Hayward to get £600,000 a year pension

BBC business editor Robert Peston on the oil chief's pay-off.

Tony Hayward will be able to draw a pension of around £600,000 a year from the moment he leaves the company on October 1, I have learned.

This is his contractual entitlement under the company's pension scheme. The rules of the scheme say that those who joined it before April 6 2006 can take the pension at any point from age 50: Mr Hayward is 53.

However the pension entitlement is bound to be hugely controversial.

Mr Hayward's pension pot had a transfer value on 31 December 2009 of £10.8m, and he had accrued a pension of £584,000 a year. The pension pot will be worth more than that by the time of his departure.

The terms of Mr Hayward's departure from BP have been agreed by the company's board.

He will be succeeded by Bob Dudley as chief executive.

Mr Hayward is not being sacked but is leaving by mutual agreement, so the board feels it has to honour the terms of its contract with him.

He will therefore receive a year's salary plus benefits. That's worth more than £1m.

He retains a right to any bonus that's paid to senior executives this year, but bonuses won't be decided till the end of the year (by way of an aside, it would be slightly odd - to put it mildly - if any bonuses were paid for 2010, a year in which the company will declare a record loss).

And he will retain entitlement to shares under the long-term performance scheme, which - depending on BP's recovery over the coming years - could eventually be worth several million pounds

Mr Hayward is not severing his links with BP completely. He will become a non-executive member of BP's joint venture in Russia, TNK-BP (a part-time role) - largely because, I am told, his Russian contacts and knowledge are valuable.

UPDATE 0725: Hayward's circa 600k pension payable in 18 months, age 55

You can keep up with the latest from business editor Robert Peston by visiting his blog on the BBC News website.

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