Despite the howls, Tony Hayward’s departure as boss of BP was deftly handled. And other firms are trying harder not to reward bad leadership

What made Hayward's 'I'd like my life back' comment so reviled was that 11 men were killed on the Deepwater Horizon.

"Who would want to take a job that came with a serious risk of financial destruction? Whoever did take it would surely manage in a way that minimised the risk of catastrophic failure. That sounds peachy until you remember that capitalism depends on risk-taking."
You are not thinking straight! Capitalism depends on controlling risk and everyone would like a well-paid job running a big company. And would accept the risk of losing the job if he/she failed. That is what I accepted in my business life. Or do you still believe in crazy risk-takers???

Those people in an uproar should get over it

When two people get divorced the richer partner pays a settlement to the less rich partner. This happens even if they've been married for less than a year and the less rich party has broken matrimonial vows. The rationale is that they should not have to drastically downgrade their living standard.

Tony Hayward has worked for BP for 28 years. He oversees hundreds of wells, numerous refineries, distribution pipelines and other infrastructre belonging to BP.

BPs revenues and profits increased over his 3 year tenure as did their safety record. And his pay is just a piddle compared to any S&P500 CEO.

I'm not sure why anyone would argue against would be a fair pension and contractual severance, for any assembly line worker or public servant.

Accidents happen every day, some are preventable and some are not, some are big and some are small. We only punish people when their was malicious intent or personal negligence.

As for Warren Buffet, I have great respect for him as an investor (even studying his methods and trying hardest to emulate them), but I question his ability to manage bankers. I recall his disasterous attempt to control the pay of Salomon bankers, they just walked out of the door (with the clients.)

The problem with defending golden parachutes is that Americans see their friends and neighbors losing their jobs through no fault of their own left and right and after paying taxes for years getting cut off of a paltry survival sum by Congressional inaction. Then these executives, some of whom are in no small part responsible for the employment carnage we see today fail at their jobs and get sent off with inconceivable amounts of money.

This ballooning in executive pay over the past years has been justified by explaining that these particular people are worth it, and to that I call hogwash. Even the complete failures, of which Heyward is by no means the worst, get insane compensation. There is nothing special about these people yet they are being compensated as if they are wizards. Give me a couple of years of in house experience and I could run a profitable oil company and would be happy to do it for less than $400m. If you look at the workforce in America you see our doctors, our scientists, and our other elite minds making good money for sure but nothing like what even junior executives make. Corporations are run by cabals of talented but by not necessarily any more exceptional people that instead of taking salaries consistent with their abilities and actual value to their organization collude to divide vast sums of money from their corporation that should be invested or paid in dividends under the pretext that because they happen to be business executives are worth millions and millions of dollars. It's a vicious positive feedback loop of self-interest. If the boards had any integrity and weren't entangled in the same system they would control executive compensation. In any company as large as BP there will be mile long line of capable candidates; these people are not indispensable. Heyward's package should be at the top of a list like this, not the bottom. It is generous but not obscene.

Lee Raymond contributed a lot more to XOM than riding crude prices. He was the key architect of the transformation of Exxon from a 75% US company to one whose business in 75% outside the US and 25% domestic. He was responsible for keeping the largest R&D investment in basic science among oil companies. He led the creation of the safest and most reliable industrial company after Valdez spill by leading the creation of Operations Integrity Management System that covers all aspects of XOMs business. He also lead the merger with Mobil, arguably the most efficient and effective merger of two oil giants. Those are higlights of Lee Raymond's contributions. The Economist has done a great injustice by including him on the list of failed CEOs.

This article seems to be predicated on the assumption that corporate executives are a different species from us mere mortals, and that the two simply cannot be considered with even remotely-related standards.

Such a relief to know that you're still alive, Mrs. Rand. Don't worry; I won't tell anyone that you faked your death and have actually lived to 105 (congratulations!) and are writing for The Economist, now.

This move is, as everyone knows, a PR stunt to "de-foreignize"(or "Americanize") BP's image, like those BP ads in which an American-accented guy who claims "we'll make it right". A cheaper and more effective way than firing Hayward should have been changing B-P to US-P or A-P, and probably adding some red white & blue to the logo.

Yeah, this is the same Dudley the Russians ran out of their country before he could ruin BP's chances there - they could not stomach dealing with his cowboy mentality. Good luck, PB!

I have not seen any good reason for removing any kind of parachute from a failing (or even not failing) CEO. Usually these are oversize ego individuals who would step on anybody to reach their goal (i.e. be at the top), where they can exercise their primal instinct for dominance and grab all the rewards they can. By the time the shareholders notice how bad they are, they would have feathered their nest sufficiently - without need for more rewards for bad performance.

