Shake-up at top of Royal Mail sparks speculation that company could be broken up
A shake-up at the top of Royal Mail has sparked speculation that the company could be broken up.
The firm named former Ocado executive Simon Thompson as the boss of its UK operations as it grapples with falling letter numbers and an explosion in parcel deliveries.
The 54-year-old, who spent some of last year running the NHS test and trace app designed to help tackle the coronavirus crisis, was put in charge yesterday, replacing interim chief Stuart Simpson.
Breaking away?: Simon Thompson’s appointment as boss of Royal Mail Group’s UK arm only – and not the whole business – will fuel speculation that the company could be broken up
Thompson, who has also worked at iPhone maker Apple and supermarket Morrisons, has been tasked with expanding Royal Mail’s UK parcel operations after an internet shopping boom during the Covid-19 pandemic has sent demand soaring to record levels.
But his appointment as chief executive of Royal Mail Group’s UK arm only – and not the whole business – will fuel speculation that the historic company could be broken up.
The changes come after the departure of former group chief executive Rico Back in May, who was ousted following acrimonious rows with unions that delayed modernisation plans and led to poor performance.
Following Back’s departure, the role of group chief has now been abolished.
Instead, Thompson will report directly to the board and have equal status to Martin Seidenberg, the German boss of GLS, Royal Mail Group’s European parcels business, a spokesman said. The pair will each get roughly equal salaries of about £525,000 per year.
Keith Williams, who has been executive chairman for the past eight months, will resume his previous role as non-executive chairman. Royal Mail claims the new structure is a better fit because the UK and European businesses have significant differences and each require their own separate strategies.
Williams said Thompson was the right man for a period of ‘significant transition’ in the UK, while adding that Seidenberg had made an ‘impressive’ start since taking over as GLS boss last summer.
The chairman, 64, said: ‘We have two excellent leaders in place for each of our businesses, focused on the opportunities which they each have to grow and succeed in the future.’
Analysts said the new structure could make a break-up much easier. A spokesman for Royal Mail refused to comment on that suggestion. Daniel Roeska, a senior research associate at Bernstein, said: ‘It doesn’t close the door on a future break-up.’