Colin sent me this article. I lived in North Carolina for a year and Duke Energy really has its tentacles wrapped tight around the Carolinas. This is a very big deal for North and South Carolina.
You might want check out Colin's blog at:
Questions, outrage after Duke Energy's CEO exits
By John Murawski and David Ranii
July 7, 2012
Pressure is building on Duke Energy Corp.to explain the abrupt departure of Bill Johnson as chief executive this week, as former Progress Energy board members break their silence and express outrage at what they term a calculated deception.
At the same time, the North Carolina Utilities Commission, which last week approved the merger between Charlotte, N.C.-based Duke and Raleigh, N.C., Progress with the understanding that Johnson would be Duke's CEO, is deliberating whether to investigate Duke officials over possible false statements about their intentions.
For less than a day's work, Johnson is entitled to a hefty exit package that could amount to about $44 million, according to a securities filing.
Meanwhile, a leading Wall Street credit rating firm put Duke on a watch list for a potential credit downgrade in the wake of Johnson's exit. Johnson's abrupt resignation, announced Tuesday, raises questions about Duke's internal stability, planning and management, Standard & Poor's Financial Services said. Scores of former Progress executives were recruited by Johnson, with many moving to Charlotte this week for their new jobs.
The former Progress Energy board members were the most vocal in their outrage.
"Frankly, I felt misled," said Alfred Tollison Jr., who lives in Georgia and served on the Progress board until the completion of the merger. "Just from circumstantial evidence you would have to think it didn't happen overnight, that there was a lot of forethought given to it."
Another former Progress board member, John Mullin III of Virginia, sent a letter to the Wall Street Journal, stating: "I do not believe that a single director of Progress would have voted for this transaction as structured with the knowledge that the CEO of Duke, Jim Rogers, would remain as the CEO of the combined company."
In the letter, which he shared with McClatchy Newspapers, Mullin wrote: "In my opinion this is the most blatant example of corporate deceit that I have witnessed during a long career on Wall Street and as a director of 10 publicly traded companies and as a former trustee of Putnam's numerous mutual funds."
The recent, rapid developments pose new challenges to Duke's leadership. The company's merger with Progress created the nation's largest electric utility.
Duke spokesman Tom Williams said, "We will be working with S&P in the coming weeks to resolve their 'credit watch' listing as expeditiously as possible."
Credit ratings are crucial to utilities, which depend on capital markets to finance power plants and other infrastructure projects that can cost billions of dollars. Lowered credit ratings could result in higher interest rates and millions in added costs.
Moody'sInvestor Services, however, affirmed its ratings and "stable outlooks" for Duke and Progress, citing their strong financial profiles and merger benefits.
But Johnson's departure,Moody'sadded, creates uncertainty over the company's long-term leadership "and could also lead to some additional turnover in the newly constituted company's senior management team."
Details emerged Thursday revealing that Johnson was asked to resign Monday afternoon, shortly after the merger closed that day at 4:02 p.m., suggesting to some that his ouster was choreographed in advance. The merger had received final approval from South Carolina regulators earlier Monday.
Johnson signed his employment contract with Duke on June 27, days before the merger closed. He was CEO of the combined company for about 20 minutes, Mullin said. After the merger closed, Duke's board went into executive session and voted to request Johnson's resignation, Mullin wrote.
Murawski and Ranii write for the News & Observer (Raleigh, N.C.)/McClatchy. Bruce Henderson, who writes for the Charlotte Observer/McClatchy, and the Los Angeles Times contributed to this report.