Set the plywood on a stable, relatively even area around your retaining wall.
Pull the tape measure along the retaining wall stone. Mark the cut length with soapstone.
Extend the soapstone line around the retaining wall block by dragging the soapstone along each side of the block. The line can wander, as you want a natural cut in the block.
Set the pointed tip of the masonry chisel on the soapstone line. Strike the back of the chisel with a 3-pound sledgehammer to score the retaining wall block. Turn the block on its side and score the side with the masonry chisel and the sledgehammer. Continue flipping and scoring the block until you have the perimeter of the block scored.
Place the scored retaining wall block on its bottom side. Set the tip of the masonry chisel on the scored line. Strike the chisel hard with the 3-pound sledgehammer. Move the chisel across the top of the retaining wall block and striking the chisel with the sledgehammer until the block splits along the score line.