ConocoPhillips' chief deserves a pat on the back for deciding to limit high-cost exploration and put more money in shareholders' hands. But don't expect the idea to catch on.
The sky is falling. The apocalypse is around the corner. It's the end of civilization as we know it.
More on oil company dividends
I wish. It would be cheery to see a CEO admit that the purpose of the public company he or she temporarily runs is to create wealth for shareholders. And not to perpetuate either the CEO's job or the company itself. Click graphic to see interactive chartConocoPhillipsWhile I'm waiting for that unlikely event, I'm going to take what cheer I can from ConocoPhillips CEO Jim Mulva saying that, in the short term, the best way for this oil company to create value for shareholders isn't to chase high-cost opportunities to look for oil but to pay off debt, buy back shares and raise the dividend so that the company puts cash in the hands of its shareholders.
Dear reader, this is the way it's supposed to work. Mulva's decision to pass out cash to the debtors and owners of ConocoPhillips isn't likely to sweep the oil industry. But, hey, this is the reason that stocks aren't simply lottery tickets or some kind of Ponzi scheme. The distribution of cash to shareholders, however delayed, is the reason that stocks are worth anything at all.
So I say hats off to Mulva. And I hope he holds on to his job.The powerlessness of ownership Some refrains occur over and over in my e-mail, no matter what the year. And the one that's peskiest to answer is "Why are stocks worth anything at all?"
It's not that I don't know the conventional textbook answer. It's just that most people don't find it very convincing for the simple reason that it runs against everything they know about the way the stock market works.Msn.Video.createWidget('PlayerAd1Container', 'PlayerAd', 304, 314, {"configCsid": "MSNmoney", "configName": "player-money-4x3-articles-inline", "player.vcq": "videoByUuids.aspx?uuids=b27e3b6a-07d0-46ba-9c60-d9c7672bf50a,56199ef9-8db2-48ea-ace7-062aad61d651,78a8ed47-38e8-4e54-a6ae-676fc5edf8ce,b550572f-28de-4929-a1a2-fc61f759a019,1e4ab826-7726-4aff-bc18-9e21d59ee28e,bbd90a31-6b2e-4106-965f-814e4cdc7a1d,04b077d9-85c2-42f0-a29e-94dfe02d5937,a82a1b39-dbff-4e20-a59a-cec345ad5c29", "player.fr": "iv2_en-us_money_article_Investing-JubaksJournal-inline"}, 'PlayerAd1');Msn.Video.createWidget('Gallery4Container', 'Gallery', 304, 150, {"configCsid": "MSNmoney", "configName": "gallery-money-articles", "gallery.linkbackLocation": "bottom_left", "gallery.numColsGrid": "3", "gallery.categoryRequests": "videoByUuids.aspx?uuids=b27e3b6a-07d0-46ba-9c60-d9c7672bf50a,56199ef9-8db2-48ea-ace7-062aad61d651,78a8ed47-38e8-4e54-a6ae-676fc5edf8ce,b550572f-28de-4929-a1a2-fc61f759a019,1e4ab826-7726-4aff-bc18-9e21d59ee28e,bbd90a31-6b2e-4106-965f-814e4cdc7a1d,04b077d9-85c2-42f0-a29e-94dfe02d5937,a82a1b39-dbff-4e20-a59a-cec345ad5c29;videoByTag.aspx%3Ftag%3Dmoney_dispatch%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3Dbest%2520of%2520money%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1"}, 'Gallery4');Buying a share of a company, the conventional explanation goes, makes you a part owner of the company. If you buy a share of IBM (IBM, news, msgs), for example, for your $130 or so you become the proud owner of not quite one-billionth of the company.
Of course, you don't get any real power for that $130. Career managers run the company for you -- in theory. But it's just about impossible for any of us individual investors to get management to change its mind about anything. Not totally impossible, just almost.
I can tell you from personal experience -- trying to get an electric utility where I owned one share not to flood a valley in the Virginia mountains -- exactly how hard it is. And management at American Electric Power (AEP, news, msgs) pretty much played fair. Well, pretty much. They let the opposition speak. They didn't call meetings for the middle of nowhere far away from where their shareholders actually lived. They didn't walk out when shareholders who opposed their decision began to speak.
But it still took years, a campaign to reach out to institutional shareholders, a lawsuit, hearings before regulatory bodies at the state and national levels -- and more hours than I can even now imagine contributed by people more stubborn than I was -- to change the decision.
If most investors are convinced that they don't have any real say in how the public companies they theoretically own are run, nothing in my own experience convinces me that they're wrong.
