<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
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[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)
N/A
(Name of Person(s) Filing Proxy Statement if other
than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $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 trans-
action computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
[ ] 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
H&R BLOCK, Inc.
4410 Main Street
Kansas City, Missouri 64111
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held September 12, 1995
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 Tuesday,
September 12, 1995. 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 four Class III directors to serve
three-year terms (See page 4);
2. The approval of an amendment to the Third Stock
Option Plan for Seasonal Employees in order to
extend the Plan for three years (See page 28);
3. The ratification of the appointment of Deloitte &
Touche LLP as the Company's independent auditors
for the year ending April 30, 1996 (See page 30);
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 14, 1995 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
August 9, 1995
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>3
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 12, 1995, 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. The Company has retained Corporate
Investor Communications, Inc. to assist in the solicitation of
proxies on behalf of the Board of Directors for a fee of
$6,000, plus reimbursement of reasonable expenses. 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 form
of proxy 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 14, 1995, the Company's
outstanding voting securities consisted of 104,896,019 shares
of Common Stock.
The proxy statement and accompanying form of proxy are
first being sent to shareholders on or about August 9, 1995.
<PAGE>4
ELECTION OF DIRECTORS
(Item 1 on Form of Proxy)
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. The
Board has most recently 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 its meeting held on July 29, 1995, the Board of
Directors accepted Thomas M. Bloch's resignation as a Class
III director and elected Richard H. Brown to fill the vacancy
thereby created, effective August 5, 1995.
At the annual meeting of shareholders to be held on
September 12, 1995, four Class III directors will be elected
to hold office for three years and until their successors are
elected and shall have qualified. Richard H. Brown, Donna R.
Ecton, Marvin L. Rich and Morton I. Sosland have been
nominated for election as Class III directors of the Company.
All nominees are currently Class III 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 III directors and the
current Class I and Class II 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. G. Kenneth Baum, Henry F. Frigon and
Roger W. Hale serve as Class II directors with terms scheduled
to expire at the annual meeting of shareholders in 1997.
<PAGE>5
<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 (65) 1961 95,399<F4> 95,399<F4> -0-
Chairman of the Board, (.09%)
George K. Baum Group, Inc.,
investment company<F2><F3>
Henry W. Bloch (73) 1955 5,358,700<F4> 5,066,500<F4> 292,200
Chairman of the Board (5.11%)
of the Company<F5>
Richard H. Brown (48) 1995 -0- -0- -0-
President and Chief Executive (0%)
Officer of the Company<F2><F6>
Robert E. Davis (64) 1981 17,799<F4> 17,599<F4> 200
Managing Director, Axess (.02%)
Corporation, diversified
manufacturing<F2><F7>
Donna R. Ecton (48) 1993 999<F4> 999<F4> -0-
Chairman, President and (0%)
Chief Executive Officer of
Business Mail Express, Inc.,
expedited mail service<F2><F8>
Henry F. Frigon (60) 1992 7,999<F4> 7,999<F4> -0-
Retired Chief Executive Officer, (.01%)
BATUS Incorporated, and
Executive Vice President,
Hallmark Cards Incorporated<F2><F9>
Roger W. Hale (52) 1991 9,151<F4> 9,094<F4> 57
Chairman, President and Chief (.01%)
Executive Officer, LG&E Energy
Corporation, a diversified
energy services company<F2><F10>
<PAGE>6
<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>
Marvin L. Rich (61) 1961 64,479<F4> 56,479<F4> 8,000
Of Counsel, Craft, Fridkin & (.06%)
Rhyne, law firm
Frank L. Salizzoni (57) 1988 21,999<F4> 21,999<F4> -0-
President and Chief Operating (.02%)
Officer, USAir, Inc., airline<F2><F11>
Morton I. Sosland (70) 1963 290,746<F4> 98,809<F4> 191,937
Chairman of the Board, (.28%)
Sosland Companies, Inc.,
publishers<F2><F12>
<FN>
<F1> As of June 1, 1995. 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 14,000 shares held by a charitable
foundation of which Mr. Sosland is an officer and a
director, and 104,592 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. Brown is a director of The
Upjohn Company; Mr. Davis is a director of Rheometric
Scientific, Inc. and USF&G Corporation; Ms. Ecton is a
director of Barnes Group, Inc., PETsMART, Inc., Tandy
Corporation and Vencor, Inc.; Mr. Frigon is a director
of The Circle K Corporation, Dimon, Inc. and Group
Technologies Corp.; 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
Brown Group, Inc. and Kansas City Southern Industries,
Inc.
<PAGE>7
<F3> Mr. Baum has served as Chairman of the Board of George
K. Baum Group, Inc., Kansas City, Missouri, since May
1994. He was Chairman of the Board of George K. Baum &
Company, an investment banking firm, from 1982 until
May 28, 1994. During the Company's 1995 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.
<F4> Includes shares which on June 1, 1995 the specified
directors had the right to purchase as of June 30, 1995
pursuant to options granted in connection with the
Company's stock option plans, as follows: Mr. Baum,
15,999 shares; Mr. Bloch, 16,500 shares; Mr. Davis,
11,999 shares; Ms. Ecton, 666 shares; Mr. Frigon, 1,999
shares; Mr. Hale, 7,999 shares; Mr. Rich, 15,999
shares; Mr. Salizzoni, 15,999 shares; and Mr. Sosland,
15,999 shares.
