(1) | On a Schedule 13G (Amendment No. 11) filed on February 13, 2015, Dodge & Cox reported beneficial ownership of 46,449,361 shares of Capital One’s common stock as of December 31, 2014 with sole voting power with respect to 43,782,464(2) | Based on a Schedule 13G/A (Amendment No. 2) filed on February 13, 2017. As of December 30, 2016, Capital World Investors reported sole voting power and sole dispositive power over all shares beneficially owned. |
(3) | Based on a Schedule 13G/A (Amendment No. 4) filed on January 23, 2017. As of December 31, 2016, BlackRock, Inc. reported sole voting power with respect to 29,633,046 shares and sole dispositive power over all shares beneficially owned. |
(4) | Based on a Schedule 13G/A (Amendment No. 2) filed on February 10, 2017. As of December 31, 2016, The Vanguard Group reported sole voting power with respect to 777,021 shares, shared voting power with respect to 95,086 shares, sole dispositive power over 29,644,830 shares and shared dispositive power over 846,243 shares. |
(5) | Based on a Schedule 13G/A (Amendment No. 4) filed on February 14, 2017. As of December 30, 2016, FMR LLC reported sole voting power with respect to 2,265,972 shares and sole dispositive power over all shares beneficially owned. |
(2) | On a Schedule 13G (Amendment No. 2) filed on January 12, 2015, BlackRock, Inc. reported beneficial ownership of 34,667,040 shares of Capital One’s common stock as of December 31, 2014 with sole voting power with respect to 29,744,521 shares and sole dispositive power over all shares beneficially owned. |
Security Ownership of Directors and Named Executive Officers (3) | On a Schedule 13G filed on February 13, 2015, Capital World Investors reported beneficial ownership of 31,440,000 shares of Capital One’s common stock as of December 31, 2014 with sole voting power and sole dispositive power over all shares beneficially owned. |
(4) | On a Schedule 13G filed on February 9, 2015, The Vanguard Group reported beneficial ownership of 28,857,629 shares of Capital One’s common stock as of December 31, 2014 with sole voting power with respect to 966,424 shares and sole dispositive power over 27,945,110 shares. |
(5) | On a Schedule 13G (Amendment No. 2) filed on February 13, 2015, FMR LLC reported beneficial ownership of 28,417,689 shares of Capital One’s common stock as of December 31, 2014 with sole voting power with respect to 3,595,430 shares and sole dispositive power over all shares beneficially owned. |
Security Ownership of Directors and Named Executive Officers
The following table lists the beneficial ownership of Capital One’s common stock as of January 31, 2015,
The following table lists the beneficial ownership of Capital One’s common stock as of February 28, 2017, by our directors, the named executive officers in this proxy statement and all directors and executive officers as a group. All percentage calculations are based on the number of shares of common stock issued and outstanding on February 28, 2017, which was 482,365,855. Except as otherwise indicated below, each director or executive officer had sole voting and investment power for the shares of common stock in the table. | | | | | | | | | | | | | | | | | | | | | | | | | Name | | | | Amount and Nature of Beneficial Ownership | | | | Stock Settled RSUs (3) | | | | Total (4) | | | | Common and Restricted Stock (1) | | | | Stock that May Be Acquired Within 60 days(2) | | | | Total Beneficial Ownership | | | | Percent of Class | | | | | | | Richard D. Fairbank | | | | 2,262,593 | | | | 3,542,139 | | | | 5,804,732 | | | | 1.19% | | | | 74,644 | | | | 5,879,376 | R. Scott Blackley | | | | 11,497 | | | | 0 | | | | 11,497 | | | | * | | | | 34,983 | | | | 46,480 | Stephen S. Crawford | | | | 86,846 | | | | 105,038 | | | | 191,884 | | | | * | | | | 79,864 | | | | 271,748 | John G. Finneran, Jr. | | | | 113,213 | | | | 194,885 | | | | 308,098 | | | | * | | | | 50,428 | | | | 358,526 |
| | | | | | | | | 34 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION III – SECURITY OWNERSHIP |
| | | | | | | | | | | | | | | | | | | | | | | | | Name | | | | Amount and Nature of Beneficial Ownership | | | | Stock Settled RSUs (3) | | | | Total (4) | | | | Common and Restricted Stock (1) | | | | Stock that May Be Acquired Within 60 days(2) | | | | Total Beneficial Ownership | | | | Percent of Class | | | | | | | Frank G. LaPrade, III | | | | 10,687 | | | | 159,945 | | | | 170,632 | | | | * | | | | 49,104 | | | | 219,736 | Sanjiv Yajnik | | | | 111,973 | | | | 165,432 | | | | 277,405 | | | | * | | | | 48,716 | | | | 326,121 | Ryan M. Schneider | | | | 127,228 | | | | 119,121 | | | | 246,349 | | | | * | | | | 63,948 | | | | 310,297 | Patrick W. Gross | | | | 7,539 | | | | 40,300 | | | | 47,839 | | | | * | | | | 0 | | | | 47,839 | Ann Fritz Hackett | | | | 20,656 | | | | 71,716 | | | | 92,372 | | | | * | | | | 0 | | | | 92,372 | Lewis Hay, III | | | | 2,728 | | | | 81,046 | | | | 83,774 | | | | * | | | | 0 | | | | 83,774 | Benjamin P. Jenkins, III | | | | 2,192 | | | | 10,547 | | | | 12,739 | | | | * | | | | 0 | | | | 12,739 | Peter Thomas Killalea | | | | 0 | | | | 3,090 | | | | 3,090 | | | | * | | | | 0 | | | | 3,090 | Pierre E. Leroy | | | | 0 | | | | 39,300 | | | | 39,300 | | | | * | | | | 0 | | | | 39,300 | Peter E. Raskind | | | | 2,000 | | | | 24,556 | | | | 26,556 | | | | * | | | | 0 | | | | 26,556 | Mayo A. Shattuck III | | | | 1,589 | | | | 86,622 | | | | 88,211 | | | | * | | | | 0 | | | | 88,211 | Bradford H. Warner | | | | 14,640 | | | | 75,053 | | | | 89,693 | | | | * | | | | 0 | | | | 89,693 | Catherine G. West | | | | 0 | | | | 10,547 | | | | 10,547 | | | | * | | | | 0 | | | | 10,547 | All directors and executive officers as a group (25 persons) | | | | 3,011,971 | | | | 5,449,170 | | | | 8,461,141 | | | | 1.73% | | | | 721,548 | | | | 9,182,689 |
* | Less than 1% of the outstanding shares of common stock. |
(1) | Includes shares of unvested restricted stock that have voting rights but are not transferable until the end of the period of restriction. |
(2) | This amount includes shares underlying stock options that are exercisable within 60 days after February 28, 2017, and restricted stock units for which delivery of the shares of common stock underlying the stock units is deferred until the director’s service with the Board of Directors, or for Mr. Fairbank, his employment with the Company, ends. |
(3) | Restricted stock units held by our officers and which are settled in equivalent number of shares of our common stock issuedupon vesting. Represents unvested stock-settled RSUs as of February 28, 2017. |
(4) | The amount includes the aggregate total of the “Total Beneficial Ownership” column and outstanding on January 31, 2015, which was 551,590,891.Except as otherwise indicated below, each director or executive officer had sole voting and investment power for the applicable shares of common stock shown in the table.“Stock Settled RSUs” column.
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Some of the shares shown in the preceding table are subject to restrictions or not held directly by the director or executive officer. Below is a table showing the number of shares subject to restrictions or not held directly by the director or executive officer. | | | | | | | | | Name | | | | Restricted Stock Units For Which Delivery of Stock is Deferred | | | | Stock Held by, or Tenant in Common With, Family Member, Trust or Partnership | Richard D. Fairbank | | | | 241,680 | | | | 0 | R. Scott Blackley | | | | 0 | | | | 0 | Stephen S. Crawford | | | | 0 | | | | 0 | John G. Finneran, Jr. | | | | 0 | | | | 117,411 | Frank G. LaPrade, III | | | | 0 | | | | 0 | Sanjiv Yajnik | | | | 0 | | | | 0 | Ryan M. Schneider | | | | 0 | | | | 0 | Patrick W. Gross | | | | 40,300 | | | | 0 | Ann Fritz Hackett | | | | 40,300 | | | | 5,006 | Lewis Hay, III | | | | 40,300 | | | | 1,806 | Benjamin P. Jenkins, III | | | | 10,547 | | | | 0 | Peter Thomas Killalea | | | | 3,090 | | | | 0 | Pierre E. Leroy | | | | 39,300 | | | | 0 | Peter E. Raskind | | | | 14,131 | | | | 0 | Mayo A. Shattuck III | | | | 40,300 | | | | 0 | Bradford H. Warner | | | | 33,524 | | | | 140 | Catherine G. West | | | | 10,547 | | | | 0 |
| | | | | CAPITAL ONE FINANCIAL CORPORATION | | | | | | | | | | | | | | | | | Amount and Nature of Beneficial Ownership | | | | | Name | | Common and Restricted Stock (1) | | Stock that May Be Acquired Within 60 days (2) | | Total Beneficial Ownership | | Percent of Class | | Stock Settled RSUs (3) | | Total (4) | Richard D. Fairbank | | 1,946,154 | | 5,569,422 | | 7,515,576 | | 1.35% | | 47,728 | | 7,563,304 | Stephen S. Crawford | | 158,056 | | 15,681 | | 173,737 | | * | | 51,477 | | 225,214 | Ryan M. Schneider | | 160,487 | | 208,324 | | 368,811 | | * | | 40,355 | | 409,166 | John G. Finneran, Jr. | | 146,236 | | 492,113 | | 638,349 | | * | | 32,811 | | 671,160 | Sanjiv Yajnik | | 108,143 | | 141,891 | | 250,034 | | * | | 30,767 | | 280,801 | Patrick W. Gross | | 7,539 | | 85,217 | | 92,756 | | * | | 0 | | 92,756 | Ann Fritz Hackett | | 20,656 | | 67,173 | | 87,829 | | * | | 0 | | 87,829 | Lewis Hay, III | | 2,728 | | 92,418 | | 95,146 | | * | | 0 | | 95,146 | Benjamin P. Jenkins, III | | 2,192 | | 6,004 | | 8,196 | | * | | 0 | | 8,196 | Pierre E. Leroy | | 4,900 | | 63,944 | | 68,844 | | * | | 0 | | 68,844 | Peter E. Raskind | | 2,000 | | 20,013 | | 22,013 | | * | | 0 | | 22,013 | Mayo A. Shattuck | | 1,589 | | 89,094 | | 90,683 | | * | | 0 | | 90,683 | Bradford H. Warner | | 14,640 | | 70,510 | | 85,150 | | * | | 0 | | 85,150 | Catherine G. West | | 0 | | 6,004 | | 6,004 | | * | | 0 | | 6,004 | All directors and executive officers as a group (20 persons) | | 2,843,026 | | 7,794,668 | | 10,637,694 | | 1.90% | | 367,255 | | 11,004,949 |
| | 2017 PROXY STATEMENT * | Less than 1% of the outstanding shares of common stock. | | 35 |
| SECTION III – SECURITY OWNERSHIP |
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) requires that Capital One’s executive officers and directors, and persons that beneficially own more than 10% of Capital One’s 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 2016 each reporting person complied with these filing requirements, except for Mr. LaPrade, who filed a Form 4 to report a stock option exercise andsame-day open market sale of 20,000 shares of Capital One common stock one day late due to an administrative error by the Company. | | | | | | | | | 36 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| (1) | Includes shares of unvested restricted stock that have voting rights but are not transferable until the end of the period of restriction. |
(2) | This amount includes shares underlying stock options that are exercisable within 60 days after January 31, 2015, and restricted stock units for which delivery of the shares of common stock underlying the stock units is deferred until the director’s service with the Board of Directors, or for Mr. Fairbank, his employment with the Company, ends. |
(3) | Restricted stock units held by our officers and which are settled in equivalent number of shares of our common stock. |
Section IV – Director Compensation (4) | The amount includes the aggregate total of the “Total Beneficial Ownership” column and the “Stock Settled RSUs” column. |
Some of the shares shown in the preceding table are either subject to restrictions or not held directly by the director or executive officer. Below is a table showing the number of shares subject to restrictions or not held directly by the director or executive officer.
| | | | | Name | | Restricted Stock Units For Which Delivery of Stock is Deferred | | Stock Held by, or Tenant in Common With, Family Member, Trust or Partnership | Richard D. Fairbank | | 241,680 | | 0 | Stephen S. Crawford | | 0 | | 0 | Ryan M. Schneider | | 0 | | 0 | John G. Finneran, Jr. | | 0 | | 64,904 | Sanjiv Yajnik | | 0 | | 0 | Patrick W. Gross | | 35,757 | | 0 | Ann Fritz Hackett | | 35,757 | | 5,006 | Lewis Hay, III | | 35,757 | | 1,806 | Benjamin P. Jenkins, III | | 6,004 | | 0 | Pierre E. Leroy | | 34,757 | | 0 | Peter E. Raskind | | 9,588 | | 0 | Mayo A. Shattuck III | | 35,757 | | 0 | Bradford H. Warner | | 28,981 | | 140 | Catherine G. West | | 6,004 | | 0 |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that Capital One’s executive officers and directors, and persons that beneficially own more than 10% of Capital One’s 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 2014 each of the reporting persons complied with these filing requirements except the Company discovered that a timely report filed in 2008 for Robert M. Alexander, the Company’s Chief Information Officer, underreported one of his equity award holdings as a result of an administrative error by the Company, which was subsequently corrected on a Form 5 filed in 2015.
SECTION IV – DIRECTOR COMPENSATION
Director Compensation Objectives
The Board of Directors approves the compensation for
Director Compensation Objectives The Board of Directors approves the compensation fornon-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 One’s success; |
∎ | | Fairly compensate directors for the work required in a company of Capital One’s 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 2016, Mr. Fairbank was Capital One’s only management director. Director Compensation Procedures The Compensation Committee annually reviews the compensation program for Capital One’snon-management directors. FW Cook provides competitive compensation data and program recommendations to the Compensation Committee for review. See the discussion under “Compensation Committee – Compensation Committee Consultant” in the “Corporate Governance at Capital One” section on page 27 for further information on the role and responsibilities of FW Cook. The competitive compensation data includes the compensation (cash, equity and other benefits) ofnon-management directors within Capital One’s peer comparator group. See the discussion under “Market Data” in the “Compensation Discussion and Analysis” section on page 63 for further information on the selection of the peer comparator group. The Compensation Committee considers this information, and FW Cook’s 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 FW Cook in the second quarter of 2016, the Compensation Committee determined that the director compensation program described below meets the objectives listed above. Director Compensation Structure On May 5, 2016, the Board of Directors approved a compensation program for Capital One’snon-management directors for the period from May 5, 2016 until Capital One’s 2017 Annual Meeting that is similar to the program for the preceding year. The compensation program consists of an annual cash retainer of $90,000 for service on the Board of Directors. In addition, directors receive cash retainers for committee service and for service as committee chairs and the Lead Independent Director as detailed under “Compensation of Directors” beginning on page 38. Eachnon-management director serving on May 4, 2016 received an annual award of restricted stock units of Capital One common stock (“RSUs”) on such date, valued at $170,019. Lastly, the Lead Independent Director cash retainer was increased from $30,000 to $50,000 in 2016. This increase was implemented upon consideration of analysis and data provided by FW Cook, and ensures a compensation level commensurate with the market and to appropriately reward the contributions required of this role. Ms. Hackett was the Lead Independent Director in 2016. Under the Capital One Financial CorporationNon-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 can direct their individual deferrals among nineteen investments available through the plan. Directors that elected a deferral receive their deferred income benefits in cash when they cease serving as directors, upon certain other distribution events specified in the plan, or at such earlier time as | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 37 |
| SECTION IV – DIRECTOR COMPENSATION |
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 director’s account balance as of the date of the change of control. In 2016, Mr. Jenkins elected to defer his cash compensation under this plan. A list of the investments available can be found under “Capital One’s VoluntaryNon-Qualified Deferred Compensation Programs” on page 78. Capital One offerednon-management directors the opportunity to direct a contribution of up to $10,000 annually from Capital One to charitable organization(s) of their choice. Eachnon-management director serving on May 5, 2016 elected to make such a charitable contribution in 2016. In addition, all directors serving on May 5, 2016 were eligible and nine directors elected to participate in a charitable contribution program available to Capital One employees under which Capital One made a contribution of $5,000 to a charitable organization of their choice. Directors also receive reimbursements for certain board-related expenses including 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. Stock Ownership Requirements Capital One requiresnon-management directors to retain all shares underlying RSUs granted to them by Capital One until their service with the Board of Directors ends, under 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 RSUs. Compensation of Directors Directors of Capital One received the following compensation in 2016: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Director Name | | | | Fees Earned or Paid in Cash (3) | | | | | Stock Awards | | | | | Option Awards | | | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | | | | All Other Compensation (4) | | | | | Total | | | | Richard D. Fairbank (1) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | Patrick W. Gross | | | | $ | 150,000 | | | | | $ | 170,019 | | | | | | — | | | | | | — | | | | | $ | 15,000 | | | | | $ | 335,019 | | | | Ann Fritz Hackett | | | | $ | 205,000 | | | | | $ | 170,019 | | | | | | — | | | | | | — | | | | | $ | 15,000 | | | | | $ | 390,019 | | | | Lewis Hay, III | | | | $ | 150,000 | | | | | $ | 170,019 | | | | | | — | | | | | | — | | | | | $ | 10,000 | | | | | $ | 330,019 | | | | Peter T. Killalea (2) | | | | $ | 90,000 | | | | | $ | 212,536 | | | | | | — | | | | | | — | | | | | $ | 15,000 | | | | | $ | 317,536 | | | | Benjamin P. Jenkins, III | | | | $ | 150,000 | | | | | $ | 170,019 | | | | | | — | | | | | | — | | | | | $ | 15,000 | | | | | $ | 335,019 | | | | Pierre E. Leroy | | | | $ | 135,000 | | | | | $ | 170,019 | | | | | | — | | | | | | — | | | | | $ | 15,000 | | | | | $ | 320,019 | | | | Peter E. Raskind | | | | $ | 150,000 | | | | | $ | 170,019 | | | | | | — | | | | | | — | | | | | $ | 15,000 | | | | | $ | 335,019 | | | | Mayo A. Shattuck III | | | | $ | 165,000 | | | | | $ | 170,019 | | | | | | — | | | | | | — | | | | | $ | 15,000 | | | | | $ | 350,019 | | | | Bradford H. Warner | | | | $ | 150,000 | | | | | $ | 170,019 | | | | | | — | | | | | | — | | | | | $ | 15,000 | | | | | $ | 335,019 | | | | Catherine G. West | | | | $ | 135,000 | | | | | $ | 170,019 | | | | | | — | | | | | | — | | | | | $ | 15,000 | | | | | $ | 320,019 | |
(1) | Management directors do not receive compensation for their service on the Board of Directors. In 2014,2016, Mr. Fairbank was Capital One’s only management director. |
Director Compensation Procedures
The Compensation Committee reviews the compensation program for Capital One’s non-management directors on an annual basis. F.W. Cook 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 “Corporate Governance at Capital One” section on page 14 for further information on the role and responsibilities of F.W. Cook. The competitive compensation data includes the compensation (cash, equity and other benefits) of non-management directors within Capital One’s peer comparator group. Please see the discussion under “Market Data” in the “Compensation Discussion and Analysis” section on page 46 for further information on the selection of the peer comparator group. The Compensation Committee considers this information,
(2) | Mr. Killalea was appointed as well as F.W. Cook’s recommendations, and finalizes a proposed compensation structure. The proposed structure is then reviewed and approveddirector by the full Board of Directors, typically in April or May of each year.Based on their review of competitive market dataFebruary 24, 2016, and guidance from F.W. Cook inelected by our stockholders at the second quarter of 2014, the Compensation Committee determined that the director compensation program described below meets the objectives listed above.
