July 27 (Bloomberg) -- Tony Hayward’s resignation became inevitable after the worst oil spill in U.S. history jeopardized BP Plc’s independence and wiped 45 billion pounds ($70 billion) off the company’s value.
A geologist who joined BP in 1982, Hayward will be replaced as chief executive officer by U.S.-born Robert Dudley, the company said today. Dudley, the former head of BP’s Russian unit and in charge of the Gulf of Mexico cleanup, will take the helm on Oct. 1.
Hayward, 53, had faced rising public anger and attacks from lawmakers over his handling of the leak, triggered by the April 20 explosion on the Deepwater Horizon rig, which killed 11 workers. A series of public relations blunders in which he played down the impact of the spill as “relatively tiny” and said he wanted his “life back” did little to restore his reputation.
“This is a good oil man who’s fallen on the PR hurdle, rather than a bad oil man who’s being paid for failure,” said Nick McGregor, an investment manager at Redmayne-Bentley Stockbrokers in London.
After taking over from John Browne in 2007, Hayward pledged a “laser like focus” on safety in the wake of a number of accidents, including a deadly 2005 explosion at a Texas City refinery. Before the leak, he oversaw a 16 percent gain in BP’s shares and new projects that saw the company overtake Exxon Mobil Corp. in terms of output for the same time.
At the height of the crisis in June, investors drove BP’s share price down to a 14-year low and bondholders priced in more than 40 percent odds of bankruptcy as the company’s image deteriorated and costs mounted. The company’s plunge prompted speculation that it may become a takeover target.
‘Hated and Clueless’
The New York Daily News said Hayward was “the most hated -- and clueless -- man in America.” U.S. President Barack Obama said he would have fired Hayward, while White House Chief of Staff Rahm Emanuel said on ABC in June that “Tony Hayward isn’t going to have a second career in PR consulting.”
Under pressure from the U.S., the company set up a $20 billion fund to pay for the cleanup and provide money for people hurt by the disaster. BP also canceled three quarters of dividend and pledged to sell $10 billion in assets to ensure it has enough cash.
BP announced a record quarterly loss of $17.2 billion today after writing off the projected costs of paying for the spill.
Hayward will get a pension fund, worth 10.8 million pounds ($16.8 million) at the end of last year, as well as a year’s salary of about 1 million pounds.
Hayward isn’t the first CEO of BP to quit under a cloud. Browne resigned after losing a battle to stop a newspaper from publishing details about his private life in 2007, while Robert Horton stepped aside in 1992 after poor financial results.
With the runaway well now sealed using a temporary cap and BP on schedule to permanently plug it with cement next month, analysts said it was good time for Hayward to go.
“Hayward’s doing a great job but the board needs to get BP’s reputation back,” said Peter Hitchens, an analysts at London-based Panmure Gordon & Co. “Having an American should lessen some of the xenophobia that’s out there and Dudley’s a perfectly capable manager.”
The eldest of seven children, Hayward was born in Slough, 25 miles west of London. He studied in Birmingham and then in Edinburgh, earning a Ph.D. in geology in 1982.
That same year he joined BP after an invitation from then-Chief Geologist David Jenkins. Hayward worked in Aberdeen, Scotland, as a rig geologist and was part of the team that discovered the Miller field in the North Sea. He joined Browne’s office in 1990 after they met at a conference in Arizona, and the two worked on BP’s takeover of Amoco Corp. and Atlantic Richfield Co.
On the Board
After assignments in France, China, Colombia and Venezuela, he returned to London in 1997 as a director of BP Exploration, the biggest unit. Two years later, he was named group vice president and was elected to the board in 2003.
On getting the top job, Hayward’s task was to improve safety after the Texas refinery accident and an oil spill in Alaska the following year. The refinery blast, which killed 15 people, led to a legal battle between victims’ families and BP.
The Deepwater Horizon disaster means his successor will have to start from scratch in rebuilding the company’s reputation.
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