&RPSDVVLRQ)DWLJXH$Q$SSOLFDWLRQRIWKH&RQFHSWWR,QIRUPDO&DUHJLYHUVRI)DPLO\0HPEHUVZLWK

+LQGDZL3XEOLVKLQJ&RUSRUDWLRQ

1XUVLQJ5HVHDUFKDQG3UDFWLFH
9ROXPH$UWLFOH,'SDJHV
GRL

5HYLHZ$UWLFOH

&RPSDVVLRQ)DWLJXH$Q$SSOLFDWLRQRIWKH&RQFHSWWR,QIRUPDO&DUHJLYHUVRI
)DPLO\0HPEHUVZLWK'HPHQWLD
-HQQLIHU5'D\DQG5XWK$$QGHUVRQ

$EVWUDFW
)XOO7H[W3')
)XOO7H[W+70/
)XOO7H[WH38%
/LQNHG5HIHUHQFHV
+RZWR&LWHWKLV$UWLFOH

'XNH8QLYHUVLW\6FKRRORI1XUVLQJ7UHQW'ULYH'80&'XUKDP1&86$
5HFHLYHG)HEUXDU\5HYLVHG-XO\$FFHSWHG-XO\
$FDGHPLF(GLWRU6KHLOD3D\QH
&RS\ULJKW   -HQQLIHU 5 'D\ DQG 5XWK $ $QGHUVRQ 7KLV LV DQ RSHQ DFFHVV DUWLFOH GLVWULEXWHG XQGHU WKH &UHDWLYH &RPPRQV
$WWULEXWLRQ/LFHQVHZKLFKSHUPLWVXQUHVWULFWHGXVHGLVWULEXWLRQDQGUHSURGXFWLRQLQDQ\PHGLXPSURYLGHGWKHRULJLQDOZRUNLVSURSHUO\
FLWHG

$EVWUDFW
,QWURGXFWLRQ &RPSDVVLRQ IDWLJXH LV D FRQFHSW XVHG ZLWK LQFUHDVLQJ IUHTXHQF\ LQ WKH QXUVLQJ OLWHUDWXUH 7KH REMHFWLYH RI WKLV SDSHU LV WR
LGHQWLI\ FRPPRQ WKHPHV DFURVV WKH OLWHUDWXUH DQG WR DSSO\ WKHVH WKHPHV DQG DQ H[LVWLQJ PRGHO RI FRPSDVVLRQ IDWLJXH WR LQIRUPDO
FDUHJLYHUV IRU IDPLO\ PHPEHUV ZLWK GHPHQWLD )LQGLQJV &DUHJLYHUV IRU IDPLO\ PHPEHUV ZLWK GHPHQWLD PD\ EH DW ULVN IRU GHYHORSLQJ
FRPSDVVLRQ IDWLJXH 7KH PRGHO RI FRPSDVVLRQ IDWLJXH SURYLGHV DQ LQIRUPDWLYH IUDPHZRUN IRU XQGHUVWDQGLQJ FRPSDVVLRQ IDWLJXH LQ WKH
LQIRUPDO FDUHJLYHU SRSXODWLRQ /LPLWDWLRQV RI WKH PRGHO ZKHQ DSSOLHG WR WKLV SRSXODWLRQ ZHUH LGHQWLILHG DV WUDXPDWLF PHPRULHV DQG WKH
HPRWLRQDOUHODWLRQVKLSEHWZHHQSDUHQWDQGFKLOGVXJJHVWLQJDUHDVIRUIXWXUHUHVHDUFK&RQFOXVLRQV5HVHDUFKLVQHHGHGWREHWWHUXQGHUVWDQG
WKH LPSDFW RI FRPSDVVLRQ IDWLJXH RQ LQIRUPDO FDUHJLYHUV WKURXJK TXDOLWDWLYH LQWHUYLHZV WR LGHQWLI\ LQIRUPDO FDUHJLYHUV DW ULVN IRU
FRPSDVVLRQIDWLJXHDQGWRSURYLGHDQHPSLULFDOEDVLVIRUGHYHORSLQJQXUVLQJLQWHUYHQWLRQVIRUFDUHJLYHUVH[SHULHQFLQJFRPSDVVLRQIDWLJXH

,QWURGXFWLRQ
&RPSDVVLRQIDWLJXHZDVLQWURGXFHGWRWKHKHDOWKFDUHFRPPXQLW\DVDXQLTXHIRUPRIEXUQRXWH[SHULHQFHGE\WKRVHLQFDULQJSURIHVVLRQV
SDUWLFXODUO\ SDOOLDWLYH FDUH DQG RQFRORJ\ QXUVHV >@ /DWHU RWKHU KHDOWK FDUH SURIHVVLRQV VXFK DV VRFLDO ZRUN PHGLFLQH DQG SV\FKRORJ\
DGRSWHGWKHFRQFHSW>q@0DQ\GHILQLWLRQVRIFRPSDVVLRQIDWLJXHKDYHEHHQRIIHUHGE\UHVHDUFKHUVDQGDXWKRUVWKHPRVWFRPPRQEHLQJ
WKDW FRPSDVVLRQ IDWLJXH LV DQ DGYHUVH FRQVHTXHQFH RI FDULQJ IRU LQGLYLGXDOV LQ QHHG DQG WKH FDUHJLYHU PD\ H[SHULHQFH WKH V\PSWRPV RI
DQJHU GHSUHVVLRQ DQG DSDWK\ >  @ )DPLO\ FDUHJLYHUV SDUWLFXODUO\ WKRVH FDULQJ IRU ROGHU DGXOWV ZLWK GHPHQWLD GLVSOD\ PDQ\ RI WKH
FKDUDFWHULVWLFVRIFRPSDVVLRQIDWLJXH&DUHJLYHUVIRUIDPLO\PHPEHUVZLWKGHPHQWLDH[SHULHQFHGHSUHVVLRQDQ[LHW\DQGVWUHVV>q@ DQG
DOVR IHHOLQJV RI UHVHQWPHQW KHOSOHVVQHVV DQG KRSHOHVVQHVV LQ DGGLWLRQ WR IHHOLQJ WKDW WKH\ KDYH OLWWOH IUHH WLPH >@ &DUHJLYHUV ZKR KDYH
WKHVHIHHOLQJVDQGH[SHULHQFHVRQWRSRIWKHHPRWLRQDOO\ODGHQILOLDOFDUHJLYLQJUHODWLRQVKLSPD\EHVXIIHULQJIURPFRPSDVVLRQIDWLJXH\HW
FRPSDVVLRQIDWLJXHKDVQRWEHHQH[SORUHGIRULQIRUPDOFDUHJLYHUVRIIDPLO\PHPEHUVZLWKGHPHQWLD
,QIRUPDOFDUHJLYHUVIRUIDPLO\PHPEHUVZLWKGHPHQWLDZKRGHYHORSFRPSDVVLRQIDWLJXHPD\WHUPLQDWHWKHFDUHJLYLQJUHODWLRQVKLSWKRXJK
SUHPDWXUH QXUVLQJ KRPH DGPLVVLRQ RU UHOLQTXLVKLQJ FDUH WR DQRWKHU IDPLO\ PHPEHU DQG WKHUH PD\ DOVR EH LQFUHDVHG ULVN IRU DEXVH RU
QHJOHFW> @ 6XSSRUWLQJ WKHVH FDUHJLYHUV PD\ LPSURYH RXWFRPHV IRU SHRSOH ZLWK GHPHQWLD EHFDXVH LQGLYLGXDOV ZKR DUH FDUHG IRU DW
KRPH KDYH ORZHU PRUELGLW\ DQG PRUWDOLW\ WKDQ WKRVH LQ LQVWLWXWLRQDO VHWWLQJV >@ DQG FDULQJ IRU IDPLO\ PHPEHUV DW KRPH SURYLGHV D
VLJQLILFDQWGHFUHDVHLQFRVWWRVRFLHW\>@,QRUGHUIRUWKHSURIHVVLRQDOKHDOWKFDUHFRPPXQLW\WRVXSSRUWWKHVHFDUHJLYHUVFRPSDVVLRQ
IDWLJXHPXVWEHIXOO\H[SORUHGLQWKLVSRSXODWLRQRIFDUHJLYHUV7KHUHIRUHWKHREMHFWLYHRIWKLVSDSHULVWRLGHQWLI\FRPPRQWKHPHVDFURVV
WKH OLWHUDWXUH RQ FRPSDVVLRQ IDWLJXH DQG WR DSSO\ WKHVH WKHPHV DQG WKH H[LVWLQJ PRGHO RI FRPSDVVLRQ IDWLJXH WR LQIRUPDO FDUHJLYHUV IRU
IDPLO\PHPEHUVZLWKGHPHQWLD

&RPSDVVLRQ)DWLJXH7KHPHVIURPWKH/LWHUDWXUH
+LVWRULFDOO\ WKH KHDOWK FDUH OLWHUDWXUH KDV QRW SUHVHQWHG D FRQVLVWHQW GHILQLWLRQ RI FRPSDVVLRQ IDWLJXH &RPSDVVLRQ IDWLJXH D WHUP
LQWURGXFHG E\ -RLQVRQ >@ DQG GHYHORSHG E\ )LJOH\ >@ KDV EHHQ GHILQHG LQWHUFKDQJHDEO\ ZLWK VHFRQGDU\ WUDXPDWLF VWUHVV DQG VHFRQGDU\
WUDXPDWLFVWUHVVGLVRUGHUYLFDULRXVWUDXPDWL]DWLRQDQGEXUQRXW>@WKXVFUHDWLQJFRQIXVLRQUHJDUGLQJLWVGHILQLWLRQ)RUH[DPSOH
DXWKRUVRIDOLWHUDWXUHUHYLHZRIFRPSDVVLRQIDWLJXHDVH[SHULHQFHGE\FDQFHUFDUHSURYLGHUVVWDWHGWKDWWKH\ZHUHXQDEOHWRJHQHUDWHD
GHILQLWLRQEDVHGRQWKHVWXGLHVUHYLHZHG>@7DEOHFRQWDLQVWKHXQLTXHGHILQLWLRQVRIFRPSDVVLRQIDWLJXHIRXQGLQHDUOLHUOLWHUDWXUH
IURPQXUVLQJDQGDOODUWLFOHVE\)LJOH\RUDXWKRUVDGDSWLQJKLVGHILQLWLRQ
ZZZKLQGDZLFRPMRXUQDOVQUS





&RPSDVVLRQ)DWLJXH$Q$SSOLFDWLRQRIWKH&RQFHSWWR,QIRUPDO&DUHJLYHUVRI)DPLO\0HPEHUVZLWK

7DEOH'HILQLWLRQVRIFRQFHSWVDQGNH\WHUPV

6HYHUDO WKHPHV DULVH IURP WKH GHILQLWLRQV LQ WKH OLWHUDWXUH RI FRPSDVVLRQ IDWLJXH &RPSDVVLRQ IDWLJXH D LV GHSHQGHQW RQ D FDULQJ
UHODWLRQVKLSEHWZHHQWKHFDUHJLYHUDQGDFDUHUHFLSLHQWZKRLVVXIIHULQJRUWUDXPDWL]HG>@ELVDIRUPRIEXUQRXW>@
F KDV DQ DFXWH RQVHW >@ DQG G KDV QHJDWLYH HPRWLRQDO UHVSRQVHV IRU WKH FDUHJLYHU VXFK DV KHOSOHVVQHVV KRSHOHVVQHVV LVRODWLRQ DQG
DSDWK\RUDQLQDELOLW\WREHHPSDWKLF>@7KHVHIRXUWKHPHVDQG)LJOH\
VPRGHORIWKHFRPSDVVLRQIDWLJXHSURFHVV>@SURYLGHD
EDVLVIRUH[SORULQJZKHWKHUFRPSDVVLRQIDWLJXHLVDFRQFHSWWKDWDSSOLHVWRLQIRUPDOFDUHJLYHUVIRUIDPLO\PHPEHUVZLWKGHPHQWLD

