For years 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, 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 prominent banker forced Chief Executive John Browne to publicly pin down his retirement date. After Lord Browne’s unanticipated decision last month to leave 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 a decade.
Despite oil prices dramatically increasing its shares rose just 4.5 per cent in 2006, compared with a 36 per cent increase 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, in the mean time, faces U.S. criminal probes on three fronts — corrosion and oil spills in Alaska; a a refinery explosion in March 2005 which claimed the lives of 15 in Texas; and its energy-trading practices, with federal officials alleging BP traders manipulated propane markets in 2004. BP refutes this claim and says it is cooperating with investigators on all three inquiries.
Mr. Sutherland’s higher profile also underscores a trend that goes beyond BP: a shift in the boardroom dynamics at many of Europe’s largest publicly traded companies. The criticism is often leveled that nonexecutive directors leave too much of the decision making to the executives. Now, many companies 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 scandal, it employed 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.
Mr. Sutherland’s mission at BP from the beginning has always been to establish a “robust” and independent board structure he was quoted as saying in an interview recently. After stints 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, an important trade agreement that set the basis 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.
