<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
STEWART INFORMATION SERVICES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rules 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
STEWART INFORMATION SERVICES CORPORATION
1980 POST OAK BOULEVARD
HOUSTON, TEXAS 77056
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1995
Notice is hereby given that the Annual Meeting of the Stockholders of
Stewart Information Services Corporation, a Delaware corporation (the
"Company"), will be held on Tuesday, April 25, 1995, at 8:30 A.M. in the
Americana Room on the eighth floor of the Company's offices, 1980 Post Oak
Boulevard, Houston, Texas, for the following purposes:
(1) To elect directors of the Company to hold office until the next
Annual Meeting of Stockholders or until their respective successors are
duly elected and qualified.
(2) To consider and act upon a proposal to adopt the Company's 1995
Stock Option Plan.
(3) To consider and act upon, if presented at the meeting, a proposal
submitted by a stockholder as described at page 15 of the proxy statement.
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The holders of record of Common Stock and Class B Common Stock of the
Company at the close of business on February 24, 1995 will be entitled to vote
at the meeting.
By Order of the Board of Directors,
Secretary
March 23, 1995
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY
PROMPTLY. IF YOU ATTEND THE MEETING YOU CAN VOTE EITHER IN PERSON OR BY YOUR
PROXY.
<PAGE> 3
STEWART INFORMATION SERVICES CORPORATION
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1995
This Proxy Statement is furnished to the stockholders of Stewart
Information Services Corporation (the "Company"), 1980 Post Oak Boulevard,
Houston, Texas 77056 (Tel. No. 713/625-8100), in connection with the
solicitation by the Board of Directors of the Company of proxies to be used at
the annual meeting of stockholders to be held on Tuesday, April 25, 1995, at
8:30 A.M. in the Americana Room on the eighth floor of the Company's offices,
1980 Post Oak Boulevard, Houston, Texas, and any adjournment thereof.
Proxies in the form enclosed, properly executed by stockholders and
received in time for the meeting, will be voted as specified therein. If a
stockholder does not specify otherwise, the shares represented by his or her
proxy will be voted for the nominees listed therein. The giving of a proxy
does not preclude the right to vote in person should the person giving the
proxy so desire, and the proxy may be revoked at any time before it is
exercised by written notice delivered to the Company at or prior to the
meeting. This Proxy Statement is being mailed on or about March 23, 1995 to
stockholders of record at the close of business on February 24, 1995 (the
"Record Date").
At the close of business on the Record Date, there were outstanding and
entitled to vote 5,686,706 shares of Common Stock and 525,006 shares of Class B
Common Stock, and only the holders of record on such date shall be entitled to
vote at the meeting. As long as 300,000 or more shares of Class B Common Stock
are issued and outstanding, at each election of directors the Common Stock and
Class B Common Stock are voted as separate classes. Shares of the Company's
Class B Common Stock are convertible on a one-for-one basis into shares of the
Company's Common Stock.
The holders of Common Stock, voting as a class, are entitled to elect five
of the nine directors of the Company. Each share of Common Stock is entitled,
at the option of the person voting such share, either to cast one vote per
share for each of the five directors to be elected by the holders of the Common
Stock or to vote cumulatively by casting five votes per share, which may be
distributed in any manner among any number of the nominees. The enclosed form
of proxy provides a means for stockholders to vote for all of the nominees
listed therein, to withhold authority to vote for one or more of such nominees
or to withhold authority to vote for all of such nominees. If authority to
vote for four or fewer of the nominees is withheld, and if there are nominees
other than management nominees for the directorships to be filled by the
holders of the Common Stock, then the persons named in the enclosed proxy may
vote cumulatively by dividing the number of votes represented by the proxy
equally among the nominees for which authority to vote is not withheld. If
there are no nominees for the five positions to be elected by the holders of
Common Stock other than the management nominees set forth herein, it is the
intention of the persons named in the enclosed proxy to allocate the votes
represented by the proxy evenly among the management nominees. If there should
be any additional nominees for such positions, then the persons named in the
enclosed proxy will vote cumulatively to elect as many as possible of the
management nominees. If it is not possible to elect each of the five
management nominees, then the persons named in the enclosed proxy will have
discretion as to which of such nominees may be elected.
Unless a holder of Common Stock who withholds authority votes in person at
the meeting or votes by means of another proxy, the withholding of authority
will have no effect upon the election of those directors for whom authority to
vote is withheld because the Company's by-laws provide that directors are
elected by a plurality of the votes cast. Under applicable Delaware law, a
broker non-vote will have no effect on the outcome of the election of
directors. The shares held by each stockholder who signs and returns the
enclosed form of proxy will be counted for purposes of determining the presence
of a quorum at the meeting.
The holders of Class B Common Stock, voting as a class, are entitled to
elect the remaining four of the nine directors of the Company. Each holder of
Class B Common Stock has the right to vote, in person or by proxy,
<PAGE> 4
the number of shares owned by him for the four directors to be elected by the
holders of Class B Common Stock and for whose election he has a right to vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of the Record Date with
respect to persons known to the Company to be the beneficial owners of more
than 5% of either class of the Company's voting shares:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address of Beneficial Owner Title of Class Beneficial Ownership Class
------------------------------------ -------------- -------------------- ----------
<S> <C> <C> <C>
Malcolm S. Morris Class B Common Stock 262,503 50.0
3992 Inverness
Houston, Texas 77019
Stewart Morris, Jr. Class B Common Stock 262,503 50.0
4944 Woodway #13
Houston, Texas 77056
FMR Corp. Common Stock 586,500(1) 10.3
82 Devonshire Street
Boston, Massachusetts 02109
Fairfax Financial Holdings Limited Common Stock 478,563(2) 8.4
95 Wellington St. W., Suite 802
Toronto, Ontario
M5J 2N7 Canada
Lindner Fund, Inc. Common Stock 421,800(3) 7.4
7711 Carondelet Ave., Box 16900
St. Louis, Missouri 63105
Brookhaven Capital Management Co., Ltd Common Stock 412,223(4) 7.2
3000 Sandhill Road, Suite 130
Menlo Park, California 94025
College Retirement Equities Fund Common Stock 387,200(5) 6.8
730 Third Avenue
New York, New York 10017
Markel Corporation Common Stock 349,350(6) 6.1
4551 Cox Road
Glen Allen, Virginia 23060
Neuberger & Berman Common Stock 277,150(7) 4.9
605 Third Avenue
New York, New York 10158
</TABLE>
_________
(1) With respect to all such shares, FMR Corp. has no voting power and sole
investment power. Information with respect to the ownership of such
stockholder was obtained from its report on Schedule 13G dated February
13, 1995.
2
<PAGE> 5
(2) With respect to all such shares, Fairfax Financial Holdings Limited has
shared voting investment power. Information with respect to the ownership
of such stockholder was obtained from its report on Schedule 13G dated
February 8, 1995.
(3) Lindner Fund, Inc. has sole voting and investment power with respect to
409,950 of such shares and shared voting and investment power with respect
to 11,850 of such shares. Information with respect to the ownership of
such stockholder was obtained from its report on Schedule 13G dated January
25, 1995.
(4) Brookhaven Capital Management Co., Ltd has sole voting and investment power
with respect to 9,000 of such shares and shared voting and investment power
with respect to 403,223 of such shares. Information with respect to the
ownership of such stockholder was obtained from its report on Schedule 13D
dated December 21, 1994.
(5) With respect to all such shares, College Retirement Equities Fund has sole
voting and investment power. Information with respect to the ownership of
such stockholder was obtained from its report on Schedule 13G dated
February 10, 1995.
(6) With respect to all such shares, Markel Corporation has shared voting power
and shared investment power. Information with respect to the ownership of
such stockholder was obtained from its report on Schedule 13G dated
February 2, 1995.
(7) With respect to all such shares, Neuberger & Berman has shared investment
power. Such stockholder has sole voting power with respect to 20,250
shares and no voting power with respect to 256,900 shares. Does not
include 262,800 shares as to which such stockholder has disclaimed
beneficial ownership. Information with respect to the ownership of such
stockholder was obtained from its report on Schedule 13G dated February 10,
1995.
The holders of the Class B Common Stock have entered into an agreement
intended to maintain an equal ownership of shares of Common Stock and Class B
Common Stock by Carloss Morris and Malcolm S. Morris, collectively, and by
Stewart Morris and Stewart Morris, Jr., collectively. Such agreement also
provides for rights of first refusal with respect to Class B Common Stock among
themselves in the event of the death, voluntary or involuntary disposition of
the shares of Class B Common Stock and upon certain other specified conditions.
In addition, the agreement provides that the parties will not sell their Class
B Common Stock or convert their Class B Common Stock into Common Stock prior to
January 2005.
