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Dr Neville Bain
Chairman
Sth Floor
148 Old Street
27 June 2000 LONDON
ECIV 9HQ
Mr Alan Johnson MP
Minister for Competitiveness
DTI
1 Victoria Street
LONDON
SW1H 0ET
Dear Alan
Thank you for the meeting in private where I raised two matters of concern for
the Board as expressed by the Non Executive Directors. This follows on from
our last Board meeting - but the matters are not new, although they are
unresolved.
As discussed, I agreed to briefly set out the points raised:
1. The Board, especially the Non Executive Directors, including the
Chairman, feel under-valued by Government and its officials.
In support of this statement I indicated that:
© While the Chairman and the Non Executive Directors were appointed
by Government as the representatives of the shareholder, there is no
sense in which the Government uses them as such.
¢ Recommendations of the Board and the Remuneration Committee are
usually ignored.
¢ Judging by the extent of their contact and involvement with the Prime
Minister downwards, we get the strong impression that the input
which is valued, is from trade unions and the NFSP. This overt
endorsement of these bodies - not mirrored by contact with the Board
~ makes it much harder for management to manage.
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2. Some parts of Government and its officials do not value the senior team
at The Post Office, causing demotivation, and exploitation of
committed, capable people.
In support of this statement the following points were made:
© Contracts are not treated seriously by officials or Ministers, as they
have been allowed to expire in every case. This causes a strong
feeling of resentment, and reinforces the view that people do not
matter to this Government.
* Bonuses recommended by the Chairman and the Remuneration
Committee are chiselled away to reduce fair payments to individuals.
Examples of this:
- The use of the unplanned impairment provision for Parcelforce to
avoid paying bonuses. Furthermore, this is a point which we
must urgently address for the current year. We must ensure that
it is clear, well in advance, how changes in accounting practice
and standards, as well as exceptional items, are to be treated for
incentive purposes.
- Inability to accept the Chairman and the Remuneration
Committee’s judgement in relation to John Roberts’ bonus to
31 October 1999 which remains unresolved and unpaid in total.
- Inability to agree to pay the bonus from I November 1999 to
31 March 2000.
- Once again a failure to agree bonus plans for the current year
which is now 25% complete.
- Current salaries are unrealistically low, uncompetitive in a
commercial environment and lower than in comparable situations
such as BBC or BNF (see schedule attached), I remind you that
we are currently recruiting a Finance Director with a salary range
of £300,000-£350,000 (market rates) against the CEO’s current
salary of £205,000.
Looking at this evidence, it does seem to me that several paradoxes
are apparent:
« The first paradox arising from these observations is that while The
Post Office is supposedly moving to greater commercial freedom, it is
still not being given freedom to motivate and manage its key people.
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* The second paradox is that while the Secretary of State appointed the
Chairman and the Non Executive Directors as the representatives of
the shareholder, the Government shows no inclination to use them in
this way.
© The third paradox is that while this Government says it is committed
to fairness at work, development of people, and fair rewards for
results, the interface with The Post Office Board completely belies
this.
Alan, I do believe that these issues need to be addressed with urgency. The
present situation is frankly demotivating, unprofessional and unnecessary.
Kind regards
Yours sincerely
be ATR
wé-
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PRIVATE & CONFIDENTIAL :
SCHEDULE OF EXTERNAL COMPARABLE SALARIES
Name Current Outside BBC BNE
Salary assessment of equivalent equivalent
commercial
value
£k £k &k &k
NCBain
Chairman 93 250 N/A 150*
AJ Roberts
CEO 205 400 330 350
Finance
Director 159 300-350 180 200-250**
Executive
Director 120-142 200-300 180-254 200
NEDs 16-18 30 17-25 20
* 2 days per week compares with PO Chairman 3 days per week.
** Job not yet filled.
Ww
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