Thank you for your continued investment in Duke Energy.
Please take time to vote now. If you choose to vote by mail, you may do so by marking, dating, and signing the proxy card, and returning it to us. Please follow the voting instructions, that are includedwhich can be found on your proxy card. Regardless of the manner in which you vote, we urge and greatly appreciate your prompt response.
As part of our commitment to corporate governance, we have a track record of engaging with shareholders year-round to discuss and obtainrespond to their feedback on our corporate governance andpractices as well as executive compensation, practices. During the Fallenvironmental, and social matters of 2017,interest to shareholders. In 2019, we reached out to holders of approximately 36%one-third of our outstanding common shares and held meetings with the holders of approximately 30%25% of our outstanding common shares, manysome of which included participation by members of the Board. The agenda for these conversations spanned a variety of topics, including our strategic vision, our operational priorities, the strength of our Board and leadership team, our commitment to ESG issues, our human capital management, and our executive compensation sustainability and governance such as director skills and diversity and the Board's oversight over key risk areas for Duke Energy, including environmental, health and safety.program. We also discussed the shareholder proposals that were votedand received positive feedback on our goals to reduce carbon emissions from electricity generation by at the 2017 Annual Meeting, including a proposal seeking a report on the impactsleast 50% from 2005 levels by 2030 and to Duke Energy of climate change. The feedback received during those discussions helped inform us as we prepared our Climate Report published in March 2018. Also, as a result of feedback receivedreach net-zero emissions from shareholders, we enhanced our policy prohibiting hedging and pledging of our common stock and the Compensation Committee enhanced its disclosures related to performance shares in this proxy statement. A more complete discussion of our corporate governance engagement program and these changes is included on pages 21 and 36.
The Corporate Governance Committee, comprised of only independent directors, has recommended the following current directors as nominees for director, and the Board has approved their nomination for election to serve on the Board. We have a declassified Board, which means all of the directors are voted on every year at the Annual Meeting.
If any director is unable to stand for election, the Board may reduce the number of directors or designate a substitute. In that case, shares represented by proxies may be voted for a substitute director. We do not expect that any nominee will be unavailable or unable to serve.
 |
|
12 DUKE ENERGY – 2018 Proxy Statement
Table of Contents
PROPOSAL 1: ELECTION OF DIRECTORS
| | | | | John T. Herron       | | | | | | Independent Director Nominee |  | | Age: 64
Director of Duke Energy since 2013
Retired President, Chief Executive Officer and Chief Nuclear Officer, Entergy Nuclear | | Committees:•
Nuclear Oversight Committee (Chair)
•
Regulatory Policy and Operations Committee
Other current public directorships:
•
None
|
Mr. Herron was President, Chief Executive Officer and Chief Nuclear Officer of Entergy Nuclear from 2009 until his retirement in 2013. Mr. Herron joined Entergy Nuclear in 2001 and held a variety of positions. He began his career in nuclear operations in 1979 and has held positions at a number of nuclear stations across the country. Mr. Herron is a director of Ontario Power Generation and also has served on the Institute of Nuclear Power Operations' board of directors. |
Skills and qualifications: |
Mr. Herron's qualifications for election include his knowledge and extensive insight gained as a senior executive in the utility industry, including his three decades of experience in nuclear energy. During Mr. Herron's career, and particularly during his time as Chief Executive Officer and Chief Nuclear Officer of Entergy Nuclear, he gained significant financial, regulatory, environmental and risk management expertise as well as an understanding of utility customers. Mr. Herron also had direct responsibility for the management of cybersecurity as Chief Executive Officer and Chief Nuclear Officer of Entergy Nuclear. |
James B. Hyler, Jr. | | | | |
ü |
|
Incentive compensation tied to a clawback policy | | | | |
ü |
|
Consistent level of severance protection | | | | |
ü |
|
Shareholder approval policy for severance agreements | | | | |
ü |
|
Equity award granting policy | | | | |
ü |
|
Independent compensation consultant | | | | |
ü |
|
Annual tally sheets for executive officers | | | | |
ü |
|
Review and consideration of prior year's "say-on-pay" vote | | | | |
ü |
|
Do not encourage excessive or inappropriate risk-taking | | | | |
ü |
|
No tax gross-ups | | | | |
ü |
|
No "single trigger" vesting of stock awards upon a change in control | | | | |
ü |
|
No employment agreements except for the CEO | | | | |
ü |
|
No excessive perquisites | | | | |
ü |
|
Enhanced disclosure of performance goals | | | | |
ü |
|
Minimum vesting requirement of one year for stock awards, subject to limited exceptions | | | | | Independent Director Nominee |  | | Age: 70
Director of Duke Energy since 2012
Retired Vice Chairman and Chief Operating Officer, First Citizens BancShares, Inc. | | Committees:•
Audit Committee
•
Regulatory Policy and Operations Committee (Chair)
Other current public directorships:
•
None
|
8 DUKE ENERGY – 2020 Proxy Statement
Table of Contents
PROPOSAL 1: ELECTION OF DIRECTORS The Board of Directors |
Mr. Hyler was Vice Chairman and Chief Operating Officer of First Citizens BancShares, a company involved in commercial banking, from 1994 until 2008, President from 1988 until 1994 and Chief Financial Officer from 1980 until 1988. Prior to joining First Citizens BancShares, Mr. Hyler was an auditor with Ernst & Young for 10 years. Mr. Hyler served as a director of First Citizens BancShares from 1988 until 2008 and as Managing Director of Morehead Capital Management, LLC from December 2011 until December 2015. |
Skills and qualifications: |
Mr. Hyler's qualifications for election include his understanding of Duke Energy's North Carolina service territory and his knowledge and expertise in financial services, regulatory matters, corporate finance and risk management gained during his career in finance as Vice Chairman and Chief Operating Officer of First Citizens BancShares as well as his role with Morehead Capital Management. |
The Corporate Governance Committee, comprised of only independent directors, has recommended the following current directors as nominees for director, and the Board has approved their nomination for election to serve on the Board. We have a declassified Board, which means all the directors are voted on every year at the Annual Meeting. If any director is unable to stand for election, the Board may reduce the number of directors or designate a substitute. In that case, shares represented by proxies may be voted for a substitute director. We do not expect that any nominee will be unavailable or unable to serve. Our Principles for Corporate Governance includes a director tenure policy in addition to a retirement policy. The Board believes that it is very important to monitor the Board's composition, skills, and needs in the context of Duke Energy's overall strategy, and, therefore, our Principles for Corporate Governance includes a range for the Board to consider retirement. Pursuant to this policy, the Board may determine not to nominate a director who has reached the age of 70 or 15 years of service on the Board if, after examining the Board composition and impending Board retirements in light of the Company's strategy, the Board determines it is in the best interest of Duke Energy and our shareholders. Similarly, the Board may determine that it is in the best interest of Duke Energy and our shareholders for a director to remain on the Board. However, the Board will not nominate a director for election at the Annual Meeting in the calendar year following the year of his or her 75th birthday without a waiver of this policy from the Board. DUKE ENERGY – 2018 Proxy Statement 13
Table of Contents
PROPOSAL 1: ELECTION OF DIRECTORS
| | | | | William E. Kennard | | | | | | Independent Director Nominee |  | | Age: 61
Director of Duke Energy since 2014
Non-Executive Chairman, Velocitas Partners, LLC | | Committees:•
Corporate Governance Committee
•
Finance and Risk Management Committee
Other current public directorships:
•
AT&T Inc.
•
Ford Motor Company • MetLife, Inc. |
Mr. Kennard has been Co-Founder and Non-Executive Chairman of Velocitas Partners, an asset management firm, since November 2014. He also serves as an advisor to Staple Street Capital and Astra Capital Management, both private equity firms. Prior to joining Velocitas Partners, Mr. Kennard served as Senior Advisor at Grain Management from October 2013 until November 2014, United States Ambassador to the European Union from 2009 until August 2013, Managing Director of The Carlyle Group from 2001 until 2009, and Chairman of the Federal Communications Commission ("FCC") from 1997 until 2001. | | | | | | | | | | | | | | |
Skills and qualifications: | | | | | | | | | | | | | | |
Mr. Kennard's qualifications for election include his considerable experience and knowledge of the regulatory arena, as well as his financial, legal and risk management knowledge obtained during his career as a lawyer and investor in the technology and telecommunications sector, and as Chairman of the FCC and United States Ambassador. |
E. Marie McKee | | 69 | | ü | | 2012 | | Retired Senior Vice President, Corning Incorporated | | ü | | •
•
| | •
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Marya M. Rose | | 57 | | | | 2019 | | Vice President and Chief Administrative Officer, Cummins Inc. | | ü | | • Compensation • Regulatory Policy | | • None | | | | | | | Independent Director Nominee |  | | Age: 67
Director of Duke Energy since 2012
Retired Senior Vice President, Corning Incorporated | | Committees:•
Compensation Committee (Chair)
•
Corporate Governance Committee
Other current public directorships:
•
None
|
Ms. McKee is a retired Senior Vice President of Corning Incorporated, a manufacturer of components for high-technology systems for consumer electronics, mobile emissions controls, telecommunications and life sciences. Ms. McKee has over 35 years of experience obtained at Corning, where she held a variety of management positions with increasing levels of responsibility, including Senior Vice President of Human Resources from 1996 until 2010, President of Steuben Glass from 1998 until 2008, and President of The Corning Museum of Glass and The Corning Foundation from 1998 until 2014. |
Skills and qualifications: |
Ms. McKee's qualifications for election include her senior management experience in human resources, which provides her with a thorough knowledge of employment and compensation practices. Her prior experience as a senior executive of Corning Incorporated has also given her excellent operating skills and an understanding of financial matters and her exposure to environmental regulations and risk management with regard to the manufacturing process aids the Board in its oversight of environmental, health and safety matters. |
14 DUKE ENERGY – 2018 Proxy Statement
Table of Contents
PROPOSAL 1: ELECTION OF DIRECTORS
| | | | | Charles W. Moorman IV | | | | | | | Independent Director Nominee | |  | | Age: 66
Director of Duke Energy since 2016
Senior Advisor, Amtrak | | | | | | | | | | | | | CommitteesThomas E. Skains:
| | 63 | | | | 2016 | | Retired Chairman, President and CEO, Piedmont Natural Gas Company, Inc. | | ü | | • Nuclear Oversight CommitteeFinance and Risk Management
• Regulatory Policy and Operations Committee(C) | | Other current public directorships:
• Chevron Corporation
|
Mr. Moorman is Senior Advisor to Amtrak. He has served in this position since January 2018. Prior to that date, Mr. Moorman served as President and Chief Executive Officer of Amtrak since August 2016. Previously, Mr. Moorman served as Chairman and Chief Executive Officer of Norfolk Southern Corporation and was Special Advisor to the Chief Executive Officer of Norfolk Southern from October 2015 until December 31, 2015. Prior to his retirement, he served as Chairman of Norfolk Southern from 2006 until 2015 and as Chief Executive Officer from 2005 until 2015. |
Skills and qualifications: |
Mr. Moorman's qualifications for election include experience in business, regulatory issues, finance, technology, strategy, risk management and safety and environmental issues as a result of his career at a large public company in the freight and transportation industry. His experience with Amtrak also gives him reliable insight into customer needs. |
Carlos A. Saladrigas | | | | | | Independent Director Nominee |  | | Age: 69
Director of Duke Energy since 2012
Chairman, Regis HR Group | | Committees:•
Audit Committee
•
Compensation Committee
Other current public directorships:
•
None
|
Mr. Saladrigas is Chairman of Regis HR Group, which offers a full suite of outsourced human resources services to small and mid-sized businesses. He has served in this position since July 2008. Mr. Saladrigas served as Chairman of Concordia Healthcare Holdings, LLC, which specializes in managed behavioral health, from 2011 until 2017. Prior to joining Regis HR Group and Concordia Healthcare Holdings, LLC, he served as Vice Chairman from 2007 until 2008, and as Chairman from 2002 until 2007 of Premier American Bank. Mr. Saladrigas served as Chief Executive Officer of ADP Total Source (previously the Vincam Group, Inc.) from 1984 until 2002. |
Skills and qualifications: |
Mr. Saladrigas' qualifications for election include his extensive expertise in human resources, risk management and finance as well as his understanding of customer needs in Duke Energy's Florida service territory. |
DUKE ENERGY – 2018 Proxy Statement 15
Table of Contents
PROPOSAL 1: ELECTION OF DIRECTORS
| | | | | Thomas E. Skains | | | | | | Independent Director Nominee |  | | Age: 61
Director of Duke Energy since 2016
Retired Chairman, President and Chief Executive Officer, Piedmont Natural Gas | | Committees:•
Nuclear Oversight Committee
•
Regulatory Policy and Operations Committee
Other current public directorships:
•
BB&TTruist Financial Corporation
• National Fuel Gas Company | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | William E. Webster, Jr. | | 66 | | | | 2016 | | Retired Executive Vice President, Institute of Nuclear Power Operations | | ü | | • Audit • Operations and Nuclear Oversight | | • None | | | | | | | | | | | | | | | | |
4 DUKE ENERGY – 2020 Proxy Statement
Table of Contents 
DUKE ENERGY – 2020 Proxy Statement 5
Table of Contents Shareholder Engagement (pages 21 and 36) As part of our commitment to corporate governance, we have a track record of engaging with shareholders year-round to discuss and respond to their feedback on our corporate governance practices as well as executive compensation, environmental, and social matters of interest to shareholders. In 2019, we reached out to holders of approximately one-third of our outstanding common shares and held meetings with the holders of approximately 25% of our outstanding common shares, some of which included participation by members of the Board. The agenda for these conversations spanned a variety of topics, including our strategic vision, our operational priorities, the strength of our Board and leadership team, our commitment to ESG issues, our human capital management, and our executive compensation program. We also discussed and received positive feedback on our goals to reduce carbon emissions from electricity generation by at least 50% from 2005 levels by 2030 and to reach net-zero emissions from electricity generation by 2050. 
- *
- Information provided for director nominees
6 DUKE ENERGY – 2020 Proxy Statement
Table of Contents Corporate Governance Highlights (page 26) | | | | | | | | ü | | Ability for shareholders to nominate directors through proxy access | | | | | | ü | | Independent Lead Director with clearly defined role and responsibilities | | | | | | ü | | Majority voting for directors with mandatory resignation policy and plurality carve-out for contested elections | | | | | | ü | | Robust year-round shareholder engagement program, including director involvement | | | | | | ü | | Annual Board, committee, and director assessments | | | | | | ü | | Ability for shareholders to take action by less than unanimous written consent | | | | | | ü | | Ability for shareholders to call a special shareholder meeting | | | | | | ü | | Clearly defined environmental and social initiatives and goals | | | | | | ü | | Annual election of all directors | | | | | | ü | | Independent Board committees | | | | | | ü | | Policy to prohibit all hedging and pledging of corporate securities | | | | | | ü | | Independent directors meet in executive session at each regularly scheduled Board meeting | | | | | | ü | | Regular Board refreshment | | | | | | ü | | Board responsiveness to majority support of shareholder proposals | | | | | | ü | | Each share of common stock is equal to one vote | | | | |
Executive Compensation Highlights (page 36) Principles and Objectives Our executive compensation program is designed to: - •
- Link pay to performance
- •
- Attract and retain talented executive officers and key employees
- •
- Emphasize performance-based compensation to motivate executives and key employees
- •
- Reward individual performance
- •
- Encourage long-term commitment to Duke Energy and align the interests of executives with shareholders
We meet these objectives through the appropriate mix of compensation, including: - •
- Base salary
- •
- Short-term incentives
- •
- Long-term incentives, consisting of performance shares and RSUs
DUKE ENERGY – 2020 Proxy Statement 7
Table of Contents 
Key Executive Compensation Features (page 41) | | | | | | |
ü |
|
Significant stock ownership requirements (6x base salary for the CEO) | | | | |
ü |
|
Stock holding policy | | | | |
ü |
|
Incentive compensation tied to a clawback policy | | | | |
ü |
|
Consistent level of severance protection | | | | |
ü |
|
Shareholder approval policy for severance agreements | | | | |
ü |
|
Equity award granting policy | | | | |
ü |
|
Independent compensation consultant | | | | |
ü |
|
Annual tally sheets for executive officers | | | | |
ü |
|
Review and consideration of prior year's "say-on-pay" vote | | | | |
ü |
|
Do not encourage excessive or inappropriate risk-taking | | | | |
ü |
|
No tax gross-ups | | | | |
ü |
|
No "single trigger" vesting of stock awards upon a change in control | | | | |
ü |
|
No employment agreements except for the CEO | | | | |
ü |
|
No excessive perquisites | | | | |
ü |
|
Enhanced disclosure of performance goals | | | | |
ü |
|
Minimum vesting requirement of one year for stock awards, subject to limited exceptions | | | | |
8 DUKE ENERGY – 2020 Proxy Statement
Table of Contents
PROPOSAL 1: ELECTION OF DIRECTORS The Corporate Governance Committee, comprised of only independent directors, has recommended the following current directors as nominees for director, and the Board has approved their nomination for election to serve on the Board. We have a declassified Board, which means all the directors are voted on every year at the Annual Meeting. If any director is unable to stand for election, the Board may reduce the number of directors or designate a substitute. In that case, shares represented by proxies may be voted for a substitute director. We do not expect that any nominee will be unavailable or unable to serve. Our Principles for Corporate Governance includes a director tenure policy in addition to a retirement policy. The Board believes that it is very important to monitor the Board's composition, skills, and needs in the context of Duke Energy's overall strategy, and, therefore, our Principles for Corporate Governance includes a range for the Board to consider retirement. Pursuant to this policy, the Board may determine not to nominate a director who has reached the age of 70 or 15 years of service on the Board if, after examining the Board composition and impending Board retirements in light of the Company's strategy, the Board determines it is in the best interest of Duke Energy and our shareholders. Similarly, the Board may determine that it is in the best interest of Duke Energy and our shareholders for a director to remain on the Board. However, the Board will not nominate a director for election at the Annual Meeting in the calendar year following the year of his or her 75th birthday without a waiver of this policy from the Board. Majority Voting for the Election of Directors Under Duke Energy's By-Laws, in an uncontested election at which a quorum is present, a director-nominee will be elected if the number of votes cast "FOR" the nominee's election exceeds the number of votes cast as "WITHHOLD" from that nominee's election. Abstentions and broker non-votes do not count. In addition, Duke Energy has a resignation policy in our Principles for Corporate Governance, which requires an incumbent director who has more votes cast as "WITHHOLD" from that nominee's election than votes cast "FOR" his or her election to tender his or her letter of resignation for consideration by the Corporate Governance Committee. In contested elections, directors will be elected by plurality vote. For purposes of the By-Laws, a "contested election" is an election in which the number of nominees for director is greater than the number of directors to be elected. DUKE ENERGY – 2020 Proxy Statement 9
Table of Contents PROPOSAL 1: ELECTION OF DIRECTORS Board Biographical Information, Skills, and Qualifications | | | | | Michael G. Browning  | | | | | | | Independent Director Nominee
Independent Lead Director |  | | Age: 73
Director of Duke Energy since 2006
Chairman, Browning Consolidated, LLC | | Committees: • Compensation Committee • Corporate Governance Committee (Chair) • Regulatory Policy Committee Other current public directorships: • None |
Mr. Browning has been Chairman of Browning Consolidated, LLC (and its predecessor), a real estate development firm, since 1981 and served as President from 1981 until 2013. He also serves as owner, general partner, or managing member of various real estate entities. Mr. Browning is a former director of Standard Management Corporation, Conseco, Inc., and Indiana Financial Corporation. Mr. Browning has served as Independent Lead Director since January 1, 2016. |
Skills and qualifications: Mr. Browning's qualifications for election include his management experience as well as his knowledge and understanding of customers' needs in Duke Energy's Midwest service territory gained during his long career as the Chairman of Browning Consolidated, a real estate development firm located in Indiana. Mr. Browning's financial and investment expertise adds a valuable perspective to the Board and its committees. | | | | | Annette K. Clayton     | | | | | | | | Independent Director Nominee |  | | Age: 56
Director of Duke Energy since 2019
President and CEO,
North America Operations,
Schneider
Electric SA | | Committees: • Audit Committee • Operations and Nuclear Oversight Committee Other current public directorships: • Polaris Industries Incorporated |
Ms. Clayton has been President and CEO of the North America Operations of Schneider Electric, a global electrical equipment manufacturer, and a member of the Executive Committee since June 2016. She also served as Chief Supply Chain Officer from June 2016 until January 2019. From May 2011 to June 2016, she served as Executive Vice President of Schneider Electric and a Member of the Executive Committee, Hong Kong. Prior to her employment at Schneider Electric, Ms. Clayton served at Dell, Inc. as Vice President of Global Supply Chain Operations and Vice President of Dell Americas operations, and at General Motors as President of their Saturn subsidiary, Corporate Vice President of Global Quality, and a member of their strategy board. |
Skills and qualifications: Ms. Clayton's qualifications for election include her experience as senior management of Schneider Electric overseeing the strategic direction and financial accountability of the North America operations. In her role as President and CEO of Schneider Electric's North America Operations, she has gained experience in customer service through her direct responsibility for the customer call centers, in cybersecurity and technology through Schneider Electric's work with the government on cybersecurity infrastructure, and the digital transformation of their supply chain, and in environmental and regulatory matters through her oversight of Schneider Electric's Safety and Environment function. She also has human capital management experience through her work on talent management initiatives, succession planning, and supply chain workforce planning at Schneider Electric. These skills uniquely fit the skill sets that benefit Duke Energy in our corporate strategy. 
10 DUKE ENERGY – 2020 Proxy Statement
Table of Contents PROPOSAL 1: ELECTION OF DIRECTORS | | | | | | Theodore F. Craver, Jr. | | | | | | | | Independent Director Nominee |  | | Age: 68
Director of Duke Energy since 2017
Retired Chairman, President and CEO,
Edison International | | Committees: • Audit Committee (Chair) • Regulatory Policy Committee Other current public directorships: • Wells Fargo & Company |
Mr. Craver was Chairman, President and CEO of Edison International, the parent company of a large California utility and various competitive electric businesses, from 2008 until his retirement in 2016. From 2005 to 2007, Mr. Craver served as CEO of Edison Mission Energy, a subsidiary of Edison International. Prior to his appointment as CEO of Edison Mission Energy, Mr. Craver served as CFO of Edison International from 2000 to 2004. He started at Edison International in 1996 after leaving First Interstate Bancorp where he was Executive Vice President and Corporate Treasurer. Mr. Craver is a former member of the ESCC, the organization that is the principal liaison between the federal government and the electric power sector responsible for coordinating efforts to prepare for, and respond to, national-level disasters or threats to critical infrastructure. Mr. Craver currently serves as a Senior Advisor to Blackstone's Global Infrastructure Fund and as a Senior Advisor to Bain & Company. He is also a member of the Economic Advisory Council of the Federal Reserve Bank of San Francisco, on the Board of Advisors of Mobility Impact Partners, and, in 2019, joined the Advisory Board of the Center on Cyber and Technology Innovation, which is a research institute focusing on national security and foreign policy. Mr. Craver is also a member of the Board of Trustees of the California Chapter of The Nature Conservancy. |
Skills and qualifications: Mr. Craver's qualifications for election include his experience as CEO of Edison International, which gives him in-depth knowledge of the utility industry and the regulatory arena, including environmental regulations, as well as his financial and risk management experience obtained as a CFO at Edison International, and at First Interstate Bancorp as the Chair of the Asset and Liability Committee, which was responsible for the oversight of risk management within the organization. Mr. Craver's experience in the industry also gives him a keen awareness of the needs of utility customers during this time of industry change. In addition, Mr. Craver's experience with grid cybersecurity as a member of the Steering Committee of the ESCC and as a member of the Advisory Board of the Center on Cyber and Technology Innovation gives him insight into this crucial area for Duke Energy. In 2018, he earned the CERT Certificate in Cybersecurity Oversight from the National Association of Corporate Directors.
DUKE ENERGY – 2020 Proxy Statement 11
Table of Contents PROPOSAL 1: ELECTION OF DIRECTORS | | | | | Robert M. Davis | | | | | | | | Independent Director Nominee |  | | Age: 53
Director of Duke Energy since 2018
CFO and Executive Vice President, Global Services, Merck | | Committees: • Compensation Committee • Finance and Risk Management Committee Other current public directorships: • None |
Mr. Davis has been CFO since April 2014 and CFO and Executive Vice President, Global Services since 2016 for Merck, a global healthcare company that provides prescription medicines, vaccines, and other health solutions. Prior to Merck, Mr. Davis worked for Baxter International, Inc. as Corporate Vice President and President of Medical Products from 2010 to 2014, Corporate Vice President and President of Baxter International's renal business in 2010, Corporate Vice President and CFO from 2006 to 2010, and Treasurer from 2004 to 2006. Mr. Davis previously served on the board of directors of C.R. Bard until its merger with Becton, Dickinson and Company in December 2017. |
Skills and qualifications: Mr. Davis' qualifications for election include his significant experience in regulatory matters, finance, and risk management obtained during his service as the CFO of Merck, where enterprise risk management and finance are within his areas of responsibility, as well as his prior experience gained in a variety of management and finance roles at Baxter International. Mr. Davis' legal knowledge, obtained when he earned his Doctor of Jurisprudence, adds additional insight to the Board's discussions of legal and risk issues. Mr. Davis also has significant experience with technology and cybersecurity as a result of his direct oversight over those areas during his time as CFO of Merck and at Baxter International. Mr. Davis' experience at Merck provides valuable insight into navigating an industry undergoing rapid transformation. | | | | | | Daniel R. DiMicco | | | | | | | | Independent Director Nominee |  | | Age: 69
Director of Duke Energy since 2007
Chairman Emeritus, Retired President and CEO, Nucor Corporation | | Committees: • Corporate Governance Committee • Regulatory Policy Committee Other current public directorships: • Hennessy Capital Acquisition Corp. III |
Mr. DiMicco has served as Chairman Emeritus of Nucor, a steel company, since December 2013. He served as Executive Chairman of Nucor from January 2013 until December 2013 and as Chairman from May 2006 until December 2012. He served as CEO from September 2000 until December 2012 and President from September 2000 until December 2010. Mr. DiMicco was a member of the Nucor board of directors from 2000 until 2013 and is the former Chairman of the American Iron and Steel Institute. |
Skills and qualifications: Mr. DiMicco's qualifications for election include his management, finance, and risk management experience gained during his time as CEO of a Fortune 500 company, which served many constituencies. In addition, his experience as CEO of Nucor, a large industrial company headquartered in North Carolina and with operations in the Midwest, provides a valuable perspective on Duke Energy's industrial customer class as well as extensive knowledge of regulatory issues and environmental regulations in Duke Energy's Carolinas and Midwest service territories.
12 DUKE ENERGY – 2020 Proxy Statement
Table of Contents PROPOSAL 1: ELECTION OF DIRECTORS | | | | | | Nicholas C. Fanandakis | | | | | | | | Independent Director Nominee |  | | Age: 63
Director of Duke Energy since 2019
Retired Executive Vice President, DuPont
de Nemours, Inc. (formerly known as
DowDuPont, Inc.) | | Committees: • Audit Committee • Finance and Risk Management Committee Other current public directorships: • ITT Inc. • FTI Consulting, Inc. |
Mr. Fanandakis is a retired Executive Vice President of DuPont, a holding company with agriculture, materials science, and specialty products businesses. Mr. Fanandakis served as Executive Vice President and CFO at E.I. du Pont de Nemours and Company from 2009 until January 2019 and as Executive Vice President of DuPont until his retirement in July 2019. Prior to 2009, Mr. Fanandakis served in various plant, marketing, product management, and business director roles in the DuPont organization since 1979. |
Skills and qualifications: Mr. Fanandakis' qualifications for election include his management experience gained during his career in numerous areas of DuPont. In addition to his management experience, Mr. Fanandakis' expertise in finance, tax, banking, and risk management at a company undergoing transformation is an asset to Duke Energy's Board.
| | | | | | Lynn J. Good | | | | | | | Non-Independent Director Nominee
Chair |  | | Age: 60
Director of Duke Energy since 2013
Chair, President and CEO,
Duke Energy Corporation | | Committees: • None Other current public directorships: • The Boeing Company |
Ms. Good has served as Chair, President and CEO of Duke Energy since January 1, 2016, and was Vice Chair, President and CEO of Duke Energy from July 2013 through December 2015. She served as Executive Vice President and CFO of Duke Energy from July 2009 through June 2013. She is a former director of Hubbell Incorporated. |
Skills and qualifications: Ms. Good is our Chair, President and CEO and was previously our CFO. Her extensive financial and risk management background as well as her knowledge of the affairs of Duke Energy and our business make her uniquely suited to lead our Board and Duke Energy. Her many years of experience in the utility industry, her knowledge of the associated regulatory issues, technologies, environmental regulations, and customer focus, provide valuable resources for the Board.
DUKE ENERGY – 2020 Proxy Statement 13
Table of Contents PROPOSAL 1: ELECTION OF DIRECTORS | | | | | | John T. Herron | | | | | | | | Independent Director Nominee |  | | Age: 66
Director of Duke Energy since 2013
Retired President, CEO and Chief Nuclear Officer, Entergy Nuclear | | Committees: • Finance and Risk Management Committee • Operations and Nuclear Oversight Committee (Chair) Other current public directorships: • None |
Mr. Herron was President, CEO and Chief Nuclear Officer of Entergy Nuclear, the nuclear operations of Entergy Corporation, an electric utility, from 2009 until his retirement in 2013. Mr. Herron joined Entergy Nuclear in 2001 and held a variety of positions. He began his career in nuclear operations in 1979 and, through his career, held positions at a number of nuclear stations across the country. Mr. Herron is a director of Ontario Power Generation and also has served on the board of directors of INPO. |
Skills and qualifications: Mr. Herron's qualifications for election include his knowledge and extensive insight gained as a senior executive in the utility industry, including his three decades of experience in nuclear energy. In addition to his nuclear expertise, during Mr. Herron's career, and particularly during his time as CEO and Chief Nuclear Officer of Entergy Nuclear, he gained significant financial, regulatory, and environmental expertise, as well as an understanding of utility customers. He also obtained risk management expertise, a required skill for those tasked with overseeing the operation of nuclear power plants. Mr. Herron also had direct responsibility for the management of cybersecurity as CEO and Chief Nuclear Officer of Entergy Nuclear.
| | | | | | William E. Kennard | | | | | | | | Independent Director Nominee |  | | Age: 63
Director of Duke Energy since 2014
Co-Founder and Non-Executive Chairman, Velocitas Partners, LLC | | Committees: • Corporate Governance Committee • Finance and Risk Management Committee (Chair) Other current public directorships: • AT&T Inc. • Ford Motor Company • MetLife, Inc. |
Mr. Kennard has been Co-Founder and Non-Executive Chairman of Velocitas Partners, an asset management firm, since November 2014. He also serves as an advisor to Staple Street Capital and Astra Capital Management, both private equity firms. Prior to joining Velocitas Partners, Mr. Kennard served as Senior Advisor to Grain Management from October 2013 until November 2014, United States Ambassador to the European Union from 2009 until August 2013, Managing Director of The Carlyle Group from 2001 until 2009, and Chairman of the FCC from 1997 until 2001. |
Skills and qualifications: Mr. Kennard's qualifications for election include his considerable experience and knowledge of the regulatory arena from his service as Chairman of the FCC and United States Ambassador, as well as his legal, financial, and risk management knowledge obtained during his career as a lawyer, policymaker, and investor in the technology and telecommunications sector.
14 DUKE ENERGY – 2020 Proxy Statement
Table of Contents PROPOSAL 1: ELECTION OF DIRECTORS | | | | | | E. Marie McKee | | | | | | | | Independent Director Nominee |  | | Age: 69
Director of Duke Energy since 2012
Retired Senior Vice President, Corning Incorporated | | Committees: • Compensation Committee (Chair) • Corporate Governance Committee Other current public directorships: • None |
Ms. McKee is a retired Senior Vice President of Corning Incorporated, a manufacturer of components for high-technology systems for consumer electronics, mobile emissions controls, telecommunications, and life sciences. Ms. McKee has over 35 years of experience obtained at Corning, where she held a variety of management positions with increasing levels of responsibility, including Senior Vice President of Human Resources from 1996 until 2010, President of Steuben Glass from 1998 until 2008, and President of The Corning Museum of Glass and The Corning Foundation from 1998 until 2014. |
Skills and qualifications: Ms. McKee's qualifications for election include her senior management experience in human resources, which provides her with a thorough knowledge of human capital management and compensation practices. Her prior experience as a senior executive of Corning Incorporated has also given her excellent operating skills and an understanding of environmental regulations, technology, and risk management with regard to the manufacturing process, which aids the Board in its oversight of environmental and health and safety matters.
| | | | | | Marya M. Rose | | | | | | | | Independent Director Nominee |  | | Age: 57
Director of Duke Energy since 2019
Vice President and Chief Administrative Officer, Cummins Inc. | | Committees: • Compensation Committee • Regulatory Policy Committee Other current public directorships: • None |
Ms. Rose has been the Vice President and Chief Administrative Officer of Cummins, a global manufacturer of engines, filtration, and power generation equipment, since August 2011, and is responsible for the communications, marketing, government relations, ethics and compliance, enterprise risk management, facilities, security, corporate responsibility, shared services organization and, until January 2018, the legal function. From 2001 until August 2011, Ms. Rose served as Vice President – General Counsel and Corporate Secretary of Cummins. Prior to her employment at Cummins, Ms. Rose was an attorney with Bose McKinney & Evans and a senior aide to two Indiana Governors. |
Skills and qualifications: Ms. Rose's qualifications for election include her experience in the role of Chief Administrative Officer, and previously as General Counsel of Cummins, which has given her a background in a number of key areas that are critical to the future success of Duke Energy. In her role as Chief Administrative Officer, she has had direct responsibility for the regulatory, environmental, technology, risk management, and customer service areas. In addition, her legal background, including her time as General Counsel and Corporate Secretary of Cummins, will enable her to have unique insights, which she can lend to the Board on legal and corporate governance issues.
DUKE ENERGY – 2020 Proxy Statement 15
Table of Contents PROPOSAL 1: ELECTION OF DIRECTORS | | | | |
Thomas E. Skains | | | | | | | | Independent Director Nominee |  | | Age: 63
Director of Duke Energy since 2016
Retired Chairman, President and CEO,
Piedmont Natural Gas Company, Inc. | | Committees: • Finance and Risk Management Committee • Regulatory Policy Committee (Chair) Other current public directorships: • Truist Financial Corporation • National Fuel Gas Company |
Mr. Skains was Chairman, President and Chief Executive OfficerCEO of Piedmont, Natural Gas, a regional natural gas distributor, until his retirement in 2016. He served as Chairman of Piedmont Natural Gas from December 2003 until October 2016, Chief Executive OfficerCEO from February 2003 until October 2016, and as President from February 2002 until October 2016. Previously, hePrior to his service as President, Ms. Skains served asin various roles, including Chief Operating Officer of Piedmont Natural Gas from February 2002 until February 2003. From 1995 until 2002, he servedand as Senior Vice President, Marketing and Supply Services andwhere he directed Piedmont Natural Gas'Piedmont's commercial natural gas activities. |
|
Skills and qualifications: Mr. Skains' qualifications for election include his financial and risk management expertise and public company governance and strategy gained during his time as Chairman, President and CEO of Piedmont. His time at Piedmont also provided him with in-depth knowledge of the natural gas industry, the environmental regulations related to the industry, and the needs of natural gas customers, which is helpful to Duke Energy as it expands into the natural gas arena since the acquisition of Piedmont. His prior experience as a corporate energy attorney also gives Mr. Skains insight on legal and regulatory compliance matters.
| | | | |
Mr. Skains' qualifications for election include his financial and risk management expertise and public company governance and strategy gained during his time as Chairman, President and Chief Executive Officer of Piedmont Natural Gas. His time at Piedmont Natural Gas has also given him knowledge of the natural gas industry, the environmental regulations related to the industry and the needs of natural gas customers which is helpful to Duke Energy as it expands into the natural gas arena since the acquisition of Piedmont Natural Gas. His prior experience as a corporate energy attorney also gives Mr. Skains insight on legal and regulatory compliance matters. |
William E. Webster, Jr. | | | | | | | | Independent Director Nominee |   | | Age: 6466
Director of Duke Energy since 2016
Retired Executive Vice President, Institute of Nuclear Power Operations | | Committees: • Nuclear OversightAudit Committee
• Regulatory PolicyOperations and OperationsNuclear Oversight Committee
Other current public directorships: • None |
Mr. Webster was Executive Vice President of Industry Strategy for the Institute of Nuclear Power Operations ("INPO"),INPO, a non-profit organization that promotes the highest levels of safety and reliability in the operation of commercial nuclear power plants, until his retirement in June 2016. Mr. Webster has 34 years of experience obtained at INPO where he held a variety of management positions in the Industry Evaluations, Plant Support, Engineering Support, and Plant Analysis and Emergency Preparedness divisions prior to his retirement. |
Skills and qualifications: |
Mr. Webster's qualifications for election include his extensive knowledge gained during his 34 years inWebster currently serves as the nuclear industry, including exposure to environmental laws, regulatory expertise as well as unique insight into best practices in engineering and risk management which is an asset toChairman of the Board and its committees.Japan Nuclear Safety Institute. |
Skills and qualifications: Mr. Webster's qualifications for election include the extensive knowledge he gained during his 34 years in the nuclear industry, including experience with respect to environmental laws and reporting for the nuclear industry, and his regulatory expertise through his interface with the NRC on making new nuclear safety rules after the Fukushima accident in Japan. At INPO, Mr. Webster also was responsible for the development of risk management guidelines for the nuclear industry. These skills, as well as his operational and engineering expertise, are an asset to the Board and its committees as the Company focuses on operational excellence. The Board of Directors Recommends a Vote "FOR" Each Nominee.
16 DUKE ENERGY – 20182020 Proxy Statement
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INFORMATION ON THE BOARD OF DIRECTORS Our Board Leadership Structure
The Board regularly evaluates the leadership structure of the CorporationDuke Energy and may consider alternative approaches, as appropriate, over time. Though the Board is currently structured with a combined Chairman and Chief Executive Officer, theThe Board believes that the CorporationDuke Energy and our shareholders are best served by the Board retaining discretion to determine the appropriate leadership structure based on what it believes is best for the CorporationDuke Energy at a particular point in time, including whether the same individual should serve as both ChairmanChair and Chief Executive Officer,CEO, or whether the roles should be separate. Lynn J. Good serves as the Corporation's Chairman,Duke Energy's Chair, President and Chief Executive Officer.CEO. Our Board believes that combining the ChairmanChair and Chief Executive OfficerCEO roles fosters clear accountability, effective decision-making, and execution of corporate strategy. Michael G. Browning serves as the Corporation'sour Independent Lead Director and has served in that role since January 2016. Mr. Browning's responsibilities, which meet the latest corporate governance standards set by the National Association of Corporate Directors, include, among other things:include: - •
- serving as liaison between the Chair and the CEO and the independent directors;
- •
- leading, in conjunction with the Corporate Governance Committee, the process for the review of the
Chief Executive Officer;CEO;
- •
- leading, in conjunction with the Corporate Governance Committee, the Board, committee, and individual director self-assessment review process;
- •
- presiding at the executive sessions of the independent members of the Board;
- •
- assisting the
ChairmanChair and the Chief Executive OfficerCEO in setting, reviewing, and approving agendas and schedules of Board meetings;
- •
- approving meeting schedules to assure there is sufficient time for discussion of all agenda items;
- •
- reviewing and approving information sent to the Board and advising on quality, quantity, and timeliness of information;
- •
- calling meetings of the independent members of the Board when necessary and appropriate;
- •
- developing topics for discussion during executive sessions of the Board;
- •
- assisting the
ChairmanChair and the Chief Executive OfficerCEO to promote the efficient and effective performance and functioning of the Board; and
- •
- being available for consultation and direct communication with
the Corporation'sour major shareholders.
Our Independent Lead Director is elected by the independent members of the Board. A complete list of the responsibilities of our Independent Lead Director is included in our Principles for Corporate Governance, a copy of which is posted on our website atduke-energy.com/our-company/investors/corporate-governance/principles-corp-governance. Independence of Directors
The Board has determined that none of the directors, other than Ms. Good, has a material relationship with Duke Energy or any of our subsidiaries, and all are, therefore, independent under the listing standards of the NYSE and the rules and regulations of the Securities and Exchange Commission ("SEC").SEC. In making the determination regarding each director's independence, the Board considered all transactions and the materiality of any relationship with Duke Energy and any of our subsidiaries in light of all facts and circumstances. The Board may determine a director to be independent if it has affirmatively determined that the director has no material relationship with Duke Energy or our subsidiaries, (references in this proxy statement to Duke Energy's subsidiaries shall mean our consolidated subsidiaries), either directly or as a shareholder, director, officer, or employee of an organization that has a relationship with Duke Energy or our subsidiaries. Independence determinations are generally made when a director joins the Board and on an annual basis at the time the Board approves director nomineesdirector-nominees for inclusion in the proxy statement. The Board also considers its Standards for Assessing Director Independence, which set forth certain relationships between Duke Energy and our directors and their immediate family members, or affiliated entities, that the Board, in its judgment, has deemed to be immaterial for purposes of assessing a director's independence. Duke Energy's Standards for Assessing Director Independence are linked on our website atduke-energy.com/our-company/investors/corporate-governance/board. In the event a director has a relationship with Duke Energy that is not addressed in the Standards for Assessing Director Independence, the Corporate Governance Committee, which is composed entirely of independent members of the Board, reviews the relationship and makes a recommendation to the nonconflicted, independent members of the Board who determine whether such relationship is material. For Mr. Webster, the Board considered a relationship between the Corporation and PriceWaterhouseCoopers ("PwC"), a firm that provides professional tax and other services from time to time to the Corporation and at which Mr. Webster's brother-in-law was a partner for the majority of 2017. In December 2017, Mr. Webster's brother-in-law left his partnership with PwC to join the board of directors of the Public Company Accounting Oversight Board. The Board determined
DUKE ENERGY – 20182020 Proxy Statement 17
Table of Contents INFORMATION ON THE BOARD OF DIRECTORS this prior relationship did not impair Mr. Webster's independence in 2017, and, because there is no longer any ongoing relationship, there is no related person transaction for Mr. Webster with PwC at this time.
See Related Person Transactions on page 75 for further information.
Director Attendance
The Board of Duke Energy met fivenine times during 20172019 and has met once so far in 2018.2020. During 2019 Board meetings, our Board held five executive sessions with independent directors only. Directors are expected to attend at least 75% of Board meetings and the meetings of the committees upon which he or she serves. The overall attendance percentage for our directors was approximately 96%97% in 2017,2019, and all directors attended more than 75% of the Board meetings and the meetings of the committees upon which he or she served in 2017.2019. Directors are also encouraged to attend the Annual Meeting. All of our directors who were directors at the time of last year's Annual Meeting on May 4, 2017,2, 2019, attended the 20172019 Annual Meeting except Ann Maynard Gray who retired from the Board at the 2017 Annual Meeting and Michael J. Angelakis who resigned from the Board in 2017.Meeting. Board and Committee Assessments
Each year the Board, with the assistance of the Corporate Governance Committee, conducts an assessment of the Board, each of its committees, and the directors. The assessment process is facilitated by a third partythird-party advisor, which allows directors to provide anonymous feedback and promotes candidness among the directors. The results of the feedback are presented to the Board and committees and discussed. In addition to the written assessments, the Independent Lead Director annually takes the opportunity to meet with each of the directors separately to discuss the performance of the Board with the directors and to obtain advice on areas of improvement for the Board and the individual directors. Our Board is committed to effective board succession planning and refreshment, including having honest and difficult conversations, as may be deemed necessary, with individual directors. Management and the Board then incorporate the feedback received in both the written assessments and the discussions throughout the year. For example, over the course of 2019, we incorporated feedback to make changes to the presentation of the materials provided to our directors in advance of their meetings. We also increased Board education opportunities and provided special information sessions on topics of interest to our Board members. This annual review process and discussion provides continuous improvement in the overall effectiveness of the directors, committees, and Board, and provides an opportunity for directors to express any concerns they may have. This process also allows the Board to identify opportunities for Board succession and skills. 
18 DUKE ENERGY – 2020 Proxy Statement
Table of Contents INFORMATION ON THE BOARD OF DIRECTORS Board Role in Management Succession
The independent directors of the Board are actively involved in the Corporation'sour management succession planning process. Among the Corporate Governance Committee's responsibilities described in its charter is to oversee continuity and succession planning. At least annually, the Corporate Governance Committee or full Board reviews the Chief Executive OfficerCEO succession plan and makes recommendations to the Board for the successor to the Chief Executive Officer.CEO. The Corporate Governance Committee also reports to the Board any concerns or issues that might indicate that organizational strengths are not equal to the requirements of long-range goals and oversees the evaluation of the Chief Executive Officer. 18 DUKE ENERGY – 2018 Proxy Statement
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INFORMATION ON THE BOARD OF DIRECTORSCEO.
