<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 the 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(i)(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 transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 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 26, 1996
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 Friday, April 26, 1996, at 9:00 A.M. in the
Independence Room on the eleventh 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 1996
Directors' Stock Plan.
(3) 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 29, 1996 will be entitled to vote
at the meeting.
By Order of the Board of Directors,
/s/ MAX CRISP
Secretary
March 20, 1996
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 26, 1996
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 Friday, April 26, 1996, at
9:00 A.M. in the Independence Room on the eleventh 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 20, 1996 to
stockholders of record at the close of business on February 29, 1996 (the
"Record Date").
At the close of business on the Record Date, there were outstanding and
entitled to vote 6,151,330 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, 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.
<PAGE> 4
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 571,000(1) 9.3
82 Devonshire Street
Boston, Massachusetts 02109
Lindner Growth Fund Common Stock 421,800(2) 6.9
7711 Carondelet Ave., Box 16900
St. Louis, Missouri 63105
Brookhaven Capital Management Co., Ltd Common Stock 412,223(3) 6.7
3000 Sandhill Road, Suite 130
Menlo Park, California 94025
College Retirement Equities Fund Common Stock 340,000(4) 5.5
730 Third Avenue
New York, New York 10017
Third Avenue Value Fund Common Stock 310,000(5) 5.0
767 Third Avenue
New York, New York 10017
</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
14, 1996.
(2) Lindner Growth Fund 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, 1996.
(3) 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.
(4) 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 1, 1996.
(5) Based on information provided by Third Avenue Value Fund.
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
2
<PAGE> 5
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.
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) 1.2
Stewart Morris Common Stock 64,278(1) 1.0
Malcolm S. Morris Common Stock 68,000(1)(2) 1.1
Class B Common Stock 262,503(1) 50.0
Stewart Morris, Jr. Common Stock 38,000(3) (4)
Class B Common Stock 262,503(1) 50.0
Max Crisp Common Stock 5,500(1)(5) (4)
C. M. Hudspeth Common Stock 26,400(6) (4)
Nita B. Hanks Common Stock 183(1) (4)
Paul W. Hobby Common Stock None --
Dr. E. Douglas Hodo Common Stock None --
Dr. W. Arthur Porter Common Stock None --
Lloyd Bentsen, III Common Stock 1,500(1) (4)
All officers and directors Common Stock 280,511 4.6
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 68,000 shares subject to stock options (see "Executive
Compensation--Option Grants and Exercises" at page 7).
(3) Consists of 38,000 shares subject to stock options (see "Executive
Compensation--Option Grants and Exercises" at page 7).
(4) Less than 1%.
(5) Includes 4,000 shares subject to a stock option (see "Executive
Compensation--Option Grants and Exercises" at page 7).
(6) 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.
3
<PAGE> 6
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 1995, the Board of Directors held five 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.
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 1995, the Executive Committee held five meetings at which all members
were present and executed 48 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 Dr.
E. Douglas Hodo, who succeeded A. Oakley Hunter in June, 1995. During 1995,
the Audit Committee held two meetings at which both members were present.
See "Executive Compensation--Compensation Committee" at page 10 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 1995. 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, 42, Director . . . . . . . . . . . . . . . . . . . . . . . . . . 1990
Dr. E. Douglas Hodo, 61, Director . . . . . . . . . . . . . . . . . . . . . . . 1988
Paul W. Hobby, 35, Director . . . . . . . . . . . . . . . . . . . . . . . . . . 1989
Max Crisp, 61, Vice President-Finance, Secretary, Treasurer and Director . . . 1970
C. M. Hudspeth, 76, 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 L.L.P. 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
4
<PAGE> 7
the Lieutenant Governor of Texas. Since May 1992 Mr. Hobby has served as Vice
President of H & C Communications. Mr. Hobby has also served since 1995 as
Chairman of Columbine JDS Systems, Inc., a media software company.
