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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.           )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

Check the appropriate box:
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o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
ý   Definitive Proxy Statement
o   Definitive Additional Materials
o   Soliciting Material under §240.14a-12

 

GRAPHIC
DUKE ENERGY CORPORATION

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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    (1)   Amount Previously Paid:
         
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Welcome to the Duke Energy

Annual Meeting
of Shareholders

GRAPHIC

March 23, 2017

Dear Fellow Shareholders:

I am pleased to invite you to our Annual Meeting of Shareholders ("Annual Meeting") to be held on Thursday, May 4, 2017, at 12:30 p.m. Eastern Time. We look forward to updating you on the progress we have made and our plans for the future of Duke Energy.

This year we are excited to hold the Annual Meeting exclusively online for the first time via live webcast. This format enables us to use technology to open our Annual Meeting to shareholders from all over the world and improve our communications with them. We want to make sure that all of our shareholders have the opportunity to participate in the governance of the Corporation, and the live webcast will help accomplish this. An audio broadcast of the Annual Meeting will also be available by telephone toll-free at 1.888.256.9124, conference number 4228233. Details regarding how to participate in the Annual Meeting via webcast and the business to be conducted at the Annual Meeting are more fully described in the accompanying Notice of Annual Meeting on page 10 and Frequently Asked Questions and Answers About the Annual Meeting on page 75 of this proxy statement.

The online format will also allow us to communicate with you in advance of the Annual Meeting via a pre-meeting forum that you can enter by visiting www.proxyvote.com. Through the use of our pre-meeting forum, you can submit questions in writing in advance of the Annual Meeting. As a result, we will be able to answer more questions than we were able to answer at previous meetings by posting written answers online to any questions that we do not have time to answer during the Annual Meeting.

This proxy statement contains details about Duke Energy's strong corporate governance practices. The Corporation has made numerous positive changes to our corporate governance practices in recent years. These steps are in addition to the many strategic business developments that occurred in 2016, which are detailed in the 2016 Annual Report that accompanies this proxy statement.

Your participation as a shareholder is important to us. Please review this proxy statement prior to voting as it contains important information relating to the business of the Annual Meeting. Page 3 contains instructions on how you can vote your shares online, by telephone or by mail. At Duke Energy's 2016 Annual Meeting, approximately 84% of the Corporation's outstanding shares were represented in person or by proxy. It is important that all Duke Energy shareholders, regardless of the number of shares owned, participate in the affairs of the Corporation.

Thank you for your continued investment in Duke Energy.

Sincerely,

GRAPHIC

Lynn J. Good
Chairman, President and Chief Executive Officer

GRAPHIC

 


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Letter from the Independent Lead Director

Dear Fellow Shareholders:

Duke Energy Corporation's Board of Directors (the "Board") is committed to sound corporate governance policies and practices to ensure the Corporation operates responsibly, efficiently, and in the best interests of its shareholders. This proxy statement highlights the governance practices of the Corporation and our Board, as well as the governance developments at Duke Energy in 2016.

In January 2016, the Board appointed me as the Corporation's Independent Lead Director. As Independent Lead Director, I work with our Chief Executive Officer on the issues to be discussed with the Board at each Board and Committee meeting. In addition, I take the lead on the implementation of the Board and Committee assessment process, as well as Chief Executive Officer and Board succession review. I also lead the executive sessions held by our independent directors.

As Independent Lead Director, I also have the privilege to work with the Corporation's other engaged and experienced directors. The diversity of experience, background and skills among our directors allows for active oversight by the Board of the many issues facing the Corporation and utility industry at this time, as well as thoughtful advice as the Corporation navigates its strategic initiatives. As this proxy statement details, the Board continues to recruit new directors to bring fresh perspectives and new ideas to our Board. Since the 2016 Annual Meeting, we have added three new directors: William E. Webster, Jr., retired Executive Vice President at the Institute for Nuclear Power Operations, Thomas E. Skains, retired Chairman, President and Chief Executive Officer at Piedmont Natural Gas Company, Inc., and Theodore F. Craver, Jr., retired Chairman and Chief Executive Officer at Edison International.

The Board continues to value the feedback from its shareholders and welcomes our ongoing dialogue with shareholders. In recent years, our engagement with you has resulted in a number of enhancements to our corporate governance practices, including the adoption of majority voting for the election of directors, proxy access, and the ability for shareholders to call special shareholder meetings and act by written consent. On behalf of the entire Board, thank you for your continued support.

Sincerely,

GRAPHIC

Michael G. Browning
Independent Lead Director

GRAPHIC

From left to right: Ann Maynard Gray (Retiring), James B. Hyler, Jr., John H. Forsgren, Daniel R. DiMicco, Carlos A. Saladrigas, Thomas E. Skains, Lynn J. Good, John T. Herron, E. Marie McKee, William E. Kennard, Michael G. Browning, William E. Webster, Jr., Michael J. Angelakis and Charles W. Moorman IV. Not pictured, Theodore F. Craver, Jr.

    DUKE ENERGY – 2017 Proxy Statement


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TABLE OF CONTENTS

PARTICIPATE IN THE FUTURE OF DUKE ENERGY; CAST YOUR VOTE NOW   3

PROXY SUMMARY

 

4

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

10

PROPOSAL 1:

 

ELECTION OF DIRECTORS

 

11

INFORMATION ON THE BOARD OF DIRECTORS

 

20

REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

 

29

DIRECTOR COMPENSATION

 

32

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

34

PROPOSAL 2:

 

RATIFICATION OF DELOITTE & TOUCHE LLP AS DUKE ENERGY CORPORATION'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017

 

36

REPORT OF THE AUDIT COMMITTEE

 

37

PROPOSAL 3:

 

ADVISORY VOTE TO APPROVE DUKE ENERGY CORPORATION'S NAMED EXECUTIVE OFFICER COMPENSATION

 

38

REPORT OF THE COMPENSATION COMMITTEE

 

39

COMPENSATION DISCUSSION AND ANALYSIS

 

39

EXECUTIVE COMPENSATION

 

55

PROPOSAL 4:

 

ADVISORY VOTE ON THE FREQUENCY OF THE VOTE ON EXECUTIVE COMPENSATION

 

67

PROPOSAL 5:

 

AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF DUKE ENERGY CORPORATION TO ELIMINATE SUPERMAJORITY REQUIREMENTS

 

68

SHAREHOLDER PROPOSALS

 

69

PROPOSAL 6:

 

SHAREHOLDER PROPOSAL REGARDING PROVIDING AN ANNUAL REPORT ON DUKE ENERGY'S LOBBYING EXPENSES

 

69

PROPOSAL 7:

 

SHAREHOLDER PROPOSAL REGARDING PREPARING AN ASSESSMENT OF THE IMPACTS ON DUKE ENERGY'S PORTFOLIO OF CLIMATE CHANGE CONSISTENT WITH A TWO DEGREE SCENARIO

 

71

PROPOSAL 8:

 

SHAREHOLDER PROPOSAL REGARDING PROVIDING A REPORT ON THE PUBLIC HEALTH RISK OF DUKE ENERGY'S COAL USE

 

73

DUKE ENERGY – 2017 Proxy Statement    


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Forward-Looking Information

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions and can often be identified by terms and phrases that include "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," "target," "guidance," "outlook" or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements. Accordingly, there is no assurance that such results will be realized. For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and available at the SEC's website at www.sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made. Duke Energy expressly disclaims an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

    DUKE ENERGY – 2017 Proxy Statement


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PARTICIPATE IN THE FUTURE OF DUKE ENERGY; CAST YOUR VOTE NOW

It is very important that you vote to participate in the future of Duke Energy Corporation ("Duke Energy" or the "Corporation"). New York Stock Exchange ("NYSE") rules state that if your shares are held through a broker, bank or other nominee, they cannot vote without your instruction on nondiscretionary matters.

Eligibility to Vote

You can vote if you were a shareholder of record at the close of business on March 6, 2017.

Vote Now

Even if you plan to participate in this year's Annual Meeting, it is a good idea to vote your shares before the Annual Meeting in the event your plans change. Whether you vote online, by telephone or by mail, please have your proxy card or voting instruction form in hand and follow the instructions.


By internet

 

By telephone

 

By mailing your
proxy card

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GRAPHIC

 

GRAPHIC
Visit 24/7
www.proxyvote.com
  Call toll-free 24/7
1.800.690.6903
or by calling the
number provided
by your broker, bank
or other nominee if your shares are not
registered in your name
  Cast your vote,
sign your proxy card
and send free of postage

 

 

 

 

 

Participate in the Annual Meeting

This year's Annual Meeting will be held exclusively online via a live webcast, enabling shareholders from around the world to participate, submit questions in writing and vote. Shareholders of record as of the close of business on March 6, 2017, are entitled to participate in and vote at the Annual Meeting by visiting duke-energy.onlineshareholdermeeting.com. To participate in the online Annual Meeting, you will need the 16-digit control number included on your Notice of Internet Availability of the Proxy Materials (the "Notice"), on your proxy card and on the instructions that accompanied your Notice, proxy statement and 2016 Annual Report (the "proxy materials"). The Annual Meeting will begin promptly at 12:30 p.m. Eastern Time. Online check-in will begin at 12:00 p.m. Eastern Time. Please allow ample time for the online check-in procedures. An audio broadcast of the Annual Meeting will be available by telephone toll-free at 1.888.256.9124, conference number 4228233.

DUKE ENERGY – 2017 Proxy Statement    3


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PROXY SUMMARY

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider. You should read the entire proxy statement carefully before voting. Page references ("XX") are supplied to help you find further information in this proxy statement.

Voting Matters (page 10)

 
   
  More
information

  Board
recommendation

  Broker
non-votes

  Abstentions
  Votes
required
for approval

PROPOSAL 1   Election of directors   Page 11   FOR each nominee   Do not count   Do not count   Majority of votes cast, with a resignation policy
PROPOSAL 2   Ratification of Deloitte & Touche LLP as Duke Energy Corporation's independent registered public accounting firm for 2017   Page 36   FOR   Vote for   Vote against   Majority of shares represented
PROPOSAL 3   Advisory vote to approve Duke Energy Corporation's named executive officer compensation   Page 38   FOR   Do not count   Vote against   Majority of shares represented
PROPOSAL 4   Advisory vote on the frequency of the vote on executive compensation   Page 67   FOR AN
ADVISORY
VOTE EVERY
YEAR
  Do not count   Do not count   The frequency receiving the greatest number of votes will be approved
PROPOSAL 5   Amendment to the Amended and Restated Certificate of Incorporation of Duke Energy Corporation to eliminate supermajority requirements   Page 68   FOR   Vote against   Vote against   80% of the outstanding shares
PROPOSAL 6   Shareholder proposal regarding providing an annual report on Duke Energy's lobbying expenses   Page 69   AGAINST   Do not count   Vote against   Majority of shares represented
PROPOSAL 7   Shareholder proposal regarding preparing an assessment of the impacts on Duke Energy's portfolio of climate change consistent with a two degree scenario   Page 71   AGAINST   Do not count   Vote against   Majority of shares represented
PROPOSAL 8   Shareholder proposal regarding providing a report on the public health risks of Duke Energy's coal use   Page 73   AGAINST   Do not count   Vote against   Majority of shares represented

4    DUKE ENERGY – 2017 Proxy Statement


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2016 Business Highlights

2016 was a pivotal year for Duke Energy. We completed a multiyear transformation of our business portfolio, maintained strong earnings growth in our core businesses and continued to increase our dividend for the benefit of our shareholders. With our transition complete, our strategy for the next decade is clear. We see great opportunities ahead and remain focused on investing in infrastructure our customers value and delivering sustainable growth for our investors. We will do this while building on our foundation of customer satisfaction and stakeholder engagement, all while remaining focused on safety, operational excellence and the environment.

Safety remains our top priority. We improved on our industry-leading performance from 2015, reducing our total incident case rate and OSHA-reportable employee safety incidents. And in 2016, we had no work-related fatalities.

We also reduced reportable environmental events by 17% from last year and continued to advance our efforts to permanently close our coal ash basins in ways that protect people and the environment.

We have completed our multi-year transition to a more stable business mix by focusing on our core regulated and highly-contracted businesses. We expanded our natural gas platform and capabilities by acquiring Piedmont Natural Gas Company, Inc. We also completed the sale of our Latin American generation business, whose earnings introduced volatility to our consolidated results. Today's Duke Energy, with scale and a portfolio of complementary businesses, is well-positioned to deliver predictable, stable earnings and cash flows to our investors.

We are making significant investments to strengthen and modernize our energy grid, generate cleaner energy through natural gas and renewables, and by building natural gas infrastructure to support the growing need of this important resource. Reducing our carbon footprint is important to many in our communities, and we remain focused on being a leader with environmental stewardship at the forefront of our plans.

Our total shareholder return ("TSR") was 13.5% in 2016, compared to negative 10.8% in 2015. The total shareholder return of the Philadelphia Utility Index ("UTY") was 17.4% in 2016, compared to negative 6.3% in 2015.

During 2016, we increased the dividend payment to our shareholders by approximately four percent, reflecting our confidence in the strength of our core businesses. This is the tenth consecutive year of annual dividend growth. It also marked the 90th consecutive year that Duke Energy has paid a quarterly cash dividend on its common stock, a record we expect to continue for shareholders, who rely on a steady and growing dividend.

Board Representation

GRAPHIC


*
Board representation statistics as of March 6, 2017.

DUKE ENERGY – 2017 Proxy Statement    5


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Board Nominees (page 11)

 
   
   
   
  Independent (Yes/No)    
   
 
   
  Director
since

   
   
  Other Public
Company Boards

Name
  Age
  Occupation
  Yes
  No
  Committee Memberships
             

Michael J. Angelakis

  52   2015   Chairman and Chief Executive Officer, Atairos Management, L.P.   ü    

Audit

Finance and Risk Management

 

Hewlett Packard Enterprise

Groupon, Inc.

