BP is clawing back $40 million from ex-CEO Bernard Looney

BP’s former chief, Bernard Looney, is paying a heavy price to keep things from the board.

The former chief executive “deliberately misled the board” about his personal relationships with colleagues at the time of his resignation in September 2022, the 113-year-old oil giant said in a press release. Giving “inaccurate and incomplete assurances” as part of an investigation into the relationships in 2022 amounted to “serious misconduct,” and as a result Looney’s compensation was reduced by £32 million ($41 million).

For 2023, Looney will receive no further salary, pension allowance, benefits or annual bonus. In addition, he will relinquish unvested share awards, repay half of the cash portion of the annual bonus paid to him in the 2022 financial year and forfeit a portion of his August 2023 share award.

The press release also announced Looney’s immediate dismissal yesterday (December 13). He was supposed to serve a 12-month notice period ending in September 2024 before his lack of transparency became public knowledge and cut it short. BP CFO Murray Auchincloss, who has been acting as the company’s interim chief executive, will continue in the role. A search for a permanent successor is underway.

In his first public statement since resigning in September, Looney said that he was proud of what he had achieved and was “disappointed with the way the situation was handled”.

One big number: Giving up 2023’s remaining rewards

87%: Percentage of the potential compensation automatically forfeited as a result of Looney’s resignation, including £24.9 million ($31.4 million) in performance share awards and a £2 million ($2.5 million) annual 2023 bonus. (Values ​​calculated using a BP share price of 460.95p, the closing price on 12 Dec 2023.)

A brief timeline of Bernard Looney’s BP career

1991: Looney joins BP as a drilling engineer as a 21-year-old graduate of University College Dublin.

2010: become looney part of BP’s executive team.

April 2016: Looney take over as chief of BP’s upstream arm, the segment responsible for oil and natural gas exploration, field development and production.

February 2020: Looney was appointed CEO just before the covid-19 pandemic hit. He enters the role with a bang, committed to “net-zero” carbon emissions by 2050, forcing competitors to follow suit. At the time, Looney disclosed “a small number of historical relationships” and gave the board assurances about his future conduct.

May 2022: After receiving an anonymous tip, BP investigates allegations related to Looney’s personal relationships. He admit to four previous relationships with colleagues and assured the board in writing that he had nothing further to disclose. The investigation found that none of the relationships breached BP’s code of conduct.

September 2023: Looney’s sudden resignation is prompted by a female BP whistleblower’s allegations, including an accusation that Looney promoted women with whom he had previously undisclosed relationships before taking the helm in 2020 — and did not disclose details of all relationships at the earlier review. BP says it has launched an investigation into the allegations with the support of external counsel and will make a decision on his compensation at a later date.

Citable: BP makes an example

“It’s a hell of a reaction. This demonstrates how seriously the board takes these accusations and they want to make an example of him. Business leaders must know they cannot lie to the board and get away with it.”

—Mark Freebairnheadhunter and head of advisory practice at Odgers Berndtson

Retrospective: BP’s controversial CEO resignations

Many of BP’s recent CEOs have made scandal-plagued exits.

In 2010, Tony Hayward bowed to pressure after receiving tremendous backlash for his handling – or rather, mishandling – of the Deepwater Horizon oil rig explosion. “The Gulf of Mexico explosion was a terrible tragedy for which, as the man in charge of BP when it happened, I will always feel a deep responsibility, regardless of where the blame is ultimately found,” he said in his statement. At the time, BP said the explosion and subsequent environmental damage was a “watershed incident” and the company requires “fresh leadership supported by robust management and a highly engaged board.”

In May 2007 John Browne, who had been chief executive for a decade, suddenly resigned after he lied to a court about how his relationship, which landed him in the grip of a perjury charge and led to a newspaper outing detailing his personal life. He had to resign two months later because of high profile accidentsincluding a deadly refinery explosion in Texas and an oil spill in Alaska.