When it comes to investing in stocks, shareholders are usually well aware of their rights, but a topic that is often rarely talked about is shareholder perks and benefits. As a shareholder, not only should you benefit from the company’s financial and operational performance, but you should also be rewarded in other ways. In this article, we will analyze what shareholder perks and benefits are and how companies are taking a stance to ensure their shareholders benefit from investing in their stock.
What are shareholder perks?
Shareholder perks are benefits that companies offer to their shareholders as a way to strengthen the relationship between companies and retail investors. Shareholder perks can include offering products and services, or discounts, to investors that are currently invested in the stock.
While most investors are focused on the financial benefits of owning a stock, like its price increase or being paid a dividend, other investors look for companies they relate to.
How shareholder perks work
Companies can set up a shareholder perks program that allows them to establish exactly what will be offered to shareholders and the conditions and requirements. Companies will often require two things:
Minimum number of shares:
This is the minimum amount of shares an investor needs to hold to be able to benefit from a certain shareholder perk.
Holding period:
Companies also determine which investors can benefit from their perks based on the time they have held the shares.
So, for example, a company might offer a discount or a credit to its shareholders but requires them to hold the shares for a certain period of time or to own a certain number of shares.
This is to prevent and deter investors from buying the shares just to benefit from the shareholder perks and sell them right away. Instead, companies want to offer shareholder perks as a way to improve their relationship with investors and promote investment in the company for the long term.
Shareholder perks example
There are a few well-known companies that offer shareholder perks and benefits. Let’s look at a few examples to understand exactly how it works:
Whirlpool (WHR)
Whirlpool offers its customers 30% off its brand’s products as long as shareholders own a single share of the company.
iRobot (IRBT)
iRobot has 3 different perks that require investors to hold shares for at least 12 weeks. The first one allows you to save up to $50 on some iRobot products, and you are required to own just one share of the company.
Investors that own at least 500 shares will be eligible for a $90 discount on selected products and can receive a free replenishment Kit when purchasing a Roomba S9+ and j7+.
Carnival (CCL)
Carnival requires its inventors to own at least 100 shares and hold them for a minimum of 3 weeks. This will make you eligible to receive $50, $100, and even $250 of credit when booking a Carnival cruise.
Berkshire Hathaway (BRKB)
Warren Buffett’s iconic company also offers a shareholder perk, and by investing in just one share of the company, you can get an 8% discount only on your insurance plan with GEICO.
Popularizing shareholder perks in the US
One of the companies at the forefront of the shareholder benefits revolution is TiiCKER, founded by Jeff Lambert, a veteran of investor relations. For Jeff, there is a clear reason why shareholder benefits are becoming increasingly popular:
“In the past, public companies didn’t focus on their retail investors because there was no way to connect with them or even know who they are, but that changed when TiiCKER invented “verified perks” or the ability for companies and brands to offer perks to verified shareholders. Couple this new technology with the rise of retail investing, which has more than doubled in the last 5 years in trading volume and the number of investors – 100 million or more – and the result is more companies offering the perks and rewards of ownership.”
TiiCKER allows shareholders to connect their brokerage accounts and validate their ownership of the shares, and access shareholder perks. It also allows retail investors to request
The benefits of shareholder perks
Shareholder perks programs can benefit both companies and shareholders while strengthening the relationship between companies and their retail investors.
Improves relationships between companies and retail investors
It gives investors another reason to hold the stock
Promotes long-term investing
Brands can increase loyalty and grow their sales
According to TiiCKER’s CEO and founder, Jeff Lambert:
“Shareholder Loyalty is a win-win for brands and investors alike. The brands can provide exclusive rewards and discounts to their most loyal audience, owners, and also grow their sales. Remember, every investor is also a consumer. For investors, they want and deserve the perks of ownership just like being a frequent flyer or shopper, and every dollar an investor spends with that company or brand helps their investment. Shareholder Loyalty as a category didn’t exist until 2 years ago, but it’s always made sense. In fact, 80% of retail investors say being a shareholder makes them more likely to buy that company’s products and 77% of retail investors would be more likely to buy stock in a company that offers a shareholder perk, according to a national Harris Poll/TiiCKER survey.”
It is clear that shareholder perks benefit both companies and their investors, but how does it affect the relationship between the two parties?
“Perks are a tool to find and connect with retail investors, as a means to attract new investors to your stock, keep the ones you have longer, and encourage all shareholders to invest more over time. And your investors want to shop your stores and buy your products because it helps their investment. Public companies are increasingly looking at retail investors as their best consumers and a new affinity audience that already exists, but can now be nurtured and rewarded.” - Jeff Lambert
Companies with shareholder perks and benefits
Here are a few of the most well-known companies that offer shareholder perks:
Lionsgate
Whirlpool
Carnival
Royal Caribean
Berkshire Hathaway
iRobot
Starbucks
Conclusion
While shareholder benefits and perks are only now becoming popular, they are a great incentive to invest in the companies you like and believe in. As this new trend emerges, more and more companies will start creating their shareholder perks programs, and we will see an increase in the number of companies offering them.
Read the full story as originally published on Value of Stocks
