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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.            )

 

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March 26, 2015

Dear Fellow Shareholders:

I am pleased to invite you to our Annual Meeting of Shareholders to be held on Thursday, May 7, 2015, at 10:00 a.m. in the O.J. Miller Auditorium located at 526 South Church Street in Charlotte, North Carolina.

As explained in the enclosed proxy statement, at this year's meeting you will be asked to vote (i) for the election of directors, (ii) for the ratification of the selection of the independent public accountant, (iii) for the approval, on an advisory basis, of Duke Energy Corporation's named executive officer compensation, (iv) for the approval of the Duke Energy Corporation 2015 Long-Term Incentive Plan, (v) against three shareholder proposals, and (vi) to consider any other business that may properly come before the meeting.

This year's proxy statement details the many steps we have undertaken, beginning in 2014, to expand our strong corporate governance practices. We have conducted a significant outreach campaign this year to speak directly with a number of our shareholders about various matters, including executive compensation and board oversight of critical issues facing Duke Energy. Consistent with shareholder feedback, we have implemented several new shareholder friendly changes to our governance practices. These steps are in addition to the many exciting developments and opportunities Duke Energy has been involved in, which will be detailed in the 2014 Annual Report.

Your vote is important – exercise your shareholder right and vote your shares now.

Please turn to page 3 for the instructions on how you can vote your shares over the Internet, by telephone or by mail. It is important that all Duke Energy shareholders, regardless of the number of shares owned, participate in the affairs of the Company. At Duke Energy's 2014 Annual Meeting of Shareholders, approximately 84 percent of the Company's outstanding shares were represented in person or by proxy.

Thank you for your continued investment in Duke Energy.

Sincerely,

Lynn J. Good
Vice Chairman, President and Chief Executive Officer

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PARTICIPATE IN THE FUTURE OF DUKE ENERGY; CAST YOUR VOTE NOW

It is very important that you vote to play a part in the future of Duke Energy. New York Stock Exchange ("NYSE") rules state that if your shares are held through a broker, bank or other nominee, they cannot vote on your behalf on nondiscretionary matters.

Eligibility to Vote (page 79)

You can vote if you were a shareholder of record at the close of business on March 9, 2015.

Vote Now

Even if you plan to attend this year's meeting, it is a good idea to vote your shares now, before the meeting, in the event your plans change. Whether you vote by Internet, by telephone or by mail, please have your proxy card or voting instruction form in hand and follow the instructions.

Visit Our Website

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Proxy Summary

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.

Voting Matters (page 10)

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2014 Business Highlights

2014 was a year of challenges, but also a year that showed the great resolve and determination of Duke Energy as the Company continued to advance its strategy and deliver significant benefits to its customers, investors, communities and employees:

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First, safety, which is our top priority. We did not meet our objective for no employee and contractor fatalities in 2014 as we tragically lost four teammates during the year. Our goal is for each of our employees and contractors to return safely to their families each day. Our performance in this area during 2014 was not acceptable and we are refocusing our efforts in 2015.

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The efficient, reliable and safe operational performance of our fleet and grid is critical to the service we provide to our customers. Our nuclear fleet of 10,500 megawatts achieved a capacity factor of approximately 93%, the 16^th consecutive year above 90%. Additionally, our system met record customer demands during the 2014 polar vortex, and we quickly and safely responded to over 1.7 million customer outages following two major ice storms in February and March. We also continued to achieve significant savings from our 2012 merger with Progress Energy. We are well on track to achieve the $687 million customer fuel and joint dispatch savings commitment we made to Duke Energy's customers in the Carolinas over the first five years of the merger. The efficiency and diversity of our system helps us maintain customer rates below national averages in each of our jurisdictions.

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We made significant progress in advancing our coal ash management practices as we responded to the early February 2014 coal ash accident at our Dan River site. We have begun to accelerate plans to close ash basins across our system. We have formed a new internal organization to manage all coal combustion products and an advisory board of independent experts in engineering, waste management, environmental science and risk analysis.

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We advanced $8 billion in growth initiatives during the year as we made investments to continue to meet the needs of our customers in the future. These investments consist of new gas-fired and solar generation in our regulated businesses, natural gas pipeline infrastructure and upgrades to the grid.

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During the year, we made strides to tighten our strategic alignment. In February, we announced an intent to exit our Midwest commercial generation business. In August, we announced an agreement to sell this portfolio of nonregulated assets to Dynegy for $2.8 billion in cash. We are still awaiting final Federal Energy Regulatory Commission approval and expect to close the transaction by mid-2015.

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We achieved strong financial performance during 2014, which is important to maintaining the confidence of our investors.

o

We increased our quarterly dividend payment by approximately 2% during the year, the seventh consecutive year of annual dividend growth. Additionally, 2014 was the 88^th consecutive year Duke Energy paid a quarterly cash dividend on its common stock. At the end of 2014, our dividend yield was approximately 3.8%.

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We achieved a total shareholder return ("TSR") of 26.4% compared to the 28.9% TSR of the Philadelphia Utility Index.

Board Representation

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Board Nominees (page 11)

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Corporate Governance Highlights (page 27)

Shareholder Engagement

As part of Duke Energy's commitment to corporate governance, we have instituted a corporate governance engagement program to discuss our corporate governance practices and obtain feedback from our shareholders on our corporate governance and executive compensation practices. During the Fall 2014 corporate governance engagement program, the Company met with the holders of approximately 25% of our shares to discuss, among other issues, board structure and director refreshment, as well as the shareholder proposals which were voted on at the 2014 Annual Meeting of Shareholders, including the right for shareholders to call a special shareholder meeting, and political contribution disclosure.

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Executive Compensation Highlights (page 37)

Named Executive Officers (page 37)

Principles and Objectives (page 37)

Our executive compensation program is designed to:

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Link pay to performance

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Attract and retain talented executive officers and key employees

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Emphasize performance-based compensation to motivate executives and key employees

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Reward individual performance

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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:

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Base salary

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Short-term incentives

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Long-term incentives

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2014 Executive Total Compensation Mix (page 38)

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May 7, 2015

10:00 a.m.
O.J. Miller Auditorium
526 South Church Street
Charlotte, NC 28202

We will convene the Annual Meeting of Shareholders of Duke Energy Corporation on Thursday, May 7, 2015, at 10:00 a.m. in the O.J. Miller Auditorium located at 526 South Church Street in Charlotte, North Carolina.

The purpose of the Annual Meeting is to consider and take action on the following:

1.

Election of directors;

2.

Ratification of Deloitte & Touche LLP as Duke Energy Corporation's independent public accountant for 2015;

3.

Advisory vote to approve Duke Energy Corporation's named executive officer compensation;

4.

Approval of the Duke Energy Corporation 2015 Long-Term Incentive Plan;

5.

A shareholder proposal regarding limitation of accelerated executive pay;

6.

A shareholder proposal regarding political contribution disclosure;

7.

A shareholder proposal regarding proxy access; and

8.

Any other business that may properly come before the meeting (or any adjournment or postponement of the meeting).

Shareholders of record as of the close of business on March 9, 2015, are entitled to vote at the Annual Meeting of Shareholders. It is important that your shares are represented at this meeting.

