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1999
Noon 1

This meeting was held September 19, 2000 at Catawba Nuclear Station and was hosted by Rick Priory.

Opening Comments:
Rick Priory: You completed the shortest nuclear refueling outage in our company's history, at 28.7 days, with the lowest dose record ever achieved. And you had no outage-related injuries. You recorded three million safe work hours, … and were recognized as providing the second lowest nuclear fuel cost in the nation - only to be beat by McGuire! Combine these accomplishments with last year's capacity factor approaching 91 percent, your record runs of 180 days and 199 days, your station generation record (17,929,117 mWh) - the best in the world, and it adds up to a great performance by a great team. Our board, our shareholders and your fellow teammates appreciate the fine work you've done.

Advocate: The company has asked for, and received, top quartile performance from the employees. For this the employees receive hollow words and bottom, or near bottom, quartile pay and benefits.

Nuclear Industry Update:
Rick Priory: The demand for electricity in this country continues to grow. In California, New York and elsewhere, we're running into tight electric markets. As a result, the value of our product has risen significantly. There are wonderful growth opportunities before us, and Duke Energy is poised to capture as much of that growth as we possibly can, and to convert it into value for our employees and shareholders.

Advocate: Growth may be converted to value for the shareholders and Board of Directors, but the record shows that precious little ever trickles down to the employees. To the contrary, as Duke Energy vacuums in more wealth, the employee benefits are constantly hacked away.

Rick Priory: Things are progressing well for delivery of MOX fuel. The test facility should be ready in 2003, and the fuel should begin being delivered for use at Catawba and McGuire in about 2007.

Advocate: Now nuclear employees can look forward to increased doses of ionizing radiation.

The MOX issue was discussed at the last shareholder's meeting:

Shareholder's Meeting 2000

Corporate Highlights:
Rick Priory: …All of our activities are geared toward telling and selling the Duke Energy story.

Advocate: No argument here; telling and selling = hype and propaganda.

Rick Priory: Duke Energy North America (DENA) continues to be a major player in California. We're trying to be part of the solution to the energy demand challenges they're facing. The current situation in California came about due to two primary factors - the fact that no new capacity has been built in the state for 10 years, and the fact that plant licensing is an extremely long and difficult process in California. In Connecticut it took us 11 months to license and build a facility to address a supply crisis a few years ago. In California, it takes about five years. As a result, the state simply does not have enough generating capacity. We have told the governor we can build 3,000 megawatts of capacity by next summer to help relieve the problem, if he will work with us on the permitting and licensing. We offered to sell them capacity for $50 per megawatt hour through a five-year contract. Unfortunately, they're still studying our proposals. The bottom line is that we'll only be able to help as much as they'll let us.

Advocate: Deregulation was going to make electricity soooo cheap. The people of California are very wise to study the proposal long and hard before accepting any "help" from Duke Energy. Duke Energy helped their employees by stripping away much of their pension and other benefits. They can surely find many ways to "help" the people of California.

Rick Priory: …Electricity is a commodity market…

Advocate: Yes it is, and so is gas. Gas and electricity are worth no more from ABC Company than XYZ Company. But Duke is now jumping through hoops to create "brand awareness." A brand is achieved when consumers value one product over another and are willing to pay more for it, just because of the brand. Would you be willing to pay more for a certain brand of electricity?

Questions:
Employee: We're getting such good press and such good reviews on Wall Street about our stock. Do you foresee a split?

Rick Priory: When we were an electric utility company, many of our investors were retail, rather than institutional, investors. They typically bought small numbers of securities and were sensitive to the price of that security. And they were often unwilling to buy a security that cost $100 a share. Duke Energy is a growing company. Large institutions are buying into us because they appreciate the growth and value those earnings. These large institutions generally view splitting stock as a waste of time and money because of the associated costs. So there has to be some real value in splitting the stock. If the stock remains in the $80 to $82 range for a period of time, the board may consider whether splitting the stock would enhance the value of the security. But that would be a decision the board would have to make. This is definitely a question that's on shareholders' minds, though. I even get postcards at home with nothing but the words, "Split the stock." on them! Incidentally, a good deal of research has been done on this subject, and results indicate that stock splits really don't create any value.

