Sunday, 28 August 2016
Last updated 1 day ago
Aug 1 2007 | 12:29pm ET
The battle between H&R Block and hedge fund Breeden Partners is now in the hands of the shareholders, and the tax preparation company is beseeching investors to keep a former Securities and Exchange Commission chairman off of its board of directors.
That former SEC chief, of course, is Richard Breeden, founder of the eponymous Greenwich, Conn.-based hedge fund engaged in a proxy battle with the Kansas City-based firm, pushing it to sell its year-old banking division. Breeden and two associates are seeking election to H&R Block’s board of directors.
In a letter to shareholders accompanying its proxy materials, H&R Block CEO Mark Ernst said Breeden offered no plan to boost shareholder value, other than selling the bank, which he called a key part of building its tax business.
“It is unfortunate that a dissident hedge fund, Breeden Partners, has chosen to launch a costly and distracting proxy contest,” Ernst wrote.
In regulatory filings, H&R Block said its strategy is the right one to improve returns, a sentiment echoed in Ernst’s letter. The CEO told shareholders to expect better things when it exits the sub-prime mortgage market: The firm agreed in April to sell its Option One Mortgage Corp. to hedge fund Cerberus Capital Management.
Last week, Breeden, who headed the SEC during George H.W. Bush’s presidency, said the proxy battle was not about dissidence.
“The issue in the pending proxy contest for the board at H&R Block Inc. are the company’s lagging performance, its poor return to stockholders compared to market averages during recent years and its future strategy for growth,” he said.