(CN) - Duke Energy will pay $146 million to settle a class action that claimed shareholders lost millions after the utility abruptly fired its CEO in 2012 following the buyout of a competitor.
Duke, the nation's largest electric company, announced the settlement Tuesday with a brief statement on its website.
The statement said the company has set aside $26 million to cover the amount of the payout that is not covered by insurance, and emphasized that consumers would not bear the cost of the agreement.
The lawsuit was filed in the Charlotte, N.C. Federal Court on July 24, 2012, on behalf of "all persons who exchanged shares of Progress Energy. Inc. common stock for shares of Duke Energy Corporation common stock in connection with the merger between Progress and Duke announced on January 10, 2011."
According to lead plaintiff Maurine Nieman, shareholders would assured that the transaction would be "a merger of equals," and that once it was completed, William Johnson, then CEO of Progress Energy, would become the CEO of the new firm, while Duke's then-CEO, James Rogers, would become the new company's chairman.
"Contrary to the representations in the Registration Statement of sharing power in a merger-of-equals, on July 2, 2012, just hours after the Merger closed and Progress shareholders received their shares under the Registration Statement, New Duke voted to oust Johnson as CEO of the combined company ... and appoint Rogers as CEO," the complaint says.
Nieman says as soon as Johnson was shown the door he was entitled to a $44.7 million as per his separation agreement.
"In return for this generous exit package, Johnson agreed to a non-disparagement clause ... due to this agreement, Johnson has not yet publically spoken about his termination from New Duke," Nieman continues. "Contrary to the representations in the Registration Statement, there has been no combination of the companies' complementary strengths to create a stronger unified whole under a combined leadership structure."
Duke said in its statement that the settlement "would avoid the cost of prolonged litigation and eliminate uncertainty." The company and its executives and directors continue to deny any wrongdoing.
The settlement covers shareholders who purchased or acquired shares of Duke common stock between June 11 and July 9, 2012.
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