EXHIBIT 10.4

 

PERFORMANCE AWARD AGREEMENT

 

This Performance Award Agreement (the “Agreement”) has been made as of
                                  (the “Date of Grant”) between Duke Energy
Corporation, a Delaware corporation, with its principal offices in Charlotte,
North Carolina (the “Corporation”), and James E. Rogers (the “Grantee”).

 

RECITALS

 

The Corporation has entered into an employment agreement with the Grantee dated
February 19, 2009 (the “Employment Agreement”), pursuant to which it has agreed
to make certain equity-based awards to the Grantee, including the award
memorialized by this Agreement (the “Award”).  The Award memorialized by this
Agreement is made pursuant to the Duke Energy Corporation 2006 Long-Term
Incentive Plan, as it may, from time to time, be further amended (the “Plan”). 
The applicable provisions of the Plan are incorporated in this Agreement by
reference, including the definitions of terms contained in the Plan (unless such
terms are otherwise defined herein).

 

AWARD

 

In accordance with the Plan and the Employment Agreement, the Corporation has
made this Award, effective as of the Date of Grant and upon the following terms
and conditions:

 

Section 1.  Number and Nature of Performance Shares and Tandem Dividend
Equivalents.

 

(a)                                  At maximum performance, the number of
Performance Shares and the number of tandem Dividend Equivalents subject to
Section 2(a)(i) and the remaining provisions of this Award (other than
Section 2(a)(ii)) are each                 ; at target performance, the number
of Performance Shares and the number of tandem Dividend Equivalents subject
Section 2(a)(i) and the remaining provisions of this Award (other than
Section 2(a)(ii)) are each               .  Such maximum and target number of
Performance Shares shall be subject to adjustment in respect of attainment of
safety goals as further described in Section 2(a)(i).  The Performance Shares
described in this Section 1(a) are herein referred to as the “Annual Performance
Shares.”

 

(b)                                 At maximum performance, the number of
Performance Shares and the number of tandem Dividend Equivalents subject to
Section 2(a)(ii) and the remaining provisions of this Award (other than
Section 2(a)(i)) are each               ; at target performance, the number of
Performance Shares and the number of tandem Dividend Equivalents subject
Section 2(a)(ii) and the remaining provisions of this Award (other than
Section 2(a)(i)) are each                  .  The Performance Shares described
in this Section 1(b) are herein referred to as the “Long-Term Performance
Shares” and, together with the Annual Performance Shares, as the “Performance
Shares.”

 

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(c)                                  Each Performance Share, upon becoming
vested before its expiration, represents a right to receive payment in the form
of one (1) share of Common Stock.  Each tandem Dividend Equivalent, after its
tandem Performance Share vests, represents a right to receive a cash payment
equivalent in amount to the aggregate cash dividends declared and paid on one
(1) share of Common Stock for the period beginning on the Date of Grant and
ending on the date the vested, tandem Performance Share is paid or deferred and
before the Dividend Equivalent expires.  Performance Shares and Dividend
Equivalents are used solely as units of measurement, and are not shares of
Common Stock and the Grantee is not, and has no rights as, a shareholder of the
Corporation by virtue of this Award.

 

Section 2.  Vesting of Performance Shares.

 

(a)                                  Performance Goals

 

Except as otherwise provided in this Section 2, the Performance Shares shall
vest only if and to the extent the Compensation Committee of the Board of
Directors of the Corporation (the “Committee”), or its delegatee, determines
that the performance goals for the respective performance period (the
“Performance Goals”) have been met (provided that such determination in respect
of any performance period shall be made not later than the first March 15
following the end of the applicable performance period).  To the extent
Performance Goals are not met, the Performance Shares that do not so become
vested shall be forfeited.

