Shareholder Meetings - Page One

The meeting was held on May 13, 2004, in Charlotte, North Carolina. It was the first meeting with Paul Anderson as chairman and CEO.

There were empty chairs at this meeting. This could be taken as a good sign. If shareholders feel that management can be trusted, they may be less inclined to check up on them as much. Also, for the first time, the meeting was assessable over the Internet.

This is only one example of how Duke has become more open since Paul Anderson replaced Rick Priory. A paranoid, obsessively secret corporation (or political regime) gives the impression that it is up to no good, and is afraid that it will be exposed. If a corporation were doing everything right, would it not want everyone to know? An organization that feels compelled to keep all matters secret, but loudly proclaims that it is doing everything right, has no credibility.

It is no surprise that Duke opposed the shareholder proposal that all directors be elected each year. Duke’s position was that the staggered method of electing directors provided stability and protection from takeover attempts.

Corporations get a lot of mileage out of the takeover scare. The same scare is used to justify large “poison pill” provisions for executives. These windfalls can be worth millions of extra dollars to executives. The fact is always overlooked that some corporations need to be taken over! There always should be a means to blast out ineffective and/or corrupt directors.

It is obvious that the annual election of all directors will give the shareholders more control of the corporation. Yes, it is obvious, but more control by shareholders is not what corporations are looking for. Corporations want good little shareholders who just fork over money and blindly trust management.

Corporations also look for the same traits in employees. They want employees who will work until they keel over, and not be concerned if their retirement benefits happen to vanish. Duke Energy says that it wants employees with a questioning attitude. But when employees’ deferred pay ends up in other pockets, Duke does not want that questioned! If someone is rewarded with millions of dollars for almost wrecking the company, that is not a matter to be questioned!

There were proposals to elect directors and approve Deloitte & Touche as auditing firm.

A Subpoena for Deloitte & Touche

It is commonplace for the directors and auditor to be approved, but shareholder proposals are usually difficult to get passed. First, it is not easy to get a shareholder proposal on the agenda. There are many stumbling blocks in place to discourage any such proposals. If the proposal does not get enough support, it dies immediately. If it gets a certain percentage of support, but does not pass, it can be offered again the next year. Of the few shareholder proposals that survive the first vote, some take years to finally pass. After all this, the corporation is free to completely ignore the proposal, even after it passes!

As usual, all directors were elected and Deloitte & Touche was approved. The shareholder proposal also passed, with 63 percent of the vote! Outstanding!

Not only did the proposal pass, but Mr. Anderson said: “We will abide by the will of the shareholders, and as chairman of the board of directors, I will work with the board to make sure those steps are taken.”

Mr. Anderson said "We didn't listen to the analysts and the hedge funds and the day traders; we listened to our long-term investors. We decided to maintain the dividend at $1.10 per share and concentrate on producing reliable income for our shareholders."

That statement demonstrates the differences between Mr. Anderson and Mr. Priory. Mr. Priory was unbelievably short-sighted. He threw away Duke’s blue chip status to cater to the hot money crowd. The dividend was sacrificed, along with stability, integrity, and trust.

Mr. Anderson said “We've turned the corner.” Actually, the corner was turned on November 1, 2003, when Mr. Anderson came in and Mr. Priory went out. Only now there are numbers to prove it.

The first shareholder to speak was, regular meeting attender, Reverend Douglas Moore. In the past, Rev. Moore has experienced problems with letters, that were sent to Rick Priory, getting lost. Mr. Priory caught on that if he did not respond to the letters, he would get to explain everything at shareholder meetings. Last year, Mr. Priory read the letter sent by Rev. Moore, and had a package of information waiting for him at the meeting.

Rev. Moore said that he could not send e-mail because his computer has a virus. So he called Mr. Anderson’s secretary and asked her to relay a question. Mr. Anderson said that the question about minority purchasing programs had been relayed to him. He had a card that listed a person who could give Rev. Moore a detailed explanation. It so happened that Rev. Moore was sitting beside that person. It is unlikely that this was a chance occurrence. The representative probably sought out Rev. Moore like a heat seeking missile.

Rev. Moore was gesturing with his hands, including the one holding the microphone. So, if you were listening to the webcast, you probably only heard part of what he said. He asked about certain Duke properties in Georgia that had been for sale. He was told that the properties had already been sold. Rev. Moore said that this was an ongoing problem. He said that he has difficulty buying Duke property, because his requests for information are never answered. He said “Every time I have tried to buy a coal mine or power plant, for some reason, people in certain administrative positions don’t believe that minorities can to do it – I have the money – I have GE Capital backing me – the money is there.”

Rev. Moore said “You have a real estate division – a real estate development - and you have a Wachovia.” He then began complaining that Wachovia also did not respond to his requests about property for sale.

Rev. Moore feels that Duke Energy is in violation of certain federal laws, which were enacted to aid minorities. He wants Duke’s general council to look into the matter. He said that if you don’t obey the law, then you will pay some liquidated damages.

He complained about El Paso and J. P. Morgan denying him the opportunity to buy property. Then he got back on Wachovia.

Rev. Moore said “There’s something – I think it must be the way I look.”

As soon as those words left his mouth, the five-minute time limit bell rang.

Mr. Anderson explained that this was a Duke Energy Meeting. He said that he appreciated Rev. Moore’s comments and was sure that Duke’s general council would take his comments to heart. Mr. Anderson guaranteed that if Duke had a sale, and Mr. Moore was a qualified bidder, he could call his office and he would be put on the list.

William and Carole Bowers, from Pennsylvania, had a complaint about their experience with Texas Eastern. When their house was purchased in 1964, the couple discussed with Texas Eastern representatives the fact that two pipelines ran under the property. They were assured that if buildings were kept 25 feet away from the pipelines, that trees could be planted anywhere. The trees would not be disturbed unless the pipelines had to be dug up. In 2000, they were informed that Texas Eastern was going to cut a swath 88 ½ feet over the pipelines.

