Duke Energy Corp. agreed to a $27 million settlement of claims that directors wrongfully concealed their plan to fire Chief Executive Officer William Johnson just minutes after the company closed on its $13.7 billion merger with Progress Energy Inc.
Duke Energy agreed to settle multiple suits over Johnson’s removal after a judge concluded Sept. 1 that its board members must face accusations they acted in bad faith by hiding plans to oust ex-Progress CEO Johnson from shareholders and regulators so they could install Duke Energy CEO James Rogers as the merged company’s top executive. Charlotte, North Carolina-based Duke Energy is the second-largest U.S. utility owner by market value.
“Duke Energy is pleased that the parties were able to reach a settlement agreement,” Dave Scanzoni, a company spokesman, said Friday.
The accord, which will be “funded by certain insurers,” isn’t an admission by the company “of any liability or wrongdoing,” Duke’s lawyers said in a Nov. 9 court filing in Chancery Court in Wilmington, Delaware.
Chancery Judge Sam Glasscock III concluded on Sept. 1 that investors raised legitimate questions about whether Duke Energy directors acted improperly by not disclosing to shareholders their plan for a boardroom coup and violated North Carolina law by keeping it from regulators.
Johnson became Duke Energy’s CEO for what may be one of the briefest tenures in corporate history, holding the position for “a few minutes” before the newly formed board held a meeting and voted to oust him and put Rogers at the helm, according to investors’ court filings.
Under the merger agreement, Johnson was slated to become the merged power provider’s top executive, but Ex-Duke Energy directors outnumbered former Progress board members and plotted to immediately remove Johnson once the deal was finalized, shareholders alleged.
“They elected to make it appear that they were going to comply with the merger agreement, when in fact they had decided to fire Johnson immediately post-merger and replace him with Old Duke CEO Rogers,” the judge said in his ruling rebuffing Duke Energy’s bid to have the suits thrown out.
The judge must give final approval to the tentative settlement of the so-called derivative suits. Investors don’t receive awards in such cases and the insurance payout from policies covering directors will go into the Duke Energy’s coffers.
The case is In RE Duke Energy Corporation Derivative Litigation, CA 7705, Delaware Chancery Court (Wilmington).
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