Royal Mail Share Incentive Plan · Partnership & Matching – a new employee benefit. Royal Mail is introducing a new employee benefit for all . eligible. Royal Mail employees. Partnership

Invitation to join the Partnership & Matching Plan

Royal Mail Share Incentive Plan

contents>

Terms in bold are explained in the jargon buster on page 14 and 15.

2Introduction

9Selling my Partnership and Matching Shares

16Contacts

4How does Partnership & Matching work?

10What happens if I leave Royal Mail?

17Terms and Conditions

5Who is eligible?

6How could I benefit and what factors do I need to think about?

11Frequently asked questions

Partnership & Matching 1

Partnership & Matching – a new employee benefit

Royal Mail is introducing a new employee benefit for all eligible Royal Mail employees. Partnership & Matching is a flexible way to invest in Royal Mail shares. It is a new element of our Share Incentive Plan (SIP) and offers similar tax advantages to SIP Free Shares, which were first allocated to eligible employees at the time of Royal Mail’s privatisation.

With this new benefit, you can use your gross (pre-tax) pay to purchase Royal Mail shares (‘Partnership Shares’) on a monthly basis. Royal Mail will then add to the shares you buy by giving you ‘Matching Shares’ for free.

Owning shares is not for everyone. Before deciding, you may want to get independent financial advice. Royal Mail and Equiniti, the scheme administrator, cannot provide this advice.

Please note: The price of a company’s shares may go up or down depending on the demand for the shares. This can be influenced by many things, including the company’s performance. Any investment you make in shares is a risk. The future value of shares and dividends cannot be guaranteed. The share price does not always go up if a company does well.

Introduction

2 Royal Mail Share Incentive Plan

An example:

This booklet includes detailed information on our new employee benefit and how to apply. Please read it carefully, including the Terms and Conditions at the back of the booklet.

For more information on how Partnership & Matching compares to previous Royal Mail employee share offers, please see the frequently asked questions section.

PARTNERSHIP AND MATCHING

Partnership Share

Partnership Share

Partnership Share

Partnership Share

Partnership Share

Five Partnership Shares

£1 £100

Matching

Share

Here’s Jane... She invests between £1 and £100 a month

Her investment is used to buy

Partnership Shares

>

For every five Partnership Shares Jane

buys the Company will give her one Matching Share for free, up to a

maximum of two Matching Shares per month.

How Partnership & Matching works at a glance:• You can invest up to £100 a month or, if lower, ten per

cent of your gross (pre-tax) pay in any tax year. If you are paid weekly, you can invest up to £23.07 a week.

• Buying shares from your gross pay, i.e. before income tax and National Insurance Contributions (NICs) are deducted, is more tax efficient than buying them from your net pay (i.e. after income tax and NICs), provided you keep your shares for five years.

• For every five shares you buy in Royal Mail plc (‘Partnership Shares’), the Company will give you one ‘Matching Share’, up to a maximum of two Matching Shares per month.

• You can stop, restart or change your investment at any time (one change per month).

• You own the Partnership Shares you buy from your gross pay. These shares, together with the Matching Shares we add, will qualify for any future Royal Mail dividend payments for as long as you own the shares.

• If you keep the shares for five years, you will not have to pay income tax and NICs on their value when you come to sell them. If you sell your Partnership Shares within three years of purchase, all of the corresponding Matching Shares will be forfeited.

• You benefit if the share price increases. But remember, any investment you make in shares is a risk. Share prices can go down as well as up. You could lose your investment.

• Unlike the Save As You Earn (SAYE) scheme, the money you invest is used to purchase shares every month at the market price on the day of purchase. Once the shares have been bought, you cannot change your mind and get your money back.


How does Partnership & Matching work?Royal Mail is giving all eligible employees the opportunity to buy shares in Royal Mail plc on a monthly basis. The shares, known as ‘Partnership Shares’, will be purchased under the Royal Mail Share Incentive Plan (SIP).

How much can I invest?

You can invest up to £100 a month or, if you are paid weekly, up to £23.07 a week, from your pay. When you make an application to join Partnership & Matching, you will be asked to specify a regular investment amount. This will then be deducted from your weekly or monthly pay. The minimum contribution is £1 for each pay period (weekly or monthly).

The money you invest will then be used to buy Royal Mail shares on the 15th of each month. Deductions from your pay will typically begin the month after you make your application. Have a look at the monthly schedule opposite for more details.

Please note, the amount you invest in any tax year through Partnership & Matching cannot be more than £1,200 or, if lower, 10 per cent of your gross (pre-tax) pay.

Can I make changes to the amount I invest each month, or temporarily stop/restart my deductions?

You can stop, restart or change the amount of your investment at any time by logging on to the Employee Share Plan (ESP) portal at www.royalmailemployeeshares.co.uk. One change is permitted every month. The

schedule opposite shows the monthly cut-off date for any changes. Where you stop and then restart your investments, the deductions will start again in the next available payroll.

How many Royal Mail shares can I buy with my pay deductions?

This will depend on how much you contribute and the market price at the time that the shares are purchased. All of your gross (pre-tax) pay deductions will go towards the purchase of your Royal Mail Partnership Shares. There are no fees to pay when you buy them. It is not possible to buy part-shares, so any deductions that have not been used to buy a whole Royal Mail share will be added to the next month’s purchase.

