Duke Energy has agreed to a $27 million settlement of shareholder claims over its ousting of CEO Bill Johnson following the 2012 merger of Duke and Progress Energy.
The litigation, filed in Delaware Chancery Court, say Duke’s directors broke their fiduciary duty to shareholders by concealing their plan to fire Johnson, the Progress chief executive, immediately after closing the $32 billion merger.
In an August ruling, a judge ruled in part against Duke’s motion to dismiss the case. The parties notified the judge last Wednesday of the settlement, which the court must still approve.
Insurers will pay the settlement amount, which because of the nature of the litigation will be paid to Duke itself, not the shareholders who brought the litigation. Duke’s directors admitted no wrongdoing in the settlement.
“Duke Energy is pleased that the parties were able to reach a settlement agreement to resolve all remaining litigation stemming from the CEO change that occurred following the Duke Energy-Progress Energy merger in 2012,” the company said in a statement.
The agreement resolves all pending shareholder litigation over the Progress merger, Duke said.
In 2015 Duke agreed to a $146 million settlement of a class-action shareholder lawsuit that claimed Duke, its executives and directors made misrepresentations related to a post-merger CEO change. The agreement covered shareholders who bought Duke stock between June 11, 2012, leading up to the merger’s close, and July 9, 2012, the days after it closed. Duke denied wrongdoing in that agreement.
When Duke and Progress agreed to the $32 billion “merger of equals,” Johnson was expected to lead the combined companies. But within hours of closing the deal, the new Duke board fired Johnson and reinstalled Duke chief executive Jim Rogers.
Johnson, who got a $44 million severance payout, is now president and CEO of the Tennessee Valley Authority.
The N.C. Utilities Commission launched an investigation of whether the commission had been misled about the company’s leadership. In testimony, Rogers and Duke directors depicted Johnson’s “autocratic” style as a poor fit for the job. Johnson testified that Duke had simply wanted to get out of the merger before it closed.
Under the settlement terms reached in late 2012, Rogers retired at the end of 2013, when his contract expired. Duke agreed to replace two other executives and added $25 million to the $650 million in merger savings it guaranteed Carolinas customers.
Duke also said it would maintain at least 1,000 employees in Raleigh, the former Progress headquarters, for at least five years.