<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
H&R BLOCK, INC.
(Name of Registrant as Specified in Its Charter)
James H. Ingraham, Secretary, for the Board of Directors
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which the
transaction applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
[Text of form of proxy]
[FRONT SIDE]
PROXY FOR MEETING OF SHAREHOLDERS, September 7, 1994
The undersigned hereby appoints Henry W. Bloch, Thomas M. Bloch
and Morton I. Sosland, and each of them, the proxies (acting by a
majority or, if only one be present, then that one shall have all
of the powers hereunder), each with full power of substitution,
for and in the name of the undersigned to represent and to vote
all shares of stock of H&R BLOCK, INC., a Missouri corporation,
of the undersigned at the annual meeting of shareholders of said
corporation to be held at the Nelson-Atkins Museum of Art, 4525
Oak Street, Kansas City, Missouri, commencing at 9:00 a.m.,
Kansas City time, and at any adjournment thereof, notice of said
meeting and the proxy statement furnished therewith having been
received by the undersigned; and without limiting the authority
hereinabove given, said proxies or proxy are expressly authorized
to vote in accordance with the undersigned's direction as to
those matters set forth on the reverse side hereof and in
accordance with their best judgment in connection with the
transaction of such other business, if any, as may properly come
before the meeting.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS AND WILL
BE VOTED AS SPECIFIED ON THE
REVERSE SIDE HEREOF. IF NO SUCH
SPECIFICATION IS MADE, IT WILL BE
VOTED FOR EACH OF THE PROPOSALS.
[REVERSE SIDE]
1. ELECTION OF CLASS II DIRECTORS. FOR all nominees listed
---
below (except as marked to the contrary below)
WITHHOLD AUTHORITY to vote
---
for all nominees listed below
INSTRUCTION: To withhold authority to vote for any
individual nominee(s), clearly cross out his (their) name(s)
below.
NOMINEES ARE: G. KENNETH BAUM, HENRY F. FRIGON AND ROGER W.
HALE.
2. APPROVAL OF AN AMENDMENT TO THE THIRD STOCK OPTION PLAN FOR
SEASONAL EMPLOYEES TO MODIFY ONE OF THE CONDITIONS UPON
WHICH THE ABILITY TO EXERCISE AN OPTION IS DEPENDENT.
FOR AGAINST ABSTAIN
--- --- ---
<PAGE> 3
3. RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR ENDING APRIL 30,
1995.
FOR AGAINST ABSTAIN
--- --- ---
Dated , 1994
----------------------
----------------------------------
----------------------------------
(Please date and sign exactly as
name appears at the left and return
in the enclosed postage paid
envelope)
<PAGE> 4
H&R BLOCK, Inc.
4410 Main Street
Kansas City, Missouri 64111
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held September 7, 1994
The annual meeting of shareholders of H&R Block, Inc., a Missouri
corporation (the "Company"), will be held at the Nelson-Atkins Museum of Art,
4525 Oak Street, Kansas City, Missouri, at 9:00 a.m., Kansas City time, on
Wednesday, September 7, 1994. Shareholders attending the meeting are asked to
park on the east side of the parking lot that is north of the Museum and enter
the Museum's east entrance. The meeting will be held for the purpose of
considering and acting upon the following:
1. The election of three Class II directors to serve three-year
terms (See page 6);
2. The approval of an amendment to the Third Stock Option Plan for
Seasonal Employees to modify one of the conditions upon which the
ability to exercise an option is dependent (See page 24);
3. The ratification of the appointment of Deloitte & Touche as the
Company's independent auditors for the year ending April 30, 1995
(See page 27); and
4. The transaction of such other business as may properly come
before the meeting or any adjournments thereof;
all as set forth in the proxy statement accompanying this Notice.
The Board of Directors has fixed the close of business on July 19, 1994
as the record date for determining shareholders of the Company entitled to
notice of and to vote at the meeting.
By Order of the Board of Directors
JAMES H. INGRAHAM
Secretary
Kansas City, Missouri
July 29, 1994
A proxy for the annual meeting is enclosed herewith. Please date and
sign the proxy and return it promptly in the enclosed postage-paid envelope.
If you are present at the meeting and desire to vote in person, the proxy will
not be used. Therefore, please return the signed proxy even if you plan to
attend the meeting.
<PAGE> 5
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of H&R
Block, Inc., 4410 Main Street, Kansas City, Missouri 64111, for use at the
annual meeting of shareholders to be held on September 7, 1994, or at any
adjournment of that meeting, for the purposes set forth in the foregoing
notice. All costs of solicitation will be borne by the Company. In addition
to solicitation by mail, proxies may be solicited personally or by telephone
or telegram by regular employees of the Company. Further, brokers and other
custodians, nominees and fiduciaries will be requested to forward soliciting
material to their principals and the Company will reimburse them for the
expense of doing so.
A shareholder giving a proxy has the power to revoke it at any time
before it is exercised. A proxy may be revoked by filing with the Secretary
of the Company a revoking instrument or a duly executed proxy bearing a later
date. The powers of the proxy holders will be suspended if the person
executing the proxy is present at the meeting and elects to vote in person.
Subject to such revocation or suspension, shares represented by properly
executed proxies received by the Board of Directors will be counted at the
meeting and will be voted in accordance with the shareholder's directions. If
the proxy card is signed and returned and the shareholder has made no
specifications with respect to voting matters, the shares will be voted in
accordance with the recommendations of the Board of Directors.
Directors will be elected by a plurality of the votes of the shares
present or represented by proxy at the meeting and entitled to vote on the
election of directors. Shareholders do not have cumulative voting rights with
respect to the election of directors. For all other matters to be voted upon
at the meeting, the affirmative vote of a majority of shares present in person
or represented by proxy, and entitled to vote on the matter, is necessary for
approval. For purposes of determining the number of shares present in person
or represented by proxy on a voting matter, all votes cast "for," "against" or
"abstain" are included. "Broker non-votes," which occur when brokers or other
nominees are prohibited from exercising discretionary voting authority for
beneficial owners who have not provided voting instructions, are not counted
for the purpose of determining the number of shares present in person or
represented by proxy on a voting matter.
At the close of business on July 19, 1994, the Company's outstanding
voting securities consisted of 106,576,312 shares of Common Stock.
The proxy statement and accompanying form of proxy are first being sent
to shareholders on or about July 29, 1994.
<PAGE> 6
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
The Company's Articles of Incorporation and Bylaws provide that the
number of directors to constitute the Board of Directors shall be not less
than nine nor more than 15, with the exact number to be fixed by a resolution
adopted by the affirmative vote of a majority of the whole Board. Effective
September 8, 1993, the Board fixed the number of directors to constitute the
Board of Directors at 10. The Articles of Incorporation and Bylaws further
provide that the Board of Directors shall be divided into three classes: Class
I, Class II and Class III, with each class to consist, as nearly as possible,
of one-third of the members of the Board. The term of office of one class of
directors shall expire at each annual meeting of shareholders. Directors
elected at an annual meeting of shareholders to succeed those whose terms
expire shall be identified as being of the same class as those directors they
succeed and shall be elected for a term to expire at the third annual meeting
of shareholders after their election.
Nominations of persons for election to the Board of Directors may be
made at a meeting of shareholders only (i) by or at the direction of the Board
of Directors or (ii) by any shareholder of the Company entitled to vote for
the election of directors at the meeting who complies with the notice
procedures set forth in the Company's Bylaws.
At the annual meeting of shareholders to be held on September 7, 1994
three Class II directors will be elected to hold office for three years and
until their successors are elected and shall have qualified. G. Kenneth Baum,
Henry F. Frigon and Roger W. Hale have been nominated for election as Class II
directors of the Company. All nominees are currently Class II directors of
the Company. The shares voted by the proxies will be voted for their election
unless authority to do so is withheld as provided in the form of proxy. All
nominees have consented to serve if elected and the Board of Directors has no
reason to believe that any of the nominees will be unable to accept the office
of director, but if such contingency should arise, it is the intention of the
proxies to vote for such person or persons as the Board of Directors may
recommend.
The nominees for election as Class II directors and the current Class I
and Class III directors are listed in alphabetical order in the following
table. Messrs. Henry Bloch, Davis and Salizzoni serve as Class I directors
with terms scheduled to expire at the annual meeting of shareholders in 1996.
Ms. Ecton and Messrs. Thomas Bloch, Rich and Sosland serve as Class III
directors with terms scheduled to expire at the annual meeting of shareholders
in 1995. Ms. Ecton was elected a Class III director by the Board of Directors
on September 8, 1993 in order to fill a vacancy on the Board at that time.
