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POLB 13(5")
POLB 13/30-13/46
POST OFFICE LIMITED
(Company no. 2154540)
(the ‘Company’)
Minutes of a Board meeting held on 21 May 2013
at 148 Old Street, London EC1V 9HQ
Present:
Alice Perkins Chairman
Neil McCausland Senior Independent Director
Tim Franklin Non-Executive Director
Virginia Holmes Non-Executive Director
Alasdair Marnoch Non-Executive Director (items 13/30-13/37)
Susannah Storey Non-Executive Director (items 13/30-13/37)
Paula Vennells Chief Executive Officer (all items excluding 13/36-13/37)
Chris Day Chief Financial Officer (all items excluding 13/36-13/37)
In Attendance:
Alwen Lyons Company Secretary
Mark Davies Communications Director (item 13/31-13/32)
Sue Barton Strategy Director (item 13/31-13/35)
Kevin Gilliland Network and Sales Director (item 13/33-13/34)
Martin Moran Commercial Director (item 13/38)
Kevin Seller Head of Government Services (item 13/38)
POLB 13/30 INTRODUCTION
(a) A quorum being present, the Chairman opened the meeting.
(b) The CEO updated the Board on the recent challenging NFSP
conference at which she and the Minister had spoken and taken
questions. She explained that it had been helpful to attend as the
specific debate around the network model had challenged the
business to produce different solutions for the ‘small rural’ and
ACTION: Sue Barton ‘urban deprived’ branches. The reception had also made it clear
that the business needs to find a more constructive way to engage
individual subpostmasters.
POLB 13/31 GOVERNMENT RESPONSE TO THE FUNDING AND
STRATEGY PLAN
(a) The Board agreed the strategy and funding update and the
proposed delegated authorities for the Board’s Funding Sub-
ACTION: Sue Barton Committee. It was agreed that delegated authority levels for
mutualisation should be added.
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ACTION: CEO (b) The Board valued the weekly updates sent by the CEO and asked
for them to continue.
POLB 13/32 GOVERNMENT/STAKEHOLDER INTERACTION PLAN 2013/14
(a) Mark Davies, Communications Director, presented a paper to the
Board setting out the proposed approach for engaging with
stakeholders around Post Office Limited’s strategy for 2013-2020.
The Chairman thanked Mark not only for the excellent media
coverage for the new Current Account and the network
transformation programme but also for managing the difficult
ACTION: messages around the current industrial action. Mark described it as
Mark Davies a team effort and said that he would pass on the Board’s thanks
(b) The Board asked for a simple crib sheet of 4 or 5 communication
ACTION: points.
Mark Davies The Chairman asked Mark Davies to ensure that any statements
were checked to ensure that they were future proof.
(c) The Board endorsed the approach to stakeholder engagement.
POLB 13/33 NFSP & TRADE ASSOCIATION
(a) The Board received a verbal update from Kevin Gilliland, Network
and Sales Director, on the current relationship with the NFSP.
(b) The Board discussed the advantages of direct engagement with
individual subpostmasters and the CEO explained that the
ACTION: Kevin business would be introducing a subpostmaster engagement
Gilliland satisfaction measure this year. The Network and Sales Director
was asked to present the detail to the Board when it was available
with the timeline for introduction included in the mutual ways of
working session at the Board awayday.
(c) The CEO reported her recent positive experience of trade
associations and her view that they could have a positive and
challenging effect on the business. It was agreed that the proposal
of a trade association would be included in the mutualisation
ACTION: Sue Barton options which would be presented to the Board at their awayday.
POLB 13/34 UPDATE ON CWU AND INDUSTRIAL ACTION
(a) Kevin Gilliland, Network and Sales Director, updated the Board on
the current situation in respect of the Crown Transformation
Programme and the current industrial action.
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(b) The Board acknowledged the sensitive nature of the current
situation and agreed that it was at a finely balanced stage. They
endorsed the strategy of maintaining a firm and consistent position
with the CWU on the key points regarding consolidated pay,
franchising and the need to make any pay deal conditional on co-
operation in delivering transformation to the Crown Network.
(c) The Board supported the view that face to face communication was
the most effective way to get the business’ messages across and
increasing the ‘super-briefers’ role in the communication.
