A shareholder perk is an additional benefit for holding shares of a company. Not to be confused with dividends, perks are designed to make holding a stock more attractive than buying and selling it for a profit. Depending on the company and the industry, a perk could be samples of products or discounts for other companies' services.
Learn what shareholder perks are, how they work, and whether they are still used to attract investors.
What Is a Shareholder Perk?
If you purchase a few shares of a company, you essentially have a small ownership claim in that company. Because shareholders provide funds for a business, it's reasonable to think that there might be something to purchasing a share other than voting rights and dividends.
Some businesses show their appreciation to their shareholders by giving out perks. Perks are benefits offered to shareholders besides monetary compensation and voting rights; companies often use them to help attract investors and build a company's image and brand while fostering loyalty through involvement.
Shareholder perks often come and go in cycles, depending on how the business is doing financially. To qualify for these perks, an investor usually has to have a specific amount of stock registered in their name (rather than held under a street name in a brokerage account).
Why Many Companies Have Stopped
As hyperactive trading continues to take hold and long-term individual stock ownership becomes a thing of the past, the culture of fostering and rewarding business-like ownership has been lost to some degree.
Many investors place their capital in exchange-traded funds, mutual funds, and derivatives of the actual stocks owned by institutional investors—who make up nearly 70% of corporate stock trading and manage close to 67% of them.
The capital that used to be raised by large numbers of individual investors has been replaced by capital from institutional investors.
Exchange-traded funds and mutual funds are required to be registered as investment companies with the Securities and Exchange Commission (SEC). Since companies are buying other corporations' stocks and using them to make money with derivatives or funds for individual investors, perks have become a dated method of attracting investors.
How to Find Shareholder Perks
Some of the remaining companies that offer perks advertise them on their websites under their investor information sections. Weisse Arena AG broadcasts to the world that you can get a 10% reduction for yourself and your family on all company lift tickets and rentals by owning 75 shares.
Some companies might offer perks like a master limited partnership (MLP) that allows monthly investors who buy equity through regular paycheck withdrawals to get a 15% discount from the market price everyone else pays. If you stumble upon an MLP at a business you wanted to purchase stock from anyway, it can make your purchase even better.
Companies With Shareholder Perks
Although the type of perks that used to be available has mostly disappeared, many large companies still offer perks. Here are a few:
- Berkshire Hathaway: Shareholders receive discounts at several companies, as well as significant price reductions during the weekend of the shareholder meeting in Omaha on merchandise from various outlets.
- Carnival Cruise Lines: Qualifying shareholders get a free credit of $50 when they sail six days or less in North America, $100 when they sail seven to 13 days, and $250 when they sail 14 days or longer.
- Intercontinental Hotels Group (IHG): Through a dedicated, controlled-access website, registered shareholders of IHG can book hotel stays for discounted prices (subject to availability).
- Royal Caribbean Cruises: At least 100 shares are required to qualify. The company awards a $50 onboard credit per stateroom for shareholders sailing for five nights or less, $100 for shareholders sailing six to 13 nights, and $250 for shareholders sailing 14 or more nights.
Companies That No Longer Offer Perks
Investing goals and sentiments, changes in leadership and business models, and how the market currently works have caused many perks to disappear. A few notable companies that have discontinued perks are:
- The Walt Disney Company: Shareholder perks for Disney's stockholders used to be enrollment in the Magic Kingdom Club and discounts at all Disney resorts, stores, theme parks, attractions, and events. The company no longer offers any investor incentives.
- Churchill Downs: Investors with 100 shares or more could participate in the Shareholder Pass Program for free general admission for two at all of the company's racing and off-track betting facilities.
Frequently Asked Questions (FAQs)
What's the difference between a shareholder and a stakeholder?
Shareholders and stakeholders are essentially the same things, but the term "shareholders" is a bit more specific, because it refers to the shares you hold in a company. A "stake" can refer to any sort of interest in the well-being of the company. A "share" is a specific investment tool, and each share represents the same percentage of ownership in the company. If there are 100 shares in existence, for example, then each share is worth exactly 1% of the company.
What is shareholder equity?
Shareholder equity is typically included on company balance sheets as a measurement of the total dollar figure that all shareholders collectively own. In other words, if a company were to suddenly close up shop, sell off everything it owns, and settle all of its debts, the shareholder equity would be the money left over after doing all of that. This rarely happens in the real world, but the calculation is useful for gauging the overall value of a company. If it were to happen in the real world, the shareholder equity would be distributed to shareholders according to the number of shares they own.