The board deems his retirement package of $1.3-million a year and $38-million in stock a fitting reward.
By LOUIS HAU
Published April 1, 2004
Retirement isn't likely to cramp the style of former Progress Energy Inc. chief executive Bill Cavanaugh.
Cavanaugh will collect a lifetime pension of about $1.3-million a year and will leave the company with Progress stock worth more than $38-million, according to the company's annual proxy statement released Wednesday.
That includes a parting gift from the Progress board of more than 153,581 shares of Progress stock valued at $7.2-million. The board's compensation committee bestowed the benefit by accelerating long-term stock incentives that Cavanaugh otherwise would have collected in future years. It did the same for options that will allow him to purchase 477,367 more shares in the company at a discount.
Company officials said Cavanaugh's rich retirement package recognized accomplishments at Progress that included dramatically expanding the company's size and profile through Carolina Power & Light's 2000 takeover of Florida Progress of St. Petersburg; boosting the company's share price and annual dividend; and keeping the utility on an even keel during severe volatility in the electric utility industry.
"By any measure, he's had a very successful run as CEO of this company," spokesman Keith Poston said.
But Cavanaugh's retirement package rankled W.O. "Butch" Enyard, business manager of the International Brotherhood of Electrical Workers System Council U-8 in Crystal River, which represents Progress Florida's unionized work force.
Enyard described Cavanaugh's retirement package as "grotesque," arguing that Progress will be paying him money "that should have been put back in the company to maintain our power plants, to keep the proper number of employees and to keep our customers properly serviced."
The move to improve Cavanaugh's compensation on his way out the door was reminiscent of the rich exit package pocketed by Florida Progress chief executive Richard Korpan. He departed after CP&L's acquisition of Florida Progress to form Progress Energy.
Korpan collected a $15.8-million payout that was triggered by the merger, as well as a lifetime pension of $828,845 a year. Korpan had worked at Florida Progress for little more than a decade but the company's pension plan credited him with 35 years of service.
The 65-year-old Cavanaugh retired March 1 as Progress chief executive and will step down May 12 as chairman of the Raleigh, N.C., utility, the parent of Progress Energy Florida Inc. of St. Petersburg.
Progress Energy described Cavanaugh's compensation package as comparable to that for chief executives at similarly sized utility companies.
Under the terms of Progress' pension and retirement plans for senior executives, Cavanaugh will receive an annual pension of $1,349,596 minus what he will receive from the company's standard pension plan and Social Security. If Cavanaugh dies before his wife, she will collect half his pension for the rest of her life.
His standard pension payout, which was calculated under the same terms as the pensions collected by rank-and-file employees, will total less than $50,000 a year, Poston said.
Cavanaugh was credited with 14 years of company service when he first joined CP&L in 1992 as president and chief operating officer. It is a common practice when large companies recruit senior executives to compensate them for the years of service they had accumulated at previous jobs - in Cavanaugh's case, more than 20 years at Entergy Corp. of New Orleans, Poston said.
Cavanaugh also collected other perks and awards available only to top executives. For instance, he will receive an added $121,368 a year for the next 15 years as part of his original recruitment bonus when he joined Progress.
Thanks to large awards of company stock over the years, Cavanaugh owns 822,606 shares of Progress stock, valued at $38.7-million based on the stock's Wednesday closing price of $47.08 a share.
Cavanaugh also holds options to purchase another 688,100 shares of Progress stock at various predetermined prices below the current share price.
- Information from Times files was used in this report. Louis Hau can be reached at hau@sptimes.com or 813 226-3404.
