Progress Energy 2008 Annual Report Download - page 152

PROXY STATEMENT
16
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) has four parts. The first part describes the
Company’s executive compensation philosophy and provides an overview of the compensation program
and process. The second part describes each element of the Company’s executive compensation program.
The third part describes how the Organization and Compensation Committee of the Company’s Board
of Directors (in this CD&A, the “Committee”) applied each element to determine the compensation paid
to each of the named executive officers in the Summary Compensation Table on page 40 (the “named
executive officers”) for the services they provided to the Company in 2008. For 2008, the Company’s
named executive officers were:
• WilliamD.Johnson,Chairman,PresidentandChiefExecutiveOfficer;
• PeterM.ScottIII,ExecutiveVicePresidentandChiefFinancialOfficer(retiredeffective
September 1, 2008);
• MarkF.Mulhern,SeniorVicePresidentandChiefFinancialOfficer,effectiveSeptember1,
2008 (formerly Senior Vice President-Finance);
• JohnR.McArthur,ExecutiveVicePresidentandCorporateSecretary,effectiveSeptember1,
2008 (formerly Senior Vice President and General Counsel);
• JeffreyJ.Lyash,PresidentandChiefExecutiveOfficer,ProgressEnergyFlorida,Inc.;and
• LloydM.Yates,PresidentandChiefExecutiveOfficer,ProgressEnergyCarolinas,Inc.
The fourth part consists of the Compensation Committee’s Report. Following the CD&A are the
tables setting forth the 2008 compensation for each of the named executive officers, as well as a discussion
concerning compensation for the members of the Company’s Board of Directors. Throughout this CD&A,
the Company is at times referred to as “we,” “our” or “us.”
I. COMPENSATION PHILOSOPHY AND OVERVIEW
We are an integrated electric utility primarily engaged in the regulated utility business. Our executive
compensation philosophy is designed to provide competitive and reasonable compensation consistent with the
three key principles that we believe are critical to our long-term success as described below:
• Aligning the interests of shareholders and management. We believe that our major
shareholders invest in the Company because they believe we can produce average annual
total shareholder return in the 7 percent to 10 percent range over a three- to five-year holding
period. Total shareholder return is defined as the stock price appreciation plus dividends over
the period, divided by the share price at the beginning of the measurement period. Further,
our investors do not expect or desire significant volatility in our stock price. Accordingly, our
executive compensation program is designed to encourage management to lead our Company
in a way that consistently produces earnings per share growth and sustained dividend growth,
thus minimizing our stock price volatility.
• Rewarding operating performance results that are consistent with reliable and efficient
electric service. We believe that to achieve this goal over the long-term, we must:
• deliverhighlevelsofcustomersatisfaction;
• operateoursystemsreliablyandefficiently;