FLORIDA PROGRESS CORP, DEF 14A, 1998-03-12

FLORIDA PROGRESS CORP
DEF 14A, 1998-03-12
ELECTRIC SERVICES

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P. O. Box 33042, St. Petersburg, Florida 33733

[LOGO] NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
[LOGO]

March 12, 1998

To the Common Shareholders:

The Annual Meeting of Shareholders of Florida Progress Corporation
(the "Company") will be held at Ruth Eckerd Hall, 1111 McMullen Booth Road
North, Clearwater, Florida, on Friday, April 17, 1998, at 9:00 A.M., for the
following purposes:

1. To elect three directors to serve for a three-year term;

2. To vote upon two shareholder proposals as set forth in the
accompanying proxy statement;

and to transact such other business as may properly come before the meeting, or
any adjournment thereof.

The Board of Directors has fixed the close of business on February 6,
1998, as the record date for the determination of the shareholders entitled to
notice of, and to vote at, the meeting and any adjournment thereof. A complete
list of the shareholders entitled to vote at the meeting will be open to
examination by the shareholders, during regular business hours, for a period of
ten days prior to the meeting at the principal executive offices of the Company,
One Progress Plaza, St. Petersburg, Florida 33701.

By order of the Board of Directors,

Kathleen M. Haley
Corporate Secretary

You are urged, whether you own one or many shares, to mark, date,
sign and promptly mail the enclosed Proxy in the enclosed envelope, which
requires no postage.

<PAGE> 1

Florida Progress Corporation, P. O. Box 33042, St. Petersburg, Florida 33733,
March 12, 1998

PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS/APRIL 17, 1998

This statement is furnished in connection with the solicitation by
the Board of Directors of Florida Progress Corporation (the "Company") of
proxies to be voted at the Annual Meeting of Shareholders to be held at Ruth
Eckerd Hall, 1111 McMullen Booth Road North, Clearwater, Florida, on Friday,
April 17, 1998, at 9:00 A.M., or at any adjournment thereof. Any proxy given
pursuant to this solicitation may be revoked by the person giving it at any time
prior to the voting thereof by giving written notice of revocation to the
Secretary of the Company at the Company's principal executive offices at any
time before the proxy is voted, by executing and delivering a later-dated proxy
or by attending the Annual Meeting and voting his or her shares in person. No
such notice of revocation or later-dated proxy, however, will be effective
unless and until received by the Company prior to or at the Annual Meeting.

Shares of Common Stock, without par value (the "Common Stock"), are
the only outstanding voting securities of the Company.

Only shareholders whose names appeared of record on the books of the
Company at the close of business on February 6, 1998, are entitled to receive
notice of and to vote at the Annual Meeting and any adjournment thereof. As of
that date, there were 97,044,941 shares of Common Stock outstanding. Each share
is entitled to one vote for each director to be elected and one vote for each
other matter to be considered. The attendance, in person or by proxy, of the
holders of a majority of the issued and outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum to
transact business. The Florida Business Corporation Act (the "FBCA") provides
that directors are elected by a plurality of the votes cast and all other
matters are approved if the votes cast in favor of the action exceed the votes
cast against the action (unless the matter is one for which the FBCA, or other
applicable laws, or the Company's articles of incorporation require a greater
vote). Therefore, under the FBCA, abstentions and broker non- votes have no
legal effect, unless a specific percentage of those shareholders entitled to
vote is required by the FBCA, or other applicable laws, or the Company's
articles of incorporation to approve a matter.

The cost of preparing and mailing proxy material and soliciting
proxies will be borne by the Company. Solicitation of proxies from some
shareholders will be made by telephone or in person by regular employees of the
Company, who will receive no additional compensation therefor. In addition,
arrangements will be made with brokerage firms and other custodians, nominees
and fiduciaries to forward solicitation material for the Annual Meeting to
beneficial owners, and the Company will reimburse such firms for their expense
in so doing.

This proxy statement and accompanying notice and form of proxy are
first being sent to the shareholders of the Company on or about March 12, 1998.

Election of Directors

The Board of Directors of the Company currently consists of twelve
members, divided into three classes. The current terms of the three classes
expire in 1998 (Class II directors), 1999 (Class III directors) and 2000 (Class
I directors). Directors are generally elected for three-year terms. Effective
with the 1998 annual meeting of shareholders, the number of directors has been
reduced to eleven and the number of Class II directors has been reduced to
three.

Three Class II directors with terms expiring in 2001 are to be
elected at the Annual Meeting. The Board of Directors has nominated three
persons, all of whom are currently

<PAGE> 2

directors, to stand for election at the Annual Meeting. The directors shall be
elected by a plurality of the votes cast, so that the three persons nominated
for election as Class II directors receiving the three highest totals of votes
cast in favor of his election will be elected as Class II directors. Each share
of Common Stock entitles its holder to cast one vote in respect of each director
to be elected. Votes may not be cumulated.

It is the intention of the persons named in the accompanying proxy,
unless otherwise directed, to vote all proxies FOR the election of the three
nominees of the Board of Directors as directors of the Company. Directors
elected at the Annual Meeting, after being duly qualified, will serve until
their successors are elected and qualified.

The Board of Directors has been informed that all nominees are
willing to serve as directors, but if any of them should decline or be unable to
serve as a director, the persons named in the accompanying proxy will vote for
the election of another person or persons as they, in their discretion, may
choose. The Board of Directors has no reason to believe that any nominee will be
unable or unwilling to serve.

Information as to Nominees

The names and ages of the nominees for election as directors, their
principal occupations and employment during the past five years, including a
brief biography, and the first year elected as a director, are as follows:

NOMINEES FOR TERMS EXPIRING IN 2001
(CLASS II DIRECTORS)
<S> <C>

[PHOTO] W. D. ("BILL") FREDERICK, JR., age 63, Citrus grower and investor, Orlando,
Florida. From 1980 to 1992 Mr. Frederick served as Mayor of the City of Orlando.
He practiced law as a public defender for the Ninth Judicial Circuit of Florida
and in 1966 founded the Orlando law firm of Frederick, Wooten & Honeywell P.A.
He returned to the practice of law in 1992 as a partner in the Orlando office of
the firm of Holland & Knight from which he retired in 1995. He is a member of
the Board of Directors of Florida Power Corporation ("Florida Power"), Blue
Cross/Blue Shield of Florida, and SunTrust Bank, Central Florida, N.A.
Committees: Compensation; Compliance, Chairman. Director since 1995.

[PHOTO] FRANK C. LOGAN, age 62, attorney with the law firm of Harper, Kynes, Geller,
Watson & Buford, P.A., Clearwater, Florida, since 1996. Previously, he was with
the Clearwater law firm of Harris, Barrett, Mann & Dew and the Tampa firm of
MacFarlane, Ausley, Ferguson & McMullen. He has practiced law since 1962,
specializing in estate planning, probate, corporate and business law. He is a
director of Florida Power. Committee: Compliance. Director since 1997.
<PAGE> 3

[PHOTO] VINCENT J. NAIMOLI, age 60, Chairman, President and Chief Executive Officer
of Anchor Industries International, Inc., an operating and holding company, Tampa,
Florida, a position he has held for more than five years. He is also Managing
General Partner and Chief Executive Officer of the Tampa Bay Devil Rays, Ltd.
Major League Baseball Club, St. Petersburg, Florida. He is a director of Florida
Power and Players International, Inc., and in conjunction with the business activities
of Anchor Industries, Mr. Naimoli serves as a director of Russell Stanley Corp. and
Simplicity Pattern Company. Committees: Finance and Budget; Nominating.
Director since 1992.