3
<PAGE> 6
The following table sets forth information as of the Record Date with
respect to each class of the Company's voting shares beneficially owned by
executive officers, directors and nominees for director of the Company and by
all officers, directors and nominees for director of the Company as a group:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name Title of Class Beneficial Ownership Class
---- -------------- -------------------- ----------
<S> <C> <C> <C>
Carloss Morris Common Stock 76,650(1) 1.3
Stewart Morris Common Stock 64,278(1) 1.1
Malcolm S. Morris Common Stock 60,000(2) 1.0
Class B Common Stock 262,503(1) 50.0
Stewart Morris, Jr. Common Stock 49,837(3) (4)
Class B Common Stock 262,503(1) 50.0
Max Crisp Common Stock 1,500(1) (4)
C. M. Hudspeth Common Stock 26,400(5) (4)
Nita B. Hanks Common Stock 183(1) (4)
Paul W. Hobby Common Stock None --
Dr. E. Douglas Hodo Common Stock None --
A. Oakley Hunter Common Stock 300(1) (4)
Dr. W. Arthur Porter Common Stock None --
All officers and directors Common Stock 279,148 4.9
as a group (11 persons) Class B Common Stock 525,006 100.0
</TABLE>
_________
(1) The beneficial owner has sole voting and investment power.
(2) Consists of 60,000 shares subject to a stock option (see "Executive
Compensation--Option Grants and Exercises").
(3) Includes 30,000 shares subject to a stock option (see "Executive
Compensation--Option Grants and Exercises").
(4) Less than 1%.
(5) Includes 900 shares as to which C. M. Hudspeth has sole voting and
investment power and 25,500 shares owned by C. M. Hudspeth's wife and
as to which he has no voting and no investment power.
ELECTION OF DIRECTORS
At the meeting, nine directors (constituting the entire Board of Directors)
are to be elected. The holders of Common Stock are entitled to elect five
directors, and the holders of Class B Common Stock are entitled to elect four
directors. All directors of the Company hold office until the next annual
meeting of stockholders or until their respective successors are elected and
qualify. All officers of the Company hold office until the regular meeting of
directors following the annual meeting of stockholders or until their
respective successors are elected and qualify.
During 1994, the Board of Directors held six meetings and executed one
consent in lieu of a meeting. No director attended fewer than 80% of such
meetings. The Board of Directors has an Executive Committee, an Audit
Committee and a Compensation Committee. The Company has no nominating
committee of the Board of Directors.
4
<PAGE> 7
The Executive Committee may exercise all of the powers of the Directors,
except those specifically reserved to the Board of Directors by law, and is
comprised of Carloss Morris, Stewart Morris, Max Crisp and C. M. Hudspeth.
During 1994, the Executive Committee held six meetings at which all members
were present and executed 50 consents in lieu of meetings.
It is the duty of the Audit Committee to (i) review, with the Company's
independent auditors, the scope of the annual audit, (ii) review the
independent auditors' management letter and (iii) meet with the Company's
internal auditors. The Audit Committee is comprised of C. M. Hudspeth and A.
Oakley Hunter. During 1994, the Audit Committee held two meetings at which
both members were present.
See "Executive Compensation--Compensation Committee" for information with
respect to the Company's Compensation Committee.
COMMON STOCK
The following persons have been nominated to fill the five positions to be
elected by the holders of Common Stock. Each was elected by the holders of the
Common Stock at the annual meeting of stockholders held in 1994. It is the
intention of the persons named in the proxy for the holders of Common Stock to
vote the proxies for the election of the nominees named below, unless otherwise
specified. The management of the Company does not contemplate that any of such
nominees will become unavailable for any reason, but if that should occur
before the meeting, proxies will be voted for another nominee, or other
nominees, to be selected by the Board of Directors of the Company.
<TABLE>
<CAPTION>
Nominee, Age and Position with the Company Director Since
- ------------------------------------------ ----------------
<S> <C>
Nita B. Hanks, 41, Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1990
Dr. E. Douglas Hodo, 60, Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1988
Paul W. Hobby, 34, Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1989
Max Crisp, 60, Vice President-Finance, Secretary, Treasurer and Director . . . . . . . . . 1970
C. M. Hudspeth, 75, Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1976*
</TABLE>
_________
* Mr. Hudspeth also served as a director of the Company from 1970 to 1973.
Mrs. Hanks has been a Senior Vice President of Stewart Title Guaranty
Company ("Guaranty"), a subsidiary of the Company, since May 1990 and a Vice
President of Guaranty since 1981.
Dr. Hodo served as Dean of the College of Business at the University of
Texas-San Antonio from September 1972 to May 1987. Dr. Hodo is currently
serving as President of Houston Baptist University and has served in such
capacity since June 1, 1987. Dr. Hodo is also a director of the United
Services Group of funds.
Mr. Hobby practiced law with the firm of Fulbright & Jaworski from 1986
until October 1989. Mr. Hobby served as an Assistant U.S. Attorney, Houston,
Texas, from November 1989 to May 1992. He was on leave from such position
during the first six months of 1991, during which time he served as Chief of
Staff of the Lieutenant Governor of Texas. Since May 1992 Mr. Hobby has served
as Vice President of H & C Communications.
Mr. Crisp has served as Vice President-Finance of the Company since 1970,
as Treasurer since 1971 and as Secretary since 1973.
Mr. Hudspeth has been of counsel to the law firm of DeLange, Hudspeth &
Pitman, L.L.P., Houston, Texas, for more than the past five years. Mr.
Hudspeth is a Trustee Emeritus of Rice University, Houston, Texas.
5
<PAGE> 8
CLASS B COMMON STOCK
The following persons have been nominated to fill the four positions to be
elected by the holders of Class B Common Stock. Each was elected by the
holders of the Class B Common Stock at the annual meeting of stockholders held
in 1994. It is the intention of the persons named in the proxy for the holders
of Class B Common Stock to vote the proxies for the election of the nominees
named below, unless otherwise specified. The management of the Company does
not contemplate that any of such nominees will become unavailable for any
reason, but if that should occur before the meeting, proxies will be voted for
another nominee, or other nominees, to be selected by the Board of Directors of
the Company.
<TABLE>
<CAPTION>
Nominee, Age and Position with the Company Director Since
- ------------------------------------------ --------------
<S> <C>
Carloss Morris, 79, Co-Chief Executive Officer and Chairman of the Board of Directors . . . 1970
Stewart Morris, 75, Co-Chief Executive Officer, President and Director . . . . . . . . . . 1970
A. Oakley Hunter, 78, Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1982
Dr. W. Arthur Porter, 53, Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1993
</TABLE>
Carloss Morris and Stewart Morris have served as Co-Chief Executive
Officers of the Company since 1975.
Carloss Morris and Stewart Morris are brothers. Stewart Morris, Jr., an
officer of the Company, is the son of Stewart Morris and a nephew of Carloss
Morris. Malcolm S. Morris, an officer of the Company, is the son of Carloss
Morris and a nephew of Stewart Morris.
Mr. Hunter served as Chairman and/or President and Chief Executive Officer
of the Federal National Mortgage Association from 1970 until his retirement in
1981. Mr. Hunter is an organizer and director of Allegiance Bank, N.A.
(formerly Montgomery National Bank), Bethesda, Maryland. He is also Chairman
of the National Academy of Conciliators, Dallas, Texas, a dispute
settlement institution, and a director of the Community Preservation and
Development Corp., Bethesda, Maryland.
Dr. Porter has served as President and Chief Executive Officer of Houston
Advanced Research Center, a non-profit research consortium, for more than the
past five years. He also has served as an Adjunct Professor of Electrical
Engineering at Rice University since 1989. Dr. Porter is also a director of
Electro Scientific Industries, Inc., Portland, Oregon.
Carloss Morris, Stewart Morris, Malcolm S. Morris and Stewart Morris, Jr.,
acting together, have the power to direct the management and policies of the
Company. Accordingly, they may be deemed to be "control persons" as such term
is used in regulations adopted under the Securities Exchange Act of 1934.
6
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table summarizes compensation information concerning each of
the Company's executive officers for each of the three years ended December 31,
1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation (Awards)
--------------------------------- ----------
Stock All Other
Name and Principal Position Year Salary Bonus Options Compensation
--------------------------- ---- ------ ----- ---------- -------------
($) ($) (# shares) ($)
<S> <C> <C> <C> <C> <C>
Carloss Morris 1994 130,000 160,000 - 20,845(1)
Chairman of the Board and 1993 130,000 160,000 - 21,847
Co-Chief Executive Officer(2) 1992 128,332 161,667 - 13,238
Stewart Morris 1994 130,000 160,000 - 15,778(3)
President and 1993 130,000 160,000 - 13,971
Co-Chief Executive Officer(4) 1992 128,332 161,667 - 13,304
Stewart Morris, Jr. 1994 125,000 144,130 - 3,418(5)
Senior Executive Vice Presi- 1993 125,000 165,100 - 5,278
dent--Assistant President(6) 1992 123,336 166,167 60,000(7) 2,931
Malcolm S. Morris 1994 125,000 144,130 - 3,828(8)
Senior Executive Vice Presi- 1993 125,000 165,100 - 3,882
dent--Assistant Chairman(9) 1992 123,336 166,167 60,000(7) 1,469
Max Crisp 1994 133,860 67,775 - 7,882(10)
Vice-President--Finance(11) 1993 127,140 119,019 - 7,388
1992 122,540 69,721 - 2,182
</TABLE>
_________
(1) Consists of matching contributions to the Company's 401(k) plan
($1,000), director's fees ($1,200) and $18,645, representing the portion
of insurance premiums paid by the Company with respect to term life
insurance plus the dollar value of the benefit of the remainder of life
insurance premiums paid by the Company (see"--Insurance").
