Transocean execs donate safety bonus after firestorm of criticism
Transocean, the owner of the oil rig that exploded and sank in the Gulf of Mexico, doled out big “safety bonuses” over the weekend. Transocean, which investigators determined was complicit in the 2010 Gulf oil spill, said 2010 was the safest year in the company’s history. After a firestorm of criticism, Transocean announced that the safety bonuses will be donated to the families of the 11 workers killed in the blast.
Transocean: 2010 safest year ever
In 2009, Transocean withheld all executive bonuses after four employees were killed on the job “to underscore the company’s commitment to safety.” This year, Transocean awarded executive safety bonuses on April 2, calling 2010 its best year ever for safety. The explosion of Transocean’s Deepwater Horizon oil rig killed 11 people and gushed about 200 million gallons of oil into the Gulf of Mexico for 86 days. However, Transocean rationalized the safety bonuses in a security filing: “Notwithstanding the tragic loss of life in the Gulf of Mexico, we achieved an exemplary statistical safety record.” Based on the total rate of incidents and their severity, “we recorded the best year in safety performance in our company’s history.” To calculate safety bonuses, Transocean factors the rate of accidents per 200,000 employee hours with a number that rates the severity of the accidents. Despite the 2010 Gulf oil spill disaster, Transocean’s rate of accidents in dropped 4 percent from the year before.
Transocean bonus backlash
A few days after Transocean announced the safety bonuses, Interior Secretary Ken Salazar was in Mexico City with members of the presidential commission that investigated the BP oil spill to discuss offshore drilling regulation with Mexican authorities. In January, the oil spill commission concluded that the 2010 Gulf oil spill could have been avoided. Negligence and errors by BP, Transocean and Halliburton, as well as subcontractors and government regulators, contributed to the disaster. Salazar said Transocean had a role in making 2010 “the greatest year of pain” in deepwater drilling worldwide. William K. Reilly, co-chairman of commission, called the Transocean bonuses “embarrassing.” To offset the PR damage, Transocean issued an apology Monday for “insensitive” wording in the securities filing about the bonuses. When that didn’t work, Transocean said on Tuesday that its five top executives would donate their safety bonuses.
Execs keep most of their bonuses
According to the securities filing, safety accounted for 25 percent of Transocean’s 2010 executive bonuses. The top five executives received $898,282, about 45 percent of their targeted performance bonuses for the year. The safety portion of those bonuses totaled more than $250,000, which will be donated to the Deepwater Horizon Memorial Fund. Transocean has used the fund to distribute more than $1.6 million to the 11 families of the workers killed in the disaster. Transocean CEO Steven L. Newman is on the hook for about $93,500 of that money. Newman made $6.6 million in 2010 in the form of salary, bonuses, incentives, stocks, options and allowances. After giving up the safety bonuses, Newman and his executive team get to keep about $650,000 in cash, plus more valuable “long-term incentives” in the form of stocks and options.