Business Breakfast: BP's New American CEO

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Robert Dudley will be the new CEO of BP. He's American! You will still probably hate him. Martin Wolf hates supply side economics. Businesses might hate Obama, but the president sure knows how to pick winners: shares of companies whose CEOs dine with the president are outdoing the S&P. Also, why aren't CEOs hiring? One economist says it has to do with executive compensation. Here are today's five morning stories.

1. BP CEO Tony Hayward Out, Yankee In: On Monday, BP's board is expected to announce that Hayward, 53, will step down on Oct. 1. The departure, say people close to the company, will be his decision as much as the board's. Hayward, a geologist who has spent his entire career working for BP, is said to recognize that he has become a liability as the company tries to move forward.  The board will probably turn to Robert Dudley, who grew up in Mississippi and who joined BP from Amoco after the two firms merged. Dudley would be the first American to run the company once known as British Petroleum. [WaPo]

2. The Political Genius of Always-Be-Cutting Economics: Supply-side economics liberated conservatives from any need to insist on fiscal rectitude and balanced budgets. Supply-side economics said that one could cut taxes and balance budgets, because incentive effects would generate new activity and so higher revenue. [Financial Times]

3. So, Should We Sell Alaska to Fix the Budget? Around the nation, cities and towns facing grim budget circumstances are grasping at unlikely -- some would say desperate -- means to bolster their shrunken tax bases. Like Beatrice, places like Dayton, Ohio, and Grafton, Ill., are giving away land for nominal fees or for nothing in the hope that it will boost the tax rolls and cut the lawn-mowing bills. [NYT]

4. Companies Whose CEOs Dine with Obama Outdo the S&P: Since becoming President, Barack Obama has held seven lunches with small groups of chairmen and chief executive officers, including Jeff Bezos of Amazon.com, Ken Chenault of American Express, Ursula Burns of Xerox, and Howard Schultz of Starbucks. In four of the lunches, the guests' companies, as a group, outperformed the Standard & Poor's 500-stock index 30 trading days after the repast. Altogether, the six lunch groups outdid the S&P by more than two percentage points. [BusinessWeek]

5. Robert Samuelson on the Why CEOs Aren't Hiring: Economist Robert J. Gordon of Northwestern University argues that the "shift of executive compensation towards much greater use of stock options" has made corporate managers more zealous cost-cutters in recessions and more reluctant hirers early in recoveries. Lowering the head count is the quickest way to restore profits and, from there, a company's stock price. [WaPo]


Pancake breakfast image courtesy of ugod/Flickr.
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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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