<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[_] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Carolina Power & Light Company
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
R R Donnelley Financial
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PRELIMINARY COPY
CAROLINA POWER & LIGHT COMPANY
411 FAYETTEVILLE STREET
RALEIGH, NORTH CAROLINA 27601
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 10, 1995
The Annual Meeting of the Shareholders of Carolina Power & Light Company will
be held in the Northeast Exhibit Hall of the Raleigh Civic Center, Fayetteville
Street Mall, Raleigh, North Carolina, on May 10, 1995, at 10 o'clock a.m., for
the following purposes:
(1) To act upon two proposals which would (i) amend the Company's Restated
Charter and By-Laws to establish a variable range for the size of the
Board of Directors, and (ii) amend the Company's By-Laws to provide for
classification of the Board of Directors;
(2) To elect directors of the Company; and
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
All shareholders of $5 Preferred Stock, Serial Preferred Stock and Common
Stock of record at the close of business on March 3, 1995, will be entitled to
vote on all questions at the meeting or any adjournment thereof. The stock
transfer books will remain open.
By order of the Board of Directors.
RICHARD E. JONES
Senior Vice
President,
General Counsel
and Secretary
Raleigh, North Carolina March 31, 1995
Shareholders who do not plan to attend the meeting are requested to
SIGN, DATE and RETURN their proxies promptly.
<PAGE>
PRELIMINARY COPY
CAROLINA POWER & LIGHT COMPANY
411 FAYETTEVILLE STREET
RALEIGH, NORTH CAROLINA 27601
----------------
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Carolina Power & Light Company (Company) of proxies in
the accompanying form to be used at the Annual Meeting of Shareholders to be
held in the Northeast Exhibit Hall of the Raleigh Civic Center, Fayetteville
Street Mall, Raleigh, North Carolina, on May 10, 1995, at 10 o'clock a.m., and
at any subsequent time which may be made necessary by its adjournment. The
Proxy Statement and form of proxy were first sent to shareholders on or about
March 31, 1995.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR 1994,
INCLUDING FINANCIAL STATEMENTS AND SCHEDULES, ARE AVAILABLE UPON WRITTEN
REQUEST, WITHOUT CHARGE, TO THE PERSONS WHOSE PROXIES ARE SOLICITED. ANY
EXHIBIT TO FORM 10-K IS ALSO AVAILABLE UPON WRITTEN REQUEST AT A REASONABLE
CHARGE FOR COPYING AND MAILING. WRITTEN REQUESTS SHOULD BE MADE TO MS. MARGARET
S. GLASS, VICE PRESIDENT AND TREASURER, CAROLINA POWER & LIGHT COMPANY, P. O.
BOX 1551, RALEIGH, NORTH CAROLINA 27602.
PROXIES
The accompanying proxy is solicited by the Board of Directors of the Company
and the entire cost of solicitation of proxies will be borne by the Company.
The Company expects to solicit proxies primarily by mail although proxies may
be solicited by telephone, telegraph or personally by officers and employees of
the Company, who will not be specially compensated for such services.
Additionally, solicitation of proxies will be made by Morrow & Co., Inc. at a
cost to the Company of approximately $20,000 plus out-of-pocket expenses.
Any shareholder who has executed a proxy and attends the meeting may elect to
vote in person rather than by proxy. A shareholder may revoke his proxy at any
time before it is exercised by filing written notice thereof or by filing a
later valid proxy with the Secretary of the Company. All shares represented by
valid proxies received pursuant to this solicitation, and not revoked before
they are exercised, will be voted in the manner specified therein. Where
specifications are not made, proxies will be voted for the proposals to amend
the Company's Restated Charter and By-Laws and for the election of Directors as
set forth in this Proxy Statement and, in the discretion of the named proxies,
upon such other business as may properly come before the meeting.
VOTING SECURITIES
The Directors of the Company have fixed March 3, 1995, as the record date for
shareholders entitled to vote at the Annual Meeting and only shareholders of
record at the close of business on that date will be entitled to vote.
Accordingly, only holders of the Company's $5 Preferred Stock, Serial Preferred
Stock and Common Stock of record at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting. Holders of $5
Preferred Stock, Serial Preferred Stock and Common Stock will vote together
1
<PAGE>
without regard to class upon the matters currently expected to come before the
Annual Meeting. Each share is entitled to one vote on each such matter,
including the election of Directors. As of March 3, 1995, there were outstanding
237,259 shares of $5 Preferred Stock, 1,200,000 shares of Serial Preferred
Stock, and [TO BE INSERTED AFTER RECORD DATE] shares of Common Stock. Pursuant
to the provisions of the North Carolina Business Corporation Act, as amended,
Directors will be elected by a plurality of the votes cast. Approval of the
proposal relating to the establishment of a variable range for the size of the
Board of Directors will require the affirmative vote of the holders of a
majority of the shares outstanding and entitled to vote. Abstentions and broker
non-votes will have the effect of a "negative" vote with respect to this
proposal. Approval of the proposal relating to the classification of the Board
of Directors will require the affirmative vote of the holders of a majority of
the shares voted with respect to such matters. Abstentions and broker non-votes
will not have the effect of a "negative" vote with respect to this proposal.
ELECTION OF DIRECTORS
Based on the report of the Nominating Committee (see page ), the Board of
--
Directors nominates for election the twelve nominees listed below. Valid
proxies received pursuant to this solicitation will be voted in the manner
specified therein. Where specifications are not made, the shares represented by
the accompanying proxy will be voted for the election of the twelve nominees in
the classes and for the terms indicated (in each case, until their respective
successors have been elected and qualified):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class I Class II Class III
(Term expiring in 1996) (Term expiring in 1997) (Term expiring in 1998)
- ---------------------------------------------------------------------------------
<S> <C> <C>
[insert four names] [insert four names] [insert four names]
- --------------------------------------------------------------------------------
</TABLE>
Votes (other than votes withheld) will be cast pursuant to the accompanying
proxy for the election of the nominees listed above unless, by reason of death
or other unexpected occurrence, one or more of such nominees shall not be
available for election, in which event it is intended that such votes will be
cast for such substitute nominee or nominees as may be determined by the
persons named in such proxy. The Board of Directors has no reason to believe
that any of the nominees listed above will not be available for election as a
director.
In the event either or both of the management proposals described on pages -
- -
are not approved, proxies will be voted as appropriate for the twelve nominees
listed below and for any additional nominees required in order to elect an
appropriate number of directors, for an appropriate term or terms, as required
by the Company's Restated Charter and By-Laws.
The names of the twelve nominees for election to the Board of Directors,
their ages, principal occupations or employment for the past five years, and
current directorships are set forth below. Mr. Gordon C. Hurlbert, who has
served as a director since 1984 with distinction, has reached retirement age
from the Board and is not a candidate for re-election.
[INSERT NOMINEE]
EDWIN B. BORDEN, age 61, is President of The Borden Manufacturing Company, a
textile yarn manufacturer. He has served as a Director of the Company since
1985 and also serves as a director of Jefferson-Pilot Corporation, Triangle
Bancorp, Inc., Ruddick Corporation and Winston Hotels, Inc.
FELTON J. CAPEL, age 68, is President of Century Associates of North
Carolina, distributors of cookware and housewares. He has served as a Director
of the Company since 1972.
2
<PAGE>
WILLIAM CAVANAUGH III, 56, is President and Chief Operating Officer of the
Company (since September 1992). He previously served in various executive
capacities for Entergy Corporation and its affiliates. He has served as a
Director of the Company since 1993.
GEORGE H. V. CECIL, age 70, is Chairman of Biltmore Farms, Inc., a real
estate and investment entity (since 1992). He previously served as President.
He has served as a Director of the Company since 1976 and also serves as a
director of Multimedia, Inc.
CHARLES W. COKER, age 61, is Chairman and Chief Executive Officer of Sonoco
Products Company, a manufacturer of paperboard and paper and plastics packaging
products. He has served as a Director of the Company since 1975 and also serves
as a director of NationsBank Corporation, Sara Lee Corporation and Springs
Industries, Inc.
