I was hoping this was a twisted April Fools’ Day joke but apparently it’s not. From the Associated Press:
“Transocean Ltd. gave its top executives bonuses for achieving the “best year in safety performance in our company’s history” – despite the explosion of its oil rig that killed 11 people and spilled 200 million gallons (757 million liters) of oil into the Gulf of Mexico.”
Now I don’t pretend to understand executive compensation. My experience is in the realm of store level compensation, specifically in regards to quarterly and annual bonuses. However, if I’m reading this article correctly it doesn’t appear to be much different.
The programs I managed awarded individuals and groups who met certain goals, which is what Transocean did. The article states that “the company still had an “exemplary” safety record because it met or exceeded certain internal safety targets concerning the frequency and severity of its accidents, according to the filing with the Securities and Exchange Commission on Friday.“ So it appears that, in spite Transocean’s role in the largest offshore oil spill in history, it was on or above their target goals.
Also, I’ve worked for organizations that provided a clause in its compensation program which, generally stated, made bonus payouts contingent upon certain criteria being met. For example, if an employee was on disciplinary action, or if the company was unable to pay out bonuses due to a financial emergency.
Where was the language in the Transocean’s bonus program to protect the company from paying these types of bonuses? Or were they locked in and didn’t have a choice (as this BBC article implies)?
So I asked if they could share their thoughts. Currently I received 2 responses. Franny O. and Steve Browne provided much needed perspective on the situation.
- They could need to keep the folks involved employed/fat and happy, so they’ll remain witnesses FOR Transocean rather than against them, as hearings and trials continue.
- They could just see a greater risk in failing to honor the terms of their employment contracts than in losing what small amount of credibility they have with the general public, especially since much of the media has moved on from this tragedy.
- They could honestly be that tone deaf.
So some great points were made. In looking at just the big picture I lost sight of some things. I viewed Transocean as a monolithic organization, almost as a person, instead of an entity composed of hundreds of employees. Those that received the bonuses may not have had any direct ties to the disaster. Also, my perception around these bonuses shouldn’t take away from the fact that safety measurements did show improvement. If this led to less deaths and accidents then that’s to be applauded.
It also highlighted how tricky incentives can be. What measures a company focuses on (“avoidance vs. performance” as Steve pointed out) and how they reward employees don’t always turn out to be the right ones, either internally or in the public’s eye. I’d be curious to know if non-executives had the opportunity to participate and if so, what the bonus structure looked like for them.
In conclusion, while it appears callous and short-sighted, I’ll concede that there could be more to the story than what’s currently being reported. Again, I believe the leadership at Transocean, if they wanted to regain public trust, should be up front about the bonus payments. If not then they can expect people to draw their own conclusions.