United States General Accounting Office GAO Report to the Chairman, Subcommittee on the Postal Service, Committee on Government Reform and Oversight, House of Representatives August 1997 U.S. POSTAL SERVICE Issues Related to Governance of the Postal Service GAO/GGD-97-141 United States GAO General Accounting Office Washington, D.C. 20548 General Government Division B-272702 August 14, 1997 The Honorable John M. McHugh Chairman, Subcommittee on the Postal Service Committee on Government Reform and Oversight House of Representatives Dear Mr. Chairman: This report responds to your request that we obtain information on Postal Service governance issues. You indicated that the views of current and former members of the Postal Service’s Board of Governors would be particularly useful to the Subcommittee as it deliberates its current legislative proposal to reform the U.S. Postal Service (USPS).1 Our objectives in this report were to (1) identify any major areas of concern, including specific issues, that current and former members of the Postal Service Board of Governors have about the Board and their suggested legislative changes; (2) compare the major characteristics of the Postal Service’s Board of Governors with the characteristics of selected boards of other government-created corporations or corporation-like organizations2 to identify similarities and dissimilarities—particularly as they relate to the major areas of concern identified by current and former Board members; and (3) provide additional information on governance issues that might be helpful to the Subcommittee as it deliberates Postal Service reform. We also discuss areas where some, but less than a majority of, current and former Board members indicated legislative attention is needed. Additionally, we identify governance topics discussed with current and former members where none believed legislative attention is needed. We draw no conclusions nor make any recommendations concerning the governance issues raised by the interviewees and their suggested legislative changes. 1 Postal Reform Act of 1997, H.R. 22, 105th Congress (1997). 2 As agreed with the Subcommittee, we did not restrict our comparisons to only those organizations legislatively designated as “government corporations.” Comparisons were made with The National Railroad Passenger Corporation (AMTRAK), Australia Post, Canada Post, Corporation for Public Broadcasting (CPB), Federal National Mortgage Association (Fannie Mae), Federal Deposit Insurance Corporation (FDIC), Federal Home Loan Mortgage Corporation (Freddie Mac), Rural Telephone Bank (RTB), and Tennessee Valley Authority (TVA). We also attempted to include the Communications Satellite Corporation (COMSAT) in our study. However, after agreeing to participate, COMSAT did not furnish the requested information. Page 1 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 The Postal Service is a corporation-like organization that was created by Background the government to provide postal services and to help bind the nation through the personal, educational, literary, and business correspondence of the people. Over the years, the government has created a number of corporations or corporation-like organizations to fulfill a variety of public functions or purposes of a predominately business nature. Historically, such organizations have been created on an individual need basis with the characteristics and functions of each being tailored to its specific mission. In general, these organizations can be identified under certain categories, such as wholly-owned government corporations, mixed-ownership government corporations, government-sponsored enterprises (GSE), or government-created private corporations. Grouping these government-created corporations and corporation-like organizations into these categories can be helpful because such organizations share certain common characteristics. However, for comparative purposes, it should be noted that even within these categories, the organizations are structured and governed in a variety of ways. Therefore, for purposes of this report, we found it more helpful to review each organization in our study individually without regard to any particular category under which it may be identified. Appendix I contains additional information about government-created corporations and corporation-like organizations. The Postal Reorganization Act of 1970 (1970 Act) created the Postal Service, designated it as an independent establishment of the executive branch, and created a Board of Governors to be its governing body. The Postal Service is not identified as falling under any particular category of government corporation or government-created corporation-like organization. The Postal Service has reported that it is not a government corporation; however, it is frequently considered by others to be one and has been previously included in major government corporation studies done over the last several years. According to the Postal Service, its Board of Governors is comparable to the board of directors of a private sector corporation. The Board of Governors directs the exercise of the powers of the Postal Service, directs and controls its expenditures, reviews its practices, and conducts long-range planning. It sets policy; participates in establishing postage rates; and takes up matters, such as mail delivery standards and capital investments and facilities projects exceeding $10 million. It also determines the pay of the Postmaster General (PMG) and approves the pay of other Postal Service officers. By statute, the Postal Service is to maintain compensation and benefits for all officers and employees on a Page 2 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 standard of comparability with the private sector. However, no officer or employee can receive pay in excess of the rate for level I of the Executive Schedule—currently $148,400. The Board consists of 11 members, including (1) 9 Governors appointed by the president, with the advice and consent of the Senate, to 9 year staggered terms; (2) the PMG, who is appointed by the Governors; and (3) the Deputy Postmaster General (DPMG), who is appointed by the Governors and the PMG. By law, Governors are chosen to represent the public interest and cannot be representatives of special interests. They serve part time and may be removed only for cause. Not more than five of the nine Governors may belong to the same political party. No other qualifications or restrictions are specified in law. The 1970 Act provided for each Governor to receive an annual salary of $10,000, plus $300 a day and travel expenses for not more than 30 days of meetings each year.3 The act providing appropriations4 to the Postal Service for fiscal year 1997 increased the Governors’ annual salaries to $30,000 per year, but the $300 daily meeting allowance remained unchanged. A majority of current and former members of the Postal Service Board of Results in Brief Governors whom we interviewed said legislative attention was needed in three broad areas. However, there was not a consensus among the members on what the specific issues were within each area of concern, or what legislative changes should be considered to address their concerns. The major areas of concern were the Board’s authority, Board members’ compensation, and Board members’ qualifications. Within these broad areas of concern, the most frequently cited issues were (1) the limitations on the Board’s authority to establish postage rates; (2) the inability of the Board to pay the PMG more than the rate for level I of the Executive Schedule—currently $148,400; (3) the Board’s lack of pay comparability with the private sector; and (4) qualification requirements that are too general to ensure that Board appointees possess the kind of experience necessary to oversee a major government business. 3 Public Law 99-190, enacted in December 1985, amended the 1970 Act to increase the number of paid meeting days from 30 to 42. 4 The USPS is essentially a self-supporting organization; however, it is authorized to receive three types of appropriations: public service, transitional costs, and revenue foregone. Appropriations received in fiscal year 1996 totaled about $130 million, which accounted for about 0.2 percent of its total revenues. Page 3 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 Our comparison of the Postal Service’s Board of Governors with nine other boards of government-created organizations showed both similarities and dissimilarities. Similarities indicate that these boards were created to function much like private sector corporate boards. For example, all 10 boards were exempted from some statutes and regulations that other government departments and agencies are required to follow. Dissimilarities, however, reflect the amount of flexibility the boards were given to operate like private sector corporations. We noted many differences reported among the selected government-created organizations in ratemaking processes, compensation practices, and the processes used to appoint board members. (See app. IV for detailed information about similarities and dissimilarities among the boards of selected government-created organizations.) For example, the Postal Service’s ratemaking process requires that its rate increases be reviewed by a third party; the ratemaking processes reported by five other organizations included in our study did not involve a third-party review. We also identified four broad areas where some of the interviewees, but less than a majority, believed legislative attention was needed. These areas were the Board’s mission and responsibilities, the Board’s relationship with Postal management, the Board’s accountability and performance measures, and Board composition. The most frequently cited issues in these areas were (1) uncertainties as to how far the Board should go in letting the Postal Service compete and operate like a private sector corporation, (2) the limited specificity in law concerning the Board’s oversight responsibilities, and (3) perceptions that the Chief Postal Inspector may not have all the independence the position requires. Finally, there were two areas that we raised for which none of the interviewees believed legislative attention was warranted. These areas were Board staffing and the Board’s legal status. The interviewees’ concerns about many issues, such as Board authority, accountability, and how far to let the Postal Service go in competing and operating like a private sector corporation, are issues being grappled with in the larger context of streamlining government operations. A recent Congressional Research Service study prepared for the Senate Committee on Governmental Affairs notes a renewed interest in government corporations and discusses the probability that even more government corporations will be created in the next decade as government struggles to find ways to make organizations more productive.5 The study notes that the major challenge will be holding government corporations accountable 5 Managing the Public’s Business: Federal Government Corporations (S. Prt. 104-18, Apr. 1995). Page 4 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 for their policies and operations while at the same time allowing them sufficient financial and administrative discretion to operate efficiently and effectively—the same challenge that Congress faces in reforming the Postal Service. To identify current and former members’ areas of concern, including Scope and specific issues and their suggested legislative changes, we (1) interviewed Methodology all 11 members of the current Board (including the PMG and DPMG); and (2) interviewed 2 former Governors appointed after December 1, 1985, whom we were able to contact. We also interviewed the PMG’s predecessor and the PMG serving at the time of the 1970 Postal Service reorganization. The latter also served as the first Chairman of the Board of Governors. Appendix II lists the interviewees included in our study, position(s) held, and date(s) of appointment. We sent each interviewee a list of questions, judgmentally grouped into broad areas, prior to our interview. This list guided our interviews (see app. III). We asked each interviewee if he or she had any issues or concerns within each of the broad areas. If the interviewees had concerns, we asked them to elaborate and identify any specific legislative action(s) they believed Congress might want to consider. We also offered interviewees an opportunity to discuss any other concerns related to the Board. For each broad area discussed, we tallied the number of interviewees who believed legislative changes were either needed or not needed. If interviewees did not definitely answer yes or no, we did not include their answers in our tallies. To compare the characteristics of the boards of other government-created organizations with those of the Postal Service Board, we developed and sent a matrix to 11 boards,6 including the Postal Service Board. The matrix covered 73 characteristics, grouped in such broad categories as (1) the board’s mission and responsibilities, (2) the board’s authority, (3) board members’ compensation, and (4) board composition. In developing and refining our matrix and interview questions, we researched and reviewed available information on the structure and characteristics of public and private corporate boards, reviewed prior work we had done on government corporations, and consulted with knowledgeable individuals on Postal Service Board activities. 