EXHIBIT NO. 10b(13)
EXHIBIT ____ TO THE
ORGANIZATION AND COMPENSATION
COMMITTEE
MEETING MINUTES
AMENDED MANAGEMENT INCENTIVE COMPENSATION PROGRAM
OF
CAROLINA POWER & LIGHT COMPANY
AS AMENDED DECEMBER 10, 1997
TABLE OF CONTENTS
Page
ARTICLE I PURPOSE.............................................1
ARTICLE II DEFINITIONS.........................................1
ARTICLE III ADMINISTRATION......................................4
ARTICLE IV PARTICIPATION.......................................5
ARTICLE V AWARDS..............................................5
ARTICLE VI DISTRIBUTION AND DEFERRAL OF AWARDS.................9
ARTICLE VII TERMINATION OF EMPLOYMENT...........................15
ARTICLE VIII MISCELLANEOUS.......................................16
ARTICLE I
PURPOSE
The purpose of the Management Incentive Compensation Program (the
"Program") of Carolina Power & Light Company (the "Company") is to promote the
financial interest 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.
ARTICLE II
DEFINITIONS
The following definitions are applicable to the Program:
1. "Award": The benefit payable to a Participant hereunder, consisting
of a Corporate Component and a Noncorporate Component.
2. "Company": Carolina Power & Light Company, a North Carolina
corporation, and its corporate successors.
3. "Compensation Committee": The Organization and Compensation
Committee of the Board of Directors of the Company.
4. "Corporate Factor": The factor determined by the Compensation
Committee to be utilized in calculating the Corporate Component of an Award
pursuant to Article V, Section 3.a. hereof, which can range from 0 to 1.5.
5. "Corporate Component": That portion of an Award based upon the
overall performance of the Company, as determined in Article V, Section 3.a.
hereof.
6. "Date of Retirement": The first day of the calendar month
immediately following the Participant's Retirement.
7. "Noncorporate Component": That portion of an Award based upon the
level of attainment of business unit/group, departmental, and individual
Performance Measures, as provided in Article V, Section 3 .b. hereof, which can
range from 0 to 1.5.
8. "Participant": An employee of the Company who is selected pursuant
to Article IV hereof to be eligible to receive an Award under the Program.
9. "Performance Measure": A goal or goals established for measuring the
performance of a business unit/group, department, or individual used for the
purpose of computing the Noncorporate Component of an Award for a Participant.
10. "Performance Unit": A unit or credit, linked to the value of the
Company's Common Stock under the terms set forth in Article VI hereof.
11. "Program": The Management Incentive Compensation Program of
Carolina Power & Light Company as contained herein, and as it may be amended
from time to time.
12. "Retirement": A Participant's termination of employment with the
Company after having met the requirements for early, normal or postponed
retirement under the Supplemental Retirement Plan of Carolina Power & Light
Company.
13. "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 the
Company.
14. "Section 16 Participants": Those Participants who are subject to
the provisions of Section 16 of the Securities Exchange Act of 1934, as amended
(the "1934 Act"). Individuals who are subject to Section 16 of the 1934 Act
include, without limitation, directors and certain officers of the Company, and
any individual who beneficially owns more than ten percent of a class of the
Company's equity securities registered under Section 12 of the 1934 Act.
15. "Senior Management Committee": The Senior Management Committee of
the Company.
16. "Target Award Opportunity": The target for an Award under this
Program as set forth in Section 2 of Article V hereof.
17. "Year": A calendar year.
ARTICLE III
ADMINISTRATION
The Program shall be administered by the Chief Executive Officer of the
Company. Except as otherwise provided herein, the Chief Executive Officer shall
have sole and complete authority to (i) select the Participants; (ii) establish
and adjust (either before or during the relevant Year) a Participant's
Performance Measures, their relative percentage weight, and the performance
criteria necessary for attainment of various performance levels; (iii) approve
Awards; (iv) establish from time to time regulations for the administration of
the Program; and (v) interpret the Program and make all determinations deemed
necessary or advisable for the administration of the Program, all subject to its
express provisions. Notwithstanding the foregoing, with respect to Participants
who are at or above the Department Head level in the Company, the performance
criteria and Awards shall be subject to the specific approval of the
Compensation Committee. In addition, the Compensation Committee shall have the
sole authority to determine the total payout under the Program up to a maximum
of two percent (2%) of the Company's after-tax income for a relevant Year.
