-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IfSF23sPjwRRU0fmSdEj9tYqMErEIjWy7RlnaSBiJjs58+RGfcA1juhrUTi440Uf PHir8DjNA8IsoKWvW6WTcw== 0001094093-04-000352.txt : 20041213 0001094093-04-000352.hdr.sgml : 20041213 20041213152346 ACCESSION NUMBER: 0001094093-04-000352 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041207 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041213 DATE AS OF CHANGE: 20041213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAROLINA POWER & LIGHT CO CENTRAL INDEX KEY: 0000017797 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 560165465 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03382 FILM NUMBER: 041198654 BUSINESS ADDRESS: STREET 1: 411 FAYETTEVILLE ST CITY: RALEIGH STATE: NC ZIP: 27601 BUSINESS PHONE: 9195466111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLORIDA POWER CORP / CENTRAL INDEX KEY: 0000037637 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 590247770 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03274 FILM NUMBER: 041198656 BUSINESS ADDRESS: STREET 1: 3201 34TH ST SOUTH STREET 2: ONE PROGRESS PLAZA CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 7278205151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROGRESS ENERGY INC CENTRAL INDEX KEY: 0001094093 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 562155481 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15929 FILM NUMBER: 041198653 BUSINESS ADDRESS: STREET 1: 410 S WILMINGTON ST CITY: RALEIGH STATE: NC ZIP: 27601 BUSINESS PHONE: 9195466463 MAIL ADDRESS: STREET 1: 410 S WILMINGTON ST CITY: RALEIGH STATE: NC ZIP: 27601 FORMER COMPANY: FORMER CONFORMED NAME: CP&L ENERGY INC DATE OF NAME CHANGE: 20000314 FORMER COMPANY: FORMER CONFORMED NAME: CP&L HOLDINGS INC DATE OF NAME CHANGE: 19990830 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLORIDA PROGRESS CORP CENTRAL INDEX KEY: 0000357261 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 592147112 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08349 FILM NUMBER: 041198655 BUSINESS ADDRESS: STREET 1: ONE PROGRESS PLAZA STREET 2: STE 2600 CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 7278246400 MAIL ADDRESS: STREET 1: ONE PROGRESS PLZ STREET 2: SUITE 2600 CITY: ST PETERSBURG STATE: FL ZIP: 33701 8-K 1 eightk.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): December 7, 2004 ---------------- Exact names of registrants as specified in their charters, state of incorporation, IRS Employer Commission address of principal executive offices, Identification File Number and telephone number Number - -------------------------------------------------------------------------------- 1-15929 PROGRESS ENERGY, INC. 56-2155481 410 South Wilmington Street Raleigh, North Carolina 27601-1748 Telephone: (919) 546-6111 State of Incorporation: North Carolina 1-8349 FLORIDA PROGRESS CORPORATION 59-2147112 410 South Wilmington Street Raleigh, North Carolina 27601-1748 Telephone: (919) 546-6111 State of Incorporation: Florida 1-3382 CAROLINA POWER & LIGHT COMPANY 56-0165465 d/b/a Progress Energy Carolinas, Inc. 410 South Wilmington Street Raleigh, North Carolina 27601-1748 Telephone: (919) 546-6111 State of Incorporation: North Carolina 1-3274 FLORIDA POWER CORPORATION 59-0247770 d/b/a Progress Energy Florida, Inc. 100 Central Avenue St. Petersburg, Florida 33701-3324 Telephone: (727) 820-5151 State of Incorporation: Florida None - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) This combined Form 8-K is filed separately by four registrants: Progress Energy, Inc., Florida Progress Corporation, Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. and Florida Power Corporation d/b/a Progress Energy Florida, Inc. Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf, and is not, and shall not be deemed to be filed or disclosed by any other registrant listed above. Section 1 - Registrant's Business and Operations Item 1.01 Entry into a Material Definitive Agreement. On December 7, 2004, the Organization and Compensation Committee of the Board of Directors (the "Committee") of Progress Energy, Inc. (the "Company") approved certain amendments to certain of the Company's compensation plans. The amendments, which are described below, will become effective on January 1, 2005. Performance Share Sup-Plan ("PSSP") The Committee approved the following amendments to the Company's PSSP: (i) each December, the Committee will determine the appropriate peer group of utilities that will be used for the following year's award in computing the performance multipliers that are used to calculate the number of vested performance shares in each PSSP participant's account at the end of the three year performance period; (ii) the two highest and two lowest performing utilities within the peer group shall be excluded for purposes of determining peer group performance; (iii)awards that are paid out following an executive's retirement shall be adjusted similar to other awards of other executives, except the award would not accrue dividends during the period from the executive's retirement date to the time of regular payment of the award at the end of the three year performance period; and (iv) distributions to key employees must be delayed until at least six (6) months after a separation from service termination event, including retirement. The Company