Texas Eastern was charged with making a clear and purposeful misrepresentation of new regulations. In 2001, the couple demanded an explanation from Texas Eastern and Rick Priory. Unsatisfactory replies were received from Texas Eastern. No reply was received from Rick Priory.

A meeting was held at their home with Texas Eastern representatives. The couple agreed to allow the swath to be cut, but asked to keep one black oak shade tree, that was 15 feet from the pipelines. The Texas Eastern representatives said that they did not negotiate and threatened the couple with a court order.

The couple hired an attorney, who was also unable to negotiate with Texas Eastern. Texas Eastern filed action against the couple in court. After two hearings, Texas Eastern was denied preliminary injunction. Texas Eastern was later granted an easement, subject to certain encroachments, which included the oak tree. This was the very same deal the couple had offered many times! The story does not end here.

Texas Eastern filed a motion to alter the finding or get a new trial. It was denied. Texas Eastern filed an appeal and went after the oak tree! The appeal was unanimously denied.

The couple filed a $15,000 suit against Texas Eastern for property damages and making fraudulent statements. The suit went through several courts. Texas Eastern did offer a settlement of $500. Texas Eastern finally realized that it was not going to be able to shake the couple, and offered a settlement of $25,000. The settlement was accepted.

Mr. Anderson once described the energy industry as a bombed out village. This description was used to describe the business practices of Texas Eastern. The couple questioned why Texas Eastern would spend over $200,000 trying to enforce misrepresented regulations. They asked Mr. Anderson to have an attitude adjustment session with Texas Eastern personnel.

This snafu occurred under previous management, but Mr. Anderson commented on it. He said that, as the situation was presented, it was totally inconsistent with the environment he is trying to establish and inconsistent with the charter. Mr. Anderson said that the man who Texas Eastern reports to was at the meeting. The couple was encouraged to talk to him after the meeting.

Other citizens have found that fighting the pipeline pushers is not easy:

Pipeline Battle

But citizens have fought and beaten overbearing pipeline operators:

Citizen Victorious Over Duke

George Sherrell, Duke Energy retiree from Greenville, S. C., wanted to know how many retirees were at the meeting. Dozens of people raised their hands. Mr. Sherrell spoke to Rick Priory at the 2000 shareholder meeting about the lack of cost of living adjustments for retirees. The last adjustment was in 1989. Rick Priory said that the retirees would continue to get "careful consideration." Maybe they did and maybe they didn’t get careful consideration, but they never received an adjustment! It has now been fifteen years since an adjustment in retiree benefits was made.

Mr. Sherrell said that management could “breathe easy,” that he was not here this time to ask for a pension increase. He said that retirees were grateful for the amount of health coverage provided by Duke.

Mr. Sherrell may or may not know that future Duke retirees will lose all company health coverage at age 65. He may or may not know that the Bush administration is working to deprive health coverage to all retirees at age 65.

EEOC Sellout

Mr. Sherrell said that he was concerned about Duke’s ability to continue to pay the current dividend. He wanted to know why Duke did not appeal to the regulators for a rate increase.

Ruth Shaw, president of Duke Power, said that such a request might backfire and result in a rate reduction! Only last year, the Public Service Commission of South Carolina ordered Duke Power to return millions of dollars to customers, because too much money was made.

Duke Takes a Hit in South Carolina

The 2003 excess earnings incident is not all either. The preceding year, Duke Power made settlements with the regulators of North and South Carolina for underreporting $124 million in profits. Try to imagine the reaction of the Commission if Duke Power popped in now and asked for a rate increase!

Duke Whistleblower Vindicated

Doris Darnell wanted to know the purpose of the new type of nuclear fuel, were any nuclear plants going to be sold, and about the prevention of terrorists attacks. The question was directed to Fred Fowler. Mr. Fowler had previously outlined all the business units, without any problems. But he appeared dumbfounded by this question. Did he perhaps think that the issues of MOX fuel and terrorists attacks had been swept under the rug?

As Mr. Fowler struggled to answer the questions, he was not able to immediately explain MOX fuel. He started out calling it “plutonium grade.” He was able to get it straightened out that MOX fuel is composed of weapons grade plutonium. He listed the low cost as a benefit of using plutonium fuel. It is interesting that former Executive Vice President of Nuclear Generation, Mike Tuckman, expressed the opposite opinion at the 2001 NRC MOX Fuel Hearing, in Charlotte, N. C. Mr. Tuckman indicated that MOX fuel would not have much of a financial impact on the company!

Of course Mr. Tuckman was playing to a different crowd. He was trying to convince the Nuclear Regulatory Commission that MOX fuel was a great idea, and that the monetary savings were insignificant. But at the shareholder meeting, Mr. Fowler played up the fuel cost savings. Hey, just tell everyone what they want to hear; politicians do it all the time.

NRC MOX Fuel Hearing - Part Two

MOX fuel is certainly not inherently less expensive than uranium fuel. How could it possibly cost less to build plants to process MOX fuel and then mix plutonium with uranium? With taxpayer subsidies – that’s how. A more expensive fuel suddenly costs less, with a little help from the taxpayers.

Mr. Fowler said that security had been increased, but that he was not permitted to give the details. Mr. Anderson said that no nuclear plants were for sale.

Maybe a nerve was hit. There was no call for any further questions after the MOX issue was brought up.

The webcast was alloted two hours, but the meeting was declared adjourned after only one hour.

The 2003 Duke Energy Shareholder Meeting was held yesterday in Charlotte, North Carolina.

We have always given Rick Priory credit where credit was due. And as always, the man can dance!

