GOVERNMENT REPORT - HIGHLY CRITICAL OF POST OFFICE BONUS SCHEME AND GOVERNANCE PROCESSES

Simmons & Simmons report into the Post Offices Transformation Incentive Scheme (TIS) has now been released. Colleagues can read the full report here. 

This is the review of Amanda Burton’s investigation into Post Office senior management being awarded a bonus for not achieving a metric in the TIS. For clarity that metric was that “All required evidence and information supplied on time, with confirmation from Sir Wyn Williams and team that Post Office’s performance supported and enabled the Inquiry to finish in line with expectations.” The report highlights that PO did not intend for a confirmation specific to this target to be obtained from Sir Wyn Williams or his team. 

The report provides a context to the formation of the TIS, that due to market conditions, Covid and PO’s cash position the Short-Term Incentive plan for senior leaders would not be appropriate. It goes on to highlight that PO’s CEO was asking staff during the pandemic to go above and beyond, yet it would only be the senior leaders who would benefit from this bonus scheme. We cannot ignore that when PO senior management were working from home, Postmasters were very much on the front line at increased risk, keeping their post offices open. Does, this show how out of step PO management are with the needs of their own colleagues never mind the needs of Postmasters? Leaders should lead for the benefit of those they lead, not for their own benefit. 

The report indicates that PO’s governance of the Inquiry target was inadequate and that there was a lack of proper consideration of the external audience nor the impact on Sir Wyn or his team. It was further critical of both the Remittance Committee (RemCo) and PO’s Human Resources function to recognise that the metric required changing after the Inquiry moved from a non-statutory to a statutory Inquiry in June 2021. 

Indeed, the report highlighted a poor standard of minutes, a lack of transparency and rational around RemCo decision making in the awarding of the metric above, which creates risk for PO. This is despite four of the Non-Executive Directors who were part of the RemCo being provided with updates from the Historical Remediation Committee, which highlighted that the Inquiry had not finished. The report also highlights that some of the documentation it received was redacted, which made the reviewing of the information more challenging. 

Despite all of this, the RemCo report was provided to the Board and approved in August 2022. This could have included the two Postmaster Non-Executive Directors, who may have voted. This is why the NFSP has concerns over serving Postmasters being Non-Executive Directors of Post Office as it may drag them into situations that could prohibit their ability to provide independent judgement or where they could be placed in a conflict-of-interest position, which could be potential breaches of the Companies Act 2006 rules 173 and 175.   

Worryingly, the report shows concern as to how the RemCo Directors could deliver their duties in terms of the UK governance code when dealing with the metrics of the bonus scheme, especially when there is a requirement for shareholder approval. Added, there was fairly limited thought given to how the Inquiry support targets were drafted nor was there written evidence to suggest there was sufficient consideration to whether the scheme was an appropriate workable target. 

The report provided the following recommendations: 

• Recommendation 1 - Review of governance structures, processes and systems in place at POL in relation to remuneration to ensure best practice is being followed consistently and is in alignment with the role of the Shareholder. 
• Recommendation 2 - review the support provided to the RemCo. 
• Recommendation 3 – accurate and complete minuting of RemCo meetings. 
• Recommendation 4 – review the process for the creation of incentive of schemes. 
• Recommendation 5 – reduce the amount of time between the agreement of a scheme framework and the design of its metrics and measures. 
• Recommendation 6 – ensure clarity as to scheme rules. 
• Recommendation 7 – ensure scheme rules are applied appropriately. 
• Recommendation 8 – ensure that schemes are sufficiently clear and simple. 
• Recommendation 9 – consider applying separate schemes to Executive Directors and the broader Group Executive and Senior Leadership populations. 
• Recommendation 10 – ensure that schemes are appropriately reviewed on an ongoing basis. 

Ultimately, colleagues rightly ask whether senior managers who are already paid beyond what Postmasters can contemplate, should be paid even more for ensuring the business provides the Inquiry into its actions in the past, the information it requires in a timely manner. Especially when so many Postmasters, assistants and employees of the Post Office had their lives ruined and still await recompense for the losses they incurred. For Government, senior Civil Servants, the Board of Post Office and the senior leadership of the Post Office to not realise just how wrong the optics of this scheme were say’s a lot and justifiably leads to questions of whether a new governance structure of the Post Office is required. 

Given so many people have had their lives ruined in the manner they have, every single person who was a recipient of a bonus linked to this metric should look themselves in the mirror and in good conscience return every penny associated with it. Unfortunately, some of those responsible for this fiasco on the Board of Post Office that has caused the reputation of the business to be further damaged have already left so there is a question over whether they will be held to account for their failings.  

Calum Greenhow, CEO of the NFSP commented when the report was released:

“Given that remuneration from Postmasters is in continual decline along with an average of six Post Offices closing per week and the number of full-time, full service Post Offices now less than 9500, I strongly question the ethical code of a senior leadership group who believe they deserve a performance related bonus that it is linked to the tragic events that the Inquiry is considering.”  

It is now over to Government to determine what happens next and whether anyone will be held to account. We can’t have a situation where Post Office are simply able to move on and think “Phew, we got away with that!”