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,
L.L.P., Houston, Texas, for more than the past five years. Mr. Hudspeth is a
Trustee Emeritus of Rice University, Houston, Texas.
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 1995, except for Lloyd Bentsen, III, who was elected by the Board of
Directors in May 1995 to fill the vacancy created by the death of A. Oakley
Hunter. 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, 80, Co-Chief Executive Officer and Chairman of the Board of Directors . . 1970
Stewart Morris, 76, Co-Chief Executive Officer, President and Director . . . . . . . . . 1970
Dr. W. Arthur Porter, 54, Director . . . . . . . . . . . . . . . . . . . . . . . . . . . 1993
Lloyd Bentsen, III, 51, Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1995
</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.
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.
Mr. Bentsen served as an Advisory Director of the Company from 1992 until
his election to the Board of Directors in 1995. Mr. Bentsen is a general
partner and co-founder of Triad Ventures, a group of venture capital funds with
over $50 million of capital that seeks to invest in Texas-based emerging growth
companies. Prior to founding his venture capital firm in 1979, Mr. Bentsen
spent ten years with Rotan Mosle, Inc., a regional investment banking firm, as
a member of the corporate finance department. Mr. Bentsen is a graduate of
Princeton University and holds an MBA from Stanford University.
Carloss Morris, Stewart Morris, Malcolm S. Morris and Stewart Morris, Jr.,
acting together, have the power to direct the management and policies of the
Company. Accordingly, they may be deemed to be "control persons" as such term
is used in regulations adopted under the Securities Exchange Act of 1934.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table summarizes compensation information concerning each of
the Company's executive officers for each of the three years ended December 31,
1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (AWARDS)
------------------------------------ -------------
STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
--------------------------- ---- -------- ------- ------------- ------------
($) ($) (# shares) ($)
<S> <C> <C> <C> <C> <C>
Carloss Morris 1995 130,000 160,000 -- 22,824(1)
Chairman of the Board and 1994 130,000 160,000 -- 20,845
Co-Chief Executive Officer(2) 1993 130,000 160,000 -- 21,847
Stewart Morris 1995 130,000 160,000 -- 17,966(3)
President and 1994 130,000 160,000 -- 15,778
Co-Chief Executive Officer(4) 1993 130,000 160,000 -- 13,971
Stewart Morris, Jr. 1995 125,000 117,790 8,000 5,245(5)
Senior Executive Vice Presi- 1994 125,000 144,130 -- 3,418
dent--Assistant President(6) 1993 125,000 165,100 -- 5,278
Malcolm S. Morris 1995 125,000 117,790 8,000 4,427(7)
Senior Executive Vice Presi- 1994 125,000 144,130 -- 3,828
dent--Assistant Chairman(8) 1993 125,000 165,100 -- 3,882
Max Crisp 1995 139,900 67,775 4,000 8,374(9)
Vice President--Finance(10) 1994 133,860 64,856 -- 7,882
1993 127,140 119,019 -- 7,388
- ----------------------
</TABLE>
(1) Consists of matching contributions to the Company's 401(k) plan ($1,000),
director's fees ($1,200) and $20,624, 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" at page 8).
(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 $15,766, 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" at page 8).
(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 ($3,175) and $1,070, 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 47, is also President and Chief Executive
Officer of Title and Chairman of the Board of Guaranty.
(7) Consists of matching contributions to the Company's 401(k) plan ($1,000),
director's fees ($825) and $2,602, 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
<PAGE> 9
(8) Malcolm S. Morris, age 49, is also President and Chief Executive Officer
of Guaranty and Chairman of the Board of Title.
(9) Consists of matching contributions to the Company's 401(k) plan ($1,000),
director's fees ($1,125) and $6,249, 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.
