It’s been two months since Elliott Management bought its stake in
as well as his desire to see change at the major utility. However, there are no signs that the two sides will reach an agreement anytime soon.
Earlier this week, the $44 billion hedge fund sent a letter to Duke’s board of directors (ticker: DUK), citing the company’s “prolonged underperformance” under its current management team. Elliott noted that Duke stock has underperformed regulated utilities 63% since Lynn Good became CEO in July 2013.
Elliott had previously called on Duke to split into three entities, claiming that such a move would free up up to $15 billion in short-term value for shareholders. But Elliott’s latest message didn’t point to a potential split. Instead, it called on the utility to increase board independence and seat directors with more experience in public policy in Florida and Indiana, with a view to improving performance.
Duke was quick to respond, arguing that Elliott is pushing a “short-term agenda at the expense of long-term shareholders”. It noted that the Duke stock’s three-year total shareholder return of 47% is higher than both the
PHLX Utilities Index
(UTY) and the
S&P 500 Electric Utilities Industry Index.
Duke also noted that nine of its 13 board members have been added in the past five years, resulting in an average board term of 4.7 years.
While Duke said it remains open to “value-creating ideas,” there are few signs that Elliott’s call is leading to change.
Write to Carleton English at firstname.lastname@example.org