Congress will in­ves­ti­gate post­mas­ter’s hefty pay in­creases

The Washington Times Weekly - - Politics - BY JIM MCELHATTON

Congress will hold a hear­ing this month into why Post­mas­ter Gen­eral John E. Pot­ter has re­ceived a nearly 40 per­cent pay raise since 2006 and was awarded a six-fig­ure in­cen­tive bonus last year, even as the U.S. Postal Ser­vice faces a multi­bil­lion-dol­lar short­fall that threat­ens a day of mail de­liv­ery.

“Last year, the Postal Ser­vice took a loss of nearly $3 bil­lion and rec­om­mended that the pub­lic take aus­tere cuts in ser­vice to al­low it to op­er­ate, in­clud­ing cut­ting a day of mail de­liv­ery and rais­ing the price of stamps,” Rep. Stephen F. Lynch, Mas­sachusetts Demo­crat, said Feb. 20.

“All things con­sid­ered, I think most postal cus­tomers feel that the huge in­crease in pay for Mr. Pot­ter is in­con­gru­ent with the post of­fice’s re­cent per­for­mance. I as­sure you that our sub­com­mit­tee will look into this mat­ter at a hear­ing in March,” said Mr. Lynch, chair­man of the House Over­sight and Gov­ern­ment Re­form sub­com­mit­tee that over­sees the Postal Ser­vice.

On Feb. 17, The Wash­ing­ton Times re­ported that Mr. Pot­ter had re­ceived nearly 40 per­cent in pay raises since 2006 and about $135,000 in in­cen­tive bonuses last year. For fis­cal 2008, in­clud­ing in­creases to the value of his two pen­sions, Mr. Pot­ter’s en­tire com­pen­sa­tion pack­age to­taled more than $800,000, ac­cord­ing to Postal Ser­vice fi­nan­cial records.

The sub­com­mit­tee on the fed­eral work force, Postal Ser­vice and the District of Columbia will take up the is­sue at a hear­ing set for March 25. In ad­di­tion to ex­ec­u­tive com­pen­sa­tion, mem­bers will re­view the Postal Ser­vice’s eco­nomic trou­bles and com­pet­i­tive­ness, of­fi­cials said.

Rep. Ja­son Chaf­fetz of Utah, the sub­com­mit­tee’s rank­ing Repub­li­can, said he, too, ques­tions the tim­ing of the big pay pack­ages, given the Postal Ser­vice’s fi­nan­cial woes.

“On the sur­face it just doesn’t smell right,” Mr. Chaf­fetz said. “Re­ward­ing peo­ple for per­for­mance is ac­cept­able, but things kind of seem to be go­ing in the wrong di­rec­tion. I’m looking for­ward to that hear­ing.”

The Postal Ser­vice’s board of gov­er­nors in­formed the Postal Reg­u­la­tory Com­mis­sion about Mr. Pot­ter’s com­pen­sa­tion in an an­nual fi­nan­cial fil­ing in De­cem­ber. Six weeks later, Mr. Pot­ter tes­ti­fied be­fore Congress that the Postal Ser­vice’s wors­en­ing fi­nances could prompt of­fi­cials to cut a day of mail de­liv­ery. The Postal Ser­vice also re­cently an­nounced a pend­ing 2-cent in­crease in the price of stamps.

Mr. Pot­ter said the Postal Ser­vice’s losses occurred de­spite cut­ting more than $2 bil­lion and set­ting records for on-time de­liv­ery. He blamed the fi­nan­cial prob­lems on a weak­en­ing econ­omy, re­quired health plan pay­ments and in­creased use of elec­tronic mail as a means of com­mu­ni­ca­tion.

Among other top postal of­fi­cials, Deputy Post­mas­ter Pa­trick Don­a­hoe got $600,026 in to­tal com­pen­sa­tion, more than half of which was an in­crease to the value of his re­tire­ment an­nu­ities. His base salar y was $238,654.

Postal of­fi­cials de­fend the pay pack­ages, say­ing their coun­ter­parts in pri­vate in­dus­try earn far more money. The chief ex­ec­u­tive of FedEx, for ex­am­ple, earned more than $10 mil­lion last year, ac­cord­ing to Se­cu­ri­ties and Ex­change Com­mis­sion fil­ings.

Ger­ald J. McKier­nan, a spokesman for the Postal Ser­vice, said Feb. 20 that postal of­fi­cials briefed the sub­com­mit­tee last year. He said ad­di­tional brief­ings on the com­pen­sa­tion of top postal of­fi­cials took place two weeks ago.

“It’s an ed­u­ca­tional process,” he said of the brief­ings. “We’re pre­pared for the hear­ing.”

Postal of­fi­cials also note that out­side re­views have rec­om­mended in­creased com­pensa- tion for postal ex­ec­u­tives.

Un­der fed­eral rules, the post­mas­ter’s pay is capped so he can­not earn more than 20 per­cent above the salary of the vice pres­i­dent of the United States. But the board of gov­er­nors, which over­sees the Postal Ser­vice, can pay ad­di­tional money to Mr. Pot­ter as long as it’s de­ferred un­til later years, ac­cord­ing to the board.

For ex­am­ple, the board gave Mr. Pot­ter a “pay for per­for­mance” award of $18,300 last year as well as a per­for­mance in­cen­tive award of $116,741. Both bonuses came on top of Mr. Pot­ter’s $263,575 salary. Mr. Pot­ter won’t be paid the in­cen­tive award money un­til af­ter he leaves the Postal Ser vice, records show.

In award­ing the in­cen­tive awards, the board of gov­er­nors noted that it “con­sid­ered Mr. Pot­ter’s ef­fec­tive lead­er­ship dur­ing the dif­fi­cult eco­nomic chal­lenges of 2008, his im­ple­men­ta­tion of a num­ber of process im­prove­ments that led to record ser­vice lev­els at a lower cost, the steps he took that strate­gi­cally po­si­tioned the Postal Ser­vice to main­tain its vi­a­bil­ity for the fu­ture, and his achieve­ment of per­sonal goals.”


Re­warded: Post­mas­ter Gen­eral John E. Pot­ter re­ceived a com­pen­sa­tion pack­age to­tal­ing more than $800,000 for fis­cal 2008.

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