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OMB APPROVAL |
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OMB Number:
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3235-0059 |
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Expires:
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January 31, 2008 |
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14. |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Materials Pursuant to §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):
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þ No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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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): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o 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. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
TABLE OF CONTENTS
STEWART
INFORMATION SERVICES CORPORATION
1980 Post Oak Boulevard
Houston, Texas 77056
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held May 9,
2008
Notice is hereby given that Stewart Information Services
Corporation, a Delaware corporation, will hold its annual
meeting of stockholders on May 9, 2008, at 8:30 A.M.,
in the First Floor Conference Room of Three Post Oak Central,
1990 Post Oak Boulevard, Houston, Texas, for the following
purposes:
(1) To elect Stewarts directors to hold office until
the next annual meeting of stockholders or until their
respective successors are duly elected and qualified.
(2) To transact such other business as may properly come
before the meeting or any adjournment thereof.
The holders of record of Stewarts common stock and
Class B common stock at the close of business on
March 11, 2008 will be entitled to vote at the meeting.
By Order of the Board of Directors,
Max Crisp
Secretary
April 8, 2008
Important
Notice Regarding the Availability of Proxy Materials for the
Shareholder
Meeting to be Held May 9, 2008
Our proxy statement for the 2008 Annual Meeting and our Annual
Report to Stockholders for the year 2007 are available at
www.stewart.com/docs/2008ProxyStatement.pdf.
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.
STEWART
INFORMATION SERVICES CORPORATION
1980 Post Oak Boulevard
Suite 800
Houston, Texas 77056
713-625-8100
FOR ANNUAL MEETING OF
STOCKHOLDERS
To Be Held May 9,
2008
We at Stewart Information Services Corporation are furnishing
this proxy statement to our stockholders in connection with the
solicitation by our board of directors of proxies for the annual
meeting of stockholders we are holding on Friday, May 9,
2008, at 8:30 A.M., in the First Floor Conference Room of
Three Post Oak Central, 1990 Post Oak Boulevard, Houston,
Texas, or for any adjournment of that meeting.
Proxies in the form enclosed, properly executed by stockholders
and received in time for the meeting, will be voted as specified
therein. Unless you specify otherwise, the shares represented by
your proxy will be voted for the nominees listed therein. If
after sending in your proxy you wish to vote in person, you may
revoke the proxy at any time before it is exercised by
delivering written notice to us at or prior to the meeting. We
are mailing this proxy statement on or about April 8, 2008
to stockholders of record at the close of business on
March 11, 2008.
At the close of business on March 11, 2008,
17,069,810 shares of our common stock and
1,050,012 shares of our Class B common stock were
outstanding and entitled to vote, and only the holders of record
on such date may vote at the meeting. As long as 600,000 or more
shares of Class B common stock are outstanding, the common
stock and Class B common stock will be voted as separate
classes at each election of directors. Holders of our
Class B common stock, to whom we refer as our Class B
common stockholders, may convert their shares of Class B
common stock on a
one-for-one
basis into shares of our common stock at any time.
The holders of our common stock, to whom we refer as our common
stockholders, voting as a class, are entitled to elect five of
our nine directors. Each common stockholder is entitled either
to cast one vote per share for each of those five directors, or
to vote cumulatively by casting five votes per share, which may
be distributed in any manner among any number of the nominees
for director. The enclosed form of proxy allows you 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 you withhold authority to
vote for four or fewer of the nominees, and if there are
nominees other than management nominees for the positions to be
elected by the common stockholders, 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 you did not withhold authority to vote. If there are no
nominees other than management nominees for the five positions
to be elected by the common stockholders, the persons named in
the enclosed proxy intend to allocate the votes represented by
the proxy evenly among the management nominees. If there are any
additional nominees for such positions, 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, the persons named in
the enclosed proxy will have discretion as to which of such
nominees they will elect.
Withholding of authority to vote in the enclosed proxy will not
affect the election of those directors for whom you withhold
authority to vote, unless you vote in person at the meeting or
by means of another proxy, because our By-Laws provide that
directors are elected by a plurality of the votes cast. Under
applicable Delaware law, a broker non-vote will not affect the
outcome of the election of directors. We will count the shares
held by each stockholder who signs and returns the enclosed form
of proxy only to determine the presence of a quorum at the
meeting.
Our Class B common stockholders, voting as a class, are
entitled to elect the remaining four of our nine directors. Each
Class B common stockholder has the right to vote, in person
or by proxy, the number of shares owned by him for those four
directors 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 March 11,
2008 with respect to persons we believe to be the beneficial
owners of more than 5% of either class of our voting shares:
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Amount and
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Nature of
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Beneficial
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Percent
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Name and Address of Beneficial Owner
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Title of Class
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Ownership
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of Class
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Malcolm S. Morris
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Class B Common Stock
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525,006
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50.0
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3992 Inverness
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Houston, Texas 77019
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Stewart Morris, Jr.
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Class B Common Stock
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525,006
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50.0
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#8 West Rivercrest
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Houston, Texas 77042
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Artisan Partners Limited Partnership
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Common Stock
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2,931,194
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(1)
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17.2
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875 East Wisconsin Avenue, Suite 800
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Milwaukee, Wisconsin 53202
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Wachovia Corporation
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Common Stock
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1,538,501
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(2)
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9.0
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One Wachovia Center
Charlotte, North Carolina 28288-0137
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Dimensional Fund Advisors L.P.
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Common Stock
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1,454,070
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(3)
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8.5
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1299 Ocean Avenue
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Santa Monica, California 90401
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Barrow, Hanley, Mewhinney & Strauss, Inc.
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Common Stock
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1,203,300
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(4)
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7.0
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2200 Ross Avenue, 31st Floor
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Dallas, Texas 75201-2761
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Cooke & Bieler, L.P.
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Common Stock
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1,198,847
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(5)
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7.0
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1700 Market Street, Suite 3222
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Philadelphia, Pennsylvania 19103
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Advisory Research, Inc.
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Common Stock
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1,112,400
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(6)
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6.5
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180 North Stetson St., Suite 5500
Chicago, Illinois 60601
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Barclays Global
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Common Stock
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951,420
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(7)
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5.6
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45 Fremont Street
San Francisco, California 94105
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Artisan Partners Limited Partnership reported shared dispositive
power with respect to all of such shares and shared voting power
with respect to 2,619,694 of such shares in its most recent
report on Schedule 13G filed February 13, 2008.
Artisan Partners is an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940. The
shares reported have been acquired on behalf of discretionary
clients of Artisan Partners. Persons other than Artisan Partners
are entitled to receive all dividends from and proceeds from the
sale of such shares. |
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Wachovia Corporation reported shared voting power with respect
to 2,500 of such shares, sole dispositive power with
respect to 1,533,531 of such shares and sole voting power
with respect to 1,536,001 of such shares in its report on
Schedule 13G filed February 4, 2008. |
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Dimensional Fund Advisors L.P. reported sole voting and
dispositive power with respect to all of such shares in its
report on Schedule 13G filed February 6, 2008. Dimensional
is an investment advisor registered under Section 203 of
the Investment Advisors Act of 1940 and furnishes investment
advice to four investment companies registered under the
Investment Company Act of 1940. Dimensional also serves as
investment manager to certain other commingled group trusts and
separate accounts. All securities reported in this schedule are
owned by these investment companies, trusts and accounts.