<F5> Henry W. Bloch has served as Chairman of the Board of
the Company since 1989. He was its Chief Executive
Officer from 1974 through July 1992.
<F6> On July 29, 1995, Mr. Brown was elected President and
Chief Executive Officer of the Company, effective
August 5, 1995. Prior to that date, he had served
since 1993 as Vice Chairman and a director of Ameritech
Corporation, Chicago, Illinois, a telecommunications
company. From 1990 to 1993, Mr. Brown was President
and Chief Executive Officer of Illinois Bell Telephone
Co., an Ameritech subsidiary. Prior thereto, he was
Executive Vice President/Chief Information and Planning
Officer of United Telecommunications, Inc. (now Sprint
Corporation) from 1989 to 1990 and he served in other
executive positions with such firm from 1981 to 1989.
<F7> Mr. Davis has served as Managing Director of Axess
Corporation, West Palm Beach, Florida, since March
1991. He was President of Sequa Corporation from 1983
through February 1991.
<F8> Ms. Ecton has served as Chairman of Business Mail
Express, Inc., Reston, Virginia, since June 1995, and
as President and Chief Executive Officer of such
corporation since February 1995. She 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.
<PAGE>8
<F9> Mr. Frigon served as Executive Vice President-Corporate
Development & Strategy and Chief Financial Officer of
Hallmark Cards Incorporated, Kansas City, Missouri,
greeting card company, from January 1991 until his
retirement in December 1994. He had previously served
as President and Chief Executive Officer of BATUS
Incorporated, Louisville, Kentucky.
<F10> Mr. Hale has served as Chairman, President and Chief
Executive Officer of LG&E Energy Corporation,
Louisville, Kentucky, 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.
<F11> Mr. Salizzoni has served as President and Chief
Operating Officer of USAir, Inc., Pittsburgh,
Pennsylvania, since March 1994. He was Executive Vice
President-Finance of USAir, Inc. from November 1990
until March 1994.
<F12> Mr. Sosland has served as Chairman of Sosland
Companies, Inc., Kansas City, Missouri, 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 ten meetings of the Board of Directors held
during the 1995 fiscal year, and 11 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 $24,000 ($25,200 as of September 1, 1995) and meeting fees
of $1,700 for each Board meeting attended and $1,100 for each
committee meeting attended. In accordance with the provisions
of the H&R Block 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
<PAGE>9
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.
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
$39.25 per share, were granted to Ms. Ecton and to Messrs.
Baum, Davis, Frigon, Hale, Rich, Salizzoni and Sosland on June
30, 1994. 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 H&R Block
Tax Services, Inc.'s Executive Tax Service and free business
travel insurance in connection with Company-related travel.
<PAGE>10
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. Mr. Bloch, Chairman
of the Board of the Company, and Mr. Brown, 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 Mr. Bloch
(Chairman) and Messrs. Baum, Brown, Rich and Sosland, held no
meetings during fiscal year 1995. 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 Mr. Salizzoni
(Chairman), Ms. Ecton and Messrs. Frigon, Hale and Rich, held
three meetings during the 1995 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 Mr. Rich
(Chairman), Ms. Ecton and Messrs. Baum, Davis and Hale, held
two meetings during fiscal year 1995. 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 on Executive Compensation under "COMPENSATION OF
EXECUTIVE OFFICERS," below.
The Diversification Committee, whose members are
Mr. Sosland (Chairman) and Messrs. Baum, Frigon, Hale and
Salizzoni, held three meetings during fiscal year 1995. 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 Mr. Baum
(Chairman) and Messrs. Davis, Frigon, Salizzoni and Sosland,
held three meetings during the 1995 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
<PAGE>11
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 Mr. Sosland
(Chairman), Ms. Ecton and Messrs. Bloch, Brown and Davis, held
no meetings during the 1995 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 of each person or organization known to the
Company to be the beneficial owner of more than 5% of the
outstanding Common Stock of the Company. Unless otherwise
indicated, information concerning share ownership is as of
June 1, 1995. The percentage of ownership is based upon the
number of shares of the Company's Common Stock issued and
outstanding as of June 1, 1995.
<TABLE>
<CAPTION>
Percent of
Shares Common
Name and Address Beneficially Stock
of Beneficial Owner Owned Outstanding
--------------------------- ------------- -----------
<S> <C> <C>
Putnam Investments, Inc. 8,427,228<F1> 8.04%
One Post Office Square
Boston, Massachusetts 02109
FMR Corp. 5,879,668<F2> 5.61%
82 Devonshire Street
Boston, Massachusetts 02109
Henry W. Bloch 5,358,700<F3><F4> 5.11%
Marion H. Bloch
4410 Main Street
Kansas City, Missouri 64111
<FN>
<F1> Information as to number of shares is as of December
31, 1994, and is furnished in reliance on the Schedule
13G filing of Putnam Investments, Inc., a registered
investment adviser ("Putnam"). The Schedule 13G
indicates that such number of shares includes 554,469
shares with shared voting power, 8,427,228 shares with
shared dispositive power and no shares with either sole
voting power or sole dispositive power. Putnam filed
the Schedule 13G on behalf of itself and Marsh &
McLennan Companies, Inc. (parent holding company
reporting no shares beneficially owned), Putnam
<PAGE>12
Investment Management, Inc. (Putnam subsidiary and
registered investment adviser reporting beneficial
ownership of 7,624,902 shares) and The Putnam Advisory
Company, Inc. (Putnam subsidiary and registered
investment adviser reporting beneficial ownership of
802,326 shares).
