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PRIVATE AND CONFIDENTIAL
Report to the Board of
Royal Mail Group
Board Governance Assessment 2012
Rob Goffee
London Business School
Regent’s Park
London NW1 4SA
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Royal Mail Group Board Governance Questionnaire 2012
Table of Contents
Introduction
Summary
Analysis of Board Responses to Part 1 of the Questionnaire: The Board
Role and Organisation
Agenda
Corporate Governance
Non-Executive Directors
Executive Directors
Information
Monitoring Group Performance
Board Leadership and Culture
Audit & Risk Committee
Nomination Committee
Remuneration Committee
Analysis of Board Responses to Part 2 of the Questionnaire: Board Priority Tasks
Appendix 1
Questionnaire results by rank order of means
Appendix 2
Wider databank scores by rank order of means
Appendix 3
Questionnaire results by gap between Board data and wider databank means
Appendix 4
Table showing frequency of numbers rated per respondent
Appendix 5
Questionnaire results by gap between Royal Mail 2009 & 2012 Mean Scores
Appendix 6
Bar chart comparison for section Mean Score between Royal Mail 2009 & 2012
Appendix 7
Bar chart comparisons between mean scores of Board, Executive Directors,
Non-Executive Directors and wider databank
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Royal Mail Group Board Governance Questionnaire 2012
This report summarises responses to face-to-face interviews and a two-part questionnaire on the
operation and governance of the Royal Mail Board. All Board Directors were interviewed and all
completed the questionnaire. The interviews were broad ranging and help to provide context for
the questionnaire responses.
The questionnaire has 2 parts:
Part 1 comprises 11 distinct sections and a total of 76 questions on a 1-7 scale, where 1 indicates
dissatisfaction and 7 indicates satisfaction. In addition, respondents are given the opportunity to
write comments under each section.
Part 2 asks respondents to assess the level of Board engagement at Royal Mail for six business
activities, indicating both their rating for current engagement and desired engagement.
Here, we report on both the quantitative data from the scaled questions and the qualitative data
from the written observations and interviews.
We show, where appropriate, the overall means for individual questions taken from the databank of
a wider sample of Boards drawn mainly from the FTSE 100, but also including not-for-profit and
some enterprises based outside the UK. The databank therefore does not constitute a directly
comparable or random sample, but is included for illustrative purposes and to show where there
may be patterns in high and low scores on other Board surveys using similar questions
Appendix 1 shows questionnaire results by rank order. Appendix 2 shows wider databank means by
rank order. Appendix 3 shows the gap between Royal Mail and the wider databank means.
Appendix 4 shows the distribution of responses for each Board member across the 76 scaled
questions in Part 1. Appendix 5 shows the gap between Royal Mail 2009 & 2012 Mean Scores,
Appendix 6 shows a bar chart comparison for section Mean Score between Royal Mail 2009 & 2012
and Appendix 7 shows bar chart comparisons of mean scores for the Board, Executive Directors,
Non-Executive Directors and the wider databank.
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Royal Mail Group Board Governance Questionnaire 2012
ummary
Questionnaire responses
Overall, the results show that Board members express satisfaction with various aspects of Board
governance and functioning. In Part 1 53% of questions are at and above the mean from the wider
databank and 67% have a rating of 5.5 or above on a seven point scale. 52% of questions score the
same as or higher than the 2009 Board assessment results.
Particular strengths are:
* Board leadership and culture (qs 49-56)
* Audit and Risk Committee (qs 57-63)
* Corporate governance (qs 24, 16, 50)
Also strong - by comparison to wider norms and/or the previous 2009 assessment - are:
* — Utilisation of directors’ experience (q 3)
* Agenda focus on relevant issues (q 11)
But data from Part 1 also suggest areas for improvement which include:
* Resourcing, remit and operation of the Remuneration Committee (qs 70-76)
* — Structure and membership of Board committees (q 8)
* Number and length of meetings (qs 6, 7)
In addition, some commentary and questionnaire responses indicate concerns around:
* Setting of performance objectives (q 43); monitoring of performance (qs 44, 47)
* ~ Quality/quantity of information flows (qs 34, 35)
In Part 2 responses show a Board which could be more engaged in several priority areas, in
particular:
* Innovation and new products; and strategy for growth
* Customer focus
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Royal Mail Group Board Governance Questionnaire 2012
Interview responses
Context and recent history
Interviews enabled discussion of issues free from the constraints of the questionnaire design, while
at the same time giving opportunity to comment on key themes emerging from the pattern of
questionnaire responses.
Board members stress the unique context of the RM Board — in relation to the shareholder
relationship; demanding market conditions; pace of technological change; mix and scale of
operations and so on. These comments mirror those expressed in the 2009 Board assessment. As
before, they describe a context of considerable complexity.
Since 2009 the Board has been in a period of transition. One NED joined as the last assessment was
completed - three more NEDs arrived during 2010. A new CEO and CFO were appointed in the same
year.
Given the diverse backgrounds of those simultaneously appointed to the Board, directors describe a
period of learning and adjustment. At the same time, they recall Board focus on short-term survival
—with a constant check on whether Royal Mail could be regarded as “a going concern”.
Recent developments in relation to pension plan liabilities; balance sheet restructuring and a new
regulatory framework are seen to have resolved many questions about the financial health of RM.
With a more settled Board - and short-term challenges addressed - the focus turns to preparation for
privatisation. How well set is the Board - and the business - for a transaction likely to take place
within the next 18 months?
Board members describe a “highly charged” atmosphere; events unfolding at “breakneck” speed; a
business even more “in the spotlight”; increasing work pressures; and a set of potentially “career
defining” business challenges.
How, then, can the Board equip itself to actively shape this new agenda?
Board capabilities
The interviews indicate a Board more confident in its capabilities — and confirm many of the positive
questionnaire responses. In particular:
* The Board is perceived as substantially strengthened by its newer members (both NEDs and
EDs).
* NEDs are seen to bring appropriate experience/expertise relating to, for example,
government/regulatory environment; public utility privatisation; marketing/customer insight
and so on
* NEDs are seen as more aligned and knowledgeable; better able to understand the business;
more engaged and demanding; more aware of their respective roles — and, as a result, more
respected by the EDs
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Royal Mail Group Board Governance Questionnaire 2012
* Internal dynamics and key relationships appear to be excellent; culture and teamwork are
strong
* ~The Chairman is universally praised — typical comments include: “clear on priorities but
enables discussion”; “strong but listens”; “supportive”; “excellent mentor for newcomers”;
“handles complexity’; “appropriate skill set for transaction”.
* The CEO is also described in very positive terms: “a force of nature”; “hands on”;
“energetic”; “challenging” “a powerful communicator of our case — to the shareholder, and
the regulator”; “successfully engaged with the unions and staff”.
* The Chairman-CEO relationship is seen as strong and well place to handle anticipated
challenges
* Audit and Remuneration Committees are regarded as well led
* Board agendas are appropriately focused and, in the main, business effectively dispatched
On all these important dimensions - relating to membership, priorities and dynamics - the Board
compares well with others and seems set to handle RM’s anticipated transition.
