Muted Response on Svanberg's BP PostSarah Arnott
BP (BP) has finally appointed a new chairman, surprising the City by announcing yesterday that it had poached Carl-Henric Svanberg, chief executive of Ericsson (ERIC), to replace Peter Sutherland when he steps down in December.
The 57-year old Swede's name was not even on the list of candidates rumoured to be in the running for the role, and he has no connections with the oil sector. But he is credited with turning the telecommunications giant around since taking the top job in 2003.
Tony Hayward, the BP chief executive, yesterday described Mr Sutherland's chairmanship as "outstanding" and "a hard act to follow". "But I am sure Carl-Henric will be a worthy successor," Mr Hayward said. "He is a businessman of international stature."
Mr Svanberg was Ericsson's fourth chief executive in five years, and took on a group with seven consecutive quarters of losses behind it. His tenure included axing more than half the company's 105,000 staff and selling nearly $4bn-worth of stock to deal with the fallout of the dot.com crash. Prior to Ericsson, Mr Svanberg was chief executive at Assa Abloy (ASSAB.ST), the lock company, which he turned into a market leader through a spree of 45 acquisitions that boosted sales by a factor of seven.
It has taken two years for BP to find a successor to Mr Sutherland. Earlier this year, the race appeared to have been run, with Rio Tinto (RTP) chairman Paul Skinner widely tipped as the winner. But BP shareholders baulked at the choice, scared off by Mr Skinner's top-of-the-market purchase of Alcan that left the mining group with $40bn (£25bn) in debt and forced its recourse to the unpopular Chinalco proposal (which was subsequently junked).
Mr Sutherland has been in the job since 1997. His tenure has included the Texas City refinery disaster that killed 15 people, a pipeline leak in Alaska, the scandal-fuelled departure of the former chief executive Lord Browne, and last year's internal ructions at Russian subsidiary TNK-BP. He had been due to leave in April, but agreed to stay on until a successor was found.
Mr Svanberg said: "Following such a distinguished predecessor is quite a challenge, but I'm hugely excited about joining the energy industry which is so much at the heart of the global economy. I look forward to it with relish."
Until yesterday's announcement, Paul Anderson, a former chief executive of rival miner BHP Billiton (BHP), was the most widely tipped successor. The City was particularly surprised at the appointment of a chairman with no natural resources experience. Peter Hitchens, at Panmure Gordon, said: "He is a bit of an unknown quantity but at least he does have experience of running a major business."
The appointment may have been unexpected, but it is not unprecedented to appoint a chairman from outside the sector. BP rival Royal Dutch Shell (RDSA) also looked to the telecoms sector. Jorma Ollila, who was appointed to run the board in 2006, was the former chief executive of Nokia (NOK).
Mr Svanberg – who is also on the boards of the Confederation of Swedish Enterprise and the investment group Melker Schörling – will stay on at Ericsson until taking on the BP role at the end of the year. He will become a non-executive director of BP in September.
After the problems left by Mr Hayward's predecessor, BP's current focus is on streamlining operations and improving performance against a backdrop of spending constrained by lower oil prices. The company said in April that its capital expenditure will be more than $1bn lower in 2009 than it had forecast just a month earlier.
Mr Svanberg's involvement in the day-to-day running will be limited. "The BP chairmanship is more to do with the public image of the company, running the board meetings and so on," Mr Hitchens said. "The nuts and bolts of the operational side are left to Tony Hayward."
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