H&R Block, Inc.



 



Exhibit 10.2



H&R BLOCK, INC.






2003 LONG-TERM EXECUTIVE COMPENSATION PLAN

(As Approved by Shareholders on September 11, 2002)






     1.     Purposes. The purposes of this 2003 Long-Term Executive Compensation
Plan are to provide incentives and rewards to those employees largely
responsible for the success and growth of H&R Block, Inc. and its subsidiary
corporations, and to assist all such corporations in attracting and retaining
executives and other key employees with experience and ability.





     2.     Definitions.





     (a)  Award means one or more of the following: shares of Common Stock,
Restricted Shares, Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Performance Shares, Performance Units and any other rights which may be
granted to a Recipient under the Plan.





     (b)  Committee means the Compensation Committee described in Section 3.





     (c)  Common Stock means the Common Stock, without par value, of the
Company.





     (d)  Company means H&R Block, Inc., a Missouri corporation, and, unless the
context otherwise requires, includes its “subsidiary corporations” (as defined
in Section 424(f) of the Internal Revenue Code) and their respective divisions,
departments and subsidiaries and the respective divisions, departments and
subsidiaries of such subsidiaries.





     (e)  Incentive Stock Option means a Stock Option which meets all of the
requirements of an “incentive stock option” as defined in Section 422(b) of the
Internal Revenue Code.





     (f)  Internal Revenue Code means the Internal Revenue Code of 1986, as now
in effect or hereafter amended.





     (g)  Performance Period means that period of time specified by the
Committee during which a Recipient must satisfy any designated performance
goals in order to receive an Award.





     (h)  Performance Share means the right to receive, upon satisfying
designated performance goals within a Performance Period, shares of Common
Stock, cash, or a combination of cash and shares of Common Stock, based on the
market value of shares of Common Stock covered by such Performance Shares at
the close of the Performance Period.





     (i)  Performance Unit means the right to receive, upon satisfying
designated performance goals within a Performance Period, shares of Common
Stock, cash, or a combination of cash and shares of Common Stock.





     (j)  Plan means this 2003 Long-Term Executive Compensation Plan, as the
same may be amended from time to time.





     (k)  Recipient means an employee of the Company who has been granted an
Award under the Plan.





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     (l)  Restricted Share means a share of Common Stock issued to a Recipient
hereunder subject to such terms and conditions, including, without limitation,
forfeiture or resale to the Company, and to such restrictions against sale,
transfer or other disposition, as the Committee may determine at the time of
issuance.





     (m)  Stock Appreciation Right means the right to receive, upon exercise of
a stock appreciation right granted under this Plan, shares of Common Stock,
cash, or a combination of cash and shares of Common Stock, based on the
increase in the market value of the shares of Common Stock covered by such
stock appreciation right from the initial day of the Performance Period for
such stock appreciation right to the date of exercise.





     (n)  Stock Option means the right to purchase, upon exercise of a stock
option granted under this Plan, shares of the Company’s Common Stock.





     3.     Administration of the Plan. The Plan shall be administered by the
Committee which shall consist of directors of the Company, to be appointed by
and to serve at the pleasure of the Board of Directors of the Company. A
majority of the Committee members shall constitute a quorum and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee, shall be valid acts of
the Committee, however designated, or the Board of Directors of the Company if
the Board has not appointed a Committee.





     The Committee shall have full power and authority to construe, interpret
and administer the Plan and, subject to the powers herein specifically reserved
to the Board of Directors and subject to the other provisions of this Plan, to
make determinations which shall be final, conclusive and binding upon all
persons including, without limitation, the Company, the shareholders of the
Company, the Board of Directors, the Recipients and any persons having any
interest in any Awards which may be granted under the Plan. The Committee shall
impose such additional conditions upon the grant and exercise of Awards under
this Plan as may from time to time be deemed necessary or advisable, in the
opinion of counsel to the Company, to comply with applicable laws and
regulations. The Committee from time to time may adopt rules and regulations
for carrying out the Plan and written policies for implementation of the Plan.
Such policies may include, but need not be limited to, the type, size and terms
of Awards to be made to Recipients and the conditions for payment of such
Awards.





