Charter of the
2003 Committee Charter : CIN
Corporate Governance Committee
of the Board of Directors
of Cinergy Corp.
The Corporate Governance Committee (the "Governance Committee") is
responsible for creating and maintaining the overall corporate governance
principles and policies for the Company and for identifying, screening, recruiting
and recommending to the Board of Directors (the "Board") for approval, director
nominees for the annual meeting of shareholders. The Governance Committee
also nominates directors for committee membership for full Board approval.
The Governance Committee shall be comprised of three or more members, all of
whom must qualify as independent directors ("Independent Directors") under the
listing standards of the New York Stock Exchange and other applicable rules and
The members shall be nominated by the Governance Committee for full Board
approval and appointed annually to one-year terms by the Board. The
Governance Committee shall recommend to the Board for approval, one member
of the Governance Committee as Chair. The members shall serve until their
resignation, retirement, or removal by the Board or until their successors shall be
appointed and qualified. No member of the Governance Committee shall be
removed except by majority vote of the Independent Directors of the Board then
III. Meetings and Procedures
1. The Governance Committee shall fix its own rules of procedure, which shall
be consistent with the Bylaws of the Company and this Charter.
2. The Governance Committee shall meet at least two times annually and more
frequently as circumstances require.
3. The Chair of the Governance Committee or a majority of the members of the
Governance Committee may call a special meeting of the Governance
4. A majority of the members of the Governance Committee shall constitute a
97411v3 April 22, 2003 2
5. The Governance Committee may form subcommittees for any purpose that
the Governance Committee deems appropriate and may delegate to such
subcommittees such power and authority as the Governance Committee
deems appropriate; provided, however, that:
(a) No subcommittee shall consist of fewer than two members, and
(b) The Governance Committee shall not delegate to a subcommittee any
power or authority required by any law, regulation or listing standard to be
exercised by the Governance Committee as a whole.
6. The Governance Committee may request that any directors, officers or
employees of the Company, or other persons whose advice and counsel are
sought by the Governance Committee, attend any meeting of the Governance
Committee to provide such pertinent information as the Governance
7. Following each of its meetings, the Governance Committee shall deliver a
report on the meeting to the Board, including a description of all actions taken
by the Governance Committee at the meeting.
8. The Governance Committee shall keep written minutes of its meetings, which
minutes shall be maintained with the books and records of the Company.
IV. Responsibilities and Duties
The Governance Committee shall have the following duties and responsibilities:
1. To determine director and committee member/chair compensation for those
directors who are not also employees of the Company.
Implement Policies Regarding Corporate Governance Matters
2. To recommend to the Board policies to enhance the Board's effectiveness,
including with respect to the distribution of information to Board members, the
size and composition of the Board, and the frequency and structure of Board
3. To develop and review periodically, and at least annually, the corporate
governance policies of the Company to ensure that they are appropriate for
the Company and comply with applicable laws, regulations and listing
standards, and to recommend any desirable changes to the Board.
97411v3 April 22, 2003 3
4. To create and recommend to the Board for adoption, and maintain therefor, a
Code of Business Conduct and Ethics for directors, officers and employees.
5. To consider any other corporate governance issues that arise from time to
time, and to develop appropriate recommendations for the Board.
Assess Board Membership Needs and Recommend Nominees
6. To determine what types of backgrounds are needed to help strengthen and
balance the Board and to nominate candidates to fill vacancies accordingly,
always being sensitive to the emergence of outstanding talent among minority
groups and women.
7. To be constantly alert to the needs of the Board and maintain an active file of
suitable candidates for consideration as nominees to the Board, which
candidates may include, if the Governance Committee deems it advisable,
candidates recommended by the Chief Executive Officer and other members
of the Board. In compiling the file, the Governance Committee shall consider,
where appropriate, the independence of each candidate.
8. To consider the competency of the Board as a whole in the following areas,
with at least one director contributing knowledge, experience and skill in each
area: (i) accounting and finance; (ii) business judgment; (iii) management;
(iv) crisis response; (v) industry knowledge; (vi) international markets; (vii)
leadership; and (viii) strategy/vision.
9. To assess, on a regular basis, the skills and characteristics needed by the
Board in the context of the current status of the Board. Skills and
characteristics to consider are: (i) mature judgment; (ii) diversity; (iii)
experience; (iv) skills; (v) accountability and integrity; (vi) financial literacy;
(vii) high performance standards; (viii) time; (ix) other board appointments; (x)
industry knowledge; (xi) networking/contacts; and (xii) degree of
independence from management.
10. To conduct annual evaluations of each director.
11. To recommend to the Board the slate of nominees of directors to be elected
by the shareholders and any directors to be elected by the Board to fill
vacancies. Recommendations should include a review by the Governance
Committee of the performance and contribution of fellow directors as well as
the qualifications of proposed new directors.
Make Recommendations Regarding Committee Memberships
12. To recommend to the Board those directors to be selected for membership on
the various Board committees. Recommendations should consider the
97411v3 April 22, 2003 4
qualifications for membership on each committee, the extent to which there
should be a policy of periodic rotation of directors among the committees, and
any limitations on the number of consecutive years a director should serve on
any one Board committee.
13. To recommend that individual directors be designated as chairs of Board
committees, particularly those that perform oversight functions, i.e., Audit and
14. To be involved with management in reviewing director and officer insurance
needs and the means of satisfying them.
Evaluation of the Board and Management
15. To sponsor and oversee performance evaluations for the Board as a whole,
the directors and management.
16. To monitor director performance, counsel those who may be found wanting
and, when necessary, steer low-performance directors away from standing for
V. Performance Evaluation
1. The Governance Committee shall conduct a self-evaluation of its
2. In conducting this review, the Governance Committee shall evaluate whether
this Charter appropriately addresses the matters that are or should be within
3. In conducting this review, the Governance Committee shall address all
matters that it considers relevant to its performance, including at least the
following: the adequacy, appropriateness and quality of the information and
recommendations presented by the Governance Committee to the Board, the
manner in which they were discussed or debated, and whether the number
and length of meetings of the Governance Committee were adequate for the
Governance Committee to complete its work in a thorough and thoughtful
4. The Governance Committee shall deliver to the Board a written report setting
forth the results of its evaluation, including any recommended amendments to
this Charter and any recommended changes to the Company's or the Board's
policies and procedures, which shall then be discussed with the full Board and
acted upon as appropriate.
97411v3 April 22, 2003 5
VI. Investigations and Studies; Outside Advisors
1. The Governance Committee may conduct or authorize investigations into or
studies of matters within the scope of the Governance Committee's duties
and responsibilities, and may retain, at the Company's expense, such as it
2. The Governance Committee shall have the sole authority to retain or
terminate any search firm to be used to identify director candidates, including
sole authority to approve the search firm's fees and other retention terms,
such fees to be borne by the Company.