Who’s leaving the TVA board?
* Joe Ritch, a Huntsville, Ala., attorney, was appointed to the TVA board in 2012 and has been chairman for the past three years. He was re-elected by the board as chair for a 2-year term in February, but his term will now end only half way through that term.
* Mike McWherter, a Jackson, Tenn., lawyer and beer distributor, was appointed to the TVA board in 2013 after he ran unsuccessfully for governor of Tennessee in 2010.
* Peter Mahurin, chairman of Hilliard Lyons Financial Services, was appointed to the TVA board in 2013 and served as chairman of the finance, rates and portfolio committee.
TVA's outgoing directors have boosted the pay and opened up a richer golden parachute for the head of America's biggest government utility to lessen the chances he may be ousted or encouraged to leave by a new TVA board appointed by President Donald Trump.
In their final act on the TVA board last week, three TVA directors whose terms end next week voted along with other board members to add another $200,000 in potential compensation for TVA CEO Bill Johnson. The board also added possibly millions of dollars more in retirement benefits for Johnson, who is already the nation's highest paid federal employee.
"It was just a clear statement that we want to keep our current management in place and the board wants to continue to keep going in the direction it has been going," said TVA Chairman Joe Ritch, one of three TVA board members whose reappointment by President Obama was not confirmed by the Republican-controlled U.S. Senate. "The loss of three board members is not going to change that."
With one third of the 9-member TVA board out of office at the end of 2016 — and the terms of two other TVA board members ending next May — President-elect Trump will be able to appoint a majority of the TVA board next year to replace most of the nine Democratic appointees made by President Obama over the past eight years.
Trump has vowed to "drain the swamp" in government and to do more to boost the coal industry, which has been hurt as TVA and other utilities close down aging fossil plants. But the president-elect has not yet voiced any specific plans for TVA or other federal energy agencies.
Board urges CEO to carry on
The TVA board voted at a November board meeting to raise the potential pay for Johnson this year by at least $199,000 above the record high $4.9 million in salary and benefits he received in fiscal 2016.
Johnson's total compensation last year totaled $6.45 million, but pay consultants Towers Watson said that still left Johnson 40 percent below the median pay for comparable CEOs in the utility industry.
When it became clear this month that the U.S. Senate was unlikely to confirm Obama's renomination of three leading Democrats on the TVA board, the board conducted another vote on Dec. 12 to boost the potential cash bonus for Johnson by another $200,000 and to sweeten Johnson's golden parachute even if he leaves TVA before his 5-year vesting in the Supplemental Executive Retirement Plan next November. The board also added extra years credit for Johnson, which can be worth up to $761,000 for each year of employment.
Ritch said raising the compensation for Johnson will make his pay more competitive with other higher-paying investor-owned utilities and boosting the retirement benefit might discourage a new board from trying to quickly push Johnson out of office.
"If we get people (on the board next year) who don't share the same interest we have shared in the past four years, we may find that some good people at TVA start getting other job offers and they might start looking at those opportunities more carefully," Ritch said. "Bill Johnson has made a very clear and valuable imprint on the organization in the past four years, and if people try to change that I can see him becoming less interested in the position."
Inequity in pensions?
But raising the pay and retirement eligibility for Johnson when TVA still has an underfunded employee pension plan isn't sitting well with some TVA employees and retirees who accepted cuts in their promised retirement benefits this year. TVA's pension plan is underfunded by $6 billion, according to actuaries. To help shore up the plan, TVA capped future cost of living increases and raised the age when some other benefits are paid.
"I'm concerned that employee pension benefits have been reduced while Mr. Johnson's executive retirement plan has been enhanced," said Leonard Muzyn, an accountant who serves on TVA's Retirement System board. "As an elected representative of TVA employees on TVA's pension board, I would like to know how this golden parachute for Mr. Johnson benefits ratepayers and the poor people of the Tennessee Valley."
Ritch said TVA remains committed to paying retirement benefits to its employees and retirees and is on a 20-year path to restoring the plan to complete funding.
Customers back CEO, board
The leaders of the major customer groups that buy most of TVA's power said Monday they were not upset by the pay boost for Johnson, who they credit with helping to streamline TVA and improving its efficiency. Since be became CEO of TVA in January 2013, Johnson has cut more than $600 million a year in operating expenses from the federal utility.
"I think TVA has done a real nice job in the last several years and are starting to get their house in order," said Pete Mattheis, an attorney for Nucor Steel and chairman of the Tennessee Valley Industrial Committee, which represents TVA's biggest industrial power customers. "We like the direction that TVA is headed, and we would like some continuity in that direction. So we are concerned about the potential board changes that could threaten that continuity."
Greg Williams, general manager of the Appalachian Electric Coop in New Market, Tenn., and chairman of the Tennessee Valley Public Power Association, said TVA distributors "are very happy with Bill Johnson and the current board" and are not eager to see a wholesale change in direction by TVA. Williams said he supports the board in trying to be more competitive with executive pay and urging Johnson to stay at the helm.
"Bill and the leadership team at TVA have made huge improvements in the openness and dialogue between TVA and the local power companies, and we appreciate that," Williams said. "We'd much rather pick leadership and experience rather than just making a political pick for the board."
Contact Dave Flessner at firstname.lastname@example.org or at 423-757-6340.