UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549




FORM 10-K/A (Amendment No. 2)




(Mark One)[ X ]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2010OR[     ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the transition period from ____________ to ____________




Exact name of registrant as specified in its charter,
I.R.S. EmployerCommission
state of incorporation, address of principal executive
IdentificationFile Number
office, and telephone number
Number




1-15929
Progress Energy, Inc.
56-2155481410 South Wilmington StreetRaleigh, North Carolina 27601-1748Telephone: (919) 546-6111State of Incorporation: North CarolinaSECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:




Title of each class

Name of each exchange on which registeredCommon Stock (Without Par Value)
New York Stock Exchange




SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:


None




Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes x

No oIndicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o

No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x

No oIndicate by check mark whether the registrant has submitted electronically and posted to its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x

No o


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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of each registrant’s knowledge, in definitive proxy or information statements incorporated by reference in PART III of this Form 10-K or any amendment to this Form 10-K.

xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:




Large accelerated filer
x
Accelerated filer
oNon-accelerated filer
o
Smaller reporting company
o




Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o

No x





As of June 30, 2010, the aggregate market value of the voting and nonvoting common equity of Progress Energy held by nonaffiliates was $11,477,572,820.





As of May 23, 2011, the registrant had the following shares of common stock outstanding:




Description

SharesCommon Stock (Without Par Value)
294,527,431




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TABLE OF CONTENTS




PART III




ITEM 11.

EXECUTIVE COMPENSATION
6


PART IV




ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES
56


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EXPLANATORY NOTE FOR FORM 10-K/A




This Amendment No. 2 on Form 10-K/A (“this Amendment No. 2”) amends the Annual Report on Form 10-K of Progress Energy, Inc. for the fiscal year ended December 31, 2010, originally filed with the Securities Exchange Commission (the “SEC”) on February 28, 2011 (the “Original Filing”), as amended in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2010, as filed with the SEC on March 17, 2011 (“Amendment No. 1”). Throughout this Amendment No. 2, we use the words “Progress Energy,” the “Company,” “we,” “us,” or “our” to refer to Progress Energy, Inc. (Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. (“PEC”) and Florida Power Corporation d/b/a Progress Energy Florida, Inc. (“PEF”), are wholly owned subsidiaries of the Company.) We are filing this Amendment No. 2 for the sole purpose of amending Part III, Item 11 and Part IV, Item 15 for Progress Energy. The reference on the cover of the Original Filing to the incorporation by reference of Progress Energy’s definitive proxy statement into Part III of the Original Filing is hereby deleted. The Company’s Annual Meeting of Shareholders (the “Annual Meeting”) was held on May 11, 2011, as scheduled. The reference on the cover of the Original Filing to the incorporation by reference of PEC’s definitive proxy statement into Part III of the Original Filing remains unchanged.




In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), Part III, Item 11 of the Original Filing, as amended by Amendment No. 1, has been amended and restated in its entirety, and Part IV, Item 15 of the Original Filing, as amended by Amendment No. 1, has been amended to delete an exhibit that is no longer material to the Company and was not material to the Company during the period covered by the Original Filing, and to include as exhibits the new certifications for Progress Energy required by Rule 13a-14(a) under the Exchange Act.




Except as described above, no other changes have been made to the Original Filing, and we have not modified or updated the other disclosures presented in the Original Filing, including, without limitation, the financial statements. In particular, no changes have been made to the Original Filing with respect to PEC or PEF and this Form 10-K/A is not, and shall not be deemed to be an amendment of the Form 10-K filed by PEC and PEF as part of the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing. Accordingly, this Amendment No. 2 should be read in conjunction with the Original Filing, as amended by Amendment No. 1, and the Company’s other filings made with the SEC subsequent to the filing of the Original Filing.




SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS




This 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 is based on information current as of the date of this report and speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made.




Examples of factors that you should consider with respect to any forward-looking statements made throughout this document include, but are not limited to, the following:


- our ability to obtain the approvals required to complete the proposed merger with Duke Energy Corporation and the impact of compliance with material restrictions or conditions potentially imposed by our regulators;
- the risk that the merger is terminated prior to completion and results in significant transaction costs to us;
- our ability to achieve the anticipated results and benefits of the merger;
- the impact of business uncertainties and contractual restrictions while the merger is pending;
- the impact of fluid and complex laws and regulations, including those relating to the environment and energy policy;
- our ability to recover eligible costs and earn an adequate return on investment through the regulatory process;

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- the ability to successfully operate electric generating facilities and deliver electricity to customers;
- the impact on our facilities and businesses from a terrorist attack;
- the ability to meet the anticipated future need for additional baseload generation and associated transmission facilities in our regulated service territories and the accompanying regulatory and financial risks;
- our ability to meet current and future renewable energy requirements;
- the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks;
- the financial resources and capital needed to comply with environmental laws and regulations;
- risks associated with climate change;
- weather and drought conditions that directly influence the production, delivery and demand for electricity;
- recurring seasonal fluctuations in demand for electricity;
- the ability to recover in a timely manner, if at all, costs associated with future significant weather events through the regulatory process;
- fluctuations in the price of energy commodities and purchased power and our ability to recover such costs through the regulatory process;
- our ability to control costs, including operations and maintenance expense and large construction projects;
- the ability of our subsidiaries to pay upstream dividends or distributions to Progress Energy;
- current economic conditions;
- the ability to successfully access capital markets on favorable terms;
- the stability of commercial credit markets and our access to short- and long-term credit;
- the impact that increases in leverage or reductions in cash flow may have on the Company;
- our ability to maintain our current credit ratings and the impacts in the event our credit ratings are downgraded;
- the investment performance of our nuclear decommissioning trust funds;
- the investment performance of the assets of our pension and benefit plans and resulting impact on future funding requirements;
- the impact of potential goodwill impairments;
- our ability to fully utilize tax credits generated from the previous production and sale of qualifying synthetic fuels under Internal Revenue Code Section 29/45K; and
- the outcome of any ongoing or future litigation or similar disputes and the impact of any such outcome or related settlements.

Many of these risks similarly impact our reporting and nonreporting subsidiaries.




These and other risk factors are detailed from time to time in our filings with the SEC. All such factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can management assess the effect of each such factor on the Company.




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PART III




Item 11. Executive Compensation




Compensation Discussion and Analysis




EXECUTIVE SUMMARY




We are an integrated electric utility primarily engaged in the regulated utility business. Our executive compensation philosophy is designed to provide competitive compensation consistent with key principles that we believe are critical to our long-term success.




We are committed to providing an executive compensation program that supports the following goals and philosophies:


- Aligning our management team’s interests with shareholders’ expectations of earnings per share growth and a competitive dividend yield;
- Effectively compensating our management team for actual performance over the short and long term;
- Rewarding operating performance results that are sustainable and consistent with reliable and efficient electric service;
- Attracting and retaining an experienced and effective management team;
- Motivating and rewarding our management team to produce growth and performance for our shareholders that are sustainable and consistent with prudent risk-taking and based on sound corporate governance practices; and
- Providing market competitive levels of target (i.e., opportunity) compensation.

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Highlights of the 2010 e x ecutive comp e nsation progr a m are:


- As the chart below indicates, the Company delivered total shareholder return for2010 and annualized total shareholder return for the three-years ending December 31, 2010 that were between the median of the totalshareholderreturns of the Company’s Benchmarking and PSSP Peer Group as definedon pages 11 and18, respectively.




- Our chief executive officer’s (CEO)total compensation, as shownin the “Summary Compensation Table” onpage 29 of this document, is largely flat since 2008 (+0.6%)(the first fullyear he was in the position)and decreased3.5% from the amount of total compensation he received in 2009.
- Met our commitmentto our customers to provide safe, reliable and competitively priced electric service.
- The Company reportedongoing earnings for 2010of $889 million, or $3.06 pershare, compared to $846 million, or $3.03 per share in 2009.
- Our named executiveofficers’ (NEOs) target (i.e.,opportunity) total compensation levels were approximately 25% below the 50th percentile of our benchmarking peergroup as defined in the Benchmarking section.
- We continue to provide only minimal executive perquisites (only those prevalent in the marketplace and thatare conducive to promoting our desiredbusiness outcomes). No taxgross-ups were made on anyperquisites.
- All of our NEOs currently meet or exceed the Company’s marketcompetitive executive stockownership guidelines (as shownbelow in the table on page 12).
- Payments under theManagement Incentive Compensation Plan (“MICP”) and the Performance Share Sub-Plan (“PSSP”) are based onthe achievement of multipleperformancefactors that webelieve drive shareholder value.

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- We continue to strongly believe in a pay-for-performance culture. The charts below illustratethe percentage of performance- based compensation for our CEO andour NEOs.




- The Organization andCompensation Committee ofthe Company’s Board of Directors (in this CompensationDiscussion and Analysis section, the “Committee”) made a number of its decisions in consideration of the challenging economic environmentsuch as:
- no increases to the CEO’s and otherNEOs’ base salaries other than one market-based adjustment, and
- a 20% reduction in theannual grantof restricted stock units (RSUs).
- The Company will adopt a compensation recoupment policy thatwill, at a minimum, complywith the final rules issued under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Pursuantto the Dodd-Frank Act, in theevent the Company is required to prepare an accountingrestatement due to material non-compliance withfinancial reporting requirements under theU.S. securities laws, the Company would berequired to recover compensation regardlessof whether the executive officers covered bythe recoupment policy engaged in misconduct or otherwise caused or contributed to the requirementfor restatement.
- Our CEOhas agreed that if he is involuntarily terminated without“cause” or resigns for “goodreason” on orprior to the secondanniversary of the completionof the proposed merger withDuke EnergyCorporation, he will not receive a tax gross-upfor any of hisexcise tax obligation (as disclosed belowon page 22).

For 2010, t he Company’ s NEOs were:


- WilliamD. Johnson,Chairman, President and Chief Executive Officer;
- Mark F. Mulhern, Senior Vice President and Chief Financial Officer;
- JeffreyJ. Lyash, Executive Vice President – EnergySupply (formerly ExecutiveVice President – CorporateDevelopment);

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Lloyd M. Yates, President and Chief Executive Officer, Progress Energy Carolinas, Inc. (PEC); and

John R. McArthur, Executive Vice President, General Counsel and Corporate Secretary. I. COMPENSATION OVERVIEW
  ASSESSMENT OF RISK
  Our Company is highly regulated at both the federal and state levels; therefore, significant swings in earnings performance or growth over time are less influenced by any particular individual or groups of individuals. We believe our compensation program for executive officers does not incentivize excessive risk taking for the following reasons:
 Our compensation program is evaluated annually by the Committee, with the assistance of its compensation consultant, for its effectiveness and consistency with the Company’s goals.

Our incentive compensation practices do not reward the executive officers for meeting or exceeding volume or revenue targets.

Our compensation program appropriately balances short- and long-term incentives with approximately 63% of total target compensation for the CEO and approximately 50% of total target compensation for the other NEOs provided in equity and focused on long-term performance.

The PSSP rewards significant and sustainable performance over the longer term by focusing on three-year earnings per share growth and relative total shareholder return targets.

The MICP focuses on ongoing earnings per share and legal entity net income, because we believe that these are the best measures to assess the change in the intrinsic value of the Company over time and therefore to determine how successful the Company is in its fundamental business.

The executive officers receive restricted stock units that generally have a three-year vesting period so that their upside potential and downside risk are aligned with that of our shareholders and promote long-term performance over the vesting period.

The executive officers are subject to stock ownership guidelines independently set by the Committee to align with our shareholders’ interests over the long-term.

The Committee has discretion to adjust all incentive awards based on factors it deems appropriate, including the Company’s and the individual executive’s performance and how results are achieved. We have determined that the compensation program for executive officers who are in senior management positions does not encourage excessive risk taking for all the reasons stated above.
  PROGRAM ADMINISTRATION
  Our executive compensation program is administered by the Committee, which is composed of seven independent directors (as defined under the NYSE Corporate Governance Rules). Members of the Committee do not receive compensation under any compensation program in which our executive officers participate. For a discussion of director compensation, see the “Director Compensation” section on page 52.
  The Committee’s charter authorizes the Committee to hire outside consultants. The Committee evaluates the performance of its compensation consultant annually to assess the consultant’s effectiveness in assisting the Committee with implementing the Company’s compensation program and principles. The Committee retained Meridian Compensation Partners, LLC (“Meridian”) as its independent executive compensation consultant to assist the Committee in meeting the Company’s compensation objectives. The Committee regularly meets with its consultant in executive session to discuss matters independent of management. Under the terms of its engagement, in 2010 Meridian reported directly to the Committee. Meridian solely provides executive compensation advisory services to the Committee and provides no other services to the Committee or the Company.
  9
   
  Our executive officers and other members of management periodically meet with the compensation consultant to ensure the consultant understands the Company’s business strategy. Our executive officers and other Company employees provide the consultant with information regarding our executive compensation and benefit plans and how we administer them on an as-needed basis. In addition, the executive officers ensure that the Committee receives administrative support and assistance, and make recommendations to the Committee to ensure that compensation plans are aligned with our business strategy and meet the principles described above. John R. McArthur, our Executive Vice President, serves as management’s liaison to the Committee. William D. Johnson, our Chief Executive Officer, is responsible for conducting annual performance evaluations of the other executive officers and making recommendations to the Committee regarding those executives’ compensation. The independent directors of the Board conduct an annual performance evaluation of Mr. Johnson. The Committee discusses the results of the evaluation with Mr. Johnson and makes compensation decisions for him giving consideration to the evaluation results.
  COMPETITIVE POSITIONING PHILOSOPHY
  The Committee believes its compensation philosophy is aligned with our executive compensation objective of linking pay to performance. When we benchmark and set compensation for our executives against a peer group, we focus on “target” compensation. Target compensation is the value of a pay opportunity as of the beginning of the year. For short-term incentives, this means the value of that incentive opportunity based on the target percentage of salary if our performance objectives are achieved. For example, the Chief Executive Officer’s target incentive opportunity is 85% of salary. This means if we reach our targeted financial objectives for the year, a target incentive award would likely be paid. Correspondingly, if performance should fall short or rise above these goals, then the earned incentive award would typically be lesser or greater than targeted. In any event, target incentive opportunities are not a certainty but are a function of business results.
  For the performance shares, the ultimate value of any earned award is entirely a function of performance against the pre-established 3-year performance goals as well as the value of the underlying stock price. Also, for the restricted shares the value of any earned award is a function of continued service and the value of the underlying stock price. The target value is not a certainty but only the value of the opportunity.
  What ultimately might be earned from either short- or long-term incentives is a function of performance and extended service. With respect to our variable pay programs, it is generally not the Company’s purpose to deliver comparable pay outcomes versus that of other companies since outcomes can differ by company based on their performance. Rather, our general compensation objective is to deliver comparable pay opportunities. Realized results will then be a significant function of performance and continued service. This is a common convention among companies; nonetheless, it is an important context to consider when reviewing the remainder of this CD&A where regular references to targets and/or grant date values for our compensation programs appear.
  Target total compensation opportunities are intended to approximate the 50th percentile of our peer group (as defined below) with flexibility to pay higher or lower amounts based on individual contribution, competition, retention, succession planning and the uniqueness and complexity of a position. To assess overall compensation, the Committee utilizes tally sheets that provide a summary of the elements of compensation for each senior executive. The tally sheets indicate target and actual pay earned. They also summarize potential retirement benefits at age 65, current equity holdings and potential value from severance.
  The compensation opportunities vary significantly from individual to individual based on the specific nature of the executive position. For example, our CEO is responsible for the overall performance of the Company and, as such, his position has a greater scope of responsibility than our other executive positions and is benchmarked accordingly. From a market perspective, the position of chief executive officer receives a greater compensation opportunity than other executive positions. The Committee therefore sets our CEO’s compensation opportunity at a level that reflects the responsibilities of his position and the Committee’s expectations.
  10
   
  COMPETITIVE BENCHMARKING
  On an annual basis, the Committee’s compensation consultant provides the Committee with a written analysis comparing base salaries, target annual incentives and the grant date value of long-term incentives of our executive officers to compensation opportunities provided to executive officers of our peers. For 2010, the Committee approved the use of a peer group of 18 integrated utilities used in the prior year and added three new companies: CenterPoint Energy, Inc., CMS Energy Corporation, and NiSource, Inc. (the “Benchmarking Peer Group”). These companies were added to further the Benchmarking Peer Group’s alignment with the executive market in which the Company competes for talent. Further, the addition of the new peer companies positioned the Company’s revenue more closely to the overall median than the previous peer group. The Benchmarking Peer Group is comprised of utilities that have transmission, distribution and generation assets and was chosen based primarily on revenues. The median revenue of the Benchmarking Peer Group is $10.3 billion compared to the Company’s $10.2 billion. These companies would likely be companies with which we primarily compete for executive talent. The table below lists the companies in the Benchmarking Peer Group.
  Benchmarking Peer GroupAllegheny Energy, Inc.
Duke Energy Corporation
PG&E CorporationAmeren Corporation
Edison International
Pinnacle West Capital CorporationAmerican Electric Power Co., Inc.
Entergy Corporation
PPL CorporationCenterPoint Energy, Inc.
Exelon Corporation
SCANA CorporationCMS Energy Corporation
FirstEnergy Corporation
Southern CompanyDominion Resources, Inc.
NextEra Energy, Inc.
TECO Energy, Inc.DTE Energy Company
NiSource, Inc.
Xcel Energy, Inc.
  The electric utility industry has subsectors identified frequently as competitive merchant, regulated delivery, regulated integrated, and unregulated integrated (typically state-regulated delivery and unregulated generation). Each of these subsectors typically differs in financial performance and market valuation characteristics such as earnings multiples, earnings growth prospects and dividend yields. Progress Energy generally is identified as being in the regulated integrated subsector. This means Progress Energy and its peer companies are primarily rate-of-return regulated, operate in the full range of the value chain (generation, transmission and/or delivery), and typically have requirements to serve all customers under state utility regulations. The Committee annually evaluates the Benchmarking Peer Group to ensure that it remains appropriate for compensation comparisons.
  SECTION 162(m) IMPACTS
  Section 162(m) of the Internal Revenue Code of 1986, as amended, limits, with certain exceptions, the amount a publicly held company may deduct each year for compensation over $1 million paid or accrued with respect to its chief executive officer and any of the other three most highly compensated officers (excluding the chief financial officer). Certain performance-based compensation is, however, specifically exempt from the deduction limit. To qualify as performance-based, compensation must be paid pursuant to a plan that is:
 administered by a committee of outside directors;

