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The following is an excerpt from a DEF 14A SEC Filing, filed by FLORIDA PROGRESS CORP on 3/12/1998.
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FLORIDA PROGRESS CORP - DEF 14A - 19980312 - DIRECTOR_COMPENSATION

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.


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.

                                            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)

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

(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

               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:

                                            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
      ----                    ------------      -----------       --------------        ---------------       -----------

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

(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.


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.

                       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
                      -            --             --             --             --            --       ----------

$   200,000        $ 37,500      $ 75,000     $ 112,500        $120,000       $120,000       $120,000       $126,000
    300,000          56,250       112,500       168,750         180,000        180,000        180,000        189,000
    400,000          75,000       150,000       225,000         240,000        240,000        240,000        252,000
    500,000          93,750       187,500       281,250         300,000        300,000        300,000        315,000
    600,000         112,500       225,000       337,500         360,000        360,000        360,000        378,000
    700,000         131,250       262,500       393,750         420,000        420,000        420,000        441,000
    800,000         150,000       300,000       450,000         480,000        480,000        480,000        504,000
    900,000         168,750       337,500       506,250         540,000        540,000        540,000        567,000
 1,000,000          187,500       375,000       562,500         600,000        600,000        600,000        630,000
 1,100,000          206,250       412,500       618,750         660,000        660,000        660,000        693,000
 1,200,000          225,000       450,000       675,000         720,000        720,000        720,000        756,000
 1,300,000          243,750       487,500       731,250         780,000        780,000        780,000        819,000
 1,400,000          262,500       525,000       787,500         840,000        840,000        840,000        882,000
 1,500,000          281,250       562,500       843,750         900,000        900,000        900,000        945,000

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


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-


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


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-


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


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.


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.


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.


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.


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


[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 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


[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:

                                                                                        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.

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:_____

BROKERAGE PARTNERS