Houston-based Stewart Information Services Corp. said Wednesday that its board approved a proposed change to the title insurer's dual-share structure, creating a single class of common stock and giving a small group of private shareholders $12 million.
Activist investor Phil Goldstein of New Jersey-based Bulldog Investors called for the change early last year, saying it wasn't appropriate for a public company to have a dual-share structure.
Stewart's stock is divided into two classes, one of which is not publicly traded. Owners of those Class B shares include members of the company's founding family. Those shareholders have the authority to elect four board directors.
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Dual-share structures have been more common in media companies that do it for purposes of journalistic integrity.
Under the terms of the reclassification, Class B shareholders will exchange 1.05 million shares for the same amount of common stock, plus $12 million in cash. The stockholders include Malcolm S. Morris, Matthew William Morris, Stewart Morris Jr., Morris Children Heritage Trust and Stewart Security Capital.
"We believe the proposal ... will help to strengthen Stewart's corporate governance, aligning voting rights with the economic interests of our stockholders," board chairman Thomas G. Apel said.
The reclassification is expected to be completed in the second quarter.
Stewart's stock closed at $34.35 Wednesday, up $1.53.
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