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From: Minister HOLLINRAKE (DBT)[/O=EXCHANGELABS/OU=EXCHANGE
ADMINISTRATIVE GROUP
(FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=3F 131AB4A1E443368F392D196C
626FAE-5B2AC667-8A]
Sent: Thur 23/11/2023 1:27:16 PM (UTC)
To: Secretary Of State INTERNATIONAL TRADE
“4; Perm SEC
Sonia ZVEDENIUK
(DBT)[perm.sec¢..
(DBT)[Sonia.Zvedeniuk
(DBT)[Daniel.ElGamry@
(DBT)[spad.badenoch@
Subject: Re: OS PERSONAL [FOR DECISION] FY22/23 and FY 23/24 Annual Bonus
Schemes for POL CEO/CFO
Hi Rose
Sorry for the delay on this there's been a fair amount of back and forth.
Minister Hollinrake has now approved. He commented that he looks forward to seeing
the headcount reduction numbers of senior management. He also commented that on
the Banking Framework, we need to emphasise to management that we need to see all
the improved remuneration going directly to the network.
v best,
Jamie
Jamie Lucas I Deputy Head of Office and Private Secretary to Kevin Hollinrake MP, Minister for
Enterprise, Markets and Small BusinessI
Dep ss and Trade I Old Admiralty Building I London SW1A 2DY I
From: Secretary Of State INTERNATIONAL TRADE (DBT) <i
Sent: 20 November 2023 12:36
To: Perm SEC (DBT;
____.}; Minister HOLLINRAKE (DBT)
onia ZVEDENIUK (DBT)
“>; Daniel EL-GAMRY (DBT)
CEO/CFO
Thank you. Jamie, I'll put to SoS once KH is content.
Best,
Rose
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et Rose Lasko-Skinner I Private Secretary to The Secretary of State
Department for Business and_ Trade. Old Admiralty Building I
London I SW1A 2BLI; = GRO
From: Perm SEC (DBT) <. .
Sent: Wednesday, November 15, 2023 2:26 PM
To: Secretary Of State INTERNATIONAL TRADE (DBT) <.
5 Minister
onia ZVEDENIUK (DBT)
'>; Daniel EL-GAMRY (DBT)
i; Spad SOS (DBT)
i
Subject: RE: OS PERSONAL [FOR DECISION] FY22/23 and FY 23/24 Annual Bonus Schemes for POL
CEO/CFO
Hi Rose,
Yes, after a bit of back and forth with the team (see attached), the Perm Sec signed this off.
Jasmine
) Py :
be Jasmine Bossley I Private Secretary to the Per
Department for Office Group
Department for Business and Trade I Old Adn
E-mail: Perm.Sec¢
Twitter I Linkedin I great.gov.uk
Business & Trade
For more information about working with the Pe
please click here.
Box Time: 12pm daily — please agree non-stand
Private Secretary.
Clearance: Routine clearance is 6 working days-
clearance with the relevant Private Secretary.
From: Secretary Of State INTERNATIONAL TRADE (DBT) GRO :
Sent: Wednesday, November 1. — — eal
To: Minister HOLLINRAKE (DBT)
Daniel EL-GAMRY (DBT)
G RO !Spad SOS (DBT)
' 'Perm SEC (DBT) <_
Subject: RE: OS PERSONAL [FOR DECISION] FY22/23 and FY 23/24 Annual Bonus Schemes for POL
CEO/CFO
Thanks Jamie — agreed. I'll box once Kevin is content with approach.
@Perm SEC (DBT) has Perm Sec opined on this?
Thanks all,
Rose
q Rose Lasko-Skinner I Private Secretary to The Secretary of State
“the? Department for Business @
ee
London I SW1A 2BL { GRO
From: Minister HOLLINRAKE (DBT) ¢
Sent: Wednesday, November 15, 2023 1:42 PM __
To: Secretary Of State INTERNATIONAL TRADE (DBT,
ZVEDENIUK (DBT)
Sonia
S PERSONAL [FOR DECISION] FY22/23 and FY 23/24 Annual Bonus Schemes for POL
CEO/CFO
Thanks Rose - from my perspective I think it would be sensible to have SoS across
this 1. given her interest in Post Office matters and 2. for more weight if, for want of a
better phrasing, we need to tell them off about governance matters again.
