Despite a drop in power sales and net income in fiscal 2017, the Tennessee Valley Authority boosted what it paid CEO Bill Johnson last year by 3.3 percent to more than $5 million and increased his total compensation package, including retirement and deferred benefits, to nearly $6.7 million.
In its year-end financial report filed today with the U.S. Securities and Exchange Commission, TVA said it boosted the pay for Johnson by $161,584 in the past year over his 2016 pay after the TVA president helped the agency meet or exceed most of its corporate targets.
Johnson, the 63-year-old attorney and utility executive who joined America's biggest government-owned power utility in 2013 after serving as CEO of Progress Energy in North Carolina, is the highest paid federal employee in America.
But even with the higher pay in 2017, Johnson' compensation was still nearly 40 percent below the median annual pay of $8.4 million for comparable CEOs at 38 other similar power utilities surveyed by Willis Towers Watson.
During the past four years while Johnson has been CEO, the federal utility has cut its annual operating costs by more than $800 million and last year cuts its air pollution, employee injury rate and overall staff size to record lows.
TVA said today its net income of $685 million for the fiscal year ended September 30, 2017 was down from $1.2 billion during the prior year due primarily to a one-time extra $500 million contribution TVA made to help shore up its employee pension fund in 2017.
TVA reported total operating revenues of $10.7 billion in 2017, up 1 percent from the prior year, primarily due to higher fuel cost recovery revenues. TVA's power sales were down about 2 percent for the year, impacted by extremely mild weather that affected sales to local power companies. Fuel and purchased power expenses were $70 million, or about 2 percent, higher than the prior year, largely driven by higher prices for natural gas and lower hydroelectric production.
"The prolonged warmer weather over the summer and fall, combined with our efforts to improve operational efficiency, created a level of strong performance by TVA employees that allowed us to accelerate our long-term financial plans," Johnson said in a statement today. "As a result, we were able to provide low-cost power, carry out our responsibilities for stewardship and economic development, invest more than $2 billion in capital improvements to our system and still reduce our debt and financing obligations by nearly $200 million – the first year TVA has lowered debt levels since the implementation of the long-range financial plan in 2013."
Among 20 major rating factors, Johnson exceeded the targets in 13 categories and fell short in only two, according to a TVA report released today.
TVA said 72 percent of Johnson's compensation is based upon performance, a higher share than the utility industry as a whole. Johnson's base salary of $995,000 was unchanged from 2015 through 2017, although the board did approve a 5.5 percent salary increase last week for Johnson in the current fiscal year to boost his base salary to $1.05 million.
"We think Bill Johnson is one of the best executives in the utility industry and we feel very fortunate that we have him," TVA Chairman Richard Howorth said after the board voted unanimously to boost Johnson's pay package last week. "He could make more somewhere else."