Delaware
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001-02658
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74-1677330
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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1980 Post Oak Blvd.
Houston, Texas
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77056
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(Address of principal executive offices)
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(Zip Code)
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Item 9.01
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Financial Statements and Exhibits.
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Exhibit
No. |
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Description
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10.1
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Addendum, entered into as of March 30, 2017 and effective as of January 1, 2017, to Employment Agreement entered into as of March 31, 2016 and effective as of January 1, 2016, by and between Stewart Information Services Corporation and Matthew W. Morris.
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10.2
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Addendum, entered into as of March 30, 2017 and effective as of January 1, 2017, to Employment Agreement entered into as of March 31, 2016 and effective as of January 1, 2016, by and between Stewart Information Services Corporation and John L. Killea.
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10.3
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Amended and Restated Employment Agreement, entered into as of January 1, 2016, and effective as of January 1, 2016, by and between Stewart Information Services Corporation and David A. Fauth.
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10.4
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Addendum, entered into as of March 30, 2017 and effective as of January 1, 2017, to the Amended and Restated Employment Agreement entered into as of January 1, 2016 and effective as of January 1, 2016, by and between Stewart Information Services Corporation and David A. Fauth.
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STEWART INFORMATION SERVICES CORPORATION
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||
By:
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/s/ J. Allen Berryman
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J. Allen Berryman, Chief Financial Officer, Secretary,
Treasurer and Principal Financial Officer
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Exhibit
No. |
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Description
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10.1
|
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Addendum, entered into as of March 30, 2017 and effective as of January 1, 2017, to Employment Agreement entered into as of March 31, 2016 and effective as of January 1, 2016, by and between Stewart Information Services Corporation and Matthew W. Morris.
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10.2
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Addendum, entered into as of March 30, 2017 and effective as of January 1, 2017, to Employment Agreement entered into as of March 31, 2016 and effective as of January 1, 2016, by and between Stewart Information Services Corporation and John L. Killea.
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10.3
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Amended and Restated Employment Agreement, entered into as of January 1, 2016, and effective as of January 1, 2016, by and between Stewart Information Services Corporation and David A. Fauth.
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10.4
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Addendum, entered into as of March 30, 2017 and effective as of January 1, 2017, to the Amended and Restated Employment Agreement entered into as of January 1, 2016 and effective as of January 1, 2016, by and between Stewart Information Services Corporation and David A. Fauth.
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Annual Salary:
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$600,000
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Target STI Percent of Annual Salary:
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100%
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Target STI Amount:
|
$600,000
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Metric
|
Org Unit
|
Weight
|
Details
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Threshold
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Target
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Maximum
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Modified EBITDA
|
Corporate
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33.33%
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Performance to Achieve*
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See definition for Target Modified EBITDA (Corporate Metric)
|
||
Performance to Achieve as Percent of Target
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70%
|
100%
|
130%
|
|||
Payout Percent of Target
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25%
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100%
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225%
|
|||
Payout Amount
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$50,000
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$200,000
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$450,000
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|||
|
|
|
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Modified Pretax Margin
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Corporate
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33.33%
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Performance to Achieve
|
4.49%
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6.41%
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8.33%
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Performance to Achieve as Percent of Target
|
70%
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100%
|
130%
|
|||
Payout Percent of Target
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25%
|
100%
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225%
|
|||
Payout Amount
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$50,000
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$200,000
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$450,000
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|||
|
|
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|
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Modified Return on Equity
|
Corporate
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33.33%
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Performance to Achieve
|
7.36%
|
10.51%
|
13.66%
|
Performance to Achieve as Percent of Target
|
70%
|
100%
|
130%
|
|||
Payout Percent of Target
|
25%
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100%
|
225%
|
|||
Payout Amount
|
$50,000
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$200,000
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$450,000
|
|||
|
|
|
|
|
|
|
|
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Total Payout Amount
|
$150,000
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$600,000
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$1,350,000
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Term of Calculation
|
Definition
|
Annual Salary
|
This is the annual salary as defined herein.
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Budget Attainment
|
Budget Attainment measures the variance between actual expenses and budget expenses. The variance is expressed as a percent variance. The metric is calculated by taking the actual annual expenses minus the budgeted annual expenses. The difference is then divided by the budgeted annual expenses. Payout for this metric is based on variance percentage.
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Company
|
The Company is Stewart Information Services Corporation and its subsidiaries.
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Corporate
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Corporate is the same as Company.
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Corporate Performance
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Corporate Performance is the set of metrics for the Company.
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Term of Calculation
|
Definition
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Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (Business Unit Metric)
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EBITDA (Business Unit Metric) is calculated by removing the effect of the fixed Home Office allocation from pretax profits for the business unit(s) and adding back interest, depreciation, and amortization expenses.
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Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (Corporate Metric)
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EBITDA (Corporate Metric) is calculated by adding interest, depreciation, and amortization expenses to pretax profits for the Company.
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Investment and Other (Losses) Gains – Net
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Investment and Other (Losses) Gains – Net is a line item on the Company’s 10K that includes, but is not limited to, realized earnings (losses) from the sale of various types of financial and non-financial instruments; sale of subsidiaries, equity basis investments, and cost-bases investments; impairment of equity and cost-basis investments; and other types of non-operating transactions.
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Maximum Performance Level
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The level of performance that results in Maximum Payout for a metric.
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Maximum Payout Amount
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The Maximum Payout Amount is the maximum annual cash bonus that can be earned and paid under the STI Plan. It is calculated by multiplying the Target Payout by an agreed upon percentage as indicated in Executive’s STI Plan Summary Table.
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Modified Average Shareholders’ Equity
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Modified Average Shareholders’ Equity is Calculated by subtracting cumulative other comprehensive income and non-controlling interest as well as effects of Non-Recurring Items from shareholders’ equity. This calculation is done as of the beginning of the year and the end of the year. The average is then calculated by adding the beginning of the year and ending of the year calculations and then dividing by two.
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Modified Earnings Before Interest, Taxes, Depreciation and Amortization (“Modified EBITDA”) (Business Unit Metric)
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The Modified EBITDA (Business Unit Metric) is calculated by adding/subtracting actual Investment and Other (Losses) Gains – Net as well as the effects of Non-Recurring Items from EBITDA (Business Unit Metric).
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Modified Earnings Before Interest, Taxes, Depreciation and Amortization (“Modified EBITDA”) (Corporate Metric)
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The Modified EBITDA (Corporate Metric) is calculated by adding/subtracting actual Investment and Other (Losses) Gains – Net as well as the effects of Non-Recurring Items from EBITDA (Corporate Metric).
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Term of Calculation
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Definition
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Modified EBITDA Margin (Business Unit Metric)
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The Modified EBITDA Margin (Business Unit Metric) is calculated by dividing Modified EBITDA (Business Unit Metric) by Modified Operating Revenues (Business Unit Metric).
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Modified Gross Revenues (Corporate Metric)
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Modified Gross Revenues is calculated by subtracting Investment and Other (Losses) Gains – Net, as well as the effects of Non-Recurring Items from Total Gross Revenues (Corporate Metric).
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Modified Operating Revenues (Business Unit Metric)
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Modified Operating Revenues is calculated by subtracting the effects of Non-Recurring Items from Operating Revenues (Business Unit Metric).
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Modified Pretax Profits (Corporate Metric)
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Modified Pretax Profits (Corporate Metric) is calculated by subtracting Investment and Other (Losses) Gains – Net, as well as removing the effects of Non-Recurring Items from pretax profits.
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Modified Pretax Margin (Corporate Metric)
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The Modified Pretax Margin (Corporate Metric) is calculated by dividing Modified Pretax Profits (Corporate Metric) by Modified Gross Revenues (Corporate Metric).
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Modified Net Income Attributable to Company (Actual)
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Modified Net Income Attributable to Company (Actual) is calculated by subtracting Investment and Other (Losses) Gains – Net, as well as the effects of Non-Recurring Items, (all on an after-tax basis) from Net Income Attributable to Company. The source of data is as reported in the Company’s 10K.
