SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
[X]
|
|
Filed by a Party other than
the Registrant [ ]
|
|
|
|
|
|
Check the appropriate
box:
|
|
|
[ ]
|
|
Preliminary Proxy
Statement
|
[ ]
|
Soliciting Material Under Rule
14a-12
|
[ ]
|
|
Confidential, For Use of
the
Commission Only (as permitted
by Rule 14a-6(e)(2))
|
|
|
[X]
|
|
Definitive Proxy
Statement
|
|
[ ]
|
|
Definitive Additional
Materials
|
|
|
CAPITAL ONE FINANCIAL CORPORATION
|
|
|
(Name of Registrant as
Specified In Its Charter)
|
|
|
|
|
|
|
|
|
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
|
|
Payment of Filing Fee (Check
the appropriate box):
|
[X]
|
|
No fee required.
|
[
]
|
|
Fee computed on
table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
|
|
|
1)
|
|
Title of each class of
securities to which transaction applies:
|
|
|
|
|
|
|
|
2)
|
|
Aggregate number of
securities to which transaction applies:
|
|
|
|
|
|
|
|
3)
|
|
Per unit price or
other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
|
|
|
|
|
|
|
|
4)
|
|
Proposed maximum
aggregate value of transaction:
|
|
|
|
|
|
|
|
5)
|
|
Total fee
paid:
|
|
|
|
|
|
[
]
|
|
Fee paid previously
with preliminary materials:
|
[
]
|
|
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
|
|
|
1)
|
|
Amount previously
paid:
|
|
|
|
|
|
|
|
2)
|
|
Form, Schedule or Registration
Statement No.:
|
|
|
|
|
|
|
|
3)
|
|
Filing Party:
|
|
|
|
|
|
|
|
4)
|
|
Date Filed:
|
|
|
|
|
|
NOTICE OF CAPITAL ONE FINANCIAL
CORPORATIONS
2012 ANNUAL STOCKHOLDER MEETING
Important Notice Regarding the
Availability of Proxy Materials for
The Stockholder Meeting To Be Held On May
8, 2012
The Proxy Statement and Annual Report
to Stockholders are available at
www.proxyvote.com
The Annual Stockholder Meeting of Capital
One Financial Corporation (Capital One or the Company) will be held at
Capital Ones headquarters, 1680 Capital One Drive, McLean, Virginia 22102, on
May 8, 2012, at 10:00 a.m.
As a stockholder you will be asked
to:
1.
|
|
Elect Richard D. Fairbank, Peter
E. Raskind and Bradford H. Warner as directors of Capital
One;
|
|
2.
|
|
Ratify the Audit and Risk
Committees selection of Ernst & Young LLP as independent auditors of
Capital One for 2012;
|
|
3.
|
|
Approve, on a non-binding
advisory basis, Capital Ones 2011 Named Executive Officer
compensation;
|
|
4.
|
|
Approve and adopt Capital Ones
Amended and Restated Associate Stock Purchase Plan; and
|
|
5.
|
|
Transact such other business as
may properly come before the meeting.
|
You may vote if you held shares of Capital
One common stock as of the close of business on March 13, 2012.
Your vote is important. You may vote your
shares in person at the Annual Stockholder Meeting, via the Internet, by
telephone or by mail. Please refer to the section How do I vote? for detailed
voting instructions. If you choose to vote in person at the Annual Stockholder
Meeting, via the Internet or by telephone, you do not need to mail in a proxy
card.
Due to space limitations, attendance is
limited to stockholders and one guest each. Admission to the meeting is on a
first-come, first-served basis. Registration begins at 9:00 a.m. A valid picture
identification and proof of stock ownership as of the record date must be
presented in order to attend the meeting. If you hold Capital One stock through
a broker, bank, trust or other nominee, you must bring a copy of a statement
reflecting your stock ownership as of the record date. If you plan to attend as
the proxy of a stockholder, you must present a legal proxy (described below).
Cameras, recording devices and other electronic devices are not
permitted.
We look forward to seeing you at the
meeting.
On behalf of the Board of
Directors,
John G. Finneran, Jr.
Corporate
Secretary
Capital One Financial
Corporation
1680 Capital One Drive
McLean, VA 22102
March 23, 2012
SECTION I ABOUT THIS PROXY
STATEMENT
|
|
1
|
SECTION II GOVERNANCE OF CAPITAL
ONE
|
|
6
|
SECTION III SECURITY
OWNERSHIP
|
|
23
|
SECTION IV DIRECTOR
COMPENSATION
|
|
27
|
SECTION V COMPENSATION DISCUSSION AND
ANALYSIS
|
|
30
|
SECTION VI NAMED EXECUTIVE OFFICER
COMPENSATION
|
|
51
|
SECTION VII EQUITY COMPENSATION
PLANS
|
|
70
|
SECTION VIII COMPENSATION COMMITTEE
REPORT
|
|
73
|
SECTION IX AUDIT AND RISK COMMITTEE
REPORT
|
|
74
|
SECTION X ELECTION OF DIRECTORS (ITEM
1 ON PROXY CARD)
|
|
75
|
SECTION XI RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
(ITEM 2 ON PROXY CARD)
|
|
76
|
SECTION XII ADVISORY APPROVAL OF
CAPITAL ONES 2011 NAMED EXECUTIVE
OFFICER COMPENSATION (ITEM 3 ON
PROXY CARD)
|
|
77
|
SECTION XIII APPROVAL AND ADOPTION OF
CAPITAL ONES AMENDED
AND RESTATED ASSOCIATE STOCK PURCHASE PLAN (ITEM
4 ON PROXY CARD)
|
|
78
|
SECTION XIV OTHER BUSINESS
|
|
80
|
APPENDIX A AMENDED AND RESTATED
CAPITAL ONE FINANCIAL CORPORATION 2002
ASSOCIATE STOCK PURCHASE
PLAN
|
|
A-1
|
SECTION I ABOUT
THIS PROXY STATEMENT
|
Why did I receive a
Notice Regarding the Internet Availability of Proxy
Materials?
|
In accordance with rules of the Securities
and Exchange Commission (SEC), instead of mailing printed copies of our proxy
materials, we are furnishing the proxy materials to our stockholders via the
Internet. This process will save the Company the cost of printing and mailing
documents and will reduce the impact of our annual stockholder meetings on the
environment. Accordingly, on or about March 23, 2012, we mailed to our
stockholders a Notice Regarding the Internet Availability of Proxy Materials
(the Notice). If you received a Notice, you will not receive a printed copy of
the proxy materials unless you request one. The Notice provides instructions on
how to access the proxy materials for Capital Ones 2012 Annual Stockholder
Meeting (the Annual Meeting) via the Internet, how to request a printed set of
proxy materials and how to vote your shares.
What is the purpose
of the proxy materials?
|
The Board of Directors of Capital One is
providing you these materials in connection with the solicitation by Capital
Ones Board of Directors of proxies to be voted at the Annual Meeting. All
stockholders who held shares as of the close of business on March 13, 2012 (the
record date), are entitled to attend the Annual Meeting and to vote on the
items of business outlined in this proxy statement. If you choose not to attend
the Annual Meeting, you may vote your shares via the Internet, by telephone or
by mail.
How do I access the
proxy materials?
|
The Notice provides instructions regarding
how to view our proxy materials for the Annual Meeting online. As explained in
greater detail in the Notice, to view the proxy materials and vote, you will
need to visit
www.proxyvote.com
and have available your 12-digit control
number(s) contained on your Notice.
How do I request
paper copies of the proxy materials?
|
You may request paper copies of the 2012
proxy materials by following the instructions listed at
www.proxyvote.com
, by telephoning 1-800-579-1639 or by sending an e-mail
to
sendmaterial@proxyvote.com
.
What is the
difference between a record holder and a holder of shares in street
name?
|
You are a record holder if you hold shares
of Capital One common stock directly in your name through Capital Ones transfer
agent, Computershare Trust Company, N.A. (Computershare), as a stockholder of
record.
If you hold shares of Capital One common
stock through a broker, bank, trust or other nominee, then you are a holder of
shares in street name. As a result, you must instruct the broker, bank, trust or
other nominee about how to vote your shares. Under the rules of the New York
Stock Exchange (NYSE), if you do not provide such instructions, the firm that
holds your shares will have discretionary authority to vote your shares with
respect to routine matters, as described below.
Can I attend the
Annual Meeting?
|
If you held shares of Capital One common
stock as of the close of business on March 13, 2012, you may attend the Annual
Meeting. Because seating is limited, only you and a guest may attend the
meeting. Admission to the meeting is on a first-come, first-served basis.
Registration begins at 9:00 a.m. You must present a valid picture identification
and proof of Capital One stock ownership as of the record date. If you hold
Capital One stock in street name, you must also bring a copy of a brokerage
statement reflecting your stock ownership as of the record date. If you plan to
attend as the proxy of a stockholder, you must present a legal proxy (described
below). Cameras, recording devices and other electronic devices are not
permitted at the meeting.
1
You are entitled to vote if you were the
record holder of shares of Capital One common stock as of the close of business
on March 13, 2012. All stockholders of record are entitled to one vote per share
of common stock held for each matter submitted for a vote at the
meeting.
If you hold your shares of Capital One
common stock in street name, you may instruct your broker regarding voting your
shares using the same methods described below under How do I vote?
On March 13, 2012, there were 555,629,222
shares of Capital Ones common stock issued and outstanding.
By Internet
You may vote via the Internet by going to
www.proxyvote.com
and following the instructions on the screen. Have your
Notice or proxy card available when you access the web page.
By Telephone
You may vote by telephone by calling the
toll-free telephone number on your Notice or proxy card
(1-800-690-6903), which is available 24 hours a day, and following the
prerecorded instructions. Have your Notice or proxy card available when you
call. If you hold your shares in street name, your broker, bank, trustee or
other nominee may provide additional instructions to you regarding voting your
shares by telephone.
By Mail
If you received your proxy materials by
mail, you may vote by mail by marking the enclosed proxy card, dating and
signing it, and returning it in the postage-paid envelope provided, or returning
it to Capital One Financial Corporation, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
Time for Voting Your Shares By
Internet, By Telephone or By Mail
You may vote via the Internet or by
telephone up until 11:59 PM Eastern Daylight Time on May 7, 2012. If you vote by
mail, your proxy card must be received by May 7, 2012.
In Person
If you are a record holder of shares of
Capital One common stock, you may vote in person at the Annual Meeting. A valid
picture identification and proof of stock ownership as of the record date must
be presented in order to attend the meeting. Stockholders of record also may be
represented by another person at the Annual Meeting by executing a legal proxy
designating that person. See Can I attend the Annual Meeting? above for more
information regarding attending the Annual Meeting.
If you hold your shares of Capital One
common stock in street name, you must bring a copy of a statement reflecting
your stock ownership as of the record date in order to attend the meeting. You
must also obtain a legal proxy from your broker, bank, trust or other nominee
and present it to the inspector of elections with your ballot to be able to vote
at the Annual Meeting. To request a legal proxy, please follow the instructions
at
www.proxyvote.com
.
What if I hold my shares in street name
and I do not provide my broker, bank, trustee or other nominee with instructions
about how to vote my shares?
You may instruct your broker, bank,
trustee or other nominee on how to vote your shares using the methods described
above. If you do not give voting instructions to the firm that holds your shares
prior to the Annual Meeting, the firm has discretion to vote your shares only
with respect to Item 2 on the proxy card, which is considered a routine
matter. The election of members of the Board of Directors is not considered a
routine matter, and the firm that holds your shares will not have
discretionary authority to vote your shares for Item 1
2
if you do not provide instructions using
one of the methods described above. Therefore, you are encouraged to participate
in electing directors by returning voting instructions. Likewise, the firm that
holds your shares does not have discretionary authority to vote your shares with
respect to Items 3 and 4.
How do I vote my 401(k)
shares?
|
If you participate in the Capital One
Associate Savings Plan, you may vote the number of shares equivalent to your
interest in the Capital One Pooled Stock Fund as credited to your account on the
record date. You will receive instructions on how to vote your shares via e-mail
from Broadridge. The trustee of the Associate Savings Plan will vote your shares
in accordance with your duly executed instructions if they are received by May
2, 2012. If you do not send instructions, the trustee will not vote the share
equivalents credited to your account.
Can I revoke my proxy or change my
vote?
|
Yes, you may revoke any proxy that you
previously granted or change your vote by:
-
submitting another timely vote via the Internet,
by telephone or by mailing a new proxy;
-
if you are a record holder, giving written notice
of revocation to the Corporate Secretary, Capital One
Financial Corporation, 1680 Capital One Drive, McLean, VA 22102;
or
-
attending the Annual Meeting and voting in
person.
Your new vote or revocation must be
submitted in accordance with the timeframes above under Time for Voting Your
Shares By Internet, By Telephone or By Mail.
What constitutes a
quorum?
|
A quorum of stockholders is necessary to
transact business at the Annual Meeting. A quorum exists if the holders of a
majority of the voting power of Capital Ones outstanding shares entitled to
vote generally in the election of directors are present in person or represented
by proxy. Abstentions and broker non-votes will be counted in determining if
there is a quorum, but neither will be counted as votes cast.
What is a broker
non-vote?
|
As described above, under NYSE rules, if
you hold your shares in street name and you do not submit voting instructions to
the firm that holds your shares, the firm has discretionary authority to vote
your shares only with respect to routine matters. For non-routine matters,
which include the election of directors and matters relating to executive
compensation, if you do not submit voting instructions, the firm that holds your
shares will not have discretion to vote your shares. This is called a broker
non-vote.
Votes will be tabulated by Broadridge. The
Board of Directors has appointed a representative of American Elections
Services, LLC to serve as the Inspector of Elections.
Will a list of stockholders be made
available?
|
Capital One will make a list of
stockholders available at the Annual Meeting and for ten days prior to the
meeting, at our offices located at 1680 Capital One Drive in McLean, Virginia.
Please contact Capital Ones Corporate Secretary at (703) 720-1000 if you wish
to inspect the stockholders list prior to the Annual Meeting.
3
How much did the
solicitation cost?
|
Capital One will pay the costs of the
solicitation. We have retained Innisfree M&A Incorporated to assist us in
the solicitation of proxies for an aggregate fee of $15,000, plus reasonable
out-of-pocket expenses. In addition to Capital One soliciting proxies via the
Internet, by telephone and by mail, our directors, officers and employees may
solicit proxies on our behalf, without additional compensation.
Under SEC rules, a single package of
Notices may be sent to any household at which two or more stockholders reside if
they appear to be members of the same family unless contrary instructions have
been received. Each stockholder continues to receive a separate Notice within
the package. This procedure, referred to as householding, reduces the volume of
duplicate materials stockholders receive and reduces mailing expenses.
Stockholders may revoke their consent to future householding mailings or enroll
in householding by contacting Broadridge toll free at 1-800-542-1061, or by
writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY
11717. Stockholders who wish to receive a separate set of proxy materials now
should contact Broadridge at the same phone number or mailing
address.
What are the Board
of Directors recommendations?
|
If you properly submit a proxy without
giving specific voting instructions, the individuals named as proxy holders will
vote in accordance with the recommendations of the Board of Directors as
follows:
FOR
the election of Richard D. Fairbank, Peter E. Raskind and Bradford H. Warner, as
directors of Capital One (see page 75);
FOR
the ratification of the Audit and Risk Committees selection of Ernst &
Young LLP as independent auditors of the Company for 2012 (see page
76);
FOR
the advisory approval of Capital Ones 2011 Named Executive Officer compensation
(see page 77); and
FOR
the approval and adoption of Capital Ones Amended and Restated Associate Stock
Purchase Plan (see page 78).
The Board of Directors is not aware of any
other matter that will be presented at the Annual Meeting. If any other matter
is properly presented at the Annual Meeting, the persons named on the
accompanying proxy card will, in the absence of stockholder instructions to the
contrary, vote such proxy at their discretion.
What vote is
necessary to approve each item?
|
All stockholders of record are entitled to
one vote per share of common stock held for each nominee for director and for
each other matter presented for a vote at the meeting.
Item 1
requests your vote for the election of three candidates for director.
Richard D. Fairbank, Peter E. Raskind and Bradford H. Warner will each be
elected as a director of Capital One if a majority of the votes cast in his
election is voted in favor of such election. Capital One also maintains a
majority voting policy, which requires that any director who fails to receive
a majority of votes cast in favor of his or her election tender a resignation
for the Boards consideration. Cumulative voting for the election of directors
is not permitted. For more information regarding Capital Ones director
nomination process see page 15.
Item 2
, the ratification of the Audit and Risk Committees selection of Ernst
& Young LLP as independent auditors of the Company for 2012, will be
approved if a majority of the votes cast on the proposal are voted in favor of
the proposal.
Item 3
, the advisory approval of Capital Ones 2011 Named Executive Officer
compensation, will be approved if a majority of the votes cast on the proposal
are voted in favor of the proposal.
4
Item 4,
the approval and adoption of Capital Ones Amended and Restated Associate
Stock Purchase Plan, will be approved if a majority of the votes cast on the
proposal are voted in favor of the proposal. In addition, NYSE rules require
that the total votes cast represent over 50% of all shares entitled to vote on
the proposal.
As described under How do I vote? on
page 2, under NYSE rules, if you hold your shares in street name and you do not
submit voting instructions to the broker, bank, trust or other nominee that
holds your shares, the firm will have discretionary authority to vote your
shares with respect to Item 2 only. If you do not submit voting instructions,
the firm that holds your shares will not have discretion to vote your shares
with respect to Items 1, 3 and 4. Abstentions and broker non-votes are not
considered votes cast and thus do not have an effect on the outcome of the
vote as to Items 1, 2, 3 or 4.
5
SECTION II
GOVERNANCE OF CAPITAL ONE
|
Capital One is committed to strong
corporate governance. Our governance practices not only comply with applicable
laws, rules and regulations, including the Sarbanes-Oxley Act of 2002 and NYSE
listing standards, but they also incorporate key components of Capital Ones
established controls and governance program. The Board of Directors believes
that these practices are important to the future success and growth of Capital
One.
Corporate
Governance Principles
|
We believe that sound corporate governance
creates a foundation for the ethical and effective functioning of the Board of
Directors, its Committees and Capital One as a whole. It is also critical to
preserving the trust of our stakeholders, including stockholders, associates,
customers, suppliers, governmental entities and the general public.
The Board of Directors has adopted
Corporate Governance Principles to formalize the Boards governance practices
and its view of effective governance. The Board of Directors receives regular
updates on external governance developments and practices and reviews the
Corporate Governance Principles periodically to see that Capital One continues
to implement effective governance practices. Capital Ones Corporate Governance
Principles are available free of charge on the corporate governance page of
Capital Ones Internet site at
www.capitalone.com
under
Investors.
Code of Business
Conduct and Ethics
|
Capital One is committed to honesty, fair
dealing and integrity. This can only be achieved if the Board of Directors and
all associates conduct their business affairs with the utmost integrity and
ethical commitment. The Board of Directors has therefore adopted the Capital One
Code of Business Conduct and Ethics (the Code of Conduct), which applies to
all Capital One directors and associates, including Capital Ones Chief
Executive Officer, Chief Financial Officer, Principal Accounting Officer and
other persons performing similar functions. The purpose of the Code of Conduct
is to guide ethical actions and working relationships by Capital Ones
directors, officers and associates with investors, current and potential
customers, fellow associates, competitors, governmental entities, the media and
other third parties with whom Capital One has contact.
The Code of Conduct, as amended from time
to time, is available free of charge on the corporate governance page of Capital
Ones Internet site at
www.capitalone.com
under Investors. Capital One
will disclose on its website any amendment to the Code of Conduct or any waiver
under the Code of Conduct granted to any of its directors or executive
officers.
Composition and
Meetings of the Board of Directors
|
The Board of Directors oversees Capital
Ones business and directs its management. The Board of Directors does not
involve itself with the day-to-day operations and implementation of Capital
Ones business. Instead, the Board of Directors meets periodically with
management to review Capital Ones performance, risks and business strategy.
Directors also regularly consult with management outside of formal meetings to
keep themselves informed about Capital Ones progress. The Board of Directors
met fourteen times during 2011. Each incumbent director attended at least 75% of
the aggregate of the meetings of the Board of Directors and the committees on
which the director served during the year. The independent directors meet in
executive session (without the presence of management) on a regularly scheduled
basis, at least three times each year and at least annually to conduct the Chief
Executive Officers evaluation.
6
Capital One expects all of its directors
to attend the Annual Meeting. In 2011, all directors then serving attended the
Annual Meeting.
Leadership Structure of the Board of
Directors
Capital One is led by Mr. Richard
Fairbank, who has served as Chief Executive Officer of Capital One since July
26, 1994, and as Chairman of the Board of Directors of Capital One since
February 28, 1995. Capital Ones Board of Directors is comprised of Mr. Fairbank
and nine independent directors. The Corporate Governance Principles provide for
a Lead Independent Director (the Lead Director), to be appointed by the Board
of Directors, who aids and assists the Chairman and the remainder of the Board
in assuring effective governance in managing the affairs of the Board and
Capital One. The Lead Director is currently Ms. Hackett.
In addition to other
duties more fully described in the Corporate Governance Principles, the Lead
Director:
-
presides at all executive sessions of the Board of
Directors;
-
presides at all meetings of the Board at which the
Chairman is not present;
-
serves as a liaison between the Chairman and the
independent directors regarding views, concerns
and issues of the independent directors;
-
approves matters and issues for inclusion on the
Boards meeting agendas;
-
works with the Chairman of the Board and Committee
chairs to ensure that agendas allow for
sufficient time for discussion;
-
has the authority to call meetings of the
independent directors; and
-
leads the annual Chief Executive Officer
performance assessment and facilitates
succession planning.
The Board of Directors has four standing
Committees: Audit and Risk; Compensation; Governance and Nominating; and Finance
and Trust Oversight. Each of these committees is composed of independent
directors and has a separate independent chair. Detailed information on each
Committee is contained below under Committees of the Board of
Directors.
We believe that a combined Chairman of the
Board of Directors and Chief Executive Officer position, together with an
independent Lead Director, independent Board committees each with an independent
chair and regularly-scheduled executive sessions of the Board and independent
directors, is the most appropriate Board leadership structure for Capital One at
this time. This structure demonstrates for our associates, customers,
stockholders, investors, regulators and other stakeholders that Capital Ones
Board of Directors is committed to engaged, independent leadership and
performance of its responsibilities. Experienced and independent directors,
sitting on various committees with independent chairs, oversee the Companys
operations, risks, performance and business strategy, and have appointed the
Lead Director with the duties described above. The Board of Directors believes
that combining the Chairman and Chief Executive Officer positions takes
advantage of the talent and knowledge of Mr. Fairbank as the founder of Capital
One and effectively combines the responsibilities for strategy development and
execution with management of day-to-day operations. It also reduces the
potential for confusion or duplication of efforts and provides clear leadership
for Capital One. The Board of Directors believes that the combination of the
Chairman and the Chief Executive Officer roles, together with its strong
governance practices, including its supermajority of independent directors and
its clearly defined Lead Director responsibilities, provide an appropriate
balance among strategy development, operational execution and independent
oversight of Capital One.
Boards Role in Risk
Oversight
The Board of Directors believes that
effective risk management and control processes are critical to Capital Ones
safety and soundness, our ability to predict and manage the challenges that
Capital One and the financial services industry face and, ultimately, Capital
Ones long-term corporate success. Management is responsible for implementing
Capital Ones risk assessment and management functions and for reporting to the
Board of Directors on its processes and assessments with respect to the
management of risk. The Board of Directors, in
7
turn, both directly and through its
committees, is responsible for overseeing managements risk functions. We
evaluate risks in terms of eight risk categories: strategic, compliance,
operational, reputational, legal, credit, market and liquidity. Capital Ones
Enterprise Risk Management policy, approved by the Board of Directors,
summarizes Capital Ones risk appetite for each risk category and its governance
of the amount of risk the Company takes.
The Audit and Risk Committee monitors the
processes by which management assesses and manages risk in the eight risk
categories identified above, as set forth in its charter. In addition, the
Finance and Trust Oversight Committee oversees the guidelines and policies that
govern the process by which the Company assesses and manages market and
liquidity risks. The Compensation Committee assesses the risks that Capital
Ones overall compensation goals and objectives, as well as its senior
executive, corporate incentive and other material incentive compensation
programs, may pose.
The Chief Risk Officer, Chief Financial
Officer, Chief Internal Auditor, Chief Compliance Officer, Chief Credit Review
Officer and General Counsel each meet with, or provide reports to, Capital Ones
Audit and Risk Committee at least once per quarter as well as separately with
the Committee throughout the year on a periodic basis without other members of
management present. The Chief Risk Officer also meets at least once per quarter
with the Audit and Risk Committee and the full Board of Directors, and
periodically with the Chair of the Audit and Risk Committee, the full Board or
individual members of the Board, as appropriate, to review the Companys
enterprise risk profile, credit risk or other risk topics. In addition, the
Chief Financial Officer meets at least quarterly with the Audit and Risk
Committee, the Finance and Trust Oversight Committee or the full Board of
Directors to discuss Capital Ones market risk, liquidity risk, financial
results and financial forecasts. Throughout the year, strategic presentations
and line of business updates to the Board of Directors or its Committees
typically include reports on risk management.
Corporate Audit Services provides
independent and objective assurance services and advice and counsel regarding
risk management and control practices to provide that risk management, internal
controls and governance systems are adequate and functioning on a consistent and
reliable basis. The Chief Internal Auditor reports organizationally to the Audit
and Risk Committee of the Board of Directors, which has the authority to hire
and compensate the Chief Internal Auditor and to terminate his or her
employment.
Risk Assessment of Compensation
Policies and Practices
The Compensation Committee actively
oversees all of our compensation policies and practices, including our incentive
compensation policies and practices, to monitor that they do not encourage
inappropriate risk-taking, are compatible with effective controls and risk
management and align with our business strategy. Throughout 2011, the Company
continued to participate in the horizontal review of incentive compensation
practices that the Federal Reserve Board began in 2010 with respect to the
incentive compensation practices at 25 large banking organizations. The purpose
of the review has been to assess the incentive compensation practices at these
organizations and their compliance with the interagency guidance on sound
incentive compensation practices issued by the Federal Reserve Board and other
bank regulators in June 2010. We believe that the Compensation Committees
active oversight, together with the Companys interactions and discussions with
its regulators, has further enhanced the Companys risk management and control
processes with respect to incentive compensation at the Company. In January
2012, the Compensation Committee adopted an Incentive Compensation Governance
Policy applicable to all Company employees that governs incentive compensation
decisions and provides the framework for oversight of the design of incentive
compensation programs. In the context of setting executive compensation, the
Compensation Committee assessed each of the named executive officers against one
or more performance objectives specifically designed to evaluate the degree to
which the executive balanced risks inherent in his or her role and also
implemented additional risk-balancing features for certain equity awards, as
described in more detail in the Compensation Discussion and Analysis on page
30.
The Compensation Committee annually
reviews and approves the overall goals and purposes of the Companys corporate
incentive program, the named executive officer and other senior executive
compensation programs and any other material incentive compensation programs.
During the course of these reviews,
8
the Compensation Committee discusses the
Companys most significant risks, including the Companys status with respect to
managing those risks and the relationship of those risks to applicable
compensation programs. The review includes discussion and analysis of
risk-balancing features embedded in these incentive compensation programs and
other actions taken by the Company designed to achieve conformance with
regulatory guidance and appropriately balance risk. The Compensation Committee
also discusses these programs with the Companys Chief Risk Officer, Chief Human
Resources Officer and the Compensation Committees independent compensation
consultant, as appropriate. Based on these discussions, the Compensation
Committee believes that these compensation programs are consistent with safety
and soundness and operate in a manner that appropriately balances
risk.
The Board of Directors has assessed
whether each of its non-management members is independent under Capital Ones
Director Independence Standards. These standards, which have been adopted by the
Board of Directors as part of Capital Ones Corporate Governance Principles,
reflect, among other things, the director independence requirements set forth in
the listing standards of the NYSE and other applicable legal and regulatory
rules, and describe certain relationships that the Board has determined to be
immaterial for purposes of determining director independence. As noted above,
Capital Ones Corporate Governance Principles, including the Director
Independence Standards, are available on the corporate governance page of
Capital Ones Internet site at
www.capitalone.com
under Investors. The
Board of Directors has determined that each of Mr. Campbell, Mr. Dietz, Mr.
Gross, Ms. Hackett, Mr. Hay, Mr. Leroy, Mr. Raskind, Mr. Shattuck and Mr. Warner
are independent under these standards. When determining Mr. Leroys
independence, the Board considered his association with a private company that
has a minority, unconsolidated interest in another private company from which
the Company purchased less than $1 million in products in the ordinary course of
business during 2011.
Related Person
Transactions
|
Capital Ones policies and procedures for
the review, approval or ratification of related person transactions are set
forth in the Charter of the Governance and Nominating Committee, Capital Ones
Code of Conduct and internal written procedures. The Charter of the Governance
and Nominating Committee requires the Committee to review on an annual basis any
transactions involving Capital One and any of its directors, executive officers
or their immediate family members and, as appropriate, to consider potential
conflicts of interest or the appearance of potential conflicts of interest, as
well as issues relating to director independence. The Governance and Nominating
Committee performs this review each year based on the information provided by
each director and executive officer on an annual questionnaire and through a
review of Capital Ones internal systems for payments or other transactions that
could indicate the presence of a related person transaction. In developing its
assessment and recommendation regarding related person transactions to the Board
of Directors, the Governance and Nominating Committee relies upon criteria set
forth in the Code of Conduct to evaluate activities or relationships that may
create a conflict of interest, including potential related person transactions.
In addition to specific prohibitions, these criteria include the extent to which
the proposed relationship would be legal, authorized and permitted (or
prohibited) by Capital One policies, as well as the potential perspective of
third parties regarding such relationships.
From time to time in the ordinary course
of its business, Capital One issues loans to directors, executive officers
and/or nominees for director, or to a directors, executive officers or
director nominees immediate family member, including persons sharing the
household of such director, executive officer or director nominee (other than a
tenant or employee). Such loans are made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable loans with persons not related to the Company and do not involve more
than the normal risk of collectability or present other unfavorable
features.
9
Internal written procedures require that
any potential conflict of interest, including related person transactions
involving any of Capital Ones directors or executive officers, be reviewed by
the General Counsel (in the case of a director) and by either the General
Counsel or Chief Human Resources Officer (in the case of an executive officer).
If the reviewer believes that such relationship could create a conflict of
interest or require disclosure as a related person transaction, a second review
is conducted by the disinterested members of the Governance and Nominating
Committee and, ultimately, by the disinterested members of the Board of
Directors (in the case of a director), or by the Chief Executive Officer (in the
case of an executive officer).
Capital One has had no reportable related
person transactions since the beginning of 2011.
Committees of the Board of
Directors
|
In order to assist it in fulfilling its
functions, the Board of Directors conducts business through four Committees: the Audit and Risk Committee,
the Compensation Committee, the Governance and Nominating Committee and the
Finance and Trust Oversight Committee. Pursuant to Capital Ones Corporate
Governance Principles and applicable law, the Audit and Risk, Compensation, and
Governance and Nominating Committees are comprised solely of independent
directors. Currently, the Finance and Trust Oversight Committee is also
comprised solely of independent directors. The Chair of each Committee
determines the frequency, length and agenda of meetings for his or her Committee
in accordance with such Committees charter, in consultation with other members
of the Committee and with appropriate members of management, and establishes an
annual calendar of topics for consideration by the Committee. The Chair of each
Committee may also seek comments on key issues from other directors who are not
part of the Committee and reports Committee activities to the full Board of
Directors. In January 2012, each Committee and the Board of Directors approved
the respective Committees amended and restated charter. Copies of the charter
of each Committee are available free of charge on the Corporate Governance page
of Capital Ones Internet site at
www.capitalone.com
under Investors.
Below is a description of each Committee.
Audit and Risk
Committee
Description
The Audit and Risk Committee is generally
responsible for overseeing Capital Ones accounting, financial reporting,
internal controls and risk assessment and management processes.
