BP shareholders are loss dividend by £40bn

The latest reports have estimated £40bn loss in dividend payment. BP is a multi mega international company. The BP have been losses over the past years, due to safety regulations problems lead to disasters Mexican Gulf oil spill and explosion on Texas city also bad management. The CEO has been changes continuously over a period of time, Such as in 2006, departure of Browne and Hayward in 2010. They have to get more remuneration, pension and other benefits from their work but not focus on shareholder wealth maximisation.

The Texas City explosion was a result of varies cost cutting such as training of the staff and poor management of safety. The CEO (Browne) has to show the performance of the achievement but not the benefit of the workers and the environment. He wants to get more remuneration, however the Gulf oil spill was an insufficient quality in packing cement. The explosion has affected the employees and local community. The employees have lost their future life. The safety management of BP found that safety measures not adequate to measure the safety in a safe way. The cost cutting and poor management are short term objective not the long term survival of the company. This could have increase share price in the shorter period of time but not their objective to ultimately increase the shareholder wealth. The BP invested all over the businesses to make shareholders confidence. They can redevelop their position in the future.

The explosion has lead to destroy the entire company’s reputation and image of the BP. The image can’t develop easily in the future. BP has lost their stakeholders and future investors. If the BP have to get permission from other country to operate a business unit, they can’t deliver the permission due to the explosion reoccurred in the future.

Latest report covered the difficulty in production operation in the Russia. Because the BP’s venture TNK-BP passes a case in the high court regarding share swap agreement and Arctic exploration agreements between BP and Rosneft(another Russian company) without TNK-BP permission.

BP analysis says the emerging economies to lead energy growth to 2030 and renewable to out- grow oil. This is not a predictable environment because some technologies will change the energy production without oil. The BP will further loss of the wealth.

The management and executive have to do more effective way to balance the shareholder wealth and stakeholder satisfaction. But BP example is helpful to the management what they want to do. But the executive have to increase the share price through profitability and belief that benefit for the overall community.