According to Yahoo News, TransoceanBritish Petroleum oil spill in the Gulf of Mexico last year. executives received safety bonuses for their performance in 2010. This is the same company whose equipment exploded on an oil rig and sparked the oil spill in the gulf of Mexico.
With an estimated cost of more than $8 billion, which included attempts to plug the gap, the spill took at least eleven lives and, according to an information reprographic by the people at Visual Economics, a source for demystifying economic data, their numbers are just the tip of the iceberg. Thousands of people lost their livelihood, many people lost their homes, others had to file for public assistance and many others still wait for compensation from British Petroleum.
In the Yahoo News article, writer Brett Michael Dykes cites many of the negative effects of the oil spill and less on the bonuses to the Transocean executives.
In contrast, Reuter's headline for the same story reads, "Transocean execs giving safety bonuses to memorial fund." This headline provides a more objective perspective, thereby making the Transocean executives appear more humane in accepting the bonuses, without chastising them.
Several large companies have structured the payment of bonuses to their executives into their corporate culture, as evidenced when Lee Raymond, the former CEO of Exxon Oil retired in 2006, whose retirement package reached $400 million which included his pension, perks, stock options and more. The company justification is that it was for a “long and distinguished career.”
When BP Oil executives were awarded bonuses after the Deepwater disaster, the company defended the awards, saying that the two men “had hit their divisional targets.”(MacAlister, www.Guardian.co.uk, 2011)
In the case of the Transocean bonuses, although the company maintains that the bonuses were issued based on its "best year in safety performance", according to the Wall Street Journal, the executives donated the money to the fund developed to aid the families of the eleven workers who died in the explosion. According to Reuter's, more than $1.6 million had been distributed by the Deepwater Horizon Memorial Fund.
Opinions on the morality, business sense and strategic logic of the issuance of the Transocean bonuses has caused speculation about the rationality of the bonuses.
Transocean executives had the best safety record, on a statistical basis, than in many recent years. This was despite the loss of life and enormous damages incurred. In evaluating the number of incidents per year, the company found that the year 2010 had the lowest number on an incident basis. This is the criteria upon which the bonuses were issued. Had the company's criteria for bonuses been based upon the dollar amount or cost to the company in damages, then the same executives may well have lost their jobs, however, this was not the criteria.
Are the executives entitled to receive bonuses if their safety record meets the criteria for a bonus? Tell me what you think.
