EXHIBIT 10.5


 


PERFORMANCE AWARD AGREEMENT


 


This Performance
Award Agreement (the “Agreement”) has been made as of February 19, 2009 (the “Date of Grant”) between Duke Energy Corporation, a Delaware corporation, with its
principal offices in Charlotte, North Carolina (the “Corporation”), and                                 
(the “Grantee”).


 


RECITALS


 


Under the Duke Energy
Corporation 2006 Long-Term Incentive Plan, as it may, from time to time, be
further amended (the “Plan”), the Compensation Committee of the Board of
Directors of the Corporation (the “Committee”), or its delegatee, has
determined the form of this Agreement and selected the Grantee, as an Employee,
to receive the award evidenced by this Agreement (the “Award”) and the
Performance Shares and tandem Dividend Equivalents that are subject
hereto.  The applicable provisions of the
Plan are incorporated in this Agreement by reference, including the definitions
of terms contained in the Plan (unless such terms are otherwise defined
herein).


 


AWARD


 


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


 


Section 1.                            Number and Nature of Performance Shares and Tandem Dividend Equivalents.  At target performance, the
number of Performance Shares and the number of tandem Dividend Equivalents
subject to this Award are each                                     ;
at maximum performance, the number of Performance Shares and the number of tandem
Dividend Equivalents subject to this award are equal to 150% of the number of
Performance Shares and tandem Dividend Equivalents at target performance,
respectively.  The number of such
Performance Shares that may become vested upon determination of achievement of
each Performance Goal at maximum, as provided in Section 2(a), is 150% of
the number that becomes vested at target performance.  Each Performance Share, upon becoming vested,
represents a right to receive payment in the form of one (1) share of
Common Stock.  Each tandem Dividend
Equivalent, after its tandem Performance Share vests, represents a right to
receive a cash payment equivalent in amount to the aggregate cash dividends
declared and paid on one (1) share of Common Stock for the period
beginning on the Date of Grant and ending on the date the vested, tandem
Performance Share is paid or deferred and before the Dividend Equivalent expires.  Performance Shares and Dividend Equivalents
are used solely as units of measurement, and are not shares of Common Stock and
the Grantee is not, and has no rights as, a shareholder of the Corporation by
virtue of this Award.


 


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Section 2.                            Vesting of Performance Shares.


 


(a)  Performance Goals. 
Except as otherwise provided in this Section 2, the Performance
Shares shall vest only if and to the extent the Committee, or its delegatee,
determines that the Performance Goals (as defined below) have been met
(provided that such determination shall be made not later than the first March 15
following the end of the Performance Period, as defined below).  To the extent Performance Goals are not met,
the Performance Shares that do not so become vested shall be forfeited.


 


(i)                                     The following Performance Goal shall apply
with respect to one-half of the Performance Shares and Dividend Equivalents
covered by this Agreement.  Provided
Grantee’s continuous employment by the Corporation, including Subsidiaries, has
not terminated, or as otherwise provided in Sections 2(b) or 2(c), up to one-half
of the Performance Shares subject to this Award shall become vested upon the
written determination by the Committee, or its delegatee, in its sole
discretion, of the extent to which the Corporation achieves the “TSR
Performance Goal,” which is the Corporation’s Total Shareholder Return (“TSR”)
percentile ranking among the companies that are in the Philadelphia Utility
Index as of the end of the Performance Period, with higher percentile ranking
for more positive/less negative TSR, for the period beginning January 1,
2009 and ending December 31, 2011 (“Performance Period”), in accordance
with the applicable vesting percentage specified for such percentile ranking in
the following schedule:


 


	
  Percentile

  Ranking

  	
   

  	
  Vesting

  Percentage

  (Applicable to

  Target # of

  Shares)

  	
   

  	
  Vesting

  Percentage

  (Applicable to

  Maximum # of

  Shares)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






*     When such determination is of a percentile
ranking between those specified, the Committee, or its delegatee, in its sole
discretion, shall interpolate to determine the applicable vesting percentage.


 


Such Performance Shares that
do not so become vested shall be forfeited. 
For purposes of this Agreement, TSR means the change in fair market
value over a specified period of time, expressed as a percentage, 


 


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of an initial investment in
specified common stock, with dividends reinvested, all as determined utilizing
such methodology as the Committee, or its delegatee, shall approve, provided,
however, that the Committee, or its delegatee, shall have the discretion to
make appropriate and equitable adjustments to the TSR of any company (including
the Corporation) whose shares trade ex-dividend as of December 31, 2011,
provided, however, that no such adjustment shall be permitted if it would
result in the loss of the otherwise available exemption of the Award under Section 162(m) of
the Code.  In the event that a company
becomes a member of the Philadelphia Utility Index following January 1,
2009, such company shall not be taken into account for purposes of this
Agreement.


