Effective January 1, 2007
Company has maintained and operated the Plan since the Effective Date pursuant
to individual deferral agreements with the Company’s Directors.
Company adopted this written restatement of the Plan effective as of January
2007 in order to clarify the rights and obligations under the Plan of the
Company and its Directors.
purpose of the Plan is to
the Company’s non-employee Directors to defer all or a portion of their annual
retainers and meeting fees in the form of Stock Units (as defined below),
thereby aligning the interests of the Directors with the interests of the
Distributions required or contemplated by this Plan or actions required to
taken under this Plan shall not be construed as creating a trust of any kind
a fiduciary relationship between the Company and any Director, any Director’s
designated beneficiary, or any other person.
Plan is intended to comply with the requirements of Section 409A of the Internal
Revenue Code and the regulations and other guidance issued thereunder, as in
effect from time to time (“Section 409A”). To the extent a provision of the Plan
is contrary to or fails to address the requirements of Section 409A, the Plan
shall be construed and administered as necessary to comply with such
requirements until this Plan is appropriately amended.
following terms shall have the following meanings unless the context in which
they are used clearly indicates that some other meaning is
means the bookkeeping account maintained for each Director which shall be
credited with all Voluntary Deferrals elected by a Director, all Automatic
Deferrals and Matching Contributions made on behalf of
Director, and all dividend credits with respect to Stock Units in the Account,
and other adjustments thereto.
Deferral” means the portion of a Director’s annual retainer that is
automatically deferred under this Plan pursuant to Section 6.1.
means the beneficiary or beneficiaries designated by a Director pursuant to
Section 11.7 to receive the benefits, if any, payable on behalf of the Director
under the Plan after the death of such Director, or, when there has been no
designation or an invalid designation, the individual or entity, or the
individuals or entities, who will receive such amount.
means the Board of Directors of the Company.
in Control” means “Change in Control,” as defined in Section 2.5.1 of the
Progress Energy, Inc. Management Change in Control Plan (Amended and Restated
Effective January 1, 2007).
means the Internal Revenue Code of 1986, as amended.
means the Board’s Committee on Corporate Governance.
Stock” means the common stock of the Company.
means a Director’s annual retainer fees, meeting fees and committee fees
otherwise payable to such Director during his or her current term as a
Directors” mean the members of the Board as of January 1, 2007; provided,
however, that any person becoming a Director subsequent to such date whose
election or nomination for election was supported by 75 percent or more of
Directors who then comprised the Continuing Directors shall be considered to
a Continuing Director.
Election” means an annual irrevocable election, made in accordance with Section
6 in such form (electronic or otherwise) as approved and provided by the
Committee, to defer the receipt of a designated amount of
mean Automatic Deferrals and Voluntary Deferrals.
means any person (other than a person who is an employee of the Company) who
been elected to serve as a member of the Board and any former member of the
Board for whom an Account is maintained under this Plan.
Date” means January 1, 2007.
Market Value” means the average of the highest and lowest selling prices of
Common Stock on the date a Director’s Account is credited (or on the last
preceding trading date if Common Stock is not traded on such date) if Common
Stock is readily tradable on a national securities exchange or other market
system. If the Common Stock is not readily tradable on a national securities
exchange or other market system, an amount determined in good faith by the
as the fair market value of Common Stock on the date of
Contributions” mean discretionary amounts the Company may from time to time
contribute to Directors’ Accounts based on the Company’s achievement of
corporate incentive goals.
Year” means the calendar year ending on each December 31.
Units” mean investment units, each of which is deemed to be equivalent to one
share of Common Stock.
Deferrals” mean the Compensation that a Director elects to defer under this Plan
pursuant to Section 6.2.
Committee shall have the responsibility, in its sole discretion, to control,
operate, manage and administer the Plan in accordance with its
of the Committee.
Committee shall have all the discretionary authority that may be necessary
helpful to enable it to discharge its responsibilities with respect to the
including but not limited to the following:
correct any defect, supply any omission, and reconcile any inconsistency in
Plan in such manner and to such extent as it shall deem appropriate in its
discretion to carry the same into effect;
administrative guidelines as an aid to administer the Plan and make changes
such guidelines as it from time to time deems proper;
rules for carrying out and administering the Plan and make changes in such
as it from time to time deems proper;
extent permitted under the Plan, grant waivers of Plan terms, conditions,
restrictions and limitations; and
any and all other actions it deems necessary or advisable for the proper
operation or administration of the Plan.
by the Committee.
