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Table of Contents

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

SCHEDULE 14A

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

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

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

 

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 26, 2020

Dear Fellow Shareholders:

I am pleased to invite you to Duke Energy's Annual Meeting to be held on Thursday, May 7, 2020, at 12:30 p.m. Eastern time. We look forward to updating you at the Annual Meeting on our strategy and areas of focus and progress in 2019, as well as plans for the future of Duke Energy.

2019 Developments

In 2019, Duke Energy executed on our strategy to transform the customer experience by modernizing the energy grid, generating cleaner energy, and expanding natural gas infrastructure. We announced an updated 2030 goal to reduce carbon emissions from electricity generation by at least 50% from 2005 levels and set a new goal to reach net-zero emissions from electricity generation by 2050. This is an aggressive goal, and one we are committed to strive to attain. We also reached a very important agreement with the NC DEQ and community groups to permanently close all remaining ash basins in North Carolina, with the substantial majority of the ash being excavated and placed in lined landfills. These developments are just a small portion of the progress made on implementing Duke Energy's long-term strategy in 2019, which is further detailed in the 2019 Annual Report that accompanies this proxy statement.

This proxy statement contains information about our Board's oversight of Duke Energy's strategy, performance, risks, governance, executive compensation, and sustainability practices. It also talks about the outreach we have had in the past year with fellow shareholders and how that feedback has influenced the work that we are doing at Duke Energy.

Annual Meeting Details

This year's Annual Meeting will once again be held exclusively via live webcast. As a result of the online format, we are able to connect with more shareholders and answer more questions than we were able to do at previous in-person meetings, all while providing our shareholders the same opportunities to vote and ask questions that they would have had at an in-person meeting.

As we have done in previous years, 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 1.800.289.0438, confirmation code 1802740. 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 79 of this proxy statement.

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. We hope you can participate in the Annual Meeting. It is important that all of our shareholders, regardless of the number of shares owned, participate in the affairs of Duke Energy. We encourage you to vote promptly, even if you plan to participate in the Annual Meeting.

Thank you for your continued investment in Duke Energy.

Sincerely,

GRAPHIC

Lynn J. Good
Chair, 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 and to work closely with our Chair, President and CEO, Lynn Good, who has skillfully positioned Duke Energy as a leader as the utility industry navigates rapid changes. I am fortunate to have the privilege of working with a diverse, engaged, and experienced group of directors at Duke Energy. In 2019, we added three new directors, Annette K. Clayton, Marya M. Rose, and Nicholas C. Fanandakis, to the Board. The varied opinions and perspectives of the Board allow us to actively oversee the most important issues facing Duke Energy.

Our Board is deeply committed to sound corporate governance, executive compensation, and risk management policies and practices to ensure that Duke Energy operates responsibly and efficiently and achieves long-term sustainable value for our fellow shareholders. In 2019, the Board focused on the oversight of certain key risk areas for the Company, including operations and regulatory risks, cyber and physical security risks, sustainability and climate change risks, and the Board's oversight of the investments being made toward our strategy to transform the customer experience, modernize the energy grid, generate cleaner energy, and expand natural gas infrastructure. The Board was actively involved in the development of our updated goal to reduce carbon emissions from electricity generation by at least 50% from 2005 levels by 2030 and set a new goal to reach net-zero emissions from electricity generation by 2050. The Board was also instrumental in the addition of over 1,500 megawatts of new commercial renewables projects and additional renewables on our regulated system. Finally, the Board focused on the resolution of the Company's ash basin closure plans and was pleased that the Company reached an agreement with the NC DEQ and community groups to permanently close all remaining ash basins in North Carolina, primarily by excavating to lined landfills.

In 2019, we also continued our annual shareholder engagement program, reaching out to holders of approximately one-third of our outstanding common shares twice a year as well as numerous conversations we have every year with shareholders and stakeholders outside of our shareholder engagement program. The feedback we have gathered both in 2019 and in previous years from this program has helped the Board shape our policies, practices, and disclosures.

We look forward to continuing our dialogue with shareholders at the 2020 Annual Meeting, and, on behalf of the entire Board, thank you for your continued support.

Sincerely,

GRAPHIC

Michael G. Browning
Independent Lead Director

LOGO

 


Table of Contents

GRAPHIC

Notice of Annual Meeting
of Shareholders

May 7, 2020

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 7, 2020, at 12:30 p.m. Eastern time via live webcast at duke-energy.onlineshareholdermeeting.com.Though we plan to hold the Annual Meeting live via webcast on May 7, 2020, we recognize that the challenging and rapidly changing environment caused by the COVID-19 pandemic may necessitate that we re-evaluate our plans for the Annual Meeting at some point in the future. Should the time or date of the Annual Meeting change, we will announce the change by issuing a press release and filing additional proxy materials with the SEC.

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 2020;

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).

Holders of Duke Energy's common stock as of the close of business on the record date of March 9, 2020, 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 1.800.289.0438, confirmation code 1802740.

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 once 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 26, 2020

 

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 – 2020 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     9  
              
INFORMATION ON THE BOARD OF DIRECTORS     17  
              
REPORT OF THE CORPORATE GOVERNANCE COMMITTEE     26  
              
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 2020     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     54  
              
PROPOSALS 4 - 7:   SHAREHOLDER PROPOSALS     70  
              
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING     79  
              
OTHER INFORMATION     82  
              
GLOSSARY OF TERMS     84  
              
APPENDIX A   CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION     86  
              

    DUKE ENERGY – 2020 Proxy Statement


Table of Contents

GLOSSARY OF TERMS

To enhance the readability of this year's proxy statement, we added a Glossary of Terms beginning on page 84, 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 holder of Duke Energy's common stock as of the close of business on the record date of March 9, 2020.


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. Holders of record of Duke Energy's common stock as of the close of business on the record date of March 9, 2020, 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 1.800.289.0438, confirmation code 1802740. For more details on participating in the Annual Meeting, see "Frequently Asked Questions and Answers About the Annual Meeting" beginning on page 79 of this proxy statement.

Rules of Conduct for the Annual Meeting

Duke Energy has strived to ensure that shareholders at the online only Annual Meeting 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 may do so by visiting our pre-meeting forum at proxyvote.com using their 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. However, 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 on 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, on our website at duke-energy.com/our-company/investors/financial-news under "05/07/2020 – 2020 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 2021 Annual Meeting.

DUKE ENERGY – 2020 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 and website addresses are supplied to help you find additional information in this proxy statement and elsewhere. Information provided on websites linked to this proxy statement is not incorporated by reference into this proxy statement.

Voting Matters

 
   
  More
information

  Board
recommendation

  Broker non-votes
  Abstentions
  Votes
required for
approval

PROPOSAL 1   Election of directors   Page 9   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 2020   Page 33   FOR   Brokers have discretion to vote   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
PROPOSAL 4   Shareholder proposal regarding independent board chair   Page 70   AGAINST   Do not count   Vote against   Majority of shares represented
PROPOSAL 5   Shareholder proposal regarding elimination of supermajority voting provisions in Duke Energy's Certificate of Incorporation   Page 73   NO RECOMMENDATION   Do not count   Vote against   Majority of shares represented
PROPOSAL 6   Shareholder proposal regarding providing a semiannual report on Duke Energy's political contributions and expenditures   Page 75   AGAINST   Do not count   Vote against   Majority of shares represented
PROPOSAL 7   Shareholder proposal regarding providing an annual report on Duke Energy's lobbying payments   Page 77   AGAINST   Do not count   Vote against   Majority of shares represented

2    DUKE ENERGY – 2020 Proxy Statement


Table of Contents

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 7.8 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.

2019 Business Highlights

2019 was an outstanding year for Duke Energy as we met our near-term financial commitments and positioned the Company for sustainable long-term growth. We exceeded the midpoint of our 2019 earnings guidance, resulting in a 5% CAGR in adjusted diluted EPS since 2017, the first year after the completion of our portfolio transformation. We took proactive steps to strengthen our balance sheet, paving the way for a substantial increase in our five-year capital plan, significantly increasing our earnings potential to the benefit of our communities and shareholders. 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 2019:

Safety remained our top priority. Our employees delivered strong safety results, consistent with our industry-leading performance levels from 2016 through 2018. As an indication of our commitment to safety, we include safety metrics in both the STI and LTI plans. We met our challenging employee target for TICR in 2019. However, the STI plan payments for our NEOs were reduced by a 5% safety penalty, as explained in more detail on page 45.

