The new head of the Tennessee Valley Authority was paid nearly 50 percent more than his predecessor even though he was on the job only nine months of the year and has vowed to cut the agency's overall payroll.
TVA said in a regulatory filing Monday it paid its chief executive, Bill Johnson, more than $5.9 million from when he began his job in January through the end of the fiscal year in September. Johnson's predecessor, Tom Kilgore, was paid just under $4.03 million in his last full year on the job at TVA before retiring at the end of 2012.
Although Johnson is the highest paid federal government employee in the country, his pay this year was still 13 percent below the industry average for utility CEOs. Compensation consultants Towers Watson said the average head of a comparable size investor-owned utility was paid nearly $6.8 million in total compensation in 2012.
Johnson's pay at TVA also was only a fraction of what he made in his previous job. The 59-year-old attorney was paid a severance of $44.4 million after three days leading Duke Energy, which bought out Johnson's old firm, Progress Energy, last year.
The TVA Act prescribes that the federal utility pay competitive levels to private industry. In its year-end financial report released Monday, the TVA board said Johnson met all of his initial performance goals to qualify for year-end bonuses.
But U.S. Rep. John Duncan, R-Knoxville, called TVA's pay levels "ridiculously excessive," noting that the $5.9 million compensation package for Johnson is nearly 15 times as much as the $400,000 salary for President Barack Obama and nearly 30 times the $200,700 salary given the U.S. secretary of Energy.
"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 said, repeating a criticism he has used in the past against TVA executive pay.
Despite the higher pay for its CEO, TVA said other top executives took home less pay last year. TVA also cut its year-end Winning Performance payments for all full-time TVA employees in 2013 by more than 18 percent from the record high bonuses paid a year ago.
TVA's 12,612 employees will be paid a total of $127 million in performance payments within the next couple of weeks, TVA spokesman Duncan Mansfield said. The average TVA worker will get more than $10,000 in incentive payments based upon the utility meeting most of its operating and financial results.
A year ago, TVA paid year-end incentive payments totaling $156 million, or more than $12,000 for the typical worker.
Despite a drop in power sales because of mild weather, the sluggish recovery and greater energy efficiency, TVA still boosted its net income and doubled its cash holdings over the past year.
"I would say that our performance in 2013 was really pretty good, but our goals get harder to meet every year for these incentives," Johnson said. "Despite the challenges of less revenue and lower sales, the financial performance was quite good and a lot of that is attributable to employee thinking and behavior in reducing spending and better lining up our projects."
Johnson said the agency is in the midst of trying to cut its operating and maintenance expenses by $500 million over three years.
"I do think that will impact people (and staffing levels at TVA)," he said. "This is not because of performance or anything other than economic and customer factors."
Johnson said he expects managers to begin to develop leaner staffing levels for their organizations by the end of the year.
TVA has agreed to abide by a federal pay freeze for its executive employees, but the freeze applies only to the workers' base salary. Johnson's salary of $712,500 in 2013 represented only 12 percent of his total compensation. Most of what was paid to Johnson this year came from performance incentives of nearly $2.6 million and deferred compensation payments of $2.06 million.
Although CEO compensation went up, TVA's pay for other top executives declined in fiscal 2013. TVA paid its chief financial officer, John Thomas, $2.1 million in 2013, or 3.3 percent less than the prior year. TVA's chief counsel, Ralph Rogers, was paid $1.9 million in 2013, or 25 percent less than the previous year. TVA's chief nuclear officer, Preston Swafford, was paid $1.9 million for most of 2013 before leaving the agency in August.
Contact Dave Flessner at dflessner@timesfree press.com or at 757-6340.