Committee may act only by a majority of its members. Subject to applicable
any determination of the Committee may be made, without a meeting, by a writing
or writings signed by all of the members of the Committee. In addition, the
Committee may authorize any one or more of its members to execute and deliver
documents on behalf of the Committee.
to applicable law, the Committee may delegate to one or more of its members,
to one or more agents, such duties, responsibility and authority with respect
this Plan as it may deem advisable. In addition, the Committee, or any person
whom it has delegated duties, responsibility and authority as aforesaid, may
employ one or more persons to render advice with respect to any responsibility
the Committee or such person may have under the Plan. The Committee may employ
such legal or other counsel, consultants and agents as it may deem desirable
the administration of the Plan and may rely upon any opinion or computation
received from any such counsel, consultant or agent. Expenses incurred by the
Committee in the engagement of such counsel, consultant or agent shall be paid
by the Company or the Subsidiary whose employees have benefited from the Plan,
as determined by the Committee.
and Interpretations by the Committee.
determinations and interpretations made by the Committee shall be binding and
conclusive on all Directors and their heirs, successors, and legal
Directors are automatically eligible and shall participate in the Plan.
portion of each Director’s annual retainer, in an amount established from time
to time by the Board, shall automatically be deferred under this Plan, which
amount for purposes of the Plan shall be referred to as an “Automatic Deferral.”
Unless and until changed by the Board, the annual amount of the Automatic
Deferral shall be $15,000.
addition to Automatic Deferrals, a Director may elect to defer all or any
portion, expressed as a whole percentage, of his or her remaining Compensation
by filing the appropriate Deferral Election with the Committee's designee.
Deferrals under this Section 6.2 shall be known as “Voluntary
Term Deferral Elections.
individual who is elected to serve as a Director or who is nominated for
election as a Director (other than an individual who was a Director immediately
before such election or nomination) shall have the right at any time before
end of the thirty (30) day period immediately following the effective date
his or her election as a Director to elect to defer the payment of all or any
portion of his or her future Compensation by filing the appropriate Deferral
Election with the Committee's designee.
the beginning of each calendar year, a Director shall have the right to elect
defer the payment of his or her Compensation which is attributable to services
rendered as a Director during such calendar year by filing the appropriate
Deferral Election with the Committee's designee. Any Deferral Election which
made and which is not revoked before the beginning of such calendar year shall
become irrevocable on the first day of such calendar year and shall remain
irrevocable through the end of such calendar year.
Renewal of Deferral Elections.
Director makes a Deferral Election under either Section 6.3 or Section 6.4
any calendar year and does not revoke such Deferral Election before the
beginning of any subsequent calendar year, such Deferral Election shall remain
in effect for each such subsequent calendar year and shall be irrevocable
through the end of each subsequent calendar year.
Compensation which a Director defers under this Section shall be credited to
or to her Account effective as of the business day on which such Compensation
would otherwise have been paid to the Director.
Company may from time to time in its sole discretion make Matching Contributions
to Directors’ Accounts which shall be converted to Stock Units as specified in
of Deferrals and Matching Contributions to Stock Units.
Deferrals and Matching Contributions shall be converted to Stock Units on the
day such Deferrals and Matching Contributions are credited to a Director’s
Account. The number of Stock Units to be credited shall be determined by
dividing the dollar value of the Deferrals and Matching Contributions credited
to a Director’s Account by the Fair Market Value of one share of Common Stock as
of the date on which the Deferrals and Matching Contributions are converted
of Dividend Equivalents to Stock Units.
Directors’ Accounts will be credited with additional fully vested Stock Units as
of the payment date of any dividends declared on the Common Stock. The number
additional Stock Units credited to an Account shall be determined by dividing
(i) the product of the per-share cash dividend amount (or the value of any
non-cash dividend) times the number of Stock Units credited to the Account
the record date for such dividend, by (ii) the Fair Market Value of one share
Common Stock as of the dividend payment date.
Other Investment Alternatives.
contained in this Plan shall be construed to give any Director any power or
control to make investment decisions with respect to Deferrals or Matching
Contributions other than the conversion to Stock Units as provided in this
Section 8. Nothing contained in the Plan shall be construed to require the
Company or the Committee to fund any Director's Account.
