BP and Dividends: What’s going on?

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BP’s decision to issue $1.25 billion in dividend payments rankled Gulf Coast residents Tuesday who saw it as another sign the company wants to move on even though many are still suffering from last year’s massive oil spill in the Gulf of Mexico. At issue is the fact that none of the 91,000 claims funneled to the claims fund Trustee, Ken Feinberg, have been finalized from the $20 billion claims fund.

Question:

1. What journal entry do you think BP should make for the dividend issue on Tuesday, February 1, 2011?

2.  Could the Trustee handling BP claims intervene and get a court order barring any distributi­ons until all claims are fully settled? Do you think he should?  Why or why not?

3.  Discuss both the strategic management perspective of making this dividend. Include both qualitative and quantitative issues related to BP’s decision to begin dividend payments again.

Source:

CNN Video. (2011). Reaction to BP dividend payment, February 2. (Retrievable online at www.cnn.com/video/)

Lewison, Jed. (2011). Frustration on Gulf Coast As BP Resumes Dividends Despite Unsettled Claims, DailyKos.com, February 2 (Retrievable online at http://www.dailykos.com/storyonly/2011/2/2/940710/-Frustration-on-Gulf-Coast-as-BP-resumes-dividends-despite-unsettled-claims)