In the midst of controversy over his strategy that pushed Block deeply into subprime mortgage lending, banking, accounting, and brokerage, Mark A. Ernst has resigned from his positions as Chairman, President, and CEO of Kansas City-based H&R Block.
In recent years, the company has been dogged by poor financial performance in some of those businesses, customer lawsuits over refund loans, marketing fraud charges from New York’s attorney general, and public embarrassment when Block had erred in its own tax filing, according to a report in the Kansas City Star.
Richard Breeden, former head of the Securities and Exchange Commission, will replace Ernst as Chairman. The company press release follows:
H&R Block Inc. has announced several management changes. Effective immediately:
Mark A. Ernst has resigned as Chairman, President and CEO. Mr. Ernst will remain with the Company as a consultant through year-end to facilitate the transition to new leadership.
Richard C. Breeden has been elected by the Board of Directors to fill the position of Chairman of the Board. Mr. Breeden will serve in a non-executive capacity, with a principal focus on external constituencies and leadership of the Board of Directors. Mr. Breeden is a former Chairman of the U.S. Securities and Exchange Commission, and he leads an investment fund that is a major investor in the Company.
Alan M. Bennett has been named interim CEO. Mr. Bennett retired earlier this year as Chief Financial Officer and a Member of the Office of the Chairman of Aetna Inc. Mr. Bennett has a background in public accounting and finance, as well as having had previous assignments in sales and marketing. Mr. Bennett will temporarily relocate to Kansas City and work full time at the Company during the search for a new CEO.
The Board has formed a search committee to recruit a new CEO on a permanent basis. Mr. Bennett has informed the search committee that he does not wish to be considered as a candidate for the new CEO search.
"For more than 50 years H&R Block has successfully served the tax-related needs of millions of Americans and thousands of businesses, as well as helped clients meet their financial objectives. Our actions today reflect a determination to focus on those activities where H&R Block can generate significant shareholder value," said Mr. Breeden. "H&R Block has long offered customers a combination of market-leading expertise, advice and quality products and services. By refocusing on our core strengths and market-leading capabilities, we will work to generate strong growth in shareholder value."
"The Board believes Alan Bennett’s experience and expertise make him the right person to step into the role of interim CEO. We are delighted to welcome him to H&R Block," added Mr. Breeden.
"In his years at H&R Block, Mark Ernst has worked tirelessly and with integrity to pursue the best interests of the Company and its shareholders," continued Mr. Breeden. "The Board of Directors and his colleagues are grateful to Mark for his many years of dedicated service. We wish him all the best in his future endeavors."
Mr. Ernst said, "I want to express my personal gratitude to my colleagues throughout H&R Block for your professionalism and dedication to serving the needs of our clients. It has been a pleasure to work with such a talented group of people. I am confident that H&R Block has great prospects for the coming tax season and for years to come."
Mr. Bennett was the CFO of Aetna for six years. Prior to serving as CFO, he held positions as Aetna’s Controller and head of Internal Audit, along with earlier experience in sales and marketing at other companies. Mr. Bennett currently serves as a director and chairman of the audit committee of Halliburton Co., and also as a director of The TJX Companies, Inc.
Mr. Breeden joined the Company’s Board in September 2007. Mr. Breeden served as Chairman of the U.S. Securities and Exchange Commission from 1989 to 1993. Since 1996 he has led his own firm that has advised companies and boards on capital markets issues, financial restructurings and corporate governance. Mr. Breeden has served on or advised numerous boards in the U.S. and Europe, and he currently leads an investment fund with approximately $1 billion in assets that is a major investor in H&R Block.