based on achieving objective performance goals; and

disclosed to and approved by the shareholders. The Committee considers the impact of Section 162(m) when designing executive compensation elements and attempts to minimize nondeductible compensation. The Company received shareholder approval of the Progress Energy 2009 Executive Incentive Plan (the “EIP”), an annual cash incentive plan for the Company’s named executive officers, at its 2009 Annual Meeting of Shareholders. The MICP and EIP were designed to work together to enable the Company to preserve the tax deductibility of incentive awards under Section 162(m) of the Internal Revenue Code, as amended, to the extent practicable. The sole purpose of the EIP is to preserve the tax deductibility of incentive awards that are qualified performance-based compensation.
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  STOCK OWNERSHIP GUIDELINES
  To align the interests of our executives with the interests of shareholders, the Committee utilizes stock ownership guidelines for all executive officers. The guidelines are designed to ensure that our management maintains a significant financial stake in the Company’s long-term success. The guidelines require each senior executive to own a multiple of his or her base salary in the form of Company common stock within five years of assuming his or her position. The required levels of ownership are designed to reflect the level of responsibility that the executive positions entail.
  The Committee benchmarked both the position levels and the multiples in our guidelines against those of the Benchmarking Peer Group and general industry practices. The benchmarking for 2010 indicated that the Company’s guidelines were “at market” with respect to ownership levels, the types of equity that count toward ownership, and the timeframe for compliance. The Committee also considered the results of the vote on a shareholder proposal included in the Company’s 2010 Proxy Statement that proposed the Committee adopt a policy requiring senior executives to retain no less than 75% of net after-tax shares acquired through equity compensation programs until the year following termination of employment through retirement or otherwise. The Committee did not adopt such a policy in 2010 based in part on the fact that approximately 76% of the votes cast were against the proposal. The stock ownership guidelines for our executive officer positions are shown in the table below:
  Stock Ownership GuidelinesChief Executive Officer
5.0 times Base SalaryChief Operating Officer
4.0 times Base SalaryChief Financial Officer
3.0 times Base SalaryPresidents/Executive Vice Presidents/Senior Vice Presidents
3.0 times Base Salary
  For purposes of meeting the applicable guidelines, the following are considered as common stock owned by an executive: (i) shares owned outright by the executive; (ii) stock held in a defined contribution, Employee Stock Ownership Plan, or other stock-based plan; (iii) phantom stock deferred under an annual incentive or base salary deferral plan; (iv) stock earned and deferred in any long-term incentive plan account; (v) restricted stock awards and RSUs; and (vi) stock held in a family trust or immediate family holdings.
  As of February 25, 2011, our named executive officers exceeded the guidelines (see Management Ownership table on page 37 of Amendment No. 1 for specific details). As an indication of Mr. Johnson’s alignment of his interests with that of our shareholders, he currently holds equity valued at more than 12 times his base salary (based on the closing share price on February 25, 2011), which exceeds the 5-times base salary required under the guidelines.
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  II. ELEMENTS OF COMPENSATION
  The table below summarizes the current elements of our executive compensation program.
  Element
Brief Description
Primary Purpose
Short- or
Long-Term
FocusBase Salary
Fixed compensation. Annual merit increases reward individual performance and growth in the position.
Basic element of compensation that pays for expertise and experience and necessary to attract and retain.
Short-term 
(annual)Annual Incentive
Variable compensation based on achievement of annual performance goals.
Rewards operating performance results that are consistent with reliable and efficient electric service.
Short-term 
(annual)Long-Term Incentives — 
Performance Shares
Variable compensation based on achievement of long-term performance goals.
Align interests of shareholders and management and aid in attracting and retaining executives.
Long-termLong-Term Incentives — 
Restricted Stock/Restricted 
Stock Units
Variable compensation based on target levels. Service-based vesting.
Align interests of shareholders and management and essential in attracting and retaining executives.
Long-termSupplemental Senior 
Executive Retirement Plan
Formula-based compensation, based on salary, annual incentives and eligible years of service.
Provides long-term retirement benefit influenced by service and performance. Aids in attracting and retaining executives.
Long-termManagementChange-In-Control Plan
Defines Company’s relationship with executives in the event of a change-in-control.
Aligns interests of shareholders and management and aids in (i) attracting executives; (ii) retaining executives during transition following a change-in-control; and (iii) focusing executives on maximizing value for shareholders.
Long-termEmployment Agreements
Define Company’s relationship with its executives and provide protection to each of the parties in the event of termination of employment.
Aid in attracting and retaining executives.
Long-termExecutive Perquisites
Personal benefits awarded outside of base pay and incentives.
Aid in attracting and retaining executives and allowing executives to focus their energies on Company priorities.
Short-term 
(annual)Other Broad-Based Benefits
Employee benefits such as health and welfare benefits, 401(k) and pension plan.
Basic elements of compensation expected in the marketplace. Aid in attracting and retaining executives.
Both Short- and 
Long-termDeferred Compensation
Provides executives with tax deferral options in addition to those available under our qualified plans.
Aids in attracting and retaining executives.
Long-term
 
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  The table below shows the target awards of short-term and long-term incentives to each NEO for 2010. Percentages for incentives are expressed as a percentage of base salary. Additional elements of compensation are discussed further in this section.
  Incentive TargetsLong-Term Incentive
Targets as a Percentage
of SalaryNamed Executive
Officer
Base
Salary
(as of
1/1/11)
Short-Term
(annual)
Incentive
Target1
Performance
Shares2
Restricted
Stock
Total
Incentive
TargetWilliam D. Johnson
$990,000
85%
233%
117%
435%Mark F. Mulhern
$450,000
55%
117%
58%
230%Jeffrey J. Lyash
$453,000
55%
117%
58%
230%Lloyd M. Yates
$448,000
55%
117%
58%
230%John R. McArthur
$488,000
55%
117%
58%
230%
  1Annual incentive awards can range from 0%-200% of target percentages.
  2Payout opportunities can range from 0%-200% of target percentages.
  1. BASE SALARY
  The primary purpose of base salaries is to provide a basic element of compensation necessary to attract and retain executives. Base salary levels are established based on data from the Benchmarking Peer Group identified on page 11 and consideration of each executive officer’s skills, experience, responsibilities and performance. Market compensation levels that approximate the 50th percentile of the Benchmarking Peer Group are used to assist in establishing each executive’s job value (commonly called the “midpoint” at other companies). Job values serve as the market reference for determining base salaries.
  Each year, the compensation consultant provides the market values for our executive officer positions. Based, in part, on these market values and, in part, on the executives’ achievement of individual and Company goals, the Chief Executive Officer then recommends to the Committee base salary adjustments for our executive officers (excluding himself). The Committee reviews the proposed base salaries, adjusts them as it deems appropriate based on the executives’ achievement of individual and Company goals and market trends that result in changes to job values, and approves them in the first quarter of each year. The Committee meets in executive session with the compensation consultant to review and establish the Chief Executive Officer’s base salary.
  2. ANNUAL INCENTIVE
  We sponsor the MICP, an annual cash incentive plan, in which our executives, managers and supervisors participate. The Company includes managers and supervisors in the MICP to increase accountability for all levels of the Company’s management team and to better align compensation with management performance. Annual incentive opportunities are provided to executive officers to promote the achievement of annual performance objectives. MICP targets are based on a percentage of each executive’s base salary and are intended to offer target award opportunities that approximate the 50th percentile of the market for the Benchmarking Peer Group.
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  Each year, the Committee establishes, based on the recommendations of the CEO, the threshold, target and outstanding levels for the performance measures applicable to the named executive officers. The 2010 MICP performance measures were ongoing earnings per share (Ongoing EPS) and legal entity net income for PEC and PEF as shown in the table below:
  2010 MICP Financial Performance Goals(in millions except EPS)
Threshold
Target
OutstandingCompany Ongoing EPS
$2.75
$2.95
$3.05PEC Net Income
$572
$605
$623PEF Net Income
$405
$429
$441
  The MICP’s performance targets are designed to align with our financial plan and are intended to appropriately motivate the executive officers to achieve the desired corporate financial objectives. Effective January 1, 2010, the legal entity net income performance measure was implemented as a result of the Company’s desire to increase its legal entity focus on net income results. The potential MICP funding for each performance measure is 50% at threshold, 100% at target and 200% at outstanding (maximum). Interpolation is applied when actual performance is between the identified levels. Each performance measure is assigned a weight based on the relative importance of that measure to the Company’s performance. During the year, updates are provided to the Committee on the Company’s performance as compared to the performance measures. For 2010, the named executive officers’ performance measures under the MICP were weighted among Ongoing EPS and legal entity net income as follows:
  Performance Measures(Relative Percentage Weight)Named Executive
Officer
Target
Opportunity
Company
Ongoing EPS
PEC
Net Income
PEF
Net IncomeWilliam D. Johnson
85%
100%
—
—Mark F. Mulhern
55%
100%
—
—Jeffrey J. Lyash
55%
35%
32.5%
32.5%Lloyd M. Yates
55%
45%
55%
—John R. McArthur
55%
100%
—
—
  The determination of the annual MICP award that each named executive officer receives has two steps: i) funding the MICP awards based on the performance as compared to the financial goals specified above; and ii) determining individual MICP awards.
  First, the Committee approves the total amount that will be made available to fund MICP awards to managers and executives, including the NEOs. To determine the total amount available to fund all MICP awards, we calculate an amount for each MICP participant by multiplying each participant’s base salary by a performance factor (based on the sum of a participant’s weighted target award achievements). The performance factor ranges between 0 and 200% of a participant’s target award, depending upon the results of each applicable performance measure. The sum of these amounts for all participants is the total amount of funds available to pay to all participants, including the named executive officers.
  Second, the CEO recommends to the Committee an MICP payment for executives (excluding the CEO) based on the executive’s target award opportunity, the degree to which the Company achieved certain goals, and the executive’s individual performance based on achieving individual goals and operating results. The Committee reviews the CEO’s recommendations and approves and/or makes adjustments as appropriate. The CEO’s MICP payment is determined by the Committee based upon the Committee’s annual evaluation of the CEO’s performance. The Committee may reduce but cannot increase the amount payable to a participant according to business factors determined by the Committee, including the performance measures under the MICP.
  As allowed by the MICP, the Committee uses discretion to adjust funding amounts up or down depending on factors that it deems appropriate, such as weather, storm costs, impairments, restructuring costs, and gains/losses on sales of assets. The Committee uses Ongoing EPS as defined and reported by the Company in its annual earnings release.
  Based on management’s recommendations, with respect to 2010, the Committee exercised discretion for the three performance measures: the Company’s Ongoing EPS, PEC net income and PEF net income. The Committee approved adjusting the Company’s earnings per share results downward by $0.22 to account for favorable weather, storm and regulatory costs. The Committee approved adjusting PEC net income for favorable weather, storm and regulatory costs for a net downward adjustment of $32 million. The Committee approved adjusting PEF net income downward by $42 million to account for favorable weather and regulatory costs. These adjustments resulted in the Company’s Ongoing EPS, PEC net income and PEF net income performance at 73%, 74% and 82% of target, respectively. As a result of these downward adjustments, the 2010 MICP payments were below the target award opportunity for each of the NEOs.
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  3.LONG-TERM INCENTIVES
  The 2007 Equity Incentive Plan (the “Equity Incentive Plan”) was approved by our shareholders in 2007 and allows the Committee to make various types of long-term incentive awards to Equity Incentive Plan participants, including the named executive officers. The awards are provided to the named executive officers to align the interests of each executive with those of the Company’s shareholders. Long-term incentive awards are intended to offer target award opportunities that approximate the 50th percentile of the peer group. Currently, the Committee utilizes two types of equity-based incentives: restricted stock units and performance shares.
  The Committee has determined that to accomplish our compensation program’s purposes effectively, equity-based awards should consist of one-third restricted stock units and two-thirds performance shares. This allocation reflects the Committee’s strategy of utilizing long-term incentives to retain officers, align officers’ interests with those of the Company’s shareholders and drive specific financial performance.
  Performance shares are intended to focus executive officers on the multi-year sustained achievement of financial and shareholder value objectives. RSUs are intended to further align executives’ interests with shareholder interests while providing strong retention for the executive to remain with the Company long enough for the restricted stock units to vest.
  The table below shows the 2010 long-term incentive targets for the NEOs’ positions.
  Long-Term Incentive Award Target1Position2
Performance
Shares
Target Award
2010
Restricted Stock
Units
Target Award
20103Chief Executive Officer
233%
117%Executive Vice President
117%
58%Chief Financial Officer
117%
58%President, PEC
117%
58%
  1 Target award amounts are expressed as percentages of base salaries for the listed positions.
 
 2 Position held at Progress Energy, Inc. unless otherwise noted.
 
 3 NEOs’ 2010 RSU target award amounts were reduced by 20%.
  After October 2004, we ceased granting stock options. All previously granted stock options remain valid in accordance with their terms and conditions.
  Performance Shares
  The Performance Share Sub-Plan under the Equity Incentive Plan authorizes the Committee to issue performance shares to executives as selected by the Committee in its sole discretion. The value of a performance share is equal to the value of a share of the Company’s common stock, and earned performance share awards are paid in Company common stock. The performance period for a performance share is the three-consecutive-calendar-year period beginning in the year in which it is granted. Dividends or dividend equivalents are not paid on unvested performance shares. Rather, dividend equivalents accrue quarterly and are reinvested in additional shares that are only paid on earned performance shares at the end of each three-year performance cycle.
  To determine the number of shares granted at the beginning of each performance cycle, the Company divides the target award value by the closing stock price on the last trading day of the year prior to the beginning of the performance period. The performance shares must then be earned over the three-year performance cycle. The granting of performance shares does not provide the participant with any guarantee of actually receiving the awards.
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Notwithstanding the above calculation, the Committee may exercise discretion in determining the size of each performance share grant, with the maximum grant size at 125% of target. In 2010, the Committee did not exercise this discretion with respect to any grant of the named executive officers.




2007 Performance Share Sub-Plan (the “2007 PSSP”)




The 2007 PSSP provides for an adjusted measure of total shareholder return (referred to as “Total Business Return” or TBR) to be utilized as the sole measure for determining the amount of a performance share award upon vesting. TBR is computed assuming a constant price to earnings ratio, which was set at the beginning of each performance period. During a period when the Company was undergoing transformation of its underlying operating portfolio, this measure was intended to filter out external or market-based variations in the Company’s stock price and focus on internal restructuring. The performance measure also uses the Company’s publicly reported ongoing earnings as the earnings component for determining performance share awards. The Committee chose this method as the sole performance measure to support its desire to better align the long-term incentives with the interests of our shareholders and to emphasize our focus on dividend and Ongoing EPS growth. TBR was used for the 2007 – 2009 and 2008 – 2010 performance share grants made under the 2007 PSSP. The performance measures for the 2008 – 2010 performance cycle are shown in the table below.




Threshold
Target
Outstanding2007 Total Business Return1
5%
8%
≥10.5%2007 Percentage of Target Award Earned
50%
100%
200%2008 Total Business Return1
5%
8%
≥11%2008 Percentage of Target Award Earned
25%
100%
200%


1 Total shareholder return, adjusted to reflect a constant price to earnings ratio set at January 1 of the grant year and to reflect the Company’s ongoing earnings per share for each year of the performance period.




Additionally, the Committee retained the discretion to reduce the number of performance shares awarded if it determines that the payouts resulting from the TBR do not appropriately reflect the Company’s actual performance.




In the first quarter of 2010, the Committee approved a payout of 125% of the target value for the 2007 – 2009 PSSP grants. The Company achieved a Total Business Return (TBR) of 9.95% which would equate to 178% of target value for the 2007-2009 performance share grants. The Committee retains the discretion to reduce the number of performance shares earned if the TBR formula would result in payouts that the Committee deems to be disproportionate to the Company’s performance or other circumstances merit a reduction in the amounts earned. The Committee deemed a payout of 178% of target to be disproportionate to the Company’s performance and exercised its discretion to reduce the payout to 125%. In applying its discretion, the Committee balanced a number of factors including the Company’s three year annualized total shareholders return for the 2007-2009 period of -0.2% which was slightly below the 50th percentile of the Company’s PSSP Peer Group, the Company’s positive three year average on-going earnings growth for the same period of 7.49%, and the challenging economy.




2009 Performance Share Sub-Plan (the “2009 PSSP”)




The 2009 PSSP uses two equally weighted performance measures: relative total shareholder return (TSR) and earnings growth. TSR, unlike the previously discussed TBR, is based on the conventional metric of annual share price appreciation and dividends. By using a combination of relative TSR and absolute earnings growth, the 2009 PSSP allows the Committee to consider the Company’s performance as compared to the PSSP Peer Group (as defined below), and management’s achievement of internal goals.




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Relative TSR




The relative TSR performance is calculated using the Company’s three-year annualized TSR ranked against the PSSP Peer Group. TSR is defined as the appreciation or depreciation in the value of the stock, plus dividends paid during the year, divided by the closing value of the stock on the last trading day of the preceding year. The table below shows the percent of target awards that may be earned based on the Company’s relative TSR percentile ranking:




Performance and Award Structure (50%)Percentile Ranking
Percent of Target Award Earned80th
200%50th
100%40th
50%<40th
0%


However, regardless of the relative ranking, if the Company’s TSR is negative for the performance period, no award above the threshold can be earned.




In making awards under the 2009 PSSP, the Committee used a group of highly regulated companies with a business strategy similar to ours based on a percentage of regulated earnings (the “PSSP Peer Group”). These companies have a significant amount of their earnings generated from regulated assets. In addition, the PSSP Peer Group was selected based on other factors including revenues, market capitalization, and enterprise value. The PSSP Peer Group differs from the Benchmarking Peer Group the Committee uses for purposes of benchmarking compensation. The Benchmarking Peer Group is a broader group that represents those companies with which we primarily compete for executive talent and includes companies that are not regulated integrated utilities. The Committee believes that for purposes of our long-term incentive plan, it is more appropriate to use the PSSP Peer Group comprised of companies that derive a significant percentage of their earnings from regulated businesses. The table below lists the companies in the PSSP Peer Group.




PSSP Peer GroupAlliant Energy Corporation
Great Plains Energy, Inc.
SCANA CorporationAmerican Electric Power, Inc.
NV Energy, Inc.
Southern CompanyConsolidated Edison, Inc.
PG&E Corporation
Westar Energy, Inc.DPL, Inc.
Pinnacle West Capital Corporation
Wisconsin Energy Corp.Duke Energy Corporation
Portland General Electric Company
Xcel Energy, Inc.


Earnings Growth




Earnings growth is based on the Company’s annual Ongoing EPS. Ongoing EPS is determined in accordance with the Company’s “Policy for Press Release Earnings Disclosure of Non-GAAP Measures.” The earnings growth component of the PSSP award is based on the Company’s earnings growth performance as measured against pre-established goals set at the beginning of the performance period. The Committee determined the earnings growth targets for the 2010 annual grant were appropriate in consideration of a challenging economy, consistency with analysts’ expectations, the 2010 projected analysts’ consensus on earnings growth for the PSSP Peer Group, and continued uncertainties of the Florida regulatory environment. The table below shows the percent of target awards that may be earned based on the Company’s earnings growth performance:




Performance and Award Structure (50%)Performance
Three-Year Average Ongoing
EPS Growth
Percent of Target Award
Earned2009-2011
2010-2012Threshold
2%
1%
50%Target
4%
3%
100%Maximum
6%
5%
200%


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Restricted Stock Units




The restricted stock unit component of the current long-term incentive program helps us retain executives and aligns the interests of management with those of our shareholders and management by rewarding executives for increasing and sustaining shareholder value. The Committee believes that the service-based nature of RSUs is essential in retaining an experienced and capable management team.




Executive officers typically receive a grant of service-based RSUs in the first quarter of each year which are subject to a three-year graded vesting schedule. The size of each grant is based on the executive officer’s target award percentage and is determined by using the closing stock price of the Company’s common stock on the last trading day of the year prior to the date of the award. The Committee establishes target levels based on the peer group information discussed under the caption “Competitive Positioning Philosophy” on page 10 above. The 2010 RSU targets for the NEOs are shown in the “Long-Term Incentive Award Target” table on page 16 above. The granting of RSUs does not provide the participant with any guarantee of vesting in the awards. Holders of RSUs receive quarterly cash dividend equivalents equal to the amount of any quarterly dividends paid on our common stock.




To further accent the retention quality of the Equity Incentive Plan and to recognize the contribution of the officer team, including the named executive officers, the Committee may also issue in its discretion service-based ad hoc grants of restricted stock units to executives. No ad hoc grants were awarded by the Committee during 2010.




