Two former Progress Energy directors resigned in protest from the Duke Energy board on Friday and said the company needed a new chief executive to restore confidence among investors and regulators after a boardroom coup this month.
The board members, John D. Baker II and Theresa M. Stone, had each been legacy members from Progress, which completed its $32 billion merger with Duke on July 2, the day that the new board abruptly voted along party lines to oust the former Progress chief, William D. Johnson, as head of the combined company.
Under the deal, James Rogers, the chief of Duke, was to be executive chairman. But Mr. Johnson's tenure lasted only a few hours and Mr. Rogers was announced as the new chief, spawning regulatory investigations and uncertainty on Wall Street.
The merger created the country's largest utility, with more than seven million customers across six states, but it has made the new company much more dependent on its regulated business es, leading to concern that the bad publicity and disruption to its leadership could harm its position in rate cases.
Standard & Poor's downgraded the company this week and said its “abrupt leadership changes†had “heightened regulatory risk.â€
In her letter to Mr. Rogers and Duke's lead director, Ann Gray, Ms. Stone, who retired last year as executive vice president and treasurer at M.I.T., said the board's coup and maneuvering left her deeply disappointed in Duke's corporate governance.
“One step that would, in my view, go a long way to addressing the firestorm of concerns which have resulted from the actions of July 2 would be the immediate announcement of a well-designed formal C.E.O. search process,†she wrote.
Mr. Baker, the executive chairman of Patriot Transportation Holdings, separately wrote that the board should move quickly to replace Mr. Rogers.
The North Carolina Utilities Commission has been investigating the shake-up, holding hearings where Mr. Rogers and Ms. Gray have described Mr. Johnson's shortcomings in oversight, and Mr. Johnson in turn has said he was pushed out because Duke changed its mind on the merger and wanted to call off the deal.
North Carolina is the largest customer base for the merged company, and the deal will also mean the loss of a corporate headquarters and as many as 1,000 jobs from Raleigh, the state's capital and Progress' former home. Duke is based in Charlotte, N.C.
In a statement, Duke said that it accepted the resignations of Mr. Baker and Ms. Stone and that the board's corporate governance committee would make a recommendation on these vacancies.
When the merger was completed, the combined company's 18-member board had 11 directors from Duke and 7 from Progress. With Mr. Johnson's removal and the resignations, it is now 11 to 4.
Robert Gruber, the executive director of the public staff of the utilities commission, said in an interview that Duke's board should consider appointing an intermediate chief while it seeks a replacement for Mr. Rogers.
He noted that the next year would be critical for the company, because that was when most of its merger integration would take place and when it was likely to be asking for rate increases from customers to pay for new plants.
The commission itself has not made a recommendation about any change of leadership and its investigation is continuing. While it is unlikely that the commission would rescind its approval of the merger, it could recommend penalties as part of a settlement.
C. Dukes Scott, Mr. Gruber's counterpart in South Carolina, said in an interview that the company's problems could no longer be confined to one state. “As they talk settlement in North Carolina, that becomes of interest to us, because we want to make sure that whatever settlement they work out is not of adverse interest to us,†he said.
Separately, Duke announced Friday that it would close two coal power plants, one in North Carolina and one in South Carolina.