<F2> Information as to number of shares is as of June 30,
1995, and is furnished in reliance on the Schedule 13G
filing of FMR Corp., a parent holding company. The
Schedule 13G indicates that such number of shares
includes 510,032 shares with sole voting power,
5,879,668 shares with sole dispositive power and no
shares with either shared voting power or shared
dispositive power. The relevant subsidiaries of FMR
Corp. identified in the Schedule 13G filing are
Fidelity Management & Research Company (a registered
investment adviser reporting beneficial ownership of
5,178,136 shares) and Fidelity Management Trust Company
(a bank reporting beneficial ownership of 701,532
shares).
<F3> 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.
<F4> Includes 16,500 shares that Mr. Bloch has the right to
purchase as of June 30, 1995 pursuant to options
granted in connection with the Company's 1984 Long-Term
Executive Compensation Plan and its 1993 Long-Term
Executive Compensation Plan.
</FN>
</TABLE>
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, 1995. Information regarding
individual directors is contained in the table above, under
"ELECTION OF DIRECTORS." No directors or executive officers
of the Company own any shares of Preferred Stock of the
Company.
<PAGE>13
<TABLE>
<CAPTION>
Shares
Beneficially Percent of
Name of Beneficial Owner Owned Class
------------------------ ----------- -----------
<S> <C> <C>
Thomas M. Bloch 358,556<F1><F2> .34%
William P. Anderson 13,709<F2> .01%
Ozzie Wenich 33,086<F2> .03%
Robert L. Arnold 15,599<F2> .01%
William F. Evans 3,333<F2> .00%
All directors and officers 5,998,221<F3><F4> 5.71%
as a group (13 persons)
<FN>
<F1> Includes 290,000 shares for which Henry W. Bloch is also listed as the
beneficial owner in the table above, under "ELECTION OF DIRECTORS."
Thomas M. Bloch is the son of Henry W. Bloch. The shares reported for
Mr. Thomas Bloch include shares held in trust for certain family members
of Mr. Bloch and Mr. Bloch has disclaimed any beneficial ownership of
such shares held in trust. Mr. Bloch has sole voting and investment
powers with respect to 8,556 shares and shared voting and investment
powers with respect to 350,000 shares shown as beneficially owned by
him.
<F2> Includes shares which the specified officers had the right to purchase
as of June 30, 1995 pursuant to options granted in connection with the
Company's 1984 Long-Term Executive Compensation Plan or its 1993 Long-
Term Executive Compensation Plan, as follows: Mr. Bloch, 8,500 shares;
Mr. Anderson, 12,999 shares; Mr. Wenich, 9,416 shares; Mr. Arnold,
15,399 shares; and Mr. Evans, 3,333 shares. All shares shown as
beneficially owned by Messrs. Anderson, Wenich, Arnold and Evans are
considered to be held with sole voting and investment powers.
<F3> 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 149,473 shares which such directors
and officers have the right to purchase as of June 30, 1995 pursuant to
options granted in connection with the Company's stock option plans.
The figure does not include shares beneficially owned by William F.
Evans, who was not an executive officer of the Company at the end of
fiscal year 1995 or on June 1, 1995.
<F4> Includes 5,445,827 shares held with sole voting and investment powers
and 552,394 shares held with shared voting and investment powers.
</FN>
</TABLE>
<PAGE>14
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION OF RICHARD H. BROWN
Richard H. Brown was elected President and Chief
Executive Officer of the Company on July 29, 1995, effective
on August 5, 1995. Mr. Brown and the Company have entered
into an employment agreement with a term of three years and
providing for annual renewal thereafter unless notice of non-
renewal is delivered within 45 days prior to the anniversary
date. The agreement provides for a base salary of $650,000
for the first year and for a bonus of $250,000 upon signing.
In addition, Mr. Brown will participate in the Company's 1996
fiscal year management incentive plan as if he had been
employed by the Company from the start of the fiscal year,
with a preliminary target award of $375,000. After the first
year, base salary and incentive bonus compensation will be
determined by the Compensation Committee.
Mr. Brown also received an award under the Company's
1993 Long-Term Executive Compensation Plan of 46,370
restricted shares of the Company's Common Stock (valued at
$1,779,449 based upon the last quoted market price for the
Company's Common Stock on July 27, 1995). Of such restricted
stock, 18,153 shares will vest on January 1, 1996 and one-
third of the balance of such shares will vest, respectively,
on each of the anniversary dates of the employment agreement.
Mr. Brown was granted an option to purchase 250,000
shares of stock at the last quoted market price for the
Company's Common Stock as of August 5, 1995, the date of
grant. Such options have a term of ten years and 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.
Mr. Brown also received an award of 6,500 performance units
under the H&R Block Long-Term Performance Program for the
performance period from May 1, 1995 through April 30, 1998. The
agreement provides that Mr. Brown will receive awards under the
Program with respect to the performance periods commencing May 1,
1996, 1997 and 1998 with a market value of not less than $260,000
at the beginning of each period.