I am an Indian who was an employee of BP refinery Aden during 1955-'63. I did the job of a chemist (shift in charge for the most part), was a post graduate at 23 years of age, stuck at the designation, asst. Lab technician throughout. My equally qualified colleagues and I were paid one tenth compared to those of British nationality doing equivalent work, ( but with designation 'chemist', perhaps); we were accommodated four each to one barely furnished house with not even one window A/C,while British expats had a studio suite each, central A/C, with full fledged mess and club, we were entitled to leave with ticket once in two years, whereas British expats had it twice every year, etc, etc. The Refinery investment had been paid off in less than five years. In the '70's, working for IndianOil, I visited the same refinery, (nationalised and run by locals) as an honoured guest on business, when I got my facts right. Later, I had the privilege of being an adviser to a rich oil producing company of the middle east, and knew the difference even better, I thought of these while reading the highbrow discussions going on regarding the figures of 900,000 and 1.6 million. I am only stating the fact, not complaining, I humbly admit I needed whatever BP gave me, and it was really a lot of help.

America is a funny country. Never mind if it is Toyota or BP their politicians seem to mentally stuck in the time that they were in kindergarten. In non banana republics judgement is passed after all facts are known, investigated and due process is followed. Foreign companies are easy targets in the US. We really do not yet know if Halliburton or any other american company shares to blame or is to blame. If a person works 28 years in a company he is simply entitled to certain perks, which have nothing to do with rewarding failing leadership. If there is failing leadership it is in the american political arena, with very immature people shouting "Drill Baby Drill". When I watched the news I did not see one of those politicians taking any responsibility. But wait, they are American and elected so they can change their position any which moment they like.

@Jay Virgil
So why do the companies not expand these golden parachutes to all workers, but only to CEO or senior executives?

It seems odd to me that The Economist as well as many in the corporate world see man as a rational economic animal everywhere except the executive suite. Why exactly would it be a bad idea to have executives take a view of risk that has a direct relationship to reality instead of distorting it to make it more risk tolerant?

This is one of the best artcles put out by the Economist. It is illuminting about the facts,and judicious in evaluating TH's parting payment in comparison with those given to the failed US executives. To avoid these outrageously high pay in the corporate world, perhaps a law should be passed to allow shareholders vote for the compensation package of these incoming top officers with "crawback" clauses as an essential component of their contracts.

Of course Tony Hayward WAS in effect the boss of an American firm; but he was fairly cheap to dispose of because he personally was British (like so many of the baddies in US movies!). What deal has his US successor managed to negotiate?

There's always risk in running a company and these guys are being paid for their supposed capability in running an organization and creating shareholder value etc etc. The most important is were these CEOs asleep at the wheel and clueless to what was going on in their own organizations? If it's plain poor management, then some were most definitely over rewarded for poor performance - whether it's financial meltdown, destroying the environment or whatever. I think every other oil company in the world is breathing a sigh of relief that it was BP's well that blew and it's not their poor practices in the limelight.

It's also important to remember that golden parachutes allow executives to make decisions that are to the benefit of the organization and the shareholders, not just to themselves. The principal-agent issue is limited through these payments.

Knowing that you'll be taken care of financially allows CEOs to pursue mergers, acquisitions, sales, etc. that benefit the shareholders at the expense of their own position. Shareholders want this. There's empirical evidence to show that pattern holds true. I should probably link some, but I don't recall exactly.

This is the other side of the argument that I wish The Economist had presented here. This view is quite simplistic.

I wonder if the wage slaves (of which no doubt there are many at BP) are ever going to get their life back?

Sadly, the only lasting & sorry image that stays on my mind is that of the "greedy, grasping American, feverishly latching onto the 'victim bandwaggon' & trying to squeeze the last drop of blood from their victim, scapegoat & fall guy: (non-American) BP."

Looks like we never eveolved from the Dark Ages. The laws of the dog-eat-dog concrete jungle prevails, as always.

Sad..

Take your money and run. If you anger the Obama regime any more with your outrageous claims that you have been used as a political scapegoat, they will definitely would not make your departure pleasant.

Awareness
The problem is not Tony Hayward (I am not defending or supporting him); it is about the culture of exploitation and profit-making, which makes companies to ignore or (be) careless about security and safety standards. It is a much wider issue.

You would think that after such disasters as ExxonMobil, etc., companies would learn. They haven't. Look at car recalls, food recalls, blood diamonds, or importing cheap and dangerous goods from countries with virtually no standards at all. Why? The goods are very cheap, and these companies can make huge profits (selling to us) at our expense. And our governments, well as long as the politicians keep their jobs, no one will enforce any standards, or they just appear to enforce the regulations.
This will only end when citizens are aware of their rights.