ATHENS, Ala. -- TVA President Tom Kilgore gave up any bonus last year after the coal ash spill in Kingston, but he could triple his pay -- up to $3.6 million -- this year.
TVA directors agreed Thursday to boost Kilgore's potential bonus by $325,000 in the fiscal year that began Oct. 1. He'll earn the bonus if TVA meets all its performance standards.
"This is a performance-based approach to encourage and reward the achievement of top standards," said Robert Gormley, a principal with the compensation consulting firm Towers Watson, which advises TVA.
Kilgore's base salary will remain at $850,000 under the compensation plan the Tennessee Valley Authority board adopted Thursday.
After three years of no increases for the top boss, board members said they needed to boost Kilgore's compensation for TVA to compete with other utilities.
The TVA board is required under federal law to pay competitive salaries to its employees.
"As a groomed and experienced CEO of one of the largest energy services organizations in the country, his pay remains well below his peer's," Gormley said.
Even with the potential bonus boost, Kilgore's pay still would be barely more than half the $6 million-a-year average for chief executives at comparable investor-owned utilities, Gormley said.
Towers Watson recommended that TVA boost Kilgore's minimum salary to $1 million and raise his eligible pay to $3.8 million. Board members scaled back the base pay after taking criticism in previous years from critics such as U.S. Rep. John Duncan, R-Tenn., who insists TVA doesn't have to match the multimillion-dollar executive pay of private utilities.
Kilgore was paid just under $1.2 million in fiscal 2009, down from $2.47 million in fiscal 2008. He will disclose his pay for fiscal 2010 when TVA releases financial results later this month.
Kilgore's salary is more than twice the $400,000 paid to President Barack Obama. And, unlike federal civil servants, Kilgore is eligible to more than quadruple his base pay of $850,000 if TVA achieves the top level of performance standards for rates, reliability and reputation set by the board.
Barbara Haskew, a labor economist and one of three new directors attending their first board meeting Thursday, said the utility is required to pay competitive salaries "to make sure you have the type of talent needed to run a utility the size of TVA."
TVA is the nation's biggest government utility and serves 8 million people in seven states -- the fourth most customers of any U.S. utility.
TVA Chairman Dennis Bottorff said the utility is still figuring bonuses for all employees for the past year.
Kilgore's bonus was suspended last year after the Kingston ash spill dumped more than 1 billion gallons of coal ash on land and into the Emory River.
But TVA fared much better in fiscal 2010, meeting increased power loads during the hottest summer on record and improving its relative price of electricity despite fuel cost increases during the year.
The agency is likely to report the highest net income in its 77-year history when its financial results are released in about two weeks, officials said.
The average retail price of TVA power in fiscal 2010 was 7.7 cents per kilowatt-hour, down from 8.4 cents in the previous year. TVA reliably delivered its power 99.999 percent of the time or better for the 11th consecutive year.
"It was a good year for TVA operationally and financially, which means it was a good year for TVA's customers," Kilgore said.