Rewarding Long-Term Shareholders: European And US Loyalty Share Programmes

Loyalty share programmes, or programmes that encourage shareholders to hold their shares for longer periods of time, have been gaining traction in Europe, but for a number of reasons they remain uncommon in the United States.

"Long-term oriented shareholders, who hold on to their shares during the difficult but critical time the company is facing [will thus be rewarded]." This is how the CEO of Michelin explained the motivation behind the issuance of loyalty shares by his company in 1991. Loyalty shares (typically in the form of additional shares or dividends) that reward shareholders who hold shares for a certain period of time, and other similar programmes, have become increasingly popular in European countries as a way to incentivise long-term shareholding.