&RPSDVVLRQ)DWLJXH$SSOLHGWR,QIRUPDO&DUHJLYHUV
$VVKRZQLQ)LJXUH>@FRPSDVVLRQIDWLJXHLVDSURFHVV$FFRUGLQJWR)LJOH\
VPRGHOWKHFDUHJLYHUPXVWKDYHFRQFHUQDQGDQHPSDWKLF
DELOLW\RUIHHOPRWLYDWHGWRUHVSRQGZKHQWKH\SHUFHLYHWKDWWKHFDUHUHFLSLHQWLVVXIIHULQJ>@:KHQFDUHJLYHUVKDYHWKLVHPSDWKLFUHVSRQVH
FRXSOHGZLWKDQXQZLOOLQJQHVVRULQDELOLW\WRGHWDFKIURPWKHFDUHJLYLQJVLWXDWLRQDQGWKHDEVHQFHRIIHHOLQJVRIVDWLVIDFWLRQWKHFDUHJLYHU
GHYHORSV FRPSDVVLRQ VWUHVV >@ &RPSDVVLRQ VWUHVV UHVXOWV LQ FRPSDVVLRQ IDWLJXH LI WKH FDUHJLYHU KDV SURORQJHG H[SRVXUH WR VXIIHULQJ
FRXSOHGZLWKWUDXPDWLFPHPRULHVDQGFRPSHWLQJOLIHGHPDQGV>@
)LJXUH&RPSDVVLRQIDWLJXHSURFHVV>@

&RPSDVVLRQ IDWLJXH KDV QRW EHHQ VSHFLILFDOO\ VWXGLHG LQ LQIRUPDO FDUHJLYHUV EXW PDQ\ RI WKH FKDUDFWHULVWLFV RI FRPSDVVLRQ IDWLJXH DUH
UHFRJQL]DEOH LQ LQIRUPDO FDUHJLYHUV SDUWLFXODUO\ WKRVH FDULQJ IRU IDPLO\ PHPEHUV ZLWK GHPHQWLD &KDUDFWHULVWLFV RI FRPSDVVLRQ IDWLJXH
GLVSOD\HG LQ IRUPDO FDUHJLYHUV LQFOXGH EXW DUH QRW OLPLWHG WR DSDWK\ GHSUHVVLRQ DQG DQ[LHW\ > @ 'HPHQWLD FDUHJLYHUV H[SHULHQFH
VWUHVVDQGKDYHDOVREHHQIRXQGWRH[SHULHQFHDQ[LHW\DQGGHSUHVVLRQ>q@,WLVOLNHO\WKHUHIRUHWKDWLQIRUPDOFDUHJLYHUVDUHDWULVN
IRUFRPSDVVLRQIDWLJXH
7RDQDO\]HWKHDSSOLFDELOLW\RIWKHFRQFHSWWRLQIRUPDOFDUHJLYHUVZHDSSO\)LJOH\
VPRGHORIWKHFRPSDVVLRQIDWLJXHSURFHVV)LJXUH>@
WRLQIRUPDOFDUHJLYHUVH[SORUHWKHSRVVLEOHGLIIHUHQFHVLQFRPSDVVLRQIDWLJXHEHWZHHQIRUPDODQGLQIRUPDOFDUHJLYHUVDQGXVHWKHUHVXOWVRI
WKHDQDO\VLVWRVXJJHVWIXWXUHGLUHFWLRQVIRUUHVHDUFKRQFRPSDVVLRQIDWLJXHLQIDPLO\FDUHJLYHUV
(PSDWKLF$ELOLW\&RQFHUQDQG$WWDFKPHQW
$OWKRXJKFRPSDVVLRQIDWLJXHKDVQRWEHHQVSHFLILFDOO\VWXGLHGLQIDPLO\FDUHJLYHUVIRUDIDPLO\PHPEHUZLWKGHPHQWLDWKHLUH[SHULHQFHV
DSSHDUWRSODFHWKHPDWULVNIRUGHYHORSLQJFRPSDVVLRQIDWLJXH)RUH[DPSOHDORYLQJHPRWLRQDOUHODWLRQVKLSEHWZHHQFDUHUHFLSLHQWDQG
FDUHJLYHULVLPSRUWDQWLQWKHIDPLO\FDUHJLYLQJG\DGDQGZHSURSRVHWKLVSODFHVWKHFDUHJLYHUDWSDUWLFXODUULVNIRUFRPSDVVLRQIDWLJXH7KH
FDUHJLYHUFDUH UHFLSLHQW UHODWLRQVKLS SURYLGHV D VRXUFH IRU WKH FDUHJLYHU
V GHVLUH WR UHVSRQG WR VXIIHULQJ DQG WKH FDUHJLYHU
V DELOLW\ WR
UHFRJQL]HWKHLUIDPLO\PHPEHU
VVXIIHULQJ7KHIROORZLQJTXRWHIURPDGDXJKWHUDERXWKHUUHODWLRQVKLSZLWKKHUPRWKHUGHPRQVWUDWHVDQ
DIIHFWLRQDWH UHODWLRQVKLS k,I , GLGQjW ORYH P\ PRWKHU XQFRQGLWLRQDOO\ WKLV H[SHULHQFH ZRXOGQjW KXUW VR GHHSO\ 6R , DP JUDWHIXO WR KDYH
ORYHG WUXO\ DQG GHHSO\ DQG WR VXIIHU QRZ WKDQ QHYHU WR KDYH KDG VXFK DQ DPD]LQJ UHODWLRQVKLS LQ WKH ILUVW SODFHy >@ $OWKRXJK WKLV
GDXJKWHUGRHVQRWGLVSOD\FRPSDVVLRQIDWLJXHVKHPD\EHDWULVNJLYHQKHUFORVHUHODWLRQVKLSZLWKKHUPRWKHU
3UHPRUELG UHODWLRQVKLS TXDOLW\ LPSDFWV WKH FDUHJLYLQJ UHODWLRQVKLS >@ 5HVHDUFK VKRZV WKDW FDUHJLYHUV ZKR KDG D SRVLWLYH UHODWLRQVKLS
KDYH OHVV VWUDLQ GXULQJ FDUHJLYLQJ DQG DUH DEOH WR ILQG PHDQLQJ LQ FDUHJLYLQJ >q@ &RPSDVVLRQ LV DWWULEXWDEOH WR WKH TXDOLW\ RI WKH
UHODWLRQVKLSEHWZHHQWZRSHRSOH>@&RPSDVVLRQKDSSHQVLQWKHPRPHQWDQGLVQRWDERXWKRZDSHUVRQLVEXWZKDWDSHUVRQGRHVk,WLV
QRWVRPHWKLQJ,KDYHDQGJLYHWR\RX,WPDQLIHVWVLQWKHUHODWLRQVKLSEHWZHHQEHLQJVy>@7KHUHODWLRQVKLSTXDOLW\LVOLNHO\FHQWUDOWRWKH
UHDVRQWKHFDUHJLYHUH[SHULHQFHVFRPSDVVLRQIDWLJXHDQGSURYLGHVIRUWKHHPRWLRQDODWWDFKPHQWWKHFDUHJLYHUKDVWRWKHFDUHUHFLSLHQWWKXV
PDNLQJLQIRUPDOFDUHJLYHUVSDUWLFXODUO\YXOQHUDEOHWRFRPSDVVLRQIDWLJXH5HODWLRQVKLSVZLWKDQHPRWLRQDODWWDFKPHQWPD\DIIHFWWKHZD\
WKHFDUHJLYHUSHUFHLYHVVXIIHULQJE\WKHFDUHUHFLSLHQWDQGLQIOXHQFHWKHDPRXQWRIHPSDWK\WKDWWKHFDUHJLYHUIHHOV
,QIRUPDO FDUHJLYHUV IRU IDPLO\ PHPEHUV ZLWK GHPHQWLD PD\ EH DW DQ HYHQ JUHDWHU ULVN IRU FRPSDVVLRQ IDWLJXH WKDQ IRUPDO FDUH SURYLGHUV
JLYHQWKHHPRWLRQDODWWDFKPHQWWRWKHFDUHUHFLSLHQW,QWKHFRPSDVVLRQIDWLJXHSURFHVVGHWDFKPHQWLVWKHDELOLW\RIWKHSURYLGHUWRGLVWDQFH
WKHPVHOYHV IURP WKH VXIIHULQJ >@ 7KH VWURQJ HPRWLRQDO DWWDFKPHQW EHWZHHQ SDUHQW DQG FKLOG PD\ SURKLELW WKH IDPLO\ FDUHJLYHU IURP
GHWDFKLQJDQGWKHUHIRUHUHPRYHVDQHVVHQWLDOFRSLQJPHFKDQLVPXWLOL]HGE\IRUPDOFDUHSURYLGHUV>@7KXVHPRWLRQDODWWDFKPHQWLVDQ
LPSRUWDQWDVSHFWIRUIXWXUHVWXGLHVDERXWLQIRUPDOFDUHJLYHUVDQGFRPSDVVLRQIDWLJXH
([SRVXUHWR3HUFHLYHG6XIIHULQJ
6WXGLHVVXJJHVWWKDWFDUHJLYHUVIHHOWKDWWKHLUIDPLO\PHPEHUZLWKGHPHQWLDLVVXIIHULQJUHJDUGOHVVRIKRZPXFKWKHSHUVRQZLWKGHPHQWLD
IHHOVKLPVHOIRUKHUVHOIWREHVXIIHULQJ>q@6FKXO]HWDO>@IRXQGWKDWKLJKHUFDUHJLYHUFRPSDVVLRQZDVUHODWHGWRIDPLO\PHPEHU
VXIIHULQJEXWVWDWHGWKDWWKHZRUVWFDVHRFFXUVZKHQkVXIIHULQJLVFKURQLFDQGLQWHQVHZLWKORZSHUFHLYHGDELOLW\WRDIIHFWLWVFRXUVHy>@
&KURQLFVXIIHULQJLVSDUWLFXODUO\WUXHIRUGHPHQWLDSDWLHQWVDQGPDQ\IDPLO\PHPEHUVDUHKHOSOHVVWRFKDQJHWKHWUDMHFWRU\DQGWKXVDUHDW
JUHDWHUULVNWRGHYHORSFRPSDVVLRQIDWLJXH'HPHQWLDFDUHJLYHUVFDUHIRUORQJHUSHULRGVRIWLPHWKDQFDUHJLYHUVIRURWKHUFKURQLFLOOQHVVHV
>@FDUHIRUPRUHWKDQD\HDUDQGFDUHIRUILYH\HDUVRUPRUH>@&DULQJIRUDSDUHQWZLWKGHPHQWLDZDVGHVFULEHGE\RQHDGXOW
FKLOGDVkWKHIXQHUDOWKDWQHYHUHQGVy>@DQGGHPRQVWUDWHVDSURORQJHGH[SRVXUHIRUWKHFDUHJLYHUVWRWKHLUIDPLO\PHPEHUV
VXIIHULQJ
ZZZKLQGDZLFRPMRXUQDOVQUS