Director Compensation Structure
On May 1, 2014, the2016 Annual Stockholder Meeting. The Board of Directors approved apro-rated compensation programpackage for Capital One’s non-management directors for the periodMr. Killalea from May 1, 2014February 24, 2016 until Capital One’s 2015our 2016 Annual Meeting, that is similar to the program for the preceding year. The compensation program consistsconsisting of an annual casha $22,500 retainer and a grant of $90,000 as well as cash retainers for committee service detailed in the notes to the table below. Each non-management director serving on May 1, 2014 also received an annual award650 RSUs with a grant date fair value of restricted stock units of Capital One common stock (“RSUs”) on such date,$42,517, valued at $170,003. Lastly, the Lead Independent Director received a cash retainer of $25,000. Ms. Hackett was the Lead Independent Director in 2014.
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 opportunity to direct their individual deferrals among seventeen 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, upon certain other distribution events specified in the plan, or at such earlier time as is 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 director’s account balance as of$65.41 per share. The RSUs vest one year from the date of the change of control. In 2014, Messrs. Jenkinsgrant and Hay elected to defer their cash compensation under this plan. A listdelivery of the different investments available can be found under “Capital One’s Voluntary Non-Qualified Deferred Compensation Programs” on page 63.
Capital One offered non-management directors the opportunity to direct a contribution of up to $10,000 annually from Capital One to a charitable organization of their choice. Each non-management director serving on May 1, 2014 elected to make such a charitable contribution in 2014.
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.
Stock Ownership Requirements
Capital One requires non-management directors to retain allunderlying shares underlying RSUs granted to them by Capital Oneis deferred until theirMr. Killalea’s service with the Board of Directors ends, pursuantends. Mr. Killalea did not serve on any Board committees prior to the terms2016 Annual Stockholder Meeting.
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(3) | Represents cash payments during 2016, which include half of their respective grant agreements. The Boardthe payments under the compensation program for the period from May 5, 2016, until Capital One’s 2017 Annual Meeting and half of Directors may grantthe payments under the compensation program for the period from April 30, 2015, until Capital One’s 2016 Annual Meeting. |
(4) | Eachnon-management director serving on May 5, 2016 elected to direct contributions from Capital One in an exception for any case where this requirement would impose a financial hardship on a director. No directors have been granted an exceptionaggregate amount of up to this requirement for any outstanding awards$15,000 to charitable organization(s) of RSUs.his or her choice. |
| | | | | | | | | 38 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | Compensation of Directors
Directors of Capital One received the following compensation in 2014: 2017 PROXY STATEMENT
| | | | | | | | | | | | | Name | | Fees Earned or Paid in Cash (2) | | Stock Awards (3) | | Option Awards (4) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | All Other Compensation (5) | | Total | | | | | | | | Richard D. Fairbank (1) | | — | | — | | — | | — | | — | | — | | | | | | | | Patrick W. Gross | | $150,000 | | $170,003 | | — | | — | | $10,000 | | $330,003 | | | | | | | | Ann Fritz Hackett | | $190,000 | | $170,003 | | — | | — | | $10,000 | | $370,003 | | | | | | | | Lewis Hay, III | | $150,000 | | $170,003 | | — | | — | | $10,000 | | $330,003 | | | | | | | | Benjamin P. Jenkins, III | | $135,000 | | $170,003 | | — | | — | | $10,000 | | $315,003 | | | | | | | | Pierre E. Leroy | | $120,000 | | $170,003 | | — | | — | | $10,000 | | $300,003 | | | | | | | | Peter E. Raskind | | $150,000 | | $170,003 | | — | | — | | $10,000 | | $330,003 | | | | | | | | Mayo A. Shattuck III | | $150,000 | | $170,003 | | — | | — | | $10,000 | | $330,003 | | | | | | | | Bradford H. Warner | | $150,000 | | $170,003 | | — | | — | | $10,000 | | $330,003 | | | | | | | | Catherine G. West | | $135,000 | | $170,003 | | — | | — | | $10,000 | | $315,003 |
(1) | In 2014, Mr. Fairbank was Capital One’s only management director. |
| SECTION IV – DIRECTOR COMPENSATION |
(2) | Figures above represent cash payments during 2014, which include half of the payments under the compensation program for the period from May 1, 2014, until Capital One’s 2015 Annual Meeting and half of the payments under the compensation program for the period from May 2, 2013, until Capital One’s 2014 Annual Meeting. |
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 “Corporate Governance at Capital One” section of this proxy statement. Under the most recently approved compensation program, retainers are as follows:
| ¡ | | Lead Independent Director Retainer: $25,000Compensation for committee service includes retainers for service as chairperson or as a member of a committee as described under the heading “Information About Our Current Board Committee Membership and 2016 Committee Meetings” in the “Corporate Governance at Capital One” section on page 8. Under the most recently approved compensation program, retainers are as follows: | ∎ | | Lead Independent Director Retainer: $50,000 |
| ∎ | | Chair of the Risk Committee: $45,000 |
| ∎ | | Chair of the Audit Committee, Compensation Committee or Governance and Nominating Committee: $30,000 |
| ∎ | | Member of the Risk Committee (other than the chair): $30,000 |
| ∎ | | Member of the Audit Committee, Compensation Committee or Governance and Nominating Committee (other than the chair): $15,000 |
| ¡ | | Chair of the Risk Committee: $45,000Eachnon-management director serving on May 4, 2016, received a grant of 2,440 RSUs with a grant date fair value of $170,019 valued at $69.68 per share. All RSUs were granted under the 2004 Stock Incentive Plan and were valued at the fair market value of a share of Capital One common stock on the date of grant. The RSUs vest one year from the date of grant and delivery of the underlying shares is deferred until the director’s service with the Board of Directors ends. In addition, prior to 2013, directors were offered the opportunity to elect to forego their cash retainers for a grant ofnon-qualified stock options under the 2004 Stock Incentive Plan. In 2013, the Compensation Committee determined not to include stock options as part of the director compensation program. 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 shows the number of RSUs outstanding, including dividends, and the total number of stock options outstanding for each director as of December 31, 2016: | | | | | | | | | Director Name | | | | Number of Outstanding Restricted Stock Units | | | | Number of Outstanding Stock Options | Patrick W. Gross | | | | 40,300 | | | | 41,060 | Ann Fritz Hackett | | | | 40,300 | | | | 31,416 | Lewis Hay, III | | | | 40,300 | | | | 40,746 | Peter T. Killalea | | | | 3,090 | | | | 0 | Benjamin P. Jenkins, III | | | | 10,547 | | | | 0 | Pierre E. Leroy | | | | 39,300 | | | | 4,098 | Peter E. Raskind | | | | 14,131 | | | | 10,425 | Mayo A. Shattuck III | | | | 40,300 | | | | 49,737 | Bradford H. Warner | | | | 33,524 | | | | 41,529 | Catherine G. West | | | | 10,547 | | | | 0 |
| | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 39 |
| | ¡ | | Chair of the Audit Committee, Compensation Committee or Governance and Nominating Committee: $30,000 |
| ¡ | | Member of the Risk Committee (other than the chair): $30,000 |
| ¡ | | Member of the Audit Committee, Compensation Committee or Governance and Nominating Committee (other than the chair): $15,000 |
(3) | Each non-management director serving on May 1, 2014, received a grant of 2,281 RSUs with a grant date fair value of $170,003 valued at $74.53 per share. All RSUs were granted under the terms of the 2004 Stock Incentive Plan and were valued at the fair market value of a share of Capital One common stock on the date of grant. RSUs vest one year from the date of grant. Delivery of the underlying shares is deferred until the director’s service with the Board of Directors ends. The following table shows the number of RSUs outstanding for each director as of December 31, 2014: |
| | | Director Name | | Number of Outstanding
Restricted Stock Units | Patrick W. Gross
| | 35,757 | Ann Fritz Hackett
| | 35,757 | Lewis Hay, III
| | 35,757 | Benjamin P. Jenkins, III
| | 6,004 | Pierre E. Leroy
| | 34,757 | Peter E. Raskind
| | 9,588 | Mayo A. Shattuck III
| | 35,757 | Bradford H. Warner
| | 28,981 | Catherine G. West
| | 6,004 |
(4) | Prior to 2013, directors were offered the opportunity to elect to forego their cash retainers in exchange for a grant of non-qualified stock options under the 2004 Stock Incentive Plan. In 2013, the Compensation Committee determined not to include stock options as part of the director compensation program. |
The following table sets forth the total number of stock options outstanding for each director as of December 31, 2014. 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.
| | | Director Name | | Number of Outstanding
Stock Options
| Patrick W. Gross
| | 49,460 | Ann Fritz Hackett
| | 31,416 | Lewis Hay, III
| | 56,661 | Benjamin P. Jenkins, III
| | 0 | Pierre E. Leroy
| | 29,187 | Peter E. Raskind
| | 10,425 | Mayo A. Shattuck III
| | 53,337 | Bradford H. Warner
| | 41,529 | Catherine G. West
| | 0 |
(5) | Each non-management director serving on May 1, 2014, elected to direct a contribution from Capital One of $10,000 to a charitable organization of his or her choice. |
Section V – Compensation Discussion and Analysis Key Topics Covered in our Compensation Discussion and Analysis: | | | | | | | | | 40 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
Capital One’s 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, approving, monitoring and managing the compensation of all of our executive officers, including the named executive officers defined below. Final decisions regarding the compensation of our executive officers, including our Chief Executive Officer, 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 for 2014:
Capital One’s 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 (“Committee”) is responsible for, among other matters, developing, approving, monitoring and managing the compensation of all of our executive officers, including the named executive officers defined below. Final decisions regarding the compensation of our executive officers, including our Chief Executive Officer, are made by the Compensation Committee and the other independent directors. This Compensation Discussion and Analysis will review the compensation of the CEO, Richard D. Fairbank, and the following executive officers for 2016: ∎ | | R. Scott Blackley, Chief Financial Officer (effective May 9, 2016) |
∎ | | Stephen S. Crawford, Head of Finance and Corporate Development (effective May 9, 2016); Chief Financial Officer Ryan M. Schneider, President, Card
(prior to May 9, 2016) |
∎ | | John G. Finneran, Jr., General Counsel and Corporate Secretary |
∎ | | Frank G. LaPrade, III, Chief Enterprise Services Officer, Chief of Staff to the CEO |
∎ | | Sanjiv Yajnik, President, Financial Services As
|
∎ | | Ryan M. Schneider, President, Card (prior to November 28, 2016) |
Except as otherwise indicated, as used throughout this proxy statement, the “named executive officers” or “NEOs” means the six executive officers listed above and the CEO, collectively. Our Compensation Objectives Capital One’s executive compensation program has four primary objectives. Strongly link rewards with both business and individual performance while appropriately balancing risk Capital One emphasizespay-for-performance at all organizational levels. Typically, as an executive’s level of responsibility increases, so does the proportion of the executive’s 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 to the named executive officers in February 2017 for the 2016 performance year were based on Company and individual performance, and on demonstrating specific leadership competencies assessed through a comprehensive performance management process that included an individual assessment specifically designed to evaluate the degree to which the executive balanced risks inherent in his or her role. The Chief Risk Officer compiled the assessments and the Chief Human Resources Officer reviewed the assessments for the NEOs. Separately, the Chief Auditor compiled and reviewed the risk assessment for the Chief Risk Officer. 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. For 2016, approximately 84% of the CEO’s total compensation is equity-based and allat-risk to the performance of the Company’s stock price, and 100% of his compensation is deferred for a three-year period. For 2016, approximately 80% of total target compensation for NEOs other than the CEO was provided through equity-based vehicles which were allat-risk to the performance of the Company’s 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 Company’s stock over time because the value of these compensation vehicles increases and decreases based on the performance of the Company’s stock price. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 41 |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
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 Company performance and that are aligned with the creation of stockholder value over the long-term. Because named executive officer compensation is primarily 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 and stock retention provisions applicable to certain equity awards. OurCompensation Governance Cycle The Committee is actively engaged throughout the year. The Committee met seven times in 2016, with each meeting concluding with an executive session without management present. While specific topics may vary from meeting to meeting, the following graph describes the typical annual cycle of the Committee’s activities. For additional detail regarding the Committee’s processes for compensation decisions, see “Criteria and Process for Compensation Decisions” beginning on page 62. | | | | | | | | | 42 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
Important Aspects of Our Executive Compensation Programs Highlights of Our Compensation Program The Committee believes that our named executive officer compensation programs balance risk and financial results, reward named executive officers for their achievements, promote our overall compensation objectives and encourage appropriate, but not excessive, risk-taking. The following are some highlights of our compensation program: | | | | | | | | | | | | | | | What We Do | | | | | | What We Don’t Do | | | | | | | | | | ✓ | | We provide primarilylong-term, equity-based compensation to our NEOs | | | | | | û | | We do not provide forexcise taxgross-up payments | | | | | | | | | | ✓ | | We provide our CEO with compensation consistingentirely ofequity awards anddeferred payouts | | | | | | û | | Wedo not reprice stock options | | | | | | | | | | ✓ | | We pay our NEOsequity-based awards based on Company and individual performance rather than cash bonuses | | | | | | û | | Wedo not guarantee incentive awards | | | | | | | | | | ✓ | | We applyrisk balancing so as not to jeopardize the “NEOs” meanssafety and soundness of Capital One | | | | | | û | | Wedo not provide compensation or awards to our NEOs on terms and conditions that aremore favorable than compensation and awards granted to all other executive officers | | | | | | | | | | ✓ | | We applyperformance thresholds to determine the fouramount of equity delivered at vesting of grants to our NEOs | | | | | | û | | We do not permit our NEOs to engage inshort sales, hedging transactions, orspeculative trading in derivatives of our securities | | | | | | | | | | ✓ | | We reduce performance share award values at vesting if the Company does not achievepositive Adjusted ROA | | | | | | û | | We do not permit our NEOs to place their Company securities in amargin account or topledge their Company securities as collateral for a loan | | | | | | | | | | ✓ | | We haveclawback provisions in our award agreements to ensure accountability | | | | | | û | | Generally we do not utilizeemployment agreements | | | | | | | | | | ✓ | | We require a change of control event and a termination to accelerate the vesting of equity awards (double trigger) | | | | | | û | | We do not pay a cash salary to our CEO | | | | | | | ✓ | | We have anindependent compensation consultant advising the Compensation Committee | | |
In addition, the awards granted to our named executive officers include the following performance and recovery provisions that are designed to further enhance alignment between pay and performance and to balance risks: | | | | | Performance- Based Vesting Provisions | | | | We include performance-based vesting provisions as part of each stock option and stock-settled RSU award to named executive officers listed above,and each cash-settled RSU award to the CEO. These provisions 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. The total value can be reduced to zero if the performance threshold is not met in any of the three years in the performance period. | Performance Share Reduction | | | | Each performance share award to the named executive officers provides that the total value delivered at vesting will be reduced if for any year in the three-year performance period the Company does not achieve positive Adjusted ROA (as defined on page 62 under “Performance Share Reduction”). The total value can be reduced to zero if positive Adjusted ROA is not achieved in any of the three years in the performance period. This reduction can occur regardless of where the Adjusted ROA ranks relative to a comparator group. |
| | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 43 |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
| | | | | Misconduct Clawback | | | | Each incentive award to the named executive officers is subject to clawback provisions that allow the Committee to seek recovery of all unvested portions of the awards in the event there has been misconduct resulting in a violation of law or Company policy and the “namednamed executive officers” meansofficer committed the misconduct or failed in his or her responsibility to manage or monitor the applicable conduct or risks. | Financial Restatement Clawback | | | | Each performance share award to the named executive officers includes clawback provisions that allow the Company to recover shares under the award following a financial restatement. |
See “Additional Performance Conditions and Recovery Provisions” on page 60 for more details. All of the terms and features described above, including the performance-based vesting and clawback provisions, apply to awards granted to all executive officers and not just the named executive officers. Use of Discretion The Committee believes that exercising discretion is an important element in reaching balanced compensation decisions and supplements other aspects of Capital One’spay-for-performance philosophy. By applying discretion, the Committee seeks to mitigate the risks associated with a rigid and strictly formulaic compensation program, which could unintentionally create incentives for our executives to focus only on certain performance metrics, encourage imprudent risk taking, and not provide the best results for stockholders. In addition, the use of discretion allows the Committee to respond to changes in economic conditions, our operating environment, and other significant factors that may affect the long-term performance of Capital One or our lines of business. The use of discretion also allows the Committee to adjust compensation based on factors that would not be appropriately reflected by a strictly formulaic approach, such as the discrepancies between absolute and relative performance levels or recognition of individual performance levels. There are certain performance conditions for which the Committee would not exercise discretion, for example where the minimum performance metric is not met in the award of Performance Share Units or if the performance-based vesting requirements applicable to certain other stock-settled awards are not met. Consideration of 2016 Say on Pay Vote and Stockholder Engagement The Committee and the Board of Directors value the input of our stockholders and strive to foster a constructive dialogue with stockholders on matters of executive compensation and corporate governance. At our 2016 Annual Meeting of Stockholders, our stockholders supported our executive compensation program by approving ournon-binding advisory vote on executive compensation (“2016 Say on Pay”). Recognizing that the 2016 Say on Pay vote reflected some level of investor concern for the Company’s executive compensation programs, we continued to strengthen our outreach to stockholders to ensure that we maintain strong lines of communication with our stockholders and that the perspectives of our stockholders are shared with the Committee and the Board of Directors. In 2016, management directly engaged with stockholders representing approximately 60% of our outstanding shares in over 300 interactions with investors, as noted above under “Corporate Governance at Capital One—Stockholder Engagement Program.” From these interactions, the Committee and the Board of Directors gained valuable insight into our investors’ views about the Company, including our executive compensation programs. As a result of the feedback received from investors during 2016, the Committee made the following enhancements to our executive compensation programs and disclosure: ∎ | | Increased alignment of CEO compensation and Company performance by increasing the percentage of the CEO’s total target compensation that is tied to ayear-end evaluation of CEO and Company performance from 30% to 40%, providing a more direct link between the NEOs, collectively.CEO’s compensation and the Committee’s and independent directors’ assessment of such performance. |
