Progress Energy 2009 Annual Report Download - page 168

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 2009 MICP performance measures were ongoing earnings
per share (EPS) and business unit EBITDA for PEC and PEF as shown in the table below:
MICP Financial Performance Goals
(in millions except EPS) Threshold Target Outstanding
Company EPS $2.86 $3.06 $3.16
PEC EBITDA $1,630 $1,685 $1,715
PEF EBITDA $1,060 $1,100 $1,115
The MICP’s performance targets are designed to align with our financial plan and are intended to
appropriately motivate the executive officers to achieve the desired corporate financial objectives. The potential
MICP funding for each performance measure is 50% at threshold, 100% at target and 200% at outstanding
(maximum). Interpolation occurs when actual performance is between the identified levels. 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. Effective January 1, 2010, the legal entity EBITDA performance measure was replaced by
legal entity net income. This new performance measure was implemented as a result of the Company’s desire to
increase its legal entity focus on net income results. Net income results include certain regulatory decisions and key
costs that are part of achieving EPS targets in managing a capital-intensive utility business.
The determination of the annual MICP award that each named executive officer receives has two steps:
1) funding the MICP awards based on the performance as compared to the financial goals specified above; 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% 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. For 2009, 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% — —
Mark F. Mulhern 55% 100% — —
Jeffrey J. Lyash (through July 5, 2009) 55% 45% — 55%
Jeffrey J. Lyash (effective July 6, 2009)155% 35% 32.5% 32.5%
Lloyd M. Yates 55% 45% 55% —
Paula J. Sims 45% 35% 32.5% 32.5%
1 Mr. Lyash’s performance measure opportunities and relative weights under the MICP were adjusted effective July 6, 2009,
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Second, the Committee utilizes discretion to determine the MICP award to be paid to each executive. This
determination is based on the executive’s target award opportunity, the degree to which the Company achieved
certain goals, and the executive’s individual performance based on achieving individual goals and operating results.
As allowed by the MICP, the Committee uses discretion to adjust funding amounts up or down depending
on factors that it deems appropriate, such as storm costs and other nonrecurring items including impairments,
restructuring costs, and gains/losses on sales of assets. The Committee uses ongoing earnings per share as defined
and reported by the Company in its annual earnings release. Based on management’s recommendations, with