We announced a new, aggressive goal to reduce carbon emissions from electricity generation by at least 50% from 2005 levels by 2030 and to reach net-zero emissions from electricity generation by 2050. To promote clean energy initiatives, we incorporate a nuclear reliability objective and a renewables availability metric in our STI plan to measure the efficiency of our nuclear and renewables generation assets.

We demonstrated progress on our commitment to generate cleaner energy, achieving key milestones in our Western Carolinas modernization plan allowing for the retirement of a 376 megawatt coal-fired plant in Asheville, North Carolina in January 2020.

In our Commercial Renewables business, we announced the addition of over 1,500 megawatts of new wind and solar projects, and we made significant progress on new solar projects in our regulated businesses in Florida and the Carolinas.

We outperformed our target for reportable environmental events.

We reached an agreement with the NC DEQ and community groups to permanently close all remaining ash basins in North Carolina, with the substantial majority of the ash being excavated and placed in lined landfills, completed the excavation of 12 ash basins, with nearly 28 million tons of ash moved to fully lined facilities or recycled, and completed technology upgrades at operating coal plants to take ash basins permanently out of service. We also made significant progress on the removal of water from basins across the system.

We delivered outstanding customer service, improving distribution reliability measures by 15% and our internal customer satisfaction measure by 25%.

We increased the dividend payment to our shareholders by approximately 2%, reflecting our confidence in the investment opportunities within our businesses. This is the 13th consecutive year of annual dividend growth. 2019 also marked the 93rd 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.

GRAPHIC

DUKE ENERGY – 2020 Proxy Statement    3


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Board Nominees (page 9)

Name
  Age
  Gender,
Racial or
Ethnically
Diverse

  Director since
  Occupation
  Independent
  Committee Memberships
  Other Public
Company Boards

             

Michael G. Browning
Independent Lead Director


 
73     2006   Chairman, Browning Consolidated, LLC   ü  

Compensation

Corporate Governance (C)

Regulatory Policy

 

None

                           

Annette K. Clayton

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

Audit

Operations and Nuclear Oversight

 

Polaris Industries Incorporated

             

             

Theodore F. Craver, Jr.

  68     2017   Retired Chairman, President and CEO, Edison International   ü  

Audit (C)

Regulatory Policy

 

Wells Fargo & Company

                           

Robert M. Davis

  53       2018   CFO and Executive Vice President, Global Services, Merck   ü  

Compensation

Finance and Risk Management

 

None

             

             

Daniel R. DiMicco

  69     2007   Chairman Emeritus, Retired President and CEO, Nucor Corporation   ü  

Corporate Governance

Regulatory Policy

 

Hennessy
Capital Acquisition
Corp. III

                           

Nicholas C. Fanandakis

  63       2019   Retired Executive Vice President, DuPont de Nemours, Inc. (formerly known as DowDuPont, Inc.)   ü  

Audit

Finance and Risk Management

 

ITT Inc.

FTI Consulting, Inc.

             

             

Lynn J. Good
Chair


 
60   ü   2013   Chair, President and CEO, Duke Energy Corporation    

None

 

The Boeing Company

                           

John T. Herron

  66       2013   Retired President, CEO and Chief Nuclear Officer, Entergy Nuclear   ü  

Finance and Risk Management

Operations and Nuclear Oversight (C)

 

None

             

             

William E. Kennard

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

Corporate Governance

Finance and Risk Management (C)

 

AT&T Inc.

Ford Motor Company

MetLife, Inc.

                           

E. Marie McKee

  69   ü   2012   Retired Senior Vice President, Corning Incorporated   ü  

Compensation (C)

Corporate Governance

 

None

             

             

Marya M. Rose

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

Compensation

Regulatory Policy

 

None

                           

Thomas E. Skains

  63       2016   Retired Chairman, President and CEO, Piedmont Natural Gas Company, Inc.   ü  

Finance and Risk Management

Regulatory Policy (C)

 

Truist Financial Corporation

National Fuel Gas Company

             

             

William E. Webster, Jr.

  66     2016   Retired Executive Vice President, Institute of Nuclear Power Operations   ü  

Audit

Operations and Nuclear Oversight

 

None

(C)
Committee Chair

4    DUKE ENERGY – 2020 Proxy Statement


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GRAPHIC

DUKE ENERGY – 2020 Proxy Statement    5


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Shareholder Engagement (pages 21 and 36)

As part of our commitment to corporate governance, we have a track record of engaging with shareholders year-round to discuss and respond to their feedback on our corporate governance practices as well as executive compensation, environmental, and social matters of interest to shareholders. In 2019, we reached out to holders of approximately one-third of our outstanding common shares and held meetings with the holders of approximately 25% of our outstanding common shares, some of which included participation by members of the Board. The agenda for these conversations spanned a variety of topics, including our strategic vision, our operational priorities, the strength of our Board and leadership team, our commitment to ESG issues, our human capital management, and our executive compensation program. We also discussed and received positive feedback on our goals to reduce carbon emissions from electricity generation by at least 50% from 2005 levels by 2030 and to reach net-zero emissions from electricity generation by 2050.

GRAPHIC

GRAPHIC


*
Information provided for director nominees

6    DUKE ENERGY – 2020 Proxy Statement


Table of Contents

Corporate Governance Highlights (page 26)

 
ü   Ability for shareholders to nominate directors through proxy access
ü   Independent Lead Director with clearly defined role and responsibilities
 
ü   Majority voting for directors with mandatory resignation policy and plurality carve-out for contested elections
ü   Robust year-round shareholder engagement program, including director involvement
 
ü   Annual Board, committee, and director assessments
ü   Ability for shareholders to take action by less than unanimous written consent
 
ü   Ability for shareholders to call a special shareholder meeting
ü   Clearly defined environmental and social initiatives and goals
 
ü   Annual election of all directors
ü   Independent Board committees
 
ü   Policy to prohibit all hedging and pledging of corporate securities
ü   Independent directors meet in executive session at each regularly scheduled Board meeting
 
ü   Regular Board refreshment
ü   Board responsiveness to majority support of shareholder proposals
 
ü   Each share of common stock is equal to one vote

Executive Compensation Highlights (page 36)

Principles and Objectives

Our executive compensation program is designed to:

Link pay to performance

Attract and retain talented executive officers and key employees

Emphasize performance-based compensation to motivate executives and key employees

Reward individual performance

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

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

Base salary

Short-term incentives

Long-term incentives, consisting of performance shares and RSUs

DUKE ENERGY – 2020 Proxy Statement    7


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GRAPHIC

Key Executive Compensation Features (page 41)

 

ü

 

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

ü

 

Stock holding policy

ü

 

Incentive compensation tied to a clawback policy

ü

 

Consistent level of severance protection

ü

 

Shareholder approval policy for severance agreements

ü

 

Equity award granting policy

ü

 

Independent compensation consultant

ü

 

Annual tally sheets for executive officers

ü

 

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

ü

 

Do not encourage excessive or inappropriate risk-taking

ü

 

No tax gross-ups

ü

 

No "single trigger" vesting of stock awards upon a change in control

ü

 

No employment agreements except for the CEO

ü

 

No excessive perquisites

ü

 

Enhanced disclosure of performance goals

ü

 

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

8    DUKE ENERGY – 2020 Proxy Statement


Table of Contents

PROPOSAL 1:     ELECTION OF DIRECTORS

The 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.

