UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)

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One H&R Block Way

Kansas City, Missouri 64105

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 14, 2007

 

 

 

A special meeting of shareholders of H&R Block, Inc., a Missouri corporation (the “Company”), will be held at the H&R Block Center located at One H&R Block Way (corner of 13th and Main Streets), Kansas City, Missouri, on Friday, December 14, 2007 at 9:30 a.m., Kansas City time (CST). Shareholders attending the meeting are asked to park in the H&R Block Center parking garage located beneath the H&R Block Center (enter the parking garage from Walnut or Main Street). The meeting will be held for the following purposes:

 

 

The foregoing items of business are more fully described in the proxy statement accompanying this notice. The Board of Directors has fixed the close of business on November 2, 2007 as the record date for determining shareholders of the Company entitled to notice of and to vote at the meeting.

 

All shareholders are cordially invited to attend the special meeting. Whether or not you expect to attend the meeting in person, we urge you to complete, sign, date and return the enclosed proxy card as promptly as possible in the postage-paid envelope provided, or to vote by telephone or Internet. Telephone and Internet voting information is provided on the proxy card. If you are present at the meeting and desire to vote in person, your vote by proxy will not be counted.

 

By Order of the Board of Directors
BRET G. WILSON
Secretary

 

Kansas City, Missouri

November 21, 2007

 

H&R BLOCK, INC.
PROXY STATEMENT
FOR THE DECEMBER 14, 2007 SPECIAL MEETING OF SHAREHOLDERS

 

 

QUESTIONS AND ANSWERS ABOUT THE DECEMBER 14, 2007 SPECIAL MEETING AND VOTING –

 

The Board of Directors (the “Board of Directors” or “Board”) of H&R Block, Inc., a Missouri corporation (“H&R Block” or the “Company”) solicits the enclosed proxy for use at a special meeting of shareholders of the Company to be held at 9:30 a.m. (CST), on Friday, December 14, 2007 at the H&R Block Center located at One H&R Block Way (corner of 13th and Main Streets), Kansas City, Missouri. This proxy statement contains information about the matter to be voted on at the meeting and the voting process, as well as certain information about our directors and management.

 

WHY DID I RECEIVE THIS PROXY STATEMENT?

 

The Board of Directors is soliciting your proxy to vote at the special meeting because you are a shareholder at the close of business on November 2, 2007, the record date, and are entitled to vote at the meeting. This proxy statement and the accompanying proxy card are being made available to shareholders beginning on or about November 21, 2007. This proxy statement summarizes the information you need to know to vote at the special meeting. You do not need to attend the special meeting to vote your shares.

 

WHAT AM I VOTING ON?

 

You are voting on one item of business at the special meeting:

 

 

WHO IS ENTITLED TO VOTE?

 

Shareholders of record as of the close of business on November 2, 2007 are entitled to vote at the special meeting. Each share of H&R Block common stock is entitled to one vote.

 

WHAT ARE THE VOTING RECOMMENDATIONS OF THE BOARD OF DIRECTORS?

 

Our Board of Directors has determined that the Article Amendment is advisable and in the best interests of the Company and its shareholders. Our Board of Directors has therefore unanimously approved the Article Amendment and recommends that you vote “FOR” approval of the Article Amendment at the special meeting.

 

WHAT IS THE EFFECT OF THE ARTICLE AMENDMENT?

 

The purpose of the Article Amendment is to eliminate the classified structure of the Company’s Board of Directors. The Company’s Restated Articles of Incorporation and Amended and Restated Bylaws provide for the classification of the Board of Directors into three classes, with each class being elected every three years. If approved, the Article Amendment would provide that, starting at the 2008 annual meeting of the shareholders, all directors will be elected for one-year terms at each annual meeting of the shareholders.

 

In addition, the Board has approved a similar amendment to the Amended and Restated Bylaws of the Company which will become effective upon shareholder approval of the Article Amendment.

 

HOW DO I VOTE?

 

It is important that your shares are represented at the special meeting, whether or not you attend the meeting in person. To make sure that your shares are represented, we urge you to vote as soon as possible by signing, dating and returning the accompanying proxy card in the postage-paid envelope provided, or alternately by Internet or telephone by following the instructions on the accompanying proxy card.

 

If you are a registered shareholder, there are four ways to vote:

 

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Your shares will be voted as you indicate. If you do not indicate your voting preferences, the appointed proxies (Henry F. Frigon, David Baker Lewis and Tom D. Seip) will vote your shares “FOR” item 1. If your shares are owned in joint names, all joint owners must vote by the same method and if joint owners vote by mail, all of the joint owners must sign the proxy card.