 

(i)                                     The following Performance Goal shall
apply with respect to the Annual Performance Shares and the related Dividend
Equivalents.  Provided Grantee’s continuous employment by the Corporation,
including Subsidiaries, has not terminated, or as otherwise provided in Sections
2(b) or 2(c), 80% of such Performance Shares shall become vested upon the
written determination by the Committee, or its delegatee, in its sole
discretion, of the extent to which the Corporation achieves the same goals
(including the safety penalty and adder) established by the Committee for the
other executive officers of the Corporation in respect of corporate performance
under the Duke Energy Corporation Executive Short-Term Incentive Plan for the
period beginning                           and ending
                                    (the “Short-Term Performance Period”), and
the remaining 20% of such Performance Shares shall become vested upon the
written determination by the Committee, or its delegatee, in its sole
discretion, of the extent to which the Grantee achieves the individual goals
established by the Committee for the Short-Term Performance Period (as set forth
on Schedule I hereto), in each case in accordance with the applicable vesting
percentage specified in the following schedule (expressed as a percent of the
target number of Annual Performance Shares) and subject to the adjustments
described therein, and such Annual Performance Shares that do not so become
vested shall be forfeited:

 

Nature of
Performance
Goal*

 

Vesting Percentage
(Minimum Performance)

 

Vesting
Percentage (Target
Performance)

 

Vesting Percentage
(Maximum
Performance)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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*When a performance determination is at a level between those specified, the
Committee, or its delegatee, in its sole discretion, shall interpolate to
determine the applicable vesting percentage.

 

** If EPS performance is at less than the minimum level, the Committee reserves
discretion to reduce the amounts otherwise payable by reason of attainment of
the O&M and Reliability Goals.

 

(ii)                                  The following Performance Goal shall apply
with respect to the Long-Term Performance Shares and the related Dividend
Equivalents.  Provided Grantee’s continuous employment by the Corporation,
including Subsidiaries, has not terminated, or as otherwise provided in Sections
2(b) or 2(c), such Performance Shares shall become vested upon the written
determination by the Committee, or its delegatee, in its sole discretion, of the
extent to which the Corporation achieves the same performance share goals
established by the Committee for the other executive officers of the Corporation
under the Corporation’s         long-term incentive program for the period
beginning                            and ending                         (the
“Long-Term Performance Period” and, together with the Short-Term Performance
Period, each a “Performance Period”) in accordance with the applicable vesting
percentage specified in the following schedule (expressed as a percent of the
target number of Long-Term Performance Shares), and such Long-Term Performance
Shares that do not so become vested shall be forfeited:

 

Nature of
Performance
Goal*

 

Vesting Percentage
(Minimum Performance)

 

Vesting
Percentage (Target
Performance)

 

Vesting Percentage
(Maximum
Performance)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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*When a performance determination is at a level between those specified, the
Committee, or its delegatee, in its sole discretion, shall interpolate to
determine the applicable vesting percentage.

 

(b)                                 Certain Terminations

 

The provisions of this Section 2(b) shall apply in the event that, prior to the
date that the determination of the achievement of each respective Performance
Goal is made, the Grantee’s continuous employment by the Corporation, including
Subsidiaries, terminates as follows:

 

(i)                                     If such employment terminates as a
result of termination of such employment (1) by the Corporation without “Cause”
(as defined in the Employment Agreement) or (2) by the Grantee with “Good
Reason” (as defined in the Employment Agreement) or (3) by reason of retirement
of the Grantee with approval of the Board of Directors of the Corporation (the
“Board”), subject to the timely execution and non-revocation of a release of
claims as described in the Employment Agreement, each Performance Share
outstanding at the time of such termination shall remain outstanding and shall
be payable (if at all) as determined with its terms without regard to the
termination of employment.

 

(ii)                                  If such employment terminates (1) as the
result of the Grantee’s death or (2) as the result of the Grantee’s disability
(meaning any physical or mental illness or

 

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injury that precludes Grantee from performing any job for which he is qualified
and able to perform based upon his education, training or experience), subject
to the timely execution and non-revocation of a release of claims as further
described in the Employment Agreement, each Performance Share outstanding at the
time of such termination shall remain outstanding and shall be payable (if at
all) as determined with its terms without regard to the termination of
employment, provided that the amount payable shall be such proportion of the
amount otherwise payable that the number of days elapsed at the time of
termination (inclusive) in the applicable Performance Period not yet concluded
at the time of termination bears to the total number of days in the applicable
Performance Period.