4.SUPPLEMENTAL SENIOR EXECUTIVE RETIREMENT PLAN




The Supplemental Senior Executive Retirement Plan (“SERP”) provides a supplemental, unfunded pension benefit for executive officers who have at least 10 years of service with at least three years of service on our Senior Management Committee (“SMC”), i.e., service as a Senior Vice President or above. The SERP is designed to provide pension benefits above those earned under our qualified pension plan. Current tax laws place various limits on the benefits payable under our qualified pension, including a limit on the amount of annual compensation that can be taken into account when applying the plan’s benefit formulas. Therefore, the retirement incomes provided to the named executive officers by the qualified plans generally constitute a smaller percentage of final pay than is typically the case for other Company employees. To make up for this shortfall and to maintain the market-competitiveness of the Company’s executive retirement benefits, we maintain the SERP for members of the SMC, including the NEOs.




The SERP defines covered compensation as annual base salary plus the annual cash incentive award. The qualified plans define covered compensation as base salary only. The Committee believes it is appropriate to include annual cash incentive awards in the definition of covered compensation for purposes of determining pension plan benefits for the named executive officers to ensure that the named executive officers can replace in retirement a portion of total compensation received during employment. This approach takes into account the fact that base pay alone comprises a relatively smaller percentage of a named executive officer’s total compensation than of other Company employees’ total compensation.




The Committee believes that the SERP is a valuable and effective tool for attraction and retention due to its significant benefit and vesting requirements. It is also a common tool among the Benchmarking Peer Group and utilities in general. Total years of service attributable to an eligible executive officer may consist of actual or deemed years. The Committee grants deemed years of service on a case-by-case basis depending upon our need to attract and retain a particular executive officer. All of our named executive officers participate in the SERP and are fully vested in the SERP other than John R. McArthur, who will begin participation and vest on January 1, 2012.




Payments under the SERP are made in the form of an annuity, payable at age 65. The monthly SERP payment is calculated using a formula that equates to 4% per year of service (capped at 62%) multiplied by the average monthly eligible pay for the highest completed 36 months of eligible pay within the preceding 120-month period. Eligible pay includes base salary and annual incentive. (For those executives who became SERP participants on or after January 1, 2009, the target benefit percentage is 2.25% rather than 4% per year of service. None of the named executive officers for 2010 is subject to the new benefit percentage.) Benefits under the SERP are fully offset by Social Security benefits and by benefits paid under our qualified pension plan. An executive officer who is age 55 or older with at least 15 years of service may elect to retire and commence his or her SERP benefit prior to age 65. The early retirement benefit will be reduced by 2.5% for each year the participant receives the benefit prior to reaching age 65.




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5.MANAGEMENT CHANGE-IN-CONTROL PLAN




We sponsor a Management Change-In-Control Plan (the “CIC Plan”) for selected employees. The purpose of the CIC Plan is to retain key management employees who are critical to the negotiation and subsequent success of any transition resulting from a change-in-control (“CIC”) of the Company. Providing such protection to executive officers in general minimizes disruption during a pending or anticipated CIC. Under our CIC Plan, we generally define a CIC as occurring at the earliest of the following:


- the date any person or group becomes the beneficial owner of 25% or more of the combined voting power of our then outstanding securities; or
- the date a tender offer for the ownership of more than 50% of our then outstanding voting securities is consummated; or
- the date we consummate a merger, share exchange or consolidation with any other corporation or entity, regardless of whether we are the surviving company, unless our outstanding securities immediately prior to the transaction continue to represent more than 60% of the combined voting power of the outstanding voting securities of the surviving entity immediately after the transaction; or
- the date, when, as a result of a tender offer, exchange offer, proxy contest, merger, share exchange, consolidation, sale of assets or any combination of the foregoing, the directors serving as of the effective date of the change-in-control plan, or elected thereafter with the support of not less than 75% of those directors, cease to constitute at least two-thirds (2/3) of the members of the Board of Directors; or
- the date when our shareholders approve a plan of complete liquidation or winding-up or an agreement for the sale or disposition by us of all or substantially all of our assets; or
- the date of any other event that our Board of Directors determines should constitute a CIC.

The purposes of the CIC Plan and the levels of payment it provides are designed to:


- focus executives on maximizing shareholder value;
- ensure business continuity during a transition and thereby maintain the value of the acquired company;
- allow executives to focus on their jobs and not alternative future employment if they should be terminated; and
- retain key executives during a period of potentially protracted transition for the benefit of shareholders and customers.

The Committee has the sole authority and discretion to designate employees and/or positions for participation in the CIC Plan. The Committee has designated certain positions, including all of the NEO positions, for participation in the CIC Plan. The benefits provided under the CIC Plan do not duplicate the employment agreement severance benefits in the case of CIC Plan participants. Participants are not eligible to receive any of the CIC Plan’s benefits absent both a CIC of the Company and an involuntary termination of the participant’s employment without cause, including voluntary termination for good reason. Good reason termination includes changes in employment circumstances such as a:


- reduction of base salary or material reduction of incentive compensation opportunity;
- material adverse change in position or scope of authority;
- significant change in work location; or
- breach of provisions of the CIC Plan.

Rather than allowing benefit amounts to be determined at the discretion of the Committee, the CIC Plan has specified multipliers designed to be competitive with current market practices. With the assistance of its compensation consultant, the Committee has reviewed the design of the CIC Plan to ensure that it meets the Company’s business objectives and falls within competitive parameters. The Committee has determined that the current CIC Plan is effective at meeting the goals described above.




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The CIC Plan provides separate tiers of severance benefits based on the position a participant holds within our Company. The continuation of health and welfare benefits coverage and the degree of excise tax gross-up for terminated participants align with the length of time during which they will receive severance benefits.




The following table sets forth the key provisions of the CIC Plan benefits as it relates to our NEOs:




Tier I
Tier IIEligible Positions
Chief Executive Officer,
Senior Vice PresidentsChief Operating Officer,Presidents and ExecutiveVice PresidentsCash Severance
300% of base salary and
200% of base salary and annual incentive1annual incentive1Health & Welfare Coverage Period
Coverage up to 36 months
Coverage up to 24 monthsGross-ups
Full gross-up of excise tax
Conditional gross-up of excise tax


1 The cash severance payment will be equal to the sum of the applicable percentage of annual base salary and the greater of the average of the participant’s annual incentive award for the three years immediately preceding the participant’s employment termination date, or the participant’s target annual incentive award for the year the participant’s employment with the Company terminates.




Additionally, the CIC Plan has the following key provisions:




Benefit
DescriptionAnnual Incentive
100% of target incentive if terminated within coverage period after CIC.Restricted Stock
Agreements
Restrictions are fully waived on all outstanding grants if terminated during coverage period (unless outstanding awards are not assumed by the acquiring company in which case they would vest at CIC).Performance Share
Sub-Plan
Outstanding awards vest (at the target level) as of the termination date (unless outstanding awards are not assumed by the acquiring company in which case they would vest at CIC).Stock Option Agreements
Unvested awards if assumed by acquiring company would vest according to their normal schedule; otherwise they would vest if participant is terminated during coverage period after the CIC (there are no unvested stock option awards currently outstanding).Supplemental Senior Executive
Retirement Plan
Participant shall be deemed to have met minimum service requirements for benefit purposes, and participant shall be entitled to payment of benefit under the SERP.Deferred Compensation
Entitled to payment of accrued benefits in all accrued nonqualified deferred compensation plans.


In the event an NEO is terminated following a change-in-control of the Company, benefits payable under the CIC Plan will be paid in lieu of any severance benefits payable under the NEO’s employment agreement if the transaction qualifies as a change in control under Section 409A of the Internal Revenue Code of 1986, as amended. If the transaction is not a Section 409A change in control, the NEO will receive the same level of CIC Plan benefits except that a portion of the cash severance will be paid in installments rather than in a lump sum. Accordingly, the amounts shown in the “Involuntary or Good Reason Termination (CIC)” columns in the tables captioned “Potential Payments Upon Termination,” on pages 42 through 51 below show only the potential payments each of our NEOs would be eligible to receive under the CIC Plan in the event of a CIC.




The CIC Plan also permits the Board to establish a nonqualified trust to protect the benefits of the impacted participants. This type of trust generally is established to protect nonqualified and/or deferred compensation against various risks such as a CIC or a management change-of-heart. Any such trust the Board establishes will be irrevocable and inaccessible to future or current management, and may be currently funded. To date, no such trust has been funded with respect to any of our NEOs.




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Application of the CIC Plan and Other Compensation Related Consequences of the Proposed Merger with Duke Energy




On January 8, 2011, Duke Energy Corporation (“Duke Energy”) and the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement, if the merger is consummated, the Company will become a wholly owned subsidiary of Duke Energy and shareholders of the Company will receive shares of Duke Energy common stock. Consummation of the merger is subject to customary conditions, including among other things, approval of the shareholders of each company.




Our NEOs will not receive additional compensation or benefits under their employment agreements or the CIC Plan solely on account of the consummation of the merger with Duke Energy. However, subject to the limitations described below, if an NEO is terminated without “cause” or resigns with “good reason” within twenty-four months after consummation of the merger, they will be entitled to severance benefits under the CIC Plan as set forth in the “Involuntary or Good Reason Termination (CIC)” column of the tables captioned “Potential Payments Upon Termination,” on pages 42 through 51 below. The eligibility of certain NEOs to receive the CIC Plan benefits is limited by the following:


- Each of our NEOs are expected to assume new positions with Duke Energy effective upon consummation of the merger. Thus, we do not expect that these executives’ employment will be terminated in connection with consummation of the merger.
- In connection with the execution of the Merger Agreement, Duke Energy, Diamond Acquisition Corporation and Mr. Johnson executed a term sheet pursuant to which the parties agreed to enter into an employment agreement upon consummation of the merger. Pursuant to the term sheet, Mr. Johnson has waived his right to resign with “good reason,” and receive CIC Plan benefits or to assert a “constructive termination” under his existing employment agreement, on account of (i) his required relocation to Charlotte, North Carolina, (ii) any changes to his positions, duties and responsibilities in connection with his acceptance of the new position with Duke Energy, or (iii) any changes to his total incentive compensation opportunity following the merger with Duke Energy. In addition, Mr. Johnson’s term sheet specifies that if he is involuntarily terminated without “cause” or resigns for “good reason” on or prior to the second anniversary of the completion of the merger, he will not receive a tax gross-up for the parachute payment excise tax under Sections 280G and 4999 of the Internal Revenue Code. In addition to the waivers described above, Mr. Johnson’s term sheet also specifies that if he is involuntarily terminated without “cause” or resigns for “good reason” following the second anniversary of, but prior to the third anniversary of, the consummation of the merger, he will be entitled to the severance benefits provided under his current employment agreement. If the merger with Duke Energy is not completed, the waivers described in this paragraph will not take effect.
- Also in connection with the execution of the Merger Agreement, each of Messrs. Yates, Lyash, McArthur and Mulhern entered into a letter agreement with the Company waiving certain rights of such executive officer under the CIC Plan and such executive officer’s employment agreement. Messrs. Yates, Lyash, McArthur and Mulhern have each waived the right to resign with “good reason,” and receive the CIC Plan benefits or to assert a “constructive termination” under their employment agreements, on account of (i) a required relocation to Charlotte, North Carolina, (ii) a change in his position, duties or responsibilities in connection with his acceptance of the new position with Duke Energy or (iii) a reduction in his total incentive compensation opportunity by virtue of his participation in Duke Energy’s incentive compensation plans (provided that his target incentive compensation opportunity is substantially similar to that of similarly situated Duke Energy executives). Thus, Messrs. Yates, Lyash, McArthur and Mulhern cannot claim entitlement to CIC Plan benefits or severance under their employment agreements upon a resignation following the merger for any of these reasons. The letter agreements will be terminated in the event that the Merger Agreement is terminated prior to the merger with Duke Energy being consummated.

Upon consummation of the merger, outstanding options to purchase shares of Company common stock and outstanding awards of restricted stock, restricted stock units, phantom shares and performance shares will be converted into equity or equity-based awards in respect of a number of shares of Duke Energy common stock equal to the number of shares of Company common stock represented by such award multiplied by the exchange ratio under the Merger Agreement and will remain subject to the same vesting requirements as were applicable to such awards prior to consummation of the merger with Duke Energy. In other words, the vesting of options and other equity awards held by our NEOs will not be accelerated on account of the completion of the merger. The outstanding annual incentive awards of our NEOs also will remain subject to their original vesting requirements and will remain subject to performance criteria. The compensation committee of the Duke Energy board of directors will adjust the original performance criteria for outstanding performance shares and annual incentive awards as it determines is appropriate and equitable to reflect the merger, Progress Energy’s performance prior to completion of the merger and the performance criteria of awards made to similarly situated Duke Energy employees.




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Notwithstanding the provisions of the CIC Plan providing for the funding of a nonqualified trust to protect the benefits of the impacted participants, the terms of the Merger Agreement prohibit the funding of any such trust and stipulate that the CIC Plan must be amended prior to the consummation of the merger to eliminate any funding requirement.




On March 16, 2011, the Board amended the SERP in two respects. The SERP was amended to provide that all service with the Company and its affiliates, including Duke Energy and its affiliates, after completion of the merger will be treated as service as a Senior Vice President or above for purposes of meeting the SERP’s eligibility requirements. Second, the SERP was amended to limit participation in the SERP to executives who were members of the SMC on January 8, 2011.




6. EMPLOYMENT AGREEMENTS




Each named executive officer has an employment agreement that documents the Company’s relationship with that executive. We provide these agreements to the executives as a means of attracting and retaining them. Each agreement has a term of three years. When an agreement’s remaining term diminishes to two years, the agreement automatically adds another year to the term, unless we give a 60-day advance notice that we do not want to extend the agreement. If a named executive officer is terminated without cause during the term of the agreement, he is entitled to severance payments equal to his base salary times 2.99, as well as up to 18 months of COBRA reimbursement. A description of each named executive officer’s employment agreement is discussed under the “Employment Agreement” section of the “Discussion of Summary Compensation Table and Grants of Plan-Based Awards Table” on page 33.




The Committee provides employment agreements to the named executive officers because it believes that such agreements are important for the Company to be competitive and retain a cohesive management team. The employment agreements also provide for a defined employment arrangement with the executives and provide various protections for the Company, such as prohibiting competition with the Company, solicitation of the Company’s employees and disclosure of confidential information or trade secrets. The Committee believes that the terms of the employment agreements are in line with general industry practice.




7. EXECUTIVE PERQUISITES




We provide limited perquisites and other benefits to our executives. Amounts attributable to perquisites are disclosed in the “All Other Compensation” column of the Summary Compensation Table on page 29.




The Committee has determined that the current perquisites are appropriate and consistent with market practices. The perquisites available to the named executive officers during 2010 include:




Perquisites for 2010
DescriptionPersonal Travel on Corporate Aircraft and “Business-Related” Spousal Travel1
Personal and spousal travel on corporate aircraft is permitted under very limited circumstances.Financial and Estate Planning
An annual allowance of up to $16,500 for the purpose of purchasing financial and estate planning counseling and services and preparation of personal tax return.Luncheon and Health Club Dues
Membership in an approved luncheon club and membership in a health club of executive officer’s choice.Executive Physical
Reimbursement of up to $2,500 for an extensive physical at a clinic specializing in executive physicals, every other year.Internet and Telecom Service2
Monthly fees for Internet and telecom access.Home Security
An installed home security system and payment of monitoring fees.Accidental Death and Dismemberment Insurance
$500,000 of AD&D insurance for each executive officer.


1 Personal travel on the Company’s aircraft in the event of a family emergency or similar situation is permitted with the approval of the Chief Executive Officer. Executives’ spouses may travel on the Company’s aircraft to accompany the executives to “business-related” events executives’ spouses are requested to attend. For 2010, the named executive officers whose perquisites included spousal travel on corporate aircraft for business purposes were Messrs. Johnson, Lyash, and Yates.




2 Including home use of Company-owned computer.




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The Committee believes that the perquisites we provide to our executives are reasonable, competitive and consistent with our overall executive compensation program in that they help us attract and retain skilled and qualified executives. We believe that these benefits generally allow our executives to work more efficiently and, in the case of the tax and financial planning services, help them to optimize the value received from all of the compensation and benefits programs offered. The costs of these benefits constitute only a small percentage of each named executive officer’s total compensation.




8. OTHER BROAD-BASED BENEFITS




The named executive officers receive our general corporate benefits provided to all of our regular, full-time, nonbargaining employees. These broad-based benefits include the following:


- participation in our 401(k) Plan (including a limited Company match of up to 6% of eligible compensation);
- participation in our funded, tax-qualified, noncontributory defined-benefit pension plan, which uses a cash balance formula to accrue benefits; and
- general health and welfare benefits such as medical, dental, vision and life insurance, as well as long-term disability coverage.

9. DEFERRED COMPENSATION




We sponsor the Management Deferred Compensation Plan (the “MDCP”), an unfunded, deferred compensation arrangement. The plan is designed to provide executives with tax deferral options, in addition to those available under the existing qualified plans. An executive may elect to defer, on a pre-tax basis, payment of up to 50% of his or her salary for a minimum of five years or until his or her date of retirement. As a make-up for the 401(k) statutory compensation limits, executives receive deferred compensation credits of 6% of their base salary over the Internal Revenue Code statutory compensation limit on 401(k) retirement plans. The Committee views the matching feature as a restoration benefit designed to restore the matching contribution the executive would have received under the 401(k) retirement plan in the absence of the Internal Revenue Service compensation limits. Each executive may allocate his or her deferred compensation among available deemed investment funds that mirror those options available under the 401(k) plan.




Executives can elect to defer up to 100% of their MICP and/or performance share awards. The deferral option is provided as an additional benefit to executive officers to provide flexibility in the receipt of compensation. Deferred awards may be allocated among deemed investment options that mirror the Company’s 401(k) Plan. Effective September 1, 2010, the named executive officers cannot allocate deferred awards to the deemed Company stock investment fund.




III. 2010 COMPENSATION DECISIONS




Company Performance




The Committee made decisions for the executive officers’ compensation following the provisions of the compensation plans and benefit programs described in Article II, Elements of Compensation. The Committee also considered a number of factors in exercising its permitted discretion under the plans, including the challenging economic environment, the performance of the Company’s nuclear fleet, and the Company’s overall operational and financial results. Highlights of the Company’s 2010 performance include the following:


- Returned value to shareholders including increasing dividends from $693 million in 2009 to $717 million in 2010; maintained the dividend rate in the face of a challenging economic environment;
- Total shareholder return in 2010 was 12.6% as compared to the median 2010 total shareholder return for the PSSP Peer Group of 14.9%; the Company’s three-year annualized total shareholder return was 2.6% as compared to the median three-year annualized total shareholder return for the PSSP Peer Group of 4.1%;
- Delivered ongoing earnings of $889 million, or $3.06 per share, compared to $846 million, or $3.03 per share in 2009;
- PEC ongoing net income was $618 million and PEF ongoing net income was $462 million for 2010;
- Experienced higher operations and maintenance expense primarily due to higher nuclear plant outage and maintenance costs driven by expanded scope and more emergent work in 2010 as compared to 2009;

24




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- Received approval from the Florida Public Service Commission to recover all proposed costs in Progress Energy Florida’s annual filings for fuel and purchased power, environmental projects, conservation programs and new nuclear generation, including approval to collect, subject to refund, replacement power costs related to the Crystal River 3 Nuclear Plant outage;
- Received approval from the North Carolina Utilities Commission to recover all proposed costs of fuel, energy-efficiency programs and renewable energy resource; and
- Completed successful refueling and maintenance outage at Harris Nuclear Plant, executing several major projects, including an electric generator replacement, cooling tower fill project, and a fire protection enhancement.