Duke proposed the reappointment of Deloitte & Touche as outside auditors because of their “healthy relationship” with management. It was not clarified just whom the relationship was healthy for. Is the relationship healthy for the public, investors, and customers, or only “healthy” for Duke and Deloitte?

Duke’s auditors did not prevent the company from having to make a settlement of millions of dollars, due to a certain earnings-hiding incident at Duke Power. Duke claimed to be innocence. Then Duke claimed to have made a few mistakes. The outside investigating auditor found that Duke had indeed hid earnings from the regulators. A Duke accountant tried to get management to resolve the issue for years, but was ignored. He was ignored until he reported his suspicions to the regulating agencies.

Duke kept denying, but paid up just the same. In the midst of Duke’s repeated denials, the FBI and a federal grand jury decided to investigate. Now Duke wants to keep a low profile concerning the issue. Duke went full circle on that one. Duke went from ignoring the issue, to vehemently denying the issue, to not wanting to even talk about it anymore.

Of course, the Deloitte & Touche proposal was ratified. It always is.

Duke proposed amending the 1998 Long-Tern Incentive Plan. This would, among other things, increase the number of shares of stock available to be awarded as bonuses from 6 million to 12 million. Theoretically the bonuses can be awarded to any employee. The Compensation Committee of the Board of Directors determines who is the recipient of any awards - what a tough call. They must decide whether to give stock awards to employees or their cronies. Have you received any stock awards lately?

If the company is not able to meet is commitments to delivering promised employee benefits, then all give-away boondoggles should be eliminated. If basic promises to employees cannot be kept, the company should not strive for more and more ways to cram money into the pockets of executives.

This proposal also passed.

Duke proposed amending and restating the 2000 Policy Committee Short-Term Incentive Plan as the Executive Short-Term Incentive Plan. Ah, this proposal is more plainly stated. It is to heap awards upon the members of the Policy Committee. These awards go only to executive officers. As it now stands, only eight people in the company are eligible to eat from this trough.

One would think that until the company is willing to honor basic promises made to employees, that the executives would be ashamed to make such a proposal. Not so; the money that the workers lost must go somewhere!

The proposal passed, as did all other company proposals.

Next came the shareholder proposals. Richard Seers again proposed that a study be conducted of the risks of the nuclear programs. The study would include the risk of nuclear terrorism. He pointed out that the use of plutonium fuel might make the Catawba and McGuire nuclear plants more attractive to terrorist. Also, plutonium would have to be shipped across the U.S., creating more opportunities for terrorist to wreak havoc. Mr. Seers asked why Duke was taking the lead in promoting the use of plutonium fuel. (Duke does not like to mention it, but the government heavily subsidizes the use of plutonium from nuclear weapons as reactor fuel.)

As expected, the proposal did not pass. It’s hard to beat the house advantage.

David Bailey presented a shareholder proposal to re-examine the dividend policy. Mr. Bailey has noticed that as the shareholders’ dividends remain constant, Mr. Priory’s compensation seems to keep increasing.

Employees have noticed the same phenomenon. As their benefits vanish, the compensation for executives increases by leaps and bounds! As shareholders and workers get less, there is naturally more money available to be skimmed into executive awards and bonuses.

Mr. Bailey charged that growth and excessive executive pay are being financed on the backs of shareholders. He questioned Mr. Priory’s 24% total compensation for 2002, given his less than impressive management. He mentioned round trip trading, delays in restoring power, and poor decisions in the merchant energy department as examples of poor management.

2002 marked the fifth year that the dividend has been stuck at the $1.10 level. Prior to Priory, the dividend was increased at regular intervals. The dividend situation is part of Priory’s follow Enron, become a growth company, dominate the world, and “flip” companies policy. Almost every problem can be traced back to this disastrous plan.

Many shareholders are small investors and retirees. They are dependent upon the dividend to meet living expenses. What can these investors do if the dividend is not adequate? They could sell shares of stock. But that would possibility be selling them at a 60% loss.

The Duke executives have been racking up, as the shareholders have been left behind. Duke now has the shareholders in a position similar to that of the company retirees. Retirees get no cost of living adjustments to their pensions. Each year the retirees fall farther behind. Plus, Duke continues to raise their medical insurance premiums. Their pension amount is frozen, but their medical costs are free to rise each year. In some cases, the only way to break even is to die early.

Mr. Bailey pointed out that there are hundreds, if not thousands, of Duke employees in middle management capable of filling the executive positions, and would be willing to do it for a lot less money! Mr. Bailey called for these excessive executive salaries and salary increases to be limited. He suggested allowing the present executives to leave the company if they are unhappy with making only 2, 3, 4, or 5 million dollars a year in total compensation.

Mr. Priory said that this proposal was not in the best interest of the company or the shareholders. This predictable reaction can be translated as: “This proposal is not in the best interest of Rick Priory and cronies.”

A regular, substantial dividend is the earmark of a blue chip stock. Such stock is viewed as desirable by investors, except day traders, “flippers,” gamblers, and the hot money crowd. Under the reign of Mr. Priory, Duke stock has gone from blue chip to cow chips.

The proposal received 7% percent of the vote. That is a noteworthy percentage for a new shareholder proposal. The proposal should be eligible to be introduced again next year.

The meeting was subdued. Mr. Priory even noted how quite it was. One shareholder did have his mobile phone turned on and it was ringing. No one would have been really surprised if he had taken the call during the meeting.

In a surprise statement, Mr. Priory said that he was not proud of Duke’s performance in 2002, but that he took full responsibility for it. People were so used to hearing thin excuses and blame shifting that they were undoubtedly caught off guard by the comment.

Reverend Douglas Moore was back again. In the past, his letters to Mr. Priory have always been misdirected. Mr. Priory said that he had his staff on the lookout for the letter this year. His letter was received this time.

