HR Block 2005 Annual Report Download - page 36

compensation of outside directors of the Company. All of the Company serving as such on June 30 of each year in which the
members of the Governance and Nominating Committee are Plan is in effect. Effective June 30, 2002, each stock option
independent under the New York Stock Exchange listing granted to an outside director of the Company pursuant to the
standards and the Board’s Director Independence Standards. Plan is for 4,000 shares of the Company’s Common Stock, and the
purchase price per share is equal to the last reported sale price
DIRECTOR’S COMPENSATION ⬎⬎⬎ Directors, excluding
for the Common Stock on the New York Stock Exchange on the
those who are employed by the Company or its subsidiaries,
date of grant. The maximum number of shares of Common Stock
received an annual director’s fee of $40,000, meeting fees of
as to which options may be granted under the Plan is 800,000.
$2,000 for each Board meeting attended, committee chairman Options for 4,000 shares each, with an option price of $58.35
fees of $2,000 for each committee meeting that they chaired, and per share, were granted to Ms. Ecton and Messrs. Baum, Bloch,
meeting fees of $1,200 for each committee meeting attended in a Frigon, Hale, Lewis, Seip, Smith and Wilkins on June 30, 2005.
capacity other than as chairman. In addition, the chairman of the The options are fully vested and immediately exercisable as of
audit committee receives an annual committee chairman’s fee of date of grant. All outstanding options expire ten years after the
$5,000. Beginning with the quarterly installment payable on date of grant.
June 1, 2005, the Board approved an increase in the annual The Company also offers to its non-employee directors free
retainer for non-employee directors from $40,000 to $50,000 and income tax return preparation services at an H&R Block office of
the audit committee chair annual retainer was increased from their choice, a fifty percent discount on tax preparation services
$5,000 to $7,500. All other fees paid will remain the same. from RSM McGladrey, Inc. and free business travel insurance in
In accordance with the provisions of the H&R Block Deferred connection with Company-related travel.
Compensation Plan for Directors, as amended, eligible non- CORPORATE GOVERNANCE ⬎⬎⬎ Our Board of Directors
employee directors may defer receipt of their retainers and/or operates under duly adopted Corporate Governance Guidelines
meeting fees. Deferrals are placed in an account maintained by (the ‘‘Guidelines’’) to assist the Board in exercising its
the Company for each director and such deferrals are fully vested responsibilities. The Guidelines reflect the Board’s commitment
at all times. Gains or losses are posted to each account in to monitor the effectiveness of policy and decision-making both
accordance with the participant’s selection among fixed rate, at the Board level and management level, with a view to
variable rate and Company Common Stock investment enhancing shareholder value over the long term. The Guidelines
alternatives. Payment of benefits occurs in cash upon termination also assure that the Board will have the necessary authority and
of the participant’s service as a director or upon his or her death. practices in place to review and evaluate the Company’s business
The account balance is generally paid out in approximately equal
operations as needed and to make decisions that are independent
monthly installments over a 10-year period after the occurrence
of the Company’s management. The Guidelines are not intended
of the event which results in the benefit distribution.
to be a static statement of the Company’s policies, principles and
Pursuant to the H&R Block Stock Plan for Non-Employee
Directors, eligible non-employee directors have the opportunity guidelines, but are subject to continual assessment and
to receive payment of their retainers and/or meeting fees on a refinement as the Board may determine advisable or necessary in
deferred basis in shares of Common Stock of the Company. The the view of the best interests of the Company and
retainers and/or fees are initially paid in the form of stock units. its shareholders.
The stock units in the directors’ accounts are fully vested at all The Guidelines also provide that a non-employee director may
times. Payment of the stock units must be deferred at least one be appointed as the ‘‘Presiding Director’’ of the Board. The
year after the year such units are credited and the director shall Presiding Director (Roger W. Hale) leads executive sessions of
select the date of payment, which may be upon termination of the non-employee directors at meetings that are held prior to
service as a director. The maximum number of shares of each regular meeting of the Board. In addition, the Presiding
Common Stock that may be issued under the Stock Plan is Director may call executive sessions as deemed necessary.
currently 600,000 shares. As further described in the Guidelines, the Board believes that
The 1989 Stock Option Plan for Outside Directors, as amended, a substantial majority of the Board should consist of directors
provides for the grant of stock options to directors of the who are independent under the New York Stock Exchange listing
Company who are not employees of the Company or any of its standards. As described below, eight of the Board’s ten directors
subsidiaries. The Plan specifies that nonqualified stock options are independent directors within the meaning of the Board’s
are to be automatically granted to outside directors of the
H&R BLOCK 2005 Proxy Statement
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