Progress Energy 2008 Annual Report Download - page 173

Progress Energy Proxy Statement
37
In March 2008, the Committee approved a base salary of $350,000 for Mr. Mulhern, representing
an increase of approximately 6.1 percent above his salary from July 1, 2007, when he became Senior Vice
President – Finance. On July 3, 2008, the Committee approved a base salary of $385,000 for Mr. Mulhern
(effective September 1, 2008) as a result of his promotion to Chief Financial Officer of the Company. The
new base salary was set at $115,000 below the 50th percentile of the market. The Committee established Mr.
Mulhern’s base salary at this level due to his relatively short tenure in the Chief Financial Officer position.
For 2008, Mr. Mulhern’s initial MICP target was approximately 45 percent of his base salary.
Upon his promotion to Chief Financial Officer, the Committee established Mr. Mulhern’s MICP target at
55 percent of base salary based on the compensation consultant’s advice that this level is consistent with
the 50th percentile of market. (Mr. Mulhern’s effective MICP target for 2008 was approximately 48 percent
of his base salary, reflecting a prorated blend of the applicable incentive target for the respective positions
he held in 2008, 45 percent for the Senior Vice-President–Finance position and 55 percent for the Chief
Financial Officer position.) Mr. Mulhern’s performance goals for 2008 were consistent with the focus areas
established for Mr. Scott as discussed above. In recognition of the achievements he accomplished in his
various roles during 2008, the Committee awarded Mr. Mulhern an MICP payout of $200,000, which is
equal to 116 percent of Mr. Mulhern’s target award. Mr. Mulhern’s award was due in part to his successful
transition into the Chief Financial Officer role; achieving our EPS goal; and leading efforts to maintain
positive relationships with the Board, the Finance Committee, and the financial community in a difficult
and volatile economy.
With respect to his long-term incentive compensation, in 2008, Mr. Mulhern was granted 3,407
restricted stock units and 6,814 performance shares in accordance with his pre-established targets of
50 percent and 100 percent, respectively, of base salary. The performance shares are earned based on
performance over the three years ending December 31, 2011. Additionally, 7,131 shares of the 2007
transitional performance shares vested in 2008 and were paid out at 150% of target, and 7,131 shares of the
transitional performance shares will vest in 2009. The transitional “Performance Shares” are discussed in
the “LONG-TERM INCENTIVES” section on page 26. The increase in year-over-year total compensation
to Mr. Mulhern for 2008, as compared to 2007, as noted in the “Summary Compensation Table” on page 40
of this Proxy Statement, was largely due to Mr. Mulhern becoming vested in the SERP in 2008.
Compensation of Other Named Executive Officers
In March 2008, the Committee approved a base salary of $460,000 for Mr. McArthur, representing
an increase of approximately 5.75 percent above his 2007 salary. On July 3, 2008, the Committee approved
a base salary of $480,000 for Mr. McArthur, effective September 1, 2008, as a result of his promotion to
Executive Vice President of the Company. The new base salary was set at $15,000 below the 50th percentile
of the market. The Committee established Mr. McArthur’s salary at this level due to his relatively short
tenure in the Executive Vice President position.
For 2008, the Committee approved base salaries for Messrs. Lyash and Yates of $445,000
and $440,000, respectively. The base salaries for Messrs. Lyash and Yates represented an increase of
approximately 11.25 and 10.00 percent, respectively, above their 2007 salaries and placed their 2008
salaries at $50,000 and $45,000 below, respectively, the 50th percentile of the market. The Committee’s
decision to increase Mr. Lyash’s and Mr. Yates’s base salaries by 11.25 percent and 10 percent, respectively,
for 2008 reflected Messrs. Lyash’s and Yates’s strong leadership, corporate contribution and continued
professional growth, while still recognizing their relatively short tenure in their current roles.