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Strategy is seeking shareholder approval to set daily dividend record dates for STRC, STRD, STRF and STRK, with any declared dividend paid on the next business day. Its board approved the proposal on Sept. 24, according to an SEC filing. The amendments would not change dividend rates or increase the company’s total regular dividend obligations.
Why it matters
Strategy says more frequent payment dates could support price stability, liquidity and demand for its preferred stocks, which form the core of its “Digital Credit” platform. The company also says stronger demand for the securities could help it raise preferred equity to fund its Bitcoin treasury strategy.
The proposal builds on a June change that moved STRC from monthly to semi-monthly dividends. STRC would be the first to adopt daily record dates, starting Nov. 1 if shareholders approve. STRD, STRF and STRK would follow in January.
Market impact
STRC is a variable-rate perpetual preferred stock designed to trade around its $100 par value. It closed at $98.31 on Thursday, down 0.6%, after previously falling below $75 in June. Strategy responded to that earlier drop with a preferred-stock repurchase program, first set at $1 billion and later doubled to $2 billion.
Shareholders will vote at a virtual special meeting scheduled for Oct. 28. Approval requires a majority of the voting power of Strategy’s outstanding common stock; holders of the four preferred securities do not vote. If approved, the changes take effect after the company files amended certificates in Delaware.
Frequently asked questions
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How would Strategy’s proposed daily dividend schedule work?
Each security would have a dividend record date every calendar day, including weekends and holidays. Any dividend declared for a date would be paid on the next business day.
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Would the proposal increase Strategy’s dividend rates or obligations?
No. Strategy says the amendments would not change dividend rates or increase its total regular dividend obligations.
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When would the four preferred stocks move to daily record dates?
If shareholders approve, STRC would start with a Nov. 1 record date. STRD, STRF and STRK would follow in January.
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Why does Strategy say it wants more frequent dividend dates?
Strategy says the changes aim to support price stability, liquidity and demand for its preferred securities, which could help it raise preferred equity for its Bitcoin treasury strategy.
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Who votes on the proposal, and when is the meeting?
A virtual special meeting is scheduled for Oct. 28. Approval requires a majority of the voting power of Strategy’s outstanding common stock; holders of STRC, STRD, STRF and STRK do not vote.
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