A pending decision on whether to continue salary bonuses for Tennessee lottery CEO Rebecca Paul and her employees will be based on business principles rather than politician opinions, a key lottery board member said Monday.
Some state legislators have criticized the bonuses, which will total $772,000 for the lottery's startup year under current calculations. Of that, Paul will receive $350,000, doubling a base salary that is already the highest paid for any lottery CEO in the nation.
Four executives - all paid $180,000 per year - are to receive bonuses totaling $72,000 and another $350,000 will be spread among all other staff of the Tennessee lottery. The lottery has 174 employees.
The board of directors for the Tennessee Education Lottery Corp. had been scheduled to vote at a meeting Monday on whether to continue a bonus system and, if so, at what level and for what employees. Deloitte and Touche, an accounting firm, is being paid $85,000 for consultation in developing a plan.
But Jim Hill, vice chairman of the board and chairman of a committee assigned to make a recommendation on bonuses, said the issue is proving "a lot more complex than we thought." The committee needs to work with the consultants at least another month before reaching a decision, he told fellow board members.
State Sen. Steve Cohen, D-Memphis, who listened to the board meeting through a telephone hookup on Monday, said afterward that bonuses in the startup year were understandable, though "way too high." Now that the lottery is up and running, he said, the need for bonuses is questionable.
The board did approve on Monday a commission system for sales staff who recruit and deal with the vendors who sell lottery tickets. Under the system, the base pay for a lottery salesman will be $32,000 and he or she can receive up to $18,000 in commissions, based on meeting goals set up for their sales area.
Hill said "it is possible" that the bonus system for other employees could be abandoned entirely, but indicated his committee is considering continuation at some reduced level.
In other action Monday, the board:
- Approved a plan for tying lottery retailer machines into the "Amber Alert" network, designed to provide rapid public notification of abducted children.
- Approved reducing the time for a lottery winner to claim his or her prize from one year to 180 days. Paul said the change should have little, if any, impact on the amount of unclaimed prize money - projected at about $2 million for the first year. Under state law, half of unclaimed prizes go to help after-school care programs for children and the other half goes back into the prize money pot.
- Approved a new "Lotto 5" game, scheduled to debut on Aug. 29. Players will buy a $1 ticket and pick five numbers. Drawings will be held three times per week and persons who have picked three, four or five of the drawn numbers will receive a prize. The size of the prize will depend on sales, Paul said, with a potential for $100,000 or more.