SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act ofPROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
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( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Duke Power CompanyDUKE ENERGY CORPORATION
(Name of Registrant as Specified In Itsin its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, If Other Thanif other than Registrant)
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( ) $500 per each party to the controversy pursuant to Exchange Act
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DUKE POWER COMPANY
422 SOUTH CHURCH STREET
CHARLOTTE, NORTH CAROLINA 28242
W. H. GRIGG[DUKE LOGO]
Duke Energy Corporation
526 South Church Street
Charlotte, NC 28202-1904
R.B. PRIORY
Chairman of the Board, President
and Chief Executive Officer
March 18, 199612, 1999
Dear Shareholder:
It is my pleasureYou are cordially invited to invite you to ourattend the annual shareholders meeting, which
will be held on Thursday, April 25, 1996,15, 1999, at 10 a.m., in the PeaceO. J. Miller
Auditorium in the Energy Center, for
the Performing Arts, 101 West Broad526 South Church Street, Greenville, SouthCharlotte, North
Carolina. This marks the first time in many years that we have held the meeting inwill provide a location
other thangood opportunity for us to report to you
our Company headquarters.progress during 1998, as well as to outline for you our goals for 1999.
During the meeting, we will elect four Class II directors to three-year
terms expiring in 1999,2002. Also, we will act upon a proposal to amend the
Corporation's Articles of Incorporation to increase the amount of authorized
Common Stock, act upon the ratification of the appointment of auditors, act
upon a shareholder proposal to approve a Stock Incentive Plan for the Company and transact any other business that may come
before the meeting. On behalfThe accompanying proxy statement contains further
information about all of the entire Board of Directors, I would like to express our
sincere appreciation to James V. Johnson, who will retire from the Board at the
annual meeting at age 72, concluding fourteen years of valued service to the
Company.these matters.
The Board of Directors and I hope you can attend the meeting, in Greenville,
and look
forward to seeing you. Even ifWhether or not you planexpect to attend, please sign and
date the enclosed form of proxy and return it promptly in the accompanying
envelope to ensure that your signedshares will be represented. If you attend the
meeting, you may withdraw any previously given proxy as soon as possible.and vote your shares in
person.
Sincerely,
(Signature of W.H. Grigg)/s/ R.B. PRIORY
DUKE POWER COMPANY
422ENERGY CORPORATION
526 SOUTH CHURCH STREET
CHARLOTTE, NORTH CAROLINA 2824228202-1904
NOTICE OF 19961999 ANNUAL MEETING OF SHAREHOLDERS
March 18, 199612, 1999
To the ShareholdersHolders of Common Stock of
DUKE POWER COMPANY:ENERGY CORPORATION:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Duke
Power CompanyEnergy Corporation (the "Corporation") will be held in O. J. Miller Auditorium
in the PeaceEnergy Center, for the Performing Arts, 101 West
Broad526 South Church Street, Greenville, SouthCharlotte, North Carolina, on
Thursday, April 25, 1996,15, 1999, at 10 a.m., for the following purposes:
(1) to elect four directors who will constituteto Class II of the Board of Directors;
(2) to act upon a proposal to amend the Articles of Incorporation to
increase the amount of authorized Common Stock from 500,000,000 to
1,000,000,000;
(3) to ratify the appointment of auditors;
(3)(4) to act upon a proposal to approve the Duke Power Company Stock
Incentive Plan;shareholder proposal; and
(4)(5) to transact such other business as may come before the meeting or
any adjournment or adjournments thereof.meeting.
The Board of Directors has fixed the close of business on March 1, 1996February 22,
1999 as the record date for the meeting.
It is important that your shares be represented at the meeting regardless
of the number of shares you may hold. Please complete, sign and date the
enclosed form of proxy and return it promptly in the enclosed envelope which
requires no postage if mailed within the United States.
By Order of the Board of Directors
RICHARD W. BLACKBURN
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
DUKE ENERGY CORPORATION
PROXY STATEMENT
This proxy statement, with the accompanying proxy card, is first being
mailed to holders of Common Stock on or about March 12, 1999 and is furnished
in connection with the solicitation of proxies by the Board of Directors of the
Corporation to be used at the annual meeting of shareholders to be held on
April 15, 1999.
PROXIES; REVOCATION OF PROXIES
The accompanying form of proxy may be used by a holder of Common Stock
whether or not such holder attends the meeting in person. The proxy may be
revoked by such holder at any time prior to its use at the meeting. There is no
specific procedure or requirement under the Corporation's Articles of
Incorporation, By-Laws or North Carolina law with respect to how proxies may be
revoked. All shares represented by valid proxies received pursuant to this
solicitation, and not revoked before such proxies are exercised, will be voted
in the manner specified therein. If no directions are given, the proxies will
be voted FOR the proposed slate of directors (Proposal 1); FOR the proposal to
amend the Articles of Incorporation to increase the amount of authorized Common
Stock (Proposal 2); FOR the ratification of the appointment of auditors
(Proposal 3); AGAINST the shareholder proposal (Proposal 4); and AT THE
DISCRETION OF THE PERSONS NAMED IN SUCH PROXIES ON ANY OTHER MATTER THAT MAY
COME BEFORE THE MEETING.
COST OF PROXY SOLICITATION
The entire cost of soliciting the proxies from holders of Common Stock
will be borne by the Corporation. In addition to the solicitation of the
proxies by mail, the Corporation will request banks, brokers and other record
holders to send proxies and proxy material to the beneficial owners of Common
Stock and secure their voting instructions. The Corporation will reimburse such
record holders for their reasonable expenses in so doing. The Corporation has
also made arrangements with Georgeson & Company, Inc. to assist it in
soliciting proxies and has agreed to pay $17,500 plus expenses for such
services. If necessary, the Corporation may also use several of its officers
and regular employees, who will not be specially compensated, to solicit
proxies from holders of Common Stock, either personally or by telephone,
telegram, facsimile or special delivery letter or by other means.
RECORD DATE; QUORUM; VOTING RIGHTS
The Board of Directors has fixed February 22, 1999, as the record date
(the "Record Date") for determination of shareholders whoholders of Common Stock entitled to
notice of and to vote at the meeting. Accordingly, only holders of record of
Common Stock at the close of business on the Record Date will be entitled to
notice of and to vote at the meeting. Each shareholder is requested to date, sign and return the accompanying
proxy in the enclosed return envelope, to which no postage need be affixed if
mailed in the United States.
By orderThe number of the Board of Directors,
ELLEN T. RUFF
SECRETARY
DUKE POWER COMPANY
422 SOUTH CHURCH STREET
CHARLOTTE, NORTH CAROLINA 28242
PROXY STATEMENT
This proxy statement is furnished to the shareholders of Duke Power Company
(the Company) in connection with the solicitation of proxies to be used in
voting at the annual meeting of shareholders to be held on April 25, 1996. Only
holders of recordoutstanding shares of
Common Stock entitled to vote at the closemeeting is 363,464,761. In order to
establish a quorum for the meeting, a majority of business on March 1, 1996the votes entitled to be cast
must be either present in person or represented by valid proxy. Abstentions and
broker non-votes will be counted for purposes of determining whether a quorum
exists at the meeting.
Each share of Common Stock entitled to vote at the meeting entitles its
holder to one vote. Directors will be elected by a plurality of the votes cast
by the holders of Common Stock entitled to vote at the meeting. On such date, there were outstanding
204,859,339 shares"Plurality"
means that the individuals who receive the largest number of votes cast are
elected as directors up to the maximum number of directors to be chosen at the
meeting. Approval by a majority of the votes cast by holders of Common Stock
entitled to vote at the meeting is required to approve Proposals 2, 3 and 4.
Any shares not voted, whether by abstention or broker non-vote, will not be
counted as votes cast for purposes of determining whether Proposals 2, 3 and 4
have received sufficient votes for approval, nor will any abstentions or broker
non-votes be counted in the election of directors.
MULTIPLE COPIES OF ANNUAL REPORT TO SHAREHOLDERS
The Corporation's Annual Report to Shareholders has been mailed to all
shareholders. The Annual Report is not to be regarded as proxy soliciting
material. If more than one copy of the Annual Report is sent to your address
and you wish to reduce the number of Annual Reports you receive and save the
Corporation the cost of producing and mailing duplicate reports, the
Corporation will discontinue the mailing of those reports if you mark the
appropriate box on each shareproxy card for which you do not wish to receive an
Annual Report. Mailing of which entitlesdividends, dividend reinvestment and stock purchase
statements, proxy materials and special notices will not be affected by your
election to discontinue duplicate mailings of the Annual Report.
At least one account must continue to receive an Annual Report. To
discontinue or resume the mailing of an Annual Report to an account,
shareholders of record may also call the Investor Relations Department at (800)
488-3853.
If you own Common Stock through a bank, broker or other nominee and
receive more than one Annual Report, contact the holder of record to one vote.eliminate
duplicate mailings.
ADVANCE NOTICE PROCEDURES
Under the Corporation's By-Laws, nominations for director may be made only
by the Board of Directors or by a shareholder entitled to vote who has
delivered notice to the Corporation not less than 90 nor more than 120 days
prior to the first anniversary of the preceding year's annual meeting. For the
annual meeting of shareholders in the year 2000, the Corporation must receive
this notice on or after December 17, 1999, and on or before January 16, 2000.
The enclosed proxy is solicited on behalfCorporation's By-Laws also provide that no business may be brought
before an annual meeting except as specified in the notice of the meeting or as
otherwise brought before the meeting by or at the direction of the Board of
Directors or by a shareholder entitled to vote who has delivered notice to the
Corporation (containing certain information specified in the By-Laws) within
the time limits described above for delivering notice of a nomination for the
election of a director. These requirements apply to any matter that a
shareholder wishes to raise at an annual meeting other than pursuant to the
procedures under Rule 14a-8 of the Company. Such proxy material was first forwardedSecurities and Exchange Commission ("SEC").
A copy of the full text of the By-Law provisions discussed above may be
obtained by writing to the shareholders on or about
March 18, 1996. Any shareholder giving a proxy may revoke it at any time prior
to its use at the meeting.
The Company will bear the costSecretary of the solicitation of proxies including the
charges and expenses of brokerage firms and others for forwarding solicitation
material to beneficial owners of shares of the Common Stock of the Company. In
addition to the use of the mails, proxies may be solicited by personal
interview, telephone or telegraph. Additionally, the Company has retained
Georgeson & Co. to solicit proxies in the same manner, at an anticipated cost to
the Company of approximately $12,500.Corporation, Post Office Box 1244,
Charlotte, North Carolina 28201-1244.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company'sCorporation's Articles of Incorporation provide that the Board of
Directors shallis to be divided into three classes, as nearly equal in size as
possible. Each year the directors of one class are elected to serve terms of
three years.
Four persons have been nominated by the Board of Directors for election as
directors to Class II at this annualthe meeting, to serve three-year terms and until their
successors are duly elected and qualified. The Class II nominees are G. Alex
Bernhardt, W.Sr., William A. Coley, W. H. GriggMax Lennon and Max Lennon.Leo E. Linbeck, Jr. All of the
Class II nominees are currently Class II directors with the exception of Mr. Bernhardt, who
presently serves as a Class III director but has been nominated to serve in
Class II in order to balance as nearly as possible the number of directors in
each class. James V. Johnson will retire as a Class II director at the
expiration of his current term on April 25, 1996.directors.
Votes (other than votes withheld) will be cast pursuant to the
accompanying proxy for the election of the nominees listed unless, by reason of
death or other unexpected occurrence, one or more of such nominees shallwill not be
available for election. In that event, it is intended that such votes will be
cast for such substitute nominee or nominees as may be determined by the
persons named in such proxy. The Board of Directors has no reason to believe
that any of the nominees listed will not be available for election as a
director.
Directors are elected by a plurality of the votes cast by the holders of
the Common Stock of the Company at a meeting at which a quorum is present.
"Plurality" means that the individuals who receive the largest number of votes
cast are elected as directors up to the maximum number of directors to be chosen
at the meeting. Consequently, any shares not voted (whether by abstention,
broker nonvote or otherwise) have no impact in the election of directors except
to the extent the failure to vote for an individual results in another
individual receiving a larger number of votes.
CLASS II
NOMINEES FOR ELECTION TO THE BOARD OFAS
CLASS II DIRECTORS
(TERM EXPIRING IN 1999)
(Photo) G. ALEX BERNHARDT, PRESIDENT AND CHIEF EXECUTIVE OFFICER, BERNHARDT FURNITURE COMPANY,
FURNITURE MANUFACTURERS
Mr. Bernhardt, 52, was elected a director in 1991 and serves on the Corporate
Performance Review Committee. He has been associated with Bernhardt Furniture Company of
Lenoir, North Carolina, since 1965. He was named President and a director in 1976.2002)
[GRAPHIC]
G. ALEX BERNHARDT, SR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
BERNHARDT FURNITURE COMPANY, FURNITURE MANUFACTURER
Mr. Bernhardt, 55, was elected a director in 1991. He is
Chairman of the Corporate Performance Review Committee and
serves on the Finance Committee. He has been associated with
Bernhardt Furniture Company of Lenoir, North Carolina, since
1965. He was named President and a director in 1976 and
became Chairman and Chief Executive Officer in 1996. He is a
director of Robert Talbott, Inc. and First Union
Corporation. He serves as a trustee of Davidson College and
a member of the North Carolina Governor's Business Council.
He is a director emeritus and past President of the American
Furniture Manufacturers Association.
(Photo) W. A. COLEY, PRESIDENT, ASSOCIATED ENTERPRISES GROUP, DUKE POWER COMPANY
Mr. Coley, 52, joined the Company in 1966 and was elected a director in 1990. He was
named Vice President, Operation, in 1984; Vice President, Central Division, in 1986;
Senior Vice President, Power Delivery, in 1988; Senior Vice President, Customer Group,
in 1990; Executive Vice President, Customer Group, in 1991 and was appointed to his
present position in 1994. He serves on the Management, Corporate Performance Review,
Retirement Plan and Stock Purchase-Savings Program Committees. He is a director of
Carolina Pad and Paper Company, and serves on the Boards of Trustees of Charlotte Latin
School, Queens College, Union Theological Seminary and Presbyterian Hospital.
(Photo) W. H. GRIGG, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, DUKE POWER COMPANY
Mr. Grigg, 63, joined the Company in 1963, was named Vice President and General Counsel
in 1971 and became a director in 1972. He was elected Senior Vice President, Legal and
Finance, in 1975; Executive Vice President, Finance and Administration, in 1982;
Executive Vice President, Customer Group, in 1988; and Vice Chairman of the Board in
1991. He was named Chairman of the Board, President and Chief Executive Officer in April
1994, and Chairman of the Board and Chief Executive Officer in July 1994. He serves on
the Nominating, Finance, Retirement Plan and Stock Purchase-Savings Program Committees
and as Chairman of the Management Committee. He is a director of Hatteras Income
Securities, Inc., Nations Fund, Inc., the Research Triangle Foundation and the
Associated Electric and Gas Insurers, Ltd., and is a trustee of Johnson C. Smith
University.
2
(Photo) MAX LENNON, PRESIDENT, MARS HILL COLLEGE, MARS HILL, NORTH CAROLINA
Dr. Lennon, 55, was elected a director in 1988 and is Chairman of[GRAPHIC]
WILLIAM A. COLEY, GROUP PRESIDENT, DUKE POWER, ELECTRIC
OPERATIONS OF DUKE ENERGY CORPORATION
Mr. Coley, 55, joined the Audit Committee.
He assumed his present position in early 1996, after serving as President of Eastern
Foods, Inc. from 1994 through 1995. He was previously involved in higher education from
1966 to 1994, his last tenure being at Clemson University where he served as President
for eight years. He is a director of First Union Corporation and Delta Woodside
Industries, Inc.
DIRECTORS CONTINUING IN OFFICE
(Photo) CRANDALL C. BOWLES, EXECUTIVE VICE PRESIDENT, SPRINGS INDUSTRIES, INC., HOME
FURNISHINGS, FINISHED FABRICS AND INDUSTRIAL TEXTILES COMPANY
Mrs. Bowles, 48, was elected a director in 1988 and serves on the Compensation and
Finance Committees. Prior to attaining her current position in 1992, she served as
President of The Springs Company for ten years. She is a director of Springs Industries,
Inc. and Wachovia Corporation. She is a Class III director with a term expiring in 1997.
(Photo) ROBERT J. BROWN, CHAIRMAN AND PRESIDENT, B&C ASSOCIATES, INC., MARKETING RESEARCH AND
PUBLIC RELATIONS FIRM
Mr. Brown, 61, was elected a director in 1994 and serves on the Audit Committee. He
founded B&C Associates, Inc., High Point, North Carolina, in 1960 and served as its
President from 1960 until 1968 and its Chairman and President from 1973 to the present.
From 1968 until 1973, Mr. Brown was a Special Assistant to the President of the United
States, with oversight responsibility for community relations, civil rights, emergency
preparedness and day care. He is a director of First Union Corporation, Pacific National
Financial Group, Sonoco Products Company and North Carolina Citizens for Business and
Industry. He is a Class III director with a term expiring in 1966 and was elected
a director in 1990. He was named Vice President, Operation,
in 1984; Vice President, Central Division, in 1986; Senior
Vice President, Power Delivery, in 1988; Senior Vice
President, Customer Group, in 1990; Executive Vice President,
Customer Group, in 1991; President, Associated Enterprises
Group, in 1994 and was appointed to his present position in
June 1997.
3
(Photo) STEVE C. GRIFFITH, JR., VICE CHAIRMAN OF THE BOARD AND GENERAL COUNSEL, DUKE POWER
COMPANY
Mr. Griffith, 62, joined the Company in 1964 as Assistant General Counsel, was named
Secretary and Associate General Counsel in 1971 and was appointed General Counsel in
1975. He was named a Vice President in 1977 and a Senior Vice President in 1982, at
which time he was elected a director. He was named an Executive Vice President in 1991
and assumed his present position in July 1994. Mr. Griffith serves on the Management,
Retirement Plan and Stock Purchase-Savings Program Committees. He is a Fellow of the
American Bar Foundation and a member of the American Bar Association, the North Carolina
State Bar and the South Carolina Bar. He also serves on the Board of Governors of the
Research Triangle Institute and the boards of the Charlotte Center for Urban Ministry,
the Arts & Science Council and the Mint Museum of Art. He is a Class I director with a
term expiring in 1998.
(Photo) PAUL H. HENSON, CHAIRMAN, KANSAS CITY SOUTHERN INDUSTRIES, INC., HOLDING COMPANY FOR
RAILROAD OPERATIONS AND FINANCIAL SERVICES
Mr. Henson, 70, was elected a director in 1976. He is Chairman of the Corporate
Performance Review Committee and also serves on the Nominating and Compensation
Committees. He became Chairman of the Board of Kansas City Southern Industries, Inc. in
1990 following his retirement as Chairman of Sprint Corporation. He is a director of
Armco Inc. and Kansas City Southern Industries, Inc. He is a Class I director with a
term expiring in 1998.
(Photo) GEORGE DEAN JOHNSON, JR., PRESIDENT AND CHIEF EXECUTIVE OFFICER, EXTENDED STAY AMERICA,
DEVELOPMENT, OWNERSHIP AND MANAGEMENT OF EXTENDED-STAY LODGING FACILITIES
Mr. Johnson, 53,He serves on the Management Committee. He is a
director of Carolina Pad and Paper Company and the North
Carolina Board of SouthTrust Bank. He also serves on the
Boards of Trustees of the Lynnwood Foundation, Queens
College, Union Theological Seminary, Presbyterian Healthcare
Systems, United Way of the Central Carolinas and the
Charlotte Chamber of Commerce and is on the Institutional
Advisory Board and the Engineering Advisory Board of the
Georgia Institute of Technology.
[GRAPHIC]
MAX LENNON, PRESIDENT, MARS HILL COLLEGE, MARS HILL, NORTH
CAROLINA
Dr. Lennon, 58, was elected a director in 1988. He is
Chairman of the Audit Committee and also serves on the
Corporate Governance Committee. He assumed his present
position as President of Mars Hill College in 1996, after
serving as President of Eastern Foods, Inc. from 1994
through 1995. He was previously involved in higher education
from 1966 to 1994, his last tenure being at Clemson
University where he served as President for eight years. He
is a director of Delta Woodside Industries, Inc.
