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Item 9A. Controls and Procedures

2020-11-17 compared with 2019-11-15 · 1346 added, 705 removed, 685 unchanged (75% of the section changed)

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Disclosure Controls and Procedures

TVA's management, including the President and Chief Executive Officer, the Executive Vice President and Chief Financial Officer, and members of the Disclosure Control Committee, including the Vice President and Controller (Principal Accounting Officer), evaluated the effectiveness of TVA's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2019 .

Based on this evaluation, TVA's management, including the President and Chief Executive Officer, the Executive Vice President and Chief Financial Officer, and members of the Disclosure Control Committee, including the Vice President and Controller (Principal Accounting Officer), concluded that TVA's disclosure controls and procedures were effective as of September 30, 2019 , to ensure that information required to be disclosed by TVA in reports that it files or submits under the Exchange Act, is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by TVA in such reports is accumulated and communicated to TVA's management, including the President and Chief Executive Officer, the Executive Vice President and Chief Financial Officer, and members of the Disclosure Control Committee, including the Vice President and Controller (Principal Accounting Officer), as appropriate, to allow timely decisions regarding required disclosure.

TVA's management, including the President and Chief Executive Officer, the Executive Vice President and Chief Financial Officer, and members of the Disclosure Control Committee, including the Vice President and Controller (Principal Accounting Officer) ("management"), evaluated the effectiveness of TVA's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2020.

Based on this evaluation, TVA's management, concluded that TVA's disclosure controls and procedures were effective as of September 30, 2020, to ensure that information required to be disclosed by TVA in reports that it files or submits under the Exchange Act, is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by TVA in such reports is accumulated and communicated to TVA's management, as appropriate, to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

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OTHER INFORMATION

On November 14, 2019, the TVA Board approved adjustments to the compensation of Chief Executive Officer Jeffrey J.

Lyash for 2020.

Lyash's base salary will increase from $920,000 to $1,058,000.

Lyash was awarded a performance grant ("LTP") of $2,341,000 under TVA's Long-Term Incentive Plan ("LTIP") effective October 1, 2019, which will vest on September 30, 2022.

Lyash was also awarded a retention grant ("LTR") of $1,014,000 under TVA's LTIP effective October 1, 2019, which will vest in three equal increments on September 30, 2020, September 30, 2021, and September 30, 2022.

The two LTIP grants will replace two grants outlined in Mr.

Lyash's initial offer letter.

The LTP grant of $2,341,000 will replace a grant of $2,024,000, effective October 1, 2019 and vesting September 30, 2022.

The LTR grant of $1,014,000 will replace a grant of $876,000, effective October 1, 2019 and vesting fully on September 30, 2022.

The LTP grant of $2,024,000 effective October 1, 2019 and vesting September 30, 2021, will remain in place.

On November 14, 2019, Mr.

Lyash approved compensation adjustments for the following Named Executive Officers for 2020:

The salary for Mr.

Thomas will increase from $647,169 to $666,584.

Additionally, Mr.

Thomas was awarded a LTP grant of $980,000 effective October 1, 2019, which will vest on September 30, 2022.

Thomas also received a LTR grant of $420,000 effective October 1, 2019, which will vest in three equal increments on September 30, 2020, September 30, 2021, and September 30, 2022.

The salary for Mr.

Skaggs will increase from $620,000 to $663,400.

Additionally, Mr.

Skaggs was awarded a LTP grant of $990,000 effective October 1, 2019, which will vest on September 30, 2022.

Skaggs also received a LTR grant of $429,000 effective October 1, 2019, which will vest in three equal increments on September 30, 2020, September 30, 2021, and September 30, 2022.

The salary for Ms.

Quirk will increase from $541,059 to $557,291.

Additionally, Ms.

Quirk was awarded a LTP grant of $695,000 effective October 1, 2019, which will vest on September 30, 2022.

Quirk also received a LTR grant of $297,000 effective October 1, 2019, which will vest in three equal increments on September 30, 2020, September 30, 2021, and September 30, 2022.

The salary for Mr.

Rausch will increase from $520,000 to $535,600.

Additionally, Mr.

Rausch was awarded a LTP grant of $500,000 effective October 1, 2019, which will vest on September 30, 2022.

Rausch also received a LTR grant of $330,000 effective October 1, 2019, which will vest in three equal increments on September 30, 2020, September 30, 2021, and September 30, 2022.

The salary adjustments described above became effective as of October 1, 2019.

No adjustments were made to any other existing elements of compensation for these Named Executive Officers for 2020.

No Adjustments to CEO Compensation

On October 22, 2020, the People and Performance Committee (the "Committee") commissioned FW Cook to conduct an independent study of CEO compensation that provides increased direct focus on pay levels among government agencies.

TVA's CEO benchmarking approach has historically considered TVA's federal agency status in both a direct and indirect manner:

the direct manner has been to incorporate government agencies from Willis Towers Watson's ("WTW") Energy Services Survey into the survey sample used to develop benchmarks (four of the 31 companies in the 2019 sample were government agencies).

The indirect manner has been to position CEO target total direct compensation below the 25th percentile of the market composite data even though TVA's compensation plan provides for a general target at the 50th percentile.

The independent study for 2021 seeks to further incorporate government agency pay into the market composite data via the following actions:

(1) the Committee has authorized a custom survey of CEO/Principal Executive compensation at non-utility government agencies to be conducted by Willis Towers Watson and (2) the Committee will consider compensation practices from an expanded pool of government agencies and non-profit entities that participate in the WTW Energy Services Survey.

The results of the independent study will be presented to the Committee in January 2021 and will be used by the Committee and TVA Board in determining Mr.

Lyash's target total direct compensation for 2021.

Compensation Adjustments for Other NEOs

On November 13, 2020, Chief Executive Officer ("CEO") Jeffrey J.

Lyash approved compensation adjustments for the following Named Executive Officers ("NEOs") for 2021.

(Biographical information for each is set out in Item 10, Directors, Executive Officers, and Corporate Governance.) The following sets forth salary increases and incentive awards granted for 2021, effective October 1, 2020:

• Salary increased from $666,584 to $686,582.

• Long-term performance ("LTP") grant of $1,000,000, which will vest on September 30, 2023.

• Long-term retention ("LTR") grant of $432,000, which will vest in three equal increments on September 30, 2021, September 30, 2022, and September 30, 2023.

• Salary increased from $663,400 to $689,936.

• LTP grant of $1,175,000, which will vest on September 30, 2023.

• LTR grant of $504,000, which will vest in three equal increments on September 30, 2021, September 30, 2022, and September 30, 2023.

• Salary increased from $557,291 to $574,010.

• LTP grant of $695,000, which will vest on September 30, 2023.

• LTR grant of $295,000, which will vest in three equal increments on September 30, 2021, September 30, 2022, and September 30, 2023.

• Salary increased from $535,600 to $551,668.

• LTP grant of $500,000, which will vest on September 30, 2023.

• LTR grant of $330,000, which will vest in three equal increments on September 30, 2021, September 30, 2022, and September 30, 2023.

No adjustments were made to any other existing elements of compensation for these NEOs for 2021.

Supplemental Compensation Plan Change to Better Align to Market

Long-Term Incentive Plan

On November 12, 2020, the CEO approved an amended and restated Long-Term Incentive Plan ("LTIP") that allows TVA to make off-cycle performance-based grants and retention grants on a pro-rated basis.

A copy of the amended and restated LTIP is attached as an exhibit to this Annual Report and is incorporated herein by reference.

The foregoing description is qualified in its entirety by reference to such document.

Corporate Multiplier

On November 13, 2020, the TVA Board approved the following performance measures for the Corporate Multiplier for 2021:

(1) Safety, (2) Total Financing Obligations, (3) Cash Flow from Operations, (4) Net Income, (5) Jobs Created and Retained, and (6) Board Level Significant Events.

These measures are described in more detail in the table below:

Performance Measure Description Target

Safety (Serious Injury Incident Rate) (Number of cases X 200,000) / (Number of hours worked by TVA employees and staff augmentation contractors) 0

Total Financing Obligations The total amount of net long-term debt (including unamortized premiums and discounts), net short-term debt, leaseback obligations, energy prepayment obligations, and variable interest entities less unbudgeted contributions to unfunded liabilities $21,249

Cash Flow from Operating Activities Net cash provided by operating activities as shown on TVA's Consolidated Statements of Cash Flows $2,707

Net Income Net income as shown on TVA's Consolidated Statements of Operations $1,010

Jobs Created and Retained The number of new or retained jobs in the Tennessee Valley for which TVA has played a role in the recruitment or retention of the economic development project 42,000-70,000

Board Level Significant Events Items (both favorable and unfavorable) that the Board deems significant and that affect TVA's reputation, organizational health, or the public at large 0

The TVA Board and the CEO will jointly qualitatively assess TVA's performance and determine the final Corporate Multiplier, which will range between 0 and 1.0, after the end of 2021.

The award for certain participants in the Winning Performance Team Incentive Plan ("WPTIP") and the Executive Annual Incentive Plan ("EAIP") may be adjusted by the participant's supervisor based on an evaluation of the participant's individual achievements and performance during the year.

In addition, awards may be further adjusted by the TVA Board or the CEO (1) as a result of any unusual or nonrecurring event affecting TVA or the financial statements of TVA or (2) as a result of changes in business conditions or the business strategy of TVA.

Establishment of LTIP Performance Measures and Goals for the 2021 - 2023 Performance Cycle

On November 13, 2020, the TVA Board approved LTIP performance measures for the 2021 - 2023 performance cycle.

These performance measures, along with their associated weights and goals, are as follows:

2021 - 2023 LTIP Performance Cycle

Performance Measure Weight Threshold

(100%) Maximum

Non-Fuel Delivered Cost of Power (1)

45% 3.62 3.48 3.34

Load Not Served (2)

30% 4.6 3.9 3.4

External Performance Indicators for TVA Nuclear Fleet (3)

15% 95.3 96.8 98.3

Customer Survey (4)

5% 67.3 71.3 75.3

Stakeholder Survey (5)

5% 75.2 77.7 80.2

(1) Non-Fuel Delivered Cost of Power = (Operating and Maintenance Expense + Base Capital Expense + Interest Expense + Other Expense) / Budgeted Electric Power Sales.

For the 2021 - 2023 LTIP performance cycle, the Non-Fuel Delivered Cost of Power measure will be calculated using an average of the 2021, 2022, and 2023 results.

(2) Load Not Served = (Percentage of Total Load Not Served) x (Number of Minutes in the Period).

The Load Not Served measure excludes events during declared major events, variances, gunfire, vandalism, and verified tornadoes and includes distributor provided load not served estimates for distributor connection point interruptions caused by TVA.

For the 2021 - 2023 LTIP performance cycle, the Load Not Served measure will be calculated using an average of the 2021, 2022, and 2023 results.

(3) The External Performance Indicators for TVA Nuclear Fleet measure is calculated using a weighted combination of key performance indicators based on standard nuclear industry definitions for station performance, with the maximum obtainable being 100 points.

For the 2021 – 2023 LTIP performance cycle, this measure will be based on 2023 results.

(4) For the 2021 - 2023 LTIP performance cycle, the Customer Survey metric will be a composite score of customer survey results based on responses to key survey questions related to the impact of customer experience on loyalty to TVA.

This measure will be calculated using an average of the 2021, 2022, and 2023 results.

(5) For the 2021 - 2023 LTIP performance cycle, the Stakeholder Survey metric will be the average score of a survey conducted among the general public, public officials, economic development leaders, and business and community leaders in the TVA service area to assess public opinion of TVA.

This measure will be calculated using an average of the 2021, 2022, and 2023 results.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The Tennessee Valley Authority Act of 1933 (the "TVA Act") provides that the Tennessee Valley Authority ("TVA") will be administered by a board of nine part-time members appointed by the President of the United States ("U.S.") with the advice and consent of the United States Senate.

The Chair of the TVA Board of Directors (the "TVA Board") is selected by the members of the TVA Board.

The Tennessee Valley Authority Act of 1933, as amended (the "TVA Act") provides that the Tennessee Valley Authority ("TVA") will be administered by a board of nine part-time members appointed by the President of the United States ("U.S.") with the advice and consent of the U.S.

The Chair of the TVA Board of Directors ("TVA Board") is selected by the members of the TVA Board.

Under the TVA Act, to be eligible to be appointed as a member of the TVA Board, an individual (i) must be a U.S.

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At least seven of the nine TVA Board members must be legal residents of the TVA service area.

Currently, TVA has nine active TVA Board members.

Currently, TVA has five active TVA Board members.

TVA Board members serve five-year terms, and at least one member's term ends each year.

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and establishes a compensation plan for employees.

The TVA Board as of November 14, 2019 , consisted of the following nine individuals with their ages and terms of office provided:

Year Current Term Began

Year Term Expires

Thompson, III, Chair (1)

Thompson assumed the Board Chair role on May 19, 2019.

(2) Although the terms of Director Lodge and Director Walter expired in May 2019, they are permitted under the TVA Act to remain in office until the earlier of the end of the current session of Congress or the date a successor takes office.

Thompson of Decatur, Alabama, joined the TVA Board in January 2018.

Since 2009, he has served as President, Chief Executive Officer ("CEO"), and chair of Corporate Billing, LLC, a commercial finance company.

Thompson previously served as the CEO of First American Bank, Alabama National Bancorporation's largest subsidiary bank, from 1999 until 2008.

From 2011 until January 2018, he was also a member of the Board of Directors of Decatur Utilities, one of TVA's local power company customers ("LPCs") .

The TVA Board as of November 16, 2020, consisted of the following five individuals with their ages and terms of office provided:

Directors Age Year Current Term Began Year Term Expires

Ryder, Chair (1)

Allen 74 2018 2021

Frazier 76 2018 2022

Kilbride 69 2019 2023

Smith 61 2018 2022

Ryder assumed the Board Chair role on August 13, 2020.

Ryder of Memphis, Tennessee, joined the TVA Board in March 2019.

He has served as a bankruptcy and election law attorney with Harris Shelton Hanover Walsh, PLLC, since 2000.

In addition, he served as General Counsel to the Republican National Committee from 2013 to 2017 and as Chairman of the Republican National Lawyers Association from 2017 to 2018.

Allen of White Plains, Kentucky, joined the TVA Board in January 2018.

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Since July 2012, he has served as President Emeritus of Georgia Oak Partners, LLC, a private equity company.

Frazier previously held a number of other executive management positions, including chair and Chief Financial Officer ("CFO") of the Chicago Stock Exchange, chair and

CEO of Danka Business Systems, a reseller of high-end photocopying equipment, president of Caremark, a pharmacy benefit management company, and COO of the Atlanta Committee for the 1996 Olympic Games.

Howorth of Oxford, Mississippi, joined the TVA Board in July 2011 and began a second term on the TVA Board in December 2015.

He is the owner of Square Books, an Oxford independent bookstore he founded in 1979.

Howorth served two terms as the mayor of Oxford, from 2001 to 2009, during which time he was chair of the authority overseeing the Oxford Electric Department.

From 2001 to 2009, he also served as a director and officer of the North Mississippi Industrial Development Association, an economic development consortium made up of power association directors and mayors of cities in 29 Mississippi counties in the TVA service area.

Frazier previously held a number of other executive management positions, including chair and Chief Financial Officer ("CFO") of the Chicago Stock Exchange, chair and Chief Executive Officer ("CEO") of Danka Business Systems, a reseller of high-end photocopying equipment, president of Caremark, a pharmacy benefit management company, and COO of the Atlanta Committee for the 1996 Olympic Games.

Kilbride of Chattanooga, Tennessee, joined the TVA Board in August 2019.

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He previously served as the president of the Home Division of Mohawk Industries after earlier holding positions with both Dean Witter Reynolds Financial Services and the New York Stock Exchange.

Lodge of Nashville, Tennessee, joined the TVA Board in December 2014.

She has served as the CEO of FSI Inc., a fulfillment and supply chain company based in Nashville, Tennessee, since March 2012.

She served as Commissioner of the Tennessee Department of Human Services from 2003 to 2011.

From 2002 to 2003, she worked on Tennessee Governor Phil Bredesen's campaign and transition team.

Lodge was National Director of GoreCorps for the Gore for President Campaign in 2000 and served as Executive Director for Kids Voting of Middle Tennessee from 1994 to 1999.

Ryder of Memphis, Tennessee, joined the TVA Board in March 2019.

He has served as a bankruptcy and election law attorney with Harris Shelton Hanover Walsh, PLLC, since 2000.

In addition, he served as General Counsel to the Republican National Committee from 2013 to 2017 and as Chairman of the Republican National Lawyers Association from 2017 to 2018.

Smith of Knoxville, Tennessee, joined the TVA Board in January 2018.

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Department of Homeland Security.

Walter of Memphis, Tennessee, joined the TVA Board in December 2014.

He is currently the President and General Manager of WREG-TV, a Memphis-based television station.

Walter has been employed by WREG-TV since 1987, and assumed his current position in 2004.

Walter was Vice President of Customer Relations for the Memphis Light, Gas and Water Division ("MLGW") from 1982 to 1987.

His prior roles at MLGW from 1980 to 1982 included Assistant to the President and Director of Personnel.

Executive Officers

TVA's executive officers as of November 16, 2020, their titles, their ages, and the date their employment with TVA commenced are as follows:

Executive Officers

Employment Commenced

President and Chief Executive Officer

Executive Vice President and Chief Operating Officer

Executive Vice President and General Counsel

Executive Vice President and Chief Financial Officer

Executive Vice President and Chief External Relations Officer

Senior Vice President and Chief Nuclear Officer

Senior Vice President and Chief Human Resource and Communications Officer

Vice President and Controller (Principal Accounting Officer)

Lyash commenced employment with TVA on April 8, 2019.

Rausch commenced employment with TVA on October 15, 2018.

Executive Officers Title Age Employment Commenced

Lyash President and Chief Executive Officer 59 2019

Thomas, III Executive Vice President and Chief Financial Officer 57 2005

Skaggs Executive Vice President and Chief Operating Officer 60 1994

Quirk Executive Vice President and General Counsel 66 2015

Rausch Executive Vice President and Chief Nuclear Officer 56 2018

Collins Executive Vice President and Chief People and Communications Officer 54 2014

Jeannette Mills Executive Vice President and Chief External Relations Officer 53 2020 (1)

Wear Vice President and Controller (Principal Accounting Officer) 52 2008

Mills commenced employment with TVA on February 3, 2020.

Lyash has served as TVA's President and CEO since April 2019.

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since June 2018.

Thomas has served as TVA's CFO since June 2010 and was also named Executive Vice President in February 2012.

He served as Executive Vice President of People and Performance from January 2010 to June 2010, as Senior Vice President, Corporate Governance and Compliance from July 2009 to January 2010, as Controller and Chief Accounting Officer from January 2008 to September 2009, and as the General Manager, Operations Business Services from November 2005 to January 2008.

Prior to joining TVA, Mr.

Thomas was CFO during 2005 for Benson Security Systems.

He was also the Controller of Progress Fuels Corporation from 2003 to 2005 and Controller of Progress Ventures, Inc.

from 2001 to 2002, both subsidiaries of Progress Energy.

Skaggs was named TVA's Executive Vice President and COO effective October 2018.

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Prior to joining Schiff Hardin, Ms.

Quirk was a partner in the Energy Group of Sullivan & Worcester LLP, and a partner in the Energy Group of Verner, Liipfert, Bernhard, McPherson and Hand, specializing in federal energy regulation, legislation, power supply transactions, and state proceedings.

Thomas has served as TVA's CFO since June 2010 and was also named Executive Vice President in February 2012.

Prior to joining TVA, Mr.

Thomas was CFO during 2005 for Benson Security Systems.

He was also the Controller of Progress Fuels Corporation from 2003 to 2005 and Controller of Progress Ventures, Inc.

from 2001 to 2002, both subsidiaries of Progress Energy.

Wardlaw was named TVA's Executive Vice President and Chief External Relations Officer in July 2014.

Wardlaw served as Senior Vice President, Customer Relations, from September 2013 to July 2014, as Executive Vice President, Customer Relations, from June 2011 to September 2013, as Executive Vice President, Enterprise Relations, from October 2010 to June 2011, as Acting Executive Vice President of Strategy and Planning from January 2010 until September 2010, as Executive Vice President of Power Supply and Fuels from July 2008 to August 2010, as Senior Vice President, Commercial Operations and Fuels from January 2007 to June 2008, as Vice President, Bulk Power Trading from September 2006 to December 2006, and as Vice President of Transmission and Reliability from December 2000 to September 2006.

Wardlaw began his career with TVA in January 1982 as an electrical engineer, and has also worked in customer service, marketing, and field services.

Quirk was a partner in the Energy

Group of Sullivan & Worcester LLP, and a partner in the Energy Group of Verner, Liipfert, Bernhard, McPherson and Hand, specializing in federal energy regulation, legislation, power supply transactions, and state proceedings.

Rausch joined TVA in October 2018 as Senior Vice President and Chief Nuclear Officer.

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Rausch has 25 years of experience in virtually all the disciplines of the nuclear power industry, including roles as Site Vice President, Plant General Manager, and Director of Engineering.

Collins joined TVA in May 2014 as Vice President of Human Resources, and she was named Senior Vice President and Chief Human Resources Officer in February 2016.

In November 2020, he was named Executive Vice President and Chief Nuclear Officer.

Collins joined TVA in May 2014 as Vice President of Human Resources, she was named Senior Vice President and Chief Human Resources Officer in February 2016, and she was named Senior Vice President, Chief Human Resources and Communications Officer in June 2019.

Before joining TVA, Ms.

Collins served as Senior Vice President of Human Resources for Constellation Energy Nuclear Group, LLC from 2009 to 2014 and as Vice President of Human Resources for Constellation Energy from 2008 to 2009.

In June 2019, she was named Senior Vice President, Chief Human Resources and Communications Officer.

In November 2020, she was named Executive Vice President, Chief People and Communications Officer to reflect the broader scope of her role.

Mills was named TVA's Executive Vice President and Chief External Relations Officer in February 2020.

Most recently, from 2017 until arriving at TVA, Ms.

Mills served as the Senior Vice President of Safety, Health, Environmental and Assurance for the U.S.

region at National Grid Group, the United Kingdom's largest investor-owned utility.

Beginning in June 2015, she served as a Commissioner on the Maryland Public Service Commission, providing regulatory oversight of gas, electric, telephone, water, sewage disposal, and transportation companies.

Mills spent 25 years of her career at Baltimore Gas and Electric, starting as an associate engineer and steadily progressing through positions of increasing responsibility to ultimately serve as Vice President, Customer Operations and Chief Customer Officer from 2008 to 2013.

Wear has served as TVA's Vice President and Controller since March 2012.

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The TVA Board has an Audit, Risk, and Regulation Committee established in accordance with the TVA Act.

TVA's Audit, Risk, and Regulation Committee consists of James R.

Thompson, III, Kenneth E.

Allen, John Ryder, and Virginia T.

Director Thompson is an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S-K under the Securities Exchange Act of 1934 (the "Exchange Act") .