(10) 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 following table sets forth information concerning individual
grants of stock options made during the year ended December 31, 1995 to each of
its executive officers. All such grants were made on July 12, 1995, under the
terms of the Company's 1995 Stock Option Plan. The Company did not grant any
stock appreciation rights during such year. The hypothetical values on the
date of grant of stock options granted in 1995 shown below are presented
pursuant to the rules of the Securities and Exchange Commission and are
calculated under the modified Black-Scholes Model (the "Model") for pricing
options. This hypothetical value of options trading on the stock markets bears
little relationship to the compensation cost to the Company or potential gain
realized by an optionee. The actual amount, if any, realized upon exercise of
stock options will depend upon the market price of the Company's Common Stock
relative to the exercise price per share of Common Stock issuable under the
stock option at the time the stock options are exercised. There is no
assurance that the hypothetical present values of stock options reflected in
this table actually will be realized.
OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------
PERCENT OF
TOTAL OPTIONS
GRANTED GRANT DATE
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION PRESENT
NAME GRANTED IN 1995 PRICE DATE VALUE(1)
---- ----------- ------------ ---------- ------------ ---------
(# shares) (%) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Carloss Morris . . . . . -- -- -- -- --
Stewart Morris . . . . . -- -- -- -- --
Stewart Morris, Jr. . . . 8,000(2) 26 19.50 July 11, 2005 73,384
Malcolm S. Morris . . . . 8,000(2) 26 19.50 July 11, 2005 73,384
Max Crisp . . . . . . . . 4,000(3) 13 19.50 July 11, 2005 36,692
- ------------------
</TABLE>
(1) The grant date present values are calculated under the Model. The Model is
a mathematical formula used to value stock options and is based on the
stock's historical volatility, dividend rate, option term and risk-free
rate of return. The grant date present value does not reflect any
discount with respect to prohibitions on transfer.
(2) Options with respect to 5,100 shares became exercisable on July 12, 1995,
and the remaining 2,900 options became exercisable on January 1, 1996.
(3) Such options became exercisable in full on July 12, 1995.
7
<PAGE> 10
The following table sets forth information concerning each exercise of
stock options during the year ended December 31, 1995 by each of its executive
officers and the value of unexercised options at December 31, 1995. The
Company has not issued any tandem or freestanding stock appreciation rights.
AGGREGATED OPTION EXERCISES IN 1995 AND OPTION VALUES AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1995 AT DECEMBER 31, 1995
SHARES ACQUIRE 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. -- -- 35,100 2,900 242,700 5,800
Malcolm S. Morris -- -- 65,100 2,900 475,200 5,800
Max Crisp -- -- 4,000 -- 8,000 --
</TABLE>
COMPENSATION OF DIRECTORS
Directors of the Company, other than employees of the Company, receive an
annual retainer of $7,500 and 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
$41,000 for his services as a director and member of each of the committees of
the Board of Directors.
On March 11, 1996, the Board of Directors of the Company adopted, subject
to stockholder approval, the Stewart Information Services Corporation 1996
Directors' Stock Plan (the "1996 Plan"). See "Approval of the 1996 Directors'
Stock Plan" at page 12. If the 1996 Plan is approved by the stockholders of
the Company, each non-employee Director will receive, in addition to the annual
retainer and per meeting fees described above, an annual award of shares of
Common Stock of the Company valued at $7,500 based on the fair market value of
the Common Stock on the date of the award.
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 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 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 from the proceeds of death benefits under the SD Policies. In
1995, the net death benefits to Carloss Morris and Stewart Morris under the SD
policies
8
<PAGE> 11
were $721,120 and $790,000, respectively, and such benefits will decline
annually by the amount of the premiums 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 (i) the net death benefit
under the SD Policies will decline to approximately $400,000 for Carloss Morris
by the year 2000 and $400,000 for Stewart Morris by the year 2004 and (ii) the
SD Policies will be fully paid up by the year 2000.
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 1995; however, pursuant to
applicable federal income tax regulations, taxable income attributable to the
such policies in 1995 of $40,199 and $34,736 was incurred by Carloss Morris and
Stewart Morris, respectively.