Director shall be fully vested at all times in the Stock Units credited to
or her Account.
and Form of Distributions
Directors must make or have in effect an election for each Plan Year regarding
the timing of distributions to be made under the Plan as set forth in Section
9.2(b) below (a “Distribution Election”). The Distribution Election shall have
been or shall be made pursuant to a “Method of Payment Agreement” or otherwise
pursuant to a Director’s Deferral Election.
Director may only have one Distribution Election in effect with respect to
Deferrals and Matching Contributions made prior to January 1, 2005 (the “409A
Grandfathered Amounts”). A Director may change his or her Distribution Election
with respect to 409A Grandfathered Amounts by completing and signing a new
Method of Payment Agreement provided by the Company; provided, however, that
such new Method of Payment Agreement shall not be effective for a period of
(6) months from the day it is delivered to the Company.
respect to Deferrals and Matching Contributions made after January 1, 2005,
Director must make or have in effect a Deferral Election with respect to an
upcoming Plan Year no later than December 31 of the preceding Plan Year, which
Deferral Election shall be irrevocable for such Plan Year. A Director may change
his or her Distribution Election in effect for a subsequent Plan Year by
delivering a new Method of Payment Agreement to the Company on or before
December 31 of the preceding Plan Year. A Deferral Election will remain in
effect for future Plan Years unless and until changed by the Director’s timely
delivery of a new Method of Payment Agreement with respect to an upcoming Plan
Year. A Director may not amend or change a Distribution Election with respect
any prior Plan Year. Notwithstanding the foregoing, a Director may make a
one-time change to his or her Distribution Election with respect to all Plan
Years, including the 2007 Plan Year, on or before December 31, 2007, subject
the transition relief rules under Code Section 409A and the regulations
director’s Distribution Election shall specify whether the Director shall
receive distributions (i) in a single lump sum payment in cash as soon as
practicable following the first business day of the calendar year following
year in which the Director’s service as a member of the Board terminates for any
reason or (ii) in a series of annual installments (not to exceed 10) commencing
as soon as practicable following the first business day of the calendar year
following the year in which the Director’s service as a member of the Board
terminates for any reason. If the Director has elected to receive installment
payments, the amount of each installment shall be determined by dividing the
number of Stock Units credited to the Director’s Account on the first business
day preceding the date of payment by the number of installments remaining to
paid, and then converting the number of Stock Units determined thereby into
cash payment as provided in Section 9.2(c) below.
distributions under this Plan shall be in cash. Prior to any distribution,
Units shall be converted into the right to receive a cash payment equal to
number of Stock Units being distributed multiplied by the Fair Market Value
share of Common Stock on the date of distribution.
Notwithstanding anything in this Plan to the contrary (and regardless of any
distribution election in the Director’s Deferral Agreement, Method of Payment
Agreement or Deferral Election), the value of the Director's entire Account
shall be distributed in a single lump sum to the Director’s Beneficiary as soon
as administratively feasible after the Director’s death.
event a Director incurs a financial hardship as a result of an “unforeseeable
emergency” (as such term is defined below), the Director may apply to the
Committee for the distribution of all or a portion of the Director’s Account.
The application shall provide such information and be in such form as the
Committee shall require. The Committee, in the exercise of its sole and absolute
discretion, may approve or deny the request in whole or in part. The term
“unforeseeable emergency” shall mean a severe financial hardship to the Director
resulting from an illness or accident of the Director, the Director’s spouse, or
a dependent (as defined in Section 152(a) of the Code) of the Director, loss
the Director’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control
the Director. In no event may the amounts distributed with respect to an
unforeseeable emergency exceed the amounts necessary to satisfy such emergency
plus amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such hardship is
may be relieved through reimbursement, cancellation of Deferrals for the
remainder of the Plan Year, or compensation by insurance or otherwise or by
liquidation of the Director’s assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship). If a Director receives
a distribution of all or a portion of the Director’s Account pursuant to this
Section 9.3, any Deferral Election in effect for the Director shall be
cancelled, and the Director shall make no additional Voluntary Deferrals for
remainder of the current Plan Year. The Director may make Voluntary Deferrals
with respect to future Plan Years by delivering a new Deferral Election in
accordance with Section 6.4. Notwithstanding any provision in the Plan to the
contrary, any payment made pursuant to this Section 9.3 shall comply with
Section 409A(a)(2)(A)(vi) of the Code and the regulations (or similar guidance)
promulgated thereunder (or under any successor provisions).
