EX-10.1






EXHIBIT A

TO

2007 EQUITY INCENTIVE PLAN




EXECUTIVE AND KEY MANAGER 2007 PERFORMANCE SHARE SUB-PLAN




This Executive and Key Manager 2007 Performance Share Sub-Plan (“Sub-Plan”) sets forth rules
and regulations adopted by the Committee for issuance of Performance Share Awards under Section 10
of the 2007 Equity Incentive Plan (“Plan”). This Sub-Plan shall apply to Awards granted effective
on and after May 9, 2007. In addition, the rules and regulations relating to the deferral of
Awards set forth in this Sub-Plan shall apply to any Awards which become vested on or after January
1, 2005. Capitalized terms used in this Sub-Plan that are not defined herein shall have the
meaning given in the Plan. In the event of any conflict between this Sub-Plan and the Plan, the
terms and conditions of the Plan shall control. No Award Agreement shall be required for
participation in this Sub-Plan.



Section 1. Definitions



When used in this Sub-Plan, the following terms shall have the meanings as set forth below, and are
in addition to the definitions set forth in the Plan.




	1.1	 	“Account” means the account used to record and track the number of Performance Shares
granted to each Participant as provided in Section 2.4.






	1.2	 	“Award” as used in this Sub-Plan means each aggregate award of Performance Shares as
provided in Section 2.2.






	1.3	 	“Early Vesting Event” with respect to a Performance Award means the Participant’s
death, Retirement, or termination as a result of a Divestiture, or any of the vesting events
provided in Section 3.2 in connection with a Change in Control.






	1.4	 	“Performance Period” for purposes of this Sub-Plan means three consecutive Years
beginning with the Year in which an Award is granted.






	1.5	 	“Performance Schedule” means Attachment 1 to this Sub-Plan, which sets forth the
Performance Measures applicable to this Sub-Plan.






	1.6	 	“Performance Share” for purposes of this Sub-Plan means each unit of an Award granted
to a Participant, the value of which is equal to the value of Company Stock as hereinafter
provided.






	1.7	 	“Prorated Total Shareholder Return” for purposes of this Sub-Plan means the weighted
average of the Total Shareholder Return over a Performance Period calculated for the period
between the first day of the Performance Period and the date of the applicable Early Vesting
Event (other than Retirement).






	1.8	 	“Retire” or “Retirement” means Separation from Service on or after:






(a) becoming 65 years old with at least 5 years of service;




(b) becoming 55 years old with at least 15 years of service; or




(c) achieving at least 35 years of service, regardless of age.




	1.9	 	“Salary” means the regular base rate of compensation payable by the Company to a
Participant on an annual basis. Salary does not include bonuses, if any, or incentive
compensation, if any. Such compensation shall not be reduced by any deferrals made under any
other plans or programs maintained by the Company.






	1.10	 	“Section 409A” means Section 409A of the Code, or any successor section under the
Code, as amended and as interpreted by final or proposed regulations promulgated thereunder
from time to time.






	1.11	 	“Separation from Service” means the death, Retirement or other separation from
service with the Company as defined for purposes of Section 409A of the Code.






	1.12	 	“Total Shareholder Return” means the total percentage return realized by the owner of
a share of stock during a relevant Year or any part thereof. Total Shareholder Return is
equal to the appreciation or depreciation in value of the stock (which is equal to the average
closing value of the stock over the last ten trading days of the relevant period minus the
average closing value of the stock over the last ten trading days of the preceding Year) plus
the dividends declared during the relevant period, divided by the average closing value of the
stock over the last ten trading days of the preceding Year. For purposes of this Plan, Total
Shareholder Return is calculated using (i) an adjusted end-of-period stock price based on a
constant price to earnings ratio, which is equal to the average of the price to earnings ratio
over the last ten trading days of the Year preceding the Year in which a grant takes place;
and (ii) an earnings amount equal to the Company’s ongoing earnings (excluding non-core
earnings) for the Year preceding the Year in which a grant takes place.






	1.13	 	“Year” means a calendar year.






	 	 	Section 2. Sub-Plan Participation and Awards





2.1 Participant Selection. Participants under this Sub-Plan shall be selected by the
Committee in its sole discretion as provided in Section 4.2 of the Plan.



