ROBERT SIEGEL, Host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MICHELE NORRIS, Host:
And I'm Michele Norris. BP's board of directors today confirmed that the company is moving embattled CEO Tony Hayward out of the executive suite. American Bob Dudley will officially take over on October 1st.
Dudley's first task will be to repair the company's image, and guide BP out of the sticky mess it's made in the Gulf of Mexico under Hayward's leadership.
While departing chief executives in the U.S. often end up with extravagant golden parachutes, NPR's John Ydstie reports that doesn't seem to be the case for Tony Hayward.
JOHN YDSTIE: In the U.S., CEOs exiting large companies, even those leaving under a cloud, can usually look forward to a soft landing.
NORRIS: We've seen some pretty spectacular golden parachutes paid out over the last four or five years.
YDSTIE: That's Paul Hodgson, senior research associate at the Corporate Library. It specializes in executive compensation and corporate governance issues.
NORRIS: Certainly, one of the highest was to Robert Nardelli when he left Home Depot. That was valued by us at around $120 million.
YDSTIE: And that was after five years of underperformance at Home Depot. Exit packages averaging around $40 million are pretty standard in the U.S., says Hodgson. Now, contrast that with what Tony Hayward could get.
NORRIS: His severance would amount to around a year's salary, which translates into between $1.5 and $1.6 million.
YDSTIE: Most of us might be very pleased with that, but it's peanuts compared with U.S. payouts. The 53-year-old Hayward, who has worked at BP since 1982, could also claim a pension worth close to $17 million.
Paul Hodgson says there didn't used to be this vast difference between practices in the U.S. and the U.K.
NORRIS: In the mid '90s, when the corporate governance revolution started in the U.K., that golden parachute was one of the main targets of the code writers.
YDSTIE: The rule makers reduced the standard exit package, from three years' salary to one year's salary. The code also allows companies to pay less if the departing executive gets a new job within a year. The rules are enforced by the London Stock Exchange, not the government.
The Corporate Library's Paul Hodgson says the newly minted financial overhaul law in the U.S. could narrow the difference between U.K. and U.S. exit packages.
NORRIS: Part of the Dodd-Frank Act that's just been signed into law indicates that golden parachutes must now be put to shareholder votes.
YDSTIE: That could reduce the bloated consolation prizes many American executives receive when they're forced out the door.
Now, it's quite possible Tony Hayward may not receive any exit compensation even though he's losing his CEO job. That's because according to today's BP board announcement, he may stay on at the company. Hayward may take a position in BP's joint venture with the Russian energy firm TNK.
John Ydstie, NPR News, Washington.
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