OF PLAN; AMENDMENT AND TERMINATION
shall be effective as of the Effective Date. The Plan shall remain in effect
until the Board terminates the Plan.
or Amendment of Plan.
Board may amend, suspend or terminate the Plan at any time with or without
notice; provided, however, that
action authorized by this Section 10.2 shall reduce the balance or adversely
affect the Account of a Director.
there shall be any change in Common Stock through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, reverse stock
split, split up, spin-off, combination of shares, exchange of shares, dividend
in kind or other like change in capital structure or distribution (other than
normal cash dividends) to holders of Common Stock, the number of Stock Units
the Director’s Account shall be adjusted to equitably reflect such change or
Plan and all actions taken in connection herewith shall be governed by and
construed in accordance with the laws of the State of North Carolina without
reference to principles of conflict of laws, except as superseded by applicable
Right Title or Interest in Company Assets.
Directors shall have no right, title, or interest whatsoever in or to any
investments which the Company may make to aid it in meeting its obligations
under the Plan. Nothing contained in the Plan, and no action taken pursuant
its provisions, shall create or be construed to create a trust of any kind,
fiduciary relationship between the Company and any Director, beneficiary, legal
representative or any other person. To the extent that any person acquires
right to receive payments from the Company under the Plan, such right shall
no greater than the right of an unsecured general creditor of the Company.
payments to be made hereunder shall be paid from the general funds of the
Company and, except as provided in Section 11.10 below, no special or separate
fund shall be established and no segregation of assets shall be made to assure
payment of such amounts.
Right to Continued Service.
Director’s rights, if any, to continue to serve the Company as a member of the
Board shall not be enlarged or otherwise affected by his or her participation
Plan shall not affect or impair the rights or obligations of the Company or
Director under any other written plan, contract, arrangement, or pension, profit
sharing or other compensation plan.
term or condition of the Plan shall be invalid or unenforceable to any extent
in any application, then the remainder of the Plan, with the exception of such
invalid or unenforceable provision, shall not be affected thereby and shall
continue in effect and application to its fullest extent. If, however, the
Committee determines in its sole discretion that any term or condition of the
Plan which is invalid or unenforceable is material to the interests of the
Company, the Committee may declare the Plan null and void in its
Director may file with the Company a designation in such form (electronic or
otherwise) as approved and provided by the Company of one or more persons as
Beneficiary who shall be entitled to receive the benefits, if any, payable
the Plan after the Director’s death. A Director may from time to time revoke or
change such Beneficiary designation without the consent of any prior Beneficiary
by filing a new designation with the Company. The last such designation received
by the Company shall be controlling; provided, however, that no designation,
change or revocation thereof, shall be effective unless received by the Company
prior to the Director’s death, and in no event shall it be effective as of any
date prior to such receipt. All decisions of the Committee concerning the
effectiveness of any Beneficiary designation and the identity of any Beneficiary
shall be final. If a Beneficiary shall die after the death of the Director
prior to receiving the payment(s) that would have been made to such Beneficiary
had such Beneficiary’s death not occurred, then for the purposes of the Plan the
payment(s) that would have been received by such Beneficiary shall be made
the Beneficiary’s estate.
Director or spouse of a Director shall have any right to encumber, transfer
otherwise dispose of or alienate any present or future right or expectancy
the Director or such spouse may have at any time to receive payments of benefits
hereunder, which benefits and the right thereto are expressly declared to be
nonassignable and nontransferable, except to the extent required by law. Any
attempt to transfer or assign a benefit, or any rights granted hereunder, by
Director or the spouse of a Director shall be null and void and without
Plan, as set forth herein, supersedes any and all prior practices,
understandings, agreements, descriptions or other non-written arrangements
respect to the subject matter hereof.
in Control. In
case of a Change in Control, the Company, subject to the restrictions in this
Section 11.10 and in Section 11.3, shall irrevocably set aside funds in one
more grantor trusts in an amount that is sufficient to pay each Director the
value of the Director’s Account as of the date on which the Change in Control
occurs; provided, however, that the Company shall establish no such trust if
assets thereof are includable in the income of Directors thereby pursuant to
Section 409A(b). The obligations and responsibilities of the Company under
Plan shall be assumed by any successor or acquiring corporation, and all of
rights, privileges and benefits of the Directors hereunder shall continue
following the Change in Control.
WITNESS WHEREOF, this instrument has been executed this 13th day of December,
By: /s/ Robert B. McGehee