RICHARD L. DAUGHERTY, age 59, is the retired Vice President of IBM PC
Company, manufacturers and distributors of personal computers worldwide, and
former Senior State Executive for IBM Corporation in North Carolina. Mr.
Daugherty retired from IBM in August 1994. He has served as a Director of the
Company since 1992.
J. R. BRYAN JACKSON, age 63, is Chairman and Chief Executive Officer of
Superior Machine Company of S.C., Inc., a heavy industrial machinery
manufacturing and repair company. He has served as a Director of the Company
since 1986.
ROBERT L. JONES, age 58, is President of Davidson and Jones Corporation,
general contractors/developers and operators of real estate properties. He has
served as a Director of the Company since 1990 and also serves as a director of
Giant Group, Ltd.
ESTELL C. LEE, age 59, is President of The Lee Company, a building supplies
company. Previously, she was Secretary of the North Carolina Department of
Economic and Community Development and President of Seacor, Inc. She has served
as a Director of the Company since 1988.
SHERWOOD H. SMITH, JR., age 60, is Chairman and Chief Executive Officer of
the Company (since 1992). He previously served as Chairman/President and Chief
Executive Officer. He has served as a Director of the Company since 1971 and
also serves as a director of Wachovia Corporation, Springs Industries, Inc.,
and Northern Telecom Limited, and as a Trustee of The Northwestern Mutual Life
Insurance Company.
J. TYLEE WILSON, age 63, is retired Chairman and Chief Executive Officer of
RJR Nabisco, Inc. He has served as a Director of the Company since 1987 and
also serves as a director of BellSouth Corporation.
PRINCIPAL SHAREHOLDER
The following table sets forth the only shareholder known to the Company to
beneficially own more than 5% of the outstanding shares of the Common Stock of
the Company as of December 31, 1994. The Company does not know of any
shareholder that owned more than 5% of any other class of the Company's voting
securities as of December 31, 1994.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Number of Shares of Common Percentage of Common
Name and Address Stock Beneficially Owned/1/ Stock Outstanding
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Wachovia Bank of North Carolina, N.A.
Post Office Box 3099
Winston-Salem, North Carolina 27102 25,027,393 15.9%
- --------------------------------------------------------------------------------------------
</TABLE>
/1/Consists of shares of Common Stock held in fiduciary capacity as Trustee
of the Company's Stock Purchase-Savings Plan. Wachovia Bank of North Carolina,
N.A. has sole voting power with respect to 746,923 shares, shared voting power
with respect to 24,240,570 shares, sole dispositive power with respect to
673,153 shares and shared dispositive power with respect to 124,644 shares.
3
<PAGE>
MANAGEMENT OWNERSHIP OF COMMON STOCK
The following table presents information regarding the beneficial ownership
of the Common Stock of the Company and ownership of Common Stock units as of
December 31, 1994 of (i) all current directors and nominees for director, (ii)
each executive officer of the Company named in the Summary Compensation Table
contained elsewhere herein and (iii) all directors and executive officers as a
group. A unit of Common Stock does not represent an equity interest in the
Company and possesses no voting rights, but is equal in value at all times to a
share of Common Stock. As of December 31, 1994, none of the individuals or
group in the above categories owned one percent (1%) or more of any class of
the Company's voting securities.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number of Shares of Common Stock
Beneficially Owned/1/ and Units Representing
Name Shares of Common Stock/2/,/3/,/4/
- --------------------------------------------------------------------------------
<S> <C> <C>
[Insert nominee]
Charles D. Barham, Jr. 22,766/5/ Common Stock
8,605/3/,/4/ Units
Edwin B. Borden 3,687 Common Stock
8,183/2/ Units
Felton J. Capel 1,000 Common Stock
8,009/2/ Units
William Cavanaugh III 7,005/6/ Common Stock
9,401/3/,/4/ Units
George H. V. Cecil 2,000 Common Stock
3,682/2/ Units
Charles W. Coker 2,388/7/ Common Stock
8,331/2/ Units
Richard L. Daugherty 692 Common Stock
2,737/2/ Units
William E. Graham, Jr. 25,239/8/ Common Stock
80/2/ Units
Gordon C. Hurlbert 4,808 Common Stock
15,547/2/ Units
J. R. Bryan Jackson 2,827 Common Stock
113/2/ Units
Richard E. Jones 10,039/9/ Common Stock
5,009/3/,/4/ Units
Robert L. Jones 5,441/10/ Common Stock
5,194/2/ Units
Estell C. Lee 4,484/11/ Common Stock
7,621/2/ Units
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Number of Shares of Common Stock
Beneficially Owned/1/ and Units Representing
Name Shares of Common Stock/2/,/3/,/4/
- -------------------------------------------------------------------------------------
<S> <C> <C>
William S. Orser 2,787 Common Stock
1,498/3/,/4/ Units
Sherwood H. Smith, Jr. 64,134/12/ Common Stock
20,829/3/,/4/ Units
J. Tylee Wilson 4,000 Common Stock
113/2/ Units
Shares of Common Stock beneficially owned
by all directors and executive
officers of the Company as a group (20
persons) 207,484 Common Stock
- -------------------------------------------------------------------------------------
</TABLE>
/1/Unless otherwise noted, all shares of Common Stock set forth in the table
are beneficially owned, directly or indirectly, with sole voting and
investment power, by such shareholder.
/2/Consists of units representing Common Stock of the Company under the
Directors Deferred Compensation Plan (see "Directors' Compensation" on page ).
--
/3/Consists of performance units under the Long-Term Compensation Program
(see "Summary Compensation Table" on page and footnote 4 thereunder).
--
/4/Consists of replacement units to replace the value of Company
contributions to the Stock-Purchase Savings Plan that would have been made but
for the deferral of salary under the Key Management Deferred Compensation Plan
and contribution limitations under Section 415 of the Internal Revenue Code of
1986, as amended (see "Summary Compensation Table" on page and footnote 4
--
thereunder).
/5/Includes 200 shares with shared voting and investment power owned by
members of immediate family to which beneficial ownership has not been
disclaimed.
/6/Includes 322 shares with shared voting and investment power owned by
members of immediate family to which beneficial ownership has not been
disclaimed.
/7/Includes 2,188 shares with shared voting and investment power owned by
members of immediate family to which beneficial ownership has not been
disclaimed.
/8/Includes 5,800 shares with shared voting and investment power owned by
members of immediate family to which beneficial ownership has not been
disclaimed. Does not include 50 shares of $7.95 Serial Preferred Stock
with shared voting and investment power owned by members of immediate family
to which beneficial ownership has not been disclaimed.
/9/Does not include 920 shares owned by members of immediate family to which
beneficial ownership has been disclaimed.
/10/Includes 3,441 shares with shared voting and investment power owned by
members of immediate family to which beneficial ownership has not been
disclaimed.
/11/Includes 160 shares with shared voting and investment power owned by
members of immediate family to which beneficial ownership has not been
disclaimed.
/12/Does not include 900 shares owned by members of immediate family to
which beneficial ownership has been disclaimed.
5
<PAGE>
BOARD OF DIRECTORS
The Board of Directors is currently comprised of fourteen members. The Board
of Directors met six times in 1994. Average attendance of the Directors at the
meetings of the Board and its Committees held during 1994 was 95%.
The Board of Directors appoints from the Board a Committee on Audit, Finance
and Corporate Performance, a Committee on System Operations, Forecasting and
Development, a Committee on Personnel, Executive Development and Compensation,
a Committee on Customer and Public Relations, and a Nominating Committee.
COMMITTEE ON AUDIT, FINANCE
AND CORPORATE PERFORMANCE
The Committee on Audit, Finance and Corporate Performance is presently
composed of five outside Directors--Mr. J. Tylee Wilson, Chairman, Ms. Estell
C. Lee and Messrs. George H. V. Cecil, J. R. Bryan Jackson and Robert L. Jones.
The work of this Committee includes review of the performance of the
independent auditors and the internal audit department. The Committee reviews
corporate goals established by the Company and the Company's progress in
achieving these goals. The Committee also maintains an overall view of the long
and short range financial planning of the Company and the supporting rate
action. The Committee held two meetings in 1994.