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, 1995. The graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 at December
31, 1990 and that all dividends were reinvested.
9
<PAGE> 12
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, RUSSELL 2000 AND RUSSELL 2000 FINANCIAL SERVICES SECTOR
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------------------
1990 1991 1992 1993 1994 1995
--------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Company . . . . . . . . . . . . . . . . . $ 100.00 $ 177.32 $ 267.93 $ 395.88 $ 307.94 $ 435.17
Russell 2000 . . . . . . . . . . . . . . 100.00 146.05 172.94 205.64 201.90 259.31
Russell 2000 Financial Services Sector. . 100.00 165.27 244.68 300.75 302.61 420.20
</TABLE>
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 1995, the Compensation Committee was comprised
of C. M. Hudspeth, Paul W. Hobby and, prior to May, A. Oakley Hunter. Dr. W.
Arthur Porter succeeded Mr. Hunter as a member of the Compensation Committee in
June, 1995. During 1995, the Compensation Committee held two meetings at which
all members were present.
During 1995, the Company and its subsidiaries paid a total of $296,776 to
the law firm of DeLange & Hudspeth, L.L.P. C. M. Hudspeth is of counsel to
such firm.
10
<PAGE> 13
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, an annual cash bonus and, commencing in 1995, stock option
grants to officers of the Company other than the co-chief executive officers.
The Company also provides life insurance to each of its executive officers.
Base Salary. For 1995, the Committee continued base salary levels for
executive officers at the levels in effect for 1994 except for one increase of
approximately 4.5%. 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 of Guaranty, subject to a
limitation on the maximum bonus payable. For 1993, 1994 and 1995, aggregate
compensation, exclusive of board fees and insurance premiums, to the co-chief
executive officers was limited to $290,000 each.
Stock Options. In 1995, the Compensation Committee recommended, the Board
of Directors adopted, and the stockholders of the Company approved, a stock
option plan pursuant to which 100,000 shares of the Company's common stock were
reserved for issuance by the Committee from time to time. 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, are eligible for
grants of options at a purchase price not less than the fair market value of
the shares on the date of grant. Pursuant to the plan, in 1995 the Committee
granted options to Malcolm Morris, Stewart Morris, Jr. and Max Crisp for 8,000,
8,000 and 4,000 shares, respectively. See "--Option Grants and Exercises"
elsewhere in the Proxy Statement in which this report is included. The values
of such options were taken into account by the Committee in determining the
reasonableness of the recipient officer's annual compensation package.
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.
11
<PAGE> 14
The Company's net earnings declined from $1.56 per share in 1994 to $1.11
per share in 1995, primarily due to the relatively high interest rates
prevailing in the first half of 1995. 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 1995, the
Committee gave particular consideration to the efforts of the co-chief
executive officers and other executive officers in entering new markets through
acquisitions, increasing the Company's market share in existing markets,
further developing the Company's automation programs and pursuing opportunities
in international markets.
C. M. Hudspeth Paul W. Hobby
Dr. W. Arthur Porter
Members of the Compensation Committee
APPROVAL OF THE 1996 DIRECTORS' STOCK PLAN
BACKGROUND
On March 11, 1996, the Board of Directors of the Company adopted, subject
to stockholder approval, the Stewart Information Services Corporation 1996
Directors' Stock Plan (the "1996 Plan"). The purpose of the plan is to provide
non-employee directors with additional incentive and to increase their
proprietary interest in the success of the Company, thereby encouraging them to
continue their service to the Company.
SUMMARY OF THE DIRECTORS' STOCK PLAN
The amount of the Common Stock with respect to which awards may be granted
under this Plan shall not exceed 45,000 shares in the aggregate and 5,000
shares to any one individual.
