The Tennessee Valley Authority is increasing compensation and incentives for its president and CEO Bill Johnson. The federal utility's board of directors voted unanimously to add $200,000 in at-risk incentive pay and an additional year of service credit to Johnson's compensation plan, according to TVA's director of public and community relations, Gail Rymer.
The motivation behind the pay raise is retaining Johnson as the head of TVA, Rymer said in an email, adding that the board of directors said they wanted to "see Johnson continue to lead TVA and continue the progress being made in executing on TVA’s mission of serving the Tennessee Valley."
"The value for each additional year in Johnson’s Supplemental Executive Retirement Plan (SERP) calculation ranges from $0 to $761,000 depending on the nature of Johnson’s departure from TVA and provided he remains employed with TVA for the specified period of time," Rymer noted.
Johnson joined TVA as president and CEO in 2012 after serving as CEO of Progress Energy Inc. prior to its acquisition by Duke Energy Corp.
"While TVA’s performance is measured against other utilities, we do not compensate the CEO at the same level, given the public service nature of TVA and the leadership position," Rymer said. "Even with this increase in SERP benefit and the additional incentive pay, Johnson’s compensation package still falls well below the median for the industry (below the 25th percentile)."
According to SNL Energy data, Johnson is slated to earn a base salary of approximately $1.0 million in 2016. He is also in line to earn approximately $5.4 million in other compensation, which could include non-equity incentive pay and deferred compensation.
Rymer noted that because TVA is one of the nation’s largest utility systems, it "must compete with other utilities for talented people to strategically lead TVA."
She added that the utility's compensation strategy is "market-based and performance driven, enabling TVA to attract, retain and motivate highly qualified and committed leaders to guide the organization’s strategy and performance."
During Johnson's time at TVA's helm, the utility's financial and operational health has improved even despite falling energy demand, Rymer said, adding that Johnson helped reduce operation and maintenance costs by more than $800 million.
Additionally, since Johnson joined TVA, its generation portfolio has diversified, performance has improved and the environmental impacts of its operations have decreased, Rymer said. Watts Bar unit 2 was also completed and placed into commercial operation.
The board of directors also believes retaining Johnson is important to keeping the utility on track for its long-term plan, according to Rymer.
Board Chair Joe Ritch and directors Pete Mahurin and Mike McWherter have terms that will expire when Congress ends its term, according to Rymer, but she noted that the board has 30 days from the time of the vacancy to appoint a new chair. If a board meeting is called before that happens, the chair of the audit committee would preside over the meeting.
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