CHARLOTTE, N.C., — Below is Duke Energy’s (NYSE: DUK) statement in response to Elliott Management’s announcement today:
The new Elliott Management letter to the Board of Directors is the latest attempt to push its short-term agenda at the expense of long-term shareholder value as well as the interests of Duke Energy’s employees and the communities it serves.
Duke Energy remains open to value-creating ideas in the company’s pursuit of continuous operational improvement and frequently engages with shareholders for their input, including a good faith engagement with Elliott over the last 12 months. However, Elliott has again failed to provide any concrete and specific ideas to increase shareholder value, choosing instead to launch public attacks supported by cherry-picked data and anonymous sources. Duke remains focused on delivering long-term value and growth to customers and investors in all jurisdictions.
This announcement is similar to earlier Elliott plans that failed to gain support. Elliott first proposed a preferential equity scheme in which the company would issue up to $7 billion of deeply discounted equity to Elliott and its hedge fund allies, which would materially dilute Duke’s existing shareholders. After that was rejected by the Duke Energy Board, Elliott then publicly advocated for an illogical, complex three-way breakup of the company.
Elliott’s “shrink-the-company” break-up proposal collapsed immediately because it was financially unsound and ran counter to the strategic direction of the entire industry. Over the past several months, Duke Energy’s management team has been in active dialogue with the equity analyst community and institutional shareholders. Our largest investors, as well as analysts, public officials, and other stakeholders were near universal in their rejection of the hedge fund’s unsound plan.
Now, Elliott is taking aim at Duke Energy’s leadership to find a way to force a shareholder-value-destroying plan that has no support.
Duke Energy’s management team and Board are focused on executing on its long-term strategy, which enjoys broad and deep shareholder and stakeholder support, and continuing to deliver customer benefits and create jobs in the communities the company serves. Duke Energy and its Board will always advocate for the best long-term interests of its shareholders and other stakeholders over any narrow special or short-term interest.
Elliott’s attempt to undermine Duke Energy’s leadership team ignores the diverse and experienced professional talent that drives this company and is silent on the significant accomplishments it has achieved.
Duke Energy is now leading the largest, most ambitious clean energy transition in North America, in collaboration with all stakeholders across all of Duke’s service territories. As a result of successfully positioning the company for this transition, coupled with disciplined top tier cost efficiency and operational excellence, Duke Energy’s Total Shareholder Return (TSR) over the last several years has outperformed peers across the regulated utility industry and Duke is currently trading at a premium valuation. Duke Energy’s 3-year Total Shareholder Return of 47% exceeds that of the UTY Index (43%) and the S&P Utility Index (40%), as of July 16, 2021.
The management team has completed a multi-year transformation of Duke Energy’s business portfolio, including divesting its international business, reducing its commercial business exposure and executing the highly successful acquisition of Piedmont Natural Gas, which has generated outstanding results.
In addition, the company has recently achieved several milestone events that provide certainty for growth, including landmark settlements with North Carolina to close all coal ash basins and the pending sale of a minority stake in Duke Energy Indiana at an attractive valuation that satisfies the company’s equity needs while allowing the company to increase its long-term adjusted EPS growth rate to 5% to 7% through 2025.
Duke’s Board of Directors has overseen the company’s strong track record of delivering value to its customers, communities, and shareholders, and is committed to best practices in corporate governance.
During the past five years, the Board has consistently refreshed its members and has successfully implemented key strategic initiatives. Nine out of 13 directors were first appointed in the last five years. The number of women represented on Duke Energy’s Board has doubled to four since 2017. The average tenure on the Board is 4.7 years, compared to 6.8 years in the peer set disclosed in Duke’s proxy. Each current Board member has served in senior leadership roles across multiple industries, and seven have deep operational experience in the utility industry.
Duke Energy will continue running the business in the best long-term interests of all shareholders and stakeholders, and not those of a single hedge fund focused only on the short-term and with a decidedly mixed track record in its other interventions in the utility sector. The management team has the full support of the Board, and the company will continue to focus on its long-term strategy of operational excellence, which has helped keep rates below the national average, and the execution of its five-year, $59 billion capital plan.