Advocate: Let the record show that we are in total agreement with Mr. Priory on at least one issue. Stock splits are a constant topic of conversation among public investors. We have yet to figure out what they think a stock split will gain them. If they own 1,000 shares of stock, worth $100,000, after a two for one split, they will own 2,000 shares of stock, worth $100,000. The shares will double; the price will be halved. The net gain from a split will always be zero! They will not have gained one cent! And, there have been studies that indicate that a stock, more often than not, will decrease in value after the split. Yes, stock splitting is a waste of time and money. Evidently, on some level, there is a belief that the value of one's holdings will double with a two for one split. What else could explain the avid public interest in stock splits? There are many avenues for employees to pursue in regaining their lost benefits and improving their futures. Obsessing about stock splits is not one of them.

Employee: Part of the allure when I was hired by Duke Power was that the company was so diverse and offered many avenues for advancement. In the months directly before and after the creation of Duke Energy, I had several conversations with my supervisor about how this would/could affect job diversification. He assured me there would be new doors opened that would allow everyone to explore new ways to further their careers. This doesn't appear to be the case. Tighter restrictions are in place regarding the types of jobs we can apply for, restricting our room for advancement. And our management has basically told us we won't be allowed to even apply for any other positions. This limits the company in the following ways:

1. A power company employee might have the interest and skills to fill a position in Field Services, but might not be allowed to apply for the job because of the labor-sharing rules between the two groups,
2. The employee's morale and work performance suffer because s/he isn't allowed to advance his/her own career, and
3. A good employee may be lost to a competitor because s/he is afforded greater mobility elsewhere.

Rick Priory: You're right about the diverse career opportunities available at Duke Energy. These opportunities are shared with employees through the business unit job posting process. There are times, however, when management must consider the impact of employee transfers on business operations. Usually, these situations are of limited duration and employee transfers may be granted when critical projects are completed or replacement skills can be obtained. I encourage you to work with your immediate supervisor and your local human resources representative to develop a career plan that meets your personal needs and the needs of the business.

Advocate: By asking the question, the employee has provided his own answers. Senior management regards employees as just so many widgets. Employees are regarded as being completely generic and fully interchangeable. As long as X number of slots are filled by X number of employees, management sees no value in swapping employees from slot to slot. The future employee will always be regarded as being more valuable that present employee. The company figures that they own the present employee and that there is no need to expend benefits on him when they can be used to attract new employees. As soon as the new employee is hired, he also goes into the worthless bin. Not only does the company regard the present employees as not being worthy of new benefits, they regard present employees as a source of revenue. This revenue is realized by reducing benefits, as serendipitously as possible, but always by reducing them. The company will try to convince you that "big rewards" are coming your way if you will just work a little harder, jump through a few more hoops, and relinquish a few more benefits. Before you know it, you will have reached retirement age. The big rewards will still be an illusion, and you will find that the retirement benefits that you were promised for years were also an illusion!

Employee: With the price of things going up faster and faster, I haven't really seen a raise for some time. The annual increases we're seeing just cover the cost of our annual insurance premium increases. Can we expect a real cost of living raise anytime soon?

Rick Priory: We strive to provide competitive compensation to all employees. All Duke Energy employees are provided compensation in the form of base pay and annual incentives for achievement of one or a combination of company, business unit, department and personal objectives. The amount of base pay increase provided to any specific employee depends on many variables, including performance, where the employee's base salary falls in the market-competitive range for the position and other variables. Incentive payout depends in many cases on personal, business unit and company's performance. If you have specific questions related to your base salary or incentive compensation, we recommend that you direct them to your supervisor or business unit human resources representative.

Advocate: You got a good dance, but the answer is "No." You know what competitive means: not paying one cent more than absolutely necessary. "Competitive" no longer means monitoring other companies to see if we are receiving enough pay/benefits. "Competitive" now means monitoring other companies to see if anything else can be taken from the employees! You know the question is too hot for Mr. Priory when he defers you to H.R. - Excuse me Mr. H. R. person. But I have a question that the CEO, chairman of the board, and president is unable or unwilling to answer. He feels that you can answer it for me (howls of laughter in the background). -

Employee: I've heard a rumor that medical plan premiums will increase significantly for employees for 2001. Is this true and, if so, why?

