News

Jul 26, 2010 3:41 PM by Melissa Canone

Hayward Will Step Down In October

NEW ORLEANS (AP) - Tony Hayward, who became the face of BP's
flailing efforts to contain the massive Gulf oil spill, will step
down as chief executive in October and be offered a job with the
company's joint venture in Russia, a person familiar with the
matter said Monday.
The person spoke on condition of anonymity because an official
announcement had not been made by the British company's board,
which was meeting Monday in London to decide Hayward's fate.
It's not yet clear what Hayward's role will be with TNK-BP. He
left the board meeting Monday without speaking to reporters,
climbing into a silver Lexus that sped off.
BP owns half of the oil firm, which is Russia's third-largest.
It was once run by American Bob Dudley, now the odds-on favorite
to replace Hayward as BP CEO. After Hayward made a series of
missteps, including telling reporters he wanted his life back as
Gulf residents struggled to deal with the spill, Dudley took over
as BP's point man in dealing with it. He was in London Monday with
other board members.
Hayward was called back to London a month ago after a bruising
encounter with a Congressional committee and has since kept a low
profile.
"We're getting to the end of the situation," said David
Battersby at Redmayne Bentley Stockbrokers. "To draw a line under
it, they need a new chief executive."
In New York, BP shares rose almost 5 percent Monday as the stock
market anticipated a formal announcement about Hayward. Shares of
BP PLC rose $1.82, or 4.9 percent, to $38.68 in midday trading in
New York. BP shares closed up 4.6 percent Monday at 416.95 pence in
London.
The BP board would have to approve a change in company
leadership, and there is persistent speculation that chairman
Karl-Henric Svanberg, who moved into the post on Jan. 1, is also
likely to lose his job later this year.
The one-day board meeting comes a day before BP announces
earnings for the second quarter. That report is expected to include
preliminary provisions for the cost of the Gulf disaster, with
analysts saying that could be as high as $30 billion.
"BP notes the press speculation over the weekend regarding
potential changes to management and the charge for the costs of the
Gulf of Mexico oil spill. BP confirms that no final decision has
been made on these matters," the company said in a statement
Monday to the London Stock Exchange before trading began.
Shares were up 2.6 percent at 408.95 pence ($6.33) in
midafternoon trading in London.
Hayward, 53, who has a Ph.D in geology, had been a well-regarded
chief executive. But his promise when he took the job in 2007 to
focus on safety "like a laser" came back to haunt him after an
April 20 explosion on the Deepwater Horizon rig killed 11 workers
and unleashed a deep-sea gusher of oil.
Hayward's early attempts to shift blame to the rig operator,
Transocean, failed to take the heat off BP. Later remarks that the
amount of oil pouring into the Gulf was "tiny" compared to its
volume of water and Hayward's whining that he would "like my life
back" made him an object of scorn. That emotion turned to fury
when Gulf residents heard that Hayward spent a day at a fancy
English sailing race in which his yacht was competing at the height
of the disaster.
David Cumming, head of U.K. equities at Standard Life
Investments, said the board's reported intention to remove Hayward
is an act of "political appeasement."
"I think they have taken view that his departure will relieve
some of the political and media pressure in the U.S. and help BP
rebuild its U.S. reputation," Cumming told BBC radio.
Chief executives inevitably often are sacked for corporate
failure, whether or not they had any direct responsibility for what
happened, said Howard Wheeldon, senior strategist at BGC Partners
in London.
"Neither should we forget that Mr. Hayward has been master of
his own downfall and that by those sometimes unfortunate remarks
and attitude displayed in public he made his own situation all the
more worse," Wheeldon said.
Dudley has so far avoided any gaffes. Currently BP's managing
director, Dudley grew up partly in Hattiesburg, Mississippi. He
spent 20 years at Amoco Corp., which merged with BP in 1998, and
lost out to Hayward on the CEO's slot three years ago.
BP says the cost of dealing with the spill had reached nearly $4
billion by July 19, but that it was too early to quantify the
eventual total cost.
New Orleans Mayor Mitch Landrieu said BP's attitude about making
things right was more important than who is running the company.
"BP, from I think everybody's perspective, made a very bad
mistake," he said. "I think what the world expects from BP is an
acknowledgment that something was done wrong. I think BP has a long
way to go to gain the trust of the people."
Hayward makes 1.045 million pounds ($1.6 million) a year as the
company's head, according to its annual report. In 2009, he
received a performance bonus of more than 2 million pounds plus
other remuneration, bringing his total pay package to over 4
million pounds.
BP is the process of selling assets to raise $10 billion toward
a $20 billion fund that will finance the clean up of the mess in
the Gulf. BP announced last week that it had sold properties in the
United States, Canada and Egypt to Apache Corp. for $7 billion.
Under pressure from President Barack Obama, BP has also
announced that it will pay no more dividends to shareholders this
year. That move disappointed some 18 million Britons, many of them
retirees, who hold stock in what used to be the country's largest
company.

»Comments

»Topics in this article

Top Videos

1 2 3 4

Most Popular