NEW YORK ( TheStreet) -- BP announced concurrent with its earnings that Tony Hayward was leaving the CEO post, effective Oct. 1. Will Hayward's departure be enough to placate public outcry over his mismanagement of the oil spill, or will Hayward's golden parachute severance package become the next target of BP wrath from the U.S. public and politicians?
Hayward is receiving a severance payment roughly equal to one year's salary, as high as $1.6 million -- and annual pension payments totalling $1 million per year. The Sunday Times, taking a stab at the overall financial parachute, reported that Hayward would received $18 million. Hayward also holds millions of BP shares in a long-term incentive plan.
As news broke on Hayward's departure and the financial terms of his stepping down as BP CEO, the political backlash was immediate, and not surprising.Rep. Edward J. Markey (D-Mass.), Congressional thorn-in-the-side of BP, demanded that BP not provide a golden parachute to Hayward until it had paid all of the costs resulting from the company's spill. BP has not yet fully funded the $20 billion escrow account set up to compensate Gulf of Mexico victims from the spill. "At a time when BP should be devoting every possible resource to ending the spill, cleaning up the Gulf and fully compensating the residents who have had their livelihoods impacted, I find it extremely troubling that BP's board would consider providing such a large severance package to Mr. Hayward," Rep. Markey wrote to Carl-Henric Svanberg, Chairman of BP, on Monday afternoon. "BP should be dedicating its resources to compensating the residents of the Gulf Coast who are the victims of this tragedy, not handing out multi-million dollar golden parachutes." If Hayward's severance agreement with BP does become a political pawn of ongoing public anger at BP, it wouldn't be the first time that BP faces a decision about when "enough is enough" in ceding to U.S. government demands, especially when it has the law on its side. When BP agreed to U.S. government demands that it suspend its $10.5 billion in annual dividend payments, and set up a $20 billion escrow fund to pay oil spill liabilities, some BP experts thought the oil company caved, as opposed to meeting the U.S. government demands half way.
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