Michael G. Browning
Independent Lead Director

  70   2006   Chairman, Browning Consolidated, LLC   ü      

Compensation

Corporate Governance

Finance and Risk Management

 

None

             

Theodore F. Craver, Jr.

  65   2017   Retired Chairman, President and Chief Executive Officer, Edison International   ü    

Finance and Risk Management

Regulatory Policy and Operations

 

None

Daniel R. DiMicco

  66   2007   Chairman Emeritus, Retired President and Chief Executive Officer, Nucor Corporation   ü      

Corporate Governance

Nuclear Oversight

 

None

             

John H. Forsgren

  70   2009   Retired Vice Chairman, Executive Vice President and Chief Financial Officer, Northeast Utilities   ü    

Audit

Finance and Risk Management

 

None

Lynn J. Good
Chairman

  57   2013   Chairman, President and Chief Executive Officer, Duke Energy Corporation       GRAPHIC  

None

 

The Boeing Company

             

John T. Herron

  63   2013   Retired President, Chief Executive Officer and Chief Nuclear Officer, Entergy Nuclear   ü    

Nuclear Oversight

Regulatory Policy and Operations

 

None

James B. Hyler, Jr.

  69   2012   Retired Vice Chairman and Chief Operating Officer, First Citizens BancShares, Inc.   ü      

Audit

Regulatory Policy and Operations

 

None

             

William E. Kennard

  60   2014   Non-Executive Chairman, Velocitas Partners, LLC   ü    

Corporate Governance

Finance and Risk Management

Regulatory Policy and Operations

 

AT&T Inc.

Ford Motor Company

MetLife, Inc.

E. Marie McKee

  66   2012   Retired Senior Vice President, Corning Incorporated   ü      

Audit

Compensation

 

None

             

Charles W. Moorman IV

  65   2016   President and Chief Executive Officer, Amtrak   ü    

Compensation

Nuclear Oversight

 

Chevron Corporation

Carlos A. Saladrigas

  68   2012   Chairman, Regis HR Group   ü      

Audit

Compensation

 

None

             

Thomas E. Skains

  60   2016   Retired Chairman, President and Chief Executive Officer, Piedmont Natural Gas Company, Inc.   ü    

Nuclear Oversight

Regulatory Policy and Operations

 

BB&T Corporation

National Fuel Gas Company

William E. Webster, Jr.

  63   2016   Retired Executive Vice President, Industry Strategy for the Institute of Nuclear Power Operations   ü      

Nuclear Oversight

Regulatory Policy and Operations

 

None

6    DUKE ENERGY – 2017 Proxy Statement


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Corporate Governance Highlights (page 29)

 
ü   Ability for shareholders to nominate directors through proxy access
ü   Independent Lead Director with clearly defined role and responsibilities
 
ü   Majority voting for directors with mandatory resignation policy and plurality carve-out for contested elections
ü   Robust shareholder engagement program
 
ü   Annual Board, committee and director assessments
ü   Ability for shareholders to take action by less than unanimous written consent
 
ü   Ability for shareholders to call a special shareholder meeting
ü   Annual election of directors
 
ü   Independent Board committees
ü   No hedging or pledging of Duke Energy securities

Shareholder Engagement (page 23)

As part of Duke Energy's commitment to corporate governance, we have instituted an engagement program to discuss and obtain feedback from our shareholders on our corporate governance and executive compensation practices. During the fall of 2016, the Corporation reached out to holders of approximately 33% of our outstanding shares and met with the holders of approximately 20% of our outstanding shares to discuss a variety of topics including executive compensation, sustainability, social and governance issues such as coal ash management, Board structure, Board succession planning and director onboarding. We also discussed the shareholder proposals that were voted on at the 2016 Annual Meeting, including a majority supported shareholder proposal to eliminate supermajority requirements in our Amended and Restated Certificate of Incorporation. As a result of the Corporation's engagement on this shareholder proposal, the Board is recommending to shareholders at this Annual Meeting that they approve an amendment to the Corporation's Amended and Restated Certificate of Incorporation to eliminate supermajority requirements. A more complete discussion of our corporate governance engagement program is included on page 23.

DUKE ENERGY – 2017 Proxy Statement    7


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Executive Compensation Highlights (page 39)

Principles and Objectives

Our executive compensation program is designed to:

Link pay to performance

Attract and retain talented executive officers and key employees

Emphasize performance-based compensation to motivate executives and key employees

Reward individual performance

Encourage long-term commitment to Duke Energy and align the interests of executives with shareholders

We meet these objectives through the appropriate mix of compensation, including:

Base salary

Short-term incentives

Long-term incentives

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8    DUKE ENERGY – 2017 Proxy Statement


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Key Executive Compensation Features (page 44)

 

ü

 

Significant stock ownership requirements (6x base salary for the Chief Executive Officer)

ü

 

Stock holding policy

ü

 

Incentive compensation tied to a clawback policy

ü

 

Consistent level of severance protection

ü

 

Shareholder approval policy for severance agreements

ü

 

Equity award granting policy

ü

 

Independent compensation consultant

ü

 

Annual tally sheets for executive officers

ü

 

Review and consideration of prior year's "say-on-pay" vote

ü

 

No tax gross-ups

ü

 

No "single trigger" severance upon a change in control

ü

 

No employment agreements except for our Chief Executive Officer

ü

 

Do not encourage excessive or inappropriate risk-taking

ü

 

No excessive perquisites

DUKE ENERGY – 2017 Proxy Statement    9


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Notice of Annual Meeting
of Shareholders

May 4, 2017

12:30 p.m. Eastern Time
Online at duke-energy.onlineshareholdermeeting.com

We will convene the Annual Meeting of Shareholders of Duke Energy Corporation ("Annual Meeting") on Thursday, May 4, 2017, at 12:30 p.m. Eastern Time online via live webcast at duke-energy.onlineshareholdermeeting.com.

The purpose of the Annual Meeting is to consider and take action on the following:

1.
Election of directors;
2.
Ratification of Deloitte & Touche LLP as Duke Energy Corporation's independent registered public accounting firm for 2017;
3.
Advisory vote to approve Duke Energy Corporation's named executive officer compensation;
4.
Advisory vote on the frequency of the vote on executive compensation;
5.
Amendment to the Amended and Restated Certificate of Incorporation of Duke Energy Corporation to eliminate supermajority requirements;
6.
A shareholder proposal regarding providing an annual report on Duke Energy's lobbying expenses;
7.
A shareholder proposal regarding preparing an assessment of the impacts on Duke Energy's portfolio of climate change consistent with a two degree scenario;
8.
A shareholder proposal regarding providing a report on the public health risks of Duke Energy's coal use; and
9.
Any other business that may properly come before the meeting (or any adjournment or postponement of the meeting).

Shareholders of record as of the close of business on March 6, 2017, are entitled to vote at the Annual Meeting by visiting duke-energy.onlineshareholdermeeting.com. To participate in the online Annual Meeting, you will need the 16-digit control number included on your Notice, on your proxy card or on the instructions that accompany your proxy materials. The Annual Meeting will begin promptly at 12:30 p.m. Eastern Time. Online check-in will begin at 12:00 p.m. Eastern Time. Please allow ample time for the online check-in procedures. An audio broadcast of the Annual Meeting will be available by telephone toll-free at 1.888.256.9124, conference number 4228233.

The online format for the Annual Meeting also allows us to communicate more effectively with more of our shareholders via a pre-meeting forum that you can enter by visiting www.proxyvote.com. On our pre-meeting forum, you can submit questions in writing in advance of the Annual Meeting, vote and also access copies of proxy materials.

This year we are again providing our proxy materials to our shareholders via the internet. By doing so, most of our shareholders will only receive the Notice containing instructions on how to access the proxy materials via the internet and vote online, by telephone or by mail. If you would like to request paper copies of the proxy materials, you may follow the instructions on the Notice. If you receive paper copies of the proxy materials, we ask you to consider signing up to receive these materials via the internet in the future by following the instructions contained in this proxy statement. By delivering proxy materials via the internet, we can reduce the consumption of natural resources and the cost of printing and mailing our proxy materials.

Please take time to vote now. If you choose to vote by mail, you may do so by marking, dating and signing the proxy card and returning it to us. Please follow the voting instructions that are included on your proxy card. Regardless of the manner in which you vote, we urge and greatly appreciate your prompt response.

Dated: March 23, 2017   By order of the Board of Directors,
GRAPHIC

Julia S. Janson
Executive Vice President, Chief Legal Officer and Corporate Secretary

10    DUKE ENERGY – 2017 Proxy Statement


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PROPOSAL 1:     ELECTION OF DIRECTORS

The Board of Directors

The Board of Directors of Duke Energy has nominated the following 14 candidates to serve on the Board. We have a declassified Board of Directors, which means all of the directors are voted on every year at the Annual Meeting.

If any director is unable to stand for election, the Board of Directors may reduce the number of directors or designate a substitute. In that case, shares represented by proxies may be voted for a substitute director. We do not expect that any nominee will be unavailable or unable to serve. The Corporate Governance Committee, comprised of only independent directors, has recommended the following current directors as nominees for director and the Board of Directors has approved their nomination for election. One of our directors, Ms. Gray, will be retiring at our Annual Meeting in accordance with our Principles for Corporate Governance. Therefore, she is not nominated for re-election.

GRAPHIC

DUKE ENERGY – 2017 Proxy Statement    11


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PROPOSAL 1:    ELECTION OF DIRECTORS

Board Biographical Information, Skills and Qualifications

GRAPHIC

12    DUKE ENERGY – 2017 Proxy Statement


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PROPOSAL 1:    ELECTION OF DIRECTORS

Michael J. Angelakis     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 52
Director of Duke Energy since 2015
Chairman and Chief Executive Officer, Atairos Management, L.P.
  Skills and Qualifications:

Mr. Angelakis' qualifications for election include his management and financial expertise as well as his risk management experience obtained as a senior executive at a large company.

  Committees:

Audit Committee

Finance and Risk Management Committee

Other current public directorships:

Hewlett Packard Enterprise Co.

Groupon, Inc.


Mr. Angelakis serves as Chairman and Chief Executive Officer of Atairos Management, L.P., a private investment firm. Prior to that he served as Vice Chairman and Chief Financial Officer at Comcast Corporation from March 28, 2007, until July 31, 2015.

Michael G. Browning     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
Independent Lead Director
GRAPHIC   Age: 70
Director of Duke Energy since 2006
Chairman, Browning Consolidated, LLC
  Skills and Qualifications:

Mr. Browning's qualifications for election include his management experience and his knowledge and understanding of Duke Energy's Midwest service territory. Mr. Browning's financial and investment expertise adds a valuable perspective to the Board and its committees.

  Committees:

Compensation Committee

Corporate Governance Committee

Finance and Risk Management Committee

Other current public directorships:

None


Mr. Browning has been Chairman of Browning Consolidated, LLC (and its predecessor), a real estate development firm, since 1981 and served as President from 1981 until 2013. He also serves as owner, general partner or managing member of various real estate entities. Mr. Browning is a former director of Standard Management Corporation, Conseco, Inc. and Indiana Financial Corporation. Mr. Browning has served as Independent Lead Director since January 1, 2016.

GRAPHIC

DUKE ENERGY – 2017 Proxy Statement    13


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PROPOSAL 1:    ELECTION OF DIRECTORS

Theodore F. Craver, Jr.     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 65
Director of Duke Energy since 2017
Retired Chairman, President and Chief Executive Officer, Edison International
  Skills and Qualifications:

Mr. Craver's qualifications for election include his experience as Chief Executive Officer of Edison International which gives him in-depth knowledge of the utility industry and its regulations, including environmental regulations, as well as his financial experience as a senior finance executive prior to becoming Chief Executive Officer. In addition, Mr. Craver's experience with grid cybersecurity as a member of the Steering Committee of the Electric Subsector Coordinator Council ("ESCC") gives him insight into this crucial area for the Corporation.

  Committees:

Finance and Risk Management Committee

Regulatory Policy and Operations Committee

Other current public directorships:

None


Mr. Craver was Chairman, President and Chief Executive Officer of Edison International, the parent company of a large California utility and various competitive electric businesses, from 2008 until his retirement in 2016. From 2005 to 2007, Mr. Craver served as Chief Executive Officer of Edison Mission Energy, a subsidiary of Edison International. Prior to his appointment as Chief Executive Officer of Edison Mission Energy, Mr. Craver served as Chief Financial Officer of Edison International from 2000 to 2004. He started at Edison International in 1996 after leaving First Interstate Bancorp where he was Executive Vice President and Corporate Treasurer. Mr. Craver is a former member of the ESCC, the organization which is the principal liaison between the federal government and the electric power sector responsible for coordinating efforts to prepare for, and respond to, national-level disasters or threats to critical infrastructure. Mr. Craver currently serves as a member of the Economic Advisory Council of the Federal Reserve Bank of San Francisco.

Daniel R. DiMicco     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 66
Director of Duke Energy since 2007
Chairman Emeritus, Retired President and Chief Executive Officer, Nucor Corporation
  Skills and Qualifications:

Mr. DiMicco's qualifications for election include his management experience, including his experience as Chief Executive Officer of a Fortune 500 company and successfully operating a company serving many constituencies. In addition, Mr. DiMicco's experience as Chief Executive Officer of a large industrial corporation provides a valuable perspective on Duke Energy's industrial customer class as well as extensive knowledge of the environmental regulations in Duke Energy's Carolinas and Midwest territories.

  Committees:

Corporate Governance Committee

Nuclear Oversight Committee

Other current public directorships:

None


Mr. DiMicco has served as Chairman Emeritus of Nucor Corporation, a steel company, since December 2013. Mr. DiMicco served as Executive Chairman of Nucor Corporation from January 2013 until December 2013, and as Chairman from May 2006 until December 2012. He served as Chief Executive Officer from September 2000 until December 2012 and President from September 2000 until December 2010. Mr. DiMicco was a member of the Nucor board of directors from 2000 until 2013. Mr. DiMicco is a former chair of the American Iron and Steel Institute.

