TVA's CEO remains the highest-paid federal employee

America's highest-paid federal employee got a raise in both his salary and performance pay during the past year but is still paid significantly below most of his peers in the private sector.

Jeff Lyash, the 61-year-old CEO of the Tennessee Valley Authority, was paid a total of nearly $9.8 million in salary, performance bonuses and benefits in the fiscal year ended Sept. 30, according to TVA's annual financial report released Tuesday. TVA's other top executives were given compensation packages in 2022 ranging from just over $2 million up to $3.5 million, TVA reported in its annual pay disclosures to the U.S. Securities and Exchange Commission.

"We had an outstanding fiscal year, lowering our debt to a 35-year low and boosting TVA's overall performance while reducing operating and maintenance expenses," TVA Chairman Bill Kilbride said following last week's TVA board meeting in Mississippi. "We need the very best talent and we're fortunate to have the executive team that we do."

Kilbride and other TVA officials said paying market-rate pay at all levels helps TVA to compete against other investor-owned utilities.

"It's all about attracting and retaining the best talent and to do that requires that our pay levels are competitive," said Sue Collins, executive vice president of people and communications at TVA.

Lyash is the highest-paid federal employee in the country, but an independent consultant said the pay for TVA's CEO was still 18% below the average of 42 comparable investor-owned utilities. Lyash's compensation was only 19% of the $51.2 million that PG&E paid last year to Patricia Poppe, who was the highest-paid utility executive in the country, according to S&P Global Market Intelligence.

Although Lyash's total compensation package in 2022 was down $122,456 from his record-high package the previous year due to a change in how his pension is valued, the $1.15 million salary of the TVA CEO in 2022 was nearly triple the $400,000 salary given to the president of the United States. Lyash was paid more than $7 million in additional incentive pay for meeting or exceeding all of TVA's key targets in the past year.

Two years ago, then-President Donald Trump blasted TVA for paying its executives what he said were "ridiculous" salaries and bonuses for government jobs, noting that TVA paid far more for its executives than the federal government pays cabinet officers to run much bigger operations. Trump urged the TVA board to cut Lyash's pay "by a lot."

Although Trump has appointed all five current members of the TVA board -- and fired two former TVA chairmen, in part, for their support of higher executive pay -- Kilgore said the TVA board is directed under federal legislation to pay competitive salaries for its employees.

Following Trump's criticism of TVA's pay, the board conducted another pay study of its executives that determined TVA directors were following the TVA requirements Congress adopted in 2005. The board has since raised executive pay even higher at TVA to compete with other utilities.

Kilbride said TVA has kept its CEO pay below the market average "and we are mindful of our public role and the sensitive nature" of the pay given a public employee. But TVA no longer receives any taxpayer support and operates under regulations of the Securities and Exchange Commission similar to investor-owned utilities with which it competes.

TVA is America's largest public utility and through most of its 89-year history received federal funding and was subject to federal pay caps much lower than what the utility now provides its employees. Since the late 1980s, TVA has been funded entirely by electric ratepayers without any taxpayer appropriations and in 2005 the structure of TVA was changed to expand the TVA board into a more corporate-like structure and executive pay was changed to reflect the overall market in the utility industry.

U.S. Sen. Bill Frist, who pushed through the reforms, said the changes helped improve TVA operations and leadership.

"I believed then that TVA needed a strong leadership team to remain competitive and ready to meet the challenges of the 21st century," Frist said in an editorial opinion he wrote last year. "My proposal took TVA's Depression-era administrative structure and updated it to reflect the challenges and realities of the time."

A study last year by the global consulting firm Lazard also concluded that TVA's government ownership and corporate-like governing structure served the Tennessee Valley well with below-average power rates.

Lyash's compensation was 65 times greater than the median compensation of $149,400 paid to the average TVA employee in fiscal 2022. TVA's CEO-to-employee pay ratio was the lowest among comparable utilities and was only one-fourth the disparity in pay at PG&E and less than half the pay CEO-to-employee pay ratio at Southern Co., Duke Energy and NextEra.

The TVA board, which sets TVA's objectives for the next year in advance, said Lyash met 138% of his targets in the fiscal year that ended Sept. 30. Although TVA's $1.1 billion in net income in fiscal 2022 was below the utility's profits in the previous two years, TVA maintained its 99.999% reliability factor while keeping its base rates constant despite higher inflation and fuel cost adjustments. In the past year, TVA's economic development program also helped recruit more than $10.2 billion of new investment with a projected addition of 66,500 more jobs in the Tennessee Valley.

Over the past three years, TVA has also improved the performance of its nuclear power plants. The capacity factor for TVA's seven reactors was in the bottom quartile four years ago but has moved into the top quartile of all U.S. plants. TVA Director A.D. Frazier said the turnaround "has been remarkable" and underscores the value of TVA's leadership team.

Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340. Follow him on Twitter @DFlessner1.