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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.           )

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Filed by a Party other than the Registrant o

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ý   Definitive Proxy Statement
o   Definitive Additional Materials
o   Soliciting Material under §240.14a-12

 

LOGO
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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Table of Contents


Welcome to the Duke Energy

Annual Meeting
of Shareholders

GRAPHIC

March 21, 2019

Dear Fellow Shareholders:

I am pleased to invite you to Duke Energy's Annual Meeting to be held on Thursday, May 2, 2019, at 12:30 p.m. Eastern time. We look forward to updating you on our plans for the future of Duke Energy and the progress we have made since our last Annual Meeting. We are excited to once again hold this year's Annual Meeting exclusively via live webcast. This is our third year using the online format. It has been well-received by shareholders and enabled us to use technology to open our Annual Meeting to shareholders all over the world and improve our communications with them while still providing them the same opportunities to vote and ask questions that they have had at previous in-person meetings. As a result of the online format, we are able to connect with more participants and answer more questions than we were able to do at previous in-person meetings.

Once again, you will be able to submit questions in writing in advance of the Annual Meeting on our pre-meeting forum at proxyvote.com. An audio broadcast of the Annual Meeting will also be available by phone toll-free at 1.888.254.3590, confirmation code 1907885. Details regarding how to participate in the Annual Meeting via live webcast, as well as the items to be voted on, are more fully described in the accompanying Notice of Annual Meeting of Shareholders and in the Frequently Asked Questions and Answers About the Annual Meeting on page 75 of this proxy statement.

This proxy statement contains details about our strong governance and executive compensation practices and the oversight of Duke Energy's strategy and risks by our Board. The Board has implemented numerous positive changes to our governance practices in recent years, many of which were influenced by the feedback we received from you, our shareholders. These changes are in addition to the progress made on implementing Duke Energy's long-term strategy in 2018, which is further detailed in the 2018 Annual Report that accompanies this proxy statement.

Your participation in the Annual Meeting is important to us. Please review this proxy statement prior to casting your vote as it contains important information relating to the business of the Annual Meeting. Page 1 contains instructions on how you can vote your shares online, by phone, or by mail. It is important that all of our 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 CEO

LOGO

 


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Letter from the Independent
Lead Director

GRAPHIC

Dear Fellow Shareholders:

It is a great honor to serve as Duke Energy's Independent Lead Director. The Board is deeply committed to sound corporate governance, executive compensation, and risk management policies and practices to ensure that Duke Energy operates responsibly, efficiently, and in the best interests of shareholders. In 2018, we continued our annual shareholder engagement program, reaching out to holders of approximately one-third of our outstanding shares. These conversations were in addition to the numerous conversations we have every year with shareholders and stakeholders outside our shareholder engagement program. The feedback we have gathered both in 2018 and in previous years from this program has been instrumental in the Board's deliberations and adoption of our policies, practices, and disclosures.

The focus of our conversations in 2018 involved our corporate strategy and purpose; board oversight of key risk areas, including human capital management and climate change; the composition of our Board; and Duke Energy's environmental and sustainability goals and practices. Members of the Board were present in many of these conversations and feedback from shareholders was discussed by the Board.

I am fortunate to have the privilege of working with a diverse, engaged, and experienced group of directors at Duke Energy. This Board's diversity, not only of race, gender, and ethnicity, but also of experience, background, and skills, provides the Board with the varied opinions and perspectives that are necessary to allow us to actively oversee the most important issues facing Duke Energy. The Board strikes the right balance between fresh perspectives and established experience. Since the 2018 Annual Meeting, we have appointed two new directors, Annette K. Clayton and Marya M. Rose, to the Board. Our directors' diverse mix of ideas and experiences has resulted in a dynamic Board uniquely equipped to lead Duke Energy as it navigates the rapid changes occurring in the utility industry. I have been honored to lead this Board as Independent Lead Director, and to work closely with our Chairman, President and CEO, Lynn Good, who has skillfully positioned Duke Energy as a leader in the industry during this time of change.

We look forward to continuing our dialogue with you at the 2019 Annual Meeting and beyond. On behalf of the entire Board, thank you for your continued support.

Sincerely,

GRAPHIC

Michael G. Browning
Independent Lead Director

LOGO

 


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GRAPHIC

Notice of Annual Meeting
of Shareholders

May 2, 2019

12:30 p.m. Eastern time
Via live webcast at duke-energy.onlineshareholdermeeting.com

We will convene Duke Energy's Annual Meeting on Thursday, May 2, 2019, at 12:30 p.m. Eastern time 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's independent registered public accounting firm for 2019;

3.
Advisory vote to approve Duke Energy's named executive officer compensation;

4.
Four shareholder proposals; and

5.
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 4, 2019, are entitled to vote at the Annual Meeting by visiting duke-energy.onlineshareholdermeeting.com. To participate in the Annual Meeting via live webcast, you will need the 16-digit control number, which can be found on your Notice, on your proxy card, and 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 process. An audio broadcast of the Annual Meeting will be available by phone toll-free at 1.888.254.3590, confirmation code 1907885.

Holding the Annual Meeting via live webcast allows us to communicate more effectively with more of our shareholders. On our pre-meeting forum at proxyvote.com, you can submit questions in writing in advance of the Annual Meeting, access copies of proxy materials, and vote.

This year we again plan to provide our proxy materials to our shareholders electronically. By doing so, most of our shareholders will only receive the Notice containing instructions on how to access the proxy materials electronically and vote online, by phone, 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 electronically in the future by following the instructions contained in this proxy statement. By delivering proxy materials electronically, 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 which can be found on your proxy card. Regardless of the manner in which you vote, we urge and greatly appreciate your prompt response.


Dated: March 21, 2019

 

By order of the Board of Directors,
GRAPHIC

David B. Fountain
Senior Vice President, Legal, Chief Ethics and Compliance Officer and Corporate Secretary

DUKE ENERGY – 2019 Proxy Statement    


Table of Contents

TABLE OF CONTENTS

PARTICIPATE IN THE FUTURE OF DUKE ENERGY; CAST YOUR VOTE NOW     1  

           
PROXY SUMMARY     2  
              
PROPOSAL 1:   ELECTION OF DIRECTORS     8  
              
INFORMATION ON THE BOARD OF DIRECTORS     16  
              
REPORT OF THE CORPORATE GOVERNANCE COMMITTEE     25  
              
DIRECTOR COMPENSATION     29  
              
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT     31  
              
PROPOSAL 2:   RATIFICATION OF DELOITTE & TOUCHE LLP AS DUKE ENERGY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019     33  
              
REPORT OF THE AUDIT COMMITTEE     34  
              
PROPOSAL 3:   ADVISORY VOTE TO APPROVE DUKE ENERGY'S NAMED EXECUTIVE OFFICER COMPENSATION     35  
              
REPORT OF THE COMPENSATION COMMITTEE     35  
              
COMPENSATION DISCUSSION AND ANALYSIS     36  
              
EXECUTIVE COMPENSATION     52  
              
PROPOSALS 4-7:   SHAREHOLDER PROPOSALS     67  
              
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING     75  
              
OTHER INFORMATION     78  
              
GLOSSARY OF TERMS     80  
              
APPENDIX A   CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION     81  
              

    DUKE ENERGY – 2019 Proxy Statement


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GLOSSARY OF TERMS

To enhance the readability of this year's proxy statement, we have added a Glossary of Terms beginning on page 80, which includes all defined terms in this proxy statement.

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

Vote Now

It is very important that you vote to participate in the future of Duke Energy. NYSE rules state that if your shares are held through a broker, bank, or other nominee, they cannot vote on nondiscretionary matters without your instruction. 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 phone, or by mail, please have your Notice, proxy card, or instructions that accompanied your proxy materials available and follow the instructions.

Eligibility to Vote

You can vote if you were a shareholder of record at the close of business on March 4, 2019.


By internet

 

By phone

 

By mailing your proxy card

GRAPHIC

 

GRAPHIC

 

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

Participate in the Annual Meeting

This year's Annual Meeting will be held exclusively via 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 4, 2019, are entitled to participate in and vote at the Annual Meeting by visiting duke-energy.onlineshareholdermeeting.com. To participate in the Annual Meeting via live webcast, you will need the 16-digit control number, which can be found on your Notice, on your proxy card, and on the instructions that accompanied 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 process. Shareholders may also listen to an audio broadcast of the Annual Meeting by phone toll-free at 1.888.254.3590, confirmation code 1907885.

Rules of Conduct for the Annual Meeting

Duke Energy has strived to ensure that shareholders at the online only Annual Meeting will have the same rights that they would have had at an in-person meeting and an enhanced opportunity for participation and discourse.

Shareholders who have submitted proposals for the Annual Meeting are given the choice of recording the presentation of their proposal in advance or presenting their proposal live via a third-party operated conference line.

A representative of Broadridge Financial Solutions has been appointed as the independent inspector of elections.

Shareholders who would like to submit questions in writing in advance of the Annual Meeting can do so by visiting our pre-meeting forum at proxyvote.com using your 16-digit control number.

Shareholders participating in the Annual Meeting live via webcast may also submit questions in writing during the Annual Meeting.

Questions submitted by shareholders will be read during the Annual Meeting unedited; provided, however, that questions that are of an inappropriate personal nature or that use offensive language will not be read at the Annual Meeting or answered and posted to our website after the Annual Meeting. Questions regarding technical issues related to the Annual Meeting will be referred to technical support personnel to respond separately.

We will post answers to all questions received in advance of or during the Annual Meeting, including those questions that we do not have time to answer during the Annual Meeting, to our website at duke-energy.com/our-company/investors/financial-news under "05/02/2019 – 2019 Annual Meeting of Shareholders." All unedited questions and the answers to those questions, as well as a video replay of the Annual Meeting, will be available on our website until the release of the proxy statement for the 2020 Annual Meeting.

