By Mark Kleinman, City Editor
The board of Royal Mail is drawing up secret plans to hand an inflation-busting pay rise to Moya Greene, its chief executive, just weeks after next month's General Election.
Sky News has learnt that directors of the privatised postal services group have been discussing the move to boost Ms Greene's salary ahead of the publication of its annual report, which is expected in June.
Insiders said on Tuesday that a final decision about the pay increase had not yet been taken, and that formal consultations with leading shareholders, including the Government, which holds a 30% stake in Royal Mail, were still to take place.
They added, however, that it was "likely" that Ms Greene would be awarded an increase to her £498,000 base salary of approximately 5%.
The increase, they said, would be lower than a 9% three-year pay deal for staff agreed between Royal Mail and the Communication Workers' Union in December 2013, just three months after the company's controversial £3.3bn privatisation.
That agreement was designed to provide stability for industrial relations at Royal Mail even as Ms Greene wrestled with the twin challenges of increased competition for declining letter volumes and a changing regulatory framework.
It was unclear on Tuesday whether Royal Mail would seek the formal consent of the Government to hand a pay increase to its chief executive, although one source said that directors were determined to retain Ms Greene and were prepared to resist any attempts to maintain her salary at current levels for a fifth successive year.
One source close to the company pointed to a £535,000 pay and bonus deal awarded to Britain's new arms procurement chief as evidence that Whitehall was "prepared to pay commercial rates" to top executives.
In last year's annual report, Orna Ni-Chionna, the non-executive director who chairs Royal Mail's remuneration committee, wrote: "We …decided to make no change of any sort to the potential remuneration of our Chief Executive, Moya Greene.
"In making that decision, we took account of her views and wishes.
"This means that her salary has remained the same each year since she joined our Company in July 2010 and her annual bonus and LTIP [long-term incentive plan] potential have remained the same since the current policy was introduced in 2011."
Donald Brydon, who is to step down as Royal Mail's chairman later this year, has previously said that Ms Greene's status as "the lowest-paid chief executive in the FTSE-100" meant there was a greater risk of losing her.
Ms Greene, who ran Canada's postal service before moving to the UK, is widely regarded as having performed strongly in steering the former state monopoly through an ongoing restructuring as well as its privatisation 18 months ago.
However, earlier moves to increase her pay, which some Royal Mail directors have pushed for, were hampered by a row with ministers over a £250,000 housing allowance which Ms Greene later volunteered to return.
Under reforms introduced by Vince Cable, the Business Secretary, shareholders now have a binding vote on the pay policies of listed companies.
Last year, talks between the company and Mr Cable's officials over its pay plans continued until the eleventh hour, indicating that they had had significant difficulty reaching an agreement.
Mr Cable has also clashed with Ms Greene over regulatory changes to the postal industry, accusing her of "scaremongering" over warnings about the viability of the Universal Service Obligation, which requires Royal Mail to deliver to every UK address for the price of a stamp.
Part of the sensitivity in Whitehall over remuneration at Royal Mail stems from the repeated accusation that ministers allowed the company to be sold too cheaply.
In a report in December, Lord Myners, the former City Minister, said future state asset sales should be handled differently in order to preserve greater value for taxpayers.
Since the Government sold a 60% stake - with a further 10% handed to the company's workforce - the shares have endured a rollercoaster ride.
An initial surge in their value saw them almost double during the three months after the flotation, but a combination of regulatory and competition issues have since weighed on the shares.
On Tuesday, they closed up 1.3% at 448p, giving the company a market value of nearly £4.5bn.
Royal Mail declined to comment.
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