BP shares fall after board removes chairman Albert Manifold over 'serious’ conduct concerns

Shares of British energy major BP fell sharply on Tuesday after the board announced it had removed Chairman Albert Manifold in a surprise move.

The decision to oust Manifold with immediate effect followed "serious concerns" related to governance standards, oversight and conduct, the company said in a statement, without elaborating.

"Albert has helped bring a welcome focus and pace to bp's transformation," said Amanda Blanc, senior independent director at BP. "However, the board has been surprised and disappointed to learn of governance oversight and conduct issues it deems unacceptable and has taken decisive action."

London-listed shares of BP fell as much as 9% on the news, before paring losses. The stock was last seen trading off by around 4%.

BP said it has appointed Ian Tyler as interim chair with immediate effect, noting that a succession process for a permanent chair is set to get underway.

"The Board and leadership team have deep conviction in the strategic direction we have laid out, and the company is moving at pace to deliver it," Tyler said.

"bp is building a track record of strong underlying operational performance and a tight focus on financial discipline - all in the pursuit of growing shareholder value and returns," he added.

CNBC has reached out to the U.K.'s Serious Fraud Office and is awaiting a response. The Metropolitan Police Service declined to comment.

Manifold, who had only been in the post as chair since October, had received lower-than-typical support at BP's annual general meeting last month following an investor rebellion.

A majority of 81.8% of shareholders voted in favor of electing the former boss of Irish building materials giant CRH as BP chair. Board members require 50% of the vote to be elected, and they typically receive close to 100% support.

Some activist investors had said that even a 5% vote against Manifold would have marked a severe reprimand, particularly after a historic 24% vote against outgoing chair Helge Lund last year.

The dismissal of Manifold comes as the energy major pivots back to its core business of oil and gas and away from renewables – and as former Woodside Energy boss Meg O'Neill takes the reins as CEO.

O'Neill assumed the role as CEO on April 1, replacing Murray Auchincloss after less than two years in the role.

"The announcement of Albert Manifold's departure is certainly a surprise, albeit BP has had more than its fair share of senior personnel leaving the company abruptly over the past 20 years, including former CEOs Lord Browne, Tony Hayward, Bernard Looney and Murray Auchinchloss, albeit all with very different individual circumstances leading to their departure," said Maurizio Carulli, global energy analyst at Quilter Cheviot.

"Whilst the news is obviously a short-term negative, it is important to remember that BP has made significant operational improvements and strategic refocusing over the past year, and this is the result of the successful efforts of the entire organisation and its management, not just of one person," he added.

Lindsey Stewart, director of institutional investor content at Morningstar, described Manifold's dismissal as proof that BP has "the most volatile boardroom" of the oil supermajors.

"The company's decision to exclude a shareholder proposal that appear to have ticked all the boxes to be voted by shareholders needlessly antagonised a wide swath of investors and again raised questions about governance and oversight at the company," Stewart said, referring to BP's contentious decision to block a proposal put forward by Dutch activist group Follow This at its AGM.

"With a resurgent share price so far this year, BP should be taking credit for the rewards of its strategic reset," Stewart continued. "Instead, the company is on its third CEO and now it's third chairman in under three years. It's clear that getting a grip on corporate governance and strategy at the company must be a priority of the interim chair and his eventual successor."

Climate group ACCR called on BP's board to provide "a full and transparent account" of exactly what led to Manifold's dismissal, while Follow This said the new chair must bring "real expertise" in governance, climate risk and transition risk.