(d) The Board also endorsed a controlled and strategic approach to
sharing information with the CWU, and not supplying individual
office P&L accounts whilst the dispute continues.
The Board endorsed proceeding with the practical next steps
outlined in the Crown Network — Transformation Programme and
Industrial Relations Paper.
POLB 13/35 ANNUAL REPORT AND ACCOUNTS/RESULTS OF EXTERNAL
AUDIT
(a) The Board received the Annual Report and Financial Statements
for the 2012-13 financial year and ancillary documents. Alasdair
Marnoch, Chairman of the Audit, Risk and Compliance Committee,
reported very positive feedback from the auditors who were
complimentary about the controls in place and management
capability.
(b) With due regard to their individual duties and liabilities, the Board:
¢ Approved the approach to Going Concern and agreed the
Going Concern status for Post Office Limited at the full year;
« Agreed that it was appropriate for the Directors of Post
Office Limited to make the undertakings and statements in
the financial statements;
« Confirmed that, as individual directors, so far as they were
aware, there was no relevant audit information of which the
auditor was unaware and that each director had taken all
reasonable steps to make themselves aware of any relevant
audit information and to establish that the auditor was aware
of that information;
¢ Approved the financial statements;
« Delegated authority for reviewing final amendments and
ACTION: Mark Davies completing the Annual Report and Financial Statements on
behalf of Post Office Limited to a Sub-Committee, the
quorum for which to comprise any three of Alice Perkins,
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Paula Vennells, Chris Day and Alasdair Marnoch. The
Board asked that a final paper copy of the full report be
circulated to the Board before completion, the Board agreed
to review within 24 hours;
« Authorised Alwen Lyons to sign the Directors’ Report and
Chris Day and Paula Vennells (or, in either’s absence, Alice
Perkins) to sign the balance sheet, each acting on behalf of
the Board; and
« Approved the Letter of Representation to the auditor and
authorise Paula Vennells or Chris Day to sign and issue it
on behalf of the Board.
The Board agreed the process and timeline for production of the
(©) Report & Accounts as set out in the papers:
A copy would be sent to BIS on the 21% May
A copy to the designers on the 22"¢ May
Sign off by sub-committee and the Chairman by 24" May
Revised version circulated to the Board approx. 10” June
(paper copy)
Response by 11" June
¢ Report published 3 July
The CEO and CFO left the Meeting
POLB 13/36 BONUS PAYMENTS FOR THE YEAR 2012/13
(RECOMMENDATION FROM REMUNERATION COMMITTEE)
(a) Neil McCausland, Chairman of the Remuneration Committee
informed the Board of the outturn of the 2012/2013 scorecard
measures for the Short Term Incentive Plan (STIP) and the Long
Term Incentive Plan (LTIP).
(b) The Board noted the outturn of the STIP against the scorecard
targets and approved the recommendation of the Remuneration
Committee for the STIP payments for the CEO and CFO.
(c) The Board noted the outturn of the LTIP against the performance
conditions and approved the recommendation for the LTIP payment
for the CEO.
ACTION: Company = (q)_ The Board asked the Company Secretary to seek consent for these
Secretary payments from the Shareholder Executive as required by the
Company's Articles of Association.
POLB 13/37 LONG TERM INCENTIVE PLAN (LTIP) AND SHORT TERM
INCENTIVE PLAN (STIP) BONUS SCORECARD MEASURES
(a) Neil McCausland, Chairman of the Remuneration Committee,
presented the Board with the Scorecard measures for 2013/2014
for the Short Term Incentive Plan (STIP). He recommended the
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adoption of a new STIP design for the Chief Financial Officer (CFO)
for 2013/2014, to align it with the design of that of the Chief
Executive Officer (CEO), albeit with a lower potential.
(b) He also informed the Board of the Long Term Incentive Plan (LTIP)
performance conditions for the award dated April 2013. He brought
to the Board's attention the fact that the framework of the STIP and
LTIP design and measures for the CEO and CFO required Special
Shareholder approval which would now be sought.
(c) The Board discussed the recommendations and noted that the
performance measures had hardened with the threshold collar
tightening towards the target and the stretch cap becoming more
stretching. They discussed the likely outturn and which was thought
to be between target and stretch.
(d) They were assured that these bonus scorecard measures would be
replicated down through the ExCo and throughout the business.
