First major steps in company's cost-management initiative aimed at reducing expense growth
RALEIGH, N.C. (December 8, 2004) -- 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.
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 April.
"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 possible.
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 Florida
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 Energy
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 www.progress-energy.com.
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.
# # #
Contacts:
Investor Relations: Bob Drennan, 919-546-7474
Corporate Communications: Keith Poston, 919-546-6189, or toll-free 877-641-NEWS (6397)
|
