Duke Energy’s shareholders are fine with CEO Lynn Good also continuing to serve as chair of the company’s board of directors.

A proxy proposal presented at the company’s annual meeting Thursday requiring the chair to be independent — that is, not an officer of the company — failed. Only 35% of shareholders voted for the proposed amendment to Duke’s bylaws.

The New York City Office of the Comptroller, on behalf of four city employee pension funds holding approximately 1 million Duke shares, offered the amendment in a presentation.

The coalition of pension funds, describing themselves “as long-term shareholders,” argued that separating the two responsibilities of chair and chief executive would “assist the board in overseeing Duke’s necessary strategic transformation to achieve its goal of net-zero carbon emissions by 2050.”

“Our fundamental concern is that Duke’s CEO has no long-term incentive to make investments and strategic choices whose payoff — no matter how substantial — is decades into the future,” the coalition said.

“Duke’s planned transition from coal is too slow, and … its near-term capital investments in long-lived natural gas assets are incompatible with achieving its goal, and … these assets are at risk of becoming stranded.”

A city representative stressed that the proposal was not a criticism of Good or her leadership.

In its written arguments, the pension fund coalition backed up its arguments by quoting a 2020 study by Deloitte that concluded generally that “the math doesn’t add up” after reviewing the fossil retirements and renewable additions of the major utilities that had made future net-zero commitments.

“There is an inherent conflict of interest when a CEO chairs the board to which she is answerable,” the argument continued. “An independent board chair can help ensure that the CEO is accountable for managing the company in alignment with the long-term interests of its shareholders.”

The board countered that this year it had added a performance metric aligning executive compensation with its long-term strategy to reach net-zero carbon emissions by 2050, and that it has recently announced that the company is planning to spend $59 billion on “clean generation” and grid upgrades.

The board also said it has created a strong “independent lead director in order to independently oversee management, rendering a separate chair unnecessary.”

To that assertion, the pension funds countered that the lead independent director, Michael Browning, is also the chair of Browning Investments, a company that has served as the “planning partner” for developable land owned by the Purdue Research Foundation in Indiana. Duke in 2019 leased land there to build a solar array, the pension funds stated, but they noted that “Duke has represented that Browning Investments LLC was not involved with and did not profit from Duke’s” solar project.

The Duke Energy Accountability Coalition, a multistate citizens group, earlier this week added its weight to the formal arguments made by the pension funds. (See Activists Urge Duke Shareholders to Reject Chair Lynn Good.)

The activists further argued that Duke’s replacement of coal-fired power plants with natural gas would not get the company to net zero and would add the extra risk of methane leakage.

Shareholders did pass a different proxy proposal, this one offered by the New York State Common Retirement Fund, for the company to make semiannual reports on its political contributions and related expenditures. The nonbinding proposal passed with 52% of shareholders voting for it. The company suspended all political contributions after the Jan. 6 attack on the U.S. Capitol but has not said what it will do in the long term.

Following the results of the proxy votes, Good spent 30 minutes answering anonymous questions from shareholders and guests watching the meeting, including several questions about its investments in gas turbines and how exactly the company thinks it can reach net zero by 2050.

The short answer: It doesn’t know yet.

“As we get out into the 2030s and 2040s, we see a need for technologies that don’t exist today at commercial scale — hydrogen, longer-duration storage, advanced nuclear, carbon capture and so forth,” Good said.

“And so, we’re working actively to advocate for the research and development necessary to move forward. That balance of resources is going to be important for us as we continue this transformation, and our commitment to our customers is reliability, and affordability will always be a part of the way we evaluate resources.”