Dimensional disclaims beneficial ownership of such securities. |
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Barrow, Hanley, Mewhinney & Strauss, Inc. reported
sole dispositive power with respect to all of such shares,
shared voting power with respect to 682,670 of such shares and
sole voting power with respect to 520,630 of such shares in its
report on Schedule 13G filed February 13, 2008. |
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Cooke & Bieler, L.P. reported shared voting power with
respect to 731,472 of such shares and shared dispositive power
with respect to all of such shares in its report on
Schedule 13G filed February 14, 2008. |
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Advisory Research, Inc. reported sole voting and dispositive
power with respect to all of such shares in its report on
Schedule 13G filed February 14, 2008. |
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In its group filing on Schedule 13G filed February 6,
2008, Barclays Global Investors, N.A., Barclays Global
Fund Advisors and Barclays Global Investors, Ltd., reported
sole voting power with respect to 710,706 of such shares and
sole dispositive power with respect to all of such shares. |
Our Class B common stockholders have entered into an
agreement to maintain an equal ownership of shares of common
stock and Class B common stock by Malcolm S. Morris and the
estate of Carloss Morris, collectively, and by Stewart
Morris, Jr. and Stewart Morris, collectively. Such
agreement also provides for rights of first refusal among
themselves with respect to Class B common stock in the
event of the death or voluntary or involuntary disposition of
Class B common stock and upon certain other specified
conditions.
The following table sets forth information as of March 11,
2008 with respect to each class of our voting shares
beneficially owned by our executive officers, directors and
nominees for director and by all our executive officers,
directors and nominees for director as a group:
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Amount and
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Nature of
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Beneficial
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Percent
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Name
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Title of Class
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Ownership(1)
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of Class
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Malcolm S. Morris
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Common Stock
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141,578
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(2)
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*
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Class B Common Stock
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525,006
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50.0
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Stewart Morris, Jr.
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Common Stock
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206,000
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(3)
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1.2
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Class B Common Stock
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525,006
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50.0
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Matthew W. Morris
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Common Stock
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10,050
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(4)
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*
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E. Ashley Smith
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Common Stock
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3,348
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(5)
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*
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Robert L. Clarke
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Common Stock
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3,993
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*
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Max Crisp
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Common Stock
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49,000
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(6)
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*
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Nita B. Hanks
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Common Stock
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7,666
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(7)
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*
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Paul W. Hobby
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Common Stock
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5,755
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*
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Dr. E. Douglas Hodo
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Common Stock
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7,955
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*
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Laurie C. Moore
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Common Stock
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2,349
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*
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Dr. W. Arthur Porter
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Common Stock
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3,755
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*
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All executive officers, directors and nominees for director as a
group (11 persons)
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Common Stock
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441,449
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2.6
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Class B Common Stock
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1,050,012
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100.0
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Less than 1%. |
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Unless otherwise indicated, the beneficial owner has sole voting
and dispositive power with respect to all shares indicated. |
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Includes 100,000 shares subject to stock options. |
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Includes 170,000 shares subject to stock options. |
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Includes 1,600 shares subject to stock options and
450 shares owned through the Companys 401(k) plan. |
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Includes 1,000 shares subject to stock options and
348 shares owned through the Companys 401(k) plan. |
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Includes 38,000 shares subject to stock options. |
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Includes 7,300 shares subject to stock options. |
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Section 16(a)
Beneficial Ownership Reporting Compliance
Each of our directors and certain officers are required to
report to the Securities and Exchange Commission, by a specified
date, his or her transactions related to common stock or
Class B common stock. Based solely on a review of the
copies of reports furnished to us or written representations
that no other reports were required, we believe that all filing
requirements applicable to our executive officers, directors and
greater than 10% beneficial owners were met during the 2007
fiscal year.
ELECTION
OF DIRECTORS
At our annual meeting, our stockholders will elect nine
directors, constituting the entire board of directors. Our
common stockholders are entitled to elect five directors, and
our Class B common stockholders are entitled to elect four
directors.
Common
Stock Nominees
The following persons have been nominated as directors to be
elected by our common stockholders. Although we do not believe
that any of these nominees will become unavailable, if one or
more should become unavailable before the meeting, your proxy
will be voted for another nominee, or other nominees, selected
by our board of directors.
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Nominee, Age and Position with Stewart
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Director Since
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Robert L. Clarke, 65, Director
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2004
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Nita B. Hanks, 54, Director
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1990
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Dr. E. Douglas Hodo, 73, Director
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1988
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Laurie C. Moore, 62, Director
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2004
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Dr. W. Arthur Porter, 66, Director
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1993
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Each of the five nominees up for election by our common
stockholders was elected by the common stockholders at our 2007
annual meeting of stockholders. The persons named in your proxy
intend to vote the proxy for the election of each of these
nominees, unless you specify otherwise.
Mr. Clarke has been a partner of the law firm of
Bracewell & Giuliani LLP for more than the past five
years. Mr. Clarke also serves as director and chairman of
the audit committees of the boards of Eagle Materials, Inc., a
NYSE-listed manufacturer of building materials, and First
Investors Financial Services Group, Inc., a consumer finance
company. He served as U.S. Comptroller of the Currency from
December 1985 through February 1992. Prior to his election as
our director, Mr. Clarke had served as our advisory
director since 2003.
For more than the past five years, Ms. Hanks has been a
Senior Vice President of Stewart Title Guaranty Company,
our largest subsidiary. Ms. Hanks is our Director of
Employee Services and brings a key perspective from our
employees to our board of directors. Employee costs represent
one of our largest expenses.
Dr. Hodo serves as Chairman of our Audit Committee.
Dr. Hodo served as President of Houston Baptist University
for more than 19 years and became President Emeritus of the
University in 2006.
Ms. Moore is the President of Laurie Moore and Associates,
a speaking and consulting practice. In 2003 she founded, and has
since served as President of, The Institute for Luxury Home
Marketing, LLC, an international membership organization
targeting real estate agents who work in the upper-tier
residential market. Prior to 2003, Ms. Moore co-founded and
served as managing partner of REAL Trends, Inc., a publishing,
communications and research company serving brokerage company
owners and top management of franchise organizations in the
residential real estate industry. Prior to her election as our
director, Ms. Moore had served as our advisory director
since 2002.
Dr. Porter is a Professor Emeritus of the University of
Oklahoma. Prior to his retirement, he served as University
Professor and Regents Chair of Engineering at that university.
From 1998 to 2006 he served as University Vice President for
Technology Development and also served as Dean of the College of
Engineering from 1998 to 2005. Prior to those appointments, he
had served as President and Chief Executive Officer of Houston
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Advanced Research Center, a nonprofit research consortium for
more than five years. He also served as an Adjunct Professor of
Electrical Engineering at Rice University for more than five
years prior to his appointment with the University of Oklahoma.
Dr. Porter is also a director of Electro Scientific
Industries, Inc., in Oregon and Bookham Technologies in
California.
Class B
Common Stock Nominees
The following persons have been nominated as directors to be
elected by our Class B common stockholders. The persons
named in the Class B common stockholders proxies
intend to vote the proxies for the election of the nominees
named below, unless otherwise specified. Although we do not
believe that any of these nominees will become unavailable, if
one or more should become unavailable before the meeting,
proxies will be voted for another nominee, or other nominees,
selected by our board of directors.
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Nominee, Age and Position with Stewart
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Director Since
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Max Crisp, 73, Executive Vice President and Chief Financial
Officer, Secretary, Treasurer and Director
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1970
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Paul W. Hobby, 47, Director
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1989
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Malcolm S. Morris, 61, Co-Chief Executive Officer and Chairman
of the Board of Directors
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2000
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Stewart Morris, Jr., 59, Co-Chief Executive Officer,
President and Director
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2000
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Each of these nominees was elected by our Class B common
stockholders at our 2007 annual meeting of stockholders.
Mr. Crisp has served as our Executive Vice
President Finance, Treasurer and Secretary and as
our Chief Financial Officer for more than the past five years.
Mr. Crisp is also Executive Vice President and Chief
Financial Officer of Stewart Title Guaranty Company and
Stewart Title Company, its subsidiary.
Mr. Hobby is founding chairman of Genesis Park, L.P., a
Houston-based private equity business specializing in technology
and communications investments. He has served since 2004 as the
CEO of Alpheus Communications, Inc., a Texas wholesale
telecommunications provider, and, from 2002 to 2006, as Chairman
of CapRock Services, Inc., the largest provider of satellite
services to the global energy business. Mr. Hobby
previously served on the boards of three publicly traded
companies: Coastal Bancorp, Inc. and Aronex Pharmaceutical, Inc.
from 1999 through 2001 and Amegy Bank of Texas, Inc. from 2002
through 2005. He currently serves on the boards of two other
publicly traded companies: EGL, Inc., a transportation supply
chain management and information services company, and NRG
Energy, Inc., a nonutility power generation company.
