Colin Barr

Following the money in banking, economics, and Washington

Bonuses come first at Transocean

April 4, 2011: 1:48 PM ET

The oil driller committed the corporate public relations blunder of the year, then followed up with an empty apology. What will it do for an encore?

Making full use of its April 1 filing date, Transocean's (RIG) proxy statement deemed 2010 the "best year in safety performance in our company's history," by certain statistical measures. In a small oversight, those stats ignored the 11 deaths caused last April when the company's Deepwater Horizon drillship exploded in the Gulf of Mexico. Nine of those killed worked for Transocean.

A company at sea

When this disconnect came to light, Transocean retreated a half step. It issued a statement conceding that the safety claim "may have been insensitive" and adding that the company "continues to mourn the loss of these friends and colleagues."

"Nothing in the proxy was intended to minimize this tragedy or diminish the impact it has had on those who lost loved ones," the company said.

But you could swear the impact Transocean is really concerned about is the one on its executives' paychecks. Transocean made the ludicrous safety claim to justify paying five top executives $898,282 in bonuses – a quarter of which are explicitly tied to the company's safety performance.

It seems like it should be hard to qualify for a safety-related bonus in a year in which one of your rigs blows up, causing deaths and dozens of injuries. Indeed, Transocean itself made that case in 2009, when it withheld executive bonuses after four of its workers were killed in workplace accidents.

The board's compensation committee "took this extraordinary action to underscore the company's commitment to safety and to increase the incentive for executive officers to promote the goal of an incident-free workplace and, in particular, the avoidance of future fatal accidents," Transocean said in last year's proxy statement.

But for some reason, Transocean has lost interest in increasing that incentive this time round. Friday's proxy statement makes no mention of withholding bonuses for the sake of putting safety first. Instead, it shows that the compensation committee had the option to pay execs 115% of their safety-related bonus target -- and decided instead to pay them 67% of that sum, what with the deaths and all.

That sort of hair-splitting isn't going to put Transocean's directors in the next edition of Profiles in Boardroom Courage.

Transocean didn't comment, but it seems safe to say the company isn't going to do an about-face and have the executives return the bonuses. That's too bad, because a company that truly put safety first – or is really concerned about the sensitivities of dead employees' families and friends -- might have done so.

After all, the top five executives – CEO Steven Newman, finance chief Ricardo Rosa, top lawyer Eric Brown, and executive vice presidents Arnaud Bobillier and Ihab Toma – together earned $19.6 million in compensation in 2010. Giving back a measly 5% of that sum is not going to put anyone in the poor house -- and come to think of it, should that even be a consideration?

But this being Transocean, first we must consider how the execs feel.  Despite the fact that 2010 was a debacle that will be forever remembered as the year the Deepwater Horizon blew up, Transocean moved last year to pay Rosa, Brown, Bobillier and Toma some $2.8 million in stock-based "special retention awards."

Because, needless to say, every oil drilling company is going to be bidding for these guys after the great job they've done. It's starting to look like every day is April Fool's Day at Transocean.

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About This Author
Colin Barr
Colin Barr
Senior Writer, Fortune

Colin Barr has covered finance for Fortune.com since November 2007. Previously he was a writer and editor for TheStreet.com, winning a 2006 Society of American Business Editors and Writers award for "The Five Dumbest Things on Wall Street," and for Dow Jones Newswires. He is a 1991 graduate of Penn State and lives in Port Washington, N.Y., with his wife Meena Bose and their two kids.

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