<PAGE> 7
<TABLE>
<CAPTION>
Common Stock
(and percent Sole Shared
Name, Age and Principal of class) Voting and Voting and
Occupation or Employment Director Beneficially Investment Investment
During the Past 5 Years Since Owned<F1> Powers Powers
- - ------------------------- --------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
G. Kenneth Baum (64) 1961 92,665<F4> 92,665<F4> -0-
Chairman of the Board, (.09%)
George K. Baum Group, Inc.,
investment company<F2><F3>
Henry W. Bloch (71) 1955 5,552,700<F4><F7> 5,260,500<F4> 292,200<F7>
Chairman of the Board (5.21%)
of the Company<F5><F6>
Thomas M. Bloch (40) 1983 360,556<F4><F7> 10,556<F4> 350,000<F7>
President and Chief Executive (.34%)
Officer of the Company<F2><F6><F8>
Robert E. Davis (63) 1981 14,465<F4> 14,265<F4> 200
Managing Director, Axess (.01%)
Corporation, diversified
manufacturing<F2><F9>
Donna R. Ecton (47) 1993 100 100 -0-
Former President and Chief (0%)
Executive Officer of Van Houten
North America, Inc. and Andes
Candies Inc.<F2><F10>
Henry F. Frigon (59) 1992 5,666<F4> 5,666<F4> -0-
Executive Vice President-Corporate (.01%)
Development & Strategy and Chief
Financial Officer, Hallmark Cards
Incorporated, greeting cards<F2><F11>
Roger W. Hale (51) 1991 5,783<F4> 5,728<F4> 55
Chairman, President and Chief (.01%)
Executive Officer, LG&E Energy
Corporation, a diversified
energy services company<F2><F12>
Marvin L. Rich (60) 1961 61,545<F4> 53,145<F4> 8,400
Of Counsel, Craft, Fridkin & (.06%)
Rhyne, law firm<F13>
Frank L. Salizzoni (56) 1988 18,665<F4> 18,665<F4> -0-
President and Chief Operating (.02%)
Officer, USAir, Inc., airline<F2><F14>
<PAGE> 8
<CAPTION>
Common Stock
(and percent Sole Shared
Name, Age and Principal of class) Voting and Voting and
Occupation or Employment Director Beneficially Investment Investment
During the Past 5 Years Since Owned<F1> Powers Powers
- - ------------------------- --------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Morton I. Sosland (69) 1963 289,687<F4> 103,650<F4> 186,037
Chairman of the Board, (.27%)
Sosland Companies, Inc.,
publishers<F2><F15>
<FN>
<F1> As of June 1, 1994. For purposes of this disclosure, the Securities and
Exchange Commission has defined "beneficial ownership" to include
securities over which the individual has sole or shared investment or
voting power regardless of the economic incidents of ownership. The
shares reported in the table include shares held by certain family
members of the directors or in trusts or custodianships for such members
(directly or through nominees). The reported shares also include 18,000
shares held by a charitable foundation of which Mr. Sosland is an
officer and a director, and 106,192 shares held by a corporation of
which Mr. Sosland is an officer and a director. The respective directors
have disclaimed any beneficial ownership of those shares held by or for
their family members and Mr. Sosland has disclaimed any beneficial
ownership of those shares held in the name of said charitable foundation
or by said corporation.
<F2> With respect to other directorships held by the above persons in any
company with a class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934 or subject to the requirements of
Section 15(d) of said Act, Mr. Baum is a director of Interstate Bakeries
Corporation, Sealright Co., Inc. and Unitog Company; Mr. Thomas Bloch is
a director of Business Men's Assurance Company of America; Mr. Davis is
a director of Rheometrics, Inc. and USF&G Corporation; Ms. Ecton is a
director of Barnes Group, Inc., PETsMART, Inc. and Vencor, Inc.; Mr.
Frigon is a director of Dibrell Brothers, Inc. and Pulte Corporation;
Mr. Hale is a director of PNC Bank Corp.; Mr. Salizzoni is a director of
SKF USA Inc. and USAir Group, Inc.; and Mr. Sosland is a director of
AgriStar, Inc., Brown Group, Inc., Commerce Bancshares, Inc. and Kansas
City Southern Industries, Inc.
<F3> Mr. Baum has served as Chairman of the Board of George K. Baum Group,
Inc. since May 1994. He was Chairman of the Board of George K. Baum &
Company from 1982 until May 1994. During the Company's 1994 fiscal year,
George K. Baum & Company executed brokerage transactions for the Company
in the normal course of business at normal commission rates and the
total compensation received by George K. Baum & Company for performing
all services rendered to the Company was less than five percent of
George K. Baum & Company's consolidated gross revenues for its last full
fiscal year.
<PAGE> 9
<F4> Includes shares which on June 1, 1994 the specified directors had the
right to purchase as of July 1, 1994 pursuant to options granted in
connection with the Company's stock option plans, as follows: Mr. Baum,
12,665 shares; Mr. Henry Bloch, 10,500 shares; Mr. Thomas Bloch, 10,500
shares; Mr. Davis, 8,665 shares; Mr. Frigon, 666 shares; Mr. Hale, 4,665
shares; Mr. Rich, 12,665 shares; Mr. Salizzoni, 12,665 shares; and Mr.
Sosland, 12,665 shares.
<F5> Henry W. Bloch served as President of the Company from 1962 through July
1989 and served as its Chief Executive Officer from 1974 through July
1992.
<F6> Thomas M. Bloch is the son of Henry W. Bloch.
<F7> Includes 290,000 shares for which both Henry W. Bloch and Thomas M.
Bloch are listed as beneficial owners.
<F8> Thomas M. Bloch was President and Chief Operating Officer of the Company
from August 1989 through July 1992 and Executive Vice President of the
Company from August 1988 through July 1989.
<F9> Mr. Davis was President of Sequa Corporation (formerly Sun Chemical
Corporation) from 1983 through February 1991.
<F10> Ms. Ecton was President and Chief Executive Officer of Van Houten North
America, Inc. and Andes Candies Inc., Delavan, Wisconsin, chocolate and
confections companies, from December 1991 until January 1994. She served
as Senior Vice President, Franchise and International, Nutri/System,
Inc., Blue Bell, Pennsylvania, weight control service, from February
1989 until January 1991.
<F11> Mr. Frigon has served as Executive Vice President-Corporate Development
& Strategy and Chief Financial Officer of Hallmark Cards Incorporated
since January 1991. He served as President of BATUS Incorporated in
Louisville, Kentucky, from 1983 until April 1990 and as Chief Executive
Officer of such firm from 1985 until April 1990. The principal
businesses of BATUS Incorporated at that time were tobacco, paper,
retailing and financial services.
<F12> Mr. Hale has served as Chairman, President and Chief Executive Officer
of LG&E Energy Corporation since August 1990. He has also served as
Chairman of the Board of Louisville Gas & Electric Company since
February 1990 and Chief Executive Officer of such company since June
1989. Mr. Hale was Executive Vice President of BellSouth Enterprises,
Inc. from September 1988 until June 1989.
<F13> Mr. Rich was a partner of Rich, Granoff, Levy & Gee, law firm, from 1959
until March 1990.
<PAGE> 10
<F14> Mr. Salizzoni has served as President and Chief Operating Officer of
USAir, Inc. since March 1994. He was Executive Vice President-Finance
of USAir, Inc. from November 1990 until March 1994. He served as
Chairman and Chief Executive Officer of TW Services, Inc. from April
1987 until July 1989.
<F15> Mr. Sosland has served as Chairman of Sosland Companies, Inc. since
January 1993. He served as President of such firm from July 1968
through December 1992. He has also served as Chairman of Sosland
Publishing Company since 1984.
</FN>
</TABLE>
DIRECTORS' MEETINGS, COMPENSATION AND COMMITTEES
There were five meetings of the Board of Directors held during the 1994
fiscal year, and nine meetings of the standing Board committees held during
such year. Each of the incumbent directors attended at least 75% of the
aggregate of (1) the total number of meetings of the Board held during the
time in which he or she served as a director in such year and (2) the total
number of meetings of the Board committees on which he or she served that were
held during the time in which he or she served on such committees in such
year.
Directors, excluding those who are employed by the Company or its
subsidiaries, receive an annual director's fee of $23,000 ($24,000 as of
September 1, 1994) and meeting fees of $1,600 for each Board meeting attended
and $1,000 for each committee meeting attended ($1,700 and $1,100,
respectively, as of September 1, 1994). In accordance with the provisions of
the H&R Block, Inc. Deferred Compensation Plan for Directors, as amended,
eligible non-employee directors may defer 100% of such fees. Deferrals are
placed in an account maintained by the Company for each director and such
deferrals are fully vested at all times. Gains or losses are posted to each
account in accordance with the participant's election of a fixed rate
investment option, a variable rate investment option or the Company's Common
Stock as an investment alternative. Payment of benefits occurs upon the
termination of the participant's services as a director, upon his or her death
or, if he or she first became eligible to participate in the Plan at age 68 or
older, upon attainment of age 75. The account balance is generally paid out
in approximately equal monthly installments over a 10-year period commencing
not later than six months after the occurrence of the event which results in
the benefit distribution.
