BP CEO Bernard Looney Resigns Over Failure to Disclose Past Relationships

Introduction

Bernard Looney, the CEO of BP Plc, has resigned with immediate effect due to the failure to fully disclose his past relationships with colleagues. This unexpected development leaves the oil and gas giant leaderless at a critical time when it is striving to convince investors to support its costly transition to low-carbon energy. It also highlights how the demand for higher standards of personal behavior in the workplace, influenced by the Me Too movement, has reached the highest levels of the corporate world.

Interim Replacement

Murray Auchincloss, the Chief Financial Officer of BP, will temporarily replace Bernard Looney as the CEO. BP has not yet named any potential successors but traditionally selects CEOs from its own top executives.

Failure to Disclose

BP stated that its board had reviewed allegations regarding Looney’s past relationships with colleagues in 2022 and found no breaches of the company’s code of conduct. However, further allegations of a similar nature were recently received, prompting Looney to admit that he had not been fully transparent during the previous investigation. The company emphasizes the importance of its values and expects all employees to adhere to those values.

Market Reaction

BP’s American depositary receipts initially rose on the news but closed 1.3% lower in New York. The impact of Looney’s resignation on the company’s strategic direction is a concern for investors.

Looney’s Legacy

Bernard Looney has been a strong advocate for a faster shift into low-carbon energy among the CEOs of major oil companies. Despite scaling back some emissions reduction goals, BP still maintains aggressive plans to cut oil production and expand in electric-car charging and renewable energy. However, BP’s shares have underperformed compared to its peers since Looney took over as CEO.

Expert Opinion

Bill Fitzpatrick, a fund manager at Logan Capital Management, recognizes Looney’s efforts to steer BP in a shareholder-friendly manner and promote clean energy. However, Fitzpatrick criticizes Looney’s poor judgment in not being more forthcoming with the board, stating that such behavior is concerning and surprising.

Looney’s Background

Bernard Looney, born in 1970 and an electrical engineer by training, has been with BP throughout his career. He worked his way up from a drilling engineer to chief of exploration before becoming CEO in 2020.

End of an Era

Looney’s departure marks the end of the era dominated by a group of executives at BP known as the “turtles.” These individuals, who were assistants to former CEO John Browne, were named after the Teenage Mutant Ninja Turtles due to their speed and availability. Both of Looney’s predecessors as CEO, Tony Hayward and Bob Dudley, were part of this group.

Strategic Implications

Eric Talley, a corporate governance expert at Columbia Law School, believes that Looney’s sudden exit poses strategic challenges for BP. Talley emphasizes the importance of honest disclosure from CEOs when confronted with potentially problematic situations, as the board must be able to trust its CEO.

–With assistance from Anne Riley Moffat and Joe Carroll.

(Updates with comments from investor in 10th paragraph, corporate governance expert in final paragraph.)

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.