[GRAPHIC]
LEO E. LINBECK, JR., CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, LINBECK CORPORATION, HOLDING COMPANY OF FOUR
CONSTRUCTION-RELATED FIRMS
Mr. Linbeck, 64, was appointed a director in June 1997 upon
the merger of the Corporation and PanEnergy. He had been a
director of PanEnergy since 1986. He is Chairman of the Finance Committee
and also serves on the Nominating Committee. Mr. Johnson began his legal career in 1967
when he joined Johnson, Smith, Hibbard and Wildman. He was General Partner of WJB Video,
a Blockbuster Video franchisee, from 1987 to 1993, and served as President of the
Domestic Consumer Division of Blockbuster Entertainment Corporation from 1993 until
1995. He assumed the position of President and Chief Executive Officer of Extended Stay
America in 1995. He is also Chairman of Johnson Development Associates, Inc. and a
director of Viacom, Inc., Extended Stay America and Republic Industries, Inc. He also
serves as Chairman of the Board of Trustees of Converse College. He is a Class III
director with a term expiring in 1997.
4
(Photo) W. W. JOHNSON, CHAIRMAN OF THE EXECUTIVE COMMITTEE, NATIONSBANK CORPORATION
Mr. Johnson, 65, was elected a director in 1984. He is Chairman of the Nominating
Committee and also serves on the Finance Committee. He is Chairman of the Executive
Committee of NationsBank Corporation. Mr. Johnson was, since 1980, Chairman of the Board
and Chief Executive Officer of Bankers Trust of South Carolina, which merged with
NationsBank Corporation in January 1986. He is a director of NationsBank Corporation,
ALLTEL Corporation and The Liberty Corporation. He is a Class I director with a term
expiring in 1998.
(Photo) JAMES G. MARTIN, VICE PRESIDENT, DEVELOPMENT AND CHAIRMAN, RESEARCH DEVELOPMENT BOARD,
CHARLOTTE-MECKLENBURG HOSPITAL AUTHORITY
Mr. Martin, 60, was elected a director in 1994 and serves on the Corporate Performance
Review Committee. Since January 1993, he has been Chairman of the Research Development
Board of the Charlotte-Mecklenburg Hospital Authority, located at Carolinas Medical
Center, Charlotte, North Carolina. He was named Vice President, Development in 1995. He
served as Governor of the State of North Carolina from 1985 to 1993 and was a member of
the United States House of Representatives, representing the Ninth District of North
Carolina, from 1972 until 1984. Mr. Martin is currently a director of J. A. Jones, Inc.,
Carolina Freight Corporation and Meadowbrook Healthcare Services, Inc. He is Chairman of
the Global TransPark Foundation, Inc. and a member of the University of North Carolina
Board of Governors. He is a Class III director with a term expiring in 1997.
(Photo) BUCK MICKEL, RETIRED VICE CHAIRMAN, FLUOR CORPORATION
Mr. Mickel, 70, was elected a director in 1976. He is Chairman of the
Compensation Committee and also serves on the Corporate Performance Review Committee. He had been
associated with Daniel International since 1947 and served as its Chairman from 1974 to
1987. He served as President and later Vice Chairman of Fluor Corporation from 1977
until his retirement in 1987. He is a director of Emergent Group, Fluor Corporation,
Monsanto Company, The Liberty Corporation, NationsBank Corporation, Delta Woodside
Industries, Inc., RSI Holdings, Inc., Textile Hall Corporation and Insignia Financial
Group, Inc. He is a life trustee of Clemson University and Converse College. He is a
Class I director with a term expiring in 1998.
5
(Photo) R. B. PRIORY, PRESIDENT AND CHIEF OPERATING OFFICER, DUKE POWER COMPANY
Mr. Priory, 49, joined the Company in 1976 as a Design Engineer and was elected a
director in 1990. He was named Vice President, Design Engineering, in 1984; Senior Vice
President, Generation and Information Services, in 1988; Executive Vice President, Power
Generation Group, in 1991 and was appointed to his present position in July 1994. He
serves on the Management, Finance, Retirement Plan and Stock Purchase-Savings Program
Committees. He is President of Claiborne Energy Services, Inc., and is a director of J.
A. Jones Applied Research Corp. He serves on the boards of the Charlotte-Mecklenburg
Education Foundation, the North Carolina Chapter of The Nature Conservancy and the North
Carolina State University Engineering Foundation. He is also a member of the Board of
Visitors of the University of North Carolina at Charlotte and a member of the National
Academy of Engineering. He is a Class III director with a term expiring in 1997.
(Photo) RUSSELL M. ROBINSON, II, ATTORNEY, ROBINSON, BRADSHAW & HINSON, P.A.
Mr. Robinson, 64, was elected a director in 1995 and serves on the Audit Committee. He
assumed his present position with Linbeck Corporation in
1990 after serving as Chairman, President and Chief
Executive Officer of Linbeck Construction Corporation from
1975 to 1990. He serves as a director of Daniel Industries,
Inc. and as a director and trustee of 33 investment
companies managed by John Hancock Advisers, Inc.
DIRECTORS CONTINUING IN OFFICE
[GRAPHIC]
ROBERT J. BROWN, CHAIRMAN AND PRESIDENT, B&C ASSOCIATES,
INC., MARKETING RESEARCH AND PUBLIC RELATIONS FIRM
Mr. Brown, 64, was elected a director in 1994 and serves on
the Audit and Corporate Performance Review Committees. He
founded B&C Associates, Inc., High Point, North Carolina, in
1960, served as its President from 1960 until 1968 and has
been its Chairman and President since 1973. From 1968 until
1973, Mr. Brown was a Special Assistant to the President of
the United States, with oversight responsibility for
community relations, civil rights, emergency preparedness
and day care. He is a director of First Union Corporation,
Sonoco Products Company, Republic Industries, Inc. and North
Carolina Citizens for Business and Industry. He is a Class
III director with a term expiring in 2000.
3
[GRAPHIC]
WILLIAM T. ESREY, CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
SPRINT CORPORATION, A DIVERSIFIED TELECOMMUNICATIONS HOLDING
COMPANY
Mr. Esrey, 59, was appointed a director in June 1997 upon
the merger of the Corporation and PanEnergy. He had been a
director of PanEnergy since 1985. He serves on the
Compensation and Corporate Governance Committees. He has
served as Chairman of Sprint Corporation since 1990 and as
its Chief Executive Officer since 1985. He was President of
Sprint Corporation from 1985 to 1996. He is a director of
Sprint Corporation, General Mills, Inc., Everen Capital
Corporation, Exxon Corporation and Earthlink Network, Inc.
He is a Class III director with a term expiring in 2000.
[GRAPHIC]
ANN MAYNARD GRAY, FORMER VICE PRESIDENT, ABC, INC. AND FORMER
PRESIDENT, DIVERSIFIED PUBLISHING GROUP OF ABC, INC.,
TELEVISION, RADIO AND PUBLISHING
Ms. Gray, 53, was appointed a director in June 1997 upon the
merger of the Corporation and PanEnergy. She had been a
director of PanEnergy since 1994. She serves on the Audit
and Corporate Performance Review Committees. She was
President, Diversified Publishing Group of ABC, Inc. from
1991 until 1997, and was a Corporate Vice President of ABC,
Inc. and its predecessors from 1979 to 1998. She is a
director of Cyprus Amax Minerals Company. She is a Class I
director with a term expiring in 2001.
[GRAPHIC]
DENNIS R. HENDRIX, RETIRED CHAIRMAN OF THE BOARD, PANENERGY
CORP
Mr. Hendrix, 59, was appointed a director in June 1997 upon
the merger of the Corporation and PanEnergy. He had been a
director of PanEnergy since 1990. He serves on the Corporate
Performance Review and Corporate Governance Committees. He
was Chairman of the Board of PanEnergy from 1990 to 1997;
Chief Executive Officer of PanEnergy from 1990 to 1995; and
President of PanEnergy from 1990 to 1993. He served as a
director of Panhandle Eastern Pipe Line Company ("PEPL") and
Texas Eastern Transmission Corporation ("TETCO") from 1990
to 1997; Chairman of the Board of PEPL and TETCO from 1990
to 1994 and President of TETCO from 1990 to 1994. He is a
director of Allied Waste Industries, Inc., National Power,
PLC, Newfield Exploration Company and Pool Energy Services
Co. He is a Class I director with a term expiring in 2001.
[GRAPHIC]
HAROLD S. HOOK, CONSULTANT, RETIRED CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF AMERICAN GENERAL CORPORATION,
DIVERSIFIED FINANCIAL SERVICES
Mr. Hook, 67, was appointed a director in June 1997 upon the
merger of the Corporation and PanEnergy. He had been a
director of PanEnergy since 1978. He serves on the Corporate
Performance Review and Finance Committees. Mr. Hook retired
from American General Corporation in 1997 after more than 18
years as Chairman and Chief Executive Officer. He serves as
a director of Chase Manhattan Corporation, The Chase
Manhattan Bank, Cooper Industries, Inc. and Sprint
Corporation. He is a Class I director with a term expiring
in 2001.
4
[GRAPHIC]
GEORGE DEAN JOHNSON, JR., PRESIDENT AND CHIEF EXECUTIVE
OFFICER, EXTENDED STAY AMERICA, DEVELOPMENT, OWNERSHIP AND
MANAGEMENT OF EXTENDED-STAY LODGING FACILITIES
Mr. Johnson, 56, was elected a director in 1986. He is
Chairman of the Finance Committee and also serves on the
Compensation Committee. Mr. Johnson began his legal career in
1967 when he joined Johnson, Smith, Hibbard and Wildman as an
attorney. He was General Partner of WJB Video, a Blockbuster
Video franchisee, from 1987 to 1993, and served as President
of the Domestic Consumer Division of Blockbuster
Entertainment Corporation from 1993 until 1995. He was a
co-founder of Extended Stay America and has served as its
President and Chief Executive Officer since 1995. He is
Chairman of Johnson Development Associates, Inc. and is a
director of Florida Panthers Holdings, Inc., Extended Stay
America and Republic Industries, Inc. He also serves on the
Board of Trustees of Converse College. He is a Class III
director with a term expiring in 2000.
[GRAPHIC]
JAMES G. MARTIN, PH.D., VICE PRESIDENT, RESEARCH, CAROLINAS
HEALTHCARE SYSTEM
Mr. Martin, 63, was elected a director in 1994. He is
Chairman of the Corporate Governance Committee and also
serves on the Compensation Committee. Since January 1993, he
has been Chairman of the Research Development Board of the
Carolinas HealthCare System located at Carolinas Medical
Center, Charlotte, North Carolina. He was named to his
present position in 1995. He served as Governor of the State
of North Carolina from 1985 to 1993 and was a member of the
United States House of Representatives, representing the
Ninth District of North Carolina, from 1973 to 1984. Mr.
Martin is currently a director of J. A. Jones, Inc., Palomar
Medical Technologies, Inc., Entropy, Inc., Reprogenesis,
Inc. and Family Dollar Stores, Inc. He is Chairman of the
Global TransPark Foundation, Inc. and a Trustee of Davidson
College, where he was on the Chemistry Department faculty
from 1960 to 1972. He is a Class III direc
tor with a term expiring in 2000.
[GRAPHIC]
RICHARD B. PRIORY, CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, DUKE ENERGY CORPORATION
Mr. Priory, 52, became Chairman of the Board and Chief
Executive Officer in June 1997 upon the merger of the
Corporation and PanEnergy, and became President in November
1998. He was elected a director in 1990. He joined the
Corporation in 1976 as a Design Engineer; was named Vice
President, Design Engineering, in 1984; Senior Vice
President, Generation and Information Services, in 1988;
Executive Vice President, Power Generation Group, in 1991
and President and Chief Operating Officer in 1994. He is
Chairman of the Management Committee and serves on the
Finance and Corporate Governance Committees. He is a
director of Dana Corporation and J. A. Jones Applied
Research Corp. He serves on the boards of the Edison
Electric Institute, the Association of Edison Illuminating
Companies and the Institute of Nuclear Power Operations. He
is a member of The National Petroleum Council and The
Business Roundtable. Mr. Priory is also a member of the
National Academy of Engineering.
He is a Class III director with a term expiring in 2000.
[GRAPHIC]
RUSSELL M. ROBINSON, II, ATTORNEY, ROBINSON BRADSHAW &
HINSON, P.A.
Mr. Robinson, 67, was elected a director in 1995 and serves
on the Audit and Corporate Performance Review Committees. He
has been engaged in the practice of law since 1956, and is
the author of ROBINSON ON NORTH CAROLINA CORPORATION LAW. He
is a director of Cadmus Communications Corporation and
Caraustar Industries, Inc. and also serves as a member of
the American Law Institute and a Fellow of the American Bar
Foundation. He is Chairman of the Board of Trustees of
the University of North Carolina at Charlotte, a member of the Board of Visitors of Duke
University Law School, a trustee of The Duke Endowment and a director of the
Presbyterian Hospital Foundation. He is a Class I director with a term expiring in 1998.
6
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 4, 1996, The Duke Endowment, 100 North Tryon Street, Charlotte,
North Carolina 28202, beneficially owned 12,674,464 shares, or approximately
6.2%, of the outstanding Common Stock of the Company. The Duke Endowment is a
common law trust administered by fifteen trustees, who also constitute all of
the trustees of the Doris Duke Trust, 1515 Mockingbird Lane, Charlotte, North
Carolina 28209, another common law trust, which, as of March 4, 1996,
beneficially owned 1,302,132 shares, comprising less than 1% of the outstanding
Common Stock of the Company. Russell M. Robinson, II, a director of the Company,
is a trustee of both The Duke Endowment and
Chairman of The Foundation of the Doris Duke Trust.
SetUniversity of North
Carolina at Charlotte, Inc. He is a Class I director with a
term expiring in 2001.
5
SECURITY OWNERSHIP OF NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth below is the number of sharesbeneficial ownership of Common Stock of the Company
beneficially owned by
the directors, the Chief Executive Officer, the othereach director, each nominee for director, each executive officers namedofficer whose name
appears in the Summary Compensation Table below ("Named Executive Officer") and
theby directors and executive officers of the Corporation as a group, on February 1, 1996:as of
December 31, 1998. In addition to the Common Stock, the Corporation also has
outstanding nine series of Preferred Stock and four series of Preferred Stock
A. As of December 31, 1998, no director, nominee for director or executive
officer of the Corporation was the beneficial owner of any shares of the
Corporation's Preferred Stock or Preferred Stock A.
SHARES BENEFICIALLY RIGHT TO TOTAL SHARES
NAME SHARESOF INDIVIDUAL OR IDENTITY OF GROUP OWNED (1) ACQUIRE (2) BENEFICIALLY OWNED
- -------------------------------------------------- --------------------- ----------- -------------------
Paul M. Anderson(3) ............................. 215,133 106,800 321,933
G. Alex Bernhardt, 2,239(1)
Crandall C. Bowles 6,208(1)Sr.(4) ....................... 5,968 5,968
Richard W. Blackburn(3) ......................... 4,035 4,035
Robert J. Brown 449(1)
W.Brown(4) .............................. 2,732 2,732
William A. Coley 17,013(2)(3)
Steve C. Griffith, Jr. 43,069(2)
W. H. Grigg 40,046(2)
Paul H. Henson 2,954(1)................................ 19,750 19,750
William T. Esrey(4) ............................. 6,151 13,574 19,725
Fred J. Fowler(3) ............................... 34,402 54,304 88,706
Ann Maynard Gray(4) ............................. 3,603 8,354 11,957
Dennis R. Hendrix(4) ............................ 237,605 237,605
Harold S. Hook(4) ............................... 11,693 5,220 16,913
George Dean Johnson, Jr. 4,409(1)
James V. Johnson 5,794(1)
NAME SHARES
W. W. Johnson 11,872(1)(4,6) ................... 8,805 8,805
Max Lennon 1,622(1)(4) .................................. 6,123 6,123
Leo E. Linbeck, Jr.(4) .......................... 5,942 13,574 19,516
James G. Martin 351(1)
Buck Mickel 67,774(1)(4)Martin(4) .............................. 3,115 3,115
Richard J. Osborne 6,643(2)
R.Osborne(3) ........................... 7,586 7,586
Richard B. Priory 10,532(2)Priory(3) ............................ 12,138 12,138
Russell M. Robinson, II 13,977,265(1)(5)II(4,7) .................... 8,909,725 8,909,725
Directors and executive officers as a group
(17(19 persons) 14,200,439(1)(2)(3)(4)(5)(3,4,5,6,7) ........................ 9,498,812 204,046 9,702,858
No person listed- ---------
(1) Individuals may disclaim beneficial ownership of certain shares, as
indicated in a footnote. Unless otherwise indicated in a footnote, the tablenamed
individual or family member possesses sole voting power and sole investment
power with respect to shares of Common Stock shown as beneficially owned more than one percentby
such person.
(2) Represents shares which the individual has a right to acquire within 60 days
after December 31, 1998 through exercise of stock options.
(3) Includes full shares allocated to the Common Stockparticipant's accounts under employee
benefit plans as of the Company outstanding on February 1, 1996 with the exception
of Mr. Robinson, who beneficially owned 6.8% of such stock on that date largely
because of the attribution to him of the shares owned by The Duke Endowment and
the Doris Duke Trust. The directors and executive officers as a group
beneficially owned 6.9% of such stock on that date.
(1)December 31, 1998.
(4) Includes full shares held in trust under the arrangement for directors
described under the caption "Executive Compensation -- Directors' Fees."Compensation of Directors."
(2)(5) Includes full shares credited to the participant's account under the Stock
Purchase-Savings Program for Employees, as of December 31, 1995.
(3) Includes 1,1001,411 shares owned by Mr. Coley's wife and 245 shares held as
custodian for his son. Beneficial ownership of all such shares is
disclaimed.
(4) Includes 60,000 shares owned by The Daniel Foundation of South Carolina, a
charitable foundation located in Greenville, South Carolina, of which Mr.
Mickel is a trustee.wife. Beneficial ownership of
such shares is expressly
disclaimed.
(5)(6) Includes 12,674,4642,609 shares held in a limited partnership controlled by Mr.
Johnson.
(7) Includes 7,604,721 shares owned by The Duke Endowment and 1,302,132 shares
owned by the Doris Duke Trust. Mr. Robinson, who is a trustee of each of
such entities, with shared voting and investment power, expressly disclaims
beneficial ownership of the shares owned by them.
7such trusts.
No person listed in the table beneficially owned more than 1% of the
Common Stock outstanding on December 31, 1998, with the exception of Russell M.
Robinson, II, who beneficially owned 8,909,725 shares of such stock on that
date largely because of the attribution to him of 7,604,721 shares owned by The
Duke Endowment and 1,302,132 shares owned by the Doris Duke Trust, shares he is
deemed to beneficially own in his capacities as a trustee of The Duke Endowment
and a trustee of the Doris Duke Trust, respectively. The directors and
executive officers as a group beneficially owned less than 1% of such stock
(not including the shares owned by such trusts) on that date.
The following table shows the number of units of limited partnership
interests in TEPPCO Partners, L.P., a publicly traded master limited
partnership of which Texas Eastern Products Pipeline Company, an indirect
wholly owned subsidiary of the Corporation, is the general partner, which were
beneficially owned on December 31, 1998 by a director or nominee for director
of the Corporation, a Named Executive Officer, and by the directors and
executive officers of the Corporation
6
as a group. None of such persons had the right to acquire units within 60 days
after December 31, 1998. As of December 31, 1998, the number of units
beneficially owned by directors and executive officers of the Corporation as a
group did not exceed 1% of the then outstanding units.
