POL00448734
POL00448734
Grant Thornton Governance and Board Effectiveness Reviews: recommendations tracker
DRAFT
UK Corporate
Governance Code
Principles
Recommendation
Status
Priority Actions
Board Leadership
and Company
Purpose
See GT
Governance
Review, Page 9
and further
observations/
recommendation
s
Establish a Group strategy/ambition for POL to frame, prioritise, and guide governance design, decision-making structures, and inform culture and
performance management. Key will be the need to:
* Frame for the Shareholder what POL is about (purpose), where it
wants to get to (strategy and vision) and how it is going to meet its
aims.
The Board has agreed the commissioning ofa Strategic Review by
Teneo — the final outputs from which are expected to be provided
circa October 2024.
In the meantime, POL’s intent to 2025, annual business plan and
2024/25 Outcomes remain relevant, including to inform objective
setting and the performance management framework
at #1(a
(a) * Ensure the right balance and clarity around POL's future commercial I ¢ Board focus will be informed by the outputs of the Strategic review
ambition and its social purpose. and the POHIT Inquiry.
Division of Clarify the role of the Shareholder versus the Board, including the setting of objectives for POL.Key will be the need to:
Responsibilities
See GT
Governance
Review, Page 9
and
further
observations/
recommendation
s
at #2(a)
e Review and update foundational governance documentation to
enhance clarity, connected guidelines
"Managing Public Money", and clearly defining principles impacting
day-to-day operational approvals between POL and the Shareholder.
aligning with such as
UKGI currently updating the Shareholder Framework Document in
Government's new standard template.
The updates will clarify POL’s CEO role in relation to MPM and the
AO role - in line with best practice.
UKGI are looking to have the revised Shareholder Framework
Document in place ahead of the commencement of P7 of the
Inquiry.
MPM and AO briefing note and training being developed with UKGI.
Note anticipated to be issued at the end of June/ beginning of July
and training to be scheduled for September 2024.
«Address any duplication between the Articles of Association, the
Shareholder Framework Document, and Funding Agreement.
See above — while UKGI has said that amendments to the
Shareholder Framework Document are unlikely to give rise to
subsequent changes to AoA, a review will be undertaken.
e Clarify the achievability of Matters Reserved for the Board and
To be considered as part of the review of governance
documentation.
POL00448734
POL00448734
Grant Thornton Governance and Board Effectiveness Reviews: recommendations tracker
DRAFT
address any points of contention with the Shareholder.
8. © Evaluate whether an alternative governance or capital structure canI e See #1 above on Strategic Review.
deliver better outcomes for all stakeholders, based on shared
objectives and market-wide sentiment.
9. Composition, Strengthen succession planning and ensuring effective management of the people agenda. Key will be the need to:
10. I Succession and * Manage the composition of the Board to maintain a strong decision-I ¢ Skills matrix review of NEDs has been undertaken.
Evaluation making body and agree key criteria for assessing the required I * Upcoming NED recruitment is being informed by the skills matrix
See GT composition, including by: and the prevailing context within which POL is operating and the
povernance 10 — considering the operational horizons of the historic Horizon IT] __ future outlook.
‘eview, Page - a Pr .
and ® Inquiry, the continuing transformation to stabilize the I Progress against the succession planning actions to be delegated to
further operational platform, and the future strategic options; and NomCo.
observations/ = evaluating the skills and experience gaps in technology, digital
recommendation transformation, government relations, and franchise expertise.
s
11. at #3(a) * Build out L&D across the Board, including by: * To be informed by the skills matrix review and outputs from the
— considering strategic priorities, principal risks, and skills matrices Strategic Review.
to supplement any succession planning work.
12. e Evaluate and develop the Postmaster NED role, formalise Postmaster I ¢ I Under consideration as part of the current Postmaster NED
rotations and review the selection process. recruitment.
13. Ensure NomCo has the capacity to deliver against its wider ToR, I e I NomCo membership extended to ARC & Remco Chairs and the
including by: Interim Chair.