</TABLE>

Information as to Continuing Directors

The names and ages of directors who continue in terms expiring in
1999 and 2000, their principal occupations and employment during the past five
years, including a brief biography, and the first year elected as a director,
are as follows:

CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 1999
(CLASS III DIRECTORS)
<S> <C>
[PHOTO] JACK B. CRITCHFIELD, age 64, Chairman of the Board, a position he has held for
more than five years. Since 1983, he has held numerous executive positions with
the Company and its subsidiaries, including President, Chief Executive Officer,
Chief Operating Officer and Group Vice President of the Company, President of
Electric Fuels Corporation ("Electric Fuels") and Vice President of the Eastern
and Ridge Divisions of Florida Power. He has been a director of Florida Power
since 1988 and served as a director of Florida Power from 1975 through 1978 and
as Chairman of its Board from 1990 until April 1996. Committee: Executive,
Chairman. Director since 1988.

[PHOTO] CLARENCE V. MCKEE, ESQ., age 55, Chairman and Chief Executive Officer of McKee
Communications, Inc., Tampa, Florida, a firm involved in the acquisition and
management of television and radio stations. He served as Counsel to Pepper &
Corazinni, a Washington, D.C. communications law firm, from 1980 until 1987 when
he became a co-owner of WTVT Holdings, Inc., where he held the position of
Chairman and Chief Executive Officer until 1992. He is a director of Florida
Power, American Heritage Life Insurance Company, and Checkers Drive-In
Restaurants, Inc. Committees: Compensation; Audit, Chairman. Director since
1989.

[PHOTO] RICHARD A. NUNIS, age 65, Chairman of Walt Disney Attractions, Orlando, Florida.
He has held various positions with the Disney organization since 1955, including
Vice President, Operations in 1968, Executive Vice President of DISNEYLAND and
Walt Disney World in 1972, President of Walt Disney Attractions in 1980, and his
current position since 1991. He is a director of Florida Power, The Walt Disney
Company, and SunTrust Bank, Central Florida N.A. Committees: Executive;
Compensation; Finance and Budget. Director since 1989.
<PAGE> 4

[PHOTO] JEAN GILES WITTNER, age 63, President of Wittner & Co., Wittner Securities,
Inc., and Wittner & Associates, Inc., St. Petersburg, Florida, firms involved
in real estate management, insurance brokerage and consulting, positions she has
held for more than five years. She previously served as President and Chief
Executive Officer of a savings association until it was sold in 1986. She
serves on the boards of Florida Power, Checkers Drive-In Restaurants, Inc.,
and Raymond James Bank, F.S.B. Committees: Audit; Compensation, Chairman; Compliance.
Director since 1982.

</TABLE>

DIRECTORS WHOSE TERMS EXPIRE IN 2000
(CLASS I DIRECTORS)
<S> <C>

[PHOTO] MICHAEL P. GRANEY, age 54, Partner, Simpson Thacher & Bartlett, Columbus,
Ohio. He has practiced law with this New York-based law firm since 1980 and is
now resident partner in its Ohio office. His specialties are utilities, antitrust and
litigation. He is a member of the American, District of Columbia, Ohio and
Columbus Bar Associations and the Federal Energy Bar Association. He is a
director of Florida Power. Committees: Executive; Compliance; Nominating,
Chairman. Director since 1991.

[PHOTO] RICHARD KORPAN, age 56, President and Chief Executive Officer of the Company. He
has held the position of President since 1991, and effective June 1, 1997, was
appointed Chief Executive Officer of the Company. Since April 1996, he has also
served as Chairman of the Board of Florida Power, and until June 1, 1997, as
Chief Executive Officer of Florida Power. He joined the Company in 1989 as
Executive Vice President and Chief Financial Officer. He is a director of
SunTrust Bank of Tampa Bay. Committees: Executive; Finance and Budget. Director
since 1989.

[PHOTO] JOAN D. RUFFIER, age 58, General Partner, Sunshine Cafes, Ltd., Orlando,
Florida, a food and beverage concession business at major Florida airports,
positions she has held for more than five years. Previously, she practiced
public accounting with the firm of Colley, Trumbower & Howell. She is a director
of Florida Power and also serves on the boards of directors of Cyprus Equity
Fund and INVEST, INC. Committees: Audit; Compliance; Finance and Budget,
Chairman. Director since 1990.
<PAGE> 5

[PHOTO] ROBERT T. STUART, JR., age 65, rancher and investor, Dallas, Texas, for more than
five years. He held numerous executive positions with Mid-Continent Life Insurance
Company ("Mid-Continent") since 1949, including Vice President, President,
Chairman of the Board and Chief Executive Officer until 1986 when Mid-Continent was
acquired by the Company. He is a director of Florida Power. Committee: Executive.
Director since 1986.

</TABLE>

Security Ownership of Certain Beneficial Owners

The following table sets forth information concerning shares of
Common Stock that are held by persons known to the Company to be the beneficial
owners of more than 5% of said stock as of December 31, 1997.
<TABLE>
<CAPTION>

<S> <C> <C>
Number of Shares Percent
Name and Address Beneficially Owned(1) of Class

Franklin Resources, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404 6,443,775 6.6%

The Capital Group Companies, Inc.
333 South Hope Street
Los Angeles, CA 90071 7,973,800 8.2%
</TABLE>

Security Ownership of Management

The directors and nominees and all other named executive officers
individually, and the directors, nominees, named executive officers and
executive officers of the Company as a group, beneficially owned Common Stock as
follows: <TABLE> <CAPTION> <S> <C> <C>
Number of Shares Percent of
Name Beneficially Owned(1) Class (2)

Jack B. Critchfield 51,394
W. D. ("Bill") Frederick, Jr. 2,885
Michael P. Graney 3,616
Richard Korpan 24,326
Frank C. Logan 2,383
Clarence V. McKee 3,113
Vincent J. Naimoli 9,206
Richard A. Nunis 22,672
Charles B. Reed 3,768
Joan D. Ruffier 4,688
Robert T. Stuart, Jr. 1,506,073(3) 1.55%
Jean Giles Wittner 10,317
Stanley I. Garnett, II 6,186
Jeffrey R. Heinicka 5,692
Richard D. Keller 14,963
Joseph H. Richardson 12,643

All 17 directors, nominees and
executive officers as a group, 1,689,621 1.74%
including those named above

</TABLE>

<PAGE> 6

(1) As used in the above tables, "beneficial ownership" means the direct or
indirect, sole or shared power to vote, or to direct the voting of, a
security and/or investment power with respect to a security. Unless
otherwise noted, the number of shares held are beneficially owned as of
December 31, 1997.

(2) Unless otherwise noted, less than 1% per individual.

(3) Includes 594 shares owned by Mr. Stuart's children, as to which shares
Mr. Stuart disclaims beneficial ownership.

