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.