Mr. Brown will be entitled to participate in all other
benefit programs of the Company.
The agreement provides that it may be terminated by the
Company for "cause" and by Mr. Brown for "good reason," in each
case as defined in the agreement. If the agreement is terminated
by the Company without "cause" or by Mr. Brown with "good reason,"
the Company will continue to pay Mr. Brown's salary and bonuses,
all outstanding options will vest and be exercisable for two years
and all other benefits will continue, in each case for a period of
two years following such termination. In the event such payments
result in the imposition of any excise taxes under Section 4999 of
the Internal Revenue Code, the Company will reimburse Mr. Brown
for such taxes.
<PAGE>15
SUMMARY COMPENSATION TABLE
The following table sets forth for the year ended
April 30, 1995, and the two previous fiscal years, the annual,
long-term and other compensation paid to the Company's Chief
Executive Officer who was serving as such at the end of such year,
to each of the four highest paid executive officers of the Company
(other than the Chief Executive Officer) who was serving as an
executive officer of the Company at the end of such year, and to
one former executive officer of the Company who would have been
one of such highest paid executive officers, but for the fact that
he was not serving as an executive officer of the Company at the
end of such year.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------------------ ------------------------- -------
Securities
Other Annual Restricted Underlying LTIP All Other
Fiscal Salary Compensation Stock Options Payouts Compensation
Name and Principal Position Year ($) Bonus ($) ($) Award(s) ($) (#)<F1> ($) ($)
--------------------------- ------ --------- --------- ------------ ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas M. Bloch 1995 483,333 134,509 45,927<F2> 170,000<F3> 9,000 0 14,258<F4>
Former President and 1994 433,333 293,785 18,885<F2> 138,500<F3> 9,000 0 14,349<F4>
Chief Executive Officer 1993 366,667 254,287 13,335<F2> 0 7,500 0 14,462<F4>
Henry W. Bloch 1995 628,333 0 133,249<F2> 0 4,500 0 23,450<F5>
Chairman of the Board 1994 608,333 0 81,472<F2> 0 4,500 0 22,520<F5>
1993 585,333 63,572 71,884<F2> 0 9,000 0 24,949<F5>
William P. Anderson 1995 221,667 135,000 72 127,500<F3> 5,000 0 79,072<F6>
Senior Vice President and 1994 200,075 123,287 23,772<F7> 103,875<F3> 5,000 0 45,811<F6>
Chief Financial Officer 1993 180,000 58,863 122,678<F7> 0 3,000 0 29,946<F6>
Ozzie Wenich 1995 140,900 61,400 72 0 3,000 0 36,595<F8>
Vice President, Finance 1994 129,875 41,904 75 0 2,500 0 35,530<F8>
and Treasurer 1993 121,000 30,506 75 0 2,250 0 30,235<F8>
Robert L. Arnold 1995 118,500 25,044 72 0 2,000 0 15,042<F9>
Vice President, Director 1994 114,000 25,309 72 0 2,000 0 14,614<F9>
of Internal Audit 1993 108,667 22,163 72 0 2,000 0 13,425<F9>
William F. Evans 1995 260,000 0 40,072<F7> 127,500<F3> 5,000 0 64,548<F11>
Former Senior Vice 1994 255,075 183,103 133 103,875<F3> 5,000 0 91,403<F11>
President, Corporate 1993 183,750 119,056 98,457<F7> 0 30,000 0 14,516<F11>
Operations<F10>
<FN>
NOTES:
<F1> Stock options were granted pursuant to the Company's 1984
Long-Term Executive Compensation Plan or its 1993 Long-Term
Executive Compensation Plan.
<PAGE>16
<F2> Includes payments by the Company of fees incurred by
Messrs. Bloch for personal income tax return preparation
and tax consultation services, as well as amounts
reimbursed for the payment of taxes incurred by such
officers in connection with the Company's payment of such
fees.
<F3> For fiscal year 1995, the figure represents the dollar
value of performance units awarded to the specified
executive officer as of May 1, 1994, calculated by
multiplying $42.50, the last-quoted market price for the
Company's Common Stock on April 29, 1994 (the last business
day prior to May 1, 1994), by the number of performance
units awarded to the officer (4,000 to Mr. Thomas Bloch,
3,000 to each of Messrs. Anderson and Evans). For fiscal
year 1994, the figure 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. Anderson and Evans). 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. None of the
executive officers held other performance units or
restricted stock at the end of fiscal year 1995. At April
30, 1995, Mr. Thomas Bloch held an aggregate of 8,000
performance units with a value of $337,000 and Messrs.
Anderson and Evans each held an aggregate of 6,000 units
with a value of $252,750. The performance units held by
Mr. Thomas Bloch have been forfeited as a result of his
resignation as President and Chief Executive Officer of the
Company effective August 5, 1995. As Mr. Evans' employment
agreement provides for the termination of his employment as
of October 31, 1995, it is expected that he will not
satisfy the employment requirement applicable to such
performance units and that such units will be forfeited.
<F4> Includes a contribution under the Company's profit-sharing
plan in each of fiscal years 1995, 1994 and 1993 of
$11,000; Company matching contributions under the Company's
401(k) savings plan in fiscal years 1995, 1994 and 1993 of
$2,250, $2,499 and $2,682, respectively; and the $1,008
(1995), $850 (1994) and $780 (1993) economic values 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.
