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BP chief Hayward to quit 'by end of September'

By Channel 4 News

Updated on 26 July 2010

Channel 4 News understands BP's embattled chief executive Tony Hayward is expected to leave his post by the end of September with an exit package of up to £12m, and an appointment on the board of BP's Russian joint venture TNK-BP.

BP chief executive Tony Hayward may leave the oil group with up to £11m (Image: Getty)

A formal announcement is expected after a board meeting at BP's headquarters in London tonight, ahead of the company's second quarter results on Tuesday.

Channel 4 News business correspondent Siobhan Kennedy said Mr Hayward would step down by "mutual agreement" following the disastrous Deepwater Horizon oil spill in the Gulf of Mexico.

Mr Hayward, who has been with the company for 28 years, is expected to be offered a non-executive director role with BP's Russian joint venture TNK-BP.

He had faced serious criticism over his handling of the US oil spill, following a number of gaffes including his comment of: "I want my life back". 

Mr Hayward's exit package is believed to be worth up to £12m, which would comprise of a year's salary, which last year was £1.045m, alongside his pension pot which after almost three decades at BP will have swelled to an estimated £10.84m by the end of the year.
 
It is thought he will be replaced on 1 October by his US colleague Bob Dudley, who is currently in charge of the clean-up operation.

Who is Bob Dudley?
Widely tipped as Tony Hayward's replacement, Mississippi-raised Bob Dudley is expected to smooth over US outrage as BP's fixer with his softly spoken Southern accent. But the man who has taken charge of the clean-up operation in the Gulf of Mexico is no stranger to controversy himself, Channel 4 News reports.

Best known as former chief executive of BP's 50:50 Russian venture TNK-BP, Dudley was pushed out of Russia by the group's shareholders in 2008 – after suffering police raids, back-tax demands, legal action, office bugs and visa issues.
Bob Dudley
He exited the country steeped in scandal, blaming the dispute on a campaign waged by BP-TNK's billionaire oligarch shareholders. BP also accused its Russian partners of calling in the security services to target staff seen siding with the oil giant.

In the five years that Dudley led the TNK-BP formation however, the venture increased oil output 33 percent to 1.6 million barrels per day. Tony Hayward has previously described Dudley as "the management team's foreign secretary".

The son of a naval officer, Dudley started out as a field engineer with Amoco in Texas, later taking on roles in Scotland, Russia and China. He joined BP through its takeover of Amoco, when he was made head of renewable and solar energy. He is currently managing director of the BP Group, responsible for the company's activities in the Americas and Asia.

The 54-year old, if chosen, will become BP’s first non-British chief executive. The oil giant will be banking on Americans warming to Dudley's background – a thoroughly American childhood that led to a chemical engineering degree at the University of Illinois and an MBA at Southern Methodist University.

The oil giant's shares have risen more than 2 per cent today on the news that Hayward is expected to quit the company by October. Analysts have deemed rumours of Dudley lining up for the top job a "sensible move".

Howard Wheeldon, senior strategist at BGC partners, said: "They needed a new man at the helm. They appear to have done it just before second quarter results for the purpose of ensuring that markets know that Bob Dudley is in the seat. He is the one, as an American, who will lead the company forward for the next few years and they seem fairly content with that, so we've got a 24-hour bedding in period here. I think it's a pretty sensible move."

The White House has said that BP must continue to cleanup the Gulf oil spill, despite who was in charge.

"BP cannot, should not and will not leave the Gulf without meeting its responsibilities to plug the well, to clean up the damage that's been caused and to compensate those that have been damaged. I think that is the most important lesson out of here," White House spokesman Robert Gibbs said today.

"Regardless of who leads the company, those obligations and responsibilities must be met."

However Siobhan Kennedy said criticism remained of the role of Carl-Henric Svanberg, BP's chairman:

"One shareholder said to me today he was upset and angry that Tony Hayward was being seen to be falling on his sword and Svanberg was left to stay." 

However she said that the decision for Mr Hayward to go would mean he would not give evidence to US politicians examining whether BP had a role in the release of the Lockerbie bomber Abdelbaset Al Megrahi.

Who knows Tony Hayward, 'BP lifer'?
Born in Slough in 1957 Mr Hayward was the oldest of seven children, perhaps making him a natural leader.

He gained a PhD in geology at the University of Edinburgh in 1982 and in the same year began working for BP as a rig geologist.

The "BP lifer" took over from Lord Browne of Madingley as chief executive in May 2007 and his total salary and benefits in 2009 were estimated at more than £3m.

He has worked alongside Anji Hunter, Tony Blair's former PR director who became BP communications chief after exiting Downing Street.
Read more

BP is set on Tuesday to reveal a provision of up to $30bn for the costs of capping the well, compensation claims and fines to be paid – pushing the company into a quarterly loss for the first time since 1992.

Mr Hayward also became "the most hated man in America" as US citizens laid the blame at his door for the massive oil leak and President Barack Obama ramped up the pressure. 

He also faced US congressman over his handling of the leak, which was caused by an initial explosion on the rig, leading to the deaths of 11 people.

Shares in the company are down more than a third from their peak, which has hit pension funds on both sides of the Atlantic. BP has also been forced to sell assets to meet the costs of the spill.

More from Channel 4 News on the BP oil spill
- Obama: more work to do on BP oil spill
- BP: no oil leaking out of well
- Who Knows Who: Tony Hayward
- Rivals, white knights or Libya: who wants BP?
- BP oil spill: timeline

There was some good news for BP last week – although too late, it seems, for its chief executive – that its latest relief efforts to stop the spill are working.

However, Charles Stanley analyst Tony Shepard said the Gulf spill would be a "permanent feature in the results for some time."

"There is no doubt BP has valuable assets and attractive cashflows going into the future but uncertainty remains over the potential liabilities," he added.

Channel 4 News business correspondent Siobhan Kennedy predicted in June that Tony Hayward may not survive the disaster.

The pressure is mounting on Tony Hayward, BP's embattled chief executive, she wrote, who stoked fresh anger when he said: "There's nobody who wants this over more than I do. I want my life back."

Industry insiders have said it’s becoming increasingly difficult for Mr Hayward to survive the disaster. One said the US Government would likely demand that heads roll in the wake of the crisis and it was inevitable Mr Hayward’s would be top of the list – despite the fact he is well liked and respected within the industry.

Iain Conn, BP's head of refining and marketing and Bob Dudley, the former chief executive of BP's joint venture in Russia, have been tipped as the most likely candidates to replace him.

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