This year we will again be using the Securities and Exchange Commission ("SEC") rule that allows us to provide our proxy materials to our shareholders via the Internet. By doing so, most of our shareholders will only receive a notice containing instructions on how to access the proxy materials via the Internet and vote online, by telephone or by mail. If you would like to request paper copies of the proxy materials, you may follow the instructions on the notice. If you receive paper copies of the proxy materials, we ask you to consider signing up to receive these materials electronically in the future by following the instructions contained in this proxy statement. By delivering proxy materials electronically, we can reduce the consumption of natural resources and the cost of printing and mailing our proxy materials.

Whether or not you expect to be present at the Annual Meeting of Shareholders, please take time to vote now. If you choose to vote by mail, you may do so by marking, dating and signing the proxy card and returning it to us. Please follow the voting instructions that are included on your proxy card. Regardless of the manner in which you vote, we urge and greatly appreciate your prompt response.

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PROPOSAL 1:     ELECTION OF DIRECTORS

The Board of Directors of Duke Energy has nominated the following 14 candidates to serve on the Board. We have a declassified Board of Directors, which means all of the directors are voted on every year at the Annual Meeting of Shareholders.

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. The Corporate Governance Committee, comprised of only independent directors, has recommended the following current directors as nominees for director and the Board of Directors has approved their nomination for election. Two of our current directors, Messrs. Bernhardt and Reinsch, will be retiring at our 2015 Annual Meeting of Shareholders in accordance with our Principles for Corporate Governance. Therefore, they are not nominated for re-election.

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PROPOSAL 1:    ELECTION OF DIRECTORS

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PROPOSAL 1:    ELECTION OF DIRECTORS

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PROPOSAL 1:    ELECTION OF DIRECTORS

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PROPOSAL 1:    ELECTION OF DIRECTORS

Majority Voting for the Election of Directors

Under the Amended and Restated By-Laws, in an uncontested election at which a quorum is present, a director-nominee will be elected if the number of shares voted "FOR" the nominee's election exceeds the number of votes withheld from that nominee's election. In addition, the Company has a resignation policy in its Principles for Corporate Governance which requires an incumbent Director who has more votes withheld from that nominee's re-election than votes "FOR" his or her re-election to tender his or her letter of resignation for consideration by the Corporate Governance Committee of the Company's Board of Directors.

In contested elections, Directors will continue to be elected by plurality vote. For purposes of the Amended and Restated By-Laws, a "contested election" is an election in which the number of nominees for director is greater than the number of directors to be elected.

The Board of Directors Recommends a Vote "FOR" Each Nominee.

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INFORMATION ON THE BOARD OF DIRECTORS

Our Board Leadership

Our Board of Directors is currently structured with an independent Chairman of the Board and a separate Vice Chairman who is also our President and Chief Executive Officer. On December 31, 2013, Ann Maynard Gray, previously the Company's independent lead director, became Chairman of the Board. Our President and Chief Executive Officer, Lynn Good, assumed the role of Vice Chairman in July 2013.

The Board of Directors believes that the Company and its shareholders are best served by the Board retaining discretion to determine the appropriate leadership structure for the Company based on what it believes is best for the Company at a particular point in time, including whether the same individual should serve as both Chief Executive Officer and Chairman of the Board, or whether the roles should be separate. In the event that the Board of Directors determines that the same individual should hold the positions of Chief Executive Officer and Chairman of the Board, the Company's Principles for Corporate Governance provide for an independent lead director to be appointed from among the independent directors.

Our independent Chairman of the Board presides at the regularly scheduled executive sessions of the non-management/independent directors.

Director Attendance

The Board of Directors of Duke Energy met 11 times during 2014 and has met 4 times so far in 2015. The overall attendance percentage for our directors was approximately 98% in 2014, and no director attended less than 75% of the total of the Board of Directors' meetings and the meetings of the committees upon which he or she served in 2014. Directors are encouraged to attend the Annual Meeting of Shareholders. All members of the Board of Directors attended Duke Energy's last Annual Meeting of Shareholders on May 1, 2014.

Independence of Directors

The Board of Directors may determine a director to be independent if the Board of Directors has affirmatively determined that the director has no material relationship with Duke Energy or its subsidiaries (references in this proxy statement to Duke Energy's subsidiaries shall mean its consolidated subsidiaries), either directly or as a shareholder, director, officer or employee of an organization that has a relationship with Duke Energy or its subsidiaries. Independence determinations are generally made on an annual basis at the time the Board of Directors approves director nominees for inclusion in the proxy statement and, if a director joins the Board of Directors in the interim, at such time.

The Board of Directors also considers its Standards for Assessing Director Independence, which set forth certain relationships between Duke Energy and directors and their immediate family members, or affiliated entities, that the Board of Directors, in its judgment, has deemed to be immaterial for purposes of assessing a director's independence. Duke Energy's Standards for Assessing Director Independence are linked on our website at www.duke-energy.com/corporate-governance/board-of-directors/independence.asp. In the event a director has a relationship with Duke Energy that is not addressed in the Standards for Assessing Director Independence, the independent members of the Board of Directors determine whether such relationship is material.

In making the determination regarding each director's independence, the Board of Directors considered all transactions and the materiality of any relationship with Duke Energy and its subsidiaries in light of all facts and circumstances. In December 2013 and January 2014, the Company and the Duke Energy Foundation, respectively, entered into agreements with the North Carolina Chapter of The Nature Conservancy, for whom Mr. Bernhardt is a trustee, to sponsor research on coastal conservation and adaptation in the Company's North and South Carolina service territories. The Board of Directors determined that this relationship was not material and did not impair Mr. Bernhardt's independence because the agreements were made without any direct input from Mr. Bernhardt, and the associated project work has fulfilled, in part, the Company's obligation to make certain charitable contributions in the Duke Energy Progress, Inc. service territory in accordance with a merger commitment associated with the Company's merger with Progress Energy, Inc.

The Board of Directors has determined that none of the directors, other than Ms. Good, has a material relationship with Duke Energy or its subsidiaries, and all are, therefore, independent under the listing standards of the NYSE and the rules and regulations of the SEC.

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INFORMATION ON THE BOARD OF DIRECTORS

Board and Committee Assessments

Each year the Board, with the assistance of the Corporate Governance Committee, conducts an assessment of the Board of Directors and each of the Committees. The assessment process is facilitated by an independent adviser, which allows directors to provide anonymous feedback and promotes candidness among the directors. The results of the feedback are presented to the Board and Committees and discussed. This annual review and discussion provides continuous improvement in the overall effectiveness of the Directors, Committees and Board.

Board Oversight of Risk

The Company faces a myriad of risks, including operational, financial and reputational risks that affect every segment of its business. The Board of Directors is actively involved in the oversight of these risks in several ways. This oversight is conducted primarily through the Finance and Risk Management Committee of the Board but also through the other committees of the Board, as appropriate. The Board of Directors annually reviews the Company's enterprise risk assessment with management, including the Chief Risk Officer. This detailed risk assessment identifies the broad range of risks that affect the Company, their probabilities and severity and reviews the Company's approach to managing and prioritizing those risks, based on input from the officers responsible for their management.

Each committee of the Board is responsible for the oversight of certain areas of risk that pertain to that committee's area of focus. Throughout the year, each committee chair regularly reports to the full Board regarding the committee's considerations and actions relating to the risks within its area of focus.