Areas for improvement
This is not to say that members did not express concerns — for example, around:
* Shared understanding of “operations”; the challenges of modernisation; and the “people
factor”
* The extent to which EDs constructively invite help from NEDs
* The need for newer NEDs to continue their learning
* The appropriate and timely provision of information (in a fast changing context)
* Political tensions surrounding the operation of the Remuneration Committee and related
retention issues
More broadly, several express the view that whilst the Board appears strong on many dimensions,
the business remains “at risk”. Consequently questions are raised about shaping the organisation
and maximising performance in the run up to the anticipated transaction in ways which can produce
a successful outcome (whatever this may look like). How can the Board facilitate:
* Development and communication of a strong growth story/strategy
* Capability to execute or deliver a growth strategy
* Greater customer focus and insight
* Development of change management/transformation/IT capability
* Robust management structures; metrics and information flows
* Greater awareness of the levers that can be pulled (and those that cannot)
Next steps
The areas for improvement that emerge from the questionnaire and interviews are likely to be
interconnected not discrete. Further, the weight attached to each varies by Board member.
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Royal Mail Group Board Governance Questionnaire 2012
When asked to consider positive outcomes from this assessment directors’ responses fall broadly
into two sets.
One favours an early and explicit “airing” of any differences amongst directors on the business risk
factors referred to above - as a step towards building agreement on how to address them.
The other focuses more on fine tuning what might be called Board mechanics — for example, number
of meetings and their length; Committee membership; operation of the Remuneration Committee;
and length and quality of Board papers.
These two sets are not mutually exclusive. Together with some of the more detailed observations
emerging from the questionnaire they might form the start point for further Board discussion.
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Analysis of Board Responses to Part 1 of the Questionnaire:
The Board
Role and Organisation
(Note Mean Board score for 2009 is included below the 2012 score in brackets throughout)
The mean score for this section comprising eight items is 5.5 out of a possible 7.
* Utilisation of Directors’ experience (q 3) has improved since 2009
* But other scores have fallen and compare unfavourably with the wider mean- in particular
those relating to committee structure (q8) and the number and length of meetings (qs 7 and
8)
* Several comments relate to meeting length and to Committee membership
Question
1 The role and scope of
the Board's authority is
clearly defined.
2 The Board keeps under
review whether its role
should be changed in
any way.
3 The Directors’
experience is utilised.
4
The Board reviews its
composition annually.
5 There are written
defined expectations
concerning Directors’
responsi
es.
6 The number of
meetings is sufficient.
7 I The length of meetings
is adequate.
8 I The current Board
committee structure is
appropriate.
6
uy
Mean
Board
6.1
(6.2)
5.3
(5.4)
5.9
(5.1)
48
(4.9)
5.1
(5.2)
5.5
(6.0)
5.7
(6.3)
5.2
(6.2)
Mean
NEDs
6.0
4.9
5.7
46
64
49
5.6
5.3
Mean
EDs
6.3
6.3
6.3
5.3
5.0
7.0
6.0
5.0
Mean
Databank
6.0
5.2
5.5
5.2
5.1
6.1
61
6.0
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Comments from questionnaire
NED
1 With regard to the structure of committees, I don’t believe that the present ‘all in’ approach is
incorrect, but I think the proposal to review this is the right one even if we decide to stay as is.
2 I These comments obviously relate to the current governance obligations. The governance
challenge will become more complicated and onerous post transaction, and particularly if
listed. The Board should start to think about the implications.
3 I Some Board meetings are too long
4 — All NEDs sit on the Rem Committee and the Audit Committee thus defeating one of the
purposes of having Board Committees. I would prefer a conventional approach where
committee membership is a subset of NEDs with appropriate and relevant experience
5 I Question 7 is unhelpfully worded. My view is that we meet too infrequently, given the range
of issues that we are facing, and that the meetings are too long as a consequence. But saying
that the length of meetings is inadequate doesn’t convey the latter point. In response to
question 5, I am not aware of a written statement of expectations of Directors, but I do not
particularly think this is a problem
6 I The meetings are often too long. This may be because we are trying to cover too much with
too few meetings.
ED
8 I Ihave marked 4 where I am not aware whether this is an accurate statement or not
9 I 1. We need clarification of mandate of RemCo
4. The Chairman does this periodically, e.g. union participation, etc.
10 I Would expect to also have a Board HSE Committee
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Royal Mail Group Board Governance Questionnaire 2012
Agenda
The mean score for this section comprising seven items is 5.8 out of a possible 7.
Generally scores have improved since 2009 and compare favourably with wider means
Agenda focus is particularly strong (q 11) and the time devoted to strategic issues has
improved (q 14)
Broadly comments are positive with some areas for fine tuning suggested
Question 1/2I3)I4)I5)6I7I Mean I Mean) Mean I Mean
Board I NEDs EDs Databank
9 I The agenda-setting 5.9
process schedules issues I ~ I ~ I ~ I ~ I 3/5) 2) 6 I 59 I 60 il
ina timely fashion.
All Directors are able to 5.4
10 I influence the contentof I ~ I ~ ) >) 4/4) 5) I oy) I 53) 57 oe
the agenda.
11 I pgendaitemsfocuson I. I. I...) gi 2) 8 I 6a I) 63 57
relevant issues. Ba
12 I The Board identifies 5.7
issues for review ona cfr pe ype pap ay- (5.7) 57 57 56
regular basis.
13 I Board meetings are 5.8
productive andachieve I ~ I ~ I" I~ I 2/7)" gy I 59 I) 55 ee
their objectives.
14 I Sufficient meeting time 5.6
is devoted to strategic ~fofpoya psy sya (4.8) 20 per aS
issues.
15 I Sufficient meeting time 5.7
is devoted to corporate oe ee ee ee 5.9) av oa ae
performance
10
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Comments from questionnaire
NED
a. Believe more time should be spent on bigger picture strategic issues, customer trends and
revenue development. Should consider weaving these in more to Board meetings...perhaps
quarterly than a one off event in the summer
2 An attempt has been made to cover the groups’ principal risks during the Board cycle, by
using the lens of real business issues. Whilst the intention is good, the execution has not been
as systematic as I would like.
3 Broadly the Board works well and there has been increased focus on what matters
5 The process of setting the agenda is opaque to me - I assume it happens between the
Chairman and the executive. However, I have no problem with that. The Chairman quite
effectively picks up on issues that arise in the meetings, and suggests issues that need
consideration at future meetings. And if there is an issue that I want discussed, I can easily
raise it with the Chairman and he is responsive.
6 See above. Board meetings could be even more productive if pace is kept up, with tighter
chairing.
ED
8 As an Executive it is easier to judge but the Chairman is very active in defining what is to come
to the Board and getting balance
9 9. We do the best we can. Sometimes things come up requiring discussion without prior
notification.
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Corporate Governance
The mean score for this section comprising five items is 5.9 out of a possible 7.
* The strong score on corporate governance standards (q 16) is repeated from the 2009
assessment
* Most— but not all — are satisfied with the balance between EDs and NEDs (q 19) and the
committee structure (q 20), and these issues are taken up in some of the comments
Question 1,2 °>3)I)4,>5 +6) 7 Mean I Mean Mean Mean
Board I NEDs EDs _I Databank
16 I The Board operates to 65
high standards of “toto pope PS) 8] ee I 84 I 87 Pa)
corporate governance.
17 I Non-Executive Directors
arerecruitedaccordng I. I-I-I2/2}/2/a4) 5% I 57 I 65 60
to corporate governance 6.3)
good practice.
