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, either directly or as a shareholder, director, officer or
employee of an organization that has a relationship with Duke Energy. 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 between annual meetings, at such time.
The Board of Directors has determined that all but one of its nonemployee
directors are 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.
As part of this determination, the Board of Directors adopted the following
categorical standards for relationships that are deemed not to impair a director's
independence:
| Relationship |
Requirements for Immateriality of Relationship |
| Personal Relationships |
| The director or immediate family member
resides within a service area of, and is provided with utility service
by, Duke Energy or its subsidiaries. |
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. |
| The director or immediate family member
holds securities issued publicly by Duke Energy or its subsidiaries. |
The director or immediate family
member can receive no extra benefit not shared on a pro rata basis. |
| 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. |
- 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.
|
| Business Relationships |
| 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. |
- 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 (or current)
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 is outstanding between Duke
Energy or its subsidiaries and a company associated* with the director
or immediate family member. |
- Indebtedness amounts must not exceed 5% of the associated company's
assets in any of its last three (or current) 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 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. |
The business must be done in
the ordinary course of Duke Energy's or its subsidiary's business and
on arm's-length terms. |
| 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. |
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. |
| 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. |
None |
| Charitable Relationships |
| Charitable donations or pledges are made
by Duke Energy or its subsidiaries to a charity associated* with the
director or immediate family member. |
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 (or the current or any
future) fiscal years. |
| 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. |
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. |
| Payments for property or services are made between Duke Energy or its
subsidiaries and a charity associated* with the director or immediate family
member. |
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. |
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.
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