Rick Priory: Recent articles in both local and national publications indicate that most large U.S. employers will experience, on the average, a 12 percent rise in overall employee health costs in 2001. Increased prescription drug rates and an aging population requiring more medical care are among significant drivers of rising costs. Health and insurance plans for 2001, including employee contributions, are currently being reviewed. Since the employee and the company share in the total cost of medical care, it is likely that contribution rates will increase for 2001. Additional information about premiums will be included in 2001 enrollment materials, which will be distributed to employees this fall.

Advocate: The rumor was dead on the money. The deductible for the Catastrophic Plan went from $2,000 to $2,500 per person! Copays for generic drugs are going up from $10 to $14; brand-name drug copays are going up from $20 to $30 - a fifty percent increase! One employee asked: "With our medical costs going up fifty percent and our cost of living increases amounting to about three and one-half percent, how are we to get ahead?" The whole scheme was never designed for the employee to "get ahead." Rick Priory may not be able to answer your question, but you will get a cartoon book that will explain it all.

Employee: Where can I get information, in writing, describing benefits at retirement? Of special interest are the benefits related to medical coverage. I contacted the Retirement Benefits Center and they said they would get back with me. They haven't yet.

Rick Priory: Benefits at retirement age were outlined in On Track Volume 3, No. 2, May 1998, and Volume 3, No. 2, July 1998. Retiree contributions are reviewed annually and, generally, change on an annual basis. You did the right thing by contacting the Retirement Benefits Center (RBC) about your current-year retiree contributions (based on an age at retirement and service at retirement assumption). The RBC can give you a verbal estimate based on current medical costs. Written information about retiree health and insurance contributions is provided only when an actual retirement is initiated.

Advocate: You did the right thing to ask for the information in writing. However, the company is unwilling to give you anything in writing until your retirement is initiated, and it is too late for you to do anything about it (just trust us)! Everything prior to your retirement will be marked as "estimates" (not legally enforceable). What a racket! The CEO refers people to H. R. Then H. R. stonewalls and provides no information. Then the CEO refers the employee to a cartoon book. This would be hilarious - if it were fiction. But the only fiction you will find here is the benefits.

Employee: Duke Energy's pension plan was recently referenced twice nationally in two days - in a Wall Street Journal article and on the NBC Nightly News. Duke Energy made a complex adjustment in the early 1990s to the way it incorporates Social Security into its pension formula, a move that halted the accruals for some older workers for months, or even years. The company later converted to a cash balance plan, again reducing accruals for most baby boomer aged employees (the majority of the workforce). Business study after study has shown that the most successful companies are those that value their employees and treat them in a fair and ethical manner. How can Duke Energy expect to maintain a loyal and productive workforce?

Rick Priory: We value our employees, and work hard to attract and retain a high-performing team by offering competitive pay and benefits. We ensure the ongoing competitiveness of our pay and benefits by regularly benchmarking against companies similar in size and scope to Duke Energy. The decision to transition to a cash balance plan in 1997 was part of the company's integrated benefits approach designed to meet the ever-changing, highly competitive business environment. The integrated benefits program has been based on a "total rewards approach," which includes increased incentive opportunities and a 401(k) program. When we created Duke Energy, all employees were transitioned to the Retirement Cash Balance Plan. If you have questions or concerns about your current retirement benefits, I encourage you to call the Retirement Benefits Center...

Advocate: Objection! Duke Energy obviously places very little value on the employees. It is bad enough to let employees wages stagnate. And, this has been the case where some employees have not had a raise in years! It is far more heinous to take away benefits that employees have earned over the years. Attempting to hide these takeaways, makes it clear that the whole scheme was an insidiously designed plot to deprive employees of earned benefits. "Benchmarking" was the excuse used for our pension reduction in 1997. And, the company has be slashing benefits every since. During all of this, their profits have been increasing. Duke expected to maintain a loyal and productive workforce because they assumed that we were too ignorant and too stupid to see the obvious takeaways. You can see the predicament that senior management is in. They do not want to admit to hiding benefit reductions. They certainly do not want to give anything back. No matter how this plays out in the courts, senior management has lost all credibility. They are working diligently to turn invisible. All excuses are baloney. Much more was taken than was ever given back. You know that your question hit a nerve - you were deferred to H. R.