Our Principles for Corporate Governance includes a director tenure policy in addition to a retirement policy. The Board believes that it is very important to monitor the Board's composition, skills, and needs in the context of Duke Energy's overall strategy, and, therefore, our Principles for Corporate Governance includes a range for the Board to consider retirement. Pursuant to this policy, the Board may determine not to nominate a director who has reached the age of 70 or 15 years of service on the Board if, after examining the Board composition and impending Board retirements in light of the Company's strategy, the Board determines it is in the best interest of Duke Energy and our shareholders. Similarly, the Board may determine that it is in the best interest of Duke Energy and our shareholders for a director to remain on the Board. However, the Board will not nominate a director for election at the Annual Meeting in the calendar year following the year of his or her 75th birthday without a waiver of this policy from the Board.

Majority Voting for the Election of Directors

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

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

DUKE ENERGY – 2020 Proxy Statement    9


Table of Contents

PROPOSAL 1:    ELECTION OF DIRECTORS

Board Biographical Information, Skills, and Qualifications

Michael G. Browning     GRAPHIC      GRAPHIC
Independent Director Nominee
Independent Lead Director
GRAPHIC   Age: 73
Director of Duke Energy since 2006
Chairman, Browning Consolidated, LLC
  Committees:

Compensation Committee

Corporate Governance Committee (Chair)

Regulatory Policy Committee

Other current public directorships:

None


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

Skills and qualifications:

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

Annette K. Clayton     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 56
Director of Duke Energy since 2019
President and CEO,
North America Operations,
Schneider
Electric SA
  Committees:

Audit Committee

Operations and Nuclear Oversight Committee

Other current public directorships:

Polaris Industries Incorporated


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

Skills and qualifications:

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

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PROPOSAL 1:    ELECTION OF DIRECTORS

Theodore F. Craver, Jr.     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 68
Director of Duke Energy since 2017
Retired Chairman, President and CEO,
Edison International
  Committees:

Audit Committee (Chair)

Regulatory Policy Committee

Other current public directorships:

Wells Fargo & Company


Mr. Craver was Chairman, President and CEO of Edison International, the parent company of a large California utility and various competitive electric businesses, from 2008 until his retirement in 2016. From 2005 to 2007, Mr. Craver served as CEO of Edison Mission Energy, a subsidiary of Edison International. Prior to his appointment as CEO of Edison Mission Energy, Mr. Craver served as CFO of Edison International from 2000 to 2004. He started at Edison International in 1996 after leaving First Interstate Bancorp where he was Executive Vice President and Corporate Treasurer. Mr. Craver is a former member of the ESCC, the organization that is the principal liaison between the federal government and the electric power sector responsible for coordinating efforts to prepare for, and respond to, national-level disasters or threats to critical infrastructure. Mr. Craver currently serves as a Senior Advisor to Blackstone's Global Infrastructure Fund and as a Senior Advisor to Bain & Company. He is also a member of the Economic Advisory Council of the Federal Reserve Bank of San Francisco, on the Board of Advisors of Mobility Impact Partners, and, in 2019, joined the Advisory Board of the Center on Cyber and Technology Innovation, which is a research institute focusing on national security and foreign policy. Mr. Craver is also a member of the Board of Trustees of the California Chapter of The Nature Conservancy.

Skills and qualifications:

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

   

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PROPOSAL 1:    ELECTION OF DIRECTORS

Robert M. Davis         GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 53
Director of Duke Energy since 2018
CFO and Executive Vice President, Global Services, Merck
  Committees:

Compensation Committee

Finance and Risk Management Committee

Other current public directorships:

None


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

Skills and qualifications:

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

Daniel R. DiMicco         GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 69
Director of Duke Energy since 2007
Chairman Emeritus, Retired President and CEO, Nucor Corporation
  Committees:

Corporate Governance Committee

Regulatory Policy Committee

Other current public directorships:

Hennessy Capital Acquisition Corp. III


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

Skills and qualifications:

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

   

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PROPOSAL 1:    ELECTION OF DIRECTORS

Nicholas C. Fanandakis     GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 63
Director of Duke Energy since 2019
Retired Executive Vice President, DuPont
de Nemours, Inc. (formerly known as
DowDuPont, Inc.)
  Committees:

Audit Committee

Finance and Risk Management Committee

Other current public directorships:

ITT Inc.

FTI Consulting,  Inc.


Mr. Fanandakis is a retired Executive Vice President of DuPont, a holding company with agriculture, materials science, and specialty products businesses. Mr. Fanandakis served as Executive Vice President and CFO at E.I. du Pont de Nemours and Company from 2009 until January 2019 and as Executive Vice President of DuPont until his retirement in July 2019. Prior to 2009, Mr. Fanandakis served in various plant, marketing, product management, and business director roles in the DuPont organization since 1979.

Skills and qualifications:

Mr. Fanandakis' qualifications for election include his management experience gained during his career in numerous areas of DuPont. In addition to his management experience, Mr. Fanandakis' expertise in finance, tax, banking, and risk management at a company undergoing transformation is an asset to Duke Energy's Board.


Lynn J. Good     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Non-Independent Director Nominee
Chair
GRAPHIC   Age: 60
Director of Duke Energy since 2013
Chair, President and CEO,
Duke Energy Corporation
  Committees:

None

Other current public directorships:

The Boeing Company


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

Skills and qualifications:

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

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PROPOSAL 1:    ELECTION OF DIRECTORS

John T. Herron     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 66
Director of Duke Energy since 2013
Retired President, CEO and Chief Nuclear Officer, Entergy Nuclear
  Committees:

Finance and Risk Management Committee

Operations and Nuclear Oversight Committee (Chair)

Other current public directorships:

None


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

Skills and qualifications:

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

 

William E. Kennard     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 63
Director of Duke Energy since 2014
Co-Founder and Non-Executive Chairman, Velocitas Partners, LLC
  Committees:

Corporate Governance Committee

Finance and Risk Management Committee (Chair)

Other current public directorships:

AT&T Inc.

Ford Motor Company

MetLife, Inc.


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

Skills and qualifications:

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

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PROPOSAL 1:    ELECTION OF DIRECTORS

E. Marie McKee     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 69
Director of Duke Energy since 2012
Retired Senior Vice President, Corning Incorporated
  Committees:

Compensation Committee (Chair)

Corporate Governance Committee

Other current public directorships:

None


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

Skills and qualifications:

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


Marya M. Rose     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 57
Director of Duke Energy since 2019
Vice President and Chief Administrative Officer, Cummins Inc.
  Committees:

Compensation Committee

Regulatory Policy Committee

Other current public directorships:

None


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

Skills and qualifications:

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

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Thomas E. Skains     GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC      GRAPHIC
Independent Director Nominee
GRAPHIC   Age: 63
Director of Duke Energy since 2016
Retired Chairman, President and CEO,
Piedmont Natural Gas Company, Inc.
  Committees:

Finance and Risk Management Committee

Regulatory Policy Committee (Chair)

Other current public directorships:

Truist Financial Corporation

National Fuel Gas Company


Mr. Skains was Chairman, President and 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. Prior to his service as President, Ms. Skains served in various roles, including Chief Operating Officer and as Senior Vice President, Marketing and Supply Services where he 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: 66
Director of Duke Energy since 2016
Retired Executive Vice President, Institute of Nuclear Power Operations
  Committees:

Audit Committee

Operations and Nuclear Oversight 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 experience with respect to environmental laws and reporting for the nuclear industry, and his regulatory expertise through his interface with the NRC on making new nuclear safety rules after the Fukushima accident in Japan. At INPO, Mr. Webster also was responsible for the development of risk management guidelines for the nuclear industry. These skills, as well as his operational and engineering expertise, are an asset to the Board and its committees as the Company focuses on operational excellence.

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

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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. 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 Chair and CEO, or whether the roles should be separate.

Lynn J. Good serves as Duke Energy's Chair, President and CEO. Our Board believes that combining the Chair 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:

serving as liaison between the Chair and the CEO and the independent directors;

leading, in conjunction with the Corporate Governance Committee, the process for the review of the 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 Chair and the CEO in setting, reviewing, and approving agendas and schedules of Board meetings;

approving meeting schedules to assure there is sufficient time for discussion of all agenda items;

reviewing and approving information sent to the Board and advising on quality, quantity, and timeliness of information;

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

developing topics for discussion during executive sessions of the Board;

assisting the Chair 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.

Our Independent Lead Director is elected by the independent members of the Board.