∎ | | Increased the rigor of relative Company performance governing payouts applicable to performance share awards, which represent 50% of CEO total target compensation and approximately 12.5% of total target compensation of the other NEOs. See “Performance Share Awards” on page 52 for more information. |
| | | | | | | | | 44 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
∎ | | Provided greater transparency regarding the Committee’s use of discretion, particularly regarding the year end incentive awards granted to the named executive officers. See “Use of Discretion” on page 44 for more information. |
∎ | | Provided detail regarding the Committee’s process for assessing and determining executive compensation program structures and pay decisions. See “Our Compensation Governance Cycle” on page 42 for more information. |
The Committee continues to actively monitor our stockholder engagement with respect to executive compensation matters and has considered stockholder feedback in approvingyear-end incentive awards for 2016 and structuring and approving the 2017 compensation programs for the named executive officers. Chief Executive Officer Compensation Goals and Principles The Committee’s top priority is to align the interests of the CEO with the interests of our stockholders by directly linking his compensation with the Company’s performance and his contributions to that performance over appropriate time horizons. The Committee believes that all of the CEO’s compensation should beat-risk based on his and the Company’s performance. Each year the Committee approves the form, timing and amount of CEO compensation and makes recommendations to the independent directors for final approval. The Committee considers the CEO’s historical performance and seeks to effectively align the CEO’s interests with the interests of our stockholders over the appropriate time horizons, support safety and soundness and appropriately balance risk. The Committee and the independent directors have the flexibility to adjust compensation decisions from year to year to take into account the Company’s performance and evolving market practices. For example, between performance year 2014 and performance year 2016, the CEO’s total performance year compensation has ranged from $19.6 to $16.7 million. CEO Compensation Components The CEO’s compensation for the performance year 2016 was composed of equity awards designed to provide the CEO with an incentive to focus on long-term performance during the year and the opportunity for a year end incentive award based on the Committee’s evaluation of the Company’s performance and the CEO’s contributions to that performance throughout the year. The equity awards granted to the CEO in February 2016 consisted of: stock options; performance shares; and stock-settled restricted stock units. The year end incentive award granted to the CEO in February 2017 consisted of deferred cash and cash-settled restricted stock units. All of the CEO’s equity awards are subject to a three-year deferred vesting or payout schedule. The chart below shows these elements of CEO compensation as an approximate percentage of the CEO’s total target compensation. 2016 CEO Target Compensation | | | | | CAPITAL ONE FINANCIAL CORPORATION 2014 | | 2017 PROXY STATEMENT | | 45 |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
2016 CEO Compensation Program The Committee annually reviews and approves the compensation structure of the CEO and makes recommendations to the independent directors for final approval. In February 2016, the Committee and the independent directors reviewed the compensation structure utilized since 2009 for Mr. Fairbank and determined that for 2016 the compensation program would continue to consist of equity awards granted at the beginning of the year plus an opportunity for an additionalyear-end incentive award based on the Company’s actual performance for 2016. In this manner, the CEO’s compensation continues to be completelyat-risk based on the Company’s and Mr. Fairbank’s performance. The Committee and independent directors determined that the compensation program structured in this manner remained appropriate for Mr. Fairbank in 2016 given that the compensation program aligns Mr. Fairbank’s compensation with the Company’s performance over the appropriate time horizons and supports the Company’s executive compensation goals and principles. The table below summarizes the CEO compensation program that the Committee and the independent directors approved for the 2016 performance year. | | | | | | | | | | | | | | | | | | | | | Compensation Element | | | | Timing of Award Determination | | | | Basis for Award | | | | Vesting Schedule | | | | Performance and Recovery Provisions | | | Base Salary | | | | Not applicable | | | | Not applicable | | | | Not applicable | | | | Not applicable | | | Stock Options | | | | February 2016 | | | | Incentive for Future Company Performance | | | | 3-year cliff vesting; expires in 10 years | | | | ∎ Performance-based vesting provisions In 2014,∎ Misconduct clawback
| | | Performance Shares | | | | February 2016 | | | | Incentive for Future Company Performance | | | | Vest at the end of the3-year performance period; the number of shares vesting depends on achievement of performance factors | | | | ∎ Performance share reduction ∎ Misconduct clawback ∎ Financial restatement clawbacks | | | Stock-Settled RSUs | | | | February 2016 | | | | Incentive for Future Company Performance | | | | 3-year cliff vesting; settles in Company stock | | | | ∎ Performance-based vesting provisions ∎ Misconduct clawback | | | Year-End Incentive Opportunity | | | | February 2017 | | | | Reward for 2016 CEO and Company Performance | | | | Delivered as combination of cash-settled RSUs and deferred cash bonus; payout after 3 years | | | | ∎ Performance-based vesting provisions (RSUs only) ∎ Misconduct Clawback |
See “Additional Performance Conditions and Recovery Provisions” on page 60 for more details regarding the performance and recovery provisions applicable to each of the elements of compensation that the Committee approved for the 2016 performance year for the named executive officers. After considering various factors as described below, without giving particular weight to any specific factor, the Committee and the independent directors determined that a total target compensation amount of $17.5 million was appropriate for Mr. Fairbank’s 2016 compensation program. When determining the structure and total target compensation opportunity for Mr. Fairbank’s 2016 compensation program, as well as the value for each component of the award, the Committee and the independent directors considered Mr. Fairbank’s and the Company’s performance during 2015 relative to certain financial, operating, safety and soundness and strategic performance factors. In addition, the Committee and the independent directors considered the Company’s performance in 2015 relative to the peer comparator companies’ performance in 2015, the structure and amount of compensation awarded to the chief executive officers of the peer comparator companies and the structure and amount of Mr. Fairbank’s compensation awards in prior years. The Committee and the independent directors also considered the Company’s risk profile and the time horizon over which the deferred, equity-based vehicles will vest, as well as the fact that the ultimate value of Mr. Fairbank’s deferred, equity-based awards will depend on the Company and Mr. Fairbank’s performance over time. | | | | | | | | | 46 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
The chart below shows the pay mix of the CEO’s actual compensation for the 2016 performance year, including theyear-end incentive opportunity which consisted of 60% deferred cash and 40% cash-settled RSUs. 2016 CEO Pay Mix Stock Option Award In February 2016, Mr. Fairbank received a grant of 106,973non-statutory stock options at an exercise price of $63.73 per share (which was the fair market value of the Company’s 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 February 15, 2019 and will expire ten years after the date of grant. The option grant had a grant date value of $1,750,003; however, the ultimate value Mr. Fairbank realizes, if any, depends solely on the long-term appreciation in the Company’s stock price. Mr. Fairbank can only realize value from the stock options if and to the extent the Company’s 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 performance-based vesting conditions and clawback provisions, each as described in more detail under “Additional Performance Conditions and Recovery Provisions” beginning on page 60. Performance Share Award In February 2016, 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 150% of a target number of 137,298 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 2016 through December 31, 2018. The Company’s performance will be assessed on the basis of Adjusted ROA relative to a comparator group consisting of companies in the KBW Bank Index, excluding threenon-traditional banks that do not focus on lending to consumers and businesses (“KBW Index”). The Committee believes that the KBW Index is an appropriate index against which to assess the Company’s performance because it reflects institutions of a comparable size and business mix to the Company. In addition, the Committee believes that relative Adjusted ROA is an appropriate metric for the Company and its stockholders because it achieves a balance of incentivizing and rewarding management to pursue business strategies that reward stockholders over the long term, while discouraging excessive risk-taking or balance sheet leverage in pursuit of those goals. Under the performance share reduction feature of this award, the number of shares issued at settlement will be reduced if the Company’s Adjusted ROA for one or more fiscal years completed during the performance period is not positive, no matter how well the Company compares to the peer group. If the Company’s Adjusted ROA is not positive in any of the three fiscal years in the performance period, the executive will forfeit the entire award of performance shares. As a result, although Mr. Fairbank’s award had a grant date value of $8,750,002, the number of shares that he ultimately receives, if any, will be solely dependent on the Company’s performance over the performance period. The performance share award also is subject to certain clawback provisions. See “Performance Share Reduction” on page 61 and “Financial Restatement Clawbacks” on page 62 for more information. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 47 |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
After the end of the three-year performance period, the Committee will certify the Company’s performance and issue the corresponding number of shares of the Company’s common stock, if any, in accordance with the table below. The table below shows potential payouts based on specific Company performance results. Payouts will range between the values shown below for performance that falls between the performance results in the table. | | | | | | | | | | | | | | | Relative Metric: Adjusted ROA | | | | | ³75th Percentile | | 50th Percentile | | 20th Percentile | | < 20th Percentile | Number of years with positive Adjusted ROA: | | Three | | 150% | | 100% | | 40% | | 0% | | Two | | 125% | | 83% | | 33% | | 0% | | One | | 100% | | 67% | | 27% | | 0% | | None | | 0% | | 0% | | 0% | | 0% |
Stock-Settled RSU Award In February 2016, Mr. Fairbank also received a grant of 27,460 stock-settled RSUs. The stock-settled RSU grant had a grant date value of $1,750,026. The stock-settled RSU award vests in full on February 15, 2019 and is subject to performance-based vesting conditions and clawback provisions, each as described in more detail under “Additional Performance Conditions and Recovery Provisions” beginning on page 60. Year-End Incentive Opportunity A portion of Mr. Fairbank’s 2016 compensation consisted of an opportunity for ayear-end incentive award based on the Company’s performance in 2016. The award had a target value of $5,250,000, but the ultimate value of the award was determined based on the Committee’s evaluation of the Company’s performance during 2016 and Mr. Fairbank’s contributions to that performance relative to the factors shown below related to: financial and operating performance, governance and risk management, strategic performance and winning with our customers and associates. These factors were evaluated on a qualitative and quantitative basis without any specificpre-established targets or weights. The Committee believes that these factors appropriately reflect and balance near term performance and long-term success for the Company’s customers, associates and stockholders. In 2016, Capital One delivered solid financial performance, improved operating efficiency, resilient growth, and capital distribution to our shareholders. We had industry-leading growth in our Credit Card business and continued the disciplined growth of our Auto and Commercial Banking businesses. The Company continued to make transformational investments in growth and technology to create value today and over the long term. In addition, management continued to build risk management capabilities and is committed to effective, proactive, and sustainable operation of these capabilities. The Committee believes that the actions taken by the named executive officers throughout the year contributed greatly to the Company’s 2016 results and have positioned the Company to deliver on long-term strategic goals and achieve strong, sustainable financial performance over the long term. | | | | | | | | | 48 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
In February 2017, the Committee considered the Company’s performance on both a quantitative and qualitative basis. In particular, the Committee considered: | | | | | | | | | | | | | Performance Factor | | | | 2016 Performance | | | | | | | | | | | | | | ∎ Revenue ∎ Expense management ∎ Earnings and Earnings per share ∎ ROA and ROTCE ∎ Capital One delivered strong financial performance and distributedmanagement ∎ Total shareholder return | | | | ∎ Revenue of $25.5 billion ∎ Pre-provision earnings of $11.9 billion ∎ Efficiency ratio of 53.2%, or 52.7% net of adjustments,(1) demonstrating prudent expense management ∎ Net Income of $3.8 billion ∎ Earnings per share (“EPS”) of $6.89 per common share, fully diluted ∎ Return on Assets (“ROA”) of 1.11% ∎ Return on average common equity of 7.82%; return on average tangible common equity (“ROTCE”) of 11.93%,(2) above bank average ∎ Returned significant capital to our shareholders. We returned toshareholders by completing $3.7 billion of share repurchases and paying a quarterly common stock dividend of $.40 per share ∎ Industry-leading growth in our Credit Card business and continued to prudently grow our Auto and Commercial Banking businesses. We improved the quality of our franchise and laid a solid foundation to position Capital One as a digital leader. We continued to generate capital on a strong trajectory, maintaining our common stock dividend in 2014 and positioning ourselves to complete our announced $2.5 billion share repurchase program by the end of the first quarter 2015. Key financial results for 2014 included: $4.4 billion in net income, or $7.59 per common share (fully diluted), with return on tangible common equity ranking fourth among our peer comparator group;
Pre-provision earnings of $10.1 billion;
Common equity Tier 1 capital ratio as calculated under the Basel III Standardized Approach of 12.46% as of December 31, 2014;
Strong credit risk performance, with a net charge-off rate of 1.72% for 2014;
Credit Card net income of $2.5 billion; Domestic Card$2.2 billion and loan growth of 6.1% from the end of 2013;
Solid10.0%∎ Strong financial and operating results in the Auto business, with new loan originations of $20.9 billion;$25.7 billion, and Solid solid loan growth of 13.1%6% in ourthe Commercial Banking business from the end∎ One, three and five-year Total Shareholder Return (“TSR”) of 2013. 23.8%, 20.7% and 122.7%, respectivelyThe Committee believes that the actions taken
| | | | | | | | | | | | | | ∎ Credit performance and underwriting quality ∎ Risk management and compliance ∎ Balance sheet strength ∎ Board and executive governance | | | | ∎ Strong credit performance including a netcharge-off rate of 2.17%, 4.16% for Domestic Card, as management continues to focus on underwriting quality ∎ Higher provision for loan losses primarily driven by the named executive officers throughout 2014 contributed greatly to the Company’s results and have positioned the Company well to deliverfront-loaded credit costs of strong sustainable financial performance over the long-term.loan growth, particularly in Domestic Card Important Aspects of Our Executive Compensation Programs
The Committee believes that our named executive officer compensation programs balance risk∎ Continued progress enhancing the soundness and financial results, reward named executive officers for their achievements, promote our overall compensation objectives and encourage appropriate, but not excessive, risk-taking. The following are some of the highlights of our compensation program:
Capital One’s executive compensation programs consist primarily of a variety of long-term, equity-based compensation vehicles. See “Compensation Components” on page 34 for more details on the specific components of the CEO and NEO compensation programs.
Since 1997, the CEO’s compensation program has consisted entirely of equity awards and other incentive awards with payouts deferred for three years in lieu of any salary, retirement plan contributions or other traditional forms of compensation.
We do not pay cash bonuses to the NEOs. Instead, we grant equity-based awards following the end of the year based on Company and individual performance during the year.
Beginning in January 2015, vesting for all equity awards granted to named executive officers will not automatically accelerate upon a change of control but instead will require a so-called “double trigger” for accelerated vesting. The vesting of such awards will accelerate only in the event of a qualifying termination of the named executive officer within the two years following a change of control. See “Potential Payments Upon Termination or Change of Control – Change of Control” on page 67 for more information.
We have eliminated excise tax gross-up provisions from our executive officer change of control agreements. All executive officer change of control agreements containing an excise tax gross-up that previously were entered into have expired as of the date of this proxy statement and have been replaced with new agreements that do not provide for an excise tax gross-up. See “Change of Control Agreements” on page 48 for more information.
We have designed our incentive compensation programs such that they continue to appropriately balance risk and do not jeopardize the safety and soundness of Capital One. See “Risk Assessment of Compensation Policies and Practices” in the “Corporate Governance at Capital One” section on page 9 for more information.
The awards granted to our named executive officers include the following provisions that are designed to further enhance alignment between pay and performance and balance risks:
| | | Performance-
Based Vesting
Provisions
| | Since January 2012, we have included performance-based vesting provisions as part of each stock option, restricted stock and stock-settled RSU award to the named executive officers and each cash-settled RSU award to the CEO. These provisions 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. The total value can be reduced to zero if the performance metric is not met for all three years in the performance period. | Performance
Share Reduction
| | Each performance share award to the named executive officers since January 2012 provides that the total value delivered at vesting will be reduced if for any year in the three-year performance period the Company does not achieve positive Adjusted ROA. The total value can be reduced to zero if the metric is not met for all three years in the performance period. These terms are in addition to the performance metric relative to a comparator group. | Clawback
Provisions
| | Each incentive award to the named executive officers since January 2013 is subject to clawback provisions that allow the Committee to seek recovery of all unvested portions of the awards in the event there has been misconduct resulting in a violation of law or Company policy and the named executive officer committed the misconduct or failed in his or her responsibility to manage or monitor the applicable conduct or risks. | Financial
Restatement
Clawback
| | Since January 2011, each performance share award to the named executive officers has included clawback provisions that allow the Company to recover shares under the award following a financial restatement. |
See “Additional Performance Conditions and Recovery Provisions” on page 44 for more details.
Capital One does not distinguish the terms and conditions of compensation and awards between the NEOs and all other executive officers. All of the terms and features described above, including the clawback and performance-based vesting provisions, apply to awards granted to all executive officers and not just the named executive officers.