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Shareholder Engagement

We conduct extensive governance reviews and investor outreach so that management and the Board understand and consider the issues that matter most to our shareholders and address them effectively. In 2014, we further expanded our outreach to include a formal outreach program to the holders of approximately 25% of Duke Energy's shares throughout the year.

During the 2014 corporate governance engagement program, the Company discussed, among other issues, board structure and director refreshment, as well as the shareholder proposals which were voted on at the 2014 Annual Meeting of Shareholders, including the right for shareholders to call a special shareholder meeting, and political contribution disclosure. The Board of Directors, after considering the feedback it received on these issues, amended Duke Energy's Amended and Restated By-Laws to give shareholders holding 15% of the outstanding shares of Duke Energy common stock the right to call a special shareholder meeting. The Company has also committed to make changes to its disclosure of political contributions on the Company's website as well as to increase disclosure regarding the Board's oversight of the Company's political activity.

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INFORMATION ON THE BOARD OF DIRECTORS

Board of Directors Committees

The Board of Directors has the six standing, permanent committees described below:

Audit Committee

9 meetings held in 2014

Carlos A. Saladrigas

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The Audit Committee considers risks and matters related to financial reporting, internal controls and compliance. As part of those responsibilities, the Audit Committee selects and retains a firm of independent public accountants to conduct audits of the accounts of Duke Energy and its subsidiaries. It also reviews with the independent public accountant the scope and results of their audits, as well as the accounting procedures, internal controls, and accounting and financial reporting policies and practices of Duke Energy and its subsidiaries, and makes reports and recommendations to the Board of Directors as it deems appropriate. The Audit Committee is responsible for approving all audit and permissible non-audit services provided to Duke Energy by its independent public accountant. Pursuant to this responsibility, the Audit Committee adopted the policy on Engaging the Independent Auditor for Services, which provides that the Audit Committee will establish detailed services and related fee levels that may be provided by the independent public accountant and will review such policy annually. See page 34 for additional information on the Audit Committee's pre-approval policy.

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The Board of Directors has determined that Messrs. Hance and Saladrigas are "audit committee financial experts" as such term is defined in Item 407(d)(5)(ii) of Regulation S-K. See pages 15 and 18 for a description of Messrs. Hance's and Saladrigas' business experience.

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Each of the members has been determined to be "independent" within the meaning of the NYSE's listing standards, Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the Company's Standards for Assessing Director Independence. In addition, each of the members meets the financial literacy requirements for audit committee membership under the NYSE's rules and the rules and regulations of the SEC.

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INFORMATION ON THE BOARD OF DIRECTORS

Compensation Committee

8 meetings held in 2014

E. Marie McKee

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The Compensation Committee establishes and reviews the overall compensation philosophy of the Company, confirms that our policies and philosophy do not encourage excess or inappropriate risk-taking by our employees, reviews and approves the salaries and other compensation of certain employees, including all executive officers of Duke Energy, reviews and approves compensatory agreements with executive officers, approves equity grants and reviews the effectiveness of, and approves changes to, compensation programs. This committee also makes recommendations to the Board of Directors on compensation for independent directors.

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Management's role in the compensation-setting process is to recommend compensation programs and assemble information as required by the committee. When establishing the compensation program for our named executive officers, the committee considers input and recommendations from management, including Ms. Good, who attends the Compensation Committee meetings.

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This committee has engaged Frederic W. Cook & Company, Inc. as its independent compensation consultant. The compensation consultant generally attends each committee meeting and provides advice to the committee at the meetings, including reviewing and commenting on market compensation data used to establish the compensation of the executive officers and directors. The consultant has been instructed that it shall provide completely independent advice to the committee and is not permitted to provide any services to Duke Energy other than at the direction of the committee.

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Each of the members of the Compensation Committee has been determined to be "independent" within the meaning of the NYSE's listing standards, Rule 10C-1(b) of the Exchange Act, and the Company's Standards for Assessing Director Independence; to be "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"); and, to be "non-employee directors" within the meaning of Rule 16b-3 of the Exchange Act.

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INFORMATION ON THE BOARD OF DIRECTORS

Corporate Governance Committee

7 meetings held in 2014

Ann Maynard Gray

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The Corporate Governance Committee considers risks and matters related to corporate governance and formulates and periodically revises governance principles. It recommends the size and composition of the Board of Directors and its committees and recommends potential successors to the Chief Executive Officer. This committee also recommends to the Board of Directors the slate of nominees, including any nominees recommended by shareholders, for director for each year's annual meeting of shareholders and, when vacancies occur, names of individuals who would make suitable directors of Duke Energy. This committee may engage an external search firm or a third party to identify or evaluate or to assist in identifying or evaluating a potential nominee. The committee also performs an annual evaluation of the performance of the Chief Executive Officer with input from the full Board of Directors. The Committee also assists the Board in its annual determination of director independence and review of any related person transactions.

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Each of the members of the Corporate Governance Committee has been determined to be "independent" within the meaning of the NYSE's listing standards and the Company's Standards for Assessing Director Independence.

Finance and Risk Management Committee

5 meetings held in 2014

James H. Hance, Jr.

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The Finance and Risk Management Committee is primarily responsible for the oversight of financial risk and enterprise level risk assessment at the Company. This oversight function includes reviews of Duke Energy's financial and fiscal affairs and recommendations to the Board of Directors regarding dividends, financing and fiscal policies, and significant transactions. It reviews the financial exposure of Duke Energy, as well as mitigation strategies, reviews Duke Energy's risk exposure as related to overall company portfolio and impact on earnings, and reviews the financial impacts of major projects as well as capital expenditures.

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INFORMATION ON THE BOARD OF DIRECTORS

Nuclear Oversight Committee

6 meetings held in 2014

James T. Rhodes

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The Nuclear Oversight Committee provides oversight of the nuclear safety, operational performance and long-term plans and strategies of Duke Energy's nuclear power program. The oversight role is one of review, observation and comment and in no way alters management's authority, responsibility or accountability. At least annually, the Nuclear Oversight Committee visits each of Duke Energy's operating nuclear power stations and reviews the station's nuclear safety, operational and financial performance.

Regulatory Policy and Operations Committee

12 meetings held in 2014

James B. Hyler, Jr.

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The Regulatory Policy and Operations Committee provides oversight of Duke Energy's regulatory strategy and environmental, health and safety issues and the risks related to such issues, including our ash management strategy, as well as the public policies and practices of Duke Energy. This includes reviewing Duke Energy's regulatory approach to strategic initiatives, the operational performance of Duke Energy's utilities with regard to energy supply, delivery, fuel procurement and transportation and making visits to Duke Energy's generation facilities. It is also responsible for the oversight of Duke Energy's environmental, health and safety goals and policies as well as its policies and practices with respect to its political activities and community affairs.

Each committee operates under a written charter adopted by the Board of Directors. The charters are posted on our website at www.duke-energy.com/corporate-governance/board-committee-charters.asp.

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INFORMATION ON THE BOARD OF DIRECTORS

BOARD OF DIRECTORS COMMITTEE MEMBERSHIP ROSTER (AS OF MARCH 26, 2015)

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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

The following is the report of the Corporate Governance Committee with respect to its philosophy, responsibilities and initiatives.