And the antipathy to giving shareholders any say in how their company is run extends way beyond hostility to the individual shareholder with 100 or 200 or 1,000 shares. Consider, for example, the "radical" change that the financial-reform bill that Sen. Chris Dodd, D-Conn., is shepherding toward a Senate vote. It would require companies to hold a vote on pay and other compensation for a company's top executives. Of course, this vote wouldn't be binding on management and the company's board of directors in compensation decisions. It would be advisory only.
Now don't you feel better?
Continued: Finding value -- or the greater fool More from MSN Money and MoneyShow.com
Will oil hit $200 a barrel after all?Jubak on video: Is it Boeing's turn to fly high?Is there anyplace to put your cash?The key to maximum safety and returns4 dividend plays in emerging marketsJubak on video: Climate-change legislation is dead1 | 2 | 3 | next >
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ReplyReport AbuseRoadhouse Blues #5Tuesday, April 06, 2010 7:35:00 AM"Now tell us why money has value."
......go to the grocery store and try paying for your food with just a smile, see how far that gets you. I know what you're trying to say, but it's all we've got right now. And I agree with Jubak about the dividends, owners (shareholders) should be the major beneficiaries of company profits, not corporate management. Unfortunately, it's become the other way around. We need shareholder associations to pool our votes and force corporate boards and CEOs to toe the line on salaries and bonuses.
ReplyReport Abusesr0343_67adljdogj #6Monday, April 05, 2010 9:58:29 PMDecent article with a brief explanation of stocks and the reality of the uncertain future facing the oil industry. Now tell us why money has value.ReplyReport Abuse1 - 6 of 6PreviousNext_ucf13('0'); _iuc2Om1('MSNPortalInlineComments','Initial_Load_Comment_View','http://articles.moneycentral.msn.com/Investing/JubaksJournal/ceos-novel-idea-share-the-wealth.aspx?','en-us');Are you sure you want to delete this comment?Report AbusePlease help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease notify us using the Report abuse form below. We will investigate your report and take appropriate action against offenders. We report all illegal activity to authorities.CategoriesSpam or advertisingChild pornography or exploitationProfanity, vulgarity or obscenityCopyright infringementHarassment or threatOtherAdditional comments(optional)100 character limit To add a comment, pleasesign in/*MSN PrivacyLegalAdvertiseRSSHelpFeedbackSite mapAbout our ads© 2010 Microsoft/*Of course, you don't get any real power for that $130. Career managers run the company for you -- in theory. But it's just about impossible for any of us individual investors to get management to change its mind about anything. Not totally impossible, just almost.
I can tell you from personal experience -- trying to get an electric utility where I owned one share not to flood a valley in the Virginia mountains -- exactly how hard it is. And management at American Electric Power (AEP, news, msgs) pretty much played fair. Well, pretty much. They let the opposition speak. They didn't call meetings for the middle of nowhere far away from where their shareholders actually lived. They didn't walk out when shareholders who opposed their decision began to speak.
But it still took years, a campaign to reach out to institutional shareholders, a lawsuit, hearings before regulatory bodies at the state and national levels -- and more hours than I can even now imagine contributed by people more stubborn than I was -- to change the decision.
If most investors are convinced that they don't have any real say in how the public companies they theoretically own are run, nothing in my own experience convinces me that they're wrong.
And the antipathy to giving shareholders any say in how their company is run extends way beyond hostility to the individual shareholder with 100 or 200 or 1,000 shares. Consider, for example, the "radical" change that the financial-reform bill that Sen. Chris Dodd, D-Conn., is shepherding toward a Senate vote. It would require companies to hold a vote on pay and other compensation for a company's top executives. Of course, this vote wouldn't be binding on management and the company's board of directors in compensation decisions. It would be advisory only.
Now don't you feel better?
Continued: Finding value -- or the greater fool More from MSN Money and MoneyShow.com
1 | 2 | 3 | next >
Check out Jim's top stocks for the next 12 months.
Read how to invest with Jubak's showcase portfolio.
Follow the long-term portfolio from Jim's book "The Jubak Picks."
See Jim's new portfolio to help navigate the treacherous interest-rate environment.
This article does a good job of showing why America is in trouble. It's the greedy, entitlement hungry, get rich quick thinking that leads companies to pump up their quarterly profits and dividends rather than invest in their -and our- future.
"Now tell us why money has value."
......go to the grocery store and try paying for your food with just a smile, see how far that gets you. I know what you're trying to say, but it's all we've got right now. And I agree with Jubak about the dividends, owners (shareholders) should be the major beneficiaries of company profits, not corporate management. Unfortunately, it's become the other way around. We need shareholder associations to pool our votes and force corporate boards and CEOs to toe the line on salaries and bonuses.
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