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PROPOSAL 1:    ELECTION OF DIRECTORS


John H. Forsgren     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 70
Director of Duke Energy since 2009
Retired Vice Chairman, Executive Vice President and Chief Financial Officer, Northeast Utilities
  Skills and Qualifications:

As a Vice Chairman and Chief Financial Officer of a large utility company prior to his retirement, Mr. Forsgren's qualifications for election include financial and risk management expertise as well as extensive knowledge of the energy industry, the regulatory environment within the industry and insight on renewable energy.

  Committees:

Audit Committee

Finance and Risk Management Committee

Other current public directorships:

None


Mr. Forsgren was Vice Chairman, Executive Vice President and Chief Financial Officer of Northeast Utilities from 1996 until his retirement in 2004. He is a former director of The Phoenix Companies, Inc., CuraGen Corporation and Neon Communications Group, Inc.

Lynn J. Good     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Non-Independent Director Nominee
Chairman
GRAPHIC   Age: 57
Director of Duke Energy since 2013
Chairman, President and Chief Executive Officer, Duke Energy Corporation
  Skills and Qualifications:

Ms. Good is our Chief Executive Officer and was previously our Chief Financial Officer. Her knowledge of the affairs of Duke Energy and its business and her experience in the energy industry provide valuable resources for the Board.

  Committees:

None

Other current public directorships:

The Boeing Company


Ms. Good has served as Chairman, President and Chief Executive Officer of Duke Energy since January 1, 2016, and was Vice Chairman, President and Chief Executive Officer of Duke Energy from July 2013 through December 2015. She served as Executive Vice President and Chief Financial Officer of Duke Energy from July 2009 until June 2013. She is a former director of Hubbell Incorporated.

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PROPOSAL 1:    ELECTION OF DIRECTORS

John T. Herron     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 63
Director of Duke Energy since 2013
Retired President, Chief Executive Officer and Chief Nuclear Officer, Entergy Nuclear
  Skills and Qualifications:

Mr. Herron's qualifications for election include his knowledge and extensive insight gained as a senior executive in the utility industry, including his three decades of experience in nuclear energy. During Mr. Herron's career, he has gained significant regulatory and risk management expertise, which is an asset to the Board and its committees.

  Committees:

Nuclear Oversight Committee

Regulatory Policy and Operations Committee

Other current public directorships:

None


Mr. Herron was President, Chief Executive Officer and Chief Nuclear Officer of Entergy Nuclear from 2009 until his retirement in 2013. Mr. Herron joined Entergy Nuclear in 2001 and held a variety of positions. He began his career in nuclear operations in 1979 and has held positions at a number of nuclear stations across the country. Mr. Herron is a director of Ontario Power Generation and also has served on the Institute of Nuclear Power Operations' board of directors.

James B. Hyler, Jr.     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 69
Director of Duke Energy since 2012
Retired Vice Chairman and Chief Operating Officer, First Citizens BancShares, Inc.
  Skills and Qualifications:

Mr. Hyler's qualifications for election include his understanding of Duke Energy's North Carolina service territory and his knowledge and expertise in financial services, corporate finance and risk management.

  Committees:

Audit Committee

Regulatory Policy and Operations Committee

Other current public directorships:

None


Mr. Hyler was Vice Chairman and Chief Operating Officer of First Citizens BancShares, a company involved in commercial banking, from 1994 until 2008, President from 1988 until 1994, and Chief Financial Officer from 1980 until 1988. Prior to joining First Citizens BancShares, Mr. Hyler was an auditor with Ernst & Young for 10 years. Mr. Hyler served as a director of First Citizens BancShares from 1988 until 2008, and as Managing Director of Morehead Capital Management, LLC from December 2011 until December 2015.

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PROPOSAL 1:    ELECTION OF DIRECTORS

William E. Kennard     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 60
Director of Duke Energy since 2014
Non-Executive Chairman, Velocitas Partners, LLC
  Skills and Qualifications:

Mr. Kennard's qualifications for election include his considerable experience and knowledge of the regulatory arena, as well as his financial knowledge, legal knowledge and international perspective. As former Chairman of the Federal Communications Commission, Mr. Kennard also has a great deal of expertise in technology, which is extremely valuable to the Board and its committees.

  Committees:

Corporate Governance Committee

Finance and Risk Management Committee

Regulatory Policy and Operations Committee

Other current public directorships:

AT&T Inc.

Ford Motor Company

MetLife, Inc.


Mr. Kennard is Non-Executive Chairman of Velocitas Partners, LLC, an asset management and advisory firm, since November 2014, as well as a member of the Operating Executive Committee of Staple Street Capital, a private equity firm. Prior to joining Velocitas Partners, LLC, Mr. Kennard served as Senior Advisor at Grain Management from October 2013 until November 2014; U.S. Ambassador to the European Union from 2009 until August 2013; Managing Director of The Carlyle Group from 2001 until 2009; and Chairman of the Federal Communications Commission from 1997 until 2001.

E. Marie McKee     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 66
Director of Duke Energy since 2012
Retired Senior Vice President, Corning Incorporated
  Skills and Qualifications:

Ms. McKee's qualifications for election include her experience in human resources, which provides her with a thorough knowledge of employment and compensation practices. Her prior experience as a senior executive of Corning Incorporated has also given her excellent operating skills and an understanding of financial matters.

  Committees:

Audit Committee

Compensation Committee

Other current public directorships:

None


Ms. McKee is a retired Senior Vice President of Corning Incorporated, a manufacturer of components for high-technology systems for consumer electronics, mobile emissions controls, telecommunications and life sciences. Ms. McKee has over 35 years of experience obtained at Corning, where she held a variety of management positions with increasing levels of responsibility, including Senior Vice President of Human Resources from 1996 until 2010; President of Steuben Glass from 1998 until 2008; and President of The Corning Museum of Glass and The Corning Foundation from 1998 until 2014.

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PROPOSAL 1:    ELECTION OF DIRECTORS

Charles W. Moorman IV     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 65
Director of Duke Energy since 2016
President and Chief Executive Officer, Amtrak
  Skills and Qualifications:

Mr. Moorman's qualifications for election include experience in business, finance, technology, strategy, risk management and safety and environmental issues as a result of his career at a large public company in the freight and transportation industry.

  Committees:

Compensation Committee

Nuclear Oversight Committee

Other current public directorships:

Chevron Corporation


Mr. Moorman is the President and Chief Executive Officer of Amtrak, the nation's passenger railroad. He has served in this position since August 19, 2016. Previously, Mr. Moorman served as Chairman and Chief Executive Officer of Norfolk Southern Corporation and was Special Advisor to the Chief Executive Officer of Norfolk Southern from October 1, 2015, until December 31, 2015. Prior to his retirement, he served as Chairman of the Board at Norfolk Southern from 2006 until 2015 and as Chief Executive Officer from 2005 until 2015.

Carlos A. Saladrigas     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 68
Director of Duke Energy since 2012
Chairman, Regis HR Group
  Skills and Qualifications:

Mr. Saladrigas' qualifications for election include his extensive expertise in health care, human resources, financial services and accounting arenas, as well as his understanding of Duke Energy's Florida service territory.

  Committees:

Audit Committee

Compensation Committee

Other current public directorships:

None


Mr. Saladrigas is Chairman of Regis HR Group, which offers a full suite of outsourced human resources services to small and mid-sized businesses. He has served in this position since July 2008. Mr. Saladrigas served as Chairman of Concordia Healthcare Holdings, LLC, which specializes in managed behavioral health, from 2011 until 2017. Prior to joining Regis HR Group and Concordia Healthcare Holdings, LLC, he served as Vice Chairman, from 2007 until 2008, and Chairman, from 2002 until 2007, of Premier American Bank. Mr. Saladrigas served as Chief Officer of ADP Total Source (previously the Vincam Group, Inc.) from 1984 until 2002.

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PROPOSAL 1:    ELECTION OF DIRECTORS

Thomas E. Skains     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 60
Director of Duke Energy since 2016
Retired Chairman, President and Chief Executive Officer, Piedmont Natural Gas Company, Inc.
  Skills and Qualifications:

Mr. Skains' qualifications for election include his extensive knowledge of the natural gas industry and public company governance and strategy, and his experience as a corporate energy attorney allows insight on legal and regulatory compliance matters.

  Committees:

Nuclear Oversight Committee

Regulatory Policy and Operations Committee

Other current public directorships:

BB&T Corporation

National Fuel Gas Company


Mr. Skains was Chairman, President and Chief Executive Officer of Piedmont Natural Gas Company, Inc. ("Piedmont Natural Gas"), a national natural gas distributor, until his retirement in 2016. He served as Chairman of Piedmont Natural Gas from December 2003 until October 2016, Chief Executive Officer from February 2003 until October 2016, and as President from February 2002 until October 2016. Previously, he served as Chief Operating Officer of Piedmont Natural Gas from February 2002 until February 2003. From 1995 until 2002, he served as Senior Vice President, Marketing and Supply Services and directed Piedmont Natural Gas' commercial natural gas activities.

William E. Webster, Jr.     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
 
GRAPHIC   Age: 63
Director of Duke Energy since 2016
Retired Executive Vice President, Institute of Nuclear Power Operations
  Skills and Qualifications:

Mr. Webster's qualifications for election include his extensive knowledge gained during his 34 years in the nuclear industry which has given him regulatory expertise as well as unique insight into best practices in engineering and risk management which is an asset to the Board and its committees.

  Committees:

Nuclear Oversight Committee

Regulatory Policy and Operations Committee

Other current public directorships:

None


Mr. Webster was Executive Vice President of Industry Strategy for the Institute of Nuclear Power Operations ("INPO"), a nonprofit organization that promotes the highest levels of safety and reliability in the operation of commercial nuclear power plants, until his retirement in June 2016. Mr. Webster has 34 years of experience obtained at INPO where he held a variety of management positions in the Industry Evaluations, Plant Support, Engineering Support and Plant Analysis and Emergency Preparedness divisions prior to his retirement.

    

 

 

 

 

 

 

Majority Voting for the Election of Directors

Under the Corporation's By-Laws, in an uncontested election at which a quorum is present, a director-nominee will be elected if the number of votes cast "FOR" the nominee's election exceeds the number of votes cast as "WITHHOLD" from that nominee's election. Abstentions and broker non-votes do not count. In addition, the Corporation has a resignation policy in its Principles for Corporate Governance which requires an incumbent Director who has more votes cast as "WITHHOLD" from that nominee's re-election than votes cast "FOR" his or her re-election to tender his or her letter of resignation for consideration by the Corporate Governance Committee of the Corporation's Board of Directors.

In contested elections, Directors will be elected by plurality vote. For purposes of the By-Laws, a "contested election" is an election in which the number of nominees for director is greater than the number of directors to be elected.

The Board of Directors Recommends a Vote "FOR" Each Nominee.

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INFORMATION ON THE BOARD OF DIRECTORS

Our Board Leadership Structure

Lynn J. Good serves as the Corporation's Chairman, President and Chief Executive Officer. Our Board of Directors believes that combining the Chairman and Chief Executive Officer roles fosters clear accountability, effective decision-making and execution of corporate strategy.

The Board regularly evaluates the leadership structure of the Corporation and may consider alternative approaches, as appropriate, over time. Though the Board is currently structured with a combined Chairman and Chief Executive Officer, the Board believes that the Corporation and its shareholders are best served by the Board retaining discretion to determine the appropriate leadership structure based on what it believes is best for the Corporation at a particular point in time, including whether the same individual should serve as both Chairman and Chief Executive Officer, or whether the roles should be separate.

Michael G. Browning serves as the Corporation's Independent Lead Director and has served in that role since January 2016. Mr. Browning's responsibilities, which meet the latest corporate governance standards set by the National Association of Corporate Directors, include, among other things:

leading, in conjunction with the Corporate Governance Committee, the process for the review of the Chief Executive Officer and the Board;

presiding at the executive sessions of the independent members of the Board;

assisting the Chairman and the Chief Executive Officer in setting, reviewing and approving agendas and schedules of Board meetings;

calling meetings of the independent members of the Board when necessary and appropriate;

developing topics for discussion during executive sessions of the Board;

consulting with the Corporate Governance Committee on the Board's annual self-assessment;

assisting the Chairman and the Chief Executive Officer to promote the efficient and effective performance and functioning of the Board; and

being available for consultation and direct communication with the Corporation's major shareholders.

A complete list of the responsibilities of our Independent Lead Director is included in our Principles for Corporate Governance, a copy of which is posted on our website at www.duke-energy.com/our-company/investors/corporate-governance/principles-corp-governance.

Independence of Directors

The Board of Directors has determined that none of the directors, other than Ms. Good, has a material relationship with Duke Energy or its subsidiaries, and all are, therefore, independent under the listing standards of the NYSE and the rules and regulations of the SEC.

In making the determination regarding each director's independence, the Board of Directors considered all transactions and the materiality of any relationship with Duke Energy and its subsidiaries in light of all facts and circumstances.

The Board of Directors may determine a director to be independent if the Board of Directors has affirmatively determined that the director has no material relationship with Duke Energy or its subsidiaries (references in this proxy statement to Duke Energy's subsidiaries shall mean its consolidated subsidiaries), either directly or as a shareholder, director, officer or employee of an organization that has a relationship with Duke Energy or its subsidiaries. Independence determinations are generally made on an annual basis at the time the Board of Directors approves director nominees for inclusion in the proxy statement and, if a director joins the Board of Directors in the interim, at such time.

The Board of Directors also considers its Standards for Assessing Director Independence, which set forth certain relationships between Duke Energy and directors and their immediate family members, or affiliated entities, that the Board of Directors, in its judgment, has deemed to be immaterial for purposes of assessing a director's independence. Duke Energy's Standards for Assessing Director Independence are linked on our website at www.duke-energy.com/our-company/investors/corporate-governance/board. In the event a director has a relationship with Duke Energy that is not addressed in the Standards for Assessing Director Independence, the Corporate Governance Committee, which is composed entirely of independent members of the Board, reviews the relationship and makes a recommendation to the independent members of the Board who determine whether such relationship is material.

