Is Duke's New CEO Good for Duke Energy Stock?

Duke Energy (NYSE: DUK  ) is switching up its corporate leadership for the first time in nearly a decade. As Jim Rogers eases out, he takes with him an inordinate amount of institutional knowledge... but also a significant amount of bad blood. With a new sheriff in town, let's see if this utility's corporate shuffle is enough to boost Duke Energy stock.

From CFO to CEO
Jim Rogers is relinquishing his corporate kingdom to Lynn Good, the company's current CFO of four years. Effective July 1, Good will assume the roles of president and CEO, while Jim Rogers will remain as chairman of the board through the end of 2012.

Source: Duke Energy

"The selection committee considered several exceptional internal and external candidates and determined that Lynn's leadership abilities and strategic vision for Duke Energy's continued growth make her the ideal choice," said Duke Energy lead director Ann Maynard Gray in a statement today.

But to understand Duke's decision, we also have to rewind the tenure of Jim Rogers, one of the most controversial CEOs of our time. Duke's merger with Progress Energy in July 2012 made it the largest U.S. utility in terms of assets, but the dreamy transition turned into a corporate nightmare overnight. Progress CEO Bill Johnson was supposed to take over as CEO of the newly merged company, but he resigned the day after the merger was completed, taking more than $44 million in exit payments and putting Rogers back in his previous position.

CEO salary is always a hot topic, but in this case, Jim Rogers' compensation alone wasn't the biggest issue. Here's how his 2011 pay stacked up against a few competitors:

CEO

Company

2011 Compensation ($M)

% of 2011 Sales

% of 2011 Net Income

Barry Welch

Atlantic Power

1.92

2.04%

(negative)

Chris Cane

Exelon

5.56

0.03%

0.22%

Jim Rogers

Duke Energy

8.78

0.06%

0.51%

Kevin Burke

Consolidated Edison

10.97

0.09%

1.03%

Anthony Alexander

FirstEnergy

18.33

0.11%

2.07%

Source: Forbes.com, Yahoo! Finance 

Rogers' salary fell somewhere in the middle of his competitors, but unlike all the other utilities mentioned above, there may be a hidden costs to Rogers' continued corporate ties. Of all the stakeholders affected by the last-minute-merger madness, the North Carolina regulatory commission took the turn of events especially hard. Only after an 18-month approval process, two state investigations, and an agreement that Rogers would step down by 2014, did the North Carolina Utilities Commission cut the corporation some slack.

Good will receive a base salary of $1.2 million, with potential total compensation clocking in at $8.1 million. But what's more important for Duke Energy investors is whether or not N.C. regulators will give Duke a fresh start with this CFO-turned-CEO.

Duke Energy stock dipped earlier this week on the news that North Carolina Public Staff had cut Duke's base rate request nearly in half. Instead of a $446 million increase, the utility will pocket just $235 million over a three-year period. And although there's no direct link to be drawn between Rogers and the regulators' decision, politics plays an important part in any government decision. If regulators see Good as separate from merger meddling, then Duke Energy stock could be headed higher in the coming years.

Can Duke Energy stock soar?
CEO's are more than a strategic brain or salary drain. They are a symbol of a company and, in this case, Rogers' departure is a necessary step to separate controversial history from future frontiers. As an inside woman, Good knows the ins and outs of the company. But she also provides a new face to turn regulatory foes into friends, a much-needed makeover for Duke Energy stock.

Duke suffered mightily after its merger mishaps, but Exelon's massive 2012 merger with Constellation Energy proved to be free of problems. Now, as the nation moves increasingly toward clean energy, Exelon is perfectly positioned to capitalize on having the largest nuclear fleet in North America. This strength, combined with an increased focus on balance sheet health, places Exelon and its resized dividend on a short list of the top utilities. To determine if Exelon is a good long-term fit for your portfolio, you're invited to check out The Motley Fool's premium research report on the company. Simply click here now for instant access.


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