Board Oversight of Risk
As is true with other large public companies, Duke Energy faces a myriad of risks, including operational, financial, strategic, and reputational risks that affect every segment of our business. The Board is actively involved in the oversight of these risks in several ways. This oversight is conducted primarily through the Finance and Risk Management Committee of the Board but also through the other committees of the Board, as appropriate. The Finance and Risk Management Committee reviews the Corporation'sDuke Energy's enterprise risk program with management, including the Chief Risk Officer, on a regular basis at its committee meetings. The enterprise risk program includes the identification of a broad range of risks that affect the Corporation,Duke Energy, their probabilities and severity, and incorporates a review of the Corporation'sour approach to managing and prioritizing those risks based on input from the officers responsible for the management of those risks. Each committee of the Board is responsible for the oversight of certain areas of risk that pertain to that committee's area of focus. Throughout the year, each committee chair reports to the full Board regarding the committee's considerations and actions related to the risks within its area of focus. Each committee regularly receives updates from the business units in that committee's area of focus to review the risks in those areas. 
 
DUKE ENERGY – 20182020 Proxy Statement 19
Table of Contents INFORMATION ON THE BOARD OF DIRECTORS  
20 DUKE ENERGY – 20182020 Proxy Statement
Table of Contents INFORMATION ON THE BOARD OF DIRECTORS Shareholder Engagement
We conduct extensive governance reviews and investor outreach so that management and the Board understand and consider the issues that matter most to our shareholders and address them effectively. In 2017,2019, we reached out to holders of approximately 36%one-third of Duke Energy's outstanding common shares, and members of our Board and management met with holders of approximately 30%25% of Duke Energy's outstanding common shares. We engaged with every shareholder who accepted our offer to meet.meet as well as every shareholder who requested to meet with us. During 2019, Duke Energy engaged with shareholders on numerous topics, during the year, including sustainability, governance, and executive compensation matters, sustainability and governance issues such as the disclosure of the performance goals for the performance shares granted in our most recently completed fiscal year. We have also included additional disclosure in this proxy statement on director skills and diversity and the Board's oversight over key risk areas for the Corporation, including environmental, health and safety.matters. Shareholder feedback has been invaluable to Duke Energyus in enhancing our governance and compensationpractices, policies, and related disclosures such as additional disclosure in this proxy statement on director skills and diversity in recent years to give shareholders greater insight into the background and abilities of our capable Board. disclosures. During the Fall of 2017,2019, we focused our engagements with shareholders on explaining recent changesthe following topics: - •
- management and shareholder proposals at the 2019 Annual Meeting;
- •
- our strategic vision to build a smarter, cleaner energy future for our customers;
- •
- our operational priorities, including investments in the energy grid, the retirement of coal facilities and replacement with lower-carbon alternatives such as natural gas and renewables, and expanding natural gas infrastructure;
- •
- the strength of our Board and its oversight of key areas of risk for Duke Energy such as sustainability and the environment, cybersecurity, and corporate culture;
- •
- our commitment to ESG issues;
- •
- our human capital management, diversity and inclusion matters, and workforce innovation; and
- •
- our executive compensation program.
In the fall, we also extensively discussed our goal to reduce carbon emissions from electricity generation by at least 50% from 2005 levels by 2030 and our new goal to reach net-zero emissions from electricity generation by 2050, as well as the steps Duke Energy is taking to mitigate the risks of climate change on our operations, which was well-received by shareholders. The Corporate Governance Committee reviewed the feedback from all discussions and the feedback informed the decisions discussed herein, including updates to our compensation program and on sustainability matters. A more complete discussionpolitical expenditures disclosures, updates to the ash management section of our engagements aroundwebsite, and our intention to begin using SASB standards in 2020 to help inform and align our sustainability reporting. Additional information on our discussions with shareholders regarding executive compensation matters is included in the Compensation Discussion and Analysisprovided on page 36.36 of this proxy statement. 
 
DUKE ENERGY – 20182020 Proxy Statement 21
Table of Contents INFORMATION ON THE BOARD OF DIRECTORS Board of Directors Committees BOARD COMMITTEE MEMBERSHIP ROSTER(1) | | | | | | | | | | | | | Name
| | Audit
| | Compensation
| | Corporate
Governance
| | Finance and Risk
Management
| | Operations and Nuclear
Oversight
| | Regulatory
Policy and
Operations
|
|---|
| | | | | | | | | | | | | | Michael G. Browning | | | | ✔ | | C | | ✔ | | | | ✔ | Annette K. Clayton | | ✔ | | | | | | | | ✔ | | | Theodore F. Craver, Jr. | | C | | | | | | | | | | ✔ | Robert M. Davis | | | | ✔ | | | | ✔ | | | | | Daniel R. DiMicco | | | | | | ✔ | | | | | | ✔ | Nicholas C. Fanandakis | | ✔ | | | | | | ✔ | | | | | Robert M. Davis | | ✔ | | | | | | ✔ | | | | | Daniel R. DiMicco
| | | | | | ✔ | | | | ✔ | | | John H. Forsgren
| | | | ✔ | | | | C | | | | | Lynn J. Good | | | | | | | | | | | | | John T. Herron
| | | | | | | | | | C | | ✔ | James B. Hyler, Jr.John T. Herron
| | ✔ | | | | | | | | ✔ | | C | | | William E. Kennard | | | | | | ✔ | | ✔C | | | | | E. Marie McKee | | | | C | | ✔ | | | | | | | Charles W. Moorman IV | | | | | | | | | | ✔ | | ✔ | Carlos A. SaladrigasMarya M. Rose
| | ✔ | | ✔ | | | | | | | | ✔ | Carlos A. Saladrigas | | ✔ | | ✔ | | | | | | | | | Thomas E. Skains | | | | | | | | ✔ | | | | C | William E. Webster, Jr. | | ✔ | | | | | | | | ✔ | | ✔ | William E. Webster, Jr.
| | | | | | | | | | ✔ | | ✔ | | | | | | | | | | | | | | | |
C(C)- Committee Chair
- (1)
- As of March 26, 2020
The Board has the six standing, permanent committees described below:below. Each committee operates under a written charter adopted by the Board. The charters are posted on our website atduke-energy.com/our-company/investors/corporate-governance/board-committee-charters. Audit Committee Eight meetings held in 20172019
| | | | | | | | Committee Members |
 |
|
Theodore F. Craver, Jr., Chair*
Robert M. Davis*Annette K. Clayton*
James B. Hyler, Jr.*Nicholas C. Fanandakis*
Carlos A. Saladrigas*
William E. Webster, Jr.*
* Designated as an Audit Committee
Financial Expert by the Board |
Theodore F. Craver, Jr. - •
- TheAudit Committee considers risks and matters related to financial reporting, internal controls, compliance,
and legal matters, and cybersecurity and technology matters.
- •
- As part of its responsibilities, the Audit Committee selects and retains an independent registered public accounting firm to conduct audits of the accounts of Duke Energy and our subsidiaries. It also reviews with the independent registered public accounting firm the scope and results of their audits, as well as the accounting procedures, internal controls, and accounting and financial reporting policies and practices of Duke Energy and our subsidiaries, and makes reports and recommendations to the Board as it deems appropriate.
- •
- The Audit Committee is responsible for approving all audit and permissible non-audit services provided to Duke Energy by our independent registered public accounting firm. Pursuant to this responsibility, the Audit Committee adopted the policy on Engaging the Independent Auditor for Services, which provides that the Audit Committee will establish detailed services and related fee levels that may be provided by the independent registered public accounting
firm and will review such policy annually.firm. See page 33 for additional information on the Audit Committee's preapproval policy.
22 DUKE ENERGY – 2020 Proxy Statement
Table of Contents INFORMATION ON THE BOARD OF DIRECTORS - •
- The Audit Committee also receives, reviews, and acts on complaints and concerns regarding material accounting, internal controls, and auditing matters, including complaints regarding material misconduct on the part of our executive officers that could lead to significant reputational damage to the Company. Information regarding how to report concerns to the Audit Committee is posted on our website atduke-energy.com/our-company/investors/corporate-governance/report-concerns-to-the-audit-committee.
- •
- The Board has determined that
Mr. Craver, Mr. Davis, Mr. Hyler and Mr. Saladrigaseach of the members are "Audit Committee Financial Experts" as such term is defined in Item 407(d)(5)(ii) of Regulation S-K. See pages 10, 11, 13, and 1516 for a description of theirthe business experience.experience for Ms. Clayton, Mr. Craver, Mr. Fanandakis, and Mr. Webster, all of whom are nominated for election at the Annual Meeting. Mr. Saladrigas, who is retiring at the Annual Meeting, was also determined to be an "Audit Committee Financial Expert" by the Board.
- •
- Each of the members has also been determined to be "independent" within the meaning of the NYSE's listing standards, Rule 10A-3 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the Corporation'sDuke Energy's Standards for Assessing Director Independence. In addition, each of the members meets the financial literacy requirements for audit committee membership under the NYSE's rules and the rules and regulations of the SEC.
22 DUKE ENERGY – 2018 Proxy Statement
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INFORMATION ON THE BOARD OF DIRECTORS
Compensation Committee Six meetings held in 20172019
| | | | | | | | Committee Members | | |  | | E. Marie McKee, Chair
Michael G. Browning
John H. ForsgrenRobert M. Davis
Marya M. Rose
Carlos A. Saladrigas | | |
E. Marie McKee - •
- TheCompensation Committee establishes and reviews our overall compensation philosophy, confirms that our policies and philosophy do not encourage excessive or inappropriate risk-taking by our employees, reviews and approves the salaries and other compensation of certain employees, including all executive officers of Duke Energy, reviews and approves compensatory agreements with executive officers, approves certain equity grants and delegates authority to approve others, and reviews the effectiveness of, and approves changes to, compensation programs. The Compensation Committee also makes recommendations to the Board on compensation for independent
directors.directors, and oversees human capital management as well as diversity and inclusion.
- •
- Management's role in the compensation-setting process is to recommend compensation programs and assemble information as required by the committee. When establishing the compensation program for our
named executive officers,NEOs, the committee considers input and recommendations from management, including Ms. Good, who attends the Compensation Committee meetings.
- •
- The Compensation Committee has engaged FW Cook as its independent compensation consultant. The compensation consultant generally attends each committee meeting and provides advice to the committee at the meetings, including reviewing and commenting on market compensation data used to establish the compensation of the executive officers and directors. The consultant has been instructed that it shall provide completely independent advice to the Compensation Committee and is not permitted to provide any services to Duke Energy other than at the direction of the Compensation Committee.
- •
- Each of the members of the Compensation Committee has been determined to be "independent" within the meaning of the NYSE's listing standards, Rule 10C-1(b) of the Exchange Act, and
the Corporation'sDuke Energy's Standards for Assessing Director Independence; to be "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"); and, to be "non-employee directors" within the meaning of Rule 16b-3 of the Exchange Act.Independence.
- •
- Compensation Committee Interlocks and Insider
ParticipationParticipation.. During 2017,2019, Ms. McKee, Ms. Rose, Mr. Browning, Mr. MoormanDavis, and Mr. Saladrigas served as members of the Compensation Committee with Mr. Forsgren joining the Compensation Committee on January 8, 2018. Noneand none of the Compensation Committee members was an officerwere officers or employeeemployees of Duke Energy, during 2017 or a former officer of the Duke Energy, or had any business relationships requiring review and disclosure under our Related Person Transactions Policy. Furthermore, none of our executive officers served as a director or member of the compensation committeeCompensation Committee (or other committee of the boardBoard performing equivalent functions) of another entity where an executive officer of such entity served as a director of Duke Energy or on our Compensation Committee.
DUKE ENERGY – 20182020 Proxy Statement 23
Table of Contents INFORMATION ON THE BOARD OF DIRECTORS Corporate Governance Committee FiveSix meetings held in 20172019
| | | | | | | | Committee Members | | |  | | Michael G. Browning, Chair
Daniel R. DiMicco
William E. Kennard
E. Marie McKee | | |
Michael G. Browning - •
- TheCorporate Governance Committee considers risks and matters related to corporate governance and
the Corporation'sour policies and practices with respect to political activities, community affairs, and sustainability.
- •
- It recommends the size and composition of the Board and its committees and recommends potential
Chief Executive OfficerCEO successors to the Board.
- •
- The Corporate Governance Committee also recommends to the Board the slate of nominees, including any nominees recommended by shareholders, for director at each year's Annual Meeting and, when vacancies occur, names of individuals who would make suitable directors of Duke Energy. This committee may engage an external search firm or a third party to identify,
or evaluate, or to assist in identifying or evaluating, a potential nominee.
- •
- The Corporate Governance Committee performs an annual evaluation of the performance of the
Chief Executive OfficerCEO with input from the full Board. The Corporate Governance Committee assists the Board in its annual determination of director independence and review of any related person transactions as well as the Board's annual assessment of the Board and each of its committees.
- •
- Each of the members of the Corporate Governance Committee has been determined to be "independent" within the meaning of the NYSE's listing standards and
the Corporation'sDuke Energy's Standards for Assessing Director Independence.
Finance and Risk Management Committee FourEight meetings held in 20172019
| | | | | | | | Committee Members | | |   | | John H. Forsgren,William E. Kennard, Chair
Michael G. Browning
Theodore F. Craver, Jr.
Robert M. Davis
WilliamNicholas C. Fanandakis
John T. Herron
Thomas E. KennardSkains | | |
John H. ForsgrenWilliam E. Kennard
- •
- The
Finance Financeand Risk Management Committee is primarily responsible for the oversight of financial risk and enterprise risk at the Corporation.Duke Energy. This oversight function includes reviews of Duke Energy'sour financial and fiscal affairs and recommendations to the Board regarding dividends, financing and fiscal policies, and significant transactions. It
- •
- The Finance and Risk Management Committee reviews the financial exposure of Duke Energy, as well as mitigation strategies, reviews Duke Energy's enterprise risk exposures and provides oversight for the process to assess and manage enterprise risk, and reviews the financial impacts of major projects as well as capital expenditures.
24 DUKE ENERGY – 20182020 Proxy Statement
Table of Contents INFORMATION ON THE BOARD OF DIRECTORS Operations and Nuclear Oversight Committee Four meetings held in 20172019
| | | | | | | | Committee Members | | |  | | John T. Herron, Chair
Daniel R. DiMiccoAnnette K. Clayton
Charles W. Moorman IV
Thomas E. Skains
William E. Webster, Jr. | | |
John T. Herron - •
- TheOperations and Nuclear Oversight Committee provides oversight of the nuclear safety, operational and financial performance as well as operational risks, long-term plans, and strategies of Duke Energy's nuclear power program. The oversight role is one of review, observation, and comment and in no way alters management's authority, responsibility, or accountability.
- •
- In 2019, in order for the Board to better align its structure with the oversight of certain key operational risks, such as nuclear and environmental operations, the oversight of Duke Energy's environmental, health, and safety goals and policies, including ash management, and the operational performance of Duke Energy's utilities with regard to energy supply, delivery, fuel procurement, and transportation, was moved from the Regulatory Policy and Operations Committee to the Nuclear Oversight Committee, which was subsequently renamed the Operations and Nuclear Oversight Committee.
- •
- The Operations and Nuclear Oversight Committee visits each of Duke Energy's operating nuclear power stations over a two-year period and reviews the station's nuclear safety, operational, and financial performance.
Regulatory Policy and Operations Committee FourFive meetings held in 20172019
| | | | | | | | Committee Members | | |   | | James B. Hyler,Thomas E. Skains, Chair
Michael G. Browning
Theodore F. Craver, Jr., Chair
John T. HerronDaniel R. DiMicco
Charles W. Moorman IV
Thomas E. Skains
William E. Webster, Jr.Marya M. Rose | | |
James B. Hyler, Jr.Thomas E. Skains
- •
- The
Regulatory RegulatoryPolicy and Operations Committee provides oversight of Duke Energy's regulatory and legislative strategy impacting utility operations in each jurisdiction. This includes oversight of the regulatory objectives and public policies initiatives and practices of Duke Energy's utility operations.
- •
- The Regulatory Policy Committee also has oversight
over environmental, health and safety matters and the risks related to such matters, including our ash management strategy, as well as the public policies and practices of Duke Energy. This includes reviewing Duke Energy's regulatory approach to strategic initiatives, the operational performance of Duke Energy's utilities with regard to energy supply, delivery, fuel procurementprincipal regulatory compliance risks and transportation and making visits to Duke Energy's generation facilities. The Regulatory Policy and Operations Committee is also responsible for the oversight of Duke Energy's environmental, health and safety goals and policies.related risk mitigation plans.
Each committee operates under a written charter adopted by the Board. The charters are posted on our website atduke-energy.com/our-company/investors/corporate-governance/board-committee-charters.
DUKE ENERGY – 20182020 Proxy Statement 25
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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE
The following is the report of the Corporate Governance Committee with respect to its philosophy, responsibilities and initiatives.
Philosophy and Responsibilities
We believe that sound corporate governance has three components: (i) Board independence, (ii) processes and practices that foster sound decision-making by both management and the Board, and (iii) balancing the interests of all of our stakeholders – our investors, customers, employees, the communities we serve and the environment. The Corporate Governance Committee's charter is available on our website atduke-energy.com/our-company/investors/corporate-governance/board-committee-charters/corporate-governance and is summarized below. Additional information about the Corporate Governance Committee and its members is detailed on page 24 of this proxy statement.
Membership. The committee must be comprised of three or more members, all of whom must qualify as independent directors under the listing standards of the NYSE and other applicable rules and regulations.
Responsibilities. The committee's responsibilities include, among other things, (i) implementing policies regarding corporate governance matters, (ii) assessing the Board's membership needs and recommending nominees, (iii) recommending to the Board those directors to be selected for membership on, or removal from, the various Board committees and those directors to be designated as chairs of Board committees, (iv) sponsoring and overseeing annual performance evaluations for the various Board committees, including the Corporate Governance Committee, the Board and the Chief Executive Officer, (v) overseeing the Corporation's political expenditures and activities pursuant to the Political Expenditures Policy, and (vi) reviewing the Corporation's charitable contributions and community service policies and practices. The committee may also conduct or authorize investigations into or studies of matters within the scope of the committee's duties and responsibilities, and may retain, at the Corporation's expense, and in the committee's sole discretion, consultants to assist in such work as the committee deems necessary. In 2018, the Board also formally tasked the committee with oversight over sustainability issues.
Governance Policies
All of our Board committee charters, as well as our Principles for Corporate Governance, Code of Business Ethics for Employees and Code of Business Conduct & Ethics for Directors, are available on our website atduke-energy.com/our-company/investors/corporate-governance.
Any amendments to or waivers from our Code of Business Ethics for Employees with respect to executive officers or Code of Business Conduct & Ethics for Directors must be approved by the Board and will be posted on our website. During 2017, our Board held four executive sessions with independent directors only.
Board Composition
Director Qualifications. The Board recognizes that a diverse Board, management and workforce is key to the Corporation's success. This diversity is evidenced in the backgrounds, skills and qualifications of the directors who have been nominated, as well as the diversity of Duke Energy's executives and workforce, starting with our Chairman, President and Chief Executive Officer, Lynn J. Good, who was selected by the Board to lead Duke Energy in 2013. The Board strives to have a diverse Board representing a range of experiences and qualifications in areas that are relevant to the Corporation's business and strategy. As part of the search process, the committee looks for the most qualified candidates, including women and minorities, with the following characteristics:
•fundamental qualities of intelligence, perceptiveness, good judgment, maturity, high ethics and standards, integrity and fairness;
•a genuine interest in Duke Energy and a recognition that, as a member of the Board, one is accountable to the shareholders of Duke Energy, not to any particular interest group;
•a background that includes broad business experience or demonstrates an understanding of business and financial affairs and the complexities of a large, multifaceted, global business organization;
26 DUKE ENERGY – 2018 Proxy Statement
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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE
•diversity among the existing Board members, including racial and ethnic background, gender, experiences, skills and qualifications;
•present or former chief executive officer, chief operating officer or substantially equivalent level executive officer of a highly complex organization such as a corporation, university or major unit of government, or a professional who regularly advises such organizations;
•no conflict of interest or legal impediment which would interfere with the duty of loyalty owed to Duke Energy and our shareholders;
•the ability and willingness to spend the time required to function effectively as a director;
•compatibility and ability to work well with other directors and executives in a team effort with a view to a long-term relationship with Duke Energy as a director;
•independent opinions and willingness to state them in a constructive manner; and
•willingness to become a shareholder of Duke Energy (within a reasonable time of election to the Board).
Director Candidate Recommendations. The committee may engage a third party from time to time to assist it in identifying and evaluating director-nominee candidates, in addition to current members of the Board standing for re-election. The committee will provide the third party, based on the profile described above, the characteristics, skills and experiences that may complement those of our existing members. The third party will then provide recommendations for nominees with such attributes. The committee considers nominees recommended by shareholders on a similar basis, taking into account, among other things, the profile criteria described above and the nominee's experiences and skills. In addition, the committee considers the shareholder-nominee's independence with respect to both the Corporation and the recommending shareholder. All of the nominees on the proxy card are current members of our Board and were recommended by the committee.
Shareholders interested in submitting nominees as candidates for election as directors must provide timely written notice to the Corporate Governance Committee, c/o Julia S. Janson, Executive Vice President, External Affairs, Chief Legal Officer and Corporate Secretary, Duke Energy Corporation, DEC 48H, P.O. Box 1414, Charlotte, NC 28201-1414. The written notice must set forth, as to each person whom the shareholder proposes to nominate for election as director:
•the name and address of the recommending shareholder(s), and the class and number of shares of capital stock of Duke Energy that are beneficially owned by the recommending shareholder(s);
•a representation that the recommending shareholder(s) is a holder of record of capital stock of Duke Energy entitled to vote at the Annual Meeting and intends to attend the Annual Meeting remotely or by proxy to nominate the person(s) specified in the written notice;
•the name, age, business address and principal occupation and employment of the recommended nominee;
•any information relevant to a determination of whether the recommended nominee meets the criteria for Board membership established by the Board and/or the Corporate Governance Committee;
•any information regarding the recommended nominee relevant to a determination of whether the recommended nominee would be considered independent under the applicable NYSE rules and SEC rules and regulations;
•a description of any business or personal relationship between the recommended nominee and the recommending shareholder(s), including all arrangements or understandings between the recommended nominee and the recommending shareholder(s) and any other person(s) (naming such person(s)) pursuant to which the nomination is to be made by the recommending shareholder(s);
•a statement, signed by the recommended nominee, (i) verifying the accuracy of the biographical and other information about the nominee that is submitted with the recommendation, (ii) affirming the recommended nominee's willingness to be a director, and (iii) consenting to serve as a director if so elected;
•if the recommending shareholder(s) has beneficially owned more than 5% of Duke Energy's capital stock for at least one year as of the date the recommendation is made, evidence of such beneficial ownership as specified in the rules and regulations of the SEC;
•if the recommending shareholder(s) intends to solicit proxies in support of such recommended nominee, a representation to that effect; and
•all other information relating to the recommended nominee that is required to be disclosed in solicitations for proxies in an election of directors pursuant to Regulation 14A under the Exchange Act, including, without limitation, information regarding, (i) the recommended nominee's business experience, (ii) the class and number of shares of capital stock of Duke Energy, if any, that are beneficially owned by the recommended nominee, and (iii) material relationships or transactions, if any, between the recommended nominee and Duke Energy's management.
Director Candidate Nominations through Proxy Access. In order to nominate a director pursuant to the Corporation's proxy access provision, shareholders who meet the eligibility and other requirements set forth in Section 3.04 of the Corporation's By-Laws must send a written notice to the Corporate Governance Committee, c/o Julia S. Janson, Executive Vice President, External Affairs, Chief Legal Officer and Corporate Secretary, Duke Energy Corporation, DEC 48H, P.O. Box 1414, Charlotte, NC 28201-1414. The written notice must provide the information set forth above, as well as the other detailed requirements set forth in Section 3.04 of the Corporation's By-Laws, which can be located on our website atduke-energy.com/our-company/investors/corporate-governance.
DUKE ENERGY – 2018 Proxy Statement 27
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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE The following is the report of the Corporate Governance Committee with respect to its philosophy, responsibilities, and initiatives. Philosophy and Responsibilities
We believe that sound corporate governance has three components: (i) Board independence; (ii) processes and practices that foster sound decision-making by both management and the Board; and (iii) balancing the interests of all of our stakeholders – our investors, customers, employees, the communities we serve, and the environment. The Corporate Governance Committee's charter is available on our website atduke-energy.com/our-company/investors/corporate-governance/board-committee-charters/corporate-governance and is summarized below. Additional information about the Corporate Governance Committee and its members is detailed on page 24 of this proxy statement. Membership. The committee must be comprised of three or more members, all of whom must qualify as independent directors under the listing standards of the NYSE and other applicable rules and regulations. Responsibilities. The committee's responsibilities include, among other things: (i) implementing policies regarding corporate governance matters; (ii) assessing the Board's membership needs and recommending nominees; (iii) recommending to the Board those directors to be selected for membership on, or removal from, the various Board committees and those directors to be designated as chairs of Board committees; (iv) sponsoring and overseeing annual performance evaluations for the various Board committees, including the Corporate Governance Committee, the Board and the CEO; (v) overseeing Duke Energy's political expenditures and activities pursuant to the Political Expenditures Policy; (vi) reviewing our charitable contributions and community service policies and practices; and (vii) reviewing Duke Energy's policies, programs, and practices with regard to sustainability. The committee may also conduct or authorize investigations into or studies of matters within the scope of the committee's duties and responsibilities, and may retain, at Duke Energy's expense, and in the committee's sole discretion, consultants to assist in such work as the committee deems necessary. Governance Policies
All of the Board committee charters, as well as our Principles for Corporate Governance, Code of Business Ethics for Employees, and Code of Business Conduct & Ethics for Directors, are available onour website at duke-energy.com/our-company/investors/corporate-governance. Any amendments to or waivers from our Code of Business Ethics for Employees with respect to executive officers or Code of Business Conduct & Ethics for Directors must be approved by the Board and will be posted on our website. In addition, information regarding how to report actual or suspected violations of our Code of Business Ethics, either through our anonymous EthicsLine or otherwise, is provided on the Ethics section of our websiteat duke-energy.com/our-company/about-us/ethics in the Code of Business Ethics. Board Composition
Director Qualifications and Diversity. The Board recognizes that a diverse Board, management, and workforce is key to Duke Energy's success and believes that diversity of background, skill sets, experience, thought, ethnicity, race, gender, age, and nationality, are important considerations in selecting candidates. This commitment to diversity is evidenced in the backgrounds, skills, and qualifications of the directors who have been nominated, as well as the diversity of Duke Energy's executives and workforce, starting with our Chair, President and CEO, Lynn J. Good, who was selected by the Board to lead Duke Energy in 2013, and the diverse senior management team that reports to her. The Board strives to have a diverse Board representing a range of experiences and qualifications in areas that are relevant to Duke Energy's business and strategy. As part of the search process, the committee looks for the most qualified candidates, including women and minorities, with the following characteristics: - •
- fundamental qualities of intelligence, perceptiveness, good judgment, maturity, high ethics and standards, integrity, and fairness;
- •
- a genuine interest in Duke Energy and a recognition that, as a member of the Board, one is accountable to the shareholders of Duke Energy, not to any particular interest group;
- •
- a background that includes broad business experience or demonstrates an understanding of business and financial affairs and the complexities of a large, multifaceted, global business organization;
26 DUKE ENERGY – 2020 Proxy Statement
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- diversity among the existing Board members, including racial and ethnic background, gender, experiences, skills, and qualifications;
- •
- present or former CEO, chief operating officer or substantially equivalent level executive officer of a highly complex organization such as a corporation, university, or major unit of government, or a professional who regularly advises such organizations;
- •
- no conflict of interest or legal impediment, which would interfere with the duty of loyalty owed to Duke Energy and our shareholders;
- •
- the ability and willingness to spend the time required to function effectively as a director;
- •
- compatibility and ability to work well with other directors and executives in a team effort with a view to a long-term relationship with Duke Energy as a director;
- •
- independent opinions and willingness to state them in a constructive manner; and
- •
- willingness to become a shareholder of Duke Energy (within a reasonable time of election to the Board).
Director Candidate Recommendations. The committee may engage a third party from time to time to assist it in identifying and evaluating director-nominee candidates, in addition to current members of the Board standing for re-election. The committee will provide the third party, based on the profile described above, the characteristics, skills, and experiences that may complement those of our existing members. The third party will then provide recommendations for nominees with such attributes. The committee considers nominees recommended by shareholders on a similar basis, taking into account, among other things, the profile criteria described above and the nominee's experiences and skills. In addition, the committee considers the shareholder-nominee's independence with respect to both Duke Energy and the recommending shareholder. All of the nominees on the proxy card are current members of our Board and were recommended by the committee. Shareholders interested in submitting nominees as candidates for election as directors must provide timely written notice to the Corporate Governance Committee, c/o David B. Fountain, Senior Vice President, Legal, Chief Ethics and Compliance Officer and Corporate Secretary, Duke Energy Corporation, DEC 48H, P.O. Box 1414, Charlotte, NC 28201-1414. The written notice must set forth, as to each person whom the shareholder proposes to nominate for election as director: - •
- the name and address of the recommending shareholder(s), and the class and number of shares of common stock of Duke Energy that are beneficially owned by the recommending shareholder(s);
- •
- a representation that the recommending shareholder(s) is a holder of record of common stock of Duke Energy entitled to vote at the Annual Meeting and intends to attend the Annual Meeting remotely or by proxy to nominate the person(s) specified in the written notice;
- •
- the name, age, business address, principal occupation, and employment of the recommended nominee;
- •
- any information relevant to a determination of whether the recommended nominee meets the criteria for Board membership established by the Board and/or the Corporate Governance Committee;
- •
- any information regarding the recommended nominee relevant to a determination of whether the recommended nominee would be considered independent under the applicable NYSE rules and SEC rules and regulations;
- •
- a description of any business or personal relationship between the recommended nominee and the recommending shareholder(s), including all arrangements or understandings between the recommended nominee and the recommending shareholder(s) and any other person(s) (naming such person(s)) pursuant to which the nomination is to be made by the recommending shareholder(s);
- •
- a statement, signed by the recommended nominee, (i) verifying the accuracy of the biographical and other information about the nominee that is submitted with the recommendation; (ii) affirming the recommended nominee's willingness to be a director; and (iii) consenting to serve as a director if so elected;
- •
- if the recommending shareholder(s) has beneficially owned more than 5% of Duke Energy's common stock for at least one year as of the date the recommendation is made, evidence of such beneficial ownership as specified in the rules and regulations of the SEC;
- •
- if the recommending shareholder(s) intends to solicit proxies in support of such recommended nominee, a representation to that effect; and
- •
- all other information relating to the recommended nominee that is required to be disclosed in solicitations for proxies in an election of directors pursuant to Regulation 14A under the Exchange Act, including, without limitation, information regarding: (i) the recommended nominee's business experience; (ii) the class and number of shares of capital stock of Duke Energy, if any, that are beneficially owned by the recommended nominee; and (iii) material relationships or transactions, if any, between the recommended nominee and Duke Energy's management.
Director Candidate Nominations through Proxy Access. In order to nominate a director pursuant to our proxy access provision for the 2021 Annual Meeting, shareholders who meet the eligibility and other requirements set forth in Section 3.04 of the Company's By-Laws must send a written notice to the Corporate Governance Committee, c/o David B. Fountain, Senior Vice President, Legal, Chief Ethics and Compliance Officer and Corporate Secretary, Duke Energy Corporation, DEC 48H, P.O. Box 1414, Charlotte, NC 28201-1414. The written notice must be provided no earlier than October 27, 2020, and no later than November 25, 2020, and must provide the information set forth above, as well as the other detailed requirements set forth in Section 3.04 of the Company's By-Laws, which can be located on our website atduke-energy.com/our-company/investors/corporate-governance. DUKE ENERGY – 2020 Proxy Statement 27
Table of Contents REPORT OF THE CORPORATE GOVERNANCE COMMITTEE New DirectorsDirector Since the 20172019 Annual Meeting
Following the 20172019 Annual Meeting, at which oneand in consideration of the Corporation's directors, Ann Maynard Gray, retiredretirement of several members of the Board with extensive expertise in accordance with our Principles for Corporate Governance, as well as following the departure of Michael J. Angelakis from our Board in August 2017,finance, the Corporate Governance Committee sought to recruit an additional Board membermember. The committee worked extensively in 2019 on identifying a candidate with a deep background in finance and whose qualifications align with the desired qualifications discussed earlier and the needs of the Board in light ofconsidering the major riskspriorities and issues facing the Corporation, as well asDuke Energy, our long-term strategy. Afterstrategy, and our Board refreshment goals. As a result, after working with an independent search firm, the committee identified a candidate with the desired experience, diversity, skills, and other qualifications, to make for a well-balanced Board. In June 2019, the committee recommended in December 2017 that Robert M. DavisNicholas C. Fanandakis be appointed to the Board effective January 8, 2018.June 26, 2019. Mr. DavisFanandakis brings extensive financialmanagement experience and cybersecurity knowledge, along with experience workingexpertise in an industry under going rapid transformationfinance, tax, banking, and risk management gained during his tenure as Chief Financial Officer of Merck & Co.an executive officer at DuPont de Nemours, Inc. and during his career at Baxter International.its predecessors. For more information on Mr. Davis'Fanandakis' skills and qualifications,expertise, see page 11.13. Director Onboarding. WithOver half of our Board members have joined the addition of a number ofBoard in the last five years. In order to help those new directors to ourquickly transition into their roles on the Board, over the past several years, the director onboarding process has become increasingly more important to educating our new directors about Duke Energy.important. Immediately following their appointment, each new director meets individually with the senior executives responsible for our major lines of business and operations so that they may better understand the issues involved in all aspects of Duke Energy's business. In addition to discussing Duke Energy's businesses and operations, the new directors learn about our corporate governance practices and policies; the financial and technical aspects of our electric utility, natural gas, and commercial renewables businesses; the enterprise's significant risks; our long-term strategy; and Duke Energy's long-standing mission to provide clean, reliable, and affordable energy for our customers. Finally, new members to our Audit and Compensation Committees have a separate orientation to learn more about each committee's responsibilities, policies, and practices, and the matters regularly coming before the committee. Communications and Engagements with Directors
Interested parties can communicate with any of our directors by writing to our Corporate Secretary at the following address: Corporate Secretary
Julia S. JansonDavid B. Fountain
ExecutiveSenior Vice President, External Affairs,Legal, Chief Legal Ethics and Compliance
Officer and Corporate Secretary
Duke Energy Corporation
DEC 48H
P.O. Box 1414
Charlotte, NC 28201-1414 Interested parties can communicate with our Independent Lead Director by writing to the following address: Independent Lead Director
c/o Julia S. JansonDavid B. Fountain
ExecutiveSenior Vice President, External Affairs,Legal, Chief Legal Ethics and Compliance
Officer and Corporate Secretary
Duke Energy Corporation
DEC 48H
P.O. Box 1414
Charlotte, NC 28201-1414 Our Corporate Secretary will distribute communications to the Board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Duke Energy Board has requested that certain items that are unrelated to the duties and responsibilities of the Board be excluded, such as spam, junk mail and mass mailings, service complaints, resumes, and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, obscene or similarly unsuitable will be excluded. However, any communication that is so excluded remains available to any director upon request.  
Corporate Governance Committee
Michael G. Browning, Chair
Daniel R. DiMicco
William E. Kennard
E. Marie McKee 28 DUKE ENERGY – 20182020 Proxy Statement
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DIRECTOR COMPENSATION
Our non-employee director compensation program is designed to attract and retain highly qualified directors and align their interests with those of our shareholders. We compensate non-employee directors with a combination of cash and equity awards, along with certain other benefits as described below. Ms. Good receives no compensation for her service on the Board.
The Compensation Committee annually reviews the non-employee director compensation program and recommends proposed changes for approval by the Board. As part of this review, the Compensation Committee considers the significant amount of time expended, and the skill level required, by each non-employee director in fulfilling his or her duties on the Board, each director's role and involvement on the Board and its committees and the market compensation practices and levels of our peer companies. Effective May 4, 2017, our non-employee director compensation program consisted of the following:
| | | | | Type of Fee
| | Amount
($)
| |
|---|
| | | | Annual Board Retainer (cash)
| | 125,000 | | Annual Board Retainer (stock)
| | 160,000 | | Annual Board Chair Retainer (if applicable)
| | 100,000 | | Annual Lead Director Retainer (if applicable)
| | 40,000 | | Annual Audit Committee Chair Retainer
| | 25,000 | | Annual Compensation Committee and Nuclear Oversight Committee Chair Retainers
| | 20,000 | | Annual Chair Retainer (other committees)
| | 15,000 | | Additional Cash Retainer Opportunity (see below)
| | 10,000 | | Board Meeting Fees
| | n/a | | | | | |
During its annual review of the non-employee director compensation program in 2017, the Compensation Committee considered an analysis prepared by its independent consultant, FW Cook, which summarized non-employee director compensation trends and pay levels at the same peer companies used to evaluate the compensation of our named executive officers. Following this review, and after considering the advice of FW Cook about market practices and pay levels, the Compensation Committee recommended, and the Board approved, the following changes to our non-employee director compensation program:
•Eliminated Board meeting fees
•Increased the Annual Board Cash Retainer from $90,000 to $125,000
•Increased the Annual Board Stock Retainer from $125,000 to $160,000
•Increased the Compensation Committee and Nuclear Oversight Committee Chair Retainers from $15,000 to $20,000
•An additional $10,000 cash retainer will be provided to any director who completes one or more of the following tasks during the calendar year: (a) participation on a special committee, (b) attendance at more than 30 meetings of the Board and/or regular standing committee meetings during the calendar year or (c) in person attendance at more than two offsite committee meetings during the calendar year.
Annual Board Stock Retainer for 2017. In 2017, each eligible director received the portion of his or her annual retainer that was payable in stock in the form of fully-vested shares. The stock retainer was granted under the Duke Energy Corporation 2015 Long-Term Incentive Plan which was approved by our shareholders and which contains an annual limit on equity awards to a non-employee director of $400,000.
Deferral Plan and Stock Purchases. Directors may elect to receive all or a portion of their annual cash compensation on a current basis or defer such compensation under the Duke Energy Corporation Directors' Savings Plan (the "Directors' Savings Plan"). Deferred amounts are credited to an unfunded account, the balance of which is adjusted for the performance of phantom investment options, including the Duke Energy common stock fund, as elected by the director, and generally are paid when the director terminates his or her service from the Board.
Charitable Giving Program. The Duke Energy Foundation, independent of Duke Energy, maintains the Duke Energy Foundation Matching Gifts Program under which directors are eligible to request matching contributions of up to $5,000 per director per calendar year to qualifying institutions. In addition, Duke Energy made a $2,500 donation to designated charities on behalf of the independent directors who exited the Board of Directors during 2017 as well as a $1,000 donation to the American Red Cross in November 2017 on behalf of each of the independent directors who were actively serving at that time.
Expense Reimbursement and Insurance. Duke Energy provides travel insurance to directors and reimburses directors for expenses reasonably incurred in connection with attendance and participation at Board and committee meetings and special functions.
Stock Ownership Guidelines. Outside directors are subject to stock ownership guidelines, which establish a minimum level of ownership of Duke Energy common stock (or common stock equivalents). Currently, each independent director is required to own shares with a value equal to at least five times the annual Board cash retainer (i.e., an ownership level of $625,000) or retain 50% of his or her vested annual equity retainer. All independent directors were in compliance with the guidelines as of December 31, 2017.
DUKE ENERGY – 2018 Proxy Statement 29
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DIRECTOR COMPENSATION Our director compensation program is designed to attract and retain highly qualified directors and align their interests with those of our shareholders. We compensate directors who are not employed by Duke Energy with a combination of cash and equity awards, along with certain other benefits as described below. Ms. Good receives no compensation for her service on the Board. The Compensation Committee annually reviews the director compensation program and recommends proposed changes for approval by the Board. As part of this review, the Compensation Committee considers the significant amount of time expended, and the skill level required, by each director not employed by Duke Energy in fulfilling his or her duties on the Board, each director's role and involvement on the Board and its committees, and the market compensation practices and levels of our peer companies. During its annual review of the director compensation program in 2019, the Compensation Committee considered an analysis prepared by its independent consultant, FW Cook, which summarized director compensation trends for independent directors and pay levels at the same peer companies used to evaluate the compensation of our NEOs. Following this review, and after considering the advice of FW Cook about market practices and pay levels, the Compensation Committee did not recommend any changes to our director compensation program. For 2019, our director compensation program consisted of the following: | | | | | Type of Fee
| | Amount
($)
| |
|---|
| | | | | Annual Board Retainer (cash) | | 125,000 | | Annual Board Retainer (stock) | | 160,000 | | Annual Board Chair Retainer (if applicable) | | 100,000 | | Annual Lead Director Retainer (if applicable) | | 40,000 | | Annual Audit Committee Chair Retainer | | 25,000 | | Annual Compensation Committee and Operations and Nuclear Oversight Committee Chair Retainers | | 20,000 | | Annual Chair Retainer (other committees) | | 15,000 | | Additional Cash Retainer Opportunity* | | 10,000 | | Board Meeting Fees | | n/a | | | | | | |
- *
- An additional $10,000 cash retainer will be provided to any director who completes one or more of the following during the calendar year: (i) participation on a special committee; (ii) attendance at more than 30 meetings of the Board and/or regular standing committee meetings during the calendar year; or (iii) in person attendance at more than two off-site committee meetings during the calendar year.
