BP CEO Browne to retire at end of July

Departure spells ‘end of an era’ for London-based oil and gas giant; Browne joined BP in 1966 as an apprentice, took top job in 1995

The Associated Press

BP’s chief executive is stepping down by the end of July — more than a year ahead of schedule — after a series of high-profile mishaps including a deadly refinery blast in Texas that tarnished the image of one of the world’s largest oil companies.

BP said Jan. 12 that Chief Executive John Browne, 58, will be succeeded by Tony Hayward, the head of exploration and production, who will take over the difficult task of trying to repair the company’s reputation with investors and the public.

Browne, whose future has been the subject of intense speculation, had announced in July that he would step down at the end of 2008.

“Last summer, John and I had agreed that he would stay as CEO until the end of 2008,” said BP Chairman Peter Sutherland. “John decided that it would be in the company’s interest to name a successor now in order to provide an orderly transition. Having made that decision, which the board fully supports, we came to the conclusion that a six-month handover would be more appropriate than 18 months.”

Hayward, 49, who is currently in charge of the firm’s exploration and production arm, will take over on Aug. 1. Analysts said Hayward’s appointment was no surprise, but that having a succession plan announced could help the company move forward.

“Tony’s been standing in the wings for some time and he currently runs the largest division at BP, so the move is no surprise,” said Brendan Wilders of Oriel Securities. He added that the appointment removes some uncertainty and “clears the air” but that Browne’s departure will be “the end of an era.”

Richard Hunter, head of U.K. equities at Hargreaves Lansdown stockbrokers, called 2006 “something of an annus horribilis for BP. … Whilst it was previously known that Lord Browne would be departing in 2008, clearly this move may allow BP to draw a line in the sand and concentrate on the various operational problems it is currently facing.”

Browne first joined the company in 1966 as an apprentice and worked his way up, taking the top job in 1995. He oversaw BP’s expansion into the United States, involving a number of takeovers, including the 1998 merger with Amoco and the subsequent acquisitions of ARCO and Castrol.

During Browne’s tenure as CEO, BP said, the company saw a fivefold increase in its market capitalization to $202.7 billion.

But BP said in early January that production in the fourth quarter is unlikely to change compared with the previous three months, following more than a year of declining output.

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It was forced to temporarily close some of its operations at the Prudhoe Bay oil field in Alaska because of a major pipeline spill and delayed the opening of its key Thunder Horse platform in the Gulf of Mexico. The 2005 explosion at its Texas refinery that killed 15 workers has so far cost the company around $2 billion in compensation payouts, repairs and lost profits. (See related story on page 16.)

“We clearly have important issues still to deal with which I am determined to address,” Browne said in a statement. “I am pleased that Peter and I have been able to work together to develop a successor in Tony in whom I have every confidence.”

Browne earned $6.5 million last year after his $2.9 million salary was boosted by bonuses. He’s entitled to a pension of around $2 million each year, as well as share options. BP did not provide details on his retirement package.