6 The matrix was sent to 11 boards; however, COMSAT did not furnish the information we requested. Page 5 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 Except for the Postal Service, we judgmentally selected the government-created organizations included in our study in order to have a mix of the various types. We selected two government-sponsored enterprises, two wholly-owned government corporations, two mixed-ownership government corporations, and two federally created private corporations.7 In making these selections, we used our recent report on government corporations,8 as well as other prior work we had done, to identify organizations of various types. To provide a broader range of organizations for comparison purposes, we also selected two foreign postal administrations—Canada Post and Australia Post. We selected these organizations primarily because of our previous work in this area.9 These organizations were described in a recent Price Waterhouse report10 as among the most “progressive postal administrations.” In this report, we highlight differences between the Postal Service and the other government-created organizations as they apply to the four issues most frequently cited by current and former Board members as needing legislative attention. Some of the other issues raised by the interviewees, however, were outside the scope of our matrix. Therefore, we did not have sufficient information to make comparisons with the other government-created organizations on all of the issues raised by the interviewees. Appendix IV contains selected details from the matrices. We did not verify the boards’ responses to our matrix. However, we did ask each of the boards that completed our matrix to review their respective sections of appendix IV for accuracy. To provide the Subcommittee with additional information on governance issues that might be helpful in its deliberations on postal reform, we reviewed a broad range of available literature affecting both public and private boards. The result of our literature research is included in our discussions of governance issues. 7 COMSAT was one of the two federally created private corporations selected for inclusion in our study. 8 See our report Government Corporations: Profiles of Existing Corporations (GAO/GGD-96-14, Dec. 13, 1995). 9 U.S. Postal Service: A Look at Other Countries’ Postal Reform Efforts (GAO/T-GGD-96-60, Jan. 25, 1996). 10 A Strategic Review of Progressive Postal Administrations: Competition, Commercialization, and Deregulation (Price Waterhouse LLP, Feb. 1995). Page 6 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 We conducted our review at postal headquarters in Washington, D.C., between July 1996 and April 1997 in accordance with generally accepted government auditing standards. We requested comments on a draft of this report from the PMG and the Chairman of the USPS Board of Governors. Their comments are discussed at the end of this letter and included as appendixes V and VI, respectively. A majority of the current and former members of the Postal Service Board Areas Where a of Governors whom we interviewed believed legislative attention may be Majority of warranted in three areas—the Board’s authority, Board members’ Interviewees Believed compensation, and Board members’ qualifications. Although there was no consensus among the members on the specific issues within each area of Legislative Attention concern, several issues were mentioned frequently, and a number of Is Needed legislative changes were offered for consideration. The most frequently cited issues were (1) the limitations on the Board’s authority to establish postage rates; (2) the inability of the Board to pay the PMG more than the rate for level I of the Executive Schedule—currently $148,400; (3) the Board’s lack of pay comparability with the private sector; and (4) qualification requirements that are too general to ensure that Board appointees possess the kind of experience necessary to oversee a major government business. Board’s Authority to The issue most frequently cited by current and former Postal Service Establish Postage Rates Board members as needing legislative attention was the limitations on the Board’s authority to establish postage rates. Ten of the 15 interviewees believed that the current ratemaking process adversely affects the Postal Service’s ability to compete with its private sector competitors. They were concerned that the current ratemaking process is too restrictive and therefore limits the Postal Service’s ability to quickly adjust postage rates in a highly competitive and rapidly changing marketplace. Three of the remaining five interviewees did not comment specifically on this issue, and two said the current ratemaking process should not be changed. Under the current ratemaking process, the Postal Service, through its Board of Governors, is to propose changes to the Postal Rate Commission (PRC)—an independent regulatory agency established in the executive branch—and request that it issue a recommended decision. PRC, after holding public hearings and reviewing data provided by the Postal Service, is to provide the Postal Service Board of Governors with its recommended Page 7 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 decision concerning proposed rate changes. By law, this process can take up to 10 months. After receiving a recommendation from PRC, the Governors can approve, reject, or allow the recommended rates to take effect under protest; or, under certain circumstances, the Governors can modify a PRC decision. However, before the Governors can modify any PRC-recommended rates, they are required to return the rate case to PRC for reconsideration. After PRC renders a further rate decision, the nine Governors can modify that decision only by a unanimous vote—a task that some members said was almost impossible to achieve because, in their experience, the Governors seldom agree unanimously on any issue. In fact, there has been only one instance—in 1980—where the Governors modified a PRC recommendation for First-Class postage. Interviewees suggesting legislative attention in this area offered a number of changes for consideration. Two suggestions were mentioned most frequently. One suggestion was to use administrative law judges to hear rate cases and make recommendations to the Board—rather than going through PRC. The members believed this change would streamline the ratemaking process and still give due consideration to the views of the mailing community. The other suggestion was that the Board be given the authority to override a PRC recommended rate decision with something less than a unanimous vote. For example, suggestions were made that the unanimous vote requirement be changed to either a majority or a two-thirds majority vote. Other legislative changes offered for consideration included (1) giving the Board authority to raise rates within legislatively established parameters (e.g., allow the Board to raise postage rates annually up to the increase in a designated index, such as the Consumer Price Index11); (2) restricting PRC’s ratemaking role to monopoly mail12—and a related suggestion allowing the Postal Service to establish private sector-type subsidiary companies that would compete directly with private carriers of nonmonopoly mail; and (3) legislatively requiring that PRC render its rate decisions in much less time than the 10 months currently allowed by law. One interviewee, however, said the law should not be changed to require faster decisions from PRC because, given current complex ratemaking requirements, it is unreasonable to expect faster decisions. The two interviewees who said the current ratemaking process 11 The Consumer Price Index measures average price change using a specified market basket representing all goods and services purchased for everyday living. The index measures the same basket relative to a designated base period. 12 Monopoly mail is mail protected by the Private Express Statutes (laws that restrict the private carriage of letter mail). See our reports U. S. Postal Service: Pricing Postal Services in a Competitive Environment (GAO/GGD-92-49, Mar. 1992); and U.S. Postal Service: Postal Ratemaking in Need of Change (GAO/GGD-96-8, Nov. 1995). Page 8 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 should not be changed agreed that the current ratemaking process negatively affected the Postal Service’s ability to compete with private sector carriers. However, they believed a better way of addressing the ratemaking issue was to create a PRC-type body to regulate private sector carriers’ rates rather than change the ratemaking process within the Postal Service. Our survey of nine other government-created organizations showed some similarity between the ratemaking processes of the Postal Service and the processes reported by two other organizations—Australia Post and Canada Post. No similarities were apparent at the other seven organizations. According to Australia Post, its Board of Directors sets prices for all products and services. The board must notify the Minister for Communications and the Arts of any intention to alter the price of the standard postal rate and the Minister has the opportunity to disallow it. Although it has no direct authority over the price, the Australian Competition and Consumer Council has the opportunity to consider any proposal and make its views known to the Minister as part of his/her consideration of proposed price alterations. According to Canada Post, its Board of Directors oversees virtually all ratemaking decisions. This includes decisions for such products as basic domestic and international single-piece letters, international printed matter, and some registered mail products. Once new postage rate regulations are proposed, interested parties are given a 60-day period during which they can provide written comments on the rate change. For various reasons, the ratemaking process at the Postal Service contrasts sharply with the reported ratemaking processes at Fannie Mae, Freddie Mac, AMTRAK, FDIC, and TVA. Each of these organizations is permitted to set prices in a manner very much like any private sector corporation—i.e., independent of a third-party review or approval. Ratemaking processes at the RTB and the CPB are not comparable to the Postal Service’s ratemaking process. At the RTB, its Board of Directors makes loans at legislatively established rates. At the CPB, there are no products or services sold and, therefore, no ratemaking procedures. Proposed legislation introduced in Congress in January 1997 to reform the Postal Service, H.R. 22, proposes significant changes to the ratemaking process and to the long-standing relationship between the Postal Service Page 9 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 and PRC. Current law requires that the Postal Service file a request with PRC for changes in rates for services offered. H.R. 22 would change that requirement. It would divide postal products into two categories, noncompetitive mail and competitive mail.13 Noncompetitive mail would include those products, such as First-Class Mail, for which there are few alternatives to the Postal Service. For products in the noncompetitive mail category, the Service would establish rates using a price cap based on the Gross Domestic Product Chain-Type Price Index14 modified by an adjustment factor, which PRC would determine every 5 years. Once the cap was established, the Postal Service would generally be able to adjust prices annually without filing a request for change with PRC. Competitive mail, such as Express Mail, would include those products facing full competition within the marketplace. The Postal Service could price competitive products as it saw fit, without filing a request for change with PRC. However, Postal Service pricing of competitive mail would be subject to the constraints of the antitrust laws as well as requirements that rates cover the Service’s costs and make a reasonable contribution to overhead. PRC would conduct annual audits of the Postal Service to ensure it was acting in compliance with the law with respect to both noncompetitive and competitive products. Adoption of the ratemaking proposals in H.R. 22 would increase the ratemaking similarities between the Postal Service and Canada Post and Australia Post. In testimony before your Subcommittee on the Postal Service on July 10, 1996, the PRC Chairman noted that proposed legislation to reform the Postal Service included several proposals that would increase the Postal Service’s flexibility to price its products. He also noted that under the proposed ratemaking process, provisions for multiple reconsideration and judicial reviews of rate decisions would be eliminated. Generally, the Board has adjusted rates every 3 years or so against a backdrop of an extensive body of public input. Under H.R. 22, the Board could be adjusting many rates as often as annually. The PRC Chairman said that the current system of multiple checks and balances is, in some instances, too much of a good thing. At the same time, however, he cautioned about going too far in the opposite direction. 