EXHIBIT 10.5
PERFORMANCE AWARD
AGREEMENT
This Performance Award
Agreement (the “Agreement”) has been made as of
February 19, 2009 (the “Date of Grant”)
between Duke Energy Corporation , a Delaware corporation,
with its principal offices in Charlotte, North Carolina (the
“Corporation”), and
(the “Grantee”).
RECITALS
Under the Duke Energy Corporation
2006 Long-Term Incentive Plan, as it may, from time to time, be
further amended (the “Plan”), the Compensation
Committee of the Board of Directors of the Corporation (the
“Committee”), or its delegatee, has determined the form
of this Agreement and selected the Grantee, as an Employee, to
receive the award evidenced by this Agreement (the
“Award”) and the Performance Shares and tandem Dividend
Equivalents that are subject hereto. The applicable
provisions of the Plan are incorporated in this Agreement by
reference, including the definitions of terms contained in the Plan
(unless such terms are otherwise defined herein).
AWARD
In accordance with the Plan, the
Corporation has made this Award, effective as of the Date of Grant
and upon the following terms and conditions:
Section 1.
Number and Nature of
Performance Shares and Tandem Dividend Equivalents
. At target performance,
the number of Performance Shares and the number of tandem Dividend
Equivalents subject to this Award are each
;
at maximum performance, the number of Performance Shares and the
number of tandem Dividend Equivalents subject to this award are
equal to 150% of the number of Performance Shares and tandem
Dividend Equivalents at target performance, respectively. The
number of such Performance Shares that may become vested upon
determination of achievement of each Performance Goal at maximum,
as provided in Section 2(a), is 150% of the number that
becomes vested at target performance. Each Performance Share,
upon becoming vested, represents a right to receive payment in the
form of one (1) share of Common Stock. Each tandem
Dividend Equivalent, after its tandem Performance Share vests,
represents a right to receive a cash payment equivalent in amount
to the aggregate cash dividends declared and paid on one
(1) share of Common Stock for the period beginning on the Date
of Grant and ending on the date the vested, tandem Performance
Share is paid or deferred and before the Dividend Equivalent
expires. Performance Shares and Dividend Equivalents are used
solely as units of measurement, and are not shares of Common Stock
and the Grantee is not, and has no rights as, a shareholder of the
Corporation by virtue of this Award.
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Section 2.
Vesting of Performance
Shares .
(a) Performance Goals
. Except as otherwise provided in this Section 2, the
Performance Shares shall vest only if and to the extent the
Committee, or its delegatee, determines that the Performance Goals
(as defined below) have been met (provided that such determination
shall be made not later than the first March 15 following the
end of the Performance Period, as defined below). To the
extent Performance Goals are not met, the Performance Shares that
do not so become vested shall be forfeited.
(i)
The following Performance Goal shall
apply with respect to one-half of the Performance Shares and
Dividend Equivalents covered by this Agreement. Provided
Grantee’s continuous employment by the Corporation, including
Subsidiaries, has not terminated, or as otherwise provided in
Sections 2(b) or 2(c), up to one-half of the Performance
Shares subject to this Award shall become vested upon the written
determination by the Committee, or its delegatee, in its sole
discretion, of the extent to which the Corporation achieves the
“TSR Performance Goal,” which is the
Corporation’s Total Shareholder Return (“TSR”)
percentile ranking among the companies that are in the Philadelphia
Utility Index as of the end of the Performance Period, with higher
percentile ranking for more positive/less negative TSR, for the
period beginning January 1, 2009 and ending December 31,
2011 (“Performance Period”), in accordance with the
applicable vesting percentage specified for such percentile ranking
in the following schedule:
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Percentile
Ranking
|
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Vesting
Percentage
(Applicable to
Target # of
Shares)
|
|
Vesting
Percentage
(Applicable to
Maximum # of
Shares)
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* When such determination is of a percentile
ranking between those specified, the Committee, or its delegatee,
in its sole discretion, shall interpolate to determine the
applicable vesting percentage.
Such Performance Shares that do not
so become vested shall be forfeited. For purposes of this
Agreement, TSR means the change in fair market value over a
specified period of time, expressed as a percentage,
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of an initial investment in
specified common stock, with dividends reinvested, all as
determined utilizing such methodology as the Committee, or its
delegatee, shall approve, provided, however, that the Committee, or
its delegatee, shall have the discretion to make appropriate and
equitable adjustments to the TSR of any company (including the
Corporation) whose shares trade ex-dividend as of December 31,
2011, provided, however, that no such adjustment shall be permitted
if it would result in the loss of the otherwise available exemption
of the Award under Section 162(m) of the Code. In
the event that a company becomes a member of the Philadelphia
Utility Index following January 1, 2009, such company shall
not be taken into account for purposes of this
Agreement.