Annual Board Stock Retainer for 2019. In 2019, each eligible director received the portion of his or her annual retainer that was payable in stock in the form of fully vested shares. The stock retainer was granted under the Duke Energy Corporation 2015 Long-Term Incentive Plan that was approved by our shareholders and contains an annual limit on equity awards of $400,000 to any director not employed by Duke Energy. Deferral Plan and Stock Purchases. Directors may elect to receive all or a portion of their annual cash compensation on a current basis or defer such compensation under the Directors' Savings Plan. Deferred amounts are credited to an unfunded account, the balance of which is adjusted for the performance of phantom investment options, including the Duke Energy common stock fund, as elected by the director, and generally are paid when the director terminates his or her service from the Board. Charitable Giving Program. The Duke Energy Foundation, independent of Duke Energy, maintains the Duke Energy Foundation Matching Gifts Program under which directors and employees generally are eligible to request matching contributions of up to $5,000 per director or employee per calendar year to qualifying institutions. In addition, Duke Energy made a $2,500 donation to designated charities on behalf of the independent directors who retired from the Board of Directors during 2019, as well as a $1,000 donation to the American Red Cross in November 2019 on behalf of each of the directors not employed by Duke Energy who were actively serving at that time. Expense Reimbursement and Insurance. Duke Energy provides travel insurance to directors and reimburses directors for expenses reasonably incurred in connection with attendance and participation at Board and committee meetings and special functions. Stock Ownership Guidelines. Directors are subject to stock ownership guidelines, which establish a minimum level of ownership of Duke Energy common stock (or common stock equivalents). Currently, each director not employed by Duke Energy is required to own shares with a value equal to at least five times the annual Board cash retainer (i.e., an ownership level of $625,000) or retain 50% of his or her vested annual equity retainer. All directors were in compliance with the guidelines as of December 31, 2019. DUKE ENERGY – 2020 Proxy Statement 29
Table of Contents DIRECTOR COMPENSATION The following table describes the compensation earned during 20172019 by each individual, other than Ms. Good, who served as an independenta director during 2017. It does not include any payments to Mr. Skains attributable to his former employment at Piedmont Natural Gas. In addition, because Mr. Davis joined the Board on January 8, 2018, he did not receive any compensation in 2017 and is not listed below.2019. | Name
| | Fees Earned
or Paid in Cash
($)(2)
| | Stock
Awards
($)(3)
| | All Other
Compensation
($)(4)
| | Total
($)
| | | Fees Earned
or Paid in Cash
($)(2)
| | Stock
Awards
($)(3)
| | All Other
Compensation
($)(4)
| | Total
($)
| |
|---|
| | | | | | | | | | | | | | | | | | | | Michael J. Angelakis(1) | | | 99,903 | | | 160,000 | | | 2,674 | | | 262,577 | | | Michael G. Browning | | | 190,077 | | | 160,000 | | | 6,269 | | | 356,346 | | | | 180,000 | | | 160,000 | | | 19,349 | | | 359,349 | | Annette K. Clayton(1) | | | | 122,893 | | | 210,549 | | | 1,795 | | | 335,237 | | Theodore F. Craver, Jr.(1) | | | 113,523 | | | 181,978 | | | 6,225 | | | 301,726 | | | | 150,000 | | | 160,000 | | | 6,240 | | | 316,240 | | Robert M. Davis | | | | 135,000 | | | 160,000 | | | 1,240 | | | 296,240 | | Daniel R. DiMicco | | | 129,077 | | | 160,000 | | | 6,269 | | | 295,346 | | | | 125,000 | | | 160,000 | | | 6,240 | | | 291,240 | | John H. Forsgren | | | 147,577 | | | 160,000 | | | 6,269 | | | 313,846 | | | Ann Maynard Gray(1) | | | 45,003 | | | 0 | | | 7,694 | | | 52,697 | | | Nicholas C. Fanandakis(1) | | | | 64,217 | | | 136,280 | | | 1,124 | | | 201,621 | | John H. Forsgren(1) | | | | 47,308 | | | 0 | | | 7,733 | | | 55,041 | | John T. Herron | | | 150,374 | | | 160,000 | | | 6,269 | | | 316,643 | | | | 145,000 | | | 160,000 | | | 6,240 | | | 311,240 | | James B. Hyler, Jr. | | | 145,077 | | | 160,000 | | | 1,269 | | | 306,346 | | | James B. Hyler, Jr.(1) | | | | 47,308 | | | 0 | | | 2,733 | | | 50,041 | | William E. Kennard | | | 134,077 | | | 160,000 | | | 6,269 | | | 300,346 | | | | 134,931 | | | 160,000 | | | 6,240 | | | 301,171 | | E. Marie McKee | | | 149,374 | | | 160,000 | | | 6,269 | | | 315,643 | | | | 145,000 | | | 160,000 | | | 6,240 | | | 311,240 | | Charles W. Moorman IV | | | 125,077 | | | 160,000 | | | 6,269 | | | 291,346 | | | | 125,000 | | | 160,000 | | | 6,240 | | | 291,240 | | Marya M. Rose(1) | | | | 104,284 | | | 187,253 | | | 6,202 | | | 297,739 | | Carlos A. Saladrigas | | | 131,077 | | | 160,000 | | | 6,269 | | | 297,346 | | | | 125,000 | | | 160,000 | | | 6,240 | | | 291,240 | | Thomas E. Skains | | | 130,077 | | | 160,000 | | | 6,269 | | | 296,346 | | | | 154,862 | | | 160,000 | | | 6,240 | | | 321,102 | | William E. Webster, Jr. | | | 132,077 | | | 160,000 | | | 6,201 | | | 298,278 | | | | 135,000 | | | 160,000 | | | 6,475 | | | 301,475 | | | | | | | | | | | | | | | | | | | | | |
- (1)
Effective May 4, 2017, Ms. Gray retired from the BoardClayton, Mr. Fanandakis, and effective August 25, 2017, Mr. Angelakis resigned from the Board due to increased external business commitments. Mr. Craver wasMs. Rose were appointed to the Board on January 7, 2019, June 26, 2019, and March 1, 2017.2019, respectively. Effective May 2, 2019, Mr. Forsgren and Mr. Hyler retired from the Board.
- (2)
- Mr.
Angelakis, Mr. Browning, Ms. Gray,Clayton, Mr. Hyler, Mr. Moorman, and Mr. Saladrigas elected to defer $49,952; $190,077; $45,003; $72,539; $125,077$180,000; $122,893; $23,654; $125,000; and $131,077,$125,000 respectively, of his or her 2017their 2019 cash compensation under the Directors' Savings Plan.
- (3)
- This column reflects the grant date fair value of the stock awards granted to each eligible director during
2017.2019. The grant date fair value was determined in accordance with the accounting guidance for stock-based compensation. See Note 2022 of the Consolidated Financial Statements contained in our Annual Report on2019 Form 10-K for the year ended December 31, 2017 ("Form 10-K") for an explanation of the assumptions made in valuing these awards. In March 2017, Mr. CraverUpon joining the Board in early 2019, Ms. Clayton and Ms. Rose received a prorated portion of the 2016-20172018 - 2019 annual stock retainer, amounting to 268595 and 304 shares of Duke Energy common stock.stock, respectively. In May 2017,2019, each sitting director on the Board received an annual stock retainer in the form of 1,9371,782 shares of Duke Energy common stock. Mr. Angelakis,Browning, Ms. Clayton, Mr. Browning, Mr. Forsgren, Mr. Hyler,Craver, Mr. Kennard, Mr. Moorman, Ms. Rose, Mr. Saladrigas, and Mr. Webster elected to defer their 2017-20182019 - 2020 stock retainer of Duke Energy shares under the Directors' Savings Plan. In addition, Mr. Fanandakis received a prorated portion of the 2019 - 2020 annual stock retainer in the form of 1,549 shares of Duke Energy common stock, upon joining the Board in June 2019.
- (4)
As described in the following table,The All Other Compensation column includes the following for 2017 includes cost associated with a business travel accident insurance premium that was prorated among the directors based on their service on the Board during 2017, contributions made in the director's name to charitable organizations and a retirement gift for Ms. Gray.2019:
| Name
| | Personal Use
of Airplane
($)
| | Business Travel
Accident
Insurance
($)
| | Charitable
Contributions
($)
| | Retirement
Gift
($)
| | Total
($)
| | | Personal Use
of Airplane
($)
| | Business Travel
Accident
Insurance
($)
| | Charitable
Contributions
($)
| | Other*
($)
| | Total
($)
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | Michael J. Angelakis | | | 0 | | | 174 | | | 2,500 | | | 0 | | | 2,674 | | | Michael G. Browning | | | 0 | | | 269 | | | 6,000 | | | 0 | | | 6,269 | | | | 13,109 | | | 240 | | | 6,000 | | | 0 | | | 19,349 | | Annette K. Clayton | | | | 0 | | | 236 | | | 1,559 | | | 0 | | | 1,795 | | Theodore F. Craver, Jr. | | | 0 | | | 225 | | | 6,000 | | | 0 | | | 6,225 | | | | 0 | | | 240 | | | 6,000 | | | 0 | | | 6,240 | | Robert M. Davis | | | | 0 | | | 240 | | | 1,000 | | | 0 | | | 1,240 | | Daniel R. DiMicco | | | 0 | | | 269 | | | 6,000 | | | 0 | | | 6,269 | | | | 0 | | | 240 | | | 6,000 | | | 0 | | | 6,240 | | Nicholas C. Fanandakis | | | | 0 | | | 124 | | | 1,000 | | | 0 | | | 1,124 | | John H. Forsgren | | | 0 | | | 269 | | | 6,000 | | | 0 | | | 6,269 | | | | 0 | | | 80 | | | 7,500 | | | 153 | | | 7,733 | | Ann Maynard Gray | | | 0 | | | 91 | | | 7,500 | | | 103 | | | 7,694 | | | John T. Herron | | | 0 | | | 269 | | | 6,000 | | | 0 | | | 6,269 | | | | 0 | | | 240 | | | 6,000 | | | 0 | | | 6,240 | | James B. Hyler, Jr. | | | 0 | | | 269 | | | 1,000 | | | 0 | | | 1,269 | | | | 0 | | | 80 | | | 2,500 | | | 153 | | | 2,733 | | William E. Kennard | | | 0 | | | 269 | | | 6,000 | | | 0 | | | 6,269 | | | | 0 | | | 240 | | | 6,000 | | | 0 | | | 6,240 | | E. Marie McKee | | | 0 | | | 269 | | | 6,000 | | | 0 | | | 6,269 | | | | 0 | | | 240 | | | 6,000 | | | 0 | | | 6,240 | | Charles W. Moorman IV | | | 0 | | | 269 | | | 6,000 | | | 0 | | | 6,269 | | | | 0 | | | 240 | | | 6,000 | | | 0 | | | 6,240 | | Marya M. Rose | | | | 0 | | | 202 | | | 6,000 | | | 0 | | | 6,202 | | Carlos A. Saladrigas | | | 0 | | | 269 | | | 6,000 | | | 0 | | | 6,269 | | | | 0 | | | 240 | | | 6,000 | | | 0 | | | 6,240 | | Thomas E. Skains | | | 0 | | | 269 | | | 6,000 | | | 0 | | | 6,269 | | | | 0 | | | 240 | | | 6,000 | | | 0 | | | 6,240 | | William E. Webster, Jr. | | | 0 | | | 269 | | | 5,932 | | | 0 | | | 6,201 | | | | 0 | | | 240 | | | 6,000 | | | 235 | | | 6,475 | | | | | | | | | | | | | | | | | | | | | | | | | |
- *
- lncludes the cost of a gift for the directors who retired during 2019 and occasional personal use of tickets to athletic and cultural events.
30 DUKE ENERGY – 20182020 Proxy Statement
Table of Contents
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table indicates the amount of Duke Energy common stock beneficially owned by the current directors, the executive officers listed in the Summary Compensation Table under Executive Compensation (referred to as the named executive officers)NEOs), and all directors and executive officers as a group as of February 26, 2018.March 9, 2020. There were 700,299,523734,028,620 shares of Duke Energy common stock outstanding as of February 26, 2018.March 9, 2020. | | | | | | | | | | | | Name or Identity of Group
| | Total Shares
Beneficially Owned(1)
| | Percent
of Class
| |
|---|
| | | | | | | Michael G. Browning | | | 78,31489,028 | | | | * | | | Theodore F. Craver, Jr.Annette K. Clayton
| | | 5,7383,800 | | | | * | | | Robert M. DavisTheodore F. Craver, Jr. | | | 6156,310 | | | | * | | | Daniel R. DiMiccoRobert M. Davis
| | | 45,3584,559 | | | | * | | | John H. ForsgrenDaniel R. DiMicco | | | 20,52452,695 | | | | * | | | Douglas F Esamann | | | 66,526 | | | | * | | | Nicholas C. Fanandakis | | | 1,549 | | | | * | | | Lynn J. Good | | | 120,876274,504 | | | | * | | | John T. Herron | | | 15,69519,841 | | | | * | | | James B. Hyler, Jr.Dhiaa M. Jamil
| | | 18,28824,900 | | | | * | | | Dhiaa M. JamilJulia S. Janson | | | 15,72925,995 | | | | * | | | Julia S. JansonWilliam E. Kennard
| | | 22,62212,911 | | | | * | | | William E. KennardMarie McKee | | | 8,176156 | | | | * | | | E. Marie McKeeCharles W. Moorman IV
| | | 14312,820 | | | | * | | | Charles W. Moorman IVMarya M. Rose | | | 6,9392,142 | | | | * | | | Carlos A. Saladrigas | | | 4,4285,260 | | | | * | | | Thomas E. Skains | | | 18,41622,204 | | | | * | | | William E. Webster, Jr. | | | 3,0583,638 | | | | * | | | Lloyd M. Yates(2) | | | 35,65322,047 | | | | * | | | Frank H. Yoho(2) | | | 23,139 | | | | * | | | Steven K. Young | | | 51,42881,440 | | | | * | | | Directors and executive officers as a group (22)(26) | | | 548,816790,859 | | | | * | | | | | | | | | |
- *
- Represents less than 1%.
- (1)
- Includes the following number of shares with respect to which directors and executive officers have the right to acquire beneficial ownership within 60 days of
February 26, 2018:March 9, 2020: Mr. Browning – 24,384 ;28,418; Ms. Clayton – 1,838; Mr. Craver – 0 ;572; Mr. Davis – 0;2,162; Mr. DiMicco – 17,869;19,478; Mr. ForsgrenEsamann – 17,203;0; Mr. Fanandakis – 0; Ms. Good – 0; Mr. Herron – 0; Mr. Hyler – 10,946; Mr. Jamil – 0; Ms. Janson – 0; Mr. Kennard – 8,176;12,911; Ms. McKee – 143;156; Mr. Moorman – 3,673;6,274; Ms. Rose – 1,838; Mr. Saladrigas – 1,480;2,136; Mr. Skains – 0; Mr. Webster – 1,997;2,577; Mr. Yates – 0; Mr. Yoho – 0; and Mr. Young – 0; and all directors and executive officers as a group – 85,871.78,358.
- (2)
- Provided as of the date of termination of employment.
Supplemental Table – Including Ownership of Units Representing Common Stock The table below shows ownership of both Duke Energy common stock (listed in the table above as defined by SEC regulations) as well as units (not listed in the table above) related to Duke Energy common stock under the Directors' Savings Plan or the Duke Energy Corporation Executive Savings Plan, ("Executive Savings Plan"), as applicable, which units do not represent an equity interest in Duke Energy and possess no voting rights, but are equal in economic value to one share of Duke Energy common stock. | | | | | | | Name
| | Number of Units
| |
|---|
| | | | | Michael G. Browning | | | 108,271121,543 | | | Annette K. Clayton | | | 3,800 | | | Theodore F. Craver, Jr. | | | 5,7389,737 | | | Robert M. Davis | | | 6154,559 | | | Daniel R. DiMicco | | | 46,72554,186 | | | Douglas F Esamann | | | 66,947 | | | John H. ForsgrenNicholas C. Fanandakis | | | 20,5241,549 | | | Lynn J. Good | | | 120,950274,585 | | | John T. Herron | | | 15,69519,841 | | | James B. Hyler, Jr.
| | | 29,853 | | | Dhiaa M. Jamil | | | 17,61126,943 | | | Julia S. Janson | | | 22,83226,223 | | | William E. Kennard | | | 8,17612,911 | | | E. Marie McKee | | | 58,66763,950 | | | Charles W. Moorman IV | | | 6,93914,550 | | | Marya M. Rose | | | 2,142 | | | Carlos A. Saladrigas | | | 40,97948,580 | | | Thomas E. Skains | | | 18,41622,204 | | | William E. Webster, Jr. | | | 3,0587,237 | | | Lloyd M. Yates(1) | | | 47,10834,345 | | | Frank H. Yoho(1) | | | 23,139 | | | Steven K. Young | | | 51,92681,982 | | | | | | | |
- (1)
- Provided as of the date of termination of employment.
DUKE ENERGY – 20182020 Proxy Statement 31
Table of Contents SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table lists the beneficial owners of 5% or more of Duke Energy's outstanding shares of common stock as of December 31, 2017.2019. This information is based on the most recently available reports filed with the SEC and provided to us by the company listed. | Name or Identity of Beneficial Owner
| | Shares of Common Stock
Beneficially Owned
| | Percentage
| | | Shares of Common Stock
Beneficially Owned
| | Percentage
| |
|---|
| | | | | | | | | | | | The Vanguard Group | | | 51,528,433 | | | 7.36 | % | | | | 61,943,594 | | | 8.49 | % | | 100 Vanguard Blvd.
Malvern, PA 19355 |
| | | | | | | |
| | | | | | | |
BlackRock Inc. |
|
|
45,499,220 |
|
|
6.5 |
% |
|
|
|
52,746,741 |
|
|
7.00 |
% |
| 40 East 52nd Street
New York, NY 10022 | | | | | | | | | | 40 East 52nd Street
New York, NY 10022 | | | | | | | | | |
State Street Corporation(3) | |
|
|
39,906,222 |
|
|
|
5.47 |
% |
| State Street Financial Center
One Lincoln Street
Boston, MA 02111 | |
| | | | | | | | | | | | | | | | | | | |
- (1)
- According to the Schedule 13G/A filed by The Vanguard Group, these shares are beneficially owned by The Vanguard Group, which is the parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G) to various investment companies, and has sole voting power with respect to
1,080,0361,268,705 shares, 345,502438,116 shares with shared voting power, sole dispositive power with regard to 50,246,45860,515,245 shares, and 1,281,9751,428,349 shares with shared dispositive power.
- (2)
- According to the Schedule 13G/A filed by BlackRock Inc., these shares are beneficially owned by BlackRock Inc., which is the parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G) to various investment companies, and has sole voting power with respect to
39,676,33147,094,850 shares, 0no shares with shared voting power, sole dispositive power with regard to 45,499,22052,746,741 shares, and 0no shares with shared dispositive power.
- (3)
- According to the Schedule 13G filed by State Street Corporation, these shares are beneficially owned by State Street Corporation, which is the parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G) to various investment companies, and has no shares with sole voting power, 33,890,598 shares with shared voting power, no shares with sole dispositive power, and 39,854,777 shares with shared dispositive power.
Prohibition on Hedging and Pledging
Under our Securities Trading Policy, our directors, officers, employees, and their "related persons" may not engage in any hedging or monetization transactions with respect to Duke Energy securities, including by trading in put or call options, warrants, swaps, forwards and other derivatives or similar instruments on our securities, or by selling Duke Energy securities "short." In addition, our directors, officers, employees, and their related persons are prohibited from holding Duke Energy securities in a margin account or otherwise pledging our securities in any way, including as collateral for a loan. For purposes of this policy, a "related person" of any director or employee includes the spouse, minor children, or anyone else living in the director's or employee's household, partnerships in which the director or employee is a general partner, trusts of which the director or employee is a trustee, estates of which the director or employee is an executor, and any other legal entities controlled by the director or employee. 32 DUKE ENERGY – 20182020 Proxy Statement
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PROPOSAL 2: RATIFICATION OF DELOITTE & TOUCHE LLP AS DUKE ENERGY CORPORATION'SENERGY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 20182020 The Audit Committee is directly responsible for the appointment and compensation, including the preapproval of audit fees as described below, and the retention and oversight of the independent registered public accounting firm that audits our financial statements and our internal control over financial reporting. The Audit Committee annually performs an assessment of Deloitte's independence and performance in deciding whether to retain Deloitte or engage a different independent auditor. Based on this evaluation, the Audit Committee has selected Deloitte & Touche LLP ("Deloitte") as Duke Energy's independent registered public accounting firm for 2018. 2020. This appointment is being submitted to shareholders for its ratification as the Audit Committee and the Board believe that the continued retention of Deloitte as our independent registered public accounting firm is in the best interests of Duke Energy and our shareholders. Independence
Deloitte (or one of its predecessor companies) has served as our independent registered public accounting firm since 1947. Independence
The Audit Committee Deloitte's level of service, industry experience, and the Board believe that the continued retention of Deloitte as Duke Energy's independent registered public accounting firm is in the best interests of the Corporation and our shareholders. Deloitte's years of experience with Duke Energy have allowed them to gain expertise regarding Duke Energy's operations, accounting policies and practices, and internal controls over financial reporting. It also prevents the significant time commitment that educating a new auditor would entail, which could also result in distraction in focus for Duke Energy management.management and enables a more efficient fee structure.
To safeguard the continued independence of the independent registered public accounting firm, the Audit Committee adopted a policy that provides that the independent registered public accounting firm is only permitted to provide services to Duke Energy and our subsidiaries that have been preapproved by the Audit Committee. Pursuant to the policy, detailed audit services, audit-related services, tax services, and certain other services have been specifically preapproved up to certain categorical fee limits. In the event that theProposed services exceeding cost of any of these services may exceed the preapproved limits must be approved by the Audit Committee must approve the service before the independent registered public accounting firm is engaged for such service. All other services that are not prohibited pursuant to the SEC's or other applicable regulatory bodies' rules or regulations must be specifically approved by the Audit Committee before the independent registered public accounting firm is engaged for such service. All services performed in 20172019 and 20162018 by the independent registered public accounting firm were approved by the Duke Energy Audit Committee pursuant to its policy on Engaging the Independent Auditor for Services. Information on Deloitte's fees for services rendered in 2019 and 2018 are listed below. In addition to the annual review of Deloitte's independence and in association with the mandatedmandatory rotation of Deloitte's lead engagement partner every five years, the Audit Committee is directly involved inoversees the selection of Deloitte's new lead engagement partner.partner, including discussing candidate qualifications and interviewing potential candidates put forth by Deloitte. In 2018, the Audit Committee approved the selection of a new lead engagement partner beginning with the 2019 audit year. Representatives of Deloitte are expected to participate in the Annual Meeting and will be available to respond to appropriate questions. Information on Deloitte's fees for services renderedquestions that are submitted in 2017 and 2016 are listed below.advance of or at the Annual Meeting. The approval of a majority of shares represented in person or by proxy at the Annual Meeting is required to approve this proposal. Audit Fees
| Type of Fees
| | 2017
| | 2016
| | | 2019
| | 2018
| |
|---|
| | | | | | | | | | | | Audit Fees(1)(5) | | $ | 13,535,000 | | | $ | 13,616,400 | | | | $ | 13,460,000 | | | $ | 13,950,000 | | | Audit-Related Fees(2)(5) | | 249,000 | | | 626,000 | | | | Audit-Related Fees(2) | | | 588,000 | | | 386,000 | | | Tax Fees(3) | | 1,746,000 | | | 384,000 | | | | 192,000 | | | 550,000 | | | All Other Fees(4) | | 50,000 | | | 225,000 | | | | All Other Fees(4)(5) | | | 30,000 | | | 20,000 | | | | | | | | | | | | | | | TOTAL FEES: | | $ | 15,580,000 | | | $ | 14,851,400 | | | | Total fees: | | | $ | 14,270,000 | | | $ | 14,906,000 | | | | | | | | | | | | | | |
- (1)
- Audit Fees are fees billed, or expected to be billed, by Deloitte for professional services for the financial statement audits
audit of the financial statements of Duke Energy and our subsidiaries, including the audit of the internal control over financial reporting of Duke Energy and subsidiaries included in Duke Energy's Annual Report on2019 Form 10-K, and reviews of financial statements included in Duke Energy's Quarterly Reports on Form 10-Q, statutory and regulatory attestation procedures, and services associated with securities filings such as comfort letters and consents.
- (2)
- Audit-Related Fees are fees billed, or expected to be billed, by Deloitte for assurance and related services,
that are reasonably related to the performanceincluding examinations of an audit or review ofmanagement assertions on financial statements, including assistance with acquisitions and divestitures and internal control reviews.reporting-related matters.
- (3)
- Tax Fees are fees billed, or expected to be billed, by Deloitte for tax return assistance and preparation, tax examination assistance, and professional services related to tax planning and tax strategy.
- (4)
- Other Fees are billed, or expected to be billed, by Deloitte for attendance at Deloitte-sponsored conferences and access to Deloitte research tools and subscription services.
In 2016, other fees also include non-audit fees related to consulting services.
- (5)
- Audit Fees and
Audit RelatedAll Other Fees for 20162018 have been updated from the number disclosed in the 20172019 Proxy Statement to reflect actuals.
For the Above Reasons, the Board of Directors Recommends a Vote "FOR" This Proposal. DUKE ENERGY – 20182020 Proxy Statement 33
Table of Contents
REPORT OF THE AUDIT COMMITTEE The following is the report of the Audit Committee with respect to Duke Energy's audited financial statements for the fiscal year ended December 31, 2017.2019. The information contained in this report of the Audit Committee shall not be deemed to be "soliciting material" or "filed" or "incorporated by reference" in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that Duke Energy specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act. The purpose of the Audit Committee is to assist the Board in its general oversight of Duke Energy's financial reporting, internal controls, and audit functions. The Audit Committee's charter describes in greater detail the full responsibilities of the committee and is available on our website atduke-energy.com/our-company/investors/corporate-governance/board-committee-charters/audit. Further information about the Audit Committee, its Policy on Engaging the Independent Auditor for Services and its members is detailed on pages 22 and 33 of thethis proxy statement. The Audit Committee has reviewed and discussed the consolidated financial statements with management and Deloitte, the Corporation'sDuke Energy's independent registered public accounting firm. Management is responsible for the preparation, presentation, and integrity of Duke Energy's financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e))13a-15I); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and, evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Deloitte is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States ("GAAP"),GAAP, as well as expressing an opinion on the effectiveness of internal control over financial reporting based on the criteria established in Internal Control – Integrated Framework (2013). The Audit Committee reviewed the Corporation'sCompany's audited financial statements with management and Deloitte, and met separately with both management and Deloitte to discuss and review those financial statements and reports prior to issuance. These discussions also addressed the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. Management has represented, and Deloitte has confirmed, that the financial statements are fairly presented, in all material respects, in conformity with GAAP. In addition, management completed the documentation, testing, and evaluation of Duke Energy's system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received periodic updates provided by management and Deloitte at each of the regularly scheduled Audit Committee meetings. At the conclusion of the process, management presented to the Audit Committee on the effectiveness of the Corporation'sDuke Energy's internal control over financial reporting. The Audit Committee also reviewed the report of management contained in the Corporation's 2017Duke Energy's 2019 Form 10-K filed with the SEC, as well as Deloitte's report included in the Corporation's 2017Company's 2019 Form 10-K related to its audit of the effectiveness of internal control over financial reporting. The Audit Committee has discussed with Deloitte the matters required to be discussed by professional and regulatorythe applicable requirements including, but not limited to, the standards of the Public Company Accounting Oversight Board regarding The Auditors' Communications with those charged with governance.Board. In addition, Deloitte has provided the Audit Committee with the written disclosures and the letter required by Public Company Accounting Oversight Board Ethics and Independence Rule 3526, "Communications with Audit Committees Concerning Independence" that relates to Deloitte's independence from Duke Energy and our subsidiaries and the Audit Committee has discussed with Deloitte the firm's independence. Based on its review of the consolidated financial statements and discussions with and representations from management and Deloitte referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in Duke Energy's 20172019 Form 10-K for filing with the SEC. Audit Committee
Theodore F. Craver, Jr., Chair
Robert M. DavisAnnette K. Clayton
James B. Hyler, Jr.Nicholas C. Fanandakis
Carlos A. Saladrigas
William E. Webster, Jr. 34 DUKE ENERGY – 20182020 Proxy Statement
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PROPOSAL 3: ADVISORY VOTE TO APPROVE DUKE ENERGY CORPORATION'SENERGY'S NAMED EXECUTIVE OFFICER COMPENSATION At the 2011 and 2017 Annual Meetings, ourDuke Energy's shareholders recommended that our Board hold say-on-pay votes on an annual basis. As a result, we are providing our shareholders with the opportunity to approve, on a nonbinding, advisory basis, the compensation of our named executive officersNEOs as disclosed in this proxy statement. This proposal gives our shareholders the opportunity to express their views on the compensation of our named executive officers.NEOs. In connection with this proposal, the Board encourages shareholders to review, in detail, the description of the compensation program for our named executive officersNEOs that is set forth in the Compensation Discussion and Analysis beginning on page 36, as well as the information contained in the compensation tables and narrative discussion in this proxy statement. As described in more detail in the Compensation Discussion and Analysis section, the guiding principle of our compensation philosophy is that pay should be linked to performance and that the interests of our executives and shareholders should be aligned. Our compensation program is designed to provide significant upside and downside potential depending on actual results as compared to predetermined measures of success. A significant portion of our named executive officers' total direct compensationNEOs' TDC is directly contingent upon achieving specific results that are important to our long-term success and growth in shareholder value. We supplement our pay-for-performancepay for performance program with a number of compensation policies that are aligned with the long-term interests of Duke Energy and our shareholders. We are asking our shareholders to indicate their support for the compensation of our named executive officersNEOs as disclosed in this proxy statement by voting "FOR" the following resolution: "RESOLVED, that the shareholders of Duke Energy approve, on an advisory basis, the compensation paid to Duke Energy's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K of the Securities Act, of 1933, as amended, including the Compensation Discussion and Analysis, the compensation tables, and the narrative discussion in Duke Energy's 20182020 Proxy Statement." The approval of a majority of shares represented in person or by proxy at the Annual Meeting is required to approve this proposal. Because your vote is advisory, it will not be binding on the Board, the Compensation Committee, or Duke Energy. The Compensation Committee, however, will review the voting results and take them into consideration when making future decisions regarding the compensation of our named executive officers.NEOs. For the Above Reasons, the Board of Directors Recommends a Vote "FOR" This Proposal.
REPORT OF THE COMPENSATION COMMITTEE The Compensation Committee of Duke Energy is responsible for the oversight of the Corporation'sDuke Energy's compensation programs and compensation of the Corporation's executives,Duke Energy's executive officers per the Compensation Committee's charter, which is available on our website atduke-energy.com/our-company/investors/corporate-governance/board-committee-charters/compensation. The Compensation Committee of Duke Energy has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement. Compensation Committee
E. Marie McKee, Chair
Michael G. Browning
John H. ForsgrenRobert M. Davis
Marya M. Rose
Carlos A. Saladrigas DUKE ENERGY – 20182020 Proxy Statement 35
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COMPENSATION DISCUSSION AND ANALYSIS
Section 1: Executive Summary The purpose of this Compensation Discussion and Analysis is to provide information about Duke Energy's compensation objectives and policies for our named executive officers ("NEOs"),NEOs, who, for 20172019 are: | | | Name
| | Title
|
|---|
| | | | | Lynn J. Good | | Chairman,Chair, President and Chief Executive OfficerCEO | | Steven K. Young | | Executive Vice President and Chief Financial OfficerCFO | | Dhiaa M. Jamil | | Executive Vice President and Chief Operating Officer | | Julia S. Janson | | Executive Vice President, External Affairs Chief Legal Officer and Corporate SecretaryPresident, Carolinas Region | Lloyd M. YatesDouglas F Esamann | | Executive Vice President, Customer and Delivery OperationsEnergy Solutions and President, Carolinas RegionMidwest/Florida Regions and Natural Gas Business | | | | |
Our NEOs for 2019 also include two executives who left Duke Energy during 2019. Mr. Lloyd M. Yates, who most recently served as Executive Vice President, Customer and Delivery Operations and President, Carolinas Region, left on September 30, 2019, and Mr. Frank H. Yoho, who most recently served as Executive Vice President and President, Natural Gas Business, left on October 3, 2019. This Compensation Discussion and Analysis focuses on the compensation earned by our current NEOs listed in the table above, but also describes the compensation earned by Mr. Yates and Mr. Yoho. Compensation Objectives and Principles for 20172019 |
- •
- Our compensation program is designed to link pay to performance, with the goal of attracting and retaining talented executives, rewarding individual performance, encouraging long-term commitment to our business strategy, and aligning the interests of our management team with those of
shareholders.key stakeholders, including, shareholders and customers.
- •
- Our compensation program provides significant upside and downside potential depending on actual results, as compared to predetermined
measures ofgoals for success.
- •
- We received 91.87% favorable support from our shareholders for our executive compensation program pursuant to the "say on pay" vote at our 2019 Annual Meeting.
- •
- In setting executive compensation for
2017,2019, we sought to balance the need to recognize the evolving nature of our business strategy with Duke Energy's focus on maximizing long-term, sustainable shareholder value.value and providing safe, reliable and cost-effective service to our customers.
We have a longstanding history of engaging with, and responding to the feedback provided by, our shareholders and value the deep relationships we have built. The feedback our shareholders have provided over time has greatly informed our compensation and governance programs as well as our environmental and social initiatives. We received 82.71% favorable support from our shareholders for our executive compensation program pursuant to the "say on pay" vote at our 2017 annual meeting. In response,Given its success, we continued our shareholder outreach program in 2017,2019, reaching out to shareholders representingholders of approximately 36%one-third of our outstanding shares and engagingmet with shareholders representingthe holders of approximately 30%25% of our outstanding shares. Our outreach team included members of our Board, as well as management who representedrepresenting, among others, the Investor Relations, Sustainability, Human Resources, and Legal Departments, as well as E. Marie McKee, the Chair of the Compensation Committee, who participated in a number of the conversations with our largest shareholders.Departments. The focus of these meetings was to provide an update on on: - •
- our strategic
vision,vision;
- •
- our operational
priorities and priorities;
- •
- the strength of our leadership
team, as well asteam;
- •
- our commitment to
discuss ESG issues;
- •
- our
governancehuman capital management; and
- •
- our executive compensation
program, notably updates to our Chief Executive Officer's compensation for 2017 and several disclosure and governance enhancements the Compensation Committee was considering. program.
During these conversations, shareholders thanked us for the pay for performance alignment in our proactive approachcompensation program, as well as the clear and provideddetailed disclosure of our executive compensation program. Shareholders also were pleased that environmental, customer satisfaction, and safety metrics continue to be incorporated into our incentive plans. No significant changes were recommended to the following specific feedback: •Appreciated that we have evolved theoverall design of our long-term incentive ("LTI")compensation plans during our 2019 engagement with shareholders.We greatly value the input shareholders provided and will continue our outreach efforts on a variety of topics, including executive compensation, as our compensation program over the last three years to incorporate strategic and operational measures in addition to Total Shareholder Return ("TSR")
•Understood the historically conservative approach to compensating Ms. Good and the need to make adjustments commensurate with market levels
•Acknowledged that the Compensation Committee followed a thoughtful approach to addressing retention risk by providing Ms. Good with a performance-based retention grant
•Appreciated our commitment to enhance the disclosure of performance levels under future performance shares and expand the restrictions in our anti-pledging policy to prohibit pledging of Duke Energy securities held in any capacity
•Appreciated the changeevolves in the requirement for achieving a target payout on the relative TSR component of our LTI performance shares from the 50th to the 55th percentile of the UTY.
future. 36 DUKE ENERGY – 20182020 Proxy Statement
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS Taking into account the feedback shareholders provided during our conversations, we made the following changes for 2017:
•Enhanced the disclosure in this year's proxy statement of performance goals for the newest cycle of performance shares (i.e., the 2017-2019 cycle), along with continued reporting of actual performance results for the recently-completed cycle
•Expanded the restrictions of our anti-pledging policy
We greatly value the input shareholders provided and will continue our outreach efforts on a variety of topics – including executive compensation – as our compensation program evolves in the future.
Business Highlights: Compensation Decisions in Context Portfolio TransitionAdvancing Our Strategic Vision
|
We have successfully implementedcontinue to advance our business transformation strategy to maximize the competitiveness of Duke Energy. The following timeline summarizes key events in our business transformation since 2011.strategic vision as indicated below.  
Our value proposition is to be the leading energy infrastructure company. Under the leadership of Ms. Good, who became Chief Executive Officerour CEO in July 2013, Duke Energy haswe have intensified our focus on serving our customers and communities, while leading the way to a safe, secure, and responsible energy future. With our transition complete, ourOur strategy for the next decade is clear. We see greata long runway of opportunities ahead and remain focused on investing in infrastructure our customers value and delivering sustainable growth for our investors. We will do this while building on our foundation of customer satisfaction and stakeholder engagement, all while remaining focused on safety, operational excellence and the environment.
Duke Energy is committed to creating value for our shareholders while building trust and transforming the energy experience of our energy future.communities. We continuously strive to achieve this core purpose of creating shareholder value in all that we do, but with a particular emphasis on the following areas: - •
- Modernizing the energy
gridgrid;
- •
- Generating cleaner
energyenergy; and
- •
- Expanding
our natural gas infrastructureinfrastructure.
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COMPENSATION DISCUSSION AND ANALYSIS
During 2017 we made meaningful progress on our strategy. We developed a multi-year plan to modernize the energy grid across our jurisdictions, and in the Carolinas we branded our efforts as Power/Forward Carolinas. We placed the Sabal Trail natural gas pipeline into service and obtained several key permits necessary to advance the Atlantic Coast Pipeline. We achieved constructive regulatory outcomes, including the facilitation of renewables-related legislation in North Carolina and a comprehensive multi-year rate settlement in Florida. In addition, we announced a more stringent carbon dioxide emissions reduction target for our generation fleet – a 40% reduction from the 2005 level by 2030. We also maintained a sharp focus during the year on the performance measures that relate to our incentive plans, including the following.
•Operational Excellence.
•Our key employee safety metric, TICR, improved by approximately 10% during the year to 0.36, building on our industry-leading performance of 0.40 in 2016.
•During the third quarter, our employees rose to the challenge of Hurricane Irma – one of the most powerful storms ever to hit the Atlantic – by restoring power to 99% of customers in just over a week.
•We reduced reportable environmental events from last year, the third consecutive year of improvement and continued to advance our efforts to permanently close our coal ash basins in ways that protect people and the environment.
•Financial Performance.
•Despite the significant headwind from unfavorable weather, we delivered on our earnings guidance for the year.
•Our TSR of 13.0% exceeded the TSR of the UTY, which was 12.8%.
•We increased our dividend for the eleventh consecutive year.
38 DUKE ENERGY – 2018 Proxy Statement
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS
Adjustments2019 Business Highlights
|
We had an outstanding year during 2019. We met our near-term financial commitments and positioned Duke Energy for sustainable long-term growth. We continued to advance a growth strategy focused on investments to modernize our energy grid, generate cleaner energy, and expand our natural gas infrastructure – all built on a foundation of operational excellence, employee and stakeholder engagement, and customer service. Our business highlights in 2019 include the following: - •
- Operational Excellence
- •
- Safety remains our top priority. Our employees delivered strong safety results in 2019, consistent with our industry-leading performance levels from 2016 through 2018. As an indication of our commitment to safety, we include safety metrics in both the STI and LTI plans. We met our challenging employee target for TICR in 2019; however, the STI plan payments for our NEOs were reduced by a 5% safety penalty in 2019, as explained in more detail on page 45.
- •
- We demonstrated progress on our commitment to generate cleaner energy, achieving key milestones in our Western Carolinas modernization plan allowing for the retirement of a 376-megawatt coal-fired plant in Asheville, North Carolina in January 2020.
- •
- We announced a new, aggressive goal to reduce carbon emissions from electricity generation by at least 50% from 2005 levels by 2030 and to reach net-zero emissions from electricity generation by 2050.
- •
- We reached an agreement with the NC DEQ and community groups to permanently close all remaining ash basins in North Carolina, with the substantial majority of the ash being excavated and placed in lined landfills, completed the excavation of 12 ash basins, with nearly 28 million tons of ash moved to fully lined facilities or recycled, and completed technology upgrades at operating coal plants to take ash basins permanently out of service. We also made significant progress on the removal of water from basins across the system.
- •
- In our Commercial Renewables business, we announced over 1,500 megawatts of new wind and solar projects, and made significant progress on new solar projects in our regulated businesses in Florida and the Carolinas.
- •
- We continued to deliver outstanding customer service, improving distribution reliability by 15% and our internal customer satisfaction measure by 25%.
- •
- Financial Performance
- •
- Our EPS results exceeded the midpoint of our 2019 earnings guidance, resulting in a 5% compounded annual growth rate in adjusted EPS since 2017, the first year after completion of the Company's portfolio transformation.
- •
- We took proactive steps to strengthen our balance sheet, paving the way for a substantial increase in our 5-year capital plan, significantly increasing the earnings potential of the Company for the benefit of our communities and shareholders.
- •
- During 2019, we also increased our dividend payment for the 13th consecutive year.
38 DUKE ENERGY – 2020 Proxy Statement
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS Performance Metrics Aligned to Our ESG Strategy |
DUKE ENERGY – 2020 Proxy Statement 39
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS
Chief Executive Officer Compensation |
Changes to Core Compensation
Ms. Good's leadership has been instrumental to the evolution of Duke Energy. Since becoming Chief Executive Officerour CEO in July 2013, Ms. Good has led the development of our strategy (focused on modernizing the energy grid, generating cleaner energy, and expanding our natural gas infrastructure), driven industry-leading operational performance, and guided us through several major transactions as we restructured our portfolio of businesses to reduce risk and improve returns. As we seek to advance and execute on our strategic vision and execution in the coming years, Ms. Good's leadership will continue to be critical to the organization. When Ms. Good became Chief Executive Officer in 2013, her compensation was significantly below the market. To address this gap, the Compensation Committee conducted a detailed review of Ms. Good's compensation and analyzed her pay relative to the competitive market, within and outside the utility sector. The Compensation Committee took into account the size and complexity of Duke Energy and our ability to compete for talent against multiple industries, and relied heavily on data from its independent compensation consultant. To address the initial gap in 2013 between Ms. Good's pay and the competitive market, rather than provide a large compensation adjustment or bonus, the Compensation Committee adopted a step-like approach that allowed flexibility to make pay decisions based on Ms. Good's specific contributions and experience in her role. As illustrated below, the steps taken by the Compensation Committee resulted in closing the significant competitive pay gap relative to the market over time.
*Target TDC (Total Direct Compensation) = the sum of base salary, target annual incentive opportunity and the grant date fair value of long-term incentive awards
**Because peer group information was not yet available for 2017, it was assumed to be at the same level as in 2016.
After conducting its analysis,review of the market data, the Compensation Committee determined that it was appropriate to make the following adjustments toadjust Ms. Good's compensation, for 2017: •Awarded a 3.8% merit adjustment to Ms. Good's salary, increased her target short-term incentive ("STI") opportunity from 150% to 155% and increased her LTI opportunity from 700% to 750% of her salary.
DUKE ENERGY – 2018 Proxy Statement 39
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COMPENSATION DISCUSSION AND ANALYSIS
One-Time, Performance-Based Retention Grant
The Compensation Committee believes alignmentbe competitive with shareholders is best achieved and retention risk mitigated when our senior executives hold unvested equity grants with a value of approximately 2x or more of their total direct compensation. Realizing that Ms. Good fell well below this standard despite her four-year tenure as Chief Executive Officer and her history of strong performance, the Compensation Committee developed a strategy to strengthen shareholder alignment and mitigate retention riskmarket data, by providing Ms. Good a one-time, performance-based retention grant valued at $7,000,000. Three other NEOs also received performance-based retention grants3% increase in amounts ranging from $250,000 to $1,000,000, as well as increases to base salary described on page 42 of this Compensation Discussion and Analysis.salary.
Details of the performance-based retention grants are as follows:
•Performance Requirement. The grants are subject to a return on equity ("ROE") goal, which, if not achieved, results in zero payout. Duke Energy's average ROE (excluding goodwill) over the 2017-2019 period must equal or exceed 10%. In light of Duke Energy's large capital deployment program, the Compensation Committee believed that it was important to make the vesting of the retention grants subject to a return on equity goal.
•Stringent Vesting Conditions. The awards are subject to a three-year cliff vesting requirement, and no pro-rata vesting upon retirement.
•Strengthens Retention. Ms. Good's grant increases the ratio of her outstanding equity awards (that would be forfeited if she voluntarily terminated employment) to her total direct compensation from 1.33x to 1.85x.
The Compensation Committee designed the supplemental retention grant for Ms. Good to address unique retention concerns, and it is not part of our regular compensation program.
We discussed Ms. Good's compensation and the supplemental retention grant during the shareholder engagement process to ensure that our shareholders were aware of the circumstances that drove the need for additional retention.
During these conversations, shareholders provided the following feedback:
•Understood the historically conservative approach to compensating Ms. Good and the need to make adjustments commensurate with market levels
•Acknowledged that the Compensation Committee followed a thoughtful approach to addressing retention risk by providing Ms. Good with the performance-based retention grant, which contains a stringent three-year cliff vesting requirement
Core Compensation Structure and Incentive Metrics in 20172019 |
- •
- Our core compensation program consists of base salary, STI and LTI (performance shares and
restricted stock units ("RSUs"))RSUs), as outlined in the table below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Element |
| | | Performance Metrics Aligned to Strategy |
| | | | | | | | | | | | | | | | | | | Base Salary | | | | • Cash | | | | | | | | | | | | | | | | | | | | | | | | Annual
Incentive |
| | | • Short-Term Cash Incentive | | | | • Adjusted EPS • Operational ExcellenceO&M
• Reliability • Safety (targets set on an absolute basis) • Environmental • Customer Satisfaction • Individual Objectives •
Safety
| | | | | | | | | | | | | | | | | | | | Long TermLong-Term | | | | • Performance Shares (70%) | | | | • Cumulative Adjusted EPS • Relative TSR • Safety (targets set on a relative basis) | | | | | | | | | | | | | | | | | | | | Equity Incentive | | | | • RSUs (30%) | | | | • Service-based with three-year pro-ratapro rata vesting | | | | | | | | | | | | | | | | |
40 DUKE ENERGY – 20182020 Proxy Statement
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS DUKE ENERGY – 20182020 Proxy Statement 41
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS Section 2: Compensation Program We design our compensation program so that it motivates our executives to focus on our core business priorities and aligns the interests of executives and shareholders.key stakeholders, including shareholders and customers. Elements of Our Total Direct Compensation Program |
As discussed in more detail below, during 2017,2019, the components of total directTDC for our NEOs were base salary, STI compensation, for the NEOs were: base salary; STI compensation; and LTI compensation. Base Salary The salary for each NEO is based on, among other factors, upon job responsibilities, level of experience, individual performance, comparisons to the salaries of executives in similar positions obtained from market surveys, and internal comparisons. The Compensation Committee considers changes in the base salaries of theour NEOs at least annually. When an individual is promoted to a new role, it has been Duke Energy's philosophy to bring the individual to market median over a multi-year period, assuming strong performance in the new role. Consistent with that philosophy, after reviewing their performance,In 2019, the Compensation Committee approved merit increases, effective as of March 1, 2019, of 4% for Mr. Young, Mr. Jamil, and Ms. Janson, of 10% and 19%, respectively. These increases further closed the gap between their salaries and the peer group median. After reviewing their performance, the Committee also approved the following merit increases3% for Ms. Good, Mr. Jamil,Esamann, Mr. Yates, and Mr. Yates: 3.8%, 5%,Yoho, and 3%, respectively. Each of these increases wasincreased Ms. Janson's salary an additional 7.3% and Mr. Esamann's salary an additional 4.7% effective MarchOctober 1, 2017.2019, upon a change in their roles and responsibilities. Short-Term Incentive Compensation STI opportunities are provided to our NEOs under the Duke Energy Corporation Executive Short-Term Incentive Plan to promote the achievement of annual performance objectives. Each year, the Compensation Committee establishes the target annual incentive opportunity for each NEO, which is based on a percentage of his or her base salary. No changes were made to theMs. Good's STI target incentive opportunitiesopportunity did not change during 2019. In order to further close the gap between his or her total cash compensation opportunity and market median, Mr. Young, Mr. Jamil, Ms. Janson, and Mr. Esamann each received an increase in his or her target opportunity from 80% to 90% of base salary. Each of these increases was effective as of January 1, 2019, except that the NEOsincrease for Mr. Esamann became effective upon a change in 2017 other than for Ms. Good, as previously noted.his roles and responsibilities on October 1, 2019. | | | | | | | Name
| | Target IncentiveSTI Opportunity
(as a % of base salary)(1)
| |
|---|
| | | | | Lynn J. Good | | | 155 | % | | Steven K. Young | | | 8090 | % | | Dhiaa M. Jamil | | | 8090 | % | | Julia S. Janson | | | 8090 | % | | Lloyd M. YatesDouglas F Esamann | | | 8090 | % | | | | | | |
- (1)
- Mr. Yates had a target STI opportunity of 80% of his base salary and Mr. Yoho had a target STI opportunity of 75% of his base salary during 2019.
