NETHERLANDS - Institutional Shareholder Services (ISS), the international consultant for institutional investors and investment managers has advised its clients to vote against Dutch chemicals firm DSM's loyalty dividend.
DSM shareholders will vote on March 28 on whether or not to reward loyal shareholders with a dividend bonus of 10% per year after three years of registration.
ISS European head Jean-Nicola Caprasse told Dutch financial daily Het Finacieele Dagblad that the extra bonus would come from DSM's profit, which all shareholders can claim regardless of a registration for the bonus.
Caprasse added that the ISS' advice follows several talks with both large investors as well as DSM, adding that of the 1,700 ISS clients globally a few hundred hold a stake in DSM.
A DSM spokeswoman today confirmed the talks, but said there is no infringement of the principle of equal treatment of shareholders.
Speaking to IPE, she referred to DSM's website, on which the company says: "Shareholders who qualify for loyalty dividends are in different circumstances compared with shareholders who do not qualify for a loyalty dividend. For the same reason, this proposal is, in our opinio, in accordance with good corporate governance."
The company also says that the loyalty dividend is not at the expense of the other shareholders: "Introduction of the loyalty dividend bonus will not alter DSM's current policy regarding the regular dividends for ordinary shares."
The company said it will remain committed to a payout ratio for the ordinary dividend in the range of 16-20% of the cashflow from ordinary activities. "The loyalty dividend bonus will not erode the ordinary dividend to be paid by DSM to all its shareholders," the firm added.
Elsewhere, media reports have claimed that ABN Amro is also planning to pay investors a special dividend bonus.
An ABN Amro spokesperson declined to comment on the claims, saying that they bank is still preparing a response to the attack of the London-based hedge fund TCI.
Other ABN shareholders, among which the second largest Dutch pension fund, PGGM, and the asset management arm of Dutch bank SNS which has a 0.3% stake, said they support TCI's break-up plan.