Postal Chief's $384,000 Pay Sparks Call for Cut

CNNMoney.com

The chief of the struggling U.S. Postal Service received $384,229 in compensation last year -- and at least one lawmaker thinks he should take a paycut.

Sen. Jon Tester, a Montana Democrat, decried top U.S. Postal Service salaries in a letter this week to the board governing the service. Tester wants top postal executives to cut their own salaries and bonuses as they move to cut mail delivery services and close postal plants and offices, laying off tens of thousands of workers.

Postmaster General Patrick Donahoe received a base salary of $271,871 in 2011, according to a November filing by the service with the Securities and Exchange Commission. But he also made another $81,954 in pension and deferred compensation. And he benefited from $30,404 in "other" compensation, including security costs, life insurance premiums, parking and financial planning services.

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Donahoe, 56, is a career postal employee who most recently served as the deputy postmaster general.

All of the top officers at the U.S. Postal Service had annual base salaries topping $200,000, according to the filing.

The Postal Service said last week it was moving forward with a plan to close more than 200 postal plants that may cost 32,000 jobs. The plan is aimed at helping the service get out of major debt caused by declining first-class mail volumes and a congressional mandate to prefund retirement health care benefits. The service reported a $5.1 billon loss for the year ended Sept. 30.

Tester said Postal Service leaders should recognize sacrifices made throughout the agency. He also said that, in the past, executives from other private companies seeking "favorable treatment from Congress" have forgone some compensation.

"To date, not a single executive has offered to forgo bonuses or reduce his salary during this difficult time," Tester wrote.

A spokesman for U.S. Postal Service said he couldn't comment on Tester's letter. But he said senior executives at the Postal Service are paid well below the compensation of similarly sized private companies in the delivery field.

"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," said Mark Saunders, an agency spokesman.

The CEO and chairman of United Parcel Service Inc. (UPS, Fortune 500), D. Scott Davis, made $10.7 million in 2010, the most recent pay data available for that company. That company employs 398,000 people and reported more than $3.8 billion in profits last year.

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The CEO of FedEx (FDX, Fortune 500), Frederick W. Smith, made $7.26 million in 2011, according to financial filings. FedEx posted $1.4 billion in profit for the most recent fiscal year ended May 31 and employs 290,000.

The U.S. Postal Service is, by law, an "independent establishment" of the executive branch. The agency doesn't normally use tax dollars for operations, but it is working with a $12.9 billion loan from Treasury. Under the law, the agency is supposed to compensate senior officers comparable to similar jobs in the private sector.

Tester compared executive pay at the U.S. Postal Service to the annual salaries made by the Secretary of Treasury, Tim Geithner, and the Secretary of Defense, Leon Panetta -- $199,700.

"Both (cabinet) secretaries have accepted compensation that is likely much less than they would receive in the private sector," Tester wrote. "Public service is uniquely different and the Postal Service must rise to meet that expectation."

Last year, the U.S. Postal Service Board agreed to forgo most bonuses to top executives. Yet, Chief Operating Officer Megan Brennan and Chief Information Officer Ellis Burgoyne both got $25,000 recruiting bonuses when they were promoted to new jobs in 2011.

Donahoe's compensation in 2011 was less than half what his predecessor as postmaster general, John Potter, made in 2010 -- $798,418. Potter retired last year.

During a committee debate over a Senate bill to save the postal service last fall, Tester tried and failed to cap senior executive pay at the service to the same pay that senators make: $174,000.

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