US Postal Service 2011 Annual Report Download - page 50

2011 Report on Form 10-K United States Postal Service - 48 -
CODE OF ETHICS
All Postal Service employees are required to comply with
the Standards of Ethical Conduct for Employees of the
Executive Branch ("Standards"). The Standards are
published at 5 CFR Part 2635 and cover prohibitions and
restrictions on the acceptance of gifts, conflicting
financial interests, the obligation of all employees to
perform their duties impartially, restrictions on the
misuse of government positions, restrictions on certain
outside activities, and other related ethical obligations.
Postal Service employees are also covered by a set of
additional restrictions that apply only to the employees of
the Postal Service. These supplemental standards can
be found at 5 C.F.R. Part 7001 and focus on limitations
on outside employment and outside business activities
that could give rise to a conflict with their official duties.
The Standards of Conduct and the Supplemental
Standards contain many examples to help employees
identify and resolve ethical issues. New employees
receive ethics training at their orientation and ethics
officials provide ethics training throughout the year as
required by law and as otherwise deemed appropriate.
To ensure that all of our employees can receive timely
and accurate ethics advice, we have established a
dedicated ethics telephone helpline and an e-mail
address that is managed by ethics specialists.
Certain high level employees are also subject to the
Senior Financial Managers' Code of Ethics. This Code of
Ethics can be found on our website at:
http://about.usps.com/who-we-are/financials/senior-
financial-managers-code-of-ethics-2010.pdf.
ITEM 11 — EXECUTIVE
COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
ROLE OF THE BOARD OF GOVERNORS AND STATUTORY COMPENSATION
AND BENEFITS REQUIREMENTS AND LIMITATIONS
The Board of Governors of the Postal Service
establishes executive officer compensation and benefits,
subject to the requirements and limitations of federal
law. The Board has delegated to its Compensation and
Management Resources Committee (“Compensation
Committee”) authority for initial review of management
proposals related to compensation and benefits for
executive officers. The Compensation Committee, which
meets several times throughout the year, is composed
solely of presidentially-appointed, Senate-confirmed
Governors who are independent of postal management.
The Compensation Committee makes recommendations
to the full Board for their review and approval.
Federal law governing the Postal Service, set forth in
Title 39 of the United States Code, provides that
compensation and benefits for all officers in the Postal
Service shall be comparable to the compensation and
benefits paid for comparable levels of work in the private
sector of the economy. The Postal Service is the second
largest civilian employer in the nation, with
approximately 646,000 career and non-career
employees as of the end of fiscal year 2011. The Postal
Service operates nearly 214,000 motor vehicles and
more than 32,000 retail units. In 2011, the Postal Service
delivered 168 billion pieces of mail, almost half of the
world’s mail, and generated $66 billion in revenue. In
2011, the Postal Service ranked 109th in Fortune
Magazine’s listing of Fortune Global 500 Companies. By
way of comparison, two of our largest competitors
ranked 166th and 261st on this list. If the Postal Service
were listed on the Fortune 500 annual ranking of
America’s largest corporations, it would be ranked 34th.
The same two of our largest competitors are ranked 48th
and 73rd on that list.
Given the Postal Service’s size and scope of operations,
the comparability requirement in Title 39 would suggest
that the Postal Service’s executive officer compensation
and benefits should be on par with the compensation
and benefits of the very largest private sector companies
in the United States. Even in these challenging
economic times, comparably sized companies typically
provide their top executives with annual salaries well in
excess of $1 million and total compensation and benefits
valued at several million dollars. These compensation
packages typically consist of annual and long-term
performance incentives, including a combination of cash
payments and stock options and a number of benefits
and perquisites.
Although the law governing the Postal Service provides
that executives and others should be compensated at a
level comparable to the private sector, the law does not
afford the Governors the tools to achieve a standard of
compensation comparable to the private sector. Postal
law imposes three different caps on compensation for
postal employees. The first cap provides that no officer
or employee may be paid compensation “at a rate in
excess of the rate for level I of the Executive Schedule
under section 5312 of title 5” of the United States Code.
39 U.S.C. § 1003(a). This compensation cap was set at
$196,700 for calendar year 2009, $199,700 for calendar
year 2010 and $199,700 for calendar year 2011.
With the approval of the Board, however, the Postal
Service may develop a program to award a bonus or
other reward in excess of the compensation cap
discussed above, as long as this does not cause the
total compensation paid to the officer in a year to
“exceed the total annual compensation payable to the
Vice President [of the United States] under [3 U.S.C. §