Wall Street ran into a storm of public outrage by rewarding bankers with hefty bonuses while memories of the 2008 market crash, and federal bailouts, remained fresh. Now Big Oil is under the microscope after the disclosure by Transocean Ltd., which had nine employees killed in last year’s Gulf of Mexico oil rig disaster, that it paid nearly $900,000 in “safety” bonuses to its top executives.
Swiss-based Transocean, the owner of the ill-fated Deepwater Horizon rig, quickly backtracked, saying it would donate a quarter of the money to charity. But that has done little to stem the outcry. “Transocean has achieved the rare feat of making Wall Street bankers look relatively restrained on pay,” two Reuters columnists wrote.
In all, 11 workers died in the explosion of the Deepwater Horizon rig. A presidential commission that investigated the accident spread blame among Transocean, BP — which leased the rig — and Halliburton, which installed the rig’s cement casing.
But in a filing with the Securities and Exchange Commission, Transocean disclosed that it had paid $898,282 in 2010 bonuses to its chief executive, Steven Newman, and four other executives. “Notwithstanding the tragic loss of life in the Gulf of Mexico, we achieved an exemplary statistical safety record as measured by our total recordable incident rate and total potential severity rate,” the filing explained. “As measured by these standards, we recorded the best year in safety performance in our company’s history.”
Transocean’s executive compensation committee also awarded base pay raises in February, with Newman’s salary going up from $900,000 in 2010 to $1.1 million this year.
U.S. Interior Secretary Ken Salazar led the chorus of outrage. “In my own view, 2010 was probably the greatest year of pain in terms of oil and gas development in the deep water all across the world, especially in the Gulf of Mexico,” he said. William Reilly, co-chair of the presidential commission that investigated the disaster, chimed in, saying, “It’s been said with respect to the disaster that some companies just don’t get it. I think Transocean just doesn’t get it.”
Transocean quickly acknowledged in a statement to CNN that “some of the wording in our 2010 proxy statement may have been insensitive.” But with the media storm still raging, it announced that $250,000 of the safety bonuses would go to the Deepwater Horizon Memorial Fund, which was established by Transocean to assist the families of the disaster victims.
“We offer our most sincere apologies and we regret the impact this matter has had on the entire Transocean family,” Newman said in a news release.
Still, Fortune blogger Colin Barr questioned why the executives didn’t manage “to give back their entire bonuses, which seems to be the course the board set by withholding bonuses in 2009, a year in which four people were killed in accidents at Transocean.” He noted wryly that as a result of the donations, the “Transocean Five’s” total pay for 2010 had shrunk “from a respectable $19.6 million to an unthinkable, wage-slaving, poverty-inducing $19.3 million.”
The following table shows the 2010-11 salaries of the executives and their 2010 bonuses:
| Salary | 2010 Bonus | ||
| 2010 | 2011 | ||
| Steven Newman (chief executive officer) | $900,000 | $1,100,000 | $374,062 |
| Ricardo Rosa (chief financial officer) | $450,000 | $500,000 | $150,528 |
| Eric Brown (executive vice-president) | $468,000 | $500,000 | $133,612 |
| Arnaud Bobillier (executive vice-president) | $392,000 | $435,000 | $131,040 |
| Ihab Toma (executive vice-president) | N/A | $435,000 | $109,040 |