<PAGE>17
<F5> Includes a contribution under the Company's profit-sharing
plan in each of fiscal years 1995, 1994 and 1993 of
$11,000; Company matching contributions under the Company's
401(k) savings plan in fiscal years 1995, 1994 and 1993 of
$2,250, $2,310 and $2,249, respectively; and the $10,200
(1995), $9,210 (1994) and $11,700 (1993) economic values of
the death benefit provided by the Company's ESP.
<F6> Includes contributions under the Company's profit-sharing
plan in fiscal years 1995 and 1994 of $11,000 and $7,793,
respectively; Company matching contributions under the
Company's 401(k) savings plan in fiscal years 1995 and 1994
of $2,250 and $2,994, respectively; Company matching
contributions under the Company's deferred compensation
plan for executives ("DCP") of $59,644 in fiscal year 1995
and $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 $6,178 (1995), $3,944 (1994) and $1,439 (1993)
dollar values 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.
<F7> Includes payments by the Company of certain relocation-
related expenses in fiscal years 1994 and 1993, as well as
amounts reimbursed in such years for the payment of taxes
incurred in connection with the payment of such relocation-
related expenses. The totals of such payments and
reimbursements were $23,697 (1994) and $122,607 (1993) for
Mr. Anderson and $98,436 (1993) for Mr. Evans. For Mr.
Evans, the figure for fiscal year 1995 includes a one-time
additional payment of $40,000 in cash compensation made
pursuant to his employment agreement.
<F8> Includes contributions under the Company's profit-sharing
plan in fiscal years 1995, 1994 and 1993 of $7,673, $6,059
and $6,075, respectively; Company matching contributions
under the Company's 401(k) savings plan in fiscal years
1995, 1994 and 1993 of $1,897, $1,674 and $1,658,
respectively; Company matching contributions under the DCP
in fiscal years 1995, 1994 and 1993 of $24,001, $24,645 and
$20,348, respectively; additional Company contributions
under the DCP in fiscal years 1995, 1994 and 1993 of
$1,172, $2,239 and $1,683, respectively, to negate the
effect of the deferral of income on profit-sharing
contributions in such years; the $1,253 (1995), $395 (1994)
and $18 (1993) dollar values of "above-market" amounts
earned on deferred compensation under the DCP; and the $599
(1995), $518 (1994) and $453 (1993) economic values of the
death benefit provided by the Company's ESP.
<PAGE>18
<F9> Includes contributions under the Company's profit-sharing
plan in fiscal years 1995, 1994 and 1993 of $6,853, $6,505
and $6,482, respectively; Company matching contributions
under the DCP of $6,000 in each of fiscal years 1995, 1994
and 1993; additional Company contributions under the DCP in
fiscal years 1995, 1994 and 1993 of $660, $660 and $220,
respectively, to negate the effect of the deferral of
income on profit-sharing contributions in such years; the
$822 (1995), $712 (1994) and $252 (1993) dollar values of
"above-market" amounts earned on deferred compensation
under the DCP; and the $707 (1995), $737 (1994) and $471
(1993) economic values of the death benefit provided by the
Company's ESP.
<F10> Mr. Evans' employment with the Company commenced in August
1992. Mr. Evans resigned as Senior Vice President,
Corporate Operations, effective October 31, 1994.
Mr. Evans continues to be employed by a subsidiary of the
Company pursuant to an employment agreement that terminates
on October 31, 1995.
<F11> Includes a contribution under the Company's profit-sharing
plan in fiscal year 1995 of $11,000; Company matching
contributions under the Company's 401(k) savings plan of
$2,310 in fiscal year 1995 and $1,326 in fiscal year 1994;
Company matching contributions under the Company's DCP in
fiscal years 1995, 1994 and 1993 of $42,500, $85,000 and
$14,167, respectively; the $8,738 (1995), $5,077 (1994) and
$119 (1993) dollar values of "above-market" amounts earned
on deferred compensation under the DCP; and, for fiscal
year 1993, the $230 economic value of the death benefit
provided by the Company's ESP.
</FN>
</TABLE>
STOCK OPTION GRANT TABLE
The following table summarizes options to purchase the
Company's Common Stock granted during the fiscal year ended April
30, 1995 to the executive officers named in the Summary
Compensation Table, above (the "Named Officers"):
<PAGE>19
<TABLE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
--------------------------------------------------------------
Number of Potential
Securities % of Total Realizable Value at Assumed
Underlying Options Annual Rates of Stock Price
Options Granted to Appreciation for Option Term<F1>
Granted Employees in Exercise Price Expiration --------------------------------
Name (#)<F2> Fiscal Year ($/Sh) Date 5% ($) 10% ($)
----------------------- --------- ------------ -------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Bloch . . . . 9,000 0.23% $39.25 6/30/04 222,157 562,990
Henry W. Bloch . . . . 4,500 0.12% $39.25 6/30/04 111,079 281,495
William P. Anderson . . 5,000 0.13% $39.25 6/30/04 123,421 312,772
Ozzie Wenich . . . . . 3,000 0.08% $39.25 6/30/04 74,052 187,663
Robert L. Arnold . . . 2,000 0.05% $39.25 6/30/04 49,368 125,109
William F. Evans . . . 5,000 0.13% $39.25 6/30/04 123,421 312,772
<FN>
NOTES:
<F1> 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.
