You’ve probably heard by now that Transocean announced last week that 2010 was its “best year for safety performance” based on incident rate statistics even though their offshore rig, the Deepwater Horizon, burned down and sank during the largest blowout and oilspill in the history of the US. Eleven workers were killed in the disaster, nine of whom worked for Transocean. The company said their executives qualified for 115% of their bonus amount, which makes up 25% of their overall bonuses. As a token gesture to their dead employees and their families, the company reduced the safety portion of the bonuses to 67% of the target amount.
The public outcry was predictable; I’m amazed that no one at Transocean had thought through the ramifications of filing an SEC document that actually made the claim that they had the best safety year ever. Either their previous years had been even more disastrous, or some lawyer got involved trying to spin the facts of last year’s tragedy. I think it’s the latter, since their safety bonus last year was zero after they experienced four fatalities in 2009. I’m confused.
Anyway. Yesterday, the company belatedly apologized for the gaffe, announcing that the senior executives of the company will donate the safety portion of their bonuses to the Deepwater Horizon Memorial Fund totaling about $250,000. To be clear, they are donating only their safety portion of the bonus. They are keeping the rest of their compensation, totaling over $19 million. How generous.
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Bob Cavnar is a 30-year veteran of the oil and gas industry with deep experience in operations, start-ups, turn-arounds, and management of both public and private companies. He was most recently President and Chief Executive Officer of Milagro Exploration, a large, privately held oil and gas exploration firm based in Houston, Texas with operations along the Texas, Louisiana, Mississippi Gulf Coasts, and offshore in the Gulf of Mexico. Cavnar holds a Master of Business Administration degree from Southern Methodist University and completed the Program for Management Development at the Harvard Business School.
He blogs at dailyhurricane.com.