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02 May 2007 07:19
BP chief executive John Browne resigned on Tuesday, hours after a judge lifted a legal injunction preventing a newspaper from publishing details of his private life and allegations that he misused company resources.
The board named Tony Hayward, the head of exploration and production, as the new CEO effective immediately, BP said. Hayward, who had already been set to take over on August 1, will have to repair BP’s reputation after several high-profile operational and regulatory mishaps tarnished its image.
Browne (59) had been fighting since January to keep the Mail on Sunday newspaper from publishing details from an interview with a man with whom he had a relationship.
BP said the newspaper had also sought to report allegations that Browne misused company resources—claims it said an internal investigation determined were unfounded.
In a statement, Browne said he was stepping down voluntarily “to avoid unnecessary embarrassment and distraction to the company”.
“For the past 41 years of my career at BP, I have kept my private life separate from my business life,” he said.
BP said Browne’s decision meant he would lose a bonus of up to 1,3 times his annual salary, worth in total more than £3,5-million.
Shares in BP edged lower after the announcement, closing down 0,4% at 563 pence on the London Stock Exchange.
“The board of BP has accepted John’s resignation with the deepest regret,” chairperson Peter Sutherland said. He called it “a tragedy that he should be compelled by his sense of honour to resign in these painful circumstances”.
Browne acknowledged in the statement that he had lied to a judge about how he met Jeff Chevalier, with whom he said he had a four-year relationship.
“My initial witness statements, however, contained an untruthful account about how I first met Jeff. This account, prompted by my embarrassment and shock at the revelations, is a matter of deep regret.”
The Mail on Sunday suggested in a statement on Tuesday that Browne should be charged with perjury.
“That Lord Browne should have felt free to lie deliberately and repeatedly raises deeply worrying questions about the system of secret court hearing, which is increasingly being used by the rich and powerful to prevent the public knowing the truth about their activities,” the newspaper said in a statement.
Browne rejected allegations that he misused company resources, calling them “full of misleading and erroneous claims”.
“I deny categorically any allegations of improper conduct relating to BP,” he said. “The company has confirmed today that it has found no such wrongdoing.”
Browne’s decision will allow Hayward to start with a clean slate, said analyst Jason Kenney of ING Group.
After more than a decade at the helm of BP, Browne—a close associate of Prime Minister Tony Blair—had announced in January that he would resign at the end of July, bringing his expected departure forward by more than a year.
Then his annual performance bonus for last year was cut almost in half as an oil spill in Alaska and a deadly refinery blast in Texas overshadowed record profits for the oil company.
Last month, BP reported a 17% drop in first-quarter earnings on lower oil prices and declining production.
Browne first joined the company in 1966 as an apprentice and worked his way up, taking the top job in 1995. He oversaw BP’s expansion into the United States, involving a number of takeovers, including the 1998 merger with Amoco and the subsequent acquisitions of Arco and Castrol.
But his attempts to fashion BP as an environmentally friendly oil company—he was the first major oil-company CEO to acknowledge global warming and masterminded BP’s logo change from a shield to a flowerlike sunburst design the slogan “Beyond Petroleum”—were undermined by the company’s recent US troubles.
BP was forced to temporarily close some of its operations at the Prudhoe Bay oil field in Alaska because of a major pipeline spill and delayed the opening of its key Thunder Horse platform in the Gulf of Mexico. The 2005 explosion at its Texas refinery that killed 15 workers has so far cost the company about $2-billion in compensation pay-outs, repairs and lost profits.
Sutherland told shareholders at the annual meeting earlier this year that the company was making “good progress” on safety issues following refinery explosion and the oil spill.—Sapa-AP
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