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Dutch court bans DSM loyalty bonus

NETHERLANDS - A Dutch court has barred chemicals group Royal DSM from implementing its loyalty dividend.

Pension giant ABP, one of DSM's shareholders, immediately told the company to consider an appeal.

Following yesterday's ruling - just four hours before DSM shareholders were supposed to vote on the bonus at the annual general shareholders meeting - DSM said it will withdraw the proposal.

Earlier this year, the Heerlen-based group told IPE the programme would reward long-term shareholders with a dividend bonus of 10% per year after three years of their registration as shareholder.

However, the Amsterdam court's enterprise chamber decided that the dividend goes against the ‘one share, one vote and one dividend principle', after American investment managers Franklin Mutual, which holds a 2% stake in DSM, complained to the court earlier this year that it felt the dividend would create inequality among investors.

Earlier this month, Institutional Shareholder Services (ISS), the international consultancy for institutional investors and investment managers, advised its clients to vote against the loyalty dividend.

Following the ruling, the €211bn ABP, also Heerlen-based, said DSM should appeal the ruling.

Rene Maatman, ABP's head of legal and fiscal affairs, said according to Dutch newspaper Het Financieele Dagblad: "This initiative is too good to just stop like this."

DSM said in a statement that it is "considering other ways" to strengthen its relationship with shareholders and improving communication, as many shareholders had already shown their support for the scheme and pre-registered.

Nonetheless, the company has rejected the introduction of a different class of shares to implement its loyalty bonus as being "too costly and complicated," a spokeswoman told IPE.

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