UPDATE: Henderson Rumored to Be Leaving USPS

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Postmaster General William J. Henderson is set to leave the U.S. Postal Service in May, according to news reports. However, postal officials refused to comment on the issue last week.


Henderson, the 71st postmaster general, was named to the post in May 1998. The agency's Board of Governors and Henderson reached a mutual decision last summer not to extend his three-year contract, according to an article in The Denver Post. U.S. News & World Report added fuel to the rumor mill, saying Henderson "is thinking about quitting rather than face a life of headaches" because of the agency's bleak financial future.


Also last week, postal officials released numbers for the first eight weeks of fiscal 2001. Net income totaled $357.7 million on gross revenue of $10.4 billion, compared with last year's gross of $9.8 billion for the same period.


USPS spokesman Greg Frey would only confirm that Henderson has "a three-year contract that expires in May 2001, and there is no change in that agreement at this point." Moreover, Henderson told the Post that he "planned to fulfill his commitment to the board" but declined to comment further. Henderson and other postal officials declined to comment.


Reportedly, some members of the board wanted Henderson to stay another year so he could complete negotiations with Federal Express to provide extra airlifts for the USPS' Priority Mail and Express Mail. Others were concerned about an incident earlier this year in which Henderson approved the payment of $250,000 in moving expenses for two postal executives.


Regardless, any hopes that Henderson would stay were dashed when the board recently told him it would not increase his salary, which is currently $157,800. Without the promise of a raise, Henderson, who at 53 is one of the youngest chief executives in the agency's history, decided he would seek a job in the private sector, sources said. Though Henderson will leave a short legacy, he is known for pushing the postal service to deliver a record 94 percent of First-Class letters overnight in the nation's major cities.


Much of the attention concerning a possible successor will likely focus on Deputy Postmaster General John Nolan, who, like Henderson, is a career postal executive and has received several high-profile assignments. For example, Nolan is a 19-year veteran of the agency, who, for the past 10 years, served as director of operations at Merrill Lynch Production Technologies, a division of Merrill Lynch & Co. in Piscataway, NJ. When Nolan left the postal service in 1989, he was postmaster and general manager of the New York City Post Office, the world's largest, with annual revenues of $1 billion, operating expenses of $900 million, 25,000 employees and an annual volume of 4.5 billion pieces of mail.


Some insiders said that Nolan could bring a unique perspective to the table that could be useful: He knows the inside of the postal service very well, he has business experience and he also knows what business needs from the postal service. Some even said Nolan was brought in earlier this year specifically to take the reins.


But, while Nolan would be a solid choice to replace Henderson, some insiders said the USPS needs a different type of person at its helm -- one who is more of a public relations specialist.


The postal service is, indeed, going through tumultuous times. Earlier this month, it reported a $199 million deficit in the just-ended fiscal year. Despite winning an overall 4.6 percent rate increase, it now expects to end fiscal 2001 $1.2 billion in the red. There also have been rumors of raising rates as much as 24 percent in 2003.


Reasons for the gloomy financial future include high fuel costs, declining First-Class mail volume and the need for additional routes and mail carriers. In addition, potentially large pay increases may result from arbitration between the postal service and three unions. About 530,000 members of the postal service's 830,000-person labor force are in contract arbitration.


The cry for postal reform, however, is growing.


"Statutory reform of the nation's postal system is necessary to provide the foundation for a financially secure postal service, one that is capable of meeting the needs of the American people today and far into the future," Einar V. Dyhrkopp, chairman of the Board of Governors, told other board members at their most recent meeting.


Reform, for example, could privatize parts of the agency -- such as the delivery of Standard-A mail and parcels -- while keeping public its mandate for delivering universal First-Class mail. But reform seems dead at the moment, as Rep. John McHugh, R-NY, who has championed postal reform, will not be able to head the House postal subcommittee in next year's 107th Congress. House regulations prevent committee or subcommittee chairmen from holding a seat for more than three terms.


Neal Denton, executive director, the Alliance for Nonprofit Mailers, Washington, said that if Henderson is leaving and doing so because of his salary, "it reminds us again why we need legislative reform that will allow better compensation packages for postal officials."
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