A month after Duke Energy’s abrupt ouster of CEO Bill Johnson, Wall Street remains divided over how much of a threat the controversy poses to the Charlotte-based power company and longtime CEO Jim Rogers.

Some analysts and investors are beginning to talk openly about the urgency for Rogers, who was reinstated after Johnson’s forced exit, to step down so the company can rebuild trust with regulators and employees in North Carolina. But despite the commotion that one analyst has dubbed “CEO-gate,” many on Wall Street remain confident Duke is on firm legal ground and that Rogers will emerge unscathed.

Tuesday could mark a breakthrough that could resolve the dispute, which has spawned parallel investigations by the N.C. Utilities Commission and state Attorney General.

Duke has until the end of the day to comply with requests to turn over internal emails and corporate records going as far back as mid-2010. The files will be audited by the commission’s special investigator and may determine if the case warrants further interviews with executives and board members.

A review of those documents, which will include communications between board members and Rogers, could determine if state officials can build a case that Duke deliberately misled them about their CEO intentions to win approval for its merger with Raleigh-based Progress Energy.

Rogers told analysts last week the company is in settlement talks and hopes to resolve the matter quickly. A legal quagmire would not only distract the company’s management, analysts fear, but could antagonize regulators who will be asked to weigh whether to allow Duke to raise customers’ rates in the state.

For these reasons, some suggest Duke must exercise its fiduciary duty and take whatever steps are necessary to resolve the impasse in North Carolina, even if that route requires a change at the top.

“A new CEO would probably help heal the combined company and re-establish constructive regulatory relationships,” said analyst Marc de Croisset of FBR Capital Markets in New York. “Jim Rogers was apparently set to retire and to move on to other things.”

Rogers and Duke still enjoy broad support on Wall Street, even among those who suspect he may be forced to step aside.

Analyst Angie Storozynski of Macquarie Research, for example, wrote in a report that Duke’s board “had an exclusive right to make the CEO change decision without consulting its regulators, especially given that keeping Johnson as CEO was not one of the regulatory conditions of the merger.”

She believes Duke can appease the utilities commission by reinforcing its commitment to maintaining a significant number of ex-Progress employees in Raleigh. As part of the merger, the company said it would eliminate 700 to 1,000 jobs in Raleigh, keeping a workforce here that numbers between 1,000 to 1,300.

Credibility gap

Credit Suisse analyst Dan Eggers suggested last week in a research report that North Carolina officials and Duke management will come to their senses and realize that putting the ill will behind them is in the best interest of customers and shareholders.

Don Olmstead, co-founder of Novare Capital Management in Charlotte, defended Rogers as an excellent utility CEO and said it would be wrongheaded to oust him.

“We’ve got good confidence in Jim Rogers,” said Olmstead, whose company held 4,921 Duke shares in the first quarter.

“We would not want to see him sacrificed,” Olmstead added. “We don’t think the utilities commission should be trying to force Jim Rogers out.”

Even the chairman of the Federal Energy Regulatory Commission, the Washington agency that approved the Progress-Duke Merger in June, recently suggested Duke was within its right to fire Johnson, and that Progress employees and state regulators should get over it and move on.

But the financial world is aware that Duke’s credibility is damaged in the company’s home state. Analysts are worried that the low morale among ex-Progress managers and employees could exacerbate internal tensions and delay a smooth integration of the two companies.

Succession plans

Analyst Hugh Wynne of Sanford Bernstein & Co. said in a report that Rogers’ ability to lead the power company through the merger integration and managing the planned rate requests is “the most important issue facing Duke Energy.”

On Friday, a Wells Fargo Securities analyst said in a note on Duke’s earnings that the company “has considerable work to establish credibility with regulators and constituents.” The analyst, Neil Kalton, said Duke “would be best served on the regulatory front, particularly in N.C., by communicating an orderly succession plan.”

Succession plans are generally a closely guarded secret. For Duke to communicate a succession plan would reveal if Duke’s board will heed calls for Rogers’ early retirement, or if the board plans to defy Duke’s critics and keep Rogers through the end of his contract, which expires in December 2013. Kalton declined comment.

Rogers has been a utility CEO for 23 years and has run Duke since 2006. Duke’s board reinstated Rogers a month ago, after Johnson was fired. In testimony before the utilities commission last month, Rogers called Johnson “autocratic” while Duke board members said they lacked confidence in his leadership abilities.

In a phone interview last week, Rogers, 64, said his fate as CEO is in the hands of Duke’s board of directors.

“What’s important to understand is I’ve been asked by the board to deliver on the benefits of this combination,” he said. “I have my head down, sleeves rolled up, and that’s what I’m trying to achieve.”

Duke’s stock price fell more than 5 percent after Johnson’s firing and the ensuing firestorm, but has since then regained most of its value. It closed at $68.21 on Monday, up 28 percent since the deal with Progress was first announced in January 2011.

Murawski: 919-829-8932