SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act ofPROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT
OF 1934
(Amendment No. )
(x(AMENDMENT NO. )
Filed by the Registrant ( )[X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
( )[X] Preliminary Proxy Statement (x )[ ] Confidential, for Use of the
[ ] Definitive Proxy Statement
( ) Confidential, for use of the Commission Only (as permitted by
Rule 14a -6(e)(2))
( )[ ] Definitive Additional Materials ( Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
(section mark)240.14a-11(c)Section 240 14a-11(c) or (section mark)240.14a-12
Duke Power CompanySection 240
14a-12
DUKE ENERGY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Itsin its Charter)
Duke Power CompanyN/A
-------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEEStatement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(x ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
( )[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1)(1) Title of each class of securities to which transaction applies:
2)- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
3)- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
4)0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
5)- --------------------------------------------------------------------------------
(5) Total fee paid:
( )- --------------------------------------------------------------------------------
[ ] Fee paid previously paid with preliminary materials
( )materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1)(1) Amount Previously Paid:
$
2)--------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
3)--------------------------------------------------------------------------
(3) Filing Party:
4)--------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------
DUKE POWER COMPANY
422 SOUTH CHURCH STREET
CHARLOTTE, N.C. 28242
W. H. GRIGG[DUKE ENERGY LOGO Duke Energy Corporation
APPEARS HERE] 526 South Church Street
P.O. Box 1244
Charlotte, NC 28201-1244
R.B. PRIORY
Chairman of the Board, President
and Chief Executive Officer
March 20, 199512, 1999
Dear Shareholder:
It is my pleasureYou are cordially invited to invite you to ourattend the annual shareholders meeting, which
will be held on Thursday, April 27, 1995,15, 1999, at 10 a.m., in the O. J. Miller
Auditorium in the ElectricEnergy Center, 526 South Church St.,Street, Charlotte, N.C.North
Carolina. This meeting will provide a good opportunity for us to report to you
our progress during 1998, as well as to outline for you our goals for 1999.
During the meeting, we will elect fivefour Class III directors to a three-year
termterms expiring in 1998,2002. Also, we will act upon a proposal to amend the
Corporation's Articles of Incorporation to increase the amount of authorized
Common Stock, act upon the ratification of the appointment of auditors, act
upon a shareholder proposal and transact any other business that may come
before the meeting. The accompanying proxy statement contains further
information about all of these matters.
The Board of Directors and I hope you can attend the meeting, and look
forward to seeing you. Even ifWhether or not you planexpect to attend, please sign and
date the enclosed form of proxy and return it promptly in the accompanying
envelope to ensure that your signed
proxy as soon as possible.shares will be represented. If you attend the
meeting, you may withdraw any previously given and vote your shares in person.
Sincerely,
(Signature of W.H. Grigg)/s/ R.B. PRIORY
--------------------------
DUKE POWER COMPANY
422ENERGY CORPORATION
526 SOUTH CHURCH STREET
P.O. BOX 1244
CHARLOTTE, N.C. 28242NORTH CAROLINA 28201-1244
NOTICE OF 19951999 ANNUAL MEETING OF SHAREHOLDERS
March 20, 199512, 1999
To the ShareholdersHolders of Common Stock of
DUKE POWER COMPANY:ENERGY CORPORATION:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Duke
Power CompanyEnergy Corporation (the "Corporation") will be held in the O. J. Miller Auditorium
in the ElectricEnergy Center, 526 South Church Street, Charlotte, N.C.,North Carolina, on
Thursday, April 27, 1995,15, 1999, at 10 a.m., for the following purposes:
(1) to elect fivefour directors who will constituteto Class III of the Board of Directors;
(2) to act upon a proposal to amend the Articles of Incorporation to
increase the amount of authorized Common Stock from 500,000,000 to
1,000,000,000;
(3) to ratify the appointment of auditors;
(4) to act upon a shareholder proposal; and
(3)(5) to transact such other business as may come before the meeting or
any adjournment or adjournments thereof.meeting.
The Board of Directors has fixed the close of business on March 3, 1995February 22,
1999 as the record date for the meeting.
It is important that your shares be represented at the meeting regardless
of the number of shares you may hold. Please complete, sign and date the
enclosed form of proxy and return it promptly in the enclosed envelope which
requires no postage if mailed within the United States.
By Order of the Board of Directors
RICHARD W. BLACKBURN
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
DUKE ENERGY CORPORATION
PROXY STATEMENT
This proxy statement, with the accompanying proxy card, is first being
mailed to holders of Common Stock on or about March 12, 1999 and is furnished
in connection with the solicitation of proxies by the Board of Directors of the
Corporation to be used at the annual meeting of shareholders to be held on
April 15, 1999.
PROXIES; REVOCATION OF PROXIES
The accompanying form of proxy may be used by a holder of Common Stock
whether or not such holder attends the meeting in person. The proxy may be
revoked by such holder at any time prior to its use at the meeting. There is no
specific procedure or requirement under the Corporation's Articles of
Incorporation, By-Laws or North Carolina law with respect to how proxies may be
revoked. All shares represented by valid proxies received pursuant to this
solicitation, and not revoked before such proxies are exercised, will be voted
in the manner specified therein. If no directions are given, the proxies will
be voted FOR the proposed slate of directors (Proposal 1); FOR the proposal to
amend the Articles of Incorporation to increase the amount of authorized Common
Stock (Proposal 2); FOR the ratification of the appointment of auditors
(Proposal 3); AGAINST the shareholder proposal (Proposal 4); and AT THE
DISCRETION OF THE PERSONS NAMED IN SUCH PROXIES ON ANY OTHER MATTER THAT MAY
COME BEFORE THE MEETING.
COST OF PROXY SOLICITATION
The entire cost of soliciting the proxies from holders of Common Stock
will be borne by the Corporation. In addition to the solicitation of the
proxies by mail, the Corporation will request banks, brokers and other record
holders to send proxies and proxy material to the beneficial owners of Common
Stock and secure their voting instructions. The Corporation will reimburse such
record holders for their reasonable expenses in so doing. The Corporation has
also made arrangements with Georgeson & Company, Inc. to assist it in
soliciting proxies and has agreed to pay $17,500 plus expenses for such
services. If necessary, the Corporation may also use several of its officers
and regular employees, who will not be specially compensated, to solicit
proxies from holders of Common Stock, either personally or by telephone,
telegram, facsimile or special delivery letter or by other means.
RECORD DATE; QUORUM; VOTING RIGHTS
The Board of Directors has fixed February 22, 1999, as the record date
(the "Record Date") for determination of shareholders whoholders of Common Stock entitled to
notice of and to vote at the meeting. Accordingly, only holders of record of
Common Stock at the close of business on the Record Date will be entitled to
notice of and to vote at the meeting. Each shareholder is requested to date, sign and return the accompanying
proxy in the enclosed return envelope, to which no postage need be affixed if
mailed in the United States.
By orderThe number of the Board of Directors,
ELLEN T. RUFF
SECRETARY
DUKE POWER COMPANY
422 SOUTH CHURCH STREET
CHARLOTTE, N.C. 28242
PROXY STATEMENT
This proxy statement is furnished to the shareholders of Duke Power Company
(the Company) in connection with the solicitation of proxies to be used in
voting at the annual meeting of shareholders to be held on April 27, 1995. Only
holders of recordoutstanding shares of
Common Stock entitled to vote at the closemeeting is . In order to establish a
quorum for the meeting, a majority of business on March 3, 1995the votes entitled to be cast must be
either present in person or represented by valid proxy. Abstentions and broker
non-votes will be counted for purposes of determining whether a quorum exists
at the meeting.
Each share of Common Stock entitled to vote at the meeting entitles its
holder to one vote. Directors will be elected by a plurality of the votes cast
by the holders of Common Stock entitled to vote at the meeting. On such date, there were outstanding
204,859,339 shares"Plurality"
means that the individuals who receive the largest number of votes cast are
elected as directors up to the maximum number of directors to be chosen at the
meeting. Approval by a majority of the votes cast by holders of Common Stock
entitled to vote at the meeting is required to approve Proposals 2, 3 and 4.
Any shares not voted, whether by abstention or broker non-vote, will not be
counted as votes cast for purposes of determining whether Proposals 2, 3 and 4
have received sufficient votes for approval, nor will any abstentions or broker
non-votes be counted in the election of directors.
MULTIPLE COPIES OF ANNUAL REPORT TO SHAREHOLDERS
The Corporation's Annual Report to Shareholders has been mailed to all
shareholders. The Annual Report is not to be regarded as proxy soliciting
material. If more than one copy of the Annual Report is sent to your address
and you wish to reduce the number of Annual Reports you receive and save the
Corporation the cost of producing and mailing duplicate reports, the
Corporation will discontinue the mailing of those reports if you mark the
appropriate box on each shareproxy card for which you do not wish to receive an
Annual Report. Mailing of which entitlesdividends, dividend reinvestment and stock purchase
statements, proxy materials and special notices will not be affected by your
election to discontinue duplicate mailings of the Annual Report.
At least one account must continue to receive an Annual Report. To
discontinue or resume the mailing of an Annual Report to an account,
shareholders of record may also call the Investor Relations Department at (800)
488-3853.
If you own Common Stock through a bank, broker or other nominee and
receive more than one Annual Report, contact the holder of record to one vote.eliminate
duplicate mailings.
ADVANCE NOTICE PROCEDURES
Under the Corporation's By-Laws, nominations for director may be made only
by the Board of Directors or by a shareholder entitled to vote who has
delivered notice to the Corporation not less than 90 nor more than 120 days
prior to the first anniversary of the preceding year's annual meeting. For the
annual meeting of shareholders in the year 2000, the Corporation must receive
this notice on or after December 17, 1999, and on or before January 16, 2000.
The enclosed proxy is solicited on behalfCorporation's By-Laws also provide that no business may be brought
before an annual meeting except as specified in the notice of the meeting or as
otherwise brought before the meeting by or at the direction of the Board of
Directors or by a shareholder entitled to vote who has delivered notice to the
Corporation (containing certain information specified in the By-Laws) within
the time limits described above for delivering notice of a nomination for the
election of a director. These requirements apply to any matter that a
shareholder wishes to raise at an annual meeting other than pursuant to the
procedures under Rule 14a-8 of the Company. Such proxy material was first forwardedSecurities and Exchange Commission ("SEC").
A copy of the full text of the By-Law provisions discussed above may be
obtained by writing to the shareholders on or about
March 20, 1995. Any shareholder giving a proxy may revoke it at any time prior
to its use at the meeting.
The Company will bear the costSecretary of the solicitation of proxies including the
charges and expenses of brokerage firms and others for forwarding solicitation
material to beneficial owners of shares of the Common Stock of the Company. In
addition to the use of the mails, proxies may be solicited by personal
interview, telephone or telegraph. Additionally, the Company has retained
Georgeson & Co. to solicit proxies in the same manner, at an anticipated cost to
the Company of approximately $12,500.Corporation, Post Office Box 1244,
Charlotte, North Carolina 28201-1244.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company'sCorporation's Articles of Incorporation provide that the Board of
Directors shallis to be divided into three classes, as nearly equal in size as
possible. Each year the directors of one class are elected to serve terms of
three years.
FiveFour persons have been nominated by the Board of Directors for election as
directors to Class III at this annualthe meeting, to serve three-year terms and until their
successors are duly elected and qualified. The Class II nominees are Steve C. Griffith,G. Alex
Bernhardt, Sr., William A. Coley, Max Lennon and Leo E. Linbeck, Jr., Paul H. Henson, W. W. Johnson, Buck Mickel and Russell M. Robinson, II. All of the
Class III nominees are currently Class I directors elected by the
shareholders with the exception of Mr. Robinson, who has served as a Class I
director since his appointment by the Board on January 31, 1995.II directors.
Votes (other than votes withheld) will be cast pursuant to the
accompanying proxy for holders of Common Stock for the election of the nominees listed unless, by reason of
death or other unexpected occurrence, one or more of such nominees shallwill not be
available for election, in whichelection. In that event, it is intended that such votes will be
cast for such substitute nominee or nominees as may be determined by the
persons named in such proxy. The Board of Directors has no reason to believe
that any of the nominees listed will not be available for election as a
director.
2
Directors are elected by a plurality of the votes cast by the holders of
the Common Stock of the Company at a meeting at which a quorum is present.
"Plurality" means that the individuals who receive the largest number of votes
cast are elected as directors up to the maximum number of directors to be chosen
at the meeting. Consequently, any shares not voted (whether by abstention,
broker nonvote or otherwise) have no impact in the election of directors except
to the extent the failure to vote for an individual results in another
individual receiving a larger number of votes.
CLASS I
NOMINEES FOR ELECTION TO THE BOARD OFAS
CLASS II DIRECTORS
(TERM EXPIRING IN 1998)
(Photo of STEVE C. GRIFFITH, JR., VICE CHAIRMAN OF THE BOARD AND GENERAL COUNSEL,
Steve C. DUKE POWER COMPANY
Griffith, Jr.) Mr. Griffith, 61, joined the Company in 1964 as Assistant General Counsel, was named
Secretary and Associate General Counsel in 1971 and was appointed General Counsel in
1975. He was named a Vice President in 1977 and a Senior Vice President in 1982, at
which time he was elected a director. He was named an Executive Vice President in 1991
and assumed his present position in July 1994. Mr. Griffith serves on the Management,
Retirement Plan and Stock Purchase-Savings Program Committees. He is a Fellow of the
American Bar Foundation and a member of the American Bar Association, the North Carolina
State Bar and the South Carolina Bar. He is the immediate past Chair of the American Bar
Association's Section of Public Utility, Communications and Transportation Law. He also
serves on the Board of Governors of the Research Triangle Institute and the boards of
the Charlotte Center for Urban Ministry, the Arts & Science Council and the Mint Museum
of Art.
(Photo of PAUL H. HENSON, CHAIRMAN, KANSAS CITY SOUTHERN INDUSTRIES, INC., HOLDING COMPANY FOR
Paul H. Henson) RAILROAD OPERATIONS AND FINANCIAL SERVICES
Mr. Henson, 69, was elected a director in 1976. He is Chairman of the Corporate
Performance Review Committee and also serves on the Nominating and Compensation
Committees. He became Chairman of the Board of Kansas City Southern Industries, Inc. in
1990 following his retirement as Chairman of Sprint Corporation. He is a director of
Armco Inc., Kansas City Southern2002)
G. ALEX BERNHARDT, SR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
BERNHARDT FURNITURE COMPANY, FURNITURE MANUFACTURER
Photo Mr. Bernhardt, 55, was elected a director in 1991. He is Chairman of
Appears the Corporate Performance Review Committee and serves on the Finance
Here Committee. He has been associated with Bernhardt Furniture Company
of Lenoir, North Carolina, since 1965. He was named President and a
director in 1976 and became Chairman and Chief Executive Officer in
1996. He is a director of Robert Talbott, Inc. and First Union
Corporation. He serves as a trustee of Davidson College and a member
of the North Carolina Governor's Business Council. He is a director
emeritus and past President of the American Furniture Manufacturers
Association.