As discussed in more detail below,on the following page, the Compensation Committee established the following objectives under the STI Planplan in February 20172019 with the STI target opportunity allocated between corporate and individual objectives.  
42 DUKE ENERGY – 2020 Proxy Statement
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS In order to emphasize the importance of the EPS objective, the Compensation Committee established a performance floor or circuit-breaker providing that if an adjusted diluted EPS performance level of at least $4.10$4.35 was not achieved, theour NEOs would not have receivedreceive any payout under the 20172019 STI Plan. To encourage a continued focus on safety, theplan. The Compensation Committee also included a potential safety penalty (executives only) and adder, (all employees), each in the amount of 5% of a participant's entire STI payment. Depending on actual performance, NEOs were eligible to earn up to 183.75% of the amount of their STI target opportunity, based on a potential maximum payout of 200% for the EPS objective, a 150% potential maximum payout for the O&M expense, operational excellence, customer satisfaction and individual objectives, and the potential 5% safety adder. 42 DUKE ENERGY – 2018 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
Corporate Objectives (80% of total) The 20172019 corporate objectives and the related target and performance results were as follows and are defined below: | | | | | | | | | | | | | | | | | | | | | | | Objective(1)
| | Weight
| | Threshold
(50%)
| | Target (100%)
| | Maximum(2)
| | Result
| | Sub-Total
| | Payout
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | Adjusted Diluted EPS(3) | | | 50 | % | $ | 4.35 | | $ | 4.60 | | $ | 4.85 | | $ | 4.57 | | | | | | 94 | % | | Operational Excellence(4) | | | 20 | % | | | | | | | | | | | | | | | | | 127.2 | % | (a) Operations and Maintenance Expense | | | | | $ | 5.040B | | $ | 4.890B | | $ | 4.740B | | $ | 4.785B | | | 135.10 | % | | | | (b) Reliability(5) | | | | | | | | | | | | | | | | | | | | | | | Regulated Generation (Fossil/Hydro) Commercial Availability | | | | | | 85 | % | | 87 | % | | 88 | % | | 88.01 | % | | 150 | % | | | | Nuclear Generation Capacity Factor | | | | | | 92 | % | | 94 | % | | 95 | % | | 95.64 | % | | 150 | % | | | | System Average Interruption Duration Index | | | | | | 146 | | | 135 | | | 124 | | | 151 | | | 0 | % | | | | Renewables Availability | | | | | | 93.5 | % | | 94.5 | % | | 96.0 | % | | 94.6 | % | | 103.33 | % | | | | Natural Gas Business Outage Factor | | | | | | 4 | | | 2 | | | 1 | | | 2 | | | 100 | % | | | | (c) Safety/Environmental(6) | | | | | | | | | | | | | | | | | | | | | | | Total Incident Case Rate: | | | | | | | | | | | | | | | | | | | | | | | Employees | | | | | | 0.50 | | | 0.38 | | | 0.35 | | | 0.36 | | | 133.33 | % | | | | Contractors | | | | | | 1.00 | | | 0.90 | | | 0.85 | | | 0.80 | | | 150 | % | | | | Reportable Environmental Events | | | | | | 48 | | | 39 | | | 35 | | | 24 | | | 150 | % | | | | | Customer Satisfaction | | | 10 | % | | 789 | | | 799 | | | 809 | | | 793 | | | | | | 70 | % | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Objective(1)
| | Weight
| | Threshold
(50%)
| | Target
(100%)
| | Maximum(2)
| | Result
| | Sub-Total
| | Payout
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | Adjusted EPS(3) | | | 50 | % | $ | 4.70 | | $ | 5.00 | | $ | 5.20 | | $ | 5.10 | | | | | | 150 | % | | O&M Expense | | | 10 | % | $ | 4.990B | | $ | 4.840B | | $ | 4.690B | | $ | 4.838B | | | | | | 101 | % | | Operational Excellence(4) | | | 10 | % | | | | | | | | | | | | | | | | | 123.73 | % | (a) Reliability(5) | | | | | | | | | | | | | | | | | | | | | | | Nuclear Optimized Reliability | | | | | | 210.86 | | | 203.67 | | | 196.80 | | | 183.36 | | | 150 | % | | | | Fossil/Hydro Optimized Reliability | | | | | | 59.98 | | | 57.34 | | | 55.44 | | | 57.83 | | | 91 | % | | | | Transmission Reliability | | | | | | 0.34 | | | 0.28 | | | 0.26 | | | 0.24 | | | 150 | % | | | | Renewables Availability | | | | | | 94.0 | % | | 95.0 | % | | 96.25 | % | | 94.0 | % | | 50 | % | | | | Natural Gas Business Outage Factor | | | | | | 4 | | | 2 | | | 1 | | | 1 | | | 150 | % | | | | Customer Delivery Reliability | | | | | | 50 | | | 100 | | | 150 | | | 144.1 | | | 144 | % | | | | (b) Safety/Environmental(6) | | | | | | | | | | | | | | | | | | | | | | | TICR Employees | | | | | | 0.50 | | | 0.38 | | | 0.35 | | | 0.38 | | | 100 | % | | | | Reportable Environmental Events | | | | | | 46 | | | 37 | | | 31 | | | 31 | | | 150 | % | | | | | Customer Satisfaction | | | 10 | % | | 43.9 | | | 45.9 | | | 47.9 | | | 51.2 | | | | | | 150 | % | | | | | | | | | | | | | | | | | | | | | | | | |
- (1)
- For additional information about the calculation of the EPS and
operations and maintenanceO&M expense control objectives, see page 53.
- (2)
- A payout of up to 200% of the target opportunity is available for the adjusted
diluted EPS objective and a payout of up to 150% of the target opportunity is available for the operational excellence and customer satisfactionother objectives.
- (3)
- If an adjusted
diluted EPS performance level of at least $4.10$4.35 was not achieved (i.e., a performance floor or circuit-breaker), the NEOs would not have received a payout under the 20172019 STI Plan.plan. The Compensation Committee approved an adjustment to EPS, pursuant to the terms of the 2019 STI plan, to exclude the impact of a significant unanticipated prefunding contributrion to the Duke Energy Foundation.
- (4)
- Each of the
threetwo primary operational excellence objectives contains an equal weighting of one-thirdone-half of the aggregate weighting of 20%10%.
- (5)
- Each reliability metric contains an equal weighting of
one-fifthone-sixth of the aggregate weighting of the reliability objective.
- (6)
- Each safety/environmental metric contains an equal weighting of one-half of the aggregate weighting of the safety/environmental objective.
In order to reflect our focus on expense reduction, the Compensation Committee established the target for the operations and maintenance ("O&M") expense objective at $4.890 billion, which is $95 million less than the target level established under the 2016 STI Plan and $119 million less than our actual O&M expense result under the 2016 STI Plan.
DUKE ENERGY – 20182020 Proxy Statement 43
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COMPENSATION DISCUSSION AND ANALYSIS
Establishment of EPS Target for 2017
The EPS target for purposes of the STI Plan has been relatively flat from 2015 to 2017, primarily due to Duke Energy's multi-year portfolio transition, which lowered our business risk to provide shareholders with more consistent earnings and cash flow growth. As a result, Duke Energy now operates almost exclusively in stable, predictable regulated businesses. Due to the impact of the portfolio transition and the other items described below, the Compensation Committee determined it was appropriate to establish the EPS targets as follows:
•The EPS target for 2015 was established based on the assumption that we would own the Midwest Commercial Generation business for approximately one quarter during 2015, and was based on normal hydrology and stable economic conditions in Brazil. Due to the deterioration of hydrology conditions in Brazil (which was expected to continue into 2016) and the disposition of the Midwest Commercial Generation business, the Compensation Committee established the EPS target for 2016 at $4.61.
STI 2015 Target to 2016 Target
•The EPS target for 2016 was established based on the assumption that we would own the Latin American Generation business during 2016. Due to the disposition of the Latin American Generation business in the fourth quarter of 2016, the Compensation Committee established the EPS target for 2017 at $4.60.
STI 2016 Target to 2017 Target
•The Compensation Committee established the 2017 EPS target at less than our 2016 actual results under the STI Plan due to the disposition of the Latin American Generation business, as well as the impact of weather in 2016 that was not expected to continue in 2017.
STI 2016 Actual to 2017 Target
44 DUKE ENERGY – 2018 Proxy Statement
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS | | | | | | | | | | | | | | | | | | Corporate Metrics | | Description/Rationale | | | | | | | | | | |
| | | Financial Metrics
| |
|
|---|
| | | | Adjusted Diluted EPS | | A widely accepted, easily understood, and important metric used to evaluate the success of our performance andperformance. This metric impacts the market value of our common stock.stock, which aligns the interests of shareholders and executives. For the 2019 STI plan, this measure is calculated based on adjusted diluted EPS. |
Operational ExcellenceO&M Expense |
|
Motivates our executive officersA measure that includes those costs necessary to achieve operational excellence, which is valued by our customers. This measure aligns with our strategic business goalssupport daily operations, as well as operate and provides an incentive for achieving operational efficiencies.maintain the operating efficiency and productive life of assets. | | | | |
| | | Reliability Metrics
| |
|
|---|
| | | | Regulated Generation (Fossil/Hydro) Commercial AvailabilityNuclear Optimized Reliability | | Determined asA measure of the weighted percentagelinkage between financial investment and reliability of time the generation units are available to generate electricity, where the availability each hour is weighted by the difference between market price and unit cost.nuclear fleet. |
Nuclear Generation Capacity FactorFossil/Hydro Optimized Reliability |
|
A measure of the amountlinkage between financial investment and reliability of electricity produced by a nuclear generating unit relative to the amount of electricity the unit is capable of producing.fossil/hydro fleet. |
System Average Interruption Duration IndexTransmission Reliability |
|
A measure of the number ofbalance between sustained line outage minutes experienced during the year perevents and customer served fromimpact. The metric reflects system reliability relative to both transmissionoperational and distribution systems calculated in accordance with applicable guidelines.equipment performance. |
Renewables Availability |
|
A renewables energy yield metric, calculated by comparing actual generation to expected generation based on the wind speed measured at the turbine and by calculating the actual generation to expected generation based on solar intensity measures at the panels. |
Natural Gas Business Outage Factor |
|
A measure of the number of outages in the natural gas business. For this purpose, an "outage" is defined as an event that causes a loss of natural gas service for at least 100 customers, where such event is not caused by a third party. If a single event causes a loss of natural gas service for at least 500 customers, that event shall automatically resultresults in less than minimum performance for this measure. |
Customer Delivery Reliability |
|
A metric designed to focus on the customer experience, being reflective for reliability and responsiveness to changes in performance. It is calculated using the following inputs: system average interruption duration index (SAIDI) (40%); customers experiencing multiple interruptions (CEMI-6) (30%); and customers experiencing long interruption duration (CELID-4) (30%). | | | | |
| | | Safety/Environmental Metrics
| |
|
|---|
| | | | Total Incident Case Rate (TICR)TICR | | MeasuresA measure of the number of occupational injuries and illnesses per 100 employees and staff augmentation contractors.employees. This objective emphasizes our focus on achieving an event-free and injury-free workplace. |
Reportable Environmental Events |
|
Environmental events that require notification to, or enforcement action by, a regulatory agency. This objective emphasizes service reliability and the mitigation of environmental risks associated with our operations. | | | | |
| | | Customer Satisfaction Metric
| |
|
|---|
| | | | CSAT | | A composite of customer satisfaction results for each regulated utility. Results are based on external surveys by third parties, including J.D. Power, and internal surveys of our customers. | | | | |
44 DUKE ENERGY – 20182020 Proxy Statement 45
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS Individual Objectives (20% of total) The 20172019 individual objectives for theour NEOs were divided into the following fourthree equally-weighted areas: - •
- Achieve growth and financial results;
- •
- Focus on operational excellence, optimize performance, and
performancelead organization with an emphasis on safety, reliability, and sustainable efficiency to achieve event-free operationsoperations; and
- •
Achieve growthLeverage Duke Energy's leadership initiativies to foster a culture of innovation and financial results
•Leadexecution, and implement the regulated utility strategy
•Foster a high performanceto attract diverse and inclusive culture built on strong leadership and highly engaged and diverse employeeshighly-engaged employees.
Safety ComponentModifier In order to emphasize a continued focus on safety, the Compensation Committee included the followinga safety measuresmodifier, which can be positive or negative, in the 20172019 STI Plan: •Safety Penalty. Theplan. Under this modifier, the STI Planplan payments for each of theour NEOs were subject to a safety penalty ofwould be decreased by 5% if Duke Energy experienced more than six enterprise-wide life altering injuries ("LAI")three LAIs or there was a significant operational event (including a controllable work-related Duke Energy employee or contractor fatality).
•Safety Adder. The In addition, the STI Planplan payments of theour NEOs, were alsoalong with other eligible for a safety adder that could result in an increase ofemployees, would be increased by 5% if:if (i) there were no controllable work-related fatalities of any Duke Energy employee or contractor during 2017,2019; (ii) there were fourtwo or fewer LAIsLAls during 2017,2019; and (iii) there were no significant operational events.
There were three LAIs during 2017, and two work-related fatalities, and, therefore, The payments to the safety adder did not apply and the safety penalty applied such that total paymentsNEOs under the 20172019 STI Plan for NEOsplan were decreasedreduced by 5%. because of the occurrence of a work-related employee fatality.
Payouts Based on the aggregate corporate operational and individual performance results, including the 5% safety penalty, each NEO's aggregate payout under the 20172019 STI Planplan was equal to: | Name
| | Payout
| |
| |
|---|
Name*
| | | Target STI
Opportunity
($)
| | Achievement
of Corporate
Objectives
(80% Weighting)
| | Achievement
of Individual
Objectives
(20% Weighting)
| | Overall
Achievement
as a % of
Target STI
Opportunity*
| | Payout**
($)
| |
|---|
| | | | | | | | | | | | | | | | | | Lynn J. Good | | $ | 2,110,736 | | | | $ | 2,144.813 | | | 140.5 | % | | 123.3 | % | | 130.2 | % | | 2,793,389 | | | | Steven K. Young | | $ | 557,291 | | | | $ | 660,602 | | | 140.5 | % | | 130.0 | % | | 131.5 | % | | 868,773 | | | | Dhiaa M. Jamil | | $ | 643,863 | | | | $ | 750,685 | | | 140.5 | % | | 130.0 | % | | 131.5 | % | | 987,243 | | | | Julia S. Janson | | $ | 496,731 | | | | $ | 606,750 | | | 140.5 | % | | 130.0 | % | | 131.5 | % | | 797,951 | | | | Lloyd M. Yates | | $ | 532,072 | | | | | Douglas F Esamann | | | $ | 536,208 | | | 140.5 | % | | 130.0 | % | | 131.5 | % | | 705,180 | | | | | | | | | | | | | | | | | | | |
- *
- Mr. Yates and Mr. Yoho, each of whom left during 2019, were entitled to a pro rata amount of their annual bonus, determined based on the actual achievement of performance objectives, in the amount of $564,300 and $398,282, respectively.
- **
- Values have been reduced by 5% to reflect the safety penalty.
Long-Term Incentive Compensation Our LTI program is designed to provide our NEOs with appropriate balance to the STI Planplan and to align executive and shareholder interests in an effort to maximize shareholder value. Each year, the Compensation Committee establishes the target LTI opportunity for each NEO, which is based on a percentage of his or her base salary. WithThe target LTI opportunity for each of Mr. Young, Mr. Jamil, Ms. Janson, Mr. Esamann, and Mr. Yates was increased by 25 percentage points to further close the exception of Ms. Good, nogap between his or her TDC opportunity and market median. No changes were made to the LTI opportunities of the NEOs in 2017. In an effort to align Ms. Good's total compensation opportunity with the competitive market median of the peer group data provided by our independent, compensation consultant, the Compensation Committee increased Ms. Good's LTI opportunity from 700% to 750% of base salary. This action was taken to strengthen the competitiveness of Ms. Good's total annual compensation opportunity. The Compensation Committee believes it in the best interests of our shareholders to ensure that our Chief Executive Officer is compensated in a way that fosters alignment with their long-term interests. Given the importance of the performance measures used in our LTI program (cumulative adjusted EPS, relative TSR and safety), and the focus on the ROE goal for Ms. Good's supplemental performance-based retention grant, the Compensation Committee determined it appropriate to provide Ms. Good with an increased LTI award opportunity in 2017. The increased annual LTI award opportunity completed the Compensation Committee's 2017 strategy of addressing both: (1) retention concerns (resolved with the granting of the one-time, performance-based retention grant) and (2) alignment with the 50th percentile of the market (resolved with the continuation of the Compensation Committee's step-like approach to elevate Ms. Good's total annual target pay opportunity to be consistent with the market).Mr. Yoho.
| | | | | | | NameName*
| | Target LTI Opportunity
(as a % of base salary)
| |
|---|
| | | | | Lynn J. Good | | | 750 | % | | Steven K. Young | | | 225250 | % | | Dhiaa M. Jamil | | | 275300 | % | | Julia S. Janson | | | 225250 | % | | Lloyd M. YatesDouglas F Esamann | | | 225250 | % | | | | | | |
- *
- The target LTI opportunities for Mr. Yates and Mr. Yoho were 250% and 150%, respectively, of base salary.
The Compensation Committee reviews the allocation between performance shares and RSUs annually with its compensation consultant, which confirmed that the present 70%/30% mix of performance shares (70% allocation) and RSUs (30% allocation) was consistent with market benchmarking amonggenerally more performance-weighted than both utility peers and the general industry. The Compensation Committee believes that this allocation strikes an appropriate balance to both incentivize and retain our executive officers, and aligns with our strong pay for performance philosophy. 46 DUKE ENERGY – 20182020 Proxy Statement 45
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS 2017-20192019 - 2021 Performance Shares (70% of Long-Term Incentive Program)
Our Compensation Committee has evolvedguided the designevolution of our performance shares over the last three years to reflect shareholder feedback requesting a focus on multiple core metrics linked to our long-term success and balancing relative and absolute performance comparisons. As indicated in the following chart, we added a cumulative adjusted EPS metric in 2016, and in 2017, we added a safety metric and several new features to further strengthen theour pay for performance alignment in thealignment. | | | | | | | | |
| |
| |
| |
| |
|
|---|
| | | | | | | | | | | | | | | | Evolution of Core Metrics |
| | | | | | | | | | | | | | | 2015 – 2017 Performance Share Award | | | | • 100% Relative TSR | | | | | | | | | | | | | | | | 2016 – 2018 Performance Share Award | | | | • 50% Cumulative Adjusted EPS • 50% Relative TSR metric. 
| | | | | | | | | | | | | | | | 2017 – 2019 Performance Share Award 2018 – 2020 Performance Share Award 2019 – 2021 Performance Share Award | | | | • 50% Cumulative Adjusted EPS • 25% Relative TSR • 25% Safety (targets set on a relative basis) | | | | | | | | | | | | |
In order to emphasize pay for performance, the 2017-20192019 - 2021 performance shares vest at the end of the 2017-2019three-year performance period based on: (i) our cumulative adjusted EPS compared to pre-established targets (50% weighting),; (ii) our relative TSR compared to the companies in the UTY (25% weighting),; and (iii) a new safety measure based on our TICR compared to pre-established targetscertain companies in the EEI Group 1 Large Company Index (25% weighting). These performance measures were selected to emphasize their importance in aligning the interests of our executives and shareholders. Each of the three performance measures for the 2017-20192019 - 2021 performance shares is described below, along with a table that sets forth the performance targets and payout levels. Cumulative Adjusted EPS (50% Weighting) - –
- Payout is based on adjusted EPS over a three-year performance period compared to pre-established levels
- –
- EPS is a core financial metric for Duke Energy
The first performance measure is based on Duke Energy's three-year cumulative adjusted EPS measured against pre-established target levels. The Compensation Committee established the EPS target for the three-year cycle in February 2019 at a level that is challenging, but achievable with strong long-term performance. The following table provides the EPS target levels and corresponding payout levels: | | | | | | | Cumulative Adjusted EPS
| | Percent Payout of
Target 2019 - 2021
Performance Shares
| |
|---|
| | | | | $16.25 or Higher | | | 200 | % | | $15.65 (Target) | | | 100 | % | | $15.05 | | | 50 | % | | Lower than $15.05 | | | 0 | % | | | | | | |
If Duke Energy's cumulative adjusted EPS during the performance period is between the minimum and target level, or between the target and maximum level, the payout for the portion of the performance shares related to this performance measure is interpolated on a straight-line basis. TSR (25% Weighting) - –
- Payout is based on relative TSR performance compared to the companies in the UTY
- –
- Target payout requires relative TSR performance at the 55th percentile
- –
- Payout is capped at target level if TSR is negative, regardless of the relative performance
The second performance measure is based on the percentile ranking of Duke Energy's TSR for the three-year performance period beginning January 1 in the year of grant compared to the TSR of each company in the UTY for the same period. The target amount is not earned unless Duke Energy's TSR is at least at the 55th55th percentile of the UTY. The following table provides the percentile ranking and corresponding payout levels: | | | | | | | Relative TSR
Performance Percentile
| | Percent Payout of
Target 2017-20192019 - 2021
Performance Shares*
| |
|---|
| | | | | 90th90th or Higher
| | | 200 | % | | 55th55th (Target)
| | | 100 | % | | 25th25th | | | 50 | % | | Below 25th25th | | | 0 | % | | | | | | |
- *
- If Duke Energy's cumulative TSR is negative during the performance period, the payout is limited to the target
level.level regardless of the relative performance. If Duke Energy's cumulative TSR is at least 15%, the payout cannot be less than 30% of the target number of shares related to the TSR portion of the award.award regardless of the relative performance.
If Duke Energy achieves a TSR ranking between the 25th25th percentile and the 55th55th percentile or between the 55th55th percentile and the 90th90th percentile, the number of performance shares paid will berelated to this performance measure is interpolated on a straight-line basis. 46 DUKE ENERGY – 2020 Proxy Statement
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS To determine performance share payouts, TSR is calculated using the difference between the opening and closing value of the shares of Duke Energy and each peer in the UTY, with dividends assumed to be reinvested. For purposes of the TSR calculation, the opening value is determined based on the average closing stock price for each company's shares on each trading day during the calendar month immediately preceding the performance period, and the closing value is determined based on the average closing stock price for each company's shares on each trading day during the last calendar month in the performance period. Safety – TICR (25% Weighting) - –
- The
second performance measurefoundation for our growth and success is our continued operational excellence, the leading indicator of which is safety - –
- TICR is a transparent metric that is based on
Duke Energy's three-year cumulative adjusted EPS measured against pre-established target levels. The Compensation Committee established the EPS target for the three-year cycle in February 2017 at a level that is challenging, but achievable with strong long-term performance. The following table provides the EPS target levels and corresponding payout levels: | | | | | | | Cumulative Adjusted EPS
| | Percent Payout of
Target 2017-2019
Performance Shares
| |
|---|
| | | | | $15.00 or Higher | | | 200 | % | | $14.40 (Target) | | | 100 | % | | $13.80 | | | 50 | % | | Lower than $13.80 | | | 0 | % | | | | | | |
If Duke Energy's cumulative adjusted EPS during the performance period is between the minimum and target level, or between the target and maximum level, the payout for the portion of the performance shares related to this performance measure is interpolated on a straight-line basis.
The third performance measure is based on Duke Energy's safety as determined based on our TICR for employees, as compared to pre-established target levels. The Compensation Committee established the target levels in February 2017, based on the relative historical performance of the companies in the EEI Group 1 large company index from 2013 to 2015, with minimum performance based on the 75th percentile, target performance based on the 90th percentile, and maximum DUKE ENERGY – 2018 Proxy Statement 47
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
performance based on the results of the top company during the historical period.Large Company Index, excluding companies without gas or nuclear operations. The following table provides the TICR target levels and corresponding payout levels:
| | | | | | | Total Incident Case Rate for
Employees
| | Percent Payout of
Target 2017-2019
Performance Shares
| |
|---|
| | | | | 0.45 or Better | | | 200 | % | | 0.59 (Target) | | | 100 | % | | 0.77 | | | 50 | % | | Worse than 0.77 | | | 0 | % | | | | | | |
| | | | | | | Relative TICR
Performance Percentile
| | Percent Payout of
Target 2019 - 2021
Performance Shares
| |
|---|
| | | | | Top Company | | | 200 | % | | 90th (Target) | | | 100 | % | | 75th | | | 50 | % | | Below 75th | | | 0 | % | | | | | | |
If Duke Energy's safety performance during the 2017-20192019 - 2021 period is between the minimum and target level, or between the target and maximum level, the payout for the portion of the performance shares related to this performance measure is interpolated on a straight-line basis. Restricted Stock Units (30% of Long-Term Incentive Program) The RSUs generally vest in equal installments on the first three anniversaries of the date of grant, provided the recipient continues to be employed by Duke Energy on each vesting date. Performance-Based Retention Awards
As described on page 40, the Compensation Committee provided performance-based retention grants to Ms. Good ($7,000,000), Mr. Young ($250,000), Mr. Jamil ($1,000,000) and Ms. Janson ($750,000) to mitigate retention risk.
Payout of 2015-20172017 - 2019 Performance Shares The 2015-20172017 - 2019 performance shares were eligiblefor the three-year performance period ending December 31, 2019, generally vest based on: (i) our cumulative adjusted EPS compared to be earnedpre-established targets (50% weighting); (ii) our relative TSR compared to the companies in the UTY (25% weighting); and (iii) a safety measure based on Duke Energy's relative TSRour TICR compared to pre-established targets (25% weighting). The first measure was based on our cumulative adjusted EPS during the three-year period from January 1, 2015,compared to December 31, 2017,pre-established targets, as follows: | | | | | | | | | | | | | | | | | Cumulative Adjusted EPS
| | Percent Payout of
Target 2017 - 2019
Performance Shares
| | Result
| | Payout of
Target
| |
|
|---|
| | | | | | | | | | $15.00 or Higher | | | 200 | % | | | | | | | | | | $14.40 (Target) | | | 100 | % | | $ | 14.66 | | | | 143.3 | % | | | $13.80 | | | 50 | % | | | | | | | | | | Lower than $13.80 | | | 0 | % | | | | | | | | | | | | | | | | | | | |
The second measure was based on our relative TSR for the three-year period as compared to the companies in the UTY. The | | | | | | | | | | | | | | | Relative TSR
Performance Percentile
| | Percent Payout of
Target 2017 - 2019
Performance Shares
| | Result
| | Payout of
Target*
| |
|
|---|
| | | | | | | | | | 90th or Higher | | | 200 | % | | | | | | | | | 55th (Target) | | | 100 | % | | | | | | | | | 25th | | | 50 | % | | | | | | | | | Below 25th | | | 0 | % | | 21st Percentile | | | 30 | % | | | | | | | | | | | | |
- *
- This measure further provides that if cumulative TSR is at least 15%, the payout
levelsof the TSR portion cannot be less than 30% of target. Duke Energy's cumulative TSR for the 2015-2017 performance shares, as well ascycle was 34.4%, resulting in a 30% payout.
The third measure was based on TICR for employees during the result that was certified by the Compensation Committee in February 2018, arethree-year period compared to pre-established targets, as follows: | | | | | | | | | | | | | | | Relative TSR
Performance
Percentile
| | Percent Payout of
Target 2015-2017
Performance
Shares
| | Result
| | Payout of
Target
| |
|
|---|
| | | | | | | | | | 90th or Higher | | | 200 | % | | | | | | | | | 50th (Target) | | | 100 | % | | | | | | | | | 25th | | | 30 | % | | 33.3rd Percentile | | | 53.2 | % | | | Below 25th | | | 0 | % | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | TICR for
Employees
| | Percent Payout of
Target 2017 - 2019
Performance Shares
| | Result
| | Payout of
Target
| |
|
|---|
| | | | | | | | | | 0.45 or Better | | | 200 | % | | 0.39 | | | | 200 | % | | | 0.59 (Target) | | | 100 | % | | | | | | | | | | 0.77 | | | 50 | % | | | | | | | | | | Worse than 0.77 | | | 0 | % | | | | | | | | | | | | | | | | | | | |
In the aggregate, this performance corresponds to a payout of 129.17% of the target number of 2017 - 2019 performance shares, plus dividend equivalents earned during the performance period. The following table lists the number of 2017 - 2019 performance shares to which our NEOs became vested at the end of that performance cycle: | | | | | | | Name
| | 2017 - 2019
Performance
Shares Earned*
| |
|---|
| | | | | Lynn J. Good | | | 114,623 | | | Steven K. Young | | | 17,653 | | | Dhiaa M. Jamil | | | 24,517 | | | Julia S. Janson | | | 15,921 | | | Douglas F Esamann | | | 14,902 | | | | | | | |
- *
- Mr. Yates and Mr. Yoho received 17,493 and 7,645 vested performance shares, respectively, for the 2017 -2019 cycle.
Payout of 2017 Performance-Based Retention Grants On February 22, 2017, the Compensation Committee granted performance-based retention grants to Ms. Good, Mr. Young, Mr. Jamil, and Ms. Janson. These retention awards generally vest in full on the third anniversary of the grant date, provided the recipient remains continuously employed with Duke Energy through that date and Duke Energy achieves an average ROE (excluding goodwill) equal to at least 10% during the period DUKE ENERGY – 2020 Proxy Statement 47
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS beginning on January 1, 2017, and ending on December 31, 2019. Any shares not earned are forfeited. In addition, following a determination that the performance goal has been achieved, participants will receive a cash payment equal to the amount of cash dividends paid on one share of Duke Energy common stock during the performance period multiplied by the number of performance shares earned. Duke Energy's average ROE (excluding goodwill) for the three-year period ending December 31, 2019, was 14.25%, meaning that the performance condition for the retention awards was fully satisfied. The following table lists the number of shares under the retention awards to which our NEOs became vested as of February 22, 2020: | | | | | | | Name
| | 2017
Performance-Based
Retention Award
Shares Earned
| |
|---|
| | | | | Lynn J. Good | | | 87,642 | | | Steven K. Young | | | 3,130 | | | Dhiaa M. Jamil | | | 12,520 | | | Julia S. Janson | | | 9,390 | | | | | | | |
Other Elements of Our Compensation Program |
Retirement and Welfare Benefits Our NEOs participate in the retirement and welfare plans generally available to other eligible employees. In addition, in order to attract and retain key executive talent, we believe that it is important to provide our NEOs with certain limited retirement benefits that are offered only to a select group of management. These retirement plans provided to our NEOs are described on pages 58-6258 to 62 and are generally comparable to the benefits provided by peers of Duke Energy, as determined based on market surveys. Duke Energy provides theour NEOs with the same health and welfare benefits it provides to all other similarly-situated employees, and at the same cost charged to all other eligible employees. TheOur NEOs also are entitled to the same post-retirement health and welfare benefits as those provided to similarly-situated retirees. Perquisites The Compensation Committee believes it is important to provide only limited perquisites as supported by competitive practice. In 2017,2019, Duke Energy provided our NEOs with certain otherthe perquisites which are disclosed in footnote 5the footnotes to the Summary Compensation Table on page 54.Table. Duke Energy providesoffers these perquisites as well as other benefits to certain executives in order to provide competitive total compensation packages. The cost of perquisites and other personal benefits is not part of base salary, and, therefore, does not affect the calculation of awards and benefits under Duke Energy's other compensation arrangements (i.e., retirement and incentive compensation plans). Our NEOs were eligible to receive the following perquisites and other benefits during 2017:2019: (i) up to $2,500 for the cost of a comprehensive physical examination,examination; (ii) reimbursement of expenses incurred for tax and financial planning services, which program is administered on a three-year cycle, such that participating executives can be reimbursed for up to $15,000 of eligible expenses during the three-year cycle,cycle; (iii) matching contributions from the Duke Energy Foundation of up to $5,000 to qualifying charitable institutions,institutions; (iv) reimbursement of a portion of the monthly expense for a personal mobile device; and (iv)(v) preferred airline status. In addition, we occasionally provide our NEOs with tickets to athletic and cultural events for personal use. Ms. Good may use the corporate aircraft for personal travel in North America. With advance approval from the Chief Executive Officer,CEO, the other NEOs may use the corporate aircraft for personal travel in North America. If Ms. Good or any other NEO uses the corporate aircraft for personal travel, he or she must reimburse Duke Energy for the direct operating costs for such travel. However, Ms. Good is not required to reimburse Duke Energy for the cost of travel forto her executive physical or to meetings of the board of directors of other companies on which board she serves. For additional information on the use of the corporate aircraft, see footnote 5the footnotes to the Summary Compensation Table. 48 DUKE ENERGY – 2018 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
Employment Agreement with Ms. Good Effective July 2013, Duke Energy entered into an employment agreement with Ms. Good that containscontained a three-year initial term and automatically renews for additional one-year periods at the end of the initial term unless either party provides 120 days' advance notice. In the event of a change in control of Duke Energy, the term automatically extends to a period of two years. Upon a termination of Ms. Good's employment by Duke Energy without "cause" or by Ms. Good for "good reason" (each as defined in her employment agreement), Ms. Good would be entitled to the severance benefits described under the "Potential Payments Upon Termination or Change in Control" section on page 63 of this proxy statement. Ms. Good's employment agreement does not provide for golden parachute excise tax gross-up payments. Severance Plan The Executive Severance Plan provides severance protection to theour NEOs, other than Ms. Good, in order to provide a consistent approach to executive severance and to provide eligible executives with certainty and security while they are focusing on their duties and responsibilities. Severance compensation would only be paid in the event that an eligible executive's employment is involuntarily terminated without "cause" or is voluntarily terminated for "good reason," and is subject to compliance with restrictive covenants (i.e., 48 DUKE ENERGY – 2020 Proxy Statement
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS confidentiality and noncompetition). The severance compensation that would be paid in the event of a qualifying termination of employment to those senior executives who are identified as "Tier I Participants," including Mr. Young, Mr. Jamil, Ms. Janson, and Mr. Yates,Esamann, generally approximates two times his or her annual compensation and benefits. The Executive Severance Plan prohibits the payment of severance if an executive also would be entitled to severance compensation under a separate agreement or plan maintained by Duke Energy, including the Change in Control Agreements described below. The Executive Severance Plan does not provide for golden parachute excise tax gross-up payments. Executive Severance Plan Payments for Mr. Yates On September 30, 2019, in connection with a restructuring of roles and responsibilities among the executive team, Mr. Yates resigned from Duke Energy under circumstances that the Compensation Committee determined constituted "good reason," and he, therefore, was eligible to receive severance benefits under the terms of the Executive Severance Plan. Mr. Yates received the standard severance compensation provided under the Executive Severance Plan, which was not modified or increased in connection with his termination of employment. The benefit levels under the Executive Severance Plan are described in more detail on pages 64 - 65 under the "Potential Payments Upon Termination or Change in Control" section of this proxy statement. Consulting Agreement with Mr. Yoho On October 3, 2019, Mr. Yoho retired from Duke Energy. During his 35-year career, Mr. Yoho led every aspect of the natural gas business and played an integral role in restructuring Piedmont Natural Gas to prioritize the customer experience. After joining Duke Energy following the 2016 acquisition of Piedmont Natural Gas, Mr. Yoho was responsible for all of Duke Energy's natural gas operations in North Carolina, South Carolina, Ohio, Kentucky, and Tennessee. In order to ensure an orderly transition of Mr. Yoho's duties, Duke Energy entered into a one-year consulting agreement with him. Under the consulting agreement, Mr. Yoho has agreed to provide consulting services to Duke Energy relating to our natural gas business and investments in natural gas-related ventures. In exchange, he is entitled to a consulting fee of $10,000 per month. Change in Control Agreements Duke Energy has entered into Change in Control Agreements with theour NEOs other than Ms. Good. Under these agreements, each such NEO would be entitled to certain payments and benefits if (i) a change in control were to occur and (ii) within two years following the change in control, (a) Duke Energy terminates the executive's employment is terminated without "cause""cause," or (b) the executive terminates his or her employment for "good reason." The severance that would be provided by Duke Energy to these NEOs is generally two times the executive's annual compensation and benefits and becomes payable only if there is both a change in control and a qualifying termination of employment. The Compensation Committee approved the two times severance multiplier after consulting with its advisors and reviewing the severance provided by peer companies. The Change in Control Agreements do not provide for golden parachute excise tax gross-up payments. Our restricted stock unitRSU and performance share awards provide for "double-trigger" vesting in full (without proration) upon a qualifying termination of employment in connection with a change in control. Performance share awards granted prior to 2018 provide for pro rata vesting at the target performance level in the event of a change in control, without regard to termination of employment. Performance shares granted after 2017 do not vest upon a change in control, but instead would vest only in the event of a subsequent termination of employment. The Compensation Committee believes these change in control arrangements are appropriate in order to diminish the uncertainty and risk to the executives' roles in the context of a potential or actual change in control. The benefit levels under the Change in Control Agreements and equity awards are described in more detail on page 63 under the "Potential Payments Upon Termination or Change in Control" section beginning on page 63 of this proxy statement. DUKE ENERGY – 2020 Proxy Statement 49
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS Section 3: Competitive Market Practices The Compensation Committee has engaged FW Cook to report directly to the Compensation Committee as its independent compensation consultant. The compensation consultant generally attends each Compensation Committee meeting and provides advice to the Compensation Committee at the meetings, including reviewing and commenting on market compensation data used to establish the compensation of the executive officers and directors, the terms and performance goals applicable to incentive plan awards, the process for certifying achievement of the incentive goals, and analysis with respect to specific projects and information regarding trends and competitive practices. The compensation consultant also routinely meets with the Compensation Committee members without management being present. When establishing the compensation program for our NEOs, the Compensation Committee considers input and recommendations from management, including Ms. Good, who attends the Compensation Committee meetings. The consultant has been instructed that it is to provide completely independent advice to the Compensation Committee and is not permitted to provide any services to Duke DUKE ENERGY – 2018 Proxy Statement 49
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
Energy other than at the direction of the Compensation Committee. With the consent of the Chair of the Compensation Committee, the consultant may meet with management to discuss strategic issues with respect to executive compensation and assist the consultant in its engagement with the Compensation Committee. The Compensation Committee has assessed the independence of FW Cook pursuant to SEC rules and concluded that no conflict of interest exists that would prevent the consulting firm from independently advising the Compensation Committee. One of our core compensation objectives is to attract and retain talented executive officers through total compensation that generally is competitive with that of other executives and key employees of similarly-sized companies with similar complexity, whether within or outside of the utility sector. The Compensation Committee, with input and advice from its independent consultant, has developed a customized peer group for review of executive compensation levels and plan design practices. The customized peer group consists of 2320 similarly-sized companies from the utility and general sectors, with the general industry companies also having satisfied at least one of the following characteristics: (i) operates in capital intensive industry,industry; (ii) operates in a highly regulated industry,industry; (iii) has significant manufacturing operations,operations; or (iv) derives more than 50% of revenue in the United States. The customized peer group consistsused by the Compensation Committee in February 2019 remained unchanged from 2018 (other than to exclude Monsanto due to its acquisition by Bayer in June 2018) and consisted of: | | | | | | | Compensation Peer Group
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| | | | | | | | | 3M | | Dominion Resources*Deere & Co. | | FedEx | | MonsantoMedtronic | | American Electric Power* | | Dow Chemical**Dominion Resources* | | FirstEnergy* | | NextEra Energy* | | CenturyLink | | DuPont**Eaton | | General Dynamics | | PG&E Corp.* | | Colgate-Palmolive | | EatonEdison International* | | International Paper | | Southern* | | Consolidated Edison* | | Edison International*Exelon* | | Lockheed Martin | | UPS | Deere & Co. | | Exelon* | | Medtronic | | | | | | | | | |
- *
- Utility subset consisting of nine
companies in the UTY.
**Dow Chemical and DuPont merged on August 31, 2017, and, therefore, each has been excluded from the peer group after that time.companies.
The Compensation Committee also reviews executive compensation levels against a subset of the customized peer group consisting of nine companies in the UTY, and where appropriate, the Towers Watson Energy Services Executive Compensation database and the Towers Watson General Industry Executive Compensation database. 50 DUKE ENERGY – 20182020 Proxy Statement
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS Section 4: Executive Compensation Policies FollowingThe following is a summary of our executive compensation policies, which reinforce our pay-for-performancepay for performance philosophy and strengthen the alignment of interests of our executives and shareholders:
| | | | | | | | | | | Policy
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| | | | | | | | | | | | | Stock ownership policy | | | | Requires significant stock ownership. We maintain aggressivemeaningful stock ownership guidelines to reinforce the importance of Duke Energy stock ownership. These guidelines are intended to align the interests of executives and shareholders and to focus the executives on our long termlong-term success. Under these guidelines, each of our currentactive NEOs must own Duke Energy shares in accordance with the following schedule: | | | | | | | Leadership Position | | Value of Shares | | | | | | | | | | | | | | | | | | | | | | Chief Executive OfficerCEO | | 6x Base Salary | | | | | | | | | | Other NEOs | | 3x Base Salary | | | | | | | | | | | | | | | | |
Stock holding policy |
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Each NEO is required to hold 50% of all shares acquired under the LTI program (after payment of any applicable taxes) and 100% of all shares acquired upon the exercise of stock options (after payment of the exercise price and taxes) until the applicable stock ownership requirement is satisfied. Each of our NEOs was in compliance with the stock ownership/stock holding policy during 2017.2019. |
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Clawback policy |
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We maintain a "clawback policy," which would allow us to recover (i) certain cash or equity based incentive compensation tied to financial results in the event those results were restated due at least in part to the recipient's fraud or misconduct or (ii) an inadvertent payment based on an incorrect calculation. |
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Hedging or pledging policy |
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We have a policy that prohibits employees (including theour NEOs) and directors from trading in options, warrants, puts, and calls, or similar instruments in connection with Duke Energy securities, or selling Duke Energy securities "short." |
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| | | | | | | | | | | | | | | | In addition, in 2017, we strengthened our pledging policy to prohibit the pledging of any Duke Energy securities, regardless of where or how such securities are held. See "Prohibition on Hedging and Pledging" on page 32 of this proxy statement for additional information about the hedging prohibition. |
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Equity award grant policy |
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In recognition of the importance of adhering to specific practices and procedures in the granting of equity awards, the Compensation Committee has adopted a policy that applies to the granting of equity awards. Under this policy, annual grants to employeesour NEOs may be made at any regularlypreviously scheduled meeting, provided that reasonable efforts will be made to make such grants at the first regularly scheduled meeting of each calendar year, and annual grants to independent directors may be made by the Board at any regularlypreviously scheduled meeting, provided that reasonable efforts will be made to make such grants at the regularly scheduled meeting that is held in conjunction with the annual meeting of shareholdersAnnual Meeting each year. |
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DUKE ENERGY – 20182020 Proxy Statement 51
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS | | | | | | | | | | | Policy
| |
| | Description
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| | | | | | | | | | | | | Risk assessment policy | | | | In consultation with the Compensation Committee, members of management from Duke Energy's Human Resources, Legal, and Risk Management groupsDepartments assessed whether our compensation policies and practices encourage excessive or inappropriate risk taking by our employees, including employees other than our NEOs. This assessment included a review of the risk characteristics of Duke Energy's business and the design of our incentive plans and policies. Management reported its findings to the Compensation Committee, and after review and discussion, the Compensation Committee concluded that our plans and policies do not encourage excessive or inappropriate risk taking. | | |
Shareholder approval policy for severance |
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We have a policy, generally, to seek shareholder approval for any future agreements with our NEOs that provide severance compensation in excess of 2.99x the executive's annual compensation or that provide for tax gross-ups in connection with a termination event. |
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Section 5: Tax and Accounting Implications Deductibility of Executive Compensation |
The Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which provides that Duke Energy generally may not deduct, for federal income tax purposes, annual compensation in excess of $1 million paid to certain employees. Performance-basedPrior to 2018, performance-based compensation paid pursuant to shareholder approved plans iswas not subject to the deduction limit as long as such compensation is approved by "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code and certain other requirements are satisfied. For example, in orderThe Tax Act, which was enacted on December 22, 2017, included a number of significant changes to qualifySection 162(m), such as the STI asrepeal of the performance-based compensation our STI Plan is structured so that if 2017 adjusted diluted EPS is at least equal to $4.10,exemption and the executive officers will have satisfied the requirement to receive the "maximum" payout under the plan, but the executive officers are not assured of earning this maximum amount. Instead, the Compensation Committee has the authority to reduce from the maximum the payout based on its assessmentexpansion of the definition of "covered employees" (e.g., by including the CFO and certain former NEOs as covered employees). As a result of these changes, except as otherwise provided in the transition relief provisions of the Tax Act, compensation paid to any of our covered employees generally will no longer be deductible in 2018 or future years, to the extent to which the applicable performance goals under the plan are achieved.that it exceeds $1 million.