DUKE ENERGY – 2019 Proxy Statement    1


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PROXY SUMMARY

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

Voting Matters

 
   
  More
information

  Board
recommendation

  Broker
non-votes

  Abstentions
  Votes
required for
approval

PROPOSAL 1   Election of directors   Page 8   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's independent registered public accounting firm for 2019   Page 33   FOR   Vote for   Vote against   Majority of shares represented
PROPOSAL 3   Advisory vote to approve Duke Energy's named executive officer compensation   Page 35   FOR   Do not count   Vote against   Majority of shares represented
PROPOSALS 4-7   Shareholder proposals   Page 67   AGAINST   Do not count   Vote against   Majority of shares represented

2    DUKE ENERGY – 2019 Proxy Statement


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Duke Energy Overview

Headquartered in Charlotte, North Carolina, Duke Energy is one of the largest energy holding companies in the United States. Our Electric Utilities and Infrastructure business serves approximately 7.7 million customers located in six states in the Southeast and Midwest. Our Gas Utilities and Infrastructure business distributes natural gas to approximately 1.6 million customers in the Carolinas, Ohio, Kentucky, and Tennessee. Our Commercial Renewables business operates a growing renewable energy portfolio across the United States. More information about Duke Energy is available at duke-energy.com.

2018 Business Highlights

2018 was an outstanding year for Duke Energy as we met our near-term financial commitments and positioned the Corporation for sustainable long-term growth. We exceeded our 2018 earnings target and took proactive steps to strengthen our balance sheet. We advanced capital projects and regulatory initiatives that support our 4% to 6% EPS growth trajectory, and addressed key uncertainties, including federal tax reform treatment and North Carolina rate case outcomes. We also continued to advance a growth strategy focused on investments to modernize our energy grid, generate cleaner energy, and expand our natural gas infrastructure – all built on a foundation of customer service, operational excellence, and stakeholder engagement. In 2018:

Safety remained our top priority. Our employees delivered strong safety results in 2018, consistent with our industry-leading performance levels from 2016 and 2017. However, we fell short of our target for TICR. We will continue to learn from and use each incident as an opportunity to review and improve enterprise safety practices.

We demonstrated progress on our commitment to generate cleaner energy, including the completion of highly efficient combined–cycle natural gas plants in Florida and South Carolina, and the advancement of renewable energy in both our regulated and commercial businesses.

We achieved constructive regulatory outcomes during the year, including the completion of two rate cases in North Carolina. Importantly, the cases addressed cost recovery of coal ash basin closure costs, providing certainty to customers and investors. Across our jurisdictions we made significant progress in addressing tax reform, targeting solutions that provide benefits to customers, and supporting the long-term credit quality of our utilities.

2018 was a year of intense storm activity with Hurricane Florence and Hurricane Michael impacting our service territories. Our employees and utility partners worked tirelessly to restore three million outages during the hurricane season. Consistent with our customer service culture, all employees within our corporate offices assisted in responding to the needs of customers during Hurricane Florence and Hurricane Michael, whether it was in our customer call center or helping assist linemen in the field with logistical issues.

We outperformed our target for reportable environmental events in 2018 and continued to advance our efforts to permanently close coal ash basins in ways that protect people and the environment.

Our 2018 TSR of 7.4% exceeded the TSR of the S&P 500 and the UTY, which was – 4.4% and 3.5% respectively in 2018.

During 2018, we increased the dividend payment to our shareholders by approximately 4%, reflecting our confidence in the strength of our businesses. This is the 12th consecutive year of annual dividend growth. 2018 also marked the 92nd consecutive year that Duke Energy has paid a quarterly cash dividend on our common stock, a record we expect to continue for shareholders, who rely on a steady and growing dividend.

Shareholder Engagement (pages 20 and 36)

As part of our commitment to corporate governance, we have a track record of engaging with shareholders to discuss and obtain their feedback on our corporate governance practices as well as executive compensation, environmental, and social matters of interest to shareholders. During the fall of 2018, we reached out to holders of approximately one-third of our outstanding shares and held meetings with the holders of approximately 20% of our outstanding shares, many of which included participation by members of the Board. The agenda for these conversations spanned a variety of topics including corporate strategy, sustainability, governance, director skills, diversity, and the Board's oversight over key risk areas for Duke Energy, including human capital management and climate change. We also discussed Duke Energy's Climate Report, which was published in 2018, as well as the re-inclusion of the management proposal regarding the amendment to Duke Energy's Amended and Restated Certificate of Incorporation to eliminate its supermajority voting provisions, which failed to receive the necessary shareholder support at both the 2017 and 2018 Annual Meetings.

DUKE ENERGY – 2019 Proxy Statement    3


Table of Contents

Board Nominees (page 8)

Name
  Age
  Gender,
Racial or
Ethnically
Diverse

  Director since
  Occupation
  Independent
  Committee Memberships
  Other Public
Company Boards

             

Michael G. Browning
Independent Lead Director


 
72     2006   Chairman, Browning Consolidated, LLC   ü  

Compensation

Corporate Governance (C)

Finance and Risk Management

 

None

Annette K. Clayton

  55   ü   2019   President and CEO, North America Operations, Schneider Electric SA   ü  

Audit

Nuclear Oversight

 

Polaris Industries Incorporated

             

Theodore F. Craver, Jr.

  67     2017   Retired Chairman, President and CEO, Edison International   ü  

Audit (C)

Finance and Risk Management

 

Wells Fargo & Company

Robert M. Davis

  52       2018   CFO and Executive Vice President, Global Services, Merck & Co., Inc.   ü  

Audit

Finance and Risk Management

 

None

             

Daniel R. DiMicco

  68     2007   Chairman Emeritus, Retired President and CEO, Nucor Corporation   ü  

Corporate Governance

Nuclear Oversight

 

Hennessy Capital Acquisition Corp. III

Lynn J. Good
Chairman

  59   ü   2013   Chairman, President and CEO, Duke Energy Corporation      

None

 

The Boeing Company

             

John T. Herron

  65     2013   Retired President, CEO and Chief Nuclear Officer, Entergy Nuclear   ü  

Nuclear Oversight (C)

Regulatory Policy and Operations

 

None

William E. Kennard

  62   ü   2014   Co-Founder and Non-Executive Chairman, Velocitas Partners, LLC   ü  

Corporate Governance

Finance and Risk Management

 

AT&T Inc.

Ford Motor Company

MetLife, Inc.

             

E. Marie McKee

  68   ü   2012   Retired Senior Vice President, Corning Incorporated   ü  

Compensation (C)

Corporate Governance

 

None

Charles W. Moorman IV

  67       2016   Senior Advisor, Amtrak   ü  

Nuclear Oversight

Regulatory Policy and Operations

 

Chevron Corporation

Oracle Corporation

             

Marya M. Rose

  56   ü   2019   Vice President and Chief Administrative Officer, Cummins Inc.   ü  

Compensation

Regulatory Policy and Operations

 

None

Carlos A. Saladrigas

  70   ü   2012   Chairman, Regis HR Group   ü  

Audit

Compensation

 

None

             

Thomas E. Skains

  62     2016   Retired Chairman, President and CEO, Piedmont Natural Gas Company, Inc.   ü  

Nuclear Oversight

Regulatory Policy and Operations

 

BB&T Corporation

National Fuel Gas Company

William E. Webster, Jr.

  65       2016   Retired Executive Vice President, Institute of Nuclear Power Operations   ü  

Nuclear Oversight

Regulatory Policy and Operations

 

None

(C)
Committee Chair

4    DUKE ENERGY – 2019 Proxy Statement


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GRAPHIC

DUKE ENERGY – 2019 Proxy Statement    5


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GRAPHIC


*
Information provided for director nominees

Corporate Governance Highlights (page 25)

 
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   Clearly defined environmental and social initiatives and goals
 
ü   Annual election of directors
ü   Independent Board committees
 
ü   Policy to prohibit all hedging and pledging of corporate securities

Executive Compensation Highlights (page 36)

Principles and Objectives

Our executive compensation program is designed to:

Link pay to performance

Attract and retain talented executive officers and key employees

Emphasize performance-based compensation to motivate executives and key employees

Reward individual performance

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

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

Base salary

Short-term incentives

Long-term incentives, consisting of performance shares and RSUs

6    DUKE ENERGY – 2019 Proxy Statement


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GRAPHIC

Key Executive Compensation Features (page 40)

 

ü

 

Significant stock ownership requirements (6x base salary for the CEO)

ü

 

Stock holding policy

ü

 

Incentive compensation tied to a clawback policy

ü

 

Consistent level of severance protection

ü

 

Shareholder approval policy for severance agreements

ü

 

Equity award granting policy

ü

 

Independent compensation consultant

ü

 

Annual tally sheets for executive officers

ü

 

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

ü

 

Do not encourage excessive or inappropriate risk-taking

ü

 

No tax gross-ups

ü

 

No "single trigger" severance upon a change in control

ü

 

No employment agreements except for the CEO

ü

 

No excessive perquisites

ü

 

Enhanced disclosure of performance goals, along with continued reporting of actual performance results

ü

 

Minimum vesting requirement of one year for stock awards, subject to limited exceptions

DUKE ENERGY – 2019 Proxy Statement    7


Table of Contents

PROPOSAL 1:     ELECTION OF DIRECTORS

The Board of Directors

The Corporate Governance Committee, comprised of only independent directors, has recommended the following current directors as nominees for director, and the Board has approved their nomination for election to serve on the Board. We have a declassified Board which means all the directors are voted on every year at the Annual Meeting.

If any director is unable to stand for election, the Board may reduce the number of directors or designate a substitute. In that case, shares represented by proxies may be voted for a substitute director. We do not expect that any nominee will be unavailable or unable to serve.

In 2018, the Board amended our Principles for Corporate Governance to include a director tenure policy in addition to a retirement policy. The Board believes that it is very important to monitor the Board's composition, skills, and needs in the context of Duke Energy's overall strategy, and, therefore, has approved a range for the Board to consider retirement. Pursuant to this policy, the Board may determine not to nominate a director who has reached the age of 70 or 15 years of service on the Board if, after examining the Board composition and impending Board retirements in light of the Corporation's strategy, the Board determines it is in the best interest of Duke Energy and our shareholders. Similarly, the Board may determine that it is in the best interest of Duke Energy and our shareholders for a director to remain on the Board; however, the Board will not nominate a director for election at the annual meeting in the calendar year following the year of his or her 75th birthday.

Majority Voting for the Election of Directors

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

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

8    DUKE ENERGY – 2019 Proxy Statement


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PROPOSAL 1:    ELECTION OF DIRECTORS

Board Biographical Information, Skills, and Qualifications

Michael G. Browning     GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
Independent Lead Director
GRAPHIC   Age: 72
Director of Duke Energy since 2006
Chairman, Browning Consolidated, LLC
  Committees:

Compensation Committee

Corporate Governance Committee (Chair)

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.

