Tony Hayward is stepping out of the role of CEO at BP, but he’s not exactly getting thrown to the curb. According to ABC, “he will receive a year’s salary, worth $1.61 million, and he’ll also keep his approximately $17 million pension fund. He will also take a job at a BP outpost in Russia.” That is, he will become a board member at TNK-BP, BP’s joint venture with Russian oligarchs.
Ah, the Russia thing.
BP’s new CEO, Bob Dudley, went into hiding in 2008, when he was leader of TNK-BP, after teeing off oligarch shareholders (from NPR):
…Dudley didn’t provide an exemplary showing in his other recent big experience in the limelight — his 2008 dust-up with four Russian oligarchs who are BP’s partners in TNK-BP, a Russian company that accounts for some 20 percent of BP’s global oil production and more than 10 percent of its profit. Dudley was CEO of TNK-BP when a dispute with the oligarchs broke out in 2008, and he ended up leaving Russia to what was politely called seclusion in an undisclosed location. More bluntly, Dudley fled and was hiding out. Early this year, the partners attempted to explain away the row as just one of those things — a warm spin on events described by the Wall Street Journal’s Greg White — but the CEO doesn’t go incommunicado for several months in a normal business disagreement.
The oligarchs are over the dispute, according to Bloomberg:
In 2008, workers seconded by BP were barred from working in Moscow, while the successor to the Soviet KGB raided its office and an employee was charged with industrial espionage. In the end, Dudley fled the country, citing “sustained harassment” amid court battles and labor and tax inspections.
Moscow-based TNK-BP accounts for about a quarter of BP’s production, a fifth of reserves and about a tenth of earnings. In 2008, TNK-BP’s partner AAR, a group of companies owned by German Khan, Mikhail Fridman, Viktor Vekselberg and Len Blavatnik, called for Dudley’s ouster in a dispute over strategy at Russia’s third-biggest oil company, alleging he ignored their interests. Dudley denied the charge.
“I sent Bob my congratulations today,” TNK-BP shareholder German Khan said. “We also welcome the possibility that Tony Hayward will be named to the board of TNK-BP,” Khan said. “We think he’s highly qualified specialist and was the victim of a subjective situation.”
So Hayward will be sent to Russia, hopefully in a peaceful manner, to help out with 25% of BP’s production. Dudley, who failed in Russia, will be sent to the US to deal with Washington and a leaky 40% of BP’s production. Sounds like BP likes both of these guys, but the oil spill forced the company to swap them out.
Will Hayward go from US whipping boy to the Russian oligarchs’ darling? It may depend on how much the oligarchs like cost-cutting. According to the AP:
Not long before he took over, Hayward told a conference that BP needed to change its leadership style because it was “too directive and doesn’t listen sufficiently well.” He said he was concentrating on “closing the performance gap” with rivals such as Royal Dutch Shell.
Hayward stripped out layers of management and costs across a stumbling and bloated business, improving its refining efficiency and putting the firm on a stronger footing to weather a global downturn.
BP’s market position improved and its reputation was rehabilitated. Cost-cutting, which saw around 7,500 positions axed, led to savings of around $4 billion.
The BP situation in the US, despite the CEO thing, is still uncertain. Let’s see how the public reacts to Mississippi boy Dudley.