 

If your shares are held in a brokerage account in your broker’s name (this is called street name), please follow the voting directions provided by your broker or nominee. You may sign, date and return a voting instruction card to your broker or nominee or, in most cases, submit voting instructions by telephone or the Internet to your broker or nominee. If you provide specific voting instructions by mail, telephone, or the Internet, your broker or nominee should vote your shares as you have directed.

 

At the special meeting, we will pass out written ballots to anyone who wishes to vote in person. If you hold your shares in street name, you must request a legal proxy from your broker or other nominee to vote at the special meeting.

 

If your shares are held through the H&R Block Retirement Savings Plan, please follow the voting directions provided by Fidelity Management Trust Company, the Plan’s Trustee. You may sign, date and return a voting instruction card to the Trustee or submit voting instructions by telephone or the Internet. If you provide voting instructions by mail, telephone, or the Internet, the Trustee will vote your shares as you have directed (or not vote your shares, if that is your direction). If you do not provide voting instructions, the Trustee will vote your shares in the same proportion as shares for which the Trustee has received voting instructions, except as otherwise required by law. You must submit voting instructions to the Plan Trustee by no later than December 11, 2007 at 11:59 pm Eastern time in order for your shares to be voted as you have directed by the Trustee at the special meeting. Plan participants may not vote their Plan shares in person at the special meeting.

 

MAY I ATTEND THE MEETING?

 

All shareholders, properly appointed proxy holders, and invited guests of the Company may attend the special meeting. Shareholders who plan to attend the meeting must present a valid photo identification. If you hold your shares in street name, please also bring proof of your share ownership, such as a broker’s statement showing that you owned shares of the Company on the record date of November 2, 2007, or a legal proxy from your broker or nominee (a legal proxy is required if you hold your shares in street name and you plan to vote in person at the special meeting). Shareholders of record will be verified against an official list available at the registration area. The Company reserves the right to deny admittance to anyone who cannot adequately show proof of share ownership as of the record date.

 

WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS A BENEFICIAL OWNER?

 

If your shares are registered directly in your name with the Company’s transfer agent, Mellon Investor Services LLC, you are considered, with respect to those shares, the “shareholder of record.” The proxy statement and proxy card have been made available directly to shareholders of record by the Company.

 

If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of shares held in street name. The proxy materials should be forwarded to you by your broker, bank or nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial holder, you have the right to direct your broker, bank or nominee how to vote and are also invited to attend the special meeting. However, since you are not a shareholder of record, you may not vote these shares in person at the special meeting unless you bring with you a legal proxy from the shareholder of record. A legal proxy may be obtained from your broker or nominee. Your broker or nominee has enclosed a voting instruction card for you to use in directing the broker, bank or other nominee how to vote your shares.

 

WHAT ARE BROKER NON-VOTES AND HOW ARE THEY COUNTED?

 

Broker non-votes occur when nominees, such as brokers and banks holding shares on behalf of the beneficial owners, are prohibited from exercising discretionary voting authority for beneficial owners who have not provided voting instructions at least ten days before the special meeting date. If no instructions are given within that time

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frame, the nominees may vote those shares on matters deemed “routine” by the New York Stock Exchange. On non-routine matters, nominees cannot vote without instructions from the beneficial owner, resulting in so-called “broker non-votes.” Broker non-votes are not counted for the purposes of determining the number of shares present in person or represented by proxy on a voting matter. The proposal will be deemed to be a routine matter.

 

MAY I CHANGE MY VOTE?

 

If you are a shareholder of record, you may revoke your proxy at any time before it is voted at the special meeting by:

 

 

If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other nominee. You may also vote in person at the special meeting if you obtain a legal proxy as described above.

 

WHAT VOTE IS REQUIRED TO APPROVE THE PROPOSAL?

 

For the matter to be voted upon at the special meeting, shareholders may vote “for,” “against,” or “abstain” on such matter. The Article Amendment has been unanimously adopted by the members of the Board of Directors. Therefore, the affirmative vote of a majority of the outstanding shares entitled to vote is necessary for adoption of the Article Amendment. Shares represented by a proxy which directs that the shares abstain from voting or that a vote be withheld on the proposal are deemed to be represented at the meeting as to that matter, and have the same effect as a vote against the proposal.

 

WHAT CONSTITUTES A QUORUM?

 

As of the record date, 326,775,787 shares of the Company’s Common Stock were issued and outstanding. A majority of the outstanding shares entitled to vote at the special meeting, represented in person or by proxy, will constitute a quorum. Shares represented by a proxy that directs that the shares abstain from voting or that a vote be withheld on a matter will be included at the special meeting for quorum purposes. Shares represented by proxy as to which no voting instructions are given as to matters to be voted upon will be included at the special meeting for quorum purposes.

 

WHO WILL COUNT THE VOTE?