If a non-employee director retires from the Board after attaining age 72
or after incurring a permanent and total disability, he or she may receive
retirement income from the Company following such retirement. Pursuant to the
H&R Block, Inc. Retirement Plan for Non-Employee Directors, a director who
retires due to either such reason and who has served on the Board for at least
five years prior to retirement may thereafter receive an annual benefit equal
to the largest annual director's fee paid by the Company at any time during
the year preceding the date of retirement. Such benefit is payable in
quarterly installments during the life of the director. A non-employee
director who ceases to be a director within one year after a "change in
control of the Company" (as defined in the Plan) is also thereafter entitled
under the Plan to such an annual benefit. In such circumstances, the benefit
is payable in quarterly installments for a term equal to the shortest of the
term during which the director served as a director of the Company or the life
of the director.
<PAGE> 11
The 1989 Stock Option Plan for Outside Directors, as amended, provides
for the grant of stock options to directors of the Company who are not
employees of the Company or any of its subsidiaries. The amended Plan
specifies that nonqualified stock options are to be automatically granted to
outside directors of the Company serving as such on June 30 of each year in
which the Plan is in effect. Each stock option granted to an outside director
of the Company pursuant to the Plan, as amended, is for 2,000 shares of the
Company's Common Stock, without par value, and the purchase price per share is
equal to the last reported sale price for the Common Stock on the New York
Stock Exchange on the date of grant. The maximum number of shares of Common
Stock as to which options may be granted under the Plan is 300,000 shares.
Options for 2,000 shares each, with an option price of $35.75 per share,
were granted to Messrs. Baum, Davis, Frigon, Hale, Rich, Salizzoni and Sosland
on June 30, 1993. Subject to certain exceptions, the outstanding stock
options may not be exercised until at least one year after the date of grant,
and then may be exercised only in increments in any one year of up to one-
third of the aggregate number of shares subject to the option. All
outstanding options expire 10 years after the date of grant.
The Company also offers to its non-employee directors free access to
CompuServe Incorporated's Information Service, free income tax return
preparation services through the Company's Executive Tax Service and free
business travel insurance in connection with Company-related travel.
The standing committees of the Board include the Executive Committee,
the Audit Committee, the Compensation Committee, the Diversification
Committee, the Finance Committee and the Nominating Committee. Henry W.
Bloch, Chairman of the Board of the Company, and Thomas M. Bloch, President
and Chief Executive Officer of the Company, are nonvoting ex officio members
of the Compensation, Diversification and Finance Committees.
The Executive Committee, whose members are Henry W. Bloch (Chairman), G.
Kenneth Baum, Thomas M. Bloch, Marvin L. Rich and Morton I. Sosland, held no
meetings during fiscal year 1994. The primary function of the Executive
Committee is to control and manage, between meetings of the Board, the
property and business of the Company in all matters in which exclusive
authority has not been given to the entire Board of Directors or in which
specific direction has not been given by the Board.
The Audit Committee, whose members are Frank L. Salizzoni (Chairman),
Donna R. Ecton, Roger W. Hale and Marvin L. Rich, held three meetings during
the 1994 fiscal year. The functions of the committee include, among other
things, reviewing the various internal accounting controls of the Company;
reviewing and approving the services of the Company's independent auditors,
including any non-audit services provided by them; making recommendations to
the Board of Directors with respect to the employment, retention or
replacement of such auditors, as well as monitoring the independence of such
auditors; and reviewing the scope of the annual audit and related matters.
The Compensation Committee, whose members are Marvin L. Rich (Chairman),
G. Kenneth Baum, Robert E. Davis and Donna R. Ecton, held one meeting during
fiscal year 1994. The functions of the committee primarily include reviewing
the compensation of the Company's executive officers and recommending to the
Board of Directors the salaries, and any bonus or incentive plans, for such
executive officers. See the Compensation Committee Report under "COMPENSATION
OF EXECUTIVE OFFICERS," below.
<PAGE> 12
The Diversification Committee, whose members are Morton I. Sosland
(Chairman), G. Kenneth Baum, Henry F. Frigon, Roger W. Hale and Frank L.
Salizzoni, held three meetings during fiscal year 1994. The functions of the
committee include, among other things, determining appropriate areas of
business diversification for the Company, investigating available
opportunities for such diversification and recommending to the Board of
Directors the acquisition of those businesses which in the committee's
judgment would best serve the interests of the Company.
The Finance Committee, whose members are G. Kenneth Baum (Chairman),
Henry F. Frigon, Frank L. Salizzoni and Morton I. Sosland, held two meetings
during the 1994 fiscal year. The primary duties of such committee are to
provide advice to management and the Board of Directors concerning financial
policies and long-term financial planning, to review and approve the Company's
short-term and intermediate-term investment positions within the framework of
the investment policies established by the Board of Directors, and, in
connection with such duties, to review and monitor periodically the Company's
working capital needs.
The Nominating Committee, whose members are Morton I. Sosland
(Chairman), Henry W. Bloch, Thomas M. Bloch and Donna R. Ecton, held no
meetings during the 1994 fiscal year. The Nominating Committee is responsible
for the initiation of nominations for election as a director of the Company.
INFORMATION REGARDING SECURITY HOLDERS
PRINCIPAL SECURITY HOLDERS
The following table sets forth the name, address and share ownership,
as of June 1, 1994, of the persons or organizations known to the Company to be
the beneficial owners of more than 5% of the outstanding Common Stock of the
Company.
<TABLE>
<CAPTION>
Percent of
Shares Common
Name and Address Beneficially Stock
of Beneficial Owner Owned Outstanding
--------------------------- ------------- -----------
<S> <C> <C>
Henry W. Bloch 5,552,700<F1><F2> 5.21%
Marion H. Bloch
4410 Main Street
Kansas City, Missouri 64111
<FN>
<F1> Marion H. Bloch is the wife of Henry W. Bloch. Each spouse may be
deemed under current rules and regulations of the Securities and
Exchange Commission to be the beneficial owner of those shares of the
Company's Common Stock held by his or her spouse. However, the Blochs
have disclaimed ownership of shares held by or for each other and by or
for their children.
<F2> Includes 10,500 shares which Mr. Bloch has the right to purchase as of
July 1, 1994 pursuant to options granted in connection with the
Company's 1984 Long-Term Executive Compensation Plan.
</FN>
</TABLE>
<PAGE> 13
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of Common Stock of
the Company of those executive officers of the Company listed in the Summary
Compensation Table, below, under "COMPENSATION OF EXECUTIVE OFFICERS," who are
not directors of the Company, as well as the beneficial ownership of Common
Stock of all directors and executive officers of the Company as a group as of
June 1, 1994. Information regarding individual directors is contained in the
table above, under "ELECTION OF DIRECTORS." No shares of Preferred Stock have
been issued by the Company.
<TABLE>
<CAPTION>
Shares
Beneficially Percent of
Name of Beneficial Owner Owned Class
------------------------ ----------- -----------
<S> <C> <C>
William P. Anderson 7,709<F1> .01%
William F. Evans 11,666<F1> .01%
Allan C. Sorensen 35,000<F1> .03%
Ozzie Wenich 30,503<F1> .03%
All directors and officers 6,180,119<F2><F3> 5.79%
as a group (15 persons)
<FN>
<F1> Includes shares which the specified officers had the right to purchase
as of July 1, 1994 pursuant to options granted in connection with the
Company's 1984 Long-Term Executive Compensation Plan, as follows: Mr.
Anderson, 6,999 shares; Mr. Evans, 11,666 shares; and Mr. Wenich, 10,333
shares. All shares shown as beneficially owned by Messrs. Anderson,
Evans, Sorensen and Wenich are considered to be held with sole voting
and investment powers.
<F2> Includes shares held by certain family members of such directors and
officers or in trusts or custodianships for such members (directly or
through nominees). Also includes 132,721 shares which such directors
and officers have the right to purchase as of July 1, 1994 pursuant to
options granted in connection with the Company's stock option plans.
The figure does not include shares beneficially owned by Allan C.
Sorensen, who was not an executive officer of the Company at the end of
fiscal year 1994 or on June 1, 1994.
<F3> Includes 5,633,227 shares held with sole voting and investment powers
and 546,892 shares held with shared voting and investment powers.
