Is Royal Mail ignoring concerns about how it is run?

[TrueBlueTerrier]

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From an executive pay row to a £50m fine, Royal Mail could be relegated from the FTSE 100 amid shareholder discontent.

Royal Mail's recent form resembles that of a hungover postie who turns up late for his shift, decides he can't be bothered to deliver all of that day's post, but instead takes it home for a few days.

First there was a painful row with shareholders over the appointment of the new chief executive, Rico Back, who, despite already working for Royal Mail, was awarded a £6m 'golden hello'.


That deal, along with a near-£1m 'golden goodbye' to its departing chief executive, Moya Greene, earned Royal Mail a severe rebuke from shareholders, 70% of whom voted against the remuneration report at last month's annual meeting.

In a further sign of shareholder displeasure, 34% of investors voted against the reappointment of Peter Long as chairman of Royal Mail, while both he and Orna Ni-Chionna, the head of the company's remuneration committee, look set to be hauled before the Business, Industry and Skills select committee when it opens hearings into executive pay this autumn.

Mr Long, an experienced City campaigner respected for his record at the helm of tour operator TUI Travel, also faces accusations of so-called 'over-boarding': the Royal Mail pay row came just as he was trying to get to grips with problems at Countrywide, the estate agent, where he is also chairman.

Now, today, comes this punishment from Ofcom. Regulators are often accused of going soft on companies.

This £50m fine, the largest ever imposed by the media and communications regulator, is ferocious and reflects Ofcom's view of the severity of Royal Mail's alleged offence. The company stands accused of breaking competition law to such an extent that its only competitor in the field, Whistl, gave up in despair.

Royal Mail has been fined a record £50m by the communications regulator "for a serious breach of competition law".

Royal Mail has pledged to appeal against the fine and argues it will win because the price changes it planned to impose on Whistl were never actually implemented.

However, while technically this may prove to be the case, Royal Mail's defence does it few favours. The evidence unearthed by the regulator suggests strongly that, regardless of whether or not the changed prices were ever paid, Royal Mail intended to hurt its rival.

That highlights an ugly internal culture. Royal Mail also argues that it took the steps it did to prevent 'cherry picking' of its more profitable routes by rivals and insists that it took a great deal of advice when seeking to implement the price changes on what would remain within the bounds of competition law.

Nonetheless, the company's overall response to Ofcom's fine displays signs of the insouciance with which it sought to brush aside shareholder anger over its executive pay policy. That insouciance extended today to a refusal, not for the first time, to make anyone available for interview.

Not only is there disquiet over executive pay, there is also concern among investors over underlying trading at the company, following news that the number of letters handled during the three months to the end of June were down 6% on a year earlier - representing an acceleration in the rate of decline seen during the entire 2017-18 financial year.

Royal Mail has blamed this on the introduction of GDPR, the EU's new data protection rules, but the slowdown does raise questions about an arm of the business that still accounts for more than half of Royal Mail's annual revenues.

The company is hoping, over time, that higher parcel volumes will make up for this but clearly it must continue investing to ensure such an outcome. Today's fine may hamper its ability to do that.

Mr Back, whose residence in Zurich while running a company 65% of whose operations are still in the UK has also been criticised by investors, should tread carefully.

Royal Mail clearly enjoys dominance in the letters and parcels market. Today's disclosures point to a preparedness to exploit that. That preparedness will ensure the regulator continues to watch it like a hawk and will also embolden the Labour Party in its commitment to renationalise the company.

Exactly three months ago today, Royal Mail shares hit an all-time high of 632.6p. Since then, reflecting the executive pay row, the recent trading update and today's spanking from Ofcom, they have lost almost 29% of their value, putting the company at risk of relegation from the FTSE-100 next month.

The hungover postie who stuffs a few mailbags under his bed or in the airing cupboard might argue his own performance is not bad by comparison.

[tommyrep]

Hardly the behaviour of a large blue chip company.
Shareholders views are being treated with contempt.
Being run by rogues and charlatans with their nose firmly in trough.
So nothing has changed really.

[cockneyrebel]

True Blue so right -where are we going ?? road to nowhere ??
we seem rudderless at the moment Mr Back - Ms Whalley quieter than a silent movie !!!!!!!!!!!!!!!!!
unrest across the country -morale low -workload high even now in summer !! overtime sprayed about to avoid walk failures 2 years ago i would have said yes to relative joining
Now NO WAY IN THE WORLD !!
we heading into our busiest period and I can only see more depot issues, and no matter how dedicated we are
the physical demands on our bodies re longer walks etc, will take its toll of that no doubt
sickness bound to go up-Dr Corinne Parsons head of Ergonomics virtually admits this re recent survey re musculoskeletal issues
I suffer myself told by consultant in nicest way-wont see me anymore
cant help as long as I continue to be a postman !! she alarmed at the increase in postal personnel seeing her
I have time for Mr Back/Ms Whalley and Mr Pullinger -but they got to get together and thrash this out and fast
Winter is not far away. Shares as we can all see not great -but marker does fluctuate but we not looking good to stay in top 100
Its our livelyhood -most of us do care and our future we want it to work
there are big earners in this Company -its time we saw why they warrant those figures and get us back and up where we belong