Duke Realty Announces Corporate Governance Initiatives; Expensing of Stock Options and Repeal of Poison Pill Among Today's Announcements.

Business Editors

INDIANAPOLIS--(BUSINESS WIRE)--July 31, 2002

Duke Realty Corporation (NYSE:DRE) reported today that its Board of Directors approved several new corporate governance initiatives. Some of these initiatives are effective immediately and some are recommended changes to Duke's articles of incorporation to be voted on by shareholders at the Company's 2003 annual meeting next April.

One of the new initiatives announced today pertains to how the Company accounts for stock options. Beginning in the second quarter, Duke began expensing the fair value of stock options granted to its associates. As required by SFAS 123, this accounting treatment has been adopted on a prospective basis. Accordingly, Duke will recognize expense over the option vesting period (currently five years) for all options granted after December 31, 2001. Because a large portion of the Company's long-term compensation is paid under plans not involving stock options, and awards under those plans are currently being expensed, Duke expects the effect of this change in accounting treatment to be small. In 2002, the Company anticipates approximately $0.002 per share of stock option expense. Based on current option levels, once the effect of this change is fully implemented over the option-vesting period, the overall effect will be approximately $0.01 per share of additional expense annually.

The Company also announced today that, beginning this quarter and in the future in accordance with any guidelines or regulations established by the New York Stock Exchange or the Securities and Exchange Commission, Tom Hefner, Chairman and Chief Executive Officer; Denny Oklak and Gary Burk, Co-Chief Operating Officers; and Gene Zink, Chief Financial Officer will certify the completeness and accuracy of materials made available by Duke for investors, including the Company's financial statements.

Duke also disclosed today that its Board of Directors voted to revoke the Company's shareholder rights plan, or poison pill. In doing so, the Board further stated its intent not to authorize the issuance of preferred stock for any anti-takeover or defensive purposes without the consent of the Company's shareholders.

In order to memorialize the Company's policies of compliance with the highest prevailing standards of corporate governance, the Board of Directors also approved today the guidelines and principles set forth below:

-- Change the minimum independent director requirement to 75 percent from a simple majority;

-- Require annual election of all directors rather than electing directors to staggered terms of three years;

-- Permit the Company's articles of incorporation to be amended by a simple majority vote in all circumstances, including mergers, rather than by a supermajority vote; and

-- Permit shareholders to act by written consent.

The Board of Directors also recommended today the following changes to the Company's articles of incorporation to be voted upon at Duke's April 2003 annual meeting:

-- Change the minimum independent director requirement to 75 percent from a simple majority;

-- Require annual election of all directors rather than electing directors to staggered terms of three years;

-- Permit the Company's articles of incorporation to be amended by a simple majority vote in all circumstances, including mergers, rather than by a supermajority vote; and

-- Permit shareholders to act by written consent.

Commenting on the Company's new corporate governance initiatives, Thomas L Hefner, Duke's Chairman and Chief Executive officer, stated,

"Since our inception we have strived to not only be a top-performer operationally, but to also be a leader in disclosure and in other areas that are important to our shareholders such as corporate governance. These guidelines and initiatives announced today, including many that were already in place but simply not published, emphatically reinforce that commitment. Going forward, we will continue to show to the investment community that the quality and integrity of our accounting and corporate governance practices is among the best in corporate America and is a top priority of our Board of Directors."

Duke Realty Corporation is one of the largest real estate companies in the United States with a total market capitalization of $6.8 billion at June 30, 2002. Committed to Complete Customer Satisfaction, the Company is a fully integrated real estate company that owns a diversified portfolio of primarily industrial, office and retail properties in 13 major U.S. cities. The Company was also named to the Forbes Super 500 list for 2002. With a largely dominant presence in the Midwest and Southeast, Duke owns, manages or has under development more than 106 million square feet of properties. The Company also controls more than 4,000 acres of undeveloped land that can support approximately 62 million square feet of future development. The more than 1,000 real estate professionals at Duke strive to completely satisfy their tenants. Visit Duke on the web at www.dukerealty.com.