H&R Block Says Chairman Breeden Stepping Down to Concentrate on Hedge Fund
H&R Block Inc. (HRB), the biggest U.S. tax preparer, said Richard C. Breeden will step down as chairman more than three years after the hedge-fund manager and former securities regulator seized control in a proxy fight.
Breeden, 61, plans to leave at the end of the tax season on April 18, the Kansas City, Missouri-based company said yesterday in a statement. He intends to devote more time to his hedge fund, Breeden Capital Management, H&R Block said. The firm didn’t name a successor.
“I am looking forward to having more time to work on some of Breeden Capital’s more recent investments,” Breeden said in the statement.
Breeden, the former head of the Securities and Exchange Commission and a senior adviser to Presidents Ronald Reagan and George H.W. Bush, was elected chairman Sept. 6, 2007. He won a proxy contest after saying H&R Block had underperformed. Since then, H&R Block’s total return including dividends was minus 10 percent, compared with a 6.8 percent decline for the Standard & Poor’s 500 Index.
H&R Block rose 7 cents to $15.89 yesterday on the New York Stock Exchange and has advanced 33 percent this year. As of Dec. 31, Breeden Capital Management owned 13.3 million shares.
Chief Executive Officer Alan Bennett, 60, stepped up marketing to recapture market share lost to Intuit Inc. (INTU), the maker of TurboTax, and to counter the firm’s inability to offer clients refund-anticipation loans this year. The company reported a 30 percent increase in online clients in the fiscal third quarter ended Jan. 31.
Bennett took over last year from Russell Smyth, whose July 7 resignation followed the departures of General Counsel Brian Woram and Chief Financial Officer Becky Shulman. A week later the board received a letter from Thomas Bloch, a member of the family that built the firm, saying he wouldn’t seek re-election as a director because of disagreements with Breeden and “the intense pressure from short-term oriented shareholders.”
Smyth, the former president of McDonald’s Corp. (MCD)’s European unit, was brought in by Breeden in 2008 to help turn around the tax preparer after it racked up more than $1 billion in losses tied to subprime home loans.
In yesterday’s statement, H&R Block said Breeden helped the company refinance $500 million in bridge loans originally incurred during its foray into mortgage lending. His hedge fund purchased $50 million of common stock, enabling the firm to “withstand the credit collapse that struck the global financial market,” the statement said.
H&R Block also took steps to improve its corporate governance such as separating the roles of chairman and CEO, adopting term limits for directors and giving shareholders more influence over executives’ compensation, the company said.
“This is now a vastly stronger company,” Breeden said in the statement. “I feel truly confident in saying ‘Mission Accomplished.’”
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