Exhibit 10(iv)
AMENDED MANAGEMENT INCENTIVE COMPENSATION PLAN
OF
PROGRESS ENERGY, INC.
AS AMENDED JANUARY 1, 2003
TABLE OF CONTENTS
Page
ARTICLE I PURPOSE........................................... 1
ARTICLE II DEFINITIONS....................................... 1
ARTICLE III ADMINISTRATION.................................... 7
ARTICLE IV PARTICIPATION..................................... 8
ARTICLE V AWARDS............................................ 8
ARTICLE VI DISTRIBUTION AND DEFERRAL OF AWARDS............... 12
ARTICLE VII TERMINATION OF EMPLOYMENT......................... 18
ARTICLE VIII MISCELLANEOUS..................................... 18
ARTICLE I
PURPOSE
The purpose of the Management Incentive Compensation Plan (the "Plan") of
Progress Energy, Inc. (the "Sponsor") is to promote the financial interests of
the Sponsor and its Affiliated Companies, including its growth, by (i)
attracting and retaining executive officers and other management-level employees
who can have a significant positive impact on the success of the Sponsor and its
Affiliated Companies; (ii) motivating such personnel to help the Sponsor and its
Affiliated Companies achieve annual incentive, performance and safety goals;
(iii) motivating such personnel to improve their own as well as their business
unit/work group's performance through the effective implementation of human
resource strategic initiatives; and (iv) providing annual cash incentive
compensation opportunities that are competitive with those of other major
corporations.
The Sponsor amends and restates the Plan effective January 1, 2003.
ARTICLE II
DEFINITIONS
The following definitions are applicable to the Plan:
1. "Award": The benefit payable to a Participant hereunder, consisting of a
Corporate Component and a Noncorporate Component.
2. "Affiliated Company": Any corporation or other entity that is required
to be aggregated with the Sponsor pursuant to Sections 414(b), (c), (m), or (o)
of the Internal Revenue Code of 1986, as amended (the "Code"), but only to the
extent required.
3. "Board": The Board of Directors of the Sponsor.
4. "Cause": means:
(a) embezzlement or theft from the Company, or other acts of
dishonesty, disloyalty or otherwise injurious to the Company;
(b) disclosing without authorization proprietary or confidential
information of the Company;
(c) committing any act of negligence or malfeasance causing injury to
the Company;
(d) conviction of a crime amounting to a felony under the laws of the
United States or any of the several states;
(e) any violation of the Company's Code of Ethics; or
(f) unacceptable job performance which has been substantiated in
accordance with the normal practices and procedures of the
Company.
5. "Change of Control": The earliest of the following dates:
(a) the date any person or group of persons (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934),
excluding employee benefit plans of the Sponsor, becomes,
directly or indirectly, the "beneficial owner" (as defined in
Rule 13d-3 promulgated under the Securities Act of 1934) of
securities of the Sponsor representing twenty-five percent (25%)
or more of the combined voting power of the Sponsor's then
outstanding securities (excluding the acquisition of securities
of the Sponsor by an entity at least eighty percent (80%) of the
outstanding voting securities of which are, directly or
indirectly, beneficially owned by the Sponsor); or
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(b) the date of consummation of a tender offer for the ownership of
more than fifty percent (50%) of the Sponsor's then outstanding
voting securities; or
(c) the date of consummation of a merger, share exchange or
consolidation of the Sponsor with any other corporation or entity
regardless of which entity is the survivor, other than a merger,
share exchange or consolidation which would result in the voting
securities of the Sponsor outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being
converted into voting securities of the surviving or acquiring
entity) more than sixty percent (60%) of the combined voting
power of the voting securities of the Sponsor or such surviving
or acquiring entity outstanding immediately after such merger or
consolidation; or
(d) the date, when as a result of a tender offer or exchange offer
for the purchase of securities of the Sponsor (other than such an
offer by the Sponsor for its own securities), or as a result of a
proxy contest, merger, share exchange, consolidation or sale of
assets, or as a result of any combination of the foregoing,
individuals who are Continuing Directors cease for any reason to
constitute at least two-thirds (2/3) of the members of the Board;
or
(e) the date the shareholders of the Sponsor approve a plan of
complete liquidation or winding-up of the Sponsor or an agreement
for the sale or disposition by the Company of all or
substantially all of the Sponsor's assets; or
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(f) the date of any event which the Board determines should
constitute a Change of Control.