I'll come back to you once Minister Hollinrake has taken a look at the answers
provided by Lorna.
v best,
Jamie
Jamie Lucas I Deputy Head of Office and Private Secretary to Kevin Hollinrake MP, Minister for
Enterprise, Markets and Small BusinessI
Department for Business and Trade I Old Admiralty Building I London SW1A 2DY I
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From: Secretary Of State INTERNATIONAL TRADE (DB
Sent: 15 November 2023 13:35
T
onia ZVEDENIUK (DBT)
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4 _ GRO ~ i Spad SOS (DBT)
4 >
Subject: RE: OS PERSONAL [FOR DECISION] FY22/23 and FY 23/24 Annual Bonus Schemes for POL
CEO/CFO
Hi Jamie,
Thanks v much for pushing these questions — @Spad SOS (DBT) this is one that deffo needs to be
boxed for SpAds once_@Minister HOLLINRAKE (DBT) is happy_@Sonia ZVEDENIUK (DBT) from a Post
Office PoV and_@ Daniel EL-GAMRY (DBT) from the corporate pov.
My sense is that it should also go to SoS given the upset with the last round of bonuses for the Post
Office but Jamie keen to be led by you.
Many thanks,
Rose
4 4 Rose Lasko-Skinner I Private Secretary to The Secretary of State
ae) Department for Business and Trade I Old Admiralty Building I
al London I SW1A 2BL i ~
From: Gratton, Lorna - UKGI <
Sent: Tuesday, November 14, 2023 9:27.PM.
To: Minister HOLLINRAKE (DBT). >; Secretary Of State
INTERNATIONAL TRADE (DBT) < GRO Rajeswaran, Siv - UKG
}, Spad SOS (DBT) 5 GRO I
; Kennedy, Benjamin - UKGI
GRO “I
“Subject:
CEO/CFO
Jamie,
l agree this is extremely complicated. Amanda Burton (new Remco chair) and I have agreed that we
will be dramatically simplifying it going forward. With regard to your specific questions, please see
answers below.
Let us know if you need anything else.
Best wishes,
Lorna
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Why are we only now approving an STIP covering 22/23 (ended March 23)?
The previous Remco Chair unfortunately took her eye off the ball and didn’t get the 22/23 scheme
into HMG for approval within the financial year. It was approved by Remco at the start of the
financial year (FY22) and communicated to the wider Group Executive (so did act as an incentive for
the management team), but the HMG STIP approval for the CEO/CFO was lost by the company
amongst the other contentious pay approvals they tried to seek last year. They had initially sought to
submit to HMG in March 22, but given the issue with bonuses and the annual accounts, the company
then pulled the document from the approval process until that was resolved. It’s clearly completely
suboptimal and Amanda is clear that it won’t happen again.
Please can I see basic salary and bonuses of CEO and CFO paid over last 3 years and projected OTE for
next 3 years?
CEO
2020 2021 2022
£000 £000 £000
[Total Remuneration 257 415 816 573
Of which;
Salary 225* 415 415 436
TIS value 123 (66%)
STIP value (% of max) 32 (32%)' I 0° I 163 (87%) [137 (70%)
LTIP value (% of max] o* [115(76%) I Oo
*Pro-Rated Entitlement from September 2019
[1] the STIP Executive Directors was subject to a 50% reduction for 2019/20
[2] Nick Read was not eligible for LTIP2017/20 Scheme as he joined the organisation in September 2019
[3] The 2020-21 STIP was cancelled on account of the pandemic and replaced with a longer term TI Scheme of
identical quantum paying out in FY21/22
[4]The 2018-21 LTIP did not pay out as performance did not reach the EBITDAS target threshold
(5) The TI Scheme figures are the same as the ARA and it should be noted that a subsequent voluntary gross
repayment of £54,469 has been made by CEO.
2020 2021 2022 2023
£000 £000 £000 £000
otal Remuneration 512 316 627 400
Of which;
Salary 245 245 245 245
Benefits} 71 71 71 71
TIS value (% of max} 80 (49%)
STIP value (% of max] 48 (32%) I 0 I 99 (61%) [85 (52%)
LTIP value (% of max] 148 (86%) I 0 I 133 (78%) 0
The out-turns for the 21/24, 22/25 LTIP aren’t yet known. The metrics for assessment (as set by
Remco) were set out in the sub. The 23/26 LTIP will come to the shareholder shortly. Some
additional observations:
© 21/24 LTIP:
© 40% of the pay out is based on a financial metric that will not be met due to the overspend on
the IT system
© 15% of the pay out is based on a Horizon replacement implementation metric that will not be
met
© 22/25 LTIP:
© 25% of the pay out is based on a Horizon implementation metric that will not be met
Can we confirm that there are no remuneration incentives for anything to do with the inquiry or
compensation schemes/ payments and that the overall package has been reduced as a result rather
than the incentive being spread over other targets.
All Inquiry metrics have been removed — the total quantum available has been reduced as a result
(worth 4% of the scheme). There was an HSS metric in the 22/23 STIP (worth 6% of the scheme). This
is was to make 95% of offers by 1 Dec 2022. This was marked by Remco as not met as 94.52% of
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offers were made by this date, and therefore Remco has declined to pay. You could decline to approve
the HSS metric in the scheme. This would not change the quantum of the award to any member of
POL staff, but it would mean that the metric did not appear in the table in the annual accounts and
instead would be noted as having been removed.
