LONDON -- The personnel changes at BP aren't over yet, and this time a coming leadership change reaches the company's highest post. CEO Lord John Browne is expected to announce during BP's second-quarter 2006 results call today his intention to retire in 2008, when he hits age 60, as required by company policy, according to a report in The Times of London.
Investors, however, are expected to contest the company policy in an effort to keep Browne in the top spot a few more years, according to a separate report in the Telegraph. Mark Iannotti, a Merrill [image-nocss] Lynch oil analyst, said in a research note this past week that Browne's impending retirement is a potential medium-term risk for shareholders, reflecting growing jitters over BP's prospects once Browne leaves the helm.
It is right to question on behalf of shareholders (before it is too late) BP's imposed retirement of an executive of Browne's caliber, Iannotti wrote.
Browne must retire as CEO on February 20, 2008, when he turns 60. Yet the reason for an about-face on company policy is compelling; the popular Lord Browne said in a speech on April 6 that mandatory retirement at a fixed age is inappropriate and that he did not intend to spend the rest of his life on the golf course, but to continue to lead an active business life.
Thus, Iannotti wrote: Given the opportunity, Browne might choose to extend his tenure as chief executive of BP or move up to a senior role such as chairman on the board of BP.
Browne may find relief in the law. New U.K. age-discrimination legislation, which will come into force in October 2006, will set a retirement age of 65 and will place a duty on employers to consider requests to work beyond that age, according to the Telegraph report. It will also outlaw any discrimination on grounds of age in recruitment, training and promotion.
Assuming Browne does choose to retire, BP is almost certain to promote an insider to replace him, according to The Times of London report. Sources close to BP told the Times that the BP board has drawn up a short list of five internal candidates to take over from Browne.
It is said that no leading replacement figure has yet emerged, but the top five contenders include Tony Hayward, the head of exploration and production, and his deputy Andrew Inglis. The other three candidates for the top job are Iain Conn, the head of safety and environment, John Manzoni, the head of refining and marketing, and Robert Dudley, the chief executive of the group's joint venture in Russia, TNK-BP.
BP is expected to report second-quarter profits of between $5.8 billion and $6.3 billion tomorrow.
The retirement announcement comes on the tail of leadership changes announced at BP Products North America. As reported in previously in CSP Daily News, those changes to the oil company's convenience-retailing arm are expected to usher in significant shifts to BP's U.S. strategy. Chief among the changes were the promotion of Fiona MacLeod to head up BP's U.S. convenience retailing efforts.
MacLeod, the former chief of staff to John Manzoni, managing director and CEO of BP refining and marketing, will oversee the company's U.S. marketing, merchandising, operations, franchise development and other key downstream activities. Her predecessor, Polly Flinn, is expected to take another position in London.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.