2.2 Awards. The Compensation Committee may, in its sole discretion, grant Awards to some
or all of the Participants in the form of a specific number of Performance Shares. Except as
described below, the target and maximum value of any Award granted to any Participant in any
calendar Year will be based upon the following:



	 	 	 	 	 
	Participant	 	Target Award	 	Maximum Award
	CEO*

	 	233% of Salary
	 	291.25% of Salary
	 

	 	 
	 	 
	COO*

	 	184% of Salary
	 	230% of Salary
	 

	 	 
	 	 
	CFO*

	 	133% of Salary
	 	166.25% of Salary
	 

	 	 
	 	 
	Presidents*/Executive

VPs*

	 	

117% of Salary
	 	

146.25% of Salary
	 

	 	 
	 	 
	Senior VPs*

	 	100% of Salary
	 	125% of Salary
	 

	 	 
	 	 
	VP/Department Heads**

Level I

Level II

	 	

80% of Salary

67% of Salary
	 	

100% of Salary

83.75% of Salary
	 

	 	 
	 	 
	Key Managers

	 	67% of Salary
	 	83.75% of Salary
	 

	 	 
	 	 







 * Senior Management Committee level position




**Levels shall be determined in the sole discretion of the Committee



2.3 Award Valuation at Grant. In calculating the value of an Award for purposes of
Section 2.2, the value of each Performance Share shall be equal to the closing price of a share of
Stock on the last trading day of the Year before the Performance Period begins. The Participant’s
Salary shall be determined as of the January 1 preceding the date the Award is granted, or such
other time as is determined in the discretion of the Committee. Each Award is deemed to be granted
on the day that it is approved by the Committee.



2.4 Accounting and Adjustment of Awards. The number of Performance Shares awarded to a
Participant shall be recorded in a separate Account for each Participant. The number of
Performance Shares recorded in a Participant’s Account shall be adjusted to reflect any splits or
other adjustments in the Stock in accordance with Section 6.4 of the Plan. If any cash dividends
are paid on the Stock, the number of Performance Shares in each Participant’s Account shall be
increased by a number equal to (i) the dividend multiplied by the number of Performance Shares in
each Participant’s Account, divided by (ii) the closing price of a share of Stock on the payment
date of the dividend. No adjustment shall be made to any outstanding Awards of a Retired
Participant for cash dividends paid on Stock during the Performance Period following the Retirement
of the Participant.



2.5 Performance Schedule and Calculation of Awards.



(a) The Committee shall, as soon as practicable after the end of the Performance Period, but
in no event later than April 15 of the first Year immediately following expiration of the
Performance Period, certify as to (i) the Company’s average Total Shareholder Return over the
Performance Period, and (ii) the applicable percentage of the Performance Shares vesting in
accordance with the Performance Schedule contained in Attachment 1 hereto.



(b) Notwithstanding the Company’s average Total Shareholder Return over the Performance
Period, or the Prorated Total Shareholder Return, as the case may be, the Committee may in its sole
discretion, with respect to any or all Participants, elect to vest fewer Performance Shares than
indicated by the Performance Schedule. This subsection 2.5(b) shall cease to apply upon the
occurrence of a Change in Control.



(c) Except with respect to the adjustments permitted by subsection (b) above, the Performance
Measures and the Performance Schedule will not change during any Performance Period with regard to
any Awards that have already been granted. The Committee reserves the right to modify or adjust
the Performance Measures and/or the Performance Schedule in the Committee’s sole discretion with
regard to future grants.



(d) Except in the case of an Early Vesting Event, each Award shall become vested on January 1
immediately following the end of the applicable Performance Period. In no event shall such
“normal” vesting date be construed to be earlier than January 1 immediately following the end of
the applicable Performance Period.



2.6 Payment of Awards. Except as provided in Section 3, Awards shall be paid after
expiration of the Performance Period. The Company will issue one share of Stock in payment for
each vested Performance Share (rounded to the nearest whole Performance Share) credited to the
Account of the Participant. Payment shall be made as follows:



(a) Normal Payment. Unless deferred as provided below, 100% of the vested Performance
Shares for a Performance Period shall be converted to shares of Stock no later than April 15 of the
Year immediately following expiration of the Performance Period and will be delivered to
Participants as soon as practical thereafter, in certificated or uncertificated form, as the
Participant shall direct.