A complete list of the responsibilities of our Independent Lead Director is included in our Principles for Corporate Governance, a copy of which is posted on our website 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 any of our subsidiaries in light of all facts and circumstances.

The Board may determine a director to be independent if it has affirmatively determined that the director has no material relationship with Duke Energy or our subsidiaries, 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 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 nonconflicted, independent members of the Board who determine whether such relationship is material.

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INFORMATION ON THE BOARD OF DIRECTORS


Director Attendance

The Board met nine times during 2019 and has met once so far in 2020. During 2019 Board meetings, our Board held five executive sessions with independent directors only.

Directors are expected to attend at least 75% of Board meetings and the meetings of the committees upon which he or she serves. The overall attendance percentage for our directors was approximately 97% in 2019, and all directors attended more than 75% of the Board meetings and the meetings of the committees upon which he or she served in 2019. Directors are also encouraged to attend the Annual Meeting. All directors who were directors at the time of last year's Annual Meeting on May 2, 2019, attended the 2019 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. For example, over the course of 2019, we incorporated feedback to make changes to the presentation of the materials provided to our directors in advance of their meetings. We also increased Board education opportunities and provided special information sessions on topics of interest to our Board members.

This annual review process and discussion provides continuous improvement in the overall effectiveness of the directors, committees, and Board, and provides an opportunity for directors to express any concerns they may have. This process also allows the Board to identify opportunities for Board succession and skills.

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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 2019, we reached out to holders of approximately one-third of Duke Energy's outstanding common shares, and members of our Board and management met with holders of approximately 25% of Duke Energy's outstanding common shares. We engaged with every shareholder who accepted our offer to meet as well as every shareholder who requested to meet with us.

During 2019, Duke Energy engaged with shareholders on numerous topics, including sustainability, governance, and executive compensation matters. Shareholder feedback has been invaluable to us in enhancing our practices, policies, and related disclosures. During 2019, we focused our engagements with shareholders on the following topics:

management and shareholder proposals at the 2019 Annual Meeting;

our strategic vision to build a smarter, cleaner energy future for our customers;

our operational priorities, including investments in the energy grid, the retirement of coal facilities and replacement with lower-carbon alternatives such as natural gas and renewables, and expanding natural gas infrastructure;

the strength of our Board and its oversight of key areas of risk for Duke Energy such as sustainability and the environment, cybersecurity, and corporate culture;

our commitment to ESG issues;

our human capital management, diversity and inclusion matters, and workforce innovation; and

our executive compensation program.

In the fall, we also extensively discussed our goal to reduce carbon emissions from electricity generation by at least 50% from 2005 levels by 2030 and our new goal to reach net-zero emissions from electricity generation by 2050, as well as the steps Duke Energy is taking to mitigate the risks of climate change on our operations, which was well-received by shareholders. The Corporate Governance Committee reviewed the feedback from all discussions and the feedback informed the decisions discussed herein, including updates to our political expenditures disclosures, updates to the ash management section of our website, and our intention to begin using SASB standards in 2020 to help inform and align our sustainability reporting. Additional information on our discussions with shareholders regarding executive compensation matters is provided on page 36 of this proxy statement.

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INFORMATION ON THE BOARD OF DIRECTORS

Board of Directors Committees

BOARD COMMITTEE MEMBERSHIP ROSTER(1)

Name
  Audit
  Compensation
  Corporate
Governance

  Finance and Risk
Management

  Operations and Nuclear
Oversight

  Regulatory
Policy

Michael G. Browning

      C      

Annette K. Clayton

                   

Theodore F. Craver, Jr.

  C          

Robert M. Davis

                   

Daniel R. DiMicco

           

Nicholas C. Fanandakis

                   

Lynn J. Good

           

John T. Herron

                C    

William E. Kennard

        C    

E. Marie McKee

      C              

Charles W. Moorman IV

           

Marya M. Rose

                   

Carlos A. Saladrigas

           

Thomas E. Skains

                    C

William E. Webster, Jr.

           
(C)
Committee Chair

(1)
As of March 26, 2020

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

Audit Committee

Eight meetings held in 2019

    Committee Members

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Theodore F. Craver, Jr., Chair*
Annette K. Clayton*
Nicholas C. Fanandakis*
Carlos A. Saladrigas*
William E. Webster, Jr.*

*    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.

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INFORMATION ON THE BOARD OF DIRECTORS

The Audit Committee also receives, reviews, and acts on complaints and concerns regarding material accounting, internal controls, and auditing matters, including complaints regarding material misconduct on the part of our executive officers that could lead to significant reputational damage to the Company. Information regarding how to report concerns to the Audit Committee is posted on our website at duke-energy.com/our-company/investors/corporate-governance/report-concerns-to-the-audit-committee.

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 10, 11, 13, and 16 for a description of the business experience for Ms. Clayton, Mr. Craver, Mr. Fanandakis, and Mr. Webster, all of whom are nominated for election at the Annual Meeting. Mr. Saladrigas, who is retiring at the Annual Meeting, was also determined to be an "Audit Committee Financial Expert" by the Board.

Each of the members has also been determined to be "independent" within the meaning of the NYSE's listing standards, Rule 10A-3 of the 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.

Compensation Committee

Six meetings held in 2019

    Committee Members    
GRAPHIC   E. Marie McKee, Chair
Michael G. Browning
Robert M. Davis
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, and oversees human capital management as well as diversity and inclusion.

Management's role in the compensation-setting process is to recommend compensation programs and assemble information as required by the committee. When establishing the compensation program for our 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 2019, Ms. McKee, Ms. Rose, Mr. Browning, Mr. Davis, and Mr. Saladrigas served as members of the Compensation Committee and 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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INFORMATION ON THE BOARD OF DIRECTORS

Corporate Governance Committee

Six meetings held in 2019

    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

Eight meetings held in 2019

    Committee Members    
GRAPHIC   William E. Kennard, Chair
Robert M. Davis
Nicholas C. Fanandakis
John T. Herron
Thomas E. Skains
      

William E. Kennard

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.

The Finance and Risk Management Committee reviews the financial exposure of Duke Energy, as well as mitigation strategies, reviews Duke Energy's enterprise risk exposures and provides oversight for the process to assess and manage enterprise risk, and reviews the financial impacts of major projects as well as capital expenditures.

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INFORMATION ON THE BOARD OF DIRECTORS

Operations and Nuclear Oversight Committee

Four meetings held in 2019

    Committee Members    
GRAPHIC   John T. Herron, Chair
Annette K. Clayton
Charles W. Moorman IV
William E. Webster, Jr.
      

John T. Herron

The Operations and Nuclear Oversight Committee provides oversight of the nuclear safety, operational and financial performance as well as operational risks, long-term plans, and strategies of Duke Energy's nuclear power program. The oversight role is one of review, observation, and comment and in no way alters management's authority, responsibility, or accountability.

In 2019, in order for the Board to better align its structure with the oversight of certain key operational risks, such as nuclear and environmental operations, the oversight of Duke Energy's environmental, health, and safety goals and policies, including ash management, and the operational performance of Duke Energy's utilities with regard to energy supply, delivery, fuel procurement, and transportation, was moved from the Regulatory Policy and Operations Committee to the Nuclear Oversight Committee, which was subsequently renamed the Operations and Nuclear Oversight Committee.

The Operations and Nuclear Oversight Committee visits each of Duke Energy's operating nuclear power stations over a two-year period and reviews the station's nuclear safety, operational, and financial performance.

Regulatory Policy Committee

Five meetings held in 2019

    Committee Members    
GRAPHIC   Thomas E. Skains, Chair
Michael G. Browning
Theodore F. Craver, Jr.
Daniel R. DiMicco
Charles W. Moorman IV
Marya M. Rose
      

Thomas E. Skains

The Regulatory Policy Committee provides oversight of Duke Energy's regulatory and legislative strategy impacting utility operations in each jurisdiction. This includes oversight of the regulatory objectives and public policies initiatives and practices of Duke Energy's utility operations.

The Regulatory Policy Committee also has oversight of Duke Energy's principal regulatory compliance risks and related risk mitigation plans.

