US Postal Service 2012 Annual Report Download - page 63

2012 Report on Form 10-K United States Postal Service- 62 -
CODE OF ETHICS
All Postal Service employees are required to comply with the Standards of Ethical Conduct for Employees of the
Executive Branch ("Standards"). The Standards are published at 5 CFR Part 2635 and cover prohibitions and restrictions
on the acceptance of gifts, conflicting financial interests, the obligation of all employees to perform their duties impartially,
restrictions on the misuse of government positions, restrictions on certain outside activities, and other related ethical
obligations. Postal Service employees are also covered by a set of additional restrictions that apply only to the employees
of the Postal Service. These supplemental standards can be found at 5 C.F.R. Part 7001 and focus on limitations on
outside employment and outside business activities that could give rise to a conflict with their official duties. The
Standards of Conduct and the Supplemental Standards contain many examples to help employees identify and resolve
ethical issues. New employees receive ethics training at their orientation and ethics officials provide ethics training
throughout the year as required by law and as otherwise deemed appropriate. To ensure that all of our employees can
receive timely and accurate ethics advice, we have established a dedicated ethics telephone helpline and an e-mail
address that is managed by ethics specialists.
Certain high level employees are also subject to the Senior Financial Managers' Code of Ethics. This Code of Ethics can
be found on our website at: http://about.usps.com/who-we-are/financials/senior-financial-managers-code-of-ethics-
2010.pdf.
ITEM 11 — EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
ROLE OF THE BOARD OF GOVERNORS AND STATUTORY COMPENSATION AND BENEFITS REQUIREMENTS AND LIMITATIONS
The Board of Governors of the Postal Service establishes executive officer compensation and benefits, subject to the
requirements and limitations of federal law. The Board has delegated to its Compensation and Management Resources
Committee (“Compensation Committee”) authority for initial review of management proposals related to compensation
and benefits for executive officers. The Compensation Committee, which meets several times throughout the year, is
composed solely of presidentially-appointed, Senate-confirmed Governors who are independent of postal management.
The Compensation Committee makes recommendations to the full Board for their review and approval.
Federal law governing the Postal Service, set forth in Title 39 of the United States Code, provides that compensation and
benefits for all officers in the Postal Service shall be comparable to the compensation and benefits paid for comparable
levels of work in the private sector of the economy. The Postal Service is the second largest civilian employer in the
nation, with approximately 629,000 career and non-career employees as of the end of fiscal year 2012. The Postal
Service operates approximately 213,000 motor vehicles and nearly 32,000 retail units. In 2012, the Postal Service
delivered 160 billion pieces of mail, almost half of the world’s mail, and generated $65 billion in revenue. In 2012, the
Postal Service ranked 135th in Fortune Magazine’s listing of Fortune Global 500 Companies. By way of comparison, two
of our largest competitors ranked 177th and 263rd on this list. If the Postal Service were listed on the Fortune 500 annual
ranking of America’s largest corporations, it would be ranked 42nd. The same two of our largest competitors are ranked
52nd and 70th on that list.
Even as the economy continues to be challenged, comparably sized companies typically provide their top executives with
annual salaries well in excess of $1 million and total compensation and benefits valued at several million dollars. These
compensation packages typically consist of annual and long-term performance incentives, including a combination of cash
payments and stock options and a number of benefits and perquisites.
Although the law governing the Postal Service provides that executives and others should be compensated at a level
comparable to the private sector, the law does not afford the Governors the tools to achieve a standard of compensation
comparable to the private sector. Compensation for executive officers of the Postal Service remains significantly below
that of similarly-situated senior executives in the private sector. Postal law imposes three different caps on compensation
for postal employees. The first cap provides that no officer or employee may be paid compensation “at a rate in excess of
the rate for level I of the Executive Schedule under section 5312 of title 5” of the United States Code. 39 U.S.C. § 1003(a).
As the upper limit on federal salaries has been frozen for three years, this compensation cap has been set at $199,700 for
calendar years 2010, 2011, and 2012.