Progress Energy 2008 Annual Report Download - page 182

PROXY STATEMENT
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DISCUSSION OF SUMMARY COMPENSATION TABLE AND GRANTS OF
PLAN-BASED AWARDS TABLE
EMPLOYMENT AGREEMENTS
Messrs. Johnson, Scott, Mulhern, McArthur, Lyash and Yates entered into employment agreements
with the Company or one of its subsidiaries, referred to collectively in this section as the “Company.”
Each of these agreements has an effective date of May 8, 2007. The employment agreements replaced the
previous employment agreements in effect for each of these officers, except that, with respect to Mr. Scott,
the Amendment to the Employment Agreement dated August 5, 2005, remained in force in accordance
with its terms until Mr. Scott retired, effective September 1, 2008. Please see below for more information
regarding these two agreements.
The employment agreements provide for base salary, bonuses, perquisites and participation in
the various executive compensation plans offered to our senior executives. The agreements expire on
December 31, 2009. Thereafter, each agreement will be automatically extended by an additional year
on January 1 of each year. We may elect not to extend an executive officer’s agreement and must notify
the officer of such an election at least 60 days prior to the automatic extension date. The employment
agreements each contain restrictive covenants imposing non-competition obligations, restricting solicitation
of employees and protecting our confidential information and trade secrets for specified periods if the
applicable officer is terminated without cause or otherwise becomes eligible for the benefits under the
agreement.
Except for the application of previously granted years of service credit to our post-employment
health and welfare plans as discussed below, the employment agreements do not affect the compensation,
benefits or incentive targets payable to the applicable officers.
With respect to Messrs. Johnson and Scott, the Employment Agreements specify that the years
of service credit we previously granted to them for purposes of determining eligibility and benefits in the
SERP will also be applicable for purposes of determining eligibility and benefits in our post-employment
health and welfare benefit plans. Mr. Johnson was awarded seven years of deemed service toward the
benefits and vesting requirements of the SERP. Three of those years also were deemed to have been in
service on the Senior Management Committee for purposes of SERP eligibility. Mr. Scott has been awarded
seven years of deemed service toward the benefits and vesting requirements of the SERP.
Each Employment Agreement provides that if the applicable officer is terminated without cause or
is constructively terminated (as defined in Paragraph 8(a)(i) of the agreement), then the officer will receive
(i) severance equal to 2.99 times the officer’s then-current base salary and (ii) reimbursement for the costs
of continued coverage under certain of our health and welfare benefit plans for a period of up to 18 months.
Agreement with Mr. Scott
In March 2005, Mr. Scott was assigned increased responsibilities within our Company. In light
of those increased responsibilities and in order to retain Mr. Scott through at least April 1, 2008, the
Organization and Compensation Committee of the Company’s Board of Directors (the “Committee”)
approved an amendment to Mr. Scott’s employment agreement (the “Amendment”) on July 12, 2005. The
Amendment provides for certain increases in Mr. Scott’s 2005 long- and short-term compensation targets.
Mr. Scott’s new annual targets for long-term compensation in the form of performance share awards
granted pursuant to the Performance Share Sub-Plan (“PSSP”) of our 2002 Equity Incentive Plan and
restricted stock increased to 165 percent and 85 percent, respectively, of his base salary for each of the
years 2005, 2006 and 2007. Additionally, the Amendment provides that at the time of each annual review
of MICP awards for the years 2005, 2006 and 2007, we will consider exercising discretion under the MICP