COMMITTEE ON SYSTEM OPERATIONS,
FORECASTING AND DEVELOPMENT
The Committee on System Operations, Forecasting and Development is presently
composed of six outside Directors--Messrs. Edwin B. Borden, Chairman, Felton J.
Capel, Richard L. Daugherty, William E. Graham, Jr., Gordon C. Hurlbert and
Robert L. Jones. The Committee examines the Company's projections as to the
economic development of the Company's service area and the estimates of sales
and load growth. The Committee considers recommendations as to the locations of
generating facilities and types of fuels for these facilities. It also reviews
the Company's construction budget and generation plan. The Committee held two
meetings in 1994.
COMMITTEE ON PERSONNEL, EXECUTIVE
DEVELOPMENT AND COMPENSATION
The Committee on Personnel, Executive Development and Compensation is
presently composed of five outside Directors--Messrs. Gordon C. Hurlbert,
Chairman, Edwin B. Borden, George H. V. Cecil, Charles W. Coker and J. Tylee
Wilson. The Committee ascertains that personnel policies and procedures are in
keeping with all governmental rules and regulations and are designed to attract
and retain competent, talented employees and develop the potential of these
employees. The Committee reviews all executive development plans, makes
executive compensation decisions and oversees plans for management succession.
The Committee held four meetings in 1994.
COMMITTEE ON CUSTOMER AND PUBLIC RELATIONS
The Committee on Customer and Public Relations is presently composed of six
outside Directors--Mr. J. R. Bryan Jackson, Chairman, Ms. Estell C. Lee and
Messrs. Felton J. Capel, Richard L. Daugherty, William E. Graham, Jr. and
Robert L. Jones. It is the responsibility of the Committee to review, monitor
and assess the effectiveness of the Company's communications programs for
informing its customers, the general public and the various governmental
bodies. The Committee held two meetings in 1994.
6
<PAGE>
NOMINATING COMMITTEE
The Nominating Committee is presently composed of five outside Directors--
Messrs. George H. V. Cecil, Chairman, Edwin B. Borden, Gordon C. Hurlbert, J.
R. Bryan Jackson and J. Tylee Wilson. The Committee proposes to the Board
annually a slate of nominees for directors to be submitted to the shareholders
for election at the Annual Meeting of Shareholders. It is also the
responsibility of the Committee to submit nominations for the filling of
vacancies which occur at other times. Shareholder suggestions as to persons
suitable for service on the Board sent to the Chairman of the Nominating
Committee at the Company's principal office are received and considered by the
Nominating Committee. The Committee held one meeting in 1994.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive an annual retainer of
$20,000, of which $2,000 is automatically deferred under the Directors Deferred
Compensation Plan (see below), and an attendance fee of $1,000 per meeting for
regularly scheduled Board meetings. Directors who are not employees of the
Company also receive an attendance fee for committee meetings of $1,000 for
committee members and $1,200 for committee chairmen except that the attendance
fee is $500 and $600 for committee members and committee chairmen,
respectively, for a committee meeting held on the day of a regularly scheduled
Board meeting or another committee meeting. Directors who are officers do not
receive an annual retainer or attendance fees. All Directors are reimbursed for
expenses incident to their service as Directors.
In addition to the $2,000 in annual retainer which is automatically deferred,
outside Directors may elect to defer the remainder of their annual retainer and
Board attendance fees until after the termination of their service on the Board
under the Directors Deferred Compensation Plan. Any fees so deferred 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 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.
Directors are also eligible for matching contributions of up to $2,000 under
an incentive compensation program. Awards under this program are based upon the
achievement of the corporate incentive goals which are established each year by
the Board and used as the basis for a matching contribution of shares of Common
Stock for participating employees in the Company's Stock Purchase-Savings Plan.
In the event that five of the corporate incentive goals are met, the $2,000
portion of the annual retainer which is automatically deferred pursuant to the
Directors Deferred Compensation Plan will be increased by 50 percent, with an
additional 10 percent increase for each corporate incentive goal met in excess
of five (up to a maximum matching contribution of 100 percent).
An unfunded plan for outside Directors who have served on the Board for a
minimum period of five years provides retirement compensation to outside
Directors in an amount established by the Board (currently $15,000 annually)
for life or for the number of years the individual has served on the Board,
whichever period expires first.
7
<PAGE>
All of the Directors participate in a Directors' Educational Contribution
Plan. The plan is funded by policies of corporate-owned life insurance on the
lives of pairs of Directors, with proceeds payable to the Company at the death
of the second to die in each pair. All costs of the plan are expected to be
covered from the life insurance proceeds to be received by the Company.
Pursuant to this plan, the Company will make a contribution in the name of each
Director to an educational institution or approved educational foundation or
fund in North Carolina or South Carolina selected by the Director and approved
by the Executive Committee of the Board of Directors. The contribution will be
made at the later to occur of the retirement of the Director from the Board of
Directors or ten years from the date of adoption of the plan. If a Director has
served as a Director for at least five but less than ten years at the time the
contribution is to be made, the Company will contribute $250,000 in the name of
the Director. If the Director has served for ten or more years, the amount of
the contribution will be $500,000. The plan may be terminated at any time in
the discretion of the Executive Committee without recourse or obligation to the
Company.
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
- -------------------------------------------------------------------------------------------------------
Name Other Restricted All
and Annual Stock Other
Principal Salary/1/ Bonus/2/ Compensation/3/ Award(s)/4/ Compensation
Position Year ($) ($) ($) ($) ($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sherwood H. Smith, Jr., 1994 $595,000 $ * $ 7,428 $ * /5/ $ 58,530/6/
Chairman and Chief 1993 567,000 160,000 182,776 60,372
Executive Officer 1992 542,000 150,000 180,129 62,163
William Cavanaugh III, 1994 $420,000 $ * $ 6,267 $ * /7/ $ 44,608/8/
President and Chief 1993 400,000 150,000/9/ 128,128 192,177
Operating Officer 1992 133,333 255,820/10/ 110,427 47,250 955
William S. Orser, 1994 $291,770 $ * $ 517 $ * /11/ $ 33,495/12/
Executive Vice President 1993 194,205 163,320/13/ 55,735 33,954 177,497
(employed as of April 1,
1993) 1992 N/A N/A N/A N/A
Charles D. Barham, Jr., 1994 $250,000 $ * $ 3,120 $ * /14/ $ 34,863/15/
Executive Vice President 1993 232,000 58,000 69,019 35,494
and Chief Financial Of-
ficer 1992 218,000 52,000 57,572 36,607
Richard E. Jones, 1994 $205,000 $ * $ 1,173 $ * /16/ $ 26,040/17/
Senior Vice President, 1993 195,000 41,000 50,931 24,865
General Counsel and Sec-
retary 1992 181,000 38,000 39,701 25,806
=======================================================================================================
</TABLE>
[* AWARDS, IF ANY, UNDER THESE PROGRAMS FOR PERFORMANCE IN 1994 WILL BE MADE
AT A BOARD OF DIRECTORS MEETING ON MARCH 15, 1995. AWARD AMOUNTS WILL BE
INSERTED AT THAT TIME.]
- --------------
/1/ Consists of base salary prior to (i) employee contributions to the Stock
Purchase-Savings Plan and (ii) voluntary deferrals, if any, under the Key
Management Deferred Compensation Plan. See "Other Benefit Opportunities" on
page .
--
/2/ Except as otherwise noted, consists of amounts earned with respect to
performance in the stated year under the Management Incentive Compensation
Program. See "Other Annual Compensation Opportunities" on page .
--
/3/ Consists of gross-up payments for certain federal and state income tax
obligations.
/4/ Consists of the value of (i) performance units awarded under the Long-
Term Compensation Program and (ii) performance units credited to the account
of a participant to replace the value of Company contributions to the Stock
Purchase-Savings Plan that would have been made on behalf of the participant
but for the deferral of salary under the Key Management Deferred Compensation
Plan and contribution limitations under Section 415 of the Internal Revenue
Code of 1986, as amended ("Replacement Units"). Performance units do not
represent an equity interest in the Company and possess no voting rights.
