WHITEPAPER | Dividend Policy in 30 Minutes

From the perspective of family shareholders, dividend policy is the most transparent element of corporate finance. Dividend policy addresses both how much cash flow should be distributed to shareholders and the ideal form of such distributions. In the context of a family business’s life cycle, directors can use dividend policy to manage the company’s capital structure and tailor the form of returns to better match family shareholder preferences. Diverse shareholder preferences and characteristics can enhance the attractiveness of share repurchases relative to dividends; however, executing share repurchases for family businesses bring its own set of considerations and challenges. The purpose of this whitepaper is to help family business directors formulate and communicate a dividend policy that contributes to family shareholder wealth and satisfaction.