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Hayward to Step Down as BP's CEO in October

Aired July 27, 2010 - 02:04   ET


ZAIN VERJEE, CNN ANCHOR: This just coming in now to CNN. I'd like to welcome our viewers in the United States.

According to PA News, Tony Hayward, BP's CEO will step down in October of this year. He'll be stepping down as BP chief. He is the first executive casualty of the spill.

There has been so much speculation on his position ever since the explosion at BP's Deepwater Horizon oil rig in the Gulf of Mexico that killed 11 workers.

No big surprise here. There was a lot of speculation in the last 48 hours that this would happen, that he was negotiating some kind of package and he was on his way out.

Tony Hayward has been condemned by so many in the United States as the face of failure of BP. He was called the most hated and clueless man in America, according to one paper. He sunk himself, really, by a series of gaffes.

Let's go to Charles Hodson now who joins me now. He's just outside BP headquarters. We're continuing to get a lot more information, we hope, this morning.

Charles, no surprise here.

CHARLES HODSON, CNN INTERNATIONAL CORRESPONDENT: So far no. I mean not clearly we're going to have to see exactly what the fine print of the results is when that comes out. That's expected to -- obviously to be a heavy lost. But certainly the -- I believe I might be getting a copy of the press release any moments.

I believe my producer has got it for me here. Thank you very much, indeed.

Yes, here we are. This is the statement from BP, which has just been hand out to us here outside the headquarters.

And Hayward is to step down as crude chief executive from October 1, 2010. He will be succeeded as of that date by his fellow executive director Robert Dudley.

And the BP chairman, Carl-Henric Svanberg, on this statement pays tribute to Tony Hayward, saying the BP board is deeply saddened to lose a CEO whose success over some three years in driving the performance of the company was so widely and deservedly admired.

The tragedy of the Macondo well explosion -- that's the Deepwater Horizon, as most of us know it -- and subsequent environmental damage has been a watershed incident. BP remains a strong asset -- strong business with fine assets, excellent people and a vital role to play in meeting the world's energy needs.

And I'm just skimming ahead to see if I can see -- the results. Yes, and it -- again, the numbers that we expected in terms of the severance payment for Hayward, and his full pension rights, that would be of the order of $18 billion.

So absolutely no surprises there. And the final page of this statement, which I'm just skimming through, is about Bob Dudley. And again, tell us that he has been the president and CEO of BP's Gulf Coast restoration organization in the United States.

So, again, totally no surprise. We'll have to see what the results are. Do we have a release on that? Here we are. I believe he's handing me that magically as well.

And in fact the charge for the -- for the Gulf of Mexico oil disaster is some $32.2 billion. So that is somewhat heavier than we expected. It is not as high as some of this -- some had expected. There's been speculation about as much as $40, maybe even $60 billion being necessary to set aside both in cleanup operation and for the liabilities arising out of that incident.

And the company will also analysts later today that it plans to sell assets for up to $30 billion over the next 18 months. That process already, as you know, has already started. And I think I'm going to get the results here, as well.

Thank you very much.

So the -- the overall second quarter loss for the period is a loss of $17.15 billion. So a very heavy menu (ph) as a result of that $32 billion plus charge -- Zain.

VERJEE: Charles Hodson, some great stuff there. Hot off the press from BP. A lot of stuff to deal with here.

Let's start with Tony Hayward is out, Dudley is in. BP is drawing a line in the sand here, hoping that it can now just move on. Can Bob Dudley be -- do it? Is he the man?

HODSON: Well, I think, you know the short answer to that is only time will tell. But certainly he has a good chance. He speaks with an American accent. He is an American. He spent a lot of time in Mississippi, although he was born in New York.

He comes very much from the U.S. side of the business, which is a hugely important part of BP ever has been ever since the merger with Amoco back in the late 1990s, a decade or so ago.

And I think a lot of people are saying that he is a much more capable PR man, if you like, than Tony Hayward has been. Tony Hayward was very much a company man. He has been with BP for 28 years. He is a geologist by trade.

Communication was not one of his skills. One of the things that we notice, I think, covering the oil sector, is the fact that unlike Lord Brown, his predecessor, Tony Hayward did not come and speak to us at every set of results.

He was a much more reluctant communicator and I think it was this in the end which was his undoing. He simply did not have, if you like, those -- those fine sensitivities to cultural differences and so on that you really need in order to communicate at the highest level for a huge corporation, above all, when things go to disastrously wrong -- Zain.

VERJEE: Let's talk about the numbers here that you just reported, second quarter, last numbers $17.15 billion. What does this mean for BP?

HODSON: Well, this means I think that, again, a line in the sand, if you like. This has been a watershed. And I think the attempt -- by making this such a large charge now, I think the hope is that they will get the hit, the financial hit, from the Deepwater Horizon disaster out of the way.

By putting it on the accounts now, dealing with it, raising that money, getting it out of the way, their hope that in future people will look at the results. And I suspect that what we're looking at in -- although I haven't had the chance to look at the fine detail -- is that they will resume the dividend, very important to a number of pension funds and big investors who hold BP shares in very large numbers.

They will be hoping to return to the dividend within the next year or two. It's currently held at the moment in response to the disaster and huge political pressure -- Zain.

VERJEE: Charles Hodson, thank you so much.

If you were just joining us, this breaking news from CNN. BP is confirming that the CEO Tony Hayward is out. He will be stepping down on the 1st of October and be replaced by Bob Dudley.

Also we got the second quarter results from BP -- they're reporting a loss of $17.15 billion.

We're going to continue to follow this story and get you all the details as much as we can. For now, though, if you're watching in the U.S. we're going to return you to your regular programming.