The Tennessee Valley Authority boosted compensation for its top officers in fiscal 2012 to a record high despite a federal pay freeze.
Tom Kilgore, TVA's chief executive who is retiring at the end of the year, was paid more than $4 million in total compensation in the fiscal year that ended Sept. 30. Kilgore has headed the nation's biggest government utility for the past six years and is one of the highest paid federal workers in America.
Kilgore's total pay for salary, benefits and pension was more than 10 times the $400,000 salary paid to President Barack Obama.
But a study by pay consultants Towers Perrin found that Kilgore is paid the least among CEOs at 14 comparable investor-owned electric utilities and Kilgore's compensation ranked ninth among the heads of 11 comparably sized, nonenergy companies in Tennessee.
Kilgore's salary was down slightly from the previous year. But his performance bonuses and deferred retirement benefits boosted his overall compensation in 2012 by nearly 2 percent above the year-ago total.
Other TVA executives got compensation packages with bigger increases than Kilgore, including one who received more than 50 percent more in pay and benefits last year.
Although the gains were largely in noncash pension or deferred bonus payments, the overall compensation levels still were denounced by U.S. Rep. John Duncan, R-Tenn., as "ridiculously excessive."
"To give pay raises as high as 50 percent in times of relatively low inflation is just wrong and unfair to the ratepayers," Duncan said in a statement. "Because East Tennessee is one of the most popular places to live in the entire country, TVA can get outstanding people at its top level without paying these extraordinary salaries."
Duncan, a longtime critic of TVA paying more than the president and cabinet officers, called the salaries disclosed Friday by TVA "especially cruel in a time when almost all other federal employees have had their salaries frozen and millions of private sector workers have had their salaries go down."
The Knoxville Republican urged President Obama to "appoint very fiscally conservative people to the board because the board members are the only ones who could stop giving these inflated salaries."
But TVA Chairman Bill Sansom said the federal utility needs to pay competitive salaries with other utilities to recruit and keep the best talent.
"TVA operates one of the nation's largest public utility systems and competes with other investor owned utilities for talented people to sustain operational excellence," he said in a statement Friday.
Sansom said TVA "performed well at a time of slow economic recovery" during 2012. But the TVA board did reduce some of even bigger bonus checks the executives were to receive because the board was concerned about delays in the completion of Watts Bar Unit 2, Sansom said.
Coal into cash
Kimberly S. Greene, who Kilgore said "knocked it out of the park" with improvements in fossil generation in the past year in her role as chief generation officer, received a 50 percent jump in compensation in 2012 to $3.57 million.
In the past year, coal plant outages were cut by more than half and the availability of TVA coal and gas plants was among the top 10 percent for all U.S. utilities.
TVA's chief financial officer, John Thomas, got a 32 percent boost in his compensation package to more than $2.2 million. Thomas helped lead a "diet and exercise" program to trim expenses in the past year when power sales fell by $621 million from the previous year.
Thomas said the midyear budget corrections forced by the mild weather and economy were among the most sweeping ever by TVA and helped the utility to not only make money but to cut its wholesale rates an average of 5 percent in fiscal 2012 compared with the previous year.
"Compared with last year, we had about $620 million less in revenue but ended the year with about $360 million in cash," Kilgore told investors during a conference call Friday. "That's about a billion dollar favorable swing due to the efforts of our employees and leadership to react to our challenges."
Preston Swafford, head of TVA's nuclear power program, was paid $2.28 million in compensation in the past year, up 17.1 percent from the previous year. The availability of TVA's nuclear plants for generation was among the top quartile of all U.S. nuclear plants in 2012, TVA said.
Cutting costs & rates
Despite a drop in power sales due to the mild weather and economy, TVA still reported a net income of $60 million for the fiscal year ended Sept. 30. TVA said it ranked among the top 10 percent of all utilities for its reliability and among the top 25 percent of utilities for its employee safety.
"Most importantly, we kept rates lower in 2012 and didn't have to raise rates this year," Kilgore said. "That's what creates and keeps jobs in the Tennessee Valley."
To pare its own expenses, TVA cut about 500 of its own jobs in the past year and cut about $40 million in contracts for outside workers, Thomas said.
But TVA's remaining rank-and-file workers will benefit by the utility's success in cutting costs to offset lower power sales. On the eve of Thanksgiving next week, workers will have extra reason to be thankful with year-end "Winning Performance" payments totaling $150 million, up from $107 million the previous year.
Janet Herrin, TVA's executive vice president and chief administrative officer, said the average TVA employee will receive $12,140, or 15 percent of base salary. However, some craft workers said they will be getting checks worth about 5 percent of their pay, or between $2,000 and $3,000.