Our Compensation Objectives
Capital One’s 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 executive’s level of responsibility increases, so does the proportion of the executive’s 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 2015 for the 2014 performance year were based on Company and individual performance, as well as on the demonstration of specific leadership competencies assessed through a comprehensive performance management process that included an individual assessment 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, with the Chief Auditor also reviewing the risk assessment for the Chief Risk Officer, 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. For 2014, approximately 78% of the CEO’s total compensation is equity-based and at-risk to the performancesustainability of the Company’s stock price,compliance and 100%risk management programs, including sound management of his compensation is deferred for a three-year period. Formarket and liquidity risk
∎ Common equity Tier 1 capital ratio of 10.1%, calculated under the NEOsBasel Pillar III Standardized Approach, as of December 31, 2016 ∎ Open and active Board governance model, including access to management, embrace of effective challenge, and proactive stockholder outreach | | | | | | | | | |
| | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 49 |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
| | | | | | | | | | | | | Performance Factor | | | | 2016 Performance | | | | | | | | | | | | | | ∎ Progress toward achievement of long-term strategy ∎ Execution against corporate imperatives ∎ Disciplined investments in 2014, approximately 80% of total target compensation was provided through equity-based vehicles which were all at-risk to theinfrastructure, technology and growth initiatives ∎ CEO leadership and performance of executive team | | | | ∎ Significant progress on building the Company’s stock pricecapabilities of a leading information-based technology company ∎ Balanced investments in market opportunities and subject to vestinglong-term capabilities, including talent, infrastructure, and process reinvention ∎ Successful integration of GE Healthcare acquisition, enhancing the capabilities and scale in commercial healthcare finance | | | | | | | | | | | | | | ∎ Recruitment and development of world class talent ∎ Associate engagement and retention ∎ Customer advocacy ∎ Brand ∎ Corporate reputation and community engagement ∎ Live our values and champion our culture | | | | ∎ Achieved strong Net Promotor Scores including record-high levels in both Consumer and Small Business Card ∎ Continued focus on attracting top talent and welcomed over multiple time horizons. The use9,500 new associates, including over 500 military recruits, while maintaining high bar for talent and diversity ∎ Recorded strong associate engagement scores and low voluntary attrition rates ∎ Increased focus on enhancing and developing our executive leadership ∎ Accelerated the development and release 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 Company’s stock over time because the value of these compensation vehicles increasesbrand-defining software applications and decreasesfeatures | | | | | | | | | |
(1) | Efficiency ratio is calculated based on total non-interest expense divided by total net revenue for the performanceperiod and reflects as-reported results in accordance with U.S. GAAP. The efficiency ratio net of the Company’s 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 preserveadjustments is 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 named executive officer 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 policiesnon-GAAP measure that the named executive officers must meet on an annual basis and stock retention provisions applicable to certain equity awards.
ConsiderationCommittee reviews as part of 2014 Say on Pay Vote and Stockholder Engagement
The Committee and the Board of Directors value the input of our stockholders and strive to foster a constructive dialogue with stockholders on matters of executive compensation and corporate governance. At our 2014 Annual Meeting of Stockholders, our stockholders supported our executive compensation program by approving our non-binding advisory vote on executive compensation (“2014 Say on Pay”) with a higher percentage of votes cast than at any prior meeting. Though the Committee recognized the 2014 Say on Pay vote reflected strong support for the Company’s executive compensation programs, the Committee remains committed to stockholder engagement. In 2014, we continued to strengthen our outreach to stockholders to ensure that we maintain strong lines of communication with our stockholders and that the perspectives of our stockholders are shared with the Committee and the Board of Directors. To that end, since the 2014 Annual Meeting of Stockholders, we continued direct engagement and discussions with stockholders representing approximately 50% of our
outstanding shares. The Committee continues to actively oversee our stockholder engagement with respect to executive compensation matters and has considered stockholder feedback in approving year-end incentive awards for 2014 and structuring and approving the 2015 compensation programs for the named executive officers.
CEO Compensation
In 2014, as in past years, the Committee granted equity awards to the CEO at the beginning of the year that are designed to provide an incentive to focus on longer term performance. The Committee also established the opportunity for the CEO to receive an additional year-end incentive award based on the Committee’s evaluationits assessment of the Company’s performance and reflects adjustments to exclude $161 million from builds in the CEO’s contributions overU.K. Payment Protection Insurance customer refund reserve, a $28 million impairment charge associated with certain acquired intangible and software assets and a $24 million gain related to the year. Allexchange of our ownership interest in Visa Europe with Visa Inc. See Exhibit 99.2 to the CEO’s awards are subjectForm 8-K filed with the SEC on January 24, 2017 for supplemental financial data and corresponding reconciliation of this financial metric to U.S. GAAP.
|
(2) | ROTCE is a three-year deferred vesting or payout.The table below summarizesnon-GAAP financial measure calculated based on the elementssum of compensation that the Committee approved(i) income from continuing operations, net of tax; (ii) less dividends and undistributed earnings allocated to participating securities; and (iii) less preferred stock dividends, for the 2014 performance yearperiod, divided by average tangible common equity. See “MD&A-Table F-Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” on our Annual Report on Form 10-K for the CEO.fiscal year ended December 31, 2016 for supplemental financial data and corresponding reconciliation of this financial metric to U.S. GAAP.
|
The Committee also took into account peer comparator group CEO compensation levels, the tenures of each of the peer companies’ CEOs, the varying degrees of success those CEOs have had in leading their respective companies, and Mr. Fairbank’s strategic role as the founder of Capital One. After considering all of the above factors, in February 2017 the Committee and the independent directors approvedyear-end incentive awards for Mr. Fairbank totaling $4,462,580. For a second consecutive year, Mr. Fairbank’syear-end incentive awards represent a payout of 85% of the target award value established by the Committee in February 2016. Between performance year 2014 and performance year 2016, Mr. Fairbank’syear-end incentive award has ranged from $4.5 million to $7.4 million. In particular, in determining the 2016year-end incentive awards the Committee rewarded Mr. Fairbank’s leadership contributions that accelerated the momentum toward the achievement of the Company’s long-term strategic goals and value creation, while recognizing that the rapid loan growth in Domestic Card and strategic investments made to support the Company’s growth opportunities and digital transformation affected certain of the Company’s financial performance metrics listed above, including EPS. The Committee also recognized that the Company’s one and three-year TSR lagged its peers’. While growth and investments may dampen short-term returns to shareholders, the Committee and the independent directors believe that the Company is striking the right balance between investing for the future and delivering attractive returns over the short, medium and long term. The Committee and the independent directors determined to award Mr. Fairbank’syear-end incentive award using two vehicles: (i) an award of 20,675 RSUs, which had a total grant date value of approximately $1,785,080, | | | | | | | | | 50 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | | | | | | | | 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
| | 2017 PROXY STATEMENT |
| | | | | SECTION V – COMPENSATION DISCUSSION AND ANALYSIS | Stock Options
| | January 2014 | | Incentive for Future
Company Performance
|
| | 10% | | 3-year cliff vesting; expires in 10 years | | | | | | Performance Shares | | January 2014 | | Incentive for Future
Company Performance
| | 50% | | Vest at the end of the 3-year performance period; the number of shares vesting depends on achievement of performance factors
| | | | | | Stock-Settled RSUs
| | January 2014
| | Incentive for Future Company Performance
| | 10% | | 3-year cliff vesting; settles in Company stock
| | | | | | Year-End Incentive
Opportunity
| | January 2015 | | Reward for 2014 Company Performance | | 30% | | Delivered as combination of cash-settled RSUs and deferred cash bonus; payout after 3 years
|
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 Committee’s 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 2014 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 2014 | | Overall experience, skills, performance, and knowledge
| | 20% | | Paid in cash throughout the performance year | Base Salary -
RSUs
| | January 2014 | | Portion of base salary Delivered in RSUs
| | 15% | | Awarded as RSUs which settle in cash on February 15 following the performance year
| Cash Bonus
| | Not applicable | | Not applicable
| | 0% | | Not applicable | Cash-Settled RSUs
| | January 2015 | | Reward for 2014
Company Performance
| | 15% | | 3-year ratable vesting | Stock Options
| | January 2015 | | Reward for 2014 Individual
Performance and
Incentive for Long-Term Performance
| | 50% | | 3-year ratable vesting; expires in 10 years | Performance Shares
| | | | | Vest at the end of the 3-year performance period; the number of shares vesting depends on achivement of performance factors
| Stock-Settled RSUs
| | | | | 3-year ratable vesting
|
Performance and Recovery Provisions
The table below summarizes the performance and recovery provisions applicable to the elements of compensation that the Committee approved for the 2014 performance year for the named executive officers. See “Additional Performance Conditions and Recovery Provisions” on page 44 for more details.
and (ii) a deferred cash bonus in the amount of approximately $2,677,500. Including theyear-end incentive opportunity, Mr. Fairbank’s total compensation for the 2016 performance year consisted of 84% equity-based awards and 16% deferred cash. The award of RSUs will vest in full on February 15, 2020, will settle in cash based on the Company’s average stock price over the 15 trading days preceding the vesting date, and is subject to performance-based vesting provisions. The cash bonus is mandatorily deferred for three years into the Company’s VoluntaryNon-Qualified Deferred Compensation Plan and will pay out in the first calendar quarter of 2020. Both the award of RSUs and the deferred cash bonus are subject to clawback provisions. The performance-based vesting provisions applicable to the RSUs and the clawback provisions applicable to both awards are described in more detail under “Additional Performance Conditions and Recovery Provisions” beginning on page 60. CEO Compensation by Performance Year Below is a table showing Mr. Fairbank’s compensation awards as they are attributable to the performance years indicated. For the years shown in the table, Mr. Fairbank’s total target compensation was $17.5 million. Mr. Fairbank’s compensation for performance year 2015 was $16,712,536, a decrease of $2,887,492 or 14.7% compared to his compensation for performance year 2014. Mr. Fairbank’s compensation for performance year 2016 was $16,712,611, which is substantially similar to his 2015 performance year compensation due to a second consecutive year of Mr. Fairbank receiving 85% of his target value of theyear-end incentive opportunity. See“Year-End Incentive Opportunity” on page 48 for additional information regarding theyear-end incentive granted to Mr. Fairbank for performance year 2016. | | | | | Compensation Element | | Performance and Recovery Provisions | Cash-Settled RSUs
| | • Clawback provisions
| Stock Options
| | • Performance-based vesting provisions
• Clawback provisions
| Performance Shares
| | • Performance share reduction
• Clawback provisions
• Financial restatement clawbacks
| Stock-Settled RSUs
| | • Performance-based vesting provisions
• Clawback provisions
| CEO Year-End
Incentive Opportunity
| | • Performance-based vesting provisions (RSUs)
• Clawback provisions
|
Chief Executive Officer Compensation
Goals and Principles
The Committee’s top priority is to align the interests of the CEO with the interests of our stockholders by directly linking his awards with the Company’s performance and his contributions to that performance over appropriate
time horizons. The Committee believes that the CEO’s compensation should be at-risk based on his and the Company’s performance. Each year the Committee approves the form, timing and amount of CEO compensation and makes recommendations to the independent directors for final approval. The Committee takes into account the CEO’s historical performance and how to most effectively align the CEO’s interests with the interests of our stockholders over the appropriate time horizons, support safety and soundness and appropriately balance risk. The Committee and the independent directors have the flexibility to adjust compensation decisions from year to year to take into account the Company’s performance and evolving market practices.
2014 CEO Compensation Decisions
In January 2014, the Committee and the independent directors reviewed the compensation structure utilized since 2009 for Mr. Fairbank and determined that for 2014 the compensation program would continue to consist of equity awards granted at the beginning of the year plus an opportunity for an additional year-end incentive award based on the Company’s actual performance for 2014. In this manner, the CEO’s compensation continues to be completely at-risk based on the Company’s and Mr. Fairbank’s performance. The Committee and independent directors determined that the compensation program structured in this manner remained appropriate for Mr. Fairbank in 2014 given that the compensation program aligns Mr. Fairbank’s compensation with the Company’s performance over the appropriate time horizons and supports the Company’s executive compensation goals and principles. The Committee and the independent directors determined, however, to change the mix of the vehicles for the 2014 CEO compensation program, reducing the proportion of total target compensation represented by stock options, increasing the year-end incentive opportunity to 30% of the CEO’s total target compensation program and introducing a stock-settled RSU award. In addition, the Committee and the independent directors determined to reduce the maximum value of Mr. Fairbank’s year-end incentive opportunity to one and a half times the target value from two times the target value for prior year-end incentive opportunities. The Committee and the independent directors made these decisions after taking into account the perspectives of stockholders, proxy advisory firms, the Federal Reserve and other federal banking regulators. After considering various factors as described below, without giving particular weight to any specific factor, the Committee and the independent directors determined that a total target compensation amount of $17.5 million was appropriate for Mr. Fairbank’s 2014 compensation program.
When determining the structure and total target compensation amount for Mr. Fairbank’s 2014 compensation program, as well as the value for each component of the award, the Committee considered Mr. Fairbank’s and the Company’s performance during 2013 relative to the financial, operating, safety and soundness and strategic performance factors described below under “Year-End Incentive Opportunity.” In addition, the Committee and the independent directors considered the Company’s performance in 2013 relative to the peer comparator companies’ performance in 2013, the structure and amount of compensation awarded to the chief executive officers of the peer comparator companies and the structure and amount of Mr. Fairbank’s compensation awards in prior years. The Committee and the independent directors also considered the Company’s risk profile and the time horizon over which the deferred, equity-based vehicles will vest, as well as the fact that the ultimate value of Mr. Fairbank’s deferred, equity-based awards will depend on the Company and Mr. Fairbank’s performance over time.
Performance Share Award
In January 2014, 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 150% of a target number of 123,309 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 2014 through December 31, 2016. The Company’s performance will be assessed on the basis of Adjusted ROA relative to a comparator group consisting of companies in the KBW Bank Index, excluding custody banks (the “KBW Index”). The Committee believes that the KBW Index is an appropriate index against which to assess the Company’s performance because its members are principally lending businesses similar to the Company. Moreover, under the performance share reduction feature of this award, the number of shares issued at settlement will be reduced if the Company’s Adjusted ROA for one or more fiscal years completed during the performance period is not positive, no matter how well it compares to the peer group. If the Company’s Adjusted ROA is not positive for all three fiscal years in the performance period,
Mr. Fairbank will forfeit the entire award of performance shares. Thus, although the award had a grant date value of $8,750,007, the number of shares that Mr. Fairbank ultimately receives, if any, will be solely dependent on the Company’s performance over the performance period. The performance share award also is subject to certain clawback provisions. See “Performance Share Reduction” and “Financial Restatement Clawbacks” on page 45 for more information.
After the end of the three-year performance period, the Committee will certify the Company’s performance and issue the corresponding number of shares of the Company’s common stock, if any, in accordance with the table below.
| | | | | | | | | | | Relative Metric: Adjusted ROA | | | ³ 75th Percentile | | 50th Percentile | | < 20th Percentile | Number of years with positive Adjusted
ROA: | | Three | | 150% | | 100% | | 0% | | Two | | 125% | | 83% | | 0% | | One | | 100% | | 67% | | 0% | | None | | 0% | | 0% | | 0% |
The table above shows potential payouts based on specific Company performance results. Payouts will range between the values shown above for performance that falls between the performance results shown in the table.
Stock Option Award
In January 2014, Mr. Fairbank also received a grant of 108,944 non-statutory stock options at an exercise price of $70.96 per share (which was the fair market value of the Company’s 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 February 15, 2017 and will expire ten years after the date of grant. The option grant had a fixed grant date value of $1,750,000; however, the ultimate value Mr. Fairbank realizes, if any, is solely dependent on the long-term appreciation in the Company’s stock price. Mr. Fairbank can only realize value from the stock options if and to the extent the Company’s 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 performance-based vesting conditions and clawback provisions, each as described in more detail under “Additional Performance Conditions and Recovery Provisions” beginning on page 44.
Stock-Settled RSU Award
In January 2014, Mr. Fairbank also received a grant of 24,662 stock-settled RSUs. The stock-settled RSU grant had a fixed grant date value of $1,750,016. The stock-settled RSU award vests in full on February 15, 2017 and is subject to performance-based vesting conditions and clawback provisions, each as described in more detail under “Additional Performance Conditions and Recovery Provisions” beginning on page 44.
Year-End Incentive Opportunity
A portion of Mr. Fairbank’s 2014 compensation award consisted of an opportunity for a year-end incentive award based on the Company’s actual performance in 2014. The award had a target value of $5,250,000, but the ultimate value of the award was determined based on the Committee’s evaluation of the Company’s performance during 2014 and Mr. Fairbank’s 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
| | • Revenue generation
| | • Capital adequacy
| | • CEO leadership and performance
| • Earnings per share
| | • Expense management
| | • Risk management and
| | of executive team
| • Return on tangible capital
| | • Operating effectiveness
| | compliance
| | • Capital management
| | | • Customer satisfaction
| | • Credit loss management
| | • Progress toward achievement
| | | | | • Underwriting quality
| | of long-term strategy
| | | | | • Balance sheet management
| | • 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
|
In January 2015, the Committee considered the Company’s performance on both a quantitative and qualitative basis, including the results described under “2014 Company Performance” on page 31. In particular, the Committee considered:
Capital One’s strong financial results in 2014, particularly the solid growth in earnings per share and the Company’s return on tangible common equity relative to the peer comparator group;
Management’s success in delivering $10.1 billion in pre-provision earnings, tightly managing costs while investing in growth and positioning the Company for future earnings growth potential;
The return to growth in Domestic Card and continued prudent growth in the Auto and Commercial Banking businesses, all while maintaining focus on resiliency and managing credit losses across the Company;
The Company’s return of substantial capital to stockholders in 2014, maintaining the common stock dividend from the end of 2013 and significantly increasing share repurchases coming out of the 2014 Comprehensive Capital Analysis and Review (CCAR) cycle;
Ending 2014 with a Common Equity Tier 1 Capital ratio of 12.46%, even with increased capital distribution and growth in Card and other loan portfolios;
The Company’s total shareholder return (“TSR”) of 9.5% in 2014, outperforming the KBW Bank Index;
The Company’s continued progress enhancing its compliance and risk management programs across the enterprise, reflecting investments in talent and infrastructure;
The significant progress on positioning Capital One as a digital leader, including recruiting great digital talent, building foundational infrastructure, simplifying our core systems and applications, introducing new products and features, enhancing design and data capabilities, and re-inventing processes, operations and governance designed to ensure the Company has the agility to get to market quickly and securely; and
The CEO’s leadership in building Capital One’s powerful national brand, with a strategic focus on products and services designed to build an enduring customer franchise.
The Committee considered these factors in light of the challenges still facing management to position Capital One to deliver superior and sustainable returns, including the Company’s ongoing work to meet rising regulatory expectations across the financial services industry. The Committee also considered the Company’s one-year TSR of 9.5% and noted that it ranked at the median for the peer comparator group in 2014. The Committee also considered the Company’s three- and five-year TSR of 102.0% and 124.9%, respectively.