A Change of Control shall not be deemed to have occurred until a
majority of the members of the Board receive written certification from the
Compensation Committee that one of the events set forth in this Section 5 has
occurred. Any determination that an event described in this Section 5 has
occurred shall, if made in good faith on the basis of information available at
that time, be conclusive and binding on the Compensation Committee, the Sponsor,
each Affiliated Company, the Participant and their Beneficiaries for all
purposes of the Plan.
6. "Company": Progress Energy, Inc., a North Carolina corporation, or any
successor to it in the ownership of substantially all of its assets and each
Affiliated Company that, with the consent of the Compensation Committee, adopts
the Plan and is included in Exhibit B, as in effect from time to time.
7. "Compensation Committee": The Organization and Compensation Committee of
the Board of Directors of the Sponsor.
8. "Continuing Director": The members of the Board as of the Effective
Date; provided, however, that any person becoming a director subsequent to such
date whose election or nomination for election was supported by seventy-five
percent (75%) or more of the directors who then comprised Continuing Directors
shall be considered to be a Continuing Director.
9. "Corporate Factor": The factor determined by the Compensation Committee
to be utilized in calculating the Corporate Component of an Award pursuant to
Article V, Section 3.a. hereof, which can range from 0 to 2.0.
10. "Corporate Component": That portion of an Award based upon the overall
performance of the Sponsor, as determined in Article V, Section 3.a. hereof.
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11. "Date of Retirement": The first day of the calendar month immediately
following the Participant's Retirement.
12. "Designated Beneficiary": The beneficiary designated by the
Participant, pursuant to procedures established by the Human Resources
Department of the Company, to receive amounts due to the Participant or to
exercise any rights of the Participant to the extent permitted hereunder in the
event of the Participant's death. If the Participant does not make an effective
designation, then the Designated Beneficiary will be deemed to be the
Participant's estate.
13. "EBITDA": The earnings of the Sponsor before interest, taxes,
depreciation, and amortization as determined from time to time by the
Compensation Committee.
14. "EBITDA Growth": The percentage increase (if any) in EBITDA of the
Sponsor for any Year, as compared to the previous Year as determined from time
to time by the Compensation Committee.
15. "Effective Date": The Effective Date of this Plan, as amended, is of
January 1, 2003.
16. "Noncorporate Component": That portion of an Award based upon the level
of attainment of a Company, business unit/group, departmental, and individual
Performance Measures, as provided in Article V, Section 3.b. hereof, which can
range from 0 to 2.0.
17. "Participant": An employee of any Company who is selected pursuant to
Article IV hereof to be eligible to receive an Award under the Plan.
18. "Peer Group": The utilities included in the Standard & Poor's Utility
(Electric Power Companies) Index.
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19. "Performance Measure": A goal or goals established for measuring the
performance of a Company, business unit/group, department, or individual used
for the purpose of computing the Noncorporate Component of an Award for a
Participant.
20. "Performance Unit": A unit or credit, linked to the value of the
Sponsor's Common Stock under the terms set forth in Article VI hereof.
21. "Plan": The Management Incentive Compensation Plan of Progress Energy,
Inc. as contained herein, and as it may be amended from time to time.
22. "Retirement": A Participant's termination of employment with a Company
after having met at least one of the following requirements: at least age 65
with 5+ years of service, at least age 55 with 15+ years of service, or 35+
years of service regardless of age.
23. "Salary": The compensation paid by a Company to a Participant in a
relevant Year, consisting of regular or base compensation, such compensation
being understood not to include bonuses, if any, or incentive compensation, if
any. Provided, that such compensation shall not be reduced by any cash deferrals
of said compensation made under any other plans or programs maintained by such
Company.
24. "Section 16 Participants": Those Participants who are subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, as amended (the
"1934 Act"). Individuals who are subject to Section 16 of the 1934 Act include,
without limitation, directors and certain officers of the Sponsor, and any
individual who beneficially owns more than ten percent of a class of the
Sponsor's equity securities registered under Section 12 of the 1934 Act.
