The BP board will today decide the future of the company's chief executive Tony Hayward as speculation mounts that he will be forced to step down within days. The discussions will focus on the timing of Mr Hayward's departure rather than on whether he will stay on, Reuters reported yesterday, citing unnamed sources.
London media reported yesterday that a weekend of detailed negotiations over Mr Hayward's severance package would be followed by an announcement on his future, possibly within 24 hours. A BP spokesman said yesterday he had no knowledge of talks regarding Mr Hayward. "Tony Hayward is the chief executive and has the confidence the board and senior management," he said. "I don't know about any discussions."
The spokesman was unable to confirm that BP's board would meet today but it is customary for the board to meet on the eve of an earnings release. The company is scheduled to release its first-half financial results tomorrow. A consensus of analysts' estimates suggests BP made almost US$10 billion (Dh36.73bn) in profits in the first six months this year. That is despite the company spending about $4bn so far on efforts to stop crude flowing from its damaged Macondo well in the Gulf of Mexico and clean up the worst oil spill in US history. But BP, which could face tens of billions of dollars in liabilities, may record a $25bn pre-tax loss for the second quarter.
Any announcement by BP's board over Mr Hayward's tenure with the company would signal that BP was ready to make a fresh start, implying the board also believed the worst of the publicity storm over the oil spill might be over. The details of Mr Hayward's severance package, which at a minimum would amount to £1,045,000 (Dh5.9m) - his salary last year - could take some time to negotiate. A significantly higher cash settlement would enrage US politicians, as well as BP's shareholders.
Shareholders have been deprived of quarterly dividends until next year at the earliest as BP seeks to persuade the US government it is doing everything possible to compensate coastal residents and businesses hurt by the spill. So severance negotiations may focus on how many BP shares or options Mr Hayward should receive to compensate him for the 546,000 share options he would relinquish if he left the company promptly.
Those options are out of the money, as BP's shares have fallen sharply in the more than three months after the April 20 explosion that sank the Deepwater Horizon oil platform with the loss of 11 lives. Mr Hayward, 53, is also entitled to a £10.8m pension from BP at £584,000 a year from the age of 60. The odds-on favourite to succeed him is Bob Dudley, the director of BP's oil spill response unit. Mr Dudley was born and raised in Mississippi, one of the states affected by the spill. He has enjoyed a much better media profile in the US than Mr Hayward.
BP is expected to outline plans tomorrow to sell more assets as it tries to raise money for its compensation and clean-up fund and to streamline its operations to optimise growth potential. Last week, BP announced an agreement to sell American, Canadian and Egyptian onshore oil and gas assets to the US oil company Apache for $7bn. BP said it would also sell its operations in Pakistan, Vietnam and Colombia. Naeem Malik, the head of Pakistan's petroleum concessions directorate general, said the country's government might exercise its pre-emptive right to buy BP's interests in the Pakistani assets.
Murli Deora, the Indian oil minister, said last week his government planned to hold talks with BP about buying its assets in Vietnam as India seeks to secure energy to fuel its rapidly growing economy. BP's Alaskan assets may also be back on the block after the company reportedly failed to close a deal with Apache. Oil companies drilling in Arctic waters off Alaska, Canada and Norway have already been hit by tighter regulations after the oil spill.