Date

02 Aug 2021

Attendees

Agenda

1) Use Case reminder

2) Where we are on our road map.

3) Open Action Items

4) JIRA Issues Review - https://jira.edmcouncil.org/projects/SEC/issues/SEC-7?filter=allopenissues

5) Todays content discussion.

SMIF OWL-UML

SKOS

RDF/S

6) For next week.

Proceedings:

Today we continued our discussion from last week of SEC-135, which involves clarifying the definition of dividend. From research that Pete did last week, it appears that most companies that issue dividends include a statement about their dividend policy, for example:

Here is a quote from Zillow's https://www.sec.gov/Archives/edgar/data/1334814/000119312511192519/d424b4.htm#toc167001_6:

Dividend Policy
We have never declared or paid a cash dividend on our capital stock and we intend to retain all available funds and any future earnings to fund the development and growth of our business. We therefore do not anticipate paying any cash dividends on our Class A common stock or Class B common stock in the foreseeable future. Any future determinations to pay dividends on our Class A common stock or Class B common stock would depend on our results of operations, our financial condition and liquidity requirements, restrictions that may be imposed by applicable law or our contracts, and any other factors that our board of directors may consider relevant. Pursuant to the current terms of our loan and security agreement with a financial institution, we cannot pay dividends unless specified financial covenants are satisfied.

And from Google Class A https://www.sec.gov/Archives/edgar/data/1288776/000119312504143377/d424b4.htm#toc59330_8

DIVIDEND POLICY

We have never declared or paid any cash dividend on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.

Facebook: https://www.sec.gov/Archives/edgar/data/1326801/000119312512240111/d287954d424b4.htm#toc287954_5

DIVIDEND POLICY

We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings for use in the operation of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any further determination to pay dividends on our capital stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our board of directors considers relevant. In addition, the terms of our credit facilities contain restrictions on our ability to pay dividends.

At last here's Goldman Sachs with an actual intention. However it's all "intends" and "expects" and not a commitment (sorry about odd characters)

https://www.goldmansachs.com/investor-relations/financials/archived/other-information/ipo-prospectus-gs-pdf-file.pdf

Dividend Policy
The holders of common stock, as well as the holders of nonvoting
common stock, will share proportionately on a per share basis in all
dividends and other distributions declared by our board of directors.
Our board of directors currently intends to declare quarterly dividends

on all outstanding shares and expects that the Ñrst quarterly dividend
will be $0.12 per share, and that it will be declared during the third

quarter of Ñscal 1999. For a discussion of the factors that aÅect the
determination by our board of directors to declare dividends, as well as
other matters concerning our dividend policy, see ""Dividend Policy'' and
""Business Ì Regulation''.

So in summary I don't think any of these prospectuses are making any contractual statement or term, positive or negative, about dividends - except to say it's up to the Board.
And if we do want to model something at that level it should be named "DividendPolicy" rather than the current "Dividend" - DividendPolicy is both clearer and reflects the words used in prospectuses.

From Jeff:

Yes, quite agree about any “promise” or commitment regarding dividends — very much at the discretion of the Board and Senior Management as to whether, when, and how much. It is true that companies that normally post dividends continue to do so and just vary the amount based upon earnings, etc, but occasionally dividends are suspended if economic conditions do not support them.

“DividendPolicy” is certainly a clear name for the contractual commitment aspect of dividends as far as governance is concerned, but I would think that there would also be a definition somewhere else of “Dividends”, as the distribution of profits to shareholders in the form of dividends is itself an important economic action or fact related to share ownership that exists in addition to whatever the policy may be.

And, in follow-up from Pete:

Here's one from London: https://www.jtcgroup.com/wp-content/uploads/2021/07/JTC-PLC-disclosure-doc.pdf

Dividend Policy
At the outset, the Board intends to pay out an annual maximum payment
of 25 per cent. on an annualised basis of post tax earnings and thereafter
to adopt a progressive dividend policy which will seek to maximise
shareholder value and reflect the strong earnings potential and cash flow
characteristics of the Group, while allowing it to retain sufficient capital
to fund ongoing operating requirements and to execute the Group’s long
term organic and inorganic growth strategy.

And from Frankfurt https://boersengefluester.de/wp-content/uploads/assets/annuals/2020/A3CRRN.pdf which has a whole page of detail I won't copy here.
It's still all textual statements of intent. Having said that, in practice a lot of companies do stick to regular dates, usually quarterly. But more out of habit I think. If you look at this dividend history for Costco https://www.streetinsider.com/dividend_history.php?q=cost it shifts a fair bit including between Sept and Aug. And there are several Special dividends sprinkled in there.

BTW nice explanation here https://support.stockcharts.com/doku.php?id=policies:adjusted_data of how adjusted stock prices are recalculated prior to the exdividend date.
Which is generally 1 business day before the date of record.

In addition to the equities ontology, making a change with respect to how we model dividends impacts the Futures and Forward ontology, where we have currently linked a dividend future to the dividend (which should really be linked to the share and be a subclass of equity derivative) and it also impacts CIV, where there is duplication with respect to the concepts related to dividend policies for a fund that need to be reconciled / merged with what we do for equities.

We investigated adding a property to the equity offering document / prospectus, and determined that it was not necessary. Here is the definition of Prospectus we found today:

A prospectus is a formal document that is required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering to the public. A prospectus is filed for offerings of stocks, bonds, and mutual funds. The document can help investors make more informed investment decisions because it contains a host of relevant information about the investment security.

This is similar to what we already have, although our definition is not US specific.

At the end of the session, we agreed on the rewording of the definition of dividend, cleaned up the definition of DividendFuture to refer to the listed share rather than the dividend itself, since it is the share that determines the dividend and is linked to the dividend schedule, and cleaned up dividend related terms in the CIV ontology, eliminating some redundancy for properties such as the ex-dividend date which we already have in equities and which fund unit inherits as a consequence. The resulting work is reflected in the SEC-135 pull request.

Date

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