EXHIBIT A
TO
1997 EQUITY INCENTIVE PLAN
PERFORMANCE SHARE SUB-PLAN
This Performance Share Sub-Plan ("Sub-Plan") sets forth the rules and
regulations adopted by the Committee for issuance of Performance Share Awards
under Section 10 of the Plan. Capitalized terms used in this Sub-Plan that are
not defined herein shall have the meaning given in the Plan. In the event of any
conflict between this Sub-Plan and the Plan, the terms and conditions of the
Plan shall control. No Award Agreement shall be required for participation in
this Sub-Plan.
Section 1. Definitions
When used in this Sub-Plan, the following terms shall have the meanings as set
forth below, and are in addition to the definitions set forth in the Plan.
1.1 "Account" means the account used to record and track the number of
Performance Shares granted to each Participant as provided in Section
2.4.
1.2 "Award" as used in this Sub-Plan means each aggregate award of
Performance Shares as provided in Section 2.2.
1.3 "Peer Group" means the major electric utilities with nuclear and fossil
generation located in the eastern portion of the United States as set
forth in Attachment 1 to this Sub-Plan. The Committee may in its sole
discretion change the members of the Peer Group for future grants.
1.4 "Performance Period" for purposes of this Sub-Plan means three
consecutive Years beginning with the Year in which an Award is
granted.
1.5 "Performance Schedule" means Attachment 2 to this Sub-Plan, which sets
forth the Performance Measures applicable to this Sub-Plan.
1.6 "Performance Share" for purposes of this Sub-Plan means each unit of an
Award granted to a Participant, the value of which is equal to the
value of Company Stock as hereinafter provided.
1.7 "Salary" means the regular base rate of compensation payable by the
Company to a Participant on an annual basis as of the date an Award is
Granted. Salary does not include bonuses, if any, or incentive
compensation, if any. Such compensation shall not be reduced by any
deferrals made under any other plans or programs maintained by the
Company.
1.8 "Total Shareholder Return" means the total percentage return realized
by the owner of a share of stock during a relevant Year or any part
thereof. Total Shareholder Return is equal to the appreciation or
depreciation in value of the stock (which is equal to the closing value
of the stock on the last trading day of the relevant period minus the
closing value of the stock on the last trading day of the preceding
Year) plus the dividends declared during the relevant period, divided
by the closing value of the stock on the last trading day of the
preceding Year. Closing values for the stock on the dates given above
shall be those published in the Wall Street Journal. Total Shareholder
Return is intended to be the sole Performance Measure under this
Sub-Plan.
1.9 "Year" means a calendar year.
Section 2. Sub-Plan Participation and Awards
2.1 Participant Selection. Participants under this Sub-Plan shall be selected by
the Committee in its sole discretion as provided in Section 4.2 of the Plan.
2.2 Awards. Subject to any adjustments to be made under Section 2.5, the
Compensation Committee may, in its sole discretion, grant Awards to some or all
of the Participants in the form of a specific number of Performance Shares. The
total value of any Award shall not exceed the following limitations, based on
the Participant's Salary on the date that the Award is granted:
- ----------------------------------------- -------------------------------
Participant Award Limitation
- ----------------------------------------- -------------------------------
President/CEO 75% of Salary
- ----------------------------------------- -------------------------------
- ----------------------------------------- -------------------------------
Group Executives 50% of Salary
- ----------------------------------------- -------------------------------
- ----------------------------------------- -------------------------------
Department Heads and Key Managers*
Level I 30% of Salary
Level II 25% of Salary
Level III 20% of Salary
- ----------------------------------------- -------------------------------
*Levels shall be determined in the sole discretion of the Committee
2.3 Award Valuation at Grant. In calculating the limitations set forth in
Section 2.2, the value of each Performance Share shall be equal to the closing
price of a share of Stock on the last trading day before the Award is granted,
as published in the Wall Street Journal. Each Award is deemed to be granted on
the day that it is approved by the Committee.
2.4 Accounting and Adjustment of Awards. The number of Performance Shares
awarded to a Participant shall be recorded in a separate Account for each
Participant. The number of Performance Shares recorded in a Participant's
Account shall be adjusted to reflect any splits or other adjustments in the
Stock. If any cash dividends are paid on the Stock, the number of Performance
Shares in each Participant's Account shall be increased by a number equal to (i)
the dividend multiplied times the number of Performance Shares in each
Participant's Account, divided by (ii) the closing price of a share of Stock on
the payment date of the dividend, as published in the Wall Street Journal.
