Progress Energy 2010 Annual Report Download - page 200

PROXY STATEMENT
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Change-in-Control and payment is made based upon the target value of the award. In the event of death, the 2008 performance shares
would vest 100% and be paid in an amount using performance factors determined at the time of the event. For the 2009 and 2010
performance grants, a pro-rata payment would be made based upon the target value of the award and time in the plan.
5 Amounts shown for restricted stock units are based on a December 31, 2010, closing price of $43.48 per share.
For a detailed description of outstanding restricted stock units, see the “Outstanding Equity Awards at Fiscal Year-End Table.”
Unvested units would be forfeited under for cause termination. Voluntary termination and involuntary not for cause termination
are not applicable. See footnote 1. In the event of early retirement, Mr. Johnson would receive a pro-rata percentage of all
unvested units, based upon the number of full months elapsed between the grant date and the date of early retirement. In the event
of involuntary or good reason termination (CIC), all outstanding restricted stock units would vest immediately. Upon death or
disability, all outstanding restricted stock units that are more than one year past their grant date would vest immediately. Shares
that are less than one year past their grant date would be forfeited. Mr. Johnson would immediately vest restricted stock units
granted in 2007, 2008, and 2009, and would forfeit restricted stock units granted in 2010.
6 Amounts shown for restricted stock shares are based on a December 31, 2010, closing price of $43.48 per share. For a
detailed description of outstanding restricted stock shares, see “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested
shares would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. In the
event of early retirement, all outstanding shares may vest at the Committee’s discretion. In the event of involuntary or good
reason termination (CIC), all outstanding shares would vest immediately. Upon death or disability, all outstanding restricted
stock shares that are more than one year past their grant date would vest immediately. Shares that are less than one year past their
grant date would be forfeited. All of Mr. Johnson’s restricted stock grant dates are beyond the one-year threshold; therefore, all
outstanding restricted stock shares would vest immediately.
7 No accelerated vesting or incremental nonqualified pension benefit applies under any of these scenarios. Mr.
Johnson was vested under the SERP as of December 31, 2010, so there is no incremental value due to accelerated vesting under
involuntary or good reason termination (CIC). For a detailed description of the accumulated SERP benefit and estimated annual
benefit payable at age 65, see “Pension Benefits Table.” In the event of early retirement, Mr. Johnson would receive a 2.5%
decrease in his accrued SERP benefit for each year that he is younger than age 65.
8 All outstanding deferred compensation balances will be paid immediately following termination, subject to IRC
Section 409(a) regulations, under voluntary termination, early retirement, involuntary not for cause termination, for cause
termination, involuntary or good reason termination (CIC), death and disability. Unvested MICP deferral premiums would be
forfeited. Mr. Johnson would forfeit $0 of unvested deferred MICP premiums.
9 No post-retirement health care benefits apply under voluntary termination, for cause termination, death or disability.
In the event of early retirement, Mr. Johnson would receive no additional benefits above what all full-time, nonbargaining
employees would receive. Under involuntary not for cause termination, Mr. Johnson would be reimbursed for 18 months of
COBRA premiums at $1,371.22 per month as provided in his employment agreement. In the event of involuntary or good reason
termination (CIC), the Management Change-in-Control Plan provides for Company-paid medical, dental and vision coverage in
the same plan Mr. Johnson was participating in prior to termination for 36 months at $1,344.33 per month.
10 Mr. Johnson would be eligible to receive $500,000 proceeds from the executive AD&D policy.
11 Upon a change in control, the Management Change-in-Control Plan provides for the Company to pay all excise taxes
under IRC Section 280G plus applicable gross-up amounts for Mr. Johnson. Under IRC Section 280G, Mr. Johnson would be
subject to excise tax on $10,222,095 of excess parachute payments above his base amount. Those excess parachute payments
result in $2,044,419 of excise taxes, $3,365,647 of tax gross-ups, and $78,446 of employer Medicare tax related to the excise
tax payment. As discussed above, in connection with the merger with Duke Energy, Duke Energy, Diamond Acquisition
Corporation and Mr. Johnson executed a term sheet pursuant to which the parties agreed to enter into an employment agreement
upon consummation of the merger. Pursuant to the term sheet, if Mr. Johnson is involuntarily terminated without “cause” or
resigns for “good reason” following, but prior to the second anniversary of, the consummation of the merger, no tax gross-up will
be provided.
12 See “Management Change-in-Control Plan – Application of the CIC Plan and Other Compensation Related
Consequences of the Proposed Merger with Duke Energy” on pages 38 through 39 above for a discussion regarding
“involuntary” or “good reason” termination following the merger with Duke Energy.