Signs of a culture clash emerged more than a year before Duke Energy closed its merger with Progress Energy, according to 2,676 pages of confidential e-mails and other company documents opened to the public Tuesday.
Dukes board has cited differences in management styles, Progress financial performance and problems at its nuclear plants in the firing of Progress CEO Bill Johnson after the merger closed July 2. Johnson was to have led the combined companies.
Duke CEO Jim Rogers alluded to the differences in an April 4, 2011 e-mail to five top executives about his conversation with Ann Gray, Dukes lead director.
After expressing my views (tone/arrogance/lack of respect/inflated sense of capability especially in light of their track record), she is properly concerned about a clash of culture as I am, Rogers wrote.
Duke filed the documents under an order by the N.C. Utilities Commission, which is investigating Johnsons ouster. Duke said it will ask the N.C. Court of Appeals to allow it to keep confidential 443 pages of company documents and 199 pages filed by former Progress directors.
Duke said it wants to keep confidential documents that discuss business plans, strategic discussions, earnings analyses, nuclear operations information, employee compensation and other personnel matters.
Large chunks of the released documents are blotted out. Theyre documents or passages whose release Duke is appealing, or that contain information deemed personal or irrelevant to the merger.
But some e-mails offer glimpses of growing problems in the two companies two-year courtship:
• Four months after the merger was announced, Dukes chief legal officer, Marc Manly, sent an e-mail to Progress executive John McArthur and recipients whose names are redacted. He attached an anonymous letter to Rogers decrying Progress horrible financial shape and a nuclear fleet in shambles.
Based on all available information we believe the source of the letter is a home computer belonging to one of the two of you, Manly tersely wrote.
• This past February, Rogers forwarded to Gray a copy of a news article that dealt in part with Progress troubled Crystal River plant, shut down since 2009, and its proposed Levy plant in Florida. Dukes directors later suggested Progress misled Duke about the status of Crystal River, which faces up to $3.5 billion in repairs.
The part of the story about Progress supplies some very interesting insights into what is actually happening with respect to Levy/Crystal River, Rogers wrote.
• That same month, in another e-mail to Gray, Rogers alludes to discussing with Johnson several issues on which the two apparently differed. Among them were renegotiating a settlement with North Carolinas consumer advocacy agency on the $650 million in merger savings Duke had promised to customers.
• In May, Duke director Michael Browning referred to Progress poor first-quarter earnings report. This is the nicest description of a really lousy quarter that I have ever read, he wrote a Duke executive.
• On June 22, as Duke directors headed toward a decision to fire Johnson, Gray wrote fellow directors: Please exercise extreme caution regarding any reference to the contingency plan as we work through our committee and board meetings, the dinner and general presence in the hallway/elevators of headquarters.
• Four pages of hand-written meeting notes capture the reaction of Progress directors when it became clear July 2 the 10-member Duke majority would fire Johnson:
Did you consider giving him a chance.
Feels like there was a scheme to do this.
We will regret this over the next several months.
Clearly there are cultural differences between the two companies.
Impact on (Progress) executives they will leave.
And Grays responses:
(Johnson) not looking to combine cultures but to impose (Progress) culture.
Fundamental missteps in leadership.
Very much want (executives) to stay. Plan to incent.
The Tennessee Valley Authority announced Johnson as its new CEO on Monday.