TVA reviews its top pay after White House blasts compensation levels,
MOVE COMES AFTER TRUMP CALLS PAY LEVELS ‘RIDICULOUS’
The compensation for America’s highest paid federal employee is getting another look at the urging of President Donald Trump who has already brought about a change in the outsourcing of information technology jobs by the federal government.
Directors of the Tennessee Valley Authority, who last year agreed to pay TVA President Jeff Lyash more than $8.1 million in pay and benefits in his first six months at the federal utility, are hiring a new consulting firm and reviewing the pay for Lyash and other TVA executives after Trump called TVA’s pay for Lyash “ridiculous” and said his pay should be cut “by a lot.”
Earlier this month, Trump fired the current and former chairmen of the TVA board and threatened to fire other TVA directors if they didn’t suspend the outsourcing of IT jobs and if they didn’t cut the pay for the TVA president. Trump has urged the TVA board to fire Lyash and hire a new chief executive who “puts the interests of Americans first.”
“The new CEO must be paid no more than $500,000 a year,” said Trump, who appoints the members of the TVA board but cannot directly dictate TVA actions. “We want the TVA to take action on this immediately.”
TVA’s new chairman, Memphis attorney John Ryder who previously worked for the Republican National Committee, said Thursday that TVA was wrong to try to outsource IT work during the current pandemic and that decision has been reversed as the White House wanted.
“It’s going to be a broad scope and review and we’ll see what the consultants and the committee comes back with. We’re getting a fresh set of eyes on this.”
–TVA CHAIRMAN JOHN RYDER
Although TVA sets its executive compensation based upon the TVA act requirement to pay prevailing wages in the industry, Ryder said TVA is reviewing its compenation policies and the board could recommend a change in the TVA law. Currently, Lyash is paid an annual salary of $920,000 — more than twice the $400,000 salary for the president — and Lyash also received more than $7 million of other pension and deferred benefits to join TVA in the spring of 2019.
“We are part of the federal government and all board members are appointed by the president, so the administration’s policies are an important filter that we must use in fulfilling our obligations,” Ryder said during a quarterly TVA board meeting Thursday. “I want to be clear that the TVA board and the TVA leadership totally support the administration’s direction on maintaining and growing American jobs.”
Ryder and Lyash both conceded Thursday that TVA shouldn’t have pursued a policy of outsourcing some of the IT work now done by TVA employees in Chattanooga and Knoxville. Last year, TVA launched a study on outsourcing IT work to contractors that specialize in such work, similar to what other utilities and federal agencies have done. TVA ultimately contracted with CapGemini, which is based in France and has nearly half of its workforce in India; the Canadian-based CGI; and Accenture Federal Services, which is headquartered in Virginia and is a subsidiary of the Irish-based Accenture plc, to perform about 20% of the IT jobs previously done by TVA workers.
The loss of more than 100 TVA IT jobs during the pandemic sparked protests by labor unions and critics of foreign outsourcing and ultimately attracted the attention of President Trump who urged TVA to halt the outsourcing.
Within three days of Trump’s firing of the two former TVA directors, the utility reversed course, agreed to rehire or keep all of the IT workers whose jobs were threatened and served notice that the new contracts would be terminated.
“Simply put, we made mistakes and we immediately set out to make things right,” Ryder said. “The prior actions that affected TVA workers have been rescinded.”
Lyash said “our intentions were good but our execution was not what it should have been” and TVA is now working to limit outsourcing that replaces TVA jobs, especially American workers being displaced by foreign workers with H-1B visas. Since reversing TVA’s initial decision, Lyash said he and Ryder have twice talked with White House Chief of Staff Mark Meadows “and those conversation have been very clear and very positive and we’re committed to making sure our actions match our words.”
The TVA board has not acted as quickly on President Trump’s complaints about Lyash’s pay. Ryder and other directors have praised the TVA president and noted that the TVA act directs the board to pay competitive compensation for all workers, including the CEO.
“I don’t think anybody has questioned the performance of Jeff Lyash because I think his performance has been outstanding,” Ryder said. “But the question of compensation is on the table.”
TVA Director Kenny Allen was named Thursday as the new head of the TVA board panel that oversees compensation and Allen said the agency is hiring a new consulting firm, Erin Bass-Goldberg of FW Cook Advisors, to review TVA’s pay levels for its executives.
“It’s going to be a broad scope and review and we’ll see what the consultants and the committee comes back with,” Ryder said. “We’re getting a fresh set of eyes on this.”
Ryder said if the consultants recommend a change in the TVA law to alter the top pay at the utility, he is open to asking Congress to amend the TVA act.
“We have reported that back to the White House and the indications are that we are approaching this in the right way,” Ryder said.
Lyash said he supports the board review of compensation levels, although he noted that TVA is America’s biggest public utility with more than $11 billion in annual revenues, over 10,000 employees and the third largest operator of nuclear power plants in the country. In the past decade under the current CEO pay structure, TVA electricity prices have declined slightly for the first time in the utility’s 87-year history.
“We need to keep and attract the best talent,” Lyash said.