<F2> Stock option grants consist of nonqualified stock options,
incentive stock options or a combination of the two types
of options. No stock appreciation rights were granted
during fiscal year 1995. Options were granted under the
1993 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 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.
</FN>
</TABLE>
<PAGE>20
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, 1995
and presents the value of unexercised options as of such date for
the Named Officers. 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.
<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 (#) ($)
Shares ----------------- -----------------
Acquired on Value Exercisable (E)/ Exercisable (E)/
Name Exercise (#) Realized ($) Unexercisable (U) Unexercisable (U)
---------------------- ------------ ------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Thomas M. Bloch 10,500 133,563 0(E) 0(E)
17,500(U) 84,125(U)
Henry W. Bloch 0 0 10,500(E) 113,813(E)
10,500(U) 56,063(U)
William P. Anderson 0 0 8,666(E) 68,496(E)
9,334(U) 43,629(U)
Ozzie Wenich 3,500 52,500 6,833(E) 77,498(E)
5,417(U) 25,252(U)
Robert L. Arnold 0 0 13,399(E) 252,860(E)
4,001(U) 19,590(U)
William F. Evans 21,666 196,453 0(E) 0(E)
18,334(U) 110,629(U)
</TABLE>
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> <S>
Thomas M. Bloch 4,000 Three Years
Henry W. Bloch -0- N/A
William P. Anderson 3,000 Three Years
Ozzie Wenich -0- N/A
Robert L. Arnold -0- N/A
William F. Evans 3,000 Three Years
</TABLE>
<PAGE>21
The awards in the foregoing table are awards of performance
units granted by the Compensation Committee of the Board of
Directors as of May 1, 1994 under the 1993 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.
EMPLOYMENT AGREEMENT
Pursuant to an agreement dated October 24, 1994, between a
subsidiary of the Company and William F. Evans, Mr. Evans agreed
to remain in the employ of such subsidiary for a period of one
year following his resignation on October 31, 1994 as Senior Vice
President, Corporate Operations, of the Company and provide
consultation services to the Company and its subsidiaries. The
agreement provides for Mr. Evans to be paid a salary of $260,000
during such year, plus additional cash compensation of $40,000,
and specifies that he may continue to participate in various
employee benefit plans during the continuation of his employment.
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, Roger W. Hale and
Marvin L. Rich. Mr. Henry Bloch, Chairman of the Board of the
Company, and Mr. Brown, 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 a portion of fiscal year 1995, 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 1995,
said firm executed brokerage transactions for the Company in the
normal course of business at normal commission rates. The total
<PAGE>22
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.
PERFORMANCE GRAPH
The following graph sets forth for the five-year period ended
April 30, 1995, the cumulative total shareholder return to the
Company's shareholders, as well as the cumulative total return of
the Standard & Poor's 500 Stock Index and 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 performance graph assumes that
$100 was invested at the market close on April 30, 1990 and that
dividends were reinvested. The data for the graph 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 seven corporations,
including the Company.
<TABLE>
TOTAL RETURN TO SHAREHOLDERS
<CAPTION>
Base
Period Return Return Return Return Return
4/30/90 4/30/91 4/30/92 4/30/93 4/30/94 4/30/95
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
H&R Block, Inc. 100.00 154.29 198.68 218.29 275.45 281.19
S&P 500 Index 100.00 117.62 134.12 146.51 154.30 181.25
S&P Specialized
Services 100.00 110.53 115.08 96.77 93.01 102.94
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Company continues to be 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 sustained improvements in corporate 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 to recommend to the non-
employee members of the Board of Directors the compensation of the
Company's executive officers. The objectives that serve as
guidelines for the Compensation Committee in connection with
compensation decisions are as follows:
(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>23
(2) Integrate executive compensation programs with the
Company's annual and long-term 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 outside compensation consultants 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 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 such plan
provide financial rewards for the achievement of substantive
business and personal results. Competitive target bonus
opportunities are generally established by the Committee for each
participating salary grade level, with adjustments made for
specific individual circumstances.
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 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 1995 was the degree
to which the Company (or a subsidiary of the Company) attained its
<PAGE>24
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 individual management goals and the
degree to which an executive operates within the budget for his or
her business unit or department.
Participants can earn more than the target award if actual
results exceed the performance targets. For some senior executive
officers of the Company, however, the fiscal 1995 management
incentive plan imposed an additional performance qualification
upon any bonus amount that is greater than the target award. If
the fiscal 1995 pretax earnings of the Company (or other business
unit) did not exceed its fiscal 1994 pretax earnings, any computed
bonus amount that exceeds the target award for such officers was
to be either forfeited or deferred, depending on fiscal year 1996
results. If the fiscal year 1996 pretax earnings for the unit do
not exceed the fiscal 1995 pretax earnings (or if the officer's
employment terminates prior to April 30, 1996), the portion of the
computed bonus amount that is more than the target award will be
forfeited. Otherwise, such portion will be paid following the
completion of fiscal year 1996.
