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Staff photo by Doug Strickland / TVA director James "Skip" Thompson, center, speaks flanked by directors Virginia Lodge, right, and A.D. Frazier during a meeting by the Tennessee Valley Authority's board of directors at TVA Headquarters on Thursday, Feb. 14, 2019, in Chattanooga

Most of the directors of the Tennessee Valley Authority were appointed to oversee TVA by President Trump, but the board is taking exception with Trump's claims that TVA's top salaries are "ridiculous" and should be brought more in line with other federal agencies.

In a memo to TVA's more than 10,000 employees and contractors Thursday, TVA Chairman Skip Thompson said the current effort in Congress and by the Trump administration to reduce what TVA pays its CEO is "ill informed" and the directors stand behind their decisions to pay TVA President Jeff Lyash the richest compensation package of any federal employee in America.

"We are fully supportive of Jeff and of the entire TVA team," Thompson said in his note to TVA employees. "It's unfortunate that ill-informed opinions are now distracting us from our focus on providing reliable power and other vital services during this challenging time."

President Trump Wednesday night said he doesn't know Lyash personally, but he thinks the $8.1 million compensation package the board voted to give the TVA CEO last year should be "reduced by a lot." Trump said he would support measures to bring TVA compensation more in line with other government pay levels as part of a major infrastructure spending package being proposed to restart the economy slowed by the coronavirus shutdowns.

Lyash is the highest paid federal employee in America. But TVA as a federal corporation no longer gets any taxpayer support from the government and relies entirely upon the sale of its electricity in its 7-state region to pay Lyash and its other bills.

TVA is an independent agency governed by its own board that is nominated by the president and confirmed by the U.S. Senate. Congress can conduct oversight hearings and could change the TVA Act, but the president cannot directly dictate its policies or pay.

Thompson, who was appointed by Trump to the 9-member, part-time board in 2017, said the board "takes its oversight of TVA operations very seriously, including our role in determining appropriate compensation."

The TVA Act, as amended in 2004 to create the part-time oversight board, directs the board to pay TVA employees, including its CEO, competitive wages with private industry in comparable jobs.

TVA relies upon a Willis Towers Watson Energy Services Executive Compensation Database of 28 investor-owned utilities with revenues of more than $3 billion plus, plus five major government entities to help set Lyash's pay. TVA's CEO salary of $920,000 is more than twice the highest federal salary — the $400,000 annual pay for the president — and TVA also has a host of pension and performance bonuses that add millions more to Lyash's pay package.

But TVA said Lyash is still paid far less than the compensation offered for such jobs in the private sector. Lyash's predecessor, Bill Johnson, was paid $6.9 million in his final year at TVA in 2017. But Johnson was paid $18.5 million last year to run Pacific Gas & Electric in California, although much of that compensation from PG&E is on paper that could be worth far less in the company's bankruptcy reorganization.

"Our CEO compensation is based on comparisons with the utility industry and is evaluated by independent auditors," Thompson said. "That total compensation (for Lyash) ranks in the lower 25 percent of utility peers."

Thompson urged TVA employees to continue the 87-year legacy of the New Deal agency to deliver low-cost, reliable power and to promote economic development in the Tennessee River basin.

Through the first 71 years of that history, TVA was run by a three-member board appointed by the president and no employee could make more than the salary of a member of Congress, currently $174,000 a year.

Former TVA Chairman S. David Freeman, a Chattanooga native who worked as both an engineer and lawyer at TVA before President Jimmy Carter appointed him chairman in 1977, said he believes that under the current corporate-style board and CEO structure TVA has abandoned its unique role to promote economic growth and innovation in the Valley.

"TVA is not the agency that Franklin Roosevelt founded (in 1933) and today I think TVA is just another utility," Freeman said. "Unfortunately, TVA is no longer the New Deal, people-oriented yardstick example by which to judge a private company. It's the equivalent now of a private company without any regulation."

Freeman said TVA attracted the best talent in the country decades ago without paying the 6-figure compensation packages paid to all of TVA's top officers today because workers wanted to be a part of TVA's national mission.

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Staff photo by C.B. Schmelter / Tennessee Valley Authority President Jeffrey Lyash speaks with the Times Free Press from the TVA Chattanooga Office Complex on Tuesday, April 23, 2019 in Chattanooga, Tenn.
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