Tennessee Valley Authority 10-K

ITEM 9A. CONTROLS AND PROCEDURES 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) ("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 (a) Management's Annual Report on Internal Control over Financial Reporting TVA's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) and required by Section 404 of the Sarbanes-Oxley Act. TVA's internal control over financial reporting is designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Because of the inherent limitations in all control systems, internal control over financial reporting and systems may not prevent or detect misstatements. 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 design and effectiveness of TVA's internal control over financial reporting as of September 30, 2020, based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, TVA's management concluded that TVA's internal control over financial reporting was effective as of September 30, 2020. Although the effectiveness of internal control over financial reporting was not required to be subject to attestation by TVA's independent registered public accounting firm, TVA has chosen to obtain such a report. Ernst & Young LLP, the independent registered public accounting firm that audited the financial statements included in this Annual Report, has issued an attestation report on TVA's internal control over financial reporting. (b) Changes in Internal Control over Financial Reporting During the quarter ended September 30, 2020, there were no changes in TVA's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, TVA's internal control over financial reporting. 152 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors of Tennessee Valley Authority Opinion on Internal Control over Financial Reporting We have audited Tennessee Valley Authority's internal control over financial reporting as of September 30, 2020, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO Criteria). In our opinion, Tennessee Valley Authority (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2020, based on the COSO criteria . We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), changes in proprietary capital and cash flows for each of the three years in the period ended September 30, 2020, and the related notes and our report dated November 16, 2020 expressed an unqualified opinion thereon. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Chattanooga, Tennessee November 16, 2020 153 Table of Contents ITEM 9B. OTHER INFORMATION 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: John M. Thomas, III • 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. Michael D. Skaggs • 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. Sherry A. Quirk • 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. Timothy S. Rausch • 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. 154 Table of Contents 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 (50%) Target (100%) Maximum (150%) 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 Notes (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. 155 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE Directors 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. Senate. 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. citizen; (ii) must have management expertise relative to a large for-profit or nonprofit corporate, government, or academic structure; (iii) cannot be a TVA employee; (iv) must make a full disclosure to Congress of any investment or other financial interest that the individual holds in the energy industry; and (v) must affirm support for the objectives and missions of TVA, including being a national leader in technological innovation, low-cost power, and environmental stewardship. In addition, the President of the U.S., in appointing members of the TVA Board, must (i) consider recommendations from other public officials such as the Governors of the states in TVA's service area; individual citizens; business, industrial, labor, electric power distribution, environmental, civic, and service organizations; and the congressional delegations of the states in TVA's service area; and (ii) seek qualified members from among persons who reflect the diversity, including geographical diversity, and needs of TVA's service area. At least seven of the nine TVA Board members must be legal residents of the TVA service area. 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. After a member's term ends, the member is permitted under the TVA Act to remain in office until the earlier of the end of the then-current session of Congress or the date a successor takes office. The TVA Board, among other things, establishes broad goals, objectives, and policies for TVA; develops long-range plans to guide TVA in achieving these goals, objectives, and policies; approves annual budgets; and establishes a compensation plan for employees. 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 John L. Ryder, Chair (1) 71 2019 2021 Kenneth E. Allen 74 2018 2021 A.D. Frazier 76 2018 2022 William B. Kilbride 69 2019 2023 Jeff W. Smith 61 2018 2022 Note (1) Mr. Ryder assumed the Board Chair role on August 13, 2020. Mr. 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. Mr. Allen of White Plains, Kentucky, joined the TVA Board in January 2018. He spent more than 50 years in the coal industry and held a number of executive management positions prior to his retirement in June 2017. Most recently, he served as Executive Vice President and Chief Operating Officer ("COO") of Armstrong Energy, Inc. from July 2014 to June 2017, as Executive Vice President of Operations for Armstrong Energy, Inc. from 2011 to July 2014, and as COO of Armstrong Coal Company, Inc. from December 2013 until June 2017. He is currently a member of the Board of Directors for the First United Bank in Madisonville, Kentucky. Mr. Frazier of Mineral Bluff, Georgia, joined the TVA Board in January 2018. Since July 2012, he has served as President Emeritus of Georgia Oak Partners, LLC, a private equity company. Mr. 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. Mr. Kilbride of Chattanooga, Tennessee, joined the TVA Board in August 2019. He served as the president and CEO of the Chattanooga Area Chamber of Commerce from July 2014 until his retirement in January 2017, where he led multiple initiatives to attract and retain business to southeast Tennessee. 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. 156 Table of Contents Mr. Smith of Knoxville, Tennessee, joined the TVA Board in January 2018. Since April 2000, Mr. Smith has served as the deputy for operations at Oak Ridge National Laboratory ("ORNL"). Since April 2001, he has also served as the President of UT-Battelle Development Corporation, an entity established to develop privately constructed facilities at ORNL. During a six-month special assignment in 2002, he assisted with the creation of the U.S. Department of Homeland Security. 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 Title Age Employment Commenced Jeffrey J. Lyash President and Chief Executive Officer 59 2019 John M. Thomas, III Executive Vice President and Chief Financial Officer 57 2005 Michael D. Skaggs Executive Vice President and Chief Operating Officer 60 1994 Sherry A. Quirk Executive Vice President and General Counsel 66 2015 Timothy S. Rausch Executive Vice President and Chief Nuclear Officer 56 2018 Susan E. 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) Diane T. Wear Vice President and Controller (Principal Accounting Officer) 52 2008 Note (1) Ms. Mills commenced employment with TVA on February 3, 2020. Mr. Lyash has served as TVA's President and CEO since April 2019. He previously served as the President and Chief Executive Officer of Ontario Power Generation Inc. ("OPG"), an electric utility, from August 2015 until April 2019. Prior to joining OPG, Mr. Lyash served as the President of the Power Business Unit of Chicago Bridge & Iron Company N.V., an engineering, procurement, and construction company, from July 2013 to August 2015, as Executive Vice President of Energy Supply for Duke Energy Corporation, an electric utility, from July 2012 to December 2012, and as Executive Vice President of Energy Supply for Progress Energy, Inc. ("Progress Energy"), an electric utility, from June 2010 to July 2012. Mr. Lyash joined Progress Energy (formerly Carolina Power & Light Company) in 1993 and held a number of other positions before assuming the role of Executive Vice President of Energy Supply, including Executive Vice President of Corporate Development from July 2009 to June 2010, President and Chief Executive Officer of Progress Energy Florida, Inc., from June 2006 to July 2009, Senior Vice President of Energy Delivery for Progress Energy Florida, Inc., from November 2003 to June 2006, and Vice President of Transmission for Progress Energy Carolinas, Inc., from January 2002 to October 2003. He also held a wide range of management and executive roles in Progress Energy's nuclear program, including Operations Manager, Engineering Manager, Plant Manager, and Director of Site Operations. Mr. Lyash began his career in the utility industry in 1981 and worked for Pennsylvania Power & Light before joining the U.S. Nuclear Regulatory Commission ("NRC"), where he worked from 1984 to 1993. While at the NRC, Mr. Lyash held a number of senior technical and management positions and also worked from June 1984 to May 1985 as an engineer at Browns Ferry Nuclear Plant while on loan to TVA. Mr. Lyash has served as a director for the Electric Power Research Institute ("EPRI") since 2015 and is currently Chair of the EPRI Board, and he has served as a director for Granite Construction Inc. since June 2018. Mr. 