Global Capital Markets

Loyalty has its rewards—or might, if DSM has its way. On March 28 the Dutch nutrition-to-chemicals firm wants shareowners to green light an innovative bonus dividend to any investors who switch their anonymous bearer shares into registered shares, complete with name and address, and then hold the stock for at least three years. The bonus isn’t trivial, either: 30% of the average dividend in the first payoff, and 10% each subsequent year. DSM says the plan won’t add a class of shares, change any voting rights or reduce dividends for ordinary investors. But Chairman Peter Elverding says it would allow the company to identify and communicate directly with its owners—a complex and costly task when bearer shares are involved. DSM is the first company with the grit to road-test the loyalty dividend, an idea first proposed one year ago (GPW X-09). Top ABP executives had said the €200 billion fund would agree to lock up its shares in a company for an extended period—thereby assuming more risk—in exchange for an extra dividend. A loyalty dividend, ABP said, would give shareowners "financial incentive to intensify ties with the company and to exercise voting rights" while giving the firm "a stable shareholder base" focused on long-term value. Proponents call the premium a weapon against short-termism. Critics warn it would create unequal classes of owners and penalize investors wishing to remain confidential. Proxy services such as Institutional Shareholder Services, Glass Lewis and Manifest have yet to issue their analyses. Eumedion, the Dutch shareowner coalition, is to meet Tuesday to craft a common policy.