recently ceased granting stock options. Effective January 1, 2005, long-term incentive compensation that was previously awarded to employees in the form of stock options will be awarded pursuant to the PSSP. As a result, the number of PSSP participants will increase. Also effective January 1, 2005, awards granted pursuant to the PSSP will be payable in Company common stock rather than in cash, and only individuals who are employed as Department Heads or in higher level positions will be eligible to defer payment of their PSSP awards. Amended Management Incentive Compensation Plan ("MICP") The Committee also approved amendments to the Company's MICP that: (i) eliminate award threshold performance requirements related to the Company's EBITDA growth and return on common equity, and rely, instead, on the establishment of appropriate threshold, target and outstanding level goals to determine award eligibility; (ii) provide that the fund available for MICP awards will be determined primarily by corporate financial performance, including the Company's earnings per share, legal entity EBITDA, and the achievement of "target" level goals under the Company's Employee Cash Incentive Plan, with the Committee designated to approve threshold, target and outstanding levels for the Company's on-going earnings per share and legal entity EBITBA at the beginning of each calendar year; (iii)eliminate the Individual/Non-Corporate component of awards, and provide that MICP awards will be allocated based upon management's determination of each participant's individual performance and leadership ratings; and (iv) provide that deferral elections must be made prior to the beginning of the year in which the award is earned; no changes in award form (lump sum versus annual installments) or distribution dates are allowed; and distributions to "key employees" must be delayed until at least six months after a separation from service termination event, including retirement. The changes related to deferrals apply only to awards deferred after December 31, 2004. The Amended Management Incentive Compensation Plan is filed as Exhibit 10(i) to this Current Report on Form 8-K. Management Deferred Compensation Plan ("MDCP") In addition, the Committee approved amendments to the Company's MDCP that are required for compliance with the American Jobs Creation Act of 2004. The approved amendments apply to amounts deferred after December 31, 2004, and provide that: o no changes in the distribution dates for awards will be allowed; o no changes in the form of distribution (i.e. lump sum versus annual installments) will be allowed; o the distribution of deferred balances to key employees must be delayed until at least six months after a separation from service termination event, including retirement; and o the acceleration of award payments is prohibited. * * * * * On December 8, 2004, the Board of Directors (the "Board") of the Company approved certain amendments to other non-qualified deferred compensation plans in which the Company's executives and/or directors are eligible to participate. Many of the changes were necessitated by the American Jobs Creation Act of 2004. The amendments that were approved by the Board will become effective on January 1, 2005, and are described below. Supplemental Senior Executive Retirement Plan The amendment provides that distributions to key employees must be delayed until at least six months after a separation from service termination event, including retirement, but excluding death. Restoration Retirement Plan The amendments provide that: (i) distributions to key employees must be delayed until at least six months after a separation from service termination event, including retirement, but excluding death; and (ii) acceleration of payments is generally prohibited. Management Change-in-Control Plan The amendment provides that distributions to key employees must be delayed until at least six months after a separation from service termination event, including retirement, but excluding death. Deferred Compensation Plan for Directors The amendments provide that no changes in the form of distribution of awards (lump sum versus annual installments) are allowed on amounts deferred after December 31, 2004. The Deferred Compensation Plan for Board of Directors--Method of Payment Agreement is filed as Exhibit 10(ii) to this Current Report on Form 8-K. Non-Employee Director Stock Unit Plan (the "Unit Plan") The amendments: (i) provide that the initial payment method election must be made within 30 days after an individual becomes a participant in the Unit Plan; (ii) provide that no changes in the form of distribution (lump sum versus annual installments) are allowed on amounts deferred after December 31, 2004; (iii)increase the annual grant of deferred stock units to be granted under the Unit Plan from 350 to 1,200 stock units, effective January 1, 2005; and (iv) discontinue the matching program for units acquired under the Unit Plan. The Progress Energy, Inc. Non-Employee Director Stock Unit Plan is filed as Exhibit 10(iii) to this Current Report on Form 8-K. This combined report contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The matters discussed throughout this document that are not historical facts are forward-looking and, accordingly, involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and neither the Company, Florida Progress Corporation, Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. nor Florida Power Corporation d/b/a Progress Energy Florida, Inc. undertakes any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made. Section 9 - Financial Statement and Exhibits Item 9.01 Financial Statements and Exhibits (c) Exhibits 10(i) Amended Management Incentive Compensation Plan of Progress Energy, as amended January 1, 2005. 