Reporting its results this week, Royal Mail said full-year profits fell to £233 million – a third lower than last year. This was partly due to pension fund top-ups and partly due to the fact that its customers are deserting it in droves – a process that the recent strikes will only accelerate, as chairman Allan Leighton acknowledged. Management has already admitted that the company is over-staffed, inefficient and uncompetitive.
In other words, the business is clearly in a bit of a mess. So it’s no surprise that Crozier’s £1.3 million package (which includes a £633,000 basic, a bonus of £469,000 and £140,000 in lieu of pension) has sent the unions apoplectic. They’re arguing that it took them eight days of strikes to get a 5.4% raise – while Crozier has got a 16% increase without even bothering to attend the talks.
Crozier got the bonus because Royal Mail achieved record service levels last year, with 94% of first-class post delivered the following day. All very admirable, but it seems to be ignoring the bigger picture – after all, it’ll be tough to maintain those levels if his entire workforce keeps walking out on strike.
The straight-talking Leighton was unapologetic, saying: ‘The reason Adam paid what he gets paid is because he runs a bloody big company and does a great job. Getting good people to run this company is difficult.’ And he probably has a point – most FTSE 100 CEOs earn much more than this, and get a lot less hassle.
But in a week when Stan O’Neal walked away from Merrill Lynch with a $160m severance package after leading the bank to catastrophic losses, this will again give rise to complaints about the rewards for failure.
Perhaps next time Leighton should send Crozier his bonus cheque by second-class post – that way all the fuss will probably have died down by the time it eventually arrives.