24/7 Wall St. has had the dubious honor in recent years of picking many CEOs who are likely to go, either by firing, retirement, or by splitting of roles.  BP plc (NYSE: BP)  denying reports today out of Russia that CEO Tony Hayward is stepping down.  The company can deny this all it wants, but blood is in the water and sharks are circling.  The reality is that it would take a miracle for Tony Hayward to save his job.  The conundrum on this situation is that looking for an immediate CEO replacement might not be the best bet either.

Hayward took over the CEO role after John Browne left in May, 2007.  Browne’s departure had not gone without controversy, albeit from his personal life on top of BP’s image of the time.  Safety and quality control issues were a problem back then as well.  Many of BP’s safety and quality control woes today cannot be the fault of Tony Hayward.  Still, fault does not mean that this is not Hayward’s problem.

The biggest blow to Hayward is getting spotted at a yacht race during the midst of this major ecological disaster, although merely being there should be enough.  This marked the breaking point.  How tuned into reality is someone if they are at a yacht race during the crisis of a lifetime?  Did Hayward believe the public would believe BP had this situation under control?  If so, he was nuts.

BP said it had received more than 80,000 claims and made almost 41,000 payments, but the cost is now running at a rate of about $100 million per day and it has spent some $2.65 billion.  Its $20 billion pledge is outside of the aspects of its costs today.  An issue at hand in the cost is that there is no way to adequately manage costs in the clean-up, despite the notion that corporations are notorious for and are expected by their shareholders to be tight-fisted when it comes to reimbursement for damages.  Any CEO or manager of BP now has to just look the other way and throw money at the clean-up.  Getting caught denying claims at this point, short of obvious fraud, is just more food to throw at a media and public relations frenzy.  Down the road, shareholders even could argue that Hayward caved in to pressure to pay without even checking the validity of the claims  Another conundrum.

There is also the notion that this started out as a mere 5,000 barrels per day leak, then went up to 20,000 barrels and some even noted far higher than that.  Hayward was slow to react to this in the size and the scope, despite many industry insider’s claims that BP knew almost right from the start that the floodgates were wide open.  BP has a history of safety issues and production quality.  That is not new, and sadly is not entirely Hayward’s doing as CEO.  Again, he’s been there only three years.

Hayward has already been removed as the head of clean-up for this disaster and replaced by Robert Dudley, yet at the end of the day it will still be Hayward who lives or dies by this sword.  It may just actually be that Hayward gets credit for the losses and damages and none of the accolades once the mess is finally cleaned up.

Cutting the dividend was another no-win situation.  Shareholders who stayed with BP now do not even have any assured income in the future.  Public opinion and the reality of future losses are just too great for BP to pay cash out to its shareholders.  Another CEO dilemma.

BP is now faced with a much smaller future. It could be a dead brand in America that faces some of the same challenges that CITGO did.  Boycotts are only adding to the damages and if they go on and broaden elsewhere, then BP’s great value and great plans ahead are out the window.  Now Hayward may get to be forced to sell assets, including the prized BP Solar, at lower valuations.  And borrowing money now comes at a higher cost.  Tony Hayward’s dilemma is that he may have to sell assets at cheap prices and may have to borrow cash at rates that otherwise would not make financial sense.  This is room for more shareholder suits and more ammunition for those who would want a new corporate head here at BP.

There is also the notion of whistle-blowing.  BP is losing all friends it had with outside oil contractors and partners at other well locations.  Imagine if (or when) managers start getting charged with crimes that could lead to jail time on top of endless fines.  At that point, any loyalty to a company goes out the door in most cases.

There is a stark reality that has to be considered here about WHEN a CEO change can be made.  Right or wrong, for better or worse, Hayward may not leave during this mess.  Imagine having to take over today as CEO.  It is a corporate dilemma and oversight nightmare.  A safer bet is that BP will wait to get past this, assuming that it can eventually get this hole plugged, and then the company could name a new CEO.  There is also the notion that changing CEOs right in the middle of the mess might be like the United States announcing a general change during the middle of the Pearl Harbor attack.

BP has lost more than half of its value.  Now the stock has to double just to catch up to where it was earlier this year.  Like most peers, its shares were lower even at 2010 highs compared to the 2008 oil bubble.  This is still close to $100 billion lost in shareholder value.  Some CEOs can survive that sort of a loss if there are systemic issues taking down the values of all peers simultaneously.  This is not that sort of case.

Whether this is a termination or a resignation likely matters not.  Tony Hayward will probably not be retiring from BP as CEO when he is an old man.  Take our survey on when CEO Hayward leaves:

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JON C. OGG

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