But as the WSJ reports:
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."
I want to express my view about the obligation of shareholders to hold management accountable and the problems in corporate law and practice that make that difficult (eg staggered boards) but sometimes you need to just look in wonder at where we have got to.
John
Yes. I checked the SEC filing. This was NOT an April Fools joke.
ReplyDeleteIs there any particular historical era when it became undeniable that executive pay was just looting of the shareholders? 1970s? 1980s?
ReplyDelete1890s?
The first executive I remember that went over-the-top was Eisner at Disney. But Eisner at Disney created HUGE value in his first seven to eight years. The book the Disney Wars makes it clear how good he was before he became bad. That was 1980s - but it was the harbinger of stuff that came in the 90s...
ReplyDeleteIn the 80s if the execs were completely egregious the company got a hostile takeover bid. The rise of takeover defenses like staggered boards was an early 90s phenomenon - and it removed the real links between performance and pay.
Just my opinion though.
Short answer - the 80s examples I remember of HUGE pay had pay-performance links.
ReplyDeleteThe 90s examples did not.
John, you are remarkably ignorant when it comes to Transocean history. 2010 was a banner year for safety performance!
ReplyDeleteIf you knew anything about Transocean you'd know that their worst year for safety was 1963, when they accidentally assassinated JFK.
Interestingly, BP's worst year for safety performance was 65 million B.C, when they accidentally wiped out the dinausors (hey mistakes happen!).
Here is another (call it cynical) view: if Transocean did not give any safety bonus, this could be construed as an implicit admission of liability in the Deepwater Horizon accident. At least, that's how they might have justified it in their compensation committee minutes. It's still outrageous, of course.
ReplyDeleteI agree with the previous comment that this was RIG's way of denying any liability for the oil spill. If they didn't give the bonus it would be viewed as an admission of liability that would come up in court. This was a strategic decision, as opposed to an opportunity for management to enrich themselves. I agree with youur general complaint about overpaid management, but I don't think this is a good example, despite the optics.
ReplyDeleteTransocean Ltd. had its best year in safety performance … with notably rare exceptions…
ReplyDelete@Andrew: like.
ReplyDeleteToo bad that you can't organise a run on Transocean via social media...
ReplyDeletehttp://www.guardian.co.uk/business/2011/mar/27/dutch-bankers-bonuses-axed-by-people-power
P.