Certain Relationships and Related Transactions

The Company has invested $5 million for a 5.75% limited partnership
interest in the Tampa Bay Devil Rays, Ltd. ("Devil Rays"), a Florida limited
partnership that acquired in 1995 a Major League Baseball franchise for the
Tampa Bay area. A corporation controlled by Vincent J. Naimoli, a director of
the Company, is the managing general partner and a limited partner in the Devil
Rays. Mr. Naimoli has a total indirect interest of 16.67% in the Devil Rays. The
foregoing percentage capital interests are subject to change should additional
investors be admitted to the Devil Rays. The Company has also executed a Private
Suite License Agreement ("License") with the Devil Rays for the use of a private
suite to be constructed in Tropicana Field located in St. Petersburg, Florida.
The License fee in the amount of $125,000 per year is subject to annual
increases over the five-year term of the License equal to 2.5% plus the
percentage increase in the Consumer Price Index. The term of the License is
expected to commence in 1998 and no later than the date of the first regular
season game scheduled to be played by the Devil Rays baseball team in Tropicana
Field. The terms and conditions of the License are substantially similar to
those entered into with other licensees.

Florida Power, a subsidiary of the Company, has entered into an
eight-year Sponsorship Agreement (the "Agreement") with the Devil Rays. The
Agreement provides that Florida Power will sponsor a Walk of Fame and one
in-stadium sign at Tropicana Field, the site where the Tampa Bay Devil Rays team
will play its home Major League Baseball games. The cost for constructing and
maintaining the Walk of Fame will be borne by Florida Power and will depict the
names of various people, including local and national athletes, celebrities and
entertainers. During the term of the Agreement, Florida Power will pay to the
Devil Rays a sponsorship fee of $100,000 per year for the Walk of Fame. The
costs for constructing and maintaining the in-stadium signage will be borne by
the Tampa Bay Devil Rays. Beginning in 1998 through 2000 inclusive, Florida
Power will pay a sponsorship fee in the amount of $350,000 for the in-stadium
signage, and beginning in the year 2001 and for the duration of the term of the
Agreement, the sponsorship fee payable for the in-stadium signage will be
increased by 3 1/2% over the fee paid in the immediately preceding year. In
addition, Florida Power has entered into agreements with the

Devil Rays for the naming rights and promotional and advertising programs at the
baseball stadium in St. Petersburg, where the Devil Rays baseball team will play
its spring training games. The baseball stadium complex has been renamed
"Florida Power Park, Home of Al Lang Field." Approximately one-third of a
$150,000 annual fee for the naming rights will be shared by the Devil Rays with
the City of St. Petersburg. A $150,000 annual fee for promotion and advertising
will be paid to the Devil Rays based on plans by Florida Power for community and
employee relations programs. The terms of the agreements expire in 2007.

Mr. Michael P. Graney is a partner in the law firm of Simpson Thacher &
Bartlett. That firm provided legal services to the Company and Electric Fuels in
1997, and has been providing legal services to the Company and Electric Fuels
during 1998.

<PAGE> 7

Meetings of the Board of Directors
and Standing Committees

During 1997, the Board of Directors held six meetings. In addition,
certain directors attended standing committee meetings, including the following:

Audit Committee. During 1997, the Audit Committee met three times to
review the financial statements and results of the 1996 audit, to recommend
independent auditors for 1997 and to discuss plans and objectives for internal
audit activities for 1998.

Compensation Committee. During 1997, the Compensation Committee met six
times to review and approve the total compensation opportunities and awards for
the executive officers of the Company and Florida Power, and to take actions
relating to the basic design of the Company's compensation and benefit policies
for all employees of the Company and its subsidiaries.

Nominating Committee. During 1997, the Nominating Committee met two
times to review potential candidates for election to the Board of Directors. The
Committee will consider recommendations for nominees for election to the Board
of Directors submitted by shareholders. In addition to other requirements, for a
nomination to be made by a shareholder, the Company's bylaws provide that such
shareholder must have given timely notice thereof in proper written form to the
Secretary of the Corporation. To be timely, a shareholder's notice to the
Secretary must be delivered to or mailed and received at the principal executive
offices of the Company (a) in the case of an annual meeting, not less than 90
days nor more than 120 days prior to the date of the annual meeting; provided,
however, that in the event that less than 100 days' notice or prior public
disclosure of the date of the annual meeting is given or made to shareholders,
notice by the shareholder in order to be timely must be so received not later
than the close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure of
the date of the annual meeting was made, whichever occurs first; and (b) in the
case of a special meeting of shareholders called for the purpose of electing
directors, not later than the close of business on the 10th day following the
day on which the notice of the date of the special meeting was mailed or public
disclosure of the date of the special meeting was made, whichever occurs first.

The Company also has Executive, Finance and Budget and Compliance
Committees. Members of all committees are identified in the sections titled
"Information as to Nominees" and "Information as to Continuing Directors."
During 1997, all directors attended at least 75% of the total number of Board
and pertinent committee meetings, except for Mr. Stuart who attended at least
50% of the total number of Board meetings.

Compensation of Directors

At the 1996 Annual Meeting, the Company's shareholders approved the
Stock Plan for Non- Employee Directors of Florida Progress Corporation and
Subsidiaries (the "Director Plan"). Under the terms of the Director Plan during
1997, 75% of each non-employee director's $30,000 retainer fee was paid
quarterly in arrears in Common Stock. In addition, non-employee directors were
paid $1,500 for attendance at each meeting of the Company's Board of Directors,
and effective May 15, 1997, a per meeting fee of $1,000 for attendance at each
subsidiary board or board committee meeting. A $750 meeting fee was also paid to
each Committee Chairman for each meeting chaired. Directors have also been paid
a $500 attendance fee for participation in strategic update conferences. The
cash portion of directors' compensation is allowed to be deferred.

In accordance with the six practices adopted by the Board in November
1995 with regard to director compensation, the Compensation Committee meets each
year to review all elements of director compensation. In May of 1997, the
Compensation Committee reviewed the total value of all forms of director
compensation and determined that its current objectives to increase stock
ownership and provide directors with a fair and competitive compensation package
are being met. The per meeting fee of $1,000 for attendance at each subsidiary
board or board committee meeting was changed from the previous per day meeting
fee of $1,500 to conform to standard practice based upon benchmarking studies.

<PAGE> 8

Executive Compensation

The following table contains information with respect to compensation
awarded, earned or paid during the years 1995-1997 to (i) the former Chief
Executive Officer ("former CEO") of the Company; (ii) the current Chief
Executive Officer ("CEO") of the Company; and (iii) the other four most highly
compensated executive officers of the Company (the individuals referred to in
(i), (ii) and (iii) are referred to collectively as the "Named Executive
Officers") whose total remuneration paid in 1997 exceeded $100,000.
<TABLE>
<CAPTION>

SUMMARY COMPENSATION TABLE

Long-Term
Compensation
Annual Compensation (1) Payouts
(a) (b) (c) (d) (h) (i)
Name and Principal Position LTIP All Other
Year Salary Bonus Payouts(2) Compensation(3)

<S> <C> <C> <C> <C> <C>
JACK B. CRITCHFIELD 1997 $685,006 $ 47,500 $527,363(4) $33,465
Chairman and former
Chief Executive Officer 1996 672,581 498,000 505,252 25,060

1995 589,992 382,500 465,654 22,715

RICHARD KORPAN 1997 $592,304 $ 41,500 $324,028(4) $26,490
President and Chief
Executive Officer 1996 535,610 333,500 339,107 18,900

1995 440,003 257,000 284,109 19,800

RICHARD D. KELLER 1997 $366,733 $173,500 $205,910(4) $16,227
Group Vice President
and President and Chief 1996 320,640 -0- 139,347 12,646
Executive Officer, Electric
Fuels Corporation 1995 284,466 108,500 146,882 9,813

STANLEY I. GARNETT, II 1997 $408,616 $ 21,500 $51,891(4) $5,063
Executive Vice President(5)
1996 N/A N/A N/A N/A

1995 N/A N/A N/A N/A

JOSEPH H. RICHARDSON 1997 $384,619 $ -0- $162,091(4) $13,890
Group Vice President
and President and Chief 1996 288,884 214,000 128,858 16,585(6)
Executive Officer, Florida
Power Corporation 1995 215,009 113,000 110,473 8,835

JEFFREY R. HEINICKA 1997 $264,992 $ 15,500 $110,393(4) $12,315
Senior Vice President and
Chief Financial Officer 1996 258,456 169,000 113,139 8,595

1995 211,200 100,000 N/A 8,325

</TABLE>

(1) All other annual compensation paid to the Named Executive
Officers during 1997, other than salary and annual incentive
compensation, does not exceed the minimum amounts required to
be reported pursuant to Securities and Exchange Commission
rules.