(b) Deferred Payment. Any Participant who is employed as a Department Head or in a
higher position as of the beginning of a Performance Period may elect to defer the conversion and
payment of his or her Performance Shares for that Performance Period by executing a deferral
election substantially in the form attached hereto as Attachment 2, and returning it to the Vice
President, Human Resources Department no later than the end of the first Year of the Performance
Period. Once made, this election shall be irrevocable except as may be permitted by rules
promulgated under Section 409A and allowed by the Committee.



2.7 Grantor Trust. In the case of a Change in Control, the Company shall, subject to the
restrictions in this Section 2.7 and Section 13.12 of the Plan, irrevocably set aside shares of
Stock or cash 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 in Control occurs, of the earned benefits to which Participants (or their
Designated Beneficiaries) would be entitled pursuant to the terms of the Plan if the value of their
deferral account (if any) established pursuant to section 2.6(b) would be paid in a lump sum upon
the Change in Control. Any such trust shall be 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.
Notwithstanding the foregoing provisions of this Section 2.7, the Company shall establish no such
trust if the assets thereof shall be includable in the income of Participants thereby pursuant to
Section 409A(b).



Section 3. Early Vesting and Forfeiture



3.1 Retirement, Death or Divestiture. If the Participant Retires or dies prior to
expiration of the Performance Period, or terminates employment as the result of a Divestiture
during a Performance Period, any outstanding Awards of the Participant for any unexpired
Performance Period shall vest as of the date of such Early Vesting Event. In the event of the
death of the Participant (whether before or after Retirement), or termination of employment as the
result of a Divestiture during a Performance Period, the Participant’s outstanding Awards shall be
calculated on the basis of the Prorated Total Shareholder Return. In each such case, the
early-vesting Awards shall be paid in accordance with Section 3.3.



3.2 Change in Control. In the event of a Change in Control prior to the expiration of the
Performance Period, any outstanding Award of the Participant for any unexpired Performance Period
shall be treated as follows:



(a) Awards Assumed by Acquiror. If the Award is assumed by the successor to the
Sponsor as of the date of the Change in Control, each outstanding Award not previously forfeited
shall continue to vest and shall be paid pursuant to the terms of this Sub-Plan; provided, however,
that in the event the employment of the Participant is terminated by the Company without Cause
following the Change in Control, any outstanding Award shall become vested as of the termination
date, and the aggregate value of the Award shall be paid in accordance with Section 3.3.



(b) Awards Not Assumed by Acquiror. If the Award is not assumed by the successor to
the Sponsor as of the date of the Change in Control, any outstanding Award shall become vested as
of the date of the Change in Control, and the aggregate value of the Award shall be paid in
accordance with Section 3.3.



3.3 Payment of Awards Due to Early Vesting Event. Any Award that is vested prior to the
end of the Performance Period due to an Early Vesting Event shall be paid as follows:



(a) Retirement. In the event of the Retirement of the Participant, the Participant’s
outstanding Awards shall be paid in accordance with Section 2.6 following the end of the
Performance Period for the Award; provided, that if the Participant has elected to defer payment
until a specified date certain and Retires before the date specified in the deferral election, the
Company will commence distribution of the Deferred Award as soon as practicable on or after the
later of: (i) the April 1 following the first anniversary of the date of Retirement, or (ii) the
April 1 of the year following the end of the Performance Period, even though said date is earlier
than the date specified in the deferral election. If the Participant dies following Retirement but
prior to the expiration of the Performance Period, the Participant’s outstanding vested Awards
shall be paid to the Participant’s Designated Beneficiary within a reasonable time after the
Participant’s death.



(b) Death. In the event of the death of the Participant, payment shall be made to the
Participant’s Designated Beneficiary within a reasonable time after the Participant’s death,
notwithstanding any election to defer the payment of any Award under Section 2.6(b).



(c) Divestiture. In the event of the termination of employment of the Participant as
a result of a Divestiture, payment shall be made within a reasonable time after the date of
termination, notwithstanding any election to defer the payment of any Award under Section 2.6(b).