Employee: Why are part-time customer service representatives expected to work storms and give up their weekends without getting time-and-a-half for hours worked (since we don't work 40 hours each week)? This is causing the company to lose good reps. We don't get full benefits, and we don't get overtime. Since that's the case, it seems as if we shouldn't be expected to work "full storm mode" for 12 hours.

Rick Priory: Duke Power's goal is to provide excellent customer service 24 hours a day, everyday. This can be challenging when severe weather causes numerous power outages. To ensure our service is consistent during storms, we must, in some cases, extend employees' work hours to handle the large call volume. When we anticipate extended outages that will cause the call volume to remain high for several consecutive days, we activate our emergency response plan (storm mode). At that time, normal schedules are abandoned and all full-time employees are required to work extended shifts. Once we activate our emergency response plan, part-time employees are encouraged to work with their coaches to negotiate extended schedules to provide support. These schedules may or may not be 12-hour schedules. Since many employees who work part-time do so because of other commitments, part-time employees can decline to work extended schedules. All nonexempt, full-time and part-time employees receive overtime pay once they have worked 40 hours in a week.

Advocate: If a company will take away pension benefits that a full time employee has earned over decades, just what do you suppose they will do for a part time employee? Duke ran into a few problems because of their cheapness with temporary employees. Vendors from out of state have walked off of Duke jobs, because they could only work 40 hours per week during power outages. Who in their right mind would expect someone to face the travel expenses and inconvenience of going to another state, to only work 40 hours per week? Duke faces shortages of vendors due to the low pay offered. Some vendors refuse to even consider working on a Duke job. There have been outage delays due to lack of Radiation Protection vendors, because of the low pay. Perhaps Duke was benchmarking with "Burger Doodle."

Employee: I have been with Duke Power for a little more than two years and have loved every minute of it. However, I'd like to share my concerns about callout policy. I have always responded to callout in a timely fashion but today was shocked to receive a written notice for not responding to a call within 15 minutes. I have repeatedly asked that an alternate number be listed as a permanent second contact during callout, and was told it was my responsibility to make sure a number was provided daily. I was also informed that the pager is only the second method of contact; telephone is first. If that's the case, are we expected to wait at home for the phone to ring, hoping that it doesn't? If that's the case and I'm expected to use "my" time for work purposes, why aren't we given extra compensation? Other companies pay overtime to employees for the same service. Do you foresee a change in this approach? It seems as if arriving late would be better than not responding at all but, with the current approach, you get a written warning either way. Shouldn't this be judged on a case-by-case basis rather than using an across-the-board policy for everybody?

Rick Priory: To respond to our customers during emergency situations, customer service specialists are required to be on call approximately four to five weeks each year. They may also be required to work additional hours during storms to respond to our customers' needs for emergency restoration efforts. When outages or emergency situations have escalated to the point that call volume can't be handled with normal staffing, employees who are on call are called or paged and asked to respond within 15 minutes. They then have one hour to report to work. Failure to do so may result in corrective action. The on-call pay question has been addressed numerous times through the Noon Meeting process, and the response continues to be if nonexempt employees are not required to remain on the premises but must wear a pager or be reachable by telephone, they are "waiting to be engaged," and are not paid since they are completely relieved of their duties and can use the time effectively for their own purpose. This is in compliance with The Fair Labor Standards Act (FLSA). If you have additional questions concerning on-call duty within your business unit, you should talk with your supervisor or with your business unit human resources representative.

Advocate: We seriously doubt that the employee has "loved every minute of it." If so, why would they be asking questions here? And, sucking up will not net any call out pay. The on-call pay question has never be satisfactorily answered here. That is why it will continue to be asked! The question has been side-stepped, avoided, and deferred to H. R., but never resolved. "Waiting to be engaged" - that sounds like the old maid's dilemma. That term rates right up there with "wear away." There seems to be no shortage of goofball terms to cover non-existent benefits and lost benefits. Bingo! You have just been referred to your supervisor and H. R!