(2) The number of shares of restricted Common Stock held by the Named
Executive Officers as of December 31, 1997 as a result of awards
earned under the 1993-1995 and 1994-1996 performance cycles, and
the value of such shares, was as follows: Jack B. Critchfield
12,261 shares, $481,244; Richard Korpan 8,010 shares, $314,393;
Richard D. Keller 3,524 shares, $138,317; Stanley I. Garnett, II
-0- shares; Joseph H. Richardson 3,062 shares, $120,184; and
Jeffrey R. Heinicka 1,938 shares, $76,067. The restrictions were
removed from all shares effective January 1, 1998.

(3) Company contributions to its Savings Plan and Executive Optional
Deferred Compensation Plan on behalf of the Named Executive
Officers.

(4) Represents the dollar value as of February 18, 1998, the date of
award, of shares of Common Stock earned under the 1995-1997
performance cycle of the Company's Long-Term Incentive

<PAGE> 9

Plan ("LTIP"), none of which are restricted. The total number of
shares earned, including dividend equivalent shares, is as
follows: Jack B. Critchfield, 13,720 shares; Richard Korpan,
8,430 shares; Richard D. Keller, 5,357 shares; Stanley I.
Garnett, II, 1,350 shares; Joseph H. Richardson, 4,217 shares;
and Jeffrey R. Heinicka, 2,872 shares.

See the discussion of the method of calculating payouts contained
in the Long- Term Incentive Compensation portion of the
Compensation Committee Report
of the Board of Directors on page 13.

(5) Stanley I. Garnett, II became an executive officer of the
Company effective June 1, 1997. Salary information for 1997
includes $182,075 paid to Mr. Garnett through a consulting firm
that was retained by the Company prior to his employment by
the Company. No compensation information is provided for 1995
and 1996 because he was not an executive officer of the Company
during those years.

(6) Represents $8,835 in Company Contributions to the Savings Plan of
Florida Progress and the Executive Optional Deferred Compensation
Plan and $7,750 of director fees for services as a director of
Echelon International Corporation, a former subsidiary of Florida
Progress.

The following table contains information with respect to
performance shares granted in 1997 to the Named Executive Officers of the
Company under the LTIP: <TABLE> <CAPTION>

LONG-TERM INCENTIVE PLAN(1)
AWARDS IN 1997

Number of Performance
Performance Period Estimated Payout at End of Period (3)
----------------------------------------------
Name Shares (2) Covered Threshold Target Maximum
---- ------------ ----------- -------------- --------------- -----------

<S> <C> <C> <C> <C> <C> <C>
Jack B. Critchfield 15,406 1997-1999 3,852 shares 15,406 shares 30,812 shares
Richard Korpan 9,639 1997-1999 2,410 shares 9,639 shares 19,278 shares
Richard D. Keller 6,024 1997-1999 0 shares 6,024 shares 16,566 shares
Stanley I. Garnett, II 4,863 1997-1999 1,216 shares 4,863 shares 9,726 shares
3,242 1996-1998 1,080 shares 3,242 shares 5,944 shares
1,621 1995-1997 811 shares 1,621 shares 2,432 shares
Joseph H. Richardson 6,426 1997-1999 1,607 shares 6,426 shares 12,852 shares
Jeffrey R. Heinicka 3,406 1997-1999 852 shares 3,406 shares 6,812 shares
</TABLE>

(1) The LTIP is a Common Stock and cash-based incentive plan to reward
participants for long-term performance of the Company. It was approved
by the shareholders in 1990. See the Long-Term Incentive Compensation
portion of the Report of the Compensation Committee of the Board of
Directors on page 13 for additional information.

(2) The number of performance shares granted is based on a percentage of
base salary in effect at the time of each award and is subject to
automatic increase or decrease on a prorated basis in accordance with
changes to a participant's base salary or LTIP percentages throughout
the performance cycle.

In the event of a change in control of the Company, 150% of all
performance shares granted to the Named Executive Officers under the
LTIP and then outstanding would automatically be considered earned and
would be paid in shares of unrestricted Common Stock together with
shares of unrestricted Common Stock payable for dividend equivalents
accrued through the date of the change in control.

(3) Payouts for the 1995-1997 performance cycle were based on achieving
return on equity ("ROE") and return on average invested capital
("ROIC") goals, equal to or exceeding the thresholds determined by the
Compensation Committee. Payouts for the 1996-1998 performance cycle
will be based on achieving ROE and total shareholder return ("TSR")
objectives and for Mr. Keller, based also on Electric Fuels' compound
annual earnings growth and ROIC. Payouts for the 1997-1999 performance
cycle will be based on TSR, and for Mr. Keller, based also on Electric
Fuels' compound annual earnings growth and ROIC.

<PAGE> 10

Pension Plan Table

The table below illustrates the estimated annual benefits (computed as
a straight life annuity beginning at retirement at age 65) payable under the
Company's Retirement Plan, Nondiscrimination Plan and Supplemental Executive
Retirement Plan ("SERP") for specified final average compensation and years of
service levels.
<TABLE>
<CAPTION>

Estimated Annual Retirement Benefits Payable Under
the Retirement Plan, Nondiscrimination Plan and
the Supplemental Executive Retirement Plan

Average Annual
Compensation Service Years
5 10 15 20 25 30 35 or more
- -- -- -- -- -- ----------

The Named Executive Officers are entitled to benefits under the SERP.
These benefits are offset by the benefits payable under the Retirement Plan and
the Nondiscrimination Plan, as well as 50% of the executive's primary Social
Security benefit. The estimated annual SERP benefit for the Named Executive
Officers (prior to any offsets) may be determined using the Pension Plan Table
set forth above. For these purposes, the current compensation for each executive
that would be used in calculating benefits under the SERP is substantially the
same as the three year average of the salary and bonus reported in the summary
compensation table, and the number of years of deemed credited service that
would be used in calculating benefits under the SERP for each such executive is
as follows: Dr. Critchfield, 35 years of service; Mr. Korpan, 35 years of
service; Mr. Keller, 19 years of service; Mr. Garnett, 4 years of service; Mr.
Richardson, 22 years of service; and Mr. Heinicka, 20 years of service. Under
the formula used for calculating benefits under the SERP, the maximum benefit
payable to each Named Executive Officer is reached at 16 years of deemed
credited service unless the Named Executive Officer achieves 35 years of
service.