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Modified Net Income Attributable to Company (Budget)
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Modified Net Income Attributable to Company (Budget) is calculated as pretax profit from the System of Record less estimated effective tax rate and non-controlling interest.
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Modified Return on Equity (“Modified ROE”) (Corporate Metric)
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Modified Return on Equity (Corporate Metric) is calculated by dividing Modified Net Income Attributable to Company by Modified Average Shareholders’ Equity.
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Non-Recurring Items
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Non-recurring, unusual and/or extraordinary items as determined at the discretion of the Committee.
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Operating Revenues (Business Unit Metric)
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Operating Revenues is total operating income plus equity income as reported in the System of Record. Where applicable, shadow credit revenue is also included.
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Operating Revenues Local Currency (Business Unit Metrics International Operations)
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The source of data for local currency is from International Operations accounting and reporting systems as reported in Lawson (in USD) and converted at current foreign exchange rates used to generate such financial reporting.
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Pretax Profit (Corporate Metric)
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Pretax Profit (Corporate Metric) is as reported in the System of Record.
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Project Attainment
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Project Attainment metric is tied to specific goals established for Executive. This metric is measured by determining how much of the annual goals were completed on a percentage basis. Payout for this metric is based on completion percentage.
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Term of Calculation
|
Definition
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System of Record (Actual)
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Unless otherwise stated, System of Record for actual financial performance is management instance of actual as loaded into Adaptive Insights as populated by Hyperion Financial Management.
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System of Record (Budget)
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System of Record for budgeted financial performance is management instance of budget as loaded in Adaptive Insights.
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Target Modified Earnings Before Interest, Taxes, Depreciation and Amortization (“Target Modified EBITDA”) (Corporate Metric)
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The Target Modified EBITDA (Corporate Metric) is as approved by the Committee for the respective Performance Period.
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Target Performance Level
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The expected level of performance, which results in a payout of 100% of target.
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Target Payout
|
Target Payout is the annual cash bonus that can be earned and paid under the STI. Target Payout is calculated by multiplying Annual Salary by an agreed upon percentage as indicated in Executive’s STI Plan Summary Table.
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Threshold Performance Level
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The level of performance for a metric below which no payout is earned or paid.
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Total Gross Revenues (Corporate Metric)
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Total Gross Revenues (Corporate Metric) is equivalent to total revenues as reported in the System of Record excluding the effect of agent retention.
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Weighting
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Weighting is a calculation that applies a percentage to each metric, which is the fraction of the Target STI tied to that metric. The aggregation of the percentages is 100%.
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Grant date
|
February 8, 2017
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Annual Salary
|
$600,000
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Target estimated grant date value of total LTI grant as percent of base salary at grant
|
200%
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Target estimated grant date value of total LTI grant:
|
$1,200,000
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Closing stock price on February 7, 2017
|
$43.87
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Threshold
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Target
|
Maximum
|
|
Number of shares with time-based vesting*
|
9,117
|
9,117
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9,117
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Number of shares tied to Relative Total Shareholder Return (TSR)
|
2,279
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9,117
|
20,513
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Number of shares tied to Book Value (BV)
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2,279
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9,117
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20,513
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Total number of shares
|
13,675
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27,351
|
50,143
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·
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One-third (1/3) of the grant date value of total LTI grant will be provided in time-based RSA’s.
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·
|
The target number of shares is calculated as: Target estimated grant date value of total LTI grant ÷ 3 ÷ the closing stock price on February 7, 2017, rounded down to the nearest full share.
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·
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One-third (1/3) of RSA’s will vest on each of the first three anniversaries of the date of grant.
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·
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These shares are not subject to performance contingencies and will be earned by the recipient by continued employment through the vesting period.
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·
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The TSR-based performance shares will constitute one-third (1/3) of the grant date value of total LTI grant.
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·
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The target number of shares granted will be equal to the number of time-based restricted shares.
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·
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The three-year period from January 1, 2017 to December 31, 2019 (the “Performance Period”).
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·
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The shares shall be released to Executive after the Board reviews and approves Company performance, after the performance period has concluded.
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·
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Vesting of performance shares occurs at the end of the three-year Performance Period based on the achievement of pre-determined TSR percentile ranking in relation to the comparator group approved by the Committee (“Comparative Group”). At the end of the three-year performance period, any TSR-based performance shares determined not to have become vested shall be forfeited and Executive shall have no further rights with respect to such forfeited shares.
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·
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The performance metrics associated with the Performance Shares will function on a relative TSR-based scale. Actual relative TSR performance will be measured as soon as practicable at the end of the three-year Performance Period as compared to the Board-approved Custom Real Estate Index.
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·
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As set out in the table below, Threshold and Maximum opportunity to incentivize performance will be associated with varying levels of relative performance. Targeted performance is achieved when Company TSR is at the 50th percentile of the Comparative Group. Threshold performance is set at the 40th percentile. In the event performance is below the 40th percentile, the associated payout is equal to zero. Maximum Payout is achieved when performance is at the 80th percentile of the Comparative Group.
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TSR Percentile Ranking Performance Achieved
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Payout as % of Target Number of Shares
|
|
Maximum
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80th
|
225%
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Target
|
50th
|
100%
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Threshold
|
40th
|
25%
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Below Threshold
|
<40th
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0%
|
·
|
Payout percentages will be interpolated for performance achievement between threshold, target, and maximum.
|
·
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The BV-based performance shares will constitute one-third (1/3) of the grant date value of total LTI grant.
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·
|
The target number of shares to grant will be equal to the number of time-based RSA’s.
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·
|
The three-year period from January 1, 2017 to December 31, 2019.
|
·
|
The shares shall be released to executive after the Board reviews and approves Company performance, after the Performance Period has concluded.
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·
|
Vesting of performance shares occurs at the end of the three-year Performance Period based on the achievement of pre-determined performance levels determined by the Committee. At the end of the three-year Performance Period, any BV-based performance shares determined not to have become vested shall be forfeited and Executive shall have no further rights with respect to such forfeited shares.
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·
|
BV performance shares will function on a Compound Annual Growth Rate (CAGR) Book Value Per Share + Cumulative Dividends Per Share performance scale.
|
·
|
As set out in the table below, Threshold and Maximum opportunity to incentivize performance will be associated with varying levels of performance achievement detailed in the table below.
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CAGR (Book Value Per Share + Cumulative Dividends Per Share)
Performance Achieved
|
Payout as % of Target Number of Shares
|
|
Maximum
|
15%
|
225%
|
Target
|
10%
|
100%
|
Threshold
|
5%
|
25%
|
Below Threshold
|
<5%
|
0%
|
·
|
Payout percentages will be interpolated for performance achievement between threshold, target, and maximum.
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Term/Calculation
|
Definition
|
Annual Salary
|
This is the annual salary as defined herein.
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Average Shares Outstanding
|
Average Shares Outstanding is the number of shares at the end of the Baseline Period, plus the shares at the end of the Performance Period, divided by two.
|
Term/Calculation
|
Definition
|
Baseline Period
|
Baseline Period is the 12-month period ending immediately preceding the Performance Period. For example, a Performance Period of January 1, 2017 through December 31, 2019 would have a baseline period of 12 months ending December 31, 2016.
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Book Value per Share
|
Book Value is calculated as assets less total liabilities as reported in the Company 10K, divided by Average Shares Outstanding.
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Compound Annual Growth Rate (CAGR)
|
CAGR is the annual growth rate, taking into account the Performance Period and effects of compounded growth. The formula used to determine CAGR is as follows:
CAGR = (Value at end of Performance Period / Value at end of Baseline Period)^1/years in Performance Period – 1.