Chief Executive Officer Compensation




William D. Johnson




In March 2010, the Committee considered Mr. Johnson’s salary against the salaries of the chief executive officers in the Benchmarking Peer Group, the Company’s performance, the difficult external economic climate and the performance of our nuclear fleet. Based on these factors, the Committee did not approve an increase to Mr. Johnson’s salary of $990,000. Mr. Johnson’s current target total base compensation is approximately 9% below the 50th percentile of the Benchmarking Peer Group due to his relatively short tenure in the Chief Executive Officer position, and more significantly, the challenging economic environment. It is the Committee’s intention to increase Mr. Johnson’s salary over time to a level that is at the 50th percentile of the Benchmarking Peer Group. For 2010, the Committee set Mr. Johnson’s MICP target award opportunity at 85% of base salary. This target award was the same as the target Mr. Johnson had in 2007 after he assumed his new position, and represents a target award opportunity that is below the 50th percentile of market. The payout of the 2010 MICP award was based on the extent to which Mr. Johnson achieved his performance goals, which were focused on the following general areas of Company success:


- Delivering on fundamentals of safety, operational excellence and customer satisfaction;
- Strengthening nuclear performance through a fleet alignment initiative;
- Achieving financial objectives and strengthening financial accountability and understanding throughout the Company;
- Managing capital projects and programs effectively;
- Executing the energy-efficiency and emerging technology features of the Company’s Balanced Solution Strategy;
- Fostering a more constructive regulatory environment in Florida;
- Advocating effectively for achievable, affordable climate and renewable energy policies;
- Achieving sustainable internal efficiency improvements through the application of the Company’s Continuous Business Excellence (“CBE”) initiative; and
- Demonstrating leadership behaviors that fully engage employees in executing our strategy and that foster a positive culture of people, performance and excellence.

In recognition of his accomplishments during 2010, the Committee awarded Mr. Johnson an MICP payout of $715,000, which is equal to 85% of Mr. Johnson’s target award. The Committee considered, among other things, Mr. Johnson’s leadership in achieving ongoing EPS of $3.06 which was higher than the upper end of the Company’s guidance range of $3.00 to $3.05; managing 21 major capital projects that collectively came in 6% under budget for the year-end; increasing renewable energy capacity; successfully applying CBE resulting in all business units, except nuclear, holding operations and maintenance (“O&M”) expenses flat at 2009 levels; and guiding the strategic direction of the Company that resulted in the execution of the Merger Agreement with Duke Energy. The Committee also considered the Company’s challenges in the nuclear business unit, including higher than budgeted utility non-fuel O&M related to unplanned nuclear outages at the Robinson Nuclear Plant. The Committee recognized Mr. Johnson’s focus on improving nuclear fleet performance by strengthening the leadership of the entire generating fleet and developing a comprehensive nuclear fleet renewal plan. The Committee also considered Mr. Johnson’s emphasis on specific leadership behaviors and expectations throughout the year, which were communicated to the Company’s management team in clear and direct terms. The Committee also noted Mr. Johnson’s increasing leadership in key national industry organizations, including frequent, direct engagement with policymakers and regulators at the federal and state levels.




25




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With respect to his long-term incentive compensation during 2010, Mr. Johnson was granted 22,596 restricted stock units and 56,248 performance shares in accordance with his pre-established targets of 117% and 233%, respectively, of his base salary. The performance shares are earned based on performance over the three years ending December 31, 2012. Additionally, 29,456 shares of the 2007 annual grant vested in 2010 and were paid out at 125% of target. The total year-over-year compensation to Mr. Johnson for 2010, as compared to 2009, as noted in the “Summary Compensation Table” on page 29, was largely flat.




Chief Financial Officer Compensation




Mark F. Mulhern




In March 2010, Mr. Johnson recommended the Committee approve a market-based adjustment to Mr. Mulhern’s base salary. The Committee approved a base salary of $450,000 for Mr. Mulhern, representing a 5.9% increase to his previous salary of $425,000. The new base salary was set at 15.9% below the 50th percentile of the Benchmarking Peer Group. Mr. Mulhern’s base salary was established at this level due to his relatively short tenure in the Chief Financial Officer position, and more significantly, the challenging economic environment. It is the Committee’s intention to increase Mr. Mulhern’s salary over time to a level that is at the 50th percentile of the Benchmarking Peer Group.




For 2010, Mr. Mulhern’s MICP target award was set at 55% of his base salary. This target award is the same target Mr. Mulhern had in 2009 after he assumed the Chief Financial Officer position and represents a target award opportunity that is below the 50th percentile of the market. Mr. Mulhern’s performance goals for 2010 focused on the following general areas of Company success:


- Achieving financial objectives;
- Successfully communicating to the financial market modifications of financial goals that reflect changes resulting from PEF regulatory outcomes;
- Focusing on capital discipline and O&M expense management; and
- Providing financial support for and ensuring strategic alignment of the Company’s Balanced Solution Strategy.

In recognition of his accomplishments in 2010 and on Mr. Johnson’s recommendation, the Committee awarded Mr. Mulhern an MICP payout of $205,000, which is equal to 84% of Mr. Mulhern’s target award. The Committee considered, among other things, Mr. Mulhern’s significant role in the Company achieving a 12.6% shareholder return as of the end of the year; implementation of an integrated strategic planning process including appropriate focus on capital discipline, O&M expense management, and long-term workforce planning; supporting a successful rate settlement for PEF requiring adaptation of the Company’s financial plan to absorb no new cash revenue during the settlement period; and negotiating and executing the Merger Agreement with Duke Energy. The Committee also noted Mr. Mulhern’s leadership in coordinating the development of the financial components for the Company’s regulatory strategy and strategic scenario planning.




With respect to his long-term incentive compensation, in 2010, Mr. Mulhern was granted 4,809 restricted stock units and 12,126 performance shares in accordance with his pre-established targets of 58% and 117%, respectively, of base salary. The performance shares are earned based on performance over the three years ending December 31, 2012. Additionally, 7,131 shares of the 2007 annual grant vested in 2010 and were paid out at 125% of target. Mr. Mulhern’s compensation in 2010, as noted in the “Summary Compensation Table” on page 29, increased by 8.2% from the amount of total compensation he received in 2009, largely due to an increase in his accrued pension benefits.




26




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Compensation of Other Named Executive Officers




For 2010, Mr. Johnson recommended and the Committee approved no increases to the base salaries for Messrs. Lyash, Yates, and McArthur.




On Mr. Johnson’s recommendation, the Committee awarded Messrs. Lyash, Yates, and McArthur 2010 MICP awards as described in the table below.




Named Executive
Officer
2010 MICP 
Award
Percent of
Target
Explanation of AwardJeffrey J. Lyash
$195,000
78%
Mr. Lyash played a significant role in developing and implementing a comprehensive nuclear fleet renewal plan; accelerating the CBE initiative into nuclear outages; improving performance of the Brunswick Nuclear Plant; and maintaining regulatory confidence in the Company’s nuclear generation group’s leadership.Lloyd M. Yates
$195,000
79%
Mr. Yates played a significant role in achieving the successful financial and operational performance of PEC which contributed to the Company achieving its ongoing EPS goal; effectively managing PEC’s O&M expenses, particularly for nuclear outages and in the supply chain business unit; and effectively communicating the Company’s climate change policy and Balanced Solution Strategy to external stakeholders and industrial customers.John R. McArthur
$220,000
82%
Mr. McArthur played a significant role in developing a North Carolina legislative approach for 2011 to support consistent regulated earnings and cost recovery for nuclear investment; improving our business planning process through better alignment and deeper understanding of our business objectives and cost drivers; achieving success in all clause recovery dockets in Florida; recovering all fuel and efficiency and renewable costs and incentives in North Carolina and South Carolina; and negotiating and executing the Merger Agreement with Duke Energy.


With respect to long-term compensation, in 2010 each of the other named executive officers received annual grants of restricted stock units and performance shares in accordance with their pre-established targets. The table below describes those grants.




Named Executive
Officer
Restricted
Stock Units Vesting in

1/3 Increments in 2011,
2012 and 2013
Performance
Shares
Vesting 2013Jeffrey J. Lyash
5,126
12,924Lloyd M. Yates
5,069
12,782John R. McArthur
5,522
13,923


Mr. Lyash’s total compensation as shown in the “Summary Compensation Table” on page 29 decreased 10.6% from the amount of total compensation he received in 2009.




Mr. Yates’ total compensation as shown in the “Summary Compensation Table” on page 29 decreased 3.2% from the amount of total compensation he received in 2009.




Mr. McArthur’s total compensation as shown in the “Summary Compensation Table” on page 29 decreased 3.3% from the amount of total compensation he received in 2009.




27




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IV. COMPENSATION COMMITTEE REPORT




The Committee has reviewed and discussed this CD&A with management as required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Committee recommended to the Company’s Board of Directors that the CD&A be included in this document.




Organization and Compensation CommitteeE. Marie McKee, ChairJohn D. Baker IIHarris E. DeLoach, Jr.James B. Hyler, Jr.Robert W. JonesMelquiades R. “Mel” MartinezJohn H. Mullin, III


Unless specifically stated otherwise in any of the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, the foregoing Compensation Committee Report shall not be deemed soliciting material, shall not be incorporated by reference into any such filings and shall not otherwise be deemed filed under such Acts.




28




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SUMMARY COMPENSATION TABLE FOR 2010




The following Summary Compensation Table discloses the compensation during 2010 of our Chief Executive Officer, Chief Financial Officer, and the other three most highly paid executive officers who were serving at the end of 2010. Additionally, column (h) is dependent upon actuarial assumptions for determining the amounts included. A change in these actuarial assumptions would impact the values shown in this column. Where appropriate, we have indicated the major assumptions in the footnote to column (h).




Change inPension ValueandNonqualifiedNon-Equity
DeferredName and



Stock
Option
Incentive Plan
Compensation
All OtherPrincipal

Salary1
Bonus
Awards2
Awards3
Compensation4
Earnings5
Compensation6
TotalPosition
Year
($)
($)
($)
($)
($)
($)
($)
($)(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)William D.Johnson,
2010
$990,000
N/A
$3,109,607
-
$715,000
$1,096,829
$316,051
$6,227,487Chairman, Presidentand
2009
979,231

3,090,605
-
950,000
1,144,448
289,726
6,454,010Chief ExecutiveOfficer7
2008
950,000

2,911,701
-
929,000
1,091,256
304,571
6,186,528Mark F. Mulhern,
2010
$443,269
N/A
$667,916
-
$205,000
$517,696
$77,672
$1,911,553Senior VicePresident and
2009
414,231

655,990
-
225,000
369,822
102,137
1,767,180Chief FinancialOfficer
2008
355,385

433,473
-
200,000
820,419
141,354
1,950,631Jeffrey J. Lyash,
2010
$453,000
N/A
$711,892
-
$195,000
$281,882
$102,290
$1,744,064Executive VicePresident –
2009
450,846

728,120
-
235,000
244,369
292,061
1,950,396Energy Supply2008
432,885

612,952
-
225,000
323,904
140,812
1,735,553Lloyd M. Yates,President
2010
$448,000
N/A
$704,043
-
$195,000
$342,925
$80,548
$1,770,516and Chief ExecutiveOfficer,
2009
445,846

720,683
-
235,000
308,815
119,432
1,829,776PEC2008
429,231

612,952
-
210,000
777,983
155,042
2,185,208John R. McArthur,
2010
$488,000
N/A
$766,911
-
$220,000
$81,601
$92,677
$1,649,189Executive VicePresident,
2009
485,846

780,070
-
250,000
74,001
116,381
1,706,298General Counseland
2008
459,423

571,390
-
250,000
46,028
137,536
1,464,377Corporate Secretary


1 Consists of base salary earnings prior to (i) employee contributions to the Progress Energy 401(k) Savings & Stock Ownership Plan and (ii) voluntary deferrals, if any, under the Management Deferred Compensation Plan. See “Deferred Compensation” discussion in Part II of the CD&A. Salary adjustments, if deemed appropriate, generally occur in March of each year.




29




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2 Includes the fair value of stock awards as of the grant date computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. Assumptions made in the valuation of material stock awards are discussed in Note 9.B. to our consolidated financial statements for the year ended December 31, 2010. The values reflected for 2008 in columns (e) and (j) are different than originally disclosed because these values represent the fair value of stock awards as of the grant date rather than the expense related to equity awards for financial statement reporting purposes in accordance with ASC Topic 718. Fair value of stock awards granted in 2010 and the maximum potential payout for the performance shares granted in 2010 are based on the March 16, 2010 closing stock price of $39.44 as shown in the table below:





2010 Stock Awards (column (e))
Maximum Potential Payoutfor Performance SharesGrant Date Fair ValueName
Restricted
Stock Units
Performance
Shares
Total
(column
(e))
Maximum
Percentage
Maximum ValueWilliam D. Johnson
$891,186
$2,218,421
$3,109,607
200%
$4,436,842Mark F. Mulhern
189,667
478,249
667,916
200%
956,498Jeffrey J. Lyash
202,169
509,723
711,892
200%
1,019,446Lloyd M. Yates
199,921
504,122
704,043
200%
1,008,244John R. McArthur
217,788
549,123
766,911
200%
1,098,246


3 We ceased granting stock options in 2004. No additional expense remains with respect to our stock option program.





4 Includes the awards given under the Management Incentive Compensation Plan (MICP) for 2008, 2009 and 2010 performance.





5 Includes the change in present value of the accrued benefit under Progress Energy’s Pension Plan, SERP, and/or Restoration Plan where applicable. The current incremental present values were determined using actuarial present value factors as provided by our actuarial consultants, Buck Consultants, based on FAS mortality assumptions post-age 65 and FAS discount rates for the years shown as follows:





FAS Discount RatesYear
Pension Plan
SERP
Restoration
Retirement Plan2010
5.50%
5.70%
5.00%2009
5.95%
6.10%
5.45%2008
6.30%
6.30%
6.25%


In addition, it includes the above market earnings on deferred compensation under the Deferred Compensation Plan for Key Management Employees. The 1996-1999 Deferred Compensation Plan for Key Management Employees provided a fixed rate of return of 10.0% on deferred amounts, which was 2.7% above the market interest rate of 7.3% at the time the plan was frozen in 1996. The Deferred Compensation Plan for Key Management Employees was discontinued in 2000 and replaced with the Management Deferred Compensation Plan, which does not have a guaranteed rate of return. Named executive officers who were participants in the 1996-1999 Deferred Compensation Plan for Key Management Employees continue to receive plan benefits with respect to amounts deferred prior to its discontinuance in 2000. The above market earnings under the Deferred Compensation Plan for Key Management Employees are included in this column for Mr. Johnson. Changes in the accrued benefit under each plan for named executive officers are shown in the table below:





2010 Change in Pension Value and Nonqualified Deferred Compensation Earnings (column (h))Name
Change in Pension
Plan
Change in SERP
Change in
Restoration
Plan
Above Market
Earnings on
Deferred
Compensation Plan
Total
(column (h))William D. Johnson
$80,055
$1,005,387
—
$11,387
$1,096,829Mark F. Mulhern
57,308
460,388
—
—
517,696Jeffrey J. Lyash
60,279
221,603
—
—
281,882Lloyd M. Yates
41,092
301,833
—
—
342,925John R. McArthur
41,256
—
40,345
—
81,601


30





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6 Includes the following items: Company match contributions under the Progress Energy 401(k) Savings & Stock Ownership Plan; deferred credits under Management Deferred Compensation Plan (MDCP); perquisites; the Company’s payment of the FICA tax on the non-qualified retirement accrual and the tax gross-up on the imputed income of that tax payment; and dividends paid under provisions of the Restricted Stock Award/Unit Plans. The total value of perquisites and personal benefits received by Messrs. Mulhern and Yates was less than $10,000 each. Thus, those amounts are excluded from this column. Named executive officers were compensated for these items as follows:




2010 All Other Compensation (column (i))Name
Company
Contributions
under 401(k)
Deferred Credits
under the MDCP
Perquisites (detailed
in table below)
Imputed
Income and
Tax
Gross-ups
Dividends
Total
(column (i))William D. Johnson
$14,700
$44,700
$65,145
$6,201
$185,305
$316,051Mark F. Mulhern
14,700
11,601
—
5,521
45,850
77,672Jeffrey J. Lyash
14,700
12,480
24,012
315
50,784
102,291Lloyd M. Yates
14,700
12,180
—
3,125
50,543
80,548John R. McArthur
13,569
14,580
11,058
722
52,748
92,677


Perquisites that exceed the greater of $25,000 or 10% of the total amount of perquisites and personal benefits for each officer are quantified in the table below. “Other” perquisites include health club dues, spousal meals, spousal travel, Internet and telecom access, AD&D insurance, residential telephone, meals (family other than spouse), and registration fee (family other than spouse).




2010 Perquisites (Component of column (i))Name
Luncheon
Club Dues
Financial/Tax
Planning
Home
Security
Spousal
Travel on
Corporate
Aircraft*
Other
Total PerquisitesWilliam D. Johnson
$1,508
$7,500
$30,128
$20,228
$5,781
$65,145Jeffrey J. Lyash
2,088
6,583
918
11,934
2,489
24,012John R. McArthur
1,476
7,500
840
0
1,242
11,058


* Executives’ spouses may travel on the Company’s aircraft only to accompany executives on “business-related” events that spouses are requested to attend.




7 Mr. Johnson did not receive additional compensation for his service on the Board of Directors.




31




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GRANTS OF PLAN-BASED AWARDS




Estimated
Estimated
OtherFuture Payouts Under
Future Payouts Under
StockNon-Equity Incentive
Equity Incentive
Awards:
Grant DatePlan Awards1
Plan Awards2
Number of
Fair ValueShares of
of Stock andStock
OptionGrant Date
Threshold
Target ($)
Maximum
Threshold
Target
Maximum
or Units3
Awards4($)Name (a)
(b)
($) (c)
(d)
($) (e)
(#) (f)
(#) (g)
(#) (h)
(#) (i)
(j)William D.
MICPJohnson,
3/4/11
$420,750
$841,500
$1,683,000Chairman,
RestrictedPresident
Stock Unitsand
3/16/10






22,596
$891,186ChiefExecutive
PSSPOfficer
3/16/10



28,124
56,248
112,496

$2,218,421Mark F.
MICPMulhern,
3/4/11
$121,899
$243,798
$487,596Senior
RestrictedVice
Stock UnitsPresident
3/16/10






4,809
$189,667and ChiefFinancial
PSSPOfficer
3/16/10



6,063
12,126
24,252

$478,249Jeffrey J.
MICPLyash,
3/4/11
$124,575
$249,150
$498,300Executive
RestrictedVice
Stock UnitsPresident –
3/16/10






5,126
$202,169Energy
PSSPSupply
3/16/10



6,462
12,924
25,848

$509,723Lloyd M.
MICPYates,
3/4/11
$123,200
$246,400
$492,800President
Restrictedand
Stock UnitsChief
3/16/10






5,069
$199,921ExecutiveOfficer,
PSSPPEC
3/16/10



6,391
12,782
25,564

$504,122John R.
MICPMcArthur,
3/4/11
$134,200
$268,400
$536,800Executive
RestrictedVice
Stock UnitsPresident,
3/16/10






5,522
$217,788GeneralCounselandCorporate
PSSPSecretary
3/16/10



6,962
13,923
27,846

$549,123


1 The Management Incentive Compensation Plan is considered a non-equity incentive compensation plan. Award amounts are shown at threshold, target, and maximum levels. The target award is calculated using the 2010 eligible earnings times the executive’s target percentage. See target percentage in table on page 15 of the CD&A. Threshold is calculated at 50% of target and maximum is calculated at 200% of target. Actual award amounts paid are reflected in the Summary of Compensation Table under the “Non-Equity Incentive Plan Compensation” column.




