Source · Select Committees · Business and Trade Committee
Recommendation 9
9
Accepted
Paragraph: 32
Lastly, we call on the Royal Mail board to reflect on its decision to exclude...
Recommendation
Lastly, we call on the Royal Mail board to reflect on its decision to exclude the delivery of the USO from the long term pay and incentive structure for its senior managers and to reconsider whether this is the right approach. We encourage the Royal Mail board to add delivery of the USO to its pay and incentive structure and to write to this Committee to set out its conclusions.
Government Response Summary
Royal Mail states that the delivery of the USO is already included in the annual Royal Mail Short Term Incentive Plan (STIP) for all managers as one of five bonus metrics.
Paragraph Reference:
32
Government Response
Accepted
HM Government
Accepted
I can confirm that our existing pay and incentive structures are designed to incentivise all managers to ensure delivery of the USO. All managers are part of the annual Royal Mail Short Term Incentive Plan (STIP). The STIP has five bonus metrics which sit at a company level. These are Royal Mail UK revenue; Royal Mail UK profit; health and safety; quality of service (namely, the delivery of the USO); and environmental. Quality of service is an annually monitored measure and forms part of the CEO, senior management and managers’ STIP. Clearly, if quality of service targets are not achieved, that element of the potential bonus will not be paid. The long-term incentive (LTIP) that the report references is a three year performance programme that only vests at the end of the three year period. We believe that ensuring that quality of service is included in the annual bonus plan (STIP) is the right approach as it ensures that all managers are incentivised to deliver our quality of service targets.