How do I sell my Partnership and Matching Shares?

You can instruct Equiniti to sell your shares via the ESP portal or by phone. On the portal you will be able to see the status of your shares and whether you need to pay income tax and NICs when you sell them. To take advantage of the tax benefits, you will need to keep your shares in the SIP for five years.


Who is eligible?

Key dates

All Royal Mail Group Limited’s employees in the UK, including Parcelforce Worldwide, are eligible to participate in the Partnership & Matching, provided you meet the eligibility criteria set out here.

Employees of GLS, Property & Facilities Solutions (PFS) and other subsidiaries and joint ventures are not eligible to participate.

Eligibility criteriaTo qualify for Partnership & Matching, eligible employees must be a UK tax resident and have a minimum of 12 months’ continuous service with:

• Royal Mail Group Limited, or

• Royal Mail plc

Key dates – first application period

Cut-off date for first applications: 17th August 2018

Deductions from your pay start: From weekly beginning 3rd September 2018 for weekly paid employees; last working day of September for monthly paid employees

Shares purchased: 15th October 2018

Key dates thereafter

Cut-off date for new applications or any changes in investment:

19th of the month (From September)

Deductions from your pay start: From the week following the 20th of the month for weekly paid employees (from September onwards); from the following month’s payroll for monthly paid employees (from October onwards)

Shares purchased: 15th of the month (from November onwards)

More about the SIPA SIP (Share Incentive Plan) is a tax-advantaged share plan for all employees, which is recognised by HM Revenue & Customs (HMRC), and offers a flexible way for employees to hold shares in their company. ‘Partnership Shares’ are purchased out of your gross (pre-tax) income, which means you don’t pay any income tax or NICs on the amount you are investing. You may be required to pay income tax and NICs on your shares when you sell them or you leave Royal Mail. For details, see ‘Selling my Partnership

and Matching Shares while I am a Royal Mail employee’ (page 9) and ‘What happens if I leave Royal Mail?’ (page 10).

All the SIP shares that you acquire will be held in a trust by the SIP Trustee, Equiniti Share Plan Trustees Limited. Equiniti Limited (‘Equiniti’) acts as the Administrator of the SIP on behalf of Royal Mail. The special tax advantages offered by the SIP mean that you do not have to pay any income tax or NICs if you keep your shares for more than five years.

See page 8 for more information on how to apply.


How could I benefit?Partnership & Matching offers you three potential benefits:

oneYou get tax benefits, provided you keep your shares for five yearsIf, for example, you are a basic rate tax payer (paying income tax at 20 per cent and NICs at 12 per cent) and choose to invest £50 per month, you are only reducing your take home pay by £34 per month. This is

because there is no income tax or NICs to pay on the £50 invested. So, you will receive £50 worth of shares, which only cost you £34. Have a look at this table for more examples.

Examples of tax benefits when buying Royal Mail shares through Partnership & Matching

Basic rate (20 per cent) tax payer

Monthly contribution from pay £20 £50 £80 £100

Tax saved £4 £10 £16 £20

NIC saved (Assuming 12 per cent rate) £2.40 £6 £9.60 £12

Net cost to you £13.60 £34 £54.40 £68

Higher rate (40 per cent) tax payer

Monthly contribution from pay £20 £50 £80 £100

Tax saved £8 £20 £32 £40

NIC saved (Assuming 2 per cent rate) £0.40 £1 £1.60 £2

Net cost to you £11.60 £29 £46.40 £58

The example above is for illustrative purposes only and is based on the rates of income tax and NICs in force at the time of publication. The amount of income tax and NICs that you pay will depend on your own personal circumstances.

It is important to be aware that buying Partnership Shares will reduce your pay on which income tax and NICs are assessed. This may affect your and/or your spouse or civil partner’s entitlement to

certain benefits including statutory maternity pay and statutory sick pay. This is important if it means that your earnings, on which NICs are due, fall below the Lower Earnings Limit (£6,032 per year for 2018/19) so that you are not paying any NICs. HMRC publishes a guidance leaflet ‘Share Incentive Plans and your entitlement to benefits (IR177)’ which you can view on their website: www.hmrc.gov.uk.


two

three

You get Matching Shares for free Royal Mail will give you one Matching Share for every five Partnership Shares acquired each month up to a maximum of two Matching Shares per month.

It is not possible to buy part-shares, so any deductions that have not been used to buy a whole Royal Mail share will be added to the next month’s purchase.

Partnership Shares that have not been used to get a Matching Share are rolled over to the following month’s calculation (unless you have been granted your full allocation of two Matching Shares for that month).

The following table helps to illustrate how your shares could accumulate.

You benefit from any future dividend payments If you buy shares through Partnership & Matching, you will also be entitled to any dividend payments that Royal Mail makes, as with other Royal Mail shares you may have, including Free Shares. Please remember that dividend payments are not guaranteed.