(2) Carloss Morris is also a director of the Company, Chairman of the
Executive Committee of Guaranty and Vice Chairman of the Executive
Committee of Stewart Title Company ("Title"), a subsidiary of the
Company.
(3) Consists of matching contributions to the Company's 401(k) plan ($1,000),
director's fees ($1,200) and $13,578, representing the portion of
insurance premiums paid by the Company with respect to term life
insurance plus the dollar value of the benefit of the remainder of life
insurance premiums paid by the Company (see"--Insurance").
(4) Stewart Morris is also a director of the Company, Chairman of the
Executive Committee of Title and Vice Chairman of the Executive Committee
of Guaranty.
(5) Consists of matching contributions to the Company's 401(k) plan ($1,000),
director's fees ($775) and $1,643, representing the portion of insurance
premiums paid by the Company with respect to term life insurance plus the
dollar value of the benefit of the remainder of life insurance premiums
paid by the Company.
(6) Stewart Morris, Jr., age 46, is also President and Chief Executive
Officer of Title and Chairman of the Board of Guaranty.
(7) Restated to give effect to a one-for-two stock dividend in April 1994.
7
<PAGE> 10
(8) Consists of matching contributions to the Company's 401(k) plan ($1,000),
director's fees ($750) and $2,078, representing the portion of insurance
premiums paid by the Company with respect to term life insurance plus the
dollar value of the benefit of the remainder of life insurance premiums
paid by the Company.
(9) Malcolm S. Morris, age 48, is also President and Chief Executive Officer
of Guaranty and Chairman of the Board of Title.
(10) Consists of matching contributions to the Company's 401(k) plan ($1,000),
director's fees ($1,200) and $5,682, representing the portion of
insurance premiums paid by the Company with respect to term life
insurance plus the dollar value of the benefit of the remainder of life
insurance premiums paid by the Company.
(11) Max Crisp is also Secretary, Treasurer and a director of the Company and
Vice President-Finance of Guaranty and Title.
Each executive officer of the Company holds office until the regular
meeting of directors following the annual meeting of stockholders or until his
successor is elected and qualifies.
OPTION GRANTS AND EXERCISES
The Company did not grant to any officer named in the Summary Compensation
Table any stock options or stock appreciation rights during the year ended
December 31, 1994.
The following table sets forth information concerning each exercise of
stock options during the year ended December 31, 1994 by each of its executive
officers and the value of unexercised options at December 31, 1994. The
Company has not issued any tandem or freestanding stock appreciation rights.
AGGREGATED OPTION EXERCISES IN 1994 AND OPTION VALUES AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
Number Of Value Of Unexercised
Unexercised Options In-the-Money Options
at December 31, 1994 at December 31, 1994
Shares Acquired Value ------------------------------ -------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ------------ ------------- ------------ --------------
(# shares) ($) (# shares) (# shares) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Carloss Morris -- -- -- -- -- --
Stewart Morris -- -- -- -- -- --
Stewart Morris, Jr. 30,000 365,000 30,000 -- 186,300 --
Malcolm S. Morris -- -- 60,000 -- 372,600 --
Max Crisp -- -- -- -- -- --
</TABLE>
COMPENSATION OF DIRECTORS
Directors of the Company, other than employees of the Company, receive
directors' fees of $2,000 per meeting attended. Directors of the Company who
are employees receive directors' fees of $75 per meeting. Members of the Audit
Committee and members of the Compensation Committee who are not employees of
the Company receive $1,000 per meeting attended. No additional amounts are
paid to members of the Executive Committee for their services as such. Mr.
Hudspeth receives aggregate annual fees of $36,400 for his services as a
director and member of each of the committees of the Board of Directors.
DEFERRED COMPENSATION AGREEMENTS
On March 10, 1986, the Company entered into a Deferred Compensation
Agreement with each of Malcolm S. Morris, Stewart Morris, Jr. and Max Crisp
(individually, a "Beneficiary"). Pursuant to such agreements, a Beneficiary or
his designee is entitled to receive, commencing upon his death or attainment of
the age of 65 years, 15 annual payments in amounts, which will, after payment
of federal income taxes thereon, result in a net annual
8
<PAGE> 11
payment of $66,667 to Max Crisp and $133,333 to each of Malcolm S. Morris and
Stewart Morris, Jr. For purposes of such agreements, each Beneficiary is
deemed to be subject to federal income tax at the highest marginal rate
applicable to individuals. Such benefits are fully vested and are forfeited
only if a Beneficiary's employment with the Company is terminated by reason of
fraud, dishonesty, embezzlement or theft. Any death or income benefits
provided to a Beneficiary under certain insurance policies currently maintained
by the Company will reduce payments due to such Beneficiary under his Deferred
Compensation Agreement.
INSURANCE
The Company is a party to Life Insurance Coverage Agreements dated December
1, 1993, with Carloss Morris and Stewart Morris under which the Company has
agreed to maintain $1,000,000 in life insurance coverage on the lives of each
of them, with death benefits payable to their designated beneficiaries.
Pursuant to such agreements, the Company has purchased and Split Dollar life
insurance policies ("SD Policies") for which the Company pays annual premiums
of $55,776 and $42,000 for the SD Policies on the lives of Carloss Morris and
Stewart Morris, respectively. Premiums under the SD Policies will be returned
to the Company upon their termination. In 1994, the net death benefits under
the SD policies were $776,896 and $832,000 for Carloss Morris and Stewart
Morris, respectively, and such benefits will decline annually by the amount of
the premium paid by the Company. The net death benefit under each SD Policy
will also be affected by annual earnings under such policy. The Company
currently anticipates that the net death benefit under each SD Policy will
decline to approximately $400,000 by 1998 and that the SD Policies will be
fully paid up by 2001 or 2002.
Prior to 1994, the Company established two paid up policies having no cash
surrender value and providing death benefits of $890,954 and $769,873 to the
beneficiaries of Carloss Morris and Stewart Morris, respectively. No premiums
were paid by the Company under such policies in 1994; however, pursuant to
applicable federal income tax regulations, taxable income attributable to the
such policies in 1994 of $40,199 and $34,736 was incurred by Carloss Morris and
Stewart Morris, respectively.
9
<PAGE> 12
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on Common Stock with the cumulative total
return of the Russell 2000 Index and the Russell 2000 Financial Services Sector
Index (which includes the Company and its major publicly owned competitors) for
five years ended December 31, 1994. The graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 at December
31, 1989 and that all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, RUSSELL 2000 AND RUSSELL 2000 FINANCIAL SERVICES SECTOR
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
At December 31,
------------------------------------------------------------
1989 1990 1991 1992 1993 1994
--------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Company . . . . . . . . . . . . . . . $ 100.00 $ 47.53 $ 84.28 $ 127.35 $ 188.17 $ 146.30
Russell 2000 . . . . . . . . . . . . 100.00 80.49 117.56 139.20 165.52 162.51
Russell 2000 Financial
Services Sector . . . . . . . . . . 100.00 72.60 119.99 177.64 218.34 219.69
</TABLE>
10
<PAGE> 13
COMPENSATION COMMITTEE
Compensation Committee Interlocks and Insider Participation
It is the duty of the Compensation Committee to approve the compensation of
the executive officers. During 1994, the Compensation Committee was comprised
of Carloss Morris and Stewart Morris, each of whom is an executive officer of
the Company, and C. M. Hudspeth, Paul W. Hobby and A. Oakley Hunter. Carloss
Morris and Stewart Morris resigned from the Compensation Committee effective
December 31, 1994. During 1994, the Compensation Committee held one meeting at
which all members except Mr. Hunter were present and executed two consents in
lieu of meetings.
During 1994, the Company and its subsidiaries paid a total of $315,168 to
the law firm of DeLange, Hudspeth & Pitman, L.L.P. C. M. Hudspeth is of
counsel to such firm.
Compensation Committee Report on Executive Compensation
To the Board of Directors of
Stewart Information Services Corporation:
COMPENSATION COMMITTEE REPORT
Compensation Policy. The Compensation Committee of the Board of Directors
(the "Committee") is responsible for the oversight and administration of the
Company's executive compensation program. The Committee reviews the
compensation program of the Company during each year as it deems necessary.
The objective of the Committee is to provide executive officers of the Company
with a compensation package that is fair and reasonable based on their
individual levels of responsibility and performance in relation to the
compensation of executive officers of other publicly held companies in the
title insurance and comparable industries. In making its determinations as to
the reasonableness of the Company's executive compensation, the Committee
relies in part on the advice of a nationally recognized, independent
compensation consulting firm.
The principal elements of the Company's executive compensation program are
an annual salary and cash bonus. The Company also provides life insurance to
each of its executive officers. As described below, the Committee has
recommended that, commencing in 1995, stock options be available for grant by
the Committee as a component of the Company's compensation package for
executive officers.
Base Salary. For 1994, the Committee continued base salary levels for
executive officers at the levels in effect for 1993. The base salaries of each
of the Company's co-chief executive officers was $130,000 in each year.
