CNNMONEY. Tony Hayward will step down as chief executive of BP, the company announced Tuesday, amid ongoing outrage over the oil spill in the Gulf of Mexico.
BP said Hayward will be replaced by American Robert Dudley effective October 1.
Dudley is another long-time BP employee with more than 30 years in the oil business. A chemical engineer by training, Dudley was put in charge of the day-to-day leadership of the Gulf Coast clean-up operation in June.
Hayward will receive a year's salary amounting to $1.6 million. The company also plans to nominate him as a non-executive director of Russian oil and gas venture TNK-BP.
The announcement of the change in leadership came as BP reported a second-quarter net loss of $17.2 billion. The heavy loss was due to a $32.2 billion charge the company took related to the oil disaster. That charge includes oil spill costs through the end of June, BP said.
The news ends weeks of speculation about management changes at the company responsible for what has been called the worst environmental disaster in U.S. history. It also presents an opportunity for BP to put a new public face on the company as it seeks to rebuild its reputation.
BP Chairman Carl-Henric Svanberg called the Deepwater Horizon explosion a "watershed incident." In a statement, he said BP would be "a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board."
Hayward has become a lightning rod for public and political anger since a drill rig operated by BP exploded in the Gulf of Mexico in April. The disaster killed 11 workers and ruptured a well deep below the surface.
The company has already committed $20 billion to compensate individuals and businesses affected by the spill. But it still could face billions more in fines and legal costs associated with the explosion.
BP has since managed to temporarily halt the flow of oil into the Gulf. But attempts to provide a permanent fix were delayed after Tropical Storm Bonnie prompted crews to suspend efforts to create a relief well last week. BP said Monday it will probably be several more days before it can resume drilling operations.
The spill, which Hayward himself called an environmental catastrophe, has fouled large portions of the coastline in Louisiana, Mississippi and Florida. It has also crippled the Gulf Coast economy and led to a government-imposed moratorium on deepwater oil drilling in the region.
Investors have punished the company. Shares of BP (BP) have plunged nearly 40% since the spill, erasing about $72 billion of BP's market value.
Despite signs that BP chose cheaper, riskier drilling tactics before the disaster, Hayward is not expected to face criminal charges. Legal experts believe some mid-level employees at BP could go to jail though.
Since he was thrust into the spotlight, Hayward has made a number of high-profile gaffes that critics say illustrated his lack of sensitivity for those hurt by the spill. In May, he botched an apology by saying he'd like his life back, a slip he later apologized for.
Hayward, who grew up outside London, joined BP in 1982 after completing his Ph.D. in geology at the University of Edinburgh the same year. After stints on BP projects in Europe, China and South America, he was made a company director and returned to London in 1997.
He moved up the corporate ladder in the years after BP merged with Amoco in 1998, creating what was then the largest company in Britain. He took over as CEO in 2007.