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. Mr. Skaggs was named TVA's Executive Vice President and COO effective October 2018. Since joining TVA in 1994 as Manager of Projects at Watts Bar Nuclear Plant ("Watts Bar"), Mr. Skaggs has held several management positions, including Executive Vice President, Operations from October 2016 to September 2018, Senior Vice President, Watts Bar Operations and Construction from September 2013 to October 2016, Senior Vice President, Nuclear Construction from February 2012 to September 2013, Senior Vice President of Nuclear Generation Development and Construction from October 2011 to February 2012, Site Vice President of Sequoyah Nuclear Plant from November 2010 to October 2011, Vice President of Nuclear Operations Support from December 2009 to November 2010, Site Vice President at Watts Bar from July 2005 to December 2009, and Site Vice President at Browns Ferry Nuclear Plant from July 2004 to July 2005. Ms. Quirk has served as TVA's Executive Vice President and General Counsel since February 2015. From October 2010 to February 2015, Ms. Quirk was an equity partner in the law firm of Schiff Hardin LLP, which specializes in federal energy regulation, legislation, and power supply transactions. Prior to joining Schiff Hardin, Ms. Quirk was a partner in the Energy 157 Table of Contents 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. Mr. Rausch joined TVA in October 2018 as Senior Vice President and Chief Nuclear Officer. Before joining TVA, Mr. Rausch served as the Senior Vice President and Chief Nuclear Officer of Talen Energy Corporation from June 2015 until September 2018 and as the Senior Vice President and Chief Nuclear Officer of PPL Generation, LLC from July 2009 to June 2015. Mr. 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. In November 2020, he was named Executive Vice President and Chief Nuclear Officer. Ms. 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 November 2020, she was named Executive Vice President, Chief People and Communications Officer to reflect the broader scope of her role. Ms. 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. Ms. 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. Ms. Wear has served as TVA's Vice President and Controller since March 2012. Ms. Wear was the Assistant Controller from February 2010 to March 2012. Between April 2008, when she joined TVA, and February 2010, Ms. Wear was the General Manager, External Reporting/Accounting Policy and Research. Prior to joining TVA, Ms. Wear was a Managing Director at PricewaterhouseCoopers LLP. Ms. Wear joined a predecessor firm to PricewaterhouseCoopers LLP in January 1992. Disclosure and Financial Code of Ethics TVA has a Disclosure and Financial Ethics Code ("Financial Ethics Code") that applies to all executive officers (including the CEO, CFO, and Controller) and directors of TVA as well as to all employees who certify information contained in quarterly reports or annual reports or who have responsibility for internal control self-assessments. The Financial Ethics Code includes provisions covering conflicts of interest, ethical conduct, compliance with applicable laws, rules, and regulations, responsibility for full, fair, accurate, timely, and understandable disclosures, and accountability for adherence to the Financial Ethics Code. TVA will provide a current copy of the Financial Ethics Code to any person, without charge, upon request. Requests may be made by calling 888-882-4975 or by sending an e-mail to: investor@tva.com. Any waivers of or changes to provisions of the Financial Ethics Code that require disclosure pursuant to applicable Securities and Exchange Commission requirements will be promptly disclosed to the public, subject to limitations imposed by law, on TVA's website at: www.tva.gov. Information contained on TVA's website shall not be deemed to be incorporated into, or to be a part of, this Annual Report. Committees of the TVA Board 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 John L. Ryder and William B. Kilbride. 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. The TVA Act contains certain provisions that are similar to the considerations for independence under Section 10A(m)(3) of the Exchange Act, including that to be eligible for appointment to the TVA Board, an individual shall not be an employee of TVA and shall make full disclosure to Congress of any investment or other financial interest that the individual holds in the energy industry. Under Section 10A(m)(2) of the Exchange Act, which applies to TVA, the audit committee is directly responsible for the appointment, compensation, and oversight of the external auditor; however, the TVA Act assigns the responsibility for engaging the services of the external auditor to the TVA Board. The TVA Board has also established the following committees in addition to the Audit, Risk, and Regulation Committee: • Finance, Rates, and Portfolio Committee, • External Relations Committee, • People and Performance Committee, and • Nuclear Oversight Committee. 158 Table of Contents ITEM 11. EXECUTIVE COMPENSATION Compensation Discussion and Analysis 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"): Name Title Employed with TVA since Jeffrey J. Lyash President and CEO 2019 John M. Thomas, III Executive Vice President and Chief Financial Officer 2005 Michael D. Skaggs Executive Vice President and Chief Operating Officer 1994 Sherry A. Quirk Executive Vice President and General Counsel 2015 Timothy S. Rausch Executive Vice President and Chief Nuclear Officer (1) 2018 Note (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 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 . 159 Table of Contents 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. Energy Delivering reliable, low cost, clean energy Largest Public Power Provider In the United States 36,937 MW 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 160 Table of Contents Environment Caring for our region's natural resources Managing 49 Dams 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 Caring for Over 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 161 Table of Contents Economic Development Creating sustainable economic growth Attracting Over $45.4 Billion Capital Investment in Tennessee Valley over the last five years, creating and retaining approximately 341,000 jobs Nearly 10,000 Employees 13,800 Contractors TVA Programs 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 Community Training & development, facilitation services, leadership training, workforce training, and young talent development 162 Table of Contents 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. utilities. 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. 163 Table of Contents 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 164 Table of Contents 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 165 Table of Contents 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. The Compensation Plan is designed to: • 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. 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 energy companies, publicly-owned electric companies, and federal, state, and local governments; and • Compensation will take into account education, experience, level of responsibility, geographic differences, and retention and recruitment needs. 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. 166 Table of Contents 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. CEO 2020 Total Direct Compensation at Target is below 25 th percentile 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. 167 Table of Contents CEO Compensation at a Glance ACTUAL 2020 TOTAL DIRECT COMPENSATION EARNED $1,058,000 BASE SALARY $2,391,609 ANNUAL PERFORMANCE INCENTIVE under Executive Annual Incentive Plan 137 percent of target enterprise performance achieved 1.10x Individual Multiplier applied $338,000 LONG-TERM RETENTION INCENTIVE (1) 2020 tranche of 2020 Long-Term Retention Award Note (1) Mr. Lyash's long-term incentives earned in 2020 reflect a partial long-term incentive award. Since Mr. Lyash joined TVA in 2019, he did not vest in any long-term performance award in 2020, and while executives typically have three overlapping retention awards (granted annually with ratable vesting over three years subject to continued employment), Mr. Lyash only had one such award outstanding in 2020. Total Direct Compensation earned reflects the decisions made by the Committee at the end of 2020 to reward NEOs for past performance. Under Mr. Lyash's leadership in his first full year as CEO, TVA has made meaningful progress on improving its Public Power mission. The company's outperformance under key operational metrics strengthened TVA's ability to deliver low-cost and reliable energy to the Tennessee Valley. 2020 objectives were established in 2019 and despite challenges presented by the COVID-19 pandemic, TVA achieved or exceeded nearly all targeted objectives, delivering high operational, safety, and financial strength performance for 2020. As a result of TVA's 2020 achievements, eligible TVA employees were rewarded with payouts under TVA's annual incentive plans. KEY COMPANY PERFORMANCE METRICS Metric(1) Target Performance Actual Performance Performance Against Target TVA Total Spend ($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 Notes (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: Mr. 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 Mr. 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. 168 Table of Contents 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. The TVA Board is directed under Section 2 of the TVA Act to establish a plan that specifies all compensation (such as salary and any other pay, benefits, incentives, or other form of remuneration) for the CEO and TVA employees. The TVA Act also provides that: • The TVA Board will annually approve all compensation (such as salary and any other pay, benefits, incentives, or other form of remuneration) for all managers and technical personnel who report directly to the CEO (including any adjustment(s) to compensation); • On the recommendation of the CEO, the TVA Board will approve the salaries of employees whose salaries would be in excess of Level IV of the Executive Schedule of the U.S. Government ($170,800 in 2020); and • The CEO will determine the salary and benefits of employees whose annual salary is not greater than Level IV of the Executive Schedule ($170,800 in 2020). 