Historically, base salaries of the Company's executive officers have remained
relatively stable from year to year. Base salaries are set at levels deemed
reasonable by the Committee based upon its subjective evaluation of the
executive officer's level of responsibility.
Annual Bonus. Each of the executive officers is eligible to receive an
annual cash bonus based on the consolidated net income of Guaranty. The annual
bonus tends to link a portion of the executive's compensation to the Company's
annual results, particularly with respect to officers other than the co-chief
executive officers. The Committee believes that the consolidated income of
Guaranty, and the effect thereof on the level of dividends paid by the Company
and the Company's book value per share, are important determinants over time of
the value of the Company's Common Stock. For more than the past ten years,
each of the co-chief executive officers has received an annual bonus equal to
three percent of the annual consolidated net income after taxes of Guaranty,
subject to a limitation on the maximum bonus payable. For 1993 and 1994,
aggregate compensation, exclusive of board fees and insurance premiums, to the
co-chief executive officers was limited to $290,000 each.
11
<PAGE> 14
Stock Options. No stock options were granted to any executive officer in
1994. In 1995, the Compensation Committee recommended, and the Board of
Directors adopted, a stock option plan pursuant to which 100,000 shares of the
Company's common stock would be reserved for issuance by the Committee from
time to time. The stock option plan is subject to approval by the stockholders
of the Company and is described elsewhere in the Proxy Statement in which this
report is included. The purpose of the plan is to make available to the
Committee a form of compensation that will align the interests of executive
officers with those of the stockholders over a multi-year term. Executive
officers, other than Carloss Morris and Stewart Morris, who were omitted from
the plan at their request, would be eligible for grants of options at a
purchase price not less than the fair market value of the shares on the date of
grant. If the plan is approved, it is the present intent of the Committee to
grant options in 1995 to Malcolm Morris, Stewart Morris, Jr. and Max Crisp for
8,000, 8,000 and 4,000 shares, respectively. The value of any options granted
will be taken into account by the Committee in determining the reasonableness
of an executive officers annual compensation package. Carloss Morris and
Stewart Morris resigned from the Committee effective December 31, 1994, and did
not vote on the Committee's recommendation of the stock option plan.
Insurance. Pursuant to agreements dated December 1, 1993, the Company pays
the premium on individual split-dollar life insurance policies for the co-chief
executive officers and their beneficiaries. The Company will recover the full
amount of premiums paid from the death benefit upon the death of the insured.
See "--Insurance" elsewhere in the Proxy Statement in which this report is
included. Except with respect to the co-chief executive officers, such
insurance is not considered by the Compensation Committee to be a significant
part of the aggregate compensation package afforded by the Company to its
executive officers.
The Company's net earnings declined from $3.87 per share in 1993 to $1.56
per share in 1994, primarily due to higher interest rates which substantially
reduced the demand for title insurance policies related to refinancing
transactions. The Committee recognizes that the title insurance industry is
strongly affected by nationally prevailing interest rates, and the Company's
financial results from year to year will depend largely on the level of real
estate activity in its primary markets. Since these factors are beyond the
control of the Company, the Committee does not attempt to closely tie the
compensation of its co-chief executive officers, or its executive officers as a
group, to the Company's annual financial results. Rather, the Committee
subjectively evaluates the performance of the Company's executive officers,
including the co-chief executive officers, with respect to their efforts to
provide for the long-term financial well being of the Company and to respond to
continuing changes in the industry environment. In 1994, the Committee gave
consideration to the efforts of the co-chief executive officers and other
executive officers in reducing staffing costs in response to the decline in
orders, continuing to improve the ratio of title loss provisions to title
revenues, increasing the Company's market share, further developing the
Company's automation programs and pursuing opportunities in international
markets.
Carloss Morris Stewart Morris
C. M. Hudspeth Paul W. Hobby
A. Oakley Hunter
Members of the Compensation Committee
APPROVAL OF THE 1995 STOCK OPTION PLAN
BACKGROUND
On March 13, 1995, the Board of Directors of the Company adopted, subject
to stockholder approval, the Stewart Information Services Corporation 1995
Stock Option Plan (the "1995 Plan"). The Board adopted the 1995 Plan upon the
recommendation of the Compensation Committee of the Board of Directors (the
"Committee") following a review and evaluation of the Company's existing
compensation program by the Committee. See the Compensation Committee Report
at page 11 of this proxy statement.
12
<PAGE> 15
The Company has not previously had a stock option plan under which
executive officers of the Company were eligible to receive stock options,
although stock options were granted to two executive officers in 1992 pursuant
to individual stock option agreements (see "Executive Compensation--Summary of
Compensation" and "--Option Grants and Exercises). The purpose of the plan is
to make available to the Committee a form of compensation that will align the
interests of executive officers with those of the stockholders over a
multi-year term.
SUMMARY OF THE STOCK OPTION PLAN
The 1995 Plan is administered by the Committee, which may from time to time
grant stock options (either "incentive" or "non-qualified" stock options)
(hereinafter collectively referred to as "Stock Options") to executive officers
of the Company other than Carloss Morris and Stewart Morris, who were excluded
at their request. Therefore, three executive officers of the Company are
currently eligible to receive grants of stock options under the 1995 Plan. The
1995 Plan provides that an aggregate of 100,000 shares of common stock, $1.00
par value, of the Company shall be subject to the 1995 Plan. The shares
subject to the 1995 Plan consist of authorized and unissued shares or
previously issued shares reacquired and held by the Company or any subsidiary.
Subject to certain limitations specified in the 1995 Plan, the Committee has
discretion to determine the terms and conditions upon which Stock Options may
be exercisable. No member of the Committee is eligible to receive Stock
Options under the 1995 Plan. No Stock Options may be granted under the 1995
Plan after December 1, 2005. If the plan is approved, it is the present intent
of the Committee to grant options in 1995 to Malcolm Morris, Stewart Morris,
Jr. and Max Crisp for 8,000, 8,000 and 4,000 shares, respectively. Such
options are expected to be for terms of 10 years and exercisable at the market
price of the shares on the date of grant.
Stock options under the 1995 Plan give the optionee the right to purchase a
number of shares of the Company's Common Stock at future dates within ten years
of the date of grant. No optionee may be granted options to purchase more than
40,000 shares during the life of the 1995 Plan. The exercise price may be the
fair market value of the stock (as defined in the 1995 Plan) on the date of
grant, or such other price as the Committee may determine, but not less than
100% of such market value. The purchase price to be paid upon exercise of an
option may be paid by cashier's check or, if authorized by the Board of
Directors, by the delivery of shares of the Company's Common Stock with a fair
market value at the time of exercise equal to the total option price, or by a
combination of the preceding methods. The fair market value of a share of
Common Stock on a particular date is defined as the closing price per share of
the Common Stock in the New York Stock Exchange - Composite Transactions
Listing, as reported for that date or if, in the discretion of the Committee,
another means of determining fair market value of a share of Common Stock at
such date shall be necessary or advisable, the Committee may provide for
another means of determining such fair market value. On March 20, 1995, the
closing sale price of the Company's Common Stock on the New York Stock Exchange
Composite Tape was $16-7/8.
The 1995 Plan permits an optionee to exercise an outstanding option after
termination of employment during the three months after such termination. In
the event of the death or retirement of an optionee while in the employ of the
Company and before the date of expiration of the option, the option shall
terminate on earlier of such date of expiration or one year following the date
of death or retirement.
The Board of Directors is authorized to amend or terminate the 1995 Plan.
Stockholder approval will be required for a plan amendment only if and to the
extent such approval is required (i) to maintain compliance with the 1995 Plan
with Rule 16b-3 under the Securities Exchange Act of 1934, (ii) change the
aggregate number of shares which may be issued under options pursuant to the
provisions of the 1995 Plan, (iii) reduce the option price permitted for
incentive stock options, (iv) extend the term during which an incentive stock
option may be exercised or the termination date of the 1995 plan or (v) change
the class of employees eligible to receive incentive stock options.
13
<PAGE> 16
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. The grant of incentive stock options to an
officer does not result in any income tax consequences. The exercise of an
incentive stock option does not result in any income tax consequences to the
officer if the incentive stock option is exercised by the officer during his
employment with the Company or a subsidiary, or within a specified period after
termination of employment. However, the excess of the fair market value of the
shares of stock as of the date of exercise over the option price is a tax
preference item for purposes of determining an officer's alternative minimum
tax. An officer who sells shares acquired pursuant to the exercise of an
incentive stock option after the expiration of (i) two years from the date of
grant of the incentive stock option, and (ii) one year after the transfer of
the shares to him (the "Waiting Period") will generally recognize a long-term
capital gain or loss on the sale.
An officer who disposes of his incentive stock option shares prior to the
expiration of the Waiting Period (an "Early Disposition") generally will
recognize ordinary income in the year of sale in an amount equal to the excess,
if any, of (a) the lesser of (i) the fair market value of the shares as of the
date of exercise or (ii) the amount realized on the sale, over (b) the option
price. Any additional amount realized on an Early Disposition should be
treated as capital gain to the officer, short or long term, depending on the
officer's holding period for the shares. If the shares are sold for less than
the option price, the officer will not recognize any ordinary income but will
recognize a capital loss, short or long term, depending on the holding period.
