The U.S. Postal Service on Monday defended its top executive pay in the face of anticipated new legislation that would place a lower cap on executive salaries and bonuses.
Rep. Kathy Hochul, D-N.Y., announced Friday that she intended to introduce legislation reducing the salaries of the postmaster general and his immediate subordinates to the level of Cabinet secretaries. The legislation would overturn a provision in the 2006 Postal Accountability and Enhancement Act, which authorized USPS executives to be paid salaries of up to 120 percent of the vice president’s annual compensation, plus bonuses.
“We’re obviously in tough economic times, and the Post Office is on the hook for billions of dollars of taxpayer money,” Fabien Levy, a spokesman for Hochul’s office, told Government Executive. “When that’s going on, you expect the top leadership there to make the sacrifices that everyone else is willing to make.”
The vice president’s salary is currently set at $230,700, meaning postal executives can be paid up to $276,840, according to USPS spokesman Mark Saunders. Levy said the proposed legislation would scale back the wages of top USPS executives to the level of Cabinet secretaries’, which was set at $199,700 in 2010.
Postal officials, however, argued because USPS functions like a company, it is important for executive salaries to remain competitive with the private sector.
“When you compare the size and scope of an organization that employs well over half a million employees operating among 32,000 locations linked by more than 210,000 vehicles, our officer compensation is well below that of similar private sector positions,” Saunders said.
He also said USPS has enacted self-imposed pay freezes for four consecutive years since passage of the Postal Accountability and Enhancement Act: Officer base salaries were frozen in 2009 and 2011, and no performance lump sums were awarded in 2010. Base salaries remained frozen this year and no bonuses were awarded. Decisions regarding executive pay for 2013 will be made later in the year.
Yet USPS Chief Operating Officer Megan Brennan and Chief Information Officer Ellis Burgoyne each received $25,000 in bonuses in 2011, according to Levy. Saunders said the executives received “recruitment incentives” for moving to areas with higher costs of living.
Hochul, who wrote to USPS Board of Governors Chairman Thurgood Marshall Jr. on March 9 expressing concerns about rising executive salaries, also expects to include a provision in the bill prohibiting executive officer bonuses in years where USPS closes any retail or processing facility. Saunders called the two issues unrelated.
“Network and retail optimization is part of our five-year business plan and is needed for the Postal Service to return to profitability,” Saunders said. “Our network was designed for a different era. Our networks need to be streamlined to match today's mail volume and the changing ways our customers do business with us.”
Amid billions of dollars in losses, USPS currently aims to shutter more than 220 mail processing plants and cut a total of 30,000 career positions through downsizing. The Postal Service wants Congress to eliminate mandates requiring retiree health benefit prepayments, return the Civil Service Retirement System and Federal Employees Retirement System overpayments to USPS, and grant authority to determine the frequency of mail delivery, according to Saunders.