&RPSDVVLRQ)DWLJXH$Q$SSOLFDWLRQRIWKH&RQFHSWWR,QIRUPDO&DUHJLYHUVRI)DPLO\0HPEHUVZLWK

,QDGGLWLRQDTXDOLWDWLYHVHFRQGDU\DQDO\VLVRILQWHUYLHZVZLWKQXUVHGDXJKWHUVFDULQJIRUHOGHUO\SDUHQWVLGHQWLILHGDQDVVRFLDWLRQEHWZHHQ
SDUHQWDO VXIIHULQJ DQG FRPSDVVLRQ IDWLJXH >@ 2QH GDXJKWHU GHVFULEHG WKH GLIIHUHQFH EHWZHHQ FDULQJ IRU D SDUHQW YHUVXV FDULQJ IRU D
QRQIDPLO\PHPEHUWKLVZD\k:KHQ,VDZP\SDUHQWVVXIIHULQJ,VXIIHUHG{:KHQLW
V\RXUSDUHQWDQGVRPHRQH\RXORYHVRLQWHQVHO\\RX
MXVW ZDQW PRUH IRU WKHP WR EH VDIH DQG KHDOWK\y >@ 7KHUH LV D FOHDU UHODWLRQVKLS EHWZHHQ WKH DIIHFWLRQ RU HPRWLRQDO DWWDFKPHQW WR WKH
SDUHQWDQGWKHGDXJKWHU
VSHUFHSWLRQRIVXIIHULQJ>@
:KHUHDVIRUPDOFDUHSURYLGHUVPD\EHDEOHWRWDNHWLPHDZD\IURPSHRSOHZKRDUHVXIIHULQJ>q@IDPLO\FDUHJLYHUVPD\QRWKDYH
WKLV RSSRUWXQLW\ > @ 7KLV PD\ SODFH IDPLO\ FDUHJLYHUV DW D JUHDWHU ULVN IRU FRPSDVVLRQ IDWLJXH WKDQ IRUPDO FDUHJLYHUV ,Q DGGLWLRQ
IDPLO\ FDUHJLYHUV DUH RIWHQ FDULQJ IRU ORQJ SHULRGV RI WLPH DURXQGWKHFORFN DQG WKXV WKLV FRQVWDQW H[SRVXUH WR VXIIHULQJ LV HVSHFLDOO\
SURORQJHGIRULQIRUPDOFDUHJLYHUVIRUIDPLO\PHPEHUVZLWKGHPHQWLD
6HQVHRI6DWLVIDFWLRQ
)HHOLQJVRIIXOILOOPHQWDQGFRQWHQWPHQWIURPFDULQJIRUDIDPLO\PHPEHUZLWKGHPHQWLDPD\SURWHFWIDPLO\FDUHJLYHUVIURPFRPSDVVLRQ
IDWLJXH:LWKRXWDVHQVHRIVDWLVIDFWLRQLQFDULQJKRZHYHUWKHFDUHJLYHULVDWULVNIRUFRPSDVVLRQIDWLJXH'HPHQWLDFDUHJLYHUVDUHFDSDEOHRI
H[SHULHQFLQJ VDWLVIDFWLRQ EXW WKHLU VDWLVIDFWLRQ UHVXOWV IURP WKH IDPLO\ PHPEHU ZLWK GHPHQWLD
V ZHOOEHLQJ DV ZHOO DV IURP UHFHLYLQJ
DSSUHFLDWLRQ IRU WKH FDUH WKH\ DUH SURYLGLQJ >@ ERWK RI ZKLFK DUH FRPSURPLVHG E\ WKH GHPHQWLQJ FRQGLWLRQ 7KHUH DUH DOVR UDFLDO
GLIIHUHQFHVZLWKFDUHJLYLQJVDWLVIDFWLRQ$ODUJHPXOWLVLWHVWXG\ZLWKSDUWLFLSDQWVFRPSDULQJ&DXFDVLDQDQG$IULFDQ$PHULFDQIDPLO\
FDUHJLYHUV IRXQG WKDW &DXFDVLDQ FDUHJLYHUV KDG D ORZHU SHUFHLYHG EHQHILW IURP FDUHJLYLQJ WKDQ WKH $IULFDQ $PHULFDQ FDUHJLYHUV ZKHQ
FRQWUROOLQJ IRU VRFLRHFRQRPLF VWDWXV JHQGHU UHODWLRQVKLS DQG DJH >@ &DXFDVLDQ FDUHJLYHUV DOVR GHPRQVWUDWHG D GHFUHDVH LQ OLIH
VDWLVIDFWLRQ RYHU WLPH ZKHUHDV WKH $IULFDQ $PHULFDQ FDUHJLYHUV KDG D FRQWLQXHG KLJK OHYHO RI OLIH VDWLVIDFWLRQ >@ 7KXV WKH UDFH RU
HWKQLFLW\RIDFDUHJLYHUPD\SODFHKLPRUKHUDWJUHDWHUULVNIRUFRPSDVVLRQIDWLJXH
7UDXPDWLF0HPRULHV
:H SURSRVH WKDW WKH LQIRUPDO FDUHJLYHU PD\ GHYHORS FRPSDVVLRQ IDWLJXH ZLWKRXW WUDXPDWLF PHPRULHV DQG WKLV LV ZKHUH DSSOLFDWLRQ RI
)LJOH\
VPRGHOWRLQIRUPDOFDUHJLYHUVPD\GLYHUJHIURPIRUPDOKHDOWKFDUHSURYLGHUV,QUHYLHZLQJWKHKLVWRU\RIWKHFRQFHSWRIFRPSDVVLRQ
IDWLJXHWKHGHILQLWLRQKDVFKDQJHGIURPDGHILQLWLRQZLWKRXWDIRFXVRQWUDXPDWLFPHPRULHV>@WRRQHWKDWLQFRUSRUDWHVWKHVHHOHPHQWV>@
&RPSDVVLRQ IDWLJXH DFFRUGLQJ WR -RLQVRQ LV FDXVHG E\ XQDYRLGDEOH H[WHUQDO VRXUFHV LV GLIILFXOW WR UHFRJQL]H DQG OHDGV WR D FDUHJLYHU
EHFRPLQJkDQJU\LQHIIHFWLYHDSDWKHWLFDQGGHSUHVVHGy>@&RPSDVVLRQIDWLJXHPD\EHFDXVHGZKHQDQXUVHHQFRXQWHUVPRUHVWUHVVWKDQKH
RU VKH LV DEOH WR FRSH ZLWK DQG WKH QXUVH
V DELOLW\ WR IXQFWLRQ LV FRPSURPLVHG >@ -RLQVRQ
V GHILQLWLRQ GRHV QRW LQFOXGH WUDXPDWLF
PHPRULHV WKLV HOHPHQW ZDV DGGHG WR WKH GHILQLWLRQ E\ )LJOH\ ZKHQ KH UHSUHVHQWHG FRPSDVVLRQ IDWLJXH DV D kVWDWH RI WHQVLRQ DQG
SUHRFFXSDWLRQ ZLWK WKH WUDXPDWL]HG SDWLHQWV E\ UHH[SHULHQFLQJ WKH WUDXPDWLF HYHQWV DYRLGDQFHQXPELQJ RI UHPLQGHUV >VLF@ SHUVLVWHQW
DURXVDOHJDQ[LHW\DVVRFLDWHGZLWKWKHSDWLHQWy>@:HSURSRVHWKDWVRPHGHILQLWLRQVRIFRPSDVVLRQIDWLJXHH[FOXGHWKHFDUHJLYHU
VRZQ
SHUVRQDO WUDXPDWLF PHPRULHV DQG FRPSDVVLRQ IDWLJXH LV WKHUHIRUH DSSOLFDEOH WR LQIRUPDO FDUHJLYHUV ZKHWKHU RU QRW WKH\ KDYH WUDXPDWLF
PHPRULHV)XWXUHLQIRUPDOFDUHJLYLQJUHVHDUFKPD\LOOLFLWWUDXPDWLFPHPRULHVIURPIDPLO\FDUHJLYHUVDQGZLOODOORZIRUWKHH[SORUDWLRQRI
SRVVLEOHWUDXPDWLFPHPRULHVUHODWHGWRFDUHJLYLQJLQWKLVSRSXODWLRQ
/LIH'HPDQGV
7KH WLPH FDUHJLYHUV VSHQG RQ FDUHJLYLQJ UHPRYHV WKHP IURP RWKHU UHODWLRQVKLSV ,QIRUPDO FDUHJLYHUV IRU IDPLO\ PHPEHUV ZLWK GHPHQWLD
RIWHQ ILQG WKHPVHOYHV DORQH GXULQJ WKH GD\ ZLWK WKHLU IDPLO\ PHPEHU DQG ZKLOH WKLV UHODWLRQVKLS LV YDOXDEOH LW GRHV QRW UHSODFH SHHU
UHODWLRQVKLSV&DUHJLYHUVEHFRPHLVRODWHGDQGRIWHQIHHOWKHUHLVQRRQHWKH\FDQWDONWRDERXWWKHLUIHHOLQJVDQGWKDWIULHQGVFDQQRWUHODWHWR
WKHP>@+LUVFKIHOG
V>@VXUYH\RIFDUHJLYHUVIRXQGWKDWFDUHJLYHUVIHOWUHVHQWIXOKHOSOHVVDQGKRSHOHVVDQGWKDWWKH\KDGOLWWOHIUHH
WLPH :KHQ D FDUHJLYHU KDV OLWWOH IUHH WLPH WKH\ DUH XQDEOH WR SDUWLFLSDWH LQ DFWLYLWLHV IRFXVLQJ RQ WKHPVHOYHV DQG IRVWHULQJ RWKHU
UHODWLRQVKLSV
,WLVOLNHO\WKDWPXOWLSOHOLIHGHPDQGVFDQDOVRFRQWULEXWHWRDFDUHJLYHUGHYHORSLQJFRPSDVVLRQIDWLJXH'HPHQWLDFDUHJLYHUVDUHIUHTXHQWO\
IDFHGZLWKVLWXDWLRQVRIEXUGHQDQGWKHPRUHGHSHQGHQWWKHFDUHUHFLSLHQWWKHKLJKHUWKHEXUGHQDQGGHPDQGV/D\HULQJRQWKHHPRWLRQDO
DWWDFKPHQW RI WKH IDPLO\ FDUHJLYLQJ VLWXDWLRQ PD\ IDFLOLWDWH GHYHORSPHQW RI FRPSDVVLRQ IDWLJXH LQ ZD\V WKDW DUH \HW XQNQRZQ DQG OLNHO\
XQLTXHWRIDPLO\FDUHJLYHUV7KHOLIHGHPDQGVRIDIDPLO\FDUHJLYHUDUHGLIIHUHQWIURPIRUPDOFDUHJLYHUV>@DQGZHSURSRVHWKDWWKHVH
GHPDQGVPD\PDNHLWPRUHGLIILFXOWIRUIDPLO\FDUHJLYHUVWRDYRLGGHYHORSLQJFRPSDVVLRQIDWLJXH)DPLO\FDUHJLYHUVDSSHDUWRKDYHIHZHU
RXWOHWVIRUVXSSRUWDQGEXIIHUVDJDLQVWWKHFRPSDVVLRQIDWLJXHSURFHVVWKDQGRIRUPDOFDUHJLYHUV

