Item 1.01. Entry into a Material Definitive Agreement.
On November 13, 2021, Duke Energy Corporation, a Delaware corporation (the
"Corporation"), entered into a cooperation agreement (the "Cooperation
Agreement") with Elliott Investment Management L.P., a Delaware limited
partnership, Elliott Associates, L.P., a Delaware limited partnership, and
Elliott International, L.P., a Cayman Islands limited partnership (collectively,
"Elliott").
Pursuant to the Cooperation Agreement, the Corporation has agreed to take such
actions as are necessary within one business day to elect Idalene F. Kesner (the
"New Independent Director"), a previously identified independent
director-candidate by the Board, to the Corporation's board of directors (the
"Board"). In addition, the Corporation has agreed that the Corporation and
Elliott will cooperate and use their respective good faith efforts to identify
and mutually agree upon an additional independent director by February 15, 2022,
with expertise and skills as determined by the Board's Corporate Governance
Committee (the "Additional New Independent Director" and, together with the New
Independent Director, the "New Directors") and that, by March 31, 2022, the
Board and all applicable committees thereof will take such actions as are
necessary to elect the Additional New Independent Director to the Board.
Under the terms of the Cooperation Agreement, Elliott has agreed to abide by
customary standstill restrictions (subject to certain exceptions relating to
private communications to the Corporation) until the first anniversary of the
Cooperation Agreement (the "Cooperation Period"), including that Elliott will
not, among other things, (A) engage in transactions resulting in Elliott's
beneficial ownership exceeding 4.9% of the Corporation's common stock, or its
aggregate economic exposure exceeding 7.5% of the Corporation's common stock,
(B) seek any additional representation on the Board, (C) make any requests for
stock list materials or other books and records of the Corporation, (D) engage
in any solicitation of proxies or (E) make certain proposals relating to
extraordinary transactions publicly or in a manner that would require public
disclosure. The Cooperation Agreement provides that the standstill restrictions
will terminate automatically upon certain events, including, among other things,
the Corporation's material breach of the Cooperation Agreement and the
Corporation's entry into certain change-of-control and other extraordinary
transactions.
Under the Cooperation Agreement, Elliott has agreed to appear in person or by
proxy at any annual or special meeting of the Corporation's stockholders held
during the Cooperation Period and to vote (i) in favor of the slate of directors
nominated by the Board for election, and in accordance with the recommendations
of the Board on all other proposals and (ii) against the removal of any
incumbent directors or the election of any director nominees not recommended by
the Board; provided, however, that if both Institutional Shareholder Services
Inc. ("ISS") and Glass, Lewis & Co., LLC ("Glass Lewis") recommend otherwise
with respect to any of the Corporation's proposals at any such meeting (other
than proposals relating to the election or removal of directors, the size of the
Board, or filling vacancies on the Board), Elliott is permitted to vote in
accordance with the ISS and Glass Lewis recommendation. The Corporation and
Elliott also agreed to customary mutual non-disparagement obligations.
The Company has agreed that from the election of the Additional New Independent
Director as a member of the Board until the end of the Cooperation Period, the
size of the Board will be no greater than fifteen (15) members.
The foregoing description is qualified in its entirety by reference to the
Cooperation Agreement, a copy of which is attached hereto as Exhibit 10.1 and is
incorporated herein by reference.
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Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
New Director
On November 13, 2021 the Board appointed Dr. Kesner to the Board, effective
November 15, 2021, with an initial term expiring at the 2022 Annual Meeting. The
Board has also appointed Dr. Kesner to the Corporate Governance Committee and
the Operations and Nuclear Oversight Committee of the Board, effective November
15, 2021.
Dr. Kesner is the Dean and the Frank P. Popoff Chair of Strategic Management at
the Indiana University Kelley School of Business, becoming the first woman to
lead the School in 2013. The Board has affirmatively determined that Dr. Kesner
is independent pursuant to the Corporation's Standards for Assessing Director
Independence, the listing standards of the New York Stock Exchange and the rules
and regulations of the Securities and Exchange Commission.
As a non-employee director of the Corporation, Dr. Kesner will receive a
pro-rated payment of the cash and stock annual retainer and will be eligible for
other retainers (if applicable) in accordance with the Corporation's Director
Compensation Program, as set forth on Exhibit 10.3 of the Company's Form 10-Q,
filed with the SEC on August 3, 2017, and will be eligible to participate in the
Corporation's Directors' Savings Plan, which is described in the Annual Proxy
Statement filed with the SEC on March 23, 2021. Dr. Kesner is subject to the
Corporation's Stock Ownership Guidelines, which require outside directors to own
Duke Energy Corporation common stock (or common stock equivalents) with a value
equal to at least five (5) times the annual Board cash retainer (i.e., an
ownership level of $625,000) or retain fifty percent (50%) of his or her vested
annual equity retainer.
There are no arrangements or understandings between Dr. Kesner and any other
person pursuant to which Dr. Kesner was elected to the Board, other than with
respect to the matters referred to in Item 1.01. There are no transactions in
which Dr. Kesner has or will have an interest that would be required to be
disclosed pursuant to Item 404(a) of Regulation S-K under the Securities
Exchange Act of 1934, as amended, at this time.
Retirement of Independent Lead Director
On November 12, 2021, Michael G. Browning, currently the Independent Lead
Director of the Board, notified the Board of his voluntary decision to not stand
for reelection when his term expires at the 2022 Annual Meeting in accordance
with Board's retirement policy. Mr. Browning's decision to retire was not the
result of any dispute or disagreement with the Corporation, the Corporation's
management or the Board on any matter relating to the operations, policies or
practices of the Corporation. The Board, as of November 13, 2021, selected
Theodore F. Craver, Jr., an independent director of the Board, to serve as the
Independent Lead Director of the Board after Mr. Browning's retirement.
Item 8.01. Other Events.
On November 15, 2021, the Company issued a press release announcing the
Cooperation Agreement, Dr. Kesner's appointment to the Board, Mr. Browning's
retirement and Mr. Craver's's appointment as Independent Lead Director upon Mr.
Browning's retirement. A copy of the press release is attached hereto as Exhibit
99.1.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
10.1 Cooperation Agreement, dated as of November 13, 2021, by and among
Duke Energy Corporation, Elliott Investment Management L.P., a Delaware
limited partnership, Elliott Associates, L.P., a Delaware limited
partnership, and Elliott International, L.P., a Cayman Islands limited
partnership
99.1 Press Release, dated November 15, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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