(d) Change in Control. If the Award vests pursuant to Section 3.2(b) or by reason of
a termination of employment without Cause following a Change in Control pursuant to Section 3.2(a),
the Award shall be paid within a reasonable time after the date of vesting, notwithstanding any
election to defer the payment of any Award under Section 2.6(b).



(e) 409A Delay. Notwithstanding subsections (a), (c) or (d) above, if the Participant
is a “key employee” as defined in Section 416(i) of the Code (but determined without regard to
paragraph 5 thereof or the 50 employee limit on the number of officers treated as key employees),
then payment shall not be made before the date that is six months after the date of Separation from
Service (or, if earlier, the date of death of the Participant) and the amount of any payment made
in cash (i.e., with respect to Awards granted prior to January 1, 2005) shall be based upon the
value of the Performance Shares as determined by reference to the closing price of the Stock on the
trading day occurring on or next following the date that is six months after the date of Separation
from Service of the Participant (or, if earlier the date of death of the Participant).



3.4 Other Termination of Employment. In the event that a Participant’s employment with the
Company terminates for any reason other than as provided in this Section 3, any Award made to the
Participant that has not vested as provided in Section 2 or Section 3 shall be forfeited.



Section 4. Payment of Taxes



The Company has the authority and the right to deduct or withhold, or require a Participant to
remit to the employer, an amount sufficient to satisfy federal, state, and local taxes (including
the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event
arising as a result of the vesting or settlement of the Performance Shares. The obligations of the
Sponsor under this Sub-Plan will be conditional on such payment or arrangements, and the Sponsor,
and, where applicable, its Affiliates will, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the Participant. By
participating in this Sub-Plan, each Participant thereby authorizes the Company to instruct a third
party broker or plan administrator to sell Shares earned by the Participant upon settlement of the
Performance Shares in an amount sufficient to satisfy the amount required to be withheld for tax
purposes, and to remit the cash proceeds from such sale to the Company.



Section 5. Non-Assignability of Awards



The Awards and any right to receive payment under the Plan and this Sub-Plan may not be
anticipated, alienated, pledged, encumbered, or subject to any charge or legal process, and if any
attempt is made to do so, or a Participant becomes bankrupt, then in the sole discretion of the
Committee, any Award made to the Participant which has not vested as provided in Sections 2 and 3
shall be forfeited.



Section 6. Amendment and Termination



This Sub-Plan shall be subject to amendment, suspension, or termination as provided in the Plan.
No action to amend, suspend or terminate this Sub-Plan shall permit the acceleration of the time or
schedule of the payment of any Award granted under this Sub- Plan (except as provided in
regulations under Section 409A).



Section 7. Section 409A



This Sub-Plan shall be administered in compliance with Section 409A.



1



IN WITNESS WHEREOF, this instrument has been executed this 10th day of July, 2007.




PROGRESS ENERGY, INC.




By: /s/ Robert B. McGehee

Robert B. McGehee

Chief Executive Officer




2




ATTACHMENT 1




PERFORMANCE SCHEDULE




PERFORMANCE SHARE CALCULATION

for Post-2007 Performance Awards




	 	 	 	 	 	 	 	 	 
	Total Shareholder	 	 	 	 	 	 	 	 
	Return(1)(2)
up>

	 	<     (3)

     %
	 	

     (3)     %
	 	

     (3)     %
	 	

     (3)_% or >
	 

	 	 
	 	 
	 	 
	 	 
	% of Target Award

Earned(2)

	 	

0%
	 	

50%
	 	

100%
	 	

200%
	 

	 	 
	 	 
	 	 
	 	 






1 For purposes of Section 3 of the Sub-Plan, the Prorated Total Shareholder Return
shall be used.


2 Straight line interpolation between points


3 Total Shareholder Return performance metrics to be established by the Committee on an
annual basis



Committee Discretion. Unless a Change in Control shall have occurred, the Committee
retains the sole discretion to reduce the number of Performance Shares earned, with respect to any
or all Participants, if the formula would result in payouts that the Committee deems to be
disproportionate to Company performance or other circumstances merit a reduction in the amounts
earned.



