HRB

H&R Block, Inc. Form 8-K Summary

Business Context and Reporting Period

This Current Report on Form 8-K, dated April 25, 2011, discloses significant changes in executive leadership for H&R Block, Inc. The report details the retirement of the outgoing President and Chief Executive Officer (CEO) and the appointment of a successor, effective May 16, 2011.

Key Financial Metrics

This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on executive compensation arrangements and employment terms.

Material Changes

Departure of Alan M. Bennett:

• Mr. Bennett notified the Company of his retirement as President and CEO, effective May 16, 2011.
• He will remain an employee through July 31, 2011, and a Board member until the September 2011 annual shareholder meeting, though he will not seek re-election.
• He will serve in a consulting role from August 1, 2011, to July 31, 2012, receiving a fee of $15,000 per month.
• He is ineligible for fiscal year 2012 short-term and long-term incentive compensation.
• He may be eligible for a discretionary one-time cash bonus following the consulting period.

Appointment of William C. Cobb:

• Mr. Cobb was appointed President and CEO, effective May 16, 2011.
• He will remain on the Board of Directors but will no longer serve on the Audit Committee.
• Compensation Package:
• Five-year employment term.
• Base salary of $950,000.
• Sign-on bonus of $900,000 (repayable if terminated prior to November 16, 2011 without Good Reason).
• Short-term incentive target of 125% of base salary.
• Initial equity grants valued at $2,225,000 each for stock options and restricted stock, vesting in three equal installments.
• Minimum long-term equity incentive award of $4,500,000 for fiscal year 2012.

Guidance, Risks, and Contingencies

Severance Provisions for Mr. Cobb:

• Standard Termination (Good Reason/Without Cause): Includes accrued salary/vacation, unpaid bonuses, a lump sum equal to base salary plus target bonus, and 18 months of COBRA premiums.
• Change in Control Termination: Includes accrued salary/vacation, unpaid bonuses, a lump sum equal to two times base salary plus one times target bonus, 24 months of COBRA premiums, and full immediate vesting of initial equity grants.

Restrictive Covenants: Mr. Cobb is subject to non-hire, non-solicitation, and non-compete restrictions for one year post-employment, non-disparagement for two years, and perpetual non-disclosure of proprietary information.

Investor Verification Checklist

• Verify the exact effective date of the leadership transition (May 16, 2011).
• Review the total value of the initial equity grants ($4,450,000 combined) and the vesting schedule.
• Confirm the terms of the $900,000 sign-on bonus repayment clause.
• Assess the potential financial impact of the consulting fees paid to the outgoing CEO ($180,000 total over one year).
• Examine the "Change in Control" severance multiplier (2x salary + 1x bonus) for potential future liabilities.