Per a recent agreement with Bulldog Investors, Stewart Information Services ($STC) will add an independent director to the board, while also submitting a non-binding proposal to shareholders for the conversion of the company's class B stock into common stock. In return, Bulldog won't wage a proxy battle.
Recall that part of the reason for all the activist upheaval (where Foundation Asset Management and Engine capital are also activist at STC) is the dual class structure of Stewart.
The key is that approval of the stockholder advisory proposal would not eliminate the company's dual-class capital structure, rather, it would be an advisory recommendation to the board to submit such a proposal to the stockholders in the future.
Last year, Engine Capital and Foundation Asset Management settled with Stewart Information, getting the company to put two of its nominees on the board. Engine and Foundation own right at 8.5% of the company. Bulldog Investors owns just over 5%.
The issues are well told at Stewart Information, but as a recap,
The majority of Class B shares are held by the Morris family, with Matthew Morris as CEO.
Class B shareholders own 5% of the company but have enough of the shareholder vote to elect four of the nine directors.
Class B shareholders aren't entitled to dividends, leading to an inherent conflict of interest.
From 2001 to 2013 the Morris family received payments of $40.8mm, while it simultaneously raised $37.5mm from public shareholders.
The number of companies with two classes of stock in the S&P 500 is only about 8%. Of 2,300 companies in the U.S. with a market cap greater than $500mm, only 4% have a dual share structure.