Reverend Moore spoke of talking to the Duke “crap shooter.” He was referring to someone in investor relations. He had not been able to get a straight answer about a certain power plant. He wanted to know if it was for sale. Mr. Priory said that he could answer that question. He said that everything in the Duke portfolio was always for sale.

Mr. Priory said that a detailed reply to all his questions had been prepared ahead of time. The document was presented to Reverend Moore at the meeting, so that the other shareholders would not have to sit through all of the questions. Reverend Moore thanked Mr. Priory and said that he hoped that they did not cut his pay.

A shareholder asked about the allegations that executives of Crescent Resources had purchased land at prices substantially below market price. Mr. Priory denied that such incidents had taken place. He said that the bidding process had been improved to allow more public access.

Fred Fowler, COO, noted that Duke's core regulated businesses, Duke Power and Duke Energy Gas Transmission are expected to generate 80% of the company's operating income this year.

Everyone is finally aware that chasing Enron is not the way to make profits.

Ray Swanson mentioned Warren Buffet’s warnings about overpaid executives. He suggested that, due to the large losses in stock value, Duke executives should cut back on their own compensation.

Mr. Priory gave a lengthy explanation concerning his compensation. He said that much of the compensation attributed to 2002 actually came from prior years. He claimed that he had a terrible year.

Mr. Priory expressed support for the dividend to remain at $1.10 a share. But he threw in enough weasel words to allow himself wiggle room.

At the close of the 90 minute meeting, Mr. Priory actually said that the shareholders deserved better!

The 2002 Duke Energy Shareholder Meeting was held April 25 in Charlotte, North Carolina.

The most shocking difference about this shareholder meeting was that Rick Priory made reference to the employees several times. Heretofore, one might think that Duke Energy was a one-man operation. Rick Priory always took credit for everything.

A reason given for Duke Energy wanting to keep its present outside auditing firm, Deloitte & Touche, was their “cooperative relationship with management.” Such a relationship could be good or bad. A reasonable relationship with management is alright. But too much of a cooperative relationship with management is detrimental to the public. You know where to look for an example: Arthur Anderson and Enron! They had more that a cooperative relationship – that had a scandalous love affair.

The Nuclear Regulatory Commission moves it resident plant inspectors around from time to time. This is to keep them from developing too good of a working relationship with the energy companies’ management.

The company wants to throw out its corporate purpose clause, and replace it with one that is, pretty much, wide open. The only restriction about making money in the new clause is that the activity must be lawful. This, in itself, would not be good or bad. It would all depend what the new ventures would be.

Duke wanted to authorize serial preferred stock, and increase the percentage of shareholders required to change the by-laws. Each investor’s power to make changes in the company by-laws would be diminishes under this proposal. The company does not want investors changing by-laws; they only want them to furnish the money to run the business.

Duke wanted make changes to reduce the number of the board of directors members.

There were also four shareholder proposals to be voted on.

Robin Mills, of Washington D. C., was back. He offered a clean energy proposal. He used the example of a Duke Energy hydroelectric dam that has been in operation for ninety-nine years. He said if the cost of this plant were amortized over ninety-nine years, one would find that the electricity produced was very inexpensive. He is in favor of wind and solar energy because there is no fuel to buy. There is no waste to dispose of either.

Shawn O’Rion, representative of the Sheetmetal Workers Local Unions and Counsels Pension Fund, presented a shareholder proposal. The proposal asks for specific disclosure of the corporate strategy, and how directors are involved in the planning and implementation.

In light of all that has transpired, we need all of the disclosure that we can get.

Mr. O’Rion also represented the United Association S & P 500 Index Fund, and presented the shareholder audit proposal. Outside auditors should perform no other work for corporations to prevent conflict of interest. He referred to page 31 of the proxy statement. Deloitte & Touche was listed as receiving $5.6 million for audit work in 2001. They received $27.6 million for other work! It is easy to see rationale for this proposal. The Enron calamity was mentioned. The proposal was offered at the Disney shareholder meeting, and received strong support. Disney elected to embrace the audit proposal. Mr. O’Rion called upon Duke Energy to do the right thing and also support the audit proposal.

Mr. Priory said that adopting the proposal was not necessary because Deloitte & Touche was going to spilt their audit and other services, due to the Enron debacle. That statement was somewhat unsettling. It is doubtful that erecting a Chinese wall in the audit firm will make all potential problems vanish.

Richard Seers’ shareholder proposal is for a study of the risk and responsibility for public harm due to Duke Energy’s Nuclear Program. He is asking for a comprehensive, independent study of safety issues – an independent audit. Mr. Sears stated that his proposal was not an accusation of Duke Energy, but a request for information for shareholders, due to the terrorism of September 11, 2001. He feels that his proposal is consistent with Duke’s policy statement. He correctly pointed out the lack of information regarding nuclear safety. (If one were to rely solely upon Duke spokespeople to provide nuclear risk information, they would be grossly misinformed!) Mr. Seers feels that the time is right for such a nuclear safety audit.

Robin Mills had some comments to make about this shareholder proposal. He mentioned that Duke has just reaffirmed its plans to use mixed plutonium (MOX) fuel at the Catawba and McGuire Nuclear Plants. He contends that the use of MOX fuel will make these two plants more of a terrorist target that any other nuclear plant in the country!

We can see where Duke would have a few problems with a nuclear safety audit. A corporation doing an excellent job in all areas, and knowing that there were no undue safety risks with their operation would welcome all the audits that they could get. They would send out taxies for auditors. They would run ads, inviting people to audit them. However, Duke recommended voting against this proposal. That alone should tell you something. Duke does not like investigation that they cannot control. If they do a private study, and do not like the results, they can just shred the findings. An independent audit is quite a different matter. The results would come out, no matter how damaging they might be. That’s the rub. An independent audit cannot be manipulated satisfactorily. Can you possibly think of a worse time to throw MOX fuel into the equation?

