The Calgary-based company slashed its capital spending budget by $150 million in early April to stabilize the business amid low crude oil prices.
Such situations have already caused some companies to suspend or cut their dividends, including Swiss Chalet and Harvey's owner Recipe Unlimited Corp., Mr. Sub and Manchu Wok owner MTY Food Group Inc., oil and gas company Arc Resources Ltd. and Chorus Aviation Ltd. "It would be very difficult to argue that when tough decisions have to be made about laying off workers and supply chains that dividends should not be ," Leblanc said.But David Beatty, the director of the David and Sharon Johnston Centre for Corporate Governance Innovation at the Rotman School of Management in Toronto, is not hopeful all companies will take that approach.
"If we give you our free cash flow, we're gonna have to lay off a ton of people,...defer capital improvements in A, B and C plants," Beatty imagined companies should be thinking. "Rather than do that and keep you happy with a dividend even when you need it most, we're thinking about the medium to long term of our business and it requires this cash."
"This bank has been making dividend payments for 188 years and we certainly expect that to continue," Brian Porter, Bank of Nova Scotia's chief executive, said.
Any dividend cuts and suspensions should start with management and board of directors.
I wonder what will happen with the market then. Market value will drop even more because the value of the stock is even lower. Correct?
United States United States Latest News, United States United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: globeandmail - 🏆 5. / 92 Read more »