Skills and qualifications:

Mr. Browning's qualifications for election include his management experience as well as his knowledge and understanding of customers' needs in Duke Energy's Midwest service territory gained during his long career as the Chairman of Browning Consolidated, a real estate development firm located in Indiana. Mr. Browning's financial and investment expertise adds a valuable perspective to the Board and its committees.

Annette K. Clayton     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 55
Director of Duke Energy since 2019
President and CEO,
North America Operations,
Schneider
Electric SA
  Committees:

Audit Committee

Nuclear Oversight Committee

Other current public directorships:

Polaris Industries Incorporated


Ms. Clayton has been President and CEO of the North America Operations of Schneider Electric, a global electrical equipment manufacturer, and a member of the Executive Committee since June 2016. She also served as Chief Supply Chain Officer from June 2016 until January 2019. From May 2011 to June 2016, she served as Executive Vice President of Schneider Electric and a Member of the Executive Committee, Hong Kong. Prior to her employment at Schneider Electric, Ms. Clayton served at Dell,  Inc. as Vice President of Global Supply Chain Operations and Vice President of Dell Americas operations, and at General Motors as President of their Saturn subsidiary, Corporate Vice President of Global Quality and a member of their strategy board.

Skills and qualifications:

Ms. Clayton's qualifications for election include her experience as senior management of Schneider Electric overseeing the strategic direction and financial accountability of the North America operations. In her role as President and CEO of Schneider Electric's North America Operations, she has gained experience in customer service through her direct responsibility for the customer call centers, in cybersecurity and technology through Schneider Electric's work with the government on cybersecurity infrastructure, and in environmental and regulatory matters through her oversight of Schneider Electric's Safety and Environment function. These skills uniquely fit the skill sets that benefit Duke Energy in our corporate strategy.

GRAPHIC

DUKE ENERGY – 2019 Proxy Statement    9


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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: 67
Director of Duke Energy since 2017
Retired Chairman, President and CEO,
Edison International
  Committees:

Audit Committee (Chair)

Finance and Risk Management Committee

Other current public directorships:

Wells Fargo & Company


Mr. Craver was Chairman, President and CEO of Edison International, the parent company of a large California utility and various competitive electric businesses, from 2008 until his retirement in 2016. From 2005 to 2007, Mr. Craver served as CEO of Edison Mission Energy, a subsidiary of Edison International. Prior to his appointment as CEO of Edison Mission Energy, Mr. Craver served as CFO of Edison International from 2000 to 2004. He started at Edison International in 1996 after leaving First Interstate Bancorp where he was Executive Vice President and Corporate Treasurer. Mr. Craver is a former member of the Electricity Subsector Coordinating Council (ESCC), the organization that is the principal liaison between the federal government and the electric power sector responsible for coordinating efforts to prepare for, and respond to, national-level disasters or threats to critical infrastructure. Mr. Craver currently serves as a Senior Advisor to Blackstone's Global Infrastructure Fund and as a Senior Advisor to Bain & Company. He is also a member of the Economic Advisory Council of the Federal Reserve Bank of San Francisco.

Skills and qualifications:

Mr. Craver's qualifications for election include his experience as CEO of Edison International, which gives him in-depth knowledge of the utility industry and the regulatory arena, including environmental regulations, as well as his financial and risk management experience obtained as a CFO. Mr. Craver's experience in the industry also gives him a keen awareness of the needs of utility customers during this time of industry change. In addition, Mr. Craver's experience with grid cybersecurity as a member of the Steering Committee of the ESCC gives him insight into this crucial area for Duke Energy. In 2018, he earned the CERT Certificate in Cybersecurity Oversight from the National Association of Corporate Directors.

Robert M. Davis         GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 52
Director of Duke Energy since 2018
CFO and Executive Vice President, Global Services, Merck & Co., Inc.
  Committees:

Audit Committee

Finance and Risk Management Committee

Other current public directorships:

None


Mr. Davis has been CFO of Merck & Co., a global healthcare company that provides prescription medicines, vaccines, and other health solutions, since April 2014 and CFO and Executive Vice President, Global Services for Merck & Co. since 2016. Prior to Merck & Co., Mr. Davis worked for Baxter International, Inc. as Corporate Vice President and President of Medical Products from 2010 to 2014, Corporate Vice President and President of Baxter International's renal business in 2010, Corporate Vice President and CFO from 2006 to 2010, and Treasurer from 2004 to 2006. Mr. Davis previously served on the board of directors of C.R. Bard until its merger with Becton, Dickinson and Company in December 2017.

Skills and qualifications:

Mr. Davis' qualifications for election include his significant experience in regulatory matters, finance, and risk management obtained during his service as the CFO of Merck & Co., as well as his prior experience gained in a variety of management and finance roles at Baxter International. Mr. Davis' legal knowledge, obtained when he earned his Doctor of Jurisprudence, adds additional insight to the Board's discussions of corporate and risk matters. Mr. Davis also has significant experience with technology and cybersecurity obtained during his time as CFO of Merck & Co. and Baxter International where he had direct oversight over those areas. Mr. Davis' experience at Merck & Co. provides valuable insight into navigating an industry undergoing rapid transformation.

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Daniel R. DiMicco         GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 68
Director of Duke Energy since 2007
Chairman Emeritus, Retired President and CEO, Nucor Corporation
  Committees:

Corporate Governance Committee

Nuclear Oversight Committee

Other current public directorships:

Hennessy Capital Acquisition Corp. III


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

Skills and qualifications:

Mr. DiMicco's qualifications for election include his management, finance, and risk management experience gained during his time as CEO of a Fortune 500 company, which served many constituencies. In addition, his experience as CEO of Nucor, a large industrial corporation headquartered in North Carolina and with operations in the Midwest, provides a valuable perspective on Duke Energy's industrial customer class as well as extensive knowledge of regulatory issues and environmental regulations in Duke Energy's Carolinas and Midwest service territories.

Lynn J. Good     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Non-Independent Director Nominee
Chairman
GRAPHIC   Age: 59
Director of Duke Energy since 2013
Chairman, President and CEO,
Duke Energy Corporation
  Committees:

None

Other current public directorships:

The Boeing Company


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

Skills and qualifications:

Ms. Good is our Chairman, President and CEO and was previously our CFO. Her extensive financial and risk management background as well as her knowledge of the affairs of Duke Energy and our business make her uniquely suited to lead our Board and Duke Energy. Her many years of experience in the utility industry, her knowledge of the associated regulatory issues, technologies, environmental regulations, and customer focus, provide valuable resources for the Board.

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PROPOSAL 1:    ELECTION OF DIRECTORS

John T. Herron     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 65
Director of Duke Energy since 2013
Retired President, CEO and Chief Nuclear Officer, Entergy Nuclear
  Committees:

Nuclear Oversight Committee (Chair)

Regulatory Policy and Operations Committee

Other current public directorships:

None


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

Skills and qualifications:

Mr. Herron's qualifications for election include his knowledge and extensive insight gained as a senior executive in the utility industry, including his three decades of experience in nuclear energy. In addition to his nuclear expertise, during Mr. Herron's career, and particularly during his time as CEO and Chief Nuclear Officer of Entergy Nuclear, he gained significant financial, regulatory, environmental, and risk management expertise as well as an understanding of utility customers. Mr. Herron also had direct responsibility for the management of cybersecurity as CEO and Chief Nuclear Officer of Entergy Nuclear.

William E. Kennard     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 62
Director of Duke Energy since 2014
Co-Founder and Non-Executive Chairman, Velocitas Partners, LLC
  Committees:

Corporate Governance Committee

Finance and Risk Management Committee

Other current public directorships:

AT&T Inc.

Ford Motor Company

MetLife, Inc.


Mr. Kennard has been Co-Founder and Non-Executive Chairman of Velocitas Partners, an asset management firm, since November 2014. He also serves as an advisor to Staple Street Capital and Astra Capital Management, both private equity firms. Prior to joining Velocitas Partners, Mr. Kennard served as Senior Advisor to Grain Management from October 2013 until November 2014, United States Ambassador to the European Union from 2009 until August 2013, Managing Director of The Carlyle Group from 2001 until 2009, and Chairman of the Federal Communications Commission (FCC) from 1997 until 2001.

Skills and qualifications:

Mr. Kennard's qualifications for election include his considerable experience and knowledge of the regulatory arena from his service as Chairman of the FCC and United States Ambassador, as well as his financial, legal, and risk management knowledge obtained during his career as a lawyer and investor in the technology and telecommunications sector.

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E. Marie McKee     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 68
Director of Duke Energy since 2012
Retired Senior Vice President, Corning Incorporated
  Committees:

Compensation Committee (Chair)

Corporate Governance Committee

Other current public directorships:

None


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

Skills and qualifications:

Ms. McKee's qualifications for election include her senior management experience in human resources, which provides her with a thorough knowledge of human capital management and compensation practices. Her prior experience as a senior executive of Corning Incorporated has also given her excellent operating skills and an understanding of environmental regulations and risk management with regard to the manufacturing process, which aids the Board in its oversight of environmental and health and safety matters.

Charles W. Moorman IV     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 67
Director of Duke Energy since 2016
Senior Advisor, Amtrak
  Committees:

Nuclear Oversight Committee

Regulatory Policy and Operations Committee

Other current public directorships:

Chevron Corporation

Oracle


Mr. Moorman is Senior Advisor to Amtrak, a passenger rail provider. He has served in this position since January 2018. Prior to that date, Mr. Moorman served as President and CEO of Amtrak since August 2016. Previously, Mr. Moorman served as Chairman and CEO of Norfolk Southern Corporation and was Special Advisor to the CEO of Norfolk Southern from October 2015 until December 31, 2015. Prior to his retirement, he served as Chairman of Norfolk Southern from 2006 until 2015 and as CEO from 2005 until 2015.

Skills and qualifications:

Mr. Moorman's qualifications for election include experience in business, regulatory issues, finance, technology, strategy, risk management, and environmental issues as a result of his long career at a large public company in the highly regulated freight and transportation industry, as well as former chair of the Virgina chapter of the Nature Conservancy and as a trustee of the Chesapeake Bay Foundation. His experience with Amtrak also gives him insight into customer needs which is a core focus for Duke Energy.

