Progress CEO is out as Duke, Progress complete merger
After Duke Energy and Progress Energy completed their merger Tuesday morning, the combined utility announced that Progress' top executive, Bill Johnson, who had been designated to lead the new company, has resigned "by mutual agreement." Duke's chairman will be the CEO.Posted — Updated
In an unexpected turn of events, Duke Chairman and Chief Executive Jim Rogers will be CEO of what is now the nation's largest utility. Rogers had been scheduled to serve as chairman and Johnson as president and CEO.
However, in the announcement early Tuesday of the formal merger closing and the formation of a new board of directors, the new Duke Energy said Rogers was staying and Johnson was out.
Johnson had been a strong advocate for the merger and was planning to buy a home in Charlotte, according to a report in The Charlotte Observer.
A Duke spokesman in Charlotte said the company had no further comment about Johnson's departure. Company officials also refused to talk about it during a conference call later Tuesday morning.
Johnson would not be made available for comment, the spokesman said when asked. He had been CEO at Progress since October 2007, when his predecessor and friend, Robert McGehee, died of a heart attack.
Asked if Johnson's departure would have any impact on Duke's plans for post-merger Progress operations in Raleigh, he replied: "No."
Still, Raleigh officials were caught off guard by the move and expressed some trepidation about the utility's future presence in the Capital City.
"(There's) concern and a little disappointment because I think Progress Energy is a great company (and) has been for us for many, many years in the city of Raleigh," City Councilman John Odom said. "I was hoping that they might be a mainstay in downtown Raleigh and Raleigh all over. Now, we have no idea."
Progress previously said it expected to cut at least 700 jobs in Raleigh, where it's name is on the downtown performing arts center and other local groups count on its philanthropy.
"Even though it's a big shake-up on Day 1, you really have to give them some time and see how it plays out," Mayor Nancy McFarlane said. "We're still the state capital. They're still going to be coming to Raleigh for all sorts of things. Right now, I still take them at their word (that) they plan on being a good presence here (and) a good community partner."
Harvey Schmitt, president of the Greater Raleigh Chamber of Commerce, said he's not concerned about the management shake-up.
"I do not suspect a single change in their commitment to making certain this community is successful," Schmitt said. "I know, in the absence of information, people assume all sorts of things, but I think at the end of the day, we're going to look back on this and say it was a change in leadership, it was not a change in direction."
Ed Finley, chairman of the North Carolina Utilities Commission, which approved the merger last week, said that company officials never indicated to the commission that Johnson wouldn't be part of the management of the combined utility.
"His departure on the same day the merger is closed and three days after our order may raise questions in the minds of some as to the timing of the decision by those involved in it," Finley said in a statement. "While management structure and succession are important, a more significant emphasis will be on ensuring that the benefits to the ratepayers will materialize as forecasted.
"There is significant management talent within the two companies, and we hope the best lineup will fall quickly into place," he said.
Robert Gruber, executive director of the Utilities Commission's Public Staff, which represents consumers in utilities cases, said he thinks the management change was known by at least some board members ahead of time. He said it should have been made public before the merger was finalized, not hours after.
"The calculus was that, if this was revealed a week ago, this would have delayed the merger," Gruber said."There would have been something all parties would've wanted to investigate. Another extension of time might have jeopardized the whole merger."
If the merger wasn't finalized by July 8, either side could have walked away without penalty.
The regulatory approval from North Carolina and South Carolina, which came Monday, were the final hurdles Duke and Progress needed to close the deal.
The Public Staff signed off on the merger once the two companies agreed to keep a large presence in Raleigh, maintain corporate contributions at the current level and ensure stockholders, not customers, paid for the cost of the merger, Gruber said.
The new board of directors includes nine people from the Duke side and four people from the Progress side, and Gruber said he's been assured by Duke management Progress Energy's senior vice presidents will remain in place.
“Having served as CEO of Duke and its predecessor companies for more than 23 years, Jim Rogers is well-suited to lead the integration effort and to drive our combined businesses forward,” Ann Maynard Gray, the lead director of the Duke board, said in a statement. “The board of directors looks forward to working with Jim and the rest of the executive team to enhance our position as a utility with financial strength and a greater ability to meet the needs of our customers.”
Gray made only a brief comment about Johnson, saying he was “instrumental in helping us close the merger with Progress Energy" and wishing him well in the future.
Progress will now operate as a subsidiary of Duke.