Question: For 22 consecutive years Marston Corporation a steel producer has
For 22 consecutive years, Marston Corporation, a steel producer, has paid a quarterly dividend to its common shareholders. The annual dividend amount has ranged from 1 percent to 4 percent of the market price of Marston's common shares. Marston's board of directors decides not to declare a common dividend for the next three years. Its steel plants are over 40 years old, and several need to be updated or replaced. The board estimates the cost of updating or replacing its steel plants at $2.3 billion. Eliminating the common share dividend will result in Marston retaining an additional $634 million over a threeyear period. Marston currently has retained earnings of $1.2 billion. Marston's minority shareholders sue Marton's to force the board of directors to declare the dividend. Will their action be successful?
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