BP Moving Forward
For years the most prominent public role for Peter Sutherland as chairman of BP PLC was to play host at the company’s yearly meeting. But after a string of oil spills, deadly 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 banker forced Chief Executive John Browne to publicly commit to his retirement date. After Lord Browne’s unanticipated decision last month to depart a year and a half earlier than planned, Mr. Sutherland must now bolster BP’s image and manage the company’s first executive-suite transition in more than ten years.
Despite oil prices dramatically increasing 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 fourth-quarter net income fell 22 per cent, in part reflecting lower production and lower natural-gas prices.
BP, in the mean time, faces U.S. criminal probes on three fronts — oil spills and corrosion in Alaska; a a refinery explosion in March 2005 which claimed the lives of 15 in Texas; as well as its energy-trading practices, with federal officials alleging BP traders surreptitiously influenced propane markets in 2004. BP refutes this claim and says it is cooperating with investigators on all three inquiries.
Mr. Sutherland’s prominent public standing also underscores a pattern that goes beyond BP: a transition in the boardroom dynamics at many of Europe’s biggest publicly traded companies. Nonexecutive directors here have in the past been criticized for leaving too much decision-making in the hands of powerful executives. Now, many firms are moving to shore up their boards with independent and strong directors.
Up until Shell were shaken by an accounting scandal in 2004, Shell’s British holding company had as its chairman a professor of geology. After the controversy, it recruited Jorma Ollila, former chief executive officer of Nokia Corp as chairman. Unilever also appointed an outside 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 focus on establishing a “robust” and independent board of directors he was quoted as saying in a recent interview. After stints as Ireland’s attorney general and Europe’s competition czar, Peter Sutherland in 1993 was instrumental in taking forward the General Agreement on Tariffs and Trade in Geneva. There, he clinched the Uruguay Round, an important 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.