However, a performance unit is equal in value at all times to a share of the
Company's Common Stock. Additional units are credited from time to time to
reflect the payment of dividends on the underlying Common Stock. Awards made
under the Long-Term Compensation Program vest on the earlier of the date of
death, the fourth month of the second year following grant or the date of
normal, early or disability retirement. The Company will distribute in cash
the aggregate value of the units related to an award as follows: one-third on
the date of vesting; one-half of the remaining balance one year following
vesting; and the remainder two years after vesting. In addition, a participant
may make a one-time, irrevocable payment election to defer receipt of the
payout as follows: in full in the fifth year following the grant of the award;
over three years beginning in the year following retirement; or in full in the
year following retirement. This payment election must be made no later than
the end of the year for which an award is made. See "Long-Term Compensation
Opportunities" on page .
--
Payment of the value of the Replacement Units will be made in cash and will
generally be made at such time as a participant retires or is no longer a
full-time employee of the Company. The amount of the payout will equal the
market value of a share of the Company's Common Stock on the date of payout
multiplied by the number of units credited to the account of the participant.
See "Other Benefit Opportunities" on page .
--
9
<PAGE>
/5/ Consists of (i) performance units granted under the Long-Term
--
Compensation Program based on the market value of a share of Common Stock on
the date of grant, and (ii) 798 Replacement Units based on the market value of
a share of Common Stock on the date such units were credited to the account of
the participant. As of December 31, 1994, a total of 20,829 performance units
were held at an aggregate value of $554,593 based on the market value of a
share of Common Stock on that date.
/6/ Consists of (i) $8,778 which represents Company contributions under the
Stock Purchase-Savings Plan, and (ii) $49,752 which represents the dollar
value of the premium relating to the term portion and the present value of the
premium relating to the whole life portion of the benefit to be received
pursuant to the Executive Permanent Life Insurance Program.
/7/ Consists of (i) performance units granted under the Long-Term
--
Compensation Program based on the market value of a share of Common Stock on
the date of grant, and (ii) 488 Replacement Units based on the market value of
a share of Common Stock on the date such units were credited to the account of
the participant. As of December 31, 1994, a total of 9,401 performance units
were held at an aggregate value of $250,324 based on the market value of a
share of Common Stock on that date.
/8/ Consists of (i) $6,783 which represents Company contributions under the
Stock Purchase-Savings Plan, and (ii) $37,825 which represents the dollar
value of the premium relating to the term portion and the present value of the
premium relating to the whole life portion of the benefit to be received
pursuant to the Executive Permanent Life Insurance Program.
/9/ Pursuant to an employment agreement, this amount is in lieu of an award
for performance in 1993 under the Management Incentive Compensation Program.
/10/ Pursuant to an employment agreement, consists of (i) $150,000 which
is in lieu of an award for performance in 1992 under the Management Incentive
Compensation Program, and (ii) the fair market value at date of grant of 2,000
shares of the Company's Common Stock awarded in 1992.
/11/ Consists of (i) performance units granted under the Long-Term
--
Compensation Program based on the market value of a share of Common Stock on
the date of grant, and (ii) 189 Replacement Units based on the market value of
a share of Common Stock on the date such units were credited to the account of
the participant. As of December 31, 1994, a total of 1,498 performance units
were held at an aggregate value of $39,908 based on the market value of a
share of Common Stock on that date.
/12/ Consists of (i) $8,778 which represents Company contributions under
the Stock Purchase-Savings Plan, and (ii) $24,717 which represents the dollar
value of the premium relating to the term portion and the present value of the
premium relating to the whole life portion of the benefit to be received
pursuant to the Executive Permanent Life Insurance Program.
/13/ Pursuant to an employment agreement, includes (i) $50,000 in lieu of
an award for performance in 1993 under the Management Incentive Compensation
Program, (ii) a $50,000 employment bonus in 1993, and (iii) $63,320
representing the fair market value at date of grant of 2,000 shares of the
Company's Common Stock awarded in 1993.
/14/ Consists of (i) performance units granted under the Long-Term
--
Compensation Program based on the market value of a share of Common Stock on
the date of grant, and (ii) 164 Replacement Units based on the market value of
a share of Common Stock on the date such units were credited to the account of
the participant. As of December 31, 1994, a total of 8,605 performance units
were held at an aggregate value of $229,121 based on the market value of a
share of Common Stock on that date.
/15/ Consists of (i) $8,778 which represents Company contributions under
the Stock Purchase-Savings Plan, and (ii) $26,085 which represents the dollar
value of the premium relating to the term portion and the present value of the
premium relating to the whole life portion of the benefit to be received
pursuant to the Executive Permanent Life Insurance Program.
/16/ Consists of (i) performance units granted under the Long-Term
--
Compensation Program based on the market value of a share of Common Stock on
the date of grant, and (ii) 88 Replacement Units based on the market value of
a share of Common Stock on the date such units were credited to the account of
the participant. As of December 31, 1994, a total of 5,009 performance units
were held at an aggregate value of $133,375 based on the market value of a
share of Common Stock on that date.
/17/ Consists of (i) $8,778 which represents Company contributions under
the Stock Purchase-Savings Plan, and (ii) $17,262 which represents the dollar
value of the premium relating to the term portion and the present value of the
premium relating to the whole life portion of the benefit to be received
pursuant to the Executive Permanent Life Insurance Program.
10
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Estimated Annual Pension at Normal Retirement
Average Compensation (Years of Credited Service)
- -----------------------------------------------------------------------------------
10 years 15 years 15 1/2 or more years
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
$190,000 $ 76,000 $114,000 $117,800
255,000 102,000 153,000 158,100
320,000 128,000 192,000 198,400
385,000 154,000 231,000 238,700
450,000 180,000 270,000 279,000
515,000 206,000 309,000 319,300
555,000 222,000 333,000 344,100
595,000 238,000 357,000 368,900
635,000 254,000 381,000 393,700
675,000 270,000 405,000 418,500
715,000 286,000 429,000 443,300
760,000 304,000 456,000 471,200
- -----------------------------------------------------------------------------------
</TABLE>
The above table demonstrates senior executive pension benefits payable upon
normal retirement under the Supplemental Retirement Plan and Supplemental
Executive Retirement Plan at age 65 as a function of average annual income and
years of service. Covered compensation under these plans consists only of the
amounts in the Salary and Bonus columns of the Summary Compensation Table.
Pursuant to the Supplemental Retirement Plan, a defined benefit plan, benefits
are partially offset by Social Security payments and the monthly pension
benefit payable upon retirement is based on final five years average
compensation multiplied by 1.7% for each year of service up to a maximum of
60%. Benefits under the Supplemental Executive Retirement Plan are fully offset
by Social Security benefits and by benefits paid under the Supplemental
Retirement Plan. The monthly benefit payable upon retirement under this plan is
equal to 4% of the average of a participant's highest three years of earnings
for each year of credited service with the Company up to a maximum of 62%.
Benefits listed in the table below do not reflect the Social Security or other
offset. For purposes of benefits under these plans, Messrs. Smith, Cavanaugh,
Barham and Jones each have more than 15 1/2 years of credited service and are
thereby entitled to the maximum percentage allowable in the benefit formula
under these plans. Mr. Orser has one year of credited service.
EMPLOYMENT AGREEMENTS
Mr. Cavanaugh and Mr. Orser have entered into employment agreements with the
Company. These agreements provide for base salary, bonuses, and participation
in the various executive compensation plans offered to senior executives of the
Company. Base salary increases and bonus amounts are determined by the Board of
Directors' Committee on Personnel, Executive Development and Compensation, as
described in "Report of Board Committee on Personnel, Executive Development and
Compensation" below. Mr. Cavanaugh also received 14 years of credited service
in the Supplemental Executive Retirement Plan. There is no specific employment
term in these agreements; rather, employment is at the continued will of the
parties. Upon termination or constructive termination of employment by the
Company for any reason other than good cause, the agreements contain provisions
for continuation of salary and health benefits for 24 months. Constructive
termination, which is an option that must be elected by the individual within
one year of occurrence, consists of a change in the form of ownership of the
Company or a change in the present Chairman and Chief Executive Officer (or a
material change in his responsibilities). In addition, if Mr. Orser's
employment is terminated after he has attained age 55 but before attaining age
60, the Company shall pay to him a retirement severance benefit of $153,912 per
year (less benefits payable under the Supplemental Executive Retirement Plan).
