Option Grants in 2003 - 2004 Proxy Statement - Duke Energy
Duke Energy

Option Grants in 2003

This table shows options granted to the Named Executive Officers during 2003, along with the present value of the options on the date they were granted, calculated as described in the footnote to the table. The grant to Paul M. Anderson was awarded on November 17, 2003, in connection with his election as Chairman of the Board and Chief Executive Officer.

Option/SAR Grants in Last Fiscal Year

Name Number of Shares Underlying Options/SARS Granted1,2 (#) Individual Grants Expiration Date Grant Date Value
% of Total Options/SARS Granted to Employees Exercise or Base Price ($/Sh) Grant Date Present Value3 ($)
Paul M. Anderson 1,100,000 13.3% 17.45 11/17/2013 5,500,000
Richard B. Priory 490,800 6.0% 13.77 2/25/2013 2,144,796
Fred J. Fowler 201,000 2.4% 13.77 2/25/2013 878,370
Robert P. Brace 127,600 1.5% 13.77 2/25/2013 557,612
Richard J. Osborne 129,600 1.6% 13.77 2/25/2013 566,352
Richard W. Blackburn 110,000 1.3% 13.77 2/25/2013 480,700
Ruth G. Shaw 110,000 1.3% 13.77 2/25/2013 480,700

1 Duke Energy has not granted any stock appreciation rights (SARs) to the Named Executive Officers or any other persons.

2 Vested options in Mr. Anderson's award are not exercisable until January 1, 2007, unless his employment with Duke Energy terminates earlier.

3 Based on the Black-Scholes option valuation model. The following table lists key input variables used in valuing the options:
 
Input Variable 1,100,000 Share Option
Grant to Paul M. Anderson		 All Other Option Grants
Risk-free Interest Rate 4.54% 4.42%
Dividend Yield 4.03% 3.38%
Stock Price Volatility 37.37% 37.71%
Option Term 10 years 10 years

With respect to Mr. Anderson's 1,100,000 option grant, the volatility variable reflected historical monthly stock price trading data with respect to Duke Energy Common Stock from October 31, 2000, through October 31, 2003. With respect to all other option grants reflected in the table, the volatility variable reflected historical monthly stock price trading data with respect to Duke Energy Common Stock from November 30, 1999, through November 30, 2002. An adjustment was made with respect to each valuation for risk of forfeiture during any applicable vesting period. The actual value, if any, that a grantee may realize will depend on the excess of the stock price over the exercise price on the date the option is exercised, so that there is no assurance the value realized will be at or near the value estimated based upon the Black-Scholes model.