 

(iii)                               If such employment terminates as a result of
termination of such employment (1) by the Employee other than with “Good Reason”
(as defined in the Employment Agreement) and other than by reason of retirement
with the approval of the Board or (2) by the Corporation  for “Cause” (as
defined in the Employment Agreement), each Performance Share outstanding at the
time of such termination shall expire and be forfeited immediately.

 

(iv)                              If, following the occurrence of a Change in
Control (as defined in the Plan as in effect on the effective date of the
Employment Agreement) and before the second anniversary of such occurrence, such
employment is terminated (1) by the Corporation without “Cause” (as defined in
the Employment Agreement), (2) by the Grantee with “Good Reason” (as defined in
the Employment Agreement) or (3) by reason of retirement of the Grantee with the
approval of the Board, each Performance Share subject to this Award that is then
outstanding shall vest immediately upon such termination based on the target
level of performance, irrespective of any subsequent determination of the
achievement of each Performance Goal.

 

(c)                                  Approved Leave of Absence

 

In the event that Grantee is on an employer-approved, personal leave of absence
on the date that the determination of the achievement of each Performance Goal
is made, then, unless prohibited by law, vesting shall be postponed and shall
not occur unless and until Grantee returns to active service in accordance with
the terms of the approved personal leave of absence and before November 1 of the
calendar year immediately following the calendar year in which the applicable
Performance Period ends, and if the Grantee returns after March 15 of the year
following the year in which the applicable Performance Period ends, payment
shall occur not later than the year in which the Grantee returns.  In the event
Grantee does not return to active service from such leave of absence prior to
November 1 of the calendar year immediately following the calendar year in which
the Performance Period ends, any Performance Shares covered by this Award that
were not vested as of the commencement of such leave shall be immediately
forfeited (as if Grantee terminated employment for purposes of Section 4
hereof).   Further, in the event that such determination is made and during any
portion of the applicable Performance Period the Grantee was on
employer-approved, personal leave of absence, the applicable vesting percentage
shall be determined by the Committee, or its delegatee, in its sole discretion,
to reflect only that portion of the applicable Performance Period during which
such employment continued while the Grantee was entitled to payment of salary.

 

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Section 3.  Grantee Obligation under Employment Agreement.  Grantee acknowledges
that this Award is subject to Grantee’s obligations under the confidentiality,
noncompetition and nonsolicitation provisions set forth in Section 9 of the
Employment Agreement.

 

Section 4.  Forfeiture/Expiration.  Any Performance Share subject to this Award
shall be forfeited upon the termination of the Grantee’s continuous employment
by the Corporation, including Subsidiaries, from the Date of Grant, except to
the extent otherwise provided in Section 2.  Any Dividend Equivalent subject to
this Award shall expire at the time its tandem Performance Share (i) is vested
and paid, or deferred, (ii) is forfeited, or (iii) expires.  The Grantee agrees
that, in the event he violates the confidentiality, noncompetition or
nonsolicitation provisions set forth in Section 9 of the Employment Agreement,
(1) he will forfeit and not be entitled to any further payments in accordance
with Section 2(b)(i) hereof and (2) if such violation is after the termination
of his employment, he will be obligated to repay to the Corporation any amounts
paid (determined as of the date of payment) after the termination of employment
pursuant to Section 2(b) hereof, with such sum reduced by any amount previously
repaid pursuant to this Section 4.  Such amount shall be paid to the Corporation
in cash in a single sum within ten (10) business days after the first date of
the violation, whether or not the Corporation has knowledge of the violation or
has made a demand for payment. Any such payment made following such date shall
bear interest at a rate equal to the prime lending rate of Citibank, N.A. (as
periodically set) plus 1%.