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 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 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. • 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 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. 169 Table of Contents 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. Corporate Multiplier (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. Long-Term 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). CEO Compensation 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. CEO Annual Performance 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. CEO Performance 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. 170 Table of Contents 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 TVA generally determines target total direct compensation for executives based on the relevant labor market. After compiling market compensation for the positions at the beginning of 2020, the Committee, with assistance from FW Cook, used the information to: • Assess target compensation level and incentive opportunity competitiveness; and • 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 $3.0 billion plus (ii) four additional government entities. Data from this sample were further regressed to TVA's size based on revenue. For NEO roles, the survey analysis was supplemented with public compensation data from a separate proxy peer group of investor-owned utilities. The Committee reviews the proxy peers annually to ensure continued appropriateness, including comparable business content and model, company size measured primarily by revenue and assets, and other refining factors such as generating capacity, number of employees, and number of customers. When making compensation decisions for 2020, the Committee reviewed peer group data, which is shown below. At that time, TVA was centrally-positioned within the current peer group: the primary financial metrics, revenue and assets, are positioned near the median, while secondary metrics are balanced, with generating capacity above the 75th percentile, customers near the 75th percentile, and employee count near the 25th percentile. TVA REVENUE VS PEERS (1) ($MMs) TVA ASSETS VS PEERS (2) ($MMs) GEN CAPACITY VS PEERS (3) (000s MW) TVA EMPLOYEE COUNT VS PEERS (4) TVA CUSTOMER COUNT VS PEERS (5) (000s) Notes (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. 171 Table of Contents 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: 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 Utilities AES Corp. n n Alliant Energy n Ameren n n American Electric Power Co., Inc. n n CenterPoint Energy, Inc. n n CMS Energy Corp. n n Consolidated Edison n n Dominion Energy n n DTE Energy Co. n n Duke Energy Corp. n n Edison International n n Energy Northwest n Entergy Corp. n n Evergy n Eversource Energy n n Exelon Corp. n n FirstEnergy Corp. n n JEA n NextEra Energy, Inc. n n NiSource n n NRG Energy n Omaha Public Power n Pacific Gas and Electric Co. n n Pinnacle West Capital n PPL Corp. n n Public Service Enterprise Group Inc. n n Salt River Project n Sempra Energy n n Southern Company n n Vistra Energy n n WEC Energy n Xcel Energy n n 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. 172 Table of Contents 2020 Executive Compensation Program Components 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 Provides fixed base level of compensation to executives to encourage hiring and retention of qualified individuals • Annual salary is determined by reference to 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. • 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 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. • Target annual incentive opportunities increase with position and responsibility and are based in part on the opportunities other companies in TVA's peer group provide to those in similar positions. • Typically reviewed annually to consider changes in benchmark annual incentives. 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 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. • 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 173 Table of Contents Setting Competitive Compensation Amounts and Opportunities Relevant to Labor Market Salary 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. In 2020, Mr. 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 174 Table of Contents 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. Mr. 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. In 2020, Mr. 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 2020, each NEO's annual incentive payment was calculated as follows: EAIP Amount = Annual Salary × Annual Target Incentive Opportunity × Percent of Opportunity Achieved (0% to 150%) × Corporate Multiplier (0 to 1.00) × Individual Performance Multiplier (0% to 150%) Each component of this calculation is discussed below (except for annual salary, which is discussed above). Annual Target Incentive Opportunity 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 2020 Target Annual Incentive Opportunity (1) Mr. Lyash 150 % Mr. Thomas 80 % Mr. Skaggs 80 % Ms. Quirk 70 % Mr. Rausch 70 % Note (1) Represents a percent of each NEO's salary. 175 Table of Contents 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 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 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. 176 Table of Contents 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. 177 Table of Contents 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 Income 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 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. 178 Table of Contents 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) Note (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 179 Table of Contents 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 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, 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 Mr. Lyash 221.3 % $ 2,341,000 15.7 % (2) 95.8 % $ 1,014,000 N/A (3) Mr. Thomas 147.0 % $ 980,000 11.4 % 63.0 % $ 420,000 10.5 % Mr. Skaggs 149.2 % $ 990,000 1.0 % 64.7 % $ 429,000 2.1 % Ms. Quirk 124.7 % $ 695,000 1.5 % 53.3 % $ 297,000 2.4 % Mr. Rausch 93.4 % $ 500,000 23.7 % 61.6 % $ 330,000 90.5 % Notes (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. (3) Mr. Lyash did not receive a LTR award in 2019. 180 Table of Contents 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. LTP Incentive Amount = Target Value × Percent of Opportunity Achieved (0% to 150%) 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. 181 Table of Contents 2018-2020 LTP PERFORMANCE METRICS 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 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 182 Table of Contents 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 Notes (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 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 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). 183 Table of Contents 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 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): Notes (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. (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. (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): 184 Table of Contents Notes (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. The purpose of the retention awards under the LTIP is to provide 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. 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. 185 Table of Contents 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." Note (1) Mr. 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. 186 Table of Contents CEO 2020 TARGET TOTAL DIRECT COMPENSATION OPPORTUNITY Notes (1) Mr. 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. (2) Mr. 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) Note (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. Mr. 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. 187 Table of Contents 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 188 Table of Contents 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. PEERS 189 Table of Contents 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. JEFFREY J. LYASH President and CEO Joined TVA April 2019 2020 TOTAL DIRECT COMPENSATION EARNED $3,787,609 Base Salary. Mr. 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. Based on Mr. 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. Mr. 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. Mr. 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. 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 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. • Mr. Lyash's highest rated competencies were adaptability, effective communication, business acumen, accountability and driving for results, and leveraging diversity. 190 Table of Contents JOHN M. THOMAS, III Executive Vice President and Chief Financial Officer Joined TVA November 2005 2020 TOTAL DIRECT COMPENSATION EARNED $2,876,994 Base Salary. Mr. 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. Based on Mr. 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. Thomas. 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. Mr. 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 191 Table of Contents MICHAEL D. SKAGGS Executive Vice President and Chief Operating Officer Joined TVA February 1994 2020 TOTAL DIRECT COMPENSATION EARNED $2,813,695 Base Salary. Mr. 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. 