Bonus Material

Executive awards come under increased scrutiny.

Did you get a bonus this year? If so, you might want to keep it to yourself. Because this spring, some federal executives who received cash awards found themselves in the spotlight, with uncomfortable questions raised about the size and timing of their awards-sometimes with good reason, sometimes not.

In general, executive bonuses in government don't attract a lot of controversy. They don't go to large numbers of people, and they're usually not that big, compared to what high-level corporate executives are routinely granted. About the best a career federal official can hope for is the Presidential Rank Award of Distinguished Executive, which goes to only a few dozen people annually and amounts to 35 percent of salary.

But executives are eligible for other awards, too, and those can draw unwanted attention if they come at a time when an agency's performance is under question. Earlier this year, for example, the Associated Press reported that the Veterans Affairs Department had handed out $3.8 million in bonuses to executives who were involved in developing a budget for VA operations that failed to take into account the growing pool of veterans resulting from ongoing military operations in Iraq and Afghanistan.

VA officials defended the bonuses, saying they were a key tool in retaining executives with highly marketable skills. But in mid-June, both the Government Accountability Office and the Office of Personnel Management told a House subcommittee that VA needed to improve the procedures it uses to award bonuses. That process "should more clearly focus on results," said OPM Director Linda Springer.

The VA bonuses were as high as $33,000. But that pales in comparison to what Theresa Shaw took in during her tenure as chief operating officer of the Education Department's Federal Student Aid office. In May, Government Executive's Karen Rutzick reported that Shaw had received annual bonuses ranging from $60,000 to $71,250 from 2003 to 2006. She was eligible for the extreme awards (by federal standards) because the student aid office had been designated by Congress as a performance-based organization. Under that designation, Shaw could get bonuses of up to 50 percent of her base salary if she met certain predetermined performance goals.

By all accounts, Shaw met such goals routinely. Indeed, she was frequently called to Capitol Hill to testify about her accomplishments in improving student loan processing and reducing default rates. But then came revelations this spring of improper financial ties among the student loan industry, universities and government officials, and allegations of weak oversight of the industry. As the controversy swirled, Shaw resigned at the beginning of June in what Education Secretary Margaret Spellings characterized as a long-planned departure.

In both the VA and Education cases, reasonable questions were raised about the performance of an agency whose executives had received bonuses. But in some cases the connection is tenuous at best. For example, in early June, The Hill newspaper reported that executives at the Government Accountability Office had taken home a total of more than $900,000 in bonuses last year, at a time when some of the agency's employees were denied a cost-of-living increase.

That sounds scandalous, but the employees were denied raises on the grounds they were overpaid relative to their occupational peers. Whether or not the study GAO used to reach that conclusion was fair remains a subject of some debate.

But that doesn't really have anything to do with whether or not executives deserved the bonuses they received. If they did good work-and especially if it was work unrelated to the issue of compensation for the GAO analysts who were denied raises-why shouldn't they get bonuses?

Executive bonuses represent less than one-quarter of 1 percent of the agency's overall compensation costs, the agency reports. GAO executives get bonuses at a lower rate than their counterparts in executive branch agencies and at slightly smaller amounts.

GAO chief David M. Walker insisted that his executives' bonuses were "fully justified." That may or may not be the case, based on GAO's overall performance and the executives' individual performance. But it is unrelated to the question of whether the analysts at the lower ranks of the agency are eligible and qualified for pay increases.

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