10(ii) Deferred Compensation Plan for Board of Directors-Method of Payment Agreement. 10(iii) Progress Energy, Inc. Non-Employee Director Stock Unit Plan. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized. PROGRESS ENERGY, INC., FLORIDA PROGRESS CORPORATION, CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC. and FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC. ------------------------------------ Registrants By: /s/ Geoffrey S. Chatas ---------------------- Geoffrey S. Chatas Executive Vice President and Chief Financial Officer Date: December 13, 2004 EX-10 2 ex1.txt EXHIBIT 10(I) 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: ----------------------------- ------------------------------- EX-10 3 ex10ii.txt EXHIBIT 10(II) Exhibit 10(ii) DEFERRED COMPENSATION PLAN FOR BOARD OF DIRECTORS METHOD OF PAYMENT AGREEMENT Agreement by and between ___________________________ (the "Director") and PROGRESS ENERGY, INC. (the "Company"). WITNESSETH ---------- WHEREAS, Director has served or will serve as a member of the Board of Directors of the Company (the "Board"); WHEREAS, the Board previously has adopted a Deferred Compensation Plan (the "Plan") for the benefit of the directors, which Plan is incorporated herein; WHEREAS, a portion of the Director's annual retainer and certain matching contributions of the Company are automatically deferred under the Plan, and Director has been or will be eligible to defer by means of annual deferral agreements (the "Deferral Agreements") the receipt of some or all of Director's retainer and fees (other than the portion that is automatically deferred) (all amounts automatically or electively deferred under the Plan and the Deferral Agreements being referred to collectively herein as the "Amounts Deferred"), until the calendar year after the year in which Director ceases to be a member of the Board; WHEREAS, under the terms of the Plan and the Deferral Agreements, Director has been permitted to elect future payment of the Amounts Deferred in the form of either a single, lump-sum payment or a series of up to ten (10) annual installments. AGREEMENT --------- NOW, THEREFORE, in consideration of the premises, the Company and Director hereby agree as follows: 1. Election of Method of Payment. All Amounts Deferred beginning on or after January 1, 2005, shall be paid (choose one): [ ] Through the transfer, as soon as practicable after the last business day of the calendar year in which Director ceases to be a member of the Board, of a single, lump-sum payment in cash determined in accordance with the applicable Deferral Agreements; or [ ] In a series of _______ annual installments (not more than 10) commencing on the first business day of the calendar year following the year in which Director ceases to be a member of the Board. The amount of cash in each such installment shall be determined in accordance with the applicable Deferral Agreements. The unpaid portion of the Director's Unit Account shall continue to be adjusted, as provided in the applicable Deferral Agreements, during the period that Director is receiving such installment payments. 2. Change of Election. Director may not change the method of payment elected in Section 1 hereunder. 3. Ratification and Approval of Terms. This Agreement supersedes any prior Method of Payment Agreements with respect to the method of payment of the Amounts Deferred beginning on or after January 1, 2005. The Agreement shall not affect any Deferral or Method of Payment Agreements with respect to the method of payment of Amounts Deferred prior to January 1, 2005. In all other respects, the Plan and the Deferral Agreements as in effect prior to the date of this Agreement are hereby ratified and approved. 4. Governing Law. This Agreement shall be interpreted in accordance with, and all rights hereunder shall be governed by and construed in accordance with, the laws of the State of North Carolina. 5. Execution in Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement. DIRECTOR: PROGRESS ENERGY, INC.: By: - ------------------------------- ---------------------------------- Director's Signature - ------------------------------- --------------------------------------- Name Name Date: Date: --------------------------- --------------------------------- EX-10 4 ex10iii.txt EXHIBIT 10(III) Exhibit 10(iii) PROGRESS ENERGY, INC. NON-EMPLOYEE DIRECTOR STOCK UNIT PLAN 1.0 RECITALS 1.1 Whereas, Carolina Power & Light Company ("CP&L") adopted the Carolina Power & Light Company Retirement Plan for Outside Directors (the "Directors Retirement Plan") in 1986, which provided for a fixed-dollar retirement benefit for non-employee directors of CP&L following their termination of service as a member of the Board of Directors of CP&L. 1.2 Whereas, effective January 1, 1998, CP&L froze the Directors Retirement Plan so that no further benefits would accrue under such plan, and adopted the Carolina Power & Light Company Non-Employee Director Stock Unit Plan (the "Plan"), the purpose of which was to provide deferred compensation to the non-employee directors of CP&L based on the value of CP&L common stock. 