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 shall select from time to time the
Participants in the Program for each Year from those employees of the 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 Program for any Year
nor, having been selected as a Participant for one Year, have the right to be
selected as a Participant in any other Year.
ARTICLE V
AWARDS
1. Eligibility. In order for any Participant to be eligible to receive
an Award, two conditions must be met. First, a contribution must be earned by
one or more groups of employees under the corporate incentive feature of the
Company's Stock Purchase-Savings Plan. Second, the Company must also meet
minimum threshold performance levels for return on common equity, revenue per
kilowatt hour, and other measures for the relevant Year as may be established by
the Compensation Committee. Threshold performance for return on common equity
and revenue per kilowatt hour is the weighted average of a peer group of
utilities, consisting of all major utilities with nuclear and fossil generation
in the eastern portion of the United States, averaged over the most recent
three-year period. To satisfy threshold performance, the Company must be above
the three-year average with respect to return on common equity and below the
three-year average with respect to cost per kilowatt hour.
2. Target Award Opportunities. The following table sets forth Target
Award Opportunities, expressed as a percentage of Salary, for various levels of
participation in the Program:
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Participation Target Award 0pportunities
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Chief Executive Officer 40%
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Chief Operating Officer 40%
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Executive Vice Presidents 30%
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Senior Vice Presidents 25%
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Department Heads 20%
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Other Participants:
Key Managers 15%
Other Managers 10%
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The Target Award Opportunity for the Chief Executive Officer shall be 40%;
however, the Compensation Committee of the Board shall be authorized to change
that amount from year to year, or to award an amount of compensation based on
other considerations, in its complete discretion.
3. Award Components. Awards under the Program to which Participants are
eligible consist of the sum of a Corporate Component and a Noncorporate
Component. The portion of the Target Award Opportunities attributable to the
Corporate Component and Noncorporate Component, respectively, for various levels
of participation, is set forth in the following table:
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Participants Corporate Noncorporate
Component Component
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Chief Executive Officer 100% -
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Chief Operating Officer 100% -
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Executive Vice Presidents 75% 25%
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Senior Vice Presidents 75% 25%
- ---------------------------------------- ------------- --------------
Department Heads 50% 50%
- ---------------------------------------- ------------- --------------
Other Participants 50% 50%
- ---------------------------------------- ------------- --------------
a. Corporate Component. The Corporate Component of an Award is
based upon the overall performance of the Company. In the event the conditions
set forth in Section 1 of Article V are met and the Compensation Committee, in
its discretion, determines an appropriate Corporate Factor, that Corporate
Factor shall be multiplied by the portion of a Participant's Target Award
Opportunity attributable to the Corporate Component in order to determine the
percentage of such Participant's Salary which will comprise the Corporate
Component of his or her Award. Notwithstanding the foregoing, if the second
condition set forth in Section 1 of Article V is not fully met, the Compensation
Committee may nevertheless in its discretion determine an appropriate Corporate
Factor and grant a Corporate Component of an Award to the Participants.
b. Noncorporate Component. The Noncorporate Component of an
Award for a Participant is based upon the level of attainment of business
unit/group, departmental and individual Performance Measures. Performance
Measures for each Participant and their relative weight are determined pursuant
to authority granted in Article III hereof.
(i) Performance Levels. There are levels of
performance related to each of a Participant's Performance Measures:
outstanding, target, and threshold. The specific performance criteria for each
level of a Participant's Performance Measures shall be set forth in writing
prior to the beginning of an applicable Year, or within thirty (30) days after a
Participant first becomes eligible to participate in the Program, and shall be
determined pursuant to authority granted in Article III hereof. The payout
percentages to be applied to each Participant's Target Award Opportunity are as
follows:
Performance Level Payout Percentage
Outstanding 150%
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 unless the
Chief Executive Officer directs otherwise.