32




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2 Reflects the potential payouts in shares of the 2010 PSSP grants. The grant size was calculated by multiplying the executive’s salary as of January 1, 2010, times his 2010 PSSP target and dividing by the December 31, 2009, closing stock price of $41.01. The Threshold column reflects the minimum payment level under our PSSP, which is 50% of the target amount shown in the Target column. The amount shown in the maximum column is 200% of the target amount.




3 Reflects the number of restricted stock units granted during 2010 under the 2007 Equity Incentive Plan. The number of shares granted was determined by multiplying the executive’s salary as of January 1, 2010, times his 2010 restricted stock target and dividing by the December 31, 2009, closing stock price of $41.01.




4 Reflects the grant date fair value of the award based on the following assumptions: Market value of restricted stock granted on March 16, 2010, based on closing price of $39.44 per share, times the shares granted in column (i). Market value of PSSP granted on March 16, 2010, based on closing stock price on March 16, 2010, of $39.44 times target number of shares in column (g). The 2010 PSSP grant payout is expected to be 100% of target.




DISCUSSION OF SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE




EMPLOYMENT AGREEMENTS




In 2007, Messrs. Johnson, Mulhern, Lyash, Yates and McArthur entered into employment agreements with the Company or one of its subsidiaries, referred to collectively in this section as the “Company.” The employment agreements replaced the previous employment agreements in effect for each of these officers.




The employment agreements provide for base salary, annual incentives, perquisites and participation in the various executive compensation plans offered to our senior executives. Upon expiration, the agreements are automatically extended by an additional year on January 1 of each year. We may elect not to extend an executive officer’s agreement and must notify the officer of such an election at least 60 days prior to the automatic extension date. Each employment agreement contains restrictive covenants imposing non-competition obligations, restricting solicitation of employees and protecting our confidential information and trade secrets for specified periods if the applicable officer is terminated without cause or otherwise becomes eligible for the benefits under the agreement.




Except for the application of previously granted years of service credit to our post-employment health and welfare plans as discussed below, the employment agreements do not affect the compensation, benefits or incentive targets payable to the applicable officers.




With respect to Mr. Johnson, the Employment Agreement specifies that the years of service credit we previously granted to him for purposes of determining eligibility and benefits in the SERP will also be applicable for purposes of determining eligibility and benefits in our post-employment health and welfare benefit plans. Mr. Johnson was awarded seven years of deemed service toward the benefits and vesting requirements of the SERP. However, as of 2008, Mr. Johnson reached the maximum service accrual and therefore benefit augmentation for deemed service is $0. Three of those years also were deemed to have been in service on the Senior Management Committee for purposes of SERP eligibility.




Each Employment Agreement provides that if the applicable officer is terminated without cause or is constructively terminated (as defined in Paragraph 8(a)(i) of the agreement), then the officer will receive (i) severance equal to 2.99 times the officer’s then-current base salary and (ii) reimbursement for the costs of continued coverage under certain of our health and welfare benefit plans for a period of up to 18 months.




33




---




OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END




Option Awards1
Stock AwardsName
(a)
Number
of
Securities

Underlying
Unexercised
Options
(#)
Exercisable
(b)
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(c)
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
Option
Exercise
Price
($)
(e)
Option
Expiration
Date
(f)
Number
of
Shares or

Units ofStock
That
Have Not
Vested
(#)
(g)2
Market
Value of

Shares or
Units of
Stock
That
Have Not
Vested
($)
(h)3
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or

Other
Rights
That
Have Not
Vested
(#)
(i)4
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)
(j)4William D.
—
—
—
—
—
72,248
$3,141,343
112,869
$4,907,526Johnson,Chairman,Presidentand ChiefExecutiveOfficerMark F.
7,000
—
—
$44.75
9/30/2013
15,725
$683,723
20,733
$901,486Mulhern,Senior VicePresident andChief FinancialOfficerJeffrey J.
—
—
—
—
—
17,559
$763,465
24,941
$1,084,416Lyash,ExecutiveVice President –Energy SupplyLloyd M.
—
—
—
—
—
17,454
$758,900
24,792
$1,077,968Yates,President andChiefExecutiveOfficer, PECJohn R.
—
—
—
—
—
18,299
$795,641
25,178
$1,094,716McArthur,Executive VicePresident,GeneralCounseland CorporateSecretary


34




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1 All outstanding stock options were vested as of December 31, 2006. The Company ceased granting stock options in 2004.




2 Consists of outstanding restricted stock grants and restricted stock units as follows:




Number of Shares or Units of Stock That Have Not Vested (column (g))Stock Award
Vesting Date
William D.
Johnson
Mark F.
Mulhern
Jeffrey J.
Lyash
Lloyd M.
Yates
John R.
McArthurRestricted Stock
March 14, 2011
5,534
1,167
1,367
1,367
1,667Restricted Stock Units
March 16, 2011
7,532
1,603
1,708
1,689
1,840Restricted Stock Units
March 17, 2011
9,297
1,868
2,159
2,135
2,329Restricted Stock Units
March 18, 2011
7,651
1,136
1,597
1,597
1,497Restricted Stock Units
March 20, 2011
4,936
1,189
1,576
1,576
1,477Restricted Stock Units
March 16, 2012
7,532
1,603
1,709
1,690
1,841Restricted Stock Units
March 17, 2012
17,298
4,368
4,159
4,135
4,329Restricted Stock Units
March 20, 2012
4,936
1,188
1,575
1,575
1,478Restricted Stock Units
March 16, 2013
7,532
1,603
1,709
1,690
1,841Total (column (g))
72,248
15,725
17,559
17,454
18,299


3 Market value of shares or units of stock that have not vested is based on a December 31, 2010, closing price of $43.48 per share.




4 The 2008 grant vests on January 1, 2011; the 2009 grant vests on January 1, 2012; and the 2010 grant vests on January 1, 2013. Performance share value for the 2009 annual grant is expected to be at 0% of target while the 2008 annual grant and 2010 annual grant are expected to be 100% of target. The value in Column (j) is derived by multiplying the shares (rounded to the nearest whole share) times the December 31, 2010 closing stock price ($43.48). The difference between the calculated value and the noted value is attributable to fractional shares. See further discussion under “Performance Shares” in Part II of the CD&A. Outstanding performance shares for named executive officers are shown in the table below:




Number of Unearned Shares, Units or Other Rights That Have Not Vested (column (i))Stock Award
Vesting Date
William D.
Johnson
Mark F.
Mulhern
Jeffrey J.
Lyash
Lloyd M.
Yates
John R.
McArthurPerformance Shares
January 1, 2011
54,125
8,069
11,443
11,443
10,637Performance Shares
January 1, 2012
0
0
0
0
0Performance Shares
January 1, 2013
58,744
12,664
13,498
13,349
14,541Total (column (i))
112,869
20,733
24,941
24,792
25,178


35




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OPTION EXERCISES AND STOCK VESTED




Option Awards
Stock AwardsName
(a)
Number of
Shares
Acquired
on Exercise
(#)
(b)
Value
Realized
on Exercise
($)
(c)
Number of
Shares
Acquired
on Vesting
(#)
(d)1
Value Realized
on Vesting
($)
(e)2William D. Johnson,
—
—
76,448
$3,080,112Chairman, President and Chief Executive OfficerMark F. Mulhern,
—
—
26,504
$1,064,791Senior Vice President and Chief Financial OfficerJeffrey J. Lyash,
—
—
31,031
$1,248,972Executive Vice President – Energy SupplyLloyd M. Yates,
—
—
31,006
$1,247,986President and Chief Executive Officer, PECJohn R. McArthur,
—
—
30,632
$1,231,050Executive Vice President, General Counsel and CorporateSecretary


1 Reflects the number of restricted stock shares, restricted stock units, and performance shares that vested in 2010 for named executive officers as shown in the table below.




Number of Shares Acquired on Vesting (column (d))Stock Award
Vesting
Date
Vesting
Price
William D.
Johnson
Mark F.
Mulhern
Jeffrey J.
Lyash
Lloyd M.
Yates
John R.
McArthurPerformance
January 1,Shares
2010
$41.01
43,965
10,644
14,232
14,232
13,229March 14,Restricted Stock
2010
$38.60
5,533
1,167
1,367
1,367
1,667March 15,Restricted Stock
2010
$38.60
5,067
—
1,100
1,100
1,434March 21,Restricted Stock
2010
$39.45
—
3,500
—
—
—Restricted Stock
March 17,Units
2010
$39.44
9,297
1,868
2,159
2,134
2,328Restricted Stock
March 18,Units
2010
$39.82
7,650
1,136
1,597
1,597
1,497Restricted Stock
March 22,Units
2010
$39.84
4,936
8,189
10,576
10,576
10,477Total (column (d))

76,448
26,504
31,031
31,006
30,632


2 The value realized is the sum of the vested shares for each vesting date times the vesting price. Values realized on vesting during 2010 for named executive officers are shown in the table below:




36




---




Value Realized on Vesting (column (e))Stock Award
Vesting
Date
Vesting
Price
William D.
Johnson
Mark F.
Mulhern
Jeffrey J.
Lyash
Lloyd M.
Yates
John R.
McArthurPerformance
January 1,Shares
2010
$41.01
$1,803,005
$436,510
$583,654
$583,654
$542,521March 14,Restricted Stock
2010
$38.60
$213,574
$45,046
$52,766
$52,766
$64,346March 15,Restricted Stock
2010
$38.60
$195,586
—
$42,460
$42,460
$55,352March 21,Restricted Stock
2010
$39.45
—
$138,075
—
—
—Restricted Stock
March 17,Units
2010
$39.44
$366,674
$73,674
$85,151
$84,165
$91,816Restricted Stock
March 18,Units
2010
$39.82
$304,623
$45,236
$63,593
$63,593
$59,611Restricted Stock
March 22,Units
2010
$39.84
$196,650
$326,250
$421,348
$421,348
$417,404Total (column (e))

$3,080,112
$1,064,791
$1,248,972
$1,247,986
$1,231,050


PENSION BENEFITS TABLE




Name
(a)
Plan Name
(b)
Number of
Years
Credited
Service
(#)
(c)
Present
Value of
Accumulated
Benefit1
($)
(d)
Payments
During Last
Fiscal Year
($)

(e)William D. Johnson,
Progress Energy Pension Plan
18.3
$528,633
$0Chairman, President and ChiefExecutive Officer
Supplemental SeniorExecutive Retirement Plan
25.32
$8,287,8713
$0Mark F. Mulhern,
Progress Energy Pension Plan
14.8
$326,707
$0Senior Vice President and ChiefFinancial Officer
Supplemental SeniorExecutive Retirement Plan
14.8
$1,605,1554
$0Jeffrey J. Lyash,
Progress Energy Pension Plan
17.6
$334,696
$0Executive Vice President – EnergySupply
Supplemental SeniorExecutive Retirement Plan
17.6
$1,640,8115
$0Lloyd M. Yates,
Progress Energy Pension Plan
12.1
$198,700
$0President and Chief Executive
Supplemental SeniorOfficer, PEC
Executive Retirement Plan
12.1
$1,367,5396
$0John R. McArthur,
Progress Energy Pension Plan
9.1
$192,479
$0Executive Vice President,General Counsel and Corporate
Restoration Retirement Plan
9.1
$162,615
$0Secretary


1 Actuarial present value factors as provided by our actuarial consultants, Buck Consultants, based on FAS mortality assumptions post-age 65 and FAS discount rates as of December 31, 2010, for computation of accumulated benefit under the Supplemental Senior Executive Retirement Plan and the Progress Energy Pension Plan were 5.70% and 5.50% respectively. Additional details on the formulas for computing benefits under the Supplemental Senior Executive Retirement Plan and Progress Energy Pension Plan can be found under the headings “Supplemental Senior Executive Retirement Plan” and “Other Broad-Based Benefits,” respectively, in the CD&A.




37




---




2 Includes seven years of deemed service. However, as of 2008, Mr. Johnson reached the maximum service accrual and therefore benefit augmentation for deemed service is $0.




3 Based on an estimated annual benefit payable at age 65 of $1,046,261.




4Based on an estimated annual benefit payable at age 65 of $282,595.




5 Based on estimated annual benefit payable at age 65 of $322,742.




6 Based on estimated annual benefit payable at age 65 of $254,485.




NONQUALIFIED DEFERRED COMPENSATION




The table below shows the nonqualified deferred compensation for each of the named executive officers. Information regarding details of the deferred compensation plans currently in effect can be found under the heading “Deferred Compensation” in the CD&A on page 24. In addition, the Deferred Compensation Plan for Key Management Employees is discussed in footnote 5 to the “Summary Compensation Table.”




Name and Position
(a)
Executive
Contributions
in Last FY1
($)
(b)
Registrant
Contributions
in Last FY2
($)
(c)
Aggregate
Earnings
in Last
FY3
($)
(d)
Aggregate
Withdrawals/
Distributions
($)
(e)
Aggregate
Balance
at Last FYE4
($)
(f)William D. Johnson,Chairman, Presidentand Chief Executive Officer
$0
$44,700
$68,9325
$0
$849,703Mark F. Mulhern,Senior Vice President and Chief Financial Officer
$22,163
$11,601
$20,715
($147,094)6
$233,261Jeffrey J. Lyash,Executive Vice President – Energy Supply
$0
$12,480
$20,359
$0
$168,012Lloyd M. Yates,President and Chief ExecutiveOfficer, PEC
$22,400
$12,180
$66,737
$0
$601,121John R. McArthur, Executive Vice President,GeneralCounsel and Corporate Secretary
$73,200
$14,580
$29,600
$0
$301,215


1 Reflects salary deferred under the Management Deferred Compensation Plan, which is reported as “Salary” in the Summary Compensation Table. For 2010, named executive officers deferred the following percentages of their base salary: (i) Mulhern – 5%; Yates – 5%; and McArthur – 15%.




2 Reflects registrant contributions under the Management Deferred Compensation Plan, which is reported as “All Other Compensation” in the Summary Compensation Table.




3 Includes aggregate earnings in the last fiscal year under the following nonqualified plans: Management Incentive Compensation Plan, Management Deferred Compensation Plan, Performance Share Sub-Plan, and Deferred Compensation Plan for Key Management Employees.




4 Includes December 31, 2010 balances under the following deferred compensation plans: Management Incentive Compensation Plan, Performance Share Sub-Plan, Management Deferred Compensation Plan, and Deferred Compensation Plan for Key Management Employees. Balances for named executive offices under each deferral plan are shown in the table below:




38




---




Aggregate Balance at Last FYE (column (f))Name
Management
Deferred
Compensation
Plan
Management
Incentive
Compensation
Plan
Deferred
Compensation for
Key Management
Employees
Performance
Share Sub-Plan
Total
(column (f))William D. Johnson
$492,740
$77,712
$279,251
—
$849,703Mark F. Mulhern
$116,631
$77,537
—
$39,093
$233,261Jeffrey J. Lyash
$168,012
—
—
—
$168,012Lloyd M. Yates
$190,251
$121,356
—
$289,514
$601,121John R. McArthur
$301,215
—
—
—
$301,215


5 Includes above market earnings of $11,387 under the Deferred Compensation Plan for Key Management Employees, which is reported as “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the Summary Compensation Table.




6 Mr. Mulhern received distributions from his Management Incentive Deferred Compensation Plan: $84,465; Management Deferred Compensation Plan: $0; and Performance Share Sub-Plan: $62,629.




39




---




CASH COMPENSATION AND VALUE OF VESTING EQUITY TABLE




The following table shows the actual cash compensation and value of vesting equity received in 2010 by the named executive officers. The Committee believes that this table is important in order to distinguish between the actual cash and vested value received by each named executive officer as opposed to the grant date fair value of equity awards as shown in the Summary Compensation Table.




Name and
Position
Base
Salary
(a)1
Annual
Incentive
(paid in
2010)
(b)2
Deferred
Compensation
under
MDCP and
MICP
(c)3
Restricted
Stock /
Units
Vesting
(d)4
Performance

Shares
Vesting
(e)5
Restricted
Stock /
Unit
Dividends
(f)6
Stock
Options
Vesting
(g)7
Perquisite
(h)8
Tax
Gross-
ups
(i)9
TotalWilliam D.Johnson,Chairman,President andChiefExecutiveOfficer
$990,000
$950,000
$0
$1,277,107
$1,803,005
$185,305
$0
$65,145
$6,201
$5,276,763Mark F.Mulhern,SeniorVicePresidentand ChiefFinancialOfficer
$443,269
$225,000
$22,163
$628,280
$436,510
$45,850
$0
$8,408
$5,521
$1,792,838Jeffrey J.Lyash,ExecutiveVicePresident –EnergySupply
$453,000
$235,000
$0
$665,318
$583,654
$50,784
$0
$24,012
$315
$2,012,083Lloyd M.Yates,President andChiefExecutiveOfficer, PEC
$448,000
$235,000
$22,400
$664,332
$583,654
$50,543
$0
$9,874
$3,125
$1,994,528John R.McArthur,ExecutiveVicePresident,GeneralCounselandCorporateSecretary
$488,000
$250,000
$73,200
$688,529
$542,521
$52,748
$0
$11,058
$722
$2,033,578


1 Consists of the total 2010 base salary earnings prior to (i) employee contributions to the Progress Energy 401(k) Savings & Stock Ownership Plan and (ii) voluntary deferrals, if applicable, under the Management Deferred Compensation Plan (MDCP) shown in column (c).




40




---




2 Awards given under the Management Incentive Compensation Plan (MICP) attributable to Plan Year 2009 and paid in 2010.




3 Consists of amounts deferred under the MDCP and the MICP. These deferral amounts are part of Base Pay and/or Annual Incentive and therefore are not included in the Total column.




4 Reflects the value of restricted stock and restricted stock units vesting in 2010. The value of the restricted stock was calculated using the opening stock price for Progress Energy Common Stock three days prior to the day vesting occurred. The value of the restricted stock units was calculated using the closing stock price for Progress Energy Common Stock on the business day prior to when vesting occurred.




5 Reflects the value of performance shares vesting on January 1, 2010. The value of the 2007 performance share units were calculated using the closing stock price for Progress Energy Common Stock on the business day prior to when distribution occurred.




6 Reflects dividends and dividend equivalents paid as the result of outstanding restricted stock or restricted stock units held in Company Plan accounts.




7 Reflects the value of any stock options vesting in 2010. Since we ceased granting stock options under our Incentive Plans in 2004, all outstanding options had fully vested by 2006.




8 Reflects the value of all perquisites provided during 2010. For a complete listing of the perquisites, see the “Executive Perquisites” section of the “Elements of Compensation” discussion of the CD&A on page 23. Perquisite details for each named executive officer are discussed in the Summary Compensation Table footnotes.




9 Reflects the Company’s payment of the Medicare portion of the FICA tax on the non-qualified retirement accrual and the tax gross-up on the imputed income of that tax payment provided during 2010.