The Committee also took into account peer comparator group CEO compensation levels, the different tenures of each of the peer companies’ CEOs as compared to Mr. Fairbank’s 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, in January 2015 the Committee and the independent directors approved awards for Mr. Fairbank totaling $7,350,006. The Committee and the independent directors determined to award that amount using two vehicles: (i) an award of 39,221 restricted stock units (“RSUs”), which had a total grant date value of $2,940,006, and (ii) a deferred cash bonus in the amount of $4,410,000. The award of RSUs will vest in full on February 15, 2018, will settle in cash based on the Company’s average stock price over the fifteen trading days preceding the vesting date, and is subject to performance-based vesting provisions. The cash bonus is mandatorily deferred for three years into the Company’s Voluntary Non-Qualified Deferred Compensation Plan and will pay out in the first calendar quarter of 2018. Both the award of RSUs and the deferred cash bonus are subject to clawback provisions. The performance-based vesting provisions applicable to the RSUs and the clawback provisions applicable to both awards are described in more detail under “Additional Performance Conditions and Recovery Provisions” beginning on page 44.
CEO Compensation by Performance Year
Below is a table showing Mr. Fairbank’s compensation awards as they are attributable to the performance years indicated.
| | | | | | | | | | | | | Performance Year | | Cash Salary | | Deferred Cash Bonus | | Cash-Settled RSUs | | Stock-Settled Awards | | Option Awards | | Total | 2014 | | $0 | | $4,410,000 | | $2,940,006 | | $10,500,022 | | $1,750,000 | | $19,600,028 | 2013 | | $0 | | $2,843,750 | | $2,843,793 | | $8,750,044 | | $4,375,012 | | $18,812,599 | 2012 | | $0 | | $2,187,500 | | $2,187,525 | | $8,750,008 | | $4,375,009 | | $17,500,042 |
The table above is presented to show how the Committee views compensation actions and to which year the compensation awards relate. This table differs substantially from the Summary Compensation Table on page 53 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Year | | | | Cash Salary | | | | Deferred Cash Bonus | | | | Cash-Settled RSUs | | | | Stock-Settled Awards | | | | Option Awards | | | | Total | | | 2016 | | | | $0 | | | | $2,677,500 | | | | $1,785,080 | | | | $10,500,028 | | | | $1,750,003 | | | | $16,712,611 | | | 2015 | | | | $0 | | | | $2,677,500 | | | | $1,785,014 | | | | $10,500,022 | | | | $1,750,000 | | | | $16,712,536 | | | 2014 | | | | $0 | | | | $4,410,000 | | | | $2,940,006 | | | | $10,500,022 | | | | $1,750,000 | | | | $19,600,028 |
The table above is presented to show how the Committee views compensation actions and to which year the compensation awards relate. This table differs substantially from the Summary Compensation Table on page 69 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 cash-settled RSU award granted to the CEO in January 2015February 2017 for the 20142016 performance year, for example, is shown in the table above as 20142016 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 andnon-qualified 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. Fairbank’s productivity and well-being. These include: ∎ | | Executive term life insurance with a benefit level of $5 million; |
∎ | | The ability to participate in a comprehensive voluntary annual health screening; Office supplies and other maintenance
|
∎ | | Maintenance for Mr. Fairbank’s home office; |
∎ | | The use of a driver who also provides for Mr. Fairbank’s 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 68. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | Additional details on these programs can be found in the “Named Executive Officer Compensation” section beginning on page 52. 2017 PROXY STATEMENT
| | 2015 CEO Compensation Decisions 51 |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
2017 CEO Compensation Program The Committee and the independent directors continue to believe that the CEO compensation program aligns Mr. Fairbank’s compensation with the Company’s performance over the appropriate time horizons and supports the Company’s executive compensation goals and principles. In February 2017, the Committee and the independent directors reviewed the compensation structure utilized in 2016 for Mr. Fairbank and determined that for 2017, the CEO compensation program would continue to consist of equity awards granted at the beginning of the year plus an opportunity for an additionalyear-end incentive award based on CEO and Company performance for 2017. In this manner, the CEO’s compensation will continue to be completelyat-risk based on the Company’s and Mr. Fairbank’s performance and all CEO compensation continues to be subject to a three year deferred vesting or payout. The Committee and the independent directors also determined that for Mr. Fairbank’s 2017 compensation program, a total target compensation amount of $17.5 million, the same total target compensation for 2016, was appropriate. In response to feedback received from stockholders, the Committee and the independent directors made changes to the year end incentive and performance share elements of the CEO compensation program. The terms of all other compensation granted to Mr. Fairbank in February 2017 are substantially similar to the terms described earlier under “2016 CEO Compensation Program,” including the application of performance-based vesting and clawback provisions. CEOYear-End Incentive Opportunity In response to stockholder feedback the Committee and the independent directors modified the structure of the CEO compensation program to eliminate the grant of stock-settled RSUs that were previously granted at the beginning of the performance year and accounted for approximately 10% of the CEO’s total target compensation to increase the percentage of the CEO’s total target compensation that is granted based on CEO and Company performance as theyear-end incentive opportunity from 30% to 40%. This change increases the alignment of CEO compensation and Company performance by directly linking a greater portion of the CEO’s compensation to the performance of the CEO and the Company during the performance year which allows the Committee and the independent directors the ability to adjust or eliminate that portion of the CEO’s compensation as appropriate to reflect the performance. The chart below illustrates the elements of the CEO’s 2017 compensation program as an approximate percentage of his total target compensation: 2017 CEO Target Compensation Performance Share Awards During 2016, we received feedback from our stockholders regarding the rigor of our performance share program. Based on this feedback, the Committee and the independent directors revised the performance metrics applicable to performance shares granted in 2017 to require a more rigorous set of relative Company performance hurdles related to the potential payouts made in connection with the awards. The performance share awards represent 50% of CEO total target compensation and approximately 12.5% of total target compensation of the other NEOs. As with previous years, the compensation paid in connection with the performance shares will be based on the | | | | | | | | | 52 | | | | | | CAPITAL ONE FINANCIAL CORPORATION In January 2015, the Committee and the independent directors reviewed the compensation structure utilized in 2014 for Mr. Fairbank and determined that the structure for the 2015 CEO compensation program would be the same, consisting of equity awards granted at the beginning of the year plus an opportunity for an additional year-end incentive award based on the Company’s actual performance for 2015. In this manner, the CEO’s compensation will continue to be completely at-risk based on the Company’s and Mr. Fairbank’s performance. The Committee and the independent directors continue to believe that the compensation program aligns Mr. Fairbank’s compensation with the Company’s performance over the appropriate time horizons and supports the Company’s executive compensation goals and principles. The Committee and the independent directors determined that for Mr. Fairbank’s 2015 compensation program a total target compensation amount of $17.5 million, the same total target compensation for 2014, was appropriate.
| | 2017 PROXY STATEMENT Based on this framework, in January 2015
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| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
Company’s performance assessed on the basis of Adjusted ROA relative to the KBW Index, and the number of shares issued at settlement will be reduced if the Company’s Adjusted ROA for one or more fiscal years completed during the performance period is not positive, no matter how well the Company performs relative to the peer group. After the end of the three-year performance period, the Committee will certify the Company’s performance and issue the corresponding number of shares of the Company’s common stock, if any, in accordance with the revised metrics set forth in the table below. The table below shows the revised potential payouts based on specific Company performance results. Payouts will range between the values shown below for performance that falls between the performance results shown in the table. For example, Adjusted ROA performance at the 50th percentile of peers will earn 90% of target payout, rather than 100% as in previous years. | | | | | | | | | | | | | | | Relative Metric: Adjusted ROA | | | | | ³80th Percentile | | 55th Percentile | | 25th Percentile | | < 25th Percentile | Number of years with positive Adjusted ROA: | | Three | | 150% | | 100% | | 40% | | 0% | | Two | | 125% | | 83% | | 33% | | 0% | | One | | 100% | | 67% | | 27% | | 0% | | None | | 0% | | 0% | | 0% | | 0% |
Beginning with performance share awards granted in 2017, the Company’s positive Adjusted ROA must be at least at the 25th percentile of peers, rather than the 20th percentile, for any performance shares to vest. Similarly, target payout will be achieved at the 55th percentile of peers instead of the 50th percentile, and the maximum payout can only be achieved if the Company performs at the 80th percentile of peers, instead of the 75th percentile. The graph below illustrates the revised performance metrics: | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 53 |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
2017 CEO Compensation Decisions Based on the revised CEO compensation program, in February 2017 the Committee and the independent directors granted to Mr. Fairbank the following compensation: ∎ | | a performance share award under which he may receive from 0% to 150% of a target number of 116,729101,344 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 2015,2017, through December 31, 2017. Mr. Fairbank also received 2019; and |
∎ | | a grant of 115,812 81,486non-statutory stock options at an exercise price of $74.96$86.34 per share (which was the fair market value of the Company’s common stock on the grant date) and a grant of 23,346 stock-settled RSUs. The Committee also determined that Mr. Fairbank will have an opportunity to receive an award in late 2015 or early 2016.. |
The Committee also determined that Mr. Fairbank will have an opportunity to receive an incentive award in late 2017 or early 2018. Any such award will consist of deferred cash, an equity-based award or both and will pay out or vest after a three-year deferral period. The Committee and the independent directors will have absolute discretion to determine whether to make the award, the form of the award and the value of the award relative to the target amount of $7 million, and will base these determinations on the Committee’s evaluation of the Company’s performance in 2017 relative to the same factors described earlier under “2016 CEO Compensation Program –Year-End Incentive Opportunity” related to financial and operating performance, governance and risk management, strategic performance and winning with our customers and associates. The maximum value of the award, if granted, will not exceed one and a half times the target value. The Company expects that any such award will be subject to performance-based vesting and clawback provisions similar to provisions applicable to the 2016year-end incentive opportunity. Goals and Principles As with the CEO, the Committee seeks to align the interests of the other named executive officers with the interests of our stockholders by linking compensation to Company performance and the NEOs’ contribution to that performance over the appropriate time horizons, while supporting safety and soundness and appropriately balancing risk. The Committee takes into account each NEO’s 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 NEO’s performance. In determining 2016 NEO compensation, the Committee also considered the specific factors discussed below under “Equity Incentive Awards” beginning on page 58. Final decisions regarding NEO compensation are made by the independent directors. In this section, “NEO Compensation,” the term “NEO” refers to the named executive officers other than the CEO. NEO Compensation Components The NEOs traditionally receive a mix of approximately 20% cash and 80% equity-based compensation, consisting of: cash salary, RSU salary, and cash-settled RSUs, which are determined at the beginning of each performance year; and long-term incentive awards, which are determined following the end of each performance year based on the Committee’s evaluation of Company and individual performance during the past year. The long-term incentive awards are equity-based and may consist of performance shares, stock-settled RSUs, and stock options. All of these equity-based awards are subject to deferred vesting over a three-year period. The NEOs do not receive cash bonuses. | | | | | | | | | 54 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
The chart below shows these elements of NEO compensation as an approximate percentage of NEO total target compensation:(1) (1) | Due to hismid-year appointment to the target amountposition of $5,250,000, and will base these determinations onChief Financial Officer, Mr. Blackley’s 2016 compensation varied slightly from the Committee’s evaluation of the Company’s performance in 2015 relative to the same financial, operating, safety and soundness and strategic factors described earlier under “2014 CEO Compensation Decisions – Year-End Incentive Opportunity.” The maximum value of the award, if granted, will not exceed one and a half times the target value. The Company expects that any such award will be subject to performance-based vesting and clawback provisions similar to provisions applicable to the 2014 year-end incentive opportunity.The terms of the performance share, stock option and stock-settled RSU awards granted to Mr. Fairbank in January 2015 are substantially similar to the terms described earlier under “2014 CEO Compensation Decisions,” including the application of performance-based vesting and clawback provisions.chart above. See “Additional Performance Conditions and Recovery Provisions” on page 44below for more details.
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 linkinginformation regarding Mr. Blackley’s 2016 compensation to performance over the appropriate time horizons while supporting safety and soundness and appropriately balancing risk. The Committee annually reviews and approves theprogram. For 2017, Mr. Blackley’s compensation structure for all of our executive officers, including those who are ultimately reported as NEOs, and makes recommendations to the independent directors for final approval. The Committee takes into account each NEO’s 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 NEO’s performance. In determining 2014 NEO compensation, the Committee also considered the specific factors discussed below. Final decisions regarding NEO compensation are made by the independent directors.
2014 NEO Compensation Decisions
The 2014 NEO compensation program approved by the Committee and the independent directors was designed to beis consistent with the Company’s other NEOs.
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See “Additional Performance Conditions and Recovery Provisions” on page 60 for more details regarding the performance and recovery provisions applicable to each element of compensation that the Committee approved for the 2015 performance year for the named executive officers. 2016 NEO Compensation Program The Committee annually reviews and approves the compensation structure for all of our executive officers, including those who are ultimately reported as NEOs, and makes recommendations to the independent directors for final approval. In February, 2016 the Committee and the independent directors approved the 2016 compensation program which is designed to be consistent with the Company’spay-for-performance philosophy and is generally consistent with the 2015 compensation program. The Committee believes that this pay mix balances stockholder interests while effectively rewarding and motivating key talent. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 55 |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
The table below summarizes the NEO compensation program that the Committee and the independent directors approved for the 2016 performance year. | | | | | | | | | | | | | | | | | | | | | Compensation Element(1) | | | | Timing of Award Determination | | | | Basis for Award | | | | Vesting Schedule | | | | Performance and Recovery Provisions | | | Base Salary – Cash | | | | January 2016 | | | | Overall experience, skills, performance, and knowledge | | | | Paid in cash throughout the performance year | | | | Not applicable | | | Base Salary – RSUs | �� | | | January 2016 | | | | Portion of base salary delivered in RSUs | | | | Awarded as RSUs which settle in cash on February 15 following the performance year | | | | Not applicable | | | Cash Bonus | | | | Not applicable | | | | Not applicable | | | | Not applicable | | | | Not applicable | | | Cash-Settled RSUs | | | | February 2017 | | | | Reward for 2016 Company performance | | | | 3-year ratable vesting | | | | ∎ Misconduct Clawback | | | Stock Options | | | | February 2017 | | | | Reward for 2016 Individual Performance and Incentive for Long-Term Performance | | | | 3-year ratable vesting; expires in 10 years | | | | ∎ Performance-based vesting provisions ∎ Misconduct clawback | | | Performance Shares | | | | | | | | | | Vest at the end of the 3-year performance period; the number of shares vesting depends on achievement of performance factors | | | | ∎ Performance share reduction ∎ Misconduct clawback ∎ Financial restatement clawbacks | | | Stock-Settled RSUs | | | | | | | | | | 3-year ratable vesting | | | | ∎ Performance-based vesting provisions ∎ Misconduct clawback |
(1) | Mr. Blackley was appointed to the position of Chief Financial Officer in May 2016. As a result, his 2016 compensation reflects his pay in his prior role as Executive Vice President and Controller of the Company. See below for more information regarding Mr. Blackley’s 2016 compensation program. Beginning with performance year 2017, Mr. Blackley’s compensation program is consistent with the 2013compensation program. Base salary remains a smaller portion of total target compensation than equity based vehicles, and cash bonuses are not included in the 2014 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 2014other NEOs.
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Based on the above framework, the Committee and the independent directors determined the 2016 total target compensation for each NEO by considering the following factors: ∎ | | Each NEO’s performance relative to the Company’s strategic objectives; |
∎ | | Capital One’s historical performance; |
∎ | | The role and qualifications of each NEO (for example, the NEO’s scope of responsibility, experience and tenure and the demonstration of competencies consistent with the Company’s values and the ability to deliver strong, sustainable business results); |
∎ | | Appropriate internal pay differentials and the desire to foster teamwork and collaboration; |
| | | | | | | | | 56 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
∎ | | 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 2014 performance year, the Committee chose to defer a significant portion of each NEO’s base salary until the end of the year. Rather than award each NEO a base salary entirely in cash, the 2014 base salary for NEOs was delivered in a mix of cash (approximately 20% of total target compensation) and RSUs that settled in cash on February 15, 2015 (approximately 15% of total target compensation). In this way, the 2014
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Mr. Blackley was appointed as the Company’s Chief Financial Officer effective May 9, 2016; prior to this appointment, he served as Executive Vice President and Controller of the Company. As a result, his compensation for the 2016 performance year reflects a compensation program applicable to Executive Vice Presidents of the Company. Mr. Blackley’s 2016 compensation program was substantially similar to the compensation program for the other NEOs, except that: (1) he received a slightly higher percentage of his compensation as salary (23% instead of 20% of total target compensation); (2) he received a slightly lower percentage of his compensation as long-term incentive opportunity (47% instead of 50% of total target compensation); and (3) he did not receive stock options. Beginning with the 2017 performance year, Mr. Blackley’s compensation program is consistent with the other NEOs. Base Salaries For the 2016 performance year, the Committee chose to defer a significant portion of each NEO’s base salary until the end of the year. Rather than award each NEO a base salary entirely in cash, the 2016 base salary for NEOs was delivered in a mix of cash (approximately20-30% of total target compensation) and RSUs that settled in cash on February 15, 2017 (approximately 15% of total target compensation). In this way, the 2016 compensation program further deferred cash compensation for each NEO and placed it at risk to the performance of the Company’s stock price for the entire performance year. In January 2014, the Committee and the independent directors approved 2014 base salaries for the NEOs, including the portion of base salary delivered as RSUs, ranging from $1,588,056 to $2,655,071. Individual details for each NEO are provided in the table below showing compensation by performance year.
Year-End Incentive Awards
In addition to base salary, in January 2015 the Committee determined to award each NEO various equity-based incentive awards as a reward for Company and individual performance in 2014.
Cash-Settled RSU Awards
In January 2015, the Committee and the independent directors approved awards of cash-settled RSUs for the NEOs ranging from $942,247 to $1,575,060, representing a payout at 140% of the target award values established by the Committee in January 2014. 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 Company’s performance as described under “Year-End Incentive Opportunity” on page 38 in connection with the determinations by the Committee and the independent directors relating to the CEO’s year-end incentive awards.
Equity Incentive Awards
In January 2015, the Committee and the independent directors awarded various equity incentive awards to the NEOs for the 2014 performance year.
