HR Block 2005 Annual Report Download - page 128

options to purchase 51,828 shares of Convertible Preferred Stock payments are made to the holders of Participating Preferred
were issued as a part of the acquisition and 37,399 shares of Stock or the holders of any other class or series of stock of the
Convertible Preferred Stock were issued in connection with these Company with preference over the Common Stock.
options. Each share of Convertible Preferred Stock became We grant restricted shares to selected employees under our
convertible on April 5, 1998 into sixteen shares of Common Stock stock-based compensation plans. Upon the grant of restricted
of the Company, subject to adjustment upon certain events. The shares, unearned compensation is recorded as an offset to
holders of the Convertible Preferred Stock are not entitled to additional paid in capital and is amortized as compensation
receive dividends paid in cash, property or securities and, in the expense over the restricted period. The balance of unearned
event of any dissolution, liquidation or wind-up of the Company, compensation related to restricted shares at April 30, 2005 and
will share ratably with the holders of Common Stock then 2004 was $23.7 million and $15.0 million, respectively.
outstanding in the assets of the Company after any distribution or
NOTE 13: STOCK-BASED COMPENSATION AND RETIREMENT BENEFITS
We have four stock-based compensation plans: the 2003 Long- cumulative basis at the rate of 40%, 30%, and 30% over the
Term Executive Compensation Plan, the 1989 Stock Option Plan following three years. In addition, certain option grants have
for Outside Directors, the 1999 Stock Option Plan for Seasonal accelerated vesting provisions based on our stock price reaching
Employees, and the 2000 ESPP. The shareholders have approved specified levels.
all of our stock-based compensation plans. Options granted under the 1989 Plan for Outside Directors
The 2003 Plan replaced the 1993 Long-Term Executive prior to June 30, 2004 are exercisable starting one year after the
Compensation Plan, effective July 1, 2003. The 1993 Plan date of grant on a cumulative basis at an annual rate of 331/3% of
terminated at that time, except with respect to outstanding the total number of option shares. Beginning with the grant on
awards thereunder. The shareholders had approved the 1993 Plan June 30, 2004, options granted under this Plan are fully vested
in September 1993 to replace the 1984 Long-Term Executive and immediately exercisable as of the date of grant.
Compensation Plan, which terminated at that time except with Under the 2003 and 1989 plans, restricted shares of our
respect to outstanding awards thereunder. Under the 2003 and common stock may be granted to selected employees. Restricted
1989 plans, options may be granted to selected employees and shares granted vest either (1) starting one or three years after the
outside directors to purchase our Common Stock for periods not grant on a cumulative basis at an annual rate of 331/3% of the total
exceeding 10 years at a price that is not less than 100% of fair number of shares, or (2) at the end of three years.
market value on the date of the grant. The 1999 Stock Option Plan for Seasonal Employees provided
Options granted under the 2003 Plan are exercisable either for the grant of options on June 30, 2004, 2003 and 2002 at the
(1) starting one year after the date of the grant, (2) starting one, market price on the date of the grant. The options are exercisable
two or three years after the date of the grant on a cumulative during September through November in each of the two years
basis at the annual rate of 331/3% of the total number of option following the calendar year of the grant, subject to certain
shares, or (3) starting three years after the date of the grant on a conditions.
H&R BLOCK 2005 Form 10K
66