Tennessee Gov. Phil Bredesen said Thursday that Rebecca Paul's potential $752,000 annual salary package involves "a much more businesslike" arrangement than a similar amount paid to former University of Tennessee President John Shumaker.
"I don't think that's legitimate at all," said the governor when asked at a brief news conference if it was fair to compare the two pay packages.
"I think there's much more accountability in this process," Bredesen said. "For example, Rebecca Paul has a job now that you can look at the numbers she produces relative to the numbers that other people have produced in other states.
"It's much less of a guessing game about what somebody might do in the future," he said, noting that Paul can be fired at any time by the Tennessee Education Lottery Corp. that hired her.
Shumaker had a five-year contract with built-in base pay and incentive arrangements providing $735,000 per year. He resigned Aug. 8 after meeting with Bredesen, who supported payment to him of $423,000 in severance pay.
"It's not a multimillion-dollar contract (with Paul)," the governor said. "She's being paid month to month, and she has the opportunity to earn bonuses on very specific performance measures, not some general board judgment about how well she's doing."
To maximize her bonus, Paul must begin sales of instant lottery tickets by Feb. 17, online lottery tickets by April 15 and bank $122 million in profits for a college scholarship fund by July 1.
Paul earned $500,000 last year as CEO of the Georgia Lottery, consisting of $290,000 in base pay plus a $210,000 "discretionary bonus" awarded by the Georgia Lottery board. The governor said that when he learned of the new Tennessee lottery CEO's pay package - a base salary of $350,000 with bonuses that could reach $402,500 annually - "my first reaction was, 'That's a lot of money.'"
Some state legislators criticized Paul's salary.
"It sounds like she's the one who just won the lottery," said Sen. Rusty Crowe, R-Johnson City.
Crowe said many citizens had told him, following the Shumaker controversy, that "we are now entering into another situation wherein Tennessee is paying a salary that seems to be way out of line as related to others."
Bredesen said he's convinced Paul's pay package is "the route that would get us the most money for children's scholarships."
Paul's salary in Georgia was apparently the highest paid to any state lottery director. Her new Tennessee base salary is triple that for lottery CEOs in states with far larger lottery sales.
New York, the biggest state lottery with a $4.75 billion gross, pays its lottery director $134,000 annually, while Massachusetts, the runner-up in sales with a $4.21 billion gross, pays $110,000. Massachusetts also has the highest per-capita lottery ticket sales of the two states, $663 vs. New York's $250, according to data on the Web site of the North American Association of State and Provincial Lotteries.
Texas, with a $3 billion gross, pays its president $110,000 a year, and California, with a $2.9 billion gross, hired former Washington lottery CEO Anthony Molica last month at an annual salary of $123,255.
Kentucky lottery CEO Arch Gleason received a $169,000 base salary last year plus a $17,600 bonus. Bonus payments to other lottery directors, if any, were not available.