BEIS0001013
BEIS0001013
2% June 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 report by Amanda Burton - Clarification to Post Office Annual Report and Accounts 2021-22
Thank you for your letter (31*' May) with your comments on the draft report prepared by Amanda Burton.
You express your significant concern that the specific metric to support for the Inquiry was marked as.
achieved and that bonus payments were made to senior staff at a time when Horizon affected postmasters
are still to receive full compensation. I emphasise 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. These mistakes, although inexcusable, were made by the Remco
with the belief that the Transformation Incentive Scheme as a whole was appropriate to prioritise the much
needed transformation of Post Office.
You ask for further clarification on two specific issues notably: how the Remco determined that the
relevant criteria had been met; and why the incorrect statement was included in the Annual Report 2021-
22. Both of these issues are addressed in the final report by Amanda which is attached.
On the first issue, Amanda concludes that the terms of discretion were explained to the Permanent
Secretary but the determination by Remco was not discussed with the Permanent Secretary as the
Committee considered that they had discretion. The Board discussed in January 2022 the progress being
made in delivering everything that the Inquiry had asked for and relied on a report prepared by Herbert
Smith Freehills (HSF) and the in-house Post Office legal team that gave an update on recent
developments in the Inquiry programme. We are seeking clarification about the status of this potentially
confidential report from the Horizon IT Inquiry, which we would like to share with you not least given the
public interest in disclosing it, but are unable yet to do so in the timescale required for publication of
Amanda's report.
Amanda comments in her report that the first sub-metric was not achieved as by then the Inquiry had not
completed, nor had the feedback from Sir Wyn (quite rightly) been sought. However, Remco exercised
discretion, bearing in mind that the sub-metric was, and could not, have been achieved because the
Inquiry timetable had been extended. Throughout the Remco sought advice and affirmation from the
firm's remuneration consultants and internal auditors, noting the report by lawyers, and on that basis was.
pleased with progress, which is why they rated the overall metric as achieved. Amanda concludes that it
would have been better to minute the depth of discussion and for the rationale to be explained in the
Directors’ Remuneration Report.
On the second issue, Amanda has provided further detail as to the process for signing off the Annual
Report and Accounts, including the Directors’ Remuneration Report. She states that these were shared
with UKGI officials to comment on them, with emails received from them on 8" July, 25" July and 5"
August 2022. A near final version was seen by the Audit and Risk Committee in July and a sub-committee
was appointed to finalise the drafting. The final draft was presented to the Board for approval on 12"
August and was published with the date of 17" August 2022.
Post Office Limited is registered in England and Wales. Registered No. 2154540.
Registered Office: Finsbury Dials, 20 Finsbury Street, London EC2¥ 9AQ. -
Post Office and the Post Office logo are registered trademarks of Post Office Limited. postoffice.co.uk
BEIS0001013
BEIS0001013
Throughout these processes of approval, and as I said to you at our meeting on Monday 22” May, I
remain baffled as to how the inappropriate sub-metric, and the error in how it was described as achieved,
was included in the published Annual Report and Accounts. As the newly appointed Chair of Post Office I
will ensure further rigour is applied to Remco and Board processes to help avoid any similar such mistake
in the future. In the final analysis, I accept that what is included in the published Annual Report and
Accounts, no matter how many individuals and advisers are involved, is the responsibility of the Chair of
the Board.
Amanda has also incorporated comments from your officials in her final report. You asked that she would
address the concerns of Tom Cooper, as expressed to you, as well as share and address comments with
others named in her report. Amanda has shared two drafts with Tom Cooper and has carefully reviewed
his comments and made some changes where she felt this was appropriate having revisited the data. She
has also sent the report to those named and reviewed comments received so far.
Subsequent to Amanda's final report, I am seeking further legal advice about the opportunity for
mandatory clawback of the sub-metric payment by recipients and will keep you informed.
I affirm my support for the conclusions and recommendations made by Amanda in her final report,
including re-engaging with the shareholder at the macro level, as that will drive better decision making at
the micro level
I also confirm, as set out in my letter to you on Friday 26" May that inter alia Post Office is taking the
following actions:
Amanda was appointed Chair of the Remuneration Committee with immediate effect as Lisa
Harrington left the Board on Thursday 1st June. Tom Cooper has already left the Board.
The Remco will review the terms of the 2022/23 Short Term Incentive Plan when it meets later in
June and Amanda will be recommending that Remco exercises its discretion not to award the
element of bonus specifically relating to the Inquiry. I endorse fully this recommendation. Any
variable pay schemes going forward will also not include any metrics relating to the Inquiry.
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. Other
recipients of the Transformation Incentive are also being offered a way to voluntarily repay the
specific sub-metric.
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.
I understand that you intend to publish the report at the earliest opportunity from Friday 2°¢ June.
I remain 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.
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 EC2¥ 9AQ. -
Post Office and the Post Office logo are registered trademarks of Post Office Limited. postoffice.co.uk