What would be the negative effect to XOM to reduce or eliminate the dividend? Seems crazy to have to borrow to pay it. And a lot of jobs could be saved if it were eliminated.
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You cannot cut your way to prosperity. Cutting dividends only reduces the amount of money we will have to borrow to fund our programs. Why? The real problem is that we are no longer competitive. We have 78k employees, when we really need 55k employees, based on workforce comparison tools. CVX and RDS are operating at 25% to 30% higher margins. It is just not sustainable.
Because the company went down the tube due to most of the employees s—ing the resources out. Now take it, and do some work. In the meantime, the hope is that all employee the salaries are cut in half and pension goes away without delay.
Stock holders come first as the company exists because of the hard working investors in a normal real world and these are the people who care.
Many widows and annuitants are doing better than the American populace that was let go / fired due to covid-19. Why should they not take any of the pain of current economic climate?
Retirees can invest in bonds and annuities. If your financial planner is telling you to fund retirement based on a cyclical commodity business that promises an eternally growing dividend then I also have some magic beans for you. I know our management uses this excuse all the time, but it is not the role equities play in capital markets to fund stable retirements. We seem to truly not understand anything about capital markets or the market we operate in.
Many annuitants and widows rely on the dividend as retirement pay.
It's likely the stock market has already factored a dividend cut into the Exxon's stock price. Investors are aware the dividend payout creates a cash flow problem and they've priced the stock accordingly. Is seems counter intuitive, but under the circumstances a cut in the dividend might actually help investor and the company. At least it would slow the cash drain.
Shell did not experience a death spiral after dividend cut. We have an example today of it not being a big deal. We just make a big deal out of it because we only train people to do what their predecessor did. So the chairman thinks you “have” to raise the dividend even when it is completely id–tic.
Ignorance of people thinking that management = shareholders and that they are just lining their own pockets. The amount of share that EM management own dwarfs that of actual shareholders in the market. The ones that ones the shares (and ultimately the direction of the company) does not want to see the dividend cut (they are the ones that practically have no clue about the status or the workings of the company.)
I personally think that we will cut the dividend in the near future. There is literally no way to pay for it without taking on more loans, DW atleast had a spine and publically stated that we will not be taking more loans (it remains to be seen in the next few quarters IF he actually holds true to that)
Due to the size of the dividend payments, headcount targets are essentially analogous to how much work does the company forsee in the next few years. We are not trimming headcount to pay for the divided (do the math, we would have to lay off nearly all the corporation to cover the costs - not practical)
Because, capitalism!
Shareholders = management.
it’s just management robbing the company to line themselves. Can’t believe it’s legal! They will tell you how cheap it is to borrow right now, especially with our balance sheet. Don’t be fooled. They are having harder and harder time selling bonds and our credit rating is getting trashed!
XOM needs 30% fewer people. Even if the dividend is cut, 30% of employees need to be cut and cost structure reduced to become profitable in a lower for longer scenario. The company should not be wasting expenses on people who are idle with nothing to do. If the downturn was temporary, then keep the employees, but it appears to be longer lasting, so cut the expense. If costs cannot be cut fast enough then, dividend will be trimmed. New Business outlook requires radical rethinking staff levels.
@tps+16XnHN0q - you really need a "sacrcasm" sign!
Take a look why is Exxon Mobil Investment Management company selling XOM Shares
http://www.j3sg.com/Reports/Stock-Insider/Generate-Institution-Portfolio.php?institutionid=3290&viewArchive=no&archiveDateIn=&DV=yes
Dividend is closely tied with Death Spiral the Management is afraid of. If Dividend is cut the stock would dive, which would raise Debt/Equity Ratio –> This would force Rating agencies such as Moody's and S&P to downgrade the debt –> Cost of loans to increase leading to what is called "Death Spiral". Unfortunately, it appears inevitable now no way out, unless big war breaks out in the middle east, supply disruption that could prop up oil prices, but there is still an issue with demand destruction due to work from home situation which is here to stay for a while.
Just unintended consequences of the system - I’m sure they always thought the dividend would be in the general interest. Unfortunately it is not at this level and price environment. We will see if they do the right thing for employees and majority shareholders, or not.
@skb+16XnHN0q - I agree with you. However, considering how severely the company chases down "conflicts of interest" for regular employees, why isn't this practice (borrowing against company equity to artificially inflate the dividend and raise executive compensation) a major red flag for Controllers and the SEC?
It seems that a CEO and their Directors could bankrupt a company by incurring huge debts to siphon money into their own pockets through RSU's and the associated dividends. It would be even more worrying if they used the pension fund as collateral for the debt. Not that this would - or could - ever happen ;)
Don’t confuse our Executive Shareholders with the majority of XOM shareholders. RSUs are locked up for 5-10 years but the execs get the cash dividend each quarter (higher than base salary). So it really isn’t for the “shareholders”, it’s to line the pockets of the execs. Paying a dividend with borrowed money doesn’t help shareholders, it just reduces the equity ownership of the company and increase the debt holders ownership. Zero sum game. It’s stupid, arrogant, and selfish to pay the dividend, period.
I agree. The definition of a Dividend is a sum of money paid regularly by a company to its shareholders out of its PROFITS. If there are no profits to share, why do we continue to have a dividend? Continued borrowing to pay a dividend seems irresponsible and bad for employees.
Look no further than EM's Guiding Principles:
https://corporate.exxonmobil.com/Company/Who-we-are/Our-guiding-principles
Notice how Shareholders is the first demographic they address.
We should prob stop complaining on this site and get back to cranking out shareholder value
If they are committed to shareholder value they should be switching to stock buybacks instead of dividend....keep share price afloat and reduce future dividend obligation. It's obvious, so no wonder they haven't thought about it.
The management lining their own pockets is a short sighted goal. They pad it with 100k and crash the company for no future payouts vs adjusting dividend to be sustainable so that they can keep claiming 50k for years.
Status and ego? Who wants to be the management team that ended the dividend increase steak so often bragged about? Regardless though, something big has to give pretty soon and job cuts alone won't cut it. Or maybe oil prices will shoot back up quickly and we can return to the status quo.
The people making the decisions make more money off stock compensation (and thus dividends) than salary
Shareholders are put ahead of everything and everyone.
Shareholders are more important than employees I guess. Plus the compensation of the executives includes a ton of stock so they want to continue lining their own pockets.