     4.     Absolute Discretion. The Committee may, in its sole and absolute
discretion (subject to the Committee’s power to delegate certain authority in
accordance with the second paragraph of this Section 4), at any time and from
time to time during the continuance of the Plan, (i) determine which employees
of the Company shall be granted Awards under the Plan, (ii) grant to any
employee so selected such an Award, (iii) determine the type, size and terms of
Awards to be granted (subject to Sections 6, 10 and 11 hereof), (iv) establish
objectives and conditions for receipt of Awards, (v) place conditions or
restrictions on the payment or exercise of Awards, and (vi) do all other things
necessary and proper to carry out the intentions of this Plan; provided,
however, that, in each and every case, those Awards which are Incentive Stock
Options shall contain and be subject to those requirements specified in Section
422 of the Internal Revenue Code and shall be granted only to those employees
eligible thereunder to receive the same.





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     The Committee may at any time and from time to time delegate to the Chief
Executive Officer of the Company authority to take any or all of the actions
that may be taken by the Committee as specified in this Section 4 or in other
sections of the Plan in connection with the determination of Recipients, types,
sizes, terms and conditions of Awards under the Plan and the grant of any such
Awards, provided that any authority so delegated (a) shall apply only to Awards
to employees of the Company that are not officers of Company under Regulation
Section 240.16a-1(f) promulgated pursuant to Section 16 of the Securities
Exchange Act of 1934, and (b) shall be exercised only in accordance with the
Plan and such rules, regulations, guidelines, and limitations as the Committee
shall prescribe.





     5.     Eligibility. Awards may be granted to any employee of the Company. No
member of the Committee (other than any ex officio member) shall be eligible
for grants of Awards under the Plan. An employee may be granted multiple forms
of Awards under the Plan. Incentive Stock Options may be granted under the Plan
to a Recipient during any calendar year only if the aggregate fair market value
(determined as of the date the Incentive Stock Option is granted) of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by such Recipient during any calendar year under the Plan and any
other “incentive stock option plans” (as defined in the Internal Revenue Code)
maintained by the Company does not exceed the sum of $100,000.





     6.     Stock Subject to the Plan. The total number of shares of Common Stock
issuable under this Plan may not at any time exceed 9,000,000 shares, subject
to adjustment as provided herein. All of such shares may be issued or issuable
in connection with the exercise of Incentive Stock Options. No more than an
aggregate of five percent (5%) of the total number of shares of Common Stock
issuable under this Plan may be issued or issuable in connection with Awards
that constitute Common Stock, Restricted Shares, Performance Shares and
Performance Units. Shares of Common Stock not actually issued pursuant to an
Award shall be available for future Awards. Shares of Common Stock to be
delivered or purchased under the Plan may be either authorized but unissued
Common Stock or treasury shares. The total number of shares of Common Stock
that may be subject to one or more Awards granted to any one Recipient during a
calendar year may not exceed 500,000, subject to adjustment as provided in
Section 16 of the Plan.





     7.     Awards.





     (a)  Awards under the Plan may include, but need not be limited to, shares
of Common Stock, Restricted Shares, Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Performance Shares and Performance Units. The amount
of each Award may be based upon the market value of a share of Common Stock.
The Committee may make any other type of Award which it shall determine is
consistent with the objectives and limitations of the Plan.





     (b)  The Committee may establish performance goals to be achieved within
such Performance Periods as may be selected by it using such measures of the
performance of the Company as it may select as a condition to the receipt of
any Award.





     8.     Vesting Requirements. The Committee may determine that all or a portion
of an Award or a payment to a Recipient pursuant to an Award, in any form
whatsoever, shall be vested at such times and upon such terms as may be
selected by it.