For example, for a Performance Period of January 1, 2017 through December 31, 2019, the basis for the CAGR calculation would be as follows:
CAGR = (Value at December 31, 2016
/ Value at December 31, 2019)^1/3-1
|
Company
|
The Company is Stewart Information Services Corporation and its subsidiaries.
|
Cumulative Dividends Per Share
|
Cumulative Dividends Per Share is the aggregate cash dividend paid during the Performance Period as reported in the 10K.
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Maximum Performance Level
|
The level of performance that results in Maximum Payout for a metric.
|
Maximum Payout
|
The Maximum Payout is the maximum number of shares that can be earned under the LTI Plan for each performance metric. It is calculated by multiplying the Target number of shares by an agreed upon percentage as indicated in Executive’s LTI Plan Summary.
|
Performance Period
|
Performance Period is a three-year period beginning on January 1 of the initial award year and ending December 31 three years later. For example, the Performance Period for 2017-initiated awards is January 1, 2017 through December 31, 2019.
|
Performance Share Award (PSA)
|
Performance Share Award is share-based compensation that vests based on defined measures, which include Company performance and time-based measures.
|
Term/Calculation
|
Definition
|
Restricted Stock Award (RSA)
|
Restricted Stock Award is share-based compensation that is restricted by time of service.
|
System of Record
|
Hyperion Financial Management (HFM) is the system of record for all financial data unless otherwise stated.
|
Target Performance Level
|
The expected level of performance, which results in a payout of 100% of Target number of shares.
|
Threshold Performance Level
|
The level of performance for a metric below which no shares will vest.
|
Total Shareholder Return (TSR)
|
Total Shareholder Return is calculated by taking the difference between the Company’s end of year price per share and the beginning of year price per share and adding the Company dividend per share. Next, divide that sum by the Company’s beginning of year price per share.
|
Total Shareholder Return (TSR) Ranking
|
Total Shareholder Return Ranking is determined by calculating the Company’s percentile ranking for Total Shareholder Return relative to the Comparative Group.
|
Annual Salary:
|
$390,000
|
Target STI Percent of Annual Salary:
|
50%
|
Target STI Amount:
|
$195,000
|
Metric
|
Org Unit
|
Weight
|
Details
|
Threshold
|
Target
|
Maximum
|
Modified EBITDA
|
Corporate
|
33.33%
|
Performance to Achieve*
|
See definition for Target Modified EBITDA (Corporate Metric)
|
||
Performance to Achieve as Percent of Target
|
70%
|
100%
|
130%
|
|||
Payout Percent of Target
|
25%
|
100%
|
225%
|
|||
Payout Amount
|
$16,250
|
$65,000
|
$146,250
|
|||
|
|
|
|
|
|
|
Modified Pretax Margin
|
Corporate
|
33.33%
|
Performance to Achieve
|
4.49%
|
6.41%
|
8.33%
|
Performance to Achieve as Percent of Target
|
70%
|
100%
|
130%
|
|||
Payout Percent of Target
|
25%
|
100%
|
225%
|
|||
Payout Amount
|
$16,250
|
$65,000
|
$146,250
|
|||
|
|
|
|
|
|
|
Modified Return on Equity
|
Corporate
|
33.33%
|
Performance to Achieve
|
7.36%
|
10.51%
|
13.66%
|
Performance to Achieve as Percent of Target
|
70%
|
100%
|
130%
|
|||
Payout Percent of Target
|
25%
|
100%
|
225%
|
|||
Payout Amount
|
$16,250
|
$65,000
|
$146,250
|
|||
|
|
|
|
|
|
|
|
|
|
Total Payout Amount
|
$48,750
|
$195,000
|
$438,750
|
Term of Calculation
|
Definition
|
Annual Salary
|
This is the annual salary as defined herein.
|
Budget Attainment
|
Budget Attainment measures the variance between actual expenses and budget expenses. The variance is expressed as a percent variance. The metric is calculated by taking the actual annual expenses minus the budgeted annual expenses. The difference is then divided by the budgeted annual expenses. Payout for this metric is based on variance percentage.
|
Company
|
The Company is Stewart Information Services Corporation and its subsidiaries.
|
Corporate
|
Corporate is the same as Company.
|
Corporate Performance
|
Corporate Performance is the set of metrics for the Company.
|
Term of Calculation
|
Definition
|
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (Business Unit Metric)
|
EBITDA (Business Unit Metric) is calculated by removing the effect of the fixed Home Office allocation from pretax profits for the business unit(s) and adding back interest, depreciation, and amortization expenses.
|
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (Corporate Metric)
|
EBITDA (Corporate Metric) is calculated by adding interest, depreciation, and amortization expenses to pretax profits for the Company.
|
Investment and Other (Losses) Gains – Net
|
Investment and Other (Losses) Gains – Net is a line item on the Company’s 10K that includes, but is not limited to, realized earnings (losses) from the sale of various types of financial and non-financial instruments; sale of subsidiaries, equity basis investments, and cost-bases investments; impairment of equity and cost-basis investments; and other types of non-operating transactions.
|
Maximum Performance Level
|
The level of performance that results in Maximum Payout for a metric.
|
Maximum Payout Amount
|
The Maximum Payout Amount is the maximum annual cash bonus that can be earned and paid under the STI Plan. It is calculated by multiplying the Target Payout by an agreed upon percentage as indicated in Executive’s STI Plan Summary Table.
|
Modified Average Shareholders’ Equity
|
Modified Average Shareholders’ Equity is Calculated by subtracting cumulative other comprehensive income and non-controlling interest as well as effects of Non-Recurring Items from shareholders’ equity. This calculation is done as of the beginning of the year and the end of the year. The average is then calculated by adding the beginning of the year and ending of the year calculations and then dividing by two.
|
Modified Earnings Before Interest, Taxes, Depreciation and Amortization (“Modified EBITDA”) (Business Unit Metric)
|
The Modified EBITDA (Business Unit Metric) is calculated by adding/subtracting actual Investment and Other (Losses) Gains – Net as well as the effects of Non-Recurring Items from EBITDA (Business Unit Metric).
|
Modified Earnings Before Interest, Taxes, Depreciation and Amortization (“Modified EBITDA”) (Corporate Metric)
|
The Modified EBITDA (Corporate Metric) is calculated by adding/subtracting actual Investment and Other (Losses) Gains – Net as well as the effects of Non-Recurring Items from EBITDA (Corporate Metric).
|
Modified EBITDA Margin (Business Unit Metric)
|
The Modified EBITDA Margin (Business Unit Metric) is calculated by dividing Modified EBITDA (Business Unit Metric) by Modified Operating Revenues (Business Unit Metric).
|
Term of Calculation
|
Definition
|
Modified Gross Revenues (Corporate Metric)
|
Modified Gross Revenues is calculated by subtracting Investment and Other (Losses) Gains – Net, as well as the effects of Non-Recurring Items from Total Gross Revenues (Corporate Metric).
|
Modified Operating Revenues (Business Unit Metric)
|
Modified Operating Revenues is calculated by subtracting the effects of Non-Recurring Items from Operating Revenues (Business Unit Metric).
|
Modified Pretax Profits (Corporate Metric)
|
Modified Pretax Profits (Corporate Metric) is calculated by subtracting Investment and Other (Losses) Gains – Net, as well as removing the effects of Non-Recurring Items from pretax profits.
|
Modified Pretax Margin (Corporate Metric)
|
The Modified Pretax Margin (Corporate Metric) is calculated by dividing Modified Pretax Profits (Corporate Metric) by Modified Gross Revenues (Corporate Metric).
|
Modified Net Income Attributable to Company (Actual)
|
Modified Net Income Attributable to Company (Actual) is calculated by subtracting Investment and Other (Losses) Gains – Net, as well as the effects of Non-Recurring Items, (all on an after-tax basis) from Net Income Attributable to Company. The source of data is as reported in the Company’s 10K.
|
Modified Net Income Attributable to Company (Budget)
|
Modified Net Income Attributable to Company (Budget) is calculated as pretax profit from the System of Record less estimated effective tax rate and non-controlling interest.
