The Board of Directors has the six standing committees described below:
- Audit Committee Overview
The Audit Committee considers risks and matters related to financial reporting, internal controls, compliance and legal matters. As part of those responsibilities, the Audit Committee selects and retains an independent registered public accounting firm to conduct audits of the accounts of Duke Energy and its subsidiaries. It also reviews with the independent registered public accounting firm the scope and results of their audits, as well as the accounting procedures, internal controls, and accounting and financial reporting policies and practices of Duke Energy and its subsidiaries, and makes reports and recommendations to the Board of Directors as it deems appropriate. The Audit Committee is responsible for approving all audit and permissible non audit services provided to Duke Energy by its independent registered public accounting firm. Pursuant to this responsibility, the Audit Committee adopted the policy on Engaging the Independent Auditor for Services, which provides that the Audit Committee will establish detailed services and related fee levels that may be provided by the independent registered public accounting firm and will review such policy annually. See page 34 for additional information on the Audit Committee’s pre approval policy.
The Board of Directors has determined that Mr. Angelakis, Mr. Hance and Mr. Saladrigas are “audit committee financial experts” as such term is defined in Item 407(d)(5)(ii) of Regulation S K. See pages 13 and 18 for a description of Mr. Angelakis’ and Mr. Saladrigas’ business experience. Mr. Hance will be retiring at the 2016 Annual Meeting of Shareholders.
This committee met nine times in 2015. Currently, the Audit Committee is comprised of Carlos A. Saladrigas (Chairperson), Michael J. Angelakis, Michael G. Browning, James H. Hance, Jr., James B. Hyler, Jr. and E. Marie McKee. Each of the members has been determined to be “independent” within the meaning of the NYSE’s listing standards, Rule 10A 3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Corporation’s Standards for Assessing Director Independence. In addition, each of the members meets the financial literacy requirements for audit committee membership under the NYSE’s rules and the rules and regulations of the SEC.
- Compensation Committee Overview
The Compensation Committee establishes and reviews the overall compensation philosophy of the Corporation, confirms that our policies and philosophy do not encourage excess or inappropriate risk taking by our employees, reviews and approves the salaries and other compensation of certain employees, including all executive officers of Duke Energy, reviews and approves compensatory agreements with executive officers, approves equity grants and reviews the effectiveness of, and approves changes to, compensation programs. The Compensation Committee also makes recommendations to the Board of Directors on compensation for independent directors.
Management’s role in the compensation setting process is to recommend compensation programs and assemble information as required by the committee. When establishing the compensation program for our named executive officers, the committee considers input and recommendations from management, including Ms. Good, who attends the Compensation Committee meetings.
The Compensation Committee has engaged Frederic W. Cook & Company, Inc. 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 Committee and is not permitted to provide any services to Duke Energy other than at the direction of the Compensation Committee.
This committee met eight times in 2015. Currently, the Compensation Committee members are E. Marie McKee (Chairperson), Ann Maynard Gray, James H. Hance, Jr. and Carlos A. Saladrigas. Each of the members of the Compensation Committee has been determined to be “independent” within the meaning of the NYSE’s listing standards, Rule 10C 1(b) of the Exchange Act, and the Corporation’s Standards for Assessing Director Independence; to be “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”); and, to be “non employee directors” within the meaning of Rule 16b 3 of the Exchange Act.
- Corporate Governance Committee Overview
The Corporate Governance Committee considers risks and matters related to corporate governance and formulates and periodically revises governance principles. It recommends the size and composition of the Board of Directors and its committees and recommends potential successors to the Chief Executive Officer. The Corporate Governance Committee also recommends to the Board of Directors the slate of nominees, including any nominees recommended by shareholders, for director for each year’s annual meeting of shareholders and, when vacancies occur, names of individuals who would make suitable directors of Duke Energy. This committee may engage an external search firm or a third party to identify or evaluate or to assist in identifying or evaluating a potential nominee. The Committee also performs an annual evaluation of the performance of the Chief Executive Officer with input from the full Board of Directors. The Corporate Governance Committee also assists the Board in its annual determination of director independence and review of any related person transactions as well as its annual assessment of the Board of Directors and each of its committees. The Committee is also responsible for the oversight of the Corporation’s policies and practices with respect to its political activities and community affairs.
This committee met seven times in 2015. Currently, the Corporate Governance Committee members are Ann Maynard Gray (Chairperson), Michael G. Browning, Harris E. DeLoach, Jr., Daniel R. DiMicco, William E. Kennard and E. Marie McKee. Each of the members of the Corporate Governance Committee has been determined to be “independent” within the meaning of the NYSE’s listing standards and the Corporation’s Standards for Assessing Director Independence.
- Finance and Risk Management Committee Overview
The Finance and Risk Management Committee is primarily responsible for the oversight of financial risk and enterprise risk at the Corporation. This oversight function includes reviews of Duke Energy’s financial and fiscal affairs and recommendations to the Board of Directors regarding dividends, financing and fiscal policies, and significant transactions. It reviews the financial exposure of Duke Energy, as well as mitigation strategies, reviews Duke Energy’s enterprise risk exposures and provides oversight for the process to assess and manage enterprise risk, and reviews the financial impacts of major projects as well as capital expenditures.
This committee met five times in 2015. Currently, the Finance and Risk Management Committee is comprised of James H. Hance, Jr. (Chairperson), Michael J. Angelakis, Michael G. Browning, John H. Forsgren, Ann Maynard Gray, James B. Hyler, Jr. and William E. Kennard.
- Nuclear Oversight Committee Overview
The Nuclear Oversight Committee provides oversight of the nuclear safety, operational and financial performance as well as operational risks, long term plans and strategies of Duke Energy’s nuclear power program. The oversight role is one of review, observation and comment and in no way alters management’s authority, responsibility or accountability. At least annually, the Nuclear Oversight Committee visits each of Duke Energy’s operating nuclear power stations and reviews the station’s nuclear safety, operational and financial performance.
This committee met six times in 2015. The Nuclear Oversight Committee members are James T. Rhodes (Chairperson), Harris E. DeLoach, Jr., Daniel R. DiMicco, John H. Forsgren, John T. Herron, Richard A. Meserve and Charles W. Moorman IV.
- Regulatory Policy and Operations Committee
The Regulatory Policy and Operations Committee provides oversight of Duke Energy’s regulatory and legislative strategy impacting utility operations in each jurisdiction. The Committee also has oversight over environmental, health and safety matters and the risks related to such matters, including our ash management strategy, as well as the public policies and practices of Duke Energy. This includes reviewing Duke Energy’s regulatory approach to strategic initiatives, the operational performance of Duke Energy’s utilities with regard to energy supply, delivery, fuel procurement and transportation and making visits to Duke Energy’s generation facilities. The Regulatory Policy and Operations Committee is also responsible for the oversight of Duke Energy’s environmental, health and safety goals and policies.
This committee met eight times in 2015. Currently, the Regulatory Policy and Operations Committee members are James B. Hyler, Jr. (Chairperson), John T. Herron, William E. Kennard, Richard A. Meserve, James T. Rhodes and Carlos A. Saladrigas.
Each committee operates under a written charter adopted by the Board of Directors.