WILLIAM A. COLEY, GROUP PRESIDENT, DUKE POWER, ELECTRIC OPERATIONS OF
DUKE ENERGY CORPORATION
Photo Mr. Coley, 55, joined the Corporation in 1966 and was elected a
Appears director in 1990. He was named Vice President, Operation, in 1984;
Here Vice President, Central Division, in 1986; Senior Vice President,
Power Delivery, in 1988; Senior Vice President, Customer Group, in
1990; Executive Vice President, Customer Group, in 1991; President,
Associated Enterprises Group, in 1994 and was appointed to his
present position in June 1997. He serves on the Management
Committee. He is a director of Carolina Pad and Paper Company and
the North Carolina Board of SouthTrust Bank. He also serves on the
Boards of Trustees of the Lynnwood Foundation, Queens College, Union
Theological Seminary, Presbyterian Healthcare Systems, United Way of
the Central Carolinas and the Charlotte Chamber of Commerce and is
on the Institutional Advisory Board and the Engineering Advisory
Board of the Georgia Institute of Technology.
MAX LENNON, PRESIDENT, MARS HILL COLLEGE, MARS HILL, NORTH CAROLINA
Photo Dr. Lennon, 58, was elected a director in 1988. He is Chairman of
Appears the Audit Committee and also serves on the Corporate Governance
Here Committee. He assumed his present position as President of Mars Hill
College in 1996, after serving as President of Eastern Foods, Inc.
from 1994 through 1995. He was previously involved in higher
education from 1966 to 1994, his last tenure being at Clemson
University where he served as President for eight years. He is a
director of Delta Woodside Industries, Inc.
LEO E. LINBECK, JR., CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
LINBECK CORPORATION, HOLDING COMPANY OF FOUR CONSTRUCTION-RELATED
FIRMS
Photo Mr. Linbeck, 64, was appointed a director in June 1997 upon the
Appears merger of the Corporation and PanEnergy. He had been a director of
Here PanEnergy since 1986. He is Chairman of the Compensation Committee
and serves on the Audit Committee. He assumed his present position
with Linbeck Corporation in 1990 after serving as Chairman,
President and Chief Executive Officer of Linbeck Construction
Corporation from 1975 to 1990. He serves as a director of Daniel
Industries, Inc. and as a director and trustee of 33 investment
companies managed by John Hancock Advisers, Inc.
3
ROBERT J. BROWN, CHAIRMAN AND PRESIDENT, B&C ASSOCIATES, INC.,
MARKETING RESEARCH AND PUBLIC RELATIONS FIRM
Photo Mr. Brown, 64, was elected a director in 1994 and serves on the
Appears Audit and Corporate Performance Review Committees. He founded B&C
Here Associates, Inc., High Point, North Carolina, in 1960, served as its
President from 1960 until 1968 and has been its Chairman and
President since 1973. From 1968 until 1973, Mr. Brown was a Special
Assistant to the President of the United States, with oversight
responsibility for community relations, civil rights, emergency
preparedness and day care. He is a director of First Union
Corporation, Sonoco Products Company, Republic Industries, Inc. and
North Carolina Citizens for Business and Industry. He is a Class III
director with a term expiring in 2000.
ANN MAYNARD GRAY, FORMER VICE PRESIDENT, ABC, INC. AND FORMER
PRESIDENT, DIVERSIFIED PUBLISHING GROUP OF ABC, INC., TELEVISION,
RADIO AND PUBLISHING
Photo Ms. Gray, 53, was appointed a director in June 1997 upon the merger
Appears of the Corporation and PanEnergy. She had been a director of
Here PanEnergy since 1994. She serves on the Audit and Corporate
Performance Review Committees. She was President, Diversified
Publishing Group of ABC, Inc. from 1991 until 1997, and was a
Corporate Vice President of ABC, Inc. and its predecessors from 1979
to 1998. She is a director of Cyprus Amax Minerals Company. She is a
Class I director with a term expiring in 2001.
WILLIAM T. ESREY, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, SPRINT
CORPORATION, A DIVERSIFIED TELECOMMUNICATIONS HOLDING COMPANY
Photo Mr. Esrey, 59, was appointed a director in June 1997 upon the merger
Appears of the Corporation and PanEnergy. He had been a director of
Here PanEnergy since 1985. He serves on the Compensation and Corporate
Governance Committees. He has served as Chairman of Sprint
Corporation since 1990 and as its Chief Executive Officer since
1985. He was President of Sprint Corporation from 1985 to 1996. He
is a director of Sprint Corporation, General Mills, Inc., Everen
Capital Corporation, Exxon Corporation and Earthlink Network, Inc.
He is a Class III director with a term expiring in 2000.
DENNIS R. HENDRIX, RETIRED CHAIRMAN OF THE BOARD, PANENERGY CORP
Photo Mr. Hendrix, 59, was appointed a director in June 1997 upon the
Appears merger of the Corporation and PanEnergy. He had been a director of
Here PanEnergy since 1990. He serves on the Corporate Performance Review
and Corporate Governance Committees. He was Chairman of the Board of
PanEnergy from 1990 to 1997; Chief Executive Officer of PanEnergy
from 1990 to 1995; and President of PanEnergy from 1990 to 1993. He
served as a director of Panhandle Eastern Pipe Line Company ("PEPL")
and Texas Eastern Transmission Corporation ("TETCO") from 1990 to
1997; Chairman of the Board of PEPL and TETCO from 1990 to 1994 and
President of TETCO from 1990 to 1994. He is a director of Allied
Waste Industries, Inc., National Power, PLC, Newfield Exploration
Company and Pool Energy Services Co. He is a Class I director with a
term expiring in 2001.
4
HAROLD S. HOOK, CONSULTANT, RETIRED CHAIRMAN AND CHIEF EXECUTIVE
OFFICER OF AMERICAN GENERAL CORPORATION, DIVERSIFIED FINANCIAL
SERVICES
Photo Mr. Hook, 67, was appointed a director in June 1997 upon the merger
Appears of the Corporation and PanEnergy. He had been a director of
Here PanEnergy since 1978. He serves on the Corporate Performance Review
and Finance Committees. Mr. Hook retired from American General
Corporation in 1997 after more than 18 years as Chairman and Chief
Executive Officer. He serves as a director of Chase Manhattan
Corporation, The Chase Manhattan Bank, Cooper Industries, Inc. and
Sprint Corporation.
2He is a Class I director with a term expiring in
2001.
GEORGE DEAN JOHNSON, JR., PRESIDENT AND CHIEF EXECUTIVE OFFICER,
EXTENDED STAY AMERICA, DEVELOPMENT, OWNERSHIP AND MANAGEMENT OF
EXTENDED-STAY LODGING FACILITIES
Photo Mr. Johnson, 56, was elected a director in 1986. He is Chairman of
Appears the Finance Committee and also serves on the Compensation Committee.
Here Mr. Johnson began his legal career in 1967 when he joined Johnson,
Smith, Hibbard and Wildman as an attorney. He was General Partner of
WJB Video, a Blockbuster Video franchisee, from 1987 to 1993, and
served as President of the Domestic Consumer Division of Blockbuster
Entertainment Corporation from 1993 until 1995. He was a co-founder
of Extended Stay America and has served as its President and Chief
Executive Officer since 1995. He is Chairman of Johnson Development
Associates, Inc. and is a director of Florida Panthers Holdings,
Inc., Extended Stay America and Republic Industries, Inc. He also
serves on the Board of Trustees of Converse College. He is a Class
III director with a term expiring in 2000.
JAMES G. MARTIN, PH.D., VICE PRESIDENT, RESEARCH, CAROLINAS
HEALTHCARE SYSTEM
Photo Mr. Martin, 63, was elected a director in 1994. He is Chairman of
Appears the Corporate Governance Committee and also serves on the
Here Compensation Committee. Since January 1993, he has been Chairman of
the Research Development Board of the Carolinas HealthCare System
located at Carolinas Medical Center, Charlotte, North Carolina. He
was named to his present position in 1995. He served as Governor of
the State of North Carolina from 1985 to 1993 and was a member of
the United States House of Representatives, representing the Ninth
District of North Carolina, from 1973 to 1984. Mr. Martin is
currently a director of J. A. Jones, Inc., Palomar Medical
Technologies, Inc., Entropy, Inc., Reprogenesis, Inc. and Family
Dollar Stores, Inc. He is Chairman of the Global TransPark
Foundation, Inc. and a Trustee of Davidson College, where he was on
the Chemistry Department faculty from 1960 to 1972. He is a Class
III director with a term expiring in 2000.
RICHARD B. PRIORY, CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, DUKE ENERGY CORPORATION
Photo Mr. Priory, 52, became Chairman of the Board and Chief Executive
Appears Officer in June 1997 upon the merger of the Corporation and
Here PanEnergy, and became President in November 1998. He was elected a
director in 1990. He joined the Corporation in 1976 as a Design
Engineer; was named Vice President, Design Engineering, in 1984;
Senior Vice President, Generation and Information Services, in 1988;
Executive Vice President, Power Generation Group, in 1991 and
President and Chief Operating Officer in 1994. He is Chairman of the
Management Committee and serves on the Finance and Corporate
Governance Committees. He is a director of Dana Corporation and J.
A. Jones Applied Research Corp. He serves on the boards of the
Edison Electric Institute, the Association of Edison Illuminating
Companies and the Institute of Nuclear Power Operations. He is a
member of The National Petroleum Council and The Business
Roundtable. Mr. Priory is also a member of the National Academy of
Engineering. He is a Class III director with a term expiring in
2000.
5
(Photo of W. W. JOHNSON, CHAIRMAN OF THE EXECUTIVE COMMITTEE, NATIONSBANK CORPORATION
W.W. Johnson) Mr. Johnson, 64, was elected a director in 1984. He is Chairman of the Nominating
Committee and also serves on the Finance Committee. He is Chairman of the Executive
Committee of NationsBank Corporation. Mr. Johnson was, since 1980, Chairman of the Board
and Chief Executive Officer of Bankers Trust of South Carolina, which merged with
NationsBank Corporation in January 1986. He is a director of NationsBank Corporation,
ALLTEL Corporation and The Liberty Corporation.
(Photo of BUCK MICKEL, RETIRED VICE CHAIRMAN, FLUOR CORPORATION
Buck Mickel) Mr. Mickel, 69, was elected a director in 1976. He is Chairman of the Compensation
Committee and also serves on the Corporate Performance Review Committee. He had been
associated with Daniel International since 1947 and served as its Chairman from 1974 to
1987. He served as President and later Vice Chairman of Fluor Corporation from 1977
until his retirement in 1987. He is a director of Emergent Group, Fluor Corporation,
Monsanto Company, The Liberty Corporation, NationsBank Corporation, Delta Woodside
Industries, Inc., RSI Holdings, Inc., Textile Hall Corporation and Insignia Financial
Group, Inc. He is a life trustee of Clemson University and Converse College.
(Photo of RUSSELL M. ROBINSON, II, ATTORNEY, ROBINSON, BRADSHAW & HINSON, P.A.
Russell M. Mr. Robinson, 63, was appointed a director by the Board of Directors on January 31,
Robinson, II) 1995, and serves on the Audit Committee.RUSSELL M. ROBINSON, II, ATTORNEY, ROBINSON BRADSHAW & HINSON, P.A.
Photo Mr. Robinson, 67, was elected a director in 1995 and serves on the
Appears Audit and Corporate Performance Review Committees. He has been
Here engaged in the practice of law since 1956, and is the author of
ROBINSON ON NORTH CAROLINA CORPORATION LAW. He is a director of
Cadmus Communications Corporation and Caraustar Industries, Inc. and
also serves as a member of the American Law Institute and a Fellow
of the American Bar Foundation. He is Chairman of the Board of Trustees of the University of North Carolina
at Charlotte, a member of the Board of
Visitors of Duke University Law School, and a
Trustee of The Duke Endowment.
3
DIRECTORS CONTINUING IN OFFICE
(Photo of G. ALEX BERNHARDT, PRESIDENT AND DIRECTOR, BERNHARDT FURNITURE COMPANY, FURNITURE
G. Alex Bernhardt) MANUFACTURERS
Mr. Bernhardt, 51, was elected a director in 1991 and serves on the Corporate
Performance Review Committee. He has been associated with Bernhardt Furniture Company of
Lenoir, North Carolina, since 1965. He was named to his present position in 1976. He is
a director of Robert Talbott, Inc. and First Union Corporation. He serves as a trustee of Davidson College and a member of the North Carolina Governor's Business Council. He
is a director emeritus of the American Furniture Manufacturers Association. He is a
Class III director with a term expiring in 1997.
(Photo of CRANDALL C. BOWLES, EXECUTIVE VICE PRESIDENT, SPRINGS INDUSTRIES, INC., HOME
Crandall C. Bowles) FURNISHINGS, FINISHED FABRICS AND INDUSTRIAL TEXTILES COMPANY
Mrs. Bowles, 47, was elected a director in 1988 and serves on the Compensation and
Finance Committees. Prior to attaining her current position in 1992, she served as
President of The Springs Company for ten years. She is a director of Springs Industries,
Inc. and Wachovia Corporation. She is a Class III director with a term expiring in 1997.
(Photo of ROBERT J. BROWN, CHAIRMAN AND PRESIDENT, B&C ASSOCIATES, INC., MARKETING RESEARCH AND
Robert J. Brown) PUBLIC RELATIONS FIRM
Mr. Brown, 60, was elected a director in 1994 and serves on the Audit Committee. He
founded B&C Associates, Inc., High Point, North Carolina, in 1960 and served as its
President from 1960 until 1968 and its Chairman and President from 1973 to the present.
From 1968 until 1973, Mr. Brown was a Special Assistant to the President of the United
States, with oversight responsibility for community relations, civil rights, emergency
preparedness and day care. He is a director of First Union Corporation, Pacific National
Financial Group, Sonoco Products Company and North Carolina Citizens for Business and
Industry. He is a Class III director with a term expiring in 1997.
4
(Photo of W. A. COLEY, PRESIDENT, ASSOCIATED ENTERPRISES GROUP, DUKE POWER COMPANY
W. A. Coley) Mr. Coley, 51, joined the Company in 1966 and was elected a director in 1990. He was
named Vice President, Operation, in 1984; Vice President, Central Division, in 1986;
Senior Vice President, Power Delivery, in 1988; Senior Vice President, Customer Group,
in 1990; Executive Vice President, Customer Group, in 1991 and was appointed to his
present position in July 1994. He serves on the Management, Corporate Performance
Review, Retirement Plan and Stock Purchase-Savings Program Committees. He is a member of
the Board of Trustees of Charlotte Latin School and serves on the Public Library Board.
He is a director of the Charlotte Symphony and Carolina Pad and Paper Company. He is a
Class II Director with a term expiring in 1996.
