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POST OFFICE LIMITED
REMUNERATION COMMITTEE REPORT
ce tae Remuneration Committee . .
Title: Evaluation Report 2022/23 Meeting Date: I 3 July 2023
. Rachel Scarrabelotti, Company . Amanda Burton, Remuneration
Author: Secretary Sponsor: Committee Chair
Input Sought: Discussion/Decision
The Committee is asked to:
. NOTE and DISCUSS the Remuneration Committee Evaluation for 2022/23 (please
see Appendix 1).
. APPROVE the recommended actions to address points raised and areas which may
require development.
Recommendations:
1. It is recommended that the Committee focus greater efforts to ensure that
remuneration structures/packages are simplified.
2. The quality of papers/presentations submitted to the Committee from management
require improvement. The Committee could work with management to provide regular
feedback on the calibre of papers and to call out papers that are inadequate.
3. The Committee could allocate time annually to review Willis Towers Watson’s (WTW)
work and advice.
Executive Summary
The UK Corporate Governance Code and the Corporate Governance Code for Central
Government Departments? both stipulate that there should be an annual evaluation of the
Board and its Committees which should be externally facilitated at least once every three
years.
The Remuneration Committee questionnaire for 2022/23 mirrored that for 2021/22 to allow
comparison across years.
The Committee Members at the time and Angela Williams, former Interim Group Chief People
Officer, who was a regular attendee at Remuneration Committee meetings, were invited to
participate in the Committee Evaluation. The questions, average scores and a summary of
the findings are at Appendix 1.
Questions addressed
1. How have we implemented the actions from last year’s Remuneration Committee
Evaluation?
2. What are the findings from the Remuneration Committee Evaluation 2022/23?
2 Provision 21 of the UK Corporate Governance Code 2018 and paragraph 4.12 of the Corporate Governance Code for Central
Government Departments.
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Report
3.
Actions from the Board Evaluation 2021/22
e The Committee to schedule time with advisors away from management to
establish stronger Committee relationships.
It does not appear that this recommendation was implemented at a Committee
wide level. The key representative from the Committee’s advisors was on
scheduled leave for part of the year and interim resource provided by the
Committee’s advisors.
e The Committee to consider scheduling in informal discussions ahead of meetings
to test proposals where necessary.
Committee members met on an informal basis to discuss the content of
proposals ahead of meetings where required.
e The importance of diversity and inclusion be considered by the Committee,
within the remit of the Committee’s work.
The results of the 2022 Equity, Diversity and Inclusion survey was considered by
the Committee at its meeting on 6 December 2022.
e That the Committee review the meeting schedule for adjustments to either
frequency or length of meetings.
The Committee’s meeting schedule was re-aligned to match in with anticipated
timings for decisions to be taken, and an Annual Planner has been proposed.
4. Findings 2022/23
Several questions had a decline in average scores particularly in the ‘Skills, experience,
diversity, knowledge’ section. This may be due to the fact that several members of the
Committee are fairly new to the Committee. Nevertheless, with the exception of two
questions, all other questions achieved an average score of 3 or higher (3 = “good/at
the required standard”).
The highest scoring questions were:
Q3. How would you assess the Chair's encouragement of debate within the
Committee, including ensuring that all members are able to contribute I 4.4
to the discussion?
Q4. How effective is the Committee at focussing on the right issues? 3.8
Qs. How effective is the Committee at providing both challenge and 3.6
support to management? .
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The lowest scoring questions were:
Q2. How would you assess the Committee’s knowledge of the following 2.4
b issues:
Structure of staff remuneration packages and approvals process for
these (PO Limited and PO Insurance)
Qs. How would you rate the quality of papers and presentations received 2.6
by the Committee?
5. How do last year’s responses and this year’s compare?
The average score for most questions has declined as compared to last year. For
example, the question relating to the structure of staff remuneration packages and
approvals dropped by nearly two points from 4.0 (4 = ‘very good’) in 2021/22 to 2.4 in
2022/23.
