WITNO00220103
WITNO0220103
POST OFFICE LIMITED
BOARD TERMS OF REFERENCE
Including the Schedule of Matters reserved for Board decision
The Board of Post Office Limited is collectively responsible for setting the Company's primary business
objectives, for establishing a proper governance framework to manage and monitor risk and for ensuring
that the Company has the resources and leadership required to achieve its stated objectives. Directors’
statutory duties are set out in the Companies Act 2006. The primary duty of the directors is to promote
the success of Post Office Limited as a Company for the benefit of its Government shareholder and the
wider stakeholder community.
The Board remains accountable for performance to the Shareholder Executive within the Department for
Business, Innovation & Skills (“ShEx”). The Board is required to notify ShEx of certain activities and
capital commitments and to seek the consent of ShEx, as Shareholder, for certain actions, as set out in
the Articles of Association.
A. BOARD COMPOSITION
1. The Board is made up of two executive directors and five non-executive directors, including the
Chairman.
ROLE INCUMBENT
Chairman Alice Perkins CB
(Chairman of Nominations Committee)
Senior Independent Director Neil McCausland (retail expertise)
(Chairman of Remuneration Committee)
Non-Executive Director Virginia Holmes (pensions expertise)
(Chairman of Pension Committee)
Non-Executive Director Alasdair Marnoch (financial expertise)
(Chairman of Audit, Risk & Compliance
Committee)
Non-Executive Director Tim Franklin (financial services expertise)
Non-Executive Director Susannah Storey (Government appointee)
Chief Executive Paula Vennells
CFO Chris Day
2. The Company Secretary (Alwen Lyons) will act as Secretary to the Board.
3. The composition of the Board will be monitored by the Nominations Committee, which will make
recommendations to the Board for the appointment or retirement of directors, taking into account
the need for a diverse board membership with a range of appropriate skills and experience. All
appointments will be subject to the consent of the Shareholder.
10.
WITNO00220103
WITNO0220103
Non-Executive directors will form the majority of the Board. The term of office of each Non-
Executive Director will be set by the Shareholder. Non-executive Directors will usually be appointed
for a minimum period of three years. The initial term of office may be renewed for a further period
but no Non-Executive Director shall serve for longer than [6] years.
BOARD MEETINGS
The Board shall meet as often as required. At least 8 Board meetings will be held each year.
In addition to regular Board meetings, separate Strategy sessions will be held twice a year.
The quorum for the transaction of business at a Board meeting shall be two directors (one
Executive, one Non-Executive).
The Board may meet in person, by telephone or by other electronic means, so long as each member
can contribute to the business of the meeting simultaneously.
Meetings may be convened by the Secretary, at the request of the Chairman, or by any director, at
any time.
Notice of each meeting shall be given to all directors and, unless there are special circumstances,
shall be given at least 3 working days before each meeting.
The Secretary (or a nominated deputy) shall attend all Board meetings and keep minutes and
records of all decisions and actions.
Other Post Office employees and/or external consultants may attend for part or the whole of any
Board meeting at the invitation of the Chairman.
The Secretary will be accountable to the Chairman for the provision of relevant and timely
information to the Board and for ensuring regular reporting from Board Committees and the
Executive Committee to the full Board.
The Non-Executive Directors will meet twice at least once each year without the executive directors
being present.
DUTIES AND RESPONSIBILITIES
In addition to its legal duties, the Board has the following specific responsibilities:
¢ — Establishment of the Post Office's vision and values
e — Setting the Company's risk appetite and ensuring a proper framework exists for the
management of risk
e Maintenance of proper accounting and tax records, as required by the Companies Act 2006
e Maintenance of a sound system of internal control so that the Company can meet its statutory
and regulatory obligations
WITNO00220103
WITNO0220103
e Maintenance of the reputation of the Post Office as a public institution, including consideration
of new products and activities which may attract public interest or have an impact on the value
of the Post Office brand
e — Ensuring regular and active communications with the Shareholder, particularly on the
Company's performance against the Strategic Plan and other key indicators
e Delegation of authority to Board Committees and to the Post Office Executive Committee,
according to their respective Terms of Reference
e Formal evaluation of the performance of the Board, Board Committees and individual directors
The Board may delegate authority to the Executive Committee or to any Board Sub-Committee to
deal with any particular matter or to complete a project or task on behalf of the Board. A Board
Sub-Committee shall include both standing committees such as the Audit, Risk and Compliance
Committee (ARC), the Nominations , Pension and Remuneration Committees and any ad-hoc sub-
committees. The Board shall set out clearly the terms of reference of all such committees and shall
receive reports on their activities, including copies of the minutes of committee meetings. Directors
of the Board shall constitute the majority of members of any Board Sub-Committee.
SCHEDULE OF MATTERS RESERVED FOR BOARD DECISION
The following matters are reserved specifically for Board decision. Where indicated (*), the Board
may delegate authority to a Board sub-committee to bring forward a recommendation for approval
or to complete a project or task on behalf of the Board.