Each person who is not a full-time employee of the Company or any of its
subsidiaries and who shall be elected or re-elected as a director of the
Company shall be awarded shares annually on the first business day following
the Company's annual meeting of stockholders at which such person was elected
or re-elected to serve, provided that this Plan is in effect on that day. Each
person who is not a full-time employee of the Company or any of its
subsidiaries and who shall be elected or re-elected as an Advisory Director of
the Company shall be awarded shares annually on the first business day
following the Company's annual meeting of directors at or subsequent to which
such person was elected or re-elected to serve, provided that this Plan is in
effect on that day.
The number of shares to be awarded pursuant to the 1996 Plan shall be the
amount determined by dividing $7,500 by the fair market value of a share of the
Company's Common Stock on the date of the award. For purposes of the 1996
Plan, "fair market value" means the closing price of a share of stock on that
date as reported in the New York Stock Exchange--Composite Transactions
listing. On March 18, 1996, the closing sales price of the Company's Common
Stock on the New York Stock Exchange Composite Tape was $20-5/8 per share.
No shares awarded under the 1996 Plan may be disposed of by a recipient
before six months after the date the shares are awarded.
The Board of Directors is authorized to amend or terminate the 1996 Plan.
Stockholder approval will be required for a plan amendment only if and to the
extent such approval is required to (i) change the number of shares which may
be issued pursuant to the provisions of the 1996 Plan or (ii) change the class
of persons eligible to receive awards.
12
<PAGE> 15
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In general, a person to whom shares of Common Stock are awarded under the
1996 Plan will recognize ordinary income six months after the date the shares
are granted in an amount equal to the fair market value of the shares on the
date such person recognizes income unless such person makes an election under
Section 83(b) of the Code to recognize income as of the date of grant based on
the fair market value on the date of grant. The Company and its subsidiaries
will be entitled to a business expense deduction in the same amount and at the
same time as such person recognizes ordinary income.
APPROVAL BY STOCKHOLDERS
Approval of the 1996 Plan 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 6,676,336 shares of Common Stock and Class B Common Stock were
outstanding and entitled to vote on the proposal to approve the 1996 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1996 PLAN.
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, 1996,
and served in such capacity for the Company's fiscal year ended December 31,
1995. 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 1995, the Company subleased office space in Houston, Texas, to the
law firm of Morris, Lendais, Hollrath & Snowden, P.C., of which Carloss Morris
and Malcolm S. Morris are shareholders. Aggregate sublease rentals were
$127,158 during such year. The terms of the sublease are the same as those of
the Company's primary lease.
During 1995, the Company and its subsidiaries paid a total of $294,753 to
the law firm of Morris, Lendais, Hollrath & Snowden, 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 1995, 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" at page 10).
During 1995, Marietta Maxfield, a daughter of Carloss Morris, was a full
time attorney for Guaranty and was paid $87,190 for services rendered in such
capacity.
PROPOSALS AND NOMINATIONS 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 1997 must be received by the Company at its principal executive offices,
1980 Post Oak Boulevard, Houston, Texas 77056, no later than November 21, 1996,
in order to be included in the proxy statement and form of proxy relating to
that meeting.
Pursuant to the Company's By-Laws, nominations of persons for election by
the holders of Common Stock to the Board of Directors of the Company must be
received by the Company not less than 60 days nor more than 120 days prior to
the meeting at which directors are to be elected by the holders of Common
Stock, provided that if less than 30 days notice or prior public disclosure of
the date of such meeting is given or made known to stockholders,
13
<PAGE> 16
nominations to be timely must be received no later than the close of business
on the seventh day following the day on which notice of the date of the meeting
was mailed or public disclosure was made. A copy of the relevant provisions of
the Company's by-laws with respect to nominations to the Company's Board of
Directors will be provided to any stockholder of the Company upon written
request to the Corporate Secretary of the Company at 1980 Post Oak Boulevard,
Suite 800, Houston, Texas 77056.