Malcolm S. Morris has served as our Chairman of the Board and
Co-Chief Executive Officer since 2000 and as our Senior
Executive Vice President Assistant Chairman for more
than five years prior to that time. Malcolm S. Morris has also
served for more than the past five years as Chief Executive
Officer of Stewart Title Guaranty Company and Chairman of
the Board of Stewart Title Company.
Stewart Morris, Jr. has served as our President and
Co-Chief Executive Officer since 2000 and as our Senior
Executive Vice President Assistant President for
more than five years prior to that time. Stewart
Morris, Jr. has also served for more than the past five
years as President and Chief Executive Officer of Stewart
Title Company and Chairman of the Board of Stewart
Title Guaranty Company.
Malcolm S. Morris and Stewart Morris, Jr. are cousins.
Acting together they have the power to direct our management and
policies. Accordingly, they may be deemed to be control
persons as such term is used in regulations adopted under
the Securities Exchange Act of 1934. Matthew W. Morris is the
son of Malcolm S. Morris.
5
CORPORATE
GOVERNANCE
Board of
Directors
We are managed by a board of directors comprised of nine
members, five of whom are elected by our common stockholders and
four of whom are elected by our Class B common
stockholders. A majority of the members of the board of
directors are independent within the meaning of the
listing standards of the New York Stock Exchange. These
directors are: Paul W. Hobby, E. Douglas Hodo, W. Arthur Porter,
Robert L. Clarke and Laurie C. Moore. The board of directors has
determined that none of these directors has any material
relationship with us or our management that would impair the
independence of their judgment in carrying out their
responsibilities to us. In making this determination, the board
of directors considers any transaction, or series of similar
transactions, or any currently proposed transaction, or series
of similar transactions, between us or any of our subsidiaries
and a director to be material if the amount involved exceeds
$60,000, exclusive of directors fees, in any of our last
three fiscal years.
All of our directors hold office until the next annual meeting
of stockholders or until their respective successors are duly
elected and qualified. All of our officers hold office until the
regular meeting of directors following the annual meeting of
stockholders or until their respective successors are duly
elected and qualified. Any action by the board of directors
requires the affirmative vote of at least six members.
During 2007, the board of directors held five meetings and one
retreat. Each director attended each of such meetings, except
that one director did not attend one meeting. The board of
directors has an Executive Committee, an Audit Committee, a
Nominating and Corporate Governance Committee and a Compensation
Committee. See Committees of the Board of Directors
below.
The board of directors has adopted the Stewart Code of
Business Conduct and Ethics, Guidelines on Corporate
Governance and a Code of Ethics for Chief Executive
Officers, Principal Financial Officers and Principal Accounting
Officer, each of which is available on our website at
www.stewart.com and available in print to any stockholder
who requests it. Our Guidelines on Corporate Governance and the
charters of the Audit Committee, the Nominating and Corporate
Governance Committee and the Compensation Committee require an
annual self-evaluation of the performance of the board of
directors and of such committees, including the adequacy of such
guidelines and charters. The charters of the Audit Committee,
the Nominating and Corporate Governance Committee and the
Compensation Committee are available on our website at
www.stewart.com and available in print to any stockholder
who requests them.
Our Guidelines on Corporate Governance strongly encourage
attendance in person by our directors at our annual meetings of
stockholders. All of our incumbent directors attended our 2007
annual meeting of stockholders.
Advisory
Directors
In addition to the directors elected by our common stockholders
and Class B common stockholders, our board of directors
appoints advisory directors to supplement the experience and
expertise of the elected directors. Our advisory directors
receive notice of and regularly attend meetings of our board of
directors and committees on which they serve as non-voting
members. They provide valuable insights and advice to us and
participate fully in all deliberations of our board of directors
but are not included in quorum and voting determinations.
Advisory directors receive the same compensation for their
services as our elected directors receive.
Committees
of the Board of Directors
Executive Committee. The Executive Committee
may exercise all of the powers of the our directors, except
those specifically reserved to the board of directors by law or
resolution of the board of directors. Malcolm S. Morris, Stewart
Morris, Jr. and Max Crisp serve as the members of the
Executive Committee. During 2007, the Executive Committee held
four meetings at which all members were present, and executed 36
consents in lieu of meetings.
Audit Committee. It is the Audit
Committees duty to (i) review with our independent
auditors the scope of the annual audit, (ii) review the
independent auditors findings related to our internal
controls over financial
6
reporting and (iii) meet with our internal auditors. The
Audit Committee has sole authority to appoint or replace our
independent auditors. The Audit Committee operates under a
written charter adopted by our board of directors, a copy of
which is available on our website at www.stewart.com. The
Audit Committee is comprised of Dr. E. Douglas Hodo
(Chair), Robert L. Clarke and Laurie C. Moore. During 2007, the
Audit Committee held eight meetings, at which all members then
serving were present. Each of the members of the Audit Committee
is independent as defined under the listing
standards of the New York Stock Exchange and the Securities
Exchange Act of 1934, and the board of directors has determined
that Dr. Hodo is an audit committee financial
expert as defined in the rules of the Securities and
Exchange Commission. No member of our Audit Committee serves on
the audit committees of more than three public companies. The
Audit Committee has the authority to engage independent counsel
and other advisers, as it determines necessary to carry out its
duties.
The Audit Committee has established procedures for the receipt,
retention and treatment of complaints received by us regarding
accounting, internal accounting controls and auditing matters
and the confidential, anonymous submission by our employees of
concerns regarding questionable accounting or auditing matters.
Persons wishing to communicate with the Audit Committee may do
so by writing in care of Chairman, Audit Committee, Stewart
Information Services Corporation, 1980 Post Oak Boulevard,
Suite 800, Houston, Texas 77056.
Nominating and Corporate Governance
Committee. The Nominating and Corporate
Governance Committee is comprised of Dr. W. Arthur Porter
(Chair), Robert L. Clarke and Laurie C. Moore, each of whom is
independent as defined in the listing standards of
the New York Stock Exchange. It is the Nominating and Corporate
Governance Committees duty to (i) recommend to our
board of directors nominations of persons for election to our
board of directors by our common stockholders, (ii) create
procedures for identification of nominees, (iii) consider
and recommend to the board of directors criteria for nomination
to our board of directors and (iv) receive and consider
nominations submitted by our stockholders.
Our Guidelines on Corporate Governance require that a majority
of the nine members of our board of directors be
independent as defined in the rules of the New York
Stock Exchange. As described above, a majority of our current
board of directors are independent under the filing
standards of the New York Stock Exchange. Those Guidelines also
provide that the Nominating and Corporate Governance Committee
shall be guided by the following principles:
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Each director should be an individual of the highest character
and integrity and have an inquiring mind, experience at a
strategy or policy-setting level, or otherwise possess a high
level of specialized expertise, and the ability to work well
with others. Special expertise or experience that will augment
the board of directors expertise is particularly desirable.
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Each director should have sufficient time available to devote to
our affairs to carry out the responsibilities of a director and,
absent special circumstances, no director should simultaneously
serve on the boards of directors of more than three public
companies. Directors are qualified for service on the board of
directors only if they are able to make a commitment to prepare
for and attend meetings of the board of directors and its
committees on a regular basis.
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Each independent director should be free of any significant
conflict of interest that would interfere with the independence
and proper performance of the responsibilities of a director.
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Directors to be nominated for election by our common
stockholders should not be chosen as representatives of a
constituent group or organization. Each should utilize his or
her unique experience and background to represent and act in the
best interests of all stockholders as a group.