13 Generally, the terms “noncompetitive mail” and “competitive mail” are synonymous with “monopoly mail” and “nonmonopoly mail.” 14 The Gross Domestic Product is the value of all final goods and services produced within the borders of the United States in a given period, whether produced by residents or nonresidents. The Gross Domestic Product Chain-Type Price Index is the featured measure of prices in the national income and products accounts. Changes in the price level are calculated using the weights of adjacent years. Page 10 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 Ratemaking issues were again discussed at a hearing before your Subcommittee on the Postal Service on April 9, 1997. Witnesses included economists who helped formulate and design price cap plans for telecommunications and utility regulatory entities, as well as experts in antitrust laws, telecommunication regulation, postal arbitration, and contracts. Differences in opinion among these witnesses as to how well price caps would work for the Postal Service indicate that the debate over the Postal Service’s pricing system and the roles of the Board of Governors and PRC have not yet been resolved among all interested parties. The issue of ratemaking is a central part of the ongoing congressional deliberations related to the proposed postal reform legislation (H.R. 22). Board’s Authority to Pay The second most frequently cited issue was the Board’s inability to pay the PMG PMG more than the rate for level I of the Executive Schedule—currently $148,400.15 Eight of the 15 interviewees said the Board should be given more flexibility to compensate the PMG so that pay could be more comparable with the private sector. One interviewee strongly disagreed that compensation changes were needed, and the other six interviewees had no comment on the issue. The eight interviewees who believed the Board should have more flexibility to compensate the PMG were concerned that because of the pay cap, the Board might have a difficult time filling future PMG vacancies with highly qualified candidates. They were concerned that many highly qualified candidates might not even consider the position of PMG because of more financially lucrative positions in the private sector. These eight interviewees suggested legislative consideration be given to removing the pay cap on the PMG’s pay. As an alternative, one of the eight interviewees said legislative consideration should be given to allowing the Board to award the PMG performance-based bonuses over and above the legislated pay cap. The one interviewee with an opposing view did not believe the Board would have a difficult time attracting highly qualified candidates to the PMG position at the current salary. That interviewee said people are attracted to the position because of its status and the desire to serve the public—not because they are seeking a highly paid position. 15 By statute, all officers and employees of the Postal Service are to be paid at a level commensurate with the private sector. However, that same statute restricts the Board from paying the PMG more than level I of the Executive Schedule. Page 11 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 Our survey of nine other government-created organizations showed that the PMG’s pay is in line with the reported pay received by the top officials in those organizations where pay is legislatively capped. Five of the nine organizations had legislative pay caps similar to the Postal Service’s. Those organizations were TVA, RTB, FDIC, AMTRAK, and the CPB. However, two organizations—Fannie Mae and Freddie Mac—were not subject to legislative pay caps. According to information provided by Fannie Mae and Freddie Mac, the chief executive officers (CEO) at these two organizations were paid substantially more than the PMG. Data provided show that in 1995, the CEOs at Fannie Mae and Freddie Mac were each paid more than $1 million, compared to the $148,400 paid the PMG. Our ability to make pay comparisons with the CEOs at Canada Post and Australia Post was limited because both organizations said they consider this information to be private. Information provided by Canada Post shows its CEO’s pay is set by Canada’s Governor in Council16 and was in the neighborhood of $200,000 (U.S.) in 1995.17 Australia Post did not provide specific information on its CEO’s pay but said the pay is set at a level that takes into account both public and private sector considerations.18 Executive compensation is, has been, and will likely continue to be, a hotly debated issue in both the public and private sectors. Recent literature on executive compensation in the private sector shows the issue to be sharply focused on the amount of compensation paid executives in comparison to the health of the company, returns to investors, and wages paid nonmanagerial employees. For example, Business Week reported in April 1997 that the average pay increase for top executives in U.S. companies last year was 54 percent, compared with an average increase of 3 percent for U.S. factory workers. It also reported that the average CEO in the United States was paid 209 times more than the average U.S. factory worker. According to the literature, the spread in pay between these two groups has continued to widen since the 1980s. As time passes, however, more and more private sector executives are reportedly seeing their compensation challenged by stockholders and employee unions who 16 The Governor in Council is a special committee of the Cabinet with responsibility for approving government regulations, including regulations for setting postal rates. For additional information on ratemaking at Canada Post, see our report Postal Reform in Canada: Canada Post Corporation’s Universal Service and Ratemaking (GAO/GGD-97-45BR, Mar. 5, 1997). 17 Canada Post reported that its salary information is private. However, it stated that in fiscal year 1995, the head of Canada Post was paid somewhere in the range of $189,000 to $233,000 (U.S. dollars). 18 The PMG, in commenting on a draft of this report, provided additional information on CEO pay at nine foreign postal administrations, including Canada Post and Australia Post. See appendix V for additional information. We did not independently verify the information provided. Page 12 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 perceive the pay of some executives to be exorbitant. Other attempts are also being made to bring the issues surrounding executive pay to the forefront. For example, the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) launched an Internet site in April 1997 to give the public ready access to information on executive compensation for the Fortune 500 companies.19 Executive pay issues also exist within the public sector. The Senior Executives Association20 has cited lifting the 3-year freeze on Executive Level pay as one of its top priorities. Over time, the spread in pay between executives and other employees has narrowed. Along with the pay compression issue, Congress and the administration have become increasingly concerned about executive compensation in some government-created organizations and have been taking steps to address some of those concerns. For example, in October 1995, the President signed Executive Order 12976 requiring that certain bonuses paid executives of designated government corporations be preapproved by the Office of Management and Budget. Additionally, since 1992, Fannie Mae and Freddie Mac have been prohibited from providing compensation to any executive officer that is not reasonable and comparable with compensation for employment in other similar organizations (including other publicly held financial institutions or major financial services companies) involving similar duties and responsibilities. Also, a significant portion of potential compensation for executive officers must be based on the performance of the enterprises. Further, Fannie Mae and Freddie Mac are prohibited from entering into any severance agreement or contract with an executive officer, unless the Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development approves the agreement or contract in advance. Board Members’ Pay Although 12 of the 15 interviewees believed Board members’ pay was another area warranting legislative attention, there was substantial disagreement on the specific issues and possible legislative remedies. Some interviewees thought Board members’ pay should be increased, while others thought compensation should not be increased because Board service should be considered public service. Others thought the 19 See http://aflcio.paywatch.org 20 The Senior Executives Association was founded in 1980 as a tax-exempt, nonprofit corporation representing career federal executives. The Association concerns itself with those issues that affect the career executive service as a whole. Page 13 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 daily meeting attendance fee should be increased. Others thought periodic reviews of Board members’ pay should be required, and varying combinations of these changes were also offered for consideration. Six of the 15 interviewees said that even though Board members’ salaries were increased from $10,000 to $30,000 in 1996, they were still below private sector salaries and should be made more comparable. Five of the 15 interviewees also believed the law should be changed to increase the $300 daily fee members are paid for attending Board meetings. Interviewees who suggested legislative change were particularly concerned that there is no legal requirement that pay be reviewed on a periodic basis, and they pointed out that the time span between the last two pay increases was 26 years. Seven interviewees, however, said Board members’ salaries should not be increased, and four said daily meeting attendance fees should not be increased. Two interviewees did not comment on Board members’ salaries, and six did not comment on daily meeting attendance fees. Interviewees opposing these suggested legislative changes were generally of the opinion that Board service should be recognized as public service and that Postal Service Governors should not expect compensation similar to that found on private sector boards. Our comparison of Postal Governors’ pay with the reported pay of board members of nine other government-created organizations did not show major disparities. In fact, we identified only two notable differences. First, board members at Fannie Mae and Freddie Mac may elect to receive shares of stock in lieu of cash compensation. Second, board members at TVA and FDIC are paid more than Postal Service Governors, but they serve full time. None