Key Responsibilities
-
Monitor the integrity of Capital Ones financial
statements and internal controls;
-
Monitor Capital Ones compliance with legal and
regulatory requirements;
-
Review the qualifications, independence and
performance of Capital Ones independent auditor;
-
Appoint, compensate, retain and oversee Capital
Ones independent auditor;
-
Assess the performance of Capital Ones Chief
Internal Auditor and Chief Credit Review Officer; and
-
Monitor the processes by which management assesses
and manages risk.
The Committee may delegate authority for
certain responsibilities to subcommittees or members of management as the
Committee deems appropriate and as permitted by law.
Financial Expert
Although other members of the Audit and
Risk Committee may qualify as audit committee financial experts under the
Sarbanes-Oxley Act of 2002 and the rules of the SEC and the NYSE promulgated
thereunder, the Board of Directors has designated Mr. Dietz and Mr. Warner as
its audit committee financial experts.
10
Service
No member of the Audit and Risk Committee
simultaneously serves on the audit committees of more than three public
companies, including that of Capital One, except for Mr. Gross. The Board of
Directors has determined, in accordance with NYSE rules, that Mr. Gross
simultaneous service does not impair his ability to effectively serve on Capital
Ones Audit and Risk Committee.
2011 Meetings
During 2011, the Audit and Risk Committee
met twelve times.
Governance and Nominating
Committee
Description
The Governance and Nominating Committee
assists the Board of Directors with respect to a variety of corporate governance
matters and practices.
Key Responsibilities
-
Advise the Board of Directors on its organization,
membership and function;
-
Identify and recommend director nominees and the
structure and membership of each Committee of the Board;
-
Advise and recommend action on corporate
governance matters applicable to Capital One;
-
Advise the Board of Directors on the frequency of
the Companys advisory vote on executive compensation; and
-
Oversee the Boards and the Chief Executive
Officers annual evaluation processes and provide that the directors engage in
periodic discussions to plan for the Chief Executive Officers succession, as
described in more detail in Capital Ones Corporate Governance
Principles.
The Committee may delegate authority for
certain responsibilities to subcommittees or members of management as the
Committee deems appropriate and as permitted by law.
2011 Meetings
During 2011, the Governance and Nominating
Committee met four times.
Compensation
Committee
Description
The Compensation Committee assists the
Board of Directors by reviewing and recommending officer titles and roles to the
Board; overseeing and recommending benefit plans for Capital One associates to
the Board; recommending compensation and benefit plans for the Chief Executive
Officer, senior management and the directors to the independent directors or the
full Board; reviewing and approving the Committees report, and reviewing and
recommending Capital Ones Compensation Discussion and Analysis disclosure for
inclusion in this proxy statement; and carrying out such other responsibilities
and activities as may be required by law or regulation.
Key Responsibilities
-
Recommend to the Board officers for election or
re-election or the manner in which such officers will be chosen;
-
Evaluate and recommend to the independent
directors the Chief Executive Officers compensation in light of the
independent directors assessment of his performance and anticipated
contributions with respect to Capital Ones strategy and objectives;
-
Recommend the salary levels, incentive awards,
perquisites and termination arrangements for executive officers, other than
the Chief Executive Officer, to the independent directors and the hiring or
promotion of such executive officers to the Board;
11
-
Review the Companys goals and objectives relevant
to compensation, oversee the Companys policies and programs relating to
compensation and benefits available to senior management to ensure that they
align with such goals and objectives, and review relevant market data in
establishing compensation and benefits programs;
-
Oversee incentive compensation programs for senior
management and others who can expose the Company to material risk to ensure
programs are designed and operated in a manner that achieves balance and is
consistent with safety and soundness;
-
Review data and analyses to allow an assessment of
whether the design and operation of incentive compensation programs are
consistent with the Companys safety and soundness as provided under
applicable regulatory guidance;
-
Oversee other compensation and benefit programs
and recommend benefit plans to the Board for approval;
-
Administer Capital Ones 2004 Stock Incentive
Plan, 2002 Associate Stock Purchase Plan and other employee benefit
plans;
-
Recommend director compensation to the
Board;
-
Carry out such other responsibilities and
activities as may be required by law or regulation; and
-
Recommend the inclusion of the Compensation
Discussion and Analysis in our annual Proxy Statement or our Annual Report on
Form 10-K.
The independent directors of the Board may
meet concurrently with the Compensation Committee, as appropriate, to review and
approve compensation for the Chief Executive Officer and other executive
officers.
The Committee may also delegate authority
for certain responsibilities to subcommittees or members of management as the
Committee deems appropriate and as permitted by law and applicable plan
documents.
Compensation Committee Interlocks and
Insider Participation
No interlocking relationship exists
between any member of Capital Ones Board of Directors or Compensation Committee
and any member of the board of directors or compensation committee of any other
company, nor has any such interlocking relationship existed in the past. No
member of the Compensation Committee is or was formerly an officer or an
employee of Capital One.
Compensation Committee
Consultant
The Compensation Committee has the
authority to retain and terminate legal counsel and other consultants and to
approve such consultants fees and other retention terms. The Committee has
retained the services of Frederic W. Cook & Co., Inc., an independent
executive compensation consulting firm (the Consultant). The Consultant
reports to the Chair of the Committee, and its engagement may be terminated by
the Committee at any time.
The Committee determines the scope and
nature of the Consultants assignments. In 2011, the Consultant:
-
Provided to the Committee independent competitive
market data and advice related to the Chief Executive Officer, the other
executive officers and director compensation, including the development of a
group of comparator companies for purposes of competitive benchmarking;
-
Reviewed for the Committee management-provided
market data and recommendations on the design of compensation programs for
senior executives other than the Chief Executive Officer;
-
Reviewed for the Committee Capital Ones executive
compensation levels, performance and the design of incentive programs;
-
Reviewed the compensation program for Capital
Ones directors and provided competitive compensation data and director
compensation program recommendations to the Committee for review; and
-
Provided information to the Committee on executive
and director compensation trends and analyses of the implications of such
trends for Capital One.
12
The Consultant generally attends Committee
meetings and executive sessions upon the Chair of the Committees request, including meetings
held jointly with the independent directors to review or approve the
compensation for the Chief Executive Officer, the other executive officers and
the directors compensation, to provide an independent perspective regarding
such compensation practices.
The services provided by the Consultant
are limited in scope as described above. The Consultant does not provide any
services to the Company or its management other than the services provided to
the Compensation Committee as described above.
2011 Meetings
During 2011, the Compensation Committee
met six times.
Finance and Trust Oversight
Committee
Description
The Finance and Trust Oversight Committee
assists the Board of Directors in overseeing Capital Ones management of
liquidity, capital and financial (or market) risks, as well as the trust
activities of Capital One, National Association, a subsidiary of Capital
One.
Key Responsibilities
-
Monitor Capital Ones significant capital and
funding transactions;
-
Monitor liquidity and financial (or market) risks,
as well as Capital Ones fiduciary activities and exposures;
-
Oversee Capital Ones debt funding and capital
programs;
-
Oversee management and monitor execution of
Capital Ones wholesale and retail funding plans;
-
Recommend the payment of dividends on Capital
Ones common stock to the Board of Directors; and
-
Exercise general oversight of the trust activities
of Capital One, National Association.
The Committee may delegate authority for
certain responsibilities to subcommittees or members of management as the
Committee deems appropriate and as permitted by law.
2011 Meetings
During 2011, the Finance and Trust
Oversight Committee met five times.
13
The table below provides a summary of the
Boards current Committee structure, membership and related
information.
|
Chair
|
|
Member
|
|
Audit Committee Financial
Expert
|
|
Audit and
Risk
Committee
|
|
Compensation
Committee
|
|
Finance and
Trust
Oversight
Committee
|
|
Governance
and
Nominating
Committee
|
|
|
|
|
|
|
|
|
E.R.
Campbell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.
Ronald Dietz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick
W. Gross
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ann
Fritz Hackett
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lewis
Hay, III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pierre
E. Leroy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter E. Raskind
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mayo A.
Shattuck III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradford H. Warner
|
|
|
|
|
|
|
|
How to Contact the Board of
Directors and the Lead Director
|
Interested parties may make their concerns
known to the Board of Directors or independent directors as a group by
contacting the Lead Director, care of the Corporate Secretary, at the address
below:
Lead Director
Board of
Directors
c/o Corporate Secretarys Office
Capital One Financial
Corporation
1680 Capital One Drive
McLean, Virginia 22102
Communications may also be sent to
individual directors at the same address.
The Corporate Secretary reviews all
communications sent to the Board of Directors, Committees or individual
directors and forwards all substantive communications to the appropriate
parties. Communications to the Board of Directors, the independent directors or
any individual director that relate to Capital Ones accounting, internal
accounting controls or auditing matters are referred to the Chair of the Audit
and Risk Committee and Capital Ones Chief Internal Auditor. Other
communications are referred to the Lead Director, the Chair of the appropriate
Committee and/or the specified director, as applicable.
14
Director Nomination
Process
|
The Governance and Nominating Committee
considers and makes recommendations to the Board of Directors concerning
nominees to create or fill open positions within the Board. Stockholders may
propose nominees for consideration by the Committee by submitting the names and
other relevant information as required by Capital Ones Amended and Restated
Bylaws (the Bylaws) to the Corporate Secretary, with a copy to the Chair of
the Committee, at the address set forth on the Notice of Annual Stockholder
Meeting. In connection with Capital Ones acquisition of ING Direct in exchange
for cash and stock consideration, Capital One and ING Groep N.V. entered into a
Shareholders Agreement that gave ING Groep the right to designate one nominee to
serve on the Companys Board of Directors until the earlier of February 17, 2013
(the one-year anniversary of the closing) or the day on which ING Bank N.V.
shall have sold more than 33% of its shares of the Companys common stock
acquired in the transaction to third parties.
Director candidates, other than current
directors, may be interviewed by the Chair of the Governance and Nominating
Committee, other directors, the Chief Executive Officer and/or other members of
senior management. The Committee considers the criteria described below, as well
as the results of interviews and any background checks the Committee deems
appropriate, in making its recommendation to the Board of Directors. The
Committee also considers current directors for re-nomination in light of the
criteria described below and their past and potential contributions to the Board
of Directors.
Consideration of Director
Nominees
All director candidates, including
incumbent directors and those recommended by stockholders, are evaluated using
the same criteria. These criteria are as follows:
-
Candidates should
possess a strong educational background, substantial tenure and breadth of
experience in leadership capacities, and business and financial acumen;
-
Candidates may also be selected for their
background relevant to Capital Ones business strategy, their understanding of
the intricacies of a public company, their international business background
and their experience in risk management; and
-
Other relevant criteria may include a reputation
for high personal and professional ethics, integrity and honesty, good
character and judgment, the ability to be an independent thinker and diversity
along a variety of dimensions, including the candidates professional and
personal experience, background, perspective and viewpoint.
The Governance and Nominating Committee
and the Board of Directors believe that diversity along multiple dimensions,
including opinions, skills, perspectives, personal and professional experiences
and other differentiating characteristics, is an important element of its
nomination recommendations. The Board of Directors considers each nominee in the
context of the Board as a whole, with the objective of assembling a Board that
can best maintain the success of Capital Ones business. Although the Board of
Directors does not have a formal diversity policy, the Governance and Nominating
Committee and the Board periodically review the Boards membership in light of
Capital Ones business model and strategic objectives, consider whether the
directors possess the requisite skills, experience and perspectives to oversee
the Company in achieving those goals, and may seek additional directors from
time to time as a result of its considerations.
In 2011, Capital One contracted with a
third-party director search firm, to identify, evaluate, and verify references
for potential director candidates and with a third-party to perform various
background verification services for director candidates, including those
related to federal and state criminal background checks, employment and
education verification, and credit reporting.
Information about our
Directors and Executive Officers
|
Each of Capital Ones current executive
officers, and each director who is nominated for election or who is continuing
to serve his or her term after the Annual Meeting, are listed below with a brief
description of their business experience.
15
All of our directors have demonstrated
business acumen, the ability to exercise sound judgment and a commitment of
service to Capital One and the Board of Directors. Our directors also bring to
our Board of Directors a wealth of executive leadership experience derived from
their service as executives and, in many cases, chief executive officers, of
large corporations. We also believe that all of our directors have a reputation
for integrity, honesty and adherence to high ethical standards. Set forth below
is each directors biographical information and a description of the nature of
each directors experience that the Board of Directors believes supports his or
her continuing service as a director.
Richard D. Fairbank,
61
Chairman, Chief Executive Officer and
President
Mr. Fairbank is founder, Chairman,
Chief Executive Officer and President of Capital One Financial
Corporation. Mr. Fairbank also serves as Chairman of Capital One Bank
(USA), National Association, Capital One, National Association and ING
Bank, fsb.
Mr. Fairbank has been a director of
Capital One since July 26, 1994. Mr. Fairbank was appointed as the Fifth
Federal Reserve Districts representative on the Federal Advisory Council,
effective January 1, 2010. As a member of the Council, he confers
periodically with the Board of Governors of the Federal Reserve System on
business conditions and issues related to the banking industry. Mr.
Fairbank also served on MasterCard Internationals Global Board of
Directors from February 2004 until May 2006 and, prior to that, as
Chairman of MasterCards U.S. Region Board.
Mr. Fairbanks experience in leading
the business as founder and Chief Executive Officer of Capital One, his
responsibilities for the strategic direction and management of Capital
Ones day-to-day operations and his roles with the Federal Advisory
Council and MasterCard International bring broad industry and specific
institutional knowledge and experience to the Board of
Directors.
|
Edward R. Bo Campbell,
71
Director
Mr. Campbell, a director of Capital
One Financial Corporation since November 16, 2005, is not eligible to
stand for re-election as a director at the Annual Meeting because of the
age restriction in the Bylaws. He is also a director of Capital One,
National Association and has served on the Finance and Trust Oversight
Committee since November 2005 and on the Compensation Committee since
April 2006.
He has been an active investor
primarily in oil and gas, land and timber, and banking since 1970. He had
an extensive banking career at Pioneer Bancshares, a Louisiana-based bank
holding company, where he was President and Chief Executive Officer before
becoming Chairman of the Board of Directors, and at Hibernia National
Bank, headquartered in Louisiana, where he also served as Director and
Chairman of the Board of Directors from 2003 until its acquisition by
Capital One in 2005.
As the former Chief Executive
Officer of a community bank in Louisiana and former
Chairman of a national bank, Mr. Campbell brought
valuable experience to the Board of Directors in overseeing, among other
matters, Capital Ones banking
business.
|
16
W. Ronald Dietz,
69
Director
Mr. Dietz is Vice Chairman of the
Board of Directors of W.M. Putnam Company (Putnam), a nationwide
provider of outsourced facilities management services to companies with
networks of offices or retail stores. Mr. Dietz joined Putnam in January
2001 as President and a director and became President, Chief Executive
Officer and director in 2004. In 2010, he retired as President and Chief
Executive Officer. Previously, he was a Managing Partner of Customer
Contact Solutions, LLC (CCS), an advisory firm offering services in a
broad range of customer treatment and call center performance and risk
management areas.
Mr. Dietz has been a director of
Capital One Financial Corporation since February 28, 1995 and is also a
director of Capital One Bank (USA), National Association, Capital One,
National Association and ING Bank, fsb. He has been Chair of the Audit and
Risk Committee since 1995 and has been a member of the Finance and Trust
Oversight Committee since July 2003. He qualifies as an audit committee
financial expert under SEC guidelines and has been designated as audit
committee financial expert for Capital One since January 2003. Mr. Dietz
is also a member of the NACD National Audit Chair Advisory Council as well
as the PRMIA Blue Ribbon Advisory Panel. He has written several articles
on various aspects of risk management.
Mr. Dietzs experience in financial
services, financial reporting, risk management, consulting, venture
management, customer experience and call center performance, developed
during his positions with Putnam and CCS as well as earlier roles with
Citigroup and American Savings Bank, helps him bring valuable knowledge to
the Board of Directors on these and other matters.
|
Patrick W. Gross,
67
Director
Mr. Gross is Chairman of The Lovell
Group, a private business and technology advisory and investment firm he
founded in 2002 to work with private venture-funded technology companies
on a range of business, management and financial strategies. Prior to his
role with Lovell, he was a founder, and served as a principal executive
officer from 1970 to 2002, of American Management Systems, Inc. (AMS),
an information technology, consulting, software development and systems
integration firm.
He has been a director of Capital
One Financial Corporation since February 28, 1995 and is also a director
of Capital One, National Association and ING Bank, fsb. He has served on
the Audit and Risk Committee since March 1995, the Compensation Committee
since April 2005 and the Governance and Nominating Committee since April
2008.
Mr. Gross is currently a director of
the following publicly-held companies: Career Education Corporation;
Liquidity Services, Inc.; Rosetta Stone, Inc.; Taleo Corporation; and
Waste Management, Inc. In addition to Capital One, he serves on four other
public company audit committees. Mr. Gross also served on the boards of
Mobius Management Systems, Inc. from 2002 through 2007 and of Computer
Network Technology Corporation from 1997 through 2006.
Mr. Grosss experience in applying
information technology, advanced data analytics and risk management
analytics within global financial services firms, as well as his roles in
founding and leading AMS and with other public company boards, assists the
Board of Directors in overseeing, among other matters, Capital Ones
entrepreneurial innovations and information
systems.
|
17
Ann Fritz Hackett,
58
Director
Ms. Hackett has been President of
Horizon Consulting Group, LLC since she founded the company in 1996.
Horizon Consulting Group provides strategic, organizational and human
resources advice to clients worldwide. She has worked with boards of
directors, chief executive officers and senior executives to identify
strategic opportunities and execute solutions during periods of business
and financial challenges. Prior to Horizon Consulting, Ms. Hackett was
Vice President and Partner of a leading national strategy consulting firm
where she served on the Management Committee and, among other assignments,
led Human Resources and developed her expertise in managing cultural
change, creating performance management processes and a performance-based
culture, nurturing leadership talent and planning for executive
succession.
Ms. Hackett has been a director of
Capital One Financial Corporation since October 27, 2004, and is also a
director of Capital One Bank (USA), National Association. She has served
on the Audit and Risk and Governance and Nominating Committees since
October 2004 and on the Compensation Committee since April 2005. Ms.
Hackett became the Chair of the Governance and Nominating Committee and
the Lead Director in April 2007. She is also a director of Fortune Brands
Home & Security, Inc., an industry-leading home and security products
company. She is also a director of Beam, Inc. (formerly Fortune Brands,
Inc.), one of the worlds leading premium spirits companies. In 2012, Ms.
Hackett joined the Tapestry Networks Lead Director Network, a select
group of lead directors who collaborate on matters regarding board
leadership.
Ms. Hackett has experience in
leading change initiatives, talent management and succession planning and
in creating performance management processes and performance-based
compensation. She also has experience in corporate governance and risk
matters as a result of her participation with public company boards of
directors and related governance committees, non-profit boards and
consulting engagements. This combination of skills assists the Board of
Directors in its discussions on these and other
matters.
|
Lewis Hay, III,
56
Director
Mr. Hay has been Chairman and Chief
Executive Officer of NextEra Energy, Inc. (formerly FPL Group, Inc.), one
of the nations leading electricity-related services companies and the
largest renewable energy generator in North America, since January 2002.
He joined NextEra Energy in 1999 as Vice President, Finance and Chief
Financial Officer and became President of NextEra Energy Resources, LLC
(formerly FPL Energy, LLC) in March 2000. He became a director and the
President and Chief Executive Officer of NextEra Energy in June 2001.
Prior to joining NextEra Energy, Mr. Hay was Executive Vice President and
Chief Financial Officer of US Food Service where he was responsible for
finance and accounting, treasury, credit, investor relations, mergers and
acquisitions, and information systems.
Mr. Hay has been a director of
Capital One
Financial Corporation since
October 31, 2003, and is also a director of Capital One Bank (USA),
National Association. He has served on the Compensation Committee since
April 2004, the Finance and Trust Oversight Committee, of which he has
served as Chair, since April 2005, and the Governance and Nominating
Committee since April 2007. He is also a director of Harris Corporation.
In February 2011, Mr. Hay was appointed to President Obamas Presidents
Council on Jobs and Competitiveness.
Mr. Hay has extensive knowledge of
complex strategic, operational, management, regulatory, financial and
governance issues faced by a large public company. His background in
leading finance and accounting, treasury, credit, investor relations,
mergers and acquisitions and information systems functions, as well as his
understanding of enterprise risk management, executive compensation and
public company governance, provides the Board of Directors with valuable
insight on these and other
matters.
|
18
Pierre E. Leroy,
63
Director
Mr. Leroy was appointed Executive
Chairman of Vigilant Video, Inc., a leading provider of video analytics
software and systems, on March 1, 2012. Mr. Leroy retired in 2005 from
Deere & Company as President of both the Worldwide Construction &
Forestry Division and the Global Parts Division. Deere & Company is a
world leader in providing advanced products and services for agriculture,
forestry, construction, lawn and turf care, landscaping and irrigation,
and also provides financial services worldwide and manufactures and
markets engines used in heavy equipment. During his professional career
with Deere, Mr. Leroy served in a number of positions in Finance,
including Treasurer, Vice-President and Treasurer, and Senior
Vice-President and Chief Financial Officer.
Mr. Leroy has been a director of
Capital One Financial Corporation since September 1, 2005, and is also a
director of Capital One, National Association and ING Bank, fsb. He has
also served on the Governance and Nominating Committee since April
2006.
Mr. Leroy has been a director of RSC
Holdings, Inc. since May 2008. He has also served on the Boards of
Directors of Beam, Inc. (formerly Fortune Brands, Inc,) from September
2003 to February 2012, ACCO Brands from August 2005 to April 2009 and
Nuveen Investments, Inc. from March 2006 to April 2007.
Mr. Leroys experience in capital
markets and asset-liability management, as well as leading and managing
large complex international marketing, engineering and manufacturing
organizations and serving on other public company boards, provides the
Board of Directors with valuable insight on these and other
matters.
|
Peter E. Raskind,
55
Director
Mr. Raskind is the owner of JMB
Consulting, LLC, which he established in February 2009 to provide
consulting services to financial services firms. In 2011, he served as
Interim Chief Executive Officer of the Cleveland Metropolitan School
District, and in 2010, he served as Interim President and Chief Executive
Officer of the Cleveland-Cuyahoga County Port Authority. Until its merger
with PNC Financial Services Group in December 2008, Mr. Raskind served as
Chairman, President and Chief Executive Officer of National City
Corporation, one of the largest banks in the United States, where he was
appointed as a Director in January 2007 and Chief Executive Officer in
July 2007. He also became Chairman of the Board in December 2007. Mr.
Raskind joined National City in 2000 as the Manager of the Consumer
Finance Division and served in a number of executive positions throughout
his tenure. Prior to National City, Mr. Raskind had a 20-year career with
U.S. Bancorp/First Bank System and Harris Bank, holding positions of
successively greater responsibility in a broad range of disciplines,
including cash management services, corporate finance, international
banking, corporate trust, retail banking, operations and strategic
planning.
Appointed to the Board on January
31, 2012, Mr. Raskind was first identified by a third-party search firm
and was recommended as a director nominee by the Governance and Nominating
Committee. He is a member of the Companys
Audit and Risk Committee.
In January 2012, Mr. Raskind was appointed a
director of Omek Interactive, Inc., which provides tools and technology to
enable manufacturers and software developers to add gesture-based
interfaces to their products. He also served as a director of United
Community Banks, Inc. from May 2011 to January 2012. Mr. Raskind
previously served as a director of Visa USA and Visa International, served
on the Board of Directors of the Consumer Bankers Association and was a
member of the Financial Services Roundtable.
Mr. Raskind is experienced in
corporate banking, retail banking, wealth management/trust, mortgage,
operations, technology, strategy, asset/liability management, risk
management and acquisition integration from his extensive career in
banking. He provides the Board with valuable insight on these and other
matters.
|
19
Mayo A. Shattuck III,
57
Director
Mr. Shattuck is Executive Chairman
of the Board of Chicago-based Exelon Corporation, a Fortune 100 company
and the nations largest competitive energy provider. Prior to joining
Exelon, he was Chairman, President and Chief Executive Officer of
Constellation Energy, a leading supplier of electricity to large
commercial and industrial customers, a position he held from 2001 to 2012.
He was previously at Deutsche Bank, where he served as Chairman of the
Board of Deutsche Banc Alex. Brown and, during his tenure, served as
Global Head of Investment Banking and Global Head of Private
Banking.
Mr. Shattuck has been a director of
Capital One Financial Corporation since October 31, 2003. He has served on
the Compensation Committee since April 2004 and became its Chairman in
April 2005. He has also served on the Finance and Trust Oversight
Committee since December 2003. Mr. Shattuck is also a director of Gap,
Inc. and chairs its Audit and Finance Committee.
Mr. Shattucks experience in
corporate finance, capital markets, risk management and private banking,
as well as his experience in leading a large, publicly-held company and
serving on other public company boards, provides the Board of Directors
with valuable insight on these and other matters.
|
Bradford H. Warner,
60
Director
Mr. Warner served in a variety of
positions at BankBoston, FleetBoston and Bank of America from 1975 until
his retirement in 2004. These positions included President of Premier and
Small Business Banking, Executive Vice President of Personal Financial
Services, and Vice Chairman of the Investment Services and Consumer
Business Group.
Throughout his banking career, Mr.
Warner served in leadership roles for many of the major business lines and
functional disciplines that constitute commercial banking, including
leadership of retail and branch banking, consumer lending (credit cards,
mortgage and home equity), student lending and small business; various
corporate banking functions, including community banking and capital
markets businesses, such as underwriting, trading and sales of domestic
and international fixed income securities, foreign exchange and
derivatives; international banking businesses in northern Latin America
and Mexico; and several investment related businesses, including private
banking, asset management and brokerage. He also served on the senior most
management policy and governance committees at BankBoston, FleetBoston and
Bank of America.
Mr. Warner has been a director of
Capital One Financial Corporation since April 24, 2008, and also serves as
a director of Capital One, National Association and ING Bank, fsb. He has
been a member of the Audit and Risk and Finance and Trust Oversight
Committees since April 2008. He qualifies as an audit committee financial
expert under SEC guidelines and was designated an audit committee
financial expert for Capital One in 2012.
Mr. Warners experience in a broad
range of commercial, consumer, investment and international banking
leadership roles, as well as his experience in corporate banking
functions, customer relationships and corporate culture change management,
bring valuable insight to the Board of Directors in overseeing, among
other matters, a broad range of matters critical to Capital Ones banking
business.
|
20
Robert M. Alexander,
47
Chief Information Officer
Mr. Alexander joined Capital One in
April 1998. From April 1998 to May 2007, Mr. Alexander had responsibility
at various times for a number of Capital Ones lending businesses,
including the U.S. consumer credit card and installment loan businesses.
Mr. Alexander became Chief Information Officer in May 2007, and in this
role he is responsible for overseeing all technology activities for
Capital One.
|
Jory A. Berson,
41
Chief Human Resources
Officer
Mr. Berson joined Capital One in
July 1992. From July 1992 to June 2009, Mr. Berson held a variety of roles
at Capital One, including President, Financial Services and President,
U.S. Card. In June 2009, Mr. Berson became Chief Human Resources Officer,
and in this role Mr. Berson is responsible for overseeing Capital Ones
Human Resources strategy, recruitment efforts, development programs and
corporate real estate portfolio.
|
Lynn A. Carter, 55
former
President, Banking
Ms. Carter joined Capital One in
April 2007 as Chief Operating Officer for the Banking Segment and became
President, Banking in August 2007. Ms. Carter has over 30 years of banking
and community development expertise. She joined Capital One from Bank of
America Corporation, where she served from April 2004 to April 2007 as
president of Business Banking and as president of Bank of America
California. Ms. Carter left her role as President, Banking and as director
of Capital One, National Association at the close of business on December
31, 2011.
|
John G. Finneran, Jr.,
62
General Counsel and
Corporate Secretary
Mr. Finneran joined Capital One in
September 1994. Since that time, he has served as General Counsel and
Corporate Secretary and is responsible for managing Capital Ones legal,
governmental affairs, corporate governance, regulatory relations and
corporate affairs departments. He also manages Capital Ones internal
audit department for administrative purposes.
|
Frank G. LaPrade, III,
45
Chief Enterprise Services Officer
Chief of Staff to the
CEO
Mr. LaPrade joined Capital One in
January 1996. Since that time he has served in various positions,
including as Capital Ones Deputy General Counsel responsible for managing
the companys litigation, employment, intellectual property and
transactional practice areas. In 2004, Mr. LaPrade became Chief of Staff
to the Chief Executive Officer. In 2010, Mr. LaPrade added
responsibilities as Chief Enterprise Services Officer. In that capacity,
Mr. LaPrade manages Information Technology, Brand Marketing, Corporate
Development and Digital Banking for the company.
|
Gary L. Perlin, 60
Chief
Financial Officer
Mr. Perlin joined Capital One in
July 2003, and since that time he has served as Capital Ones Chief
Financial Officer. Mr. Perlin is responsible for Capital Ones corporate
finance, corporate accounting and reporting, planning and financial risk
management, treasury and investor relations functions. Mr. Perlin also
serves as a director of Capital One, National Association, Capital One
Bank (USA), National Association and ING Bank,
fsb.
|
21
Peter A. Schnall, 48
Chief
Risk Officer
Mr. Schnall joined Capital One in
August 1996. From August 1996 to October 2002, Mr. Schnall served in a
variety of roles at Capital One. From October 2002 until June 2006, he
served as Chief Credit Officer. Mr. Schnall has been Chief Risk Officer
since June 2006, and in this role he is responsible for overseeing Capital
Ones credit, compliance, operational and enterprise risk management
functions.
|
Ryan M. Schneider,
42
President, Card
Mr. Schneider joined Capital One in
December 2001. From December 2001 to December 2007, Mr. Schneider held a
variety of positions within Capital One including Executive Vice
President, Auto Finance and Executive Vice President, US Card. Mr.
Schneider became President, Card in December 2007, and in this role he is
responsible for all of Capital Ones consumer and small business credit
card lines of business, including those in the United States, the United
Kingdom and Canada. Mr. Schneider also serves as a director of Capital One
Bank (USA), National Association.
|
Michael C. Slocum,
58
President, Commercial
Banking
Mr. Slocum joined Capital One in
August 2007. From August 2007 to September 2011, Mr. Slocum was Executive
Vice President of Capital Ones Banking Business, leading the companys
Commercial Banking business including asset-based lending, leasing and
private banking. Mr. Slocum became President, Commercial Banking in
September 2011 and in this role he is responsible for leading multiple
broad lines of business, including Commercial Real Estate, Middle Market
Banking, Commercial & Specialty Finance and Treasury Services. Before
joining Capital One, Mr. Slocum served in various leadership roles at
Wachovia Bank (now Wells Fargo), a provider of consumer and commercial
financial services, including as the Regional Chief Executive Officer for
Northeastern US.
|
Jonathan W. Witter,
42
President, Retail and
Direct Banking
Mr. Witter joined Capital One in
December 2010 as an Executive Vice President in Retail Banking. In
September 2011, Mr. Witter became President, Retail and Small Business
Banking and in this role, he provides strategic direction for the Retail
and Small Business Banking organization and is responsible for more than
13,000 associates, nearly 1,000 branch locations and 2,200 ATMs in New
York, New Jersey, Connecticut, Delaware, Virginia, Washington, D.C.,
Maryland, Louisiana and Texas. In February 2012, Mr. Witter became
President, Retail and Direct Banking and a director of ING Bank, fsb.
Prior to joining Capital One, Mr. Witter held various positions, including
executive vice president and head of general Bank Distribution at
Wachovia, managing director and president of Morgan Stanley Private Bank
NA, a global financial services firm, and Chief Operating Officer of
Morgan Stanleys Retail Banking Group.
|
Sanjiv Yajnik,
55
President, Financial
Services
Mr. Yajnik joined Capital One in
July 1998. From July 1998 to June 2009, Mr. Yajnik held a number of
positions within Capital Ones European credit card business, Canadian
credit card business and small business services organization. Mr. Yajnik
became President, Financial Services in June 2009, and in this role he is
responsible for overseeing Capital Ones auto finance, mortgage businesses
and consumer lines and loans. Mr. Yajnik also serves as a director of
Capital One, National Association. Prior to joining Capital One, Mr.