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In recent years, vacancies occurring in our board of directors
have been filled by advisory directors whose experience and
expertise have contributed significantly to the deliberations of
the board of directors and who meet the criteria set forth above.
Directors should have an equity ownership in us. Toward that
end, each non-employee director shall be paid a portion of his
or her directors fees in our common stock pursuant to our
2005 Long-Term Incentive Plan, or any
7
successor plan, but only to the extent permitted by law and the
Corporate Governance Standards of the New York Stock Exchange.
Pursuant to our By-Laws, the Nominating and Corporate Governance
Committee will accept and consider nominations by stockholders
of persons for election by our common stockholders to our board
of directors. To be considered for nomination at our 2009 annual
meeting of stockholders, stockholder nominations must be
received by us no later than February 15, 2009. Persons
wishing to submit the names of candidates for consideration by
the Nominating and Corporate Governance Committee may write to
the Nominating and Corporate Governance Committee in care of
Corporate Secretary, Stewart Information Services Corporation,
1980 Post Oak Boulevard, Suite 800, Houston, Texas 77056.
Any such submission should include the candidates name,
credentials, contact information and consent to be considered as
a candidate. The person proposing the candidate should include
his or her contact information and a statement of his or her
share ownership, including the number of shares and the period
of time the shares have been held.
The Nominating and Corporate Governance Committee held four
meetings during 2007, at which all members were present. Our
Nominating and Corporate Governance Committees charter is
available on our website at www.stewart.com.
Compensation Committee. It is the duty of the
Compensation Committee to approve the compensation of the
executive officers. The Compensation Committee is comprised of
Paul W. Hobby (Chair), Robert L. Clarke and Dr. W. Arthur
Porter. During 2007, the Compensation Committee held two
meetings, at which all members were present.
Our board of directors has determined that each member of our
Compensation Committee is independent as that term
is defined in the rules of the New York Stock Exchange.
Executive
Sessions of Non-Management Directors
Our non-management directors, all of whom are independent, meet
at regularly scheduled executive sessions without management.
Our Audit Committees Chairman serves as the presiding
director at those executive sessions. Persons wishing to
communicate with our non-management directors may do so by
writing in care of Chairman, Audit Committee, Stewart
Information Services Corporation, 1980 Post Oak Boulevard,
Suite 800, Houston, Texas 77056. Persons wishing to
communicate with our other directors may do so by writing in
care of Corporate Secretary, Stewart Information Services
Corporation, at the same address.
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
The Compensation Committee is comprised of Paul W. Hobby
(Chair), Robert L. Clarke and Dr. W. Arthur Porter, each of
whom is an independent director under the standards of the New
York Stock Exchange. The Compensation Committee functions
pursuant to its charter, which is available on our web site at
www.stewart.com. Under its charter, the Compensation
Committee is charged with establishing and monitoring the basic
philosophy and policies governing the compensation of our
executive officers and senior managers. The Committee makes
recommendations to the board of directors with respect to
compensation, incentive compensation plans and equity-based
plans.
The Compensation Committees specific duties and
responsibilities include, but are not limited to, the following:
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Review and approve our goals and objectives relevant to the
compensation of the Co-Chief Executive Officers, evaluate the
Co-Chief Executive Officers performance in light of those
goals and objectives, and recommend to the board of directors
the Co-Chief Executive Officers compensation levels based
on this evaluation.
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Administer the stock-based compensation plans that we have
adopted (or may adopt).
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Review and approve employment, severance and change in control
agreements with our executive officers.
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Review the overall compensation structure for all employees and
make recommendations to the board of directors with respect to
non-Chief Executive Officer compensation, incentive compensation
plans and equity-based plans.
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Retain in our discretion and on our behalf one or more firms
that specialize in officer compensation to (i) compare
compensation we pay to our officers with comparable compensation
paid by competitors, (ii) compute the value of stock
options and (iii) issue a fairness letter upon completion
of the firms study.
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Produce an annual report on executive compensation for inclusion
in the proxy statement as the Compensation Committee Report.
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Annually review and reassess the adequacy of our charter and
recommend any proposed changes to the board of directors for
approval.
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Annually perform an evaluation of our performance to determine
whether the Committee is functioning effectively and report its
conclusions to the board of directors.
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The Compensation Committee currently engages a compensation
consultant in odd-numbered years to gather and present to the
Committee data available publicly with respect to the
compensation of executive officers serving with other title
insurance companies and other financial services companies
deemed comparable by the Compensation Committee. This
information is supplemented by similar data developed
internally. The Compensation Committee considers many factors,
including the information on comparable compensation at other
companies, in its evaluation of the fairness of our compensation
program, as discussed below. For the reasons discussed below,
the compensation of our Co-Chief Executive Officers has
historically been set at levels below those of executives at
comparable companies. The Compensation Committee consults with
the Co-Chief Executive Officers for the purposes of assuring the
Committee that executive compensation programs do not distort
our overall compensation structure, resulting in discontent
among our Region Managers and other Associates. The Compensation
Committee also works with the Co-Chief Executive Officers to
structure their compensation programs and those of our other
executive officers to make the compensation programs tax
efficient and accommodate their estate planning.
The Compensation Committee met twice in 2007, with all members
participating.
Objectives
of the Compensation Programs
We were founded in 1893 by the sons of Judge William H. Stewart,
and have been managed by his lineal descendents since that time.
At the time of our initial public offering in 1972, our capital
stock was divided into two classes, with the Stewart family
owning all of the outstanding shares of Class B Common
Stock, which entitles them to elect a certain number of
directors depending on the number of shares of this class that
they hold. Currently, Malcolm S. Morris and Stewart
Morris, Jr. own a sufficient number of shares of
Class B Common Stock to enable them to elect four of our
nine directors. Because the vote of six directors is required to
take action, at least one of the four directors elected by the
Morrises must vote with the directors elected by our Common
stockholders for our board of directors to take action.
The Compensation Committee believes that our century-long
management by members of the Stewart/Morris family has created a
climate of long-term stability that is attractive to the kind of
Associates that we wish to hire and retain, as well as to our
customers. We are managed with a view to maximizing intermediate
and long-term shareholder values.
In light of the Companys history as a family-controlled
company, the Compensation Committee has adopted a compensation
philosophy of fairness, rather than focusing on attracting and
retaining its chief executive officers. The Compensation
Committees compensation philosophy also includes
maintaining Associate satisfaction and morale by assuring that
the compensation of executive officers, particularly the
Co-Chief Executive Officers, is not out of line with that of
Region Managers and other Associates. The Compensation Committee
believes that our compensation programs have in the past
achieved these goals. The Compensation Committee notes that it
is not uncommon for the compensation of one or more Region
Managers to exceed that of the Co-Chief Executive Officers in
some years.
9
The Compensation Committee also follows a policy, begun in 1985
when the respective fathers of the current Co-Chief Executive
Officers served in such capacities, of equalizing the
compensation packages of the Co-Chief Executive Officers. The
Compensation Committee believes that this policy has served us
well by eliminating a source of possible friction.
Finally, the Compensation Committees compensation
philosophy considers the cyclical nature of our business, which
is strongly influenced by prevailing mortgage interest rates and
the U.S. real estate market. Because these factors are beyond
the control of the executive officers, we do not attempt to
closely link year to year operating results with their
compensation. The Compensation Committee nevertheless tends to
focus on tangible book value along with earnings per share and
accretion of stockholder value over time, among other measures,
in evaluating our executive officers performance.
Elements
of In-Service Compensation
The principal elements of in-service compensation for our
executive officers are salary, an annual bonus based on Stewart
Title Guaranty Companys financial performance and
equity awards, which have historically taken the form of fully
vested
10-year
stock options at an exercise price equal to the market price of
our stock on the grant date. In 2007, our 2005 Long-Term
Incentive Plan was amended to permit us to make restricted and
unrestricted stock grants to our executive officers. However, no
equity awards were made to our Co-Chief Executive Officers in
2007.
