Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) On May 15, 2017, William C. Cobb, President, Chief Executive Officer, and Director of H&R Block, Inc. (the “Company”), notified the Company of his decision to retire from his positions as President and Chief Executive Officer and as a member of the Board of Directors (“Board”) effective as of July 31, 2017 (the “Retirement Date”). In connection with his retirement, the Company, H&R Block Management, LLC, and Mr. Cobb entered into a Letter Agreement Regarding Retirement and Transition, dated May 15, 2017 (the “Letter Agreement”). The Letter Agreement provides, among other things, that Mr. Cobb will continue full-time employment with the Company through the Retirement Date, and that he will assist in the transition of his responsibilities during that time.
Mr. Cobb will receive the benefits to which he is entitled upon a retirement under the terms and conditions of his applicable plans and agreements, as described in the Company’s Definitive Proxy Statement filed on July 26, 2016. Under the terms of the Amended and Restated H&R Block Executive Performance Plan (the “STI Plan”), Mr. Cobb will receive a pro-rated annual short term incentive bonus for the Company’s 2018 fiscal year ending April 30, 2018. Any such short term incentive would be payable only if and to the extent that annual short term incentive bonuses are payable to other Company senior executive officers under the STI Plan, based on Company performance in fiscal year 2018 as determined by the Compensation Committee of the Board.
The foregoing summary of the Letter Agreement is qualified in its entirety by reference to the full text of the Letter Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
(c) On May 16, 2017, the Company announced that Thomas A. Gerke, 60, has been appointed as President and Chief Executive Officer (in an interim capacity), effective August 1, 2017, to serve on an interim basis until a permanent President and Chief Executive Officer is appointed. Mr. Gerke has been the Company’s General Counsel and Chief Administrative Officer since May 2016, prior to that serving as the Company’s Chief Legal Officer (formerly titled Senior Vice President and General Counsel) starting in January 2012. Mr. Gerke does not have any family relationships required to be disclosed pursuant to Item 401(d) of Regulation S-K, nor is he a party to any transaction, or series of transactions, required to be disclosed pursuant to Item 404(a) of Regulation S-K.
On May 15, 2017, the Compensation Committee of the Board approved changes to Mr. Gerke’s compensation in connection with his appointment as President and Chief Executive Officer (in an interim capacity). Pursuant to the letter filed as Exhibit 10.2 to this Form 8-K, Mr. Gerke will receive a base salary amount that would equal $950,000 annually, effective June 1, 2017 and continuing through the later of (i) the end of the effectiveness of his appointment as President and Chief Executive Officer (in an interim capacity) and (ii) December 1, 2017. The Company has also agreed that Mr. Gerke will remain employed with the Company until July 31, 2018, except in the event of a termination for Cause as such term is defined in the H&R Block, Inc. Executive Severance Plan.
Mr. Gerke will participate in the Company’s fiscal year 2018 STI Plan, with a target award value of $900,000. He will receive equity grants as a participant in the Company’s long term incentive program for fiscal year 2018, with a target award value of $2.5 million. The foregoing summary of the letter is qualified in its entirety by reference to the full text of the letter, a copy of which is filed as Exhibit 10.2 hereto and incorporated herein by reference.
On May 16, 2017, the Board also announced that it has formed a CEO Search Committee to oversee a search for a permanent President and Chief Executive Officer, which will consider both internal and external candidates.
A copy of the press release announcing the above-described changes is furnished as Exhibit 99.1 to this Current Report on Form 8-K.