18 I Directors receive
appropriate guidancein I - I - I -I- > 4/4/2) 38 5.7 6.0 5.8
matters of corporate (5.4)
governance.
19 I The balance of 5.6
executive/non executive I ~ I ~ I) +) 2) 2/5) 2) ey I 57 eS al
directors is appropriate
20 I The Committee -I-]fa]-]2}s]2 5.7 5.4 6.3 6.0
structure is sufficient
Comments from questionnaire
NED
2 Having all Directors sit on all committees has its merits, but does provide an opportunity for
some to ‘sit back’ rather than forward. This increases the burden on committee Chairs.
3 Consideration is being given to a Finance Committee which may prove very helpful in any run-
up to an IPO
4 Too many Executive Directors — should be restricted to CEO and CFO although recognise the
difficulty of changing at the moment - Comment on committees as above
5 The recruitment of the current Non-Execs was done by the current Chairman. I was not
involved in the recruitment, which in my experience is unusual. However, I have no criticism
whatsoever of the result.
ED
9 I 19. There are too many Executives on the Board.
12
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Non-Executive Directors
The mean score for this section comprising nine items is 5.4 out of a possible 7.
The mix of expertise and experience amongst the NEDs (q 21) represents the biggest
improvement on any item since the 2009 assessment.
The independence of the NEDs (q 24) is also highly rated
But views on knowledge of, and interaction with, key executives below the Board (qs 26, 27)
are mixed; as are opportunities for additional training (q 28)
Anew question on diary flexibility elicits a mixed response (q 29)
Comments from NEDs return to the diary issue; EDs focus on the need for more operational
experience
Question 6 = 7 Mean Mean Mean Mean
Board I NEDs EDs Databank
21 I Non-Executive Directors 5.8
represent an appropriate 5 I 2 6.2 45 5.6
: (4.2)
mix of expertise and
experience.
22 The recruitment criteria 5.9
for Non-Executive sj a 6.0 515) 5.5
Directors ensure a (48)
balanced Board.
23 I Non-Executive Directors 5.3
have appropriate 2)- (5.3) 5.3 5.0 5.5
knowledge of the Group :
and the issues it faces.
24 I Non-Executive Directors 67
are sufficiently 3 6 (6.4) 6.6 7.0 6.4
independent of executive s
management.
25 I Non-Executive Directors
eisai 6I-I 33 54 6.0 55
opportunities to meet (5.4)
without the Executive
Directors.
26 I Non-Executive Directors
have adequate 47
knowledge of key 3) I as ad ed ad
executives below the
Board.
27 I Non-Executive Directors
have adequate ; aI - 48 a Ais as
opportunity to meet with (5.1)
key executives below the
Board.
28 I Non-Executive Directors 49
are offered the 2) - 49 5.0 5.1
opportunity to undertake ($4)
additional training.
29 I Non-Executive Directors
are sufficiently flexible in 4/4 5.3 5.1 6.0 NA
their diaries to facilitate
meetings.
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Royal Mail Group Board Governance Questionnaire 2012
Comments from questionnaire
NED
1 Don’t believe that the criteria for NEDs has ever been written down or articulated. Not been
party to a discussion about make-up, overlaps, gaps etc.
2 Continuous professional development is encouraged, but no idea if colleagues make the effort
- maybe it should also be reported on
3 Diaries are a problem; with a Group like RM there is a need for more flexibility. The Group
should diarise 2012 and 2013 meetings as soon as possible.
5 Diary management is always a problem with busy people. And there has recently been a
tendency to move meetings around late in the day, which wherever possible should be
avoided.
ED
9 21. Not enough operational experience. No technology or project experience.
23. It is getting better
10 I More Industrial Operational change experience would be useful
14
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Executive Directors
The mean score for this section comprising four items is 5.7 out of a possible 7.
* The balance and teamwork of the EDs are positively scored (qs 31, 32)
* _NEDs are less positive than EDs about opportunities to evaluate performance of the EDs
(q33)
* Comments relate to size, teamwork and customer/digital experience
Question 12/3 )4)5 I 6 I 7 I Mean I Mean Mean Mean
Board I NEDs EDs Databank
30 I The Executive Directors 55
as a group are -}a}-Jal2}3a]a) gy I 53 I 60 6.0
representative of the (6.3)
business.
31 I The Executive Directors 5.8
-[-]-Jaf2}s]2 60 I 53 5.8
work well as an (5.6)
Executive Team.
32 I The Executive Directors éo
areabalancedteamof I - I - I - I - I 3/4) 3 : 5.9 6.3 5.8
, (5.8)
management expertise
and experience.
33 I The Board has sufficient
i 55
eppartunityiand -I-]-]2]3}a]2 51) 63 5.6
information to evaluate (5.9)
the performance of the
Executive Directors.
Comments from questionnaire
NED
a. There is no deep customer experience represented at Executive level. Could also combine
with greater digital experience.
2 I have a generally high regard for the capability and performance of the executive team. But
Royal Mail is a difficult environment for word class talent to thrive in — mainly because of
shareholder limitations. The Board needs to monitor closely the stability of the executive
team in light of this.
3 Small number of Exec Directors is appropriate
4 The Exec Directors act as a team when in the presence of the NEDs. Hard to tell if they act as a
team outside that environment although no evidence to suggest that they don’t. The CEO is a
dominant personality.
1s
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Information
The mean score for this section comprising nine items is 5.7 out of a possible 7.
Questions on the quality and quantity of information receive slightly mixed responses (qs 34,
35) and compare unfavourably with wider means
Generally, however, comments are positive - with improvements acknowledged - but some
say there is scope for further gains
Question 2)I3 5 6 I 7 Mean I Mean Mean Mean
Board I NEDs EDs Databank
34 The quality of
information provided _I. acacia, 3S 55 4 Pe
to the Board and its (6.0)
Committees is
appropriate
35 The quantity of
information provided I. sloli] 5 54 a“ aa
to the Board and its (5.6)
Committees is
appropriate.
36 Additional 5.7
information required -I- 2)6/1 6.0 5.0 6.1
is fully and promptly (5.9)
made available.
37 Presentations to the 5.7
Board are of a high oe a)sja (6.0) al 53 ae
standard.
38 Directors receive By
appropriate -I- 3/4] 2 94 5.7 5.3
A 7 (5.9)
education on issues
facing the Group.
39 The induction
process provides
adequate aa
information for new -ja 6 2) 1 5.6 4.3 5.4
(5.9)
Directors to
understand the
Company and their
role.
40 The Board has 6.2
appropriate access to 7) o ajay (6.4) as aad Lal
external advice
41 Non-committee
members are 62
appropriately -I- 2/53/4 65 5.7 5.7
informed about the (6.2)
business of Board
committees.
42 The papers for each
Board and
Committee meeting I. aisl2} 59 59 ao Bg
are provided (5.9)
sufficiently in
advance of the
meeting.
16
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Comments from questionnaire
NED
2 Generally very high quality staff work. All management presentations are of a high quality,
and pitched at the right level.
i= The quality and quantity of information has improved. Summaries are very useful. Q41:
Those not attending are informed.
4 Quantity of info is high! Would be more digestible for NEDs if quantity was reduced and it
was made easier to see the wood from the trees in some of the standard Board papers.