1.3 Whereas, sponsorship of the Plan was transferred to CP&L Energy, Inc. effective August 1, 2000, and the name of the Plan was subsequently changed to Progress Energy, Inc. Non-Employee Director Stock Unit Plan. 1.4 Whereas, the Company desires to amend and restate the Plan to increase the Annual Stock Unit Grant and to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), regarding the payment of benefits from the Plan. 1.5 Now, therefore, effective January 1, 2005, the Company adopts this amended and restated Progress Energy, Inc. Non-Employee Director Stock Unit Plan. 2.0 PURPOSE 2.1 Purpose. The purpose of the Plan is to attract and retain highly qualified individuals as non-employee directors of the Company, and to provide deferred compensation to the Company's non-employee directors based on the value of the Company's stock. 3.0 DEFINITIONS The following terms shall have the following meanings unless the context indicates otherwise: 3.1 "Annual Stock Unit Grant" shall mean a grant of Stock Units as described in Section 5.2 below. 3.2 "Board" shall mean the Board of Directors of the Company. 3.3 "Change of Control" shall mean the earliest of the following dates: (1) 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 Company, becomes, directly or indirectly, the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Securities Act of 1934) of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company's then outstanding securities (excluding the acquisition of securities of the Company by an entity at least eighty percent (80%) of the outstanding voting securities of which are, directly or indirectly, beneficially owned by the Company); or (2) the date of consummation of a tender offer for the ownership of more than fifty percent (50%) of the Company's then outstanding voting securities; or (3) the date of consummation of a merger, share exchange or consolidation of the Company 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 Company 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 Company or such surviving or acquiring entity outstanding immediately after such merger or consolidation; or (4) the date, when as a result of a tender offer or exchange offer for the purchase of securities of the Company (other than such an offer by the Company 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 of Directors; or (5) the date the shareholders of the Company approve a plan of complete liquidation or winding-up of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; or (6) the date of any event which the Board of Directors 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 of Directors receive written certification from the Committee that one of the events set forth in this Section 3.3 as occurred. Any determination that an event described in this Section 3.3 has occurred shall, if made in good faith on the basis of information available at that time, be conclusive and binding on the Board of Directors, the Company, the Participants and their beneficiaries for all purposes of the Plan. 3.4 "Committee" shall mean the Board's Committee on Organization and Compensation. 3.5 "Common Stock" shall mean the common stock of the Company. 3.6 "Company" shall mean Progress Energy, Inc., a North Carolina corporation, including any successor entity. 3.7 "Continuing Directors" shall mean the members of the Board as of July 10, 2002; provided, however, that any person becoming a director subsequent to such date whose election or nomination for election was supported by 75 percent or more of the directors who then comprised Continuing Directors shall be considered to be a Continuing Director. 3.8 "Distribution Date" shall mean the later of (i) the date a Participant is no longer a member of the Board or (ii) the date such Participant attains age 65. 3.9 "Effective Date" shall mean January 1, 1998. The Plan has been subsequently amended and restated effective July 10, 2002, and January 1, 2005. 3.10 "Common Stock Value" shall mean: (1) the average of the highest and lowest selling prices of Common Stock on the relevant date (or on the last preceding trading date if Common Stock was not traded on the relevant date) if Common Stock is readily tradable on a national securities exchange or other market system; or (2) an amount determined in good faith by the Board as the fair market value of Common Stock on the date of determination if Common Stock is not readily tradable on a national securities exchange or other market system. 3.11 "Initial Stock Unit Grant" shall mean a grant of Stock Units us described in Section 5.1 below. 3.12 "Matching Stock Unit Grant" shall mean a grant of Stock Units as described in Section 5.3 below. 3.13 "Participant" shall mean a member of the Board who is not an employee of the Company or any of its Subsidiaries. 3.14 "Stock Unit" shall mean a unit maintained by the Company for bookkeeping purposes, equal in value to one (1) share of Common Stock. 