For Mr. Webster, the Board considered a relationship between the Corporation and PriceWaterhouseCoopers ("PwC"), a firm that provides professional tax and other services from time to time to the Corporation and at which Mr. Webster's brother-in-law is a partner. See Related Person Transactions on page 78 for further information. The Board determined this relationship does not impair Mr. Webster's independence.

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INFORMATION ON THE BOARD OF DIRECTORS


Director Attendance

The Board of Directors of Duke Energy met seven times during 2016 and has met once so far in 2017. The overall attendance percentage for our directors was approximately 98% in 2016, and no director attended less than 86% of the total of the Board of Directors' meetings and the meetings of the committees upon which he or she served in 2016. Directors are encouraged to attend the Annual Meeting. Fifteen of the 16 directors who were directors at the time of last year's Annual Meeting on May 5, 2016, attended the 2016 Annual Meeting.

Board and Committee Assessments

Each year the Board, with the assistance of the Corporate Governance Committee, conducts an assessment of the Board of Directors, each of its committees and the directors. The assessment process is facilitated by an independent advisor, which allows directors to provide anonymous feedback and promotes candidness among the directors. The results of the feedback are presented to the Board and committees and discussed. This annual review and discussion provides continuous improvement in the overall effectiveness of the directors, committees and Board.

Board Role in Management Succession

The independent directors of the Board are actively involved in the Corporation's management succession planning process. Among the Corporate Governance Committee's responsibilities described in its Charter is to oversee continuity and succession planning. At least annually, the Corporate Governance Committee reviews the Chief Executive Officer succession plan and makes recommendations to the Board for the successor to the Chief Executive Officer. The Corporate Governance Committee also reports to the Board any concerns or issues that might indicate that organizational strengths are not equal to the requirements of long-range goals, and oversees the evaluation of the Chief Executive Officer.

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INFORMATION ON THE BOARD OF DIRECTORS

Board Oversight of Risk

The Corporation faces a myriad of risks, including operational, financial, strategic and reputational risks that affect every segment of its business. The Board of Directors is actively involved in the oversight of these risks in several ways. This oversight is conducted primarily through the Finance and Risk Management Committee of the Board but also through the other committees of the Board, as appropriate. The Finance and Risk Management Committee reviews the Corporation's enterprise risk program with management, including the Chief Risk Officer. The enterprise risk program includes the identification of a broad range of risks that affect the Corporation, their probabilities and severity and incorporates a review of the Corporation's approach to managing and prioritizing those risks, based on input from the officers responsible for the management of those risks.

Each committee of the Board is responsible for the oversight of certain areas of risk that pertain to that committee's area of focus. Throughout the year, each committee chair reports to the full Board regarding the committee's considerations and actions relating to the risks within its area of focus.

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Shareholder Engagement

We conduct extensive governance reviews and investor outreach so that management and the Board understand and consider the issues that matter most to our shareholders and address them effectively. In 2016, we reached out to holders of approximately 33% of Duke Energy's outstanding shares and met with holders of approximately 20% of Duke Energy's outstanding shares. We engaged with every shareholder who accepted our offer to meet.

The Corporation engaged with shareholders on numerous topics during the year, including executive compensation matters, sustainability, and social and governance issues such as the execution of the Corporation's coal ash management plans and the Board's oversight of coal ash management and other environmental concerns. We also discussed the combination of our Chairman and Chief Executive Officer roles, the strong role our Lead Independent Director plays in our Board structure and Board succession planning and director onboarding.

At the Corporation's 2016 Annual Meeting, a shareholder proposal was voted on that requested the elimination of supermajority requirements in the Corporation's Amended and Restated Certificate of Incorporation. The supermajority voting proposal received the vote of a majority of the shares represented at the 2016 Annual Meeting. We discussed the outcome of this proposal with our shareholders during the fall engagement program. After considering the feedback it received from shareholders on the supermajority proposal, the Board of Directors decided to recommend to shareholders at the 2017 Annual Meeting that they approve an amendment to the Corporation's Amended and Restated Certificate of Incorporation that would eliminate the supermajority requirements contained in it.

In addition to our discussions with shareholders about supermajority requirements in our Amended and Restated Certificate of Incorporation during the 2016 corporate governance engagement program, the Corporation also discussed with shareholders the possibility of holding our Annual Meeting online via live webcast to get their feedback on best practices and their interest in participating via webcast. As a result of the positive feedback we received, the Board of Directors decided to hold the 2017 Annual Meeting exclusively online via live webcast so that more of its shareholders could participate in the Annual Meeting.

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INFORMATION ON THE BOARD OF DIRECTORS

Board of Directors Committees

The Board of Directors has the six standing, permanent committees described below:

Audit Committee

Nine meetings held in 2016

    Committee Members    
PHOTO   Michael J. Angelakis, Chairperson, Financial Expert
John H. Forsgren
James B. Hyler, Jr.
E. Marie McKee
Carlos A. Saladrigas, Financial Expert
      

Michael J. Angelakis

The Audit Committee considers risks and matters related to financial reporting, internal controls, compliance and legal matters. As part of those responsibilities, the Audit Committee selects and retains an independent registered public accounting firm to conduct audits of the accounts of Duke Energy and its subsidiaries. It also reviews with the independent registered public accounting firm the scope and results of their audits, as well as the accounting procedures, internal controls, and accounting and financial reporting policies and practices of Duke Energy and its subsidiaries, and makes reports and recommendations to the Board of Directors as it deems appropriate. The Audit Committee is responsible for approving all audit and permissible non-audit services provided to Duke Energy by its independent registered public accounting firm. Pursuant to this responsibility, the Audit Committee adopted the policy on Engaging the Independent Auditor for Services, which provides that the Audit Committee will establish detailed services and related fee levels that may be provided by the independent registered public accounting firm and will review such policy annually. See page 36 for additional information on the Audit Committee's preapproval policy.

The Board of Directors has determined that Mr. Angelakis and Mr. Saladrigas are "audit committee financial experts" as such term is defined in Item 407(d)(5)(ii) of Regulation S-K. See pages 13 and 18 for a description of Mr. Angelakis' and Mr. Saladrigas' business experience.

Each of the members has been determined to be "independent" within the meaning of the NYSE's listing standards, Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the Corporation's Standards for Assessing Director Independence. In addition, each of the members meets the financial literacy requirements for audit committee membership under the NYSE's rules and the rules and regulations of the SEC.

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Compensation Committee

Seven meetings held in 2016

    Committee Members    
PHOTO   E. Marie McKee, Chairperson
Michael G. Browning
Charles W. Moorman IV
Carlos A. Saladrigas
      

E. Marie McKee

The Compensation Committee establishes and reviews the overall compensation philosophy of the Corporation, confirms that our policies and philosophy do not encourage excessive or inappropriate risk-taking by our employees, reviews and approves the salaries and other compensation of certain employees, including all executive officers of Duke Energy, reviews and approves compensatory agreements with executive officers, approves equity grants and reviews the effectiveness of, and approves changes to, compensation programs. The Compensation Committee also makes recommendations to the Board of Directors on compensation for independent directors.

Management's role in the compensation-setting process is to recommend compensation programs and assemble information as required by the committee. When establishing the compensation program for our named executive officers, the committee considers input and recommendations from management, including Ms. Good, who attends the Compensation Committee meetings.

The Compensation Committee has engaged FW Cook as its independent compensation consultant. The compensation consultant generally attends each committee meeting and provides advice to the committee at the meetings, including reviewing and commenting on market compensation data used to establish the compensation of the executive officers and directors. The consultant has been instructed that it shall provide completely independent advice to the Compensation Committee and is not permitted to provide any services to Duke Energy other than at the direction of the Compensation Committee.

Each of the members of the Compensation Committee has been determined to be "independent" within the meaning of the NYSE's listing standards, Rule 10C-1(b) of the Exchange Act, and the Corporation's Standards for Assessing Director Independence; to be "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"); and, to be "non-employee directors" within the meaning of Rule 16b-3 of the Exchange Act.

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INFORMATION ON THE BOARD OF DIRECTORS

Corporate Governance Committee

Six meetings held in 2016

    Committee Members    
PHOTO   Michael G. Browning, Chairperson
Daniel R. DiMicco
Ann Maynard Gray
William E. Kennard
      

Michael G. Browning

The Corporate Governance Committee considers risks and matters related to corporate governance, and formulates and periodically revises governance principles. It recommends the size and composition of the Board of Directors and its committees and recommends potential successors to the Chief Executive Officer. The Corporate Governance Committee also recommends to the Board of Directors the slate of nominees, including any nominees recommended by shareholders, for director for each year's Annual Meeting and, when vacancies occur, names of individuals who would make suitable directors of Duke Energy. This committee may engage an external search firm or a third party to identify or evaluate or to assist in identifying or evaluating a potential nominee. The Corporate Governance Committee performs an annual evaluation of the performance of the Chief Executive Officer with input from the full Board of Directors. The Corporate Governance Committee assists the Board in its annual determination of director independence and review of any related person transactions as well as the Board's annual assessment of the Board of Directors and each of its committees. The Corporate Governance Committee is also responsible for the oversight of the Corporation's policies and practices with respect to its political activities and community affairs.

Each of the members of the Corporate Governance Committee has been determined to be "independent" within the meaning of the NYSE's listing standards and the Corporation's Standards for Assessing Director Independence.

Finance and Risk Management Committee

Six meetings held in 2016

    Committee Members    
PHOTO   John H. Forsgren, Chairperson
Michael J. Angelakis
Theodore F. Craver, Jr.
Michael G. Browning
Ann Maynard Gray
William E. Kennard
      

John H. Forsgren

The Finance and Risk Management Committee is primarily responsible for the oversight of financial risk and enterprise risk at the Corporation. This oversight function includes reviews of Duke Energy's financial and fiscal affairs and recommendations to the Board of Directors regarding dividends, financing and fiscal policies, and significant transactions. It reviews the financial exposure of Duke Energy, as well as mitigation strategies, reviews Duke Energy's enterprise risk exposures and provides oversight for the process to assess and manage enterprise risk, and reviews the financial impacts of major projects as well as capital expenditures.

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Nuclear Oversight Committee

Six meetings held in 2016

    Committee Members    
PHOTO   John T. Herron, Chairperson
Daniel R. DiMicco
Charles W. Moorman IV
Thomas E. Skains
William E. Webster, Jr.
      

John T. Herron

The Nuclear Oversight Committee provides oversight of the nuclear safety, operational and financial performance as well as operational risks, long-term plans and strategies of Duke Energy's nuclear power program. The oversight role is one of review, observation and comment and in no way alters management's authority, responsibility or accountability. The Nuclear Oversight Committee visits each of Duke Energy's operating nuclear power stations over a two-year period and reviews the station's nuclear safety, operational and financial performance.

Regulatory Policy and Operations Committee

Five meetings held in 2016

    Committee Members    
PHOTO   James B. Hyler, Jr., Chairperson
Theodore F. Craver, Jr.
John T. Herron
William E. Kennard
Thomas E. Skains
William E. Webster, Jr.
      

James B. Hyler, Jr.

The Regulatory Policy and Operations Committee provides oversight of Duke Energy's regulatory and legislative strategy impacting utility operations in each jurisdiction. The Committee also has oversight over environmental, health and safety matters and the risks related to such matters, including our ash management strategy, as well as the public policies and practices of Duke Energy. This includes reviewing Duke Energy's regulatory approach to strategic initiatives, the operational performance of Duke Energy's utilities with regard to energy supply, delivery, fuel procurement and transportation and making visits to Duke Energy's generation facilities. The Regulatory Policy and Operations Committee is also responsible for the oversight of Duke Energy's environmental, health and safety goals and policies.

Each committee operates under a written charter adopted by the Board of Directors. The charters are posted on our website at www.duke-energy.com/our-company/investors/corporate-governance/board-committee-charters.

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INFORMATION ON THE BOARD OF DIRECTORS

BOARD OF DIRECTORS COMMITTEE MEMBERSHIP ROSTER

Name
  Audit
  Compensation
  Corporate
Governance

  Finance and Risk
Management

  Nuclear
Oversight

  Regulatory Policy and
Operations

Michael J. Angelakis

  C          

Michael G. Browning

        C          

Theodore F. Craver, Jr.

           

Daniel R. DiMicco

                   

John H. Forsgren

        C    

Lynn J. Good

                       

Ann Maynard Gray(1)

           

John T. Herron

                  C  

James B. Hyler, Jr.

            C

William E. Kennard

                 

E. Marie McKee

    C        

Charles W. Moorman IV

                   

Carlos A. Saladrigas

           

Thomas E. Skains

                   

William E. Webster, Jr.

           
C
Committee Chair

(1)
Retiring at the Annual Meeting.

28    DUKE ENERGY – 2017 Proxy Statement


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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

The following is the report of the Corporate Governance Committee with respect to its philosophy, responsibilities and initiatives.

Philosophy and Responsibilities

We believe that sound corporate governance has three components: (i) Board of Directors' independence, (ii) processes and practices that foster solid decision-making by both management and the Board of Directors, and (iii) balancing the interests of all of our stakeholders – our investors, customers, employees, the communities we serve and the environment. The Corporate Governance Committee's charter is available on our website at www.duke-energy.com/our-company/investors/corporate-governance/board-committee-charters/corporate-governance and is summarized below. Additional information about the Corporate Governance Committee and its members is detailed on page 26 of the proxy statement.

Membership. The committee must be comprised of three or more members, all of whom must qualify as independent directors under the listing standards of the NYSE and other applicable rules and regulations.

