TVA Boss, Already The Highest Paid Federal Employee, Gets A Raise

TVA CEO Bill Johnson and Board Chairman Joe Ritch address reporters after the public utility’s Thursday meeting. Credit: Bobby Allyn

The Tennessee Valley Authority is defending giving Bill Johnson, its top executive, a $1 million compensation raise. Johnson is the highest-paid federal employee in the country.

TVA Board Chairman Joe Ritch’s argument boils down to: you have to pay big for top talent. And the TVA was sorely in need of someone with Johnson’s experience, he says.

“We could go get someone for much less,” Ritch said at a press conference after the TVA’s Board meeting on Thursday. “But in my view, we are still underpaying our CEO. So, I do not apologize for what he makes. And I can’t apologize to those that misunderstand how we calculate our pay and what value he brings to the organization.”

With the agency’s more than $20 billion in debt, the Obama administration floated the idea to sell its stake in the TVA in order to “mitigate risk to taxpayers.” The TVA employs around 12,000.

Since Johnson took over TVA’s helm last year, he has overseen the reduction of 2,000 full-time jobs and ordered plant consolidations, as well as sold properties. It’s all part and parcel of his effort to reduce TVA’s operating costs by $500 million by 2015.

The Board approved raising Johnson’s base salary from $950,000 to $995,000. Including deferred compensation benefits and performance incentives, TVA paid Johnson nearly $6 million last year. If he hits all of the goals set forth by the Board, that sum will climb to around $7 million.

“If all of the people that worked in government performed as well as our leadership team led by Bill Johnson, I would not have any problem with them making the kind of pay that he makes,” Ritch said.

Johnson’s TVA pay has been supported consultant studies showing that CEOs at similar investor-owned utilities bring in much more. But some federal officials have taken a more skeptical view. A spokesman for Congressman John Duncan told the Times Free Press that it shouldn’t take a “ridiculous salary” to attract talented leaders to the TVA.

“The President of the United States earns $400,000 per year and the Secretary of Energy earns just under $200,000. No one in the federal government should be earning more than the President, but people can rationalize and justify just about anything,” Duncan’s spokesman Patrick Newton told the paper.

When asked about his pay on Thursday, Johnson said: “I don’t think it’s appropriate to comment on your own compensation, particularly when you have a Board and a process that sets that. So I’m happy to be here.”

In 2012, Johnson left publicly traded Duke Energy days after accepting a three-year contract to be its top executive. The move came shortly after Duke completed a merger with another company. Although Johnson only worked one full day, the company gave him a $44 million exit payment.