BP scuttling embattled CEO
Oil giant will oust Hayward this week, promote managing director, source says
ATLANTA – After a bruising week of gulf oil-spill hearings and more scrutiny to come, BP moved Sunday to accelerate the departure of Chief Executive Officer Tony Hayward, who has become a lightning rod for criticism and a burden to the company.
Hayward, who infamously went yachting as his company’s broken oil well created an unprecedented ecological disaster in the Gulf of Mexico, had been expected to depart in the fall.
But BP moved up that timetable within the last two weeks, a source close to the BP board said, and is likely to cut him loose Tuesday at the company’s second-quarter earnings teleconference, replacing him with Managing Director Bob Dudley. The source was not authorized to speak publicly, and thus insisted upon anonymity.
Dudley, the company’s highest ranking American executive, was recently put in charge of BP’s operations in the Gulf of Mexico.
Hayward’s potential ouster may come even as BP moves significantly closer to permanently shutting its runaway well off the Louisiana coast.
With the withered threat of Tropical Storm Bonnie behind them, crews who had evacuated the site last week were back at work on the open water Sunday, preparing for the steps that should lead to the “bottom kill” gambit that is expected to permanently jam the well with mud and concrete thousands of feet below the ocean floor. The tropical storm delayed those plans by seven to nine days but did not otherwise change them, said Thad Allen, the federal oil-spill response chief.
The BP board was reportedly meeting over the weekend and had more meetings planned for today. But publicly, BP continued to withhold comment on Hayward’s future.
“We don’t comment on speculation or rumors,” said Mark Salt, a company spokesman. “Tony Hayward remains the company’s CEO and continues to have the full support of the board of directors.”
The crippled BP well had been spewing as much as 60,000 barrels of oil a day into the Gulf until the flow was stopped in mid-July. The disaster began April 20, when an explosion rocked the Deepwater Horizon drilling rig. It sank, killing 11 men and setting in motion the worst offshore oil spill in U.S. history.
Hayward, 53, was responsible for a number of the company’s high-profile public-relations blunders. Apart from the outing on his racing yacht, he said in May that “I’d like my life back.”
In hearings before Congress, Hayward was less than forthcoming and repeatedly deflected blame. When U.S. Rep. Cliff Stearns, R-Fla., asked Hayward whether it would be appropriate to tell Floridians that oil was spilling onto their coast “because of BP’s reckless behavior,” Hayward replied that it was “a consequence of a big accident.”
“No, yes or no. Reckless behavior or not?” Stearns asked.
“There is no evidence of reckless behavior,” Hayward said.
Fairly or not, Hayward became a target of public rage. In the New York Daily News, he was branded “the most hated – and clueless – man in America.” His yachting excursion became a favorite topic for late-night comedians. President Barack Obama said Hayward should have been fired.
Analyst Phil Weiss of Argus Research is among those who believe that BP’s future problems will be best faced with new leadership. “We continue to see too many uncertainties to warrant a short-term investment in BP, and believe that taking a short-term position in the shares is speculation, not investing,” he said.
Hayward, who is British, had been expected to leave at a later date, but several factors seemed to be accelerating beyond BP’s ability to manage them. One was the fact that BP shares, while rebounding from their worst depths since the disaster, were not rising quickly enough and could fall again if storm-related delays slowed the process of permanently sealing the well.
“The board has decided enough was enough. I thought it would have happened before now. This is not a big surprise. A change at the top, they hope, will help them,” said Phil Flynn, an analyst at PFGBest Research in Chicago.
Last week’s revelations at the oil-spill hearings in suburban New Orleans further undermined BP’s reputation. Testimony showed the company made several questionable decisions before the Deepwater Horizon exploded. One was permitting the rig to continue operating even though BP itself had released a highly critical audit in September 2009 that highlighted maintenance problems aboard the rig, which was owned by Transocean. BP also used a cheaper well design and skipped tests that might have detected problems in sealing the well, testimony showed. BP has disputed that any of its decisions harmed safety.