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MINICASE 4 - MINICASE Liu the CHO ol'Pcnn Schurnann was a...

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MINICASE Liu. the CHO ol'Pcnn Schurnann was a creature of habit. Every month he and Jennifer Rodriguez. the company's chief met for lunch and an informal chat at Pierre's. nothing was ever discussed until George had finished his favorite dt .litic grus c'ltuude. At their last meeting in March he had been toyed thoughtfully with his glass ol'Chatcau Haut-Brion: before suddenly asking, "What do you think we should be about our payout policy?" Penn Schumann was a large and successful pharmaceutical company. It had an enviable list of highly profitable drugs, many Which had 5 or further years of patent protection. Earnings the latest 4 years had increased rapidly, but it was difficult to see such rates of growth could continue. The company had tardily paid out about 40% of earnings as dividends, though the in 2001t was only 35%. Penn was spending over $4 billion an on R&D, but the strong operating cash flow and conservative policy had resulted in a buildup of cash.
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