Royal Mail has blocked bonuses and share awards to senior executives worth £1.4million after painful delays meant mountains of parcels did not arrive on time over Christmas, The Mail on Sunday can reveal.
The postal firm said it took the decision after considering the impact of service failures, ‘slower than planned’ modernisation and admitting revenue had been boosted by contracts to support the Government’s pandemic response.
The festive chaos was described at the time as a ‘strategic nightmare’ as pictures emerged of parcels piled high, and customers experienced weeks of delays. Royal Mail had already angered customers during the pandemic after Covid-related absences, high volumes of mail and social distancing caused significant logjams.
Missing out: Stuart Simpson and Mick Jeavons, inset, will lose a combined £1.4million in rewards due to postal delays
The firm struggled to cope with millions of extra parcels from a surge in online shopping. One borough in East London went for more than a month without post during the festive period. Former interim chief executive Stuart Simpson will miss out on rewards worth just over £1million. He was in line to receive a bonus of up to £570,000 and will not receive shares worth £450,000.
Mick Jeavons, who was interim finance chief before being made group chief financial officer in January, will not receive a bonus for last year, which would have been worth up to £141,000. He will also miss out on shares worth up to £260,000 under Royal Mail’s 2018 share incentive plan.
Pay campaigners welcomed the news. Remuneration committees and shareholders are often accused of waving through large bonuses to executives regardless of a company’s performance.
Last year, a swathe of executives cut their pay to conserve cash in the early days of the pandemic, but The Mail on Sunday revealed many, including the bosses of easyJet and Wetherspoons, quietly returned to full pay later in the year despite ongoing troubles at their business.
Executive bonuses can be withheld in specific circumstances. At BT, former boss Gavin Patterson had his bonus cut after an accounting scandal and his successor Philip Jansen waived cash bonuses after the telecoms giant suspended its dividend last year.
At Royal Mail, chairman Keith Williams took charge in May 2020, after ousting former boss Rico Back to speed up work modernising the 505-year-old firm. Simpson was installed as interim chief executive, but left in January after former Apple and Ocado executive Simon Thompson took charge.
Boost: The company saw profits soar 116 per cent to £702m in the year to March 28, 2021
Andrew Speke, of the High Pay Centre, said: ‘Royal Mail’s decision not to award bonuses to its directors should be welcomed, to the extent that it shows the board are considering factors beyond profit margins when assessing performance such as customer experience.
‘But the real story of Royal Mail’s past year should focus on the remarkable efforts of its staff, without whose hard work and dedication the quality of service provided and the company’s profit margins would be far lower.’
The company saw profits soar 116 per cent to £702million in the year to March 28, 2021, aided by the online boom, while Government contracts to deliver and collect Covid testing kits and vaccination letters boosted revenues. Despite not receiving his bonus, Royal Mail’s annual report showed Simpson received £462,000 during his last year with the firm. He will still be paid £375,000 in this calendar year as part of his termination agreement and retains share awards originally worth £1.2million.
Jeavons, who was paid £110,000 last year including pension benefits, was handed shares worth up to £390,000 late last year under a scheme set to vest in 2023. He is in line for a maximum bonus of £630,000 for this year – on top of his £420,000 salary – which is only payable for exceptional performance with a third deferred for three years in shares.
Rico Back, who was handed a £6million golden hello on his appointment in 2018, still received £94,000 in 2020-21, and owns shares now worth £9.8million. He will also receive £480,000 as part of his termination agreement.
Thompson’s strategy includes automating the sorting of parcels through new machines and huge ‘parcel hubs’, the first of which is due to open in Warrington in spring next year. He is also trying to address longstanding problems with bullying at the firm, as first reported in The Mail on Sunday.
A spokeswoman for Royal Mail said: ‘We paid no 2020-21 annual bonuses to Royal Mail executive board members and other senior managers. The decision not to award bonuses took several factors into account, including the pace of transformation at Royal Mail being slower than planned and quality of service.
‘We are making one-off recognition payments to frontline managers and other colleagues totalling £25million to recognise their exceptional contribution over the year.’
Royal Mail shares have soared 270 per cent to £5.82 in the past year, boosting the fortunes of its largest shareholder, Czech tycoon Daniel Kretinsky and returning the company to the FTSE100.
However, the stock fell last month after Royal Mail failed to offer specific financial guidance in its annual results.
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