Payment of Awards. The number of Performance Shares earned shall be paid in accordance
with the provisions of Section 2.6 or 3.3 of the Sub-Plan, as appropriate.



3




ATTACHMENT 2




PERFORMANCE SHARE SUB-PLAN

200_ DEFERRAL ELECTION FORM




As a Participant in the Performance Share Sub-Plan of the 2007 Equity Incentive Plan
(“Sub-Plan”), I hereby elect to defer payment of my Award otherwise payable to me by the Company
and attributable to services to be performed by me during the Performance Period beginning on
January      , 200     . This election shall apply to [CHECK ONE]:



	 	 	 	 	 
	[ ]

[ ]

	 	100% of the Award

75% of the Award
	 	[ ] 50% of the Award

[ ] 25% of the Award






Upon vesting, I understand that my Award shall continue to be recorded in my Account as Performance
Shares as described in the Sub-Plan and adjusted to reflect the payment and reinvesting of the
Company’s common stock dividends over the deferral period, until paid in full.



I hereby elect to defer receipt (or commencement of receipt) of my Award until the date specified
below, or as soon as practical thereafter [CHECK ONE]:*



	 	 	 	 	 	 	 
	[ ]

	 	a specific date certain at least 5 years from expiration

of the Performance Period:
	 	

4/1/
	 	



	
 
	 	 	 	 
	 	 






(month/day/year)



[ ] the April 1 following the date of Retirement, or if later, the date which is six months
after the date of my Separation from Service for any reason (including Retirement), if I am a “key
employee” as defined in Section 416(i) of the Code (but determined without regard to paragraph 5
thereof or the 50 employee limit on the number of officers treated as key employees).



[ ] the April 1 following the first anniversary of my date of Retirement



* Notwithstanding any election above, if I elect a date certain distribution and I Retire
before that date certain, I understand that the Company will commence distribution of my Account as
soon as practicable on or after the later of: (i) the April 1 following the first anniversary of
the date of Retirement, or (ii) the April 1 of the year following the end of the Performance
Period, even though said date is earlier than 5 years from the expiration of the Performance
Period.



I hereby elect to be paid as described in the Sub-Plan in the form of [CHECK ONE]:




[ ] a single payment




[ ] annual payments commencing on the date set forth above and payable on the anniversary
date thereof over:




[ ] a two year period [ ] a three year period


[ ] a four year period [ ] a five year period



I understand that I will receive “earnings” on those deferred amounts when they are paid to me.



I understand that the election made as indicated herein is irrevocable and that all deferral
elections are subject to the provisions of the Sub-Plan, including provisions that may affect
timing of distributions.



I understand that this deferral election is subject to the requirements of Section 409A of Code,
and regulations and other guidance issued thereunder. The Company makes no representation or
guarantee that any tax treatment, including, but not limited to, federal, state and local income,
or estate and gift tax treatment, will be applicable with respect to the amounts deferred. The
Company shall have no responsibility for the tax consequences that I may incur as a result of
Section 409A, regulations or guidance issued thereunder, or any other provision of the Internal
Revenue Code. I understand it is my responsibility to consult a legal or tax advisor regarding the
tax effects of this deferral election. I further acknowledge and agree that the Company may (but
shall not be required to) modify this election as necessary to comply with Section 409A and any
guidance or regulations issued thereunder. I further agree to cooperate in any manner necessary to
ensure that this election is in compliance with Section 409A and any guidance or regulations issued
thereunder.



I understand and acknowledge that my interests herein and my rights to receive distribution of the
deferred amounts may not be anticipated, alienated, sold, transferred, assigned, pledged,
encumbered, or subjected to any charge or legal process, and if any attempt is made to do so, or I
become bankrupt, my interest may be terminated by the Committee, in its sole discretion, may cause
the same to be held or applied for the benefit of one or more of my dependents or make any other
disposition of such interests that it deems appropriate. I further understand that nothing in the
Sub-Plan shall be interpreted or construed to require the Company in any manner to fund any
obligation to me, or to my beneficiary(ies) in the event of my death.



	 	 	 	 	 
	(Signature)	 	(Date)
	(Print Name)	 	(Company Location)






Received:


Agent of Chief Executive Officer



 



(Signature) (Date)




4