Reuters: Regulatory News: UPDATE 1-Duke director grew wary of 'controlling' ex-Progress CEO

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UPDATE 1-Duke director grew wary of 'controlling' ex-Progress CEO Jul 20th 2012, 17:57 Fri Jul 20, 2012 1:57pm EDT By Matt Daily RALEIGH, North Carolina, July 20 (Reuters) - Duke Energy's board grew frustrated with then-Progress Energy Chief Executive William Johnson's lack of transparency about a troubled nuclear power plant in the months before their merger closed, Duke's lead director said on Friday. Ann Maynard Gray, the Duke director, told the North Carolina Utilities Commission that lack of disclosure about the plant and Johnson's "controlling" management style prompted Duke's board to seek his resignation shortly after Duke completed the $18 billion deal that put him in the CEO job. "I think the reasons why Bill was asked to resign were unique to his leadership style," Gray testified. Duke's purchase of Progress created the nation's largest utility but sparked anger from the regulators in Raleigh, where Progress was based, because of the removal, which returned Duke's James Rogers to the top job. Johnson got off to a rocky start in his first meeting with the Duke board in 2010, Gray said, when he gave a presentation and discussed how he liked to operate. "He did describe himself as an individual who likes to learn but not to be taught. That was an expression that stayed with the board," Gray said. Gray said she and board member Dan DiMicco, the CEO of steelmaker Nucor, were both concerned about Johnson after that initial meeting. Gray's testimony largely echoed Rogers' comment to the NCUC that it was Johnson's management style, the issues around Progress's Crystal River nuclear plant and the poor performance of other Progress nuclear plants that eroded the Duke board's confidence in Johnson. Rogers, who is also Duke's chairman, also testified that it was Gray who first brought board's concerns about Johnson to him in the months ahead of the deal's closing, but that he was excluded from the decision to oust him. The NCUC has not indicated whether it would try to re-open its approval of the merger, or impose new financial conditions on it, although corporate governance experts have said the board was within its rights to change the CEO if it had concerns. 'RADIO SILENT' As regulatory approvals dragged on, the Duke board judged information provided by Progress on the status of repairs at the Crystal River plant as lacking. Duke's board requested that Johnson set up a face-to-face meeting with Rogers and the head of Nuclear Electric Insurance Ltd (NEIL) to discuss a claim Progress filed with NEIL, but it only yielded a telephone call with NEIL nine weeks later. NEIL insures the nuclear operations of electric utilities. That type of delay to a board request would never have happened inside Duke, she said. "You'd never go radio silent for nine weeks like that," she said. "I think a number of the Duke directors were stunned." On Thursday, Johnson testified before the commission that he believed Duke tried to back out of the deal after the Federal Energy Regulatory Commission imposed expensive requirements on the companies to reduce their market power. Duke has denied it sought to scuttle the deal, and said it made every effort to comply with the merger agreement. Marie McKee, one of the Progress board members who joined the Duke board, testified on Thursday that she felt blindsided by Gray's quick effort to remove Johnson after the deal had closed. She testified that Gray refused to elaborate on the reasons for Johnson's removal during an hour-long board discussion and would only say the Progress CEO was not a "good fit." Shares of Duke, which have dropped more than 5 percent since the deal closed, were up less than 1 percent at $66.23. Link this Share this Digg this Email Reprints

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