(Photo of W. H. GRIGG, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, DUKE POWER COMPANY
W. H. Grigg) Mr. Grigg, 62, joined the Company in 1963, was named Vice President and General Counsel
in 1971 and became a director in 1972. He was elected Senior Vice President, Legal and
Finance, in 1975; Executive Vice President, Finance and Administration, in 1982;
Executive Vice President, Customer Group, in 1988; and Vice Chairman of the Board in
1991. He was named Chairman of the Board, President and Chief Executive Officer,
effective April 28, 1994, and Chairman of the Board and Chief Executive Officer,
effective July 27, 1994. He serves on the Nominating, Finance, Retirement Plan and Stock
Purchase-Savings Program Committees and as Chairman of the Management Committee. He is a
director of Hatteras Income Securities, Inc., Nations Fund, Inc., the Research Triangle
Foundation and the Associated Electric and Gas Insurers, Ltd. and is a trustee of
Johnson C. Smith University. He is a Class II director with a term expiring in 1996.
(Photo of GEORGE DEAN JOHNSON, JR., PRESIDENT, DOMESTIC CONSUMER DIVISION, BLOCKBUSTER
George Dean ENTERTAINMENT CORPORATION
Johnson, Jr.) Mr. Johnson, 52, was elected a director in 1986. He is Chairman of the Finance Committee
and also serves on the Nominating Committee. Mr. Johnson began his legal career in 1967
when he joined Johnson, Smith, Hibbard and Wildman. He was General Partner of WJB Video,
a Blockbuster Video franchisee, from 1987 to 1993, and has served as President of the
Domestic Consumer Division of Blockbuster Entertainment Corporation since 1993. He is
also Chairman of Johnson Development Associates, Inc. He is a director of Viacom, Inc.,
Discovery Zone and William Barnet & Son, Inc. He also serves as Chairman of the Board of
Trustees of Converse College. He is a Class III director with a term expiring in 1997.
5
(Photo of JAMES V. JOHNSON, RETIRED VICE CHAIRMAN AND DIRECTOR OF PUBLIC AFFAIRS, COCA-COLA
James V. Johnson) BOTTLING CO. CONSOLIDATED.
Mr. Johnson, 71, a director since 1982, serves on the Audit Committee. He was associated
with Coca-Cola Bottling Co. Consolidated or its affiliates from 1947 until his
retirement on December 31, 1987. He served as President and Chief Executive Officer from
1969 until 1980 when he became Vice Chairman and Director of Public Affairs. He was a
member of the State Senate of North Carolina from 1960 to 1966 and Chairman of the
Senate Finance Committee in 1963 and 1964. He is a Class II director with a term
expiring in 1996.
(Photo of MAX LENNON, PRESIDENT, EASTERN FOODS, INC.
Max Lennon) Dr. Lennon, 54, was elected a director in 1988 and is Chairman of the Audit Committee.
Prior to assuming his present position in August 1994, he was involved in higher
education from 1966 to 1994, his last tenure being at Clemson University where he served
as President for eight years. He is a director of First Union Corporation and Delta
Woodside Industries, Inc. He is a Class II director with a term expiring in 1996.
(Photo of JAMES G. MARTIN, CHAIRMAN, RESEARCH DEVELOPMENT BOARD, CHARLOTTE-MECKLENBURG HOSPITAL
James G. Martin) AUTHORITY
Mr. Martin, 59, was elected a director in 1994 and serves on the Corporate Performance
Review Committee. Since January 1993, he has been Chairman of the Research Development
Board of the Charlotte-Mecklenburg Hospital Authority, located at Carolinas Medical
Center, Charlotte, North Carolina. He served as Governor of the State of North Carolina
from 1985 to 1993 and was a member of the United States House of Representatives,
representing the Ninth District of North Carolina, from 1972 until 1984. Mr. Martin was
a Mecklenburg County Commissioner from 1966 to 1972, and an Associate Professor of
Chemistry at Davidson College, Davidson, North Carolina, from 1960 to 1972. He is
currently a director of J. A. Jones, Inc., Carolina Freight Corporation and Meadowbrook
Healthcare Services, Inc. He is Chairman of the Global TransPark Foundation, Inc. and a
member of the University of North Carolina Board of Governors. He is a Class III
director with a term expiring in 1997.
6
(Photo of R. B. PRIORY, PRESIDENT AND CHIEF OPERATING OFFICER, DUKE POWER COMPANY
R.B. Priory) Mr. Priory, 48, joined the Company in 1976 as a Design Engineer and was elected a
director in 1990. He was named Vice President, Design Engineering, in 1984; Senior Vice
President, Generation and Information Services, in 1988; Executive Vice President, Power
Generation Group, in 1991 and was appointed to his present position in July 1994. He
serves on the Management, Finance, Retirement Plan and Stock Purchase-Savings Program
Committees. He is President of Claiborne Energy Services, Inc. and is a director of
J. A. Jones Applied Research Corp. He serves on the boards of the Charlotte-Mecklenburg
Education Foundation, the North Carolina Chapter of The Nature Conservancy and the North
Carolina State University Engineering Foundation. He is also a member of the Board of
Visitors of the University of North Carolina at Charlotte and a member of the National
Academy of Engineering. He is a Class III director with a term expiring in 1997.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 3, 1995, The Duke Endowment, 100 North Tryon Street, Charlotte,
N.C. 28202, beneficially owned 10,070,200 shares, or approximately 5%, of the
outstanding Common Stock of the Company. The Duke Endowment is a common law
trust administered by fifteen trustees, who also constitute all of the trustees
of the Doris Duke Trust, 1515 Mockingbird Lane, Charlotte, N.C. 28209, another
common law trust, which, as of March 3, 1995, beneficially owned 3,906,396
shares, or approximately 2%, of the outstanding Common Stock of the Company.
Russell M. Robinson, II, a director of the Company, is a trustee of both The Duke
Endowment and Chairman of The Foundation of the Doris Duke Trust.
SetUniversity of North
Carolina at Charlotte, Inc. He is a Class I director with a term
expiring in 2001.
SECURITY OWNERSHIP OF NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth below is the number of sharesbeneficial ownership of Common Stock of the Company
beneficially owned by
the directors, the Chief Executive Officer, the othereach director, each nominee for director, each executive officers namedofficer whose name
appears in the Summary Compensation Table below ("Named Executive Officer") and
theby directors and executive officers of the Corporation as a group, on February 1, 1995:as of
December 31, 1998. In addition to the Common Stock, the Corporation also has
outstanding nine series of Preferred Stock and four series of Preferred Stock
A. As of December 31, 1998, no director, nominee for director or executive
officer of the Corporation was the beneficial owner of any shares of the
Corporation's Preferred Stock or Preferred Stock A.
SHARES BENEFICIALLY RIGHT TO TOTAL SHARES
NAME SHARESOF INDIVIDUAL OR IDENTITY OF GROUP OWNED (1) ACQUIRE (2) BENEFICIALLY OWNED
- -------------------------------------------------- --------------------- ----------- -------------------
Paul M. Anderson(3)............................ 215,133 106,800 321,933
G. Alex Bernhardt, 2,064(1)
Crandall C. Bowles 5,067(1)Sr.(4)...................... 5,968 5,968
Richard W. Blackburn(3)........................ 4,035 4,035
Robert J. Brown 352(1)
W.Brown(4)............................. 2,732 2,732
William A. Coley 15,909(2)(3)
Steve C. Griffith, Jr. 40,624(2)
W. H. Grigg 37,855(2)
Paul H. Henson 2,805(1).............................. 19,750 19,750
William T. Esrey(4)............................ 6,151 13,574 19,725
Fred J. Fowler(3).............................. 34,402 54,304 88,706
Ann Maynard Gray(4)............................ 3,603 8,354 11,957
Dennis R. Hendrix(4)........................... 237,605 237,605
Harold S. Hook(4).............................. 11,693 5,220 16,913
George Dean Johnson, Jr. 4,232(1)
James V. Johnson 5,386(1)
W. W. Johnson 11,648(1)
NAME SHARES
W. S. Lee 112,570(2)(4)(4,6).................. 8,805 8,805
Max Lennon 1,419(1)(4)................................. 6,123 6,123
Leo E. Linbeck, Jr.(4)......................... 5,942 13,574 19,516
James G. Martin 202(1)
Buck Mickel 67,554(1)(5)Martin(4)............................. 3,115 3,115
Richard J. Osborne 8,248(2)
R.Osborne(3).......................... 7,586 7,586
Richard B. Priory 13,263(2)Priory(3)........................... 12,138 12,138
Russell M. Robinson, II 13,977,120(1)(6)II(4,7)................... 8,909,725 8,909,725
Directors and executive officers as a group
(18(19 persons) 14,308,281(1)(2)(3)(4)(5)(6)(3,4,5,6,7)....................... 9,498,812 204,046 9,702,858
(1)- ---------
1. Individuals may disclaim beneficial ownership of certain shares, as
indicated in a footnote. Unless otherwise indicated in a footnote, the
named individual or family member possesses sole voting power and sole
investment power with respect to shares of Common Stock shown as
beneficially owned by such person.
2. Represents shares which the individual has a right to acquire within 60 days
after December 31, 1998 through exercise of stock options.
3. Includes full shares allocated to the participant's accounts under employee
benefit plans as of December 31, 1998.
4. Includes full shares held in trust under the arrangement for directors
described under the caption "Executive Compensation -- Directors' Fees."Compensation of Directors."
(2)5. Includes full shares credited to the participant's account under the Stock
Purchase-Savings Program for Employees, as of December 31, 1994.
7
(3) Includes 1,1001,411 shares owned by Mr. Coley's wife and 233 shares held as
custodian for his son. Beneficial ownership of all such shares is
disclaimed.
(4) Includes 49,960 shares held by a Grantor Retained Income Trust established
by W. S. Lee and 12,500 shares attributable to him as beneficiary of a trust
as well as 855 shares held by his wife, beneficial ownership of which is
disclaimed. Mr. Lee retired from his position as Chairman, President and
Chief Executive Officer of the Company on April 28, 1994.
(5) Includes 60,000 shares owned by The Daniel Foundation of South Carolina, a
charitable foundation located in Greenville, South Carolina, of which Mr.
Mickel is a trustee.wife. Beneficial ownership of
such shares is expressly
disclaimed.
(6)6. Includes 10,070,2002,609 shares held in a limited partnership controlled by Mr.
Johnson.
7. Includes 7,604,721 shares owned by The Duke Endowment and 3,906,3961,302,132 shares
owned by the Doris Duke Trust. Mr. Robinson, who is a trustee of each of
such entities, with shared voting and investment power, expressly disclaims
beneficial ownership of these shares.the shares owned by such trusts.
6
No person listed in the table beneficially owned more than 1% of the
Common Stock of the Company outstanding on February 1, 1995December 31, 1998, with the exception of Mr.Russell M.
Robinson, II, who beneficially owned 6.8%8,909,725 shares of such stock on that
date largely because of the attribution to him of the7,604,721 shares owned by The
Duke Endowment and 1,302,132 shares owned by the Doris Duke Trust.Trust, shares he is
deemed to beneficially own in his capacities as a trustee of The Duke Endowment
and a trustee of the Doris Duke Trust, respectively. The directors and
executive officers as a group beneficially owned 7.0%less than 1% of such stock
(not including the shares owned by such trusts) on that date.
InThe following table shows the number of units of limited partnership
interests in TEPPCO Partners, L.P., a seriespublicly traded master limited
partnership of transactions between May 1994which Texas Eastern Products Pipeline Company, an indirect
wholly owned subsidiary of the Corporation, is the general partner, which were
beneficially owned on December 31, 1998 by a director or nominee for director
of the Corporation, a Named Executive Officer, and December 1994,by the Company
purchased 2,000,000 shares of its Common Stock from The Duke Endowment at market
prices, for the accounts of participants in the Company's Stock Purchase-Savings
Program for Employees, the Employee Stock Ownership Plandirectors and the Stock Purchase
and Dividend Reinvestment Plan.
The
executive officers and directors of the Company,Corporation as a group. None of such persons had the
right to acquire units within 60 days after December 31, 1998. As of December
31, 1998, the number of units beneficially owned by directors and any beneficial
owners of greater than ten percent of a registered classexecutive
officers of the Company's equity
securities, are required under Section 16(a)Corporation as a group did not exceed 1% of the Securities Exchange Act of
1934 to file reports of initial ownership and changes in ownership of such
securities with the Securities and Exchange Commission and the New York Stock
Exchange. During 1994, the Initial Statement of Beneficial Ownership (Form 3)
with respect to the Company's Common Stock of Dr. John Hope Franklin, a Trustee
of The Duke Endowment and the Doris Duke Trust, was inadvertently filed on an
untimely basis. Also during 1994, the Initial Statement of Beneficial Ownership
(Form 3) with respect to the Company's Common Stock of Jeffrey L. Boyer was
inadvertently filed late following his appointment as Controller.
8
then
outstanding units.
NAME OF INDIVIDUAL OR UNITS BENEFICIALLY
IDENTITY OF GROUP OWNED
- ----------------------------------------------- -------------------
Paul M. Anderson 4,000
Dennis R. Hendrix 29,000
Harold S. Hook 4,000
Richard J. Osborne 1,000
Directors and executive officers as a group 38,900
EXECUTIVE COMPENSATION
BelowSet forth below is information regarding compensation to the Chief
Executive Officer, the other four most highly compensated executive officers of
the Corporation who were serving as executive officers at the end of 1998, and
one additional individual (Paul M. Anderson) for whom disclosure would have
been required as one of those executive officers but for the former Chief
Executive Officer,fact that he was
not serving as an executive officer at the end of 1998, for services to the
CompanyCorporation for the years ended December 31, 1994, 19931998, 1997 and 1992.1996.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION($)
- ----------------------------------- ------ ------------ ----------- -----------------
R. B. Priory 1998 810,000 891,000 34,011
Chairman of the Board, President 1997 671,933 297,339 59,652
and Chief Executive Officer 1996 476,509 107,215 14,144
P. M. Anderson (1) 1998 612,500 551,280 19,932
President and 1997 373,864 225,000 5,257
Chief Operating Officer
W. A. Coley 1998 380,676 159,884 16,941
Group President 1997 387,392 190,407 14,302
Duke Power Company 1996 378,947 300,723 43,734
F. J. Fowler (2) 1998 360,000 237,600 2,131
Group President 1997 190,227 185,040
Energy Transmission
R. W. Blackburn (3) 1998 360,000 237,600 2,123
Executive Vice President, 1997 53,077
General Counsel & Secretary
R. J. Osborne 1998 324,000 213,840 9,987
Executive Vice President 1997 299,322 72,085 36,284
and Chief Financial Officer 1996 253,200 47,931 3,448
LONG TERM COMPENSATION
-----------------------------------------------
AWARDS PAYOUTS
---------------------------------- ------------
RESTRICTED SECURITIES
STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION (1) YEAR SALARY($AWARD(S) ($) BONUS($) (2) COMPENSATION($)(4) OPTIONS/SARS(#) PAYOUTS($) COMPENSATION($) (3)(5)
- ----------------------------------- ---------------- ----------------- ------------ --------------------
W. H. Grigg 1994 558,500 103,496 74,292 180,019 138,030R. B. Priory 500,000 1,034,203
Chairman of the Board, President 397,013 99,165
and 1993 411,500 111,347 6,987 87,267 Chief Executive Officer 1992 384,000 138,350 3,736 87,237
S. C. Griffith, Jr. 1994 342,850 63,078 16,323 135,081 73,618
Vice Chairman and 1993 322,015 88,880 7,034 60,737
General Counsel 1992 300,180 108,329 2,603 52,819
R. B. Priory 1994 348,425 63,078 8,110 118,125 14,299124,362 31,254
P. M. Anderson (1) 400,000 1,254,052
President and 698,475
Chief 1993 287,250 78,885 1,172 11,224 Operating Officer 1992 262,500 94,814 383 14,746
W. A. Coley 1994 339,975 63,078 13,069 118,125 42,478200,000 221,245
Group President Associated 1993 287,250 79,057 4,710 33,018
Enterprises281,959 95,180
Duke Power Company 124,362 53,594
F. J. Fowler (2) 200,000 47,056
Group 1992 262,500 97,518 1,278 28,207President 27,665
Energy Transmission
R. W. Blackburn (3) 165,750 150,000 73,166
Executive Vice President,
General Counsel & Secretary
R. J. Osborne 1994 225,735 28,606 1,572 65,453 7,367
Senior100,000 168,907
Executive Vice President 171,774 32,516
and 1993 187,520 43,994 95 9,603 Chief Financial Officer 1992 174,540 49,634 30 8,775
W. S. Lee 1994 581,668 111,870 87,965 328,112 172,168
Chairman, President and 1993 795,833 244,539 18,807 199,653
Chief Executive Officer 1992 750,000 548,750 11,546 254,289
(Retired)61,272 15,932
(1)- ---------
1. Mr. Grigg was promoted to Chairman, President and Chief Executive Officer
effective April 28, 1994, and became Chairman and Chief Executive Officer in
July 1994 upon the promotion of Mr. Priory toAnderson resigned as President and Chief Operating Officer. Messrs. Griffith, Priory, ColeyOfficer on November
15, 1998. Compensation amounts shown for Mr. Anderson for 1997 relate to
the period from June 18, 1997 to December 31, 1997.
