- The Washington Times - Monday, January 4, 2010

The financially troubled U.S. Postal Service pays Robert F. Bernstock a $232,500 salary to oversee its shipping and mailing division, but a little-known hiring provision allows the executive to earn even more money from outside corporate sources.

Mr. Bernstock took home more than $270,000 in cash and other compensation combined in fiscal 2008 by serving on the corporate boards for weight-loss giant Nutrisystem Inc. and Pantry Inc., which runs the Kangaroo Express convenience store chain, according to U.S. Securities and Exchange Commission filings.

Postal officials agreed to let Mr. Bernstock retain his paid outside corporate positions even as he works full time for the Postal Service under a special condition of his June 2008 hiring. In addition, the Postal Service further boosted Mr. Bernstock’s finances by awarding him an $85,000 hiring bonus in fiscal 2008 and an $85,000 retention bonus for fiscal 2009, according to a recent postal regulatory filing.

In his full-time role as president of mailing and shipping, Mr. Bernstock oversees a division that produces more than $70 billion in revenue. But watchdog groups question whether the outside corporate demands could distract Mr. Bernstock as he tries to help turn around the Postal Service, which is losing billions of dollars and is considering cutting a day of mail delivery to save money.

“Postal customers have every right to ask if they’re getting a full-time employee who can devote the time to help keep Postal Services from crumbling even further,” said Pete Sepp, vice president of policy for the nonpartisan National Taxpayers Union, which monitors spending of the government and spinoff agencies such as the Postal Service.

“Obviously, we’re dealing with a very talented individual, but I would be hard-pressed to think of any other examples of this at the federal level,” Mr. Sepp said.

Through a Postal Service spokesman, Mr. Bernstock defended his outside employment, saying it does not distract from his postal job.

“When he’s doing anything for them, he uses his own vacation time and pays his own expenses,” Gerald McKiernan said. He said postal officials approved Mr. Bernstock’s outside work as “a condition of his employment.”

In addition, Mr. McKiernan said, the bonus payments to Mr. Bernstock were negotiated before Postmaster General John E. Potter froze executive salaries.

Pantry Inc.’s board of directors met 15 times for the fiscal year ending Sept. 25, 2008, according to SEC filings. Mr. Bernstock also is a member of the board’s corporate governance committee, which met four times.

The company paid Mr. Bernstock $53,000 in fees and $91,054 in option awards in fiscal 2008, for a total compensation of $144,054, the records show.

Nutrisystem’s board of directors met 14 times during 2008. Mr. Bernstock also belongs to the company’s compensation committee, which met eight times, and its corporate governance committee, which met once, SEC records show. The company paid Mr. Bernstock $35,000 in fees and $95,586 in stock awards, for a total compensation package worth $130,586.

Mr. McKiernan said that many of those meetings were held by telephone in the evenings or on weekends and that they usually lasted 30 to 60 minutes.

Still, Thomas A. Schatz, president of the nonpartisan Citizens Against Government Waste, called the dual roles of corporate board member and postal executive unusual.

“Generally, individuals who work in government should not have paid outside employment because it raises the appearance of a conflict,” he said. “What if Nutrisystem’s shipping is faster? It just lends itself to the sort of questions that can be avoided.”

Mr. McKiernan said Postal Service attorneys “continually monitor” Mr. Bernstock’s outside corporate arrangements to ensure there are no conflicts.

“He reports on every board meeting he has,” he said.

The Postal Service is an independent government agency subject to congressional oversight, but it doesn’t get its funding from taxpayers. It funds operations through cash from operations and borrowing from the government’s Federal Financing Bank, an arm of the Treasury Department.

The Washington Times obtained information about Mr. Bernstock’s corporate compensation from fiscal 2008 proxy forms filed with the SEC by Pantry Inc. and Nutrisystem.

Additional details about his postal pay were disclosed in an annual financial report on file with the U.S. Postal Regulatory Commission. The report shows that the Postal Service awarded Mr. Bernstock hiring and retention bonuses, for fiscal 2008 and 2009 respectively, worth $85,000 each, with a portion of the bonus pay deferred.

In addition, Mr. Bernstock is listed on the advisory board for a private equity firm in New York, though postal officials said he does not draw a salary from that position.

When he announced Mr. Bernstock’s hiring, Mr. Potter called him “a proven leader” who is “particularly well-prepared to help us meet the challenges ahead.” He said Mr. Bernstock had a “proven record of building businesses and delivering revenue while driving down costs.”

The announcement also noted that Mr. Bernstock “serves as a director on a number of public company boards,” including Nutrisystem and Pantry Inc.

Mr. Bernstock previously held corporate positions at General Foods Corp., Campbell Soup Co., Vlasic Foods International, Atlas International, Dial Corp. and Scotts Miracle-Gro Co.

In SEC filings, Pantry Inc. and Nutrisystem list Mr. Bernstock as an independent member of the board of directors who works for the Postal Service.

Mr. Bernstock is one Postal Service’s highest-ranking officers. In November, he testified before Congress about the agency’s billions of dollars in losses.

“The Postal Service will suffer this loss and be unprofitable despite heroic cost reduction initiatives by our operations team that eliminated approximately 114 million work hours this year,” he said, adding that the move appeared to be the biggest such cost cutting by any company in the country this year.

The Postal Service came under scrutiny in Congress earlier this year over salary raises, bonuses and other perks given to Mr. Potter and other top executives as the service’s finances worsened. Mr. Potter received $135,000 in incentive pay in 2008 on top of his $265,575 salary. For 2009, he received a $265,320 salary but no incentive pay.

Postal officials defended the 2008 incentive payments, saying postal officials earn less than what his counterparts in private industry earn. They also point to cost-cutting moves and outside reviews that have recommended increasing compensation for top postal executives.

For 2009, only Mr. Bernstock and Joseph Corbett, the Postal Service’s newly hired chief financial officer, received bonuses. Hired in January 2009, Mr. Corbett received a $75,000 bonus, with $25,000 deferred, and his salary for the year was listed at $150,385.

In a regulatory filing, postal officials said the bonuses to Mr. Bernstock and Mr. Corbett “reflect lump sum incentive compensation that was required to recruit and/or retain these individuals.”

• Jim McElhatton can be reached at jmcelhatton@washingtontimes.com.

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