Tennessee Lottery CEO could get 65 percent pay bonus

<p>A state lawmaker instrumental in creating the Tennessee lottery is upset by a bonus plan approved this week for the lottery's employees.</p><p>"You ought to do your work," said state Sen. Steve Cohen, D-Memphis. "You get paid your salary. You do your best."</p><p>Under the bonus plan approved by the lottery's board of directors, CEO Rebecca Paul, who formerly headed Georgia's lottery, can earn a bonus equaling almost two-thirds of her base pay. Other executives and employees can earn as much as 30 percent if the lottery matches the highest-performing states in raising money for college scholarships.</p><p>Jim Hill, the lottery board's vice chairman and the chairman of its Human Resources Committee, defended the bonuses as a motivational tool and said the legislation creating the lottery corporation requires it to act "like an entrepreneurial business."</p><p>"Incentives bring about better performance from employees," said Hill, who is from Chattanooga. "We believe we would be derelict in our duties if we ran the lottery like a bureaucratic organization."</p><p>The bonus plan covers the fiscal year that started July 1. Paul can earn a 65 percent bonus if the lottery's net proceeds increase by 8 percent _ raising her pay from a $364,000 base salary to just over $600,000.</p><p>The lottery's executive vice presidents can earn as much as 30 percent of their base pay if the lottery meets its scholarship fund-raising goals. Vice presidents can earn up to 15 percent bonuses, and most other eligible employees can earn 5-10 percent of their salaries.</p><p>Paul's compensation and the performance bonuses have been a touchy subject with Cohen and others since Tennessee hired Paul away from Georgia in 2003 to get the lottery off the ground. She was paid $700,000 in her first year here _ half in salary, half in bonus pay _ and could have made as much as $752,500.</p><p>In the fiscal year that just ended, which was the lottery's first full year, Paul earned $577,500: $350,000 in salary and a 65 percent bonus, or $227,500, for exceeding profit goals.</p><p>Lottery spokeswoman Kym Gerlock said all eligible employees received full bonuses for the previous fiscal year, when the lottery sold $844.3 million in tickets and transferred $227.4 million in net proceeds to the state. The net proceeds beat the lottery's goal of $219.9 million, Gerlock said.</p><p>For employees to get their maximum bonuses this year, the lottery will need to raise $245.5 million. But Paul and other eligible employees would receive lesser bonuses for any growth between 4 and 7 percent.</p><p>Hill said Paul is worth her high pay.</p><p>"Yes, it's a lot of money, but the lottery has grossed $1.3 billion in the year and a half it's been going," Hill said.</p><p>Cohen said the Tennessee lottery should easily reach 8 percent growth in net proceeds for at least the next year or two because of the introduction of new games and the novelty.</p><p>"All lotteries do 8 percent the first couple of years," he said. "It has nothing to do with management."</p><p>Georgia's lottery changed its bonus program earlier this year. The lottery's performance alone does not determine employees' bonuses anymore, spokesman J.B. Landroche said. Individual performance now is a factor as well.</p><p>___</p><p>HASH(0x1cde2b0)</p>

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