Though Superior Energy Services may be unknown to an average citizen, it has gained some recognition in the global oil industry. A recent report has shown that the company is still trying to retain its position in the target market by reconsidering its financial policy. The current dividend policy adopted by the company can be identified as the irregular dividend policy, as the organization leader is clearly geared towards returning the cash to the key stakeholders (Superior Energy Services, Inc., 2013, p. 3).
Though seemingly reasonable, the policy in question still has a few questionable aspects. To be fair, Superior Energy needs attracting more customers at present, as more competitive rivals are becoming very aggressive. Therefore, the payout policy may jeopardize SES’s relationships with the stakeholders, especially in case the company incurs major losses. More to the point, the stakeholders must feel that they are valued and that their interests are secured by the company, which is not quite possible with irregular dividends being the manifestation of the organizations lack of trust for the stakeholders in question.
Therefore, as far as the best dividend policy is concerned, the stable dividend policy in general and the constant payout ratio in particular can be suggested. The specified policy allows the company for providing the stakeholders with decent payouts that depend on the exchange rate and, thus, does not allow the stakeholders involved to lose their money. At the same time, the policy in question gives the company an opportunity to be flexible in its financial decisions, as the constant payout ratio means that no unexpected costs regarding payouts should incur. Consequently, the company may be more certain in its financial decisions (XNYS: SPN Superior Energy Services, Inc. quarterly report, 2014).
The payout policy chosen by Superior Energy Services, Inc., however, can also be deemed as rather efficient. While it may become a major obstacle in establishing a contact with the stakeholders, it allows Superior Energy Services to become more secure in terms of its financial status. It can be suggested that the organization should view the transfer to the irregular dividend as a temporary solution to the existing issues, and consider the shift to the above-mentioned type of a dividend policy as soon as the company’s income stabilizes. It should be born in mind that the necessity to shift from the current strategy to a less risky one is dictated not only by the need to establish more trustworthy relationships with the partners, the staff and the rest of the stakeholders involved, but also with the need to retain the company’s ethical values.
The dividend rate, which the company has at present, shows that the financial strategy chosen by Superior Energy Services works quite well for the organization. According to the existing definition, the company’s dividend rate can be calculated with the help of the following formula: (recent dividend) x (number of dividends per year) + extra dividends.
Therefore, the company’s dividend rate makes $ 0.08 x 3 + 0 = $ 0.24. Compared to 2014, Superior Energy Services used deliver a much worse performance, which means that the course for the organization’s development has been chosen correctly. Indeed, seeing that the company’s dividends made 0% in 2010–2012 (SUPERIOR ENERGY SERVICES INC (SPN) SEC Filing 10-K Annual report for the fiscal year ending Tuesday, December 31, 2013), it is reasonable to assume that the organization has chosen the right track for development. The change was obviously facilitated by the shift in the company’s financial policy and the reconsideration of priorities.
Reference List
Superior Energy Services, Inc. (2013). 2013 annual report. New York, NY: Superior Energy Services, Inc..
SUPERIOR ENERGY SERVICES INC (SPN) SEC Filing 10-K Annual report for the fiscal year ending Tuesday. (2013). Web.
XNYS: SPN Superior Energy Services, Inc. quarterly report. (2014). Web.