The odds are growing that embattled BP (BP) CEO Tony Hayward will be ousted from his job over his company's continued failures to contain the huge oil spill in the Gulf of Mexico. He has also made several misstatements in the press that have compounded the problem.
On Wednesday, Louisiana Congressman Charlie Melancon (D-La.), suggested Hayward be fired on Good Morning America.
"I wish the board would call him back and give us somebody who really wants to make sure that the people of this state and the Gulf coast region have what they need when they want to try and fight this oil leak," said Melancon. He has even set up a page on his web site for constituents to write Hayward a "pink slip". The lawmaker added that the company's poor stock performance was also a reason Hayward should be canned.
Others have been outraged over Hayward's comments during the Gulf crisis. On Sunday, Hayward told Louisiana residents, "I would like my life back," as he attempted to convey the urgency with which BP is attempting to fix the leaking oil well. He apologized for the "hurtful and thoughtless" remark Wednesday.
The British executive has made other damaging statements, including describing the oil spill as "tiny" and refuting scientists' claims that there are giant plumes of oil traveling below the ocean's surface. These statements and others have significantly damaged BP's credibility with the government, shareholders and the public.
A shareholder lawsuit has been filed against Hayward and BP's board of directors for breach of fiduciary duties and gross mismanagement, which may place more pressure on company officials to act.
Board Needs to Take More Responsibility
Nell Minow, a well-known corporate governance expert, believes Hayward isn't likely to remain CEO for long. "I think that the odds are strongly in favor of his removal, sooner rather than later," says the editor and co-founder of the Corporate Library, an independent corporate governance research organization.
Minow says Hayward could be removed "sometime this summer," even before BP is able to resolve the problem with the leaking oil well. She suggests the current board will likely announce a clear plan on how BP is going to deal with the problem and restore its credibility.
"What they're going to need to do is have somebody from the board take over on an interim basis, but also announce who it is that's going to be supervising the cleanup," she says. "There has got to be one full-time person assigned to the cleanup, and the board has to take more responsibility communicating the progress of the cleanup as well as on the investigation into what went wrong."
Fitch Ratings today downgraded BP, becoming the first agency to cut the oil company's credit rating and reversing its initial opinion that the oil spill's financial impact on BP would be limited. The company's debt was bumped down to AA, from AA+, with a negative outlook.
After BP stock traded at a 52-week high of $62.38 on Jan. 19, more than $68 billion in market value has been wiped out from its stock price due to the spill. Investors must decide whether to stomach more losses, especially since there is growing speculation about the company being a takeover target. BP stock opened today at $38.89.
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