2.5 Performance Schedule and Calculation of Awards. Each Award shall become
vested on January 1 immediately following the end of the applicable Performance
Period, subject to adjustment in accordance with the following procedure:
(a) The Total Shareholder Return for the Company shall be determined
for each Year during the Performance Period, and shall then be averaged (the
"Company TSR").
(b) The average Total Shareholder Return for all Peer Group utilities
shall be determined for each Year during the Performance Period, and shall then
be averaged ( the "Peer Group TSR").
(c) The Peer Group TSR for the Performance Period shall be subtracted
from the Company TSR for the Performance Period. The remainder shall then be
used to determine the total number of vested Performance Shares using the
Performance Schedule, based on the number of Performance Shares in the
Participant's Account.
(d) The Performance Measures and the Performance Schedule will not
change during any Performance Period with regard to any Awards that have already
been granted. The Committee reserves the right to modify or adjust the
Performance Measures and/or the Performance Schedule in the Committee's sole
discretion with regard to future grants.
2.6 Payment Options. Except as provided in Section 3, Awards shall be paid after
expiration of the Performance Period. The Company will pay in cash to each
Participant the aggregate value of vested Performance Shares, which shall be
determined in accordance with Section 2.7. Payment shall be made as follows:
(a) 100% on or about April 1 of the Year immediately following
expiration of the Performance Period; or
(b) in accordance with an alternative payment election made by
Participant substantially in the form attached hereto as Attachment 3, provided
that such election is executed by the Participant and returned to the Vice
President, Human Resources Department no later than the end of the first Year of
the Performance Period. Once made, this election is irrevocable.
2.7 Valuation of Performance Shares. For the purposes of payment of under
Section 2.6, the aggregate value of vested Performance Shares shall be equal to
number of vested Performance Shares in the Participant's Account (after any
applicable adjustments under Section 2.5) multiplied times the closing price of
the Stock on the last trading day before payment of the Award, as published in
the Wall Street Journal.
Section 3. Early Vesting and Forfeiture
3.1 Normal Retirement, Early Retirement, Death, Disability, Divestiture or
Change in Control. If prior to expiration of the Performance Period the
Participant Retires, dies or becomes disabled, or in the event of a Divestiture
or a Change in Control during a Performance Period, the Participant's Award
shall immediately become vested, and the aggregate value of the Award shall be
paid in cash after being adjusted accordance with the following procedure:
(a) The Total Shareholder Return for the Company shall be determined
for each Year or partial Year, and a weighted average Total Shareholder Return
for the Company shall be calculated for the period between the first day of the
Performance Period and the date the Participant Retires, dies or becomes
Disabled, or the date of the Divestiture, or the date that the Change in Control
becomes effective (the "Prorated Company TSR").
(b) The average Total Shareholder Return for all Peer Group utilities
shall be determined for each Year or partial Year, and a weighted average Total
Shareholder Return shall be calculated for the period between the first day of
the Performance Period and the date the Participant Retires, dies or becomes
Disabled, or the date of the Divestiture, or the date that the Change in Control
becomes effective (the "Prorated Peer Group TSR").
(c) The Prorated Peer Group TSR for the Performance Period shall be
subtracted from the Prorated Company TSR for the Performance Period. The
remainder shall then be used to determine the total vested Performance Shares
using the Performance Schedule, based on the number of Performance Shares in the
Participant's Account.
(d) If the Participant Retires, the Award shall be paid in accordance
with the Participant's election as provided in Section 2.6. If the Participant
dies or becomes disabled, or in the event of a Divestiture or Change in Control,
payment shall be made in cash within a reasonable time after the Participant
dies or becomes Disabled, or within a reasonable time after the Divestiture or
Change in Control becomes effective, notwithstanding any election under Section
2.6. Payment upon death shall be made to the Participant's Designated
Beneficiary. The aggregate value of the vested Performance Shares shall be
determined in accordance with section 3.2.
3.2 Valuation of Performance Shares. For the purposes of payment of under
Section 3.1, the aggregate value of vested Performance Shares shall be equal to
the number of vested Performance Shares in the Participant's Account (after any
applicable adjustments under Section 3.1) multiplied times the closing price of
the Stock on the date that the Participant Retires, dies or becomes Disabled, or
on the date of the Divestiture or Change in Control (as applicable), as
published in the Wall Street Journal.
3.3 Termination of Employment. In the event that a Participant's employment with
the Company terminates for any reason other than Early Retirement, Normal
Retirement, death or Disability, any Award made to the Participant which has not
vested as provided in Section 2 shall be forfeited. Any vested Awards shall be
paid within a reasonable time after termination, notwithstanding any election to
defer the payment of any Award under Section 2.6.