United Way

Employee: I don't want to sound critical of United Way, but has Duke Energy studied the cost effectiveness of using full-time personnel to organize additional fundraisers (lunches, ice cream breaks, manager breaks, etc.) beyond the pledge cards? It seems as if we spend more money in lost productivity than we raise through these types of fundraisers.

Rick Priory: Duke Energy is committed to being a good steward of the community, and we support the United Way because it is the most efficient and effective way to raise and disperse contributions for health and human service organizations that fund critically needed services in our communities. Use of employee volunteers helps enhance and build employee skills and morale, and provides an opportunity for employees to network and participate in teambuilding activities. While they may work on United Way activities during normal business hours, employee volunteers know that their first priority is to perform their normal work duties and, in many cases, they arrive at work early, stay late or work through their lunch hours to make up any time needed.

Advocate: Your question is the same one that employees have been asking each other for years. You have no doubt noticed that at Duke Energy, nothing is exactly what it seems to be. By allowing events to be held on company time, the company is effectively subsidizing the amount that would otherwise be given. Without getting into ethics or the soundness of the rationale, many employees respond to perceived abuses by the company, by being less that enthusiastic in responding to company solicitations - this is human nature. By stepping up events held on company time, reduced participation is masked. Another mind game is played with participation. Everyone is encouraged to return their pledge card whether a donation is made or not. Employees are really encouraged to return the cards. Employees are encouraged again and again to return the pledge cards. When the company announces 95% (or whatever) participation, one would think that means that 95% of the employees contributed. Wrong - that is just part of the deception. That means that 95% of the employees returned their pledge cards. Now, you see the reason for all the encouragement to return cards. It is a sad commentary that even something that would seem to be a gracious, humanitarian act has to have an element of deception in it.

Even though you questions will probably not be answered any better next month, don't stop asking them!

Rick Priory hosted the session on August 21, 2000.

Corporate Highlights:
Rick Priory: The deregulated California power market has been in the news a lot over the past month or so. We've faced a period of "disinformation" - the time we go through before studies are done and facts are known.

Translation: This is the period of time when the truth gets out. It is the period of time before Duke has time to gear up its "spin machinery" to explain everything away.

Rick Priory: Based on our experience in California, we believe we have a good fix on what the studies will reveal.

Translation: The numbers have been fixed and we know what they will reveal! Any numbers will be massaged relentlessly to place Duke in the best possible light.

Rick Priory: I'm regularly asked if activities in California indicate that deregulation is harmful to markets and consumers. My answer is that deregulation actually solves supply problems.

Advocate: Did anyone really expect him to say that deregulation will be used as an excuse to gouge the public and strip employees of benefits? Duke has been touting deregulation for over a decade. Mr. Priory is helping write the rules that will govern deregulation. Just whose interests do you think he has in mind?

Rick Priory: Upcoming Events: The Greater Charlotte Area Leadership Development Network's kickoff event is August 23 at the Charlotte Convention Center. Both the Houston and the Charlotte LDNs are designed to give employees opportunities to network and to fine-tune their personal leadership skills.

Advocate: Our comments on what abilities will be fine-tuned are at:
Now You Can Pay To Suck Up!

Questions:
Employee: I've heard that people in management will be in line to receive as much as a 17 percent incentive goal bonus. If this is true, I would like to know the reasoning behind it.

Rick Priory: Compensation - for management as well as all other levels of employees - is personal and confidential, therefore, we don't respond to specific compensation questions through the Noon Report. Our goal is to provide competitive compensation for all employees through comparisons to companies similar in size, complexity and lines of business. The competitive analysis includes all components of compensation, including incentives. Adjustments are made as appropriate to provide for market-competitive compensation.

Advocate: Well, that has been fully explained, and you should have no further questions. Duke has always attempted to operate in the shadows - keeping employees ignorant. "Comparisons to companies similar in size" means not paying one cent more than is absolutely necessary. Senior management wants you to be ignorant about financial matters, but when they have a problem, they are always willing to share! They will whine and fret and ask you to knock yourself out to solve "their" problem.