The responses to the questionnaire suggest that there remained a high degree of
confidence in how the Committee was chaired. The question relating to the Chair’s
effectiveness (Q3) maintained an average score of 4.
Next Steps & Timelines
1. If the Committee accepts the report’s recommendations, it will be asked to consider
inecarnaratina the racammendations into the forward plan for the Committee at its next
scheduled periodic meeting.
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Appendix 1
Remuneration Committee Evaluation Questionnaire 2022/23
Question 2021/22 2022/23
Average Average
Skills, experience, diversity, knowledge
1. How appropriate is the composition of the Committee for the I 4.0 3.4
requirements of the business?
2. How would you assess the Committee’s knowledge of the
following issues:
a. Structure of senior executive remuneration packages and I 4.0 3.4
approvals process for these (PO Limited and PO
Insurance)
b. Structure of staff remuneration packages and approvals 4.0 2.4
process for these (PO Limited and PO Insurance)
c. Reporting requirements for the Remuneration Report in 4.0 3.4
the Annual Report and Accounts
d. Increased focus on and reporting requirements for equality I 4.0 3.0
and diversity issues.
Additional Comments:
« We need to cover more staff related rem in 2023. We have started looking at
EDI, but need to step this up in 2023
e« Iam new to this area and so I think is Brian, so I think we are a bit light on experience
on most of these issues.
Leadership, ways of working, time management
3. How would you assess the Chair’s encouragement of debate 4.0 4.4
within the Committee, including ensuring that all members
are able to contribute to the discussion?
4. How effective is the Committee at focussing on the right 3.8 3.8
issues?
5. How effective is the Committee at providing both challenge 4.0 3.6
and support to management?
Additional Comments:
e Lisa runs an excellent meeting, despite difficult circumstances. Too many points
come in a messy way, take too long to get resolved and are revisited after
decisions are made. As a result, we are late with outcomes and management are
in a poor position to use the incentives properly.
e Lisa has done an excellent job chairing this committee in very trying circumstances.
Information and Support
6. Are the frequency and length of Remuneration Committee Yes =3 Yes=5
meetings appropriate? No=2 No=0
7. How effective is the Committee at testing the information 3.2 3.2
provided by its external advisers?
8. How would you rate the quality of papers and presentations 3.8 2.6
received by the Committee?
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9. How would you rate the access you have to any additional 4.0 3.4
information and support you need to fulfil the requirements
of your role (i.e. from management, secretariat or from
external advisers, where required)?
Additional Comments
e« Areview of WTW would be helpful especially regarding benchmarking
e "WTW have not been very proactive and they seem not to have any definite
views.
« Some of the papers have been muddled and confusing, especially in terms of
accurately recording what the underlying factual position is and maintaining the
integrity of what the Committee has actually agreed.
.
10. Please include any thoughts you have about the operation of the Committee and any
ideas for its future operation.
¢ More to do to get to a better timetable of decision making
¢ More to go to balance reward fairness and affordability
e More to go to simplify reward structures
¢ Trust needs to continue to be built between the Executive and the Committee - a
focus on engagement/listening/incentivisation would be helpful
¢ The interplay with Shareholder approval remains a significant working issue for
the Committee - in particular the level of approvals required for any executive
Board comp.
e There seems to be much merit in trying to simplify the incentive plans.
e¢ The appointment of a new head of HR provides an opportunity to reset the
relationship with the committee. It must be recognised that the environment in
which the company is operating and pressures it is under (both internal and
external) make the job of the HR team and Remco difficult. Turnover in the HR
team also means corporate memory is sometimes missing. However, it has been
disappointing that some decisions which should have been taken to Remco have
not (eg certain senior exec exit packages). In addition, the process of STIP/LTIP
design continues to a problem - more interaction before the end of the previous
FY would speed up framework design and would help with the creation and
presentation of the supporting papers on the metrics themselves. As a result the
quality of Remco papers has been poor and decisions delayed for too long.
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