of the interviewees believed Postal Board Governors should serve full time. As discussed earlier, compensation is an area of contention in both the public and private sectors. Board members’ compensation, like CEOs’ compensation, is currently being examined from different angles by various interest groups—e.g., stockholders and employee unions. Work done by Spencer Stuart, a company that tracks board trends and practices at 100 major American corporations, showed that private sector board members’ annual salaries and meeting attendance fees averaged $55,300 in 1996 (ranging from $25,000 to $100,000).21 This compares to compensation 21 This does not include additional stock that was awarded board members at 41 of the 100 corporations. Page 14 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 of about $38,000 that the Postal Service Governors will likely receive in 1997 (salary plus the historical average of daily meeting attendance fees). Qualification Requirements The final issue cited by a majority of current and former members as for Board Membership needing legislative attention was the lack of well-defined qualification requirements for Board appointments. Eight of the 15 interviewees stated that the statutes governing Board appointments are too general and should be more precisely defined. Seven of the interviewees, however, said no legislative change should be made in the appointment process. They were generally of the opinion that the current process, which requires Senate confirmation, ensures that highly qualified candidates are appointed to the Board. The eight interviewees who favored more precisely defined qualification requirements believed that, historically, appointments to the Board have not always been based on an individual’s demonstrated ability to govern large corporations like the Postal Service. They were concerned that because qualification requirements are not clearly defined in law, the Board may not always have the most appropriate mix of skills for effectively managing an organization as big and as complex as the Postal Service. The interviewees suggested a number of legislative changes that they believed could enhance the appointment process. These included having an independent body make recommendations for Board appointments and delineating, in law, specific requirements for Board service. Examples of specific requirements mentioned included (1) requiring that appointees have corporate experience, (2) requiring a mix of geographic representation on the Board, and (3) requiring labor and mailing industry representation on the Board. The statutory restrictions/qualifications for board service at six of the other nine government-created organizations included in our study were more specific than the Postal Service’s. For example, at Fannie Mae and Freddie Mac, four of the five presidential appointees to the board must have specific business backgrounds: one must be from the mortgage lending industry, one must be from the home building industry, one must be from the real estate industry, and one must be from an organization representing consumer interests. At the CPB, statutes require that the nine appointed board members be selected from such fields as education, cultural and civic affairs, or the arts. Board members are also to represent various regions of the nation and professions, occupations, and various kinds of talent and experience appropriate to the function and Page 15 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 responsibilities of the CPB. Additionally, of the nine board members, one is to be selected from among individuals who represent the licensees and permittees of public television stations, and one is to represent the licensees and permittees of public radio stations. Australia Post and AMTRAK statutes require that at least one board member have an understanding of employee issues. The RTB statutes require that of the Bank’s 13 board members, 3 be elected by stockholders of eligible cooperative borrowers, and 3 be elected by stockholders of eligible commercial borrowers. The statutory qualifications for board service at the other three government-created organizations included in our study (TVA, FDIC, and Canada Post) were similar to the Postal Service’s qualifications in that they were generally nonrestrictive. For example, requirements for board membership at FDIC state only that the three appointed members must be U.S. citizens and that no more than three of the five board members may be members of the same political party. Additionally, like the Postal Service, three of the other nine government-created organizations included in our study have provisions for ex officio membership on their boards. At the Postal Service, the PMG and DPMG are ex officio members of the Board. At the RTB, there are five ex officio members—all from the Department of Agriculture. Ex officio members on the FDIC board include the Comptroller of the Currency and the Director of the Office of Thrift Supervision. Additionally, one of the presidentially appointed members also serves as the chair of the board and full-time head of FDIC. The Secretary of Transportation and AMTRAK president serve as ex officio members on AMTRAK’s board. Current literature on private sector governance suggests that some aspects of corporate governance have been undergoing changes in recent years. Some stockholders, concerned with publicized instances of excessive executive compensation, coupled with unacceptable corporate performance, are increasingly scrutinizing governance issues, including the qualifications of board members. An article in the spring 1995 issue of Business Quarterly points to a lack of meaningful qualifications for board members and a lack of needed expertise and knowledge as two areas that could signal competence problems affecting board performance.22 The article goes on to point out that healthy boards require, among other things, a balance of qualifications, knowledge, skills, attitudes, and experiences. Business literature suggests that now, more so than in 22 Donald H. Thain and David S. R. Leighton, “Why Boards Fail,” Business Quarterly (Spring 1995), p. 71. Page 16 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 previous eras, corporations are developing more well-defined criteria for board membership—acknowledging that various roles on the board may require various backgrounds and skills. Although conceptually it may be desirable to have board representation for all stakeholders, it presents a real challenge to do so within the Postal Service structure. The Postal Service, unlike many other corporate and corporate-like organizations, has numerous stakeholders with widely varying interests and concerns, e.g., rural patrons, inner-city patrons, business mailers, six labor unions, and three management associations. If qualification requirements are changed, one challenge for Congress will be determining what qualifications or special interests, if any, should be represented on the Board. In our discussions with current and former members of the Postal Service Areas Where Some, Board of Governors, we also identified areas where some, but less than a but Less Than a majority of, interviewees believed legislative attention is needed. Those Majority of, areas were (1) the Board’s mission and responsibilities, (2) the Board’s relationship with postal management, (3) the Board’s accountability and Interviewees Believed performance measures, and (4) the Board’s composition and structure. Legislative Attention Additionally, our review of pertinent literature indicated that others have Is Needed expressed concerns within these same four areas as they relate to government-created organizations in general. A recurring theme in this literature focuses on accountability. For example, in April 1995,23 the Congressional Research Service reported that a key issue for policymakers is how to make government corporations politically accountable for their policies and operations while still giving them the necessary financial and administrative discretion to function in a commercial manner. An article in the February 1995 issue of Government Executive also expressed concern that quasi-government organizations are largely unaccountable for their actions.24 Some of the current and former Postal Service Board members we spoke with had the following specific concerns in these four areas. Also, where applicable, we have included as part of our discussion other related issues identified as part of our literature search. 23 See S. Prt. 104-18, April 1995. 24 Clyde Linsley, “Government Inc.,” Government Executive (Feb. 1995). Page 17 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 Board Mission and Six interviewees cited the Board’s mission and responsibilities as an area Responsibilities needing legislative attention. Concerns in this area centered on two issues. One issue was the Board’s uncertainty as to how far it should go in letting the Postal Service compete and operate like a private sector corporation. The other issue concerned the limited specificity in law concerning the Board’s oversight responsibilities. Four of the six interviewees said that uncertainties about how far the Postal Service should go in competing with the private sector are not helped by the Postal Service’s current legal designation. By law, the Postal Service is designated as an independent establishment in the executive branch. One interviewee characterized this situation by saying that the Postal Service’s current legal designation places it in the unenviable position of being “neither fish nor fowl,” i.e., neither an executive agency nor a private corporation. The four interviewees suggested that Congress consider clarifying the Postal Service’s legal designation, which, in turn, should provide a clearer picture of the Service’s mission.25 Legal status questions are not unique to the Postal Service. Such questions are being raised with regard to government-created organizations in general. Unclear legal definitions are disconcerting to some, while others use it to their advantage. For example, a fellow at both the National Academy of Public Administration (NAPA) and the Johns Hopkins Center for the Study of American Government said government-created organizations can generally choose whatever legal status best suits their purposes.26 He cited a 1977 incident in which the Secretary of Housing and Urban Development instructed Fannie Mae to increase its mortgage purchases in the inner cities. Fannie Mae replied that, as a private agency, its principal obligation was to its stockholders, who would object to its investing in riskier properties. A few years later, however, when the administration attempted to strip away some of Fannie Mae’s special privileges, such as its tax exemptions, Fannie Mae responded, “Congress established Fannie Mae to run efficiently as an agency, not as a fully private company.” Without those special relationships, Fannie Mae said, it would not be able to survive. While discussing the Postal Service Board’s mission and responsibilities, four of the six interviewees said the Board could benefit from more 25 Seven of the nine interviewees who did not believe legislative attention was needed to clarify the Board’s mission and responsibilities specifically stated that they were opposed to changing the Postal Service’s legal designation. 