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The Sunday Times: Call for BP’s Browne to stay on

EXTRACT: This week BP and rival Shell could report record quarterly profits of about $6 billion each. The bumper figures come just as diesel is expected to hit £1 a litre for the first time tomorrow.

THE ARTICLE

July 23, 2006
By Tracey Boles

 
A LEADING shareholder in BP is calling for the company to lift its mandatory retirement age of 60 so that chief executive Lord Browne can stay on at the oil giant.

Co-operative Insurance Society (CIS), which owns 1% of BP, intends to raise the matter at next year’s annual meeting if informal talks in the next few months do not yield the results it wants. 
 
Ian Jones, CIS’s head of corporate governance, said: “We want the compulsory retirement age removed. To forcibly retire is not necessarily in shareholder interests. We would be unhappy about Browne’s retirement being forced in that way.”

Under BP’s rules, Browne must retire as chief executive in February 2008 when he turns 60. The succession issue has already come under the spotlight after Browne said he hoped to play a key role in choosing his replacement.

Morley Fund Management — a top 10 investor in BP with a 2% holding — said that it wanted to see a “well-managed succession process”.

Browne is widely seen as having led BP through the most successful decade in its history. But a source close to the company said: “I don’t think Browne’s departure is a matter of mandatory retirement age. Twelve years is long enough for any chief executive.”

BP declined to comment. The company favours appointing a new chief executive from within the company. The candidates are thought to be Tony Hayward, head of exploration and production, John Manzoni, who heads refining and marketing, and Iain Conn, group executive director.

One shareholder said that appointing Browne’s successor would be arguably the single most difficult decision the board had to make. Several others said they were happy with the way BP was conducting the process.

Martin Cawthorne, a fund manager at Morley, said: “Morley’s focus is succession planning and, as for any company with a successful chief executive approaching retirement age, Morley calls for an effective and well-managed process.

“Given that there is almost two years to develop an effective and well-managed succession plan at BP, Morley has every reason to believe the BP board will manage this process well.”

This week BP and rival Shell could report record quarterly profits of about $6 billion each. The bumper figures come just as diesel is expected to hit £1 a litre for the first time tomorrow.

Meanwhile, British Gas is set to post a record loss of up to £150m for the first six months of the year, putting pressure on its parent Centrica to raise household energy bills again. Analysts predict another rise in bills at British Gas late in the summer.

The record loss, topping the £75m loss posted by British Gas in the second half of last year, has occurred because soaring wholesale gas prices have not been fully offset by rises in the prices it charges consumers.

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