Business

Two quit Duke Energy board, say new CEO needed

Posted July 27, 2012

— Two riled directors of America's largest electric company resigned Friday, saying they were blindsided by a surprise management switch that has put pressure on Duke Energy Corp.'s credit rating and stock price.

John Baker II and Theresa Stone called on the remaining board of directors to start a search to replace Chief Executive Jim Rogers. Baker and Stone had been on Progress Energy Inc.'s board of directors and joined the Duke board when the companies merged July 2.

Progress Chief Executive Bill Johnson, who the companies had promised for 18 months would lead the combined company, was ousted hours after the merger deal was done and replaced by Rogers, who had been slated to be company chairman.

"From the outset of the merger negotiations, it was understood between Progress and Duke that Mr. Rogers should not be the CEO of the combined company," Stone wrote in her resignation letter. "It was surprising, therefore, that there was no discussion at the (July 2 board) meeting of why Mr. Rogers was now a good fit as CEO of the combined company or whether alternatives to him being appointed as CEO had been discussed."

Stone and Baker said bringing in a new CEO would help restore the public's confidence in Duke.

Two other Progress directors who moved to Duke board told the North Carolina Utilities Commission last week they also were thinking about quitting.

There are now four Progress representatives on the new company's 15-member board of directors. The company had started with an 11-7 split on the board, but Johnson's ouster and the two resignations have shrunk the board and increased Duke's power on it.

Three high-ranking Progress executives also left the new company in the wake of Johnson's departure.

The Utilities Commission is reviewing its June 29 approval of the merger and has the power under state law to rescind its approval or require Duke to meet additional conditions. Commissioners have said they feel misled by Duke officials, who repeatedly told them Johnson would be in charge as they debated whether to approve the deal.

Rogers and two longtime Duke board members said the board had been having doubts for months about Johnson's leadership style and ability and had secretly discussed removing him.

The commission had demanded that Duke turn over emails and other communications regarding the merger by next Tuesday, but on Friday, they moved the deadline back to Aug. 7.

30 Comments

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  • Scubagirl Jul 30, 12:40 p.m.

    While I in no way agree with how this merger panned out or with anything that DE has done I'm really sorry to see the PE folks jumping ship. I understand WHY they are but it does leave more control in the hands of the legacy DE folks and that's not good.

  • elcid liked Ike Jul 27, 7:52 p.m.

    CGinbox, how do you think that would benefit you? (I'm assuming that you are a legacy Progress customer).

    If the merger is rescinded, an independent Progress will be faced with a high probability of financial collapse. You need to grasp that. Progress was a sick company that was circling the drain. Continuing as an independent entity was never a possibility. It had to merge with somebody in order to survive.

    So, in the unlikely event that the commission were to rescind the merger (which we all need to acknowledge is not going to happen), Progress would be faced with the immediate necessity of finding another merger partner, and quickly, and these antics displayed by the commission would make accomplishing that feat even more difficult that it already was. Short version: such a merger would have to have been with an out of state firm and would have to have been approved on terms that you would have disliked even less.

    Duke basically saved Progress from collapse. Be glad it did.

  • cginbox Jul 27, 7:43 p.m.

    Puh-lease - Email is electronic. If Duke uses MS Outlook and MS Exchange Server - it only takes a few minutes to export all emails for all parties concerned and they cound then be turned over in a file. As an expert in the field - these are simple tasks by any measure and the delay seems suspicious !

    Nobody gets to the top by missing an elephant in the living room. Duke appears to have manipulated and carefully constructed this situation.

    With 7 million electric meters - Duke has the ability to reach deep into the finances of 7 million households. What a crime !

    NERC and FERC should rescind the deal.

  • elcid liked Ike Jul 27, 7:37 p.m.

    "I'm hearing (through a number of qualified sources in Raleigh) that Progress needed this merger to go through, as they are otherwise bankrupt, or that they are on financially shaky ground... makes sense that some at PE wanted this 'deal' pushed this through." - determined2win

    Johnson himself admitted as much in his testimony. In his own words, had the merger failed to go through, Progress was facing massive layoffs, cuts to employee benefits and slshed capital spending (which is the death knell for a utility with a physical plant that is already old and getting older by the day.)

    Legacy Progress had one of the highest debtloads in the industry, and one only need consult their financial reports to see how bad things had gotten. Legacy Progress literally paid 2011 dividends (and Johnson's $1.2 million bonus in 2011 as well) with borrowed money. It was a company on life support that needed a sugar daddy with deep pockets to survive, so it went out and found itself one.

  • elcid liked Ike Jul 27, 7:28 p.m.

    Rocky Mount and Wilson have municipal power agencies. They are not regulated by the utilities commission. if you feel you pay too much, talk to your city councils. They set the rates.

    Interestingly though, Duke has lower rates than legacy Progress did. Progress customers were already paying more.

  • Gork Jul 27, 7:23 p.m.

    everybody wakeup - it's not just the next rate increase, it's FOREVER. Eleven rich people have taken over and will decide your fate from here on out. Eleven people. Millions of us have no say in a utility that we can't live without, it's all up to those 11 people who will never have a problem paying their electric bills?

  • jmcelveen Jul 27, 7:08 p.m.

    I can see electricity rates skyrocketing to cover all these legal bills........they aint hurtin since the new CEO flew the company helicopter to HNP instead of driving the 3 hrs from Charlotte...money to burn

  • barownerx2 Jul 27, 7:04 p.m.

    WE have been paying these high bills in Rocky Mount and wilson for some time now. They are going to raise your rates along with what we pay. Enjoy it

  • lollipop2 Jul 27, 6:58 p.m.

    U C please give us back Progress Energy. We don't need or want Duke Power

  • NCPictures Jul 27, 6:31 p.m.

    " Pat McCrory worked for them for 27 years and is steeped in the culture of power and running over "little people." I hope the voters will soon see McCrory for what he is, a pawn of Duke Energy." ----disgusted2010

    WOW, would you care to cite any references to your statement? Most other people that have tried to go down this road have been dis proven. But it sure seems that most liberals are prone to repeating lies over and over until they begin to believe them.

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