Business

Duke Energy to Pay $146M to Settle Lawsuit Over CEO Ouster

Published

11 years ago

March 10, 2015

In this Feb. 14, 2012 file photo, Duke Energy employees work on power lines in Charlotte, N.C. Duke Energy Corp. reports quarterly earnings on Tuesday, Feb. 18, 2014. (AP Photo/Chuck Burton, File)

EMERY P. DALESIO, AP Business Writer

RALEIGH, N.C. (AP) — America’s largest electric company said Tuesday that it will pay nearly $150 million to settle claims that shareholders lost millions when it ousted its CEO hours in a surprise move after a long-anticipated buyout.

Duke Energy said its insurers and shareholders would pay $146 million — an “off the charts,” number for such a settlement, according to one expert — to end the lawsuit filed after the company’s July 2012 buyout of Raleigh-based Progress Energy Inc.

Duke set aside $26 million for the amount not covered by insurance and said consumers would not pay the cost.

The company denied the allegations, and it denies any wrongdoing as part of the settlement, which must be approved by a federal judge in Charlotte. Duke Energy spokesman David Scanzoni said the company had no comment beyond its prepared statement.

The decision to settle was probably driven by insurers who feared forking out more if the case went to trial, said Alan Palmiter, a business law professor at Wake Forest University.

For litigation prompted by a merger, “$146 million is off the charts,” said James Cox, a securities law specialist at Duke University. “It is probably an indication that the amount of money that was involved here, if it gone to trial, would have been a very significant recovery.”

Over the past six years, about nine out of 10 corporate mergers valued at more than $100 million have been challenged by shareholder lawsuits, according to an annual report by Cornerstone Research, which consults with attorneys in complex litigation. Fewer than 10 percent end up with any payments for shareholders, the report said.

Few shareholder lawsuits in recent years have seen settlements in the ballpark of Duke’s, though Freeport-McMoRan Inc. settled for $137 million in January over a pair of 2013 acquisitions.

The lawsuit against Duke said the company violated federal securities laws by misrepresenting the terms of the buyout to shareholders.

It claimed shareholders suffered when Duke directors decided hours after the merger closed to fire new chief executive Bill Johnson, who was supposed to head the combined company after holding the same post at Progress Energy. Five months later, Johnson became president and chief executive officer of the Tennessee Valley Authority, the nation’s largest public utility.

Johnson’s ouster was “the most blatant example of corporate deceit that I have witnessed during a long career on Wall Street,” John Mullin III, the former lead director of Progress Energy, said at the time.

Thousands of individual and institutional investors are covered by the class-action settlement, but exact numbers are not available, said Scott Zdrazil, first vice president of Amalgamated Bank, one of the lead plaintiffs in the case. A unit of the Service Employees International Union owns a majority of the New York bank.

Investors covered by the settlement include those who purchased Duke Energy shares in the three weeks leading up to the merger closing or in the week after the deal finalized, including former Progress Energy shareholders who acquired shares in the combined company after the merger.

North Carolina regulators and the state’s attorney general launched separate investigations into whether the utility misled officials who approved the merger. Subsequent hearings into what led Duke Energy’s board to dump Johnson forced the company to pay another $30 million for ratepayers and low-income assistance and dictated the replacement of several other executives and board members.

Duke Energy has more than 7 million customers in the Carolinas, Ohio, Kentucky, Indiana and Florida.

___

Emery P. Dalesio can be reached at http://twitter.com/emerydalesio

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Financial Wellness and Mental Health: Managing Money Stress in College 

While everyone’s financial situation is unique, several common sources of stress have the potential to strain your financial health. These include financial and economic uncertainty, existing debts, unexpected expenses, and mental or physical health changes. Financial stress may differ from situation to situation, but understanding the factors contributing to yours may help you begin to craft a plan for your unique circumstances.

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March 17, 2026

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As a college student, managing financial responsibilities can be stressful.

If you’ve found yourself staying up late thinking about your finances or just feeling anxious overall about your financial future, you’re not alone. In one survey, 78% of college students who reported financial stress had negative impacts on their mental health, and 59% considered dropping out. While finances can impact overall stress, taking steps to manage your finances can support your mental, emotional and physical well-being.

When it comes to money, the sources of stress may look different for each student, but identifying the underlying causes and setting goals accordingly may help you feel more confident about your financial future.

Consider these strategies to help improve your financial wellness and reduce stress.

Understand what causes financial stress

2. Determine your financial priorities

Start by reflecting on your financial priorities. For students this often includes paying for school or paying off student loans, studying abroad, saving for spring break, building an emergency fund, paying down credit card debt or buying a car. Name the milestones that are most important to you, and plan accordingly.

3. Create a plan and stick to it

While setting actionable goals starts you on the journey to better financial health, it’s essential to craft a plan to follow through. Identifying and committing to a savings plan may give you a greater sense of control over your finances, which may help reduce your stress. Creating and sticking to a budget allows you to better track where your money is going so you may spend less and save more.

4. Pay down debt

Many students have some form of debt and want to make progress toward reducing their debt obligations. One option is the debt avalanche method, which focuses on paying off your debt with the highest interest rate first, then moving on to the debt with the next-highest interest rate. Another is the debt snowball method, which builds momentum by paying off your smallest debt balance, and then working your way up to the largest amounts.

5. Build your financial resilience

Some financial stress may be inevitable, but building financial resilience may allow you to overcome obstacles more easily. The more you learn about managing your money, for instance, the more prepared you’ll feel if the unexpected happens. Growing your emergency savings also may increase resilience since you’ll be more financially prepared to cover unexpected expenses or pay your living expenses.

6. Seek help and support

Many colleges have resources to help students experiencing financial stress, like financial literacy courses or funds that provide some assistance for students in need. Talk to your admissions counselor or advisor about your concerns, and they can direct you to sources of support. Your school’s counseling center can also be a great resource for mental health assistance if you’re struggling with financial stress.

The bottom line

Financial stress can affect college students’ health and wellbeing, but it doesn’t have to derail your dreams. Setting smart financial goals and developing simple plans to achieve them may help ease your stress. Revisit and adjust your plan as needed to ensure it continues to work for you, and seek additional support on campus as needed to help keep you on track.

 JPMorgan Chase Bank, N.A. Member FDIC