Piedmont Natural Gas CEO Tom Skains could leave with an $11.3 million exit package if he’s ousted in the merger with Duke Energy, securities filings show.
Duke’s $4.9 billion acquisition, announced Monday, left Skains’ status unclear. Piedmont stockholders and regulators still have to approve the deal.
A “change in control” severance package for Piedmont’s officers could ease the sting if Skains is forced out. The benefits are commonly awarded to top corporate executives.
A merger or other change in control can “create insecurity among senior executives regarding continued employment,” says Piedmont’s 2014 proxy statement. Severance agreements are intended to eliminate those distractions.
Piedmont’s agreements hinge on two things happening: A change in control and the executive’s termination under circumstances related to the change.
If those conditions are met, Piedmont will pay a lump sum severance of three times the executive’s base pay and target bonus, totaling about $4.3 million. He would also take home about $6.9 million in vested stock awards, the filing shows.
Skains joined Piedmont in 1995 and was named chairman, president and CEO in 2003. He earned total compensation of $4.2 million in 2014. Skains is chair of the Charlotte Chamber and a past chairman of the American Gas Association.
The companies said Monday only that “an existing member of Piedmont’s management team” will lead Duke’s natural gas operations in five states and report to Duke CEO Lynn Good. One Piedmont board member will join Duke’s board.
Skains said the deal wasn’t predicated on a continued role for him but that he looked forward to discussions with Good.
The former chief executive of Duke’s most recent merger partner, Progress Energy, negotiated a severance of $23.6 million when Duke’s board abruptly fired him in 2012. Bill Johnson is now CEO of the Tennessee Valley Authority.
Analysts continued to marvel Tuesday over the price Duke agreed to pay for Piedmont – 40 percent higher than its stock price three days earlier – but generally supported it.
Sanford C. Bernstein analyst Hugh Wynne wrote that the acquisition will let Duke share in capital projects for which Piedmont has earned high returns in recent years.
The merger, he wrote, “so increases the scale of Duke’s gas distribution business ... as to create a credible platform for growth in natural gas infrastructure, including through additional acquisitions in the highly fragmented gas utility industry.”