26 Clyde Linsley, “Government Inc.,” Government Executive (Feb. 1995). Page 18 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 detailed guidance concerning its oversight responsibilities. They suggested that Congress consider making the law more specific. They were concerned that the broad guidance currently in law does not always provide them with a good basis for knowing Congress’ desires as the Postal Service moves toward the 21st century. Board Relationship With Five interviewees cited the Board’s relationship with postal management Postal Management as an area needing legislative attention. The most frequently cited issue related to perceptions that the position of Chief Postal Inspector did not have all the independence necessary. Four of the five interviewees said that to help ensure the Chief Postal Inspector’s independence, he/she should be appointed by the Board and be directly accountable to the Board—similar to the status of the Postal Service’s recently appointed Inspector General. They said the Chief Postal Inspector should not be appointed by, or be considered part of, management. The five interviewees also had three other suggestions for legislative consideration in this area, but no one suggestion was cited by more than two of the interviewees. The specific suggestions included the following. • The Postal Service’s General Counsel should be appointed by the Board and be directly accountable to the Board—similar to the suggestion concerning the Chief Postal Inspector. • The law should require that the PMG be appointed from within the Postal Service. This suggestion stemmed from the belief that the Postal Service’s size and complexity makes it very difficult for an outsider to be an effective Postmaster General during the early years of his/her appointment. • The PMG and DPMG should be allowed to vote on all matters that come before the Board, except for personnel matters relating directly to them. This suggestion was made to make the PMG and DPMG a more integral part of the Board. Currently, the PMG and DMPG are prohibited from voting on some issues that come before the Board, e.g., increases in postage rates. Board Accountability and Six interviewees cited Board accountability and performance measures as Performance Measures another area needing legislative attention, although no one issue was cited by more than two of the interviewees. Specific suggestions for legislative consideration included the following. Page 19 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 • Periodic peer reviews should be required as a prerequisite for continued service on the Board. • The fiduciary responsibilities of Board members should be more clearly delineated in law—particularly in light of the Postal Service’s current legal status. • Specific actions for which the Board will be held accountable should be clearly delineated in law. • A mechanism should be established for removing nonproductive Board members. One of the interviewees, however, cautioned against such an action, citing the potential for abuse. Although the interviewees discussed accountability from a boardroom perspective, it is, in fact, a topic pertinent to all facets of organizational life. As discussed earlier, accountability is an issue being grappled with as the government examines its corporations and corporation-like organizations. Defining accountability in government begins with clearly establishing who is accountable to whom, and for what. Board Composition and Four interviewees cited Board composition and structure as an area Structure needing legislative attention, but no one issue was cited by more than two of the interviewees. Specific suggestions for legislative attention included the following. • The current 9-year appointments to the Board are too long and should be shortened. Appointments should be made more comparable to the private sector, where terms are generally for no more than 3 years.27 • Board members should be prohibited from serving more than one term. • Former Postal Service employees should be prohibited from serving on the Board. • The process for selecting a Chair should be changed. The Chair should be appointed by the president rather than elected by the Board. • The PMG should be designated, in law, as the permanent Chair of the Board. • The law should be clarified to explicitly state that the PMG can be elected Chair by the members. • Management should have only one, not two, seats on the Board. 27 Five of the 15 interviewees, however, specifically said they were opposed to shorter terms. They thought 9-year terms were appropriate given the amount of time required to become well versed in postal issues. Page 20 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 There were two areas discussed where none of the current or former Areas Where None of Board members interviewed believed legislative attention is needed. These the Interviewees areas were (1) Board staffing and (2) the Board’s legal status. Believed Legislative All of the interviewees agreed that Board staffing was an internal Attention Is Needed management issue and not an issue warranting legislative attention. They said the Board has the authority to hire as many staff as it needs to fulfill its responsibilities. Most individuals believed that the current staff, consisting of two professionals and two administrative staff, is adequate. However, four interviewees believed that the Board should consider expanding its staff to include experts in such areas as real estate, finance, and ratemaking. Nevertheless, they agreed that any decision to hire additional staff should be made by the Board itself, not by legislative fiat. Additionally, current and former Board members we spoke with saw no need for legislative action to change the Board’s legal status. The Board of Governors is part of the Postal Service and does not have a separate legal status. Nevertheless, discussion of the Board’s legal status prompted several interviewees to reiterate their concerns about the Postal Service’s legal status. As noted earlier, some interviewees believed that the current legal definition of the Postal Service—an independent establishment of the executive branch—is unclear and causes uncertainties about how far the Postal Service can go in competing with the private sector. The PMG and the Chairman of the Postal Service Board of Governors Agency Comments provided written comments on a draft of this report. The PMG said most of the issues raised in the report speak for themselves and have been discussed by the Governors and PMGs for many years. His comments also included supplemental information on compensation practices at TVA and CEO pay at nine foreign postal administrations plus the USPS. His comments are reproduced in appendix V. The Chairman of the Postal Service Board of Governors said in his written comments that the report provides valuable information on governance issues and how other boards function. He also said many of the issues raised in the report have been discussed by the various Boards of the Postal Service over the years. His comments are reproduced in appendix VI. Program personnel at the nine other organizations included in this report for comparison purposes were provided copies of a draft of appendix IV Page 21 GAO/GGD-97-141 Issues Related to Governance of the Postal Service B-272702 for their review and comment. The program personnel at two of the nine (AMTRAK and CPB) organizations said the information was accurate as presented. Program personnel at the other seven organizations either provided additional information or made technical suggestions that have been incorporated into the appendix as appropriate. We are sending copies of this report to the Ranking Minority Member of your Subcommittee, the Chair and Ranking Minority Member of the Senate oversight subcommittee, the Postal Service Board of Governors, the PMG, and other interested parties. Copies will also be made available to others upon request. Major contributors to this report are listed in appendix VII. If you have any questions about the report, please call me on (202) 512-4232. Sincerely yours, Bernard L. Ungar Director, Government Business Operations Issues Page 22 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Page 23 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Contents Letter 1 Appendix I 26 Descriptions of Various Government-Created Organizations Appendix II 28 Current and Former Postal Service Board Members Interviewed Appendix III 29 Interview Guide Appendix IV 32 Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Appendix V 53 Comments From the U.S. Postal Service Appendix VI 55 Comments From the U.S. Postal Service Board of Governors Page 24 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Contents Appendix VII 56 Major Contributors to This Report Abbreviations AFL-CIO American Federation of Labor-Congress of Industrial Organizations AMTRAK National Railroad Passenger Corporation CEO chief executive officer COMSAT Communications Satellite Corporation CPB Corporation for Public Broadcasting DPMG Deputy Postmaster General FDIC Federal Deposit Insurance Corporation GSE government-sponsored enterprise NAPA National Academy of Public Administration PMG Postmaster General PRC Postal Rate Commission RTB Rural Telephone Bank TVA Tennessee Valley Authority USPS U.S. Postal Service Page 25 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix I Descriptions of Various Government-Created Organizations The organizations we selected to compare with the Postal Service Board of Governors are generally identified as wholly-owned government corporations, mixed-ownership government corporations, GSEs, or federally created private corporations. In addition, we compared the boards of two selected foreign postal administrations with the Board of Governors of the Postal Service. Although there is no authoritative definition for the term “government corporation,” there are certain characteristics common to government corporations that were identified by President Truman in 1948 and that have been referred to and accepted over the years by public administration experts. According to President Truman, a corporate form of organization is appropriate for the administration of government programs that are predominately of a business nature, produce revenue and are potentially self-sustaining, involve a large number of business-type transactions with the public, and require a greater flexibility than the customary type of appropriations budget ordinarily permits. In 1981, NAPA defined a wholly-owned government corporation as a corporation pursuing a government mission assigned in its enabling statute, financed by appropriations, with assets owned by the government and controlled by board members or an administrator appointed by the president or a department secretary. It defined a mixed-ownership government corporation as a corporation with both government and private equity, with assets owned and controlled by board members selected by both the president and private stockholders, and as usually intended for transition to the private sector.28 Of the organizations selected for this study, TVA and the RTB are wholly-owned government corporations, and FDIC and AMTRAK are generally considered to be mixed-ownership government corporations. GSEs are federally established, privately owned corporations designed to increase the flow of credit to specific economic sectors. GSEs typically receive their financing from private investment, and the credit markets perceive that GSEs have implied federal financial backing. GSEs issue capital stock and short- and long-term debt instruments, issue mortgage-backed securities, fund designated activities, and collect fees for guarantees and other services. GSEs generally do not receive government appropriations. Fannie Mae and Freddie Mac are two examples of GSEs. 28 See Report on Government Corporations, Vols. I-II (Washington, D.C.: NAPA, 1981). Page 26 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix I Descriptions of Various Government-Created Organizations The CPB is a federally created private, nonprofit corporation. It does not consider itself to be a government corporation or a GSE. However, it does receive at least some of its operating funds from yearly federal appropriations and has been considered to be a government corporation by others. Page 27 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix II Current and Former Postal Service Board Members Interviewed Name Position(s) held Date(s) of appointment Susan E. Alvarado Current Governor July 1988 Winton M. Blount Former PMG January 1969 Former Board Chair July 1971 Michael Coughlin Current DPMG January 1987 LeGree S. Daniels Current Governor August 1990 Einar V. Dyhrkopp Current Governor November 1993 S. David Fineman Current Governor May 1995 Anthony M. Frank Former PMG February 1988 Tirso del Junco Current Board Chair July 1988, Reappointed December 1991 Bert H. Mackie Current Governor December 1988 Ned R. McWherter Current Governor October 1995 Norma Pace Former Governor May 1987 Robert F. Rider Current Governor May 1995, Reappointed June 1996 Marvin Runyon Current PMG July 1992 Robert Setrakian Former Governor December 1985 Sam Winters Current Governor November 1991 Page 28 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix III Interview Guide 1. Are you satisfied with the statutory relationship between the PMG and Relationship Between the Board? If not, why? Should anything be changed in law/regulation? PMG and Board 2. Aside from the statutory/regulatory relationship between the PMG and the Board, are there other issues dealing with the relationship that you would like to see addressed? If so, please explain your position and cite examples. 