The chief executive of Royal Mail's parent company received nearly £7 million in pay and bonuses last year—more than triple the previous figure—despite group profits slumping by a fifth. Martin Seidenberg, group chief executive of International Distribution Services (IDS), took home £6.9 million in pay, bonus, and long-term incentive scheme awards for the year ending 31 March 2024, compared with £2.1 million the previous year.
Takeover Triggers Bumper Pay Package
The company attributed the substantial increase to the £3.6 billion takeover by Czech billionaire Daniel Křetínský, which led to IDS being delisted last June and triggered the vesting of incentive awards and share-based bonuses for Seidenberg. No award plans vested in the prior year. IDS stated in its annual report, published on Tuesday, that "the vesting of awards was accelerated at the point of takeover," explaining the rise in emoluments for the highest-paid director.
In total, IDS's executive and non-executive directors received £9.8 million last year, more than double the £4.2 million from the previous year.
Profits Decline Amid Rising Costs
IDS, which also owns parcel delivery service GLS, reported that adjusted operating profits fell by 20% to £222 million for the year to 31 March. While Royal Mail's profits grew to £5 million from £2 million a year earlier, GLS experienced a 17% decline to £237 million, attributed to factors including regulatory changes in Italy affecting the delivery sector and the impact of US tariffs on businesses in Canada. Revenues increased by 3.6% to £13.6 billion, but total operating costs ballooned by £629 million to £13.4 billion.
The company blamed the cost increase on "higher wages and associated taxes," following the government's move to raise employers' national insurance contributions (NICs) and the minimum wage. IDS reported that people costs, including wages and salaries, rose 5.7% to £7.16 billion, a £384 million increase over the previous year.
Royal Mail Faces Repeated Ofcom Fines
At Royal Mail, parcel volumes grew 7% to 1.4 billion, while letter volumes fell 10% to 5.7 billion. Earlier this month, the UK postal regulator Ofcom launched another investigation into Royal Mail for missing its annual delivery targets. The company has been fined £37 million since 2023 for missing targets set by Ofcom, and was late delivering almost a quarter of first-class mail in the year to the end of March.
Takeover Commitments
To secure the deal to take over IDS, which included a state review of national security laws, Křetínský's EP Group made several promises. These include maintaining IDS and Royal Mail headquarters in the UK for at least five years and remaining tax resident in the country. Other pledges encompass no change of control for GLS or Royal Mail for three years, not touching any Royal Mail pension scheme surpluses, and continuing to recognise the Communication Workers Union and CMA Unite workers' unions.
