Stewart Info Settles With Starboard to Replace Four on Board
Stewart Information Services Corp. is reshaping its board by adding three independent directors and its chief executive officer to the panel as part of a settlement with its biggest shareholder, activist investor Starboard Value.
Stewart CEO Matthew Morris and Clifford Press — a former Morgan Stanley banker who founded his own investment companies — will join the property-title insurer's board immediately, the company said in a statement Tuesday. They replace Malcolm Morris and Stewart Morris, who agreed to resign. Stewart is searching for two additional independent directors to replace Laurie Moore-Moore and Frank Keating, who will step down once replacements are found. The changes mean eight of Stewart's nine directors will be independent.
Starboard disclosed a near 10% activist stake on Aug. 12 in Stewart, which had faced earlier pressure from other investors. Stewart also said Tuesday it reached a separate agreement with Foundation Asset Management to end efforts to call a special shareholder meeting. As part of Tuesday's pacts, Starboard and Foundation agreed to standstill and voting provisions.
Title insurers like Stewart, which competes with First American Financial Corp. and No. 1 Fidelity National Financial Inc., use records and public documents to verify a seller is a property's true owner and that it's free from liens. The companies collect a premium at the closing of a purchase or a refinancing, and pay costs that may arise if there are disputes over ownership. Title insurance is typically required to finalize mortgages and property transactions.
Stewart ended its dual-class share structure at its April annual meeting, opening up voting rights after being targeted by other activists. Phil Goldstein's Bulldog Investors went public with its grievances in 2015, urging a sale and seeking control of its board. In a settlement announced weeks later, Stewart agreed to add an independent director and Bulldog to a standstill.
Under Stewart's now-defunct dual-class share structure, four directors were elected by the B holders, including members of the company's founding Morris family.
Bulldog's campaign came a year after the third-largest U.S. title insurer settled a separate activist battle with hedge funds Foundation Asset Management and Engine Capital. To resolve that situation, Stewart agreed to add two directors, embark on a $70 million share buyback, deliver $25 million in annual cost cuts and begin holding earnings calls.