Cinergy board adopts corporate governance guidelines, code of conduct


CINCINNATI, Ohio, Aug. 28, 2002 — The board of directors of Cinergy Corp. recently adopted new corporate governance guidelines and a code of business conduct and ethics for directors, officers and employees.

It also took steps to terminate the company’s shareholder rights plan effective in September 2002.

“The effectiveness of any board is primarily dependent on the integrity and commitment of the people involved, both the directors and the management team. But, it is also important that a responsible and transparent governance system is in place to assure there will be an appropriate focus on relevant, meaningful information and issues,” said James E. Rogers, chairman, president and chief executive officer. “By adopting the new guidelines and code of conduct, the company is formalizing the corporate governance practices it has utilized since it was formed in 1994, together with adopting new processes to strengthen the role of the board in setting corporate policy and direction.”

Many investors consider corporate governance issues in making investment decisions, linking good corporate governance with strong stock performance. In fact, Institutional Shareholder Services (ISS), the world’s largest provider of proxy advisory and corporate governance services, has recently implemented a rating system which takes into consideration a variety of corporate governance matters, called the Corporate Governance Quotient (CGQ).

Based on the decisions announced recently, Cinergy calculates under the CGQ scoring criteria that it outperforms approximately 95 percent of the companies in the S&P 500 index. “We are taking action to ensure a leadership position in adopting practices that are considered best in class while complying with new SEC regulations, the Sarbanes-Oxley Act, and the proposed listing standards of the NYSE,” said Rogers. Another example of this leadership is the Cinergy board’s earlier announced decision to expense stock options beginning in 2003.

The corporate governance guidelines set out in detail the role of the board of directors, selection criteria for board members, stock ownership requirements for directors and executive officers, and establishment of two co-lead directors, who are the chair of the corporate governance committee and the compensation committee. The guidelines also provide for, as has been the company’s past practice, regularly scheduled executive sessions of non-management directors, which will be chaired by one or both of the co-lead directors.

The company’s code of business conduct and ethics strives to achieve the highest business and personal ethical standards and to help ensure that decisionmaking considers the interests of all stakeholders. Some of the areas addressed include conflict of interest, corporate opportunities, use of inside information, environmental leadership, accounting practices, citizenship, fair dealing, confidentiality, protection and use of company assets and compliance with laws and regulations. The code is intended as an overview of the company’s guiding principles and not as a restatement of Company policies and procedures.

The board also approved recently the corporate governance committee’s charter delineating its structure and responsibilities, including that it will be comprised entirely of independent outside directors and will identify and recommend individuals to be nominated to serve as directors, as well as facilitate the board’s annual self evaluation. The audit committee and the compensation committee will also be made up entirely of independent outside directors.

The board also approved a resolution to accelerate the termination date of the company’s shareholder rights plan. Under the resolution, the company will take steps to terminate the plan effective mid-September, 2002, will revise its contract with the plan’s agent and will notify the Securities and Exchange Commission (SEC) and the New York Stock Exchange (NYSE).

The new corporate governance guidelines, corporate governance committee charter and code of business conduct and ethics will be published on the company’s web site, cinergy.com.

Cinergy Corp. has a balanced, integrated portfolio consisting of two core businesses: regulated operations and energy merchant. Cinergy owns regulated delivery operations in Ohio, Indiana, and Kentucky that serve 1.5 million electric customers and about 500,000 gas customers. In addition, its Indiana regulated operations own 6,000 megawatts of generation.

Cinergy’s energy merchant business is a Midwest leader in low-cost generation owning 7,000 megawatts of capacity with a profitable balance of stable existing customer portfolios, new customer origination, marketing and trading, and industrial-site cogeneration. The “into Cinergy” power-trading hub is the most liquid trading hub in the nation.

Source: Cinergy Corp..


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