|
Modified Return on Equity (“Modified ROE”) (Corporate Metric)
|
Modified Return on Equity (Corporate Metric) is calculated by dividing Modified Net Income Attributable to Company by Modified Average Shareholders’ Equity.
|
Non-Recurring Items
|
Non-recurring, unusual and/or extraordinary items as determined at the discretion of the Committee.
|
Operating Revenues (Business Unit Metric)
|
Operating Revenues is total operating income plus equity income as reported in the System of Record. Where applicable, shadow credit revenue is also included.
|
Operating Revenues Local Currency (Business Unit Metrics International Operations)
|
The source of data for local currency is from International Operations accounting and reporting systems as reported in Lawson (in USD) and converted at current foreign exchange rates used to generate such financial reporting.
|
Pretax Profit (Corporate Metric)
|
Pretax Profit (Corporate Metric) is as reported in the System of Record.
|
Project Attainment
|
Project Attainment metric is tied to specific goals established for Executive. This metric is measured by determining how much of the annual goals were completed on a percentage basis. Payout for this metric is based on completion percentage.
|
Term of Calculation
|
Definition
|
System of Record (Actual)
|
Unless otherwise stated, System of Record for actual financial performance is management instance of actual as loaded into Adaptive Insights as populated by Hyperion Financial Management.
|
System of Record (Budget)
|
System of Record for budgeted financial performance is management instance of budget as loaded in Adaptive Insights.
|
Target Modified Earnings Before Interest, Taxes, Depreciation and Amortization (“Target Modified EBITDA”) (Corporate Metric)
|
The Target Modified EBITDA (Corporate Metric) is as approved by the Committee for the respective Performance Period.
|
Target Performance Level
|
The expected level of performance, which results in a payout of 100% of target.
|
Target Payout
|
Target Payout is the annual cash bonus that can be earned and paid under the STI. Target Payout is calculated by multiplying Annual Salary by an agreed upon percentage as indicated in Executive’s STI Plan Summary Table.
|
Threshold Performance Level
|
The level of performance for a metric below which no payout is earned or paid.
|
Total Gross Revenues (Corporate Metric)
|
Total Gross Revenues (Corporate Metric) is equivalent to total revenues as reported in the System of Record excluding the effect of agent retention.
|
Weighting
|
Weighting is a calculation that applies a percentage to each metric, which is the fraction of the Target STI tied to that metric. The aggregation of the percentages is 100%.
|
Grant date
|
February 8, 2017
|
Annual Salary
|
$390,000
|
Target estimated grant date value of total LTI grant as percent of base salary at grant
|
85%
|
Target estimated grant date value of total LTI grant:
|
$331,500
|
Closing stock price on February 7, 2017
|
$43.87
|
Threshold
|
Target
|
Maximum
|
|
Number of shares with time-based vesting*
|
2,518
|
2,518
|
2,518
|
Number of shares tied to Relative Total Shareholder Return (TSR)
|
629
|
2,518
|
5,665
|
Number of shares tied to Book Value (BV)
|
629
|
2,518
|
5,665
|
Total number of shares
|
3,776
|
7,554
|
13,848
|
·
|
One-third (1/3) of the grant date value of total LTI grant will be provided in time-based RSA’s.
|
·
|
The target number of shares is calculated as: Target estimated grant date value of total LTI grant ÷ 3 ÷ the closing stock price on February 7, 2017, rounded down to the nearest full share.
|
·
|
One-third (1/3) of RSA’s will vest on each of the first three anniversaries of the date of grant.
|
·
|
These shares are not subject to performance contingencies and will be earned by the recipient by continued employment through the vesting period.
|
·
|
The TSR-based performance shares will constitute one-third (1/3) of the grant date value of total LTI grant.
|
·
|
The target number of shares granted will be equal to the number of time-based restricted shares.
|
·
|
The three-year period from January 1, 2017 to December 31, 2019 (the “Performance Period”).
|
·
|
The shares shall be released to Executive after the Board reviews and approves Company performance, after the performance period has concluded.
|
·
|
Vesting of performance shares occurs at the end of the three-year Performance Period based on the achievement of pre-determined TSR percentile ranking in relation to the comparator group approved by the Committee (“Comparative Group”). At the end of the three-year performance period, any TSR-based performance shares determined not to have become vested shall be forfeited and Executive shall have no further rights with respect to such forfeited shares.
|
·
|
The performance metrics associated with the Performance Shares will function on a relative TSR-based scale. Actual relative TSR performance will be measured as soon as practicable at the end of the three-year Performance Period as compared to the Board-approved Custom Real Estate Index.
|
·
|
As set out in the table below, Threshold and Maximum opportunity to incentivize performance will be associated with varying levels of relative performance. Targeted performance is achieved when Company TSR is at the 50th percentile of the Comparative Group. Threshold performance is set at the 40th percentile. In the event performance is below the 40th percentile, the associated payout is equal to zero. Maximum Payout is achieved when performance is at the 80th percentile of the Comparative Group.
|
TSR Percentile Ranking Performance Achieved
|
Payout as % of Target Number of Shares
|
|
Maximum
|
80th
|
225%
|
Target
|
50th
|
100%
|
Threshold
|
40th
|
25%
|
Below Threshold
|
<40th
|
0%
|
·
|
Payout percentages will be interpolated for performance achievement between threshold, target, and maximum.
|
·
|
The BV-based performance shares will constitute one-third (1/3) of the grant date value of total LTI grant.
|
·
|
The target number of shares to grant will be equal to the number of time-based RSA’s.
|
·
|
The three-year period from January 1, 2017 to December 31, 2019.
|
·
|
The shares shall be released to executive after the Board reviews and approves Company performance, after the Performance Period has concluded.
|
·
|
Vesting of performance shares occurs at the end of the three-year Performance Period based on the achievement of pre-determined performance levels determined by the Committee. At the end of the three-year Performance Period, any BV-based performance shares determined not to have become vested shall be forfeited and Executive shall have no further rights with respect to such forfeited shares.
|
·
|
BV performance shares will function on a Compound Annual Growth Rate (CAGR) Book Value Per Share + Cumulative Dividends Per Share performance scale.
|
·
|
As set out in the table below, Threshold and Maximum opportunity to incentivize performance will be associated with varying levels of performance achievement detailed in the table below.
|
CAGR (Book Value Per Share + Cumulative Dividends Per Share)
Performance Achieved
|
Payout as % of Target Number of Shares
|
|
Maximum
|
15%
|
225%
|
Target
|
10%
|
100%
|
Threshold
|
5%
|
25%
|
Below Threshold
|
<5%
|
0%
|
·
|
Payout percentages will be interpolated for performance achievement between threshold, target, and maximum.
|
Term/Calculation
|
Definition
|
Annual Salary
|
This is the annual salary as defined herein.
|
Average Shares Outstanding
|
Average Shares Outstanding is the number of shares at the end of the Baseline Period, plus the shares at the end of the Performance Period, divided by two.
|
Term/Calculation
|
Definition
|
Baseline Period
|
Baseline Period is the 12-month period ending immediately preceding the Performance Period. For example, a Performance Period of January 1, 2017 through December 31, 2019 would have a baseline period of 12 months ending December 31, 2016.
|
Book Value per Share
|
Book Value is calculated as assets less total liabilities as reported in the Company 10K, divided by Average Shares Outstanding.
|
Compound Annual Growth Rate (CAGR)
|
CAGR is the annual growth rate, taking into account the Performance Period and effects of compounded growth. The formula used to determine CAGR is as follows:
CAGR = (Value at end of Performance Period / Value at end of Baseline Period)^1/years in Performance Period – 1.