25. "Senior Management Committee": The Senior Management Committee of the
Company.
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26. "Target Award Opportunity": The target for an Award under this Plan as
set forth in Section 2 of Article V hereof. 27. "Year": A calendar year.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Chief Executive Officer of the
Sponsor. Except as otherwise provided herein, the Chief Executive Officer of the
Sponsor shall have sole and complete authority to (i) select the Participants;
(ii) establish and adjust (either before or during the relevant Year) a
Participant's Performance Measures, their relative percentage weight, and the
performance criteria necessary for attainment of various performance levels;
(iii) approve Awards; (iv) establish from time to time regulations for the
administration of the Plan; and (v) interpret the Plan and make all
determinations deemed necessary or advisable for the administration of the Plan,
all subject to its express provisions. Notwithstanding the foregoing, the
Compensation Committee shall (a) approve the performance criteria and Awards for
all Participants who are members of the Senior Management Committee; (b)
determine the total payout under the Plan up to a maximum of four percent (4%)
of the Sponsor's after-tax income for a relevant Year; and (c) certify to the
Board that a Change of Control has occurred as provided in Section 5 of Article
II.
A majority of the Compensation Committee shall constitute a quorum, and the
acts of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the members of the
Committee without a meeting, shall be the acts of such Committee.
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ARTICLE IV
PARTICIPATION
The Chief Executive Officer of the Sponsor shall select from time to time
the Participants in the Plan for each Year from those employees of each Company
who, in his opinion, have the capacity for contributing in a substantial measure
to the successful performance of the Company that Year. No employee shall at any
time have a right to be selected as a Participant in the Plan for any Year nor,
having been selected as a Participant for one Year, have the right to be
selected as a Participant in any other Year.
ARTICLE V
AWARDS
1. Eligibility. In order for any Participant to be eligible to receive an
Award, two conditions must be met. First, a contribution must be earned by one
or more groups of employees under the Employee Stock Incentive Plan feature of
the Sponsor's 401(k) Savings & Stock Ownership Plan. Second, the Sponsor must
also meet minimum threshold performance levels for return on common equity,
EBITDA Growth, and other measures for the relevant Year as may be established by
the Compensation Committee. Threshold performance for return on common equity
and EBITDA Growth is the weighted average of a Peer Group of utilities, averaged
over the most recent three-year period. To satisfy threshold performance, the
Sponsor must be above the three-year average with respect to return on common
equity and EBITDA Growth.
2. Target Award Opportunities. The following table sets forth Target Award
Opportunities, expressed as a percentage of Salary, for various levels of
participation in the Plan:
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- -------------------------------------------------------------------------------
Participation Target Award Opportunities
- -------------------------------------------------------------------------------
Chief Executive Officer of Sponsor* 85%
- -------------------------------------------------------------------------------
Chief Operating Officer of Sponsor* 70%
- -------------------------------------------------------------------------------
Presidents*/Executive Vice Presidents* 55%
- -------------------------------------------------------------------------------
Senior Vice Presidents* 45%
- -------------------------------------------------------------------------------
Department Heads 35%
- -------------------------------------------------------------------------------
Other Participants:
Key Managers 25%
Other Managers 20%
- -------------------------------------------------------------------------------
*Senior Management Committee level positions.
The Target Award Opportunity for the Chief Executive Officer of the Sponsor
shall be 85%; however, the Compensation Committee of the Board shall be
authorized to change that amount from year to year, or to award an amount of
compensation based on other considerations, in its complete discretion.
