Block & Leviton LLP, a Boston-based law firm, is investigating possible breaches of fiduciary duties by the Board of Directors of Duke Energy Corp. (NYSE: DUK) in connection with its merger with Progress Energy Inc. and the subsequent ouster of former Progress Energy CEO Bill Johnson.
Block & Leviton’s investigation will determine, among other things, whether the Board of Directors breached their fiduciary duties in connection with the merger and subsequent events.
On July 3, Duke Energy closed its merger with Progress Energy, making Progress Energy a wholly-owned direct subsidiary of Duke Energy. The companies had said in filings with regulators that Johnson would become president and CEO of the combined company and Duke’s president, Jim Rogers, would be executive chairman, adviser to Johnson and lead spokesman on energy policy. However, within hours of closing the merger, the Duke Energy Board of Directors voted to oust Johnson and appointed Rogers as president and CEO. Johnson will receive more than $44 million in severance, pension benefits, deferred compensation, and stock awards for his brief tenure as CEO, which Rogers said would be paid by investors.
Shortly afterward, Standard & Poor’s placed Duke Energy on “Credit Watch,” citing concerns over the execution of the merger among other things. On July 5, the North Carolina Attorney General and the North Carolina Utilities Commission (NCUC) launched investigations into whether the company misled regulators prior to the merger’s approval. The NCUC, which has the power to rescind its approval, held a hearing on July 10 to investigate the details surrounding Johnson’s departure.
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