,QGLFDWRUVRI&RPSDVVLRQ)DWLJXH
2XU DQDO\VLV RI WKH OLWHUDWXUH SUHVHQWLQJ GHILQLWLRQV RI FRPSDVVLRQ IDWLJXH VXJJHVWV WKDW WKH LQGLFDWLRQV RI FRPSDVVLRQ IDWLJXH SUHVHQW LQ
IRUPDOKHDOWKFDUHSURYLGHUVVXFKDVKRSHOHVVQHVVKHOSOHVVQHVVHPRWLRQDOGLVHQJDJHPHQWDQGDSDWK\DOVRDUHSUHVHQWLQFDUHJLYHUVIRUROGHU
DGXOWVZLWKGHPHQWLD&RPSDVVLRQIDWLJXHLVDFRPELQDWLRQRIWKHVHIDFWRUVQRWHDFKLQGHSHQGHQWO\DQGPD\SUHVHQWGLIIHUHQWO\LQLQIRUPDO
FDUHJLYHUV WKDQ LW GRHV LQ IRUPDO KHDOWKFDUH SURYLGHUV 7KH OLWHUDWXUH RQ SRWHQWLDO LQGLFDWRUV RI FRPSDVVLRQ IDWLJXH LV SUHVHQWHG WR KHOS
HVWDEOLVKZKHWKHUIXUWKHUUHVHDUFKLQWKLVDUHDZRXOGEHIUXLWIXO
+RSHOHVVQHVV
)DPLO\ FDUHJLYHUV SDUWLFXODUO\ FDUHJLYHUV IRU ROGHU DGXOWV ZLWK GHPHQWLD H[KLELW KRSHOHVVQHVV +RSH LV GHILQHG DV kD IHHOLQJ RI GHVLUH IRU
VRPHWKLQJ XVXDOO\ ZLWK FRQILGHQFH LQ WKH SRVVLELOLW\ RI LWV IXOILOOPHQWy >@ &DUHJLYHUV ZKR DUH H[SHULHQFLQJ KRSHOHVVQHVV ZLOO IHHO WKH
LPSRVVLELOLW\RIDGHVLUHWREHIXOILOOHG$VWXG\RIFDUHJLYHUVDQGQRQFDUHJLYHUVLQ%UD]LOFRPSDUHGOHYHOVRIGHSUHVVLRQDQ[LHW\
KRSHOHVVQHVVDQGVWUHVV>@&DUHJLYHUVKDGVLJQLILFDQWGLIIHUHQFHVIURPQRQFDUHJLYHUVRQWKHKRSHOHVVQHVVPHDVXUHZLWKKLJKHUOHYHOVRI
KRSHOHVVQHVV>@ +RSHOHVVQHVV ZDV DOVR DVVRFLDWHG ZLWK KLJKHU OHYHOV RI DQ[LHW\ DQG GHSUHVVLRQ LQ WKH FDUHJLYHUV >@ ,Q WKLV VWXG\ WKH
UHODWLRQVKLSEHWZHHQFDUHJLYHUDQGWKHSHUVRQZLWKGHPHQWLDDQGVWDJHRIGHPHQWLDZHUHQRWUHODWHGWROHYHORIKRSHOHVVQHVV>@
+HOSOHVVQHVV
&DUHJLYHUV ZKR IHHO KHOSOHVV PD\ DOVR IHHO SRZHUOHVV LQ WKH FDUHJLYLQJ VLWXDWLRQ +HOSOHVVQHVV LQ FDUHJLYHUV IRU IDPLO\ PHPEHUV ZLWK
GHPHQWLD LV DVVRFLDWHG ZLWK WKH IUHTXHQF\ RI GHSUHVVLYH EHKDYLRUV LQ WKH FDUH UHFLSLHQW WKH FDUHJLYHU
V DSSUDLVDO RI WKHVH GHSUHVVLYH
ZZZKLQGDZLFRPMRXUQDOVQUS





&RPSDVVLRQ)DWLJXH$Q$SSOLFDWLRQRIWKH&RQFHSWWR,QIRUPDO&DUHJLYHUVRI)DPLO\0HPEHUVZLWK

EHKDYLRUVDQGWKHFDUHJLYHU
VDSSUDLVDORIGLVUXSWLYHEHKDYLRUV>@&DUHJLYHUVDUHPRUHOLNHO\WRIHHOKHOSOHVVZKHQWKH\GRQRWXQGHUVWDQG
DIDPLO\PHPEHU
VGHSUHVVLRQ>@0DOHFDUHJLYHUVDQG&KULVWLDQFDUHJLYHUVZHUHPRUHOLNHO\WRKDYHIHHOLQJVRIKHOSOHVVQHVVFRPSDUHGWR
IHPDOHFDUHJLYHUVDQG0XVOLPRU'UX]HFDUHJLYHUV>@&DUHJLYHUVRIIDPLO\PHPEHUVZLWKFDQFHUGHVFULEHKHOSOHVVQHVVDQGSRZHUOHVVQHVV
SDUWLFXODUO\ UHODWHG WR WKH SHUFHSWLRQ RI VXIIHULQJ >@ 3DUWLFLSDQWV GHVFULEHG VXIIHULQJ QRW RQO\ DV SDLQ EXW DV DQ H[LVWHQWLDO VXIIHULQJ
LQFOXGLQJ LPSDLUHG IXQFWLRQ LQ GDLO\ OLIH UHGXFHG DXWRQRP\ DQG ORQHOLQHVV >@ +HOSOHVVQHVV DQG SRZHUOHVVQHVV ZHUH UHODWHG WR WKH
FDUHJLYHU
VSHUFHSWLRQRIWKHSDWLHQW
VIDGLQJDZD\DQGIHHOLQJVRILQVXIILFLHQF\>@DQGGHPHQWLDFDUHJLYHUVDOVRUHSRUWIHHOLQJWKDWWKHLU
IDPLO\PHPEHULVIDGLQJDZD\>@
$SDWK\
$SDWK\ LV D ODFN RI LQWHUHVW RU FRQFHUQ DQG KDV EHHQ LQFOXGHG LQ WKH GHILQLWLRQ RI FRPSDVVLRQ IDWLJXH LQ SURIHVVLRQDO FDUHJLYHUV >@ 1R
VWXGLHVZHUHIRXQGWKDWGHVFULEHGFDUHJLYHUVH[SHULHQFLQJDSDWK\LQUHODWLRQVKLSWRFDULQJIRUIDPLO\PHPEHUVZLWKGHPHQWLD%HFDXVHWKHUH
LVQRUHVHDUFKRQWKHFRQFHSWRIFRPSDVVLRQIDWLJXHLQIDPLO\FDUHJLYHUVWKHPHDQLQJRIDSDWK\IRUWKLVSRSXODWLRQLV\HWWREHXQGHUVWRRG
(PRWLRQDO'LVHQJDJHPHQWRU,VRODWLRQ
&DUHJLYHUV ZLWK FRPSDVVLRQ IDWLJXH PD\ KDYH HPRWLRQDO GLVHQJDJHPHQW RU DFWLYH ZLWKGUDZDO IURP DQG DYRLGDQFH RI WKH FDUHJLYLQJ
VLWXDWLRQ (PRWLRQDO GLVHQJDJHPHQW KDV EHHQ H[SORUHG LQ VSRXVHV RI SDWLHQWV XQGHUJRLQJ FDUGLDF UHKDELOLWDWLRQ >@ 2
)DUUHOO HW DO >@
IRXQG WKDW VSRXVHV ZKR ZHUH GLVWUHVVHG FRSHG XVLQJ GLVHQJDJHPHQW VWUDWHJLHV VLJQLILFDQWO\ PRUH WKDQ QRQGLVWUHVVHG VSRXVHV 4XDOLWDWLYH
LQWHUYLHZV ZLWK  IDPLO\ FDUHJLYHUV DERXW VWLJPD SDUWLFXODUO\ IDPLO\ VWLJPD WKDW FRPHV IURP EHLQJ DVVRFLDWHG ZLWK D UHODWLYH ZLWK D
VWLJPDWLF PDUN >@ UHYHDOHG WKDW FKLOGUHQ FDUHJLYHUV ZKR KDG QHJDWLYH HPRWLRQV WR FDUHJLYLQJ VXFK DV HPEDUUDVVPHQW VKDPH DQG
SDUWLFXODUO\ GLVJXVW UHSRUWHG D GHFUHDVH LQ LQYROYHPHQW 2QH FDUHJLYHU VWDWHG k, FRPH WR YLVLW KHU DQG , VHH KHU{OLNH D VPDOO ELUG{
WRRWKOHVV{DOOZULQNOHG,DSSURDFKKHUEXW,FDQQRWWDONWRKHU,FDQQRWKXJKHUNLVVKHUy>@&RPSDVVLRQIDWLJXHOLNHWKHIDPLO\VWLJPD
WKDWFDXVHVWKHIDPLO\PHPEHUVRIDSHUVRQZLWKGHPHQWLDWRKDYHIHHOLQJVRIGLVJXVWHPEDUUDVVPHQWDQGGHFUHDVHGLQYROYHPHQWFDQFDXVH
DQ DGXOW FKLOG FDULQJ IRU D SDUHQW ZLWK GHPHQWLD WR EHFRPH HPRWLRQDOO\ GLVHQJDJHG %HLQJ HPRWLRQDOO\ GLVHQJDJHG LV HYLGHQFH RI
FRPSDVVLRQIDWLJXH

