This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider. You should read the entire proxy statement carefully before voting. Page references (“XX”) are supplied to help you find further information in this proxy statement.
2015 Business Highlights
During 2015, Duke Energy turned the corner to the future – we have (i) resolved or made strong headway on operational challenges, (ii) realigned our portfolio to focus on growth in our core businesses, and (iii) charted The Road Ahead, a map for long‑term success that will benefit our customers, communities and investors for the next decade and well beyond. All the while, we remain focused on our commitment to power the lives of our customers on a 24/7 basis.
- First, safety, which is our top priority. Following a challenging 2014, we reduced OSHA‑reportable employee safety incidents by 20 percent and our total incident case rate by 30 percent over 2014, making Duke Energy a top safety performer in the industry.
- We also reduced reportable environmental events by 50 percent and continued to advance our efforts to permanently close our coal ash basins in ways that protect people and the environment.
- We are completing our multi‑year transition to a higher quality, more stable business mix by focusing on our core regulated and highly‑contracted businesses. To that end, we have made excellent progress to expand our natural gas platform and capabilities by agreeing to acquire Piedmont Natural Gas Company, Inc. We also completed the sale of our merchant Midwest Commercial Generation business, reducing our exposure to volatile power markets. Most recently, in early 2016, we announced our intent to exit the Latin American generation business, which has experienced returns that are inconsistent with our commitment to provide predictable, stable earnings and cash flows to our investors.
- We are making significant investments to improve the customer experience and to continue making our power generation portfolio less carbon‑intensive. We are investing in a more flexible, resilient electric grid to make power outages increasingly rare and service restoration faster. We are also shifting our generation mix to more natural gas and renewable energy, complementing our carbon‑free nuclear fleet.
- Our total shareholder return (“TSR”) was negative 10.8 percent in 2015, following a very strong year in 2014 when the total return was 26.4 percent. The total shareholder return of the Philadelphia Utility Index (UTY) was negative 6.3 percent in 2015, compared to 28.9 percent in 2014.
- During 2015, we increased the level of growth in the dividend payment to our shareholders to approximately four percent, reflecting our confidence in the strength of our core business. This is the eighth consecutive year of annual dividend growth. It also marked the 89th consecutive year that Duke Energy has paid a quarterly cash dividend on its common stock, a record we expect to continue for shareholders, who rely on a steady and growing dividend.
Corporate Governance Highlights
|✔||Ability for shareholders to nominate directors through proxy access||2015
|✔||Independent Lead Director with clearly defined role and responsibilities|
|✔||Majority voting for directors, with mandatory resignation policy and plurality carve out for contested elections|
|✔||Robust shareholder engagement program|
|✔||Annual Board, committee and director assessments|
|✔||Ability for shareholders to take action by less than unanimous written consent|
|✔||Ability for shareholders to call a special shareholder meeting|
|✔||Annual election of directors|
|✔||Independent Board committees|
|✔||No poison pill|
As part of Duke Energy’s commitment to corporate governance, we have instituted an engagement program to discuss and obtain feedback from our shareholders on our corporate governance and executive compensation practices. During the fall of 2015, the Corporation reached out to holders of approximately 33 percent of our shares and met with the holders of approximately 25 percent of our shares to discuss, among other issues, board structure, director refreshment and executive compensation, as well as the shareholder proposals that were voted on at the 2015 Annual Meeting of Shareholders (the “2015 Annual Meeting”), including a shareholder proposal that requested the Corporation allow shareholders the right to nominate directors on the Corporation’s proxy materials, known as “proxy access.” A more complete discussion of our corporate governance engagement program and proxy access is included on page 21.
Duke Energy Board of Directors
From left to right: Jim Hance, Jr. (Retiring), Ann Maynard Gray, Jim Hyler, Jr., Jim Rhodes (Retiring), Dan DiMicco, John Forsgren, Carlos Saladrigas, Lynn Good, John Herron, Marie McKee, Harris DeLoach, Jr. (Retiring), William Kennard, Richard Meserve (Retiring), Michael Browning, Charles W. Moorman and Michael Angelakis
Executive Compensation Highlights
Named Executive Officers (“NEOs”)
Our named executive officers for 2015 also include two executives who terminated employment in June 2015: Mr. Marc E. Manly, who previously served as Executive Vice President and President, Commercial Portfolio, and Mr. B. Keith Trent, who previously served as Executive Vice President, Grid Solutions and President, Midwest and Florida Regions.
Principles and Objectives
Our executive compensation program is designed to:
- Link pay to performance
- Attract and retain talented executive officers and key employees
- Emphasize performance‑based compensation to motivate executives and key employees
- Reward individual performance
- Encourage long‑term commitment to Duke Energy and align the interests of executives with shareholders
We meet these objectives through the appropriate mix of compensation, including:
- Base salary
- Short‑term incentives
- Long‑term incentives
Key Executive Compensation Features
|✔||Significant stock ownership requirements|
|✔||Stock holding policy|
|✔||Incentive compensation tied to a clawback policy|
|✔||Consistent level of severance|
|✔||Shareholder approval policy for severance agreements|
|✔||Equity award granting policy|
|✔||Independent compensation consultant|
|✔||Annual tally sheets for named executive officers|
|✔||Review and consideration of prior year’s “say on pay” vote|
|✔||No tax gross ups|
|✔||No hedging or pledging of Duke Energy securities|
|✔||No “single trigger” severance upon a change in control|
|✔||No employment agreements except for our Chief Executive Officer|
|✔||Do not encourage excessive or inappropriate risk taking|
|✔||No excessive perquisites|
2015 Executive Total Compensation Mix