 

Representatives of Mellon Investor Services LLC, the Company’s transfer agent, will count the vote and serve as the inspectors of election.

 

WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?

 

It means your shares are held in more than one account. You should vote all your proxy shares.

 

WHAT IS THE COMPANY’S WEB ADDRESS?

 

The Company’s home page is www.hrblock.com. You can access this proxy statement at this web address. The Company’s filings with the Securities and Exchange Commission are available free of charge via a link from this address.

 

WILL ANY OTHER MATTERS BE VOTED ON?

 

As of the date of this proxy statement, our management knows of no other matter that will be presented for consideration at the special meeting other than those matters discussed in this proxy statement. If any other matters properly come before the meeting and call for a vote of the shareholders, validly executed proxies in the enclosed form will be voted in accordance with the recommendation of the Board of Directors.

 

 

ITEM 1

 

ADOPTION OF AN AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION TO ELIMINATE THE CLASSIFIED BOARD STRUCTURE –

 

Article 6(B) of the Restated Articles of Incorporation of the Company (the “Articles”) and Section 15(a) of the Amended and Restated Bylaws of the Company (the “Bylaws”) provide for the classification of the Board of

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Directors of the Company (the “Board”) into three classes of directors, with each class being elected every three years. The Board has determined that the Articles should be amended to amend and restate Article 6(B) to eliminate the classified board structure (the “Article Amendment”), and has unanimously adopted a resolution approving the Article Amendment, declaring its advisability and recommending approval of the Article Amendment to our shareholders.

 

The Board has passed a resolution amending the Bylaws of the Company to eliminate the Bylaw provision providing for a classified board structure, to be effective at the time the Article Amendment is approved by our shareholders (the “Bylaw Amendment”). The Board has also passed a resolution adding a new Section 15(c) to the Bylaws implementing the Article Amendment and Bylaw Amendment, which requires each incumbent director to agree to resign from any portion of his or her current term that extends beyond the 2008 annual meeting.

 

If the shareholders approve the Article Amendment, the terms of all Directors will expire at the annual meeting of shareholders each year and their successors will be elected for one-year terms that will expire at the next annual meeting. The text of the proposed Article Amendment is attached as Appendix A to this Proxy Statement. The text of the Bylaw Amendment is attached as Appendix B to this Proxy Statement.

 

The Board believes that shareholders should have the opportunity to vote on all Directors each year and that elimination of the classified board structure will both enhance our Company’s corporate governance practices and be an effective way to maintain and enhance the accountability of the Board. In making this determination, the Board has considered that removing the classified board structure will have the effect of reducing the time required for a majority shareholder or group of shareholders to replace a majority of the Board. Under our current classified board structure, a majority of the Board may be replaced only after two annual elections. Under a declassified board structure, the entire Board may be replaced each year. If the shareholders approve the Article Amendment, all Directors who are elected at the 2008 annual meeting will be elected for a one-year term that will expire at the 2009 annual meeting.

 

The Board examined the arguments for and against continuation of the classified board structure, listened to the views of a number of its shareholders, and determined that the classified board structure should be eliminated. The Article Amendment has unanimously been adopted by the members of the Board. Therefore, approval of the Article Amendment requires the affirmative vote of at least a majority of the outstanding shares entitled to vote, or approximately 163,387,894 shares.

 

If the shareholders approve the Article Amendment, it will become effective upon the filing of a Certificate of Amendment to the Restated Articles of Incorporation with the Missouri Secretary of the State. The Company plans to file a Certificate of Amendment to the Restated Articles of Incorporation promptly after the requisite shareholder vote is obtained.

 

If the shareholders approve the Article Amendment, Section 15(a) of the Bylaws will also be amended to eliminate the classified board structure. The Bylaw Amendment has been approved by the Board subject to the approval by the shareholders of the Article Amendment and does not require separate approval by the shareholders. The Bylaw Amendment will become effective concurrently with the effectiveness of the Article Amendment.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADOPTION OF AN AMENDMENT TO THE COMPANY’S RESTATED ARTICLES OF INCORPORATION TO ELIMINATE THE CLASSIFIED BOARD STRUCTURE, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY.

 

 

INFORMATION REGARDING SECURITY HOLDERS

 

SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT –

 

The following table shows as of October 1, 2007 the number of shares of Common Stock beneficially owned by each director, by each of the named executive officers set forth in the proxy statement for our 2007 annual meeting of shareholders and by all directors and executive officers as a group. The number of shares beneficially owned is determined under rules of the Securities and Exchange Commission. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual has either sole or shared voting power or investment power and also any shares that the individual has the right to acquire within 60 days through the exercise of any stock option or other right. Unless

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otherwise indicated in the footnotes, each person has sole voting and investment power with respect to shares set forth in the following table.