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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 24 of this proxy statement.

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

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

Governance Policies

All of the Board committee charters, as well as our Principles for Corporate Governance, Code of Business Ethics for Employees, and Code of Business Conduct & Ethics for Directors, are available 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. In addition, information regarding how to report actual or suspected violations of our Code of Business Ethics, either through our anonymous EthicsLine or otherwise, is provided on the Ethics section of our website at duke-energy.com/our-company/about-us/ethics in the Code of Business Ethics.

Board Composition

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

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

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

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

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

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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Director Candidate Nominations through Proxy Access. In order to nominate a director pursuant to our proxy access provision for the 2021 Annual Meeting, shareholders who meet the eligibility and other requirements set forth in Section 3.04 of the Company's By-Laws must send a written notice to the Corporate Governance Committee, c/o David B. Fountain, Senior Vice President, Legal, Chief Ethics and Compliance Officer and Corporate Secretary, Duke Energy Corporation, DEC 48H, P.O. Box 1414, Charlotte, NC 28201-1414. The written notice must be provided no earlier than October 27, 2020, and no later than November 25, 2020, and must provide the information set forth above, as well as the other detailed requirements set forth in Section 3.04 of the Company's By-Laws, which can be located on our website at duke-energy.com/our-company/investors/corporate-governance.

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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

New Director Since the 2019 Annual Meeting

Following the 2019 Annual Meeting, and in consideration of the retirement of several members of the Board with extensive expertise in finance, the Corporate Governance Committee sought to recruit an additional Board member. The committee worked extensively in 2019 on identifying a candidate with a deep background in finance and whose qualifications align with the desired qualifications discussed earlier and the needs of the Board 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 candidate with the desired experience, diversity, skills, and other qualifications, to make for a well-balanced Board. In June 2019, the committee recommended that Nicholas C. Fanandakis be appointed to the Board effective June 26, 2019. Mr. Fanandakis brings extensive management experience and expertise in finance, tax, banking, and risk management gained during his tenure as an executive officer at DuPont de Nemours, Inc. and its predecessors. For more information on Mr. Fanandakis' skills and expertise, see page 13.

Director Onboarding. Over half of our Board members have joined the Board in the last five years. In order to help those new directors quickly transition into their roles on the Board, the director onboarding process has become increasingly important. Immediately following their appointment, each new director meets individually with the senior executives responsible for our major lines of business and operations so that they may better understand the issues involved in all aspects of Duke Energy's business. In addition to discussing Duke Energy's businesses and operations, the new directors learn about our corporate governance practices and policies; the financial and technical aspects of our electric utility, natural gas, and commercial renewables businesses; the enterprise's significant risks; our long-term strategy; and Duke Energy's long-standing mission to provide clean, reliable, and affordable energy for our customers. Finally, new members to our Audit and Compensation Committees have a separate orientation to learn more about each committee's responsibilities, policies, and practices, and the matters regularly coming before the committee.

Communications and Engagements with Directors

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

Corporate Secretary
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

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 2019, the Compensation Committee considered an analysis prepared by its independent consultant, FW Cook, which summarized director compensation trends for independent directors and pay levels at the same peer companies used to evaluate the compensation of our NEOs. Following this review, and after considering the advice of FW Cook about market practices and pay levels, the Compensation Committee did not recommend any changes to our director compensation program.

For 2019, our director compensation program consisted of the following:

Type of Fee
Amount
($)

Annual Board Retainer (cash)

125,000

Annual Board Retainer (stock)

160,000

Annual Board Chair Retainer (if applicable)

100,000

Annual Lead Director Retainer (if applicable)

40,000

Annual Audit Committee Chair Retainer

25,000

Annual Compensation Committee and Operations and Nuclear Oversight Committee Chair Retainers

20,000

Annual Chair Retainer (other committees)

15,000

Additional Cash Retainer Opportunity*

10,000

Board Meeting Fees

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

Annual Board Stock Retainer for 2019. In 2019, each eligible director received the portion of his or her annual retainer that was payable in stock in the form of fully vested shares. The stock retainer was granted under the Duke Energy Corporation 2015 Long-Term Incentive Plan that was approved by our shareholders and contains an annual limit on equity awards of $400,000 to any director not employed by Duke Energy.

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

Charitable Giving Program. The Duke Energy Foundation, independent of Duke Energy, maintains the Duke Energy Foundation Matching Gifts Program under which directors and employees generally are eligible to request matching contributions of up to $5,000 per director or employee per calendar year to qualifying institutions. In addition, Duke Energy made a $2,500 donation to designated charities on behalf of the independent directors who retired from the Board of Directors during 2019, as well as a $1,000 donation to the American Red Cross in November 2019 on behalf of each of the directors not employed by Duke Energy who were actively serving at that time.

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

Stock Ownership Guidelines. Directors are subject to stock ownership guidelines, which establish a minimum level of ownership of Duke Energy common stock (or common stock equivalents). Currently, each director not employed by Duke Energy is required to own shares with a value equal to at least five times the annual Board cash retainer (i.e., an ownership level of $625,000) or retain 50% of his or her vested annual equity retainer. All directors were in compliance with the guidelines as of December 31, 2019.

DUKE ENERGY – 2020 Proxy Statement    29


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DIRECTOR COMPENSATION

The following table describes the compensation earned during 2019 by each individual, other than Ms. Good, who served as a director during 2019.

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

Stock
Awards
($)(3)

All Other
Compensation
($)(4)

Total
($)

Michael G. Browning

180,000 160,000 19,349 359,349

Annette K. Clayton(1)

122,893 210,549 1,795 335,237

Theodore F. Craver, Jr.

150,000 160,000 6,240 316,240

Robert M. Davis

135,000 160,000 1,240 296,240

Daniel R. DiMicco

125,000 160,000 6,240 291,240

Nicholas C. Fanandakis(1)

64,217 136,280 1,124 201,621

John H. Forsgren(1)

47,308 0 7,733 55,041

John T. Herron

145,000 160,000 6,240 311,240

James B. Hyler, Jr.(1)

47,308 0 2,733 50,041

William E. Kennard

134,931 160,000 6,240 301,171

E. Marie McKee

145,000 160,000 6,240 311,240

Charles W. Moorman IV

125,000 160,000 6,240 291,240

Marya M. Rose(1)

104,284 187,253 6,202 297,739

Carlos A. Saladrigas

125,000 160,000 6,240 291,240

Thomas E. Skains

154,862 160,000 6,240 321,102

William E. Webster, Jr.

135,000 160,000 6,475 301,475
(1)
Ms. Clayton, Mr. Fanandakis, and Ms. Rose were appointed to the Board on January 7, 2019, June 26, 2019, and March 1, 2019, respectively. Effective May 2, 2019, Mr. Forsgren and Mr. Hyler retired from the Board.

(2)
Mr. Browning, Ms. Clayton, Mr. Hyler, Mr. Moorman, and Mr. Saladrigas elected to defer $180,000; $122,893; $23,654; $125,000; and $125,000 respectively, of their 2019 cash compensation under the Directors' Savings Plan.

(3)
This column reflects the grant date fair value of the stock awards granted to each eligible director during 2019. The grant date fair value was determined in accordance with the accounting guidance for stock-based compensation. See Note 22 of the Consolidated Financial Statements contained in our 2019 Form 10-K for an explanation of the assumptions made in valuing these awards. Upon joining the Board in early 2019, Ms. Clayton and Ms. Rose received a prorated portion of the 2018 - 2019 annual stock retainer, amounting to 595 and 304 shares of Duke Energy common stock, respectively. In May 2019, each sitting director on the Board received an annual stock retainer in the form of 1,782 shares of Duke Energy common stock. Mr. Browning, Ms. Clayton, Mr. Craver, Mr. Kennard, Mr. Moorman, Ms. Rose, Mr. Saladrigas, and Mr. Webster elected to defer their 2019 - 2020 stock retainer of Duke Energy shares under the Directors' Savings Plan. In addition, Mr. Fanandakis received a prorated portion of the 2019 - 2020 annual stock retainer in the form of 1,549 shares of Duke Energy common stock, upon joining the Board in June 2019.

