I usually do not discuss business or investment topics on this blog; I try to keep a glass ceiling or wall or something between my personal musings and business/investment discussions. But a recent article just about made my blood boil. Everyone should be aware of the absolute chutzpah (I couldn’t think of a better word to describe it) of Transocean management. Business is not always just about business. It is about real people and their communities and the world in which we live. So I hope no one is too bored with the saga of a company interested in nothing other than itself.
An article in this week’s Bloomberg Businessweek – Transocean: No Apologies Over Gulf Oil Spill -relates how Transocean is working very hard (and spending a lot of money) denying any responsibility for the Gulf oil spill. The company is attempting to avoid payments of any consequence as a result of the disaster. The Deepwater Horizon oil rig that exploded on April 20, 2010 was Transocean’s baby.
· Transocean owned and operated the rig that exploded, resulting in the largest offshore oil spill in U.S. history.
· Nine of the 11 men killed were Transocean employees.
· Transocean blames BP.
· Transocean says it made no mistakes.
· The company has contributed 0 for the cleanup.
· The company has contributed 0 to the victims’ compensation fund.
· The company took an accounting gain on its 2010 taxes of $270 million, the difference between the real value of the rig that blew up and the amount received from its insurance company.
· Transocean declared that – despite the Gulf disaster – 2010 had been “the best year in safety performance in our company’s history”. The company later realized their PR problem with this statement and donated safety-related bonuses to a workers’ memorial fund.
· Transocean filed a petition with the U.S. government to cap its liability as a result of the oil spill.
· The company issued $1 billion in dividends in 2010.
· A Presidential Commission and Coast Guard investigation cites all parties involved as responsible to some extent for the disaster.
Companies have gone bankrupt as a result of lawsuits. On the other hand avoiding and denying responsibility for one’s actions is cowardly, immoral and unethical. It might be legal and the company may get away with it. That does not make it right. It is just one more example of the big guy succeeding at the expense of individuals, the less sophisticated and less organized – in this case the victims, their families, businesses, local communities and the environment.
An Observation on Wages
The wage chasm between corporate executives and company workers is another example of the disconnect impacting our society today. A Wall Street Journal article – Pay Tally up 19% for Finance Chiefs - points out CEO compensation increased 24% in 2010. Median CFO (Chief Financial Officer) pay increased 19%. I doubt the CEO and CFO recipients of these hefty increases granted similar pay raises to their employees. A few financial and other companies may have amply rewarded their people, but most workers were not so lucky. Average base pay increases for 2011 are expected to be 2.9%. A growing economy is not solely built on the bonuses of high-paying executives. The rest of the working population needs to participate in a positive way to sustain and grow the economy.