Global Economics

No Bonus for BP's Hayward After Bad Year


Since taking over, the British oil company's chief has been working furiously to restructure and cut costs. He still earned less than his predecessor

BP's chief executive, Tony Hayward, pocketed £2.1m in his first year at the helm of the oil giant, but failed to pick up a bonus share package after a calamitous period marked by plummeting profits, a series of industrial accidents, and lawsuits from families of victims killed in an explosion at one of its refineries.

Mr Hayward's compensation, revealed in the company's annual report, fell £1m short of that earned last year by his predecessor, Lord Browne of Madingley, who worked for just four months before resigning in a perjury scandal. In those four months to April, Lord Browne earned £3.1m in cash and benefits, including a £1.5m golden goodbye, £1.2m in cash, shares and benefits, and £436,000 in stock options. A company spokesman said the £1.5m severance, equal to a year's salary, was standard for executives "of that generation" in the company -- Lord Browne spent more than four decades at BP -- but that such lavish deals were eliminated for new employees three years ago. Lord Browne also left with a £21m pension.

Since he took over, Mr Hayward has been furiously undoing much of what was done by Lord Browne, shining an uncomfortable light on the legacy of the executive once dubbed the "Sun King".

In his first yearly review as chief executive, Mr Hayward said: "The unsatisfactory financial performance was primarily a result of two things: missing revenues, principally from delayed projects and poor reliability in some of our US refineries, and excessive complexity in the way we manage the business."

Mr Hayward has put a huge restructuring in motion that will cut 5,000 jobs. The company's bloated levels of middle management helped it become the worst performer among the oil super-majors. While rivals like ExxonMobil, Chevron and Royal Dutch Shell produced record profits, BP's fell by a fifth last year -- this despite an oil price that roughly doubled, to near-record highs.

The company's top five executives, including Mr Hayward, the chief financial officer Byron Grote, Andy Inglis, who replaced Mr Hayward as head of exploration and production, and Iain Conn, chief executive of refining and marketing, pulled in more than £10m in cash and bonuses between them. Mr Conn and Mr Inglis are also in line for £1.5m "special retention awards" that would be paid in shares over the next three to five years. They failed, however, to secure some larger bonuses, due to the company's poor performance relative to its rivals. Mr Hayward alone missed out on £3.78m.

John Manzoni, Mr Conn's predecessor, who resigned last year after he was severely criticised for not acting on "clear warning signals" of dangers at the Texas City refinery before the blast that killed 15 people, pocketed £667,000 in cash and shares and had another £600,000 worth of shares vest.

The company also revealed that it had increased the cash it has set aside for victims of the Texas City explosion. BP had said previously that it had agreed to pay out $1.6bn in claims, but yesterday said it has added another $525m to the pot for the families of the deceased and those injured in the blast.

Provided by The Independent—from London, for Independent minds worldwide

Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus