HR Block 2006 Annual Report Download - page 36

an annual director’s fee of $50,000, meeting fees of $2,000 for Plan is in effect. Effective August 22, 2005, each stock option
each Board meeting attended, committee chairman fees of $2,000 granted to an outside director of the Company pursuant to the
for each committee meeting that they chair, and meeting fees of Plan is for 8,000 shares of the Company’s Common Stock, and the
$1,200 for each committee meeting attended in a capacity other purchase price per share is equal to the last reported sale price
than as chairman. The chairman of the audit committee receives for the Common Stock on the New York Stock Exchange on the
an annual committee chairman’s fee of $7,500, which is payable in date of grant. The maximum number of shares of Common Stock
cash or shares of the Company’s common stock. The presiding as to which options may be granted under the Plan is 1,600,000.
director receives an annual presiding director’s fee of $20,000. The amount of shares of Common Stock to which options may be
Mr. Hale, the Company’s presiding director, declined to accept granted to each outside director of the Company and the
such fee through the end of his term in September 2006. maximum number of shares of Common Stock to which options
In accordance with the provisions of the H&R Block Deferred may be granted under the Plan were adjusted to reflect the two-
Compensation Plan for Directors, as amended, eligible non- for-one stock split of the Company’s Common Stock on
employee directors may defer receipt of their retainers and/or August 22, 2005.
meeting fees. Deferrals are placed in an account maintained by Options for 8,000 shares each, with an option price of
the Company for each director and such deferrals are fully vested $29.175 per share (adjusted to reflect the stock split), were
at all times. Gains or losses are posted to each account in granted to G. Kenneth Baum (retired from the Board in
accordance with the participant’s selection among fixed rate, September 2005), Ms. Ecton and Messrs. Bloch, Frigon, Hale,
variable rate and Company Common Stock investment Lewis, Seip, Smith and Wilkins on June 30, 2005. The options are
alternatives. Payment of benefits occurs in cash upon termination fully vested and immediately exercisable as of the date of grant.
of the participant’s service as a director or upon his or her death. All outstanding options expire ten years after the date of grant.
The account balance is generally paid out in approximately equal Options for 8,000 shares each, with an option price of
monthly installments over a 10-year period after the occurrence $23.86 per share, were granted to Ms. Ecton and Messrs. Bloch,
of the event which results in the benefit distribution. Choate, Frigon, Hale, Lauer, Lewis, Seip, Smith and Wilkins on
Pursuant to the H&R Block Stock Plan for Non-Employee June 30, 2006. The options are fully vested and immediately
Directors, as amended, eligible non-employee directors have the exercisable as of the date of grant. All outstanding options expire
opportunity to receive payment of their retainers and/or meeting ten years after the date of grant.
fees on a deferred basis in shares of Common Stock of the The Company also offers to its non-employee directors free
Company. The retainers and/or fees are initially paid in the form income tax return preparation services at an H&R Block office of
of stock units. The stock units in the directors’ accounts are fully their choice, a fifty percent discount on tax preparation services
vested at all times. Payment of the stock units must be deferred from RSM McGladrey, Inc. and free business travel insurance in
at least one year after the year such units are credited and the connection with Company-related travel. In addition, the H&R
director shall select the date of payment, which may be upon Block Foundation will match gifts by non-employee directors to
termination of service as a director. The maximum number of any 501(c)(3) organization up to an annual aggregate limit of
shares of Common Stock that may be issued under the Stock Plan $5,000 per calendar year.
is currently 600,000 shares. The Board has adopted stock ownership guidelines regarding
The 1989 Stock Option Plan for Outside Directors, as amended, stock ownership by Board members. The Board membership
provides for the grant of stock options to directors of the ownership guidelines provide for non-employee directors to own
Company who are not employees of the Company or any of its shares of Company stock with an aggregate value generally
subsidiaries. The Plan specifies that nonqualified stock options exceeding five times the annual retainer paid to non-
are to be automatically granted to outside directors of the employee directors.
Company serving as such on June 30 of each year in which the
H&R BLOCK 2006 Proxy Statement
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