NAME OF INDIVIDUAL OR UNITS BENEFICIALLY
IDENTITY OF GROUP OWNED
- ----------------------------------------------- -------------------
Paul M. Anderson 4,000
Dennis R. Hendrix 29,000
Harold S. Hook 4,000
Richard J. Osborne 1,000
Directors and executive officers as a group 38,900
EXECUTIVE COMPENSATION
BelowSet forth below is information regarding compensation to the Chief
Executive Officer, and the other four most highly compensated executive officers of
the Corporation who were serving as executive officers at the end of 1998, and
one additional individual (Paul M. Anderson) for whom disclosure would have
been required as one of those executive officers but for the fact that he was
not serving as an executive officer at the end of 1998, for services to the
CompanyCorporation for the years ended December 31, 1995, 19941998, 1997 and 1993.1996.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION($)
- ----------------------------------- ------ ------------ ----------- -----------------
R. B. Priory 1998 810,000 891,000 34,011
Chairman of the Board, President 1997 671,933 297,339 59,652
and Chief Executive Officer 1996 476,509 107,215 14,144
P. M. Anderson (1) 1998 612,500 551,280 19,932
President and 1997 373,864 225,000 5,257
Chief Operating Officer
W. A. Coley 1998 380,676 159,884 16,941
Group President 1997 387,392 190,407 14,302
Duke Power 1996 378,947 300,723 43,734
F. J. Fowler (2) 1998 360,000 237,600 2,131
Group President 1997 190,227 185,040
Energy Transmission
R. W. Blackburn (3) 1998 360,000 237,600 2,123
Executive Vice President, 1997 53,077
General Counsel and Secretary
R. J. Osborne 1998 324,000 213,840 9,987
Executive Vice President 1997 299,322 72,085 36,284
and Chief Financial Officer 1996 253,200 47,931 3,448
LONG TERM COMPENSATION
-----------------------------------------------
AWARDS PAYOUTS
---------------------------------- ------------
RESTRICTED SECURITIES
STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($AWARD(S) ($) BONUS($) (1) COMPENSATION($)(4) OPTIONS/SARS(#) PAYOUTS($) COMPENSATION($) (2)(5)
- ----------------------------------- ------------------ ----------------- ------------ ------------------
W. H. Grigg 1995 636,667 312,704 48,098 204,392 163,720R. B. Priory 500,000 1,034,203
Chairman of the Board, President 397,013 99,165
and 1994 558,500 103,496 74,292 180,019 138,030 Chief Executive Officer 1993 411,500 111,347 6,987 87,267
S. C. Griffith, Jr. 1995 369,565 122,834 19,064 145,800 83,549
Vice Chairman 1994 342,850 63,078 16,323 135,081 73,618
and General Counsel 1993 322,015 88,880 7,034 60,737
R. B. Priory 1995 423,445 149,407 9,716 130,275 20,945124,362 31,254
P. M. Anderson (1) 400,000 1,254,052
President and 698,475
Chief 1994 348,425 63,078 8,110 118,125 14,299 Operating Officer 1993 287,250 78,885 1,172 11,224
W. A. Coley 1995 380,110 208,360 9,997 130,275 44,809200,000 221,245
Group President Associated 1994 339,975 63,078 13,069 118,125 42,478
Enterprises281,959 95,180
Duke Power 124,362 53,594
F. J. Fowler (2) 200,000 47,056
Group 1993 287,250 79,057 4,710 33,018President 27,665
Energy Transmission
R. W. Blackburn (3) 165,750 150,000 73,166
Executive Vice President,
General Counsel and Secretary
R. J. Osborne 1995 250,800 57,504 1,873 70,763 13,591
Senior100,000 168,907
Executive Vice President 171,774 32,516
and 1994 225,735 28,606 1,572 65,453 7,367 Chief Financial Officer 1993 187,520 43,994 95 9,60361,272 15,932
- ---------
(1) BonusMr. Anderson resigned as President and Chief Operating Officer on November
15, 1998. Compensation amounts listedshown for 1993 consistMr. Anderson for 1997 relate to the
period from June 18, 1997 to December 31, 1997.
(2) Compensation amounts shown for Mr. Fowler for 1997 relate to the period from
June 18, 1997 to December 31, 1997.
(3) Mr. Blackburn joined the Corporation on November 10, 1997. Compensation
amounts shown for Mr. Blackburn for 1997 relate to the period from November
10, 1997 to December 31, 1997.
(4) Mr. Blackburn's aggregate restricted stock holdings at December 31, 1998,
were 3,000 shares with a value on that date of $192,188. Dividends are paid
on such shares. One-third of the sumrestricted stock award to Mr. Blackburn
(1,000 shares) vested on January 4, 1999. The remainder vests in two
additional installments of payments made to1,000 shares each of
the listed officers under theon January 3, 2000 and January
2, 2001. No other Named Executive Long-Term Incentive Plan and the
Employee Incentive Plan. Bonus amounts listed for 1995 and 1994 consist of
compensation under the Executive Short-Term Incentive Plan.
(2) "AllOfficer held restricted stock on December
31, 1998.
(5) All Other Compensation"Compensation Column includes the following for 1995:
(i) Amounts contributed to1998:
a. Matching contributions under the Stock Purchase-Savings Program for
EmployeesDuke Energy Retirement Savings Plan as
follows: W. H. Grigg, $7,118; S. C. Griffith, Jr.,
$6,904;
R. B. Priory, $4,780;$8,333; W. A. Coley, $6,139; and$7,990; R. J. Osborne, $4,774.
(ii) Amounts earned by foregoing vacation pursuant to the Vacation Banking
Plan as follows:$7,200; R. W.
H. Grigg, $36,923; S. C. Griffith, Jr., $20,305;
R. B. Priory, $0; W. A. Coley, $20,305; and R. J. Osborne, $4,615.
(iii) Amounts accruedBlackburn, $2,138.
7
b. Matching contribution credits under a make-whole arrangement under the
Supplementary Defined ContributionDuke Energy Corporation Executive Savings Plan designed to maintain the
overall integrity of the employee benefit plans as follows: W. H.
Grigg, $25,309; S. C. Griffith, Jr., $11,581; R. B. Priory,
$10,057;$77,457; W. A. Coley, $11,879; and$27,789; R. J. Osborne, $3,456.
(iv)$15,970; R. W. Blackburn,
$9,108.
c. Matching contributions under the Employees' Savings Plan of PanEnergy
Corp and Participating Affiliates as follows: P. M. Anderson, $10,560;
F. J. Fowler, $10,560.
d. Matching contribution credits under a make-whole arrangement under the
PanEnergy Corp Key Executive Deferred Compensation Plan designed to
maintain the overall integrity of employee benefit plans as follows: P.
M. Anderson, $95,936; F. J. Fowler, $25,413.
e. Above-market interest earned on account balances in the Compensation
DeferralDuke Energy
Corporation Executive Savings Plan, Supplemental Account as follows; W. H. Grigg, $49,686; S. C. Griffith, Jr.,
$31,405;follows: R.
B. Priory, $1,358; W.A.$8,132; W. A. Coley, $1,181; and$10,805; R. J. Osborne, $746.
8
(v)$3,656; R. W.
Blackburn, $ 0.
f. Above-market interest earned on account balances in the PanEnergy Corp
Key Executive Deferred Compensation Plan as follows: P. M. Anderson,
$8,558; F. J. Fowler, $16.
g. Economic value of life insurance coverage provided under the Life
Insurance Planlife insurance
plans as follows: W. H. Grigg, $27,161; S. C. Griffith, Jr.,
$7,859;
R. B. Priory, $1,135;$16,323; P. M. Anderson, $3,276; W. A. Coley, $2,427; and$6,408; F.
J. Fowler, $8,006; R. J. Osborne, $0.
(vi)$2,081; R. W. Blackburn, $ 0.
h. The cost to the CompanyCorporation of supplemental life insurance coverage
under the Supplemental Insurance Plan as follows: W. H. Grigg, $15,690; S.
C. Griffith, Jr., $4,773; R. B. Priory, $3,465;$10,851;
W. A. Coley, $2,701;
and$3,997; R. J. Osborne, $0.
(vii)$0; R. W. Blackburn, $ 0.
i. The economic benefit of split-dollar life insurance coverage pursuant
to the Estate Conservation Plan as follows: W. H. Grigg, $1,833; S.
C. Griffith, Jr., $722; R. B. Priory, $150;$289; W. A.
Coley, $177; and$347; R. J. Osborne, $0.
LONG-TERM INCENTIVE PLAN$0; R. W. Blackburn, $ 0.
j. Pursuant to the employment agreement with P. M. Anderson described in
"Employment Contracts and Termination of Employment and
Change-in-Control Arrangements" below, $83,334 in deferred compensation
is accrued monthly for a two-year period beginning in June 1997. In
1998, $1,000,008 was deferred under such agreement.
k. Cash payments to certain key employees whose incentives were not
adjusted to market-competitive levels between June 18, 1997 and December
31, 1997 to reflect significant changes in responsibilities as follows:
R. B. Priory, $910,000; W. A. Coley, $162,000; R. J. Osborne, $140,000.
See "Compensation Committee Report on Executive Compensation -- AWARDS IN LAST FISCAL YEAROther
Compensation."
1998 OPTION GRANTS
The following table sets forth estimated future payoutsoptions granted to the executives
namedNamed Executive
Officers during 1998, along with the present value of such options on the date
they were granted, calculated as described in the Summary Compensation Table under the Executive Long-Term Incentive
Plan for the performance period beginning in 1995. Awards are based upon the
Company's total shareholder return during the performance period as compared
with that of the companies comprising the S&P Electric Utility Index. The table
assumes that total shareholder return will be attained at the threshold (or
minimum) performance level. The actual award, however, will be $0 if total
shareholder return is less than the 33rd percentile as comparedfootnote to the companies
comprising the S&P Electric Utility Index. Payout of the threshold, target and
maximum amounts will be made for performance at or above the 33rd, 55th and 75th
percentiles, respectively.table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS
PERFORMANCEGRANT DATE
INDIVIDUAL GRANTS VALUE
- --------------------------------------------------------------------------------- ------------
NUMBER
OF SHARES % OF TOTAL EXERCISE
UNDERLYING OPTIONS/SARS OR OTHER PERIOD UNTIL UNDER NON-STOCK PRICE-BASED PLANBASE GRANT DATE
OPTIONS/SARS GRANTED TO PRICE EXPIRATION PRESENT
NAME MATURATION OR PAYOUT THRESHOLD($GRANTED (1) (#) EMPLOYEES ($/SH) DATE VALUE (2) ($)
TARGET($) MAXIMUM($)- ------------------------ --------------- -------------- ------------ ------------ --------------
Richard B. Priory 500,000 14.1 58.9375 04/16/2008 4,495,000
Paul M. Anderson 400,000 11.3 58.9375 04/16/2008 3,596,000
William A. Coley 200,000 5.6 58.9375 04/16/2008 1,798,000
Fred J. Fowler 200,000 5.6 58.9375 04/16/2008 1,798,000
Richard W. H. Grigg 1/1/95-12/31/97 176,000 352,000 528,000
S. C. Griffith, Jr. 1/1/95-12/31/97 70,392 140,784 211,176Blackburn 150,000 4.2 58.9375 04/16/2008 1,348,500
Richard J. Osborne 100,000 2.8 58.9375 04/16/2008 899,000
- ---------
(1) The Corporation has not granted any SARs to the Named Executive Officers or
any other persons.
(2) Based on the Black-Scholes option valuation model. The key input variables
used in valuing the options were: risk-free interest rate, 5.8%; dividend
yield, 4.23%; stock price volatility, .151; option term, ten years. The
volatility variable reflected weekly stock price trading data from June 18,
1997 (the effective date of the merger between the Corporation and PanEnergy
Corp) through April 16, 1998 (the option grant date). An adjustment was made
for risk of forfeiture during the vesting period. The actual value, if any,
that a grantee may realize will depend on the excess of the stock price
8
over the exercise price on the date the option is exercised, so that there is
no assurance the value realized will be at or near the value estimated by the
Black-Scholes model.
EXERCISES OF STOCK OPTIONS IN 1998 AND YEAR-END OPTION VALUES
The following table shows aggregate exercises of options during 1998 by
the Named Executive Officers, and the aggregate year-end value of the
unexercised options held by them. The value assigned to each unexercised,
"in-the-money" stock option is based on the positive spread between the
exercise price of such stock option and the fair market value ("FMV") of the
Common Stock on December 31, 1998, which was $64.25. The FMV is the average of
the high and low prices of a share of Common Stock on that date as reported on
the New York Stock Exchange Composite Transactions Tape. The ultimate value of
a stock option will be dependent on the market value of the underlying shares
on a future date.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END * (#) FY-END ($)
----------------- ---------------------
SHARES
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------ -------------- -------------------- ----------------- ---------------------
Richard B. Priory -- -- 0/500,000 0/2,656,250
Paul M. Anderson 253,394 8,594,366 106,800/0 4,682,486/0
William A. Coley -- -- 0/200,000 0/1,062,500
Fred J. Fowler 5,495 209,144 50,823/206,963 2,063,239/1,202,358
Richard W. Blackburn -- -- 0/150,000 0/796,875
Richard J. Osborne -- -- 0/100,000 0/531,250
---------
* The Corporation has not granted any SARs to the Named Executive Officers
or any other persons.
Future exercisability of currently unexercisable stock options depends on
the grantee remaining employed by the Corporation throughout the vesting period
of the options, subject to provisions applicable at retirement, death or total
disability. As of December 31, 1998, the Named Executive Officers'
unexercisable options vest and become exercisable on the following schedule,
although all unvested options will fully vest and become exercisable upon a
change-in-control (as defined in the applicable option agreement) of the
Corporation.
UNEXERCISABLE OPTIONS HELD BY:
VESTING DATE R. B. Priory 1/1/95-12/31/97 85,620 171,240 256,860PRIORY W. A. Coley 1/1/95-12/31/97 70,392 140,784 211,176COLEY F. J. FOWLER R. W. BLACKBURN R. J. Osborne 1/1/95-12/31/97 42,000 84,000 126,000OSBORNE
- -------------------- -------------- ------------- -------------- ----------------- --------------
January 22, 1999 0 0 3,481 0 0
April 16, 1999 100,000 40,000 40,000 30,000 20,000
January 22, 2000 0 0 3,482 0 0
April 16, 2000 100,000 40,000 40,000 30,000 20,000
April 16, 2001 100,000 40,000 40,000 30,000 20,000
April 16, 2002 100,000 40,000 40,000 30,000 20,000
April 16, 2003 100,000 40,000 40,000 30,000 20,000
RETIREMENT PLAN INFORMATION
The Company has an Employees' Retirement Plan (the Retirement Plan)Executive officers and a
Supplemental Retirement Plan (the Supplemental Plan) (collectively, the
Retirement Plans) forother employees of the Company and certainCorporation participate in
either of its subsidiaries.
The Supplemental Plan will provide certain officers withtwo noncontributory, qualified, defined benefit retirement benefits
which they otherwise would have received underplans: the
Retirement Plan formula but
which may not be paid to them under the Retirement Plan due to limitations on
benefits imposed by the Internal Revenue Code or occasioned through operation of
the RetirementCash Balance Plan and the Compensation DeferralRetirement Income Plan. The Retirement
Income Plan ceased admitting new participants after December 31, 1998. In
general, employees who have attained age 21addition, selected managers are eligible to participate in the Retirement Plans. InExecutive Cash
Balance Plan, which is a noncontributory, nonqualified, defined benefit
retirement plan. A portion of the eventbenefits earned in the Executive Cash Balance
Plan is attributable to compensation in excess of retirement at or after age 65, an
eligible employee with 30 years of creditable service will, in general, be
entitledthe Internal Revenue Service
annual compensation limit ($160,000 for 1998) and deferred compensation, as
well as reductions caused by maximum benefit limitations that apply to
paymentsqualified plans from the Retirement Plans which, when added to such
employee's primary Social Security benefits will provide such employee for life
with total annual retirement benefits ranging from 61% to 88% of highest average
annual compensation during any 60 consecutive month period of creditable
service. Benefits are alsothat would otherwise be provided under the
Retirement Plans inCash Balance Plan and the event of
early retirement at or after age 55 with 10 years of creditable service or with
30 years of creditable service regardless of age and in the event of retirement
for
9
disability. Surviving spouse benefits are available on an elective basis with
the participant bearing a portion of the incremental cost.
Employees who do not retireRetirement Income Plan. Benefits under the
Retirement Cash Balance Plan, but whose employment
terminates after they have completed at least five vesting credit years have
vested rights in benefits accrued prior to their termination date.the Retirement
9
Income Plan and the Executive Cash Balance Plan are based on eligible pay,
generally consisting of base pay, short-term incentives and lump-sum merit
increases. The Retirement Cash Balance Plan is wholly paid for byand the CompanyRetirement Income Plan
exclude deferred compensation, other than deferrals pursuant to Sections 401(k)
and participating
subsidiaries, which have established125 of the Internal Revenue Code.
Under a trust with a bank as trustee to which
contributions are made from time to time by the Company and participating
subsidiaries and from which thenew benefit accrual formula that applies in determining benefits
under the Retirement Cash Balance Plan are paid. The
Supplemental Plan is administered by the Companyon and the benefits thereunder are
payable from the Company's general funds.
The following table shows the estimated annual pension benefits payable
upon retirement (at age 65)after January 1, 1997, and under
the Retirement Plans to personsIncome Plan on and after January 1, 1999, an eligible employee's
plan account receives a pay credit at the end of each month in specified
remunerationwhich the
employee remains eligible and years-of-service classifications, allowingreceives eligible pay for reasonable
increases in existing compensation levels.services. The benefits listed in the table are
not subject to any deduction for Social Security benefits or other offset
amounts.
PENSION PLAN TABLE
YEARS OF SERVICE
REMUNERATION 15 20 25 30
$100,000........................................................ $ 26,000 $ 35,000 $ 44,000 $ 52,000
150,000........................................................ 40,000 54,000 67,000 81,000
200,000........................................................ 55,000 73,000 91,000 109,000
250,000........................................................ 69,000 92,000 115,000 138,000
300,000........................................................ 83,000 111,000 139,000 166,000
350,000........................................................ 97,000 130,000 162,000 195,000
400,000........................................................ 112,000 149,000 186,000 223,000
450,000........................................................ 126,000 168,000 210,000 252,000
500,000........................................................ 140,000 187,000 234,000 280,000
550,000........................................................ 154,000 206,000 257,000 309,000
600,000........................................................ 169,000 225,000 281,000 337,000
650,000........................................................ 183,000 244,000 305,000 366,000
700,000........................................................ 197,000 263,000 329,000 394,000
750,000........................................................ 211,000 282,000 352,000 423,000
800,000........................................................ 226,000 301,000 376,000 451,000
(1) Compensation covered by the Retirement Plans in 1995, 1994 and 1993 for each
executive officer listed in the Summary Compensation Tablemonthly
pay credit is equal to a percentage of the amount shown as salary under such table.
(2)employee's monthly eligible pay. The
number ofpercentage depends on age and completed years of service creditedat the beginning of
the year, as shown below:
MONTHLY PAY CREDIT
AGE AND SERVICE PERCENTAGE
- ---------------------- -------------------
34 or less ......... 4%
35 to 49 ........... 5%
50 to 64 ........... 6%
65 or more ......... 7%
In addition, the employee receives a monthly allocation of 4% for any
portion of eligible pay above the Social Security taxable wage base ($72,600
for 1999). However, for certain other employees of the Corporation, the
percentage is a flat 3% of eligible pay. Employee accounts also receive monthly
interest credits on their balances. The rate of the interest credit is adjusted
quarterly and equals the yield on 30-year U.S. Treasury Bonds during the third
week of the last month of the previous quarter, subject to a minimum rate of 4%
per year and a maximum rate of 9% per year.
Prior to application of the new benefit accrual formula, benefits for
eligible employees, including benefits under the Retirement Income Plan for
1998, were determined under other formulas. To transition from a prior formula
to the new formula, an eligible employee's accrued benefit earned under the
prior formula is preserved as a minimum, and the employee's account under the
new benefit accrual formula receives an opening balance derived from a variety
of factors. In addition, during 1998, Messrs. Priory, Coley, Osborne and
Blackburn were awarded one-time supplemental credits to their Executive Cash
Balance Plan accounts of $337,100; $102,800; $137,062; and $89,075,
respectively.