Responsibilities. The committee's responsibilities include, among other things, (i) implementing policies regarding corporate governance matters, (ii) assessing the Board of Directors' membership needs and recommending nominees, (iii) recommending to the Board of Directors those directors to be selected for membership on, or removal from, the various Board of Directors' committees and those directors to be designated as chairs of Board of Directors' committees, (iv) sponsoring and overseeing annual performance evaluations for the various Board of Directors' committees, including the Corporate Governance Committee, the Board of Directors and the Chief Executive Officer, (v) overseeing the Corporation's political expenditures and activities pursuant to the Political Activity Policy, and (vi) reviewing the Corporation's charitable contributions and community service policies and practices. The committee may also conduct or authorize investigations into or studies of matters within the scope of the committee's duties and responsibilities, and may retain, at the Corporation's expense, and in the committee's sole discretion, consultants to assist in such work as the committee deems necessary.

Governance Policies

All of our Board committee charters, as well as our Principles for Corporate Governance, Code of Business Ethics for Employees and Code of Business Conduct & Ethics for Directors, are available on our website at www.duke-energy.com/our-company/investors/corporate-governance. Any amendments to or waivers from our Code of Business Ethics for Employees with respect to executive officers or Code of Business Conduct & Ethics for Directors must be approved by the Board and will be posted on our website. During 2016, our Board of Directors held four executive sessions with independent directors only.

Board Composition

Director Qualifications. We look for the following characteristics in any candidate for nomination to our Board of Directors:

fundamental qualities of intelligence, perceptiveness, good judgment, maturity, high ethics and standards, integrity and fairness;

a genuine interest in Duke Energy and a recognition that, as a member of the Board of Directors, one is accountable to the shareholders of Duke Energy, not to any particular interest group;

a background that includes broad business experience or demonstrates an understanding of business and financial affairs and the complexities of a large, multifaceted, global business organization;

diversity among the existing Board members, including racial and ethnic background, gender, experiences, skills and qualifications;

present or former chief executive officer, chief operating officer, or substantially equivalent level executive officer of a highly complex organization such as a corporation, university or major unit of government, or a professional who regularly advises such organizations;

no conflict of interest or legal impediment which would interfere with the duty of loyalty owed to Duke Energy and its shareholders;

the ability and willingness to spend the time required to function effectively as a director;

DUKE ENERGY – 2017 Proxy Statement    29


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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

compatibility and ability to work well with other directors and executives in a team effort with a view to a long-term relationship with Duke Energy as a director;

independent opinions and willingness to state them in a constructive manner; and

willingness to become a shareholder of Duke Energy (within a reasonable time of election to the Board of Directors).

Director Candidate Recommendations. The committee may engage a third party from time to time to assist it in identifying and evaluating director-nominee candidates, in addition to current members of the Board of Directors standing for re-election. The committee will provide the third party, based on the profile described above, the characteristics, skills and experiences that may complement those of our existing members. The third party will then provide recommendations for nominees with such attributes. The committee considers nominees recommended by shareholders on a similar basis, taking into account, among other things, the profile criteria described above and the nominee's experiences and skills. In addition, the committee considers the shareholder-nominee's independence with respect to both the Corporation and the recommending shareholder. All of the nominees on the proxy card are current members of our Board of Directors and were recommended by the committee.

Shareholders interested in submitting nominees as candidates for election as directors must provide timely written notice to the Corporate Governance Committee, c/o Ms. Julia S. Janson, Executive Vice President, Chief Legal Officer and Corporate Secretary, Duke Energy Corporation, DEC 48H, P.O. Box 1414, Charlotte, NC 28201-1414. The written notice must set forth, as to each person whom the shareholder proposes to nominate for election as director:

the name and address of the recommending shareholder(s), and the class and number of shares of capital stock of Duke Energy that are beneficially owned by the recommending shareholder(s);

a representation that the recommending shareholder(s) is a holder of record of capital stock of Duke Energy entitled to vote at the Annual Meeting and intends to attend the Annual Meeting remotely or by proxy to nominate the person(s) specified in the written notice;

the name, age, business address and principal occupation and employment of the recommended nominee;

any information relevant to a determination of whether the recommended nominee meets the criteria for Board of Directors membership established by the Board of Directors and/or the Corporate Governance Committee;

any information regarding the recommended nominee relevant to a determination of whether the recommended nominee would be considered independent under the applicable NYSE rules and SEC rules and regulations;

a description of any business or personal relationship between the recommended nominee and the recommending shareholder(s), including all arrangements or understandings between the recommended nominee and the recommending shareholder(s) and any other person(s) (naming such person(s)) pursuant to which the nomination is to be made by the recommending shareholder(s);

a statement, signed by the recommended nominee, (i) verifying the accuracy of the biographical and other information about the nominee that is submitted with the recommendation, (ii) affirming the recommended nominee's willingness to be a director, and (iii) consenting to serve as a director if so elected;

if the recommending shareholder(s) has beneficially owned more than five percent of Duke Energy's capital stock for at least one year as of the date the recommendation is made, evidence of such beneficial ownership as specified in the rules and regulations of the SEC;

if the recommending shareholder(s) intends to solicit proxies in support of such recommended nominee, a representation to that effect; and

all other information relating to the recommended nominee that is required to be disclosed in solicitations for proxies in an election of directors pursuant to Regulation 14A under the Exchange Act, including, without limitation, information regarding (i) the recommended nominee's business experience, (ii) the class and number of shares of capital stock of Duke Energy, if any, that are beneficially owned by the recommended nominee, and (iii) material relationships or transactions, if any, between the recommended nominee and Duke Energy's management.

Director Candidate Nominations through Proxy Access. In order to nominate a director pursuant to the Corporation's proxy access provision, shareholders who meet the eligibility and other requirements set forth in Section 3.04 of the Corporation's By-Laws must send a written notice to the Corporate Governance Committee, c/o Ms. Julia S. Janson, Executive Vice President, Chief Legal Officer and Corporate Secretary, Duke Energy Corporation, DEC 48H, P.O. Box 1414, Charlotte, NC 28201-1414. The written notice must provide the information set forth above, as well as the other detailed requirements set forth in Section 3.04 of the Corporation's By-Laws, which can be located on our website at www.duke-energy.com/our-company/investors/corporate-governance.

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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

New Directors Since the 2016 Annual Meeting

Following the 2016 Annual Meeting at which four of the Corporation's directors retired, the Corporate Governance Committee sought to recruit additional Board members whose qualifications align with the needs of the Board in light of the major risks and issues facing the Corporation as well as its long-term strategy. After working with an independent search firm, the Corporate Governance Committee recommended in August 2016 that Mr. William E. Webster, Jr. be appointed to the Board effective September 1, 2016. Mr. Webster brings extensive knowledge gained during his 34 years in the nuclear industry which has given him regulatory expertise as well as a unique insight into best practices in engineering and risk management. The committee also recommended, in connection with the acquisition by the Corporation of Piedmont Natural Gas, that Mr. Thomas E. Skains, the Chairman, President and Chief Executive Officer of Piedmont Natural Gas prior to the closing of the acquisition, join the Corporation's Board, effective upon the closing of the acquisition on October 3, 2016. Among other things, Mr. Skains, who retired from Piedmont Natural Gas upon the closing of the acquisition, brings his significant knowledge of the natural gas business to the Corporation's Board which is extremely valuable to the Board following the Corporation's expansion of its natural gas business through the Piedmont Natural Gas acquisition. In February of 2017, the Corporate Governance Committee recommended the appointment of Mr. Theodore F. Craver, Jr. effective March 1, 2017. Mr. Craver has 20 years of experience at Edison International, the parent company of a large utility and various competitive electric businesses, at which he was Chairman, President and Chief Executive Officer from 2008 until his retirement in 2016.

Director Onboarding. With the addition of a number of new directors to our Board over the past several years, the director onboarding process has become increasingly more important to educating our new directors about Duke Energy. Immediately following their appointment, each new director meets individually with the senior executives responsible for our major lines of business and operations so that they may better understand the issues involved in all aspects of the Corporation's business. In addition to discussing the Corporation's businesses and operations, the new directors learn about our corporate governance practices and policies; the financial and technical aspects of the Corporation's electric utility, natural gas and commercial renewables businesses; the enterprise's significant risks; the Corporation's long-term strategy; and Duke Energy's long-standing mission to provide clean, reliable and affordable energy for our customers.

Communications with Directors

Interested parties can communicate with any of our directors by writing to our Corporate Secretary at the following address:

Corporate Secretary
Ms. Julia S. Janson
Executive Vice President, Chief Legal Officer and Corporate Secretary
Duke Energy Corporation
DEC 48H
P.O. Box 1414
Charlotte, NC 28201-1414

Interested parties can communicate with our Independent Lead Director by writing to the following address:

Independent Lead Director
c/o Ms. Julia S. Janson
Executive Vice President, Chief Legal Officer and Corporate Secretary
Duke Energy Corporation
DEC 48H
P.O. Box 1414
Charlotte, NC 28201-1414

Our Corporate Secretary will distribute communications to the Board of Directors, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Duke Energy Board of Directors has requested that certain items that are unrelated to the duties and responsibilities of the Board of Directors be excluded, such as: spam; junk mail and mass mailings; service complaints; resumes and other forms of job inquiries; surveys; and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, obscene or similarly unsuitable will be excluded. However, any communication that is so excluded remains available to any director upon request.

Corporate Governance Committee
Michael G. Browning, Chairperson
Daniel R. DiMicco
Ann Maynard Gray
William E. Kennard

DUKE ENERGY – 2017 Proxy Statement    31


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DIRECTOR COMPENSATION

Annual Retainer and Fees. During 2016, the retainer and meeting fees paid to our independent directors consisted of:

 
 
Meeting Fees
Type of Fee
Fee (Other Than
for Meetings)
($)

In-Person Attendance at
Meetings Held in Conjunction
With a Regular Board of
Directors Meeting
($)

In-Person Meetings Not
Held in Conjunction
With a Regular Board
of Directors Meeting
($)

Telephonic
Participation
in Meetings
($)

Annual Board of Directors Retainer (Cash)

90,000

Annual Board of Directors Retainer (Stock)

125,000      

Board of Directors Meeting Fees

2,000 2,500 2,000

Annual Board Chair Retainer (if applicable)

100,000      

Annual Lead Director Retainer (if applicable)

40,000

Annual Audit Committee Chair Retainer

25,000      

Annual Chair Retainer (Other committees)

15,000

Audit Committee and Finance and Risk Management Committee Meeting Fees

  3,000 2,500 2,000

Nuclear Oversight Committee Meeting Fees

4,000 2,500 2,000

Regulatory Policy and Operations Committee Meeting Fees

  3,500 2,500 2,000

Other Committee Meeting Fees

2,000 2,500 2,000

Annual Stock Retainer for 2016. In 2016, each eligible director received the portion of his or her annual retainer that was payable in stock in the form of fully-vested shares.

Deferral Plan and Stock Purchases. Directors may elect to receive all or a portion of their annual compensation, consisting of retainers and attendance fees, on a current basis, or defer such compensation under the Duke Energy Corporation Directors' Savings Plan (the "Directors' Savings Plan"). Deferred amounts are credited to an unfunded account, the balance of which is adjusted for the performance of phantom investment options, including the Duke Energy common stock fund, as elected by the director, and generally are paid when the director terminates his or her service from the Board of Directors.

Charitable Giving Program. The Duke Energy Foundation, independent of Duke Energy, maintains the Duke Energy Foundation Matching Gifts Program under which directors are eligible to request matching contributions of up to $5,000 per director per calendar year to qualifying institutions. Duke Energy also maintains a Directors' Charitable Giving Program. Eligibility for this program has been frozen and Ms. Gray is the only current director who is eligible. Under this program, Duke Energy will make a donation of up to $1 million upon the director's death, or the actuarial present value of that amount during the director's lifetime, to a charitable organization selected by the director. At Ms. Gray's request, a donation was made under this program during 2016. No additional contributions will be made under this legacy program on behalf of our current directors. In addition, Duke Energy made a $2,500 donation to designated charities on behalf of the independent directors who retired in May 2016 as well as a $1,000 donation to the American Red Cross in November 2016 on behalf of each of the independent directors who were actively serving at that time.

Expense Reimbursement and Insurance. Duke Energy provides travel insurance to directors and reimburses directors for expenses reasonably incurred in connection with attendance and participation at Board of Directors and committee meetings and special functions.

Stock Ownership Guidelines. Outside directors are subject to stock ownership guidelines, which establish a target level of ownership of Duke Energy common stock (or common stock equivalents). Currently, each independent director is required to own shares with a value equal to at least five times the annual Board of Directors cash retainer (i.e., an ownership level of $450,000) or retain 50% of his or her vested annual equity retainer. All independent directors were in compliance with the guidelines as of December 31, 2016.

32    DUKE ENERGY – 2017 Proxy Statement


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DIRECTOR COMPENSATION


The following table describes the compensation earned during 2016 by each individual who served as an independent director during 2016. Because Mr. Craver joined the Board of Directors on March 1, 2017, he did not receive any compensation in 2016 and is not listed below.

Name
Fees Earned
or Paid in Cash
($)(2)

Stock
Awards
($)(3)

All Other
Compensation
($)(4)

Total
($)

Michael J. Angelakis

155,346 125,000 1,270 281,616

Michael G. Browning

215,308 125,000 6,270 346,578

Harris E. DeLoach, Jr.(1)

52,654 0 3,493 56,147

Daniel R. DiMicco

132,000 125,000 1,270 258,270

John H. Forsgren

164,808 125,000 6,270 296,078

Ann Maynard Gray

153,192 125,000 488,988 (5) 767,180

James H. Hance, Jr.(1)

67,846 0 7,749 75,595

John T. Herron

159,808 125,000 6,270 291,078

James B. Hyler, Jr.