The salaries of our executive officers are kept relatively
stable, with the base salaries of our Co-Chief Executive
Officers having increased annually by an average of 9% since
2002. We have historically paid cash bonuses to our executive
officers under formulas based on the consolidated pretax income
(after deducting minority interests) of Stewart
Title Guaranty Company. Guaranty had a loss in 2007, and no
cash bonuses were earned by our Co-Chief Executive Officers
under those plans in that year. The Compensation Committee
attempts to set performance targets that will result in an
aggregate compensation package that meets its standard of
fairness. Our executive officers may receive discretionary cash
bonuses from time to time upon approval by our board of
directors. For 2007, each of the Companys Co-Chief
Executive Officers was awarded a discretionary bonus of $140,000
in recognition of their efforts in managing the Company to
mitigate the effects of the recent downturn in the real estate
markets.
As disclosed in our Summary Compensation Table under All
Other Compensation, and the accompanying footnotes, we
provide certain perquisites to our executive officers, including
home security, tax and financial planning, country club dues,
and company cars or car allowances. These perquisites have been
provided for many years, and we believe them to be reasonable as
to type and amounts.
Recent
Changes in Compensation Strategy for Co-Chief Executive
Officers
In 2008, the Compensation Committee revised its compensation
strategy for our Co-Chief Executive Officers by deciding to use
restricted stock grants, rather than stock options, as a part of
their compensation packages and by approving a Strategic
Incentive Pool, described below.
Restricted Stock Grants. These are equity
awards that replace the option grants used in some previous
years to supplement the cash components of compensation of our
Co-Chief Executive Officers. While the grants are taxable to the
receiving executive, they advance our concept of management
equity ownership generally and alignment of interest between our
Co-Chief Executive Officers and holders of our common stock.
While the taxability of stock grants may result in modest sales
of stock by our Chief Executive Officers in order to fund
personal tax liabilities, the concept of direct ownership and
clear and transparent reporting for financial statement purposes
seem to the Committee to be preferable to the volatility of
stock option valuations, particularly in light of the current
real estate environment.
Strategic Incentive Pool. As a carefully
constructed experiment, the Committee has recommended, and the
Board has approved in principle, a
34-month
cash incentive plan tied to quantifiable measures in each of the
several areas chosen by the Board and management as
long-term
and strategic in nature. This Strategic Incentive Pool is
intended to keep managements eyes on the horizon at this
difficult moment in the real estate and title insurance
10
business cycles. An extraordinarily rapid contraction in the
housing market has created an operational imperative to
right-size employee counts and centralize operating expenses.
While that type of nimble, reactive management is necessary at
times, the Committee seeks to counterbalance that daily reality
with long-term objectives consistent with the boards and
managements vision for the Company.
The total amount of the Strategic Incentive Pool available for
distribution will be the cash equivalent of the fair market
value of 50,000 shares of the Companys Common Stock
as of December 31, 2010. Subject to certain conditions and
to the extent each of the three equally weighted, independent
targets set out under the plan are achieved, the cash award
would be made in equal amounts to each of the Co-Chief Executive
Officers. At least half of the after-tax cash received by each
Co-Chief Executive Officer must be invested in the
Companys Common Stock within 60 days of the award.
The targets under the plan relate to increasing our market share
of commercial business, increasing our revenues from
international business and implementing technology milestones.
Each measure is independent and eligible for one-third of the
cash award. To the extent a strategic measures threshold
is achieved at less than 100% but at the minimum of 80%, there
will be a proportionate reduction in the cash award from the
100% level. Targets met at less than 80% are not eligible for
their respective one-third of the cash award. The Company
believes that the achievement of the strategic measure under the
plan will significantly enhance the value of the Company.
The Strategic Incentive Pool will be presented to the full Board
for final adoption in May 2008, to be effective for the
34 months ending December 31, 2010.
Elements
of Post-Termination Compensation and Benefits
In 1986, we entered into an agreement with each of Malcolm S.
Morris, Stewart Morris, Jr. and Max Crisp, pursuant to
which the executive officer or his designee is entitled to
receive, commencing upon his death or attainment of the age of
65 years, 15 annual payments in amounts that 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 taxes at the highest marginal rate applicable to
individuals. Such benefits are fully vested and are forfeited
only if a beneficiarys employment with us is terminated by
reason of fraud, dishonesty, embezzlement or theft. Any death or
income benefits provided to a beneficiary under certain
insurance policies we currently maintain will reduce payments
due to such beneficiary or his designee under his deferred
compensation agreement. The Compensation Committee has no plans
to propose any additional defined benefit plans for its
executive officers.
Our executive officers also participate in our defined
contribution (401(k)) plan on the same terms as our other
Associates.
We have no change of control agreements that would
provide additional post-termination compensation to any of our
executive officers upon a change of control of the Company.
Limitation on the deductibility of executive compensation
imposed by Section 162(m) of the Internal Revenue Code has
had no effect on our compensation program for executive officers
because we have never exceeded those limits.
Conclusion
In summary, the Compensation Committee strives to focus on the
principles of fairness, stability and correlation between the
duties and compensation of our senior corporate officers and our
operational managers. Compensation of executive officers who are
not members of the Morris family is intended to balance the
market opportunities of those individuals and the deliberate
modesty of the compensation packages provided to members of the
Morris family.
11
EXECUTIVE
COMPENSATION
Summary
of Compensation
The following table summarizes compensation information for each
of our executive officers for the two years ended
December 31, 2007.
Summary
Compensation Table
(Year
Ended December 31, 2007)
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Change in
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Pension
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Value and
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Nonqualified
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Deferred
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Non-Equity
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Compensation
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All Other
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Salary
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Bonus
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Awards
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Incentive Plan
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Earnings
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Compensation
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Total
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Name and Principal Position
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Year
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($) (1)
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($)
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Options ($)
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Compensation ($) (2)
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($)
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($) (3)
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($)
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(a)
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(b)
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(c)
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(d)
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(f)
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(g)
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(h)
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(i)
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(j)
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Stewart Morris, Jr.
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2007
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225,000
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140,000
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81,000
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47,504
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493,504
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President and
Co-Chief
Executive Officer
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2006
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175,000
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486,299
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76,000
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19,001
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756,300
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Malcolm S. Morris
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2007
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225,000
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140,000
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93,000
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26,187
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484,187
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Chairman of the Board and
Co-Chief
Executive Officer
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2006
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175,000
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486,299
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87,000
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24,754
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773,053
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Max Crisp
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2007
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207,000
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140,000
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56,173
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403,173
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Executive Vice President and Chief Financial Officer, Secretary
and Treasurer
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2006
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200,000
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295,974
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70,527
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566,501
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Matthew W. Morris(4)
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2007
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200,000
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140,000
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15,172
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12,700
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367,872
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Senior Executive Vice President
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2006
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150,000
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25,000
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105,565
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11,950
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292,515
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E. Ashley Smith(5)
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2007
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347,692
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9,482
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10,900
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368,074
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Executive Vice President and Chief Legal Officer
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2006
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316,667
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62,500
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11,250
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390,417
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Includes salary earned and deferred at the officers
election. |
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(2) |
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Consists of the variable portion of executive bonuses. See
Compensation Discussion and Analysis Elements
of In-Service Compensation. |
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(3) |
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See the following table captioned All Other
Compensation. |
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(4) |
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Mr. Morris, age 36, has served as Senior Vice
President of the Company since May 2004. Prior to that time, he
served as Director for a strategic litigation consulting firm
from 2000 to May 2004. |
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(5) |
|
Mr. Smith, age 61, has served as Executive Vice
President and Chief Legal Officer of the Company since January
2006. Prior to that time, he served as Vice Chancellor of the
University of Texas, with responsibilities for policy and
governmental relations. |
12
The following table shows the components of the compensation
included in column (i) of our Summary Compensation table
for the year ended December 31, 2007.