Accrued benefits may also be paid under each of the Retirement Plan,
Nondiscrimination Plan and SERP if a participant terminates employment before
age 65 and meets the requirements for early retirement, disability, death or
other termination of employment benefits after becoming vested under the rules
of the particular plan.

Under the Retirement Plan and the Nondiscrimination Plan, the
compensation taken into account in calculating benefits is salary only. The
years of credited service that would be used in calculating benefits under the
formula applicable to the Retirement Plan and the Nondiscrimination Plan (1.8%
of final average earnings for each year of service) for the Named Executive
Officers in the summary compensation table are as follows: Dr. Critchfield, 14
years of service; Mr. Korpan, 9 years of service; Mr. Keller, 19 years of
service; Mr. Garnett, -0- years of service; Mr. Richardson, 22 years of service;
and Mr. Heinicka, 20 years of service. The benefits

<PAGE> 11

under the Retirement Plan and the Nondiscrimination Plan are subject to offset
by an amount equal to 1 1/7% of a participant's primary Social Security benefit
for each year of service (with a maximum offset of 40%).

In the event of a change in control, each Named Executive Officer would
receive credit under the SERP for five additional years of service. If a
participant's employment is terminated following a change in control, the
benefit payable from the SERP is as follows: (1) an annuity beginning at age 55
through 59, subject to early payment reductions in the amount of 3% for each
year prior to age 60, or age 60 without reduction; (2) the amount of any federal
excise taxes (and income taxes on any reimbursement under this provision)
imposed on the executive under Section 4999 of the Internal Revenue Code; and
(3) a 50% surviving spouse benefit payable upon death.

Employment Contracts, Termination of
Employment and Change-in-Control
Arrangements

In 1998, the Company amended its 1995 employment agreement with Mr.
Korpan. The term of the agreement is from March 1, 1998 through February 28,
2002. On each March 1, beginning with March 1, 2000, the agreement will
automatically be extended for one additional year, unless either party gives 90
days' written notice to the contrary. The agreement provides for an annual base
salary of not less than $660,000 with award opportunities as a participant in
the Management Incentive Compensation Plan ("MICP") and LTIP of not less than
the level authorized for any other executive officer of the Company. The
agreement establishes minimum annual retirement benefits to be paid in any case,
that increase with Mr. Korpan's tenure. The agreement also provides for the
payment of comparable retirement benefits to his surviving spouse as well as
payment to his estate of the base salary and MICP target bonus for the year in
which death occurs. Severance pay established in the agreement is three times
the sum of his annual base pay and MICP target bonus. Severance pay is due upon
termination by the Company without cause or upon termination by the employee for
good reason. The agreement contains restrictive covenants that apply for a
period of two years after termination of employment. The Company will pay the
employee's attorneys' fees in the event of an action to enforce the agreement
after a change in control. The employee will be entitled to an additional
payment in the event that any payment or benefit under the agreement would
subject the employee to the excise tax imposed under Section 4999 of the
Internal Revenue Code. To the extent that benefits are payable under both Mr.
Korpan's employment agreement and the agreement referred to in the next
paragraph, they are payable to the maximum extent under either, but not both, of
those agreements.

Change-in-control benefits were previously included in the SERP which
was originally adopted August 1, 1989 and which has been amended from time to
time. In 1998, the Company entered into individual agreements with each of the
Named Executive Officers, except Jack B. Critchfield, dealing with a change in
control as defined in each agreement. These agreements implement changes to the
change-in-control benefits previously included in the SERP and reduce the cost
to the Company in the event a change in control occurs. In the event of a change
in control, each Named Executive Officer would receive credit under the SERP for
five additional years of service. Each agreement establishes the conditions of
employment during an employment period which commence on the date of any change
in control until the earliest to occur of: (1) the date which is 36 months from
the date of any such change in control; or (2) the date of termination of
employment of the Named Executive Officer. In the event of termination of
employment following a change in control, each agreement provides for the
following: (1) a severance payment equal to two and a half or three times the
Named Executive Officer's base salary and annual bonus; (2) payout in cash at
150% or maximum of performance shares granted under the LTIP after a change in
control and, in one instance, payout of the difference between actual and
maximum of performance share awards paid out as a result of the occurrence of a
change in control; (3) welfare benefits for the Named Executive Officer for a
maximum of thirty months after termination with lifetime access to medical in-

<PAGE> 12

surance with the executive paying the full cost thereafter; (4) the payment of
the premium for group executive excess liability insurance for 15 years; (5) tax
assistance up to $15,000; (6) the payment of reasonable attorneys' fees and
expenses related to disputes involving the agreement; and (7) reimbursement of
relocation expenses not covered by another employer and not in excess of $10,000
incurred within 30 months of termination.

Report of the Compensation
Committee of the Board of Directors

Executive Compensation Design

The Company's executive compensation system is intended to attract,
retain and motivate high quality executives with individually tailored market-
and performance-based compensation packages that reward protection of Company
assets and enhancement of shareholder value. The Compensation Committee of the
Board of Directors of Florida Progress Corporation (the "Committee"), comprised
solely of outside directors, approves total compensation opportunities and
awards for executive officers of the Company and Florida Power. The target
compensation for each executive officer is established annually by the Committee
and is made up of three principal components: base salary; annual incentive cash
compensation; and long-term incentive compensation payable in cash or Common
Stock. A significant portion of each executive officer's total target
compensation is variable, at risk and dependent upon the Company's annual and
long-term performance.

In determining target compensation, the Committee reviews market values
compiled by human resource professionals from several independent surveys based
upon an equal blend of compensation levels of both electric power and general
industry median rates, where possible. This philosophy is intended to reflect
the changing nature of the utility industry and to recognize the fact that pay
practices in the future must be adequate to attract talented employees from
industries other than solely electric utilities. In 1997, the Committee received
an updated competitive compensation analysis for total direct compensation
prepared by Towers and Perrin, a benefits consulting firm, for each executive
officer as well as a parallel study done at the Committee's request to ensure
that the survey data was accurate.

The Committee believes its "pay- for-performance" program, which
compensates an executive officer at his or her target level of compensation only
if specific goals are achieved, is a fair way to structure an executive
compensation program. The program rewards executives for meeting financial
targets, thus producing benefits for the entire Company and its shareholders.

A discussion of the three compensation components and the actions taken
by the Committee with respect to compensation reported for 1997 for the Named
Executive Officers, including the CEO and the former CEO follows.

Base Salary

The base salary component is based, in most instances, on an equal
weighting of market data from both utility and general industry sources. An
executive officer's base salary will vary within this competitive framework
based on experience, responsibilities, leadership and performance. As a result,
updated market data increases were appropriate for many of the executive
officers. These increases are reflected in the Summary Compensation Table. Mr.
Garnett's base salary was established based on market data evaluated at the time
he was appointed as an executive officer of the Company. The former CEO's base
salary was not increased from the previous year although updated market data and
the Committee's succession plans warranted an increase in the CEO's base salary.