Assuming that the Named Executive Officers continue in their present
positions at December 31, 1995 was 30 fortheir present salaries until retirement at age 65, their estimated
annual pensions in a single life annuity form under the applicable plan
attributable to such salaries would be: Richard B. Priory, $666,438; William A.
Coley, $255,114; Fred J. Fowler, $294,231; Richard W. H. Grigg, 30 for S. C. Griffith,Blackburn, $37,231; and
Richard J. Osborne, $196,147. Such estimates are calculated assuming interest
credits at a rate of 7% per annum and using a future Social Security taxable
wage base equal to $72,600. As described under "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements," Mr. Anderson's
employment agreement provided that, upon a termination prior to early
retirement age of (55), he would receive retirement benefits as if he had
reached such age. As a result, Mr. Anderson received a lump sum distribution of
$3,434,743, exceeding by $244,356 the retirement benefit otherwise payable to
him.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is currently
comprised of William T. Esrey, George Dean Johnson, Jr., 19 for
R. B. Priory, 30 for W. A. ColeyLeo E. Linbeck, Jr.
and 20 for R. J. Osborne. The maximum
number of years of service for benefits is 30.
(3) Amounts shown above represent estimated 50% joint and survivor annuity
benefits calculated by the Social Security integration formula.
10
Notwithstanding anything to the contrary set forth in anyJames G. Martin. None of the Company's
previous filings underpresent or former members of the Securities ActCompensation
Committee was at any time during 1998 or at any other time an officer or
employee of 1933,the Corporation.
No executive officer of the Corporation serves as amended,a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Corporation's Board of Directors
or the Securities
Exchange Act ofCompensation Committee.
---------------
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
CORPORATION'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES EXCHANGE ACT OF 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph on page 14 shall not be incorporated by reference into any
such filings.AS AMENDED (THE "EXCHANGE ACT"), THAT
MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT IN WHOLE OR IN
PART, THE FOLLOWING COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION AND
THE PERFORMANCE GRAPH IMMEDIATELY FOLLOWING SUCH REPORT SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company, under the supervision of the Compensation Committee of the Board of Directors, has developed and implementedwhich is composed
exclusively of nonemployee directors, is responsible for the Corporation's
executive compensation programs which
seek to provide a direct relationship betweenprograms. The following is the report of the
Compensation Committee on compensation provided topolicies regarding executive officers
and corporate performance.
COMPENSATION PHILOSOPHYthe basis of compensation actions it has taken.
The Company has a pay policy of setting total cash compensation for its
entire workforce between the 50th and 75th percentilesobjective of the marketplace.
ConsistentCorporation's executive compensation programs is to
offer compensation opportunities that attract and retain talented executive
officers and key employees and that motivate such employees to enhance
shareholder value. Base pay, annual incentives and long-term incentives are
structured to deliver competitive pay opportunities, reward individual
performance and encourage executives to manage from the perspective of owners
with this policy, itan equity stake in the Corporation. The executive compensation programs
are intended to provide total compensation (consisting of base salaries, annual
cash incentive opportunities and long-term incentive opportunities) that is
competitive with the philosophymedian total compensation offered other executives
employed by companies of similar size, complexity and lines of business. To
determine competitive compensation levels, the Compensation Committee considers
data from surveys, proxy statements and independent compensation consultants.
The attainment of corporate, business group and, in some instances, individual
performance goals determines the payouts from the annual incentive compensation
plans. Long-term incentive compensation awards are designed to link a
significant portion of total pay directly to long-term financial performance
and creation of shareholder value.
To underscore the importance of linking executive and shareholder
interests, the Board of Directors to
set total compensation opportunities for its executive officers between the 50th
and 75th percentile. The "marketplace"has adopted stock ownership guidelines for
executive officers has been defined
asand other members of senior management. The target level of
ownership of Common Stock (or Common Stock equivalents) for the groupChairman of electric utilities comprising the
Standard & Poor's ("S&P")
Electric Utility Index.
Total cash compensationBoard, President and Chief Executive Officer under such guidelines is three
times annual salary. The target level for executiveother officers consistswho are members of base salary,
whichthe
Corporation's Policy Committee, including Messrs. Coley, Fowler, Blackburn and
Osborne, is two times annual salary. Each employee subject to the guidelines is
expected to achieve the ownership target within a period of five years,
commencing on the later of January 1, 1997, or the date upon which the employee
became subject to the guidelines. Common Stock held in an executive's
Retirement Savings Plan account, Common Stock equivalents earned through
non-qualified deferred compensation programs and any Common Stock beneficially
owned outside such programs are included in determining compliance with the
guidelines.
COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code imposes a limitation on the
Corporation's ability to deduct from income tax annual merit increases,compensation in excess
of $1 million paid to certain employees, generally the chief executive officer
and incentives, which are awarded
through the Executive Short-Termfour other most highly compensated executive officers. The Compensation
Committee intends to structure compensation that rewards performance while
preserving maximum deductibility of all compensation awards. Towards this end,
in 1998 the Board of Directors recommended and shareholders approved the Duke
Energy Corporation 1998 Long-Term Incentive Plan and the Duke Energy
Corporation Policy Committee Short-Term Incentive Plan to allow future grants
of stock options (under the 1998 Long-Term Incentive Plan) and other
performance awards to satisfy the requirements for exemption from Section
162(m). It is not anticipated that compensation realized by any executive
officer under programs now in effect will result in a material loss of tax
deductions.
BASE SALARIES
The Compensation Committee believes that a significant percentage of each
individual's compensation should be at risk as incentive compensation.
Therefore, the Compensation Committee tends to be conservative in establishing
salary opportunities and typically sets them at a level which approximates the
competitive median as determined by survey data. Individual executive officer's
salaries are reviewed annually and increases are determined by the Compensation
Committee based upon job responsibilities, level of experience, individual
performance and data obtained from surveys, consultants and staff research. No
salary increase was approved by the Compensation Committee for any Named
Executive Officer in 1998.
SHORT-TERM INCENTIVE COMPENSATION
In 1998, the Compensation Committee administered two annual incentive
plans that permitted the granting of cash awards. Policy Committee members,
including Messrs. Priory, Anderson (before his resignation), Coley, Fowler,
Blackburn and Osborne, earned incentive compensation under the Policy Committee
Short-Term Incentive Plan, while other executive officers earned incentive
compensation under the Duke Energy Short-Term Incentive Plan. Individual
incentive targets under both Plans are intended to pay amounts equal to the
competitive median when target performance is achieved and to reward
outstanding results by paying bonuses of up to 150% of target when outstanding
results are achieved.
11
Awards under the Policy Committee Short-Term Incentive Plan were
calculated pursuant to a formula based upon the Corporation's earnings per
share (EPS). Minimum, target and maximum performance levels were established,
and participants could receive up to 150% of their short-term incentive
targets. According to the range of EPS threshold amounts established by the
Compensation Committee at the beginning of 1998, EPS resulted in payments of
110% of bonus targets to each Policy Committee member, including the Named
Executive Officers, prior to changes in such amounts as determined by the
Compensation Committee because of individual performance.
Awards under the Duke Energy Short-Term Incentive Plan, in which executive
officers other than members of the Policy Committee participated, were
determined on the basis of a combination of 1) EPS measures, 2) earnings before
interest and income taxes (EBIT) measures and, in some instances, other
measures unique to individual business groups, and 3) individual objectives.
Each of these three components determined one-third of each executive officer's
bonus.
LONG-TERM INCENTIVE COMPENSATION
In 1998, the Compensation Committee approved the award of non-qualified
stock options (as described earlier in the proxy statement) to members of the
Policy Committee under the Duke Energy Corporation 1998 Long-Term Incentive
Plan. The useAlso in 1998, the Compensation Committee approved the award of
incentives is intendednon-qualified stock options to result in a direct
relationship between total compensation and corporate performance. Opportunity
to receive compensation beyond the 50th percentileexecutive officers who were not members of the
marketplace is
provided through incentives, based on corporate performance. Similarly,
compensation can fall belowPolicy Committee under the 50th percentile if corporate performance
measures are not achieved and incentives are not paid. The Company's goal is to
create a competitive compensation program that will attract and retain quality
leadership and link compensation directly to corporate performance.
In January 1996, the Board of Directors adopted a new compensation plan,
theDuke Power Company Stock Incentive Plan approved in
1996. The number of stock options granted was determined through a process
which: first, utilizes survey data to determine the annualized value of
long-term incentive compensation made to other executives and management
employees in comparable positions in companies with which the Company is submittingCorporation
competes for shareholder
approval. See page 16. No awards have been made under that Plan.
COMPENSATION PROCESS
Inexecutive talent (target value), second, uses a variant of the
early partBlack-Scholes stock option pricing model to calculate a ratio which, when
multiplied by the exercise price of each yearthe option, produces an expected present
value of the option, and third, calculates the number of options required to
make a competitive long-term grant by dividing target value by the expected
present value of a single option. The result of this process, expressed as a
number of options, may be adjusted by the Compensation Committee, reviewsor, in some
cases, its designee, depending upon the compensationgrant recipient's qualitative and
quantitative performance, the size of stock option awards in the past, and
expectations of the Company's executive officers (other thangrant recipient's future performance.
OTHER COMPENSATION
In 1998 the Chief Executive
Officer) withCompensation Committee approved one-time payments to certain
employees whose long-term and short-term compensation was not adjusted at the
Chief Executive Officer and sets the compensationtime of the executive officers for such yearmerger of the Corporation with modificationsPanEnergy Corp, when, with regard to
those employees, there was a significant change in responsibilities as it deems appropriate. The
review isa result
of the merger, clear evidence of a compensation shortfall based on performance evaluationssurvey data
and a significant contribution by the employees to the success of the individual executive officersmerger.
Messrs. Priory, Coley and on a comparisonOsborne qualified for and were awarded such one-time
payments in the amounts of their compensation with compensation$910,000, $162,000 and financial
performance data from$140,000, respectively.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Prior to the S&P Electric Utility Index companies, using
information provided in surveys such asmerger of the Edison Electric Institute Executive
Compensation Survey.
TheCorporation and PanEnergy Corp, the
Compensation Committee also reviewscommissioned its compensation consultant to prepare an
independent report regarding the level of compensation of the Chief Executive
Officer with assistance from the Company's human resources staff. It
recommends adjustments as appropriate, based on competitive compensation data
from the S&P Electric Utility Index companies, the Committee's assessment of the Chief Executive Officer's performance and its expectation as to his future
contributionsCorporation, considering in leadingparticular the Company. The Committee's recommendation on
compensation for the Chief Executive Officer is considered and acted upon by the
Board of Directors, with inside directors neither present nor participating.
11
The Board of Directors has recommended approval by the shareholderssize of the
Stock Incentive Plan, as described beginning on page 16 of this Proxy Statement.
Subject to shareholder approvalCorporation, its complexity and the markets in which the Corporation competes
for executive talent. Based upon the Compensation Committee's analysis of the
Plan,consultant's report, the Compensation Committee may
chooseat its June 1997 meeting
adjusted Mr. Priory's annual base salary to make awards under the Plan which would qualify for deductibility under
Section 162(m)$810,000 and adjusted his annual
short-term incentive target to 100% of base salary beginning on January 1,
1998. Also based upon its analysis of the Internal Revenue Code. The Company has no current plans to
qualify other compensation paid to its executive officers for deductibility
under such section.
1995 COMPENSATION SUMMARY
INCREASES IN BASE SALARY
Increases in base salary were granted in February 1995 to the executive
officers named in the Summary Compensation Table and were based on individual
performance for the 1994 performance period, as measured under the Company's job
performance evaluation program. Increases varied based upon individual
performance and the individual's compensation relative to the competitive
marketplace. Beginning in 1995, merit increases were no longer subject to
adjustment based upon attainment of corporate performance measures, although
corporate and unit performance continue to be factors in evaluating individual
performance. This change resulted from the introduction of the Executive
Short-Term Incentive Plan, which now provides the direct link between level of
compensation and the attainment of corporate and unit performance measures.
Messrs. Griffith, Priory, Coley and Osborne received increases in base
salary ranging from 7.79% to 21.53%. Each of these increases reflects comparison
of full-year 1995 salary compensation with full-year 1994 amounts. Thus, the
percentage increases in base salary reflect the impact of increases in base
salary levels during the course of 1994 due to officer promotions, as well as
the impact of 1995 merit increases.
Chief Executive Officer Grigg received a salary of $636,667 in 1995,
representing a 14.00% increase over his 1994 base salary. In recommending such
increase to the Board,consultant's report, the Compensation
Committee consideredgranted Mr. Grigg's
individual performance and competitive compensation levels in the marketplace.
The percentage increase in Mr. Grigg's salary also reflects both his promotion
in April 1994 as well as his 1995 merit increase.
SHORT-TERM INCENTIVE COMPENSATION
Short-term incentive awards were made through the Executive Short-Term
Incentive Plan and were based on a pre-established awards formula and the
achievement of certain corporate and business unit measures. Those measures vary
according to the position held by the executive officer and provide additional
alignment with business unit performance. Minimum, target and maximum
performance levels are established for determining awards. 1995 awards were
calculated with respect to base salaries as established in February 1995.
Messrs. Grigg, Griffith and Priory were members of the Company's Management
Committee in 1995 for purposes of determining awards under the Plan, with their
awards being based on the achievement of certain corporate measures and a return
on equity threshold of 12.65%. The corporate measures, target performance levels
and respective weights of the corporate measures were:
(i) return on equity of 13.15% (60%);
(ii) total cost per kilowatt hour delivered of 5.54 cents (20%); and
(iii) corporate safety level of 255 recordable incidents reported for
the year (20%).
The Company, including the Associated Enterprises Group, achieved a return
on equity of 15.07% in 1995, thereby exceeding the maximum level of 13.75%
specified in the Plan with respect to awards for Messrs. Grigg, Griffith and
Priory. The Company's total cost per kilowatt hour delivered was 5.51 cents,
bettering the target
12
performance level of 5.54 cents. The Company also exceeded the corporate safety
target performance level in that only 246 recordable incidents were reported in
1995. Accordingly, Messrs. Griffith and Priory received awards of 34.90% of
their base salaries. Chief Executive Officer Grigg received an award of $312,704, constituting 48.86%non-qualified stock options to
purchase 500,000 shares of his base salary.
Mr. Coley, who is President of the Associated Enterprises Group and also a
member of the Company's Management Committee, received an award that was based
on the level of achievement of After-tax Net Profit for four key business units
of the Associated Enterprises Group, with each being weighted at 25%. The
After-tax Net Profit for two of the four business units, Crescent Resources,
Inc. and Duke/Fluor Daniel, exceeded the maximum performance level; the
After-tax Net Profit for the third business unit,Common Stock under the Duke Energy Group, did not
attain the minimum performance level; and the After-tax Net Profit for the
fourth business unit, Duke Engineering and Services, Inc., exceeded the target
performance level, resulting in Mr. Coley receiving an award of 26.57% of his
base salary. Mr. Coley was also eligible for an additional award based on the
1995 Total After-tax Net Profits of the Associated Enterprises Group as a whole.
Accordingly, since the Associated Enterprises Group exceeded the maximum
performance level in respect of Total After-tax Net Profits, Mr. Coley received
an additional award of 32.63% of his base salary.
Mr. Osborne was a member of the Company's Senior Vice President group for
purposes of determining awards under the Plan. Accordingly, his award was based
on the three corporate measures listed in (i), (ii) and (iii) above, which
together were weighted 50% for purposes of his award, together with business
unit measures weighted another 50%. Mr. Osborne received an award of 23.96% of
his base salary.
LONG-TERM INCENTIVE COMPENSATION
Long-term incentive awards were made through the ExecutiveCorporation 1998
Long-Term Incentive Plan usingPlan. The Compensation Committee believes that this award
has put in place a pre-establishedmechanism which will result in meaningful rewards to Mr.
Priory for substantial improvements in shareholder value. The Compensation
Committee will consider additional stock option awards formula based on total shareholder
return over a three-year period as comparedit deems appropriate
from time to time.
It is the performanceCompensation Committee's intention that, when taken together,
the components of a peer group
comprised of companiesMr. Priory's pay, including salary, short-term incentive
opportunity and annualized long-term incentive award value, will result in
compensation which approximates the S&P Electric Utility Index. "Total shareholder
return" is calculated by dividing the sum of the change in the market price of
the Company's Common Stock over the three-year performance period plus dividends
paid over that period, by the price of the Company's Common Stock at the
beginning of the performance period. For any award to have been made, this
figure had to exceed the 33rd50th percentile of the peer group, which wasmarket when
incentive plan performance expectations are met and for compensation as high as
the minimum performance level established by the Compensation Committee. The target
performance level was the 55th75th percentile of the peer group and the maximum
performance level was the 75th percentile. The Company exceeded the maximum
performance level by achieving total shareholder return at the 96th percentile
of the peer group for the 1993 through 1995 performance period. As a result,
Messrs. Griffith, Priory, Coley and Osborne received awards under the Plan
ranging from 37.50% to 45.00% of their respective base salaries as established
in February 1993. Chief Executive Officer Grigg received an award of 49.37% of
his base salary, also as established in February 1993.market when results exceed expectations.
This report has been provided by the Compensation Committee.
BUCK MICKEL,LEO E. LINBECK, JR., Chairman
CRANDALL C. BOWLES
PAUL H. HENSON
13WILLIAM T. ESREY
GEORGE DEAN JOHNSON, JR.
JAMES G. MARTIN
12
PERFORMANCE GRAPH
Note: The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG DUKE POWER COMPANY,THE CORPORATION, S&P 500 INDEX,
AND S&P ELECTRIC UTILITYUTILITIES INDEX (The performance graphAND DOW JONES UTILITIES AVERAGE
(Performance Chart appears here. Thehere -- see table below for plot points are listed in the
table below.)
1990 1991 1992 1993 1994 1995
Duke Power Co. $100 $121 $131 $161 $152 $199
S & P 500 Index $100 $130 $140 $155 $157 $215
S & P Electric Utility
Index $100 $130 $138 $155 $135 $177points)
Assumes $100 invested on Dec. 31, 19901993
in Duke Power Common Stock, S&P 500 Index,
and S&P Electric Utility Index.Utilities Index, and DJ Utilities.
Assumes reinvestment of dividends.
DIRECTORS' FEES
Directors who are not employees1993 1994 1995 1996 1997 1998
----------------------------------------------------
Duke 100 95 122 125 155 186
S&P 500 Index 100 101 139 170 227 291
S&P Utilities 100 92 129 133 165 188
DJ Utilities 100 85 111 121 147 174
The above performance graph features two widely published industry
indices, the S&P Utilities Index and the Dow Jones Utilities Average, in
satisfaction of the Companyrequirement for a comparative industry index. The
Corporation believes that the use of both of these indices provides the best
opportunity for comparison of the Corporation's total cumulative return with
those of significant peer companies in the electric and gas industries.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Corporation entered into employment agreements dated as of November
24, 1996 with Messrs. Priory, Coley, Fowler, Osborne and Anderson, which became
effective on June 18, 1997 (the "Effective Time") and which remain in effect
for a two-year period from the Effective Time or such longer period as may be
mutually agreed upon by the parties to such agreements (the "Employment
Period"). The employment agreements were amended in October 1997 (as amended,
the "Employment Agreements"), when the Corporation and the employees mutually
agreed to short-term and long-term incentive opportunities. The principal terms
and conditions of the Employment Agreements are described below.
The Employment Agreements for Messrs. Priory, Coley, Fowler and Osborne
provide for an annual base salary that is at least equal to the executive's
annual base salary for the twelve-month period prior to the Effective Time
(i.e., Messrs. Priory, Coley, Fowler and Osborne were paid $476,509, $378,947,
$260,000 and $253,200, respectively, as base salary in 1996). Those Employment
Agreements also provide for an annual bonus opportunity of 100% for Mr. Priory
and 60% for each of Messrs. Coley, Fowler and Osborne under the terms of the
Duke Energy Corporation Policy Committee Short-Term Incentive Plan calculated
as a percentage of annual base salary. Each such executive is entitled to
participate in all long-term incentive plans, savings, retirement and welfare
benefit plans on the same basis as other peer executives of the Corporation.