How your Royal Mail Partnership and Matching Shares could accumulate

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7

Monthly contribution £50 £50 £20 £20 £0 £50 £50

Cash not used in the previous month £0 £0.32 £2.89 £3.65 £3.69 £3.69 £5.61

Unused Matching Share allowance rolled over from previous month

0 4 0 4 3 3 0

Total amount available to buy Partnership Shares £50 £50.32 £22.89 £23.65 £3.69 £53.69 £55.61

Share price £5.52 £5.27 £4.81 £4.99 £5.23 £6.01 £5.18

Number of Partnership Shares bought 9 9 4 4 0 8 10

Cost of Partnership Shares £49.68 £47.43 £19.24 £19.96 £0 £48.08 £51.80

Cash available after purchase of Partnership Shares

£0.32 £2.89 £3.65 £3.69 £3.69 £5.61 £3.81

Matching Shares added in the month 1 2 0 1 0 2 2

Unused Matching Share allowance rolled forward 4 0 4 3 3 0 0

Total Partnership and Matching Shares acquired in the month

10 11 4 5 0 10 12

Total shares accumulated 10 21 25 30 30 40 52

The share prices used above are for illustration purposes only and are not to be taken as an indication of future share price performance. Please note the value of shares can go down as well as up.

What other factors do I need to think about?

1. Buying Partnership Shares could mean your earnings, on which NICs are due, fall below the Lower Earnings Limit. See page 6 for more information.

2. Any investment you make in shares is a risk. Share prices can go down as well as up. The future value of shares and dividends cannot be guaranteed. Unlike Free Shares and the SAYE scheme, your capital is at risk as soon as you make a monthly payment. Once the shares have been bought, you cannot change your mind and get your money back. You could lose your investment.

3. If you sell your Partnership Shares within three years, you will lose the corresponding Matching Shares. You will also need to pay income tax and NICs on the value of any shares you sell within five years of the purchase. See ‘Selling my Partnership and Matching Shares while I am a Royal Mail employee’ (page 9) and ‘What happens if I leave Royal Mail?’ (page 10).

See the frequently asked questions section on page 11 for more information.


How do I apply?If you decide that you want to participate in Partnership & Matching, you can apply online by visiting the ESP portal at www.royalmailemployeeshares.co.uk or by calling 0800 012 12 13 and using the automated phone service.

To start investing at the first opportunity, please apply by 17th August 2018.

OnlineIf you are registering for the first time, you will be sent an activation code for your account. If you have a royalmail.com email address, the activation code will be sent immediately by email. If not, your activation code will be sent to your home address.

Once you have activated your account, please log on to the portal:

• Click on ‘Apply’ and follow the step-by-step process to submit your application.

• You will then see a summary of your SIP application.

PhoneIf you call the Employee Shares Helpline on 0800 012 12 13 and use the automated phone service, you will need your payroll number, which can be found on your payslip, and your date of birth when you call. At the end of the call, you will need to take a note of your reference number. You will need this to confirm your request, if you have any questions.

The online and phone services are both available 24 hours per day.

If you have any questions about the application process, please call 0800 012 12 13. Calls are free from a BT landline, but other network providers may charge.


Selling my Partnership and Matching Shares while I am a Royal Mail employee Different rules apply to selling your Partnership and Matching Shares, depending on when you choose to sell them. Please note, each monthly purchase will have its own three and five year holding periods.

I sell my shares within three years of the initial monthly purchase

Partnership SharesYou can sell your Partnership Shares from the SIP at any time. But, if you sell them within three years of purchase, you will have to pay income tax and NICs on the value of the shares on the date they are sold.

Matching SharesAny Matching Shares held for less than three years will be forfeited at the same time as the corresponding Partnership Shares are sold (e.g. for every five Partnership Shares sold, one Matching Share is forfeited).

I sell my shares within three to five years of the initial monthly purchase

Partnership SharesYou can sell your Partnership Shares from the SIP at any time. But, if you sell between three and five years of purchase, you will have to pay income tax and NICs on the lower of:

– the money used to buy the Partnership Shares

and

– the market value of the Partnership Shares on the date they are sold.

Matching SharesYou can sell the associated Matching Shares once they have reached the three year anniversary. But, if they are sold prior to the five year anniversary, income tax and NICs will be payable on the lower of:

– the market value of the shares at the date of award

and

– the market value of the shares when they are sold.

I have held my Partnership and Matching Shares for more than five years

Partnership and Matching SharesYou will not pay income tax or NICs on the Partnership or Matching Shares if you sell them. You will not have to pay capital gains tax (CGT) if you sell your shares directly from the SIP. However you may need to pay CGT if you decide to transfer the shares out of the SIP and sell them at a later date.

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What happens if I leave Royal Mail? If you leave Royal Mail, your shares will need to be taken out of the SIP. You can transfer them to your own name or instruct Equiniti to sell them for you. You may need to pay

income tax and NICs. Different rules apply depending on how long you have held them for. Please note, each monthly purchase will have its own three and five year holding periods.

Period since shares were purchased

Reason for leaving Less than three yearsOver three years but

under five years Over five years

Employee who leaves due to resignation or dismissal.

This makes you a ‘taxable leaver’:

Partnership Shares:Income tax and NICs payable on market value of shares on the date they are taken out of the SIP.

Matching Shares:Shares forfeited.

Partnership and Matching Shares:Income tax and NICs payable on the lower of:– the market value of the

shares at the date of award and– the market value of the

shares when they are taken out of the SIP.

Partnership and Matching Shares:Shares can be released from the SIP free of income tax and NICs.

Employee who leaves due to one of the following circumstances.

