Transocean bonus mess makes Goldman look sensitive
By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Wall Street banks have recently been in a league of their own when it comes to rewarding executives for lousy performance. But by granting safety bonuses, Transocean, the deep sea driller that owned and operated the rig involved in the Macondo disaster, has set a new standard for chutzpah. Hastily donating to a victims’ fund won’t undo the damage. Energy bigwigs on the board have justified public cynicism about the entitlement culture of Big Oil.
Transocean’s recent actions make the likes of Goldman Sachs seem like paragons of sensitivity. In a filing slipped out late Friday the company boasted of its “exemplary” safety record. Despite the deaths of 11 workers on the Deepwater Horizon rig, the firm declared 2010 its “best year in safety.” This “exemplary” performance triggered extra payments to management of $250,000. Only after a media outcry and harsh words from Interior Secretary Ken Salazar, did the management decide to hand over this share of their compensation to the families of the deceased.
True, the sums involved are modest by banking standards (Goldman last Friday disclosed it was paying five top executives an extra $5.4 million each in bonuses). And the company claims the bonuses followed a preconceived formula. But Transocean’s safety evaluation system is clearly flawed if it accords so little weight to 11 human lives, a rig explosion and a massive oil spill. In such a calamitous year, awarding any kind of incentive pay is just plain wrong. Even now executives are keeping over two-thirds of their bonuses.
This even surpasses the egregious insensitivity of 2008, when Merrill Lynch bankers earned bonuses despite driving the firm and its erstwhile savior Bank of America to the brink of collapse and a taxpayer bailout. Given the public outcry over crisis-era bonuses on Wall Street — where, it has to be said, lives were not lost — it is galling to see Transocean’s tin-eared approach. With so many seasoned veterans, from Schlumberger, Shell and elsewhere, on Transocean’s board and its remuneration committee, this act amounts to a broad indictment of the energy industry.
It will be years before Transocean’s full role in the Macondo accident is totally understood. And a final reckoning may place far more of the blame with well-owner BP or contractor Halliburton. Even so, Transocean has achieved the rare feat of making overpaid Wall Street bankers look like good corporate citizens.