The Employment Agreements also provided that Messrs. Priory, Coley, Fowler and
Osborne were to receive non-qualified stock options to purchase 500,000,
200,000, 200,000 and 100,000 shares of Common Stock, respectively. Such options
were issued under the Duke Energy Corporation 1998 Long-Term Incentive Plan. In
the event the executive's employment is terminated for "Good Reason" by the
executive or without "Cause" by the Corporation (both as defined in the
Employment Agreements), Messrs. Priory, Coley and Osborne will be entitled to
receive a lump-sum severance payment
13
equal to the product of three times the executive's annual base salary and
target bonus and Mr. Fowler will be entitled to receive a lump-sum severance
payment equal to two times annual base salary and target bonus. In addition,
for three years following the executive's date of termination for "Good Reason"
or without "Cause" by the Corporation, Messrs. Priory, Coley and Osborne will
be entitled to continued coverage under the medical, life insurance and other
welfare benefit plans of the Corporation; Mr. Fowler's coverage would be
extended for two years and he would receive supplemental pension benefits
calculated as if he had an additional two years of service. In the event that
any of the payments or benefits provided for in the relevant Employment
Agreement would constitute a "parachute payment" (as defined in section
280G(b)(2) of the Internal Revenue Code), the executive is entitled to elect to
reduce such payments or benefits so that the excise tax imposed by section 4999
of the Internal Revenue Code would not apply. Each of the Priory, Coley,
Osborne and Fowler Employment Agreements contains a restrictive covenant that
prohibits the executive from disclosing or using certain confidential
information while employed by the Corporation and at any time thereafter.
The Employment Agreement of Paul M. Anderson provided that Mr. Anderson
would serve as Chief Operating Officer and President of the Corporation, a
member of the Office of the Chief Executive Officer and a member of the
Corporation's Policy Committee. The Anderson Employment Agreement further
provided that during the Employment Period Mr. Anderson would receive an annual
base salary of no less than $700,000, an annual bonus opportunity set at a
target level of no less than 90% of Mr. Anderson's base salary claimed under
the terms of the Duke Energy Corporation Policy Committee Short-Term Incentive
Plan, and a supplementary salary payment in the event that Mr. Anderson became
subject to North Carolina taxes such that the amount of Mr. Anderson's
after-tax compensation would be no less than the amount he would have received
during 1995absent the imposition of North Carolina taxes. In addition, Mr. Anderson was to
be awarded 400,000 nonqualified stock options, which were issued in 1998. Such
options were issued under the Duke Energy Corporation 1998 Long-Term Incentive
Plan. Pursuant to the Anderson Employment Agreement, the Corporation also
provided Mr. Anderson with deferred compensation payable upon his attainment of
the age of 55, accruing at a monthly rate of $83,334, plus interest, for each
of the twenty-four months following the Effective Time. The Anderson Employment
Agreement prohibits Mr. Anderson from disclosing or using certain confidential
information while employed by the Corporation and at any time thereafter. The
Anderson Employment Agreement also provided that if Mr. Anderson's employment
terminated before the end of the Employment Period (except in the case of
termination for "Cause" or "Disability" as defined in the Employment
Agreement), Mr. Anderson would be entitled to the following: (i) a lump-sum
payment aggregating accrued obligations (such as unpaid salary and a pro rata
portion of his target bonus opportunity) to Mr. Anderson, and (ii) retirement
benefits, including qualified defined benefit retirement benefits, excess or
supplemental retirement benefits, and welfare benefits, as if Mr. Anderson had
reached early retirement age as of the date of termination of his employment.
In the event that compensation payments to Mr. Anderson would subject him to
excise tax under section 4999 of the Internal Revenue Code, the Corporation
would reduce such payments if and to the extent it would maximize Mr.
Anderson's after-tax compensation. Upon Mr. Anderson's resignation, effective
November 15, 1998, he received the payments described above and in the Summary
Compensation Table.
The Corporation entered into an employment agreement with Mr. Blackburn,
effective November 10, 1997, in connection with his employment as Executive
Vice President and General Counsel of the Corporation and a member of the
Policy Committee. The term of the employment agreement extended through
December 31, 1998. The agreement established an initial annual base salary of
$360,000 and an annual incentive target opportunity of 60% of base salary under
the Duke Energy Corporation Policy Committee Short-Term Incentive Plan. The
Agreement also provided for an award of 150,000 stock options which were
granted in 1998 at the same time and under the same terms as grants of stock
options to other Policy Committee members. The agreement further provided for
the award of 9,000 shares of restricted stock in three equal grants of 3,000
shares in January 1998, January 1999 and January 2000. With respect to each
such grant, 1,000 shares were to vest on each of the three successive
anniversary dates of the original award of the grant. It was also agreed that
Mr. Blackburn would be eligible to participate in the executive benefits plans
that are available to other members of the Policy Committee. The Blackburn
employment agreement further contained a non-competition clause and
confidentiality provision.
COMPENSATION OF DIRECTORS
The fixed annual retainer for nonemployee directors of the Corporation is
$40,000. Additional annual compensation for serving as the Chairman of $24,000 andthe
Audit, Compensation, Corporate Governance, Corporate Performance Review or
Finance Committees is $4,000. In addition, nonemployee directors receive a fee
of $1,000 for attendance at each meeting of the Board of Directors, each
committee meeting and other functions of the CompanyCorporation requiring their
presence, together with expenses of attendance.
In
addition, each14
A nonemployee director may elect to receive 50% of the Chairmen of the Audit, Compensation, Nominating, Corporate
Performance Reviewhis or her retainer and Finance Committees received annual compensation of
$3,500. A portion of the
attendance fees for each nonemployee director is placedin the form of Common Stock or may defer such portion by having
it held in trust for the director's benefit and invested in Common Stock of the Company
at
market price. An additional portion of annual compensation or attendance
fees, atThe director may elect to receive the optionremaining 50% of such
director,compensation in cash or may be
14
placed in trust. Uponelect to defer, until termination of service on the
Board of Directors, that portion in trust as shares of Common Stock or in an
investment account that is credited with interest based upon the interest paid
on 30-year U.S. Treasury Bonds.
Each January and July that a nonemployee director continues to serve on
the Board of Directors, such director is credited with 100 shares of Common
Stock to be held in trust. In general, shares of Common Stock held in trust,
and income thereon, will then receivenot become distributable until the nonemployee
director terminates service on the Board of Directors. Dividends will be
converted into additional shares held in trust at fair market value on the
dividend payment date. When a nonemployee director terminates service on the
Board of Directors, shares held in trust for his or her benefitaccount will be
distributed to the director on the basis of the distribution schedule chosen by
such director.
Upon completing ten years of service on the Board of Directors, certain
directors become eligible to participate in the Directors' Charitable Giving
Program. Under this program, the Corporation will make, upon the director's
death, donations of up to $1,000,000 to charitable organizations selected by
the trusteedirector. A director may request that the Corporation make donations under
this program during the director's lifetime, in which case the maximum donation
will be reduced on a net present value basis. The Corporation maintains life
insurance policies upon eligible directors to fund donations under the program.
Eligible directors include only those who were members of the trust, including shares
purchased with reinvested dividends.Board of
Directors on February 18, 1998, and certain former directors who previously
qualified for benefits.
Nonemployee directors also participateare subject to the Corporation's stock ownership
guidelines which require nonemployee directors to build and maintain holdings
of Common Stock (or Common Stock equivalents) equal in retirement and compensation deferral plans which are intendedmarket value to provide
benefits substantially similar to those afforded by the Company to directors who
are employees.
In September 1995, the Board approved an increase ofthree
times the annual retainer to
$30,000 per year, effective($120,000). Nonemployee directors must attain this
ownership level within five years from January 1, 1996.1997, the date of
implementation of the guidelines, or from the commencement of their service on
the Board of Directors, if after the implementation date.
INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board of Directors of the Company had a total of seveneight meetings during 1995.1998. No director
attended fewer than 75% of the totalaggregate of suchthe meetings of the Board meetingsof
Directors held during the period for which he or she was a director and the
meetings of the committees upon which he or she served during the period for
which he or she was a director, with the exception of Paul H. Henson, who
attended 64% of such meetings.director.
Among its standing committees the CompanyCorporation has a Management Committee,
an Audit Committee, a Compensation Committee, a NominatingCorporate Governance Committee,
a Corporate Performance Review Committee, and a Finance Committee.
The Management Committee consists of Richard B. Priory and William A.
Coley. This Committee may exercise all of the authority of the Board of
Directors except with respect to certain actions specified in the Corporation's
By-Laws.
The Audit Committee consists of Robert J. Brown, James V. Johnson,Ann Maynard Gray, Max
Lennon, Leo E. Linbeck, Jr. and Russell M. Robinson, II. This Committee
recommends to the Board of Directors the engagement of the independent auditors
for the Company,Corporation, determines the scope of the auditing of the books and
accounts of the Company,Corporation, reviews the reports submitted by the auditors,
examines procedures employed in connection with the Company'sCorporation's internal
audit program and makes recommendations to the Board of Directors as may be
appropriate. There were sixThe Committee held seven meetings of this Committee
during 1995.1998.
The Compensation Committee consists of Crandall C. Bowles, Paul H. HensonWilliam T. Esrey, George Dean
Johnson, Jr., Leo E. Linbeck, Jr. and Buck Mickel.James G. Martin. This Committee sets the
salaries and other compensation of all employeesexecutive officers of the CompanyCorporation
except the Chairman of the Board, Vice Chairman of the
Board, President and any other officers the Board of Directors may designate
whose salaries are at a monthly rate at or above a level as determined from time
to time by the Board of Directors.Board. This Committee makes recommendations to the
Board of Directors regarding the salary and other compensation of the Chairman
of the Board Vice
Chairman of the Board and any President for consideration and action by the Board of Directors, without
the presence or participation of those directors who are also
employeesthe Chairman of the Company.Board. The Committee also
makes recommendations to the Board of Directors regarding the compensation of
nonemployee directors. There were eightThe Committee held seven meetings of thisduring 1998.
The Corporate Governance Committee during 1995.
The Nominating Committeeconsiders matters related to corporate
governance and formulates and periodically revises principles for board
governance, recommends to the Board of Directors the size and composition of
the Board of Directors within the limits set forth in the Corporation's
Articles of Incorporation and By-Laws and recommends persons to be considered
as successors to the Chief Executive Officer. The Nominating Committee will consider
nominees for the Board of Directors recommended by shareholders. Recommendations by
shareholders should be forwarded to the Secretary of the Company and should
identify the nominee by name and provide pertinent information concerning his or
her background and experience. A shareholder recommendation must be received at
least ninety days prior to the date of the annual meeting of shareholders. The
Nominating Committee,
consisting of W. H. Grigg, Paul H. Henson, George Dean
Johnson, Jr.William T. Esrey, Dennis R. Hendrix, Max Lennon, James G. Martin
and W. W. Johnson,Richard B. Priory, met oncethree times in 1995.1998.
15
The Corporate Performance Review Committee consists of G. Alex Bernhardt,
William A. Coley, Paul H. Henson, James G. MartinSr., Robert J. Brown, Ann Maynard Gray, Dennis R. Hendrix, Harold S. Hook and
Buck Mickel. The Corporate
Performance ReviewRussell M. Robinson, II. This Committee monitors and makes recommendations for
improving the overall performance of the Company,Corporation, and, at the policy level,
determines the adequacy of and support for the Company'sCorporation's emphasis on
continuous improvement. The Committee met six times during 1995.
15
1998.
The Finance Committee consists of Crandall C. Bowles, W. H. Grigg,G. Alex Bernhardt, Sr., Harold S. Hook,
George Dean Johnson, Jr., W. W. Johnson and Richard B. Priory. This Committee directsreviews the
financial and fiscal affairs of the CompanyCorporation and makes recommendations to
the Board of Directors regarding the Corporation's dividend, financing and
fiscal policiespolicies. The Committee met six times during 1998.
In February 1998, the Corporation adopted a policy stating that members of
the Company. ThereBoard of Directors are to submit their resignation as a matter of course
upon a change in employment or other significant change in their professional
roles and responsibilities, with the exception of the normal retirement of
those individuals who were six meetingsmembers of thisthe Board of Directors on the date the
policy was adopted. The Corporate Governance Committee during 1995.will determine whether
any such resignation will be accepted. It is expected that acceptance of any
such resignation will be effective as of the end of the term of the director
tendering the resignation.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Corporation has had business relationships and engaged in certain
transactions with affiliated parties. It is the policy of the Corporation to
engage in transactions with related parties only on terms that, in the opinion
of the Corporation, are no less favorable to the Corporation than could be
obtained from unrelated parties.
During 1995,1998, the CompanyCorporation retained the law firm of Robinson, Bradshaw &
Hinson, P.A., of which Russell M. Robinson, II, a director of the Corporation,
is a shareholder, in connection with a number of small matters. Legal feesFees for legal
services paid by the CompanyCorporation to the law firm in 19951998 represented less than
five percent5% of such firm's gross revenues for the year.
In October 1995, CLT Development Corp.,AMENDMENT TO ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
(PROPOSAL 2)
The Board of Directors recommends that the shareholders approve the
adoption of a subsidiaryproposed amendment to the Articles of Incorporation to increase
the amount of authorized Common Stock of the Company,
entered into a joint venture arrangementCorporation from 500,000,000 to
1,000,000,000 shares. As of December 31, 1998, 362,965,360 shares of Common
Stock were issued and 137,034,640 were unissued, including approximately
25,000,000 shares reserved for issuance under the Corporation's stock plans.
The additional shares of Common Stock, if authorized, would have the same
rights and privileges as the shares of Common Stock presently outstanding and
could in the future be issued for any proper corporate purpose. The
Corporation's Articles of Incorporation provide that the shares of Common Stock
of the Corporation do not have preemptive rights.
In 1997, in connection with Charter Properties, Inc.the merger of the Corporation and PanEnergy
Corp, the Corporation's shareholders approved an increase in the authorized
Common Stock from 300,000,000 shares to 500,000,000 shares, primarily to enable
the Corporation to issue the additional shares necessary to consummate the
merger. The Board of Directors believes that the proposed increase in the
number of authorized shares of Common Stock will be advantageous to the
Corporation and its shareholders because it will provide the Corporation with
added flexibility in effecting financings, stock splits or stock dividends,
stock plans and other transactions and arrangements involving the use of stock.
The Board of Directors has the authority to issue additional shares of Common
Stock without shareholder approval except as may be required by law or
regulatory agencies or by the applicable rules of the New York Stock Exchange.
Although the Corporation is always alert to opportunities, it has no present
intention to issue any of the newly authorized shares of Common Stock.
Furthermore, the Board of Directors is not proposing the increase in authorized
shares of Common Stock with the intention of discouraging tender offers or
takeover attempts. However, in the event of an unsolicited tender offer or
takeover proposal, the increased number of shares could give the Board of
Directors greater flexibility to act in the best interests of the Corporation
and its shareholders.
Unless required by law or by the applicable rules of the New York Stock
Exchange, no further authorization for the developmentissuance of an apartment complex near Charlotte. CLT Development Corp. is a
60 percent member inCommon Stock by the
venture, whose total development costs are expectedshareholders would be necessary, but any such issuance would be subject to be up to $4,250,000. Crandall C. Bowles, a directorthe
approval of the Company, is a
directorNorth Carolina Utilities Commission and The Public Service
Commission of Charter Properties, Inc. and its parent, The Springs Company, a
family-owned corporation.South Carolina.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
16
RATIFICATION OF APPOINTMENT OF AUDITORS
(PROPOSAL 3)
The Board of Directors, upon recommendation of the Audit Committee, has
reappointed, subject to shareholder ratification, the firm of Deloitte & Touche
LLP, certified public accountants, as independent auditors to make an
examination of the accounts of the CompanyCorporation for the year 1996.1999. If the
shareholders do not ratify this appointment, other certified public accountants
will be considered by the Board of Directors upon recommendation of the Audit
Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
A representative of Deloitte & Touche LLP will, as in prior years, attend
the annual meeting and will have the opportunity to make a statement and be
available to respond to appropriate questions.
APPROVALSHAREHOLDER PROPOSAL
(PROPOSAL 4)
THE CORPORATION HAS BEEN ADVISED THAT ROBERT B. MILLS (OWNER OF STOCK INCENTIVE PLAN
The following is a description ofRECORD OF
30 SHARES OF COMMON STOCK), 1443 GORSUCH AVENUE, BALTIMORE, MARYLAND 21218, AND
EDWARD LEWIS KING (OWNER OF RECORD OF 186 SHARES OF COMMON STOCK), 846
CANTERBURY ROAD NE, ATLANTA, GEORGIA 30324, INTEND TO PRESENT A PROPOSAL AT THE
ANNUAL MEETING.
THE SHAREHOLDER PROPOSAL AND SUPPORTING STATEMENT AND THE OPPOSING
STATEMENT OF THE BOARD OF DIRECTORS ARE SET FORTH BELOW.
A Shareholder Proposal to the Duke Power Company Stock Incentive
Plan (the "Plan"), adoptedfor consideration at its 1999
Annual Meeting
REFUSE PLUTONIUM FUEL FOR COMMERCIAL REACTORS
Whereas: The Department of Energy (DOE) plans to dispose of surplus weapons
plutonium by immobilization in ceramics and possibly as plutonium/uranium (MOX)
fuel for commercial reactors (to prevent diversion to bomb making and
environmental dispersal);
Whereas: Duke Power has expressed interest in using MOX fuel;
Whereas: I believe the public opposes using weapons plutonium fuel because I
believe it would: (1) be too dangerous because it would be more hazardous to
control during fissioning in reactors, increasing operating risks and component
aging; (2) still be weapons-usable, so would require heavy security in transit
and at reactors (greater proliferation potential than immobilization); (3) be
more costly to fabricate the fuel and to operate the reactors; (4) violate the
barrier between nuclear power and nuclear weapons; (5) generate nearly as much
new plutonium during fissioning as it initially contained, resulting in little
net loss of plutonium; (6) generate great quantities of radioactive waste,
exacerbating the already critical, unresolved problems of radioactive waste
storage; (7) increase the likelihood of locking the U.S. into a deadly
plutonium economy;
Whereas: The DOE has a poor track record over the last 23 years managing large
projects;
Whereas: The potential financial rewards are too small to justify the large
risks to some of the Company's most valuable assets;
Whereas: Cost-cutting to meet the new competition shakes public confidence that
Duke Energy could maintain adequate safety and security if the more risky
plutonium fuel were used;
THEREFORE BE IT RESOLVED that the shareholders request the Board of Directors
to establish a firm policy to refuse to use plutonium (MOX) fuel.
Shareholders Supporting Statement:
Weapons plutonium cannot be fissioned directly, but must undergo complicated
and dangerous processing, creating additional radioactive waste. No conversion
facilities exist in the U.S. It could be many years before MOX could be
produced, extending plutonium accessibility for diversion or theft. During
these delays, economic or technical conditions may close candidate reactors.
Regulatory uncertainties between the DOE and the Nuclear Regulatory Commission
(NRC) could complicate the process, introducing further adverse economic
conditions for the utility.
European experience using MOX is only from reprocessed commercial reactor
wastes, not the experimental weapons plutonium. European support for MOX is
declining. European reprocessing corporations are a driving force of the Company on January
30, 1996. If approved byMOX
promotion, and falsely claim that the shareholdersU.S. must use MOX to win Russia's
cooperation with surplus plutonium disposition.
17
Rather, the U.S. should lead in developing the most effective way to immobilize
weapons plutonium directly, and assist all others in this choice.
The safety of hundreds of future generations depends upon the careful isolation
of plutonium from the biosphere. Use of weapons plutonium in commercial
reactors would create a dangerous precedent. For economic, safety,
environmental, and nonproliferation reasons, I urge your supporting vote for
this proposal.
OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
In MOX fuel, a small amount of plutonium oxide (approximately 5%) is blended
with uranium oxide (approximately 95%). The resulting fuel is very similar to
the uranium fuel that is currently used in power reactors such as proposed herein, the Plan will
allow the Compensation Committee of the Board or another committee appointed by
the Board (the "Committee") to make various types of awards to officers and key
employees of the Company and its subsidiaries.
As of the date of this proxy statement, no awards have been made under the
Plan, nor has any determination been made as to any recipient of any award or
the size or type of any award. Currently, approximately 150 persons are eligible
to participatethose in the
Plan. The numberCorporation's McGuire and Catawba plants. There are decades of persons eligiblesuccessful
experience with MOX fuel, and it is widely used in Europe today. In France
alone, 17 pressurized water reactors, very similar to participatethose in the PlanMcGuire and
the number of grantees may vary from year to year.
The PlanCatawba plants, are currently using MOX fuel.
Using MOX fuel in U.S. reactors is reproduced in its entirety in Appendix A to this Proxy
Statement, and all capitalized terms used but not defined in the following
description are used as defined in the Plan. The following description is
qualified in all respects by reference to the full Plan document.
Approval of this proposal requires the affirmative vote of a majority of
the Company's shares of Common Stock present, or represented, and entitled to
vote at the annual meeting. Shares voted for the proposal and shares represented
by returned proxies that do not contain instructions to vote against the
proposal or to abstain from voting will be counted as shares cast for the
proposal. Shares will be counted as cast against the proposal if the
16
shares are voted either against the proposal or to abstain from voting. Broker
nonvotes will not change the number of votes cast for or against the proposal
and will not be treated as shares present or represented at the meeting.
ELIGIBILITY, DURATION AND OBJECTIVES
The Plan permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Units,
Performance Shares and Performance Units. Officers and key employees of the
Company and its subsidiaries ("Key Employees") are eligible to participate in
the Plan.
Subject to approval by the Company's shareholders, the Plan will become
effective as of April 25, 1996 (the "Effective Date") and will remain in effect
until all shares of Common Stock of the Company ("Shares") subject to it have
been purchased or acquired in accordance with the Plan. However, in no event may
an Award be granted under the Plan on or after April 25, 2006.
The objectives of the Plan are to optimize the profitability and growth of
the Company through incentives which are consistent with the Company's
objectives and which link the interests of Participants to those of the
Company's shareholders; to provide Participants with an incentive for excellence
in individual performance; and to promote teamwork among Participants. The Plan
is further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of Participants who make significant
contributions to the Company's success and to allow Participants to share in the
success of the Company.
The Plan is designed to allow the Committee the opportunity to grant
certain types of Awards that are exempt from the limitations of Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"). Under Section
162(m), the Company is not entitled to a federal income tax deduction for
compensation in excess of $1 million paid in any year to its chief executive
officer and its four other most highly compensated executive officers, subject
to certain exceptions. Compensation that qualifies as "performance-based" under
Section 162(m) is exempt from this limitation. The applicable conditions of this
exemption include, among others, a requirement that the shareholders of the
Company approve the material terms of the Plan. Options and SARs granted under
the Plan are designed to satisfy the requirements for the performance-based
exemption. Performance Shares and Performance Units, as well as Restricted Stock
and Restricted Units, that are based on the performance measures described below
may be granted by the Committee in a manner that meets the requirements for the
performance-based exemption, as the Committee deems advisable in its discretion.
The Compensation Committee may, however, grant Awards or take other actions
under the Plan that would not qualify for the performance-based exemption under
Section 162(m).
ADMINISTRATION
The Plan will be administered by the Committee, which (unless otherwise
determined by the Board) is intended to satisfy the "disinterested
administration" regulations of Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the "outside director" provisions of
Section 162 (m) of the Code. The members of the Committee will be appointed from
time to time by, and will serve at the discretion of, the Board of Directors.
Except as limited by law and subject to the provisions of the Plan, the
Committee will select Key Employees to participate in the Plan; determine the
sizes and types of Awards; determine the terms and conditions of Awards in a
manner consistent with the Plan; construe and interpret the Plan and any
agreement or instrument entered into under the Plan; establish, amend, or waive
rules and regulations for the Plan's administration; and amend the terms and
conditions of any outstanding Award to the extent such terms and conditions are
within the discretion
17
of the Committee as provided in the Plan. Further, the Committee will make such
other determinations as may be necessary or advisable in the administration of
the Plan.
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
Subject to adjustment as described below, up to 2,000,000 Shares may be
issued or transferred to Participants under the Plan. The maximum aggregate
number of Shares and Share equivalent units that may be granted during any
fiscal year of the Company to any one Participant under Options, Freestanding
SARs, Restricted Stock, Restricted Units or Performance Shares will be 100,000
Shares. This limit will apply regardless of whether such compensation is paid in
Shares or in cash. The maximum aggregate amount of compensation payable in
respect of Awards of Performance Units made during any fiscal year of the
Company to any one Participant will be $1,500,000, which limit shall apply
regardless of whether the compensation is paid in cash or in Shares (valued at
Fair Market Value at the applicable valuation date for payment of the award).
If any Award is canceled, terminates, expires, or lapses for any reason,
any Shares subject to such Award will again be available for grant under the
Plan, except that such Shares will still be counted for purposes of the
individual yearly Share award limit described above.
In the event of any change in corporate capitalization, such as a stock
split, or a corporate transaction, such as a merger, consolidation, separation,
or other distribution of stock or property of the Company including a spin-off,
or any reorganization, or any partial or complete liquidation of the Company, an
adjustment may be made in the number and class of Shares which may be delivered
under the Plan, in the number and class of and/or price of Shares subject to
outstanding Awards, and in the individual yearly Award limits set forth above,
as may be determined to be appropriate and equitable by the Committee, in its
sole discretion, to prevent dilution or enlargement of rights.
The approval of the North Carolina Utilities Commission and The Public
Service Commission of South Carolina is required for issuance of the Shares
under the Plan.
STOCK OPTIONS
The Committee may grant Incentive Stock Options and/or Nonqualified Stock
Options under the Plan. Each Option grant will be evidenced by an Award
Agreement specifying the Option Price, the duration of the Option, the number of
Shares to which the Option pertains, and such other provisions as the Committee
determines. The Option Price will be at least equal to 100% of the Fair Market
Value of a Share on the date the Option is granted. Each Option will expire as
the Committee determines at the time of grant; provided, however, that no Option
will be exercisable later than the tenth anniversary date of its grant. The
Committee may grant dividend equivalents with respect to Options granted, which
may be paid in cash or in Shares at the discretion of the Committee.
The Option Price will be payable to the Company in full at the time of
exercise, either: (a) in cash or its equivalent, or (b) if permitted in the
governing Award Agreement, by tendering previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the Option Price,
or (c) if permitted in the governing Award Agreement, by a combination of (a)
and (b). The Committee may also allow "cashless exercise" as permitted by law
and may authorize Company loans to Participants in connection with Option
exercises. Each Award Agreement will set forth the extent to which the
Participant will have the right to exercise the Option following termination of
the Participant's employment.
18
STOCK APPRECIATION RIGHTS
The Committee may grant Freestanding SARs, Tandem SARs, and/or any
combination of these forms of SAR under the Plan. The grant price of a
Freestanding SAR will equal the Fair Market Value of a Share on the date of
grant of the SAR. A Freestanding SAR may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes. The grant price of a
Tandem SAR will equal the Option Price of the related Option. A Tandem SAR may
be exercised for all or part of the Shares subjectinternational
nonproliferation initiative to dispose of surplus weapons plutonium in the
United States and Russia. Currently, surplus plutonium in both countries is
simply being stored, raising the risk (especially in Russia) that the plutonium
could be stolen, diverted, or re-used in weapons. The MOX fuel project involves
converting plutonium from nuclear weapons into MOX fuel and using that fuel in
commercial reactors. Irradiation of MOX fuel in a reactor destroys much of the
original plutonium and degrades the remainder so that it is no longer
attractive for weapons use. The program to dispose of surplus weapons material
was recommended by the National Academy of Sciences and has the strong support
of the U.S. government and other industrialized nations.
In the proposed program, surplus plutonium will be converted to plutonium
oxide, blended with uranium oxide, and fabricated into MOX fuel on a U.S.
government site (most likely the Savannah River Site in South Carolina). The
completed and sealed MOX fuel assemblies, virtually indistinguishable from
uranium fuel assemblies, will be shipped to the related Option uponMcGuire and Catawba plants for
irradiation. Many years of European experience, government-sponsored studies,
and evaluations by the surrenderCorporation indicate that MOX fuel can be used safely.
However, before receiving and irradiating MOX fuel at the McGuire and Catawba
plants, the Corporation must first apply for and receive amendments to their
respective facility operating licenses from the Nuclear Regulatory Commission
(NRC). In order to receive these necessary regulatory approvals, the
Corporation will have to demonstrate to the NRC that MOX fuel poses no
significant hazard to the health and safety of the right to exercisepublic.
The Corporation will pay substantially less for the MOX fuel than for the
equivalent portionquantity of uranium fuel. Therefore, the related
Option.Corporation will realize
direct economic benefits through lower nuclear fuel prices.
THE MOX FUEL PROGRAM OFFERS THE CORPORATION AN OPPORTUNITY TO BENEFIT ITS
SHAREHOLDERS AT THE SAME TIME AS IT MAKES A Tandem SAR may be exercised only with respect to the Shares for which
its related Option is then exercisable. Each SAR grant will be evidenced by an
Award Agreement that will specify the grant price, the term of the SAR, and such
other provisions as the Committee determines. The term of an SAR granted under
the Plan will be determined by the Committee, in its sole discretion; provided,
however, that such term will not exceed ten years.
Upon exercise of an SAR, a Participant will be entitled to receive payment
from the Company in an amount determined by multiplying the difference between
the Fair Market Value of a Share on the date of exercise of the SAR over the
grant price specifiedMEANINGFUL CONTRIBUTION TO
NONPROLIFERATION AND INTERNATIONAL SECURITY. IN THE WORDS OF THE LATE WILLIAM
S. LEE III, WHO WAS CHAIRMAN OF THE BOARD AND PRESIDENT OF THE CORPORATION FOR
MANY YEARS:
It's clearly in the Award Agreement by the numberinterest of Shares with
respectworld peace to which the SAR is exercised. At the discretion of the Committee, the
payment may be in cash, in Shares of equivalent value, or in some combination
thereof. Each Award Agreement will set forth the extent to which the Participant
will have the right to exercise the SAR following termination of the
Participant's employment.
RESTRICTED STOCK AND RESTRICTED UNITS
The Committee may grant Restricted Stock and/or Restricted Units under the
Plan. Each Restricted Stock or Restricted Unit grant will be evidenced by an
Award Agreement that will specify the Period(s) of Restriction, the number of
Shares (in the case of Restricted Stock) or Share equivalent units (in the case
of Restricted Units) granted, and such other provisions as the Committee will
determine. Except as providedmake a substantial
investment in the Plan, Sharessafe dismantling and disposal of Restricted Stock or
Restricted Units may not be sold, transferred, pledged, assigned, or otherwise
alienated untilnuclear weapons. The
opportunity to earn a return on that investment by reclaiming materials for
peaceful uses seems too sensible to ignore. We should move now to convert
our nuclear weapons to power plant fuel and assist others to do the end ofsame.
Twentieth century swords can literally become the applicable Period of Restriction or upon earlier
satisfaction of other conditions governing the Award. The Committee will impose
such other conditions or restrictions on any Restricted Stock or Restricted
Units granted pursuantplowshares that work to
the Plan as it may deem advisable.
The Company will retain the certificates representing Shares of Restricted
Stockfuel a growing, more prosperous global economy in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied. Restricted Units
will not be evidenced by stock certificates. During the Period of Restriction,
Participants holding Restricted Stock may exercise full voting rights with
respect to those Shares and Participants holding Restricted Stock or Restricted
Units will be credited with regular cash dividends or dividend equivalents, as
the case may be, paid with respect to the underlying Shares or Share equivalent
units while they are so held. Dividends and other distributions may be paid upon
such terms as the Committee establishes. Each Award Agreement will set forth the
extent to which the Participant has the right to retain unvested Restricted
Stock or Restricted Units following termination of the Participant's employment
with the Company. Such provisions will be determined in the sole discretion of
the Committee, and may reflect distinctions based on the reasons for termination
of employment; provided, however, that except in cases of terminations resulting
from a Change in Control and terminations by reason of death or Disability, the
vesting of Restricted Stock or Restricted Units which are designed to qualify
for the performance-based exemption under Section 162(m) of the Code will not be
accelerated.
PERFORMANCE UNITS AND PERFORMANCE SHARES
The Committee may grant Performance Units and/or Performance Shares under
the Plan. Each Performance Unit will have an initial value that is established
by the Committee at the time of grant. Each Performance Share
19
will have an initial value equal to the Fair Market Value of a Share on the date
of grant. The Committee will set performance periods and performance objectives
in its discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Units or Performance Shares
that will be paid out to the Participant. The Committee may pay earned
Performance Units or Performance Shares in cash, in Shares or in a combination
thereof. Shares may be paid subject to any restrictions deemed appropriate by
the Committee.
Unless otherwise set forth in the Award Agreement, in the event the
employment of a Participant is terminated by reason of death, Disability, or
Retirement during a Performance Period, the Participant will receive a payout of
the Performance Units or Performance Shares which is prorated as specified in
the Award Agreement. In the event that a Participant's employment terminates
during the applicable Performance Period for any reason other than death,
Disability or Retirement, all Performance Units or Performance Shares will be
forfeited, unless otherwise specified in the Award Agreement.
The performance measure(s) to be used to determine the level of payout or
vesting with respect to Awards designed to qualify for the performance-based
exception under Section 162(m) of the Code will be chosen from among the
following: total shareholder return (absolute or peer-group comparative); stock
price increase (absolute or peer-group comparative); dividend payout as a
percentage of net income; return on equity; return on capital; cash flow,
including operating cash flow, free cash flow, discounted cash flow return on
investment, and cash flow in excess of cost of capital; economic value added
(income in excess of capital costs); cost per kilowatt hour (absolute or
peer-group comparative); market share; and customer satisfaction as measured by
surveys.
The Committee may adjust determinations of the degree of attainment of the
pre-established performance objectives; provided, however, that Awards which are
designed to qualify for the performance-based exception may not be adjusted to
increase the compensation payable to a Participant.
AMENDMENT, MODIFICATION, AND TERMINATION
The Board may amend, modify or terminate the Plan as it deems advisable;
provided, however, that no amendment which requires shareholder approval in
order for the Plan to continue to comply with Rule 16b-3 under the Exchange Act
will be effective unless the amendment is approved by the Company's
shareholders. No termination, amendment, or modification of the Plan may
adversely affect in any material way any Award previously granted under the
Plan, without the written consent of the Participant holding such Award.
The Committee may make adjustments in the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or nonrecurring events
affecting the Company or of changes in applicable laws, regulations, or
accounting principles, if the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, subject to the
requirements of Code Section 162(m) in the case of Awards designed to qualify
for the performance-based exception.
OTHER
Upon the occurrence of a Change in Control (as defined in Section 2.5 of
the Plan), unless otherwise specifically prohibited under applicable laws or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all outstanding Options and SARs granted under the Plan
will become immediately exercisable and remain exercisable throughout their
entire term;
20
(b) Any Periods of Restriction and other restrictions imposed on
Restricted Stock or Restricted Units will lapse; except that vesting
associated with Restricted Stock or Restricted Units which is conditioned
upon the achievement of performance conditions will be determined in the
manner applicable to Performance Units and Performance Shares, as set forth
in (c) hereof.
(c) Except as otherwise provided in the Award Agreement, with certain
exceptions, the vesting of all Performance Units and Performance Shares
will be accelerated as of the effective date of the Change in Control, and
there will be paid out in cash to Participants a pro rata amount based upon
an assumed achievement of all relevant performance objectives at target
levels and upon the length of time within the Performance Period which has
elapsed prior to the effective date of the Change in Control. In the event,
however, the Committee determines that actual performance to the effective
date of the Change in Control exceeds target levels, the prorated payouts
will be made at levels commensurate with such actual performance based upon
the length of time within the Performance Period which has elapsed prior to
the effective date of the Change in Control.
Notwithstanding any other provision of the Plan or of any Award Agreement,
the Change-in-Control provisions of the Plan may not be terminated, amended, or
modified on or after the effective date of a Change in Control to affect
adversely any Award previously granted under the Plan without the prior written
consent of the Participant with respect to the Participant's outstanding Awards.
Committee and Board members will be indemnified and held harmless by the
Company against and from any loss or expense imposed upon or reasonably incurred
by them in connection with the Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general description of federal income tax consequences
to Participants and the Company relating to Options and other Awards that may be
granted under the Plan. This discussion does not purport to cover all tax
consequences relating to Options and other Awards.
A Participant will not recognize income upon the grant of a Nonqualified
Stock Option to purchase Shares. Upon exercise of the Option, the Participant
will recognize ordinary compensation income equal to the excess of the Fair
Market Value of the Shares on the date the Option is exercised over the exercise
price for such Shares. The tax basis of the Shares in the hands of the
Participant will equal the exercise price paid for the Shares plus the amount of
ordinary compensation income the Participant recognizes upon exercise of the
Option, and the holding period for the Shares will commence on the day the
Option is exercised. A Participant who sells any of such Shares will recognize
capital gain or loss measured by the difference between the tax basis of the
Shares and the amount realized on the sale. Such gain or loss will be long term
if the Shares are held for more than one year after exercise. The Company will
be entitled to a deduction equal to the amount of ordinary compensation income
recognized by the Participant. The deduction will be allowed at the same time
the Participant recognizes the income.
A Participant will not recognize income upon the grant of an Incentive
Stock Option to purchase Shares and will not recognize income upon exercise of
the Option, provided such Participant was an employee of the Company or a
Subsidiary at all times from the date of grant until three months prior to
exercise. Generally, the amount by which the Fair Market Value of the Shares on
the date of exercise exceeds the exercise price will be includable for purposes
of determining any alternative minimum taxable income of a Participant in the
year the Shares are sold. Where a Participant who has exercised an Incentive
Stock Option sells the Shares acquired upon exercise more than two years after
the grant date and more than one year after exercise, long-term capital gain or
loss will be recognized equal to the difference between the sales price and the
exercise price. A Participant who sells such
21
Shares within two years after the grant date or within one year after exercise
will recognize ordinary compensation income in an amount equal to the lesser of
the difference between (a) the exercise price and the Fair Market Value of such
Shares on the date of exercise or (b) the exercise price and the sales proceeds.
Any remaining gain or loss will be treated as a capital gain or loss. The
Company will be entitled to a deduction equal to the amount of ordinary
compensation income recognized by the optionee in this case. The deduction will
be allowable at the same time the Participant recognizes the income.
The current federal income tax consequences of other Awards authorized
under the Plan are generally in accordance with the following: SARs are taxed
and deductible by the Company in substantially the same manner as Nonqualified
Stock Options; Restricted Stock subject to a substantial risk of forfeiture
results in income recognition equal to the excess of the Fair Market Value of
the Shares over the purchase price (if any) only at the time the restrictions
lapse (unless the recipient elects to accelerate recognition as of the date of
grant); Restricted Units, Performance Shares, Performance Units and dividend
equivalents generally are subject to tax at the time of payment. In each of the
foregoing cases, the Company will generally have (at the time the Participant
recognizes income) a corresponding deduction.
The closing price of the Company's Common Stock on the New York Stock
Exchange on March 12, 1996, was $47.75 per share.21st century.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FORAGAINST THIS PROPOSAL.
18
OTHER BUSINESS
The BoardMATTERS
On the date this proxy statement went to press, management did not know of
Directors ofany other matters to be brought before the Company knows of nomeeting other matter tothan those described
in this proxy statement. If any matters come before the meeting. However, if any matter requiring a vote ofmeeting that are not
specifically set forth on the shareholders
should arise,proxy card and in this proxy statement, it is the
intention of the persons named in the enclosed form of
proxy card to vote such proxythereon in accordance
with their best judgment.