The Company will not be entitled to a deduction as a result of the grant of
an incentive stock option, the exercise of an incentive stock option, or the
sale of incentive stock option shares after the Waiting Period. If an officer
disposes of his incentive stock option shares in an Early Disposition, the
Company will be entitled to deduct the amount of ordinary income recognized by
the officer.
Non-Incentive Stock Options. The grant of non-incentive stock options
under the 1995 Plan will not result in the recognition of any taxable income by
the officer. An officer will recognize ordinary income on the date of exercise
of the non-incentive stock option equal to the difference between the fair
market value of the shares acquired on such date and the exercise price. The
tax basis of the shares for purposes of a subsequent sale includes the option
price paid and the ordinary income reported on exercise of the option. The
income reportable on exercise of the non-incentive stock option is subject to
federal and state income and employment tax withholding.
Generally, the Company will be entitled to a deduction in the amount
reportable as income by the officer on the exercise of a non-incentive stock
option.
APPROVAL BY STOCKHOLDERS
Approval of the Stock Options will require the affirmative vote of a
majority of the total votes cast on such proposal, with holders of Common Stock
and Class B Common Stock voting together as a single class. On the Record
Date, an aggregate of 6,211,712 shares of Common Stock and Class B Common Stock
were outstanding and entitled to vote on the proposal to approve the Stock
Options. Malcolm Morris and Stewart Morris, Jr., collectively, have the power
to vote an aggregate of 544,843 shares of Common Stock and Class B Common Stock
(representing approximately 8.8% of the outstanding shares of the combined
classes entitled to vote) with respect to such proposal and intend to vote such
shares for approval of the Stock Options.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE STOCK OPTIONS.
14
<PAGE> 17
STOCKHOLDER PROPOSAL
Lindner Fund, Inc., 7711 Carondelet Avenue, Suite 700, St. Louis (Clayton),
Missouri, owning 409,950 shares of the Company's Common Stock, has advised the
Company that it plans to introduce the following resolution at the annual
meeting:
Resolved, that the shareholders of Stewart Information Services
Corporation hereby recommend to the Board of Directors that the Board take
the steps necessary to achieve a sale or cash merger of Stewart Information
Services on terms that will maximize values as promptly as possible.
The stockholder has submitted the following statement in support of the
resolution:
"The Lindner Fund, which owns 409,950 shares of the Company's common
stock, believes the value that may be achieved for the shareholders of our
company by a cash merger or sale of the entire corporation or all its
assets is significantly greater than the current market price of its
shares.
"The market price of the stock on December 14, 1994 (the day prior to
the date this proposal was submitted) was $14.75, or 58% of stated 9-30-94
book value of $25.29.
"In the last 7 years the common stock of the company has never traded
above book value, and the returns on shareholder equity over this period of
time have averaged only 6.6%. Due to these facts and the steady price
decline, the Lindner Fund believes that all shareholders will receive
maximum value for our shares when, and only when, the board of directors
conducts a competitive auction for Stewart Information Services
Corporation's businesses and/or assets.
"If you want to vote in favor of this proposal, you must mark the
"FOR" box on the proxy card next to this proposal.
"YOUR VOTE IS IMPORTANT!
"Please vote "FOR" this proposal and remember to sign and date your
proxy card before returning it.
"Thank you for your consideration."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS RESOLUTION FOR THE
FOLLOWING REASONS:
The Board of Directors does not believe that a sale or cash merger of the
Company is the optimal strategy for maximizing stockholder value. The Board of
Directors believes that this objective is more likely to be achieved by
continuing to operate the Company's business in accordance with the Company's
intermediate and long-term plan previously adopted by the Board of Directors
prior to its receipt of the stockholder proposal described above. Recognizing
the cyclical nature of the title insurance industry, the goal of the plan is to
increase book value per share and earnings per share over the intermediate and
long terms. Certain key elements of the plan are:
# Continued increase in policyholder surplus, which is a significant
factor in increasing market share, particularly with respect to large
commercial policies.
# Continued leadership in automation, including the addition of imaging
and electronic data interchange, to increase employee productivity,
improve cost control and expand base of customers and agents.
# Stable relationships with agents and associates, which is based on
continuity of a management team with a long history in the title
insurance industry.
# Continued increase in the Company's market share.
15
<PAGE> 18
# Carefully targeted acquisitions and pursuit of foreign expansion
opportunities.
# Respond to the cyclical nature of the title insurance industry with
appropriate changes in staffing levels.
# Continued reduction of policy losses.
# Emphasis on continued increases in earnings per share and book value
per share.
# Continued careful consideration of cash and stock dividend policies.
The Board of Directors believes that continued implementation of these plans is
more likely to maximize stockholder value than a sale or cash merger of the
Company.
The affirmative vote of a majority of the shares of Common Stock and Class
B Common Stock participating in the voting on this proposal, voting together as
a single class, is required for adoption of this resolution. Proxies will be
voted AGAINST the resolution unless otherwise instructed on a proxy returned to
the Company. Abstentions indicated on such a proxy card will not be counted as
either "for" or "against" this proposal. "Broker non-votes" specified on
proxies returned by brokers holding shares for beneficial owners who have not
provided instructions as to voting on this proposal will be treated as not
present for voting on this issue.
SELECTION OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected by the Company as its principal
independent auditors for the Company's fiscal year ending December 31, 1995,
and served in such capacity for the Company's fiscal year ended December 31,
1994. Representatives of KPMG Peat Marwick LLP are expected to be present at
the annual meeting with the opportunity to make a statement if they desire to
do so, and such representatives are expected to be available to respond to
appropriate questions.
CERTAIN TRANSACTIONS
During a portion of 1994, the Company rented approximately 121,203 square
feet of office space at 2200 West Loop South, Houston, Texas, which is owned by
a partnership in which the father of Paul W. Hobby has a 10.28% interest.
Aggregate rental payments by the Company to such partnership were approximately
$1,584,000 during such year. The Company relocated its offices in 1994, and
such lease was terminated.
For a number of years the Company and its subsidiaries have purchased
photographic work of Company functions from Lisa Clements, daughter of Stewart
Morris. During 1994, the Company and its subsidiaries paid to Mrs. Clements
approximately $9,504 for photographic work.
Stewart Morris and Stewart Morris, Jr. own a ranch located in Wharton
County, Texas, that is used from time to time by the Company to entertain
clients. The Company pays them $400 per month plus all utilities, maintenance
and insurance as compensation for its use of such property. During 1994, the
Company paid $4,800 in rent and $15,218 for utilities and maintenance.
Tim Crisp, the son of Max Crisp, is a full-time employee of Title. During
1994, Title paid Tim Crisp $41,419 for services rendered in such capacity.
During 1994, Marietta Maxfield, a daughter of Carloss Morris, was a full
time attorney for Guaranty and was paid $88,175 for services rendered in such
capacity.
For a number of years the Company and its subsidiaries have purchased art
work of Carlotta Barker, daughter of Stewart Morris, for display in corporate
offices and publications, including the Company's annual report to
16
<PAGE> 19
stockholders. During 1994, the Company and its subsidiaries paid to Mrs.
Barker approximately $23,698 for such art work. It is expected that similar
purchases will be made from time to time in the future.
During 1994, the Company subleased office space in Houston, Texas, to the
law firm of Morris, Lendais, Hollrath & Brown, P.C., of which Carloss Morris
and Malcolm S. Morris are shareholders. Aggregate sublease rentals were
$109,603 during such year. The terms of the sublease are the same as those of
the Company's primary lease.
During 1994, the Company and its subsidiaries paid a total of $178,274 to
the law firm of Morris, Lendais, Hollrath & Brown, P.C. In connection with
real estate transactions processed by Title, such firm receives legal fees from
its clients who are also customers of Title and who select such firm as their
counsel. During 1994, the Company and its subsidiaries also paid legal fees to
a law firm to which C. M. Hudspeth is of counsel (see "Executive Compensation--
Compensation Committee--Compensation Committee Interlocks and Insider
Participation").
PROPOSALS FOR NEXT ANNUAL MEETING
Any proposals of holders of Common Stock or Class B Common Stock intended
to be presented at the annual meeting of stockholders of the Company to be held
in 1996 must be received by the Company at its principal executive offices,
1980 Post Oak Boulevard, Houston, Texas 77056, no later than December 26, 1995,
in order to be included in the proxy statement and form of proxy relating to
that meeting.
OTHER MATTERS
The management of the Company knows of no other matters which may come
before the meeting. However, if any matters other than those referred to above
should properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote such proxy in accordance with their best
judgment.
The cost of solicitation of proxies in the accompanying form will be paid
by the Company. The Company has retained Georgeson & Co., a proxy solicitation
firm, to assist it in soliciting proxies for the proposals described in this
proxy statement. The Company has agreed to pay Georgeson & Co. a fee for such
services, which is not expected to exceed $5,000, plus expenses. In addition
to solicitation by use of the mails, certain officers or employees of the
Company, and of Georgeson & Co., may solicit the return of proxies by
telephone, telegram or personal interview.
