Progress Energy Announces Early-Retirement Program and Streamlined Organization Structure; Bill Johnson Named President and Chief Operating Officer First major steps in company's cost-management initiative aimed at reducing

expense growth

    RALEIGH, N.C., Dec. 8 /PRNewswire-FirstCall/ -- Progress Energy
 (NYSE:   PGN) today announced its board of directors has approved an early-
 retirement program to be offered to its employees in early 2005. Progress
 Energy Chairman, President and CEO Bob McGehee also named a new streamlined
 leadership team that includes 12 fewer senior management positions, an
 18 percent reduction. The new organization is designed to position the company
 for future success while reducing costs. These two announcements are the first
 major milestones in the company's cost-management initiative announced
 internally Oct. 12.
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     The Voluntary Enhanced Retirement Program approved by the board of
 directors will be available to all active, regular full-time employees who are
 age 50 and older and vested in their retirement plan benefit as of March 31,
 2005. Progress Energy employees generally vest in their retirement benefit
 after five years; however, bargaining and nonbargaining pension plan vesting
 rules vary and eligibility will be based on the respective governing plan
 documents. Approximately 3,500 of Progress Energy's 15,300 employees meet the
 eligibility requirements of the program.
     As part of the new leadership structure announced by McGehee, numerous
 departments and functions have been consolidated companywide, effective
 Jan. 1. The new organization represents an overall reduction of 12 senior
 management positions (department heads and up), down from 67 in March of this
 year when McGehee became CEO. Some highlights include:
      -- William D. "Bill" Johnson, currently group president - Energy
         Delivery, has been named president and chief operating officer. In
         that role, Johnson will oversee the Energy Supply and Energy Delivery
         business units.
      -- Lloyd M. Yates has been named senior vice president - Energy Delivery,
         Progress Energy Carolinas, a new position. Yates previously served as
         vice president - Transmission for the Carolinas utility.
      -- The position of group president - Energy Supply will be eliminated
         March 1 after the retirement of William "Skip" Orser, as previously
         announced. At that time, C.S. "Scotty" Hinnant, senior vice president
         - Nuclear Generation and chief nuclear officer, and Mike Williams,
         senior vice president - Power Operations, will report to Johnson.
      -- Two levels of management in Progress Fuels have been eliminated -
         president and senior vice president/chief operating officer. Bonnie
         Hancock, who has served as president, will be leaving the company in
     "I am confident that this talented team and this structure will lead us
 into 2005 and beyond," McGehee said. "We will be a much leaner organization.
 We have made some very difficult decisions and as a result will lose a number
 of highly capable and successful leaders. But to successfully implement our
 strategy in the years ahead, we have to consolidate significantly, while
 maintaining our commitment to safety, performance and employee development.
     "I told our employees when we announced the cost-management initiative in
 October that our operating costs were growing at a faster rate than revenues -
 about 4 percent to 5 percent annual growth in costs at our utilities as
 compared to 2.5 percent in revenues - and that this was an unsustainable
 trend," said McGehee. "The time had come for more fundamental and aggressive
 cost management than the incremental belt-tightening of recent years. I also
 promised them I would start at the top, and that's what I've done.
     "Our strategic focus on our core utility and energy businesses remains on
 target. We have great utility service areas, valuable assets and an attractive
 investment profile, especially our 17-year record of dividend growth," said
 McGehee. "To ensure that Progress Energy remains a financially strong company
 with a bright future, we must take decisive action now."
     Progress Energy continues a companywide assessment of organizational
 structure, staffing and outside labor to ensure that each department is
 designed to meet the company's business goals and objectives as efficiently as
     Effective January 1, 2005, Progress Energy's Senior Management Committee
 will be:
      -- Robert B. "Bob" McGehee, Chairman and CEO, Progress Energy
      -- William D. "Bill" Johnson, President and Chief Operating Officer,
         Progress Energy
      -- Peter M. Scott III, President and CEO, Progress Energy Service Company
      -- Don K. Davis, Executive Vice President, Diversified Operations,
         Progress Energy
      -- Tom D. Kilgore, Group President, Progress Ventures
      -- William S. "Skip" Orser, Group President, Energy Supply (until
         March 1)
      -- H. William "Bill" Habermeyer, Jr., President and CEO, Progress Energy
      -- Fred N. Day IV, President and CEO, Progress Energy Carolinas
      -- Geoffrey S. "Geoff" Chatas, Executive Vice President and Chief
         Financial Officer, Progress Energy
      -- John R. McArthur, Senior Vice President and General Counsel, Progress
      -- E. Michael "Mike" Williams, Senior Vice President - Power Operations,
         Progress Energy
      -- C.S. "Scotty" Hinnant, Senior Vice President and Chief Nuclear
         Officer, Progress Energy
      -- Jeffrey J. "Jeff" Lyash, Senior Vice President - Energy Delivery,
         Progress Energy Florida
      -- Lloyd M. Yates, Senior Vice President - Energy Delivery, Progress
         Energy Carolinas
     Progress Energy (NYSE:   PGN), headquartered in Raleigh, N.C., is a Fortune
 250 diversified energy company with more than 24,000 megawatts of generation
 capacity and $9 billion in annual revenues. The company's holdings include two
 electric utilities serving more than 2.9 million customers in North Carolina,
 South Carolina and Florida. Progress Energy also includes nonregulated
 operations covering generation, energy marketing, natural gas production, fuel
 extraction, rail services and broadband capacity. For more information about
 Progress Energy, visit the company's Web site
 at .
     This press release contains forward-looking statements within the meaning
 of the safe harbor provisions of the Private Securities Litigation Reform Act
 of 1995. The forward-looking statements involve estimates, projections, goals,
 forecasts, assumptions, and predictions. The forward-looking statements are
 subject to risks and uncertainties that could cause actual results to differ
 materially from those expressed in, or implied by, the forward-looking
 statements. These risks and uncertainties are detailed from time to time in
 the companies' SEC reports including the Company's Annual Report on Form 10-K
 for the year ended December 31, 2003. All such factors are difficult to
 predict, contain uncertainties that may materially affect actual results and
 may be beyond the ability of the company to control or estimate precisely.

SOURCE Progress Energy, Inc.

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