1. Are you satisfied with the Board’s statutory relationship with PRC? If not, Board’s Relationship why? Should anything be changed in law/regulation? to PRC 2. Do you believe PRC provides the Board with sufficient information to meet the Board’s needs? Is information provided in a timely manner? If the information is not sufficient and/or timely, what changes do you believe are needed? 1. How does the Board get involved in setting goals and developing Board’s Mission and implementation strategies for the Postal Service? Responsibilities 2. Are you satisfied with the Board’s mission and responsibilities as specified in legislation? If not, why? 3. Are you satisfied with the Board’s mission and responsibilities as further defined by the Bylaws? If not, please cite examples and discuss any changes you believe are needed. 1. Are there any statutory authorities the Board does not have that you Board’s Authority believe it should have? If so, please explain. 2. Are there any statutory authorities the Board has that need to be expanded or contracted? 1. Is the Board’s legal status satisfactory, or are legislative changes Board’s Legal Status needed? If so, what changes are needed and why? Provide examples supporting the need for any change in the legal status of the Board. Page 29 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix III Interview Guide 1. Do you believe there are Board accountability issues that need to be Board’s addressed with regard to the Board as a collective unit? If so, what are Accountability and those issues? Performance 2. To whom are individual Board members accountable? Measures 3. Are there accountability issues that need to be addressed with regard to the performance of individual Board members? If so, what are those issues? 4. In general, how are ethical or conflict of interest issues addressed? Are you satisfied with the guidance available in this area? 1. Is the new pay level adequate? If not, please explain why. Board’s Compensation 2. Do you believe benefits are adequate in relation to other boards (other board directors may receive stock options, health insurance, life insurance, etc.)? If not, how should they be adjusted? 3. Are travel reimbursements adequate? If not, where do they fall short? 1. Do the current size and composition of the Board allow the Board to Board’s Composition/ effectively perform its duties? Qualifications 2. Are the qualifications/restrictions for Board membership adequate, or should more specific qualifications be spelled out in legislation? If more specific qualifications are needed, please state why and cite examples of how more specific qualifications would have been helpful in past situations. 3. Do you serve on any other boards? If so, how many and which ones? Do you believe there should be a limit on the number of boards on which members can serve? 4. Should service on the Postal Service Board of Governors be changed from part time to full time? Explain. Page 30 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix III Interview Guide 1. Do you believe that the Board has sufficient staff resources? If not, what Board Staff additional staff are needed (numbers, qualifications, etc.)? Page 31 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Organization the board directs USPS Fannie Mae Freddie Mac TVA Organization background Legal status Independent Government-sponsored Government-sponsored Wholly-owned establishment of the enterprise enterprise government corporation executive branch of the United States government Legal authority Postal Reorganization Federal National Federal Home Loan Tennessee Valley Act of 1970 and Mortgage Association Mortgage Corporation Authority Act of 1933 amendments Charter Act, as amended Act, as amended and amendments [39 U.S.C.] [12 U.S.C. 1716-1723d] [12 U.S.C. 1451-1459] [16 U.S.C. 831-831dd] Created July 1, 1971 June 27, 1934 July 24, 1970 May 18, 1933 Page 32 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards RTB FDIC AMTRAK CPB Canada Post Australia Post Wholly-owned Mixed- Mixed- Private, nonprofit “Parent Crown Federal government government ownership ownership corporation Corporation” (fully business enterprise corporationa government government organized under owned by the Crown) (fully owned by the corporation corporation D.C. law Commonwealth Government of Australia) 7 U.S.C. 941-950b 12 U.S.C. 49 U.S.C. 240101 et 47 U.S.C. 396 et al. Canada Post Australia Postal 1811-1835a seq. Corporation (CPC) Corporation Act of Act 1980 and 1989 and amendments amendments [CPCA 1980-81-82-83, c.54 and amendments] May 7, 1971 June 16, 1933 March 30, 1971 March 27, 1968 October 16, 1981 January 1, 1989b (continued) Page 33 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Organization the board directs USPS Fannie Mae Freddie Mac TVA Mission/ To provide postal To provide stability in the To provide stability in the To improve the purpose services to bind the secondary market for secondary market for navigability of the nation through the residential mortgages; residential mortgages; Tennessee River; personal, educational, respond appropriately to respond appropriately to provide for flood control, literary, and business the private capital the private capital reforestation, the proper correspondence of the market; provide ongoing market; provide ongoing use of marginal lands, people; and to provide assistance to the assistance to the and the agricultural and prompt, reliable, and secondary market for secondary market for industrial development of efficient service to residential mortgages residential mortgages the Tennessee Valley; patrons in all areas and (including activities (including activities provide for the national to render postal services relating to mortgages on relating to mortgages on defense; and provide an to all communities. housing for low- and housing for low- and ample supply of electric moderate-income moderate-income power to seven-state families involving a families involving a region in the reasonable economic reasonable economic southeastern United return that may be less return that may be less States. than the return earned than the return earned on other activities) by on other activities) by increasing the liquidity of increasing the liquidity of mortgage investments mortgage investments and improving the and improving the distribution of investment distribution of investment capital available for capital available for residential mortgage residential mortgage financing; and promote financing; and promote access to mortgage access to mortgage credit throughout the credit throughout the nation (including central nation (including central cities, rural areas, and cities, rural areas, and underserved areas) by underserved areas) by increasing the liquidity of increasing the liquidity of mortgage investments mortgage investments and improving the and improving the distribution of investment distribution of investment capital available for capital available for residential mortgage residential mortgage financing. financing. Page 34 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards RTB FDIC AMTRAK CPB Canada Post Australia Post To obtain an To insure deposits To provide intercity To facilitate the full To establish and To supply postal adequate supply of of banks and and commuter rail development of operate a postal services within supplemental funds, savings associations. passenger public service for the Australia and to the extent transportation in the telecommunications. collection, between Australia feasible, from United States. transmission, and and places outside nonfederal sources delivery of Australia. Australia to (1) make loans to messages, Post is also able to corporations and information, funds, carry on any public bodies for the and goods both business or activity, purpose of financing within Canada and either in Australia or or refinancing the between Canada overseas, relating to construction, and places outside the supply of postal improvement, Canada; service. expansion, manufacture and acquisition, and provide such Australia Post may operation of products and to also carry on any telephone lines, provide such business or activity facilities, and services as are, in that is conveniently systems; and (2) the opinion of the carried on by use of conduct its Corporation, resources not operations, to the necessary or immediately extent practicable, incidental to the required in on a self-sustaining postal service performing the basis. provided by the principal function or Corporation; and in the course of provide to or on performing the behalf of principal function. departments and agencies of, and corporation owned, controlled, or operated by, the Government of Canada or a provincial, regional, or municipal government in Canada or to any person services that, in the opinion of the Corporation, are capable of being conveniently provided in the course of carrying out the other objects of the Corporation. (continued) Page 35 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Organization the board directs USPS Fannie Mae Freddie Mac TVA Board authority Description of board’s Postal rates are The Board has unilateral Freddie Mac’s charter TVA’s board has authority to set prices, determined in authority to conduct explicitly provides that exclusive authority to set rates, etc. conjunction with a Postal business operations, but Freddie Mac has full prices, rates, etc., for the Rate Commission (PRC) generally day-to-day discretion in setting products or services that recommendation. The business activities are prices and other TVA sells. Governors may approve delegated to business operations. The TVA act contains a PRC-recommended management subject to standards for change; accept provisions of charter. There are no regulatory determining appropriate recommended change or other external limits on levels for TVA’s electric under protest; reject or, the authority of Freddie power rates but commits in limited circumstances, Mac’s management to the fixing of those rates modify recommended set prices for mortgages to the discretion of the change. it purchases and the TVA board and securities it issues. precludes judicial review PRC is an independent thereof. agency that acts upon requests from the USPS With one exception, no or in response to statutory provision complaints filed by authorizes another interested parties. person, board, or Among its major commission to set or responsibilities are to review prices.c submit recommended decisions to the USPS on postage rates and fees and mail classifications, issue advisory opinions to the USPS on proposed nationwide changes in postal services, and submit recommendations for changes in the mail classification schedule. Does board set pay for Yes, Governors set pay Yes, the Board is Yes, the Board of Yes, the board sets CEO? of the PMG, subject to authorized to fix Directors determines compensation for all TVA limitations of 39 U.S.C. compensation for the compensation of officers. employees. Salary for 1003(a); i.e., salary officers of the regular employees may cannot exceed the rate Corporation. not exceed that received for Level I of the by board members. Executive Schedule. Does board set benefits Yes, subject to Yes, the Board is Yes, the Board of Yes, the board sets for CEO? restrictions of Federal authorized to fix Directors determines compensation, including Retirement and Workers compensation for benefits of officers. benefits, for all Compensation Laws. officers of the appointees. Corporation. Page 36 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards RTB FDIC AMTRAK CPB Canada Post Australia Post The only product of The board has The board has The board has the The board, directly The board sets RTB is loans. Loans unilateral authority to unilateral authority to authority to approve or indirectly through prices for all are to be made in grant or deny set prices, rates, prices; however, it delegation of products and accordance with the deposit insurance to etc., without review has no products to authority to the services. The board requirements financial institutions. or approval by an sell. Specifically, President/CEO, must notify the contained in the Board decisions are independent CPB is