UK Royal Mail paying for performance to beat losses

Allan Leighton, non-executive chairman of Royal Mail, received a performance-related bonus of pounds 165,000 last year, the company’s annual report reveals. The amount stops just shy of the potential pounds 180,000 that Mr Leighton, who is supposed to spend one day a week at the group, could receive. “This is because Royal Mail hasn’t hit certain service targets,” a spokesman said. Mr Leighton is paid a nominal salary of pounds 21,375 a year for the high-profile post. “There aren’t many Allan Leightons,” the spokesman said, commenting on the unusual performance-related element for a non-executive salary. The report shows that total remuneration for Royal Mail directors has increased more than two and a half times since last year, from pounds 873,000 to pounds 2.23m. This is due to the appointment of executives from the commercial world, including Adam Crozier and Elmar Toime, chief executive and deputy chairman respectively. Both men will be on a salary of pounds 500,000, with bonuses and incentives that could reach a similar level if performance criteria are met. Royal Mail has bowed to corporate government suggestions and amended all executive directors’ contracts to 12 months’ duration. The spokesman said: “Two years ago you would have found some two or three-year contracts. There is a significant difference now because market rates are being paid to attract people into the organisation. Our goal is to be much more commercial, but these are incentives for performance, not rewards for failure.” The Post Office is losing pounds 750,000 a day. Royal Mail has also barred the practice of allowing directors to take their pension early if they retire before age 60. But John Roberts, who resigned as Royal Mail’s chief executive at 58 after presiding over the most troubled years in the group’s recent history, has been allowed to take his pension 20 months early, under the terms of his contract. The report shows that the transfer value of his pension (what it would cost on the open market) is just over pounds 3.5m, and he will receive pounds 160,000 a year. He also received pounds 119,000 compensation for loss of office, or six months’ salary. “John has been here nearly 40 years. I think he has earned a fair pension,” the spokesman said.

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