For example, for a Performance Period of January 1, 2017 through December 31, 2019, the basis for the CAGR calculation would be as follows:
CAGR = (Value at December 31, 2016
/ Value at December 31, 2019)^1/3-1
|
Company
|
The Company is Stewart Information Services Corporation and its subsidiaries.
|
Cumulative Dividends Per Share
|
Cumulative Dividends Per Share is the aggregate cash dividend paid during the Performance Period as reported in the 10K.
|
Maximum Performance Level
|
The level of performance that results in Maximum Payout for a metric.
|
Maximum Payout
|
The Maximum Payout is the maximum number of shares that can be earned under the LTI Plan for each performance metric. It is calculated by multiplying the Target number of shares by an agreed upon percentage as indicated in Executive’s LTI Plan Summary.
|
Performance Period
|
Performance Period is a three-year period beginning on January 1 of the initial award year and ending December 31 three years later. For example, the Performance Period for 2017-initiated awards is January 1, 2017 through December 31, 2019.
|
Performance Share Award (PSA)
|
Performance Share Award is share-based compensation that vests based on defined measures, which include Company performance and time-based measures.
|
Term/Calculation
|
Definition
|
Restricted Stock Award (RSA)
|
Restricted Stock Award is share-based compensation that is restricted by time of service.
|
System of Record
|
Hyperion Financial Management (HFM) is the system of record for all financial data unless otherwise stated.
|
Target Performance Level
|
The expected level of performance, which results in a payout of 100% of Target number of shares.
|
Threshold Performance Level
|
The level of performance for a metric below which no shares will vest.
|
Total Shareholder Return (TSR)
|
Total Shareholder Return is calculated by taking the difference between the Company’s end of year price per share and the beginning of year price per share and adding the Company dividend per share. Next, divide that sum by the Company’s beginning of year price per share.
|
Total Shareholder Return (TSR) Ranking
|
Total Shareholder Return Ranking is determined by calculating the Company’s percentile ranking for Total Shareholder Return relative to the Comparative Group.
|
EXECUTIVE:
|
COMPANY:
|
/s/ David A. Fauth
David A. Fauth
|
STEWART INFORMATION SERVICES CORPORATION
By: /s/ Matthew W. Morris
|
Name: Matthew W. Morris
Title: Chief Executive Officer
|
|
Date: March 28, 2017
|
Date: March 30, 2017
|
Term of Calculation
|
Definition
|
Annual Salary
|
This is the annual base salary as defined in the Agreement.
|
Budget Attainment
|
Budget Attainment measures the variance between actual expenses and budget expenses for service center executives. The variance is expressed as a percent variance. The metric is calculated by taking the actual annual expenses minus the budgeted annual expenses. The difference is then divided by the budgeted annual expenses. Payout for this metric is based on variance percentage.
|
Company
|
The Company is Stewart Information Services Corporation and its subsidiaries.
|
Corporate
|
Corporate is the same as Company.
|
Corporate Performance
|
Corporate Performance is the set of metrics for the Company.
|
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (Corporate Metric)
|
EBITDA metric is calculated by adding back interest expense, depreciation expense and amortization expense to pretax earnings. The source of data is the System of Record. Payout for the metric is based on percent attainment of target.
|
Investment and Other Gains (Losses) – Net
|
Investment and Other Gains (Losses) – Net is a line item on the Company’s Consolidated Statement of Operations, Retained Earnings and Comprehensive Earnings that includes, but not limited to, realized earnings (losses) from the sale of various types of financial and non-financial instruments; sale of subsidiaries, equity basis investments, and cost-bases investments; impairment of equity and cost-basis investments; and other types of non-operating transactions. The source of data is the system of Record.
|
Term of Calculation
|
Definition
|
Maximum (Performance Level)
|
See Performance Level.
|
Maximum Target Payout
|
The Maximum Target Payout is the maximum annual cash bonus that can be earned and paid under the STI Plan. It is calculated by multiplying the Target Payout by an agreed upon percentage as indicated in the Executive Compensation Plan Summary.
|
Modified Average Shareholders’ Equity
|
Modified Average Shareholders’ Equity is Calculated by subtracting cumulative other comprehensive income and non-controlling interest as well as the after-tax effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from shareholders’ equity. This calculation is done as of the beginning of the year and the end of the year. The average is then calculated by adding the beginning of the year and ending of the year calculations and then dividing by two.
|
Modified Earnings Before Interest Taxes, Depreciation and Amortization (Modified EBITDA Corporate Metric)
|
The Modified EBITDA metric is calculated by subtracting Investment and Other Gains (Losses) – Net as well as the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from EBITDA. The source of data is the system of Record. Payout for this metric is based on percent deviation from targeted amount, which has been approved by the Compensation Committee of the Board of Directors.
|
Modified Gross Revenues (Corporate Metric)
|
Modified Gross Revenues is calculated by subtracting Investment and Other Gains (Losses) — Net, as well as the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from Total Gross Revenues (Corporate Metric).
|
Modified Operating Revenues (Personal Metric)
|
Modified Operating Revenues is calculated by subtracting the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from Operating Revenues (Personal Metric). Payout for this metric is based on percent improvement from prior year.
|
Term of Calculation
|
Definition
|
Modified Pretax Profits (Corporate Metric)
|
Modified Pretax Profits (Corporate Metric) is calculated by subtracting Investment and Other Gains (Losses) — Net, as well as removing the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from pretax profits. The source of data is the System of Record.
|
Modified Pretax Margin (Corporate Metric)
|
The Modified Pretax Margin (Corporate Metric) is calculated by dividing Modified Pretax Profits (Corporate Metric) by Modified Gross Revenues (Corporate Metric). The source of data is the System of Record. Payout for this metric is based on ratio attainment.
|
Modified EBITDA (Personal Metric)
|
Modified EBITDA (Personal Metric) is Line 71 Contribution to Profit from the Management Schedule A adjusted to exclude depreciation, interest expense, and the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from Net Earnings Attributable to Company. Where applicable, Commercial Services Shadow Credit Revenue included in the total. The System of Record is the STATAPP Budget Scenario.
|
Modified EBITDA Margin (Personal Metric)
|
The Modified EBITDA Margin (Personal Metric) is calculated by dividing Modified EBITDA (Personal Metric) by Modified Operating Revenues (Personal Metric). The source of data is the STATAPP Budget Scenario. Payout for this metric is based on ratio attainment.
|
Modified Net Earnings Attributable to Company
|
Modified Net Earnings Attributable to Company is calculated by subtracting Investment and Other Gains (Losses) — Net on an after-tax basis, as well as the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company of the Company from Net Earnings Attributable to Company. The source of data is the System of Record.
|
Term of Calculation
|
Definition
|
Modified Return on Equity (Modified ROE)
|
Modified Return on Equity metric is calculated by dividing Modified Net Earnings Attributable to Company by Modified Average Shareholders’ Equity. The source of data is the System of Record. Payout for this metric is based on ratio attainment.
|
Operating Revenues (Corporate Metric)
|
Operating Revenues is calculated by deducting Investment Income and Investment and Other Gains (Losses) — Net from total gross revenues. The Company's portion of earnings from equity investees is included in the calculation.
|
Operating Revenues (Personal Metric)
|
Operating Revenues is Line 16 Total Operating Income plus Line 18 Equity Income from the Management Schedule A. Where applicable, Commercial Services Shadow Credit Revenue is also included. The System of Record is the STATAPP Budget Scenario.
|
Operating Revenues Local Currency (Personal Metrics International Operations)
|
The source of data for local currency is from International Operations accounting and reporting systems.
|
Operational Performance
|
Operational Performance is the set of metrics for an executives’ area of management.
|
Performance Level
|
Performance Level represents the range of possible payout depending on performance driver for each metric. The payout range is defined as the Threshold, Target, and Maximum.
|
Pretax Profit (Corporate Metric)
|
Pretax Profit for the corporate metric is equivalent to earnings before taxes and non-controlling interests as reported in the Form 10-K.
|
EBITDA (Personal Metric)
|
EBITDA for the personal metric is the Contribution to Profit reported on line 71 of the Management Schedule A less depreciation and interest expense. The System of Record is the STATAPP Budget Scenario.