</FN>
</TABLE>
<PAGE> 14
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth for the year ended April 30, 1994, and
the two previous fiscal years, the annual, long-term and other compensation
paid to the Company's Chief Executive Officer, to each of the four highest
paid executive officers of the Company (other than the Chief Executive
Officer), who was serving as an executive officer of the Company at the end of
such year, and to one former executive officer of the Company who would have
been one of such highest paid executive officers, but for the fact that he was
not serving as an executive officer of the Company at the end of such year:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------------------ ------------------------- -------
Securities
Other Annual Restricted Underlying LTIP All Other
Fiscal Salary Compensation Stock Options Payouts Compensation
Name and Principal Position Year ($) Bonus ($) ($)<F1> Award(s) ($) (#)<F2> ($) ($)<F1>
- - --------------------------- ------ --------- --------- ------------ ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas M. Bloch 1994 433,333 293,785 18,885<F3> 138,500<F4> 9,000 0 14,349<F5>
President and Chief 1993 366,667 254,287 13,335<F3> 0 7,500 0 14,462<F5>
Executive Officer 1992 290,000 165,040 N/A 0 15,000 0 N/A
Henry W. Bloch 1994 608,333 0 81,472<F3> 0 4,500 0 22,520<F6>
Chairman of the Board 1993 585,333 63,572 71,884<F3> 0 9,000 0 24,949<F6>
1992 556,667 249,650 N/A 0 18,000 0 N/A
William F. Evans 1994 255,075 183,103 133 103,875<F4> 5,000 0 91,403<F8>
Senior Vice President, 1993 183,750 119,056 98,457<F9> 0 30,000 0 14,516<F8>
Corporate Operations<F7> 1992 N/A N/A N/A N/A N/A N/A N/A
William P. Anderson 1994 200,075 123,287 23,772<F9> 103,875<F4> 5,000 0 45,811<F11>
Vice President, Corporate 1993 180,000 58,863 122,678<F9> 0 3,000 0 29,946<F11>
Development and Chief 1992 63,104 17,556 N/A 0 5,000 0 N/A
Financial Officer<F10>
Ozzie Wenich 1994 129,875 41,904 75 0 2,500 0 35,530<F12>
Vice President, Corporate 1993 121,000 30,506 75 0 2,250 0 30,235<F12>
Controller and Treasurer 1992 113,500 29,758 N/A 0 4,500 0 N/A
Allan C. Sorensen 1994 182,154 0 0 0 2,500 0 23,072<F14>
Chairman of the Board, 1993 268,000 39,087 0 0 3,000 0 32,153<F14>
Interim Services Inc.<F13> 1992 260,000 56,815 N/A 0 6,000 0 N/A
<PAGE> 15
<FN>
<F1> In accordance with the transitional provisions applicable to the
revised rules on executive compensation disclosure adopted by the
Securities and Exchange Commission, amounts of Other Annual
Compensation and All Other Compensation for fiscal year 1992 are not
disclosed.
<F2> Stock options were granted pursuant to the Company's 1984 Long-Term
Executive Compensation Plan. Options reported for fiscal year 1992
reflect the adjustments made pursuant to the anti-dilution provisions
of the 1984 Plan as a result of the two-for-one stock split effected
October 1, 1991.
<F3> Represents payments by the Company of fees incurred by the executive
officers for personal income tax return preparation services, as well
as amounts reimbursed for the payment of taxes incurred by such
officers in connection with the Company's payment of the tax
preparation fees.
<F4> Represents the dollar value of performance units awarded to the
specified executive officer as of May 1, 1993, calculated by
multiplying $34.625, the last-quoted market price for the Company's
Common Stock on April 30, 1993 (the last business day prior to May 1,
1993), by the number of performance units awarded to the officer (4,000
to Mr. Thomas Bloch, 3,000 to each of Messrs. Evans and Anderson).
None of the executive officers held other performance units or
restricted stock at the end of fiscal year 1994. Dividends are not
paid with respect to the performance units, but, in determining the
actual value of a performance unit at the end of the three-year
performance period (based upon a comparison of cumulative total
shareholder return on the Company's stock during such period to the
cumulative total return of the Standard & Poor's 500 Stock Index during
such period), it is assumed that dividends are reinvested.
<F5> Includes a contribution under the Company's profit-sharing plan in each
of fiscal years 1994 and 1993 of $11,000; Company matching
contributions under the Company's 401(k) savings plan in fiscal years
1994 and 1993 of $2,499 and $2,682, respectively; and the $850 (1994)
and $780 (1993) economic value of the death benefit provided by the
Company's Executive Survivor Plan ("ESP"). The imputed income reported
from the ESP represents the portion of the premium paid by the Company
pursuant to the ESP that is attributable to term life insurance
coverage for the executive officer. The ESP provides only an insurance
benefit with no cash compensation element to the executive officer.
<F6> Includes a contribution under the Company's profit-sharing plan in each
of fiscal years 1994 and 1993 of $11,000; Company matching
contributions under the Company's 401(k) savings plan in fiscal years
1994 and 1993 of $2,310 and $2,249, respectively; and the $9,210 (1994)
and $11,700 (1993) economic value of the death benefit provided by the
Company's ESP.
<F7> Mr. Evans commenced his employment with the Company in August 1992.
<PAGE> 16
<F8> Includes Company matching contributions under the Company's 401(k)
savings plan of $1,326 in fiscal year 1994; Company matching
contributions under the Company's deferred compensation plan for
executives ("DCP") in fiscal years 1994 and 1993 of $85,000 and
$14,167, respectively; the $5,077 (1994) and $119 (1993) dollar value
of "above-market" amounts earned on deferred compensation under the
DCP; and, for fiscal year 1993, the $230 economic value of the death
benefit provided by the Company's ESP.
<F9> Includes payments by the Company of certain relocation-related
expenses, as well as amounts reimbursed for the payment of taxes
incurred in connection with the payment of such relocation-related
expenses. The total of such payments and reimbursements during fiscal
year 1994 were $23,697 for Mr. Anderson and during fiscal year 1993
were $98,436 for Mr. Evans and $122,607 for Mr. Anderson.
<F10> Mr. Anderson commenced his employment with the Company in December
1991.
<F11> Includes a contribution under the Company's profit-sharing plan in
fiscal year 1994 of $7,793; Company matching contributions under the
Company's 401(k) savings plan of $2,994 in fiscal year 1994; Company
matching contributions under the Company's DCP of $28,000 in each of
fiscal years 1994 and 1993; an additional Company contribution of
$3,080 under the DCP in fiscal year 1994 to negate the effect of the
deferral of income on the profit-sharing plan contribution in such
year; the $3,944 (1994) and $1,439 (1993) dollar value of "above-
market" amounts earned on deferred compensation under the DCP; and, for
fiscal year 1993, the $507 economic value of the death benefit provided
by the Company's ESP.
<F12> Includes contributions under the Company's profit-sharing plan in
fiscal years 1994 and 1993 of $6,059 and $6,075, respectively; Company
matching contributions under the Company's 401(k) savings plan in
fiscal years 1994 and 1993 of $1,674 and $1,658, respectively; Company
matching contributions under the DCP in fiscal years 1994 and 1993 of
$24,645 and $20,348, respectively; additional Company contributions
under the DCP in fiscal years 1994 and 1993 of $2,239 and $1,683,
respectively, to negate the effect of the deferral of income on profit-
sharing contributions in such years; the $395 (1994) and $18 (1993)
dollar value of "above-market" amounts earned on deferred compensation
under the DCP; and the $518 (1994) and $453 (1993) economic value of
the death benefit provided by the Company's ESP.
<F13> During fiscal year 1994, Mr. Sorensen served as a director of the
Company until September 8, 1993, and as an officer of Interim Services
Inc., which was an indirect wholly-owned subsidiary of the Company
until Interim's disposition in January 1994. While he served as a
director of the Company, he was considered an "executive officer" of
the Company and disclosures are, therefore, included in the Summary
Compensation Table for Mr. Sorensen for compensation paid to him, or
earned by him, during the portion of the fiscal year in which Interim
was indirectly owned by the Company.
<PAGE> 17
<F14> Includes Company matching contributions under the DCP in fiscal years
1994 and 1993 of $18,270 and $25,000, respectively; the $4,259 (1994)
and $5,666 (1993) dollar value of "above-market" amounts earned on
deferred compensation under the DCP; and the $543 (1994) and $1,487
(1993) economic value of the death benefit provided by the Company's
ESP.
</FN>
</TABLE>
STOCK OPTION GRANT TABLE
The following table summarizes options to purchase the Company's Common
Stock granted during the fiscal year ended April 30, 1994 to the executive
officers named in the Summary Compensation Table, above (the "Named
Officers"). The amounts shown as potential realizable values on the options
identified in the table are based on arbitrarily assumed annualized rates of
appreciation in the price of the Company's Common Stock of five percent and
ten percent over the term of the options, as set forth in the rules of the
Securities and Exchange Commission relating to proxy disclosure. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock. There can be no assurance that the potential
realizable values reflected in this table will be achieved. No stock
appreciation rights were granted during fiscal year 1994.
<TABLE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
--------------------------------------------------------------
Number of Potential
Securities % of Total Realizable Value at Assumed
Underlying Options Annual Rates of Stock Price
Options Granted to Appreciation for Option Term
Granted Employees in Exercise Price Expiration ----------------------------
Name (#)<F1> Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- - ----------------------- --------- ------------ -------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Bloch . . . . 9,000 0.37% $35.75 6/30/03 202,347 512,784
Henry W. Bloch . . . . 4,500 0.19% $35.75 6/30/03 101,173 256,392
William F. Evans . . . 5,000 0.21% $35.75 6/30/03 112,415 284,880
William P. Anderson . . 5,000 0.21% $35.75 6/30/03 112,415 284,880
Ozzie Wenich . . . . . 2,500 0.10% $35.75 6/30/03 56,207 142,440
Allan C. Sorensen . . . 2,500 0.10% $35.75 6/30/03 0<F2> 0<F2>
<FN>
<F1> Stock option grants consisted of nonqualified stock options, incentive
stock options or a combination of the two types of options. Options
were granted under the 1984 Long-Term Executive Compensation Plan.