41




---




POTENTIAL PAYMENTS UPON TERMINATION
William D. Johnson, Chairman, President and Chief Executive Officer




Voluntary
Termination 
($)
Early
Retirement1
($)
Involuntary
Not for
Cause
Termination 
($)
For Cause
Termination
($)
Involuntary
or Good
Reason
Termination
(CIC)12
($)
Disability
($)
Death
($)CompensationBase Salary—$990,0002
$0
$0
$2,960,100
$0
$5,712,500
$594,000
$0Annual Incentive3
$0
$715,000
$0
$0
$841,500
$715,000
$715,000Long-term Incentives:Performance Shares (PSSP)42008 PSSP Grant
$0
$2,353,332
$0
$0
$2,353,332
$2,353,332
$2,353,3322009 PSSP Grant
$0
$0
$0
$0
$2,692,674
$0
$1,795,1162010 PSSP Grant
$0
$851,398
$0
$0
$2,554,194
$851,398
$851,398Restricted Stock Units52007 RSU Grant
$0
$362,188
$0
$0
$429,235
$429,235
$429,2352008 RSU Grant
$0
$304,925
$0
$0
$332,665
$332,665
$332,6652009 RSU Grant
$0
$792,466
$0
$0
$1,156,351
$1,156,351
$1,156,3512010 RSU Grant
$0
$450,322
$0
$0
$982,474
$0
$0Restricted Stock62006 RS Grant
$0
$240,618
$0
$0
$240,618
$240,618
$240,618Benefits and PerquisitesIncremental Nonqualified Pension7
$0
$0
$0
$0
$0
$0
$0Deferred Compensation8
$849,703
$849,703
$849,703
$849,703
$849,703
$849,703
$849,703Post-retirement Health Care9
$0
$0
$24,682
$0
$48,396
$0
$0Executive AD&D Proceeds10
$0
$0
$0
$0
$0
$500,000
$500,000280G Tax Gross-up11
$0
$0
$0
$0
$5,488,512
$0
$0TOTAL
$849,703
$6,919,952
$3,834,485
$849,703
$23,682,154
$8,022,302
$9,223,418


1 Mr. Johnson became eligible for early retirement at age 55 in January 2009. Therefore, under the voluntary termination and involuntary not for cause termination scenarios, Mr. Johnson would be treated as having met the early retirement criteria under the Equity Incentive Plan and would be paid out under the early retirement provisions of that plan. Mr. Johnson is not eligible for normal retirement.




2 There is no provision for payment of salary under voluntary termination, early retirement, for cause termination or death. In the event of involuntary not for cause termination, the salary continuation provision of Mr. Johnson’s employment agreement requires a severance equal to 2.99 times his then current base salary ($990,000) payable in equal installments over a period of 2.99 years. In the event of involuntary or good reason termination (CIC), the maximum benefit allowed under the cash payment provision of the Management Change-in-Control Plan equals three times the sum of annual salary plus average MICP award for the three years prior (($990,000 + $914,167) x 3). In the event of a long-term disability, Mr. Johnson would receive 60% of base salary during the period of his disability, offset by any Social Security benefits and Progress Energy Pension Plan payments. The long-term disability payment as shown in the table above represents an annual amount before offsets.




3 There is no provision for payment of annual incentive under voluntary termination, involuntary not for cause termination, or for cause termination. In the event of involuntary or good reason termination (CIC), Mr. Johnson would receive 100% of his target award under the Annual Cash Incentive Compensation Plan provisions of the Management Change-in-Control Plan, calculated as 85% times $990,000. In the event of early retirement, death or disability, Mr. Johnson would receive a pro-rata incentive award for the period worked during the year. For December 31, 2010, this is based on the full award. For 2010, Mr. Johnson’s MICP award was $715,000.




42




---




4 Amounts shown for performance shares are based on a December 31, 2010, closing price of $43.48 per share. Unvested performance shares would be forfeited under for cause termination. Voluntary termination and involuntary not for cause termination are not applicable. See footnote 1. In the event of early retirement or disability, a pro rata percentage of performance shares would vest based upon the period of employment during the performance measurement period and the extent that the performance factors are satisfied. In the event of involuntary or good reason termination (CIC), unvested performance shares vest as of the date of Management Change-in-Control and payment is made based upon the target value of the award. In the event of death, the 2008 performance shares would vest 100% and be paid in an amount using performance factors determined at the time of the event. For the 2009 and 2010 performance grants, a pro-rata payment would be made based upon the target value of the award and time in the plan.




5 Amounts shown for restricted stock units are based on a December 31, 2010, closing price of $43.48 per share. For a detailed description of outstanding restricted stock units, see the “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested units would be forfeited under for cause termination. Voluntary termination and involuntary not for cause termination are not applicable. See footnote 1. In the event of early retirement, Mr. Johnson would receive a pro-rata percentage of all unvested units, based upon the number of full months elapsed between the grant date and the date of early retirement. In the event of involuntary or good reason termination (CIC), all outstanding restricted stock units would vest immediately. Upon death or disability, all outstanding restricted stock units that are more than one year past their grant date would vest immediately. Shares that are less than one year past their grant date would be forfeited. Mr. Johnson would immediately vest restricted stock units granted in 2007, 2008, and 2009, and would forfeit restricted stock units granted in 2010.




6 Amounts shown for restricted stock shares are based on a December 31, 2010, closing price of $43.48 per share. For a detailed description of outstanding restricted stock shares, see “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested shares would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. In the event of early retirement, all outstanding shares may vest at the Committee’s discretion. In the event of involuntary or good reason termination (CIC), all outstanding shares would vest immediately. Upon death or disability, all outstanding restricted stock shares that are more than one year past their grant date would vest immediately. Shares that are less than one year past their grant date would be forfeited. All of Mr. Johnson’s restricted stock grant dates are beyond the one-year threshold; therefore, all outstanding restricted stock shares would vest immediately.




7 No accelerated vesting or incremental nonqualified pension benefit applies under any of these scenarios. Mr. Johnson was vested under the SERP as of December 31, 2010, so there is no incremental value due to accelerated vesting under involuntary or good reason termination (CIC). For a detailed description of the accumulated SERP benefit and estimated annual benefit payable at age 65, see “Pension Benefits Table.” In the event of early retirement, Mr. Johnson would receive a 2.5% decrease in his accrued SERP benefit for each year that he is younger than age 65.




8 All outstanding deferred compensation balances will be paid immediately following termination, subject to IRC Section 409(a) regulations, under voluntary termination, early retirement, involuntary not for cause termination, for cause termination, involuntary or good reason termination (CIC), death and disability. Unvested MICP deferral premiums would be forfeited. Mr. Johnson would forfeit $0 of unvested deferred MICP premiums.




9 No post-retirement health care benefits apply under voluntary termination, for cause termination, death or disability. In the event of early retirement, Mr. Johnson would receive no additional benefits above what all full-time, nonbargaining employees would receive. Under involuntary not for cause termination, Mr. Johnson would be reimbursed for 18 months of COBRA premiums at $1,371.22 per month as provided in his employment agreement. In the event of involuntary or good reason termination (CIC), the Management Change-in-Control Plan provides for Company-paid medical, dental and vision coverage in the same plan Mr. Johnson was participating in prior to termination for 36 months at $1,344.33 per month.




10 Mr. Johnson would be eligible to receive $500,000 proceeds from the executive AD&D policy.




11 Upon a change in control, the Management Change-in-Control Plan provides for the Company to pay all excise taxes under IRC Section 280G plus applicable gross-up amounts for Mr. Johnson. Under IRC Section 280G, Mr. Johnson would be subject to excise tax on $10,222,095 of excess parachute payments above his base amount. Those excess parachute payments result in $2,044,419 of excise taxes, $3,365,647 of tax gross-ups, and $78,446 of employer Medicare tax related to the excise tax payment. As discussed above, in connection with the merger with Duke Energy, Duke Energy, Diamond Acquisition Corporation and Mr. Johnson executed a term sheet pursuant to which the parties agreed to enter into an employment agreement upon consummation of the merger. Pursuant to the term sheet, if Mr. Johnson is involuntarily terminated without “cause” or resigns for “good reason” following, but prior to the second anniversary of, the consummation of the merger, no tax gross-up will be provided.





12 See “Management Change-in-Control Plan – Application of the CIC Plan and Other Compensation Related Consequences of the Proposed Merger with Duke Energy” on pages 22 through 23 above for a discussion regarding “involuntary” or “good reason” termination following the merger with Duke Energy.





43




---








POTENTIAL PAYMENTS UPON TERMINATION
Mark F. Mulhern, Senior Vice President and Chief Financial Officer




Voluntary
Termination 
($)
Early
Retirement 
($)
Involuntary
Not for
Cause
Termination 
($)
For Cause
Termination
($)
Involuntary
or Good
Reason
Termination
(CIC)11
($)
Disability
($)
Death
($)CompensationBase Salary—$450,0001
$0
$0
$1,345,500
$0
$1,395,000
$270,000
$0Annual Incentive2
$0
$0
$0
$0
$247,500
$205,000
$205,000Long-term Incentives:Performance Shares (PSSP)32008 PSSP Grant
$0
$0
$0
$0
$350,850
$350,850
$350,8502009 PSSP Grant
$0
$0
$0
$0
$547,978
$0
$365,3192010 PSSP Grant
$0
$0
$0
$0
$550,636
$183,545
$183,545Restricted Stock Units42007 RSU Grant
$0
$0
$0
$0
$103,352
$103,352
$103,3522008 RSU Grant
$0
$0
$0
$0
$49,393
$49,393
$49,3932009 RSU Grant
$0
$0
$0
$0
$271,141
$271,141
$271,1412010 RSU Grant
$0
$0
$0
$0
$209,095
$0
$0Restricted Stock52006 RS Grant
$0
$0
$0
$0
$50,741
$50,741
$50,741Benefits and PerquisitesIncremental Nonqualified Pension6
$0
$0
$0
$0
$0
$0
$0Deferred Compensation7
$233,262
$0
$233,262
$233,262
$233,262
$233,262
$233,262Post-retirement Health Care8
$0
$0
$15,249
$0
$19,934
$0
$0Executive AD&D Proceeds9
$0
$0
$0
$0
$0
$500,000
$500,000280G Tax Gross-up10
$0
$0
$0
$0
$1,141,872
$0
$0TOTAL
$233,262
$0
$1,594,011
$233,262
$5,170,754
$2,217,284
$2,312,603


1 There is no provision for payment of salary under voluntary termination, for cause termination or death. Mr. Mulhern is not eligible for early retirement or normal retirement. In the event of involuntary not for cause termination, the salary continuation provision of Mr. Mulhern’s employment agreement requires a severance equal to 2.99 times his then current base salary ($450,000) payable in equal installments over a period of 2.99 years. In the event of involuntary or good reason termination (CIC), the maximum benefit allowed under the cash payment provision of the Management Change-in-Control Plan equals two times the sum of annual salary plus annual target MICP award (($450,000 + $247,500) x 2). In the event of a long-term disability, Mr. Mulhern would receive 60% of base salary during the period of his disability, offset by any Social Security benefits and Progress Energy Pension Plan payments. The long-term disability payment as shown in the table above represents an annual amount before offsets.




2 There is no provision for payment of annual incentive under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Mulhern is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), Mr. Mulhern would receive 100% of his target award under the Annual Cash Incentive Compensation Plan provisions of the Management Change-in-Control Plan, calculated as 55% times $450,000. In the event of death or disability, Mr. Mulhern would receive a pro-rata incentive award for the period worked during the year. For December 31, 2010, this is based on the full award. For 2010, Mr. Mulhern’s MICP award was $205,000.




44




---




3 Amounts shown for performance shares are based on a December 31, 2010, closing price of $43.48 per share. Unvested performance shares would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Mulhern is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), unvested performance shares vest as of the date of Management Change-in-Control and payment is made based upon the target value of the award. In the event of disability, a pro rata percentage of performance shares would vest based upon the period of employment during the performance measurement period and the extent that the performance factors are satisfied. In the event of death, the 2008 performance shares would vest 100% and be paid in an amount using performance factors determined at the time of the event. For the 2009 and 2010 performance grants, the target value of the award would be paid based upon time in the plan.




4 Amounts shown for restricted stock units are based on a December 31, 2010, closing price of $43.48 per share. For a detailed description of outstanding restricted stock units, see the “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested restricted stock units would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Mulhern is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), all outstanding restricted stock units would vest immediately. Upon death or disability, all outstanding restricted stock units that are more than one year past their grant date would vest immediately. Shares that are less than one year past their grant date would be forfeited. Mr. Mulhern would immediately vest restricted stock units granted in 2007, 2008, and 2009; and would forfeit restricted stock units granted in 2010.




5 Amounts shown for restricted stock shares are based on a December 31, 2010, closing price of $43.48 per share. For a detailed description of outstanding restricted stock shares, see the “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested restricted stock would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Mulhern is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), all outstanding restricted stock shares would vest immediately. Upon death or disability, all outstanding restricted stock shares that are more than one year past their grant date would vest immediately. Shares that are less than one year past their grant date would be forfeited. All of Mr. Mulhern’s restricted stock grant dates are beyond the one-year threshold; therefore, all outstanding restricted stock shares would vest immediately.




6 No accelerated vesting or incremental nonqualified pension benefit applies under any of these scenarios. Mr. Mulhern was vested under the SERP as of December 31, 2010, so there is no incremental value due to accelerated vesting under involuntary or good reason termination (CIC).




7 All outstanding deferred compensation balances will be paid immediately following termination, subject to IRC Section 409(a) regulations, under voluntary termination, involuntary not for cause termination, for cause termination, involuntary or good reason termination (CIC), death and disability. Mr. Mulhern is not eligible for early retirement or normal retirement. Unvested MICP deferral premiums would be forfeited. Mr. Mulhern would forfeit $0 of unvested deferred MICP premiums.




8No post-retirement health care benefits apply under voluntary termination, for cause termination, death or disability. Mr. Mulhern is not eligible for early retirement or normal retirement. Under involuntary not for cause termination, Mr. Mulhern would be reimbursed for 18 months of COBRA premiums at $847.18 per month as provided in his employment agreement. In the event of involuntary or good reason termination (CIC), the Management Change-in-Control Plan provides for Company-paid medical, dental and vision coverage in the same plan Mr. Mulhern was participating in prior to termination for 24 months at $830.57 per month.




9 Mr. Mulhern would be eligible to receive $500,000 proceeds from the executive AD&D policy.




10 Upon a change in control, the Management Change-in-Control Plan provides for the Company to pay all excise taxes under IRC Section 280G plus applicable gross-up amounts for Mr. Mulhern. Under IRC Section 280G, Mr. Mulhern would be subject to excise tax on $2,126,683 of excess parachute payments above his base amount. Those excess parachute payments result in $425,337 of excise taxes, $700,215 of tax gross-ups, and $16,320 of employer Medicare tax related to the excise tax payment.




11 See “Management Change-in-Control Plan – Application of the CIC Plan and Other Compensation Related Consequences of the Proposed Merger with Duke Energy” on pages 22 through 23 above for a discussion regarding “involuntary” or “good reason” termination following the merger with Duke Energy.




45




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POTENTIAL PAYMENTS UPON TERMINATION
Jeffrey J. Lyash, Executive Vice President – Energy Supply




Voluntary
Termination
($)
Early
Retirement
($)
Involuntary
Not for
Cause
Termination
($)
For Cause
Termination
($)
Involuntary
or Good
Reason
Termination
(CIC)11
($)
Disability
($)
Death
($)CompensationBase Salary—$453,0001
$0
$0
$1,354,470
$0
$2,106,450
$271,800
$0Annual Incentive2
$0
$0
$0
$0
$249,150
$195,000
$195,000Long-term Incentives:Performance Shares (PSSP)32008 PSSP Grant
$0
$0
$0
$0
$497,544
$497,544
$497,5442009 PSSP Grant
$0
$0
$0
$0
$633,345
$0
$422,2302010 PSSP Grant
$0
$0
$0
$0
$586,872
$195,624
$195,624Restricted Stock Units42007 RSU Grant
$0
$0
$0
$0
$137,005
$137,005
$137,0052008 RSU Grant
$0
$0
$0
$0
$69,438
$69,438
$69,4382009 RSU Grant
$0
$0
$0
$0
$274,707
$274,707
$274,7072010 RSU Grant
$0
$0
$0
$0
$222,878
$0
$0Restricted Stock52006 RS Grant
$0
$0
$0
$0
$59,437
$59,437
$59,437Benefits and PerquisitesIncremental Nonqualified Pension6
$0
$0
$0
$0
$0
$0
$0Deferred Compensation7
$168,012
$0
$168,012
$168,012
$168,012
$168,012
$168,012Post-retirement Health Care8
$0
$0
$17,420
$0
$34,158
$0
$0Executive AD&D Proceeds9
$0
$0
$0
$0
$0
$500,000
$500,000280G Tax Gross-up10
$0
$0
$0
$0
$1,565,051
$0
$0TOTAL
$168,012
$0
$1,539,902
$168,012
$6,604,047
$2,368,567
$2,518,997


1 There is no provision for payment of salary under voluntary termination, for cause termination or death. Mr. Lyash is not eligible for early retirement or normal retirement. In the event of involuntary not for cause termination, the salary continuation provision of Mr. Lyash’s employment agreement requires a severance equal to 2.99 times his then current base salary ($453,000) payable in equal installments over a period of 2.99 years. In the event of involuntary or good reason termination (CIC), the maximum benefit allowed under the cash payment provision of the Management Change-in-Control Plan equals three times the sum of annual salary plus annual target MICP award (($453,000 + $249,150) x 3). In the event of a long-term disability, Mr. Lyash would receive 60% of base salary during the period of his disability, offset by any Social Security benefits and Progress Energy Pension Plan payments. The long-term disability payment as shown in the table above represents an annual amount before offsets.




2 There is no provision for payment of annual incentive under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Lyash is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), Mr. Lyash would receive 100% of his target award under the Annual Cash Incentive Compensation Plan provisions of the Management Change-in-Control Plan, calculated as 55% times $453,000. In the event of death or disability, Mr. Lyash would receive a pro-rata incentive award for the period worked during the year. For December 31, 2010, this is based on the full award. For 2010, Mr. Lyash’s MICP award was $195,000.




46




---




3Amounts shown for performance shares are based on a December 31, 2010, closing price of $43.48 per share. Unvested performance shares would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Lyash is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), unvested performance shares vest as of the date of Management Change-in-Control and payment is made based upon the target value of the award. In the event of disability, a pro rata percentage of performance shares would vest based upon the period of employment during the performance measurement period and the extent that the performance factors are satisfied. In the event of death, the 2008 performance shares would vest 100% and be paid in an amount using performance factors determined at the time of the event. For the 2009 and 2010 performance grants, the target value of the award would be paid based upon time in the plan.




4 Amounts shown for restricted stock units are based on a December 31, 2010, closing price of $43.48 per share. For a detailed description of outstanding restricted stock units, see the “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested restricted stock units would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Lyash is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), all outstanding restricted stock units would vest immediately. Upon death or disability, all outstanding restricted stock units that are more than one year past their grant date would vest immediately. Shares that are less than one year past their grant date would be forfeited. Mr. Lyash would immediately vest restricted stock units granted in 2007, 2008, and 2009; and would forfeit restricted stock units granted in 2010.




5 Amounts shown for restricted stock shares are based on a December 31, 2010, closing price of $43.48 per share. For a detailed description of outstanding restricted stock shares, see the “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested restricted stock would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Lyash is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), all outstanding restricted stock shares would vest immediately. Upon death or disability, all outstanding restricted stock shares that are more than one year past their grant date would vest immediately. Shares that are less than one year past their grant date would be forfeited. All of Mr. Lyash’s restricted stock grant dates are beyond the one-year threshold; therefore, all outstanding restricted stock shares would vest immediately.




