Surprise CEO Switch As Duke/Progress Complete
Fri August 24, 2012
Surprise CEO Switch As Duke/Progress Complete Merger
In a surprise move Tuesday morning, the board of the newly-merged Duke and Progress Energy announced Duke CEO Jim Rogers would stay on as the top executive. Throughout the merger process, the companies had said Progress CEO Bill Johnson would take the leadership role, but he resigned today by "mutual agreement."
On a brief conference call with analysts to announce the change, Duke Energy's lead director Ann Maynard Gray read a prepared statement thanking Bill Johnson for his four years at Progress and touting Jim Rogers' 23 years of leadership at Duke through two prior mergers.
"We have a great future ahead of us," said Gray. "I'd like to note that we won't be commenting further on the board's discussions with regard to Bill's resignation."
Jim Rogers stuck to that line as well in a brief interview with WFAE after the analyst call. He said only that he's "delighted to step up" and "serve at the pleasure of the board" in helping integrate the two companies.
Here's how he put it to analysts: "This is day one and we are all one group of employees. And so I am really focused on making sure we come together, work together and stay focused on capturing the synergies and achieving our objectives."
By "synergies" he means cost-cutting through eliminating duplicate functions and coordinating power plant operation to save on fuel.
UNC Charlotte economics professor and energy industry analyst Peter Schwarz notes the surprise move to keep Rogers in the CEO seat also offers a cost savings. The plan had been for Rogers to stay on the payroll in a strategic role, with Johnson in charge of day-to-day operations.
"They don't have that expense anymore," says Schwarz. "I think that's going to make some analysts happy, actually. I think there was some concern about having two of those positions."
Schwarz says Johnson's unexpected resignation may also signal additional concern within the company about a Progress nuclear plant in Florida that has been off-line since 2009.
While attempting repairs to the plant, Progress crews caused multiple cracks in the containment building. The company has estimated it could cost more than one-billion dollars to repair the damage. Duke Energy now inherits the costly choice of repairing - or shuttering - the plant.
CEO Jim Rogers told analysts he hopes to resolve the problem by year's end.