Annual Incentive Cash Compensation

The Company's MICP provides annual incentive cash compensation
opportunities to officers and key employees of the Company and its subsidiaries
(including the Named Executive Officers) by creating performance award pools
associated with the achievement of corporate goals. The goals associated with
the threshold, target and maximum funding levels for each performance award pool
under the MICP are established by the Committee, based upon objective measures
of corporate performance. For 1997, the goals established by the

<PAGE> 13

Committee for the performance award pools in which each of the Named Executive
Officers was a participant were based upon return on average invested capital
for the Company's principal operating subsidiaries as well as net income for
Electric Fuels. The Committee considers the projections and assumptions
contained in the relevant annual profit plan in establishing threshold, target
and maximum funding level goals for each performance award pool. Executive
officers having responsibility primarily for a single operating subsidiary were
assigned to subsidiary performance award pools having goals based solely on that
subsidiary's performance. Executive officers having Company-wide
responsibilities were assigned to the holding company performance award pool
whose goals were a composite of weighted, operating subsidiary goals. The
Committee explicitly retains discretion to take into account, in determining if
performance goals were met, whether assumptions contained in the relevant profit
plan were in fact valid, and if they were not, to make appropriate adjustments
to reported financial results for purposes of computing goal achievement levels.

Performance award pool funding levels typically are based upon a
mathematical function of pool participants' target annual incentive cash
compensation opportunity (expressed as a percentage of base salary) and the pool
goal level achieved. The Committee may exercise its discretion in approving
the amount of the award pool and the specific amount of the annual
incentive cash compensation to be paid to executive and other key
officers from the appropriate pools based upon the Committee's subjective
evaluation of the officer's overall contributions to the Company. The
Committee takes into account recommendations of the CEO in
approving annual incentive cash compensation for individual executive and key
officers (other than the CEO).

The 1997 annual incentive compensation targets for the Named Executive
Officers ranged from 50% to 60% of base salary. These targets were increased
from the 1996 percentages for all of the applicable Named Executive Officers,
except the former CEO, as part of the review of total compensation targets
taking into account the changes in market data. Mr. Garnett's target annual
incentive was established based on market data evaluated at the time he was
appointed as an executive officer of the Company. The CEO's 1997 target annual
incentive compensation was increased to 60% of his base salary for the same
reason.

The amounts contained in the bonus column of the Summary Compensation
Table for the Named Executive Officers (other than the CEO and former CEO) for
1997 are the result of the Committee's determination that 1997 results did not
meet the threshold MICP goals of Florida Power and that the 1997 results
exceeded the threshold goal for Electric Fuels for the Named Executive Officers.
The amount contained in the bonus column of the Summary Compensation Table for
the CEO and former CEO for 1997 is based on the same results since the holding
company's MICP goals were weighted 85% on the Florida Power goals and 15% on the
goals of Electric Fuels. The amounts contained in the bonus column for all the
Named Executive Officers were the result of the application of a mathematical
formula converting the goal levels achieved, which were above threshold levels,
into dollar amounts, without the Committee making any discretionary adjustments.

Long-Term Incentive Compensation

To facilitate executive stock ownership and align the interest of key
executives with that of the Company's other shareholders in the long-term
performance of the Company, the Committee awarded in 1997 the Named Executive
Officers the opportunity to earn Common Stock or cash through the grant of
performance shares under the Company's LTIP, as indicated in the table appearing
on page 9. To date, under the LTIP, the Committee has granted performance shares
for eight consecutive three-year performance cycles beginning with the 1991-1993
performance cycle.

In 1997, the Committee approved changes to the design and
administration of the LTIP and established stock ownership guidelines for
Company officers to be met within five years of entry into the LTIP. Stock
ownership guidelines range from one-half times base salary for a Vice President
to two times base salary for the CEO. To the extent earned, performance shares
will be converted into shares of un-

<PAGE>14

restricted Common Stock; however, if the stock ownership guidelines have been
met, the participant may elect to convert such performance shares into either
unrestricted Common Stock or cash.

The financial goals for the 1995- 1997 performance cycle of the LTIP
were established, in accordance with the administration policies previously
adopted by the Committee, to be the sum of the three annual ROE or ROIC goals
for 1995, 1996 and 1997 used as goals for the MICP (the "Cycle V goals"). The
goal weighting used in the MICP was also used for the Cycle V goals. As part of
the changes approved by the Committee in 1997, financial goals for later LTIP
performance cycles (Cycles VI, VII and VIII) will begin to measure the Company's
TSR against an industry peer group.

The payouts listed in the Long- Term Compensation column of the Summary
Compensation Table for the Named Executive Officers on page 8 for the 1995-1997
performance cycle are the result of (i) the Committee's determination that Cycle
V results did meet the threshold goals for Florida Power after adjusting for
strategic expenditures or expenses incurred in connection with the buyout of the
Tiger Bay purchase power contract, the nuclear replacement fuel costs, and
nuclear operating and maintenance outage costs that exceeded the Nuclear
Regulatory Commission mandated work for 1997; (ii) the Committee's determination
that the Cycle V results did meet the threshold goals for certain non-utility
subsidiaries, after adjusting for the exclusion of a provision for loss on coal
properties in determining Electric Fuels' ROE for 1996; (iii) the application of
a mathematical formula converting the goal level achieved into the number of
performance shares earned and (iv) adding dividend equivalents on shares earned
for the period of the performance cycle. All payouts to the Named Executive
Officers were made in shares of Common Stock. The LTIP payouts to the CEO and
former CEO were based on Florida Power achievement above threshold for its
three-year ROE and ROIC goals, weighted 82%, and achievement above threshold for
the three-year ROE and ROIC goals of certain non-utility subsidiaries weighted
18%.

During 1997, the Committee approved the number of performance shares
granted to each Named Executive Officer (other than the CEO and former CEO) for
the 1997-1999 performance cycle that had a value on the date of grant equal to
40% or 50% of 1997 base salary, depending on the total compensation opportunity
established by the Committee for each executive. None of the percentages were
increased from the previous performance cycle. In accordance with the new LTIP
design approved by the Committee in 1997, the grants are subject to automatic
increase or decrease on a prorated basis in accordance with changes to a
participant's base salary or LTIP percentage during the performance cycle.

During 1997, the Committee also approved performance share grants to Mr. Garnett
on a prorated basis for the 1995-1997, 1996-1998 and 1997-1999 performance
cycles based on the total compensation opportunity established by the Committee
at the time he was appointed as an executive officer. For the CEOs, the number
of performance shares granted to Dr. Critchfield for the 1997- 1999 performance
cycle had a value on the date of grant equal to 70% of his 1997 base salary.
This percentage was not increased from the previous performance cycle. For Mr.
Korpan, the number of performance shares granted for the 1997-1999 performance
cycle had a value on the date of grant equal to 50% of his 1997 base salary and
was increased on a prorated basis to 70% of base salary effective June 1, 1997,
following a review of updated market data in connection with Mr. Korpan's
promotion to CEO.

Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code would deny the Company a
deduction for compensation paid to each Named Executive Officer in a taxable
year to the extent it exceeds $1 million per officer, unless the compensation
qualifies as "performance-based compensation." In 1997, the Committee rescinded
an amendment to the Company's MICP that provided for the mandatory deferral of
annual cash incentive compensation which would not qualify for a Company tax
deduction due to Section 162(m) of the Internal Revenue Code until such time as
it becomes deductible. The MICP deferral was no longer

<PAGE> 15

effective in preserving the full deduction and the Committee has determined that
the amount of the foregone deduction for 1997 was not material.