Duke did not readily agree to cooperate with the financial audit by the North and South Carolina utility regulators. At first Duke said any finding would have to be kept secret! Duke had a laundry list of things that the auditors could not do; it was ridiculous. Needless to say, the regulators shot down Duke’s myriad of restrictions and obstructions. So, do not expect the company to voluntarily agree to any audit. And, a nuclear safety audit could potentially be much more devastating than a financial audit. That is one good thing about working with money – restitution is so easy to accomplish. If party “A” defrauds party “B” out of $200 thousand (or $2 million), the solution is so simple. Party “A” simply makes party “B” whole through reimbursement. A punitive award, and maybe even a little something for mental anguish, may be included in the settlement. But settlement is always a snap. When it comes to a worst case nuclear holocaust, mere money quickly becomes inadequate and un-calculable.

A video was then shown. It was an improvement over the videos of the past. It mainly showed headlines from 2001. They even threw in the headlines about Duke being accused of price manipulation in California, power blackouts, and the Enron collapse.

The name “Enron” came up several times during the meeting. Mr. Priory said that it is hard to believe that people used to call energy the sleepy industry. He said that now it more like the “loose sleep industry.” Need we remind anyone that those losing sleep are doing so by their own choice? The actions started at least six years ago brought the company to the point it is now. Duke then had a nice quite power business that was guaranteed to make a profit! This enviable situation was looked upon with disdain by those with an urge to day trade, and roll the dice. Now we hear complaints of loss of sleep. The average employee probably would not have cared what kind of crap shoots the company engaged in, if the company had not dipped into their pension fund to finance it. The chronology of events led many employees to believe that this was indeed the case. The cash balance pension conversion, purchase of Pan Energy, and loss of retirement health benefits all converged in a short time span. Is it any wonder that employees suspected some connection? The attempts of the company to explain everything away were laughable.

Has anyone noticed that since that time, Duke seems to be in quicksand. The harder they struggle, the deeper in they go. Mr. Priory said that the Duke Energy employees remained focused during the turmoil of the last twelve months. It is hard to get used to Mr. Priory giving employees credit for anything. We were not sure if he even knew that the company had any employees.

Mr. Priory mentioned the “noisy static” of the day’s headlines. Truth that one does not want to acknowledge could be referred to as noisy static. But the fluff articles are regarded as the sweetest music on earth by the same executives.

Growth and earnings were mentioned. But the company is slowly becoming aware of the tremendous cost of these Monetary profits. Mr. Priory again mentioned his earnings promise to shareholders. The pension and health benefits promises made to employees, once again, slipped his mind.

Mr. Priory then said that external recognition confirmed what he had known for a long time: “Duke Energy has the finest employee team in the industry.” He even went on to lay in on a little thicker!

One cannot help but wonder if he really feels that way, why employee benefits keep getting vacuumed away! If the “finest” employees constantly lose benefits, what if he thought that the employees were the scum-of-the-earth? Would employees lose benefits and be beaten with bamboo sticks? Inquiring minds want to know.

Mr. Priory said that North Carolina Governor Mike Easley is announcing strict anti pollution measures. It is high time that something was done. Power plant pollution is literally killing citizens in North Carolina and in other states.

Mr. Priory talked of the companies that Duke has sold. He said that the buyers will be able to offer their new employees a bright future. It is a good thing that we do not have false teeth - we would have dropped them when Rick Priory said that! He has never showed any concern about his own employees. And now, he is concerned about employees that he has already axed? He is showing concern about employees that have been “flipped,” liquidated, “boned and juiced”?

Mr. Priory will never win the employees back with words alone. During his watch, employees have suffered devastating financial damage. The damage will never be talked away.

Mr. Priory spoke of companies with snappy slogans that talk a great game, sell the latest concept, make a great splash, and peddling “hype and hope.” He said that he is glad to see companies returning to the basics. Does that mean that he is going to stop all of the above and return to the basics? Understand, the problem is not just “all these other companies.” He went on to say that Duke has never based its future on hype and hope, but rather, real assets. True, Duke has never been without hard assets, but in the last six years there has been a tremendous amount of hype, hope, and investor promises from Mr. Priory.

He said that some companies follow trends, but Duke strives to stay ahead of those trends. But Duke bought the deregulation trend, and followed Enron until it went over the cliff. Then they blinked and started talking about basics.

Mr. Priory went on to say: “We will never forget, nor will we neglect the business values that have guided us for almost 100 years. At Duke Energy we believe in doing good business, and operating in high standards of ethics and integrity. If there’s a mistake, we are going to correct it. If there is a disagreement, we’ll discuss it. And if there is a problem, we are going to find a solution to that problem. I am a firm believer in getting the facts on the table and dealing with the issue at hand. It is no secret that the reputation of corporate America has taken a beating over the last twelve months. I don’t need to repeat the headlines for you; you already know them. A number of companies have not operated in their shareholders best interest, and there are also companies that have not operated in the best interest of their employees, or their customers, for that matter. Investors have lost faith in some companies. In many cases, I can’t blame them. The current crisis in confidence requires that companies take strong action to regain the investing public’s trust. The critical step is providing more and clear information about how we run our company and how we record our results. Duke Energy led the industry in providing increased financial disclosure, beginning with our year end earnings report.”

He even mention the employees once again. He said: “The employees of Duke Energy remained fully focused on delivering on the promises that we made to you, our investors.”

Mr. Priory is evidently trying to turn over a new leaf, or he has hired a new speech writer. But there was a slight fallacy in his last statement, above. We (the employees) never made any promises to anyone. He (Rick Priory) was solely responsible for making the earnings promises. Don’t try to saddle the employees with that one!

Most employees know that such things can never be guaranteed. They know that making foolish promises only makes one look like a fool and a liar when the promises are not kept. Plus, employees know that Duke has broken benefits promises made to them for decades. Why should they bend over backwards to get Mr. Priory’s bacon out of the fire?