3.15 "Stock Unit Account" shall mean a bookkeeping account established and maintained (or caused to be established and maintained) by the Company for the Participant which shall record the number of Stock Units granted to the Participant under Section 5 below. This account shall be established (or caused to be established) by the Company for bookkeeping purposes only, and no separate funds shall be segregated by the Company for the benefit of the Participant. 3.16 "Plan" shall mean the Progress Energy, Inc. Non-Employee Director Stock Unit Plan. 3.17 "Subsidiary" shall mean a corporation of which the Company directly or indirectly owns more than 50 percent of the Voting Stock (meaning the capital stock of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation) or any other business entity in which the Company directly or indirectly has an ownership interest of more than 50 percent. 4.0 ADMINISTRATION 4.1 Responsibility. The Committee shall have the responsibility, in its sole discretion, to control, operate, manage and administer the Plan in accordance with its terms. 4.2 Authority of the Committee. The Committee shall have all the discretionary authority that may be necessary or helpful to enable it to discharge its responsibilities with respect to the Plan, including but not limited to the following: (a) to determine eligibility for participation in the Plan; (b) to correct any defect, supply any omission, or reconcile any inconsistency in the Plan in such manner and to such extent as it shall deem appropriate in its sole discretion to carry the same into effect; (c) to issue administrative guidelines as an aid to administer the Plan and make changes in such guidelines as it from time to time deems proper; (d) to make rules for carrying out and administering the Plan and make changes in such rules as it from time to time deems proper; (e) to the extent permitted under the Plan, grant waivers of Plan terms, conditions restrictions, and limitations; (f) to make reasonable determinations as to a Participant's eligibility for benefits under the Plan, including determinations as to vesting; and (g) to take any and all other actions it deems necessary or advisable for the proper operation or administration of the Plan. 4.3 Action by the Committee. The Committee may act only by a majority of its members. Any determination of the Committee may be made, without a meeting, by a writing or writings signed by all of the members of the Committee. In addition, the Committee may authorize any one or more of its members to execute and deliver documents on behalf of the Committee. 4.4 Delegation of Authority. The Committee may delegate to one or more of its members, or to one or more agents, such administrative duties as it may deem advisable; provided, however, that any such delegation shall be in writing. In addition, the Committee, or any person to whom it has delegated duties as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company, or the Subsidiary whose employees have benefited from the Plan, as determined by the Committee. 4.5 Determinations and Interpretations by the Committee. All determinations and interpretations made by the Committee shall be binding and conclusive on all Participants and their heirs, successors, and legal representatives. 4.6 Information. The Company shall furnish to the Committee in writing all information the Committee may deem appropriate for the exercise of its powers and duties in the administration of the Plan. Such information may include, but shall not be limited to, the full names of all Participants, their earnings and their dates of birth, employment, retirement or death. Such information shall be conclusive for all purposes of the Plan, and the Committee shall be entitled to rely thereon without any investigation thereof. 4.7 Self-Interest. No member of the Committee may act, vote or otherwise influence a decision of the Committee specifically relating to his or her benefits, if any, under the Plan. 5.0 STOCK UNIT GRANTS 5.1 Rollover. CP&L granted an Initial Stock Unit Grant to the Participants listed on Schedule A (who were participants in the CP&L Retirement Plan for Outside Directors) who elected by December 31, 1997, pursuant to an election made in writing to the CP&L Vice President-Human Resources to rollover their accrued benefit under such plan (the "Accrued Benefit") into the Plan. The number of shares underlying each Initial Stock Unit Grant was equal to the present value of the Participant's Accrued Benefit as of December 31, 1997, divided by the Common Stock Value of CP&L common stock on the last trading day of 1997. Any fractional Stock Unit greater than 50 percent was rounded up to one Stock Unit, and any fractional Stock Unit equal to or less than 50 percent was disregarded. Such number of Stock Units underlying the Initial Stock Unit Grant was entered and recorded in the Participant's Stock Unit Account, and later adjusted to reflect the change in the capital structure of CP&L as a result of which CP&L became a Subsidiary of the Company. 5.2 Annual Grant. Effective January 1, 2005, the Company shall grant to each Participant who has been a member of the Board for a least 1 year an Annual Stock Unit Grant equal to 1,200 Stock Units. The Annual Stock Unit Grant shall be made on or about the date of the Company's annual meeting of shareholders. The Company shall enter and record (or shall cause to be entered and recorded) in the Participant's Stock Unit Account such number of Stock Units underlying the Annual Stock Unit Grant. 