 

Section 5.  Dividend Equivalent Payment.  Payment with respect to any Dividend
Equivalent subject to this Award that is in tandem with a Performance Share that
is vested and paid shall be paid in cash to the Grantee at the same time as the
vested Performance Share as provided in Section 6, or, if the vested Performance
Share is deferred by Grantee as provided in Section 6, payment with respect to
the tandem Dividend Equivalent shall likewise be deferred.  The Dividend
Equivalent payment amount shall equal the aggregate cash dividends declared and
paid with respect to one (1) share of Common Stock for the period beginning on
the Date of Grant and ending on the date the vested, tandem Performance Share is
paid or deferred and before the Dividend Equivalent expires.  However, should
the timing of a particular payment under Section 6 to the Grantee in shares of
Common Stock in conjunction with the timing of a particular cash dividend
declared and paid on Common Stock be such that the Grantee receives such shares
without the right to receive such dividend and the Grantee would not otherwise
be entitled to payment under the expiring Dividend Equivalent with respect to
such dividend, the Grantee, nevertheless, shall be entitled to such payment. 
Dividend Equivalent payments shall be subject to withholding for taxes.  Any
required tax withholdings in respect of Dividend Equivalents attributable to
Performance Shares shall be satisfied by reducing the cash payment in respect of
the required withholding amount, unless the Committee, or its delegatee, in its
discretion, permits Grantee to satisfy such tax obligation by other payment to
the Corporation.

 

Section 6.  Payment of Performance Shares.   Payment of Performance Shares
subject to this Award that become vested shall be made to the Grantee as soon as
practicable following the end of the applicable Performance Period (and in any
event on or before the first March 15 following the end of the applicable
Performance Period), except to the extent deferred by the Grantee in accordance
with such procedure as the Committee, or its delegatee, may prescribe from time
to time; provided that, in the case of Performance Shares that become vested by
reason

 

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of the application of Section 2(b)(iv), payment shall be made as soon as
practicable and in any event within thirty (30) days following the applicable
termination of employment unless the Change in Control does not constitute a
change in the ownership or effective control of the Corporation or a change in
the ownership of a substantial portion of the assets of the Corporation within
the meaning of Section 409A of the Code, in which case payment shall be made as
soon as practicable following the end of the applicable Performance Period (and
in any event on or before the first March 15 following the end of the applicable
Performance Period); and provided further that payment shall in any event be
made in a manner required to avoid accelerated taxation and/or tax penalties
under Section 409A of the Code. Payment (or deferrals, as applicable) shall be
subject to withholding for taxes. Payment shall be in the form of one (1) share
of Common Stock for each full vested Performance Share, and any fractional
vested Performance Share shall be rounded down to the next whole share for
purposes of both vesting under Section 2 and payment under Section 6. 
Notwithstanding the foregoing, the number of shares of Common Stock that would
otherwise be paid or deferred (valued at Fair Market Value on the date the
respective Performance Share became vested, or if later, payable) shall be
reduced by the Committee, or its delegatee, in its sole discretion, to fully
satisfy tax withholding requirements, unless the Committee, or its delegate, in
its discretion requires Grantee to satisfy such tax obligation by other payments
to the Corporation.

 

Section 7.  No Employment Right.  Nothing in this Agreement or in the Plan shall
confer upon the Grantee the right to continued employment with the Corporation
or any Subsidiary, or affect the right of the Corporation or any Subsidiary to
terminate the employment or service of the Grantee at any time for any reason.

 

Section 8.  Nonalienation.  The Performance Shares and Dividend Equivalents
subject to this Award are not assignable or transferable by Grantee.  Upon any
attempt to transfer, assign, pledge, hypothecate, sell or otherwise dispose of
any such Performance Share or Dividend Equivalent, or of any right or privilege
conferred hereby, or upon the levy of any attachment or similar process upon
such Performance Share or Dividend Equivalent, or upon such right or privilege,
such Performance Share or Dividend Equivalent, or such right or privilege, shall
immediately become null and void.

 

Section 9.  Determinations.  Determinations by the Committee, or its delegatee,
shall be final and conclusive with respect to the interpretation of the Plan and
this Agreement.

 

Section 10.  Governing Law.  This Agreement shall be governed, construed and
enforced in accordance with the laws of the State of Delaware applicable to
transactions that take place entirely within that state.

