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Two on Duke Energy board resign, complain about CEO switch

RALEIGH, N.C. — Two riled directors of Duke Energy resigned Friday, complaining they were blindsided by a surprise CEO switch that has put pressure on the credit rating and stock price of what is now the largest U.S. utility.

John Baker II and Theresa Stone said in their resignation letters that the remaining members of the board of directors should start a search to replace current chief executive officer Jim Rogers. Baker and Stone had been on Progress Energy's board of directors and joined the Duke Energy board when the companies merged July 2.

Hours after the merger deal was done, Bill Johnson, the top Progress Energy executive, whom the companies had promised for 18 months would lead the combined company, was out. Rogers was in. Johnson also had a seat on the board of directors, so what had started out as an 18-member supervisory panel now has three vacancies.

Two other Progress Energy directors who moved over to Duke Energy said last week they were considering quitting.

Following the CEO switch, Duke Energy's credit rating was downgraded by Standard & Poor's. In addition, North Carolina's utilities regulator and attorney general started investigations, and the share price is down 3 percent.

"In light of the negative reaction among important constituencies to the corporate governance issues raised" by the CEO surprise, Stone wrote, "I believe that the company faces major hurdles in restoring trust and confidence."

Stone wrote that one step in overcoming the concerns "would be the immediate announcement of a well-designed, formal CEO search process."

Baker also said the company should show that it's moving to find a replacement for Rogers.

Duke Energy said in a prepared statement that it would not comment on the contents of the resignation letters.

Rogers had been Duke Energy's CEO since 2006. He said during sworn testimony to the North Carolina Utilities Commission that two directors on the pre-merger Duke Energy board approached him in May. The two directors, who asked Rogers whether he'd remain as CEO of the combined company, testified last week that they turned to him after deciding they disliked Johnson's leadership style.

Two on Duke Energy board resign, complain about CEO switch 07/27/12 [Last modified: Friday, July 27, 2012 10:24pm]
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