Counterparties: The shortest CEO tenure ever
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On June 27, Bill Johnson, the CEO of Progress Energy, signed a contract to become the next CEO of Duke Energy. On July 2, the year-and-a-half-old merger agreement between Progress and Duke closed with the stipulation that Johnson would become the new company’s CEO.
Yet, on July 3, Johnson’s resignation was announced. Here’s how Duke Energy explained what happened in its regulatory disclosure:
On July 3, 2012, Duke Energy announced that Mr. Johnson has resigned from all of his positions at Duke Energy and will no longer serve as President and Chief Executive Officer of Duke Energy or as a member of Duke Energy’s Board of Directors…effective as of 12:01 a.m. on July 3, 2012… Also, on July 2, 2012, the Board reappointed Mr. James E. Rogers as President and Chief Executive Officer of Duke Energy, effective as of 12:01 a.m. on July 3, 2012, in addition to his role as Chairman of the Board.
Yes, you’re reading that right: Johnson served only one day as CEO. Here’s Dealbreaker’s Matt Levine: “I have no way of researching this but I’ll go out on a limb and say it’s unlikely that any company has ever previously announced the hiring and firing of a CEO within three paragraphs of each other in the same 8-K”. The WSJ somehow needed to speak to actual sources to make following assertion: “New chief executives almost never quit days after accepting an employment contract, executive-compensation consultants said”.
The former lead director of Progress Energy is not pleased, calling Johnson’s removal “the most blatant example of corporate deceit that I have witnessed during a long career on Wall Street”. S&P is also not pleased and put Duke on a downgrade watch.
Johnson’s ego is no doubt bruised, but on the bright side he’s eligible for $44 million in deferred compensation and pension benefits. This includes a $1.5 million lump sum payment for not disparaging the company that fired him after just one day. – Ben Walsh
On to today’s links:
UK’s Serious Fraud Office decides to investigate possible criminal fraud – WSJ
“The Libor fiasco is the latest black eye for the FSA” – WSJ
“You have two groups of banks … One group is trying to pull LIBOR up, the other is trying to pull LIBOR down” – Aleph Blog
The LIBOR scandal and “the rotten heart of finance” – Economist