If employment under the agreements is terminated by the individual, he shall
retain all vested benefits but shall not be entitled to any form of salary or
health benefit continuance.
11
<PAGE>
REPORT OF BOARD COMMITTEE ON PERSONNEL,
EXECUTIVE DEVELOPMENT AND COMPENSATION
The Company's executive compensation program is administered by the
Committee on Personnel, Executive Development and Compensation of the Board of
Directors (the "Committee"). The five-member Committee is composed entirely of
independent outside directors who are not eligible to participate in any
compensation program in which Company executives participate.
COMPENSATION PRINCIPLES
An independent executive benefits consulting firm is utilized to assist the
Company in meeting its compensation objectives. Each year, this consulting
firm provides the Committee with an analysis comparing overall compensation
paid to Company executives with overall compensation paid to executives of a
comparison group of electric utility companies. This comparison group consists
of seven electric utility companies in the southeastern United States. While
this comparison group is smaller than (i) the group of companies comprising
the Standard & Poor's 24 Utility (Electric Power Companies) Index, which is a
published industry index, shown in the performance graph on page , and (ii)
the group of companies utilized for performance comparisons in determining
award eligibility under the Management Incentive Compensation Program and the
Long-Term Compensation Program, the Committee believes these seven electric
utility companies, because of their similarity in size, electric facilities,
and geographic location, are appropriate for overall compensation comparisons.
The Company's executive compensation program consists of four major
elements: base salary; other annual compensation opportunities; long-term
compensation opportunities; and other benefit opportunities. Specific targets
are not utilized by the Committee in determining the level of any of these
individual components of overall compensation. Rather, the Committee's
objective in administering this program is to structure, through a combination
of these components, an overall compensation package for executives which
approximates in value the median range of overall compensation paid to
executives of the comparison group. Overall compensation paid to the Company's
executives in 1994 met this objective.
Section 162(m) of the Internal Revenue Code imposes a limit, with certain
exceptions, on the amount a publicly held corporation may deduct for
compensation paid or accrued with respect to its five most highly compensated
officers. The 1994 compensation disclosed in this proxy statement does not
exceed the limit and the Committee has not established a policy should the
limit be exceeded by future compensation.
Set forth below is a description of the major elements of the Company's
executive compensation program and their relationship to corporate
performance, as well as a summary of the actions taken by the Committee with
respect to the compensation of the Chief Executive Officer.
BASE SALARY
Executives of the Company receive a base salary determined by the Committee
based upon the value of their position compared to competitively established
salary ranges, their individual performance and overall corporate performance.
The Committee does not utilize a specific mathematical formula in determining
base salaries. During 1994, the Committee in its discretion approved increases
in the base salaries of the Chief Executive Officer and the named executives
as set forth in the Summary Compensation Table. These increases were based on
the executive's level of responsibility in the Company, comparable
compensation of executives in the comparison group of utilities, the
achievement of corporate goals, and individual merit performance as
qualitatively determined by the Committee.
12
<PAGE>
OTHER ANNUAL COMPENSATION OPPORTUNITIES
The Company sponsors a Management Incentive Compensation Program for its
senior executives, department managers and selected key employees. In order for
awards to be made under the program, a matching contribution must be earned by
all employees under the corporate incentive feature of the Company's Stock
Purchase-Savings Plan, a tax qualified 401(k) plan. Incentive matching
contributions are earned by participating employees if at least five out of ten
annual corporate goals are met. (See the description of the Stock Purchase-
Savings Plan under "Other Benefit Opportunities" below.) In the event an
incentive matching contribution is earned, the Committee compares the Company's
return on common equity and electric revenue per KWH for the most recent three-
year period with a comparison group that is comprised of electric utility
companies in the eastern United States with nuclear and fossil generation. This
twenty-three member comparison group is larger in number and more diverse in
terms of size and geographic location than the comparison group utilized for
overall compensation purposes. The Committee believes, however, that the
additional size and diversity of this group is appropriate for comparisons
based on corporate performance. This performance comparison group also differs
from the group comprising the Standard & Poor's 24 Utility (Electric Power
Companies) Index shown in the performance graph on page . Participants are
--
eligible for an award under this program only if the Company's performance
criteria surpass the median of the performance criteria of the comparison
group. If participants are eligible for an award, then the Committee in its
discretion determines whether awards are to be made and, if so, in what
amounts. The Committee does not utilize a specific mathematical formula in
determining award levels under this program. If earned, awards are paid in
cash.
The threshold requirements for award eligibility, as discussed above, were
met and exceeded in 1994. At a meeting of the Committee on March 15, 1995,
based on highly commendable performance, awards were made in the discretion of
the Committee to the named executives including the Chief Executive Officer, as
set forth in the Summary Compensation Table.
LONG-TERM COMPENSATION OPPORTUNITIES
The Company also sponsors a Long-Term Compensation Program. There are two
award opportunities available under this program. The first is an award which
may be made to attract and retain key executives or to recognize and reward
sustained individual performance which has in the opinion of the Committee
contributed significantly to the success of the Company. This award opportunity
is in the discretion of the Committee considering the Company's overall
performance and best interests, and it is not subject to a specific
mathematical formula. The other award opportunity available under the Long-Term
Compensation Program may be granted only if at least two of the following
corporate performance criteria for the most recent three-year period surpass a
comparison group consisting of the same companies as the comparison group
utilized for performance comparisons under the Management Incentive
Compensation Program as discussed above: return on common equity; electric
revenue per KWH; and total return to shareholders. This comparison group is
utilized for performance comparisons only and differs from the comparison group
utilized for overall compensation comparisons (which is comprised of electric
utilities that are generally similar in size, electric facilities, and
geographic location to the Company), and the group comprising the Standard &
Poor's 24 Utility (Electric Power Companies) Index shown in the performance
graph on page . In addition, other criteria may be established by the
Committee in its discretion that may be of relevance to the overall success of
the Company. If participants are eligible for an award, then the Committee in
its discretion determines whether awards are to be made and, if so, in what
amounts. The Committee does not utilize specific targets in determining award
levels under the Long-Term Compensation Program.
Awards made under the Long-Term Compensation Program are deferred and
recorded in the form of performance units equal in value to the Company's
Common Stock. A performance unit does not represent
13
<PAGE>
an equity interest in the Company and possesses no voting rights. However, a
performance unit is equal in value at all times to a share of Common Stock and
additional units are credited from time to time to reflect the payment of
dividends on the Company's Common Stock. An award to a participant vests on the
earlier of the date of death, the fourth month of the second year following the
date of grant, or the date of normal, early or disability retirement. The
Company will distribute in cash to a participant the value of the performance
units credited to the participant's account as follows: one-third on the date
the award vests; one-half of the remaining balance one year after the date the
award vests; and the remainder two years after the date the award vests. Thus,
the amount received by a participant is dependent upon the future performance
of the Company and market value of Common Stock over a future four-year period
after the award is granted. In addition, a participant may make a one-time,
irrevocable payment election to defer receipt of the payout until the fifth
year following the date of grant, the year following retirement, or over a
three-year period beginning in the year following retirement.
In 1994, corporate performance criteria surpassed the comparison group and
participants were eligible for an award. At a meeting of the Committee on March
15, 1995, based on highly commendable performance, awards under the Long-Term
Compensation Program were made in the discretion of the Committee to the named
executives including the Chief Executive Officer, as set forth in the Summary
Compensation Table.
OTHER BENEFIT OPPORTUNITIES
The following additional benefit opportunities are also available to the
Company's senior executives:
. The Company sponsors a Key Management Deferred Compensation Plan which
allows a participant to defer until retirement up to 15% of the participant's
annual compensation for one to four years. All employees at or above the
department head level are eligible to participate in the plan. Upon retirement,
the participant receives monthly supplemental retirement payments over a 180-
month period.
. Pursuant to the Executive Deferred Compensation Plan, all or a portion of
an executive's salary may be deferred. There was no deferral of compensation in
1994 under this plan.
