British oil giant BP announced Tuesday morning that embattled CEO Tony Hayward would step down from his position on October 1, and his American deputy, Bob Dudley, would assume to top job.
In a statement accompanying its earnings update on Tuesday, BP said the decision was made by "mutual agreement."
The company said Dudley would be based in London when he takes up his appointment and will hand over his present duties in the United States to Lamar McKay, the chairman and president of BP America.
The newly named CEO his top priority would be sealing the company's blown oil well for good, and cleaning and restoring the Gulf of Mexico.
Hayward has been slammed by U.S. officials - including President Obama - for his handling of the Gulf oil spill.
Hayward is the bone being thrown to the angry dog of public opinion, reports CBS News correspondent Mark Phillips.
And as sacrificial lambs go, Hayward is an expensive one. Phillips reports the golden handshake from BP will involve a year's salary of $1.6 million, a pension worth roughly another million dollars every year, and BP shares that could be worth many more millions -- if the company's stock price recovers.
BP said Tuesday the company was allocating $32.2 billion to cover the costs of cleaning up after the spill and compensating the thousands of Gulf Coast residents put out of work by the waves of crude oil. The company said it would sell $30 billion worth of assets over 18 months to help foot the bill.
The cost figures were released along with BP's quarterly earnings report -- a record loss of $17 billion for the second quarter.
Special Section: Disaster in the Gulf
Hayward is to take a job with the company's joint venture in Russia, TNK-BP. BP owns half of the oil firm, which is Russia's third-largest. It was once run by Dudley.
CBS News correspondent Kelly Cobiella says, right from the start of the Gulf disaster, Hayward couldn't seem to get it right. First came his predictions that the impact from the oil spill would be modest; then the stinging gaffe when he told television cameras he was eager for a conclusion to the catastrophe so that he could get his "life back."
The final gaffe: being spotted sailing off the English coast as BP's well kept gushing. Analysts say the pile of public relations mistakes, along with a 40 percent drop in the company's worth, left the board no choice but to remove him.
After Hayward's series of missteps, Dudley, the current Managing Director, took over as BP's point man in dealing with the spill. He was in London on Monday with other board members.
Dudley will be the first non-British CEO in BP's 100 year history. "He's a very good delegator," Oppenheimer & Co. senior analyst Fadel Gheit said of the 54-year-old Dudley.
It also helps that Dudley can identify with the people and the region.
Dudley spent time growing up in Hattiesburg, Miss., an easy drive from the coast. He spent two decades climbing the ranks at Amoco Corp., which merged with BP, and lost out to Hayward on the CEO's slot three years ago.
Dudley is viewed as more of a diplomat than Hayward, who angered U.S. lawmakers with his refusal to answer many of their questions during testimony in Washington on the spill.
Last week, the company said its containment and cleanup costs to date had totaled approximately $3.95 billion. The company has also agreed to create a $20 billion fund to pay out claims arising from the disaster, which has decimated the Gulf Coast.
The change in leadership will not change the mammoth tasks ahead for BP, from stopping the offshore oil gusher for good, to cleaning up the millions of gallons that have already leaked, to paying billions in claims - all while defending its stock price and repairing its battered reputation.
Hayward has become the battered face of BP's efforts to contain the Gulf of Mexico oil spill and clean up the damage. He was called back to London a month ago after a bruising encounter with a Congressional committee and has since kept a low profile.
"We're getting to the end of the situation," said David Battersby at Redmayne Bentley Stockbrokers. "To draw a line under it, they need a new chief executive."
Many Gulf residents found small comfort in Hayward's imminent departure as BP's biggest mistake under Hayward continued to foul their waters, their beaches and their way of life.
"His first concern should have been the livelihoods of the people of the Gulf of Mexico," Rep. Edward Markey, D-Mass., told "The Early Show" on Monday.
There has been persistent speculation that chairman Karl-Henric Svanberg, who moved into the post on Jan. 1, is also likely to lose his job later this year.
Rep. Edward Markey, D-Mass., chairman of the House Subcommittee on Energy and the Environment, told CBS' "The Early Show" on Monday he was, "hopeful that Mr. Dudley will be more responsible, but a total change in the culture of this company is what's called for."
Markey added that new BP management and the expected permanent seal of the oil well would not end the challenge of dealing with the disaster, the consequences of which, he said, would "go on for months and potentially for years."