PROPOSALS FOR 19972000 ANNUAL MEETING
ShareholderShareholders who intend to present proposals intended to be presented at the 1997 annual meeting in 2000
pursuant to the procedures under Rule 14a-8 of the SEC, and who wish to have
such proposals included in the Corporation's proxy statement for that meeting,
must be certain that such proposals are received by the CompanySecretary of the
Corporation by November 19, 199612, 1999. Such proposals must meet the requirements set
forth in the rules and regulations of the SEC in order to be eligible for possible
inclusion in the proxy material relatingstatement for the 2000 annual meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Corporation's knowledge, based on information furnished to such meeting.it and
contained in the reports filed pursuant to Rule 16a-3 of the Exchange Act, as
well as any written representations that no other reports were required, all
applicable Section 16(a) filing requirements were complied with during the year
ended December 31, 1998.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'SCORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995,1998, WHICH IS REQUIRED TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION,SEC, WILL BE MADE
AVAILABLE TO SHAREHOLDERSHOLDERS OF COMMON STOCK TO WHOM THIS PROXY STATEMENT IS MAILED,
WITHOUT CHARGE, UPON WRITTEN REQUEST TO ALLEN STEWART,THE INVESTOR RELATIONS DEPARTMENT, DUKE
POWER COMPANY,ENERGY CORPORATION, P.O. BOX 1005, CHARLOTTE, NORTH CAROLINA 28201-1005.
Whether or not you plan to attend the meeting, please mark, sign, date and
promptly return the enclosed proxy in the enclosed envelope. No postage is
required for mailing in the United States.
By orderOrder of the Board of Directors
ELLEN T. RUFF
March 18, 1996RICHARD W. BLACKBURN
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
22
APPENDIX A
STOCK INCENTIVE PLAN
Duke Power Company
CONTENTS
PAGE
Article 1. Establishment, Objectives, and Duration........................................................ A-1
Article 2. Definitions.................................................................................... A-1
Article 3. Administration................................................................................. A-4
Article 4. Shares Subject to the Plan and Maximum Awards.................................................. A-4
Article 5. Eligibility and Participation.................................................................. A-5
Article 6. Stock Options.................................................................................. A-5
Article 7. Stock Appreciation Rights...................................................................... A-7
Article 8. Restricted Stock and Restricted Units.......................................................... A-8
Article 9. Performance Units and Performance Shares....................................................... A-9
Article 10. Performance Measures.......................................................................... A-10
Article 11. Beneficiary Designation....................................................................... A-11
Article 12. Deferrals..................................................................................... A-11
Article 13. Rights of Employees........................................................................... A-11
Article 14. Change in Control............................................................................. A-11
Article 15. Amendment, Modification, and Termination...................................................... A-12
Article 16. Withholding................................................................................... A-13
Article 17. Indemnification............................................................................... A-13
Article 18. Successors.................................................................................... A-13
Article 19. Legal Construction............................................................................ A-13
DUKE POWER COMPANY
STOCK INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Duke Power Company, aCharlotte, North Carolina
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "Duke Power Company Stock
Incentive Plan" (hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Nonqualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Units,
Performance Shares and Performance Units.
Subject to approval by the Company's stockholders, the Plan shall become
effective as of April 25, 1996 (the "Effective Date") and shall remain in effect
as provided in Section 1.3 hereof.
1.2 OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the
profitability and growth of the Company through incentives which are consistent
with the Company's objectives and which link the interests of Participants to
those of the Company's stockholders; to provide Participants with an incentive
for excellence in individual performance; and to promote teamwork among
Participants.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 15 hereof, until all Shares subject to it pursuant to
Article 4 shall have been purchased or acquired according to the Plan's
provisions. However, in no event may an Award be granted under the Plan on or
after April 25, 2006.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1 "AWARD" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Units, Performance Shares or Performance Units.
2.2 "AWARD AGREEMENT" means an agreement entered into by the Company and a
Participant setting forth the terms and provisions applicable to an Award or
Awards granted under this Plan to such Participant.
2.3 "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
2.4 "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
2.5 "CHANGE IN CONTROL" of the Company shall be deemed to have occurred (as
of a particular day, as specified by the Board) upon the occurrence of any event
described in this Section 2.5 as constituting a Change in Control.
A Change in Control will be deemed to have occurred as of the first day any
one (1) or more of the following paragraphs shall have been satisfied:
A-1March 12, 1999
19
(a) Any Person (other than the Company or a trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
or a corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company) becomes the Beneficial Owner,
directly or indirectly, of securities of the Company, representing
more than twenty-five percent (25%) of the combined voting power
of the Company's then outstanding securities; or
(b) During any period of two (2) consecutive years (not including any
period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board (and any new
Directors, whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds ( 2/3) of the Directors then still in office who either
were Directors at the beginning of the period or whose election or
nomination for election was so approved) cease for any reason
(except for death, Disability or voluntary Retirement ) to
constitute a majority thereof; or
(c) The stockholders of the Company approve: (i) a plan of complete
liquidation of the Company; or (ii) an agreement for the sale or
disposition of all or substantially all the Company's assets; or
(iii) a merger, consolidation, or reorganization of the Company
with or involving any other corporation, other than a merger,
consolidation, or reorganization that would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at
least seventy-five percent (75%) of the combined voting power of
the voting securities of the Company (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization.
However, in no event shall a Change in Control be deemed to have occurred,
with respect to a Participant, if that Participant is "part of a purchasing
group" which consummates the Change-in-Control transaction. The Participant
shall be deemed "part of a purchasing group" for purposes of the preceding
sentence if the Participant is an equity participant or has agreed to become an
equity participant in the purchasing company or group (except for (i) passive
ownership of less than three percent (3%) of the voting equity securities of the
purchasing company or (ii) ownership of equity participation in the purchasing
company or group which is otherwise deemed not to be significant, as determined
prior to the Change in Control by a majority of the nonemployee continuing
Directors).
2.6 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
2.7 "COMMITTEE" means, as specified in Article 3 herein, the Compensation
Committee of the Board or such other Committee as may be appointed by the Board
to administer the Plan.
2.8 "COMPANY" means[DUKE LOGO]
Duke Power Company, a North Carolina corporation, and
any successor thereto as provided in Article 18 herein.
2.9 "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
2.10 "DISABILITY" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan.
2.11 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.12 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
A-2
2.13 "FAIR MARKET VALUE" means the closing sale price of the relevant
security on the composite tape of New York Stock Exchange issues or, if there is
no such sale on the relevant date, then on the last previous day on which a sale
was reported.
2.14 "FREESTANDING SAR" means an SAR that is granted independently of any
Options, as described in Article 7 herein.
2.15 "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares
granted under Article 6 herein which is designated as an Incentive Stock Option
and which is intended to meet the requirements of Code Section 422.
2.16 "INSIDER" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.17 "KEY EMPLOYEE" means any officer or key employee of the Company or any
of its Subsidiaries. Directors who are not employed by the Company or its
Subsidiaries shall not be considered Key Employees under this Plan.
2.18 "NONEMPLOYEE DIRECTOR" means an individual who is a member of the
Board of Directors of the Company but who is not an employee of the Company or
any of its Subsidiaries.
2.19 "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
2.20 "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.
2.21 "OPTION PRICE" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
2.22 "PARTICIPANT" means a Key Employee who has outstanding an Award
granted under the Plan. The term "Participant" shall not include Nonemployee
Directors.
2.23 "PERFORMANCE-BASED EXCEPTION" means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).
2.24 "PERFORMANCE SHARE" means an Award granted to a Participant, as
described in Article 9 herein.
2.25 "PERFORMANCE UNIT" means an Award granted to a Participant, as
described in Article 9 herein.
2.26 "PERIOD OF RESTRICTION" means the period during which the transfer of
Shares of Restricted Stock/Units is limited in some way (based on the passage of
time, the achievement of performance objectives, or upon the occurrence of other
events as determined by the Committee, at its discretion), and the Restricted
Stock/Units are not vested.
2.27 "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
2.28 "RESTRICTED STOCK" means a contingent grant of stock awarded to a
Participant pursuant to Article 8 herein.
2.29 "RESTRICTED UNIT" means an Award granted to a Participant as described
in Article 8 herein.
A-3
2.30 "RETIREMENT" shall have the meaning ascribed to such term in the
Company's tax-qualified defined benefit retirement plan.
2.31 "SHARES" means the shares of Common Stock of the Company.
2.32 "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or
in connection with a related Option, designated as an SAR, pursuant to the terms
of Article 7 herein.
2.33 "SUBSIDIARY" means any corporation in which the Company owns directly
or indirectly through its Subsidiaries, at least 50% of the total combined
voting power of all classes of stock, or any other entity (including but not
limited to partnerships and joint ventures) in which the Company owns directly
or indirectly at least 50% of the total combined equity thereof.
2.34 "TANDEM SAR" means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board, or by any other Committee appointed by the Board, which
Committee (unless otherwise determined by the Board) shall satisfy the
"disinterested administration" regulations of Rule 16b-3 under the Exchange Act
and the "outside director" provisions of Code Section 162(m), or any successor
regulations or provisions. The members of the Committee shall be appointed from
time to time by, and shall serve at the discretion of, the Board of Directors.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law and subject to the
provisions herein, the Committee shall have full power to select Key Employees
who shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan; establish, amend, or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 15 herein)
amend the terms and conditions of any outstanding Award to the extent such terms
and conditions are within the discretion of the Committee as provided in the
Plan. Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law
and consistent with Section 3.1, the Committee may delegate its authority as
identified herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan shall be final, conclusive and
binding on all persons, including the Company, its stockholders, employees,
Participants, and their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as
provided in Section 4.3 herein, the number of Shares that may be issued or
transferred to Participants under the Plan shall be two million (2,000,000).
The following rules shall apply to grants of Awards under the Plan:
(a) SHARE-BASED AWARDS. The maximum number of Shares and Share
equivalent units that may be granted during any fiscal year of the
Company, to any one Participant, under Options, Freestanding SARs,
Restricted Stock, Restricted Units or Performance Shares, shall be
one hundred thousand
A-4
(100,000) Shares (on an aggregate basis for all such types of
Awards), which limit shall apply regardless of whether such
compensation is paid in Shares or in cash.
(b) CASH-BASED AWARDS. The maximum aggregate amount of compensation
payable in respect of Awards of Performance Units made during any
fiscal year of the Company to any one Participant shall be one
million five hundred thousand dollars ($1,500,000), which limit
shall apply regardless of whether the compensation is paid in cash
or in Shares (valued at Fair Market Value at the applicable
valuation date for payment of the Award).
4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason, any Shares subject to such Award
again shall be available for the grant of an Award under the Plan (other than
for purposes of subsection 4.1(a) above.)
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation or other distribution of stock or
property of the Company, including a spin-off, or any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under
Section 4.1, in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, and in the Award limits set forth in
subsections 4.1(a) and 4.1(b), as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that the number of Shares subject to
any Award shall always be a whole number. The provisions of this Section shall
be subject to the requirements of Code Section 162(m) in the case of Awards that
are designed to qualify for the Performance-Based Exception.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan consist of
all Key Employees, including Key Employees who are members of the Board.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all Key Employees, those to whom
Awards shall be granted and shall determine the nature and amount of each Award.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee.
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Code Section 422, or an
NQSO whose grant is intended not to fall under the provisions of Code Section
422.
6.3 OPTION PRICE. The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted.
A-5
6.4 DURATION OF OPTIONS. Each Option granted to a Key Employee shall expire
at such time as the Committee shall determine at the time of grant; provided,
however, that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.
6.5 DIVIDEND EQUIVALENTS. The Committee may grant dividend equivalents in
connection with Options granted under this Plan. Such dividend equivalents may
be payable in cash or in Shares, upon such terms as the Committee, in its sole
discretion, deems appropriate.
6.6 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each Award or for each Participant.
6.7 PAYMENT. Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) if permitted in
the governing Award Agreement, by tendering previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the total Option
Price or (c) if permitted in the governing Award Agreement, by a combination of
(a) and (b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law. In addition, the Committee may authorize
loans by the Company to Participants in connection with Option exercises, upon
such terms and subject to such limits that the Committee, in its sole
discretion, deems appropriate.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s) less Shares withheld to satisfy
withholding tax obligations.
6.8 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as the Committee deems necessary or advisable,
including, without limitation, restrictions under applicable Federal securities
laws, under the requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and under any blue sky or state securities
laws applicable to such Shares.
6.9 TERMINATION OF EMPLOYMENT. Each Participant's Option Award Agreement
shall set forth the extent to which the Participant shall have the right to
exercise the Option following termination of the Participant's employment with
the Company or a Subsidiary. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreement entered
into with each Participant, need not be uniform among all Options issued
pursuant to this Article 6, and may reflect distinctions based on the reasons
for termination of employment.
6.10 NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by such
Participant.
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(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article
6 may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, except as otherwise provided in
a Participant's Award Agreement, all NQSOs granted to a
Participant under this Article 6 shall be exercisable during his
or her lifetime only by such Participant.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
The Committee shall have sole discretion in determining the number of SARs
granted to each Participant (subject to Article 4 herein) and, consistent with
the provisions of the Plan, in determining the terms and conditions pertaining
to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
7.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
7.3 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.
7.4 AWARD AGREEMENT. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Committee shall determine.
7.5 TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the
date of exercise of the SAR over the grant price specified in the
Award Agreement; by
(b) The number of Shares with respect to which the SAR is exercised.
At the sole discretion of the Committee, the payment upon SAR exercise may
be in cash, in Shares of equivalent value, or in some combination thereof.
7.7 SECTION 16 REQUIREMENTS. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of an SAR (including,
without limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Rule 16b-3
of the Exchange Act or any successor rule.
7.8 TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company or a
Subsidiary. Such provisions shall be determined in the sole discretion of the
Committee, shall
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be included in the Award Agreement entered into with Participants, need not be
uniform among all SARs issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination of employment.
7.9 NONTRANSFERABILITY OF SARS. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.
ARTICLE 8. RESTRICTED STOCK AND RESTRICTED UNITS
8.1 GRANT OF RESTRICTED STOCK/UNITS. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant Restricted
Stock and/or Restricted Units to Participants in such amounts as the Committee
shall determine. Each grant of Restricted Stock shall be represented by the
number of Shares to which the Award relates. Each grant of Restricted Units
shall be represented by the number of Share equivalent units to which the Award
relates.
8.2 AWARD AGREEMENT. Each Restricted Stock/Unit grant shall be evidenced by
an Award Agreement that shall specify the Period(s) of Restriction, the number
of Shares or Share equivalent units granted, and such other provisions as the
Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this Article 8, the Restricted
Stock/Units granted herein may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the end of the applicable Period of
Restriction established by the Committee and as specified in the Award
Agreement, or upon earlier satisfaction of any other conditions, as specified by
the Committee in its sole discretion and as set forth in the Award Agreement.
All rights with respect to Restricted Stock/Units granted to a Participant under
the Plan shall be available only to such Participant during his or her lifetime.
8.4 OTHER RESTRICTIONS. Subject to Article 11 herein, the Committee shall
impose such other conditions and/or restrictions on any Restricted Stock/Units
granted pursuant to the Plan as it may deem advisable including, without
limitation, restrictions based upon the achievement of specific performance
objectives (Company-wide, business unit, and/or individual), time-based
restrictions on vesting following the attainment of the performance objectives,
and/or restrictions under applicable Federal or state securities laws.
The Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
8.5 PAYMENT OF AWARDS. Except as otherwise provided in this Article 8, (i)
Shares covered by each Restricted Stock grant made under the Plan shall become
freely transferable by the Participant after the last day of the applicable
Period of Restriction and (ii) Share equivalent units covered by each Restricted
Unit grant made under the Plan shall be paid out to the Participant in cash
promptly following the last day of the applicable Period of Restriction, based
on the Fair Market Value of a Share on the date immediately preceding the date
of such payment.
8.6 VOTING RIGHTS. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.7 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants holding Shares of Restricted Stock/Units granted hereunder shall be
credited with regular cash dividends or dividend equivalents paid with respect
to the underlying Shares or Share equivalent units while they are so held. Such
dividends may
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be paid currently, accrued as contingent cash obligations, or converted into
additional Shares or units of Restricted Stock/Units, upon such terms as the
Committee establishes.
The Committee may apply any restrictions to the crediting and payment of
dividends and other distributions that the Committee deems advisable. Without
limiting the generality of the preceding sentence, if the grant or vesting of
Restricted Stock/Units is designed to qualify for the Performance-Based
Exception, the Committee may apply any restrictions it deems appropriate to the
payment of dividends declared with respect to such Restricted Stock/Units, such
that the dividends and/or the Restricted Stock/Units maintain eligibility for
the Performance-Based Exception.
8.8 TERMINATION OF EMPLOYMENT. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain unvested
Restricted Stock/Units following termination of the Participant's employment
with the Company or a Subsidiary. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Awards of
Restricted Stock/Units issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination of employment; provided, however, that
except in cases of terminations resulting from a Change in Control and
terminations by reason of death or Disability, the vesting of Restricted
Stock/Units which are designed to qualify for the Performance-Based Exception
shall not be accelerated.
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan,
Performance Units and/or Performance Shares may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.
9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance objectives in
its discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Units/Shares that will be paid
out to the Participant. For purposes of this Article 9, the time period during
which the performance objectives must be met shall be called a "Performance
Period" and shall be set by the Committee in its discretion.
9.3 EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this Plan,
after the applicable Performance Period has ended, the holder of Performance
Units/Shares shall be entitled to receive payout on the number and value of
Performance Units/Shares earned by the Participant over the Performance Period,
to be determined as a function of the extent to which the corresponding
performance objectives have been achieved.
9.4 AWARD AGREEMENT. Each grant of Performance Units and/or Performance
Shares shall be evidenced by an Award Agreement which shall specify the material
terms and conditions of the Award, and such other provisions as the Committee
shall determine.
9.5 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of
earned Performance Units/Shares shall be made within seventy-five (75) calendar
days following the close of the applicable Performance Period in a manner
designated by the Compensation Committee, in its sole discretion. Subject to the
terms of this Plan, the Committee, in its sole discretion, may pay earned
Performance Units/Shares in the form of cash or in Shares (or in a combination
thereof). Such Shares may be paid subject to any restrictions deemed appropriate
by the Committee.
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9.6 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT.
Unless determined otherwise by the Committee and set forth in the Participant's
Award Agreement, in the event the employment of a Participant is terminated by
reason of death, Disability, or Retirement during a Performance Period, the
Participant shall receive a payout of the Performance Units/Shares which is
prorated, as specified by the Committee in its discretion in the Award
Agreement. Payment of earned Performance Units/Shares shall be made at a time
specified by the Committee in its sole discretion and set forth in the
Participant's Award Agreement.
9.7 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant's employment terminates during a Performance Period for any reason
other than those reasons set forth in Section 9.6 herein, all Performance
Units/Shares shall be forfeited by the Participant to the Company, unless
determined otherwise by the Committee in the Participant's Award Agreement.
9.8 NONTRANSFERABILITY. Except as otherwise provided in a Participant's
Award Agreement, Performance Units/Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant or the
Participant's legal representative.
ARTICLE 10. PERFORMANCE MEASURES
Unless and until the Committee proposes for shareholder approval and the
Company's shareholders approve a change in the general performance measures set
forth in this Article 10, the attainment of which may determine the degree of
payout and/or vesting with respect to Awards which are designed to qualify for
the Performance-Based Exception, the performance measure(s) to be used for
purposes of such grants shall be chosen from among the following alternatives:
(a) Total shareholder return (absolute or peer-group comparative)
(b) Stock price increase (absolute or peer-group comparative)
(c) Dividend payout as percentage of net income
(d) Return on equity
(e) Return on capital
(f) Cash flow, including operating cash flow, free cash flow,
discounted cash flow return on investment, and cash flow in
excess of cost of capital
(g) Economic value added (income in excess of capital costs)
(h) Cost per kWh (absolute or peer-group comparative)
(i) Market share
(j) Customer satisfaction as measured by survey instruments
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the pre-established performance objectives; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception may not be adjusted upward (the Committee shall retain the discretion
to adjust such Awards downward), except to the extent permitted under Code
Section 162(m) to reflect accounting changes or other events.
