Shareholders are people who own stocks in a company. As owners, they have access to several types of benefits. In this article, we'll review the different types of shareholder benefits and who is eligible for what.
Shareholder benefits are the rewards that stock owners receive for owning shares of a company. This can include dividends, which are payments made by a company to its shareholders, as well as price appreciation, which is when the share price of a company increases over time. In addition, shareholders may also receive voting rights and the ability to participate in corporate decisions.
The Types of Shareholder Benefits
Voting Rights
As shareholders, you have the right to vote on various corporate decisions, such as the election of board members and the approval of major company actions. While your individual vote may not seem like much, it’s important to remember that every shareholder’s vote counts.
Dividends
Dividends are cash payments made by a company to its shareholders. Companies usually declare dividends on a quarterly basis, and the dividend amount is based on the company’s profitability and the board of directors’ decision.
Bonuses
Bonuses can mean different things, depending on the context.
Sometimes, companies offer bonus dividends, which are essentially 1 time dividends. Companies will offer these bonuses to shareholders as a way to show appreciation for their support.
Bonus issues work like bonus dividends, except instead of a cash distribution, shareholders receive extra shares instead.
Shareholder Meetings
As a shareholder, you’re also invited to attend the company’s annual shareholder meeting. At this meeting, shareholders have the opportunity to ask questions about the company’s performance and learn more about its plans for the future.
Depending on the company, these are either virtual or in person events. The most well known shareholder meeting is the Berkshire Hathaway shareholders meeting, often called the Woodstock of Capitalism, which is held every year in Omaha, Nebraska. Shareholders who attend often get discounts, perks, and in person physical gifts.
Shareholder Perks
In addition to the benefits mentioned above, some companies offer shareholder perks as a way to show appreciation for their support. These perks can include discounts on products and services, early access to new products, and invitations to exclusive events.
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Shareholder Clubs
Shareholder clubs are groups of people who own shares in the same company. These clubs are a great way to meet other shareholders and learn more about the company you’re invested in.
In addition, some shareholder clubs offer memberships that come with exclusive benefits. These clubs are epically popular with French companies. Learn more here: https://shareclub.io/blog/shareholder-clubs-in-france
Price Appreciation
While not technically a benefit, price appreciation is the increase in value of a company’s shares over time. Shareholders who invest in a company early and hold onto their shares for long periods of time can see significant gains.
Common vs Preferred Stockholders
In many public markets, there are two types/classes of shares offered to investors: common stock and preferred stock.
Preferred stock comes with no voting rights, but dividend are set. For many companies, this class is not available to retail investors.
Access; Retail Vs Institutional Investors
There is also a difference between the benefits that retail investors and institutional investors receive. Retail investors are everyday people who invest in stocks for the hope of making a profit. They usually buy stocks through a broker or an online brokerage account.
Institutional investors, on the other hand, are organizations such as banks, pension funds, and mutual funds that invest large sums of money into stocks. They usually have more access to information and can buy and sell stocks more quickly than retail investors.
Because of their larger size stakes, Institutional Investors will typically have more access to management and their investments when compared to individual investors. In a Reddit AMA titled, "I am an analyst at a dark and mysterious hedge fund, AMA!", a Hedge Fund analyst stated:
"Sometimes I'll have calls with management of the companies where we ask them questions on their business, and sometimes I'm out of the office to meet with these guys one on one. This can be fun because you get to tour some big facilities, play with product, and see how things are going for many businesses. These involve a lot of prep because you really want to make it worth your time to meet with these guys."
Conclusion
In conclusion, shareholders are people who own stocks in a company and receive benefits as a result. These benefits can include dividends, voting rights, bonuses, and the ability to participate in corporate decisions. There are two types of shareholders: common and preferred. Common shareholders have more rights and benefits than preferred shareholders. Retail investors usually have less access to information and benefits than institutional investors.
