How the reward system works; Bonus outcry as UK Royal Mail fails to deliver

ROYAL MAIL bonus schemes last year netted five top executives Pounds 1.5 million, even though the organisation missed all its service targets. They are expected to get at least as much this year.

In an effort to defuse controversy Allan Leighton, the part-time chairman, deferred all of his Pounds 144,000 bonus until four key targets are met. His deputy Elmar Toime said he would defer half of it until the same targets were achieved. Adam Crozier, chief executive, and three others, said they would waive the part of their bonus which comes from meeting service standards.

But that element amounts to just 20 per cent of the bonus, while 80 per cent is dependent on financial targets.

Royal Mail executives are rewarded on an annual basis and also through a three-year plan linked to the recovery programme.

Although the organisation made pre-tax profits of Pounds 105 million last year, compared with losses of Pounds 611 million in the previous year, it had benefited from an increase in the price of stamps.

Last year Mr Crozier received an annual bonus of Pounds 300,000 and a long term bonus, which can be retrieved after three years, of Pounds 216,000. Royal Mail’s accounts say that executives are rewarded to attract the best in a competitive market and who “will deliver success for the shareholder (the Government) and high levels of customer service”.

Royal Mail aims to make operating profits -day-to-day profits as opposed to pretax profits -of Pounds 400 million by next year. If it does so, it will declare its renewal plan successful. This will trigger a one-off payment of Pounds 1,000 for every employee.

Allan Leighton, chairman, Pounds 20,000 (for a one-day week) Joined Royal Mail in 2001, chairman in March 2002. Worked for Mars and then Asda, where he rose to president. Also chairman of Bhs, Cannons Group and lastminute.com.

Elmar Toime, executive deputy chairman, Pounds 500,000 Joined Royal Mail in March 2003 and is responsible for “renewal plan”. Born in Italy, he moved to New Zealand in 1987. Chief executive of New Zealand Post for ten years.

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