not a oversees virtually all Minister of any Rural Electrification not subject to regulatory authority. commodity business. rate-making intention to alter the Act, Section 408(a). approval by another decisions. The price of the Interest rates are regulatory authority. board, in delegating standard postal rate determined by a its authority, has (the reserved formula set by law in established that (1) service), and the the Act, Section all rates established Minister has the 408(b). through regulation opportunity to (i.e., noncompetitive disallow it. The U.S. products) require Department of approval of the The Australian Agriculture Rural board, (2) all Competition and Utilities Service is generic rates (rates Consumer Council, responsible for the available to anyone while having no day-to-day meeting specified direct authority over operation of RTB, terms and the price, has the and Congress conditions) opportunity to maintains regulatory established outside consider any authority. of regulation require proposal and make the President/CEO’s its views known to approval, and (3) all the Minister as part sales agreements of his/her (generic or consideration of non-generic) are proposed price subject to the alterations. board’s delegation of authority instrument and related processes. No. No, the pay of the Yes. Yes, but president No, the CEO’s pay is Yes. Chair of the Board may not be set by Governor in (“CEO”) is compensated at an Council. determined by annual rate of pay reference to Federal that exceeds the Statutes—Level III of rate of basic pay in the Executive effect from time to Schedule. time for Level I of the Executive Schedule under Sec. 5312 of Title 5. No. Yes. Yes, under 49 Yes. No, benefits are set Yes. U.S.C. § 24303(b). by the Governor in Council. (continued) Page 37 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Organization the board directs USPS Fannie Mae Freddie Mac TVA CEO compensation $148,400 $800,000 salary; $865,000 salary; Not applicable. (FY95)d $833,263 bonus; and $394,000 bonus; and $23,102 other annual $100,688 other annual compensation, as well as compensation, as well as long-term compensation long-term compensation in the form of stock in the form of restricted awards and securities stock awards and options. securities options. Page 38 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards RTB FDIC AMTRAK CPB Canada Post Australia Post Annual The Chair’s total pay The CEO’s $148,400 This is not Not publicly compensation is to and benefits compensation does considered public available.e conform to compensation for not exceed the information.e provisions of the FY95 was Federal Executive Terms and federal executive $147,014.74. Level I salary scale. However, the CPC conditions are set at salary schedule. Board contact a level that takes The CEO receives provided a range of into account both $108,200 salary and the following public and private salary that is public: approximately 20% benefits: health $189,000 to sector of that for benefits insurance, an $233,000 (U.S. considerations. Prior for the Administrator employer-paid dollars). consultation with the of Rural Utilities retirement income Remuneration Services, who plan, a 401(k) The benefit package Tribunal is part of serves as the CEO retirement savings is worth about 20% the process of of the telephone plan, life and of salary. establishing a bank. accidental death package. and disability insurance, split dollar life insurance, business travel accident insurance, short-term and long-term disability benefits, United States Railroad retirement benefits as well as paid vacation and sick leave, rail pass privileges, educational assistance, parking, and relocation benefits. (continued) Page 39 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Organization the board directs USPS Fannie Mae Freddie Mac TVA Board compensation Description of how For Governors, salary Board advised by Pursuant to a resolution Salary of TVA Board salaries and benefits for and reimbursable outside experts on adopted by the board, Chair is established Board members are expenses determined by appropriate levels of the 15 outside directors under Level III of the determined and statute. compensation based on receive an annual Executive Schedule approved payments made by retainer, annual award of Salary. Governors determine comparable businesses. stock options and pay of PMG and DPMG restricted stock, and The salary of the other within legislatively meeting attendance two members of the TVA established parameters. fees. board is established under Level IV of the They do not receive Executive Schedule. salaries or other Benefits available to employee benefits. board members are those generally available to federal employees, including presidential appointees, by statute. Description of how Governors’ salaries are Generally annual Board members receive The Chairman and two increases in salaries set by legislation. From adjustments. cash fees and stock directors of the TVA and other benefits 1970 to 1995, there were awards as their board are positions occur no salary increases. In Board is advised by compensation. covered by level III and 1996, salaries were outside experts on Adjustments for inflation level IV, respectively, of increased by legislation. appropriate levels of are not included in the the Executive Schedule compensation based on criteria for setting (5 U.S.C. §5314 and PMG and DPMG salaries payments made by compensation. However, §5315). are set by the comparable businesses. from time to time Freddie Increases in pay are Governors, subject to a Mac reviews the done through the pay cap. compensation package legislative process. for board members to Increases in pay are ensure that it remains done through the competitive. legislative process. Is member service full or Full time for PMG and Full time for 3 Part time. Board Full time part time? DPMG. management employees members provide and part time for service year round. Part time for Governors. rest of board, who are There is no fixed-hour outside management requirement for service. directors. Page 40 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards RTB FDIC AMTRAK CPB Canada Post Australia Post Determined by Salary is determined Pay and expenses By statute. Determined by the Determined by an statute. under federal are set by statute. Governor in Council. independent central statutes —Level III remuneration of the Executive tribunal. Schedule for Chairperson and Level IV for other members. Salaries and Board members’ Adjustment would Salaries and Increases are not The Remuneration benefits have not salaries are set by require legislative benefits may be made on a regular Tribunal regularly been increased statute (5 U.S.C. change. changed by an act basis. They are examines since establishment §5314 and §5315) of Congress at any made following a remuneration levels of Board in 1971. under appropriate time. recommendation and will consult with Adjustments would executive levels. from the Minister the board on be made Changes would be responsible for specific issues. legislatively. done legislatively. Canada Post to the Governor in Council. The last adjustment was made by the Governor in Council in 1990. Part time Full time Part time Part time Part time Full time for Managing Director and part time for other Directors. (continued) Page 41 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Organization the board directs USPS Fannie Mae Freddie Mac TVA Current annual salary of $30,000 plus $300 a day $23,000 retainer $20,000 retainer Effective January 1, 1996: board members for not more than 42 annually, plus $1,000 for annually, prorated based days of meetings per attending each board or on the quarter in which $115,700 for Board year for Governors. board committee they were appointed. members meeting. $148,400 salary for PMG Directors also were paid $123,100 for Chairman Committee chairs $1,000 for attendance at $148,000 salary for received an additional each meeting of the Board service is full time; DPMG $500 for each committee board or any board therefore, no daily meeting they chaired. committee meeting and meeting attendance fees were reimbursed for paid. Additionally, each out-of-pocket costs of nonmanagement director attending such meetings. has restricted common stock under the Fannie Each board committee Mae Restricted Stock chairman also received Plan for Directors and an annual retainer of stock options under the $2,500. Fannie Mae Stock Compensation Plan of Pursuant to the 1995 1993. Fannie Mae Directors’ Stock officers who serve on the Compensation Plan,f Board of Directors do not each Director was receive compensation granted options to for serving as directors purchase 2,400 shares other than the of the Corporation’s compensation they common stock and receive as Fannie Mae received shares of officers. Fannie Mae restricted stock having a officers are not eligible to fair market value of participate in the Fannie approximately $10,000 Mae Restricted Stock on the date of the award. Plan for Directors and are not eligible to receive nonmanagement director stock options under the Fannie Mae Stock Compensation Plan of 1993. Board composition/qualifications Number of board 11 18 18 3 members (9 Governors plus the PMG and DPMG) Page 42 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards RTB FDIC AMTRAK CPB Canada Post Australia Post Board members $123,100 for Chair Board members $150 a day while $437 (U.S. dollars) Directors—$27,650 from the general receive $300 per attending meetings for physical (U.S. dollars) public and elected $115,700 for other diem for attending or while engaged in attendance at board members receive board members board and duties related to or board committee Deputy $100 each day (or committee meetings such meetings or meetings. Chair—$37,750 part thereof) for up Board service is full or conducting other other activities of the (U.S. dollars) to 50 days per year, time; therefore, no official business of board, including The $437 (U.S. spent in the daily meeting the Corporation. travel time. dollars) is also Chair—$58,700 performance of their attendance fees payable for each full (U.S. dollars) official duties. paid. The $300 per diem No board member day of travel to and is a fixed statutory shall receive from the meeting. No daily meeting Federal employees compensation level compensation of attendance fees appointed to the that has been in more than $10,000 Board members are paid. Board receive no place since the in any fiscal year. paid an annual additional board was created. retainer ($4,080 to compensation for $5,100 U.S. dollars) serving on the that is set by Board. Order-in-Council (i.e., by Her Majesty’s Government) on the recommendation of the responsible Minister. 