H&R Block Inc. director Thomas Bloch, a member of the family that built the biggest U.S. tax preparer, said he won’t seek re-election because of disagreements with Chairman Richard Breeden and “the intense pressure from short-term oriented shareholders.”
In a letter to the board filed with regulators today, Bloch cited “fundamental” disagreements with Breeden, a hedge-fund manager, and said the company was “overly generous” with compensation for Chief Executive Officer Alan Bennett. Bloch said a 2008 stock buyback was “ill-timed,” that the 2010 fiscal plan was “overly optimistic” and that the company missed its earnings guidance.
“My father Henry Bloch, who will turn 88 this month, has witnessed the company suffer a number of setbacks that could have likely been avoided or minimized,” the letter said. “He has watched our customer base contract by a staggering amount -- a loss approaching two million customers in the last two years.”
H&R Block dropped 62 cents to $13.99 at 4 p.m. in New York Stock Exchange composite trading. Shares of the Missouri-based firm have declined 38 percent this year. That’s the second-worst in the Standard & Poor’s 500 Index, behind Nvidia Corp.
Unable to Execute
“The departure of a longstanding board member will likely increase investor concerns that the latest version of the turnaround plan has weak prospects, or that new management will be unable to successfully execute,” Vance Edelson, an analyst with Morgan Stanley, said today in a telephone interview.
Thomas Bloch served as CEO from 1992 to 1995. His departure from the board follows those of three senior executives this year: Russ Smyth resigned as CEO to join a private company on July 7, general counsel Brian Woram left on July 2 and Chief Financial Officer Becky Shulman quit on April 30.
H&R Block spokeswoman Jennifer Love said the company won’t grant any interviews. The firm e-mailed a statement saying, “We appreciate the more than 10 years of service Tom Bloch dedicated to the H&R Block board of directors. We wish him well in his future endeavors.”
Bennett was given a base salary of $950,000 with a sign-on bonus of $900,000 as part of his compensation package, according to a company filing dated July 7. That compares with a base salary of $450,000 with a guaranteed bonus of $562,500 when he served as interim CEO in 2007 and 2008, according to a company filing.
Housing, Car, Jet
Bennett is entitled to “reasonable and customary furnished” housing and rental car expense while in Kansas City and can use the firm’s Net Jet share for one round trip per week between his Connecticut or Florida residences and Kansas City, where the company is based, according to the filing.
“I hope Alan, as permanent CEO, will make a commitment to live in Kansas City, where the company is headquartered,” Bloch wrote. “Furthermore, I hope he will demonstrate a genuine commitment to long-term value creation, even though his compensation package, I believe, may prove to be seriously flawed with respect to its incentive components.”
H&R Block expects to remain an independent company and plans to step up efforts to win online customers as more returns get filed electronically, Bennett said in an interview after returning to the CEO job earlier this month.