3. Award Components. Awards under the Plan to which Participants are
eligible consist of the sum of a Corporate Component and a Noncorporate
Component. The portion of the Target Award Opportunities attributable to the
Corporate Component and Noncorporate Component, respectively, for various levels
of participation, is set forth in the following table:
- ------------------------------------------------------------------------------
Participants Corporate Noncorporate
Component Component
- ------------------------------------------------------------------------------
Chief Executive Officer of Sponsor* 100% -
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Chief Operating Officer of Sponsor* 100% -
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Presidents*/Executive Vice Presidents* 75% 25%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Senior Vice Presidents* 75% 25%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Department Heads 50% 50%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Other Participants 50% 50%
- ------------------------------------------------------------------------------
*Senior Management Committee level positions.
a. Corporate Component. The Corporate Component of an Award is based
upon the overall performance of the Sponsor. In the event the conditions set
forth in Section 1 of Article V are met and the Compensation Committee, in its
discretion, determines an appropriate Corporate Factor, that Corporate Factor
shall be multiplied by the portion of a Participant's Target Award Opportunity
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attributable to the Corporate Component in order to determine the percentage of
such Participant's Salary which will comprise the Corporate Component of his or
her Award. Notwithstanding the foregoing, if the second condition set forth in
Section 1 of Article V is not fully met, the Compensation Committee may
nevertheless in its discretion determine an appropriate Corporate Factor and
grant a Corporate Component of an Award to the Participants.
b. Noncorporate Component. The Noncorporate Component of an Award for
a Participant is based upon the level of attainment of Company, business
unit/group, departmental and individual Performance Measures. Performance
Measures for each Participant and their relative weight are determined pursuant
to authority granted in Article III hereof.
(i) Performance Levels. There are three levels of performance
related to each of a Participant's Performance Measures: outstanding, target,
and threshold. The specific performance criteria for each level of a
Participant's Performance Measures shall be set forth in writing prior to the
beginning of an applicable Year, or within thirty (30) days after a Participant
first becomes eligible to participate in the Plan, and shall be determined
pursuant to authority granted in Article III hereof. The payout percentages to
be applied to each Participant's Target Award Opportunity are as follows:
Performance Level Payout Percenge
Outstanding 200%
Target 100%
Threshold 50%
Payout percentages shall be adjusted for performance between the designated
performance levels, provided, however, that performance which falls below the
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"Threshold" performance level results in a payout percentage of zero unless the
Chief Executive Officer of Sponsor directs otherwise.
(ii) Determination of Noncorporate Component. In
order to determine a
Participant's Noncorporate Component, if any, for a particular Year, the Chief
Executive Officer of Sponsor initially shall determine the appropriate payout
percentage for each of such Participant's Performance Measures. Thereafter, each
payout percentage is multiplied by the percentage weight assigned to each such
Performance Measure and the results added together. That aggregate amount is
multiplied by the Participant's Target Award Opportunity for the Noncorporate
Award Component for the respective Year and the result is multiplied by the
Participant's Salary.
(iii) Change of Job Status. Participants who change organizations
during a Year will have their Noncorporate Component prorated based upon the
Performance Measures achieved in each organization and the length of time served
in each organization. In the discretion of the Chief Executive Officer of
Sponsor, employees may become Participants during a Year based on promotions and
may receive an Award prorated based on the length of time served in the
qualifying job and the Performance Measures achieved while in the qualifying
job.
4. New Participants. Any Award that is earned during the Year of selection
shall be pro rated based on the length of time served in the qualifying job.
5. Adjustment of Award Amount. In the event of documented performance of a
Participant during a Year that is either deficient or exceptional, the Chief
Executive Officer of Sponsor, in his sole discretion, may adjust the Award
payable to such Participant for such Year.
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6. Example. Attached as Exhibit A and incorporated by reference is an
example of the process by which an Award is granted hereunder. Said exhibit is
intended solely as an example and in no way modifies the provisions of this
Article V.
ARTICLE VI
DISTRIBUTION AND DEFERRAL OF AWARDS
1. Distribution of Awards. Unless a Participant elects to defer an award
pursuant to the remaining provisions of this Article VI, awards under the Plan
earned during any Year shall be paid in cash in the succeeding Year, normally no
later than March of such succeeding Year.
2. Deferral Election. A Participant may elect to defer the Plan Award he or
she has earned for any Year by completing and submitting to the Vice President,
Human Resources, a deferral election form by the later of (i) November 30 of the
Year in which the Award is earned or (ii) the thirtieth (30th) day after first
becoming eligible to participate in the deferral election provisions of the
Plan. Such election shall apply to the Participant's Award, if any, otherwise to
be paid after the Year during which it was earned. A Participant's deferral
election may apply to 100%, 75%, 50%, or 25% of the Plan Award; provided,
however, that in no event shall the amount deferred be less than $1,000.