TVA's Audit, Risk, and Regulation Committee consists of John L.

Ryder and William B.

Director Kilbride is an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S-K under the Securities Exchange Act of 1934 (the "Exchange Act").

TVA is exempted by Section 37 of the Exchange Act from complying with Section 10A(m)(3) of the Exchange Act, which requires each member of a listed issuer's audit committee to be an independent member of the board of directors of the issuer.

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Compensation Discussion and Analysis

The Compensation Discussion and Analysis ("CD&A") focuses on the compensation of TVA's CEO, retired CEO, CFO, and three other most highly compensated executive officers serving at the end of fiscal year 2019 .

This Compensation Discussion and Analysis ("CD&A") provides information on the objectives, goals, and structure of TVA's executive compensation program and the 2020 compensation awarded to TVA's CEO, CFO, and three other most highly compensated executive officers serving at the end of 2020.

Collectively, these officers are TVA's 2020 Named Executive Officers ("NEOs"):

Lyash, President and CEO;

Johnson, Retired President and CEO;

Thomas, III, Executive Vice President and Chief Financial Officer;

Skaggs, Executive Vice President and Chief Operating Officer;

Quirk, Executive Vice President and General Counsel;

Rausch, Senior Vice President and Chief Nuclear Officer.

On November 14, 2018, Mr.

Johnson gave notice to the Board of his intent to retire.

The Board conducted a search for a new CEO, and Mr.

Lyash was hired effective April 8, 2019.

Johnson assisted with the CEO transition and retired effective May 2, 2019.

Executive Summary

Name Title Employed with TVA since

President and CEO

Executive Vice President and Chief Financial Officer

Executive Vice President and Chief Operating Officer

Executive Vice President and General Counsel

Executive Vice President and Chief Nuclear Officer (1)

(1) Effective November 13, 2020;

formerly Senior Vice President and Chief Nuclear Officer

TVA's Unique Public Power Mission of Service

TVA is a corporate agency and instrumentality of the U.S.

that was created in 1933 by federal legislation in response to a request by President Franklin D.

TVA was created to, among other things, improve navigation on the Tennessee River, reduce the damage from destructive flood waters within the Tennessee River system and downstream on the lower Ohio and Mississippi Rivers, further the economic development of TVA's service area in the southeastern U.S., and sell the electricity generated at the facilities TVA operates.

Today, TVA operates the nation's largest public power system and supplies power to a population of nearly 10 million people.

2019 Compensation Highlights

2019 At-Risk Compensation.

Based on its annual performance and productivity, TVA rewards employees through its Winning Performance Team Incentive Plan ("WPTIP") and Executive Annual Incentive Plan ("EAIP") .

In addition, certain executives in critical positions, including the NEOs, participate in the Long-Term Incentive Plan ("LTIP").

The LTIP provides for long-term performance ("LTP") grants and long-term retention ("LTR") grants.

Similar to incentive programs at other utilities, awards under the WPTIP, EAIP, and the performance-based component of the LTIP are not part of base pay but are "at risk" and require employees to reach or exceed specific performance targets in order for payments to be earned.

For 2019 , the scorecard results for the EAIP were 116 percent of the target opportunity.

The following factors contributed to overall performance:

Achieved better than top decile safety performance (recordable incident rate);

Achieved lowest level of debt in nearly 30 years;

Maintained strong transmission reliability performance;

Helped to attract and retain approximately 66,500 jobs and over $8.9 billion in capital investment to the TVA service area.

In addition, for the three-year period ending September 30, 2019, the TVA Board-approved LTP awards to NEOs under the LTIP were 116 percent of the target opportunity primarily because of overall strong performance and financial discipline.

Throughout the 2017 - 2019 performance period, TVA accomplished the following objectives:

Strong financial performance reduced debt to the lowest level in almost 30 years and met the 10-year Long-Range Financial Plan goals in six years,

Strong transmission system reliability performances, and

Outstanding customer survey results.

2019 Compensation Adjustments.

On November 14, 2018, the TVA Board approved the compensation of CEO William Johnson for 2019.

On October 1, 2018, Mr.

Johnson's salary increased from $1,050,000 to $1,150,000.

He was awarded a LTP grant of $2,537,500 under the LTIP which would have fully vested on September 30, 2021.

He was also awarded a LTR grant under the LTIP of $1,087,500, which provided for vesting in three equal increments on September 30, 2019, 2020, and 2021.

Based on the provisions of the LTIP, Mr.

Johnson will receive prorated portions of all outstanding LTIP grants based on the date of his retirement of May 2, 2019.

On November 14, 2018, Mr.

Johnson approved compensation adjustments and grants for the following NEOs for 2019:

The salary for Mr.

Thomas increased from $628,319 to $647,169.

Additionally, Mr.

Thomas was awarded a LTP grant of $ 880,000 effective October 1, 2018, which will fully vest on September 30, 2021.

Thomas also received a LTR grant of $380,000 effective October 1, 2018, which will vest in three equal increments on September 30, 2019, 2020, and 2021.

The salary for Mr.

Skaggs increased from $520,000 to $620,000.

Additionally, Mr.

Skaggs was awarded a LTP grant of $ 980,000 effective October 1, 2018, which will fully vest on September 30, 2021.

Skaggs also received a LTR grant of $420,000 effective October 1, 2018, which will vest in three equal increments on September 30, 2019, 2020, and 2021.

The salary for Ms.

Quirk increased from $510,000 to $541,059.

Additionally, Ms.

Quirk was awarded a LTP grant of $ 685,000 effective October 1, 2018, which will fully vest on September 30, 2021.

Quirk also received a LTR grant of $290,000 effective October 1, 2018, which will vest in three equal increments on September 30, 2019, 2020, and 2021.

Rausch commenced employment at TVA effective October 15, 2018, at a base salary of $520,000.

Additionally, Mr.

Rausch was awarded a LTP grant of $ 404,250 effective October 1, 2018, which will fully vest on September 30, 2021.

Rausch also received a LTR grant of $173,250 effective October 1, 2018, which will vest in three equal increments on September 30, 2019, 2020, and 2021.

On April 8, 2019, Mr.

Lyash commenced employment as TVA’s President and Chief Executive Officer and his offer letter outlines the following compensation components:

Annual Salary of $920,000

EAIP target annual incentive opportunity of 150% of his annual salary.

He was eligible for an EAIP award for fiscal year 2019, and the amount of the award was prorated based on the number of months he was employed during the fiscal year and was based on individual and corporate performance.

LTP target grant opportunity of 220% of his annual salary.

Effective October 1, 2019, LTP grant of $2,024,000 for the three-year performance cycle ending September 30, 2021.

This grant fully vests at the end of the performance cycle.

Effective October 1, 2019, LTP grant of $2,024,000 for the three-year performance cycle ending September 30, 2022.

This grant fully vests at the end of the performance cycle.

LTR target grant opportunity of 95.2% of his annual salary.

Effective October 1, 2019, LTR grant of $876,000 for the three-year performance cycle ending September 30, 2022.

This grant vests in one-third increments annually on the applicable vesting dates:

$292,000 on September 30, 2020, $292,000 on September 30, 2021, and $292,000 on September 30, 2022.

Recruitment and relocation incentive of $1,784,000 which will vest and pay in three installments as long as Mr.

Lyash remains employed by TVA on the applicable vesting dates:

$400,000 on September 30, 2019, $1,092,000 on September 30, 2020, and $292,000 on September 30, 2021.

Sign-On Bonus of $380,000 which remains subject to certain repayment conditions.

Amendment of Compensation Plan.

On August 22, 2019, the Board approved an amended and restated compensation plan for employees ("Compensation Plan").

The changes to the plan were editorial in nature.

Among other things, the changes strengthened the description of TVA’s compensation components and updated language related to qualified and non-qualified retirement plans.

TVA is committed to achieving its mission to serve the people of the Tennessee Valley to make life better.

It does this through a focus on three core areas:

Energy, Environment, and Economic Development.

The compensation structure of TVA is developed to reinforce TVA's mission and strategic imperatives.

TVA aims to achieve its mission by attracting, retaining, and motivating highly qualified and committed executives to guide the organization's strategy and performance.

that was created in 1933 by federal legislation to provide integrated resource management of the Tennessee Valley while improving the lives of the people in the region.

This congressional statute mandates a primary objective of providing reliable energy at rates that are as low as feasible;

managing natural resources responsibly;

and promoting economic development.

The Consolidated Appropriations Act of 2005 altered the TVA Act in several key areas designed to more closely align TVA with other corporate entities, including changing its Board structure, providing for a CEO, requiring TVA to follow Securities and Exchange Commission reporting requirements, and requiring that compensation be based on prevailing compensation for similar positions in investor-owned companies as well as governmental entities.

TVA's operational and financial performance have considerably improved since the transition to its current governance structure.

TVA PUBLIC POWER MISSION - TO SERVE THE PEOPLE OF THE TENNESSEE VALLEY TO MAKE LIFE BETTER

Today, TVA operates the nation's largest public power system and is one of the largest U.S.

utility companies in terms of generating capacity.

However, TVA's "Public Power" mission sets it apart from its investor-owned peers:

as an instrumentality of the federal government, its mission is to serve the people of the Tennessee Valley.

Profits do not go to shareholders, but rather are reinvested back into the Tennessee Valley community and the energy infrastructure that powers it.

In doing so, no American tax dollars are used:

TVA is self-funded, with virtually all its operations funded through revenue and power system financings .

Complexity and Scale Comparable to Investor-Owned Utilities

TVA supplies reliable power over more than 16,000 miles of transmission lines to a population of approximately 10 million people over nearly 80,000 square miles in seven states, employs nearly 10,000 people, and helps recruit and retain billions of dollars in economic development and environmental stewardship projects annually.

The complexity, scale, and scope of its utility operations rival those of the largest U.S.

utility companies.

Unlike most of its peers, TVA is also responsible for managing and caring for many of the natural resources, including public lands and waters, in the Tennessee Valley region.

Delivering reliable, low cost, clean energy

Largest Public Power Provider

In the United States

Summer Net Capacity

2nd Largest Transmission System

In high voltage lines among United States utilities

More than 16,000 miles of high voltage lines and

69 interconnections with neighboring electric systems

3rd Largest Electricity Generator

In the United States, based on 2019 Total

Electric Generation

3rd Largest Nuclear Fleet

In the United States, providing over 40 percent of the energy produced by TVA

29 Power-Generating Dams with 109 Units

3rd Largest Pumped-Storage Hydro Plant

In the United States, capable of producing 1,635 megawatts of net summer capability on demand

Generating Assets

– Three nuclear sites

– Five coal-fired sites

– 29 hydroelectric sites

– One pumped-storage site

– Nine combustion turbine gas sites

– Eight combined cycle gas sites

– 14 solar energy sites

Partnering with 153 Local Power Companies,

Every Day We Serve

Approximately

10 Million People Served

Over 750,000 Businesses

Including 56 large corporations and federal installations

Across Seven States

Managing Large, Complex Operations Safely

2020 Was One of TVA's Safest Years on Record

Caring for our region's natural resources

Hydroelectric and non-power providing 5,394 MW

summer net capability

Approximately

100 Public Recreation Areas

The Tennessee River

to provide year-round navigation, flood damage reduction,

and affordable and reliable electricity

40,000 Miles of Rivers, Streams, and Tributaries

11,000 Miles of reservoir shoreline

293,000 Acres of reservoir land

650,000 Surface Acres of reservoir water

Water Source for more than

Five Million People

Using 10 Billion Gallons in the Valley every day

Economic Development

Creating sustainable economic growth

Over $45.4 Billion Capital Investment in Tennessee Valley

over the last five years, creating and retaining approximately 341,000 jobs

Nearly 10,000

Rural Development

Rural Leadership Institute / Rural Certified Communities

Technical Services

Site evaluations and master planning, 3D renderings, video, photography, and virtual reality

Workforce Analytics Company Research

Support communities in fulfillment of information for company prospects

Telework Technology Grant

Assistance for rural or economically distressed communities to enhance technology capabilities that support remote work opportunities

Product Development

Financial support for communities to make sites and buildings more marketable for companies to locate and grow

Training & development, facilitation services, leadership training, workforce training, and young talent development

Attracting Experienced Talent Requires Competitive Pay

Talent matters, because of its high value and scarcity.

Attraction and retention of talent is paramount to TVA given its complex operations and performance expectations.

This important component of TVA's strategy was incorporated in the TVA Act through the requirement of competitive compensation in the Consolidated Appropriations Act of 2005.

In order to fulfill its public power mission in the most effective way possible, TVA must provide market-based, competitive compensation levels to deliver superior performance and execute ambitious multi-year objectives aligned with TVA's public power mission.

TVA is one of the largest and most complex organizations in the energy services industry, with generating capacity, assets, and customer counts that surpass most of its peers.

While TVA's revenue is below the median of its peer group, this is reflective of TVA's success with regard to its public service mission as one of its primary objectives is to maintain the lowest feasible rates.

As noted in "Delivering Value Through Superior Performance" below, TVA's rates are below the vast majority of the top U.S.

Unique to TVA, the company is also responsible for managing the Tennessee River system to provide flood control, navigation, hydroelectric generation, recreation, water quality and supply, and other benefits.

Further, TVA plays the critical role of attracting and allocating a significant amount of capital back into the economic development of the Tennessee Valley.

TVA successfully manages all of this with an employee count below the median employee count of its peers, demonstrating a comparatively greater efficiency.

TVA WELL-POSITIONED AGAINST PEERS*

*For information on peer group see "Compensation Setting Process Demonstrates Strong Governance - TVA Competes with Peers for Talent" below

(1) Based on data from the consecutive four quarters ending June 30, 2019 (data source S&P's Capital IQ)

(2) Based on data from the consecutive four quarters ending June 30, 2019 (data source S&P's Capital IQ)

(3) Based on preceding fiscal year end as of October 2019 (data source S&P's Capital IQ)

(4) Estimated as of October 2019 (data source SNL Energy)

(5) As of October 2019 (data source SNL Energy)

Given the nature and scale of its operations, TVA competes with large investor-owned utilities to attract and retain talent.

In fact, over 70 percent of TVA executives that were externally recruited over the last five years are former employees of investor-owned utilities .

Three of TVA's five NEOs, including its CEO, were formerly employed by investor-owned utilities.

TVA's ability to compete with these organizations for talent has yielded success for TVA and its stakeholders.

Delivering Value Through Superior Performance

TVA's success is measured in terms of value delivered to the businesses, customers, and residents of the Tennessee Valley by providing low-cost energy, maintaining reliable, safe, and efficient infrastructure, investing in the community's economy, and managing and protecting its environmental assets.

As shown below, TVA has executed on this objective year after year, making a positive impact on all of its stakeholders.

Under the leadership of TVA's NEOs, TVA's employees delivered another year of performance improvements – and achieved or exceeded original 2020 plan objectives – despite the significant challenges arising from the COVID-19 pandemic.

Value Delivered to Partners and Customers Low Rates

• Residential rates lower than 70 percent of the top 100 U.S.

utilities (based on U.S.

Energy Information Administration ("EIA") data for CY 2019)

• Industrial rates lower than 90 percent of the top 100 U.S.

utilities (based on EIA data for CY 2019)

• Effective wholesale rates held flat, stable, and low for past seven years and through next decade

Reliable Energy

• 99.999 percent transmission reliability since 2000

Strong Partnerships

• COVID-19 Pandemic Support

– Made $1.0 billion of credit support available to local power companies ("LPCs")

– Provided regulatory relief and flexibility to LPCs

– Approved a $200 million Pandemic Relief Credit that will apply to service provided to TVA's LPCs, their large commercial and industrial customers, and TVA's directly served customers as a 2.5 percent monthly base rate credit during 2021

– Created Back-to-Business Credit Program with approximately $10 million in incentives to help large customers return to work at pre-pandemic levels

• Returned $163 million in bill credits to local power companies participating in Long-Term Partnership Agreements in 2020

TVA Strength and Stability

• Reduced total financing obligations ("TFO") to $21.4 billion, the lowest level in 30 years

• Organization and operations entirely self-funded since 1999

Value Delivered to the Community Economic Development

• Named Top Utility in Economic Development by Site Selection Magazine for 15th year in a row

• Attracted or allocated more than $45.4 billion in investment into the Tennessee Valley in the last five years, with more than $8.6 billion of that in 2020 alone

• Responsible for approximately 341,000 jobs attracted or retained in the Tennessee Valley in the last five years, with approximately 67,000 of those added in 2020 despite the COVID-19 pandemic headwinds

• Supported rural communities with nearly half of TVA economic development projects tailored to meet the needs of these areas

• Contributed nearly $552 million in tax equivalent payments to states and local governments in 2020 (excluding impacts from tax equivalents related to fuel cost adjustments)

Community Organization Support

• Supported community organizations and education in the Tennessee Valley with more than $3 million in corporate giving and grants

• Distributed more than one million meals to families in need in 2020 through TVA's partnership with Feeding America

COVID-19 Pandemic Support

• Created Community Care Fund that has already provided over $2 million to charitable and community organizations, with an additional $2 million available

National Defense

• Proudly supports national defense efforts and partners with Oak Ridge National Laboratory on cutting-edge research

Value Delivered to Employees Safety-Focused Operations

• Top decile performance in 2020 for both TVA's Serious Injury Rate and Recordable Injury Rate

– One of TVA's best safety performance years on record

• Invested in innovative trend tracking technology and employee engagement and oversight to continuously improve safety performance

Pay for Performance

• Above target at-risk incentive payouts awarded to employees for achieving company performance goals in 2020

Inclusive Culture

• Ranked as Top 10 Employer for U.S.

military veteran support in the workforce - military veterans comprise nearly 20 percent of the TVA workforce

• TVA Employee Resource Groups received a 2020 Diversity Impact Award from the Association of ERGs and Councils

• Recognized as a 2020 Leading Disability Employer

• Ranked on Forbes list of America's Best Employers for 2020 and ranked No.

2 employer in Tennessee

Training and Education

• Invested in TVA's employees through training and performance improvement programs

COVID-19 Pandemic Support

• Established TVA Employee Relief Fund to support employees adversely impacted by the COVID-19 pandemic and natural disasters

Strong Labor Partnerships

• Employees and contractors are represented by 17 different labor union groups

• Extended agreements with the Trades and Labor Council for Annual Employees and North America's Building Trades Unions for 10 year periods

Value Delivered to the Public and the Environment Sustainability

• $15 billion in cleaner, more diverse energy generation mix since 2013

• Contracted additional solar that increased total operating and contracted capacity approximately 70 percent in 2020

• Nearly 50 percent more renewable energy generation than TVA's closest regional peer

• Increased carbon-free power supply mix to 57 percent for the year ended September 30, 2020 (nearly 59 percent including the impact of TVA's energy efficiency programs)

• For CY2019, TVA's emissions of carbon dioxide were at a 55 percent reduction from 2005 levels

Power Supply Mix by Source*

*Chart depicts both generated and purchased power within respective resource types.

In addition to power supply sources

included here, TVA offers energy efficiency programs that effectively reduced 2020 energy needs by about 2,300 GWh or 1.5%.

• Programs and Partnerships

– Exploring grid-scale, battery energy-storage systems, the first of which TVA expects to install in eastern Tennessee and expects to store 40 megawatt hours of energy with enough power to run more than 11,000 homes for three hours

– Established annual carbon reduction awards for top performing and most-improved companies across the Tennessee Valley

– TVA offers green programs in partnership with LPCs which allow businesses and individuals to purchase renewable energy certificates to meet their renewable energy and sustainability goals

• Published first TVA Sustainability Report in 2020

Effective Resource Management

• Prevented over $9.5 billion in potential flood damage over TVA's recorded history, with approximately $1.0 billion in potential flood damage averted in 2020 despite it being the wettest year on record

• Provides both conservation and responsible recreation, and serves as a driver for nearly $12.0 billion of annual economic activity across the Tennessee Valley each year

Public Power Mission Means Exceptional Performance with Conservative Compensation

As noted above, TVA's workforce has consistently performed at a high level in managing TVA's extensive, complex operations and delivering on its public power mission.

2020 was no exception despite the headwinds created by the COVID-19 pandemic.

As a result of its high level of performance, TVA was able to fund annual and long-term incentives above target for 2020 - at 137 percent and 129 percent , respectively, of target payout.

TVA is a utility company that competes with other utilities - including investor-owned utilities - for talent, but since TVA is a mission-based organization, TVA compensates its executives conservatively relative to its compensation peers.

In particular, TVA's CEO is currently compensated below the 25th percentile of 2020 compensation peers.

TVA's performance along with its compensation structure results in differentiated value delivered directly to the residents of the Tennessee Valley and reflects a keen focus on TVA's mission of serving those residents.

TVA's Executive Compensation Philosophy

TVA's mission is to serve the people of the Tennessee Valley to make life better.

TVA aims to achieve its mission by attracting, retaining, and motivating highly qualified and committed executives to guide the organization's strategy, performance, and public power mission.

TVA follows a Compensation Plan as adopted by the TVA Board in accordance with the guidance of the TVA Act.

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• Provide market-based, competitive compensation levels so TVA can attract, retain, and motivate highly competent employees.

Target total direct compensation generally is determined by reference to the 50th percentile of the relevant labor market, although some positions are determined by reference to up to the 75th percentile based on labor market scarcity and other issues.

Reward employees for performance.

A substantial portion of executive pay, including pay for the NEOs, is tied to performance improvement.

As illustrated in the charts below, at least half of each NEO's target total direct compensation opportunity is delivered through performance-based incentive programs.

Align the organization's short-term and long-term goals and objectives with compensation opportunities by providing a mix of salary and performance-based short-term and long-term incentives.

Target total direct compensation generally is determined by reference to the 50th percentile of the relevant labor market.

Executives may be positioned above or below the median based on labor market scarcity and other factors such as tenure in the role.

• Set performance goals that are aligned with TVA's strategic priorities .

• Incentivize and reward short-term and long-term performance by providing a mix of salary and performance-based short-term and long-term incentives.

• Align performance and productivity improvement at all levels by setting consistent performance goals and objectives for all levels of the organization.

The TVA Board follows these requirements of the TVA Act in designing and implementing its Compensation Plan:

Compensation will be based on an annual survey of benchmark compensation for similar positions in private industry, including engineering and electric utility companies, publicly-owned electric utilities, and federal, state, and local governments;

• Compensation will be based on an annual survey of benchmark compensation for similar positions in private industry, including engineering and electric energy companies, publicly-owned electric companies, and federal, state, and local governments;

• Compensation will take into account education, experience, level of responsibility, geographic differences, and retention and recruitment needs.

Authority for the Executive Compensation Program

TVA's Executive Compensation Program Aligns Pay with Performance

Nearly two-thirds of the CEO's target direct compensation is performance-based and/or at risk, based on achievement of performance goals that further advance TVA's mission and strategic objectives.

More than half of the other NEOs' target direct compensation opportunity is performance-based and at risk.