The exercise price for each option is the fair market value of a share
of Common Stock on the date of grant. Options granted to the Named
Officers become exercisable one year after the date of grant, at which
time they are exercisable on a cumulative basis at a maximum annual
rate of 33 1/3% of the total number of shares subject to the option.
The stock options become fully exercisable at any time after the Named
<PAGE> 18
Officer reaches retirement age, retires and more than one year has
elapsed since the date of grant. The Named Officer must be employed by
the Company or one of its subsidiary corporations at the time of
exercise, except that the exercise of the options may take place for
limited time periods after the termination of employment in the event
of death, retirement, disability or termination without cause. All
options expire ten years after the date of grant.
<F2> No potential realizable value is set forth for options granted to Mr.
Sorensen as such options terminated on February 3, 1994 upon completion
by the Company of the disposition of Interim Services Inc.
</FN>
</TABLE>
OPTION EXERCISES AND FISCAL YEAR END VALUES
The following table summarizes the value realized on the exercise of
options during the fiscal year ended April 30, 1994 and presents the value of
unexercised options as of such date for the Named Officers:
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Number of Value of Unexercised
Securities Underlying In-the-Money
Unexercised Options Options at FY-End
at FY-End (#) ($)<F1>
Shares ----------------- -----------------
Acquired on Value Exercisable (E)/ Exercisable (E)/
Name Exercise (#) Realized ($)<F1> Unexercisable (U) Unexercisable (U)
- - ---------------------- ------------ ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Thomas M. Bloch 10,834 161,212 0(E) 0(E)
19,000(U) 166,625(U)
Henry W. Bloch 27,000 343,313 0(E) 0(E)
16,500(U) 159,000(U)
William F. Evans 0 0 10,000(E) 76,250(E)
25,000(U) 185,000(U)
William P. Anderson 0 0 4,333(E) 36,456(E)
8,667(U) 62,920(U)
Ozzie Wenich 9,000 265,812 7,250(E) 120,094(E)
5,500(U) 48,688(U)
Allan C. Sorensen 5,000 68,063 0(E) 0(E)
0(U) 0(U)
<FN>
<F1> The value realized on the exercise of options and the value of
unexercised in-the-money options at fiscal year end are determined by
subtracting the exercise price for the options from the fair market
value of the shares subject to the options as of the date of exercise
or fiscal year end, respectively.
</FN>
</TABLE>
<PAGE> 19
LONG-TERM INCENTIVE PLAN AWARDS TABLE
<TABLE>
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<CAPTION>
Number of Performance or
Shares, Units Other Period
or Other Until Maturation
Name Rights (#) or Payout
--------------------- ---------- -----------
<S> <C> <C>
Thomas M. Bloch 4,000 Three Years
Henry W. Bloch -0- N/A
William F. Evans 3,000 Three Years
William P. Anderson 3,000 Three Years
Ozzie Wenich -0- N/A
Allan C. Sorensen -0- N/A
</TABLE>
The awards in the above table are awards of performance units granted
by the Compensation Committee of the Board of Directors as of May 1, 1993
under the 1984 Long-Term Executive Compensation Plan and the Long-Term
Performance Program thereunder. Each performance unit has an initial value of
one share of the Common Stock, without par value, of the Company. The
recipient is entitled to receive whole shares of Common Stock after the end of
the three-year performance period equal to the actual value of the unit at
such time. The actual value of a performance unit at the end of the
performance period is determined by dividing the percentage change in
cumulative total shareholder return on the Company's Common Stock during the
performance period, assuming reinvestment of dividends, by the percentage
change in the cumulative total return of the Standard & Poor's 500 Stock Index
during such period, assuming the reinvestment of dividends. If the
performance ratio so determined is 1.0 (target), the actual value of each unit
is one share, with the following other actual values prescribed by the
Program: 1.5 or more (performance ratio)/1.5 shares (actual value of each
unit); .85 (floor)/.5 share; below .85/0 shares. The actual value of a
performance unit is computed by interpolation for performance ratios between
.85 and 1.0 and between 1.0 and 1.5. Payments of performance units are made
in whole shares of Common Stock after the completion of the performance
period.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors serve on the Compensation
Committee of the Company's Board of Directors: G. Kenneth Baum, Robert E.
Davis, Donna R. Ecton and Marvin L. Rich. Henry W. Bloch, Chairman of the
Board of the Company, and Thomas M. Bloch, its President and Chief Executive
Officer, are ex officio members of the Compensation Committee. Such ex
officio status does not entitle them to vote on matters submitted to the
Compensation Committee. During fiscal year 1994, Mr. Baum was an executive
officer of George K. Baum & Company, an investment banking firm that has
performed services for the Company during the last fiscal year and that will
perform services for the Company during the current fiscal year. During
fiscal year 1994, said firm executed brokerage transactions for the Company in
the normal course of business at normal commission rates. The total
compensation received by George K. Baum & Company for performing services for
the Company was less than five percent of George K. Baum & Company's
consolidated gross revenues for its last full fiscal year.
<PAGE> 20
During the Company's fiscal year 1994, Thomas M. Bloch and William F.
Evans, the Company's Senior Vice President, Corporate Operations, each served
on the board of directors and compensation committee of Interim Services Inc.,
formerly an indirect wholly-owned subsidiary of the Company. Allan C.
Sorensen, Chairman of the Board of Interim Services Inc., served on the Board
of Directors of the Company until September 8, 1993. The Company sold its
entire interest in Interim in January 1994.
PERFORMANCE GRAPHS
The following graphs each set forth the cumulative total shareholder
return to the Company's shareholders during the five-year period ended April
30, 1994, as well as the cumulative total return of the Standard & Poor's 500
Stock Index for the same period. The first graph also sets forth for the same
period the cumulative total return of the Standard & Poor's Specialized
Services Index, the published industry index to which the Company is currently
assigned by Standard & Poor's. The second graph sets forth the cumulative
total shareholder return for the five-year period ended April 30, 1994 of the
Standard & Poor's Miscellaneous Industry Index, the index to which the Company
was assigned by Standard & Poor's a year ago and the published industry index
presented in the Company's proxy statement for the annual meeting of
shareholders held on September 8, 1993. In light of the change in the
industry index to which the Company has been assigned, the Company has
selected the Specialized Services Index for the performance graph, but also
presents a performance graph reflecting the Miscellaneous Industry Index for
comparison purposes.
The performance graphs assume that $100 was invested at the market
close on April 30, 1989 and that dividends were reinvested. The data for both
graphs was furnished by Standard & Poor's Compustat, a division of McGraw-
Hill, Inc. The Company has been advised that the Standard & Poor's
Specialized Services Group consists of eight corporations, including the
Company, and that the Standard & Poor's Miscellaneous Industry Group now
includes 14 corporations.
("TOTAL RETURN TO SHAREHOLDER" PERFORMANCE GRAPHS SUBMITTED ON PAPER,
FORM SE, PURSUANT TO RULES 304(d) AND 311 OF REGULATION S-T)
COMPENSATION COMMITTEE REPORT
COMPENSATION PHILOSOPHY
The Company is strongly committed to maximizing shareholder value
through consistent growth and profitability. Superior performance by the
executive officers and management team of the Company and its subsidiary
corporations is an essential element to reaching that goal. As such, it is
the philosophy of the Company to ensure that executive compensation is
directly linked to financial performance and increases in shareholder value as
measured by the Company's stock price and dividend history. It is the
Compensation Committee's responsibility to review the Company's executive
compensation program and policies each year and recommend to the non-employee
members of the Board of Directors the compensation of the Company's executive
officers. The Compensation Committee has adopted the following objectives as
guidelines for compensation decisions:
(1) Provide a competitive total compensation program that enables the
Company and its subsidiary corporations to attract and retain the key
executives needed to accomplish the Company's goals.
<PAGE> 21
(2) Integrate executive compensation programs with the Company's
business objectives and focus executive behavior on the fulfillment of those
objectives.
(3) Provide variable compensation opportunities that are directly
related to the performance of the Company and that align executive
compensation with the interests of the Company's shareholders.
COMPENSATION PROGRAM
The Company's executive compensation program has been designed to
ensure that pay levels and incentive opportunities for executives are
competitive and reflect the performance of both the individual executive and
the Company. The Committee from time to time confers with an outside
compensation consultant concerning salaries, annual incentive compensation,
long-term incentive programs and overall executive compensation. In designing
compensation programs for executives and determining executive officer
salaries, the Committee takes into consideration information provided by such
consultants and from published surveys with respect to compensation paid to
executives holding positions with similar responsibilities in organizations of
comparable size. The components of the compensation program for executives
are described below.