(e) The Board:
« Accepted the Remuneration Committee’s recommendations
for the Scorecard Measures subject to STIP for 2013/2014;
« Approved the change to the STIP design for the CFO;
* Accepted the Remuneration Committee’s recommendation
for the LTIP performance conditions for the award dated
April 2013; and
¢ Noted that the framework for the STIP and LTIP design and
measures for the CEO and CFO require Special
Shareholder approval.
Sarah Storey and Alasdair Marnoch left the meeting.
Paula Vennells and Chris Day rejoined the meeting.
POLB 13/38 FRONT OFFICE OF GOVERNMENT PROGRAMME (FOOG)
(a) Martin Moran, Commercial Director, updated the Board on the
current position of the Front Office for Government (FOoG)
Business and the revised FOOG strategy.
(b) The Board supported the scaling back to focus on real prospects
but emphasised the need remain alert to wider opportunities
especially if they could be positioned as helping government
departments during the current funding round.
(c) Kevin Seller, Head of Government Services explained that the
Government could make better use of the DVLA framework
contract and he suggested updating the stakeholder plan to that
effect. This would then be shared with the Chairman and CEO to
agree how the Board could support the stakeholder engagement.
ACTION: Kevin
Seller
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(d) The Board noted the revised income forecasts and progress to date
and the changes in the FOoG strategy.
POLB 13/39 MINUTES OF PREVIOUS BOARD MEETINGS
(a) The minutes of the Board meeting held on 20 March 2013 were
approved for signature by the Chairman.
(b) The minutes of the Board meeting held on 9 April 2013 were
approved for signature by the Chairman.
POLB 13/40 COMMITTEE MEETING MINUTES FOR NOTING
(a) The Board noted the minutes of the Audit, Risk and Compliance
Committee meeting held on 13 February 2013.
(b) The Board also noted the minutes of the Nominations Committee
meeting held on 5 February 2013.
(c) The Board noted the minutes of the Pensions Committee meetings
held on 4 March and 8 April 2013.
(d) The Board also noted the minutes of the Remuneration Committee
meeting held on 13 March 2013.
(e) It was noted that the minutes of each of the above Committee
meetings, provided for information, had been formally approved by
the relevant Committee.
POLB 13/41 MATTERS ARISING STATUS REPORT
(a) The Status Report, showing matters outstanding from previous
Board meetings, was noted.
POLB 13/42 CHIEF EXECUTIVE’S REPORT
(a) The Board noted the Chief Executive’s report and discussed the
following specific items:
(b) Parcels Tariff
The new Parcel prices were already affecting the sales in branch
and the Mails team are discussing this with RMG to try to negotiate
a price discount for drop and go small business customers. The
Chairman also reported that this had been a topic at her meeting
with Donald Brydon, RMG Chairman, which had been very positive.
(c) Current Account
The CEO reported a successful first week with the number of
accounts opened ahead of target.
The Board asked for a note explaining the success criteria on
ACTION: Nick which the pilot will be evaluated. They also asked if they could have
Kennett the opportunity to open their own accounts.
ACTION: Susan
Crichton
POLB 13/43
POLB 13/44
POLB 13/45
POLB13/46
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(d)
(a)
(b)
(c)
(d)
(a)
(b)
Horizon
The Board asked for a note to update on the Horizon position with
the Second Sight review
ITEMS FOR NOTING
The Board noted the update on various Financial Services matters,
including Bank of Ireland (UK) plc capital & liquidity.
The Board noted the Health and Safety report.
The Board noted the Significant Litigation report.
The Board noted the Report on Sealings and resolved that the
affixing of the Common Seal of the Company to the documents
set out against items numbered 865 to 1039 inclusive in the
seal register was hereby confirmed.
ANY OTHER BUSINESS
Financial Update
The CFO reported that period 1 reports showed a positive EBIT
variance after adjustments mainly driven by lower staff and agent
costs. The one off project costs were 25% above target and he
assured the Board that he would monitor these closely over the
following period.
The next full financial update would be available at the July Board
with PIR and benefits realisation work reporting to the ARC on the
5" June 2013
DATE OF NEXT MEETING
The Board away day would take place on the 18" &19" June 2013.
The next full Board would take place on the 16" July 2013.
CLOSE
There being no further business the meeting was declared closed