Philosophy and Responsibilities

We believe that sound corporate governance has three components: (i) Board of Directors' independence, (ii) processes and practices that foster solid decision-making by both management and the Board of Directors, and (iii) balancing the interests of all of our stakeholders – our investors, customers, employees, the communities we serve and the environment. The Corporate Governance Committee's charter is available on
our website at www.duke-energy.com/corporate-governance/ board-committee-charters/corporate-governance.asp and is summarized below. Additional information about the Corporate Governance Committee and its members is detailed on page 24 of the proxy statement.

Membership. The Committee must be comprised of three or more members, all of whom must qualify as independent directors under the listing standards of the NYSE and other applicable rules and regulations.

Responsibilities. The Committee's responsibilities include, among other things (i) implementing policies regarding corporate governance matters, (ii) assessing the Board of Directors' membership needs and recommending nominees, (iii) recommending to the Board of Directors those directors to be selected for membership on, or removal from, the various Board of Directors' committees and those directors to be designated as chairs of Board of Directors' committees, and (iv) sponsoring and overseeing annual performance evaluations for the various Board of Directors' committees, including the Corporate Governance Committee, the Board of Directors and the Chief Executive Officer. The Committee may also conduct or authorize investigations into or studies of matters within the scope of the Committee's duties and responsibilities, and may retain, at the Company's expense, and in the Committee's sole discretion, consultants to assist in such work as the Committee deems necessary.

Governance Policies

All of our Board of Directors committee charters, as well as our Principles for Corporate Governance, Code of Business Ethics for Employees and Code of Business Conduct & Ethics for Directors are available on our website at www.duke-energy.com/investors/corporate-governance.asp. Any amendments to or waivers from our Code of Business Ethics for Employees with respect to executive officers or Code of Business Conduct & Ethics for Directors must be approved by the Board and will be posted on our website. During 2014, our Board of Directors held 5 executive sessions with independent directors only.

Board Composition

Director Qualifications. We look for the following characteristics in any candidate for nomination to our Board of Directors:

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fundamental qualities of intelligence, perceptiveness, good judgment, maturity, high ethics and standards, integrity and fairness;

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a genuine interest in Duke Energy and a recognition that, as a member of the Board of Directors, one is accountable to the shareholders of Duke Energy, not to any particular interest group;

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a background that includes broad business experience or demonstrates an understanding of business and financial affairs and the complexities of a large, multifaceted, global business organization;

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diversity among the existing Board members, including racial and ethnic background, gender, experiences, skills and qualifications;

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present or former chief executive officer, chief operating officer, or substantially equivalent level executive officer of a highly complex organization such as a corporation, university or major unit of government, or a professional who regularly advises such organizations;

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no conflict of interest or legal impediment which would interfere with the duty of loyalty owed to Duke Energy and its shareholders;

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the ability and willingness to spend the time required to function effectively as a director;

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compatibility and ability to work well with other directors and executives in a team effort with a view to a long-term relationship with Duke Energy as a director;

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independent opinions and willingness to state them in a constructive manner; and,

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willingness to become a shareholder of Duke Energy (within a reasonable time of election to the Board of Directors).

Director Candidate Recommendations. The Committee may engage a third party from time to time to assist it in identifying and

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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

evaluating director-nominee candidates, in addition to current members of the Board of Directors standing for re-election. The Committee will provide the third party, based on the profile described above, the characteristics, skills and experiences that may complement those of our existing members. The third party will then provide recommendations for nominees with such attributes. The Committee considers nominees recommended by shareholders on a similar basis, taking into account, among other things, the profile criteria described above and the nominee's experiences and skills. In addition, the Committee considers the shareholder-nominee's independence with respect to both the Company and the recommending shareholder. All of the nominees on the proxy card are current members of our Board of Directors and were recommended by the Committee.

Shareholders interested in submitting nominees as candidates for election as directors must provide timely written notice to the Corporate Governance Committee, c/o Ms. Julia S. Janson, Executive Vice President, Chief Legal Officer and Corporate Secretary, Duke Energy Corporation, DEC 48H, P.O. Box 1414, Charlotte, NC 28201-1414. The notice must set forth, as to each person whom the shareholder proposes to nominate for election as director:

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the name and address of the recommending shareholder(s), and the class and number of shares of capital stock of Duke Energy that are beneficially owned by the recommending shareholder(s);

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a representation that the recommending shareholder(s) is a holder of record of stock of Duke Energy entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate the person(s) specified in the notice;

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the name, age, business address and principal occupation and employment of the recommended nominee;

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any information relevant to a determination of whether the recommended nominee meets the criteria for Board of Directors membership established by the Board of Directors and/or the Corporate Governance Committee;

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any information regarding the recommended nominee relevant to a determination of whether the recommended nominee would be considered independent under the applicable NYSE rules and SEC rules and regulations;

•

a description of any business or personal relationship between the recommended nominee and the recommending shareholder(s), including all arrangements or understandings between the recommended nominee and the recommending shareholder(s) and any other person(s) (naming such person(s)) pursuant to which the nomination is to be made by the recommending shareholder(s);

•

a statement, signed by the recommended nominee, (i) verifying the accuracy of the biographical and other information about the nominee that is submitted with the recommendation, (ii) affirming the recommended nominee's willingness to be a director, and (iii) consenting to serve as a director if so elected;

•

if the recommending shareholder(s) has beneficially owned more than 5% of Duke Energy's voting stock for at least one year as of the date the recommendation is made, evidence of such beneficial ownership as specified in the rules and regulations of the SEC;

•

if the recommending shareholder(s) intends to solicit proxies in support of such recommended nominee, a representation to that effect; and

•

all other information relating to the recommended nominee that is required to be disclosed in solicitations for proxies in an election of directors pursuant to Regulation 14A under the Exchange Act, including, without limitation, information regarding (i) the recommended nominee's business experience; (ii) the class and number of shares of capital stock of Duke Energy, if any, that are beneficially owned by the recommended nominee, and (iii) material relationships or transactions, if any, between the recommended nominee and Duke Energy's management.

New Directors since the 2014 Annual Meeting

Following the 2014 Annual Meeting of Shareholders, the Corporate Governance Committee sought to recruit additional Board members whose qualifications align with the needs of the Board in light of the Company's long-term strategy and the major risks and issues facing the Company. After working with an independent search firm, the Corporate Governance Committee recommended that Dr. Richard A. Meserve be appointed to the Board. Dr. Meserve's appointment was effective February 3, 2015. Dr. Meserve brings technical, legal, regulatory and public policy expertise in numerous areas, including nuclear power, environmental, climate change and energy policy, as well as leadership and business skills developed as an executive and a director of, and an advisor to, national and international scientific, research and legal organizations. The Corporate Governance Committee believes Dr. Meserve provides valuable industry and environmental expertise to Duke Energy.

