Following BHP Billiton’s AGM on Tuesday that company has been forced to defend the size of its dividends and other cash returns in the face of angry shareholders.
The West reported that BHP is stockpiling $5 billion in surplus cash when it should be paying a special dividend.
However, in a statement released yesterday BHP chairman Jac Nasser said their dividends are the highest in the company’s history.
One angry shareholder criticised the company’s write down of their US Fayetteville gas asset by US$1.8 billion this year and suggested a 10 cent special dividend (overall cost $500 million) or 20 cents ($1 billion) would be acceptable the West reported.
"This great bunch here (BHP board and management) with all their knowledge rushed into US shale oil," the shareholder said at the AGM.
"We don't get enough, why aren't we getting more?
"Instead of 33 per cent (dividend yield relative to share price) we should be getting 45 per cent, why don't we get special dividends instead you are starving and strangling us."
BHP’s institutional shareholders agreed, calling for greater capital returns.
Nasser rejected the criticism saying paying out about $6 billion in dividends in 2011/12 financial year equates to an 11 per cent increase for the year to $1.12 a share.
"We have averaged an over 50 per cent pay out ratio back to shareholders over the decade (including share buybacks)," he said.
"We think we've got the balance about right: if we pay more dividends we can increase debt, or the balance sheet suffers or we invest less in the business."
Not all shareholders disagreed with the dividend amounts.
Pengana Capital fund manager Tim Schroeders told AAP he did not want capital investment curtailed in order to return cash to shareholders.
Australian Mining reported BHP’s Financials remained strong despite operating within an uncertain global economy.
The company’s profit and net operating cash flows are at the second highest level in the company’s 127 year history.