Shares in BP saw falls of over 1% either side of the Atlantic, before mounting a partial recovery following the shock resignation of Chief Executive Officer Bernard Looney over his failure to fully disclose details of “past relationships” with colleagues.
During early trading in London on Wednesday (September 13, 2023) at 08:07 BST, the company’s shares (LON: BP) were down 1.1% or 5p to 514.7p. That’s after overnight falls in New York (NYSE: BP) where shares ended trading down 1.3% or $0.51 at $38.10. However, recent buoyant oil prices ensured the dip was somewhat short-lived with London prices recovering to trade around 518p, still down 0.75% at 09:40 BST.
Looney, who began his career at BP in 1991, had been CEO since 2020. His tenure had been both controversial as well as colorful, coinciding with Covid lockdowns and negative oil prices as well as higher returns following the war in Ukraine, and the company’s exit from Russia in the wake of Russian sanctions.
Found frequently musing on his LinkedIn and Instagram social media accounts, Looney launched a pivot to green energy with questionable timing with his “Reimagine BP” campaign. The plan – to make the energy giant net zero by 2050 -failed to impress both shareholders at a time of extreme energy market volatility and as well as environmental groups who accused Looney of watering down pledges he so publicly backed.
Bottomline is that BP shares have persistently lagged its industry rivals, and more so since his pivot to green energy. His successor will have to make a crucial call on sticking with Looney’s strategy or pivoting back to oil and gas, as the company’s fellow British rival Shell (LON:SHEL) appears to be doing.
BP’s Chief Financial Officer Murray Auchincloss will act as CEO on an interim basis until a successor is found. The company said its board of directors had received allegations in May 2022 from an anonymous source relating to Looney’s conduct, regarding personal relationships with company colleagues prior to becoming CEO.
Following a review, no breach of company code was found, for at the time, Looney disclosed “a small number of historical relationships with colleagues prior to becoming CEO.” The board was also given assurances by the then CEO about disclosure of past personal relationships, as well as future conduct.
However, subsequent “allegations of a similar nature” received “recently” prompted another review. BP said Looney then stepped down with immediate effect on Tuesday having “informed the company that he now accepts that he was not fully transparent in his previous disclosures. He did not provide details of all relationships and accepts he was obligated to make more complete disclosure.”
Markets will be watching what happens next and will likely be unforgiving should BP fudge its lines. Perhaps a back to basics, pragmatic approach by a potential successor might be wise to steady the ship and instead of an all singing, dancing and overpaying one reimagined for social media clicks.