Most employees continue to do good work because that is the way that they were raised. They cannot fathom purposefully doing “bad work.” They know that if they do not do as good of a job as they can, innocent people will suffer. Well over 99% of the people in Duke Energy had nothing to do with the pension and health benefits takeaways. Most employees know that if they can hold the company together until the current executive cowboys pass on, perhaps it can be salvaged. Any outlandish promises that Rick Priory made has nothing to do with the quality of the work performed.

Of course, Mr. Priory has always had the option of mending his ways. It is an option that he has chosen to ignore. He may now be hinting around about it. But employees who have seen written promises broken, are not likely to get too excited about a few hints dropped.

The problem has never been about what Duke senior management said that they were going to do. The sticking point has always been in the delivery; it never happened. Employees have been fed a steady diet of empty promises. It will take more than talk to change opinions formed about the present day leaders of Duke Energy.

And, another thing: Superficial “smoke screen” types of changes will not cut it either. IBM, and other companies, have tried that. They tried to gloss over real damage to employees with superficial improvements. And now, the management is more despised by employees than ever. So, if the company is not going to make meaningful amends to the employees, they might as well save their energy.

If Mr. Priory truly want to change for the better. We will support him. But so far, all he has offered is (using his words) “hype and hope.” (And, we hope that he will keep his hype to himself!)

Reverend Douglas Moore, of Washington D. C. was back again this year to ask questions. He told Mr. Priory: “You up there with the big boys now.”

He asked if Duke was going to buy any of El Paso’s assets. Mr. Priory answered that it would be considered.

Rev. Moore asked: “Would you like to enter into a joint venture with me if I can get you some money from GE capital?”

Mr. Priory said: “I think that it would be out of order for us to strike a deal right here at the shareholders meeting.

Reverend Moore said: “You are absolutely right.”

Reverend Moore said: “I was at GE’s meeting yesterday and they bought Enron’s windmills. Did Y’all think about buying those windmills so that this young man (Mr. Mills) would not have to raise the question?”

Reverend Moore then stated: “You’re not going to answer that. Okay.”

Other shareholders also asked questions, but no one can ever top Reverend Moore's questions.

As expected, all of Duke’s proposals passed, and all of the shareholder proposals were rejected.

The meeting lasted one hour and fifteen minuets.

After the meeting, Duke Energy released the vote tabulations below:

DUKE ENERGY ANNUAL MEETING VOTES

Proposal 2 - Approval of Auditors:
FOR - 96.84 percent; AGAINST - 3.16 percent

Proposal 3A - Updating of Corporate Purpose Clause:
FOR -- 99.38 percent; AGAINST - 0.62 percent

Proposal 3B - Authorize Serial Preferred Stock:
FOR - 84.35 percent; AGAINST - 15.65 percent

Proposal 3C - Company By-Law Change:
FOR - 82.44 percent; AGAINST - 17.56 percent

Proposal 3D - Decrease Permissible Size of Board:
FOR - 98.52 percent; AGAINST - 1.48 percent

SHAREHOLDER PROPOSALS

Proposal 4 - Investment in Alternative Energy Sources:
AGAINST 95.75 percent; FOR -- 4.25 percent

Proposal 5 - Role of Board in Strategic Planning:
AGAINST -- 94.54 percent; FOR -- 5.46 percent

Proposal 6 - Independent Auditors Who Render Only Auditing Opinions:
AGAINST - 63.70 percent; FOR - 36.30 percent

Proposal 7 - Nuclear Program Study:
AGAINST - 89.48 percent; FOR - 10.52 percent

The Annual Meeting of Duke Energy Shareholders was held April 26, 2001, in Charlotte, North Carolina.

The minutes of last year’s meeting were not read. But, if you would like to know what took place, no problem. Just scroll down the page to the report on the year 2000 meeting.

As the motion was being made to Ratify the Appointment of Auditors, a question was asked from the floor.

Reverend Douglas Moore, of Washington D. C., directed a question to the Duke Energy auditors, regarding international operations. He wanted to know “what they do to make sure that there are no bribes being given or taken.”

Rick Priory said that there is a Corporate Compliance Program designed to prohibit such bribes from being taken.

Reverend Moore said that he asked the question because IBM Corporation “got a real big black eye” due to bribery.

A motion was made to dilute Duke Energy stock by 100 percent by increasing the number of shares the company is authorized to issue from one billion shares to two billion shares.

There was a motion to amend the Long Term Incentive Plan by increasing the shares reserved for issuance by thirty million shares. And, to increase the number of shares available for restricted stock awards from three million to six million shares. This would also include “phantom stock” awards.” (There also seems to be a new trend toward phantom pension benefits, phantom health benefits, and phantom holidays.)

Patricia Broadrick submitted a shareholder’s proposal to Bar Contributions to Political Movements and Entities. The proposal recognized that “these contributions are nothing more than an overt effort to control elections…”

“When any large entity, corporation, or union can influence elected officials using political action committees and lobbyist with hundreds of thousands of dollars of shareholder money, our precious individual influence in the ballot box is totally disfranchised,” said Ms. Broadrick.

She said: “I recommend my proposal as a beginning of campaign finance reform putting Duke Energy on the map as a leader in ethics and reform. It all boils down to just doing the right thing.”

That was a great proposal. Unfortunately, the company has shown absolutely no inclination toward being a leader in ethics and doing the right thing is just a catchy phrase to them. They have shown no interest in being a leader, a follower, or even in meeting minimal acceptable standards of ethics. The pension conversion is the best example of the lack of ethics.

Duke does follow others in relieving employees of their earned pension benefits. Duke is a leader only in promoting the use of plutonium nuclear reactor fuel. What is the common denominator? …MONEY.

Rick Priory said the he was “sickened by the current political process.”