Respectfully submitted,

Jean Giles Wittner, Chairman
W. D. ("Bill") Frederick, Jr.
Clarence V. McKee
Richard A. Nunis

Company Performance

The following graph compares the Company's performance, as measured by
the change in price of its Common Stock plus reinvested dividends, with the
Standard & Poor's ("S & P") 500 stock index and the S & P Electric Companies
stock index for the five years ended December 31, 1997:

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG FLORIDA PROGRESS CORPORATION, THE S & P 500 INDEX
AND THE S & P ELECTRIC COMPANIES INDEX

[GRAPH]
1992 1993 1994 1995 1996 1997

Florida Progress 100 109 104 131 131 170
S & P 500 100 110 112 153 189 252
S & P Electrics 100 113 98 128 128 162

* $100 invested on 12/31/92 in stock or index, including reinvestment of
dividends. Fiscal year ending December 31.

<PAGE>16

Relationship with Independent
Accountants

The firm of KPMG Peat Marwick LLP, which has been the Company's
independent certified public accountants since February 2, 1990, was recommended
by the Audit Committee and approved by the Board of Directors as the Company's
auditor for the year ended December 31, 1997. Representatives of KPMG Peat
Marwick are expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions.

The Company has not yet selected its independent auditors for the
current year. The Audit Committee presently intends to make its recommendation
concerning the Company's auditors no later than August 1998, in accordance with
past practice.

Shareholder Proposals

It is the intention of the persons named in the accompanying proxy,
unless otherwise directed, to vote all proxies AGAINST each of the following
shareholder proposals. Each shareholder proposal will be approved if the votes
cast for the proposal by holders of the shares represented at the Annual Meeting
and entitled to vote exceeds the votes cast against the proposal.

1. Joseph E. Deddo, 2935 E. Buck Court, Inverness, Florida 34452, a
holder of 150 shares of the Company's Common Stock, hereby notifies the Company
of his intention to present the following proposal for action at the Annual
Meeting:

"RESOLVED: that the shareholders request the Board of
Directors to adopt a policy that requires annual salary
increases for executive officers that are greater than 2%
of their prior year's salary to be approved by a
vote of the shareholders."

SHAREHOLDERS' SUPPORTING STATEMENT

Executive salaries are out of control and the Shareholders are paying for poor
performance or no performance. We see revenue growth with new customers, just to
see it wiped out by big write-offs. Shareholders shouldn't have to pay
entitlements such as high executive salaries, just to see their profits be given
out to baseball team owners, a seized insurance company or fines. Compensation
is earned not granted. THANK YOU FOR YOUR SUPPORT.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL FOR THE
FOLLOWING REASONS:

The Company believes that decisions regarding executive salaries and
employee compensation, including its various performance incentive plans --
including the "Sharing the Success" incentive plan implemented in 1996 for
non-executive employees of the Company and Florida Power -- should remain the
responsibility of the Company's management and Board of Directors.

The proposal of Florida Power employee Deddo presents his grievances
with management to the shareholders in the form of a request to limit executive
compensation. However, in providing competitive base salaries and incentive
programs like Sharing the Success, the Management Incentive Compensation Plan,
and the Long-Term Incentive Plan, the Board of Directors believes it is creating
shareholder value by providing its workforce with appropriate incentives that
reward employees for the contributions they make to the successful financial
performance of the Company and its subsidiaries. Comparable compensation
programs are in place at similarly sized U.S. electric utilities.

The Board's Compensation Committee, comprised of four outside
directors, is charged with establishing target compensation levels for
executives based on data developed through research of national industry
standards and consultations with internal and external compensation
professionals. Executive compensation is primarily composed of salary and awards
under incentive compensation plans that together are targeted to provide a
competitive level of compensation. Incentive plan performance goals are tied to
financial performance and business unit and individual contributions, thereby
putting a significant portion of the executive's total compensation at risk.

<PAGE> 17

It is the philosophy of the Board of Directors that executive
compensation for all Florida Progress companies be market driven. It is targeted
at levels that allow the Company to meet the demands of the competitive
marketplace for executive leadership. It is structured to provide a financial
stimulus and rewards for contributing to the continued success of the Company.
The recommended limitation put forward by the proponent would place the Company
at a competitive disadvantage to the detriment of you, its owners.

ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"AGAINST" THIS PROPOSAL.

2. Louis D. Putney, 485 South Himes Avenue, Tampa, Florida 33611,
holder of 81 shares of the Company's Common Stock, has notified the Company of
his intention to present the following proposal for action by the shareholders
at the Annual Meeting:

NOW, THEREFORE, BE IT RESOLVED that the shareholders request the
Board of Directors to make available to all stockholders within
six months of the 1998 stockholders' meeting a special report on
the Crystal River Nuclear Plant. More specifically, this report
shall include the following, provided that information directly
affecting the competitive position of the Corporation may be
omitted, and further provided that the cost of compiling this
report shall be limited to an amount deemed reasonable by the
Board of Directors:

1. A description of all significant deficiencies at the Nuclear
Plant which existed when the reactor was shut down in September,
1996, whether or not such deficiencies were identified by the NRC
as such, including deficiencies in management, engineering,
design, or training, and describing the operational and safety
implications of each such deficiency.

2. A description of the actions taken to remedy the deficiencies
identified above, including the cost of such actions, the cost of
replacement fuel during the outage, and whether such costs were
or are to be paid by the company or its ratepayers.

3. A description of all fines imposed and corrective actions
ordered by nRC since January 1, 1996, specifying those corrective
actions which have been completed by the Company and those which
have not.

4. An analysis of the advantages and disadvantages of the
continued operation of the Crystal River Nuclear Reactor versus a
planned decommissioning of the reactor within five years,
including an analysis of financial, liability and environmental
considerations.

5. A description of the expected financial losses, injuries and
loss of life likely to result from a catastrophic nuclear
accident at the Crystal River reactor, including a "worst case"
scenario, and the Company's expected financial liability in that
event.

SHAREHOLDERS' SUPPORTING STATEMENT

We believe the NRC's findings in its 1996 Notice of Violation in which
it imposed civil penalties of $500,000, and found that the Company committed
numerous violations "of significant potential safety consequence," and in which
the NRC stated, "The NRC is very concerned about the ineffective management
oversight of engineering, operations, and corrective action activities
demonstrated by these violations."

We believe that as a result of a settlement approved by the Florida
Public Service Commission in June, 1997, the Company will forego collection of
$440 million from its ratepayers in connection with the recent extended outage
at the nuclear plant, which has resulted in unprecedented losses to the Company,
and which is a result of poor management of the reactor.

We believe the catastrophic accident at Chernobyl clearly exhibited the
dangers of nuclear power. We believe that disaster caused the equivalent of $2.8
billion in damage, contaminated 400 square miles of land, and will result in the
deaths of 25,000 people.

As stockholders, we believe that corporations should act responsibly.
We believe a full review of our company's nuclear energy operations and policies
is necessary. A report will help stockholders and management assess our
corporation's social responsibilities and actions relating to its nuclear
reactor. These issues demand informed discussion and deliberation.

<PAGE> 18

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL FOR THE
FOLLOWING REASONS:

The Board of Directors agrees with Mr. Putney's assertion that
corporations must act responsibly. The Board fully supports Florida Power's
policy of placing safety first in the operation of its facilities and power
plants, particularly the Crystal River Nuclear Plant ("CR-3").

The Board believes that Mr. Putney's request for a special report is
both unnecessary and costly to prepare. Much of the information, which would be
included in such a report, already is available to the public from other
sources.