2. Compensation amounts shown for Mr. Fowler for 1997 relate to the period from
June 18, 1997 to December 31, 1997.
7
3. Mr. Blackburn joined the Corporation on November 10, 1997. Compensation
amounts shown for Mr. Blackburn for 1997 relate to the period from November
10, 1997 to December 31, 1997.
4. Mr. Blackburn's aggregate restricted stock holdings at December 31, 1998,
were 3,000 shares with a value on that date of $192,188. Dividends are paid
on such shares. One-third of the restricted stock award to Mr. Blackburn
(1,000 shares) vested on January 4, 1999. The remainder vests in two
additional installments of 1,000 shares each on January 3, 2000 and Osborne were promoted to their
current positions in July 1994. Mr. Lee retired as Chairman, President and
ChiefJanuary
2, 2001. No other Named Executive Officer held restricted stock on April 28, 1994, and retired as a Company employee
on his 65th birthday in June 1994.
(2) Bonus amounts listed for 1992 and 1993 consist of the sum of payments made
to each of the listed officers under the Executive Long-Term Incentive Plan
and the Employee Incentive Plan. These amounts were previously reported
under "All Other Compensation" for each of the officers listed except Mr.
Osborne, whose compensation was not required to be reported in previous
years. Bonus amounts listed for 1994 consist of compensation under the
Executive Short-Term Incentive Plan.
(3)December
31, 1998.
5. All Other Compensation Column includes the following for 1994:
(i) Amounts contributed to1998:
a. Matching contributions under the Stock Purchase-Savings Program for
EmployeesDuke Energy Retirement Savings Plan as
follows: W. H. Grigg, $9,240; S. C. Griffith, Jr.,
$6,619; R. B. Priory, $7,433;$8,333; W. A. Coley, $6,612;$7,990; R. J. Osborne,
$6,486; and$7,200; R. W. S. Lee, $8,033.
9
(ii) Amounts earned by foregoing vacation pursuant to the Vacation Banking
Plan as follows: W. H. Grigg, $34,615; S. C. Griffith, Jr., $20,305;
R. B. Priory, $0; W. A. Coley, $20,305; R. J. Osborne, $0; and W. S.
Lee, $0.
(iii) Amounts accruedBlackburn, $2,138.
b. Matching contribution credits under a make-whole arrangement under the
Supplementary Defined ContributionDuke Energy Corporation Executive Savings Plan designed to maintain the
overall integrity of the employee benefit plans as follows: W. H.
Grigg, $17,286; S. C. Griffith, Jr., $9,292; R. B. Priory,
$3,419;$77,457; W. A. Coley, $9,538;$27,789; R. J. Osborne, $481;$15,970; R. W. Blackburn,
$9,108.
c. Matching contributions under the Employees' Savings Plan of PanEnergy
Corp and W. S. Lee, $10,244.
(iv)Participating Affiliates as follows: P. M. Anderson, $10,560;
F. J. Fowler, $10,560.
d. Matching contribution credits under a make-whole arrangement under the
PanEnergy Corp Key Executive Deferred Compensation Plan designed to
maintain the overall integrity of employee benefit plans as follows: P.
M. Anderson, $95,936; F. J. Fowler, $25,413.
e. Above-market interest earned on account balances in the Compensation
DeferralDuke Energy
Corporation Executive Savings Plan, Supplemental Account as follows; W. H. Grigg, $39,297; S. C. Griffith, Jr.,
$25,118;follows: R.
B. Priory, $575;$8,132; W. A. Coley, $681;$10,805; R. J. Osborne, $400;
and$3,656; R. W.
S. Lee, $61,162.
(v)Blackburn, $ 0.
f. Above-market interest earned on account balances in the PanEnergy Corp
Key Executive Deferred Compensation Plan as follows: P. M. Anderson,
$8,558; F. J. Fowler, $16.
g. Economic value of life insurance coverage provided under the Life
Insurance Planlife insurance
plans as follows: W. H. Grigg, $22,352; S. C. Griffith, Jr.,
$7,647; R. B. Priory, $915;$16,323; P. M. Anderson, $3,276;
W. A. Coley, $2,338;$6,408; F. J. Fowler, $8,006; R. J. Osborne, $0;
and$2,081;
R. W. S. Lee, $55,199.
(vi)Blackburn, $ 0.
h. The cost to the CompanyCorporation of supplemental life insurance coverage
under the Supplemental Insurance Plan as follows: W. H. Grigg, $14,274;
S. C. Griffith, Jr., $4,087; R. B. Priory, $1,880;$10,851;
W. A. Coley, $2,891;$3,997; R. J. Osborne, $0; andR. W. S. Lee, $33,478.
(vii)Blackburn, $ 0.
i. The economic benefit of split-dollar life insurance coverage pursuant
to the Estate Conservation Plan as follows: W. H. Grigg, $966; S. C.
Griffith, Jr., $550; R. B. Priory, $77;$289; W. A.
Coley, $113;$347; R. J. Osborne, $0; R. W. Blackburn, $ 0.
j. Pursuant to the employment agreement with P. M. Anderson described in
"Employment Contracts and Termination of Employment and
Change-in-Control Arrangements" below, $83,334 in deferred compensation
is accrued monthly for a two-year period beginning in June 1997. In
1998, $1,000,008 was deferred under such agreement.
k. Cash payments to certain key employees whose incentives were not
adjusted to market-competitive levels between June 18, 1997 and December
31, 1997 to reflect significant changes in responsibilities as follows:
R. B. Priory, $910,000; W. S. Lee, $4,052.
LONG-TERM INCENTIVE PLANA. Coley, $162,000; R. J. Osborne, $140,000.
See "Compensation Committee Report on Executive Compensation -- AWARDS IN LAST FISCAL YEAROther
Compensation."
8
1998 OPTION GRANTS
The following table sets forth estimated future payoutsoptions granted to the executives
namedNamed Executive
Officers during 1998, along with the present value of such options on the date
they were granted, calculated as described in the Summary Compensation Table under the Executive Long-Term Incentive
Plan for the performance period beginning in 1994. Awards are based upon the
Company's total shareholder return during the performance period as compared
with that of the companies comprising the S&P Electric Utility Index. The table
assumes that total shareholder return will be attained at the threshold (or
minimum) performance level. The actual award, however, will be $0 if total
shareholder return is less than the 33rd percentile as comparedfootnote to the companies
comprising the S&P Electric Utility Index. Payout of the threshold, target and
maximum amounts will be made for performance at or above the 33rd, 55th and 75th
percentiles, respectively.table.
ESTIMATED FUTURE PAYOUTS
PERFORMANCEGRANT DATE
INDIVIDUAL GRANTS VALUE
- --------------------------------------------------------------------------------- --------------
NUMBER
OF SHARES % OF TOTAL EXERCISE
UNDERLYING OPTIONS/SARS OR OTHER PERIOD UNTIL UNDER NON-STOCK PRICE-BASED PLANBASE GRANT DATE
OPTIONS/SARS GRANTED TO PRICE EXPIRATION PRESENT
NAME MATURATION OR PAYOUT THRESHOLD($GRANTED (1) (#) EMPLOYEES ($/SH) DATE VALUE (2) ($)
TARGET($) MAXIMUM($)- ------------------------ --------------- -------------- ------------ ------------ ---------------
Richard B. Priory 500,000 14.1 58.9375 04/16/2008 4,495,000
Paul M. Anderson 400,000 11.3 58.9375 04/16/2008 3,596,000
William A. Coley 200,000 5.6 58.9375 04/16/2008 1,798,000
Fred J. Fowler 200,000 5.6 58.9375 04/16/2008 1,798,000
Richard W. H. GriggBlackburn 150,000 4.2 58.9375 04/16/2008 1,348,500
Richard J. Osborne 100,000 2.8 58.9375 04/16/2008 899,000
- ---------
1. The Corporation has not granted any SARs to the Named Executive Officers or
any other persons.
2. Based on the Black-Scholes option valuation model. The key input variables
used in valuing the options were: risk-free interest rate, 5.8%; dividend
yield, 4.23%; stock price volatility, .151; option term, ten years. The
volatility variable reflected weekly stock price trading data from June 18,
1997 (the effective date of the merger between the Corporation and
PanEnergy Corp) through April 16, 1998 (the option grant date). An
adjustment was made for risk of forfeiture during the vesting period. The
actual value, if any, that a grantee may realize will depend on the excess
of the stock price over the exercise price on the date the option is
exercised, so that there is no assurance the value realized will be at or
near the value estimated by the Black-Scholes model.
EXERCISES OF STOCK OPTIONS IN 1998 AND YEAR-END OPTION VALUES
The following table shows aggregate exercises of options during 1998 by
the Named Executive Officers, and the aggregate year-end value of the
unexercised options held by them. The value assigned to each unexercised,
"in-the-money" stock option is based on the positive spread between the
exercise price of such stock option and the fair market value ("FMV") of the
Common Stock on December 31, 1998, which was $64.25. The FMV is the average of
the high and low prices of a share of Common Stock on that date as reported on
the New York Stock Exchange Composite Transactions Tape. The ultimate value of
a stock option will be dependent on the market value of the underlying shares
on a future date.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (1) 1/1/94-12/31/96 76,776 153,551 230,327
S. C. Griffith, Jr. 1/1/94-12/31/96 50,760 101,520 152,280(#) FY-END ($)
----------------- ---------------------
SHARES
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------ -------------- -------------------- ----------------- ---------------------
Richard B. Priory -- -- 0/500,000 0/2,656,250
Paul M. Anderson 253,394 8,594,366 106,800/0 4,682,486/0
William A. Coley -- -- 0/200,000 0/1,062,500
Fred J. Fowler 5,495 209,144 50,823/206,963 2,063,239/1,202,358
Richard W. Blackburn -- -- 0/150,000 0/796,875
Richard J. Osborne -- -- 0/100,000 0/531,250
---------
1. The Corporation has not granted any SARs to the Named Executive Officers
or any other persons.
Note: Future exercisability of currently unexercisable stock options
depends on the grantee remaining employed by the Corporation throughout
the vesting period of the options, subject to provisions applicable at
retirement, death or total disability. As of December 31, 1998, the Named
Executive Officers' unexercisable
9
options vest and become exercisable on the following schedule, although
all unvested options will fully vest and become exercisable upon a
change-in-control (as defined in the applicable option agreement) of the
Corporation.
UNEXERCISABLE OPTIONS HELD BY:
VESTING DATE R. B. Priory 1/1/94-12/31/96 50,760 101,520 152,280PRIORY W. A. Coley 1/1/94-12/31/96 50,760 101,520 152,280COLEY F. J. FOWLER R. W. BLACKBURN R. J. Osborne 1/1/94-12/31/96 25,005 50,010 75,015
W. S. Lee (2) 1/1/94-12/31/96 26,255 52,511 78,766OSBORNE
- -------------------- -------------- ------------- -------------- ----------------- --------------
January 22, 1999 0 0 3,481 0 0
April 16, 1999 100,000 40,000 40,000 30,000 20,000
January 22, 2000 0 0 3,482 0 0
April 16, 2000 100,000 40,000 40,000 30,000 20,000
April 16, 2001 100,000 40,000 40,000 30,000 20,000
April 16, 2002 100,000 40,000 40,000 30,000 20,000
April 16, 2003 100,000 40,000 40,000 30,000 20,000
(1) Award projection reflects Mr. Grigg's promotion to ChiefRETIREMENT PLAN INFORMATION
Executive Officer.
(2) Award projection is prorated to reflect Mr. Lee's retirement.
10
The Company has an Employees' Retirement Plan (the Retirement Plan)officers and a
Supplemental Retirement Plan (the Supplemental Plan) (collectively, the
Retirement Plans) forother employees of the Company and certainCorporation participate in
either of its subsidiaries.
The Supplemental Plan will provide certain officers withtwo noncontributory, qualified, defined benefit retirement benefits
which they otherwise would have received underplans: the
Retirement Plan formula but
which may not be paid to them under the Retirement Plan due to limitations on
benefits imposed by the Internal Revenue Code or occasioned through operation of
the RetirementCash Balance Plan and the Compensation DeferralRetirement Income Plan. The Retirement
Income Plan ceased admitting new participants after December 31, 1998. In
general, employees who have attained age 21addition, selected managers are eligible to participate in the Retirement Plans. InExecutive Cash
Balance Plan, which is a noncontributory, nonqualified, defined benefit
retirement plan. A portion of the eventbenefits earned in the Executive Cash Balance
Plan is attributable to compensation in excess of retirement at or after age 65, an
eligible employee with 30 years of creditable service will, in general, be
entitledthe Internal Revenue Service
annual compensation limit ($160,000 for 1998) and deferred compensation, as
well as reductions caused by maximum benefit limitations that apply to
paymentsqualified plans from the Retirement Plans which, when added to such
employee's primary Social Security benefits will provide such employee for life
with total annual retirement benefits ranging from 61% to 88% of highest average
annual compensation during any 60 consecutive month period of creditable
service. Benefits are alsothat would otherwise be provided under the
Retirement Plans inCash Balance Plan and the event of
early retirement at or after age 55 with 10 years of creditable service or with
30 years of creditable service regardless of age and in the event of retirement
for disability. Surviving spouse benefits are available on an elective basis
with the participant bearing a portion of the incremental cost.
