Raleigh, N.C. — One day after telling North Carolina utilities regulators that Duke Energy Corp. didn't mislead them about the company's management structure after its merger with Progress Energy Inc., Chief Executive Jim Rogers faced a tougher audience Wednesday.
Thousands of Progress Energy employees in four states packed ballrooms and meeting rooms to hear directly from Rogers about why their former chief executive, Bill Johnson, was suddenly removed as president and CEO of the combined utility less than an hour after they merged last week.
Anxious and angry employees filed into the Marriott in downtown Raleigh, across the street from Progress' longtime headquarters, and Rogers' statements were broadcast to employee groups in Charlotte, St. Petersburg, Fla., Cincinnati and Plainfield, Ind.
Rogers said during the closed-door meeting that he isn't a "perfect leader," adding that the most important step during the company's "difficult time" is to develop trust. He also encouraged employees to ask him "tough questions," saying he wants to hear their concerns.
"(There is) nothing more valuable than developing trust," he said. "I have every belief that you will find a way to build relationships, build collaborations and build trust."
One Progress employee told Rogers that Duke's board of directors is unethical, prompting applause from other workers.
On Tuesday, Rogers told the North Carolina Utilities Commission that Duke's board lost confidence in Johnson's ability to lead the company weeks before the July 2 merger. The commission, which approved the merger on June 29, has the power under state law to rescind or alter its decision.
Rogers, who had been slated to become chairman of the combined Duke Energy, was selected to continue in his roles as president and chief executive immediately after Johnson was asked to resign.
Board members were concerned about problems at Progress' nuclear power plants, Rogers told the commissions, including an estimated $2.5 billion price tag for repairing damage to the Crystal River plant in Florida, which has been out of commission since 2009. He said they also didn't like Johnson's leadership style, which he described as "autocratic," and were less than enthused about Progress' recent financial results.
"It isn't one single thing that led them to this view," he said.
Late Tuesday, Raleigh attorney Wade Smith released a statement defending Johnson, who has remained mum since leaving the company.
"Bill Johnson has a distinguished record of leadership at Progress Energy and was looking forward to the opportunity to lead the nation's largest utility," Smith said. "The fact that he is held in the highest regard by his peers in the utility industry and in the North Carolina business community speaks volumes about his leadership and business capabilities."
Johnson is due to receive up to $44.7 million in severance, pension benefits, deferred compensation and stock awards under his employment contract with Duke. The Utilities Commission has ordered that company shareholders, not customers, pick up the tab.
Some members of North Carolina's congressional delegation are likely keeping a close eye on the situation, as they own stock in Duke.
Sen. Kay Hagan owns less than $15,000 in Duke stock as well as less than $15,000 in Progress Energy stock, according to her financial disclosure forms. Meanwhile, 5th District Congresswoman Virginia Foxx owns more than $50,000 in stock for each of the companies, and 12th District Congressman Mel Watt owns less than $15,000 in Duke stock.
Job losses include top Progress executives
The merger is expected to eliminate an estimated 1,860 jobs, including 700 to 1,000 Progress Energy workers in Raleigh, Duke spokesman Tom Williams said.
About 1,150 of those job losses have already been set through negotiated buyouts, while 300 to 400 are vacant positions, Williams said. The remaining 300 to 400 positions that will be trimmed haven't yet been determined.
Following Johnson's departure, three other Progress executives turned in their resignations – John McArthur, executive vice president of regulated utilities; Mark Mulhern, executive vice president and chief administrative officer; and Paula Sims, chief integration and innovation officer – Rogers told the panel.
Lloyd Yates, who has headed Progress' operations in North and South Carolina, said after Wednesday morning's meeting that he also considered turning in his resignation.
"At the end of the day, for the customers, for the employees of Progress Energy and for our shareholders, this merger makes absolute sense," Yates said.
Still, he said, coming to terms with the wrenching changes of the past week is "a grieving process" and noted that there are "some significant trust issues" moving forward.
"The Progress Energy that we know of has gone away, and we are now Duke Energy," he said, adding that he hopes to galvanize the combined workforce in the new company.
A Progress employee expressed frustration Wednesday that workers first learned about the loss of three top leaders in the commission hearing.
"We can certainly appreciate that people are upset about what happened and how it happened," Williams said after the meeting. "Why weren't they told first? And they were upset about that, and I can understand why."
Rogers told employees that he expects the Utilities Commission might put more restrictions on the merger. The commission hasn't said what it plans to do.
"I think there is concern, and there is hope about moving forward, based on what Mr. Rogers stated today," Progress employee Rodney Wright said.