5.3 Matching Grant. [Deleted effective January 1, 2005.] 5.4 Dividend Stock Units. On the date that any holder of Common Stock receives a dividend with respect to Common Stock, the Company shall grant to each Participant, and shall enter and record (or shall cause to be entered and recorded) in each such Participant's Stock Unit Account a number of Stock Units equal to the result of (x) the dollar amount of such dividend paid with respect to one share of Common Stock multiplied by (y) the number of Stock Units in the Stock Unit Account as of the date such dividend is paid divided by (z) the Common Stock Value as of the date such dividend is paid. Any fractional Stock Unit greater than 50 percent shall be rounded up to one Stock Unit, and any fractional Stock Unit equal to or less than 50 percent shall be disregarded. 6.0 BENEFIT 6.1 Vesting. A Participant shall be entitled to a Benefit described in this Section 6 only after such Participant has been a member of the Board for 5 years. If there is a Change in Control, the Participant shall be entitled to a Benefit described in this Section 6 as of the date of the Change in Control, regardless of the number of years such Participant has been a member of the Board. 6.2 Timing of Benefit. In accordance with Section 6.4 below, the Company shall pay or begin paying a Benefit to a vested Participant during the 60-day period following the Distribution Date. If the Participant has selected annual payments in accordance with Section 6.4(b) below, all payments other than the first payment shall be made on the applicable anniversary of the Distribution Date. 6.3 Valuation. The value of a Participant's Stock Unit Account for purposes of the Benefit shall be equal to the product of (x) the number of Stock Units in the Participant's Stock Unit Account as of the Distribution Date or the applicable anniversary of the Distribution Date multiplied by (y) the Common Stock Value on the Distribution Date or the applicable anniversary of the Distribution Date, in accordance with Section 6.4 below. 6.4 Form of Benefit. The Company shall pay a Benefit to a vested Participant in one of the following four (4) forms, as elected by the Participant: (a) a lump sum payment, with such payment equal to the value of the Participant's Stock Unit Account as of the Distribution Date: or (b) annual payments over 5, 10 or 15 years, with each annual payment equal to (x) the value of the Participant's Stock Unit Account as of the Distribution Date or the applicable anniversary of the Distribution Date divided by (y) the number of payments yet to be made. A Participant who becomes eligible to participate in the Plan on or after January 1, 2005, shall elect the form of payment within 30 days after the date the Participant becomes eligible to participate the Plan. 6.5 Change of Form of Benefit. The Participant may not change the form of payment of Stock Units credited to the Stock Unit Account of the Participant or vested after December 31, 2004. The Participant may change the form of payment of all Stock Units credited to the Stock Unit Account of the Participant and vested prior to January 1, 2005, so long as the change is made at least six (6) months prior to the Distribution Date. 6.6 Death of Participant Prior to the Distribution Date. If the Participant's death occurs prior to the Distribution Date, the Company shall pay or begin paying a Benefit to a vested Participant's beneficiary (as designated by the Participant under Section 6.8 below) on the first day of the sixth month following the date of the Participant's death, and if the Participant has selected a form of Benefit under Section 6.4(b) above, the Company shall pay the remaining annual payments on the anniversary of the first payment date as determined under this Section 6.6. 6.7 Death of Participant Following the Distribution Date. If the Participant's death occurs following the Distribution Date, the Company shall continue to pay the Benefit to the Participant's beneficiary (as designated by the Participant under Section 6.8 below) following the date of the Participant's death in the form of Benefit selected by the Participant in accordance with Section 6.4 above. 6.8 Designation of Beneficiary. Within 30 days after becoming a Participant, a Participant shall designate a beneficiary to receive the Benefit in the event of the Participant's death. If the Participant does not designate a beneficiary, the beneficiary shall be deemed to be the Participant's spouse on the date of the Participant's death, and if the Participant does not have a spouse on the date of his or her death, then the Participant's estate shall be deemed to be the beneficiary under this Section 6. 7.0 TAXES 7.1 Withholding Taxes. The Company shall be entitled to withhold from any and all payments made to a Participant under the Plan all federal, state, local and/or other taxes or imposts which the Company determines are required to be so withheld from such payments or by reason of any other payments made to or on behalf of the Participant or for his or her benefit hereunder. 