in the midst of an unprecedented deluge of takeovers that has contributed to listed entities on the ASX falling by 145 to 2,172 since June 2022, including 15 straight months of declines. There have already been 7 major takeovers completed this year with another 18 deals announced and in the works. The ASX is losing long standing names such as CSR, Boral, Blackmores, Alumina, Coca Cola Amatil, the old Leighton Holdings, Sydney Airport, Invocare, OZ Minerals, Newcrest Mining, Crown Resorts and Ausnet, which have all disappeared over the past 3 years. Fellow insurer PSC agreed to a $2.3 billion takeover just this week. There is a clear mis-pricing between public markets and private markets. Why are public markets not valuing ASX listed companies like ours more highly and what are we doing to avoid being gobbled up like so many other companies companies. Does the chair agree this is a problem for the nation, particularly with so few new floats replenishing the ASX ranks?

Answer: Chair Mike Wilkins said this ebbs and flows and the best takeover defence is performance, which it is delivering. Watch video of exchange via Twitter.

Q2. It is very unusual to have 3 new directors presented for election at the one AGM. Could new directors Ferguson, James and Wilson please comment on how they found the recruitment process and whether they knew any of our directors before engaging with the recruitment process? Could the chair please clarify how many candidates the full board interviewed before selecting these 3 and which recruitment firm assisted with the process?

Answer: Chair Mike Wilkins said he didn't know any of the new directors before the process and declined to name the recruiter or say if the full board interviewed any unsuccessful candidates. Mr Ferguson was the only one in the room and he was given the call and said it was a rigorous process that ran for 10 months and he did know some of the directors, but had never worked with any of them before. The chair then said the same applied with the other two new directors, without providing any detail. Watch video of exchange via Twitter.

Q3. Thank you to Jann Skinner and Sir Brian Pomeroy for their 10 years of services on this board, which ends at the conclusion of today's AGM. It is always helpful for investors to have access to some exit perspectives from retiring independent directors. In their final contributions as QBE directors, could Jann and Sir Brian each comment on what they believe were the 2 best board decisions QBE made during their time on the board and are they prepared to honestly acknowledge any mistakes.

Answer: Unusually, chair Mike Wilkins blocked them both from answering the question, saying it was unfair. It was probably also because neither was in the room. There clearly wasn't a Sydney board meeting co-inciding with the AGM given about half didn't attend in person. Watch video of exchange via Twitter.

Q4. The 2023 QBE annual report states that we have 72,027 shareholders but unfortunately, only a tiny fraction of them will have voted today. The move away from paper has deepened the crisis in retail shareholder participation, both at AGMs and in capital raisings. In order to address this problem, we first need to understand the data. Therefore, when disclosing the outcome of voting on all resolutions today, could you please advise the ASX how many shareholders voted for and against each item, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholder sentiment and was a voluntary disclosure initiative adopted by the likes of ASX, Qantas, Metcash, Myer, Altium, Dexus, Webjet, Tabcorp and Myer over the past 3 years. If refusing to do this, in line with your previous correspondence, will you at least now advise the AGM whether even 5% of the register participated in proxy voting. What if anything can you tell us about retail shareholder participation at this AGM?

Answer: Chair Mike Wilkins stuck with his intransigent position of saying they would follow the law, and nothing more, and provided no insight into the level of retail shareholder participation at the AGM. I voted my 8 shares online against the only director seeking re-election as a protest. Watch video of exchange via Twitter.

Q5. One of the great positives of Australia's corporate elections system is that there are normally no meaningful barriers to those who wish to nominate for a board. This is the case at QBE over its 50 years as a public company, where no hostile candidate has ever run for the board. Unfortunately, there are a handful of listed companies (ie Medibank, Treasury Wine Estates and South 32) which were either floated or demerged in recent years where barriers to board entry were installed in their constitutions, such as requiring that any external nominee be supported by 5 per cent of total capital or 100 shareholder signatures, just to get on the ballot. These clauses effectively entrench boards and therefore limit competition for their positions and reduce shareholder power in terms of holding boards to account. If our chair Mike Wilkins believes this is appropriate to retain at Medibank, which he also chairs, why doesn't he put up a constitutional amendment at QBE to adopt the practice? If he agrees that shareholders overwhelmingly oppose such board entrenchment tactics, why doesn't he remove this barrier to entry at Medibank?

Answer: Another inadequate answer as Wilkins ran the old "this is not a Medibank" AGM without engaging with the substance or explaining why QBE didn't pursue such an entrenchment tactic. He said the QBE constitution served the company well, which makes it even more puzzling that had won't fix the problem at Medibank. His letter as Medibank chair rejecting reform was covered in this Intelligent Investor column in June 2023. Watch video of exchange via Twitter.

Q6. Thank you for offering shareholders a hybrid AGM this year and will you commit to keep doing this in future years to maximise shareholder participation? However, it is not best practice to ignore the agenda and only provide a single debate opportunity. This is controversial debate-limiting tactic is only done by a small number of ASX50 companies, including Macquarie and Rio Tinto. It is also against Australian Shareholders Association policy. If it's good enough to systematically follow the agenda in board meetings, why do you refuse to do this at AGMs, disrespecting those who wish to engage in focused debate on specific resolutions where shareholder approval is being sought. Could the chair confirm that he received formal minuted board approval for this controversial tactic or was it a captain's call. Will he commit to have a further full board discussion, including with the 3 new directors, before resolving to lead another poor practice AGM debate at next year's AGM?

Answer: Wilkins gloated that he would stand and answer questions for as long as it took, but the meeting only lasted 75 minutes in the end with just 2 questioners from the floor and 2 of us online. His defence of the tactic also included the interesting claim that having one job lot of questions was better for people online who might not be able to stay for the whole meeting. Yes, but the online platform had a drop down box with the 6 items listed so any online participant could log their questions on their specific issue and then head back into the garden and listen back to it later, if that's what they wanted. Watch video of exchange via Twitter.