This alignment of compensation with performance also results in compensation being aligned with value delivered to TVA's stakeholders, including LPCs, businesses, communities, and the economy of the Tennessee Valley.

CEO (LYASH) TARGET DIRECT

COMPENSATION MIX OTHER NEO TARGET DIRECT

COMPENSATION MIX

2020 CEO Target Total Direct Compensation Is Well Below Peer Median

The TVA Act requires competitive, market-based executive compensation.

Many of TVA's peers, with similarly complex and large-scale operations, are large, investor-owned utilities.

The TVA Board considers TVA's federal agency status in setting compensation components and pay levels, in both a direct and indirect manner.

This is done directly by incorporating government agencies into the executive compensation survey sample used to develop benchmarks, as required by the TVA Act.

Total Direct Compensation at Target is

of 2020 market composite data

Although the TVA Board moved Mr.

Lyash's pay closer to the median in 2020, its compensation decisions resulted in positioning his pay below the 25th percentile of the 2020 market composite.

The use of benchmarking data is described in detail under "Compensation Setting Process Demonstrates Strong Governance – TVA Competes With Peers For Talent" below.

The graphic below illustrates the variance between 2020 target total direct compensation for the CEO and the average 2020 target total direct compensation for the other NEOs, and the 2020 market composite 50th (median) and 25th percentiles.

CEO Compensation at a Glance

ACTUAL 2020 TOTAL DIRECT COMPENSATION EARNED

ANNUAL PERFORMANCE INCENTIVE

under Executive Annual Incentive Plan

137 percent of target enterprise performance achieved

1.10x Individual Multiplier applied

LONG-TERM RETENTION INCENTIVE (1)

2020 tranche of 2020 Long-Term Retention Award

Lyash's long-term incentives earned in 2020 reflect a partial long-term incentive award.

Lyash joined TVA in 2019, he did not vest in any long-term performance award in 2020, and while executives typically have three overlapping retention awards (granted annually with ratable vesting over three years subject to continued employment), Mr.

Lyash only had one such award outstanding in 2020.

Total Direct Compensation earned reflects the decisions made by the Committee at the end of 2020 to reward NEOs for past performance.

Lyash's leadership in his first full year as CEO, TVA has made meaningful progress on improving its Public Power mission.

The company's outperformance under key operational metrics strengthened TVA's ability to deliver low-cost and reliable energy to the Tennessee Valley.

2020 objectives were established in 2019 and despite challenges presented by the COVID-19 pandemic, TVA achieved or exceeded nearly all targeted objectives, delivering high operational, safety, and financial strength performance for 2020.

As a result of TVA's 2020 achievements, eligible TVA employees were rewarded with payouts under TVA's annual incentive plans.

KEY COMPANY PERFORMANCE METRICS

Metric(1) Target

Performance Actual

Performance Performance Against Target

TVA Total Spend ($M) (2)

$4,847 $4,441 Exceeded stretch goal

Load Not Served (System Minutes) 3.9 2.7 Exceeded stretch goal

Annualized Nuclear Unit Capability Factor 90.9 % 90.0 % Exceeded threshold goal despite challenges

Combined Cycle Equivalent Availability Factor 77.6 % 84.0 % Exceeded target goal

Coal Equivalent Availability Factor 61.8 % 79.4 % Exceeded target goal;

ahead of 5-year plan for coal fleet

(1) See "2020 Performance Goals and Performance Achievement" below for further information on each performance metric.

(2) Total Non-Fuel Operating and Maintenance, Capital, Non-Fuel Inventory, and Cloud Implementation expenses for corporate and operational Strategic Business Unit organizations (excludes Board of Directors).

2020 TARGET TOTAL DIRECT COMPENSATION OPPORTUNITY GRANTED BELOW MARKET

Target Total Direct Compensation opportunity is forward-looking – it represents potential compensation set by the Committee at the beginning of 2020 to incentivize superior performance.

Some of the $6 million opportunity was earned in 2020 (salary, annual performance award and 1/3 of the long-term retention award) while most will not be earned until future satisfaction of performance or employment conditions:

Lyash will earn the long-term performance award component only upon achievement of certain performance targets at the end of the three-year performance period (September 30, 2022), and he will receive the second and third tranches of the long-term retention award opportunity only upon his continued employment on each of September 30, 2021 and September 30, 2022.

See "2020 Performance Goals and Performance Achievement" below for more information on long-term incentives.

There is no minimum payment guaranteed under the annual and long-term performance awards.

The amount that he will receive upon the vesting of those awards will be determined at the end of the performance periods and depends on the level of performance against preset performance goals.

OTHER COMPENSATION

Lyash was paid $1,092,000 in 2020 as the second tranche of a deferred cash recruitment and relocation incentive award under his employment offer letter.

This deferred cash incentive award was intended to compensate him for amounts he forfeited from his previous employer in order to join TVA, as well as to provide some measure of substitute compensation in light of his not being eligible to receive any long-term performance incentive payments until September 2021.

Compensation Setting Process Demonstrates Strong Governance

Who Is Involved In Setting Compensation

The TVA Board, under the authority of the TVA Act, has responsibility for establishing compensation for TVA employees, including the NEOs.

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Under the authority of the TVA Act, the TVA Board, its People and Performance Committee (the "Committee"), and individual TVA Board members are involved in compensation matters.

The TVA Board has delegated to the CEO the authority to approve, or delegate to others the authority to approve, all personnel and compensation actions for which the TVA Board is responsible but has not reserved for itself.

In addition, the TVA Board has taken the following actions to delegate authority with respect to executive compensation:

The TVA Board has taken the following actions to delegate authority with respect to executive compensation:

• The TVA Board has delegated to the TVA Board Chair, in consultation with the Committee and with input from individual members of the TVA Board, the authority to evaluate and rate the CEO's performance during the year, and the authority to approve any payout to the CEO under the EAIP, based on, among other things, the CEO's evaluated performance during the year.

The TVA Board has authorized the CEO to set or adjust compensation for present or future direct reports within compensation ranges of 80 percent to 110 percent of the target total direct compensation for comparable positions, as well as to approve the parameters under which such executives may participate in certain supplemental benefit plans such as TVA's Supplemental Executive Retirement Plan ("SERP") , provided that the CEO may not finally set or adjust such compensation until the TVA Board members have been notified of the proposed compensation and given the opportunity to ask the Committee, or the full TVA Board, to review the proposed compensation before it becomes effective.

• The TVA Board has authorized the CEO to set or adjust compensation for present or future direct reports within a compensation range of 80 percent to 110 percent of the target total direct compensation, as well as to approve the parameters under which such executives may participate in certain supplemental benefit plans such as TVA's Supplemental Executive Retirement Plan ("SERP"), provided that the CEO may not finally set or adjust such compensation until the TVA Board members have been notified of the proposed compensation and given the opportunity to ask the Committee, or the full TVA Board, to review the proposed compensation before it becomes effective.

• The TVA Board has delegated to the CEO, in consultation with the Committee and with input from individual members of the TVA Board, the authority to approve the individual performance goals for the CEO's direct reports and the authority to evaluate and rate the performance of the CEO's direct reports during the year against such performance goals.

TVA Board Committee Oversight

The Committee was responsible for oversight of executive compensation pursuant to the Compensation Plan, review of this Compensation Discussion and Analysis, and review of performance goal achievement for 2019.

As delegated by the TVA Board, the Committee also (1) reviewed proposed CEO actions to set or adjust compensation for his direct reports, (2) consulted with the TVA Board Chair about the Chair's proposed evaluation and rating of the CEO's performance during the year and about the proposed payout to the CEO under the EAIP, and (3) consulted with the CEO on the proposed individual performance goals and evaluation and performance ratings for the CEO's direct reports for the year.

The Committee used the independent consulting firm Frederic W.

• The TVA Board has delegated to the CEO the authority to approve, or delegate to others the authority to approve, all personnel and compensation actions for which the TVA Board is responsible but has not reserved for itself.

• The Committee is responsible for oversight of executive compensation pursuant to the Compensation Plan and review of this Compensation Discussion and Analysis.

Role of Compensation Consultant

The Committee engaged the independent consulting firm Frederic W.

Cook & Co., Inc.

("FW Cook") in 2019 to help evaluate competitive compensation.

("FW Cook") in 2020 to determine the peer group and the benchmarking process, and to help evaluate competitive compensation.

The Committee assessed certain independence factors and determined the firm's work raised no potential conflict of interest.

Assessment of Risk

TVA's Enterprise Risk Management Organization, in coordination with other members of TVA's management, including Human Resources and Total Rewards, conducts an annual assessment of enterprise level risks which includes considering risks arising from TVA's compensation policies and practices, in order to identify any risks that are reasonably likely to have a material adverse effect on the organization and its achievement of its strategic goals and objectives.

Based on the results of this assessment, no risks were identified with the compensation policies and practices that are reasonably likely to have a material adverse effect on TVA's achievement of its strategic goals and objectives.

The following chart sets forth the roles of the TVA Board, Board Chair, Committee, and CEO in setting compensation for the NEOs.

What When How

Compensation Governance Typically April – Committee reviews and evaluates independent compensation consultant.

– Committee reviews TVA Compensation Plan, peer group, and benchmarking process and recommends any changes to the TVA Board.

Typically August – TVA Board reviews and approves any changes.

(WPTIP/EAIP) Typically October – CEO evaluates and assesses performance results compared to target goals.

– CEO recommends corporate multiplier (reviewed by the Committee) for TVA Board approval.

Typically October -

November – Committee reviews and recommends to the TVA Board.

Typically November – TVA Board reviews and approves.

Incentive Plan

("LTIP") Typically October – CEO evaluates performance and recommends LTIP payout percentage (reviewed by Committee) for TVA Board approval.

Typically October -

November – Committee reviews and recommends LTIP payout percentage.

Typically November – TVA Board reviews and approves the LTIP payout percentage.

– The TVA Board has the discretionary authority to review the results of performance measures and goals and to approve any adjustments to payouts in appropriate circumstances.

Executive Schedule ("ES") Level IV Typically October -

November – The list of employees (excluding CEO and Inspector General ("IG")) whose salaries would be above ES Level IV is made available to the Committee and other TVA Board members.

– Proposed delegation for the CEO to approve the list is reviewed prior to presentation for TVA Board approval.

Typically November – TVA Board approves, on recommendation of CEO, the salaries of employees (excluding CEO and IG) whose annual salary would be above ES Level IV ($170,800 for 2020).

– Approval of employee list has been delegated annually to CEO (2008 – 2020).

Adjustment Typically October – Committee reviews the compensation consultant's benchmarking and market analysis report.

– Committee decides whether to recommend compensation adjustments for the CEO (recommends to the full TVA Board, if applicable).

Typically November – TVA Board reviews and approves at the November Board meeting, if applicable.

Goals Mid-July to

September 30 – Board Chair reviews and discusses with CEO performance goals for the next fiscal year.

– Board Chair consults with appropriate TVA Board committee.

– Board Chair solicits input from individual TVA Board members.

Evaluation September – October – Individual TVA Board members complete CEO performance assessment and return to Compensation.

– Compensation summarizes comments and information and presents to the Board Chair.

– Board Chair consults with Committee.

– Board Chair informs EVP, Chief People and Communications Officer he/she has:

• Evaluated the CEO's performance

• Determined the EAIP award

– Board Chair and Committee Chair jointly inform CEO of his/her performance evaluation.

CEO Executive Annual Incentive Plan ("EAIP") Award Typically October – Board Chair obtains input from TVA Board members, consults with Committee, and approves any payout, or adjustments to payout, to the CEO under the EAIP.

– Informs EVP, Chief People and Communications Officer via memo.

Compensation Discussion and Analysis ("CD&A") August – November – Committee reviews and recommends inclusion in TVA's Annual Report on Form 10-K.

CEO Direct Reports Typically October – Committee receives and discusses CEO direct reports' performance report and compensation.

CEO Direct Report ("DR") Compensation October/November – CEO determines compensation adjustments for CEO direct reports.

The TVA Board has delegated this responsibility to the CEO for the CEO direct reports within an approved range (80-110 percent of market total direct compensation).

– CEO reviews CEO direct reports performance with Committee and informs TVA Board members of compensation adjustments under consideration prior to approving the compensation adjustments.

– CEO notifies EVP, Chief People and Communications Officer of approved compensation adjustments via memo.

TVA Competes with Peers for Talent

A fundamental goal of TVA's executive compensation program is to attract, retain, and motivate the highly competent talent necessary to manage TVA's complex operations and achieve superior performance.

TVA competes for this talent with large investor-owned energy companies, and thus TVA needs to offer compensation programs that are competitive with those peers.

Use of Market Data and Benchmarking

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• Assess target compensation level and incentive opportunity competitiveness;

Determine appropriate target compensation levels and incentive opportunities to maintain the desired degree of market competitiveness.

The relevant labor market for most of TVA's executives, including the NEOs, consisted of both private and publicly-owned companies in the energy services industry of similar revenue and scope to TVA.

TVA's peer group is reviewed on an annual basis.

For the survey-based analysis, TVA referenced a sample from the 2018 Willis Towers Watson Energy Services Executive Compensation Database consisting of (i) 28 investor-owned utilities with revenues greater than or equal to $3 billion plus (ii) five additional government entities.

• Determine appropriate target compensation levels and incentive opportunities to maintain the desired degree of market competitiveness taking into consideration other factors such as experience, skill set, performance, and internal parity.

The relevant labor market for most of TVA's executives, including the NEOs, consists of both private and publicly-owned companies in the energy services industry that have similar revenue and scope as TVA.

Each year, the TVA Board's compensation consultant recommends a peer group for approval by the Committee.

For 2020 compensation opportunities, TVA's market data was determined based on a review of executive compensation survey data and proxy peer group data.

For the survey-based analysis, TVA referenced a sample from the 2019 Willis Towers Watson Energy Services Executive Compensation Database consisting of (i) 27 investor-owned utilities with revenues greater than or equal to $3.0 billion plus (ii) four additional government entities.

Data from this sample were further regressed to TVA's size based on revenue.

For NEO roles, the survey analysis was supplemented with public compensation data from a separate proxy peer group of investor-owned utilities.

TVA approximated the median of this proxy group in terms of revenue.

The Committee reviews the proxy peers annually to ensure continued appropriateness, including comparable business content and model, company size measured primarily by revenue and assets, and other refining factors such as generating capacity, number of employees, and number of customers.

When making compensation decisions for 2020, the Committee reviewed peer group data, which is shown below.

At that time, TVA was centrally-positioned within the current peer group:

the primary financial metrics, revenue and assets, are positioned near the median, while secondary metrics are balanced, with generating capacity above the 75th percentile, customers near the 75th percentile, and employee count near the 25th percentile.

TVA REVENUE VS PEERS (1)

TVA ASSETS VS PEERS (2)

GEN CAPACITY VS PEERS (3)

TVA EMPLOYEE COUNT VS PEERS (4)

TVA CUSTOMER COUNT VS PEERS (5)

(1) Based on data from the consecutive four quarters ending June 30, 2019 (data source S&P's Capital IQ)

(2) Based on data from the consecutive four quarters ending June 30, 2019 (data source S&P's Capital IQ)

(3) Based on preceding fiscal year end as of October 2019 (data source S&P's Capital IQ)

(4) Estimated as of October 2019 (data source SNL Energy)

(5) As of October 2019 (data source SNL Energy)

For executives with both proxy and survey benchmarks, competitive comparisons were made relative to a "market composite" or an average of the survey and proxy data.

List of Compensation Peer Companies

The following chart outlines the companies that constituted the survey sample and proxy peer group used to benchmark NEO compensation for 2020:

Investor Owned Utilities with Revenue Greater than or Equal to $3 Billion Which Participated in 2018 Willis Towers Watson Energy Services Survey

Government Entities Which Participated in 2018 Willis Towers Watson Energy Services Survey

Proxy Peer Group of Investor Owned Utilities

Alliant Energy

Company Investor Owned Utilities

with Revenue Greater

than or Equal to $3.0 Billion

Which Participated in

2019 Willis Towers

Watson Energy Services

Survey Government Entities

Which Participated in

2019 Willis Towers

Watson Energy Services

Survey Proxy Peer Group

of Investor Owned

Alliant Energy n

American Electric Power Co., Inc.

Calpine Corp.

CenterPoint Energy, Inc.

CMS Energy Corp.

Consolidated Edison

Dominion Energy

Consolidated Edison n n

Dominion Energy n n

DTE Energy Co.

Duke Energy Corp.

Edison International

Energy Northwest

Edison International n n

Energy Northwest n

Entergy Corp.

Eversource Energy

Eversource Energy n n

FirstEnergy Corp.

New York Power Authority

NextEra Energy, Inc.

Omaha Public Power

Omaha Public Power n

Pacific Gas and Electric Co.

Pinnacle West Capital

Pinnacle West Capital n

Public Service Enterprise Group Inc.

Salt River Project

Sempra Energy

Southern Company

Vistra Energy

Salt River Project n

Sempra Energy n n

Southern Company n n

Vistra Energy n n

Xcel Energy n n

Assessment of Risk

2020 Executive Compensation Program Components

The primary compensation program components for 2019 for the NEOs are summarized in the diagram below and are briefly described in the table and the narrative that follow the diagram.

Primary Compensation Program Components for Named Executive Officers in 2019

Total Direct Compensation

In setting executive compensation each year, the Committee focuses on Total Direct Compensation ("TDC"), which includes those compensation elements that incentivize future performance or reward past performance.

TDC is comprised of annual salary, annual incentive award under the Executive Annual Incentive Plan ("EAIP"), Long-Term Performance ("LTP") award, and Long-Term Retention ("LTR") award.

Each year, two key compensation decisions are made with respect to NEO compensation:

(1) the amount of the TDC opportunity to grant, which is forward-looking, incentivizes the NEO to perform, and is determined towards the beginning of the fiscal year, and (2) the amount of TDC earned, which rewards the NEO for prior performance and (other than salary) is determined at the end of the year.

The TDC components and weightings for TDC opportunities granted to the NEOs in 2020 are summarized below and described in the sections that follow.

Since TVA is a governmental entity that issues no equity, all direct compensation is denominated and paid out in cash.

Compensation Component

And % of Target Total

Direct Compensation Objective Key Features

Annual Salary

2 unchanged sentences

• Typically reviewed annually to consider changes in benchmark salaries and/or exceptional individual merit performances.

Executive Annual Incentive Plan (EAIP)

Incentivizes performance by providing at-risk compensation tied to attainment of pre-established performance goals for the fiscal year

- Annual incentive payouts are based on the results of established goals of an enterprise scorecard, as determined from year to year by the TVA Board or the CEO, as applicable.

• Annual incentive payouts are based on the results of enterprise goals as determined from year to year by the TVA Board or the CEO, as applicable.

Annual incentive payouts may be impacted by a corporate multiplier or adjusted by the TVA Board or CEO, as applicable, based on the evaluation of performance during the year.

1 unchanged sentence

• Typically reviewed annually to consider changes in benchmark annual incentives.

Incentivizes performance and retention by providing performance-based and retention-based grants that are tied to a vesting schedule

Long-Term Incentive Plan (LTIP)

• Participation is limited to key positions that have the ability to significantly impact the long-term financial and/or operational objectives critical to TVA's overall success.

• LTP awards are granted annually with a three-year vesting cycle.

Awards are variable at-risk opportunities based on achieved level of performance (i.e., scorecard results for the three-year performance period).

Awards are variable at-risk opportunities based on achievement against performance goals established at the beginning of the three-year performance period.

• The Committee's policy is for approximately 70 to 80 percent of each executive's total long-term incentive opportunity to be in the form of performance-based awards

• LTR awards may be granted annually and will vest and pay out in three equal increments annually over three years, subject to the participant being employed through such dates, but are payable upon death or disability if earlier on a pro-rated basis.

Retirement Plans

(Qualified Plans and SERP)

Provides compensation beginning with retirement or termination of employment (if vesting requirements are satisfied) with enhanced compensation for certain executives to provide an additional incentive for hiring and retention of qualified individuals

- Broad-based plans available to full-time employees of TVA that are qualified under Internal Revenue Service ("IRS") rules and are similar to the qualified plans provided by other companies in TVA's peer group.

- Certain executives in critical positions also participate in a non-qualified pension plan that provides supplemental pension benefits at compensation levels that are higher than the limits specified by IRS regulations for qualified pension plans.

These supplemental benefits are comparable to those provided by other companies in TVA's peer group.

Annual salary is determined by reference to the median (50th percentile) for similar positions at other companies in TVA's peer group or above the median (50th to 75th percentile) for positions affected by market scarcity, recruitment and retention issues, and other business reasons.

In general, salary is reviewed annually with increases awarded based on prior year performance, the executive's role and responsibilities, and to bring salaries into alignment with the market.

The salaries of the NEOs for 2019 and 2018 were as follows:

Percent Change

(1) All 2019 salary changes were effective on October 1, 2018.

Lyash commenced employment with TVA on April 8, 2019 and Mr.

Rausch commenced employment with TVA on October 15, 2019.

Skaggs was named TVA's Executive Vice President and COO effective October 2018 and received a promotional compensation adjustment.

Annual Incentive Compensation.

All executives, including the NEOs, participate in the EAIP.

• Since TVA issues no equity, TVA offers retention awards to be competitive with the industry marketplace for talent, providing a retention incentive similar to restricted stock or restricted stock units.

These grants are intended to encourage executives to remain with TVA and to provide, in combination with salary, EAIP, and LTP grants, a competitive level of total direct compensation.

• The Committee's policy is for approximately 20 to 30 percent of each executive's total long-term incentive opportunity be retention-oriented.

Long-Term Performance Award (LTP)

Incentivizes performance by providing at-risk compensation tied to attainment of pre-established performance goals over a three-year performance period

Long-Term Retention Award (LTR)

Incentivizes retention by providing retention-based grants that are tied to a three-year vesting schedule

Setting Competitive Compensation Amounts and Opportunities Relevant to Labor Market

Annual salary is determined by reference to median (50th percentile) for similar positions at other companies in TVA's peer group.

Reference above the median (50th to 75th percentile) may be used for positions affected by market scarcity, recruitment and retention issues, and other business reasons.

Salary levels are typically reviewed annually to consider changes in benchmark salaries and/or exceptional individual merit performances.

Incentive Opportunities

The incentive opportunities for the NEOs are set at levels that (i) are competitive with the relevant labor market, with target total direct compensation generally determined by reference to the 50th percentile of the relevant labor market, and (ii) result in approximately 70 to 80 percent of each executive's total long-term incentive opportunity in the form of performance-based awards and approximately 20 to 30 percent of each executive's total long-term incentive opportunity in the form of retention awards.

Long-term incentive awards are intended to provide a similar pay component as equity-based compensation at peer investor-owned utilities.

Since TVA does not issue equity, the compensation program cannot provide a component similar to equity awards that capture long-term value, reflect the continuing efforts of executives, and have the potential for significant appreciation.

As a result, TVA's long-term incentives are not necessarily intended to match market pay levels.