BASE SALARY. Base salaries are determined by reference to an
individual's salary grade and corresponding salary range. Several factors are
considered in determining the appropriate salary grade for a particular
officer, including level of responsibility, prior experience and
accomplishments and the relative importance of the job in terms of achieving
corporate objectives. Among the factors considered in determining the
appropriate salary within a particular salary range are the experience and
performance of the executive. The individual salaries of executive officers
are reviewed annually by the Committee.
MANAGEMENT INCENTIVE COMPENSATION. The Company's management incentive
plan is designed to specifically relate executive pay to Company and
individual performance. Cash bonuses under this plan provide financial
rewards for the achievement of substantive business and personal results. The
performance measures upon which bonus compensation is based vary depending on
the executive and the related line of business. Bonuses are paid after the
end of a fiscal year only if the Company (or a subsidiary of the Company) has
met a performance target, or performance targets, established by the
Compensation Committee for such fiscal year end and only if the executive
remained in the employ of the Company or one of its subsidiary corporations at
the end of such year. The primary factor upon which bonus compensation was
dependent for the fiscal year ended April 30, 1994 was the degree to which the
Company (or a subsidiary of the Company) attained its budgeted fiscal year
pretax profit. Among other performance factors upon which incentive awards
for executive officers may depend are goals relating to specific business
results for the executive's applicable business unit, the degree to which the
executive achieves certain management goals and the degree to which an
executive operates within the budget for his or her business unit or
department. Competitive target bonus opportunities are generally established
by the Committee for each participating salary grade level, with adjustments
made for specific individual circumstances.
<PAGE> 22
DEFERRED COMPENSATION. The Company offers to its executive officers
and to key employees of its subsidiaries a deferred compensation program
designed to enhance such officers' and employees' financial security upon
retirement. The primary plan offers executive officers the opportunity to
defer annually up to 35% of base salary over periods of four or eight years
with an aggregate limit on deferrals of 280% of base salary. The Company
contributes $.50 for each dollar deferred and vesting in such Company
contributions is based on the individual's length of employment with the
Company. Gains or losses are posted to a participant's account in accordance
with his or her election of a fixed rate, variable rate or Company stock
investment option. A supplemental plan became effective May 1, 1994 and it
offers participants an opportunity to defer an additional 280% of base salary
after they have reached the aggregate deferral limit under the primary plan.
Under the supplemental plan, there is no Company match and the Company's
Common Stock is the sole benchmark for measuring gains and losses on deferral
accounts. The deferred compensation plans are unfunded. Benefits are paid
upon termination of employment, except in cases of disability or hardship.
STOCK OPTIONS. The Company encourages stock ownership by executive
officers of the Company, but has not established target levels for equity
holdings by executives. Long-term incentive awards which are tied to the
Company's Common Stock, such as stock options, are designed to encourage stock
ownership. Stock options provide incentive to executives by giving them a
strong economic interest in maximizing stock price appreciation, thereby
better aligning their interests with the interests of the Company's
shareholders. Under the Company's 1993 Long-Term Executive Compensation Plan
(approved by the Company's shareholders in September 1993 to replace the 1984
Long-Term Executive Compensation Plan), option exercise prices are set at 100%
of the fair market value on the date of grant and the options expire after 10
years. Options granted to executive officers provide that they are not
exercisable until one year after the date of grant, at which time they become
exercisable on a cumulative basis at a maximum annual rate of 33 1/3% of the
total number of shares subject to the option. Although the grant of options
is discretionary with the Compensation Committee, executives have received
stock options on an annual basis since 1985 due to the strong performance of
the Company in such years, as well as the Committee's desire to increase stock
ownership among executive officers so as to better align their economic
interests with those of the shareholders. The number of shares subject to
each option is determined by an analysis of the executive's applicable salary
grade and level of responsibility. The Compensation Committee believes that
stock options have been effective in attracting, retaining and rewarding
executives and key employees of the Company and its subsidiary corporations
over the years.
LONG-TERM PERFORMANCE PROGRAM. Senior executive officers of the
Company and the chief executive officers of its primary operating subsidiaries
have received awards of performance units granted as of May 1, 1993 pursuant
to the 1984 Long-Term Executive Compensation Plan and as of May 1, 1994
pursuant to the 1993 Long-Term Executive Compensation Plan. The objectives of
the Long-Term Performance Program are to provide a meaningful incentive to
senior executives, encourage their continued employment and base the value of
the compensation upon total shareholder return with respect to the Company's
Common Stock, thereby again aligning their interests with the interests of the
Company's shareholders. Each performance unit has an initial value of one
share of the Company's Common Stock and is subject to a performance period of
<PAGE> 23
three years. The actual value of a performance unit at the end of a
performance period is dependent upon the cumulative total shareholder return
on the Company's Common Stock during the performance period, assuming
reinvestment of dividends, as compared to the cumulative total return of the
Standard & Poor's 500 Stock Index (which index was selected due to the
diversified nature of the Company). Based upon such comparison, the actual
value of a performance unit may be from 0% to 150% of one share of Common
Stock with payments of performance units to be made in whole shares of Common
Stock after the completion of the three-year performance period. The
Compensation Committee has absolute discretion to determine the senior
executives to whom performance units are to be awarded and the number of
performance units to be awarded to each selected recipient. The Committee's
determination of the size of any award granted is subjective and not subject
to any specific formula or criteria.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The salary, bonus, stock
option awards and performance unit awards of the Chief Executive Officer are
determined by the Committee substantially in conformity with the policies
described above for all other executives of the Company.
Thomas M. Bloch became President and Chief Executive Officer on August
1, 1992. In September 1993, at the time of the Compensation Committee's
annual review of executive compensation, Thomas Bloch's annual base salary was
increased from $400,000 to $450,000 in recognition of his and the Company's
performance for the fiscal year ended April 30, 1993, and after the Committee
referred to published compensation surveys and conferred with an outside
consultant concerning salaries paid to persons holding the title of chief
executive officer (and having similar responsibilities to those performed and
to be performed by Mr. Bloch) in organizations of comparable size.
As Chief Executive Officer of the Company, Thomas Bloch has
responsibility for the general and active management of the business of the
Company and its subsidiaries. Therefore, the Compensation Committee
established Mr. Bloch's target award for the fiscal year ended April 30, 1994
at $258,000 and determined that his management incentive compensation for such
fiscal year should be based solely upon the Company's achievement of its
budgeted fiscal year pretax profit. The Company achieved an increase in
earnings from continuing operations before taxes of 11.7% compared to the
previous year. Based upon the results achieved by the Company, Mr. Bloch was
entitled to bonus compensation of $293,800, an amount which is 113.9% of the
target award.
The award of stock options to Thomas Bloch was made during fiscal
year 1994 on June 30, 1993 at the same time that options were awarded to other
executive officers then in the employ of the Company or one of its subsidiary
corporations. The fiscal 1994 stock option grant awarded to Mr. Bloch was for
a total of 9,000 shares of Common Stock with a stock option price of $35.75
(the closing price for the Company's stock on the New York Stock Exchange on
the date of grant). Mr. Bloch's fiscal 1994 stock option is exercisable in
one-third annual increments (3,000 shares each year) commencing on June 30,
1994, provided that he remains in the employ of the Company or one of its
subsidiaries.
<PAGE> 24
Mr. Bloch also received an award of 4,000 performance units under the
Long-Term Performance Program. The terms of the performance units are
described above under "Long-Term Performance Program."
COMPENSATION COMMITTEE
Marvin L. Rich, Chairman
G. Kenneth Baum
Robert E. Davis
Donna R. Ecton
AMENDMENT TO THIRD STOCK OPTION PLAN FOR SEASONAL EMPLOYEES
(Item 2 on Proxy Card)
INTRODUCTION
The Company has offered a stock option program to the seasonal employees
of its income tax services business since 1969. The program is intended to
reward performance, encourage retention and instill loyalty in the seasonal
tax associates who are vital to this segment of the Company's business. The
Board of Directors of the Company believes that a substantial majority of
seasonal associates perceive the Third Stock Option Plan for Seasonal
Employees (the "Plan") as a valuable benefit and that the Plan is a valuable
tool in retaining such associates. The Board has approved an amendment to the
Plan (subject to further approval by the shareholders of the Company) that
will modify one of the conditions that must be satisfied by optionees in order
to exercise outstanding stock options and, thereby, in the Board's opinion,
increase the value of the Plan to the seasonal employees and the Company. The
proposed amendment does not extend the Plan or otherwise modify the Plan in
any manner. If approved by the shareholders, the amendment will be effective
January 1, 1995 and will apply to all stock options then outstanding or
thereafter granted under the Plan. The Plan is described below and is set
forth (as it is proposed to be amended) in Exhibit A, comprising a part of
this proxy statement.
Under the Plan as it currently exists, each option granted thereunder is
exercisable only during the month of September in either of the two years
following the date of grant and then only if (1) the optionee is an eligible
seasonal employee or a full-time employee and (2) the actual compensation
earned by the optionee during the year of exercise is at least equal to 80% of
the actual compensation earned by him or her during the year of grant. The
80% provision was included in the Plan as an inducement for optionees to
return to work for a significant number of hours in the years following the
year in which the option was granted.