— considering the membership of NomCo to align with market Ie Progress against the succession planning actions to be delegated to
norms, comprising the Chairs of the Board and Committees. NomCo,
14. * Agree the ownership of the People agenda between Board and I New Culture Dashboard being developed and is due to be reviewed
Committees, and improve monitoring in areas such as culture and at the Board Strategy Away day in July and periodically thereafter.
wider ED&l.
15. e Address governance issues at Remco, including by: e Action plan is being tracked separately at RemCo.
— — reviewing the balance of membership and independence;
— considering reward design and suitability of current award
schemes.
POL00448734
POL00448734
Grant Thornton Governance and Board Effectiveness Reviews: recommendations tracker
DRAFT
16.
17.
18.
19.
20.
21.
22.
23.
24.
General: MI,
transparency,
agenda &
minutes etc
See GT
Governance
Review, Page 11
Review underlying processes. Key will be the need to:
* Review rolling agendas to ensure sufficient balance between
historical, operational, forward looking and strategic matters.
Board focus will be informed by the outputs of the Strategic review
and the POHIT Inquiry.
« Provide greater oversight of the work of NomCo and RemCo, with
time allocated for full updates and debates on delivery against ToRs
to assess whether elements of the people agenda need to be picked
up at Board.
Updates on the work of NomCo and RemCo are standing agenda
items on the POL Board Agenda and time is allocated for Committee
Chairs to provide verbal updates.
Additionally, all NEDs have been provided with access to NomCo and
RemCo materials to ensure transparency and equivalent access
across NEDs.
e Consider regular informal get-togethers to allow for unstructured
discussion and building of trust and engagement.
NED only sessions are regularly held.
Additionally, Board dinners have been reinstated.
* Ensure higher-quality Board papers, with simplified and streamlined
content, and overhaul MI and consider dashboards for measurement
and insights, including by:
— considering the use of training / Al tools and potentially shutting
down the reading room; and
— empowering the Secretariat to reject papers which do not meet
standards for the board.
Interim Chair has requested shorter, sharper and more strategically
focused Board papers; the ‘Reading Room’ will no longer be used.
Board paper template being updated and will provide guidance to
authors on ensuring the right focus for Board decision-
making/strategic responsibilities.
Additional Dashboard reporting will be provided to the Board from
July in respect of cultural metrics and Whistleblowing and
Investigations.
The Secretariat are empowered to return papers to authors that do
not meet the guidelines.
* Maintain the discipline around actions and the matters arising to
ensure proper oversight, accountability and delivery.
Ongoing
* Assess satisfaction with current minutes accuracy and style, and if
satisfactory, continue with consistent reviews and approvals.
Similarly to papers the narrative style of minutes is being reviewed
and a more concise format may be adopted for Board and
Committees with the agreement of the directors.
e Promote transparency by allowing all NEDs to access content from
Board and Committee meetings.
Access in Diligent has been updated.
* Ensure decisions are not being taken outside of the formal
governance structure and without proper debate.
Ongoing
POL00448734
POL00448734
Grant Thornton Governance and Board Effectiveness Reviews: recommendations tracker
DRAFT
Further underlying observations/recommendations
1 (a) I Board Leadership I Consider and address the need to: * Green-highlighted recommendations will be addressed by the above
and Company ° Agree strategic design principles/resolve the lack of a single set of actions.
Purpose metrics and KPIs linked to strategy. © Grey-highlighted recommendations are subject to a separate action
See GT © Resolve the lack of ownership of culture at the Board level plan being tracked at RemCo.
Governance * Develop a rolling five-to-ten-year funding facility with shorter
Review, Page 16 budgetin cycles _ feedin; in for long-term _ strategic
and Appendix 3 pee es . 2
investment/planning.
@ Rebalance the over reliance on Shareholder input.
e Ensure timely agreement of reward structures.
e Improve trust levels between Executive and Board members,
including by agreeing a common ambition and improving informal
engagement (eg dinners, off-site visits).
e Ensure the Board and SEG work collectively to unify and drive clarity
through culturally aligned measures of performance.