By Order of the Board of Directors,
Secretary
March 23, 1995
17
<PAGE> 20
APPENDIX A
STEWART INFORMATION SERVICES CORPORATION
1995 STOCK OPTION PLAN
1. Purpose. The 1995 Stock Option Plan (the "Plan") of Stewart
Information Services Corporation (the "Company"), for certain key employees, is
intended to advance the best interest of the Company by providing those persons
who have substantial responsibility for its management and growth, with
additional incentive and by increasing their proprietary interest in the
success of the Company, thereby encouraging them to remain in its employ.
2. Administration. The Plan shall be administered by a committee to
be appointed by the Board of Directors of the Company (the "Committee"). The
Committee shall consist of not less than two members of the Board of Directors,
who have not, for a period of at least one year prior to being appointed to the
Committee, been eligible for selection as a person to whom stock may be
allocated or to whom stock options or stock appreciation rights may be granted
pursuant to the Plan or any other plan of the Company entitling the participant
therein to acquire stock, stock options or stock appreciation rights of the
Company. The Board of Directors of the Company shall have the power from time
to time to add or remove members of the Committee, and to fill vacancies
arising for any reason. The Committee shall designate a chairman from among
its members, who shall preside at all of its meetings, and shall designate a
secretary, without regard to whether that person is a member of the Committee,
who shall keep the minutes of the proceedings and all records, documents, and
data pertaining to its administration of the Plan. Meetings shall be held at
any time and place as it shall choose. A majority of the members of the
Committee shall constitute a quorum for the transaction of business. The vote
of a majority of those members present at any meeting shall decide any question
brought before that meeting. In addition, the Committee may take any action
otherwise proper under the Plan by the affirmative vote, taken without a
meeting, of a majority of its members. No member of the Committee shall be
liable for any act or omission of any other member of the Committee or for any
act or omission on his own part, including but not limited to the exercise of
any power or discretion given to him under the Plan, except those resulting
from his own gross negligence or willful misconduct. All questions of
interpretation and application of the Plan, or as to options granted under it
(the "Options"), shall be subject to the determination of a majority of the
Committee. The Committee in exercising any power or authority granted under
this Plan or in making any determination under this Plan shall perform or
refrain from performing those acts using its sole discretion and judgment. Any
decision made by the Committee or any refraining to act or any act taken by the
Committee in good faith shall be final and binding on all parties. The
Committee's decision shall never be subject to de novo review. When
appropriate the Plan shall be administered in order to qualify certain of the
Options granted under it as "incentive stock options" described in Section 422
of the Internal Revenue Code of 1986, as amended.
3. Option Shares. The stock subject to the Options and other
provisions of the Plan shall be shares of the Company's Common Stock, $1.00 par
value (or such other par value as may be designated by act of the Company's
stockholders) (the "Common Stock"). The amount of the Common Stock with
respect to which Options may be granted under this Plan shall not exceed
100,000 shares in the aggregate and 40,000 shares to any one individual. The
class and aggregate number of shares which may be subject to the Options
granted it under this Plan shall be subject to adjustment under Section 15.
The shares may be treasury shares or authorized but unissued shares.
In the event that an outstanding Option shall expire or terminate for
any reason, the shares of Common Stock allocable to the unexercised portion of
that Option may again be subject to an Option under the Plan.
4. Authority to Grant Options. The Committee may grant the following
options at any time during the term of this Plan to any eligible employee of
the Company that it chooses:
(a) "Incentive" Stock Options. The Committee may grant to an
eligible employee an Option, or Options, to buy a stated number of
shares of Common Stock under the terms and
<PAGE> 21
conditions of the Plan, which Option or Options would be an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended.
(b) "Non-incentive" Stock Options. The Committee may grant
to an eligible employee an Option, or Options, to buy a stated number
of shares of Common Stock under the terms and conditions of the Plan,
which Option or Options would not constitute an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended.
Each option granted shall be approved by the Committee. Subject only
to any applicable limitations set forth in this Plan, the number of shares of
Common Stock to be covered by an Option shall be as determined by the
Committee.
5. Eligibility. The individuals who shall be eligible to participate
in the Plan shall be the executive officers of the Company other than Carloss
Morris and Stewart Morris. However, no person who owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company shall be eligible to receive an Option which is an incentive stock
option unless at the time that the Option is granted the option price is at
least 110% of the fair market value of the Common Stock at the time the Option
is granted and the Option by its own terms is not exercisable after the
expiration of five years from the date the Option is granted. No individual
shall be eligible to receive an Option under the Plan while that individual is
a member of the Committee.
A person will be considered as owning the stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants. Stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust will be
considered as being owned proportionately by or for its shareholders, partners
or beneficiaries.
6. Option Price. The price at which shares may be purchased pursuant
to an Option that is an incentive stock option shall be not less than the fair
market value of the shares of Common Stock on the date the Option is granted.
The Committee in its discretion may provide that the price at which shares may
be purchased shall be more than the minimum price required. If an individual
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, the option price at which shares may be
purchased under an Option which is an incentive stock option shall be not less
than 110% of the fair market value of the Common Stock on the date the Option
is granted.
7. Duration of Options. No Option which is an incentive stock option
shall be exercisable after the expiration of 10 years from the date the Option
is granted. The Committee in its discretion may provide that the Option shall
be exercisable throughout the 10 year period or during any lesser period of
time commencing on or after the date of grant of the Option and ending upon or
before the expiration of the 10 year period. If an individual owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, no Option which is an incentive stock option shall be
exercisable after the expiration of five years from the date the Option is
granted. No Option which is a non-incentive stock option shall be exercisable
after the expiration of 10 years from the date the Option is granted. The
Committee in its discretion may provide that the Option shall be exercisable
throughout the 10 year period or during any lesser period of time commencing on
or after the date of grant of the Option and ending upon or before the
expiration of the 10 year period.
8. Maximum Value of Stock Subject to Options Which are Incentive Stock
Options. To the extent that the aggregate fair market value (determined as of
the date the Option is granted) of the stock with respect to which incentive
stock options are exercisable for the first time by the optionee in any calendar
year (under this Plan and any other incentive stock option plan(s) of the
Company and any parent and subsidiary corporation) exceeds $100,000, the Options
shall be treated as non-incentive stock options. In making this determination,
Options shall be taken into account in the order in which they were granted.
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<PAGE> 22
9. Exercise of Options. An optionee may exercise such optionee's
Option by delivering to the Company a written notice stating (i) that such
optionee wishes to exercise such Option on the date such notice is so
delivered, (ii) the number of shares of stock with respect to which the Option
is to be exercised and (iii) the address to which the certificate representing
such shares of stock should be mailed. In order to be effective, such written
notice shall be accompanied by (i) payment of the Option Price of such shares
of stock and (ii) payment of an amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of such Option.
Each such payment shall be made by cashier's check drawn on a national banking
association and payable to the order of the Company in United States dollars.
If, at the time of receipt by the Company of such written notice, (i)
the Company has unrestricted surplus in an amount not less than the Option
Price of such shares of stock, (ii) all accrued cumulative preferential
dividends and other current preferential dividends on all outstanding shares of
preferred stock of the Company have been fully paid, (iii) the acquisition by
the Company of its own shares of stock for the purpose of enabling such
optionee to exercise such Option is otherwise permitted by applicable law and
without any vote or consent of any stockholder of the Company, and (iv) there
shall have been adopted, and there shall be in full force and effect, a
resolution of the Board of Directors of the Company authorizing the acquisition
by the Company of its own shares of stock for such purpose, then such optionee
may deliver to the Company, in payment of the Option Price of the shares of
stock with respect to which such Option is exercised, (x)(i) certificates
registered in the name of such optionee that represent a number of shares of
stock legally and beneficially owned by such optionee (free of all liens,
claims and encumbrances of every kind) and having a fair market value on the
date of receipt by the Company of such written notice that is not greater than
the Option Price of the shares of stock with respect to which such Option is to
be exercised, such certificates to be accompanied by stock powers duly endorsed
in blank by the record holder of the shares of stock represented by such
certificates, with the signature of such record holder guaranteed by a national
banking association or (ii) an assignment to the Company of a portion of the
shares with respect to which such Option is exercised, and (y) if the Option
Price of the shares of stock with respect to which such Option is to be
exercised exceeds such fair market value, a cashier's check drawn on a national
banking association and payable to the order of the Company in an amount, in
United States dollars, equal to the amount of such excess.
As promptly as practicable after the receipt by the Company of (i)
such written notice from the optionee, (ii) payment, in the form required by
the foregoing provisions of this Section 9 of the Option Price of the shares of
stock with respect to which such Option is to be exercised, and (iii) payment,
in the form required by the foregoing provisions of this Section 9, of an
amount of money necessary to satisfy any withholding tax liability that may
result from the exercise of such Option, a certificate representing the number
of shares of stock with respect to which such Option has been so exercised,
such certificate to be registered in the name of such optionee, provided that
such delivery shall be considered to have been made when such certificate shall
have been mailed, postage prepaid, to such optionee at the address specified
for such purpose in such written notice from the optionee to the Company.
For purposes of this Section 9, the "fair market value" of a share of
stock as of any particular date shall mean the closing price of a share of
stock on that date as reported in the New York Stock Exchange--Composite
Transactions listing, provided that if no closing price for the stock as so
reported on that date or if, in the discretion of the Committee, another means
of determining the fair market value of a share of stock at such date shall be
necessary or advisable, the Committee may provide for another means for
determining such fair market value.
