BP Chairman Carl-Henric Svanberg may be ousted as early as next month, primarily because he was so late in participating publicly in the oil company's Gulf disaster response, The Financial Times reports. The same report says CEO Tony Hayward is hanging on to his position, but only barely, because of board support. But he may be forced to resign in August as well.
The resignations will not solve any of BP's (BP) immediate problems, although they may offer some satisfaction to the chorus of company critics, including shareholders, Gulf residents, and the U.S. government. The oil spill is still growing, although it has been partially contained. BP's stock was down by half and has made only the most modest recovery from its 52-week low. The company's liabilities grow with each new barrel of crude that leaks from the Deepwater Horizon rig wreck.
BP has agreed to set up an an escrow fund of $20 billion to cover some of the liabilities and costs arising from the spill. The fund will be run by Ken Feinberg, the former pay czar who established compensation levels for some Wall Street firms that took government funds during the financial crisis. BP's future legal problems will probably not be covered entirely by the money as the oil slick spreads. It may reach south Florida, according to some recent government projections.
It is hard to say why Svanberg and Hayward aren't already gone. BP's board may have decided that replacing the company's two top officials at the height of the crisis would leave a management void. It may be that there is no one of substantial enough stature to take the job and calm some fears about the company's future. No matter what the reason, it appears that the two men have almost run out of time.
Basics Of The Stock Market
Stock Market 101 - everything you need to know but were afraid to ask!View Course »