Martin Seidenberg, the chief executive of International Distribution Services (IDS), the parent company of Royal Mail, received a total pay package worth £6.9 million for the financial year ending March 31, more than triple the £2.1 million he earned the previous year. The sharp increase was driven by long-term incentive awards that vested early due to the £3.6 billion takeover of IDS by Czech billionaire Daniel Kretinsky's EP Group.
Profits Plunge Amid Takeover Costs
The bumper pay package came despite a significant decline in group profitability. IDS reported underlying earnings fell by a fifth to £222 million, while pre-tax profits dropped by more than two-thirds to £141 million from £429 million the prior year. The GLS parcel division, a key part of the group, saw earnings fall 17.1% to £237 million, impacted by regulatory changes in Italy and a challenging trading environment in Canada.
Royal Mail's UK operations also suffered. Operating profits at the postal arm more than halved to £96 million, down from £198 million the previous year. The decline was attributed to rising labour costs, including a 5.5% increase in employee costs driven by a 4.2% pay rise for frontline staff and an additional £133 million national insurance contributions bill. The previous year had also benefited from increased letter mailings during the 2024 general election.
Takeover Costs and Universal Service Changes
IDS incurred £57 million in costs related to the takeover in the latest financial year, on top of £28 million in the prior year. The company's annual report stated that the accelerated vesting of long-term incentive plan awards at the point of takeover explained the increase in the highest-paid director's emoluments.
Royal Mail is pressing ahead with changes to its universal service obligation, including delivering second-class post every other weekday and scrapping Saturday deliveries across the UK. These changes follow an agreement with trade unions that had previously delayed their rollout to all 1,200 delivery offices.
Service Failures and Regulatory Scrutiny
The company faces increasing pressure from regulator Ofcom, which launched an investigation into Royal Mail's failure to meet delivery targets. In the 12 months to March, only 75.7% of first-class mail arrived the next working day, and 90.2% of second-class mail was delivered within three working days. Royal Mail was fined a record £21 million by Ofcom in October last year for missing targets in 2024/25.
Royal Mail's parcel volumes rose 7% to 1.4 billion, but addressed letters fell 10% to 5.7 billion, reinforcing the need for service reforms. Martin Seidenberg commented: "Following Royal Mail's agreement with the unions, we are rolling out universal service changes across the UK which will lead to a more efficient, reliable and sustainable service for our customers."