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 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. Mr. 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 192 Table of Contents SHERRY A. QUIRK Executive Vice President and General Counsel Joined TVA February 2015 2020 TOTAL DIRECT COMPENSATION EARNED $2,253,150 Base Salary. Ms. 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. 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 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 Award Payments Earned. Ms. 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 193 Table of Contents TIMOTHY S. RAUSCH 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 $1,216,990 Base Salary. Mr. 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. Mr. 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. Mr. 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. Mr. 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 194 Table of Contents 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. 195 Table of Contents 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 NEOs in 2020 (and 2019 and 2018, as applicable). SUMMARY COMPENSATION TABLE Name and Principal Position Year Salary Bonus (1) Non-Equity Incentive Plan Compensation (2) Change in Pension Value and Nonqualified Deferred Compensation Earnings (3) All Other Compensation (4) Total Jeffrey J. 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 John M. 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) 173,723 (10) 20,250 2,515,314 Michael D. 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) 320,678 (14) 12,150 2,275,912 Sherry A. 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) 401,540 (16) 24,750 2,456,047 and General Counsel 2018 511,254 — 1,288,900 (17) 207,166 (18) 24,300 2,031,620 Timothy S. Rausch 2020 $ 535,600 $ — $ 1,031,390 $ 106,428 $ 159,794 $ 1,833,212 Executive Vice President 2019 502,000 — 713,750 (19) 72,784 (20) 255,735 1,544,269 and Chief Nuclear Officer (1) The 2020 data is outlined in the table below. BONUS Jeffrey J. Lyash John M. Thomas, III Michael D. Skaggs Sherry A. Quirk Timothy S. Rausch LTP Scorecard Adjustment $ — $ — $ — $ — $ — Sign-on Bonus — — — — — Total $ — $ — $ — $ — $ — (2) The 2020 data is outlined in the table below. NON-EQUITY INCENTIVE PLAN COMPENSATION Jeffrey J. Lyash John M. Thomas, III Michael D. Skaggs Sherry A. Quirk Timothy S. Rausch 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) 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 Notes (A) LTR grant representing the third tranche of the LTR award effective October 1, 2017. (B) LTR grant representing the second tranche of the LTR award effective October 1, 2018. (C) LTR grant representing the first tranche of the LTR award effective October 1, 2019. (D) Represents the maximum amount payable for the second payment of the PIA. 196 Table of Contents (3) The 2020 data is outlined in the table below. CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS Jeffrey J. Lyash John M. Thomas, III Michael D. Skaggs Sherry A. Quirk Timothy S. Rausch 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 Jeffrey J. Lyash John M. Thomas, III Michael D. Skaggs Sherry A. Quirk Timothy S. Rausch 401(k) Matching Contribution $ 12,600 $ 12,600 $ 12,600 $ 12,600 $ 12,600 Non-Elective 401(k) Contribution 12,600 8,400 — 12,600 12,600 Recruitment/Relocation Incentive 1,092,000 — — — 100,000 Relocation Benefits 120,777 — — — 34,594 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. (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. (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 $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. The following table provides information on non-equity incentive plan opportunities and grants provided to NEOs and the possible range of payouts associated with the opportunities and grants. Awards under the EAIP, LTP, LTR, and PIA that vested as of September 30, 2020, will be paid in cash during the first quarter of 2021. 197 Table of Contents GRANTS OF PLAN-BASED AWARDS TABLE as of September 30, 2020 Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) Current Year Future Years Name Plan Threshold (2) Target (2) Maximum (2) Threshold (2) Target (2) Maximum (2) Performance Period Ending/Vesting Date Jeffrey J. 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 LTP 2019 (6) — $ 1,012,000 $ 2,024,000 $ 3,036,000 9/30/2021 LTR 2020-02 (5) — 338,000 338,000 9/30/2021 LTP 2020 (7) 1,170,500 2,341,000 3,511,500 9/30/2022 LTR 2020-03 (5) 338,000 338,000 9/30/2022 John M. Thomas, III EAIP (3) $ 266,634 $ 533,267 $ 799,901 9/30/2020 LTP 2018 (4) 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 LTP 2019 (6) $ 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 LTP 2020 (7) 490,000 980,000 1,470,000 9/30/2022 LTR 2020-03 (5) 140,000 140,000 9/30/2022 Michael D. Skaggs EAIP (3) $ 265,360 $ 530,720 $ 796,080 9/30/2020 LTP 2018 (4) 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 LTP 2019 (6) $ 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 LTP 2020 (7) 495,000 990,000 1,485,000 9/30/2022 LTR 2020-03 (5) 143,000 143,000 9/30/2022 Sherry A. Quirk EAIP (3) $ 195,052 $ 390,104 $ 585,156 9/30/2020 LTP 2018 (4) 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 LTP 2019 (6) $ 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 LTP 2020 (7) 347,500 695,000 1,042,500 9/30/2022 LTR 2020-03 (5) 99,000 99,000 9/30/2022 Timothy S. Rausch EAIP (3) $ 187,460 $ 374,920 $ 562,380 9/30/2020 PIA 2020 (8) 350,000 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 LTP 2019 (6) $ 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 LTP 2020 (7) 250,000 500,000 750,000 9/30/2022 LTR 2020-03 (5) 110,000 110,000 9/30/2022 Notes (1) TVA does not have any equity securities and therefore has no equity-based awards. 198 Table of Contents (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. (3) Target incentive opportunities as a percentage of salaries were as follows: Mr. Lyash 150 percent; Mr. Thomas, 80 percent; Mr. Skaggs, 80 percent; Ms. Quirk, 70 percent; and Mr. Rausch 70 percent. 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 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. (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. 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. The awards will be paid in cash after deducting applicable federal, state, and local withholding taxes. 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. 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) Mr. 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 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 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 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. Retirement and Pension 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 Jeffrey J. Lyash TVARS N/A N/A (4) $ — SERP Tier 1 11.417 (2) $ 8,242,520 — John M. Thomas, III TVARS 14.833 411,949 — SERP Tier 1 14.833 4,634,859 — Michael D. Skaggs TVARS 26.583 772,678 — SERP Tier 1 24.000 (3) 7,893,997 — Sherry A. Quirk TVARS N/A N/A (4) — SERP Tier 1 5.583 1,110,246 — Timothy S. Rausch TVARS N/A N/A (4) — SERP Tier 2 1.917 179,212 — Notes (1) Limited to 24 years when determining supplemental benefits available under SERP Tier 1, described below. (2) Mr. Lyash was granted five years of credited service for calculating his SERP benefit. In the event of involuntary termination except for cause prior to five years of actual service, the vesting requirement will be waived and he will be entitled to the additional five years of granted credited service plus his actual years of service for calculating his SERP benefit. In the event of termination for cause or voluntary termination for any reason prior to five years of actual service, the vesting requirement will be waived and his SERP benefit will be calculated based on a total of five years of credited service. After five years of actual service with TVA, he will be granted five additional years of credited service for a total of 15 years of credited service for calculating his SERP benefit. As of September 30, 2020, Mr. Lyash had 1.417 years of service. The Present Value of the Accumulated SERP benefit with 6.417 years of credited service is $4,558,306. The Present Value of the Accumulated SERP benefit with 11.417 years of credited service is $8,242,520. (3) Mr. Skaggs has reached the 24 year service cap allowed under the SERP. (4) Mr. Lyash, Ms. Quirk, and Mr. Rausch are not eligible to participate in the TVARS Pension Plan since they were hired after June 30, 2014. 199 Table of Contents Qualified Retirement Plans The retirement benefits for which employees are eligible and receive under the TVARS pension plan and 401(k) plan depend on the employee's hire date, years of service, and individual elections, as follows: • Employees who were first hired prior to January 1, 1996, receive (i) a traditional pension benefit calculated based on the employee's creditable service, the employee's average monthly salary for the highest three consecutive years of eligible compensation, and a pension factor based on the employee's age and years of service, less a Social Security offset, and (ii) 401(k) plan matching contributions from TVA. 