For example, the Company is required to disclose all material
information concerning CR-3 in its filings with the Securities and Exchange
Commission. In addition, Florida Power is required to provide the U.S. Nuclear
Regulatory Commission (NRC) with documentation, compliance reports and other
filings as part of maintaining the Company's operating license for CR-3.
Information contained in these filings is often voluminous and highly technical.

It is the opinion of the Board that preparing such a special report
would be of little or no value to the majority of our shareholders. The Company
does, however, take steps to inform the public -- including its shareholders and
other investors -- of significant developments in the nuclear plant's
operations. Special Company announcements and important updates related to CR-3
are issued regularly to the public and news media.

With respect to the operation of CR-3, here is a summary of key events
in recent years:

o On balance, CR-3 has been a steady
performer over its lifetime, since
coming into service in 1977. The
plant recorded its best three-year
performance ever in 1992, 1993, and
1994, averaging more than 80%
capacity during those years. (The
industry average for U.S. nuclear
plants is about 70% annually.) In
1995, CR-3 achieved a 100% capacity
factor.

o In September 1996, CR-3 was shut
down to repair a turbine oil leak. That
work was completed by mid-September,
and operation of the plant could have
continued later that month.

o During the September outage, Florida
Power discovered a problem with a
modification to the plant's emergency
feedwater system. At the same time,
the company identified other issues related
to the design of the plant that
needed to be resolved.

o NRC officials also expressed concern over
the condition of the plant, as well as some
of the plant's operating and management practices.

o Florida Power's management decided to
keep the plant shut down until all
issues could be addressed and corrections
be made. The Company was committed to
making the necessary changes to return
the plant to peak operating condition.

o Attention was focused on improving
five key areas at the plant: Leadership
Oversight and Involvement;
Engineering Performance;
Configuration Management and
Design Basis; Regulatory
Compliance; and Operating
Performance.

o As a first step toward improving
performance at CR-3 and restarting
the unit, Florida Power established a
new nuclear management team
experienced in returning units to
service following extended outages.
This action was taken to achieve
immediate improvement in the
performance of the Company's
nuclear program.

o In early 1997, Roy Anderson, formerly
of Carolina Power & Light, joined
Florida Power to lead the Company's
effort to restart CR-3 and prepare the
plant for another 20 years of
operation. Since January 1997, the
Company also has hired a new Site
Vice President, Site Director, Plant
Manager, Engineering Director,
Regulatory Affairs Director, Training
Director, and several new managers
in other areas of Nuclear Operations.

<PAGE> 19

o During the extended outage of CR-3,
Florida Power took the opportunity to
make numerous, additional
improvements so that when the plant
returned to service it would be
prepared to operate safely, reliably
and with sustained excellent
performance over the next 20 years of
its operating license. Accomplishing
these improvements at the plant has
required a significant commitment of
resources by Florida Power over the
past year.

o Monthly meetings were held with NRC
officials to keep them informed of the
progress being made during the outage at
CR-3. The Company also held public
meetings in communities surrounding the
Crystal River Energy Complex.

o Florida Power received official NRC
permission to restart CR-3 on January
30, 1998.

The Board does not believe that preparing the requested special report
would result in any improvement in the safe operation of CR-3. In fact, the time
and effort deployed to produce such a report would divert valuable Company
resources from developing and implementing programs that improve the plant's
safety and performance. Therefore, it is the Board's opinion that it would not
be in the best interests of the Company or the Company's shareholders to incur
the expenses to prepare such a report.

ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"AGAINST" THIS PROPOSAL

1999 Shareholder Proposals

Proposals of shareholders intended to be included in the proxy
statement and presented at the 1999 Annual Meeting must be received on or before
November 12, 1998. The Company's Bylaws require timely notice by shareholders
for other business to be conducted at an annual meeting. To be timely, in
addition to other requirements, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the Company not less
than 90 days nor more than 120 days prior to the date of the annual meeting;
provided, however, that in the event that less than 100 days' notice or prior
public disclosure of the date of the annual meeting is given or made to
shareholders, notice by the shareholder in order to be timely must be so
received not later than the close of business on the 10th day following the day
on which such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever occurs first.
Proposals should be sent to the Secretary of the Company, Florida Progress
Corporation, P.O. Box 33042, St. Petersburg, Florida 33733.

General

In the event that any other matters properly come before the Annual
Meeting, the persons named in the form of proxy intend to vote all proxies in
accordance with their judgment on such matters.

Enclosed is the Annual Report of the Company for the year ended
December 31, 1997. It is not to be regarded as proxy soliciting material.

By order of the Board of Directors,

Kathleen M. Haley
Corporate Secretary

<PAGE>

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FLORIDA PROGRESS CORPORATION

I M P 0 R T A N T

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Your proxy card is attached below. Please follow these steps:

1. Please clearly mark your voting selections on the reverse side.

2. Please sign and date your card on the reverse side.

3. Please detach and return to us in the enclosed postage-paid envelope.

4. Please help us avoid the expense of follow-up mailings by completing
and returning your proxy card promptly.

(DETACH HERE)

FLORIDA PROGRESS CORPORATION - Annual Meeting, April 17, 1998

Proxy solicited on behalf of the Board of Directors

The undersigned hereby appoints Jack B. Critchfield, Richard Korpan and Kathleen
M. Haley and each of them, with power of substitution, proxies to represent, and
to vote all shares of Common Stock of Florida Progress Corporation, which the
undersigned is entitled to vote, at the Annual Meeting of Shareholders to be
held in Clearwater, Florida on April 17, 1998, at 9 a.m. EDT, and at any and all
adjournments thereof, and hereby revokes any prior proxies given with respect to
such stock, and the undersigned authorizes the voting of such stock as follows
on the reverse side.

CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE SEE REVERSE
SIDE

<PAGE>

[LOGO]
FLORIDA PROGRESS CORPORATION

I M P 0 R T A N T

YOUR PROXY CARD IS BELOW

Your proxy card is attached below. Please follow these steps:

1. Please clearly mark your voting selections.

2. Please sign and date your card.

3. Please detach and return to us in the enclosed postage-paid envelope.

4. Please help us avoid the expense of follow-up mailings by completing
and returning your proxy card promptly.

(DETACH HERE)

[X] Please mark your votes
as in this example.

This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no contrary specification is made,
this proxy will be voted "FOR" the nominees listed in the Election of Class II
Directors, and "AGAINST" the Shareholder Proposals.

1. Election of Class II Directors
Nominees: W.D. Frederick, Jr., Frank C. Logan,
Vincent J. Naimoli
FOR WITHHELD
[ ] [ ]
[ ] ------------------------

For all nominees except those written on the line above.

2. The Board of Directors recommends a vote "AGAINST" the following shareholder
proposals requesting the Board to:
<TABLE>
<CAPTION>

<S> <C> <C> <C>
FOR AGAINST ABSTAIN

A. Require shareholder approval of annual salary [ ] [ ] [ ]
increases for executive officers greater than
2%.

B. Prepare a special report on the Crystal River [ ] [ ] [ ]
Nuclear Plant to be available to shareholders
within six months of the 1998 Annual Meeting.
</TABLE>

In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.

MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]

(Please mark, date, sign, detach and mail in the enclosed envelope.)

When signing as attorney, executor,
administrator, trustee or guardian,
please give title. For joint account,
each joint owner should sign. If the
signer is a corporation, please sign
full corporation name by duly authorized
officer. If a partnership, please sign
in partnership name by authorized
person.

Signature:_______________ Date:____________ Signature:______________ Date:_____