Yajnik held a broad range of positions, including General Manager at
Circuit City Stores (USA), Market Manager at PepsiCo (Canada), and Chief
Engineer at Mobil Oil (International).
|
|
22
SECTION III SECURITY
OWNERSHIP
|
Security Ownership of Certain Beneficial
Owners
|
Based on Schedule 13D and 13G filings
submitted to the SEC, Capital One is aware of the following beneficial owners of
more than 5% of Capital Ones outstanding common stock.
Name and
Address
|
Amount and Nature of
Beneficial Ownership (1)
|
Percent of Class (2)
|
ING Groep N.V.
(3)
|
|
|
Bijlmerplein 888
|
54,753,377
|
9.9%
|
1102 MG Amsterdam
|
|
|
The Netherlands
|
|
|
|
|
|
Dodge & Cox
(4)
|
|
|
555 California Street, 40th
Floor
|
52,049,563
|
9.4%
|
San Francisco, CA 94104
|
|
|
(1)
|
Beneficial ownership is determined under SEC Rule
13d-3(d)(1). The information contained in this table is based on Schedule
13D and 13G reports filed with the SEC, and the amount and nature of
beneficial ownership indicated are current only as of the dates of filing
with the SEC, as indicated below.
|
|
|
(2)
|
Percentages calculated based on 555,374,853 shares of
Capital Ones common stock outstanding as of February 29, 2012, which
includes the issuance of 40,000,000 shares on February 16, 2012, in
connection with the settlement of the forward sale agreements that we
entered into with certain counterparties acting as forward purchasers in
connection with a public offering of shares of our common stock in July
2011 and the issuance of 54,028,086 shares to ING Bank N.V. on February
17, 2012, as consideration for our purchase of the ING Direct
business.
|
|
(3)
|
On a Schedule 13D filed on February 27, 2012, ING Groep
N.V. reported beneficial ownership as of February 17, 2012, of 54,753,377
shares of Capital Ones common stock, which beneficial ownership in the
aggregate represented 9.9% of Capital Ones outstanding common stock as of
February 17, 2012. According to its Schedule 13D, ING Groep has sole
voting power with respect to no shares, shared voting power with respect
to 54,753,377 shares and sole dispositive power with respect to no shares
and shared dispositive power with respect to 54,753,377. Indirect
subsidiaries of ING Groep hold 725,291 shares in their role as a
discretionary manager of client portfolios. Certain of these shares may be
managed by third-party sub-managers over which ING Groep and its
subsidiaries do not have the ability to either direct the vote or the
disposition of such shares. ING Groep disclaims beneficial ownership of
such shares.
|
|
(4)
|
On a Schedule 13G (Amendment No. 8) filed on February
10, 2012, Dodge & Cox reported beneficial ownership as of December 31,
2011, of 52,049,563 shares of Capital Ones common stock, which beneficial
ownership in the aggregate represented 11.3% of Capital Ones outstanding
common stock as of December 31, 2011. According to its Schedule 13G, Dodge
& Cox has sole voting power with respect to 49,181,366 shares, shared
voting power with respect to no shares, sole dispositive power with
respect to 52,049,563 shares and shared dispositive power with respect to
no shares. The securities reported on the Schedule 13G are beneficially
owned by clients of Dodge & Cox, which clients may include investment
companies registered under the Investment Company Act of 1940 and other
managed accounts, and which clients have the right to receive or the power
to direct the receipt of dividends from, and the proceeds from the sale
of, the common stock of Capital One. The Dodge & Cox Stock Fund, an
investment company registered under the Investment Company Act of 1940,
has an interest in 30,180,911 shares, or 6.6%, of the class of securities
reported in the Schedule 13G. Dodge & Cox certified in its Schedule
13G that the securities referred to above were acquired in the ordinary
course of business and were not acquired for the purpose of and do not
have the effect of changing or influencing the control of Capital One and
were not acquired in connection with or as a participant in any
transaction having such purpose or effect.
|
23
Security Ownership of Directors and Named
Executive Officers
|
The following table lists the beneficial
ownership of Capital Ones common stock as of January 31, 2012, by our
directors, the named executive officers in this proxy statement and all
directors and executive officers as a group.
|
Number of Shares or
Units
|
Name
|
Common
Stock (1)
|
Unvested
Restricted Stock
|
Stock That May
Be Acquired
Within 60 days
(2)
|
Total Amount and
Nature of
Beneficial
Ownership (3)
|
Percent of Class (4)
|
Richard D. Fairbank
|
2,325,095
|
0
|
4,967,714 (5)
|
7,292,809
|
1.57%
|
Gary L. Perlin
|
78,982
|
71,257
|
796,096
|
946,335
|
*
|
Lynn A. Carter
|
92,019
|
46,026
|
400,656
|
538,701
|
*
|
Peter A. Schnall
|
144,215
|
51,696
|
441,091
|
637,002
|
*
|
Ryan M. Schneider
|
96,716
|
57,064
|
279,758
|
433,538
|
*
|
E. R. Campbell
|
631,526
|
0
|
53,936
|
685,462 (6)
|
*
|
W. Ronald Dietz
|
5,251
|
0
|
72,614 (7)
|
77,865
|
*
|
Patrick W. Gross
|
7,539
|
0
|
137,758 (8)
|
145,297
|
*
|
Ann Fritz Hackett
|
15,650
|
0
|
60,665 (9)
|
76,315
|
*
|
Lewis Hay, III
|
2,728
|
0
|
86,860
|
89,588 (10)
|
*
|
Pierre E. Leroy
|
4,900
|
0
|
74,391 (11)
|
79,291
|
*
|
Peter E. Raskind
|
0
|
0
|
3,956 (12)
|
3,956
|
*
|
Mayo A. Shattuck III
|
1,589
|
0
|
84,237 (13)
|
85,826
|
*
|
Bradford H. Warner
|
14,640
|
0
|
53,752
|
68,392 (14)
|
*
|
All directors and executive
officers
as a group
(21 persons)
|
3,943,918
|
484,956
|
9,192,886
|
13,621,760 (15)
|
2.91%
|
*
|
Less than 1% of the outstanding
shares of common stock.
|
|
|
(1)
|
The inclusion of any shares of common stock deemed
beneficially owned does not constitute an admission of beneficial
ownership of those shares.
|
|
|
(2)
|
In accordance with the rules of the SEC, each
stockholder is deemed to beneficially own any shares subject to stock
options that are exercisable on or within 60 days after January 31,
2012.
|
|
(3)
|
To Capital Ones knowledge, all executive officers and
directors beneficially own the shares shown next to their names either in
their sole names or jointly with their spouses, unless indicated
otherwise. The column Total Amount and Nature of Beneficial Ownership
includes: (i) shares of common stock; (ii) shares of unvested restricted
stock; (iii) shares of common stock subject to stock options and shares of
restricted stock and restricted stock units granted under Capital Ones
1994 Stock Incentive Plan (the 1994 Stock Incentive Plan), Capital Ones
1999 Stock Incentive Plan (the 1999 Stock Incentive Plan), Capital Ones
1995 Non- Employee Directors Stock Incentive Plan (the 1995 Directors
Plan), Capital Ones 1999 Non-Employee Directors Stock Incentive Plan
(the 1999 Directors Plan) and Capital Ones 2004 Stock Incentive Plan
(the 2004 Stock Incentive Plan), each as amended or restated from time
to time, that are or will become exercisable or that are or will be vested
within 60 days of January 31, 2012; and (iv) shares of common stock held
by the executive officers under Capital Ones 1994 Associate Stock
Purchase Plan or 2002 Associate Stock Purchase Plan (the Stock Purchase
Plans), each as amended or restated from time to time. Shares of unvested
restricted stock have voting rights but are not transferable until the end
of the period of restriction.
|
24
(4)
|
All percentage calculations are based on the number of
shares of common stock issued and outstanding on January 31, 2012, which
was 459,408,409. In addition, for the purpose of calculating each
directors or officers percentage of shares outstanding, any shares of
common stock subject to outstanding stock options held by such person that
are exercisable on or within 60 days after January 31, 2012, are deemed to
be outstanding shares of common stock.
|
|
|
(5)
|
Includes 241,680 restricted stock units for which
delivery of the shares of common stock underlying the restricted stock
units is deferred until Mr. Fairbanks employment with the Company
ends.
|
|
(6)
|
Includes 181,486 shares owned by Campbell Capital, LLC,
181,486 shares owned by Campbell Capital II, LLC, 238,533 shares owned by
Campbell Holdings, LP and 7,864 shares owned by the E.R. Campbell Family
Foundation for which Mr. Campbell holds voting and investment power. Also
includes 25,829 restricted stock units for which delivery of the shares of
common stock underlying the restricted stock units is deferred until Mr.
Campbells service with the Board of Directors ends. Does not include
268,179 shares held in a Grantor Retained Annuity Trust, of which Mr.
Campbell is not a trustee, for which Mr. Campbell disclaims beneficial
ownership.
|
|
(7)
|
Includes 27,409 restricted stock units for which
delivery of the shares of common stock underlying the restricted stock
units is deferred until Mr. Dietzs service with the Board of Directors
ends.
|
|
(8)
|
Includes 27,409 restricted stock units for which
delivery of the shares of common stock underlying the restricted stock
units is deferred until Mr. Grosss service with the Board of Directors
ends.
|
|
(9)
|
Includes 27,409 restricted stock units for which
delivery of the shares of common stock underlying the restricted stock
units is deferred until Ms. Hacketts service with the Board of Directors
ends. Does not include 5,006 shares held by Ms. Hacketts spouse for which
Ms. Hackett disclaims beneficial ownership.
|
|
(10)
|
Includes 1,806 shares held by the Hay Family Limited
Partnership, for which Mr. Hay holds voting and investment power. Also
includes 27,409 restricted stock units for which delivery of the shares of
common stock underlying the restricted stock units is deferred until Mr.
Hays service with the Board of Directors ends.
|
|
(11)
|
Includes 26,409 restricted stock units for which
delivery of the shares of common stock underlying the restricted stock
units is deferred until Mr. Leroys service with the Board of Directors
ends.
|
|
(12)
|
Includes 1,240 restricted stock units for which delivery
of the shares of common stock underlying the restricted stock units is
deferred until Mr. Raskinds service with the Board of Directors
ends.
|
|
(13)
|
Includes 27,409 restricted stock units for which
delivery of the shares of common stock underlying the restricted stock
units is deferred until Mr. Shattucks service with the Board of Directors
ends.
|
|
(14)
|
Includes 140 shares held by Mr. Warners spouse. Also
includes 20,633 restricted stock units for which delivery of the shares of
common stock underlying the restricted stock units is deferred until Mr.
Warners service with the Board of Directors ends.
|
|
(15)
|
Includes 1,629,056 shares issuable upon the exercise of
options and 258,913 shares of common stock subject to trading restrictions
for all other executive officers as a group. Does not include the shares
set forth in footnotes (6) and (9) above for which the directors disclaim
beneficial ownership and 102 shares held by other executive officers and
for which such executive officers disclaim beneficial
ownership.
|
25
Section 16(a) Beneficial Ownership Reporting
Compliance
|
Section 16(a) of the Securities Exchange
Act of 1934 requires that Capital Ones executive officers and directors, and
persons that beneficially own more than 10% of Capital Ones common stock file
certain reports of beneficial ownership of the common stock and changes in such
ownership with the SEC and provide copies of these reports to Capital One. As a
matter of practice, members of our staff assist our executive officers and
directors in preparing initial ownership reports and reporting ownership changes
and typically file these reports on their behalf. Based solely on our review of
the copies of such forms in our possession and written representations furnished
to us, we believe that in 2011 each of the reporting persons complied with these
filing requirements.
26
SECTION IV
DIRECTOR COMPENSATION
|
Director
Compensation Objectives
|
The Board of Directors approves the
compensation for non-management directors, based on recommendations made by the
Compensation Committee. The Board of Directors has designed the director
compensation program to achieve four primary objectives:
-
Attract and retain talented directors with the
skills and capabilities to perpetuate Capital
Ones success;
-
Fairly compensate directors for the work required
in a company of Capital Ones size and scope;
-
Recognize the individual roles and
responsibilities of the directors; and
-
Align directors interests with the long-term
interests of Capital One stockholders.
Management directors do not receive
compensation for their service on the Board of Directors. In 2011, Mr. Fairbank
was Capital Ones only management director.
Director
Compensation Procedures
|
The Compensation Committee reviews the
compensation program for Capital Ones non-management directors on an annual
basis. Frederic W. Cook & Co., Inc. (the Consultant), provides competitive
compensation data and program recommendations to the Compensation Committee for
review. Please see the discussion under Compensation Committee Compensation
Committee Consultant in the Governance of Capital One section on page 12 for
further information on the role and responsibilities of the Consultant. The
competitive compensation data includes the compensation (cash, equity and other
benefits) of non-management directors within Capital Ones peer comparator
group. Please see the discussion under Market Data in the Compensation
Discussion and Analysis section on page 45 for further information on the
selection of the peer comparator group. The Compensation Committee considers
this information, as well as the Consultants recommendations, and finalizes a
proposed compensation structure. The proposed structure is then reviewed and
approved by the full Board of Directors, typically in April or May of each
year.
Based on their review of competitive
market data and guidance from the Consultant in the second quarter of 2011, the
Compensation Committee determined that the director compensation program
described below meets the objectives listed above.
Director
Compensation Structure
|
Each non-management director serving on
the Board of Directors on May 11, 2011, received an annual cash retainer of
$70,000 as well as cash retainers for committee and leadership service detailed
in the notes to the table below. Each director also received an annual award of
restricted stock units of Capital One common stock (RSUs), valued at $170,014,
granted on May 11, 2011. Lastly, the Lead Director received a cash retainer of
$25,000. Ms. Hackett was the Lead Director in 2011.
Each director was offered the opportunity
to elect to forego his or her cash retainer in exchange for a one-time grant of
non-qualified stock options, granted on May 11, 2011. Messrs. Campbell, Gross,
Hay, Shattuck, and Warner each elected to forego their cash compensation in
favor of such stock options.
27
Under the Capital One Financial
Corporation Non-Employee Directors Deferred Compensation Plan, non-management
directors may voluntarily defer all or a portion of their cash compensation and
receive deferred income benefits. Participants in the plan have the option to
direct their individual deferrals among thirteen different investments available
through the plan. Directors that elected a deferral will begin to receive their
deferred income benefits in cash when they cease serving as directors, or
earlier if authorized by the Compensation Committee. Upon a change of control,
Capital One will pay to each director within thirty days of the change of
control a lump sum cash payment equal to such directors account balance as of
the date of the change of control. In 2011, no directors elected to defer any
cash compensation under this plan.
Capital One offered directors the
opportunity to direct a contribution of up to $10,000 annually from Capital One
to a charitable organization of their choice. All directors elected to make
charitable contributions in 2011.
Directors also receive reimbursements for
certain board-related expenses including, among other things, external
educational seminars and travel-related costs incurred to attend Board meetings.
Such reimbursements are not included as compensation for the directors in the
table below.
In 2011, directors did not receive any
additional compensation beyond what is described above and disclosed in the
table below.
Stock Ownership
Requirements
|
Capital One requires non-management
directors to retain all shares underlying restricted stock units granted to them
by Capital One until their service with the Board of Directors ends, pursuant to
the terms of their respective grant agreements. The Board of Directors may grant
an exception for any case where this requirement would impose a financial
hardship on a director. No directors have been granted an exception to this
requirement for any outstanding awards of restricted stock units.
Compensation of
Directors
|
Directors of Capital One received the
following compensation for 2011:
Name
|
Fees
Earned or
Paid in Cash (1)
|
Stock
Awards
(2)
|
Option
Awards
(3)
|
Change in Pension Value
and Nonqualified
Deferred
Compensation Earnings
|
All
Other
Compensation (4)
|
Total
|
E. R. Campbell
|
$90,006
|
$170,014
|
|
|
$10,000
|
$270,020
|
W. Ronald Dietz
|
$120,000
|
$170,014
|
|
|
$10,000
|
$300,014
|
Richard D. Fairbank*
|
|
|
|
|
|
|
Patrick W. Gross
|
$120,013
|
$170,014
|
|
|
$10,000
|
$300,027
|
Ann Fritz Hackett
|
$155,000
|
$170,014
|
|
|
$10,000
|
$335,014
|
Lewis Hay, III
|
$110,006
|
$170,014
|
|
|
$10,000
|
$290,020
|
Pierre E. Leroy
|
$120,000
|
$170,014
|
|
|
$10,000
|
$300,014
|
Mayo A. Shattuck III
|
$100,013
|
$170,014
|
|
|
$10,000
|
$280,027
|
Bradford H. Warner
|
$110,006
|
$170,014
|
|
|
$10,000
|
$290,020
|
*
|
In 2011, Mr. Fairbank was Capital
Ones only management director.
|
|
|
(1)
|
Each non-management director was
eligible to receive an annual cash retainer of $70,000. Compensation for
committee service includes retainers for service as chairperson or as a
member of a committee as described under the heading Committee
Membership in the Governance of Capital One section of this proxy
statement. In 2011, retainers were as follows:
|
-
Lead Director Retainer: $25,000
-
Chair of the Audit and Risk Committee: $40,000
28
-
Chair of the Compensation Committee, Governance and Nominating Committee
or Finance and Trust Oversight Committee: $20,000
-
Member of the Audit and Risk Committee (other than the chair): $30,000
-
Member of the Compensation Committee, Governance and Nominating Committee
or Finance and Trust Oversight Committee (other than the chair): $10,000
(2)
|
Non-management directors serving
on May 11, 2011, received a grant of 3,206 RSUs with a grant date fair
value of $170,014 under the 2004 Stock Incentive Plan. The RSUs were
valued at $53.03 per share, which was the fair market value of a share of
Capital One common stock on the date of grant, and vest one year from the
date of grant. Delivery of the underlying shares is deferred until the
directors service with the Board of Directors ends. The following table
shows the number of RSUs outstanding for each director as of December 31,
2011:
|
|
|
Director Name
|
Number of Outstanding
Restricted Stock
Units
|
E. R. Campbell
|
25,829
|
W. Ronald Dietz
|
27,409
|
Patrick W. Gross
|
27,409
|
Ann Fritz Hackett
|
27,409
|
Lewis Hay, III
|
27,409
|
Pierre E. Leroy
|
26,409
|
Mayo A. Shattuck III
|
27,409
|
Bradford H. Warner
|
20,633
|
(3)
|
Certain non-management directors
serving on May 11, 2011, elected to forego his or her cash retainer in
exchange for a grant of nonqualified stock options under the 2004 Stock
Incentive Plan with an equivalent Black-Scholes value. These options have
an exercise price of $53.03.
|
|
|
|
The Black-Scholes value for the
stock option awards granted on May 11, 2011, was determined using the
following assumptions:
|
Volatility
|
Risk-Free Interest
Rate
|
Dividend
Yield
|
Expected Term
|
34%
|
1.87%
|
2.34%
|
5
years
|
|
The compensation amounts reflected in the table
above do not include a reduction for risk of forfeiture.
The stock options
vest on the first anniversary of the date of grant or, if earlier, upon a
change of control of Capital One or the directors termination of service
(other than removal for cause). The options expire ten years from the date
of grant. Upon termination from Board service (other than by removal for
cause), a director will have the remainder of the full option term to
exercise the vested stock options.
The following table sets forth the number of
stock options awarded in 2011, the date of grant and the grant date fair
value of those awards, and the total number of stock options outstanding
for each director as of December 31, 2011. The grant date fair values of
the stock options awarded in 2011 are not included in the Option Awards
column of the above table because the foregone cash amounts are included
in the Fees Earned or Paid in Cash column.
|
|
|
|
Director
|
Number
of
Stock Options
|
Date of Grant
|
Grant Date Fair Value
|
Total Number of Outstanding
Stock Options
|
|
E. R. Campbell
|
6,638
|
5/11/2011
|
$90,006
|
28,107
|
|
W. Ronald Dietz
|
|
|
|
75,705
|
|
Patrick W. Gross
|
8,851
|
5/11/2011
|
$120,013
|
171,349
|
|
Ann Fritz Hackett
|
|
|
|
33,256
|
|
Lewis Hay, III
|
8,113
|
5/11/2011
|
$110,006
|
59,451
|
|
Pierre E. Leroy
|
|
|
|
47,982
|
|
Mayo A. Shattuck III
|
7,376
|
5/11/2011
|
$100,013
|
56,828
|
|
Bradford H. Warner
|
8,113
|
5/11/2011
|
$110,006
|
33,119
|
|
|
(4)
|
In 2011, each non-management
director elected to direct a contribution from Capital One of $10,000 to a
charitable organization of his or her choice.
|
29
SECTION V COMPENSATION DISCUSSION AND
ANALYSIS
|
Capital Ones executive compensation
program is designed to attract, retain and motivate leaders who have the ability
to foster strong business results and promote the long-term success of the
Company. The Compensation Committee of the Board of Directors (the Committee)
is responsible for, among other matters, developing, monitoring and managing the
compensation of all of our executive officers, including the named executive
officers. Final decisions regarding the compensation of our executive officers,
including our Chief Executive Officer (CEO), are made by our independent
directors. This Compensation Discussion and Analysis will review the
compensation of the CEO, Richard D. Fairbank, and the following executive
officers:
-
Gary L. Perlin, Chief Financial Officer
-
Lynn A. Carter, President, Banking
-
Peter A. Schnall, Chief Risk Officer
-
Ryan M. Schneider, President, Card
As used throughout this proxy statement,
the NEOs means the four executive officers listed above, and references to
named executive officers refer to the CEO and the NEOs,
collectively.
In 2011, Capital One delivered strong
financial results and solid growth despite prolonged economic uncertainty. After
weathering the Great Recession, the sweeping legislative financial reform of the
CARD Act and the Dodd-Frank Act and the balance sheet consolidation of FAS
166/167, Capital One emerged as one of the few financial institutions able to
capitalize on the market disruption caused by those forces and announce the
acquisitions of both ING Direct and the U.S. credit card business of HSBC. The
Committee believes that the actions taken by the CEO and the NEOs throughout
2011 contributed greatly to the Companys results and helped position the
Company to take advantage of emerging opportunities and to deliver stockholder
value over the long-term. These accomplishments included:
-
Delivering $3.1 billion in net income for 2011, or
$6.80 per common share (fully diluted), compared
to net income for 2010 of $2.7 billion, or $6.01 per common share
(fully diluted), an increase in net
income of
14.7% year over year;
-
Announcing two strategically and financially
compelling deals with the acquisition of ING Direct
and the pending acquisition of the U.S. credit card business of
HSBC;
-
Maintaining a Tier 1 common ratio of 9.7% at the
end of 2011, up from 8.8% at the end of 2010;
-
Ranking second among our peer comparator group in
return on tangible equity for 2011;
-
Ranking third among our peer comparator group in
both one-year and three-year total stockholder
return and strongly outperforming the broader KBW Bank Sector index,
which was down 24.6% for
2011;
-
Improving credit losses to $3.8 billion, or 2.94%,
for 2011, down from $6.7 billion, or 5.18%, in 2010;
-
Maintaining a strong and flexible balance sheet
and strategically positioning it to support the
acquisitions;
-
Earning $2.3 billion in net income from the
Companys Domestic Card business and acquiring and
integrating the credit card partnership with Kohls Department
Stores;
-
Once again delivering outstanding results and
growth in the Auto Finance business, strengthening
our position as a leading franchise in the industry;
-
Driving loan growth and solid returns in our
Commercial Banking business; and
-
Assisting our customers and communities in this
challenging economic environment by extending
billions of dollars of new loans, commitments and renewals to our
banking customers and
investing substantial
philanthropic, community development and volunteer resources to improve
our communities.
30
Important Aspects of Our
Executive Compensation Programs
|
Capital Ones executive
compensation programs are implemented primarily through a variety of
equity-based compensation vehicles. Since 1997, the compensation structure for
the CEO has consisted entirely of equity-based awards in lieu of any salary,
bonus, retirement plan contributions or other traditional forms of compensation.
In addition, we do not pay cash bonuses to the NEOs for annual performance and
instead grant them a variety of equity-based awards following the end of the
year, based on the Committees evaluation of Company and individual performance
during the year. The Committee annually reviews and assesses these programs and
adjusts them as it deems appropriate.
For the 2011 performance year, the
Committee maintained the components of the CEO compensation program that it
first developed in January 2009, consisting of a mix of stock option and
performance share awards granted at the beginning of the year and the
opportunity for restricted stock units that may be awarded after the end of the
year. This structure is designed to create a direct link between Mr. Fairbanks
compensation and the Companys performance over various time horizons. In
January 2011, the Committee developed an NEO compensation program under which,
consistent with the Companys historical pay-for-performance philosophy, 80% of
NEO total target compensation is equity-based and directly tied to the
performance of the Company over multiple time horizons. The Committee believes
that both programs balance risk and financial results, reward named executive
officers for their achievements, promote the overall objectives of our executive
compensation program and encourage appropriate, but not excessive,
risk-taking.
The Committee adopted additional
performance conditions for equity awards granted to the named executive officers
in January 2012 to further enhance the connection between the compensation of
the CEO and each NEO and the performance of the Company as follows:
-
Each of the January 2012 awards of restricted
stock units and stock options granted to the CEO and
restricted stock and stock options granted to the NEOs are subject to
performance-based vesting
provisions tied to
core earnings and return on assets that would reduce each award in the event
that
the Company does not achieve certain
performance thresholds over the course of the three-year
vesting period; and
-
Each of the performance share awards for the named
executive officers granted in January 2012 is
subject to an Adjusted ROA performance condition measured on an
absolute basis, in addition to the
relative
three-year Adjusted ROA performance metric that applies to these
awards.
In this manner, each long-term equity
incentive award granted to the named executive officers in January 2012 is at
risk of complete forfeiture over the three-year vesting period. In addition, the
Company maintained its clawback and stock retention provisions implemented in
January 2011. See Other Aspects of Executive Compensation on page 48 for more
details on all of these terms and provisions.
As of March 1, 2011, Capital One also
changed its practice relating to excise tax gross-ups to which the named
executive officers may be entitled if terminated in connection with a change of
control. All current change of control agreements providing for a potential
excise tax gross-up will expire at the end of their terms and will be replaced
with agreements that do not provide for an excise tax gross-up. See below under
Change of Control Agreements on page 47 for more information.
The Company continued to participate in
the horizontal review of incentive compensation practices that the Federal
Reserve Board conducted in 2010 and 2011 with respect to the incentive
compensation practices at 25 large banking organizations. Capital One has
cooperated with the review by responding to requests for data and other
information relating to the Companys incentive compensation policies, processes
and programs. The Company has worked with, and will continue to work with, the
Federal Reserve and other federal bank regulators so that our incentive
compensation programs are structured such that they continue to appropriately
balance risk and do not jeopardize the safety and soundness of Capital
One.
31
The Company also continues to annually
perform a risk assessment of its compensation policies and practices as
discussed under Risk Assessment of Compensation Policies and Practices in the
Governance of Capital One section on page 8.
Objectives of Our Executive
Compensation Programs
|
Capital Ones executive compensation
program has four primary objectives.
Strongly link rewards with both
business and individual performance while appropriately balancing
risk
Capital One emphasizes pay-for-performance
at all organizational levels. Typically, as an executives level of
responsibility increases, so does the proportion of the executives pay that is
subject to performance criteria. Therefore, the named executive officers have
the highest relative portion of their pay directly linked to Company and
individual performance, as compared to other associates. Awards made in January
2012 for the 2011 performance year were based on the performance of both the
Company and the individual, as well as on the demonstration of specific
leadership competencies that are assessed through a comprehensive performance
management process. As part of the performance management process, each of the
named executive officers was assessed against one or more performance objectives
specifically designed to evaluate the degree to which the executive balanced
risks inherent in his or her role. The Chief Human Resources Officer and the
Chief Risk Officer reviewed these assessments, and the Committee considered the
assessments in making its determinations regarding individual performance and
compensation levels.
Ensure that total compensation
rewards performance over multiple time horizons
Our compensation programs are structured
to encourage our executives to deliver strong results over the short-term while
making decisions that create sustained value for our stockholders over the
long-term. The CEOs compensation is all equity-based, all at-risk and all
performance-based. For the NEOs in 2011, approximately 80% of total target
compensation was provided through equity-based vehicles which were all at-risk
to the performance of the Companys stock price and subject to vesting over
multiple time horizons. The use of deferred, equity-based compensation vehicles
with multi-year vesting terms advances our goal of aligning the ultimate value
realized by the named executive officers with the performance of the Companys
stock over time because the value of these compensation vehicles increases and
decreases based on the performance of the Companys stock price.
Attract, retain and motivate top
executive talent
To attract, retain and motivate
exceptional leaders, we believe that compensation opportunities at Capital One
must be competitive with the marketplace for talent. The Committee and the
independent directors strive to preserve a competitive pay mix and total target
compensation values in the executive compensation program, as well as provide
competitive total rewards based on our selected peer group.
Align our executives interests with
those of our stockholders
The Committee and the independent
directors remain committed to designing incentive compensation programs that
reward individual and corporate performance and that are aligned with the
creation of stockholder value over the long-term. Because the majority of CEO
and NEO compensation is delivered through deferred, equity-based vehicles that
vest over multiple time horizons, the named executive officers have a
significant stake in the success of the Company. In addition, we established
specific stock ownership policies that the named executive officers must meet on
an annual basis and stock retention provisions applicable to certain equity
awards. Finally, in an effort to manage the financial impact of our compensation
programs and to use our resources most efficiently, the Committee and the
independent directors focus on making awards that have an appropriate
correlation between the value of the award to the executive officer and the
expense taken by the Company.
32
Components of CEO
Compensation
In 2011, as in past years, the Committee
granted to the CEO equity-based awards at the beginning of the year that are
designed to provide an incentive to focus on longer term performance. Following
the end of the year, the CEO had the opportunity to receive an additional
equity-based award based on the Committees evaluation of the Companys
performance and the CEOs contributions over the past year.
The table below summarizes the elements of
compensation that the Committee approved for the 2011 performance year for the
CEO.
Compensation
Element
|
Timing of
Award
Determination
|
Basis for
Award
|
Approximate % of
CEO Total
Target
Compensation
|
Vesting Schedule
|
Base
Salary
|
Not
applicable
|
Not
applicable
|
0%
|
Not applicable
|
Cash
Bonus
|
Not
applicable
|
Not
applicable
|
0%
|
Not applicable
|
Stock
Options
|
January
2011
|
Incentive
for Future
Company Performance
|
50%
|
3-year cliff vesting; expire in 10 years
|
Performance Shares
|
January
2011
|
Incentive
for Future
Company Performance
|
25%
|
Vest at the
end of the 3-year performance period; the number of shares vesting depends
on achievement of performance factors
|
Restricted Stock Units
|
January
2012
|
Reward for
Contributions to
2011 Company Performance
|
25%
|
3-year cliff vesting; subject to performance based vesting; settle
in cash
|
Components of NEO
Compensation
The NEOs traditionally receive a mix of
cash and equity-based compensation. As noted above, we do not pay cash bonuses
to the NEOs for annual performance. Instead, following the end of the year the
Committee may grant a variety of equity-based awards based on the Committees
evaluation of Company and individual performance during the past year. All of
these equity-based awards are subject to deferred vesting over a three-year
period.
The table below summarizes the elements of
compensation that the Committee approved for the 2011 performance year for the
NEOs.