165,500 125,000 1,270 291,770

William E. Kennard

157,783 125,000 6,270 289,053

E. Marie McKee

178,500 125,000 6,270 309,770

Richard A. Meserve(1)

50,154 0 7,749 57,903

Charles W. Moorman IV(1)

110,165 147,321 6,226 263,712

James T. Rhodes(1)

57,346 0 7,749 65,095

Carlos A. Saladrigas

156,654 125,000 6,270 287,924

Thomas E. Skains(1)

43,011 73,146 6,066 122,223

William E. Webster, Jr.(1)

50,837 84,135 2,915 137,887
(1)
Effective May 5, 2016, Mr. DeLoach, Mr. Hance, Dr. Meserve and Dr. Rhodes retired from the Board of Directors of Duke Energy. Mr. Moorman, Mr. Webster and Mr. Skains were appointed to the Board of Directors of Duke Energy on March 1, 2016, September 1, 2016, and October 3, 2016, respectively.

(2)
Mr. Angelakis, Mr. Browning, Mr. DeLoach, Mr. DiMicco, Mr. Hyler, Dr. Meserve, Mr. Moorman, Dr. Rhodes, Mr. Saladrigas and Mr. Webster elected to defer $77,673; $215,308; $52,654; $132,000; $82,750; $25,077; $110,165; $28,673; $156,654 and $25,419, respectively, of their 2016 cash compensation under the Directors' Savings Plan.

(3)
This column reflects the grant date fair value of the stock awards granted to each eligible director during 2016. The grant date fair value was determined in accordance with the accounting guidance for stock-based compensation. See Note 20 of the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016, ("Form 10-K") for an explanation of the assumptions made in valuing these awards. In March 2016, Mr. Moorman received a prorated portion of the 2015-16 annual stock retainer, amounting to 304 shares of Duke Energy common stock. In May 2016, each sitting director on the Duke Energy Board received their annual stock retainer in the form of 1,559 shares of Duke Energy common stock. Mr. Angelakis, Mr. Browning, Mr. DiMicco, Mr. Forsgren, Mr. Hyler, Mr. Kennard, Mr. Moorman, Mr. Saladrigas and Ms. Gray elected to defer their 2016-17 stock retainer of Duke Energy shares under the Directors' Savings Plan. In addition, Mr. Webster and Mr. Skains received a prorated portion of the 2016-17 annual stock retainer, amounting to 1,061 and 925 shares of Duke Energy common stock, respectively, upon joining the Board of Directors during 2016.

(4)
As described in the following table, All Other Compensation for 2016 includes cost associated with personal use of company aircraft, a business travel accident insurance premium that was prorated among the directors based on their service on the Board of Directors during 2016, contributions made in the director's name to charitable organizations and a gift for the directors who retired in 2016.
Name
Personal Use
of Airplane
($)

Business Travel
Accident
Insurance
($)

Charitable
Contributions
($)

Retirement
Gift
($)

Total
($)

Michael J. Angelakis

0 270 1,000 0 1,270

Michael G. Browning

0 270 6,000 0 6,270

Harris E. DeLoach, Jr.

744 93 2,500 156 3,493

Daniel R. DiMicco

0 270 1,000 0 1,270

John H. Forsgren

0 270 6,000 0 6,270

Ann Maynard Gray

0 270 488,718 (5) 0 488,988

James H. Hance, Jr.

0 93 7,500 156 7,749

John T. Herron

0 270 6,000 0 6,270

James B. Hyler, Jr.

0 270 1,000 0 1,270

William E. Kennard

0 270 6,000 0 6,270

E. Marie McKee

0 270 6,000 0 6,270

Richard A. Meserve

0 93 7,500 156 7,749

Charles W. Moorman IV

0 226 6,000 0 6,226

James T. Rhodes

0 93 7,500 156 7,749

Carlos A. Saladrigas

0 270 6,000 0 6,270

Thomas E. Skains

0 66 6,000 0 6,066

William E. Webster, Jr.

0 90 2,825 0 2,915
(5)
In 2016, upon Ms. Gray's request, a donation was made under the Charitable Giving Program in an amount equal to the actuarial present value of her benefit under the program, resulting in a donation on her behalf of $482,718. As indicated on page 32, no additional contributions will be made under this legacy program on behalf of our current directors.

DUKE ENERGY – 2017 Proxy Statement    33


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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table indicates the amount of Duke Energy common stock beneficially owned by the current directors, the executive officers listed in the Summary Compensation Table under Executive Compensation (referred to as the named executive officers), and all directors and executive officers as a group as of February 26, 2017. There were 699,611,196 shares of Duke Energy common stock outstanding as of February 26, 2017. Because Mr. Craver, Jr. did not join the Board until March 1, 2017, he is not included in the following tables. On March 1, 2017, Mr. Craver received 268 shares of Duke Energy common stock as a prorated portion of the 2016-2017 annual stock retainer.

Name or Identity of Group
Total Shares
Beneficially Owned(1)

Percent
of Class

Michael J. Angelakis

11,482 *

Michael G. Browning

71,899 *

Daniel R. DiMicco

41,771 *

John H. Forsgren

20,006 *

Lynn J. Good

100,112 *

Ann Maynard Gray

25,799 *

John T. Herron

13,726 *

James B. Hyler, Jr.

14,831 *

Dhiaa M. Jamil

18,664 *

Julia S. Janson

15,981 *

William E. Kennard

5,932 *

E. Marie McKee

137 *

Charles W. Moorman IV

3,307 *

Carlos A. Saladrigas

4,092 *

Thomas E. Skains

28,615 *

William E. Webster, Jr.

1,061 *

Lloyd M. Yates

41,650 *

Steven K. Young

42,741 *

Directors and executive officers as a group (22)

534,426 *
*
Represents less than 1%.

(1)
Includes the following number of shares with respect to which directors and executive officers have the right to acquire beneficial ownership within 60 days of February 26, 2017: Mr. Angelakis – 1,609; Mr. Browning – 21,494 ; Mr. DiMicco – 17,156; Mr. Forsgren – 14,600; Ms. Good – 0; Ms. Gray – 2,109; Mr. Herron – 0; Mr. Hyler – 8,592; Mr. Jamil – 0; Ms. Janson – 0; Mr. Kennard – 5,932; Ms. McKee – 137; Mr. Moorman – 1,609; Mr. Saladrigas – 1,229; Mr. Skains – 27,680; Mr. Webster – 0; Mr. Yates – 0; Mr. Young – 0; and all directors and executive officers as a group – 102,149.

Ownership of Units Representing Common Stock

The table below shows ownership of other units (not listed in the table above) related to Duke Energy common stock under the Directors' Savings Plan. These units do not represent an equity interest in Duke Energy and possess no voting rights, but are equal in economic value to one share of Duke Energy common stock.

Name
Number of Units

Michael J. Angelakis

0

Michael G. Browning

28,763

Daniel R. DiMicco

1,313

John H. Forsgren

0

Ann Maynard Gray

5,113

John T. Herron

0

James B. Hyler, Jr.

11,103

William E. Kennard

0

E. Marie McKee

56,190

Charles W. Moorman IV

0

Carlos A. Saladrigas

33,368

Thomas E. Skains

0

William E. Webster, Jr.

0

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The table below shows ownership of other units (not listed in the table on page 34) related to Duke Energy common stock under the Duke Energy Corporation Executive Savings Plan ("Executive Savings Plan"). These units do not represent an equity interest in Duke Energy and possess no voting rights, but are equal in economic value to one share of Duke Energy common stock.

Name
Number of Units

Lynn J. Good

72

Steven K. Young

478

Dhiaa M. Jamil

1,805

Julia S. Janson

201

Lloyd M. Yates

10,984

The following table lists the beneficial owners of five percent or more of Duke Energy's outstanding shares of common stock as of December 31, 2016. This information is based on the most recently available reports filed with the SEC and provided to us by the company listed.

Name or Identity of Beneficial Owner
Shares of Common Stock
Beneficially Owned

Percentage
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355


46,552,427 6.75 %(1)
BlackRock Inc.
40 East 52nd Street
New York, NY 10022
42,107,192 6.10 %(2)
(1)
According to the Schedule 13G/A filed by The Vanguard Group, these shares are beneficially owned by The Vanguard Group, which is the parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G) to various investment companies, and has sole voting power with respect to 1,146,371 shares, 160,356 shares with shared voting power, sole dispositive power with regard to 45,331,347 shares and 1,221,080 shares with shared dispositive power.

(2)
According to the Schedule 13G/A filed by BlackRock Inc., these shares are beneficially owned by BlackRock Inc., which is the parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G) to various investment companies, and has sole voting power with respect to 36,065,492 shares, 0 shares with shared voting power, sole dispositive power with regard to 42,107,192 shares and 0 shares with shared dispositive power.

DUKE ENERGY – 2017 Proxy Statement    35


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PROPOSAL 2:     RATIFICATION OF DELOITTE & TOUCHE LLP AS DUKE ENERGY CORPORATION'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017

The Audit Committee is directly responsible for the appointment and compensation, including the preapproval of audit fees as described below, and the retention and oversight of the independent registered public accounting firm that audits our financial statements and our internal control over financial reporting. The Audit Committee has selected Deloitte & Touche LLP ("Deloitte") as Duke Energy's independent registered public accounting firm for 2017. Deloitte has served as our independent registered public accounting firm since 1978.

Independence

The Audit Committee and the Board believe that the continued retention of Deloitte as Duke Energy's independent registered public accounting firm is in the best interests of the Corporation and its shareholders. Deloitte's years of experience with Duke Energy have allowed them to gain expertise regarding Duke Energy's operations, accounting policies and practices and internal controls over financial reporting. It also prevents the significant time commitment that educating a new auditor would entail, which could also result in distraction in focus for Duke Energy management.

To safeguard the continued independence of the independent registered public accounting firm, the Audit Committee adopted a policy that provides that the independent registered public accounting firm is only permitted to provide services to Duke Energy and its subsidiaries that have been preapproved by the Audit Committee. Pursuant to the policy, detailed audit services, audit-related services, tax services and certain other services have been specifically preapproved up to certain categorical fee limits. In the event that the cost of any of these services may exceed the preapproved limits, the Audit Committee must approve the service before the independent registered public accounting firm is engaged for such service. All other services that are not prohibited pursuant to the SEC's or other applicable regulatory bodies' rules or regulations must be specifically approved by the Audit Committee before the independent registered public accounting firm is engaged for such service. All services performed in 2016 and 2015 by the independent registered public accounting firm were approved by the Duke Energy Audit Committee pursuant to its policy on Engaging the Independent Auditor for Services.

In addition to the annual review of Deloitte's independence and in association with the mandated rotation of Deloitte's lead engagement partner, the Audit Committee is directly involved in the selection of Deloitte's new lead engagement partner.

Representatives of Deloitte are expected to participate in the Annual Meeting and will be available to respond to appropriate questions. Information on Deloitte's fees for services rendered in 2016 and 2015 are listed below.

The approval of a majority of shares represented in person or by proxy at the Annual Meeting is required to approve this proposal.

Audit Fees

Type of Fees
2016
2015

Audit Fees(1)

$ 13,822,090 $ 12,392,000 (5)

Audit-Related Fees(2)

649,000 2,438,000 (5)

Tax Fees(3)

384,000 195,000

All Other Fees(4)

225,000 40,000

TOTAL FEES:

$ 15,080,090 $ 15,065,000
(1)
Audit Fees are fees billed, or expected to be billed, by Deloitte for professional services for the financial statement audits, audit of the financial statements of Duke Energy and its subsidiaries included in Duke Energy's Annual Report on Form 10-K and reviews of financial statements included in Duke Energy's Quarterly Reports on Form 10-Q. Total audit fees for 2016 also include amounts for the audits of Piedmont Natural Gas. Audit fees also include services related to certain regulatory and agreed upon procedures reports.

(2)
Audit-Related Fees are fees billed, or expected to be billed, by Deloitte for assurance and related services that are reasonably related to the performance of an audit or review of financial statements, including assistance with acquisitions and divestitures and internal control reviews.

(3)
Tax Fees are fees billed by Deloitte for tax return assistance and preparation, tax examination assistance and professional services related to tax planning and tax strategy.

(4)
Other Fees are billed by Deloitte for attendance at Deloitte-sponsored conferences and access to Deloitte research tools and subscription services. Additionally, 2016 includes information technology consulting services related to human resources software selection seminars.

(5)
Audit Fees and Audit-Related Fees for 2015 have been updated from the number disclosed in the 2016 proxy statement to reflect the movement of Duke Energy Ohio Gas Examination fees from Audit-Related Fees to Audit Fees.

For the Above Reasons, the Board of Directors Recommends a Vote "FOR" This Proposal.

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REPORT OF THE AUDIT COMMITTEE

The following is the report of the Audit Committee with respect to Duke Energy's audited financial statements for the fiscal year ended December 31, 2016.

The information contained in this Audit Committee Report shall not be deemed to be "soliciting material" or "filed" or "incorporated by reference" in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that Duke Energy specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act.

The purpose of the Audit Committee is to assist the Board in its general oversight of Duke Energy's financial reporting, internal controls and audit functions. The Audit Committee Charter describes in greater detail the full responsibilities of the committee and is available on our website at www.duke-energy.com/our-company/investors/corporate-governance/board-committee-charters/audit. Further information about the Audit Committee, its Policy on Engaging the Independent Auditor for Services and its members is detailed on pages 24 and 36 of the proxy statement.

The Audit Committee has reviewed and discussed the consolidated financial statements with management and Deloitte, the Corporation's independent registered public accounting firm. Management is responsible for the preparation, presentation and integrity of Duke Energy's financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and, evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Deloitte is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States ("GAAP"), as well as expressing an opinion on the effectiveness of internal control over financial reporting based on the criteria established in Internal Control – Integrated Framework (2013).

The Audit Committee reviewed the Corporation's audited financial statements with management and Deloitte, and met separately with both management and Deloitte to discuss and review those financial statements and reports prior to issuance. These discussions also addressed the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. Management has represented, and Deloitte has confirmed, that the financial statements present fairly, in all material respects, in conformity with GAAP.

