BP CEO May be Trying to Get Fired, Really
Commentary: Hayward's compensation pales against those of American oil execsIs BP PLC's Tony Hayward actually trying to get fired?
You might think so after his latest stunt. The hapless honcho, already slammed as "the most hated man in America," skipped out on the Gulf gusher over the weekend to participate a yacht race in England.
A yacht race? Are you kidding? Paging Thurston Howell III!
OK, maybe Hayward's critics are being hypocritical. After all, if his hour-by-hour presence in the Gulf of Mexico is absolutely essential, why was it appropriate to drag him away for that ridiculous circus up on Capitol Hill last week?
Nonetheless, from the point of view of spin — and we live now in the age of spin, to the point where almost nothing else seems to matter — the move seems crass, even for "Tone-Deaf Tony," the gaffe-prone chief executive.
He already was under fire for a series of public-relations disasters, from his "I'd like my life back" comment to his lame appearance before Congress last week.
So why would an intelligent man (he has a Ph.D. and has worked at BP for 28 years) make such a bonehead move as to take the weekend off to go boating?
There's one explanation that makes sense. Yes, he's actually trying to get fired. It's not as crazy as it sounds; I have data to back it up.
I've looked through the fine print of Hayward's compensation terms at BP (NYSE: BP - News), and I've found something remarkable: He doesn't have much financial incentive to stick around anymore. Indeed, he may do better if he manages to get himself fired.
If Hayward is kicked out by the board — so long as it is not for actual malfeasance — he'll get a payoff of about $1.5 million, or one year's basic salary. That's just the minimum. He'll probably get more.
In my long experience following British company boardrooms, rarely have I seen chief executives get only the minimum salary. Even when they were utterly incompetent and were absolutely loathed by everybody. Even when they actually quit, and so by rights should have received nothing at all.
If Hayward gets kicked out, he'll also walk away with a generous pension entitlement of nearly $900,000 a year.
To jaded American eyes, these figures may not seem that large. But that's only because we have become inured to the wholesale larceny of U.S. executive pay. We forget that the United States is to boardroom looting what Nigeria is to email scams — the undisputed heavyweight champion of the world. No one else comes close.
In the rest of the world, including Great Britain, a $1.5 million payoff and pension of $900,000 a year are considered pretty good compensation for getting fired.
(To better illustrate the differences between the two countries, look at Jim Hackett, chief executive of Texas-based Anadarko Petroleum Corp.(NYSE: APC - News), which is BP's partner in the Deepwater Horizon well, although it is now claiming it has no liability. Even though Anadarko is a much smaller company than BP, Hackett gets paid more than $25 million a year, about five times as much as Hayward. Hackett also receives other goodies, such as personal use of the company's jets.)
Although Hayward may get a couple of million if he gets fired, what's his financial incentive to stay and keep doing this miserable, thankless job? The near-50% collapse of BP's stock price and the fallout for the firm's reputation surely have wiped out most, if not all, of his incentive for staying.
Hayward has nearly 300,000 stock options, but they are now virtually worthless. BP stock would have to rise by about 60% from here just to reach the exercise price.
But his biggest payoff was supposed to come from performance and bonus shares he was hoping to receive down the road. Until Deepwater Horizon blew, Hayward was already in line for shares potentially worth about $20 million. Under a new plan approved in April, he could have expected further bonus shares, potentially worth tens of millions more, in the future.
Alas, Hayward would have received those shares only if he, and BP, met performance targets. Those targets include beating rivals in terms of stockholder performance. That is surely a distant dream now that the stock has collapsed and dividends have been suspended. Getting those shares, according to the company's remuneration committee, is also subject to a review of "safety and environmental sustainability."
As Hayward almost certainly has realized, that, er, yacht has sailed.
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