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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

Communications with Directors

Interested parties can communicate with any of our directors by writing to our Corporate Secretary at the following address:

Corporate Secretary
Ms. Julia S. Janson
Executive Vice President, Chief Legal Officer and Corporate Secretary
Duke Energy Corporation
DEC 48H
P.O. Box 1414
Charlotte, NC 28201-1414

Interested parties can communicate with our independent Chairman of the Board by writing to the following address:

Chairman of the Board
c/o Ms. Julia S. Janson
Executive Vice President, Chief Legal Officer and Corporate Secretary
Duke Energy Corporation
DEC 48H
P.O. Box 1414
Charlotte, NC 28201-1414

Our Corporate Secretary will distribute communications to the Board of Directors, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Duke Energy Board of Directors has requested that certain items that are unrelated to the duties and responsibilities of the Board of Directors be excluded, such as: spam; junk mail and mass mailings; service complaints; resumes and other forms of job inquiries; surveys; and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, obscene or similarly unsuitable will be excluded. However, any communication that is so excluded remains available to any director upon request.

Corporate Governance Committee
Ann Maynard Gray (Chair)
Michael G. Browning
Harris E. DeLoach, Jr.
Daniel R. DiMicco
William E. Kennard
E. Marie McKee

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DIRECTOR COMPENSATION

Annual Retainer and Fees. During 2014, the retainer and meeting fees paid to our independent directors consisted of:

The compensation program is the same as in effect at the end of 2013.

Annual Stock Retainer for 2014. In 2014, each eligible director received the portion of his or her annual retainer that was payable in stock in the form of fully-vested shares granted under the Duke Energy Corporation 2010 Long-Term Incentive Plan.

Deferral Plans and Stock Purchases. Directors may elect to receive all or a portion of their annual compensation, consisting of retainers and attendance fees, on a current basis, or defer such compensation under the Duke Energy Corporation Directors' Savings Plan (the "Directors' Savings Plan"). Deferred amounts are credited to an unfunded account, the balance of which is adjusted for the performance of phantom investment options, including the Duke Energy common stock fund, as elected by the director, and generally are paid when the director terminates his or her service from the Board of Directors. In connection with the merger with Progress Energy, Duke Energy assumed the Progress Energy, Inc. Non-Employee Director Deferred Compensation Plan (the "Deferred Compensation Plan") and the Progress Energy, Inc. Non-Employee Director Stock Unit Plan (the "Stock Unit Plan"), each of which was merged into the Directors' Savings Plan effective at the end of 2013. Under the Deferred Compensation Plan, the former Progress Energy directors were provided the opportunity to elect to defer their annual retainer and board attendance fees. Any deferred fees are deemed to be invested in stock units. The number of units in each account is adjusted from time to time to reflect the payment of dividends on the number of shares of stock represented by the units. Payments from the plan are made in cash upon termination of service. Under the Stock Unit Plan, the number of units in each account is adjusted from time to time to reflect the payment of dividends on the number of shares of stock represented by the units. Payments from the plan are made in cash upon termination of service.

Charitable Giving Program. The Duke Energy Foundation, independent of Duke Energy, maintains The Duke Energy Foundation Matching Gifts Program under which directors are eligible to request matching contributions of up to $5,000 per director per calendar year to qualifying institutions. Duke Energy also maintains a Directors' Charitable Giving Program. Eligibility for this program has been frozen and Ms. Gray is the only current director who is eligible. Under this program, Duke Energy will make, upon the director's death, donations of up to $1,000,000 to charitable organizations selected by the director. Ms. Gray may request that donations be made under this program during her lifetime, in which case the maximum donation will be reduced on an actuarially determined net present value basis. In 2014, no donations were made on behalf of Ms. Gray. In addition, Duke Energy made a $1,000 donation to the Crisis Assistance Ministry in November 2014 on behalf of each of the independent directors who were actively serving at that time.

Expense Reimbursement and Insurance. Duke Energy provides travel insurance to directors and reimburses directors for expenses reasonably incurred in connection with attendance and participation at Board of Directors and committee meetings and special functions.

Stock Ownership Guidelines. Outside directors are subject to stock ownership guidelines, which establish a target level of ownership of Duke Energy common stock (or common stock equivalents). Currently, each independent director is required to own shares with a value equal to at least five times the annual Board of Directors cash retainer (i.e., an ownership level of $375,000) or retain 50% of his or her vested annual equity retainer. All independent directors were in compliance with the guidelines as of December 31, 2014.

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DIRECTOR COMPENSATION

The following table describes the compensation earned during 2014 by each individual who served as an independent director during 2014. Because Dr. Meserve joined the Board of Directors on February 3, 2015, he did not receive any compensation in 2014 and is not listed below.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table indicates the amount of Duke Energy common stock beneficially owned by the current directors, the executive officers listed in the Summary Compensation Table under Executive Compensation (referred to as the named executive officers), and all directors and executive officers as a group as of March 9, 2015.

Ownership of Units Representing Common Stock

The table below shows ownership of other units (not listed in the table above) related to the common stock of Duke Energy under the Directors' Savings Plan and the plans that merged into the Directors' Savings Plan at the end of 2013 (i.e., the Director Deferred Compensation Plan and the Stock Unit Plan). These units do not represent an equity interest in Duke Energy and possess no voting rights, but are equal in economic value to one share of the common stock of Duke Energy.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The table below shows ownership of other units (not listed in the table on page 32) related to the common stock of Duke Energy under the Duke Energy Executive Savings Plan ("Executive Savings Plan"). These units do not represent an equity interest in Duke Energy and possess no voting rights, but are equal in economic value to one share of the common stock of Duke Energy.

The following table lists the beneficial owners of 5% or more of Duke Energy's outstanding shares of common stock as of December 31, 2014. This information is based on the most recently available reports filed with the SEC and provided to us by the company listed.

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PROPOSAL 2:     RATIFICATION OF DELOITTE & TOUCHE LLP AS
DUKE ENERGY CORPORATION'S INDEPENDENT
PUBLIC ACCOUNTANT FOR 2015

The Audit Committee is directly responsible for the appointment and compensation, including the pre-approval of audit fees as described below, and the retention and oversight of the independent public accountant that audits our financial statements and our internal control over financial reporting. The Audit Committee has selected Deloitte & Touche LLP ("Deloitte") as Duke Energy's independent public accountant for 2015. Deloitte has served as our independent public accountant since 1978.

Independence

The Audit Committee and the Board believe that the continued retention of Deloitte as Duke Energy's independent public accountant is in the best interests of the Company and its shareholders. Deloitte's years of experience with Duke Energy have allowed them to gain expertise regarding Duke Energy's operations, accounting policies and practices and internal controls over financial reporting. It also prevents the significant time commitment that educating a new auditor would entail, which could also result in distraction in focus for Duke Energy management.

To safeguard the continued independence of the independent public accountant, the Audit Committee adopted a policy that provides that the independent public accountant is only permitted to provide services to Duke Energy and its subsidiaries that have been pre-approved by the Audit Committee. Pursuant to the policy, detailed audit services, audit-related services, tax services and certain other services have been specifically pre-approved up to certain categorical fee limits. In the event that the cost of any of these services may exceed the pre-approved limits, the Audit Committee must approve the service before the independent public accountant is engaged for such service. All other services that are not prohibited pursuant to the SEC's or other applicable regulatory bodies' rules or regulations must be specifically approved by the Audit Committee before the independent public accountant is engaged for such service. All services performed in 2014 and 2013 by the independent public accountant were approved by the Duke Energy Audit Committee pursuant to its policy on Engaging the Independent Auditor for Services.

