DSM LOYALTY DIVIDEND RULED OUT
[BIZ: Amsterdam, March 29] The underlying idea of he loyalty dividend was to bind shareholders more closely to the company so that their shares would be less likely to fall prey to corporate raiders in the form of hedge funds and private equities. DSM announced on March 15 that more than 4,500 shareholders had opted to have their shares pre-registered in January and February within the framework of DSM’s loyalty dividend program. 31 million shares were registered in this period, which is approximately 17% of DSM’s outstanding ordinary shares. DSM’s proposal was that shareholders who kept their DSM shares for a period of at least three financial years would be entitled to a non-recurring loyalty dividend amounting to 30% of the average annual dividend paid on ordinary shares in the three previous years, in addition to the regular dividend.
DSM’s loyalty dividend program, which was established to reward shareholders, who held on to their shares, has been judged to be in conflict with the law; this is because shareholders would not be treated equally. The decision was taken by the business division of the Court in Amsterdam. According to a report in ‘Dagblad de Limburger’, DSM does not intend to appeal against the decision. The Court still has to decide whether to investigate DSM’s policy on this issue. The protest against the policy came from the Franklin Templeton private equity group, which represents approximately 2% of the DSM shares.
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