UK Royal Mail bosses take late delivery on bonus

Executives at Royal Mail are deferring or waiving bonus payments, even though the postal organisation has made a profit for the first time in four years.

Chairman Allan Leighton is to defer his entire bonus, worth pounds 144,000, until the group meets quality of service targets in the 2004/5 financial year and if the targets are not reached he will lose his entire bonus.

Chief executive Adam Crozier will waive the quality of service element of his bonus which is worth tens of thousands of pounds.

Four other executive directors are also waiving the quality of service part of their bonus.

The news came as Royal mail announced it had made a profit of pounds 220m in the 2003/4 financial year, compared to losses of pounds 197m in the previous year, a turnaround of more than 200pc.

But the company, which has been under fire in recent weeks over late deliveries, missed its target for delivering letters on time. In the year to March, 90.1pc of first class mail was delivered the next day against a target of 92.5pc while the figure for second letters was 97.8pc compared to a target of 98.5pc.

The Royal Mail said unofficial industrial action by postal workers which crippled deliveries last autumn had affected the figures.

The return to profitability followed a two year period when losses reached more than pounds 1m a day.

But the Royal Mail, which is undergoing a renewal plan which includes the closure of post offices and scrapping second deliveries, said the return on turnover of 2.5pc was still much lower than a decade ago and “significantly lower” than its competitors. Mr Leighton said the biggest single factor behind the company missing its targets was the unofficial strike.

He said: “Without it, we would have reported quality of service levels higher than at the beginning of the renewal plan as well as an even higher profit

“In deferring bonuses we are saying we have confidence in everyone in Royal Mail achieving our key targets by the end of this current year.

“Making a profit, however, is a major step forward, especially when Royal Mail was losing well over pounds 1m a day from its operations barely two years ago.”

He said the return to profitability allowed the organisation to invest in the company and in the pay and pensions of its employees.

Peter Carr, chairman of consumer watchdog Postwatch, said: “Royal Mail has rightly focused on returning to profit, but has taken its eye off its delivery performance to customers, who are paying more and getting less.”