|
Project Attainment
|
Project Attainment metric is specific goals established for an executive. This metric is measured by determining how much of the annual goals were completed on a percentage basis. Payout for this metric is based on completion percentage.
|
Term of Calculation
|
Definition
|
System of Record
|
Hyperion Financial Management (HFM) is the system of record for all financial data unless otherwise stated.
|
Target (Performance Level)
|
See Performance Level.
|
Target Payout
|
Target Payout is the annual cash bonus that can be earned and paid under the STI. Target Payout is calculated by multiplying Annual Salary by an agreed upon percentage as indicated in the Executive Compensation Plan Summary
|
Threshold (Performance Level)
|
See Performance Level.
|
Total Gross Revenues (Corporate Metric)
|
Total Gross Revenues is equivalent to total revenues as reported in the Form 10-K.
|
Weighting
|
Weighting is a calculation that applies a percentage to each metric. The aggregation of the percentages is 100%.
|
·
|
One-third of the total targeted annual grant value will be provided in time-based RSA’s.
|
·
|
The grant value will be determined by calculating the total equity grant value [(2016 Annual Salary x LTI target as % of 2016 Annual Salary) then dividing by three].
|
·
|
Share count is based on the grant value divided by grant date closing stock price on 12/31/2015.
|
·
|
One-third (1/3) of RSA’s will vest on each of the first three anniversaries of the date of grant.
|
·
|
These shares are not subject to performance contingencies and will be earned by the recipient by continued employment through the vesting period.
|
·
|
The TSR-based performance shares will constitute one third of the overall long-term incentive grant value.
|
·
|
The target number of shares granted will be equal to the number of time-based restricted shares.
|
·
|
Vesting of performance shares occurs at the end of the three year performance period based on the achievement of pre-determined TSR percentile ranking in relation to the Russell 2000 Financial Services Index Companies (“Comparative Group”).
|
·
|
The three year period which covers the grant date to the three year anniversary of the grant date.
|
·
|
The performance metrics associated with the Performance Shares will function on a relative TSR-based model provided on the following page. Actual relative TSR performance will be measured at the end of the three-year period as compared to the Russell 2000 Financial Services Index.
|
·
|
As set out in the table below, threshold and maximum opportunity to incentivize performance will be associated with varying levels of relative performance. Targeted performance is achieved when SISCO TSR is at the 60th percentile of the comparative group. Threshold performance is set at the 40th percentile. In the event SISCO performance is below the 40th percentile, the associated payout is equal to zero. Maximum payout is achieved when SISCO TSR performance is at the 100th percentile of the comparative group.
|
Performance-Based Payment Schedule
|
||
TSR Percentile
Ranking |
Percent of
Target Payment1 |
|
Maximum
|
100th
|
200%
|
90th
|
175%
|
|
80th
|
150%
|
|
70th
|
125%
|
|
Target
|
60th
|
100%
|
50th
|
75%
|
|
Threshold
|
40th
|
50%
|
<40th
|
0%
|
·
|
The EPS-based performance shares will constitute one third of the overall long-term incentive grant value.
|
·
|
The target number of shares to grant will be equal to the number of time-based RSA’s Vesting:
|
·
|
Vesting of EPS performance shares occurs at the end of the three-year performance period based on achievement of pre-determined EPS targets.
|
·
|
The three year period which covers the grant date to the three year anniversary of the grant date.
|
·
|
EPS performance shares will function on an EPS Compounded Annual Growth Rate performance scale.
|
·
|
As set out in the table below, threshold and maximum opportunity to incentivize performance will be associated with varying levels of EPS achievement. Targeted performance is achieved when SISCO’s EPS Compounded Annual Growth Rate is equal to 10% within the three-year performance period. A threshold performance level has been established at 5% growth. In the event SISCO performance is below this level, the associated payout is equal to zero. Maximum payout is achieved when SISCO EPS performance is equal to or greater than 15% growth.
|
EPS Performance Shares
|
||
EPS Compounded
Growth Rate |
Percent of
Target Payment1 |
|
Maximum
|
15%
|
200%
|
13%
|
150%
|
|
Target
|
10%
|
100%
|
8%
|
80%
|
|
Threshold
|
5%
|
50%
|
<5%
|
0%
|
Term/Calculation
|
Definition
|
Annual Salary
|
This is the annual base salary as defined in the Agreement.
|
Company
|
The Company is Stewart Information Services Corporation and its subsidiaries.
|
Circuit Breaker
|
Circuit Breaker is the minimum corporate performance that must be achieved in order to receive the specified compensation.
|
Modified Earnings Per Share (EPS)
|
Modified Earnings Per Share (EPS) is the Diluted EPS attributable to Stewart as reported annually in the Form 10-K, adjusted by the earnings per share effect of excluding Investment and Other Gains (Losses) – Net, as well as the earnings per share effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company.
|
Maximum (Performance Level)
|
See Performance Level.
|
Maximum Target Payout
|
The Maximum Target Payout is the maximum annual cash bonus that can be earned and paid under the LTI. It is calculated by multiplying the Target Payout by an agreed upon percentage as indicated in the Executive Compensation Plan Summary.
|
Performance Goals
|
Performance Goals provide the threshold, target and maximum measurements that must be achieved in order to receive the related level of compensation.
|
Performance Level
|
Performance Level represents the range of possible payout depending on performance driver for each metric. The payout range is defined as the Threshold, Target, and Maximum.
|
Performance Share Award (PSA)
|
Performance Share Award is share-based compensation that vests based on defined measures, which include corporate performance and time based measures.
|
Term/Calculation
|
Definition
|
Restricted Stock Award (RSA)
|
Restricted Stock Award is share-based compensation that is restricted by time of service and corporate performance.
|
System of Record
|
Hyperion Financial Management (HFM) is the system of record for all financial data unless otherwise stated
|
Target (Performance Level)
|
See Performance Level.
|
Threshold (Performance Level)
|
See Performance Level.
|
Total Shareholder Return (TSR)
|
Total Shareholder Return is calculated by taking the difference between the Company’s end of year price per share and the beginning of year price per share and adding the Company dividend per share. Next, divide that sum by the Company’s beginning of year price per share.
|
Total Shareholder Return (TSR) Ranking
|
Total Shareholder Return Ranking is determined by calculating the Company’s percentile ranking for Total Shareholder Return relative to the Russell 2000 Financial Services Index. The source of data is Bloomberg.