ALL OTHER
COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stewart
|
|
|
Malcolm S.
|
|
|
|
|
|
Matthew W.
|
|
|
E. Ashley
|
|
Item
|
|
Morris, Jr.
|
|
|
Morris
|
|
|
Max Crisp
|
|
|
Morris
|
|
|
Smith
|
|
|
Other Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors fees
|
|
$
|
4,350
|
|
|
$
|
4,350
|
|
|
$
|
4,350
|
|
|
$
|
3,000
|
|
|
$
|
|
|
Tax gross-up
|
|
|
|
|
|
|
|
|
|
|
35,897
|
|
|
|
|
|
|
|
|
|
401(k) match
|
|
|
2,500
|
|
|
|
2,500
|
|
|
|
2,500
|
|
|
|
2,500
|
|
|
|
2,500
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal use of company-owned auto
or car allowance
|
|
|
5,825
|
|
|
|
8,072
|
|
|
|
8,501
|
|
|
|
7,200
|
|
|
|
8,400
|
|
Home security
|
|
|
516
|
|
|
|
4,200
|
|
|
|
363
|
|
|
|
|
|
|
|
|
|
Country club dues
|
|
|
4,266
|
|
|
|
6,455
|
|
|
|
3,556
|
|
|
|
|
|
|
|
|
|
Investment and tax planning and tax preparation
|
|
|
30,047
|
|
|
|
610
|
|
|
|
1,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47,504
|
|
|
$
|
26,187
|
|
|
$
|
56,173
|
|
|
$
|
12,700
|
|
|
$
|
10,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan-Based
Awards
The following table sets forth information concerning individual
grants of plan-based equity and
non-equity
awards.
Grants of
Plan-Based Awards
(Year
Ended December 31, 2007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
Option Awards:
|
|
|
|
Grant Date
|
|
|
|
|
Number of
|
|
Exercise or
|
|
Fair Value
|
|
|
|
|
Securities
|
|
Base Price
|
|
of Stock
|
|
|
|
|
Underlying
|
|
of Option
|
|
and Option
|
Name
|
|
Grant Date
|
|
Options (#)
|
|
Awards ($/Sh)
|
|
Awards ($)
|
(a)
|
|
(b)
|
|
(j)
|
|
(k)
|
|
(l)
|
|
Matthew W. Morris
|
|
|
11/30/07
|
|
|
|
1,600
|
|
|
|
26.83
|
|
|
|
42,928
|
|
E. Ashley Smith
|
|
|
11/30/07
|
|
|
|
1,000
|
|
|
|
26.83
|
|
|
|
26,830
|
|
13
The following table sets forth information concerning the
outstanding equity awards held by each of our executive officers
at December 31, 2007. No executive officer held
unexercisable options at that date.
Outstanding
Equity Awards at December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
|
Options (#)
|
|
|
Exercise
|
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
|
Price ($)
|
|
|
Date
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
Stewart Morris, Jr.
|
|
|
25,000
|
|
|
|
42.11
|
|
|
|
02/02/15
|
|
|
|
|
25,000
|
|
|
|
47.10
|
|
|
|
02/02/14
|
|
|
|
|
25,000
|
|
|
|
21.87
|
|
|
|
01/23/13
|
|
|
|
|
25,000
|
|
|
|
19.10
|
|
|
|
02/01/12
|
|
|
|
|
25,000
|
|
|
|
20.01
|
|
|
|
01/31/11
|
|
|
|
|
25,000
|
|
|
|
13.00
|
|
|
|
02/04/10
|
|
|
|
|
20,000
|
|
|
|
19.375
|
|
|
|
05/24/09
|
|
|
|
|
24,000
|
|
|
|
18.78
|
|
|
|
05/13/08
|
|
Malcolm S. Morris
|
|
|
25,000
|
|
|
|
42.11
|
|
|
|
02/02/15
|
|
|
|
|
25,000
|
|
|
|
47.10
|
|
|
|
02/02/14
|
|
|
|
|
25,000
|
|
|
|
21.87
|
|
|
|
01/23/13
|
|
|
|
|
25,000
|
|
|
|
19.10
|
|
|
|
02/01/12
|
|
Max Crisp
|
|
|
16,500
|
|
|
|
42.11
|
|
|
|
02/02/15
|
|
|
|
|
16,500
|
|
|
|
47.10
|
|
|
|
02/02/14
|
|
|
|
|
5,000
|
|
|
|
21.87
|
|
|
|
01/23/13
|
|
Matthew W. Morris
|
|
|
1,600
|
|
|
|
26.83
|
|
|
|
11/30/17
|
|
E. Ashley Smith
|
|
|
1,000
|
|
|
|
26.83
|
|
|
|
11/30/17
|
|
The following table sets forth information concerning options
exercised or transferred by our named executive officers in 2007.
Option
Exercises and Stock Vested as of December 31,
2007
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Number of
|
|
|
|
|
Shares
|
|
|
|
|
Acquired
|
|
Value Realized
|
|
|
on Exercise
|
|
on Exercise
|
Name
|
|
(#)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
Malcolm S. Morris
|
|
|
19,156
|
|
|
|
581,768
|
|
Defined
Benefit Agreements
On March 10, 1986, we entered into an agreement with each
of Malcolm S. Morris, Stewart Morris, Jr. and Max Crisp
pursuant to which 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 that will, after
payment of federal income taxes thereon, result in a net annual
payment of $66,667 to Max Crisp and $133,333 to each of Malcolm
S. Morris and Stewart Morris, Jr. For purposes of such
agreements, each beneficiary is deemed to be subject to federal
income taxes at the highest marginal rate applicable to
individuals. Such benefits are fully vested and are forfeited
only if a beneficiarys employment with us is terminated by
reason of fraud, dishonesty, embezzlement or theft. Any death or
income benefits provided to a beneficiary under certain
insurance policies we own will reduce payments due to such
beneficiary or his designee under his agreement. We have paid no
premiums on these policies since 2001.
14
The following table provides information with respect to each
defined contribution or other plan that provides for the
deferral of compensation on a basis that is not tax-qualified.
Nonqualified
Deferred Compensation
(Year Ended December 31, 2007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
|
|
|
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Aggregate Earnings
|
|
|
Aggregate Balance
|
|
|
|
Last FY
|
|
|
Last FY
|
|
|
in Last FY
|
|
|
at Last FYE
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Stewart Morris, Jr.
|
|
|
70,833
|
|
|
|
|
|
|
|
57,349
|
|
|
|
490,534
|
|
Malcolm S. Morris
|
|
|
75,000
|
|
|
|
|
|
|
|
27,137
|
|
|
|
512,136
|
|
Max Crisp
|
|
|
75,000
|
|
|
|
|
|
|
|
21,553
|
|
|
|
446,248
|
|
Pension
Plans
The following table summarizes benefits payable and paid to our
executive officers under our defined benefit pension plans. All
benefits are fully vested.
Pension
Benefits as of December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Payments During
|
|
|
|
|
|
Accumulated Benefit
|
|
|
Last Fiscal Year
|
|
Name
|
|
Plan Name
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
(d)
|
|
|
(e)
|
|
|
Stewart Morris, Jr.
|
|
Agreement with beneficiary
|
|
|
1,242,000
|
|
|
|
|
|
Malcolm S. Morris
|
|
Agreement with beneficiary
|
|
|
1,422,000
|
|
|
|
|
|
Max Crisp
|
|
Agreement with beneficiary
|
|
|
556,000
|
|
|
|
66,667
|
|
Compensation
of Directors
Our non-employee directors receive fees as follows:
Director
Compensation
(Year Ended December 31, 2007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Stock
|
|
|
All Other
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Robert L. Clarke
|
|
|
52,000
|
|
|
|
40,000
|
|
|
|
|
|
|
|
92,000
|
|
Paul W. Hobby
|
|
|
48,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
68,000
|
|
Dr. E. Douglas Hodo
|
|
|
73,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
93,000
|
|
Laurie C. Moore
|
|
|
68,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
88,000
|
|
Dr. W. Arthur Porter
|
|
|
55,000
|
|
|
|
20,000
|
|
|
|
4,000
|
|
|
|
79,000
|
|
|
|
|
(1) |
|
The annual stock award to directors is valued based on the
market value per share of common stock on the date of the award. |
Our directors who are employees receive directors fees of
$150 per meeting. On November 30, 2007, Ms. Hanks
was granted, as our Director of Employee Services, a fully
vested
10-year
option for 1,600 shares of our common stock at an exercise
price of $26.83 per share, which was the closing price of a
share of our common stock on the grant date. The compensation of
our named executive officers for service on our board of
directors or the boards of directors of our subsidiaries is
included in All Other Compensation in our Summary
Compensation Table.
