RALEIGH — Acknowledging that the power company is in the midst of a difficult transition, Duke Energy Chief Executive Jim Rogers urged employees on Wednesday to give him a chance to regain their trust in the wake of the firing of Bill Johnson as CEO.
The 2-1/2-hour meeting with about 1,000 Progress Energy employees in the downtown Raleigh Marriott hotel was beamed live to employees watching and listening in auditoriums and rented halls in Charlotte, Florida, Indiana and Ohio. Duke now has about 29,000 employees.
Rogers’ Q&A in Raleigh followed Tuesday’s interrogation by the N.C. Utilities Commission, which is looking into Johnson’s abrupt exit last week.
Rogers’ revelation during the hearing that three senior executives who previously worked with Johnson at Progress had also resigned added to the concerns of employees, regulators and shareholders that the company could face an extended period of instability.
A Wall Street financial analyst on Wednesday predicted the fallout from Johnson’s firing will cost the company dearly. Hugh Wynne of Sanford C. Bernstein & Co., expects the costs to include a “substantial fine” from the N.C. Utilities Commission, a potential fine from the N.C. Attorney General, likely handsome severance payments to the three departing executives, unfavorable treatment in upcoming rate reviews, and the cost of defending and settling shareholder lawsuits.
But the N.C. Utilities Commission is unlikely to “unscramble the omelet” of the Progress-Duke merger, Wynne wrote in a report, as many public comments to the commission urge. The commission is investigating whether it was misled with false promises that Progress CEO Johnson would lead the combined company as an inducement to approve the $32 billion merger last month. The board of the newly combined Duke Energy, on a 10-5 vote, asked Johnson to resign hours after the deal closed July 2.
Journalists were barred from Wednesday’s meeting with employees, which filled a Marriott ballroom and an overflowing conference room. Out in the corridor, employees could be heard cheering and clapping inside the ballroom when questioners challenged Rogers’ credibility. Rogers, accompanied by a security detail, did not speak to reporters afterward.
“It’s been one of the most difficult weeks I’ve had in my career,” said Lloyd Yates, Duke’s executive vice president for customer operations, after the meeting. “We didn’t start out on the right foot. There were some significant trust issues about the way this (merger) started.”
‘A grieving process’
Yates was one of five senior-level executives who followed Johnson from Progress to Duke – and one of two who decided not to resign in the wake of Johnson’s ouster. Yates said he was stunned and angry by Johnson’s exit, and considered resigning out of concern for Duke’s internal stability and for his own career prospects. But after several days of reflection, he concluded the merger creates a stronger company and makes sense on its own merits.
“The analogy here is it is kind of like a grieving process,” Yates said of Johnson, whom he considers a friend and mentor.
As to Rogers’ testimony on Tuesday that Johnson brought about his own dismissal because of his autocratic leadership style, Yates said that didn’t reflect his experience with Johnson.
“I was thinking, ‘When did this happen and what does that mean?’ ” said Yates, who said he heard those charges for the first time Tuesday.
Jeffrey Lyash, Duke’s executive vice president for energy supply, said that although he had great respect for Johnson and was sorry to see him go, he remains upbeat about Duke’s prospects.
Like Yates, Lyash came to Duke from Progress and is one of the high-level executives who reports directly to Rogers.
“I have a great optimism for this company,” Lyash said. “There is an excellent opportunity for this company to set the industry standard.”
Rogers told Progress employees that he made a mistake Tuesday in telling the Utilities Commission that the company’s commitment to maintaining a significant presence in Raleigh meant a local work force of 800 to 1,000 employees. The correct figure is higher: 1,000 to 1,300 workers, he said.
Duke plans to maintain its 3,000 workers in Charlotte, said Duke spokesman Tom Williams.
Most Progress employees approached by reporters at the conclusion of Rogers’ remarks declined to comment, some saying they feared for their jobs.
But engineer Arnaldo Rivera said he felt reassured by Rogers’ remarks. He said he thought the CEO acquitted himself better than he had during the tense, four-hour hearing before the Utilities Commission, during which Rogers explained that the Duke board lost confidence in Johnson’s ability to lead.
“I do feel more (job) security today,” Rivera said.
Dan Davis, a nuclear engineer who is anticipating that he’ll have to move to Charlotte to keep his job, reserved judgment.
“He did say that everything is going to be based on trust and he realized there wasn’t a lot of that going around,” Davis said. “That was certainly encouraging. Whether or not that comes to fruition, we’ll see. I sure hope it does.”
Angry comments pour in
Meanwhile, angry comments are flooding in to the utilities commission as the panel investigates Duke’s last-minute CEO switch. Some, including a New York portfolio manager, are suggesting that Rogers has become a distraction and should be asked, or forced, to step aside.
Others say the commissioners were made to look like dunces.
“Too bad you didn’t listen to the people who warned you about this merger,” wrote Rebecca Holdsworth of Cary. “It will be impossible for you to get this company under control. You have been taken to the woodshed and didn’t even realize where you were headed.”
Todd Singleton of Wendell emailed to the commission: “Duke spit in your face. You gonna sit there and take it or do your job on behalf of consumers. Show some stones and regulate. Rescind this mockery of a merger.”
The commission is trying to resolve the investigation quickly but has not set a timetable for its action. On Tuesday, chairman Edward Finley Jr. hinted that the commission could call more witnesses, including Johnson.