H&R Blocks board has appointed Alan M. Bennett as its new president and CEO after Russ Smyth resigned to become CEO of a large private company headquartered in his hometown of Chicago, according to Block.
The change of leadership occurred after a decline in tax season revenues this year (see Block Took Tax Season Hit in Fiscal 2010). Smyths resignation is the latest in a string of departures in the executive suite at the tax prep giant. Blocks CFO Becky Schulman also resigned in April, and legal counsel Brian Woram left a week ago.
The companys stock plunged Thursday morning following the announcement late Wednesday. Many investors are likely to conclude that Mr. Smyth has simply thrown in the towel after a roughly two-year stint in the CEO position, wrote Macquarie Research analyst Bill Carcache.
Theres nothing positive about Mr. Smyths departure, he added. Without him, we now quite frankly view H&R Block as an organization that may lack the drive, fierce competitiveness, and strong leadership necessary to outperform.
The replacement CEO, Bennett, served during 2007-2008 as the companys interim CEO, and since 2008 he has served on its board of directors.
The board of directors is enthusiastic about Alans agreement to serve as chief executive officer of H&R Block, said Block chairman Richard C. Breeden in a statement. Alans previous tenure as interim CEO was extremely successful, and demonstrated his executive and leadership skills. As a board member, he has been an active participant in the oversight of the company and its strategic direction. We have complete confidence in his ability to do an outstanding job as chief executive officer, to build an outstanding management team, and to lead the company effectively. The company is in a very strong financial position today, but we recognize the need to accelerate efforts to create value for our shareholders.
Russ Smyth has strong and deep family roots in Chicago, added Breeden. We appreciate that the opportunity to return to his hometown to lead a major private company is something he believes is a unique opportunity. In addition to his fine personal qualities, Russ made many positive contributions to the company during his tenure, including launching a series of long-term initiatives to enhance the overall quality of the client experience. We wish Russ every success in his new company.
I am honored to have been chosen to lead this extraordinary company, said Bennett in a statement. The national economic environment has presented its share of challenges, but as a company we have weathered that storm and shown great resilience. I know this company well, and I am confident that everyone at H&R Block shares a commitment to improving our business and financial performance so we can meet our key objective of delivering value to shareholders. I believe we have many opportunities to improve the business and enhance its value, and that job begins immediately.
Bennett was recruited to H&R Block by the newly installed board in 2007. He served as interim CEO from Nov.20, 2007, until Aug.1, 2008. During his tenure, the company closed its subprime mortgage origination business, sold its mortgage servicing operations and its financial advisory business, and acquired a major tax franchise in the Southwestern United States. Bennett also carried out a significant round of cost reductions as the company realigned from a holding company structure to an operating company.
Upon completion of his tenure as interim CEO, Bennett was elected to the H&R Block board, where he has served on both the audit and finance committees. Bennett has extensive experience in public accounting and finance. He was the CFO of insurance giant Aetna for six years prior to retiring in 2007. Prior to serving as CFO, he held positions as Aetnas controller and head of internal audit. Earlier in his career, he headed sales and marketing at Pirelli Tire Co. Bennett currently serves as a director and chairman of the audit committee of Halliburton Co., and also as a director of The TJX Cos. Inc.
I have greatly enjoyed my tenure at H&R Block, and I am proud of what the company has accomplished over the past two years during a particularly difficult economic time, said Smyth in a statement. While there is still much work to do, I believe H&R Block has a very bright future. I will miss this great company and the thousands of associates and franchisees I have had the pleasure to work with over the last two years. I will also miss my colleagues on the board and management teams, for whom I have the highest level of respect.
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