It may be possible to single out long-term shareho

It may be possible to single out long-term shareholders for a stock dividend. Long read, but here's the reader's digest version for anyone interested:

L-Shares: Rewarding Long-term Investors - Columbia Univ. paper, Patrick Bolton, Frederic Samama

Quote:

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In this paper we analyze a particular form of L-share [Loyalty share], which attaches a call-warrant to a common share, that vests only if the shareholder continuously holds her shares for a specific period of time (whether directly or under a street name). – p.12

More recently, L'Oreal offered a Loyalty bonus to registered shareholders (proposed at the Annual General Meeting of April 16th, 2009), which granted a 10% incremental dividend to all shareholders having held registered shares for at least two years, up to a limit of 0.5% of nominal capital per shareholder (as defined in the article L232-14 of the French Commercial Code) – p. 12

So far we have described only the simplest possible form of L-share: a share with a one-time warrant attached, which vests at the expiration of a given loyalty period. Such a share makes most sense if the goal of the firm is mainly to delay a dividend payment or to secure a temporary alliance with a strategic partner. – p. 16

II.2. Postponing a costly dividend payment or stock repurchase
In times of financial stress, firms in need of cash may want to temporarily suspend a costly dividend payment, or postpone a planned stock repurchase...

This is exactly what Michelin did in 1991, when it offered shareholders a classic out-of the money warrant, exercisable in two years in exchange for a dividend cut. More precisely, the warrant could be exercised only by those shareholders who would have held on to their shares for the two years (without any interruption). This highly innovative move by Michelin was motivated by its management at the time as a way of saving precious cash reserves during a difficult period and of compensating and rewarding those shareholders who would remain loyal to the firm during the difficult transition period. –p. 18-19

From a U.S. perspective, the simplest way of tracking holding periods in order to identify loyal shareholders would be for the company to retain the services of a transfer agent that would act as the issuer’s warrant agent. The retained transfer agent would maintain a register of warrant holders and would ensure that no transfers are effected until the end of the holding period, when the positions would be unblocked. – p. 31

VIII] CONCLUSION
As more and more commentators are arguing, there is a greater need than ever of counteracting the short-termist outlook of modern financial markets. Continuous electronic trading platforms, computer trading algorithms, the growth of day-trading, have all contributed to accelerating the response of speculative investors to news and to increasing the returns to short-term speculative activities. What has suffered as a consequence is long-term investing focused on an evaluation of the long-term fundamental value of a firm.

Loyalty-shares provide in our view a simple contractual innovation that helps restore the balance between long-term investors and short-term speculators. They allow issuers to discriminate between long-term and short-term investors and to reward those shareholders that are most loyal to the company. At the same time loyalty-shares do not require firms to make radical financing and corporate governance changes. They offer a simple correction towards a more long-term fundamental value outlook, which can be scaled up at will by the corporation. But, their introduction
will not disrupt the functioning of secondary markets or undermine stock market liquidity. – p. 39

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And this is interesting:
What is a conditional dividend?
A: A conditional dividend is a dividend contingent upon an event or circumstance that has not yet happened at the time of declaration. For example, a company may declare a dividend contingent upon the sale of a subsidiary or other substantial asset. In such a case, if the sale is ultimately not made, the dividend contingent upon the sale would not be paid.

How often are conditional dividends declared?
A: Conditional dividends represent less than 1% of all dividends declared.