Employee: I signed up for the Partners HMO this year after reviewing the list of available doctors and hospitals in my area. I recently learned that my PCP (primary care physician) is dropping out of the Partners network because the local hospital is no longer in Partners. I suspect most of the doctors in Shelby, NC will drop out since the only hospital in the county is not in Partners, and the nearest hospital is 30 minutes away. I was told that I can't get out of Partners until the next calendar year. I can change PCPs, but I wonder how long it?ll be before they too drop out since the hospital is no longer in the network. There should be an exception for small towns that would allow employees to switch to another HMO or the PPO option if their area hospital drops out of Partners. If doctors only have to give a 30-day notice to get out, why can't employees have the same option?

Rick Priory: Your contributions for Duke Energy medical plan coverage are made before tax, resulting in significant savings to you since these payroll deductions are not subject to federal income, Social Security and most states? income taxes. Because of these pre-tax savings, however, the IRS restricts the circumstances under which you may change benefit status to applicable plans such as our medical and dental plans and our spending accounts (other than changes made during annual benefits enrollment). According to the IRS, you may make a change only if you have a qualified change in status that results in the gain or loss of eligibility for coverage. (You can refer to your Life Tracks Medical Plan benefits booklet, pages MED-8-9, for a list of qualified changes in status.) The IRS doesn't consider a particular physician and/or facility leaving the PPO or HMO network to be a qualifying event.

Advocate: Benefits seem to be getting more and more complicated - don't they? As Duke continues to squeeze more money out of the benefit programs, they will get even more complicated. Complication is a great smoke screen; it makes it more difficult to figure out exactly what you have lost. Whether the programs work for you is of little consequence, as long as the company saves money.

Employee: I recently read an editorial in The State (Columbia, S.C.'s, newspaper) related to the pay scale for South Carolina's state troopers. They are the lowest paid troopers in the country and are trying to get better pay. The writer stated that if they are the lowest paid, then either they are the worst [performing] in the country (and the low pay is justified), or the stupidest for staying around. Parallels can be drawn concerning operators at Duke Energy's nuclear plants. We are currently the second lowest-paid non-licensed and licensed operators in the country. Can you speak to this issue?

Rick Priory: Our employees, including our nuclear operators, are some of the best in the industry. To ensure we provide a competitive employment package, we participate in a number of salary surveys throughout the year to collect market data from other companies. At least annually, we compare where we are in our marketplace and make adjustments as necessary to ensure we maintain our competitive position. Survey data with other utilities confirms we are competitive with all aspects of total compensation including base pay. If you have additional questions concerning nuclear operator pay scales, you should talk with your business unit human resources representative.

Advocate: That was a very reasonable question. And, Mr. Priory did a reasonably good "soft shoe" rendition. Mr. Priory did NOT dispute the pay rankings. Duke wants top quartile performance. Duke pays for bottom quartile performance. If the employees did not give Duke a lot more than they pay for, we would not be receiving top WANO and INPO ratings. The employees are delivering; Duke is not. As long as employees are willing to accept near bottom pay and shrinking benefits, Duke will be glad to maintain the same arrangement. That leaves more money to put into the executive cash balance plan, don't you see?

"If you have additional questions concerning nuclear operator pay scales, you should talk with your business unit human resources representative." You KNOW you have really hit a nerve when they crawl behind that shield! If the chairman of the board, president and chief executive officer is unwilling to give you a meaningful answer, just what do you think you will get from HR? All they can possibly do is read a script. The bottom line of the script will always be: "You are not getting any more money or benefits - GO AWAY!"

Employee: Is any thought being given to making time off benefits more flexible? In view of the tight labor market and an aging workforce, a more flexible vacation policy would help in attracting and retaining employees. One option could be to allow employees to purchase additional time off (one or two weeks) or be paid back for unneeded vacation beyond the basic two weeks.

Rick Priory: Paid time off policies vary from business unit to business unit, based on business needs. If you have questions about paid time off options in your business unit, talk with your business unit human resources representative.

Advocate: You are not suppose to know that there is a tight labor market. You are supposed to know only what Duke tells you. With all the cutting of benefits during a tight labor market, what do you suppose is going to happen when there is eventually an abundance of labor? Yeah, yeah, go see HR; they will really answer all questions.

Employee: I wonder if our medical benefits can be more flexible. It is my understanding that, unless you had 25 years at the end of 1996, you now must work until age 55 to have medical benefits. Is this true, and is there any chance of having medical benefits available with 30 years of service and age 51+, not having 25 years at the end of 1996?

