BP's Problems Cost CEO His Job

Browne to Retire Early After Leading Growth of 'Supermajor' Oil Company

John Browne has headed BP since 1995. He will be succeeded by production chief Tony Hayward. (By Tony Gutierrez -- Associated Press)

Two years ago, John Browne -- also known as Lord Browne of Madingley -- was the toast of the corporate world and had entered popular culture for making BP stand not only for an oil company but also for a firm looking "beyond petroleum."

Since then, Browne's reputation has been tarnished by a series of debacles -- a refinery explosion in Texas that killed 15 people, leaky Alaska pipelines that shut down the biggest U.S. oil field, costly delays in a big Gulf of Mexico production platform and U.S. government accusations of cornering the propane market and manipulating gasoline futures contracts.

Yesterday, BP's board of directors announced that the man picked three times as Britain's most-admired executive was finished. The company said Browne, who will turn 59 next month, would leave in June, 18 months earlier than scheduled. The company's head of exploration and production, Tony Hayward, 49, will take over.

The switch is more than a simple change in corporate leadership. Browne -- British, urbane, an engineer educated at Cambridge University and Stanford University's business school and an art collector, whose mother was a Holocaust survivor and whose father was a British army officer -- did not fit the oil industry mold. Yet he altered its shape by gobbling up other major oil companies and creating a "supermajor." And he touched the industry's image by trading BP's trademark shield for a logo with a flowerlike sunburst design.

Like other big oil company chiefs, he played a diplomatic role as well as a management one; most notably, he met with Russian President Vladimir Putin and negotiated the first, and most lucrative, oil and gas exploration deal in Russia for a major foreign company. Earlier, he traveled three times to Saudi Arabia in a failed attempt to win rights to search for oil in unexplored areas of the kingdom.

Hayward is said by people familiar with the company to be the favorite of Browne's powerful internal critic, Peter D. Sutherland, BP's nonexecutive chairman. Unlike at most U.S. companies, a nonexecutive chairman in Britain often plays a key role, and one former company official remembers Sutherland pumping him for negative information about Browne five years ago. Last year, Sutherland and Browne were reported to have squabbled over whether Browne would work past the company's mandatory retirement age of 60.

But Hayward has been close to Browne. For a time Hayward was one of the two executive assistants -- known to company insiders as "turtles" -- that Browne kept close. The job is a rite of passage for many top BP managers, who do such chores as managing Browne's appointment schedule, guarding the bachelor chief executive's personal privacy and carrying his briefcase while gaining a glimpse into day-to-day goings-on at the company's top echelon.

What will the "beyond petroleum" company look like beyond Browne? Most analysts don't expect Hayward to steer BP in a significantly different direction. He has worked for BP since getting his PhD in geology at the University of Edinburgh in Scotland and served in France, China, Colombia and Venezuela before returning to London in 1997. In his current post, he oversees the exploration and production that accounts for three-quarters of the company's revenue. And yesterday BP reinforced its image as the environmentally friendly oil company by announcing that it would build five wind-power projects in the United States this year with a total generating capacity of 500 megawatts, enough to power about 400,000 homes.

One major challenge will be to protect the lucrative Russia deal. Russia's natural gas monopoly Gazprom recently used its leverage to pry its way into a Royal Dutch Shell venture in Sakhalin Island. Many industry executives say that BP's Russian joint venture, TNK-BP, could be next to feel Gazprom's pressure.

"I don't believe you're going to see any significant changes in BP," said Fadel Gheit, senior oil analyst at Oppenheimer & Co. who has traveled with Hayward to Moscow and Azerbaijan. "It is basically an old wine bottle but with a new label."

Despite the recent setbacks, Gheit said, "John Browne has accumulated an incredible track record very difficult for anybody including Hayward to match."

Last month, Hayward held a "town hall" meeting in Houston for BP exploration and production employees, and excerpts of his remarks were posted on the company's Web site. "We have a leadership style that probably is too directive and doesn't listen sufficiently well," Hayward said. "The top of the organization doesn't listen hard enough to what the bottom of the organization is saying."