Oil giant BP’s shares have taken a hit following the unexpected resignation of its CEO, Bernard Looney, amidst allegations of “personal relationships with colleagues.”
Looney’s departure comes less than four years after he assumed the role.
The 53-year-old executive, who earned over £10 million in wages, bonuses, and benefits last year, is reported to have failed to fully disclose details of these relationships, as required by the company.
BP, in a statement, announced Mr Looney’s immediate resignation and acknowledged that he was not fully transparent in his previous disclosures. The statement read, “He did not provide details of all relationships and accepts he was obligated to make more complete disclosure.”
BP revealed that they first received and reviewed allegations in May 2022 concerning Looney’s conduct regarding personal relationships with colleagues. During this review, Looney disclosed a limited number of historical relationships with colleagues prior to becoming CEO, and no breach of the company’s code of conduct was found.
However, the board sought and received assurances from Looney regarding the disclosure of past personal relationships and his future behaviour.
Subsequently, additional allegations of a similar nature were received recently, prompting the company to launch an investigation with external legal counsel. This investigation is ongoing.
A BP spokesperson emphasized the company’s strong values and the expectation that all employees, particularly leaders, adhere to these values and act as role models to earn the trust of others. No decisions have been made regarding remuneration payments to Looney at this time.
Murray Auchincloss, BP’s chief financial officer, will serve as interim CEO following Looney’s departure. BP shares declined by 1.7% at the market opening in London on Wednesday morning, matching the reaction on US markets the previous evening. Share prices continued to drop during trading, closing down 2.7%.
Bernard Looney assumed the role of CEO in February 2020 with a commitment to reinvent the 114-year-old company, including ambitious plans to achieve zero net emissions by 2050. He succeeded Bob Dudley, who led BP through the aftermath of the Deepwater Horizon spill in 2010. Looney had spent his entire career at BP, joining as an engineer at the age of 21 in 1991.
Edward Moya, a senior market analyst at OANDA, noted that Looney’s resignation was unexpected and could raise questions about BP’s transition toward renewable energy. He mentioned that BP’s share prices might not be significantly affected as CFO Auchincloss is poised to take over.
However, the choice of a permanent CEO will likely have a substantial impact on BP’s stock.
BP recently reported a significant drop in profits in the first half of the fiscal year due to declining energy prices following Russia’s invasion of Ukraine.
The company recorded net profits of just over $2.5 billion (£2 billion) for the three months ending in June, a substantial decrease from the preceding three months and a sharp decline compared to the same period in the previous year.