What are the metrics and incentives in here to reduce central office headcount and overheads. Please
can we show cost cuts for DMBs separately from management team cuts.
STIP 23/24 includes a cost challenge, which the interim CFO of POL is coming to present to you at the
beginning of December. The cost challenge is for £15.9m of savings against budget within the
financial year. The target was for a total savings number, rather than specified line-by-line by Remco,
in order to provide management with the opportunity to balance savings within year. However, the
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company has provided a breakdown of how they expect to make the savings (shown below), and
Remco has made clear that they will take a view on whether particular savings are appropriate to
include depending on the quality of the saving (e.g. recurrent/one-off, genuine savings as opposed to
delayed cost). Of the £15.9m target £1.7m was expected to be DMB exits, which will be missed, and
therefore additional savings will need to found from other line items to hit the target.
Cost challenges of this kind are (very surprisingly) new to POL and not well embedded in the culture of
the organisation. This is beginning to change and the current challenge is being taken very seriously
by management. The current challenge, in the terms specified below has been worked on by
management for the last 7 months. Clearly the 23/24 STIP should have come to HMG for approval
earlier in the year (it was, like the 22/23 STIP, delayed due to the bonus issue from last years
accounts). It will be difficult for management to change course on the line items in the savings at this
stage, but the company (and Remco) will be receptive to taking your steer on specifics for next year.
IRRELEVANT
Lorna Gratton I Director
UK Government Investments
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PA: Georgia Leppenweli
From: Minister HOLLINRAKE (DBT):
Sent: 14 November 2023 08:41
To: Secretary Of State INTERNATIONAL TRADE (DBT!
c GRO
Gratton, Lorna - UKGI! Rajeswaran, Siv - UKGI
GRO
Carl CRESWELL (DB
GRO.
5 Kennedy, Benjamin - UKGI
i David BICKERTON (BT)
“Subject? R
CEO/CFO
OS PERSONAL [FOR DECISION] FY22/23 and FY 23/24 Annual Bonus Schemes for POL
Hi team
Afraid Minister Hollinrake has a lot of comments, could you get back to me with
answers so I can put this back to him.
Comments:
Must be the most complicated remuneration package I've ever seen and the brief really doesn’t make
it any clearer.
° Why are we only now approving an STIP covering 22/23 (ended March 23)?
* Please can I see basic salary and bonuses of CEO and CFO paid over last 3 years and projected
OTE for next 3 years?
* Can we confirm that there are no remuneration incentives for anything to do with the inquiry
or compensation schemes/ payments and that the overall package has been reduced as a result
rather than the incentive being spread over other targets
* What are the metrics and incentives in here to reduce central office headcount and
overheads. Please can we show cost cuts for DMBs separately from management team cuts
@Secretary Of State INTERNATIONAL TRADE (DBT)Rose, suggest you hold off
putting it to SoS as these are quite hefty questions.
v best,
Jamie
Jamie Lucas I Deputy Head of Office and Private Secretary to Kevin Hollinrake MP, Minister for
Enterprise, Markets and Small BusinessI
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Department for Business and Trade I Old Admiralty Building I London SW1A 2DY I
From: Secretary Of State INTERNATIONAL TRADE (DBT) I
Sent: 09 November 2023 10:01 I
To: Minister HOLLINRAKE (DBT) <:
} Gratton, Lorna - UKGI
} Spad SOS (DBT)
Cc: Arasaratnam, Roshana - UKGI
Carl CRESWELL (BBT):
febecca STOCKBRIDGE (DBT)
Subject: RE: OS PERSONAL [FOR DECISION] FY22/23 and FY 23/24 Annual Bonus Schemes for POL
CEO/CFO
Thanks Jamie — deffo something worth flagging to SoS given the issues with the previous ones, which
SoS wrote to Nick Read about recently.
Will box once Minister Hollinrake has comment/read out.
Many thanks,
Rose
; q Rose Lasko-Skinner I Private Secretary to The Secretary of State
“the? Department for Business and Trade I Old Admiralty Building I
From: Minister HOLLINRAKE (DBT)
Sent: Monday, November 6, 2023 12:53 PM
----To: Gratton, Lorna.- UKGI GRO
: GRO
Kennedy, Benjamin - UKGI
} David BICKERTON (DBT)
‘ebeCCa STOCKBRIDGE (DBT)
Subject: Re: OS PERSONAL [FOR DECISION] FY22/23 and FY 23/24 Annual Bonus Schemes for POL
CEO/CFO
Taking off DESNZ SpAd office again, can we make sure not to copy them in. Adding
DBT SpAds office and SoS office.