Target annual incentive opportunities increase with position and responsibility to hold management accountable for delivery of results and are based in part on the opportunities other companies in TVA's peer group provide to those in similar positions.

Incentive opportunities are typically reviewed annually to consider changes in benchmark annual and long-term incentives.

The Committee reviews peer benchmark information by position for each component of pay as well as for overall total direct compensation.

Non-Direct Compensation Elements

Retirement Benefits

TVA provides its NEOs with retirement benefits through its qualified plans as well as through a non-qualified supplemental executive retirement plan ("SERP") in order to provide compensation beginning with retirement or termination of employment (if vesting requirements are satisfied), with enhanced compensation for certain executives to provide an additional incentive for hiring and retention of qualified individuals.

TVA sponsors a qualified defined benefit plan ("pension plan") and a qualified defined contribution plan ("401(k) plan"), which are administered by the TVA Retirement System ("TVARS").

The availability of, and level of benefits provided by, these qualified plans are comparable to similar qualified plans provided by companies in TVA's peer group.

In addition to its qualified retirement plans, TVA has a SERP for selected executives who are critical to the ongoing success of the enterprise.

TVA's SERP is a non-qualified plan that provides supplemental pension benefits at compensation levels that are higher than the limits specified by IRS regulations for qualified pension plans.

The provision of such non-qualified plans to executives is a common practice among companies in TVA's peer group.

The purpose of the SERP is to:

• Provide a competitive retirement benefit level that cannot be delivered solely through TVA's qualified retirement plans due to Internal Revenue Service ("IRS") limitations, and

• Provide a benefit level (as a percentage replacement of pre-retirement pay) that is more comparable to that of employees who are not subject to the IRS limitations.

More information regarding these retirement benefits is found following the Pension Benefits Table.

Health and Other Benefits

TVA offers a group of health and other benefits (medical, dental, vision, life and accidental death and disability insurance, and long-term disability insurance) that are available to a broad group of employees.

The NEOs are eligible to participate in TVA's health benefit plans and other non-retirement benefit plans on the same terms and at the same contribution rates as other TVA employees.

In order to recruit high-quality talent, TVA may offer recruitment and sign-on bonuses as well as relocation assistance and reimbursement.

Lyash received the second of three annual installments of a recruitment and relocation incentive that was part of his employment offer.

This incentive, which was intended in part to compensate Mr.

Lyash for forfeited

compensation from his prior employer, vests and is payable as long as Mr.

Lyash remains employed by TVA on the applicable vesting dates.

The second and largest installment was paid to Mr.

Lyash on September 30, 2020, in the amount of $1,092,000.

Rausch earned $350,000 in 2020 pursuant to the Performance Incentive Arrangement award opportunity that was granted to him in connection with his employment agreement in 2018.

The award opportunity was granted in order to compensate Mr.

Rausch for incentive awards forfeited upon joining TVA but were payable subject to the CEO's evaluation of Mr.

Rausch's performance.

Rausch also earned the second and final $100,000 payment of a recruitment and relocation incentive that was a part of his employment offer.

More details regarding these payments are set forth in Mr.

Rausch's compensation scorecard under "2020 Pay Decisions – 2020 NEO Pay Decisions and Compensation Scorecards" below.

2020 Performance Goals and Performance Achievement

A significant portion of each NEO's compensation is based on company performance and influenced by individual performance achievements.

As a result, a majority of NEO compensation is at-risk, providing incentive for the executive to achieve superior performance for TVA and for the businesses, communities, and residents it serves, both in the short term and in the years to come.

Incentive compensation is provided to NEOs under the Executive Annual Incentive Plan ("EAIP") and the Long-Term Incentive Plan ("LTIP").

Each incentive award is described below.

Executive Annual Incentive Plan

All TVA employees participate in an annual incentive program (subject to eligibility requirements), since every employee contributes to the success of TVA and the execution of its Public Power mission.

While the metrics used for annual incentives are the same for all employees, they are provided under two plans:

the Winning Performance Team Incentive Plan ("WPTIP") provides for annual incentive awards for eligible non-executives, and the EAIP provides for annual incentive awards for eligible executives, including the NEOs.

The EAIP is designed to encourage and reward executives for successfully achieving annual financial and operational goals.

For 2019 , an executive's annual incentive payment under the EAIP was calculated as follows:

Annual Target

Individual Performance Multiplier

For 2020, each NEO's annual incentive payment was calculated as follows:

Amount = Annual

Salary × Annual Target

Opportunity × Percent of

(0% to 150%) × Corporate

(0 to 1.00) × Individual

Each component of this calculation is discussed below (except for annual salary, which is discussed above).

Annual Target Incentive Opportunity

Annual incentive opportunities for participants in the EAIP generally increase with position and responsibility.

For 2019 , Mr.

Lyash's and Mr.

Johnson's target EAIP award opportunities were approved at 150 percent of salary.

In October 2018, Mr.

Johnson evaluated the appropriateness of the EAIP award opportunities for the other NEOs and made no changes.

The TVA Board and Mr.

Lyash evaluated the appropriateness of the EAIP award opportunities for the CEO and other NEOs, respectively, and made no changes for 2020.

Accordingly, target EAIP award opportunities of the NEOs for 2020 were as follows:

Named Executive Officers

2019 Target Annual Incentive Opportunity (1)

Named Executive Officers 2020 Target

Annual Incentive

Opportunity (1)

(1) Represents a percent of each NEO's salary.

Percent of Opportunity Achieved .

TVA had one organizational scorecard for the 2019 EAIP (TVA Enterprise Scorecard).

This scorecard was also used to determine annual incentive payouts for all non-executive TVA employees who participated in TVA's 2019 WPTIP.

Once scorecard results were calculated, the CEO, after consulting with the TVA Board, approved the scorecard result at 116 percent.

The Chair of the TVA Board, in consultation with the Committee and with input from the individual members of the TVA Board, then recommended and approved a payout of 116 percent for the CEO and the retired CEO.

The goals and associated weightings for the scorecard and the adjusted results achieved follow:

TVA 2019 Enterprise Scorecard

Enterprise Measures

TVA Total Spending ($ Million) (1)

2020 Incentive Plan Performance Metrics

The metrics used to measure performance under the WPTIP and EAIP are the same for all TVA employees.

These metrics tie directly to key enterprise metrics used by senior management in its annual budget and strategic planning process, which in turn tie directly to the achievement of TVA's strategic objectives and mission.

The 2020 WPTIP and EAIP metrics and goals were set out in an organizational scorecard ("TVA Enterprise Scorecard") applicable to all employees.

The 2020 performance measures, along with the weighting ascribed to each, are shown below as a percentage of the total WPTIP/EAIP award opportunity at target-level performance.

2020 WPTIP/EAIP METRICS

The 2020 WPTIP/EAIP metrics are described in detail below.

TVA Total Spending

What this measures:

TVA's ability to keep costs low

Total Non-Fuel Operating and Maintenance, Capital, Non-Fuel Inventory, and cloud Implementation expenses for corporate and operational Strategic Business Unit organizations (excludes Board of Directors).

Why Is This Metric Used?

Supports the overall TVA goal of maintaining costs and managing rates based on spending levels approved by TVA management and the TVA Board.

Load Not Served

Nuclear Unit Capability Factor ("UCF") (%) (3)

Combined Cycle Seasonal Equivalent Forced Outage Rate ("EFOR") (%) (4)

Coal Seasonal Equivalent Forced Outage Rate (%) (5)

Scorecard Result

(1) TVA Total Spending means total non-fuel O&M + total capital expenses for corporate and operational strategic business unit organizations (excludes Board of Directors).

(2) Load Not Served ("LNS") is a measure of the magnitude and duration of transmission system outages that affect TVA customers and is expressed in system minutes.

What this measures:

Transmission system outages that affect TVA customers

Load Not Served ("LNS") is a measure of the magnitude and duration of transmission system outages that affect TVA customers expressed in System Minutes.

An automatic customer interruption with a duration of one minute or greater is tracked as an LNS event.

LNS events caused by TVA on a distributor system will also count as a TVA event even if the TVA system remains energized.

LNS excludes interruptions due to declared major events.

(3) UCF is the ratio of available energy generation, which excludes events outside of management control, over a given period of time to the reference energy generation over the same time period.

(4) Combined Cycle Seasonal EFOR measures the generation lost due to forced events as a percentage of time the unit would have been scheduled to run.

This measure runs from December to March and June to September for 2019.

Based on Generating Availability Data System ("GADS") event reporting guidelines for megawatt hour losses.

Excludes GADS events classified as "Outside Management Control." Targets exclude any newly commissioned units for first full fiscal year of operations.

(5) Coal Seasonal EFOR measures the generation lost due to forced events as a percentage of time the unit would have been scheduled to run.

This measure runs from December through March and June through September and includes all coal plants.

Based on GADS event reporting guidelines for megawatt hour losses.

Excludes GADS events classified as "Outside Management Control." Targets exclude any forecasted units to be retired in fiscal year of retirement.

Corporate Multiplier .

The TVA Board approved the use of a corporate multiplier for the WPTIP and EAIP.

The corporate multiplier ranges between 0 and 1.0 and can be used only for purposes of reducing the amount of the award.

For 2019 , the TVA Board determined that the corporate multiplier should be 1.0 based on the following:

Safety better than top decile;

Strong financial performance reduced debt to the lowest level in almost 30 years and met the 10-year Long-Range Financial Plan goals in six years;

Zero Board level significant events;

Strong role in stimulating economic development and investment.

Corporate Multiplier

Safety - Recordable Incident Rate (RIR) (1)

Financial Health

Total Financing Obligations (TFO) and Liabilities ($ Billion) (2)

Operating Cash Flow ($ Million) (3)

Net Income ($ Million) (4)

LNS excludes interruptions due to declared Major Events, Variances, Gunfire, Vandalism, and verified Tornadoes.

Why Is This Metric Used?

An automatic customer interruption with a duration of one minute or greater is tracked as a LNS event.

We manage this critical indicator to reduce the impact of customer outages.

Nuclear Unit Capability Factor

What this measures:

Nuclear plant availability

Nuclear Unit Capability Factor is the ratio of available energy generation, which excludes events outside of management control, over a given period of time to the reference energy generation over the same time period.

Why Is This Metric Used?

Monitors progress in attaining high unit and energy production reliability.

Combined Cycle Equivalent Availability Factor

What this measures:

Combined cycle plant reliability

Combined Cycle Equivalent Availability Factor ("EAF") reflects the percentage of time over a given period that a generating unit was available to generate power for TVA combined cycle generating assets, based on Generating Availability Data System ("GADS") event reporting guidelines for megawatt hour losses.

Combined Cycle EAF excludes events classified as outside management control and variances.

Why Is This Metric Used?

Combined Cycle EAF focuses on ensuring TVA combined cycle generating assets are available and reliable to meet system demand.

Coal Equivalent Availability Factor

What this measures:

Coal plant reliability

Coal EAF reflects the percentage of time over a given period that a generating unit was available to generate power for TVA coal-fired generating assets, based on GADS event reporting guidelines for megawatt hour losses.

Coal EAF excludes events classified as outside management control and variances.

Why Is This Metric Used?

Coal EAF focuses on ensuring TVA coal generating assets are available and reliable to meet system demand.

In setting the goal for each metric, consideration is given to TVA's historic performance, its strategic business plan priorities and strategic benchmarking goals, customer and stakeholder feedback, environmental and regulatory concerns and goals, and the competitive environment.

Achievement of the target goal would result in a 100 percent payout with respect to that goal.

A threshold goal is also set for each metric, so that no payout would occur with respect to metrics that fail to achieve that threshold.

Additionally, a stretch goal for each metric is set to incentivize and reward exceptional performance.

Linear interpolation is used for results between threshold and stretch goals.

2020 Executive Annual Incentive Plan Results

The performance results on the 2020 TVA Enterprise Scorecard are set forth below.

Performance resulted in a 137 percent payout (on a scale from 0 percent – 150 percent payout).

TVA'S 2020 EAIP PERFORMANCE

Corporate Multiplier Allows TVA Board to Adjust for Overall Performance

As in previous years, the TVA Board approved the use of a corporate multiplier for the 2020 Winning Performance/EAIP program.

The corporate multiplier ranges between 0 and 1.0x and can be used only for purposes of reducing the amount of the award.

For 2020, the TVA Board determined that the corporate multiplier should be 1.0x based on the following:

• Industry-leading safety performance

• Continued strong fiscal responsibility, including reducing debt to the lowest level in three decades and achieving long-range TFO goal three years ahead of plan

• Restored service safely and efficiently after two major tornadoes and averted major flooding during third straight year of historic rainfall totals

• Strengthened customer relationships, including 93 percent of LPCs signing 20-year Partnership Agreements with TVA and $163 million in savings returned to local power company partners through a wholesale bill credit

• Achieved outstanding results despite unprecedented challenges associated with the COVID-19 pandemic

Why does the TVA Board use a multiplier?

The multiplier allows the TVA Board to qualitatively assess the organization's performance, emphasizing the importance of safety, financial health, reputation and economic development.

Corporate Multiplier Factors

Metric Definition Why Is This Metric Used?

Safety – Serious Injury Incident Rate (SIIR)

A mathematical calculation used by Edison Electric Institute that quantifies the extent of injury for serious injuries and fatalities from events within the control of the employee and/or the employer.

TVA shares a professional and personal commitment to protect the safety of its employees, its contractors, its customers, and those in communities that TVA serves.

Total Financing Obligations (TFO)

All statutory debt and other financing obligations.

TVA's TFOs are driven by its business plan and reflects the application of financial guiding principles.

Focusing on this measure will improve TVA's fiscal performance and strengthen TVA's balance sheet.

Cash Flow from Operating Activities

Amount of cash generated from power production and other mission-related activities and generally defined as Operating Revenues received less cash payments made for Operating Expenses.

Cash Flow from Operating Activities is considered a key indicator of overall financial health as it measures TVA's ability to use cash received from customers to sufficiently fund outgoing cash expenditures.

Net earnings derived by adjusting revenues for the cost of doing business.

Standard accounting measure that provides a view of TVA's financial performance position.

Jobs Created and Retained

50,000-75,000

Board Level Significant Events (6)

(1) Recordable Incident Rate is defined as the number of recordable injuries (as defined by TVA's safety program) per 200,000 employee-hours worked by TVA employees and staff augmentation contractors (excluding hearing events).

(2) Total Financing Obligations and Liabilities is calculated by subtracting contributions to unfunded liabilities from the sum of (1) long-term debt, net (including unamortized premiums/discounts), (2) short-term debt, net, (3) leaseback obligations, (4) energy prepayment obligations, and (5) variable interest entities ("VIE") .

(3) Operating Cash Flow is the amount of cash generated from power production and other mission-related activities.

It is generally defined as operating revenues received less cash payments made for operating expenses.

See Item 8, Financial Statements and Supplementary Data — Consolidated Statements of Cash Flows for additional information.

(4) Net Income consists of the organization's net earnings derived by adjusting revenues for the cost of doing business, including the cost of sales, depreciation, interest, taxes, and other expenses.

See Item 8, Financial Statements and Supplementary Data - Consolidated Statements of Operations for additional information.

(5) Jobs Created and Retained measures the number of new or retained jobs in the Tennessee Valley for which TVA has played a role in the recruitment or retention of the economic development project.

(6) Board Level Significant Events include items deemed materially significant to the TVA Board and that affect TVA's reputation with its customers and its stakeholders, the organizational health of the workforce, or TVA's impact on the public at large.

Individual Performance Multiplier .

Annually, individual goals are established at the beginning of each performance cycle.

Once all other preliminary 2019 EAIP payouts were calculated and the corporate multiplier was applied, Mr.

Lyash, as CEO, and in consultation with the Committee, evaluated each NEO's performance based upon individual performance goals (except his own) to determine the individual performance multiplier used to calculate his or her payout as set forth in the formula above.

Each of the non-CEO NEOs was assigned an Individual Performance Multiplier of 100 percent except for Mr.

Thomas, who was assigned an Individual Performance Multiplier of 110 percent based on his strong performance during the fiscal year.

In addition, the TVA Board Chair, in consultation with the Committee and with input from individual members of the TVA Board, evaluated Mr.

Lyash's performance as CEO during 2019 to determine his Individual Performance Multiplier under the EAIP.

Based on this review, the TVA Board Chair decided that Mr.

Lyash's final Individual Performance Multiplier should be 112 percent based on TVA's 2019 performance.

This recommendation was based on TVA’s strong financial performance including the development of a 10-year financial plan, focus on people performance excellence and developing the workforce for sustained optimal performance, engagement of key stakeholders, recognition of embracing continuous improvement, and successful demonstration of TVA values and behaviors.

EAIP Payouts .

As a result of the above process, the NEOs were awarded the following EAIP payouts for 2019 in comparison to the 2019 target payouts:

2019 EAIP Payouts

Named Executive Officers

(% of Salary)

Scorecard Results After Application of Corporate Multiplier

Individual Performance Multiplier

Actual EAIP Payment

Timothy Rausch (3)

Lyash's Target EAIP Payout was prorated based on time in position, April 8, 2019 through September 30, 2019.

Target for a full performance period would be $1,380,000.

Johnson's Target EAIP Payout was prorated based on retirement and time in position, October 1, 2018 through May 1, 2019.

Target for a full performance period would be $1,725,000.

Rausch's Target EAIP Payout was prorated based on time in position, October 15, 2018 through September 30, 2019.

Target for a full performance period would be $364,000.

Awards to the NEOs under the EAIP for 2019 are reported in the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table.

Measures the number of new or retained jobs in the Tennessee Valley for which TVA has played a role in the recruitment or retention of the economic development project.

Tracks its progress using an industry standard measure.

Jobs Created and Retained is a measure that economic developers can speak to and easily understand, and an established tracking mechanism is in place to measure TVA's economic development efforts.

Board Level Significant Events Includes items deemed significant by the TVA Board of Directors.

These items may affect TVA's reputation with its customers and its stakeholders, the organizational health of the workforce, or its impact on the public at large.

Both favorable and unfavorable events will be considered.

An incentive pay program, by design, cannot cover the entire scope of activities that could occur during a given cycle.

This measure allows the TVA Board to deem certain reputational, environmental, or other items as significant impacts to TVA's business.

Items that may be considered significant (either favorably or unfavorably) include customer survey results, stakeholder survey results, key indicators of organizational health, environmental events, or other major events not covered in other performance measures.

Based on the performance of the 2020 corporate multiplier measures, the TVA Board determined to apply a 1.0x multiplier, or no reduction to the calculated Winning Performance/EAIP payout.

CORPORATE MULTIPLIER MEASURES (0.0 – 1.0x MULTIPLIER)

(1) Includes impact of partnership credits.

Partnership credits are wholesale bill credits provided to local power company customers who are party to 20-year Partnership Agreements with TVA.

For more information see Item 1, Business — Rates .

Individual Performance Multiplier Reinforces Pay for Performance

Annually, individual goals for the NEOs are established at the beginning of each performance cycle.

These goals tie to the achievement of TVA's mission and strategic objectives.

A 50 percent weighting is assigned to business goals, and a 50 percent weighting is assigned to leadership competencies.

No numerical measures are assigned to the goals.

Rather, at the end of the performance period, the CEO assesses the performance of the other NEOs and informs the Committee of his decision on a multiplier for each NEO.

For the CEO Individual Performance Multiplier, each TVA Board member assesses the CEO's performance at the end of a performance period on a scale of 1–5, with "5" representing superior performance.

Results of the assessment are provided to the TVA Board Chair who, after consultation with the Committee, determines the multiplier to be applied to the CEO.

For 2020, the NEOs were evaluated on individual performance goals and the following leadership competencies:

Leadership Competencies

Inspiring Trust and

Engagement Continuous Improvement Vision, Innovation, & Strategic Execution Leadership Courage

Accountability and Driving

Results Adaptability Business Acumen Effective Communication

Building Organizational Talent Leveraging Diversity

The 2020 individual multipliers and award payouts to the NEOs under the 2020 EAIP are described under each executive's compensation scorecard under "2020 Pay Decisions - 2020 NEO Pay Decisions and Compensation Scorecards" below and reported in the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table.

Long-Term Incentive Compensation

In addition to the EAIP, certain executives in critical positions, including the Named Executive Officers, participate in the company's long-term compensation plans.

Certain executives in critical positions, including the NEOs, participate in the company's long-term compensation plans.

These individuals make decisions that significantly influence the development and execution of TVA's long-term strategic objectives.

As such, the long-term compensation plans are designed to reward executives for helping TVA improve in areas directly related to TVA's long-term success by:

Using enterprise-wide performance criteria that are directly aligned with TVA's mission;

Using a "cumulative" performance approach to measure performance achieved over a three-year period with a new three-year performance cycle beginning each year;

Using a potential payment range of 50 percent to 150 percent of target incentive opportunity to enable awards that are commensurate with performance achievements;

Establishing award opportunities for each performance cycle at levels that approximate median levels of competitiveness with TVA's peer group and adhering to the Committee's policy that (i) approximately 70 to 80 percent of each executive's total long-term incentive opportunity be performance-based (under the performance-based awards under the LTIP) and (ii) approximately 20 to 30 percent of each executive's total long-term incentive opportunity be retention-oriented under the LTIP as described below under Long-Term Retention Arrangements .

Effective October 1, 2018, TVA granted the following LTP awards:

Named Executive Officers

LTP/Long-Term Performance Grant (1)

(1) All awards vest September 30, 2021, and the actual amount the executives receive upon payout may vary based on organizational performance under the LTIP.

Lyash did not receive a LTP grant because he was not employed on the date the grants were issued, October 1, 2018.

He was eligible for a grant on October 1, 2019.

Johnson's LTP was adjusted to $493,403 upon retirement, which represents the prorated portion of the grant based on the number of months he was employed during the performance cycle.

For the three-year cycle ended September 30, 2019 , the TVA Board approved three overall long-term incentive measures of TVA performance to be applied to all participants in the LTIP:

Non-Fuel Delivered Cost of Power;

Load Not Served (the product of the percentage of total load-not-served multiplied by the number of minutes in the measurement period);

External Measures (including external nuclear performance indicators, stakeholder survey, media tone, customer survey, and Board level significant events).

The Non-Fuel Delivered Cost of Power performance measure is a financial measure not affected by weather or customer behavior.

The Non-Fuel Delivered Cost of Power measure is equal to the sum of (i) non-fuel operating and maintenance expense, (ii) base capital expense, (iii) interest expense, and (iv) other expense divided by budgeted electric power sales.

TVA chooses to use this measure as it drives performance through activities that management can control.

The 2017-2019 performance cycle had a threshold goal of 3.65, a target goal of 3.51, and a stretch goal of 3.37.

The Load Not Served performance measure reflects the percentage of total load not served multiplied by the number of minutes in the period (with the value expressed in system minutes and excluding events during declared major storms) during the three-year cycle ended September 30, 2019 , with a threshold goal of 4.8, a target goal of 4.0, and a stretch goal of 3.5.

Load Not Served events caused by TVA on a distributor system will also count as a TVA event even if TVA's system remains energized.

