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BEISO001120
Department for
Business, Energy
UK Government & Industrial Strategy
Date: 07 February 2019
Director General: Mark Russell
Lead Officiat Tom Aldred / Tom Cooper
Lead Official Telephone:
Recipient To Note / Comment To Approve / Decide
Kelly Tolhurst x
Secretary of State X
Permanent Secretary x
Post Office Limited (POL): Appointment of Al Cameron as Interim CEO
Summary
1) Post Office Limited (POL)would like to appointAl Cameron as interim CEO prior to
the appointment of a permanent replacement.Al is currently Chief Rnancial and
Operating Officer and we believe he is the best placed candidate for the job and
recommend approving his appointment.We have provided detail of his proposed
remuneration, although this will need to go through a separate clearance
procedure.
Timing - Urgent
2) POL want to announce the departure of the current CEO and the appointment of
an interim CEO as soon as possible, to provide certainty to the business. They
have been waiting since before Christmas, pending approval of PauldVennells’
exit terms.
Recommendation
3) That you approve the appointment of Alisdair Cameron as interim CEO noting the
proposed remuneration which will be subject to further clearance.
Background
4) POL’s current CEO Paula Vennells is leaving the company to take up a new part-
time position as non-executive Chair of the ImperialHealthcare NHS Trust and
you have separately approved her exit terms.
5) The recruitment of a new CEOwill take time and a successor is unlikely to be in
place before the Autumn. As a consequence, POL need to appoint an interim CEO
to ensure an orderly handover of responsibilities at an important time for the
company. Announcing the interim at the same time as Paula's departure will
enable them to minimise uncertainty for the workforce.
6) POL’s Board has discussed possible internal candidates and recommend Alisdair
(Al) Cameron for the role. Al has been with the Post Office for 4 years, having
joined as Chief Finance Officer in January 2015. Since his appointment, Al has
taken on a number of additional responsibilities and currently serves as Chief
Finance and Operating Officer. He leads an overall team of 1500 people and has
instrumental in the management of many key stakeholder relationships.He has
also been instrumental in returning the Post Office to profitability.
BEIS0001120
BEISO001120
Department for
Business, Energy
UK Government & Industrial Strategy
7) We believe that Al is the best available candidate given his experience and
understanding of POL’s wide-ranging business When Al becomes interim CEO,
his existing responsibilities will be taken on by others.POL plan to appoint an
interim CFO (not at board level), while his COO responsibilities will pass to another
member of the Executive Team.
Remuneration
8) Post Office propose to adjust Als remuneration to reflect his new responsibilities.
BEIS procedures require this be approved by an official-level panebefore coming
to you — and then subsequently be approved by the Chief Secretary Furthermore,
his final remuneration package will include an LTIP payment that cannot be
finalised until the companys three-year targets have been set in the companys
annual strategy, to be agreed at the end of March.
9) We believe further delays to POL's ability to announce these critical changes would
be unhelpful for the business and undermine our credibility with the companyWe
recommend you approve Als appointment.
10)If you are unhappy with the proposedremuneration (below) we would urge you to
agree to Al's appointment but come back to his pay. Both POL and Al are content
to go ahead with the appointment without agreement on pay, not least since POL
has historically experienced significant delays in having pay agreed.
11)POL propose that Al's base pay is increased to the level of the current CEO, which
means an increase from £244,800 to £255,000. By way of background, the CEOs
base pay has only increased once— by 2% - since Paulas appointment in 2012.
This would also feed through to a higher pension paymentsince this is calculated
as a percentage of base pay. The potential STIP payment would also rise Details
are set out in table 1.
12)The LTIP for 2019/20 would remain unchanged, since this is based on Ab salary
at the commencement of the schemein 2017/18. The potential LTIP payable in
2021/22 would increase in line with the uplift in basein this financial year. Details
are set out in table 2.
Table 1 ~ Proposed pay in 2019/20 against actual and potential pay in 2017/18 and 2018/19
Benefits I Cash in lieu of STIP 19/20 LTIP 19/20
Base salary (1) Pension (2) (3)
2017-18 I £243,600 £16,400 £54,700 £147,900 133,300
2018-19 I £244,800 £16,400 £54,700 Up to £161,568 Up to £168,000
2019-20 I £255.000 £16,400 £57,250 Up to £168,300 Up to £168,000
a) The benefits figure includes £6,500 company contributions to a Defined Contribution pension.
Q) STIP payment is subject to meeting business targets and is calculated as % of base pay ithe current financial
year
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BEISO001120
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Department for
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UK Government & Industrial Strategy
Investments
GB) LTIP payments subject to meeting business targets and is calculated as % of base pay iY 3 years previously
Table 2 - Proposed increase to LTIP in 2021/22
Base salary Maximum percentage Maximum LTIP payment
Current 244,800 70% Up to 170,520
Proposed 255,000 70% Up to 178,500
The maximum percentage is payable only if the stretch target is reached. The stretch targets have not yet been
finalised because targets for the business are being agreed as part of the Annual Budget, due to be finalised at the
end of March.
13)The maximum potential increasein total remunerationis £26,622. It is unlikely that
this maximum will be reached since te increase in remuneration will applyonly for
the period in which Al serves as Interim CEQ POL will seek approval to cover the
entire financial year, so that they do not need to return for further approval should
the CEO recruitment take longer than expected.
Retention payment
14)POL also propose putting in place a retention payment to ensure that Al remains
with the business during the transition to a new CEO,in the event that he is not
successful in securing the permanent position. We believe that a payment is
appropriate. After Paula's departure, Al will know the business better than anyone
else and it is critical that his knowledge is not lost while a new CEO gets up to
speed. The retention payment of £50,000 would be payable six months after the
commencement date of a new CEO, subject to the Al being in post at that time and
a successful handover taking place. This would be a non-pensionableallowance
so it would not feed through to higher pension or other paymerst.
15)This package will require approval from the Chief Secretary. thitial discussions with
HMT officials indicate that they are contentwith it
Do you agree to the appointment of Al Cameron as interim CEO of Post Office
Limited, with the remuneration package to beapproved separately?