HR Block 2006 Annual Report Download - page 55

EQUITY COMPENSATION PLANS –
The following table provides information about the Company’s Common Stock that may be issued upon the exercise of options,
warrants and rights under all of the Company’s existing equity compensation plans as of April 30, 2006. The Company currently has four
stock-based compensation plans: the 2003 Long-Term Executive Compensation Plan, the 1989 Stock Option Plan for Outside Directors,
the 1999 Stock Option Plan for Seasonal Employees, and the 2000 Employee Stock Purchase Plan. The shareholders have approved all
of the Company’s stock-based compensation plans. The shareholders approved the 2003 Plan in September 2002 to replace the 1993
Long-Term Executive Compensation Plan, effective July 1, 2003. The 1993 Plan terminated at that time, except with respect to
outstanding awards thereunder. The shareholders had approved the 1993 Plan in September 1993 to replace the 1984 Long-Term
Executive Compensation Plan, which terminated at that time except with respect to outstanding options thereunder.
Number of securities to Be Issued Weighted-average exercise price of Number of securities remaining available for
Upon Exercise of Outstanding outstanding options, warrants future issuance under equity compensation
Options, Warrants and Rights and rights plans excluding securities reflected in column (A)
Plan category (A) (B) (C)
Equity compensation plans approved by
security holders 26,048,000 $21.40 27,355,864
Equity compensation plans not approved
by security holders — — —
Total 26,048,000 $21.40 27,355,864
EMPLOYMENT AGREEMENTS, CHANGE-IN-CONTROL AND OTHER ARRANGEMENTS –
Mark A. Ernst is subject to an Employment Agreement with HRB options become fully vested and are exercisable for the
Management, Inc. (‘‘HRB’’), an indirect subsidiary of the three-month period following termination, and any restrictions
Company, dated July 16, 1998, whereby effective September 1, upon Common Stock awarded Mr. Ernst on the effective date
1998, he was employed as the Executive Vice President and Chief lapse and such stock becomes fully vested upon the date
Operating Officer of the Company. The Agreement provides for of termination.
an initial base salary at an annual rate of $400,000; participation Robert E. Dubrish is subject to an Employment Agreement
in the Company’s Short-Term Incentive Plan; 72,000 restricted with Option One Mortgage Corporation (‘‘Option One’’), an
shares of the Company’s Common Stock (‘‘Common Stock’’) indirect subsidiary of the Company, dated February 9, 2002, and
(split-adjusted) awarded on the effective date; and a stock option effective June 30, 2001. The Agreement provides for a base salary
to purchase 300,000 shares of Common Stock (split-adjusted) at an annual rate of $360,000 as of the effective date and a stock
granted on the effective date. Base salary and incentive bonus option to purchase 60,000 shares of Common Stock (split-
compensation are to be reviewed annually by the Compensation adjusted) granted as of the effective date. Base salary and any
Committee. The Agreement provides that it may be terminated by incentive bonus compensation are to be reviewed annually by the
either party at any time for any reason upon 45 days’ prior written Compensation Committee. The Agreement provides that it may
notice, by HRB for ‘‘cause,’’ and by Mr. Ernst for ‘‘good reason,’’ be terminated by either party at any time for any reason upon
in each case as defined in the Agreement. If the Agreement is 45 days’ prior written notice. Option One also has the right to
terminated by HRB without ‘‘cause,’’ by Mr. Ernst for ‘‘good terminate the Agreement without notice upon the occurrence of
reason,’’ or by either party during the 180-day period following certain stated events. If Mr. Dubrish incurs a ‘‘qualifying
the date of a ‘‘change of control’’ (as defined in the Agreement) of termination,’’ as defined in the H&R Block Severance Plan (the
the Company, HRB is obligated to continue to pay Mr. Ernst’s ‘‘Severance Plan’’), or if the Agreement is terminated by
salary (determined as of the termination date) and provide all Mr. Dubrish within 180 days following a ‘‘change of control’’ (as
other benefits for a period of two years following such defined in the Agreement) of the Company, Option One is
termination, as well as a pro rata portion of the incentive bonus obligated to pay to Mr. Dubrish his choice of the level of
compensation to which he would have been entitled had he severance compensation and benefits as would be provided under
remained employed through the end of the fiscal year in which the Severance Plan as such plan exists either on the effective date
such termination occurs. In addition, all outstanding stock of the Agreement or on Mr. Dubrish’s last day of employment. As
H&R BLOCK 2006 Proxy Statement
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