The External Measures represent TVA's performance in areas including external nuclear performance indicators, stakeholder survey, media tone, customer loyalty, and Board level significant events.

Targets for the External Measures are based on making incremental improvements in external perceptions of TVA's performance and brand.

The nuclear performance measure was based on 2019 results, with a threshold goal of 88.0 (third quartile), a target goal of 91.0 (between median and top quartile), and a stretch goal of 94.0 (better than top quartile).

The media tone, stakeholder survey, customer survey, and Board level significant events measures were calculated using an average of the 2017, 2018, and 2019 results.

The media tone measure had a threshold goal of 85.0, a target goal of 89.0, and a stretch goal of 91.7.

The stakeholder survey measure had a threshold goal of 81.0, a target goal of 82.5, and a stretch goal of 84.0.

The customer survey measure had a threshold goal of 64.7, a target goal of 66.3, and a stretch goal of 68.0.

The TVA Board level significant events measure had a threshold goal of two unfavorable events, a target goal of zero events, and a stretch goal of two favorable events.

The following table shows the performance goals and weighting and percent of opportunity achieved for the performance-based awards (LTP) under the LTIP for the three-year cycle ended September 30, 2019 :

TVA 2017 - 2019 Long-Term Incentive Plan Scorecard

Long-Term Incentive Measure

Non-Fuel Delivered Cost of Power (2017-2019)

Load Not Served (2017-2019)

External Measures (2017-2019)

External Nuclear Performance Indicators

Stakeholder Survey %

Customer Survey %

Board Level Significant Events

Calculated Payout

Approved Payout

In August 2018, the TVA Board approved replacing the LTP financial measure Wholesale Rate Excluding Fuel with Non-Fuel Delivered Cost of Power for the future LTP awards.

Wholesale Rate Excluding Fuel had not historically reflected TVA's financial performance as it is largely impacted by weather and customer behavior.

The TVA Board and management believe that replacing the measure with Non-Fuel Delivered Cost of Power will drive performance through activities that management can influence.

The TVA Board used its discretion and adjusted payouts for the 2017 - 2019 performance cycle to 116% to better reflect goal achievement, overall strong performance and financial discipline.

Additional highlights of the 2017 - 2019 performance period include:

Strong financial performance reduced debt to the lowest level in almost 30 years and met the 10-year Long-Range Financial Plan goals in six years;

Strong transmission system reliability performances;

"Outstanding" customer survey results;

Customer survey reflects high commitment levels.

As a result, the NEOs were awarded the following LTP payouts for the 2017 - 2019 performance cycle:

Named Executive Officers

LTP Grant Vesting September 30, 2019

Calculated LTP Payout (2)

Approved LTP Payout (3)

Johnson's initial LTIP grant was in the amount of $2,427,800.

He retired effective May 2, 2019.

Based on the provisions of the LTIP Plan, Mr.

Johnson's grant was prorated based on the 31 months (October 1, 2016 - April 30, 2019) he was employed during the performance cycle (October 1, 2016 - September 30, 2019).

(2) Amount based on calculated payout of 109%.

(3) Amount based on approved payout of 116%.

Awards to the NEOs for the LTP performance cycle that ended September 30, 2019 are reported in the Summary Compensation Table.

The amount of the award based on the calculated scorecard is reported as Non-Equity Incentive Plan Compensation.

The discretionary adjustment ("LTP Scorecard Adjustment") is reported as a Bonus in the Summary Compensation Table.

2018 - 2020 Outstanding LTP Performance Cycle

The TVA Board approved the following overall LTP measures of TVA performance for all participants for the three-year cycle ending September 30, 2020 (awards to be paid in November 2020):

Performance Measure

As such, awards under TVA's Long-Term Incentive Plan are designed to reward executives for sustainable success.

Since long-term success is supported by a commitment to continued employment, the NEOs are incentivized to remain with the company through the cliff vesting feature of the long-term performance awards and through long-term retention awards.

LONG-TERM AWARDS REWARD LONG-TERM SUCCESS LONG-TERM INCENTIVE AWARDS

• Enterprise-wide performance criteria that are directly aligned with TVA's mission

• "Cumulative" performance approach to measure performance achieved over a three-year period with a new three-year performance cycle beginning each year

• Potential payment range of 0 percent to 150 percent of target incentive opportunity to enable awards that are commensurate with performance achievements

• Award opportunities established for each performance cycle at or below median levels of competitiveness with TVA's peer group

• Long-term performance awards vest upon the completion of the three-year performance period, contingent upon continued employment through vesting date and subject to achievement of performance goals

• Long-term retention awards vest in one-third increments over three years, contingent upon continued employment on each vesting date

The TVA Board and Mr.

Lyash evaluated the appropriateness of the long-term incentive award opportunities for the CEO and other NEOs, respectively.

For 2020, the value of both the long-term performance award and the long-term retention awards were increased from 2019 levels for each NEO so that Total Direct Compensation moved closer to market median, following a review of benchmarking and individual performance and reflective of increased tenure.

Accordingly, target long-term incentive award opportunities of the NEOs for 2020 were as follows:

Named Executive Officers 2020–2022 LTP (1)

Value at target % Increase from 2019–2021 LTP target value 2020 LTR (1)

Value at target % Increase from 2019 LTR award value

221.3 % $ 2,341,000 15.7 % (2)

95.8 % $ 1,014,000 N/A (3)

147.0 % $ 980,000 11.4 % 63.0 % $ 420,000 10.5 %

149.2 % $ 990,000 1.0 % 64.7 % $ 429,000 2.1 %

124.7 % $ 695,000 1.5 % 53.3 % $ 297,000 2.4 %

93.4 % $ 500,000 23.7 % 61.6 % $ 330,000 90.5 %

(1) Represents a percent of each NEO's salary.

(2) Since Mr.

Lyash joined TVA in 2019, the second performance year under the 2019–2021 LTP, his payout under that award will be prorated to reflect his service for two-thirds of the performance period.

Lyash did not receive a LTR award in 2019.

Long-Term Performance Awards

TVA's executive compensation program provides for an annual grant of a long-term performance award with a three-year performance period.

During 2020, there were three overlapping LTP awards:

2018–2020 LTP Award Granted October 1, 2017 Vested September 30, 2020

2019–2021 LTP Award Granted October 1, 2018 Vesting September 30, 2021

2020–2022 LTP Award Granted October 1, 2019 Vesting September 30, 2022

The performance metrics and threshold, target, and stretch goals for each metric are determined annually by the TVA Board.

Following the TVA Board's approval of performance achievement at the end of each three-year performance period, awards are paid out in cash early in the subsequent fiscal year.

Target performance provides for a 100 percent payout opportunity, performance below threshold provides for no payout, performance at threshold provides for a 50 percent payout opportunity, and performance at stretch provides for a 150 percent payout opportunity.

Linear interpolation is used for results between threshold and stretch goals.

The TVA Board can use its discretion to adjust the final payout for each NEO's LTP award based on the evaluation of the NEO's individual achievements, peer group comparisons, and performance over the performance cycle.

Amount = Target

Value × Percent of Opportunity Achieved

For the three-year performance period ended September 30, 2020, the TVA Board previously approved three overall long-term incentive measures of TVA performance to be applied to all participants in the LTIP.

The 2018–2020 performance measures, along with the weighting ascribed to each, are shown below as a percentage of the total LTP award opportunity at target-level performance.

2018-2020 LTP

The 2018–2020 LTP metrics are described in detail below.

Non-Fuel Delivered Cost of Power

What this measures:

Non-fuel expenses (cents/kWh)

The Non-Fuel Delivered Cost of Power performance measure is a financial measure.

The Non-Fuel Delivered Cost of Power measure is equal to the sum of (i) non-fuel operating and maintenance ("O&M") expense, (ii) base capital expense, (iii) interest expense, and (iv) other expense divided by budgeted electric power sales.

Why Is This Metric Used?

This measure drives performance through activities that management can control.

It aligns with TVA's strategic objective of maintaining low rates and focuses on aligning O&M with revenue.

Non-Fuel Delivered Cost of Power supports retail rate objectives and aligns to the Business Plan commitment.

Load Not Served

Between top quartile and top decile

2017 - 2019 average rate based on business plans

Better than top decile

What this measures:

Transmission system outages that affect TVA customers

Load Not Served ("LNS") is a measure of the magnitude and duration of transmission system outages that affect TVA customers expressed in System Minutes.

An automatic customer interruption with a duration of one minute or greater is tracked as an LNS event.

LNS events caused by TVA on a distributor system will also count as a TVA event even if the TVA system remains energized.

LNS excludes interruptions due to declared Major Events, Variances, Gunfire, Vandalism, and verified Tornadoes.

Why Is This Metric Used?

An automatic customer interruption with a duration of one minute or greater is tracked as a Load Not Served ("LNS") event.

TVA manages this critical indicator to reduce the impact of customer outages.

External Measures

What this measures:

External perception and reputational events

• External Nuclear Performance Indicators Index – Weighted combination of key nuclear performance indicators based on standard nuclear industry definitions for station performance.

• Stakeholder Survey – Conducted among the general public, public officials, economic development leaders, and business/community leaders in the TVA service area to assess public opinion of TVA.

• Customer Survey – Annual survey of LPCs and Direct-Serve Customers ("DSC") focused on better understanding customer loyalty and related performance drivers.

• Media Tone – Measures the percent of positive and balanced media coverage out of total TVA news coverage.

Why Is This Metric Used?

Targets for these measures represent incremental improvement in external perceptions of TVA's performance and brand.

Consistent with its public power mission, TVA's long-term performance metrics include the results of surveys that assess the external reputation and perception of TVA and TVA's effectiveness in carrying out its mission and strategic objectives.

These metrics reflect TVA's focus on meeting or exceeding customer expectations and identifying areas for continuous improvement.

In setting the goal for each metric, the TVA Board considers budgeted amounts in the company's approved business plans, actual performance in recent years, and level of achievability.

The TVA Board also considers TVA's strategic business

plan priorities and strategic benchmarking goals, customer and stakeholder feedback, environmental and regulatory concerns and goals, and the competitive environment.

Achievement of the target goal would result in a 100 percent payout opportunity with respect to that goal.

A threshold goal is also set for each metric, so that no payout would occur with respect to metrics that fail to achieve that threshold.

Additionally, a stretch goal for each metric is set to incentivize and reward exceptional performance.

Linear interpolation is used for results between threshold and stretch goals.

2018–2020 LTP Award Performance Results

The performance results on the 2020 TVA Enterprise Scorecard are set forth below.

Performance resulted in a payout of 129 percent of target opportunity.

2018–2020 Long-Term Performance Scorecard

(1) On August 22, 2018, the TVA Board approved replacing the Wholesale Rate Excluding Fuel measure with Non-Fuel Delivered Cost of Power for the 2018–2020 performance cycle because the Wholesale Rate Excluding Fuel measure has not historically reflected TVA's financial performance.

For the 2018 - 2020 LTIP performance cycle, the Non-Fuel Delivered Cost of Power measure will be calculated using 2020 results.

(2) Load Not Served is equal to the product of (i) the percentage of total load not served and (ii) the number of minutes in the period (excluding interruptions due to declared major events).

Value is expressed in system minutes and is the average of the three years within the LTIP performance cycle.

Load Not Served events caused by TVA on a distributor system will also count as a TVA event even if TVA's system remains energized.

For the 2018-2020 LTIP performance cycle, the Load Not Served measure will be calculated using an average of the 2018, 2019, and 2020 results.

For the 2018–2020 LTIP performance cycle, the Non-Fuel Delivered Cost of Power measure was calculated using the average of 2019 and 2020 results.

(2) For the 2018–2020 LTIP performance cycle, the Load Not Served measure was calculated using an average of the 2018, 2019, and 2020 results.

The target Load Not Served measure is the average of the rates for 2018, 2019 and 2020 that were set forth in the approved business plans for 2016, 2017, and 2018, respectively.

(3) For the 2018 - 2020 LTIP performance cycle, the External Measures metric will be calculated using an average of the 2018, 2019, and 2020 results (except for the External Nuclear Performance Indicators measure, which will be based on 2020 results).

On August 25, 2016, the TVA Board revised (1) the method for calculating the External Nuclear Performance Indicators measure and (2) the goals related to this measure.

The changes were adopted because the external party that rates the performance of TVA's nuclear fleet revised the industry standard metric for its rating index and provided new guidance on reporting requirements related to the addition of Watts Bar Unit 2 into TVA's nuclear fleet.

(3) For the 2018–2020 LTIP performance cycle, the External Measures metrics were calculated using an average of the 2018, 2019, and 2020 results (except for the External Nuclear Performance Indicators measure, which was based on 2020 results).

In reviewing the 2018–2020 performance period, the TVA Board considered strong performance in several areas, including key areas where performance exceeded target expectations:

P TVA's debt is at the lowest level in three decades;

TVA paid down $1.4 billion in debt in 2020

P Achieved and surpassed strategic goal of reducing debt to $21.8 billion by 2023

P Sustained $800 million in annual operating costs savings

P TVA's financial position is the strongest it has been in decades and is setting a path to keep base rates stable for the next decade

P Strong transmission system reliability performance

However, in light of several external measures that failed to meet threshold targets, the TVA Board determined that on balance the calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities, and did not exercise its discretion to adjust the calculated payout.

Payouts to the NEOs for the 2018–2020 LTP Award are described under each executive's compensation scorecard under "2020 Pay Decisions – 2020 NEO Pay Decisions and Compensation Scorecards" below and reported in the Summary Compensation Table under "Non-Equity Incentive Plan Compensation."

2019–2021 Outstanding LTP Performance Cycle

The TVA Board approved the following overall LTP measures of TVA performance for all participants for the three-year cycle ending September 30, 2021 (awards to be paid in November 2021):

Performance Measure

Non-Fuel Delivered Cost of Power (1)

Load Not Served (2)

External Measures (3)

(1) Non-Fuel Delivered Cost of Power measure is equal to the sum of (i) non-fuel operating and maintenance expense, (ii) base capital expense, (iii) interest expense, and (iv) other expense divided by budgeted electric power sales.

The TVA Board previously approved the following overall LTP measures of TVA performance for all participants for the three-year cycle ending September 30, 2021 (awards to be paid in November 2021):

(1) The metrics have the same definition as for the 2018–2020 LTP awards.

(2) For the 2019–2021 LTIP performance cycle, the Non-Fuel Delivered Cost of Power measure will be calculated using an average of the 2019, 2020, and 2021 results.

(2) Load Not Served is equal to the product of (i) the percentage of total load not served and (ii) the number of minutes in the period (excluding interruptions due to declared major events).

Value is expressed in system minutes and is the average of the three years within the LTIP performance cycle.

Load Not Served events caused by TVA on a distributor system will also count as a TVA event even if TVA's system remains energized.

(3) For the 2019 – 2021 LTIP performance cycle, the Load Not Served measure will be calculated using an average of the 2019, 2020, and 2021 results.

(3) For the 2019 - 2021 LTIP performance cycle, the External Measures metric will be calculated using an average of the 2019, 2020, and 2021 results (except for the External Nuclear Performance Indicators measure, which will be based on 2021 results).

Long-Term Retention.

(4) For the 2019 – 2021 LTIP performance cycle, the External Measures metrics will be calculated using an average of the 2019, 2020, and 2021 results (except for the External Nuclear Performance Indicators measure, which will be based on 2021 results).

2020–2022 Outstanding LTP Performance Cycle

In October 2019, the TVA Board approved the following overall LTP measures of TVA performance for all participants for the three-year cycle ending September 30, 2022 (awards to be paid in November 2022):

(1) For the 2020 - 2022 LTIP performance cycle, the Non-Fuel Delivered Cost of Power measure will be calculated using an average of the results for each of 2020, 2021, and 2022.

(2) For the 2020 - 2022 LTIP performance cycle, the Load Not Served measure will be calculated using an average of the results for each of 2020, 2021, and 2022.

(3) For the 2020 - 2022 LTIP performance cycle, the External Nuclear Performance Indicators measure will be calculated based on 2022 results.

(4) For the 2020 - 2022 LTIP performance cycle, the External Measures metrics will be calculated using an average of results for each of 2020, 2021, and 2022.

Non-Fuel Delivered Cost of Power and Load Not Served have the same definition as for the 2018–2020 LTP awards.

External Nuclear Performance Indicator Index was kept a measure but is no longer a component of External Measures.

Additionally, Board Level Significant Events has been removed as a metric under External Measures since the Long-Term Incentive Plan program design gives the TVA Board discretion in its review of the results and determination of payout.

The remaining External Measures for the 2020–2022 LTP awards are the same as those for the 2018–2020 LTP awards.

The External Measures for the 2020–2022 LTP awards, together with their weighting and targets, are as follows:

2020–2022 LTP Award External Measures

Long-Term Retention Awards

As a corporate agency of the U.S., TVA does not have equity securities that it can use to provide stock awards, options, or other equity-based awards as compensation for its employees.

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These grants are intended to encourage executives to remain with TVA and to provide, in combination with salary, EAIP, and LTP grants, a competitive level of total direct compensation.

Awards are designed to constitute approximately 20 to 30 percent of each NEO's total long-term compensation.

Grants are generally provided on October 1 and will become one-third vested on each subsequent September 30 or upon death, disability, or retirement if earlier on a pro-rated basis.

Grants are generally effective as of October 1 and will become one-third vested on each subsequent September 30 or upon death, disability, or retirement if earlier on a pro-rated basis.

Each award will be paid in a lump sum within two months of vesting.

Following the market assessment conducted by FW Cook, effective October 1, 2018, TVA granted the following LTR awards under the LTIP:

Named Executive Officers

LTR/Long-Term Retention Grant (1)

(1) Awards vest in three equal tranches on September 30, 2019, September 30, 2020, and September 30, 2021.

Lyash did not receive a LTR grant because he was not employed on the date the grants were issued, October 1, 2018.

He was eligible for a grant October 1, 2019.

Johnson retired effective May 2, 2019.

Based on the provisions of the LTIP, Mr.

Johnson's LTR grants will be prorated based on the months he was employed during the vesting period.

Retirement Benefits.

TVA sponsors a qualified defined benefit plan ("pension plan") and a qualified defined contribution plan ("401(k) plan"), which are administered by the TVA Retirement System ("TVARS") .

The availability of, and level of benefits provided by, these qualified plans are comparable to similar qualified plans provided by companies in TVA's peer group.

In addition to its qualified retirement plans, TVA has a SERP for selected executives who are critical to the ongoing success of the enterprise.

TVA's SERP is a non-qualified plan similar to those used by most other companies in its peer group.

The purpose of the SERP is to:

Provide a competitive retirement benefit level that cannot be delivered solely through TVA's qualified retirement plans due to IRS limitations.

Provide a benefit level (as a percentage replacement of pre-retirement pay) that is more comparable to that of employees who are not subject to the IRS limitations.

More information regarding these retirement benefits is found following the Pension Benefits Table.

Health and Other Benefits.

The NEOs are eligible to participate in TVA's health benefit plans and other non-retirement benefit plans on the same terms and at the same contribution rates as other TVA employees.

CEO Compensation Matters.

After a thorough review, including the consideration of CEO median compensation data, the Committee recommended that the TVA Board approve the compensation and incentive opportunities for Mr.

Lyash upon commencement of his employment.

Lyash receives an annual salary of $920,000 and a target annual incentive opportunity of 150 percent of his annual salary under the EAIP.

Lyash is also a participant in the LTIP.

Under the LTP component of the LTIP, Mr.

Lyash's target grant opportunity is 220 percent of his annual salary.

As described in his offer letter, effective October 1, 2019, Mr.

Lyash received an initial LTP grant of $2,024,000 for the three-year performance cycle ending on September 30, 2021, and also received a LTP grant of $2,024,000 for the three-year performance cycle ending on September 30, 2022.

Under the LTR component of the LTIP, Mr.

Lyash's target opportunity is 95.2 percent of his annual salary beginning in fiscal year 2020.

Based on an annual salary of $920,000, Mr.

Lyash received a LTR grant of $876,000 for the three-year retention period ending on September 30, 2022, and the grant will vest in one-third increments as long as Mr.

Lyash remains employed by TVA on the applicable vesting dates:

$292,000 on September 30, 2020, $292,000 on September 30, 2021, and $292,000 on September 30, 2022, or upon death or disability if earlier.

Lyash also received a recruitment and relocation incentive of $1,784,000, which will vest and pay in three installments as long as Mr.

Lyash remains employed by TVA on the applicable vesting dates:

$400,000 on September 30, 2019, $1,092,000 on September 30, 2020, and $292,000 on September 30, 2021.

TVA also provided Mr.

Lyash a sign-on bonus payment of $380,000, which was paid upon commencement of his employment.

The sign-on bonus payment must be repaid in full to TVA if, within one year of the effective date of his employment, (1) he voluntarily terminates his employment, unless the separation is for reasons beyond his control and acceptable to TVA, or (2) he is terminated for cause.

The chart below compares (i) the total direct compensation earned by Mr.

Lyash for 2019;

(ii) the target prorated compensation opportunity for Mr.

Lyash for 2019;

(iii) the 2019 approved target compensation opportunity for Mr.

Lyash for 2019;

(iv) the total direct compensation earned by Mr.

Johnson for 2019;

(v) the target prorated compensation opportunity for Mr.

Johnson for 2019;

(vi) the 2019 approved target compensation opportunity for Mr.

Johnson for 2019;

and (vii) the CEO median compensation data provided to the Committee by FW Cook, based on TVA's peer group as discussed above.

CEO Peer Group Compensation Comparison

Compensation Component

Lyash Actual Compensation for 2019

Lyash Target Prorated Compensation Opportunity for 2019

Lyash Target Compensation Opportunity for 2019

TVA CEO Johnson Actual Compensation for 2019

TVA CEO Johnson Target Prorated Compensation Opportunity for 2019

TVA CEO Johnson Target Compensation Opportunity for 2019

Chief Executive Officer Median Market Data (1)

Total Annual Incentive

Total Cash Compensation

Total Long-Term Incentive Compensation

Sign-on Bonus

Recruitment/Relocation Incentive

Total Direct Compensation

(1) Target market assessment effective October 2018 and included market composite of Willis Towers Watson database and proxy peer group.

(2) Salary opportunity earned from April 8, 2019 through September 30, 2019.

(3) Salary opportunity earned from October 1, 2018 through May 2, 2019.

Lyash's prorated EAIP Target Opportunity was $663,462.

His award after applying the 1.0 Corporate Multiplier, 116% scorecard, and 112% Individual Performance Multiplier was $861,969.

Johnson's prorated EAIP Target Opportunity was $1,009,409.

His award after applying the 1.0 Corporate Multiplier, 116% scorecard, and 100% Individual Performance Multiplier was $1,170,915.

Johnson's actual LTP award was $2,425,103 and the LTR prorated tranches were in the amount of $118,018, $192,938, and $211,458.

(7) Based on a retirement date of May 2, 2019, Mr.

Johnson's prorated target LTP award was $2,090,606 and the LTR prorated tranches were in the amount of $118,018, $192,938, and $211,458.

