CORRECTED - Stifel postpones vote on stock-based bonus pool

Wed Jun 8, 2011 11:39am EDT

In New York story headlined "Stifel postpones vote on stock-based bonus pool" published on June 7, the sixth paragraph should have said the firm is asking for approval of 6 million new shares, not 20.6 million. Correction also removes bullet-point about 20.6 million shares.

* Stifel postpones shareholder vote on stock pay plan

* CEO Kruszewski speaking to firm's top shareholders

By Joseph A. Giannone

NEW YORK, June 7 (Reuters) - Stifel Financial Corp (SF.N) has postponed a shareholder vote to authorize new stock for employee bonuses, possibly signaling a lack of support from investors.

The St. Louis-based company, one of the best-performing financial services stock of the past decade, adjourned its otherwise routine June 1 annual meeting until June 27 "to permit additional time to solicit stockholder votes," according to a regulatory filing.

Stifel investor relations head Sarah Anderson declined to discuss the number of shares submitted in favor of the proposal or reasons for tabling the vote.

"We're meeting later this month to provide more time to solicit more votes," she said, adding that Stifel Chief Executive Ronald Kruszewski is communicating with top shareholders about the matter.

Shareholders at the annual meeting overwhelmingly approved all of Stifel's other management proposals, including the election of directors, 2010 executive pay and the appointment of an auditor.

EXPANDING AND DILUTING

Stifel is seeking to replenish its nearly depleted reserve of bonus-plan shares with 6 million new shares to satisfy a rapidly growing workforce. Since last amending its stock-pay plan in 2008, the company's employee ranks have grown by nearly 50 percent.

The company last year purchased investment bank Thomas Weisel Partners. Its count of financial advisers ballooned from 644 in 2005 to nearly 2,000 at the end of the first quarter, reflecting its 2009 acquisition of 56 brokerage offices from UBS (UBSN.VX) and its 2007 purchase of New Jersey broker-dealer Ryan Beck & Co.

The company said in its April 18 proxy statement it would issue the shares as stock appreciation rights, restricted stock or options "to attract, incent and retain the company's employees" and management and as currency for future acquisitions. As of April 6, Stifel had 3.8 million shares available in its current stock-bonus plan, with none left for issuance under automatic provisions of the plan.

Though many investment banks use treasury shares as retention and recruiting tools, shareholders sometimes object to the dilutive effect of releasing the shares.

Stifel's proposed incentive stock plan represents 38 percent of its 53.7 million shares outstanding on April 30, and at Monday's closing price would have a value of $2 billion.

Many of Stifel's biggest shareholders, including BlackRock, Vanguard Group, Wellington Management Co. and T. Rowe Price Associates, routinely decline to comment on their holdings as a matter of policy. Representatives of other large shareholders, including Rainier Investment Management, Sentinel Asset Management and The Banc Funds Co LLC, did not return calls seeking comment.

PERFORMANCE

Kruszewski, who received a $3 million cash bonus in 2010 and $1.2 million in stock awards as part of a $4.48 million compensation package, has since 2001 presided over one of the top-performing financial services companies.

Stifel produced record revenue in each of the past 15 years and has noted in presentations that its shares as of April 2010 had outperformed its peer group over the previous three-, five- and ten-year periods. This year, however, the stock is down 9.4 percent, lagging many rivals as well as the benchmark S&P 500 Index's 3 percent rise.

KBW research analyst Joel Jeffrey on Monday raised his rating on Stifel to "outperform," saying the stock has room to run and is trading at a discount to its usual valuations. He also reduced his price target by $2 to $47, citing a weaker business environment.

Shares of Stifel early Tuesday afternoon were up 32 cents, or .86 percent, at $37.52.

(Reporting by Joseph A. Giannone;editing by Jed Horowitz)

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