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 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. The monthly pay credits are equal to six percent of eligible compensation, and monthly interest is credited at an annual interest rate equal to the change in the CPI-U plus three percent (with a minimum of six percent and maximum of 10 percent). The interest rate during 2020 was six percent. The 401(k) plan matching contribution is $0.75 on every dollar contributed by the employee up to 4.5 percent of eligible compensation. Mr. Skaggs is in this group. • Employees who were first hired on or after January 1, 1996, and who had 10 or more years of service as of October 1, 2016, 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 non-elective and matching contributions from TVA. The monthly pay credits are equal to three percent of eligible compensation, and monthly interest is credited at an annual interest rate equal to the change in the CPI-U plus two percent (with a minimum of 4.75 percent and a maximum of 6.25 percent). The interest rate during 2020 was 4.75 percent. The 401(k) plan automatic, non-elective contribution is equal to three percent of eligible compensation, and the matching contribution is $0.75 on every dollar contributed by the employee up to 4.5 percent of eligible compensation. Mr. Thomas is in this group. • Employees who were first hired on or after January 1, 1996, and who had less than 10 years of service as of October 1, 2016, receive (i) a cash balance pension benefit calculated based on pay-based credits and interest that accrue over time in the employee's account and the employee's age at the time of retirement, and (ii) 401(k) plan non-elective and matching contributions from TVA. As of October 1, 2016, the cash balance accounts of these employees receive no additional pay-based credits; however, the accounts continue to receive monthly interest credits at an annual interest rate equal to the change in the CPI-U plus two percent (with a minimum of 4.75 percent and a maximum of 6.25 percent). The interest rate during 2020 was 4.75 percent. 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. 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. The 401(k) plan is an automatic, non-elective contribution that is equal to six percent of eligible compensation, and the matching contribution is dollar-for-dollar on employee contributions up to six percent of the eligible compensation. None of the NEOs are in this group. • Employees who were first hired on or after July 1, 2014 (or who were rehired and were either previously not vested in the pension plan or cashed out their pension benefit) receive a retirement benefit in the 401(k) plan only. The 401(k) plan automatic, non-elective contribution is equal to 4.5 percent of eligible compensation, and the matching contribution is $0.75 on every dollar contributed by the employee up to 4.5 percent of eligible compensation. Mr. Lyash, Mr. Rausch, and Ms. Quirk are in this group. Cash Balance Pension . For NEOs who are eligible for retirement benefits under the pension plan, which includes Mr. Thomas and Mr. Skaggs, eligible compensation is defined as annual salary only for benefit calculation purposes and is shown under the column titled "Salary" in the Summary Compensation Table. 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. The pension plan does not provide for early retirement benefits to any NEO or any other employee eligible for cash balance benefits. 401(k) Plan . All employees eligible to participate in the 401(k) plan, including the NEOs, may elect to contribute to the 401(k) plan on a before-tax, Roth, and/or after-tax basis. For purposes of matching and non-elective contributions from TVA to the 401(k) accounts of the NEOs, eligible compensation is defined as annual salary only for benefit calculation purposes and is shown under the column titled "Salary" in the Summary Compensation Table. The eligible compensation in 2020 could not exceed $280,000 pursuant to the IRS annual compensation limit applicable to qualified plans. Any participant in the 401(k) plan must have three years of TVA service to be vested in matching and non-elective contributions from TVA. 200 Table of Contents Supplemental Executive Retirement Plan All NEOs are participants in the SERP. The SERP is a non-qualified defined benefit pension plan similar to those typically found in other companies in TVA's peer group and is provided to a limited number of executives, including the NEOs. TVA's SERP was created to recruit and retain key executives. The plan is designed to provide a competitive level of retirement benefits in excess of the limitations on contributions and benefits imposed by TVA's qualified defined benefit plan and Internal Revenue Code Section 415 limits on qualified retirement plans. The SERP provides two distinct levels of participation, Tier 1 and Tier 2. Each participant is assigned to one of the two tiers at the time he or she is approved to participate in the SERP. The level of participation ("Tier") defines the level of retirement benefits under the SERP at the time of retirement. Under the SERP, normal retirement eligibility is age 62 with five years of vesting service. No vested and accrued benefits are payable prior to age 55, and benefits are reduced for retirements prior to age 62. The level of reduction in benefits for retirements prior to age 62 depends on whether a participant's termination is "approved" or "unapproved." In the event of an approved termination of TVA employment, any vested and accrued benefits are reduced by 5/12 percent for each month that the date of benefit commencement precedes the participant's 62nd birthday, up to a maximum reduction of 35 percent. In the event of an unapproved termination of TVA employment, the participant's accrued benefits are first subject to a reduced percentage of vesting if the participant's years of service are between five and 10. At five years of vesting service, the vested percentage of retirement benefits is 50 percent and increases thereafter by 10 percent for each full additional year of service, reaching 100 percent vesting for 10 or more years of vesting service. Thereafter, any vested and accrued benefits are reduced by 10/12 percent for each month that the date of benefit commencement precedes the participant's 62nd birthday up to a maximum reduction of 70 percent. For purposes of the SERP, an "approved" termination means termination of employment with TVA due to (i) retirement on or after the participant's 62nd birthday, (ii) retirement on or after attainment of actual age 55, if such retirement has the approval of the TVA Board or its delegate, (iii) death in service as an employee, (iv) disability (as defined under the Rules and Regulations of the TVARS) as determined by the Retirement Committee, or (v) any other circumstance approved by the TVA Board or its delegate. For purposes of the SERP, an "unapproved" termination means a termination of employment with TVA when such termination does not constitute an "approved" termination as defined in the preceding sentence. SERP Tier 1 . The Tier 1 structure is designed to replace 60 percent of the amount of a participant's compensation at the time the participant reaches age 62 and has accrued 24 years of TVA service. Tier 1 benefits are based on a participant's highest average compensation during three consecutive SERP years and a pension multiple of 2.5 percent for each year of credited service up to a maximum of 24 years. Compensation is defined as salary and EAIP for benefit calculation purposes. Tier 1 benefits are offset by Social Security benefits, benefits provided under TVA's qualified defined benefit pension plan, and prior employer pension benefits when applicable. SERP Tier 2 . The purpose of this restoration plan is to adjust qualified plan benefits to executives when benefits are lost due to IRS limits. Pension benefits are based on a participant's average compensation over three consecutive fiscal years and a pension multiplier of 1.3 percent for each year of service. For benefit calculation, pension includes salary and annual incentives. Nonqualified Deferred Compensation The following table provides information regarding deferred contributions, earnings, and balances for each of the NEOs. The amounts reported under this table do not represent compensation in addition to the compensation that was earned in 2020 and already reported in the Summary Compensation Table, but rather the amounts of compensation earned by the NEOs in 2020 or prior years that were or have been deferred. NONQUALIFIED DEFERRED COMPENSATION TABLE Name Executive Contributions in 2020 Registrant Contributions in 2020 Aggregate Earnings in 2020 Aggregate Withdrawals/ Distributions Aggregate Balance at September 30, 2020 Jeffrey J. Lyash $ — $ — $ — $ — $ — John M. Thomas, III — — — — — Michael D. Skaggs — — 358,568 (1) — 5,347,029 (2) Sherry A. Quirk — — — — — Timothy S. Rausch — — — — — Notes (1) Includes vested earnings. Because none of the amounts are above market or preferential earnings under SEC rules, none of these amounts are included in the Summary Compensation Table. 201 Table of Contents (2) Includes vested contributions and earnings. $600,000 of this amount has been reported in the Summary Compensation Table as compensation for a prior fiscal year. TVA's compensation plans may allow participants to defer all or a portion of compensation earned under the plans as defined by plan terms and IRS regulations. All deferrals are credited to each participant in a deferred compensation account, and the deferral amounts are then funded into a rabbi trust. Each participant may elect one or more investment options made available by TVA or allow some or all funds to accrue interest at the rate established by the beginning of each fiscal year equal to the composite rate of all Treasury issues. Participants may elect to change from either one notional investment option or the TVA interest bearing option to another at any time. Upon termination of employment, funds are distributed pursuant to elections made in accordance with applicable IRS regulations. 