(8) For the 2017-2019 LTP performance cycle, Mr.

Johnson's target LTP award was $2,427,800 and he had three LTR tranches vesting in the amounts of $202,317, $330,750, and $362,500.

Lyash received a $380,000 sign-on bonus associated with his hire.

Lyash received a Recruitment/Relocation Incentive of $1,784,000 which vests in three installments - $400,000 on September 30, 2019, $1,092,000 on September 30, 2020, and $292,000 on September 30, 2021.

2020 Long-Term Retention Award Grant

Following the market assessment conducted by FW Cook, effective October 1, 2019, TVA granted LTR awards to the NEOs.

These awards vest in three equal tranches on September 30, 2020, September 30, 2021, and September 30, 2022.

The amounts of these awards are set forth under "Long-Term Incentive Compensation" above.

2020 Vesting of Outstanding Retention Awards

In 2020, three LTR awards were outstanding for each NEO, other than the CEO for whom only the 2020 LTR was outstanding.

Each of these awards vested one-third on September 30, 2020.

The vesting schedule for the three LTR awards outstanding in 2020 is set forth below.

LTR awards that vested in 2020 are described under "2020 NEO Pay Decisions and Compensation Scorecards" below and are also reported in the Summary Compensation Table under "Non-Equity Incentive Plan Compensation."

Lyash did not receive a 2018 LTR grant or 2019 LTR grant.

2020 Pay Decisions

2020 CEO Pay Decisions Overview

CEO PAY EARNED IN 2020

Base Salary $ 1,058,000

Annual Performance Incentive under

Executive Annual Incentive Plan $ 2,391,609 137 percent of target enterprise performance achieved

Reflects Individual Performance Multiplier of 1.10x

Long-Term Retention Incentive $ 338,000 2020 tranche of 2020 LTR award

Each year, the Committee makes two key compensation decisions with respect to CEO compensation:

the amount of TDC opportunity (which is forward-looking and incentivizes the CEO to perform), and the amount of TDC earned (which rewards the CEO for his prior performance).

2020 CEO Total Direct Compensation Opportunity

The Total Direct Compensation opportunity granted to Mr.

Lyash in 2020 is illustrated below.

Based on a review of 2020 compensation peer data, Mr.

Lyash's increasing tenure with TVA, and his performance, the Committee increased each component of Mr.

Lyash's TDC over 2019 levels.

CEO 2020 TARGET TOTAL DIRECT COMPENSATION OPPORTUNITY

Lyash did not receive a LTP grant in 2019 since he joined TVA in April 2019 and LTP awards at that time were only granted effective October 1.

Amount shown for 2019 represents a 2019 – 2021 LTP award that he was granted effective October 1, 2019, under which his payout will be prorated two-thirds to reflect his service during two of the three performance years.

Lyash did not receive a LTR grant in 2019.

Although the TVA Board moved Mr.

Lyash's pay closer to the median in 2020, its compensation decisions resulted in positioning his total direct compensation at target below the 25th percentile of the 2020 market composite data.

2020 CEO TARGET TOTAL DIRECT COMPENSATION OPPORTUNITY BELOW MARKET (1)

(1) Target market assessment effective October 2019 and included market composite of WTW database and proxy peer group.

2020 CEO Total Direct Compensation Earned

The Total Direct Compensation that Mr.

Lyash received for 2020 reflected company and individual performance that exceeded targets.

Lyash was not eligible to receive any payments under any LTP award in 2020;

his first LTP award, the 2019–2021 LTP award, vests September 30, 2021;

payout under this award will be prorated two-thirds to reflect his service during two of the three performance years.

CEO 2020 TOTAL DIRECT COMPENSATION EARNED

The award that Mr.

Lyash received reflected an Individual Performance Multiplier of 1.10x.

The Committee and TVA Board were extremely pleased with Mr.

Lyash's performance, which they believe would typically warrant a maximum Individual Performance Multiplier of 1.50x.

However, given the factors described in more detail in Mr.

Lyash's scorecard under "2020 NEO Pay Decisions and Compensation Scorecards," the Committee and TVA Board exercised their discretion to reduce the multiplier to 1.10x.

In addition to Total Direct Compensation Earned (as shown in the table above), Mr.

Lyash was paid $1,092,000 in 2020 as the second tranche of a recruitment and relocation incentive under his employment offer letter.

This incentive was intended to compensate him for amounts he forfeited from his previous employer in order to join TVA, as well as to provide some measure of substitute compensation in light of his not being eligible to receive any LTP incentive payments until September 2021.

Why Total Compensation Earned Differs From Compensation Reported

2020 CEO TOTAL COMPENSATION COMPONENTS

• Amounts are estimates of the pension/SERP benefits earned for service during the prior year, determined using assumptions consistent with those used in the financial statements in this Annual Report, set forth in Note 21 - Benefit Plans .

Unlike the amounts reported in the Summary Compensation Table, Mr.

Lyash's Total Direct Compensation Earned represents the annual pay decisions by the Committee that specifically reflect its assessment of the company's performance and individual performance and reward the employee for satisfaction of incentive award conditions (enterprise performance and continued employment).

Other elements included in the Summary Compensation Table, such as changes in pension values and vesting of recruitment and relocation incentives, are excluded from Total Direct Compensation Earned because they do not relate to performance and are outside the scope of the Committee's annual pay decisions.

The Committee therefore believes that Total Direct Compensation Earned renders a more accurate and up-to-date reflection of its assessment of performance.

2020 CEO Pay Ratio Lowest Among Peers

As reflected above, TVA's CEO target Total Direct Compensation is low compared to its 2020 compensation peer group on an absolute basis but is also low compared to its peers in the context of organizational pay ratios.

As discussed fully under "CEO Pay Ratio Disclosure", the pay ratio of the total compensation for Mr.

Lyash to the median TVA employee was approximately 53 to 1 for 2020.

Based on TVA's 2020 pay ratio and the pay ratio disclosed in its peers' most recent public

disclosures, TVA has the lowest margin between CEO and median employee compensation.

Peers used are those shown under Proxy Peer Group of Investor Owned Utilities in the "List of Compensation Peer Companies."

2020 CEO PAY RATIO VS.

2020 NEO Pay Decisions and Compensation Scorecards

The following pages show each NEO's 2020 Total Direct Compensation earned, 2020 TDC opportunities granted, and the Committee's (or the CEO's in the case of NEOs other than the CEO) rationale for those pay decisions.

President and CEO

Joined TVA April 2019

2020 TOTAL DIRECT COMPENSATION EARNED

Lyash's salary was increased 15 percent to $1,058,000 for 2020, reflecting outstanding performance and positioning to a more competitive base salary.

This amount is below the 25th percentile of the 2020 compensation peer group median.

EAIP Payment Earned.

Lyash's superior performance and overall rating of 5 out of 5, TVA's guidelines for applying an individual performance multiplier to annual incentive awards would have provided the highest individual performance multiplier of 1.50x to his 2020 EAIP award.

Consideration of three issues were included in making the final decision.

These are the execution of the ongoing Information Technology transition initiative and the use of H1-B Visa workers in that process, progress in resolving TVA's supplier relationship with Memphis Light, Gas & Water, and nuclear fleet progress in improving performance.

Also, considered was Mr.

Lyash's strength of demonstrated recovery in all three areas of concern.

After taking these into consideration, and applying discretion, Mr.

Lyash's individual performance multiplier was reduced from 1.50x to 1.10x.

Based on TVA's guidelines, a 1.10x is at the bottom of the range for a 5 performance rating and in the middle of the range for a 4 rating.

Long-Term Incentives Earned

Long-Term Performance Award Earned.

Lyash did not participate in the 2018–2020 LTP program, and thus did not receive any LTP payout in 2020.

Long-Term Retention Award Earned.

Lyash earned $338,000 in 2020 as the first tranche of his 2020 LTR program award of $1,014,000.

The 2020 LTR award vests ratably over a three-year period, subject to continued employment on each vesting date.

Long-Term Incentive Opportunities Granted

2020–2022 Long-Term Performance Award Opportunity.

Effective October 1, 2019, Mr.

Lyash was granted a 2020–2022 LTP program award with a target opportunity of $2,341,000, which will vest on September 30, 2022.

Actual payout will depend on performance against targets at the end of the three-year performance period.

2020 Long-Term Retention Award Opportunity.

Effective October 1, 2019, Mr.

Lyash was granted a 2020 LTR program award of $1,014,000 that vests ratably over a three-year period, subject to continued employment on each vesting date.

The first tranche was earned in 2020 as described above.

Other Compensation

Recruitment and Relocation Incentive.

Lyash was paid $1,092,000 in 2020 as the second tranche of a recruitment and relocation incentive under his employment offer letter.

This incentive was intended to compensate him for amounts he forfeited from his previous employer in order to join TVA, as well as to provide some measure of substitute compensation in light of his not being eligible to earn any long-term performance incentive payments until September 2021.

2020 INDIVIDUAL PERFORMANCE HIGHLIGHTS

• TVA debt was reduced to the lowest level in 30 years and to the level committed to OMB three years ahead of plan significantly lowering interest expenditures.

• The reliability of the transmission system and of the nuclear, gas, coal, and hydroelectric generation fleets all improved.

This strong fleet performance reduced fuel and purchased power costs while continuing to reduce TVA's environmental footprint.

• Operating and Maintenance costs were also lowered, helping to offset the revenue reduction caused by the global pandemic.

• The aggregate impact of these achievements was that TVA not only held rates flat but returned $163 million to LPCs participating in the long-term Partnership Agreement during 2020.

• These achievements also enabled TVA to deliver a wide range of pandemic support programs to LPCs, businesses, and communities that lessened their burden and helped businesses across the Tennessee Valley recover.

• The performance achieved in 2020 is expected to help keep rates flat again next year and allow an additional Pandemic Relief Credit of $200 million in 2021.

• This performance places TVA base rates plus fuel at their lowest level in over a decade.

In the public power model, the benefits of this performance do not accrue to shareholders;

rather, they flow directly to the people TVA serves and now more than ever at the time they need it most.

Lyash's highest rated competencies were adaptability, effective communication, business acumen, accountability and driving for results, and leveraging diversity.

Executive Vice President and Chief Financial Officer

Joined TVA November 2005

2020 TOTAL DIRECT COMPENSATION EARNED

Thomas' salary was increased three percent to $666,584 for 2020, reflecting outstanding performance and positioning to maintain a competitive base salary.

EAIP Payment Earned.

Organizational performance under the TVA EAIP Scorecard exceeded target for all but one measure, resulting in a 137 percent payout percentage.

Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the challenges presented by COVID-19.

As a result, the TVA Board approved a 1.0x Corporate Multiplier.

The CEO approved an Individual Performance Multiplier of 1.0x for Mr.

Thomas for 2020.

Thomas' strong performance and overall rating of 4 out of 5, TVA's guidelines for applying an individual performance multiplier to annual incentive awards would have provided for an individual performance multiplier of up to 1.2x to his 2020 EAIP award.

Consideration of the execution of the ongoing Information Technology transition initiative and the use of H1-B Visa workers in that process led the CEO to approve a 1.0x multiplier for Mr.

Based on TVA's guidelines, a 1.0x is at the bottom of the range for a 4 performance rating.

Long-Term Incentives Earned

Long-Term Performance Awards Earned.

Organizational performance under the 2018–2020 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served.

However, several external measures failed to meet threshold targets.

In light of improvements in other key performance areas, such as financial health, the TVA Board determined that the 129 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout.

Long-Term Retention Awards Earned.

Thomas earned $383,334 in 2020 upon the vesting of the 2020 tranches of his 2018, 2019, and 2020 LTR program awards.

The LTR awards vest ratably over a three-year period, subject to continued employment on each vesting date.

Long-Term Incentive Opportunities Granted

2020–2022 Long-Term Performance Award Opportunity.

Effective October 1, 2019, Mr.

Thomas was granted a 2020–2022 LTP program award with a target opportunity of $980,000, which will vest on September 30, 2022.

The actual payout of the award will depend on performance against targets at the end of the three-year performance period.

2020 Long-Term Retention Award Opportunity.

Effective October 1, 2019, Mr.

Thomas was granted a 2020 LTR program award of $420,000 that vests ratably over a three-year period, subject to continued employment on each vesting date.

The first tranche was earned in 2020 as described above.

2020 INDIVIDUAL PERFORMANCE HIGHLIGHTS

• Executed CFO function at exceptionally high level and assumed leadership responsibility for technology and innovation units in 2020

• Responded swiftly to significant revenue loss presented by the COVID-19 pandemic by working across the organization to reduce O&M expense and adjust capital spending

• Effectively managed TVA liquidity, access to debt markets and liability management activities to maintain TVA's strong financial position and lower interest expense

• Executed major bond issuance with TVA attaining the lowest interest rate in its history

• Led efforts whereby TVA reduced debt to lowest level in 30 years – target debt level reduction achieved three years ahead of plan

• Successfully implemented the Long-Term Partnership Agreements, which returned $163 million to participating LPCs in 2020

• Developed and championed additional COVID-19 pandemic-related financial support response in the form of $1.0 billion in LPC credit support, direct fund matching to communities through the Community Care Fund, and business support through the Back-to-Business Credit program

• Established innovation agenda through which TVA has implemented an aggressive and innovative solar program that has resulted in substantial expansion of TVA's solar portfolio without adversely impacting rates

Executive Vice President and Chief Operating Officer

Joined TVA February 1994

2020 TOTAL DIRECT COMPENSATION EARNED

Skaggs's salary was increased seven percent to $663,400 for 2020, reflecting outstanding performance and positioning to maintain a competitive base salary.

EAIP Payment Earned.

Organizational performance under the TVA EAIP Scorecard exceeded target for all but one measure, resulting in a 137 percent payout percentage.

Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the challenges presented by COVID-19.

As a result, the TVA Board approved a 1.0x Corporate Multiplier.

The CEO approved an Individual Performance Multiplier of 1.10x for Mr.

Skaggs for 2020 given his exemplary performance, including those considerations noted under 2020 Individual Performance Highlights.

Long-Term Incentives Earned

Long-Term Performance Awards Earned.

However, several external measures failed to meet threshold targets.

In light of improvements in other key performance areas, such as safety, the TVA Board determined that the 129 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout.

Long-Term Retention Awards Earned.

Skaggs earned $383,000 in 2020 upon the vesting of the 2020 tranches of his 2018, 2019, and 2020 LTR program awards, respectively.

The LTR program awards vest ratably over a three-year period, subject to continued employment on each vesting date.

Long-Term Incentive Opportunities Granted

2020–2022 Long-Term Performance Award Opportunity.

Effective October 1, 2019, Mr.

Skaggs was granted a 2020–2022 LTP program award with a target opportunity of $990,000 which will vest on September 30, 2022.

Actual payout will depend on performance against targets at the end of the three-year performance period.

2020 Long-Term Retention Award Opportunity.

Effective October 1, 2019, Mr.

Skaggs was granted a 2020 LTR program award of $429,000 that vests ratably over a three-year period, subject to continued employment on each vesting date.

The first tranche was earned in 2020 as described above.

2020 INDIVIDUAL PERFORMANCE HIGHLIGHTS

• First and foremost, led the operational teams to the best industrial safety performance in TVA history, with Serious Injury Rate improving to industry top decile and OSHA Injury Rate improving to industry top decile

• Led improvement efforts for critical support functions of supply chain, environmental programs, and security in 2020

• Led significant improvement of non-nuclear generation fleet performance in 2020, exceeding aggressive goals and contributing to lower fuel costs and considerable savings to customers

• Continuously improved transmission reliability in 2020, setting industry performance standards, and resulting in more reliable and higher-quality power delivery to industrial customers, LPCs, and communities

• Executed the Grid 2023 program, which is focused on building the integrated energy system of the future, on schedule and on budget

Executive Vice President and General Counsel

Joined TVA February 2015

2020 TOTAL DIRECT COMPENSATION EARNED

Quirk's salary was increased three percent to $557,291 for 2020, reflecting strong performance and positioning to maintain a competitive base salary.

EAIP Payment Earned.

Organizational performance under the TVA EAIP Scorecard exceeded target for all but one measure, resulting in a 137 percent payout percentage.

Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the challenges presented by COVID-19.

As a result, the TVA Board approved a 1.0x Corporate Multiplier.

The CEO approved an Individual Performance Multiplier of 1.0x for Ms.

Quirk for 2020 given her strong performance, including those considerations noted under 2020 Individual Performance Highlights.

Long-Term Incentives Earned

Long-Term Performance Award Payments Earned.

However, several external measures failed to meet threshold targets.

Long-Term Retention Award Payments Earned.

Quirk earned $290,667 in 2020 upon the vesting of the 2020 tranches of her 2018, 2019, and 2020 LTR program awards, respectively.

The LTR program awards vest ratably over a three-year period, subject to continued employment on each vesting date.

Long-Term Incentive Opportunities Granted

2020–2022 Long-Term Performance Award Opportunity.

Effective October 1, 2019, Ms.

Quirk was granted a 2020–2022 LTP program award with a target opportunity of $695,000, which will vest on September 30, 2022.

Actual payout will depend on performance against targets at the end of the three-year performance period.

2020 Long-Term Retention Award Opportunity.

Effective October 1, 2019, Ms.

Quirk was granted a 2020 LTR program award of $297,000 that vests ratably over a three-year period, subject to continued employment on each vesting date.

The first tranche was earned in 2020 as described above.

2020 INDIVIDUAL PERFORMANCE HIGHLIGHTS

• Effectively led the activities of the Office of the General Counsel ("OGC") across multiple areas of law, including nuclear, regulatory, commercial, environmental, litigation, employment, natural resources, and others

• Served a critical role as an insightful and prudent advisor to the Enterprise Leadership Team and to the TVA Board

• Supported the TVA Board in developing and implementing a number of changes intended to strengthen the company's governance and improve transparency

• Led OGC's critical role in the development of the Long-Term Partnership Proposal and Flexibility Program that was overwhelmingly adopted by local power companies

• Collaboratively restructured the legal department to align with the enterprise's focus of allocation of resources to risks

• Counseled enterprise through a variety of novel legal challenges

• Played key role in developing the basis and structure of the portfolio of COVID-19 pandemic-related programs delivered across the TVA service area

• Made a positive impact on the TVA workforce with actions to strengthen the TVA Ethics Program and TVA Diversity and Inclusion Program

• Led the OGC creation and execution of the OGC pro-bono legal support initiative which launched in Memphis, Tennessee and is already positively impacting lives

Executive Vice President and

Chief Nuclear Officer (effective November 13, 2020;

formerly Senior Vice President and Chief Nuclear Officer)

Joined TVA October 2018

2020 TOTAL DIRECT COMPENSATION EARNED

Rausch's salary was increased three percent to $535,600 for 2020, reflecting strong performance and positioning to maintain a competitive base salary.

EAIP Payment Earned.

Organizational performance under the TVA EAIP Scorecard exceeded target for all but one measure, resulting in a 137 percent payout percentage.

Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the challenges presented by COVID-19.

As a result, the TVA Board approved a 1.0x Corporate Multiplier.

The CEO approved an Individual Performance Multiplier of 1.0x for Mr.

Rausch for 2020 given his strong performance, including those considerations noted under 2020 Individual Performance Highlights.

Long-Term Incentives Earned

Long-Term Retention Award Payments Earned.

Rausch earned $167,750 in 2020 upon the vesting of the 2020 tranches of his 2019 and 2020 LTR program award.

The LTR program award vests ratably over a three-year period, subject to continued employment on each vesting date.

Long-Term Incentive Opportunities Granted

2020–2022 Long-Term Performance Award Opportunity.

Effective October 1, 2019, Mr.

Rausch was granted a 2020–2022 LTP program award with a target opportunity of $500,000, which will vest on September 30, 2022.

Actual payout will depend on performance against targets at the end of the three-year performance period.

2020 Long-Term Retention Award Opportunity.

Effective October 1, 2019, Mr.

Rausch was granted a 2020 LTR program award of $330,000 that vests ratably over a three-year period, subject to continued employment on each vesting date.

The first tranche was earned in 2020 as described above.

Other Compensation

Performance Incentive Arrangement.

Rausch earned $350,000 in 2020 pursuant to the Performance Incentive Arrangement ("PIA") award opportunity that was granted to him in connection with his employment agreement in 2018.

The award opportunity was granted in order to compensate Mr.

Rausch for incentive awards forfeited upon joining TVA but were payable subject to the CEO's evaluation of Mr.

Rausch's performance.

Given his strong performance, including those considerations noted under 2020 Individual Performance Highlights, Mr.

Rausch received his maximum opportunity under the PIA award.

Recruitment and Relocation Incentive.

Rausch was paid $100,000 in 2020 as the second and final tranche of a recruitment and relocation incentive under his employment offer letter.

2020 INDIVIDUAL PERFORMANCE HIGHLIGHTS

• Led strong TVA nuclear fleet progress towards best-in-class operation

• Developed and implemented Nuclear Excellence Plan, resulting in stronger nuclear fleet performance

• Led Extended Power Uprate program at Browns Ferry Nuclear plant that increased cost effective power output by 14 percent and received nuclear industry recognition for project excellence

– Browns Ferry Nuclear Unit 1 completed the longest continuous operating run in its history

• Led four major nuclear plant refueling outages involving thousands of workers, with three completed under budget and two completed on schedule despite challenges presented by the COVID-19 pandemic

– Sequoyah Nuclear Plant, Unit 2, completed its outage in 23 days, which is top quartile performance and contributed to lower fuel costs

• Led the organization in achieving the industry's first Early Site Permit for Small Modular Reactors, which is a critical milestone in the development of this future zero carbon generating resource

CEO Pay Ratio Disclosure

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Item 402(u) of Regulation S-K, TVA is providing the following information regarding the annual total compensation of TVA's CEO position and the annual total compensation of the median employee of the company:

• The total compensation for the CEO position for 2020 was $7,297,233.

• For 2020, the median employee's annual total compensation was $136,920.

Based on this information, the pay ratio of the total compensation for the CEO position to the median employee was approximately 53 to 1.

To identify the median employee and to determine the annual total compensation of the median employee, TVA took the following steps:

• TVA selected September 30, 2020, as the date on which to identify its median employee.

On September 30, 2020, TVA's employee population (including full-time, part-time, and temporary employees) consisted of 9,942 individuals located in the U.S.

• In order to identify the median employee from its employee population, TVA compared the compensation that would be included in Box 5 (Medicare Wages and Tips) of Form W-2, which includes salary, overtime, and incentive compensation, for the period from October 1, 2019 to September 30, 2020.

Box 5 compensation was used as it is representative of the compensation received by all employees and is readily available and objective.

• After identifying its median employee, TVA calculated that employee's compensation for 2020 as though that compensation were being calculated for purposes of the Summary Compensation Table, resulting in annual total compensation of $136,920.

The above pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.

Because Item 402(u) provides companies with flexibility to select the methodology and assumptions used to identify the median employee and to calculate the pay ratio, the pay ratio reported by TVA may not be comparable to the pay ratios reported by other companies.