In addition to the annual review of Deloitte's independence and in association with the mandated rotation of Deloitte's lead engagement partner, the Audit Committee is directly involved in the selection of Deloitte's new lead engagement partner.

Representatives of Deloitte are expected to be present at the Annual Meeting of Shareholders. They will have an opportunity to make a statement and will be available to respond to appropriate questions. Information on Deloitte's fees for services rendered in 2014 and 2013 are listed below.

Audit Fees

For the Above Reasons, the Board of Directors Recommends a Vote "FOR" This Proposal.

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REPORT OF THE AUDIT COMMITTEE

The following is the report of the Audit Committee with respect to Duke Energy's audited financial statements for the fiscal year ended December 31, 2014.

The information contained in this Audit Committee Report shall not be deemed to be "soliciting material" or "filed" or "incorporated by reference" in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent that Duke Energy specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act.

The purpose of the Audit Committee is to assist the Board in its general oversight of Duke Energy's financial reporting, internal controls and audit functions. The Audit Committee Charter describes in greater detail the full responsibilities of the committee and is available on our website at www.duke -energy.com/corporate-governance/board-committee-charters/audit.asp. Further information about the Audit Committee, its Policy on Engaging the Independent Auditor for Services and its members is detailed on pages 22 and 34 of the proxy statement.

The Audit Committee has reviewed and discussed the consolidated financial statements with management and Deloitte, the Company's independent public accountant. Management is responsible for the preparation, presentation and integrity of Duke Energy's financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and, evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Deloitte is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States ("GAAP"), as well as expressing an opinion on the effectiveness of internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework (2013).

The Audit Committee reviewed the Company's audited financial statements with management and Deloitte, and met separately with both management and Deloitte to discuss and review those financial statements and reports prior to issuance. These discussions also addressed the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. Management has represented, and Deloitte has confirmed, that the financial statements were prepared in accordance with GAAP.

In addition, management completed the documentation, testing and evaluation of Duke Energy's system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received periodic updates provided by management and Deloitte at each regularly scheduled Audit Committee meeting. At the conclusion of the process, management presented to the Audit Committee on the effectiveness of the Company's internal control over financial reporting. The Audit Committee also reviewed the report of management contained in the Company's Form 10-K filed with the SEC, as well as Deloitte's Report of Independent Registered Public Accounting Firm included in the Company's Form 10-K related to its audit of (i) the consolidated financial statements and (ii) the effectiveness of internal control over financial reporting. The Audit Committee continues to oversee the Company's efforts related to its internal control over financial reporting and management's preparations for the evaluation in fiscal 2015.

The Audit Committee has discussed with Deloitte the matters required to be discussed by professional and regulatory requirements, including, but not limited to, the standards of the Public Company Accounting Oversight Board regarding The Auditors' Communications with Those Charged with Governance. In addition, Deloitte has provided the Audit Committee with the written disclosures and the letter required by "Public Company Accounting Oversight Board Ethics and Independence Rule 3526, Communications with Audit Committees Concerning Independence" that relates to Deloitte's independence from Duke Energy and its subsidiaries and the Audit Committee has discussed with Deloitte the firm's independence.

Based on its review of the consolidated financial statements and discussions with and representations from management and Deloitte referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Duke Energy's Form 10-K, for filing with the SEC.

Audit Committee
Carlos A. Saladrigas (Chair)
Michael G. Browning
James H. Hance, Jr.
James B. Hyler, Jr.
E. Marie McKee

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PROPOSAL 3:     ADVISORY VOTE TO APPROVE DUKE ENERGY
CORPORATION'S NAMED EXECUTIVE OFFICER
COMPENSATION

At the 2011 Annual Meeting of Shareholders, our shareholders recommended that our Board of Directors hold say-on-pay votes on an annual basis. As a result, we are providing our shareholders with the opportunity to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. This proposal gives our shareholders the opportunity to express their views on the compensation of our named executive officers.

In connection with this proposal, the Board of Directors encourages shareholders to review in detail the description of the compensation program for our named executive officers that is set forth in the Compensation Discussion and Analysis beginning on page 37, as well as the information contained in the compensation tables and narrative discussion in this proxy statement.

As described in more detail in the Compensation Discussion and Analysis section, the guiding principle of our compensation philosophy is that pay should be linked to performance and that the interests of our executives and shareholders should be aligned. Our compensation program is designed to provide significant upside and downside potential depending on actual results as compared to predetermined measures of success. A significant portion of our named executive officers' total direct compensation is directly contingent upon achieving specific results that are important to our long-term success and growth in shareholder value. We supplement our pay-for-performance program with a number of compensation policies that are aligned with the long-term interests of Duke Energy and its shareholders.

We are asking our shareholders to indicate their support for the compensation of our named executive officers as disclosed in this proxy statement by voting "FOR" the following resolution:

"RESOLVED, that the shareholders of Duke Energy approve, on an advisory basis, the compensation paid to Duke Energy's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K of the Securities Act of 1933, as amended, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion in Duke Energy's 2015 Proxy Statement."

Because your vote is advisory, it will not be binding on the Board of Directors, the Compensation Committee or Duke Energy. The Compensation Committee, however, will review the voting results and take them into consideration when making future decisions regarding the compensation of our named executive officers.

For the Above Reasons, the Board of Directors Recommends a Vote "FOR" This Proposal.

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REPORT OF THE COMPENSATION COMMITTEE

The purpose of the Compensation Committee is to assist the Board in its general oversight of the Company's compensation programs and compensation of the Company's executives. The Compensation Committee Charter describes in greater detail the full responsibilities of the committee and is available on our website at www.duke-energy.com/corporate-governance/board-committee-charters/compensation.asp.

The Compensation Committee of Duke Energy has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee

E. Marie McKee (Chair)
Ann Maynard Gray
James H. Hance, Jr.
Carlos A. Saladrigas

COMPENSATION DISCUSSION AND ANALYSIS

The purpose of this Compensation Discussion and Analysis is to provide information about Duke Energy's compensation objectives and policies for our named executive officers. Our named executive officers for 2014 are:

Objectives of the Compensation Program

Our executive compensation program is designed to achieve the objectives set forth below:

Pay-for-Performance

The guiding principle of our compensation philosophy is that pay should be linked to performance and that the interests of executives and shareholders should be aligned. Our compensation program is designed to provide significant upside and downside potential depending on actual results, as compared to predetermined measures of success.

As described below, the variable and equity-based components of our compensation program are short-term incentives ("STI") and long-term incentives ("LTI"). Our STI opportunities are provided under an annual cash bonus plan, the payout of which is dependent on corporate, operational and individual performance. Our LTI opportunities are provided through a three-year equity

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COMPENSATION DISCUSSION AND ANALYSIS

based compensation plan (i.e., restricted stock units and performance shares), and the payout of the performance shares is also dependent on corporate performance.

As a result, a significant portion of our named executive officers' total direct compensation — which consists of base salary as well as target STI and LTI opportunities — is directly contingent on achieving specific results that are key to our long-term success and growth in shareholder value. For example, approximately 85% of the total direct compensation opportunity (assuming target performance) for Ms. Good and approximately 75% of the total direct compensation opportunity (assuming target performance) for our other named executive officers was provided, as of December 31, 2014, in the form of STI and LTI.