 


(ii)                                  The following Performance Goal shall apply
with respect to one-half of the Performance Shares and Dividend Equivalents
covered by this Agreement.  Provided
Grantee’s continuous employment by the Corporation, including Subsidiaries, has
not terminated, or as otherwise provided in Sections 2(b) or 2(c), up to one-half
of the Performance Shares subject to this Award shall become vested upon the
written determination by the Committee, or its delegatee, in its sole discretion,
of the extent to which the Corporation achieves the “CAGR Performance Goal,”
which is based on the Corporation’s compounded annual growth rate (“CAGR”) with
respect to its adjusted diluted earnings per share (“EPS”), as calculated in
accordance with Exhibit A, for the Performance Period, in
accordance with the applicable vesting percentage specified for CAGR in the
following schedule:


 


	
  CAGR

  	
   

  	
  Vesting

  Percentage

  (Applicable to

  Target # of Shares)

  	
   

  	
  Vesting

  Percentage

  (Applicable to

  Maximum # of

  Shares)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






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


 


Such Performance Shares that
do not so become vested shall be forfeited.


 


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(b) In the event that,
prior to the date that the determination of the achievement of each Performance
Goal is made, the Grantee’s continuous employment by the Corporation, including
Subsidiaries, terminates, the Performance Shares subject to this Award are
thereupon forfeited, except that if such employment terminates (i) at a
time when Grantee has attained age 55 and has at least five years of vesting
service under the Duke Energy Retirement Cash Balance Plan or Cinergy Corp.
Non-Union Employees’ Pension Plan, or under another retirement plan of the
Corporation or a Subsidiary which plan the Committee, or its delegatee, in its
sole discretion, determines to be the functional equivalent of the Duke Energy
Retirement Cash Balance Plan or the Cinergy Corp. Non-Union Employees’ Pension
Plan, unless the Committee, or its delegatee, in its sole discretion,
determines that Grantee is in violation of any obligation identified in Section 3,
(ii) as the result of the Grantee’s death, (iii) as the result of the
Grantee’s permanent and total disability within the meaning of Code Section 22(e)(3),
(iv) as the result of the termination of such employment by the
Corporation, or employing Subsidiary, other than for cause, as determined by
the Corporation or employing Subsidiary, in its sole discretion, or (v) as
the direct and sole result, as determined by the Corporation, or employing
Subsidiary, in its sole discretion, of the divestiture of assets, a business,
or a company, by the Corporation or a Subsidiary, the Performance Shares
subject to this Award shall vest upon such determination of the achievement of
each Performance Goal, at such vesting percentage determined by the Committee,
or its delegatee, in its sole discretion, by prorating on the basis of the
portion of the Performance Period that such employment continued while Grantee
was entitled to payment of salary (unless such termination occurs after the end
of the Performance Period, in which event the number of Performance Shares
earned, if any, shall not be prorated).


 


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


 


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(c) In the event that a
Change in Control occurs before the Performance Period has ended and (i) before
the Grantee’s continuous employment by the Corporation, including Subsidiaries,
terminates, or (ii) after such employment terminates during the
Performance Period, (A) at a time when Grantee is considered “retired”,
unless the Corporation, in its sole discretion, determines that Grantee is in
violation of any obligation identified in Section 3, or (B) as the
result of an event listed in items (ii) — (v) of the first sentence
of Section 2(b), the Performance Shares subject to this Award shall vest
upon such occurrence, at such vesting percentage determined by the Committee,
or its delegatee, in its sole discretion, by prorating down, assuming
performance at the target level for each Performance Goal, on
the basis of the portion of the Performance Period that has elapsed prior to
the time of such occurrence (or such earlier termination of employment), and
the remaining Performance Shares shall be forfeited, irrespective of any
subsequent determination of the achievement of each Performance Goal.


 


Section 3.                            Violation of Grantee
Obligation.  In consideration of the continued vesting
opportunity provided under Section 2 following the termination of Grantee’s
continuous employment by the Corporation, including Subsidiaries, if, at the
time of such termination of employment, Grantee is considered “retired”,
Grantee agrees that during the period beginning with such termination of
employment and ending with the third anniversary of the Date of Grant (“Restricted
Period”), Grantee shall not (i) without the prior written consent of the
Corporation, or its delegatee, become employed by, serve as a principal,
partner, or member of the board of directors of, or in any similar capacity
with, or otherwise provide service to, a competitor, to the detriment, of the
Corporation or any Subsidiary, (ii) violate any of Grantee’s other
noncompetition obligations, or any of Grantee’s nonsolicitation or
nondisclosure obligations, to the Corporation or any Subsidiary; or (iii) except
as required by subpoena or other legal process (in which event the Grantee will
give the Chief Legal Officer of the Corporation prompt notice of such subpoena
or other legal process in order to permit the Corporation or any affected
individual to seek appropriate protective orders), publish or provide any oral
or written statements about the Corporation or any Subsidiary, any of the
Corporation’s or any Subsidiary’s current or former officers, executives,
directors, employees, agents or representatives or any initiative, program or
policy of the Corporation or any Subsidiary relating to any matter whatsoever
that are disparaging, slanderous, libelous or defamatory, or that disclose
private or confidential information about their business affairs, or that
constitute an intrusion into their private lives, or that give rise to
unreasonable publicity about their private lives, or that place them in a false
light before the public, or that constitute a misappropriation of their name or
likeness. The noncompetition obligations of clause (i) of the preceding
sentence shall be limited in scope and shall be effective only with respect to
competition with the Corporation or any Subsidiary in the businesses of:  production, transmission, distribution, or
retail or wholesale marketing or selling of electricity; resale or arranging
for the purchase or for the resale, brokering, marketing, or trading of
electricity or derivatives thereof; energy management and the provision of
energy 