The election to defer shall be irrevocable as to the Award earned during
the particular Year.
3. Period of Deferral. At the time of a Participant's deferral election, a
Participant must also select a distribution date and form of distribution.
Subject to Section 6, the distribution date may be: (a) any date that is at
least five (5) years subsequent to the date the Plan Award would otherwise be
payable, but not later than the second anniversary of the Participant's Date of
Retirement; or (b) any date that is within two years following the Participant's
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Date of Retirement. Subject to Section 6, the form of distribution may be either
(i) a lump sum or (ii) equal installments over a period extending from two years
to ten years, as elected by the Participant. Subject to Section 6, a Participant
may extend the distribution date for one or more additional Year(s) by making a
new deferral election at least one (1) year before the previously selected
distribution date occurs; provided, however, that (a) in no event shall the
subsequent distribution date be a date that is more than two years beyond the
Participant's Date of Retirement and (b) such a change will only be available
once for each deferred Award. Additionally, a Participant may elect to change
the form of distribution by making a new form of distribution election,
provided, however, that (a) any change in the form of distribution must be made
at least one (1) year before any distribution occurs and (b) such a change will
only be available once for each deferred Award.
4. Performance Units. All Awards which are deferred under the Plan shall be
recorded in the form of Performance Units. Each Performance Unit is generally
equivalent to a share of the Sponsor's Common Stock. In converting the cash
award to Performance Units, the number of Performance Units granted shall be
determined by dividing the amount of the Award by 85% of the average value of
the opening and closing price of a share of the Sponsor's Common Stock on the
last trading day of the month preceding the date of the Award. The Performance
Units attributable to the 15% discount from the average value of the Sponsor's
Common Stock shall be referred to as the "Incentive Performance Units." The
Incentive Performance Units and any adjustments or earnings attributable to
those Performance Units shall be forfeited by the Participant if he or she
terminates employment either voluntarily or involuntarily other than for death
or Retirement prior to five years from March 15 of the Year in which payment
13
would have been made if the Award had not been deferred; provided, however, that
if before such date the employment of the Participant is terminated by the
Company without Cause following a Change in Control, the Incentive Performance
Units shall not be forfeited but shall be payable to the Participant in
accordance with Section 8 of this Article VI.
5. Plan Accounts. A Plan Deferral Account will be established on behalf of
each Participant, and the number of Performance Units awarded to a Participant
shall be recorded in each Participant's Plan Deferral Account as of the first of
the month coincident with or next following the month in which a deferral
becomes effective. The number of Performance Units recorded in a Participant's
Plan Deferral Account shall be adjusted to reflect any splits or other
adjustments in the Sponsor's Common Stock, the payment of any cash dividends
paid on the Sponsor's Common Stock and the payment of Awards under this Plan to
the Participant. To the extent that any cash dividends have been paid on the
Sponsor's Common Stock, the number of Performance Units shall be adjusted to
reflect the number of Performance Units that would have been acquired if the
same dividend had been paid on the number of Performance Units recorded in the
Participant's Plan Deferral Account on the dividend record date. For purposes of
determining the number of Performance Units acquired with such dividend, the
average of the opening and closing price of the Sponsor's Common Stock on the
payment date of the Sponsor's Common Stock dividend shall be used.
Each Participant shall receive an annual statement of the balance of his
Plan Deferral Account, which shall include the Incentive Performance Units and
associated earnings and adjustments that are subject to being forfeited as
provided above.
6. Payment of Deferred Plan Awards. Subject to Section 4 related to
forfeiture of Incentive Performance Units, Deferred Plan Awards shall be paid in
cash by each Company on the deferred distribution date specified by the
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Participant in accordance with Section 3, or as soon as practicable thereafter.
To convert the Performance Units in a Participant's Plan Deferral Account to a
cash payment amount, Performance Units shall be multiplied by the average of the
opening and closing price of the Sponsor's Common Stock on the last trading day
preceding the applicable distribution date specified by the Participant for the
Deferred Plan Award. Except as otherwise provided, deferred amounts will be paid
either in a single lump-sum payment or in up to ten (10) annual payments as
elected by the Participant at the time of the deferral election.
