Biz people

Ernst to get $2.6m severance

Former H&R Block Inc Chief Executive Mark Ernst (below), who oversaw the tax preparer's failed subprime lending strategy, will receive a cash severance of $2.55 million and full vesting on 762,925 stock options, the company disclosed on Monday.

H&R Block ousted Ernst last month as the No 1 US tax preparer suffered huge losses on subprime lending at its Option One Mortgage Corp unit. New management then shut down Option One when its sale to Cerberus Capital Management LP collapsed.

The move, along with cutting 620 jobs, will trigger about $200 million in charges and write-downs, the company said last month.

H&R Block shares fell 19.4 percent in 2007, leaving the value of stock options granted to Ernst in 2006 and 2007 underwater.

For example, he received 376,885 options in mid-2006 with an exercise price of $23.86, regulatory filings show.

His 2007 award of 425,000 options had an exercise price of $23.37.

H&R Block shares on Monday closed up 2.65 percent at $18.57. But Ernst's option awards in 2006 and 2007 don't expire until 2016 and 2017, respectively.

In addition to a lump-sum severance and options vesting, Ernst will receive health care coverage at the company's expense until December 2010, H&R Block said in a regulatory filing.

The company also said former Chief Financial Officer William Trubeck, who resigned in November, will receive a severance of $900,000.

Tycoon takes out massive loan

T. Ananda Krishnan (above), Malaysia's second-richest man, borrowed $1.2 billion to help fund the buyout of Maxis Communications Bhd, 20 percent less than the maximum sought, according to Lim Ghee Keong, group treasurer of an investment company controlled by the billionaire.

Binariang GSM Sdn, Krishnan's special purpose company, decided not to exercise an option to increase the loan to $1.5 billion after getting enough funds from a 12 billion ringgit ($3.6 billion) bond sale last month, Lim, the group treasurer of Usaha Tegas Sdn, said in a phone interview conducted yesterday.

Binariang hired six banks, instead of one or two as originally planned, to arrange the financing, Lim said.

(China Daily 01/03/2008 page17)