TVA cuts bonuses; no pay raise for top brass

For the first time since the Tennessee Valley Authority revamped its top management about three years ago, the federal utility didn’t give pay raises or performance bonuses to its top managers this year.

TVA executives took home less money in 2009, while another 3,300 managers didn’t get a pay raise due to declining power sales and economic activity and rising cleanup and repair costs from TVA’s Kingston coal ash spill last December, officials said.

“Because of the Kingston (ash spill) and the economic situation, we decided to eliminate any bonus payouts for executives in place at that time,” TVA Director Dennis Bottorff said during an agency board meeting Thursday in Bowling Green, Ky.

A year ago, the TVA board voted to offer TVA President Tom Kilgore another 23 percent in salary and bonuses, making him eligible to earn up to $3.275 million in 2009.

But after the Dec. 22, 2008, accident at TVA’s Kingston Fossil Plant — projected to cost the agency up to $1.2 billion to clean up and repair — Mr. Kilgore’s pay was cut by more than half and all executive bonuses were scrapped, Mr. Bottorff said.

That cost Mr. Kilgore nearly $2 million in potential bonuses, although he still earned an $850,000 salary and another $300,000 in deferred compensation under a long-term agreement that was renewed Thursday.

Other TVA executives lost another $1.2 million of potential bonuses this year, officials said.

Most TVA employees will get a performance bonus in December based upon the agency meeting critical goals for reliability, safety and financial targets. But Mr. Bottorff said year-end “Winning Performance” payments will be down this year because TVA didn’t meet its overall corporate goals and fell short for plant operations.

“It was a year overshadowed by Kingston and the economic downturn,” Mr. Kilgore said Thursday while summarizing the fiscal year that ended Sept. 30.

TVA suffered a 7 percent drop in electricity sales in the past year due to an economic slump that cut employment in the Tennessee Valley by 171,043 jobs.

Mr. Kilgore and his top executives apparently will not be among the job casualties, however. Mr. Bottorff and other directors reaffirmed their support for TVA’s top management despite the Kingston spill and voted Thursday to reinstate potential bonus awards for fiscal 2010, which began on Oct. 1.

Even with such bonuses, however, TVA’s compensation for the chief executive still is 45 percent below the average for the top executive of comparable investor-owned utilities, according to consulting firm Watson Wyatt.

“Executive compensation is always a controversial topic,” TVA Chairman Mike Duncan said. “By most measures, TVA managers are well paid — and we believe they should be and the law says they should be. But compensation is being considered in light of tough economic times.”