The Pensions and Lifetime Savings Association publishes topical questions to aid trustees in considering the effectiveness of their managers’ stewardship activity. We encourage funds to ask these questions during their regular manager reviews in an effort to understand their managers’ approaches and activities and to ensure that they are adhering to the stewardship policies.
TOPICAL QUESTION FOR YOUR MANAGER
Background: Dividend pay-outs at BP and Shell have increased significantly (partly as a result of post-Brexit currency effects). The two companies accounted for approximately a fifth of total UK dividends in the year to September. However, there are ongoing concerns regarding the sustainability of these pay-outs in light of factors such as the low oil-price and rising debt levels at the companies.
Question: Do you have concerns about the sustainability of dividend payments at Shell and BP? Can you give an example of an occasion when you have promoted dividend parsimony in favour of investment in the long-term interest of the company?
Read previous questions here.