15
Compensation
Committee Report
To the Board of Directors of
Stewart Information Services Corporation:
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis section of this proxy
statement with Stewarts management and, based on that
review and discussions, the Compensation Committee recommended
to the board of directors that the Compensation Discussion and
Analysis be included in this proxy statement.
Members of
the Compensation Committee
Paul W. Hobby, Chair
Robert L. Clarke
Dr. W. Arthur Porter
Dated: February 28, 2008
16
SELECTION
OF INDEPENDENT AUDITORS
KPMG LLP served as our principal independent auditors for our
fiscal year ended December 31, 2007. We expect
representatives of KPMG LLP to be present at the meeting with
the opportunity to make a statement if they desire to do so, and
to be available to respond to appropriate questions. Our Audit
Committee has not yet selected independent auditors for the
fiscal year ending December 31, 2008.
Audit and
Other Fees
The following table sets forth the aggregate fees billed for
professional services rendered by KPMG LLP for each of our last
two fiscal years:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees (1)
|
|
$
|
1,487,992
|
|
|
$
|
1,631,629
|
|
Audit-Related Fees (2)
|
|
|
|
|
|
|
7,893
|
|
Tax Fees (3)
|
|
|
61,426
|
|
|
|
54,944
|
|
All Other Fees (4)
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
|
(1) |
|
Fees for the audit of our annual financial statements, the audit
of the effectiveness of our internal controls over financial
reporting, review of financial statements included in our
Quarterly Reports on
Form 10-Q,
and services that are normally provided by KPMG LLP in
connection with statutory and regulatory filings or engagements
for the fiscal years shown. |
|
(2) |
|
Fees for assurance and related services by KPMG LLP that are
reasonably related to the performance of the audit or review of
our financial statements and that are not reported under
Audit Fees. This primarily represents fees for
consultation on accounting questions. |
|
(3) |
|
Fees for professional services rendered by KPMG LLP primarily
for tax compliance, tax advice and tax planning. |
|
(4) |
|
Fees not included under other captions, consisting of
subscription for on-line accounting references. |
The Audit Committee must preapprove all audit services and
permitted non-audit services (including the fees and terms
thereof) to be performed for us by our independent auditor. The
Audit Committee may form and delegate authority to subcommittees
consisting of one or more members when appropriate, including
the authority to grant preapprovals of audit and permitted
non-audit services, provided that the subcommittee will present
all decisions to grant preapprovals to the full Audit Committee
at its next scheduled meeting. Since May 6, 2003, the
effective date of the Securities and Exchange Commissions
rules requiring preapproval of audit and non-audit services,
100% of the services identified in the preceding table were
approved by the Audit Committee.
17
REPORT OF
THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The Audit Committee serves as the representative of the board of
directors for the general oversight of Stewarts processes
in the following areas: financial accounting and reporting,
system of internal control, audit, and monitoring compliance
with laws and regulations and standards for corporate
compliance. Stewarts management has primary responsibility
for preparing the consolidated financial statements and for
Stewarts financial reporting process. Stewarts
independent auditors, KPMG LLP, are responsible for expressing
an opinion on Stewarts consolidated financial statements,
and whether such financial statements are presented fairly in
accordance with U.S. generally accepted accounting
principles.
In this context, the Audit Committee hereby reports as follows:
1. The Audit Committee has reviewed and discussed the
audited financial statements with Stewarts management.
2. The Audit Committee has discussed with the independent
auditors the matters required to be discussed by SAS
No. 114 (Codification of Statements on Auditing Standards,
AU § 380).
3. The Audit Committee has received the written disclosures
and letters from the independent auditors required by
Independence Standards Board Standard No. 1 (Independent
Discussions with Audit Committees) and has discussed with the
independent auditors the independent auditors independence.
4. Based on the review and discussions referred to in
paragraphs (1) through (3) above, the Audit
Committee has recommended to the board of directors that the
audited financial statements be included in Stewarts
Annual Report on
Form 10-K
for the year ended December 31, 2007, for filing with the
Securities and Exchange Commission.
Each of the members of the Audit Committee is independent as
defined under the listing standards of the New York Stock
Exchange.
The undersigned members of the Audit Committee have submitted
this report:
Dr. E. Douglas Hodo, Chair
Robert L. Clarke
Dated: February 28, 2008
18
CERTAIN
TRANSACTIONS
Stewart Morris is the father of Stewart Morris, Jr. and the
uncle of Malcolm S. Morris. During the year ended
December 31, 2007, Stewart Morris served as a director of
Stewart Title Company and Stewart Title Guaranty
Company and as chairman of Stewart Title Companys
executive committee and received compensation in 2007 of
approximately $344,000, consisting of his salary and bonus.
During 2007, we and our subsidiaries paid a total of $418,065 to
the law firm of Morris, Lendais, Hollrah &
Snowden, P.C., of which Malcolm S. Morris is a shareholder.
In connection with real estate transactions processed by Stewart
Title Company, such firm receives legal fees from its
clients who are also customers of Stewart Title Company and
who select such firm as their counsel.
For many decades, we have maintained a collection of antique and
replica carriages for business promotion and entertainment
purposes. The carriages have been associated with the Company by
its customers and potential customers. They symbolize the
tradition, quality and stability of the Company in keeping with
our long history.
The Company also maintains approximately 10 horses, which have
been trained to safely pull the carriages. When not in use, both
the carriages and horses are housed at the Morris Ranch in
Wharton, Texas, which is owned by Stewart Morris and Stewart
Morris, Jr., and occasionally at their homes and at the home of
Malcolm S. Morris in Houston. The horses and most of the
carriages are owned by the Morrises, and both horses and
carriages are under separate terminable leases to the Company
for no charge other than maintenance expenses. The Company also
owns some carriages directly. The Company directly pays
third-party vendors for the expenses incidental to maintaining
and insuring its horse and carriage assets. These expenses
include staff payroll, carriage maintenance, horse training,
feed, veterinary, shoeing and trucking these assets to the
different locations where they are used. These expenses also
include maintenance and related utilities for a 14,000-square
foot carriage house at the Morris Ranch, where the carriage
operation maintains a stable and an office and where the main
body of the carriage collection is housed and kept on display
for guests. The only payment by the Company to an affiliate is
$10,400 per year paid to the Morris Ranch for rental of
the Carriage House and non-exclusive pasture rental of
600 acres. Our total expenses for maintenance of these
assets in 2007 was approximately $270,000
PROPOSALS
FOR NEXT ANNUAL MEETING
To be included in the proxy statement and form of proxy relating
to our 2009 annual meeting of stockholders, proposals of common
stockholders and Class B common stockholders must be
received by us at our principal executive offices, 1980 Post Oak
Boulevard, Suite 800, Houston, Texas 77056, by
December 15, 2008.
OTHER
MATTERS
Our management does not know of any other matter that may come
before the meeting. However, if any matters other than those
referred to above should properly come before the meeting, the
persons named in the enclosed proxy intend to vote such proxy in
accordance with their best judgment.
Proxies for our 2009 annual meeting of stockholders may confer
discretionary power to vote on any matter that may come before
the meeting unless, with respect to a particular matter,
(i) we receive notice, by certified mail, return receipt
requested, addressed to our Secretary, not later than the
13th day of February next preceding the meeting, that the
matter will be presented at the meeting and (ii) we fail to
include in its proxy statement for the meeting advice on the
nature of the matter and how we intend to exercise our
discretion to vote on the matter.