In the event that a Participant elects to receive the deferred Plan Award
in equal annual payments, the amount of the Award to be received in each year
shall be determined as follows:
(a) To determine the amount of the initial annual payment, the number
of Performance Units in the Participant's Plan Deferral Account will be divided
by the total number of annual payments to be received, and the result will be
multiplied by the average of the opening and closing price of the Sponsor's
Common Stock on the last trading day preceding the due date of the initial
payment.
(b) To determine the amount of each successive annual payment, the
Plan Deferral Account balance will be divided by the number of annual payments
remaining, and the result will be multiplied by the average of the opening and
closing price of the Sponsor's Common Stock on the last trading day preceding
the due date of the annual payment.
7. Termination of Employment/Effect on Deferral Election. If the employment
of a Participant terminates prior to the last day of a Year for which a Plan
Award is determined, then any deferral election made with respect to such Plan
Award for such Year shall not become effective and any Plan Award to which the
15
Participant is otherwise entitled shall be paid as soon as practicable after the
end of the Year during which it was earned, in accordance with paragraph 1 of
this Article VI.
8. Termination of Employment/Acceleration of Deferral. Notwithstanding the
foregoing, if a Participant terminates employment by reason other than death or
Retirement, full payment of all amounts due to the Participant shall be
accelerated and paid on the first day of the month following the date of
termination, or as soon as practicable thereafter. Incentive Performance Units
shall be subject to forfeiture to the extent provided in Section 4.
9. Financial Hardship Payments. In the event of a severe financial hardship
occasioned by an emergency, including, but not limited to, illness, disability
or personal injury sustained by the Participant or a member of the Participant's
immediate family, a Participant may apply to receive a distribution earlier than
initially elected. The Chief Executive Officer of Sponsor or his designee may,
in his sole discretion, either approve or deny the request. The determination
made by the Chief Executive Officer of Sponsor will be final and binding on all
parties. If the request is granted, the payments will be accelerated only to the
extent reasonably necessary to alleviate the financial hardship. Incentive
Performance Units shall not be subject to early distribution under this Section
9 until five years from March 15 of the Year in which payment would have been
made if the Award had not been deferred.
10. Death of a Participant. If the death of a Participant occurs before a
full distribution of the Participant's Plan Deferral Account is made, payment
shall be made to the Designated Beneficiary of the Participant in accordance
with the schedule specified in the Participant's Deferral Election form. Said
payment shall be made as soon as practical following notification that death has
occurred.
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11. Non-Assignability of Interests. The interests herein and the right to
receive distributions under this Article VI 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 a Participant becomes
bankrupt, the interests of the Participant under this Article VI may be
terminated by the Chief Executive Officer of Sponsor, which, in his sole
discretion, may cause the same to be held or applied for the benefit of one or
more of the dependents of such Participant or make any other disposition of such
interests that he deems appropriate.
12. Unfunded Deferrals. Nothing in this Plan, including this Article VI,
shall be interpreted or construed to require the Sponsor or any Company in any
manner to fund any obligation to the Participants, terminated Participants or
beneficiaries hereunder. Nothing contained in this Plan nor any action taken
hereunder shall create, or be construed to create, a trust of any kind, or a
fiduciary relationship between the Sponsor or any Company and the Participants,
terminated Participants, beneficiaries, or any other persons. Any funds which
may be accumulated in order to meet any obligation under this Plan shall for all
purposes continue to be a part of the general assets of the Sponsor or Company;
provided, however, that the Sponsor or Company may establish a trust to hold
funds intended to provide benefits hereunder to the extent the assets of such
trust become subject to the claims of the general creditors of the Sponsor or
Company in the event of bankruptcy or insolvency of the Sponsor or Company. To
the extent that any Participant, terminated Participant, or beneficiary acquires
a right to receive payments from the Sponsor or Company under this Plan, such
rights shall be no greater than the rights of any unsecured general creditor of
the Sponsor or Company.