 

 

 * Less than 1%

 

 

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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. The information provided is based upon Schedule 13G filings with the Securities and Exchange Commission.

 

 

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OTHER MATTERS

 

METHODS AND COSTS OF PROXY SOLICITATION –

 

The Company will bear the costs of the solicitation of proxies on behalf of the Board for the special meeting, which includes the cost of preparing, printing and mailing the proxy materials. In addition, brokers and other custodians, nominees and fiduciaries will be requested to forward soliciting material to their principals and obtain their voting instructions, and the Company will reimburse them for the expense of doing so. In addition to solicitation by mail, officers, directors and regular employees of the Company, acting on its behalf, may also solicit proxies by telephone, telegram, facsimile, electronic mail, personal interview or other electronic means. You may also be solicited by advertisements in periodicals, press releases issued by the Company and postings on the Company’s corporate website. None of the Company’s directors, officers or employees will receive any extra compensation for soliciting you. In addition, the Company has retained Mellon Investor Services LLC to assist in soliciting proxies, for which the Company expects to pay a fee not to exceed $8,000, plus reimbursement of out-of-pocket expenses.

 

SHAREHOLDER PROPOSALS AND NOMINATIONS –

 

For a shareholder proposal to be considered for inclusion in the Company’s proxy statement for the 2008 annual meeting pursuant to Rule 14a-8 of the Securities and Exchange Commission, the Company must receive notice at our offices at One H&R Block Way, Kansas City, Missouri 64105, Attention: Corporate Secretary, on or before April 1, 2008. Applicable Securities and Exchange Commission rules and regulations govern the submission of shareholder proposals and our consideration of them for inclusion in next year’s proxy statement and form of proxy.

 

Pursuant to the Company’s Bylaws, for any business not included in the proxy statement for the 2008 annual meeting to be brought before the meeting by a shareholder, the shareholder must give timely written notice of that business to the Corporate Secretary. To be timely, the notice must be received no later than June 15, 2008 (45 days prior to July 30, 2008). The notice must contain the information required by the Company’s Bylaws. Similarly, a shareholder wishing to submit a director nomination directly at an annual meeting of shareholders must deliver written notice of the nomination within the time period described in this paragraph and comply with the information requirements in our Bylaws relating to shareholder nominations.

 

A proxy may confer discretionary authority to vote on any matter at a meeting if we do not receive notice of the matter within the time frames described above. A copy of the Company’s Bylaws is available on our website at www.hrblock.com under the tab “Company” and then under the heading “Block Investors” and then “Corporate Governance,” or upon request to: H&R Block, Inc., One H&R Block Way, Kansas City, Missouri 64105, Attention: Corporate Secretary. The Chairman of the meeting may exclude matters that are not properly presented in accordance with the foregoing requirements.

 

 

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
BRET G. WILSON
Secretary

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APPENDIX A

PROPOSED AMENDMENTS TO THE COMPANY’S RESTATED ARTICLES OF INCORPORATION

 

 

 

Article 6, Section B of the Charter shall be amended and restated in its entirety to read as follows:

 

(B) Election of Directors. Directors shall be elected at each annual meeting of shareholders to hold office until the next succeeding annual meeting of shareholders or until such director’s successor has been elected and qualified. The term of office of each director shall begin immediately after his election and each director shall hold office until the next succeeding annual meeting of shareholders or until such director’s successor has been elected and qualified and subject to prior death, resignation, retirement or removal from office of the director. No decrease in the number of directors constituting the board of directors shall reduce the term of any incumbent director.

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APPENDIX B

AMENDMENTS TO THE COMPANY’S AMENDED AND RESTATED BYLAWS

 

 

 

Section 15(a) of the Bylaws shall be amended and restated in its entirety, and shall become effective upon the filing of a Certificate of Amendment with the Secretary of State of the State of Missouri implementing the Article Amendment, to read as follows:

 

15. INCUMBENCY OF DIRECTORS. (a) Election and Term of Office. Directors shall be elected at each annual meeting of shareholders to hold office until the next succeeding annual meeting of shareholders or until such director’s successor has been elected and qualified. The term of office of each director shall begin immediately after his election and each director shall hold office until the next succeeding annual meeting of shareholders or until such director’s successor has been elected and qualified and subject to prior death, resignation, retirement or removal from office of the director. No decrease in the number of directors constituting the board of directors shall reduce the term of any incumbent director.

 

A new Section 15(c) of the Bylaws shall be added and shall become effective upon the filing of a Certificate of Amendment with the Secretary of State of Missouri implementing the Article Amendment, to read as follows:

 

(c) Qualification of Directors. To qualify for election or service as a director of the corporation, each incumbent director shall agree to resign from any portion of his or her current term that extends beyond the certification of the election results of the next annual election of directors.

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