BiPartition

Sunday, December 28th, 2008

BP Moving Forward

In recent times the most prominent public role for Peter Sutherland as chairman of BP PLC was hosting the company’s annual meeting. But after a string of oil spills, dangerous accidents and an energy-trading scandal at BP, the 60-year-old one-time rugby player has rushed into the scrum.

Last year, the Irish politician and prominent banker forced Chief Executive John Browne to publicly identify his retirement date. After Lord Browne’s surprise decision last month to leave a year and a half earlier than previously planned, Mr. Sutherland must now buff BP’s image and manage the company’s first executive-suite transition in more than ten years.

Despite a persistent rise in oil prices its shares rose only 4.5 per cent in 2006, compared with a 36 per cent rise by Exxon Mobil Corp. and 15 per cent at Royal Dutch Shell PLC. Yesterday, the company announced 4th quarter net income fell 22 per cent, in part reflecting lower production and lower natural-gas prices.

BP, meanwhile, faces U.S. criminal probes on multiple fronts — oil spills and corrosion in Alaska; a March 2005 refinery blast that killed 15 in Texas; and its energy-trading practices, with federal officials alleging BP traders surreptitiously influenced propane markets in 2004. BP denies manipulating markets and says it is cooperating with investigators on all three inquiries.

Mr. Sutherland’s higher profile also underscores a trend that goes further than BP: a shift in the boardroom dynamics at many of Europe’s biggest publicly traded companies. The criticism is often leveled that nonexecutive directors leave too much of the decision making to the executives. Now, many firms are moving to shore up their boards with strong and independent directors.

Until the point at which Shell faced an accounting controversy in 2004, Shell’s British holding company had as its chairman a professor of geology. After the controversy, it employed Jorma Ollila, former chief executive officer of Nokia Corp as chairman. Unilever also appointed an external chairman last month to cap a restructuring at the Anglo-Dutch consumer-goods giant.

The goal of Mr. Sutherland at BP from the beginning has always been to establish a “robust” and independent board of directors he remarked in an interview recently. After short periods as Ireland’s attorney general and Europe’s competition czar, Peter Sutherland took over negotiations known as the General Agreement on Tariffs and Trade in Geneva in 1993. There, he clinched the Uruguay Round, a pivotal trade agreement that set the foundations for today’s World Trade Organization. For a man who has achieved so much it is difficult to forsee where he will find his next challenge.

This entry was posted on Sunday, December 28th, 2008 at 6:51 pm and is filed under Biz, Commerce. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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