“What I don’t get is Duke knows how to run in cold weather and has done so for 100 years.”
The current CEO of Duke Energy, Lynn Good, has an accounting and finance background, not an operating background. Her annual compensation is $14 million per year. She has been a strong proponent of solar energy and under her tenure as CEO Duke has made substantial investments in solar. Good came to Duke from the Cinergy, the Ohio electric company Duke acquired a number of years ago.
The Duke executive responsible for electric power in the Carolinas is Julie Janson whose title is Executive Vice President and CEO, Duke Energy Carolinas. Ms. Janson earned a bachelor’s degree in American studies from American University and a law degree from the Cincinnati School of Law. She also began her career at Cinergy, the Ohio electric company, in the law department. She headed the law department at Duke before, as her company biography states, “Previously, Janson served as executive vice president of external affairs and president of Duke Energy’s Carolinas region. In this role, she oversaw the corporate communications, federal government affairs, strategic policy and sustainability functions, stakeholder strategy and the Duke Energy Foundation. In addition, she had responsibility for the performance of the company’s regulated utilities in North Carolina and South Carolina.”
Janson’s company biography describes her current job as, “Julie Janson is executive vice president and chief executive officer for Duke Energy Carolinas. She has responsibility for regulatory and legislative affairs – and for the long-term strategic direction, growth and overall financial performance of Duke Energy’s regulated utilities in North Carolina and South Carolina.”
Notice there is no mention about being responsible for serving the electrical needs of Duke’s customers in the biography. The senior executives running the company have no hands on experience running power plants or electric grids. They are experienced in moving numbers around on a spreadsheet and litigating.
When the United States industrial infrastructure was at its peak in the 1960’s and 1970’s, most CEO jobs were filled by executives who rose to the top through the company’s operations (i.e. they made products) or sales and marketing (i.e they served customers). In the 1970’s financial MBA’s and lawyers began filling the senior executive jobs. The takeover of corporations by financial manipulators resulted in waves of quality reducing cost savings, downsizing and the offshoring of operations in the name of financial efficiency. Short term earnings were boosted to maximize executive bonuses and curry favor with Wall Street speculators. Long term, the US industrial infrastructure was gutted and China became a major supplier and rival to the United States.
Are we seeing the same pattern play out in the utility industry today? Have the experienced operating managers been pushed aside by accountants and lawyers who give themselves huge compensation packages while currying favor with leftist politicians, climate change activists, and woke Wall Street speculators touting ESG?
A Southwest airlines employee told me it’s MBA accountants that have refused to invest in anything that didn’t immediately add to the bottom line. Not working well....
Thanks for pointing that out and I agree that is a MAJOR factor in the changes in the utility industry.
I entered the power industry in 1973 when it was run by engineers. I saw that transformation from leadership by engineers to “leadership” by lawyers and accountants and the horrific changes that wrought.
The change was evident in 1990 when Southern California Edison made John Bryson Chairman and CEO. Before joining Edison, Bryson was a partner in a major law firm. He earned his bachelor’s degree from Stanford University and a law degree from Yale Law School. Bryson co-founded and served as an attorney for the Natural Resources Defense Council, a radical environmental organization.
He served as president of the California Public Utilities Commission from 1979 to 1982, and before that was chairman of the California State Water Resources Control Board.
I was flabbergasted when he was elevated to Chairman and CEO. This same scenario was played out all over the country.
Tale as old as time.
Successful business use high performers from Operations and Production who are experts in the company’s products and services, and know their customers, as Line Mangers, Profit and Loss (P/L) Managers, and Corporate Leaders.
nascarnation used the Southwest Airlines fiasco as an example. Contrast with Eddie Rickenbacker at Eastern Airlines.
Go to the website of any publicly traded company you might be interested in investing in, and click on the link to “Our Leadership.”
Count the number of MBAs, Accountants, and Lawyers, assigning -1 point for each.
Count the number of Engineers, Scientists, Technical, and Product experts. Recognize that some of the latter obtained graduate degrees in Business, Law, and Accounting for protective coloration and to advance their careers. Assign +1 point for each.
Count the number people with degrees in Human Resources, the Social Sciences, Education, and anything else that smacks of Diversity, Inclusion, and Equality (DIE). Assign -5 points for each.
Total up the scores and use them to rank order your candidate companies for investment. Your results will be a far more accurate predictor of future performance than anything Morningstar or any other conventional stock rating service can provide.
If you are invested in a successful company, and there is an influx of MBAs, Lawyers, Accountants, and DIE advocates among corporate leadership, particularly if triggered by a liquidity event, it’s time to sell.