This makes you a ‘tax-exempt leaver’:

• You have an injury or disability which means you can no longer do your job

• You are made redundant

• You retire in line with our current policy on retirement for the purposes of the SIP (see frequently asked questions)

• The part of the company or business you work for is sold or transferred

• You die


If you die, the people managing your estate will not have to pay income tax or NICs on the value of your shares.




Frequently asked questionsWhat are Partnership, Matching and Free Shares?

Following the introduction of Partnership & Matching, there will be three types of shares in the Royal Mail SIP.

Partnership SharesEmployees can buy Partnership Shares at market value from their gross (pre-tax) pay. This means that you do not pay any income tax or NICs on the investments you make.

Royal Mail SIP Rules dictate that you can invest up to £1,200 or 10 per cent of your gross (pre-tax) pay (whichever is the lower amount) in Partnership Shares each tax year. If you leave Royal Mail, you will keep all of the Partnership Shares you have purchased, but may forfeit any linked Matching Shares (please see below).

Matching SharesMatching Shares are awarded by the Company at no cost to the employee, based on the number of Partnership Shares purchased. For every five Partnership Shares purchased, Royal Mail will give you one Matching Share, up to a maximum of two Matching Shares per month. Matching Shares are placed in the SIP at the same time

that the Partnership Shares are purchased.

Matching Shares are directly linked to the Partnership Shares purchased, so if you sell Partnership Shares that have Matching Shares linked to them, or leave employment, within three years of the initial purchase (the ‘Matching Share forfeiture period’), you may lose some or all of your Matching Shares.

Free SharesWhen Royal Mail was privatised in October 2013, 10 per cent of the Company’s shares were set aside as Free Shares for eligible employees. There are no current plans to issue further Free Shares awards.

How much can I invest in Partnership Shares?

Under the Royal Mail SIP, there is an investment limit of £1,200 per year (or 10 per cent of your gross (pre-tax) pay in any one tax year, whichever is the lower amount). There may also be periodic limits on investment under the terms of the Plan. This is currently within HMRC’s maximum limit on investment in Partnership Shares for any one tax year. HMRC could change this limit from time to time.

How risky is Partnership & Matching, compared to previous Royal Mail employee share plans?

Free Shares Save As You Earn (SAYE) Partnership & Matching Shares

How were/are these shares awarded?

Eligible employees were given these shares free of charge. They are held in the SIP.

You were able to buy shares at the end of the three-year savings term at the option price of 360p.

You can invest up to £100 a month (or, if you are paid weekly, up to £23.07 a week) from your gross (pre-tax) pay. This is used to buy shares in Royal Mail plc at the market price. For every five shares you buy (Partnership Shares), the Company will give you one Matching Share, up to a maximum of two Matching Shares per month. These shares are held in the SIP.

What was/is the risk involved?

As a share owner, the value of your shares can go down as well as up.

You could decide at the end of savings term not to invest in shares and get your money back. If you bought the shares at the end of the savings term, you became a shareholder. The value of your shares can go down as well as up.

The money you invest is used to purchase shares every month. You cannot change your mind once the shares are purchased and get your money back. Any investment you make in shares is a risk. Share prices can go down as well as up.


Why do share prices go up and down?

The price of a company’s shares may go up or down depending on the demand for the shares. This can be influenced by many things, including the company’s performance. Any investment you make in shares is a risk. The future value of shares and dividends cannot be guaranteed. The share price does not always go up if a company does well.

What other key factors do I need to think about?

• Buying Partnership Shares will reduce your pay on which income tax and NICs are assessed. This may affect your and / or your spouse or civil partner’s entitlement to certain benefits including statutory maternity pay and statutory sick pay. This is important if your participation in the Plan means that your earnings, on which NICs are due, fall below the Lower Earnings Limit (£6,032 per year for 2018/19) so that you are not paying any NICs. HMRC publishes a guidance leaflet ‘Share Incentive Plans and your entitlement to benefits (IR177)’ which you can view on their website: www.hmrc.gov.uk.

• Terms and Conditions apply to the Plan. The Company reserves the right, at its discretion, to alter the Terms and Conditions or close the Plan. If this happens, participants will be sent updated information.

• The future value of shares and dividends cannot be guaranteed. Any investment you make in shares is a risk. As for any shareholder, the value of the shares you receive through the Plan may go down or up. For example, when you decide to sell your shares, they may be worth less than you paid for them.

Can I join Partnership & Matching if I work part-time?

Yes, if you are eligible under the Plan rules, you can join the Plan if you work part-time. Please note that your entitlement to some statutory benefits may be affected if the money you contribute to the SIP reduces your qualifying earnings to below the Lower Earnings Limit (£6,032 per year for 2018/19).

Can I keep my shares in the SIP indefinitely?

You can leave your shares in the SIP for as long as the Plan is in place and you continue to be employed by Royal Mail. If you leave Royal Mail, you have to take your shares out of the SIP. You may have to take your shares out of the SIP in other circumstances such as a takeover of Royal Mail. The Trustee will contact you if you have to take your shares out of the SIP.

How do I pay for the Partnership Shares?

Once you have made your application and specified how much you want to invest in buying Partnership Shares, the funds will be deducted from your gross (pre-tax) pay each time you get paid.

How often will contributions be taken from my pay?

They will be taken weekly or monthly, depending on when you are paid.

