Duke CEO: Board lost confidence in Progress CEO
RALEIGH, North Carolina
RALEIGH, North Carolina (Reuters) - Duke Energy Corp's (DUK.N) board of directors lost confidence in Progress Energy CEO Bill Johnson in part because of his company's financial performance and the management of its nuclear power business, Duke Chief Executive Jim Rogers told North Carolina regulators on Tuesday.
Rogers was testifying at a hearing called by the North Carolina Utilities Commission to look into Johnson's ouster following Duke's $18 billion takeover of Progress, which was completed last week.
He said the board's concerns also extended to Johnson's management methods and the directors worried he would try to impose Progress' culture on Duke.
"They felt his style was autocratic and discouraged different points of view," Rogers said.
Rogers said the company's lead director approached him in late June with her concerns about Johnson's abilities to lead a combined company. She asked him then whether he would be willing to remain as CEO if the board decided to remove Johnson.
The combined directors voted straight down company lines to replace Johnson with Rogers, with 10 former Duke directors outvoting five legacy Progress directors. Johnson and Rogers, both directors at the time, did not vote and one Progress director was absent.
Johnson could not be immediately reached for comment.
Rogers' appearance at the hearing drew an overflow audience. The utilities commission hearing room, which seats 106, was packed, requiring the commission to open an adjacent room for others to hear.
Duke directors replaced Johnson with Rogers as head of the merged company just hours after the deal closed, despite telling regulators while the deal was under review that Rogers would be executive chairman and Johnson would be CEO.
With the Progress takeover, Duke became the largest U.S. power company, with 57,000 megawatts of generating capacity and 7.1 million customers in North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio. Duke also is now the second largest U.S. operator of nuclear power plants.
Utilities Commissioner Susan Warren Rabon questioned Rogers about the size of Johnson's more than $40 million severance package.
"The actual part tied to the transition is probably around $7 million," Rogers said. "The lion's share of the $44 million were items that Mr. Johnson had earned and were vested at the point of the transition."
Rabon asked if it would be fair to think the Duke's rates were too high if it could afford such a large compensation package for a 20 minute CEO.
"I will assure you none of these dollars will be charged to the customers of this state," Rogers said. "We're not taking customer money. We're taking investor money to pay this."
Utility regulators in South Carolina and Florida planned to attend or monitor Rogers' appearance before the North Carolina commission.
North Carolina's attorney general, Roy Cooper, has opened his own investigation and ordered Duke officials to produce merger-related documents from board members and senior managers of both companies going as far back as January 2011, when the deal was first announced.
Standard & Poor's also said it is reevaluating credit ratings for Duke and its utilities, citing the management news.