Performance is measured on multiple metrics, including adjusted diluted earnings per share, operation and maintenance expense, reliability, safety, total shareholder return, and return on equity, to provide a balanced mix of incentives and reduce the risk of relying on a single metric.

The actual amount of compensation received by the named executive officers in connection with STI and LTI opportunities varies based on our stock price and the extent to which predetermined corporate, operational and individual goals are achieved. The following charts illustrate the components of the target total direct compensation opportunities provided to our named executive officers.

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COMPENSATION DISCUSSION AND ANALYSIS

Align Interests of Named Executive Officers and Shareholders

We supplement our pay-for-performance program with a number of compensation policies intended to align the interests of management and our shareholders. Following are key features of our executive compensation program:

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

Effective August 1, 2014, the Compensation Committee approved adjustments to the compensation of Messrs. Young, Jamil and Yates, in connection with the restructuring of their respective roles and responsibilities. These organizational changes were made in order to support Duke Energy's long-term strategic focus. As part of the restructuring, the responsibilities for the regulated operations of Duke Energy were allocated between two executive officers as described below. These changes and their related compensation adjustments are summarized as follows:

•

Mr. Young received an increase in his annual base salary from $525,000 to $550,000 and an increase in his STI opportunity from 70% to 80%, each effective August 1, 2014, as well as an increase in his future LTI opportunity from 150% to 225%, effective January 1, 2015. These increases were made in recognition of Mr. Young's performance in his new role, as well as for internal pay equity purposes.

•

Mr. Jamil became Executive Vice President and President, Regulation Generation. In this role, Mr. Jamil is responsible for all power generation in the regulated utilities, including nuclear generation; environmental, health and safety; and fuels and system optimization. He continues to be responsible for project management and construction; and coal ash management. Mr. Jamil received an increase in his future LTI opportunity from 200% to 250% in recognition of his increased responsibilities. This increase was approved in two equal parts of 25% each, the first half in July 2014 and the second half in February 2015, and was first effective for stock grants approved in 2015.

•

Mr. Yates became Executive Vice President, Market Solutions and President, Carolinas Region. In this role, Mr. Yates is responsible for the regulated operations, including electric distribution, in Duke Energy's North Carolina and South Carolina jurisdictions. He continues to lead the advancement of Duke Energy's enterprise strategy for distributed energy resources and adds responsibility for enterprise customer solutions and delivery. In connection with this expansion of responsibilities, Mr. Yates received an increase in his annual base salary from $565,000 to $615,000, effective August 1, 2014, and an increase in his future LTI opportunity from 200% to 225%, effective January 1, 2015.

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COMPENSATION DISCUSSION AND ANALYSIS

As discussed in more detail below, during 2014, the principal components of compensation for the named executive officers were: base salary; STI compensation; LTI compensation; retirement and welfare benefits and perquisites.

Following is a summary of each principal compensation component provided to the Duke Energy named executive officers during 2014.

Base Salary The salary for each executive is based upon job responsibilities, level of experience, individual performance, comparisons to the salaries of executives in similar positions obtained from market surveys and internal comparisons. Effective August 2014, the base salaries of Messrs. Young and Yates were increased in light of the realignment described above.

Short-Term Incentive Compensation STI opportunities are provided to our named executive officers under the Duke Energy Corporation Executive Short-Term Incentive Plan ("STI Plan") to promote the achievement of annual performance objectives.

Each year, the Compensation Committee establishes the incentive opportunity for each named executive officer, which is based on a percentage of his or her base salary, along with the corporate, operational and individual goals that are critical to Duke Energy's success and that must be achieved to earn that incentive opportunity. Unless deferred, the earned STI opportunity is paid in cash. Aside from the increase in target annual incentive award opportunity for Mr. Young (from 70% to 80%) as discussed above, no changes were made to the target annual incentive award opportunities of the named executive officers in 2014, each of which is listed below.

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COMPENSATION DISCUSSION AND ANALYSIS

During 2014, depending on actual performance, named executive officers were eligible to earn up to 183.75%* of the amount of their STI target opportunity. The Compensation Committee established objectives under the STI Plan in February 2014, with the STI target opportunity allocated between (a) corporate objectives, including the Company's achievement of an adjusted diluted earnings per share ("EPS") goal, an operations and maintenance ("O&M") expense control goal and a reliability goal and (b) individual objectives. In order to emphasize the importance of the EPS objective, the Compensation Committee established a circuit-breaker providing that if an adjusted diluted EPS performance level of at least $4.09 was not achieved, the named executive officers would not have received any payout under the 2014 STI Plan. The rationale for each of these objectives is as follows:

Corporate Objectives

The 2014 corporate goals (EPS, O&M expense control and reliability), which the Compensation Committee selected to promote management actions beneficial to Duke Energy's various stakeholders, including customers and investors, as well as the actual performance results, were as follows:

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COMPENSATION DISCUSSION AND ANALYSIS

Reduction of STI Payouts to Reflect Settlement and Expenses in Connection With Dan River

On February 2, 2014, a stormwater pipe under a coal ash basin at the retired Dan River Steam Station broke, releasing ash into the Dan River in Rockingham County, N.C. Duke Energy incurred various expenses in connection with the Dan River coal ash spill and ash basin operations at other North Carolina coal plants. In order to hold the senior leaders of Duke Energy accountable for its financial and operational performance, these expenses were factored into the calculation of the EPS and O&M performance measures to reduce payouts as follows.

•

Duke Energy incurred approximately $90 million for consulting, engineering, legal and other costs, including approximately $20 million for Dan River-specific cleanup costs. Pursuant to the terms of the 2014 STI plan, these incremental costs reduced the payouts for the EPS and O&M performance measures for all participants, including the named executive officers.

•

On February 20, 2015, Duke Energy entered into a proposed agreement with the U.S. government that, if approved by the U.S. District Court for the Eastern District of North Carolina, would close a federal grand jury investigation related to the Dan River coal ash spill and ash basin operations at other North Carolina coal plants. If approved, Duke Energy's subsidiaries will pay approximately $102 million in fines, restitution, community service and mitigation. The Compensation Committee exercised discretion to take this $102 million expense into account to reduce the EPS and O&M performance measure payouts for certain senior executives, including the named executive officers.

•

As a result of the inclusion of the $90 million of incremental costs and $102 million cost of the proposed settlement in the calculation of the payouts for the named executive officers due to the Dan River incident and related costs, the EPS payout was reduced from 120% to 78.33% of target and the O&M payout was reduced from 93% to 0% of target. As a result, the aggregate STI payouts for the named executive officers were reduced by approximately 35%.

Individual Objectives

The remaining 20% of each named executive officer's 2014 opportunity under the STI Plan was based on individual objectives. The individual goals, in the aggregate, could result in a payout with respect to the target opportunity equal to 50% in the event of threshold performance, 100% in the event of target performance and 150% in the event of maximum performance. As described

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below, the individual goals for each named executive officer consisted of a combination of strategic and operational objectives, which were measured based on a subjective determination.

