The Obama administration has reached a preliminary agreement with BP executives that would see the oil company pay $20 billion over several years into an independently controlled escrow account to be established to compensate Gulf of Mexico residents affected by the disastrous oil spill, and BP's board of directors has eliminated the company's stock dividend, at least temporarily.
The agreement on the escrow account was negotiated in a meeting at the White House on Wednesday morning, the first face-to-face gathering between President Obama and senior BP leadership. A White House official said that, under the terms of the deal, the fund would be administered by attorney Kenneth Feinberg, currently serving as the special master for executive pay under the Troubled Asset Relief Program. Feinberg ran a fund that compensated victims of the terrorist attacks of Sept. 11, 2001.
Immediately after the meeting, BP Chairman Carl-Henric Svanberg said that the oil company's board of directors has decided not to pay any more dividends this year.
BP has been under intense pressure from the Obama administration to cut or eliminate the $10.5 billion it distributes annually to shareholders. Svanberg, speaking to reporters outside the White House, didn't say how long the dividend would be suspended.