HR Block 2006 Annual Report Download - page 39

ITEM 2 ON FORM OF PROXY
APPROVAL OF AN AMENDMENT TO THE 1999 STOCK OPTION PLAN FOR SEASONAL EMPLOYEES –
INTRODUCTION –Since 1969, the Company has offered a stock The Seasonal Plan is intended to reward performance,
option program to the seasonal employees of its income tax encourage retention and instill loyalty in the seasonal tax
services business. The Company’s Board of Directors adopted the associates who are vital to this segment of the Company’s
1999 Stock Option Plan for Seasonal Employees (the Plan, as business. The Board believes that a substantial majority of
amended, shall be referred to as the ‘‘Seasonal Plan’’) in March seasonal associates perceive a seasonal stock option plan as a
1999, and the shareholders approved the Plan in September 1999. valuable benefit, that such a plan has in fact proven to be a
Currently, stock options may be granted in accordance with the valuable tool in retaining seasonal associates, and that it is
terms of the Seasonal Plan until December 31, 2006, on which important to continue this incentive. The Board believes that it is
date the Plan will terminate except as to stock options then in the best interests of the Company to adopt the proposed
outstanding, which stock options will remain in effect until they amendment to extend the Seasonal Plan for three years, such that
have expired according to their terms. The original termination it will terminate, unless further extended, on December 31, 2009.
date of the Seasonal Plan was December 31, 2002. At the MATERIAL FEATURES OF THE SEASONAL PLAN –The
Company’s annual meeting of shareholders held on material features of the Seasonal Plan, as amended, are
September 12, 2001, the shareholders approved an amendment to summarized below. The summary is qualified in its entirety by
the Seasonal Plan to extend it until December 31, 2004 and at the reference to the specific provisions of the Seasonal Plan, as
annual meeting of shareholders held on September 8, 2004, the amended, the full text of which is set forth as Appendix C to this
shareholders approved an amendment to the Seasonal Plan to proxy statement.
extend it until December 31, 2006. PARTICIPATION IN AND AWARDS UNDER THE SEASONAL
The Seasonal Plan currently provides that the aggregate PLAN –Options to purchase the Company’s Common Stock are
number of shares of Common Stock that may be issued under the granted under the Seasonal Plan to ‘‘Eligible Seasonal
Plan may not exceed 46,000,000 shares, provided that such Employees’’ of the direct and indirect, majority-owned
aggregated number shall be adjusted for any stock split, stock subsidiaries of H&R Block Services, Inc., an indirect, wholly-
dividend, recapitalization or similar transaction. The Seasonal owned subsidiary of the Company. Such subsidiaries are
Plan originally provided that the aggregate number of shares of collectively referred to herein as ‘‘Tax Services.’’ Eligible
Common Stock that may be issued under the Plan may not Seasonal Employees are employees of Tax Services hired to
exceed 6,000,000 and also provided that such aggregate number perform jobs designated as seasonal jobs for limited periods of
would be adjusted for any stock split, stock dividend, time during each year. Such employees must have adhered to the
recapitalization or similar transaction. In accordance with such working hours agreed upon during the year. At the peak of the
provision, the original aggregate number of shares was doubled 2006 tax season, the Company employed approximately 109,590
to 12,000,000 shares on August 1, 2001, as a result of the two-for- Eligible Seasonal Employees. Officers and directors of H&R
one split of the Common Stock effected on that date. At the Block Services, Inc., Tax Services and the Company may not
Company’s annual meeting of shareholders held on receive grants pursuant to the Seasonal Plan.
September 12, 2001, the shareholders approved an amendment to On June 30 of each year that the Seasonal Plan is in effect, each
the Seasonal Plan to increase the aggregate number of shares of Eligible Seasonal Employee who was employed by Tax Services
Common Stock for which options may be granted by either on the immediately preceding April 15 (or the next
8,000,000 shares (from 12,000,000 to 20,000,000 shares). At the business day if it falls on a Saturday, Sunday or holiday) or for at
Company’s annual meeting of shareholders held on September 8, least 100 working days during the 12-month period preceding
2004, the shareholders approved an amendment to increase the such June 30 will receive an option to purchase shares of
aggregate number of shares of Common Stock for which options Common Stock of the Company as follows:
may be granted by 3,000,000 (from 20,000,000 to (1) Each option granted on June 30, 1999 was for one share of
23,000,000 shares). The aggregate number of shares of Common Common Stock for each $100 of compensation earned
Stock for which options may be granted was subsequently during the preceding 12 months, provided that such
doubled to 46,000,000 shares on August 22, 2005 as a result of the compensation was $500 or more;
two-for-one split of Common Stock effected on that date. (2) Each option granted on June 30 of each year that the
Seasonal Plan is in effect after 1999 to a participant who
H&R BLOCK 2006 Proxy Statement
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