QBE should have had a succession plan ahead of Pat Regan’s exit

QBE’s board got its CEO exit pay right, but filling the job is a task it has already dropped the ball on.

QBE chairman and acting CEO Mike Wilkins needs to find a new CEO before the end of the year. Picture: John Feder

The QBE board passed one test today with a relatively tough payout for outgoing boss Pat Regan. But the biggest hurdle remains in finding his replacement.

Regan will collect $310,000 on the way out, which for most would be okay. But by CEO standards, it’s well short of the normal one year’s pay, which was awarded to Orica’s Ian Smith when he left five years ago.

But Regan’s departure is with “cause” and as such any payout is rightly considered a bonus in the circumstances.

The game has moved on a bit from when Smith Orica five years ago. Chair Mike Wilkins would probably say the payout was “appropriate” and given Regan’s fixed pay last year was $3m-plus. Even with some share rights cancelled, he still owns 1.1 million QBE shares, so paying rent won’t be a problem.

The real problem is Wilkins is acting chief. And as good as he, that he is still in the position doesn’t say a lot about succession planning at QBE.

One of the key tasks for a chief executive and a board is succession planning and that has plainly failed at QBE.

The good news is the still officially unexplained reasons behind Regan’s departure suggests the company is due for yet another cultural overhaul, which means an outsider would be best placed to fill the role.

CFO Inder Singh is the most obvious internal candidate, given the recently planned or announced departures of Vivek Bhatia to Link, Peter Grewal as head of risk and Richard Pryce in the UK.

It is a tough time for a global search but then that is what head hunters are here for. The good news is that insurance is a small world globally, so the QBE board should have some clues about who would be best placed to take the top job.

The clock is however ticking and as safe as Wilkins’ hands may be it would not look good if he was still in the job at year’s end.

Succession planning is a core competence for any top tier board and on the evidence to day QBE is noting rating highly.