6 No accelerated vesting or incremental nonqualified pension benefit applies under any of these scenarios. Mr. Lyash was vested under the SERP as of December 31, 2010, so there is no incremental value due to accelerated vesting under involuntary or good reason termination (CIC).




7 All outstanding deferred compensation balances will be paid immediately following termination, subject to IRC Section 409(a) regulations, under voluntary termination, involuntary not for cause termination, for cause termination, involuntary or good reason termination (CIC), death and disability. Mr. Lyash is not eligible for early retirement or normal retirement. Unvested MICP deferral premiums would be forfeited. Mr. Lyash would forfeit $0 of unvested deferred MICP premiums.




8 No post-retirement health care benefits apply under voluntary termination, for cause termination, death or disability. Mr. Lyash is not eligible for early retirement or normal retirement. Under involuntary not for cause termination, Mr. Lyash would be reimbursed for 18 months of COBRA premiums at $967.80 per month as provided in his employment agreement. In the event of involuntary or good reason termination (CIC), the Management Change-in-Control Plan provides for Company-paid medical, dental and vision coverage in the same plan Mr. Lyash was participating in prior to termination for 36 months at $948.83 per month.




9 Mr. Lyash would be eligible to receive $500,000 proceeds from the executive AD&D policy.




10 Upon a change in control, the Management Change-in-Control Plan provides for the Company to pay all excise taxes under IRC Section 280G plus applicable gross-up amounts for Mr. Lyash. Under IRC Section 280G, Mr. Lyash would be subject to excise tax on $2,914,834 of excess parachute payments above his base amount. Those excess parachute payments result in $582,967 of excise taxes, $959,715 of tax gross-ups, and $22,369 of employer Medicare tax related to the excise tax payment.




11 See “Management Change-in-Control Plan – Application of the CIC Plan and Other Compensation Related Consequences of the Proposed Merger with Duke Energy” on pages 22 through 23 above for a discussion regarding “involuntary” or “good reason” termination following the merger with Duke Energy.




47




---




POTENTIAL PAYMENTS UPON TERMINATION
Lloyd M. Yates, President and Chief Executive Officer, PEC




Voluntary
Termination 
($)
Early
Retirement 
($)
Involuntary

Not for
Cause
Termination
($)
For Cause 
Termination
($)
Involuntary
or Good
Reason
Termination
(CIC)11
($)
Disability
($)
Death
($)CompensationBase Salary—$448,0001
$0
$0
$1,339,520
$0
$2,083,200
$268,800
$0Annual Incentive2
$0
$0
$0
$0
$246,400
$195,000
$195,000Long-term Incentives:Performance Shares (PSSP)32008 PSSP Grant
$0
$0
$0
$0
$497,544
$497,544
$497,5442009 PSSP Grant
$0
$0
$0
$0
$626,219
$0
$417,4792010 PSSP Grant
$0
$0
$0
$0
$580,424
$193,475
$193,475Restricted Stock Units42007 RSU Grant
$0
$0
$0
$0
$137,005
$137,005
$137,0052008 RSU Grant
$0
$0
$0
$0
$69,438
$69,438
$69,4382009 RSU Grant
$0
$0
$0
$0
$272,620
$272,620
$272,6202010 RSU Grant
$0
$0
$0
$0
$220,400
$0
$0Restricted Stock52006 RS Grant
$0
$0
$0
$0
$59,437
$59,437
$59,437Benefits and PerquisitesIncremental Nonqualified Pension6
$0
$0
$0
$0
$0
$0
$0Deferred Compensation7
$601,121
$0
$601,121
$601,121
$601,121
$601,121
$601,121Post-retirement Health Care8
$0
$0
$24,682
$0
$48,396
$0
$0Executive AD&D Proceeds9
$0
$0
$0
$0
$0
$500,000
$500,000280G Tax Gross-up10
$0
$0
$0
$0
$1,554,752
$0
$0TOTAL
$601,121
$0
$1,965,323
$601,121
$6,996,956
$2,794,440
$2,943,119


1 There is no provision for payment of salary under voluntary termination, for cause termination or death. Mr. Yates is not eligible for early retirement or normal retirement. In the event of involuntary not for cause termination, the salary continuation provision of Mr. Yates’ employment agreement requires a severance equal to 2.99 times his then current base salary ($448,000) payable in equal installments over a period of 2.99 years. In the event of involuntary or good reason termination (CIC), the maximum benefit allowed under the cash payment provision of the Management Change-in-Control Plan equals three times the sum of annual salary plus annual target MICP award (($448,000 + $246,400) x 3). In the event of a long-term disability, Mr. Yates would receive 60% of base salary during the period of his disability, offset by any Social Security benefits and Progress Energy Pension Plan payments. The long-term disability payment as shown in the table above represents an annual amount before offsets.




2 There is no provision for payment of annual incentive under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Yates is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), Mr. Yates would receive 100% of his target award under the Annual Cash Incentive Compensation Plan provisions of the Management Change-in-Control Plan, calculated as 55% times $448,000. In the event of death or disability, Mr. Yates would receive a pro-rata incentive award for the period worked during the year. For December 31, 2010 this is based on the full award. For 2010, Mr. Yates’ MICP award was $195,000.




48




---




3 Amounts shown for performance shares are based on a December 31, 2010, closing price of $43.48 per share. Unvested performance shares would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Yates is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), unvested performance shares vest as of the date of Management Change-in-Control and payment is made based upon the target value of the award. In the event of disability, a pro rata percentage of performance shares would vest and the extent that the performance factors are satisfied. In the event of death, the 2008 performance shares would vest 100% and be paid in an amount using performance factors determined at the time of the event. For the 2009 and 2010 performance grants, the target value of the award would be paid based upon time in the plan.




4 Amounts shown for restricted stock units are based on a December 31, 2010, closing price of $43.48 per share. For a detailed description of outstanding restricted stock units, see the “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested restricted stock units would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Yates is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), all outstanding restricted stock units would vest immediately. Upon death or disability, all outstanding restricted stock units that are more than one year past their grant date would vest immediately. Shares that are less than one year past their grant date would be forfeited. Mr. Yates would immediately vest restricted stock units granted in 2007, 2008, and 2009; and would forfeit restricted stock units granted in 2010.




5 Amounts shown for restricted stock shares are based on a December 31, 2010, closing price of $43.48 per share. For a detailed description of outstanding restricted stock shares, see the “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested restricted stock would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. Yates is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), all outstanding restricted stock shares would vest immediately. Upon death or disability, all outstanding restricted stock shares that are more than one year past their grant date would vest immediately. Shares that are less than one year past their grant date would be forfeited. All of Mr. Yates’ restricted stock grant dates are beyond the one-year threshold; therefore, all outstanding restricted stock shares would vest immediately.




6 No accelerated vesting or incremental nonqualified pension benefit applies under any of these scenarios. Mr. Yates was vested under the SERP as of December 31, 2010, so there is no incremental value due to accelerated vesting under involuntary or good reason termination (CIC).




7 All outstanding deferred compensation balances will be paid immediately following termination, subject to IRC Section 409(a) regulations, under voluntary termination, involuntary not for cause termination, for cause termination, involuntary or good reason termination (CIC), death and disability. Mr. Yates is not eligible for early retirement or normal retirement. Unvested MICP deferral premiums would be forfeited. Mr. Yates would forfeit $0 of unvested deferred MICP premiums.




8 No post-retirement health care benefits apply under voluntary termination, for cause termination, death or disability. Mr. Yates is not eligible for early retirement or normal retirement. Under involuntary not for cause termination, Mr. Yates would be reimbursed for 18 months of COBRA premiums at $1,371.22 per month as provided in his employment agreement. In the event of involuntary or good reason termination (CIC), the Management Change-in-Control Plan provides for Company-paid medical, dental and vision coverage in the same plan Mr. Yates was participating in prior to termination for 36 months at $1,344.33 per month.




9 Mr. Yates would be eligible to receive $500,000 proceeds from the executive AD&D policy.




10 Upon a change in control, the Management Change-in-Control Plan provides for the Company to pay all excise taxes under IRC Section 280G plus applicable gross-up amounts for Mr. Yates. Under IRC Section 280G, Mr. Yates would be subject to excise tax on $2,895,652 of excess parachute payments above his base amount. Those excess parachute payments result in $579,130 of excise taxes, $953,400 of tax gross-ups, and $22,222 of employer Medicare tax related to the excise tax payment.




11 See “Management Change-in-Control Plan – Application of the CIC Plan and Other Compensation Related Consequences of the Proposed Merger with Duke Energy” on pages 22 through 23 above for a discussion regarding “involuntary” or “good reason” termination following the merger with Duke Energy.




49




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POTENTIAL PAYMENTS UPON TERMINATION
John R. McArthur, Executive Vice President, General Counsel 
and Corporate Secretary




Voluntary
Termination 
($)
Early
Retirement 
($)
Involuntary

Not for
Cause
Termination
($)
For Cause 
Termination
($)
Involuntary
or Good
Reason
Termination
(CIC)11
($)
Disability
($)
Death
($)CompensationBase Salary—$488,000 1
$0
$0
$1,459,120
$0
$2,269,200
$292,800
$0Annual Incentive 2
$0
$0
$0
$0
$268,400
$220,000
$220,000Long-term Incentives:Performance Shares (PSSP) 32008 PSSP Grant
$0
$0
$0
$0
$462,480
$462,480
$462,4802009 PSSP Grant
$0
$0
$0
$0
$683,179
$0
$455,4532010 PSSP Grant
$0
$0
$0
$0
$632,237
$210,746
$210,746Restricted Stock Units42007 RSU Grant
$0
$0
$0
$0
$128,483
$128,483
$128,4832008 RSU Grant
$0
$0
$0
$0
$65,090
$65,090
$65,0902009 RSU Grant
$0
$0
$0
$0
$289,490
$289,490
$289,4902010 RSU Grant
$0
$0
$0
$0
$240,097
$0
$0Restricted Stock52006 RS Grant
$0
$0
$0
$0
$72,481
$72,481
$72,481Benefits and PerquisitesIncremental Nonqualified Pension 6
$0
$0
$0
$0
$1,483,339
$0
$0Deferred Compensation 7
$301,215
$0
$301,215
$301,215
$301,215
$301,215
$301,215Post-retirement Health Care 8
$0
$0
$16,626
$0
$32,599
$0
$0Executive AD&D Proceeds 9
$0
$0
$0
$0
$0
$500,000
$500,000280G Tax Gross-up 10
$0
$0
$0
$0
$2,347,525
$0
$0TOTAL
$301,215
$0
$1,776,961
$301,215
$9,275,815
$2,542,785
$2,705,438


1 There is no provision for payment of salary under voluntary termination, for cause termination or death. Mr. McArthur is not eligible for early retirement or normal retirement. In the event of involuntary not for cause termination, the salary continuation provision of Mr. McArthur’s employment agreement requires a severance equal to 2.99 times his then current base salary ($488,000) payable in equal installments over a period of 2.99 years. In the event of involuntary or good reason termination (CIC), the maximum benefit allowed under the cash payment provision of the Management Change-in-Control Plan equals three times the sum of annual salary plus annual target MICP award (($488,000 + $268,400) x 3). In the event of a long-term disability, Mr. McArthur would receive 60% of base salary during the period of his disability, offset by any Social Security benefits and Progress Energy Pension Plan payments. The long-term disability payment as shown in the table above represents an annual amount before offsets.




2 There is no provision for payment of annual incentive under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. McArthur is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), Mr. McArthur would receive 100% of his target bonus under the Annual Cash Incentive Compensation Plan provisions of the Management Change-in-Control Plan, calculated as 55% times $488,000. In the event of death or disability, Mr. McArthur would receive a pro-rata incentive award for the period worked during the year. For December 31, 2010, this is based on the full award. For 2010, Mr. McArthur’s MICP award was $220,000.




50




---




3 Amounts shown for performance shares are based on a December 31, 2010, closing price of $43.48 per share. Unvested performance shares would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. McArthur is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), unvested performance shares vest as of the date of Management Change-in-Control and payment is made based upon the target value of the award. In the event of disability, a pro rata percentage of performance shares would vest based upon the period of employment during performance measurement period and the extent that the performance factors are satisfied. In the event of death, the 2008 performance shares would vest 100% and be paid in an amount using performance factors determined at the time of the event. For the 2009 and 2010 performance grants, the target value of the award would be paid based upon time in the plan.




4 Amounts shown for restricted stock units are based on a December 31, 2010, closing price of $43.48 per share. For a detailed description of outstanding restricted stock units, see the “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested restricted stock units would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. McArthur is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), all outstanding restricted stock units would vest immediately. Upon death or disability, all outstanding restricted stock units that are more than one year past their grant date would vest immediately. Shares that are less than one year past their grant date would be forfeited. Mr. McArthur would immediately vest restricted stock units granted in 2007, 2008, and 2009; and would forfeit restricted stock units granted in 2010.




5 Amounts shown for restricted stock shares are based on a December 31, 2010, closing price of $43.48 per share. For a detailed description of outstanding restricted stock shares, see the “Outstanding Equity Awards at Fiscal Year-End Table.” Unvested restricted stock would be forfeited under voluntary termination, involuntary not for cause termination, or for cause termination. Mr. McArthur is not eligible for early retirement or normal retirement. In the event of involuntary or good reason termination (CIC), all outstanding restricted stock shares would vest immediately. Upon death or disability, all outstanding restricted stock shares that are more than one year past their grant date would vest immediately. Shares that are less than one year past their grant date would be forfeited. All of Mr. McArthur’s restricted stock grant dates are beyond the one-year threshold; therefore, all outstanding restricted stock shares would vest immediately.




6 Mr. McArthur was not vested under the SERP as of December 31, 2010, so this is the incremental value due to accelerated vesting under involuntary or good reason termination (CIC). No accelerated vesting or incremental nonqualified pension benefit applies under any other scenario above.




7 All outstanding deferred compensation balances will be paid immediately following termination, subject to IRC Section 409(a) regulations, under voluntary termination, involuntary not for cause termination, for cause termination, involuntary or good reason termination (CIC), death and disability. Mr. McArthur is not eligible for early retirement or normal retirement. Unvested MICP deferral premiums would be forfeited. Mr. McArthur would forfeit $0 of unvested deferred MICP premiums.




8No post-retirement health care benefits apply under voluntary termination, for cause termination, death or disability. Mr. McArthur is not eligible for early retirement or normal retirement. Under involuntary not for cause termination, Mr. McArthur would be reimbursed for 18 months of COBRA premiums at $923.64 per month as provided in his employment agreement. In the event of involuntary or good reason termination (CIC), the Management Change-in-Control Plan provides for Company-paid medical, dental and vision coverage in the same plan Mr. McArthur was participating in prior to termination for 36 months at $905.53 per month.




9 Mr. McArthur would be eligible to receive $500,000 proceeds from the executive AD&D policy.




10 Upon a change in control, the Management Change-in-Control Plan provides for the Company to pay all excise taxes under IRC Section 280G plus applicable gross-up amounts for Mr. McArthur. Under IRC Section 280G, Mr. McArthur would be subject to excise tax on $4,372,154 of excess parachute payments above his base amount. Those excess parachute payments result in $874,431 of excise taxes, $1,439,541 of tax gross-ups, and $33,553 of employer Medicare tax related to the excise tax payment.




11 See “Management Change-in-Control Plan – Application of the CIC Plan and Other Compensation Related Consequences of the Proposed Merger with Duke Energy” on pages 22 through 23 above for a discussion regarding “involuntary” or “good reason” termination following the merger with Duke Energy.




51




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DIRECTOR COMPENSATION




The following includes the required table and related narrative detailing the compensation each director received for his or her services in 2010.




Name (a)
Fees
Earned
or Paid
in Cash1
($) (b)
Stock
Awards2
($) (c)
Option 
Awards
($) (d)
Non-Equity
Incentive Plan
Compensation
($) (e)
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)
(f)
All Other
Compensation3($) (g)
Total ($)
(h)John D. Baker II
$93,500
$60,000
—
—
—
$20,581
$174,081James E. Bostic, Jr.
$93,500
$60,000
—
—
—
$112,696
$266,196Harris E. DeLoach, Jr.
$103,500
$60,000
—
—
—
$89,058
$252,558James B. Hyler, Jr.
$93,500
$60,000
—
—
—
$23,881
$177,381Robert W. Jones
$103,500
$60,000
—
—
—
$66,607
$230,107W. Steven Jones
$93,500
$60,000
—
—
—
$104,240
$257,740Melquiades R. “Mel” Martinez
$78,188
$0
—
—
—
$2,424
$80,612E. Marie McKee
$107,000
$60,000
—
—
—
$214,542
$381,542John H. Mullin, III
$108,500
$60,000
—
—
—
$168,244
$336,744Charles W. Pryor, Jr.
$93,500
$60,000
—
—
—
$35,787
$189,287Carlos A. Saladrigas
$93,500
$60,000
—
—
—
$92,831
$246,331Theresa M. Stone
$107,000
$60,000
—
—
—
$90,827
$257,827Alfred C. Tollison, Jr.
$101,500
$60,000
—
—
—
$86,944
$248,444


1 Reflects the annual retainer plus any Board or Committee fees earned in 2010. Amounts may have been paid in cash or deferred into the Non-Employee Director Deferred Compensation Plan.




2 Reflects the grant date fair value of awards granted under the Non-Employee Director Stock Unit Plan in 2010. The assumptions made in the valuation of awards granted pursuant to the Non-Employee Director Stock Unit Plan are not addressed in our consolidated financial statements, footnotes to our consolidated financial statements or in Management’s Discussion and Analysis because the Director Plan is immaterial to our consolidated financial statements. As a liability plan under FASB ASC Topic 718, the fair value of the Director Plan is re-measured at each financial statement date. The grant date fair value for each stock unit granted to each director on January 4, 2010 was $40.93. The numbers of stock units outstanding in the Non-Employee Director Stock Unit Plan as of December 31, 2010 for each Director listed above are shown in the table in footnote 3 below.




3 Includes the following items: The dollar value of dividend reinvestments and unit appreciation/depreciation accrued under the Non-Employee Director Stock Unit Plan; and dividend reinvestments and unit appreciation/depreciation accrued under the Non-Employee Director Deferred Compensation Plan. The dollar values of dividend reinvestments and unit appreciation for each Director listed above are in the table below. The total value of the perquisites and personal benefits received by each director was less than $10,000. Thus, those amounts are excluded from this column. The numbers of stock units outstanding in the Non-Employee Director Deferred Compensation Plan as of December 31, 2010 for each Director listed above are in the table below.




