Should Tony Hayward Forfeit His Severance?

The $10.5 billion in scheduled 2010 BP dividends had become political fodder for President Obama, who talked about BP "nickel and diming" the Gulf coast while paying its shareholders a king's ransom. Yet the U.S. government had no legal authority to force BP to suspend its dividend.

Notably, a UBS analyst on the conference call during which BP CFO Byron Grote explained the financial concessions made by BP, asked, "It seems to me that BP agreed to pay $20 billion into escrow and suspended the dividend for three quarters, yet the BP chairman described the meeting as being constructive. So what did you get out of the meeting, from what appears to not be a legal requirement and something people thought was an aggressive stance taken by the U.S. government?"

Now, the severance package that Hayward receives will be subject to the same comparison: the ongoing nickel-and-diming of the Gulf coast in the oil spill claims process, while Hayward walks away with a reported $18 million for quitting after the worst disaster in U.S. oil spill and BP history. When BP releases its earnings on Tuesday, the world is also expected to get its first peek at the amount BP thinks the oil spill will ultimately cost its balance sheet.

With expectations that BP will ballpark oil spill liabilities at $30 billion, the Hayward severance package will be a drop in the oil-spill bucket, even compared to the existing BP dividend and escrow fund. BP has already paid out more than $235 million in claims to Gulf coast residents and businesses also, and spent $4 billion so far in its oil spill cleanup and containment effort.

Nevertheless, Hayward's golden parachute has the potential to become a PR gaffe, maybe the last gaffe made by Hayward as BP CEO. There would be something fitting about that, in a sick sense of oil-spill irony. BP shareholders may be none too happy either, about seeing their dividends taken away while Hayward gets paid for failure.

>>Tony Hayward Top Bloopers: Slide Show

The terms of Hayward's contract are no doubt clear, and whatever golden parachute he walks away with would have its undeniable legal standing. However, questions will be asked as to whether Hayward should forfeit the package, or if BP should force the outgoing CEO to do so.

There have been notable recent examples of CEOs accepting that crisis situations demand a huge toll on their personal pay. Think of Citigroup CEO's Vikram Pandit agreeing to be paid an annual salary of $1 until Citigroup recovered from the financial crisis. It's an irony of the BP oil spill that the man now in charge of the claims process, Ken Feinberg, was formerly the executive pay czar for President Obama.

What's more, according to reports, Hayward may stay on with BP in some capacity. Speculation currently is focused on Hayward taking a non-executive job, possibly a board spot, with BP's huge venture in Russia, TNK-BP. No word yet on how much Hayward would be paid for his serving on that board.

Vote Now on the Hayward Severance

Vote Now on the Hayward Severance Package

« First ‹ Previous 1 2 3 Next › Last »