For years the most prominent public role for Peter Sutherland as chairman of BP PLC was to play host at the company’s yearly meeting. But after a string of oil spills, deadly accidents and an energy-trading scandal at BP, the 60-year-old former rugby player has rushed into the scrum.
Last year, the Irish politician and prominent banker forced Chief Executive John Browne to publicly identify his retirement date. After Lord Browne’s shock decision last month to leave a year and a half earlier than planned, Mr. Sutherland must now buff 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 rise by Exxon Mobil Corp. and 15 per cent at Royal Dutch Shell PLC. Yesterday, the company announced 4th quarter net income decreased by 22 per cent, in part this can be seen as indicative of lower natural-gas prices and lower production.
BP, meanwhile, faces U.S. criminal probes on three fronts — corrosion and oil spills in Alaska; a March 2005 refinery blast that killed 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 prominent public standing also underpins a pattern that goes beyond BP: a shift in the boardroom dynamics at many of Europe’s biggest publicly traded companies. Nonexecutive directors here have in the past been criticized for leaving too much decision-making in the hands of powerful executives. Now, many companies are moving to strengthen their boards with independent and strong directors.
Until the point at which Shell faced an accounting controversy in 2004, Shell’s British holding company had as its chairman a professor of geology. After the scandal, it recruited 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 has always been to focus on establishing a “robust” and independent board of directors he was quoted as saying in an interview recently. After short periods as Ireland’s attorney general and Europe’s competition czar, Peter Sutherland in 1993 was instrumental in taking forward the General Agreement on Tariffs and Trade in Geneva. There, he clinched the Uruguay Round, an important trade agreement that set the stage 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.
