BP Chairman Carl-Henric Svanberg
Speaking on the steps of the White House after a meeting with President Obama, BP Chairman Carl-Henric Svanberg said the company will not make any dividend payments for the rest of the year, including the one due later this month.
The oil company also agreed to set up a $20 billion escrow fund to pay claims related to the oil spill from BP’s Macondo well in the Gulf of Mexico. The administration’s pay czar, Kenneth Fineberg, is expected to oversee the fund, which could be increased if claims grow beyond the $20 billion threshold.
BP has come under pressure from the administration, members of Congress and others in recent weeks for considering a dividend payment to shareholders before the liabilities for the Gulf disaster are covered.
Blog readers overwhelmingly said BP should pay the dividend. Sorry, folks, it appears the administration had other ideas.
The dividend suspension didn’t phase investors, though. BP’s shares rose slightly after the announcement. Instead, it appears the spill fund is easing investors’ concerns about the company’s future.