The Compensation Committee has not adopted a policy that would have required all compensation to be deductible because the Compensation Committee wanted to preserve the ability to pay compensation to our executives in appropriate circumstances, even if such compensation would not be deductible under Section 162(m). For example, restricted stock unit awards received by certain employees, depending on the amount and other types of compensation received by such employees, may not be deductible under Section 162(m). The Tax Cuts and Jobs Act, which was enacted on December 22, 2017, includes a number of significant changes to Section 162(m), such as the repeal of the performance-based compensation exemption and the expansion of the definition of "covered employees" (for example, by including the Chief Financial Officer and certain former NEOs as covered employees). As a result of these changes, except as otherwise provided in the transition relief provisions of the Tax Cuts and Jobs Act, compensation paid to any of our covered employees generally will not be deductible in 2018 or future years, to the extent that it exceeds $1 million.
In response, the Compensation Committee has taken steps that it deemed appropriate with the intention of preserving the deductibility of certain of our compensation arrangements that were in effect on the date of enactment of the Tax Cuts and Jobs Act. Due to uncertainties regarding the scope of transition relief under the Tax Cuts and Jobs Act, however, there can be no guarantee that any compensation paid to our covered employees will be or remain exempt from Section 162(m). The Compensation Committee will continue to consider thesetax implications (including the potential lack of deductibility under Section 162(m)) when making compensation decisions, but reserves the right to make compensation decisions based on other factors believed to be in the best interests of Duke Energy and our shareholders.
52 DUKE ENERGY – 2018 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
Accounting for Stock-Based Compensation |
Stock-based compensation represents costs related to stock-based awards granted to employees and members of the Duke Energy Board. Duke Energy recognizes stock-based compensation based upon the estimated fair value of the awards, net of estimated forfeitures at the date of issuance. The recognition period for these costs begins at either the applicable service inception date or grant date, and continues throughout the requisite service period or, for certain share-based awards, until the employee becomes retirement eligible, if earlier. Compensation cost is recognized as expense or capitalized as a component of property, plant, and equipment. 52 DUKE ENERGY – 2020 Proxy Statement
Table of Contents COMPENSATION DISCUSSION AND ANALYSIS Non-GAAP Financial Measures |
As described previously in this Compensation Discussion and Analysis, Duke Energy uses various financial measures, including adjusted dilutedEPS, cumulative adjusted EPS, and adjusted O&M expense, in connection with short-term and long-term incentives. Adjusted diluted EPS is aand cumulative adjusted EPS are non-GAAP financial measure as it representsmeasures that represent basic and diluted EPS from continuing operations attributableavailable to Duke Energy Corporation common shareholders, adjusted for the per-share impact of special items. Cumulative adjusted EPS is calculated based on a cumulative three-year basis. For the years ended December 31, 2019, 2018, and 2017, basic EPS available to Duke Energy common shareholders and diluted EPS available to Duke Energy common shareholders were equal. For 2017, 2018, and 2019, Duke Energy used adjusted diluted EPS as a financial measure to evaluate management performance. Beginning in 2020, Duke Energy will use adjusted basic EPS as the financial measure to evaluate management performance. Adjusted basic EPS will represent basic EPS available to Duke Energy common shareholders (GAAP reported basic EPS), adjusted for the per share impact of special items. As discussed below, special items includerepresent certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. A component of the operational excellence performance metric is adjusted O&M expense. The adjusted O&M expense measure used for incentive plan purposes also is a non-GAAP financial measure as it represents GAAP O&M adjusted primarily for expenses recovered through rate riders, certain regulatory accounting deferrals, and applicable special items. Management believes that the presentation of adjusted diluted EPS provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy's performance across periods. Management uses this non-GAAP financial measure for planning and forecasting and for reporting financial results to the Board, employees, shareholders, analysts, and investors. The most directly comparable GAAP measures for adjusted diluted EPS and adjusted O&M expense measures used for incentive plan purposes are reported basic and diluted EPS from continuing operations attributableavailable to Duke Energy Corporation common shareholders and reported O&M expense from continuing operations, which includes the impact of special items. Special items included infor the periods presented include the following, items which management believes do not reflect ongoing costs. costs: - •
- Costs to achieve mergers, which represent charges that result from
potential or completed strategic acquisitions. Commercial Renewables Impairments
- •
- Regulatory and legislative impacts in 2018, which represent
other-than-temporary, assetcharges related to the Duke Energy Progress and goodwill impairments. Regulatory settlements representDuke Energy Carolinas North Carolina rate case orders and the repeal of the South Carolina Base Load Review Act. For 2017, it represents charges related to the Levy nuclear project in Florida and the Mayo Zero Liquid Discharge and Sutton combustion turbine projects in North Carolina.
- •
- Impairment charges in 2019, which represents a reduction of prior year impairment at Citrus County combined cycle and an other-than-temporary impairment of the remaining investment in Constitution Pipeline Company, LLC. For 2018, it represents an impairment at Citrus County combined cycle, a goodwill impairment at Commercial Renewables, and an other-than-temporary impairment of an investment in Constitution Pipeline Company, LLC. For 2017, the charges represent other-than-temporary asset and goodwill impairments at Commercial Renewables.
- •
- Sale of a retired plant, which represents the loss associated with selling Beckjord, a nonregulated generating facility in Ohio.
- •
- Impacts of the Tax Act, which represent amounts recognized related to the Tax
CutsAct.
- •
- Severance charges, which relate to company-wide initiatives, excluding merger integration, to standardize process and
Jobs Act.systems, leverage technology, and workforce optimization.
Adjusted EPS used in the LTI plan was adjusted for the net dilutive effect of equity issuances made in 2018 related to the Tax Act, but not adjusted for other equity issuances. Additionally, previously-approved target levels did not incorporate certain structural changes in Duke Energy's business from 2017 to 2019, including the sale of Duke Energy International and the acquisition of Piedmont. As such, adjusted EPS used in the LTI plan incorporates an expected level of operating results for Duke Energy International and removes an expected level of operating results for Piedmont, net of any transaction proceeds or financing impacts from such transactions. Duke Energy's adjusted earningsEPS and adjusted EPS and O&M expense may not be comparable to similarly-titled measures of another company because other companies may not calculate the measures in the same manner. In addition, the performance-based retention award granted in 2017 contains a performance metric that is based on an adjusted book ROE earned ratio for the periods from 2017 to 2019. This ratio is a non-GAAP financial measure. The ROE ratio will equal the average of annual ROE's earned from 2017 to 2019. The numerator represents net income, adjusted for the impact of special items (as discussed on the previous page). The denominator is average total common stockholder's equity, reduced for goodwill. DUKE ENERGY – 20182020 Proxy Statement 53
Table of Contents
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides compensation information for our Chief Executive OfficerCEO (Ms. Good), our Chief Financial OfficerCFO (Mr. Young) and theour three other most highly compensated executive officers who were employed on December 31, 2017,2019, (Mr. Jamil, Ms. Janson, and Mr. Yates)Esamann). The table also provides compensation information for Mr. Yates and Mr. Yoho, each of whom would have been among the three most highly compensated executive officers if they had remained employed with Duke Energy through December 31, 2019. The table provides information for 2017 and 2018 only to the extent that each NEO was included in the Duke Energy Summary Compensation Table for those years. | Name and Principal Position
| | Year
| | Salary
($)
| | Bonus
($)
| | Stock
Awards
($)(2)
| | Option
Awards
($)
| | Non-Equity
Incentive Plan
Compensation
($)(3)
| | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(4)
| | All Other
Compensation
($)(5)
| | Total
($)
| | | Year
| | Salary
($)
| | Bonus
($)
| | Stock
Awards
($)(3)
| | Option
Awards
($)
| | Non-Equity
Incentive Plan
Compensation
($)(4)
| | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(5)
| | All Other
Compensation ($)(6)
| | Total
($)
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lynn J. Good | | | 2017 | | | 1,341,667 | | 0 | | | 17,244,803 | | 0 | | 2,110,736 | | 308,336 | | 410,394 | | | 21,415,936 | | | | 2019 | | | 1,383,750 | | | 0 | | | 10,122,579 | | 0 | | 2,793,389 | | 355,908 | | 373,760 | | | 15,029,386 | | Chairman, President | | | 2016 | | | 1,291,667 | | 0 | | | 9,128,876 | | 0 | | 2,676,465 | | 334,612 | | 361,974 | | | 13,793,594 | | | and Chief Executive Officer | | | 2015 | | | 1,225,758 | | 0 | | | 7,565,830 | | 0 | | 1,572,161 | | 149,884 | | 312,198 | | | 10,825,831 | | | Chair, President | | | | 2018 | | | 1,350,000 | | | 0 | | | 9,873,135 | | 0 | | 2,268,961 | | 188,593 | | 302,271 | | | 13,982,960 | | and CEO | | | | 2017 | | | 1,341,667 | | | 0 | | | 17,244,803 | | 0 | | 2,110,736 | | 308,336 | | 410,394 | | | 21,415,936 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Steven K. Young | | 2017 | | 682,500 | | 0 | | 1,827,744 | | 0 | | 557,291 | | 231,604 | | 99,570 | | 3,398,709 | | | 2019 | | 734,003 | | 0 | | 1,792,619 | | 0 | | 868,773 | | 280,504 | | 104,100 | | 3,779,999 | | Executive Vice President | | 2016 | | 625,000 | | 0 | | 1,672,064 | | 0 | | 665,742 | | 192,600 | | 84,964 | | 3,240,370 | | | 2018 | | 707,438 | | 0 | | 1,558,502 | | 0 | | 616,903 | | 161,336 | | 88,576 | | 3,132,755 | | and Chief Financial Officer | | 2015 | | 591,667 | | 0 | | 1,373,846 | | 0 | | 445,068 | | 111,329 | | 73,223 | | 2,595,133 | | | and CFO | | | 2017 | | 682,500 | | 0 | | 1,827,744 | | 0 | | 557,291 | | 231,604 | | 99,570 | | 3,398,709 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dhiaa M. Jamil | | | 2017 | | | 781,250 | | 0 | | | 3,191,191 | | 0 | | 643,863 | | 270,064 | | 101,834 | | | 4,988,202 | | | | 2019 | | | 834,094 | | | 0 | | | 2,444,461 | | 0 | | 987,243 | | 294,809 | | 97,707 | | | 4,658,314 | | Executive Vice President | | | 2016 | | | 737,500 | | 0 | | | 3,069,081 | | 0 | | 832,658 | | 224,991 | | 81,218 | | | 4,945,448 | | | | 2018 | | | 803,907 | | | 0 | | | 2,164,521 | | 0 | | 701,026 | | 205,073 | | 119,873 | | | 3,994,400 | | and Chief Operating Officer | | | 2015 | | | 670,833 | | 0 | | | 1,717,248 | | 0 | | 532,795 | | 143,014 | | 83,508 | | | 3,147,398 | | | | 2017 | | | 781,250 | | | 0 | | | 3,191,191 | | 0 | | 643,863 | | 270,064 | | 101,834 | | | 4,988,202 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Julia S. Janson(1) | | 2017 | | 608,333 | | 0 | | 2,172,889 | | 0 | | 496,731 | | 404,315 | | 76,282 | | 3,758,550 | | | 2019 | | 674,167 | | 0 | | 1,616,702 | | 0 | | 797,951 | | 772,885 | | 93,652 | | 3,955,357 | | Executive Vice President | | 2016 | | 520,833 | | 0 | | 1,434,996 | | 0 | | 588,035 | | 832,261 | | 55,873 | | 3,431,998 | | | External Affairs, Chief Legal Officer and Corporate Secretary | | 2015 | | 500,000 | | 0 | | 1,017,661 | | 0 | | 388,714 | | 484,163 | | 62,358 | | 2,452,896 | | | Executive Vice President, | | | 2018 | | 638,021 | | 0 | | 1,405,548 | | 0 | | 566,067 | | 0 | | 80,040 | | 2,689,676 | | External Affairs and President, Carolinas Region | | | 2017 | | 608,333 | | 0 | | 2,172,889 | | 0 | | 496,731 | | 404,315 | | 76,282 | | 3,758,550 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lloyd M. Yates | | | 2017 | | | 683,419 | | 0 | | | 1,563,447 | | 0 | | 532,072 | | 751,046 | | 136,604 | | | 3,666,588 | | | Executive Vice President | | | 2016 | | | 661,458 | | 0 | | | 2,254,988 | | 0 | | 680,129 | | 478,811 | | 112,466 | | | 4,187,852 | | | Customer and Delivery Operations and President, Carolinas Region | | | 2015 | | | 631,667 | | 0 | | | 1,453,927 | | 0 | | 480,464 | | 0 | | 159,539 | | | 2,725,597 | | | Douglas F Esamann | | | | 2019 | | | 649,167 | | | 0 | | | 1,564,446 | | 0 | | 705,180 | | 594,127 | | 93,000 | | | 3,605,920 | | Executive Vice President, | | | | | | | | | | | | | | | | | | | | | | | | | | Energy Solutions and President, Midwest/Florida Regions and Natural Gas Business | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lloyd M. Yates(2) | | | 2019 | | 540,260 | | 0 | | 1,759,427 | | 0 | | 564,300 | | 1,871,364 | | 2,800,449 | | 7,535,800 | | Former Executive Vice | | | 2018 | | 701,060 | | 0 | | 1,544,470 | | 0 | | 600,685 | | 0 | | 106,578 | | 2,952,793 | | President, Customer and Delivery Operations and President, Carolinas Region | | | 2017 | | 683,419 | | 0 | | 1,563,447 | | 0 | | 532,072 | | 751,046 | | 136,604 | | 3,666,588 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Frank H. Yoho(2) | | | | 2019 | | | 400,901 | | | 2,300,000 | (7) | | 771,521 | | 0 | | 398,282 | | 159,504 | | 119,912 | | | 4,150,120 | | Former Executive Vice | | | | | | | | | | | | | | | | | | | | | | | | | | President and President, Natural Gas | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
- (1)
- Effective
MayOctober 1, 2017,2019, Ms. Janson became Executive Vice President, External Affairs Chief Legal Officer and Corporate Secretary.President, Carolinas Region. Prior to this assignment, she served as Executive Vice President, External Affairs and Chief Legal Officer and Corporate Secretary.Officer.
- (2)
- Mr. Yates left Duke Energy on September 30, 2019, and Mr. Yoho left Duke Energy on October 3, 2019.
- (3)
- Grant Date Fair Value of Stock Awards for Accounting
Purposes.Purposes: This column does not reflect the value of stock awards that were actually earned or received by theour NEOs during each of the years listed above. Rather, as required by applicable SEC rules, this column reflects the aggregate grant date fair value of the performance shares and performance-based retention grant (based on the probable outcome of the performance conditions as of the date of grant) and RSUs granted to our NEOs in the applicable year. The aggregate grant date fair value of the performance shares provided in 20172019 to Ms. Good, Mr. Young, Mr. Jamil, Ms. Janson, Mr. Esamann, Mr. Yates, and Mr. Yates,Yoho, assuming that the highest level of performance would be achieved, is $14,414,601; $2,219,905; $3,083,111; $2,002,073$13,987,881; $2,477,094; $3,377,948; $2,234,003; $2,161,812; $2,431,247; and $2,199,762;$1,066,108, respectively. The aggregate grant date fair value of the awards was determined in accordance with the accounting guidance for stock-based compensation. See Note 2022 of the Consolidated Financial Statements contained in our 2019 Form 10-K for an explanation of the assumptions made in valuing these awards.
(3)(4)- With respect to the applicable performance period, this column reflects amounts payable under the STI
Plan.plan. Unless deferred, the 20172019 amounts were paid in March 2018.
2020.
54 DUKE ENERGY – 2020 Proxy Statement
Table of Contents EXECUTIVE COMPENSATION (4)(5)- This column includes the amounts listed below. The amounts listed were earned over the 12-month period ending on December 31,
2017.2019.
|
| | Good ($)
| | Young ($)
| | Jamil ($)
| | Janson ($)
| | Yates ($)
| | | Good
($)
| | Young
($)
| | Jamil
($)
| | Janson
($)
| | Esamann
($)
| | Yates
($)
| | Yoho
($)
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Change in Actuarial Present Value of Accumulated Benefit Under: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Duke Energy Retirement Cash Balance Plan | | | 40,408 | | 63,353 | | 61,006 | | 105,609 | | 82,917 | | | Duke Energy Executive Cash Balance Plan | | | 267,928 | | | 168,251 | | | 209,058 | | | 298,706 | | | 668,129 | | | RCBP | | | | 45,616 | | 81,109 | | 71,291 | | 212,710 | | 192,866 | | 55,907 | | 91,815 | | ECBP | | | �� | 310,292 | | | 199,395 | | | 223,518 | | | 560,175 | | | 401,261 | | | 1,815,457 | | | 67,689 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 308,336 | | 231,604 | | 270,064 | | 404,315 | | 751,046 | | | | 355,908 | | 280,504 | | 294,809 | | 772,885 | | 594,127 | | 1,871,364 | | 159,504 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
54 DUKE ENERGY – 2018 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
(5)(6)- The All Other Compensation column includes the following for
2017:2019:
|
| | Good ($)
| | Young ($)
| | Jamil ($)
| | Janson ($)
| | Yates ($)
| | | Good
($)
| | Young
($)
| | Jamil
($)
| | Janson
($)
| | Esamann
($)
| | Yates
($)
| | Yoho
($)
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matching Contributions Under the Duke Energy Retirement Savings Plan | | | 16,200 | | | 16,200 | | | 16,200 | | | 16,200 | | | 16,200 | | | Matching and Employer Retirement Contributions Under the Retirement Savings Plan | | | | 16,800 | | | 16,800 | | | 16,800 | | | 16,800 | | | 16,800 | | | 16,800 | | | 28,000 | | Make-Whole Matching Contribution Credits Under the Executive Savings Plan | | | 224,888 | | 64,695 | | 80,634 | | 55,582 | | 62,474 | | | | 202,363 | | 64,254 | | 75,307 | | 57,614 | | 53,132 | | 0 | | 0 | | Personal Use of Airplane* | | | 160,656 | | | 5,537 | | | 0 | | | 0 | | | 51,430 | | | Airline Membership | | | 0 | | 0 | | 0 | | 0 | | 0 | | | Personal Use of the Corporate Aircraft* | | | | 131,900 | | | 0 | | | 0 | | | 0 | | | 1,600 | | | 28,622 | | | 0 | | Charitable Contributions Made in the Name of the Executive** | | | 5,000 | | | 5,000 | | | 5,000 | | | 4,500 | | | 0 | | | | 15,000 | | 14,000 | | 5,000 | | 14,500 | | 15,000 | | 7,500 | | 11,083 | | Executive Physical Exam Program | | | 2,500 | | 0 | | 0 | | 0 | | 2,500 | | | Financial Planning Program | | | 1,150 | | | 8,138 | | | 0 | | | 0 | | | 4,000 | | | | 0 | | | 7,959 | | | 0 | | | 2,950 | | | 0 | | | 7,000 | | | 4,190 | | Cost of Basic Life Coverage | | | | 0 | | 0 | | 0 | | 0 | | 0 | | 2,335 | | 0 | | Payout of Unused Vacation | | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 52,984 | | | 30,319 | | Cash Severance Accrued at Termination of Employment*** | | | | 0 | | 0 | | 0 | | 0 | | 0 | | 2,634,550 | | 0 | | Continued Health and Welfare Benefits | | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 31,212 | | | 0 | | Other**** | | | | 7,697 | | 1,087 | | 600 | | 1,788 | | 6,468 | | 19,446 | | 46,320 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 410,394 | | 99,570 | | 101,834 | | 76,282 | | 136,604 | | | | 373,760 | | | 104,100 | | | 97,707 | | | 93,652 | | | 93,000 | | | 2,800,449 | | | 119,912 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
- *
- Regarding use of the corporate aircraft, NEOs
generally are required to reimburse Duke Energy the direct operating costs of any personal travel.travel, except Ms. Good is not required to reimburse Duke Energy for the cost of travel to her executive physical or to meetings of the board of directors of other companies on whose board she serves. With respect to flights on a leased or chartered airplane,aircraft, direct operating costs equal the amount that the third partythird-party charges Duke Energy for such trip. With respect to flights on the company-owned airplane,corporate aircraft, direct operating costs include the amounts permitted by the Federal Aviation Regulations for non-commercial carriers.carriers, including hangar fees, fuel, crew travel expenses, airplane maintenance, aircraft depreciation, catering, labor, and aircraft leases. NEOs are permitted to invite their spouse or other guests to accompany them on business trips when space is available; however, in such events, the NEO is imputed income in accordance with IRS guidelines. The additionalincremental cost included in the table above is the amount of the IRS-specified tax deduction disallowance, if any, with respect to the NEO's personal travel.
- **
- Certain executives, including our NEOs, are eligible to have charitable contributions made to the United Way of $5,000 or more matched up to a cap of $10,000. This match of United Way charitable contributions is in addition to the $5,000 match opportunity to eligible organizations that continues to be available to all Duke Energy employees. Certain charitable contributions made by
theour NEOs are not eligible for matching under the Matching Gifts Program, and, therefore, are not listed above.
- ***
- lncludes interest on severance payment that is deferred under applicable tax rules. In addition, under the terms of the Executive Severance Plan, Mr. Yates received additional vesting of RSUs and performance shares with a value, excluding the portion that would have vested in any event due to him being eligible for retirement, of $761,961 and $1,796,055 (assuming target performance), respectively. See page 68 for additional information.
- ****
- lncludes the cost of benefits under the executive physical exam program, an airline club membership, reimbursement of a portion of the monthly expense for a personal mobile device, and occasional personal use of tickets to athletic and cultural events. Also includes $29,032 of consulting fees provided to Mr. Yoho for work performed in 2019 after he left Duke Energy, in order to ensure an orderly transition of his leadership of the natural gas business. This consulting arrangement is described in more detail on page 49.
- (7)
- This column reflects Mr. Yoho's retention award agreement, which was entered into in August 2016, under which he was entitled to a payment of $2,300,000 if he satisfied a vesting condition, one of which was remaining continuously employed with Duke Energy until the third anniversary of the acquisition of Piedmont by Duke Energy (i.e., October 3, 2019). In consideration of the retention award agreement, in addition to his obligation to remain employed for three years, Mr. Yoho agreed to be subject to certain non-competition restrictions for the two-year period following his termination of employment.
DUKE ENERGY – 20182020 Proxy Statement 55
Table of Contents EXECUTIVE COMPENSATION
GRANTS OF PLAN-BASED AWARDS
|
| |
| |
| |
| |
| |
| |
| |
| |
| | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
| |
| | |
| |
| |
| |
| |
| |
| |
| |
| | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
| |
| |
|---|
| |
| |
| | Estimated Possible
Payouts Under Non-Equity
Incentive Plan Awards | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | | Grant
Date Fair
Value
of Stock
Awards
($)(5)
| | |
| |
| | Estimated Possible
Payouts Under Non-Equity
Incentive Plan Awards | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | | Grant
Date Fair
Value
of Stock
Awards
($)(4)
| |
|---|
Name
| | Grant Type
| | Grant Date
| | Threshold
($)
| | Target
($)
| | Maximum
($)
| | Threshold
(#)
| | Target
(#)
| | Maximum
(#)
| | | Grant Type
| | Grant Date
| | Threshold
($)
| | Target
($)
| | Maximum
($)
| | Threshold
(#)
| | Target
(#)
| | Maximum
(#)
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lynn J. Good | | Cash STI(1) | | | | | 987,802 | | | 2,079,583 | | | 3,821,234 | | | | | | | | | | | | | | | | | | Cash STI(1) | | | | | 1,018,786 | | | 2,144,813 | | | 3,941,093 | | | | | | | | | | | | | | | | | | | LTI Perf. Shares(2) | | 2/22/2017 | | | | | | | | 44,369 | | 88,738 | | 177,476 | | | | 7,207,300 | | | LTI Perf. Shares(2) | | 2/27/2019 | | | | | | | | 36,795 | | 81,767 | | 163,534 | | | | 6,993,940 | | | | Performance-Based Retention Award(3) | | 2/22/2017 | | | | | | | | | | | | | | | 87,642 | | | | | | | | | 6,999,967 | | | RSUs(3) | | 2/27/2019 | | | | | | | | | | | | | | | | | | | | | 35,043 | | | 3,128,639 | | | | Restricted Stock Units(4) | | 2/22/2017 | | | | | | | | | | | | | | 38,031 | | 3,037,536 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ��� | | | | Steven K. Young | | Cash STI(1) | | | | | 259,350 | | | 546,000 | | | 1,003,275 | | | | | | | | | | | | | | | | | | Cash STI(1) | | | | 313,786 | | 660,602 | | 1,213,857 | | | | | | | | | | | | | | LTI Perf. Shares(2) | | 2/22/2017 | | | | | | | | 6,833 | | 13,666 | | 27,332 | | | | 1,109,952 | | | | | Performance-Based Retention Award(3) | | 2/22/2017 | | | | | | | | | | | | | | | 3,130 | | | | | | | | | 249,993 | | | LTI Perf. Shares(2) | | 2/27/2019 | | | | | | | | | | | | 6,516 | | | 14,480 | | | 28,960 | | | | | | 1,238,547 | | | | Restricted Stock Units(4) | | 2/22/2017 | | | | | | | | | | | | | | 5,857 | | 467,799 | | | RSUs(3) | | 2/27/2019 | | | | | | | | | | | | | | 6,206 | | 554,072 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dhiaa M. Jamil | | Cash STI(1) | | | | | 296,875 | | | 625,000 | | | 1,148,438 | | | | | | | | | | | | | | | | | | Cash STI(1) | | | | | 356,575 | | | 750,685 | | | 1,379,384 | | | | | | | | | | | | | | | | | | | LTI Perf. Shares(2) | | 2/22/2017 | | | | | | | | 9,490 | | 18,980 | | 37,960 | | | | 1,541,556 | | | LTI Perf. Shares(2) | | 2/27/2019 | | | | | | | | 8,886 | | 19,746 | | 39,492 | | | | 1,688,974 | | | | Performance-Based Retention Award(3) | | 2/22/2017 | | | | | | | | | | | | | | | 12,520 | | | | | | | | | 999,972 | | | RSUs(3) | | 2/27/2019 | | | | | | | | | | | | | | | | | | | | | 8,462 | | | 755,487 | | | | Restricted Stock Units(4) | | 2/22/2017 | | | | | | | | | | | | | | 8,134 | | 649,663 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Julia S. Janson | | Cash STI(1) | | | | | 231,167 | | | 486,667 | | | 894,250 | | | | | | | | | | | | | | | | | | Cash STI(1) | | | | 288,206 | | 606,750 | | 1,114,903 | | | | | | | | | | | | | | LTI Perf. Shares(2) | | 2/22/2017 | | | | | | | | 6,163 | | 12,325 | | 24,650 | | | | 1,001,037 | | | | | Performance-Based Retention Award(3) | | 2/22/2017 | | | | | | | | | | | | | | | 9,390 | | | | | | | | | 749,979 | | | LTI Perf. Shares(2) | | 2/27/2019 | | | | | | | | | | | | 5,877 | | | 13,059 | | | 26,118 | | | | | | 1,117,002 | | | | Restricted Stock Units(4) | | 2/22/2017 | | | | | | | | | | | | | | 5,282 | | 421,873 | | | RSUs(3) | | 2/27/2019 | | | | | | | | | | | | | | 5,597 | | 499,700 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lloyd M. Yates | | Cash STI(1) | | | | | 259,699 | | | 546,735 | | | 1,004,626 | | | | | | | | | | | | | | | | | | Douglas F Esamann | | | Cash STI(1) | | | | | 254,699 | | | 536,208 | | | 985,283 | | | | | | | | | | | | | | | | | | | LTI Perf. Shares(2) | | 2/22/2017 | | | | | | | | 6,771 | | 13,542 | | 27,084 | | | | 1,099,881 | | | LTI Perf. Shares(2) | | 2/27/2019 | | | | | | | | 5,687 | | 12,637 | | 25,274 | | | | 1,080,906 | | | | Restricted Stock Units(4) | | 2/22/2017 | | | | | | | | | | | | | | | | | | | | | 5,804 | | | 463,566 | | | RSUs(3) | | 2/27/2019 | | | | | | | | | | | | | | | | | | | | | 5,416 | | | 483,540 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lloyd M. Yates | | | Cash STI(1) | | | | 205,299 | | 432,208 | | 794,181 | | | | | | | | | | | | | | | LTI Perf. Shares(2) | | 2/27/2019 | | | | | | | | | | | | 6,395 | | | 14,212 | | | 28,424 | | | | | | 1,215,623 | | | | | RSUs(3) | | 2/27/2019 | | | | | | | | | | | | | | 6,091 | | 543,804 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Frank H. Yoho | | | Cash STI(1) | | | | | 142,821 | | | 300,676 | | | 552,491 | | | | | | | | | | | | | | | | | | | | LTI Perf. Shares(2) | | 2/27/2019 | | | | | | | | 2,804 | | 6,232 | | 12,464 | | | | 533,054 | | | | | RSUs(3) | | 2/27/2019 | | | | | | | | | | | | | | | | | | | | | 2,671 | | | 238,467 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
- (1)
- Reflects the STI opportunity granted to our NEOs in
20172019 under the Duke Energy Corporation Executive Short-Term Incentive Plan. The information included in the "Threshold," "Target""Target," and "Maximum" columns reflects the range of potential payouts under the plan established by the Compensation Committee. The actual amounts earned by each executive under the terms of such plan are disclosed in the Summary Compensation Table.Table on page 54.
- (2)
- Reflects the performance shares granted to our NEOs on February
22, 2017,27, 2019, under the LTI program, pursuant to the terms of the Duke Energy Corporation 2015 LTILong-Term Incentive Plan. The information included in the "Threshold," "Target""Target," and "Maximum" columns reflects the range of potential payouts established by the Compensation Committee. Earned performance shares will be paid following the end of the 2017-20192019 - 2021 performance period, based on the extent to which the performance goals have been achieved. Any shares not earned are forfeited. In addition, following a determination that the performance goals have been achieved, participants will receive a cash payment equal to the amount of cash dividends paid on one share of Duke Energy common stock during the performance period multiplied by the number of performance shares earned.
(3)Reflects retention grants In connection with the termination of performance-based RSUs provided to the NEOs on February 22, 2017, under the termsemployment of the Duke Energy Corporation 2015 LTI Plan. These retention awards generally vest in full on the third anniversary of the grant date, provided the recipient remains continuously employed with Duke Energy through that dateMr. Yates and Duke Energy achieves an average ROE (excluding goodwill) equal to at least 10% during the period beginning on January 1, 2017, and ending on December 31, 2019. Any shares not earned are forfeited. In addition, following a determination that the performance goal has been achieved, participantsMr. Yoho, each former executive officer will receive a cash payment equal to the amountpro-rated portion of cash dividends paid on one share of Duke Energy common stock during the performance period multiplied byshares reflected above as disclosed in the number of performance shares earned.Outstanding Equity Awards at Fiscal Year-End Table on page 57.
(4)(3)- Reflects RSUs granted to our NEOs on February
22, 2017,27, 2019, under our LTI program, pursuant to the terms of the Duke Energy Corporation 2015 LTILong-Term Incentive Plan. These RSUs generally vest in equal portions on each of the first three anniversaries of the grant date, provided the recipient continues to be employed by Duke Energy on each vesting date. If dividends are paid during the vesting period, then the participants will receive a current cash payment equal to the amount of cash dividends paid on one share of Duke Energy common stock during the vesting period multiplied by the number of unvested RSUs. In connection with the termination of employment of Mr. Yates and Mr. Yoho, each former executive officer will receive a pro-rated portion of the RSUs reflected above as disclosed in the Option Exercises and Stock Vested Table on page 58.
(5)(4)- Reflects the grant date fair value of each
restricted stock unit,RSU and performance share and performance-based retention grantaward (based on the probable outcome of the performance conditions as of the date of grant) granted to our NEOs in 2017,2019, as computed in accordance with the accounting guidance for stock-based compensation.
56 DUKE ENERGY – 20182020 Proxy Statement
Table of Contents EXECUTIVE COMPENSATION
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table shows the outstanding equity awards held by our NEOs as of December 31, 2017.2019. |
| |
| | Stock Awards | | |
| | Stock Awards | |
|---|
Name
| | Grant Type
| | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(1)
| | Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)
| | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#)(2)
| | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($)
| | | Grant Type
| | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(1)
| | Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(2)
| | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#)(3)
| | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($)(2)
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | Lynn J. Good | | Restricted Stock Units | | | 71,807 | | | 6,039,687 | | | | | | | | | | RSUs | | | 74,598 | | | 6,804,084 | | | | | | | | | | | Performance Shares (2016-2018) | | | | | | | | | 169,980 | | | 14,297,018 | | | | Performance-Based Retention Award(4) | | | 87,642 | | | 7,993,827 | | | | | | | | | | | Performance Shares (2017-2019) | | | | | | | | | 177,476 | | | 14,927,506 | | | | Performance Shares (2018 - 2020) | | | | | | | | | 188,148 | | | 17,160,979 | | | | | Performance-Based Retention Award | | | | | | | | | 87,642 | | | 7,371,569 | | | | Performance Shares (2019 - 2021) | | | | | | | | | 81,767 | | | 7,457,968 | | | | | | | | | | | | | | | | | | | | | | | | | | | Steven K. Young | | Restricted Stock Units | | | 14,685 | | | 1,235,155 | | | | | | | | | | RSUs | | | 12,402 | | | 1,131,186 | | | | | | | | | | | Performance Shares (2016-2018) | | | | | | | | | 26,478 | | | 2,227,065 | | | | Performance-Based Retention Award(4) | | | 3,130 | | | 285,487 | | | | | | | | | | | Performance Shares (2017-2019) | | | | | | | | | 27,332 | | | 2,298,895 | | | | Performance Shares (2018 - 2020) | | | | | | | | | 29,700 | | | 2,708,937 | | | | | Performance-Based Retention Award | | | | | | | | | 3,130 | | | 263,264 | | | | Performance Shares (2019 - 2021) | | | | | | | | | 14,480 | | | 1,320,721 | | | | | | | | | | | | | | | | | | | | | | | | | | | Dhiaa M. Jamil | | Restricted Stock Units | | | 29,116 | | | 2,448,947 | | | | | | | | | | RSUs | | | 17,067 | | | 1,556,681 | | | | | | | | | | | Performance Shares (2016-2018) | | | | | | | | | 38,526 | | | 3,240,422 | | | | Performance-Based Retention Award(4) | | | 12,520 | | | 1,141,949 | | | | | | | | | | | Performance Shares (2017-2019) | | | | | | | | | 37,960 | | | 3,192,816 | | | | Performance Shares (2018 - 2020) | | | | | | | | | 41,248 | | | 3,762,230 | | | | | Performance-Based Retention Award | | | | | | | | | 12,520 | | | 1,053,057 | | | | Performance Shares (2019 - 2021) | | | | | | | | | 19,746 | | | 1,801,033 | | | | | | | | | | | | | | | | | | | | | | | | | | | Julia S. Janson | | Restricted Stock Units | | | 13,036 | | | 1,096,458 | | | | | | | | | | RSUs | | | 11,185 | | | 1,020,184 | | | | | | | | | | | Performance Shares (2016-2018) | | | | | | | | | 22,064 | | | 1,855,803 | | | | Performance-Based Retention Award(4) | | | 9,390 | | | 856,462 | | | | | | | | | | | Performance Shares (2017-2019) | | | | | | | | | 24,650 | | | 2,073,312 | | | | Performance Shares (2018 - 2020) | | | | | | | | | 26,784 | | | 2,442,969 | | | | | Performance-Based Retention Award | | | | | | | | | 9,390 | | | 789,793 | | | | Performance Shares (2019 - 2021) | | | | | | | | | 13,059 | | | 1,191,111 | | | | | | | | | | | | | | | | | | | | | | | | | | | Lloyd M. Yates | | Restricted Stock Units | | | 21,624 | | | 1,818,795 | | | | | | | | | | Douglas F Esamann | | | RSUs | | | 10,803 | | | 985,342 | | | | | | | | | | | Performance Shares (2016-2018) | | | | | | | | | 28,022 | | | 2,356,930 | | | | Performance Shares (2018 - 2020) | | | | | | | | | 26,172 | | | 2,387,148 | | | | | Performance Shares (2017-2019) | | | | | | | | | 27,084 | | | 2,278,035 | | | | Performance Shares (2019 - 2021) | | | | | | | | | 12,637 | | | 1,152,621 | | | | | | | | | | | | | | | | | | | | | | | | | | | Lloyd M. Yates | | | Performance Shares (2018 - 2020) | | | | | | | | | 29,432 | | | 2,684,493 | | | | | | Performance Shares (2019 - 2021) | | | | | | | | | 13,019 | | | 1,187,463 | | | | | | | | | | | | | | | | | Frank H. Yoho | | | Performance Shares (2018 - 2020) | | | | | | | | | 8,386 | | | 764,887 | | | | | | Performance Shares (2019 - 2021) | | | | | | | | | 1,569 | | | 143,108 | | | | | | | | | | | | | | | | |
- (1)
- Ms. Good, Mr. Young, Mr. Jamil, Ms. Janson, Mr. Esamann, Mr. Yates, and Mr.
YatesYoho received RSUs under our LTI Plan on February 25, 2015, February 24, 2016, and February 22, 2017, February 28, 2018, and February 27, 2019, which vest, subject to certain exceptions, in equal installments on the first three anniversaries of the date of grant. In addition, Ms. Good receivedAll RSUs under our LTI Plan on June 25, 2015, which vest, subjectheld by Mr. Yates and Mr. Yoho immediately prior to certain exceptions, in equal installmentstheir termination of employment have vested or been forfeited.
- (2)
- Market value is based on the
first three anniversariesclosing price per share of February 25, 2015. Mr. Young, Mr. Jamil, Ms. Janson and Mr. Yates also received additional retention grantsour common stock on December 31, 2019, of RSUs on February 24, 2016, that vest in full, subject to continued employment, on the third anniversary of the grant date.$91.21.
(2)(3)- Ms. Good, Mr. Young, Mr. Jamil, Ms. Janson, Mr. Esamann, Mr. Yates, and Mr.
YatesYoho received performance shares on February 24, 2016,28, 2018, and on February 22, 2017,27, 2019, that, subject to certain exceptions, are eligible for vesting on December 31, 2018,2020, and December 31, 2021, respectively. Pursuant to applicable SEC rules, the performance shares granted in 2018 are listed at the maximum number of shares and the performance shares granted in 2019 respectively. are listed at target. Performance shares held by Mr. Yates and Mr. Yoho are eligible to vest following their termination on a pro-rated basis, subject to the actual achievement of pre-determined performance measures and compliance with restrictive covenants.
- (4)
- Ms. Good, Mr. Young, Mr. Jamil, and Ms. Janson
also received additional retention grants of performance-based RSUs on February 22, 2017, which grants contained performance conditions that subject to certain exceptions,have been satisfied and such grants are eligible for vesting on the third anniversary of the date of grant. Pursuant to applicable SEC rules, the performance shares granted in 2016 and 2017 are listed at the maximum number of shares and the performance-based retention awards are listed at target.
DUKE ENERGY – 20182020 Proxy Statement 57
Table of Contents EXECUTIVE COMPENSATION
OPTION EXERCISES AND STOCK VESTED
|
| | Stock Awards | | | Stock Awards | |
|---|
Name
| | Number of Shares
Acquired on
Vesting
(#)(1)
| | Value Realized
on Vesting
($)(2)
| | | Number of Shares
Acquired on
Vesting
(#)(1)
| | Value Realized
on Vesting
($)(2)
| |
|---|
| | | | | | | | | | | | Lynn J. Good | | | 64,587 | | | 5,690,262 | | | | | 152,881 | | | 15,039,130 | | | Steven K. Young | | | 11,073 | | | 980,379 | | | | | 26,954 | | | 2,622,648 | | | Dhiaa M. Jamil | | | 14,673 | | | 1,293,633 | | | | | 46,268 | | | 4,436,629 | | | Julia S. Janson | | | 8,528 | | | 752,907 | | | | | 24,507 | | | 2,383,092 | | | Douglas F Esamann | | | | 19,754 | | | 1,944,231 | | | Lloyd M. Yates | | | 12,135 | | | 1,071,667 | | | | | 44,942 | | | 4,298,123 | | | Frank H. Yoho | | | | 11,299 | | | 1,111,015 | | | | | | | | | | | | | | |
- (1)
- Includes vested RSUs and performance shares covering the
2015-20172017 - 2019 performance period, for all NEOs. On February 14, 2018,10, 2020, the Compensation Committee certified the achievement of the applicable performance measures for the performance share cycle ending in 2017.2019. Also includes the value of RSUs held by Mr. Yates and Mr. Yoho that became vested in connection with their termination of employment, which shares generally are payable six months following their separation from service date, as required by applicable tax laws.
- (2)
- The value realized upon vesting of stock awards was calculated based on the closing price of a share of Duke Energy common stock on the respective vesting date and includes the following cash payments for dividend equivalents on earned performance shares: Ms.
Good: $320,709;Good – $1,147,949; Mr. Young: $59,153;Young – $176,795; Mr. Jamil: $73,932;Jamil – $245,538; Ms. Janson: $43,817;Janson – $159,449; Mr. Esamann – $149,244; Mr. Yates – $175,192; and Mr. Yates: $62,602.Yoho – $76,565. Dividend equivalents for the first quarter of 20182020 are not included above but were paid due to the fact that the vested performance shares were not distributed until after the certification of performance results on February 14, 2018.10, 2020.
