SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
STEWART INFORMATION SERVICES CORPORATION
(Name of Registrant as Specified in its Charter)
STEWART INFORMATION SERVICES CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies: N/A
2) Aggregate number of securities to which transaction applies:
N/A
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): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Fee paid previously with preliminary materials: N/A
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
5) Total fee paid: N/A
STEWART INFORMATION SERVICES CORPORATION
1980 POST OAK BOULEVARD
HOUSTON, TEXAS 77056
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 26, 2002
Notice is hereby given that the Annual Meeting of the Stockholders of
Stewart Information Services Corporation, a Delaware corporation (the
"Company"), will be held on Friday, April 26, 2002, 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 consider and act upon a proposal to adopt the Company's 2002
Stock Option Plan for Region Managers.
(2) To elect directors of the Company to hold office until the next
Annual Meeting of Stockholders or until their respective successors are
duly elected and qualified.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The holders of record of Common Stock and Class B Common Stock of the
Company at the close of business on February 27, 2002, will be entitled to vote
at the meeting.
By Order of the Board of Directors,
Max Crisp
Secretary
March 22, 2002
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
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 26, 2002
This Proxy Statement is furnished to the stockholders of Stewart
Information Services Corporation (the "Company"), 1980 Post Oak Boulevard, Suite
800, Houston, Texas 77056 (Tel. No. 713/625-8100), in connection with the
solicitation by the Board of Directors of the Company of proxies to be used at
the Annual Meeting of Stockholders to be held on Friday, April 26, 2002, at 8:30
A.M. in the First Floor Conference Room of Three Post Oak Central, 1990 Post Oak
Boulevard, Houston, Texas, or any adjournment thereof.
Proxies in the form enclosed, properly executed by stockholders and
received in time for the meeting, will be voted as specified therein. If a
stockholder does not specify otherwise, the shares represented by his or her
proxy will be voted for the nominees listed therein. The giving of a proxy does
not preclude the right to vote in person should the person giving the proxy so
desire, and the proxy may be revoked at any time before it is exercised by
written notice delivered to the Company at or prior to the meeting. This Proxy
Statement is being mailed on or about March 22, 2002, to stockholders of record
at the close of business on February 27, 2002, (the "Record Date").
At the close of business on the Record Date, there were outstanding and
entitled to vote 16,751,240 shares of Common Stock and 1,050,012 shares of Class
B Common Stock, and only the holders of record on such date shall be entitled to
vote at the meeting. As long as 600,000 or more shares of Class B Common Stock
are issued and outstanding, at each election of directors the Common Stock and
Class B Common Stock are voted as separate classes. Shares of the Company's
Class B Common Stock are convertible on a one-for-one basis into shares of the
Company's Common Stock.
The holders of Common Stock, voting as a class, are entitled to elect five
of the nine directors of the Company. Each share of Common Stock is entitled, at
the option of the person voting such share, either to cast one vote per share
for each of the five directors to be elected by the holders of the Common Stock
or to vote cumulatively by casting five votes per share, which may be
distributed in any manner among any number of the nominees. The enclosed form of
proxy provides a means for stockholders to vote for all of the nominees listed
therein, to withhold authority to vote for one or more of such nominees or to
withhold authority to vote for all of such nominees. If authority to vote for
four or fewer of the nominees is withheld, and if there are nominees other than
management nominees for the directorships to be filled by the holders of the
Common Stock, then the persons named in the enclosed proxy may vote cumulatively
by dividing the number of votes represented by the proxy equally among the
nominees for which authority to vote is not withheld. If there are no nominees
for the five positions to be elected by the holders of Common Stock other than
the management nominees set forth herein, it is the intention of the persons
named in the enclosed proxy to allocate the votes represented by the proxy
evenly among the management nominees. If there should be any additional nominees
for such positions, then the persons named in the enclosed proxy will vote
cumulatively to elect as many as possible of the management nominees. If it is
not possible to elect each of the five management nominees, then the persons
named in the enclosed proxy will have discretion as to which of such nominees
may be elected.
Unless a holder of Common Stock who withholds authority votes in person at
the meeting or votes by means of another proxy, the withholding of authority
will have no effect upon the election of those directors for whom authority to
vote is withheld because the Company's By-Laws provide that directors are
elected by a plurality of the votes cast. Under applicable Delaware law, a
broker non-vote will have no effect on the outcome of the election of directors.
The shares held by each stockholder who signs and returns the enclosed form of
proxy will be counted for purposes of determining the presence of a quorum at
the meeting.
The holders of Class B Common Stock, voting as a class, are entitled to
elect the remaining four of the nine directors of the Company. Each holder of
Class B Common Stock has the right to vote, in person or by proxy, the number of
shares owned by him for the four directors to be elected by the holders of Class
B Common Stock and for whose election he has a right to vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of the Record Date with
respect to persons known to the Company to be the beneficial owners of more than
5% of either class of the Company's voting shares:
<Table>
<Caption>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP OF CLASS
- ------------------------------------ -------------- ---------- --------
Malcolm S. Morris.............................. Class B Common Stock 525,006 50.0
3992 Inverness
Houston, Texas 77019
Stewart Morris, Jr. ........................... Class B Common Stock 525,006 50.0
#8 West Rivercrest
Houston, Texas 77042
Artisan Partners Limited Partnership........... Common Stock 1,834,594(1) 11.0
1000 North Water Street, #1770
Milwaukee, Wisconsin 53202
EQSF Advisers, Inc. ........................... Common Stock 1,289,015(2) 7.7
767 Third Avenue
New York, New York 10017
Sterling Capital Management LLC................ Common Stock 923,040(3) 5.5
301 S. College Street, Suite 3200
Charlotte, North Carolina 28202
David L. Babson & Company, Inc. ............... Common Stock 867,250(4) 5.2
One Memorial Drive
Cambridge, Massachusetts 02142
Dimensional Fund Advisors, Inc. ............... Common Stock 856,900(5) 5.1
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</Table>
- ---------------
(1) Artisan Partners Limited Partnership reported shared voting and dispositive
power with respect to all of such shares in its most recent report on
Schedule 13G filed February 6, 2002. Artisan Partners is an investment
adviser registered under section 203 of the Investment Advisors Act of 1940.
The shares reported herein 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, those
shares.
(2) EQSF Advisers, Inc. reported sole voting power of 1,225,115 of such shares
and dispositive power with respect to all of such shares in its most recent
report on Schedule 13G/A filed February 5, 2002. Includes 564,134 shares
owned by M. J. Whitman Advisers, Inc. ("MJWA"). Third Avenue Value Fund, an
investment company registered under the Investment Company Act of 1940, has
the right to receive dividends from, and the proceeds from the sale of,
1,029,615 of the shares reported by EQSF. Third Avenue Value Portfolio of
the WRL Series Fund, an investment company registered under the Investment
Company Act of 1940, has the right to receive dividends from, and the
proceeds from the sale of, 112,900 of the shares reported by EQSF, Sun
America Style Select Series. Small-Cap Value Portfolio, an investment
company registered under the Investment Company Act of 1940, has the right
to receive dividends from, and the proceeds from the sale of, 40,100 of the
shares reported by EQSF. Third Avenue Value Portfolio of the Third Avenue
Variable Series Trust, an investment company registered under the Investment
Company Act of 1940, has the right to receive dividends from, and the
proceeds from the sale of, 42,500 of the shares reported by EQSF. American
Express Partners Variable Annuity, an investment company registered under
the Investment Company Act of 1940, has the right to receive dividends from,
and the proceeds from the sale of, 5,000 of the shares reported by EQSF.
American Express Partners Small Cap Value Fund Portfolio, an investment
company registered under the Investment Company Act of 1940, has the right
to receive dividends from, and the proceeds from the sale of, 58,900 of the
shares reported by EQSF. Various clients for whom MJWA acts as investment
adviser
2
have the right to receive dividends from, and the proceeds from the sale of,
the shares reported by MJWA.
(3) Sterling Capital Management LLC reported shared voting and dispositive power
with respect to all of such shares in its most recent report on Schedule 13G
filed February 6, 2002. Sterling is a registered investment adviser whose
clients have the right to receive dividends from, and the proceeds from the
sale of, such shares.
(4) David L. Babson & Company, Inc., in its capacity as an investment advisor,
reported sole voting and dispositive power with respect to all of such
shares in its most recent report on Schedule 13G filed January 28, 2002.
(5) Dimensional Fund Advisors, Inc. reported sole voting and dispositive power
with respect to all of such shares in its most recent report on Schedule
13G/A filed February 12, 2002. Dimensional is an investment adviser
registered under Section 203 of the Investment Advisors Act of 1940 and
furnishes 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.
