You are hereWall St. Journal: Transocean Cites Safety in Bonuses

Wall St. Journal: Transocean Cites Safety in Bonuses


April 2, 2011- Transocean Ltd. had its "best year in safety performance" despite the explosion of its Deepwater Horizon rig that left 11 dead and oil gushing into the Gulf of Mexico, the world's largest offshore-rig company said in a securities filing Friday.

Accordingly, Transocean's executives received two-thirds of their target safety bonus. Safety accounts for 25% of the equation that determines the yearly cash bonuses, along with financial factors including new rig contracts.

The payout contrasts with that for 2009, when the company withheld all executive bonuses after incurring four fatalities that year "to underscore the company's commitment to safety."

In a filing on executive pay, Transocean said, "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."

A spokesman for Transocean said, "The statements of fact in the proxy speak for themselves, but they do not and can not adequately convey the extent to which everyone at Transocean is keeping the families of the men who lost their lives at Macondo in their thoughts and prayers as we approach the first anniversary of the incident." Nine of the 11 dead worked for Transocean.

Transocean uses two safety criteria to calculate executive bonuses: the rate of incidents per 200,000 hours that employees work, and the potential severity of those incidents. In 2010, the rate of incidents dropped by 4% from 2009. A number that measures potential severity of those incidents fell nearly 15% from last year.

Mark Lanier, a Houston lawyer who is representing clients who have claims in the spill, expressed his disgust with the bonuses. "Some things are just gross," he said.

Arleen Weise, who lost her son Adam in the April 20 Deepwater Horizon explosion, said she believed the company was "safety-conscious" and it didn't bother her that Transocean paid bonuses. "Transocean is still being good to us," Ms. Weise said.

Federal investigators are still probing what caused the explosion of the Deepwater Horizon—which was leased by BP PLC—and why a crucial piece of equipment failed to stop the flow of oil into the Gulf. Transocean has largely blamed BP, saying that as the operator, BP had final responsibility for all decisions on the rig. BP, in turn, has said its contractors, including Transocean, made critical errors.

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