Royal Mail – ShareSoc supports new pay policy

At the 2018 Royal Mail AGM, over 70% of shareholders voted against the remuneration report. Following extensive consultation, the Royal Mail have developed a new remuneration policy. As part of the consultation they consulted with the UK Shareholders’ Association and ShareSoc members. On balance we recommend members to vote for the new remuneration policy and the remuneration report at the upcoming AGM, which is (sadly) inconveniently located in Exeter.

Below is the content of a letter we have written to Royal Mail:

20 June 2019

To Orna Ni-Chionna, NED and Chair of the Remuneration Committee

Royal Mail PLC

Dear Orna,

On behalf of the U.K. Shareholders Association and ShareSoc, I am responding to your letter of 14 June.

On the basis of what you have shown us, the annual report and the explanation you gave us, the package is appropriate and suitable, for a FTSE100 company of your size and complexity. The package is modest in comparison to many other UK FTSE100 companies.

The quantum is a role model for others to follow and we will be supportive of your new policy.

Thank you also for mentioning UKSA and ShareSoc in your annual report. Your consultation process is exemplary – a beacon for others to follow.

The proposed policy is complex. We would have liked a simpler approach, but we understand your approach is (sadly) necessary to satisfy the conflicting demands of different institutional shareholders.

We will recommend that individual shareholders vote FOR in respect of the votes on the remuneration policy and remuneration report.

Exeter is a long way from where most people can easily access and is not a good location for an AGM in our view, particularly when the previous one has been so contentious. Sadly, I cannot attend, but I hope to find a proxy.

There are a number of questions which I would like to ask at the AGM. Most of these are for clarification or confirmation. I thought I should give you advance warning.

1. How much was Rico paid in 2018/19 and how much in 2017/18? The annual report states earnings as a director, not the amounts he was paid.
2. We believe directors should have similar terms on pensions as other employees. If other employees’ pensions are reduced so should those of the directors. This is a point of principle, as the impact is only 1% of salary. Will Rico reconsider his pension and agree to reduce it?
3. Page 128 of the annual report shows the “maximum” pay with an assumed 50% share price maximum increase. To regain the previous Royal Mail highest share price would require a 200% increase. The 50% “maximum” increase is absurdly low and you should also show a higher figure. Persimmon were the third highest FTSE100 TSR performer and achieved a 500% increase. Surely a maximum figure in the range of 200%-500% would be more useful to shareholders?
4. On page 143, does the 10 year chart understate how much the various CEOs actually received from the Company?
5. How much were Deloitte paid by Royal Mail last year? Was their fee for other work higher than the £108,420 they received for advice to the remuneration committee? If so by how much?
6. Rico was paid £21,000 in benefits in 2018/19. For the avoidance of doubt, can you confirm three things: that he received no housing allowance, no relocation payments and no payments for hotels/apartments in the UK? If he did claim expenses for these items, please can you tell the meeting how much he received?

Yours faithfully,

Cliff Weight – Director, ShareSoc – UK Individual Shareholders Society