13 5 9 9 11 Up to 9 Directors. (6 current members (9 Directors plus the and 3 vacancies). Chair and President). (continued) Page 43 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Organization the board directs USPS Fannie Mae Freddie Mac TVA How board members are 9 Governors appointed 13 members elected by 5 appointed by the Appointed by the selected by the President of the shareholders. President of the United President of the United United States, by and States. States with the advice with the consent of the 5 members appointed by and consent of the Senate. President of the United 13 elected by voting Senate. States. common stockholders. Governors appoint PMG. Governors and PMG appoint DPMG. Page 44 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards RTB FDIC AMTRAK CPB Canada Post Australia Post 7 appointed by the 3 appointed by the 3 members are Appointed by the 9 Directors are Directors are President of the President of the appointed by President of the appointed by the appointed by the United States (5 of United States, by President of the United States with Minister with the Governor-General whom shall be and with the advice United States and the advice and approval of the on the nomination of officers or and consent of the confirmed by the consent of Senate. Governor in Council. the Minister for employees of the Senate. Senate The Governor in Communications Department of (representing labor, Council appoints the and the Arts. Agriculture and not 1 member shall be state governors, and Chair and officers or the Comptroller of business). President/CEO . The Managing employees of the the Currency. Director is Rural Utilities 2 members appointed by the Services, and 2 of 1 shall be the represent commuter Board of Directors. whom shall be from Director of the Office authorities and are the general public of Thrift Supervision. selected by the The Minister must and not officers or President from lists consult with the employees of the drawn up by those Chair of Post prior to federal government). authorities. appointing Directors, and one 3 elected by 2 are selected by Director must be stockholders of the Corporation’s recognized as eligible cooperative preferred having an borrowers. stockholder— the appropriate Department of understanding of the 3 elected by Transportation. interests of stockholders of employees. eligible commercial The Secretary of borrowers. Transportation and Amtrak President serve by virtue of their offices. (continued) Page 45 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Organization the board directs USPS Fannie Mae Freddie Mac TVA Number of years 9 years for the 9 1 year 1 year 9 year fixed terms are members are to serve Governors. A Governor staggered so that one may continue to serve up begins every 3 years on to 1 year after term May 18 (e.g., 1990, expires while awaiting a 1993, and 1996). successor to be named. PMG serves at pleasure of Governors. DPMG serves at pleasure of Governors and PMG. Page 46 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards RTB FDIC AMTRAK CPB Canada Post Australia Post At pleasure of the 6 years for each 3 members The term of office of Not to exceed 3 Up to 5 years for President of the appointed member, appointed by the each member of the years for Directors. Directors as United States for but they may President of the board appointed by specified in the appointed members. continue to serve United States and the President of the As determined by instrument of after the expiration confirmed by the United States shall Governor in Council appointment. 2-year terms for of their terms of Senate be: for Chair and elected members. office until a (representing labor, President/CEO. successor has been state governors, and 6 years, except as appointed and business) serve for provided in section qualified. 4 years. 5(c) of the Public Telecommunications Others serve during 2 members Act of 1992. their terms as representing Comptroller of commuter Any member whose Currency and authorities serve forterm has expired Director of the Office 2 years. may serve until such of Thrift Supervision. member’s 2 members selected successor has taken by the Corporation’s office, or until the preferred end of the calendar stockholder, the year in which such Department of member’s term has Transportation, expired, whichever serve for 1 year. is earlier. 2 ex officio Any member members (the appointed to fill a Secretary of vacancy occurring Transportation and prior to the the President of expiration of the AMTRAK) serve as term for which such members as long as member’s they remain in their predecessor was positions as appointed shall be Secretary of appointed for the Transportation and remainder of such President of term. AMTRAK. (continued) Page 47 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Organization the board directs USPS Fannie Mae Freddie Mac TVA Board member Qualifications are not Of 5 presidentially At least: Each member must be a qualifications and prescribed in legislation. appointed members, at U.S. citizen and profess restrictions as stated in least: 1 from home-building a belief in the feasibility legislation No restrictions in industry; and wisdom of the TVA legislation regarding who 1 must be from Act of 1933. can be PMG and DPMG. mortgage lending 1 from mortgage lending industry; industry; Members are prohibited No political from having a financial recommendations may 1 from homebuilding 1 from real estate interest in any public be considered when industry; industry; and utility corporation selecting PMG and engaged in the business DPMG. 1 from real 1 from an organization of distributing and selling estate industry; and that has represented power to the public or in Governors are chosen to consumer interests for any corporation represent the public 1 from an organization not less than 2 years, or engaged in the interest generally and that represents 1 person who has manufacture, selling, or cannot be consumer interests for demonstrated a career distribution of fixed representatives of not less than 2 years, or commitment to the nitrogen or fertilizer, or specific interests using 1 person who has provision of housing for any ingredients thereof; the USPS. demonstrated a career low-income households. nor shall any member commitment to the have any interest in any Not more than 5 of the provision of housing for business that may be Governors can be low-income households. adversely affected by members of the same the success of the political party. corporation as producer of concentrated No officer or employee of fertilizers or as a the United States may producer of electric serve concurrently as a power. Governor. Also, board members A Governor may hold are prohibited, during any other office or their tenure in office, employment not from engaging in any inconsistent or in conflict other business. with his duties, responsibilities, and powers as an officer of the USPS. Page 48 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards RTB FDIC AMTRAK CPB Canada Post Australia Post 5 members Appointed board Directors must be No more than 6 of None specified. The board must appointed by the members must be U.S. citizens. the appointed have a mix of skills President of the U.S. citizens, and members may be appropriate for the United States must not more than 3 of Secretary of from the same Corporation. One be officers or the members may Transportation political party. member is to have employees of the be members of the serves as Board an appropriate Department of same political party. member by virtue of The 9 appointed understanding of the Agriculture and not his office. members shall be interests of officers or selected from such employees. employees of the Amtrak’s President fields as education, Rural Utilities serves as the cultural and civic Services. Chairman of the affairs, or the board by virtue of arts—including 2 members his office. radio and appointed by the television—and President of the 3 members are represent various United States must appointed by the regions of the be from the general President of the nation, professions, public and not United States and and occupations, officers or confirmed by the and represent employees of the Senate various kinds of federal government. (representing labor, talent and state governors, and experience 3 members must be business). appropriate to the elected from function and cooperative-type 2 members responsibilities of organizations. represent commuter CPB. authorities and are 3 members must be selected by the Of these appointed elected from President of the members, 1 shall be commercial-type United States from selected from organizations. lists drawn up by among individuals those authorities. who represent the licensees and Elected board 2 members are permittees of public members must be selected by the television stations, officials (managers, Corporation’s and 1 shall directors, etc.) of the preferred represent the organization they stockholder. licensees and represent. permittees of public radio stations. (continued) Page 49 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Organization the board directs USPS Fannie Mae Freddie Mac TVA Are there restrictions on Nothing specified in A director should not be No, but None. the number of terms a statute or regulation. renominated after having stockholder-elected member can serve? served for 10 years or directors must retire at longer, although age 72. nominating committee may for good reason propose the renomination of such a director. No director should be proposed for renomination after 15 years of Board service. Is board referred to as Board of Governors. Board of Directors. Board of Directors. Board of Directors. “Board of Directors,” “Board of Governors” or by another title? How is Chair selected? Elected by the Elected by Board. By annual vote of the Designated by the Governors from among Board of Directors. President of the United the members of the States. Board. Page 50 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards RTB FDIC AMTRAK CPB Canada Post Australia Post No. There are no None. Yes. No member of No. Law states that None specified in restrictions the board shall be a Director may, on enabling legislation. contained in the eligible to serve in the expiration of Directors have been statute. excess of 2 his/her term of reappointed. consecutive full office, be terms. reappointed to the board. Board of Directors. Board of Directors. Board of Directors. Board of Directors. Board of Directors. Board of Directors. Elected by Board One of the President serves as Members of the The chair is Chair is selected by members. appointed members Chair. board annually elect appointed by the the Minister, with shall be designated one of their Governor in Council. appointment made by the President of members to be by Governor the United States, Chair and elect one General. by and with the or more of their advice and consent members as a Vice of the Senate, to Chair or Vice Chairs. serve as Chair of the Board of Directors for a term of 5 years. Page 51 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix IV Selected Characteristics of the Postal Service’s Board of Governors and Other Boards Note: Data displayed in this appendix were obtained primarily from the matrices completed by the boards of organizations included in our study. After receiving the completed matrices, we contacted each organization for clarification of some of their responses. We did not independently verify the information provided. a Until privatization (privatization will occur when 51 percent of the class A stock issued to the United States and outstanding at any time after September 30, 1995, has been fully redeemed and retired). b The Australian Postal Corporation came into existence on January 1, 1989. It succeeded the Australian Postal Commission. The legal status and identity of the Corporation did not change its present form until the Australian Postal Corporation Act came into effect on July 1, 1989. c Section 212 of the Federal Power Act, 18 U.S.C., authorizes the Federal Energy Regulatory Commission to review and approve rates for the transmission of electric power in connection with transmission services rendered pursuant to a Federal Energy Regulatory Commission order under section 211 of the Federal Power Act. d Some organizations provided data on pay and benefits, and others provided information only on pay. e The PMG, in commenting on a draft of this report, provided additional information on CEO pay at nine foreign postal administrations, including Canada Post and Australia Post. See appendix V for additional information. We did not independently verify the information provided. f This plan also permits Directors to receive shares of the corporation’s common stock in lieu of any portion of cash compensation. Sources: Boards of the respective organizations. Page 52 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix V Comments From the U.S. Postal Service Page 53 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix V Comments From the U.S. Postal Service Page 54 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix VI Comments From the U.S. Postal Service Board of Governors Page 55 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Appendix VII Major Contributors to This Report Michael E. Motley, Associate Director General Government Teresa L. Anderson, Assistant Director Division Arnel P. Cortez, Evaluator Martin de Alteriis, Senior Social Science Analyst Roger L. Lively, Senior Evaluator Charles F. Wicker, Senior Evaluator Jill P. Sayre, Senior Attorney Office of General Counsel (240215) Page 56 GAO/GGD-97-141 Issues Related to Governance of the Postal Service Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. Orders by mail: U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 or visit: Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. 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U.S. Postal Service: Issues Related to Governance of the Postal Service
Published by the Government Accountability Office on 1997-08-14.
Below is a raw (and likely hideous) rendition of the original report. (PDF)