For years the most visible public role for Peter Sutherland as chairman of BP PLC was to play host at the company’s yearly meeting. But after a run 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 banker forced Chief Executive John Browne to publicly identify his retirement date. After Lord Browne’s shock decision last month to depart a year and a half earlier than previously planned, Mr. Sutherland must now buff BP’s image and manage the company’s first executive-suite transition in more than a decade.
Despite a persistent rise in oil prices its shares rose just 4.5 per cent in 2006, in comparison with a 36 per cent increase by Exxon Mobil Corp. and 15 per cent at Royal Dutch Shell PLC. Yesterday, the company announced fourth-quarter net income decreased by 22 per cent, in part reflecting lower production and lower natural-gas prices.
BP, meanwhile, faces U.S. criminal probes on multiple fronts — corrosion and oil spills in Alaska; a a refinery explosion in March 2005 which claimed the lives of 15 in Texas; as well as 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 trend that goes beyond BP: a transition 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. In recent times, many firms are moving to strengthen their boards with independent and strong directors.
Until an accounting scandal rocked Shell in 2004, Shell’s British holding company had as its chairman a professor of geology. After the scandal, it employed 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 establish a “robust” and independent board of directors he was quoted as saying in a recent interview. After short periods as Ireland’s attorney general and Europe’s competition czar, Peter Sutherland took over negotiations known as the General Agreement on Tariffs and Trade in Geneva in 1993. There, he clinched the Uruguay Round, a pivotal trade agreement that set the basis 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.
