Cash-strapped U.S. Postal Service still owes retired postmaster

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In a year when the U.S. Postal Service lost more than $5 billion, former Postmaster General John E. Potter still received more than a quarter-million dollars thanks to a hefty deferred-compensation package, a “lifetime achievement award” and a severance deal, records show.

What’s more, the cash-strapped Postal Service still owes more than $800,000 to Mr. Potter — the result of years of incentive awards that were deferred to avoid running afoul of federal compensation caps.

Under federal rules, top postal executives can receive up to 120 percent of the salary of the vice president of the United States, which is $230,700 for 2011.

But saying the cap doesn’t provide the sort of compensation needed to retain top executives, the Postal Service’s board of governors has paid more money to executives through special incentive awards, particularly to Mr. Potter. Because he was earning the maximum salary as postmaster general, most of his incentive payments were deferred until after his retirement.

Postal officials have said the board had the authority to award the extra money and that key congressional offices were notified.

This year, current officials received no such awards because of the Postal Service’s “dire financial condition,” according to a regulatory filing Tuesday.

But the bill for past incentive awards is still due. Records show that Mr. Potter is owed $815,788 in deferred compensation to be paid over a 10-year period on top of the $286,840 he already has received.

The first payment was made in January, records show. Those future payouts include awards and cash incentives that Mr. Potter earned in the 1990s as a Postal Service employee, as well as cash incentives he received from 2001 to 2008 as postmaster general, records show.

For 2011 alone, the payments to Mr. Potter included deferred compensation, severance money and a lifetime achievement award, records show.

Mr. Potter declined to comment through a spokesman with the Metropolitan Washington Airports Authority, where he is now president and CEO, who referred questions to the Postal Service.

Spokesman Mark R. Saunders said Mr. Potter’s compensation package was a contractual issue, so the Postal Service will compensate him to meet the terms of the contract. He also said that when the size and scope of an organization that employs more than 500,000 people operating among 32,000 locations linked by more than 210,000 vehicles, the Postal Service compensation is well below that of similar private-sector positions.

“If you contrast Postal Service officer compensation versus a typical postal workers’ compensation, you’ll find it to be a 4- or 5-to-1 ratio versus the private sector, where it’s not uncommon to find that ratio in the hundreds if not thousands per single rank-and-file employee,” he said.

Pete Sepp, vice president of the nonpartisan National Taxpayers Union, said Mr. Potter is entitled to the money for fulfilling contractual goals, including some management improvements.

“The trouble is, the Postal Service has many long-term, structural fiscal problems that have been brewing under many postmasters as well as congresses,” he said. “Lawmakers will have to confront these problems more directly when designing future postmaster compensation packages, not to mention their own postal reform legislation.”

Mr. Potter’s compensation surfaced during a March 2009 congressional hearing held the month after The Washington Times reported postal compensation practices. At the time, Carolyn Gallagher, who was chairwoman of the Postal Service’s Board of Governors, defended Mr. Potter’s pay package as fair, especially when compared with those of private-sector competitors.

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