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Marya M. Rose     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 56
Director of Duke Energy since 2019
Vice President and Chief Administrative Officer, Cummins Inc.
  Committees:

Compensation Committee

Regulatory Policy and Operations Committee

Other current public directorships:

None


Ms. Rose has been the Vice President and Chief Administrative Officer of Cummins, a global manufacturer of engines, filtration, and power generation equipment, since August 2011, and is responsible for the communications, marketing, government relations, ethics and compliance, enterprise risk management, facilities, security, corporate responsibility, shared services organization and, until January 2018, the legal function. From 2001 until August 2011, Ms. Rose served as Vice President – General Counsel and Corporate Secretary of Cummins. Prior to her employment at Cummins, Ms. Rose was an attorney with Bose McKinney & Evans and a senior aide to two Indiana Governors.

Skills and qualifications:

Ms. Rose's qualifications for election include her experience in the role of Chief Administrative Officer, and previously as General Counsel of Cummins, which has given her a background in a number of key areas that are critical to the future success of Duke Energy. In her role as Chief Administrative Officer, she has had direct responsibility for regulatory, environmental, technology, risk management, and customer service areas. In addition, her legal background, including her time as General Counsel and Corporate Secretary of Cummins, will enable her to have unique insights, which she can lend to the Board on legal and corporate governance issues.


Carlos A. Saladrigas     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 70
Director of Duke Energy since 2012
Chairman, Regis HR Group
  Committees:

Audit Committee

Compensation Committee

Other current public directorships:

None


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

Skills and qualifications:

Mr. Saladrigas' qualifications for election include his extensive expertise in human capital management, risk management, regulatory matters and finance obtained during his long management career in the human resources services field. His understanding of Duke Energy's Florida service territory gives the Board insight into customer needs in this important service territory for Duke Energy.

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Thomas E. Skains     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 62
Director of Duke Energy since 2016
Retired Chairman, President and CEO, Piedmont Natural Gas Company, Inc.
  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 CEO of Piedmont, a regional natural gas distributor, until his retirement in 2016. He served as Chairman of Piedmont from December 2003 until October 2016, CEO from February 2003 until October 2016, and as President from February 2002 until October 2016. Previously, he served as Chief Operating Officer of Piedmont from February 2002 until February 2003. From 1995 until 2002, he served as Senior Vice President, Marketing and Supply Services and directed Piedmont's commercial natural gas activities.

Skills and qualifications:

Mr. Skains' qualifications for election include his financial and risk management expertise and public company governance and strategy gained during his time as Chairman, President and CEO of Piedmont. His time at Piedmont also provided him with in-depth knowledge of the natural gas industry, the environmental regulations related to the industry, and the needs of natural gas customers, which is helpful to Duke Energy as it expands into the natural gas arena since the acquisition of Piedmont. His prior experience as a corporate energy attorney also gives Mr. Skains insight on legal and regulatory compliance matters.


William E. Webster, Jr.     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 65
Director of Duke Energy since 2016
Retired Executive Vice President, Institute of Nuclear Power Operations
  Committees:

Nuclear Oversight Committee

Regulatory Policy and Operations Committee

Other current public directorships:

None


Mr. Webster was Executive Vice President of Industry Strategy for INPO, a non-profit organization that promotes the highest levels of safety and reliability in the operation of commercial nuclear power plants, until his retirement in June 2016. Mr. Webster has 34 years of experience obtained at INPO where he held a variety of management positions in the Industry Evaluations, Plant Support, Engineering Support, and Plant Analysis and Emergency Preparedness divisions prior to his retirement. Mr. Webster currently serves as the Chairman of the Japan Nuclear Safety Institute.

Skills and qualifications:

Mr. Webster's qualifications for election include the extensive knowledge he gained during his 34 years in the nuclear industry, including exposure to environmental laws, 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.

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

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Our Board Leadership Structure

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

Lynn J. Good serves as Duke Energy's Chairman, President and CEO. Our Board believes that combining the Chairman and CEO roles fosters clear accountability, effective decision-making, and execution of corporate strategy.

Michael G. Browning serves as our 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:

leading, in conjunction with the Corporate Governance Committee, the process for the review of the CEO;

leading, in conjunction with the Corporate Governance Committee, the Board, committee, and individual director self-assessment review process;

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

assisting the Chairman and the CEO 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;

assisting the Chairman and the CEO to promote the efficient and effective performance and functioning of the Board; and

being available for consultation and direct communication with our 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 duke-energy.com/our-company/investors/corporate-governance/principles-corp-governance.

Independence of Directors

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

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

The Board may determine a director to be independent if it has affirmatively determined that the director has no material relationship with Duke Energy or our subsidiaries, either directly or as a shareholder, director, officer, or employee of an organization that has a relationship with Duke Energy or our subsidiaries. Independence determinations are generally made when a director joins the Board and on an annual basis at the time the Board approves director-nominees for inclusion in the proxy statement.

The Board also considers its Standards for Assessing Director Independence, which set forth certain relationships between Duke Energy and our directors and their immediate family members, or affiliated entities, that the Board, in its judgment, has deemed to be immaterial for purposes of assessing a director's independence. Duke Energy's Standards for Assessing Director Independence are linked on our website at 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 Ms. Clayton, the Board considered a relationship between Duke Energy and Schneider Electric, at which she is employed as an executive officer, for the purchase of goods and services by Duke Energy, which are not material to either Duke Energy or Schneider Electric. The Board determined that Ms. Clayton had no direct or indirect material interest in the transactions between Duke Energy and Schneider Electric and that such transactions were in the best interests of the shareholders of Duke Energy as they have been entered into in the ordinary course of business on terms that are negotiated on an arm's length basis. In addition, with respect to Ms. Rose, the Board considered a relationship between Duke Energy and Cummins, at which Ms. Rose serves as an executive officer. The Board

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determined that Ms. Rose had no direct or indirect material interest in the transactions for the purchase of electrical equipment and other Cummins products by Duke Energy and that such transactions were in the best interests of shareholders and entered into in the ordinary course of business on terms that are negotiated on an arm's length basis.

Director Attendance

The Board met five times during 2018 and has met twice so far in 2019. The overall attendance percentage for our directors was approximately 98% in 2018, and all directors attended more than 75% of the Board meetings and the meetings of the committees upon which he or she served in 2018. Directors are encouraged to attend the Annual Meeting. All directors who were directors at the time of last year's Annual Meeting on May 3, 2018, attended the 2018 Annual Meeting.

Board and Committee Assessments

Each year the Board, with the assistance of the Corporate Governance Committee, conducts an assessment of the Board, each of its committees and the directors. The assessment process is facilitated by a third-party advisor, which allows directors to provide anonymous feedback and promotes candidness among the directors. The results of the feedback are presented to the Board and committees and discussed.

In addition to the written assessments, the Independent Lead Director annually takes the opportunity to meet with each of the directors separately to discuss the performance of the Board and to obtain advice on areas of improvement for the Board and the individual directors. Our Board is committed to effective board succession planning and refreshment, including having honest and difficult conversations, as may be deemed necessary, with individual directors.

Management and the Board then incorporate the feedback received in both the written assessments and the discussions throughout the year. This annual review process and discussion provides continuous improvement in the overall effectiveness of the directors, committees, and Board and provides an opportunity for directors to express any concerns they may have. This process also allows the Board to identify opportunities for Board succession and skills.

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Board Role in Management Succession

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

Board Oversight of Risk

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

Each committee of the Board is responsible for the oversight of certain areas of risk that pertain to that committee's area of focus. Throughout the year, each committee chair reports to the full Board regarding the committee's considerations and actions related to the risks within its area of focus. Each committee regularly receives updates from the business units in that committee's area of focus to review the risks in those areas.

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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 2018, we reached out to holders of approximately one-third of Duke Energy's outstanding shares, and members of our Board and management met with holders of approximately 20% of Duke Energy's outstanding shares. We engaged with every shareholder who accepted our offer to meet as well as every shareholder who requested to meet with our Board.

During 2018, Duke Energy engaged with shareholders on numerous topics, including executive compensation matters, sustainability, and governance issues. Shareholder feedback has been invaluable to us in enhancing our governance and compensation policies and related disclosures. During the fall of 2018, we focused our engagements with shareholders on corporate strategy, sustainability, and governance such as director skills, diversity, and the Board's oversight over key risk areas for Duke Energy, including human capital management and climate change. We also discussed Duke Energy's Climate Report which was published in 2018 for which we received very positive feedback. In addition, we sought feedback from our shareholders regarding the proposed amendment to Duke Energy's Amended and Restated Certificate of Incorporation to eliminate its supermajority voting provisions, which was recommended for approval by the Board at both the 2017 and 2018 Annual Meetings. Additional information on our discussions with shareholders regarding executive compensation matters is provided on page 36 of this proxy statement.

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Board of Directors Committees

BOARD COMMITTEE MEMBERSHIP ROSTER

Name
  Audit
  Compensation
  Corporate
Governance

  Finance and Risk
Management

  Nuclear
Oversight

  Regulatory Policy and
Operations

Michael G. Browning

      C      

Annette K. Clayton

                   

Theodore F. Craver, Jr.

  C          

Robert M. Davis

                   

Daniel R. DiMicco

           

John H. Forsgren(1)

            C        

Lynn J. Good

           

John T. Herron

                  C  

James B. Hyler, Jr.(1)

            C

William E. Kennard

                   

E. Marie McKee

    C        

Charles W. Moorman IV

                   

Marya M. Rose

           

Carlos A. Saladrigas

                   

Thomas E. Skains

           

William E. Webster, Jr.

                   
C
Committee Chair

(1)
Retiring at the Annual Meeting

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

Audit Committee

Eight meetings held in 2018

    Committee Members

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Theodore F. Craver, Jr., Chair*
Annette K. Clayton*
Robert M. Davis*
James B. Hyler, Jr.*
Carlos A. Saladrigas*

*    Designated as an Audit Committee
      Financial Expert by the Board

Theodore F. Craver, Jr.

The Audit Committee considers risks and matters related to financial reporting, internal controls, compliance, legal matters, and cybersecurity and technology matters.

As part of its responsibilities, the Audit Committee selects and retains an independent registered public accounting firm to conduct audits of the accounts of Duke Energy and our subsidiaries. It also reviews with the independent registered public accounting firm the scope and results of their audits, as well as the accounting procedures, internal controls, and accounting and financial reporting policies and practices of Duke Energy and our subsidiaries, and makes reports and recommendations to the Board as it deems appropriate.