|
·
|
Executive Long Term Disability Plan (Company paid)
|
·
|
Group Variable Universal Life Insurance (Basic Coverage Company paid)
|
·
|
Nonqualified Deferred Compensation Plan provided through the Company
|
·
|
Paid Association/Membership Dues as needed for the position with Management approval
|
·
|
Executive Development as needed for the position up to $5,000, with Management approval
|
Annual Salary:
|
$367,000
|
Target STI Percent of Annual Salary:
|
75%
|
Target STI Amount:
|
$275,250
|
Metric
|
Org Unit
|
Weight
|
Details
|
Threshold
|
Target
|
Maximum
|
Modified EBITDA
|
Corporate
|
30%
|
Performance to Achieve*
|
See definition for Target Modified EBITDA (Corporate Metric)
|
||
Performance to Achieve as Percent of Target
|
70%
|
100%
|
130%
|
|||
Payout Percent of Target
|
25%
|
100%
|
225%
|
|||
Payout Amount
|
$20,644
|
$82,575
|
$185,794
|
|||
|
|
|
|
|
|
|
Modified Pretax Margin
|
Corporate
|
15%
|
Performance to Achieve
|
4.49%
|
6.41%
|
8.33%
|
Performance to Achieve as Percent of Target
|
70%
|
100%
|
130%
|
|||
Payout Percent of Target
|
25%
|
100%
|
225%
|
|||
Payout Amount
|
$10,322
|
$41,288
|
$92,897
|
|||
|
|
|
|
|
|
|
Modified Return on Equity
|
Corporate
|
15%
|
Performance to Achieve
|
7.36%
|
10.51%
|
13.66%
|
Performance to Achieve as Percent of Target
|
70%
|
100%
|
130%
|
|||
Payout Percent of Target
|
25%
|
100%
|
225%
|
|||
Payout Amount
|
$10,322
|
$41,288
|
$92,897
|
|||
|
|
|
|
|
|
|
Metric
|
Org Unit
|
Weight
|
Details
|
Threshold
|
Target
|
Maximum
|
Modified Operating Revenue (Title & Escrow Fulfillment Services, Direct Operations Core Retail and Relocation Services)
|
Business Unit
|
10%
|
Performance to Achieve
|
See definition for Modified Operating Revenues (Business Unit Metric)
|
||
Performance to Achieve as Percent of Target
|
70%
|
100%
|
130%
|
|||
Payout Percent of Target
|
25%
|
100%
|
225%
|
|||
Payout Amount
|
$6,881
|
$27,525
|
$61,931
|
|||
|
|
|
|
|
|
|
Modified EBITDA (Title & Escrow Fulfillment Services, Direct Operations Core Retail and Relocation Services)
|
Business Unit
|
30%
|
Performance to Achieve*
|
See definition for Target Modified EBITDA (Business Unit Metric)
|
||
Performance to Achieve as Percent of Target
|
70%
|
100%
|
130%
|
|||
Payout Percent of Target
|
25%
|
100%
|
225%
|
|||
Payout Amount
|
$20,644
|
$82,575
|
$185,794
|
|||
|
|
|
|
|
|
|
|
|
|
Total Payout Amount
|
$68,813
|
$275,250
|
$619,313
|
Term of Calculation
|
Definition
|
Annual Salary
|
This is the annual salary as defined herein.
|
Budget Attainment
|
Budget Attainment measures the variance between actual expenses and budget expenses. The variance is expressed as a percent variance. The metric is calculated by taking the actual annual expenses minus the budgeted annual expenses. The difference is then divided by the budgeted annual expenses. Payout for this metric is based on variance percentage.
|
Company
|
The Company is Stewart Information Services Corporation and its subsidiaries.
|
Corporate
|
Corporate is the same as Company.
|
Corporate Performance
|
Corporate Performance is the set of metrics for the Company.
|
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (Business Unit Metric)
|
EBITDA (Business Unit Metric) is calculated by removing the effect of the fixed Home Office allocation from pretax profits for the business unit(s) and adding back interest, depreciation, and amortization expenses.
|
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (Corporate Metric)
|
EBITDA (Corporate Metric) is calculated by adding interest, depreciation, and amortization expenses to pretax profits for the Company.
|
Investment and Other (Losses) Gains – Net
|
Investment and Other (Losses) Gains – Net is a line item on the Company’s 10K that includes, but is not limited to, realized earnings (losses) from the sale of various types of financial and non-financial instruments; sale of subsidiaries, equity basis investments, and cost-bases investments; impairment of equity and cost-basis investments; and other types of non-operating transactions.
|
Maximum Performance Level
|
The level of performance that results in Maximum Payout for a metric.
|
Maximum Payout Amount
|
The Maximum Payout Amount is the maximum annual cash bonus that can be earned and paid under the STI Plan. It is calculated by multiplying the Target Payout by an agreed upon percentage as indicated in Executive’s STI Plan Summary Table.
|
Term of Calculation
|
Definition
|
Modified Average Shareholders’ Equity
|
Modified Average Shareholders’ Equity is Calculated by subtracting cumulative other comprehensive income and non-controlling interest as well as effects of Non-Recurring Items from shareholders’ equity. This calculation is done as of the beginning of the year and the end of the year. The average is then calculated by adding the beginning of the year and ending of the year calculations and then dividing by two.
|
Modified Earnings Before Interest, Taxes, Depreciation and Amortization (“Modified EBITDA”) (Business Unit Metric)
|
The Modified EBITDA (Business Unit Metric) is calculated by adding/subtracting actual Investment and Other (Losses) Gains – Net as well as the effects of Non-Recurring Items from EBITDA (Business Unit Metric).
|
Modified Earnings Before Interest, Taxes, Depreciation and Amortization (“Modified EBITDA”) (Corporate Metric)
|
The Modified EBITDA (Corporate Metric) is calculated by adding/subtracting actual Investment and Other (Losses) Gains – Net as well as the effects of Non-Recurring Items from EBITDA (Corporate Metric).
|
Modified EBITDA Margin (Business Unit Metric)
|
The Modified EBITDA Margin (Business Unit Metric) is calculated by dividing Modified EBITDA (Business Unit Metric) by Modified Operating Revenues (Business Unit Metric).
|
Modified Gross Revenues (Corporate Metric)
|
Modified Gross Revenues is calculated by subtracting Investment and Other (Losses) Gains – Net, as well as the effects of Non-Recurring Items from Total Gross Revenues (Corporate Metric).
|
Modified Operating Revenues (Business Unit Metric)
|
Modified Operating Revenues is calculated by subtracting the effects of Non-Recurring Items from Operating Revenues (Business Unit Metric).
|
Modified Pretax Profits (Corporate Metric)
|
Modified Pretax Profits (Corporate Metric) is calculated by subtracting Investment and Other (Losses) Gains – Net, as well as removing the effects of Non-Recurring Items from pretax profits.
|
Modified Pretax Margin (Corporate Metric)
|
The Modified Pretax Margin (Corporate Metric) is calculated by dividing Modified Pretax Profits (Corporate Metric) by Modified Gross Revenues (Corporate Metric).
|
Modified Net Income Attributable to Company (Actual)
|
Modified Net Income Attributable to Company (Actual) is calculated by subtracting Investment and Other (Losses) Gains – Net, as well as the effects of Non-Recurring Items, (all on an after-tax basis) from Net Income Attributable to Company. The source of data is as reported in the Company’s 10K.
|
Modified Net Income Attributable to Company (Budget)
|
Modified Net Income Attributable to Company (Budget) is calculated as pretax profit from the System of Record less estimated effective tax rate and non-controlling interest.
|
Term of Calculation
|
Definition
|
Modified Return on Equity (“Modified ROE”) (Corporate Metric)
|
Modified Return on Equity (Corporate Metric) is calculated by dividing Modified Net Income Attributable to Company by Modified Average Shareholders’ Equity.
|
Non-Recurring Items
|
Non-recurring, unusual and/or extraordinary items as determined at the discretion of the Committee.
|
Operating Revenues (Business Unit Metric)
|
Operating Revenues is total operating income plus equity income as reported in the System of Record. Where applicable, shadow credit revenue is also included.
|
Operating Revenues Local Currency (Business Unit Metrics International Operations)
|
The source of data for local currency is from International Operations accounting and reporting systems as reported in Lawson (in USD) and converted at current foreign exchange rates used to generate such financial reporting.
|
Pretax Profit (Corporate Metric)
|
Pretax Profit (Corporate Metric) is as reported in the System of Record.
|
Project Attainment
|
Project Attainment metric is tied to specific goals established for Executive. This metric is measured by determining how much of the annual goals were completed on a percentage basis. Payout for this metric is based on completion percentage.
|
System of Record (Actual)
|
Unless otherwise stated, System of Record for actual financial performance is management instance of actual as loaded into Adaptive Insights as populated by Hyperion Financial Management.
|
System of Record (Budget)
|
System of Record for budgeted financial performance is management instance of budget as loaded in Adaptive Insights.
|
Target Modified Earnings Before Interest, Taxes, Depreciation and Amortization (“Target Modified EBITDA”) (Corporate Metric)
|
The Target Modified EBITDA (Corporate Metric) is as approved by the Committee for the respective Performance Period.
|
Target Performance Level
|
The expected level of performance, which results in a payout of 100% of target.