Employees who do not retireRetirement Income Plan. Benefits under the
Retirement Cash Balance Plan, but whose employment
terminates after they have completed at least five vesting credit years have
vested rights in benefits accrued prior to their termination date.the Retirement Income Plan and the Executive Cash
Balance Plan are based on eligible pay, generally consisting of base pay,
short-term incentives and lump-sum merit increases. The Retirement Cash Balance
Plan is wholly paid for byand the CompanyRetirement Income Plan exclude deferred compensation, other than
deferrals pursuant to Sections 401(k) and participating
subsidiaries, which have established125 of the Internal Revenue Code.
Under a trust with a bank as trustee to which
contributions are made from time to time by the Company and participating
subsidiaries and from which thenew benefit accrual formula that applies in determining benefits
under the Retirement Cash Balance Plan are paid. The
Supplemental Plan is administered by the Companyon and the benefits thereunder are
payable from the Company's general funds.
11
The following table shows the estimated annual pension benefits payable
upon retirement (at age 65)after January 1, 1997, and under
the Retirement Plans to personsIncome Plan on and after January 1, 1999, an eligible employee's
plan account receives a pay credit at the end of each month in specified
remunerationswhich the
employee remains eligible and years-of-service classifications, allowingreceives eligible pay for reasonable
increases in existing compensation levels.services. The benefits listed in the table are
not subject to any deduction for Social Security benefits or other offset
amounts.
PENSION PLAN TABLE
YEARS OF SERVICE
REMUNERATION 15 20 25 30
$100,000........................................................ $ 26,000 $ 35,000 $ 44,000 $ 53,000
150,000........................................................ 41,000 54,000 68,000 81,000
200,000........................................................ 55,000 73,000 91,000 110,000
250,000........................................................ 69,000 92,000 115,000 138,000
300,000........................................................ 83,000 111,000 139,000 167,000
350,000........................................................ 98,000 130,000 163,000 195,000
400,000........................................................ 112,000 149,000 186,000 224,000
450,000........................................................ 126,000 168,000 210,000 252,000
500,000........................................................ 140,000 187,000 234,000 281,000
550,000........................................................ 155,000 206,000 258,000 309,000
600,000........................................................ 169,000 225,000 281,000 338,000
650,000........................................................ 183,000 244,000 305,000 366,000
700,000........................................................ 197,000 263,000 329,000 395,000
750,000........................................................ 212,000 282,000 353,000 423,000
800,000........................................................ 226,000 301,000 376,000 452,000
(1) Compensation covered by the Retirement Plans in 1994, 1993 and 1992 for each
executive officer listed in the Summary Compensation Tablemonthly
pay credit is equal to a percentage of the amount shown as salary under such table.
(2)employee's monthly eligible pay. The
number ofpercentage depends on age and completed years of service creditedat the beginning of
the year, as shown below:
MONTHLY PAY CREDIT
AGE AND SERVICE PERCENTAGE
- ---------------------- -------------------
34 or less ......... 4%
35 to 49 ........... 5%
50 to 64 ........... 6%
65 or more ......... 7%
In addition, the employee receives a monthly allocation of 4% for any
portion of eligible pay above the Social Security taxable wage base ($72,600
for 1999). However, for certain other employees of the Corporation, the
percentage is a flat 3% of eligible pay. Employee accounts also receive monthly
interest credits on their balances. The rate of the interest credit is adjusted
quarterly and equals the yield on 30-year U.S. Treasury Bonds during the third
week of the last month of the previous quarter, subject to a minimum rate of 4%
per year and a maximum rate of 9% per year.
Prior to application of the new benefit accrual formula, benefits for
eligible employees, including benefits under the Retirement Income Plan for
1998, were determined under other formulas. To transition from a prior formula
to the new formula, an eligible employee's accrued benefit earned under the
prior formula is preserved as a minimum, and the employee's account under the
new benefit accrual formula receives an opening balance derived from a variety
of factors. In addition, during 1998, Messrs. Priory, Coley, Osborne and
Blackburn were awarded one-time supplemental credits to their Executive Cash
Balance Plan accounts of $337,100; $102,800; $137,062; and $89,075,
respectively.
Assuming that the Named Executive Officers continue in their present
positions at December 31, 1994 was 30 fortheir present salaries until retirement at age 65, their estimated
annual pensions in a single life annuity form under the applicable plan
attributable to such salaries would be: Richard B. Priory, $666,438; William A.
Coley, $255,114; Fred J. Fowler, $294,231; Richard W. H. Grigg, 30 for S. C. Griffith,Blackburn, $37,231; and
Richard J. Osborne, $196,147. Such estimates are calculated assuming interest
credits at a rate of 7% per
10
annum and using a future Social Security taxable wage base equal to $72,600. As
described under "Employment Contracts and Termination of Employment and
Change-in-Control Arrangements," Mr. Anderson's employment agreement provided
that, upon a termination prior to early retirement age of (55), he would
receive retirement benefits as if he had reached such age. As a result, Mr.
Anderson received a lump sum distribution of $3,434,743, exceeding by $244,356
the retirement benefit otherwise payable to him.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is currently
comprised of William T. Esrey, George Dean Johnson, Jr., 18 for
R. B. Priory, 29 for W. A. Coley, 19 for R. J. OsborneLeo E. Linbeck, Jr.
and 30 for W. S. Lee.
The maximum number of years of service for benefits is 30.
(3) Amounts shown above represent estimated 50% joint and survivor annuity
benefits calculated by the Social Security integration formula.
Notwithstanding anything to the contrary set forth in anyJames G. Martin. None of the Company's
previous filings underpresent or former members of the Securities ActCompensation
Committee was at any time during 1998 or at any other time an officer or
employee of 1933,the Corporation.
No executive officer of the Corporation serves as amended,a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Corporation's Board of Directors
or the Securities
Exchange Act ofCompensation Committee.
---------------
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
CORPORATION'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES EXCHANGE ACT OF 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph on page 16 shall not be incorporated by reference into any
such filings.AS AMENDED (THE "EXCHANGE ACT"), THAT
MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT IN WHOLE OR IN
PART, THE FOLLOWING COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION AND
THE PERFORMANCE GRAPH IMMEDIATELY FOLLOWING SUCH REPORT SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company, under the supervision of the Compensation Committee of the Board of Directors, has developed and implementedwhich is composed
exclusively of nonemployee directors, is responsible for the Corporation's
executive compensation programs which
seek to provide a direct relationship betweenprograms. The following is the report of the
Compensation Committee on compensation provided topolicies regarding executive officers
and corporate performance.
COMPENSATION PHILOSOPHYthe basis of compensation actions it has taken.
The Company has a pay policy of setting total cash compensation for its
entire workforce between the 50th and 75th percentilesobjective of the marketplace.
ConsistentCorporation's executive compensation programs is to
offer compensation opportunities that attract and retain talented executive
officers and key employees and that motivate such employees to enhance
shareholder value. Base pay, annual incentives and long-term incentives are
structured to deliver competitive pay opportunities, reward individual
performance and encourage executives to manage from the perspective of owners
with this policy, itan equity stake in the Corporation. The executive compensation programs
are intended to provide total compensation (consisting of base salaries, annual
cash incentive opportunities and long-term incentive opportunities) that is
competitive with the philosophymedian total compensation offered other executives
employed by companies of similar size, complexity and lines of business. To
determine competitive compensation levels, the Compensation Committee considers
data from surveys, proxy statements and independent compensation consultants.
The attainment of corporate, business group and, in some instances, individual
performance goals determines the payouts from the annual incentive compensation
plans. Long-term incentive compensation awards are designed to link a
significant portion of total pay directly to long-term financial performance
and creation of shareholder value.
To underscore the importance of linking executive and shareholder
interests, the Board of Directors 12
to set total compensation opportunities for its executive officers between the
50th and 75th percentiles. The "marketplace"has adopted stock ownership guidelines for
executive officers and other members of senior management. The target level of
ownership of Common Stock (or Common Stock equivalents) for the Chairman of the
Board, President and Chief Executive Officer under such guidelines is defined
asthree
times annual salary. The target level for other officers who are members of the
group of electric utilities comprising the S&P Electric Utility Index.
Total cash compensation for executive officers consists of base salary,
whichCorporation's Policy Committee, including Messrs. Coley, Fowler, Blackburn and
Osborne, is two times annual salary. Each employee subject to the guidelines is
expected to achieve the ownership target within a period of five years,
commencing on the later of January 1, 1997, or the date upon which the employee
became subject to the guidelines. Common Stock held in an executive's
Retirement Savings Plan account, Common Stock equivalents earned through
non-qualified deferred compensation programs and any Common Stock beneficially
owned outside such programs are included in determining compliance with the
guidelines.
COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code imposes a limitation on the
Corporation's ability to deduct from income tax annual merit increases,compensation in excess
of $1 million paid to certain employees, generally the chief executive officer
and incentives, which are awarded
through the Executivefour other most highly compensated executive officers. The Compensation
Committee intends to structure compensation that rewards performance while
preserving maximum deductibility of all compensation awards. Towards this end,
in 1998 the Board of Directors recommended and shareholders approved the Duke
Energy Corporation 1998 Long-Term Incentive Plan
11
and the Duke Energy Corporation Policy Committee Short-Term Incentive Plan to
allow future grants of stock options (under the 1998 Long-Term Incentive Plan)
and other performance awards to satisfy the requirements for exemption from
Section 162(m). It is not anticipated that compensation realized by any
executive officer under programs now in effect will result in a material loss
of tax deductions.
BASE SALARIES
The Compensation Committee believes that a significant percentage of each
individual's compensation should be at risk as incentive compensation.
Therefore, the Compensation Committee tends to be conservative in establishing
salary opportunities and typically sets them at a level which approximates the
competitive median as determined by survey data. Individual executive officer's
salaries are reviewed annually and increases are determined by the Compensation
Committee based upon job responsibilities, level of experience, individual
performance and data obtained from surveys, consultants and staff research. No
salary increase was approved by the Compensation Committee for any Named
Executive Officer in 1998.
SHORT-TERM INCENTIVE COMPENSATION
In 1998, the Compensation Committee administered two annual incentive
plans that permitted the granting of cash awards. Policy Committee members,
including Messrs. Priory, Anderson (before his resignation), Coley, Fowler,
Blackburn and Osborne, earned incentive compensation under the Policy Committee
Short-Term Incentive Plan, while other executive officers earned incentive
compensation under the Duke Energy Short-Term Incentive Plan. Individual
incentive targets under both Plans are intended to pay amounts equal to the
competitive median when target performance is achieved and to reward
outstanding results by paying bonuses of up to 150% of target when outstanding
results are achieved.
Awards under the Policy Committee Short-Term Incentive Plan were
calculated pursuant to a formula based upon the Corporation's earnings per
share (EPS). Minimum, target and maximum performance levels were established,
and participants could receive up to 150% of their short-term incentive
targets. According to the range of EPS threshold amounts established by the
Compensation Committee at the beginning of 1998, EPS resulted in payments of
110% of bonus targets to each Policy Committee member, including the Named
Executive Officers, prior to changes in such amounts as determined by the
Compensation Committee because of individual performance.
Awards under the Duke Energy Short-Term Incentive Plan, in which executive
officers other than members of the Policy Committee participated, were
determined on the basis of a combination of 1) EPS measures, 2) earnings before
interest and income taxes (EBIT) measures and, in some instances, other
measures unique to individual business groups, and 3) individual objectives.
Each of these three components determined one-third of each executive officer's
bonus.
LONG-TERM INCENTIVE COMPENSATION
In 1998, the Compensation Committee approved the award of non-qualified
stock options (as described earlier in the proxy statement) to members of the
Policy Committee under the Duke Energy Corporation 1998 Long-Term Incentive
Plan. The use of incentives is intended to resultAlso in a direct
relationship between total compensation and corporate performance. Opportunity
to receive compensation beyond the 50th percentile of the marketplace is
provided through incentives, based on corporate performance. Similarly,
compensation can fall below the 50th percentile if corporate performance
measures are not achieved and incentives are not paid. The goal is to create a
competitive compensation program that will attract and retain quality leadership
at the Company and link compensation directly to corporate performance.
COMPENSATION PROCESS
In the early part of each year,1998, the Compensation Committee reviewsapproved the compensationaward of
non-qualified stock options to executive officers who were not members of the
Company'sPolicy Committee under the Duke Power Company Stock Incentive Plan approved in
1996. The number of stock options granted was determined through a process
which: first, utilizes survey data to determine the annualized value of
long-term incentive compensation made to other executives and management
employees in comparable positions in companies with which the Corporation
competes for executive officers (other than the Chief Executive
Officer) with the Chief Executive Officer and sets the compensationtalent (target value), second, uses a variant of the
executive officers for such yearBlack-Scholes stock option pricing model to calculate a ratio which, when
multiplied by the exercise price of the option, produces an expected present
value of the option, and third, calculates the number of options required to
make a competitive long-term grant by dividing target value by the expected
present value of a single option. The result of this process, expressed as a
number of options, may be adjusted by the Compensation Committee, or, in some
cases, its designee, depending upon the grant recipient's qualitative and
quantitative performance, the size of stock option awards in the past, and
expectations of the grant recipient's future performance.
OTHER COMPENSAION
In 1998 the Compensation Committee approved one-time payments to certain
employees whose long-term and short-term compensation was not adjusted at the
time of the merger of the Corporation with modificationsPanEnergy Corp, when, with regard to
those employees, there was a significant change in responsibilities as it deems appropriate. The
review isa result
of the merger, clear evidence of a compensation shortfall based on performance evaluationssurvey data
and a significant contribution by the employees to the success of the individual executive officersmerger.
Messrs. Priory, Coley and on a comparisonOsborne qualified for and were awarded such one-time
payments in the amounts of their compensation with compensation$910,000, $162,000 and financial
performance data from$140,000, respectively.
12
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Prior to the S&P Electric Utility Index companies usingmerger of the information provided in surveys such asCorporation and PanEnergy Corp, the Edison Electric Institute Executive
Compensation Survey.
The
Compensation Committee also reviewscommissioned its compensation consultant to prepare an
independent report regarding the level of compensation of the Chief Executive
Officer with assistance from the Company's human resources staff. It
recommends adjustments as appropriate, based on competitive compensation data
from the S&P Electric Utility Index companies, the Committee's assessment of the Chief Executive Officer's performance and its expectation as to his future
contributionsCorporation, considering in leadingparticular the Company. The Committee's recommendation on
compensation for the Chief Executive Officer is considered and acted upon by the
Board of Directors, with inside directors neither present nor participating.
The Company has no current plans to qualify compensation paid to its
executive officers for deductibility under Section 162(m)size of the
Internal
Revenue Code.
1994 COMPENSATION SUMMARY
INCREASES IN BASE SALARY
IncreasesCorporation, its complexity and the markets in base salary were granted in February 1994 towhich the Corporation competes
for executive officers named intalent. Based upon the Summary Compensation Table and were based on individual
and corporate performance for the 1993 performance period. Additional increases
were granted during 1994 to Messrs. Griffith, Priory, Coley and Osborne to
reflect promotions given to such executive officers due to reorganizationCommittee's analysis of the
Company's business units (i.e., the formation of the Associated Enterprises
Group, which consists of the Company's subsidiaries and diversified activities,
and other changes in the Company's organizational structure) and officer
succession after the retirement of W. S. Lee as Chairman, President and Chief
Executive Officer. Increases varied based upon individual performance, as
measured through the Company's job performance evaluation program, the
individual's compensation relative to the competitive marketplace, the Company's
achievement of corporate performance objectives, and increased responsibility as
a result of officer promotions.
