Progress Energy 2010 Annual Report Download - page 172

PROXY STATEMENT
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2009 Performance Share Sub-Plan (the “2009 PSSP”)
The 2009 PSSP uses two equally weighted performance measures: relative total shareholder return (TSR)
and earnings growth. TSR, unlike the previously discussed TBR, is based on the conventional metric of annual
share price appreciation and dividends. By using a combination of relative TSR and absolute earnings growth, the
2009 PSSP allows the Committee to consider the Company’s performance as compared to the PSSP Peer Group (as
defined below), and management’s achievement of internal goals.
Relative TSR
The relative TSR performance is calculated using the Company’s three-year annualized TSR ranked
against the PSSP Peer Group. TSR is defined as the appreciation or depreciation in the value of the stock, plus
dividends paid during the year, divided by the closing value of the stock on the last trading day of the preceding
year. The table below shows the percent of target awards that may be earned based on the Company’s relative TSR
percentile ranking:
Performance and Award Structure (50%)
Percentile Ranking Percent of Target Award Earned
80th 200%
50th 100%
40th 50%
<40th 0%
However, regardless of the relative ranking, if the Company’s TSR is negative for the performance period,
no award above the threshold can be earned.
In making awards under the 2009 PSSP, the Committee used a group of highly regulated companies with
a business strategy similar to ours based on a percentage of regulated earnings (the “PSSP Peer Group”). These
companies have a significant amount of their earnings generated from regulated assets. In addition, the PSSP Peer
Group was selected based on other factors including revenues, market capitalization, and enterprise value. The
PSSP Peer Group differs from the Benchmarking Peer Group the Committee uses for purposes of benchmarking
compensation. The Benchmarking Peer Group is a broader group that represents those companies with which
we primarily compete for executive talent and includes companies that are not regulated integrated utilities. The
Committee believes that for purposes of our long-term incentive plan, it is more appropriate to use the PSSP Peer
Group comprised of companies that derive a significant percentage of their earnings from regulated businesses. The
table below lists the companies in the PSSP Peer Group.
PSSP Peer Group
Alliant Energy Corporation Great Plains Energy, Inc. SCANA Corporation
American Electric Power, Inc. NV Energy, Inc. Southern Company
Consolidated Edison, Inc. PG&E Corporation Westar Energy, Inc.
DPL, Inc. Pinnacle West Capital Corporation Wisconsin Energy Corp.
Duke Energy Corporation Portland General Electric Company Xcel Energy, Inc.
Earnings Growth
Earnings growth is based on the Company’s annual Ongoing EPS. Ongoing EPS is determined in
accordance with the Company’s “Policy for Press Release Earnings Disclosure of Non-GAAP Measures.” The
earnings growth component of the PSSP award is based on the Company’s earnings growth performance as
measured against pre-established goals set at the beginning of the performance period. The Committee determined
the earnings growth targets for the 2010 annual grant were appropriate in consideration of a challenging economy,