The Audit Committee is responsible for approving all audit and permissible non-audit services provided to Duke Energy by our independent registered public accounting firm. Pursuant to this responsibility, the Audit Committee adopted the policy on Engaging the Independent Auditor for Services, which provides that the Audit Committee will establish detailed services and related fee levels that may be provided by the independent registered public accounting firm. See page 33 for additional information on the Audit Committee's preapproval policy.

The Board has determined that each of the members are "Audit Committee Financial Experts" as such term is defined in Item 407(d)(5)(ii) of Regulation S-K. See pages 9, 10, and 14 for a description of their business experience for Ms. Clayton, Mr. Craver, Mr. Davis, and Mr. Saladrigas, who are nominated for election at the Annual Meeting.

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

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Compensation Committee

Five meetings held in 2018

    Committee Members    
GRAPHIC   E. Marie McKee, Chair
Michael G. Browning
John H. Forsgren
Marya M. Rose
Carlos A. Saladrigas
      

E. Marie McKee

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

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 NEOs, the committee considers input and recommendations from management, including Ms. Good, who attends the Compensation Committee meetings.

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

Each of the members of the Compensation Committee has been determined to be "independent" within the meaning of the NYSE's listing standards, Rule 10C-1(b) of the Exchange Act, and Duke Energy's Standards for Assessing Director Independence.

Compensation Committee Interlocks and Insider Participation. During 2018, Ms. McKee, Mr. Browning, Mr. Forsgren, and Mr. Saladrigas served as members of the Compensation Committee. Ms. Rose joined the Compensation Committee in March 2019. During 2018, none of the Compensation Committee members were officers or employees of Duke Energy, a former officer of Duke Energy, or had any business relationships requiring review and disclosure under our Related Person Transactions Policy. Furthermore, none of our executive officers served as a director or member of the compensation committee (or other committee of the Board performing equivalent functions) of another entity where an executive officer of such entity served as a director of Duke Energy or on our Compensation Committee.

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Corporate Governance Committee

Five meetings held in 2018

    Committee Members    
GRAPHIC   Michael G. Browning, Chair
Daniel R. DiMicco
William E. Kennard
E. Marie McKee
      

Michael G. Browning

The Corporate Governance Committee considers risks and matters related to corporate governance and our policies and practices with respect to political activities, community affairs, and sustainability.

It recommends the size and composition of the Board and its committees and recommends potential CEO successors to the Board.

The Corporate Governance Committee also recommends to the Board the slate of nominees, including any nominees recommended by shareholders, for director at each year's Annual Meeting and, when vacancies occur, names of individuals who would make suitable directors of Duke Energy. This committee may engage an external search firm or a third party to identify, evaluate, or to assist in identifying or evaluating, a potential nominee.

The Corporate Governance Committee performs an annual evaluation of the performance of the CEO with input from the full Board. The Corporate Governance Committee assists the Board in its annual determination of director independence and review of any related person transactions as well as the Board's annual assessment of the Board and each of its committees.

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

Finance and Risk Management Committee

Six meetings held in 2018

    Committee Members    
GRAPHIC   John H. Forsgren, Chair
Michael G. Browning
Theodore F. Craver, Jr.
Robert M. Davis
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 Duke Energy. This oversight function includes reviews of our financial and fiscal affairs and recommendations to the Board 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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INFORMATION ON THE BOARD OF DIRECTORS

Nuclear Oversight Committee

Four meetings held in 2018

    Committee Members    
GRAPHIC   John T. Herron, Chair
Annette K. Clayton
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

Four meetings held in 2018

    Committee Members    
GRAPHIC   James B. Hyler, Jr., Chair
John T. Herron
Charles W. Moorman IV
Marya M. Rose
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. The charters are posted on our website at duke-energy.com/our-company/investors/corporate-governance/board-committee-charters.

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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

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

Philosophy and Responsibilities

We believe that sound corporate governance has three components: (i) Board independence, (ii) processes and practices that foster sound decision-making by both management and the Board, and (iii) balancing the interests of all of our stakeholders – our investors, customers, employees, the communities we serve, and the environment. The Corporate Governance Committee's charter is available on our website at 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 23 of this proxy statement.

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

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

Governance Policies

All of the Board committee charters, as well as our Principles for Corporate Governance, Code of Business Ethics for Employees, and Code of Business Conduct & Ethics for Directors, are available on our website at duke-energy.com/our-company/investors/corporate-governance.

Any amendments to or waivers from our Code of Business Ethics for Employees with respect to executive officers or Code of Business Conduct & Ethics for Directors must be approved by the Board and will be posted on our website. During 2018, our Board held executive sessions with only independent directors during each of the four regularly scheduled meetings.

Board Composition

Director Qualifications and Diversity. The Board recognizes that a diverse Board, management, and workforce is key to Duke Energy's success and believes that diversity of background, skill sets, experience, thought, ethnicity, race, gender, age, and nationality, are important considerations in selecting candidates. This commitment to diversity is evidenced in the backgrounds, skills, and qualifications of the directors who have been nominated, as well as the diversity of Duke Energy's executives and workforce, starting with our Chairman, President and CEO, Lynn J. Good, who was selected by the Board to lead Duke Energy in 2013, and the diverse senior management team that reports to her.

The Board strives to have a diverse Board representing a range of experiences and qualifications in areas that are relevant to Duke Energy's business and strategy. As part of the search process, the committee looks for the most qualified candidates, including women and minorities, with the following characteristics:

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

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

a background that includes broad business experience or demonstrates an understanding of business and financial

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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

if the recommending shareholder(s) has beneficially owned more than 5% of Duke Energy's common stock for at least one year as of the date the recommendation is made, evidence of such beneficial ownership as specified in the rules and regulations of the SEC;

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

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

Director Candidate Nominations through Proxy Access. In order to nominate a director pursuant to our proxy access provision, 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 David B. Fountain, Senior Vice President, Legal, Chief Ethics and Compliance Officer and Corporate Secretary, Duke Energy Corporation, DEC 48H, P.O. Box 1414, Charlotte, NC 28201-1414. The written notice must provide the information set forth above, as well as the

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other detailed requirements set forth in Section 3.04 of the Corporation's By-Laws, which can be located on our website at duke-energy.com/our-company/investors/corporate-governance.

New Directors Since the 2018 Annual Meeting

Following the 2018 Annual Meeting, and in consideration of the anticipated retirements of members of the Board in 2019, the Corporate Governance Committee sought to recruit additional Board members. The committee worked extensively in 2018 on identifying candidates whose qualifications align with the desired qualifications discussed earlier and the needs of the Board considering the priorities and issues facing Duke Energy, our long-term strategy, and our board refreshment goals. As a result, after working with an independent search firm, the committee identified a number of candidates with the desired experience, diversity, skills, and other qualifications, to make for a well-balanced Board. In December 2018, the committee recommended that Annette K. Clayton be appointed to the Board effective January 7, 2019. Ms. Clayton brings extensive technology, environmental, and regulatory expertise, among other things, gained during her tenure as President and CEO of Schneider Electric's North America Operations and in her former role as Chief Supply Chain Officer. For more information on Ms. Clayton's skills and qualifications, see page 9. In February 2019, the committee also recommended to the Board that Marya M. Rose be appointed to the Board effective March 1, 2019. Ms. Rose's experience as Chief Administrative Officer and previously as General Counsel of Cummins has given her a background in a number of key areas, which are critical to the future success of Duke Energy, including legal and regulatory, environmental, technology, risk management, and customer service matters. For more information on Ms. Rose's skills and experience, see page 14.

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 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 Duke Energy's business. In addition to discussing Duke Energy's businesses and operations, the new directors learn about our corporate governance practices and policies; the financial and technical aspects of our electric utility, natural gas, and commercial renewables businesses; the enterprise's significant risks; our long-term strategy; and Duke Energy's long-standing mission to provide clean, reliable, and affordable energy for our customers.

Communications and Engagements with Directors

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

Corporate Secretary
David B. Fountain
Senior Vice President, Legal, Chief Ethics and Compliance
Officer and Corporate Secretary
Duke Energy Corporation
DEC 48H
P.O. Box 1414
Charlotte, NC 28201-1414

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

Independent Lead Director
c/o David B. Fountain
Senior Vice President, Legal, Chief Ethics and Compliance
Officer and Corporate Secretary
Duke Energy Corporation
DEC 48H
P.O. Box 1414
Charlotte, NC 28201-1414

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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

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

GRAPHIC

Corporate Governance Committee
Michael G. Browning, Chair
Daniel R. DiMicco
William E. Kennard
E. Marie McKee

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DIRECTOR COMPENSATION

Our director compensation program is designed to attract and retain highly qualified directors and align their interests with those of our shareholders. We compensate directors who are not employed by Duke Energy with a combination of cash and equity awards, along with certain other benefits as described below. Ms. Good receives no compensation for her service on the Board.

The Compensation Committee annually reviews the director compensation program and recommends proposed changes for approval by the Board. As part of this review, the Compensation Committee considers the significant amount of time expended, and the skill level required, by each director not employed by Duke Energy in fulfilling his or her duties on the Board, each director's role and involvement on the Board and its committees and the market compensation practices and levels of our peer companies.

During its annual review of the director compensation program in 2018, the Compensation Committee considered an analysis prepared by its independent consultant, FW Cook, which summarized director compensation trends for independent directors and pay levels at the same peer companies used to evaluate the compensation of our NEOs. Following this review, and after considering the advice of FW Cook about market practices and pay levels, the Compensation Committee did not recommend any changes to our director compensation program.

For 2018, our director compensation program consisted of the following:

Type of Fee
Amount
($)

Annual Board Retainer (cash)

125,000

Annual Board Retainer (stock)

160,000

Annual Board Chair Retainer (if applicable)

100,000

Annual Lead Director Retainer (if applicable)

40,000

Annual Audit Committee Chair Retainer

25,000

Annual Compensation Committee and Nuclear Oversight Committee Chair Retainers

20,000

Annual Chair Retainer (other committees)

15,000

Additional Cash Retainer Opportunity*

10,000

Board Meeting Fees

n/a
*
An additional $10,000 cash retainer will be provided to any director who completes one or more of the following during the calendar year: (i) participation on a special committee, (ii) attendance at more than 30 meetings of the Board and/or regular standing committee meetings during the calendar year, or (iii) in person attendance at more than two off-site committee meetings during the calendar year.

