Print

Proposal 1:
Election of Directors

The Board of Directors recommends a vote FOR each nominee.

The Board of Directors of Duke Energy currently consists of 13 members. Two directors, Robert J. Brown and Leo E. Linbeck, Jr., will be retiring at the 2005 annual meeting pursuant to Duke Energy's Board of Directors retirement policy, and one director, George Dean Johnson, Jr., has notified Duke Energy that he will be resigning at the 2005 annual meeting. These three directors have served Duke Energy for many years, and Duke Energy thanks them for their years of service. Following the 2005 annual meeting, the Board will consist of 10 members. However, as discussed below under the caption "Corporate Governance Committee and Nomination of Directors" under "Information on the Board of Directors," the Corporate Governance Committee has recently recommended to the Board of Directors the appointment of James H. Hance, Jr., the recently retired vice chairman of Bank of America Corporation, as a director upon the receipt of a required regulatory approval, which is not expected prior to the 2005 annual meeting. The Board of Directors will consider the appointment of Mr. Hance only after the regulatory approval is obtained, and thus Mr. Hance's nomination is not being submitted to the shareholders for election at the 2005 annual meeting. If appointed, Mr. Hance will stand for election by the shareholders at the 2006 annual meeting.

The Board of Directors is divided into three classes. The three-year terms of the classes are staggered so that the term of one class expires at each annual meeting. The terms of the Class II directors will expire at the 2005 annual meeting, including Roger Agnelli, who was appointed as a Class II director by the Board of Directors on August 24, 2004, and effective November 19, 2004, and Dennis R. Hendrix, who was appointed as a Class II director by the Board of Directors on December 16, 2004. Mr. Agnelli and Mr. Hendrix were recommended to the Corporate Governance Committee by Duke Energy's Chief Executive Officer and by nonmanagement directors, respectively.

The Board of Directors has nominated the following Class II directors for election:

Roger Agnelli, G. Alex Bernhardt, Sr., and Dennis R. Hendrix, as Class II directors; and A. Max Lennon as a Class III director.

The terms of the Class II directors elected at the 2005 annual meeting will expire in 2008. The term of the Class III director elected at the 2005 annual meeting will expire in 2006.

If any director is unable to stand for election, the Board of Directors 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.