Progress Energy 2008 Annual Report Download - page 160

PROXY STATEMENT
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Each year, the Committee establishes the threshold, target and outstanding levels for the performance
measures applicable to the named executive officers. The specific performance levels are established based on
the Company’s annual goals and objectives for corporate earnings per share and business unit earnings before
interest, taxes, depreciation and amortization (“EBITDA”). The specific performance targets established by
the Committee for 2008 are set forth below in the section captioned “2008 COMPENSATION DECISIONS”
on page 35 below. Each performance measure is assigned a weight based on the relative importance of that
measure to the Company’s performance. During the year, updates are provided to the Committee on the
Company’s performance as compared to the performance measures. The MICP’s performance targets are
designed to align with our financial plan and are intended to appropriately motivate the named executive
officers to achieve the desired corporate financial objectives. Effective January 1, 2010, the legal entity
EBITDA performance measure will be replaced by legal entity earnings.
The determination of the annual MICP award that each named executive officer receives has two
steps: 1) funding the MICP awards; and 2) determining individual MICP awards. First, the Committee
determines the total amount that will be made available to fund MICP awards to managers and executives,
including the named executive officers. To determine the total amount available to fund all MICP
awards, we calculate an amount for each MICP participant by multiplying each participant’s base salary
by a performance factor (based on the sum of a participant’s weighted target award achievements). The
performance factor ranges between 0 and 200 percent of a participant’s target award, depending upon the
results of each applicable performance measure. The sum of these amounts for all participants is the total
amount of funds available to pay to all participants, including the named executive officers. Effective
January 1, 2008, the Company increased the number of MICP participants to include all supervisors. The
supervisors were added to increase accountability for all levels of the Company’s management team and to
better align compensation with management performance.
For 2008, the named executive officers’ performance measures under the MICP were weighted
among earnings per share and EBITDA as follows:
Named Executive
Officer Target Opportunity
Performance Measures
(Relative Percentage Weight)
Company
Earnings
Per Share PEC EBITDA PEF EBITDA
William D. Johnson 85% 100% — —
Peter M. Scott III (through August 31, 2008) 63% 100%
Mark F. Mulhern (through August 31, 2008)145% 100% — —
Mark F. Mulhern (effective September 1, 2008)155% 100% — —
John R. McArthur (through August 31, 2008)245% 100% — —
John R. McArthur (effective September 1, 2008)255% 100% — —
Jeffrey J. Lyash 55% 45% — 55%
Lloyd M. Yates 55% 45% 55% —
1 Mr. Mulhern’s performance measure opportunities and relative weights under the MICP were adjusted
effective September 1, 2008, to reflect his becoming the Company’s Senior Vice President and Chief Financial Officer.
Mr. Mulhern’s MICP award for 2008 was prorated to reflect the proportion of time served in his respective roles.
2 Mr. McArthur’s performance measure opportunities and relative weights under the MICP were adjusted
effective September 1, 2008, to reflect his becoming the Company’s Executive Vice President. Mr. McArthur’s MICP
award for 2008 was prorated to reflect the proportion of time served in his respective roles.