July 17 (Reuters) - Duke Energy Corp directors who voted to abruptly oust the company’s former chief executive this month should pay for the damage they caused the largest U.S. power company, according to a shareholder lawsuit filed on Tuesday.
Hours after Duke closed its $18 billion merger with Progress Energy on July 2, which regulators approved on the understanding that Progress CEO Bill Johnson would lead the company, the board voted to replace Johnson with Duke CEO James Rogers.
The move led rating agencies to consider cutting Duke’s debt rating, citing the boardroom uncertainty. The CEO change also prompted an investigation by regulators. The probe could make it tougher for the company to get regulatory approval for higher rates.
“The director defendants’ conspiracy and tactics have had a devastating effect on Duke’s credibility,” said the complaint, which was brought by individual investor Lesley Rupp of Alabama. It said damages could be “enormous.”
The complaint said the potential harm included the resignations of former Progress executives who were expected to help merge operations and Johnson’s severance package of $44 million.
Duke spokesman Dave Scanzoni said the company believed the lawsuit was entirely without merit and that Duke intended to defend itself vigorously.
The lawsuit was filed in Court of Chancery in Delaware, where Duke is incorporated, and also names Rogers as a defendant.
It does not name as defendants the former Progress directors who are now on the Duke board. They voted against replacing Johnson.
The case is a derivative lawsuit, which means the shareholder essentially is seeking to step into the shoes of the company and seeks to recover from the directors the damage they caused Duke. Shareholders will benefit only indirectly.
Rogers told the North Carolina Utilities Commission last week that Duke’s board had lost confidence in Johnson due to Johnson’s “autocratic” management style.
Rogers also questioned Johnson’s management of Progress’s nuclear power business as well as the utilities’ financial performance after the deal was announced.
Law firm Prickett Jones in Wilmington represents the plaintiff, along with Hare Wynn Newton & Newell of Birmingham and the Law Office of Frank DiPrima of Morristown, New Jersey.
The case is Lesley C. Rupp v James E. Rogers et al, Delaware Court of Chancery, No. 7705