(4)
The All Other Compensation column includes the following for 2019:
Name
Personal Use
of Airplane
($)

Business Travel
Accident
Insurance
($)

Charitable
Contributions
($)

Other*
($)

Total
($)

Michael G. Browning

13,109 240 6,000 0 19,349

Annette K. Clayton

0 236 1,559 0 1,795

Theodore F. Craver, Jr.

0 240 6,000 0 6,240

Robert M. Davis

0 240 1,000 0 1,240

Daniel R. DiMicco

0 240 6,000 0 6,240

Nicholas C. Fanandakis

0 124 1,000 0 1,124

John H. Forsgren

0 80 7,500 153 7,733

John T. Herron

0 240 6,000 0 6,240

James B. Hyler, Jr.

0 80 2,500 153 2,733

William E. Kennard

0 240 6,000 0 6,240

E. Marie McKee

0 240 6,000 0 6,240

Charles W. Moorman IV

0 240 6,000 0 6,240

Marya M. Rose

0 202 6,000 0 6,202

Carlos A. Saladrigas

0 240 6,000 0 6,240

Thomas E. Skains

0 240 6,000 0 6,240

William E. Webster, Jr.

0 240 6,000 235 6,475
*
lncludes the cost of a gift for the directors who retired during 2019 and occasional personal use of tickets to athletic and cultural events.

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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 9, 2020. There were 734,028,620 shares of Duke Energy common stock outstanding as of March 9, 2020.

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

Percent
of Class

Michael G. Browning

89,028 *

Annette K. Clayton

3,800 *

Theodore F. Craver, Jr.

6,310 *

Robert M. Davis

4,559 *

Daniel R. DiMicco

52,695 *

Douglas F Esamann

66,526 *

Nicholas C. Fanandakis

1,549 *

Lynn J. Good

274,504 *

John T. Herron

19,841 *

Dhiaa M. Jamil

24,900 *

Julia S. Janson

25,995 *

William E. Kennard

12,911 *

E. Marie McKee

156 *

Charles W. Moorman IV

12,820 *

Marya M. Rose

2,142 *

Carlos A. Saladrigas

5,260 *

Thomas E. Skains

22,204 *

William E. Webster, Jr.

3,638 *

Lloyd M. Yates(2)

22,047 *

Frank H. Yoho(2)

23,139 *

Steven K. Young

81,440 *

Directors and executive officers as a group (26)

790,859 *
*
Represents less than 1%.

(1)
Includes the following number of shares with respect to which directors and executive officers have the right to acquire beneficial ownership within 60 days of March 9, 2020: Mr. Browning – 28,418; Ms. Clayton – 1,838; Mr. Craver – 572; Mr. Davis – 2,162; Mr. DiMicco – 19,478; Mr. Esamann – 0; Mr. Fanandakis – 0; Ms. Good – 0; Mr. Herron – 0; Mr. Jamil – 0; Ms. Janson – 0; Mr. Kennard – 12,911; Ms. McKee – 156; Mr. Moorman – 6,274; Ms. Rose – 1,838; Mr. Saladrigas – 2,136; Mr. Skains – 0; Mr. Webster – 2,577; Mr. Yates – 0; Mr. Yoho – 0; and Mr. Young – 0; and all directors and executive officers as a group – 78,358.

(2)
Provided as of the date of termination of employment.

Supplemental Table – Including Ownership of Units Representing Common Stock

The table below shows ownership of both Duke Energy common stock (listed in the table above as defined by SEC regulations) as well as units (not listed in the table above) related to Duke Energy common stock under the Directors' Savings Plan or the 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

121,543

Annette K. Clayton

3,800

Theodore F. Craver, Jr.

9,737

Robert M. Davis

4,559

Daniel R. DiMicco

54,186

Douglas F Esamann

66,947

Nicholas C. Fanandakis

1,549

Lynn J. Good

274,585

John T. Herron

19,841

Dhiaa M. Jamil

26,943

Julia S. Janson

26,223

William E. Kennard

12,911

E. Marie McKee

63,950

Charles W. Moorman IV

14,550

Marya M. Rose

2,142

Carlos A. Saladrigas

48,580

Thomas E. Skains

22,204

William E. Webster, Jr.

7,237

Lloyd M. Yates(1)

34,345

Frank H. Yoho(1)

23,139

Steven K. Young

81,982
(1)
Provided as of the date of termination of employment.

DUKE ENERGY – 2020 Proxy Statement    31


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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, 2019. This information is based on the most recently available reports filed with the SEC and provided to us by the company listed.

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

Percentage
The Vanguard Group(1) 61,943,594 8.49 %
100 Vanguard Blvd.
Malvern, PA 19355

   

BlackRock Inc.(2)



52,746,741




7.00

%

40 East 52nd Street
New York, NY 10022
   

State Street Corporation(3)



39,906,222




5.47

%

State Street Financial Center
One Lincoln Street
Boston, MA 02111


   
(1)
According to the Schedule 13G/A filed by The Vanguard Group, these shares are beneficially owned by The Vanguard Group, which is the parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G) to various investment companies, and has sole voting power with respect to 1,268,705 shares, 438,116 shares with shared voting power, sole dispositive power with regard to 60,515,245 shares, and 1,428,349 shares with shared dispositive power.

(2)
According to the Schedule 13G/A filed by BlackRock Inc., these shares are beneficially owned by BlackRock Inc., which is the parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G) to various investment companies, and has sole voting power with respect to 47,094,850 shares, no shares with shared voting power, sole dispositive power with regard to 52,746,741 shares, and no shares with shared dispositive power.

(3)
According to the Schedule 13G filed by State Street Corporation, these shares are beneficially owned by State Street Corporation, which is the parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G) to various investment companies, and has no shares with sole voting power, 33,890,598 shares with shared voting power, no shares with sole dispositive power, and 39,854,777 shares with shared dispositive power.

Prohibition on Hedging and Pledging

Under our Securities Trading Policy, our directors, officers, employees, and their "related persons" may not engage in any hedging or monetization transactions with respect to Duke Energy securities, including by trading in put or call options, warrants, swaps, forwards and other derivatives or similar instruments on our securities, or by selling Duke Energy securities "short." In addition, our directors, officers, employees, and their related persons are prohibited from holding Duke Energy securities in a margin account or otherwise pledging our securities in any way, including as collateral for a loan. For purposes of this policy, a "related person" of any director or employee includes the spouse, minor children, or anyone else living in the director's or employee's household, partnerships in which the director or employee is a general partner, trusts of which the director or employee is a trustee, estates of which the director or employee is an executor, and any other legal entities controlled by the director or employee.

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PROPOSAL 2:     RATIFICATION OF DELOITTE & TOUCHE LLP AS DUKE ENERGY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020

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 2020. This appointment is being submitted to shareholders for its ratification as the Audit Committee and the Board believe that the continued retention of Deloitte as our independent registered public accounting firm is in the best interests of Duke Energy and our shareholders.

Independence

Deloitte (or one of its predecessor companies) has served as our independent registered public accounting firm since 1947. 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 2019 and 2018 by the independent registered public accounting firm were approved by the Duke Energy Audit Committee pursuant to its policy on Engaging the Independent Auditor for Services. Information on Deloitte's fees for services rendered in 2019 and 2018 are listed below.

In addition to the annual review of Deloitte's independence and in association with the 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 in advance of or at the Annual Meeting.

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

Audit Fees

Type of Fees
2019
2018

Audit Fees(1)(5)

$ 13,460,000 $ 13,950,000

Audit-Related Fees(2)

588,000 386,000

Tax Fees(3)

192,000 550,000

All Other Fees(4)(5)

30,000 20,000

Total fees:

$ 14,270,000 $ 14,906,000
(1)
Audit Fees are fees billed, or expected to be billed, by Deloitte for professional services for the financial statement audits 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 2019 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.

(5)
Audit Fees and All Other Fees for 2018 have been updated from the number disclosed in the 2019 Proxy Statement to reflect actuals.

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

DUKE ENERGY – 2020 Proxy Statement    33


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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, 2019.

