Breaking the Million Dollar Compensation Level as a “Federal Employee”

By on November 17, 2016 in Agency News, Pay & Benefits with 0 Comments

Image of pile of cash spread out to show each bill

Which federal employees receive the highest total compensation in America?  How much do they make? Total compensation of anyone working for the federal government in excess of a million dollars is rare. One person had total compensation in excess of $5 million. A recent article describes him as “the highest paid federal employee in America….”

Where Do the Highest Paid Employees Work?

Any federal employee who wants to crack or come close to the million dollar a year mark will probably only have one choice. The Tennessee Valley Authority (TVA) is probably the one entity in government that pays a few employees a total compensation at that level.

Generally, the highest paid federal employees work for the Department of Veterans Affairs (VA). Salaries at the TVA can be substantially higher than the medical professionals at the VA. The highest salary in the Department of Veterans Affairs according to the latest data from FedsDataCenter.com was “only” $400,000. That amount went to three medical officers in three different cities.

TVA is the nation’s largest public utility. It serves about 9 million people in parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina, Tennessee and Virginia. It is a government corporation, as explained below, and while it is part of the government, it is not a traditional federal agency.

Top Salaries at the TVA

Here are the salaries for some of the top officials of the TVA according to 2016 data in FedsDataCenter.com.

Name Salary Position
JOHNSON, WILLIAM DEAN $995,000.00 PRESIDENT & CEO
PARDEE, CHARLES GRAHAM $645,000.00 EVP & CHIEF OPERATING OFFICER
THOMAS III, JOHN MADISON $575,000.00 EVP & CHIEF FINANCIAL OFFICER
GRIMES JR., JOSEPH PATRICK $555,000.00 EVP & CHIEF NUCLEAR OFFICER
BALDUZZI, MICHAEL ANTHONY $478,400.00 SVP, NUCLEAR OPERATIONS
QUIRK, SHERRY ANN $450,000.00 EVP & GENERAL COUNSEL
SKAGGS, MICHAEL DAVID $445,000.00 SVP, WATTS BAR OPS & CONSTRUCTION
POLSON, KEITH J $395,959.00 VP, NUCLEAR SITE BFN
BRONSON, KEVIN HORACE $390,000.00 SR SITE VP, OPERATIONS (BFN)
WALSH SR., KEVIN THOMAS $383,250.00 VP, NUCLEAR SITE WBN

The average salary at TVA based on the latest data was $87620.24 for the 10,717 TVA employees listed in the 2016 salary database.

The salary data do not include any bonuses paid. According to the Chattanooga (TN) Times Free Press, “TVA executives who helped lead the utility to record earnings in the past year shared in record high performance bonuses, according to financial filings…with the U.S. Securities and Exchange Commission.”

The total compensation package can be substantial. For example, Charles Pardee, who is retiring at the end of the year, “was paid a compensation package worth more than $3.3 million, up 12 percent from the $2.98 million in total compensation Pardee received a year ago.” His salary was $645,000.

Highest Total Compensation Levels at TVA

Here is a listing of total compensation for TVA listed in documents filed with the Securities and Exchange Commission (SEC) for fiscal year 2015.

Name Title Total Compensation
John M. Thomas III Executive Vice President and Chief Financial Officer $2,306,812
Michael D. Skaggs Senior Vice President, Watts Bar Nuclear Operations and Construction $1,544,282
William D. Johnson President and Chief Executive Officer $5,333,705
Joseph P. Grimes, Jr. Executive Vice President and Chief Nuclear Officer $1,822,957
Charles G. Pardee Executive Vice President and Chief Operating Officer $2,559,353

Status of the TVA

The Tennessee Valley Authority is a government corporation. Its employees are not traditional federal employees. The total compensation paid to the TVA CEO in the past year was “40 percent below the median pay for comparable CEOs in the utility industry” according to one study.

It does not pay state, local or federal taxes as it is a federal government entity. TVA does pay tax equivalent payments to the states of 5 percent of its annual revenues. Private TVA bondholders do not pay state income tax on the interest on TVA bonds, lowering the interest rate that the TVA pays on the bonds.

It operates like a private company. It has a board of directors with authority to hire and fire employees and executives who are not subject to Civil Service laws, make investment decisions, prepare and execute the budget, and oversee all facets of TVA operations. As part of the federal government, the board is nominated by the President and confirmed by the Senate. Its budget is approved by Congress. Its employees are prohibited from striking. The TVA is exempt from state and federal antitrust laws. It is also generally exempt from Security and Exchange Act regulation except for reporting and state and local electric rate setting.

Very few Americans earn the high compensation paid to those listed at the TVA. No other federal employees receive compensation at that level. Hiring people to run a highly technical organization requires rare expertise. For those that have that expertise, they are well compensated.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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