BP board ready to axe Hayward


BP is paving the way for the departure of Tony Hayward, its embattled chief executive, as it prepares to unveil this week the largest quarterly loss in British corporate history. A crucial board meeting tomorrow will decide Hayward’s fate, according to insiders.

The options are to announce his exit on Tuesday, alongside the second-quarter results, or when the ruptured oil well in the Gulf of Mexico is finally sealed in a few weeks’ time.

The results will reveal the financial impact of the oil spill, the worst in American history. Insiders said BP is preparing to make provisions between $25 billion (£16 billion) and $30 billion for capping the well, the clean-up and the escrow account it promised the American government to cover damages claims.

Barclays Capital, the investment bank, estimates the provisions will push the oil group into a $13 billion loss, believed to be the largest quarterly deficit for a UK-listed company.

Analysts said it had been on course to make a profit of about $5 billion in the three-month period. Several billion of the provisions will be clawed back through tax deductions and money already spent cleaning up the spill.

BP’s market value has dropped by a third since the Deepwater Horizon rig blew up in April, plunging the group into crisis.

The focus on Tuesday will be on the leadership of what was once Britain’s most valuable company. It is thought the board has decided the job of Carl-Henric Svanberg, the chairman, is safe for now.

Hayward, who became a public hate figure in America after a series of gaffes, is vulnerable. Directors are considering a plan under which he would leave as soon as the ruptured well is sealed.

This weekend a tropical storm forced workers to halt the operation but the relief well should be completed within three weeks.

Hayward would be entitled to a £1m pay-off, equal to a year’s salary, and his £10.8m pension. He also owns £2.7m-worth of shares.

Bob Dudley, the American executive in charge of the clean-up operation, is considered his most likely successor, though Iain Conn, head of refining and marketing, is thought to have some board support.

Hayward was mauled at a congressional hearing last month. Last week he was called to testify at a hearing into whether BP played a role in the release of Abdelbaset Ali Mohmed al-Megrahi, the Lockerbie bomber. The firm will send a lower-ranking executive in his place.

Svanberg’s long-term future at the oil group is unclear. Paul Anderson, the former chief executive of BHP Billiton who sits on the board, is the internal frontrunner to replace him. Arun Sarin, the former chief executive of Vodafone, is also considered a strong candidate.

BP is pushing ahead with efforts to shore up its balance sheet. Negotiations with CNOOC, the Chinese oil giant, about BP’s 60% stake in Pan American Energy, an Argentine oil group, are thought to have stalled. BP is hoping to get $9 billion for the stake but the Chinese are understood to have offered $7 billion.

BP’s investigation into the oil spill, led by Mark Bly, head of safety, will be published early next month.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

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