The holders of the Class B Common Stock have entered into an agreement
intended to maintain an equal ownership of shares of Common Stock and Class B
Common Stock by Carloss Morris and Malcolm S. Morris, collectively, and by
Stewart Morris and Stewart Morris, Jr., collectively. Such agreement also
provides for rights of first refusal with respect to Class B Common Stock among
themselves in the event of the death, voluntary or involuntary disposition of
the shares of Class B Common Stock and upon certain other specified conditions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Each director and certain officers of the Company 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 the Company or written
representations that no other reports were required, the Company believes that
during the 2001 fiscal year all filing requirements applicable to its executive
officers, directors and greater than 10% beneficial owners were met.
3
The following table sets forth information as of the Record Date with
respect to each class of the Company's voting shares beneficially owned by
executive officers, directors and nominees for director of the Company and by
all officers, directors and nominees for director of the Company as a group:
<Table>
<Caption>
AMOUNT AND
NATURE OF
BENEFICIAL
NAME TITLE OF CLASS OWNERSHIP(1) PERCENT OF CLASS
- ---- -------------- ------------ ----------------
Malcolm S. Morris................ Common Stock 265,000(2) 1.6
Class B Common Stock 525,006 50.0
Stewart Morris, Jr. ............. Common Stock 175,000(3) 1.0
Class B Common Stock 525,006 50.0
Lloyd Bentsen, III............... Common Stock 6,406 *
Max Crisp........................ Common Stock 61,000(4) *
Nita B. Hanks.................... Common Stock 2,566(5) *
Paul W. Hobby.................... Common Stock 3,406 *
Dr. E. Douglas Hodo.............. Common Stock 3,406 *
Dr. W. Arthur Porter............. Common Stock 3,406 *
Gov. John P. LaWare.............. Common Stock 4,406 *
All officers, directors and
nominees
as a group (9 persons)......... Common Stock 524,596 3.0
Class B Common Stock 1,050,012 100.0
</Table>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated, the beneficial owner has sole voting and
investment power.
(2) Consists of 265,000 shares subject to stock options (see "Executive
Compensation -- Option Grants and Exercises" at page 8).
(3) Consists of 175,000 shares subject to stock options (see "Executive
Compensation -- Option Grants and Exercises" at page 8).
(4) Includes 58,000 shares subject to stock options (see "Executive
Compensation -- Option Grants and Exercises" at page 8).
(5) Includes 2,200 shares subject to stock options.
ELECTION OF DIRECTORS
At the meeting, nine directors (constituting the entire Board of Directors)
are to be elected. The holders of Common Stock are entitled to elect five
directors, and the holders of Class B Common Stock are entitled to elect four
directors. All directors of the Company hold office until the next annual
meeting of stockholders or until their respective successors are duly elected
and qualify. All officers of the Company hold office until the regular meeting
of directors following the annual meeting of stockholders or until their
respective successors are duly elected and qualified.
During 2001, the Board of Directors held six meetings and executed two
consents in lieu of meetings. No director attended fewer than 80% of such
meetings. The Board of Directors has an Executive Committee, an Audit Committee,
a Compensation Committee and a Nominating Committee. See "-- Committees of the
Board of Directors" at page 6.
COMMON STOCK
The following persons have been nominated to fill the five positions to be
elected by the holders of Common Stock. The management of the Company does not
contemplate that any of such nominees will
4
become unavailable for any reason, but if that should occur before the meeting,
proxies will be voted for another nominee, or other nominees, to be selected by
the Board of Directors of the Company.
<Table>
<Caption>
NOMINEE, AGE AND POSITION WITH THE COMPANY DIRECTOR SINCE
- ------------------------------------------ --------------
Lloyd Bentsen, III, 57, Director............................ 1995
Nita B. Hanks, 48, Director................................. 1990
Dr. E. Douglas Hodo, 67, Director........................... 1988
Gov. John P. LaWare, 74, Director........................... 2001
Dr. W. Arthur Porter, 60, Director.......................... 1993
</Table>
Each of such persons was elected to the Company's Board of Directors by the
holders of Common Stock at the annual meeting of stockholders held in 2001,
except for Gov. LaWare, who was elected in December 2001. Prior to that time,
Gov. LaWare had served as an advisory director of the Company since 1995. It is
the intention of the persons named in the proxy for the holders of Common Stock
to vote the proxies for the election of the nominees named above, unless
otherwise specified.
Mr. Bentsen served as an Advisory Director of the Company from 1992 until
his election to the Board of Directors in 1995. Mr. Bentsen is a general partner
and co-founder of Triad Ventures Ltd., a group of venture capital funds with
over $50 million of capital that seeks to invest in Texas-based emerging growth
companies. Mr. Bentsen also serves as a director of Zonagen, Inc., a development
stage biopharmaceutical company. Prior to founding his venture capital firm in
1979, Mr. Bentsen spent ten years with Rotan Mosle, Inc., a regional investment
banking firm, as a member of the corporate finance department. Mr. Bentsen is a
graduate of Princeton University and holds an MBA from Stanford University.
For more than the past five years, Mrs. Hanks has been a Senior Vice
President of Stewart Title Guaranty Company ("Guaranty"), the Company's largest
subsidiary. Mrs. Hanks is Director of Employee Services for the Company and
brings a key perspective from the Company's employees to its Board of Directors.
Employee costs represent one of the Company's largest expenses.
Dr. Hodo serves as Chairman of the Company's Audit Committee. Dr. Hodo has
served as President of Houston Baptist University for more than the past five
years. Dr. Hodo also serves as a director of U.S. Global Investors Funds and
chairman of its audit committee.
Gov. LaWare served on the Board of Governors of the Federal Reserve System
from 1988 until 1995. A Harvard graduate, he began his banking career in 1953 at
Chemical Bank in New York. During his 25 years with Chemical Bank, Gov. LaWare
spent several years as a senior lending officer before organizing its holding
company operations and marketing divisions. He also served as Chairman, Chief
Executive Officer and a director of Shawmut National Corp., a super-regional
bank holding company.
Dr. Porter has served as Dean of the College of Engineering and University
Vice President for Technology Development of the University of Oklahoma since
1998. Dr. Porter is also the Secretary of Science and Technology Development for
the State of Oklahoma. Prior to those appointments, he had served as President
and Chief Executive Officer of Houston Advanced Research Center, a nonprofit
research consortium, for more than five years. He also had 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., Portland, Oregon, and Bookham
Technologies, Oxfordshire, England.
CLASS B COMMON STOCK
The following persons have been nominated to fill the four positions to be
elected by the holders of Class B Common Stock. It is the intention of the
persons named in the proxy for the holders of Class B Common Stock to vote the
proxies for the election of the nominees named below, unless otherwise
specified. The management of the Company does not contemplate that any of such
nominees will become unavailable
5
for any reason, but if that should occur before the meeting, proxies will be
voted for another nominee, or other nominees, to be selected by the Board of
Directors of the Company.
<Table>
<Caption>
NOMINEE, AGE AND POSITION WITH THE COMPANY DIRECTOR SINCE
- ------------------------------------------ --------------
Max Crisp, 67, Vice President -- Finance, Secretary,
Treasurer and Director.................................... 1970
Paul W. Hobby, 41, Director................................. 1989
Malcolm S. Morris, 55, Co-Chief Executive Officer and
Chairman of the Board of Directors........................ 2000
Stewart Morris, Jr., 53, Co-Chief Executive Officer,
President and Director.................................... 2000
</Table>
Each of such persons was elected by the holders of the Class B Common Stock
at the annual meeting of stockholders held in 2001.
Mr. Crisp has served as Vice President -- Finance, Treasurer and Secretary
of the Company and as its Chief Financial Officer for more than the past five
years. Max Crisp is also Secretary, Treasurer and Vice President -- Finance of
Guaranty and Stewart Title Company ("Title"), a subsidiary of the Company.
Mr. Hobby has served since 1995 as Chairman of Hobby Media Services, Inc.,
a media software company. Mr. Hobby is also a Vice President of Hobby
Communications, L.L.C. In 1999 and 2000, Mr. Hobby served as the Co-Chief
Executive Officer, Secretary and director of CinemaStar Luxury Theaters, Inc.
Mr. Hobby also serves as the Chairman of Genesis Park GP Company L.L.C. Mr.
Hobby served as Chairman of Columbine JDS Systems, Inc. until October 31, 1997.
Mr. Hobby also served as Vice President of H & C Communications, Inc. until
December 31, 1996. Mr. Hobby also serves as a director of EGL, Inc. and
Southwest Bancorporation of Texas, Inc.