 

Section 11.  Conflicts with Plan, Correction of Errors, Section 409A and
Grantee’s Consent.  In the event that any provision of this Agreement conflicts
in any way with a provision of the Plan, such Plan provision shall be
controlling and the applicable provision of this Agreement shall be without
force and effect to the extent necessary to cause such Plan provision to be
controlling.  In addition, in the event that any provision of this Agreement
and/or Plan conflicts in any way with a provision of the Employment Agreement,
such Employment Agreement provision shall be controlling and the applicable
provision of this Agreement and/or

 

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Plan shall be without force and effect to the extent necessary to cause such
Employment Agreement provision to be controlling, except to the extent such
treatment would constitute a material modification of the Plan requiring
stockholder approval.  In the event that, due to administrative error, this
Agreement does not accurately reflect an Award properly granted to the Grantee
pursuant to the Plan and the Employment Agreement, the Corporation, acting
through its Executive Compensation and Benefits Department, reserves the right
to cancel any erroneous document and, if appropriate, to replace the cancelled
document with a corrected document.  To the extent applicable, it is intended
that this Agreement comply with the provisions of Section 409A of the Code and
that this Award not result in unfavorable tax consequences to Grantee under
Section 409A of the Code.  This Agreement will be administered and interpreted
in a manner consistent with this intent, and any provision that would cause this
Agreement to fail to satisfy Section 409A of the Code will have no force and
effect until amended to comply therewith (which amendment may be retroactive to
the extent permitted by Section 409A of the Code).  The Corporation and the
Grantee agree to work together in good faith in an effort to comply with
Section 409A of the Code including, if necessary, amending this Agreement based
on further guidance issued by the Internal Revenue Service from time to time,
provided that the Corporation shall not be required to assume any increased
economic burden.  Notwithstanding anything contained herein to the contrary, to
the extent required in order to avoid accelerated taxation and/or tax penalties
under Section 409A of the Code, the Grantee shall not be considered to have
terminated employment with Corporation for purposes of this Agreement and no
payments shall be due to him under this Agreement which are payable upon his
termination of employment until he would be considered to have incurred a
“separation from service” from the Corporation within the meaning of
Section 409A of the Code.  To the extent required in order to avoid accelerated
taxation and/or tax penalties under Section 409A of the Code, amounts that would
otherwise be payable and benefits that would otherwise be provided pursuant to
this Agreement during the six-month period immediately following the Grantee’s
termination of employment shall instead be paid within 30 days following the
first business day after the date that is six months following his termination
of employment (or upon his death, if earlier).  In addition, for purposes of
this Agreement, each amount to be paid or benefit to be provided to the Grantee
pursuant to this Agreement shall be construed as a separate identified payment
for purposes of Section 409A of the Code.  Grantee acknowledges and agrees that
payments made under this Agreement are subject to the Corporation’s requirement
that the Grantee reimburse the portion of any payment where such portion of the
payment was predicated upon the achievement of financial results that are
subsequently the subject of a restatement caused or partially caused by
Grantee’s fraud or misconduct.

 

Section 12.  Compliance with Law.  The Corporation shall make reasonable efforts
to comply with all applicable federal and state securities laws applicable to
the Plan and this Award; provided, however, notwithstanding any other provision
of this Award, the Corporation shall not be obligated to deliver any shares of
Common Stock pursuant to this Award if the delivery thereof would result in a
violation of any such law.

 

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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed and
granted in Charlotte, North Carolina, to be effective as of the Date of Grant.

 

ATTEST:

DUKE ENERGY CORPORATION:

 

 

 

 

 

By:

Marc E. Manly

By:  James H. Hance, Jr.

 

Corporate Secretary

Its:    Chairman, Compensation Committee

 

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Acceptance of Performance Award

 

IN WITNESS OF Grantee’s acceptance of this Performance Award and Grantee’s
agreement to be bound by the provisions of this Agreement and the Plan, Grantee
has signed this Agreement effective this            day of
                              .

 

 

 

 

Grantee’s Signature

 

James E. Rogers

 

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SCHEDULE I

Short-Term Performance Period

Individual Performance Goals

 

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