Progress Energy 2008 Annual Report Download - page 227

Progress Energy Proxy Statement
D-3
4. The Incentive Pool.
(a) Creation of Incentive Pool. The Incentive Pool for each Performance Period of the
Company shall equal one percent (1%) of the Earnings of the Company for such Performance Period. The
Incentive Pool shall be an unfunded pool established for the purpose of measuring performance of the
Company to determine potential compensation in connection with Individual Awards.
(b) Individual Awards Payable Only Out of Incentive Pool. Individual Awards may be earned
and become payable under the Plan only if and to the extent the Incentive Pool, specified in Section 4(a),
has become hypothetically funded.
(c) Eligibility and Participation. Not later than the time at which 25% of the applicable
Performance Period has elapsed, but in no event later than 90 days after the Performance Period
commenced, the Committee shall designate the Eligible Employees whom it has determined shall be
Participants for that Performance Period.
(d) Allocation of Individual Awards Payable Out of Incentive Pool. Not later than the time
at which 25% of the applicable Performance Period has elapsed, but in no event later than 90 days after
the Performance Period commenced, the Committee shall allocate a specified percentage or other amount
of the Incentive Pool to each such Participant, subject to Section 4(f). The allocation of the Incentive Pool
need not be strictly a fixed percentage (thus, for example, it may be a percentage of the Incentive Pool
above a defined threshold, a fixed dollar amount at a specified level of hypothetical funding, or varying
percentages of the Incentive Pool depending on the level of the hypothetical funding), so long as no amount
may be payable to the Participant except as allocated from the Incentive Pool by the Committee and no
hypothetical funding level or other circumstance possibly can arise in which the amount payable (including
amounts previously paid) in accordance with all Individual Award allocations for a given Performance
Period will exceed 100% of the Incentive Pool for the applicable Performance Period. In all cases, the
maximum Individual Award payable to any Participant shall be subject to the limitation set forth in Section
4(f). The Committee also is authorized to decline to allocate or designate for allocation all or a portion of
the Incentive Pool.
(e) Other Terms of Awards Established by the Committee. The Committee may in its
discretion specify other terms and conditions of the Individual Award. Except as otherwise provided
in a separate contractual arrangement entered into between any Participant and the Company or
otherwise determined by the Committee in its sole discretion, upon termination of a Participant’s
employment prior to the end of a Performance Period for any reason or no reason, the Participant
shall not be entitled to any payments pursuant to this Plan with respect to such Performance Period;
provided, however, that such termination shall not affect the allocation or amount of the payout to
another Participant. Except in the case of the death or disability of the Participant, or in the event
of a Change in Control, no payment shall be made to or on behalf of a Participant who terminates
employment prior to the end of a Performance Period if such payment would fail to qualify as
“performance-based compensation” under Section 162(m) of the Code.
(f) Maximum Award Payable to Any One Participant. Other provisions of the Plan
notwithstanding, no Participant may be paid, in connection with Individual Awards under the Plan
for any one Performance Period, an amount that exceeds 40% of the Incentive Pool generated for that
Performance Period.
(g) Payout of Individual Awards. As soon as administratively feasible after the end of
each Performance Period, the Committee shall determine the amount, if any, of the Incentive Pool for
that Performance Period, and the amount resulting from each Participant’s Individual Award based