At least one company is leaving Lake Wobegon behind. Progress Energy, an energy service company serving the southeast United States, has changed its approach to the competition derby this year, ratcheting down its targets and assumptions for long-term incentive awards. No longer are executives routinely awarded at the 75th percentile; now the company is using the 50th percentile for target performance.
The change reflects “a compensation philosophy shift” at the company, according to its filing, with the result that each executive will earn either above-median or below-median pay depending upon performance.
For the company’s top executive, the change is meaningful, representing about a 20 percent decline in potential long-term incentive pay. Under the new arrangement, Robert B. McGehee, chief executive officer, has an incentive target equal to 350 percent of his base salary, down from 435 percent last year.
Others at the company will take less of a hit: William D. Johnson, president and chief operating officer, stands to earn 275 percent of salary as a result of the shift, down from 300 percent last year. And John R. McArthur, Progress Energy’s general counsel, and C.S. Hinnant, its chief nuclear officer, may earn 150 percent of salary this year, down from 165 percent last year.