We recognize the importance of our common dividend to our investors, and this dividend reduction, while prudent, was not a decision that our board took lightly, said Rainwater. It was made only after implementing many other less painful steps. We put in place plans to significantly reduce 2008 and projected 2009 capital and operating expenditures by approximately $800 million. We reduced executive management salaries and incentive compensation opportunities, and placed firm controls on headcount and other operating expenditures”.
Several factors contributed to our decision to reduce the dividend. First and foremost was the desire to enhance Ameren’s financial strength and flexibility as we manage our company through the dramatically weakened state of the economy and the continued uncertainties in the capital, credit, and commodity markets. Financial strength and flexibility are critical to providing long-term benefits to our shareholders and customers. Specifically, this dividend reduction will allow Ameren to retain approximately $215 million of cash annually, which will provide incremental funds to enhance reliability, meet our customers’ expectations and grow our regulated businesses, reduce our reliance on dilutive equity financings, enhance our access to the capital and credit markets to fund our operations and drive solid long-term earnings per share growth from our strong, regulated asset base”.
In making this decision, the board was not only mindful of the dramatic changes that have taken place in the economy and the capital, credit, and commodity markets over the last few months, but also the company’s current business mix. Federal and state environmental expenditure requirements have increased, as have costs to invest in our energy infrastructure to meet our customers’ reliability needs. Upon considering these challenges and others facing our company, our industry, and in certain respects, our country, our board made a prudent decision to reduce our dividend for the long-term benefit of all our stakeholders”.
Our adjusted dividend level provides Ameren with a more sustainable dividend payout ratio based upon earnings from our regulated businesses and better aligns our dividend payout ratio with industry peers, said Rainwater. Looking ahead, our goal would be to grow the dividend level as our earnings from rate-regulated operations increase and our overall cash flow profile improves.
