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Financial Times: Time to call it a day

EXTRACT: Lord Browne may be the outstanding oil-man of his generation, and pressure from some BP executives and shareholders to keep him is understandable. He changed their company into a worldwide major with the biggest foreign stake in Russia, and exploited low oil prices in the late 1990s to snap up much of the old Rockefeller empire,to overtake Shell and to rival ExxonMobil. 

THE ARTICLE

Published: July 25 2006 03:00 | Last updated: July 25 2006 03:00

Differences within BP over the timing of Lord Browne’s retirement as chief executive go to the heart of a fundamental, age-old question of corporate life: when is the right time for a long-serving and highly successful business leader to step aside?

There can be no blanket, all-purpose answer. Individuals vary in their stamina and ability to refresh their world view, while companies vary greatly in what they need from their leaders. Increasing longevity and fitness make mandatory corporate retirement ages at about 60 look increasingly redundant. So it is welcome that, in the UK, mandatory company retirement ages will disappear this autumn under new legislation against ageism.

At BP, the 58-year-old Lord Browne has often indicated that he intends to quit at 60, the company’s normalretirement age. Yet, during the past week, some doubt has developed about his willingness to restate this publicly, and some voices in the City have expressed concern about his departure.

Lord Browne may be the outstanding oil-man of his generation, and pressure from some BP executives and shareholders to keep him is understandable. He changed their company into a worldwide major with the biggest foreign stake in Russia, and exploited low oil prices in the late 1990s to snap up much of the old Rockefeller empire,to overtake Shell and to rival ExxonMobil.

His supporters may also want to keep him on to deal with the many problems – ranging from pipe leaks in Alaska, refinery fires in Texas and price-fixing accusations – that have emerged in the US. Lord Browne, too, may feel that he has a duty to fix problems that have arisen on his watch.

However, this is an argument that leads everywhere, and therefore nowhere. Long tenure at the industry’s top is often the norm. But no chief executive can encompass all the projects that pass through an oil company as on a conveyor belt.

There are good reasons why Lord Browne should resist thoughts of an extension to his term. First, it is an unusual chief executive who retains the capacity to see the world entirely afresh after more than about a decade in office and, by the time he is 60, Lord Browne will have been chief executive for about 13 years. While he may be unusually capable of renewal – and has done more than most to embrace renewable energies – there is a case for fresh eyes at a time of such rapid change in the energy market.

Second, there is the question of succession planning. Lord Browne himself recently called for “a degree of certainty to bring on successors”. BP has been grooming possible replacements for years.

To change plan now could lead to a talent drain. An orderly succession will help preserve his legacy. In the end, no one is irreplaceable, and everyone needs replacing.

Copyright The Financial Times Limited 2006

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