7.2 No Guarantee of Tax Consequences. No person connected with the Plan in any capacity, including, but not limited to, the Company and any Subsidiary and their directors, officers, agents and employees makes any representation, Commitment, or guarantee that any tax treatment, including, but not limited to, federal, state and local income, estate and gift tax treatment, will be applicable with respect to amounts deferred under the Plan, or paid to or for the benefit of a Participant under the Plan, or that such tax treatment will apply to or be available to a Participant on account of participation in the Plan. 8.0 TERM OF PLAN; AMENDMENT AND TERMINATION 8.1 Term. The Plan shall be effective as of the Effective Date. The Plan shall remain in effect until the Board terminates the Plan. 8.2 Termination or Amendment of Plan. The Board may suspend or terminate the Plan at any time with or without prior notice and the Board may amend the Plan at any time with or without prior notice; provided, however, that no action authorized by this Section 8.2 shall reduce the balance or adversely affect the vesting of the Stock Unit Account of a Participant, or cause the acceleration of the time or schedule of any payment under the Plan except as provided by regulations under Section 409A of the Code. 9.0 MISCELLANEOUS 9.1 Adjustments. If there shall be any change in Common Stock through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to holders of Common Stock, the number of Stock Units and the Participant's Stock Unit Account shall be adjusted to equitably reflect such change or distribution. 9.2 Governing Law. The Plan and all actions taken in connection herewith shall be governed by and construed in accordance with the laws of the State of North Carolina without reference to principles of conflict of laws, except as superseded by applicable federal law. 9.3 No Right Title or Interest in Company Assets. Participants shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. 9.4 No Right to Continued Service. The Participant's rights, if any, to continue to serve the Company as a member of the Board shall not be enlarged or otherwise affected by his or her participation in the Plan. 9.5 Other Rights. The Plan shall not affect or impair the rights or obligations of the Company or a Participant under any other written plan, contract, arrangement, or pension, profit sharing or other compensation plan. 9.6 Severability. If any term or condition of the Plan shall be invalid or unenforceable to any extent or in any application, then the remainder of the Plan, with the exception of such invalid or unenforceable provision, shall not be affected thereby and shall continue in effect and application to its fullest extent. If, however, the Committee determines in its sole discretion that any term or condition of the Plan which is invalid or unenforceable is material to the interests of the Company, the Committee may declare the Plan null and void in its entirety. 9.7 Incapacity. If the Committee determines that a Participant or a designated beneficiary is unable to care for his or her affairs because of illness or accident or because he or she is a minor, any benefit due the Participant or designated beneficiary may be paid to the Participant's spouse or to any other person deemed by the Committee to have incurred expense for such Participant (including a duly appointed guardian, committee or other legal representative), and any such payment shall be a complete discharge of the Company's obligation hereunder. 9.8 Transferability of Rights. No Participant or spouse of a Participant shall have any right to encumber, transfer or otherwise dispose of or alienate any present or future right or expectancy which the Participant or such spouse may have at any time to receive payments of benefits hereunder, which benefits and the right thereto are expressly declared to be nonassignable and nontransferable, except to the extent required by law. Any attempt to transfer or assign a benefit, or any rights granted hereunder, by a Participant or the spouse of a Participant shall be null and void and without effect. 9.9 Entire Document. The Plan, as set forth herein, supersedes any and all prior practices, understandings, agreements, descriptions or other non-written arrangements respecting severance, and written employment or severance contracts signed by the Company. 9.10 Change of Control. In the case of a Change of Control, the Company, subject to the restrictions in this Section 9.10 and in Section 9.3, shall irrevocably set aside funds in one or more grantor trusts in an amount that is sufficient to pay each Participant the value of the Participant's Stock Unit Account as of the date on which the Change of Control occurs. The obligations and responsibilities of the Company under this Plan shall be assumed by any successor or acquiring corporation, and all of the rights, privileges and benefits of the Participants hereunder shall continue following the Change of Control. SCHEDULE A Participants Who Are Eligible To Receive Initial Stock Unit Grants - ------------------------------------------------------------------ 1. Edwin B. Borden 2. Richard L. Daugherty 3. Robert L. Jones 4. Felton J. Capel 5. Charles W. Coker 6. Estell C. Lee 7. Leslie M. Baker, Jr. 8. William O. McCoy 9. J. Tylee Wilson -----END PRIVACY-ENHANCED MESSAGE-----