NEDs get full info on Board committees as they all sit on all of them!
5 My induction is sufficiently in the past for me not really to know how well the induction
process works — mine was certainly fine. Since all non-execs sit on all committees (an
unusual and not necessarily desirable thing), Question 41 does not apply
ED
8 Crisper papers could be provided
9 34. It is still too long but getting better.
42. Most of the time.
17
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Royal Mail Group Board Governance Questionnaire 2012
Monitoring Group Performance
The mean score for this section comprising six items is 5.5 out of a possible 7.
Communication with the shareholder (q 48) and contribution to strategic direction (q 46) are
seen to have improved since 2009 and scores exceed wider norms
But agreement on performance objectives (q43) has declined and responses are a little
mixed
Performance objectives and monitoring issues are picked up in the comments
Question 6 7 Mean Mean Mean Mean
Board I NEDs EDs I Databank
43 The Board has
agreed appropriate as
and rigorous 4)4 5.1 6.0 5.6
company (6.9)
performance
objectives
44 The Board has robust
procedures for
monitoring s 1. OF a Pe an
corporate (5.9)
performance
(operational and
financial).
45 The Board monitors aa
business 4) - 5.1 oy 5.3
development (5.3)
effectively.
46 The Board
contributes al2 5.8 53) oy 56
effectively to the (5.2)
Group’s strategic
direction.
47 The Board is able to
identify potential aI- 5.3 5.0 6.0 55
problems in the (5.7)
Group’s
performance.
48 The Board a
communicates 6 1 5.4 6.3 5.3
effectively with the (6.0)
shareholder
18
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Comments from questionnaire
NED
2 The Board is an effective forum for proactive strategic leadership, but our role in terms of
performance setting is much more reactive. I don’t believe that we are close enough to
the business drivers to challenge management's performance expectations. The group
almost feels like a super tanker — set on a certain path and very difficult to manoeuvre.
Also, performance has to date been dominated by cash metrics and quality of service
metrics. If the group is listed, notions of ‘return’ will become critical and there is no DNA
in this area.
3 Communication with shareholder is largely through Chairman; recent dinner was helpful
5 My scoring here reflects two things. First, although we have clear targets, the process of
transformation is so complex that it is hard to insist on those targets and expect delivery.
Second, we have had one very serious failure of management and internal audit controls
which was very concerning — are there other instances of which we are unaware
ED
8 As the focused strategy crystalises so a clearer picture of the initiatives which are driving
performance will need to be given to make performance monitoring very clear
19
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Royal Mail Group Board Governance Questionnaire 2012
Board Leadership and Culture
The mean score for this section comprising eight items is 6.1 out of a possible 7.
All but one question (q56) score higher than the wider mean databank.
Board leadership (q 49), Chairman/CEO role differentiation (q 50), teamwork/constructive
relations (qs 52, 55), participation (q 53) and open communication (q 54) are scored strongly
Some scores and comments suggest that meeting management and succession planning are
areas for possible improvement
Question 1I2)3)4)5I6I 7 I Mean I Mean I Mean Mean
Board I NEDs EDs Databank
49 The Board receives 64
effective leadership. I ~ I 7 I 7 I 7 I 7 I ®& I) 4) gg I 83 I 67 oa
50 The roles of
i i 6.6
Chairman andchief I I I gg oe eu a
Executive are clearly (6.8)
differentiated at the
company.
51 Board meeti 61
joardmeetingsare I I lg 5.9 67 ea
managed efficiently. (6.0)
52 The Board operates 5.9
; -I-I-I-/)2})7]}4 a7 6.3 5.8
constructively as a (5.6)
team.
53 The Chairman and
the Group Chief 6a
Executive have -I-]-]/-]/a])4]s5 : 63 67 6.0
; (6.0)
created a culture in
which all Directors
can participate fully.
54 Board discussions 64
areafreeandopen I I I 7 I 7 I 8) 4) iggy I 84 es ai
exchange of views.
55 There isa
constructive
relationship 6.3
between Non- hfe le] F I sey I 8 63 i
Executive Directors
and Executive
Directors.
56 There is sufficient
spear ditai 48
considerationgiven I I a I) gg Ig I. rc a6 a
to succession (4.9)
planning of Board
members.
20
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Comments from questionnaire
NED
3 Succession planning for NED’s has been unnecessary as Board stability is viewed as
important pre IPO
5 I think that the Board meetings are not managed as well as they could be. There is a
tendency for long presentations on occasions from the executive, going through papers
that we have read, and the discussion can be allowed to go on too long. But this s a minor
criticism — generally Board meetings are very effective.
ED
8 I I think the Board is strong in this regard
21
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Royal Mail Group Board Governance Questionnaire 2012
Audit and Risk Committee
The mean score for this section comprising seven items is 6.2 out of a possible 7.
* Both scores and commentary are positive — particularly related to leadership and chairing.
* The issue of subcommittee membership is revisited in the comments
Question 1,>2)I)3 4/5) 6 I 7 I Mean I Mean Mean Mean
Board I NEDs EDs Databank
57 The Committee 6.4
receives effective “Jofofope ps] 4 (6.1) - - =
leadership.
58 The role, scope and an
authority of the -}-]-]}-]-]s]s5 6.4 6.7 6.3
Committee are (6.3)
clearly defined.
59 The composition of
the Committee is
4 P 5.8
appropriate with -I-]a]-]2])4]3 5.4 6.7 5.9
the right level of 5.9)
experience and
expertise.
60 There are sufficient 63
meetings of the “Jo fr pope p73} easy I ot er Se
Committee.
61 The Committee
meetings are -I-]-]-]12]}6)}2 eh 6.0 6.3 6.1
managed (6.1)
effectively.
62 The Committee is
provided with 6.0
adequate resources I I = I I” 2/e\2 (6.4) Be) ol 2,
to perform its
function effectively.
63 It is clear where
responsibility for ~Jro}rpr>]2];6)2) 60 59 6.3 NA
monitoring risk lies.
Comments from questionnaire
NED
3 The ARC should have fewer members provided attendance is guaranteed. 63: As clear as
reasonable
5 Audit Committee works very well and is very effectively chaired
ED
8 The recent enhancements of the Executive Risk Management process has really helped
this Committee
22
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Royal Mail Group Board Governance Questionnaire 2012
Nomination Committee
The mean score for this section comprising six items is 5.7 out of a possible 7.
Assessment is broadly comparable with wider means
Comments suggest assessment is difficult due to low levels of activity but that the
opportunity for strategic talent management may be missed as a result.
Question 1I2)/3I4)5I6I7 I Mean IMeanI Mean I Mean
Board I NEDs EDs Databank
64 The Committee 5.6
receives effective oe ee ee ee (6.1) 22 sto 32
leadership.
65 The role, scope and
authority of the -I-)-]-/alal2! © I 60 I 60 6.0
Committee are (6.0)
clearly defined.
66 The composition of
the Committee is
appropriate with -I-I-]-]2]af2] ® I 60 I 60 59
the right level of (5.6)
experience and
expertise.
67 There are sufficient 5.4
meetings of the “Prof Ryo p2y sy tt es I Be I 7% bd
Committee.
68 The Committee
meetings are -I-I]-]-J2fafa] 32 I se I 60 57
managed (5.5)
effectively.
