After a period of massive internal change inside BP, Finance Director Europe sits down with Brian Gilvary, group CFO, to discuss the company’s post-Macondo strategy and his personal journey through one of the world’s largest organisations.
Walking into the office of Brian Gilvary, group CFO of BP, one is struck almost immediately by his honesty.
"Why exactly are you doing this?" he asks before even my coat has found the back of the chair.
"You're our cover story, Brian."
At first take, it's easy to mistake Gilvary's candour for combativeness. He is, after all, a man at the financial helm of one of the world's largest corporations. But that doesn't seem to affect him much. Indeed you realise, quite quickly, that the questions he asks reflect a man genuinely interested in people.
His office is clean, modern and transparent with splashy art on the walls and a World Cup football perched on the side. They each betray a facet of his personality; professional, intelligent and yet surprisingly personable. So personable in fact, that halfway through the interview, he stops, mid-flow, and starts interviewing me, enjoying the sudden reversal of roles, the opportunity to find out about someone else.
Gilvary became group CFO of BP in January 2012 after 26 years in different parts of the company. Raised in a council house in the north of industrial Britain, his father worked as a boilerman in the town's docks, his mother on the production lines of a local biscuit factory.
The role that industrial heritage played in Gilvary's eventual career choice can't be understated, but he traces his love affair with BP to one particularly interesting childhood memory. In the mid-1970s, BP produced a television advert starring Collin Welland, who went on to write the script to the film Chariots of Fire. Set in the unspoilt fields of Scotland, the advert asks the audience how they'd feel about a crude oil pipe line besmirching the pristine British countryside.
The answer, for the most part, is not that happy, and that's where the twist comes in. As the advert closes, we find that BP shares that view, having already built the pipeline, not on the fields, but unobtrusively, ten feet below.
"I remember thinking to myself, this really is a company that cares for the environment," Gilvary says. "And that just drew me in immediately."
The evolution of the CFO
Gilvary joined BP as a mathematical modeller in upstream a year after completing his PhD in 1986. He left that division for a downstream job in Brussels a few years later when then chief executive Peter Walters broke up the existing divisional structure of the company. Jobs in oil trading, strategy planning, and a series of corporate positions followed before Gilvary become group CFO in January 2012, replacing Bryon Grote after two years of shadowing his predecessor.
Grote was well-known in the industry for his public reticence, rarely appearing for the press except in trade magazines. That approach is not something Gilvary is particularly concerned with reversing, describing his obligations to the board as considerably more significant than the media.
"I'm not intending to build much of a public profile," he says. "My role here is to support the chief executive and board, making sure the company is safe going forward from a financial perspective. I'll only be going near the media if it's in service of the company."
A good example of that was a letter Gilvary co-wrote to the Financial Times a few months ago. The piece - signed by eight CFOs - criticised the government for its proposed regulation of mineral extraction and for the requirement to report on individual project spending.
"We thought it was unworkable, so we sent in the letter," he says. "In places where you think you can and should influence or try and shape the debate around areas such as regulation it's important not to stay on the sidelines."
Gilvary's commitment to BP is self-evident, the diversity of his past roles reflecting the profound interest he has in the intricacies of the oil giant. It also speaks volumes about the way the CFO role has broadened over the past two decades, a fact the industry now recognises as truistic.
"To really provide independence you need to understand the breadth of business that you're overseeing," Gilvary says. "You don't need great levels of knowledge about each individual aspect of the company, just an understanding of how each business model operates, and that's because what the CFO does has changed.
"In the past you'd want someone with a pure finance/accounting background. But today you also need a combination of experience from within or outside of the company, coupled with an awareness of the business you're in."
With the 2002 Sarbanes-Oxley Act, the gambit of the CFO momentarily retreated into the classic functions of accounting, reporting and control. That shift wasn't too problematic for BP, whose emphasis on financial capability and control has been evident since its earliest days.
"It's hugely important," says Gilvary. "One of the things we have inside BP which we see as significant is our financial framework. That's been in place for the best part of two decades and gives the handrails and guidance to understand exactly what you can and cannot do."