 


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solutions; development and management of
fiber optic communications systems; development and operation of power
generation facilities, and sales and marketing of electric power, domestically
and abroad; and any other business in which the Corporation, including Subsidiaries,
is engaged at the termination of Grantee’s continuous employment by the
Corporation, including Subsidiaries; and within the following geographical
areas (i) any country in the world where the Corporation, including
Subsidiaries, has at least US$25 million in capital deployed as of termination
of Grantee’s continuous employment by Corporation, including Subsidiaries; (ii) the
continent of North America; (iii) the United States of America and Canada;
(iv) the United States of America; (v) the states of North Carolina,
South Carolina, Virginia, Georgia, Florida, Texas, California, Massachusetts,
Illinois, Michigan, New York, Colorado, Oklahoma and Louisiana; (vi) the
states of North Carolina, South Carolina, Texas, Colorado, Ohio, Kentucky, and
Indiana; and (vii) any state or states with respect to which was conducted
a business of the Corporation, including Subsidiaries, which business
constituted a substantial portion of Grantee’s employment.  The Corporation and Grantee intend the above
restrictions on competition in geographical areas to be entirely severable and
independent, and any invalidity or enforceability of this provision with
respect to any one or more of such restrictions, including areas, shall not
render this provision unenforceable as applied to any one or more of the other
restrictions, including areas.  If any
part of this provision is held to be unenforceable because of the duration,
scope or area covered, the Corporation and Grantee agree to modify such part,
or that the court making such holding shall have the power to modify such part,
to reduce its duration, scope or area, including deletion of specific words and
phrases, i.e., “blue penciling”, and in its modified, reduced or blue pencil
form, such part shall become enforceable and shall be enforced.  Nothing in Section 3 shall be construed
to prohibit Grantee from being retained during the Restricted Period in a
capacity as an attorney licensed to practice law, or to restrict Grantee from
providing advice and counsel in such capacity, in any jurisdiction where such
prohibition or restriction is contrary to law.


 


Section 4.                            Forfeiture.  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, or (ii) is forfeited.


 


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 


 


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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
income 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, requires 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 on the
earlier of: (i) the calendar year immediately following the Performance
Period, or (ii) within 30 days after the occurrence of a “change in the
ownership,” a “change in the effective control” 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, except to the extent deferred by the Grantee
in accordance with such procedures as the Committee, or its delegatee, may
prescribe from time to time or except to the extent 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 up 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 payment to the Corporation. 
In the event that payment, after any reduction in the number of shares
of Common Stock to satisfy withholding for tax requirements, would be for less
than ten (10) shares of Common Stock, then, if so determined by the
Committee, or its delegatee, in its sole discretion, payment, instead of being
made in shares of Common Stock, shall be made in a cash amount equal in value
to the shares of Common Stock that would otherwise be paid, valued at Fair
Market Value on the date the respective Performance Shares became vested.


 


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 


 


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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 the event that, due to administrative error, this Agreement does not
accurately reflect an Award properly granted to the Grantee pursuant to the
Plan, 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.  It is the intention of the Corporation and
the Grantee that this Award not result in unfavorable tax consequences to
Grantee under Code Section 409A. 
Accordingly, Grantee consents to such amendment of this Agreement as the
Corporation may reasonably make in furtherance of such intention, and the
Corporation shall promptly provide, or make available to, Grantee a copy of any
such amendment.


 


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 


 


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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.


 


Notwithstanding the
foregoing, this Award is subject to cancellation by the Corporation in its sole
discretion unless the Grantee, by not later than                         , 2009,
has signed a duplicate of this Agreement, in the space provided below, and
returned the signed duplicate to the Executive Compensation and Benefits
Department - Performance Award [(STO6E)], Duke Energy Corporation, P. O.
Box 1007, Charlotte, NC 28201-1007, which, if, and to the extent, permitted by
the Executive Compensation and Benefits Department, may be accomplished by
electronic means.


 


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.


 


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  ATTEST:

  	
  DUKE ENERGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Corporate Secretary

  	
  Its:

  	
  Chief Executive Officer

  
					



 


 


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
this            day of                                           , 2009.


 


 


	
   

  	
   

  
	
   

  	
  Grantee’s Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (print name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (address)

  



 


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