BP Bigwigs: Men Behind the Oil Spill Under Pressure
BP CEO Hayward Set for Meetings in Washington Amid Growing U.S.-U.K. Rift
By DALIA FAHMY
June 14, 2010
It has been a tough couple of months for Tony Hayward. As the CEO of BP, the company responsible for the largest oil spill in US history, Hayward has been accused of everything from incompetence to lack of integrity.
Life is set to get a little bit tougher for the 52-year-old Ph.D. geologist this week.
On Wednesday, he is expected to meet with President Obama for the first time since the Deepwater Horizon oil rig exploded almost two months ago.
The meeting is likely to be tense, given that Obama and lawmakers in Washington have made it clear they want BP to pay for the disaster. Last week, Obama told NBC News that Hayward would not be working for him after some of comments the CEO made, and and that he was trying to figure out "whose ass to kick."
The Coast Guard, meanwhile, sent a letter Friday to the energy company demanding that it speed up its spill containment efforts and present a plan for doing so by today. In response to the letter, BP said it would be able to capture 53,000 barrels of oil per day by the end of June and 80,000 barrel by mid-July, according to Bloomberg News. Current containment efforts are capturing 15,000 barrels a day.
Despite government officials' pointed criticism of BP, the President on Saturday reportedly sought to ease concerns that the U.S. is also blaming Britain for the disaster. He reportedly told British Prime Minister David Cameron in a phone call that "that our frustration has nothing to do with national identity" but instead revolves around "ensuring that a large, wealthy company lives up to its obligations,"according to the Associated Press.
Over the weekend, the Obama administration indicated that it wants BP to set up an escrow account to pay damage claims related to the spill.
"The President will make clear that he expects, and that if necessary will exercise his full legal authority to ensure, that BP sets aside the funds required to pay individuals and businesses damaged by this massive spill. And that those funds will be paid out under fair, efficient, and transparent procedures administered by an independent third-party panel established just for this purpose," a senior administration official told ABC News.
BP says Hayward also will discuss the possibility of suspending the company's dividend payment to shareholders with the President, but the firm says there will be no decision until later this summer.
On Thursday, Hayward is scheduled to testify before the House Committee on Energy and Commerce.
"It's going to be a grilling," says Fadel Gheit, head of oil and gas research at investment bank Oppenheimer & Co. He says lawmakers seem bent on publicly punishing Hayward, whether the exercise is productive or not. "Most of the politicians are playing this game because of the midterm elections, they want to get their day in the sun."
BP Causes U.S.â€“U.K. Rift
The meetings come as U.S. relations with the U.K. grow cool. British commentators have argued that Americans have come down especially hard on BP because it's a foreign company, and that the public outcry would have been more muted if an American company had caused the spill.
"The perception here is that the (U.S.) administration and 9 out of 10 commentators are distorting things by talking about 'British Petroleum,'" says one London-based oil expert who wanted to remain anonymous. BP stopped using the full name years ago after its merger with Amoco, an American company.
BP Bankruptcy Highly Unlikely
Some oil experts say they are also surprised at reports that the oil spill may lead to bankruptcy for BP. They point out that the company posted a profit of more than $21 billion last year and generates cash flow of $3 billion each month.
"This is money that's available for them to do whatever they want with," says Oppenheimer's Gheit.
So far, BP has spent $1.43 billion to clean up the disaster, and analysts at CSFB estimate that BP will probably end up spending $5-$8 billion on cleanup and containment; or $6-$12 billion after factoring in Clean Water Act liabilities.
If BP also ends up suspending its dividend that would free up another $10 billion, says Gheit.
"BP has incredible financial flexibility," says Gheit. "The demise of BP is greatly exaggerated."
BP's Men On the Frontlines
So who are the men who are shepherding BP through this crisis? ABC News.com took a look at the top executives on the front lines. Their pay was calculated by Equilar, an executive compensation research firm, based on public filings.
Tony Hayward, CEO
2009 Total Compensation: $14.3 million.
An outspoken Brit with a Ph.D. in geology, Hayward joined BP in 1982 as a rig geologist in the North Sea. He was thrust into the top job three years ago, after long-standing CEO John Browne resigned following a scandal involving a gay relationship with a Canadian escort. While Hayward sometimes comes across as arrogant, those who know him says he's friendly, smart and easygoing. He does, however, have a penchant for saying the wrong thing at the wrong time.
One-liner: "I'd like my life back," he told a television reporter in June. Angry Americans retorted that the 11 workers who died in the Deepwater Horizon fire would probably like their lives back too.
Andy Inglis, Chief Executive of Exploration & Production
Total 2009 Compensation: $9.7 million.
The second most powerful man at BP after Hayward, Inglis is a considered a quiet, competent manager. With a Master's Degree in engineering, he joined BP in 1980 and quickly climbed the ranks. He now runs the division that produces the vast majority of BP's revenues.
One-liner: "We don't do simple things," he told BusinessWeek in September 2009, discussing BP's risky drilling projects around the world.
Robert Dudley,Managing Director
Total 2009 Compensation: $6.4 million.
One of the few Americans in the top ranks, Dudley joined BP through the merger with Amoco, which he had worked for since the late 1970s. Put in charge of tough assignments, Dudley was first charged with managing BP's Russian joint venture earlier this decade, and is now responsible for BP's new unit created to deal with the financial fallout of the oil spill.
One-liner: "It's unprecedentedâ€¦ And no one wants to find out more than we do why that's happened and make sure it never, ever happens again anywhere," he told PBS television in May.
Iann Conn, Chief Executive of Refining and Marketing
Total 2009 Compensation: $9.1 million.
A native of Scotland, Conn was appointed to his current post in 2007. He began his career with BP in 1986, working in myriad production and exploration roles in Italy, Colombia and the U.S.
Earlier this month, Conn said BP was the best company to handle a Gulf of Mexico spill because of its large presence in the region, according to Dow Jones.
"Very few companies, if potentially any, could have amassed the fleet of response vessels we have today," he said.
Byron Grote, Chief Financial Officer
Total 2009 Compensation: $11.4 million.
Grote, who holds a Ph.D in quantitative analysis from Cornell University, worked at The Standard Oil Company of Ohio before BP bought the company in the late 1980s. He rose through the ranks to become executive vice president, exploration and production, in 1999 after the BP-Amoco merger. He oversaw the acquisition of Atlantic Richfield Co., another oil company, before becoming chief executive of BP Chemicals.
Grote reassured investors during a conference call earlier this month that the company was in good financial shape despite the mounting price tag of the spill.
"We've got considerable firepower to deal with any costs," he said.
ABC News' Jake Tapper and Alice Gomstyn contributed to this report.