BP has been through some challenging financial times since the 2010 Macondo spill. Its share price slid by up to 40% after the incident, resulting in huge loss of value for BP's loyal and often long-standing shareholders, throughout the UK financial system, and inspiring an existential crisis for BP: could the company survive? It could. Some quick thinking and financial ingenuity from BP staff meant it survived the catastrophe.
"We went through what could have been a major liquidity crisis," Gilvary says. "When you're a double-A company you can go on the markets and raise cash at very low rates overnight. When your stock is suddenly trading at triple B junk, that's not a pleasant place to be. The bond markets and credit markets were closed to us, commercial paper was unavailable.
"We did some pretty amazing things with our group treasurer, CFO and the rest of the finance function to make sure we could fund the balance sheet. We sold some assets and put structures in place that allowed us to accelerate cash from other ones. We learnt an awful lot from what happened and we now run the finances of the company taking on board what we learned."
Like many other companies, BP learnt the importance of maintaining a robust liquidity buffer to deal with unexpected operational and macro-economic hazards. Most treasury departments now see the need to minimise risk by introducing stronger cash management practices.
"We're now back to single-A stable," Gilvary continues. "I now know cash forecasts for up to 18 months in advance, which is an important bit of muscle to have built. We're also investing in 15 new projects where the average cash margin will be double our average portfolio, and brought in cash from other asset sales. The mix of production is being rebalanced to become higher-margin, and higher revenue-generating for the shareholder."
The ten-point plan
Outside the finance function, BP a year ago announced the next stage of its wider corporate response to the Macondo spill, releasing a ten-point plan designed to restore trust, manage risk and grow value.
"The mantra that we've had for the last three years is safety, rebuilding trust with stakeholders, partners and governments, and adding value for shareholders," he says. "My focus is on making sure we have a strong control environment that underpins the delivery of that ten-point plan."
Executing his side of the strategy will be one of the main tasks Gilvary faces during his time as CFO, as will be maintaining strong and enduring relationships with BP's shareholders, who he needs to understand and support the goals of the plan and the direction BP is taking.
"I probably spend at least 20% of my time right now with investors to make sure they know where we are," he says. "At the moment the company has two large uncertainties: one in Russia, which has taken a major step forward with our recent agreement with Rosneft, and the other in the US with our ongoing discussions with the Department of Justice. Those two things create an overhang for the investors so we have to keep our organisation focused on delivering the ten-point plan."
In fittingly sporting terms, BP has recently described itself as a marathon runner, facing obstacles and distant challenges as it attempts to implement full-scale change. The company has already taken significant steps towards fulfilling several aspects of the ten-point plan, for example improving safety and risk management after a lengthy internal review.
These developments will come to define the business over the next few years, but they haven't held Gilvary back from pursuing other areas of personal and corporate interest.
"We're making changes to our approach to diversity and inclusion, rebalancing the fact that, at a certain level in the company, the gender and ethnic diversity just isn't right," he says. "So we're working with various teams to try and address that."
He also emphasises the importance of developing financial capability at all levels of the organisation. BP has a highly regarded CFO excellence programme as part of the wider financial university put together by Iain Macdonald.
"We went out and looked at a number of organisations to see how they develop finance capability," Gilvary says. "And we created this finance university, where we bring in academics from outside places like the Wharton Business School and Cambridge."
The course has various different components on the commercial and technical side, from strategic and performance planning through to business development and growth. The most recent addition - the CFO excellence module - is a five-day course designed for senior finance leaders to take in the basics of the CFO position: accounting, reporting, control and risk management.
Encompassing different roles in different countries, Gilvary's 26 years at BP have certainly been eventful.
"There's just something about loyalty," he says looking up at the ceiling. "I've grown up with this company for three long decades because of the people who work here and the values we have. Every morning I ask myself two questions: 'Am I making a difference?' and 'Am I still learning?' Provided the answer to those two questions is yes, I'm not going anywhere."
As a child, Gilvary's local petrol station was BP-branded, the functional square-shaped garage and yellow-green logo impacting him in ways he could never possibly have imagined. Now, at the helm of the company of his boyhood daydreams, he has an opportunity to make an even more profound impact.