Additional considerations arising from the Board Effectiveness Review
*¢ On POL’s longer-term future — as part of the discussions at the
strategy away day in July, identify responsibilities for achieving
collective ambition, confirming accountability, and considering wider
market dynamics (i.e. market failure and ESG).
2(a) I Division of Consider and address the need to: * — Green-highlighted recommendations will be addressed by the above
Responsibilities
See GT
Governance
Review, Page 17
and Appendix 4
Clarify Board and Shareholder roles and responsibilities, including in
relation to:
— setting POL’s purpose; and
— setting POL’s objectives.
Additional considerations arising from the Board Effectiveness Review
© Chair to manage and navigate conflicts of interest to ensure open
debate of topics at Board.
© Consider increasing capacity at the Secretariat level to act as a
strategic conduit between the Board and Executives.
Board to be robust in pushing back decisions to the executive
management that fall within their remit.
actions.
POL00448734
POL00448734
Grant Thornton Governance and Board Effectiveness Reviews: recommendations tracker
DRAFT
3(a) I Composition, Consider and address the need to: Green-highlighted recommendations will be addressed by the above
Succession and * Mitigate risks to corporate memory, fill skill gaps, and address lack of actions.
Evaluation diversity. Grey-highlighted recommendations are subject to a separate action
See GT * Resolve the absence of a permanent CFO. plan being tracked at RemCo.
Review Page a0 I % Progress the actions/recommendations from the last Board Interim CFO has been appointed, pending the recruitmentof a
and Appendix Effectiveness Review. permanent CFO. The previous permanent CFO has now resigned as
e Develop a structured rolling 12-month agenda at RemCo to focus on a director of the POL Board.
effective and timely agreement and communication of future reward Progress against the succession planning actions to be delegated to
schemes. NomCo.
Additional considerations arising from the Board Effectiveness Review
* Build skills matrices considering not just technical skills such as gaps
in technology, digital transformation, government relations, and
franchise expertise at Board, but wider attributes such as experience
in crisis management, transformation, strategy, and EDI.
4(a) I Audit, Risk and Consider and address the need to: Splitting Audit and Risk Committees has been considered and
Internal Control I Ensure ARC agendas adequately provide for sufficient focus on risk rejected by the Board in the past year, will reconsider. Additional
See GT matters (possibly consider having separate Audit and Risk capacity for considering investment risk created with the formation
Governance committees). of the Investment Committee. Will continue to monitor.
Review, Page21 I, Ensure the attendance at ARC provides a balance of representation The ARC Chair has confirmed that the following will be added to
and included at - . A
Appendix 6 and allows for the right focus of discussions. upcoming ARC agenda:
e Provide sufficient time at ARC for executives to engage in technical — ARC attendance, balance of representation, capability and time
risk discussions and ensure the current capability and skillset of the for executive contribution.
ARC allows for such interactions. — The steps to better embed the Internal Controls Framework and
e Ensure ARC takes proactive steps to better embed the Internal address the practical adherence to documentation (alongside
Controls Framework and address the practical adherence to monitoring the work being done by Group Assurance under the
documentation. new interim arrangement combining reporting lines for second
«Ensure ARC is proactive in its preparation for the new UK Code and third lines).
coming into force in 2025 and 2026 and to attest positively to the — Preparation for the new UK Code coming into force in 2025 and
effectiveness of the internal controls and compliance with regulatory 2026 — after which discussions will be held at Board onthe pace
requirements. of adoption of emerging best practice.
Progress against the action plan to be delegated to ARC.
5(a) I Remuneration Consider and address the need to: Separate action plan being tracked at RemCo.
See GT
Grant Thornton Governance and Board Effectiveness Reviews: recommendations tracker
DRAFT
POL00448734
POL00448734
Governance
Review, Page 22
and Appendix 7
Clarify governance and accountability around reward design and
decision making at RemCo and as between RemCo, the Board and
the Shareholder.
— Simplify the overall remuneration philosophy.
* Resolve concerns about information accuracy/MI.
e Develop a structured rolling 12-month agenda for Remco to focus on
effective and timely agreement and communication of future reward
schemes and address wider aspects of RemCo’s ToR.