Independence of Directors
The Board of Directors may determine a director to be independent if the Board has affirmatively determined that the director has no material relationship with Duke Energy or its subsidiaries (references in this proxy statement to Duke Energy’s subsidiaries shall mean its consolidated subsidiaries), either directly or as a shareholder, director, officer or employee of an organization that has a relationship with Duke Energy or its subsidiaries. Independence determinations will be made on an annual basis at the time the Board of Directors approves director nominees for inclusion in the annual proxy statement and, if a director joins the Board in the interim, at such time.The Board of Directors has determined that none of the directors, other than Mr. Rogers, has a material relationship with Duke Energy or its subsidiaries, and are, therefore, independent under the listing standards of the New York Stock Exchange. In reaching this conclusion, the Board of Directors considered all transactions and relationships between each director or any member of his or her immediate family and Duke Energy and its subsidiaries.
To assist in this determination, the Board of Directors adopted the following categorical standards for relationships that are deemed not to impair a director’s independence:
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Relationship |
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Requirements for Immateriality of Relationship |
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Personal Relationships | ||
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The director or immediate family member resides within a service area of, and is provided with utility service by, Duke Energy or its subsidiaries. The director or immediate family member holds securities issued publicly by Duke Energy or its subsidiaries. The director or immediate family member receives pension or other forms of deferred compensation for prior service, or other compensation unrelated to director or meeting fees, from Duke Energy or its subsidiaries. |
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Utility services must be provided in the ordinary course of the provider’s business and at rates or charges fixed in conformity with law or governmental authority, or if the service is unregulated, on arm’s-length terms. The director or immediate family member can receive no extra benefit not shared on a pro rata basis. The compensation cannot be contingent in any way on continued service, and The director has not been employed by Duke Energy or any company that was a subsidiary of Duke Energy at the time of such employment for at least three years, or the immediate family member has not been an executive officer of Duke Energy for at least three years and any such compensation that is not pension or other forms of deferred compensation for prior service cannot exceed $10,000 per year. |
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Business Relationships | ||
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Payments for property or services are made between Duke Energy or its subsidiaries and a company associated* with the director or immediate family member who is an executive officer of the associated company. Indebtedness is outstanding between Duke Energy or its subsidiaries and a company associated* with the director or immediate family member. The director or immediate family member is a nonmanagement director of a company that does business with Duke Energy or its subsidiaries or in which Duke Energy or its subsidiaries have an equity interest. An immediate family member is an employee (other than an executive officer) of a company that does business with Duke Energy or its subsidiaries or in which Duke Energy or its subsidiaries have an equity interest. The director and his or her immediate family members together own 5% or less of a company that does business with Duke Energy or its subsidiaries or in which Duke Energy or its subsidiaries have an equity interest. |
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Payment amounts must not exceed the greater of $1,000,000 or 2% of the associated company’s revenues in any of its last three fiscal years, and Relationship must be in the ordinary course of Duke Energy’s or its subsidiary’s business and on arm’s-length terms. Indebtedness amounts must not exceed 5% of the associated company’s assets in any of its last three fiscal years, and Relationship must be in the ordinary course of Duke Energy’s or its subsidiary’s business and on arm’s-length terms. The business must be done in the ordinary course of Duke Energy’s or its subsidiary’s business and on arm’s-length terms. If the immediate family member lives in the director’s home, the business must be done in the ordinary course of Duke Energy’s or its subsidiary’s business and on arm’s-length terms. None |
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Charitable Relationships | ||
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Charitable donations or pledges are made by Duke Energy or its subsidiaries to a charity associated* with the director or immediate family member. A charity associated* with the director or immediate family member is located within a service area of, and is provided with utility service by, Duke Energy or its subsidiaries. Payments for property or services are made between Duke Energy or its subsidiaries and a charity associated* with the director or immediate family member. |
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Donations and pledges must not result in payments exceeding the greater of $100,000 and 2% of the charity’s revenues in any of its last three fiscal years. Utility service must be provided in the ordinary course of the provider’s business and at rates or charges fixed in conformity with law or governmental authority, or if the service is unregulated, on arm’s-length terms. Relationships must be in the ordinary course of Duke Energy’s or its subsidiary’s business and on arm’s-length terms or subject to competitive bidding.
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* An “associated” company or charity is one (a) for which the director or immediate family member is an officer, director, advisory board member, trustee, general partner, principal or employee, or (b) of which the director and immediate family members together own more than 5%.
For purposes of these standards, immediate family members include a director’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers-and sisters-in-law, and anyone (other than domestic employees) who shares the director’s home. For purposes of the contribution relationship described under “Charitable Relationships” above, payments exclude amounts contributed or pledged to match employee contributions or pledges.