Malcolm S. Morris has served as Chairman of the Board and Co-Chief
Executive Officer of the Company since January 31, 2000, and as Senior Executive
Vice President -- Assistant Chairman of the Company for more than five years
prior to that time. Malcolm S. Morris has also served for more than the past
five years as President and Chief Executive Officer of Guaranty and Chairman of
the Board of Title.
Stewart Morris, Jr. has served as President and Co-Chief Executive Officer
of the Company since January 31, 2000, and for more than five years prior to
that time as Senior Executive Vice President -- Assistant President of the
Company. Stewart Morris, Jr. has also served for more than the past five years
as President and Chief Executive Officer of Title and Chairman of the Board of
Guaranty.
Stewart Morris, Jr. and Malcolm S. Morris are cousins. Acting together they
have the power to direct the management and policies of the Company.
Accordingly, they may be deemed to be "control persons" as such term is used in
regulations adopted under the Securities Exchange Act of 1934.
ADVISORY DIRECTORS
In addition to the directors elected by the holders of the Company's Common
Stock and Class B Common Stock, the Company has five advisory directors who are
appointed by the Company's Board of Directors. The Company's advisory directors
receive notice of and regularly attend meetings of the Company's Board of
Directors. They provide valuable insights and advice to the Company and
participate fully in all deliberations of the Company's Board of Directors but
are not included in quorum and voting determinations. Advisory directors receive
the same compensation for their services as do the members of the Company's
Board of Directors elected by the stockholders of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
Executive Committee. The Executive Committee may exercise all of the
powers of the directors, except those specifically reserved to the Board of
Directors by law. Malcolm S. Morris, Stewart Morris, Jr. and Max Crisp serve as
the members of the Executive Committee. During 2001, the Executive Committee
held seven meetings at which all members were present and executed 41 consents
in lieu of meetings.
6
Audit Committee. It is the duty of the Audit Committee to (i) review, with
the Company's independent auditors, the scope of the annual audit, (ii) review
the independent auditors' management letter and (iii) meet with the Company's
internal auditors. The Audit Committee operates under a written charter adopted
by the Board of Directors of the Company. The Audit Committee is comprised of
Dr. E. Douglas Hodo, Lloyd Bentsen, III, and Paul W. Hobby. During 2001, the
Audit Committee held six meetings at which all members were present.
Compensation Committee. See "Executive Compensation -- Compensation
Committee" at page 10 for information with respect to the Company's Compensation
Committee.
Nominating Committee. The Nominating Committee is comprised of Dr. W.
Arthur Porter and Lloyd Bentsen, III. It is the duty of the Nominating Committee
to (i) recommend to the Board of Directors of the Company nominations of persons
for election to the Board of Directors of the Company by the holders of Common
Stock, (ii) create procedures for identification of nominees, (iii) consider and
recommend to the Board of Directors criteria for membership and (iv) receive and
consider nominations submitted by stockholders of the Company. In order to be
considered by the Nominating Committee, pursuant to the Company's By-Laws,
nominations of persons for election by the holders of Common Stock to the Board
of Directors of the Company at the Annual Meeting of Stockholders of the Company
to be held in 2003 must be received by the Company no later than February 15,
2003. The Nominating Committee held one meeting during 2001 at which both
members were present.
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table summarizes compensation information concerning each of
the Company's executive officers for each of the three years ended December 31,
2001.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- (AWARDS)
MINIMUM VARIABLE ------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS BONUS STOCK OPTIONS COMPENSATION
- ------------------------------- ---- ------- ------- -------- ------------- ------------
($) ($) ($) (# SHARES) ($)
Stewart Morris, Jr............. 2001 135,000 250,000 250,660 25,000 8,157(1)
President and 2000 135,000 250,000 -- 25,000 8,079
Co-Chief Executive Officer 1999 130,000 125,000 245,000 20,000 9,798
Malcolm S. Morris.............. 2001 135,000 250,000 250,660 25,000 10,369(2)
Chairman of the Board and 2000 135,000 250,000 -- 25,000 9,554
Co-Chief Executive Officer 1999 130,000 125,000 245,000 20,000 9,878
Max Crisp...................... 2001 144,000 126,000 239,792 16,500 123,366(3)
Vice President -- Finance, 2000 140,000 126,000 -- 16,500 118,451
Secretary and Treasurer 1999 140,000 100,000 142,755 13,000 9,403
</Table>
- ---------------
(1) Consists of matching contributions to the Company's 401(k) plan ($1,958),
director's fees ($1,950) and $4,249, representing the portion of insurance
premiums paid by the Company with respect to term life insurance plus the
dollar value of the benefit of the remainder of life insurance premiums paid
by the Company.
(2) Consists of matching contributions to the Company's 401(k) plan ($1,958),
director's fees ($1,950) and $6,461, representing the portion of insurance
premiums paid by the Company with respect to term life insurance plus the
dollar value of the benefit of the remainder of life insurance premiums paid
by the Company.
(3) Consists of $110,375 paid to Mr. Crisp under his deferred compensation
agreement. See "-- Deferred Compensation Agreements" at page 9. Also
includes matching contributions to the Company's 401(k)
7
plan ($1,958), director's fees ($1,950) and $9,083, representing the portion
of insurance premiums paid by the Company with respect to term life
insurance plus the dollar value of the benefit of the remainder of life
insurance premiums paid by the Company.
Each executive officer of the Company holds office until the regular
meeting of directors following the annual meeting of stockholders or until his
successor is duly elected and qualified.
OPTION GRANTS AND EXERCISES
The following table sets forth information concerning individual grants of
stock options made during the year ended December 31, 2001, to each of the
Company's executive officers. All such grants were made on February 1, 2001,
under the terms of the Company's 1999 Stock Option Plan. The hypothetical values
on the date of grant of stock options granted in 2001 shown below are presented
pursuant to the rules of the Securities and Exchange Commission and are
calculated under the modified Black-Scholes Model (the "Model") for pricing
options. This hypothetical value of options trading on the stock markets bears
little relationship to the compensation cost to the Company or potential gain
realized by an optionee. The actual amount, if any, realized upon exercise of
stock options will depend upon the market price of the Company's Common Stock
relative to the exercise price per share of Common Stock issuable under the
stock option at the time the stock options are exercised. There is no assurance
that the hypothetical present values of stock options reflected in this table
actually will be realized.
OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 2001
<Table>
<Caption>
INDIVIDUAL GRANTS
---------------------------------------------------------------
PERCENT OF
TOTAL OPTIONS GRANT DATE
OPTIONS GRANTED TO EXERCISE EXPIRATION PRESENT
NAME GRANTED EMPLOYEES PRICE DATE VALUE(1)
- ---- ---------- ------------- -------- ---------- ----------
(# SHARES) (%) ($) ($)
Stewart Morris, Jr. ................... 25,000 29.7 20.01 2/1/11 288,250
Malcolm S. Morris...................... 25,000 29.7 20.01 2/1/11 288,250
Max Crisp.............................. 16,500 19.6 20.01 2/1/11 190,245
</Table>
- ---------------
(1) The grant date present values are calculated under the Model. The Model is a
mathematical formula used to value stock options and is based on assumptions
regarding the stock's volatility (41.6%), dividend rate (0%), option term
(10 years) and risk-free interest rates (4.0% to 6.0%).
The following table sets forth information concerning each exercise of
stock options during the year ended December 31, 2001 by each of the Company's
executive officers and the value of unexercised options at December 31, 2001.
The Company has not issued any tandem or freestanding stock appreciation rights.
AGGREGATED OPTION EXERCISES IN 2001 AND OPTION VALUES AT DECEMBER 31, 2001
<Table>
<Caption>
NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 2001 DECEMBER 31, 2001
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ---------- -------- ----------- ------------- ----------- -------------
(# SHARES) ($) (# SHARES) (# SHARES) ($) ($)
Stewart Morris, Jr. ................ -- -- 150,000 -- 745,730 --
Malcolm S. Morris................... -- -- 240,000 -- 2,110,729 --
Max Crisp........................... 16,500 111,375 41,500 -- 16,515 --
</Table>
COMPENSATION OF DIRECTORS
Directors of the Company, other than employees of the Company, receive an
annual retainer of $8,500 and directors' fees of $2,000 per meeting attended.
