Exhibit 10(i)
AMENDED MANAGEMENT INCENTIVE COMPENSATION PLAN
OF
PROGRESS ENERGY, INC.
AS AMENDED JANUARY 1, 2005
TABLE OF CONTENTS
Page
----
ARTICLE I PURPOSE........................................... 1
ARTICLE II DEFINITIONS....................................... 1
ARTICLE III ADMINISTRATION.................................... 7
ARTICLE IV PARTICIPATION..................................... 7
ARTICLE V AWARDS............................................ 8
ARTICLE VI DISTRIBUTION AND DEFERRAL OF AWARDS............... 10
ARTICLE VII TERMINATION OF EMPLOYMENT......................... 16
ARTICLE VIII MISCELLANEOUS..................................... 17
ARTICLE I
---------
PURPOSE
-------
The purpose of the Management Incentive Compensation Plan (the "Plan") of
Progress Energy, Inc. is to promote the financial interests of the Company,
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 Company; (ii) motivating such personnel to help the Company
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, 2005.
ARTICLE II
----------
DEFINITIONS
-----------
The following definitions are applicable to the Plan:
1. "Achievement Factor": The sum of the Weighted Achievement Percentages
determined for each of the Performance Measures for the Year.
2. "Award": The benefit payable to a Participant hereunder based upon
achievement of the Performance Measures.
3. "Affiliated Entity": 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.
4. "Board": The Board of Directors of the Sponsor.
5. "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.
6. "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
(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 Sponsor of all or
substantially all of the Sponsor's assets; or
(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 6 has occurred. Any
determination that an event described in this Section 6 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 Entity, the Participant and their Beneficiaries for all purposes of
the Plan.
7. "Company": The Sponsor and each Affiliated Entity.
8. "Compensation Committee": The Organization and Compensation Committee of
the Board of Directors of the Sponsor.
9. "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.
10. "Date of Retirement": The first day of the calendar month immediately
following the Participant's Retirement.
11. "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.
12. "EBITDA": The earnings of the Participating Employer before interest,
taxes, depreciation, and amortization as determined from time to time by the
Compensation Committee.
13. "ECIP Goals" The goals set forth to receive a payment under the
Employee Cash Incentive Plan of each department or business unit of the Company.
14. "Effective Date": The Effective Date of this Plan, as amended, is
January 1, 2005.
15. "EPS": The on-going earnings per share of the Sponsor's Common Stock
for a Year as determined by the Compensation Committee from time to time.
16. "Legal Entity EBITDA": The EBITDA of the Participating Employer which
employs the Participant.
17. "Participant": An employee of a Participating Employer who is selected
pursuant to Article IV hereof to be eligible to receive an Award under the Plan.
18. "Participating Employer": Each Affiliated Entity that, with the consent
of the Compensation Committee, adopts the Plan and is included in Exhibit C, as
in effect from time to time.
19. "Performance Measures": The EPS, Legal Entity EBITDA and ECIP Goals.
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 from the
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 the 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. "Senior Management Committee": The Senior Management Committee of the
Company.
25. "Sponsor": Progress Energy, Inc., a North Carolina corporation, or any
successor to it in the ownership of substantially all of its assets.
26. "Target Award Opportunity": The target for an Award under this Plan as
set forth in Section 1 of Article V hereof.
27. "Unforeseeable Emergency": A severe financial hardship to the
Participant resulting from an illness or accident of the Participant, the
Participant's spouse, or a dependent (as defined in Section 152(a) of the Code)
of the Participant, loss of the Participant's property due to casualty, or other
unforeseeable circumstances arising as a result of events beyond the control of
the Participant.
28. "Weighted Achievement Percentage": The percentage determined by
multiplying the relative percentage weight assigned to each of the Performance
Measures applicable to the Participant for the Year by the payout percentage
corresponding to the level of achievement of the Performance Measure as
determined for each department or business unit for the Year.
29. "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 Year) the performance
criteria necessary for a Participant to attain an Award for the Year; (iii)
adjust and 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 applicable threshold, target and
outstanding levels of performance for a Performance Measure for the Year; (b)
approve the performance criteria and Awards for all Participants who are members
of the Senior Management Committee; (c) 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 (d) 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.
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. 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:
- -------------------------------------------------------------------------------
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.
2. Award Components. Awards under the Plan to which Participants are
eligible shall depend upon the achievement of the Performance Measures for the
Year. Prior to the beginning of each Year, or as soon as practical thereafter,
the Chief Executive Officer of the Sponsor will establish and the Compensation
Committee will approve the Performance Measures for the Year, their relative
percentage weight, and the performance criteria necessary for attainment of
various performance levels. Attached hereto as Exhibit A are the relative
percentage weights for each of the Performance Measures for each level of
participation as of the Effective Date, which may be changed from time to time
by the Compensation Committee.
3. Performance Levels. The Compensation Committee may establish three
levels of performance related to a Performance Measure: outstanding, target, and
threshold. In such case, the payout percentages to be applied to each
Participant's Target Award Opportunity are as follows:
Performance Level Payout Percentage
----------------- -----------------
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
"Threshold" performance level results in a payout percentage of zero.
4. Determination of Award Amount. The Chief Executive Officer of the
Sponsor shall determine the amount of the Award, if any, earned by each
Participant for the Year; provided, that the Compensation Committee shall
approve the amount of the Award for a Participant who is a member of the Senior
Management Committee. The amount of an Award earned by the Participant shall be
determined by multiplying the Salary times the Target Award Opportunity times
the Achievement Factor applicable to the Participant for the Year. The amount of
the Award of a Participant is subject to further adjustment as provided in
Section 6 of this Article V.
5. New Participants. Any Award that is earned during the initial Year of
participation shall be pro rated based on the length of time served in the
qualifying job.
6. Adjustment of Award Amount. The Chief Executive Officer of the Sponsor,
in his sole discretion, may adjust the Award payable to a Participant for the
Year based upon management's determination of the performance goals and core
skill achievement of the Participant, the succession planning leadership rating
of the Participant and any other applicable performance criteria.
7. Example. Attached as Exhibit B 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 no earlier than March 16 and no
later than March 25 of the succeeding Year. The provisions of this Article VI,
as amended effective January 1, 2005, shall apply to amounts deferred after
December 31, 2004. The predecessor provisions of this Plan as in effect before
January 1, 2005, shall continue to apply to amounts deferred before January 1,
2005, unless such provisions are materially modified after October 3, 2004. For
this purpose, an amount is considered deferred before January 1, 2005, if the
amount is earned and vested before such date.
2. Deferral Election. A Participant may elect to defer the Plan Award he or
she has earned for any Year by completing and submitting a deferral election in
a form acceptable to the Vice President, Human Resources, by the later of (i)
the last day of the preceding Year (or such other time as permitted by Section
409A of the Code and the regulations thereunder), 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
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. A Participant may not subsequently
change the distribution date and form of distribution designated in the initial
deferral election.
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
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
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
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/Payment 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 made on
the first day of the month following the date of termination, or as soon as
practical thereafter. However, if the Participant is a "key employee" as defined
in Section 416(i) of the Code (but determined without regard to the 50 employee
limit on the number of officers treated as key employees), payment shall not be
made before six months after the date of separation from service for any reason
including Retirement (or, if earlier, the date of death of the Participant).
Incentive Performance Units shall be subject to forfeiture to the extent
provided in Section 4.
9. Payments Due to Unforeseeable Emergency. In the event of an
Unforeseeable Emergency, 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 amounts distributed will
not exceed the amounts necessary to alleviate the Unforeseeable Emergency plus
amounts necessary to pay taxes reasonably anticipated as result of the
distribution, after taking into account the extent to which the Unforeseeable
Emergency may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Participant's assets (to the extent such
liquidation would not itself cause severe 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.
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
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.
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, or permit the acceleration of the time or
schedule of any payment of amounts deferred under the Plan (except as provided
in regulations under Section 409A of the Code).
