Hayward to step down as BP CEO from October 1

S Kalyana Ramanathan / London July 28, 2010

Gets £12-mn golden handshake; American Dudley to take over.

BP today announced that its group chief executive officer Tony Hayward would step down with effect from October 1, and would be replaced by American Robert Dudley, who is currently overseeing the company’s clean-up operations in the Gulf of Mexico.

Hayward, who has been BP’s CEO for three years, will take up a non-executive position with its Russian operations, TNK-BP, and will remain on the board of BP until November this year.

The “gaffe-prone” Chief Executive Officer will, however, will receive a year’s salary in lieu of notice, amounting to £1.045 million (about Rs 7.6 crore), and a further £10.8 million (over Rs 78 crore) in pension.

Hayward’s huge severance package comes at a time when BP recorded a historic loss. Today, BP also reported a £17-billion loss for the second quarter against a profit of £3.1 billion in the same quarter last year. BP is also setting aside another £20.7 billion for cleaning up the disastrous spill in the Gulf of Mexico, where the company has been fighting an oil spill since April 20.

$30 bn asset sale
The energy major plans to sell oil and gas assets worth $30 billion over the next 18 months in an effort to recover from the worst financial disaster in the company’s history.

Commenting on the decision to step down, Hayward said: “The Gulf of Mexico explosion was a terrible tragedy for which — as the man in charge of BP when it happened — I will always feel a deep responsibility, regardless of where blame is ultimately found to lie.”

Over 830 miles of Gulf Coast shoreline across Louisiana, Mississippi, Alabama and Florida have been affected due to one of modern history’s worst oil-spills. The clean-up operations have so far recovered nearly 825,000 barrels of oil-contaminated liquid. Further, a total of 409 controlled burns had been carried out, removing an estimated 261,400 barrels of oil from the surface of the sea. More than 40,000 people are involved across five states of the US. BP group companies have also been named as defendants in over 300 private civil suits following the disaster.

Robert Dudley, 54, who will be BP’s first non-British CEO in the company’s history, is a main board director of BP and currently runs the recently-established unit responsible for clean-up operations and compensation programmes in the Gulf of Mexico. He joined BP from Amoco after the merger of the two companies in 1998. He was president and CEO of BP’s Russian joint venture, TNK-BP, until 2008.

Dudley said, “I do not underestimate the nature of the task ahead, but the company is financially robust with an enviable portfolio of assets and professional teams that are among the best in the industry. I believe this combination — allied to clear, strategic direction — will put BP on the road to recovery.”

On his appointment, Dudley will be based in London and will hand over his present duties in the US to Lamar McKay, chairman and president of BP America.

Meanwhile, protesters from global environmental group Greenpeace went on a mission to close several dozen BP service stations across London, where the oil company is headquartered. Defending its move against BP, Greenpeace said: “We want to send a strong message to BP’s new boss to ditch the spin and actually move ‘beyond petroleum’. Today we’re asking you (politicians) to take a first step, and help push for the strongest possible European law on fuel quality,” Greenpeace said in its statement.