President Donald J. Trump issued a memorandum on Mar. 11 directing the Board of Directors of the Tennessee Valley Authority (TVA) to consider new limits on executive compensation at the federally owned corporation.
The move aims to promote fiscal responsibility and ensure that compensation practices at TVA align with public sector standards. The memorandum highlights concerns about excessive pay for senior executives at TVA, noting that such practices can undermine public confidence in federal stewardship of resources.
In the memorandum, Trump said, "Excessive compensation at federally owned corporations undermines public confidence and is inconsistent with responsible stewardship of Federal resources." He pointed out that while the President of the United States receives a salary of $400,000 and the highest paid state governor earns about $254,000 per year, some TVA executives have received millions in compensation for their roles in public service.
The directive instructs the TVA Board to place greater weight on government official salaries when conducting its annual survey of prevailing compensation. It recommends establishing a maximum total annual compensation limit of $500,000 for all TVA employees, including the Chief Executive Officer. The memorandum defines total annual compensation as including salary, bonuses, incentives, and any other form of financial remuneration provided by TVA.
Trump's order also calls for board member compensation to be limited to statutory minimums. The Board has been given 90 days to consider adopting policies or governance measures necessary to implement these limitations and must submit a written certification of compliance within 120 days.
The broader implication is an effort by federal leadership to bring executive pay at government-owned entities more in line with public expectations and standards seen elsewhere in government service. Observers will watch how TVA responds and whether similar measures might be considered for other federally owned corporations.