In January 2016, the Committee and the independent directors approved 2016 base salaries for the NEOs, ranging from $1,040,039 to $2,797,016, which consisted of a cash portion ranging from $630,000 to $1,598,000 and a cash-settled RSU portion ranging from $410,039 to $1,199,016. Individual details for each NEO are provided in the table below showing compensation by performance year. Year-End Incentive Awards A portion of the NEO’s 2016 compensation consisted of an opportunity for ayear-end incentive award based on the individual NEO and Company performance in 2016. This award, if granted, may consist of stock options, performance shares, and/or RSUs. In February 2017 the Committee and the independent directors determined to award each NEO various equity-based incentive awards as recognition of Company and individual performance in 2016. Cash-Settled RSU Awards In February 2017, the Committee and the independent directors approved awards of cash-settled RSUs for the NEOs ranging from $574,075 to $1,199,004, representing a payout at 100% of the target award values established by the Committee in February 2016 based on actual Company performance in 2016. Individual details for each NEO are provided in the table below showing compensation by performance year. The assessment of Company performance for the NEOs is consistent with the assessment performed in connection with the CEOyear-end incentive award. The Committee and the independent directors determined that these awards were appropriate in light of the Company’s performance as described under“Year-End Incentive Opportunity” on page 48 in connection with the determinations by the Committee and the independent directors relating to the CEO’syear-end incentive awards. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 57 |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
Equity Incentive Awards In February 2017, the Committee and the independent directors awarded various equity incentive awards to the NEOs for the 2016 performance year as recognition for individual NEO performance in 2016 and to drive further performance over the long term. At Capital One, equity incentive awards are linked to performance in two ways: ∎ | | The size of the award is based on each NEO’s individual performance assessment for the year just completed; and |
∎ | | The ultimate value of the award is dependent on Capital One’s performance over time. Equity incentive awards are designed to emphasize elements that are of particular importance to Capital One given the Company’s unique goals and continually evolving business strategies and objectives. In determining the actual amounts to be awarded to each NEO, the Committee considered each NEO’s contribution to the Company’s performance for 2014 as well as the individual performance of each NEO. The Committee also received input from the CEO on his assessment of each NEO’s individual performance and his recommendations for compensation of the NEOs. The CEO also assessed each NEO’s performance against one or more specific objectives designed to evaluate the degree to which the NEO balanced risks inherent in the NEO’s 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 before being presented to the Committee and the independent directors for their consideration.
The equity incentive awards consisted of stock-settled RSUs, performance share awards and stock options. The terms of the performance share awards are substantially similar to the terms of the performance share awards granted to our CEO, as described earlier under “2015 CEO Compensation Decisions.” The NEO stock options and stock-settled RSUs vest ratably in one-third increments starting on the first anniversary of the grant date and are subject to performance-based vesting and clawback provisions as discussed below under “Additional Performance Conditions and Recovery Provisions” on page 44. The stock options have an exercise price of $74.96 per share, which was the fair market value of the Company’s common stock on the date of grant.
Mr. Crawford, the Company’s Chief Financial Officer, was awarded 60,664 non-statutory stock options, 27,515 stock-settled RSUs and a target amount of 16,509 performance shares with a total grant date value for all three awards of $4,216,715. The Committee and the independent directors determined to grant these awards based upon Mr. Crawford’s leadership in managing the Company’s balance sheet in 2014, particularly the Company’s capital generation and distribution. The Committee and the independent directors also considered Mr. Crawford’s continued leadership in driving well-managed processes within the Company’s finance operations and across the enterprise and his positioning of Capital One for Basel-related and other regulatory initiatives, as well as his contributions providing strategic market advice and enhancing transparency and communication to investors.
Mr. Schneider, President, Card, was awarded 46,374 non-statutory stock options, 21,034 stock-settled RSUs and a target amount of 12,620 performance shares with a total grant date value for all three awards of $3,223,447. The Committee and the independent directors determined to grant these awards based upon the strong performance of the Credit Card business in 2014, particularly the year-over-year growth driving increased net income for Domestic Card with strong return on assets while maintaining focus on resiliency, as well as his leadership positioning the Domestic Card business for future strong performance and managing the partnership business. The Committee and the independent directors also considered Mr. Schneider’s leadership implementing the Company’s digital agenda while continuing to enhance the compliance and risk management programs within the business.
Mr. Finneran, General Counsel and Corporate Secretary, was awarded 31,660 non-statutory stock options, 15,956 stock-settled RSUs and a target amount of 9,574 performance shares with a total grant date value for all three awards of $2,392,134. The Committee and the independent directors determined to grant these awards based upon Mr. Finneran’s management of the Company’s engagement with a broad range of regulators and other stakeholders in an environment of heightened regulatory scrutiny and examination. In addition, the Committee and the independent directors considered his leadership enhancing the Corporation’s governance framework in 2014, his success in managing the Company’s litigation portfolio and his implementation of well-managed processes across his organization.
Mr. Yajnik, the Company’s President, Financial Services, was awarded 29,688 non-statutory stock options, 14,962 stock-settled RSUs and a target amount of 8,977 performance shares with a total grant date value for all three awards of $2,243,074. The Committee and the independent directors determined to grant these awards based upon the strong performance of the Auto business in 2014, including growth in originations, as well as his leadership managing credit risk in Auto and Home Loans. The Committee and the independent directors also considered Mr. Yajnik’s success implementing a comprehensive process improvement program and enhanced technological solutions across both businesses.
NEO Compensation by Performance Year
The table below shows actual NEO compensation as it is attributable to the performance year indicated.
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Equity incentive awards are designed to emphasize elements that are of particular importance to Capital One given the Company’s unique goals and continually evolving business strategies and objectives. In determining the actual amounts to be awarded to each NEO, the Committee considered each NEO’s contribution to the Company’s performance for 2016 as well as the individual performance of each NEO. The Committee also received input from the CEO on his assessment of each NEO’s individual performance and his recommendations for compensation of the NEOs. The CEO also assessed the degree to which the NEO balanced risks inherent in the NEO’s role. These assessments included the use of both quantitative and qualitative risk measures and were compiled by the Chief Risk Officer and reviewed by the Chief Human Resources Officer, and separately the Chief Auditor compiled and reviewed the assessment for the Chief Risk Officer, before being presented to the Committee and the independent directors for their consideration. The equity incentive awards consisted of stock-settled RSUs, performance share awards and stock options. The terms of the performance share awards are substantially similar to the terms of the performance share awards granted to our CEO, as described earlier under “2016 CEO Compensation Program—Performance Share Award” and “2016 CEO Compensation Program.” The NEO stock options and stock-settled RSUs vest ratably inone-third increments starting on the first anniversary of the grant date and are subject to performance-based vesting and clawback provisions as discussed below under “Additional Performance Conditions and Recovery Provisions” on page 60. The stock options have an exercise price of $86.34 per share, which was the fair market value of the Company’s common stock on the date of grant. Mr. Blackley, the Company’s Chief Financial Officer, was awarded 16,939 stock-settled RSUs and a target amount of 5,647 performance shares with a total grant date value for both awards of $1,950,075. The Committee and the independent directors determined to grant these awards based upon Mr. Blackley’s leadership of the Company’s financial reporting, disclosure and related controls, as well as a successful transition into his new role as the Company’s CFO managing investor relations, tax, accounting, and Global Finance business risk. Mr. Crawford, the Company’s Head of Finance and Corporate Development (effective May 9, 2016) and Chief Financial Officer (prior to May 9, 2016), was awarded 41,317non-statutory stock options, 23,124 stock-settled RSUs and a target amount of 13,875 performance shares with a total grant date value for all three awards of $4,081,830. The Committee and the independent directors determined to grant these awards based upon Mr. Crawford’s successes in integrative thinking and problem solving, driving the Company’s financial discipline and process improvement, and strengthening the effectiveness of the Finance leadership team, including the successful transition of Mr. Blackley to the role of CFO. Mr. Finneran, the Company’s General Counsel and Corporate Secretary, was awarded 23,738non-statutory stock options, 14,762 stock-settled RSUs and a target amount of 8,857 performance shares with a total grant date value for all three awards of $2,549,068. The Committee and the independent directors determined to grant these awards based upon Mr. Finneran’s continued guidance and influence across the enterprise, sound judgment, and strategic leadership. In addition, the Committee and the independent directors considered Mr. Finneran’s ability to deliver advantageous results across regulatory, contractual, negotiation, investigation, and litigation matters. Mr. LaPrade, the Company’s Chief Enterprise Services Officer and Chief of Staff to the CEO, was awarded 27,955non-statutory stock options, 15,646 stock-settled RSUs and a target amount of 9,388 performance shares with a total grant date value for all three awards of $2,761,806. The Committee and the independent directors determined to grant these awards based upon the strong performance of the Company’s information technology, brand marketing, and digital banking functions in 2016. The Committee and the independent directors also considered Mr. LaPrade’s dedication to the Company’s mission, his empowering, collaborative, and inspirational leadership, and his ability to drive transformational change. | | | | | | | | | | | | | | | Name | | Performance Year | | Cash Salary | | Cash Bonus | | Cash-Settled RSUs (1) | | Stock-Settled Awards (2) | | Option Awards | | Total | Stephen S. Crawford | | 2014 | | $1,530,000 | | $0 | | $2,700,130 | | $3,300,039 | | $916,676 | | $8,446,845 | | 2013 | | $1,326,923 | | $0 | | $2,550,531 | | $2,720,606 | | $755,714 | | $7,353,774 | | | | | | | | | | | 2014 | | $1,119,000 | | $0 | | $1,975,275 | | $2,522,704 | | $700,744 | | $6,317,723 | Ryan M. Schneider | | 2013 | | $1,097,000 | | $0 | | $2,057,566 | | $2,193,657 | | $609,345 | | $5,957,568 | | | 2012 | | $1,065,000 | | $0 | | $1,677,443 | | $1,704,018 | | $473,342 | | $4,919,803 | | | | | | | | | | | 2014 | | $977,000 | | $0 | | $1,723,258 | | $1,913,729 | | $478,405 | | $5,092,392 | John G. Finneran, Jr. | | 2013 | | $957,000 | | $0 | | $1,795,055 | | $1,913,649 | | $478,413 | | $5,144,117 | | | 2012 | | $929,000 | | $0 | | $1,463,232 | | $1,858,053 | | $464,511 | | $4,714,796 | | | | | | | | | Sanjiv Yajnik | | 2014 | | $915,000 | | $0 | | $1,615,303 | | $1,794,467 | | $448,606 | | $4,773,376 |
| | | | | | | | | 58 | (1) | For 2014, includes cash-settled restricted stock units (restricted stock unit portion of base salary granted in January 2014 and restricted stock units granted in January 2015). | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
| (2) | For 2014, includes stock-settled restricted stock units and performance share award granted in January 2015. |
This table is presented to show how the Committee views compensation actions
Mr. Yajnik, the Company’s President, Financial Services, was awarded 22,462non-statutory stock options, 13,969 stock-settled RSUs and a target amount of 8,381 performance shares with a total grant date value for all three awards of $2,412,100. The Committee and the independent directors determined to grant these awards based upon the solid performance of the Auto business in 2016, including continued disciplined growth in originations, as well as his leadership in driving digital innovation, process improvement, and customer satisfaction across operational, staff and technology functions in Financial Services. Mr. Schneider, the Company’s President, Card until November 28, 2016, and Senior Advisor (anon-executive advisory role) thereafter, was awarded 31,560non-statutory stock options, 17,663 stock-settled RSUs and a target amount of 10,598 performance shares with a total grant date value for all three awards of $3,117,846. The Committee and the independent directors determined to grant these awards in recognition of the strong performance of the Credit Card business in 2016, particularly the year-over-year growth for Domestic Card, as well as Mr. Schneider’s leadership in enhancing compliance and risk management programs within the business. The Committee and the independent directors also considered Mr. Schneider’s leadership in furthering the Company’s digital agenda while enhancing the customer experience and increasing customer satisfaction. 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 | | | | Cash-Settled RSUs(1) | | | | Stock-Settled Awards(2) | | | | Option Awards | | | | Total | | | R. Scott Blackley | | | | 2016 | | | | $630,000 | | | | $0 | | | | $984,114 | | | | $1,950,075 | | | | $0 | | | | $3,564,189 | | | Stephen S. Crawford | | | | 2016 | | | | $1,598,000 | | | | $0 | | | | $2,398,020 | | | | $3,194,494 | | | | $887,336 | | | | $8,077,850 | | | | | | | 2015 | | | | $1,552,000 | | | | $0 | | | | $2,328,082 | | | | $3,100,847 | | | | $861,334 | | | | $7,842,263 | | | | | | | 2014 | | | | $1,530,000 | | | | $0 | | | | $2,700,130 | | | | $3,300,039 | | | | $916,676 | | | | $8,446,845 | | | John G. Finneran, Jr. | | | | 2016 | | | | $1,020,000 | | | | $0 | | | | $1,530,074 | | | | $2,039,264 | | | | $509,804 | | | | $5,099,142 | | | | | | 2015 | | | | $990,000 | | | | $0 | | | | $1,486,032 | | | | $1,979,326 | | | | $494,803 | | | | $4,950,161 | | | | | | | 2014 | | | | $977,000 | | | | $0 | | | | $1,723,258 | | | | $1,913,729 | | | | $478,405 | | | | $5,092,392 | | | Frank G. LaPrade, III | | | | 2016 | | | | $983,000 | | | | $0 | | | | $1,474,122 | | | | $2,161,436 | | | | $600,370 | | | | $5,218,928 | | | Sanjiv Yajnik | | | | 2016 | | | | $966,000 | | | | $0 | | | | $1,448,084 | | | | $1,929,699 | | | | $482,401 | | | | $4,826,184 | | | | | | 2015 | | | | $937,000 | | | | $0 | | | | $1,406,056 | | | | $1,873,662 | | | | $468,416 | | | | $4,685,134 | | | | | | | 2014 | | | | $915,000 | | | | $0 | | | | $1,615,303 | | | | $1,794,467 | | | | $448,606 | | | | $4,773,376 | | | Ryan M. Schneider | | | | 2016 | | | | $1,220,000 | | | | $0 | | | | $1,830,066 | | | | $2,440,054 | | | | $677,792 | | | | $6,167,912 | | | | | | | 2015 | | | | $1,146,000 | | | | $0 | | | | $1,720,052 | | | | $2,633,133 | | | | $731,408 | | | | $6,230,593 | | | | | | | 2014 | | | | $1,119,000 | | | | $0 | | | | $1,975,275 | | | | $2,522,704 | | | | $700,744 | | | | $6,317,723 |
(1) | For 2016, includes cash-settled restricted stock units (restricted stock unit portion of base salary granted in February 2016 and to which year the compensation awards relate, but it differs substantially from the Summary Compensation Table on page 53restricted stock units granted in February 2017). |
(2) | For 2016, includes stock-settled restricted stock units and performance share award granted in February 2017. |
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 69 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 cash-settled RSU, stock option, stock-settled RSU and performance share awards granted in January 2015February 2016 for the 20142016 performance year, for example, are shown in the above table as 20142015 compensation. The Summary Compensation Table reports equity-based awards only in the year in which they were granted. |
| | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 59 |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
∎ | | The Summary Compensation Table reports the change in pension value andnon-qualified 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 employees for 2016, and security. These programs provide some level of personal benefit and are not generally available to all associates. For 2014, 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; |
∎ | | The ability to participate in a comprehensive voluntary annual health screening; |
∎ | | An automobile lease;lease or the use of a driver who also provides personal security; and |
∎ | | The monitoring and maintenance of an electronic home security system. |
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 52. 2015 NEO Compensation Decisions
For 2015, the Committee and the independent directors approved an NEO compensation program that is substantially similar to the 2015 program. The plan consists of multiple compensation vehicles that directly link the NEOs’ compensation with the Company’s performance over multiple time horizons, align the NEOs’ interests with the interests of the Company’s stockholders, support safety and soundness and encourage appropriate risk-taking.
Additional details on these programs can be found in the “Named Executive Officer Compensation” section beginning on page 68. 2017 NEO Compensation Program Each year, the Committee reviews the NEO compensation program in light of Company performance data, peer comparator group performance data, historical pay information, data on specific market practices and trends, stockholder feedback, and other relevant points of information. The plan consists of multiple compensation vehicles that directly link the NEOs’ compensation with the Company’s performance over multiple time horizons, align the NEOs’ interests with the interests of the Company’s stockholders, support safety and soundness and encourage appropriate risk-taking. Based on feedback received from stockholders, the Committee and the independent directors revised the performance metrics applicable to performance shares granted in 2017, to require a more rigorous set of relative Company performance hurdles related to the potential payouts made in connection with the awards. For a detailed description of these changes, see “Chief Executive Officer Compensation – 2017 CEO Compensation Program.” The 2017 NEO compensation program is otherwise substantially similar to the 2016 program. Additional Performance Conditions and Recovery Provisions The awards granted to our named executive officers include the following provisions that are designed to further enhance alignment between pay and performance and balance the risks that our incentive compensation programs might otherwise encourage: ∎ | | Performance-based vesting provisions; |
∎ | | Performance share reduction; Clawback
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∎ | | Misconduct clawback provisions; and |
∎ | | Financial restatement clawbacks. |
These terms and conditions apply to incentive awards granted to every executive officer and not just to the named executive officers. Performance-Based Vesting Provisions The ultimate value that our named executive officers receive from equity-based incentive 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 is also conditioned upon the Company continuing to meet certain operating performance thresholds. The vesting of | | | | | | | | | 60 | | | | | | CAPITAL ONE FINANCIAL CORPORATION Performance-Based Vesting Provisions
| | 2017 PROXY STATEMENT The ultimate value that our named executive officers receive from equity-based incentive 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 is also conditioned upon the Company continuing to meet certain operating performance thresholds. The vesting of awards subject to performance-based vesting provisions is conditioned upon the Company meeting specific performance thresholds for each and every fiscal year ending in the three-year vesting period. 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, the awards subject to performance-based vesting remain at risk of complete forfeiture over the three-year vesting period.