The 1993 corporate performance measures taken into consideration were:
(i) total operating and maintenance cost per kilowatt hour delivered
not to exceed 2.67 cents;
13
(ii) capital cost per customer equivalent not to exceed $150.46; and
(iii) return on equity of at least 12.5%.
Because the Company achieved these pre-established measures in 1993 and because
promotions were granted during 1994, Messrs. Griffith, Priory, Coley and Osborne
received increases in base salary ranging from 6.5% to 21.3%.
Former Chief Executive Officer Lee received an increase of 12.5% over his
1993 base salary. In recommending such increase to the Board,consultant's report, the Compensation Committee considered the attainment by the Companyat its June 1997 meeting
adjusted Mr. Priory's annual base salary to $810,000 and adjusted his annual
short-term incentive target to 100% of base salary beginning on January 1,
1998. Also based upon its analysis of the corporate performance
measures listed above as well as Mr. Lee's individual performance and his
leadership in the electric utility industry. Compensation to Mr. Lee, as set
forth in the Summary Compensation Table, was prorated to reflect his employment
with the Company through June 1994 and included $50,000 paid to Mr. Lee during
the second half of 1994 under a consulting arrangement with certain subsidiaries
of the Company.
Chief Executive Officer Grigg received a salary of $558,500 in 1994,
representing a 35.7% increase over his 1993 base salary. In recommending such
increase to the Board,consultant's report, the Compensation
Committee consideredgranted Mr. Priory an award of non-qualified stock options to
purchase 500,000 shares of Common Stock under the attainment by
the Company of the corporate performance measures listed above as well as Mr.
Grigg's individual performance, his increased responsibilities as Chief
Executive Officer beginning April 28, 1994, and competitive compensation levels
in the marketplace.
INCENTIVE COMPENSATIONDuke Energy Corporation 1998
Long-Term Incentive Plan. The Compensation Committee approvedbelieves that this award
has put in place a new Executive Short-Term Incentive
Planmechanism which commencedwill result in 1994.meaningful rewards to Mr.
Priory for substantial improvements in shareholder value. The Plan replaced past participation byCompensation
Committee will consider additional stock option awards as it deems appropriate
from time to time.
It is the named
executive officersCompensation Committee's intention that, when taken together,
the components of Mr. Priory's pay, including salary, short-term incentive
opportunity and annualized long-term incentive award value, will result in
compensation which approximates the Employee Incentive Plan, and was developed by the
Company with the advice of independent compensation consultants. Short-term
incentive awards were made through the Plan, based on a pre-established awards
formula and the achievement of certain corporate measures established in late
1993. The Plan requires achievement of a return on equity threshold of 12.65% in
order for awards to be made and sets minimum, target and maximum performance
levels for determining awards. The 1994 corporate measures, target performance
levels and the respective weights of each corporate measure applicable to
members of the Management Committee of the Company* were:
(i) return on equity of 13.15% (60%);
(ii) total cost per kilowatt hour delivered of 5.58 cents (20%); and
(iii) corporate safety level of 425 recordable incidents (20%).
The Company achieved a return on equity of 14.6% in 1994, exceeding the
maximum level of 13.75% that is specified in the Plan. The Company's total cost
per kilowatt hour delivered equaled the minimum level set forth in the Plan of
5.63 cents. The Company also exceeded the corporate safety target specified in
the Plan by incurring only 407 reportable incidents. Accordingly, Messrs.
Griffith, Priory, Coley and Osborne received awards under the Plan ranging from
14.30% to 18.64% of their respective base salaries as established in February
1994. Former Chief Executive Officer Lee received an award of $111,870, or
12.43% of his base salary as established in February 1994. His award was
prorated to reflect the portion of the year during which he was
* Messrs. Grigg, Griffith, Priory, Coley and Lee were members of the Company's
Management Committee in 1994, while Mr. Osborne was a member of the Company's
Officer Team for purposes of determining awards under the Plan. For members of
the Officer Team, the three corporate measures listed above together weighted
50% and business unit measures weighted another 50% in determining Plan
awards.
14
employed as Chief Executive Officer of the Company. Chief Executive Officer
Grigg received an award of $103,496, representing 23.31% of his base salary as
established in February 1994. Mr. Grigg's award represented 18.53% of the total
salary paid to him in 1994, which included the salary increase provided by the
Company in conjunction with his promotion to Chairman and Chief Executive
Officer.
Long-term incentive awards were made through the Executive Long-Term
Incentive Plan using a pre-established awards formula based on total shareholder
return over a three-year period as compared to the performance of a peer group
comprised of companies in the S&P Electric Utility Index. "Total shareholder
return" is calculated by dividing the sum of the change in the market price of
the Company's Common Stock over the three-year performance period plus dividends
paid over the period, by the stock price at the beginning of the period. For any
award to be made, this figure had to exceed the 33rd50th percentile of the peer
group, which wasmarket when
incentive plan performance expectations are met and for compensation as high as
the minimum performance level established by the Compensation
Committee. The target level was the 55th75th percentile of the peer group and the
maximum level was the 75th percentile. The Company exceeded the maximum
performance level by achieving total shareholder return at the 97th percentile
of the peer group for the 1992 through 1994 performance period. As a result,
Messrs. Griffith, Priory, Coley and Osborne received awards ranging from 37.50%
to 45.00% of their respective base salaries as established in February 1992.
Former Chief Executive Officer Lee received an award of 43.75% of base salary,
and Chief Executive Officer Grigg received an award of 46.88% of base salary.market when results exceed expectations.
This report has been provided by the Compensation Committee.
BUCK MICKEL,LEO E. LINBECK, JR., Chairman
PAUL H. HENSON
15WILLIAM T. ESREY
GEORGE DEAN JOHNSON, JR.
JAMES G. MARTIN
13
PERFORMANCE GRAPH
Note: The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG DUKE POWER COMPANY,THE CORPORATION, S&P 500 INDEX,
AND S&P ELECTRIC UTILITYUTILITIES INDEX AND DOW JONES UTILITIES AVERAGE
(Performance Chart appears here -- see table below for plot points)
Assumes $100 invested on DecDec. 31, 19891993
in Duke Power Common Stock, S&P 500 Index,
and S&P Electric Utility Index.Utilities Index, and DJ Utilities.
Assumes reinvestment of dividends.
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
----------------------------------------------------
Duke Power Co. $100 $115 $139 $151 $186 $176100 95 122 125 155 186
S&P 500 Index $100 $97 $126 $136 $150 $152100 101 139 170 227 291
S&P Electric UtilityUtilities 100 92 129 133 165 188
DJ Utilities 100 85 111 121 147 174
The above performance graph features two widely published industry
indices, the S&P Utilities Index $100 $103 $134 $141 $159 $138
DIRECTORS' FEES
Directors who are not employeesand the Dow Jones Utilities Average, in
satisfaction of the Companyrequirement for a comparative industry index. The
Corporation believes that the use of both of these indices provides the best
opportunity for comparison of the Corporation's total cumulative return with
those of significant peer companies in the electric and gas industries.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Corporation entered into employment agreements dated as of November
24, 1996 with Messrs. Priory, Coley, Fowler, Osborne and Anderson, which became
effective on June 18, 1997 (the "Effective Time") and which remain in effect
for a two-year period from the Effective Time or such longer period as may be
mutually agreed upon by the parties to such agreements (the "Employment
Period"). The employment agreements were amended in October 1997 (as amended,
the "Employment Agreements"), when the Corporation and the employees mutually
agreed to short-term and long-term incentive opportunities. The principal terms
and conditions of the Employment Agreements are described below.
The Employment Agreements for Messrs. Priory, Coley, Fowler and Osborne
provide for an annual base salary that is at least equal to the executive's
annual base salary for the twelve-month period prior to the Effective Time
(i.e., Messrs. Priory, Coley, Fowler and Osborne were paid $476,509, $378,947,
$260,000 and $253,200, respectively, as base salary in 1996). Those Employment
Agreements also provide for an annual bonus opportunity of 100% for Mr. Priory
and 60% for each of Messrs. Coley, Fowler and Osborne under the terms of the
Duke Energy Corporation Policy Committee Short-Term Incentive Plan calculated
as a percentage of annual base salary. Each such executive is entitled to
participate in all long-term incentive plans, savings, retirement, welfare
benefit plans on the same basis as other peer executives of the Corporation.
The Employment Agreements also provided that Messrs. Priory, Coley, Fowler and
Osborne were to receive non-qualified stock options to purchase 500,000,
200,000, 200,000 and 100,000 shares of Common Stock, respectively. Such options
were issued under the Duke Energy Corporation 1998 Long-Term Incentive Plan. In
the event the executive's employment is terminated for "Good Reason" by the
executive or without "Cause" by the Corporation (both as defined in the
Employment Agreements), Messrs. Priory, Coley and Osborne will be entitled to
receive a lump-sum severance payment
14
equal to the product of three times the executive's annual base salary and
target bonus and Mr. Fowler will be entitled to receive a lump-sum severance
payment equal to two times annual base salary and target bonus. In addition,
for three years following the executive's date of termination for "Good Reason"
or without "Cause" by the Corporation, Messrs. Priory, Coley and Osborne will
be entitled to continued coverage under the medical, life insurance and other
welfare benefit plans of the Corporation; Mr. Fowler's coverage would be
extended for two years and he would receive supplemental pension benefits
calculated as if he had an additional two years of service. In the event that
any of the payments or benefits provided for in the relevant Employment
Agreement would constitute a "parachute payment" (as defined in section
280G(b)(2) of the Internal Revenue Code), the executive is entitled to elect to
reduce such payments or benefits so that the excise tax imposed by section 4999
of the Internal Revenue Code would not apply. Each of the Priory, Coley,
Osborne and Fowler Employment Agreements contains a restrictive covenant that
prohibits the executive from disclosing or using certain confidential
information while employed by the Corporation and at any time thereafter.
The Employment Agreement of Paul M. Anderson provided that Mr. Anderson
would serve as Chief Operating Officer and President of the Corporation, a
member of the Office of the Chief Executive Officer and a member of the
Corporation's Policy Committee. The Anderson Employment Agreement further
provided that during the Employment Period Mr. Anderson would receive an annual
base salary of no less than $700,000, an annual bonus opportunity set at a
target level of no less than 90% of Mr. Anderson's base salary claimed under
the terms of the Duke Energy Corporation Policy Committee Short-Term Incentive
Plan, and a supplementary salary payment in the event that Mr. Anderson became
subject to North Carolina taxes such that the amount of Mr. Anderson's
after-tax compensation would be no less than the amount he would have received
during 1994absent the imposition of North Carolina taxes. In addition, Mr. Anderson was to
be awarded 400,000 nonqualified stock options, which were issued in 1998. Such
options were issued under the Duke Energy Corporation 1998 Long-Term Incentive
Plan. Pursuant to the Anderson Employment Agreement, the Corporation also
provided Mr. Anderson with deferred compensation payable upon his attainment of
the age of 55, accruing at a monthly rate of $83,334, plus interest, for each
of the twenty-four months following the Effective Time. The Anderson Employment
Agreement prohibits Mr. Anderson from disclosing or using certain confidential
information while employed by the Corporation and at any time thereafter. The
Anderson Employment Agreement also provided that if Mr. Anderson's employment
terminated before the end of the Employment Period (except in the case of
termination for "Cause" or "Disability" as defined in the Employment
Agreement), Mr. Anderson would be entitled to the following: (i) a lump-sum
payment aggregating accrued obligations (such as unpaid salary and a pro rata
portion of his target bonus opportunity) to Mr. Anderson, and (ii) retirement
benefits, including qualified defined benefit retirement benefits, excess or
supplemental retirement benefits, and welfare benefits, as if Mr. Anderson had
reached early retirement age as of the date of termination of his employment.
In the event that compensation payments to Mr. Anderson would subject him to
excise tax under section 4999 of the Internal Revenue Code, the Corporation
would reduce such payments if and to the extent it would maximize Mr.
Anderson's after-tax compensation. Upon Mr. Anderson's resignation, effective
November 15, 1998, he received the payments described above and in the Summary
Compensation Table.
The Corporation entered into an employment agreement with Mr. Blackburn,
effective November 10, 1997, in connection with his employment as Executive
Vice President and General Counsel of the Corporation and a member of the
Policy Committee. The term of the employment agreement extended through
December 31, 1998. The agreement established an initial annual base salary of
$360,000 and an annual incentive target opportunity of 60% of base salary under
the Duke Energy Corporation Policy Committee Short-Term Incentive Plan. The
Agreement also provided for an award of 150,000 stock options which were
granted in 1998 at the same time and under the same terms as grants of stock
options to other Policy Committee members. The agreement further provided for
the award of 9000 shares of restricted stock in three equal grants of 3000
shares in January 1998, January 1999 and January 2000. With respect to each
such grant, 1,000 shares were to vest on each of the three successive
anniversary dates of the original award of the grant. It was also agreed that
Mr. Blackburn would be eligible to participate in the executive benefits plans
that are available to other members of the Policy Committee. The Blackburn
employment agreement further contained a non-competition clause and
confidentiality provision.
COMPENSATION OF DIRECTORS
The fixed annual retainer for nonemployee directors of the Corporation is
$40,000. Additional annual compensation for serving as the Chairman of $24,000 andthe
Audit, Compensation, Corporate Governance, Corporate Performance Review or
Finance Committees is $4,000. In addition, nonemployee directors receive a fee
of $1,000 for attendance at each meeting of the Board of Directors, each
committee meeting and other functions of the CompanyCorporation requiring their
presence, together with expenses of attendance.
In
addition, each15
A nonemployee director may elect to receive 50% of the Chairmen of the Audit, Compensation, Nominating, Corporate
Performance Reviewhis or her retainer and Finance Committees received annual compensation of
$3,500. A portion of the
attendance fees for each nonemployee
16
director is placedin the form of Common Stock or may defer such portion by having
it held in trust for the director's benefit and invested in Common Stock of the Company at
market price. An additional portion of annual
compensation or attendance fees, atThe director may elect to receive the optionremaining 50% of such
director,compensation in cash or may be placed
in trust. Uponelect to defer, until termination of service on the
Board of Directors, that portion in trust as shares of Common Stock or in an
investment account that is credited with interest based upon the interest paid
on 30-year U.S. Treasury Bonds.
Each January and July that a nonemployee director continues to serve on
the Board of Directors, such director is credited with 100 shares of Common
Stock to be held in trust. In general, shares of Common Stock held in trust,
and income thereon, will then receivenot become distributable until the nonemployee
director terminates service on the Board of Directors. Dividends will be
converted into additional shares held in trust at fair market value on the
dividend payment date. When a nonemployee director terminates service on the
Board of Directors, shares held in trust for his or her benefitaccount will be
distributed to the director on the basis of the distribution schedule chosen by
such director.