Directors of the Company who are employees receive directors' fees of $150 per
meeting. Members of the committees of the Company's Board of Directors who are
not employees of the Company receive $1,000 per meeting attended. No additional
amounts are paid to
8
members of the Executive Committee for their services as such. Pursuant to the
Stewart Information Services Corporation 1996 Directors' Stock Plan (the "1996
Plan"), each non-employee director receives, in addition to the annual retainer
and per-meeting fees described above, an annual award of shares of Common Stock
of the Company valued at $8,500 based on the fair market value of the Common
Stock on the date of the award. The Company also reimburses each director for
the cost of an annual medical examination. In May 2001, Mrs. Hanks was granted,
in her capacity as Director of Employee Services for the Company, a 10-year
option for 1,200 shares of the Company's Common Stock at an exercise price of
$16.97 per share.
DEFERRED COMPENSATION AGREEMENTS
On March 10, 1986, the Company entered into a Deferred Compensation
Agreement with each of Malcolm S. Morris, Stewart Morris, Jr. and Max Crisp
(individually, a "Beneficiary"). Pursuant to such agreements, as amended, 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 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 Beneficiary's
employment with the Company is terminated by reason of fraud, dishonesty,
embezzlement or theft. Any death or income benefits provided to a Beneficiary
under certain insurance policies currently maintained by the Company will reduce
payments due to such Beneficiary under his Deferred Compensation Agreement.
9
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on Common Stock with the cumulative total
return of the Russell 2000 Index and the Russell 2000 Financial Services Sector
Index (which includes the Company and its major publicly owned competitors) for
the five years ended December 31, 2001. The graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 at December 31,
1996 and that all dividends were reinvested.
[PERFORMANCE GRAPH]
<Table>
<Caption>
- --------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- --------------------------------------------------------------------------------
Company $100.00 $141.29 $284.31 $131.75 $219.59 $195.47
Russell 2000 100.00 122.36 119.24 144.59 140.22 143.71
Russell 2000
Financial Services
Sector 100.00 136.03 126.24 118.83 143.84 166.34
</Table>
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
and Dr. W. Arthur Porter. During 2001, the Compensation Committee held two
meetings at which both members were present.
10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
To the Board of Directors of
Stewart Information Services Corporation:
COMPENSATION COMMITTEE REPORT
Compensation Policy. The Compensation Committee of the Board of Directors
(the "Committee") is responsible for the oversight and administration of the
Company's executive compensation program. The Committee reviews the compensation
program of the Company during each year as it deems necessary. The objective of
the Committee is to provide executive officers of the Company with a
compensation package that is fair and reasonable based on their individual
levels of responsibility and performance in relation to the compensation of
executive officers of other publicly held companies in the title insurance and
comparable industries. In making its determinations as to the reasonableness of
the Company's executive compensation, the Committee relies in part on the advice
of a nationally recognized, independent compensation consulting firm. The
principal elements of the Company's executive compensation program are an annual
salary, an annual cash bonus and stock option grants to executive officers.
Base Salary. For 2001, the base salary level for each of the Co-Chief
Executive Officers of the Company remained at $135,000. Historically, base
salaries of the Company's executive officers have remained relatively stable
from year to year. While the Company maintains no direct payroll, base salaries
of the Company's executive officers paid at the subsidiary level are set at
levels deemed reasonable by the Committee based upon its subjective evaluation
of the executive officer's level of responsibility.
Annual Bonus. Each of the Co-Chief Executive Officers is eligible to
receive an annual cash bonus based on a percentage of the consolidated income
before taxes of Guaranty, subject to a minimum bonus of $250,000. The Committee
believes that the consolidated income before taxes of Guaranty, and the effect
thereof on the Company's book value per share, are important determinants over
time of the value of the Company's Common Stock. For 2001, the Committee
recommended and the Company adopted the following bonus formula for each of the
Co-Chief Executive Officers:
<Table>
<Caption>
GUARANTY CONSOLIDATED INCOME PERCENT PAYABLE
BEFORE TAXES AND BONUSES AS BONUS
- ---------------------------- ---------------
Up to $20 million........................................... 1.00%
$20 million to $40 million.................................. 0.75%
$40 million to $60 million.................................. 0.50%
Over $60 million............................................ 0.25%
</Table>
The consolidated income before taxes and bonuses of Guaranty in 2001 was $80.3
million. Accordingly, each of the Co-Chief Executive Officers earned a bonus of
$500,660 for 2001.
Stock Options. Pursuant to the Company's 1999 Stock Option Plan (the "1999
Plan"), in 2001 the Committee granted options to Malcolm S. Morris, Stewart
Morris, Jr. and Max Crisp for 25,000, 25,000 and 16,500 shares, respectively.
See "-- Option Grants and Exercises" elsewhere in the Proxy Statement in which
this report is included. The grant date values of such options were taken into
account by the Committee in determining the reasonableness of the recipient
officer's annual compensation package. The purpose of the 1999 Plan is to make
available to the Committee an additional form of compensation that will align
the interests of executive officers with those of the stockholders over a
multi-year term. Each of the executive officers is eligible for grants of
options at a purchase price not less than the fair market value of the shares on
the date of grant.
11
The Company's net earnings increased from $0.04 per diluted share in 2000
to $2.98 per diluted share in 2001. The Committee recognizes that the title
insurance industry is strongly affected by nationally prevailing interest rates,
and the Company's financial results from year to year will depend largely on the
level of real estate activity in its primary markets. The Committee subjectively
evaluates the performance of the Company's executive officers, including the
Co-Chief Executive Officers, with respect to their efforts to provide for the
long-term financial well being of the Company and to respond to continuing
changes in the industry environment. In 2001, the Committee gave particular
consideration to the efforts of the Co-Chief Executive Officers in further
developing the Company's automation programs, entering new markets through
acquisitions and pursuing opportunities in international markets.
PAUL W. HOBBY
DR. W. ARTHUR PORTER
Members of the Compensation Committee
APPROVAL OF THE 2002 STOCK OPTION PLAN FOR REGION MANAGERS
BACKGROUND
On March 18, 2002, the Board of Directors of the Company adopted the
Stewart Information Services Corporation 2002 Stock Option Plan for Region
Managers (the "2002 Plan"). Similar plans had been in effect since 1992. As of
December 31, 2001, 38,600 shares were available for options thereunder. The
purpose of the 2002 Plan is to provide compensation in the form of ownership of
the Company's Common Stock to Region Managers of the Company and its affiliates.
The 2002 Plan is intended to advance the best interest of the Company by
providing certain persons having substantial responsibility for its management
and growth with additional incentive and by increasing their proprietary
interest in the success of the Company, thereby encouraging them to remain in
its employ. A copy of the 2002 Plan is attached as Appendix A to this proxy
statement.
SUMMARY OF THE 2002 PLAN
The 2002 Plan is administered by the Salary Committee, which may from time
to time grant stock options (either "incentive" or "non-qualified" stock
options) to full-time key employees (including officers and directors) who are
employed at the time of grant as Region Managers (or an equivalent position). At
March 18, 2002 approximately 14 Region Managers, none of whom are officers or
directors of the Company except for Mrs. Hanks, were eligible to participate in
the 2002 Plan. The 2002 Plan provides that an aggregate of 300,000 shares of
Common Stock of the Company shall be subject to the 2002 Plan. The shares
subject to the 2002 Plan consist of authorized and unissued shares. Factors to
be considered by the Salary Committee in making grants of stock options under
the 2002 Plan are set forth therein. No member of the Salary Committee is
eligible to receive stock options under the 2002 Plan. No stock options may be
granted under the 2002 Plan after March 18, 2012.
Stock options under the 2002 Plan give the holder the right to purchase a
number of shares of the Company's Common Stock at future dates not more than ten
years after the date of grant. The exercise price may be the fair market value
of the stock on the date of grant, or such other price as the Salary Committee
may determine, but not less than 100% of such fair market value. On March 15,
2002, the closing sale price of a share of the Company's Common Stock on the New
York Stock Exchange was $19.18.
The 2002 Plan permits an optionee to exercise an outstanding vested option
until the date that is three months following his termination of employment or,
if earlier, the date that is ten years after the date of grant. In the event of
the death of an optionee while in the employ of the Company and before the date
of expiration of the option, optionee's executor, administrator or other person
to whom the option could be transferred by will or the laws of descent and
distribution may exercise the vested option at any time until the date that is
one year after the date of death or, if earlier, the date that is ten years
after the date of grant. Options will not
12
continue to vest after the date of death or other termination of employment
unless otherwise provided in the optionee's option agreement.
The Board of Directors is authorized to amend or terminate the 2002 Plan.
Options shall not be transferable by the optionee except by will or under the
laws of descent and distribution and shall be exercisable, during his lifetime,
only by him or her.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. The grant of incentive stock options does not
result in any income tax consequences. The exercise of an incentive stock option
does not result in any income tax consequences to the optionee if the incentive
stock option is exercised by the optionee during his employment with the Company
or a subsidiary, or within a specified period after termination of employment.