What happens if my pay is not enough for me to make the investment amount I have chosen?

Deductions will only be made in any given week or month if there are sufficient funds to take from your pay once statutory deductions have been taken.

Will I be notified if no deductions are taken from my pay?

No. Colleagues will need to review their payslips to ensure that the correct deductions have been made.

How will I get my Matching Shares?

You will receive one Matching Share for every five Partnership Shares that you buy, up to a maximum of two Matching Shares per month. The Matching Shares will be placed in the SIP at the same time as the corresponding Partnership Shares.

Will I receive dividends?

The Company does not have to pay dividends. How often we pay dividends and how much we pay will depend on many things, including our Company’s performance and future investment plans. Any dividends paid on your shares whilst they are in the SIP will be sent to your salaried bank account. Or, you can request that Equiniti, the Plan administrator, sends a cheque to your home address for the amount of the dividend.

Frequently asked questions (cont.)


Will I have to pay income tax on any dividends I receive?

On 6 April 2016, the Government introduced a new Dividend Allowance. Under this allowance, you will not have to pay tax on any income you receive from dividends up to £2,000 a year.

Can I vote at the Royal Mail Annual General Meeting?

By taking part in Partnership & Matching, you become a shareholder in Royal Mail and have the right to vote at the Annual General Meeting. As the shares are held in the Trustee’s name, you have to instruct the Trustee how to vote on your behalf, if you want them to do so. You will receive confirmation of when you can vote from the Trustee.

Can I transfer or sell my shares whilst I am working at Royal Mail?

Partnership SharesThe Partnership Shares have been bought with your own money so you can transfer them into your name at any time, or you can ask Equiniti to sell them for you. However, you will need to pay income tax and NICs if you transfer them from the SIP within five years of purchase. See the section ‘Selling my Partnership & Matching Shares’ on page 9. If you sell any Partnership Shares within three years of purchase, the corresponding Matching Shares will be forfeited. If you wish to transfer or sell your Partnership Shares at any time, please go to your ESP portal account or contact Equiniti on 0800 012 12 13.

Matching SharesThe terms of the Plan dictate that the Matching Shares must be held in the Plan for at least three years before they can be transferred or sold, unless you leave Royal Mail (see ‘What happens if I leave Royal Mail?’ on page 10). If you transfer or sell your Matching Shares between three and five years of being acquired, you will have to pay income tax and NICs on them, as with your Partnership Shares. If you sell any Partnership Shares within three years of purchase, the corresponding Matching Shares will be forfeited.

What charges do I incur if I sell my shares?

If you sell before the end of the relevant holding period, you will pay income tax and NICs on the sale of shares. You will be charged an administration fee and brokerage commission, currently 0.5 per cent of the value of the sale or £17.50, whichever is higher. Your sale proceeds (if taxable) will be paid via payroll. All non-taxable sale proceeds will be sent to the bank account your pay goes into. If Equiniti do not hold a bank account for you, a cheque will be sent to your registered address.

How can I find out about the status of my Partnership and Matching Shares and their current value?

Log on to your Employee Shares account at www.royalmailemployeeshares.co.uk to get the latest information about your shareholding. This includes which shares are available to sell and whether you need to pay income tax and NICs when you sell them.

How do you define ‘retirement’ for the purpose of tax exemption when leaving Royal Mail?

This is currently defined as ‘resignation aged 60 or over’. Please check with HR Services for the latest definition of retirement, if you are planning on retiring soon.

How long will the Company run Partnership & Matching?

There is no formal timeline for the Plan. This is something that we will keep under review. If we decide to close or alter the Plan, we will notify you.


Capital gains tax (CGT)

A tax that is normally paid on any gains made when shares are sold. Every person has a yearly CGT allowance and you will not have to pay CGT on any gains you make below your allowance. For 2018/19, the allowance is £11,700.

Dividend

A dividend is a portion of a company’s profits that the company pays to its shareholders. Companies do not have to pay dividends. Our Board of Directors will propose when and how often we will pay dividends to shareholders and how much these dividends will be.

Eligible employees

Most of Royal Mail Group Limited’s employees in the UK, including Parcelforce Worldwide, are eligible to participate in Partnership & Matching if they meet certain conditions (eligibility criteria). Employees of GLS, PFS and other Royal Mail subsidiaries and joint ventures are not eligible to participate.

Eligibility criteria

To qualify for Partnership & Matching, eligible employees must have a minimum of 12 months’ continuous service with:

• Royal Mail Group Limited or

• Royal Mail plc

Equiniti

Equiniti Limited is the administrator of the SIP on behalf of Royal Mail. Its role is to oversee and administer the Royal Mail Employee Share Offers and also the Royal Mail share register.

Forfeiture period

If you sell your Partnership Shares within three years of purchase, the corresponding Matching Shares will be forfeited.

Free Shares

Shares that were awarded to eligible colleagues free of charge following Royal Mail’s privatisation in 2013, and through subsequent Free Share awards.

Income tax

The tax you pay on income you receive, including shares you hold in a SIP in certain circumstances. The rate of income tax you pay will vary depending on your level of income. For most people, this income tax is paid automatically through payroll. You pay 20 per cent on earnings up to £34,500 (after deducting any allowance you are entitled to). Tax on earnings above is paid at 40 per cent and 45 per cent on earnings above £150,000 per annum (these are the current income tax rates for 2018/2019). Tax laws do change and the rates can change at any time.