Since January 2012, performance-based vesting provisions have applied
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| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
awards subject to performance-based vesting provisions is conditioned upon the Company meeting specific performance thresholds for each and every fiscal year ending in the three-year vesting period. 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, the awards subject to performance-based vesting remain at risk of complete forfeiture over the three-year vesting period. Performance-based vesting provisions apply to the following awards: ∎ | | All named executive officer stock option awards; |
∎ | | All named executive officer restricted stock and stock-settled RSUs; and |
∎ | | All CEO cash-settled RSUs. In setting the threshold operating performance conditions, the Company took into account discussions with federal bank regulators. These performance conditions do not present any upside potential for the named executive officers’ compensation but instead create an additional
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In setting the threshold operating performance conditions, the Company took into account discussions with federal bank regulators. These performance conditions do not present any upside potential for the named executive officers’ compensation but instead create an additionalat-risk element to the compensation that has been awarded to them. Imposing these additional performance conditions is designed to further reflect our approach of balancing risk and performance over the long-term. For awards granted since January 2014, vesting is conditioned on the Company achieving positive Core Earnings (as defined below). If Core Earnings are not positive for any fiscal year in the vesting period, the named executive officer will automatically forfeit 50% ofone-years’ worth of vesting (i.e.,one-sixth of the total award). In addition, the Committee will determine the extent to which any named executive officer was accountable for the outcome and, based on such determination, the Committee will decide whether any or all of the remaining 50% ofone-years’ worth of vesting will also be forfeited. The Committee may also decide to delay the vesting of the applicable portion of the award not so forfeited. For the NEOs, these determinations will be made each year prior to the scheduled vesting date, based on the Core Earnings for the fiscal year ended prior to such vesting date. For the CEO, these determinations will be made prior to the scheduled vesting date at the end of the three-year vesting period, taking into account Core Earnings for each fiscal year within the period. Core Earnings focuses on whether profits are being generated by our basic business, as opposed to other factors that may not reflect business fundamentals. The terms of the applicable award agreements define “Core Earnings” to mean the Company’s net income available to common stockholders, excluding, on atax-adjusted basis, the impact of (i) impairment or amortization of intangible assets, (ii) 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 (iii) 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 Company’s 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. Performance Share Reduction As described above, the performance share awards granted to the named executive officers employ Adjusted ROA as the performance metric, with the Company’s performance assessed on the basis of Adjusted ROA relative to a comparator group consisting of companies in the KBW Index. Each of these performance share awards is subject to reduction in the event that the Company’s Adjusted ROA for any fiscal year in the three-year performance period is not positive. These reductions will occur regardless of how well the Company’s 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 byone-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 byone-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 the comparator group, the performance share awards are at risk of complete forfeiture if we do not achieve a threshold level of performance on an absolute basis. | | | | | CAPITAL ONE FINANCIAL CORPORATION For awards granted in January 2014 and 2015, vesting is conditioned on the Company achieving positive Core Earnings. If Core Earnings are not positive for any fiscal year in the vesting period, the named executive officer will automatically forfeit 50% of one-years’ worth of vesting (i.e., one-sixth of the total award). In addition, the Committee will determine the extent to which any named executive officer was accountable for the outcome and, based on such determination, the Committee will decide whether any or all of the remaining 50% of one-years’ worth of vesting will also be forfeited. The Committee may also decide to delay the vesting of the applicable portion of the award not so forfeited. For the NEOs, these determinations will be made each year prior to the scheduled vesting date, based on the Core Earnings for the fiscal year ended prior to such vesting date. For the CEO, these determinations will be made prior to the scheduled vesting date at the end of the three-year vesting period, taking into account Core Earnings for each fiscal year within the period.
| | 2017 PROXY STATEMENT Core Earnings focuses on whether profits are being generated by our basic business, as opposed to other factors that may not reflect business fundamentals. The terms of the applicable award agreements define “Core Earnings” to mean the Company’s net income available to common stockholders, excluding, on a tax-adjusted basis, the impact of (i) impairment or amortization of intangible assets, (ii) 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 (iii) 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 Company’s
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| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
“Adjusted ROA” means the ratio, expressed as a percentage, of (a) the Company’s net income available to common stockholders, excluding, on atax-adjusted basis, the impact of impairment or amortization of intangible assets to (b) the Company’s average tangible assets for the period. This metric is intended to reflect our earnings capacity by focusing on a component of our net income relative to our tangible assets. Misconduct Clawback Provisions Beginning with awards granted in January 2013, every incentive award granted to our executive officers includes a clawback provision designed to provide the Committee the authority to recover previously awarded compensation in the event that the Committee determines (i) there has been misconduct resulting in either a violation of law or of Company policy that has caused significant financial or reputational harm to the Company and (ii) either the executive committed the misconduct or failed in his or her responsibility to manage or monitor the applicable conduct or risks. These clawback provisions have been designed to apply broadly, to a range of potential manifestations of misconduct at any level of the executive’s organization. The unvested portions of all applicable incentive awards will be subject to recovery and at risk of complete forfeiture. In each case, the Committee will determine the amount of compensation to recover, allowing the Committee to calibrate each recovery to the facts and circumstances giving rise to the need for such recovery. In the event the Committee exercises the clawback provisions in the future, the Company intends to disclose the aggregate amount that the Committee has determined to recover, so long as the underlying event has already been publicly disclosed in the Company’s filings with the SEC. Financial Restatement Clawbacks All performance share awards to our executive officers include a clawback that is triggered in the event that the Company issues a restatement of its financial statements, or announces that it expects to issue a restatement within three years after the vesting of an award. If an executive would have been entitled to fewer shares on the vesting date under the restated financial statements, the executive may be required to return to the Company the excess shares awarded to him or her or, in the event he or she has sold or otherwise transferred the shares, he or she may be required to return the net proceeds from the sale or transfer. 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, stockholder feedback, and other relevant points of information to inform its business judgment. See “Our Compensation Governance Cycle” on page 42 for details regarding the Committee’s annual activities. Use of Outside Consultants for CEO Compensation The Committee engages FW Cook to assist in the design of the CEO compensation program. FW Cook 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. See the discussion under “Compensation Committee – Compensation Committee Consultant” in the “Corporate Governance at Capital One” section on page 27 for additional information about FW Cook. Use of Outside Consultants for NEO Compensation The Chief Human Resources Officer and other members of the Company’s 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. FW Cook also provides | | | | | | | | | 62 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 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. 2017 PROXY STATEMENT
Performance Share Reduction
As described above, the performance share awards granted to the named executive officers since January 2012 employ Adjusted ROA as the performance metric, with the Company’s performance assessed on the basis of Adjusted ROA relative to a comparator group consisting of companies in the KBW Index. Each of these performance share awards is subject to reduction in the event that the Company’s Adjusted ROA for any fiscal year in the three-year performance period is not positive. These reductions will occur regardless of how well the Company’s 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 the comparator group, the performance share awards are at risk of complete forfeiture if we do not achieve a threshold level of performance on an absolute basis.
“Adjusted ROA” means the ratio, expressed as a percentage, of (a) the Company’s net income available to common stockholders, excluding, on a tax-adjusted basis, the impact of impairment or amortization of intangible assets to (b) the Company’s average tangible assets for the period. This metric is intended to reflect our earnings capacity by focusing on a component of our net income relative to our tangible assets. For the January 2014 awards, the credit portion of other than temporary impairment of the securities portfolio is also excluded, on a tax-adjusted basis, from the Company’s net income available to common stockholders for purposes of determining Adjusted ROA.
Clawback Provisions
Capital One has included clawback provisions in certain equity awards since 2011. Beginning with awards granted in January 2013, every incentive award granted to our executive officers, including our named executive officers, includes a clawback provision designed to provide the Committee the opportunity to recover compensation previously awarded in the event the clawback is triggered. Under these clawback provisions, the Committee will determine the amount of compensation to recover in the event that the Committee determines (i) there has been misconduct resulting in either a violation of law or of Company policy that in either case causes significant financial or reputational harm to the Company and (ii) either the executive committed the misconduct or failed in his or her responsibility to manage or monitor the applicable conduct or risks. The portions of all applicable incentive awards that are unvested at the time the Committee makes a determination to exercise the clawback provisions will be subject to recovery and at risk of complete forfeiture.
In the event the Committee exercises the clawback provisions in the future, the Company intends to disclose the aggregate amount that the Committee has determined to recover, so long as the underlying event has already been publicly disclosed in the Company’s filings with the SEC. This disclosure would appear in the proxy following any such determination by the Committee and would provide the aggregate amount of recovery for each event if there is more than one applicable event.
Financial Restatement Clawbacks
All performance share awards to our executive officers beginning in January 2011 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. This restatement clawback is 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.
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 F.W. Cook to assist in the design of the CEO compensation program. F.W. Cook 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
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| SECTION V – Compensation Committee Consultant” in the “Corporate Governance at Capital One” section beginning on page 14 for additional information about F.W. Cook.Use of Outside Consultants for NEO Compensation
The Chief Human Resources Officer and other members of the Company’s 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. F.W. Cook 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.
Management does not have a contractual arrangement with any compensation consultant to determine or recommend compensation programs for the NEOs. A consultant from F.W. Cook is present at Committee meetings during which CEO and NEO compensation is discussed and provides market data as well as an outsider’s perspective regarding CEO and NEO compensation practices. F.W. Cook 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.
F.W. Cook plays a lead role in evaluating the peer comparator group on an annual basis. Each year, a consultant from F.W.COMPENSATION DISCUSSION AND ANALYSIS
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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. Management does not have a contractual arrangement with any compensation consultant to determine or recommend compensation programs for the NEOs. A consultant from FW Cook is present at Committee meetings during which CEO and NEO compensation is discussed and provides market data as well as an independent perspective regarding CEO and NEO compensation practices. FW Cook has no other engagement with, and performs no other services for, Capital One besides the services described above. Market Data The Committee reviews 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. FW Cook plays a lead role in evaluating the peer comparator group on an annual basis. Each year, a consultant from FW Cook 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 Company’s percentile rank versus peer comparator companies across the following financial metrics: Revenue;
Assets;
∎ | | Net income available to common stockholders;stockholders |
∎ | | Loans held for investment;investment |
∎ | | Diluted earnings per share growth;growth |
∎ | | Return on average tangible common equity;equity |
∎ | | Tier 1 common capital ratio;ratio |
∎ | | Ratio of stock price to tangible book value;value |
∎ | | Ratio of stock price to earnings; andearnings |
∎ | | 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 adjustedreturn
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After reviewing this information, the Committee recommends a final peer comparator group to the independent directors for approval. The peer comparator group is reviewed each year and adjusted, as appropriate, so that the size, scope, performance and business focus of the peer comparator companies reflect Capital One’s competitive environment. For 2016, the peer comparator group included the following companies: | | | | | | | | | American Express | | | | Discover Financial Services | | | | Regions Financial | Bank of the peer comparator companies reflect Capital One’s competitive environment. After the peer comparator group was significantly adjusted in 2009 due to considerable consolidation within the peer comparator group caused by the turmoil in the financial sector, the same peer group has been used for competitive analysis when the Committee approved the 2010 through 2014 compensation programs and target award values.America Corporation | | | | Fifth Third Bancorp | | | | SunTrust Banks | BB&T Corporation | | | | J.P. Morgan Chase | | | | U.S. Bancorp | Citigroup | | | | PNC Financial Services | | | | Wells Fargo & Company |
The Committee believes that the peer comparator group reflects the competitive environment for the Company, particularly the performance and business focus of the companies in the peer comparator group and the competition for talent, and made this determination after considering, among other things, stockholder feedback as described earlier under “Consideration of 2016 Say on Pay Vote.” The Committee determined to maintain the same peer comparator group for purposes of designing the 2017 compensation programs, and approved the comparator group in July 2016. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 63 |
| | | SECTION V – COMPENSATION DISCUSSION AND ANALYSIS | American Express
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| | Fifth Third Bancorp | | Regions Financial | | | | Bank of America Corporation
| | J.P. Morgan Chase | | SunTrust Banks | | | | 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 Committee’s determination of the total compensation target values for the named executive officers. As of December 31, 2014, Capital One was positioned at or near the median of the peer comparator group in terms of total assets, revenues, net income, market value and ratio of price to tangible book value.
For purposes of designing the 2015 compensation programs, however, the Committee determined to adjust the peer comparator group by removing KeyCorp and including Discover Financial Services. The Committee believes that the revised peer comparator group better reflects the competitive environment for the Company, particularly the performance and business focus of the companies in the peer comparator group and the competition for talent, and made this determination after considering, among other things, stockholder feedback as described earlier under “Consideration of 2014 Say on Pay Vote.”
Typically, compensation data from the peer comparator group is used to inform the Committee’s determination of the total compensation target values for the named executive officers. As of December 31, 2016, Capital One was positioned at or near the median of the peer comparator group in terms of total assets, loans, deposits, revenues, net income, and market value. 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 understand the historical context that is relevant to current compensation decisions, such as the CEO and each NEO’s accumulated equity value. The tally sheets also help the Committee 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. Other Compensation Arrangements Pension andNon-Qualified Deferred Compensation Plans Capital One does not have any active pension plans for the NEOs. We offer a voluntary,non-qualified deferred compensation plan that restores participating NEOs, excluding the CEO, 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, excluding the CEO to defer additionalpre-tax compensation in order to save for retirement. 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. Each of our named executive officers participated in Capital One’s VoluntaryNon-Qualified Deferred Compensation Plan (“Plan”) in 2016. Details of the Plan can be found under “Capital One’s VoluntaryNon-Qualified Deferred Compensation Programs” on page 78. Employment Agreements Capital One typically does not enter into defined term employment agreements with the named executive officers in order to maintain maximum flexibility in establishing separation terms at the appropriate time and considering their 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 his employment terminates in connection with a change of control as well as compensation and benefits protections during the two year period following the 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 One’s 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 his or her leadership role up to and beyond the transaction date. In addition to compensation and benefits protections during atwo-year protection period after a change of control, the named executive officers are entitled to severance-type benefits under the agreements if their employment is actually terminated as a result of (or in anticipation of) certain merger and acquisition scenarios. | | | | | | | | | 64 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
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. Our program is designed so that our stockholders are not faced with disproportionate severance costs that may impair potential merger opportunities. In addition, our change of control agreements for executive officers do not provide for excise tax“gross-up” payments. The program also supports our ability to attract and retain talented executives by providing them with a competitive level of benefits. 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 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. 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, excluding the CEO, separates from Capital One, he or she is entitled to receive the amounts set forth in the Company’s Executive Severance Plan, which provides for a payment of up to 30% of the NEO’s current target total compensation plus partially subsidized health, dental and vision benefits through COBRA, term life continuation and outplacement services. The Committee may exercise its business judgment in approving additional amounts in light of all relevant circumstances, including the NEO’s term of employment, past accomplishments, reasons for separation from the Company, potential risks and the NEO’s willingness to restrict his or her future action(s), such as through an agreement not to compete or solicit the Company’s customers or employees. Capital One has asked certain NEOs to enter into various agreements that contain restrictive covenants related to confidentiality,non-competition,non-solicitation and ownership of work product. For additional information, see “Restrictive Covenants” in the “Named Executive Officer Compensation” section beginning on page 80. Upon retiring from the Company, employees are generally entitled to receive certain retiree medical benefits, including subsidized medical benefits for qualified individuals. Other Aspects of Executive Compensation Stock Ownership and Retention Requirements Consistent with their responsibilities to our stockholders, the executive officers 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 Compensation Arrangements PensionNEOs 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.
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. Each of our named executive officers participated in Capital One’s Voluntary Non-Qualified Deferred Compensation Plan (the “Plan”) in 2014. Details of the Plan can be found under “Capital One’s Voluntary Non-Qualified Deferred Compensation Programs” on page 63.
Employment Agreements
Capital One typically does not enter into defined term 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 One’s 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 his 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 executive officers no longer provide for excise tax “gross-up” payments. On March 1, 2011, Capital One delivered notice to all executive officers that their change of control agreements, which included excise tax gross-up provisions, 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 executive officer change of control agreements providing for a potential excise tax gross-up after a change of control have expired and been replaced with the new form of agreement that does not provide for an excise tax gross-up.
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 Company’s Executive Severance Plan, which provides for a payment of upOfficers
| | | | | | 3X |
Given that the CEO’s 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. Ownership requirements may be fulfilled using the following shares: Shares owned without restriction; Unvested restricted stock; Unvested stock-settled RSUs; Shares acquired through the Associate Stock Purchase Plan; and Shares owned through Capital One’s 401(k) Plan. The Committee reviews the guidelines and monitors the named executive officers’ compliance with them. New executive officers are given two years from the date of promotion to or appointment as an executive officer to 30% of the NEO’s current target total compensation plus partially subsidized 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 NEO’s term of employment, past accomplishments, reasons for separation from the Company, potential risks and the NEO’s willingness to restrict his or her future action(s), such as through an agreement not to compete or solicit the Company’s customers or employees. Capital One has asked certain NEOs to enter into various agreements that contain restrictive covenants related to confidentiality, non-competition, non-solicitation and ownership of work product. For additional information, please see “Restrictive Covenants” in the “Named Executive Officer Compensation” section beginning on page 65. Each of the NEOs also has a change of control agreement as described above. Upon retiring from the Company, employees are generally entitled to receive certain retiree medical benefits.
| | | | | Other Aspects of Executive Compensation
Stock Ownership and Retention Requirements
Consistent with their responsibilities to our stockholders, the executive officers 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:CAPITAL ONE FINANCIAL CORPORATION
| | | 2017 PROXY STATEMENT | | 65 | Role | | Salary Multiple |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
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 officer’s compensation. The named executive officers are currently in compliance with this requirement. In addition, the Company has stock retention requirements for certain equity awards made to the named executive officers. Each executive must hold 50% of theafter-tax net shares acquired upon the vesting of performance share awards, restricted stock, and stock-settled RSUs (i) during the executive’s term of employment with Capital One, or (ii) prior to the first anniversary of the executive’s separation from Capital One, for one year after the vesting of such award. These stock ownership and retention requirements apply to all of our executive officers. Prohibition of Hedging and Speculative Trading Activities All of Capital One’s executive officers and directors 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 in a margin account or pledging Capital One stock as collateral for a loan. 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 (or by delegated authority to the Chief Human Resources Officer for certain employees who are not executive officers) 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, restricted stock units, stock options or other equity awards outside of the annual incentive cycle. The Committee has delegated authority to the CEO to award restricted stock and to the Chief Human Resources Officer to award stock-settled and cash-settled RSUs (but not options or other equity awards) to employees who are not executive officers, subject to a maximum amount of $2 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 delegation at least once per year. With respect to awards of stock options, the exercise price is always the Fair Market Value of the Company’s stock on the date of grant. Under the terms of our 2004 Stock Incentive Plan, “Fair Market Value” is equal to the closing price of the Company’s common stock on the date of grant. The Company does not seek to time equity grants to take advantage of materialnon-public information and in no event is the grant date set to a date that is prior to the date of approval. Tax Considerations The Committee carefully considers the tax impacts 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 paid or awarded in atax-deductible manner. However, it is the Committee’s intent to maximize tax deductibility to the extent reasonable, provided the Company’s programs remain consistent with the Company’s overall executive compensation objectives. With respect to the named executive officers (other than the Chief Financial Officer), Section 162(m) of the Internal Revenue Code limits the federal tax deduction for compensation paid to the executive to $1 million. Amounts in excess of $1 million are also eligible for the deduction if the compensation qualifies as “performance-based.” The Company’s 2004 Stock Incentive Plan provides for the establishment of specific performance thresholds to be tied to equity-based awards that may allow these awards to qualify as “performance-based” for the purposes of 162(m). The following awards were granted in February 2016 for the 2015 performance year to executive officers of the Company, including the named executive officers: performance share awards, RSUs (other than the RSUs representing a portion of base salary) and the deferred cash bonus to the CEO. These grants were made following a determination by the Committee and the independent directors that a performance threshold was met. | | | | | | | | | 66 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | CEO
| | 5X |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS | | | Other NEOs and
Executive Officers
| | 3X |
Given that the CEO’s 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.