&RQVHTXHQFHVRI&RPSDVVLRQ)DWLJXH
&RPSDVVLRQIDWLJXHKDVQHJDWLYHRXWFRPHVIRUIRUPDOFDUHJLYHUVVXFKDVGHSUHVVLRQLVRODWLRQSK\VLFDOV\PSWRPVRILQVRPQLDIDWLJXHRU
ZHLJKWFKDQJHVLQFUHDVHGHUURUVDWZRUNDQGMREGLVVDWLVIDFWLRQ>q@:KLOHWKHOLNHO\FRQVHTXHQFHVRIFRPSDVVLRQIDWLJXH
LQLQIRUPDOFDUHJLYHUVKDYHQRWEHHQH[SORUHGLQUHVHDUFKSXEOLVKHGLQWKHFXUUHQWOLWHUDWXUHZHSURSRVHWKDWFRPSDVVLRQIDWLJXHPD\OHDG
WRQHJDWLYHRXWFRPHVIRUERWKWKHFDUHJLYHUDQGWKHFDUHUHFLSLHQW'UDZLQJXSRQIRUPDOFDUHJLYHUV
QHJDWLYHRXWFRPHVDQGEHFDXVHVLPLODU
FRQFHSWVVXFKDVGHSUHVVLRQDQGEXUGHQKDYHQHJDWLYHRXWFRPHVIRULQIRUPDOFDUHJLYHUVZHSURSRVHWKDWLQIRUPDOFDUHJLYHUVIRUIDPLO\
PHPEHUV ZLWK GHPHQWLD ZKR GHYHORS FRPSDVVLRQ IDWLJXH PD\ VXIIHU GHSUHVVLRQ EXUGHQ FDUHJLYHU VWUDLQ DQG D GHFUHDVHG UHODWLRQVKLS
TXDOLW\ ZLWK WKH FDUH UHFLSLHQW &RPSDVVLRQ IDWLJXH PD\ DOVR GHWHUPLQH ZKHWKHU RU QRW WKH FDUHJLYHU FRQWLQXHV WR FDUH IRU WKHLU IDPLO\
PHPEHUZLWKGHPHQWLDRULIWKHSHUVRQZLWKGHPHQWLDLVSODFHGLQDQLQVWLWXWLRQDOVHWWLQJRUFDUHGIRUE\DQRWKHUSHUVRQ
'HSUHVVLRQ
,QIRUPDOFDUHJLYHUVIRUSHRSOHZLWKGHPHQWLDDUHDOUHDG\DWULVNIRUGHSUHVVLRQDVIRXQGLQPXOWLSOHVWXGLHV>@ <DIIH HW DO
>@LQDODUJHPXOWLVLWHVWXG\RISDWLHQWVIRXQGWKDWFDUHJLYHUVZLWKDWOHDVWVL[GHSUHVVLYHV\PSWRPVZHUHPRUHWLPHVOLNHO\WR
SODFH WKH FDUH UHFLSLHQW LQ D QXUVLQJ KRPH WKDQ D FDUHJLYHU ZLWK ILYH RU OHVV GHSUHVVLYH V\PSWRPV 5HVHDUFK VXJJHVWV D KLJK OHYHO RI
GHSUHVVLRQDPRQJGHPHQWLDFDUHJLYHUVILQGLQJPHDQVFRUHRI>@RQWKH&HQWHUIRU(SLGHPLRORJLF6WXGLHV'HSUHVVLRQ6FDOH&(6'
>@ZKHUHKLJKHUVFRUHVDUHLQGLFDWLYHRIJUHDWHUGHSUHVVLYHV\PSWRPDWRORJ\DQGDVFRUHRILQGLFDWHVGHSUHVVLRQ>@
%XUGHQ
&DUHJLYHUEXUGHQLVUHODWHGWRFRPSHWLQJOLIHGHPDQGVDQGWKHPRUHFRPSHWLQJOLIHGHPDQGVWKHJUHDWHUWKHRSSRUWXQLW\IRUERWKREMHFWLYH
DQG VXEMHFWLYH EXUGHQ $V GLVFXVVHG GHPHQWLD FDUHJLYHUV H[SHULHQFH EXUGHQ >  q@ DQG FRPSDVVLRQ IDWLJXH FRXOG OHDG WR HYHQ
JUHDWHUEXUGHQLWLVDOVRSRVVLEOHWKDWWKHUHODWLRQVKLSEHWZHHQEXUGHQDQGFRPSDVVLRQIDWLJXHLVUHFLSURFDO)XUWKHUFDUHJLYHUVIRUIDPLO\
PHPEHUVZLWKGHPHQWLDH[SHULHQFHEXUGHQHYHQZKHQWKHIDPLO\PHPEHUUHVLGHVLQDQLQVWLWXWLRQ>@$VWXG\RIFDUHJLYHUVIRXQG
WKDWFDUHJLYHUVKDGQRVLJQLILFDQWGLIIHUHQFHLQOHYHORIEXUGHQUHODWHGWRFDUHUHFLSLHQWUHVLGHQFH>@7KLVVWXG\DOVRIRXQGDUHODWLRQVKLS
EHWZHHQOHYHORIHGXFDWLRQDQGLQFRPHWRFDUHJLYHUEXUGHQOHVVHGXFDWHGDQGORZHULQFRPHFDUHJLYHUVZHUHDWJUHDWHUULVNIRUEXUGHQ>@
&DUHJLYHUGHSUHVVLRQLVDPDMRUIDFWRUUHODWHGWREXUGHQDQG3DSDVWDYURXDQGFROOHDJXHV>@IRXQGWKDWFDUHJLYHUVKDGVFRUHV
DERYHWKHULVNOHYHOIRUGHYHORSPHQWRIFOLQLFDOGHSUHVVLRQ&DUHJLYHUVIRUIDPLO\PHPEHUVZLWKGHPHQWLDRIWHQH[SHULHQFHEXUGHQZKLFK
PD\EHFRXSOHGZLWKGHSUHVVLRQ7KLVFRPELQDWLRQRIGHSUHVVLRQDQGEXUGHQSODFHVWKHFDUHUHFLSLHQWDWULVNIRUQHJDWLYHFRQVHTXHQFHVDV
ZHOO
&DUHJLYHU6WUDLQ
5HODWLRQVKLS TXDOLW\ LV FORVHO\ DVVRFLDWHG ZLWK FDUHJLYHU UROH VWUDLQ >@ &DUHJLYHUV ZLWK SRVLWLYH UHODWLRQVKLS TXDOLW\ KDYH OHVV FDUHJLYHU
VWUDLQEHFDXVHWKH\DUHDEOHWRILQGPHDQLQJLQFDUHJLYLQJDQGFRUUHVSRQGLQJO\FDUHJLYHUVZLWKZHDNUHODWLRQVKLSTXDOLW\ZLOOH[SHULHQFH
JUHDWHUFDUHJLYHUVWUDLQ>@+LJKPXWXDOLW\LQIDPLO\FDUHJLYHUVLVDSURWHFWLYHIDFWRUIRUQHJDWLYHFDUHJLYLQJRXWFRPHVVXFKDVGHSUHVVLRQ
EXUGHQDQGUHVHQWPHQW>qq@
'HFUHDVHG5HODWLRQVKLS4XDOLW\
5HODWLRQVKLSTXDOLW\LVGLIIHUHQWIRUDOOIDPLO\FDUHJLYLQJG\DGVKRZHYHUZHSURSRVHWKDWWKRVHFDUHJLYHUVDIIHFWHGE\FRPSDVVLRQIDWLJXH
DUHPRVWOLNHO\WRKDYHDGHFUHDVHGVHQVHRIUHODWLRQVKLSTXDOLW\ZLWKWKHLUIDPLO\PHPEHU,QDTXDOLWDWLYHVWXG\RIGDXJKWHUFDUHJLYHUV
WKH DXWKRUV GHVFULEHG IRXU RI WKH FDUHJLYHUV DV XVLQJ D GLVSDVVLRQDWH DSSURDFK >@ 7KH GDXJKWHUV XVLQJ WKH GLVSDVVLRQDWH DSSURDFK
GHPRQVWUDWHGGHFUHDVHGRURQO\VXSHUILFLDOFRPPXQLFDWLRQGHILQHGWKHLUFDUHJLYLQJUROHLQWHUPVRIWKHWDVNVDQGJDYHOLWWOHWKRXJKWWRWKH
IXWXUH >@ 7KH GLVSDVVLRQDWH DSSURDFK UHSRUWHG E\ WKH UHVHDUFKHUV SUHVXPDEO\ GHPRQVWUDWHV D GHFUHDVHG UHODWLRQVKLS TXDOLW\ EHWZHHQ
FDUHJLYHU DQG FDUH UHFLSLHQW 0XWXDOLW\ D SRVLWLYH UHODWLRQVKLS TXDOLW\ >@ LV DIIHFWHG E\ WKH FDUHJLYLQJ H[SHULHQFH ,Q D VWXG\ RI 
FDUHJLYHUVIRUIDPLO\PHPEHUVZLWKFDQFHUWKHUHVHDUFKHUVIRXQGWKDWGLIILFXOWFDUHJLYLQJVLWXDWLRQVDURVHIURPDSRRUUHODWLRQVKLS>@
ZZZKLQGDZLFRPMRXUQDOVQUS





&RPSDVVLRQ)DWLJXH$Q$SSOLFDWLRQRIWKH&RQFHSWWR,QIRUPDO&DUHJLYHUVRI)DPLO\0HPEHUVZLWK

7HUPLQDWLRQRI&DUHJLYLQJ$EXVHDQG1HJOHFW
)DPLO\PHPEHUVIHHOJXLOWZKHQWKH\DUHQRWDEOHWRFDUHIRUWKHLUORYHGRQHVDWKRPH>@:KHQH[DPLQLQJ.RUHDQIDPLO\FDUHJLYHUV
3DUN HW DO >@ IRXQG PRUH WKDQ KDOI VWDWHG WKH\ IHOW JXLOW\ DERXW GHFLGLQJ WR SODFH WKHLU ORYHG RQH LQ DQ LQVWLWXWLRQ 2QH GDXJKWHU
UHFROOHFWHGk,FRXOGQ
WVOHHSIRUGD\V7KRXJKWVOLNHZK\GLG,GRVXFKDWKLQJ"2UZKDWZRXOGKHUOLIHEHOLNH":RXOGQRWOHWPHJRWR
VOHHSy>@ DQG DQRWKHU GDXJKWHU UHFDOOHG k6RPHWLPHV , ZRQGHU KRZ PXFK VKH PXVW KDWH PH LQVLGH IRU GRLQJ WKLV WR KHU , IHHO JXLOW\
EHFDXVH,IHHOVKH
VVD\LQJk+RZFRXOG\RXDEDQGRQPHKHUH"y>@)DPLO\PHPEHUVZKRQHHGWRPDNHWKLVGHFLVLRQRIWHQKDYHDGLIILFXOW
WLPHDQGH[SHULHQFHZKDW3DUNHWDOGHVFULEHDVGHHSVRUURZ>@
$QRWKHUVWXG\H[SORULQJQXUVLQJKRPHSODFHPHQWE\ZLIHDQGGDXJKWHUGHPHQWLDFDUHJLYHUVIRXQGDQLQWHUDFWLRQEHWZHHQNLQVKLSDQGUROH
FDSWLYLW\ UROH RYHUORDG DQG GD\ FDUH XVH >@ 5ROH FDSWLYLW\ GHVFULEHG DV KRZ WUDSSHG DQG FRQVWUDLQHG WKH FDUHJLYHU IHHOV DQG UROH
RYHUORDGGHVFULEHGDVRYHUZKHOPLQJFDUHJLYLQJGHPDQGVZHUHGHVFULEHGE\WKHDXWKRUVWREHSULPDU\VXEMHFWLYHVWUHVVRUVLQQXUVLQJKRPH
SODFHPHQW7KLVVWXG\RIFDUHJLYHUVUHYHDOHGWKDWUHJDUGOHVVRIUHODWLRQVKLSWKRVHFDUHJLYHUVZLWKKLJKUROHFDSWLYLW\SODFHGWKHLUIDPLO\
PHPEHU LQ QXUVLQJ KRPHV HDUOLHU WKDQ FDUHJLYHUV ZKR KDG ORZ UROH FDSWLYLW\ ZKLOH RQO\ ZLYHV SODFHG WKHLU KXVEDQGV LQ QXUVLQJ KRPHV
HDUOLHUZKHQUROHRYHUORDGZDVKLJK>@7KLVVXJJHVWVWKDWFDUHJLYHUVZKRIHHOWUDSSHGDQGFRQVWUDLQHGOLNHFDUHJLYHUVZLWKFRPSDVVLRQ
IDWLJXHZKRVXIIHUKRSHOHVVQHVVDQGKHOSOHVVQHVVDUHPRUHOLNHO\WRSODFHDIDPLO\PHPEHULQDQXUVLQJKRPHHDUOLHUWKDQWKRVHZKRGRQRW
IHHOWKLVZD\>@
&DUHJLYHU GHSUHVVLRQ DQG EXUGHQ SODFH FDUH UHFLSLHQWV DW ULVN SK\VLFDOO\ DQG HPRWLRQDOO\ 7KRUSH HW DO >@ H[DPLQHG FDUHJLYHU
SV\FKRORJLFDO GLVWUHVV LQ  GHPHQWLD FDUHJLYHUV DQG IRXQG FDUHJLYHU GLVWUHVV WR EH VLJQLILFDQWO\ QHJDWLYHO\ UHODWHG WR D FDUH UHFLSLHQW
UHFHLYLQJDQLQIOXHQ]DYDFFLQDWLRQ*DLQH\DQG3D\QH>@FRQGXFWHGDUHYLHZRIHOGHUDEXVHFDVHVIURP$GXOW3URWHFWLYH6HUYLFHVDQG
IRXQGWKDWFDUHJLYHUEXUGHQGLGQRWFRUUHODWHZLWKLQFUHDVHGDEXVHEXWZDVDVVRFLDWHGZLWKLQFUHDVHGQHJOHFWDQGH[SORLWDWLRQ
3HRSOH ZLWK GHPHQWLD DUH QRW RQO\ DW ULVN IRU QHJOHFW EXW DOVR DW LQFUHDVHG ULVN IRU SK\VLFDO DEXVH IURP WKH FDUHJLYHU ,Q D VDPSOH RI 
LQIRUPDOFDUHJLYHUV6KDIIHUHWDO>@GLVFRYHUHGWKDWDVDFDUHJLYHUIHHOVLQFUHDVLQJO\UHVHQWIXOWRZDUGVWKHFDUHUHFLSLHQWKHRUVKHLVPRUH
OLNHO\ WR DEXVH WKH FDUH UHFLSLHQW 3UH]5RMR HW DO LQ D VDPSOH RI  6SDQLVK FDUHJLYHUV IURP 0DGULG GHPRQVWUDWHG WKDW WKH JUHDWHU D
GHPHQWLDFDUHUHFLSLHQWLVGHSHQGHQWXSRQWKHFDUHJLYHUWKHOHVVKHOSDFDUHJLYHUUHFHLYHVDQGWKHPRUHDJJUHVVLYHWKHGHPHQWLDSDWLHQW
V
EHKDYLRUVWKHPRUHOLNHO\WKHFDUHJLYHULVWREHFRPHDJJUHVVLYHDQGSRVVLEO\DEXVLYH>@3UH]5RMRHWDO
VVWXG\GLGQRWFRPSDUH6SDQLVK
FDUHJLYHUV WR RWKHU HWKQLF JURXSV DQG WKXV PRUH UHVHDUFK LV QHHGHG LQ D PRUH GLYHUVH VDPSOH 7KH VWXGLHV SUHVHQWLQJ WKH QHJDWLYH
FRQVHTXHQFHVRIFDUHJLYLQJJHQHUDOO\H[DPLQHGODUJHSRSXODWLRQVDQGPXOWLSOHVWXGLHVIRXQGWKHVDPHUHVXOWV:KLOHQRVWXGLHVVSHFLILFDOO\
H[DPLQHGWKHQHJDWLYHHIIHFWVRIFRPSDVVLRQIDWLJXHRQLQIRUPDOFDUHJLYHUVDQGFDUHUHFLSLHQWVWKLVLVQRWXQH[SHFWHGEHFDXVHWKHFRQFHSW
KDVQRWEHHQSUHYLRXVO\GHILQHGIRUWKLVSRSXODWLRQ

