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From: Brooks-White (Jobshare)!”
Sent: Fri 16/06/2023 10:17:43 AM (UTC+01:00)
To: Minister HOLLINRAKE (TRADE):
Ce: Perm SEC (TRADE)f ~~) Bickerton, David (Business
Sectors DG Office){” ~ , Carl (Business
Stockbridge,
_p Mitchell, Katie
Baird, Ed (Business Sectors - Services
; Welch, Bryan
Subject: ToR for the POL Bonus Review
Attachment: Note on draft ToR for review of the governance of decisions on senior
remuneration.docx
James, Guy
As discussed last night, you have asked for a note on the Terms of Reference for the POL Bonus
Review, and the points that the Minister had previously shared on the Burton report. We considered
the Minister’s questions when drafting the Terms of Reference (attached), a number of the points are
very specific and will be briefed to Simmons and Simmons, rather than being explicitly included within
the Terms of Reference. As you know, we are managing the combination of time, cost and scope, and
to allow completion and publication before Recess. David has kindly offered to speak with the
Mini
The
ister on the scope if you would find this useful?
Minister’s questions:
1. Who rated Nick Read 4+ out of 5, thereby triggering an enhanced bonus, and on what
grounds? We will brief Simmons & Simmons on this question. We know that the decision to rate
Nick’s overall performance as a 4+ was taken by the POL Chair, who is responsible for the CEO's
annual performance review and the marking was endorsed by the RemCo.
2. AB seems to focus on not obtaining confirmation on the bonus criteria but doesn’t appear to
question how it was included in the first place? The focus on the Review will be to look at the
mandate that Post Office received from the Department and how this was implemented by POL.
We do not recommend that we review the setting of the target itself, given the target was agreed
by previous Ministers.
3. Nick Read’s share of the 5% pot should have only been released in proportion to the number of
targets hit, was that the case? We will brief Simmons & Simmons on this question. This was included
in feedback to POL on the first draft of the Burton Report.
4. Clawback provisions included a situation caused by an ‘error’. Clearly there was one so why
can’t we clawback from all, particularly the report states that there was ‘clear failing of everyone
involved? We will brief Simmons & Simmons on this question. This was included in feedback to
POL on the first draft of the Burton Report.
5. Was this report revised from the original one referred to by Lorna as unsatisfactory? Not
applicable for the Simmons and Simmons review.
6. The Postmaster satisfaction metric was also clearly missed, why did this get an Amber/50%
rating? We have asked Simmons and Simmons to focus on the decisions surrounding the key
metric. However, we will ask, that if, in their review of relevant documents, and there is evidence
of how the Amber/50% rating was arrived at in Annex 5 of the Burton Review, that they also gain
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an understanding on how this was authorised, if capacity within the contract allows.
7. How can a rating of Green be given to the Horizon replacement when it is £200m+ over budget
and behind schedule? Did we achieve 400 locations by March 2023? We have asked Simmons
and Simmons to focus on the decisions surrounding the key metric. However, we will ask, that if, in
their review of relevant documents, how/if this metric was met in 21/22 FY, if capacity within the
contract allows.
8. Organisation Design - have we now moved to a ‘lower cost operating model’? I’ve seen no
evidence of that in cash terms. We have asked Simmons and Simmons to focus on the decisions
surrounding the key metric. However, we will ask, that if, in their review of relevant documents,
how/if this metric was met in 21/22 FY, if capacity within the contract allows.
9. Overall, I think the independent review needs to look at the entire remuneration/incentives
approach historically and identify individuals responsible and make recommendations on how we
set bonus targets going forward. A key element of the ToR is to consider Whether the processes
to set performance metrics and award bonuses on the basis of those metrics were sufficiently
robust and consistent with corporate governance best practice. We therefore expect the review to
consider this question.
Overall update
In addition, I thought it useful in this email to also cover the second of our bi-weekly updates to the
Minister on the review. Our focus this week has been on-boarding Simmons and Simmons, following
receiving their proposal on Wednesday. We have continued with the contracting elements, and have
also been briefing them further, David Bickerton briefed the lead partner yesterday afternoon, and
we also have a further briefing this afternoon. We have been working with POL and UKGI to secure
relevant documents, and to set up interviews with key personnel for the second week of the review.
Simmons and Simmons are due to begin their work on Monday. With 3 week-long sprints, we will
move to a pattern next week of twice weekly briefings to review progress and provide steers— we will
provide this update following those meetings going forward.
Kind regards
Beth
eo
Beth White I Deupty Director, Post Office I
Business Resilience
Department for Business and Trade I 1
Department for Victor don, SW1H OET
Business & Trade 1] E-mail
‘or Brooks works Monday-Wednesday
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