It is proposed that the 80% requirement be reduced to 50% in order to
allow more seasonal employees to exercise options each year. The Company's
tax business has changed since the Plan was adopted in 1974. In recent years,
the electronic filing of federal income tax returns and the income tax returns
of an increasing number of states has become a significant part of the
business of H&R Block Tax Services, Inc. and its subsidiaries. The desire on
the part of taxpayers to receive income tax refunds earlier, or to obtain
refund anticipation loans, has caused them to have their returns prepared
<PAGE> 25
earlier in the tax season and to utilize an electronic filing service so that
the processing of their returns and the issuance of their refunds or refund
anticipation loans may be accomplished quickly. A substantial portion of H&R
Block's electronic filing business is conducted each year during the last week
of January and the first few weeks of February. To accommodate the many
customers who visit H&R Block offices during this early "peak" period, many
additional employees are needed to staff such offices. Frequently, seasonal
associates who worked throughout a tax season in one year are hired to work
only through the early peak period in one or more years following such tax
season. Other seasonal employees will return to work throughout subsequent
tax seasons, but will experience a reduction in scheduled working days and
hours in such seasons after the early peak period has concluded. In these
situations, the affected seasonal employee will earn significantly less
compensation in the one or two years following the year in which they receive
stock option grants under the Plan and they often are not able to satisfy the
80% condition for the exercise of such options.
By reducing the 80% condition to a 50% condition, seasonal employees who
experienced reduced working hours for reasons not within their control will
still be rewarded for their decision to return to H&R Block for seasonal
employment. In addition, those seasonal associates who are asked to accept
employment for only a portion of a subsequent tax season, or for fewer working
hours during an entire tax season, will have an incentive to accept such
employment, as they will likely satisfy the earnings condition for the
exercise of previously awarded stock options even if they work fewer hours.
As a result, the tax business should be better able to fully staff its offices
during the early peak period. Accordingly, the Board of Directors recommends
that the Plan be amended in the manner described above.
DESCRIPTION OF THE PLAN
Options to purchase the Company's Common Stock are granted under the
Plan to "Eligible Seasonal Employees" of the Company or its subsidiaries.
Eligible Seasonal Employees are persons engaged in income tax return
preparation or related activities for limited periods of time during each
year. Their jobs must be designated by the Company to be seasonal jobs and
they must have adhered to the working hours agreed upon during the year. At
the peak of the 1994 tax season, the Company had in its employ approximately
80,000 Eligible Seasonal Employees. Officers and directors of the Company may
not receive option grants pursuant to the Plan.
On June 30 of each year that the Plan is in effect, each Eligible
Seasonal Employee who was employed by a subsidiary of the Company either on
the immediately preceding April 15 (or the next business day if it falls on a
Saturday, Sunday or holiday) or for at least 100 working days during the 12-
month period preceding such June 30 will receive an option to purchase one
share of Common Stock of the Company for each $100 of compensation earned
during the preceding 12 months, subject to a maximum and minimum annual grant
per optionee of 100 shares and five shares, respectively, and to maximum
aggregate grants to all optionees under the Plan of 39,400,000 shares.
<PAGE> 26
The number of shares that may be optioned (or purchased pursuant to
outstanding options) is subject to adjustment upon the occurrence of specified
changes in the Company's capitalization. The compensation of each Eligible
Seasonal Employee who earns less than $500 during a 12-month period ending on
June 30 is added to the actual compensation of such employee for the 12-month
period ending on the following June 30 for purposes of determining the number
of shares to be optioned on the latter date. Each option price is the market
price of the Common Stock on the date the option is granted. The times when
the options may be exercised and the conditions upon which the ability to
exercise is dependent are described above under "Introduction." An option may
be exercised for less than the total number of shares covered thereby and,
upon any exercise as to less than all of the shares covered by an option, the
option terminates as to the balance of such shares. Each option in
nontransferable and terminates upon the optionee's death. Shares subject to
options that expire or otherwise terminate unexercised may again be optioned
by the Company during the life of the Plan.
The Plan, unless extended, will terminate on December 31, 1995. The
Board of Directors of the Company may at any time during the continuance of
the Plan amend, supplement, suspend or terminate the Plan, provided that no
employee's existing rights are adversely affected thereby.
FEDERAL INCOME TAX CONSEQUENCES
Under current federal income tax laws, a seasonal employee who receives a
stock option under the Plan is not deemed to have received any income at the
time the option is granted; however, he or she will recognize taxable ordinary
income in the year any part of the option is exercised in an amount equal to
the difference between the fair market value of the shares on the exercise
date and the option price of the shares. The Company generally is entitled to
a deduction for purposes of determining its corporate income tax obligations
in an amount equal to the total amount of ordinary income recognized by the
employee. Upon disposition of the shares by the seasonal employee, he or she
will recognize capital gain or loss equal to the difference between the amount
realized on such disposition and the basis for such shares, which basis will
include the amount previously recognized by the employee as ordinary income.
OPTIONS GRANTED OR TO BE GRANTED UNDER THE PLAN
For the last three years, options were granted on the following dates of
grant, for the following total numbers of shares, to the following total
numbers of Eligible Seasonal Employees and with the following option prices
(1994 figures for shares subject to options and number of optionees are
estimates):
<TABLE>
<CAPTION>
Shares Subject Number of
Date of Grant To Options Optionees Option Price
------------- ---------- --------- ------------
<S> <C> <C> <C>
June 30, 1992 1,854,997 70,697 $34.125
June 30, 1993 1,933,829 71,799 $35.750
June 30, 1994 2,024,200 72,009 $39.250
</TABLE>
<PAGE> 27
If the Plan is not sooner terminated, stock options will automatically be
awarded under the Plan on June 30, 1995 to Eligible Seasonal Employees in
accordance with the criteria described above under "Description of the Plan."
It is not possible to state the numbers of options to be granted to any person
or group. No options under the Plan have been granted to or will be granted
to any executive officer, director or nominee for director of the Company. On
July 19, 1994, the last reported sale price of the Company's Common Stock on
the New York Stock Exchange was $39.00 per share.
RESOLUTIONS TO BE PRESENTED AT ANNUAL MEETING
The following resolutions will be presented at the annual meeting of
shareholders:
"RESOLVED, That this corporation's Third Stock Option Plan for
Seasonal Employees, as amended, be further amended by deleting the
figure '80%' from the first sentence of Section C of Article 9 of
said Plan and replacing such figure with the figure '50%'; and
"FURTHER RESOLVED, That said amendment shall be effective
January 1, 1995, and shall apply to all options then outstanding
under the Plan, as well as to all options thereafter granted under
the Plan."
RECOMMENDATION OF THE BOARD OF DIRECTORS "FOR" THIS PROPOSAL
The Board of Directors has approved the foregoing Plan amendment,
subject to shareholder approval, even though shareholder approval is not
required under the terms of the Plan relating to its amendment. If the
proposal is not approved by a majority of the shares present in person or
represented by proxy at the meeting, the conditions for the exercise of stock
options granted under the Plan will remain as they currently exist. The Board
believes that the approval of the amendment to the Plan will assist the
Company's tax services subsidiaries in their ability to employ, reward and
retain their seasonal employees and, as a result thereof, such amendment will
promote the interests of the Company and its shareholders. THE BOARD OF
DIRECTORS RECOMMENDS APPROVAL OF THE AMENDMENT AND PROXIES SOLICITED BY THE
BOARD WILL BE SO VOTED IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY.
APPOINTMENT OF AUDITORS
(Item 3 on Proxy Card)
Deloitte & Touche has audited the accounts of the Company since 1965.
It has offices or affiliates convenient to most of the Company's operations in
the United States and other countries and is considered to be well qualified.
The Board of Directors has appointed such firm as the Company's independent
auditors for the year ending April 30, 1995 and recommends that the
shareholders ratify such appointment. Representatives of Deloitte & Touche
expect to attend the annual meeting, will be afforded an opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions by the shareholders.
Proxies solicited by the Board of Directors will be voted for
ratification of the appointment of Deloitte & Touche in the absence of
instructions to the contrary.
<PAGE> 28
SHAREHOLDER PROPOSALS
Recommendations for nominees to be elected to the Board of Directors and
proposals of shareholders intended to be presented at the next annual meeting
scheduled to be held on Tuesday, September 12, 1995 must be submitted in
writing to the Secretary of the Company, H&R Block, Inc., 4410 Main Street,
Kansas City, Missouri 64111. Shareholder proposals must be received by the
Secretary no later than March 31, 1995 in order to be included in next year's
proxy statement and form of proxy.
OTHER MATTERS
The Board of Directors knows of no other matters which will be presented
at the meeting, but if other matters do properly come before the meeting, it
is intended that the persons named in the proxy will vote according to their
best judgment.
By Order of the Board of Directors
JAMES H. INGRAHAM
Secretary
July 29, 1994
<PAGE> 29
Exhibit A
H&R BLOCK, INC.