Annual Board Stock Retainer for 2018. In 2018, each eligible director received the portion of his or her annual retainer that was payable in stock in the form of fully vested shares. The stock retainer was granted under the Duke Energy Corporation 2015 Long-Term Incentive Plan that was approved by our shareholders and contains an annual limit on equity awards of $400,000 to any director not employed by Duke Energy.

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

Charitable Giving Program. The Duke Energy Foundation, independent of Duke Energy, maintains the Duke Energy Foundation Matching Gifts Program under which directors and employees generally are eligible to request matching contributions of up to $5,000 per director or employee per calendar year to qualifying institutions. In addition, the Duke Energy Foundation made a $1,000 donation to the Foundation for the Carolinas for the Relief4Employees program in November 2018 on behalf of each of the directors not employed by Duke Energy who were actively serving at that time. The Relief4Employees program provides assistance to eligible employees facing financial hardship due to natural disaster, family emergency, or other unexpected events.

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

Stock Ownership Guidelines. Directors are subject to stock ownership guidelines, which establish a minimum level of ownership of Duke Energy common stock (or common stock equivalents). Currently, each director not employed by Duke Energy is required to own shares with a value equal to at least five times the annual Board cash retainer (i.e., an ownership level of $625,000) or retain 50% of his or her vested annual equity retainer. All directors were in compliance with the guidelines as of December 31, 2018.

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DIRECTOR COMPENSATION

The following table describes the compensation earned during 2018 by each individual, other than Ms. Good, who served as a director during 2018. Because Ms. Clayton and Ms. Rose joined the Board in 2019, neither received compensation in 2018 and they are not listed below.

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

Stock
Awards
($)(3)

All Other
Compensation
($)(4)

Total
($)

Michael G. Browning

180,000 160,000 6,261 346,261

Theodore F. Craver, Jr.

150,000 160,000 6,261 316,261

Robert M. Davis(1)

122,542 210,549 6,256 339,347

Daniel R. DiMicco

125,000 160,000 6,261 291,261

John H. Forsgren

140,000 160,000 6,261 306,261

John T. Herron

155,000 160,000 6,261 321,261

James B. Hyler, Jr.

140,000 160,000 1,261 301,261

William E. Kennard

125,000 160,000 6,261 291,261

E. Marie McKee

145,000 160,000 6,261 311,261

Charles W. Moorman IV

125,000 160,000 8,114 293,114

Carlos A. Saladrigas

125,000 160,000 6,261 291,261

Thomas E. Skains

135,000 160,000 6,261 301,261

William E. Webster, Jr.

135,000 160,000 6,261 301,261
(1)
Mr. Davis was appointed to the Board on January 8, 2018.

(2)
Mr. Hyler, Mr. Moorman, and Mr. Saladrigas elected to defer $70,000, $125,000, and $125,000, respectively, of their 2018 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 2018. The grant date fair value was determined in accordance with the accounting guidance for stock-based compensation. See Note 21 of the Consolidated Financial Statements contained in our Form 10-K for an explanation of the assumptions made in valuing these awards. In January 2018, Mr. Davis received a prorated portion of the 2017-2018 annual stock retainer, amounting to 615 shares of Duke Energy common stock. In May 2018, each sitting director on the Board received an annual stock retainer in the form of 2,006 shares of Duke Energy common stock. Mr. Craver, Mr. Davis, Mr. Hyler, Mr. Kennard, Mr. Moorman, Mr. Saladrigas, and Mr. Webster elected to defer their 2018-2019 stock retainer of Duke Energy shares under the Directors' Savings Plan.

(4)
As described in the following table, All Other Compensation for 2018 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 during 2018, and contributions made in the director's name to charitable organizations.
Name
Personal Use
of Airplane
($)

Business Travel
Accident
Insurance
($)

Charitable
Contributions
($)

Total
($)

Michael G. Browning

0 261 6,000 6,261

Theodore F. Craver, Jr.

0 261 6,000 6,261

Robert M. Davis

0 256 6,000 6,256

Daniel R. DiMicco

0 261 6,000 6,261

John H. Forsgren

0 261 6,000 6,261

John T. Herron

0 261 6,000 6,261

James B. Hyler, Jr.

0 261 1,000 1,261

William E. Kennard

0 261 6,000 6,261

E. Marie McKee

0 261 6,000 6,261

Charles W. Moorman IV

1,853 261 6,000 8,114

Carlos A. Saladrigas

0 261 6,000 6,261

Thomas E. Skains

0 261 6,000 6,261

William E. Webster, Jr.

0 261 6,000 6,261

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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 NEOs), and all directors and executive officers as a group as of March 4, 2019. There were 727,645,547 shares of Duke Energy common stock outstanding as of March 4, 2019.

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

Percent
of Class

Michael G. Browning

82,785 *

Annette K. Clayton

595 *

Theodore F. Craver, Jr.

6,035 *

Robert M. Davis

2,690 *

Daniel R. DiMicco

49,163 *

John H. Forsgren

21,423 *

Lynn J. Good

170,928 *

John T. Herron

17,873 *

James B. Hyler, Jr.

22,027 *

Dhiaa M. Jamil

12,459 *

Julia S. Janson

23,794 *

William E. Kennard

10,627 *

E. Marie McKee

149 *

Charles W. Moorman IV

9,222 *

Marya M. Rose

304 *

Carlos A. Saladrigas

4,792 *

Thomas E. Skains

20,422 *

William E. Webster, Jr.

3,357 *

Lloyd M. Yates

47,106 *

Steven K. Young

66,227 *

Directors and executive officers as a group (24)

672,881 *
*
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 March 4, 2019: Mr. Browning – 25,507; Ms. Clayton – 0; Mr. Craver – 297; Mr. Davis – 2,075; Mr. DiMicco – 18,691; Mr. Forsgren – 17,995; Ms. Good – 0; Mr. Herron – 0; Mr. Hyler – 13,524; Mr. Jamil – 0; Ms. Janson – 0; Mr. Kennard – 10,627 ; Ms. McKee – 149; Mr. Moorman – 4,257; Ms. Rose – 0; Mr. Saladrigas – 1,756; Mr. Skains – 0; Mr. Webster – 2,296; Mr. Yates – 0; Mr. Young – 0; and all directors and executive officers as a group – 97,174.

Supplemental Table – Including Ownership of Units Representing Common Stock

The table below shows ownership of both Duke Energy common stock (listed in the table above as defined by SEC regulations) as well as units (not listed in the table above) related to Duke Energy common stock under the Directors' Savings Plan or the Executive Savings Plan, as applicable, which units do not represent an equity interest in Duke Energy and possess no voting rights, but are equal in economic value to one share of Duke Energy common stock.

Name
Number of Units

Michael G. Browning

114,033

Annette K. Clayton

595

Theodore F. Craver, Jr.

7,813

Robert M. Davis

2,690

Daniel R. DiMicco

50,594

John H. Forsgren

21,423

Lynn J. Good

171,006

John T. Herron

17,873

James B. Hyler, Jr.

34,124

Dhiaa M. Jamil

14,422

Julia S. Janson

24,013

William E. Kennard

10,627

E. Marie McKee

61,368

Charles W. Moorman IV

10,882

Marya M. Rose

304

Carlos A. Saladrigas

44,893

Thomas E. Skains

20,422

William E. Webster, Jr.

5,224

Lloyd M. Yates

59,051

Steven K. Young

66,748

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table lists the beneficial owners of 5% or more of Duke Energy's outstanding shares of common stock as of December 31, 2018. 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 56,503,147 7.92 %
100 Vanguard Blvd.
Malvern, PA 19355

   

BlackRock Inc.



48,270,073




6.80

%

40 East 52nd Street
New York, NY 10022
   
(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 961,043 shares, 421,555 shares with shared voting power, sole dispositive power with regard to 55,293,994 shares, and 1,209,153 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 42,774,054 shares, no shares with shared voting power, sole dispositive power with regard to 48,270,073 shares, and no shares with shared dispositive power.

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PROPOSAL 2:     RATIFICATION OF DELOITTE & TOUCHE LLP AS DUKE ENERGY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019

The Audit Committee is directly responsible for the appointment and compensation, including the preapproval of audit fees as described below, and the retention and oversight of the independent registered public accounting firm that audits our financial statements and our internal control over financial reporting. The Audit Committee annually performs an assessment of Deloitte's independence and performance in deciding whether to retain Deloitte or engage a different independent auditor. Based on this evaluation, the Audit Committee has selected Deloitte as Duke Energy's independent registered public accounting firm for 2019. Deloitte (or one of its predecessor companies) has served as our independent registered public accounting firm since 1947.

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 Duke Energy and our shareholders. Deloitte's level of service, industry experience, and 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 and enables a more efficient fee structure.

To safeguard the continued independence of the independent registered public accounting firm, the Audit Committee adopted a policy that provides that the independent registered public accounting firm is only permitted to provide services to Duke Energy and our subsidiaries that have been preapproved by the Audit Committee. Pursuant to the policy, detailed audit services, audit-related services, tax services, and certain other services have been specifically preapproved up to certain categorical fee limits. Proposed services exceeding cost of preapproved limits must be approved by the Audit Committee 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 2018 and 2017 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 mandatory rotation of Deloitte's lead engagement partner every five years, the Audit Committee oversees the selection of Deloitte's new lead engagement partner, including discussing candidate qualifications and interviewing potential candidates put forth by Deloitte. In 2018, the Audit Committee approved the selection of a new lead engagement partner beginning with the 2019 audit year.

Representatives of Deloitte are expected to participate in the Annual Meeting and will be available to respond to appropriate questions that are submitted at the Annual Meeting. Information on Deloitte's fees for services rendered in 2018 and 2017 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
2018
2017

Audit Fees(1)

$ 14,035,000 $ 13,535,000

Audit-Related Fees(2)

386,000 249,000

Tax Fees(3)

550,000 1,746,000

All Other Fees(4)

30,000 50,000

Total fees:

$ 15,001,000 $ 15,580,000
(1)
Audit Fees are fees billed, or expected to be billed, by Deloitte for professional services for the financial statement audits of Duke Energy and our subsidiaries, including the audit of the internal control over financial reporting of Duke Energy and subsidiaries included in Duke Energy's Form 10-K, reviews of financial statements included in Duke Energy's Quarterly Reports on Form 10-Q, statutory and regulatory attestation procedures, and services associated with securities filings such as comfort letters and consents.

(2)
Audit-Related Fees are fees billed, or expected to be billed, by Deloitte for assurance and related services, including examinations of management assertions on financial reporting-related matters.