69 The Committee is
provided with 5.4
adequate resources I ~ I 7 I 7 I) 2/2 /4/- ) gg I 53 I 60 Las
to perform its
function effectively.
Comments from questionnaire
NED
1 Would like to see this Committee complimented by a strategic discussion about talent
and the performance/potential of key executives.
2 The NomCo has not really had to work in ‘anger’, so its difficult to judge its effectiveness
3 Not a year for much NomCom activity
4 Not sure whether there is a separate Nominations Committee. If there is I don’t believe it
has met this year therefore no ratings given
5 I haven't felt able to comment on this because I think Nominations Committee has
operated rather informally — see my comments above on the appointment of non-execs
23
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Royal Mail Group Board Governance Questionnaire 2012
Remuneration Committee
The mean score for this section comprising seven items is 4.8 out of a possible 7.
This section receives the lowest overall mean score.
Although the leadership of the committee is positively assessed — with an improved score
from 2009 — the resources and information provided to the committee are seen as
inadequate (qs 75, 76) and this produces the lowest scores in the entire assessment.
Comments echo these concerns and raise issues relating to terms of reference, management
and scope
Question 5 I 6 I 7 I Mean IMeanI Mean I Mean
Board I NEDs EDs _ I Databank
70 The Committee 5.8
receives effective *I* 2) I >? = a
leadership.
71 The role, scope and Pr
authority of the 4\3 5.7 45 6.2
Committee are (6.0)
clearly defined.
n The composition of
the Committee is
appropriate with the s I 4 oa I g6 I 50 59
right level of (5.4)
experience and
expertise.
B There are sufficient 48
meetings of the 5] 2 (6.3) 3) $8 eae
Committee.
74 The Committee 5.1
meetings are 5) 2 6.2) I °° Be em
managed effectively.
75 The Committee is I
provided with 3.6
adequate resources Sy)ti-I) I = =
to perform its
function effectively.
76 The information
provided to the 2/41] - 3.4 3.1 45 6.2
Committee is both
timely and helpful
24
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Royal Mail Group Board Governance Questionnaire 2012
Comments from questionnaire
NED
2 Poor staff work and incomplete papers complicate the RemCo job. The rem consultant
seems ok, but management is weak. It’s also unclear how deep and in what areas RemCo
needs to get involved beyond Exec Directors.
3 As with the ARC, RemCo could have fewer members, provided attendance is guaranteed.
Astep change is required in the operation of the Committee. This will start with new
Terms of Reference.
4 There are too many committee meetings. Remuneration is politically sensitive but I have
rarely known a company have as many rem committee meetings as we do. The quality of
information coming from the HR function to the committee is of variable quality to put it
politely.
5 RemCo is one part of the machinery which does not work at all well, mainly because it is
very badly served by the HR Director, and despite having a very good chairman. This is an
issue that needs to be sorted urgently.
ED
9 I 76. Not always
25
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Analysis of Board Responses to Part 2 of the Questionnaire:
Board Priority Tasks
* There are substantial spreads in responses on several Board priority tasks
* Although improvement is desired across all areas, current and desired engagement levels
are closest for modernisation of core activities and government relationship
* Greatest scope for improvement is in the area of innovation and new products and strategy
for growth; and in customer focus
* EDs appear more satisfied with engagement levels on modernisation and differ significantly
from NEDs on the need for greater customer focus (they want less). By contrast, they
express a stronger desire for exposure to executive management
Modernisation of Core Activities:
Current Engagement
Desired Engagement
Innovation & New Products &
St ey irowth: = ad bd 3 6 i . 48 4.9 47
Current Engagement
Desired Engagement
Customer Focus:
Current Engagement
Desired Engagement
Industrial Relations:
Current Engagement
Desired Engagement
Current Engagement
Desired Engagement
Government Relationship:
Current Engagement
Desired Engagement
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Royal Mail Group Board Governance Questionnaire 2012
Appendices
27
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Royal Mail Group Board Governance Questionnaire 2012
Appendix 1
Questionnaire results by rank order of means
24 I Non-Executive Directors are sufficiently independent of executive management. 6.7
50 _I The roles of Chairman and Group Chief Executive are clearly differentiated 6.6
16 I The Board operates to high standards of corporate governance 65
58 I The role, scope and authority of the Audit and Risk Committee is clearly defined. 6.5
57 I The Audit and Risk Committee receives effective leadership 6.4
49 I The Board receives effective leadership 6.4
53 I The Chairman and the Group Chief Executive have created a culture in which all Directors can participate 64
fully
54 I Board discussions are a free and open exchange of views 6.4
55 I There is a constructive relationship between Non-Executive Directors and Executive Directors 6.3
60 I There are sufficient meetings of the Audit and Risk Committee. 6.3
41 I Non-committee members are appropriately informed about the business of Board committees. 6.2
11 I Agenda items focus on relevant issues 6.2
40 I The Board has appropriate access to external advice 6.2
61 I The Audit and Risk Committee meetings are managed effectively 61
1 The role and scope of the Board's authority is clearly defined 61
51 I Board meetings are managed efficiently 6.1
32_I The Executive Directors are a balanced team of management expertise and experience. 6.0
62 I The Audit and Risk Committee is provided with adequate resources to perform its function effectively 6.0
63 I It is clear where responsibility for monitoring risk lies 6.0
65 I The role, scope and authority of the Nomination Committee is clearly defined. 6.0
66 I The composition of the Nomination Committee is appropriate with the right level of experience and 60
expertise
3 I The Directors’ experience is utilised. 5.9
9 I The agenda-setting process schedules issues in a timely fashion 5.9
42 I The papers for each Board and Committee meeting are provided sufficiently in advance of the meeting 5.9
52 I The Board operates constructively as a team 5.9
17 I Non-Executive Directors are recruited according to corporate governance good practice 5.9
22 I The recruitment criteria for Non-Executive Directors ensure a balanced Board. 5.9
68 I The Nomination Committee meetings are managed effectively 5.9
18 I Directors receive appropriate guidance in matters of corporate governance 5.8
31_I The Executive Directors work well as an Executive Team 5.8
46 I The Board contributes effectively to the Group's strategic direction 5.8
59 I The composition of the Audit and Risk Committee is appropriate with the right level of experience and 58
expertise
13 I Board meetings are productive and achieve their objectives. 5.8
70 I The Remuneration Committee receives effective leadership 5.8
21 I Non-Executive Directors represent an appropriate mix of expertise and experience. 5.8
7 I The length of meetings is adequate 5.7
12 I The Board identifies issues for review on a regular basis 5.7
15 I Sufficient meeting time is devoted to corporate performance 57
20 I The Committee structure is sufficient 5.7
36 I Additional information required is fully and promptly made available. 5.7
37 I Presentations to the Board are of a high standard 5.7
38 I Directors receive appropriate education on issues facing the Group 57
44 I The Board has robust procedures for monitoring corporate performance (operational and financial). 57
48 I The Board communicates effectively with the shareholder 5.7
14 I Sufficient meeting time is devoted to strategic issues. 5.6
19 I The balance of executive/non executive directors is appropriate 5.6