The information contained in this report of the Audit Committee shall not be deemed to be "soliciting material" or "filed" or "incorporated by reference" in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that Duke Energy specifically incorporates it by reference into a document filed under the Securities Act 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 22 and 33 of this 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-15I); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and, evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Deloitte is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with 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 Company'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 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 2019 Form 10-K filed with the SEC, as well as Deloitte's report included in the Company's 2019 Form 10-K related to its audit of the effectiveness of internal control over financial reporting.

The Audit Committee has discussed with Deloitte the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board. In addition, Deloitte has provided the Audit Committee with the written disclosures and the letter required by Public Company Accounting Oversight Board Ethics and Independence Rule 3526, "Communications with Audit Committees Concerning Independence" that relates to Deloitte's independence from Duke Energy and our subsidiaries and the Audit Committee has discussed with Deloitte the firm's independence.

Based on its review of the consolidated financial statements and discussions with and representations from management and Deloitte referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in Duke Energy's 2019 Form 10-K for filing with the SEC.

Audit Committee
Theodore F. Craver, Jr., Chair
Annette K. Clayton
Nicholas C. Fanandakis
Carlos A. Saladrigas
William E. Webster, Jr.

34    DUKE ENERGY – 2020 Proxy Statement


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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 2020 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 executive officers 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
Robert M. Davis
Marya M. Rose
Carlos A. Saladrigas

DUKE ENERGY – 2020 Proxy Statement    35


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COMPENSATION DISCUSSION AND ANALYSIS


Section 1: Executive Summary

The purpose of this Compensation Discussion and Analysis is to provide information about Duke Energy's compensation objectives and policies for our NEOs, who, for 2019 are:

Name
Title
Lynn J. Good Chair, President and CEO
Steven K. Young Executive Vice President and CFO
Dhiaa M. Jamil Executive Vice President and Chief Operating Officer
Julia S. Janson Executive Vice President, External Affairs and President, Carolinas Region
Douglas F Esamann Executive Vice President, Energy Solutions and President, Midwest/Florida Regions and Natural Gas Business

Our NEOs for 2019 also include two executives who left Duke Energy during 2019. Mr. Lloyd M. Yates, who most recently served as Executive Vice President, Customer and Delivery Operations and President, Carolinas Region, left on September 30, 2019, and Mr. Frank H. Yoho, who most recently served as Executive Vice President and President, Natural Gas Business, left on October 3, 2019. This Compensation Discussion and Analysis focuses on the compensation earned by our current NEOs listed in the table above, but also describes the compensation earned by Mr. Yates and Mr. Yoho.

Compensation Objectives and Principles for 2019

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 key stakeholders, including, shareholders and customers.

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

We received 91.87% favorable support from our shareholders for our executive compensation program pursuant to the "say on pay" vote at our 2019 Annual Meeting.

In setting executive compensation for 2019, we sought to balance the need to recognize the evolving nature of our business strategy with Duke Energy's focus on maximizing long-term, sustainable shareholder value and providing safe, reliable and cost-effective service to our customers.

Shareholder Engagement

We have a longstanding history of engaging with, and responding to the feedback provided by, our shareholders and value the deep relationships we have built. The feedback our shareholders have provided over time has greatly informed our compensation and governance programs as well as our environmental and social initiatives. Given its success, we continued our shareholder outreach program in 2019, reaching out to holders of approximately one-third of our outstanding shares and met with the holders of approximately 25% of our outstanding shares. Our outreach team included members of our Board, as well as management representing, among others, the Investor Relations, Sustainability, Human Resources, and Legal Departments.

The focus of these meetings was to provide an update on:

our strategic vision;

our operational priorities;

the strength of our leadership team;

our commitment to ESG issues;

our human capital management; and

our executive compensation program.

During these conversations, shareholders thanked us for the pay for performance alignment in our compensation program, as well as the clear and detailed disclosure of our executive compensation program. Shareholders also were pleased that environmental, customer satisfaction, and safety metrics continue to be incorporated into our incentive plans. No significant changes were recommended to the overall design of our compensation plans during our 2019 engagement with shareholders.

We greatly value the input shareholders provided and will continue our outreach efforts on a variety of topics, including executive compensation, as our compensation program 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

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 a long runway of opportunities ahead and remain focused on investing in infrastructure our customers value and delivering sustainable growth for our investors.

Duke Energy is committed to creating value for our shareholders while transforming the energy experience of our communities. We continuously strive to achieve this core purpose of creating shareholder value in all that we do, with a particular emphasis on the following areas:

Modernizing the energy grid;

Generating cleaner energy; and

Expanding natural gas infrastructure.

 

DUKE ENERGY – 2020 Proxy Statement    37


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COMPENSATION DISCUSSION AND ANALYSIS


2019 Business Highlights

We had an outstanding year during 2019. We met our near-term financial commitments and positioned Duke Energy for sustainable long-term growth. We continued to advance a growth strategy focused on investments to modernize our energy grid, generate cleaner energy, and expand our natural gas infrastructure – all built on a foundation of operational excellence, employee and stakeholder engagement, and customer service. Our business highlights in 2019 include the following:

Operational Excellence  

Safety remains our top priority. Our employees delivered strong safety results in 2019, consistent with our industry-leading performance levels from 2016 through 2018. As an indication of our commitment to safety, we include safety metrics in both the STI and LTI plans. We met our challenging employee target for TICR in 2019; however, the STI plan payments for our NEOs were reduced by a 5% safety penalty in 2019, as explained in more detail on page 45.

We demonstrated progress on our commitment to generate cleaner energy, achieving key milestones in our Western Carolinas modernization plan allowing for the retirement of a 376-megawatt coal-fired plant in Asheville, North Carolina in January 2020.

We announced a new, aggressive goal to reduce carbon emissions from electricity generation by at least 50% from 2005 levels by 2030 and to reach net-zero emissions from electricity generation by 2050.

We reached an agreement with the NC DEQ and community groups to permanently close all remaining ash basins in North Carolina, with the substantial majority of the ash being excavated and placed in lined landfills, completed the excavation of 12 ash basins, with nearly 28 million tons of ash moved to fully lined facilities or recycled, and completed technology upgrades at operating coal plants to take ash basins permanently out of service. We also made significant progress on the removal of water from basins across the system.

In our Commercial Renewables business, we announced over 1,500 megawatts of new wind and solar projects, and made significant progress on new solar projects in our regulated businesses in Florida and the Carolinas.

We continued to deliver outstanding customer service, improving distribution reliability by 15% and our internal customer satisfaction measure by 25%.

Financial Performance  

Our EPS results exceeded the midpoint of our 2019 earnings guidance, resulting in a 5% compounded annual growth rate in adjusted EPS since 2017, the first year after completion of the Company's portfolio transformation.

We took proactive steps to strengthen our balance sheet, paving the way for a substantial increase in our 5-year capital plan, significantly increasing the earnings potential of the Company for the benefit of our communities and shareholders.

During 2019, we also increased our dividend payment for the 13th consecutive year.

 

38    DUKE ENERGY – 2020 Proxy Statement


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COMPENSATION DISCUSSION AND ANALYSIS

Performance Metrics Aligned to Our ESG Strategy

GRAPHIC

 

DUKE ENERGY – 2020 Proxy Statement    39


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COMPENSATION DISCUSSION AND ANALYSIS


Chief Executive Officer 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 and execute on our strategic vision in the coming years, Ms. Good's leadership will continue to be critical to the organization.

After conducting its review of the market data, the Compensation Committee determined that it was appropriate to adjust Ms. Good's compensation, to be competitive with the market data, by providing a 3% increase in base salary.