Upon completing ten years of service on the Board of Directors, certain
directors become eligible to participate in the Directors' Charitable Giving
Program. Under this program, the Corporation will make, upon the director's
death, donations of up to $1,000,000 to charitable organizations selected by
the trusteedirector. A director may request that the Corporation make donations under
this program during the director's lifetime, in which case the maximum donation
will be reduced on a net present value basis. The Corporation maintains life
insurance policies upon eligible directors to fund donations under the program.
Eligible directors include only those who were members of the trust, including shares
purchased with reinvested dividends.Board of
Directors on February 18, 1998, and certain former directors who previously
qualified for benefits.
Nonemployee directors also participateare subject to the Corporation's stock ownership
guidelines which require nonemployee directors to build and maintain holdings
of Common Stock (or Common Stock equivalents) equal in retirement and compensation deferral plans which are intendedmarket value to provide
benefits substantially similar to those afforded bythree
times the Company toannual retainer ($120,000). Nonemployee directors who
are employees.must attain this
ownership level within five years from January 1, 1997, the date of
implementation of the guidelines, or from the commencement of their service on
the Board of Directors, if after the implementation date.
INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board of Directors of the Company had a total of seveneight meetings during 1994.1998. No director
attended fewer than 75% of the totalaggregate of suchthe meetings of the Board meetingsof
Directors held during the period for which he or she was a director and the
meetings of the committees upon which he or she served during the period for
which he or she was a director, with the exception of Paul H. Henson, who
attended 70% of such meetings.
During 1994, the Company retained the law firm of Robinson, Bradshaw &
Hinson, P.A., of which Russell M. Robinson, II is a shareholder, in connection
with a number of small matters.director.
Among its standing committees the CompanyCorporation has a Management Committee,
an Audit Committee, a Compensation Committee, a NominatingCorporate Governance Committee,
a Corporate Performance Review Committee, and a Finance Committee.
The Management Committee consists of Richard B. Priory and William A.
Coley. This Committee may exercise all of the authority of the Board of
Directors except with respect to certain actions specified in the Corporation's
By-Laws.
The Audit Committee consists of Robert J. Brown, James V. Johnson,Ann Maynard Gray, Max
Lennon, Leo E. Linbeck, Jr. and Russell M. Robinson, II. This Committee
recommends to the Board of Directors the engagement of the independent auditors
for the Company,Corporation, determines the scope of the auditing of the books and
accounts of the Company,Corporation, reviews the reports submitted by the auditors,
examines procedures employed in connection with the Company'sCorporation's internal
audit program and makes recommendations to the Board of Directors as may be
appropriate. There were sixThe Committee held seven meetings of this Committee
during 1994.1998.
The Compensation Committee consists of Crandall C. Bowles, Paul H. HensonWilliam T. Esrey, George Dean
Johnson, Jr., Leo E. Linbeck, Jr. and Buck Mickel.James G. Martin. This Committee sets the
salaries and other compensation of all executive officers and directors of the Company and all other employees whose salaries are
at a monthly rate at or above a level as determined from time to time byCorporation
except the BoardChairman of Directors, except that thisthe Board. This Committee makes recommendations to the
Board of Directors regarding the salariessalary and other compensation of the Chief Executive Officer and
PresidentChairman
of the Board for consideration and action by the Board of Directors, without
the presence or participation of those directors who are also employeesthe Chairman of the Company. There
were sixBoard. The Committee also
makes recommendations to the Board of Directors regarding the compensation of
nonemployee directors. The Committee held seven meetings of thisduring 1998.
The Corporate Governance Committee during 1994.
The Nominating Committeeconsiders matters related to corporate
governance and formulates and periodically revises principles for board
governance, recommends to the Board of Directors the size and composition of
the Board of Directors within the limits set forth in the Corporation's
Articles of Incorporation and By-Laws and recommends persons to be considered
as successors to the Chief Executive Officer. The Nominating Committee will consider
nominees for the Board of Directors recommended by shareholders. Recommendations by
shareholders should be forwarded to the Secretary of the Company and should
identify the nominee by name and provide pertinent information concerning his or
her background and experience. A shareholder recommendation must be received at
least ninety days prior to the date of the annual meeting of shareholders. The
Nominating Committee,
consisting of W. H. Grigg, Paul H. Henson, George Dean
Johnson, Jr.William T. Esrey, Dennis R. Hendrix, Max Lennon, James G. Martin
and W. W. Johnson,Richard B. Priory, met twicethree times in 1994.1998.
16
The Corporate Performance Review Committee consists of G. Alex Bernhardt,
William A. Coley, Paul H. Henson, James G. MartinSr., Robert J. Brown, Ann Maynard Gray, Dennis R. Hendrix, Harold S. Hook and
Buck Mickel. The Corporate
Performance ReviewRussell M. Robinson, II. This Committee monitors and makes recommendations for
improving the overall performance of the Company,Corporation, and, at the policy level,
determines the adequacy of and support for the Company'sCorporation's emphasis on
continuous improvement. The Committee met six times during 1994.
17
1998.
The Finance Committee consists of Crandall C. Bowles, W. H. Grigg,G. Alex Bernhardt, Sr., Harold S. Hook,
George Dean Johnson, Jr., W. W. Johnson and Richard B. Priory. This Committee directsreviews the
financial and fiscal affairs of the CompanyCorporation and makes recommendations to
the Board of Directors regarding the Corporation's dividend, financing and
fiscal policiespolicies. The Committee met six times during 1998.
In February 1998, the Corporation adopted a policy stating that members of
the Company. ThereBoard of Directors are to submit their resignation as a matter of course
upon a change in employment or other significant change in their professional
roles and responsibilities, with the exception of the normal retirement of
those individuals who were seven meetingsmembers of thisthe Board of Directors on the date the
policy was adopted. The Corporate Governance Committee during 1994.will determine whether
any such resignation will be accepted. It is expected that acceptance of any
such resignation will be effective as of the end of the term of the director
tendering the resignation.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Corporation has had business relationships and engaged in certain
transactions with affiliated parties. It is the policy of the Corporation to
engage in transactions with related parties only on terms that, in the opinion
of the Corporation, are no less favorable to the Corporation than could be
obtained from unrelated parties.
During 1998, the Corporation retained the law firm of Robinson, Bradshaw &
Hinson, P.A., of which Russell M. Robinson, II, a director of the Corporation,
is a shareholder, in connection with a number of matters. Fees for legal
services paid by the Corporation to the law firm in 1998 represented less than
5% of such firm's gross revenues for the year.
AMENDMENT TO ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
(PROPOSAL 2)
The Board of Directors recommends that the shareholders approve the
adoption of a proposed amendment to the Articles of Incorporation to increase
the amount of authorized Common Stock of the Corporation from 500,000,000 to
1,000,000,000. As of December 31, 1998, 362,965,360 shares of Common Stock were
issued and 137,034,640 were unissued, including approximately 25,000,000 shares
reserved for issuance under the Corporation's stock plans.
The additional shares of Common Stock, if authorized, would have the same
rights and privileges as the shares of Common Stock presently outstanding and
could in the future be issued for any proper corporate purpose. The
Corporation's Articles of Incorporation provide that the shares of Common Stock
of the Corporation do not have preemptive rights.
In 1997, in connection with the merger of the Corporation and PanEnergy
Corp, the Corporation's shareholders approved an increase in the authorized
Common Stock from 300,000,000 shares to 500,000,000 shares, primarily to enable
the Corporation to issue the additional shares necessary to consummate the
merger. The Board of Directors believes that the proposed increase in the
number of authorized shares of Common Stock will be advantageous to the
Corporation and its shareholders because it will provide the Corporation with
added flexibility in effecting financings, stock splits or stock dividends,
stock plans and other transactions and arrangements involving the use of stock.
The Board of Directors has the authority to issue additional shares of Common
Stock without shareholder approval except as may be required by law or
regulatory agencies or by the applicable rules of the New York Stock Exchange.
Although the Corporation is always alert to opportunities, it has no present
intention to issue any of the newly authorized shares of Common Stock.
Furthermore, the Board of Directors is not proposing the increase in authorized
shares of Common Stock with the intention of discouraging tender offers or
takeover attempts. However, in the event of an unsolicited tender offer or
takeover proposal, the increased number of shares could give the Board of
Directors greater flexibility to act in the best interests of the Corporation
and its shareholders.
Unless required by law or by the applicable rules of the New York Stock
Exchange, no further authorization for the issuance of Common Stock by the
shareholders would be necessary, but any such issuance would be subject to the
approval of the North Carolina Utilities Commission and The Public Service
Commission of South Carolina.
17
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
RATIFICATION OF APPOINTMENT OF AUDITORS
(PROPOSAL 3)
The Board of Directors, upon recommendation of the Audit Committee, has
reappointed, subject to shareholder ratification, the firm of Deloitte & Touche
LLP, certified public accountants, as independent auditors to make an
examination of the accounts of the CompanyCorporation for the year 1995.1999. If the
shareholders do not ratify this appointment, other certified public accountants
will be considered by the Board of Directors upon recommendation of the Audit
Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
A representative of Deloitte & Touche LLP will, as in prior years, attend
the annual meeting and will have the opportunity to make a statement and be
available to respond to appropriate questions.
OTHER BUSINESSSHAREHOLDER PROPOSAL
(PROPOSAL 4)
THE CORPORATION HAS BEEN ADVISED THAT ROBERT B. MILLS (OWNER OF RECORD OF
30 SHARES OF COMMON STOCK), 1443 GORSUCH AVENUE, BALTIMORE, MARYLAND 21218 AND
EDWARD LEWIS KING (OWNER OF RECORD OF 186 SHARES OF COMMON STOCK), 846
CANTERBURY ROAD NE, ATLANTA, GEORGIA 30324, INTEND TO PRESENT THE FOLLOWING
PROPOSAL AT THE ANNUAL MEETING.
THE SHAREHOLDER PROPOSAL AND SUPPORTING STATEMENT AND THE OPPOSING
STATEMENT OF THE BOARD OF DIRECTORS ARE SET FORTH BELOW.
A Shareholder Proposal to the Duke Power Company for consideration at its 1999
Annual Meeting
REFUSE PLUTONIUM FUEL FOR COMMERCIAL REACTORS
Whereas: The Department of Energy (DOE) plans to dispose of surplus weapons
plutonium by immobilization in ceramics and possibly as plutonium/uranium (MOX)
fuel for commercial reactors (to prevent diversion to bomb making and
environmental dispersal);
Whereas: Duke Power has expressed interest in using MOX fuel;
Whereas: I believe the public opposes using weapons plutonium fuel because I
believe it would: (1) be too dangerous because it would be more hazardous to
control during fissioning in reactors, increasing operating risks and component
aging; (2) still be weapons-usable, so would require heavy security in transit
and at reactors (greater proliferation potential than immobilization); (3) be
more costly to fabricate the fuel and to operate the reactors; (4) violate the
barrier between nuclear power and nuclear weapons; (5) generate nearly as much
new plutonium during fissioning as it initially contained, resulting in little
net loss of plutonium; (6) generate great quantities of radioactive waste,
exacerbating the already critical, unresolved problems of radioactive waste
storage; (7) increase the likelihood of locking the U.S. into a deadly
plutonium economy;
Whereas: The DOE has a poor track record over the last 23 years managing large
projects;
Whereas: The potential financial rewards are too small to justify the large
risks to some of the Company's most valuable assets;
Whereas: Cost-cutting to meet the new competition shakes public confidence that
Duke Energy could maintain adequate safety and security if the more risky
plutonium fuel were used;
THEREFORE BE IT RESOLVED that the shareholders request the Board of Directors
to establish a firm policy to refuse to use plutonium (MOX) fuel.
Shareholders Supporting Statement:
Weapons plutonium cannot be fissioned directly, but must undergo complicated
and dangerous processing, creating additional radioactive waste. No conversion
facilities exist in the U.S. It could be many years before MOX could be
produced, extending plutonium accessibility for diversion or theft. During
these delays, economic or technical conditions may close candidate reactors.
Regulatory uncertainties between the DOE and the Nuclear Regulatory Commission
(NRC) could complicate the process, introducing further adverse economic
conditions for the utility.
18
European experience using MOX is only from reprocessed commercial reactor
wastes, not the experimental weapons plutonium. European support for MOX is
declining. European reprocessing corporations are a driving force of the Company knowsMOX
promotion, and falsely claim that the U.S. must use MOX to win Russia's
cooperation with surplus plutonium disposition. Rather, the U.S. should lead in
developing the most effective way to immobilize weapons plutonium directly, and
assist all others in this choice.
The safety of hundreds of future generations depends upon the careful isolation
of plutonium from the biosphere. Use of weapons plutonium in commercial
reactors would create a dangerous precedent. For economic, safety,
environmental, and nonproliferation reasons, I urge your supporting vote for
this proposal.
OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
In MOX fuel, a small amount of plutonium oxide (approximately 5%) is blended
with uranium oxide (approximately 95%). The resulting fuel is very similar to
the uranium fuel that is currently used in power reactors such as those in the
Corporation's McGuire and Catawba plants. There are decades of successful
experience with MOX fuel, and it is widely used in Europe today. In France
alone, 17 pressurized water reactors, very similar to those in the McGuire and
Catawba plants, are currently using MOX fuel.
Using MOX fuel in U.S. reactors is a key part of the international
nonproliferation initiative to dispose of surplus weapons plutonium in the
United States and Russia. Currently, surplus plutonium in both countries is
simply being stored, raising the risk (especially in Russia) that the plutonium
could be stolen, diverted, or re-used in weapons. The MOX fuel project involves
converting plutonium from nuclear weapons into MOX fuel and using that fuel in
commercial reactors. Irradiation of MOX fuel in a reactor destroys much of the
original plutonium and degrades the remainder so that it is no longer
attractive for weapons use. The program to dispose of surplus weapons material
was recommended by the National Academy of Sciences and has the strong support
of the U.S. government and other matterindustrialized nations.
In the proposed program, surplus plutonium will be converted to plutonium
oxide, blended with uranium oxide, and fabricated into MOX fuel on a U.S.
government site (most likely the Savannah River Site in South Carolina). The
completed and sealed MOX fuel assemblies, virtually indistinguishable from
uranium fuel assemblies, will be shipped to the McGuire and Catawba plants for
irradiation. Many years of European experience, government-sponsored studies,
and evaluations by the Corporation indicate that MOX fuel can be used safely.
However, before receiving and irradiating MOX fuel at the McGuire and Catawba
plants, the Corporation must first apply for and receive amendments to their
respective facility operating licenses from the Nuclear Regulatory Commission
(NRC). In order to receive these necessary regulatory approvals, the
Corporation will have to demonstrate to the NRC that MOX fuel poses no
significant hazard to the health and safety of the public.
The Corporation will pay substantially less for the MOX fuel than for the
equivalent quantity of uranium fuel. Therefore, the Corporation will realize
direct economic benefits through lower nuclear fuel prices.
