Dividendpolicy

The board of Empire Co are discussing their dividend policy and there have been various
statements made by the directors.
Director A: Our shareholders rely on the level of dividend we pay and we cannot ignore
that. We must pay out a dividend as expected otherwise our shareholders will be forced to
sell shares or invest elsewhere.
Director B: I know that when I was young that if I got a rise in my allowance in a particular
week then I was more likely to get it again. It was expected. We must pay what is expected.
Director C: What matters is the underlying value of the projects that we are doing now and
we will do in the future. We should stop wasting time discussing this.
Director D: What matters is what we can afford in cash. If we are short of money then it
should be discussion over – less dividend will have to be paid. What we could then do is
issue more shares instead – I think that is called a scrip dividend