|
Target Payout
|
Target Payout is the annual cash bonus that can be earned and paid under the STI. Target Payout is calculated by multiplying Annual Salary by an agreed upon percentage as indicated in Executive’s STI Plan Summary Table.
|
Threshold Performance Level
|
The level of performance for a metric below which no payout is earned or paid.
|
Total Gross Revenues (Corporate Metric)
|
Total Gross Revenues (Corporate Metric) is equivalent to total revenues as reported in the System of Record excluding the effect of agent retention.
|
Weighting
|
Weighting is a calculation that applies a percentage to each metric, which is the fraction of the Target STI tied to that metric. The aggregation of the percentages is 100%.
|
Grant date
|
February 8, 2017
|
Annual Salary
|
$367,000
|
Target estimated grant date value of total LTI grant as percent of base salary at grant
|
75%
|
Target estimated grant date value of total LTI grant:
|
$275,250
|
Closing stock price on February 7, 2017
|
$43.87
|
Threshold
|
Target
|
Maximum
|
|
Number of shares with time-based vesting*
|
2,091
|
2,091
|
2,091
|
Number of shares tied to Relative Total Shareholder Return (TSR)
|
522
|
2,091
|
4,704
|
Number of shares tied to Book Value (BV)
|
522
|
2,091
|
4,704
|
Total number of shares
|
3,135
|
6,273
|
11,499
|
·
|
One-third (1/3) of the grant date value of total LTI grant will be provided in time-based RSA’s.
|
·
|
The target number of shares is calculated as: Target estimated grant date value of total LTI grant ÷ 3 ÷ the closing stock price on February 7, 2017, rounded down to the nearest full share.
|
·
|
One-third (1/3) of RSA’s will vest on each of the first three anniversaries of the date of grant.
|
·
|
These shares are not subject to performance contingencies and will be earned by the recipient by continued employment through the vesting period.
|
·
|
The TSR-based performance shares will constitute one-third (1/3) of the grant date value of total LTI grant.
|
·
|
The target number of shares granted will be equal to the number of time-based restricted shares.
|
·
|
The three-year period from January 1, 2017 to December 31, 2019 (the “Performance Period”).
|
·
|
The shares shall be released to Executive after the Board reviews and approves Company performance, after the performance period has concluded.
|
·
|
Vesting of performance shares occurs at the end of the three-year Performance Period based on the achievement of pre-determined TSR percentile ranking in relation to the comparator group approved by the Committee (“Comparative Group”). At the end of the three-year performance period, any TSR-based performance shares determined not to have become vested shall be forfeited and Executive shall have no further rights with respect to such forfeited shares.
|
·
|
The performance metrics associated with the Performance Shares will function on a relative TSR-based scale. Actual relative TSR performance will be measured as soon as practicable at the end of the three-year Performance Period as compared to the Board-approved Custom Real Estate Index.
|
·
|
As set out in the table below, Threshold and Maximum opportunity to incentivize performance will be associated with varying levels of relative performance. Targeted performance is achieved when Company TSR is at the 50th percentile of the Comparative Group. Threshold performance is set at the 40th percentile. In the event performance is below the 40th percentile, the associated payout is equal to zero. Maximum Payout is achieved when performance is at the 80th percentile of the Comparative Group.
|
TSR Percentile Ranking Performance Achieved
|
Payout as % of Target Number of Shares
|
|
Maximum
|
80th
|
225%
|
Target
|
50th
|
100%
|
Threshold
|
40th
|
25%
|
Below Threshold
|
<40th
|
0%
|
·
|
Payout percentages will be interpolated for performance achievement between threshold, target, and maximum.
|
·
|
The BV-based performance shares will constitute one-third (1/3) of the grant date value of total LTI grant.
|
·
|
The target number of shares to grant will be equal to the number of time-based RSA’s.
|
·
|
The three-year period from January 1, 2017 to December 31, 2019.
|
·
|
The shares shall be released to executive after the Board reviews and approves Company performance, after the Performance Period has concluded.
|
·
|
Vesting of performance shares occurs at the end of the three-year Performance Period based on the achievement of pre-determined performance levels determined by the Committee. At the end of the three-year Performance Period, any BV-based performance shares determined not to have become vested shall be forfeited and Executive shall have no further rights with respect to such forfeited shares.
|
·
|
BV performance shares will function on a Compound Annual Growth Rate (CAGR) Book Value Per Share + Cumulative Dividends Per Share performance scale.
|
·
|
As set out in the table below, Threshold and Maximum opportunity to incentivize performance will be associated with varying levels of performance achievement detailed in the table below.
|
CAGR (Book Value Per Share + Cumulative Dividends Per Share)
Performance Achieved
|
Payout as % of Target Number of Shares
|
|
Maximum
|
15%
|
225%
|
Target
|
10%
|
100%
|
Threshold
|
5%
|
25%
|
Below Threshold
|
<5%
|
0%
|
·
|
Payout percentages will be interpolated for performance achievement between threshold, target, and maximum.
|
Term/Calculation
|
Definition
|
Annual Salary
|
This is the annual salary as defined herein.
|
Average Shares Outstanding
|
Average Shares Outstanding is the number of shares at the end of the Baseline Period, plus the shares at the end of the Performance Period, divided by two.
|
Term/Calculation
|
Definition
|
Baseline Period
|
Baseline Period is the 12-month period ending immediately preceding the Performance Period. For example, a Performance Period of January 1, 2017 through December 31, 2019 would have a baseline period of 12 months ending December 31, 2016.
|
Book Value per Share
|
Book Value is calculated as assets less total liabilities as reported in the Company 10K, divided by Average Shares Outstanding.
|
Compound Annual Growth Rate (CAGR)
|
CAGR is the annual growth rate, taking into account the Performance Period and effects of compounded growth. The formula used to determine CAGR is as follows:
CAGR = (Value at end of Performance Period / Value at end of Baseline Period)^1/years in Performance Period – 1.
For example, for a Performance Period of January 1, 2017 through December 31, 2019, the basis for the CAGR calculation would be as follows:
CAGR = (Value at December 31, 2016
/ Value at December 31, 2019)^1/3-1
|
Company
|
The Company is Stewart Information Services Corporation and its subsidiaries.
|
Cumulative Dividends Per Share
|
Cumulative Dividends Per Share is the aggregate cash dividend paid during the Performance Period as reported in the 10K.
|
Maximum Performance Level
|
The level of performance that results in Maximum Payout for a metric.
|
Maximum Payout
|
The Maximum Payout is the maximum number of shares that can be earned under the LTI Plan for each performance metric. It is calculated by multiplying the Target number of shares by an agreed upon percentage as indicated in Executive’s LTI Plan Summary.
|
Performance Period
|
Performance Period is a three-year period beginning on January 1 of the initial award year and ending December 31 three years later. For example, the Performance Period for 2017-initiated awards is January 1, 2017 through December 31, 2019.
|
Performance Share Award (PSA)
|
Performance Share Award is share-based compensation that vests based on defined measures, which include Company performance and time-based measures.
|
Term/Calculation
|
Definition
|
Restricted Stock Award (RSA)
|
Restricted Stock Award is share-based compensation that is restricted by time of service.
|
System of Record
|
Hyperion Financial Management (HFM) is the system of record for all financial data unless otherwise stated.
|
Target Performance Level
|
The expected level of performance, which results in a payout of 100% of Target number of shares.
|
Threshold Performance Level
|
The level of performance for a metric below which no shares will vest.
|
Total Shareholder Return (TSR)
|
Total Shareholder Return is calculated by taking the difference between the Company’s end of year price per share and the beginning of year price per share and adding the Company dividend per share. Next, divide that sum by the Company’s beginning of year price per share.
|
Total Shareholder Return (TSR) Ranking
|
Total Shareholder Return Ranking is determined by calculating the Company’s percentile ranking for Total Shareholder Return relative to the Comparative Group.
|
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