Progress Energy 2010 Annual Report Download - page 163

Progress Energy Proxy Statement
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I. COMPENSATION OVERVIEW
ASSESSMENT OF RISK
Our Company is highly regulated at both the federal and state levels; therefore, significant swings in
earnings performance or growth over time are less influenced by any particular individual or groups of individuals.
We believe our compensation program for executive officers does not incentivize excessive risk taking for the
following reasons:
• OurcompensationprogramisevaluatedannuallybytheCommittee,withtheassistanceofits
compensation consultant, for its effectiveness and consistency with the Company’s goals.
• Ourincentivecompensationpracticesdonotrewardtheexecutiveofficersformeetingorexceeding
volume or revenue targets.
• Ourcompensationprogramappropriatelybalancesshort-andlong-termincentiveswithapproximately
63% of total target compensation for the CEO and approximately 50% of total target compensation for
the other NEOs provided in equity and focused on long-term performance.
• ThePSSPrewardssignificantandsustainableperformanceoverthelongertermbyfocusingonthree-
year earnings per share growth and relative total shareholder return targets.
• TheMICPfocusesonongoingearningspershareandlegalentitynetincome,becausewebelievethat
these are the best measures to assess the change in the intrinsic value of the Company over time and
therefore to determine how successful the Company is in its fundamental business.
• Theexecutiveofficersreceiverestrictedstockunitsthatgenerallyhaveathree-yearvestingperiodso
that their upside potential and downside risk are aligned with that of our shareholders and promote
long-term performance over the vesting period.
• TheexecutiveofficersaresubjecttostockownershipguidelinesindependentlysetbytheCommitteeto
align with our shareholders’ interests over the long-term.
• TheCommitteehasdiscretiontoadjustallincentiveawardsbasedonfactorsitdeemsappropriate,
including the Company’s and the individual executive’s performance and how results are achieved.
We have determined that the compensation program for executive officers who are in senior management
positions does not encourage excessive risk taking for all the reasons stated above.
PROGRAM ADMINISTRATION
Our executive compensation program is administered by the Committee, which is composed of seven
independent directors (as defined under the NYSE Corporate Governance Rules). Members of the Committee do not
receive compensation under any compensation program in which our executive officers participate. For a discussion
of director compensation, see the “Director Compensation” section on page 71 of this Proxy Statement.
The Committee’s charter authorizes the Committee to hire outside consultants. The Committee evaluates
the performance of its compensation consultant annually to assess the consultant’s effectiveness in assisting the
Committee with implementing the Company’s compensation program and principles. The Committee retained
Meridian Compensation Partners, LLC (“Meridian”) as its independent executive compensation consultant to
assist the Committee in meeting the Company’s compensation objectives. The Committee regularly meets with its
consultant in executive session to discuss matters independent of management. Under the terms of its engagement,
in 2010 Meridian reported directly to the Committee. Meridian solely provides executive compensation advisory
services to the Committee and provides no other services to the Committee or the Company.