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In the event that Code Section 162(m) or applicable tax and/or securities
laws change to permit Committee discretion to alter the governing performance
measures without obtaining shareholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining shareholder
approval. In addition, in the event that the Committee determines that it is
advisable to grant Awards which shall not qualify for the Performance-Based
Exception, the Committee may make such grants without satisfying the
requirements of Code Section 162(m).
ARTICLE 11. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of the death of the
Participant before he or she receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same Participant, shall
be in a form prescribed by the Committee, and will be effective only when filed
by the Participant in writing with the Company during the Participant's
lifetime. In the absence of any such designation, benefits remaining unpaid at
the Participant's death shall be paid to the Participant's estate.
ARTICLE 12. DEFERRALS
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to Restricted
Stock/Units, or the satisfaction of any requirements or objectives with respect
to Performance Units/Shares. If any such deferral election is permitted or
required, the Committee shall, in its sole discretion, establish rules and
procedures for such deferrals.
ARTICLE 13. RIGHTS OF EMPLOYEES
13.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company or any Subsidiary to terminate any Participant's
employment at any time, or confer upon any Participant any right to continue in
the employ of the Company or such Subsidiary.
13.2 PARTICIPATION. No Key Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
ARTICLE 14. CHANGE IN CONTROL
14.1 TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all outstanding Options and SARs granted hereunder shall
become immediately exercisable, and shall remain exercisable
throughout their entire term;
(b) Any Periods of Restriction and restrictions imposed on Restricted
Stock/Units shall lapse; provided, however, that the degree of
vesting associated with Restricted Stock/Units which has been
conditioned upon the achievement of performance conditions
pursuant to Section 8.4 herein shall be determined in the manner
set forth in Section 14.1(c) herein;
(c) Except as otherwise provided in the Award Agreement, the vesting
of all Performance Units and Performance Shares shall be
accelerated as of the effective date of the Change in Control, and
there shall be paid out in cash to Participants within thirty (30)
days following the effective date of the
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Change in Control a pro rata amount based upon an assumed
achievement of all relevant performance objectives at target
levels, and upon the length of time within the Performance Period
which has elapsed prior to the effective date of the Change in
Control; provided, however, that in the event the Committee
determines that actual performance to the effective date of the
Change in Control exceeds target levels, the prorated payouts
shall be made at levels commensurate with such actual performance
(determined by extrapolating such actual performance to the end of
the Performance Period), based upon the length of time within the
Performance Period which has elapsed prior to the effective date
of the Change in Control; and provided, further, that there shall
not be an accelerated payout with respect to Awards of Performance
Units or Performance Shares which qualify as "derivative
securities" under Section 16 of the Exchange Act which were
granted less than six (6) months prior to the effective date of
the Change in Control.
14.2 TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 14 may not be terminated,
amended, or modified on or after the effective date of a Change in Control to
affect adversely any Award theretofore granted under the Plan without the prior
written consent of the Participant with respect to said Participant's
outstanding Awards.
ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION
15.1 AMENDMENT, MODIFICATION, AND TERMINATION. Subject to Section 14.2
herein, the Board may at any time and from time to time, alter, amend, modify or
terminate the Plan in whole or in part; provided, however, that no amendment
which requires shareholder approval in order for the Plan to continue to comply
with Rule 16b-3 under the Exchange Act, or any successor rule, shall be
effective unless such amendment shall be approved by the requisite vote of
shareholders of the Company entitled to vote thereon.
The Committee shall not have the authority to cancel outstanding Awards and
issue substitute Awards in replacement thereof.
15.2 ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.3 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Committee determines that such adjustments are appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, subject to the requirements of
Code Section 162(m) for the Performance-Based Exception in the case of Awards
designed to qualify for the Performance-Based Exception.
15.3 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award.
15.4 COMPLIANCE WITH CODE SECTION 162(M). At all times when Code Section
162(m) is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Committee determines that such compliance is not desired with respect to any
Award or Awards available for grant under the Plan, then compliance with Code
Section 162(m) will not be required. In addition, in the event that changes are
made to Code Section 162(m) to permit greater flexibility with respect to any
Award or Awards available under the Plan, the Committee may, subject to this
Article 15, make any adjustments it deems appropriate.
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ARTICLE 16. WITHHOLDING
16.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
16.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
the Company may satisfy the withholding requirement, in whole or in part, by
withholding Shares having a Fair Market Value (determined on the date the
Participant recognizes taxable income on the Award) equal to the withholding tax
which is required to be collected on the transaction. The Participant may elect,
subject to the approval of the Committee, to deliver the necessary funds to
satisfy the withholding obligation to the Company, in which case there will be
no reduction in the Shares otherwise distributable to the Participant.
ARTICLE 17. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in a settlement approved
by the Company, or paid by him or her in satisfaction of any judgment in any
such action, suit, or proceeding against him or her, provided he or she shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he or she undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE 18. SUCCESSORS
All obligations of the Company under the Plan or any Award Agreement with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase of all or substantially all of the business and/or assets of
the Company, or a merger, consolidation, or otherwise.
ARTICLE 19. LEGAL CONSTRUCTION
19.1 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
19.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
19.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Share
and/or cash payouts under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
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19.4 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 under the Exchange Act, or any successor rule. To the extent any provision
of the plan or action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Committee. The exceptions to the transferability and exercisability restrictions
specified in Sections 6.10(b), 7.9 and 9.8 herein shall not apply to Awards
whose grant is intended to be exempt under Rule 16b-3 and meet the requirements
of Rule 16b-3(d) (1) (ii) or any applicable successor rule.
19.5 GOVERNING LAW. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of North Carolina.
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(Duke Power Citizenship Service logo appears here)
************************************************************************
APPENDIX
(Form of proxy for general shareholders)
Duke Power Company (Map appears here)Energy Corporation
Annual Meeting of Shareholders
April 25, 199615, 1999 at 10:00 a.m.
Peace Center for the Performing Arts
101 West BroadEnergy Center-O.J. Miller Auditorium
526 South Church Street
Greenville, SCCharlotte, NC
[Map of Charlotte Location Appeared Here]
- --------------------------------------------------------------------------------
DUKE POWER COMPANYENERGY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W.H. Grigg,R.B. Priory, R.J. Osborne and Ellen T. Ruff,R.W. Blackburn,
and each of them, proxies, with the powers the undersigned would possess if
personally present, and with full power of substitution, to vote all shares of
Common Stock of Duke Power CompanyEnergy Corporation of the undersigned at the annual meeting
of shareholders to be held in the PeaceEnergy Center, for the Performing Arts, 101
West Broad526 South Church Street,
Greenville, SouthCharlotte, North Carolina, on April 25, 1996,15, 1999, and at any adjournment thereof,
upon all subjects that may come before the meeting, including the matters
described in the proxy statement furnished herewith, subject to any directions
indicated on the reverse side of this card. IF NO DIRECTIONS ARE GIVEN, THE
INDIVIDUALS DESIGNATED ABOVE WILL VOTE FOR THE ELECTION OF ALL CLASS II DIRECTOR
NOMINEES, IN ACCORD WITH THE DIRECTORS' RECOMMENDATIONRECOMMENDATIONS ON THE OTHER SUBJECTS
LISTED ON THE REVERSE OF THIS CARD AND AT THEIR DISCRETION ON ANY OTHER MATTER
THAT MAY COME BEFORE THE MEETING.
Your vote for the election of Class II directors may be indicated on the reverse.
Nominees are G. Alex Bernhardt, Sr., William A. Coley, William H. GriggMax Lennon and Max Lennon.Leo E.
Linbeck, Jr.
Please sign on reverse and return promptly in the enclosed return envelope.
[DUKE ENERGY LOGO
APPEARS HERE]
To Participants in the Duke Energy
Retirement Savings Plan:
As a participant in the Duke Energy Retirement Savings Plan, you have the right
to direct the Plan trustee in the voting of those shares of Duke Energy Common
Stock that are held by the Plan and allocated to your Plan account, on any
issues presented at Duke Energy's 1999 annual shareholder meeting, to be held
April 15 in Charlotte, N.C.
I encourage you to read the enclosed Proxy Statement and to complete the
attached proxy to direct the voting of the shares allocated to your Plan
account. Your Plan participant proxy will be treated confidentially. If you
doelect not sign andto return a completed proxy, or attendshares allocated to your Plan account
will be voted by the meeting, yourPlan trustee in the same proportion as those shares cannot be voted.
PLEASE SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
DEAR SHAREHOLDER:
It's my pleasure to inviteheld by
the Plan for which the Plan trustee has received direction from Plan
participants. Even though you to Duke Power's annual meeting of shareholders,
which begins at 10 a.m., Thursday, April 25, 1996, atmay have returned a proxy for shares owned outide
the Peace Center for
the Performing Arts, 101 West Broad Street, Greenville, S.C.
Please plan to attend this year's meeting to learn more about your Company's
performance in 1995 and the outlook for the year ahead. Whether or notPlan, you are ableencouraged to join us in Greenville, please readexercise your proxy
statementrights by completing and return your completed ballot as soon as possible.
Thank you for your support. I hope to see you personally atreturning
the Peace
Center on April 25.enclosed proxy.
Sincerely,
W.H. GriggR.B. Priory
Chairman of the Board, President and
Chief Executive Officer
Directors recommend a vote "For""FOR" Items A, B,1, 2 and C
A.3 and a vote "AGAINST" Item 4
1. Election of the four directors who will constitute Class II of
the Board of Directors. (pages 1-6)
To vote your shares for all director nominees, or to withhold voting for
all nominees, mark the appropriate box. If you do not wish your shares
voted for a particular director nominee, mark the "For*" box and enter
the name(s) of the exception(s)exceptions in the space provided.
B.2. Proposal to increase the authorized Common Stock of
the Corporation from 500,000,000 shares to
1,000,000,000 shares.
3. Ratification of Auditors. (page 16)
C. Approvalappointment of the Duke Power Company Stock Incentive Plan. (pages 16-22)
If you plan to attend the meeting, please indicate on the ballot below
and see reverse for additional information. This detachable portion may
be presented for admission to the meeting.
(2 arrows pointing down)auditors.
4. Shareholder proposal
BEFORE MAILING, PLEASE DETACH THIS PORTION.(2 arrows pointing down)
================================================================================
[DUKE ENERGY LOGO
APPEARS HERE]
- --------------------------------------------------------------------------
1. Withhold A.* Except for the following
For All For* Authority B.------------------ ----------------
[ ] [ ] [ ] ------------------ ----------------
------------------ ----------------
- ---------------------------------------------------------------------------
------------------------
2.
For Against Abstain
[ ] [ ] [ ]
------------------------
JOHN A SHAREHOLDER ------------------------ ------------------------
422 S. CHURCH STREET 3. 4.
PB01H For Against Abstain For Against Abstain
CHARLOTTE, NC 28242-0001 [ ] [ ] [ ] [ ] [ ] [ ]
*Except for the following:
C. For Against Abstain
[ ] [ ] [ ]------------------------ ------------------------
If you plan to attend the meeting, please mark: [ ]
If you do not wish to receive an Annual Report for this account, please mark:[ ]
ALLOCATION OF SHARES HELD BY RSP AS OF MARCH 1, 1996FEBRUARY 22, 1999
Shares
Account Number300.0352
Sign here as
------------------------------------
name(s) appears above X Date , 1996
Please sign this proxy and return it promptly whether or not you
plan to attend the meeting.,1999
------------------------------------ -----------------
PLEASE SIGN THIS PROXY AND RETURN IT PROMPTLY WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING. If signing for a corporation or partnership or as agent, attorney
or fiduciary, indicate the capacity in which you are signing. Each joint owner
should sign. If you do attend the meeting and decide to vote by ballot, such
vote will supersede this proxy.
(Form of proxy for participants[DUKE ENERGY LOGO
APPEARS HERE]
DEAR SHAREHOLDER:
I hope you will join me and your fellow shareholders at Duke Energy's annual
meeting, which begins at 10:00 a.m., Thursday, April 15, in Stock Purchase-Savings Program)
DUKE POWER COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W.H. Grigg, R.J. Osborne and Ellen T. Ruff, and
each of them, proxies, with the powersO.J. Miller
Auditorium, located in the undersigned would possess if
personally present, and with full power of substitution,Energy Center, 526 South Church St.,
Charlotte, North Carolina.
Shareholders will be asked to vote all shares
of Common Stock of Duke Power Company of the undersigned at the annual meeting
of shareholders to be held in the Peace Center for the Performing Arts, 101
West Broad Street, Greenville, South Carolina, on April 25, 1996, and at
any adjournment thereof, upon all subjects that may come before the meeting,
including the matters described in the proxy statement furnished herewith,
subject to any directions indicated on the reverse side of this card. IF
NO DIRECTIONS ARE GIVEN, THE INDIVIDUALS DESIGNATED ABOVE WILL VOTE FOR THE
ELECTION OF ALL CLASS II DIRECTOR NOMINEES, IN ACCORD WITH THE DIRECTORS'
RECOMMENDATION ON THE OTHER SUBJECTS LISTED ON THE REVERSE OF THIS CARD
AND AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY COME BEFORE THE
MEETING.
Your vote for the election of Class IIfour directors, may be indicated ona proposal
to increase the reverse. Nominees are G. Alex Bernhardt, William A. Coley, William H. Griggauthorized Common Stock, the ratification of appointment of
auditors and Max Lennon.
Ifa shareholder proposal.
I hope to see you do not take advantage of the opportunity to vote your shares, your
Stock Purchase-Savings Program shares will voted according to the rules of
the New York Stock Exchange in a manner which may not reflect your wishes.
PLEASE SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
TO PARTICIPANTS OF THE DUKE POWER COMPANY STOCK PURCHASE-SAVINGS PROGRAM:
You are receiving the enclosed proxy material as a participant in Duke Power's
Stock Purchase-Savings Program. You have the right as beneficial owner of
shares credited to your account to direct the voting of those shares on any
issues presented at Duke Power's 1996 annual shareholders' meetingpersonally on April 2515 in Greenville, S.C.
If you do not complete and return this proxy, shares held in your Stock
Purchase-Savings Program account will be voted under New York Stock
Exchange rules and may not reflect your wishes. I encourage you to exercise
your voting rights as a shareholder by completing and returning the
attached proxy, even though you may have already returned another proxy
for any other shares you own.Charlotte.
Sincerely,
W.H. GriggR.B. Priory
Chairman of the Board, President and
Chief Executive Officer
Directors recommend a vote "For""FOR" Items A, B,1, 2 and C
A.3 and a vote "AGAINST" Item 4
1. Election of the four directors who will constitute Class II of
the Board of Directors. (pages 1-6)
To vote your shares for all director nominees, or to withhold voting for
all nominees, mark the appropriate box. If you do not wish your shares
voted for a particular director nominee, mark the "For*" box and enter
the name(s) of the exception(s)exceptions in the space provided.
B.2. Proposal to increase the authorized Common Stock of
the Corporation from 500,000,000 shares to
1,000,000,000 shares.
3. Ratification of Auditors. (page 16)
C. Approvalappointment of the Duke Power Company Stock Incentive Plan. (pages 16-22)
(2 arrows pointing down)auditors.
4. Shareholder proposal
BEFORE MAILING, PLEASE DETACH THIS PORTION.(2 arrows pointing down)
================================================================================
[DUKE ENERGY LOGO
APPEARS HERE]
- --------------------------------------------------------------------------
1. Withhold A.* Except for the following
For All For* Authority B.------------------ ----------------
[ ] [ ] [ ] ------------------ ----------------
------------------ ----------------
- ---------------------------------------------------------------------------
------------------------
2.
For Against Abstain
[ ] [ ] [ ]
------------------------
JOHN A SHAREHOLDER ------------------------ ------------------------
422 S. CHURCH STREET 3. 4.
PB01H For Against Abstain For Against Abstain
CHARLOTTE, NC 28242-0001 [ ] [ ] [ ] [ ] [ ] [ ]
*Except for the following:
C. For Against Abstain
[ ] [ ] [ ]------------------------ ------------------------
If you plan to attend the meeting, please mark: [ ]
If you do not wish to receive an Annual Report for this account, please mark:[ ]
ALLOCATION OF SHARES HELD BY RSP AS OF MARCH 1, 1996FEBRUARY 22, 1999
Shares Account Number
300.0352 000052335
Sign here as
------------------------------------
name(s) appears above X Date , 1996
Please sign this proxy and return it promptly whether or not you
plan to attend the meeting.,1999
------------------------------------ -----------------
PLEASE SIGN THIS PROXY AND RETURN IT PROMPTLY WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING. If signing for a corporation or partnership or as agent, attorney
or fiduciary, indicate the capacity in which you are signing. Each joint owner
should sign. If you do attend the meeting and decide to vote by ballot, such
vote will supersede this proxy.
(Form of proxy for participants in Employee Stock Ownership Plan)
DUKE POWER COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W.H. Grigg, R.J. Osborne and Ellen T. Ruff, and
each of them, proxies, with the powers the undersigned would possess if
personally present, and with full power of substitution, to vote all shares
of Common Stock of Duke Power Company of the undersigned at the annual meeting
of shareholders to be held in the Peace Center for the Performing Arts, 101
West Broad Street, Greenville, South Carolina, on April 25, 1996, and at
any adjournment thereof, upon all subjects that may come before the meeting,
including the matters described in the proxy statement furnished herewith,
subject to any directions indicated on the reverse side of this card. IF
NO DIRECTIONS ARE GIVEN, THE INDIVIDUALS DESIGNATED ABOVE WILL VOTE FOR THE
ELECTION OF ALL CLASS II DIRECTOR NOMINEES, IN ACCORD WITH THE DIRECTORS'
RECOMMENDATION ON THE OTHER SUBJECTS LISTED ON THE REVERSE OF THIS CARD
AND AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY COME BEFORE THE
MEETING.
Your vote for the election of Class II directors may be indicated on the
reverse. Nominees are G. Alex Bernhardt, William A. Coley, William H. Grigg
and Max Lennon.
If you do not take advantage of the opportunity to vote your shares, your
Employee Stock Ownership Plan shares will not be voted.
PLEASE SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
TO PARTICIPANTS OF THE DUKE POWER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN:
You are receiving the enclosed proxy material as a participant in Duke Power's
Employee Stock Ownership Plan. You have the right as beneficial owner of
shares credited to your account to direct the voting of those shares on any
issues presented at Duke Power's 1996 annual shareholders' meeting on
April 25 in Greenville, S.C.
If you do not complete and return this proxy, shares held in your Employee
Stock Ownership Plan account will not be voted. I encourage you to exercise
your voting rights as a shareholder by completing and returning the
attached proxy, even though you may have already returned another proxy
for any other shares you own.
Sincerely,
W.H. Grigg
Chairman of the Board
and Chief Executive Officer
Directors recommend a vote "For" Items A, B, and C
A. Election of the four directors who will constitute Class II of the Board
of Directors. (pages 1-6)
To vote your shares for all director nominees, or to withhold voting for
all nominees, mark the appropriate box. If you do not wish your shares
voted for a particular director nominee, mark the "For*" box and enter
the name(s) of the exception(s) in the space provided.
B. Ratification of Auditors. (page 16)
C. Approval of the Duke Power Company Stock Incentive Plan. (pages 16-22)
(2 arrows pointing down)BEFORE MAILING, PLEASE DETACH THIS
PORTION.(2 arrows pointing down)
Withhold
A. For All For* Authority B. For Against Abstain
[ ] [ ] [ ] [ ] [ ] [ ]
*Except for the following:
C. For Against Abstain
[ ] [ ] [ ]
If you plan to attend the meeting, please mark: [ ]
SHARES HELD AS OF MARCH 1, 1996
Sign here as
name(s)
appears above X Date , 1996
Please sign this proxy and return it promptly whether or not you
plan to attend the meeting. If signing for a corporation or
partnership or as agent, attorney or fiduciary, indicate the
capacity in which you are signing. Each joint owner should sign.
If you do attend the meeting and decide to vote by ballot, such
vote will supersede this proxy.