THIRD STOCK OPTION PLAN FOR SEASONAL EMPLOYEES
(As Amended)
Article 1. ESTABLISHMENT OF THE PLAN. H&R BLOCK, INC., a
Missouri corporation (the "Company"), hereby formulates and
adopts a Third Stock Option Plan for Seasonal Employees (the
"Plan") whereby there may be granted to seasonal employees of the
Company and its subsidiaries, options to purchase shares of the
Company's no par value Common Stock, such shares being
hereinafter sometimes referred to for convenience as "common
stock" or "stock" or "shares." For purposes of the Plan the term
"subsidiary" shall be deemed to mean any corporation of which at
least 51% of the outstanding common stock is owned by the
Company.
Article 2. PURPOSE OF THE PLAN. The purpose of the Plan is
to advance and promote the interests of the Company and its
subsidiaries and the Company's stockholders by providing a method
whereby seasonal employees of the Company may acquire common
stock under options to purchase the same subject to the
conditions hereinafter or therein provided. The Plan is further
intended to provide seasonal employees who may be granted such
options with additional incentive to continue in the employ of
the Company or its subsidiaries on a seasonal basis and to
increase their efforts to promote the best interest of the
Company, its subsidiaries and its stockholders.
Article 3. ADMINISTRATION OF THE PLAN. The Plan shall be
administered by a Stock Option Committee (the "Committee")
consisting of three or more Directors of the Company, to be
appointed by and to serve at and during the pleasure of the Board
of Directors of the Company. All references herein to the
Committee shall be deemed to mean the Board of Directors of the
Company if the Board has not appointed a Committee. A majority
of the Committee shall constitute a quorum and the acts of a
majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by a majority of the
Committee, shall be valid acts of the Committee. The Committee
shall have full power and authority to construe, interpret and
administer the Plan and, subject to the powers herein
specifically reserved to the Board of Directors and to the other
provisions of this Plan, to make determinations which shall be
final, conclusive and binding upon all persons, including without
limitation the Company, the stockholders, the Board of Directors
and any persons having any interest in any options which may be
granted under the Plan. The Committee may impose such additional
conditions upon the grant and exercise of options under this Plan
as may from time to time be deemed necessary or desirable, in the
opinion of counsel of the Company, to comply with applicable laws
and regulations. The Committee from time to time may adopt rules
and regulations for carrying out the Plan.
<PAGE> 30
Article 4. ELIGIBILITY. Options shall be granted on June
30 of each year the plan is in effect (the "date of grant") only
to "Eligible Seasonal Employees" of the Company or of a
subsidiary of the Company for such year. The term "Eligible
Seasonal Employees" for any calendar year during which the Plan
is in effect shall include all those employees of the Company or
a subsidiary of the Company who (a) are hired to perform for
limited periods of time during such year jobs specifically
designated by the Company to be seasonal jobs and (b) have
adhered to the working hours agreed upon during such year.
Article 5. STOCK SUBJECT TO THE PLAN. The shares of common
stock to be issued upon exercise of the options granted under the
Plan shall be made available, at the discretion of the Board of
Directors of the Company, either from authorized but unissued
stock of the Company or from shares that have been purchased by
the Company from any source whatever, but the aggregate number of
shares for which options may be granted under the Plan shall not
exceed 39,400,000 shares of common stock of the Company. If an
option granted under the Plan shall be surrendered or shall for
any reason whatsoever expire or terminate in whole or in part
without the exercise thereof, then the shares of stock which were
subject to any such option shall, if the Plan shall then be in
effect, be available for options thereafter granted under the
Plan.
Article 6. METHOD OF PARTICIPATION. Each Eligible Seasonal
Employee who either (i) is an employee of the Company or one of
its subsidiaries on April 15 (or the next business day if it
falls on a Saturday, Sunday or holiday) of each calendar year the
Plan is in effect, or (ii) has been an employee of the Company or
one of its subsidiaries for at least an aggregate of 100 working
days during the 12-month period ending with the date of grant,
shall be granted an option to purchase one share of common stock
for each $100 of the total compensation earned by him during and
throughout the 12-month period ending with the date of grant,
provided, however, (a) no such employee shall be granted an
option to purchase in excess of 100 of said shares in any
calendar year under the Plan, (b) no such employee shall be
granted an option if the number of shares which he would be
entitled to purchase would be less than five, and (c) any
fractional shares which would otherwise be subject to option
under the Plan shall be adjusted to the nearest whole number of
shares. Each Eligible Seasonal Employee who earns less than $500
during the 12-month period ending on a June 30 which is a date of
grant under the Plan shall have his compensation for such period
added to his actual compensation for the following 12-month
period ending June 30 for purposes of determining the number of
shares which shall be optioned to him on said latter June 30 if
the Plan is then in effect and if he is then an Eligible Seasonal
Employee. As promptly as possible after June 30 of each year the
Plan is in effect (but effective as of such date) each Eligible
Seasonal Employee shall be notified in writing by a letter of
notice setting forth the number of shares optioned to him under
the Plan, the option price and the terms and conditions of said
option as described in Article 9.
<PAGE> 31
Article 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In
the event a merger, consolidation, reorganization,
recapitalization, stock dividend or other change in the corporate
structure or capitalization affecting the Company's capital stock
shall occur, an appropriate adjustment shall be made in the
number of shares of stock available for options under the Plan
and subject to outstanding options as well as in the provisions
of Article 6. Any such adjustment shall be made by the Board of
Directors and, when so made, shall be effective and binding for
all purposes of the Plan and of all options then outstanding.
Article 8. OPTION PRICE. Each year this Plan is in effect,
the purchase price per share under each option granted during
such year shall be equal to the last reported sale price, regular
way, for the Common Stock on the New York Stock Exchange (or, if
the stock is not then traded on such exchange, the mean of the
high bid and low asked prices per share in the over-the-counter
market, as reported by the National Quotation Bureau,
Incorporated), in each case on the date of grant (or if said date
falls on a non-business day then on the next preceding business
date on which the stock is quoted) of such year.
Article 9. TERMS AND CONDITIONS OF OPTIONS. The terms and
conditions of each option granted hereunder shall be set forth in
a letter of notice to the employees to whom such option is
granted. Said terms and conditions shall be consistent with the
provisions of the Plan and shall include but not be limited to
the following:
A. CONTINUATION OF EMPLOYMENT. The grant of an option
under this Plan shall not confer on the optionee any right to
continue in the employ of the Company or any of its subsidiaries,
nor shall it limit the right of the Company or any of its
subsidiaries to terminate the employment of any optionee at any
time.
B. PERIODS OF EXERCISING OPTION. An option may be
exercised only between the dates of September 1 through September
30 of the two calendar years immediately following the calendar
year in which said option was granted, and said option shall
expire as to all shares subject thereto which are not so
exercised.
C. CONDITIONS OF EXERCISING OPTION. If an optionee shall
not be an Eligible Seasonal Employee, as defined in Article 4,
for a year in which he would be otherwise entitled to exercise an
option under this Plan, or shall not have earned actual compensa-
tion during the 12-month period ending on June 30 of such year
which is at least equal to 50% of the actual compensation earned
by him during the 12-month period ending on June 30 of the year
in which the option was granted, he shall not be entitled to
exercise his option for such year; provided, however, if the
optionee shall become a full-time employee of the Company or any
of its subsidiaries prior to August 1 of such year he shall be
entitled to exercise said option for each such year provided he
<PAGE> 32
is a full-time employee of the Company or one of its subsidiaries
at the time the option is exercised. The option must be
exercised by the optionee in writing within the periods above
specified with respect to all or part of the shares optioned and
accompanied by full payment of the option price thereof. Only
one exercise shall be permitted with respect to a single option.
No optionee will be deemed to be a holder of any shares subject
to an option unless and until certificates for such shares are
issued to him under the terms of the Plan. As used herein, full-
time employee means an individual in the employ of the Company or
one of its subsidiaries at the time of exercise of such option.
D. NON-TRANSFERABILITY OF OPTION. The option shall be
exercisable only by the optionee and shall not be transferable by
him.
E. QUALIFICATION OF STOCK. Each option shall be subject
to the requirement that if at any time the Board of Directors of
the Company shall determine, in its discretion, that
qualification of the shares of stock thereby covered under any
state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of or in connection with the granting of such option or
the purchase of shares thereunder, the option may not be
exercised in whole or in part unless and until such
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of
Directors of the Company, at its discretion.
Article 10. AMENDMENT AND DISCONTINUANCE. The Board of
Directors of the Company shall have the right at any time during
the continuance of the Plan to amend, modify, supplement, suspend
or terminate the Plan, provided that no employee's existing
rights are adversely affected thereby.
Article 11. EXPIRATION OF PLAN. The Plan, unless extended,
shall terminate on December 31, 1995, but no termination of the
Plan, whether under the provisions of this Article 11 or
otherwise, shall affect the continuance of any option granted
hereunder prior to said date.