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.
EXHIBIT A
MICP Relative Performance Weightings
Company Legal Entity ECIP
Position EPS EBITDA Goals
-------- --- ------ -----
SMC - CEO 100% - -
SMC - COO 40% 50% 10%
SMC - Presidents 40% 50% 10%
SMC - Service Company CEO 90% - 10%
SMC - Non Service Company 30% 60% 10%
SMC - Service Company 90% - 10%
Non Service Company Department 25% 50% 25%
Heads and Managers
Service Company Department Heads 45% 30% 25%
and Managers
Note: This structure may be modified based upon a recommendation by the CEO and
approval by the Committee.
EXHIBIT B
Management Incentive Example
(Assumes preliminary PDP and Succession Planning rates are complete)
Achievement Achievement Weighting Achievement
Level Percentage (see Pro Rate %) Factor
-------------- ---------------- ------------------- --------------
Step 1: Calculate achievement factor for members of a department
PGN EPS Target 100% 25.0% 25.0%
Legal entity EBITDA Outstanding 200% 50.0% 100.0%
ECIP goals At least 7 100% 25.0% 25.0%
--------------
Total achievement factor 150.0% Would be calculated for each BU
Step 2: Apply achievement factor to target levels
Target Achievement Initial
% Factor Payout %
-------------- ---------------- -------------------
Department Head 35.0% 150.0% 52.5%
Section Manager 25.0% 150.0% 37.5%
Unit Manager 20.0% 150.0% 30.0%
Step 3: Determine dollars eligible by department:
Target Initial Calculated
Salary % Payout % Award
-------------- ---------------- ------------------- --------------
John Doe, Department Head 200,000 35.0% 52.5% 105,000
Jane Doe, Section Manager 100,000 25.0% 37.5% 37,500
John Smith, Section Manager 120,000 25.0% 37.5% 45,000
Jane Smith, Unit Manager 80,000 20.0% 30.0% 24,000
John Jones, Unit Manager 75,000 20.0% 30.0% 22,500
Jane Jones, Unit Manager 90,000 20.0% 30.0% 27,000
--------------
261,000
--------------
Step 4: Provide each group executive a list of their departments and calculated
award totals. Allow them to redistribute dollars based on organization
performance within group.
Step 5: Allocate dollars by group and department:
Target Initial Calculated Discretionary Actual Award Award
Salary % Payout % Award Adjustment %
-------------- ---------------- ------------------- -------------- ---------------- ------------- -----------
John Doe 200,000 35% 52.5% 105,000 (12,600) 92,400 46.2%
Jane Doe 100,000 25% 37.5% 37,500 5,000 42,500 42.5%
John Smith 120,000 25% 37.5% 45,000 (3,000) 42,000 35%
Jane Smith 80,000 20% 30.0% 24,000 - 24,000 30%
John Jones 75,000 20% 30.0% 22,500 5,000 27,500 36.7%
Jane Jones 90,000 20% 30.0% 27,000 (10,400) 16,600 18.4%
-------------- -------------
261,000 245,000
-------------- -------------
Per group executive, department total to spend is $245,000
(Step 4)
General notes:
The departmental sheets would still be rolled into group level sheets and
reviewed by level as in prior years (all dh's together, 25% participants, 20%
participants)
Discretion based on PDP (core skills and performance goals) and succession
planning ratings
Discretionary percentage should reflect a range of +/- TBD% of payout % for
group
Steps 1 & 2 (MICP) fund determination) based on legal entities. Steps 3-5 (MICP
allocation) utilize reporting organization/group.
EXHIBIT C
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:
-------------------------------
-------------------------------
-------------------------------
CONTINGENT BENEFICIARY:
-------------------------------
-------------------------------
-------------------------------
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:__________________
SIGNATURE OF PARTICIPANT:_________________________________
The Participant named above executed this document in our presence on the date
set forth above
WITNESS: WITNESS:
----------------------------- -------------------------------