In addition, management completed the documentation, testing and evaluation of Duke Energy's system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received periodic updates provided by management and Deloitte at regularly scheduled Audit Committee meetings. At the conclusion of the process, management presented to the Audit Committee on the effectiveness of the Corporation's internal control over financial reporting. The Audit Committee also reviewed the report of management contained in the Corporation's Form 10-K filed with the SEC, as well as Deloitte's Report of Independent Registered Public Accounting Firm included in the Corporation's Form 10-K related to its audit of (i) the consolidated financial statements and (ii) the effectiveness of internal control over financial reporting. The Audit Committee continues to oversee the Corporation's efforts related to its internal control over financial reporting and management's preparations for the evaluation in fiscal 2017.

The Audit Committee has discussed with Deloitte the matters required to be discussed by professional and regulatory requirements, including, but not limited to, the standards of the Public Company Accounting Oversight Board regarding The Auditors' Communications with Those Charged with Governance. In addition, Deloitte has provided the Audit Committee with the written disclosures and the letter required by "Public Company Accounting Oversight Board Ethics and Independence Rule 3526, Communications with Audit Committees Concerning Independence" that relates to Deloitte's independence from Duke Energy and its subsidiaries and the Audit Committee has discussed with Deloitte the firm's independence.

Based on its review of the consolidated financial statements and discussions with and representations from management and Deloitte referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Duke Energy's 2016 Form 10-K, for filing with the SEC.

Audit Committee
Michael J. Angelakis, Chairperson
John H. Forsgren
James B. Hyler, Jr.
E. Marie McKee
Carlos A. Saladrigas

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PROPOSAL 3:     ADVISORY VOTE TO APPROVE DUKE ENERGY CORPORATION'S NAMED EXECUTIVE OFFICER COMPENSATION

At the 2011 Annual Meeting, our shareholders recommended that our Board of Directors hold say-on-pay votes on an annual basis. As a result, we are providing our shareholders with the opportunity to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. This proposal gives our shareholders the opportunity to express their views on the compensation of our named executive officers.

In connection with this proposal, the Board of Directors encourages shareholders to review in detail the description of the compensation program for our named executive officers that is set forth in the Compensation Discussion and Analysis beginning on page 39, as well as the information contained in the compensation tables and narrative discussion in this proxy statement.

As described in more detail in the Compensation Discussion and Analysis section, the guiding principle of our compensation philosophy is that pay should be linked to performance and that the interests of our executives and shareholders should be aligned. Our compensation program is designed to provide significant upside and downside potential depending on actual results as compared to predetermined measures of success. A significant portion of our named executive officers' total direct compensation is directly contingent upon achieving specific results that are important to our long-term success and growth in shareholder value. We supplement our pay-for-performance program with a number of compensation policies that are aligned with the long-term interests of Duke Energy and its shareholders.

We are asking our shareholders to indicate their support for the compensation of our named executive officers as disclosed in this proxy statement by voting "FOR" the following resolution:

"RESOLVED, that the shareholders of Duke Energy approve, on an advisory basis, the compensation paid to Duke Energy's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K of the Securities Act of 1933, as amended, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion in Duke Energy's 2017 Proxy Statement."

The approval of a majority of shares represented in person or by proxy at the Annual Meeting is required to approve this proposal. Because your vote is advisory, it will not be binding on the Board of Directors, the Compensation Committee or Duke Energy. The Compensation Committee, however, will review the voting results and take them into consideration when making future decisions regarding the compensation of our named executive officers.

For the Above Reasons, the Board of Directors Recommends a Vote "FOR" This Proposal.

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REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee of Duke Energy is responsible for the oversight of the Corporation's compensation programs and compensation of the Corporation's executives, per the Committee's Charter which is available on our website at www.duke-energy.com/our-company/investors/corporate-governance/board-committee-charters/compensation.

The Compensation Committee of Duke Energy has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee
E. Marie McKee, Chairperson
Michael G. Browning
Charles W. Moorman IV
Carlos A. Saladrigas

COMPENSATION DISCUSSION AND ANALYSIS

The purpose of this Compensation Discussion and Analysis is to provide information about Duke Energy's compensation objectives and policies for our named executive officers, who, for 2016 are:

Name
Title
Lynn J. Good Chairman, President and Chief Executive Officer
Steven K. Young Executive Vice President and Chief Financial Officer
Dhiaa M. Jamil Executive Vice President and Chief Operating Officer
Julia S. Janson Executive Vice President, Chief Legal Officer and Corporate Secretary
Lloyd M. Yates Executive Vice President, Customer and Delivery Operations and President, Carolinas Region

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COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary of the Compensation Discussion and Analysis

2016 Compensation Highlights

GRAPHIC

As discussed throughout this Compensation Discussion and Analysis, our compensation program is designed to link pay to performance. Our 2016 Business Highlights are described on page 5 of this proxy statement.

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COMPENSATION DISCUSSION AND ANALYSIS

Objectives of the Compensation Program

Duke Energy is committed to creating value for our shareholders while building trust and transforming our energy future. We continuously strive to achieve this core purpose of creating shareholder value in all that we do, but with a particular emphasis on the areas described below in The Road Ahead.

GRAPHIC

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COMPENSATION DISCUSSION AND ANALYSIS

We design our compensation program so that it motivates our executives to focus on the four priorities in The Road Ahead, all of which are designed to ensure that our compensation program aligns with the interests of executives and shareholders:

GRAPHIC

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COMPENSATION DISCUSSION AND ANALYSIS

Pay-for-Performance

The guiding principle of our compensation philosophy is that pay should be linked to performance and that the interests of executives and shareholders should be aligned. Our compensation program is designed to provide significant upside and downside potential depending on actual results, as compared to predetermined measures of success.

Our core compensation program consists of base salary, STI and LTI (performance shares and restricted stock units). The following chart illustrates the components of the target total direct compensation opportunities provided to our named executive officers.

GRAPHIC

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COMPENSATION DISCUSSION AND ANALYSIS

Align Interests of Named Executive Officers and Shareholders

Following are key features of our executive compensation program, which reinforce our pay-for-performance philosophy and strengthen the alignment of interests of our executives and shareholders:

AT DUKE ENERGY WE...   AT DUKE ENERGY WE DO NOT...
GRAPHIC   Require significant stock ownership. We maintain aggressive guidelines to reinforce the importance of Duke Energy stock ownership. These guidelines are intended to align the interests of executives and shareholders and to focus the executives on our long-term success. Under these guidelines, each of our current named executive officers must own Duke Energy shares in accordance with the following schedule:   GRAPHIC   Provide tax gross-ups. We do not provide excise tax gross-ups for severance received by our named executive officers under Change in Control Agreements or under the Executive Severance Plan, and we do not provide tax gross-ups on other payments such as perquisites.

 

Leadership Position
  Value of Shares
Chief Executive Officer   6x Base Salary*
Other Named Executive Officers   3x Base Salary

    *In order to further strengthen our stock ownership guidelines, the Chief Executive Officer's ownership requirement was increased from 5X to 6X of her base salary during 2016.


GRAPHIC   Maintain a stock holding policy. Each named executive officer is required to hold 50% of all shares acquired under the LTI program (after payment of any applicable taxes) and 100% of all shares acquired upon the exercise of stock options (after payment of the exercise price and taxes) until the applicable stock ownership requirement is satisfied. Each of our named executive officers was in compliance with the stock ownership/stock holding policy during 2016.   GRAPHIC   Permit hedging or pledging of Duke Energy securities. We have a policy that prohibits employees (including the named executive officers) and directors from trading in options, warrants, puts and calls or similar instruments in connection with Duke Energy securities, or selling Duke Energy securities "short." In addition, we prohibit the pledging of Duke Energy securities in margin accounts.
GRAPHIC   Tie incentive compensation to a clawback policy. We maintain a "clawback policy," which would allow us to recover (i) certain cash or equity-based incentive compensation tied to financial results in the event those results were restated due at least in part to the recipient's fraud or misconduct or (ii) an inadvertent payment based on an incorrect calculation.   GRAPHIC   Provide "single trigger" severance upon a change in control. Our Change in Control Agreements provide cash severance only upon a "double trigger," meaning that change in control severance is payable only if our named executive officers incur a qualifying termination of employment (i.e., an involuntary termination without "cause" or a voluntary termination for "good reason") and the termination occurs in connection with a change in control of Duke Energy.
GRAPHIC   Provide a consistent level of severance. We maintain the Duke Energy Corporation Executive Severance Plan ("Executive Severance Plan") in order to provide a consistent approach to executive severance and to provide eligible employees, including our named executive officers (excluding Ms. Good, who is provided with severance compensation through her employment agreement), with certainty and security while they are focusing on their duties and responsibilities. Under this plan, severance compensation is payable only upon a qualifying termination of employment (i.e., an involuntary termination without "cause" or a voluntary termination for "good reason").   GRAPHIC   Provide employment agreements to a broad group. Except for our Chief Executive Officer, no executive is provided a comprehensive employment agreement.
GRAPHIC   Maintain a shareholder approval policy for severance agreements. We have a policy generally to seek shareholder approval for any future agreements with our named executive officers that provide severance compensation in excess of 2.99 times the executive's annual compensation or that provide for tax gross-ups in connection with a termination event.   GRAPHIC   Encourage excessive or inappropriate risk-taking through our compensation program. In consultation with the Compensation Committee, members of management from Duke Energy's Human Resources, Legal and Risk Management groups assessed whether our compensation policies and practices encourage excessive or inappropriate risk-taking by our employees, including employees other than our named executive officers. This assessment included a review of the risk characteristics of Duke Energy's business and the design of our incentive plans and policies. Management reported its findings to the Compensation Committee, and after review and discussion, the Compensation Committee concluded that our plans and policies do not encourage excessive or inappropriate risk-taking.

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COMPENSATION DISCUSSION AND ANALYSIS


AT DUKE ENERGY WE...   AT DUKE ENERGY WE DO NOT...
GRAPHIC   Comply with equity award granting policy. In recognition of the importance of adhering to specific practices and procedures in the granting of equity awards, the Compensation Committee has adopted a policy that applies to the granting of equity awards. Under this policy, annual grants to employees may be made at any regularly scheduled meeting, provided that reasonable efforts will be made to make such grants at the first regularly scheduled meeting of each calendar year, and annual grants to independent directors may be made by the Board of Directors at any regularly scheduled meeting, provided that reasonable efforts will be made to make such grants at the regularly scheduled meeting that is held in conjunction with the annual meeting of shareholders each year.   GRAPHIC   Provide excessive perquisites. Our perquisites program is limited to an executive physical, an airline club membership to facilitate travel, limited personal use of corporate aircraft (subject generally to the requirement that the executive reimburse Duke Energy for the direct operating costs for such travel), financial planning and matching charitable contributions. See page 52 for additional details.
GRAPHIC   Use an independent compensation consultant. The Compensation Committee has engaged FW Cook to report directly to the Compensation Committee as its independent compensation consultant. The consultant has been instructed to provide completely independent advice to the Compensation Committee and is not permitted to provide any services to Duke Energy other than at the direction of the Compensation Committee. The Compensation Committee has assessed the independence of FW Cook pursuant to SEC rules and concluded that no conflict of interest exists that would prevent the consulting firm from independently advising the Compensation Committee.   GRAPHIC   Provide dividend equivalents on unearned performance shares. Dividend equivalents are paid with respect to our performance share awards only if, and to the extent, the related performance share awards are earned and become vested.
GRAPHIC   Review tally sheets. At least once a year, the Compensation Committee reviews tally sheets for each executive officer, which include a summary of compensation paid in prior years, compensation for the current year, the valuation of all outstanding equity awards and a summary of amounts payable upon a termination of employment under various circumstances. This information allows the Compensation Committee to evaluate the total compensation package for each named executive officer, as well as adjustments to specific elements of the total direct compensation package.        
GRAPHIC   Consider prior year's "say-on-pay" vote. As required by the Dodd Frank Act, we included a shareholder vote on executive compensation in last year's proxy statement, which was approved by approximately 92% of the votes represented in person or by proxy. The Compensation Committee considers the results of this advisory vote when designing our compensation program, including our emphasis on pay-for-performance, which is structured and designed to achieve our stated goals and objectives. In addition, we regularly engage our shareholders in an open dialogue regarding our compensation program.        

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COMPENSATION DISCUSSION AND ANALYSIS

Elements of Duke Energy's Compensation Program

As discussed in more detail below, during 2016, the principal components of compensation for the named executive officers were: base salary; STI compensation; LTI compensation; retirement and welfare benefits, and perquisites.

GRAPHIC

Following is a summary of each principal compensation component provided to the named executive officers during 2016.

Base Salary The salary for each named executive officer is based, among other factors, upon job responsibilities, level of experience, individual performance, comparisons to the salaries of executives in similar positions obtained from market surveys and internal comparisons. The following base salary adjustments for the named executive officers occurred in 2016:

Effective March 1, 2016, Ms. Good's annual rate of base salary was increased from $1,250,000 to $1,300,000 to bring her total compensation to approximately the market median and recognize her exemplary leadership and performance over the past three years as Chief Executive Officer.

Effective March 1, 2016, Mr. Young, Mr. Yates and Ms. Janson each received market adjustments of 5%, and Mr. Jamil received a market adjustment of 11%, in each case to bring his or her salary closer to market median.

Short-Term Incentive Compensation STI opportunities are provided to our named executive officers under the Duke Energy Corporation Executive Short-Term Incentive Plan to promote the achievement of annual performance objectives.

Each year, the Compensation Committee establishes the target annual incentive opportunity for each named executive officer, which is based on a percentage of his or her base salary. No changes were made to the target incentive opportunities of the named executive officers in 2016 other than for Ms. Good, whose target incentive opportunity was increased from 140% to 150% of her annual base salary, effective as of January 1, 2016, to bring her total compensation to approximately the market median.

