Expert Corporate Governance Service (ECGS)
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Royal Mail, 18 July 2019

Profit warning

Royal Mail’s pre-tax profit has more than halved during the course of the financial year. Furthermore, as a result of Royal Mail issuing their own profit warnings regarding this, they saw their share price plummet by roughly 20%. Please see the attached report for further details.

Item 2: Approve the Remuneration Report

The remuneration structure is not satisfactory as the structure is not weighted more towards rewarding long-term performance. Instead, it is more heavily weighted toward the short term. The maximum bonus and benefits exceed guidelines. Accelerated vesting is possible. 50% of the LTI vests for threshold performance, which exceeds market practice. The quantum is not excessive, especially as no bonus was paid. However, loss of office payments were made. We recommend shareholders oppose.

Item 3: Approve the Remuneration Policy

At the previous AGM, only 27.55% of shareholders voted in favor of the remuneration report. During the year, the Company commissioned a survey to learn about investor views on the Company's pay practices and they also met with their largest investors. Following this process, they have proposed this new remuneration policy. Although the Company's engagement with shareholders is commendable, the structure of pay under the proposed policy is still unsatisfactory. Pay is not sufficiently aligned with the long term, which is especially of concern given the Company's current financial performance. We recommend shareholders oppose.

Royal Mail

Royal Mail is a delivery company. Co. delivers letters and parcels across the U.K. Co.'s operations and networks comprised of: UK Parcels, International & Letters (UKPIL) and General Logistics Systems (GLS). UKPIL comprises Co.'s main U.K. and international parcels and letters delivery businesses under the Royal Mail and Parcelforce Worldwide brands. It supports the provision of services for the collection, sorting and delivery of parcels and letters by Co. GLS is Co.'s European parcels business. It operates parcel delivery networks in Europe. The GLS network covers 41 European countries and nation states through a combination of wholly-owned companies and partner companies.


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