PENSION BENEFITS
| Name
| | Plan
Name
| | Number of Years
Credited Service
(#)
| | Present Value
of Accumulated
Benefit
($)
| | Payments
During Last
Fiscal Year
($)
| | | Plan
Name
| | Number of Years
Credited Service
(#)
| | Present Value
of Accumulated
Benefit
($)
| | Payments
During Last
Fiscal Year
($)
| |
|---|
| | | | | | | | | | | | | | | | | | | | Lynn J. Good | | Duke Energy Retirement Cash Balance Plan | | | 14.67 | | | 329,168 | | | 0 | | | | RCBP | | | 16.67 | | | 410,506 | | | 0 | | | | | Duke Energy Corporation Executive Cash Balance Plan | | | 14.67 | | | 5,987,299 | | | 0 | | | | ECBP | | | 16.67 | | | 6,450,462 | | | 0 | | | | | | | | | | | | | | | | | | | | | | | Steven K. Young | | Duke Energy Retirement Cash Balance Plan | | | 37.51 | | | 755,434 | | | 0 | | | | RCBP | | | 39.51 | | | 877,296 | | | 0 | | | | | Duke Energy Corporation Executive Cash Balance Plan | | | 37.51 | | | 936,877 | | | 0 | | | | ECBP | | | 39.51 | | | 1,256,855 | | | 0 | | | | | | | | | | | | | | | | | | | | | | | Dhiaa M. Jamil | | Duke Energy Retirement Cash Balance Plan | | | 36.34 | | | 784,049 | | | 0 | | | | RCBP | | | 38.34 | | | 903,113 | | | 0 | | | | | Duke Energy Corporation Executive Cash Balance Plan | | | 36.34 | | | 1,270,872 | | | 0 | | | | ECBP | | | 38.34 | | | 1,651,690 | | | 0 | | | | | | | | | | | | | | | | | | | | | | | Julia S. Janson | | Duke Energy Retirement Cash Balance Plan | | | 30.00 | | | 1,466,987 | | | 0 | | | | RCBP | | | 32.00 | | | 1,666,690 | | | 0 | | | | | Duke Energy Corporation Executive Cash Balance Plan | | | 30.00 | | | 3,581,196 | | | 0 | | | | ECBP | | | 32.00 | | | 4,135,899 | | | 0 | | | | | | | | | | | | | | | | | | | | | | | Douglas F Esamann | | | RCBP | | | 37.00 | | | 1,837,434 | | | 0 | | | | | | ECBP | | | 37.00 | | | 4,248,221 | | | 0 | | | | | | | | | | | | | | | Lloyd M. Yates | | Duke Energy Retirement Cash Balance Plan | | | 19.03 | | | 556,950 | | | 0 | | | | RCBP | | | 20.83 | | | 0 | | | 615,382 | | | | | Duke Energy Corporation Executive Cash Balance Plan | | | 19.03 | | | 4,486,858 | | | 0 | | | | ECBP | | | 20.83 | | | 5,917,862 | | | 0 | | | | | | | | | | | | | | | | | | | | | | | Frank H. Yoho | | | RCBP | | | 17.51 | | | 947,822 | | | 0 | | | | | | ECBP | | | 17.51 | | | 129,883 | | | 0 | | | | | | | | | | | | | | |
Duke Energy provides pension benefits that are intended to assist our retirees with their retirement income needs. A more detailed description of the plans that comprise Duke Energy's pension program follows. Duke Energy Retirement Cash Balance Plan
Ms. Good, Mr. Young, Mr. Jamil, Ms. Janson, and Mr. YatesEsamann actively participate in the Duke Energy Retirement Cash Balance Plan ("RCBP"),RCBP, which is a noncontributory, defined benefit retirement plan that is intended to satisfy the requirements for qualification under Section 401(a) of the Internal Revenue Code. Mr. Yates, and Mr. Yoho also actively participated in the RCBP prior to their respective terminations of employment in 2019. The RCBP generally covers employees of Duke Energy and affiliates, with certain exceptions for individuals employed or re-employed on or after January 1, 2014, and, prior to the merger of the Piedmont Natural Gas plan into the RCBP effective January 1, 2018, for individuals previously employed with Piedmont Natural Gas who are covered under the Piedmont Natural Gas plan.2014. The RCBP currently provides benefits under a "cash 58 DUKE ENERGY – 2020 Proxy Statement
Table of Contents EXECUTIVE COMPENSATION balance account" formula (described below are certainformula. Certain prior plan formulas).formulas are described below. Ms. Good, Mr. Young, Mr. Jamil, Ms. Janson, Mr. Esamann, Mr. Yates, and Mr. YatesYoho have satisfied the eligibility requirements to receive his or her RCBP account benefit upon termination of employment. The RCBP benefit is payable in the form of a lump sum in the amount credited to a hypothetical account at the time of benefit commencement. Payment is also available in annuity forms based on the actuarial equivalent of the account balance. 58 DUKE ENERGY – 2018 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION Mr. Yates elected and received his RCBP benefit in a lump sum in 2019.
The amount credited to the hypothetical account is increased with monthly pay credits equal toto: (i) for participants with combined age and service of less than 35 points, 4% of eligible monthly compensation,compensation; (ii) for participants with combined age and service of 35 to 49 points, 5% of eligible monthly compensation,compensation; (iii) for participants with combined age and service of 50 to 64 points, 6% of eligible monthly compensation,compensation; and (iv) for participants with combined age and service of 65 or more points, 7% of eligible monthly compensation. If the participant earns more than the Social Security wage base, the account is credited with additional pay credits equal to 4% of eligible compensation above the Social Security wage base. Interest credits are credited monthly. The interest rate for benefits accrued after 2012 is based on an annual interest factor of 4% and for benefits accrued before 2013 is based generally on the annual yield on the 30-year Treasury rate (determined quarterly), subject to a minimum of 4% and a maximum of 9%. For the RCBP, eligible monthly compensation is equal to Form W-2 wages, plus elective deferrals under a 401(k), cafeteria, or 132(f) transportation plan, and deferrals under the Executive Savings Plan. Compensation does not include severance pay, payment for unused vacation (including banked vacation and banked time), expense reimbursements, allowances, cash or noncash fringe benefits, moving expenses, bonuses for performance periods in excess of one year, transition pay, LTI compensation (including income resulting from any stock-based awards such as stock options, stock appreciation rights, RSUs, or restricted stock), military leave of absence pay (including differential wage payments) and other compensation items to the extent described as not included for purposes of benefit plans or the RCBP. The benefit under the RCBP is limited by maximum benefits and compensation limits under the Internal Revenue Code. Effective at the end of 2012, the Cinergy Corp. Non-Union Employees' Pension Plan ("Cinergy Plan") was merged into the RCBP. The balances that Ms. Good, and Ms. Janson, and Mr. Esamann had under the Cinergy Plan's "cash balance account" formula at the end of 2012 were credited to their hypothetical accounts under the RCBP. Prior to 2011, the Cinergy Plan also provided benefits under the Traditional Program formula, which provides benefits based on service and final average monthly pay.FAP. Pursuant to a choice program offered to all non-union participants in the Traditional Program formula in 2006, Ms. Janson and Mr. Esamann elected to participate in the Cinergy Plan's cash balance account formula with the retention of herformula. Their accrued benefit under the Traditional Program, which benefit is based on service through April 1, 2007, and by amendment applicable to Ms. Janson and other choice participants effective at the end of 2016, on pay through December 31, 2016, (with banked vacation taken into account at December 31, 2016). was retained in the plan as well. Ms. Good has always participated in the Cinergy Plan's cash balance account formula. Under the Cinergy Plan's Traditional Program, in which Ms. Janson and Mr. Esamann participated prior to April 1, 2007, and which was frozen as of December 31, 2016, each participant earns a benefit under a final average pay formula, which calculates pension benefits based on a participant's "highest average earnings" and years of plan participation. The Traditional Program benefit is payable following normal retirement at age 65, following early retirement at or after age 50 with three or more years of service (with reduction in the life annuity for commencement before age 62 in accordance with prescribed factors) and at or after age 55 with combined age and service of 85 points (with no reduction in the life annuity for commencement before normal retirement age). Ms. Janson isand Mr. Esamann are eligible for an early retirement benefit, the amount of which would not be reduced as of December 31, 2019, for early commencement. PaymentPayments to Ms. Janson isand Mr. Esamann are available in a variety of annuity forms and in the form of a lump sum that is the actuarial equivalent of the benefit payable to herthem under the Traditional Program. The Traditional Program benefit formula is the sum of (a), (b), and (c), where (a) is 1.1% of final average monthly pay ("FAP")FAP times years of participation (up to a maximum of 35 years); where (b) is 0.5% times FAP in excess of monthly Social Security covered compensation times years of participation (up to a maximum of 35 years); and where (c) is 1.55% of FAP times years of participation in excess of 35. The benefit under the Traditional Program will not be less than the minimum formula, which is the sum of (x) and (y), where (x) is the lesser of (i) 1.12% of FAP times years of participation (up to a maximum of 35 years) plus 0.5% times FAP in excess of monthly Social Security covered compensation times years of participation (up to a maximum of 35 years), or (ii) 1.163% of FAP times years of participation (up to a maximum of 35 years); and where (y) is 1.492% of FAP times years of participation over 35 years. Social Security covered compensation is the average of the Social Security wage bases during the 35 calendar years ending in the year the participant reaches Social Security retirement age. Under the Traditional Program, as part of the administrative record keeping process established in 1998, creditable service for Ms. Janson, Mr. Esamann, and similarly situated employees was established from the beginning of the year of hire. The number of actual years of service by Ms. Janson and Mr. Esamann with us or an affiliated company, established from the beginning of the year of hire, is the same as the number of credited years of service under the RCBP (and the Duke Energy Executive Cash Balance Plan ("ECBP"))ECBP), and, therefore, no benefit augmentation resulted under the RCBP (and the ECBP) to Ms. Janson and Mr. Esamann as a result of any difference in the number of years of actual and credited service. Ms. Janson's and Mr. Esamann's years of participation under the Traditional Program isare frozen as of April 1, 2007. FAP is the average of the participant's total pay during the three consecutive years of highest pay from the last ten years of participation at December 31, 2016, (including banked vacation taken into account at December 31, 2016, determined by multiplying the participant's weeks of unused DUKE ENERGY – 2020 Proxy Statement 59
Table of Contents EXECUTIVE COMPENSATION banked vacation as of December 31, 2016, by the participant's rate of pay as of December 31, 2016). This is determined, at December 31, 2016, using the three consecutive calendar years or last 36 months of participation that yield the highest FAP. Ms. Janson's FAPand Mr. Esamann's FAPs under the Traditional Program isare frozen as of December 31, 2016. Total pay under the Traditional Program includes base salary or wages, overtime pay, shift premiums, work schedule DUKE ENERGY – 2018 Proxy Statement 59
Table of Contents
EXECUTIVE COMPENSATION
recognition pay, holiday premiums, retirement bankbanked vacation pay, performance lump-sum pay, annual cash incentive plan awards, and annual performance cash awards. Total pay does not include reimbursements or other expense allowances, imputed income, fringe benefits, moving and relocation expenses, deferred compensation, welfare benefits, long-term performance awards, and executive individual incentive awards. The benefit under the Traditional Program is limited by maximum benefits and compensation limits under the Internal Revenue Code. Effective at the end of 2015, the Progress Energy Pension Plan ("Progress Plan") was merged into the RCBP. The balance that Mr. Yates had under the Progress Plan's "cash balance account" formula at the end of 2015 was credited to his hypothetical account under the RCBP. After 2013, the Progress Plan provided for cash balance benefits under the same formula as the RCBP. Prior to 2014, pay credits ranged from 3% to 7% depending on the participant's age at the beginning of each plan year, plus an additional similar credit on eligible pay above 80% of the Social Security wage base. Interest credits for benefits accrued before 2014 are based on an annual interest credit rate of 4% and are added to cash balance accounts on December 31 of each year based on account balances as of January 1. At benefit commencement, an employee has several lump-sum and annuity payment options. Effective as of January 1, 2018, the Piedmont Plan was merged into the RCBP, resulting in the benefits that were originally to be provided to the participants under the Piedmont Plan to be instead provided pursuant to the RCBP. Prior to 2018, the Piedmont Plan provided Mr. Yoho and similarly situated employees with benefits payable at normal retirement age (age 65) equal to the greater of (i) the sum of the participant's frozen accrued benefit at December 31, 2007, and the benefit based on multiplying the participant's benefit service up to 35 (less benefit service at December 31, 2007) by 1.2% of the participant's final average pay and 0.5% of final average pay in excess of covered compensation and (ii) the benefit based on multiplying the participant's benefit service up to 35 by 1.2% of the participant's final average pay and 0.5% of the participant's final average pay in excess of covered compensation. At benefit commencement, an employee has several lump-sum and annuity payment options. Duke Energy Corporation Executive Cash Balance Plan
Mr. Young, Mr. Jamil, Mr. Yates and Ms. Janson, and Mr. Esamann actively participate in the ECBP, which is a noncontributory, defined benefit retirement plan that is not intended to satisfy the requirements for qualification under Section 401(a) of the Internal Revenue Code. Mr. Yates and Mr. Yoho also actively participated in the ECBP prior to their respective terminations of employment in 2019. Benefits earned under the ECBP are attributable toto: (i) compensation in excess of the annual compensation limit ($275,000285,000 for 2018)2020) under the Internal Revenue Code that applies to the determination of pay credits under the RCBP; (ii) restoration of benefits in excess of a defined benefit plan maximum annual benefit limit ($220,000230,000 for 2018)2020) under the Internal Revenue Code that applies to the RCBP; and (iii) supplemental benefits granted to a particular participant. Generally, benefits earned under the RCBP and the ECBP vest upon completion of three years of service, and, with certain exceptions, vested benefits generally become payable upon termination of employment with Duke Energy. Amounts were credited to ana hypothetical account established for Ms. Good under the ECBP pursuant to an amendment to her prior employment agreement that was negotiated in connection with the merger of Cinergy Corp. and Duke Energy. This amendment provides that Ms. Good will not earn any additional benefits under any nonqualified defined benefit plan (other than future interest credits under the ECBP) unless and until she continues employment with Duke Energy past age 62. Effective as of July 2, 2012, (i.e., the closing of the Duke Energy/Progress Energy merger), the portion of the Supplemental Senior Executive Retirement Plan of Progress Energy, Inc. ("Progress Energy Supplemental Plan")Plan relating to the 10 active participants in the Progress Energy Supplemental Plan, including Mr. Yates, was merged into the ECBP, resulting in the nonqualified retirement benefits that were originally to be provided to the Progress Energy participants under the Progress Energy Supplemental Plan, to be instead provided pursuant to the ECBP. The ECBP provides that Mr. Yates will participate in the ECBP and, subject to the terms and conditions of the ECBP, be entitled to nonqualified retirement benefits equal to the greater of: - •
- The sum of (i) the accrued benefit under the Progress Energy Supplemental Plan frozen as of July 2, 2012, (based on applicable service and compensation earned prior to July 2, 2012), and (ii) future benefits under the ECBP with respect to service and compensation levels following July 2, 2012; or
- •
- The benefits earned under the Progress Energy Supplemental Plan, as increased by post-July 2, 2012, service and cost of living adjustments.
Mr. Yates participatesparticipated in the Progress Energy Supplemental Plan formula of the ECBP and is fully vested in his benefit. Payments attributable to the Progress Energy Supplemental Plan formula generally are made in the form of an annuity, payable at age 65. The monthly payment is calculated using a formula that equates to 4% per year of service (capped at 62%) multiplied by the average monthly eligible pay (annual base salary and annual cash incentive award) for the highest completed 36 months of eligible pay within the preceding 60 DUKE ENERGY – 2020 Proxy Statement
Table of Contents EXECUTIVE COMPENSATION 120-month period. Benefits under the Progress Energy Supplemental Plan formula are fully offset by Social Security benefits and by benefits paid under the RCBP. An executive officer who is age 55 or older with at least 15 years of service (including Mr. Yates, who has attained age 55 with at least 15 years of service) may elect to retire prior to age 65 and his or her benefit generally will commence within 60 days of the first calendar month following retirement. The early retirement benefit will be reduced by 2.5% for each year the participant receives the benefit prior to reaching age 65. All service with Duke Energy and ourits affiliates is treated as eligible service for purposes of meeting the Progress Energy Supplemental Plan's eligibility requirements. Mr. Yates retired and is scheduled to commence his benefit in the form of a 50% joint and survivor annuity in 2020. Present Value Assumptions Because the pension amounts shown in the Pension Benefits Table on page 58 are the present values of current accrued retirement benefits, numerous assumptions must be applied. The values are based on the same assumptions as used in our Annual Report, except as required by applicable SEC rules. Such assumptions include a 3.6%3.3% discount rate and an interest crediting rate of 4%4.00% for all cash balance accounts. Cash balance accounts areFor Ms. Good, Mr. Young, Mr. Jamil, Ms. Janson, and Mr. Esamann, the assumed toform of payment for the RCBP is that a lump sum will be paid inelected 86% of the time and an annuity (i.e., single life annuity, if single, and 100% joint and survivor annuity, if married) will be elected 14% of the time, and the assumed form of payment under the ECBP is a lump sum. Annuity benefits areFor Mr.Yates, the assumed to be paid in the form of either (i)payment for the RCBP is the lump sum that he actually elected, and the assumed form of payment under the ECBP is the 50% joint and survivor annuity that he actually elected. For Mr. Yoho, the assumed form of payment for the RCBP is that a lump sum will be elected 85% of the time and a single life annuity or (ii)will be elected 15% of the time, and the assumed form of payment under the ECBP is a 50% joint and survivor annuity.lump sum. The post-retirement mortality assumption is consistent with that 60 DUKE ENERGY – 2018 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
used in Duke Energy'sour 2019 Form 10-K. Benefits are assumed to commence at age 55 for Ms. Janson and Mr. Esamann, age 62 for Ms. Good, actual age at commencement for Mr. Yates, and at age 65 for Mr. Young, Mr. Jamil, and Mr. Yates,Yoho or the NEO's current age (if later), and each named executive officerNEO is assumed to remain employed until that age.
NONQUALIFIED DEFERRED COMPENSATION
| Name
| | Executive
Contributions
in Last FY
($)(1)
| | Registrant
Contributions
in Last FY
($)(2)
| | Aggregate
Earnings
in Last FY
($)
| | Aggregate
Withdrawals/
Distributions
($)
| | Aggregate
Balance at
Last FYE
($)(3)
| | | Executive
Contributions
in Last FY
($)(1)
| | Registrant
Contributions
in Last FY
($)(2)
| | Aggregate
Earnings
in Last FY
($)
| | Aggregate
Withdrawals/
Distributions
($)
| | Aggregate
Balance at
Last FYE
($)(3)
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | Lynn J. Good | | | 207,144 | | | 224,888 | | | 205,116 | | | 0 | | | 2,554,910 | | | | | 250,628 | | | 202,363 | | | 411,318 | | | 0 | | | 3,727,973 | | | Executive Savings Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Steven K. Young | | | 56,417 | | | 64,695 | | | 145,168 | | | 0 | | | 1,146,309 | | | | | 71,451 | | | 64,254 | | | 270,693 | | | 0 | | | 1,611,706 | | | Executive Savings Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dhiaa M. Jamil | | | 160,966 | | | 80,634 | | | 392,673 | | | 0 | | | 3,464,282 | | | | | 246,811 | | | 75,307 | | | 661,387 | | | 0 | | | 4,566,217 | | | Executive Savings Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Julia S. Janson | | | 66,304 | | | 55,582 | | | 189,329 | | | 0 | | | 1,109,618 | | | | | 88,327 | | | 57,614 | | | 310,358 | | | 0 | | | 1,591,308 | | | Executive Savings Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Douglas F Esamann | | | | 228,228 | | | 53,132 | | | 406,824 | | | 0 | | | 2,474,257 | | | Executive Savings Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lloyd M. Yates | | | 54,674 | | | 62,474 | | | 366,289 | | | 0 | | | 3,144,020 | | | | | 43,221 | | | 0 | | | 555,239 | | | 0 | | | 3,822,617 | | | Executive Savings Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Frank H. Yoho | | | | 24,054 | | | 0 | | | 116,197 | | | 0 | | | 942,871 | | | Executive Savings Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
- (1)
- Includes
$80,500, $34,125, $36,500$83,025; $36,700; $40,450; $51,933; $43,221; and $54,674$24,054 of salary deferrals credited to the plan in 20172019 on behalf of Ms. Good, Mr. Young, Ms. Janson, Mr. Esamann, Mr. Yates, and Mr. Yates,Yoho, respectively, which are included in the salary column of the Summary Compensation Table.Table on page 54. Includes $126,644, $22,292, $160,966$167,603; $34,751; $246,811; $47,877; and $29,804$176,295 of short-term incentiveSTI deferrals earned in 20172019 and credited to the plan in 20182020 on behalf of Ms. Good, Mr. Young,Mr.Young, Mr. Jamil, and Ms. Janson, and Mr. Esamann, respectively, which are included in the Non-Equity Incentive Compensation Plan column of the Summary Compensation Table.
- (2)
- Reflects make-whole matching contribution credits made under the Executive Savings Plan, which are reported in the All Other Compensation column of the Summary Compensation Table.
- (3)
- The aggregate balance as of December 31,
2017,2019, for each NEO includes the following aggregate amount of prior deferrals of base salary and short-term incentives,STI, as well as employer matching contributions, that were previously earned and reported as compensation on the Summary Compensation Table for the years 2008 through 2016:2018: (i) Ms. Good – $1,671,688;$2,512,002; (ii) Mr. Young – $273,621;$514,164; (iii) Mr. Jamil – $1,100,173;$1,587,396; (iv) Ms. Janson – $188,271;$433,987; and (v) Mr. Yates – $369,580.$600,300. These amounts have since been adjusted, pursuant to the terms of the Executive Savings Plan for investment performance (i.e., earnings and losses), deferrals, contributions, and distributions. The aggregate balance as of December 31, 2017,2019, also includes amounts earned in 20172019 but credited to the plan in 2018,2020, including the amounts described in footnotes 1 and 2 above.
DUKE ENERGY – 20182020 Proxy Statement 61
Table of Contents EXECUTIVE COMPENSATION Duke Energy Corporation Executive Savings Plan
Under the Executive Savings Plan, participants can elect to defer a portion of their base salary and short-term incentiveSTI compensation. Participants actively employed as of the end of the year also receive a company matching contribution in excess of the contribution limits prescribed by the Internal Revenue Code under the Duke Energy Retirement Savings Plan, which is the 401(k) plan in which the named executive officersNEOs participate.* In general, payments are made following termination of employment or death in the form of a lump sum or installments, as selected by the participant. Participants may direct the deemed investment of base salary deferrals, STI deferrals and matching contributions among investment options available under the Duke Energy Retirement Savings Plan, including the Duke Energy Common Stock Fund. Participants may change their investment elections on a daily basis. The benefits payable under the plan are unfunded and subject to the claims of Duke Energy's creditors. Mr. Yates previously participated in the Progress Energy, Inc. Management Deferred Compensation Plan ("MDCP"),MDCP, the Progress Energy, Inc. Management Incentive Compensation Plan ("MICP")MICP, and the Progress Energy, Inc. Performance Share Sub-Plan ("PSSP"),PSSP, each of which permitted voluntary deferrals and was merged with and into the Executive Savings Plan effective as ofat the end of 2013. In addition to voluntary deferrals, the MDCP also provided for employer contributions of 6% of base salary over the limits prescribed by the Internal Revenue Code under the Progress Energy 401(k) Savings and Stock Ownership Plan. With respect to the plans that were merged into the Executive Savings Plan, participants are entitled to the same benefits, distribution timing, and forms of benefit that were provided by the MDCP, MICP, and PSSP immediately prior to January 1, 2014. These pre-2014 benefits generally are payable following termination of employment or, in certain cases, on a date previously specified by the participant, in the form of a lump sum or installments, as selected by the participant. Mr. Yoho previously participated in the DCRP, which was merged with and into the Executive Savings Plan on January 1, 2018, resulting in the nonqualified retirement benefits that were originally to be provided to the participants under the DCRP to be instead provided pursuant to the Executive Savings Plan. Prior to the merger, the DCRP provided eligible participants, including Mr. Yoho, with a supplemental benefit equal to 13% of their eligible total cash compensation (base salary and annual incentive compensation) that exceeded the annual compensation limit for qualified retirement plans under the Internal Revenue Code. The DCRP also provided certain transition contributions for eligible participants when it was established in 2009. Under the Executive Savings Plan, Mr. Yoho and the other individuals who previously participated in the DCRP generally are entitled to the same benefits, distribution timing, and forms of benefit that were provided under the DCRP immediately prior to 2018.
- *
- The
Duke Energy Retirement Savings Plan is a tax-qualified "401(k) plan" that provides a means for employees to save for retirement on a tax-favored basis and to receive an employer matching contribution. The employer matching contribution is equal to 100% of the NEO's before-tax and Roth 401(k) contributions (excluding "catch-up" contributions) with respect to 6% of eligible pay. For this purpose, "eligible pay" includes base salary and STI compensation. Earnings on amounts credited to the Duke Energy Retirement Savings Plan are determined based on the performance of investment funds (including a Duke Energy Common Stock Fund) selected by each participant.
62 DUKE ENERGY – 20182020 Proxy Statement
Table of Contents EXECUTIVE COMPENSATION POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL Under certain circumstances, each NEO would be entitled to compensation in the event his or her employment terminates or upon a change in control. The amount of the compensation is contingent upon a variety of factors, including the circumstances under which he or she terminates employment. The relevant agreements that each NEO has entered into with Duke Energy are described below, followed by a table on page 67 that quantifies the amount that would become payable to each NEO as a result of his or her termination of employment. TheExcept with respect to Mr. Yates and Mr. Yoho, each of whom left Duke Energy during 2019, the amounts shown assume that such termination was effective as of December 31, 2017,2019, and are merely estimates of the amounts that would be paid to theour NEOs upon their termination. The actual amounts to be paid can only be determined at the time of such NEO's termination of employment.
The table shown belowon page 67 does not include certain amounts that have been earned and that are payable without regard to the NEO's termination of employment. Such amounts, however, are described immediately following the table. For a summary of the severance payment and benefits provided to Mr. Yates in connection with him leaving Duke Energy in September 2019, please see the sub-heading "Severance Payments for Mr. Yates" on page 68. Under each of the compensation arrangements described below for Ms. Good, Mr. Young, Mr. Jamil, Ms. Janson, and Mr. Yates,Esamann, "change in control" generally means the occurrence of one of the following: (i) the date any person or group becomes the beneficial owner of 30% or more of the combined voting power of Duke Energy's then outstanding securities; (ii) during any period of two consecutive years, the directors serving at the beginning of such period or who are elected thereafter with the support of not less than two-thirds of those directors cease for any reason other than death, disability, or retirement to constitute at least a majority thereof; (iii) the consummation of a merger, consolidation, reorganization, or similar corporate transaction, which has been approved by the shareholders of Duke Energy, regardless of whether Duke Energy is the surviving company, unless Duke Energy's outstanding voting securities immediately prior to the transaction continue to represent at least 50% of the combined voting power of the outstanding voting securities of the surviving entity immediately after the transaction; (iv) the consummation of a sale of all or substantially all of the assets of Duke Energy or a complete liquidation or dissolution, which has been approved by the shareholders of Duke Energy; or (v) under certain arrangements, the date of any other event that the Board determines should constitute a change in control. Employment Agreement with Ms. Good
Effective July 1, 2013, Duke Energy entered into an employment agreement with Ms. Good that contained a three-year initial term and automatically renews for additional one-year periods at the end of the initial term unless either party provides 120 days' advance notice. In the event of a change in control of Duke Energy, the term automatically extends to a period of two years. Upon a termination of Ms. Good's employment by Duke Energy without "cause" or by Ms. Good for "good reason" (each as defined below), the following severance payments and benefits would be payable: (i) a lump-sum payment equal to a pro rata amount of her annual bonus for the portion of the year that the termination of employment occurs during which she was employed, determined based on the actual achievement of performance goals; (ii) a lump-sum payment equal to 2.99 times the sum of her annual base salary and target annual bonus opportunity; (iii) continued access to medical and dental benefits for 2.99 years, with monthly amounts relating to Duke Energy's portion of the costs of such coverage paid by Duke Energy (reduced by coverage provided by future employers, if any) and a lump-sum payment equal to the cost of basic life insurance coverage for 2.99 years; (iv) one year of outplacement services; (v) if termination occurs within 30 days prior to, or two years after a change in control of Duke Energy, vesting in unvested retirement plan benefits that would have vested during the two years following the change in control and a lump-sum payment equal to the maximum contributions and allocations that would have been made or allocated if she had remained employed for an additional 2.99 years; and (vi) 2.99 additional years of vesting with respect to equity awards and an extended period to exercise outstanding vested stock options following termination of employment. Ms. Good is not entitled to any form of tax gross-up in connection with Sections 280G and 4999 of the Internal Revenue Code. Instead, in the event that the severance payments or benefits otherwise would constitute an "excess parachute payment" (as defined in Section 280G of the Internal Revenue Code), the amount of payments or benefits would be reduced to the maximum level that would not result in an excise tax under Section 4999 of the Internal Revenue Code if such reduction would cause Ms. Good to retain an after-tax amount in excess of what would be retained if no reduction were made. Under Ms. Good's employment agreement, "cause" generally means, unless cured within 30 days, (i) a material failure by Ms. Good to carry out, or malfeasance or gross insubordination DUKE ENERGY – 2020 Proxy Statement 63
Table of Contents EXECUTIVE COMPENSATION in carrying out, reasonably assigned duties or instructions consistent with her position; (ii) the final conviction of Ms. Good of a felony or crime involving moral turpitude; (iii) an egregious act of dishonesty by Ms. Good in connection with employment, or a malicious action by Ms. Good toward the customers or employees of Duke Energy; (iv) a material breach by Ms. Good of Duke Energy's Code of Business Ethics; or (v) the failure of Ms. Good to cooperate fully with governmental investigations involving Duke Energy. "Good reason," for this purpose, generally means, unless cured within 30 days,days: (i) a material reduction in Ms. Good's annual base salary or target annual bonus opportunity (exclusive of any across-the-board DUKE ENERGY – 2018 Proxy Statement 63
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
reduction similarly affecting substantially all similarly situated employees); or (ii) a material diminution in Ms. Good's positions (including status, offices, titles, and reporting relationships), authority, duties or responsibilities or any failure by the Board to nominate Ms. Good for re-election as a member of the Board. Ms. Good's employment agreement contains restrictive covenants related to confidentiality, mutual nondisparagement,no disparagement, noncompetition, and nonsolicitation obligations. The noncompetition and nonsolicitation obligations survive for two years following her termination of employment. Other Named Executive Officers
Duke Energy entered into a Change in Control Agreement with Mr. Young effective as of July 1, 2005, and with Mr. Jamil effective as of February 26, 2008, both of which were amended and restated effective as of August 26, 2008, and subsequently amended effective as of January 8, 2011. Duke Energy entered into a Change in Control Agreement with Ms. Janson effective as of December 17, 2012, and with Mr. YatesEsamann effective as of July 3, 2014.June 1, 2015. The agreements have an initial term of two years commencing as of the original effective date, after which the agreements automatically extend, unless six months' prior written notice is provided, on a month-to-month basis. The Change in Control Agreements provide for payments and benefits to the executive in the event of termination of employment within two years after a "change in control" by Duke Energy without "cause" or by the executive for "good reason" (each as defined below) as follows: (i) a lump-sum cash payment equal to a pro rata amount of the executive's target bonus for the year in which the termination occurs; (ii) a lump-sum cash payment equal to two times the sum of the executive's annual base salary and target annual bonus opportunity in effect immediately prior to termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting "good reason";reason;" (iii) continued medical, dental, and basic life insurance coverage for a two-year period or a lump-sum cash payment of equivalent value (reduced by coverage obtained by subsequent employers); and (iv) a lump-sum cash payment of the amount Duke Energy would have allocated or contributed to the executive's qualified and nonqualified defined benefit pension plan and defined contribution savings plan accounts during the two years following the termination date, plus the unvested portion, if any, of the executive's accounts as of the date of termination that would have vested during the remaining term of the agreement. If the executive would have become eligible for normal retirement at age 65 within the two-year period following termination, the two times multiple or two-year period mentioned above will be reduced to the period from the termination date to the executive's normal retirement date. The agreements also provide for enhanced benefits (i.e., two years of additional vesting) with respect to equity awards. Under the Change in Control Agreements, each named executive officerNEO also is entitled to reimbursement of up to $50,000 for the cost of certain legal fees incurred in connection with claims under the agreements. In the event that any of the payments or benefits provided for in the Change in Control Agreement otherwise would constitute an "excess parachute payment" (as defined in Section 280G of the Internal Revenue Code), the amount of payments or benefits would be reduced to the maximum level that would not result in excise tax under Section 4999 of the Internal Revenue Code if such reduction would cause the executive to retain an after-tax amount in excess of what would be retained if no reduction were made. In the event a NEO becomes entitled to payments and benefits under a Change in Control Agreement, he or she would be subject to a one-year noncompetition and nonsolicitation provision from the date of termination, in addition to certain confidentiality and cooperation provisions. The Executive Severance Plan provides certain executives, including Mr. Young, Mr. Jamil, Ms. Janson, and Mr. YatesEsamann with severance payments and benefits upon a termination of employment under certain circumstances. Pursuant to the terms of the Executive Severance Plan, "TierTier I Participants," which include Duke Energy'sour NEOs, would be entitled, subject to the execution of a waiver and release of claims, to the following payments and benefits in the event of a termination of employment by (a) Duke Energy other than for "cause" (as defined below), death or disability, or (b) the participant for "good reason" (as defined below): (i) a lump-sum payment equal to a pro rata amount of the participant's annual bonus for the year that the termination of employment occurs, determined based on the actual achievement of performance goals under the applicable performance-based bonus plan; (ii) a lump-sum payment equal to two times the sum of the participant's annual base salary and target annual bonus opportunity in effect immediately prior to termination of employment or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting "good reason";reason;" (iii) continued access to medical and dental insurance for a two-year period following termination of employment, with monthly amounts relating to Duke Energy's portion of the costs of such coverage paid to the participant by Duke Energy (reduced by coverage provided to the participant by future employers, if any) and a lump-sum payment equal to the cost of two years of basic life insurance coverage; (iv) one year of 64 DUKE ENERGY – 2020 Proxy Statement
Table of Contents EXECUTIVE COMPENSATION outplacement services; and (v) two additional years of vesting with respect to equity awards and an extended period to exercise outstanding vested stock options following termination of employment. The Executive Severance Plan also provides that, in the event any of the payments or benefits provided for in the Executive Severance Plan otherwise would constitute an "excess parachute payment" (as defined in Section 280G of the Internal Revenue Code), the amount of payments or benefits would be reduced to the maximum level that would not result in an excise tax under Section 4999 of the Internal Revenue Code if such reduction would cause the executive to retain an after-tax amount in excess of what would be retained if no reduction were made. In the event a participant becomes entitled to 64 DUKE ENERGY – 2018 Proxy Statement
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
payments and benefits under the Executive Severance Plan, he or she would be subject to certain restrictive covenants, including those related to noncompetition, nonsolicitation, and confidentiality. Duke Energy has the right to terminate any participant's participation in the Executive Severance Plan but must provide the participant with one year's notice and the participant would continue to be eligible for all severance payments and benefits under the Executive Severance Plan during the notice period. Any employee who is eligible for severance payments and benefits under a separate agreement or plan maintained by Duke Energy (such as a Change ofin Control Agreement) would receive compensation and benefits under such other agreement or plan (and not the Executive Severance Plan). For purposes of the Change in Control Agreements and the Executive Severance Plan, "cause" generally means, unless cured within 30 days,days: (i) a material failure by the executive to carry out, or malfeasance or gross insubordination in carrying out, reasonably assigned duties or instructions consistent with the executive's position; (ii) the final conviction of the executive of a felony or crime involving moral turpitude; (iii) an egregious act of dishonesty by the executive in connection with employment, or a malicious action by the executive toward the customers or employees of Duke Energy; (iv) a material breach by the executive of Duke Energy's Code of Business Ethics; or (v) the failure of the executive to cooperate fully with governmental investigations involving Duke Energy. "Good reason," for this purpose, generally means (i) a material reduction in the executive's annual base salary or target annual bonus opportunity as in effect either immediately prior to the change in control or the termination under the Executive Severance Plan (exclusive of any across-the-board reduction similarly affecting substantially all similarly situated employees); or (ii) a material diminution in the participant's positions (including status, offices, titles, and reporting relationships), authority, duties, or responsibilities as in effect either immediately prior to the change in control or immediately prior to a Tier I participant'sParticipant's termination of employment under the Executive Severance Plan. DUKE ENERGY – 2020 Proxy Statement 65
Table of Contents EXECUTIVE COMPENSATION Equity Awards – Consequences of Termination of Employment
As described above, eachEach year Duke Energy grants long-term incentives to our executive officers, and the terms of these awards vary somewhat from year to year. The following table summarizes the consequences under Duke Energy's LTI award agreements, without giving effect to Ms. Good's employment agreement, the Change in Control Agreements or the Executive Severance Plan, described above, that would generally occur with respect to outstanding equity awards in the event of the termination of employment of Ms. Good, Mr. Young, Mr. Jamil, Ms. Janson, and Mr. Yates.Esamann.
| | | | | Award Type
| | Event
| | Consequences
|
|---|
| | | | | | | | Retirement* | | Unvested RSUs prorated and vest | | | | | | | | | Voluntary termination** | | Unvested RSUs are forfeited | | | | | | | RSUs | | Death or disability | | Unvested RSUs immediately vest | | | | | | | | | Change in control | | No impact absent termination of employment; immediate vesting of unvested RSUs if involuntarily terminated after a change in control | | | | | | | Voluntary termination or involuntary
| | Retirement*
Death & Disability | | RSUs – proratedProrated portion of award vests
| termination (retirement-eligible)
| | Performance Shares – prorated portion of award vests based on actual performance
| | | | | | | Performance Share Awards
| | Performance-Based Retention – award terminates immediately
| Voluntary termination (not retirement-eligible) termination** | | RSUs and Performance Shares – the executive's right to unvested portion of award terminates immediatelyAward is forfeited
| | | | | | | | | Performance-Based Retention – award terminates immediately
Change in Control | | InvoluntaryNo impact absent termination of employment; prorated portion vests based on actual performance if involuntarily terminated after a change in control
| | | RSUs and Performance-Based Retention – immediate vesting
| | | | | | Retirement*
Voluntary termination** |
| Performance Shares – see impact of change in control belowAward is forfeited | Death or disability
| | RSUs and Performance-Based Retention – immediate vesting
| | | | Performance Shares – prorated portion of award vests based on actual performance
| Change in controlPerformance-Based
Retention Awards |
| Death or disability | | RSUs, Performance-Based Retention and Performance Shares granted after 2017 – no impact absent termination of employmentAward immediately vests | | | | | | | | | Change in control | | Performance Shares granted before 2018 – prorated portionNo impact absent termination of award vests based on target performanceemployment; immediate vesting of unvested RSUs if involuntarily terminated after a change in control | | | | | | |
- *
- Age 55 with at least 10 years of service
- **
- Not retirement eligible
66 DUKE ENERGY – 20182020 Proxy Statement 65
Table of Contents EXECUTIVE COMPENSATION
POTENTIAL PAYMENTS UPON TERMINATION OR
A CHANGE IN CONTROLCONTROL*
| Name and Triggering Event
| | Cash
Severance
Payment
($)(1)
| | Incremental
Retirement
Plan Benefit
($)(2)
| | Welfare
and Other
Benefits
($)(3)
| | Stock
Awards
($)
| | | Cash
Severance
Payment
($)(1)
| | Incremental
Retirement
Plan Benefit
($)(2)
| | Welfare
and Other
Benefits
($)(3)
| | Stock
Awards
($)
| |
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Lynn J. Good | | | | | | | | | | | | | | | | | | | | | | | | | | | • Voluntary termination without good reason | | 0 | | 0 | | 0 | | 10,654,308 | | | 0 | | 0 | | 0 | | 12,158,871 | | • Involuntary or good reason termination under Employment Agreement | | | 10,293,075 | | | 0 | | | 62,814 | | | 30,888,632 | | | | 10,601,867 | | | 0 | | | 65,888 | | | 33,883,043 | | • Involuntary or good reason termination after a change in control | | 10,293,075 | | 696,498 | | 62,814 | | 29,194,420 | | | 10,601,867 | | 715,144 | | 65,888 | | 33,075,455 | | • Death or Disability(4) | | | 0 | | | 0 | | | 0 | | | 21,962,598 | | | | 0 | | | 0 | | | 0 | | | 24,968,377 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Steven K. Young | | | | | | | | | | | | | | | | | | | • Voluntary termination without good reason | | | 0 | | | 0 | | | 0 | | | 1,669,695 | | | | 0 | | | 0 | | | 0 | | | 1,986,703 | | • Involuntary or good reason termination under Executive Severance Plan | | 2,494,800 | | 0 | | 33,016 | | 4,062,073 | | | 2,807,204 | | 0 | | 34,728 | | 4,444,224 | | • Involuntary or good reason termination after a change in control | | | 2,494,800 | | | 413,796 | | | 37,054 | | | 3,946,891 | | | | 2,807,204 | | | 466,161 | | | 38,924 | | | 4,336,410 | | • Death or Disability(4) | | 0 | | 0 | | 0 | | 2,779,033 | | | 0 | | 0 | | 0 | | 2,958,476 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dhiaa M. Jamil | | | | | | | | | | | | | | | | | | | | | | | | | | | • Voluntary termination without good reason | | 0 | | 0 | | 0 | | 2,366,138 | | | 0 | | 0 | | 0 | | 2,742,755 | | • Involuntary or good reason termination under Executive Severance Plan | | | 2,835,000 | | | 0 | | | 32,202 | | | 7,211,250 | | | | 3,190,007 | | | 0 | | | 16,404 | | | 6,956,149 | | • Involuntary or good reason termination after a change in control | | 2,835,000 | | 471,630 | | 41,360 | | 7,000,434 | | | 3,190,007 | | 531,237 | | 18,072 | | 6,808,024 | | • Death or Disability(4) | | | 0 | | | 0 | | | 0 | | | 5,372,023 | | | | 0 | | | 0 | | | 0 | | | 4,917,115 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Julia S. Janson | | | | | | | | | | | | | | | | | | | • Voluntary termination without good reason | | | 0 | | | 0 | | | 0 | | | 0 | | | | 0 | | | 0 | | | 0 | | | 1,791,660 | | • Involuntary or good reason termination under Executive Severance Plan | | 2,250,000 | | 0 | | 35,878 | | 4,152,813 | | | 2,717,000 | | 0 | | 34,652 | | 4,679,020 | | • Involuntary or good reason termination after a change in control | | | 2,250,000 | | | 372,180 | | | 41,054 | | | 4,012,410 | | | | 2,717,000 | | | 450,826 | | | 38,848 | | | 4,581,760 | | • Death or Disability(4) | | 0 | | 0 | | 0 | | 3,012,918 | | | 0 | | 0 | | 0 | | 3,339,105 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lloyd M. Yates | | | | | | | | | | | | | | | Douglas F Esamann | | | | | | | | | | | | | | | • Voluntary termination without good reason | | 0 | | 0 | | 0 | | 1,728,461 | | | 0 | | 0 | | 0 | | 1,739,259 | | • Involuntary or good reason termination under Executive Severance Plan | | | 2,472,311 | | | 0 | | | 32,148 | | | 4,436,869 | | | | 2,565,000 | | | 0 | | | 26,722 | | | 3,610,512 | | • Involuntary or good reason termination after a change in control | | 2,472,311 | | 409,973 | | 51,396 | | 4,338,798 | | | 2,565,000 | | 424,986 | | 48,364 | | 3,516,073 | | • Death or Disability(4) | | | 0 | | | 0 | | | 0 | | | 3,130,416 | | | | 0 | | | 0 | | | 0 | | | 2,309,535 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
- (1)
- The amounts listed under "Cash Severance Payment" are payable under (i) the terms of Ms. Good's employment agreement; (ii) the Change in Control Agreements of Mr. Young, Mr. Jamil, Ms. Janson, and Mr.
Yates;Esamann; or (iii) the Executive Severance Plan.
- (2)
- The amounts listed under
"IncrementalIncremental Retirement Plan Benefit"Benefit are payable under the terms of Ms. Good's employment agreement and the Change in Control Agreements of Mr. Young, Mr. Jamil, Ms. Janson, and Mr. Yates.Esamann. They represent the additional amount that would have been contributed to the RCBP, ECBP, Duke Energy Retirement Savings Plan, and the Executive Savings Plan in the event the NEO had continued to be employed by Duke Energy for (i) 2.99 years for Ms. Good or (ii) two additional years after the actual date of termination for the other NEOs.
- (3)
- The amounts listed under "Welfare and Other Benefits" include the amount that would be paid to each NEO in lieu of providing continued welfare benefits and basic life coverage. This continued coverage
representsrepresents: (i) 2.99 years for Ms. Good or (ii) two years for the other NEOs. In addition to the amounts shown above, access to outplacement services for a period of up to one year after termination will be provided to Ms. Good if terminating under her employment agreement or to any NEO terminating under the Executive Severance Plan.
- (4)
- In the event of a termination of employment due to long-term disability, because the payment of RSUs would be delayed for an additional six months as required by applicable tax rules, additional dividend equivalent payments would be made in the amount of
$97,279, $21,197, $45,063, $19,108$105,272; $17,634; $24,244; $15,904; and $33,377$15,388 for Ms. Good, Mr. Young, Mr. Jamil, Ms. Janson, and Mr. Esamann, respectively.
- *
- Mr. Yates
respectively.and Mr.Yoho are not included in the table above because each left Duke Energy during 2019, and, therefore, the amounts payable to each of them is known. Mr. Yates is entitled to severance compensation under the Executive Severance Plan as described in the "Severance Payments for Mr. Yates" section on the next page.
