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Daily Telegraph: Move to stop BP retiring Browne

EXTRACT: Precedents have been set. In May BP’s rival Shell relaxed its retirement age for executive director Rob Routs, allowing him to stay until he is 62. A similar decision is likely to be made to allow Jeroen van der Veer, Shell’s 58-year-old chief executive, to stay on beyond 60.

THE ARTICLE

By Christopher Hope, Industry Editor

(Filed: 21/07/2006)

Investors in BP are being urged to overturn the oil major’s retirement policy for directors in order to allow the chief executive, Lord Browne of Madingley, to stay on at the company.

Mark Iannotti, a Merrill Lynch oil analyst, said that Lord Browne’s impending retirement was a “potential medium-term risk for shareholders”, reflecting growing anxiety in the City over BP’s prospects once the chief executive steps down.

In a research note published yesterday, Mr Iannotti said: “It is right to question on behalf of shareholders (before it is too late) BP’s imposed retirement of an executive of Browne’s calibre.”

Under BP’s company rules, Lord Browne must retire as chief executive of BP on February 20 2008, when he turns 60.
 
The analyst cited three reasons for a U-turn: Lord Browne’s apparent desire to remain in active business life beyond 60, his position as one of Europe’s leading industrialists and the legislative developments in age discrimination.

Recent comments from Lord Browne suggested that as one of the most admired chief executives of his generation he was not ready to go, Mr Iannotti said.

In a speech on April 6, Lord Browne stated that “mandatory retirement at a fixed age is inappropriate” and that he “does not intend to spend the rest of his life on the golf course, but to continue to lead an active business life”.

Mr Iannotti said: “We interpret these comments as suggesting that, if given the opportunity, Browne might choose to extend his tenure as chief executive of BP or move up to a senior role such as chairman on the board of BP.”

New UK age discrimination legislation, due to come into force in October, bans “unjustified” retirement below 65 because it could be seen as “a form of age discrimination”, Mr Iannotti noted.

He said investors could use these new rules as a lever to force the board to consider appointing Lord Browne as chairman.

Precedents have been set. In May BP’s rival Shell relaxed its retirement age for executive director Rob Routs, allowing him to stay until he is 62.

A similar decision is likely to be made to allow Jeroen van der Veer, Shell’s 58-year-old chief executive, to stay on beyond 60.

Earlier this year, HSBC announced that Stephen Green was moving up from chief executive to chairman at HSBC in contravention of the City’s corporate governance rules.

Mr Iannotti said: “This would be a reasonable option: in our view Browne would stay at BP and would be able to mentor a new chief executive while retaining strategic influence and important high-level relationships.”

If there were resistance from the board, shareholders could propose a motion at next year’s annual meeting by forming a group of more than 100 individuals holding more than £100 each or more than 5pc of the shares.

The note was published without consulting BP, which Merrill has advised in the past. A BP spokesman said: “We are not going to make any comment on this.”

Sir William Castell, former chief executive of Amersham International for 16 years, has been appointed to BP’s board as non-executive director.

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