However, the excess of the fair market value of the shares of stock as of the
date of exercise over the option price is a tax preference item for purposes of
determining an optionee's alternative minimum tax. An optionee who sells shares
acquired pursuant to the exercise of an incentive stock option after the
expiration of (i) two years from the date of grant of the incentive stock option
and (ii) one year after the transfer of the shares to him (the "Waiting Period")
will generally recognize a long-term capital gain or loss on the sale.
An optionee who disposes of his incentive stock option shares prior to the
expiration of the Waiting Period (an "Early Disposition") generally will
recognize ordinary income in the year of sale in an amount equal to the excess,
if any, of (a) the lesser of (i) the fair market value of the shares as of the
date of exercise or (ii) the amount realized on the sale, over (b) the option
price. Any additional amount realized on an Early Disposition should be treated
as capital gain to the optionee, short or long term, depending on the optionee's
holding period for the shares. If the shares are sold for less than the option
price, the optionee will not recognize any ordinary income but will recognize a
capital loss, short or long term, depending on the holding period.
The Company will not be entitled to a deduction as a result of the grant of
an incentive stock option, the exercise of an incentive stock option, or the
sale of incentive stock option shares after the Waiting Period. If an optionee
disposes of his incentive stock option shares in an Early Disposition, the
Company will be entitled to deduct the amount of ordinary income recognized by
the optionee.
Non-Qualified Stock Options. The grant of non-qualified stock options
under the 2002 Plan will not result in the recognition of any taxable income by
the optionee. An optionee will recognize ordinary income on the date of exercise
of the non-qualified stock option equal to the difference between the fair
market value of the shares acquired on such date and the exercise price. The tax
basis of the shares for purposes of a subsequent sale includes the option price
paid and the ordinary income reported on exercise of the option. The income
reportable on exercise of the non-qualified stock option is subject to federal
and state income and employment withholding taxes.
Generally, the Company will be entitled to a deduction in the amount
reportable as income by the optionee on the exercise of a non-qualified stock
option.
APPROVAL BY STOCKHOLDERS
The grant of incentive stock options under the 2002 Plan is subject to
approval of the 2002 Plan by the stockholders of the Company. Approval of the
2002 Plan will require the affirmative vote of a majority of the total votes
cast on such proposal, with holders of Common Stock and Class B Common Stock
voting together as a single class. On the Record Date, an aggregate of
17,801,252 shares of Common Stock and Class B Common Stock were outstanding and
entitled to vote on the proposal to approve the 2002 Plan. If the 2002 Plan is
not approved by the stockholders of the Company, the Compensation Committee may
nevertheless grant non-qualified stock options thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 2002 PLAN.
13
SELECTION OF INDEPENDENT AUDITORS
KPMG LLP has been selected by the Company as its principal independent
auditors for the Company's fiscal year ending December 31, 2002, and served in
such capacity for the Company's fiscal year ended December 31, 2001.
Representatives of KPMG LLP are expected to be present at the Annual Meeting
with the opportunity to make a statement if they desire to do so, and such
representatives are expected to be available to respond to appropriate
questions.
AUDIT FEES
The aggregate fees billed by KPMG LLP for professional services rendered
for the audit of the Company's annual financial statements for the fiscal year
ended December 31, 2001 and for the reviews of the financial statements included
in the Company's Quarterly Reports on Form 10-Q for that fiscal year were
$438,700.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by KPMG LLP for professional services rendered
for information technology services relating to financial information systems
design and implementation for the fiscal year ended December 31, 2001.
ALL OTHER FEES
Fees billed by KPMG LLP for services rendered to the Company, other than
the services described above totaled $272,500. This amount consists of audit
related fees of $157,550 (including $54,250 relating to the Company's registered
public offering of Common Stock in 2001) and other non-audit services of
$115,000 (including $70,000 of tax compliance).
14
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors of the Company serves as the
representative of the Board for the general oversight of the Company's financial
accounting and reporting process, system of internal control, audit process, and
process for monitoring compliance with laws and regulations and the Company's
standards for Corporate Compliance. The Company's management has primary
responsibility for preparing the consolidated financial statements and for the
Company's financial reporting process. The Company's independent accountants,
KPMG LLP, are responsible for expressing an opinion on the conformity of the
Company's audited consolidated financial statements to accounting principles
generally accepted in the United States of America.
In this context, the Audit Committee hereby reports as follows:
1. The Audit Committee has reviewed and discussed the audited
financial statements with the Company's management.
2. The Audit Committee has discussed with the independent accountants
the matters required to be discussed by SAS 61 (Codification of Statements
on Auditing Standards, AU 380).
3. The Audit Committee has received the written disclosures and
letters from the independent accountants required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees) and has discussed with the
independent accountants the independent accountants' independence.
4. Based on the review and discussion referred to in paragraphs (1)
through (3) above, the Audit Committee has approved that the audited
financial statements be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2001, 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:
E. DOUGLAS HODO
LLOYD BENTSEN, III
PAUL W. HOBBY
Dated: March 14, 2002
15
CERTAIN TRANSACTIONS
Stewart Morris is the father of Stewart Morris, Jr. and Carloss Morris is
the father of Malcolm S. Morris. Stewart Morris and Carloss Morris are brothers.
During the year ended December 31, 2001, Stewart Morris served as a director of
Title and Guaranty and as chairman of Title's executive committee, and Carloss
Morris served as a director of Title and Guaranty and as chairman of Guaranty's
executive committee. Aggregate salaries, bonuses and other compensation for 2001
for Stewart Morris and Carloss Morris were $354,686 and $364,492, respectively.
During 2001, the Company and its subsidiaries paid a total of $298,053 to
the law firm of Morris, Lendais, Hollrah & Snowden, P.C., of which Carloss
Morris and Malcolm S. Morris are shareholders. In connection with real estate
transactions processed by Title, such firm receives legal fees from its clients
who are also customers of Title and who select such firm as their counsel.
During 2001, Marietta Maxfield, a sister of Malcolm S. Morris, was a
full-time attorney for Guaranty and was paid $116,596 for services rendered in
such capacity.
PROPOSALS FOR NEXT ANNUAL MEETING
Any proposals of holders of Common Stock or Class B Common Stock intended
to be presented at the Annual Meeting of Stockholders of the Company to be held
in 2003 must be received by the Company at its principal executive offices, 1980
Post Oak Boulevard, Suite 800, Houston, Texas 77056, no later than November 22,
2002, in order to be included in the proxy statement and form of proxy relating
to that meeting.
OTHER MATTERS
The management of the Company knows of no other matters which may come
before the meeting. However, if any matters other than those referred to above
should properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote such proxy in accordance with their best
judgment.
Proxies for the Company's annual meeting of stockholders to be held in 2003
may confer discretionary power to vote on any matter that may come before the
meeting unless, with respect to a particular matter, (i) the Company receives
notice, by certified mail, return receipt requested, addressed to the Company's
Secretary, not later than February 15, 2003, that the matter will be presented
at the annual meeting and (ii) the Company fails to include in its proxy
statement for the annual meeting advice on the nature of the matter and how the
Company intends to exercise its discretion to vote on the matter.
The cost of solicitation of proxies in the accompanying form will be paid
by the Company. The Company has retained Innisfree M&A Incorporated, a proxy
solicitation firm, to assist it in soliciting proxies for the proposals
described in this proxy statement. The Company has agreed to 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 officers or employees of
the Company, and of Innisfree, may solicit the return of proxies by telephone,
telegram or personal interview.