Matching Shares

For every five Partnership Shares you buy on a monthly basis using your pay, Royal Mail will give you one additional share, up to a maximum of two additional Matching Shares per month. Matching Shares must be held in the SIP for a period of three years whilst you are in employment with Royal Mail before you can sell them. If they are sold prior to the five year anniversary, income tax and NICs will be payable on the lower of the market value of the shares when bought and the market value of the shares when they are sold.

Royal Mail reserves the right to vary or withdraw the matching ratio applied at any time. You will be notified if this is to happen and may be required to complete a new agreement in order to continue buying new shares under Partnership & Matching. Any changes will not affect your entitlement to any shares awarded to you before the notification of any change.

Jargon buster


National Insurance Contributions (NICs)

You pay National Insurance Contributions to build up your entitlement to certain state benefits, including the State Pension. Like income tax, NICs are paid out of the income you earn at rates, and up to limits, that are set by Government.

Partnership Shares

These are shares you buy on a monthly basis through deductions by payroll from your gross (pre-tax) pay. Only whole shares can be bought, so any money left over in one month, will be carried forward and used to buy shares the following month. You can transfer them out of the SIP or sell them at any time, however you will need to pay income tax and NICs, if you sell them within five years of purchase.

SIP Trustee

Equiniti Share Plan Trustees Limited manages the Trust for the Share Incentive Plan in line with the SIP rules.

SIP Share Incentive Plan (SIP)

A SIP is a share plan for all employees. It provides tax advantages recognised by HMRC and is a flexible, tax-advantaged way for employees to hold shares in their company.


Contacts

Administrator

Our administrator is Equiniti. If you still have questions after reading this guide, you can get more information by contacting them.

Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom.

Royal Mail Employee Shares Helpline: 0800 012 12 13 (or +44 121 415 0268 if you are calling from outside the United Kingdom). Calls are free. The helpline is open from 8.30am to 5.30pm, Monday to Friday, not including UK bank holidays.

Textel or Minicom number: 0800 011 3649 (or +44 121 415 7028 if you are calling from outside the United Kingdom).

Nothing in this guide should be taken as financial advice. We (Royal Mail), and the employee shares administrator, Equiniti, cannot provide independent financial advice.

If there is any inconsistency between this guide and the terms and conditions of the Partnership and Matching Plan, the rules of the SIP or tax legislation, they shall take priority over the guide.

If you would like this guide in a different format, for example in large print, in Braille or on audio tape, please contact the Royal Mail Employee Shares Helpline on 0800 012 12 13.

The Trustee of the Share Incentive Plan

The Trustee is Equiniti Share Plan Trustees Limited. They manage the SIP in line with the SIP rules. You can contact the Trustee at:

Equiniti Share Plan Trustees Limited, Highdown House, Yeoman Way, Worthing, West Sussex, BN99 3HH, United Kingdom.


These terms apply between you and Royal Mail plc (the “Company”) and Equiniti Share Plan Trustees Limited (the “Trustee”) and form part of your agreement, along with the rules of the Plan, to buy shares under the Royal Mail Share Incentive Plan (the “Plan”). Words used here are defined in the rules of the Plan or legislation. In the event of any conflict between this agreement, the rules of the Plan and/or legislation, the rules of the Plan and legislation will apply.

Your Privacy Notices clearly explain how your data is protected and how your enhanced rights apply from 25th May 2018. To read the latest versions, please visit https://privacy.equiniti.com and https://www.myroyalmail.com/People-Privacy-Notice.

PLEASE NOTE THE PRICE OF SHARES AND THE INCOME FROM THEM MAY GO DOWN AS WELL AS UP AND YOU MAY NOT GET BACK THE AMOUNT THAT YOU HAVE INVESTED.

NOTICE TO PARTICIPANT ABOUT POSSIBLE EFFECT ON BENEFITSDeductions from your pay to buy partnership shares under this agreement may affect your entitlement to or the level of, some contributory social security benefits, statutory maternity pay and statutory sick pay.

They may also have a similar effect in respect of some contributory social security benefits paid to your spouse or civil partner.

With this agreement you should have been given information on the effect of deductions from your pay to buy partnership shares on entitlement to social security benefits, statutory sick pay and statutory maternity pay. The effect is particularly significant if your earnings are brought below the lower earnings limit for National Insurance purposes, and is explained in the information: it is therefore important that you read it. If you have not been given a copy, ask your employer for it. Otherwise a copy may be obtained from any office of HM Revenue & Customs, the Department for Work and Pensions, or, in Northern Ireland, the Department for Communities. You should take the information you have been given into account in deciding whether to buy Partnership Shares.

Alternatively, you can download leaflet IR177 from the HMRC website.

PARTICIPANT PARTNERSHIP SHARESI agree that:• the deductions stated on my application will be held in a non-

interest bearing account until they are used by the Trustee to buy Partnership Shares in the Company for me.

• I may stop the deductions at any time, or begin them again, by writing to my employer, but I may not make up any amounts missed when deductions were stopped.

• if I cease to be employed by a company or an associated company participating in the Plan my salary deductions must cease.