DEFERRED COMPENSATION. The Company offers to its executive
officers and to key employees of its subsidiaries a deferred
compensation plan and a supplemental deferred compensation plan,
both of which are designed to enhance the participants' financial
security upon retirement. The primary plan offers participants
the opportunity to defer annually up to 35% of base salary over
periods of four to 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 length of employment with the Company following
the commencement of participation in the plan. 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. The supplemental plan 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 amounts. The plans are unfunded and
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 those of the Company's shareholders.
Under the Company's 1993 Long-Term Executive Compensation Plan,
option exercise prices are set at 100% of the fair market value of
<PAGE>25
the stock 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. The grant of options is discretionary with the
Compensation Committee and the Committee has generally awarded
stock options on an annual basis. The number of shares subject to
any stock option grant is determined by an analysis of the
executive's applicable salary grade, level of responsibility and
prior year's performance. 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 its subsidiary corporations may receive awards of
performance units granted pursuant to the terms of the Company's
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 those 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 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 recipients and
amounts of performance units to be awarded. 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.
The compensation of Mr. Brown was determined by negotiation
with Mr. Brown and was approved by the Board of Directors on
July 29, 1995, upon recommendation of the Compensation Committee.
Mr. Brown's employment agreement will govern certain compensation
matters for the next three years, although the Compensation
Committee will also determine base salary, bonus and incentive
awards after the first year or in excess of the minimums
established by the employment agreement.
<PAGE>26
With respect to the former Chief Executive Officer, effective
September 1994, following the Compensation Committee's annual
review of executive compensation, Mr. Thomas Bloch's annual base
salary was increased from $450,000 to $500,000 in recognition of
the Company's performance for the fiscal year ended April 30,
1994. In determining Mr. Bloch's base salary, 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 service organizations of comparable size.
In order to align Mr. Bloch's compensation more closely with
shareholder interests, the Committee determined that his fiscal
year 1995 management incentive compensation should be dependent
not only upon the degree to which the Company achieved its
budgeted consolidated fiscal year pretax earnings (the sole
performance target in prior years), but also upon fiscal year 1995
results as compared to fiscal year 1994 results. Accordingly,
Mr. Bloch's incentive plan provided for:
(a) a preliminary target award of $265,700 (compared to a
target award of $258,000 for fiscal year 1994);
(b) the reduction of such preliminary target award by the
same percentage that the Company's fiscal year 1995
consolidated pretax earnings, excluding non-operating items
("1995 Earnings") decreased (if any) in comparison to fiscal
year 1994 consolidated pretax earnings, excluding non-
operating items, but including discontinued operations ("1994
Earnings");
(c) the computation of a conditional bonus based upon the
degree to which the Company achieved its budgeted fiscal year
1995 consolidated pretax earnings (with the ability to earn
up to 150% of the adjusted target incentive amount if the
Company achieved at least 115% of the budgeted pretax
earnings); and
(d) the deferral or forfeiture of 50% of the conditional
bonus amount if the Company's 1995 Earnings were less than
its 1994 Earnings. If the Company's fiscal year 1996
consolidated pretax earnings do not exceed its 1995 Earnings,
or if his employment terminates prior to April 30, 1996, such
amount will be forfeited. Otherwise, 50% of the bonus amount
will be paid following the completion of fiscal year 1996.
Based upon the foregoing plan provisions and the results
achieved by the Company in fiscal year 1995, incentive
compensation of $134,509 was earned in fiscal year 1995 and paid
to Mr. Bloch following the end of the year, and $134,509 was
subject to deferral or forfeiture. The $134,509 in incentive
compensation still subject to contingencies has been forfeited as
a result of Mr. Bloch's resignation as President and Chief
Executive Officer.
<PAGE>27
The stock option award to Thomas Bloch under the 1993 Plan
was made on June 30, 1994, and was for 9,000 shares of the
Company's Common Stock, with a stock option price of $39.25. Only
the first one-third annual increment (3,000 shares) of Mr. Bloch's
fiscal 1995 stock option vested prior to his termination of
employment with the Company. Upon such termination of employment,
all of the outstanding stock options granted by the Company to Mr.
Bloch terminated.
Mr. Bloch also received an award of 4,000 performance units
under the Long-Term Performance Program as of May 1, 1994. The
performance units have been forfeited by Mr. Bloch as a result of
the termination of his employment.
TAX CONSIDERATIONS
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), and proposed Treasury Regulations relating
thereto limit to $1 million the Company's federal income tax
deduction for compensation paid to any one executive officer named
in the Summary Compensation Table of the Company's proxy
statement, subject to certain transition rules and exceptions for
specified types of compensation, such as amounts that are
excludable from the employee's gross income, payments made to a
tax-qualified retirement plan, and compensation that meets the
Code definition of performance-based compensation. Under the
proposed Treasury Regulations, the amount of an incentive award
must be based entirely on an objective formula, without any
subjective consideration of individual performance, to be
considered performance-based.
To date, Code Section 162(m) has not limited the
deductibility of the Company's compensation of its executive
officers under its current compensation policies. The Committee
believes that it is in the Company's and shareholders' best
interests to maximize tax deductibility only when practicable and
consistent with the Committee's overall compensation philosophy,
the needs of the Company, and shareholder interests. The
Committee will continue to review and receive counsel concerning
the status of the Regulations under Section 162(m) and the
limitations imposed by such Section and Regulations, and will
evaluate whether the various compensation plans should be altered
in the future to meet the deductibility requirements.
