UKGI00036711 - Post Office - Decision Paper, Board Effectiveness Review by Alwen Lyons.

Evidence on official site

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POST OFFICE LIMITED PAGE 1 OF 3
POST OFFICE BOARD DECISION PAPER

Board Effectiveness Review

Author: Alwen Lyons Sponsor: Ken McCall Meeting date: 31 January 2017

Executive Summary

Context

In December the Board completed an external Board Effectiveness Review (BER)
facilitated by Lintstock Ltd. The results of the BER have been published in the
Boardpad reading room in the file ‘Board Effectiveness Review January 2017’.

Ken McCall, Senior Independent Director, working with the Company Secretary, has
analysed the feedback and proposed 4 actions in response to the review.

Questions addressed in this report

1. What are the main themes of the BER?
2. What actions should the Board take in response to BER?

Conclusion

1. The appendix of this report highlights the main themes of the BER feedback.
2. From the analysis undertaken 4 actions are proposed for debate at the Board.
a) Provide more focus on performance results and future actions.
Business Unit Chief Execs to provide quarterly updates to the Board.
b) Increase the Board’s understanding of the Mails Market.
Provide a training session on the Mails Market, possibly at the June away day.
c) Enable more support for the Board to give assurance regarding the IT
strategy decisions and IT transformation tracking.
Provide an independent advisor to the Board to review the IT strategy and give
quarterly/ six monthly assurance.
d) ARC to focus more on reviewing the Internal Audit work.
Change the ARC agenda to ensure an appropriate time and focus is spent on
Internal Audit work.

Input Sought

1. The Board is asked to consider the BER reports and debate and agree the actions
to take forward.

Strictly Confidential
POST OFFICE

Appendix

1. Linstock Report Summary

A __ Board Review

To work on:

Strengths:

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Questions:

(i) Board composition rated
highly for individual
relationships

(i)

Does the Board understand
the Sub Postmasters and

POAC relationships mixed /
NEDs attend some meetings

(i) Greater IT expertise or not?

(ii) Annual work cycle and
agenda rated highly

(ii)

Succession planning and
strengthen mails knowledge
and understanding

(ii) Should the Board better
understand the performance
of POL vs competitors?

rated highly overall

(iii) Performance of (iii) Board Packs — length and use
Committees rated of summaries — mixed views
positively

(iv) Board testing of strategy I (iv) Top 3/4 strategic challenges

- RM and future

- Bol agreement

- IT Transformation
- Cost right sizing

(v) All Board members
agreed the top 3/4
strategic challenges

- RM and future

- Bol agreement

- [T Transformation
Cost right sizing

Strengths:

Audit, Risk and Compliance

(v)

Level of detail provided in
Risk and Reward in papers
submitted was viewed as
mediocre

To work on:

Questions:

(i) Effectiveness and use of
the meeting time

(i)

‘Mound’ of papers need
more thinking time

(i) Less paper on project
structures and more reporting
on results and improvement
actions

(ii) Composition of ARC

(ii)

Lacked pensions specific
advice — but VH mitigated

(ii) External speakers / invites on
IT transformation Cyber
Security also relevant to the

progressed significantly

Board
(iii) Relationship ARC / CFO (iii) FS changing regulatory (iii) Does the ARC require greater
and Head of Internal landscape and how this focus on the Transformation
Audit rated highly impacts the organisation programme
(iv) Risk management (iv) ARC performance on

reviewing / assessing work of
Internal Audit rated least
adequate

Strictly Confidential
POST OFFICE

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C Nomination Committee Review
Strengths: To work on: Questions:
(i) I Composition and use of (i) Succession planning of the (i) Can we attract the right talent

time was rated highly

‘Top Team’

given the remuneration
challenges?

(ii)

Process of Board
appointments

Remuneration Committee Review

Strengths:

To work on:

Questions:

(i)

Composition and use of
time

(i)

Effectiveness of STIP and
LTIP with aligning strategy of
business received average
ratings

(i) Can we work with UKGI more
effectively, can they advise and
support?

development of strategy
rated highly

(ii) Information provided (ii) Relationships with other (ii) Can the Committee convince
(Natasha Wilson) also UKGI companies for best the shareholder of a more
highly rated practice / learning and “hands off” approach?

leverage

(iii) Understanding of
regulatory / environment
shareholder

— Upward Review of Board by the Group Executive

Strengths: To work on: Questions:

(i) I Composition of Board (i) I Take amore strategic and {i) IT capability at Board level?

risk based approach to
review and governance

(ii) Engagement with (ii) Non Execs to spend some (ii) Should the Board consider a
Management, support more time to better wider perspective on the future
and challenge understand the business of the Post Office as an

enterprise?

(iii) Board testing and (iii) Top priorities to focus on risk I (iii) Can the organisation handle

and balanced contribution of
all Non Execs

this level of change in a short
time frame?

Strictly Confidential