Rick Priory: When we designed the benefits changes that became effective Jan. 1, 1997, we made a policy decision to make the eligibility for access to retiree medical and life insurance coverage age 55 with a minimum of 10 years of eligible service, which was consistent with the change in retirement plan eligibility for the Retirement Cash Balance Plan. Employees with 25 or more years of eligible service as of Dec. 31, 1996 were also given access to retiree coverage if they retired at age 51 or older with at least 30 years of eligible service. Many companies, including Duke Energy, are finding it cost prohibitive to offer retiree coverage from such early retirement dates. Significant drivers of health and insurance costs are increasing medical and prescription drug rates and the fact that people are living longer. To determine the benefits available to you based on your age and service, you should call the Retirement Benefits Center...

Advocate: Ah, January 1, 1997, the day of infamy at Duke Power/Duke Energy. This was the day that our benefits really started to evaporate. The Retirement Cash Balance Plan was introduce. It cheated the employees out of a quarter of a century of retirement promises. Now, all Rick Priory wants to do is keep his promises to Wall Street. Lying to employees is OK. The combined losses from the retirement plan and medical coverage were equivalent to working for free for many years.

Employee: Recently, it seems as if every time a Wall Street analyst upgrades Duke Energy stock or the company is mentioned favorably on CNBC or Money magazine, etc., we read about it on the Intranet. Is the company trying to encourage employees to buy more Duke Energy stock? Don't most employees already have too much of their net worth tied up in company stock? If the motivation is not to boost employee purchase of the stock, why don't we ever read about analyst downgrades?

Rick Priory: We don't encourage employees to buy, or discourage them from buying, Duke Energy stock. Employee feedback continues to indicate that Duke Energy teammates have a high interest in what's happening with our stock, and financial news in general. We try to report key "news" events to help keep folks informed. The financial news recently happens to be very favorable. For example, recently we reported that the company was in the top 10 list of most recommended stocks to buy, and was the first non-tech company on the list. This is news, and we reported it as such. If five of the top investment rating services downgraded Duke Energy stock tomorrow, we'd report that too.

Advocate: It is called putting a positive spin on the news. What Duke considers positive news will always be reported and reported and reported - sometimes for years to come! Duke used to NEVER let out any negative news. Duke has been around a long time. Just how many times do you recall them informing you when the stock was downgraded? It is only recently that they have started a more broad news coverage. Why is Duke doing this now? The answer is one word - "Internet." Duke can try to hide negative news, but others will gladly put it out. It has been very hard for senior management to accept. But, they no longer have total control of the information that the employees receive. Senior management realizes it, they do not like it, but they realize it. If the news is going to get out anyway, why shouldn't the company act as if they truly want to freely disseminate information? There are still some issues that the company will not come clean on. The federal court system may help them in this area. Congress may also help them come clean.

Incidentally, of all the investment options offered, Duke Energy stock carries the most risk. If a person wants to keep the whole wad in Duke stock, that's fine. But, they should be aware of the risk factor.

Rick Priory hosted the "Noon Report" on July 10, 2000.

Employee: The May Noon Report states that Duke Energy's compensation philosophy is to provide total compensation at the market median. If that's the case, how does the company expect to attract and retain above average employees?

Rick Priory: Each business unit is responsible for setting its pay strategy, including identification of pay markets, the appropriate mix of base and variable pay, and the target level of competitive pay. In general, Duke Energy targets base pay at the 50th percentile. Total cash compensation (base plus variable) is targeted between the 50th and 75th percentiles of the markets in which we compete for talent. Actual pay can vary above the 75th percentile or below the 50th percentile based on actual individual and business unit performance. This approach links actual pay to the performance of individuals and the business unit, and has proven effective in attracting and retaining key talent.

Advocate: Here we go again. "Total compensation" is an old term used to distract employees from the amount of their take-home pay. The much touted total compensation package used to contain a decent retirement benefit and enhanced early retirement benefit. As you have seen, it was taken away overnight. Duke will continue to come up with more meaningless terms, side shows, and smoke screens to distract you from recognizing the daily erosion of your benefits.