&RQFOXVLRQV
&RPSDVVLRQIDWLJXHLQIDPLO\FDUHJLYHUVKDVQRWEHHQWKHIRFXVRIDSULPDU\UHVHDUFKVWXG\,QWKLVDQDO\VLVZHKDYHGHPRQVWUDWHGWKDWWKH
FRQFHSW DSSOLHV WR IDPLO\ FDUHJLYHUV :H SURSRVH WKDW FRPSDVVLRQ IDWLJXH LQ IDPLO\ FDUHJLYHUV PD\ EH WKH FRPELQDWLRQ RI KRSHOHVVQHVV
KHOSOHVVQHVVDSDWK\DQGHPRWLRQDOGLVHQJDJHPHQWWKDWRFFXUVDIWHUDSURORQJHGH[SRVXUHWRVXIIHULQJ&RPSDVVLRQIDWLJXHGHSHQGVXSRQ
FRQFHUQDQGDQHPSDWKLFUHVSRQVHIURPWKHFDUHJLYHUIRUWKHFDUHUHFLSLHQWZLWKGHPHQWLDDQGWKLVFRQFHUQDQGHPRWLRQDODWWDFKPHQWLVWKH
PRWLYDWLRQIRUWKHFDUHJLYHUWRUHOLHYHWKHVXIIHULQJ,IDFDUHJLYHUH[SHULHQFHVDQHPSDWKLFUHVSRQVHFRXSOHGZLWKFRPSHWLQJOLIHGHPDQGV
DQGDODFNRIVDWLVIDFWLRQIURPFDUHJLYLQJWKH\PD\EHDWULVNIRUFRPSDVVLRQIDWLJXH
&RPSDVVLRQIDWLJXHLVDSURFHVVLWLVWKHHQGUHVXOWRIDFDVFDGHRIHYHQWVWKDWLQWXUQPD\OHDGWRFDUHJLYHUGHSUHVVLRQLQFUHDVHGEXUGHQ
FDUHJLYHUVWUDLQDQGGHFUHDVHGUHODWLRQVKLSTXDOLW\7KHFRQVHTXHQFHVRIFRPSDVVLRQIDWLJXHPD\DOVROHDGWRWHUPLQDWLRQRIWKHFDUHJLYLQJ
UHODWLRQVKLSWKURXJKSUHPDWXUHDGPLVVLRQWRDORQJWHUPFDUHIDFLOLW\RUUHOLQTXLVKLQJFDUHWRDQRWKHUIDPLO\PHPEHURUWREHKDYLRUVRI
DEXVHRUQHJOHFWRIWKHFDUHUHFLSLHQW5HVHDUFKKDVVKRZQWKDWFDUHJLYHUVRIIDPLO\PHPEHUVZLWKGHPHQWLDH[SHULHQFHWKHHYHQWVWKDWOHDG
IRUPDO FDUHJLYHUV WRZDUGV FRPSDVVLRQ IDWLJXH HPSDWKLF DELOLW\ DQG FRQFHUQ SURORQJHG H[SRVXUH WR SHUFHLYHG VXIIHULQJ QR VHQVH RI
VDWLVIDFWLRQ DQG FRPSHWLQJ OLIH GHPDQGV /LNHZLVH IDPLO\ FDUHJLYHUV H[KLELW WKH OLNHO\ LQGLFDWRUV RI FRPSDVVLRQ IDWLJXH DQG DOVR HQGXUH
GHSUHVVLRQDQGEXUGHQ
%\DSSO\LQJWKHFRQFHSWRIFRPSDVVLRQIDWLJXHWRIDPLO\FDUHJLYHUVZHKDYHDQHQKDQFHGXQGHUVWDQGLQJRIWKHFDUHJLYLQJH[SHULHQFH7KLV
DSSOLFDWLRQVXJJHVWVWKHIROORZLQJUHVHDUFKTXHVWLRQV
L +RZGRHVFRPSDVVLRQIDWLJXHSUHVHQWLQFDUHJLYHUVRIDIDPLO\PHPEHUZLWKGHPHQWLD"
LL 7R ZKDW H[WHQW GR FDUHJLYHUV IRU D IDPLO\ PHPEHU ZLWK GHPHQWLD H[SHULHQFH FRPSDVVLRQ IDWLJXH" $UH WKH FRPSDVVLRQ IDWLJXH
SURFHVVDQGLWVDQWHFHGHQWVDQGRXWFRPHVVLPLODUWRWKRVHRIIRUPDOFDUHJLYHUVSULRUUHVHDUFK"
LLL +RZLVWKHQDWXUHRIWKHUHODWLRQVKLSEHWZHHQFDUHJLYHUDQGFDUHUHFLSLHQWUHODWHGWRWKHFDUHJLYHU
VULVNIRUFRPSDVVLRQIDWLJXH"
LY :KDWLQVWUXPHQWVDUHDYDLODEOHWRPHDVXUHFRPSDVVLRQIDWLJXHLQIDPLO\FDUHJLYHUVDQGGRWKHVHPHDVXUHVGHPRQVWUDWHUHOLDELOLW\
DQGYDOLGLW\"
Y +RZFDQQXUVHVLQWHUYHQHWRGHFUHDVHDFDUHJLYHU
VULVNIRURUH[SHULHQFHRIFRPSDVVLRQIDWLJXHDQGLWVFRQVHTXHQFHV"
,WLVLPSRUWDQWIRUQXUVHUHVHDUFKHUVWRLQYHVWLJDWHWKLVFRQFHSWWRIXOO\XQGHUVWDQGFRPSDVVLRQIDWLJXHDQGWKHFRQVHTXHQFHVLWPD\KDYHRQ
WKHFDUHJLYLQJG\DG,IKHDOWKFDUHSURIHVVLRQDOVNQRZWKHVSHFLILFFDVFDGHRIHYHQWVOHDGLQJWRFRPSDVVLRQIDWLJXHLQWKHIDPLO\FDUHJLYLQJ
SRSXODWLRQ WKH\ PD\ LQWHUYHQH DQG LQWHUUXSW WKLV FDVFDGH DW PDQ\ SRLQWV ,I WKH FDVFDGH LV QRW LQWHUUXSWHG DQG WKH FDUHJLYHU GHYHORSV
FRPSDVVLRQ IDWLJXH WKHUH PD\ EH ULVN IRU WHUPLQDWLRQ RI WKH FDUHJLYLQJ UHODWLRQVKLS DEXVH RU QHJOHFW > @ ,W LV SRVVLEOH WKDW
FRPSDVVLRQ IDWLJXH LV DQDORJRXV WR D V\QGURPH WKDW FRXOG LQFOXGH WKLV P\ULDG RI LQGLFDWRUV DQG FRQVHTXHQFHV DV V\PSWRPV RI DQ
RYHUDUFKLQJFRQVWUXFW)XWXUHUHVHDUFKFRXOGH[SORUHWKLVSRVVLELOLW\
.QRZOHGJH RI FRPSDVVLRQ IDWLJXH LQ IDPLO\ FDUHJLYHUV ZLOO OHDG WR GHYHORSPHQW RI LQWHUYHQWLRQV WR UHGXFH WKLV GHYDVWDWLQJ RXWFRPH
,QWHUYHQWLRQV PD\ LQFOXGH DQWLFLSDWRU\ JXLGDQFH IRU FDUHJLYHUV LGHQWLILHG DW ULVN IRU FRPSDVVLRQ IDWLJXH 1XUVHV DUH DOVR DEOH WR UHGXFH
SHUFHLYHG FDUH UHFLSLHQW VXIIHULQJ WKURXJK LQWHUYHQWLRQV VXFK DV PHGLFDWLRQ DQG EHKDYLRUDO PDQDJHPHQW $GGLWLRQDO LQWHUYHQWLRQV PD\
XWLOL]HRQOLQHUHVRXUFHVVXFKDVFKDWJURXSVDVZHOODVSKRQHLQWHUYHQWLRQVWKDWILWLQWRWKHFRPSOH[OLYHVRIFDUHJLYHUV