Mr. Yoho was not entitled to severance compensation upon leaving Duke Energy, but as is the case with other employees, he was entitled to his accrued and unpaid benefits under Duke Energy's retirement and deferred compensation plans, as well as a payout for his unused vacation.
66 DUKE ENERGY – 20182020 Proxy Statement 67
Table of Contents POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLEXECUTIVE COMPENSATION
Assumptions and Other Considerations
The amounts listed aboveon the previous page have been determined based on a variety of assumptions, including with respect to the limits on qualified retirement plan benefits under the Internal Revenue Code. The actual amounts to be paid out can only be determined at the time of each NEO's termination of employment. The amounts described in the table do not include compensation to which each named executive officerNEO would be entitled without regard to his or her termination of employment, includingincluding: (i) base salary and short-term incentivesSTI that have been earned but not yet paid; (ii) amounts that have been earned, but not yet paid, under the terms of the plans listed under the Pension Benefits and Nonqualified Deferred Compensation tables on pages 58 and 61, respectively;tables; (iii) unused vacation; and (iv) the potential reimbursement of legal fees. The amounts shown aboveon the previous page do not reflect the fact that, under Ms. Good's employment agreement and under the Change in Control Agreements that Duke Energy has entered into with Mr. Young, Mr. Jamil, Ms. Janson, and Mr. Yates,Esamann, in the event that payments to any such executive in connection with a change in control otherwise would result in a golden parachute excise tax and lost tax deduction under Sections 280G and 4999 of the Internal Revenue Code, such amounts would be reduced to the extent necessaryunder certain circumstances so that such tax would not apply under certain circumstances.apply. The amounts shown aboveon the previous page with respect to stock awards were calculated based on a variety of assumptions, including the following: (i) the NEO terminated employment on December 31, 2017;2019; (ii) a stock price for Duke Energy common stock equal to $84.11,$91.21, which was the closing price on December 29, 2017;31, 2019; (iii) the continuation of Duke Energy's dividend at the rate in effect during the first quarter of 2018;2020; and (iv) performance at the target level with respect to performance shares. PotentialSeverance Payments Due Upon a Change in Controlfor Mr. Yates
Other than as described below,On September 30, 2019, in connection with a restructuring of roles and responsibilities among the occurrenceexecutive team, Mr. Yates resigned from Duke Energy under circumstances that the Compensation Committee determined constituted "good reason," and he therefore was eligible to receive severance benefits under the Executive Severance Plan. In consideration for a waiver and release of claims, and an agreement to non-competition, non-solicitation, and confidentiality covenants, Mr. Yates is entitled to a cash severance payment equal to two times the sum of his annual base salary and target annual cash bonus, a pro-rated short-term incentive payment for 2019, continued health and welfare benefits for two years, access to outplacement services for one year, and two additional years of vesting with respect to stock awards. The following table quantifies the severance benefits provided to Mr. Yates.
| | | | | Payments and Benefits
| | Mr. Yates
| |
|---|
| | | | | | Cash Severance, with interest | | $ | 2,634,550 | | Continued Health and Welfare Benefits | | $ | 31,212 | | Additional Vesting of RSUs | | $ | 761,961 | | Additional Vesting of Performance Shares | | $ | 1,796,055 | | Outplacement Services | | $ | 0 | | | | | | | | Total | | $ | 5,223,778 | |
The amounts shown in the "Payments and Benefits" table with respect to stock awards were calculated based on a variety of assumptions, including the following: (i) a stock price for Duke Energy common stock equal to the closing price of a change in controlshare of Duke Energy common stock on the date of termination (i.e, $95.86); and (ii) the continuation of Duke Energy's dividend at the rate in effect during the first quarter of 2020. The performance share amounts are based on an assumption that target performance is achieved; payments (if any) under these awards only will be made to the extent that the shares are earned based on actual performance. The amounts listed do not include the following amounts to which Mr. Yates would not triggerbe entitled, upon termination for any reason, except death or disability, because he attained the applicable retirement age: (i) a pro-rated 2019 short-term incentive payment of benefits to the NEOs absent a termination$564,300; (ii) pro-rated vesting of employment. If a change in controlRSUs of Duke Energy occurred on December 31, 2017, with respect to each named executive officer, the outstanding performance share awards granted by Duke Energy, including dividend equivalents, would be paid on a prorated basis assuming target performance. As$352,682; and (iii) pro-rated vesting of December 31, 2017, the prorated performance shares that would be paidof $2,621,626 (assuming target performance is achieved). In addition, Mr. Yates is entitled to his accrued and unpaid benefits under Duke Energy's retirement and deferred compensation plans, as well as a resultpayout for his unused vacation. 68 DUKE ENERGY – 2020 Proxy Statement
Table of these accelerated vesting provisions, including dividend equivalents, would have had a value of $7,828,775, $1,214,841, $1,741,022, $1,039,971 and $1,258,548, for Ms. Good, Mr. Young, Mr. Jamil, Ms. Janson and Mr. Yates, respectively.Contents EXECUTIVE COMPENSATION Chief Executive Officer Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Item 402(u) of Regulation S-K,SEC rules, we are providing the following information with respectabout the ratio of the 2019 annual total compensation of Lynn Good, our CEO, to the annual total compensation of our last completed fiscal year (2017). The pay ratio reported below is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.median employee. We have estimated the median of the 20172019 annual total compensation of our employees, excluding our Chief Executive Officer,CEO, to be $122,365.$123,608. The annual total compensation of our Chief Executive OfficerCEO was $21,415,936.$15,029,386. The ratio of the annual total compensation of our Chief Executive OfficerCEO to the estimated median of the annual total compensation of our employees was 175122 to 1. The SEC rules permit us to identify our median employee once every three years. If, however, we determine it is not appropriate to use the median employee identified in one year (2018) in a subsequent year (2019) because of a change in circumstances that would result in a significant change in the pay ratio disclosure, then we are permitted to select another median employee whose compensation is substantially similar to the original median employee. The median employee we identified for 2018 is no longer employed by Duke Energy. As a result, we identified a new median employee for 2019 (the "2019 Median Employee") by selecting another individual whose compensation was also at the median of our employee population. To identify the median employee, as well as to determine the annual total compensation of our median employee and our Chief Executive Officer,2019 Median Employee, we took the following steps: •We determinedreviewed our employee population for purposes of this disclosure, as of October 31, 2017, which is within the last three months of 2017, because it enabled us to make such identification in a reasonably efficient and timely manner.
•To identify the median employee from our employee population, we2019. We used wages reported in Box 1 of IRS Form W-2 during the ten-month period ending on October 31, 2017,2019, as a consistently applied compensation measure. We did not annualize the wages or make cost of any individuals who were employed for less thanliving adjustments. Based on this methodology, we identified a group of employees whose compensation was at the full ten-month period, and because all our employees are located in the United States we did not make any cost-of-living adjustments. Consistent with Item 402(u) of Regulation S-K, in order to provide a more accurate estimatemedian of the employee data. From this group, we selected another individual who we reasonably believed represented our median employee,employee.Once we identified the median employee after disregarding an employee whose compensation included anomalous characteristics related to our defined benefit pension plan.
•Once we identified our median employee,2019 Median Employee, we calculated the annual total compensation of the median employee using the same methodology that we usedrules applicable to determine the annual total compensation of the Chief Executive Officer, as reported in the Summary Compensation Table on page 54.
DUKE ENERGY – 2018 Proxy Statement 67
Table of Contents
•- Table. With respect to the annual total compensation of our
Chief Executive Officer,CEO, we used the amount reported in the "Total" column for 20172019 in the Summary Compensation Table on page 54.
The pay ratio rules provide companies with flexibility to select the methodology and assumptions used to identify the median employee, calculate the median employee's compensation and estimate the pay ratio. As a result, our methodology may differ from those used by other companies, which likely will make it very difficult to compare pay ratios with other companies, including those within our industry. 68 DUKE ENERGY – 20182020 Proxy Statement 69
Table of Contents
SHAREHOLDER PROPOSALS Proposals 4 through 7 are proposals Duke Energy received from our shareholders. If the proponents of these proposals, or their representatives, present their respective proposal at our Annual Meeting and submit the proposal for a vote, then the proposal will be voted upon. The shareholder proposals and supporting statements are included exactly as submitted to us by the proponents. The Board recommends voting "AGAINST" proposals 4, 6, and 7, and makes no recommendation as to proposal 5. PROPOSAL 4: AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OFSHAREHOLDER PROPOSAL REGARDING INDEPENDENT BOARD CHAIR City of New York, Office of The Comptroller, One Centre Street – 8th Floor North, New York, NY 10007, submitted the following proposal on behalf of New York City Employees' Retirement System, owner of 518,263 shares of Duke Energy stock, New York City Fire Pension Fund, owner of 68,654 shares of Duke Energy stock, New York City Police Pension Fund, owner of 332,128 shares of Duke Energy stock, and New York Teachers' Retirement System, owner of 499,221 shares of Duke Energy stock: RESOLVED: Shareholders of Duke Energy Corporation ("Duke") ask the Board of Directors to adopt a policy, and amend the bylaws as necessary, to require the Chair of the Board to be an independent director. The policy should provide that (i) if the Board determines that a Chair who was independent when selected Is no longer independent, the Board shall select a new Chair who satisfies the policy within 60 days of that determination; and (ii) compliance with this policy is waived if no independent director is available and willing to serve as Chair. This policy shall apply prospectively so as not to violate any contractual obligation. Supporting Statement
In our view, shareholder value is enhanced by an independent Board Chair who can provide a balance of power between the chief executive officer ("CEO") and the Board and support strong Board oversight of management. According to proxy advisor Glass Lewis "shareholders are better served when the board is led by an independent chairman who we believe is better able to oversee the executives of the Company and set a pro-shareholder agenda without the management conflicts that exist when a CEO or other executive also serves as chairman." While separating the roles of Chair and CEO is the norm in Europe, 53% of S&P 500 boards have also implemented this leading practice. Directors on boards with a joint CEO-Chair report being more likely to have difficulty voicing a dissenting view (57% versus 41%) and to believe that one or more of their fellow directors should be replaced (61% versus 47%) according to a 2019 survey by PwC. Except for two transition periods, Duke CEOs have also served as Chair of the Board since 1999. Duke's lack of independent board leadership may be aggravated by the fact that its long-serving "Independent Lead Director," Michael Browning, age 73, has served on the boards of Duke and predecessor companies since 1990. Duke's corporate governance principles state that independent directors normally retire when they reach age 70 or 15 years of service. According to ISS Governance QualityScore, "an excessive tenure is considered to potentially compromise a director's independence." Institutional Investor CalPERS classifies directors with a tenure exceeding 12 years as not independent. We believe independent Board leadership would be particularly useful to oversee the strategic transformation necessary for Duke to capitalize on the opportunities available in the transition to a low carbon economy. While Duke has been applauded for its commitment to achieve net-zero emissions by 2050, its near term capital expenditures have been criticized for their continued reliance on fossil fuel expansion.1 An independent chair may help the Board recognize the risk that excessive investment in natural gas infrastructure could become a stranded asset.2 We urge shareholders to vote for this proposal.
- 1
- Benjamin Storrow, E&E News, "Utilities' big promises on CO2 questioned by analysts," September 25, 2019.
- 2
- Mark Dyson et al,Prospects for Gas Pipelines in the Era of Clean Energy, Rocky Mountain Institute, 2019.
70 DUKE ENERGY CORPORATION TO ELIMINATE SUPERMAJORITY VOTING REQUIREMENTS– 2020 Proxy Statement
Table of Contents PROPOSAL 4: SHAREHOLDER PROPOSAL REGARDING INDEPENDENT BOARD CHAIR Opposing Statement of the Board of Directors:
Your Board of Directors recommends a vote "AGAINST" this proposal for the following reasons: The Board believes that it is in the best interests of shareholders for the Board to retain the flexibility to determine the appropriate leadership structure for Duke Energy at a particular time. The Board is best positioned to determine the leadership structure at any given time because of its in-depth knowledge of Duke Energy's strategies, risks and opportunities and its oversight of such matters. Implementing this proposal would deprive the Board of its ability to make decisions in the best interests of our shareholders about the appropriate leadership structure of Duke Energy as the Company evolves. This is of particular importance as the utility industry undergoes rapid transformation. The Board has unanimously approved,a strong Independent Lead Director in order to independently oversee management, rendering a separate Chair unnecessary. Our Principles for Corporate Governance provide for the Board to regularly evaluate the optimal leadership for Duke Energy depending upon our particular needs and recommends that shareholders approve, an amendmentcircumstances. The members of the Board elect the Chair and, as part of this election, review whether to combine or separate the Corporation's Amendedpositions of Chair and Restated Certificate of Incorporation (the "Certificate"), substantiallyCEO. As the shareholder proponent referred, our Board has exercised this discretion on numerous occasions in the form attached to this proxy statement as Appendix A, to eliminate the current requirementrecent past, including electing an independent Chair twice in the Certificate forpast 14 years. This exercise of discretion further illustrates the engagement of our Board and reinforces the leadership structure is not a static structure. Prior to January 1, 2016, our Board was structured with an affirmative voteindependent Chair. Beginning January 1, 2016, the Board determined that Ms. Good, the Vice Chair and CEO, was in the best position to lead the Board at that time because of her in-depth knowledge of the combined voting powerCompany and industry expertise as we navigated the transformation in the industry and implemented an aggressive strategy to succeed during that transformation. The Board also determined at that time that Mr. Browning was in the best position to serve as the Board's Independent Lead Director. The Board continues to believe that having Ms. Good serve as Chair fosters clear accountability, effective decision-making, and execution of 80%corporate strategy during this time of rapid change in the utility industry. At the time the Board elected Ms. Good as Chair in 2016, the Board also took the opportunity to review the responsibilities of Duke Energy's Independent Lead Director role in accordance with the corporate governance standards set by the National Association of Corporate Directors in order to assure strong, independent oversight of the outstanding shares of all classesCEO and management. The responsibilities of Duke Energy entitled to voteEnergy's Independent Lead Director include: - •
- Serving as liaison between the Chair and the CEO and the independent directors.
- •
- Leading, in
the election of directors to approve certain actions.Background. At the 2016 Annual Meeting, Duke Energy's shareholders voted on a shareholder proposal requesting that our Board take the steps necessary to eliminate the supermajority requirements in Duke Energy's Certificate. The shareholder proposal was approved by approximately 53% of the votes cast. After discussionsconjunction with shareholders prior to the 2017 Annual Meeting, the Corporate Governance Committee, the process for review of the CEO and Board.
- •
- Presiding at all meetings of the Board at which the Chair is not present, including executive sessions of the independent members of the Board, and apprise the Chair of the issues considered, as appropriate.
- •
- In the event of the death or incapacity of the Chair or in other situations where it is not possible or appropriate for the Chair to assume leadership of the Board, becoming the acting Chair until such time as a Chair shall have been selected.
- •
- Assisting the Chair and the CEO in setting, reviewing, and approving agendas and schedules of Board
recommendedmeetings.
- •
- Approving meeting schedules to assure there is sufficient time for discussion of all agenda items.
- •
- Reviewing and approving information sent to the Board, including advising on quality, quantity, and timeliness of information.
- •
- Developing topics for discussion during executive sessions of the Board.
- •
- Calling meetings of the independent members of the Board when necessary and appropriate.
- •
- Assisting the Chair and the CEO to promote the efficient and effective performance and functioning of the Board.
- •
- Consulting with the Corporate Governance Committee on the Board's annual self-assessment.
- •
- Being available for consultation and direct communication with the Company's major shareholders.
The Board believes that its governance practices provide effective independent oversight of management. In addition to its appointment of an Independent Lead Director, the Board has implemented a number of other practices to provide for independent oversight of management. For example: - •
- Independent directors comprise 93% of the Board.
- •
- The Independent Lead Director is elected by the independent members of the Board.
- •
- The Board meets in executive session at every regularly scheduled meeting.
- •
- The Audit, Compensation, and Corporate Governance Committees are comprised exclusively of independent directors.
- •
- The Compensation Committee annually reviews the CEO's performance and establishes her compensation, the result of which is reviewed with the full Board, absent the CEO.
DUKE ENERGY – 2020 Proxy Statement 71
Table of Contents PROPOSAL 4: SHAREHOLDER PROPOSAL REGARDING INDEPENDENT BOARD CHAIR As a result of these practices, the oversight of critical issues such as the integrity of Duke Energy's financial statements, executive compensation, and the development and implementation of our corporate governance policies and practices is entrusted to independent directors. The Board's Independent Lead Director qualifies as independent under the standards of the NYSE, the SEC, and ISS. The proponent raises Mr. Browning's tenure to question his independence. Contrary to the proponent's suggestion otherwise, our Independent Lead Director not only qualifies as independent under the requirements of our Standards for Assessing Director Independence, but also each of the NYSE, the rules of the SEC, and under the proxy voting guidelines of ISS. The Board believes that his tenure and the in-depth institutional knowledge gained during that tenure is an asset for an Independent Lead Director. The Board has appointed eight new directors in the last five years – over half of its Board – and is pleased with the contributions these new directors have made and the diverse perspectives they bring to the Board; however, the Board has felt it appropriate to keep Mr. Browning as Independent Lead Director during this time of transition for the Board to lend stability among the independent directors and to keep his long-term perspective as part of the mix of ideas. In addition, the proponent references a view from ISS Governance QualityScore regarding tenure, however fails to mention that ISS has rated Duke Energy its highest rating in its Governance QualityScore, recognizing Duke Energy in the top decile of all companies. Furthermore, the significant support that Mr. Browning received from shareholders at the 20172019 Annual Meeting that shareholders vote for an amendment to our Certificate to reduce the voting requirements for the actions described below from 80%– over 95% of the outstanding shares of all classesvotes cast – supports this view. In conclusion, the Board believes that shareholder interests are best served if the Board retains the flexibility to select a leadership structure it believes to be in the best interests of Duke Energy and our shareholders at any given time. It has embraced the need for independent oversight by structuring its leadership in a way that balances independent and effective leadership while also maintaining a strong alignment with our long-term strategy. Given our strong independent Board oversight of the CEO and management, led by an effective Independent Lead Director, the Board does not believe that a fixed policy requiring an independent Chair is in the best interests of our shareholders. For the Above Reasons the Board of Directors Recommends a Vote "AGAINST" This Proposal. 72 DUKE ENERGY – 2020 Proxy Statement
Table of Contents PROPOSAL 5: SHAREHOLDER PROPOSAL REGARDING ELIMINATION OF SUPERMAJORITY VOTING PROVISIONS IN DUKE ENERGY'S CERTIFICATE OF INCORPORATION John Chevedden, 2215 Nelson Avenue #205, Redondo Beach, CA 90278, owner of 50 shares of Duke Energy stock, submitted the following proposal: Proposal 5-Simple Majority Vote RESOLVED, Shareholders request that our board take each step necessary so that each voting requirement in our charter and bylaws (that is explicit or implicit due to default to state law) that calls for a greater than simple majority vote be eliminated, and replaced by a requirement for a majority of the votes cast for and against applicable proposals, or a simple majority in compliance with applicable laws. If necessary this means the closest standard to a majority of the outstandingvotes cast for and against such proposals consistent with applicable laws. Shareholders are willing to pay a premium for shares of all classescompanies that have excellent corporate governance. Supermajority voting requirements have been found to be one of Duke Energy stock. At the 2017 Annual Meeting, the proposal recommended6 entrenching mechanisms that are negatively related to company performance according to "What Matters in Corporate Governance" by the Board received 96% supportLucien Bebchuk, Alma Cohen and Allen Ferrell of the shares that were votedHarvard Law School. Supermajority requirements are used to block initiatives supported by most shareowners but opposed by a status quo management.
This proposal topic won from 74% to 88% support at the Annual Meeting. However, in order to pass, the amendment to the Certificate requires the affirmative voteWeyerhaeuser, Alcoa, Waste Management, Goldman Sachs, FirstEnergy, McGraw-Hill and Macy's. The proponents of the combined voting power of 80% of the outstanding sharesthese proposals included Ray T. Chevedden and only 59% of the outstanding shares of the Corporation voted in favor of the amendment.William Steiner. The Board has once again decided to propose this amendment in the hopes that it will receive the affirmative vote of the combined voting power of 80% of the outstanding sharesThis same proposal topic won more than 97%-support at the 2018 Annual Meeting.Duke Energy annual meeting but it still needed more votes to be approved. Our management could have adjourned the annual meeting to obtain these votes but failed to do so.
Currently a 1%-minority can frustrate the will of our 79%-shareholder majority in an election with 80% of shares casting ballots. In other words a 1%-minority could have the power to prevent shareholders from improving the governance of our company. This can be particularly important during periods of management underperformance and/or an economic downturn. Currently the role of shareholders is downsized because management can simply say out-to-lunch in response to an overwhelming 79%-vote of shareholders. The timing of this reform is right because it has taken 5-years for our stock to crawl from $83 to $88. Plus our Lead Director, Michael Browning, received the most negative votes of any director in 2019 and our Chairman/CEO Lynn Good received the second most negative votes. And Mr. Browning chaired our Corporate Governance Committee. Please vote yes: Rationale.Simple Majority Vote-Proposal 5
The Statement of the Board recognizes that supermajority requirements are viewed by many corporate governance experts as overly burdensome and not in line with the best principles in corporate governance.of Directors:
Your Board of Directors makes no recommendation on this proposal. The proposed amendment to the Certificate toproposal asks that we eliminate theseany provisions in our charter and bylaws which require more than a simple majority vote. There is only one supermajority requirementsprovision in our governing documents and that is described in more detail below. A draft Certificate containing the text of the proposed amendment is set forth in Appendix A attached hereto. Certificate of Incorporation. Article Seventh of theDuke Energy's Certificate of Incorporation. This provision currently requires the affirmative vote of the combined voting power of 80% of the outstanding shares of all classes of Duke Energy to approve among other things, the following actions:
- •
- amend the provision
thatwhich provides for the method to amend the Amended and Restated Certificate of Incorporation (Article Seventh);
- •
- change the number of directors that constitute
the Corporation'sDuke Energy's Board (Article Fifth, section (b));
- •
- change the method by which vacancies resulting from death, resignation, disqualification, removal, or other cause can be filled on the Board (Article Fifth, section (d))
and;; and
- •
- change the method by which directors shall be elected and hold office until the next Annual Meeting (Article Fifth, section (d)).
Upon the approvalThe Board recognizes that supermajority requirements are viewed by our shareholders of the proposed amendment, Article Seventh of our Certificate would be amendedmany corporate governance experts as follows,not in line with the proposed deletion stricken throughbest principles in corporate governance. As a result, at both the 2017 and proposed addition underlined:
"The Corporation reserves2018 Annual Meetings, the rightBoard recommended that shareholders vote for an amendment to supplement, amend, alter, change or repeal any provision contained in thisour Certificate of Incorporation into revise the manner now or hereafter prescribed byvoting requirements for the lawsactions described above from 80% of the State of Delaware and this Certificate of Incorporation, and all rights conferred upon stockholders, directors and officers herein are granted subject to this reservation. Notwithstanding the foregoing, this ARTICLE SEVENTH and sections (b) and (d) of ARTICLE FIFTH may not be supplemented, amended, altered, changed, or repealed in any respect, nor may any provision inconsistent therewith be adopted, unless such supplement, amendment, alteration, change or repeal is approved by the affirmative vote of the holders of a majority of the combined voting power of the then outstanding shares of stock of all classes of Duke Energy stock to a simple majority of the Corporation entitled to vote generally inoutstanding shares of all classes of Duke Energy stock. Despite the electionBoard's support for this amendment, the proposal
DUKE ENERGY – 2020 Proxy Statement 73
Table of directors, voting together as a single class."Contents
The affirmative votePROPOSAL 5: SHAREHOLDER PROPOSAL REGARDING ELIMINATION OF SUPERMAJORITY VOTING PROVISIONS IN DUKE ENERGY'S CERTIFICATE OF INCORPORATION
received the support of holders of at least 80%only approximately 59% of the outstanding shares of Duke Energy common stock in 2017 and fell far short of the only class80% support of stockthe outstanding and entitled to vote in the election of directors, isshares that was required to approvefor the amendment to pass. At the 2018 Annual Meeting, despite a significant solicitation campaign by Duke Energy, the proposal still failed to obtain the necessary support, receiving the support of only approximately 62% of the outstanding shares, an increase of only approximately 3% from the prior year. Although the Board has recommended the amendment in the past, the Board does not support this particular proposal because of the numerous misleading statements that the shareholder proponent makes. One such statement is that "a 1%-minority can frustrate the will of our Certificate described herein.79%-shareholder majority . . . ." This statement is untrue. Obviously, where the outcome of any vote falls short of the vote required for passage by less than 1%, a shareholder holding 1% of shares could have pushed the vote over the threshold. This applies regardless of whether the voting standard is 33.33%, 50%, or any other number. However, a 1% minority is not frustrating the will of the other shareholders in those cases; rather, those votes simply failed to garner the required support as required under the law or otherwise. The proponent also mischaracterizes the support of Mr. Browning and Ms. Good among shareholders at the 2019 Annual Meeting. The proposal states that Mr. Browning and Ms. Good received the highest number of negative votes among the Board members. Although this statement is technically true, the proponent fails to state that all of our directors, including Mr. Browning and Ms. Good, received the support of over 95% of the shareholders voting. This overwhelming support of our directors, including Mr. Browning and Ms. Good, is indicative of the high regard that our shareholders have in our Board as a result of its responsiveness to shareholder concerns and exceptional oversight of the Company's issues and strategy. Accordingly, the Board is not making a recommendation for this proposal and instead encourages shareholders to consider the proposal and express their viewpoint to the Board through their votes. For the Above Reasons the Board of Directors Makes No Recommendation on this Proposal. 74 DUKE ENERGY – 2020 Proxy Statement
Table of Contents PROPOSAL 6: SHAREHOLDER PROPOSAL REGARDING PROVIDING A SEMIANNUAL REPORT ON DUKE ENERGY'S POLITICAL CONTRIBUTIONS AND EXPENDITURES State of New York, Office of The State Comptroller, 59 Maiden Lane – 30th Floor, New York, NY 10038, submitted the following proposal on behalf of the New York State Common Retirement Fund, owner of 1,512,000 shares of Duke Energy stock: Duke Energy Corporation Political Disclosure Shareholder Resolution Resolved, that the shareholders of Duke Energy Corporation ("Duke" or "Company") hereby request the Company to prepare and semiannually update a report, which shall be presented to the pertinent board of directors committee and posted on the Company's website, that discloses the Company's: - (a)
- Policies and procedures for making electoral contributions and expenditures (direct and indirect) with corporate funds, including the board's role (if any) in that process; and
- (b)
- Monetary and non-monetary contributions or expenditures that could not be deducted as an "ordinary and necessary" business expense under section 162(e)(1)(B) of the Internal Revenue Code, including (but not limited to) contributions or expenditures on behalf of candidates, parties, and committees and entities organized and operating under section 501(c)(4) of the Internal Revenue Code, as well as the portion of any dues or payments made to any tax-exempt organization (such as a trade association) used for an expenditure or contribution that, if made directly by the Company, would not be deductible under section 162(e)(1)(B) of the Internal Revenue Code.
The report shall be made available within 12 months of the annual meeting and identify all recipients and the amount paid to each recipient from Company funds. This proposal does not encompass lobbying spending. Supporting Statement
As long-term Duke shareholders, we support transparency and accountability in corporate electoral spending. Disclosure is in the best interest of the company and its shareholders. The Supreme Court recognized this in its 2010Citizens United decision, which said, "[D]isclosure permits citizens and shareholders to react to the speech of corporate entitles in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages." Publicly available records show Duke has contributed at least $17,000,000 in corporate funds since the 2010 election cycle. (CQMomoneyline.cq.com; National Institute on Money in State Politics: http://www.followthemoney.org} We acknowledge that Duke publicly discloses a policy on corporate political spending, its direct contributions to entities organized and operating under §527 of the Internal Revenue Code, and the federal lobbying portion of trade association dues for dues in excess of $50,000. We believe this is deficient because Duke does not disclose, for example, payments to organizations, including those organized under section 501(c)(4) of the Internal Revenue Code, that are used for election-related purposes. The Company's Board and shareholders need comprehensive disclosure to be able to fully evaluate the use of corporate assets in elections. This would bring our company in line with a growing number of leading companies, including Dominion Energy Inc., Consolidated Edison Inc., Edison International, and Exelon Corp., which present this information on their websites. Opposing Statement of the Board of Directors:
Your Board of Directors recommends a vote "AGAINST" this proposal for the following reasons: Duke Energy is committed to adhering to the highest standards of ethics in all of our activities, including our political activities. As a public utility holding company, Duke Energy is highly regulated and significantly impacted by public policy decisions at the local, state, and federal levels. As such, the Board believes that Duke Energy's public policy engagement is essential to protect the interests of Duke Energy, our customers, employees, shareholders, and communities. Duke Energy already discloses its Political Expenditures Policy, which incorporates robust Board and management oversight over its political activities. The first request of the shareholder proposal is to provide disclosure of our "[p]olicies and procedures for making electoral contributions and expenditures (direct and indirect) with corporate funds, including the board's role (if any) in that process." DUKE ENERGY – 2020 Proxy Statement 75
Table of Contents PROPOSAL 6: SHAREHOLDER PROPOSAL REGARDING PROVIDING A SEMIANNUAL REPORT ON DUKE ENERGY'S POLITICAL CONTRIBUTIONS AND EXPENDITURES Implementing this request would be a waste of shareholder resources as we already disclose information about our policy and procedures with regard to our political activities on the Political Expenditures page of our website which is located atduke-energy.com/our-company/investors/corporate-governance/political-expenditures-policy. The Political Expenditures Policy incorporates significant oversight of our participation in political activities, which is conducted through our government relations program, in semiannual reviews of our strategy, activities, and disclosures by the Corporate Governance Committee of the Board. We also disclose information regarding the ultimate oversight of our policies, practices, and strategy with respect to political expenditures by the Corporate Governance Committee on our website as well in the Charter of the Corporate Governance Committee atduke-energy.com/our-company/investors/corporate-governance/board-committee-charters/corporate-governance. The existence and disclosure of these policies and practices is even acknowledged by the proponent in its supporting statement. Duke Energy already provides disclosure of its political contributions and increased its level of disclosure of political contributions in 2019. The Board recommendsbelieves that the report requested in the proposal is unnecessary because of the numerous disclosures regarding our political expenditures that we currently provide. In addition to providing disclosure regarding our policies and procedures in numerous places on our website, we also provide additional disclosure of our political contributions. Corporate political contributions are subject to regulation by the state and federal governments and, as such, there are disclosures we are required to provide by law. These disclosures are publicly available and are linked to our Political Expenditures webpage. In addition to the disclosures we are required to provide by law, Duke Energy has also prepared a semiannual report since 2015, which is posted directly on our Political Expenditures webpage, that discloses all corporate contributions to 527 Committees in excess of $1,000, the federal lobbying portion of trade association dues for trade associations with dues over $50,000 during the reporting period, and all contributions of Duke Energy's political action committee, DukePAC, each in the aggregate. However, in 2019, in response to feedback we received during our shareholder engagements, Duke Energy increased the disclosures in its semiannual report to include more detail, including the amount and recipient of all contributions to 527 Committees, the federal lobbying portion of trade association dues in excess of $50,000 in the reporting period, and links to certain federal and state election websites with navigation instructions so that shareholders votecan more easily obtain contribution information for DukePAC. Disclosing this information in favorone report allows the information to be more easily accessed and viewed by our shareholders. All such semiannual reports remain available on Duke Energy's website for historical comparison purposes. Duke Energy pays dues and makes contributions to trade associations and other non-profit organizations organized under section 501(c)(4) of this amendment.the Internal Revenue Code that are not necessarily related to their political efforts. We participate in industry trade organizations for many important reasons, including business, technical, and industry standard-setting expertise. Moreover, we may not support each of the initiatives of every association in which we participate or align in strategy with every position of every association, but we believe it is important to participate in the discussions these organizations have on these topics so that important decisions that may affect our business, customers, and shareholders are made with our input. As a result, disclosure of all the trade associations in which Duke Energy participates is not likely to provide our shareholders with any meaningful benefit to their understanding of our political activities or strategies. However, as discussed above, in 2019, we added disclosures to our semiannual report to detail the federal lobbying portion of trade association dues in excess of $50,000 in the reporting period which, along with the membership fees, constitute the substantial majority of the payments made to all trade associations. Conclusion. Accordingly, because we already provide robust disclosure concerning our policies and procedures regarding our political activities, as well as a semiannual report disclosing our political contributions and the fact that such activities and procedures are subject to extensive Board and management oversight, the Board believes that the additional report requested in the proposal would result in an unnecessary and unproductive use of Duke Energy and our shareholders' resources. For the Above Reasons the Board of Directors Recommends a Vote "FOR""AGAINST" This Proposal. 76 DUKE ENERGY – 20182020 Proxy Statement 69
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SHAREHOLDER PROPOSAL
Proposal 5 is a proposal we received from one of our shareholders. If the proponent of this proposal, or its representative, presents this proposal at our Annual Meeting and submits the proposal for a vote, then the proposal will be voted upon. The shareholder proposal and supporting statement, is included exactly as submitted to us by the proponent. The Board recommends voting "AGAINST" this proposal.
PROPOSAL 5:7: SHAREHOLDER PROPOSAL REGARDING PROVIDING AN ANNUAL REPORT ON
DUKE ENERGY'S LOBBYING EXPENSESPAYMENTS National Center For Public Policy Research, 20 F Street, NW, Suite 700, Washington, DC 20001,Mercy Investment Services, Inc., 2039 North Geyer Road, St. Louis, MO, 63131, owner of 6971 shares of Duke Energy stock; Benedictine Sisters of Virginia, 9535 Linton Hall Road, Bristow, VA 20136, owner of 2,216 shares of Duke Energy stock; and Presbyterian Church U.S.A., 100 Witherspoon Street, Louisville, KY 40202, owner of 37 shares of Duke Energy stock, submitted the following proposal:
Whereas,, we believe in full disclosure of our company's direct and indirectDuke's lobbying activities and expenditures to assess whether our company'sits lobbying is consistent with the Company'sits expressed goals and in theshareholders' best interests of shareowners.interests. Resolved,, the shareownersshareholders of Duke Energy Corporation ("Duke Energy"Duke") request the preparation of a report, updated annually, disclosing: - 1.
- Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
- 2.
- Payments by Duke
Energy used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.
- 3.
Duke Energy'sDuke's membership in and payments to any tax-exempt organization that writes and/orand endorses model legislation.
- 4.
- Description of management's and the Board's decision-making process and oversight for making payments described in sections 2 and 3 above.
For purposes of this proposal, a "grassroots lobbying communication" is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. "Indirect lobbying" is lobbying engaged in by a trade association or other organization of which Duke Energy is a member. Both "direct and indirect lobbying" and "grassroots lobbying communications" include efforts at the local, state and federal levels. The report shall be presented to all relevant oversight committeesthe Corporate Governance Committee and posted on Duke Energy'sDuke's website. Supporting Statement
As shareowners, we encourage transparencyDuke spent $56,459,187 from 2010 – 2018 on federal lobbying. This does not include state lobbying, where Duke also lobbies but disclosure is uneven or absent. Duke spent $4,487,041 on lobbying in North Carolina from 2010 – 2016, and accountability in our Company's useDuke's lobbying over a pipeline that would cross the Appalachian Trail has attracted attention.1
Duke belongs to the Chamber of corporate fundsCommerce, which has spent over $1.5 billion on lobbying since 1998, and Business Roundtable (BRT), which spent $23,160,000 on lobbying for 2018 and is lobbying against shareholder rights to influence legislation and regulation. The Company lobbies on a broad array of issues and works with groups that do the same. As such, the Company has become a targetfile resolutions. Duke discloses its trade association dues used for anti-free speech activists. These activists are working to defund pro-business organizations by attacking their corporate members.
The Company should take an active role in combating this narrative and attackslobbying on its freedom ofwebsite, but fails to clarify if this captures all payments, leaving a loophole for additional payments beyond dues that could be used for lobbying, yet not be disclosed. Duke reportedly charges its customers for trade association rights.
The Company should be proud ofdues.2 And Duke does not disclose its memberships in trade associationspayments to tax-exempt organizations that write and non-profits groups that promote pro-business, pro-growth initiatives.
For example, the Company's membership in groupsendorse model legislation, such as the American Legislative Exchange Council (ALEC) should be applauded and endorsed by shareholders..
We are concerned that Duke's lack of disclosure presents reputational risks when its lobbying contradicts company public positions. Duke has drawn scrutiny for signing the BRT Statement on the Purpose of the Corporation, yet also attending the ALEC advances initiatives that are designed to unburden corporations such as Duke Energy, allowing them the freedom to create jobs and economic prosperityannual conference.3 Investors participating in the United States. The same can be said of the Company's affiliationClimate Action 100+ representing $34 trillion in assets are asking companies to align their lobbying with the Business Roundtable.Paris agreement goals. Duke uses the Global Reporting Initiative (GRI) for sustainability reporting, yet currently fails to report any differences between its lobbying positions and any stated policies, goals, or other public positions" under GRI Standard 415.
https://maplight.org/story/energy-giants--spend-big-on-lobbying-to-clear-pipeline-path-through-national-forests-appalachian-trail/ Rather than letting outside agitators set the message that these relationships are somehow nefarious, the Company should explain the benefits of its involvement with groups that advocate for smaller government, lower taxes and free-market reforms. The Company should show how these relationships benefit shareholders, increase jobs and wages, help local communities and generally advance the Company's interests.https://www.energyandpolicy.org/duke-energy-north-carolina-rate-increase-coal-ash/
The proponents supports the Company's free speech rights and freedom to associate with groups that advance economic liberty. The Company should stand up for those rights.https://readsludge.com/2019/08/27/these-ceos-promised-to-be-socially-responsible-but-their-companies-are-pushing-alecs-right-wing-agenda/
70 DUKE ENERGY – 20182020 Proxy Statement 77
Table of Contents PROPOSAL 5:7: SHAREHOLDER PROPOSAL REGARDING PROVIDING AN ANNUAL REPORT ON
DUKE ENERGY'S LOBBYING EXPENSESPAYMENTS Opposing Statement of the Board of Directors:
Your Board of Directors recommends a vote "AGAINST" this proposal for the following reasons: Duke Energy is committed to adhering to the highest standards of ethics in engaging in any lobbyinggovernment relations activities. As a public utility holding company, the CorporationDuke Energy is highly regulated.regulated and significantly impacted by public policy decisions at the local, state, and federal levels. As such, the Board believes that it is in Duke Energy's and our shareholders' best interestspublic policy engagement is essential to participate in the political process to ensure that local, state and federal lawmakers understand and considerprotect the interests of the Corporation,Duke Energy, our customers, employees, shareholders, communities and other stakeholders. The Corporation does this through a government relations program which is governed bycommunities. Participation in public policy dialogues includes contributing to organizations that advocate positions that support the Corporation's Political Expenditures Policy and overseen by the Corporate Governance Committee of the Board, in accordance with the Corporate Governance Committee's Charter. Information about the Corporation's policies and expenditures is publicly available and linked to the Duke Energy website. Disclosureinterests of Duke Energy, Policyour customers, employees, shareholders, and Procedures Over Lobbying.communities. These organizations include industry trade associations such as EEI that serve important non-political purposes, including helping to address business, technical, and standard-setting issues. We do not always support each of the lobbying goals of every association in which we participate; however, we believe it is important to participate in these organizations' public policy discussions so that important decisions that may affect our business, customers, and shareholders are not made without our position being heard.
Disclosures regarding Duke Energy's policies and procedures over lobbying.The proposal requests that the Corporationwe disclose our policy and procedures overwith regard to lobbying. Duke Energy has developed a robust governance program around our public policy engagement. The Corporation has long had a Political Expenditures Policy that governs its lobbying activities and political expenditures. The Political Expenditures Policy is disclosed on the Corporate Governance page of our website at duke-energy.com/our-company/investors/corporate-governance/political-expenditures-policy. Additional information regarding the ultimateday-to-day oversight of the Corporation'sour policies, practices, and strategy with respect to political expenditures bypublic policy advocacy is the Corporate Governance Committee is discussed in the Charterresponsibility of the jurisdictional presidents at each applicable state level and our Senior Vice President, Federal Government and Corporate Governance Committee, also disclosed on the Corporate Governance page of our website at duke-energy.com/our-company/investors/corporate-governance/board-committee-charters/corporate-governance.Affairs. Disclosure of Corporate Political Contributions and Lobbying Activities.corporate lobbying expenditures.The proposal also seeks disclosures about the Corporation'sDuke Energy's lobbying expenditures. The Corporation's corporate political contributions andOur lobbying activities are subject to regulation by various states and the state and federal government, including requirements to provide disclosures of federalcertain state and statefederal lobbying expenses. These disclosures are publicly available and linked to our website.website atduke-energy.com/our-company/investors/corporate-governance/political-expenditures-policy. Duke Energy is fully compliant with all federalstate and statefederal laws governing corporate political contributions and lobbying activities. AsIn addition to the disclosures we are required to provide by law, Duke Energy also voluntarily discloses additional information in a result ofsemiannual report which is posted directly on the site disclosed above. In 2019, in response to feedback we have received from our shareholders during our corporate governanceshareholder engagements, in recent years on this topic, Duke Energy discloses all corporate contributionsincreased the disclosures in excess of $1,000,its semiannual report to include detail regarding the federal lobbying portion of trade association dues for trade associations with dues overin excess of $50,000 duringin the reporting period, as well as additional disclosures regarding its contributions to candidates, political parties, and all DUKEPAC contributions, each in the aggregate on a semi-annual report527 Committees and links to certain federal and state election websites with navigation instructions so that is posted directly on our website at duke-energy.com/our-company/investors/corporate-governance/political-expenditures-policy.shareholders can more easily obtain contribution information for Duke Energy's political action committee, DukePAC. Disclosing this information onin one report allows the information to be more easily accessed and viewed by our shareholders. All such semi-annualsemiannual reports remain available on Duke Energy's website for historical comparison purposes. The Corporation's lobbying activities and expenditures are also discussed in our annual Sustainability Report, available at duke-energy.com/our-company/sustainability/reports. Description of Board and Management Oversight.Certain mischaracterizations in proponents' statement. As discussed above,The proponents include certain mischaracterizations with which the Corporation's governance over political expenditures is disclosed in the Political Expenditures Policy and overseen by the Corporate Governance Committee. In 2015,Board takes issue, including proponents' insinuation that Duke Energy updatedcharges its Political Expenditures Policy and enhanced the governance around the Corporation's lobbying activities and political expenditures. These changes were a direct result of discussions with our shareholders during our corporate governance engagements with them. The Corporation's governance includes a tiered approval process that requires increasing levels of authority within the Corporation depending on the dollar amounts ofcustomers for the lobbying or other political expenditure being proposed. A Political Expenditures Committee, comprisedportion of senior executives from each of the states in which we operate, reviews and provides a Corporation political expenditure strategy and monitors and tracks corporate politicalits trade association dues. This allegation is false. All lobbying expenditures (the "Political Expenditures Program"). The ultimate approval of the strategy, policies and practices of the corporate Political Expenditures Program is the discretion of the Corporate Governance Committee during its biennial review.related to trade association dues are paid for by shareholders, not customers.
Conclusion. Accordingly, because the Corporation already provides robustwe have provided disclosure concerning our policies and procedures governing lobbying, a semi-annualsemiannual political activity report detailingthat includes information regarding our actual political contributions and lobbying activities, and a description of the Board oversight of such activities and procedures, the Board believes that the additional report requested in the proposal would result in an unnecessary and unproductive use of the Corporation'sDuke Energy and our shareholders' resources. For the Above Reasons the Board of Directors Recommends a Vote "AGAINST" This Proposal. 78 DUKE ENERGY – 20182020 Proxy Statement 71
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FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING How can I participate in the Annual Meeting? As a result of positive feedback from shareholders after the Corporation's 2017Duke Energy's 2020 Annual Meeting and to enable more shareholders to participate in this year's Annual Meeting, it will once again be held exclusively via live webcast. ShareholdersHolders of record of Duke Energy's common stock as of the close of business on the record date of March 9, 2018,2020, are entitled to participate in, vote at, and submit questions in writing during the Annual Meeting by visitingduke-energy.onlineshareholdermeeting.com. To participate in the Annual Meeting via live webcast, you will need the 16-digit control number, includedwhich can be found on your Notice, on your proxy card, and on the instructions that accompany your Proxy Materials.proxy materials. The Annual Meeting will begin promptly at 12:30 p.m. Eastern Timetime on May 3, 2018.7, 2020. Online check-in will begin at 12:00 p.m. Eastern Time.time. Please allow ample time for the online check-in procedures.process. An audio broadcast of the Annual Meeting will be available by phone toll-free at 1.800.239.9838, conference number 7668330.1.800.289.0438, confirmation code 1802740.