. To replace the value of Company contributions to the Stock Purchase-Savings
Plan that would have been made but for (i) the deferral of salary under the
Executive Deferred Compensation Plan and the Key Management Deferred
Compensation Plan and (ii) contribution limitations under Section 415 of the
Internal Revenue Code of 1986, as amended, senior executives and other
employees are credited with performance units equal in value to shares of the
Common Stock of the Company. These performance units do not represent an equity
interest in the Company and possess no voting rights. However, additional units
are credited from time to time to reflect the payment of dividends on the
Company's Common Stock. Unless otherwise determined by the Board, at the time a
participant is no longer a full-time employee, he or she will receive cash
equal to the market value of a share of Common Stock times the number of
performance units credited to the account of the participant.
. The Company has implemented an executive split dollar life insurance
program which consists of two separate plans. The first plan provides life
insurance coverage approximately equal to three times salary for senior
executives. The second plan provides additional life insurance coverage
approximately equal to five times salary for those officers of the Company who
are also members of the Board of Directors.
. The Company also provides broad-based employee benefit plans in which
senior executives participate. Under the Stock Purchase-Savings Plan, a salary
reduction plan under Section 401(k) of the Internal Revenue Code of 1986, as
amended, full-time employees may invest up to 8% of earnings (up to a maximum
of $9,240
14
<PAGE>
in 1994) on a before-tax basis in the Company's Common Stock and other
investment options. The Company makes a matching contribution of 50% of such
investment (up to 3% of earnings) which is invested in Company Common Stock.
Under an incentive feature, the Company's contribution may be increased by up
to an additional 50% if certain corporate financial, operating, safety and
customer satisfaction performance goals are met. The Company also sponsors the
Supplemental Retirement Plan, a defined benefit plan which covers full-time
employees who are at least twenty-one years old and have been employed for at
least one year. The right to receive pension benefits under this plan is vested
after five years. The monthly pension benefit payable upon retirement is based
on final five years average compensation multiplied by 1.7% for each year of
service up to a maximum of 60%.
. The Supplemental Executive Retirement Plan provides a retirement benefit
for eligible senior executives equal to 4% of the average of their highest
three years of base salary and annual bonus for each year of credited service
with the Company up to a maximum of 62%. Benefits under this plan are fully
offset by Social Security benefits and by benefits paid under the Company's
Supplemental Retirement Plan.
. The Company's senior executives also receive certain perquisites and other
personal benefits which in 1994 did not exceed the lesser of either $50,000 or
10% of the executive's salary and bonus. In addition, executives received
gross-up payments in 1994 for related federal and state income tax obligations,
as disclosed in the Summary Compensation Table on page .
--
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Compensation in 1994 for the Chief Executive Officer was consistent with the
compensation principles described above and reflected performance of the
Company and the individual in 1993, as well as services in 1994. The
determination of his compensation by the Committee was qualitative in nature
and based on a variety of factors, including comparison group compensation
data, attainment of various corporate goals, total shareholder return,
financial and operating performance, individual performance and other factors.
Specific mathematical weights were not assigned to these factors. Overall
compensation in 1994 approximated in value the median range of overall
compensation paid to chief executive officers in the comparison group.
Specifically, the Committee considered the Company's stock and total return,
which continued to exceed the Standard & Poor's 24 Utility (Electric Power
Companies) Index average. Important corporate goals were also achieved
including the attainment of outstanding performance by the Company's nuclear
units. In addition, long-term power agreements were reached with several major
wholesale customers. Leadership in achieving corporate goals, developing and
implementing strategic initiatives, national leadership in the fields of
nuclear power and electric utility operations, and supporting the economic
growth and quality of life in the Company's service area were also considered
by the Committee.
Committee on Personnel, Executive
Development and Compensation
Gordon C. Hurlbert, Chairman
Edwin B. Borden
George H. V. Cecil
Charles W. Coker
J. Tylee Wilson
15
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
Company's cumulative total shareholder return on its Common Stock with the
cumulative total return of the Standard & Poor's 500 Stock Index and the
Standard & Poor's 24 Utility (Electric Power Companies) Index.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG CAROLINA POWER & LIGHT COMPANY, S&P 500 STOCK INDEX
AND S&P 24 UTILITY (ELECTRIC POWER COMPANIES) INDEX
Carolina S&P 24 S&P
<CAPTION> Power & Utility 500
Measurement period Light -------- --------
(Fiscal Year Covered) Company Index Index
- --------------------- -------- -------- --------
<S> <C> <C> <C>
Measurement PT -
12/31/89 $ 100 $ 100 $ 100
FYE 12/31/90 $ 107 $ 103 $ 97
FYE 12/31/91 $ 133 $ 134 $ 126
FYE 12/31/92 $ 145 $ 141 $ 136
FYE 12/31/93 $ 165 $ 159 $ 149
FYE 12/31/94 $ 155 $ 136 $ 151
</TABLE>
*$100 Investment Beginning on December 31, 1989 in Stock or Index. Including
reinvestment of dividends.
16
<PAGE>
PROPOSAL 1
AMENDMENT TO THE COMPANY'S RESTATED CHARTER AND BY-LAWS ESTABLISHING A
VARIABLE RANGE FOR THE SIZE OF THE COMPANY'S
BOARD OF DIRECTORS
The Board of Directors of the Company unanimously approved Proposal 1 at its
meeting on March 15, 1995, and directed that Proposal 1 be submitted to a vote
of the shareholders at this Annual Meeting of Shareholders. Proposal 1 provides
for both the amendment of Article SIXTH of the Restated Charter of Carolina
Power & Light Company ("Restated Charter") and Section 10 of the Company's By-
Laws, which, taken together, will establish a variable range for the size of
the Board of Directors. Before voting on Proposal 1, shareholders are urged to
read carefully this section of the Proxy Statement which describes Proposal 1,
and Exhibit A hereto, which sets forth the full text of Article SIXTH of the
Restated Charter, as proposed to be amended, and the text of the proposed
amendment to Section 10 of the Company's By-Laws.
Article SIXTH of the Restated Charter now provides that the Company shall
have fourteen (14) directors and that seven (7) directors shall constitute a
quorum. Any increase or decrease in such number of directors must be authorized
by a vote of a majority of the total number of shares of the Company entitled
to vote for the election of directors. If Proposal 1 is adopted, Article SIXTH
will be amended to provide that (i) the number of directors constituting the
Company's Board of Directors shall be determined in accordance with the
Company's By-Laws and (ii) at least fifty percent (50%) of the number of
directors so determined shall constitute a quorum of the Board of Directors. If
Proposal 1 is adopted, Section 10 of the Company's By-Laws will also be amended
to (i) allow the number of directors on the Company's Board to vary within a
range of a minimum of eleven (11) to a maximum of fifteen (15) and (ii) require
that the Board fix the number of directors within the approved range by the
affirmative vote of a majority of the whole Board of Directors given at any
regular or special meeting of the Board.
Section 55-8-03 of the North Carolina Business Corporation Act ("BCA")
authorizes the establishment of a variable range for the size of the Board of
Directors as proposed herein. However, such Section also provides that only the
shareholders may thereafter alter such range set forth in the By-Laws or
reamend the Restated Charter or By-Laws to return the Board of Directors to a
fixed number of directors.
The Board of Directors of the Company approved a resolution at its meeting on
March 15, 1995, fixing the number of directors at twelve (12), subject to the
right of the Board under the BCA to increase or decrease this number within the
range at any regular or special meeting of the Board. This resolution is
contingent upon the approval of Proposal 1 at this Annual Meeting of
Shareholders.
The proposed amendment to Article SIXTH as set forth in this Proposal 1 and
the corresponding proposed amendment to Section 10 of the By-Laws will allow
the Board of Directors greater flexibility to adjust the number of directors
should the need arise. It would no longer be necessary to obtain shareholder
approval each time an adjustment was warranted, while at the same time, the
Board of Directors would not be permitted to exceed the limits established by
the range.
REASONS FOR PROPOSAL 1
- ----------------------
The Board of Directors believes that the proposed amendment to Article SIXTH
of the Restated Charter and the corresponding amendment to Section 10 of the
By-Laws, by providing for a variable range of directors to be fixed by a
favorable vote of a majority of the Board of Directors, is consistent with
current principles of
17
<PAGE>
corporate governance and will enhance the Company's ability to obtain and
retain an appropriate number of well qualified persons to serve on the Board as
circumstances change from time to time.