52




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Non-Employee Director
Stock Unit Plan
Non-Employee Director
Deferred Compensation
PlanName
Stock Units
Outstanding
as of
Dec. 31, 2010
(see footnote 2
above)
Dividend
Reinvestments
and Unit
Appreciation/
Depreciation
in column
($) (g)
(see footnote 3
above)
Stock Units
Outstanding
as of
Dec. 31, 2010
(see footnote 3
above)
Dividend
Reinvestments
and Unit
Appreciation/
Depreciation
in column
($) (g)
(see footnote 3
above)
Total
(column
(g))John D. Baker II
1,555
$7,619
3,153
$12,962
$20,581James E. Bostic, Jr.
10,462
$50,586
13,104
$62,110
$112,696Harris E. DeLoach, Jr.
6,255
$30,290
12,698
$58,768
$89,058James B. Hyler, Jr.
3,227
$15,684
1,849
$8,197
$23,881Robert W. Jones
4,739
$22,978
9,560
$43,629
$66,607W. Steven Jones
7,856
$38,013
14,195
$66,227
$104,240Melquiades R. “Mel” Martinez
0
$0
633
$2,424
$2,424E. Marie McKee
13,449
$64,994
31,151
$149,548
$214,542John H. Mullin, III
13,968
$67,498
21,034
$100,746
$168,244Charles W. Pryor, Jr.
4,739
$22,978
2,805
$12,809
$35,787Carlos A. Saladrigas
11,502
$55,603
7,867
$37,228
$92,831Theresa M. Stone
7,856
$38,013
11,098
$52,814
$90,827Alfred C. Tollison, Jr.
6,255
$30,290
12,250
$56,654
$86,944


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DISCUSSION OF DIRECTOR COMPENSATION TABLE




RETAINER AND MEETING FEES




During 2010, Directors who were not employees of the Company received an annual retainer of $80,000, of which $30,000 was automatically deferred under the Non-Employee Director Deferred Compensation Plan (see below). The Lead Director/Chair of the following Board Committees received an additional retainer of $15,000: Audit and Corporate Performance Committee; Governance Committee; and Organization and Compensation Committee. The Chair of each of the following standing Board Committees received an additional retainer of $10,000: Finance Committee and Operations and Nuclear Oversight Committee. The nonchair members of the following standing Board Committees received an additional retainer of $7,500: Audit and Corporate Performance Committee and Organization and Compensation Committee. The nonchair members of the following standing Board Committees received an additional retainer of $6,000: Governance Committee; Finance Committee; and Operations and Nuclear Oversight Committee. In addition, a special meeting fee of $1,500 was paid to members of the Operations and Nuclear Oversight Committee in the January 1, 2011 retainer. The special meeting was held on September 15, 2010, and the special meeting fee was approved by the Governance Committee on December 7, 2010. The Nuclear Oversight Director received an additional retainer of $8,000. The Chair of the Nuclear Project Oversight Committee receives an attendance fee of $2,000 per meeting held by that Committee. Additionally, each member of the Nuclear Project Oversight Committee receives an attendance fee of $1,500 per meeting held by that Committee. Directors who are not employees of the Company received a fee of $1,500 per meeting, paid with the next quarterly retainer, for noncustomary meetings or reviews of the Company’s operations that are approved by the Governance Committee. Directors who are employees of our Company do not receive an annual retainer or attendance fees. All Directors are reimbursed for expenses incidental to their service as Directors. Committee positions held by the Directors are discussed in the “Board Committees” section of this document.




Effective January 1, 2011, the cash component of the annual retainer was increased by $25,000. The annual retainer is now $105,000, of which $30,000 will be automatically deferred under the Non-Employee Director Deferred Compensation Plan (see below).




The Non-Employee Director Stock Unit Plan provides that each Director will receive an annual grant of stock units that is equivalent to $60,000.




NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN




In addition to $30,000 from the annual retainer that is automatically deferred, outside Directors may elect to defer any portion of the remainder of their annual retainer and Board attendance fees until after the termination of their service on the Board under the Non-Employee Director Deferred Compensation Plan. Any deferred fees are deemed to be invested in a number of units of Common Stock of the Company, but participating Directors receive no equity interest or voting rights in any shares of the Common Stock. The number of units credited to the account of a participating Director is equal to the dollar amount of the deferred fees divided by the average of the high and low selling prices (i.e., market value) of the Common Stock on the day the deferred fees would otherwise be payable to the participating Director. The number of units in each account is adjusted from time to time to reflect the payment of dividends on the number of shares of Common Stock represented by the units. Unless otherwise agreed to by the participant and the Board, when the participant ceases to be a member of the Board of Directors, he or she will receive cash equal to the market value of a share of the Company’s Common Stock on the date of payment multiplied by the number of units credited to the participant’s account.




NON-EMPLOYEE DIRECTOR STOCK UNIT PLAN




Effective January 1, 1998, we established the Non-Employee Director Stock Unit Plan (“Stock Unit Plan”). The Stock Unit Plan provides for an annual grant of stock units equivalent to $60,000 to each non-employee Director. Each unit is equal in economic value to one share of the Company’s Common Stock, but does not represent an equity interest or entitle its holder to vote. The number of units is adjusted from time to time to reflect the payment of dividends with respect to the Common Stock of the Company. Effective January 1, 2007, a Director shall be fully vested at all times in the stock units credited to his or her account.




54




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OTHER COMPENSATION




Directors are eligible to receive certain perquisites, including tickets to various cultural arts and sporting events, which are de minimis in value. Each retiring Director also receives a gift valued at approximately $1,500 in appreciation for his/her service on the Board.




We charge Directors with imputed income in connection with (i) their travel on Company aircraft for non-Company related purposes and (ii) their spouses’ travel on Company aircraft.




Compensation Committee Interlocks and Insider Participation




None of the directors who served as members of the Compensation Committee during 2010 was our employee or former employee and none of them had any relationship requiring disclosure under Item 404 of Regulation S-K. During 2010, none of our executive officers served on the compensation committee (or equivalent), or the board of directors of another entity whose executive officer(s) served on our Compensation Committee or Board of Directors.




Compensation Committee Report




The Compensation Committee Report called for by this item appears on page 28 of this Amendment.




55




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PART IV




Item 15. Exhibits and Financial Statement Schedules




3. Exhibits Filed:




See EXHIBIT INDEX.




56




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SIGNATURES




Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




PROGRESS ENERGY, INC.Date: May 24, 2011
(Registrant)By:/s/ William D. JohnsonWilliam D. JohnsonChairman, President and Chief Executive OfficerBy:/s/ Mark F. MulhernMark F. MulhernSenior Vice President and Chief Financial OfficerBy:/s/ Jeffrey M. StoneJeffrey M. StoneChief Accounting Officer and Controller


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.




Signature


Title


Date/s/ William D. Johnson

Chairman

May 24, 2011(William D. Johnson)/s/ John D. Baker II

Director

May 24, 2011(John D. Baker II)/s/ James E. Bostic, Jr.

Director

May 24, 2011(James E. Bostic, Jr.)/s/ Harris E. DeLoach, Jr.

Director

May 24, 2011(Harris E. DeLoach, Jr.)/s/ James B. Hyler, Jr.

Director

May 24, 2011(James B. Hyler, Jr.)/s/ Robert W. Jones

Director

May 24, 2011(Robert W. Jones)/s/ W. Steven Jones

Director

May 24, 2011(W. Steven Jones)/s/ Melquiades R. Martinez

Director

May 24, 2011(Melquiades R. Martinez)/s/ E. Marie McKee

Director

May 24, 2011(E. Marie McKee)/s/ John H. Mullin, III

Director

May 24, 2011(John H. Mullin, III)/s/ Charles W. Pryor, Jr.

Director

May 24, 2011(Charles W. Pryor, Jr.)/s/ Carlos A. Saladrigas

Director

May 24, 2011(Carlos A. Saladrigas)/s/ Theresa M. Stone

Director

May 24, 2011(Theresa M. Stone)/s/ Alfred C. Tollison, Jr.

Director

May 24, 2011(Alfred C. Tollison, Jr.)




57




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Exhibit Index




Number
Exhibit*2a(1)
Agreement and Plan of Merger, dated as of January 8, 2011, by and among Duke Energy Corporation, Diamond Acquisition Corporation and Progress Energy, Inc. (filed as Exhibit 2.1 to the Current Report on Form 8-K dated January 8, 2011, File No. 1-15929).*3a(1)
Amended and Restated Articles of Incorporation of Progress Energy, Inc. (f/k/a CP&L Energy, Inc.), as amended and restated on June 15, 2000 (filed as Exhibit No. 3a(1) to Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000, File No. 1-15929 and No. 1-3382).*3a(2)
Amended and Restated Articles of Incorporation of Progress Energy, Inc. (f/k/a CP&L Energy, Inc.), as amended and restated on December 4, 2000 (filed as Exhibit 3b(1) to Annual Report on Form 10-K for the year ended December 31, 2001, as filed with the SEC on March 28, 2002, File No. 1-15929).*3a(3)
Amended Articles of Incorporation of Progress Energy, Inc., as amended on May 10, 2006 (filed as Exhibit 3.A to Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006, File No. 1-15929, 1-3382 and 1-3274).*3b(1)
By-Laws of Progress Energy, Inc., as amended on May 10, 2006 (filed as Exhibit 3.B to Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006, File No. 1-15929, 1-3382 and 1-3274).*4b(1)
Indenture, dated as of February 15, 2001, between Progress Energy, Inc. and Bank One Trust Company, N.A., as Trustee, with respect to Senior Notes (filed as Exhibit 4(a) to Form 8-K dated February 27, 2001, File No. 1-15929).*4e(1)
Contingent Value Obligation Agreement, dated as of November 30, 2000, between CP&L Energy, Inc. and The Chase Manhattan Bank, as Trustee (Exhibit 4.1 to Current Report on Form 8-K dated December 12, 2000, File No. 1-3382).*10b(1)
Progress Energy, Inc. $1,130,000,000 5-Year Revolving Credit Agreement dated as of May 3, 2006 (filed as Exhibit 10(c) to Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, File No. 1-15929, 1-3274 and 1-3382).+*10c(1)
Progress Energy, Inc. Form of Stock Option Agreement (filed as Exhibit 4.4 to Form S-8 dated September 27, 2001, File No. 333-70332).+*10c(2)
Progress Energy, Inc. Form of Stock Option Award (filed as Exhibit 4.5 to Form S-8 dated September 27, 2001, File No. 333-70332).+*10c(3)
2002 Progress Energy, Inc. Equity Incentive Plan, Amended and Restated effective January 1, 2007 (filed as Exhibit 10c(5) to Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and No. 1-3274).+*10c(4)
Amended and Restated Broad-Based Performance Share Sub-Plan, Exhibit B to the 2002 Progress Energy, Inc. Equity Incentive Plan, effective January 1, 2007 (filed as Exhibit 10c(6) to Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and No. 1-3274).+*10c(5)
Amended and Restated Executive and Key Manager Performance Share Sub-Plan, Exhibit A to the 2002 Progress Energy, Inc. Equity Incentive Plan (effective January 1, 2007) (filed as Exhibit 10c(7) to Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and No. 1-3274).+*10c(6)
Progress Energy, Inc. 2007 Equity Incentive Plan (filed as Exhibit C to Form DEF 14A, as filed with the SEC on March 30, 2007, File No. 1-15929).+*10c(7)
Executive and Key Manager 2007 Performance Share Sub-Plan, Exhibit A to the 2007 Equity Incentive Plan, effective January 1, 2007 (filed as Exhibit 10.1 to Current Report on Form 8-K dated July 16, 2007, File No. 1-15929, No. 1-3382 and No. 1-3274).+*10c(8)
Amended and Restated Management Deferred Compensation Plan of Progress Energy, Inc., effective as of January 1, 2007 (filed as Exhibit 10c(9) to Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and No. 1-3274).+*10c(9)
Amended and Restated Non-Employee Director Deferred Compensation Plan of Progress Energy, Inc., effective January 1, 2007 (filed as Exhibit 10c(11) to Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and No. 1-3274).+*10c(10)
Amended and Restated Restoration Retirement Plan of Progress Energy, Inc., effective January 1, 2007 (filed as Exhibit 10c(12) to Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and No. 1-3274).




58




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Number
Exhibit+*10c(11)
Amended and Restated Non-Employee Director Stock Unit Plan of Progress Energy, Inc., effective January 1, 2007 (filed as Exhibit 10c(14) to Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and No. 1-3274).+*10c(12)
Form of Progress Energy, Inc. Restricted Stock Agreement pursuant to the 2002 Progress Energy Inc. Equity Incentive Plan, as amended July 2002 (filed as Exhibit 10c(18) to Annual Report on Form 10-K for the year ended December 31, 2004, as filed with the SEC on March 16, 2005, File No. 1-3382 and 1-15929).+*10c(13)
Form of Restricted Stock Unit Award Agreement as of March 20, 2007 (filed as Exhibit 10.1 to Current Report on Form 8-K dated March 26, 2007, File No. 1-15929, No. 1-3382 and No. 1-3274).+*10c(14)
Form of Employment Agreement dated May 8, 2007 between (i) Progress Energy Service Company, LLC and Robert McGehee, John R. McArthur and Peter M. Scott III; (ii) PEC and Lloyd M. Yates, Fredrick N. Day IV, Paula M. Sims, William D. Johnson and Clayton S. Hinnant; and (iii) PEF and Jeffrey A. Corbett and Jeffrey J. Lyash (filed as Exhibit 10 to Quarterly Report on Form 10-Q for the period ended March 31, 2007, File No. 1-15929, No. 1-3382 and No. 1-3274).+*10c(15)
Form of Employment Agreement between Progress Energy Service Company, LLC and Mark F. Mulhern dated September 18, 2007 (filed as Exhibit 10 to Quarterly Report on Form 10-Q for the period ended March 31, 2007, File No. 1-15929, No. 1-3382 and No. 1-3274).+*10c(16)
Amendment, dated August 5, 2005, to Employment Agreement dated between Progress Energy Service Company, LLC and Peter M. Scott III (filed as Exhibit 10 to Quarterly Report on Form 10-Q for the period ended June 30, 2005, File No. 1-15929, 1-3382 and 1-3274).+*10c(17)
Selected Executives Supplemental Deferred Compensation Program Agreement, dated August, 1996, between CP&L and C.S. Hinnant (filed as Exhibit 10c(22) to Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and No. 1-3274).+*10c(18)
Form of Executive Permanent Life Insurance Agreement (filed as Exhibit 10c(23) to Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and No. 1-3274).+*10c(19)
Progress Energy, Inc. Management Change-in-Control Plan (Amended and Restated Effective January 1, 2008) (filed as Exhibit 10c(21) to Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on February 28, 2011, File No. 1-15929, 1-3382 and 1-3274).+*10c(20)
Form of Executive and Key Manager 2008 Performance Share Sub-Plan (filed as Exhibit 10(a) to Quarterly Report on Form 10-Q for the period ended March 31, 2008, File No. 1-15929, 1-3382 and 1-3274).+*10c(21)
Form of Restricted Stock Unit Award Agreement (filed as Exhibit 10(b) to Quarterly Report on Form 10-Q for the period ended March 31, 2008, File No. 1-15929, 1-3382 and 1-3274).+*10c(22)
Amended and Restated Supplemental Senior Executive Retirement Plan of Progress Energy, Inc., effective January 1, 2009 (filed as Exhibit 10(A) to Quarterly Report on Form 10-Q for the period ended March 31, 2009, File No. 1-15929, 1-3382 and 1-3274).+*10c(23)
Executive and Key Manager 2009 Performance Share Sub-Plan (filed as Exhibit 10.1 to Current Report on Form 8-K dated March 17, 2009, File No. 1-15929).+*10c(24)
Form of Progress Energy, Inc. Restricted Stock Unit Award Agreement (filed as Exhibit 10.2 to Current Report on Form 8-K dated March 17, 2009, File No. 1-15929).+*10c(25)
Amended Management Incentive Compensation Plan of Progress Energy, Inc., as amended January 1, 2010 (filed as Exhibit 10.3 to Current Report on Form 8-K dated March 17, 2009, File No. 1-15929).+*10c(26)
Progress Energy, Inc. 2009 Executive Incentive Plan, effective March 17, 2009 (filed as Exhibit D to Form DEF 14A, as filed with the SEC on March 31, 2009, File No. 1-15929).+*10c(27)
Amended and Restated Management Incentive Compensation Plan of Progress Energy, Inc., effective September 1, 2010 (filed as Exhibit 10(a) to Quarterly Report on Form 10-Q for the period ended June 30, 2010, File No. 1-15929, 1-3382 and 1-3274).+*10c(28)
Amended and Restated Management Deferred Compensation Plan of Progress Energy, Inc., effective September 1, 2010 (filed as Exhibit 10(b) to Quarterly Report on Form 10-Q for the period ended June 30, 2010, File No. 1-15929, 1-3382 and 1-3274).+*10c(29)
Employment Agreement Term Sheet for William D. Johnson in connection with the Agreement and Plan of Merger, dated as of January 8, 2011, by and among Duke Energy Corporation, Diamond Acquisition Corporation and Progress Energy, Inc. (Exhibit C to the Agreement and Plan of Merger filed as Exhibit 2.1 to the Current Report on Form 8-K, dated January 8, 2011, File No. 1-15929).


59




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Number
Exhibit+*10c(30)
Form of Letter Agreement, dated January 8, 2011, executed by certain officers of Progress Energy, Inc., waiving certain rights under Progress Energy, Inc.’s Management Change-in-Control Plan and their employment agreements (filed as Exhibit 10.1 to the Current Report on Form 8-K dated January 8, 2011, File No. 1-15929).*10d(1)
Precedent and Related Agreements among Florida Power Corporation d/b/a Progress Energy Florida, Inc. (“PEF”), Southern Natural Gas Company, Florida Gas Transmission Company (“FGT”), and BG LNG Services, LLC (“BG”), including:
a) Precedent Agreement by and between Southern Natural Gas Company and PEF, dated December 2, 2004;
b) Gas Sale and Purchase Contract between BG and PEF, dated December 1, 2004;
c) Interim Firm Transportation Service Agreement by and between FGT and PEF, dated December 2, 2004;
d) Letter Agreement between FGT and PEF, dated December 2, 2004 and Firm Transportation Service Agreement by and between FGT and PEF to be entered into upon satisfaction of certain conditions precedent;
e) Discount Agreement between FGT and PEF, dated December 2, 2004;
f) Amendment to Gas Sale and Purchase Contract between BG and PEF, dated January 28, 2005; and g) Letter Agreement between FGT and PEF, dated January 31, 2005, (filed as Exhibit 10.1 to Current Report on Form 8-K/A filed March 15, 2005). (Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from the above-referenced Current Report and submitted separately to the SEC.)*10d(2)
Engineering, Procurement and Construction Agreement, dated as of December 31, 2008, between Florida Power Corporation d/b/a/ Progress Energy Florida, Inc., as owner, and a consortium consisting of Westinghouse Electric Company LLC and Stone & Webster, Inc., as contractor, for a two-unit AP1000 Nuclear Power Plant (filed as Exhibit 10.1 to Current Report on Form 8-K filed on March 2, 2009). (The Registrants’ have requested confidential treatment for certain portions of this exhibit pursuant to an application for confidential treatment submitted to the SEC. These portions have been omitted from the above-referenced Current Report and submitted separately to the SEC.)*12(a)
Computation of Ratio of Earnings to Fixed Charges (filed as Exhibit 12(a) to Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on February 28, 2011, File No. 1-15929, 1-3382 and 1-3274).18
Preferability Letter of Deloitte & Touche LLP (filed as Exhibit 18 to Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on February 28, 2011, File No. 1-15929, 1-3382 and 1-3274).*21
Subsidiaries of Progress Energy, Inc (filed as Exhibit 21 to Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on February 28, 2011, File No. 1-15929, 1-3382 and 1-3274).23(a)
Consent of Deloitte & Touche LLP (filed as Exhibit 23(a) to Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on February 28, 2011, File No. 1-15929, 1-3382 and 1-3274).31(a)
302 Certification of Chief Executive Officer31(b)
302 Certification of Chief Financial Officer*99.1
Policies and Procedures for the Review, Approval or Ratification of Related Person Transactions (filed as Exhibit 99.1 to Amendment No. 1 on Form 10-K/A to Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on March 17, 2011, File No. 1-15929).


*

Incorporated herein by reference as indicated.+

Management contract or compensation plan or arrangement required to be filed as an exhibit to this report pursuant to Item 14(c) of Form 10-K.


60




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