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,
/s/ MAX CRISP
Secretary
March 20, 1996
14
<PAGE> 17
APPENDIX A
STEWART INFORMATION SERVICES CORPORATION
1996 DIRECTORS' STOCK PLAN
1. Purpose. The 1996 Directors' Stock Plan (the "Plan") of Stewart
Information Services Corporation (the "Company") for non-employee directors is
intended to advance the best interests of the Company by providing non-employee
directors with additional incentive and by increasing their proprietary
interest in the success of the Company, thereby encouraging them to continue
their service to the Company.
2. Award Shares. The stock subject to the 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 awards
may be granted under this Plan shall not exceed 45,000 shares in the aggregate
and 5,000 shares to any one individual. The shares may be treasury shares or
authorized but unissued shares.
3. Annual Awards. Each person who is not a full-time employee of the
Company or any of its subsidiaries and who shall be elected or re-elected as a
director of the Company shall be awarded shares annually on the first business
day following the Company's annual meeting of stockholders at which such person
was elected or re-elected to serve, provided that this Plan is in effect on
that day. Each person who is not a full-time employee of the Company or any of
its subsidiaries and who shall be elected or re-elected as an Advisory Director
of the Company shall be awarded shares annually on the first business day
following the Company's annual meeting of directors at or subsequent to which
such person was elected or re-elected to serve, provided that this Plan is in
effect on that day.
The number of shares to be awarded pursuant to this Section 3 shall be
the amount determined by dividing $7,500 by the fair market value of a share of
the Common Stock on the date of the award. For purposes of this Section 3, 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.
No shares awarded pursuant to this Section 3 may be disposed of by a
recipient before six months after the date the shares are awarded.
4. Requirements of Law. The Company shall not be required to award
any shares under this Plan if issuing the shares shall constitute a violation
by the recipient or the Company of any provisions of any law or regulation of
any governmental authority. Each award under this Plan shall be subject to the
requirements that, if at any time the Board of Directors of the Company 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 such award, such award shall not
be made 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. In the event the
shares issuable pursuant to this Plan 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:
"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
<PAGE> 18
to take any other affirmative action in order to cause awards under this Plan
to comply with any law or regulation or any governmental authority.
5. 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
number of shares which may be awarded pursuant to the provisions of this Plan
or (b) change the class of persons eligible to receive awards under this Plan.
6. Effective Date of Plan. The Plan shall become effective and shall
be deemed to have been adopted on March 11, 1996, 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 awards shall be made pursuant to the Plan
after December 1, 2006.
A-2
<PAGE> 19
STEWART INFORMATION SERVICES CORPORATION
THIS PROXY FOR HOLDERS OF COMMON STOCK IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
APRIL 26, 1996
P The undersigned stockholder of Stewart Information Services Corporation
(the "Company") hereby appoints Ken Anderson, Jr. and Tannie L.
R Pizzitola, Jr., or either of them, attorneys and proxies of the
undersigned, with full power of substitution, to vote, as designated
O 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
X to be held on the eleventh floor of the Company's offices at 1980 Post Oak
Blvd., Houston, Texas, at 9:00 A.M. on Friday, April 26, 1996, and at any
Y 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 AND FOR ADOPTION OF THE
COMPANY'S 1996 DIRECTORS' STOCK PLAN.
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY
(Continued and to be signed on other side)
<PAGE> 20
[X] Please mark your
votes as in this
example.
1. Election of Directors
FOR
all of the WITHHOLD
nominees listed AUTHORITY
(except as to vote for NOMINEES:
indicated to the election of Nita B. Hanks
contrary below) directors Dr. E. Douglas Hodo
[ ] [ ] Paul W. Hobby
Except vote withheld from the following nominee(s): Max Crisp
C.M. Hudspeth
___________________________________________________
2. Adoption of the Company's 1996 Directors' Stock Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. 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 _____________, 1996
SIGNATURE(S)___________________________________________ DATE _____________, 1996
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.