4. Non-Assignability of Awards
The Awards and any right to receive payment under the Plan and this Sub-Plan may
not be anticipated, alienated, pledged, encumbered, or subject to any charge or
legal process, and if any attempt is made to do so, or a Participant becomes
bankrupt, then in the sole discretion of the Committee, any Award made to the
Participant which has not vested as provided in Sections 2 and 3 shall be
forfeited.
5. Amendment and Termination
This Sub-Plan shall be subject to amendment, suspension, or termination as
provided in Section 14.6 of the Plan.
32950
ATTACHMENT 1
PEER GROUP LIST (1)
(TO BE ADDED LATER)
(1) Should any of the listed Peer Group utilities merge or consolidate with
another entity (other than another Peer Group utility), become bankrupt, or
reorganize, they shall be excluded from the Peer Group for the entire
Performance Period. Should any of the listed Peer Group utilities merge or
consolidate with another Peer Group utility, they shall be treated as a single
Peer Group utility for the entire Performance Period, and the Total Shareholder
Return for any period that they were two separate entities shall be the average
of the two.
ATTACHMENT 2
PERFORMANCE SCHEDULE
PERFORMANCE SHARE CALCULATION (1)
If the Company TSR(2) minus Then the total vested Performance Peer Group TSR(2)
is: Share Award shall be multiplied by:
5% or better 2.00
4.0 - 4.99 1.75
3.0 - 3.99 1.50
2.0 - 2.99 1.25
1.0 - 1.99 1.00
(0.99) - 0.99 .50
(1.0) - (1.99) .25
(2.0) or less 0.00
(1) The number of Performance Shares as calculated above shall be paid in
accordance with the provisions of Section 2.5 and 2.6 of the Sub-Plan.
(2) For purposes of Section 3, the Prorated Company TSR and Prorated Peer Group
TSR shall be used, and the number of Performance Shares as calculated above
shall be paid in accordance with the provisions of Section 3.1 of the Sub-Plan.
- --------------------------------------------------------------------------------
ATTACHMENT 3
- --------------------------------------------------------------------------------
Performance Share Sub-Plan
199_ Deferral Election Form
As an employee of Carolina Power & Light Company ("Company"), and a participant
in the Performance Share Sub-Plan of the 1997 Equity Incentive Plan
("Sub-Plan"), I hereby elect to defer payment of my Award otherwise payable to
me by the Company and attributable to services to be performed by me during the
Performance Period beginning on January __, 199__. This election shall apply to
[CHECK ONE]:
[ ] 100% of the Award [ ] 75% of the Award
[ ] 75% of the Award [ ] 25% of the Award
Upon vesting, I understand that my Award shall continue be recorded in my
Account as Performance Shares as described in the Sub-Plan and adjusted to
reflect the payment and reinvesting of the Company's common stock dividends over
the deferral period, until paid in full.
I hereby elect to defer receipt (or commencement of receipt) of my Award until
the date specified below, or as soon as practical thereafter [CHECK ONE]:
[ ] a specific date certain at least 5 years from expiration
of the Performance Period: 4 / 1 / *
-------------------------
(month/day/year)
[ ] the April 1 following the date of retirement
[ ] the April 1 following the first anniversary of my date of
retirement
* Notwithstanding my election above, if I elect a date certain distribution and
I retire before that date certain, I understand that the Company will commence
distribution of my account no later than the April 1 following the first
anniversary of the date of retirement, or as soon as practical thereafter, even
though said date is earlier than 5 years from expiration of the Performance
Period.
I hereby elect to be paid as described in the Sub-Plan in the form of [CHECK
ONE]:
[ ] a single payment [ ] annual payments commencing on the date
set forth above and payable on the
anniversary date thereof over:
a two year period a three year period
a four year period a five year period
I understand that I will receive "earnings" on those deferred amounts when they
are paid to me.
I understand that the election made as indicated herein is irrevocable and that
all deferral elections are subject to the provisions of the Sub-Plan, including
provisions that may affect timing of distributions.
I understand and acknowledge that my interests herein and my rights to receive
distribution of the deferred amounts may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered, or subjected to any charge or legal
process, and if any attempt is made to do so, or I become bankrupt, my interest
may be terminated by the Committee, which, in his sole discretion. I further
understand that nothing in the Sub-Plan shall be interpreted or construed to
require the Company in any manner to fund any obligation to me, or to my
beneficiary(ies) in the event of my death.
- --------------------------------------------- ----------------------------
(Signature) (Date)
- --------------------------------------------- ----------------------------
(Print Name) (Company Location)
Received:
Agent of Chief Executive Officer
- --------------------------------------------- ----------------------------
(Signature) (Date)