By Order of the Board of Directors,
Max Crisp
Secretary
March 22, 2002
16
ANNEX A
STEWART INFORMATION SERVICES CORPORATION
2002 STOCK OPTION PLAN FOR REGION MANAGERS
TABLE OF CONTENTS
<Table>
<Caption>
SECTION
-------
ARTICLE I PLAN
Purpose................................................... 1.1
Term of Plan.............................................. 1.2
ARTICLE II DEFINITIONS
Affiliate................................................. 2.1
Board..................................................... 2.2
Code...................................................... 2.3
Committee................................................. 2.4
Company................................................... 2.5
Employee.................................................. 2.6
Fair Market Value......................................... 2.7
Holder.................................................... 2.8
Incentive Option.......................................... 2.9
Mature Shares............................................. 2.10
Nonqualified Option....................................... 2.11
Option.................................................... 2.12
Option Agreement.......................................... 2.13
Plan...................................................... 2.14
Region Manager............................................ 2.15
Stock..................................................... 2.16
ARTICLE III ELIGIBILITY
ARTICLE IV GENERAL PROVISIONS RELATING TO OPTIONS
Authority to Grant Options................................ 4.1
Dedicated Shares; Maximum Options......................... 4.2
Non-Transferability....................................... 4.3
Requirements of Law....................................... 4.4
Changes in the Company's Capital Structure................ 4.5
ARTICLE V OPTIONS
Type of Option............................................ 5.1
Exercise Price............................................ 5.2
Duration of Options....................................... 5.3
Amount Exercisable........................................ 5.4
Exercise of Options....................................... 5.5
Substitution Options...................................... 5.6
No Rights as Stockholder.................................. 5.7
ARTICLE VI ADMINISTRATION
ARTICLE VII AMENDMENT OR TERMINATION OF PLAN
ARTICLE VIII MISCELLANEOUS
No Establishment of a Trust Fund.......................... 8.1
No Employment Obligation.................................. 8.2
Forfeiture................................................ 8.3
Tax Withholding........................................... 8.4
Written Agreement......................................... 8.5
</Table>
A-i
<Table>
<Caption>
SECTION
-------
Indemnification of the Committee.......................... 8.6
Gender.................................................... 8.7
Headings.................................................. 8.8
Other Compensation Plans.................................. 8.9
Other Options............................................. 8.10
Governing Law............................................. 8.11
</Table>
A-ii
ARTICLE I
PLAN
1.1 Purpose. The Plan is intended to advance the best interests of the
Company and its stockholders by providing those persons who have substantial
responsibility for the management and growth of the Company and its Affiliates
with additional incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to continue in
their employment with the Company or any of its Affiliates.
1.2 Term of Plan. No Option shall be granted under the Plan after March
18, 2012. The Plan shall remain in effect until all Options under the Plan have
been satisfied or expired.
ARTICLE II
DEFINITIONS
The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout the Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower or different
meaning.
2.1 "Affiliate" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50 percent or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain. The
term "subsidiary corporation" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time of
the action or transaction, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.
2.2 "Board" means the board of directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the Salary Committee of the Company.
2.5 "Company" means Stewart Information Services Corporation, a Delaware
corporation.
2.6 "Employee" means a person employed by the Company or any Affiliate as
a common law employee.
2.7 "Fair Market Value" of the Stock as of any date means the closing
price of the Stock on such date, or, if the Stock was not traded on such date,
on the immediately preceding day that the Stock was so traded. However, if the
Stock is not listed on a securities exchange or quotation system, the Fair
Market Value will be an amount determined by the Committee.
2.8 "Holder" means a person who has been granted an Option or any person
who is entitled to receive stock under an Option.
2.9 "Incentive Option" means an Option granted under the Plan which is
designated as an "Incentive Option" and satisfies the requirements of section
422 of the Code.
2.10 "Mature Shares" means shares of Stock that the Holder has held for at
least six months.
2.11 "Nonqualified Option" means an Option granted under the Plan other
than an Incentive Option.
2.12 "Option" means either an Incentive Option or a Nonqualified Option
granted under the Plan to purchase shares of Stock.
2.13 "Option Agreement" means the written agreement which sets out the
terms of an Option.
A-1
2.14 "Plan" means the Stewart Information Services Corporation 2002 Stock
Option Plan for Region Managers, as set forth in this document and as it may be
amended from time to time.
2.15 "Region Manager" means an Employee who holds the title "Region
Manager" or an Employee who the Committee, in its sole discretion, determines
has a position equivalent to the position of a Region Manager.
2.16 "Stock" means the common stock of the Company, $1.00 par value, or,
in the event that the outstanding shares of common stock are later changed into
or exchanged for a different class of stock or securities of the Company or
another corporation, that other stock or security.
ARTICLE III
ELIGIBILITY
The individuals who shall be eligible to receive Options shall be those
full-time key Employees, including officers and directors, who are employed on
the date an Option is granted as a Region Manager and who have substantial
responsibility for the management and growth of the Company or any of its
Affiliates as the Committee shall determine from time to time.
ARTICLE IV
GENERAL PROVISIONS RELATING TO OPTIONS
4.1 Authority to Grant Options. The Committee may grant Options to those
eligible Region Managers as it shall from time to time determine, under the
terms and conditions of the Plan. Factors the Committee may consider include,
without limitation:
(a) Region rank of consolidated STG/STC pretax profit (dollars) in the
Region Manager's territory as reported on the Region Manager's consolidated
profit center statement;
(b) Region rank of profit percentage in the Region Manager's territory
as reported on the Region Manager's STG/STC profit center statement;
(c) Region rank of percentage of policy losses to premiums generated
YTD as reported on the Region Performance Summary Report;
(d) Market share increase in the Region Manger's territory over the
prior year as reported on the quarterly ALTA statistics on market share.
Market share weight will be increased with market share growth in key
states and percentage of state responsibility of Region Manager;
(e) Region rank of percentage increase in Cash to Houston remittances
as reported on the Region Performance Summary Report;
(f) Region rank of percentage of delinquent premium YTD;
(g) Net expansion of territory via acquisitions, branch offices,
increased number of agents;
(h) Region Manager incorporation and pursuit of SISCO Strategies
(Service, Technology, Growth, Communication) and Ten Standards in region's
goals;
(i) Other contributions towards overall company performance or failure
to comply with company requests. Items considered may include Region
Manager rollout of technology, new products or other programs sponsored by
the company, completion of agency visits, follow-up on audits and training
and benefit participation.
The Committee shall evaluate the relative importance of these factors, and
the Region Manager's standing among the recipient group, in its sole and
absolute discretion and shall have full power and authority to determine
according to the above criteria the amount of shares subject to any option,
subject only to any applicable limitations set out in the Plan.
A-2
4.2 Dedicated Shares; Maximum Options. The aggregate number of shares of
Stock with respect to which Options may be granted under the Plan is 300,000.
Such shares of Stock may be treasury shares or authorized but unissued shares.
The number of shares stated in this Section 4.2 shall be subject to adjustment
in accordance with the provisions of Section 4.5. If any outstanding Option
expires or terminates for any reason or any Option is surrendered, the shares of
Stock allocable to the unexercised portion of that Option may again be subject
to an Option granted under the Plan.
4.3 Non-Transferability. Incentive Options shall not be transferable by
the Holder other than by will or under the laws of descent and distribution, and
shall be exercisable, during the Holder's lifetime, only by him or her. Except
as specified in domestic relations court orders, Nonqualified Options shall not
be transferable by the Holder other than by will or under the laws of descent
and distribution, and shall be exercisable, during the Holder's lifetime, only
by him or her. In the discretion of the Committee, any attempt to transfer an
Option other than under the terms of the Plan and the applicable Option
agreement may terminate the Option.
4.4 Requirements of Law. The Company shall not be required to sell or
issue any Stock under any Option if issuing that Stock would constitute or
result in a violation by the Holder or the Company of any provision of any law,
statute or regulation of any governmental authority. Specifically, in connection
with any applicable statute or regulation relating to the registration of
securities, upon exercise of any Option, the Company shall not be required to
issue any Stock unless the Committee has received evidence satisfactory to it to
the effect that the Holder will not transfer the Stock except in accordance with
applicable law, including receipt of an opinion of counsel satisfactory to the
Company to the effect that any proposed transfer complies with applicable law.
The determination by the Committee on this matter shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
Stock covered by the Plan pursuant to applicable securities laws of any country
or any political subdivision. In the event the Stock issuable on exercise of an
Option is not registered, the Company may imprint on the certificate evidencing
the Stock any legend that counsel for the Company considers necessary or
advisable to comply with applicable law. The Company shall not be obligated to
take any other affirmative action in order to cause the exercise of an Option,
or the issuance of shares pursuant thereto, to comply with any law or regulation
of any governmental authority.
4.5 Changes in the Company's Capital Structure.
(a) The existence of outstanding Options shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, any merger or consolidation of the
Company, any issue of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Stock or its rights, the dissolution or liquidation of
the Company, any sale or transfer of all or any part of its assets or business
or any other corporate act or proceeding, whether of a similar character or
otherwise.
(b) If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of Stock outstanding, without receiving
compensation for money, services or property, then (i) the number, class or
series and per share price of shares of Stock subject to outstanding Options
under this Plan shall be appropriately adjusted in such a manner as to entitle a
Holder to receive upon exercise of an Option, for the same aggregate cash
consideration, the equivalent total number and class or series of shares the
Holder would have received had the Holder exercised his or her Option in full
immediately prior to the event requiring the adjustment, and (ii) the number and
class or series of shares of Stock then reserved to be issued under the Plan
shall be adjusted by substituting for the total number and class or series of
shares of Stock then reserved, that number and class or series of shares of
Stock that would have been received by the owner of an equal number of
outstanding shares of each class or series of Stock as the result of the event
requiring the adjustment.
