FT: BP Braces For Management Shake-up

7/3/2010 9:32 PM ET

RTTNews) – Oil giant BP plc (BP: News ,BP.L: News ) may replace Chairman Carl-Henric Svanberg and Chief Executive officer Tony Hayward after the leaking oil well in the Gulf of Mexico is capped, the Financial Times reported Saturday, citing several leading shareholders and people close to the company. Shareholders are set to demand a boardroom shake-up at the company in the wake of the disaster, which has more than halved the value of BP’s shares since April.

Hayward has been facing criticism for his inept comments and public gaffe while handling the oil spill disaster. During his congressional testimony in the U.S., Hayward angered lawmakers by stressing that he was not involved in key decisions before the deadly explosion of the rig and refused to comment on possible causes of the accident. The members of Congress accused Hayward of “stonewalling” and “insulting our intelligence”. Amid the oil-spill disaster, Hayward reportedly traveled to the Isle of Wight in England to watch his yacht compete in a race.

Meanwhile, Svanberg is reportedly being singled out for criticism by the company’s shareholders for his perceived lack of decisive leadership during the crisis and his failure to support Hayward. He made international headlines in mid-June for the wrong reasons after his comments at a White House press conference were interpreted as patronizing towards the ordinary people immediately affected by the catastrophe.

“We care about the small people. I hear comments sometimes that large oil companies are greedy companies who don’t care, but that is not the case with BP, we care about the small people,” Svanberg said at that time.

According to the FT report, the management shake-up could be combined with an attempt to raise capital, such as a bond issue or an investment from a strategic shareholder. While the management shake-up will not solve any of BP’s immediate problems, they may offer some satisfaction to the chorus of company critics, including shareholders, Gulf of Mexico residents, and the U.S. government

Without decisive action to set the company on an even keel, BP is seen as vulnerable to an opportunistic bid from rivals such as ExxonMobil Corp. (XOM), Royal Dutch Shell plc (RDS-A, RDS-B, RDSA.L, RDSB.L) or PetroChina Co. Ltd. (PTR).

Pressure for change is mounting ahead of BP’s announcement of its second-quarter financial results on July 27, when the company is expected to make a statement on the liabilities it faces as a result of the oil spill, likely to run into billions of dollars.

Last Monday, BP said it has shelved out about $2.65 billion in cost of the response to the oil spill, which includes containment, relief well drilling, grants to states, claims and federal costs. The company said that it has received over 80,000 claims, and has settled about 41,000 of them at a cost of more than $128 million. BP has said it will suspend all dividend payments for the rest of the current year.

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