Core Compensation Structure and Incentive Metrics in 2019

Our core compensation program consists of base salary, STI and LTI (performance shares and RSUs), as outlined in the table below.
      Element
Performance Metrics Aligned to Strategy
  Base Salary

Cash

     
  Annual
Incentive

Short-Term Cash Incentive

 

Adjusted EPS

O&M

Reliability

Safety (targets set on an absolute basis)

Environmental

Customer Satisfaction

Individual Objectives

 
  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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COMPENSATION DISCUSSION AND ANALYSIS

The following chart illustrates the components of the 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
Integrate key performance metrics in our incentive plans relating to environmental, safety, human capital management, and customer initiatives GRAPHIC
Provide tax gross-ups to NEOs
GRAPHIC Require significant stock ownership, including 6x base salary for our CEO and 3x base salary for other NEOs GRAPHIC Permit hedging or pledging of Duke Energy securities
GRAPHIC
Maintain a stock retention policy GRAPHIC
Provide "single trigger" vesting of stock awards upon a change in control
GRAPHIC Tie equity and cash-based incentive compensation to a clawback policy GRAPHIC Provide employment agreements to a broad group
GRAPHIC
Use an independent compensation consultant retained by and reporting directly to the Compensation Committee to advise on compensation matters GRAPHIC
Encourage excessive or inappropriate risk-taking through our compensation program
GRAPHIC Review tally sheets on an annual basis GRAPHIC Provide excessive perquisites
GRAPHIC
Consider shareholder feedback and the prior year's "say-on-pay" vote GRAPHIC
Provide dividend equivalents on unearned performance shares
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

 

DUKE ENERGY – 2020 Proxy Statement    41


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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 key stakeholders, including shareholders and customers.

Elements of Our Total Direct Compensation Program

As discussed in more detail below, during 2019, the components of TDC for our NEOs were base salary, STI compensation, and LTI compensation.

Base Salary

The salary for each NEO is based on, among other factors, 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 at least annually. In 2019, the Compensation Committee approved merit increases, effective as of March 1, 2019, of 4% for Mr. Young, Mr. Jamil, and Ms. Janson, and 3% for Ms. Good, Mr. Esamann, Mr. Yates, and Mr. Yoho, and increased Ms. Janson's salary an additional 7.3% and Mr. Esamann's salary an additional 4.7% effective October 1, 2019, upon a change in their roles and responsibilities.

Short-Term Incentive Compensation

STI opportunities are provided to our NEOs under the Duke Energy Corporation Executive Short-Term Incentive Plan to promote the achievement of annual performance objectives. Each year, the Compensation Committee establishes the target annual incentive opportunity for each NEO, which is based on a percentage of his or her base salary. Ms. Good's STI target incentive opportunity did not change during 2019. In order to further close the gap between his or her total cash compensation opportunity and market median, Mr. Young, Mr. Jamil, Ms. Janson, and Mr. Esamann each received an increase in his or her target opportunity from 80% to 90% of base salary. Each of these increases was effective as of January 1, 2019, except that the increase for Mr. Esamann became effective upon a change in his roles and responsibilities on October 1, 2019.

Name
Target STI Opportunity
(as a % of base salary)(1)

Lynn J. Good

155 %

Steven K. Young

90 %

Dhiaa M. Jamil

90 %

Julia S. Janson

90 %

Douglas F Esamann

90 %
(1)
Mr. Yates had a target STI opportunity of 80% of his base salary and Mr. Yoho had a target STI opportunity of 75% of his base salary during 2019.

As discussed in more detail on the following page, the Compensation Committee established the following objectives under the STI plan in February 2019 with the STI target opportunity allocated between corporate and individual objectives.

GRAPHIC

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COMPENSATION DISCUSSION AND ANALYSIS

In order to emphasize the importance of the EPS objective, the Compensation Committee established a performance floor or circuit-breaker providing that if an adjusted EPS performance level of at least $4.35 was not achieved, our NEOs would not receive any payout under the 2019 STI plan. The Compensation Committee also included a potential safety penalty and adder, each in the amount of 5% of a participant's entire STI payment.

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

Corporate Objectives (80% of total)

The 2019 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 EPS(3)   50 % $ 4.70   $ 5.00   $ 5.20   $ 5.10     150 %
O&M Expense     10 % $ 4.990B   $ 4.840B   $ 4.690B   $ 4.838B           101 %
Operational Excellence(4)     10 %                                 123.73 %

(a) Reliability(5)

                                           

Nuclear Optimized Reliability

    210.86   203.67   196.80   183.36   150 %  

Fossil/Hydro Optimized Reliability

          59.98     57.34     55.44     57.83     91 %      

Transmission Reliability

    0.34   0.28   0.26   0.24   150 %  

Renewables Availability

          94.0 %   95.0 %   96.25 %   94.0 %   50 %      

Natural Gas Business Outage Factor

    4   2   1   1   150 %  

Customer Delivery Reliability

          50     100     150     144.1     144 %      

(b) Safety/Environmental(6)

                             

TICR Employees

          0.50     0.38     0.35     0.38     100 %      

Reportable Environmental Events

    46   37   31   31   150 %  
Customer Satisfaction     10 %   43.9     45.9     47.9     51.2           150 %
(1)
For additional information about the calculation of the EPS and O&M expense control objectives, see page 53.

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

(3)
If an adjusted EPS performance level of at least $4.35 was not achieved (i.e., a performance floor or circuit-breaker), the NEOs would not have received a payout under the 2019 STI plan. The Compensation Committee approved an adjustment to EPS, pursuant to the terms of the 2019 STI plan, to exclude the impact of a significant unanticipated prefunding contributrion to the Duke Energy Foundation.

(4)
Each of the two primary operational excellence objectives contains an equal weighting of one-half of the aggregate weighting of 10%.

(5)
Each reliability metric contains an equal weighting of one-sixth of the aggregate weighting of the reliability objective.

(6)
Each safety/environmental metric contains an equal weighting of one-half of the aggregate weighting of the safety/environmental objective.

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COMPENSATION DISCUSSION AND ANALYSIS

    Corporate Metrics   Description/Rationale  
     

 

Financial Metrics
   
Adjusted EPS   A widely accepted, easily understood, and important metric used to evaluate the success of our performance. This metric impacts the market value of our common stock, which aligns the interests of shareholders and executives. For the 2019 STI plan, this measure is calculated based on adjusted diluted EPS.

O&M Expense

 

A measure that includes those costs necessary to support daily operations, as well as operate and maintain the operating efficiency and productive life of assets.

 

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.

Transmission Reliability

 

A measure of the balance between sustained line outage events and customer impact. The metric reflects system reliability relative to both operational and equipment performance.

Renewables Availability

 

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

Natural Gas Business Outage Factor

 

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

Customer Delivery Reliability

 

A metric designed to focus on the customer experience, being reflective for reliability and responsiveness to changes in performance. It is calculated using the following inputs: system average interruption duration index (SAIDI) (40%); customers experiencing multiple interruptions (CEMI-6) (30%); and customers experiencing long interruption duration (CELID-4) (30%).

 

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

Reportable Environmental Events

 

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

 

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

44    DUKE ENERGY – 2020 Proxy Statement


Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS

Individual Objectives (20% of total)

The 2019 individual objectives for our NEOs were divided into the following three equally-weighted areas:

Achieve growth and financial results;

Focus on operational excellence, optimize performance, and lead organization with an emphasis on safety, reliability, and sustainable efficiency to achieve event-free operations; and

Leverage Duke Energy's leadership initiativies to foster a culture of innovation and execution, and to attract diverse and highly-engaged employees.

Safety Modifier

In order to emphasize a continued focus on safety, the Compensation Committee included a safety modifier, which can be positive or negative, in the 2019 STI plan. Under this modifier, the STI plan payments for each of our NEOs would be decreased by 5% if Duke Energy experienced more than three LAIs or there was a significant operational event (including a controllable work-related Duke Energy employee fatality). In addition, the STI plan payments of our NEOs, along with other eligible employees, would be increased by 5% if (i) there were no controllable work-related fatalities of any Duke Energy employee during 2019; (ii) there were two or fewer LAls during 2019; and (iii) there were no significant operational events. The payments to the NEOs under the 2019 STI plan were reduced by 5% because of the occurrence of a work-related employee fatality.

Payouts

Based on the aggregate corporate and individual performance results, including the 5% safety penalty, each NEO's aggregate payout under the 2019 STI plan was equal to:

Name*
Target STI
Opportunity
($)

Achievement
of Corporate
Objectives
(80% Weighting)

Achievement
of Individual
Objectives
(20% Weighting)