13. Change of Control. In the case of a Change of Control, the Company
shall, subject to the restrictions in this Section 13 and Section 12 of Article
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VI, irrevocably set aside funds in one or more such grantor trusts in an amount
that is sufficient to pay each Participant employed by such Company (or
Designated Beneficiary) the net present value as of the date on which the Change
of Control occurs, of the benefits to which Participants (or their Designated
Beneficiaries) would be entitled pursuant to the terms of the Plan if the value
of their Plan Deferral Account would be paid in a lump sum upon the Change of
Control.
ARTICLE VII
TERMINATION OF EMPLOYMENT
Except as otherwise provided in this Article VII, a Participant must be
actively employed by a Company on the next January 1 immediately following the
Year for which a Plan Award is earned in order to be entitled to payment of the
full amount of any Award for that Year. In the event the active employment of a
Participant shall terminate or be terminated for any reason before the next
January 1 immediately following the Year for which a Plan Award is earned, such
Participant shall receive his or her Award for the year, if any, in an amount
that the Chief Executive Officer of the Sponsor deems appropriate.
Notwithstanding the foregoing provisions of this Article VII, in the event the
employment of the Participant is terminated by the Company without Cause
following a Change in Control, the Award of the Participant for the Year in
which the termination occurs shall equal the amount of the Award which would
have been earned for the Year if the Participant had remained in the employment
of the Company until the next January 1, pro rated to reflect the portion of the
Year completed by the Participant as an employee; provided, however, that such
Award shall not be less than the Target Award Opportunity of the Participant for
the Year, pro rated to reflect the portion of the Year completed by the
Participant as an employee.
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ARTICLE VIII
MISCELLANEOUS
1. Assignments and Transfers. The rights and interests of a Participant
under the Plan may not be assigned, encumbered or transferred except, in the
event of the death of a Participant, by will or the laws of descent and
distribution.
2. Employee Rights Under the Plan. No Company employee or other person
shall have any claim or right to be granted an Award under the Plan or any other
incentive bonus or similar plan of the Sponsor or any Company. Neither the Plan,
participation in the Plan nor any action taken hereunder shall be construed as
giving any employee any right to be retained in the employ of the Sponsor or any
Company.
3. Withholding. The Sponsor or Company (as applicable) shall have the right
to deduct from all amounts paid in cash any taxes required by law to be withheld
with respect to such cash payments.
4. Amendment or Termination. The Compensation Committee may in its sole
discretion amend, suspend or terminate the Plan or any portion thereof at any
time; provided, that in the event of a Change of Control, no such action shall
take effect prior to the January 1 next following the Year in which occurs the
Change of Control. No action to amend, suspend or terminate the Plan shall
affect the right of a Participant to the payment of a Plan Award earned prior to
the effective date of such action.
5. Governing Law. This Plan shall be construed and governed in accordance
with the laws of the state of North Carolina.
6. Entire Agreement. This document (including the Exhibits attached hereto)
sets forth the entire Plan.
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EXHIBIT A
(to be supplied)
EXHIBIT B
Progress Energy Carolinas, Inc.
Progress Energy Service Company, LLC
Progress Energy Florida, Inc.
Progress Energy Ventures, Inc.
Progress Fuels Corporation (corporate employees)
DESIGNATION OF BENEFICIARY
MANAGEMENT INCENTIVE COMPENSATION PLAN
OF
PROGRESS ENERGY, INC.
As provided in the Management Incentive Compensation Plan of Progress
Energy, Inc., I hereby designate the following person as my beneficiary in the
event of my death before a full distribution of my Deferral Account is made.
PRIMARY BENEFICIARY:
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CONTINGENT BENEFICIARY:
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Any and all prior designations of one or more beneficiaries by me under the
Management Incentive Compensation Plan of Progress Energy, Inc. are hereby
revoked and superseded by this designation. I understand that the primary and
contingent beneficiaries named above may be changed or revoked by me at any time
by filing a new designation with the Sponsor's Human Resources Department.
DATE:
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SIGNATURE OF PARTICIPANT:
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The Participant named above executed this document in our presence on the date
set forth above
WITNESS: WITNESS:
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