Congress will hold a hearing next month into why Postmaster General John E. Potter has gotten a nearly 40 percent pay raise since 2006 and was awarded a six-figure incentive bonus last year, even as the U.S. Postal Service faces a multibillion-dollar shortfall that threatens a day of mail delivery.
"Last year, the Postal Service took a loss of nearly $3 billion and recommended that the public take austere cuts in service to allow it to operate, including cutting a day of mail delivery and raising the price of stamps," Rep. Stephen F. Lynch, Massachusetts Democrat, said Friday.
"All things considered, I think most postal customers feel that the huge increase in pay for Mr. Potter is incongruent with the post office's recent performance. I assure you that our subcommittee will look into this matter at a hearing in March," said Mr. Lynch, chairman of the House Oversight and Government Reform subcommittee that oversees the Postal Service.
On Tuesday, The Washington Times reported that Mr. Potter had received nearly 40 percent in pay raises since 2006 and about $135,000 in incentive bonuses last year. For fiscal 2008, including increases to the value of his two pensions, Mr. Potter's entire compensation package totaled more than $800,000, according to Postal Service financial records.
The subcommittee on the federal work force, Postal Service and the District of Columbia will take up the issue at a hearing set for March 25. In addition to executive compensation, members will review the Postal Service's economic troubles and competitiveness, officials said.
Rep. Jason Chaffetz of Utah, the subcommittee's ranking Republican, said he, too, questions the timing of the big pay packages, given the Postal Service's financial woes.
"On the surface it just doesn't smell right," Mr. Chaffetz said. "Rewarding people for performance is acceptable, but things kind of seem to be going in the wrong direction. I'm looking forward to that hearing."
The Postal Service's board of governors informed the Postal Regulatory Commission about Mr. Potter's compensation in an annual financial filing in December. Six weeks later, Mr. Potter testified before Congress that the Postal Service's worsening finances could prompt officials to cut a day of mail delivery. The Postal Service also recently announced a pending 2-cent increase in the price of stamps.
Mr. Potter said the Postal Service's losses occurred despite cutting more than $2 billion and setting records for on-time delivery. He blamed the financial problems on a weakening economy, required health plan payments and increased use of electronic mail as a means of communication.
Among other top postal officials, Deputy Postmaster Patrick Donahoe got $600,026 in total compensation, more than half of which was an increase to the value of his retirement annuities. His base salary was $238,654.
Postal officials defend the pay packages, saying their counterparts in private industry earn far more money. The chief executive of FedEx, for example, earned more than $10 million last year, according to Securities and Exchange Commission filings.
Gerald J. McKiernan, a spokesman for the Postal Service, said Friday that postal officials briefed the subcommittee last year. He said additional briefings on the compensation of top postal officials took place last week.
"It's an educational process," he said of the briefings. "We're prepared for the hearing."
Postal officials also note that outside reviews have recommended increased compensation for postal executives.
Under federal rules, the postmaster's pay is capped so he cannot earn more than 20 percent above the salary of the vice president of the United States. But the board of governors, which oversees the Postal Service, can pay additional money to Mr. Potter as long as it's deferred until later years, according to the board.
For example, the board gave Mr. Potter a "pay for performance" award of $18,300 last year as well as a performance incentive award of $116,741. Both bonuses came on top of Mr. Potter's $263,575 salary. Mr. Potter won't be paid the incentive award money until after he leaves the Postal Service, records show.
In awarding the incentive awards, the board of governors noted that it "considered Mr. Potter's effective leadership during the difficult economic challenges of 2008, his implementation of a number of process improvements that led to record service levels at a lower cost, the steps he took that strategically positioned the Postal Service to maintain its viability for the future, and his achievement of personal goals."