Executive Compensation Tables and Narrative Disclosures

Summary Compensation and Grants of Plan-Based Awards

The following table provides information on compensation earned by each of the Named Executive Officers in 2019 (and 2018 and 2017 , as applicable).

The following table provides information on compensation earned by each of the NEOs in 2020 (and 2019 and 2018, as applicable).

SUMMARY COMPENSATION TABLE

Name and Principal Position

Name and Principal Position Year Salary Bonus (1)

Non-Equity Incentive Plan Compensation (2)

2 unchanged sentences

All Other Compensation (4)

President and Chief

Executive Officer

Johnson, Retired

Lyash 2020 $ 1,058,000 $ — $ 2,729,609 $ 2,271,647 $ 1,237,977 $ 7,297,233

President and Chief 2019 445,846 380,000 861,969 (5)

5,970,873 (6)

504,835 8,163,523

Executive Officer

Thomas, III 2020 $ 666,584 $ — $ 2,210,410 $ 980,220 $ 21,000 $ 3,878,214

Executive Vice President 2019 648,208 52,500 1,804,797 (7)

1,076,752 (8)

20,625 3,602,882

and Chief Financial Officer 2018 629,023 — 1,692,318 (9)

20,250 2,515,314

Skaggs 2020 $ 663,400 $ — $ 2,150,295 $ 1,609,999 $ 12,600 $ 4,436,294

Executive Vice President 2019 614,692 52,500 1,716,194 (11)

2,017,130 (12)

12,375 4,412,891

and Chief Operating Officer 2018 520,951 — 1,422,133 (13)

12,150 2,275,912

Quirk 2020 $ 557,291 $ — $ 1,695,859 $ 360,648 $ 25,200 $ 2,638,998

Executive Vice President 2019 540,751 47,250 1,441,756 (15)

24,750 2,456,047

and General Counsel 2018 511,254 — 1,288,900 (17)

Timothy Rausch

Senior Vice President

24,300 2,031,620

Rausch 2020 $ 535,600 $ — $ 1,031,390 $ 106,428 $ 159,794 $ 1,833,212

Executive Vice President 2019 502,000 — 713,750 (19)

255,735 1,544,269

and Chief Nuclear Officer

(1) The 2020 data is outlined in the table below.

Lyash John M.

Thomas, III Michael D.

Skaggs Sherry A.

Quirk Timothy S.

LTP Scorecard Adjustment $ — $ — $ — $ — $ —

Sign-on Bonus —

Total $ — $ — $ — $ — $ —

(2) The 2020 data is outlined in the table below.

NON-EQUITY INCENTIVE PLAN COMPENSATION

Lyash John M.

Thomas, III Michael D.

Skaggs Sherry A.

Quirk Timothy S.

EAIP $ 2,391,609 $ 730,576 $ 799,795 $ 534,442 $ 513,640

LTP — 1,096,500 967,500 870,750 —

LTR 2018-03 (A)

— 116,667 100,000 95,000 —

LTR 2019-02 (B)

— 126,667 140,000 96,667 57,750

LTR 2020-01 (C)

Performance Incentive Arrangement ("PIA")

338,000 140,000 143,000 99,000 110,000

Performance Incentive Arrangement ("PIA") (D)

— — — — 350,000

Total $ 2,729,609 $ 2,210,410 $ 2,150,295 $ 1,695,859 $ 1,031,390

(A) LTR grant representing the third tranche of the LTR award effective October 1, 2017.

1 unchanged sentence

(D) Represents the maximum amount payable for the second payment of the PIA.

(3) The 2020 data is outlined in the table below.

CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS

Lyash John M.

Thomas, III Michael D.

Skaggs Sherry A.

Quirk Timothy S.

Increase under TVARS Plans $ — $ 34,401 $ 55,129 $ — $ —

Increase under SERP 2,271,647 945,819 1,554,870 360,648 106,428

Total $ 2,271,647 $ 980,220 $ 1,609,999 $ 360,648 $ 106,428

(4) The 2020 data is outlined in the table below.

ALL OTHER COMPENSATION

Lyash John M.

Thomas, III Michael D.

Skaggs Sherry A.

Quirk Timothy S.

401(k) Matching Contribution $ 12,600 $ 12,600 $ 12,600 $ 12,600 $ 12,600

2 unchanged sentences

Relocation Benefits 120,777 — — — 34,594

(5) Represents $2,354,625 awarded under the EAIP, $2,450,088 awarded under the LTIP, $722,117 awarded under LTR, and $200,000 awarded as a performance incentive arrangement ("PIA").

(6) Reflects increases of $2,969 under the Cash Balance Pension and $1,300,324 under the SERP.

(7) Represents $1,691,003 awarded under the EAIP, $1,793,488 awarded under the ELTIP, $391,366 awarded under the LTR, and $200,000 awarded as a PIA.

(8) Reflects increases of $3,588 under the Cash Balance Pension and $1,552,496 under the SERP.

Total $ 1,237,977 $ 21,000 $ 12,600 $ 25,200 $ 159,794

(5) Represents $861,969 awarded under the EAIP.

(6) Reflects increase of $5,970,873 under the SERP.

(7) Represents $660,630 awarded under the EAIP, $817,500 awarded under the LTIP, and 326,667 awarded under the LTR.

(8) Reflects increases of $60,304 under the Cash Balance Pension and $1,016,448 under the SERP.

(11) Represents $502,654 awarded under the EAIP, $753,983 awarded under the ELTIP, and $150,000 awarded under the LTR.

(12) Reflects increases of $15,312 under the Cash Balance Pension and $278,796 under the SERP.

(9) Represents $653,452 awarded under the EAIP, $772,200 awarded under the LTIP, and $266,666 awarded under the LTR.

(10) Reflects increases of $27,604 under the Cash Balance Pension and $146,119 under the SERP.

(15) Represents $408,115 awarded under the EAIP, $459,130 awarded under the ELTIP, and $133,333 awarded under the LTR.

(11) Represents $575,360 awarded under the EAIP, $817,500 awarded under the LTP, and $323,334 awarded under the LTR.

(12) Reflects increases of $91,600 under the Cash Balance Pension and $1,925,530 under the SERP.

(13) Represents $540,800 awarded under the EAIP, $648,000 awarded under the LTIP, and $233,333 awarded under the LTR.

(14) Represents increases of $49,607 under the Cash Balance Pension and $271,071 under the SERP.

(15) Represents $439,340 awarded under the EAIP, $735,750 awarded under the LTP, and $266,666 awarded under the LTR.

(16) Reflects increases of $401,540 under the SERP.

(17) Represents $464,100 awarded under the EAIP, $604,800 awarded under the LTIP, and $220,000 awarded under the LTR.

(18) Reflects an increase of $207,166 under the SERP.

(19) Represents $344,210 awarded under the EAIP, $524,515 awarded under the ELTIP, and $125,000 awarded under the LTR.

(19) Represents $406,000 awarded under the EAIP, $57,750 awarded under the LTR, and $250,000 awarded under a Performance Incentive Arrangement.

(20) Reflects an increase of $72,784 under the SERP.

7 unchanged sentences

Non-Equity Incentive Plan Awards (1)

Threshold (2)

Current Year Future Years

Name Plan Threshold (2)

Threshold (2)

Performance Period Ending/Vesting Date

Lyash EAIP (3)

$ 793,500 $ 1,587,000 $ 2,380,500 9/30/2020

LTR 2020-01 (5)

338,000 338,000 9/30/2020

— $ 1,012,000 $ 2,024,000 $ 3,036,000 9/30/2021

LTR 2020-02 (5)

— 338,000 338,000 9/30/2021

1,170,500 2,341,000 3,511,500 9/30/2022

LTR 2020-03 (5)

338,000 338,000 9/30/2022

Thomas, III EAIP (3)

$ 266,634 $ 533,267 $ 799,901 9/30/2020

425,000 850,000 1,275,000 9/30/2020

LTR 2018-03 (5)

116,667 116,667 9/30/2020

LTR 2019-02 (5)

126,667 126,667 9/30/2020

LTR 2020-01 (5)

140,000 140,000 9/30/2020

$ 440,000 $ 880,000 $ 1,320,000 9/30/2021

LTR 2019-03 (5)

126,667 126,667 9/30/2021

LTR 2020-02 (5)

140,000 140,000 9/30/2021

490,000 980,000 1,470,000 9/30/2022

LTR 2020-03 (5)

140,000 140,000 9/30/2022

Skaggs EAIP (3)

$ 265,360 $ 530,720 $ 796,080 9/30/2020

375,000 750,000 1,125,000 9/30/2020

LTR 2018-03 (5)

100,000 100,000 9/30/2020

LTR 2019-02 (5)

140,000 140,000 9/30/2020

LTR 2020-01 (5)

143,000 143,000 9/30/2020

$ 490,000 $ 980,000 $ 1,470,000 9/30/2021

LTR 2019-03 (5)

140,000 140,000 9/30/2021

LTR 2020-02 (5)

143,000 143,000 9/30/2021

495,000 990,000 1,485,000 9/30/2022

LTR 2020-03 (5)

143,000 143,000 9/30/2022

Quirk EAIP (3)

$ 195,052 $ 390,104 $ 585,156 9/30/2020

337,500 675,000 1,012,500 9/30/2020

LTR 2018-03 (5)

95,000 95,000 9/30/2020

LTR 2019-02 (5)

96,667 96,667 9/30/2020

LTR 2020-01 (5)

99,000 99,000 9/30/2020

$ 342,500 $ 685,000 $ 1,027,500 9/30/2021

LTR 2019-03 (5)

96,667 96,667 9/30/2021

LTR 2020-02 (5)

99,000 99,000 9/30/2021

347,500 695,000 1,042,500 9/30/2022

LTR 2020-03 (5)

Timothy Rausch

99,000 99,000 9/30/2022

Rausch EAIP (3)

$ 187,460 $ 374,920 $ 562,380 9/30/2020

LTR 2019-02 (5)

57,750 57,750 9/30/2020

LTR 2020-01 (5)

110,000 110,000 9/30/2020

$ 202,125 $ 404,250 $ 606,375 9/30/2021

LTR 2019-03 (5)

57,750 57,750 9/30/2021

LTR 2020-02 (5)

110,000 110,000 9/30/2021

250,000 500,000 750,000 9/30/2022

LTR 2020-03 (5)

110,000 110,000 9/30/2022

(1) TVA does not have any equity securities and therefore has no equity-based awards.

(2) Threshold, Target, and Maximum represent amounts that could be earned by a NEO based on performance during the applicable performance cycle.

(2) Threshold, Target, and Maximum represent amounts that could be earned by an NEO based on performance during the applicable performance cycle.

Threshold, Target, and Maximum targets for EAIP and LTIP are 50 percent, 100 percent, and 150 percent.

1 unchanged sentence

Lyash 150 percent;

Johnson, 150 percent;

Thomas, 80 percent;

3 unchanged sentences

Additionally, a corporate multiplier ranging between 0.00 and 1.00 may be applied which can reduce the award to $0.

An individual performance multiplier of up to 125 percent may also be applied which may increase the award to 187.5

percent of target.

An individual performance multiplier of up to 150 percent may also be applied which may increase the award to 225 percent of target.

Actual EAIP awards earned for performance in 2020 are reported for each of the NEOs under the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table.

See Compensation Discussion and Analysis for a discussion of how each award was determined.

Johnson, and Mr.

Rausch did not work a full year and their target incentive opportunities are prorated based on the number of days worked in the performance cycle.

Details of the prorated target amounts are explained in the 2019 EAIP Payouts in the Compensation Discussion and Analysis.

(4) LTP awards were granted October 1, 2017, and vested September 30, 2020.

At the end of the performance period, TVA's LTIP Scorecard was applied to the grants in order to determine award payouts.

The amount of the award payout based on the calculated scorecard is reported for each of the NEOs under the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table.

The LTP Scorecard Adjustment is reported in the "Bonus" column in the Summary Compensation Table.

In the case of death, the beneficiary will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the participant’s death.

Disability awards will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the participant’s separation from service due to disability.

Award payouts are reported for each of the NEOs under the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table.

(5) All LTR awards will be paid in a lump sum within two months of the September 30th vesting date.

3 unchanged sentences

Actual LTR awards earned in 2020 are reported for each of the NEOs under the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table.

(6) LTP awards were granted October 1, 2017, and will vest September 30, 2020.

Lyash's LTP award was granted October 1, 2019, and will vest September 30, 2021.

All other LTP awards were granted October 1, 2018, and will vest September 30, 2021.

At the end of the performance period, TVA's LTIP Scorecard will be applied to the grants in order to determine award payouts.

The final award may be adjusted by the Board based on the evaluation of the participant's individual achievements, peer group comparisons, and performance results over the performance cycle.

The final award may be adjusted by the TVA Board based on the evaluation of the participant's individual achievements, peer group comparisons, and performance results over the performance cycle.

(7) LTP awards were granted October 1, 2019, and will vest September 30, 2022.

At the end of the performance period, TVA's LTIP Scorecard will be applied to the grants in order to determine award payouts.

The final award may be adjusted by the Board based on the evaluation of the participant's individual achievements, peer group comparisons, and performance results over the performance cycle.

(8) Reflects prorated amount of 31/36ths of initial $2,427,800 grant based on Mr.

Johnson’s retirement date of May 2, 2019.

(9) Reflects prorated amount of 7/12ths of $202,317 tranche vesting September 30, 2019, based on Mr.

Johnson’s retirement date of May 2, 2019.

(10) Reflects prorated amount of 7/12ths of $330,750 tranche vesting September 30, 2019, based on Mr.

Johnson’s retirement date of May 2, 2019.

(11) Reflects prorated amount of 7/12ths of $362,500 tranche vesting September 30, 2019, based on Mr.

Johnson’s retirement date of May 2, 2019.

The final award may be adjusted by the TVA Board based on the evaluation of the participant's individual achievements, peer group comparisons, and performance results over the performance cycle.

(8) Reflects the maximum award Mr.

Rausch was eligible to receive under a Performance Incentive Arrangement (“PIA”).

Rausch was eligible to receive under a PIA.

The actual award to be paid to Mr.

Rausch is reported in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table.

Lyash’s employment offer includes a LTP grant of $2,024,000 effective October 1, 2019.

Although this grant was not effective in FY 2019, it is included in this table as it is a compensation obligation.

(14) Reflects prorated amount of 19/36ths of initial $2,315,250 grant based on Mr.

Johnson’s retirement date of May 2, 2019.

(15) Reflects prorated amount of 7/36ths of initial $2,537,500 grant based on Mr.

Johnson’s retirement date of May 2, 2019.

Retirement and Pension Plans

The table below provides the actuarial present value of the Named Executive Officers' accumulated benefits, including the number of years of credited service, under TVA's retirement and pension plans as of September 30, 2019 , determined using a methodology and interest rate and mortality rate assumptions consistent with those used in the financial statements in this Annual Report, set forth in Note 21 — Benefit Plans .

The table below provides the actuarial present value of the NEOs' accumulated benefits, including the number of years of credited service, under TVA's retirement and pension plans as of September 30, 2020, determined using a methodology and interest rate and mortality rate assumptions consistent with those used in the financial statements in this Annual Report, set forth in Note 21 — Benefit Plans .

PENSION BENEFITS TABLE

Name Plan Name Number of

Years of Credited Service (1)

Present Value of Accumulated Benefit

Payments During Last Year

Timothy Rausch

Present Value of Accumulated Benefit Payments During Last Year

Lyash TVARS N/A N/A (4)

SERP Tier 1 11.417 (2)

$ 8,242,520 —

Thomas, III TVARS 14.833 411,949 —

SERP Tier 1 14.833 4,634,859 —

Skaggs TVARS 26.583 772,678 —

SERP Tier 1 24.000 (3)

Quirk TVARS N/A N/A (4)

SERP Tier 1 5.583 1,110,246 —

Rausch TVARS N/A N/A (4)

SERP Tier 2 1.917 179,212 —

(1) Limited to 24 years when determining supplemental benefits available under SERP Tier 1, described below.

7 unchanged sentences

The Present Value of the Accumulated SERP benefit with 11.417 years of credited service is $8,242,520.

This number is reported in the Summary Compensation Table.

Johnson was granted five additional years of credited service for pre-TVA employment because he was employed with TVA for at least five years and satisfied the minimum five-year vesting requirement;

therefore, the offset for prior employer pension benefits associated with the additional five years of credited service was waived.

In addition, the offset for benefits provided under TVA’s defined benefit plan will be calculated based on the benefit he would be eligible to receive as a participant in the Cash Balance Pension taking into account the additional years of credited service being used for SERP benefit calculation purposes.

In December 2016, the TVA Board approved amendments to Mr.

Johnson’s compensation arrangements to provide, among other things, that if Mr.

Johnson remained with TVA through calendar year 2018, his SERP benefit would be based on 12 years credited service (six credited years and six actual years).

Skaggs has reached the 24 year service cap allowed under the Plan.

Skaggs has reached the 24 year service cap allowed under the SERP.

Quirk, and Mr.

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The 401(k) plan matching contribution is $0.25 on every dollar contributed by the employee up to 1.5 percent of eligible compensation.

None of the Named Executive Officers are in this group.

None of the NEOs are in this group.

• Employees who were first hired prior to January 1, 1996, and who elected to switch pension structures from traditional to cash balance, receive (i) a cash balance pension benefit calculated based on (a) pay-based credits and interest that accrue over time in the employee's account and (b) the employee's age at the time of retirement, and (ii) 401(k) plan matching contributions from TVA.

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The 401(k) plan automatic, non-elective contribution is equal to six percent of eligible compensation, and the matching contribution is dollar-for-dollar on employee contributions up to six percent of eligible compensation.

Johnson was in this group.

None of the NEOs are in this group.

• Employees who were hired prior to July 1, 2014, and who elected to waive their cash balance retirement benefit and transfer their cash balance account to the 401(k) plan effective October 1, 2018, receive a retirement benefit in the 401(k) plan only.

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The eligible compensation in 2020 could not exceed $280,000 pursuant to the IRS annual compensation limit applicable to qualified plans.

Employees with cash balance benefits who have at least five years of cash balance service are eligible at retirement or termination of employment to receive

an immediate benefit in the form of a monthly pension with survivor benefit options or in a lump-sum payment with cash out or rollover options.

Employees with cash balance benefits who have at least five years of cash balance service are eligible at retirement or termination of employment to receive an immediate benefit in the form of a monthly pension with survivor benefit options or in a lump-sum payment with cash out or rollover options.

The pension plan does not provide for early retirement benefits to any NEO or any other employee eligible for cash balance benefits.

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NONQUALIFIED DEFERRED COMPENSATION TABLE

Contributions in 2019

Distributions

Name Executive

Contributions

in 2020 Registrant

Contributions

in 2020 Aggregate

2020 Aggregate

Distributions Aggregate

September 30, 2020

Timothy Rausch

Lyash $ — $ — $ — $ — $ —

Thomas, III — — — — —

Skaggs — — 358,568 (1)

— 5,347,029 (2)

Quirk — — — — —

Rausch — — — — —

(1) Includes vested earnings.

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Upon termination of employment, funds are distributed pursuant to elections made in accordance with applicable IRS regulations.

Participants in the EAIP and LTIP, including the NEOs, were not allowed to elect to defer any portion of their awards received under the plans for 2019 .

Potential Payments on Account of Retirement/Resignation, Termination without Cause, Termination with Cause, Death, or Disability

Potential Payments on Account of Resignation, Retirement, Termination without Cause, Termination with Cause, Death, or Disability

The tables below show certain potential payments that would have been made to each NEO if his or her employment had been terminated on September 30, 2020, under various scenarios.

All of the Named Executive Officers would also be entitled to payments from plans generally available to TVA employees under the specific circumstances of termination of employment, including the health and welfare and pension plans and amounts in the 401(k) plan.

Retirement/Resignation

Termination without Cause

Termination with Cause

All of the NEOs would also be entitled to payments from plans generally available to TVA employees under the specific circumstances of termination of employment, including the health and welfare and pension plans and amounts in the 401(k) plan.

Lyash Resignation Retirement Termination without Cause Termination

with Cause Death Disability

Severance Agreement (1)

$ — $ — $ 2,645,000 $ — $ — $ —

3,483,046 3,483,046 4,558,306 3,483,046 4,558,306 (3)

EAIP 2,391,609 2,391,609 2,391,609 2,391,609 2,391,609 2,391,609

Recruitment/Relocation Incentive (4)

1,092,000 1,092,000 1,092,000 1,092,000 1,092,000 1,092,000

LTR 338,000 338,000 338,000 338,000 619,667 (5)

LTP — 1,792,333 (7)

— — 1,792,333 (8)

1,792,333 (9)

Deferred Compensation — — — — — —

13 unchanged sentences

Lyash received a Recruitment/Relocation Incentive of $1,784,000 upon employment, and $1,092,000 of this amount vested on September 30, 2020.

(5) The LTIP provides that in the event of the death of a participant, the participant’s beneficiary is entitled to (1) any LTP award that had vested at the time of the participant’s death but not been paid and (2) any LTP awards that had not vested at the time of the participant’s death and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was participating in the plan during the applicable performance cycle.

(5) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to any portion of a LTR award that had vested at the time of the participant's death but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award for each vesting period will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(6) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to any portion of a LTR award that had vested at the time of the separation from service but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(7) The LTIP provides that in the event of the retirement of a participant, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated using the actual percent of opportunity achieved and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

The amount included in the table assumes that the percent of opportunity achieved will be 100 percent of target for the performance cycles ending on September 30, 2021 and September 30, 2022.

(8) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to (1) any LTP award that had vested at the time of the participant's death but not been paid and (2) any LTP awards that had not vested at the time of the participant's death and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will

be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was participating in the plan during the applicable performance cycle

(9) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

Retirement/Resignation

Termination without Cause

Termination with Cause

Thomas, III Resignation Retirement Termination without Cause Termination with Cause Death Disability

Severance Agreement (1)

$ — $ — $ — $ — $ — $ —

SERP 4,634,859 (2)(3)(4)

4,634,859 (2) (3) (4)

4,634,859 (2) (5)

4,634,859 (2) (3)

EAIP 730,576 730,576 730,576 730,576 730,576 730,576

LTR 383,334 383,334 383,334 383,334 563,334 (6)

LTP 1,096,500 2,009,833 (8)

1,096,500 1,096,500 2,009,833 (9)

2,009,833 (10)

Deferred Compensation — — — — — —

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(7) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to any portion of a LTR award that had vested at the time of the separation from service but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(8) In the event of retirement, Mr.

Thomas will receive $870,000 upon retirement, two-thirds of the actual LTP award that vests on September 30, 2020, and one-third of the actual LTP award that vests on September 30, 2021.

(8) The LTIP provides that in the event of the retirement of a participant, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated using the actual percent of opportunity achieved and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

The amount included in the table assumes that the percent of opportunity achieved will be 100 percent of target for the performance cycles ending on September 30, 2021 and September 30, 2022.