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     9.     Deferred Payments and Dividend and Interest Equivalents.





     (a)  The Committee may determine that the receipt of all or a portion of an
Award or a payment to a Recipient pursuant to an Award, in any form whatsoever,
shall be deferred. Deferrals shall be for such periods and upon such terms as
the Committee may determine.





     (b)  The Committee may provide, in its sole and absolute discretion, that a
Recipient to whom an Award is payable in whole or in part at a future time in
shares of Common Stock shall be entitled to receive an amount per share equal
in value to the cash dividends paid per share on issued and outstanding shares
as of the dividend record dates occurring during the period from the date of
the Award to the date of delivery of such share to the Recipient. The Committee
may also authorize, in its sole and absolute discretion, payment of an amount
which a Recipient would have received in interest on (i) any Award payable at a
future time in cash during the period from the date of the Award to the date of
payment, and (ii) any cash dividends paid on issued and outstanding shares as
of the dividend record dates occurring during the period from the date of an
Award to the date of delivery of shares pursuant to the Award. Any amounts
provided under this subsection shall be payable in such manner, at such time or
times, and subject to such terms and conditions as the Committee may determine
in its sole and absolute discretion.





     10.     Stock Option Price. The purchase price per share of Common Stock under
each Stock Option shall be determined by the Committee, but shall not be less
than market value (as determined by the Committee) of one share of Common Stock
on the date the Stock Option or Incentive Stock Option is granted. Payment for
exercise of any Stock Option granted hereunder shall be made (a) in cash, or
(b) by delivery of Common Stock having a market value equal to the aggregate
option price, or (c) by a combination of payment of cash and delivery of Common
Stock in amounts such that the amount of cash plus the market value of the
Common Stock equals the aggregate option price.





     11.     Stock Appreciation Right Value. The base value per share of Common
Stock covered by an Award in the form of a Stock Appreciation Right shall be
the market value of one share of Common Stock on the date the Award is granted.





     12.     Continuation of Employment. The Committee shall require that a
Recipient be an employee of the Company at the time an Award is paid or
exercised. The Committee may provide for the termination of an outstanding
Award if a Recipient ceases to be an employee of the Company and may establish
such other provisions with respect to the termination or disposition of an
Award on the death or retirement of a Recipient as it, in its sole discretion,
deems advisable. The Committee shall have the sole power to determine the date
of any circumstances which shall constitute a cessation of employment and to
determine whether such cessation is the result of retirement, death or any
other reason.





     13.     Registration of Stock. Each Award shall be subject to the requirement
that if at any time the Committee shall determine that qualification or
registration under any state or federal law of the shares of Common Stock,
Restricted Shares, Stock Options, Incentive Stock Options, or other securities
thereby covered or the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of or in connection with the granting
of such Award or the purchase of shares thereunder, the Award may not be paid
or exercised in whole or in part unless and until such qualification,
registration, consent or approval shall





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have been effected or obtained free of any conditions the Committee, in its
discretion, deems unacceptable.





     14.     Employment Status. No Award shall be construed as imposing upon the
Company the obligation to continue the employment of a Recipient. No employee
or other person shall have any claim or right to be granted an Award under the
Plan.





     15.     Assignability. No Award granted pursuant to the Plan shall be
transferable or assignable by the Recipient other than by will or the laws of
descent and distribution and during the lifetime of the Recipient shall be
exercisable or payable only by or to him or her.





     16.     Dilution or Other Adjustments. In the event of any changes in the
capital structure of the Company, including but not limited to a change
resulting from a stock dividend or split-up, or combination or reclassification
of shares, the Board of Directors shall make such equitable adjustments with
respect to Awards or any provisions of this Plan as it deems necessary and
appropriate, including, if necessary, any adjustment in the maximum number of
shares of Common Stock subject to the Plan, the maximum number of shares that
may be subject to one or more Awards granted to any one Recipient during a
calendar year, or the number of shares of Common Stock subject to an
outstanding Award.