(c) If while unexercised Options remain outstanding under the Plan (i) the
Company shall not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of an entity other than an
entity that was wholly-owned by the Company immediately prior to such merger,
consolidation or other reorganization), (ii) the Company sells, leases or
exchanges or agrees to sell, lease or
A-3
exchange all or substantially all of its assets to any other person or entity
(other than an entity wholly-owned by the Company), (iii) the Company is to be
dissolved or (iv) the Company is a party to any other corporate transaction (as
defined under section 424(a) of the Code and applicable Department of Treasury
Regulations) that is not described in clauses (i), (ii) or (iii) of this
sentence (each such event is referred to herein as a "Corporate Change"), then,
except as otherwise provided in an Option Agreement or as a result of the
Board's effectuation of one or more of the alternatives described below, there
shall be no acceleration of the time at which any Option then outstanding may be
exercised, and no later than ten days after the approval by the stockholders of
the Company of such Corporate Change, the Board, acting in its sole and absolute
discretion without the consent or approval of any Holder, shall act to effect
one or more of the following alternatives, which may vary among individual
Holders and which may vary among Options held by any individual Holder:
(1) accelerate the time at which some or all of the Options then
outstanding may be exercised so that such Options may be exercised in full
for a limited period of time on or before a specified date (before or after
such Corporate Change) fixed by the Board, after which specified date all
such Options that remain unexercised and all rights of Holders thereunder
shall terminate;
(2) require the mandatory surrender to the Company by all or selected
Holders of some or all of the then outstanding Options held by such Holders
(irrespective of whether such Options are then exercisable under the
provisions of this Plan or the Option Agreements evidencing such Options)
as of a date, before or after such Corporate Change, specified by the
Board, in which event the Board shall thereupon cancel such Options and the
Company shall pay to each such Holder an amount of cash per share equal to
the excess, if any, of the per share price offered to stockholders of the
Company in connection with such Corporate Change over the exercise prices
under such Options for such shares;
(3) with respect to all or selected Holders, have some or all of their
then outstanding Options (whether vested or unvested) assumed or have a new
Option substituted for some or all of their then outstanding Options
(whether vested or unvested) by an entity which is a party to the
transaction resulting in such Corporate Change and which is then employing
such Holder or which is affiliated or associated with such Holder in the
same or a substantially similar manner as the Company prior to the
Corporate Change, or a parent or subsidiary of such entity, provided that
(A) such assumption or substitution is on a basis where the excess of the
aggregate fair market value of the shares subject to the Option immediately
after the assumption or substitution over the aggregate exercise price of
such shares is equal to the excess of the aggregate fair market value of
all shares subject to the Option immediately before such assumption or
substitution over the aggregate exercise price of such shares, and (B) the
assumed rights under such existing Option or the substituted rights under
such new Option as the case may be will have the same terms and conditions
as the rights under the existing Option assumed or substituted for, as the
case may be;
(4) provide that the number and class or series of shares of Stock
covered by an Option (whether vested or unvested) theretofore granted shall
be adjusted so that such Option when exercised shall thereafter cover the
number and class or series of shares of stock or other securities or
property (including, without limitation, cash) to which the Holder would
have been entitled pursuant to the terms of the agreement or plan relating
to such Corporate Change if, immediately prior to such Corporate Change,
the Holder had been the holder of record of the number of shares of Stock
then covered by such Option; or
(5) make such adjustments to Options then outstanding as the Board
deems appropriate to reflect such Corporate Change (provided, however, that
the Board may determine in its sole and absolute discretion that no such
adjustment is necessary).
In effecting one or more of alternatives (3), (4) or (5) above, and except
as otherwise may be provided in an Option Agreement, the Board, in its sole and
absolute discretion and without the consent or approval of any Holder, may
accelerate the time at which some or all Options then outstanding may be
exercised.
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(d) In the event of changes in the outstanding Stock by reason of
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Option and not otherwise provided for by this Section 4.5,
any outstanding Options and any agreements evidencing such Options shall be
subject to adjustment by the Board in its sole and absolute discretion as to the
number and price of shares of stock or other consideration subject to such
Options. In the event of any such change in the outstanding Stock, the aggregate
number of shares available under this Plan may be appropriately adjusted by the
Board, whose determination shall be conclusive.
(e) The issuance by the Company of shares of stock of any class or series,
or securities convertible into shares of stock of any class or series, for cash
or property, or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe for them, or upon conversion or
exchange of shares or obligations of the Company convertible into, or
exchangeable for, shares or other securities, shall not affect, and no
adjustment by reason of such issuance shall be made with respect to, the number,
class or series, or price of shares of Stock then subject to outstanding
Options.
ARTICLE V
OPTIONS
5.1 Type of Option. The Committee shall specify in an Option Agreement
whether a given Option is an Incentive Option or a Nonqualified Option.
Notwithstanding such designation, however, to the extent that the aggregate Fair
Market Value (determined as of the time an Incentive Option is granted) of the
Stock with respect to which incentive stock options first become exercisable by
an Employee during any calendar year (under the Plan and any other incentive
stock option plan(s) of the Company or any Affiliate) exceeds $100,000, the
Incentive Option shall be treated as a Nonqualified Option. In making this
determination, incentive stock options shall be taken into account in the order
in which they were granted.
5.2 Exercise Price. The price for which Stock may be purchased under an
Option shall not be less than 100 percent of the Fair Market Value of the shares
of Stock on the date the Option is granted.
5.3 Duration of Options. Unless the Option Agreement specifies a shorter
general term, an Option shall expire on the earliest of the date that is (a) the
tenth anniversary of the date the Option is granted or (b) one day less than
three months after the date of the Holder's termination of employment with the
Company and all Affiliates (other than by reason of the Holder's death) or (c)
the date that is one year after the date of the Holder's death. Unless the
Holder's Option Agreement specifies otherwise, an Option shall not continue to
vest after the severance of the employment relationship between the Company and
all Affiliates.
After the death of the Holder, the Holder's executors, administrators or
any person or persons to whom the Holder's Option may be transferred by will or
by the laws of descent and distribution, shall have the right, at any time prior
to the expiration of the Option to exercise the Option, in respect to the number
of shares that the Holder would have been entitled to exercise if the Holder
exercised the Option prior to the Holder's death.
5.4 Amount Exercisable. Each Option may be exercised at the time, in the
manner and subject to the conditions the Committee specifies in the Option
Agreement in its sole discretion.
5.5 Exercise of Options. Each Option shall be exercised by the delivery
of written notice to the Committee setting forth the number of shares of Stock
with respect to which the Option is to be exercised, together with: (a) cash,
certified check, bank draft or postal or express money order payable to the
order of the Company for an amount equal to the exercise price under the Option,
(b) Mature Shares with a Fair Market Value on the date of exercise equal to the
exercise price under the Option, (c) an election to make a cashless exercise
through a registered broker-dealer (if approved in advance by the Committee or
by an executive officer of the Company) or (d) except as specified below, any
other form of payment which is acceptable to the Committee, and specifying the
address to which the certificates for the shares are to be mailed. As promptly
as practicable after receipt of written notification and payment, the Company
shall deliver to the Holder certificates for the number of shares with respect
to which the Option has been exercised, issued in the Holder's name. If Mature
Shares are used for payment by the Holder, the aggregate Fair Market Value of
the
A-5
shares of Stock tendered must be equal to or less than the aggregate exercise
price of the shares being purchased upon exercise of the Option, and any
difference must be paid by cash, certified check, bank draft or postal or
express money order payable to the order of the Company. Delivery of the shares
shall be deemed effected for all purposes when a stock transfer agent of the
Company shall have deposited the certificates in the United States mail,
addressed to the Holder, at the address specified by the Holder.
Whenever an Option is exercised by exchanging Mature Shares owned by the
Holder, the Holder shall deliver to the Company certificates registered in the
name of the Holder representing a number of shares of Stock legally and
beneficially owned by the Holder, free of all liens, claims and encumbrances of
every kind, accompanied by stock powers duly endorsed in blank by the record
holder of the shares represented by the certificates (with signature guaranteed
by a commercial bank or trust company or by a brokerage firm having a membership
on a registered national stock exchange). The delivery of certificates upon the
exercise of Options is subject to the condition that the person exercising the
Option provide the Company with the information the Company might reasonably
request pertaining to exercise, sale or other disposition.
