The Local Authority Pension Fund Forum (LAPFF) has warned that Albert Manifold’s abrupt removal as BP chair points to wider governance concerns at the oil major.
BP announced on 26 May that Manifold had been removed as chair and director with immediate effect, citing concerns over governance, oversight and conduct.
The decision came less than a year after Manifold became chair and followed significant shareholder dissent at BP’s annual general meeting (AGM) on 23 April, when 18.23% of shareholders voted against his election to the board.
Shareholders also voted against two board-backed resolutions, including proposals relating to climate-related reporting and virtual-only AGMs.
Speaking to IPE, Doug McMurdo, chair of LAPFF, said Manifold’s exit highlighted both “strengths and shortcomings” in BP’s board oversight. It said the board’s willingness to act over serious governance and conduct concerns showed that minimum accountability standards were being enforced.
However, the forum said the incident also raised deeper questions about board effectiveness, succession planning and investor responsiveness.
It added that the fact these concerns emerged so soon after Manifold’s appointment raised questions over BP’s board culture and the process that led to his selection.
“For long-term investors such as pension funds, this pattern points to structural governance challenges rather than a one-off incident,” McMurdo told IPE.
“From LAPFF’s perspective, pension funds will expect the next chair to deliver stronger governance oversight and demonstrate respect for shareholder rights and engagement,” McMurdo added.
Unanimous vote
BP said its board had unanimously decided that Manifold should no longer serve as chair and director. The decision followed “serious concerns raised to the board related to important governance standards, oversight and conduct”, it added.
The company has appointed Ian Tyler as interim chair while it begins the search for a permanent successor.
Investors have also called on BP to provide more details on the circumstances behind Manifold’s departure.
Nick Mazan, oil and gas strategy lead at the Australasian Centre for Corporate Responsibility (ACCR), said Manifold’s dismissal continued what he described as a “disastrous pattern of board and executive churn at BP”.
ACCR said BP’s board should provide “a full and transparent account” of what led to Manifold’s immediate removal.
Mazan said the board should also reflect on the chair search process and how it could have prevented the situation.
He added that shareholders would rightly question the board’s capability and may seek to engage more proactively in future board search and replacement processes.
ACCR said the leadership disruption should not distract BP from its strategic challenge, including the need to move away from what it described as “the myth equating upstream spending with increased shareholder value”.
Increased scrutiny
Mazan noted that more than a quarter of BP shareholders voted for increased scrutiny of the company’s planned upstream capital expenditure at the AGM, adding: “Spending without value is not good enough.”
Lindsey Stewart, director of institutional investor content at Morningstar, said BP now had “the most volatile boardroom of the oil supermajors”.
Stewart said BP’s decision to exclude a shareholder proposal that appeared to meet the requirements to be put to investors had “needlessly antagonised” shareholders and raised further questions about governance and oversight.
Despite a resurgent share price this year, he noted BP was now on its third chief executive and third chair in fewer than three years.
Dutch advocacy group Follow This also linked Manifold’s dismissal to BP’s handling of shareholder rights and climate governance.
Mark van Baal, founder of Follow This, said: “Manifold has exacerbated the broken governance inherited from his predecessor. Instead of listening to shareholders, he refused a validly filed shareholder resolution.”
BP did not immediately respond to a request for comment.