202 Table of Contents 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 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. Jeffrey J. Lyash Resignation Retirement Termination without Cause Termination with Cause Death Disability Severance Agreement (1) $ — $ — $ 2,645,000 $ — $ — $ — SERP (2) 3,483,046 3,483,046 4,558,306 3,483,046 4,558,306 (3) 4,558,306 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) 619,667 (6) LTP — 1,792,333 (7) — — 1,792,333 (8) 1,792,333 (9) Deferred Compensation — — — — — — Total Value of Potential Payments $ 7,304,655 $ 9,096,988 $ 11,024,915 $ 7,304,655 $ 10,453,915 $ 10,453,915 Notes (1) In February 2019, TVA entered into an arrangement with Mr. Lyash that provides a lump-sum payment equal to one year's annual salary and one year's executive annual incentive based on 100 percent target payout in the event TVA terminates his employment without cause. For purposes of this provision, termination without cause includes constructive termination which will be deemed to occur if Mr. Lyash terminates his employment because he is asked to take a new position with TVA with a material reduction in level of authority, duties, compensation, and benefits. This provision will not apply, and no lump-sum payment will be made, in the event Mr. Lyash voluntarily terminates his employment or voluntarily retires, or his employment is terminated "for cause" as defined in the agreement. (2) In February 2019, TVA entered into an arrangement with Mr. Lyash that provides that at the commencement of his employment with TVA, he will be granted five years of credited service for calculating his SERP benefit. In the event of involuntary termination except for cause prior to five years of actual service, the vesting requirement will be waived and he will be entitled to the additional five years of granted credited service plus his actual years of service for calculating his SERP benefit. In the event of termination for cause or voluntary termination for any reason prior to five years of actual service, the vesting requirement will be waived and his SERP benefit will be calculated based on a total of five years of credited service. (3) In the event of death while employed by TVA, the beneficiary will 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. (4) Mr. 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 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 203 Table of Contents 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. John M. 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) (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) 563,334 (7) LTP 1,096,500 2,009,833 (8) 1,096,500 1,096,500 2,009,833 (9) 2,009,833 (10) Deferred Compensation — — — — — — Total Value of Potential Payments $ 6,845,269 $ 7,758,602 $ 6,845,269 $ 6,845,269 $ 7,938,602 $ 7,938,602 Notes (1) Mr. Thomas does not have a severance agreement with TVA. (2) Represents the present value of the accumulated benefit. (3) Actual benefit would be paid in five annual installments beginning at age 55. (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 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. (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) 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. 204 Table of Contents Michael D. 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) (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) 572,167 (7) 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 Notes (1) Mr. Skaggs does not have a severance agreement with TVA. (2) Represents the present value of the accumulated benefit. (3) Actual benefit would be paid in ten annual installments beginning on the date of Mr. Skaggs'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 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. (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) 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. (11) Amounts that Mr. Skaggs earned in past years but elected to defer, which are payable pursuant to elections he made and applicable IRS rules. 205 Table of Contents Sherry A. Quirk Resignation Retirement Termination without Cause Termination with Cause Death Disability Severance Agreement (1) $ — $ — $ 557,291 $ — $ — $ — SERP 1,110,246 (2) (3) (4) 1,110,246 (2) (3) (4) 1,110,246 (2) (3) (4) 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) 421,501 (8) LTP 870,750 1,559,083 (6) 870,750 870,750 1,559,083 (9) 1,559,083 (10) Deferred Compensation — — — — — — Total Value of Potential Payments $ 2,806,105 $ 3,494,438 $ 3,363,396 $ 2,806,105 $ 3,625,272 $ 3,625,272 Notes (1) In December 2014, TVA entered into an arrangement with Ms. Quirk that provides a lump-sum payment equal to one year's annual salary in the event TVA terminates her employment without cause. (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. (8) 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. (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. 206 Table of Contents Timothy S. Rausch Resignation Retirement Termination without Cause Termination with Cause Death Disability Severance Agreement (1) $ — $ — $ — $ — $ — $ — SERP — (2) — (2) — (2) — (2) 179,212 (3) (4) 179,212 (3) 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) 288,291 (7) LTP — 436,167 (5) — — 436,167 (8) 436,167 (9) Deferred Compensation — — — — — — Total Value of Potential Payments $ 681,390 $ 1,117,557 $ 681,390 $ 681,390 $ 1,417,310 $ 1,417,310 Notes (1) Mr. Rausch does not have a severance agreement with TVA. (2) The five-year vesting requirement has not been met. (3) Represents the present value of the accumulated benefit. (4) In the event of death while employed by TVA, the beneficiary will 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. (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. (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) 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. 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. 207 Table of Contents Director Compensation The TVA Act provides for up to nine directors on the TVA Board. 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. Government. 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. The annual stipends provided by the TVA Act for each director and for the Chair of the TVA Board as of November 16, 2020, are listed below: TVA BOARD ANNUAL STIPENDS Name Annual Stipend John L. Ryder $ 60,175 Kenneth E. Allen 55,142 A. D. Frazier 55,142 William Kilbride 55,142 Jeff W. Smith 55,142 The following table provides information on the compensation received by TVA's directors during 2020: DIRECTOR COMPENSATION Name Fees Earned or Paid in Cash Stock Awards Option Awards Non-Equity Incentive Plan Compensation Change in Pension Value and Nonqualified Deferred Compensation Earnings (1) All Other Compensation (2) Total John L. Ryder $ 55,964 — — — — $ 2,239 $ 58,203 Kenneth E. Allen 55,020 — — — — 550 55,570 A. D. Frazier 55,021 — — — — 2,751 57,772 William B. Kilbride 53,864 — — — — 539 54,403 Jeff W. Smith 55,308 — — — — 2,489 57,797 Notes (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. However, as appointed officers of the U.S. government, the directors are members of FERS. 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 Thrift Savings Plan. The directors are not eligible to participate in any incentive programs available to TVA employees. The directors do not participate in the TVARS Retirement Plans and do not participate in TVA's SERP. However, as appointed officers of the U.S. government, the directors are members of the Federal Employees Retirement System ("FERS"). FERS is a tiered retirement plan that includes three components: (1) Social Security benefits, (2) the Basic Benefit Plan, and (3) the Thrift Savings Plan ("TSP"). As members of FERS, each director is required to make a mandatory percentage contribution of his or her stipend to the Basic Benefit Plan in the amount of 0.8 percent for those directors appointed prior to January 1, 2013, 3.1 percent for those directors appointed between January 1, 2013, and December 31, 2013, and 4.4 percent for those directors appointed on or after January 1, 2014. The FERS Basic Benefit Plan is a qualified defined benefit plan that provides a retirement benefit based on a final average pay formula that includes age, highest average salary during any three consecutive years of service, and years of creditable service. A director must have at least five years of creditable service to be eligible to receive retirement benefits. 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 208 Table of Contents 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). Each director is also eligible to participate in the TSP. The TSP is a tax-deferred retirement savings and investment plan that offers the same type of savings and tax benefits offered under 401(k) plans. Once a director becomes eligible, TVA contributes an amount equal to one percent of the director's stipend into a TSP account for the director. These contributions are made automatically every two weeks regardless of whether the director makes a contribution of his or her own money. Directors are eligible to contribute up to the TSP elective deferral limit. Directors receive matching contributions of 100 percent of each dollar for the first three percent of the director's stipend and 50 percent of each dollar for the next two percent of the director's stipend. 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. Directors 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. Compensation Committee Interlocks and Insider Participation The People and Performance Committee of the TVA Board currently consists of the following two directors: Kenneth Allen and A.D. Frazier. 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 The People and Performance Committee has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the review and discussions, the Committee recommended to the TVA Board that the Compensation Discussion and Analysis be included in this Annual Report. PEOPLE AND PERFORMANCE COMMITTEE Kenneth Allen, Chair A.D. Frazier ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Not applicable. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Director Independence The composition of the TVA Board is governed by the TVA Act. The TVA Act contains certain provisions that are similar to the considerations for independence under section 10A(m)(3) of the Exchange Act, including that to be eligible for appointment to the TVA Board, an individual shall not be an employee of TVA and shall make full disclosure to Congress of any investment or other financial interest that the individual holds in the energy industry. Related Party Transactions Conflict of Interest Provisions All TVA employees, including directors and executive officers, are subject to the conflict of interest laws and regulations applicable to employees of the federal government. Accordingly, the general federal conflict of interest statute (18 U.S.C. § 208) and the Standards of Ethical Conduct for Employees of the Executive Branch (5 C.F.R. part 2635) ("Standards of Ethical 209 Table of Contents 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. Exceptions to the statutory prohibition relevant to TVA employees are (1) financial interests which have been deemed by the U.S. Office of Government Ethics, in published regulations, to be too remote or inconsequential to affect the integrity of the employee's services, or (2) interests which are determined in writing, after full disclosure and on a case-by-case basis, to be not so substantial as to be deemed likely to affect the integrity of the employee's services for TVA. In accordance with the statute, individual waiver determinations are made by the official responsible for the employee's appointment. In the case of TVA directors, the determination may be made by the Chair of the TVA Board, and in the case of the Chair of the TVA Board, the determination may be made by the Counsel to the President of the U.S. 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. 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. Additionally, the TVA Board approved a written conflict of interest policy that applies to all TVA employees, including TVA's directors and executive officers. The conflict of interest policy reaffirms the requirement that all TVA employees must comply with applicable federal conflict of interest laws, regulations, and policies. 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. 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. TVA also has a protocol titled the "Obtaining Things of Value from TVA Protocol" (the "Protocol"). The Protocol describes what a TVA employee should do if a person covered by the Protocol asks for assistance in obtaining a specified thing of value from TVA. Similarly, the TVA Board Practice on External Inquiries describes what a member of the TVA Board should do if a person covered by the practice asks for assistance in obtaining a specified thing of value from TVA. TVA relies on the policies, practices, laws, and regulations discussed above to regulate conflicts of interest involving employees, including directors and executive officers. TVA has no other written or unwritten policy for the approval or ratification of any transactions in which TVA was or is to be a participant and in which any director or executive officer of TVA (or any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of any director or executive officer of TVA) had or will have a direct or indirect material interest. Other Relationships TVA is engaged in a number of transactions with other agencies of the U.S. government, although such agencies do not fall within the definition of "related parties" for purposes of Item 404(a) of Regulation S-K. These include, among other things, supplying electricity to other federal agencies, purchasing electricity from the Southeastern Power Administration, and engaging in various arrangements involving nuclear materials with the Department of Energy ("DOE"). See Item 1, Business and Note 23 — Related Parties . TVA also has access to a financing arrangement with the U.S. Treasury. TVA and the U.S. Treasury have a memorandum of understanding under which the U.S. Treasury provides TVA with a $150 million credit facility. There were no outstanding borrowings under the facility at September 30, 2020. This credit facility has a maturity date of September 30, 2021, and is typically renewed annually. This arrangement is pursuant to the TVA Act. Access to this credit facility or other similar financing arrangements with the U.S. Treasury has been available to TVA since the 1960s. See Note 13 — Debt and Other Obligations — Credit Facility Agreements . 210 Table of Contents In addition, TVA is required by the 1959 amendment to the TVA Act to make annual payments to the U.S. Treasury from net power proceeds as a repayment of and as a return on the payments to the U.S. Treasury in repayment of and as a return on the government's appropriation investment in TVA's power facilities (the "Power Program Appropriation Investment") until $1.0 billion of the Power Program Appropriation Investment has been repaid. With the 2014 payment, TVA fulfilled its requirement to repay $1.0 billion of the Power Program Appropriation Investment. The TVA Act requires TVA to continue to make payments to the U.S. Treasury indefinitely as a return on the remaining $258 million of the Power Program Appropriation Investment. See Note 18 — Proprietary Capital — Appropriation Investment . The TVA Act requires the proceeds for each fiscal year derived from the sale of power or any other activities to be paid into the U.S. Treasury on March 31 of each year, except for the portion of such proceeds as in the opinion of the TVA Board shall be necessary for TVA in the operation of dams and reservoirs and in conducting its business in generating, transmitting, and distributing electric energy. For each fiscal year, the TVA Board adopts a resolution retaining for use in the operation of the TVA power system the entire margin of net power proceeds remaining at the conclusion of such fiscal year. 211 Table of Contents ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table shows the fees of Ernst & Young LLP for audit, audit-related, and other services for the years ended September 30, 2020 and 2019. Principal Accountant Fees and Services (in actual dollars) Year Principal Accountant Audit Fees (1) Audit-Related Fees Tax Fees All Other Fees (2) Total 2020 Ernst & Young LLP $ 3,007,830 $ — $ — $ 5,930 $ 3,013,760 2019 Ernst & Young LLP 2,839,049 — — 7,020 2,846,069 Notes (1) Audit fees consist of payments for professional services rendered in connection with the audit of TVA's annual financial statements, including the annual attestation on internal control over financial reporting and the review of interim financial statements included in TVA's quarterly reports; audit of TVA's fuel cost adjustment; federal financial reporting responsibilities for the preparation and audit of the 2020 and 2019 federal consolidated financial statements of which TVA is a component; Bond offering and other financing comfort letters; and accounting consultations related to TVA's adoption of the new revenue recognition and lease accounting standards. (2) All other fees reflect accounting and financial reporting research software license costs. The TVA Board has an Audit, Risk, and Regulation Committee ("Audit Committee"). Under the TVA Act, the Audit Committee, in consultation with the Inspector General, recommends to the TVA Board the selection of an external auditor. TVA's Audit Committee, in consultation with the Inspector General, recommended that the TVA Board select Ernst & Young LLP as TVA's external auditor for the 2020 and 2019 audits and other related services, and the TVA Board approved these recommendations. TVA has a policy (the "Policy") that requires all auditing services and permissible non-audit services provided by the external auditor to be pre-approved by the Audit Committee. The Policy also lists the following services as ones the external auditor is not permitted to perform: • Bookkeeping or other services related to the accounting records or financial statements of TVA; • Financial information system design and implementation; • Appraisal or valuation services, fairness opinions, and contribution-in-kind reports; • Actuarial services; • Internal audit outsourcing services; • Management functions or human resources; • Broker or dealer, investment adviser, or investment banking services; • Legal services and expert services unrelated to the audit; and • Any other services that the Public Company Accounting Oversight Board determines, by regulation, are impermissible. The Policy also delegates to the Chair of the Audit Committee the authority to pre-approve a permissible service so long as the amount of the service does not exceed $100,000 and the total amount of services pre-approved during the year by the Chair does not exceed $200,000. The Chair must report for informational purposes the services pre-approved under this provision at the Audit Committee's next meeting. The Audit Committee pre-approved all audit services for 2020 and 2019. 212 Table of Contents PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) The following documents have been filed as part of this Annual Report: (1) Consolidated Financial Statements. The following documents are provided in Item 8, Financial Statements and Supplementary Data herein: Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Changes in Proprietary Capital Notes to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (Ernst & Young LLP) (2) Consolidated Financial Statement Schedules. Schedules not included are omitted because they are not required or because the required information is provided in the consolidated financial statements, including the notes thereto. (3) List of Exhibits Exhibit No. Description 3.1 Tennessee Valley Authority Act of 1933, as amended, 16 U.S.C. §§ 831-831ee (Incorporated by reference to Exhibit 3.1 to TVA's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 000-52313) 3.2 Bylaws of the Tennessee Valley Authority Adopted by the TVA Board of Directors on May 18, 2006, as amended on April 3, 2008, May 19, 2008, June 10, 2010, February 13, 2014, August 21, 2014, and November 6, 2014 (Incorporated by reference to Exhibit 3.2 to TVA's Annual Report on Form 10-K for the year ended September 30, 2014, File No. 000-52313) 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. 