UPDATE 1-Fairfax alters Watsa voting-stake plan after shareholder talks

(Adds details on proposal, background, share price move)
By Euan Rocha
TORONTO, Aug 11 (Reuters) - Canada's Fairfax Financial
Holdings Ltd FFH.TO said on Tuesday it has added investor
safeguards to a plan to preserve founder Prem Watsa's voting
stake, a move aimed at assuaging the concerns of minority
shareholders who had opposed the proposal.
The plan, which must be put to a shareholder vote, would
ensure that the family of Watsa, who is Fairfax's chairman and
chief executive, maintains at least 41.8 percent voting control
via the multiple voting shares it owns.
The Toronto-based investment management and insurance
company said the proposal will help prevent a takeover and
safeguard its culture.
The plan has been opposed by two of Canada's top pension
fund managers, Canada Pension Plan Investment Board and British
Columbia Investment Management Corp. They have said it would not
treat all shareholders equally and would extend Fairfax's dual
class share structure indefinitely.
Fairfax said on Tuesday the new safeguards - put in place in
response to talks with "certain significant institutional
investors" - include provisions for additional ratification
votes by minority shareholders in certain circumstances.

It said the firms it has been in talks with, as well as
other major institutions, have advised Fairfax that they now
intend to back the proposal.
Fairfax postponed a special meeting to vote on the plan for
a second time to give shareholders time to consider the
modifications. The meeting, initially scheduled for July 21 and
postponed to Aug. 13, will now be held on Aug. 24.
When Fairfax delayed the initial vote last month, it said
the postponement would give management time to continue
discussions with investors.
Watsa has built and run Fairfax for over three decades, and
some large shareholders have publicly supported the plan to
preserve the family voting stake.
Watsa, a famed contrarian investor often dubbed "Canada's
Warren Buffett", has shepherded Fairfax since 1985, when the
stock traded at C$5 a share. Its shares rose C$1.53 to C$612.01
on the Toronto Stock Exchange on Tuesday.
The company has grown via acquisitions and prides itself on
a decentralized approach that it says attracts strong partners
and management teams that can run subsidiaries by themselves.
Fairfax said its plan would allow it to issue shares to
finance growth without further diluting Watsa's control. He has
long pledged never to sell his voting shares, making it clear
that investors should not invest in the hopes of a takeover
premium.