January 19, 1999

Return of the Shareholder Perks

by Rick Aristotle Munarriz (tmfedible@aol.com)

Back in November we explored a few publicly traded companies that reward their shareholders with more than just capital appreciation. From Wrigley's (NYSE: WWY) holiday mailings of free chewing gum to Eastman Kodak's (NYSE: EK) photographic discounts, we figured we had most of the shareholder freebies covered.

Oh were we wrong. You, our fellow Fools, floored us with perks we completely overlooked. Then again, we never traveled to annual meetings where some shareholders get treated like, well, owners.

Dole Foods (NYSE: DOL) sets up a huge display of tropical fruits that shareholders are welcome to pillage on the way out. Doesn't the chocolate dessert feast served up at Hershey Foods' (NYSE: HSY) annual meeting sound enticing? Ample spreads are also laid out for those attending the Berkshire Hathaway (NYSE: BRK.A) and CSX (NYSE: CSX) annual gatherings.

If you can't muster much of an appetite, you will probably still appreciate the goodie bags handed out to shareowners of Occidental Petroleum (NYSE: OXY) and Johnson & Johnson (NYSE: JNJ). Those who attend Ben & Jerry's (Nasdaq: BJICA) annual get-together will find themselves at a free music festival as well.

If you can't make it to the annual meetings, some perks will make it to you. If you miss out on the Buffett buffet, Berkshire Hathaway will still give you a discount on GEICO auto insurance. On the feelgood front, each of the company's Class A shareholders are allowed to designate the beneficiary of a per share charitable contribution. R.R. Donnelley & Sons (NYSE: DNY) will mail you a classically bound book. AT&T (NYSE: T) reaches out and touches its shareholders with a ten minute phone card included in the annual report.

If you're hungry, check your mail. O'Charley's (NYSE: CHUX) includes free meal vouchers in its annual report. McDonald's (NYSE: MCD) and Starbucks (Nasdaq: SBUX) offer free french fries and coffee respectively. Probably one of the nicer home delivered treats comes from Northland Cranberries (Nasdaq: CBRYA), which sends out a cranberry and juice gift pack to its shareowners.

Some conglomerates will offer favorable pricing from some of their subsidiaries. Sara Lee (NYSE: SLE), for example, offers a 15% markdown on Coach leather goods. Pfizer (NYSE: PFE) holders get discounts on Coty products.

The freebies flow. The corporate love fills the air. Yet the clincher is that most of these companies have been lucrative investments over the long haul. We said it last time -- capital appreciation is the ultimate perk.

Can the goodwill established by making these doorstep dividends available more than make up its cost? Apparently. Besides, many perks are not entirely free. Discounting is a popular path taken by some of the biggest companies. IBM (NYSE: IBM) and Compaq (NYSE: CPQ) offer promotional discounts on personal computers. Sears (NYSE: S) and Just for Feet (NYSE: FEET) owners get 10% store discounts. Flowers (NYSE: FLO) and Colgate-Palmolive (NYSE: CL) send out generous coupons. So if you want a cheaper way to dig into a Mrs. Smith's pie and then brush your teeth with a tube of Colgate Total, the solution is as simple as buying the companies whose products you like.

As creative as shareholder perks may seem in the first place, some go beyond clever consumer marketing. Chalone (Nasdaq: CHLN) offers a wine dividend. That's right, depending on how many shares you own, the company will earmark unique discount levels towards the purchase of Chalone wines. If you just happen to be sailing on a Carnival ship, Carnival Cruise Lines (NYSE: CCL) shareholders receive shipboard cash credit.

Equity ownership has its privileges. For some companies, the advantages are just a little more tangible. Yet, as warm as the fuzzies feel, they sometimes get taken away too. Eastman Kodak's innovative Friends First program has been shelved this month due to the "low level of participation among our Kodak shareholders." Some coupon and voucher mailings are inconsistent. As amazing as it may seem, some companies are simply missing the boat on the emergence of the individual investor back into the stock market and blowing a great opportunity to impress the consumer.

While the case may be made that shareholder faith should be rewarded with stock gains rather than goodie bags, they are clearly not mutually exclusive. More often than not, a company that cares for its investors finds Wall Street caring right back.

Did You Miss Our First Perk Article?
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Have you come across shareholder perks? If so, please let us know. When we have gathered more doorstep dividend information, we'll write yet another follow-up article.