By Marc Perrusquia
MEMPHIS, TN — The Tennessee Valley Authority is paying Memphis-based vice president Mark Yates nearly a quarter-million dollars a year in salary and possibly as much as $338,000 or more counting bonuses.
That’s according to newly released records obtained through a Freedom of Information lawsuit filed by an attorney with the Reporters Committee for Freedom of the Press.
Overall, TVA is paying as much as $1.4 million in annual salaries and bonuses to Yates and three others who were hired to fill newly created regional vice president positions in 2021.
“It just defies logic,’’ said TVA critic Karl Schledwitz, a Memphis businessman who said he believes the federal utility’s total annual cost for the four positions could reach as high as $3 million when short- and long-term incentives, staff support and other factors are considered.
“TVA is a bureaucratic organization that has not had checks and balances for a long time,’’ Schledwitz said. “As a result of that, they have gotten very fat. They’re very top heavy.’’
In response, TVA spokesman Scott Brooks said the agency fixes competitive salaries based on “benchmarking with other utility peers,’’ contending the new vice presidents are helping improve performance and customer service.
“Our customers expect and deserve affordable, reliable, resilient, and clean energy,’’ Brooks said in a statement released to the Institute for Public Service Reporting. “To meet their expectations, we must attract and retain the best talent – highly skilled individuals in a specialized industry.”
TVA created the position of West Regional Vice President and hired Yates, a longtime Memphis businessman and political operative, to fill the post in early 2021. The move stirred criticism because it came as officials at Memphis Light, Gas & Water debated whether to sever ties with TVA and find a cheaper power supplier. TVA receives about $1 billion a year from city-owned MLGW to serve as its exclusive supplier of electricity.
At the time TVA hired Yates, his wife Veronica was operating a business with Carlee McCullough, then a member of MLGW’s board of commissioners. Veronica Yates and McCullough were listed at the two key proprietors of the popular Midtown restaurant, Mahogany Memphis. McCullough has since left the MLGW board.
TVA later hired three other regional vice presidents across its seven-state service area.
Paul McAdoo, an attorney for the Reporters Committee, filed suit in federal court in Knoxville in September 2022 on behalf of a Memphis journalist after TVA declined to release salary and compensation information involving the four regional vice presidents.
U.S. District Court Judge Ronnie Greer ruled earlier this fall that TVA must release the compensation information. TVA is a federal agency created by Congress during the Great Depression that generates electrical power for local utility companies in portions of seven states. The agency has attempted to conceal salary information of its employees in recent years, arguing that it no longer receives subsidies from the federal government, although its dams and utility infrastructure were built with millions of dollars of taxpayers’ money.
Greer said in his decision that TVA could withhold the names and other personal identifying information of the four regional vice presidents.
In response, attorneys for TVA released four sheets of information last week listing salary and compensation details for four unnamed regional vice presidents. According to the released records:
One of the regional vice presidents received a rate of pay equivalent to $242,050 a year effective Sept. 30, 2021. The employee also was eligible for an additional 40% annual bonus, which would boost total compensation to $338,870, plus an additional 30 percent long-term bonus.
Two of the regional vice presidents received a rate of pay equal to $244,400 a year, plus short-term and long-term bonuses.
One of the regional vice presidents received a rate of pay equal to $286,768 a year, plus short-term and long-term bonuses.
TVA spokesman Brooks said in an email that a greater share of compensation for higher level employees like the regional vice presidents comes through “at risk” pay – through short-term and long-term incentives – that is based on performance.
“No individual payout is guaranteed. It is directly tied to meeting specific, measurable financial and operational performance goals, and in many cases the individual’s personal performance,” Brooks said.
Yates, 57, could not be reached for comment.
TVA announced in January 2021 that it had hired Yates to fill its newly created West Regional vice presidency. Four months later, the agency announced that it had named longtime TVA employees Carol Eimers and Jared Mitchem as vice presidents in its east and south regions respectively. Then, that June, TVA said it had selected its vice president of federal affairs, Justin Maierhofer, to serve as regional vice president in its north region.
