Progress Energy 2010 Annual Report Download - page 166

PROXY STATEMENT
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to enable the Company to preserve the tax deductibility of incentive awards under Section 162(m) of the Internal
Revenue Code, as amended, to the extent practicable. The sole purpose of the EIP is to preserve the tax deductibility
of incentive awards that are qualified performance-based compensation.
STOCK OWNERSHIP GUIDELINES
To align the interests of our executives with the interests of shareholders, the Committee utilizes stock
ownership guidelines for all executive officers. The guidelines are designed to ensure that our management
maintains a significant financial stake in the Company’s long-term success. The guidelines require each senior
executive to own a multiple of his or her base salary in the form of Company common stock within five years of
assuming his or her position. The required levels of ownership are designed to reflect the level of responsibility that
the executive positions entail.
The Committee benchmarked both the position levels and the multiples in our guidelines against those
of the Benchmarking Peer Group and general industry practices. The benchmarking for 2010 indicated that the
Company’s guidelines were “at market” with respect to ownership levels, the types of equity that count toward
ownership, and the timeframe for compliance. The Committee also considered the results of the vote on a
shareholder proposal included in the Company’s 2010 Proxy Statement that proposed the Committee adopt a policy
requiring senior executives to retain no less than 75% of net after-tax shares acquired through equity compensation
programs until the year following termination of employment through retirement or otherwise. The Committee did
not adopt such a policy in 2010 based in part on the fact that approximately 76% of the votes cast were against the
proposal. The stock ownership guidelines for our executive officer positions are shown in the table below:
Stock Ownership Guidelines
Chief Executive Officer 5.0 times Base Salary
Chief Operating Officer 4.0 times Base Salary
Chief Financial Officer 3.0 times Base Salary
Presidents/Executive Vice Presidents/Senior Vice Presidents 3.0 times Base Salary
For purposes of meeting the applicable guidelines, the following are considered as common stock owned by
an executive: (i) shares owned outright by the executive; (ii) stock held in a defined contribution, Employee Stock
Ownership Plan, or other stock-based plan; (iii) phantom stock deferred under an annual incentive or base salary
deferral plan; (iv) stock earned and deferred in any long-term incentive plan account; (v) restricted stock awards and
RSUs; and (vi) stock held in a family trust or immediate family holdings.
As of February 25, 2011, our named executive officers exceeded the guidelines (see Management
Ownership table on page 11 of this Proxy Statement for specific details). As an indication of Mr. Johnson’s
alignment of his interests with that of our shareholders, he currently holds equity valued at more than 12 times his
base salary (based on the closing share price on February 25, 2011), which exceeds the 5-times base salary required
under the guidelines.