By Adam Andrzejewski
The Tennessee Valley Authority (TVA), a quasi-public federal agency, paid their new chief executive officer much more than the U.S. president’s $400,000 annual salary.
In fact, Jeffrey Lyash earned $15.5 million in pay, perquisites, and retirement benefits over the last two years. Lyash’s compensation amounted to $8.2 million in 2019 and $7.3 million in 2020.
Unlike Dr. Anthony Fauci, who earned $434,300 last year and is the most highly compensated federal employee paid by taxpayers, TVA employees do not receive taxpayer-funded salaries and customers generate 100 percent of operating revenues.
However, the TVA is a federally owned utility, and they enjoy a competitive advantage that is funded by American taxpayers. For example, the TVA does not pay state, local or federal taxes. Congress approves its budget.
With a $1.3 billion-dollar taxpayer infusion of capital for its first 26 years; access to lower interest rates as a federal entity; exemption from some regulations and anti-trust laws; and a board appointed by the U.S. President and confirmed by the U.S. Senate, TVA remains a federal, not an independent, entity.
Our auditors at the OpenTheBooks.com compiled the TVA payroll numbers via our Freedom of Information Act request and the TVA’s U.S. Securities and Exchange filings.
In April 2019, the TVA hired Lyash and agreed to pay him $8.2 million. The package included a $445,846 salary; a $380,00 bonus; $480,085 in recruitment/relocation incentives; 401K retirement contributions; and millions in “other” compensation and deferred pension earnings.
Lyash moved to East Tennessee from Canada to take the position.
Then, in 2020, Lyash received $7.3 million in compensation. The CEO received a $1.1 million salary; a $2.4 million “annual performance incentive;” and the first of his three equal long-term retention award incentive tranches of $338,000. Lyash also received $1.092 million in “other compensation,” and the second tranche of his “recruitment/relocation incentive award.”
While the TVA was paying Lyash millions of dollars, the company announced a $15 million contract with Capgemini, a Paris-based company with 100,000 India-based employees. In January 2020, employees learned that more than 20 percent of TVA’s 500 IT jobswere being outsourced.
The ensuing kerfuffle bled into coronavirus relief and election-year politics and ultimately made it into prime time as President Trump was asked to comment on Lyash’s compensation.
During a daily press briefing in April (minute 31), a reporter askedPresident Trump, “Members of your Administration …have pointed out that the top-paid federal employee, it’s not the President, it’s the head of the Tennessee Valley Authority and he made $8 million last year ...”
The President interrupted: “It is ridiculous, I agree. It’s ridiculous. …You said Tennessee Valley Authority, right? Has to be the highest-paid man in any government. Makes approximately $8 million or $9 million. I don’t know the gentleman, but he’s got a heck of a job. He gets paid a lot of money.”
We requested comment and a TVA spokesperson responded, “The TVA Act – approved by the U.S. Congress – provides direction to the TVA Board of Directors regarding compensation. A key tenet of the TVA Act states that compensation must be market-based and competitive. The TVA Board follows that requirement when establishing CEO compensation.”
Is the TVA CEO’s salary Washington, D.C.’s business? Depends on who you ask.
A 1933 New Deal project to bring jobs to the unemployed during the Great Depression, the TVA was established to provide navigation, flood control, reliable low-cost power generation, reforestation, and economic development to a nine-state region, mostly Tennessee, Alabama, Kentucky, and Mississippi.
From 1933 to 1959, U.S. taxpayers footed the nearly $1.3 billion for TVA’s dam building and steam power plants. But legal challenges arose as the utility sold its electricity for as much as 60 percent below the price of area shareholder-owned utilities.
In 1959, Congress cut a deal with the TVA to sell electricity only to a limited and defined area, to repay $1 billion over 54 years at about $20 million per year (plus interest), and to allow TVA to issue bonds with an initial debt ceiling of $750 million. (Congress would lift that debt ceiling to a high of $30 billion in 1979.)
Officially, TVA bonds are not backed by the full faith and credit of the U.S. Government, though there is an impression they are. Technically, the debt is logged on the federal debt ledger, because federal budgetary ways are complicated.
Legislation passed in 2004 directed the board to pay TVA employees competitive wages and removed the 71-year prohibition against TVA employees earning more than the salary of a member of Congress. It modified the TVA board structure and allowed the board to hire and fire TVA’s CEO and executives.
Today, the company CEO makes a reported 53-to-1 pay ratio to a TVA median employee’s compensation of $136,920.
More reading:
2020 Op-ed by Retired Rep. John Duncan, Jr. (D-TN), “Trump is right about TVA CEO Lyash’s salary being ridiculously high”
TVA 10-K SEC annual report filing for FY2020
TVA 10-K SEC annual report filing for FY2019
The Heritage Foundation 2014 paper “Time for the Sun to Set on the Tennessee Valley Authority”
Congressional Research Service: Privatizing the Tennessee Valley Authority: Options and Issues, July 29, 2013.