000-52313) 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. 000-52313) 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. 000-52313) 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. 000-52313) 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. 000-52313) 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. 000-52313) 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. 000-52313) 213 Table of Contents 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. 000-52313) 10.8 Amendment Dated as of December 11, 2018, to December Maturity Community Bank Credit Agreement Dated as of December 12, 2016 (Incorporated by reference to Exhibit 10.1 to TVA's Current Report on Form 8-K filed on December 14, 2018, File No. 000-52313) 10.9 TVA Discount Notes Selling Group Agreement (Incorporated by reference to Exhibit 10.2 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, File No. 000-52313) 10.10 Electronotes® Selling Agent Agreement Dated as of June 1, 2006, Among TVA, LaSalle Financial Services, Inc., A.G. Edwards & Sons, Inc., Citigroup Global Markets Inc., Edward D. Jones & Co., L.P., First Tennessee Bank National Association, J.J.B. Hilliard, W.L. Lyons, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, and Wachovia Securities, LLC (Incorporated by reference to Exhibit 10.4 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) 10.11 Amendment Dated as of December 4, 2013, to Electronotes® Selling Agent Agreement Dated as of June 1, 2006, Among TVA, LaSalle Financial Services, Inc., A.G. Edwards & Sons, Inc., Citigroup Global Markets Inc., Edward D. Jones & Co., L.P., First Tennessee Bank National Association, J.J.B. Hilliard, W.L. Lyons, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, and Wachovia Securities, LLC (Incorporated by reference to Exhibit 10.3 to TVA's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, File No. 000-52313) 10.12 Second Amendment Dated as of August 28, 2015, to Electronotes® Selling Agent Agreement Dated as of June 1, 2006, and Amended as of December 4, 2013, Among TVA, LaSalle Financial Services, Inc., A.G. Edwards & Sons, Inc., Citigroup Global Markets Inc., Edward D. Jones & Co., L.P., First Tennessee Bank National Association, J.J.B. Hilliard, W.L. Lyons, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, and Wachovia Securities, LLC (Incorporated by reference to Exhibit 10.9 to TVA's Annual Report on Form 10-K for the year ended September 30, 2015, File No. 000-52313) 10.13 Assumption Agreement Between TVA and Incapital LLC Dated as of February 29, 2008, Relating to the Electronotes® Selling Agent Agreement Dated as of June 1, 2006, Among TVA, LaSalle Financial Services, Inc., A.G. Edwards & Sons, Inc., Citigroup Global Markets Inc., Edward D. Jones & Co., L.P., First Tennessee Bank National Association, J.J.B. Hilliard, W.L. Lyons, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, and Wachovia Securities, LLC (Incorporated by reference to Exhibit 10.1 to TVA's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, File No. 000-52313) 10.14 Commitment Agreement Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 19, 2003 (Incorporated by reference to Exhibit 10.5 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) 10.15 Power Contract Supplement No. 95 Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 19, 2003 (Incorporated by reference to Exhibit 10.6 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) 10.16 Void Walk Away Agreement Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 20, 2003 (Incorporated by reference to Exhibit 10.7 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) 10.17 Power Contract Supplement No. 96 Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 20, 2003 (Incorporated by reference to Exhibit 10.8 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) 10.18 Overview of TVA's September 26, 2003, Lease and Leaseback of Control, Monitoring, and Data Analysis Network with Respect to TVA's Transmission System in Tennessee, Kentucky, Georgia, and Mississippi (Incorporated by reference to Exhibit 10.9 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) 10.19* Participation Agreement Dated as of September 22, 2003, Among (1) TVA, (2) NVG Network I Statutory Trust, (3) Wells Fargo Delaware Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Owner Trustee, (4) Wachovia Mortgage Corporation, (5) Wilmington Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Lease Indenture Trustee, and (6) Wilmington Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Pass Through Trustee (Incorporated by reference to Exhibit 10.10 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) 10.20* Network Lease Agreement Dated as of September 26, 2003, Between NVG Network I Statutory Trust, as Owner Lessor, and TVA, as Lessee (Incorporated by reference to Exhibit 10.11 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) 214 Table of Contents 10.21* Head Lease Agreement Dated as of September 26, 2003, Between TVA, as Head Lessor, and NVG Network I Statutory Trust, as Head Lessee (Incorporated by reference to Exhibit 10.12 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) 10.22* Leasehold Security Agreement Dated as of September 26, 2003, Made by NVG Network I Statutory Trust to TVA (Incorporated by reference to Exhibit 10.13 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) 10.23 Facility Lease-Purchase Agreement Dated as of January 17, 2012, Between John Sevier Combined Cycle Generation LLC and TVA (Incorporated by reference to Exhibit 10.1 to TVA's Quarterly Report on Form 10-Q for the quarter ended December 31, 2011, File No. 000-52313) 10.24 Head Lease Agreement Dated as of January 17, 2012, Among the United States of America, TVA, and John Sevier Combined Cycle Generation LLC (Incorporated by reference to Exhibit 10.2 to TVA's Quarterly Report on Form 10-Q for the quarter ended December 31, 2011, File No. 000-52313) 10.25* Asset Purchase Agreement Dated as of August 6, 2013, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.33 to TVA's Annual Report on Form 10-K for the year ended September 30, 2013, File No. 000-52313) 10.26 Facility Lease-Purchase Agreement Dated as of August 9, 2013, Between Southaven Combined Cycle Generation LLC and TVA (Incorporated by reference to Exhibit 10.34 to TVA's Annual Report on Form 10-K for the year ended September 30, 2013, File No. 000-52313) 10.27 Head Lease Agreement Dated as of August 9, 2013, Among the United States of America, TVA, and Southaven Combined Cycle Generation LLC (Incorporated by reference to Exhibit 10.35 to TVA's Annual Report on Form 10-K for the year ended September 30, 2013, File No. 000-52313) 10.28* Federal Facilities Compliance Agreement Between the United States Environmental Protection Agency and TVA (Incorporated by reference to Exhibit 10.2 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, File No. 000-52313) 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. 000-52313) 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. 000-52313) 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. 000-52313) 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. 000-52313) 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. 000-52313) 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. 000-52313) 10.36† Offer Letter to Jeffrey J. Lyash Approved as of February 14, 2019 (Incorporated by reference to Exhibit 10.1 TVA's Current Report on Form 8-K filed on February 14, 2019, File No. 000-52313) 10.37† Acknowledgment by TVA and Jeffrey J. Lyash on March 25, 2019, Relating to the Offer Letter to Mr. Lyash Approved as of February 14, 2019 (Incorporated by reference to Exhibit 10.2 to TVA's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, File No. 000-52313) 10.38† Offer Letter to Sherry A. 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. 000-52313) 215 Table of Contents 10.39† Offer Letter to Timothy S. 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. 000-52313) 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. 000-52313) 14.2 TVA Conflict of Interest Policy, as amended (Incorporated by reference to Exhibit 14.2 to TVA's Annual Report on Form 10-K for the year ended September 30, 2014, File No. 000-52313) 31.1 Rule 13a-14(a)/15d-14(a) Certification Executed by the Chief Executive Officer 31.2 Rule 13a-14(a)/15d-14(a) Certification Executed by the Chief Financial Officer 32.1 Section 1350 Certification Executed by the Chief Executive Officer 32.2 Section 1350 Certification Executed by the Chief Financial Officer 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. * Certain schedule(s) and/or exhibit(s) have been omitted. TVA hereby undertakes to furnish supplementally copies of any of the omitted schedules and/or exhibits upon request by the Securities and Exchange Commission. ITEM 16. FORM 10-K SUMMARY Not applicable. 216 Table of Contents SIGNATURES 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. Date: November 16, 2020 TENNESSEE VALLEY AUTHORITY (Registrant) By: /s/ Jeffrey J. Lyash Jeffrey J. Lyash President and Chief Executive Officer SIGNATURES 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. 217 Table of Contents Signature Title Date /s/ Jeffrey J. Lyash President and Chief Executive Officer November 16, 2020 Jeffrey J. Lyash (Principal Executive Officer) /s/ John M. Thomas, III Executive Vice President and November 16, 2020 John M. Thomas, III Chief Financial Officer (Principal Financial Officer) /s/ Diane Wear Vice President and Controller November 16, 2020 Diane Wear (Principal Accounting Officer) /s/ John Ryder Chair November 16, 2020 John Ryder /s/ Kenneth E. Allen Director November 16, 2020 Kenneth E. Allen /s/ A. D. Frazier Director November 16, 2020 A. D. Frazier /s/ Jeff W. Smith Director November 16, 2020 Jeff W. Smith /s/ William B. Kilbride Director November 16, 2020 William B. Kilbride 218