(9) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to (1) any LTP award that had vested at the time of the participant's death but not been paid and (2) any LTP awards that had not vested at the time of the participant's death and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was participating in the plan during the applicable performance cycle.

(10) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

Retirement/Resignation

Termination without Cause

Termination with Cause

Skaggs Resignation Retirement Termination without Cause Termination with Cause Death Disability

Severance Agreement (1)

$ — $ — $ — $ — $ — $ —

SERP 7,893,997 (2) (3) (4)

7,893,997 (2) (3) (4)

7,893,997 (2) (5)

7,893,997 (2) (3)

EAIP 799,795 799,795 799,795 799,795 799,795 799,795

LTR 383,000 383,000 383,000 383,000 572,167 (6)

LTP 967,500 1,950,833 (8)

967,500 967,500 1,950,833 (9)

1,950,833 (10)

Deferred Compensation (11)

5,347,029 5,347,029 5,347,029 5,347,029 5,347,029 5,347,029

Total Value of Potential Payments $ 15,391,321 $ 16,374,654 $ 15,391,321 $ 15,391,321 $ 16,563,821 $ 16,563,821

2 unchanged sentences

(3) Actual benefit would be paid in ten annual installments beginning on the date of Mr.

Skaggs' separation from service.

Skaggs's separation from service.

(4) Assumes that the TVA Board or its delegate determines that the termination is an approved termination under SERP.

4 unchanged sentences

(8) In the event of retirement, Mr.

Skaggs will receive $870,000 upon retirement, two-thirds of the actual LTP award that vests on September 30, 2020, and one-third of the actual LTP award that vests on September 30, 2021.

The amount included in the table assumes that the percent of opportunity achieved will be 100 percent of target for the performance cycles ending on September 30, 2021 and September 30, 2022.

2 unchanged sentences

Skaggs earned in past years but elected to defer, which are payable pursuant to elections he made and applicable IRS rules.

Retirement/Resignation

Termination without Cause

Termination with Cause

Quirk Resignation Retirement Termination without Cause Termination with Cause Death Disability

Severance Agreement (1)

$ — $ — $ 557,291 $ — $ — $ —

SERP 1,110,246 (2)

1,110,246 (2) (3) (4)

1,110,246 (2) (5)

1,110,246 (2) (3)

EAIP 534,442 534,442 534,442 534,442 534,442 534,442

LTR 290,667 290,667 290,667 290,667 421,501 (7)

LTP 870,750 1,559,083 (6)

870,750 870,750 1,559,083 (9)

1,559,083 (10)

Deferred Compensation — — — — — —

2 unchanged sentences

Quirk that provides a lump-sum payment equal to one year's annual salary in the event TVA terminates her employment without cause.

(2) The five-year vesting requirement has not been met.

(2) Represents the present value of the accumulated benefit.

(3) Actual benefit would be paid in ten annual installments beginning on the date of Ms.

Quirk's separation from service.

(4) Assumes that the TVA Board or its delegate determines that the termination is an approved termination under SERP.

See Retirement and Pension Plans — Supplemental Executive Retirement Plan above for a discussion of approved and unapproved terminations under SERP.

(5) In the event of death while employed by TVA, the beneficiary would receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivor benefit.

Survivor will receive 50 percent of the reported value.

(6) The LTIP provides that in the event of the retirement of a participant, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated using the actual percent of opportunity achieved and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

The amount included in the table assumes that the percent of opportunity achieved will be 100 percent of target for the performance cycles ending on September 30, 2021 and September 30, 2022.

(7) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to any portion of a LTR award that had vested at the time of the participant's death but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award for each vesting period will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

2 unchanged sentences

Timothy Rausch

Retirement/Resignation

Termination without Cause

Termination with Cause

Rausch Resignation Retirement Termination without Cause Termination with Cause Death Disability

Severance Agreement (1)

$ — $ — $ — $ — $ — $ —

179,212 (3) (4)

EAIP 513,640 513,640 513,640 513,640 513,640 513,640

LTR 167,750 167,750 167,750 167,750 288,291 (6)

LTP — 436,167 (5)

— — 436,167 (8)

Deferred Compensation — — — — — —

5 unchanged sentences

Survivor will receive 50 percent of the reported value.

(5) The LTIP provides that in the event of the retirement of a participant, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated using the actual percent of opportunity achieved and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

The amount included in the table assumes that the percent of opportunity achieved will be 100 percent of target for the performance cycles ending on September 30, 2021 and September 30, 2022.

(6) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to any portion of a LTR award that had vested at the time of the participant's death but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award for each vesting period will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

2 unchanged sentences

Post-Retirement Payments for Mr.

Payments for 2019

Estimated Payments

Severance Agreement

Deferred Compensation

Johnson retired from TVA on May 2, 2019.

Represents the first SERP benefit installment (one of five) paid within 60 days following retirement.

Represents the present value of the accumulated benefit, as of September 30, 2019, to be paid in four remaining annual installments.

The payment will be made in November or December of 2019.

Johnson will receive 19/36ths of the actual LTP award that vests on September 30, 2020, and 7/36ths of the actual LTP award that vests on September 30, 2021.

Assuming 100 percent payout, these amounts will be $1,221,938 and $493,403, respectively.

Other Agreements

Except as described above and in the Compensation Discussion and Analysis, there are no other agreements between TVA and any of the NEOs.

CEO Pay Ratio Disclosure

The total compensation for the CEO position for 2019 was $15,099,142.

This amount equals the total compensation for Mr.

Johnson (former CEO) and Mr.

Lyash (current CEO) as reported in the Summary Compensation table.

For 2019, Mr.

Johnson's annual total compensation was $6,935,619.

For 2019, Mr.

Lyash's annual total compensation was $8,163,523.

For 2019, the median employee's annual total compensation was $134,749.

Based on this information, the pay ratio of the total compensation for the CEO position to the median employee was approximately 112 to 1.

To identify the median employee and to determine the annual total compensation of the median employee and Mr.

Lyash and Mr.

Johnson, TVA took the following steps:

TVA selected September 30, 2019 as the date on which to identify its median employee.

On September 30, 2019, TVA's employee population (including full-time, part-time, and temporary employees) consisted of 11,013 individuals located in the U.S.

In order to identify the median employee from its employee population, TVA compared the compensation that would be included in Box 5 (Medicare Wages and Tips) of Form W-2, which includes salary, overtime, and incentive compensation, for the period from October 1, 2018 to September 30, 2019.

Box 5 compensation was used as it is representative of the compensation received by all employees and is readily available and objective.

After identifying its median employee, TVA calculated that employee's compensation for 2019 as though that compensation were being calculated for purposes of the Summary Compensation Table, resulting in annual total compensation of $134,749.

The above pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.

Director Compensation

The TVA Act provides for up to nine directors on the TVA Board.

As of November 14, 2019, the TVA Board consisted of nine members.

As of November 16, 2020, the TVA Board consisted of five members.

Under the TVA Act, each director receives certain stipends that are increased annually by the same percentage increase applicable to adjustments under 5 U.S.C.

§ 5318, which adjusts the annual rates of pay of employees on the Executive Schedule of the U.S.

Effective January 6, 2019, the annual stipend for TVA directors was increased to $52,702 per year unless (1) the director chairs a TVA Board committee, in which case the stipend was increased to $53,745 per year, or (2) the director is the Chair of the TVA Board, in which case the stipend was increased to $58,650 per year.

Effective January 5, 2020, the annual stipend for TVA directors was increased from $52,702 to $54,072 per year unless (1) the director chairs a TVA Board committee, in which case the stipend was increased from $53,745 to $55,142 per year, or (2) the director is the Chair of the TVA Board, in which case the stipend was increased from $58,650 to $60,175 per year.

Directors are also reimbursed under federal law for travel, lodging, and related expenses while attending meetings and for other official TVA business.

1 unchanged sentence

TVA BOARD ANNUAL STIPENDS

Annual Stipend

Thompson, III

Name Annual Stipend

Ryder $ 60,175

Frazier 55,142

William Kilbride 55,142

1 unchanged sentence

DIRECTOR COMPENSATION

Fees Earned or Paid in Cash

Name Fees Earned or Paid in Cash Stock

Awards Option

Awards Non-Equity

Incentive Plan

Compensation Change in

Pension Value

All Other Compensation (2)

Thompson, III

Compensation (2)

Ryder $ 55,964 — — — — $ 2,239 $ 58,203

Allen 55,020 — — — — 550 55,570

Frazier 55,021 — — — — 2,751 57,772

Kilbride 53,864 — — — — 539 54,403

Smith 55,308 — — — — 2,489 57,797

(1) TVA directors do not participate in the TVARS Retirement Plans, TVA's SERP, or any non-qualified deferred compensation plan available to TVA employees.

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FERS is administered by the federal Office of Personnel Management, and information regarding the value of FERS pension benefits is not available to TVA.

(2) These amounts include TVA's non-elective and matching contributions to the TSP.

(2) These amounts include TVA's non-elective and matching contributions to the Thrift Savings Plan.

The directors are not eligible to participate in any incentive programs available to TVA employees.

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Directors are eligible for immediate, unreduced retirement benefits once (1) they reach age 62 and have five years of FERS creditable service, (2) they reach age 60 and have 20 years of FERS creditable service, or (3) they attain the minimum retirement age and accumulate the specified years of service as set forth in the FERS regulations.

Generally, benefits are calculated by multiplying 1.0 percent of the highest average salary during any three consecutive years of service by the number of years of creditable service.

Generally, benefits are

calculated by multiplying 1.0 percent of the highest average salary during any three consecutive years of service by the number of years of creditable service.

Directors who retire at age 62 or later with at least 20 years of FERS creditable service receive an enhanced benefit (a factor of 1.1 percent is used rather than 1.0 percent).

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Compensation Committee Interlocks and Insider Participation

The People and Performance Committee of the TVA Board currently consists of the following four directors:

Lodge, Ronald A.

Walter, James R.

Thompson, III, and Kenneth Allen.

No executive officer of TVA serves on the board of an entity that has an executive officer serving as a director of TVA.

The People and Performance Committee of the TVA Board currently consists of the following two directors:

Kenneth Allen and A.D.

No member of this Committee was at any time during 2020 or at any other time an officer or employee of TVA, and no member of this committee had any relationship with TVA requiring disclosure under Item 404 of Regulation S-K.

No executive officer of TVA has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of the People and Performance Committee during 2020.

Compensation Committee Report

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PEOPLE AND PERFORMANCE COMMITTEE

Thompson, III

Kenneth Allen, Chair-Elect

Kenneth Allen, Chair

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

9 unchanged sentences

§ 208) and the Standards of Ethical Conduct for Employees of the Executive Branch (5 C.F.R.

part 2635) ("Standards of Ethical Conduct") form the basis of TVA's policies and procedures for the review, approval, or ratification of related party transactions.

part 2635) ("Standards of Ethical

Conduct") form the basis of TVA's policies and procedures for the review, approval, or ratification of related party transactions.

The general federal conflict of interest statute, subject to certain exceptions, prohibits each government employee, including TVA's directors and executive officers, from participating personally and substantially (by advice, decision, or otherwise) as a government employee in any contract, controversy, proceeding, request for determination, or other particular matter in which, to his or her knowledge, he or she (or his or her spouse, minor child, general partner, organization with which he or she serves as officer, director, employee, trustee, or general partner, or any person or organization with which he or she is negotiating, or has an arrangement, for future employment) has a financial interest.

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More broadly, Subpart E of the Standards of Ethical Conduct provides that where an employee (1) knows that a particular matter involving specific parties is likely to have a direct and predictable effect on the financial interests of a member of his or her household, or that a person with whom the employee has a "covered relationship" (which includes, but is not limited to, persons with whom the employee has a close family relationship and organizations in which the employee is an active participant) is or represents a party to the matter, and (2) determines that the circumstances would cause a reasonable person with knowledge of relevant facts to question his or her impartiality in the matter, the employee should not participate in the matter absent agency authorization.

participation in the matter outweighs the concern that a reasonable person may question the integrity of TVA's programs and operations.

This authorization may be given by the employee's supervising officer, as agency designee, in consultation with the TVA Designated Agency Ethics Official, upon the determination that TVA's interest in the employee's participation in the matter outweighs the concern that a reasonable person may question the integrity of TVA's programs and operations.

The previously described restrictions are reflected in TVA's policies which require employees, including directors and executive officers, to comply with the guidelines outlined in the Standards of Ethical Conduct and which restate the standard of the conflict of interest statute.

2 unchanged sentences

It also establishes an additional policy that is applicable to TVA's directors and CEO.

This additional policy provides that TVA's directors and CEO shall not hold a financial interest in (1) any distributor of TVA power, (2) any entity engaged primarily in the wholesale or retail generation, transmission, or sale of electricity, except where substantially all such business is conducted outside of North America, or (3) any entity that may reasonably be perceived as likely to be adversely affected by the success of TVA as a producer or transmitter of electric power.

This additional policy provides that TVA's directors and CEO shall not hold a financial interest in (1) any distributor of TVA power;

(2) any entity engaged primarily in the wholesale or retail generation, transmission, or sale of electricity, except where substantially all such business is conducted outside of North America;

or (3) any entity that may reasonably be perceived as likely to be adversely affected by the success of TVA as a producer or transmitter of electric power.

Any waiver of this additional policy may be made only by the TVA Board and will be disclosed promptly to the public, subject to the limitations on disclosure imposed by law.

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There were no outstanding borrowings under the facility at September 30, 2020.

This credit facility matures on September 30, 2020, and is expected to be renewed.

This credit facility has a maturity date of September 30, 2021, and is typically renewed annually.

This arrangement is pursuant to the TVA Act.

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(in actual dollars)

Principal Accountant

Audit Fees (1)

Audit-Related Fees

All Other Fees (2)

Year Principal Accountant Audit Fees (1)

Audit-Related Fees Tax Fees All Other Fees (2)

2020 Ernst & Young LLP $ 3,007,830 $ — $ — $ 5,930 $ 3,013,760

42 unchanged sentences

4.1 Basic Tennessee Valley Authority Power Bond Resolution Adopted by the TVA Board of Directors on October 6, 1960, as Amended on September 28, 1976, October 17, 1989, and March 25, 1992 (Incorporated by reference to Exhibit 4.1 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No.

Amended and Restated September Maturity Credit Agreement Dated as of September 28, 2018, Among Tennessee Valley Authority, as the Borrower, Toronto Dominion (Texas) LLC, as Administrative Agent, The Toronto-Dominion Bank, New York Branch, as Letter of Credit Issuer and a Lender, Canadian Imperial Bank of Commerce, New York Branch, First Tennessee Bank National Association, Morgan Stanley Bank, N.A., and The Bank of New York Mellon (Incorporated by Reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on October 3, 2018, File No.

10.1 Amended and Restated September Maturity Credit Agreement Dated as of September 28, 2018, Among Tennessee Valley Authority, as the Borrower, Toronto Dominion (Texas) LLC, as Administrative Agent, The Toronto-Dominion Bank, New York Branch, as Letter of Credit Issuer and a Lender, Canadian Imperial Bank of Commerce, New York Branch, First Tennessee Bank National Association, Morgan Stanley Bank, N.A., and The Bank of New York Mellon (Incorporated by r eference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on October 3, 2018, File No.

10.2 Amended and Restated June Maturity Credit Agreement Dated as of June 13, 2018, Among Tennessee Valley Authority, as the Borrower, Royal Bank of Canada, as Administrative Agent, Letter of Credit Issuer, and a Lender, Barclays Bank PLC, BNP Paribas, Branch Banking and Trust Company, Mizuho Bank Ltd, Regions Bank, SunTrust Bank, and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on June 18, 2018, File No.

10.3 $500,000,000 February Maturity Credit Agreement Dated as of August 7, 2015, Among TVA, Bank of America, N.A., as Administrative Agent, Letter of Credit Issuer, and a Lender, and the Other Lenders Party Thereto (Incorporated by reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on August 7, 2015, File No.

First Amendment Dated as of February 28, 2017, to the $500,000,000 February Maturity Credit Agreement Dated as of August 7, 2015, Among TVA, Bank of America, N.A., as Administrative Agent, Letter of Credit Issuer, and a Lender, and the Other Lenders Party Thereto (Incorporated by Reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on March 3, 2017, File No.

Second Amendment Dated as of February 21, 2018, to the $500,000,000 February Maturity Credit Agreement Dated as of August 7, 2015, and Amended as of February 28, 2017, among TVA, Bank of America, N.A., as Administrative Agent, Letter of Credit Issuer, and a Lender, and the Other Lenders Party Thereto (Incorporated by Reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on February 26, 2018, File No.

10.4 First Amendment Dated as of February 28, 2017, to the $500,000,000 February Maturity Credit Agreement Dated as of August 7, 2015, Among TVA, Bank of America, N.A., as Administrative Agent, Letter of Credit Issuer, and a Lender, and the Other Lenders Party Thereto (Incorporated by r eference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on March 3, 2017, File No.

10.5 Second Amendment Dated as of February 21, 2018, to the $500,000,000 February Maturity Credit Agreement Dated as of August 7, 2015, and Amended as of February 28, 2017, among TVA, Bank of America, N.A., as Administrative Agent, Letter of Credit Issuer, and a Lender, and the Other Lenders Party Thereto (Incorporated by r eference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on February 26, 2018, File No.

10.6 Third Amendment Dated as of February 27, 2020, to the $500,000,000 February Maturity Credit Agreement Dated as of August 7, 2015, and Amended as of February 28, 2017, and February 21, 2018, among TVA, Bank of America, N.A., as Administrative Agent, Letter of Credit Issuer, and a Lender, and the Other Lenders Party Thereto (Incorporated by reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on March 3, 2020, File No.

10.7 December 2019 Maturity Community Bank Credit Agreement Dated as of December 12, 2016, with SunTrust Bank as Administrative Agent and a Lender, Branch Banking and Trust Company as Letter of Credit Issuer and a Lender, First National Bank, First Tennessee Bank National Association, HomeTrust Bank, Pinnacle Bank, Regions Bank, Trustmark National Bank, and United Community Bank (Incorporated by reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on December 15, 2016, File No.

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10.29* Consent Decree Among Alabama, Kentucky, North Carolina, Tennessee, the Alabama Department of Environmental Management, the National Parks Conservation Association, Inc., the Sierra Club, Our Children's Earth Foundation, and TVA (Incorporated by reference to Exhibit 10.3 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, File No.

Amended and Restated TVA Compensation Plan Approved by the TVA Board on August 22, 2019 (Incorporated by Reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on August 28, 2019, File No.

10.30† Amended and Restated TVA Compensation Plan Approved by the TVA Board on August 22, 2019 (Incorporated by r eference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on August 28, 2019, File No.

10.31† Amended and Restated Supplemental Executive Retirement Plan Effective as of May 1, 2015 (Incorporated by reference to Exhibit 10.1 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, File No.

10.32† Amended and Restated Executive Annual Incentive Plan Effective as of October 1, 2015 (Incorporated by reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on October 1, 2015, File No.

Deferred Compensation Plan (Incorporated by reference to Exhibit 10.2 to TVA's Current Report on Form 8-K filed on January 6, 2009, File No.

Amended and Restated Long-Term Incentive Plan Dated as of August 22, 2018 (Incorporated by reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on August 22, 2018, File No.

10.33† Amended and Restated Deferred Compensation Plan Adopted as of May 4, 2020 (Incorporated by reference to Exhibit 10.2 to TVA's Quarterly Report on Form 10 - Q for the quarter ended March 31, 2020 , File No.

10.34† Amended and Restated Long-Term Incentive Plan Dated as of November 12, 2020

10.35† Retention Incentive Plan Effective as of October 1, 2015 (Incorporated by reference to Exhibit 10.2 to TVA's Current Report on Form 8-K filed on October 1, 2015, File No.

Offer Letter to William D.

Johnson Approved as of November 1, 2012 (Incorporated by reference to Exhibit 99.1 to TVA's Current Report on Form 8-K filed on November 7, 2012, File No.

10.36† Offer Letter to Jeffrey J.

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10.38† Offer Letter to Sherry A.

Quirk Accepted as of December 29, 2014 (Incorporated by Reference to Exhibit 10.40 to TVA's Annual Report on Form 10-K for the year ended September 30, 2017, File No.

Quirk Accepted as of December 29, 2014 (Incorporated by r eference to Exhibit 10.40 to TVA's Annual Report on Form 10-K for the year ended September 30, 2017, File No.

10.39† Offer Letter to Timothy S.

Rausch Accepted as of September 18, 2018

Deferral Agreement Between TVA and Michael D.

Skaggs Dated as of March 20, 2013 (Incorporated by reference to Exhibit 10.62 to TVA's Annual Report on Form 10-K for the year ended September 30, 2013, File No.

Rausch Accepted as of September 18, 2018 (Incorporated by reference to Exhibit 10.39 to TVA's Annual Report on Form 10-K/A for the year ended September 30, 2019, File No.

14.1 Disclosure and Financial Ethics Code (Incorporated by reference to Exhibit 14 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No.

4 unchanged sentences

32.2 Section 1350 Certification Executed by the Chief Financial Officer

TVA XBRL Instance Document

TVA XBRL Taxonomy Extension Schema

TVA XBRL Taxonomy Extension Calculation Linkbase

TVA XBRL Taxonomy Extension Definition Linkbase

TVA XBRL Taxonomy Extension Label Linkbase

TVA XBRL Taxonomy Extension Presentation Linkbase

101.INS TVA XBRL Instance Document

101.SCH TVA XBRL Taxonomy Extension Schema

101.CAL TVA XBRL Taxonomy Extension Calculation Linkbase

101.DEF TVA XBRL Taxonomy Extension Definition Linkbase

101.LAB TVA XBRL Taxonomy Extension Label Linkbase

101.PRE TVA XBRL Taxonomy Extension Presentation Linkbase

† Management contract or compensatory arrangement.

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Pursuant to the requirements of Section 13, 15(d), or 37 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

November 14, 2019

TENNESSEE VALLEY AUTHORITY

November 16, 2020 TENNESSEE VALLEY AUTHORITY

/s/ Jeffrey J.

1 unchanged sentence

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Jeffrey J.

President and Chief Executive Officer

November 14, 2019

(Principal Executive Officer)

Executive Vice President and

November 14, 2019

Chief Financial Officer

Lyash President and Chief Executive Officer November 16, 2020

Lyash (Principal Executive Officer)

Thomas, III Executive Vice President and November 16, 2020

Thomas, III Chief Financial Officer

(Principal Financial Officer)

/s/ Diane Wear

Vice President and Controller

November 14, 2019

(Principal Accounting Officer)

November 14, 2019

Thompson, III

November 14, 2019

William Kilbride

November 14, 2019

/s/ Diane Wear Vice President and Controller November 16, 2020

Diane Wear (Principal Accounting Officer)

/s/ John Ryder Chair November 16, 2020

/s/ Kenneth E.

Allen Director November 16, 2020

Frazier Director November 16, 2020

Smith Director November 16, 2020

/s/ William B.

Kilbride Director November 16, 2020

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures