Directors of the Tennessee Valley Authority dismissed claims by former President Donald Trump that TVA President Jeff Lyash is overpaid and voted Thursday to boost what TVA's CEO may earn this year.
Lyash, who was the highest-paid federal employee in America last year when his compensation package totaled over $7 million, will be able to make even more in fiscal 2021 under a compensation plan adopted by the TVA board Thursday. But even with the ability to make more money, Lyash is still paid far less than the average of comparable investor-owned utilities, compensation studies show.
Although the TVA board was appointed entirely by President Trump who urged them to cut Lyash's annual pay to no more than $500,0000, TVA directors said the TVA act requires the federal utility to pay competitive salaries and by doing so they are able to attract high-quality talent and achieve better results for TVA ratepayers.
TVA Chairman John Ryder, a former chief counsel for the Republican National Committee, said the TVA board hired outside consulting firms, FW Cook and Lazard, and a Nashville law firm "to engage in a thorough review of executive compensation" after Trump questioned the pay given to Lyash last year.
"After a complete review, we came to the conclusion that the compensation system that we have is what is required by the TVA Act, which requires us to benchmark our pay against our peer utilities, and is the one that best serves the 10 million people of the Tennessee Valley we serve," Ryder said after directors unanimously approved a new compensation plan for Lyash during the board's quarterly meeting. "I think you've got to pay the market rate."
Ryder was elevated to TVA chairman last year after Trump fired both of the two previous TVA chairmen for their support of paying Lyash compensation levels that the former president labeled as "ridiculous." Trump was also upset with TVA for outsourcing some of its IT work and for shutting down the Paradise coal plant in Kentucky that then-Senate Majority Leader Mitch McConnell wanted TVA to keep operating.
The board's decision Thursday is contrary to what President Trump asked the directors he appointed to the TVA board to do last year when he called upon TVA to cut Lyash's pay "by a lot" and to do so "immediately."
Lyash's compensation is more than 15 times the $400,000 a year salary paid to the president and is higher than any other federal employee in America. But TVA is no longer a taxpayer-supported agency like other federal agencies.
Although TVA is a federal corporation and does not pay federal income taxes, all of its funds come from the ratepayers who buy TVA-generated electricity in TVA's 7-state territory.
A study by the global consulting firm Lazard released Thursday showed that Lyash is paid only about half of the $15 million-a-year compensation for CEOs at other comparable investor-owned utilities. Nonetheless, Lazard said TVA's overall performance under Lyash was better than most electric utilities.
Lyash, a former CEO of Ontario Power, joined TVA in 2019 and was paid more than $8.1 million in total compensation during his first six months on the job.
Kenny Allen, chairman of TVA's People and Performance Committee, called Lyash "an inspirational leader" who has helped improve TVA's performance and kept electricity rates low for consumers. Allen said after reviewing the compensation studies, Lyash should be eligible to achieve more compensation, subject to meeting performance goals set by the board.
Allen proposed, and the board accepted, a plan to increase what Lyash makes from "37% to 28% below the market median of CEO compensation" of comparable utilities.
TVA spokesman Jim Hopson said details about the compensation will be revealed later in Securities and Exchange filings by TVA.
Contact Dave Flessner at email@example.com or at 423-757-6340.