CONSIDERATIONS AGAINST PROPOSAL 1
- ---------------------------------
The adoption of Proposal 1 will provide the Board of Directors with the power
to alter its composition, within the prescribed range of eleven (11) to fifteen
(15), between meetings of the shareholders at which directors are elected. If
the composition of the Board of Directors is so altered, the balance of the
votes of the members of the Board of Directors elected by the shareholders will
change. The Board of Directors believes, however, that the benefits of Proposal
1 in providing flexibility in the Directors' management of the Company outweigh
any other considerations, and the Board recommends a vote in favor of Proposal
1.
----------------
The text of proposed new Article SIXTH of the Restated Charter is set forth
in Exhibit A, Section I to this Proxy Statement.
The text of proposed new first sentence of Section 10 of the By-Laws assuming
Proposal 1 is adopted and the Restated Charter is amended as set forth in
Exhibit A, Section II to this Proxy Statement.
The affirmative vote of a majority of the outstanding shares of $5 Preferred
Stock, Serial Preferred Stock and Common Stock is required for approval of the
amendment to the Company's Restated Charter contained in Proposal 1.
The Board of Directors, as noted above, recommends a vote FOR Proposal 1.
18
<PAGE>
PROPOSAL 2
AMENDMENT TO THE COMPANY'S BY-LAWS TO PROVIDE FOR
CLASSIFICATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company unanimously approved Proposal 2 at its
meeting on March 15, 1995, and directed that Proposal 2 be submitted to a vote
of the shareholders at this Annual Meeting of Shareholders. Proposal 2 involves
the amendment of Section 10 of the Company's By-Laws to provide for a
classified Board of Directors. Before voting on this proposal, shareholders are
urged to read carefully this section of the Proxy Statement, which describes
Proposal 2, and Exhibit B hereto, which sets forth the full text of Section 10
of the By-Laws, as proposed to be amended.
Section 10 of the By-Laws now provides that all directors are to be elected
to the Board annually for a term of one year. As proposed to be amended,
Section 10 will provide that the Board (other than a Board a portion of whose
members are, under certain circumstances, elected by the holders of stock
having a preference over Common Stock as to dividends or in liquidation), shall
be divided into three classes of directors, each class to be as nearly equal in
number of directors as possible. The first class (Class I) will be elected for
a term expiring at the 1996 Annual Meeting of Shareholders, the second class
(Class II) will be elected for a term expiring at the 1997 Annual Meeting of
Shareholders and the third class (Class III) will be elected for a term
expiring at the 1998 Annual Meeting of Shareholders (in each case, until their
respective successors are duly elected and qualified). Starting with the 1996
Annual Meeting of Shareholders, the class of directors whose term has expired
in that year will be elected each year to serve for a three-year term. In case
of any vacancy in the Board, the remaining directors may elect a successor to
hold office for the unexpired portion of the term. If Proposal 2 is not
adopted, directors will be elected to a term expiring at the 1996 Annual
Meeting of Shareholders or until their successors are duly elected and
qualified. Section 55-8-06 of the North Carolina Business Corporation Act
("BCA") authorizes the adoption by the shareholders of a bylaw which provides
for the classification of directors as proposed herein.
If Proposal 2 is adopted, the time necessary to effect a change in a majority
of the Board of Directors may be lengthened: it may take at least two (2)
annual meetings to change the majority of the Board of Directors, as opposed to
the present system in which a majority of the Board of Directors may be changed
after one (1) year. However, it should be noted that, if adopted, the proposed
amendment to Section 10 of the By-Laws can be subsequently repealed by simple
majority of the outstanding shares entitled to vote. Also, Article ELEVENTH of
the Restated Charter permits the removal without cause of any and all of the
members of the Board of Directors, irrespective of the length of the term for
which they were elected by the affirmative vote of a majority of the total
number of shares of the Company entitled to vote in the election of directors.
If Proposal 2 is adopted, the Board of Directors shall be authorized and
directed to make additional amendments to the By-Laws such that the By-Laws
will be consistent with new Section 10 and take into account Section 55-10-20
of the BCA which requires that new Section 10, following its approval by the
shareholders, can be amended or repealed only by appropriate shareholder
action.
The institution of a classified board of directors is sometimes perceived as
having an "anti-takeover" effect, in that it could render more difficult a
merger, tender offer or proxy contest. The Board of Directors (1) believes that
neither the Restated Charter nor the By-Laws presently contain any provisions
which have an "anti-takeover" effect, (2) has no present intention of
soliciting a shareholder vote on any proposals intended primarily to serve that
end and (3) is not recommending Proposal 2 in response to any specific effort
of which the Company is aware to obtain control of the Company. In any event,
the Board of Directors
19
<PAGE>
believes that any possible "anti-takeover" effect of Proposal 2 is minimized by
the fact that pursuant to Section 55-10-20 of the BCA, the amendment or repeal
of Section 10 will require the affirmative vote of only a majority of the total
number of shares of the Company entitled to vote, and may not be amended
unilaterally by the Board of Directors. Also, as noted above, Article ELEVENTH
of the Restated Charter permits the removal without cause of any and all of the
members of the Board of Directors, irrespective of the length of the term for
which they were elected by the affirmative vote of a majority of the total
number of shares of the Company entitled to vote in the election of directors.
It should be noted that North Carolina has enacted legislation designed to
prevent the abuses that sometimes occur during hostile takeovers. Under the
Shareholder Protection Act (Section 55-9-01 et seq. of the BCA), certain
"business combinations" involving a beneficial owner of more than 20% of the
voting shares of the Company must be authorized by the affirmative vote of the
holders of 95% of the Company's voting shares, unless the transaction complies
with certain statutory fair price and other requirements.
In addition, the North Carolina Control Share Acquisition Act (Section 55-9A-
01 et seq. of the BCA) is designed to protect the interests of all shareholders
when one shareholder attempts to acquire beneficial ownership of enough shares
to potentially control the corporation. Under the Control Share Acquisition
Act, if a person acquires shares of the Company entitled to vote in the
election of directors within the ranges specified in said Act, said person
automatically loses the right to vote the shares which fall within such ranges.
The voting rights of the disqualified shares can be restored by the affirmative
vote of at least a majority of "disinterested shares" at a special
shareholders' meeting called to consider whether to grant said person voting
rights.
REASONS FOR PROPOSAL 2
- ----------------------
The Board of Directors believes that the proposed amendment of Section 10 of
the By-Laws, by providing that directors will serve staggered three-year terms
rather than one-year terms, will help to enhance the continuity and stability
of the Company's management and policies in the future and will result in an
orderly transfer of leadership of the Company. Classification will help to
ensure that at any given time a majority of the Board of Directors will have at
least one (1) year of experience and familiarity with the Company, which will
facilitate longer-range planning for the Company's business. In addition,
classification will promote the orderly transfer of leadership of the Company,
by the rotation of directors on and off the Board of Directors, thereby
assuring the continued introduction of new ideas and perspectives.
CONSIDERATIONS AGAINST PROPOSAL 2
- ---------------------------------
Because classified boards may sometimes be perceived as introducing a
potential for delay in the process of acquiring control of a company, the
adoption of Proposal 2 might be viewed as discouraging a third party from
attempting to obtain control of the Company, even though such an attempt might
be beneficial to the Company and its shareholders. This would be unlikely
because the amendment and repeal of the classification of the Board of
Directors would require the affirmative vote of only a majority of the total
number of shares of the Company entitled to vote. Also, the Company's Restated
Charter permits the removal without cause of any and all of the members of the
Board of Directors.
The Board of Directors believes that the benefits of Proposal 2 in enhancing
the stability and continuity of the Company's management and policies while
facilitating the rotation of new directors onto the Board outweigh any other
considerations and recommends a vote in favor of Proposal 2.
----------------
20
<PAGE>
The text of proposed new Section 10 is set forth in Exhibit B to this Proxy
Statement.
The affirmative vote of the holders of a majority of the outstanding shares
of $5 Preferred Stock, Serial Preferred Stock and Common Stock present at the
Annual Meeting of Shareholders in person or represented by proxy is required
for approval of the amendment to the Company's By-Laws contained in Proposal 2.
