IBJNews

Rogers stays in charge at Duke Energy after CEO resigns

Back to TopCommentsE-mailPrintBookmark and Share

Duke Energy Corp. which closed its $17.8 billion takeover of Progress Energy Inc. Monday, announced Tuesday that Bill Johnson, the Progress CEO who was expected to lead the merged company, has resigned.

James Rogers, the head of Duke, was named CEO of the combined business effective immediately, the Charlotte, N.C.- based utility owner said in a prepared statement.

Duke announced the Progress takeover in January 2011 and said that Rogers, 64, would become executive chairman of the company with Johnson serving as president and CEO. That plan has been scrapped and the company won’t explain why, Ann Maynard Gray, Duke’s lead director, said Tuesday on a conference call.

“There’s no question that social issues play a huge role in how these mergers unfold and this latest turn of events simply highlights just how difficult they are to predict,” said Paul Patterson, a New York-based utilities analyst with Glenrock Associates LLC.

Patterson asked Rogers during a January 2011 conference call after the Progress purchase was announced how he, as executive chairman, would resolve disputes with CEO Johnson.

“Basically, Paul, we’re going to arm wrestle and you know how big Bill is and you know the outcome of that,” Rogers replied. “I would basically say that Bill is going to be CEO and he is going to be making the calls.”

Johnson, 58, is resigning “by mutual agreement,” the company said. Tom Williams, a spokesman for Duke, declined to comment on the change. Johnson has been the chairman and CEO of Raleigh, N.C.-based Progress since 2007. Duke shares fell 1.3 percent, to $68.92 each, in late-morning trading. The takeover received its final regulatory approval Monday.

“We saw this merger as a succession plan for Duke,” Angie Storozynski, a New York-based analyst for Macquarie Capital USA Inc., said. “Now Rogers is back in charge.”

The reconstituted board, which has 11 Duke members and seven from Progress, on Monday asked Rogers to remain as president and CEO after an executive session, he said Tuesday in a telephone interview. He didn’t participate in the deliberations, he said.

“I have a laser focus on making sure the key leaders from Progress feel included and part of this team,” Rogers said. The company expects to shed about 1,800 workers and about 1,200 already have accepted severance packages, he said. Some employees whose jobs are cut may be offered other positions, he said.

Rogers became Duke’s CEO in 2006 after it purchased Cinergy Corp., the Indiana-based utility owner he’d led, and became Duke chairman a year later. Under the Progress merger agreement, Rogers had a two-year contract to serve as chairman of the combined companies.

“He’s been doing it for a long time and he’s capable,” said Mark Maloney, who helps manage $4.5 billion at Manulife Asset Management US LLC in Boston, including about $1 million of Duke shares. “I’d be more concerned if there weren’t a CEO.”

Rogers and Johnson have revealed differing political views, Maloney said. Rogers is co-chairman and lead fund-raiser for this year’s Democratic National Convention in Charlotte. Johnson is more politically conservative, Maloney said.

Rogers has donated $71,600 in the past two years to political campaigns, according to OpenSecrets.org, which compiles political contributions. His donations to individual politicians have all been to Democrats, including President Barack Obama, former Virginia Gov. Tim Kaine and Sen. Mary Landrieu of Louisiana.

Progress Energy has donated $32,367 during the 2012 election cycle, with 66 percent going to Republican candidates. Duke Energy has donated $167,155 to candidates, 53 percent for Republicans, according to data compiled by Bloomberg.

With Johnson departing, Duke will need to craft a new succession plan, Andrew Smith, an analyst for St. Louis-based Edward Jones & Co. said. He rates Duke shares at hold and owns none.

Duke named Johnson to succeed Rogers after James L. Turner, former president of Duke’s U.S. utility unit, resigned in December 2010. Turner left after e-mail exchanges with an Indiana regulator surfaced as part of an investigation into alleged improper ties between the company and the state agency.

About three months after the purchase was announced, Progress disclosed unexpected damage to the containment building of its Crystal River 3 nuclear reactor while crews were completing repairs to previous damage. The plant remains shut.

Resolving the cost of the repairs to be covered by insurance, shareholders and utility customers will be the company’s third priority after cutting costs and improving efficiency as the two companies combine operations, Rogers said on a conference call with analysts.

Duke also forecast 2012 profit of $4.20 to $4.35 a share, adjusting for a 1-for-3 reverse stock split that took effect with the acquisition.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. These liberals are out of control. They want to drive our economy into the ground and double and triple our electric bills. Sierra Club, stay out of Indy!

  2. These activist liberal judges have gotten out of control. Thankfully we have a sensible supreme court that overturns their absurd rulings!

  3. Maybe they shouldn't be throwing money at the IRL or whatever they call it now. Probably should save that money for actual operations.

  4. For you central Indiana folks that don't know what a good pizza is, Aurelio's will take care of that. There are some good pizza places in central Indiana but nothing like this!!!

  5. I am troubled with this whole string of comments as I am not sure anyone pointed out that many of the "high paying" positions have been eliminated identified by asterisks as of fiscal year 2012. That indicates to me that the hospitals are making responsible yet difficult decisions and eliminating heavy paying positions. To make this more problematic, we have created a society of "entitlement" where individuals believe they should receive free services at no cost to them. I have yet to get a house repair done at no cost nor have I taken my car that is out of warranty for repair for free repair expecting the government to pay for it even though it is the second largest investment one makes in their life besides purchasing a home. Yet, we continue to hear verbal and aggressive abuse from the consumer who expects free services and have to reward them as a result of HCAHPS surveys which we have no influence over as it is 3rd party required by CMS. Peel the onion and get to the root of the problem...you will find that society has created the problem and our current political landscape and not the people who were fortunate to lead healthcare in the right direction before becoming distorted. As a side note, I had a friend sit in an ED in Canada for nearly two days prior to being evaluated and then finally...3 months later got a CT of the head. You pay for what you get...

ADVERTISEMENT