US Postal Service 2014 Annual Report Download - page 72

2014 Report on Form 10-K United States Postal Service 68
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 in the Code of Federal Regulations (“CFR”) 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 CFR 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 email 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 618,000 career and non-career employees as of the end of Fiscal Year 2014. The Postal Service operates
approximately 211,000 motor vehicles and approximately 32,000 retail units. In 2014, the Postal Service delivered 155.5 billion
pieces of mail, almost half of the world’s mail, and generated nearly $68 billion in revenue. In 2014, the Postal Service ranked
134th in Fortune Magazine’s listing of Fortune Global 500 Companies. By way of comparison, two of our largest competitors
ranked 182nd and 236th on this list. If the Postal Service were listed on the Fortune 500 annual ranking of America’s largest
corporations, it would be ranked 43rd. The same two of our largest competitors are ranked 50th and 64th 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 Service 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). In 2014, the upper limit on
federal salaries rose 1% to $201,700, after having been frozen for four years.
With the approval of the Board the Postal Service may develop a program to award a bonus or other reward in excess of the
compensation cap discussed above, as long as this does not cause the total compensation paid to the officer in a year to “exceed
the total annual compensation payable to the Vice President [of the United States] under [3 U.S.C. § 104] as of the end of the
calendar year in which the bonus or award is paid.” 39 U.S.C. § 3686(a)-(b). In 2014, this cap rose 1% to $233,000, after having