64 I The Nomination Committee receives effective leadership 5.6
28
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6 I The number of meetings is sufficient 5.5
30 I The Executive Directors as a group are representative of the business 5.5
33 I The Board has sufficient opportunity and information to evaluate the performance of the Executive 5.5
Directors
34 I The quality of information provided to the Board and its Committees is appropriate 5.5
71 I The role, scope and authority of the Remuneration Committee is clearly defined. 5.4
72 I The composition of the Remuneration Committee is appropriate with the right level of experience and 54
expertise
67 I There are sufficient meetings of the Nomination Committee 5.4
69 I The Nomination Committee is provided with adequate resources to perform its function effectively 5.4
10 I All Directors are able to influence the content of the agenda. 5.4
43 I The Board has agreed appropriate and rigorous Group performance objectives 5.4
25 I Non-Executive Directors have enough opportunities to meet without the Executive Directors 5.3
29 I Non-Executive Directors are sufficiently flexible in their diaries to facilitate meetings 5.3
2 I The Board keeps under review whether its role should be changed in any way. 5.3
45 I The Board monitors business initiatives effectively 5.3
47 I The Board is able to identify potential problems in the Group’s performance. 5.3
23 I Non-Executive Directors have appropriate knowledge of the Group and the issues it faces 5.3
8 I The current Board committee structure is appropriate 5.2
35 I The quantity of information provided to the Board and its Committees is appropriate 5.2
39 I The induction process provides adequate information for new Directors to understand the Company and 52
their role
74 I The Remuneration Committee meetings are managed effectively 5.1
5 I There are written defined expectations concerning Directors’ responsibilities. 5.1
28 I Non-Executive Directors are offered the opportunity to undertake additional training. 49
4 I The Board reviews its composition regularly 48
56 I There is sufficient consideration given to succession planning of Board members 48
27 I Non-Executive Directors have adequate opportunity to meet with key executives below the Board. 48
73 I There are sufficient meetings of the Remuneration Committee 48
26 I Non-Executive Directors have adequate knowledge of key executives below the Board. 47
75 I The Remuneration Committee is provided with adequate resources to perform its function effectively 3.6
76 I The information provided to the Remuneration Committee is both timely and helpful 3.4
29
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Royal Mail Group Board Governance Questionnaire 2012
Appendix 2
Wider databank scores by rank order of means
24 I Non-Executive Directors are sufficiently independent of executive management. 6.4
50 I The roles of Chairman and Group Chief Executive are clearly differentiated 6.4
58 I The role, scope and authority of the Audit and Risk Committee is clearly defined. 63
60 I There are sufficient meetings of the Audit and Risk Committee. 6.3
16 I The Board operates to high standards of corporate governance 62
62 I The Audit and Risk Committee is provided with adequate resources to perform its function effectively 6.2
71 I The role, scope and authority of the Remuneration Committee is clearly defined. 6.2
76 I The information provided to the Remuneration Committee is both timely and helpful 6.2
6 I The number of meetings is sufficient 6.1
7 I The length of meetings is adequate 61
36 I Additional information required is fully and promptly made available. 61
49 I The Board receives effective leadership 61
57 I The Audit and Risk Committee receives effective leadership 6.1
61 I The Audit and Risk Committee meetings are managed effectively 6.1
73 I There are sufficient meetings of the Remuneration Committee 6.1
1 I The role and scope of the Board's authority is clearly defined 6.0
8 I The current Board committee structure is appropriate 6.0
17 I Non-Executive Directors are recruited according to corporate governance good practice 6.0
20 I The Committee structure is sufficient 6.0
30 I The Executive Directors as a group are representative of the business 6.0
51 I Board meetings are managed efficiently 6.0
53 I The Chairman and the Group Chief Executive have created a culture in which all Directors can participate 6.0
fully
54 I Board discussions are a free and open exchange of views 6.0
55 I There is a constructive relationship between Non-Executive Directors and Executive Directors 6.0
65 I The role, scope and authority of the Nomination Committee is clearly defined. 6.0
69 I The Nomination Committee is provided with adequate resources to perform its function effectively 6.0
15 I Sufficient meeting time is devoted to corporate performance 5.9
34 I The quality of information provided to the Board and its Committees is appropriate 5.9
35 I The quantity of information provided to the Board and its Committees is appropriate 5.9
40 I The Board has appropriate access to external advice 5.9
59 I The composition of the Audit and Risk Committee is appropriate with the right level of experience and 5
expertise
64 I The Nomination Committee receives effective leadership 5.9
66 I The composition of the Nomination Committee is appropriate with the right level of experience and 5.9
expertise
67 I There are sufficient meetings of the Nomination Committee 5.9
72 I The composition of the Remuneration Committee is appropriate with the right level of experience and a
expertise
18 I Directors receive appropriate guidance in matters of corporate governance 5.8
31 I The Executive Directors work well as an Executive Team 5.8
32 I The Executive Directors are a balanced team of management expertise and experience. 5.8
37 I Presentations to the Board are of a high standard 5.8
52 I The Board operates constructively as a team 5.8
30
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Royal Mail Group Board Governance Questionnaire 2012
75 I The Remuneration Committee is provided with adequate resources to perform its function effectively 5.8
9 I The agenda-setting process schedules issues in a timely fashion 5.7
11 I Agenda items focus on relevant issues 5.7
13 I Board meetings are productive and achieve their objectives. 5.7
19 I The balance of executive/non executive directors is appropriate 57
41 I Non-committee members are appropriately informed about the business of Board committees. 5.7
44 I The Board has robust procedures for monitoring corporate performance (operational and financial). 57
68 I The Nomination Committee meetings are managed effectively 5.7
70 I The Remuneration Committee receives effective leadership 57
74 I The Remuneration Committee meetings are managed effectively 57
12 I The Board identifies issues for review on a regular basis 5.6
21 I Non-Executive Directors represent an appropriate mix of expertise and experience. 5.6
33 I The Board has sufficient opportunity and information to evaluate the performance of the Executive om
Directors
43 I The Board has agreed appropriate and rigorous Group performance objectives 5.6
46 I The Board contributes effectively to the Group's strategic direction 5.6
3 I The Directors’ experience is utilised. 5.5
22 I The recruitment criteria for Non-Executive Directors ensure a balanced Board. 5.5
23 I Non-Executive Directors have appropriate knowledge of the Group and the issues it faces 5.5
25 I Non-Executive Directors have enough opportunities to meet without the Executive Directors 5.5
42 I The papers for each Board and Committee meeting are provided sufficiently in advance of the meeting 5.5
47 I The Board is able to identify potential problems in the Group’s performance. 55
14 I Sufficient meeting time is devoted to strategic issues. 5.4
39 I The induction process provides adequate information for new Directors to understand the Company and 5.4
10 I All Directors are able to influence the content of the agenda. 5.3
38 I Directors receive appropriate education on issues facing the Group 53