Compensation
Element
|
Timing of
Award
Determination
|
Basis for
Award
|
Approximate % of
NEO Total
Target
Compensation
|
Vesting
Schedule
|
Base
Salary - Cash
|
January
2011
|
Overall
experience, skills,
performance, and knowledge
|
20%
|
Paid in cash throughout the
performance year
|
Base
Salary -
Restricted Stock Units
|
January
2011
|
Incentive
for Current Year
Company Performance
|
15%
|
Awarded as restricted stock
units which settle in cash on December 15 of the performance
year
|
Cash
Bonus
|
Not
applicable
|
Not
applicable
|
0%
|
Not applicable
|
Restricted Stock Units
|
January
2012
|
Reward for
2011 Company
Performance
|
15%
|
3-year ratable vesting;
settle in cash
|
Stock
Options
|
January 2012
|
Reward for 2011 Individual
Performance and Incentive
for
Long-Term Performance
|
50%
|
3-year
ratable vesting; expire in 10 years; subject to performance-based
vesting
|
Performance Shares
|
Vest at the end of the 3-year performance period; the number of
shares vesting depends on achievement of performance factors
|
Restricted Stock
|
3-year
ratable vesting; subject to performance-based
vesting
|
33
Chief Executive Officer
Compensation
|
Goals and
Principles
The Committees top priority is to align
the interests of the CEO with the interests of our stockholders by directly
linking his awards with the Companys performance and his contributions thereto
over appropriate time horizons. The Committee believes that the CEOs
compensation should be at-risk based on his and the Companys performance. Each
year the Committee makes recommendations to the independent directors regarding
the form, timing and amount of CEO compensation. The Committee takes into
account the CEOs historical performance and how to most effectively align the
CEOs interests with the interests of our stockholders over the appropriate time
horizons, support safety and soundness and appropriately balance risk. Final
decisions regarding CEO compensation are made by the independent directors. The
Committee and the independent directors have the flexibility to adjust
compensation decisions from year to year to take into account the Companys
performance and evolving market practices.
2011 CEO Compensation
Decisions
The Committee determined that the
compensation structure first adopted in 2009 remained appropriate for Mr.
Fairbank in 2011 given that the compensation program consists entirely of
equity-based vehicles and is at-risk based on the Companys and Mr. Fairbanks
performance. In particular, the Committee determined that a compensation program
that includes three different equity-based vehicles continued to be appropriate
because it aligns Mr. Fairbanks compensation with the Companys performance
over the appropriate time horizons and supports the goals and principles
described above.
In January 2011, when determining the
value for each component of the award, the Committee considered the prior
performance of the Company and the CEOs individual contributions to that
performance. In particular, the Committee considered the following:
-
Mr. Fairbanks and the Companys performance
during 2010 relative to the financial, operating,
safety and soundness and strategic performance factors described below
under Restricted Stock
Unit Award;
-
The economic environment and the Companys overall
performance in 2010 relative to its objectives;
-
The Companys performance in 2010 relative to the
peer comparator companies performance
in
2010;
-
The structure and amount of compensation awarded
to the chief executive officers of the peer
comparator companies;
-
The structure and amount of Mr. Fairbanks
compensation awards in prior years, as well as his
historical compensation value realized, existing stock holdings and
remaining unexercised options;
-
The Companys risk profile and the time horizon
over which the deferred, equity-based vehicles
will vest;
-
Mr. Fairbanks expected leadership of the
Companys strategic initiatives in 2011; and
-
The fact that the ultimate value of Mr. Fairbanks
deferred, equity-based awards will depend on the
Company and Mr. Fairbanks performance over time.
After considering all of these factors
together, without giving particular weight to any specific factor, the Committee
and the independent directors determined that a total target compensation amount
of $16 million was appropriate for Mr. Fairbanks 2011 compensation
program.
Performance Share Award
In January 2011, based on the above
determination by the Committee and the independent directors, Mr. Fairbank was
granted an award of performance shares under which he may receive from 0% to
200% of a target number of 82,851 shares of the Companys common stock based on
the Companys performance over the three-year period from January 1, 2011,
through December 31, 2013. The Companys performance will be
34
assessed on the basis of Adjusted ROA,
which we previously referred to as cash return on average tangible assets or
CROATA, relative to a comparator group consisting of companies in the KBW Bank
Sector index, excluding custody banks (the KBW index). The number of shares
issued under the award will generally be reduced by 50% if the Companys
Adjusted ROA for the three-year performance period is not positive, no matter
how well it compares against the peer group. See Additional Performance
Conditions and Risk Adjustments Performance Shares on page 44 for more
information on Adjusted ROA. The Committee believes that the KBW index is an
appropriate index against which to assess the Companys performance because its
members are principally lending businesses, as is the Company. The award had a
grant date value of $4 million; however, the number of shares that Mr. Fairbank
ultimately receives, if any, will be solely dependent on the Companys
performance over the performance period. The performance share award is also
subject to clawback provisions in the event of a restatement or misconduct as
described in more detail under Clawbacks on page 48.
After the end of the three-year
performance period, the Committee will certify the Companys performance and
issue the corresponding number of shares of the Companys common stock, if any,
in accordance with the table below.
|
Relative
Adjusted ROA / CROATA
|
≥
80th
Percentile
|
50th
Percentile
|
< 20th
Percentile
|
Capital
One
Adjusted ROA / CROATA
|
> 0%
|
200%
|
100%
|
0%
|
≤
0%
|
100%
|
50%
|
0%
|
Stock Option Award
In January 2011, Mr. Fairbank also
received a grant of 608,366 nonstatutory stock options at an exercise price of
$48.28 per share (which was the fair market value of the Companys common stock
on the date of grant). The benefits to Mr. Fairbank of the stock options are
deferred, as the options cannot be exercised until three years after the date of
grant and will expire ten years after the date of grant. The option grant had a
fixed grant date value of $8 million; however, the ultimate value Mr. Fairbank
realizes, if any, is solely dependent on the long-term appreciation in the
Companys stock price. Mr. Fairbank can only realize value from the stock
options if and to the extent the Companys stock price increases after the date
of grant and the market value of the stock exceeds the exercise price at some
point after the three-year vesting period when the options are exercised. The
stock option award is also subject to stock retention requirements and clawback
provisions in the event of misconduct, each as described in more detail under
Other Aspects of Executive Compensation beginning on page 48.
35
Restricted Stock Unit
Award
A portion of Mr. Fairbanks 2011
compensation award consisted of an opportunity to be awarded restricted stock
units in early 2012. The award had a target value of $4 million, but the
ultimate value of the award was determined based on the Committees evaluation
of the Companys performance during 2011 and Mr. Fairbanks contributions to
that performance relative to the financial, operating, safety and soundness and
strategic factors shown below (which were evaluated on a qualitative basis
without any specific pre-established targets).
Financial
Performance
|
Operating
Performance
|
Safety and
Soundness
|
Strategic
Performance
|
-
Operating
earnings
-
Earnings per share
-
Return on tangible capital
|
-
Revenue
generation
-
Expense management
-
Operating effectiveness
-
Customer satisfaction
|
-
Capital
adequacy
-
Risk management and compliance
-
Credit loss management
-
Underwriting quality
-
Balance sheet management
|
-
CEO
leadership and performance of executive team
-
Capital allocation
-
Progress toward achievement of long-term
strategy
-
Execution against corporate
imperatives
-
Recruitment and development of world class
talent
-
Disciplined investment in
infrastructure
-
Corporate reputation and community
engagement
-
Preservation of corporate culture and
values
|
The Committee considered the Companys
performance as described under Introduction on page 30. In particular, the
Committee considered: Capital Ones delivery of strong financial results in
2011, driven by strong core earnings and improving credit; the Companys ability
to capitalize on the compelling strategic opportunities provided by the
acquisition of ING Direct and the pending acquisition of the U.S. credit card
business of HSBC; the Companys strong liquidity and capital position and its
strategic positioning of the balance sheet ahead of the acquisitions; the
Companys sound credit management practices and the business choices that it
made in the credit card business; the strong performance of the Auto Finance
business; and managements continued focus on risk management and compliance,
including the progress on enhancing the Companys risk and data
infrastructure.
The Committee also discussed Mr.
Fairbanks effective, disciplined leadership in guiding the Company in all of
these areas throughout 2011 as well as the progress and results achieved by a
wide range of business and staff units as the Company continued to face
significant economic, credit, legislative, regulatory and infrastructure
challenges. The Committee also took into account peer comparator group CEO
compensation levels, although the comparability of such information was limited
due to evolving market conditions, the different tenures of each of the peer
companies CEOs as compared to Mr. Fairbanks tenure as the CEO of Capital One
and the varying degrees of success those CEOs have had in leading their
respective companies.
After considering all of the above factors
together, the Committee and the independent directors determined in January 2012
to award Mr. Fairbank $7.2 million in restricted stock units. The award of
restricted stock units is subject to the performance-based vesting provisions
described in more detail under Additional Performance Conditions and Risk
Adjustments Performance-Based Vesting beginning on page 43.
36
CEO Compensation by Performance
Year
Below is a table showing Mr. Fairbanks
equity awards as they are attributable to the performance years indicated. For
2011, the performance share and the restricted stock unit awards described above
are included in the Stock Awards column, and the stock option award described
above is included in the Option Awards column.
Performance
Year
|
Cash
Salary
|
Cash
Bonus
|
Stock
Awards
|
Option
Awards
|
Total
Equity
Compensation
|
2011
|
$0
|
$0
|
$11,200,090
|
$8,003,906
|
$19,203,996
|
2010
|
$0
|
$0
|
$9,750,059
|
$6,500,009
|
$16,250,068
|
2009
|
$0
|
$0
|
$7,000,022
|
$4,000,001
|
$11,000,023
|
The table above is presented to show how
the Committee views compensation actions and to which year the compensation
awards relate, but it differs substantially from the Summary Compensation Table
on page 52 required for purposes of this proxy statement and is therefore not a
substitute for the information required in that table. There are two principal
differences between the Summary Compensation Table and the table
above:
-
The table above reports equity-based awards as
compensation for the performance year for which
they were awarded, even if the award was granted in one year based on
performance for the prior
year. As a result,
the restricted stock unit award granted to the CEO in January 2012 for the
2011
performance year, for example, is shown in
the table above as 2011 compensation. The Summary
Compensation Table reports equity-based awards only in the year in
which they were granted.
-
The Summary Compensation Table reports the change
in pension value and nonqualified deferred
compensation earnings and all other compensation. These amounts are not
a result of current year
compensation
determinations and are not shown above.
Additional Pay
Elements
As part of the CEO compensation program,
the Committee and the independent directors also approved certain other programs
intended to support Mr. Fairbanks productivity and well-being. These
include:
-
Executive term life insurance with a benefit level
of $5,000,000;
-
The ability to participate in a comprehensive
voluntary annual health screening;
-
Office supplies and other maintenance for Mr.
Fairbanks home office;
-
The use of a driver who also provides for Mr.
Fairbanks personal security; and
-
The monitoring and maintenance of an electronic
home security system.
Additional details on these programs can
be found in the Named Executive Officer Compensation section beginning on page
51. There are no other perquisites provided to Mr. Fairbank by the Company that
constitute additional compensation.
2012 CEO Compensation
Decisions
The Committee and the independent
directors reviewed the compensation structure utilized in 2011 for Mr. Fairbank
and determined that for 2012 the compensation program would continue to consist
entirely of equity-based vehicles. The Committee and independent directors
determined that the compensation program remained appropriate for Mr. Fairbank
in 2012 given that the compensation program is at-risk based on the Companys
and Mr. Fairbanks performance, aligns Mr. Fairbanks compensation with the
Companys performance over the appropriate time horizons and supports the
Companys executive compensation goals and principles.
However, after careful consideration of a
number of different factors, the Committee and independent directors determined
that changing the mix of the equity vehicles for the CEO compensation plan would
further align the interests of the CEO and the interests of our stockholders and
enhance the link between his equity awards and the Companys performance.
Therefore, for the 2012 CEO compensation plan, the Committee and the
37
independent directors shifted the mix of
equity vehicles so that the performance share award represents 50% of the CEOs
total target compensation for 2012 and the stock option award represents 25% of
total target compensation. The CEOs opportunity for an award of restricted
stock units at the end of 2012 remains at 25% of total target compensation. In
this manner, the percentage of the CEOs total target compensation for 2012
represented by performance shares is twice the percentage represented by
performance shares in the 2011 CEO compensation package. The Committee and the
independent directors made these decisions after taking into account the
perspectives of shareholders and proxy advisory firms on the benefits provided
through various forms of equity-based compensation. Furthermore, the Committee
and the independent directors believe that this change in mix, together with the
imposition of additional performance conditions on these awards, would further
strengthen the risk-balancing features of the CEO compensation program in a
manner consistent with guidance from the Federal Reserve regarding the role of
incentive compensation in balancing risks to a financial institution such as the
Company.
Based on the above framework, in January
2012 the Committee and the independent directors granted to Mr. Fairbank a
performance share award under which he may receive from 0% to 200% of a target
number of 191,257 shares of the Companys common stock based on the Companys
performance over the three-year period from January 1, 2012, through December
31, 2014. Mr. Fairbank also received a grant of 360,009 nonstatutory stock
options at an exercise price of $45.75 per share (which was the fair market
value of the Companys common stock on the grant date). The Committee also
determined that Mr. Fairbank will have an opportunity to be awarded restricted
stock units in early 2013 based on the Committees evaluation of the Companys
performance in 2012 relative to the same financial, operating, safety and
soundness and strategic factors described above under 2011 CEO Compensation
DecisionsRestricted Stock Unit Award. The Committee and the independent
directors will have absolute discretion to determine whether to make this grant
of restricted stock units, as well as to determine the value of the grant
relative to the target value of $4.375 million.
The terms of each of these awards are
substantially similar to the terms described above under 2011 CEO Compensation
Decisions except for the following additional performance conditions imposed on
the awards for 2012:
-
Like the restricted stock unit award described
above, the stock option award is subject to
performance-based vesting provisions as described in more detail under
Additional Performance
Conditions and Risk
Adjustments Performance-Based Vesting on page 43; and
-
The number of shares issued under the performance
share award will be reduced if the Companys
Adjusted ROA for one or more fiscal years completed in the vesting
period is not positive, no matter
how well it
compares against our peers in the KBW index, according to the chart
below.
|
Relative Metric: Adjusted
ROA
|
≥
80th
Percentile
|
50th
Percentile
|
< 20th
Percentile
|
|
Three
|
200%
|
100%
|
0%
|
Number of years
with
|
Two
|
167%
|
83%
|
0%
|
positive Adjusted
ROA:
|
One
|
133%
|
67%
|
0%
|
|
None
|
0%
|
0%
|
0%
|
38
Goals and
Principles
As with the CEO, the Committee seeks to
align the interests of the NEOs with the interests of our stockholders by
directly linking compensation to performance over the appropriate time horizons
while supporting safety and soundness and appropriately balancing risk. The
Committee annually reviews and recommends to the independent directors the
compensation structure for all of our executive officers, including those who
are ultimately reported as NEOs. The Committee takes into account each NEOs
historical performance, individual roles and responsibilities and contributions
expected from each NEO in the future as well as the recommendations of the CEO,
including his assessment of each NEOs performance. In determining 2011 NEO
compensation, the Committee also considered the specific factors discussed
below. Final decisions regarding NEO compensation are made by the independent
directors.
2011 NEO Compensation
Decisions
The 2011 NEO compensation program approved
by the Committee and the independent directors was designed to be consistent
with the Companys pay-for-performance philosophy and is consistent with the
2010 compensation program. Base salary remains a smaller portion of total target
compensation than equity based vehicles, and cash bonuses are not included in
the 2011 NEO compensation program. The Committee believes that this pay mix
serves to balance stockholder interests while effectively rewarding and
motivating key talent.
Based on the above framework, the Committee and the
independent directors then determined the 2011 total target compensation for
each NEO by considering the following factors:
-
Each NEOs performance relative to the Companys
strategic objectives;
-
The Companys historical performance;
-
The role and qualifications of each NEO (for
example, the NEOs scope of responsibility, experience
and tenure and the demonstration of competencies consistent with the
Companys values and the
ability to deliver
strong, sustainable business results);
-
Appropriate internal pay differentials and the
desire to foster teamwork and collaboration;
-
Historical pay levels and compensation
realized;
-
Available role-specific market compensation data
from peer comparator companies;
-
Available information on the structure of
compensation packages for senior executives at peer
comparator companies;
-
Market trends in executive compensation (for
example, current rates of pay and the prevalence and
types of incentive vehicles); and
-
The overall structure of the compensation
program.
Base Salaries
For the 2011 performance year, the
Committee chose to defer a significant portion of each NEOs base salary until
the end of the year. Rather than award each NEO a base salary entirely in cash,
the 2011 base salary for NEOs was delivered in a mix of cash (approximately 20%
of total target compensation and subject to a $1 million cap) and restricted
stock units that settled in cash on December 15, 2011 (approximately 15% of
total target compensation). In this way, the 2011 compensation program further
deferred cash compensation for each NEO and placed it at risk to the performance
of the Companys stock price for the entire performance year.
In January 2011, the Committee and the
independent directors approved 2011 base salaries for the NEOs, including the
portion of base salary delivered as restricted stock units, ranging from
$1,780,000 to $2,596,000. Individual details for each NEO are provided in the
table below showing compensation by performance year.
39
Incentive Awards
In addition to base salary, in January
2012 the Committee determined to award each NEO various equity-based incentive
awards as a reward for Company and individual performance in 2011.
Restricted Stock Unit
Awards
In January 2012, the Committee and the
independent directors approved awards of restricted stock units for the NEOs
ranging from $1,246,050 to $1,802,250, representing a payout at 180% of the
target award values established by the Committee in January 2011. Individual
details for each NEO are provided in the table below showing compensation by
performance year. The Committee and the independent directors determined that
these awards were appropriate in light of the Companys performance as described
under Introduction on page 30 and the other Company performance factors
described above in connection with the CEOs award of restricted stock
units.
Equity Incentive Awards
In January 2012, the Committee and the
independent directors awarded various equity incentive awards to the NEOs for
the 2011 performance year. At Capital One, equity incentive awards are linked to
performance in two ways:
-
The size of the award is based on each NEOs
individual performance rating for the year just
completed; and
-
The ultimate value of the award is dependent on
Capital Ones performance over time.
Equity incentive awards are designed to
emphasize elements that are of particular importance to Capital One given the
Companys unique goals and continually evolving business strategies and
objectives. In determining the actual amounts to be awarded to each NEO, the
Committee considered each NEOs contribution to the Companys strategic
accomplishments as described under Introduction on page 30 as well as the
individual performance of each NEO. The Committee also received input from the
CEO on his assessment of each NEOs individual performance and his
recommendations for compensation of the NEOs. The CEO also assessed each NEOs
performance against one or more specific objectives designed to evaluate the
degree to which the NEO balanced risks inherent in his or her role. These
assessments included the use of both quantitative and qualitative risk measures
and were reviewed by the Chief Human Resources Officer and the Chief Risk
Officer.
The equity incentive awards consisted of
stock option, restricted stock and performance share awards. The terms of the
stock option and performance share awards are substantially similar to the terms
of the CEOs stock option and performance share awards described under 2012 CEO
Compensation Decisions, except that the NEO stock options vest ratably in
one-third increments starting on the first anniversary of the grant date. Shares
of restricted stock cannot be sold or transferred until the first anniversary of
the grant date and continue to vest in one-third increments until the third
anniversary. Like the stock option awards, the restricted stock awards are
subject to performance-based vesting provisions as discussed below under
Additional Performance Conditions and Risk Adjustments Performance-Based
Vesting on page 43 and to clawback and holding requirements as discussed below
under Other Aspects of Executive Compensation beginning on page 48.
Mr. Perlin, the Companys Chief Financial
Officer, was awarded 61,030 nonstatutory stock options, 36,476 shares of
restricted stock and a target amount of 21,886 performance shares with a total
grant date value for all three awards of $3,337,500. This amount was at the
target award value established by the Committee in January 2011. The Committee
determined to grant these awards based in part upon Mr. Perlins management of
the Companys balance sheet throughout 2011. The Committee specifically
considered the Companys capital ratios and funding levels throughout 2011 and
the Companys ability to be in a position to announce the acquisitions of ING
Direct and the U.S. credit card business of HSBC.
40
Ms. Carter, President, Banking, was
awarded 45,716 nonstatutory stock options, 27,323 shares of restricted stock and
a target amount of 16,394 performance shares with a total grant date value for
all three awards of $2,500,000. This amount was at the target award value
established by the Committee in January 2011. In addition, in January 2012, in
connection with Ms. Carters previously announced separation from the Company,
which is expected to occur on March 31, 2012, the Committee approved additional
vesting on her outstanding restricted stock awards scheduled to vest in January
and February 2013, including her award granted in January 2012, that she would
otherwise forfeit upon her separation. Ms. Carter was responsible for continued
progress on the banks infrastructure in early 2011 and assisted with the
management transition announced by the Company in May 2011.
Mr. Schnall, the Companys Chief Risk
Officer, was awarded 42,196 nonstatutory stock options, 25,219 shares of
restricted stock and a target amount of 15,132 performance shares with a total
grant date value for all three awards of $2,307,500. This amount was at the
target award value established by the Committee in January 2011. Mr. Schnall was
essential to developing and implementing the Companys rigorous risk management
strategies, which resulted in continued improvement in credit in 2011 across the
Companys businesses and improved risk management results in other risk
categories.
Mr. Schneider, President, Card, was
awarded 48,678 nonstatutory stock options, 25,219 shares of restricted stock and
a target amount of 17,456 performance shares with a total grant date value for
all three awards of $2,662,000. This amount was slightly above the target award
value established by the Committee in January 2011. The Committee determined
that an award above the target value was appropriate given the superior
performance of the Companys credit card business. In particular, the Committee
noted the introduction of three flagship products in 2011, the successful
addition and integration of the Hudson Bay Company and Kohls Department Stores
card partnerships and progress made in servicing capabilities.
NEO Compensation by Performance
Year
The table below shows actual NEO
compensation as it is attributable to the performance year indicated.
Name
|
Performance
Year
|
Cash
Salary
|
Cash
Bonus
|
Stock
Awards
(1)
|
Option
Awards
|
Total
Base
Compensation
|
|
2011
|
$1,000,000
|
$0
|
$6,068,619
|
$741,667
|
$7,810,286
|
Gary L. Perlin
|
2010
|
$1,000,000
|
$0
|
$5,107,496
|
$1,224,598
|
$7,332,094
|
|
2009
|
$3,175,000
|
$0
|
$1,360,720
|
$0
|
$4,535,720
|
|
|
|
|
|
|
|
|
2011
|
$1,000,000
|
$0
|
$4,275,134
|
$555,564
|
$5,830,698
|
Lynn A. Carter
|
2010
|
$1,000,000
|
$0
|
$3,712,612
|
$944,906
|
$5,657,517
|
|
2009
|
$2,625,000
|
$0
|
$1,125,009
|
$0
|
$3,750,009
|
|
|
|
|
|
|
|
|
2011
|
$923,000
|
$0
|
$3,949,411
|
$512,787
|
$5,385,198
|
Peter A. Schnall
|
2010
|
$1,000,000
|
$0
|
$3,222,506
|
$846,641
|
$5,069,147
|
|
2009
|
$2,350,000
|
$0
|
$1,207,173
|
$0
|
$3,557,173
|
|
|
|
|
|
|
|
Ryan M. Schneider
|
2011
|
$968,000
|
$0
|
$4,292,424
|
$591,559
|
$5,851,984
|
2010
|
$1,000,000
|
$0
|
$3,364,889
|
$956,247
|
$5,321,136
|
(1)
|
|
For 2011, includes
restricted stock unit portion of base salary granted in January 2011 and
restricted stock unit, restricted stock and performance share awards
granted in January 2012.
|
41
This table is presented to show how the
Committee views compensation actions and to which year the compensation awards
relate, but it differs substantially from the Summary Compensation Table on page
52 required for purposes of this proxy statement and is therefore not a
substitute for the information required in that table. There are two principal
differences between the Summary Compensation Table and the above
table:
-
The table above reports equity-based awards as
compensation for the performance year for which they were awarded, even if the
award was granted in one year based on performance for the prior year. As a
result, the restricted stock unit, stock option, restricted stock and
performance share awards granted in January 2012 for the 2011 performance
year, for example, are shown in the above table as 2011 compensation. The
Summary Compensation Table reports equity-based awards only in the year in
which they were granted.
-
The Summary Compensation Table reports the change
in pension value and nonqualified deferred compensation earnings and all other
compensation. These amounts are not a result of current year compensation
determinations and are not shown above.
Additional Pay
Elements
The Committee provides certain other
programs intended to support the NEOs productivity, well-being and security.
These programs provide some level of personal benefit and are not generally
available to all associates. For 2011, these included the following:
-
The ability to participate in a comprehensive
voluntary annual health screening;
-
Executive term life insurance with a benefit level
of approximately $5 million;
-
An automobile lease; and
-
The monitoring and maintenance of an electronic
home security system.
In addition, Mr. Perlin and Ms. Carter
each occasionally has been provided limited personal use of the corporate
aircraft.
The Committee has determined that the
nature and value of these programs are comparable to those offered to similarly
situated executives at our peers. Additional details on these programs can be
found in the Named Executive Officer Compensation section beginning on page
51.
2012 NEO Compensation
Decisions
For 2012, the Committee and the
independent directors approved an NEO compensation program that is substantially
similar to the 2011 program. The plan consists of multiple compensation vehicles
that directly link the NEOs compensation with the Companys performance over
multiple time horizons, align the NEOs interests with the interests of the
Companys stockholders, support safety and soundness and encourage appropriate
risk-taking. After considering market data, cash compensation delivered to
comparable executives at our peers and other factors, the Committee determined
to remove the $1 million cap on cash base salary, which means that base salary
in the form of cash and restricted stock units for 2012 represents 20% and 15%,
respectively, of total target compensation without the application of a cap that
would convert any portion of that cash salary over $1 million into restricted
stock unit salary.
Additional Performance
Conditions and Risk Adjustments
|
The equity awards approved by the
Committee for our named executive officers in January 2012 include additional
performance-based vesting terms designed to further enhance alignment between
pay and performance and balance the risks that our incentive compensation
programs might otherwise encourage. Each award of the restricted stock
(restricted stock units for the CEO) and stock options granted to the named
executive officers in January 2012 include performance-based vesting provisions
tied to core earnings and return on assets that will reduce the total value
delivered to the executive at vesting if the Company does not meet certain
performance thresholds during the three-year vesting period. Furthermore, in
addition to the relative Adjusted ROA metric applicable to performance share
awards granted to the named executive
42
officers in January 2012, the terms of the
performance share awards reduce the total value delivered to the executive at
vesting if for any of the years in the three-year performance period the Company
does not achieve positive Adjusted ROA, regardless how well the Company compares
to its peers in the KBW index over the performance period.
The ultimate value that our named
executive officers receive from these awards is tied to our stock price
performance over the vesting period. The Committee nevertheless determined that
these awards should be subject to additional performance conditions so that the
value received by the executives when the awards vest is also conditioned upon
the Company continuing to meet certain operating performance thresholds. In
setting these threshold operating performance conditions, the Company took into
account discussions with federal bank regulators. These new performance
conditions do not present any upside potential for the named executive officers
compensation but instead create an additional at-risk element to the
compensation that has been awarded to them, since the entire value of each award
could be forfeited over its three-year vesting period unless the Company
achieves the minimum thresholds.
Performance-Based
Vesting
The performance-based vesting provisions
applicable to awards of stock options, restricted stock and restricted stock
units condition the vesting of those awards upon the Company meeting the
following performance thresholds for each and every fiscal year ending in the
three-year vesting period:
-
Positive Core Earnings; and
-
Base ROA better than or equal to negative two
percent (-2%).
For any year Core Earnings are not
positive, the named executive officer will forfeit 50% of one-years worth of
vesting (i.e., one-sixth of the total award). For any year in which Base ROA is
not better than or equal to negative two percent, the executive will forfeit one
full years worth of vesting (i.e., one-third of the total award), regardless
whether the Companys Core Earnings for that fiscal year are positive. These
performance conditions were selected to reflect two standards for assessing the
earnings performance of our business. Core Earnings focuses on whether profits
are being generated by our basic business, as opposed to other factors that may
not reflect business fundamentals. Base ROA excludes only the effect of
impairments in goodwill or other intangible assets in assessing how effectively
we are utilizing our assets to generate income. Imposing these additional
performance conditions is designed to further reflect our approach of balancing
risk and performance over the long-term. Any forfeitures will be cumulative over
the three-year vesting period. In this manner, regardless of our executives
past performance and of our stock price performance, both the stock option and
restricted stock unit awards granted to the CEO in January 2012, and all of the
stock option and restricted stock awards granted to the NEOs in January 2012,
are at risk of complete forfeiture over the three-year vesting
period.
The terms of the applicable award
agreements define Core Earnings to mean the Companys net income available to
common stockholders, excluding, on a tax-adjusted basis, the impact of (i)
impairment or amortization of intangible assets, (ii) the credit portion of
other than temporary impairment of the securities portfolio, (iii) the build or
release of the allowance for loan and lease losses, calculated as the difference
between the provision for loan and lease losses and charge-offs, net of
recoveries, and (iv) the change in the combined uncollectible finance charge and
fee reserve. The Committee believes that Core Earnings is an appropriate
performance metric to employ for these performance-based vesting provisions
because the metric captures major operational costs and risks to the Companys
business, including charge-offs, operating expenses, market and competitive
risks and costs to maintain adequate levels of capital and liquidity. Because
the metric is based on net income available to common stockholders, it also
includes the impact of discontinued operations.
Base ROA is defined as the ratio,
expressed as a percentage, of (i) the Companys net income available to common
stockholders, excluding, on a tax-adjusted basis, the impact of any impairment
of intangible assets, to (ii) the Companys average total assets for the period.
The Committee believes that measuring profitability in
43
this way assesses the operational and
strategic choices of our named executive officers. Base ROA includes the impact
of intangible asset amortization and therefore reflects the impact of items such
as purchase accounting amortization related to acquisitions. Base ROA also
includes the impact of more judgmental components such as the allowance for loan
and lease losses, the finance charge and fee reserve and other than temporary
impairment of the credit portfolio.
With these performance-based vesting
provisions, the Committee has set a minimum expectation that the Companys Core
Earnings for each fiscal year ending in the three-year vesting period will be
positive, or the named executive officer will forfeit part of the corresponding
equity awards vesting for that fiscal year. The Committee believes that a Base
ROA worse than negative two percent for any fiscal year would represent material
losses to the Company, and therefore the corresponding equity awards vesting for
such fiscal year would be completely forfeited.
Performance
Shares
As described above, the performance share
awards granted in January 2012 to the named executive officers employ Adjusted
ROA as the performance metric. This metric is intended to reflect our earnings
capacity by focusing on a component of our net income relative to our tangible
assets. Adjusted ROA means the ratio, expressed as a percentage, of (a) the
Companys net income available to common stockholders, excluding, on a
tax-adjusted basis, the impact of (i) impairment or amortization of intangible
assets and (ii) the credit portion of other than temporary impairment of the
securities portfolio, to (b) the Companys average tangible assets for the
period. We previously referred to Adjusted ROA as cash return on average
tangible assets, or CROATA, and Adjusted ROA is calculated in the same manner as
the CROATA metric used in the performance share awards granted to the named
executive officers in January 2011 and to the CEO in January 2010.
Each of the performance share awards
granted in January 2012 is subject to reduction in the event that the Companys
Adjusted ROA for any fiscal year in the three-year performance period is not
positive. These reductions will occur regardless how well the Companys Adjusted
ROA compares to its peers in the KBW index. If the Company does not achieve
positive Adjusted ROA for one year in the performance period, the total number
of shares issued on the vesting date will be reduced by one-sixth. If the
Company does not achieve positive Adjusted ROA for two years in the performance
period, the total number of shares issued on the vesting date will be reduced by
one-third. If the Company does not achieve positive Adjusted ROA for any of the
three years in the performance period, the named executive officers will forfeit
the entire award. In this manner, even if we outperform compared to peers in the
KBW index, the performance share awards are subject to forfeiture if we do not
achieve a threshold level of performance on an absolute basis.
Criteria and Process for
Compensation Decisions
|
The Committee considers a number of
factors in making compensation decisions with respect to the named executive
officers. The Committee relies on a range of objective data including Company
performance data, peer comparator group performance data, historical pay
information, data on specific market practices and trends and other relevant
points of information to inform its business judgment.
