advertisement

H&R Block gave ousted CEO compensation valued at $5.2 million in '07

Thursday, July 3, 2008 | 9:58 p.m. CDT; updated 12:31 a.m. CDT, Monday, July 21, 2008

KANSAS CITY — Mark Ernst, who stepped down as chief executive officer and chairman of H&R Block Inc. in November, received compensation valued at $5.2 million in 2007, a 70 percent increase over the previous year, according to a securities filing Thursday.

Ernst was ousted after dissident shareholder Richard Breeden and two others were elected to the company's board of directors last September, criticizing that the company's diversification into areas such as mortgage lending had robbed it of momentum in its core tax preparation and accounting services businesses.

The Kansas City-based company said, in the filing with the Securities and Exchange Commission, that it paid Ernst $698,045 in salary and $2.6 million in other compensation, most of which represented severance payments. He also received $60,040 in life insurance premiums, deferred compensation contributions, retirement contributions, dividends and the economic value of an executive life insurance policy's death benefit.

Ernst also received stock and options valued by the company at $1.9 million at the time they were awarded.

The Associated Press calculates total pay based on salary, bonuses, incentives, perquisites, above-market returns on deferred compensation and the value of stock options and other awards granted during the year. This figure does not include changes in the present value of pension benefits and may differ from the total compensation listed in proxy statements.

Ernst's total doesn't include $25,700 in director payments Ernst received after he stepped down as chief executive and chairman. It also doesn't include $3.4 million in value realized on the exercise of options or the $653,100 in value realized from the vesting of stock as this represents personal finance decisions.

In 2006, Ernst received a compensation package valued at $3.1 million, including $860,000 in salary, $236,500 in inventive payments and $67,880 in other compensation. He also received stock and options valued by the company at $1.9 million at the time they were awarded.

Upon Ernst's exit, Breeden became chairman and brought in retired Aetna Inc. executive Alan Bennett to oversee the company while a permanent replacement was found.

Bennett, 57, who is still serving as interim CEO, was paid a compensation package valued at $1.4 million, according to the filing.

He received $405,682 in salary and $504,583 in other compensation, which included $5,544 in relocation expenses, $435,630 for personal use of company aircraft to travel between Kansas City and his homes in Florida and Connecticut, $18,748 for housing expenses in Kansas City, $5,461 for a rental car and $31,335 to cover taxes on those benefits.

Bennett also received stock and options valued by the company at $526,500 at the time they were awarded.

Not included in the total is $562,500 the company paid Bennett on May 20, after the fiscal year had ended, as a bonus for fulfilling his employment contract as interim CEO.

On Monday, the company announced its annual earnings, saying it lost $308.6 million, or 94 cents per share, compared with a loss of $433.7 million, or $1.33 per share, in 2007.

Not including discontinued operations, including its troubled Option One Mortgage Corp., the company said it earned $454.5 million, or $1.39 per share, compared with profits of $374.3 million, or $1.15 per share, during the previous year.

Annual revenues rose 10 percent to $4.4 billion from $4.0 billion a year earlier.

The company earlier this year sold Option One, which had stacked up significant losses as the mortgage market across the country collapsed last year.

Thursday's securities filing also included the proxy for H&R Block's annual shareholders meeting, being held Sept. 4 in Kansas City.

Shareholders will be asked to approve a number of changes to the company's bylaws for its board of directors, including provisions to split the CEO and chairman positions, reduce the size of the board to 12, impose 12-year term limits on board members and allow a nonbinding shareholder vote on executive compensation.

The company is also proposing to increase the overall annual compensation for directors from $120,000 to $165,000, but would pay the majority of it in stock options and not provide it to the director until six months after they leave the board. Most of the directors' compensation now is paid in cash.


Like what you see here? Become a member.


Show Me the Errors (What's this?)

Report corrections or additions here. Leave comments below here.

You must be logged in to participate in the Show Me the Errors contest.


Comments

Leave a comment

Speak up and join the conversation! Make sure to follow the guidelines outlined below and register with our site. You must be logged in to comment. (Our full comment policy is here.)

  • Don't use obscene, profane or vulgar language.
  • Don't use language that makes personal attacks on fellow commenters or discriminates based on race, religion, gender or ethnicity.
  • Use your real first and last name when registering on the website. It will be published with every comment. (Read why we ask for that here.)
  • Don’t solicit or promote businesses.

We are not able to monitor every comment that comes through. If you see something objectionable, please click the "Report comment" link.

You must be logged in to comment.

Forget your password?

Don't have an account? Register here.

advertisements