     17.     Merger, Consolidation, Reorganization, Liquidation, Etc. If the
Company shall become a party to any corporate merger, consolidation, major
acquisition of property for stock, reorganization, or liquidation, the Board of
Directors shall make such arrangements it deems advisable with respect to
outstanding Awards, which shall be binding upon the Recipients of outstanding
Awards, including, but not limited to, the substitution of new Awards for any
Awards then outstanding, the assumption of any such Awards and the termination
of or payment for such Awards.





     18.     Withholding Taxes. The Company shall have the right to deduct from all
Awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such Awards and, with respect to
Awards paid in other than cash, to require the payment (through withholding
from the Recipient’s salary or otherwise) of any such taxes. Subject to such
conditions as the Committee may establish, Awards payable in shares of Common
Stock, or in the form of an Incentive Stock Option or Stock Option, may provide
that the Recipients thereof may elect, in accordance with any applicable
regulations, to satisfy all or any part of the tax required to be withheld by
the Company in connection with such Award, or the exercise of such Incentive
Stock Option or Stock Option, by electing to have the Company withhold a number
of shares of Common Stock awarded, or purchased pursuant to such exercise,
having a fair market value on the date the tax withholding is required to be
made equal to or less than the amount required to be withheld.





     19.     Costs and Expenses. The cost and expenses of administering the Plan
shall be borne by the Company and not charged to any Award or to any Recipient.





     20.     Funding of Plan. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under the Plan.





     21.     Award Contracts. The Committee shall have the power to specify the
form of Award contracts to be granted from time to time pursuant to and in
accordance with the





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provisions of the Plan and such contracts shall be final, conclusive and
binding upon the Company, the shareholders of the Company and the Recipients.
No Recipient shall have or acquire any rights under the Plan except such as are
evidenced by a duly executed contract in the form thus specified. No Recipient
shall have any rights as a holder of Common Stock with respect to Awards
hereunder unless and until certificates for shares of Common Stock or
Restricted Shares are issued to the Recipient.





     22.     Guidelines. The Board of Directors of the Company shall have the power
to provide guidelines for administration of the Plan by the Committee and to
make any changes in such guidelines as from time to time the Board deems
necessary.





     23.     Amendment and Discontinuance. The Board of Directors of the Company
shall have the right at any time during the continuance of the Plan to amend,
modify, supplement, suspend or terminate the Plan, provided that in the absence
of the approval of the holders of a majority of the shares of Common Stock of
the Company present in person or by proxy at a duly constituted meeting of
shareholders of the Company, no such amendment, modification or supplement
shall (i) increase the aggregate number of shares which may be issued under the
Plan, unless such increase is by reason of any change in capital structure
referred to in Section 16 hereof, (ii) change the termination date of the Plan
provided in Section 24, (iii) delete or amend the market value restrictions
contained in Sections 10 and 11 hereof, (iv) materially modify the requirements
as to eligibility for participation in the Plan, or (v) materially increase the
benefits accruing to participants under the Plan, and provided further, that no
amendment, modification or termination of the Plan shall in any manner affect
any Award of any kind theretofore granted under the Plan without the consent of
the Recipient of the Award, unless such amendment, modification or termination
is by reason of any change in capital structure referred to in Section 16
hereof or unless the same is by reason of the matters referred to in Section 17
hereof.





     24.     Termination. The Committee may grant Awards at any time prior to July
1, 2013, on which date this Plan will terminate except as to Awards then
outstanding hereunder, which Awards shall remain in effect until they have
expired according to their terms or until July 1, 2023, whichever first occurs.
No Incentive Stock Option shall be exercisable later than 10 years following
the date it is granted.





     25.     Approval. This Plan shall take effect July 1, 2003, contingent upon
prior approval by the shareholders of the Company.







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