(ii) Determination of Noncorporate Component. In order
to determine a Participant's Noncorporate Component, if any, for a particular
Year, the Chief Executive Officer initially shall determine the appropriate
payout percentage for each of such Participant's Performance Measures.
Thereafter, each payout percentage is multiplied by the percentage weight
assigned to each such Performance Measure and the results added together. That
aggregate amount is multiplied by the Participant's Target Award Opportunity for
the Noncorporate Award Component for the respective Year and the result is
multiplied by the Participant's Salary.
(iii) Change of Job Status. Participants who change
organizations during a Year will have their Noncorporate Component prorated
based upon the Performance Measures achieved in each organization and the length
of time served in each organization. In the discretion of the Chief Executive
Officer employees may become Participants during a Year based on promotions and
may receive an Award prorated based on the length of time served in the
qualifying job and the Performance Measures achieved while in the qualifying
job.
4. New Participants. For Participants selected after May 1, any Award
that is earned during the Year of selection shall be pro rated based on the
length of time served in the qualifying job.
5. Reduction of Award Amount. In the event of documented performance
deficiencies of a Participant during a Year, the Chief Executive Officer, in his
discretion, may reduce the Award payable to such Participant for such Year.
6. Example. Attached as Exhibit A and incorporated by reference is an
example of the process by which an Award is granted hereunder. Said exhibit is
intended solely as an example and in no way modifies the provisions of this
Article V.
ARTICLE VI
DISTRIBUTION AND DEFERRAL OF AWARDS
1. Distribution of Awards. Unless a Participant elects to defer an
award pursuant to the remaining provisions of this Article VI, awards under the
Program earned during any Year shall be paid in cash in the succeeding Year,
normally no later than March 15 of such succeeding Year.
2. Deferral Election. A Participant may elect to defer the Program
Award he or she has earned for any Year by completing and submitting to the Vice
President, Human Resources, a deferral election form by the later of (1)
November 30 of the Year in which the Award is earned or (2) the thirtieth (30th)
day after first becoming eligible to participate in the deferral election
provisions of the Program; provided, however, that for the 1995 Plan Year,
deferral elections shall be made by no later than November 30, 1995. Such
election shall apply to the Participant's Award, if any, otherwise to be paid as
soon as practicable after the Year during which it was earned. A Participant's
deferral election may apply to 100%, 75%, 50%, or 25% of the Program 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. Subject to Section
6, the distribution date may be: (a) any date that is at least five (5) years
subsequent to the date the Program 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, a Participant may extend the distribution date
for one or more additional Year(s) by making a new deferral election at least
one (1) year before the previously selected distribution date occurs; provided,
however, that in no event shall the subsequent distribution date be a date that
is more than two years beyond the Participant's Date of Retirement.
4. Performance Units. All Awards which are deferred under the Program
shall be recorded in the form of Performance Units. Each Performance Unit is
generally equivalent to a share of the Company'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 Company'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 Company'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.
5. Program Accounts. A Program 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 Program 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 Program Deferral Account shall be adjusted to reflect any splits
or other adjustments in the Company's Common Stock, the payment of any cash
dividends paid on the Company's Common Stock and the payment of Awards under
this Program to the Participant. To the extent that any cash dividends have been
paid on the Company'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 Program 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 Company's
Common Stock on the payment date of the Company's Common Stock dividend shall be
used.
Each Participant shall receive an annual statement of the balance of
his Program 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 Program Awards. Subject to Section 4 related to
forfeiture of Incentive Performance Units, Deferred Program Awards shall be paid
in cash beginning no later than the next April 1 following the distribution date
or the deferred distribution date specified by the Participant in accordance
with Section 3. To convert the Performance Units in a Participant's Program
Deferral Account to a cash payment amount, Performance Units shall be multiplied
by the average of the opening and closing price of the Company's Common Stock on
the last trading day preceding the payment of the Deferred Program Award. Except
as otherwise provided below, deferred amounts will be paid either in a single
lump-sum payment or in up to five (5) annual payments.