45 I The Board monitors business initiatives effectively 5.3
48 I The Board communicates effectively with the shareholder 5.3
2 I The Board keeps under review whether its role should be changed in any way. 5.2
4 I The Board reviews its composition regularly 52
5 I There are written defined expectations concerning Directors’ responsibilities. 5.1
28 I Non-Executive Directors are offered the opportunity to undertake additional training. 5.1
56 I There is sufficient consideration given to succession planning of Board members 5.0
27 I Non-Executive Directors have adequate opportunity to meet with key executives below the Board. 49
26 I Non-Executive Directors have adequate knowledge of key executives below the Board. 48
29 I Non-Executive Directors are sufficiently flexible in their diaries to facilitate meetings =
63 I Itis clear where responsibility for monitoring risk lies E
31
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Appendix
Questionnaire results by gap between Board data and wider databank means
41 I Non-committee members are appropriately informed about the business of Board committees. 0.5
11 I Agenda items focus on relevant issues 0.5
3 I The Directors’ experience is utilised. 0.4
38 I Directors receive appropriate education on issues facing the Group 0.4
42 I The papers for each Board and Committee meeting are provided sufficiently in advance of the meeting 0.4
48 I The Board communicates effectively with the shareholder 0.4
53 I The Chairman and the Group Chief Executive have created a culture in which all Directors can participate ae
fully
54 I Board discussions are a free and open exchange of views 0.4
22 I The recruitment criteria for Non-Executive Directors ensure a balanced Board. 0.4
57 I The Audit and Risk Committee receives effective leadership 0.3
49 I The Board receives effective leadership 0.3
16 I The Board operates to high standards of corporate governance 0.3
40 I The Board has appropriate access to external advice 0.3
55 I There is a constructive relationship between Non-Executive Directors and Executive Directors 0.3
24 I Non-Executive Directors are sufficiently independent of executive management. 03
9 I The agenda-setting process schedules issues in a timely fashion 0.2
32 I The Executive Directors are a balanced team of management expertise and experience. 0.2
46 I The Board contributes effectively to the Group's strategic direction 0.2
58 I The role, scope and authority of the Audit and Risk Committee is clearly defined. 0.2
14 I Sufficient meeting time is devoted to strategic issues. 0.2
50 I The roles of Chairman and Group Chief Executive are clearly differentiated 0.2
68 I The Nomination Committee meetings are managed effectively 0.2
21 I Non-Executive Directors represent an appropriate mix of expertise and experience. 0.2
10 I All Directors are able to influence the content of the agenda. 0.1
12 I The Board identifies issues for review on a regular basis 01
52 I The Board operates constructively as a team 0.1
1 I The role and scope of the Board's authority is clearly defined 0.1
2 I The Board keeps under review whether its role should be changed in any way. 0.1
51 I Board meetings are managed efficiently 0.1
66 I The composition of the Nomination Committee is appropriate with the right level of experience and aa
expertise
13 I Board meetings are productive and achieve their objectives. 0.1
70 I The Remuneration Committee receives effective leadership 01
61 I The Audit and Risk Committee meetings are managed effectively 0.0
5 I There are written defined expectations concerning Directors’ responsibilities. 0.0
18 I Directors receive appropriate guidance in matters of corporate governance 0.0
31 I The Executive Directors work well as an Executive Team 0.0
44 I The Board has robust procedures for monitoring corporate performance (operational and financial). 0.0
45 I The Board monitors business initiatives effectively 0.0
60 I There are sufficient meetings of the Audit and Risk Committee. 0.0
65 I The role, scope and authority of the Nomination Committee is clearly defined. 0.0
33 I The Board has sufficient opportunity and information to evaluate the performance of the Executive sn
Directors °
37 I Presentations to the Board are of a high standard -0.1
19 I The balance of executive/non executive directors is appropriate -0.1
32
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Royal Mail Group Board Governance Questionnaire 2012
59 I The composition of the Audit and Risk Committee is appropriate with the right level of experience and on
expertise
17 I Non-Executive Directors are recruited according to corporate governance good practice -0.1
27 I Non-Executive Directors have adequate opportunity to meet with key executives below the Board. -0.1
26 I Non-Executive Directors have adequate knowledge of key executives below the Board. -0.1
25 I Non-Executive Directors have enough opportunities to meet without the Executive Directors -0.2
43 I The Board has agreed appropriate and rigorous Group performance objectives -0.2
15 I Sufficient meeting time is devoted to corporate performance - -0.2
39 I The induction process provides adequate information for new Directors to understand the Company and =
their role
47 I The Board is able to identify potential problems in the Group's performance. -0.2
56 I There is sufficient consideration given to succession planning of Board members -0.2
62 I The Audit and Risk Committee is provided with adequate resources to perform its function effectively -0.2
28 I Non-Executive Directors are offered the opportunity to undertake additional training. -0.2
23 I Non-Executive Directors have appropriate knowledge of the Group and the issues it faces -0.3
20 I The Committee structure is sufficient -0.3
64 I The Nomination Committee receives effective leadership -0.3
7 I The length of meetings is adequate -0.4
36 I Additional information required is fully and promptly made available. -0.4
4 I The Board reviews its composition regularly -0.4
34 I The quality of information provided to the Board and its Committees is appropriate -0.4
72 I The composition of the Remuneration Committee is appropriate with the right level of experience and 05
expertise
67 I There are sufficient meetings of the Nomination Committee -0.5
30 I The Executive Directors as a group are representative of the business -0.5
69 I The Nomination Committee is provided with adequate resources to perform its function effectively -0.6
74 I The Remuneration Committee meetings are managed effectively -0.6
6 I The number of meetings is sufficient -0.6
35 I The quantity of information provided to the Board and its Committees is appropriate -0.7
71 I The role, scope and authority of the Remuneration Committee is clearly defined. -0.8
8 I The current Board committee structure is appropriate -0.8
73 I There are sufficient meetings of the Remuneration Committee -1.3
75 I The Remuneration Committee is provided with adequate resources to perform its function effectively -2.2
76 I The information provided to the Remuneration Committee is both timely and helpful “2.8
29 I Non-Executive Directors are sufficiently flexible in their diaries to facilitate meetings :
63 I Itis clear where responsibility for monitoring risk lies -
33
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Appendix 4
Table showing frequency of numbers rated per respondent
Rating NED NED NED NED NED NED NED ED ED ED
1
- 1 1 S 4 3 3 3 :
2
2 2 2 4 3 6 ® 1 3 i
3
9 6 3 10 4 3 4 3 6 2
4
20 16 8 29) 14 15 36 I 23 12:
5
46 13. 44 27 40 33 33 8 34 44
6
- 35 18 6 4 16 3 31 4 17
7
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Appendix
Questionnaire results by gap between Royal Mail 2009 & 2012 Mean Scores
21 I Non-Executive Directors represent an appropriate mix of expertise and experience. 5.8 4.2 1.6
22 I The recruitment criteria for Non-Executive Directors ensure a balanced Board. 5.9 48 11
3 I The Directors’ experience is utilised. 5.9 5.1 08
54 I Board discussions are a free and open exchange of views 6.4 5.6 I 08