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Thanks for this, I've copied SoS office due to the interest SoS has shown in Post
Office recently. @Secretary Of State INTERNATIONAL TRADE (DBT) Rose, let me
know if this is something SoS may be interested in.
I'll box this soon.
thanks,
Jamie
Jamie Lucas I Deputy Head of Office and Private Secretary to Kevin Hollinrake MP, Minister for
Enterprise, Markets and Small BusinessI
Department for Business and Trade I Old Admiralty Building I London SW1A 2DY I
From: Gratton, Lorna - UKGI <
Sent: 06 November 2023 12:22
GRO
{avid BICRERTON (DBT)
‘STOCKBRIDGE (DBT)
CEO/CFO
Jamie,
Just to add to the below. The submission (and Siv’s email) refer to the Post Office having not set a
target for the cash flow metric for the LTIP 21/24 (and hence no value is defined in the letter sent to
the minister by Amanda Burton). After much trawling through paper, POL have now found the
number (from Nov 21) that the committee intended to set as the target, but which was never
submitted to the committee for approval.
There was a special Remco to discuss this (and some other items) this morning. The committee
resolved to adopt the target as had been intended in Nov 21. However, as there have been such
significant overspends on all investment spend (the IT programme, the Inquiry, and business as usual
investment spend) — the target has been comprehensively missed, and the committee was clear that
no payment would be made for it.
We therefore suggest that for audit purposes, the minister approve the schemes in full, without
declining to approve the cash-flow metric as we initially suggested. This will have no impact on the
amount paid to any POL staff (as they will still receive no payment for it), but will mean that when the
time comes, it will be clear in the annual accounts that they had a target and they missed it. It we
don’t approve it at all, then it will not appear in the annual account as having ever been set.
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If it helps, and if the minister agrees, it would be fine to note in your read out that the minister has
approved the schemes on the understanding that the numbers used by Remco for the cash flow
metric for LTIP 21/24 are such that the target has not been met and therefore will not be paid.
Happy to have a quick call to discuss if any of this isn’t clear.
Thanks,
Lorna
Lorna Gratton I Director
UK Government Investments
n, SW1H OET
www.ukgi.org.uk
PA: Georgia Leppenweli {
From: Rajeswaran, Siv - UKGI <
Sent: 03 November 2023 11:567~
To: SpAds Office (Private Office) <
inister HOLLINRAKE (DBT)
Cc: Arasaratnam, Roshana - UKGI min - UKGI
Partner
Perm SEC
Organisation Pay < as; CPO Office
Carl CRESWELL (DBT;
t brooks-white@.
rebecca.stockbridge
L.. GRO. wd
Subject: OS PERSONAL [FOR DECISION] FY22/23 and FY 23/24 Annual Bonus Schemes for POL
CEO/CFO
Dear Jamie,
Amanda Burton, Post Office Remuneration Committee (RemCo) Chair has written to the Minister,
seeking shareholder approval for a number of Post Office Incentive Schemes. These include the:
© Short-Term Incentive Plan (STIP) 2022-23;
© STIP 2023-24;
* Long-Term Incentive Plan (LTIP) 2021-24; and
© LTIP 2022-25.
Background
Shareholder approval is required for changes to the targets and structure of performance pay for Post
Office Limited’s CEO and CFO.
Following the recent Select Committee hearing and internal and external reviews into the awarding of
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payments relating to the Transformation Incentive (Tl) Scheme, Post Office has taken several steps, in
advance of submitting these schemes for approval, to ensure its annual performance schemes are
robust and appropriate.
It is clearly suboptimal that the company is coming for approval for schemes for which the reporting
period has closed, or nearly closed. The new RemCo Chair is dealing with a legacy of poor
performance and is adamant that this will not happen again.
Recommendation
UKGI officials are recommending that the Minister approve the Schemes subject to a significant 40%
haircut to LTIP 21-24 (worth around £80k in potential payments to both the CEO and CFO) as well as
several caveats including that Post Office meet in full their commitments to the Shareholder following
the Simmons review into RemCo Governance and RemCo agreeing that all future schemes metrics
commencing FY 24/25 will not be re-opened once set.
Next Steps
Please see attached the submission for the above schemes for the Minister's clearance. We would be
grateful if this could be put on the Minister's agenda for consideration at the earliest opportunity.
The submission and recommendations have been discussed with, and cleared by the DBT Permanent
Secretary, Gareth Davies; UKGI Director and Post Office Shareholder NED, Lorna Gratton; and the DBT
DG, David Bickerton. Please let us know if the Minister would like a call with Lorna and David to
discuss the submission.
Thanks for all your help. Please let me know if any questions.
Best,
Siv
Siv Rajeswaran I Manager
UK Government Investments
www.ukgi.org.uk
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