Dear Alice,
I was at one of those "family" restaurants the other day, waiting to pay for my pancakes, when the woman in front of me used some kind of certificate to settle her check. When she left, I asked the cashier if that was a gifuto-ken (gift certificate). She said, no, it was a yutai-ken. I'd never heard that word so I asked her to write it down. My dictionary says "yutai" means "hospitality" or "generosity." What the heck is a "hospitality certificate" and how can I get me some of that generosity?
Dave R., Ibaraki
Dear Dave,
The cashier left out the critical word you needed for understanding -- kabunushi (stockholder). The customer in front you owns stock in that restaurant chain, and twice a year, as a thank you for holding their stock, the company sends her a certificate (kabunushi yutai-ken) she can redeem at any of the chain's restaurants. This is separate from any haito (dividends) the company may pay.
To get details for you, I popped over to Shinjuku to talk with Kentaro Takahashi of Nomura Investor Relations Co. Ltd. He probably knows more about the subject than just about anyone because he's spent the last six years compiling and analyzing data on gifts to stockholders. Of the roughly 3,800 companies publicly traded in Japan, 902 -- almost a quarter -- offer some kind of gift to stockholders. That number has increased every year since 1992, when Nomura first started tracking the practice.
Buy 100 shares of Union Tool, which makes drill bits, and they'll send you 3 kg of fancy rice every November. Hagoromo Foods sends two gift packs of the company's products to investors with a least 1,000 shares. Starbuck's Japan sends out free drink coupons.
Gifts to stockholders aren't regulated in Japan. Companies don't have to offer gifts, and have complete freedom in deciding what to give, the value of the gift, and whether to extend the offer to institutional as well as individual shareholders. The only requirement is that they disclose their policy. It's a relatively cheap way to encourage individual investors to buy and hold their stock, promote new products, and build loyalty.
One of my first questions to Takahashi was whether this practice exists outside Japan. He said a handful of companies in the U.K. offer discount coupons as a "stockholder benefit," but in New York he was told "the very idea is unthinkable." "Historically, Japan is a country of gift giving, and many Japanese derive more satisfaction from a gift than a cash payment," Takahashi explained. "There have been cases of a company having a bad year and paying out no dividend rather than eliminate the stockholder gift. In structure, the Japanese stock market is the same as those elsewhere, but the way it functions is somewhat different. Company-to-stockholder relations are more emotional."
Do Japanese investors really make decisions based on stockholder gifts? Takahashi says many do. In a survey of individuals who bought Nomura's annual data book about stockholder gifts, two out of three readers said they bought stock after checking the gift policy.
You know when you learn a new word and would swear you've never encountered it before? Then you realize you've walked by it a million times without noticing it? That's how it's been for yutai and me. I didn't know the word until I started working on this column. Now I see it every time I pass a kinken-ya, those little shops that buy and resell tickets. Yes, there's a resale market for certain stockholder goodies, particular those for discounts on airline tickets.
So if you're not prepared to buy Japanese stocks in order to collect freebies, you can always stop by a ticket shop to get some "generosity" for a smaller investment. But I doubt you'll get the same emotional satisfaction.