10. Transferability of Options. Options shall not be transferable by
the optionee except by will or under the laws of descent and distribution, and
shall be exercisable, during his lifetime, only by him.
11. Termination of Employment or Death of Optionee. Except as may be
otherwise expressly provided herein, all Options (whether incentive or
non-incentive) shall terminate on the earlier of the date of the expiration of
the Option or one day less than three months after the date of severance, upon
severance of the employment relationship between the Company and the optionee,
whether with or without cause, for any reason other than the
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<PAGE> 23
death, disability or retirement of the optionee, during which period the
optionee shall be entitled to exercise the Option in respect of the number of
shares that the optionee would have been entitled to purchase had the optionee
exercised the Option on the date of such severance of employment. Whether
authorized leave of absence, or absence on military or government service, shall
constitute severance of the employment relationship between the Company and the
optionee shall be determined by the Committee at the time thereof. In the event
of severance because of the disability of the holder of any Option (whether
incentive or non-incentive) while in the employ of the Company and before the
date of expiration of such Option, such Option shall terminate on the earlier of
such date of expiration or one year following the date of such severance because
of disability, during which period the optionee shall be entitled to exercise
the Option in respect to the number of shares that the optionee would have been
entitled to purchase had the optionee exercised the Option on the date of such
severance because of disability. Disability for this purpose shall be such a
disability as would qualify the optionee for a disability benefit under the
Company's pension plan without regard to any age or service requirement in the
Plan. In the event of the death of the holder of any Option (whether incentive
or non-incentive) while in the employ of the Company and before the date of
expiration of such Option, such Option shall terminate on the earlier of such
date of expiration or one year following the date of death. After the death of
the optionee, his executors, administrators or any person or person to whom his
Option may be transferred by will or by the laws of descent and distribution,
shall have the right, at any time prior to the termination of an Option to
exercise the Option, in respect to the number of shares that the optionee would
have been entitled to exercise if he had exercised the Option on the date of his
death while in employment. In addition, in the event of the retirement of the
holder of any non-incentive stock option in accordance with the provisions of
the Company's pension plan, before the date of expiration of such Option, such
Option shall terminate on the earlier of such date of expiration or one year
following the date of such retirement, and, if such optionee should die within
the one year period any rights he may have to exercise the Option shall be
exercisable by his executor or administrator or the person or persons to whom
the Option shall have been transferred by his will or laws of descent or
distribution, as appropriate, for the remainder of the one year period.
Notwithstanding the foregoing provisions of this Section 11, in the case of an
Option that is a non-incentive stock option, the Committee may provide for a
different option termination date in the option agreement with respect to such
Option. For purposes of incentive stock options issued under this Plan, an
employment relationship between the Company and the optionee shall be deemed to
exist during any period in which the optionee is employed by the Company, by any
parent or subsidiary corporation, by a corporation issuing or assuming an option
in a transaction to which Section 424(a) of the Internal Revenue Code of 1986,
as amended, applies, or by a parent or subsidiary corporation of such
corporation issuing or assuming an option. For this purpose, the phrase
"corporation issuing or assuming an option" shall be substituted for the word
"Company" in the definitions of parent and subsidiary corporations in Section 5
and the parent-subsidiary relationship shall be determined at the time of the
corporate action described in Section 424(a) of the Internal Revenue Code of
1986, as amended. For purposes of non-incentive stock options issued under this
Plan, an employment relationship between the Company and the optionee will exist
under the circumstances described above for incentive stock options and will
also exist if the optionee is transferred to an affiliate corporation approved
by the Committee.
12. Requirements of Law. The Company shall not be required to sell or
issue any shares under any Option if issuing the shares shall constitute a
violation by the optionee or the Company of any provisions of any law or
regulation of any governmental authority. Each Option granted under this Plan
shall be subject to the requirements that, if at any time the Board of Directors
of the Company or the Committee shall determine that the listing, registration
or qualification of the shares upon any securities exchange or under any state
or federal law of the United states or of any other country or governmental
subdivision, or the consent or approval of any governmental regulatory body, or
investment or other representations, are necessary or desirable in connection
with the issue or purchase of shares subject to an Option, that Option shall not
be exercised in whole or in part unless the listing, registration,
qualification, consent, approval or representations shall have been effected or
obtained free of any conditions not acceptable to the Board of Directors. Any
determination in this connection by the Committee shall be final. In the event
the shares issuable on exercise of an Option are not registered under the
Securities Act of 1933, the Company may imprint on the certificate for those
shares the following legend or any other legend which counsel for the Company
considers necessary or advisable to comply with the Securities Act of 1933:
A-4
<PAGE> 24
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any state and may not be sold or transferred except upon
registration or upon receipt by the Corporation of an opinion of
counsel satisfactory to the Corporation, in form and substance
satisfactory to the Corporation, that registration is not required for
a sale or transfer."
The Company may, but shall in no event be obligated to, register any securities
covered by this Plan under the Securities Act of 1933 (as now in effect or as
later amended) and, in the event any shares are registered, the Company may
remove any legend on certificates representing those shares. The Company shall
not be obligated to take any other affirmative action in order to cause the
exercise of an Option or the issuance of shares under the Option to comply with
any law or regulation or any governmental authority.
13. No Rights as Stockholder. No optionee shall have rights as a
stockholder with respect to shares covered by his Option until the date a stock
certificate is issued for the shares. Except as provided in Section 15, no
adjustment for dividends, or other matters shall be made if the record date is
prior to the date the certificate is issued.
14. Employment Obligation. The granting of any Option shall not
impose upon the Company any obligation to employ or continue to employ any
optionee. The right of the Company to terminate the employment of any officer
or other employee shall not be diminished or affected by reason of the fact
that an Option has been granted to him.
15. Changes in the Company's Capital Structure. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares
or other capital adjustment of, or the payment of a dividend in capital stock
or other equity securities of the Company on, its Common Stock, or other
increase or reduction of the number of shares of the Common Stock outstanding
without receiving consideration therefor in money, services, or property, or
the reclassification of its Common Stock, in whole or in part, into other
equity securities of the Company, then (a) the number, class and per share
price of shares of stock subject to outstanding Options hereunder shall be
appropriately adjusted (or in the case of the issuance of other equity
securities as a dividend on, or in a reclassification of, the Common Stock, the
Options shall extend to such other securities) in such a manner as to entitle
an optionee to receive, upon exercise of an Option, for the same aggregate cash
compensation, the same total number and class or classes of shares (or in the
case of a dividend of, or reclassification into, other equity securities, such
other securities) he would have held after such adjustment if he had exercised
his Option in full immediately prior to the event requiring the adjustment, or,
if applicable, the record date for determining shareholders to be affected by
such adjustment; and (b) the number and class of shares then reserved for
issuance under the Plan (or in the case of a dividend of, or reclassification
into, other equity securities, such other securities) shall be adjusted by
substituting for the total number and class of shares of stock then received,
the number and class or classes of shares of stock (or in the case of a
dividend on, or reclassification into, other equity securities, such other
securities) that would have been received by the owner of an equal number of
outstanding shares of Common Stock as the result of the event requiring the
adjustment. Comparable rights shall accrue to each optionee in the event of
successive subdivisions, consolidations, capital adjustment, dividends or
reclassifications of the character described above.
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<PAGE> 25
If the Company shall make a tender offer for, or grant to all of its
holders of its shares of Common Stock the right to require the Company or any
subsidiary of the Company to acquire from such stockholders shares of, Common
Stock, at a price in excess of the Current Market Price (a "Put Right") or the
Company shall grant to all of its holders for its shares of Common Stock the
right to acquire shares of Common Stock for less than the Current Market Price
(a "Purchase Right") then, in the case of a Put Right, the Option Price shall
be adjusted by multiplying the Option Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such Put
Right by a fraction, the numerator of which shall be the number of shares of
Common Stock then outstanding minus the number of shares of Common Stock which
could be purchased at the Current Market Price for the aggregate amount which
would be paid if all Put Rights are exercised and the denominator of which is
the number of shares of Common Stock which would be outstanding if all Put
Rights are exercised; and, in the case of a Purchase Right, the Option Price
shall be adjusted by multiplying the Option Price in effect immediately prior
to the record date for the determination of the stockholders entitled to
receive such Purchase Right by a fraction, the numerator of which shall be the
number of shares of Common Stock then outstanding plus the number of shares of
Common Stock which could be purchased at the Current Market Price for the
aggregate amount which would be paid if all Purchase Rights are exercised and
the denominator of which is the number of shares of Common Stock which would be
outstanding if all Purchase Rights are exercised. In addition, the number of
shares subject to the option shall be increased by multiplying the number of
shares then subject to the Option by a fraction which is the inverse of the
fraction used to adjust the Option Price. Notwithstanding the foregoing if any
such Put Rights or Purchase Rights shall terminate without being exercised, the
Option Price and number of shares subject to Option shall be appropriately
readjusted to reflect the Option Price and number of shares subject to the
Option which would have been in effect if such unexercised Rights had never
existed Comparable adjustments shall be made in the event of successive
transactions of the character described above.