I understand that:• In the event that the Company places any restrictions on the

deductions taken from my salary, or the Partnership Shares available for the award(s) they will arrange to notify me.

MATCHING SHARESI agree:• to accept Matching Shares awarded to me under the plan.• that Matching Shares in the Company will be awarded to me

under the Plan as stated in my application. I accept that the ratio stated may be varied by the Company, but it will notify me if the ratio varies before Partnership Shares are bought for me.

• to leave the Matching Shares in the hands of the Trustee or other persons appointed by the Trustee, and not to assign, charge or otherwise dispose of my beneficial interest in the shares for the whole of the 3 year Holding Period.

• that I will lose my Matching Shares if within 3 years from the date of the Award:

a) I withdraw the Partnership Shares in respect of which the Matching Shares were awarded, or

b) I cease to be in Relevant Employment unless the employment ceases for one of the following reasons:

(i) injury or disability (ii) redundancy (iii) transfer of employment to which TUPE applies (iv) my employing company ceases to be an associated

company (v) retirement (vi) death.

DIVIDENDSI agree that all dividends paid on my Plan Shares will be paid direct to my salary bank account. If the Trustee does not have my bank account details a cheque will be sent to my registered address.

I understand that:• Any dividends paid by the Company to the Trustee will be held in

a non-interest bearing account until they are paid to me.

HOLDING PERIOD:I understand that my obligations during the Holding Period will end:i) if I cease to be in Relevant Employment, orii) if the Company terminates the Plan in accordance with the rules

of the Plan.

If i) or ii) occur, I consent to the transfer of my Plan Shares to me. If ii) occurs, Shares can only be transferred once I have received notice of the Plan’s termination (any consent to an early transfer of Shares will be invalid)

After the end of the Holding Period I may ask the Trustee for my Plan Shares, although I may have to pay income tax and National Insurance Contributions (“NICs”) when the shares are removed.

I understand that my obligations under the Holding Period are subject to:

a) the right of the Trustee to sell my shares to meet PAYE obligations, and/or

b) the Trustee accepting at my direction an offer for my Plan Shares in accordance with the Plan.

STATEMENTSI understand that a statement will be issued on an annual basis.

Share Incentive PlanTerms & Conditions for Partnership and Matching Shares


RIGHTS AND OBLIGATIONSI agree that:• taking part in the Plan does not affect my rights, entitlements

and obligations under my contract of employment, and does not give me any rights or additional rights to compensation or damages if my employment ceases.

• I allow the Trustee to sell some or all of my Plan Shares to pay any income tax and NICs in respect of my shares ceasing to be subject to the Plan, unless I provide them in advance with a cheque that is drawn on a UK bank account in my name and have sufficient funds to pay these amounts.

• if there is a rights issue, i) I agree to allow the Trustee to sell the rights attached to some

of my Plan Shares, in order to fund the exercise of the rights attached to my remaining Plan Shares.

ii) In the event that there is insufficient time to take the action outlined above (as deemed by both the Company and the Trustee) or the sale of rights is insufficient to fund the exercise of any of my rights, the Trustee will sell the rights and pass the funds to me through my payroll.

• Deductions from my salary, or the number of Partnership Shares that I receive may be scaled down if any limit on the number of Partnership Shares set by the Company for an allocation of Partnership Shares would otherwise be exceeded.

RESTRICTIONSI understand that if I am subject to the Company’s share dealing code, the restrictions set out in the code will apply and may affect my Plan Shares. I am aware that a copy of the Company’s share dealing code is available on the company’s intranet

CANCELLATION AND WITHDRAWAL RIGHTSI acknowledge that I can cancel my participation in the Plan at any time and that:-

• this exceeds my legal rights and will not affect the terms on which I agreed to accept shares already held for me under the Plan;

• no administration fees will be payable but any dealing fees incurred in selling shares awarded will be payable;

• the value of funds returned to me may be lower than the market value at the time of investment and I will not get back amounts representing market loss from the date the Plan was opened until cancellation;

• as the funds were deducted from my salary before deduction of income tax and NICs, the funds will be returned through my payroll for payment to me through the PAYE system with the necessary deductions of income tax and NIC’s.

For further information about statutory rights contact a local authority Trading Standards Department or Citizens Advice Bureau.

Any request to cancel shall be sent in accordance with the rules of the Plan.

COMPANYThe Company agrees to arrange for shares in Royal Mail plc to be bought for or awarded to me, according to the rules of the Plan.

TRUSTEEThe Trustee is a part of the Equiniti group of companies whose registered offices are Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom registered in England and Wales number 3925002. The main business of the Trustee is to act as Trustee for UK Tax Advantaged share incentive plans.

The Trustee:• will not be responsible for advising me on the suitability of any

transaction in relation to the Plan• may, whether itself or through another member of the Equiniti

group of companies, provide other services in relation to the administration of the Plan and may be compensated for these services.

EQUINITI LIMITEDI understand that:• the Company and/or the Trustee may delegate the performance

of services and the administration of the Plan to Equiniti Limited, part of the Equiniti group of companies (but Equiniti Limited will not thereby become a party to this agreement except to benefit from the rights and disclaimers conferred on Equiniti Limited).

• I will not become a customer of Equiniti Limited nor will I have any rights or obligations against or rights to give instructions directly to Equiniti Limited. Equiniti Limited is acting for the Company and/or the Trustee and not for me.