Use of Outside Consultants for CEO
Compensation
The Committee engages a consultant from
Frederic W. Cook & Co., Inc. (the Consultant) to assist in the design of
the CEO compensation program. The Consultant assists the Committee in a number
of ways, including proposing and evaluating a peer comparator group, gathering
relevant compensation data from the peer comparator companies, discussing
relevant market trends and context and developing recommendations on possible
plan designs. Please see the discussion under Compensation Committee
Compensation Committee Consultant in the Governance of Capital One section on
page 12 for additional information about the Consultant.
44
Use of Outside Consultants for NEO
Compensation
The Chief Human Resources Officer and
other members of the Companys Human Resources department assist the CEO in
developing compensation recommendations to the Committee for the NEOs. The Human
Resources department typically uses multiple surveys as sources of market
compensation data. The Consultant also provides additional market reference
points that the Committee and the independent directors use when evaluating NEO
compensation. Other outside consultants provide information to the Human
Resources department regarding market practices and trends and research reports
and provide subject matter expertise on specific concepts and technical issues
related to executive compensation. However, these outside consultants do not
recommend either the form or amount of compensation that is to be paid to the
NEOs. The Human Resources department is responsible for analyzing the
information obtained from the outside consultants and presenting it to the CEO.
The CEO then considers all of the information provided by the Human Resources
department and the Chief Human Resources Officer and makes his compensation
recommendations for the NEOs to the Committee and the independent
directors.
Neither the CEO nor the Human Resources
department has a contractual arrangement with any compensation consultant to
determine or recommend compensation programs for the NEOs. The Consultant is
present at Committee meetings during which CEO and NEO compensation is discussed
and provides market data as well as an outsiders perspective regarding CEO and
NEO compensation practices. The Consultant has no other engagement with, and
performs no other services for, Capital One besides the services described
above.
Market Data
The Committee reviews pertinent data from
a group of peer comparator companies within the financial services industry.
These organizations are intended to represent the marketplace of companies with
whom Capital One competes for business and for executive talent.
The Consultant plays a lead role in
evaluating the peer comparator group on an annual basis. Each year, the
Consultant presents a comprehensive report to the Committee that highlights
size, scope and performance information from the peer comparator companies
across a variety of metrics. The Committee specifically considers the Companys
percentile rank versus peer comparator companies across the following financial
metrics:
-
Revenue;
-
Assets;
-
Market capitalization;
-
Net income;
-
U.S. deposits;
-
Loans held for investment;
-
Revenues;
-
Diluted earnings per share growth;
-
Return on tangible equity;
-
Adjusted ROA;
-
Tier 1 common ratio;
-
Charge-off rate; and
-
Total stockholder return.
After reviewing this information, the
Committee recommends a final peer comparator group to the independent directors
for approval. The peer comparator group is adjusted each year, as appropriate,
so that the size, scope, performance and business focus of the peer comparator
companies reflect Capital Ones competitive environment. After the peer
comparator group was significantly adjusted in 2009 due to considerable
consolidation within the previous peer comparator group caused by the recent
turmoil in the
45
financial sector, it has been used for
benchmarking and analysis when the Committee approved the 2010 and 2011
compensation programs and target award values. The Committee determined to
maintain the same peer comparator group for purposes of designing the 2012
compensation programs, and approved the following peer comparator group in July
2011:
American Express
|
Fifth Third Bancorp
|
Regions Financial
|
Bank of America
Corporation
|
J.P. Morgan Chase
|
SunTrust Bank
|
BB&T Corporation
|
KeyCorp
|
U.S. Bancorp
|
Citigroup
|
PNC Financial Services
|
Wells Fargo &
Company
|
Typically, compensation data from the peer
comparator group is used to inform the Committees determination of the total
compensation target values for the named executive officers, although peer
comparator group information has been of limited utility in recent years due to
changing practices during and after the time that peers were subject to
restrictions under the Troubled Asset Relief Program.
As of December 31, 2011, the Company
ranked third among the peer comparator group in both one-year and three-year
total stockholder return and second in return on tangible equity. Capital One
was positioned at or near the median of the peer comparator group in terms of
total assets, revenues and net income.
Tally Sheets
In addition to considering market data
from our peer comparator group (when available), the Committee also considers
information contained on total compensation tally sheets for the CEO and each
NEO. The tally sheets summarize multiple components of current and historical
compensation, as well as the potential value of post-termination arrangements.
The tally sheets are just one point of information used by the Committee in the
process of determining CEO and NEO compensation. They help the Committee to
understand the historical context that is relevant to current compensation
decisions, such as the CEO and each NEOs accumulated equity value. The tally
sheets also help the Committee to assess the potential downstream consequences
of its decisions, such as the potential value to be received by the CEO and each
NEO upon separation due to a change of control, retirement or other termination
scenarios.
Consideration of 2011 Say on Pay
Vote
At our 2011 Annual Meeting of
Stockholders, our stockholders supported our executive compensation program by
approving our non-binding advisory vote on executive compensation (2011 Say on
Pay) with over 87% of the votes cast. Since this vote, the Committee has
continued to review our executive compensation program, policies and practices
in light of our business results and our stockholder support. As described
above, the Committee and the independent directors approved certain changes to
the 2012 compensation programs for the named executive officers, based in part
on the consideration of perspectives from shareholders and proxy advisory firms
that the Committee assessed following our 2011 Say on Pay vote, with the
expectation that these changes would further advance the objectives of our
executive compensation program that shareholders supported through the 2011 Say
on Pay vote. The Committee continues to believe that our executive compensation
programs support the objectives outlined above.
Other Compensation
Arrangements
|
Pension and Non-Qualified Deferred
Compensation Plans
Capital One does not currently have any
active pension plans for the CEO or the NEOs. We offer a voluntary,
non-qualified deferred compensation plan that restores participating NEOs to the
level of savings they would have achieved if they had not been impacted by IRS
limits governing our qualified 401(k) plan. It also allows the NEOs to defer
additional pre-tax compensation in order to save for retirement.
46
Capital One annually reviews programs and
practices at our peer comparator companies and across the financial services
industry. We also review changes in the legal and regulatory environment
pertaining to retirement programs. Mr. Perlin, Ms. Carter, Mr. Schnall and Mr.
Schneider each participated in Capital Ones Voluntary Non-Qualified Deferred
Compensation Plan (the Plan) in 2011. Details of the Plan can be found under
Capital Ones Voluntary Non-Qualified Deferred Compensation Programs on page
62.
Employment
Agreements
Capital One typically does not enter into
employment agreements with the named executive officers in order to maintain
maximum flexibility in establishing separation terms at the appropriate time and
considering then current circumstances. The Committee retains full discretion to
approve employment agreements on an exception basis and has done so for
exceptional circumstances in the past.
Change of Control
Agreements
Each named executive officer is a party to
an agreement providing certain benefits if their employment terminates in
connection with a change of control. The Committee determined that such
agreements were appropriate based on their prevalence within the banking and
financial services industry and given the dynamic nature of merger and
acquisition activity among these institutions.
The change of control agreements define
compensation and benefits payable to named executive officers in certain merger
and acquisition scenarios, giving them some degree of certainty regarding their
individual outcomes in these circumstances. The Committee believes these
agreements allow the named executive officers to remain neutral and consider a
full range of decisions that are focused on maximizing stockholder value. The
change of control agreements are also intended to allow Capital Ones businesses
to operate with minimal disruption in the event of a change of control by
providing each named executive officer with an incentive to remain in their
leadership roles up to and beyond the transaction date. The named executive
officers are only entitled to benefits under the agreements if their employment
is actually terminated as a result of (or in anticipation of) certain merger and
acquisition scenarios.
Both eligibility for participation and the
structure of payments under these agreements are designed to be aligned with
market practice in the banking and financial services industry. This is designed
so that our stockholders are not faced with disproportionate severance costs
that may impair potential merger opportunities. It also supports our ability to
attract and retain talented executives by providing them with a competitive
level of benefit.
Projections of potential payouts to the
named executive officers under these agreements are included in the total
compensation tally sheets reviewed by the Committee on an annual basis. Although
the potential change of control payouts do not necessarily impact annual
decisions on CEO and NEO pay, reviewing this information allows the Committee to
fully understand the downstream implications of its decisions and the resulting
impact to the Company and its stockholders.
Our change of control agreements for the
named executive officers currently provide for excise tax gross-up payments in
certain circumstances. On March 1, 2011, Capital One delivered notice to the
named executive officers, that their current change of control agreements would
not be renewed. The Committee and the independent directors also approved a new
form of change of control agreement to be used after March 1, 2011, for new
hires, promotions and renewals which does not provide for an excise tax
gross-up. Accordingly, all change of control agreements providing for a
potential excise tax gross-up after a change of control will expire by April
2014, to be replaced with the new form of agreement that does not provide for an
excise tax gross-up.
47
Post-Employment Compensation
Practices
The CEO has no employment or severance
arrangement with the Company other than the change of control agreement as
described above. If an NEO separates from Capital One, he or she is entitled to
receive the amounts set forth in the Companys Executive Severance Plan, which
provides for a payment of up to 30% of the NEOs current target total
compensation plus health, dental and vision benefits through COBRA and
outplacement services. The Committee may exercise its business judgment in
approving additional amounts in light of all relevant circumstances, including
the NEOs term of employment, past accomplishments, reasons for separation from
the Company, potential risks and the NEOs willingness to restrict his or her
future action(s), such as through an agreement not to compete or solicit the
Companys customers or employees. For example, in January 2012, in connection
with Ms. Carters previously announced separation from the Company, which is
expected to occur on March 31, 2012, the Committee approved additional vesting
on restricted stock awards scheduled to vest in January and February 2013 that
she otherwise would have forfeited upon her separation. Capital One has asked
certain NEOs to enter into various agreements that contain restrictive covenants
related to confidentiality, non-competition, non-solicitation of employees and
ownership of work product. For additional information, please see Restrictive
Covenants in the Named Executive Officer Compensation section on page 64.
Each of the NEOs also has a change of control agreement as described above. Upon
retiring from the Company, all employees are entitled to receive certain retiree
medical benefits.
Other Aspects of Executive
Compensation
|
Clawbacks
Beginning in January 2011, the Company
included recoupment, or clawback, provisions in certain equity awards made to
the named executive officers. The clawback provisions allow the Company to
recover equity compensation in the event of a financial restatement or executive
misconduct as follows:
-
Each award of performance shares granted to the
named executive officers in 2011 and 2012 include a clawback that is triggered
in the event of a financial restatement by the Company within three years of
the vesting of the award if the executive would have been entitled to fewer
shares on the vesting date as a result of the restatement; and
-
Each award of restricted stock, stock option and
performance shares granted to the named executive officers in 2011 and 2012
includes a clawback that is triggered if the executive commits misconduct
applicable to all shares and options that vested within the year prior to the
misconduct.
The clawback provisions are designed to
recoup the shares awarded to the executive or, in the event the executive has
sold or otherwise transferred the shares, the net proceeds from that sale or
transfer.
Stock Ownership and Retention
Requirements
Consistent with their responsibilities to
our stockholders, the CEO and the NEOs are required to maintain a significant
financial stake in the Company. To this end, the CEO and the NEOs must own
shares of Capital One stock with a fair market value of at least the following
annual cash salary multiples:
Role
|
Salary Multiple
|
CEO
|
5X
|
Other NEOs and Executive
Officers
|
3X
|
Given that the CEOs compensation program
does not include a base salary, his ownership requirement is based on a notional
salary established by the Committee and the independent directors, which is
currently $1,000,000.
48
Ownership requirements may be fulfilled
using the following shares:
-
Shares owned without restriction;
-
Unvested restricted stock;
-
Shares acquired through the Associate Stock
Purchase Plan (ASPP); and
-
Shares owned through Capital Ones 401(k)
Plan.
The Committee annually reviews the
guidelines and monitors the CEOs and the NEOs compliance with them. New
executive officers are given two years from the date of promotion to or
appointment as an executive officer to comply with these requirements. In the
event that an executive officer is not in compliance with these requirements,
the Committee has the right to take action, including reducing the executive
officers compensation. The CEO and the NEOs are currently in compliance with
this requirement.
In addition, beginning in January 2011,
the Company implemented stock retention requirements for certain equity awards
made to the named executive officers. Throughout each executives term of
employment with Capital One, and for all shares that are acquired during the
one-year period following termination of employment, each executive must hold
50% of the after-tax net shares acquired under stock option and restricted stock
awards for one year. These stock ownership and retention requirements apply to
all of our executive officers.
All of Capital Ones executive officers
are prohibited from engaging in short sales, hedging transactions or speculative
trading in derivative securities of Capital One stock and from using their
Capital One stock as collateral for margin loans.
Equity Grant
Practices
Capital One strives to maintain equity
grant practices that demonstrate high standards of corporate governance. Annual
incentive awards are approved by the Committee and the independent directors at
regularly scheduled meetings in the first quarter of each year. The date of
grant is the actual date on which the Committee approves the awards. The
Committee may grant awards of restricted stock, stock options or other equity
awards outside of the annual incentive cycle, usually in connection with hiring
a new executive. For a newly hired executive, the date of grant is the later of
the date of Committee approval or the executives start date. The Committee has
delegated authority to the CEO to award restricted stock (but not options or
other equity awards) to associates who are not executive officers, subject to a
maximum amount of $1 million for any employee in any one year. These awards are
designed to be used for new hires and for special programs designed by
management to incentivize and reward current employees of the Company. The
Committee reviews all grants made by the CEO at least twice a year.
With respect to awards of stock options,
the exercise price is always the Fair Market Value of the Companys stock on the
date of grant. Under the terms of our 2004 Stock Incentive Plan, as amended and
restated, Fair Market Value is equal to the closing price of the Companys
common stock on the date of grant.
The Company does not seek to time equity
grants to take advantage of material non-public information and in no event is
the grant date set to a date that is prior to the date of approval.
Tax, Accounting and Regulatory
Considerations
The Committee carefully considers the tax
and regulatory impact of its compensation programs on the Company, as well as on
its executives. To maintain flexibility in compensating executive officers, the
Committee does not require all compensation to be awarded in a tax-deductible
manner. However, it is the Committees intent to maximize tax deductibility to
the extent reasonable, provided the Companys programs remain consistent with
the Companys overall executive compensation philosophy.
With respect to the named executive
officers (other than the Chief Financial Officer), Section 162(m) of the
Internal Revenue Code allowed a federal tax deduction for compensation paid to
the executive that is $1 million or less. For amounts in excess of $1 million, a
deduction is allowed if that compensation could
49
be classified as performance-based. The
Companys 2004 Stock Incentive Plan, as amended and restated, provides for the
establishment of specific performance thresholds to be tied to equity-based
awards in order to qualify these incentive awards as performance-based.
Historically, the Committee would establish annual performance thresholds to
provide for deductibility over the $1 million limit for incentive compensation
paid to the named executive officers.
The award of stock options and performance
shares to the CEO and NEOs in 2011 were deductible as
performance-based compensation. In January 2011, the Committee and the
independent directors established a performance threshold that the Company had
to meet in order to award restricted stock and restricted stock units in January
2012 that were part of the 2011 NEO and CEO compensation programs. The Company
had to achieve positive earnings per share (EPS) on continuing operations,
less extraordinary items, for the 2011 fiscal year, or the CEO would not receive
his restricted stock unit award and the NEOs would not receive their restricted
stock and restricted stock unit awards. The 2004 Stock Incentive Plan allows for
certain extraordinary items to be excluded from the EPS calculation, including,
among other things, asset write-downs, reorganization and restructuring
programs, mergers, acquisitions or divestitures, and the effect of changes in
tax laws, accounting principles or regulations, or other laws or provisions
affecting reported results. The Companys EPS on continuing operations for 2011
was positive, and therefore the awards were made in January 2012 and are
expected to be deductible as performance-based compensation.
50
SECTION VI NAMED EXECUTIVE
OFFICER COMPENSATION
|
The Summary Compensation Table below
provides information concerning compensation for the fiscal years ended December
31, 2011, 2010 and 2009 for the named executive officers.
As discussed under Chief Executive
Officer Compensation in the Compensation Discussion and Analysis section on
page 34, the CEO receives 100% of his compensation in equity-based awards.
Amounts shown in the table below for the CEO for 2011 represent stock options
and performance shares granted in January 2011. Amounts shown in the Stock
Awards column for 2011 also include restricted stock units granted to the CEO
in January 2011 for the 2010 performance year.
As discussed under NEO Compensation on
page 39, under the NEOs 2011 compensation program, base salary comprised
approximately 35% of NEO total target compensation. Each NEO received a portion
of his or her 2011 base salary in cash that was paid throughout the year and a
portion in restricted stock units that were granted in January 2011 and settled
in cash in December 2011. These restricted stock units are included in the table
below in the Stock Awards column for 2011. For the NEOs, amounts shown for
2011 in the table below also include stock options, performance shares, shares
of restricted stock, and restricted stock units that were granted in January
2011 for the 2010 performance year. The NEOs were not eligible for annual cash
bonuses for 2011.
Amounts paid to the CEO and the NEOs in
2011 for other compensation and benefit programs are listed under the Change in
Pension Value and Non-Qualified Deferred Compensation Earnings and All Other
Compensation. The details of these program amounts are provided in the
footnotes.
Please see the footnotes to the table
below for an additional explanation regarding compensation attributable to each
performance year. Further information on the timing of awards under the 2011
compensation programs for the CEO and the NEO can be found under Compensation
Components in the Compensation Discussion and Analysis section on page
33.
51
2011 Summary Compensation
Table
|
Name
and
Principal
Position
|
Year
|
Salary
(3)
|
Bonus
(4)
|
Stock
Awards
(5)
|
Option
Awards
(6)
|
Non-Equity
Incentive
Plan
Compensation (4)
|
Change in Pension
Value and Non-
Qualified
Deferred
Compensation
Earnings (7)
|
All
Other
Compensation
(8)
|
Total
|
Richard D.
|
2011
|
$0
|
$0
|
$10,500,079
|
$8,003,906
|
$0
|
$4,608
|
$159,465
|
$18,668,058
|
Fairbank (1)
|
2010
|
$0
|
$0
|
$8,250,029
|
$6,500,009
|
$0
|
$9,013
|
$100,637
|
$14,859,688
|
Chairman, CEO
and
President
|
2009
|
$0
|
$0
|
$2,000,019
|
$4,000,001
|
$0
|
$10,560
|
$76,785
|
$6,087,365
|
|
|
|
|
|
|
|
|
|
|
Gary L.
|
2011
|
$1,000,000
|
$0
|
$5,435,749
|
$1,224,598
|
$0
|
|
$288,392
|
$7,948,739
|
Perlin (2)
|
2010
|
$1,000,000
|
$0
|
$2,628,749
|
$0
|
$0
|
|
$292,402
|
$3,921,151
|
Chief
Financial
Officer
|
2009
|
$3,175,000
|
$0
|
$4,210,038
|
$1,333,265
|
$0
|
|
$222,807
|
$8,941,110
|
|
|
|
|
|
|
|
|
|
|
Lynn A.
|
2011
|
$1,000,000
|
$0
|
$3,887,650
|
$944,906
|
$0
|
|
$251,002
|
$6,083,558
|
Carter (2)
|
2010
|
$1,000,000
|
$0
|
$1,875,015
|
$0
|
$0
|
|
$255,001
|
$3,130,016
|
President,
Banking
|
2009
|
$2,625,000
|
$0
|
$3,374,183
|
$1,120,310
|
$0
|
|
$659,304
|
$7,778,797
|
|
|
|
|
|
|
|
|
|
|
Ryan M.
|
2011
|
$953,333
|
$0
|
$3,680,867
|
$956,247
|
$0
|
|
$203,526
|
$5,793,973
|
Schneider
(2)
President, Card
|
2010
|
$1,000,000
|
$0
|
$1,750,745
|
$0
|
$0
|
|
$200,352
|
$2,951,097
|
|
|
|
|
|
|
|
|
|
|
Peter A.
|
2011
|
$918,500
|
$0
|
$3,511,742
|
$846,641
|
$0
|
|
$204,448
|
$5,481,331
|
Schnall (2)
|
2010
|
$1,000,000
|
$0
|
$1,775,197
|
$0
|
$0
|
|
$201,415
|
$2,976,612
|
Chief
Risk
Officer
|
2009
|
$2,350,000
|
$0
|
$2,893,193
|
$953,654
|
$0
|
|
$156,015
|
$6,352,862
|
(1)
|
|
Mr. Fairbanks
compensation for 2011 consisted of stock options, performance shares and
restricted stock units, in addition to certain perquisites. Mr. Fairbank
received a portion of his total compensation for 2011 in January 2011
(stock options and performance shares), which is reflected in the table
above for 2011. Mr. Fairbank received the final portion of his
compensation for 2011 in January 2012 (restricted stock units), which is
not included in the table above. His compensation for 2010 included
restricted stock units granted in January 2011, which is included in the
table above for 2011. See CEO Compensation by Performance Year in the
Compensation Discussion and Analysis section on page 37 for more
information.
|
|
(2)
|
|
NEO compensation for
2011 consisted of cash base salary, shares of restricted stock, stock
options, performance shares and two grants of restricted stock units (one
representing a portion of base salary), in addition to certain
perquisites. The restricted stock units attributable to base salary are
included in the table above for 2011, however the other equity-based
awards for 2011 performance were granted in January 2012 and are not
included in the table above. The shares of restricted stock, stock
options, performance shares and restricted stock units granted to each NEO
for 2010 performance in January 2011 are included in table above for 2011.
See NEO Compensation by Performance Year in the Compensation Discussion
and Analysis section on page 41 for more information.
|
|
(3)
|
|
The cash portion of
base salary for any NEO in 2011 was limited to $1 million, and the
remaining portion of base salary for 2011 was delivered in restricted
stock units as described under Base Salaries in the Compensation
Discussion and Analysis section on page 39.
|
|
(4)
|
|
Named executive
officers were not eligible for annual cash bonus awards for 2009, 2010 or
2011.
|
52
(5)
|
The amounts shown in this column
for 2011 represent the grant date value of stock awards (including shares
of restricted stock, performance shares and restricted stock units)
granted to the named executive officers in 2011, calculated in accordance
with FASB ASC Topic 718. The CEO received performance shares and
restricted stock units in 2011, while the NEOs received performance
shares, shares of restricted stock, and two grants of restricted stock
units (one representing a portion of base salary) in 2011. The grant date
value of performance shares included in this column assumes a payout at
the target performance level. For additional information, including
performance share awards at target and maximum performance on a per
executive basis, refer to footnote 3 to the Grants of Plan-Based Awards
Table below.
|
|
|
(6)
|
The amounts shown in this column
for 2011 represent the grant date value of stock options granted to the
named executive officers in 2011, calculated in accordance with FASB ASC
Topic 718. For information on the valuation assumptions of these awards,
refer to footnote 3 to the Grants of Plan-Based Awards Table
below.
|
|
(7)
|
The amounts shown in this column
represent the change in the actuarial present value of the accumulated
pension benefits for Mr. Fairbank under the Cash Balance Pension Plan and
the Excess Cash Balance Plan. The interest crediting rate for the Cash
Balance Pension Plan changes annually based on the average yield of 5-year
Treasury Securities for the preceding 12 months. For the Excess Cash
Balance Plan, the interest crediting rate changes monthly based on the
Wall Street Journal Prime Rate.
|
|
(8)
|
All other compensation consists
of the following on a per executive basis:
|
Named
Executive
Officer
|
Auto
Allowance
(a)
|
Travel
and
Aircraft
|
Health
Screening
|
Driver and
Security
|
Dividends
on Unvested
Restricted
Stock
|
Company
Contributions to
Defined
Contribution
Plans
(b)
|
Insurance
(c)
|
Richard D. Fairbank
|
$0
|
$0
|
$2,685
|
|
$85,754
|
(d)
|
|
$54,286
|
$0
|
$16,740
|
|
|
|
|
|
|
|
|
|
|
|
Gary L. Perlin
|
$13,675
|
$5,851
|
$0
|
|
$0
|
|
|
$36,138
|
$215,988
|
$16,740
|
|
|
|
|
|
|
|
|
|
|
|
Lynn A. Carter
|
$14,769
|
$14,979
|
$4,200
|
|
$27,826
|
(e)
|
|
$26,748
|
$150,000
|
$12,480
|
|
|
|
|
|
|
|
|
|
|
|
Ryan M. Schneider
|
$12,013
|
$0
|
$2,321
|
|
$232
|
(f)
|
|
$23,587
|
$161,173
|
$4,200
|
|
|
|
|
|
|
|
|
|
|
|
Peter A. Schnall
|
$18,621
|
$0
|
$0
|
|
$610
|
(f)
|
|
$24,726
|
$154,491
|
$6,000
|
(a)
|
|
The value attributable to
personal use of a Company-provided automobile. The percent of personal use
of the automobile is tracked throughout the calendar year and then applied
to the full expense amount.
|
|
(b)
|
|
Company contributions under
qualified and non-qualified deferred compensation programs and other
supplemental executive retirement benefits.
|
|
(c)
|
|
Represents life insurance
premiums paid on behalf of the executives.
|
|
(d)
|
|
Includes cost attributable to
personal use of a driver who also provides for Mr. Fairbanks personal
security ($47,103) and aggregate cost to the Company for home security
services ($38,651) for Mr. Fairbank. The percent of personal use of the
automobile is tracked throughout the calendar year and then applied to the
full expense amount for personal security.
|
|
(e)
|
|
Includes cost attributable to
personal use of a driver ($26,832) and aggregate cost to the Company for
home security services ($994) for Ms. Carter. The percent of personal use
of the automobile is tracked throughout the calendar year and then applied
to the full expense amount for the driver.
|
|
(f)
|
|
Includes aggregate cost to the
Company for home security services.
|
53
2011 Grants of Plan-Based Awards
Table
|
The Grants of Plan-Based Awards table
provides details on equity incentive plan awards granted in 2011, including
stock options, performance shares, shares of restricted stock and restricted
stock units.
In 2011, the named executive officers were not eligible for annual
cash bonuses.
The columns reporting Estimated Future
Payouts Under Equity Incentive Plan Awards, All Other Stock Awards and All
Other Option Awards relate to Capital Ones equity-based incentive awards to
the named executive officers.
For the CEO in 2011, these awards are
comprised of performance shares and stock options granted in January 2011 and
restricted stock units granted in January 2011 for 2010 performance.
-
The stock options become exercisable three years
after the date of grant and expire in ten years.
-
The number of performance shares that will be
issued will be based on the Companys Adjusted
ROA, which we previously referred to as cash return on average tangible
assets, over the 3-year
period from January 1,
2011, through December 31, 2013, relative to the KBW Bank Sector
index, excluding custody banks (see 2011 CEO Compensation
Decisions in the Compensation
Discussion and
Analysis section on page 34 for more details on the performance share
award).
Dividends accrued on the performance
shares will be paid out as additional shares on the date the
performance share award results are certified by the
Compensation Committee.
-
The restricted stock units vest in full three
years after the date of grant and settle in cash based on
the average closing price of the Companys common stock for
the 20 trading days preceding the
vesting date.
Dividend equivalents are paid on unvested restricted stock units at the same
rate and at
approximately the same time as
dividends are paid to the Companys other stockholders.
For the NEOs in 2011, the awards are
comprised of stock options, performance shares, shares of restricted stock, and
restricted stock units granted in January 2011 for the 2010 performance year and
restricted stock units granted in January 2011 as a portion of 2011 base salary
(as described under Base Salaries in the Compensation Discussion and
Analysis section on page 39).
-
The stock options become exercisable in three
equal annual installments, beginning one year after
the date of grant, and expire in ten years.
-
The terms of the performance shares for the NEOs
are substantially similar to the terms of the CEOs
performance shares described above. The number of performance shares
that will be issued will be
based on the
Companys Adjusted ROA, which we previously referred to as cash return on
average
tangible assets, over the 3-year period
from January 1, 2011 through December 31, 2013 relative to
the KBW Bank Sector index, excluding custody banks.
Dividends accrued on the performance shares
will be paid out as additional shares on the date the performance share
award results are certified by
the Compensation
Committee.
-
The shares of restricted stock vest in three equal
annual installments beginning one year after the
date of grant. Dividends are paid on unvested restricted stock at the
same rate and at approximately
the same time as
dividends are paid to the Companys other stockholders.
-
The restricted stock units representing a portion
of base salary vested in full on December 15, 2011,
and settled in cash based on the average closing price of the Companys
common stock for the 20
trading days preceding
the vesting date. The other restricted stock units vest in three equal
annual
installments beginning one year after
the date of grant and settle in cash based on the closing price
of the Companys common stock on the vesting date. Dividend
equivalents are paid on unvested
restricted
stock units at the same rate and at approximately the same time as dividends
are paid to the
Companys other
stockholders.
54
2011 Grants of Plan-Based Awards
Table
|
|
|
Estimated Future
Payouts Under Equity
Incentive Plan
Awards
|
|
|
|
|
Name and
Principal
Position
|
Date of
Grant
(1)
|
Target
|
Maximum
|
All Other
Stock
Awards: Number
of Shares of Stock
or
Units
|
All Other
Option
Awards: Number of
Securities
Underlying
Options
|
Exercise or Base
Price
of Option
Awards (2) ($/Sh)
|
Grand
Date Fair
Value of Stock and
Option Awards (3)
|
Richard D. Fairbank
Chairman, CEO
and
President
|
1/26/2011
|
82,851
|
165,702
|
|
|
|
$4,000,046
|
1/26/2011
|
|
|
|
608,366
|
$48.28
|
$8,003,906
|
1/26/2011
|
|
|
134,632
|
|
|
$6,500,033
|
|
|
|
|
|
|
|
|
Gary L. Perlin
Chief Financial Officer
|
1/26/2011
|
10,738
|
21,476
|
|
|
|
$518,431
|
1/26/2011
|
|
|
|
93,080
|
$48.28
|
$1,224,598
|
1/26/2011
|
|
|
35,232
|
|
|
$1,701,001
|
1/26/2011
|
|
|
33,063(4)
|
|
|
$1,596,282
|
1/26/2011
|
|
|
33,555
|
|
|
$1,620,035
|
|
|
|
|
|
|
|
|
Lynn A. Carter
President,
Banking
|
1/26/2011
|
8,286
|
16,572
|
|
|
|
$400,048
|
1/26/2011
|
|
|
|
71,821
|
$48.28
|
$944,906
|
1/26/2011
|
|
|
27,186
|
|
|
$1,312,540
|
1/26/2011
|
|
|
19,160(4)
|
|
|
$925,045
|
1/26/2011
|
|
|
25,891
|
|
|
$1,250,017
|
|
|
|
|
|
|
|
|
Ryan M.
Schneider
President, Card
|
1/26/2011
|
8,385
|
16,770
|
|
|
|
$404,828
|
1/26/2011
|
|
|
|
72,683
|
$48.28
|
$956,247
|
1/26/2011
|
|
|
23,923
|
|
|
$1,155,002
|
1/26/2011
|
|
|
17,730(4)
|
|
|
$856,004
|
1/26/2011
|
|
|
26,202
|
|
|
$1,265,033
|
|
|
|
|
|
|
|
|
Peter A.
Schnall
Chief Risk Officer
|
1/26/2011
|
7,424
|
14,848
|
|
|
|
$358,431
|
1/26/2011
|
|
|
|
64,352
|
$48.28
|
$846,641
|
1/26/2011
|
|
|
24,358
|
|
|
$1,176,004
|
1/26/2011
|
|
|
17,756(4)
|
|
|
$857,260
|
1/26/2011
|
|
|
23,199
|
|
|
$1,120,048
|
(1)
|
|
Date on which awards were approved by the independent
directors.
|
|
(2)
|
|
Equal to the fair market value of a share of Capital
Ones common stock on the date of grant determined on the basis of the
closing price as reported by the New York Stock Exchange Composite
Transaction Tape.
|
|
(3)
|
|
The grant date value for each option awarded on January
26, 2011, was calculated using the Black- Scholes method and was based on
the following assumptions:
|
|
Volatility
|
Risk-Free Interest Rate
|
Dividend
Yield
|
Expected Life
|
January 26, 2011
|
35.78%
|
2.04%
|
2.34%
|
5
Years
|
The grant date
fair values for the performance shares if the maximum level of performance is
achieved are as follows: $8,000,093 for Mr. Fairbank, $1,036,861 for Mr. Perlin,
$800,096 for Ms. Carter, $809,656 for Mr. Schneider, and $716,861 for Mr.