TVA said at the time of the appointments that the new regional vice president positions would help build “powerful partnerships” and strengthen relations “with customers and local leaders to bring value to the communities we serve.’’
As controversy about Yates’ appointment grew, Buddy Eller, TVA’s vice president for communications and public relations, said in 2022 that TVA hired Yates for “his extensive business background,’’ which includes stints as chief financial officer at LeMoyne-Owen College, senior vice president at First Horizon National Corporation and vice president at the Morgan Keegan investment firm.
Yates also once served as chief of staff to former Congressman Harold Ford Jr., and as chairman of the Shelby County Democratic Party.
Comparative industry salaries weren’t available Thursday, but critics said creation of the four regional vice president positions fits a larger pattern of secrecy and excess at TVA.
“TVA didn’t have (these positions) for a hundred years. And so now, all of a sudden, they need to pay out a couple of million dollars more in salaries for newly created positions? It just defies logic,’’ said Schledwitz, chairman and CEO of Monogram Foods, who co-founded a nonprofit advocacy group, 450M For Memphis, that contends Memphis could save money by finding a new power supplier.
Statement Released By TVA Spokesman Scott Brooks: Our customers expect and deserve affordable, reliable, resilient, and clean energy. To meet their expectations, we must attract and retain the best talent — highly skilled individuals in a specialized industry.
This is amplified by the unprecedented increase in energy demand, the need to expand and replace our assets, and the national skilled trades labor shortage. The regional vice president roles are essential to our business and play a pivotal role in delivering to the communities across this region – they have a direct working relationship with our customers and the people in their region to keep them informed of TVA’s efforts.
Ongoing benchmarking with other utility peers ensures TVA maintains a competitive compensation system to support a diverse and skilled workforce that can deliver the outcomes our customers expect, including keeping energy cost low. This is specifically defined in the TVA Act.
“This is all ratepayers money. They’re a government organization. I mean, we deserve for them to be transparent. You shouldn’t have to sue to get public information from a public entity. It makes you wonder: What do they have to hide?”
Retired East Tennessee utility executive Rody Blevins said he tried unsuccessfully for years to get executive salary information from TVA while trying to determine if the power supplier was overcharging ratepayers.
“It’s supposed to be public power. You know, they’re supposed to be transparent,’’ said Blevins, the former CEO of Volunteer Energy Cooperative, a rural power company in Decatur, Tennessee, about an hour northeast of Chattanooga. “I think ratepayers should know that information.”
As a corporate entity of the federal government, TVA is required to provide salary data for a handful of top executives in annual reports filed with the Securities and Exchange Commission. TVA’s latest annual reportshows it paid CEO Jeff Lyash $10.5 million in total compensation during the fiscal year that ended Sept. 30. It paid four others compensation ranging from $2.5 million to $4.6 million.
Lyash often is characterized as the highest-paid federal employee, yet his compensation is far less than some peers in the utility industry. The Knoxville News-Sentinel reported last month that Pacific Gas and Electric’s CEO Patricia Poppe makes considerably more – $51.2 million in 2021 – as does Duke Energy CEO Lynn Good, who made $21.35 million in 2022.
TVA spokesman Brooks said in his written statement that the new regional vice presidents serve as key liaisons between the federal power company and the communities it serves.
“The regional vice president roles are essential to our business and play a pivotal role in delivering to the communities across this region – they have a direct working relationship with our customers and the people in their region to keep them informed of TVA’s efforts,’’ TVA spokesman Brooks said.
Nonetheless, TVA critic Stephen Smith said he believes the new regional vice presidents are little more than “cheerleaders for TVA’’ who are trying to keep Memphis and other cities in the region from abandoning it for other power suppliers.
“This is just TVA paying money to keep the citizens of Memphis held captive,’’ said Smith, executive director of the Knoxville-based Southern Alliance for Clean Energy. “They are holding Memphis hostage.”