TVA CEO Gets $2 Million Raise, Total Compensation Reaches Nearly $9.9 Million

Dave Flessner, Chattanooga Times Free Press, Tenn.

November 15, 2021, 8:00 AM·4 min read

Nov. 15—America's highest-paid federal employee got a 35% raise in pay during the past year, boosting his total compensation to a record high of nearly $9.9 million even though former President Donald Trump previously denounced such pay for a government employee as "ridiculous" and urged that it be cut "by a lot."

The Tennessee Valley Authority disclosed Monday it boosted the compensation for its CEO, Jeff Lyash, by nearly $2.6 million in the fiscal year ended Sept. 30 after Lyash helped the federal utility meet or exceed all of its major corporate goals over the past year. Lyash's compensation for 2021 included his $1.1 million base salary, a $2.9 million annual performance award, nearly $2.7 million in a long-term performance award, and $754,300 in a long-term retention award, in addition to pension and relocation benefits.

Lyash, the 60-year-old former Ontario Power Co. CEO who joined TVA in 2019, is the highest-paid federal employee in the United States, with direct compensation last year nearly 20 times as great as the salary paid to the president of the United States.

But compared with other CEOs of comparably-sized electric utilities, Lyash continues to be paid below industry averages. A compensation study of 42 other U.S. utilities by the consulting firm hired by TVA to assess the market — F.W. Cook — estimates Lyash's pay is about 28% below the industry average. Even with his pay boost last year, Lyash continued to make significantly less than the CEOs of other major Southern electric utilities, including Southern Co., Duke Energy, NextEra and American Electric Power.

"We look at this issue very closely as a board and Jeff is still paid below his peers in the industry," TVA Chairman Bill Kilbride said. "I think we have the right guy who understands the public mission of TVA and we recognize the need to pay competitive salaries to keep the best talent."

Former President Donald Trump urged the TVA board two years ago to cut Lyash's salary, which he said is out of line for a federal employee. Trump even dismissed two former chairs of the TVA board, in part, for their support of the multimillion-dollar pay packages for TVA's CEO.

"I don't know the gentleman, but he's got a heck of a job," Trump said about Lyash when asked in 2020 about proposals to require TVA to cut executive pay. "He gets paid a lot of money, which is an amazing thing."

Dr. Anthony Fauci, who earned $434,300 last year, is the most highly compensated federal employee paid by taxpayers. TVA employees do not receive taxpayer-funded salaries and TVA customers generate all of the utility's operating revenues used to pay its employees.

However, TVA is a federally owned utility and enjoys a competitive advantage over investor-owned utilities that have to pay state, local or federal taxes along with taxable dividends to its shareholders. TVA makes in-lieu-of-tax payments in the seven states where it operates, but TVA does not pay any corporate income taxes or local property taxes.

In response to Trump's concerns voiced more than two years ago, the TVA board conducted another study of executive pay and reaffirmed its decision on Lyash's pay last year, and the board has since boosted his salary and incentive pay opportunities. Most of Lyash's compensation is paid only if TVA meets or exceeds the goals set by the TVA board each year.

Although TVA is government-owned, the more corporate-like board structure adopted for TVA by Congress in 2005 requires the federal utility to set its pay based on prevailing compensation for similar positions in investor-owned companies as well as governmental entities. The reforms pushed by former U.S. Senate Majority Leader Bill Frist, R-Tennessee, replaced the former three-member, full-time board structure that governed TVA for its first 72 years with a nine-member, part-time board, which hires a full-time CEO to run the agency. The 2005 reforms require TVA to follow Securities and Exchange Commission (SEC) reporting requirements similar to investor-owed companies.

In its annual financial report released Monday, TVA said "the complexity, scale and scope of its utility operations rival those of the largest U.S. utility companies."

"Attraction and retention of talent is paramount to TVA given its complex operations and high-performance expectations," TVA said in its SEC filing. "In order to fulfill its public power mission in the most effective way possible, TVA must provide market-based, competitive compensation levels to deliver superior performance and execute ambitious multi-year objectives aligned with TVA's public power mission."

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.