Schnall.
(4)
|
|
Grant of restricted stock units
representing a portion of base salary for 2011.
|
55
2011 Option Exercises and Stock Vested
Table
|
|
Option Awards
|
Stock Awards
|
Name
& Principal
Position
|
Number
of Shares Acquired
on Exercise
|
Value
Realized on
Exercise (1)
|
Number
of Shares Acquired
on Vesting
|
Value Realized on
Vesting
(2)
|
Richard D.
Fairbank
|
0
|
$0
|
0
|
$0
|
Chairman, CEO and
President
|
|
|
|
|
|
Gary L. Perlin
|
161,631
|
$5,151,948
|
204,026
|
$9,771,003
|
Chief Financial
Officer
|
|
|
|
|
|
Lynn A. Carter
|
90,595
|
$3,373,942
|
135,996
|
$6,502,869
|
President,
Banking
|
|
|
|
|
|
Ryan M.
Schneider
|
0
|
$0
|
107,390
|
$5,130,067
|
President,
Card
|
|
|
|
|
|
Peter A. Schnall
|
79,156
|
$2,393,746
|
130,231
|
$6,246,936
|
Chief Risk
Officer
|
(1)
|
|
The value realized is the pre-tax
value of the shares (market price less the exercise price)
received.
|
|
|
|
(2)
|
|
The value realized is the number
of shares multiplied by the fair market value of the Companys common
stock on vesting date, which is the closing price as reported by the New
York Stock Exchange Composite Transaction Tape.
|
56
2011 Outstanding
Equity Awards at Fiscal Year-End Table
|
|
Option Awards (1),
(2)
|
Stock Awards
(2)
|
Name
and
Principal
Position
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
|
Option
Exercise
Price
(3)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock
that Have Not
Vested
|
Market
Value of
Shares
or
Units of
Stock that
Have Not
Vested (4)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares, Units,
or Other
Rights
that Have Not
Vested
|
Equity
Incentive
Plan Awards:
Market or Payout
Value of
Unearned
Shares,
Units,
or Other Rights
that Have Not
Vested
(4)
|
Richard D. Fairbank
Chairman, CEO
and
President
|
|
|
|
|
271,431 (7)
|
$11,478,817
|
491,295 (8)
|
$20,776,866
|
360,000 (5)
|
0
|
$56.28
|
12/14/2013
|
|
|
|
|
566,000 (6)
|
0
|
$82.39
|
12/19/2014
|
|
|
|
|
573,000 (6)
|
0
|
$87.28
|
12/19/2015
|
|
|
|
|
594,851 (6)
|
0
|
$76.45
|
12/10/2016
|
|
|
|
|
1,661,780 (7)
|
0
|
$50.99
|
12/09/2017
|
|
|
|
|
0
|
970,403 (7)
|
$18.28
|
1/28/2019
|
|
|
|
|
0
|
559,333 (7)
|
$36.55
|
1/26/2020
|
|
|
|
|
0
|
608,366 (7)
|
$48.28
|
1/25/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary L. Perlin
Chief Financial Officer
|
|
|
|
|
142,979 (9)
|
$6,046,582
|
65,803 (11)
|
$2,782,809
|
100,000 (9)
|
0
|
$48.73
|
7/28/2013
|
|
|
|
|
24,500 (9)
|
0
|
$56.28
|
12/14/2013
|
|
|
|
|
77,220 (9)
|
0
|
$78.71
|
3/14/2015
|
|
|
|
|
83,510 (9)
|
0
|
$88.81
|
3/2/2016
|
|
|
|
|
122,450 (9)
|
0
|
$76.79
|
3/1/2017
|
|
|
|
|
249,570 (9)
|
0
|
$48.95
|
2/20/2018
|
|
|
|
|
0
|
107,820 (9)
|
$18.28
|
1/28/2019
|
|
|
|
|
0
|
93,080 (9)
|
$48.28
|
1/25/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lynn A. Carter
President, Banking
|
|
|
|
|
112,850 (9)
|
$4,772,427
|
53,819 (12)
|
$2,276,006
|
102,583 (9)
|
0
|
$74.72
|
4/25/2017
|
|
|
|
|
92,940 (9)
|
0
|
$48.95
|
2/20/2018
|
|
|
|
|
90,595 (9)
|
90,598 (9)
|
$18.28
|
1/28/2019
|
|
|
|
|
0
|
71,821 (9)
|
$48.28
|
1/25/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ryan M. Schneider
President, Card
|
|
|
|
|
98,434 (9)
|
$4,162,774
|
41,705 (13)
|
$1,763,704
|
142 (10)
|
0
|
$83.96
|
12/05/2012
|
|
|
|
|
1,238 (10)
|
0
|
$84.62
|
12/05/2012
|
|
|
|
|
1,155 (10)
|
0
|
$77.28
|
12/14/2013
|
|
|
|
|
5,056 (10)
|
0
|
$78.24
|
12/14/2013
|
|
|
|
|
2,210 (10)
|
0
|
$82.10
|
12/14/2013
|
|
|
|
|
945 (10)
|
0
|
$82.30
|
12/14/2013
|
|
|
|
|
15,650 (9)
|
0
|
$78.71
|
3/14/2015
|
|
|
|
|
17,890 (9)
|
0
|
$88.81
|
3/2/2016
|
|
|
|
|
26,250 (9)
|
0
|
$76.79
|
3/1/2017
|
|
|
|
|
63,700 (9)
|
0
|
$48.95
|
2/20/2018
|
|
|
|
|
60,646 (9)
|
60,649 (9)
|
$18.28
|
1/28/2019
|
|
|
|
|
0
|
72,683 (9)
|
$48.28
|
1/25/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter A. Schnall
Chief Risk
Officer
|
|
|
|
|
103,275 (9)
|
$4,367,500
|
46,555 (14)
|
$1,968,811
|
1,158 (10)
|
0
|
$86.27
|
12/05/2012
|
|
|
|
|
32,724 (9)
|
0
|
$56.28
|
12/14/2013
|
|
|
|
|
1,298 (10)
|
0
|
$76.96
|
12/14/2013
|
|
|
|
|
45,760 (9)
|
0
|
$78.71
|
3/14/2015
|
|
|
|
|
48,340 (9)
|
0
|
$88.81
|
3/2/2016
|
|
|
|
|
73,850 (9)
|
0
|
$76.79
|
3/1/2017
|
|
|
|
|
139,390 (9)
|
0
|
$48.95
|
2/20/2018
|
|
|
|
|
0
|
77,121 (9)
|
$18.28
|
1/28/2019
|
|
|
|
|
0
|
64,352 (9)
|
$48.28
|
1/25/2021
|
|
|
|
|
(1)
|
Stock
options granted generally have time-based vesting schedules and are
exercisable upon vesting or vest earlier upon the optionees death,
disability, or retirement or upon a change of control of Capital One. They
are transferable only to or for the benefit of immediate family members.
Stock options granted on or after December 1, 2005, continue to follow the
original vesting schedule after the optionees retirement.
|
|
|
(2)
|
The
following table details vesting dates for all outstanding equity awards;
the date listed as the vesting date for performance shares is the date by
which the Compensation Committee must certify the performance of the
Company over the performance
period.
|
57
Name
|
Grant Date
|
Grant Type
|
First Vesting
|
Second Vesting
|
Third Vesting
|
Vesting
Date
|
# of
Shares
|
Vesting
Date
|
# of
Shares
|
Vesting
Date
|
# of
Shares
|
Richard D. Fairbank
|
12/15/2003
|
Option Award
|
12/15/2004
|
120,000
|
12/15/2005
|
118,224
|
12/15/2006
|
118,224
|
|
12/15/2003
|
Option Award
|
12/15/2005
|
1,776
|
12/15/2006
|
1,776
|
|
|
|
12/20/2004
|
Option Award
|
12/20/2009
|
566,000
|
|
|
|
|
|
12/20/2005
|
Option Award
|
12/20/2010
|
573,000
|
|
|
|
|
|
12/11/2006
|
Option Award
|
12/11/2011
|
594,851
|
|
|
|
|
|
12/10/2007
|
Option Award
|
12/10/2010
|
1,661,780
|
|
|
|
|
|
01/29/2009
|
Perf Share Award
|
3/15/2012
|
95,239
|
|
|
|
|
|
01/29/2009
|
Option Award
|
1/29/2012
|
970,403
|
|
|
|
|
|
01/27/2010
|
Perf Share Award
|
3/15/2013
|
88,920
|
|
|
|
|
|
01/27/2010
|
Restricted Stock Unit Award
|
1/27/2013
|
136,799
|
|
|
|
|
|
01/27/2010
|
Option Award
|
1/27/2013
|
559,333
|
|
|
|
|
|
01/26/2011
|
Perf Share Award
|
3/15/2014
|
82,851
|
|
|
|
|
|
01/26/2011
|
Restricted Stock Unit Award
|
1/26/2014
|
134,632
|
|
|
|
|
|
01/26/2011
|
Option Award
|
1/26/2014
|
608,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary L. Perlin
|
07/29/2003
|
Option Award
|
7/29/2004
|
2,052
|
7/29/2005
|
2,052
|
7/29/2006
|
2,052
|
|
07/29/2003
|
Option Award
|
7/29/2004
|
31,281
|
07/29/2005
|
31,281
|
7/29/2006
|
31,282
|
|
12/15/2003
|
Option Award
|
12/15/2004
|
8,166
|
12/15/2005
|
8,167
|
12/15/2006
|
8,167
|
|
03/15/2005
|
Option Award
|
3/15/2006
|
25,739
|
3/15/2007
|
25,740
|
3/15/2008
|
25,741
|
|
03/03/2006
|
Option Award
|
3/3/2007
|
27,808
|
3/3/2008
|
27,809
|
3/3/2009
|
27,893
|
|
03/02/2007
|
Option Award
|
3/2/2008
|
40,816
|
3/2/2009
|
40,816
|
3/2/2010
|
40,818
|
|
02/21/2008
|
Option Award
|
2/21/2009
|
83,189
|
2/21/2010
|
83,189
|
2/21/2011
|
83,192
|
|
01/29/2009
|
Perf Share Award
|
3/15/2012
|
28,572
|
|
|
|
|
|
01/29/2009
|
Restricted Stock Award
|
1/29/2010
|
49,370
|
1/29/2011
|
49,371
|
1/29/2012
|
49,372
|
|
01/29/2009
|
Option Award
|
1/29/2010
|
107,815
|
1/29/2011
|
107,816
|
1/29/2012
|
107,820
|
|
01/27/2010
|
Restricted Stock Award
|
1/27/2011
|
12,409
|
1/27/2012
|
12,410
|
1/27/2013
|
12,410
|
|
01/26/2011
|
Perf Share Award
|
3/15/2014
|
10,738
|
|
|
|
|
|
01/26/2011
|
Restricted Stock Award
|
1/26/2012
|
11,184
|
1/26/2013
|
11,185
|
1/26/2014
|
11,186
|
|
01/26/2011
|
Restricted Stock Unit Award
|
1/26/2012
|
11,743
|
1/26/2013
|
11,744
|
1/26/2014
|
11,745
|
|
01/26/2011
|
Option Award
|
1/26/2012
|
31,026
|
1/26/2013
|
31,026
|
1/26/2014
|
31,028
|
|
|
|
|
|
|
|
|
|
Lynn A. Carter
|
04/26/2007
|
Option Award
|
4/26/2008
|
34,194
|
4/26/2009
|
34,194
|
4/26/2010
|
34,195
|
|
02/21/2008
|
Option Award
|
2/21/2009
|
30,979
|
2/21/2010
|
30,980
|
2/21/2011
|
30,981
|
|
01/29/2009
|
Perf Share Award
|
3/15/2012
|
24,008
|
|
|
|
|
|
01/29/2009
|
Restricted Stock Award
|
1/29/2010
|
39,250
|
1/29/2011
|
39,250
|
1/29/2012
|
39,252
|
|
01/29/2009
|
Option Award
|
1/29/2010
|
90,595
|
1/29/2011
|
90,595
|
1/29/2012
|
90,598
|
|
01/27/2010
|
Restricted Stock Award
|
1/27/2011
|
10,259
|
1/27/2012
|
10,260
|
1/27/2013
|
10,261
|
|
01/26/2011
|
Perf Share Award
|
3/15/2014
|
8,286
|
|
|
|
|
|
01/26/2011
|
Restricted Stock Award
|
1/26/2012
|
8,630
|
1/26/2013
|
8,630
|
1/26/2014
|
8,631
|
|
01/26/2011
|
Restricted Stock Unit Award
|
1/26/2012
|
9,061
|
1/26/2013
|
9,062
|
1/26/2014
|
9,063
|
|
01/26/2011
|
Option Award
|
1/26/2012
|
23,940
|
1/26/2013
|
23,940
|
1/26/2014
|
23,941
|
|
|
|
|
|
|
|
|
|
Ryan M. Schneider
|
03/15/2005
|
Option Award
|
3/15/2006
|
5,216
|
3/15/2007
|
5,217
|
3/15/2008
|
5,217
|
|
07/25/2005
|
Option Award
|
1/25/2006
|
142
|
|
|
|
|
|
01/26/2006
|
Option Award
|
7/26/2006
|
1,238
|
|
|
|
|
|
03/03/2006
|
Option Award
|
3/3/2007
|
5,957
|
3/3/2008
|
5,957
|
3/3/2009
|
5,976
|
|
07/27/2006
|
Option Award
|
1/27/2007
|
1,155
|
|
|
|
|
|
08/07/2006
|
Option Award
|
2/7/2007
|
5,056
|
|
|
|
|
|
10/26/2006
|
Option Award
|
4/26/2007
|
945
|
|
|
|
|
|
02/08/2007
|
Option Award
|
8/8/2007
|
2,210
|
|
|
|
|
|
03/02/2007
|
Option Award
|
3/2/2008
|
8,749
|
3/2/2009
|
8,750
|
3/2/2010
|
8,751
|
|
02/21/2008
|
Option Award
|
2/21/2009
|
21,233
|
2/21/2010
|
21,233
|
2/21/2011
|
21,234
|
|
01/29/2009
|
Perf Share Award
|
3/15/2012
|
16,072
|
|
|
|
|
|
01/29/2009
|
Restricted Stock Award
|
1/29/2010
|
26,223
|
1/29/2011
|
26,224
|
1/29/2012
|
26,225
|
|
01/29/2009
|
Option Award
|
1/29/2010
|
60,646
|
1/29/2011
|
60,646
|
1/29/2012
|
60,649
|
|
01/27/2010
|
Restricted Stock Award
|
1/27/2011
|
11,041
|
1/27/2012
|
11,042
|
1/27/2013
|
11,042
|
|
01/26/2011
|
Perf Share Award
|
3/15/2014
|
8,385
|
|
|
|
|
|
01/26/2011
|
Restricted Stock Award
|
1/26/2012
|
8,733
|
1/26/2013
|
8,734
|
1/26/2014
|
8,735
|
|
01/26/2011
|
Restricted Stock Unit Award
|
1/26/2012
|
7,974
|
1/26/2013
|
7,974
|
1/26/2014
|
7,975
|
|
01/26/2011
|
Option Award
|
1/26/2012
|
24,227
|
1/26/2013
|
24,227
|
1/26/2014
|
24,229
|
|
|
|
|
|
|
|
|
|
Peter A. Schnall
|
12/15/2003
|
Option Award
|
12/15/2004
|
11,500
|
12/15/2005
|
11,500
|
12/15/2006
|
9,724
|
|
03/15/2005
|
Option Award
|
3/15/2006
|
15,253
|
3/15/2007
|
15,253
|
3/15/2008
|
15,254
|
|
02/14/2006
|
Option Award
|
8/14/2006
|
1,158
|
|
|
|
|
|
03/03/2006
|
Option Award
|
3/3/2007
|
16,097
|
3/3/2008
|
16,097
|
3/3/2009
|
16,146
|
|
12/20/2006
|
Option Award
|
6/20/2007
|
1,298
|
|
|
|
|
|
03/02/2007
|
Option Award
|
3/2/2008
|
24,616
|
3/2/2009
|
24,616
|
3/2/2010
|
24,618
|
|
02/21/2008
|
Option Award
|
2/21/2009
|
46,462
|
2/21/2010
|
46,463
|
2/21/2011
|
46,465
|
|
01/29/2009
|
Perf Share Award
|
3/15/2012
|
20,437
|
|
|
|
|
|
01/29/2009
|
Restricted Stock Award
|
1/29/2010
|
33,697
|
1/29/2011
|
33,698
|
1/29/2012
|
33,699
|
|
01/29/2009
|
Option Award
|
1/29/2010
|
77,118
|
1/29/2011
|
77,118
|
1/29/2012
|
77,121
|
|
01/27/2010
|
Restricted Stock Award
|
1/27/2011
|
11,009
|
1/27/2012
|
11,009
|
1/27/2013
|
11,010
|
|
01/26/2011
|
Perf Share Award
|
3/15/2014
|
7,424
|
|
|
|
|
|
01/26/2011
|
Restricted Stock Award
|
1/26/2012
|
7,732
|
1/26/2013
|
7,733
|
1/26/2014
|
7,734
|
|
01/26/2011
|
Restricted Stock Unit Award
|
1/26/2012
|
8,119
|
1/26/2013
|
8,119
|
1/26/2014
|
8,120
|
|
01/26/2011
|
Option Award
|
1/26/2012
|
21,450
|
1/26/2013
|
21,450
|
1/26/2014
|
21,452
|
58
(3)
|
For stock options granted before April 23, 2009, the
exercise price is equal to the fair market value of common stock on the
date of grant determined on the basis of the average high and low sales
prices as reported by the New York Stock Exchange Composite Transaction
Tape. For stock options granted on or after April 23, 2009, the exercise
price is equal to the closing price of common stock on the date of grant
as reported by New York Stock Exchange Composite Transaction
Tape.
|
|
(4)
|
Market value based on the closing price of a share of
Capital Ones common stock on the last trading day of 2011 as reported by
the New York Stock Exchange Composite Transaction Tape.
|
|
(5)
|
Represents two option grants: 3,552 options which vested
equally on the second and third anniversaries of the date of grant, and
356,448 options which vested 33% annually beginning on the first
anniversary of the grant date.
|
|
(6)
|
Vested in full on the fifth anniversary of the date of
grant.
|
|
(7)
|
Vested or vests in full on the third anniversary of the
date of grant.
|
|
(8)
|
Represents the maximum number of performance shares
awarded on January 27, 2010, and January 26, 2011, and the actual shares
awarded (including accrued dividends paid out as additional shares) for
the January 29, 2009, performance share award which was certified by the
Compensation Committee on January 31, 2012, with a value of $6,759,700 on
such date.
|
|
(9)
|
Vested or vests 33% annually beginning on the first
anniversary of the date of grant.
|
|
(10)
|
Reload grant that vested in full six months following
the date of grant.
|
|
(11)
|
Represents the maximum number of performance shares
awarded on January 26, 2011, and the actual shares awarded (including
accrued dividends paid out as additional shares) for the January 29, 2009,
performance share award which was certified by the Compensation Committee
on January 31, 2012, with a value of $2,027,960 on such date.
|
|
|
(12)
|
Represents the maximum number of performance shares
awarded on January 26, 2011, and the actual shares awarded (including
accrued dividends paid out as additional shares) for the January 29, 2009,
performance share award which was certified by the Compensation Committee
on January 31, 2012, with a value of $1,704,050 on such date.
|
|
(13)
|
Represents the maximum number of performance shares
awarded on January 26, 2011, and the actual shares awarded (including
accrued dividends paid out as additional shares) for the January 29, 2009,
performance share award which was certified by the Compensation Committee
on January 31, 2012, with a value of $1,140,776 on such date.
|
|
(14)
|
Represents the maximum number of performance shares
awarded on January 26, 2011, and the actual shares awarded (including
accrued dividends paid out as additional shares) for the January 29, 2009,
performance share award which was certified by the Compensation Committee
on January 31, 2012, with a value of $1,450,595 on such
date.
|
59
Capital One
Programs
Prior to November 1995, Capital One
offered a Cash Balance Pension Plan (CBPP) and an Excess Cash Balance Plan
(Excess CBPP) to all full-time salaried associates and certain executive
officers. Both of these programs were frozen in December 1995; however, interest
credits continue to accrue on plan balances on a quarterly basis for the CBPP
and on a monthly basis for the Excess CBPP. The CBPP crediting rate changes
annually based on the average annual yield of 5-year Treasury Securities for the
preceding 12 months ending October of the prior year (2.1% annual average for
2011). The Excess CBPP interest crediting rate changes monthly based on the Wall
Street Journal Prime Rate (3.3% annual average for 2011).
Mr. Fairbank participated in these
programs. Mr. Fairbanks estimated annual payouts upon retirement in the CBPP
and the Excess CBPP as of December 31, 2011 are $2,174 and $6,176. These
projected benefits assume interest credits under the CBPP to be 3.75% credited
quarterly and under the Excess CBPP to be 4.50% credited monthly. Accounts in
either plan are distributed after separation from service. Distribution options
from the CBPP plan are lump sum, rollover to another qualified plan or personal
IRA or an annuity option. The Excess CBPP will be distributed in the same form
as the CBPP, as a lump sum or as an annuity. Since the CBPP and Excess CBPP are
account-based defined benefit plans, years of service are not
tracked.
60
2011 Pension Benefits
Table
|
Name and Principal
Position
|
Plan Name (1)
|
Present Value of
Accumulated Benefit (2), (3), (4)
|
Payments During
Last Fiscal Year
|
Richard D.
Fairbank
|
Cash Balance Pension
Plan
|
$25,116
|
$0
|
Chairman, CEO and
President
|
Excess Cash Balance
Plan
|
$73,865
|
$0
|
|
|
|
|
Gary Perlin
|
|
|
|
Chief Financial
Officer
|
|
|
|
|
Lynn A. Carter
|
|
|
|
President,
Banking
|
|
|
|
|
Ryan M.
Schneider
|
|
|
|
President,
Card
|
|
|
|
|
Peter A. Schnall
|
|
|
|
Chief Risk
Officer
|
(1)
|
In November 1995, Capital One
amended the CBPP and the Excess CBPP to eliminate further pay-based
credits to participants as of December 31, 1995, and to provide that there
would be no new participants in such plans on or after January 1, 1996.
Interest continues to be credited on plan balances on a quarterly (CBPP)
or monthly (Excess CBPP) basis.
|
|
|
(2)
|
For the CBPP, the interest
crediting rate changes annually based on the average annual yield of
5-year Treasury Securities for the preceding 12 months ending October of
the prior year. The average annual interest rate for 2011 was 2.1%. For
the Excess Cash Balance Plan, the interest crediting rate changes monthly
based on the Wall Street Journal Prime Rate. The average annual interest
rate for 2011 was 3.3%.
|
|
(3)
|
Based on SEC guidance on the
preferred disclosure method to use for cash balance plans, the amounts
shown are the present value of the accrued benefit under the same
actuarial assumptions and measurement date used for financial accounting
purposes.
|
|
(4)
|
Consistent with the measurement
date used for financial disclosure for the pension plans, the amounts for
each year are determined as of a December 31, 2011 measurement
date.
|
61
Capital Ones Voluntary Non-Qualified Deferred
Compensation Programs
|
Capital One offers its Voluntary
Non-Qualified Deferred Compensation Plan (VNQDCP) to eligible associates. In
2011, our NEOs could elect to contribute up to 50% of the cash portion of their
respective base salaries and up to 100% of the restricted stock unit portion of
their respective base salaries on a tax-deferred basis. Mr. Perlin, Ms. Carter,
Mr. Schneider and Mr. Schnall participated in the program in 2011.
In addition to participant deferrals,
Capital One makes contributions under the VNQDCP. Company contributions vest
immediately when posted to the VNQDCP.
Participants in the VNQDCP have the option
to direct their individual deferrals among thirteen different investment
offerings made available by the plan: Fidelity Retirement Money Market
Portfolio, PIMCO Total Return Fund Institutional, Dodge & Cox Balanced Fund,
Dodge & Cox Stock Fund, Goldman Sachs Large Cap Value Fund, Northern Small
Cap Value Fund, Fidelity Spartan S&P 500 Index Fund, Hartford Mid Cap Fund
Y, Fidelity Capital Appreciation Fund, Wells Fargo Advantage Capital Growth
Fund, The Hartford Small Company HLS IA Fund, Dodge & Cox International
Stock Fund, and Lazard Emerging Markets Equity Portfolio IA. Individual
investment returns experienced in 2011 were as follows: Mr. Perlin -4.35% or
-$90,695, Ms. Carter -4.18% or -$44,780, Mr. Schneider 0.01% or $18 and Mr.
Schnall 0.33% or $1,759. Distributions under the VNQDCP may be made to
participants according to their respective elected schedule for distribution in
accordance with plan terms. The distribution schedules available under the plan
include lump sum and 5, 10 or 15 year annual installments. Distributions occur
based upon the following events: termination of employment, in-service
distribution election or change of control.
Prior to December 31, 2005, Capital One
offered its executives an Excess Savings Plan (ESP). The plan was frozen as of
December 31, 2005; no additional participants are permitted to enter the plan,
and no compensation is taken into account after this date. Messrs. Fairbank,
Perlin, Schneider and Schnall participated in the ESP and, as such, returns on
these investments are reported for 2011. Effective January 1, 2008, the ESP was
merged into the VNQDCP, and participants in the ESP have the option to direct
their individual investments among the same offerings as the VNQDCP. Individual
investment returns experienced in 2011 were as follows: Mr. Fairbank 2.08% or
$5,047, Mr. Perlin 4.16% or $3,731, Mr. Schneider 0.01% or $13 and Mr. Schnall
0.92% or $5,676.
62
2011 Non-Qualified
Deferred Compensation Table
|
Name and Principal
Position
|
Plan Name
|
Executive
Contributions
in
Last FY (1)
|
Registrant
Contributions
in
Last FY (2)
|
Aggregate
Earnings
in Last
FY (3)
|
Aggregate
Withdrawals/
Distributions
|
Aggregate
Balance
at Last FYE
(4)
|
Richard D. Fairbank
Chairman, CEO
and
President
|
Voluntary Non-Qualified
Deferred
Compensation Plan
|
$0
|
$0
|
$0
|
$0
|
$0
|
Excess Saving Plan
|
$0
|
$0
|
$5,047
|
$0
|
$247,393
|
2003 Performance
Share Award
(5)
|
$0
|
$0
|
-$65,254
|
$0
|
$10,220,647
|
|
|
|
|
|
|
|
Gary
Perlin
Chief Financial Officer
|
Voluntary
Non-Qualified
Deferred Compensation Plan
|
$9,819
|
$192,900
|
-$90,695
|
$0
|
$2,094,931
|
Excess Saving Plan
|
$0
|
$0
|
$3,731
|
$0
|
$93,343
|
|
|
|
|
|
|
|
Lynn A.
Carter
President, Banking
|
Voluntary
Non-Qualified
Deferred Compensation Plan
|
$9,865
|
$142,650
|
-$44,780
|
$0
|
$1,101,861
|
Excess Saving Plan
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
|
|
|
|
|
|
Ryan M.
Schneider
President, Card
|
Voluntary
Non-Qualified
Deferred Compensation Plan
|
$9,453
|
$137,850
|
$18
|
$63,447
|
$245,357
|
Excess Saving Plan
|
$0
|
$0
|
$13
|
$0
|
$129,306
|
|
|
|
|
|
|
|
Peter A.
Schnall
Chief Risk Officer
|
Voluntary
Non-Qualified
Deferred Compensation Plan
|
$9,105
|
$131,100
|
$1,759
|
$0
|
$602,940
|
Excess Saving Plan
|
$0
|
$0
|
$5,676
|
$0
|
$621,657
|
(1)
|
Mr. Fairbank did not receive any
cash salary or bonus and therefore did not defer any compensation in 2011
under the VNQDCP. For Mr. Perlin, Ms. Carter, Mr. Schneider and Mr.
Schnall, all executive contributions under the VNQDCP were made in the
form of base salary deferrals, and are included in the Summary
Compensation Table.
|
|
|
(2)
|
Registrant contributions are also
included in the amounts reported as Company Contributions to Defined
Contribution Plans in footnote 8 to the Summary Compensation
Table.
|
|
(3)
|
Includes earnings on total assets
in the VNQDCP and the ESP.
|
|
(4)
|
All the amounts shown in this
column, other than earnings on deferred compensation, were included in
compensation amounts reported in prior years for those executives that
were NEOs in such prior years and in the amounts required to be reported
pursuant to the then applicable rules. Of these balances, the following
amounts were reported in the Summary Compensation Tables in prior year
proxy statements beginning with the 2007 proxy statement: Mr. Perlin
$779,682; Ms. Carter $643,639; Mr. Schneider $11,810; and Mr. Schnall
$44,990.
|
|
(5)
|
Includes the value of restricted
stock units that were granted to Mr. Fairbank in December 2003, subject to
Capital Ones earnings per share performance relative to its comparator
group over a three-year period from January 1, 2004 through December 31,
2006 (the Performance Period). On March 2, 2007, the independent
directors of the Board certified, following the end of the Performance
Period, the achievement of the performance target. Because the Company
ranked in the 76th percentile for the Performance Period relative to the
comparator group, Mr. Fairbank acquired the right to receive 241,680
shares of Capital Ones common stock on March 31, 2007. Delivery of these
shares is deferred until the end of Mr. Fairbanks employment with the
Company. Similar to other deferred compensation, Mr. Fairbank neither
acquired these shares nor realized any value from these shares in
2011.
|
63
Potential Payments Upon
Termination or Change of Control
|
Overview
The disclosure in the table below
illustrates payouts that the named executive officers could receive under
certain hypothetical termination scenarios. Actual circumstances resulting in
the departure of a named executive officer cannot be predicted and may differ
from the assumptions used in the information outlined below. The Company has
adopted plans providing certain standards governing named executive officer
separation payments (reflected in the table below) in order to protect the
Companys interests in the event of an acquisition as well as to provide
competitive benefits to senior executives.
The Compensation Committee reviews each
executive officers separation on a case by case basis and exercises its
business judgment, with the approval of the independent directors, to customize
the terms of such separations in consideration of the relevant circumstances,
including:
-
The reasons for the separation;
-
Market competitive practices for comparable
separation scenarios;
-
Potential benefits to the Company, such as
retaining its competitive advantage, maintaining a positive reputation
internally and externally, and preserving its ability to recruit highly
talented executives;
-
The executives tenure and contributions to the
Companys success;
-
The executives willingness to provide legal
waivers and/or enter into agreements not to compete with the Company or to
solicit the Companys employees or customers; and
-
The resulting impact of the separation terms on
the Company and its stockholders.
Restrictive
Covenants
Capital One maintains a competitive
advantage in part through the intellectual property developed and utilized by
our senior executives. Capital One has asked certain NEOs to enter into various
agreements that contain restrictive covenants related to confidentiality,
non-competition, non-solicitation of employees and ownership of work product, as
described below.
Non-Competition
Agreement
Under Capital Ones Non-Competition
Agreement program, NEOs may be restricted as to what competitive services they
may provide to an entity following separation from Capital One, typically for a
period of up to two years. In recognition of these restrictions, the agreement
calls for payments to be made to the NEO during periods of enforcement of the
non-competition restrictions, subject to certain circumstances and conditions.
For 2011, potential payments following termination under the Non-Competition
Agreement are 15% of the NEOs target total compensation for each year of
enforcement and eighteen months of subsidized health insurance premiums under
COBRA if the NEO elects such coverage, subject to certain terms and conditions.