The Board of Directors, as noted above, recommends a vote FOR Proposal 2.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP has been selected by the Board of Directors
to serve as independent public accountants for the Company for the current
year, having served in that capacity since 1930. A representative of Deloitte &
Touche LLP will be present at the Annual Meeting of Shareholders, will have the
opportunity to make a statement and will be available to respond to appropriate
questions.
FINANCIAL STATEMENTS
The Company's 1994 Annual Report, which includes financial statements for the
fiscal years ended December 31, 1994 and 1993 together with related notes,
audited statements of income and changes in financial position for the three
most recent years and the report of Deloitte & Touche LLP, independent public
accountants, was mailed to shareholders of record as of the close of business
on March 3, 1995.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
The deadline by which shareholder proposals must be submitted for
consideration at the 1996 Annual Meeting of Shareholders is December 4, 1995.
OTHER BUSINESS
The Board of Directors does not intend to bring any business before the
meeting other than that stated in this Proxy Statement. The Board knows of no
other matter to come before the meeting. If other matters properly come before
the meeting, it is the intention of the Board of Directors that the persons
named in the enclosed Proxy will vote on such matters pursuant to the Proxy in
accordance with their best judgment.
21
<PAGE>
EXHIBIT A
CAROLINA POWER & LIGHT COMPANY
(I) Adoption of Proposal 1 would amend Article SIXTH of the Restated Charter of
Carolina Power & Light Company to read, in its entirety, as follows:
"SIXTH: The number of directors constituting the Board of
Directors shall be determined in accordance with the
Company's By-Laws. At least fifty percent of the number
of directors so determined shall constitute a quorum."
(II) Adoption of Proposal 1 would amend Section 10 of the Company's By-Laws by
deleting the first sentence thereof and replacing that sentence with the
following language:
The number of directors of the Company shall not be less
than eleven (11) nor more than fifteen (15). The
authorized number of directors, within the limits above
specified, shall be determined by the affirmative vote of
a majority of the whole board given at any regular or
special meeting of the Board of Directors, provided that,
the number of directors shall not be reduced to a number
less than the number of directors then in office unless
such reduction shall become effective only at and after
the next ensuing meeting of the shareholders for the
election of directors.
<PAGE>
EXHIBIT B
CAROLINA POWER & LIGHT COMPANY
Proposed Amendment to Section 10 of the By-Laws
Section I
IF PROPOSAL 1 IS APPROVED AND PROPOSAL 2 IS APPROVED,
THEN SECTION 10 OF THE COMPANY'S BY-LAWS SHALL BE AMENDED
AS SET FORTH BELOW:
Replace the first sentence of Section 10 with a new subsection (a); redesignate
the third, fourth and fifth sentences of Section 10 as subsection (b); add a
new sentence at the end of subsection (b); and replace the second sentence of
Section 10 with a new subsection (c), so that as amended Section 10 shall read
in its entirety as follows:
Section 10.(a) The number of directors of the Company shall not be less
than eleven (11) nor more than fifteen (15). The authorized number of
directors, within the limits above specified, shall be determined by the
affirmative vote of a majority of the whole board given at a regular or
special meeting of the Board of Directors, provided that, the number of
directors shall not be reduced to a number less than the number of
directors then in office unless such reduction shall become effective only
at and after the next ensuing meeting of the shareholders for the election
of directors.
(b) The directors shall appoint from among their number a Chairman, who
shall serve at the pleasure of the Board. Members of the Board of Directors
of the Company who are full-time employees of the Company shall retire from
the Board upon attaining the age of 65 years; provided, however, that the
Chairman and Chief Executive Officer of the Company shall be eligible to
continue as a member of the Board after attaining the age of 65 years and
will be considered a Director who is not employed full-time by the Company.
Those persons who are not employed full-time by the Company shall not be
eligible for election as a Director in any calendar year (or subsequent
year) in which he or she has reached or will reach the age of 71 years. Any
Director who reaches the age of 71 during a term of office shall resign as
of the first day of the month so following unless otherwise determined by
the Board.
(c) The election of directors shall be held at the annual meeting of
stockholders. The directors, other than those who may be elected under
circumstances specified in the Company's Restated Charter, as it may be
amended, by the holders of any class of stock having a preference over the
Common Stock as to dividends or in liquidation, shall be classified into
three classes, as nearly equal in number as possible. The initial terms of
directors first elected or re-elected by the shareholders on date this
amendment to the By-Laws is adopted shall be for the following terms of
office:
Class I: One year
Class II: Two years
Class III: Three years
and until their successors shall be elected and shall qualify. Upon the
expiration of the initial term specified for each class of directors their
successors shall be elected for three-year terms or until such time as their
successors shall be elected and qualified. In the event of any increase or
decrease in the number of directors,
<PAGE>
the additional or eliminated directorships shall be classified or chosen so
that all classes of directors shall remain or become equal in number, as nearly
as possible. This subsection (c) was adopted by the stockholders of the
Company.
-or-
Section II
IF PROPOSAL 1 IS NOT APPROVED AND PROPOSAL 2 IS
APPROVED, THEN SECTION 10 OF THE COMPANY'S BY-LAWS
SHALL BE AMENDED AS SET FORTH ABOVE UNDER SECTION
I, EXCEPT THAT SECTION 10(a) SHALL BE DELETED AND
REPLACED WITH THE FOLLOWING LANGUAGE:
The number of directors of the Company which shall
constitute the whole Board of Directors shall be fourteen
(14).
<PAGE>
CAROLINA POWER & LIGHT COMPANY
411 Fayetteville Street, Raleigh, North Carolina 27601
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
PROXY. The undersigned hereby appoints Sherwood H. Smith, Jr., William Cavanaugh
III, and Charles D. Barham, Jr., and each of them, as Proxies, with full power
of substitution, to vote the shares of stock of Carolina Power & Light Company
registered in the name of the undersigned, or which the undersigned has the
power to vote, at the Annual Meeting of Shareholders of the Company to be held
Wednesday, May 10, 1995, at 10 o'clock A.M., and at any adjournment thereof,
upon the proposals set forth on the reverse side hereof, for the election of
directors and upon other matters properly coming before the meeting. The
undersigned acknowledges receipt of the notice of said annual meeting and the
proxy statement.
THIS PROXY WILL BE VOTED AS DIRECTED BY YOU ON THE REVERSE SIDE HEREOF. UNLESS
OTHERWISE SPECIFIED, IT WILL BE VOTED FOR THE ELECTION OF DIRECTORS AS SET FORTH
IN THE PROXY STATEMENT. THE NOMINEES FOR DIRECTOR ARE: [NOMINEE], E. BORDEN, F.
CAPEL, W. CAVANAUGH, G. CECIL, C. COKER, R. DAUGHERTY, J. JACKSON. R. JONES, E.
LEE, S. SMITH, J. WILSON. IF ANY NOMINEE FOR DIRECTOR BECOMES UNAVAILABLE, THE
PROXIES WILL VOTE FOR A SUBSTITUTE DESIGNATED BY THE BOARD.
TO AVOID EXPENSE AND DELAY, PLEASE SIGN EXACTLY AS YOUR NAME APPEARS, DATE AND
RETURN YOUR PROXY PROMPTLY BY USE OF THE RETURN ENVELOPE.
(Please date and sign on other side.)
<PAGE>
1. Amendment to Restated Charter and By-Laws to establish a
variable range for the size of the Board of Directors.
[_] For [_] Against [_] Abstain
Directors ) 2. Amendment to the By-Laws to provide for classification of
) the Board of Directors.
Recommend )
Vote FOR ) [_] For [_] Against [_] Abstain
--- )
3. Election of Directors as set forth in the Proxy
Statement.
[_] For All Nominees [_] Withheld on All Nominees
[_] Withheld On The Following Nominees Only
-----------------------------------------------------------
_________________________________________
_________________________________________
Signature(s) of Shareholder(s) or Authorized
Representative
Dated ________________________________, 1995
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer, giving full title. If a
partnership, please sign in partnership name by an authorized person, giving
full title.