 

 

 

 

In light of the restructuring described above, effective August 1, 2014, the individual objectives under the STI Plan for Messrs. Jamil and Yates were modified to provide the Chief Executive Officer with discretion in determining each applicable executive officer's performance relative to his individual objectives based on each applicable executive officer's efforts to manage a successful transition of prior responsibilities and performance with respect to the executive officer's new role.

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COMPENSATION DISCUSSION AND ANALYSIS

Safety Component

In order to encourage a continued focus on safety, the Compensation Committee included the following safety measures in the 2014 STI Plan:

•

Safety Penalty.  The STI Plan payments for each of the named executive officers were subject to a safety penalty of 5% depending on Duke Energy's enterprise-wide serious injuries and fatalities ("SIF") rate. In February, 2014 the Compensation Committee established a SIF goal of 31. There were 19 SIFs in 2014 and thus the safety penalty was not triggered and did not decrease the 2014 STI Plan awards.

•

Safety Adder.  The STI Plan payments of the named executive officers were also eligible for a safety adder that could result in an increase of 5% if (i) there were no work-related fatalities of any Duke Energy employee, contractor or subcontractor during 2014 and (ii) there were 19 or fewer SIFs during 2014. Because work-related fatalities occurred during 2014, the 5% safety adder was not achieved.

Payouts

As a result of the aggregate corporate, operational and individual performance, each named executive officer's aggregate payout under the 2014 STI Plan was equal to:

Long-Term Incentive Compensation

Opportunities under the LTI program are provided to our named executive officers to align executive and shareholder interests in an effort to maximize shareholder value. In this regard, each year the Compensation Committee reconsiders the design and amount of the LTI awards and generally grants equity awards at the Compensation Committee's first regularly scheduled meeting. Duke Energy's executive officers do not have a role in selecting the date on which LTI awards are granted. Because the closing price of Duke Energy's common stock is a key factor in determining the number of shares in each employee's LTI award, the Compensation Committee considers volatility when determining the size of LTI plan awards.

2012-2014 Performance Shares under the Duke Energy 2012 LTI Program

The 2012 performance share cycle commenced on January 1, 2012, and ended on December 31, 2014. The performance shares generally vest only to the extent two equally weighted performance measures were satisfied. The first measure was based on Duke Energy's relative TSR for the three-year period from January 1, 2012, to December 31, 2014, as compared to the companies in the Philadelphia Utility Index, as follows:

For purposes of the LTI program, TSR is calculated based on the change, expressed as a percentage, in the fair market value of an initial investment in common stock, over a specified period, with dividends reinvested.

The second measure was based on Duke Energy's adjusted return on equity ("ROE") for the three-year period from January 1, 2012, to December 31, 2014, as follows:

The 2012 LTI program incorporated the adjusted ROE performance measure in recognition of the capital intensive nature of Duke Energy's business. The Compensation Committee believes that this performance measure provided an additional incentive to efficiently and effectively allocate capital and measure overall business performance. For additional information about the calculation of the ROE measure, see page 50.

In the aggregate, this performance corresponds to a payout of 119.45% of the target number of 2012-2014 performance shares, plus dividend equivalents earned during the 2012-2014 performance period. The following table lists the number of 2012-2014 performance shares to which our named executive officers became vested at the end of the performance cycle:

*2012-2014 Performance Shares for Mr. Yates. Mr. Yates received these shares in connection with performance shares provided by Progress Energy, prior to its merger with Duke Energy, for the 2012-2014 performance cycle. These performance shares contained the following two equally-weighted performance measures:

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TSR.  The first performance measure was based on the relative TSR of Progress Energy (and, after the merger, the relative TSR of Duke Energy) for the three-year period from January 1, 2012, to December 31, 2014, as compared to the companies in a predetermined group of highly regulated utilities. The payout that could be earned for this measure was equal to 50% of the target opportunity in the event that relative TSR performance was at the 40^th percentile, 100% of

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COMPENSATION DISCUSSION AND ANALYSIS

the target opportunity in the event that relative TSR performance was at the 50^th percentile and 200% of the target opportunity in the event that relative TSR performance was at the 80^th percentile. Based on the actual relative TSR performance of Progress Energy and Duke Energy at the 33.3^rd percentile, Mr. Yates received no payout for the portion of his performance shares related to the TSR performance measure.

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EPS Growth.  The second performance measure was based on the rate of earnings growth during the three-year period from January 1, 2012, to December 31, 2014, calculated by reference to the ongoing EPS of Duke Energy. The payout that could be earned for this measure was equal to 50% of the target opportunity in the event that the rate of growth of ongoing EPS was at least 1% per year, 100% of the target opportunity in the event that the rate of growth of ongoing EPS was at least 3%, and 200% of the target opportunity in the event that the rate of growth of ongoing EPS was 5% or higher. Based on the 2.46% rate of growth of ongoing EPS of Progress Energy and Duke Energy during 2012-2014, Mr. Yates received a payout of 86.5% of the target opportunity for the portion of his performance shares related to the earnings growth measure.

In the aggregate, this performance corresponds to a payout for Mr. Yates of 43.25% of his target number of 2012-2014 performance shares, plus dividend equivalents earned during the 2012-2014 performance period.

2014 LTI Program

No changes were made to the target LTI opportunities of the named executive officers for 2014, each of which is listed below.

Under the 2014 LTI program, 30% of each named executive officer's LTI opportunity was provided in the form of restricted stock units and the remaining 70% was provided in the form of performance shares, as follows:

In order to enhance our retention incentives, the 2014 restricted stock units generally vest in equal portions on each of the first three anniversaries of the grant date, provided the recipient continues to be employed by Duke Energy on each vesting date.

In order to emphasize pay-for-performance, the 2014 performance shares generally vest at the end of the three-year performance period only to the extent the TSR performance goal is satisfied. The Company utilized TSR as the performance measure for the 2014 LTI program in order to emphasize its importance in aligning the interests of executives and shareholders. The TSR performance goal is based on Duke Energy's relative TSR for the three-year performance period from January 1, 2014, to December 31, 2016, as compared to the companies in the Philadelphia Utility Index, as follows:

Retirement and Welfare Benefits

Our named executive officers participate in the retirement and welfare plans generally available to other eligible employees. In addition, in order to attract and retain key executive talent, we believe that it is important to provide our named executive officers with certain limited retirement benefits that are offered only to a select group of management. The retirement plans that are provided to our named executive officers, including the plans offered only to a select group of management, are described on pages 56-58. These benefits are comparable to the benefits provided by peers of Duke Energy, as determined based on market surveys.

Duke Energy provides the named executive officers with the same health and welfare benefits it provides to all other similarly situated employees, and at the same cost charged to all other eligible employees. The named executive officers also are entitled to the same post-retirement health and welfare benefits as those provided to similarly situated retirees.

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COMPENSATION DISCUSSION AND ANALYSIS

Perquisites

In 2014, Duke Energy provided our named executive officers with certain other perquisites, which are disclosed in footnote 7 to the Summary Compensation Table on page 52. Duke Energy provides these perquisites as well as other benefits to certain executives in order to provide competitive compensation packages. The cost of perquisites and other personal benefits is not part of base salary and, therefore, does not affect the calculation of awards and benefits under Duke Energy's other compensation arrangements (i.e., retirement and incentive compensation plans). Unless otherwise noted, each of our named executive officers was eligible to receive the perquisites and other benefits described in the following table.