The Loyalty Rewards Project

Developed by Mercer, Generation Foundation and Stikeman Elliot LLP, the project is a year long collaborative research consultation with key investment stakeholders regarding ways corporations can build long term shareholder loyalty.

The project involved conducting interviews/focus groups to investigate short-termism, calling on topic experts and corporations with interest in loyalty instruments, investors, etc.

Produced report: ‘Building a Long Term Shareholder Base: Assessing the Potential of Loyalty Driven Securities

Key messages:

Short term behaviour by investors is seen as damaging the way companies are managed however the research shows little support for loyalty rewards for changing ‘short termism’ problem.  Alternative solutions included:

  • A longer term perspective and focus on economic value creation is only possible if supported by appropriately aligned performance measurement and reward frameworks

  • A more constructive relationship between companies and their long term horizon investors is required

  • Now is the time to move beyond discussion and towards implementing these revised systems and frameworks – too much theory so far.

  • Focus is needed on how policy and regulatory frameworks help or hinder desired behaviour conducive to long horizon value creation

Read more on the Mercer website.