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TVA’s top executive gets 10 times Obama’s pay

Federal cap can’t be used

The Tennessee Valley Authority is owned by the federal government and provides electricity to millions of customers in seven states, including Virginia, but the salaries it pays its executives aren't anything like what most federal workers can imagine.

Last year, the TVA paid more than $4 million just to its top executive, about 10 times what President Obama makes, while another executive's personal fortunes rose by more than 50 percent to well over $3 million.

The utility detailed the generous executive compensation in a recent filing with the Securities and Exchange Commission, prompting quick criticism from one Republican member of Congress from Tennessee who called the pay excessive.

But the payouts, including salary, retirement and bonus compensation, are perfectly legal because the self-financed TVA, for the most part, is unrestrained by compensation caps imposed across the rest of the federal government.

In its SEC filing, the utility also noted that under its policies, compensation should be based on an annual survey of prevailing compensation for similar positions in private industry. By that measure, utility officials say, TVA executives are underpaid compared with private-sector counterparts.

Indeed, the top executive for Pepco Holdings Inc., the utility that supplies electricity for much of the Washington region, received nearly $7.2 million in salary and other compensation last year, according to SEC filings. Still, Pepco doesn't have the close relationship between the federal government and TVA, whose directors are presidentially appointed.

Rep. John J. Duncan Jr., Tennessee Republican, called the TVA compensation "ridiculously excessive" in a statement his office issued after the SEC filing.

"To give pay raises as high as 50 percent in times of relatively low inflation is just wrong and unfair to rate payers," he said.

Calling on Mr. Obama to appoint "very fiscally conservative people" to the TVA's board of directors, the lawmaker also noted that almost all federal employees have had their salaries frozen as many in the private sector are facing salary cuts.

TVA officials issued a statement defending the pay package for the retiring chief executive, Tom Kilgore.

TVA Chairman William B. Sansom said Mr. Kilgore's compensation remains "near the bottom in total compensation among all utilities," based on a review of market data.

"As a board, we know TVA must hire and retain people with experience to operate and maintain a complex power system," Mr. Sansom said in a statement. "TVA operates one of the nation's largest public utility systems and competes with other investor owned utilities to sustain operational excellence."

But Mr. Duncan said TVA ought to be able to attract executives without paying such high compensation.

"Because East Tennessee is one of the popular places to live in the entire country, TVA can get outstanding people at its top level without paying these extraordinary salaries," he said.

According to SEC filings, Mr. Kilgore's total compensation for fiscal 2012 came to $4,029,562, up from the $3,950,560 he made in 2011.

For both years, the bulk of the money came in the form of incentive bonuses and deferred compensation. Mr. Kilgore's base salary dropped slightly from $853,269 to $850,000.

Mr. Kilgore announced his retirement earlier this year. He became chief executive in 2005, and Mr. Sansom credited him with "a vision that emphasizes low rates, reliable power generation and environmental stewardship."

Kimberly S. Greene, executive vice president and chief generation officer, received nearly $2.4 million in 2011, but her overall compensation increased to more than $3.5 million in fiscal 2012.

The TVA's chief financial officer, John M. Thomas III, received $2.2 million overall, compared with $1.6 million the previous year, while overall earnings for the chief nuclear officer, Preston D. Swafford, rose from about $1.9 million to nearly $2.3 million.

Executives also can receive perks such as personal financial counseling and a biweekly allowance toward the purchase or lease of a vehicle.

The TVA began in 1933 under President Franklin D. Roosevelt, but federal appropriations dwindled over the years. Since 1999, the TVA had funded its operations almost entirely from the sale of electricity and the sales of securities and lease arrangements, according to SEC filings.

The TVA reported $11.2 billion in revenue in 2012, compared with $11.8 billion in 2011 and $10.8 billion in 2010. The utility also reported net income for the 2012 fiscal year of $60 million.

Board members, who set compensation, are appointed by the president. One recent nominee includes former Democratic candidate for governor of Tennessee, Mike McWherter.

But board members' salaries are frozen because of a two-year freeze on executive pay in federal agencies.

As of Sept. 30, the base stipend for the part-time board members was $48,900, though they also are reimbursed for lodging, travel and meeting expenses.

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