The Committee may permit a Holder to elect to pay the exercise price upon
exercise of an Option by authorizing a third-party broker to sell all or a
portion of the shares of Stock acquired upon exercise of the Option and remit to
the Company a sufficient portion of the sale proceeds to pay the exercise price
and any applicable tax withholding resulting from such exercise.
The Committee shall not permit a Holder to pay such Holder's exercise price
upon the exercise of an Option by having the Company reduce the number of shares
of Stock that will be delivered to the Holder pursuant to the exercise of the
Option. In addition, the Committee shall not permit a Holder to pay such
Holder's exercise price upon the exercise of an Option by using shares of Stock
other than Mature Shares.
An Option may not be exercised for a fraction of a share of Stock.
5.6 Substitution Options. Options may be granted under the Plan from time
to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and conditions
of the substitute Options granted may vary from the terms and conditions set out
in the Plan to the extent the Committee, at the time of grant, may deem
appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted.
5.7 No Rights as Stockholder. No Holder shall have any rights as a
stockholder with respect to Stock covered by such Holder's Option until the date
a stock certificate is issued for the Stock.
ARTICLE VI
ADMINISTRATION
The Plan shall be administered by the Committee. All questions of
interpretation and application of the Plan and Options shall be subject to the
determination of the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be as effective as if it had been made
by a majority vote at a meeting properly called and held. The Plan shall be
administered in such a manner as to permit the Options which are designated to
be Incentive Options to qualify as Incentive Options. In carrying out its
authority under the Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities, to:
(a) determine the persons to whom and the time or times at which
Options will be made;
(b) determine the number of shares and the exercise price of Stock
covered in each Option, subject to the terms of the Plan;
A-6
(c) determine the terms, provisions and conditions of each Option,
which need not be identical;
(d) accelerate the time at which any outstanding Option may be
exercised;
(e) define the effect, if any, on an Option of the death, disability,
retirement or other termination of employment relationship between the
Holder and the Company and Affiliates;
(f) prescribe, amend and rescind rules and regulations relating to
administration of the Plan; and
(g) make all other determinations and take all other actions deemed
necessary, appropriate or advisable for the proper administration of the
Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of the Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.
ARTICLE VII
AMENDMENT OR TERMINATION OF PLAN
The Board may amend, terminate or suspend the Plan at any time, in its sole
and absolute discretion; provided, however, that to the extent required to
maintain the status of any Incentive Option under the Code, no amendment that
would change the aggregate number of shares of Stock which may be issued under
Incentive Options, or change the class of Employees eligible to receive
Incentive Options shall be made without the approval of the Company's
stockholders. Subject to the preceding sentence, the Board shall have the power
to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under the Plan to continue to qualify as an
incentive stock option or such other stock option as may be defined under the
Code so as to receive preferential federal income tax treatment.
ARTICLE VIII
MISCELLANEOUS
8.1 No Establishment of a Trust Fund. No property shall be set aside nor
shall a trust fund of any kind be established to secure the rights of any Holder
under the Plan. All Holders shall at all times rely solely upon the general
credit of the Company for the payment of any benefit which becomes payable under
the Plan.
8.2 No Employment Obligation. The granting of any Option shall not
constitute an employment contract, express or implied, nor impose upon the
Company or any Affiliate any obligation to employ or continue to employ, or
utilize the services of, any Holder. The right of the Company or any Affiliate
to terminate the employment of any person shall not be diminished or affected by
reason of the fact that an Option has been granted to him.
8.3 Forfeiture. Notwithstanding any other provisions of the Plan, if the
Committee finds by a majority vote after full consideration of the facts that
the Holder, before or after termination of such Holder's employment relationship
with the Company or an Affiliate for any reason committed or engaged in willful
misconduct, gross negligence, a breach of fiduciary duty, fraud, embezzlement,
theft, a felony, a crime involving moral turpitude or proven dishonesty in the
course of such Holder's employment by the Company or an Affiliate, the Holder
shall forfeit all outstanding Options, and all exercised Options if the Company
has not yet delivered a stock certificate to the Holder with respect thereto.
The decision of the Committee shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the Holder by the Company
or an Affiliate in any manner.
8.4 Tax Withholding. The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Holder any sums required by
federal, state or local tax law to be withheld with respect to the grant or
exercise of an Option. In the alternative, the Company may require the Holder of
an Option to
A-7
pay such sums for taxes directly to the Company or any Affiliate in cash or by
check within ten days after the date of exercise or lapse of restrictions. In
the discretion of the Committee, and with the consent of the Holder, the Company
may reduce the number of shares of Stock issued to the Holder upon such Holder's
exercise of an Option to satisfy the tax withholding obligations of the Company
or an Affiliate; provided that the Fair Market Value of the shares held back
shall not exceed the Company's or the Affiliate's minimum statutory withholding
tax obligations. The Company shall have no obligation upon exercise of any
Option until the Company or an Affiliate has received payment sufficient to
cover all tax withholding amounts due with respect to that exercise. Neither the
Company nor any Affiliate shall be obligated to advise a Holder of the existence
of the tax or the amount which it will be required to withhold.
8.5 Written Agreement. Each Option shall be embodied in a written
agreement which shall be subject to the terms and conditions of the Plan and
shall be signed by the Holder and by a member of the Committee on behalf of the
Committee and the Company or an executive officer of the Company, other than the
Holder, on behalf of the Company. The agreement may contain any other provisions
that the Committee in its discretion shall deem advisable which are not
inconsistent with the terms of the Plan.
8.6 Indemnification of the Committee. The Company shall indemnify each
present and future member of the Committee against, and each member of the
Committee shall be entitled without further action his or her part to indemnity
from the Company for, all expenses (including attorney's fees, the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by such member in connection with or arising out of
any action, suit or proceeding in which such member may be involved by reason of
such member being or having been a member of the Committee, whether or not he or
she continues to be a member of the Committee at the time of incurring the
expenses, including, without limitation, matters as to which such member shall
be finally adjudged in any action, suit or proceeding to have been negligent in
the performance of such member's duty as a member of the Committee. However,
this indemnity shall not include any expenses incurred by any member of the
Committee in respect of matters as to which such member shall be finally
adjudged in any action, suit or proceeding to have been guilty of gross
negligence or willful misconduct in the performance of his duty as a member of
the Committee. In addition, no right of indemnification under the Plan shall be
available to or enforceable by any member of the Committee unless, within 60
days after institution of any action, suit or proceeding, such member shall have
offered the Company, in writing, the opportunity to handle and defend same at
its own expense. This right of indemnification shall inure to the benefit of the
heirs, executors or administrators of each member of the Committee and shall be
in addition to all other rights to which a member of the Committee may be
entitled as a matter of law, contract or otherwise.
8.7 Gender. If the context requires, words of one gender when used in the
Plan shall include the other and words used in the singular or plural shall
include the other.
8.8 Headings. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.
8.9 Other Compensation Plans. The adoption of the Plan shall not affect
any other stock option, incentive or other compensation or benefit plans in
effect for the Company or any Affiliate, nor shall the Plan preclude the Company
from establishing any other forms of incentive compensation arrangements for
Employees.
8.10 Other Options. The grant of an Option shall not confer upon the
Holder the right to receive any future or other Options under the Plan, whether
or not Options may be granted to similarly situated Holders, or the right to
receive future Options upon the same terms or conditions as previously granted.
8.11 Governing Law. The provisions of the Plan shall be construed,
administered and governed under the laws of the State of Delaware.
A-8
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STEWART INFORMATION SERVICES CORPORATION Please mark [X]
your votes as
indicated in
this example
The Board of Directors recommends a vote FOR:
1. Election of Directors --
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed at right
[ ] [ ]
Nominees: 01 Lloyd Bentsen, III, 02 Nita B. Hanks, 03 Dr. E. Douglas Hodo,
04 Dr. W. Arthur Porter, 05 Gov. John P. LaWare
(Instruction: To withhold authority to vote for any nominee, write that
nominee's name on the line below.)
_____________________________________________________________________________
2. Approval of the Company's 2002 Stock Option Plan for Region Managers
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The undersigned acknowledges
receipt of the Notice of Annual
Meeting of Stockholders and of the
Proxy Statement.
Dated:_______________________, 2002
___________________________________
Signature(s)
___________________________________
Signature(s)
Please sign exactly as your name
appears. Joint owners should each
sign personally. Where applicable,
indicate your official position or
representation capacity.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
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PROXY 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 -- APRIL 26, 2002
The undersigned appoints Ken Anderson, Jr. and Tannie L. Pizzitola, Jr.,
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 April 26, 2002, or at any
adjournment thereof.
Unless otherwise marked, this proxy will be voted FOR the election of the
nominees named and FOR Proposal No. 2.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *