Progress Energy 2010 Annual Report Download - page 175

Progress Energy Proxy Statement
37
• allowexecutivestofocusontheirjobsandnotalternativefutureemploymentiftheyshouldbe
terminated; and
• retainkeyexecutivesduringaperiodofpotentiallyprotractedtransitionforthebenefitofshareholders
and customers.
The Committee has the sole authority and discretion to designate employees and/or positions for
participation in the CIC Plan. The Committee has designated certain positions, including all of the NEO positions,
for participation in the CIC Plan. The benefits provided under the CIC Plan do not duplicate the employment
agreement severance benefits in the case of CIC Plan participants. Participants are not eligible to receive any of
the CIC Plan’s benefits absent both a CIC of the Company and an involuntary termination of the participant’s
employment without cause, including voluntary termination for good reason. Good reason termination includes
changes in employment circumstances such as a:
• reductionofbasesalaryormaterialreductionofincentivecompensationopportunity;
• materialadversechangeinpositionorscopeofauthority;
• significantchangeinworklocation;or
• breachofprovisionsoftheCICPlan.
Rather than allowing benefit amounts to be determined at the discretion of the Committee, the CIC
Plan has specified multipliers designed to be competitive with current market practices. With the assistance of
its compensation consultant, the Committee has reviewed the design of the CIC Plan to ensure that it meets the
Company’s business objectives and falls within competitive parameters. The Committee has determined that the
current CIC Plan is effective at meeting the goals described above.
The CIC Plan provides separate tiers of severance benefits based on the position a participant holds within
our Company. The continuation of health and welfare benefits coverage and the degree of excise tax gross-up for
terminated participants align with the length of time during which they will receive severance benefits.
The following table sets forth the key provisions of the CIC Plan benefits as it relates to our NEOs:
Tier I Tier II
Eligible Positions
Chief Executive Officer,
Chief Operating Officer,
Presidents and Executive
Vice Presidents
Senior Vice Presidents
Cash Severance 300% of base salary and
annual incentive1200% of base salary and
annual incentive1
Health & Welfare Coverage Period Coverage up to 36 months Coverage up to 24 months
Gross-ups Full gross-up of excise tax Conditional gross-up of excise tax
1 The cash severance payment will be equal to the sum of the applicable percentage of annual base salary and the
greater of the average of the participant’s annual incentive award for the three years immediately preceding the participant’s
employment termination date, or the participant’s target annual incentive award for the year the participant’s employment with
the Company terminates.