For voluntary terminations, the previously described payments are only made for
the second year of enforcement. In the case of the NEOs involuntary termination
for any reason other than death, disability or cause, the payments are made in
two lump sums, the first following termination and the second upon completion of
the enforcement period. However, there are no payments under the Non-Competition
Agreement if benefits are payable under a change of control agreement. Payments
related to the Non-Competition Agreement are separate from any severance
payments that may be made upon the NEOs departure. However, severance payments
are typically offset in part by payments related to the Non-Competition
Agreement so that total payment amounts are consistent with the programs
intent.
Confidentiality, Work Product and
Non-Solicitation of Employee Agreement
The confidentiality provisions of this
agreement generally provide that at all times during and following employment
with the Company, the NEO may not use for personal benefit or the benefit of
others, or divulge to others, any of Capital Ones confidential information,
except as expressly authorized by Capital One or required by legal
process.
64
The work product provisions of this
agreement generally provide that Capital One shall own and be assigned ownership
of all work product of each NEO. The NEO, upon separation from Capital One,
shall return any and all work product to Capital One.
Under the Non-Solicitation of Employee
provisions of this agreement, for a period of two years following separation
from Capital One, the NEO shall not directly or indirectly solicit or induce any
associate of Capital One to become employed by any person or entity engaged in
competition with Capital One, nor directly or indirectly solicit or induce any
associate of Capital One to end their employment based on confidential
information they learned about the employee while they were employed by Capital
One.
Payments under Certain Termination
Scenarios
Upon separation from the Company, the
named executive officers, regardless of the reason for termination, receive
certain payments, such as accrued but unused vacation pay and amounts earned and
vested under the Companys qualified and non-qualified retirement programs. In
addition, cash-settled restricted stock units granted to NEOs after the end of a
performance year continue to vest according to the original provisions upon
separation except for cause because these are deferred awards attributable to
prior performance and are intended to replace cash bonuses, which would
otherwise already have been paid to an executive.
Voluntary Termination
An NEO who voluntarily terminates
employment with Capital One may receive payments related to non-competition
covenants (described above, if applicable) and any contractual payments to which
the NEO may otherwise be entitled. In addition, an NEO has the ability following
separation to exercise vested but unexercised options for 90 days following
voluntary termination.
Involuntary Termination Without
Cause
An NEO whose employment with Capital One
is terminated involuntarily, for performance or job elimination, is entitled to
receive the amounts set forth in the Companys Executive Severance Plan. For
2011, potential payments under the Executive Severance Plan were 30% of total
target compensation. If an NEOs Non-Competition Agreement is enforced, payments
under the Executive Severance Plan will be offset by any amounts paid under the
Non-Competition Agreement and the NEO will be eligible for (i) an additional
payment of up to 90% of the severance payments in exchange for executing a
release of claims against the Company, as well as (ii) continued coverage
through broad-based and executive life insurance programs, outplacement services
and any contractual payments to which the NEO may otherwise have been entitled.
Performance shares granted to named executive officers will vest on a pro-rata
basis if an involuntary termination without cause occurs during the performance
period. In addition, named executive officers have the ability following
separation to exercise vested but unexercised options for two years.
Termination for Cause
An NEO whose employment with Capital One
is terminated for cause receives no additional benefits but is required to
comply with any applicable restrictive covenants related to confidentiality,
non-competition, non-solicitation of employees and ownership of work product, as
described above. In addition, if terminated for cause, named executive officers
have the ability following separation to exercise vested but unexercised options
for 90 days.
Payments upon Retirement
As with all executives who are eligible
for retirement, named executive officers who retire from Capital One may receive
the following amounts: payments related to non-competition covenants as if they
had terminated voluntarily (described above); partially subsidized participation
in retiree medical coverage (including dependants as applicable); coverage
through the executive life insurance program (at a reduced benefit); and any
contractual payments to which he or she may otherwise be entitled.
65
Shares of restricted stock and stock
options of named executive officers who retire from Capital One continue to vest
according to their original terms. In addition, performance shares granted to
named executive officers will continue to vest after retirement, except the 2011
performance share grant to the CEO which would be forfeited if he retired prior
to December 31, 2011. For stock options granted on or before December 1, 2005,
the executive has one year from the date of separation to exercise vested but
unexercised options. Stock options granted after December 1, 2005 must be
exercised by the earlier of five years from the date of retirement or the
expiration of the option term. Unvested stock options granted on or after
January 27, 2010, will continue to vest according to their original terms, and
all stock options may be exercised until the expiration of the option
term.
Change of Control
Each named executive officer is a party to
an agreement (a Change of Control Agreement)
that provides for certain payments in the
event his or her employment is terminated within two years following (or in
anticipation of) a change of control, either involuntarily without cause or
voluntarily for good reason. Amounts payable in each of these scenarios are
outlined below.
In the agreements, a change of control
occurs if one or more of the following events take place: (i) an acquisition of
20% or more of Capital Ones common stock or the combined voting power of the
voting securities by a person or group, (ii) certain changes in the majority of
the Board of Directors, (iii) consummation of a reorganization, merger, share
exchange or consolidation or similar transaction, sale of all assets or the
acquisition of another company, except where all or substantially all of the
stockholders receive 50% or more of the stock of the resulting company, at least
a majority of the board of directors of the resulting company were incumbent
board members, and no person owns 20% or more of the resulting company who did
not own such stock immediately before the business combination or (iv) approval
by stockholders of a complete liquidation or dissolution of Capital
One.
Involuntary Termination For
Cause
Named executive officers terminated
involuntarily for cause following a change of control receive no additional
benefits.
Voluntary Termination With Good Reason
or Involuntary Termination Without Cause
For 2011, the potential payments that the
named executive officers could receive under certain termination scenarios are
based on a percentage of target total compensation. For the CEO, the potential
payments are based on a multiple of his notional salary (as described below). As
of December 31, 2011, if a change of control of Capital One occurs, then
following a voluntary termination with good reason or involuntary termination
without cause, a named executive officer may receive certain benefits as
outlined below:
-
The CEO will be entitled to receive a lump-sum
payment of 2.5 times his current notional salary.
-
An NEO will be entitled to receive:
-
The cash value, prorated through the date of
termination, of the current years target annual incentive award, whether in
the form of cash or equity-based compensation;
-
112.5% of the highest of (i) the NEOs current
target total compensation, (ii) the NEOs target total compensation for the
prior year, or (iii) the NEOs actual total compensation for the prior
year.
-
The CEO or an NEO will also be entitled to
receive:
-
An amount such that after the payment of all
income and excise taxes, the named executive officer would have been in the
same after-tax position as if no excise tax had been imposed, provided that
the gross-up results in an after-tax benefit of at least 110% of the
applicable safe harbor amount (in the event the payments do not meet that
threshold, payments are reduced so that no excise tax is imposed);
-
An amount equal to the employer contributions
under the Companys qualified and non-qualified retirement, healthcare and
life insurance programs plans for 2.5 years as well as access to such
healthcare and life insurance plans for the named executive officer (and
dependants as applicable);
66
-
Service credit of 2.5 years for purposes of
determining vesting under any supplemental or excess defined contribution plan
and eligibility under any applicable retiree medical plan;
-
Outplacement services of up to $30,000 for one
full year (the named executive officer must begin to take advantage of the
services within one year of the date of termination);
-
Accrued but unused vacation pay; and
-
Any contractual payments to which the named
executive officer may otherwise have been entitled.
In addition, as for all associates holding
equity awards, all outstanding awards under Capital Ones stock incentive plans
vest immediately upon a change of control.
On March 1, 2011, Capital One delivered
notice to the named executive officers that their current Change of Control
Agreements would not be renewed. The Committee and the independent directors
also approved a new form of Change of Control Agreement to be used after March
1, 2011, for new hires, promotions and renewals, which does not provide for an
excise tax gross-up. Accordingly, all Change of Control Agreements providing for
a potential excise tax gross-up after a change of control will expire by April
2014, to be replaced with the new form of agreement that does not provide for an
excise tax gross-up.
Richard D.
Fairbank
Mr. Fairbank receives no regular base
salary. In light of this, for 2011, Mr. Fairbanks payment in the event of a
termination following a change of control was based on a notional salary of $1
million. The Committee reviews and establishes this amount on an annual basis,
based on market trends related to CEO compensation and recommendations provided
by the Committees independent consultant. Mr. Fairbank is a party to a Change
of Control Agreement.
Gary L. Perlin
Mr. Perlin is generally eligible for the
same payments upon termination as the other NEOs at Capital One. For 2011, these
payments were calculated against the 2011 target total compensation value. Mr.
Perlin is a party to a Non-Competition Agreement and a Confidentiality, Work
Product and Non-Solicitation of Employee Agreement, as well as to a Change of
Control Agreement.
Lynn A. Carter
Ms. Carter is generally eligible for the
same payments upon termination as the other NEOs at Capital One. For 2011, these
payments were calculated against the 2011 target total compensation value. Mrs.
Carter is a party to a Change of Control Agreement. See the table below for more
information on Ms. Carters previously announced separation from the
Company.
Ryan M. Schneider
Mr. Schneider is generally eligible for
the same payments upon termination as the other NEOs at Capital One. For 2011,
these payments were calculated against the 2011 target total compensation value.
Mr. Schneider is a party to a Non-Competition Agreement and a Confidentiality,
Work Product and Non-Solicitation of Employee Agreement, as well as to a Change
of Control Agreement.
Peter A. Schnall
Mr. Schnall is generally eligible for the
same payments upon termination as the other NEOs at Capital One. For 2011, these
payments were calculated against the 2011 target total compensation value. Mr.
Schnall is a party to a Non-Competition Agreement and a Confidentiality, Work
Product and Non-Solicitation of Employee Agreement, as well as to a Change of
Control Agreement.
67
2011 Potential Payments and
Benefits Upon Termination or Change of Control Tables by
NEO
|
Name
and
Principal
Position
|
Situation
|
Cash
Severance
(1)
|
Retirement
Plan
Contributions
(2)
|
Acceleration
and
Continuation
of
Equity
Awards (3)
|
Continuation
of
Medical/
Welfare
Benefits (4)
|
Excise
Tax
Gross Up
(5)
|
Total
|
Richard D.
Fairbank
Chairman,
CEO and
President
|
Voluntary
Termination
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
Involuntary
Termination
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
Retirement (6)
|
$0
|
$0
|
$45,776,849
|
$425,000
|
$0
|
$46,201,849
|
For Cause
Termination
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
CIC*
|
$2,502,519
|
$0
|
$49,280,617
|
$216,061
|
$0
|
$51,999,197
|
|
|
|
|
|
|
|
|
Gary
L.
Perlin
Chief
Financial
Officer
|
Voluntary
Termination
|
$1,001,250
|
$0
|
$1,489,961
|
$0
|
$0
|
$2,491,211
|
Involuntary
Termination
|
$3,804,750
|
$0
|
$2,849,641
|
$46,718
|
$0
|
$6,701,109
|
Retirement (6)
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
For Cause
Termination
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
CIC*
|
$8,929,569
|
$540,514
|
$10,297,760
|
$121,457
|
$0
|
$19,889,300
|
|
|
|
|
|
|
|
|
Lynn A.
Carter
President,
Banking (7)
|
Voluntary Termination
|
$0
|
$0
|
$1,149,696
|
$0
|
$0
|
$1,149,696
|
Involuntary
Termination
|
$1,500,000
|
$0
|
$2,281,799
|
$42,464
|
$0
|
$3,824,263
|
Retirement (6)
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
For Cause
Termination
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
CIC*
|
$6,790,529
|
$375,378
|
$8,313,398
|
$145,997
|
$0
|
$15,625,302
|
|
|
|
|
|
|
|
|
Ryan M.
Schneider
President,
Card
|
Voluntary Termination
|
$726,000
|
$0
|
$1,011,704
|
$0
|
$0
|
$1,737,704
|
Involuntary
Termination
|
$2,758,800
|
$0
|
$1,809,589
|
$34,195
|
$0
|
$4,602,584
|
Retirement (6)
|
NA
|
NA
|
N/A
|
NA
|
NA
|
NA
|
For Cause
Termination
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
CIC*
|
$6,610,778
|
$403,338
|
$6,653,243
|
$77,822
|
$3,174,725
|
$16,919,905
|
|
|
|
|
|
|
|
|
Peter
A. Schnall
Chief Risk
Officer
|
Voluntary
Termination
|
$692,250
|
$0
|
$1,030,100
|
$0
|
$0
|
$1,722,350
|
Involuntary
Termination
|
$2,630,550
|
$0
|
$1,999,034
|
$35,992
|
$0
|
$4,665,576
|
Retirement (6)
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
For Cause
Termination
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
CIC*
|
$6,305,596
|
$386,616
|
$7,397,417
|
$121,582
|
$0
|
$14,211,211
|
*
|
|
Represents potential
payments and benefits upon change of control for involuntary termination
without cause or voluntary for good reason. Acceleration and Continuation
of Equity Awards represents the value of equity where vesting is
accelerated upon change of control.
|
The table above is intended to reflect
projected payments to named executive officers across a range of potential
separation scenarios, assuming the change of control or separation occurred on
December 31, 2011.
The amounts shown in the table above do not include payments
and benefits that are provided on a non-discriminatory basis to salaried
employees generally upon termination of employment. The named executive officers
also are eligible to receive certain pension benefits and certain qualified and
non-qualified deferred compensation amounts upon termination. These amounts are
outlined in the 2011 Pension Benefits Table on page 61 and the 2011
Non-Qualified Deferred Compensation Table on page 63, respectively, and are not
included in the table above.
Other amounts not included in the table
above are the following:
-
Accrued salary, bonus and vacation pay as of the
date of termination
-
Welfare benefits generally available to all
retirees, including retiree medical programs
68
(1)
|
|
Represents cash
amounts paid for severance or in relation to enforcement of
non-competition covenants. In cases where the executive is eligible for
both types of payments, non-competition amounts typically offset severance
amounts in whole or in part. Cash-settled restricted stock unit awards
granted after the end of a performance year are included in the
Acceleration and Continuation of Equity Awards column. Gary Perlin and
Lynn Carter would both receive a reduction in CIC severance payments
($190,986 and $224,344, respectively) in order to meet safe harbor
limitations. This reduction is reflected in the cash severance amounts
reported above.
|
|
(2)
|
|
Represents the value
of projected contributions to retirement plans during the severance
period.
|
|
(3)
|
|
Represents the value
of equity where vesting is accelerated or continued by the triggering
event. For stock options, this represents the in-the-money value. For
stock awards, this represents the fair market value of the
shares.
|
|
(4)
|
|
Represents the present
value of payments made on the executives behalf for continuation of
medical and welfare benefits during the severance period. Includes
programs such as medical, dental, insurance, outplacement services and
related benefits. Only includes programs that are specific to the named
executive officers; does not include the value of programs generally
available to all employees upon separation from the Company.
|
|
(5)
|
|
Represents the value
of projected excise tax and related gross-up payments made on the
executives behalf, provided that the gross-up results in an after-tax
benefit of at least 110% of the applicable safe harbor amount. As of March
1, 2011, Capital One changed its practice relating to excise tax gross-ups
to which the CEO and NEOs may be entitled if terminated after a change of
control. All change of control agreements providing for a potential excise
tax gross-up will expire by April 2014 and will be replaced with
agreements that do not provide for an excise tax gross-up. See Change of
Control Agreements in the Compensation Discussion and Analysis section
on page 47 for more information.
|
|
(6)
|
|
Most currently
unvested equity awards held by our retirement eligible executives will
continue to vest according to their original terms following retirement.
Mr. Fairbank is currently the only named executive officer eligible for
retirement.
|
|
(7)
|
|
As previously
announced, Ms. Carter left her role as President, Banking, of the Company
effective at the close of business on December 31, 2011, and will be
separating from the Company on March 31, 2012. Upon separation, she will
be entitled to the payments and benefits shown here for Involuntary
Termination. In addition, in January 2012 the Committee approved
additional vesting on her outstanding restricted stock awards scheduled to
vest in January and February 2013, including her award granted in January
2012, that she would otherwise forfeit upon her separation. The total
number of shares of restricted stock subject to this additional vesting is
27,999.
|
69
SECTION VII EQUITY
COMPENSATION PLANS
|
Equity Compensation Plan
Information
|
The following table provides information
as of December 31, 2011, with respect to shares of Capital One common stock that
may be issued under our existing compensation plans.
|
Plan Category
|
Number of securities to be
issued
upon exercise of
outstanding options, warrants
and
rights
|
Weighted-average
exercise price
of
outstanding options,
warrants and rights
|
Number
of securities
remaining available for
future issuance under
equity
compensation plans
(excluding securities reflected
in
column (a))
|
|
|
(a)
|
(b)
|
(c)
|
|
Equity compensation plans
approved
|
|
|
|
|
by security holders (1)
|
14,944,432
|
$50.74 (3)
|
15,073,972 (4)
|
|
|
|
Equity compensation plans not
|
|
|
|
|
approved by security holders
(2)
|
2,196,102 (5)
|
$53.38 (5)
|
0 (6)
|
|
|
|
Total
|
17,140,534
|
$51.08
|
15,073,972
|
(1)
|
|
The following plans have been
approved by Capital One stockholders and are currently in effect: the
Amended and Restated 2004 Stock Incentive Plan (the 2004 Stock Incentive
Plan), the 1994 Stock Incentive Plan, and the Amended and Restated 2002
Associate Stock Purchase Plan.
|
|
(2)
|
|
The following plans have not been
approved by Capital One stockholders: the 1999 Directors Plan and the 2002
Non-Executive Officer Stock Incentive Plan (the 2002 Stock Incentive
Plan), both of which are described below. The 2002 Stock Incentive Plan
was terminated in April 2004, and the 1999 Directors Plan was terminated
in April 2009. In conjunction with the acquisition of Hibernia National
Bank (Hibernia) in November 2005, Capital One assumed three existing
Hibernia stock incentive plans. In conjunction with the acquisition of
North Fork Bancorporation (North Fork) in December 2006, Capital One
assumed fifteen existing North Fork stock incentive plans. Options
outstanding under these plans were converted to Capital One options
outstanding and are included in the amounts reported in this row. There
are no shares available for future issuance under the Hibernia or North
Fork plans.
|
|
(3)
|
|
Excludes purchase rights accruing
under the 2002 Associate Stock Purchase Plan and 3,564,573 issued and
unvested outstanding shares of restricted stock under the 2004 Stock
Incentive Plan. Includes 1,123,341 restricted stock units (which have an
exercise price of $0.00) under the 2004 Stock Incentive Plan. Excludes
shares of restricted stock and stock appreciation rights, to be settled in
cash, under the 2004 Stock Incentive Plan.
|
|
(4)
|
|
Represents shares available for
future issuance under the 2004 Stock Incentive Plan; and 1,788,304 shares
available for future issuance under the 2002 Associate Stock Purchase Plan
as discounted shares purchased voluntarily by Capital One associates
through regular payroll deductions. The 1995 Directors Plan was terminated
on April 29, 1999 and the 1994 Stock Incentive Plan was terminated upon
stockholder approval of the 2004 Stock Incentive Plan, thus there are no
shares available for future issuance under these plans.
|
|
(5)
|
|
Includes 73,620 outstanding
restricted stock units under the 1999 Directors Plan that have an exercise
price of $0.00.
|
|
(6)
|
|
There are no shares available for
future issuance under the equity compensation plans not approved by
security holders.
|
70
Description of Non-Stockholder
Approved Equity Compensation Plans
|
Set forth below is a brief description of
the material features of each Capital One equity compensation plan that was
adopted without the approval of Capital Ones stockholders and that had grants
outstanding or shares available for issuance as of December 31, 2011.
The 1999 Directors Plan was adopted by the
Board on April 29, 1999, and terminated on April 28, 2009. The plan authorized a
maximum of 825,000 shares of Capital Ones common stock for the grant of
non-qualified stock options, restricted stock and restricted stock units to
members of the Board who are not otherwise employed at the time an award is
granted as an employee of Capital One or any subsidiary of Capital One. The
number of shares available for issuance under the plan included shares granted
under the plan subject to options that expire or otherwise terminate unexercised
and shares forfeited pursuant to restrictions on restricted stock or deferred
stock. Shares issued pursuant to the plan are treasury shares. The plan is
administered by the Board.
The exercise price of stock options
granted under the plan could not be less than the fair market value, as defined
in the 1999 Directors Plan, of Capital One common stock on the date of grant.
The maximum term of each stock option was ten years, and vesting schedules were
determined at the time of grant. The Board could, in its discretion, grant
options that by their terms became fully exercisable upon a change of control,
as defined in the 1999 Directors Plan.
The Board could award restricted stock to
eligible directors. During the restricted period, a director could not dispose
of any restricted shares and must forfeit any restricted shares granted to such
director if he or she ceases to be a member of the Board. The Board had the
authority to establish the terms and conditions upon which these restrictions
will lapse. The Board could also, at any time, accelerate the time at which any
or all restrictions would lapse or remove any and all such restrictions. Subject
to any applicable restrictions, a participant who received an award of
restricted stock would have all of the rights of a stockholder with respect to
the shares subject to the award, including but not limited to the right to vote
the shares and the right to receive all dividends and other distributions paid
with respect to the shares.
The Board could award restricted stock
units to eligible directors under the plan. The Board has the authority to
establish, in its discretion, the length of the vesting period; any restrictions
with respect to an award of restricted stock units and the terms and conditions
upon which restrictions, if any, shall lapse.
The Board has retained the right to cancel
any awards outstanding under the plan in exchange for a cash payment equal to
any such awards value as of the date of cancellation.
Currently, no shares are available for
issuance under this plan other than shares subject to outstanding equity awards
under the plan.
2002 Stock Incentive
Plan
|
The 2002 Stock Incentive Plan was
terminated by the Board upon the approval by the stockholders of the Company of
the 2004 Stock Incentive Plan at the annual stockholder meeting in April 2004.
Nevertheless, pursuant to the resolution of the Board, the rights or obligations
of any person under any equity-based awards granted under the 2002 Stock
Incentive Plan remained in full force and effect under the terms of such
plan.
The 2002 Stock Incentive Plan was adopted
by the Board on January 17, 2002 and amended on September 19, 2002. Under the
2002 Stock Incentive Plan, 8,500,000 shares of Capital One common stock had been
reserved for issuance with respect to the grant of non-qualified stock options,
stock appreciation rights, restricted stock or incentive stock. The number of
shares that were available for issuance under the plan includes shares subject
to options or stand-alone stock appreciation rights granted under the plan that
expire or otherwise terminate unexercised, shares forfeited pursuant to
restrictions on restricted stock or incentive
71
stock and shares surrendered by a
participant or retained by Capital One in payment of the exercise price of an
option or applicable tax withholding liabilities. The plan is administered by a
committee (the 2002 Plan Committee) consisting solely of at least two
non-management directors of Capital One.
All employees of Capital One or its
subsidiaries that the 2002 Plan Committee determined to have contributed to the
profit and growth of Capital One were eligible to receive awards under the plan,
except for Capital Ones executive officers (generally, those subject to
Section 16 of the Securities Exchange Act of 1934, as amended).
Currently no shares are available for
issuance under this plan other than shares subject to outstanding equity awards
under the plan. As established in the proposal presented to the stockholders of
the Company and approved in the 2004 annual meeting, any reload options that the
Company is obligated to grant upon the exercise of awards from the 2002 Stock
Incentive Plan will be granted under the 2004 Stock Incentive Plan, and shares
of common stock of the Company used to pay for the exercise price of options
shall be added back to the total number of shares available for issuance of
awards under the terms set forth in the 2004 Stock Incentive Plan.
72
SECTION VIII COMPENSATION
COMMITTEE REPORT
|
All members of the Compensation Committee
participated in the review and discussion of the Compensation Discussion and
Analysis (CD&A) with management. Based on that review and discussion, the
Compensation Committee recommended to the Board of Directors that the CD&A
be included in this Proxy Statement.
The Compensation Committee
|
|
Mayo A. Shattuck III
(Chair)
|
|
|
E.R. Campbell
|
|
|
Patrick W. Gross
|
|
|
Ann Fritz Hackett
|
|
|
Lewis Hay, III
|
|
|
Pierre E.
Leroy
|
The foregoing Report of the Compensation
Committee on Executive Compensation shall not be deemed to be soliciting
material or filed with the SEC and is not incorporated by reference into any of
Capital Ones previous or future filings with the SEC, except as otherwise
explicitly specified by Capital One in any such filing.
73
SECTION IX AUDIT AND RISK
COMMITTEE REPORT
|
The Audit and Risk Committees amended and
restated charter was approved by the Committee on January 30, 2012, and by the
full Board of Directors on January 31, 2012.
In accordance with its charter, the Audit
and Risk Committee assists the Board of Directors in fulfilling its
responsibility for oversight of the quality and integrity of Capital Ones
accounting, auditing, financial reporting, internal controls and risk assessment
and management processes. The Audit and Risk Committees primary
responsibilities can be classified as assisting the Board of Directors in
monitoring four broad categories:
-
The integrity of Capital Ones financial
statements and internal controls;
-
Capital Ones compliance with legal and regulatory
requirements;
-
The appointment, qualifications, independence,
performance and compensation of Capital Ones
independent auditor and the performance of its internal auditor and
Chief Credit Review Officer; and
-
The processes by which management assesses and
manages risk.
The Audit and Risk Committee has
implemented procedures to enable it to devote the attention it deems appropriate
to each of the matters assigned to it under its charter. In carrying out its
responsibilities, the Audit and Risk Committee met twelve times during 2011.
Pursuant to Capital Ones Corporate Governance Principles and applicable law,
the Audit and Risk Committee is comprised solely of independent
directors.
In discharging its oversight
responsibility, the Audit and Risk Committee has reviewed and discussed Capital
Ones audited financial statements for the fiscal year ended December 31, 2011,
with management and Ernst & Young LLP (Ernst & Young), Capital Ones
independent auditors. The Audit and Risk Committee has also discussed with Ernst
& Young the matters required to be discussed under the rules adopted by the
Public Company Accounting Oversight Board; has been timely briefed by Ernst
& Young as required by Section 204 of the Sarbanes-Oxley Act of 2002 and SEC
rules promulgated thereunder; and follows the mandates of the SECs rules
regarding auditor independence. In addition, the Audit and Risk Committee has
received the written disclosures and the letter from Ernst & Young required
by the applicable requirements of the Public Company Accounting Oversight Board
regarding Ernst & Youngs communications with the Audit and Risk Committee
concerning independence and has discussed with Ernst & Young their
independence from Capital One. Based on its review and discussions with
management and Ernst & Young, and pursuant to a delegation of authority from
the Board of Directors, the Audit and Risk Committee has approved the inclusion
of the audited financial statements in Capital Ones Annual Report on Form 10-K
for the fiscal year ending December 31, 2011, for filing with the
SEC.
The Audit and Risk Committee:
|
|
W. Ronald Dietz (Chairman and Audit
Committee Financial Expert)
|
|
|
Patrick W. Gross
|
|
|
Ann Fritz Hackett
|
|
|
Pierre E. Leroy
|
|
|
Peter E. Raskind
|
|
|
Bradford H. Warner (Audit Committee
Financial Expert)
|
The foregoing Report of the Audit and Risk
Committee shall not be deemed to be soliciting material or filed with the SEC
and is not incorporated by reference into any of Capital Ones previous or
future filings with the SEC, except as otherwise explicitly specified by Capital
One in any such filing.
74
SECTION X ELECTION OF
DIRECTORS (ITEM 1 ON PROXY CARD)
|
In 2011, Capital Ones stockholders voted
to phase out the classification of the Board and to provide instead for the
annual election of directors. Commencing with the 2012 Annual Stockholder
Meeting, directors will be elected annually for terms expiring at the next
succeeding Annual Stockholder Meeting. Directors previously elected to serve
three-year terms will serve the remainder of such terms before standing for
re-election. The table below indicates when each director was last elected as
well as the tenure of each director.
Director
|
Tenure
|
Last Elected
|
Expiration of Term
|
Richard D. Fairbank
|
Since July 26, 1994
|
2009
|
2012
|
E.R. Campbell *
|
Since November 16,
2005
|
2009
|
2012
|
W. Ronald Dietz
|
Since February 28,
1995
|
2010
|
2013
|
Patrick W. Gross
|
Since February 28,
1995
|
2011
|
2014
|
Ann Fritz Hackett
|
Since October 28, 2004
|
2011
|
2014
|
Lewis Hay, III
|
Since October 31, 2003
|
2010
|
2013
|
Pierre E. Leroy
|
Since September 1,
2005
|
2011
|
2014
|
Peter E. Raskind
|
Since January 31, 2012
|
N/A
|
2012
|
Mayo A. Shattuck III
|
Since October 31, 2003
|
2010
|
2013
|
Bradford H. Warner
|
Since April 24, 2008
|
2009
|
2012
|
*
|
|
Pursuant to the age
restriction in the Companys Bylaws, Mr. Campbell is not eligible to stand
for re-election and will leave the Board when his current term expires at
the Annual Meeting.
|
The nominees for election this year
are:
Richard D. Fairbank
Peter E.
Raskind
Bradford H. Warner
Each nominee has consented to serve a
one-year term. Information about the proposed nominees for election as
directors, and about each other current director whose term will continue after
the Annual Meeting, is set forth under Information About Our Directors and
Executive Officers in the Governance of Capital One section on page 15 of
this proxy statement.
In the event a nominee ceases to be
available for election, the Board of Directors may designate a substitute as a
nominee or reduce the size of the Board. If the Board designates a substitute
nominee, proxies will be voted for the election of such substitute. As of the
date of this proxy statement, the Board of Directors has no reason to believe
that any of the nominees will be unable or unwilling to serve as a
director.
***
The Board of Directors unanimously
recommends that you vote
FOR
each of these director nominees.
75
SECTION XI RATIFICATION OF
SELECTION OF INDEPENDENT AUDITORS
(ITEM 2 ON PROXY
CARD)
|
The Audit and Risk Committee, pursuant to
authority granted to it by the Board of Directors, has appointed the firm of
Ernst & Young LLP as independent auditors for 2012. The Board of Directors
is submitting this proposal to the vote of the stockholders as a matter of good
corporate governance. If stockholders do not ratify the selection of Ernst &
Young LLP, the Audit and Risk Committee will reconsider their appointment as our
independent auditors.
The fees billed for professional services
provided by Ernst & Young LLP for fiscal years 2011 and 2010 are shown in
the following table:
Fees (dollars in
millions)
|
2011
|
2010
|
Audit Fees
|
$9.26
|
$7.23
|
Audit-Related Fees
|
$1.37
|
$1.38
|
Tax Fees
|
$0.00
|
$0.04
|
All Other Fees
|
$0.00
|
$0.00
|
Audit fees include fees for the audit of
our annual financial statements, the review of financial statements included in
our quarterly reports on Form 10-Q and services that normally would be provided
by the accountant in connection with statutory and regulatory filings or
engagements and that generally only the independent auditor can provide. In
addition to fees for an audit or review in accordance with generally accepted
auditing standards, this category contains fees for comfort letters, statutory
audits, consents and assistance with and review of documents filed with the SEC.
Audit-related fees are assurance and related services that are reasonably
related to the performance of the audit or review of our financial statements
and traditionally are performed by the independent auditor, such as: employee
benefit plan audits; due diligence related to mergers and acquisitions; internal
control reviews; attestation services that are not required by statute or
regulation; and consultation concerning financial accounting and reporting
standards. Tax fees include corporate and subsidiary compliance, consulting,
international and employee benefit services. All other fees would include fees
for services that are not defined as Audit, Audit-related or Tax and are not
specifically prohibited by the SEC.
The Audit and Risk Committee has reviewed
the fees paid to Ernst & Young LLP and has considered whether the fees paid
for non-Audit services are compatible with maintaining Ernst & Young LLPs
independence. The Audit and Risk Committee also adopted policies and procedures
to approve services provided by Ernst & Young LLP in accordance with the
Sarbanes-Oxley Act of 2002 and rules of the SEC promulgated thereunder. These
policies and procedures involve annual pre-approval by the Audit and Risk
Committee of the types of services to be provided by Capital Ones independent
auditor and fee limits for each type of service on both a per engagement and
aggregate level. Additional service engagements that exceed these pre-approved
limits must be submitted to the Audit and Risk Committee for further
pre-approval. Under the policy adopted by the Audit and Risk Committee, Tax fees
are limited to 25% of combined Audit and Audit-related fees, and services that
would fall under the category All Other Fees are prohibited. Capital Ones
policy, for administrative ease, allows for a $25,000 de minimis exception to
the pre-approval procedures; however, any services provided pursuant to this
exception must be approved at the next meeting of the Audit and Risk Committee.