We were very surprised to hear that remark. His side won the election. The current administration has made it clear that it is going to give big business everything that they want. If the winners are sickened by the political process, that speaks volumes about how the rest of Americans feel!

Mr. Robin Mills offered the proposal to Invest in Alternative Energy Sources. He said that the San Francisco Chronicle had quoted him out of context in a recent article. He said: “…Duke has always been very courteous and professional with me in every respect.”

Mr. Mill ran out of time before he could finish, but brought up another matter. He said: “I had to really fight my way past a boatload of lawyers to get this proposal to you today.” He asked for support for the right of shareholders to continue to offer proposals to be voted on.

Mr. Priory ruled him out of order.

A short video was shown. We cannot say it contained subliminal advertising. The advertising was very much overt. All over the screen was “Buy DUK.” The video offered media clippings of advisors touting Duke Energy stock. This was, of course, accompanied by “riveting” music.

Rick Priory said that he was proud of the strides of the company, “but I am prouder, by far, of the men and women of our company. Their talent, their wisdom, and commitment drive the success that we are celebrating today. They are a bold force that bring positive change to our industry and world…”

That all sound well and good. But does one express his pride in employees by destroying pensions and benefits on a continual basis? Mr. Priory is a smooth talker with hundreds of facts committed to memory. He would almost be a perfect chairman, except his actions and his words do not always coincide. We will still give him credit for having more class than his counterpart in IBM Corporation. Not only did the IBM employees lose pension and health benefits, they also have to suffer the embarrassment of being led by an obnoxious chairman.

During the question period, Reverend Moore said that he was a retired minister who sold products to utilities.

Mr. Priory remarked that he looked too young to be retired.

Was this just an innocent pleasantry, or was Mr. Priory thinking that he would never allow anyone to retire who was still able to breath and walk? If everyone would continue working until near death, the company could hold onto the pension money that much longer!

Many of the shareholders allowed Mr. Priory to sidetrack them with anecdotal banter. Their allotted five minutes of time then expired before they could complete their presentations. He knows every trick in the book. Running out the clock is just a more subtle form of stonewalling.

Reverend Moore said that he came to the meeting because Mr. Robert Brown was on the Board of Directors. He said that Mr. Brown was a honorable, good Republican and that he did not know many of them. He said his people came from Lincolnton, North Carolina and that Mr. Brown got them out of jail when they did not have any money.

He said that there was another minister that was always “jacking up” corporations. Reverend Moore said: “Now, I beat up on corporations; I’ve got about twenty-five blacks on the Board of Directors. But, I have never beat up on a corporation that gave me some money.”

Reverend Moore said that he sent Mr. Priory a letter about the question that he was going to ask. Mr. Priory said that he did not receive the letter. Reverend Moore then asked the General Council if he was aware of a specific GSA regulation; he was not. He said that this is going to be a teach-in.

His time expired before he could finish his question.

Mr. Priory said that the company had a comprehensive plan that met all of the government requirements.

Mr. Priory was obviously proud of the price level that Duke Energy stock shares have obtained. The company executives were, no doubt, even more proud when they cashed in their stock options; there were millions for the taking! He mentioned the pledge that he made in 1997 to achieve 8 to 10 percent earning growth and transform the company. We remember 1997 vividly. That is the year that many employees lost a considerable portion of their pension benefits. Mr. Priory may consider this an even swap. Decades of pension pledges made to employees were broken, and new, grandiose pledges made to shareholders! It is ironic that as the company does better that ever, the employees are losing more that ever. Employee benefits have been transformed into executive wealth. Mr. Priory has a lot to be excited about. Employees have nothing to be excited about, unless one happens to get excited about losing benefits and working an extra ten years!

Mr. Priory said that the stock split further rewarded shareholders. We have covered this several time, but will mention it again. No one gained one thin dime from the stock split. There are now twice as many shares, worth half as much each. The split was a complete wash. Hey, maybe he was counting “phantom reward”!

As usual, the company got everything it wanted and none of the shareholder proposals passed.

Last year, the meeting lasted exactly one and one-half hours. This year, the meeting was blasted through in exactly one hour.

We have been asked if a shareholder’s proposal should be presented to allow all employees a choice of the normal retirement plan or the forced cash balance plan. We neither encourage or discourage such a proposal. But, if anyone is considering a proposal, they should be very aware of what is involved and the potential outcome. First, they would have to jump thorough all of the hoops to even get the proposal accepted. Then to get any votes, a considerable amount of resources would have to be devoted to contacting shareholders. The chance of the proposal passing is about nil. It would be difficult enough just to get three percent of the votes necessary to bring the proposal up again. Even if passed, the proposal would be non-binding. Realistically, the only value such proposals have is in generating publicity. The pension issue has been in newspapers, on TV, on talk shows, and on the internet for about two years. If there is any employee who is not aware of the losses due to cash balance plans by now, then they probably just do not want to know about it! If any employee is concerned about what they have lost with the pension conversion, they should immediately file an age discrimination charge with the Equal Employment Opportunity Commission. As of today, it is still the best chance of getting your pension benefits restored. Then, and only then, should a shareholder’s proposal be contemplated.

Employees of other corporations have generated publicity with shareholder’s proposals. But, were aware of their objectives before submitting the proposals.

We attended the Duke Energy Meeting of Shareholders on April 20, 2000. Duke will distribute the hype. We will report to the employees the proceedings that Duke will never report.

Shareholder Proposals Comments:

First was Peter Wylie from New York. He owns stock in the company which has never been traded. It was inherited from his great-grandfather, Dr. Gill Wylie, a cofounder of the company. He is considering dissolving his ties with Duke Energy if they continue on their present course. He said that mixed oxide nuclear fuel is dangerous, and that in Japan people are dying because of MOX exposure. He said that Duke Energy has expressed an interest in purchasing Millstone Nuclear Plant. He further said that this plant has been called the next most likely Chornobyl, and has been fined a record 2.2 million dollars. He said that MOX should be a dying industry.

