UKGI00010626
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bog aes
UK Government Department for
usiness, Energy
Investments & Industrial Strategy
Date: 16 October 2019
Director General: Mark Russell
Lead Official: Tom Aldred / Tom Cooper _
Lead Official Telephone 7
Recipient To Note / Comment To Approve / Decide
Kelly Tolhurst x
Special Advisors x
Permanent Secretary x
OFFICIAL SENSITIVE
POST OFFICE: APPOINTMENT OF A NEW NON-EXECUTIVE DIRECTOR
Summary
1. Following a selection process, Post Office Limited (POL) have identified two lead
candidates, Zarin Patel and Lisa Harrington, to fill the Non-Executive Director (NED)
posts on the POL Board. POL’s Nomination Committee had delegated authority to run
the recruitment process and seek ministerial consent for the final candidates. The
candidates would bring valuable skills to the Board and enhance its diversity. This note
seeks your approval for Zarin’s appointment and will be followed by a separate piece of
advice for Lisa’s appointment once final checks have been completed.
Timing
2. As soon as possible to mitigate the risk of gaps on the POL Board in the event of an
election being called. We would like to have the new NEDs in post by the 29 October
Board meeting.
Recommendation
3. We recommend that you:
approve the appointment of Zarin Patel.
note the mitigations in place to manage potential issues and conflicts of
interest.
Background
4. POL have been seeking replacements for two independent NEDs, Tim Franklin and
Shirine Khoury-Haq. Tim’s second term was expiring and Shirine had to step down as a
result of a conflict of interest issue. In order to safeguard against the prospect of a
double-gap on the Board, you agreed to extend the term of Tim Franklin to 17
December. Tim will step down as soon as both NEDs are in post.
5. A successful recruitment campaign, details of which can be found below, identified
three lead candidates for the two open roles (all women, one BAME). After further
deliberation the interview pan i i i ), initially
recommended Zarin Patel and jowever
lecided to withdraw due pi . The panel
hav efore selected Lisa Harrington, who is regarded as a high-quality alternative
fori msssevanrI and who will be the subject of a separate written advice note.
UKGI00010626
UKGI00010626
beg a
UK Government Department for
usiness, Energy
Investments & Industrial Strategy
6. Tim has formally submitted a shareholder approval request outlining the request to
approve Zarin’s appointment with a biography and justification for her appointment. This
can be seen in Annex A.
Zarin is a Chartered Accountant with a Non-Executive portfolio and a proven NED with
extensive experience of finance, change management and technology within high-
profile organisations. She is a strong fit for the role and will strengthen the POL Board.
The current Board has 6 men and 1 woman, with no BAME representation. If Zarin and
Lisa were appointed, once in place, this would change to 5 men and 3 women, and one
BAME.
As POL’s sole shareholder, BEIS’ Secretary of State has the right of approval over the
appointment and remuneration of all board members, including NEDs. You can ask
POL to reconsider these candidates however it is normal practice for BEIS Ministers to
be presented with the candidates the Partner Organisation have put forward after an
agreed recruitment campaign.
.We can confirm that the due diligence undertaken by the external recruitment
organisation for this NED post was completed and in-line with Cabinet Office guidelines.
Details of this can be seen in Annex E.
. Given Zarin’s current role at HMT as an independent member of the Audit and Risk
Committee, we have sought assurances from POL on the management of potential
issues and conflicts of interest.
. This note is specific for the appointment of Zarin Patel. A further note will be provided in
due course for the appointment of Lisa Harrington when final checks have been
completed.
Management of Potential Issues & Conflicts of Interest
13.
14.
Given Zarin’s role at HMT, there is potential for conflict to be triggered in the event of a
Board or sub-Committee discussion about executive remuneration or a potential
litigation settlement, both of which can require HMT approval. However, the HMT Audit
and Risk Committee is not a decision-making body, but provides an assurance function.
Conflicts of interest are not uncommon on Boards and do not necessarily require
individuals to step down. However, it will be important for any conflict of interest to be
managed, particularly since Shirine Khoury-Haq had to step down for this reason.
Shirine’s conflict arose subsequent to her becoming a POL Board member, when she
took on a new executive role at the Co-op (who have post offices in 235 branches). In
the event of a conflict arising, Directors should flag the potential conflict and the Board
would consider whether a) the Director should participate in the discussion but not
participate in any decision or vote or b) whether the Director should recuse themselves
entirely from that discussion (and receiving papers pertaining to it).
. We believe the conflict is manageable and should not prevent Zarin’s appointment to
the Board. The HMT Permanent Secretary has been made aware of the appointment
and should Zarin accept the post HMT have proposed mitigations to manage any
potential conflicts appropriately.
UKGI00010626
UKGI00010626
UK Government Department for
Business, Energy
Investments & Industrial Strategy
Remuneration
16. Remuneration has been approved by BEIS ministers and the CST. As a NED, Zarin will
be paid the base director's fee of £35,000, which has stayed constant since 2012 and is
in the lower quartile of FTSE 250 companies of a similar turnover.
Outline of recruitment process
17. Here is a summary of the key aspects of the recruitment process followed by POL:
¢ The indicative timeline is at Annex B.
¢ The job description is at Annex C and the current composition of the board
and diversity characteristics is at Annex D.
e POL used head-hunters to advertise and lead the search exercise, which is
standard practice in appointments of this type.
e A five-person assessment panel comprised of Tim Parker (POL Chair), Ken
McCall (POL Senior Independent Director), Tom Cooper (UKGI’s Non-Executive
Director), Carla Stent (current POL NED) and Xenia Fletcher (independent
assessor, Director, Royal Mint).
e The long-list consisted of 19 candidates for consideration (11 female, 4 BAME).
* 8 candidates were short-listed for interview by the panel. 3 candidates
considered for appointment (all female, 1 BAME).
Contributors
18. BEIS Partnerships Team and the Post Office Policy Team have been consulted on this
submission.
19. This advice does not have financial or parliamentary handling implications.