Royal Mail chiefs share £3.6m despite missed targets

The top directors of Royal Mail received more than £800,000 in bonuses last year even though the organisation missed all 15 of its targets for delivering letters on time, it emerged yesterday.

The top directors of Royal Mail received more than £800,000 in bonuses last year even though the organisation missed all 15 of its targets for delivering letters on time, it emerged yesterday.

Adam Crozier, the chief executive, earned a £300,000 bonus, taking his total pay to £664,224, while Elmar Toime, the deputy chairman and the executive directly responsible for the disastrous performance of the letters business, earned a £150,000 bonus on top of his £500,000 salary.

In total, Royal Mail's five executive directors were awarded more than £3.6m in salaries, annual bonuses and long-term incentives.

The consumer watchdog PostWatch attacked the bonuses at a time when Royal Mail's performance had "reached the bottom", while the postal regulatory Postcomm announced an investigation into what it described as a "collapse in quality of service".

Royal Mail could have to pay £160m in fines and compensation if the regulator rules that it did not use "reasonable endeavours" to meet its performance targets. This would wipe out a large part of the £220m operating profit it made in 2003-04.

In an effort to counter criticisms of the bonus payments, the Royal Mail chairman, Allan Leighton, announced he had deferred all of his £144,000 bonus due last year and would not receive any bonus this year unless the organisation hit its performance target of delivering 92.5 per cent of first class letters the next day.

Royal Mail also said that Mr Crozier and his five fellow executive directors had waived the quality service element of the bonus payments they were entitled to last year.

However, a senior source at Postcomm described this as a "highly cynical, headline-grabbing ploy". Mr Leighton has to meet only four of Royal Mail's 15 performance targets and then only in the fourth quarter, when postal volumes are lower and easier to hit. The four targets he has to meet are also regarded as the easiest.

As for the offer to waive bonuses linked to quality of service, the source said: "It is easier to waive something you never received in the first place."

Mr Leighton maintained that Royal Mail has taken a "very responsible" approach in deferring and waiving bonuses.

"Anything short of our targets is not good enough. In deferring these bonuses, we are saying we have confidence in everyone in Royal Mail achieving our key targets by the end of this year," he said.

The main target is to make an operating profit of £400m. That will trigger further multimillion-pound bonuses for Royal Mail directors and an across-the-board £800 payment for the company's 190,000 staff.

Royal Mail blamed the failure to hit its performance targets on last autumn's wildcat strike action in London. But PostWatch and the regulator rejected that excuse, saying that its performance had continued to decline this year. Only 88 per cent of letters have been delivered on time so far this financial year.

The problem stems from Royal Mail's decision to introduce a single daily delivery while simultaneously cutting the workforce at its mail centres and making radical changes in the way the post is transported.

Nigel Stapleton, the chairman of Postcomm, said: "Normally, an organisation embarking on a major change of that sort staffs up. They have staffed down which sends a warning signal to us."

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?