Name
Target Incentive Opportunity
(as a % of base salary)

Lynn J. Good

150 %

Steven K. Young

80 %

Dhiaa M. Jamil

80 %

Julia S. Janson

80 %

Lloyd M. Yates

80 %

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COMPENSATION DISCUSSION AND ANALYSIS

As discussed in more detail below, the Compensation Committee established the following objectives under the STI Plan in February 2016 with the STI target opportunity allocated between corporate and individual objectives.

GRAPHIC

In order to emphasize the importance of the EPS objective, the Compensation Committee established a circuit-breaker, providing that if an adjusted diluted EPS performance level of at least $4.11 (increased from $4.10 as explained on the next page) was not achieved, the named executive officers would not have received any payout under the 2016 STI Plan. To encourage a continued focus on safety, the Compensation Committee also included a potential safety adder and penalty, each in the amount of five percent of a participant's entire STI payment.

Depending on actual performance, named executive officers were eligible to earn up to 183.75% of the amount of their STI target opportunity, based on a potential maximum payout of 200% for the EPS objective, a 150% potential maximum payout for the operational excellence, customer satisfaction and individual objectives, and a potential five percent safety adder.

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COMPENSATION DISCUSSION AND ANALYSIS

Corporate Objectives

The 2016 corporate objectives and the related target and performance results were as follows and are defined below:

Objective(1)
  Weight
  Threshold
(50%)

  Target
(100%)

  Maximum(2)
  Result
  Payout
 
Adjusted Diluted EPS(3)   50 % $ 4.36   $ 4.61   $ 4.86   $ 4.71   140 %
Operational Excellence(4)     20 %                              

(a) Operations and Maintenance Expense

    $ 5.085B   $ 4.985B   $ 4.885B   $ 5.009B   87.8 %

(b) Reliability(5)

                                     

Regulated Generation (Fossil/Hydro) Commercial Availability

    85.75 % 86.92 % 87.92 % 84.66 % 0 %

Nuclear Generation Capacity Factor

          91.76 %   94.12 %   95.28 %   95.72 %   150 %

System Average Interruption Duration Index

    135   126   117   144   0 %

Renewables Availability

          93.00 %   96.00 %   98.00 %   94.00 %   66.67 %

International Equivalent Availability

    88.3 % 90.3 % 92.3 % 90.8 % 112.5 %

(c) Safety/Environmental(6)

                                     

Total Incident Case Rate:

                         

Employees

    0.55   0.40   0.38   0.40   100 %

Contractors

    1.10   1.00   0.90   0.87   150 %

Reportable Environmental Events

          54     45     39     39     150 %
Customer Satisfaction   10 % 752   762   770   779   150 %
(1)
For additional information about the calculation of the EPS and O&M expense control objectives, see page 54.

(2)
A payout of up to 200% of the target opportunity is available for the adjusted diluted EPS objective and a payout of up to 150% of the target opportunity is available for the Operational Excellence and CSAT objectives.

(3)
If an adjusted diluted EPS performance level of at least $4.11 was not achieved (i.e., a circuit-breaker), the named executive officers would not have received a payout under the 2016 STI Plan.

(4)
Each of the three primary operational excellence objectives contains an equal weighting of one-third of the aggregate weighting of 20%.

(5)
The reliability objectives are calculated as described below. Each reliability metric contains an equal weighting of one-fifth of the aggregate weighting of the reliability objective.

(6)
The safety/environmental objectives are calculated as described below. Each safety/environmental metric contains an equal weighting of one-half of the aggregate weighting of the safety/environmental objective.

The Compensation Committee established the target for the EPS objective under the 2016 STI Plan at $4.61 (adjusted as described below), which is slightly less than the $4.65 level established under the 2015 STI Plan but is in excess of our actual EPS under the STI Plan of $4.54 in 2015. The EPS target for 2015 was established based on the assumption that we would own the Midwest Commercial Generation business for approximately one quarter during 2015, and was based on normal hydrology and stable economic conditions in Brazil. Due to the deterioration of hydrology conditions in Brazil (which was expected to continue into 2016) and the disposition of the Midwest Commercial Generation business, the Compensation Committee determined that it was appropriate to establish the target for EPS under the 2016 STI Plan at $4.61.

After the end of 2016, the Compensation Committee approved the following adjustments to the performance levels under the 2016 STI Plan to reflect the acquisition of Piedmont Natural Gas on October 3, 2016: (i) increased each of the threshold, target, and maximum adjusted diluted EPS performance levels, as well as the circuit-breaker, by $0.01, and (ii) increased each of the threshold, target, and maximum O&M expense performance levels by $70 million. These adjustments were made under the terms of the 2016 STI Plan because the original performance levels were established based on the assumption that the acquisition of Piedmont Natural Gas would not close during 2016. The adjusted diluted EPS result shown above ($4.71) is $0.02 higher than the amount reported in our 2016 earnings release. This difference is attributable to an adjustment approved by the Compensation Committee, pursuant to the terms of the 2016 STI Plan, to exclude the impact of a significant unanticipated contribution to the Duke Energy Foundation.

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COMPENSATION DISCUSSION AND ANALYSIS

Reliability Metrics
  Description
Regulated Generation (Fossil/Hydro) Commercial Availability   A measure of regulated fossil generation reliability, determined as the weighted percentage of time the regulated fossil generation units are available to generate electricity, where the availability each hour is weighted by the difference between market price and unit cost.

Nuclear Generation Capacity Factor

 

A measure of the amount of electricity produced by a nuclear generating unit relative to the amount of electricity the unit is capable of producing.

System Average Interruption Duration Index

 

A measure of the number of outage minutes experienced during the year per customer served from both transmission and distribution systems calculated in accordance with the applicable guidelines set forth in the IEEE Standard 1366-Guide for Electric Power Distribution Reliability Indices, including application of the "major event day" exclusions described therein.

Renewables Availability

 

A renewables energy yield metric, calculated by comparing actual generation to expected generation based on the wind speed measured at the turbine and by calculating the actual generation to expected generation based on solar intensity measures at the panels. The renewables energy yield is weighted 90% to wind and 10% to solar.

International Equivalent Availability

 

A measure of the amount of electricity that potentially could be produced by an international generating unit relative to the amount of electricity the unit is actually producing.

 

Safety/Environmental Metrics
  Description
Reportable Environmental Events   REE refers to environmental events resulting from Duke Energy operations that require notification to, or enforcement action by, a regulatory agency. This objective emphasizes service reliability and the mitigation of environmental risks associated with our operations.

Total Incident Case Rate

 

TICR measures the number of occupational injuries and illnesses per 100 employees and staff augmentation contractors. This objective emphasizes our focus on achieving an event-free and injury-free workplace.

 

Customer Satisfaction Metric
   
Description   The CSAT metric is a composite of customer satisfaction results for each regulated utility.

Calculation

 

Results are based on the J.D. Power Electric Utility Residential Customer Satisfaction Index ("JDP CSI"), and internal surveys of customers through the Small/Medium Customer Perception Tracker ("SMB CPT") and the Large Business Perception Tracker ("LB CPT") using the following formula:

 

 

CSAT=0.50 (JDP CSI Score) +0.25 (SMB CPT Score X 10) +0.25 (LB CPT Score X 10)

 

 

The enterprise-wide CSAT score is calculated utilizing the regulated utility level CSAT scores, based on the following weights: Duke Energy Carolinas (32%); Duke Energy Progress (19%); Duke Energy Florida (24%); Duke Energy Indiana (12%); and Duke Energy Ohio/Kentucky (13%).

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COMPENSATION DISCUSSION AND ANALYSIS

Individual Objectives

The 2016 individual objectives were as follows:

GRAPHIC

Safety Component

In order to emphasize a continued focus on safety, the Compensation Committee included the following safety measures in the 2016 STI Plan:

Safety Penalty.  The STI Plan payments for each of the named executive officers were subject to a safety penalty of five percent if Duke Energy experienced more than nine enterprise-wide life altering injuries ("LAI") or there was a significant operational event (including a controllable work-related Duke Energy employee or contractor fatality).

Safety Adder.  The STI Plan payments of the named executive officers were also eligible for a safety adder that could result in an increase of five percent if: (i) there were no controllable work-related fatalities of any Duke Energy employee or contractor during 2016, (ii) there were seven or fewer LAIs during 2016, and (iii) there were no significant operational events.

There was one LAI during 2016, which is less than the number (9) at which the safety penalty otherwise would apply, and no significant operational events or controllable work-related fatalities occurred. Therefore, the safety adder applies such that payments under the 2016 STI Plan were increased by 5% for eligible employees.

Payouts

As a result of the aggregate corporate, operational and individual performance, each named executive officer's aggregate payout under the 2016 STI Plan was equal to:

Name
Payout
 
Lynn J. Good $ 2,676,465  
Steven K. Young $ 665,742  
Dhiaa M. Jamil $ 832,658  
Julia S. Janson $ 588,035  
Lloyd M. Yates $ 680,129  

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COMPENSATION DISCUSSION AND ANALYSIS

Long-Term Incentive Compensation

Opportunities under the LTI program are provided to our named executive officers to provide appropriate balance to the STI Plan and to align executive and shareholder interests in an effort to maximize shareholder value.

2016 LTI Program

Each year, the Compensation Committee establishes the target LTI opportunity for each named executive officer, which is based on a percentage of his or her base salary. Guided by the fact that actual realized LTI compensation will depend substantially on our long-term performance and is aligned with the interests of our shareholders, the Compensation Committee approved an increase in Ms. Good's target LTI opportunity from 600% to 700% of her annual base salary, effective January 1, 2016. The Compensation Committee's decision was based on a number of factors (none of which was assigned a fixed weight), including, but not limited to: market data that indicated Ms. Good's target compensation opportunity was below market levels for an organization of our size and scope, recognition of the complexity and importance of Ms. Good's position, as well as her outstanding performance record and leadership and potential future contributions to Duke Energy.

The target 2016 LTI opportunities for Mr. Jamil and Ms. Janson were increased from 250% to 275% and from 200% to 225%, respectively, in order to bring their total compensation levels closer to market median and for internal equity purposes. No changes were made to the target LTI opportunities of the other named executive officers for 2016.

Name
Target LTI Opportunity
(as a % of base salary)

Lynn J. Good

700 %

Steven K. Young

225 %

Dhiaa M. Jamil

275 %

Julia S. Janson

225 %

Lloyd M. Yates

225 %

The Compensation Committee reviews the allocation between performance shares and restricted stock units annually with its compensation consultant, which confirmed that the present 70%/30% mix was market based among both utility peers and the general industry. The Compensation Committee believes that this allocation strikes an appropriate balance to both incentivize and retain our executive officers and aligns with our strong pay-for-performance philosophy. Under the 2016 LTI program, each named executive officer's LTI opportunity was provided in the form of restricted stock units and performance shares, as follows:

GRAPHIC

Retention Grants

The Compensation Committee grants restricted stock units, in addition to those provided under the LTI program, when needed for retention purposes in light of the marketability of our executive officers. In February, 2016, the Compensation Committee approved retention grants of time-based restricted stock units to the named executive officers, other than Ms. Good. Different from our annual restricted stock unit awards, these grants are subject to a more-restrictive three-year cliff vesting schedule and are intended to enhance retention incentives for our top executives.

Name
Restricted Stock
Units Granted

Steven K. Young

3,336

Dhiaa M. Jamil

13,342

Julia S. Janson

3,336

Lloyd M. Yates

10,007

DUKE ENERGY – 2017 Proxy Statement    51


Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS

2014-2016 Performance Shares under the Duke Energy 2016 LTI Program

The 2014 performance shares could be earned based on Duke Energy's relative TSR for the three-year period from January 1, 2014, to December 31, 2016, as compared to the companies in the UTY. The results and payout levels for the 2014-2016 performance shares are as follows:

Relative TSR Performance Percentile
Percent Payout of
Target 2014-2016
Performance Shares

Result
Payout of
Target

 

90th or Higher

200 % 16.6th 0 %  

50th (Target)

100 %      

25th

30 %  

Below 25th

0 %      

Retirement and Welfare Benefits

Our named executive officers participate in the retirement and welfare plans generally available to other eligible employees. In addition, in order to attract and retain key executive talent, we believe that it is important to provide our named executive officers with certain limited retirement benefits that are offered only to a select group of management. These retirement plans provided to our named executive officers are described on pages 59-62 and are generally comparable to the benefits provided by peers of Duke Energy, as determined based on market surveys.

Duke Energy provides the named executive officers with the same health and welfare benefits it provides to all other similarly situated employees, and at the same cost charged to all other eligible employees. The named executive officers also are entitled to the same post-retirement health and welfare benefits as those provided to similarly situated retirees.

Perquisites

In 2016, Duke Energy provided our named executive officers with certain other perquisites, which are disclosed in footnote 6 to the Summary Compensation Table on page 56. Duke Energy provides these perquisites as well as other benefits to certain executives in order to provide competitive compensation packages. The cost of perquisites and other personal benefits is not part of base salary, and, therefore, does not affect the calculation of awards and benefits under Duke Energy's other compensation arrangements (i.e., retirement and incentive compensation plans).

Our named executive officers were eligible to receive the following perquisites and other benefits during 2016: (i) up to $2,500 for the cost of a comprehensive physical examination, (ii) reimbursement of expenses incurred for tax and financial planning services, which program is administered on a three-year cycle, such that participating executives can be reimbursed for up to $15,000 of eligible expenses during the three-year cycle, (iii) matching contributions from the Duke Energy Foundation of up to $5,000 to qualifying charitable institutions, and (iv) preferred status at American Airlines.

In addition, Ms. Good may use corporate aircraft for personal travel in North America. With advance approval from the Chief Executive Officer, the other named executive officers may use the corporate aircraft for personal travel in North America. If Ms. Good or any other named executive officer uses the aircraft for personal travel, he or she must reimburse Duke Energy for the direct operating costs for such travel. However, Ms. Good is not required to reimburse Duke Energy for the cost of travel to the executive physical described above or to meetings of the board of directors of other companies on whose board she serves. For additional information on the use of the corporate aircraft, see footnote 6 to the Summary Compensation Table.