Additionally, Capital One has established policies to provide for adherence to
Sarbanes-Oxley Act requirements relating to the rotation of partners engaged in
Capital Ones audit by the independent auditors.
Representatives of Ernst & Young LLP
are expected to be present at the Annual Meeting. They will have the opportunity
to make a statement if they desire to do so and will be available to respond to
appropriate questions.
***
The Board of Directors unanimously
recommends that you vote
FOR
the ratification of Ernst & Young LLP as Capital Ones
independent auditors for 2012.
76
SECTION XII ADVISORY
APPROVAL OF CAPITAL ONES 2011 NAMED
EXECUTIVE OFFICER COMPENSATION
(ITEM 3 ON PROXY CARD)
|
We are offering to our stockholders a
non-binding advisory vote on our 2011 Named Executive Officer compensation,
including the compensation of our Chief Executive Officer, pursuant to Section
14A of the Securities and Exchange Act of 1934. While the vote is non-binding,
the Board of Directors values the opinions that stockholders express through
their votes and in any additional dialogue. The Board of Directors will consider
the outcome of the vote when making future compensation decisions.
As discussed in the Compensation
Discussion and Analysis section beginning on page 30, our Board of Directors
generally has provided compensation programs for the CEO and the NEOs that are
competitive with the market, performance-based and transparent and that align
with our stockholders interests over multiple time horizons. Our CEO and NEO
compensation programs generally have consisted primarily of performance-based
incentive opportunities, including multiple types of equity instruments with
multi-year vesting schedules. The ultimate value of the equity-based awards made
to our CEO and the NEOs is subject to Capital Ones sustained performance over
time, both on an absolute basis and relative to our peers.
For 2011, the CEOs compensation program
remained entirely comprised of equity-based vehicles and is at-risk based on the
Companys and Mr. Fairbanks performance. As discussed under NEO Compensation
on page 39, in 2011 the Company developed a compensation program for the NEOs
consistent with the Companys pay-for-performance philosophy. Under the 2011 NEO
compensation program, approximately 80% of total target compensation was
provided through equity-based vehicles which were all at-risk based on the
performance of the Companys stock price and subject to vesting over multiple
time horizons.
Additional information relevant to your
vote can be found in the Compensation Discussion and Analysis section of this
proxy statement on pages
30 to 50 and in the Named Executive Officer Compensation
section on pages 51 to 69.
We ask for your advisory vote on the
following resolution:
Resolved, that Capital Ones stockholders hereby provide their advisory
approval of the 2011 Named Executive Officer compensation as disclosed pursuant
to the rules of the SEC in the Compensation Discussion and Analysis, the Summary
Compensation Table, the other compensation tables and the related notes and
narratives in this proxy statement.
***
The Board of Directors unanimously
recommends that you vote
FOR
advisory approval of our 2011 Named Executive Officer
compensation as disclosed in this proxy statement.
The Board of Directors has resolved to
hold annual advisory votes on executive compensation. Accordingly, the next
advisory vote on executive compensation will occur at the 2013 Annual Meeting,
unless the Board of Directors modifies its policy on the frequency of holding
such advisory votes.
77
SECTION XIII APPROVAL AND
ADOPTION OF CAPITAL ONES AMENDED
AND RESTATED ASSOCIATE STOCK PURCHASE
PLAN (ITEM 4 ON PROXY
CARD)
|
On February 23, 2012, the Board of
Directors amended the Capital One Financial Corporation 2002 Associate Stock
Purchase Plan (the ASPP) to increase the number of shares available under the
ASPP, subject to stockholder approval. Under the ASPP, which was initially
adopted by the Board effective on September 19, 2002, the Company originally
reserved 3,000,000 shares of Capital One common stock for the purpose of
employee purchases. This amount was increased by the Board to 8,000,000 shares
in February 2008, which increase was approved by stockholders in April 2008.
This amendment and restatement of the ASPP, among other things, requests
approval of an additional 10,000,000 shares, for a total reserve of 18,000,000
shares. These shares may consist of newly issued shares, treasury shares, shares
acquired on the open market or any combination thereof.
The purpose of the ASPP is to secure for
the Company and its stockholders the benefits of the incentive inherent in the
ownership of Capital Ones common stock by its employees. The following
description of the ASPP is not intended to be complete and is qualified in its
entirety by the complete text of the ASPP, which is attached to this proxy
statement as Appendix A. Stockholders are urged to read the ASPP in its
entirety.
Summary of Material Provisions of
the ASPP
Administration
The ASPP is administered by the
Compensation Committee, which must consist of not less than two members
appointed by the Board, unless the Board appoints another committee to
administer the plan. Such committee has the authority to take any and all
actions necessary to implement the ASPP and to interpret the ASPP, to prescribe,
amend and rescind rules and regulations relating to the ASPP, and to make all
other determinations necessary or advisable in administering the ASPP. All of
such actions, interpretations and determinations shall be final and binding upon
all persons.
Eligibility
All individuals who are actively employed
by the Company or a subsidiary and are customarily paid through the Companys
regular payroll are eligible to participate in the ASPP.
Purchase of Shares
Each eligible employee may elect regular,
monthly payroll deductions of up to 15% of the employees base compensation to
be used to purchase shares of common stock at monthly intervals (or at such
other times as determined by the plan administrator). Eligible employees may
also elect to make a lump-sum cash contribution (provided that the total of the
payroll deductions and such contributions for any calendar quarter do not exceed
15% of an employees base compensation for such period) to be used to purchase
shares. The total amount of monthly payroll deductions and quarterly lump-sum
cash contributions may not exceed $75,000 in any calendar year. A participating
employee may elect once each calendar quarter to increase, decrease, or
eliminate his or her regular payroll deduction. Shares of common stock are
purchased under the ASPP at the end of each month (a purchase date), or at
such other times as determined by the plan administrator.
Matching Contribution; Purchase
Price
Each employee who participates in the ASPP
will receive a matching contribution from the Company equal to 17.65% of the
amount of such employees matching and lump-sum contributions to the ASPP. This
matching contribution is combined with the employees contributions and used to
purchase common stock under the ASPP at a purchase price equal to the fair
market value of the common stock on the applicable purchase date. Taking in
account the matching contributions, participants effectively purchase common
stock under the ASPP at a 15% discount to the fair market value of the shares on
the purchase date.
78
Effect of Termination of
Employment
If an eligible employees employment is
terminated for any reason (including death), any amount withheld prior to such
termination will be used to purchase shares on the next purchase
date.
Change in Capital
Structure
In the event of a stock dividend,
spin-off, stock split or combination of shares, recapitalization or merger in
which the Company is the surviving corporation or other change in the common
stock (including, but not limited to, the creation or issuance to shareholders
generally of rights, options or warrants for the purchase of common stock or
preferred stock of the Company), the number and kind of shares of stock or
securities of the Company to be subject to the ASPP, the maximum number of
shares or securities that may be delivered under the ASPP, the purchase price
and other relevant provisions shall be appropriately adjusted by the Committee,
whose determination shall be binding on all persons.
Amendment and
Termination
The Board of Directors in its sole
discretion may at any time amend the ASPP in any respect provided that such
amendment is in compliance with all applicable laws and regulations and the
requirements of any national securities exchange on which shares of common stock
are then traded.
U.S. Federal Income Tax
Consequences
The following tax discussion is a brief
summary of current U.S. federal income tax law. The discussion is intended
solely for general information and does not make specific representations to any
employee participating in the ASPP. The discussion does not address state, local
or foreign income tax rules or other U.S. tax provisions, such as estate or gift
taxes. An employees particular situation may be such that some variation of the
basic rules is applicable to him or her. In addition, the federal income tax
laws and regulations frequently have been revised and may be changed again at
any time. Therefore, each recipient is urged to consult a tax advisor before
exercising any award or before disposing of any shares acquired under the plan
both with respect to federal income tax consequences as well as any foreign,
state or local tax consequences.
On the date of each payroll contribution,
an associate will have ordinary income equal to amount of the Company-paid match
described above. The employees tax capital gains holding period will commence
on that date. We are entitled to a deduction for amounts taxed as ordinary
income to an employee.
***
The Board of Directors recommends that you
vote
FOR
the proposal to approve and adopt the ASPP.
79
SECTION XIV OTHER
BUSINESS
|
As of the date of this proxy statement, we
know of no business that will be presented for consideration at the Annual
Meeting other than the items referred to above. If other matters are properly
brought before the meeting, the persons named in the accompanying proxy card
will vote such proxy at their discretion.
Annual Report to
Stockholders
|
Capital Ones Annual Report to
Stockholders for the fiscal year ended December 31, 2011, including consolidated
financial statements, is being furnished along with this proxy statement to
Capital Ones stockholders of record. The Annual Report to Stockholders does not
constitute a part of the proxy soliciting material. A copy of the Annual Report
as well as Capital Ones Annual Report on Form 10-K for the fiscal year ended
December 31, 2011, may be obtained at the Annual Meeting, at our website at
www.capitalone.com
under Investors or by contacting our Investor
Relations department at Capital Ones address set forth on the Notice of Annual
Stockholder Meeting. The Form 10-K, which is filed with the SEC, may also be
obtained at the SECs website at
www.sec.gov
.
Stockholder Proposals for 2013
Annual Stockholder
Meeting
|
Stockholders interested in submitting a
proposal for inclusion in the proxy materials at Capital Ones 2013 Annual
Stockholder Meeting (Capital Ones 2013 Annual Meeting) may do so by following
the rules prescribed in Rule 14a-8 under the Securities Exchange Act of 1934. To
be eligible for inclusion, stockholder proposals must be received by Capital
Ones Corporate Secretary at the address on the Notice of Annual Stockholder
Meeting no later than November 23, 2012.
Under our Bylaws, if you wish to present
other business before the stockholders at Capital Ones 2013 Annual Meeting or
nominate a director candidate, you must give proper written notice of any such
business to the Corporate Secretary not before February 7, 2013, and not after
February 27, 2013. If Capital Ones 2013 Annual Meeting is not within thirty
days before or seventy days after May 8, 2013, the anniversary date of this
years Annual Meeting, notice must be delivered no earlier than the ninetieth
day prior to such annual meeting and not later than the close of business on the
later of the seventieth day prior to such meeting or ten days following any
notice or publication of the meeting. Your notice must include the information
specified in our Bylaws concerning the business or nominee. Our Bylaws set forth
the information that must be furnished to the Corporate Secretary in order for
any such notice to be proper. A copy of our Bylaws may be obtained from the
Corporate Secretary at Capital Ones address on the Notice of Annual Stockholder
Meeting.
On behalf of the Board of
Directors,
John G. Finneran, Jr.
Corporate Secretary
March 23,
2012
80
APPENDIX A AMENDED AND
RESTATED CAPITAL ONE FINANCIAL CORPORATION
2002 ASSOCIATE STOCK
PURCHASE PLAN
|
CAPITAL ONE FINANCIAL
CORPORATION
2002 ASSOCIATE STOCK PURCHASE PLAN
AMENDED AND RESTATED AS OF MAY 8,
2012
1. Purpose and Effect of
Plan
The purpose of the Plan is to secure for
the Company and its stockholders the benefits of the incentive inherent in the
ownership of Common Stock by present and future employees of the Company and its
Subsidiaries. The Plan is hereby amended and restated effective as of February
23, 2012, subject to the approval of the Companys stockholders at the Companys
2012 annual meeting.
2. Shares Reserved for the
Plan
There shall be reserved for issuance and
purchase by Participating Associates under the Plan an aggregate of 18,000,000
shares of Common Stock, subject to adjustment as provided in Section 12. Shares
issued under the Plan may consist of newly issued shares acquired from the
Company, treasury shares held by the Company, shares acquired on the open market
or a combination of the above.
3. Definitions
Where indicated by initial capital
letters, the following terms shall have the following meanings:
|
a.
|
|
Act: The Securities
Exchange Act of 1934, as amended.
|
|
|
|
b.
|
|
Base Compensation: The
base salary and/or commissions of an Eligible Associate received from the
Employer, including salary reduction contributions pursuant to elections
under a plan subject to Code section 125 or 401(k), but excluding all
other compensation such as overtime, bonuses, profit sharing awards and
credits received under a plan subject to Code section 125.
|
|
|
|
c.
|
|
Beneficiary: The
beneficiary designated by the Participating Associate in the beneficiary
designation in effect under the Companys group life insurance plan, or if
no beneficiary designation is in effect under such plan, the beneficiary
designated by the Participating Associate in the beneficiary designation
in effect under the Companys Executive Life Insurance Plan, provided that
if the Participating Associate has no beneficiary designation in effect
under either of the foregoing plans or if the Participating Associates
designated beneficiary predeceases him, the Participating Associates
beneficiary shall be his estate.
|
|
|
|
d.
|
|
Board: The Board of
Directors of the Company.
|
|
|
|
e.
|
|
Business Day: A day on
which the New York Stock Exchange is open for trading in Common Stock or,
if trading in Common Stock is suspended, the next following day on which
the New York Stock Exchange is open for trading and on which trading in
Common Stock is no longer suspended.
|
|
|
|
f.
|
|
Code: The Internal
Revenue Code of 1986, as amended from time to time.
|
|
|
|
g.
|
|
Committee: The
committee established pursuant to Section 4 to be responsible for the
general administration of the Plan.
|
|
|
|
h.
|
|
Common Stock: The
Companys common stock, $.01 par value per share.
|
|
|
|
i.
|
|
Company: Capital One Financial
Corporation and any successor by merger, consolidation or
otherwise.
|
A-1
|
j.
|
|
Eligible Associate:
Any employee of the Company or any of its Subsidiaries who meets the
eligibility requirements of Section 5.
|
|
|
|
k.
|
|
Employer: For purposes
of Section 5, the Company or Subsidiary employing an Eligible
Associate.
|
|
|
|
l.
|
|
Enrollment Form: The
form filed with the Companys Human Resources Department authorizing
payroll deductions pursuant to Section 6.
|
|
|
|
m.
|
|
Fair Market Value:
With respect to Common Stock acquired from the Company, the closing price
as reported on the New York Stock Exchange Composite Tape on the date in
question, or, if the Common Stock shall not have been so quoted on such
date, the closing price on the last day prior thereto on which the Common
Stock was so quoted. With respect to Common Stock acquired in respect of
the Plan on the open market, the weighted average purchase price (computed
to four decimal places) of all shares purchased on the date in
question.
|
|
|
|
n.
|
|
Investment Account:
The account established for each Participating Associate pursuant to
Section 9 to account for Common Stock purchased under the
Plan.
|
|
|
|
o.
|
|
Investment Date: The
last Business Day of each calendar month, or such other date(s) as
determined by the Committee.
|
|
|
|
p.
|
|
Participating
Associate: An Eligible Associate who elects to participate in the Plan by
filing an Enrollment Form pursuant to Section 6.
|
|
|
|
q.
|
|
Payroll Deduction
Account: The account established for a Participating Associate to reflect
payroll deductions and lump-sum cash contributions pursuant to Section
6.
|
|
|
|
r.
|
|
Plan: The Capital One
Financial Corporation 2002 Associate Stock Purchase Plan, as set forth
herein and as amended from time to time.
|
|
|
|
s.
|
|
Purchase Price: The
price for each whole and fractional share of Common Stock purchased under
the Plan (after taking into account matching contributions pursuant to
Section 7), other than those purchased by dividend reinvestment, shall be
the Fair Market Value on the date in question. The price for each whole
and fractional share of Common Stock purchased by dividend reinvestment
shall be 85% (or such greater percentage determined by the Committee) of
the Fair Market Value on the date in question. In the event matching
contributions pursuant to Section 7 are eliminated, the price for each
whole and fractional share of Common Stock purchased under the Plan shall
be 85% (or such greater percentage determined by the Committee) of the
Fair Market Value on the date in question.
|
|
|
|
t.
|
|
Section: A section of
the Plan, unless otherwise required by the context.
|
|
|
|
u.
|
|
Subsidiary or
Subsidiaries: Any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, as of an Investment
Date, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain.
|
4. Administration of the
Plan
The Plan shall be administered by a
committee, consisting of not less than two members appointed by the Board. The
Committee shall be the Compensation Committee of the Board unless the Board
shall appoint another committee to administer the Plan. The Board from time to
time may remove members previously appointed and may fill vacancies, however
caused, in the Committee.
Subject to the express provisions of the
Plan, the Committee shall have the authority to take any and all actions
necessary to implement the Plan and to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to the Plan, and to make all other
determinations necessary or advisable in administering the Plan. All of such
actions, interpretations and determinations shall be final and binding upon all
persons.
A-2
A quorum of the Committee shall consist of
a majority of its members and the Committee may act by vote of a majority of its
members at a meeting at which a quorum is present, or without a meeting by a
written consent to its actions signed by all members of the Committee. The
Committee may delegate all matters relating to the administration of the Plan to
one or more of the Companys officers. In addition, the Committee may request
advice or assistance and employ such other persons as are necessary for proper
administration of the Plan.
No member of the Committee or the Board
shall be liable for any action, omission, or determination relating to the Plan,
and the Company shall indemnify and hold harmless each member of the Committee
and each other director, employee or consultant of the Company to whom any duty
or power relating to the administration or interpretation of the Plan has been
delegated against any cost or expense (including counsel fees) or liability
arising out of any action, omission or determination relating to the Plan, to
the maximum extent permitted by law.
5. Eligible
Associates
Subject to the limitations of this
Section, all employees of the Company or its Subsidiaries shall be eligible to
participate in the Plan. To be an employee eligible to participate in the Plan,
a person must be actively employed by the Employer and customarily paid through
the Employers regular payroll. Any person who is excluded by the terms and
conditions of his employment from participation in the Plan, any person acting
as a non-employee director of the Employer, any person designated by the
Employer as an independent contractor, and any person who is a leased employee
within the meaning of Section 414(n) of the Code, shall not be considered an
employee for purposes of this Section 5. It is expressly intended that persons
acting as non-employee directors of the Employer, persons designated as
independent contractors by the Employer and leased employees within the
meaning of Section 414(n) of the Code are to be excluded from Plan participation
even if a court or administrative agency determines that such persons are common
law employees and not persons acting as non-employee directors, independent
contractors or leased employees of the Employer.
6. Election to
Participate
Each Eligible Associate may elect to
become a Participating Associate by filing with the Companys Human Resources
Department (or third party plan administrator designated by the Companys Human
Resources Department) an Enrollment Form authorizing specified regular payroll
deductions from his Base Compensation; provided however that, for purposes of
this Section 6, the last Enrollment Form filed by a Participating Associate
pursuant to the Companys 1994 Associate Stock Purchase Plan prior to the
initial adoption of the Plan shall be deemed to be filed and effective with
respect to the Plan as if actually filed hereunder. Such regular payroll
deductions shall be subject to a minimum deduction of 1% and a maximum deduction
of 15% (or such lower percentage determined by the Committee) of Base
Compensation for that payroll period. A Participating Associate may also elect
to make lump-sum cash contributions to the Plan, provided that the total of
regular payroll deductions and lump-sum cash contributions in any calendar
quarter shall not exceed 15% (or such lower percentage determined by the
Committee) of the Participating Associates Base Compensation for the calendar
quarter in which the lump-sum cash contribution is made. For purposes of the
preceding sentence, a Participating Associates Base Compensation for any
calendar quarter shall be the actual Base Compensation paid to the Participating
Associate during such calendar quarter taking into account only the Base
Compensation paid with respect to payroll periods during which payroll
deductions were being made under the Plan. In addition, the total of regular
payroll deductions and lump-sum cash contributions in any calendar year shall
not exceed $75,000. All regular payroll deductions and lump-sum cash
contributions shall be credited as soon as practicable to the Payroll Deduction
Account that the Company has established with respect to the Participating
Associate. A Participating Associate may elect once each calendar quarter to
increase, decrease, or eliminate his regular payroll deduction by filing a new
Enrollment Form.
A-3
All elections described in this Section 6
shall be filed in a form and manner established by the Companys Human Resources
Department. Except to the extent otherwise required to comply with the Act or
any securities law compliance program established by the Company, elections with
respect to regular payroll deductions shall become effective as soon as
practicable on or after the first day of the first payroll period that begins
following the date the election is duly filed.
7. Method of Purchase and Investment
Accounts
Subject to Section 13, each Participating
Associate shall receive a matching contribution to his Payroll Deduction Account
as and when payroll deductions and/or lump sum contributions are made by the
Participating Associate to his Payroll Deduction Account pursuant to Section 6
equal to 17.65% of the amount of such deductions and/or contributions. In
addition, subject to Section 13, each Participating Associate having eligible
funds in his Payroll Deduction Account on an Investment Date shall be deemed,
without any further action, to have purchased the number of whole and fractional
shares that the eligible funds in his Payroll Deduction Account could purchase
at the applicable Purchase Price on that Investment Date; provided, however,
that no eligible funds in a Participating Associates Payroll Deduction Account
attributable to such Participating Associates lump-sum cash contributions shall
be deemed to have purchased whole and fractional shares of Common Stock until
the last Investment Date of the calendar quarter within which such lump-sum cash
contributions were made. All whole and fractional shares purchased (rounded to
the nearest ten thousandth) shall be maintained in a separate Investment Account
for each Participating Associate. All cash dividends paid with respect to the
whole and fractional shares of Common Stock held in a Participating Associates
Investment Account shall be used as soon as practicable to purchase additional
shares of Common Stock at the applicable Purchase Price. All such additional
shares, along with any dividends paid in shares of Common Stock, shall be added
to the shares held for the Participating Associate in his Investment Account.
Expenses incurred in the purchase of such shares of Common Stock shall be paid
by the Company. Any distribution of shares or other property with respect to
whole or fractional shares of Common Stock held in a Participating Associates
Investment Account, other than a cash dividend or dividend of Common Stock,
shall be distributed to the Participating Associate as soon as practicable. In
the event of such a distribution, certificates for whole shares shall be issued
and fractional shares shall be sold and the proceeds of sale, less selling
expenses and other applicable charges, distributed to the Participating
Associate.
8. Stock
Purchases
The Company shall issue (or direct the
issuance of or the purchase on the open market of) shares of Common Stock to be
credited to the Investment Accounts of the Participating Associates as of each
Investment Date (or as soon as practicable thereafter) and each date as of which
shares of Common Stock are purchased with reinvested cash dividends (or as soon
as practicable thereafter).
9. Title of
Accounts
The Companys Human Resources Department
or its delegate shall establish and maintain an Investment Account with respect
to each Participating Associate. Each Investment Account shall be in the name of
the Participating Associate.
10. Rights as a
Shareholder
From and after the Investment Date on
which shares of Common Stock are purchased by a Participating Associate under
the Plan, such Participating Associate shall have all of the rights and
privileges of a shareholder of the Company with respect to such shares of Common
Stock. Subject to Section 18 herein, a Participating Associate shall have the
right at any time (i) to obtain a certificate for the whole shares of Common
Stock credited to his Investment Account or (ii) to direct that any whole shares
in his Investment Account be sold and that the proceeds, less expenses of sale,
be remitted to him.
A-4
Prior to the Investment Date on which
shares of Common Stock are to be purchased by a Participating Associate, such
Participating Associate shall not have any rights as a shareholder of the
Company with respect to such shares of Common Stock. Each Participating
Associate shall be a general unsecured creditor of the Company to the extent of
any amounts deducted under the Plan from such Participating Associates Base
Compensation or lump-sum cash contributions made by such Participating Associate
during the period prior to the Investment Date on which such amounts are applied
to the purchase of Common Stock for the Participating Associate.
11. Rights Not
Transferable
Rights under the Plan, except as set forth
in Section 13(b) herein, are not transferable by a Participating
Associate.
12. Change in Capital
Structure
In the event of a stock dividend,
spin-off, stock split or combination of shares, recapitalization or merger in
which the Company is the surviving corporation or other change in the Companys
capital stock (including, but not limited to, the creation or issuance to
shareholders generally of rights, options or warrants for the purchase of common
stock or preferred stock of the Company), the number and kind of shares of stock
or securities of the Company to be subject to the Plan, the maximum number of
shares or securities that may be delivered under the Plan, the Purchase Price
and other relevant provisions shall be appropriately adjusted by the Committee,
whose determination shall be binding on all persons.
If the Company is a party to a
consolidation or a merger in which the Company is not the surviving corporation,
a transaction that results in the acquisition of substantially all of the
Companys outstanding stock by a single person or entity, or a sale or transfer
of substantially all of the Companys assets, the Committee may take such
actions with respect to the Plan as the Committee deems appropriate.
Notwithstanding anything in the Plan to
the contrary, the Committee may take the foregoing actions without the consent
of any Participating Associate, and the Committees determination shall be
conclusive and binding on all persons for all purposes.
13. Termination of Employment and
Death
|
(a)
|
|
If a Participating
Associates employment is terminated for any reason other than death: (i)
certificates with respect to the whole shares in his Investment Account
shall be issued to him as soon as practicable following the next
Investment Date, provided that the Participating Associate may elect to
have such shares sold and the proceeds of the sale, less selling expenses,
remitted to him; (ii) any fractional shares in his Investment Account
shall be sold as soon as practicable following the next Investment Date,
and the proceeds of the sale, less selling expenses, shall be remitted to
the Participating Associate; and (iii) any amount in his Payroll Deduction
Account shall be used to purchase shares as of the next following
Investment Date, and such shares shall be distributed as soon as
practicable thereafter in accordance with (a) (i) and (a) (ii) above;
provided that, following the termination of his employment for any reason
other than death, a Participating Associate may elect to receive a cash
distribution from his Payroll Deduction Account before the next following
Investment Date, if practicable.
|
|
|
|
(b)
|
|
If a Participating
Associate dies: (i) certificates with respect to any whole shares in his
Investment Account shall be delivered to his Beneficiary as soon as
practicable following the next Investment Date; (ii) any fractional shares
in his Investment Account shall be sold as soon as practicable following
the next Investment Date, and the proceeds of the sale, less selling
expenses, shall be remitted to his Beneficiary; and (iii) any amount in
his Payroll Deduction Account shall be used to purchase shares as of the
next following Investment Date, and such shares shall be distributed to
his Beneficiary as soon as practicable thereafter in accordance with (b)
(i) and (b) (ii) above;
|
A-5
provided that a
Beneficiary may elect to receive the distributions from the Participating
Associates Investment Account (as described in (b) (i) and (b) (ii) , above)
before the Investment Date next following the Participating Associates death,
if practicable.
14. Tax
Withholding
Each Participating Associate must make
adequate provision for federal, state, or other tax withholding obligations, if
any, which arise in connection with participation in the Plan. By electing to
participate in the Plan, a Participating Associate authorizes the Company to
withhold from the Participating Associates compensation the amounts necessary
to satisfy any such applicable tax withholding obligations. At any time, the
Company may, but shall not be obligated to, withhold from the Participating
Associates compensation the amount necessary for the Company to satisfy any
applicable tax withholding obligations.
15. Amendment of the
Plan
The Board in its sole discretion may at
any time amend the Plan in any respect; provided that such amendment is in
compliance with all applicable laws and regulations and the requirements of any
national securities exchange on which shares of Common Stock are then traded.
Any such amendment shall be subject to the approval of the Companys
stockholders to the extent required by applicable law or the requirements of any
national securities exchange on which shares of Common Stock are then
traded.
16. Termination of the
Plan
The Plan and all rights of Eligible
Associates hereunder shall terminate:
|
(a)
|
|
on the Investment Date
that Participating Associates become entitled to purchase a number of
shares greater than the number of reserved shares remaining available for
purchase; or
|
|
|
|
(b)
|
|
at any earlier date
determined by the Board in its sole discretion.
|
In the event that the Plan terminates
under circumstances described in (a) above, reserved shares remaining as of the
termination date shall be sold to Participating Associates at the applicable
Purchase Price on a pro rata basis. Upon termination of the Plan, all amounts in
a Participating Associates Payroll Deduction Account that are not used to
purchase Common Stock shall be refunded to the Participating
Associate.
17. Effective Date of
Plan
The Plan originally was adopted by the
Board and became effective on September 19, 2002. This amendment and restatement
of the Plan was adopted by the Board on February 23, 2012 and is subject to the
approval of the Companys stockholders at the Companys 2012 annual
meeting.
18. Government and Other
Regulations
The Plan, and the grant and exercise of
the rights to purchase shares hereunder, and the obligation to sell and deliver
shares upon the exercise of rights to purchase shares, shall be subject to all
applicable federal, state and foreign laws, rules and regulations, and to such
approvals by any regulatory or government agency as may be required, in the
opinion of counsel for the Company.
19. Gender and
Number
Masculine pronouns shall refer to both
males and females. The singular form shall include the plural.
A-6
|
|
|
CAPITAL
ONE FINANCIAL CORPORATION
1680 CAPITAL ONE DR.
MCLEAN, VA
22102-3491
|
VOTE BY INTERNET -
www.proxyvote.com
|
Use the Internet to transmit
your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Daylight Time on May 7, 2012. Have your proxy
card in hand when you access the web site and follow the instructions to
obtain your records and to create an electronic voting instruction
form.
|
|
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
|
If you would like to reduce the
costs incurred by Capital One in mailing proxy materials, you can consent
to receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet
and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
|
|
VOTE BY PHONE - 1-800-690-6903
|
Use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Daylight
Time on May 7, 2012. Have your proxy card in hand when you call and then
follow the instructions.
|
|
VOTE BY MAIL
|
Mark, sign and date your proxy
card and return it in the postage-paid envelope we have provided or return
it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS:
|
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
|
DETACH AND RETURN THIS PORTION
ONLY
|
|
THIS PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
|
|
|
|
|
|
|
The Board of Directors
recommends you vote FOR the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Election of Directors
|
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01
|
Richard D. Fairbank
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02
|
Peter E. Raskind
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03
|
Bradford H. Warner
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
The Board of Directors
recommends you vote FOR proposals 2, 3 and 4.
|
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Ratification of selection
of Ernst & Young LLP as independent auditors of Capital One for
2012.
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
Advisory, non-binding
approval of Capital One's 2011 Named Executive Officer compensation.
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
Approval and adoption of
Capital One's Amended and Restated Associate Stock Purchase Plan.
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE:
Such other
business as may properly come before the meeting or any adjournment
thereof.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please sign exactly as
your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership
name, by authorized officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
[PLEASE SIGN WITHIN BOX]
|
Date
|
|
|
|
|
|
|
Signature (Joint
Owners)
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement, Annual
Report/10K is/are available at
www.proxyvote.com
.
|
|
|
|
|
|
|
|
|
|
CAPITAL ONE FINANCIAL
CORPORATION
Annual Stockholder Meeting
Tuesday, May 8, 2012 10:00
a.m.
Capital One's
Headquarters
1680 Capital One Drive
Mclean, Virginia
22102
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby
appoints Richard D. Fairbank and John G. Finneran, Jr., and either of
them, proxies of the undersigned, with full power of substitution, to vote
all the shares of Common Stock of Capital One Financial Corporation, a
Delaware corporation, held of record by the undersigned on March 13, 2012,
at the Annual Stockholder Meeting to be held on May 8, 2012 and at any
postponement or adjournment thereof.
THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED STOCKHOLDER. IF NO
CHOICE IS SPECIFIED BY THE STOCKHOLDER, THIS PROXY WILL BE VOTED "FOR" ALL
PORTIONS OF ITEMS (1), (2), (3) AND (4), AND IN THE PROXIES' DISCRETION ON
ANY OTHER MATTERS COMING BEFORE THE MEETING.
Continued and to be signed on
reverse side
|
|
|
|
Capital One Financial (NYSE:COF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Capital One Financial (NYSE:COF)
Historical Stock Chart
From Jul 2023 to Jul 2024