Several weeks ago I posted a piece on the BP oil spill in the Gulf of Mexico. At that time I was optimistic that the oil spill would be quickly resolved. We are now more than 50 days out and still no resolution. The environmental damage to the Gulf of Mexico, and specifically to Louisiana, Alabama, and Florida, is mounting each day.
According to BP's latest press release the company has spent $1.43 billion on the oil spill thus far. Estimates on the clean-up cost of the oil spill range from $3 to $40 billion over a period of several years. Last year BP had a cash flow of $30 billion. Undoubtedly, this will be a costly accident.
BP has proposed paying a quarterly (for the second-quarter) dividend of an estimated $2.4 billion. According to BP's annual report the company paid dividends of $10.5 billion last year.
Political pressure is mounting to suspend or halt BP's payment of dividends until the Gulf of Mexico oil spill is resolved or brought under control. BP's CEO Tony Hayward will likely face intense pressure and get push-back on the dividend from members of Congress when he testifies next Thursday on the oil spill.
Apparently, members of the BP Board of Directors are discussing a plan to set up an escrow fund to place the $2.4 billion dividend payment until the Gulf of Mexico oil spill is brought under control.
What do you think? Should BP be pressured to suspend or halt all dividend payments until the Gulf of Mexico oil spill is resolved? Alternatively, would the establishment of an escrow fund be a satisfactory resolution? Should BP look out for BP shareholders? Should environmental clean-up and remediation take top priority? The BP oil spill presents important questions on shareholder primacy, corporate responsibility, and the role of the corporation in our society. I look forward to hearing your thoughts.
According to BP's latest press release the company has spent $1.43 billion on the oil spill thus far. Estimates on the clean-up cost of the oil spill range from $3 to $40 billion over a period of several years. Last year BP had a cash flow of $30 billion. Undoubtedly, this will be a costly accident.
BP has proposed paying a quarterly (for the second-quarter) dividend of an estimated $2.4 billion. According to BP's annual report the company paid dividends of $10.5 billion last year.
Political pressure is mounting to suspend or halt BP's payment of dividends until the Gulf of Mexico oil spill is resolved or brought under control. BP's CEO Tony Hayward will likely face intense pressure and get push-back on the dividend from members of Congress when he testifies next Thursday on the oil spill.
Apparently, members of the BP Board of Directors are discussing a plan to set up an escrow fund to place the $2.4 billion dividend payment until the Gulf of Mexico oil spill is brought under control.
What do you think? Should BP be pressured to suspend or halt all dividend payments until the Gulf of Mexico oil spill is resolved? Alternatively, would the establishment of an escrow fund be a satisfactory resolution? Should BP look out for BP shareholders? Should environmental clean-up and remediation take top priority? The BP oil spill presents important questions on shareholder primacy, corporate responsibility, and the role of the corporation in our society. I look forward to hearing your thoughts.
Great post! I think based on my understanding of the magnitude and harm this oil spill has caused; that the environmental and clean-up should be priority. I understand that some shareholders might view this as unfair but we cannot let the environment and innocent lives (animals) be harmed more. Money is one think but our environmental must survive as well. Therefore clean-up and environmental concerns should be one the top of the list irrespective of shareholders rights. This was the fault of BP and they must take responsibility to those harmed innocently before distrusting dividends to shareholders etc…. The animals need to be protected!
ReplyDeleteLaureenG (FIU)
ReplyDeleteBP should not be allowed to halt all dividend payments until the Gulf of Mexico oil spill is resolved, however long that may take. The people who were affected by the oil spill won't know the full extent of the effects and/or their losses until sometime in the future. Same as in the Exxon oil spill. Until their issues are resolved, all of them, no one should receive a dividend or a bonus.