Resignation Policy
We have a policy stating that members of the Board of Directors are to submit their resignations when they change employment or have another significant change in their professional roles and responsibilities. The normal retirement of those individuals who were members of the Board of Directors when the policy was adopted in 1998 is not considered a change for this purpose. The Corporate Governance Committee will determine whether any such resignation will be accepted. Any resignation that is accepted will likely be effective as of the end of the term of the director tendering the resignation.

Certain Relationships
We have had business relationships and engaged in certain transactions with affiliated parties. It is our policy to engage in transactions with related parties only on terms that are no less favorable to us than could be obtained in transactions with unrelated parties.

During 1999, certain of our subsidiaries retained the law firm of Robinson, Bradshaw & Hinson, P.A., of which Russell M. Robinson, II is a shareholder. The fees our subsidiaries paid for legal services to the law firm in 1999 represented less than 5% of the firm’s gross revenues for the year.

Compensation of Directors
We pay outside directors an annual retainer of $40,000. We also pay an outside director serving as Chairman of the Audit, Compensation, Corporate Governance, Corporate Performance Review or Finance Committee an additional $4,000 per year. Outside directors also receive a fee of $1,000 for attendance at each meeting of the Board of Directors, each committee meeting and other functions requiring their presence, together with expenses of attendance.

A director may elect to receive 50% of his or her retainer and attendance fees in the form of Duke Energy Common Stock or may defer that portion by having it held in trust for the director’s benefit and invested in Duke Energy Common Stock at market price. The director may elect to receive the remaining 50% of such compensation in cash or may elect to defer, until termination of his or her service on the Board of Directors, that portion in trust as shares of Duke Energy Common Stock or in an investment account that is credited with a market rate of interest.

In January and July of each year, each outside director is credited with 100 shares of Duke Energy Common Stock to be held in trust. Dividends paid on this stock will be reinvested in Duke Energy Common Stock. When a director’s service on the Board of Directors terminates, he or she will receive the shares held in trust for his or her account on the basis of the distribution schedule that he or she has chosen.

In 1999, outside directors began receiving annual grants of non-qualified stock options under the Duke Energy 1998 Long-Term Incentive Plan. The first grant, for a total of 1,800 options, was made on April 1, 1999, with subsequent annual grants, each for a total of 2,000 options, to be made at the same time executive officers receive awards. The grant for year 2000 was made on December 20, 1999, consistent with the grant date for year 2000 awards to executive officers.

After ten years on the Board of Directors, eligible directors participate in the Directors’ Charitable Giving Program. 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. A director may request that Duke Energy make donations under this program during the director’s lifetime, in which case the maximum donation will be reduced on a net present value basis. We maintain life insurance policies upon eligible directors to fund donations under the program. Eligible directors include only those who were members of the Board of Directors on February 18, 1998, and certain former directors who previously qualified for this benefit.

Directors are subject to stock ownership guidelines which, as originally adopted, required them to build and maintain holdings of Duke Energy Common Stock (or Common Stock equivalents) equal in market value to three times the annual retainer ($120,000). In October 1999, the Compensation Committee amended the guidelines to establish the target level of ownership as a fixed number of shares. The target level for outside directors under the amended guidelines is 2,000 shares. Each outside director is expected to attain this ownership level within five years from January 1, 1997, the implementation date of the guidelines, or from the beginning of his or her service on the Board of Directors, if after that date.

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