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Daily Telegraph: Lord Browne gets pay package approved: quits BP to join Apax

Daily Telegraph Lord Browne Photo

(Lord Browne’s recent problems include the Thunder Horse oil rig delay after a hurricane and Prudhoe Bay where pipes were found corroded causing large oil spills in Alaska)

By Richard Blackden
Last Updated: 12:40am BST 13/04/2007

Lord Browne, chief executive of oil giant BP, has seen off a potential rebellion over his pay package by shareholders who claimed it wasn’t deserved given the company’s safety record.

BP said today that of the shareholders who have voted so far, 82.7pc have approved the resolution proposed at today’s annual general meeting – Lord Browne’s last as chief executive.

A spokeswoman said the final tally, including those who cast their vote at the meeting, may not be known until Monday.

BP has endured a torrid past two years, with a fatal explosion at its Texas City refinery, two oil spills in Alaska and delays to the start of its Thunder Horse field in the Gulf of Mexico all damaging the company’s reputation.

Lord Browne told shareholders today that the last two years have been “truly humbling.”

The build-up to Lord Browne’s final agm was overshadowed by expectations that a small minority of shareholders will reject the company’s remuneration report in protest at the inclusion of Lord Browne in a three-year incentive scheme, during most of which he will already be in retirement.

Lord Browne could receive shares worth £11m in 2009 if BP meets performance criteria linked to the scheme. He will already benefit from a £21m pension pot.

The oil giant has faced severe criticism since the explosion at its 2005 Texas City refinery that killed 15 people.

Lord Browne today said of the incident that “it was the saddest and darkest day in my working life at BP.”

Pirc, a corporate governance adviser, has recommended its clients vote against Lord Browne’s pay deal for failing to link rewards to the company’s safety record.

The Association of British Insurers has waved through the report.

The company’s safety record received stinging criticism in a report by former US Secretary of State James Baker into the Texas City explosion.

BP said today that is is consulting with the Baker panel on how to best implement its recommendations.

RELATED ARTICLE

Daily Telegraph: Browne quits BP to join Apax

By Russell Hotten, Industry Editor
Last Updated: 12:39am BST 13/04/2007
 
The chief executive of troubled oil giant BP, Lord Browne, has resigned unexpectedly for a job with private equity firm Apax.

He will go at the end of July – 15 months earlier than planned – to be replaced by Tony Hayward, head of exploration and production. BP shares rose 9½ to 546½p.

Lord Browne, 58, has become non-executive chairman of the supervisory board at Apax, one of the UK’s biggest buyout firms. He is also considering offers from companies to become a non-executive director.

The surprise move ends Lord Browne’s remarkable tenure at BP, which he built into the world’s No.4 oil firm by market size. But the past 18 months have been difficult, with boardroom rows and investigations into BP’s safety standards.

On Tuesday, a report into a fatal explosion at BP’s Texas City refinery is due to be published, and is expected to be highly critical of the company.

However, a source said yesterday that Lord Browne’s departure had nothing to do with the imminent publication. “I can be categorical in that,” he said.

Another BP insider said Lord Browne had simply become “weighed down” by recent problems and had decided “to draw a line under some things”. Mark Gilman, an analyst at The Benchmark Company, said: “The deterioration in John Browne’s credibility was becoming an impairment to BP and its shareholders.” Last Tuesday Lord Browne told BP chairman Peter Sutherland of his intentions, and the issue was discussed at a board meeting on Wednesday. He will receive no compensation other than what is due under his contract.

Moves to find a successor were already underway as shareholders had become increasingly concerned about who would replace him. Mr Hayward has long been seen as the most likely successor, and he was expected to be appointed chief operating officer to work alongside Lord Browne until he retired at the end of 2008.

Speculation over the succession at BP intensified in the summer amid rumours that Mr Sutherland wanted his chief executive to leave when he hit 60 in February 2008, while Lord Browne was adamant he would stay on. A BP spokesman said of the news: “There are a number of issues we had to deal with, and John [Browne] felt it would be a good time to make a smooth transition.” Lord Browne, who played a role in selecting Mr Hayward, said: “We clearly have important issues still to deal with which I am determined to address.”

Lord Browne is one of the most admired businessmen of his generation, and is a confidant of political leaders around the globe, including Tony Blair.

But recently his star waned as BP suffered a major refinery explosion in Texas, large oil spills in Alaska due to pipeline corrosion, and a crackdown for allegedly trying to rig the petrol market. Said one analyst: “Browne doesn’t go out on a high note, but he did a tremendous job and, let’s face it, the business he leaves is not in bad shape despite recent issues.”

Lord Browne, who joined in 1966 as an apprentice and became chief executive in 1995, took BP to the top league of oil majors by buying Amoco in 1998. He was hailed as a visionary, positioning BP as environmentally-friendly long before it became fashionable.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/01/13/cnbrowne13.xml
 

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