I believe that much of the time the corporate sector is unfairly treated by the media, politicians, and the public. Part of this conviction arises from my experience working at the U.S. Chamber of Commerce, directly under its current president when he was a rising young Turk. I dealt with corporate executives every day, and got to see the challenges of big business from their side. Most of the time, they struck me as genuinely concerned about workers, communities, fairness, while believing, of course, that an unfettered private sector was in the economic interest of everyone.
Increasingly, however, I see corporate behavior that is so arrogant, so transparently greedy, so contemptuous of the public’s intelligence, so blatantly, obnoxiously wrong that I wonder if it was all a dream. There was AIG, accepting billions from American taxpayers to save it from the consequences of its own fiduciary crimes, immediately spending some of it on lush retreats and parties for its executives. There were the leaders of Goldman Sachs, telling gape-jawed U.S. Senators that, no, they didn’t see anything unethical about selling their trusted clients investment products so awful that the company made money betting on their failure. There are the U.S. banks, hoarding their money and refusing to refinance mortgages that were unconscionable to begin with, preferring to make the nation’s economic problems worse by foreclosing on families’ homes rather than making a good faith effort to undo a human and social catastrophe that was substantially of their own making.
Now comes the news that Transocean Ltd., owner of the Deepwater Horizon oil rig, has announced that it is giving millions of dollars in bonuses to its executives after “the best year in safety performance in our company’s history.” Which seems perfectly reasonable, unless you want to make a big deal over that one little Gulf oil spill incident last April…you know, the one that began when a Transocean oil rig exploded, killing eleven people including nine Transocean employees.
The company explains all that perfectly well, though:
“Notwithstanding the tragic loss of life in the Gulf of Mexico, we achieved an exemplary statistical safety record as measured by our total recordable incident rate and total potential severity rate. As measured by these standards, we recorded the best year in safety performance in our Company’s history, which is a reflection on our commitment to achieving an incident free environment, all the time, everywhere.”
Yes, and Japan’s nuclear industry has just finished a tremendous decade, with a superb safety record. Certainly, this is a good time to recognize their fine work, and excellent safety statistics, by rewarding that industry’s executives. Transocean’s deceit and shamelessness is really beyond belief. Even BP isn’t this absurd: it denied top executive bonuses in 2010, for the obvious reason.
Forbes reports, however, that Transocean President and Chief Executive Officer Steven L. Newman received about $4.3 million in cash bonuses and stock and option awards. With pension increases and cost of living, housing, and automobile allowances, Newman earned $6.6 million in 2010, almost $1 million more than in 2009. His base salary of $900,000 in 2010, will increase 22 percent to $1.1 million in 2011. Which is fair, because his company has one hell of a good year—except for its part in crippling the deep water oil drilling industry, destroying the ecosystem in the Gulf region and ruining businesses, families and lives.
There just is no reasonable explanation for the Transocean bonuses and its astounding justification of them that doesn’t contain the words contempt, arrogance, insult, and greed. These executives are just awarding themselves huge amounts of money because they can. They know it will outrage everybody, and they just don’t care. It’s not as if this is a consumer company that worries a lot about its public image, and besides, the public is too inattentive to remember more than one villain for the Gulf spill, and BP has only two letters.
I know the company’s counter-argument; it is the same one we heard from indignant AIG executives when the company caved to public and Congressional outrage and eliminated many of its 2009 bonuses. “We weren’t responsible for the bad things that happened; we did our job well, and we deserve to be rewarded.” To which the answer is, “No, you are responsible. When a company fails in such a stupendous manner, every member of management is accountable. Your team stunk, no matter how well you may have performed personally, and you don’t deserve to get a bonus as if the team won the championship.”
Corporate bonuses once were a useful incentive to reward outstanding performance. Now, they are just a way of looting the company, cheating stockholders, and misallocating resources. Until corporations can be trusted to withhold bonuses under circumstances that demand accountability and remorse—which may mean never—bonuses should just be banned, taxed at a rate of $110%, or subject to fines larger than the bonuses themselves. They are too easy to abuse, and too many corporations clearly have no compunction against abusing them.
Since they won’t be banned, taxed or fined, what do we do with companies like Transocean who give a middle finger to decency and fairness, and pat themselves on the back for a job miserably done? I’m not buying one of their oil rigs, I can tell you that; somehow, however, I think a boycott isn’t going to work. We might begin by hating them, but hate is like mercury; it gets out of hand and poisons everything it touches. Frankly, I don’t know what we can do to make despicable conduct like this sufficiently painful for business executives that they are willing to forgo outrageous self-enrichment to stop the pain.
We just have to find a way.
[Thanks to Rick Jones for the topic and a link. You can find additional information on the Transocean bonuses in his excellent post on the topic, here.]
11 thoughts on “Outrageous Corporate Conduct 2011: Transocean’s Unconscionable Bonuses”
Damn. I got “arrogant,” “insult” and “greed” (well, “greedy”), but I left out “contempt” in my piece. I did use “obscene” and “hubristic,” though. Can I get partial credit?
Arghh. I missed “hubristic.” By the way, don’t hesitate to put your links up here, Rich—they are welcome.
So be it: http://manjushri924.blogspot.com/2011/04/outrage-is-there-but-where-is-outlet.html
I just finished it, and added the link to the post as well. Great job, Rick.
I hadn’t noticed that you had a Mrs. Lincoln at the theatre reference, too. Great minds…
One of my late dad’s favorite gags, and a great example of selective focus.
And one of my favorites is:
“But WHY won’t you contribute to Native American charitable relief, Mrs. Custer?”
Contempt, arrogance, insult, and greed indeed. And absolutely shameless.
Obama takes a public anti-corporate stance, though it’s clear he’s in pocket of the Fortune 500. ( What’s he done for small business lately?) And how many people know that Fannie Mae executives — who were absolutely integral to the ruination of the housing market — award themselves a whopping $35 million in bonuses for 2010? This is a quasi-government organization, and Obama could have stopped it. He didn’t.
The entire Fannie Mae leadership should be fired — not getting bonuses (this should be pretty obvious). But as their PR person said, “They know the business better than anyone, so they’re the one’s to fix it.!” Would I use that rationale if my plumber made my toilet explode? Nope; think I’d find a different plumber.
Fannie Mae executives’ behavior is almost (but just almost) as much of an outrage as TransOcean’s bonuses — the latter of which leaves me (almost) speechless. (“Great job! Ruined both an ecosystem and the economies of about three states. Kudos to you all!”) Meantime, foreclosures remain at an all time high, people owe more than their houses are worth now, and Fannie Mae execs think they did just a great job???
Keep it up, you guys. Obama’s eventual goal of socialistic control over the private sector is right around the corner if you don’t change your ways.
Government is, unfortunately, in this case, a good teacher.
Oh man. So you mean that wasn’t an April Fool’s joke? I saw the headline Friday and thought how wise it was of that prankster to wait until after the market’s closed.
You missed the common thread. All of the examples of contempt and arrogance are in the finance and energy sector. These areas are monopolies (or effective monopolies). We have to use them and they don’t have to care about us. Everyone’s (private sector) retirement is in 401k and 403b’s. We have to buy stock and they have a monopoly over the transaction. Oil has been effectively a monopoly (look at how the gasoline terminals work) for a long time. What are we going to do, NOT buy gasoline? They are beyond our reach, too powerful for even the US government to touch (remember, stock commissions+ interest payments are roughly the same amount as the Federal Budget).
Now you see how your two visions of corporate America are not so incompatible. You have the competitive corporate America and you have the monopolies.