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Duke Energy CEO to Receive $44 Million Payout Despite Resigning on His First Day
Think Progress / News Report
Published: Saturday 7 July 2012
“The Duke board voted for Johnson’s resignation, and since Johnson was eligible for severance if he quit for ‘good reason,’ he is able to collect his $44 million.”
Hours after new Duke Energy CEO Bill Johnson assumed his new position following the Duke/Progress Energy merger this week, he resigned his post. But Johnson can still qualify for up to $44.4 million for his time and effort:
Despite his short-lived tenure, Mr. Johnson will receive exit payments worth as much as $44.4 million, according to Duke. That includes $7.4 million in severance, a nearly $1.4 million cash bonus, a special lump-sum payment worth up to $1.5 million and accelerated vesting of his stock awards, according to a Duke regulatory filing Tuesday night. Mr. Johnson gets the lump-sum payment as long as he cooperates with Duke and doesn’t disparage his former employer, the filing said.
Under his exit package, Mr. Johnson also will receive approximately $30,000 to reimburse him for relocation expenses.
The Duke board voted for Johnson’s resignation, and since Johnson was eligible for severance if he quit for “good reason,” he is able to collect his $44 million. Grist calculates that Johnson’s pay package comes out to $5.5 million per hour, if he actually put in a full 8-hour day.
Johnson’s golden parachute after his one day of work is emblematic of the disconnect between worker pay and CEO pay that has occurred over the last few decades. Average CEO pay is now 380 times the pay of the average worker, and CEO pay has grown 127 times faster than worker pay over the last 30 years.
14 comments on "Duke Energy CEO to Receive $44 Million Payout Despite Resigning on His First Day"
July 09, 2012 6:21pm
hey i will work 2 days for same deal
July 09, 2012 8:18am
It's stories like these that infuriate the 99% in this country - those of us who are struggling to find work, or pay the bills, or keep our houses from falling into foreclosure, or just trying to keep our heads above water. And the 1% wonders why they are hated so much? Even if Mr. Johnson did assist with the merger, does he deserve $44 million for what amounts to one day of work? NO!! Anybody here who is a shareholder or customer of Duke/Progress Energy needs to flood the board of directors with nastygrams about this highway robbery, and threaten to either buy their energy elsewhere, or to call a special stockholders meeting with a proxy vote calling for the resignation of all board members. The rich are gaming the system and this insanity has got to stop!!
July 08, 2012 10:05am
OK, in a merger situation it is fairly common to fire at least one CEO somewhere along the way. This guy was fired, which is the reality when the board requests a resignation. There are two plausible scenarios: a) he knew ahead of time while he was facilitating the merger that he would be fired when it was completed, and the pre-arranged title and enhanced severance package was how the new buyers convinced him to work on assisting the merger rather than blocking or sabotaging it; or b) he didn't know he was going to be fired, in which case the large payoff was to discourage him from suing the new merged entity, which could potentially alarm the market, drop the stock price, and therefore not serve the stockholders well. In other words, I don't see Johnson doing anything wrong in accepting the payment, and in a manner of speaking the board was also acting somewhat responsibly.
The overall problem is not this settlement, but rather the obscene amounts which CEOs demand and are paid in our system where the compensation is no longer just payment for values of services rendered, but also a competetive game between financial people who keep score by size of "package". So long as we tacitly endorse this by enriching the companies which behave this way (by purchasing their products), they have no reason to change their behavior, and with the close relationship between Washington and Wall Street, it is implausible that any meaningful regulation will actually be passed.
The only real approach to ending this sort of obscenity is for a sufficient number of consumers to stop rewarding companies which act this way by ceasing to give them money. So long as the vast majority of consumers look at the price first, and nothing else second, that is not going to happen, either.
The people who make these decisions don't care what you think of them morally, only what you think of their public face when you are giving your money to their business, or to buy their product.
July 08, 2012 8:54am
Absolutely infuriating. What has happened to the Executive Pay Limitations Rule?? This is the most outrageous thing that is co-equal to Madoff by a different rip-off pathway. Every person who is a customer of Duke should buy 1 share of voting stock and turn this whole operation upside down. Also, this merger seems to violate the "too big to fail constraint" that was supposed to become the operating mantra for the Securities and Exchange Commission; the U.S. Treasury; and, other regulatory stop gap agencies. How outraged must the public become, in an expressive and action manner, before Government fulfills its role of Protecting the Public Welfare, Health, and Safety. Lest we forget, this is the fundamental reason for Government to exist.
July 07, 2012 10:23pm
Where does one send ones CV? I would like a job like that!
Seriously, I would expect the share holders to demand that the board repay this out of their own pockets.
Time to send to jail those who allow such deals on the grounds of stealing from the share holders as the payments are an front to natural justice.
July 07, 2012 8:51pm
How can asking for resignation (you're fired) equal quitting for good reason?
This is either poorly worded or nonsensical.
July 07, 2012 3:27pm
Are there schools out there where people can be taught how to rise to that level (typically of incompetence) and get these types of ironclad contracts?
I have been a contract worker for more than 10 years and even though I have a lawyer draw the contracts up and insist upon clauses for payment of early termination fees; I have yet to have one stand up in the courts where I get paid. Oh, I have had to pay once, when I terminated the contract early, but I was stupid then and believed that a legal contract was worth more than the paper it was written on. I paid the fee without going to court because I believed it was the right thing to do and I had given my word. I later looked in the mirror and SUCKER was printed on my forehead.
Still, it is nice work if you can get it.
July 07, 2012 2:34pm
Isn't it just great how we acquiesce to an economic system that takes care of our wealthy? What would we ever do without them?
July 07, 2012 10:27am
GEEZ, I would just love to hear his reason!
July 07, 2012 3:17pm
The board asked for his resignation. For that much money for less than a day's work, I would have tendered my resignation too and the board would not have even had to asked.
July 07, 2012 10:16am
Just one more way to rip off the little guys 401K retirement accounts. The big question is, will he pay any taxes on his windfall? Somehow, I doubt it.
July 07, 2012 10:01am
What stops board members from appointing a favorite son, pay him $44 million, then he resigns with the loot? Why should shareholders foot the bill for board members'/CEO stupidity/collusion. The money should come from board members pockets!
July 07, 2012 3:18pm
Sadly, shareholders are not footing the bill. Consumers and taxpayers will be.
July 07, 2012 9:52am
Big money in playing musical chairs at the top while companies, and shareholders, pay the price.