This story was updated at noon on Nov. 18 to correctly state which attorneys are advising TVA on executive compensation.
Despite President Trump's appeal that the Tennessee Valley Authority cut the pay for its CEO "by a lot," TVA boosted the salary and performance bonuses given to TVA President Jeff Lyash in fiscal 2020 to keep the leader of America's biggest government utility as the highest-paid federal employee in the U.S.
Lyash was given a 15% boost in his salary and higher performance bonuses from the previous year in fiscal 2020, a year in which TVA exceeded most of its goals even amid the coronavirus pandemic. The 58-year nuclear engineer, who previously headed Ontario Power in Canada before joining TVA in April 2019, was paid direct compensation of nearly $3.8 million in the fiscal year ended Sept. 30, in addition to another $3.5 million in long-term pension benefits and one-time relocation payments.
Lyash's direct pay was more than nine times as much as the $400,000-a-year salary paid to President Trump, who earlier this year called Lyash's pay "ridiculous" and later fired the TVA chairman after he defended Lyash's pay.
Trump first publicly blasted Lyash's pay in April and in August called upon the TVA board to cut Lyash's pay to only a fraction of his current pay.
"The new CEO must be paid no more than $500,000 a year," Trump said. "We want the TVA to take action on this immediately."
The president appoints the directors to TVA's 9-member board, but the utility is an independent federal corporation that no longer receives taxpayer funds and sets its own pay and rates in accordance with the TVA Act. Under TVA's governing act as revamped in 2004 by the U.S. Congress, TVA's board is directed to pay competitive salaries and benefits to its employees.
In response to President Trump's pay concerns, the TVA board hired an independent consulting firm, Frederic W. Cook & Co., Inc, to help evaluate competitive compensation. TVA Chairman John Ryder said the board will review the new study at its next meeting in February.
"We remain committed to working with the administration and Congress to help TVA move forward," said Ryder, who once served as general counsel for the Republican National Committee board and was appointed to the TVA board by Trump. "What we've been asked to do and what we are doing now is to take a comprehensive review of our compensation system going forward."
The TVA board has asked outside counsel to give an opinion to the board on what are the legal requirements for executive compensation. The TVA Act, as amended in 2004, directs TVA to pay competitive wages in the industry and says that TVA is not bound by other federal pay caps.
"We're not going to jump the gun and reach a conclusion before we have a thorough and complete review of the system," he said.
Ryder said the compensation levels for fiscal 2020 were largely defined by the board last year, although directors did approve the incentive payments for fiscal 2020 last week during their annual review of TVA executive pay.
Combined with changes in pension values and other long-term incentives, Lyash received a total compensation package worth nearly $7.3 million in fiscal 2020, according to regulatory filings with the U.S. Securities and Exchange Commission. In his first year on the job at TVA in 2019, Lyash received a total compensation package of more than $8.1 million, including relocation payments and future benefits if he says with the utility.
Top pay at TVA
According to TVA’s annual report filed Tuesday with the U.S. Securities and Exchange Commission, the top compensation plans, including salaries, deferred pay, performance incentives and pension value changes paid to TVA’s top executives in fiscal 2020 were:
* Jeff Lyash, president and CEO, received total compensation of nearly $7.3 million, or 10.6% less than the previous year, including direct salary and bonus pay of nearly $3.8 million.
* John Thomas, chief financial officer, received total compensation of $3.8 million, or 7.6% more than the previous year, including direct salary and bonus pay of nearly $2.9 million change in pension value.
* Mike Skaggs, chief operating officer, received total compensation of $4.4 million, up 0.5% from the previous year, including direct salary and bonus pay more than $2 million change in pension value
* Sherry A. Quirk, executive vice president and general counsel, received total compensation of $2.6 million, up 7.4%, including direct salary and bonus pay of $2.25 million.
* Timothy Rausch, senior vice president and chief nuclear officer, received total compensation of $1.8 million, including direct salary and bonus pay of $1.2 million.
Source: TVA Executive Compensation Report in 10K filing with the U.S. Securities and Exchange Commission.
TVA's current pay consultant, Willis Towers Watson Energy Services, surveyed 32 comparable-sized utilities to TVA and found that Lyash's compensation is in the bottom 25% of the similar utilities. While the average utility CEO in the Willis Towers study was paid 97 times more than the average worker in that company, Lyash's compensation was 53 times the median pay and benefits package of $136,920 for the typical TVA worker in fiscal 2020, TVA said.
TVA directors in the past have said both the marketplace and the revised TVA act require that TVA pay a competitive compensation level to recruit and keep the best talent to run one of the nation's biggest nuclear fleets, the country's second-biggest transmission network and the nation's fifth-biggest river.
Most of Lyash's compensation is risk-based and is shaped by TVA's performance. In fiscal 2020, TVA directors said Lyash and the TVA leadership team met or exceeded most of the utility's goals set a year ago. TVA lowered its delivered cost of power while paying down its debt to the lowest level in more than 30 years and achieving its best overall reliability and safety record.
"The board is extremely impressed by the ability of you and your team to deliver the kind of performance we've seen this year in the face of the challenges that we've seen," Ryder told Lyash at last week's board meeting. "We've produced lower rates and high reliability in the face of a pandemic, floods, tornadoes and other natural disasters. It's been a tough environment and the team has performed exceptionally."
TVA's other top executives, including Chief Financial Officer John Thomas, Chief Operating Officer Mike Skaggs, General Counsel Sherry Quirk and Nuclear Chief Timothy Rausch, were each given raises in 2020 and their total salary and direct compensation packages ranged from$1.2 million to $2.8 million each in fiscal 2020, according to TVA's annual report.
The multi-million-dollar pay plans for TVA's top managers were blasted this spring by Trump who questioned why a government agency was paying so much to its leaders and why Lyash is paid more than any other federal employee.
But Tennessee's senior senator who supported legislation in 2004 that moved TVA's pay and governance to a more corporate-like system suggested the TVA president might deserve even more money. U.S. Sen. Lamar Alexander, the Tennessee Republican who chairs the U.S. Senate appropriations subcommittee on energy and water and helps oversee TVA, praised the federal utility for its performance under Lyash to simultaneously reduce power rates, air pollution and long-term debt.
"I like the direction that TVA is going and if Jeff Lyash was a Tennessee football or basketball coach, instead of cutting his salary, maybe you should raise his salary because I think your scorecard (at TVA) is really good," said Alexander, a former governor and president of the University of Tennessee at Knoxville.
Contact Dave Flessner at firstname.lastname@example.org or at 423-757-6340.