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

(4)
Other Fees are billed, or expected to be billed, by Deloitte for attendance at Deloitte-sponsored conferences and access to Deloitte research tools and subscription services.

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, 2018.

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

The purpose of the Audit Committee is to assist the Board in its general oversight of Duke Energy's financial reporting, internal controls, and audit functions. The Audit Committee's charter describes in greater detail the full responsibilities of the committee and is available on our website at 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 21 and 33 of the proxy statement.

The Audit Committee has reviewed and discussed the consolidated financial statements with management and Deloitte, Duke Energy's independent registered public accounting firm. Management is responsible for the preparation, presentation, and integrity of Duke Energy's financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); 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 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 are fairly presented, in all material respects, in conformity with GAAP.

In addition, management completed the documentation, testing, and evaluation of Duke Energy's system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received updates provided by management and Deloitte at each of the regularly scheduled Audit Committee meetings. At the conclusion of the process, management presented to the Audit Committee on the effectiveness of Duke Energy's internal control over financial reporting. The Audit Committee also reviewed the report of management contained in Duke Energy's Form 10-K filed with the SEC, as well as Deloitte's report included in the Corporation's Form 10-K related to its audit of the effectiveness of internal control over financial reporting.

The Audit Committee has discussed with Deloitte the matters required to be discussed by professional and 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 our subsidiaries and the Audit Committee has discussed with Deloitte the firm's independence.

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

Audit Committee
Theodore F. Craver, Jr., Chair
Annette K. Clayton
Robert M. Davis
James B. Hyler, Jr.
Carlos A. Saladrigas

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

At the 2011 and 2017 Annual Meetings, Duke Energy's shareholders recommended that our Board hold say-on-pay votes on an annual basis. As a result, we are providing our shareholders with the opportunity to approve, on a nonbinding, advisory basis, the compensation of our NEOs as disclosed in this proxy statement. This proposal gives our shareholders the opportunity to express their views on the compensation of our NEOs.

In connection with this proposal, the Board encourages shareholders to review, in detail, the description of the compensation program for our NEOs that is set forth in the Compensation Discussion and Analysis beginning on page 36, as well as the information contained in the compensation tables and narrative discussion in this proxy statement.

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

We are asking our shareholders to indicate their support for the compensation of our NEOs 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, including the Compensation Discussion and Analysis, the compensation tables, and the narrative discussion in Duke Energy's 2019 Proxy Statement."

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

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

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee is responsible for the oversight of Duke Energy's compensation programs and compensation of Duke Energy's executives per the Compensation Committee's charter, which is available on our website at 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 that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee
E. Marie McKee, Chair
Michael G. Browning
John H. Forsgren
Carlos A. Saladrigas

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Section 1: Executive Summary

The purpose of this Compensation Discussion and Analysis is to provide information about Duke Energy's compensation objectives and policies for our NEOs, who, for 2018 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, External Affairs and Chief Legal Officer
Lloyd M. Yates Executive Vice President, Customer and Delivery Operations and President, Carolinas Region

Compensation Objectives and Principles for 2018

Our compensation program is designed to link pay to performance, with the goal of attracting and retaining talented executives, rewarding individual performance, encouraging long-term commitment to our business strategy, and aligning the interests of our management team with those of shareholders.

Our compensation program provides significant upside and downside potential depending on actual results, as compared to predetermined measures of success.

In setting executive compensation for 2018, we sought to balance the need to recognize the evolving nature of our business strategy with Duke Energy's focus on maximizing shareholder value.

Shareholder Engagement

We have a longstanding history of engaging with shareholders and value the deep relationships we have built. The feedback our shareholders have provided over time has greatly informed our compensation and governance programs as well as our environmental and social initiatives. We received 80.7% favorable support from our shareholders for our executive compensation program pursuant to the "say on pay" vote at our 2018 Annual Meeting. In response, we continued our shareholder outreach program in 2018, reaching out to holders of approximately one-third of our outstanding shares and held meetings with the holders of approximately 20% of our outstanding shares. Our outreach team included members of our Board as well as management who represented the Investor Relations, Human Resources, and Legal Departments, among others.

The focus of these meetings was to provide an update on our strategic vision, operational priorities, and the strength of our leadership team, as well as to discuss our governance and executive compensation program, our CEO's compensation for 2018, and several disclosure and governance enhancements the Compensation Committee had approved. During these conversations, shareholders thanked us for our proactive approach and indicated that they appreciated that we have evolved the design of our LTI program over the last several years to incorporate strategic and operational measures in addition to TSR, as well as the enhanced disclosure of our executive compensation program. Shareholders also were pleased that safety metrics have been incorporated into the incentive plans. No significant changes were made to the design of our compensation plans in 2018 as a result of our engagement program.

We greatly value the input shareholders provided and will continue our outreach efforts on a variety of topics – including executive compensation – as our compensation program evolves in the future.

 

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COMPENSATION DISCUSSION AND ANALYSIS

Business Highlights: Compensation Decisions in Context

Advancing Our Strategic Vision

We continue to advance our strategic vision as indicated below.

GRAPHIC

Core Areas of Focus

Our value proposition is to be the leading energy infrastructure company. Under the leadership of Ms. Good, who became our CEO in July 2013, we have intensified our focus on serving our customers and communities, while leading the way to a safe, secure, and responsible energy future. 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, employee engagement, and the environment.

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 following areas:

Modernizing the energy grid

Generating cleaner energy

Expanding our natural gas infrastructure

 

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2018 Business Highlights

We had an outstanding year during 2018. We met our near-term financial commitments and positioned Duke Energy for sustainable long-term growth. We continued to advance a growth strategy focused on investments to modernize our energy grid, generate cleaner energy, and expand our natural gas infrastructure – all built on a foundation of customer service, operational excellence, and employee and stakeholder engagement.

Operational Excellence  

Safety remains our top priority. Our employees delivered strong safety results in 2018, consistent with our industry-leading performance levels from 2016 and 2017. Although we fell short of our employee target for TICR, we will continue to learn and use each incident as an opportunity to improve enterprise safety practices. As an indication of our commitment to safety, we include safety metrics in both the STI and LTI plans, and the STI plan payments for our NEOs were reduced by a 5% safety penalty in 2018, as explained in more detail on page 44.

We demonstrated progress on our commitment to generate cleaner energy, including the completion of highly efficient combined cycle natural gas plants in Florida and South Carolina, and the advancement of renewable energy in both our regulated and commercial businesses.

2018 was a year of intense storm activity, with Hurricane Florence and Hurricane Michael impacting our service territories. Our employees and utility partners worked tirelessly to restore three million outages during the hurricane season.

We outperformed our target for Reportable Environmental Events in 2018 and continued to advance our efforts to permanently close coal ash basins in ways that protect people and the environment.

Financial Performance  

Our results exceeded our 2018 earnings target and we took proactive steps to strengthen our balance sheet. We advanced capital projects and regulatory initiatives that support our 4% to 6% EPS growth trajectory, and addressed key uncertainties including federal tax reform treatment and North Carolina rate case outcomes.

Our 2018 TSR of 7.4% exceeded the TSR of the S&P 500 and the UTY, which was –4.4% and 3.5% respectively in 2018.

During 2018, we increased our dividend payment for the 12th consecutive year.

 

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Chief Executive Officer Compensation

No Changes to CEO Compensation

Ms. Good's leadership has been instrumental to the evolution of Duke Energy. Since becoming our CEO in July 2013, Ms. Good has led the development of our strategy (focused on modernizing the energy grid, generating cleaner energy, and expanding our natural gas infrastructure), driven industry-leading operational performance, and guided us through several major transactions as we restructured our portfolio of businesses to reduce risk and improve returns. As we seek to advance our strategic vision and execution in the coming years, Ms. Good's leadership will continue to be critical to the organization.

When Ms. Good became our CEO in 2013, her compensation was significantly below the market. To address this gap, each year the Compensation Committee conducted a detailed review of Ms. Good's compensation and analyzed her pay relative to the competitive market, within and outside the utility sector. The Compensation Committee took into account the size and complexity of Duke Energy and our ability to compete for talent against multiple industries, and relied heavily on data from its independent compensation consultant.

The Compensation Committee gradually increased Ms. Good's compensation levels over the past several years to bring Ms. Good's compensation in line with the competitive market. This step-like approach provided flexibility to make pay decisions based on Ms. Good's contributions to the performance of Duke Energy, her experience in the role, and the evolving market data.

After conducting its review of the market data, the Compensation Committee determined that Ms. Good's compensation continued to be competitive with the market data, and, therefore, the committee did not increase her compensation levels in 2018.

Core Compensation Structure and Incentive Metrics in 2018

Our core compensation program consists of base salary, STI and LTI (performance shares and RSUs), as outlined in the table below. There have been no significant changes to the following metrics since 2017.
      Element
Performance Metrics Aligned to Strategy
  Base Salary

Cash

     
  Annual
Incentive

Short-Term Cash Incentive

 

Adjusted EPS

Operational Excellence

Customer Satisfaction

Individual Objectives

Safety (targets set on an absolute basis)

 
  Long-Term

Performance Shares (70%)

 

Cumulative Adjusted EPS

Relative TSR

Safety (targets set on a relative basis)

 
 
  Equity Incentive

RSUs (30%)

 

Service-based with three-year pro rata vesting

 

 

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The following chart illustrates the components of the target TDC opportunities provided to our CEO and other NEOs.

GRAPHIC

Executive Compensation Best Practices

Following are key features of our executive compensation program:

AT DUKE ENERGY WE... AT DUKE ENERGY WE DO NOT...
GRAPHIC
Require significant stock ownership, including 6x base salary for our CEO and 3x base salary for other NEOs GRAPHIC
Provide tax gross-ups to NEOs
GRAPHIC Maintain a stock retention policy GRAPHIC Permit hedging or pledging of Duke Energy securities
GRAPHIC
Tie equity and cash-based incentive compensation to a clawback policy GRAPHIC
Provide "single trigger" severance upon a change in control
GRAPHIC Maintain a shareholder approval policy for severance agreements that provide severance in excess of 2.99 annual compensation GRAPHIC Provide employment agreements to a broad group
GRAPHIC
Comply with an equity award granting policy GRAPHIC
Encourage excessive or inappropriate risk-taking through our compensation program
GRAPHIC Use an independent compensation consultant retained by and reporting directly to the Compensation Committee to advise on compensation matters GRAPHIC Provide excessive perquisites
GRAPHIC
Review tally sheets on an annual basis GRAPHIC
Provide dividend equivalents on unearned performance shares
GRAPHIC Consider shareholder feedback and the prior year's "say-on-pay" vote    
GRAPHIC
Require that equity awards must be subject to a one-year minimum vesting period, subject to limited exceptions
GRAPHIC Disclose performance targets for the open performance share cycle granted in the most recent year    

 

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COMPENSATION DISCUSSION AND ANALYSIS

Section 2: Compensation Program

Overall Design

We design our compensation program so that it motivates our executives to focus on our core business priorities and aligns the interests of executives and shareholders.

