Shareholder Executive

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About Us

The Shareholder Executive?

The Shareholder Executive was created in September 2003 to improve fundamentally the government's performance as a shareholder in government-owned businesses and to provide a source of corporate finance expertise within government.

Our remit covers 29 businesses, from large well known companies such as the Royal Mail to smaller trading funds like the UK Hydrographic Office. View the full list of the 29 businesses

Our role is to be a proactive, intelligent shareholder, working with government departments and management teams to help government-owned businesses perform better. We advise Ministers and officials on a wide range of shareholder issues including objectives, governance, strategy, performance monitoring, board appointments and remuneration.

We want to create a climate of ownership that, while challenging, is genuinely supportive, and provides the framework for these businesses to be successful.
 

Organisation Structure

Download the Shareholder Executive Organisation Structure (pdf)
 

Our Objectives

The Shareholder Executive's overarching objective is to be an effective shareholder of businesses owned or part-owned by the Government. Its specific objectives are to:

• Royal Mail to pursue modernisation of the business and to find an acceptable outcome on a pension settlement with the trustees (avoiding significant call on public funds). Royal Mail to enter into a strategic partnership when market conditions are right.
• Ensure a stable and sustainable Post Office Ltd (POL) and post office network.
• Provide corporate finance advice on major initiatives to a range of departmental clients across government in the following areas:
  • Financial interventions (FI) : Launch Investment (LI), Rescue Aid and Grant for Business Investment (GBI)
  • Commercial advice (CA) : Advice on key third party relationships (e.g. suppliers) Key stakeholders are HMT and respective asset or project owning Depts.
• Lead on project managing and subsequent implementation of the Operational Efficiency Programme (OEP) asset workstream.
  • OEP’s objective is to consider the potential for alternative business models, commercialisation, new market opportunities and, where appropriate, alternatives to public ownership.
  • Ensure full involvement of Treasury, respective asset owning Departments and respective management teams.
• That the Nuclear Decommissioning Authority (NDA) delivers improved vfm in decommissioning and clean-up, including by competition for the management of decommissioning sites and by maximising revenue from its commercial operations and asset sales, with the income used to minimise the cost of decommissioning to the taxpayer.
• Provision of expert financial and governance advice to HM Treasury Officials and Ministers in respect of the UK banking sector and financial institutions.
• To establish bespoke performance targets for each of the portfolio businesses that relate to the drivers of value, ensuring longer term value creation across the portfolio.

Our Approach

To deliver these objectives, the Shareholder Executive take as a fundamental principle the need for government to act as an engaged and informed shareholder. We use a system based on the private equity model of share ownership, adapted to recognise the longer-term nature of the government's financial interests and the non-commercial policy objectives it sets.

Our approach is based on: a clear governance framework for each company based on best practice; clarity on commercial, policy and customer objectives for each business; management held to account for delivering an agreed strategy that is consistent with Government's objectives; and the raising of skills and professional staffing of shareholder teams.

Resources

The Shareholder Executive’s administrative budget consists mainly of staff costs and advisors’ fees. The unpredictability of the level of advisors’ fees each year – depending upon the nature and the number of transactions managed by the Shareholder Executive, and upon the recoverability of the fees from other Departments or portfolio companies – can give rise to significant variances between actual and budgeted expenditure.

In 2007-08 the Shareholder Executive underspent its budget by £2m, which was accounted for principally by underspending on advisors’ fees. In 2008-09, the Shareholder Executive’s actual expenditure was £10.1m against a budget of £9.3m, principally due to an increase in advisors’ fees of £0.75m to £5.0m (net of sums recovered), mainly relating to Royal Mail.

As expected, staff numbers rose from 48 at the end of 2007-08 to 60 at end of 2008-09. Of these 60 staff, 20 were external recruits appointed on fixed term contracts, 8 were secondees and the remainder were civil servants.This had the impact of increasing staff costs (including national insurance costs, superannuation and the cost of secondees) by only £0.2m to £4.7m, as the majority of additional staff were recruited towards the end of the year.

The administrative budget for 2009-10 is £9.0m. Given the growing portfolio of businesses and increasing workload, the reduced budget has put pressure on the Shareholder Executive to reduce spending and ensure value for money when incurring costs, particularly on advisors.The Shareholder Executive will continue to utilise its own in-house expertise wherever it can but, where the use of external advisors is unavoidable, it will ensure that the best possible terms are negotiated.

The Shareholder Executive manages a large programme expenditure budget dominated by payments to the Post Office, as well as the UK Atomic Energy Authority (UKAEA) to cover historic liabilities.The programme budget for 2009-10 is £182m of which £166m was Government’s annual subsidy for the post office network.This compares with £292m of programme spend in 2008-09 which included the subsidy to the Post Office and restructuring costs associated with the Post Office Network Change programme.

The Shareholder Executive also provides the governance function for DECC on the NDA, advising Ministers and the DECC Accounting Officer on financial and operational matters.The NDA’s gross expenditure in 2008/09 was around £2.7bn.