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Bonus Babies: BP Still Doesn't See a Problem With Rewarding (Some) Execs

BP's board almost got its bonus and compensation strategy right. Almost. The company smartly decided not to pay bonuses or salary increases to any of the executive directors involved in the Gulf oil spill. It did, however, issue salary increases and six-figure bonuses -- albeit at only 30 percent of the potential payout -- to chief financial officer Byron Grote and head of refining and marketing Iain Conn.

For a company that has struggled for years to change its profits-over-safety culture, any bonus to a director -- oil-spill tainted or not -- sends exactly the wrong message.

Clearly, Grotte and Conn weren't in charge of the failed decisions that led to the Gulf oil spill. And the board, as it stated in the annual report released Thursday, just wanted to "fairly acknowledge the good business results in many parts of BP, delivered in the most testing of times."

Seems reasonable enough. Except these are not normal times for BP, a company still in the throes of recovery. BP's continued problems with safety over the years signals that it's time to change the entire performance pay system. The board has tried to change by tweaking its approach for 2011 to put more weight on safety and risk management when determining performance pay.

Safety should be a given, not a bonus
As I've said in the past, safety should never be tied to bonuses -- even when they're intended to encourage safety improvements. Bonuses should be for going above and beyond the core goals and values of the company, not for meeting them. And safety, you'd think, should be a basic tenet at any workplace. Somehow it just doesn't seem right to reward employees for not killing or maiming anyone.

There's a more direct reason to end bonuses for all directors: the Gulf oil spill wasn't BP's only problem in 2010. Workers at the company's Texas City refinery -- this would fall under the purview of the head of refining and marketing -- filed a lawsuit against BP over an equipment problem that released 500,000 pounds of pollutants, including benezene, over 40 days this spring.

And a report last year by the Center for Public Integrity found that two BP refinieres -- Texas City and its Toledo, Ohio facility -- account for 97 percent of all willful violations found in the refining industry over the past three years. OSHA contends that most of those were considered "egregious willful" violations, which means BP committed these with plain indifference to or intentional disregard for employee safety.

Photo from flickr user jabberwocky381, CC 2.0
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