ZZZKLQGDZLFRPMRXUQDOVQUS





&RPSDVVLRQ)DWLJXH$Q$SSOLFDWLRQRIWKH&RQFHSWWR,QIRUPDO&DUHJLYHUVRI)DPLO\0HPEHUVZLWK

5HIHUHQFHV
 &-RLQVRQk&RSLQJZLWKFRPSDVVLRQIDWLJXHy1XUVLQJYROQRSSq9LHZDW6FRSXV
 & 5 )LJOH\ k&RPSDVVLRQ IDWLJXH SV\FKRWKHUDSLVWVj FKURQLF ODFN RI VHOI FDUHy -RXUQDO RI &OLQLFDO 3V\FKRORJ\ YRO  QR  SS
q9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 )0F+ROPk5[IRUFRPSDVVLRQIDWLJXHy-RXUQDORI&KULVWLDQ1XUVLQJYROQRSSq9LHZDW6FRSXV
 % 0 6DER k&RPSDVVLRQ IDWLJXH DQG QXUVLQJ ZRUN FDQ ZH DFFXUDWHO\ FDSWXUH WKH FRQVHTXHQFHV RI FDULQJ ZRUN"y ,QWHUQDWLRQDO
-RXUQDORI1XUVLQJ3UDFWLFHYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW
6FRSXV
 & 5 )LJOH\ &RPSDVVLRQ )DWLJXH &RSLQJ ZLWK 6HFRQGDU\ 7UDXPDWLF 6WUHVV LQ 7KRVH :KR 7UHDW WKH 7UDXPDWL]HG %UXQQHU0D]HO
/HYLWWRZQ3D86$
 5($GDPV&5)LJOH\DQG-$%RVFDULQRk7KHFRPSDVVLRQUDWLJXHVFDOHLWVXVHZLWKVRFLDOZRUNHUVIROORZLQJ8UEDQGLVDVWHUy
5HVHDUFKRQ6RFLDO:RUN3UDFWLFHYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt
9LHZDW6FRSXV
 *&.HLGHOk%XUQRXWDQGFRPSDVVLRQIDWLJXHDPRQJKRVSLFHFDUHJLYHUVy7KH$PHULFDQ-RXUQDORI+RVSLFHDQG3DOOLDWLYH&DUHYRO
QRSSq9LHZDW6FRSXV
 ( $JXJOLD 0 / 2QRU 0 7UHYLVLRO & 1HJUR 0 6DLQD DQG ( 0DVR k6WUHVV LQ WKH FDUHJLYHUV RI $O]KHLPHUjV SDWLHQWV DQ
H[SHULPHQWDOLQYHVWLJDWLRQLQ,WDO\y$PHULFDQ-RXUQDORI$O]KHLPHUjV'LVHDVHDQG2WKHU'HPHQWLDVYROQRSSq
9LHZDW6FRSXV
 & &RRSHU & .DWRQD 0 2UUHOO DQG * /LYLQJVWRQ k&RSLQJ VWUDWHJLHV DQ[LHW\ DQG GHSUHVVLRQ LQ FDUHJLYHUV RI SHRSOH ZLWK
$O]KHLPHUjV GLVHDVHy ,QWHUQDWLRQDO -RXUQDO RI *HULDWULF 3V\FKLDWU\ YRO  QR  SS q  9LHZ DW 3XEOLVKHU t 9LHZ DW
*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 6 + &URRJ - $ %XUOHVRQ $ 6XGLORYVN\ DQG 5 0 %DXPH k6SRXVH FDUHJLYHUV RI $O]KHLPHU SDWLHQWV SUREOHP UHVSRQVHV WR
FDUHJLYHUEXUGHQy$JLQJDQG0HQWDO+HDOWKYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW
3XE0HGt9LHZDW6FRSXV
 &+2WW66DQGHUVDQG67.HOEHUk*ULHIDQGSHUVRQDOJURZWKH[SHULHQFHRIVSRXVHVDQGDGXOWFKLOGFDUHJLYHUVRILQGLYLGXDOV
ZLWK$O]KHLPHUjVGLVHDVHDQGUHODWHGGHPHQWLDVy*HURQWRORJLVWYROQRSSq9LHZDW6FRSXV
 ( 5RVD 0 $PEURJLR * %LQHWWL DQG 2 =DQHWWL kj,PPLJUDQW SDLG FDUHJLYHUVj DQG SULPDU\ FDUHJLYHUVj EXUGHQy ,QWHUQDWLRQDO
-RXUQDORI*HULDWULF3V\FKLDWU\YROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt
9LHZDW6FRSXV
 . 6FKXPDFKHU & $ %HFN DQG - 0 0DUUHQ k)DPLO\ FDUHJLYHUV FDULQJ IRU ROGHU DGXOWV ZRUNLQJ ZLWK WKHLU IDPLOLHVy $PHULFDQ
-RXUQDORI1XUVLQJYROQRSSq9LHZDW6FRSXV
 '+7D\ORU-U0(]HOO0.XFKLEKDWOD7VWE\HDQG(&&OLSSk,GHQWLI\LQJWUDMHFWRULHVRIGHSUHVVLYHV\PSWRPVIRUZRPHQ
FDULQJ IRU WKHLU KXVEDQGV ZLWK GHPHQWLDy -RXUQDO RI WKH $PHULFDQ *HULDWULFV 6RFLHW\ YRO  QR  SS q  9LHZ DW
3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 .<DIIH3)R[51HZFRPHUHWDOk3DWLHQWDQGFDUHJLYHUFKDUDFWHULVWLFVDQGQXUVLQJKRPHSODFHPHQWLQSDWLHQWVZLWKGHPHQWLDy
-RXUQDORIWKH$PHULFDQ0HGLFDO$VVRFLDWLRQYROQRSSq9LHZDW6FRSXV
 0+LUVFKIHOGk+RPHFDUHYHUVXVLQVWLWXWLRQDOL]DWLRQIDPLO\FDUHJLYLQJDQGVHQLOHEUDLQGLVHDVHy,QWHUQDWLRQDO -RXUQDO RI 1XUVLQJ
6WXGLHVYROQRSSq9LHZDW6FRSXV
 &+YDQ+RXWYHQDQG(&1RUWRQk,QIRUPDOFDUHDQGKHDOWKFDUHXVHRIROGHUDGXOWVy-RXUQDORI+HDOWK(FRQRPLFVYROQR
SSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 $$532XWUHDFKDQG6HUYLFHVk6WDWHE\VWDWHORQJWHUPKHDOWKFRVWVyKWWSZZZDDUSRUJIDPLO\FDUHJLYLQJDUWLFOHVVWDWHE\
VWDWHBORQJWHUPKWPO
 305RELQV/0HOW]HUDQG1=HOLNRYVN\k7KHH[SHULHQFHRIVHFRQGDU\WUDXPDWLFVWUHVVXSRQFDUHSURYLGHUVZRUNLQJZLWKLQD
FKLOGUHQjVKRVSLWDOy-RXUQDORI3HGLDWULF1XUVLQJYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZ
DW3XE0HGt9LHZDW6FRSXV
 11DMMDU/:'DYLV.%HFN&RRQDQG&&DUQH\'RHEEHOLQJk&RPSDVVLRQIDWLJXHDUHYLHZRIWKHUHVHDUFKWRGDWHDQGUHOHYDQFH
WRFDQFHUFDUHSURYLGHUVy-RXUQDORI+HDOWK3V\FKRORJ\YROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODU
t9LHZDW3XE0HGt9LHZDW6FRSXV
 3+XJJDUGk&RPSDVVLRQIDWLJXHKRZPXFKFDQ,JLYH"y0HGLFDO(GXFDWLRQYROQRSSq9LHZDW3XEOLVKHUt
9LHZDW*RRJOH6FKRODUt9LHZDW6FRSXV
 56FKXO]56+HEHUW0$'HZHWDOk3DWLHQWVXIIHULQJDQGFDUHJLYHUFRPSDVVLRQQHZRSSRUWXQLWLHVIRUUHVHDUFKSUDFWLFHDQG
SROLF\y7KH*HURQWRORJLVWYROQRSSq9LHZDW6FRSXV
 &5)LJOH\DQG5*5RRS&RPSDVVLRQ)DWLJXHLQWKH$QLPDO&DUH&RPPXQLW\+XPDQH6RFLHW\3UHVV
 $O]KHLPHUjV$VVRFLDWLRQk(OL]DEHWKjVVWRU\yKWWSZZZDO]RUJOLYLQJBZLWKBDO]KHLPHUVBDVS
 *0:LOOLDPVRQDQG56FKXO]k&DULQJIRUDIDPLO\PHPEHUZLWKFDQFHUSDVWFRPPXQDOEHKDYLRUDQGDIIHFWLYHUHDFWLRQVy-RXUQDO
ZZZKLQGDZLFRPMRXUQDOVQUS





&RPSDVVLRQ)DWLJXH$Q$SSOLFDWLRQRIWKH&RQFHSWWR,QIRUPDO&DUHJLYHUVRI)DPLO\0HPEHUVZLWK

RI$SSOLHG6RFLDO3V\FKRORJ\YROQRSSq
 3*$UFKEROG%-6WHZDUW05*UHHQOLFNDQG7+DUYDWKk0XWXDOLW\DQGSUHSDUHGQHVVDVSUHGLFWRUVRIFDUHJLYHUUROHVWUDLQy
5HVHDUFKLQ1XUVLQJDQG+HDOWKYROQRSSq9LHZDW6FRSXV
 .6/\RQV%-6WHZDUW3*$UFKEROGDQG-+&DUWHUk2SWLPLVPSHVVLPLVPPXWXDOLW\DQGJHQGHUSUHGLFWLQJ\HDUUROH
VWUDLQLQ3DUNLQVRQjVGLVHDVHVSRXVHVy*HURQWRORJLVWYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt
9LHZDW3XE0HGt9LHZDW6FRSXV
 $&0XLk&DUHJLYHUVWUDLQDPRQJEODFNDQGZKLWHGDXJKWHUFDUHJLYHUVDUROHWKHRU\SHUVSHFWLYHy*HURQWRORJLVWYROQRSS
q9LHZDW6FRSXV
 /0DUUk&DQFRPSDVVLRQIDWLJXH"y-RXUQDORI3DOOLDWLYH0HGLFLQHYROQRSSq9LHZDW6FRSXV
 / * %HQRLW 3 0 9HDFK DQG % 6 /H5R\ k:KHQ \RX FDUH HQRXJK WR GR \RXU YHU\ EHVW JHQHWLF FRXQVHORU H[SHULHQFHV RI
FRPSDVVLRQIDWLJXHy-RXUQDORI*HQHWLF&RXQVHOLQJYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODU t
9LHZDW3XE0HGt9LHZDW6FRSXV
 -.0RQLQ56FKXO]%&)HHQH\DQG7%&RRNk$WWDFKPHQWLQVHFXULW\DQGSHUFHLYHGSDUWQHUVXIIHULQJDVSUHGLFWRUVRISHUVRQDO
GLVWUHVVy-RXUQDORI([SHULPHQWDO6RFLDO3V\FKRORJ\YROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt
9LHZDW3XE0HGt9LHZDW6FRSXV
 -.0RQLQ56FKXO]/00DUWLUH-5-HQQLQJV-+/LQJOHUDQG06*UHHQEHUJk6SRXVHVjFDUGLRYDVFXODUUHDFWLYLW\WRWKHLU
SDUWQHUVjVXIIHULQJy-RXUQDOVRI*HURQWRORJ\6HULHV%YROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt
9LHZDW3XE0HGt9LHZDW6FRSXV
 56FKXO]-.0RQLQ6-&]DMDHWDOk0HDVXULQJWKHH[SHULHQFHDQGSHUFHSWLRQRIVXIIHULQJy*HURQWRORJLVWYROQRSSq
9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 $O]KHLPHUjV$VVRFLDWLRQDQG1DWLRQDO$OOLDQFHIRU&DUHJLYLQJk)DPLOLHVFDUH$O]KHLPHUjVFDUHJLYLQJLQWKH8QLWHG6WDWHVy
 700HXVHUDQG6-0DUZLWk$FRPSUHKHQVLYHVWDJHVHQVLWLYHPRGHORIJULHILQGHPHQWLDFDUHJLYLQJy*HURQWRORJLVWYROQR
SSq9LHZDW6FRSXV
 &:DUG*ULIILQ26W$PDQWDQG-%URZQk&RPSDVVLRQIDWLJXHZLWKLQGRXEOHGXW\FDUHJLYLQJQXUVHGDXJKWHUVFDULQJIRUHOGHUO\
SDUHQWVy7KH2QOLQH-RXUQDORI,VVXHVLQ1XUVLQJYROQRPDQXVFULSW
 $5DFFLFKLQL6&DVWHOODQL3&LYHUFKLD3)LRUDYDQWLDQG26FDUSLQRk7KHFDUHJLYHUjVEXUGHQRI$O]KHLPHUSDWLHQWVGLIIHUHQFHV
EHWZHHQOLYHLQDQGQRQOLYHLQy$PHULFDQ-RXUQDORI$O]KHLPHUjV'LVHDVHDQGRWKHU'HPHQWLDV YRO  QR  SS q 
9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 0 6 0D\RU 2 5LEHLUR DQG & 3DO k6DWLVIDFWLRQ LQ GHPHQWLD DQG VWURNH FDUHJLYHUV D FRPSDUDWLYH VWXG\y 5HYLVWD /DWLQR
$PHULFDQDGH(QIHUPDJHPYROQRSSq9LHZDW6FRSXV
 :(+DOH\/1*LWOLQ65:LVQLHZVNLHWDOk:HOOEHLQJDSSUDLVDODQGFRSLQJLQ$IULFDQ$PHULFDQDQG&DXFDVLDQGHPHQWLD
FDUHJLYHUVILQGLQJVIURPWKH5($&+VWXG\y$JLQJDQG0HQWDO+HDOWKYROQRSSq9LHZDW3XEOLVKHUt9LHZDW
*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 $1HXIHOGDQG0-+DUULVRQk0HQDVFDUHJLYHUVUHFLSURFDOUHODWLRQVKLSVRUREOLJDWLRQ"y-RXUQDORI$GYDQFHG1XUVLQJYROQR
SSq9LHZDW6FRSXV
 &ROOLQV(QJOLVK'LFWLRQDU\k'HILQLWLRQPHDQLQJRI+RSHyKWWSZZZFROOLQVODQJXDJHFRP
 ' 5 %DQGHLUD - 3DZORZVNL 7 5 *RQDOYHV - % +LOJHUW 0 & %R]]HWWL DQG ) 1 +XJR k3V\FKRORJLFDO GLVWUHVV LQ %UD]LOLDQ
FDUHJLYHUVRIUHODWLYHVZLWKGHPHQWLDy$JLQJDQG0HQWDO+HDOWKYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH
6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 -6RXG&1HKP5$WDOODKHWDOk7KHKHDOWKRIIDPLO\FDUHJLYHUVRIROGHULPSDLUHGSHUVRQVLQ/HEDQRQDQLQWHUYLHZVXUYH\y
,QWHUQDWLRQDO -RXUQDO RI 1XUVLQJ 6WXGLHV YRO  QR  SS q  9LHZ DW 3XEOLVKHU t 9LHZ DW *RRJOH 6FKRODU t 9LHZ DW
3XE0HGt9LHZDW6FRSXV
 $ 0LOEHUJ 3 6WUDQJ DQG 0 -DNREVVRQ k1H[W RI NLQjV H[SHULHQFH RI SRZHUOHVVQHVV DQG KHOSOHVVQHVV LQ SDOOLDWLYH KRPH FDUHy
6XSSRUWLYH&DUHLQ&DQFHUYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW
6FRSXV
 32j)DUUHOO-0XUUD\DQG6%+RW]k3V\FKRORJLFGLVWUHVVDPRQJVSRXVHVRISDWLHQWVXQGHUJRLQJFDUGLDFUHKDELOLWDWLRQy+HDUWDQG
/XQJYROQRSSq9LHZDW6FRSXV
 -(/DUVRQDQG3&RUULJDQk7KHVWLJPDRIIDPLOLHVZLWKPHQWDOLOOQHVVy$FDGHPLF3V\FKLDWU\YROQRSSq9LHZ
DW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 3:HUQHU'*ROGVWHLQDQG(%XFKELQGHUk6XEMHFWLYHH[SHULHQFHRIIDPLO\VWLJPDDVUHSRUWHGE\FKLOGUHQRI$O]KHLPHUjVGLVHDVH
SDWLHQWVy 4XDOLWDWLYH +HDOWK 5HVHDUFK YRO  QR  SS q  9LHZ DW 3XEOLVKHU t 9LHZ DW *RRJOH 6FKRODU t 9LHZ DW
3XE0HGt9LHZDW6FRSXV
 - 6DQVRQL ( 9HOORQH DQG * 3LUDV k$Q[LHW\ DQG GHSUHVVLRQ LQ FRPPXQLW\GZHOOLQJ ,WDOLDQ $O]KHLPHUjV GLVHDVH FDUHJLYHUVy
,QWHUQDWLRQDO-RXUQDORI1XUVLQJ3UDFWLFHYROQRSSq9LHZDW6FRSXV
 6$QGUQDQG6(OPVWKOk)DPLO\FDUHJLYHUVjVXEMHFWLYHH[SHULHQFHVRIVDWLVIDFWLRQLQGHPHQWLDFDUHDVSHFWVRIEXUGHQVXEMHFWLYH
KHDOWKDQGVHQVHRIFRKHUHQFHy6FDQGLQDYLDQ-RXUQDORI&DULQJ6FLHQFHVYROQRSSq9LHZDW3XEOLVKHUt9LHZDW
ZZZKLQGDZLFRPMRXUQDOVQUS





