Tony Hayward pay-off fury after BP posts £11bn loss

BP'S reputation in America has sunk to a new low amid fury over the multi-million pound package the oil company handed out to its departing chief executive Tony Hayward.

• Outgoing Tony Hayward at BP's London headquarters yesterday. Picture: Getty

US politicians and environmental campaigners were incensed by the 1.045 million pay-off and the 11 million pension pot collected by Mr Hayward, who has become known as the "most hated man in America".

Mr Hayward's "golden parachute" was confirmed on the same day that BP announced it had gone into the red for the first time in 18 years, recording a loss of 11 billion ($17billion) for the three months between April and June.

The largest quarterly loss ever recorded by a UK company resulted from BP setting aside 20.8 billion to deal with the aftermath of the disastrous oil spill that has caused ecological destruction in the Gulf of Mexico.

In an attempt to deal with the losses caused by one of America's worst environmental catastrophes, the company announced plans to sell about 10 per cent of its production assets over the next 18 months.

BP's extensive operations in the North Sea will not be part of the sale, which BP hopes will raise 19.3 billion.

Despite the anger coming from America, Mr Hayward yesterday claimed that he had no major regrets about his stewardship of the company.

He added that he had been "demonised and vilified" over the Gulf of Mexico disaster in a statement that will do little to rid him of his gaffe-prone reputation.

In America, Ed Markey, a Democrat congressman, was furious about the size of Mr Hayward's financial package.

"At a time when BP should be devoting every possible resource to ending the spill, cleaning up the Gulf and fully compensating the residents who have had their livelihoods impacted, I find it extremely troubling that BP's board would consider providing such a large severance package to Mr Hayward," he said.

"BP should be dedicating its resources to compensating the residents of the Gulf Coast who are the victims of this tragedy, not handing out multi-million dollar golden parachutes."

His view was echoed by Shannon Dosemagen, of the Louisiana Bucket Brigade, an environmental group attempting to clean up the hundreds of millions of gallons of oil that have spilled into the sea since the Deepwater Horizon rig explosion in April.

Speaking to The Scotsman, Ms Dosemagen said: "Personally I believe that BP owes the Gulf coast a lot. We need to be taken care of down here.

"Everything that BP gives out should be coming here - plain and simple. Wouldn't it be nice if he was to say, 'I was part of the organisation that messed up and I am sending you the money'."

On this side of the Atlantic, there was also anger.

"All these people pay themselves far too much," said Brian Peart, vice-chairman of the UK Shareholders' Association. "We fight against this all the time. These people spend half the time deciding how much they are going to pay themselves instead of running their businesses."

A Greenpeace spokesman said: "There will be a fair few fishermen in Louisiana who are out of work at the moment who will look at Mr Hayward's package with shock and disdain."

In October, Mr Hayward will be replaced by Bob Dudley, the board member in charge of the clean-up operation and who, as a US citizen, becomes BP's first overseas chief executive - a move that may repair some of the damage done to the company's relationship with America.

Mr Hayward, 53, whose pay-off represents one year's salary plus the pension he will be entitled to when he reaches 55, will remain on the BP board until the end of November.

Even though he is to step down as chief executive "by mutual consent", he looks set to remain with the company and has been put forward as a non-executive director of the firm's TNK-BP Russian joint venture.

Mr Hayward claimed his decision to quit as chief executive was purely a practical one.

"This is a very sad day for me personally," Mr Hayward said. "Whether it is fair or unfair is not the point. I became the public face (of the disaster] and was demonised and vilified. BP cannot move on in the US with me as its leader . . . Life isn't fair."

He added: "Sometimes you step off the pavement and get hit by a bus."

Mr Hayward joined the company in 1982 and has been chief executive since 2007. Before the spill he had been credited for reviving the fortunes of the oil giant. But since the disaster he has not helped his cause by becoming associated with a series of public relations gaffes.

His misguided remarked that he wanted his life back led to much criticism in America and optimistic comments about the clean-up operation did not go down well.

His failure to answer questions directly when he appeared in front of a congressional sub-committee failed to endear him to the American public while his decision to participate in a JP Morgan yacht race around the Isle of Wight during the crisis was another PR own-goal.

But yesterday he said he will always feel a "deep responsibility" for the tragedy. The initial blast killed 11 oil workers.

He said: "The Gulf of Mexico explosion was a terrible tragedy for which - as the man in charge of BP when it happened - I will always feel a deep responsibility, regardless of where blame is ultimately found to lie."

He added: "BP will be a changed company as a result and it is right that it should embark on its next phase under new leadership."

The BP chairman Carl-Henric Svanberg said the firm was "deeply saddened" to lose him but said the explosion had been a "watershed incident".

"It will be a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board," Mr Svanberg said.

The 20.8bn ($32.2bn) cost of the clean-up includes the $20bn BP has already set aside under pressure from the US government for compensation claims.

"That estimate is also based on our belief that we are not grossly negligent," Mr Svanberg said.

"Of course we will not know precisely because it depends on how many claims are coming in and (other] things that could happen."

But he insisted that the company was in good financial shape, with strong cashflow.

"It's of course a huge loss that overshadows everything else, but the underlying performance of the company is actually strong. There is no worry about our financial position and our ability to get through this.

"It's of course a tragedy and it has large consequences, but we have no doubt that we will be able to rebuild the company."

UPHILL TASK

WITH a reassuringly southern twang to his voice, Bob Dudley may be BP's best chance at rehabilitation in the eyes of America.

But he now faces overseeing what could be decades of cleaning up and paying for one of the worst environmental disasters in American history. He will need to mend fences among BP's partners in the Gulf and convince the US government and public they can trust it to safely do business there.

And the stock market will be watching carefully as well. Any sign of financial trouble - or that BP will not resume its dividend - could discourage both current and prospective shareholders.

"I'm not sure if one person can do it all," John Hofmeister, former president of Shell Oil, said.

"BP cannot repair its tarnished reputation overnight. Many Gulf residents feel too much damage has already been done. And some US lawmakers want to ban BP from drilling another well in the US. What the new CEO can do is bring a fresh start with residents, businesses and lawmakers along the Gulf Coast."

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