and when did he know it? It may just be my inner paranoid talking but the CEO of British Petroleum’s selling a third of his stock in the company a few weeks before the explosion on the Deepwater Horizon that marked the start of the oil spill that’s going on in the Gulf of Mexico nearly 50 days ago certainly sounds remarkably fortuitous:
Tony Hayward cashed in about a third of his holding in the company one month before a well on the Deepwater Horizon rig burst, causing an environmental disaster.
Mr Hayward, whose pay package is £4 million a year, then paid off the mortgage on his family’s mansion in Kent, which is estimated to be valued at more than £1.2 million.
There is no suggestion that he acted improperly or had prior knowledge that the company was to face the biggest setback in its history.
His decision, however, means he avoided losing more than £423,000 when BP’s share price plunged after the oil spill began six weeks ago.
Since he disposed of 223,288 shares on March 17, the company’s share price has fallen by 30 per cent. About £40 billion has been wiped off its total value. The fall has caused pain not just for BP shareholders, but also for millions of company pension funds and small investors who have money held in tracker funds.
British law is tougher on this than American law (although even more laxly enforced). It’s considered abuse if you trade when in position of potentially market-affecting information.
The investigations into the oil spill will, no doubt, go on for years. I hope that one of the things they look into is whether Tony Hayward might have had some advance warning of serious problems on the Deepwater Horizon that his company didn’t release until after the disaster.
Why not sell all of it, if he knew that there was going to be an explosion, people were going to die, and that we’d see one of the worst man-made ecological disasters?
There are any number of possibilities, Steve. There may have been contractual restrictions on how much stock he was required to hold, how much he was able to sell at one time, and when he could sell stock.