THE MOX FUEL PROGRAM OFFERS THE CORPORATION AN OPPORTUNITY TO BENEFIT ITS
SHAREHOLDERS AT THE SAME TIME AS IT MAKES A MEANINGFUL CONTRIBUTION TO
NONPROLIFERATION AND INTERNATIONAL SECURITY. IN THE WORDS OF THE LATE WILLIAM
S. LEE III, WHO WAS CHAIRMAN OF THE BOARD AND PRESIDENT OF THE CORPORATION FOR
MANY YEARS:
It's clearly in the interest of world peace to make a substantial
investment in the safe dismantling and disposal of nuclear weapons. The
opportunity to earn a return on that investment by reclaiming materials for
peaceful uses seems too sensible to ignore. We should move now to convert
our nuclear weapons to power plant fuel and assist others to do the same.
Twentieth century swords can literally become the plowshares that work to
fuel a growing, more prosperous global economy in the 21st century.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
OTHER MATTERS
On the date this proxy statement went to press, management did not know of
any other matters to be brought before the meeting other than those described
in this proxy statement. If any matters come before the meeting. However, if any matter requiring a vote ofmeeting that are not
specifically set forth on the shareholders
should arise,proxy card and in this proxy statement, it is the
intention of the persons named in the enclosed form of
proxy for holders of Common Stockcard to vote such proxythereon in accordance
with their best judgment.
19
PROPOSALS FOR 19962000 ANNUAL MEETING
ShareholderShareholders who intend to present proposals intended to be presented at the 1996 annual meeting in 2000
pursuant to the procedures under Rule 14a-8 of the SEC, and who wish to have
such proposals included in the Corporation's proxy statement for that meeting,
must be certain that such proposals are received by the CompanySecretary of the
Corporation by November 21, 199512, 1999. Such proposals must meet the requirements set
forth in the rules and regulations of the SEC in order to be eligible for possible
inclusion in the proxy material relatingstatement for the 2000 annual meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Corporation's knowledge, based on information furnished to such meeting.it and
contained in the reports filed pursuant to Rule 16a-3 of the Exchange Act, as
well as any written representations that no other reports were required, all
applicable Section 16(a) filing requirements were complied with during the year
ended December 31, 1998.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'SCORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1994,1998, WHICH IS REQUIRED TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION,SEC, WILL BE MADE
AVAILABLE TO SHAREHOLDERSHOLDERS OF COMMON STOCK TO WHOM THIS PROXY STATEMENT IS MAILED,
WITHOUT CHARGE, UPON WRITTEN REQUEST TO ALLEN STEWART,THE INVESTOR RELATIONS DEPARTMENT, DUKE
POWER COMPANY,ENERGY CORPORATION, P.O. BOX 1005, CHARLOTTE, N.C.NORTH CAROLINA 28201-1005.
Whether or not you plan to attend the meeting, please mark, sign, date and
promptly return the enclosed proxy in the enclosed envelope. No postage is
required for mailing in the United States.
By orderOrder of the Board of Directors
ELLEN T. RUFFRICHARD W. BLACKBURN
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Charlotte, North Carolina
March 12, 1999
20
1995 SECRETARY
18
(Duke Power Logo)
*******************************************************************************
APPENDIX
(FORM OF PROXY)[DUKE ENERGY LOGO APPEARS HERE]
Duke Power Company (Map of streets near meeting siteEnergy Corporation
Annual Meeting of Shareholders
appears here)
April 27, 199515, 1999 at 10:00 a.m.
O.J.Energy Center-O.J. Miller Auditorium - Electric Center
526 South Church Street
Charlotte, NC
[Map of Charlotte Location Appeared Here]
- --------------------------------------------------------------------------------
DUKE POWER COMPANYENERGY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W. H. Grigg, R. J.R.B. Priory, R.J. Osborne and Ellen T. Ruff,R.W. Blackburn,
and each of them, proxies, with the powers the undersigned would possess if
personally present, and with full power of substitution, to vote all shares of
Common Stock of Duke Power CompanyEnergy Corporation of the undersigned at the annual meeting
of shareholders to be held in the ElectricEnergy Center, 526 South Church Street,
Charlotte, North Carolina, on April 27, 1995,15, 1999, and at any adjournment thereof,
upon all subjects that may come before the meeting, including the matters
described in the proxy statement furnished herewith, subject to any directions
indicated on the reverse side of this card. If no directions are given, the individuals designated above will
vote for the election of all Class I director nominees, in accord with
the directors' recommendation on the other subject listed on the reverse of
this card and at their discretion on any other matter that may come before
the meeting.IF NO DIRECTIONS ARE GIVEN, THE
INDIVIDUALS DESIGNATED ABOVE WILL VOTE FOR THE ELECTION OF ALL DIRECTOR
NOMINEES, IN ACCORD WITH THE DIRECTORS' RECOMMENDATIONS ON THE OTHER SUBJECTS
LISTED ON THE REVERSE OF THIS CARD AND AT THEIR DISCRETION ON ANY OTHER MATTER
THAT MAY COME BEFORE THE MEETING.
Your vote for the election of Class I directors may be indicated on the reverse.
Nominees are Steve C. Griffith,G. Alex Bernhardt, Sr., William A. Coley, Max Lennon and Leo E.
Linbeck, Jr., Paul H. Henson,
W. W. Johnson, Buck Mickel and Russell M. Robinson, II.
If you do not sign and return a proxy, or attend the meeting, your shares
cannot be voted.
Please sign on reverse and return promptly in the enclosed return envelope.
TO OUR SHAREHOLDERS:
It's my pleasure[DUKE ENERGY LOGO
APPEARS HERE]
To Participants in the Duke Energy
Retirement Savings Plan:
As a participant in the Duke Energy Retirement Savings Plan, you have the right
to invitedirect the Plan trustee in the voting of those shares of Duke Energy Common
Stock that are held by the Plan and allocated to your Plan account, on any
issues presented at Duke Energy's 1999 annual shareholder meeting, to be held
April 15 in Charlotte, N.C.
I encourage you to Duke Power's annual meetingread the enclosed Proxy Statement and to complete the
attached proxy to direct the voting of shareholders
at 10 a.m., Thursday, April 27, 1995,the shares allocated to your Plan
account. Your Plan participant proxy will be treated confidentially. If you
elect not to return a completed proxy, shares allocated to your Plan account
will be voted by the Plan trustee in the O. J. Miller Auditorium,
526 South Church Street, Charlotte.
Your Company enjoyedsame proportion as those shares held by
the Plan for which the Plan trustee has received direction from Plan
participants. Even though you may have returned a successful year in 1994. I hopeproxy for shares owned outide
the Plan, you can attend this
year's meeting for a full report onare encouraged to exercise your rights by completing and returning
the year's results and to learn how we
intend to build on our success in 1995.
Whether or not you attend, please read your proxy statement and return
your completed ballot as soon as possible. We need and value your input;
being an involved shareholder is one of the best ways you can contribute to
Duke Power's continued success.
Thank you for your support. I hope to see you personally on April 27.enclosed proxy.
Sincerely,
W.H. GriggR.B. Priory
Chairman of the Board, President and
Chief Executive Officer
Directors recommend a vote "For""FOR" Items A1, 2 and B below
A.3 and a vote "AGAINST" Item 4
1. Election of the fivefour directors who will constitute Class III of
the Board of Directors. (pages 1-7)
To vote your shares for all director nominees, or to withhold voting for
all nominees, mark the appropriate box. If you do not wish your shares
voted for a particular director nominee, mark the "For*" box and enter
the name(s) of the exception(s)exceptions in the space provided.
B.2. Proposal to increase the authorized Common Stock of
the Corporation from 500,000,000 shares to
1,000,000,000 shares.
3. Ratification of Auditors. (page 18)
If you plan to attend the meeting, please indicate on the ballot below
and see reverse for additional information. This detachable portion may
be presented for admission to the meeting.
(down arrow/down arrow)appointment of auditors.
4. Shareholder proposal
BEFORE MAILING, PLEASE DETACH THIS PORTION.(down arrow/down arrow)
(Duke Power logo appears here)
================================================================================
[DUKE ENERGY LOGO
APPEARS HERE]
- --------------------------------------------------------------------------
1. Withhold A.* Except for the following
For All For* Authority B.------------------ ----------------
[ ] [ ] [ ] ------------------ ----------------
------------------ ----------------
- ---------------------------------------------------------------------------
------------------------
2.
For Against Abstain
[ ] [ ] [ ]
------------------------
JOHN A SHAREHOLDER ------------------------ ------------------------
422 S. CHURCH STREET 3. 4.
PB01H For Against Abstain For Against Abstain
CHARLOTTE, NC 28242-0001 [ ] [ ] [ ] [ ] [ ] [ ]
*Except for the following:------------------------ ------------------------
If you plan to attend the meeting, please mark: [ ]
If you do not wish to receive an Annual Report for this account, please mark:[ ]
ALLOCATION OF SHARES HELD BY RSP AS OF MARCH 3, 1995FEBRUARY 22, 1999
Shares
Account Number300.0352
Sign here as
X------------------------------------
name(s) appears above X Date ,1995
Please sign this proxy and return it promptly whether or not
you plan to attend the meeting.,1999
------------------------------------ -----------------
PLEASE SIGN THIS PROXY AND RETURN IT PROMPTLY WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING. If signing for a corporation or partnership or as agent, attorney
or fiduciary, indicate the capacity in which you are signing. Each joint owner
should sign. If you do attend the meeting and decide to vote by ballot, such
vote will supersede this proxy.
DUKE POWER COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W. H. Grigg, R. J. Osborne[DUKE ENERGY LOGO
APPEARS HERE]
DEAR SHAREHOLDER:
I hope you will join me and Ellen T. Ruff,
and each of them, proxies, with the powers the undersigned would possess
if personally present, and with full power of substitution, to vote all shares
of Common Stock ofyour fellow shareholders at Duke Power Company of the undersigned at theEnergy's annual
meeting, of shareholders to be heldwhich begins at 10:00 a.m., Thursday, April 15, in the ElectricO.J. Miller
Auditorium, located in the Energy Center, 526 South Church Street,St.,
Charlotte, North Carolina,Carolina.
Shareholders will be asked to vote on April 27, 1995, and at any adjournment thereof,
upon all subjects that may come before the meeting, including the matters
described in the proxy statement furnished herewith, subject to any directions
indicated on the reverse side of this card. If no directions are given, the
individuals designated above will vote for the election of four directors, a proposal
to increase the Classauthorized Common Stock, the ratification of appointment of
auditors and a shareholder proposal.
I director nominees, in accord with the directors' recommendation on the other
subject listed on the reverse of this card and at their discretion on any
other matter that may come before the meeting.
Your vote for the election of Class I directors may be indicated on the
reverse. Nominees are Steve C. Griffith, Jr., Paul H. Henson, W. W.
Johnson, Buck Mickel and Russell M. Robinson, II.
Ifhope to see you do not take advantage of the opportunity to vote your shares, your Stock
Purchase-Savings Program shares will be voted according to the rules of the
New York Stock Exchange in a manner which may not reflect your wishes. Your
ESOP shares will not be voted at all.
Please sign on reverse and return promptly in the enclosed return envelope.
TO PARTICIPANTS OF THE DUKE POWER COMPANY STOCK PURCHASE-SAVINGS
PROGRAM AND/OR EMPLOYEE STOCK OWNERSHIP PLAN (ESOP):
You are receiving the enclosed proxy material as a participant in Duke Power
Company's Stock Purchase-Savings Program and/or the ESOP. As beneficial owner,
you have the right to direct voting of shares credited to your account(s) on
any issues presented at Duke Power's 1995 annual shareholders' meetingpersonally on April 27.
If you fail to return a completed proxy, shares held15 in your Stock Purchase-
Savings Program account will be voted under New York Stock Exchange rules
and may not reflect your wishes. Shares in your ESOP account will not be
voted if you do not sign and return a proxy or attend the meeting. I encourage
you to make your voice heard by completing and returning the enclosed proxy,
even though you may have already returned another proxy for any other shares
you own.Charlotte.
Sincerely,
W.H. GriggR.B. Priory
Chairman of the Board, President and
Chief Executive Officer
Directors recommend a vote "For""FOR" Items A1, 2 and B below
A.3 and a vote "AGAINST" Item 4
1. Election of the fivefour directors who will constitute Class III of
the Board of Directors. (pages 1-7)
To vote your shares for all director nominees, or to withhold voting for
all nominees, mark the appropriate box. If you do not wish your shares
voted for a particular director nominee, mark the "For*" box and enter
the name(s) of the exception(s)exceptions in the space provided.
B.2. Proposal to increase the authorized Common Stock of
the Corporation from 500,000,000 shares to
1,000,000,000 shares.
3. Ratification of Auditors. (page 18)
(down arrow/down arrow)appointment of auditors.
4. Shareholder proposal
BEFORE MAILING, PLEASE DETACH THIS PORTION.(down arrow/down arrow)
(Duke Power logo appears here)
================================================================================
[DUKE ENERGY LOGO
APPEARS HERE]
- --------------------------------------------------------------------------
1. Withhold A.* Except for the following
For All For* Authority B.------------------ ----------------
[ ] [ ] [ ] ------------------ ----------------
------------------ ----------------
- ---------------------------------------------------------------------------
------------------------
2.
For Against Abstain
[ ] [ ] [ ]
------------------------
JOHN A SHAREHOLDER ------------------------ ------------------------
422 S. CHURCH STREET 3. 4.
PB01H For Against Abstain For Against Abstain
CHARLOTTE, NC 28242-0001 [ ] [ ] [ ] [ ] [ ] [ ]
*Except for the following:------------------------ ------------------------
If you plan to attend the meeting, please mark: [ ]
If you do not wish to receive an Annual Report for this account, please mark:[ ]
ALLOCATION OF SHARES HELD BY RSP AS OF MARCH 3, 1995
Stock Purchase-
ESOP Savings ProgramFEBRUARY 22, 1999
Shares Account Number
300.0352 000052335
Sign here as
X------------------------------------
name(s) appears above X Date ,1995
Please sign this proxy and return it promptly whether or not
you plan to attend the meeting.,1999
------------------------------------ -----------------
PLEASE SIGN THIS PROXY AND RETURN IT PROMPTLY WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING. If signing for a corporation or partnership or as agent, attorney
or fiduciary, indicate the capacity in which you are signing. Each joint owner
should sign. If you do attend the meeting and decide to vote by ballot, such
vote will supersede this proxy.
On the Dear Shareholder page the signature of W.H. Grigg appears where
indicated.
On Pages 2 through 7 corresponding photos of nominees and directors listed
appears next to each nominee's or director's name.
On Page 16 the Performance Graph appears where indicated. The plot points
are as described in this submission.
The Duke Power Citizenship Service logo appears on the outside back cover
of the Proxy Statement.
On the front side of each Proxy Card the Duke Power Citizenship Service
logo appears in the background behind the text that starts with
"To vote your shares". The Duke Power Citizenship Service logo and the
words "DUKE POWER" also appear below the letter from Mr. Grigg on both
proxy cards.
On the back side of the "To Our Shareholders" proxy card a map of a
portion of the central business district of Charlotte, N.C., where
the Company's main office is located, appears where indicated.