• Equiniti Limited is part of the Equiniti group of companies whose registered offices are Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom registered in England and Wales number 6226088.

ELECTRONIC (INTERNET, INTRANET OR INTERACTIVE VOICE RESPONSE) APPLICATIONSIf I apply to participate in the Plan using the electronic facility provided, the following provisions will apply (references to “ the Company” and where investments are held in Trust “the Trustee” refer to definitions in the rules of the Plan for which I am applying).

The Company and/or the Trustee have the right to withdraw the electronic application facility at any time.

The Company and/or the Trustee may insist on a written application instead of an electronic application.

If I submit multiple applications the most recently dated application (that is received prior to any published closing date) will be given precedence. I acknowledge that if I apply in writing I should allow 5 days from receipt of the application before the information in it is processed and displayed.

The information that I provide to gain access to the service together with my acceptance of the terms and conditions will, when I confirm my application, constitute my electronic signature.

The Company and/or the Trustee may allow me to modify my application using the electronic application facility. If so, they may implement a cut-off date, after which I will no longer be able to modify my application.

Excess demand on the service and circumstances beyond the Company’s and/or the Trustee’s and/or Equiniti Limited’s reasonable control may mean it is not always possible to use the electronic application facility.

The Company and/or the Trustee will take reasonable steps to ensure that the electronic application facility is available but neither they nor Equiniti Limited are responsible for systems beyond their reasonable control or any incompatibility between my systems and the electronic application facility.

I acknowledge that the electronic application facility enables me to give instructions directly to the Company and/or the Trustees. Such instructions are not to be regarded as instructions given directly to Equiniti Limited (even if Equiniti Limited’s website or other facilities are used in connection with electronic applications).


I acknowledge that the Company (and not Equiniti Limited) is responsible for processing the electronic application, for determining how the data in the application is processed as well as for the information provided by the electronic application.

If I subscribe for Equiniti Limited’s Shareview or portfolio creation service, or any other service in connection with the Plan, Equiniti Limited will be entitled to use and process the information which I enter to gain access to that other service (subject to the terms and conditions of the service).

HOW DO I COMPLAIN?If I wish to complain about the service provided to me under this agreement my first point of contact should be the following address: Equiniti Share Plan Trustees Limited, Highdown House, Yeoman Way, Worthing, West Sussex, BN13 3RA, United Kingdom.

TEXTEL/MINICOM SERVICE NUMBER 0800 011 3649 (or +44 121 415 7028 if calling from outside the United Kingdom)

If I would like these terms and conditions in an alternative format, for example large print, Braille or audio tape, I should contact the helpline on 0800 012 12 13 (or +44 121 415 0268 if calling from outside the United Kingdom).

CONFLICTS OF INTEREST POLICYThe Equiniti group of companies has established and implemented a Conflicts Policy (which may be revised and updated from time to time), which sets out how they seek to identify and manage all material conflicts of interest. Such conflicts of interest can occur in their day to day business activities, for example, where one of their clients could make a gain at the direct expense of another client, or they might be faced with an opportunity to make a gain but this would be to the direct disadvantage of one or more of their clients.

Depending on the exact nature of the conflict of interest involved, they may take certain actions in accordance with the Conflicts Policy to mitigate the potential impact of the conflict. Such actions may include putting in place controls between the opposing sides of the conflict, which may control or prevent the exchange of information, and/or involve the appropriate management of staff activities and segregation of duties. Where such controls would be insufficient to eliminate the potential material risk of damage to clients from specific conflicts, then they will disclose the general nature and/or source of those conflicts of interest prior to them undertaking the relevant business.

Full details of the Conflicts Policy are on their website at www.shareview.co.uk, or contact them and ask for a printed copy.

At the time of the issue of this document no material conflicts of interest were identified which could not be managed in accordance with the provisions made above.

GENERAL PROVISIONSI understand that:

The Plan will be governed by the Trust Deed and Rules of the Plan under English Law. I agree that legal action relating to this agreement may only be dealt with by the courts of England and Wales. Any contact made by the parties to this agreement in relation to these terms and conditions will be in the English language. All instructions and notices to me under this agreement must be given to me under the rules of the Plan.

The Trustee will take any actions considered necessary in their reasonable opinion to comply with all applicable laws and regulations or any requirements of any regulatory body that are binding upon them.

The Trustee and the Company may vary the terms on which

participation is offered. Should the terms of this agreement change in such a way as to have an effect on my entitlements or the service provided under the Plan, either the Trustee or the Company will write to me, giving me 30 days’ notice, outlining the changes and when they are due to take effect. If I no longer wish to participate on these terms, I should write to the Trustee in accordance with the rules of the Plan.

If a gain is made in the course of administering the Plan, the Trustee will be entitled to keep it.

Financial Conduct Authority (“FCA”) Client ClassificationI understand that:

Although the Plan is not regulated by the FCA, the Company and the Trustee will endeavour at all times to treat me as if I were classified as a retail client under the FCA’s guidelines and I will be entitled to expect the same protections as would be provided by an FCA regulated provider except in the provision of best execution.



Documents

Royal Mail Share Incentive Plan · Partnership & Matching – a new employee benefit. Royal Mail is introducing a new employee benefit for all . eligible. Royal Mail employees. Partnership