Corporate Governance 102: Case Study the BP spill.

[JDPriestly]

In Corporate Governance 101, we learned how corporations limit their liability so that shareholders are assured income when their investments are profitable but do not suffer losses when investments are unprofitable.

In Corporate Governance 102, we will learn how corporations obliterate corporate memory, hide damaging facts and destroy incriminating records of corporate decision-making in order to transfer their corporation's liability to the public, i.e., the taxpayers.

This course will focus on a case study of BP's handling of the aftermath of its failed well in the Gulf of Mexico in April 2010. As your first assignment, prepare a) the legal memo of BP's General Counsel distributed to BP Board members prior to the meeting of the BP Board of Directors that preceded the interview described in the following article and b) prepare the minutes of the meeting that preceded the interview:

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BP Chairman Carl-Henric Svanberg has unceremoniously announced that CEO Tony Hayward will no longer be managing the day-to-day operations of the Gulf cleanup effort.

During an interview with Britain's Sky News, Svanberg said responsibility will be handed over to Bob Dudley, managing director of the company. It's a dramatic change of strategy for the oil giant, which has allowed its chief executive to be the public face of the company in interviews, apology ads and press conferences.

. . . .

The chairman explained that Mr Hayward left Britain for the US after the explosion with the express purpose of dealing with the response to the spill, but stopping the flow has not gone to plan. <...>

"This has now turned into a reputation matter, a financial squeeze for BP and a political matter and that is why you will now see more of me," Mr Svanberg said.

http://www.huffingtonpost.com/2010/06/18/tony-hayward-removed-from_n_617543.html

Discuss BP's strategy options including but not limited to the invoking of trade secrets protections, reminding employees of their confidentiality agreements, instituting early retirement plans (good will bonuses?) for key employees, exploring tax write-offs for business losses including environmental remediation costs, selling unprofitable assets and increasing expenditures on public relations (don't forget to explain the importance of improving relationships with civic leaders in the countries and communities in which the company operates).

Assignment due Friday.

[JBoy]

1. Tony Hayward has been a disaster as the face of BP during this crisis.