Progress Energy 2010 Annual Report Download - page 170

PROXY STATEMENT
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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 weather, storm costs, impairments, restructuring costs, and gains/losses on sales
of assets. The Committee uses Ongoing EPS as defined and reported by the Company in its annual earnings release.
Based on management’s recommendations, with respect to 2010, the Committee exercised discretion for the
three performance measures: the Company’s Ongoing EPS, PEC net income and PEF net income. The Committee
approved adjusting the Company’s earnings per share results downward by $0.22 to account for favorable weather,
storm and regulatory costs. The Committee approved adjusting PEC net income for favorable weather, storm and
regulatory costs for a net downward adjustment of $32 million. The Committee approved adjusting PEF net income
downward by $42 million to account for favorable weather and regulatory costs. These adjustments resulted in
the Company’s Ongoing EPS, PEC net income and PEF net income performance at 73%, 74% and 82% of target,
respectively. As a result of these downward adjustments, the 2010 MICP payments were below the target award
opportunity for each of the NEOs.
3. LONG-TERM INCENTIVES
The 2007 Equity Incentive Plan (the “Equity Incentive Plan”) was approved by our shareholders in
2007 and allows the Committee to make various types of long-term incentive awards to Equity Incentive Plan
participants, including the named executive officers. The awards are provided to the named executive officers to
align the interests of each executive with those of the Company’s shareholders. Long-term incentive awards are
intended to offer target award opportunities that approximate the 50th percentile of the peer group. Currently, the
Committee utilizes two types of equity-based incentives: restricted stock units and performance shares.
The Committee has determined that to accomplish our compensation program’s purposes effectively,
equity-based awards should consist of one-third restricted stock units and two-thirds performance shares. This
allocation reflects the Committee’s strategy of utilizing long-term incentives to retain officers, align officers’
interests with those of the Company’s shareholders and drive specific financial performance.
Performance shares are intended to focus executive officers on the multi-year sustained achievement of
financial and shareholder value objectives. RSUs are intended to further align executives’ interests with shareholder
interests while providing strong retention for the executive to remain with the Company long enough for the
restricted stock units to vest.
The table below shows the 2010 long-term incentive targets for the NEOs’ positions.
Long-Term Incentive Award Target1
Position2
Performance
Shares
Target Award
2010
Restricted Stock
Units
Target Award
20103
Chief Executive Officer 233% 117%
Executive Vice President 117% 58%
Chief Financial Officer 117% 58%
President, PEC 117% 58%
1 Target award amounts are expressed as percentages of base salaries for the listed positions.
2 Position held at Progress Energy, Inc. unless otherwise noted.
3 NEOs’ 2010 RSU target award amounts were reduced by 20%.
After October 2004, we ceased granting stock options. All previously granted stock options remain valid in
accordance with their terms and conditions.