IAG defended its 2021 remuneration scheme at their annual general meeting as shareholders questioned the decision to award bonuses despite a number of management lapses that led to a full-year financial loss of $427 million.
About 57% of votes cast went against the adoption of the remuneration plan, which was presented in the insurer’s 2021 annual report. As more than 25% of the votes did not back the resolution, this constitutes a first strike for the purposes of the Corporations Act 2001.
One shareholder who took part in the AGM asked if it was time for the board members to consider their positions in light of the poor results and missteps. “I don’t think that at this stage to have the board resign and be replaced by another board would be in the interests of the shareholders or the management or the company, or our customers,” outgoing Chair Elizabeth Bryan said in her response.
She added: “In restoring dividends and paying a short-term incentive bonus, the board signalled both externally and internally that IAG had addressed the issues it faced, and was now focused on the future.”
She added the decision not to pay bonuses in the 2019/20 financial year had a negative impact on employee morale and that it was these same employees that have moved quickly to work in a COVID environment while helping the business meet its commitments to customers.
“We wanted to reward the new management team for the difficult work it had done in remediation and reassure them that the errors of the past would not continue to affect their futures with IAG. In short, we drew a line in the sand and moved to a focus on improving future performance, having dealt with historical failures.”
CEO and MD Nick Hawkins in his address said he expects the Intermediated Insurance Australia business to be a positive contributor to IAG’s long-term performance, as they have already made many changes to its technical systems and risk maturity to prevent a recurrence of past issues.
“When we complete this work, we will be able to provide consistent products and services to customers wherever they are – from wherever our people are,” said Hawkins. “There have also been major improvements in our risk infrastructure as we have made significant progress in implementing a $100 million program of work to improve our fundamental risk practices.”
He says the business recorded mid-single-digit gross written premium growth (GWP) in Q1 of this financial year. “GWP guidance remains ‘low single-digit growth’ for the full year, which factors in portfolio management in Intermediated Insurance Australia. We still expect this to constrain volume growth for the balance of the year.”