HR Block 2006 Annual Report Download - page 57

effective date. Base salary and incentive bonus compensation are Stock option agreements entered into on or after June 30, 1996
to be reviewed annually by the Compensation Committee. The between the Company and the recipients of stock options granted
Agreement provides that it may be terminated by either party at pursuant to the 1993 Long-Term Executive Compensation Plan
any time for any reason upon 45 days’ prior written notice. HRB and the 2003 Long-Term Executive Compensation Plan contain
also has the right to terminate the Agreement without notice provisions that accelerate the vesting of options held more than
upon the occurrence of certain stated events. If Mr. Spaeth incurs six months in the event of certain changes in control. For
a ‘‘qualifying termination,’’ as defined in the Severance Plan, or if purposes of such agreements, changes in control include (i) the
the Agreement is terminated by Mr. Spaeth within 180 days purchase or other acquisition by a person, entity or group of
following a ‘‘change of control’’ (as defined in the Agreement) of persons of beneficial ownership of 20% or more of the Company’s
the Company, HRB is obligated to pay to Mr. Spaeth his choice of voting securities, (ii) the turnover of more than a majority of the
the level of severance compensation and benefits as would be directors on the Board of Directors as a result of a proxy contest
provided under the Severance Plan as such plan exists either on or series of contests, (iii) either approval (for agreements entered
the effective date of the Agreement or on Mr. Spaeth’s last day of into prior to June 30, 2001) by the Company’s shareholders or
employment. As of the effective date, the Severance Plan completion (for agreements entered into on or after June 30,
provides maximum compensation of 18 months of salary and one 2001) of (A) a reorganization or consolidation such that the
twelfth of the target payout under the STI Program multiplied by shareholders immediately prior to the reorganization or
Mr. Spaeth’s years of service, as well as a discretionary payment, consolidation do not, immediately after such reorganization or
which may be zero. In addition, in such circumstances, HRB is consolidation, own more than 50% of the voting securities of the
obligated to provide medical, dental, vision, employee assistance, reorganized or consolidated organization, or (B) the sale of all or
life insurance, cafeteria plan and accidental death and substantially all of the assets of the Company, or (iv) approval by
dismemberment insurance benefits for up to 12 months following the Company’s shareholders of a liquidation or dissolution of
such termination, and all outstanding stock options that would the Company.
have vested in the 18-month period following termination become
fully vested and are exercisable for the three-month period
following termination or the severance period.
INFORMATION REGARDING SECURITY HOLDERS
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT –
The following table shows as of June 1, 2006 the number of shares of Common Stock beneficially owned by each director and nominee
for election as director, by each of the Named Officers and by all directors and executive officers as a group. The number of shares
beneficially owned is determined under rules of the Securities and Exchange Commission. The information is not necessarily indicative
of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual
has either sole or shared voting power or investment power and also any shares that the individual has the right to acquire within
H&R BLOCK 2006 Proxy Statement
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