(ii)
The following Performance Goal shall
apply with respect to one-half of the Performance Shares and
Dividend Equivalents covered by this Agreement. Provided
Grantee’s continuous employment by the Corporation, including
Subsidiaries, has not terminated, or as otherwise provided in
Sections 2(b) or 2(c), up to one-half of the Performance
Shares subject to this Award shall become vested upon the written
determination by the Committee, or its delegatee, in its sole
discretion, of the extent to which the Corporation achieves the
“CAGR Performance Goal,” which is based on the
Corporation’s compounded annual growth rate
(“CAGR”) with respect to its adjusted diluted earnings
per share (“EPS”), as calculated in accordance with
Exhibit A , for the Performance Period, in accordance
with the applicable vesting percentage specified for CAGR in the
following schedule:
|
CAGR
|
|
Vesting
Percentage
(Applicable to
Target # of Shares)
|
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Vesting
Percentage
(Applicable to
Maximum # of
Shares)
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* When such determination is at a level between
those specified, the Committee, or its delegatee, in its sole
discretion, shall interpolate to determine the applicable vesting
percentage.
Such Performance Shares that do not
so become vested shall be forfeited.
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(b) In the event that, prior to
the date that the determination of the achievement of each
Performance Goal is made, the Grantee’s continuous employment
by the Corporation, including Subsidiaries, terminates, the
Performance Shares subject to this Award are thereupon forfeited,
except that if such employment terminates (i) at a time when
Grantee has attained age 55 and has at least five years of vesting
service under the Duke Energy Retirement Cash Balance Plan or
Cinergy Corp. Non-Union Employees’ Pension Plan, or under
another retirement plan of the Corporation or a Subsidiary which
plan the Committee, or its delegatee, in its sole discretion,
determines to be the functional equivalent of the Duke Energy
Retirement Cash Balance Plan or the Cinergy Corp. Non-Union
Employees’ Pension Plan, unless the Committee, or its
delegatee, in its sole discretion, determines that Grantee is in
violation of any obligation identified in Section 3,
(ii) as the result of the Grantee’s death, (iii) as
the result of the Grantee’s permanent and total disability
within the meaning of Code Section 22(e)(3), (iv) as the
result of the termination of such employment by the Corporation, or
employing Subsidiary, other than for cause, as determined by the
Corporation or employing Subsidiary, in its sole discretion, or
(v) as the direct and sole result, as determined by the
Corporation, or employing Subsidiary, in its sole discretion, of
the divestiture of assets, a business, or a company, by the
Corporation or a Subsidiary, the Performance Shares subject to this
Award shall vest upon such determination of the achievement of each
Performance Goal, at such vesting percentage determined by the
Committee, or its delegatee, in its sole discretion, by prorating
on the basis of the portion of the Performance Period that such
employment continued while Grantee was entitled to payment of
salary (unless such termination occurs after the end of the
Performance Period, in which event the number of Performance Shares
earned, if any, shall not be prorated).
In the event that Grantee is on an
employer-approved, personal leave of absence on the date that the
determination of the achievement of each Performance Goal is made,
then, unless prohibited by law, vesting shall be postponed and
shall not occur unless and until Grantee returns to active service
in accordance with the terms of the approved personal leave of
absence and before November 1 of the calendar year immediately
following the calendar year in which the Performance Period
ends. In the event Grantee does not return to active service
from such leave of absence prior to November 1 of the calendar
year immediately following the calendar year in which the
Performance Period ends, any Performance Shares covered by this
Award that were not vested as of the commencement of such leave
shall be immediately forfeited (as if Grantee terminated employment
for purposes of Section 4 hereof). Further, in the
event that such determination is made and during any portion of the
Performance Period the Grantee was on employer-approved, personal
leave of absence, the applicable vesting percentage shall be
determined by the Committee, or its delegatee, in its sole
discretion, to reflect only that portion of the Performance Period
during which such employment continued while the Grantee was
entitled to payment of salary.
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(c) In the event that a Change
in Control occurs before the Performance Period has ended and
(i) before the Grantee’s continuous employment by the
Corporation, including Subsidiaries, terminates, or (ii) after
such employment terminates during the Performance Period,
(A) at a time when Grantee is considered
“retired”, unless the Corporation, in its sole
discretion, determines that Grantee is in violation of any
obligation identified in Section 3, or (B) as the result
of an event listed in items (ii) — (v) of the first
sentence of Section 2(b), the Perfo