&RPSDVVLRQ)DWLJXH$Q$SSOLFDWLRQRIWKH&RQFHSWWR,QIRUPDO&DUHJLYHUVRI)DPLO\0HPEHUVZLWK

*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 <0DUWLQ3*LOEHUW.0FHZDQDQG&,URQVk7KHUHODWLRQRIHQWUDSPHQWVKDPHDQGJXLOWWRGHSUHVVLRQLQFDUHUVRISHRSOHZLWK
GHPHQWLDy$JLQJDQG0HQWDO+HDOWKYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HG
t9LHZDW6FRSXV
 / 6 5DGORII k7KH &(6' 6FDOH D VHOIUHSRUW GHSUHVVLRQ VFDOH IRU UHVHDUFK LQ WKH JHQHUDO SRSXODWLRQy $SSOLHG 3V\FKRORJLFDO
0HDVXUHPHQWYROQRSSq
 <$UDL..XPDPRWR0:DVKLR78HGD+0LXUDDQG..XGRk)DFWRUVUHODWHGWRIHHOLQJVRIEXUGHQDPRQJFDUHJLYHUVORRNLQJ
DIWHULPSDLUHGHOGHUO\LQ-DSDQXQGHUWKHORQJWHUPFDUHLQVXUDQFHV\VWHPy3V\FKLDWU\DQG&OLQLFDO1HXURVFLHQFHVYROQRSS
q9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 - & $UDQJR /DVSULOOD $ 0RUHQR + 5RJHUV DQG . )UDQFLV k7KH HIIHFW RI GHPHQWLD SDWLHQWjV SK\VLFDO FRJQLWLYH DQG
HPRWLRQDOEHKDYLRUDOSUREOHPVRQFDUHJLYHUZHOOEHLQJILQGLQJVIURPD6SDQLVKVSHDNLQJVDPSOHIURP&RORPELD6RXWK$PHULFDy
$PHULFDQ-RXUQDORI$O]KHLPHUjV'LVHDVHDQGRWKHU'HPHQWLDVYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH
6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 653GH0RUDHVDQG/67GD6LOYDk$QHYDOXDWLRQRIWKHEXUGHQRI$O]KHLPHUSDWLHQWVRQIDPLO\FDUHJLYHUVy&DGHUQRVGH6DXGH
3XEOLFDYROQRSSq9LHZDW6FRSXV
 55*DLQH\DQG%.3D\QHk&DUHJLYHUEXUGHQHOGHUDEXVHDQG$O]KHLPHUjVGLVHDVHWHVWLQJWKHUHODWLRQVKLSy-RXUQDORI+HDOWKDQG
+XPDQ6HUYLFHV$GPLQLVWUDWLRQYROQRSSq9LHZDW6FRSXV
 *56+RQJDQG+.LPk)DPLO\FDUHJLYHUEXUGHQE\UHODWLRQVKLSWRFDUHUHFLSLHQWZLWKGHPHQWLDLQ.RUHDy*HULDWULF 1XUVLQJ
YROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 3 / 6WHDGPDQ * 7UHPRQW DQG - ' 'DYLV k3UHPRUELG UHODWLRQVKLS VDWLVIDFWLRQ DQG FDUHJLYHU EXUGHQ LQ GHPHQWLD FDUHJLYHUVy
-RXUQDORI*HULDWULF3V\FKLDWU\DQG1HXURORJ\YROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW
3XE0HGt9LHZDW6FRSXV
 (3DSDVWDYURX$.DORNHULQRX663DSDFRVWDV+7VDQJDULDQG36RXUW]Lk&DULQJIRUDUHODWLYHZLWKGHPHQWLDIDPLO\FDUHJLYHU
EXUGHQy -RXUQDO RI $GYDQFHG 1XUVLQJ YRO  QR  SS q  9LHZ DW 3XEOLVKHU t 9LHZ DW *RRJOH 6FKRODU t 9LHZ DW
3XE0HGt9LHZDW6FRSXV
 9%DOO$/6QRZ$%6WHHOHHWDOk4XDOLW\RIUHODWLRQVKLSVDVDSUHGLFWRURISV\FKRVRFLDOIXQFWLRQLQJLQSDWLHQWVZLWKGHPHQWLDy
-RXUQDORI*HULDWULF3V\FKLDWU\DQG1HXURORJ\YROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW
3XE0HGt9LHZDW6FRSXV
 0).QHHVKDZ50&RQVLGLQHDQG--HQQLQJVk0XWXDOLW\DQGSUHSDUHGQHVVRIIDPLO\FDUHJLYHUVIRUHOGHUO\ZRPHQDIWHUE\SDVV
VXUJHU\y$SSOLHG1XUVLQJ5HVHDUFKYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW6FRSXV
 + 7DQML . ( $QGHUVRQ $ / *UXEHU%DOGLQL HW DO k0XWXDOLW\ RI WKH PDULWDO UHODWLRQVKLS LQ 3DUNLQVRQjV GLVHDVHy 0RYHPHQW
'LVRUGHUVYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 /0'RQRUILRDQG1:6KHHKDQk5HODWLRQVKLSG\QDPLFVEHWZHHQDJLQJPRWKHUVDQGFDUHJLYLQJGDXJKWHUVILOLDOH[SHFWDWLRQVDQG
UHVSRQVLELOLWLHVy-RXUQDORI$GXOW'HYHORSPHQWYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW
6FRSXV
 ./6FKXPDFKHU%-6WHZDUW3*$UFKEROG0&DSDUUR)0XWDOHDQG6$JUDZDOk(IIHFWVRIFDUHJLYLQJGHPDQGPXWXDOLW\
DQGSUHSDUHGQHVVRQIDPLO\FDUHJLYHURXWFRPHVGXULQJFDQFHUWUHDWPHQWy2QFRORJ\1XUVLQJ)RUXPYROQRSSq
9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 +5 +DQ < - &KRL 0 7 .LP - ( /HH DQG . % .LP k([SHULHQFHV DQG FKDOOHQJHV RI LQIRUPDO FDUHJLYLQJ IRU .RUHDQ
LPPLJUDQWVy-RXUQDORI$GYDQFHG1XUVLQJYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZ DW
3XE0HGt9LHZDW6FRSXV
 *7%XKU0.XFKLEKDWODDQG(&&OLSSk&DUHJLYHUVjUHDVRQVIRUQXUVLQJKRPHSODFHPHQWFOXHVIRULPSURYLQJGLVFXVVLRQVZLWK
IDPLOLHVSULRUWRWKHWUDQVLWLRQy*HURQWRORJLVWYROQRSSq9LHZDW6FRSXV
 03DUN+.%XWFKHUDQG0/0DDVk$WKHPDWLFDQDO\VLVRI.RUHDQIDPLO\FDUHJLYHUVjH[SHULHQFHVLQPDNLQJWKHGHFLVLRQWRSODFH
DIDPLO\PHPEHUZLWKGHPHQWLDLQDORQJWHUPFDUHIDFLOLW\y5HVHDUFKLQ1XUVLQJDQG+HDOWKYROQRSSq9LHZ
DW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 6&KR6+=DULWDQG'$&KLULERJDk:LYHVDQGGDXJKWHUVWKHGLIIHUHQWLDOUROHRIGD\FDUHXVHLQWKHQXUVLQJKRPHSODFHPHQWRI
FRJQLWLYHO\LPSDLUHGIDPLO\PHPEHUVy*HURQWRORJLVWYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODU t
9LHZDW3XE0HGt9LHZDW6FRSXV
 - 0 7KRUSH % / 6OHDWK & 7 . 7KRUSH HW DO k&DUHJLYHU SV\FKRORJLFDO GLVWUHVV DV D EDUULHU WR LQIOXHQ]D YDFFLQDWLRQ DPRQJ
FRPPXQLW\GZHOOLQJHOGHUO\ZLWKGHPHQWLDy0HGLFDO&DUH YRO  QR  SS q 9LHZDW3XEOLVKHU t 9LHZ DW *RRJOH
6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 ' 5 6KDIIHU : . 'RROH\ DQG * 0 :LOOLDPVRQ k(QGRUVHPHQW RI SURDFWLYHO\ DJJUHVVLYH FDUHJLYLQJ VWUDWHJLHV PRGHUDWHV WKH
UHODWLRQEHWZHHQFDUHJLYHUPHQWDOKHDOWKDQGSRWHQWLDOO\KDUPIXOFDUHJLYLQJEHKDYLRUy3V\FKRORJ\DQG$JLQJYROQRSSq
9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW6FRSXV
 *3UH]5RMR0,]DO,0RQWRULRDQG%3HQKDOHk5LVNIDFWRUVRIHOGHUDEXVHLQDFRPPXQLW\GZHOOLQJ6SDQLVKVDPSOHy$UFKLYHV
RI*HURQWRORJ\DQG*HULDWULFVYROQRSSq9LHZDW3XEOLVKHUt9LHZDW*RRJOH6FKRODUt9LHZDW3XE0HGt9LHZDW
6FRSXV
ZZZKLQGDZLFRPMRXUQDOVQUS





&RPSDVVLRQ)DWLJXH$Q$SSOLFDWLRQRIWKH&RQFHSWWR,QIRUPDO&DUHJLYHUVRI)DPLO\0HPEHUVZLWK

ZZZKLQGDZLFRPMRXUQDOVQUS