In the event that a Participant elects to receive the deferred Program
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 Program 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
Company'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 Program 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 Company'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 Program Award is determined, then any deferral election made with respect to
such Program Award for such Year shall not become effective and any Program
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/Acceleration of Deferral. Notwithstanding
the foregoing, if a Participant terminates employment by reason other than death
or Retirement, full payment of all amounts due to the Participant shall be
accelerated and paid on the first day of the month following the date of
termination. Incentive Performance Units shall be subject to forfeiture as
provided in Section 4.
9. Financial Hardship Payments. In the event of a severe financial
hardship occasioned by an emergency, including, but not limited to, illness,
disability or personal injury sustained by the Participant or a member of the
Participant's immediate family, a Participant may apply to receive a
distribution earlier than initially elected. The Chief Executive Officer or his
designee may, in his sole discretion, either approve or deny the request. The
determination made by the Chief Executive Officer will be final and binding on
all parties. If the request is granted, the payments will be accelerated only to
the extent reasonably necessary to alleviate the financial hardship. Incentive
Performance Units shall not be subject to early distribution under this Section
9 until five years from March 15 of the Year in which payment would have been
made if the Award had not been deferred.
10. Death of a Participant. If the death of a Participant occurs before
a full distribution of the Participant's Program Deferral Account is made,
payment shall be made to the beneficiary designated by the Participant to
receive such amounts 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. In the absence of any
such designation, payment shall be made to the personal representative, executor
or administrator of the Participant's estate.
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, 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 Program, including this Article
VI, shall be interpreted or construed to require the Company in any manner to
fund any obligation to the Participants, terminated Participants or
beneficiaries hereunder. Nothing contained in this Program nor any action taken
hereunder shall create, or be construed to create, a trust of any kind, or a
fiduciary relationship between the 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 Program shall for all
purposes continue to be a part of the general assets of the Company; provided,
however, that the 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 Company in the event of bankruptcy
or insolvency of the Company. To the extent that any Participant, terminated
Participant, or beneficiary acquires a right to receive payments from the
Company under this Program, such rights shall be no greater than the rights of
any unsecured general creditor of the Company.
ARTICLE VII
TERMINATION OF EMPLOYMENT
A Participant must be actively employed by the Company on the next
January 1 immediately following the Year for which a Program 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 Program Award is earned, such Participant shall receive his or
her Award for the year, if any, in an amount that the Chief Executive Officer
deems appropriate.
ARTICLE VIII
MISCELLANEOUS
1. Assignments and Transfers. The rights and interests of a Participant
under the Program 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 Program. No Company employee or other
person shall have any claim or right to be granted an Award under the Program or
any other incentive bonus or similar Plan of the Company. Neither the Program,
participation in the Program nor any action taken thereunder shall be construed
as giving any employee any right to be retained in the employ of the Company.
3. Withholding. The Company 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 Program or any portion thereof at any
time.
5. Governing Law. This Program shall be construed and governed in
accordance with the laws of the state of North Carolina.
6. Effective Date. This Program, as amended, shall be effective as of
December 10, 1997.
7. Entire Agreement. This document (including the exhibit attached
hereto and any future amendments to said exhibit that may be made by the Chief
Executive Officer) sets forth the entire Program.
EXHIBIT A
(to be supplied)
DESIGNATION OF BENEFICIARY
MANAGEMENT INCENTIVE COMPENSATION PROGRAM
OF
CAROLINA POWER & LIGHT COMPANY
As provided in the Management Incentive Compensation Program of
Carolina Power & Light Company, I hereby designate the following person as my
beneficiary in the event of my death before a full distribution of my Deferral
Account is made.
PRIMARY BENEFICIARY:
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CONTINGENT BENEFICIARY:
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Any and all prior designations of one or more beneficiaries by me under the
Management Incentive Compensation Program of Carolina Power & Light Company 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 in writing with the Company's Human Resources
Department.
DATE:
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SIGNATURE OF PARTICIPANT:
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The Participant named above executed this document in our presence on the date
set forth above
WITNESS: WITNESS:
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