Related Articles
Royal Mail’s owner has been accused of ‘rewarding failure’ as it plans to boost its boss’s bonus amid a controversial takeover by a Czech tycoon.
International Distribution Services (IDS) will this month ask shareholders to approve hiking Martin Seidenberg’s maximum award by £300,000.
That could see him take home just over £3 million – twice as much as he earned last year – as he oversees the sale of Royal Mail to billionaire Daniel Kretinsky, known as the ‘Czech Sphinx’ for his inscrutability.
A deal would see the 508-year-old postal service fall into foreign ownership for the first time since it was established by Henry VIII in 1516. IDS said that the raise reflects Seidenberg’s ‘complex’ role leading the business ‘through the current challenges’.
Andrew Speke at the High Pay Centre think-tank said Seidenberg’s ‘significant’ pay rise after the company’s ‘much publicised failings with Royal Mail’ was ‘an indictment of the failed model for rewarding executives that currently exists in the UK’.
‘It can sometimes feel that top executives are being rewarded for failure,’ he added.
IDS wants to increase Seidenberg’s long-term incentive plan (LTIP) to 200 per cent of his base salary, from 150 per cent.
Shareholders will vote on the pay deal at their annual general meeting later this month.
The meeting comes as the IDS board faces criticism for accepting Kretinsky’s £3.6 billion bid despite being close to winning key regulatory reforms it has demanded.
These include scrapping second-class deliveries on Saturdays, which could save Royal Mail £300 million a year.
Royal Mail has also been criticised for poor customer service. The postal service was last year fined £5.6 million by regulator Ofcom for failing to meet its delivery targets.
In May, the watchdog revealed that Royal Mail had failed to meet its targets again, and is investigating whether to issue a penalty.
In its annual report, IDS said it wants to boost Seidenberg’s bonus to ‘reflect the scale’ of the new group chief executive role, which oversees both Royal Mail and IDS’s European parcels business GLS.
A bumped-up bonus would be ‘a more appropriate incentive to successfully lead the group through the current challenges and deliver on the opportunities available to both GLS and Royal Mail’, an IDS spokesman said.
He added: ‘The group chief executive role is a complex role and it is appropriate that the LTIP opportunity, which is subject to delivering performance across the portfolio and returns to shareholders, reflects this.’
The move will bring Seidenberg’s maximum LTIP pay in line with the average for the top 50 FTSE 250 companies, the spokesman said.
The amount Seidenberg is in line for depends on IDS meeting targets on certain financial measures including operating profits and cashflow.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
