BP chief Hayward sold shares weeks before spill; Refuses to Step Down

The chief executive of BP sold £1.4 million of his shares in the fuel giant weeks before the Gulf of Mexico oil spill caused its value to collapse.

By Jon Swaine and Robert Winnett
Published: 05 Jun 2010

Tony Hayward cashed in about a third of his holding in the company one month before a well on the Deepwater Horizon rig burst, causing an environmental disaster.

Mr Hayward, whose pay package is £4 million a year, then paid off the mortgage on his family’s mansion in Kent, which is estimated to be valued at more than £1.2 million.

There is no suggestion that he acted improperly or had prior knowledge that the company was to face the biggest setback in its history.

His decision, however, means he avoided losing more than £423,000 when BP’s share price plunged after the oil spill began six weeks ago.

Since he disposed of 223,288 shares on March 17, the company’s share price has fallen by 30 per cent. About £40 billion has been wiped off its total value. The fall has caused pain not just for BP shareholders, but also for millions of company pension funds and small investors who have money held in tracker funds.

The spill, which has still not been stemmed, has caused a serious environmental crisis and is estimated to cost BP up to £40 billion to clean up.

There was growing confidence yesterday that a new cap placed over the well was stemming the oil flow. An estimated three million litres a day had been pouring into the sea off the coast of Louisiana since the April 20 explosion, damaging marine life.

The crisis has enraged US politicians, with President Obama yesterday forced to cancel a trip to Indonesia amid a row over the White House’s response.

Mr Hayward, whose position is thought to be under threat, risked further fury by continuing plans to pay out a dividend to investors next month.

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BP chief won't quit over Gulf of Mexico spill
By DAVID STRINGER, Associated Press Writer
Sunday, June 6, 2010

(06-06) 07:19 PDT LONDON (AP) --

BP PLC chief executive Tony Hayward said Sunday he won't step down over the Gulf of Mexico oil spill, and predicted his company will recover from the disaster.

Hayward told BBC television's "Andrew Marr Show" that he would not quit, and he had the "absolute intention of seeing this through to the end."

"We are going to stop the leak. We're going to clean up the oil, we're going to remediate any environmental damage and we are going to return the Gulf coast to the position it was in prior to this event," Hayward said. "That's an absolute commitment, we will be there long after the media has gone, making good on our promises."

The executive said a containment cap placed on the blown-out well in the Gulf had collected about 10,000 barrels of oil over the last 24 hours, and that BP hope a second containment system will be in place by next weekend.

"When those two are in place, we would very much hope to be containing the vast majority of the oil," Hayward said. He said the new containment operation is designed to "be essentially hurricane proof."

Hayward said the spill was a one-in-100,000 to a one-in-a-million occurrence. "In this accident, based on what we understand so far, seven layers of protection were breached," he told the BBC.

But Hayward rejected claims that the incident showed oil companies were now operating beyond their technical capacity.

"That's of course a very valid concern," he said. "It's also worth just highlighting the industry has been exploring in the deep water for over twenty years and it has not had to contend with an incident of this sort before."

He said that "what has to happen on the part of the industry — and certainly BP — is to move safety standards to a completely different level."

The BP CEO has faced criticism over his response to the spill, particularly about a recently launched advertising campaign to promote the company's efforts to fix the damage caused.

President Barack Obama said the money would have been better spent on cleanup efforts, and on compensating fishermen and other small business owners affected by the incident.

BP has estimated it will spend about $84 million through June to compensate for lost wages and profits caused by the oil spill.

Hayward confirmed he has not held direct talks with Obama over the incident, but said the "working relationship between BP and the federal agencies involved in this has been exemplary."

He said his company had been left devastated by the disaster, but said BP would survive, and has the "wherewithal to weather this storm and come back strongly."

"BP is a very strong company, its operations today are running extremely well. It's generating a lot of cash flow, it has a very strong balance sheet. Our reputation has been based on thousands of people, over a long period of time, in BP doing the right thing, and were are doing everything we can to do the right thing," he said.

Hayward declined to say whether it would pay a dividend to shareholders scheduled to be paid at the end of July, insisting the decision would be taken by BP's board at the end of next month.

"We have to take care of our Gulf Coast stakeholders. We have to take care of our investors. We have to take care of our employees, our retirees. We're going to take care of all of our stakeholders," he said.