Foundation Asset Management has requested a special meeting of Stewart Information Services Corp. stockholders, where it will propose removing co-vice chairmen Malcolm Morris and Stewart Morris Jr. from the company's board of directors.
Stewart is underperforming its three national competitors in the title insurance business and it needs changes to the board "for stockholders to realize the maximum value of their investment," according to Foundation's Securities and Exchange Commission filing on Thursday.
In February 2015,
Through a dual class stock structure that remained in place until earlier this year, the Morris family had significant control of the Houston-based title insurer. Current CEO Matthew Morris is Malcolm Morris' son.
Foundation owns 5.6% of the outstanding shares of Stewart. It needs the additional support of holders of 19.4% of the outstanding shares to force a meeting.
"We are concerned that due to their familial relationships, Malcolm S. Morris and Stewart Morris Jr. are at risk of placing the interests of CEO Matthew W. Morris and other members of the Morris family above those of the company's public stockholders," the SEC filing said.
Foundation is proposing Roslyn Payne, currently president of real estate venture capital firm Jackson Street Partners and a former board member at First American Financial Corp. from 1988 to 2009, and Ernest D. Smith, a former executive with Fidelity National Financial, as their replacements.
Stewart trailed its peers in terms of profitability in the second quarter at $24 million. Fidelity National Financial's title business
Stewart believes in its strategic plan and the "go-forward business performance will reflect the positive impact of these significant restructuring initiatives," the company said in a press release, adding the board "regularly considers…strategic options to enhance shareholder value."
