Transocean claims 2010 as its ‘best year in safety performance’

No, it’s not an April Fool’s joke.

Transocean, the owner of the Deepwater Horizon drilling rig that exploded, killed 11 workers and caused one of the largest environmental disasters in U.S. history, said in SEC filings Friday that 2010 was “the best year in safety performance in our company’s history,” which meant top executives were granted bonuses reflecting those results.

Despite the 11 deaths (nine worked for Transocean) and what was likely a year with fewer overall working hours because of the Gulf of Mexico drilling moratorium, Transocean’s safety metrics still put 2010 ahead of 2009. That year, four Transocean workers died and the company waived executive bonuses “to underscore the company’s commitment to safety.”

Twenty-five percent of the total Transocean executive bonuses are linked to the safety data, which is divided into two components: the rate of incidents per 200,000 hours that employees work and the potential severity of the incidents.

The rate of incidents saw a 4 percent improvement while the severity rate was about 6 percent better than the target rate. Although that would have allowed for a safety award of 115 percent, the company cut the percentage to 67.4 percent.

BP is considered the operator of the project and has been identified in all of the independent reports issued so far as the company most at fault for the accident. And Transocean’s contract with BP essentially frees it of any spill liability. But most of the crew of the rig were Transocean employees.

While the filings don’t appear to spell out specifically how much of the annual bonuses were tied to safety performance, here is the total amount top executives received in “non-equity incentive plan compensation”:

  • Steve Newman, president and CEO: $374,062
  • Ricardo Rosa, chief financial officer: $150,528
  • Eric Brown, president, legal and administration: $113,612
  • Arnaud A.Y. Bobillier, executive vice president, asset and performance: $131,040
  • Ihab M. Toma, executive vice president, global business, $109,040
  • Robert L. Long, former CEO: $86,912
  • Cheryl D. Richard, former senior vice president of human resources, technology: $39,245

This is how Transocean explains its safety measurements in its SEC filings:

Safety Performance. Our business involves numerous operating hazards and we remain committed to protecting our employees, our property and the environment. Our ultimate goal is expressed in our Safety Vision of “an incident-free workplace—all the time, everywhere.” The Committee sets our safety performance targets at levels each year that motivate our employees to continually improve our safety performance toward this ultimate goal. Twenty-five percent of the total award opportunity is based on the overall safety metric.

The Committee measures our safety performance through a combination of our total recordable incident rate (“TRIR”) and total potential severity rate (“TPSR”).

    • TRIR is an industry standard measure of safety performance that is used to measure the frequency of a company’s recordable incidents and comprised 50% of the overall safety metric. TRIR is measured in number of recordable incidents per 200,000 employee hours worked.
    •TPSR is a proprietary safety measure that we use to monitor the total potential severity of incidents and comprised 50% of the overall safety metric. Each incident is reviewed and assigned a number based on the impact that such incident could have had on our employees and contractors, and the total is then combined to determine the TPSR.

The occurrence of a fatality may override the safety performance measure.

The Committee set our TRIR target for 2010 at 0.73 and our TPSR target at 38.0. For TRIR, achievement of this target would reflect a 5% improvement over 2009 actual results. For TPSR, the target set for 2009 was maintained as the target for 2010, as 2009 actual results fell short of the 2009 target by 9.6%. Achieving performance at the target levels would result in the Named Executive Officers receiving a payout of 100% of the target bonus amount for this performance measure.

Based on the foregoing safety performance measures, the actual TRIR was 0.74 and the TPSR was 35.4 for 2010. These outcomes together resulted in a calculated payout percentage of 115% for the safety performance measure for 2010. However, due to the fatalities that occurred in 2010, the Committee exercised its discretionary authority to modify the TRIR payout component to zero, which resulted in a modified payout percentage of 67.4% for the safety performance measure.

Transocean is also embroiled in a bit of a dispute with Michael Bromwich, head of the Bureau of Ocean Energy Management, Regulation and Enforcement over a set of its employees who are refusing to testify before next week’s hearing of the joint U.S. Coast Guard/BOEMRE investigation panel in New Orleans.

22 Comments

  1. Buckman

    TRIR does not take into account fatalities. TRIR also known as the “Recordable Rate” just considers injuries requiring medical treatment beyond basic first aid. Since these 11 workers required no medical treatment they are not considered in the TRIR rate.

    #1
  2. Tex

    This is just a numbers game from TOI. What a slap in the face to those who died, their families and those who got hurt and all those who were affected on the Gulf coast from the Horizon incident.

    #2
  3. ThomasPaine

    Buckman, don’t try to talk sense to the oil-haters. They have their minds made up that oil and all of its byproducts are evil. They continually say so on their plastic-encased ipads, powered by electricity, programmed on microchips, while wearing their manufactured clothing. Don’t tell THEM there is anything good about oil or the companies that produce it.

    #3
  4. pinnywoodsrooter

    Hate to think about how disastrous Transocean’s second best “safety performance” year was. For its worst year, maybe it was responsible for the 1900 Galveston Storm.

    #4
  5. tanstaafl

    These guys have no shame. You would think that the many good guys in oil and gas would be laying into these boneheads.

    #5
  6. Bonuses tied to safety? After that horror show? =/

    #6
  7. BudaSeis

    What constitutes a bad year?

    #7
  8. BudaSeis

    The only woman on the list gets the smallest bonus by far, even smaller than the man who doesn’t work there any more. What are the odds of that?