After the merger of one or more corporations into the Company, after
any consolidation of the Company and one or more corporations, or after any
other corporate transaction described in Section 424(a) of the Code in which
the Company shall be the surviving corporation, each optionee, at no additional
cost, shall be entitled to receive, upon any exercise of his Option, in lieu of
the number of shares as to which the Option shall then be so exercised, the
number and class of shares of stock or other equity securities to which the
optionee would have been entitled pursuant to the terms of the agreement of
merger or consolidation if at the time of such merger or consolidation such
optionee had been a holder of a number of shares of Common Stock equal to the
number of shares as to which the Option shall then be so exercised and, if as a
result of such merger, consolidation or other transaction, the holders of
Common Stock are not entitled to receive any shares of Common Stock pursuant to
the terms thereof, each optionee, at no additional cost shall be entitled to
receive, upon exercise of his Option, such other assets and property, including
cash to which he would have been entitled if at the time of such merger,
consolidation or other transaction he had been the holder of the number of
shares of Common Stock equal to the number of shares as to which the Option
shall then be so exercised. Comparable rights shall accrue to each optionee in
the event of successive mergers or consolidations of the character described
above.
After a merger of the Company into one or more corporations, after a
consolidation of the Company and one or more corporations, or after any other
corporate transaction described in Section 424(a) of the Code in which the
Company is not the surviving corporation, each optionee shall, at no additional
cost, be entitled at the option of the surviving corporation (i) to have his
then existing Option assumed or have a new option substituted for the existing
Option by the surviving corporation to the transaction which is then employing
him, or a parent or subsidiary of such corporation, on a basis where the excess
of the aggregate fair market value of the shares subject to the option
immediately after the substitution or assumption over the aggregate option price
of such option is equal to the excess of the aggregate fair market value of all
shares subject to the option immediately before such substitution or assumption
over the aggregate option price of such shares, provided that the shares subject
to the new option must be traded on the New York or American Stock Exchange or
quoted on the National Association of Securities Dealers Automated Quotation
System, or (ii) to receive, upon any exercise of his Option, in lieu of the
number of shares as to which the Option shall then be so exercised, the
securities, property and other assets, including cash, to which the Optionee
would have been entitled pursuant to the terms of the agreement of merger or
consolidation or the agreement giving rise to the other corporate transaction if
at the time of such merger,
A-6
<PAGE> 26
consolidation or other transaction such optionee had been the holder of the
number of shares of Common Stock equal to the number of shares as to which the
Option shall then be so exercised.
If a corporate transaction described in Section 424(a) of the code
which involves the Company is to take place and there is to be no surviving
corporation while an Option remains in whole or in part unexercised, it shall
be canceled by the Board of Directors as of the effective date of any such
corporate transaction but before that date each optionee shall be provided with
a notice of such cancellation and each optionee shall have the right to
exercise such Option in full to the extent it is then still unexercised during
a 30-day period preceding the effective date of such corporate transaction.
For purposes of this Section 15, Current Market Price per share of
Common Stock shall mean the last reported price for the Common Stock in the New
York Stock Exchange--Composite Transaction listing on the trading day
immediately preceding the first trading day on which, as a result of the
establishment of a record date or otherwise, the trading price reflects that an
acquiror of Common Stock in the public market will not participate in or
receive the payment of any applicable dividend or distribution.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
then subject to outstanding Options.
16. Amendment or Termination of Plan. The Board of Directors may
modify, revise or terminate this Plan at any time and from time to time.
However, without the further Company stockholder approval by a majority of the
votes cast at a duly held stockholders' meeting at which a quorum representing
a majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the issue, the Board of Directors may not (a) change the
aggregate number of shares which may be issued under Options pursuant to the
provisions of this Plan; (b) reduce the Option price permitted for the
incentive stock options; (c) extend the term during which an incentive stock
option may be exercised or the termination date of this Plan; or (d) change the
class of employees eligible to receive incentive stock options. But, the Board
shall have the power to make all changes in the Plan and in the regulations and
administrative provisions under the Plan or in any outstanding Option as in the
opinion of counsel for the Company may be necessary or appropriate from time to
time to enable any Option granted pursuant to the Plan to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code of 1986,
as amended, and the regulations which may be issued under that Section as in
existence from time to time.
17. Written Agreement. Each Option granted under this Plan shall be
embodied in a written option agreement, which shall be subject to the terms and
conditions prescribed above, and shall be signed by the optionee and by the
appropriate officer of the Company for and in the name and on behalf of the
Company. Each option agreement shall contain any other provisions that the
Committee in its discretion shall deem advisable.
18. Indemnification of the Committee. The Company shall indemnify
each present and future member of the Committee against, and each member of the
Committee shall be entitled without further act on his part to indemnity from
the Company for, all expenses (including the amount of judgments and the amount
of approved settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself) reasonably incurred
by him in connection with or arising out of any action, suit or proceeding in
which he may be involved by reason of his being or having been a member of the
Committee, whether or not he continues to be such
member of the Committee at the time of incurring such expenses; provided,
however, that such indemnity shall not include any expenses incurred by any
such member of the Committee (a) in respect of matters as to which he shall be
finally adjudged in any such action, suit or proceeding to have been guilty of
gross negligence or willful misconduct in the performance of his duty as such
member of the Committee, or (b) in respect of any matter in
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<PAGE> 27
which any settlement is effected, to an amount in excess of the amount approved
by the Company on the advice of its legal counsel; and provided further, that no
right of indemnification under the provisions set forth herein shall be
available to or enforceable by any such member of the Committee unless, within
sixty (60) days after institution of any such action, suit or proceeding, he
shall have offered the Company, in writing, the opportunity to handle and defend
same at its own expense. The foregoing right of indemnification shall inure to
the benefit of the heirs, executors or administrators of each such member of the
Committee and shall be in addition to all other rights to which such member of
the Committee may be entitled to as a matter of law, contract or otherwise.
Nothing in this Section 18 shall be construed to limit or otherwise affect any
right to indemnification or payment of expense, or any provisions limiting the
liability of any officer or director of the Company or any member of the
Committee, provided by law, the Certificate of Incorporation of the Company or
otherwise.
19. Effective Date of Plan. The Plan shall become effective and
shall be deemed to have been adopted on March 13, 1995, if within one year of
that date it has been approved by the Company stockholders by a majority of the
votes cast at a duly held stockholders' meeting at which a quorum representing
a majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the Plan. No Options shall be granted pursuant to the
Plan after December 1, 2005.
A-8
<PAGE> 28
STEWART INFORMATION SERVICES CORPORATION
P THIS PROXY FOR HOLDERS OF COMMON STOCK IS SOLICITED BY
THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
R STOCKHOLDERS TO BE HELD ON APRIL 25, 1995
O The undersigned stockholder of Stewart Information Services
Corporation (the "Company") hereby appoints Ken Anderson, Jr. and
X Tannie L. Pizzitola, Jr., or either of them, attorneys and proxies
of the undersigned, with full power of substitution, to vote, as
Y designated below, the number of votes which the undersigned would
be entitled to cast if personally present at the Annual Meeting of
Stockholders of the Company to be held on the eighth floor of the
Company's offices at 1980 Post Oak Blvd., Houston, Texas, at 8:30
A.M. on Tuesday, April 25, 1995, and at any adjournment thereof.
AS NOTED IN THE ACCOMPANYING PROXY STATEMENT, RECEIPT OF WHICH IS
HEREBY ACKNOWLEDGED, IF ANY OF THE LISTED NOMINEES BECOMES
UNAVAILABLE FOR ANY REASON AND AUTHORITY TO VOTE FOR ELECTION OF
DIRECTORS IS NOT WITHHELD, THIS PROXY WILL BE VOTED FOR ANOTHER
NOMINEE, OR OTHER NOMINEES, TO BE SELECTED BY THE BOARD OF
DIRECTORS.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NOT OTHERWISE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR
ADOPTION OF THE COMPANY'S 1995 STOCK OPTION PLAN AND AGAINST THE
STOCKHOLDER PROPOSAL DESCRIBED IN THE PROXY STATEMENT.
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY
(Continued and to be signed on other side)
<PAGE> 29
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. ELECTION OF DIRECTORS
/ / FOR all of the nominees listed / / WITHHOLD AUTHORITY
(except as indicated to the to vote for election
contrary below) of directors
NOMINEES:
Nita B. Hanks Dr. E. Douglas Hodo Paul W. Hobby
Max Crisp C. M. Hudspeth
Except vote withheld from the following nominee(s):
____________________________________________________
2. Adoption of the Company's 1995 Stock Option Plan
/ / FOR / / AGAINST / / ABSTAIN
3. Stockholder proposal as described at page 15 of the proxy statement
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the above named proxies are authorized to vote upon
such other business as may properly come before the meeting or any
adjournment thereof and upon matters incident to the conduct of the
meeting.
/ / FOR / / AGAINST / / ABSTAIN
SIGNATURE(S) ___________________________________ DATE ___________________, 1995
SIGNATURE(S) ___________________________________ DATE ___________________, 1995
Your signature should correspond with your name as it appears hereon. Joint
owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please set forth your full title as it appears hereon.