14 I Sufficient meeting time is devoted to strategic issues. 5.6 48 0.8
48 I The Board communicates effectively with the shareholder 5.7 5.0 0.7
46 I The Board contributes effectively to the Group's strategic direction 5.8 5.2 0.6
17 I Non-Executive Directors are recruited according to corporate governance good practice 5.9 53 I 06
70 I The Remuneration Committee receives effective leadership 5.8 5.2 0.6
55 I There is a constructive relationship between Non-Executive Directors and Executive Directors 6.3 5.8 0.5
11 I Agenda items focus on relevant issues 6.2 5.8 0.4
49 I The Board receives effective leadership 6.4 6.0 0.4
53 I The Chairman and the Group Chief Executive have created a culture in which all Directors can 6.4 6.0 0.4
participate fully
66 I The composition of the Nomination Committee is appropriate with the right level of experience 6.0 - ae
and expertise
18 I Directors receive appropriate guidance in matters of corporate governance 5.8 5.4 0.4
68 I The Nomination Committee meetings are managed effectively 5.9 5.5 0.4
57 I The Audit and Risk Committee receives effective leadership 6.4 6.1 0.3
72 I The composition of the Remuneration Committee is appropriate with the right level of 54 54 03
experience and expertise
52 I The Board operates constructively as a team 5.9 5.6 0.3
13 I Board meetings are productive and achieve their objectives. 5.8 55 I 03
24 I Non-Executive Directors are sufficiently independent of executive management. 67 64 I 03
10 I All Directors are able to influence the content of the agenda. 5.4 5.2 0.2
31 I The Executive Directors work well as an Executive Team 5.8 5.6 0.2
32 I The Executive Directors are a balanced team of management expertise and experience. 6.0 5.8 0.2
58 I The role, scope and authority of the Audit and Risk Committee is clearly defined. 6.5 6.3 0.2
41 I Non-committee members are appropriately informed about the business of Board committees. 6.2 61 0.1
9 I The agenda-setting process schedules issues in a timely fashion 5.9 58 I O01
51 I Board meetings are managed efficiently 6.1 60 I 01
61 I The Audit and Risk Committee meetings are managed effectively 61 61 0.0
12 I The Board identifies issues for review on a regular basis S.7 5.7 0.0
15 I Sufficient meeting time is devoted to corporate performance 5.7 57 I 0.0
19 I The balance of executive/non executive directors is appropriate 5.6 5.6 0.0
20 I The Committee structure is sufficient 5.7 5.7 0.0
42 I The papers for each Board and Committee meeting are provided sufficiently in advance of the 5.9 5.9 0.0
meeting
45 I The Board monitors business initiatives effectively 5.3 5.3 0.0
60 I There are sufficient meetings of the Audit and Risk Committee. 6.3 6.3 0.0
65 I The role, scope and authority of the Nomination Committee is clearly defined. 6.0 6.0 0.0
23 I Non-Executive Directors have appropriate knowledge of the Group and the issues it faces 5.3 53 0.0
25 I Non-Executive Directors have enough opportunities to meet without the Executive Directors 5.3 54 I -O1
74 I The Remuneration Committee meetings are managed effectively 5.1 5.2 I -O1
16 I The Board operates to high standards of corporate governance 65 66 I -O.1
1 I The role and scope of the Board's authority is clearly defined 6.1 62 I -O1
35
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Royal Mail Group Board Governance Questionnaire 2012
2 I The Board keeps under review whether its role should be changed in any way. 53 I 54 I -O1
4 I The Board reviews its composition regularly 48 I 49 I -O1
5 I There are written defined expectations concerning Directors’ responsibilities. 51 I 52 I -O1
56 I There is sufficient consideration given to succession planning of Board members 43 I 49 I -01
59 I The composition of the Audit and Risk Committee is appropriate with the right level of 58 I 59 I -O1
experience and expertise
26 I Non-Executive Directors have adequate knowledge of key executives below the Board. 47 I 48 I -0.1 I
36 I Additional information required is fully and promptly made available. 57 I 59 I -02
38 I Directors receive appropriate education on issues facing the Group 57 I 59 I -0.2
40 I The Board has appropriate access to external advice 62 I 64 I -02
44 I The Board has robust procedures for monitoring corporate performance (operational and 57 I 59 I -02
50 I The roles of Chairman and Group Chief Executive are clearly differentiated 66 I 68 I -02
37 I Presentations to the Board are of a high standard 57 I 60 I -03
27 I Non-Executive Directors have adequate opportunity to meet with key executives below the 43 I 51 I -03
69 I The Nomination Committee is provided with adequate resources to perform its function 54 I 58 I -04
35 I The quantity of information provided to the Board and its Committees is appropriate 52 I 56 I -04
33 I The Board has sufficient opportunity and information to evaluate the performance of the 55 I 59 I -O4
Executive Directors
47 I The Board is able to identify potential problems in the Group’s performance. 53 I 57 I -04
62 I The Audit and Risk Committee is provided with adequate resources to perform its function 60 I 64 I -04
6 I The number of meetings is sufficient 55 I 60 I -05
34 I The quality of information provided to the Board and its Committees is appropriate 55 I 60 I -05
43 I The Board has agreed appropriate and rigorous Group performance objectives 54 I 59 I -05
28 I Non-Executive Directors are offered the opportunity to undertake additional training. 49 I 54 I -05
64 I The Nomination Committee receives effective leadership 7 5.6 61 I -05
74 I The role, scope and authority of the Remuneration Committee is clearly defined. 54 I 60 I -06
7 I The length of meetings is adequate 57 I 63 I -06
39 I The induction process provides adequate information for new Directors to understand the ao Ie I ae
Company and their role
30 I The Executive Directors as a group are representative of the business 55 I 63 I -08
67 I There are sufficient meetings of the Nomination Committee 54 I 63 I -09
8 I The current Board committee structure is appropriate 52 I 62 I -10
73 I There are sufficient meetings of the Remuneration Committee 48 I 63 I -15
75 I The Remuneration Committee is provided with adequate resources to perform its function 36 I 54 I -18
29 I Non-Executive Directors are sufficiently flexible in their diaries to facilitate meetings 53 I NA I NA
63 I It is clear where responsibility for monitoring risk lies 60 I NA I NA
76 I The information provided to the Remuneration Committee is both timely and helpful 3.4 NA I NA
36
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Appendix 6
Bar chart comparison for section Mean Score between Royal Mail 2009 & 2012
Overal Section Mean Score comparison 2009 & 2012
= 2009
2012
37
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Appendix 7
Bar chart comparison between mean scores of Board, Executive Directors, Non-Executive Directors
and wider databank
Role & Organisation
40 I Board Mean
™ Mean NED 1
"Mean €D 2
ao Wider Databank
20
00
Agenda
70
50
a0 "Board Mean
"Mean NED 1
"= Mean €D2
Wider Databank
0.0
38
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Corporate Governance
70
60
50
‘40 Board Mean
"Mean NED
= Mean £02
30 Wider Databank
20
10
00
16 v Fey 19 20
70
60
50
40 Board Mean
"Mean NED 1
= Mean £02
a Wider Databank
20
10
oo
39
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ED
70
60
50
.
‘“ Board Mean
"Mean NED
= Mean £02
30 Wider Databank
20
10
00
Information
70
"Board Mean
"Mean NED 1
= Mean £02
Wider Databank
40
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50
40
Monitoring Group Performance
Board Mean
"Mean NED
= Mean £02
Wider Databank
40
30
0.0
Board Leadership & Culture
"Board Mean
"Mean NED 1
"= Mean ED 2
Wider Databank
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Audit & Risk Committee
70
60
50
40 "Board Mean
"Mean NED
= Mean £02
30 Wider Databank
20
10
00
Nomination Committee
70
60
50
40 "Board Mean
"Mean NED 1
= Mean £02
an Wider Databank
20
10
oo
42
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70
60
50
40
30
00
Remuneration Committee
Board Mean
"Mean NED
= Mean £02
® Wider Databank
43