With Notably Rare Exceptions, RIG Had a Good Safety Year

Henry Farrell wrote a great piece last week about Alan Greenspan’s use of the phrase “With notably rare exceptions” to explain how things were MOSTLY peachy keen under his reign.  My buddy Yangabanga alerted me to yesterday’s announcement from Transocean Corp ($RIG), which falls squarely under Farrell’s meme.  From the Associated Press:

“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 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.”

This seemed like it HAD to be an April Fool’s Joke, but it was from the Associate Press, on April 2nd, and it’s not the kind of topic that the AP would be joking about . I was confused, so I reached out on Twitter, asking someone to explain this to me.  The Anal_yst responded in part that it sounded less bad if you actually read the SEC filing.  So I did:

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 (“TRIR”) and total potential severity rate (“TPSR”). 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.

They almost actually said “With notably rare exceptions….”

-KD

appendix:  for those interested in more details, here’s more from the 8-k filing, emphasis mine:

 

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.

 

So, move along – nothing to see here – they already took the rig explosion into account. (/sarcasm)

 

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