Media Release - Response to Australia Post 2017 Remuneration Report
MEDIA RELEASE 27/08/2017
LPOGroup welcomes the remuneration transparency for Australia Post’s MD / GCEO & Senior Executives in the Australia Post 2017 Remuneration Report released today.
We understand that this has been a matter of public interest in recent times and the remuneration structure and explanations within the report are insightful.
Of particular interest is the LTI (Long Term Incentive) plan in which considerable bonuses were paid to the MD & GCEO on the condition of meeting various ‘Success factors’.
The report states: “Success Factor 4: Ensure the ongoing viability of the retail network through business growth and, as necessary, government support” (Australia Post 2017 Remuneration Report - pg 9) In reality, there would be very few LPO Licensees that would agree that this particular ‘Success Factor’ was adequately met in 2016-17, or in any of the financial years in the preceding decade.
LPOGroup understands that there is no viability measure even used by Australia Post to determine the health of the LPO network, which makes up two-thirds of the entire retail network. Australia Post reports payments to Licensees only as an expense to the business. That is not a measure of success.
We note the statement: “Between 2013 and 2017 we have increased LPO payments by 36%.” (Australia Post 2017 Remuneration Report - pg 9) Any assertion that a 36% increase in payments over a four year period equates to viable outcomes for the LPOs is highly misleading. Without the context of proper analysis of LPO business cost changes over the same period, the relative nature of those revenue increases only serves to highlight the growing gap between significant cost increases and miserly revenue increases. LPOGroup’s claim of a highly vulnerable LPO network in 2013 was validated by the 2014 Senate Inquiry (Performance, importance and role of Australia Post in Australian communities and its operations in relation to licensed post offices). All increases in LPO payments since that time have been nothing more than partial catch-ups, or “sugar hits” in LPO payments that had stagnated in the past decade.
A comprehensive study of the LPO network performed by PIP (Partners In Performance) in 2015 detailed six improvement levers which needed to be addressed to improve outcomes for LPOs. Unfortunately, actionable items that would have improved LPO viability following the PIP studies have been largely avoided by Australia Post, and the LPO network continues to face a vulnerable future.
While the remuneration for senior executives and other levels of management of Australia Post are justified as being comparable to other large companies, the same can’t be said for the LPO network remuneration. Licensees are expected to accept very small contribution & retail margins, risks and conditions that don’t exist within the broader retail industry, and are not comparable in any way with other retail businesses. LPOGroup continues its call for fair and equitable payments for licensees, and these results clearly demonstrate the inequitable nature of our relationship with Australia Post.
LPOGroup looks forward to working with the incoming MD / CEO, Ms Holgate to establish a shared vision on LPO network viability, with measureable outcomes based on proven business methodologies.