19
We will pay the cost of solicitation of proxies in the
accompanying form. We have retained Innisfree M&A
Incorporated, a proxy solicitation firm, to assist us in
soliciting proxies for the proposals described in this proxy
statement. We will pay Innisfree a fee for such services, which
is not expected to exceed $6,500, plus expenses. In addition to
solicitation by use of the mails, certain of our officers or
employees, and certain officers or employees of Innisfree, may
solicit the return of proxies by telephone, telegram or personal
interview.
By Order of the Board of Directors,
Max Crisp
Secretary
April 8, 2008
20
PROXY STEWART INFORMATION SERVICES CORPORATION THIS PROXY FOR HOLDERS OF COMMON STOCK IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS -MAY 9, 2008 The
undersigned appoints Ken Anderson, Jr. and E. Ashley Smith, and each of them, as proxies with full
power of substitution and revocation, to vote, as designated on the reverse side hereof, all the
Common Stock of Stewart Information Services Corporation which the undersigned has power to vote,
with all powers which the undersigned would possess if personally present, at the annual meeting of
stockholders thereof to be held on May 9, 2008, or at any adjournment thereof. Unless otherwise
marked, this proxy will be voted FOR the election of the nominees named. Please vote, sign, date
and return this proxy card promptly using the enclosed envelope. (Mark the corresponding box on the
reverse side) FOLD AND DETACH HERE You can now access your Stewart Information Services Corporation
account online. Access your Stewart Information Services Corporation stockholder account online via
Investor ServiceDirect (ISO). The transfer agent for Stewart Information Services corporation now
makes it easy and convenient to get current information on your stockholder account. View account
status View payment history for dividends View certificate history Make address changes View
book-entry information Obtain a duplicate 1099 tax form Establish/change your PIN Visit us on the
web at http://www.bnymel/on.com/shareowner For Technical Assistance Call 1-877-978-7778 between
9am-7pm Monday-Friday Eastern Time ****TRY IT OUT**** www.bnymellon.com/shareowner/isd Investor
ServiceDirect Available 24 hours per day, 7 days per week TOLL FREE NUMBER: 1-800 ·370-1163 |
Please Mark Here for Address Change or Comments SEE REVERSE SIDE The Board of Directors
recommends a vote FOR: The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and of the Proxy Statement 1. Election of Directors -Nominees: FOR all nominees
WITHHOLD 01 Robert L. Clarke, Please sign exactly as your name appears. Joint owners listed ill
fight (except as marked to the contrary) WITHHOLD AUTHORITY to vote for all nominees listed al
right D 02 03 04 05 Nita B, Hanks, Dr-E. Douglas Hodo, Dr-W. Arthur Porter. Laurie C, Moore should
each sign personally. Where applicable, indicate your official position or representation capacity.
(INSTRUCTION: To withhold authority to vote for any nominee, write that nominees name on the line
below.) . ,,. ,. ,2008 SIGNATURE(S) . FOLD AND DETACH HERE . WE ENCOURAGE YOU TO TAKE ADVANTAGE OF
INTERNET OR TELEPHONE VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK. Internet and
telephone voting is available through 11 :59 PM Eastern Time the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card. INTERNET http://www.proxyvoting.comlstc Use
the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
TELEPHONE 1-866-540-5760 Use any touch-tone telephone to OR vote your proxy. Have your proxy card
in hand when you call. If you vote your proxy by Internet or by telephone, you do NOT need to mail
back your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the
enclosed postage-paid envelope. Choose MLinkSM for fast, easy and secure 24/7 online access to your
future proxy materials, investment plan statements, tax documents and more. Simply log on to
Investor ServiceDirect at www.bnymellon com/shareownerlisd where step-by-step instructions will
prompt you through enrollment. |
Please Mark Here for Address Change or Comments
SEE REVERSE SIDE
The Board of Directors recommends a vote FOR:The shares allocated to your account in the Companys 401(k) Savings Plan will be voted as directed. IF NOT OTHERWISE SPECIFIED, THE SHARES WILL BE
1.Election of Directors -VOTED FOR EACH OF THE NOMINEES. As noted in the accompanying proxy statement, receipt of which is hereby acknowledged, if any of the listed nominees Nominees:becomes unavailable for any reason and authority to vote for election of directors FOR all nominees listed is not withheld, the shares will be voted for another nominee or other nominees to
WITHHOLD AUTHORITY01 Robert L. Clarke, at right ( except asto vote for all nomineesbe selected by the Nominating and Corporate Governance Committee.
02 Nita B. Hanks, marked to the contrary)listed at right
03Dr. E. Douglas Hodo,The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and
04Dr. W. Arthur Porter,of the Proxy Statement.
05Laurie C. Moore
(INSTRUCTION: To withhold authority to vote for any
Please sign exactly as your name appears. Joint owners nominee, write that nominees name on the line below.) should each sign personally. Where applicable, indicate your official position or representation capacity.
Dated: ___,2008
___SIGNATURE (S)
___SIGNATURE (S)
FOLD AND DETACH HERE
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 11:59 PM Eastern Time the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
INTERNETTELEPHONE http://www.proxy voting.com/stc1-866-540-5760
Use the Internet to vote your proxy.ORUse any o t uch-tone telephone t o Have your proxy card in handvote your proxy. Have your proxy when you access h t e web site.card n i hand when you call.
f I you vote your proxy by Internet or by e t lephone, you do NOT need to mail back your proxy card. To vote by mail , mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Choose MLin kSM for fast, easy and secure 24/7 onli ne access to your u f u t re proxy materi als, investment plan state ments , tax documents and more. Simply lo g on o t I n vestor ServiceDirect® at www.bnymellon.com/share owner/isd where step-by-step in structio ns will prompt you through enrol ment. |
PROXY
STEWART INFORMATION SERVICES CORPORATION
PROXY VOTING N I STRUCTIONS
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 9, 2008
The undersigned appoints Ken Anderson, Jr. and E. Ashley Smith, and each of them, as proxies with ful power of substitutio n and revocation, to vote, as designated on h t e reverse side hereof, al the Common Stock of Ste wart I n formatio n Services Corporation which h t e undersigned has power o t vote, with al powers which the undersigned would possess if personally present, at t h e annual meeting of stockholders h t ereof to be held on May 9, 2008, or at any adjournment thereof.
Unle ss otherwise marked, t h s i proxy will be voted FOR the election of the nominees named.
Please vote, sign, date and return this proxy card promptly usin g the enclosed envelope.
Address Change/Comments M ( ark the co r esponding box on the reve rse side)
FOLD AND DETACH HERE
You can now access your Stewart Information Services Corporation account online.
Access your Stewart Informatio n Services Corporation stockholder account onlin e via Investor ServiceDirect® (ISD).
The r t ansfer agent f o r Ste wart Informati on Services Corporation now makes it easy and convenient o t get current information on your stockhold er account.
View account statu s View payment history for dividends
View certifi cate his tory Make address changes
View book-entry information Obtain a duplic ate 1099 tax form
Establish/change your PIN
Visit us on the web at http://www.bnymellon.com/shareowner
For Technic al Assistance Call 1-877-978-7778 between 9am-7pm Monday-Friday Eastern Time
****TRY T I OUT****
www.bnymellon.com/shareowner/isd
Investor ServiceDirect®
Available 24 hours per day, 7 days per week
TOLL FREE NUMBER: 1-800-370-1163
PRINT AUTHORIZ ATION(THIS BOXED AREA DOES NOT PRIN T)
To commence printing on this proxy card please sign, date and fax t h is card o t : 212-691-9013
SIGNATURE:___DATE:___TIME:___
Mark h t is box f i you would lik e h t e Proxy Card EDGARized:ASCIIEDGAR II (HTML)
Registered Quantity (common)___Color Stripe Blue |