What is the pre-meeting forum and how can I access it? One of the benefits of holding the Annual Meeting via live webcast is that it allows us to communicate more effectively with you via a pre-meeting forum that you can enter by visitingproxyvote.com. On our pre-meeting forum, you can submit questions in writing in advance of the Annual Meeting, and also access copies of our Proxy Materials.proxy materials. Through the use of the pre-meeting forum, we are able tocan respond to more questions than we were able to respond to at previous meetings. Why are you holding the Annual Meeting via live webcast?
We held our first Annual Meeting exclusively via live webcast in 2017. We received positive feedback from shareholders after the 2017 Annual Meeting and greater participation than at previous annual meetings because shareholders can participate from any location around the world via live webcast without prohibitive cost or inconvenience. By holding the Annual Meeting via live webcast, shareholders not only have the same opportunity to vote and ask questions that they would have had at an in-person meeting, but also have the ability to submit questions in advance of the Annual Meeting. As a result, the Board has once again elected to hold the Annual Meeting via live webcast.
What if I have difficulties accessing the pre-meeting forum or locating my 16-digit control number prior to the day of the Annual Meeting on May 3, 2018?7, 2020? Prior to the day of the Annual Meeting on May 3, 2018,7, 2020, if you need assistance with your 16-digit control number and you hold your shares in your own name, please call toll-free 1.866.232.3037 in the United States or 1.720.358.3640 if calling from outside the United StatesStates. If you hold your shares in the name of a bank or brokerage firm, you will need to contact your bank or brokerage firm for assistance with your 16-digit control number. What if during the check-in time or during the Annual Meeting I have technical difficulties or trouble accessing the live webcast of the Annual Meeting? If you encounter any difficulties accessing the live webcast of the Annual Meeting during the online check-in process or during the Annual Meeting itself, including any difficulties with your 16-digit control number, please call toll-free 1.855.449.0991 in the United States or 1.720.378.5962 if calling from outside the United States, for assistance. Technicians will be ready to assist you beginning at 12:00 p.m. Eastern Timetime with any difficulties. On what am I voting? | | | | |
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| | | | | | | PROPOSAL 1 | | Election of directors | | Page 9 | | PROPOSAL 2 | | Ratification of Deloitte & Touche LLP as Duke Energy Corporation'sEnergy's independent registered public accounting firm for 20182020 | | Page 33 | | PROPOSAL 3 | | Advisory vote to approve Duke Energy Corporation'sEnergy's named executive officer compensation | | Page 35 | PROPOSALPROPOSALS 4 - | | Amendment to the Amended and Restated Certificate of Incorporation of Duke Energy Corporation to eliminate supermajority voting requirements | | Page 69 | PROPOSAL 57 | | Shareholder proposalproposals | | Page 70 | | | | | | |
Who can vote? Holders of record of Duke Energy's common stock as of the close of business on the record date, March 9, 2020. Each share of Duke Energy common stock has one vote. 72 DUKE ENERGY – 20182020 Proxy Statement 79
Table of Contents FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING Who can vote?
Holders of Duke Energy's common stock as of the close of business on the record date, March 9, 2018. Each share of Duke Energy common stock has one vote.
How do I vote? By Proxy – Before the Annual Meeting, you can give a proxy to vote your shares of Duke Energy common stock in one of the following ways: | | | | | | By internet | | By phone | | By mailing your proxy card |
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Visit 24/7
proxyvote.com | |  
Call toll-free 24/7
1.800.690.6903
or by calling the
number provided
by your broker,
bank, or other
nominee if your shares
are not
registered in your name | |  
Cast your vote,
sign your proxy card,
and send free of postage |
The phone and online voting procedures are designed to confirm your identity, to allow you to give your voting instructions, and to verify that your instructions have been properly recorded. If you wish to vote by phone or online, please follow the instructions that are included on your notice.Notice. If you mail us your properly completed and signed proxy card or vote by phone or online, your shares of Duke Energy common stock will be voted according to the choices that you specify. If you sign and mail your proxy card without marking any choices, your proxy will be voted: - •
- "FOR" the election of all nominees for director;
- •
- "FOR" the ratification of Deloitte & Touche LLP as Duke
Energy Corporation'sEnergy's independent registered public accounting firm for 2018;2020;
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- "FOR" the advisory vote to approve Duke
Energy Corporation'sEnergy's named executive officer compensation;
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FOR" the Amendment to the AmendedAGAINST" shareholder proposals 4, 6, and Restated Certificate of Incorporation of Duke Energy Corporation to eliminate supermajority voting requirements;7; and
- •
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AGAINST" theABSTAIN" on shareholder proposal.proposal 5.
We do not expect that any other matters will be brought before the Annual Meeting. However, by giving your proxy, you appoint the persons named as proxies as your representatives at the Annual Meeting. You may cast your vote online up until 11:59 p.m. Eastern Timetime on May 2, 2018,6, 2020, atproxyvote.com. Remotely – You may participate in the Annual Meeting via live webcast and cast your vote online during the Annual Meeting prior to the closing of the polls by visiting duke-energy.onlineshareholdermeeting.com.duke-energy.onlineshareholdermeeting.com. May I change or revoke my vote? Yes. You may change your vote or revoke your proxy at any time prior to the Annual Meeting by: - •
- notifying Duke Energy's Corporate Secretary in writing that you are revoking your proxy;
- •
- providing another signed proxy that is dated after the proxy you wish to revoke;
- •
- using the phone or online voting procedures; or
- •
- participating in the Annual Meeting via live webcast and voting online during the Annual Meeting prior to the closing of the polls.
Will my shares be voted if I do not provide my proxy? It depends on whether you hold your shares in your own name or in the name of a bank or brokerage firm. If you hold your shares directly in your own name, they will not be voted unless DUKE ENERGY – 2018 Proxy Statement 73
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FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
you provide a proxy or vote online during the Annual Meeting prior to the closing of the polls. poll. Brokerage firms generally have the authority to vote their customers' unvoted shares on certain "routine" matters. If your shares are held in the name of a broker, bank, or other nominee, such nominee can vote your shares for the ratification of Deloitte as Duke Energy's independent registered public accounting firm for 20182020 if you do not timely provide your proxy because this matter is considered "routine" under the applicable rules. However, no other items are considered "routine" and may not be voted by your broker without your instruction. 80 DUKE ENERGY – 2020 Proxy Statement
Table of Contents FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING If I am a participant in the Duke Energy Retirement Savings Plan, how do I vote shares held in my plan account? If you are a participant in the Duke Energy Retirement Savings Plan, you have the right to provide voting directions to the plan trustee, Fidelity Management Trust Company, by submitting your proxy card for those shares of Duke Energy common stock that are held by the plan and allocated to your account. Plan participant proxies are treated confidentially. If you elect not to provide voting directions to the plan trustee, the plan trustee will vote the Duke Energy shares allocated to your plan account in the same proportion as those shares held by the plan for which the plan trustee has received voting directions from other plan participants. The plan trustee will follow participants' voting directions and the plan procedure for voting in the absence of voting directions, unless it determines that to do so would be contrary to the Employee Retirement Income Security Act of 1974. Because the plan trustee must process voting instructions from participants before the date of the Annual Meeting, you must deliver your instructions no later than April 30, 2018,May 4, 2020, at 11:59 p.m. Eastern Time.time. What constitutes a quorum? As of the record date on March 9, 2018, 700,605,3192020, 734,028,620 shares of Duke Energy common stock were issued and outstanding and entitled to vote at the Annual Meeting. In order to conduct the Annual Meeting, a majority of the shares entitled to vote must participate remotely via live webcast or by proxy. This is referred to as a "quorum." If you submit a properly executed proxy card or vote by phone or online, you will be considered part of the quorum. Abstentions and broker "non-votes" will be counted as present and entitled to vote for purposes of determining a quorum. A broker "non-vote" is not, however, counted as present and entitled to vote for purposes of voting on individual proposals other than ratification of Deloitte as Duke Energy's independent registered public accounting firm and the amendment to the Amended and Restated Certificate of Incorporation of Duke Energy Corporation to eliminate supermajority requirements.firm. A broker "non-vote" occurs when a bank, broker, or other nominee who holds shares for another person has not received voting instructions from the owner of the shares and, under NYSE listing standards, does not have discretionary authority to vote on a matter. Who conducts the proxy solicitation and how much will it cost? Duke Energy is requesting your proxy for the Annual Meeting and will pay all the costs of requesting shareholder proxies. We have hired Georgeson Inc. to help us send out the Proxy Materialsproxy materials and request proxies. The estmiatedestimated fees for Georgeson's services isare approximately $20,000, plus out-of-pocket expenses, although suchthe amount could be higher depending on the level of services provided by Georgeson. We can request proxies through the mail or personally by phone, fax, or online. We can use directors, officers, and other employees of Duke Energy to request proxies. Directors, officers and other employees will not receive additional compensation for these services. We will reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for forwarding solicitation material to the beneficial owners of Duke Energy common stock. Where can I view the replay of the Annual Meeting webcast and the answers to questions submitted by shareholders in advance of or during the Annual Meeting? A replay of the Annual Meeting webcast, as well as our answers to questions submitted by shareholders before and during the Annual Meeting, will be available for one year atat:duke-energy.com/our-company/investors/financial-news under "May 3, 2018 - 2018"05/07/2020 – Annual Meeting of Shareholders".Shareholders." 74 DUKE ENERGY – 20182020 Proxy Statement 81
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OTHER INFORMATION Discretionary Voting Authority |
As of the date this proxy statement went to press,was printed, Duke Energy did not anticipate that any matter other than the proposals set out in this proxy statement would be raised at the Annual Meeting. If any other matters are properly presented at the Annual Meeting, the persons named as proxies will have discretion to vote on those matters according to their best judgment. Section 16(a) Beneficial Ownership Reporting Compliance
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Section 16(a) of the Exchange Act requires Duke Energy's directors and executive officers, and any persons owning more than 10% of Duke Energy's equity securities, to file with the SEC initial reports of beneficial ownership and certain changes in that beneficial ownership with respect to such equity securities of Duke Energy. We prepare and file these reports on behalf of our directors and executive officers. In 2017, 17 Form 4s were inadvertently failed to be filed for Melissa H. Anderson, Executive Vice President, Administration and Chief Human Resources Officer, when she elected to exchange a portion of her funds in the Executive Savings Plan into the Duke Energy Common Stock Fund and defer a portion of her semi-monthly paycheck, beginning February 28, 2017, into the Duke Stock Fund of the Executive Savings Plan. A late Form 4 reporting such transactions was filed on December 19, 2017. A late Form 4 was also filed on behalf of Lynn J. Good to report the acquisition of 88 shares of Duke Energy common stock by her husband when he became trustee of a trust for the benefit of his mother. A late Form 4 was filed for Thomas E. Skains to report the disposition of shares withheld for taxes upon the distribution of restricted stock units in April 2017. A late Form 4 was filed for Dhiaa M. Jamil to report the sale of 500 shares of Duke Energy common stock held indirectly in November 2017. Finally, a Form 3 was amended for Theodore F. Craver, Jr. to reflect 33 shares of Duke Energy common stock held in a trust for his mother for which he is trustee. To our knowledge, all other Section 16(a) reporting requirements applicable to our directors and executive officers were satisfied in a timely manner.
Related Person Transactions |
Related Person Transaction Policy. The Corporate Governance Committee adopted a Related Person Transaction Policy that sets forth ourDuke Energy's procedures for the identification, review, consideration, and approval or ratification of "related person transactions." For purposes of our policy only, a "related person transaction" is a transaction, arrangement, or relationship (or any series of similar transactions, arrangements or relationships) in which we and any "related person" are, were, or will be participants and in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A "related person" is any executive officer, director, or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons. In 2019, none of our executive officers or directors had a related person transaction. Under the policy, if a transaction has been identified as a possible related person transaction, (includingincluding any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation),consummation, our management must present information regarding the related person transaction to our Corporate Governance Committee (or, if Corporate Governance Committee approval would be inappropriate, to the Board) for review, consideration, and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction, and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will, on an annual basis, collect information from each director, executive officer, and (to the extent feasible) significant shareholders to enable us to identify any existing or potential related person transactions and to effectuate the terms of the policy. In addition, under our codes of business conduct and ethics, our employees and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our Corporate Governance Committee (or Board) will take into accountconsider the relevant available facts and circumstances including but not limited to: - •
- the risks, costs, and benefits to us;
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- the impact on a director's independence
in the event thatif the related person is a director, immediate family member of a director or an entity with which a director is affiliated;
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- the availability of other sources for comparable services or products; and
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- the terms available to or from, as the case may be, unrelated third parties or to or from employees generally.
The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our Corporate Governance Committee (or Board) must consider, in light of known circumstances, whether the transaction is in, or is not DUKE ENERGY – 2018 Proxy Statement 75
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OTHER INFORMATION
inconsistent with, our best interests and those of our shareholders, as our Corporate Governance Committee (or Board) determines in the good faith exercise of its judgment. For Mr. Webster, the Board considered a relationship between the Corporation and PwC, a firm that provides professional tax and other services from time to time to the Corporation and at which Mr. Webster's brother-in-law was a partner for the majority of 2017. In 2017, the Corporation paid approximately $17 million to PwC for tax, merger integration services in connection with the acquisition of Piedmont Natural Gas and the sale of the Corporation's Latin American Generation business, and various other services. The Board determined that Mr. Webster had no material interest in the transactions between the Corporation and PwC and that the transactions were in the best interests of the shareholders of the Corporation. The Board reviewed and approved the transactions in advance and the relationship with PwC was deemed by the Board not to impair Mr. Webster's independence. Because Mr. Webster's brother-in-law left PwC in December 2017, there is no longer a related person transaction for Mr. Webster.
Proposals and Business by Shareholders |
If you wish to submit a proposal for inclusion in the proxy statement for our 2019Duke Energy's 2021 Annual Meeting, we must receive it byno later than November 23, 2018.25, 2020. In addition, if you wish to introduce business at our 20192021 Annual Meeting (besides that inthe matters described on the Notice), you must send us written notice of the matter. Your written notice must comply with the requirements of the Corporation'sDuke Energy's By-Laws, and we must receive it no earlier than January 3, 2019,7, 2021, and no later than February 1, 2019.6, 2021. The individuals named as proxy holders for our 20192021 Annual Meeting will have discretionary authority to vote proxies on matters of which we are not properly notified and also may have discretionary voting authority under other circumstances. Your proposal or written notice should be mailed to our Corporate Secretary at our principal executive office at the following address: Julia S. Janson, ExecutiveDavid B. Fountain, Senior Vice President, External Affairs,Legal, Chief LegalEthics and Compliance Officer and Corporate Secretary, Duke Energy Corporation, DEC 48H, P.O. Box 1414, Charlotte, NC 28201-1414. 82 DUKE ENERGY – 2020 Proxy Statement
Table of Contents OTHER INFORMATION
Duke Energy has adopted a procedure called "householding," which has been approved by the SEC. Under this procedure, a single copy of the annual report and proxy statement is sent to any household at which two or more shareholders reside, unless one of the shareholders at that address notifies us that they wish to receive individual copies. Each shareholder will continue to receive separate proxy cards, and householding will not affect dividend check mailings or InvestorDirect Choice Plan statement mailings in any way. If you have previously consented, householding will continue until you are notified otherwise or until you notify Broadridge Investor Relations by phone toll-free at 1.800.488.3853, by internet atduke-energy.com/contactIR orCommunication Solutions, Inc. by mail at P.O. Box 1005, Charlotte, NC 28201-1005,Householding Department, 51 Mercedes Way, Edgewood, NY 11717 or by phone at 1.866.540.7095, that you wish to receive separate annual reports and proxy statements. You will be removed from the householding program within 30 days of receipt of your notice. If you received a householded mailing this year and you would like to have additional copies of our annual report and proxy statement mailed to you, please submit your request to Broadridge Investor RelationsCommunication Solutions, Inc. at the number or address listed above. WeThey will promptly send additional copies of the annual report and proxy statement upon receipt of such request. A number ofMany brokerage firms have instituted householding. If you hold your shares in "street name," please contact your bank, broker, or other holder of record to request information about householding.
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If you received a paper version of this year's Proxy Materials,proxy materials, please consider signing up for electronic delivery of next year's proxy materials. Electronic delivery significantly reduces Duke Energy's printing and postage costs and also reduces our consumption of natural resources. You will be notified immediately by email when next year's annual report and Proxy Materialsproxy materials are available. Electronic delivery also makes it more convenient for shareholders to cast their votes on issues that affect Duke Energy. In order to enroll for electronic delivery, go toicsdelivery.com/duk and follow the instructions. If you elect to receive your Duke Energy proxy materials electronically, you can still request paper copies by contacting Investor Relations by phone toll-free at 1.800.488.3853 or atduke-energy.com/investors/contactIR. 76 DUKE ENERGY – 20182020 Proxy Statement 83
Table of Contents GLOSSARY OF TERMS
GLOSSARY OF TERMS | | | | | | | | | | | | | | | | | | | | | 2019 Form 10-K | | | | Annual Report on Form 10-K for the year ended December 31, 2019 | | | | | | | | | | | | | | | 527 Committees | | | | Committees organized under Section 527 of the Internal Revenue Code | | | | | | | | | | | | | | | | Annual Meeting | | | | Annual Meeting of Shareholders | | | | | | | | | | | | | | | Board | | | | Board of Directors | | | | | | | | | | | | | | | | CAGR | | | | Compound annual growth rate | | | | | | | | | | | | | | | CEO | | | | Chief Executive Officer | | | | | | | | | | | | | | | | CERT | | | | Community Emergency Response Team | | | | | | | | | | | | | | | CFO | | | | Chief Financial Officer | | | | | | | | | | | | | | | | Cinergy Plan | | | | Cinergy Corp. Non-Union Employees' Pension Plan | | | | | | | | | | | | | | | Deloitte | | | | Deloitte & Touche LLP | | | | | | | | | | | | | | | | Directors' Savings Plan | | | | Duke Energy Corporation Directors' Savings Plan | | | | | | | | | | | | | | | DRCP | | | | Piedmont Natural Gas Company, Inc. Defined Contribution Plan | | | | | | | | | | | | | | | | Duke Energy or the Company | | | | Duke Energy Corporation | | | | | | | | | | | | | | | ECBP | | | | Duke Energy Executive Cash Balance Plan | | | | | | | | | | | | | | | | EEI | | | | Edison Electric Institute | | | | | | | | | | | | | | | ESCC | | | | Electricity Subsector Coordinating Council | | | | | | | | | | | | | | | | EPS | | | | Earnings Per Share | | | | | | | | | | | | | | | ESG | | | | Environmental, social, and governance | | | | | | | | | | | | | | | | Exchange Act | | | | Securities Exchange Act of 1934, as amended | | | | | | | | | | | | | | | Executive Savings Plan | | | | Duke Energy Corporation Executive Savings Plan | | | | | | | | | | | | | | | | FCC | | | | Federal Communications Commission | | | | | | | | | | | | | | | FAP | | | | Final Average Monthly Pay | | | | | | | | | | | | | | | | GAAP | | | | Generally Accepted Accounting Principles in the United States | | | | | | | | | | | | | | | Internal Revenue Code | | | | Internal Revenue Code of 1986 | | | | | | | | | | | | | | | | INPO | | | | Institute of Nuclear Power Operations | | | | | | | | | | | | | | | ISS | | | | Institutional Shareholder Services | | | | | | | | | | | | | | | | LAI | | | | Life Altering Injuries | | | | | | | | | | | | | | | LTI | | | | Long-Term Incentive | | | | | | | | | | | | | | | | MDCP | | | | Progress Energy, Inc. Management Deferred Compensation Plan | | | | | | | | | | | | | | | MICP | | | | Progress Energy, Inc. Management Incentive Compensation Plan | | | | | | | | | | | | | | | | NC DEQ | | | | North Carolina Department of Environmental Quality | | | | | | | | | | | | | | | NEO | | | | Named Executive Officer | | | | | | | | | | | | | | | | Notice | | | | Notice Regarding the Availability of Proxy Materials | | | | | | | | | | | | | | | NRC | | | | Nuclear Regulatory Commission | | | | | | | | | | | | | | | | NYSE | | | | New York Stock Exchange | | | | | | | | | | | | | | | O&M | | | | Operations and Maintenance | | | | | | | | | | | | | | | | OSHA | | | | Occupational Safety and Health Administration | | | | | | | | | | | | | | | Piedmont | | | | Piedmont Natural Gas Company, Inc. | | | | | | | | | | | | | | | | Piedmont Plan | | | | Retirement Plan of Piedmont Natural Gas Company, Inc. | | | | | | | | | | | | | | | Progress Energy Supplemental Plan | | | | Supplemental Senior Executive Retirement Plan of Progress Energy, Inc. | | | | | | | | | | | | | | | | Progress Plan | | | | Progress Energy Pension Plan | | | | | | | | | | | | | | | PSSP | | | | Progress Energy, Inc. Performance Share Sub-Plan | | | | | | | | | | | | | | | | PwC | | | | PricewaterhouseCoopers, LLC | | | | | | | | | | | | | | | RCBP | | | | Duke Energy Retirement Cash Balance Plan | | | | | | | | | | | | |
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Table of Contents GLOSSARY OF TERMS | | | | | | | | | | | | | | | | | | | | | Retirement Savings Plan | | | | Duke Energy Retirement Savings Plan | | | | | | | | | | | | | | | | ROE | | | | Return on Equity | | | | | | | | | | | | | | | RSU | | | | Restricted Stock Unit | | | | | | | | | | | | | | | | SASB | | | | Sustainability Accounting Standards Board | | | | | | | | | | | | | | | SEC | | | | Securities and Exchange Commission | | | | | | | | | | | | | | | | Securities Act | | | | Securities Act of 1933, as amended | | | | | | | | | | | | | | | STI | | | | Short-Term Incentive | | | | | | | | | | | | | | | | Tax Act | | | | The Tax Cuts and Jobs Act | | | | | | | | | | | | | | | TDC | | | | Total Direct Compensation | | | | | | | | | | | | | | | | TICR | | | | Total Incident Case Rate | | | | | | | | | | | | | | | TSR | | | | Total Shareholder Return | | | | | | | | | | | | | | | | Traditional Program | | | | Cinergy Plan's Traditional Program | | | | | | | | | | | | | | | UTY | | | | Philadelphia Utility Index | | | | | | | | | | | | |
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APPENDIX A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
DUKE ENERGY CORPORATION
DUKE ENERGY CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the corporation is Duke Energy Corporation. The name under which the corporation was originally incorporated was Deer Holding Corp. The name of the corporation was changed to Duke Energy Holding Corp. on June 21, 2005. The original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on May 3, 2005.
2. This Amended and Restated Certificate of Incorporation, having been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware (the "DGCL") and by the approval of the stockholders of the Corporation in accordance with Section 211 of the DGCL, restates and integrates and further amends the provisions of the Amended and Restated Certificate of Incorporation as amended or supplemented heretofore. As so restated and integrated and further amended, the Amended and Restated Certificate of Incorporation (hereinafter, this "Certificate of Incorporation") reads as follows:
ARTICLE FIRST
Name
The name of the corporation is Duke Energy Corporation.
ARTICLE SECOND
Registered Office
The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle. The name of the registered agent of the Corporation at such address is The Corporation Trust Company.
ARTICLE THIRD
Purpose
The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the DGCL.
ARTICLE FOURTH
Capital Stock
(a) The aggregate number of shares of stock that the Corporation shall have authority to issue is two billion forty-four million (2,044,000,000) shares, consisting of two billion (2,000,000,000) shares of Common Stock, par value $0.001 per share (the "Common Stock"), and forty-four million (44,000,000) shares of Preferred Stock, par value $0.001 per share (the "Preferred Stock").
(b) The Board of Directors of the Corporation shall have the full authority permitted by law, at any time and from time to time, to divide the authorized and unissued shares of Preferred Stock into one or more classes or series and, with respect to each such class or series, to determine by resolution or resolutions the number of shares constituting such class or series and the designation of such class or series, the voting powers, if any, of the shares of such class or series, and the preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, of the shares of any such class or series of Preferred Stock to the full extent now or hereafter permitted by the law of the State of Delaware. The powers, preferences and relative, participating, optional and other special rights of each class or series of Preferred Stock and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other classes or series at any time outstanding.
(c) Subject to applicable law and the rights, if any, of the holders of any class or series of Preferred Stock or any class or series of stock having a preference over or the right to participate with the Common Stock with respect to the payment of dividends, dividends may be declared and paid on the Common Stock at such times and in such amounts as the Board of Directors of the Corporation in its discretion shall determine. Nothing in this ARTICLE FOURTH shall limit the power of the Board of Directors to create a class or series of Preferred Stock with dividends the rate of which is calculated by reference to, and the payment of which is concurrent with, dividends on shares of Common Stock.
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(d) In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, subject to the rights of the holders of any class or series of the Preferred Stock, the net assets of the Corporation available for distribution to stockholders of the Corporation shall be distributedprorata to the holders of the Common Stock in accordance with their respective rights and interests. If the assets of the Corporation are not sufficient to pay the amounts, if any, owing to holders of shares of Preferred Stock in full, holders of all shares of Preferred Stock will participate in the distribution of assets ratably in proportion to the full amounts to which they are entitled or in such order or priority, if any, as will have been fixed in the resolution or resolutions providing for the issue of the class or series of Preferred Stock. Neither the merger or consolidation of the Corporation into or with any other corporation, nor a sale, transfer or lease of all or part of its assets, will be deemed a liquidation, dissolution or winding up of the Corporation within the meaning of this paragraph, except to the extent specifically provided in any certificate of designation for any class or series of Preferred Stock. Nothing in this ARTICLE FOURTH shall limit the power of the Board of Directors to create a class or series of Preferred Stock for which the amount to be distributed upon any liquidation, dissolution or winding up of the Corporation is calculated by reference to, and the payment of which is concurrent with, the amount to be distributed to the holders of shares of Common Stock.
(e) Except as otherwise required by law, as otherwise provided herein or as otherwise determined by the Board of Directors as to the shares of any class or series of Preferred Stock, the holders of Preferred Stock shall have no voting rights and shall not be entitled to any notice of meetings of stockholders.
(f) Except as otherwise required by law and subject to the rights of the holders of any class or series of Preferred Stock, with respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of any outstanding shares of Common Stock shall vote together as a class, and every holder of Common Stock shall be entitled to cast thereon one vote in person or by proxy for each share of Common Stock standing in such holder's name on the books of the Corporation;provided,however, that, except as otherwise required by law, or unless provided in any certificate of designation for any class or series of Preferred Stock, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designations relating to any class or series of Preferred Stock) that relates solely to the terms of one or more outstanding classes or series of Preferred Stock if the holders of such affected class or series are entitled, either separately or together with the holders of one or more other such classes or series, to vote thereon pursuant to this Certificate of Incorporation (including any certificate of designations relating to any class or series of Preferred Stock) or pursuant to applicable law. Subject to the rights of the holders of any class or series of Preferred Stock, stockholders of the Corporation shall not have any preemptive rights to subscribe for additional issues of stock of the Corporation and no stockholder will be permitted to cumulate votes at any election of directors.
ARTICLE FIFTH
Board of Directors
(a) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
(b) Except as otherwise fixed by or pursuant to provisions of ARTICLE FOURTH relating to the rights of the holders of any series of Preferred Stock, the number of directors of the Corporation shall not be less than nine (9) nor more than eighteen (18), as may be fixed from time to time by the Board of Directors.
(c) A director may be removed from office with or without cause;provided,however, that, subject to applicable law, any director elected by the holders of any series of Preferred Stock may be removed without cause only by the holders of a majority of the shares of such series of Preferred Stock.
(d) Except as otherwise fixed by or pursuant to provisions of ARTICLE FOURTH relating to the rights of the holders of any series of Preferred Stock, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled only by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office until the next succeeding annual meeting of stockholders and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
(e) Except as otherwise fixed by or pursuant to provisions of ARTICLE FOURTH relating to the rights of the holders of any series of Preferred Stock, the directors shall be elected by the holders of voting stock and shall hold office until the next annual meeting of stockholders and until their respective successors shall have been duly elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office.
(f) Election of directors need not be by written ballot unless the By-Laws so provide.
(g) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject,
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nevertheless, to the provisions of the DGCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted.
ARTICLE SIXTH
Action by Stockholders; Books of the Corporation
(a) Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the DGCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation.
(b) Written Consent. Certain actions required or permitted to be taken by the stockholders of the Corporation at an annual or special meeting of the stockholders may be effected without a meeting by the written consent of the holders of common stock of the Corporation (a "Consent"), but only if such action is taken in accordance with the provisions of this Article Sixth, the Corporation's By-laws and applicable law.
(i)Record Date. The record date for determining such stockholders entitled to consent to corporate action in writing without a meeting shall be as fixed by the Board of Directors or as otherwise established under this Article Sixth. Any holder of common stock of the Corporation seeking to have the stockholders authorize or take corporate action by Consent shall, by written request addressed to the secretary of the Corporation and delivered to the Corporation's principal executive offices and signed by holders of record at the time such request is delivered representing at least 20 percent (20%) of the outstanding shares of common stock of the Corporation, request that a record date be fixed for such purpose. The written request must contain the information set forth in paragraph (b)(ii) of this Article Sixth. Following delivery of the request, the Board of Directors shall, by the later of (x) 20 days after delivery of a valid request to set a record date and (y) 5 days after delivery of any information required by the Corporation to determine the validity of the request for a record date or to determine whether the action to which the request relates may be effected by Consent under paragraph (b)(iii) of this Article Sixth, determine the validity of the request and whether the request relates to an action that may be taken by Consent and, if appropriate, adopt a resolution fixing the record date for such purpose. The record date for such purpose shall be no more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors and shall not precede the date such resolution is adopted. If a request complying with the second and third sentences of this paragraph (b)(i) has been delivered to the secretary of the Corporation but no record date has been fixed by the Board of Directors by the date required by the preceding sentence, the record date shall be the first date on which a signed Consent relating to the action taken or proposed to be taken by Consent is delivered to the Corporation in the manner described in paragraph (b)(vi) of this Article Sixth; provided that, if prior action by the Board of Directors is required under the provisions of Delaware law, the record date shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
(ii)Request Requirements. Any request required by paragraph (b)(i) of this Article Sixth (a) must be delivered by the holders of record of at least 20% of the outstanding shares of common stock of the, who shall not revoke such request and who shall continue to own not less than 20% of the outstanding shares of common stock of the Corporation through the date of delivery of Consents signed by a sufficient number of stockholders to authorize or take such action; (b) must contain an agreement to solicit Consents in accordance with paragraph (b)(iv) of this Article Sixth, (c) must describe the action proposed to be taken by written consent of stockholders and (d) must contain (1) such information and representations, to the extent applicable, then required by Section 2.03(b) of the Corporation's By-laws as though such stockholder was intending to propose an amendment to the Corporation's Restated Certificate of Incorporation or By-laws or other business to be brought before a meeting of stockholders and (2) the text of the proposed action to be taken (including the text of any resolutions to be adopted by Consent) and (e) must include documentary evidence that the requesting stockholder(s) own in the aggregate not less than 20% of the outstanding shares of common stock of the Corporation as of the date of such written request to the secretary; provided, however, that if the stockholder(s) making the request are not the beneficial owners of the shares representing at least 20% of the outstanding shares of common stock of the Corporation, then to be valid, the request must also include documentary evidence (or, if not simultaneously provided with the request, such documentary evidence must be delivered to the secretary within ten business days after the date on which the request is delivered to the secretary) that the beneficial owners on whose behalf the request is made beneficially own at least 20% of the outstanding shares of common stock of the Corporation as of the date on which such request is delivered to the secretary. If the action proposes to elect directors by written consent, the written request for a record date must also contain the information required by Section 3.03 of the Corporation's By-laws. The Corporation may require the stockholder(s) submitting such request to furnish such other information as may be reasonably requested by the Corporation. Any requesting stockholder may revoke his, her or its request at any time by written revocation delivered to the secretary of the Corporation at the Corporation's principal executive offices. Any disposition by a requesting stockholder of any shares of common stock of the Corporation (or of
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beneficial ownership of such shares by the beneficial owner on whose behalf the request was made) after the date of the request, shall be deemed a revocation of the request with respect to such shares, and each requesting stockholder and the applicable beneficial owner shall certify to the secretary of the Corporation on the day prior to the record date set for the action by written consent as to whether any such disposition has occurred. If the unrevoked requests represent in the aggregate less than 20% of the outstanding shares of common stock of the Corporation, the Board of Directors, in its discretion, may cancel the action by written consent.
(iii)Actions Which May Be Taken by Written Consent. Stockholders are not entitled to act by Consent if (a) the record date request does not comply with this Article Sixth or the Corporation's By-Laws; (b) the action relates to an item of business that is not a proper subject for stockholder action under applicable law; (c) the request for a record date for such action is received by the Corporation during the period commencing 90 days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next annual meeting; (d) an identical or substantially similar item of business (as determined by the Board of Directors of the Corporation in its reasonable determination, which determination shall be conclusive and binding on the Corporation and its stockholders, (a "Similar Item")), was presented at a meeting of stockholders held not more than 12 months before the request is received by the secretary of the Corporation; (e) a Similar Item consisting of the election or removal of directors was presented at a meeting of stockholders held not more than 90 days before the request is received by the secretary of the Corporation (and, for purposes of this clause, the election or removal of directors shall be deemed a "Similar Item" with respect to all items of business involving the election or removal of directors), (f) a Similar Item is included in the Corporation's notice of meeting as an item of business to be brought before an annual or special stockholders meeting that has been called but not yet held or that is called to be held within 90 days after the request is received by the secretary of the Corporation; or (g) such record date request was made in a manner that involved a violation of Regulation 14A under the Securities Exchange Act of 1934 or other applicable law. For purposes of this paragraph (b)(iii), the nomination, election or removal of directors shall be deemed to be a Similar Item with respect to all actions involving the nomination, election or removal of directors, changing the size of the Board of Directors and filling of vacancies and/or newly created directorships resulting from any increase in the authorized number of directors.
(iv)Manner of Consent Solicitation. Holders of common stock of the Corporation may take action by written consent only if Consents are solicited from all holders of common stock of the Corporation entitled to vote on the matter and in accordance with applicable law.
(v)Date of Consent. Every Consent purporting to take or authorize the taking of corporate action must bear the date of signature of each stockholder who manually signs the Consent, and no Consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated Consent delivered in the manner required by paragraph (b)(vi) of this Article Sixth and not later than 120 days after the record date, Consents signed by a sufficient number of stockholders to take such action are so delivered to the Corporation.
(vi)Delivery of Consents. No Consents may be dated or delivered to the Corporation or its registered office in the State of Delaware until 60 days after the delivery of a valid request to set a record date. Consents must be delivered to the Corporation by delivery to its registered office in the State of Delaware or its principal place of business. Delivery must be made by hand or by certified or registered mail, return receipt requested. The secretary of the Corporation shall provide for the safe-keeping of such Consents and any related revocations and shall promptly designate one or more persons, who shall not be members of the Board of Directors, to serve as inspectors ("Inspectors") with respect to such Consents. The Inspectors shall promptly conduct a ministerial review of the sufficiency of all Consents and any related revocations and of the validity of the action to be taken by written consent as the secretary of the Corporation deems necessary or appropriate, including, without limitation, whether the stockholders of a number of shares having the requisite voting power to authorize or take the action specified in Consents have given consent. If after such investigation the Inspectors shall determine that the action purported to have been taken is duly authorized by the Consents, that fact shall be certified on the records of the Corporation kept for the purpose of recording the proceedings of meetings of stockholders and the Consents shall be filed in such records. In conducting the investigation required by this section, the Inspectors of the Corporation may, at the expense of the Corporation, retain special legal counsel and any other necessary or appropriate professional advisors as such person or persons may deem necessary or appropriate and, to the fullest extent permitted by law, shall be fully protected in relying in good faith upon the opinion of such counsel or advisors.
(vii)Effectiveness of Consent. No action may be taken by the stockholders by Consent except in accordance with this Article Sixth. If the Board of Directors shall determine that any request to fix a record date was not properly made in accordance with, or relates to an action that may not be effected by Consent pursuant to, this Article Sixth, or the stockholder or stockholders seeking to take such action do not otherwise comply with this Article Sixth, then the Board of Directors shall not be required to fix a record date and any such purported action by Consent shall be null and void to the fullest extent permitted by applicable law. No Consent shall be effective until such date as the Inspectors certify to the Corporation that the Consents delivered to the Corporation in accordance with paragraph (vi) of this Article
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Sixth,represent at least the minimum number of votes that would be necessary to take the corporate action at a meeting at which all shares entitled to vote thereon were present and voted, in accordance with Delaware law and this Certificate of Incorporation.
(viii)Challenge to Validity of Consent. Nothing contained in this Article Sixth shall in any way be construed to suggest or imply that the Board of Directors of the Corporation or any stockholder shall not be entitled to contest the validity of any Consent or related revocations, whether before or after such certification by the Inspectors, as the case may be, or to prosecute or defend any litigation with respect thereto.
(ix)Board-solicited Stockholder Action by Written Consent. Notwithstanding anything to the contrary set forth above, (x) none of the foregoing provisions of this Article Sixth shall apply to any solicitation of stockholder action by written consent by or at the direction of the Board of Directors and (y) the Board of Directors shall be entitled to solicit stockholder action by written consent in accordance with applicable law.
ARTICLE SEVENTH
Amendment of Certificate of Incorporation
The Corporation reserves the right to supplement, amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware and this Certificate of Incorporation, and all rights conferred upon stockholders, directors and officers herein are granted subject to this reservation. Notwithstanding the foregoing, this ARTICLE SEVENTH and sections (b) and (d) of ARTICLE FIFTH may not be supplemented, amended, altered, changed, or repealed in any respect, nor may any provision inconsistent therewith be adopted, unless such supplement, amendment, alteration, change or repeal is approved by the affirmative vote of the holders ofa majority of the combined voting power of the then outstanding shares of stock of all classes of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
ARTICLE EIGHTH
Amendment of By-Laws
In furtherance and not in limitation of the powers conferred upon it by law, the Board of Directors of the Corporation is expressly authorized to adopt, repeal, alter or amend the By-Laws of the Corporation. No By-Laws may be adopted, repealed, altered or amended in any manner that would be inconsistent with this Amended and Restated Certificate of Incorporation (as it may be adopted, repealed, altered or amended from time to time in accordance with ARTICLE SEVENTH).
ARTICLE NINTH
Limitation of Liability
Except to the extent elimination or limitation of liability is not permitted by applicable law, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty in such capacity. Any repeal or modification of this ARTICLE NINTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.
ARTICLE TENTH
Liability of Stockholders
The holders of the capital stock of the Corporation shall not be personally liable for the payment of the Corporation's debts, and the private property of the holders of the capital stock of the Corporation shall not be subject to the payment of debts of the Corporation to any extent whatsoever.
ARTICLE ELEVENTH
Effectiveness
This Amended and Restated Certificate of Incorporation is to become effective at [·].
DUKE ENERGY – 2018 Proxy Statement 81
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APPENDIX B
Cautionary Note Regarding Forward-Looking Information This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.Act. Forward-looking statements are based on management's beliefs and assumptions and can often be identified by terms and phrases that include "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," "target," "guidance," "outlook""goal," "outlook," or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements. Accordingly, there is no assurance that such results will be realized. For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see our Annual Report on2019 Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC and available at the SEC's website atsec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made. Duke Energy expressly disclaims an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. 8286 DUKE ENERGY – 20182020 Proxy Statement
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VOTE BY INTERNET Before the Annual Meeting of Shareholders ("Annual Meeting")(Annual Meeting) - Go to proxyvote.com Use the Internetinternet to transmit your voting instructions up until 11:59 p.m. Eastern Timetime on May 2, 2018.6, 2020. Have your proxy card in handavailable when you access the website and follow the instructions to obtain your records and to create a voting instruction form. DUKE ENERGY CORPORATION 550 SOUTH TRYON STREET CHARLOTTE, NC 28202 During the Annual Meeting - Go to duke-energy.onlineshareholdermeeting.com You may participate in the Annual Meeting via live webcast and cast your vote online during the Annual Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1.800.690.6903 Use any touch-tone phone to transmit your voting instructions up until 11:59 p.m. Eastern Timetime on May 2, 2018.6, 2020. Have your proxy card in handavailable when you call and then follow the instructions. VOTE BY MAIL Mark, sign, and date this proxy card, and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E37697-P02077-Z71749E94602-P32843-Z76317 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DUKE ENERGY CORPORATION The Board of Directors recommends a vote "FOR" Director nominees. For Withhold For All AllAllExcept To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. ! ! ! 1. Election of directors: Nominees: 01) 02) 03) 04) 05) 06) 07) Michael G. Browning Annette K. Clayton Theodore F. Craver, Jr. Robert M. Davis Daniel R. DiMicco John H. ForsgrenNicholas C. Fanandakis Lynn J. Good John T. Herron 08) 09) 10) 11) 12) 13) 14) James B. Hyler, Jr.John T. Herron William E. Kennard E. Marie McKee Charles W. Moorman IV Carlos A. SaladrigasMarya M. Rose Thomas E. Skains William E. Webster, Jr. For Against Abstain The Board of Directors recommends a vote "FOR" Proposal 4. 4. Amendment to the Amended and Restated Certificate of Incorporation of Duke Energy Corporation to eliminate supermajority voting requirements ! ! ! The Board of Directors recommends a vote "AGAINST" Proposals 4, 6, and 7, and makes no recommendation as to Proposal 5. For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! 4. 5. Shareholder proposal regarding independent board chair Shareholder proposal regarding elimination of supermajority voting provisions in Duke Energy’s Certificate of Incorporation Shareholder proposal regarding providing a semiannual report on Duke Energy’s political contributions and expenditures Shareholder proposal regarding providing an annual report on Duke Energy’s lobbying payments For Against Abstain The Board of Directors recommends a vote "FOR" Proposals 2 and 3. 6. ! ! ! ! ! ! 2. Ratification of Deloitte & Touche LLP as Duke Energy Corporation'sEnergy's independent registered public accounting firm for 2018 5. Shareholder proposal regarding providing an annual report on Duke Energy's lobbying expenses ! ! ! 3.2020 Advisory vote to approve Duke Energy Corporation'sEnergy's named executive officer compensation 3. 7. ! I have provided written comments on the back of this card. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date  
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders: The Notice and Proxy Statement and Annual Report are available at proxyvote.com. E37698-P02077-Z71749E94603-P32843-Z76317 DUKE ENERGY CORPORATION Annual Meeting of Shareholders May 3, 2018,7, 2020, at 12:30 p.m. Eastern Timetime PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appointsappoint(s) Lynn J. Good, Steven K. Young, and Julia S. Janson,David B. Fountain, 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 Energy Corporation (the "Corporation")(Duke Energy) of the undersigned at the Annual Meeting of Shareholders ("Annual Meeting")(Annual Meeting) to be held via live webcast, on May 3, 2018,7, 2020, and at any adjournment thereof, upon all subjects that may come before the meeting,Annual 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 director nominees under Proposal 1, "FOR" Proposals 2 and 3, "AGAINST" Proposals 4, 6, and 4, "AGAINST"7, and "ABSTAIN" on Proposal 5, and at their discretion on any other matter that may come before the meeting.Annual Meeting. Phone and online voting cutoff is 11:59 p.m. Eastern Timetime on May 2, 2018,6, 2020, except as described below. This instruction and proxy card is also solicited by the Board of Directors of the CorporationDuke Energy for use at the Annual Meeting on May 3, 2018,7, 2020, by persons who participate in the Duke Energy Retirement Savings (the "Plan")Plan (Plan). Phone and online voting cutoff for participants in the Plan is 11:59 p.m. Eastern Timetime on April 30, 2018.May 4, 2020. By signing this instruction and proxy card or by voting by phone or online, the undersigned hereby directs Fidelity Management Trust Company, as Trustee for the Plan, to vote, as designated herein, all shares of CorporationDuke Energy common stock with respect to which the undersigned is entitled to direct the Trustee as to voting under the Plan at the Annual Meeting of the Corporation to be held on May 3, 2018,7, 2020, and at any and all adjournments thereof. The Trustee is also authorized to vote such shares in connection with the transaction of such other business as may properly come before the meetingAnnual Meeting and any and all adjournments thereof. If no directions are given, the shares of CorporationDuke Energy common stock allocated to the undersigned's account will be voted by the Trustee in the same proportion as shares held by the Plan for which the Trustee has received voting directions from other participants in the Plan, unless the Trustee determines that to do so would be contrary to the Employee Retirement Income Security Act of 1974, as amended. (If you noted any comments above, please mark corresponding box on the reverse side.) Comments:  
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