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26th May 2023,
Kevin Hollinrake MP
Parliamentary Under Secretary of State
Department of Business and Trade
Old Admiralty Building, Admiralty Place
LONDON
SW1A 2DY
Dear Minister
Final draft report by Amanda Burton - Clarification to Post Office Annual Report and Accounts 2021-22
I asked Amanda Burton on Tuesday 9" May, as a new Non-Executive Director and the new successor to
Chair the Remuneration Committee from today at Post Office Limited, to investigate the error with a sub-
metric in the Annual Report and Accounts 2021-22. Please find attached her final draft report, as
requested by you, within two working weeks.
Let me reiterate my apology to you on behalf of Post Office, as we have directly to Sir Wyn Williams, for
the error made in declaring this inappropriate metric achieved as part of the Transformation Incentive
Scheme. This mistake was made with the best of intentions to prioritise the much needed transformation
of Post Office. As Chair of Post Office, I am determined that every part of the business not only supports
all aspects of the Horizon IT Inquiry but also retains its focus to transform the business, its culture and its
operations, to help Postmasters thrive as they serve their customers and their communities across the UK.
Amanda has conducted a thorough investigation of all the documents pertaining to the setting and
evaluation of the sub-metric in the Transformation Incentive Scheme. Her report includes the following
observations and conclusions:
“Itis difficult to understand why the Inquiry first sub-metric was not questioned by anyone, and yet
seen by so many people.”
“In my opinion the assessment was made fairly, the problem was that the wording of the Inquiry
sub-metric was inappropriate once the Inquiry moved onto a statutory footing.”
The report has seven recommendations including:
“Variable pay schemes, whether short term or long term, need to be simple, transparent and
clear.”
“The timeline between the initial proposal, design and approval of variable pay schemes needs to
be shortened as it does not make sense to have schemes being debated months (even a year)
after the awards should have been made.”
“When assessing whether metrics have been achieved, there needs to be a clear audit trail of the
data reviewed. When discretion is exercised, the circumstances need to be carefully minuted and
explained in the Directors’ Remuneration Report.”
I support the conclusions and recommendations made by Amanda, including re-engaging with the
shareholder at the macro level, as that will drive better decision making at the micro level.
Post Office Limited is registered in England and Wales. Registered No. 2154540.
Registered Office: Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ. -
Post Office and the Post Office logo are registered trademarks of Post Office Limited. postoffice.co.uk
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As a consequence of the conclusions and recommendations, inter alia Post Office is taking the following
actions:
Amanda will become Chair of the Remuneration Committee with immediate effect and Lisa
Harrington will leave the Board on Thursday 1 June. Tom Cooper has already left the Board
There should be no variable pay awards linked to work directly supporting the Horizon IT Inquiry
for 2022-23 or indeed for any subsequent years.
Although Amanda's report does not recommend considering clawback, I can confirm that
Executive Board members who benefitted from the specific Transformation Incentive sub-metric
have voluntarily repaid it as have all the current members of the Group Executive. The Board,
cognisant of the impact of the inappropriate wording of the sub-metric to public confidence in
Post Office, has asked the Chief Executive to seek similar repayment of the sub-metric from other
recipients of the Transformation Incentive.
I offer you my full support in considering any further changes that may be needed in how the
Remuneration Committee operates and how its recommendations are approved by the Board and
the shareholder. This could be considered as part of the separate review you have commissioned
about the governance of remuneration at Post Office.
Given the public interest in this error, I ask that you consider publication of the report at the earliest
opportunity noting that people named in the report should be able to review the final draft before it is
published and some redaction may be required. Publication at the earliest opportunity should allow your
wider review of the governance of remuneration at Post Office to reflect any response to the report; as
well as help the House of Commons Business Select Committee to hold its hearing on a more informed
basis.
A key element of the transformation of Post Office is to ensure its long term financial stability. When we
met on Monday 22” May, we discussed the importance of reducing central costs as an essential means
of improving our commercial and financial stability. I confirm that this is a priority for the Board and the
executive team, not least to improve branch profitability for the benefit of Postmasters.
You have my assurance that as the incoming Chair, together with a new Chair of the Remuneration
Committee, that we are focused on appropriate, transparent and clear reward, including variable pay
where needed, consistent with corporate best practice to advance the transformation of Post Office.
Yours sincerely
Henry Staunton
Chairman, Post Office Limited
Post Office Limited is registered in England and Wales. Registered No. 2154540.
Registered Office: Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ. -
Post Office and the Post Office logo are registered trademarks of Post Office Limited. postoffice.co.uk