This report presents the results of our audit of compensation paid or deferred to officers1 based on the limits established in the Postal Accountability and Enhancement
Act of 2006 (Postal Act of 2006) and U.S. Postal Service policies and guidelines (Project Number 10BM001FT001). Initially we performed this work in fiscal year (FY)
2008, in response to an inquiry from the Board of Governors (Board) regarding the audit coverage we provide for officer compensation. We will continue to provide a report annually as part of our ongoing financial statement audit work. See Appendix A for additional information about this portion of the audit

Background
The passage of the Postal Act of 2006 amended Title 39, imposing guidelines on total compensation2 for the Postal Service. Under this provision, the total compensation
payable to any employee is established at three levels:

• Level I of the Executive Schedule or $196,700 for calendar year 2009.
• With the approval of the Board, total annual compensation not to exceed the total annual compensation payable to the vice president of the United States, or
  $227,300 for calendar year 2009.
•  For up to 12 officers or critical employees, compensation up to 120 percent of the total annual compensation payable to the vice president of the United States, or
  $272,760 for calendar year 2009.

Further, Postal Service officers receive additional benefits and other perquisites not subject to the compensation cap.

Conclusion
The Postal Service complied with the compensation limits stated in the Postal Act of 2006. Further, while we reviewed deferred compensation as a part of the overall scope, it does not apply to compensation caps. We noted that six of 44 officers were allocated a total of $502,395 in deferred compensation3 during calendar year 2009. Officers may be granted deferred compensation that is distributed after employment ends, or in a year when the payment of previously deferred compensation does not exceed the cap. Title 39 does not limit the Postal Service from devising and implementing deferred compensation provided it does not conflict with either the Federal Employees’ Retirement System or Civil Service Retirement System.

BACKGROUND
The passage of the Postal Act of 2006 amended Title 39, imposing guidelines on total compensation4 for the Postal Service. Under this provision, the total compensation
payable to any employee is established at three levels.

•  The first limit provides that no officer or employee may be paid compensation at a rate in excess of the rate for level I of the Executive Schedule. This
  compensation limit was set at $196,700 for calendar year 2009.
• With the approval of the Board, however, the Postal Service may develop a program to award a bonus or other reward in excess of the above compensation
  limit, as long as this does not cause the total annual compensation paid to the officer to exceed the total annual compensation payable to the vice president of
  the United States as of the end of the calendar year in which the bonus or award is paid. In approving any such program, the Board must determine that the bonus
  or award is based on a performance appraisal system that makes meaningful distinctions based on relative performance. This total compensation limit was
  $227,300 for calendar year 2009.
•  In addition, the Board may allow up to 12 officers or employees of the Postal Service in critical senior executive or equivalent positions to be paid total annual
  compensation up to 120 percent of the total annual compensation payable to the vice president of the United States as of the end of the calendar year in which
  such payment is received. This compensation limit was $272,760 for calendar year 2009.

Postal Service officers receive additional benefits and other perquisites not subject to the compensation cap, including increased annual leave exchange hours, free financial counseling, parking, life insurance, and health benefits.5 In certain limited cases, officers have contractual benefits in the form of deferred compensation. These items are not generally subject to the compensation guidelines defined in the Postal Act of 2006.

See full report