COMPENSATION COMMITTEE
Marvin L. Rich, Chairman
G. Kenneth Baum
Robert E. Davis
Donna R. Ecton
Roger W. Hale
<PAGE>28
AMENDMENT TO THIRD STOCK OPTION PLAN FOR SEASONAL EMPLOYEES
(Item 2 on Form of Proxy)
INTRODUCTION
The Company has offered a stock option program to the
seasonal employees of its income tax services business since 1969.
Unless again extended, the Company's Third Stock Option Plan for
Seasonal Employees (the "Plan") will expire on December 31, 1995.
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 Plan as a valuable benefit, that the Plan
has in fact proven to be a valuable tool in retaining such
associates and that it is important to continue such incentives by
extending the Plan. The Board further believes that there exists
a sufficient reserve of shares available for proposed stock option
grants to be made to eligible seasonal employees in the next three
years. Accordingly, the Board has approved an amendment to the
Plan (subject to further approval by the shareholders of the
Company) that will extend the Plan for three additional years
(until December 31, 1998). The proposed amendment does not
otherwise modify the Plan in any manner. 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.
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
1995 tax season, the Company had in its employ approximately
85,000 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>29
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. Each option is exercisable only during the
month of September in either of the two years following the year
in which the option is granted and then only if the optionee is an
Eligible Seasonal Employee or a full-time employee and if the
compensation earned during the year of exercise is at least 50% of
that earned during the year of grant. 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 is 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.
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 (1995 figures for
shares subject to options and number of optionees are estimates):
Shares Subject Number of
Date of Grant To Options Optionees Option Price
------------- -------------- --------- ------------
June 30, 1993 1,933,829 71,799 $35.75
June 30, 1994 2,027,543 72,040 $39.25
June 30, 1995 2,148,125 76,486 $41.00
<PAGE>30
If the Plan is not sooner terminated, stock options will
automatically be awarded under the Plan on June 30, 1996 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 14, 1995, the last reported
sale price of the Company's Common Stock on the New York Stock
Exchange was $40.00 per share.
RECOMMENDATION OF THE BOARD OF DIRECTORS "FOR" THIS PROPOSAL
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. The Board of Directors has
approved the foregoing Plan amendment subject to shareholder
approval, even though shareholder approval is not required by the
Plan. If the proposal is not approved by a majority of the shares
present in person or represented by proxy at the meeting, it is
the intention of the Board of Directors to allow the Plan to
expire by its terms on December 31, 1995, and to grant no more
options under the Plan. 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 Form of Proxy)
Deloitte & Touche LLP 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, 1996 and recommends that the
shareholders ratify such appointment. Representatives of Deloitte
& Touche LLP 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 LLP IN THE
ABSENCE OF INSTRUCTIONS TO THE CONTRARY.
<PAGE>31
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 Wednesday,
September 11, 1996 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 April 11, 1996 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
August 9, 1995
<PAGE>32
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>33
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>34
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
is a full-time employee of the Company or one of its subsidiaries
<PAGE>35
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, 1998, 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.
<PAGE>36
APPENDIX TO PROXY STATEMENT
H&R BLOCK
August 9, 1995
Dear Shareholder:
The annual meeting of shareholders of H&R Block, Inc.
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 Tuesday, September 12, 1995.
It is important that your shares are represented at this
meeting. Whether or not you plan to attend the meeting in
person, please review the enclosed proxy materials, complete
the proxy form attached below, and return it promptly in the
envelope provided.
PLEASE DETACH PROXY HERE, SIGN AND MAIL
------------------------------------------------------------
The undersigned hereby appoints G. Kenneth Baum, Henry W.
Bloch and Roger W. Hale, 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, on September 12, 1995, 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.
Dated , 1995
----------------------
---------------------------------
---------------------------------
(Please date and sign exactly as
name appears at the left and
return in the enclosed postage
paid envelope. If shares are owned
in joint names, all joint owners
should sign.)
<PAGE>37
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS
MEETING, WHETHER OR NOT YOU ATTEND THE MEETING IN PERSON. TO
MAKE SURE THAT YOUR SHARES ARE REPRESENTED, WE URGE YOU TO
COMPLETE, DETACH AND MAIL THE PROXY FORM BELOW AS SOON AS
POSSIBLE.
PLEASE DETACH PROXY HERE, SIGN AND MAIL
------------------------------------------------------------
H&R BLOCK, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS AND WILL BE VOTED AS SPECIFIED BELOW. IF
NO SUCH SPECIFICATION IS MADE, IT WILL BE VOTED FOR
EACH OF THE PROPOSALS.
1. ELECTION OF CLASS III DIRECTORS. [ ] FOR all nominees
(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 OR HER
(THEIR) NAME(S) BELOW.
NOMINEES ARE: RICHARD H. BROWN, DONNA R. ECTON, MARVIN L.
RICH AND MORTON I. SOSLAND.
2. APPROVAL OF AN AMENDMENT TO THE THIRD STOCK OPTION PLAN
FOR SEASONAL EMPLOYEES TO EXTEND THE PLAN FOR THREE YEARS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP
AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR ENDING
APRIL 30, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS FORM
