Image: Deepwater Horizon oil rig burns
AP file
The Deepwater Horizon oil rig burns April 21, 2010, after an explosion. The disaster killed 11 workers. staff and news service reports
updated 4/3/2011 11:58:35 AM ET 2011-04-03T15:58:35

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, including nine of its own employees, and spilled 200 million gallons of oil into the Gulf of Mexico.

The company said in a regulatory filing that its most senior managers were given two-thirds of their total possible safety bonus.

Transocean noted "the tragic loss of life" in the Gulf when the rig operated by BP PLC exploded last April. But it said 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.

Safety accounts for a quarter of the executives' total cash bonuses. The total bonus for CEO Steve Newman last year was $374,062.

According to calculations by The Associated Press, the total value the company assigned to Newman's compensation package was $5.8 million.

That figure includes an $850,000 base salary — a 34 percent increase from the prior year; perquisites of $622,057, which includes housing and vacation allowances, among other things; and the $374,062 bonus. Also included in the figure are stock options valued at $1.9 million and deferred shares valued at $2 million when those awards were granted in March 2010.

Transocean's Deepwater Horizon oil rig explosion on April 20 in the Gulf of Mexico killed 11 workers and set off the largest offshore oil spill in U.S. history.

A commission appointed by President Barack Obama earlier this year said the explosion was caused by a series of time and money-saving decisions by Transocean, BP and oil services company Halliburton Inc. that created an unacceptable amount of risk.

In the regulatory filing, the company said its bonuses were appropriate as a way to recognize its executives' efforts in "significantly improving the company's safety record" and implementing a new internal planning system.

Those efforts have "enabled the company to maintain its financial flexibility during a challenging period, while, at the same time, positioning the company for sustained growth in the future."

The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the SEC.

The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.

"Of the 126-member crew, 115 were safely evacuated," Transocean President and CEO Steven Newman said in a message on the company's Web site. "Despite exhaustive rescue efforts, eleven crew members lost their lives, nine of which were Transocean employees.

"Our entire Transocean family has been saddened by this tragic event and our thoughts and prayers remain with all who have been affected by this horrible tragedy."

According to Berniard Law Firm of New Orleans, three of the families of the 11 victims have settled with Transocean.

It's not clear how much those who settled received in total, but according to Berniard's BP Oil Spill Lawyers Blog, "The settlement included a long-term plan for the deceased rig worker's dependents as well as a charitable fund that distributed $130,000 to all the families in July."

"To put this into perspective, an oil rig employee's annual salary can range anywhere between $55,000-$125,000 per year," said the blog post, arguing that the company had fallen far short of its responsibilities.

In a show of respect to the 11 men, 11 stars were imprinted on the well's final cap.

An investigation of the disaster by the Department of Justice is ongoing, and media reports have suggested that criminal charges are possible, most likely aimed at British Petroleum and/or Transocean, which leased the oil rig to BP. According to the reports, the companies or individual officers of those companies could face manslaughter charges for the deaths of the 11 workers, although legal experts say such charges would be difficult to levy.

According to a recent Washington Post report, investigators are also examining violations of environmental laws and whether company officials made false statements to regulators, obstructed justice or falsified tests for key pieces of equipment, such as the rig’s failed blowout preventer.

Even if no criminal charges are filed, BP and its contractors are expected to face civil penalties worth billions of dollars.

Separately, BP set up a $20 billion fund for compensating tens of thousands of Gulf coast residents whose livelihoods have been affected by the oil spill. The fund, administered by Kenneth Feinberg, faced with about 500,000 claims, has so far paid out about $3.6 billion to 172,000 claimants.

Feinberg has been criticized for the pace and seemingly arbitrary outcome of claims processing. Fishermen, tourism companies and others have complained that the compensation is insufficient or that they were denied without explanation. staff contributed to this report from The Associated Press.

© 2013


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%