Elements of Our Total Direct Compensation Program

As discussed in more detail below, during 2018, the components of TDC for our NEOs were: base salary, STI compensation, and LTI compensation.

Base Salary

The salary for each NEO 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 Compensation Committee considers changes in the base salaries of our NEOs annually. In 2018, the Compensation Committee approved merit increases, effective as of March 1, 2018, of 2.5% for Mr. Young, Mr. Jamil, Ms. Janson, and Mr. Yates to further close the gap between their respective salaries and the peer group median. No changes were made to Ms. Good's base salary in 2018.

Short-Term Incentive Compensation

STI opportunities are provided to our NEOs under the Duke Energy Corporation Executive Short-Term Incentive Plan to promote the achievement of annual performance objectives. Each year, the Compensation Committee establishes the target annual incentive opportunity for each NEO, which is based on a percentage of his or her base salary. No changes were made to the target incentive opportunities of our NEOs in 2018.

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

Lynn J. Good

155 %

Steven K. Young

80 %

Dhiaa M. Jamil

80 %

Julia S. Janson

80 %

Lloyd M. Yates

80 %

As discussed in more detail below, the Compensation Committee established the following objectives under the STI plan in February 2018 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 performance floor or circuit-breaker providing that if an adjusted diluted EPS performance level of at least $4.15 was not achieved, our NEOs would not have received any payout under the 2018 STI plan. To encourage a continued focus on safety, the Compensation Committee also included a potential safety penalty (executives

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only) and adder (all employees), each in the amount of 5% of a participant's entire STI payment.

Depending on actual performance, NEOs were eligible to earn up to 183.75% of the amount of their STI target opportunity, based on a potential maximum payout of 200% for the EPS objective, a 150% potential maximum payout for the operational excellence, customer satisfaction and individual objectives, and the potential 5% safety adder.

Corporate Objectives (80% of total)

The 2018 corporate objectives and the related target and performance results were as follows and are defined below:

Objective(1)
  Weight
  Threshold
(50%)

  Target
(100%)

  Maximum(2)
  Result
  Sub-Total
  Payout
 
Adjusted Diluted EPS(3)   50 % $ 4.50   $ 4.70   $ 4.90   $ 4.72     110.0 %
Operational Excellence(4)     20 %                                 101.2 %

(a) O&M Expense

    $ 5.060B   $ 4.910B   $ 4.760B   $ 4.974B   79 %  

(b) Reliability(5)

                                           

Nuclear Optimized Reliability

    207.78   203.41   199.11   198.49   150 %  

Fossil/Hydro Optimized Reliability

          64.57     63.28     62.00     59.54     150 %      

System Average Interruption Duration Index (Less Planned Outages)

    160   145   130   155   67 %  

Renewables Availability

          93.5 %   94.5 %   96.0 %   95.3 %   127 %      

Natural Gas Business Outage Factor

    4   2   1   3   0% (6)  

(c) Safety/Environmental(7)

                                           

TICR:

                             

Employees

    0.50   0.38   0.35   .43   79 %  

Contractors

    0.95   0.85   0.80   .74   150 %  

Reportable Environmental Events

          44     35     31     32     138 %      
Customer Satisfaction   10 % 783   793   803   796     115 %
(1)
For additional information about the calculation of the EPS and O&M expense control objectives, see page 51.

(2)
A payout of up to 200% of the target opportunity is available for the adjusted diluted EPS objective and a payout of up to 150% of the target opportunity is available for the operational excellence and customer satisfaction objectives.

(3)
If an adjusted diluted EPS performance level of at least $4.15 was not achieved (i.e., a performance floor or circuit-breaker), the NEOs would not have received a payout under the 2018 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)
Each reliability metric contains an equal weighting of one-fifth of the aggregate weighting of the reliability objective.

(6)
The performance for the Natural Gas Business Outage Factor did not achieve the threshold level because of the occurrence of an outage that impacted at least 500 customers.

(7)
Each safety/environmental metric contains an equal weighting of one-half of the aggregate weighting of the safety/environmental objective.

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    Corporate Metrics   Description/Rationale  
     

 

Financial Metrics
   
Adjusted Diluted EPS   A widely accepted, easily understood, and important metric used to evaluate the success of our performance and the market value of our common stock.

Operational Excellence

 

Motivates our executive officers to achieve operational excellence, which is valued by our customers. This measure aligns with our strategic business goals and provides an incentive for achieving operational efficiencies.

 

Reliability Metrics
   
Nuclear Optimized Reliability   A measure of the linkage between financial investment and reliability of the nuclear fleet.

Fossil/Hydro Optimized Reliability

 

A measure of the linkage between financial investment and reliability of the fossil/hydro fleet.

System Average Interruption Duration Index (Less Planned Outages)

 

A measure of the number of outage minutes experienced during the year per customer served from both transmission and distribution systems, excluding planned outages, calculated in accordance with applicable guidelines.

Renewables Availability

 

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

Natural Gas Business Outage Factor

 

A measure of the number of outages in the natural gas business. For this purpose, an "outage" is defined as an event that causes a loss of natural gas service for at least 100 customers, where such event is not caused by a third party. If a single event causes a loss of natural gas service for at least 500 customers, that event automatically results in less than minimum performance for this measure.

 

Safety/Environmental Metrics
   
TICR   Measures the number of occupational injuries and illnesses per 100 workers. This objective emphasizes our focus on achieving an event-free and injury-free workplace.

Reportable Environmental Events

 

Environmental events that require notification to, or enforcement action by, a regulatory agency. This objective emphasizes service reliability and the mitigation of environmental risks associated with our operations.

 

Customer Satisfaction Metric
   
CSAT   A composite of customer satisfaction results for each regulated utility. Results are based on external surveys by third parties, including J.D. Power, and internal surveys of our customers.

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Individual Objectives (20% of total)

The 2018 individual objectives for our NEOs were divided into the following three equally-weighted areas:

Focus on operational excellence and performance with an emphasis on safety, reliability, sustainable efficiency, and event-free operations

Achieve risk-informed growth and financial results

Foster a high performance, engaged, diverse and inclusive culture built on strong leadership and behaviors aligned with Duke Energy's Leadership Imperatives

Safety Component

In order to emphasize a continued focus on safety, the Compensation Committee included the following measures in the 2018 STI plan:

Safety Penalty.  The STI plan payments for each of our NEOs were subject to a safety penalty of 5% if Duke Energy experienced more than five LAIs 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 our NEOs, along with other eligible employees, were also eligible for a safety adder that could result in an increase of 5% if: (i) there were no controllable work-related fatalities of any Duke Energy employee or contractor during 2018; (ii) there were four or fewer LAIs during 2018; and (iii) there were no significant operational events.

We did not achieve our goal of no work-related fatalities during 2018, and, therefore, the safety adder did not apply and the safety penalty applied such that total payments under the 2018 STI plan for our NEOs were decreased by 5%.

Payouts

Based on the aggregate corporate and individual performance results, including the 5% safety penalty, each NEO's aggregate payout under the 2018 STI plan was equal to:

Name
Target STI
Opportunity
($)

Achievement
of Corporate
Objectives
(80% Weighting)

Achievement
of Individual
Objectives
(20% Weighting)

Overall
Achievement
as a % of
Target STI
Opportunity*

Payout*
($)

Lynn J. Good

2,092,500 108.4 % 137 % 108.4 % 2,268,961

Steven K. Young

565,950 108.4 % 140 % 109.0 % 616,903

Dhiaa M. Jamil

643,125 108.4 % 140 % 109.0 % 701,026

Julia S. Janson

510,417 108.4 % 150 % 110.9 % 566,067

Lloyd M. Yates

560,848 108.4 % 130 % 107.1 % 600,685
*
Values have been reduced by 5% to reflect the safety penalty.

Long-Term Incentive Compensation

Our LTI program is designed to provide our NEOs with appropriate balance to the STI plan and to align executive and shareholder interests in an effort to maximize shareholder value.

Each year, the Compensation Committee establishes the target LTI opportunity for each NEO, which is based on a percentage of his or her base salary. No changes were made to the LTI opportunities of our NEOs in 2018.

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

Lynn J. Good

750 %

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 RSUs annually with its compensation consultant, which confirmed that the present mix of performance shares (70% allocation) and RSUs (30% allocation) was consistent with market benchmarking 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.

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2018-2020 Performance Shares (70% of LTI Program)

Our Compensation Committee has evolved the design of our performance shares over the last three years to reflect shareholder feedback requesting a focus on multiple core metrics linked to our long-term success and balancing relative and absolute performance comparisons. As indicated in the following chart, we added a cumulative adjusted EPS metric in 2016, and in 2017 we added a safety metric to further strengthen our pay for performance alignment.

 
 
 
 
 
      Evolution of Core Metrics
  2015–2017 Performance Share Award •  100% Relative TSR  
  2016–2018 Performance Share Award •  50% Cumulative Adjusted EPS

•  50% Relative TSR

 
  2017–2019 Performance Share Award

2018–2020 Performance Share Award

•  50% Cumulative Adjusted EPS

•  25% Relative TSR

•  25% Safety (targets set on a relative basis)

In order to emphasize pay for performance, the 2018-2020 performance shares vest at the end of the three-year performance period based on (i) our cumulative adjusted EPS compared to pre-established targets (50% weighting); (ii) our relative TSR compared to the companies in the UTY (25% weighting); and (iii) a safety measure based on our TICR compared to pre-established targets (25% weighting). These performance measures were selected to emphasize their importance in aligning the interests of our executives and shareholders.

Each of the three performance measures for the 2018-2020 performance shares is described below, along with a table that sets forth the performance targets and payout levels.

Cumulative Adjusted EPS (50% Weighting)

Payout is based on adjusted EPS over a three-year performance period compared to pre-established levels