Record salary offered for new post boss
THE government is to offer the biggest performance package ever for a state owned industry when it asks headhunters to find a replacement for John Roberts, chief executive of Consignia, the post office group.
Consignia will say, within the next 10 days, that Roberts intends to retire from the company. It will also reveal that the new chief executive will be offered a Pounds 500,000 basic salary. This will be supported by a Pounds 250,000 bonus package, which will be paid only if performance targets are reached.
The size of the remuneration package is likely to anger the Communication Workers' Union, which is threatening to strike over a new pay deal for postmen.
At the same time, thousands of Consignia workers are being asked to take voluntary redundancy under a radical restructuring plan that is being pushed through by Allan Leighton, the group's chairman.
The new chief executive's pay deal is more than twice the basic salary paid to Roberts. Marisa Cassoni, who joined Consignia as finance director 18 months ago from Brittanic Assurance, is at present the highest-paid executive, with a package worth Pounds 295,000. She was viewed as a potential replacement for Roberts but is no longer in the running.
The candidate who succeeds Roberts will not be the first businessman to enjoy the government's largesse. Richard Bowker, the former Virgin executive, also earns Pounds 500,000 a year as head of the Strategic Rail Authority.
The announcement of Roberts's resignation will coincide with the publication of Consignia's full-year results, which will be the bloodiest in the group's 360 year history.
The group will report losses of almost Pounds 1.2billion, the bulk of which will be exceptional items. This will cover redundancy costs as well as sweeping changes at Parcelforce.
Leighton has given himself three years to turn the group round and, despite the huge job losses that he has already announced, more are to follow. They will not be confined to the lower ranks. At least two board directors are expected to go in the fresh cull, as well as thousands of senior managers.
Leighton is also expected to drop the Consignia name, to be replaced by Royal Mail, but the move will stop short of a rebranding. The board believes that it would be an extravagance at a time when the company is trying to save money. The Consignia name was introduced to expand the group internationally but, for the time being, Leighton will concentrate on turning round the domestic business and he wants to exploit the strong heritage of the Royal Mail name.
The publication of Consignia's full-year results will be followed by a report from Postcomm, the postal regulator, on whether it will slow down the proposed pace of liberalisation in the postal service.
TPG, the Dutch postal group that earlier this year aborted plans to merge with Consignia, believes Postcomm should delay its plans. In its submission to the regulator, it says: "From a political perspective, it seems strange for the UK regulator to open up the market to full competition 21 months or more ahead of the opening to competition of the German market … There is much to recommend key European markets taking a simultaneous step forward".
The dire state of Consignia's financial situation could stop its workforce taking strike action. The group is believed to be looking at ways of motivating its workers and to try to link some of their pay to performance. This is an approach that has been successfully adopted by TPG.
(C) The Sunday Times, 2002