Section 1: Strategy and management
e Approval of the annual operating plan and budget
e — Approval of the Strategic Plan to be submitted to Government and any changes to it
e Approval of the Funding Agreement with Government and monitoring of the achievement of
milestones contained within the plan
e — Approval of the criteria for measurement of performance (Key Performance Indicators) and
annual review of such criteria
e — Ensuring that any necessary corrective action is taken in the light of reviews of performance
against budget and against the Strategic Plan and Funding Agreement
e — Setting the policy for diversity, talent management and succession planning within Post Office
e Approval of any extension of the Group’s activities into new business areas or outside the UK
e Any decision to cease to operate all or any material part of the Group's business
Section 2: Ownership, capital structure and constitution
e Consideration of any recommendations for major changes to the Group's ownership and/or
control structure’(Mutualisation Committee)
e Approval of changes to the Group's capital structure including any proposal to issue new
classes of shares, to redeem, consolidate or redesignate existing shares or to reduce the share
capital,
WITNO00220103
WITNO0220103
e Proposals for changes to the Articles of Association or other constitutional documents
applicable to the Post Office from time to time
e — Approval of the incorporation of any new Group company, partnership or joint venture entity,
including any subscription or application for allotment of shares
e Approval for the dissolution of any Group company, partnership or joint venture entity.
Section 3: Financial reporting and controls
e Approval of the annual report and accounts, including any corporate governance statement and
any specific reports required by Company law® (Board-appointed sub-committee )
¢ — Approval of any half year financial report or trading statement for publication” (Board-appointed
sub-committee)
e — Approval and declaration of any dividends or other proposed distributions, subject to the
Articles of Association and confirmation of the sufficiency of distributable reserves
¢ — Approval of any significant changes in accounting policies or practices’ (ARC)
e Approval of treasury and banking policies, including methods of mitigating against foreign
currency exposure and any use of financial derivatives * (ARC)
¢ — Monitoring of the independence of internal and external auditors * (ARC)
e — Approval of the appointment or removal of the external auditor” (ARC)
e — Ensuring that an effective risk management system is maintained as part of a sound system of
internal controls and internal risk management * (ARC)
Section 4: Financial commitments
¢ — Approval of major capital projects (above £3m)
e — Approval of material contracts in the ordinary course of business and included in the operating
plan (above £20m) and those arising which are not included in the operating plan (above
£10m)
e — Approval of all material contracts not in the ordinary course of business, including all strategic
acquisitions and disposals
e Proposals to enter into financial instruments, bank borrowings and any proposed loan facility
(above £20m).
e Any commitment involving the registration of a debenture, mortgage or charge against Post
Office Limited assets (above £3m).
¢ Approval of major asset disposals (above £1m)
e Consideration of any material changes to pension arrangements for Post Office employees, in
particular affecting the rate of contributions required to be made” (Pension Committee)
e Determination of the appropriate investment strategy for Post Office pension funds and
monitoring of performance by the investment managers’ (Pension Committee)
WITNO00220103
WITNO0220103
Section 5: Appointments and Senior Remuneration
Recommendation of the appointment of any person as a Director * (Nominations Committee)
Following receipt of consent from the Shareholder, formal appointment of any person as a
Director, including the designation of an individual to serve as Chairman, Senior Independent
Director, Chief Executive, CFO or Chair of any Board Sub-Committee
Confirmation of the division of responsibilities between the Chairman and the Chief Executive
Appointment and any termination of appointment of the Company Secretary
Recommendations to the Shareholder on changes to remuneration policy and packages for
Executive Directors * (Remuneration Committee)
Recommendations to the Shareholder on fees to be paid to Non-Executive Directors
Introduction of any long term incentive scheme and approval of the performance criteria and
the amount of any awards to be made under any long term incentive scheme * (Remuneration
Committee)
Approval of any annual bonus schemes involving participation by Directors’ (Remuneration
Committee)
Confirmation of the terms of any suspension or termination of service of an Executive Director
as an employee of the Company, subject to the law and their Director's contract *
(Remuneration Committee)
Appointments to the Boards of subsidiary and joint venture companies
Appointment of specified individuals to authenticate the Post Office Limited seal
Appointment of the Group's principal professional advisers
Section 6: Governance
Ensuring delivery of the obligations on the Post Office set by the Postal Services Act 2011,
including the publication of an annual Network Report and Postal Heritage Report
Approval of the Group's overall corporate governance arrangements
Performance evaluation of the Board, Board Sub-Committees and individual Board members
(or confirmation of why this has not occurred).
Approval of Group policies including, but not limited to, the Health and Safety Policy, Anti-
Money Laundering Policy, Freedom of Information Policy, Whistle-Blowing policy and/or Code
of Conduct and Anti-Corruption Policy
Approval of the overall levels of insurance for the Group, including directors’ and officers’
liability insurance and any arrangements for indemnity of directors
Decisions on the potential prosecution, defence or settlement of litigation involving potential
costs of more than £1m or being otherwise material to the interests of the Group
Any proposal to make political donations
Changes to the Schedule of Matters Reserved for Board decision.
January 2013