Postal chief defends bonuses

Postmaster General John E. Potter on Wednesday defended his receipt of $135,000 in bonuses while asking a House subcommittee for approval to refinance employee health care benefits to prevent having to cut mail services.

“Given today’s environment, the whole situation with AIG bonuses … these difficult financial times, can we justify, can the Postal Service justify, your compensation package?” asked Rep. Stephen F. Lynch, Massachusetts Democrat and chairman of the House subcommittee on the federal work force, the postal service and the District of Columbia.

Last month, The Washington Times reported that Mr. Potter received $135,000 in bonuses as part of a $800,000 compensation package, much of it in deferred compensation.

Mr. Potter told the subcommittee during a hearing that the conditions of his bonuses were set up by the U.S. Postal Service’s board of governors and included customer service and employee satisfaction levels.

The board attributed the Postal Service’s 2008 losses to the economy’s impact on mail, not Mr. Potter’s performance, he said.

The chairwoman of the board of governors defended the compensation package as fair, particularly compared with private-sector competitors.

“Although we governors are a diverse group with varying views on some things, we all agree that Mr. Potter has earned the compensation he has received,” Chairwoman Carolyn Gallagher said.

Mr. Potter, who has been postmaster since 2001, is slated to receive a base salary of $265,320 in 2009, according to an employment agreement he signed in November. Last year, he received $135,000 in bonuses, which, along with pension increases and other expenditures, boosted his overall compensation to more than $800,000. Nearly half the money came from an increase in the value of Mr. Potter’s retirement package, which rose by $381,496.

Much of the criticism centers on the fact that Mr. Potter is receiving extra incentive pay at a time when the Postal Service’s financial situation is so dire that officials are considering eliminating a day of mail to save money.

The Postal Service lost $2.8 billion in 2008 and is on track to record $6 billion in losses this year.

Mr. Potter and several other high-ranking Postal Service officials support a House bill that would suspend the Postal Service’s $2 billion annual payment to the retiree health care premium fund.

Some lawmakers, including Mr. Lynch, said they’re concerned the bill would merely push $75 billion in health care liabilities to come due at once in 2017. But the bill already has 200 co-sponsors in the House, and Mr. Potter said smaller payments will continue to be made to the health care account.

Several postal groups, including the National Association of Letter Carriers and the National Association of Postmasters, spoke in favor of the move.

If the bill passes, the Postal Service expects to save $5.9 billion this year and $3.8 billion in 2010. Mail volume, which peaked at 213 billion pieces in 2006, is expected to fall to 180 billion this year.

Mr. Potter frequently stressed that the Postal Service’s current business model is failing and that absent some room to make changes, which Congress must approve, it will have to cut from somewhere - likely one day of mail service. Such a cut is projected to save $3.5 billion annually.

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