HR Block 2006 Annual Report Download - page 129

Company, subject to adjustment upon certain events. The holders of the We grant restricted shares to selected employees under our
Convertible Preferred Stock are not entitled to receive dividends paid in stock-based compensation plans. Upon the grant of restricted
cash, property or securities and, in the event of any dissolution, shares, unearned compensation is recorded as an offset to additional
liquidation or wind-up of the Company, will share ratably with the paid in capital and is amortized as compensation expense over the
holders of Common Stock then outstanding in the assets of the restricted period. The balance of unearned compensation related to
Company after any distribution or payments are made to the holders of restricted shares at April 30, 2006 and 2005 was $42.6 million and
Participating Preferred Stock or the holders of any other class or series $23.7 million, respectively.
of stock of the Company with preference over the Common Stock.
NOTE 12: STOCK-BASED COMPENSATION AND RETIREMENT BENEFITS
We have four stock-based compensation plans: the 2003 Long-Term of 40%, 30%, and 30% over the following three years. In addition, certain
Executive Compensation Plan, the 1989 Stock Option Plan for Outside option grants have accelerated vesting provisions based on our stock
Directors, the 1999 Stock Option Plan for Seasonal Employees, and the price reaching specified levels.
2000 ESPP. The shareholders have approved all of our stock-based Options granted under the 1989 Plan for Outside Directors prior to
compensation plans. June 30, 2004 are exercisable starting one year after the date of grant on
The 2003 Plan replaced the 1993 Long-Term Executive Compensation a cumulative basis at an annual rate of 33
1
/
3
% of the total number of
Plan, effective July 1, 2003. The 1993 Plan terminated at that time, option shares. Beginning with the grant on June 30, 2004, options
except with respect to outstanding awards thereunder. The granted under this Plan are fully vested and immediately exercisable as
shareholders had approved the 1993 Plan in September 1993 to replace of the date of grant.
the 1984 Long-Term Executive Compensation Plan, which terminated at Under the 2003 and 1989 plans, restricted shares of our common
that time except with respect to outstanding awards thereunder. Under stock may be granted to selected employees. Restricted shares granted
the 2003 and 1989 plans, options may be granted to selected employees vest either (1) starting one or three years after the grant on a cumulative
and outside directors to purchase our Common Stock for periods not basis at an annual rate of 33
1
/
3
% of the total number of shares, or (2) at
exceeding 10 years at a price that is not less than 100% of fair market the end of three years.
value on the date of the grant. The 1999 Stock Option Plan for Seasonal Employees provided for the
Options granted under the 2003 Plan are exercisable either grant of options on June 30, 2005, 2004 and 2003 at the market price on
(1) starting one year after the date of the grant, (2) starting one, two or the date of the grant. The options are exercisable during September
three years after the date of the grant on a cumulative basis at the through November in each of the two years following the calendar year
annual rate of 33
1
/
3
% of the total number of option shares, or (3) starting of the grant, subject to certain conditions.
three years after the date of the grant on a cumulative basis at the rate
Changes during the years ended April 30, 2006, 2005 and 2004 under the stock-based compensation plans were as follows:
(shares in 000s)
2006 2005 2004
Weighted- Weighted- Weighted-
Average Average Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
Options outstanding, beginning of year 27,103 $ 19.02 28,964 $ 17.93 31,544 $ 16.07
Options granted 6,918 29.11 7,604 23.86 7,488 22.03
Options exercised (5,479) 18.17 (6,959) 18.62 (7,854) 14.56
Options expired/cancelled (2,494) 24.04 (2,506) 22.21 (2,214) 17.26
Options outstanding, end of year 26,048 21.40 27,103 19.02 28,964 17.93
Shares exercisable, end of year 14,693 18.51 13,268 15.89 13,336 15.39
Restricted shares granted 1,745 26.69 980 23.89 1,028 21.97
Restricted shares vested 616 22.96 352 21.66 144 11.90
Restricted shares outstanding, end of year 2,455 25.54 1,554 23.20 1,020 21.96
Shares reserved for future option or restricted stock grants,
end of year 27,356 9,889 9,880
H&R BLOCK 2006 Form 10K
59