Business

Two quit Duke Energy board, say new CEO needed

Posted July 27, 2012 4:11 p.m. EDT
Updated July 27, 2012 5:32 p.m. EDT

— 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.