Steven Dolley, of the Nuclear Control Institute, also spoke on behalf of the "no MOX" proposal. This paragraph is a paraphrase of his comments: Virginia Power was a partner with Duke Energy, but backed out of the MOX business - why? Duke told him that they cannot comment about the decisions of another company. Duke will not give out any information about their own position! One problem with MOX is that it is tied to the progress of Russia, which is very unstable. The government is going to place a cap on how much money would be reimbursed due to MOX losses. And, that cap has not been determined. Weapons grade plutonium does not have a safety record. The plutonium used in Europe is of a different composition than weapons grade plutonium that Duke intends to use. This fuel has not been used in a commercial power plant. Duke is out of step with the trend. Can 20 year old plants withstand the effects of plutonium fuel? All attempts to use weapons grade plutonium have failed. MOX fuel is not economically competitive per the DOE. MOX is dangerous and produces MORE radioactive waste that uranium. The reasons to use MOX fuel are shallow. Russia has never said that they will stop producing plutonium. The whole MOX effort is ridded with scandal. Plants in Europe are under attack for using MOX fuel. Duke Energy is in denial and cannot admit that they have made a mistake.

Duke has a long history of denial. Management has yet to admit any mistake has ever been made about anything! Even the Pope has been making apologies for church transgressions. If he could meet the management of Duke Energy, he could see those who are truly infallible (in their own minds).

Duke employees would have likely had little interest in the MOX issue if it had not been for the cash balance conversion. We would have likely trusted the company's decision. Post conversion, we now know that we can no longer trust the company. Now we must analyze every move the company makes. If the company can blunder that badly concerning pensions, they really bear close scrutiny when it comes to nuclear power. We found the bad pension thread dangling from Duke's fine garment. We began pulling on it. And, all manner of things began to unravel. After the pension conversion, the burden of proof will always be on the company. "Trust us" will no longer suffice.

A doctor also testified that there is more risk to humans when MOX fuel is used. Here is the gist of his comments: In the 55 year nuclear history, many of the reassurances of the safety of uranium have proven to be untrue (Three Mile Island). Why should anyone believe the reassurances about plutonium? Around plants that use plutonium, radioactivity, cancer, and mutations, will increase. The quality of life around such plants will decrease.

A shareholder said that Duke board members can now serve on an infinite number of boards. They should be limited to four. Just attending meetings is not enough. They should have time to study the issues and the energy to be attentive at the meetings. He also touched on an outside advisory committee, composed of ordinary citizens. The present situation encourages bias and nepotism.

Everyone at the meeting had voted by proxy. Not one vote was cast or changed at the meeting.

The video, "Knowledge," was shown. It was all hype ("We are sooooo smart, we are sooooo smart").

Rick Priory then made his presentation about the great things the company is going to accomplish with position and knowledge. He talks a good game. He always has. He talked of building plants and then selling them fast. He talked of speed entering deals and speed exiting them. He indicated that the internet was going to save the day; Duke has an on-line trading business. He talked of using "innovative financial strategies." He talked of integrity and social responsibility. He said that respect would be shown for the value and knowledge of Duke's people.

Integrity? Social responsibility? Respect for employees? Is this something new that is going to be started? Mr. Priory has had over 3 years and has not demonstrated any of the above! The cash balance conversion demonstrated a complete lack of integrity. Forcing some retired employees to depend on government assistance is not being socially responsible. Respect for the value and knowledge of Duke's people is not accomplished by taking promised retirement funds and health coverage away from them.

Question and Answer Period

Peter Wiley wanted to know if Duke is still considering buying Millstone Nuclear Plant. Rick Priory said that it has not been ruled out.

A stockholder questioned the discrepancies about Duke's earnings in financial reports. In explaining the discrepancies, Mr. Priory mentioned the $800 million set aside last year. He did not mention what the money was for.

That was no problem, another stockholder asked him, point blank, where the $800 million went. Rick Priory explained that it was to be used to cover asbestosis claims. He said this amount was projected to be the max expenditure for claims.

One shareholder asked about the 76% profit from real estate. Rick Priory said that they were exploiting the growth potential of real estate.

This brings up images of "Living In The Nuclear Shadow," published by "The Charlotte Observer" last year. The article covered the over development of the area around McGuire Nuclear Station. It explored what would happen in the event of an evacuation due to a nuclear accident.

A retiree asked why they had not received a cost of living adjustment since 1989 and before that 1983. He said that he was not there with his hat in his hand begging. But, he wanted to mention the thousands of hours of public service that the retirees had given and the millions of dollars that it was worth. He said that Duke takes the credit for this. Rick Priory said that they also got a slight adjustment in 1996. He said that the retirees would continue to get "careful consideration."

We are certain that this gentleman went back home with a "warm fuzzy feeling."

One investor said that Duke's South American investments made him nervous. Rick Priory said that after deregulation, the U. S. Government would "tie his hands." He wants to deal without restrictions as he can only do in foreign countries.

Do you see where the day trader analogy comes in? Just listen to his language: "Trade with no restrictions, build and sell fast, innovative financial strategies, on-line trading business, and speed entering and exiting deals." We do not really mind that. What we resent is its being done with our pension money.

On the cover of the annual report is the word "Brainpower." If management has so much brainpower, it looks like they would have known that nothing lasting can ever be built on deceit. Management is attempting to build a fine empire on wet sand. It does not take too much brainpower to realize that a company is never going to be more than mediocre without the support of its employees. Breaking long term commitments to the employees is not the way to gain their support.

As expected, management got everything that they wanted and the resolutions were defeated.

All company officers seemed relieved that the meeting was over. It lasted an hour and a half.