A federal utility's board voted Thursday to increase the multimillion-dollar pay scale of its CEO coming to the decision based on findings of an independent review ordered up after then-President Donald Trump blasted the executive as “ridiculously overpaid” last summer.
The Tennessee Valley Authority board decided to increase what CEO Jeff Lyash makes from “37% to 28% below the market median of CEO compensation” of comparable utilities, board member Kenneth Allen said during the meeting, without offering a more precise dollar amount.
Lyash's total compensation was $7.3 million for the 2020 budget year that ended in September. Lyash is the country's highest paid federal employee; however, the utility doesn't use federal tax revenue and runs largely on its electricity rates.
"Look, it’s a big number. It gets people’s attention," TVA Board Chairman John Ryder told reporters Thursday. “It’s a big number if you’re talking about the bureaucracy the federal bureaucracy. It’s a very small number, or relatively small number, if you’re talking about CEOs in the utility industry. So, it was not an apples-to-apples comparison.”
TVA announced the review of CEO pay in August, responding after Trump earlier that month fired the former board chairman and another board member and called for Lyash’s replacement and the position’s pay to be capped at $500,000. Trump had also criticized the pay package that April.
The grievance seemed to fall by the wayside during Trump's final months in office, which were consumed by his reelection campaign, the growing coronavirus pandemic and other issues.
The pay scale review stretched past Trump's tenure and the results were first discussed publicly Thursday, a few weeks after President Joe Biden took office.
Ryder said the review led the board to conclude that TVA is paying its CEO in a way "that’s required by the TVA Act, which requires us to benchmark against our peer utilities, and is the one that best serves the people of the Tennessee Valley Authority region.” The review involved outside experts, external legal counsel and a newly comprised TVA board committee, he said.
He pointed to high marks for TVA's business model in a third-party review discussed Thursday.
Federal law requires TVA to pay competitively with other major utilities. Lyash's base salary just topped $1 million last budget year. His compensation package includes various pension and performance incentives worth millions of dollars.
“Jeff’s compensation is within the lower quartile within the industry,” Ryder said. "And I would say based on the performance of the last year, his performance is in the top quartile. So, we are paying bottom dollar for top performance. I think we’re getting a good deal.”
Lyash also cited the need to increase awareness about how TVA pays people in general.
“I think the Tennessee Valley Authority is not as well understood as we probably need to be. That’s likely our issue," Lyash told reporters. "This management team isn’t paid by the federal government. It’s paid through electric system revenue by the 10 million people in the valley.”
Trump’s criticisms over the summer resulted in changes on a different front: He drove TVA to reverse course on the hiring of foreign labor for information technology jobs, which piqued his interest enough that in early August he invited the workers who would be replaced to the White House.
Lyash said TVA has begun talking with the new Biden administration, saying he thinks TVA’s agenda — from reducing greenhouse gases in power production to its new work on public electric vehicle charging stations in Tennessee — has a “very significant amount of overlap with where this administration wants the industry to go.”
TVA, the largest U.S. public utility, was created in 1933 under the New Deal to provide electricity, flood control and economic development to Tennessee and parts of six more surrounding states.