    #8
  9. sluggy

    Interesting… more than *twice as many* employees get killed on the job than the previous year, yet they declare it their ‘Safest Year Ever’, & bonuses for the head honchos. They just jiggered those ‘metrics’ around a bit…

    Then there is this tidbit in that SEC filing that the article links to:

    The Board of Directors proposes that discharge be granted to the members of the Board of Directors and executive management from liability for activities during fiscal year 2010.

    This is one of the proposals for (copied from the link):
    ANNUAL GENERAL MEETING OF TRANSOCEAN LTD.
    Friday, May 13, 2011
    4:00 p.m., Swiss time,
    at the Lorzensaal Cham, Dorfplatz 3, CH-6330 Cham, Switzerland

    So.. they give themselves bonuses, and want to be absolved of liability as well.
    Sounds like business as usual.

    #9
  10. BON JOVI

    Buckman exactly! I was just about to make that comment. Also those reality driven people in the industry realize that safety figure is massaged a lot. In fact lots of studies show a ficticious safety record massaged for bonus’s etc is directly proportional to serious safety incidents aka process upsets, equipment failure, etc etc.

    #10
  11. Spendmoney

    I have always been amazed at how upper management finds a way to reward itself. They control the money so the greater part of it is shared amongst them. The employees should receive the greater sliding scale of the money and very little to zilch should go to management. You have employees that work for less than a 10th of the big shot but because “Mr. Big” says, “we will now focus on safety and every employee should do this that or get fired”. At the end of the year employees that messed up (but still useful) are given low ratings therefore low rewards. Management looks at the overall picture and says “we did do a better job with our safety program”. I deserve this much, and that trust me is a chunk of the cash. What are managements’ risks? Office paper cuts, neck injures from sleeping, sunburn from golfing, bad back injury from dubious closed office positions, or the daily risk of driving to work with a cell phone.

    #11
  12. Drew

    Slice it however you want, call it whatever you want, is 2010 was the “best year in safety performance,” I would hate to see a bad year. How about those bonuses??? ROFLMAO!

    #12
  13. karatelady

    Just when I think I’ve seen everything… I’m not against oil. I support *responsible* production. Unfortunately, it appears that most (?all?) oil companies think only of short-term gains. The right thing to do is the *cheaper* thing to do, but *only* in the long run. But how to get companies to do the right thing when all the other companies aren’t? Then the attitude is “Well, we’re gonna get more regulations anyway, might as well squeeze out as much profit as possible now…” Since fines obviously aren’t a strong deterrent, I think jailtime should be added & the top execs go to prison for at least 2-5 yrs, maybe more. After all, isn’t jailtime a possible consequence in drunk driving or other manslaughter-type cases? We should expand this principal from an individual level to a “class-action” level where if your company hurts or kills someone (or some people), you are on trial too. That might get some execs to think twice about what they’re doing – no matter what industry they are in. (Anybody remember ENRON? What about the nuclear plants in Japan?!)

    #13
  14. AKH

    Does something happen to the brains of people who become Senior Executives? Even someone with no managerial training ought to be able to tell that handing out “Safety” bonuses in a year where 11 people were killed in one of the most catastrophic accidents in recent memory is just stupid. Congress will have a field day with this one. Safety measurement is an exercise in numbers manipulation in the industry in general, but to be so insensitive to public perception is not smart. It’s not like the folks on that list didn’t already make a comfortable living…

    #14
  15. Isn’t this the same group that says it’s “employees will not cooperate in th curremt investigation hearings? Yep.
    Foreign sleezballs and we let em right in.
    Hope someone gets it right back in the court system.
    That’s how exxon learned and now they run a pretty good ship .
    Meanwhile billy bob and the industry short termers do more harm than good
    defending Trans O , the bloddy britts and the like minded.

    #15
  16. Tom Fowler

    mikebone one:
    They’re really not foreign. Just incorporated in Switzerland for tax purposes. Most likely just as “American” as any other international oil field services firm, with largest office in Houston.

    #16
  17. Chris

    Transocean claims 2010 as its ‘best year in safety performance’

    Obama claims he has been a good president.

    #17
  18. Chris

    While the filings don’t appear to spell out specifically how much of the annual bonuses were tied to safety performance, here is the total amount top executives received in “non-equity incentive plan compensation”:

    •Steve Newman, president and CEO: $374,062
    •Ricardo Rosa, chief financial officer: $150,528
    •Eric Brown, president, legal and administration: $113,612
    •Arnaud A.Y. Bobillier, executive vice president, asset and performance: $131,040
    •Ihab M. Toma, executive vice president, global business, $109,040
    •Robert L. Long, former CEO: $86,912
    •Cheryl D. Richard, former senior vice president of human resources, technology: $39,245

    I thought the annual $ 100,000 that the average WI kindergarten teacher made was outrageous, but then again, taxpayers do not pay the salaries of private companies.

    #18
  19. Tom Fowler
    #19
  20. Slim Chance

    Say now more, nudge, nudge.

    #20
  21. airdale

    Hey Chris, there’s this neat new thing on the internet called Google and you can enter requests for data on any subject you like and really can find the truth…unless you don’t want to.
    And OBTW, taxpayers do pay for oil industry salaries,their Caribbean condo’s and those “First Oil Parties” where they pat each other on the back about how good they are every single time we go to the pump, buy a plastic bottle or use any other petroleum based products we have no alternative to at the moment. Ya got us by the b*lls…congrats!

    #21
  22. lady

    It may have been their best year. However having lost my Grandson I must say it was by far not our best year; nor do we feel the coming year is going to be good. They say time heals all wounds but I doubt that. Try telling that to his 2 year old son who goes around looking for him. Or his 6 year old daughter that talks about whather Dad did or will do “someday” Who had the best year?

    #22