America's highest-paid federal employee got a raise in both his salary and performance pay during the past year but is still paid significantly below most of his peers in the private sector.
Jeff Lyash, the 61-year-old CEO of the Tennessee Valley Authority, was paid nearly $9.8 million in salary, performance bonuses and benefits in the fiscal year ended Sept. 30, according to TVA's annual financial report released Tuesday. TVA's other top executives were given compensation packages in 2022 ranging from just over $2 million up to $3.5 million, TVA reported in its annual pay disclosures to the U.S. Securities and Exchange Commission.
"We had an outstanding fiscal year, lowering our debt to a 35-year low and boosting TVA's overall performance while reducing operating and maintenance expenses," TVA Chairman Bill Kilbride said by phone following last week's TVA board meeting in Mississippi. "We need the very best talent, and we're fortunate to have the executive team that we do."
Kilbride and other TVA officials said paying market-rate salaries at all levels helps TVA compete against other investor-owned utilities.
"It's all about attracting and retaining the best talent, and to do that requires that our pay levels are competitive," Sue Collins, executive vice president of people and communications at TVA, said in a phone interview
Lyash is the highest-paid federal employee in the country, but an independent consultant said the pay for TVA's CEO was still 18% below the average of 42 comparable investor-owned utilities. Lyash's compensation was only 19% of the $51.2 million that PG&E paid last year to Patricia Poppe, who was the highest-paid utility executive in the country, according to S&P Global Market Intelligence.
Although Lyash's total compensation package in 2022 was down $122,456 from his record-high package the previous year due to a change in how his pension is valued, the $1.15 million salary of the TVA CEO in 2022 was nearly triple the $400,000 salary given to the president of the United States. Lyash was paid more than $7 million in additional incentive pay for meeting or exceeding all of TVA's key targets in the past year.
Trump calls pay 'ridiculous'
Two years ago, then-President Donald Trump blasted TVA for paying its executives what he said were "ridiculous" salaries and bonuses for government jobs, noting that TVA paid far more for its executives than the federal government pays cabinet officers to run much bigger operations.
U.S. Rep. Steve Cohen, a Memphis Democrat who has introduced legislation for more transparency from TVA about its employee compensation, also said Lyash is paid too much.
"It is well past time for the board of directors to get realistic about TVA salaries and to do so fairly and transparently," Cohen said in a statement Tuesday. "Electricity generation and transmission managed from Knoxville should not earn its CEO three times what a typical Canadian utility CEO makes. That's why I introduced a measure in May that would require TVA compensation for the chief executive officer and employees to be comparable to the compensation of executives in public utilities in both the U.S. and Canada."
Cohen criticized TVA for comparing itself only to U.S. utilities, many of which operate in much higher-cost parts of the country and don't enjoy the government ownership advantages for TVA in borrowing money or paying taxes.
Cohen has sought information on the salaries of TVA executives making more than $1 million a year, but Collins said TVA discloses only the top executive pay for particular individuals, in accordance with SEC regulations.
"Disclosing everyone's pay at TVA, we think, would put us at a competitive disadvantage with other utilities that don't disclose such information," she said.
Stephen Smith, executive director of the Southern Alliance for Clean Energy and a frequent TVA critic, called the multi-million-dollar pay packages for TVA executives "grotesque" and contrary to the public mission of TVA, which was created in 1933 as part of President Franklin Roosevelt's New Deal.
"What they are paying is excessive. There's just no doubt about it, and any rational person recognizes that," Smith said in a phone interview. "The only way they justify this irrationally is to point to other utility executives that are also being paid grotesque salaries."
Although Trump appointed all five current members of the TVA board -- and fired two former TVA chairmen two years ago, in part, for their support of higher executive pay -- Kilbride said the TVA board is directed under federal legislation to pay competitive salaries for its employees.
Following Trump's criticism of TVA's pay, the board conducted another pay study of its executives last year that determined TVA directors were following the requirements Congress adopted in 2005. The board has since raised executive pay even higher at TVA to compete with other utilities.
Kilbride said TVA has kept its CEO pay below the market average, "and we are mindful of our public role and the sensitive nature" of the pay given a public employee. But TVA no longer receives any taxpayer support and operates under regulations of the SEC similar to investor-owned utilities with which it competes.
TVA is America's largest public utility and through most of its 89-year history received federal funding and was subject to federal pay caps much lower than what the utility now provides its employees. Since the late 1980s, TVA has been funded entirely by electric ratepayers without any taxpayer appropriations, and in 2005, the structure of TVA was changed to expand the TVA board into a more corporate-like structure. Executive pay was changed to reflect the overall market in the utility industry.
Former U.S. Sen. Bill Frist, R-Tenn., who pushed through the reforms, said the changes helped improve TVA operations and leadership.
"I believed then that TVA needed a strong leadership team to remain competitive and ready to meet the challenges of the 21st century," Frist said in an editorial opinion he wrote last year. "My proposal took TVA's Depression-era administrative structure and updated it to reflect the challenges and realities of the time."
A study last year by the global consulting firm Lazard also concluded that TVA's government ownership and corporate-like governing structure served the Tennessee Valley well with below-average power rates.
Lyash's compensation was 65 times greater than the median compensation of $149,400 paid to the average TVA employee in fiscal 2022. TVA's CEO-to-employee pay ratio was the lowest among comparable utilities and was only one-fourth the disparity in pay at PG&E and less than half the CEO-to-employee pay ratio at Southern Co., Duke Energy and NextEra.
TVA’s highest-paid executives
TVA’s top leaders each received multi-million-dollar compensation packages from salaries, incentives, pensions and other benefits in fiscal 2022
1. Jeff Lyash, president and CEO, $9.76 million
2. Donald Moul, chief operating officer, $3.6 million
3. John Thomas, chief financial officer, $3.5 million
4. Timothy Rausch, chief nuclear officer, $2.4 million
5. David Fountain, general counsel, $2.1 million
Source: Tennessee Valley Authority
America’s highest paid utility executives
In 2021, the highest paid CEOs in the utility industry, and their total compensation, were:
1. PG&E Corp., Patricia Poppe, $51.2 million
2. CenterPoint Enrgy Inc., David Lesar, $27.8 million
3. NextEra Energy Inc., James Robo, $24.3 million
4. Southern Co., Thomas Fanning, $19.6 million
5. DukeEnergy Corp., Lynn Good, $16.2 million
6. Sempra, Jeffrey Martin, $14.7 million
7. Exelon Corp., Christopher Crane, $14.7 million
8. American Electric Power Co., Nicholas Akins, $14.6 million
9. AES Corp., Andrws Ricardo Gluski Wilert, $14.4 million
10. Public Service Enterprise Group Inc., Ralph Izzzo, $14.2 million
Source: Securities and Exchange Commission filings for 2021, as reported by S&P Global Market Intelligence