Ownership requirements may be fulfilled using the following shares:
|
Under this performance threshold, which had been established in January 2015, the CEO and NEOs would receive these awards only if the Company achieved positive Core Earnings ROA from Continuing Operations for the 2015 fiscal year. For purposes of this performance metric, “Core Earnings ROA from Continuing Operations” means the ratio, expressed as a percentage, of (A) the Company’s Core Earnings from Continuing Operations for the 2015 fiscal year to (B) the Company’s average total assets for the period. Core Earnings from Continuing Operations means the Company’s net income from continuing operations, excluding, on atax-adjusted basis, the impact of (i) impairment or amortization of intangible assets, (ii) 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 (iii) the change in the combined uncollectible finance charge and fee reserve. The Company’s Core Earnings ROA from Continuing Operations for fiscal year 2015 was positive. Therefore, the Company expects the awards made in February 2016 to betax-deductible as “performance-based” compensation. In February 2016, the Committee and the independent directors again established a performance threshold that the Company had to meet in order for the following awards to be granted for the 2016 performance year to executive officers of the Company, including the named executive officers: performance share awards, RSUs (other than the RSUs representing a portion of base salary) and the deferred cash bonus to the CEO. Under this performance threshold, the CEO and NEOs would receive these awards only if the Company achieved positive Core Earnings ROA from Continuing Operations for the 2016 fiscal year. For purposes of this performance metric, Core Earnings ROA from Continuing Operations means the ratio, expressed as a percentage, of (A) the Company’s Core Earnings from Continuing Operations for the 2016 fiscal year to (B) the Company’s average total assets for the period. Core Earnings from Continuing Operations has the same meaning as described in the preceding paragraph. The Company’s Core Earnings ROA from Continuing Operations for fiscal year 2016 was positive. Therefore, the Company expects the awards made in February 2017 to betax-deductible as “performance-based” compensation. The Company also expects that all stock options awarded in 2016 or for the 2016 performance year to the CEO and NEOs will be deductible as “performance-based” compensation. Shares owned without restriction;
Unvested restricted stock;
Unvested stock-settled RSUs;
Shares acquired through the Associate Stock Purchase Plan; and
Shares owned through Capital One’s 401(k) Plan.
| | | | | The Committee annually reviews the guidelines and monitors the named executive officers’ 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 officer’s compensation. The named executive officers are currently in compliance with this requirement.CAPITAL ONE FINANCIAL CORPORATION
In addition, beginning in January 2011, the Company implemented stock retention requirements for certain equity awards made to the named executive officers. For equity awards granted in January 2015, throughout each executive’s 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 performance share and stock-settled RSU awards for one year. These stock ownership and retention requirements apply to all of our executive officers.
| | 2017 PROXY STATEMENT | | Prohibition of Hedging and Speculative Trading Activities 67All of Capital One’s 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 in a margin account or pledging Capital One stock as collateral for a loan.
|
Section VI – Named Executive Officer Compensation The Summary Compensation Table below provides information about compensation for the fiscal years ended December 31, 2016, 2015 and 2014 for the named executive officers. As discussed in the “Compensation Discussion and Analysis” section beginning on page 40, our executive compensation program is heavily weighted towards equity-based andat-risk elements of compensation. Under SEC rules, equity-based compensation is reported below in the year in which it is awarded, which may not correlate to the year for which it is paid. With respect to the compensation reported below for our Chief Executive Officer: 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 (or by delegated authority to the Chief Human Resources Officer for certain employees who are not executive officers) 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, restricted stock units, stock options or other equity awards outside of the annual incentive cycle. The Committee has delegated
authority to the CEO to award restricted stock and to the Chief Human Resources Officer to award stock-settled and cash-settled RSUs (but not options or other equity awards) to employees who are not executive officers, subject to a maximum amount of $2 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 delegation at least once per year.
With respect to awards of stock options, the exercise price is always the Fair Market Value of the Company’s stock on the date of grant. Under the terms of our 2004 Stock Incentive Plan, “Fair Market Value” is equal to the closing price of the Company’s 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 Considerations
The Committee carefully considers the tax impacts 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 paid or awarded in a tax-deductible manner. However, it is the Committee’s intent to maximize tax deductibility to the extent reasonable, provided the Company’s programs remain consistent with the Company’s overall executive compensation objectives.
With respect to the named executive officers (other than the Chief Financial Officer), Section 162(m) of the Internal Revenue Code limits the federal tax deduction for compensation paid to the executive to $1 million. Amounts in excess of $1 million are also eligible for the deduction if the compensation qualifies as “performance-based.” The Company’s 2004 Stock Incentive Plan provides for the establishment of specific performance thresholds to be tied to equity-based awards that may allow these awards to qualify as “performance-based” for the purposes of 162(m).
The Company expects that the award of stock options and performance shares to the CEO and NEOs in 2014 will be deductible as “performance-based” compensation. The vesting of restricted stock units granted to the CEO and stock-settled RSUs granted to the NEOs in January 2014 is contingent upon the achievement of performance-based vesting conditions. Specifically, the CEO and NEOs would receive these awards as long as the Company achieves a Core Earnings ROA of better than or equal to negative two percent (-2%) for the applicable fiscal year. As further described in “Additional Performance Conditions and Recovery Provisions – Performance-Based Vesting Provisions” beginning on page 44, additional vesting conditions also apply that could further limit the vesting of these awards.
For purposes of the above performance metric, Core Earnings ROA means the ratio, expressed as a percentage, of (A) the Company’s Core Earnings for the 2014 fiscal year to (B) the Company’s average total assets for the period. Core Earnings has the same meaning as described earlier under “Additional Performance Conditions and Recovery Provisions – Performance-Based Vesting Provisions” beginning on page 44.
In February 2014, the Committee and the independent directors established a performance threshold that the Company had to meet in order for the following awards to executive officers of the Company, including the named executive officers, for the 2014 performance year to be granted: performance share awards, RSUs (other than the RSUs representing a portion of base salary) and the deferred cash bonus to the CEO. Under the threshold, the CEO and NEOs would receive these awards only if the Company achieved positive Core Earnings ROA from Continuing Operations for the 2014 fiscal year. For purposes of this performance metric, Core Earnings ROA from Continuing Operations means the ratio, expressed as a percentage, of (A) the Company’s Core Earnings from Continuing Operations for the 2014 fiscal year to (B) the Company’s average total assets for the period. Core Earnings from Continuing Operations means the Company’s net income from continuing operations, excluding, on a tax-adjusted basis, the impact of (i) impairment or amortization of intangible assets, (ii) 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 (iii) the change in the combined uncollectible finance charge and fee reserve.
The Company’s Core Earnings ROA from Continuing Operations for fiscal year 2014 was positive. Therefore, the Company expects the awards made in January 2015 to be tax-deductible as “performance-based” compensation.
SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION
The Summary Compensation Table below provides information concerning compensation for the fiscal years ended December 31, 2014, 2013 and 2012 for the named executive officers.
As discussed under “Chief Executive Officer Compensation” in the “Compensation Discussion and Analysis” section beginning on page 35, 78%
∎ | | 84% of the CEO’s total compensation is equity-based andat-risk to the performance of the Company’s stock price, with 100% of his compensation deferred for a three-year period. |
∎ | | Amounts shown in the table below for the CEO for 20142016 represent stock options, performance shares, and stock-settled RSUs granted in January 2014February 2016 and a deferred cash bonus awarded in January 2015February 2017 for 20142016 performance. The CEO also was granted cash-settled RSUs in January 2015February 2017 for the 20142016 performance year, which are not shown in the table below. |
∎ | | Amounts shown in the “Stock Awards” column for 20142016 also include cash-settled RSUs granted to the CEO in January 2014February 2016 for the 20132015 performance year. |
With respect to the compensation reported below for the NEOs other than the CEO: As discussed under “NEO Compensation” beginning on page 40, under the NEOs’ 2014 compensation program, base
∎ | | Base salary comprised approximatelybetween 35% and 45% of NEO total target compensation. |
∎ | | Each NEO other than the CEO received a portion of his or her 20142016 base salary in cash that was paid throughout the year and a portion in cash-settled RSUs that were granted in January 2014February 2016 and settled in cash in February 2015.2017. These cash-settled RSUs are included in the table below in the “Stock Awards” column for 2014. For the NEOs, amounts2016. |
∎ | | Amounts shown for 20142016 in the table below also include stock options, performance shares, stock-settled RSUs, and cash-settled RSUs granted in January 2014February 2016 for the 20132015 performance year. The NEOs other than the CEO also were granted equity awards in January 2015February 2017 for the 20142016 performance year, which are not shown in the table below. The NEOs were not eligible for cash bonuses for 2014.2016. |
Amounts paid to the CEO and the other NEOs in 2016 for other compensation and benefit programs are listed under the “Change in Pension Value andNon-Qualified Deferred Compensation Earnings” and “All Other Compensation” columns. The details of these program amounts are provided in the footnotes. | | | | | | | | | 68 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
The footnotes to the table below provide additional explanation regarding compensation attributable to each performance year. Further information on the timing of awards under the 2016 compensation programs for the CEO and the other NEOs can be found under “CEO Compensation Components” and “NEO Compensation Components” in the “Compensation Discussion and Analysis” section beginning on pages 45 and 54, respectively. 2016 Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | | | Year | | | | Salary(6) | | | | Bonus(7) | | | | Stock Awards(8) | | | | Option Awards (9) | | | | Change in Pension Value and Non- Qualified Deferred Compensation Earnings (10) | | | | All Other Compensation (11) | | | | Total | Richard D. Fairbank Chair, CEO and President(1) | | | | 2016 | | | | $0 | | | | $2,677,500 | | | | $12,285,042 | | | | $1,750,003 | | | | $3,407 | | | | $205,185 | | | | $16,921,137 | | | 2015 | | | $0 | | | $2,677,500 | | | $13,440,028 | | | $1,750,000 | | | $3,357 | | | $144,289 | | | $18,015,174 | | | 2014 | | | $0 | | | $4,410,000 | | | $13,343,815 | | | $1,750,000 | | | $3,195 | | | $129,464 | | | $19,636,474 | R. Scott Blackley Chief Financial Officer(2)(3) | | | | 2016 | | | | $617,769 | | | | $0 | | | | $2,597,024 | | | | $0 | | | | — | | | | $132,046 | | | | $3,346,839 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen S. Crawford Former CFO, Head of Finance and Corporate Development (2)(4) | | | | 2016 | | | | $1,592,692 | | | | $0 | | | | $5,463,891 | | | | $861,334 | | | | — | | | | $280,676 | | | | $8,198,593 | | | 2015 | | | $1,549,462 | | | $0 | | | $6,039,153 | | | $916,676 | | | — | | | $272,031 | | | $8,777,322 | | | 2014 | | | $1,526,538 | | | $0 | | | $5,376,001 | | | $755,714 | | | — | | | $282,002 | | | $7,940,255 | John G. Finneran, Jr. General Counsel and Corporate Secretary(2) | | | | 2016 | | | | $1,016,538 | | | | $0 | | | | $3,487,369 | | | | $494,803 | | | | $778 | | | | $219,255 | | | | $5,218,743 | | | 2015 | | | $988,500 | | | $0 | | | $3,661,947 | | | $478,405 | | | $785 | | | $199,231 | | | $5,328,868 | | | 2014 | | | $974,692 | | | $0 | | | $3,708,724 | | | $478,413 | | | $842 | | | $200,481 | | | $5,363,152 | Frank G. LaPrade, III Chief Enterprise Services Officer(2) | | | | 2016 | | | | $974,577 | | | | $0 | | | | $3,329,446 | | | | $530,369 | | | | — | | | | $193,202 | | | | $5,027,594 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sanjiv Yajnik President, Financial Services (2) | | | | 2016 | | | | $962,654 | | | | $0 | | | | $3,300,705 | | | | $468,416 | | | | — | | | | $203,132 | | | | $4,934,907 | | | 2015 | | | $934,462 | | | $0 | | | $3,439,765 | | | $448,606 | | | — | | | $219,681 | | | $5,042,514 | | | 2014 | | | $912,923 | | | $0 | | | $3,477,040 | | | $448,616 | | | — | | | $191,306 | | | $5,029,885 | Ryan M. Schneider Former President, Card(2)(5) | | | | 2016 | | | | $1,211,462 | | | | $0 | | | | $4,408,204 | | | | $731,408 | | | | — | | | | $229,563 | | | | $6,580,637 | | | 2015 | | | $1,142,885 | | | $0 | | | $4,534,930 | | | $700,744 | | | — | | | $227,635 | | | $6,606,194 | | | 2014 | | | $1,116,462 | | | $0 | | | $4,251,285 | | | $609,345 | | | — | | | $212,210 | | | $6,189,302 |
(1) | Mr. Fairbank’s compensation for 2016 consisted of stock options, performance shares, stock-settled RSUs, and ayear-end incentive opportunity (payable in deferred cash bonus and cash-settled RSUs), in addition to certain perquisites. Mr. Fairbank received a portion of his total compensation for 2016 in February 2016 (stock options, performance shares, and stock-settled RSUs), which is reflected in the table above for 2016. Mr. Fairbank received the remainder of his compensation for 2016 in February 2017 (theyear-end incentive opportunity delivered partially in cash-settled RSUs and the NEOsremainder in 2014 for other compensation and benefit programs are listed underdeferred cash bonus). The portion of the “Changeyear-end incentive opportunity delivered as deferred cash bonus to Mr. Fairbank in Pension Value and Non-Qualified Deferred Compensation Earnings” and “All Other Compensation” columns. The details of these program amounts are providedFebruary 2017 is included in the footnotes.Please seetable above, while the footnotes toportion delivered as cash-settled RSUs is not. His compensation for 2015 included cash-settled RSUs granted in February 2016 (a portion of his 2015year-end incentive opportunity), which are included in the table belowabove for an additional explanation regarding compensation attributable to each performance year. Further information on the timing of awards under the 2014 compensation programs for the CEO and the NEOs can be found under “Compensation Components”2016. See “CEO Compensation by Performance Year” in the “Compensation Discussion and Analysis” section beginning on page 34.
2014 Summary51 for more information on how the Compensation Table
Committee views compensation actions and to which year the compensation awards relate. |
| | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary (3) | | Bonus (4) | | Stock Awards (5) | | Option Awards (6) | | Change in Pension Value and Non-Qualified Deferred Compensation Earnings (7) | | All Other Compensation (8) | | Total | | | | | | | | | | | | | | | | | | Richard D. Fairbank(1) Chairman, CEO and President | | 2014 | | $0 | | $4,410,000 | | $13,343,815 | | $1,750,000 | | $3,195 | | $99,464 | | $19,606,474 | | 2013 | | $0 | | $2,843,750 | | $10,937,569 | | $4,375,012 | | $2,177 | | $136,017 | | $18,294,525 | | 2012 | | $0 | | $2,187,500 | | $15,950,051 | | $4,375,009 | | $3,550 | | $89,264 | | $22,605,374 | | | | | | | | | | | | | | | | | | Stephen S. Crawford(2) Chief Financial Officer | | 2014 | | $1,526,538 | | $0 | | $5,376,001 | | $755,714 | | – | | $277,002 | | $7,935,255 | | 2013 | | $1,326,923 | | $0 | | $10,832,068 | | $0 | | – | | $223,225 | | $12,382,216 | | | | | | | | | | | | | | | | | | Ryan M. Schneider(2) President, Card | | 2014 | | $1,116,462 | | $0 | | $4,251,285 | | $609,345 | | – | | $207,210 | | $6,184,302 | | 2013 | | $1,093,308 | | $0 | | $3,405,670 | | $473,342 | | – | | $204,084 | | $5,176,404 | | 2012 | | $1,032,394 | | $0 | | $4,235,215 | | $591,559 | | – | | $204,151 | | $6,063,319 | | | | | | | | | | | | | | | | | | John G. Finneran, Jr.(2) General Counsel and Corporate Secretary | | 2014 | | $974,692 | | $0 | | $3,708,724 | | $478,413 | | $842 | | $195,481 | | $5,358,152 | | 2013 | | $953,769 | | $0 | | $3,342,536 | | $464,511 | | $293 | | $203,963 | | $4,965,072 | | 2012 | | $907,760 | | $0 | | $3,989,126 | | $518,657 | | $1,113 | | $198,199 | | $5,614,855 | | | | | | | | | | | | | | | | | | Sanjiv Yajnik(2) President, Financial Services | | 2014 | | $912,923 | | $0 | | $3,477,040 | | $448,616 | | – | | $186,306 | | $5,024,885 |
(1) | Mr. Fairbank’s compensation for 2014 consisted of stock options, performance shares, stock-settled RSUs, and a year-end incentive opportunity (payable in deferred cash bonus and cash-settled RSUs), in addition to certain perquisites. Mr. Fairbank received a portion of his total compensation for 2014 in January 2014 (stock options, performance shares, and stock-settled RSUs), which is reflected in the table above for 2014. Mr. Fairbank received the rest of his compensation for 2014 in January 2015 (the year-end incentive opportunity delivered partially in cash-settled RSUs and the remainder in deferred cash bonus). The portion of the year-end incentive opportunity delivered as deferred cash bonus to Mr. Fairbank in January 2015 is included in the table above, while the portion delivered as cash-settled RSUs is not. His compensation for 2013 included cash-settled RSUs granted in January 2014 (a portion of his 2013 year-end incentive opportunity), which are included in the table above for 2014. See “CEO Compensation by Performance Year” in the “Compensation Discussion and Analysis” section on page 39 for more information on how the Compensation Committee views compensation actions and to which year the compensation awards relate. |
(2) | NEO compensation for 2014 consisted of cash base salary, stock options, performance shares and three grants of RSUs (one representing a portion of base salary which settles in cash), in addition to certain perquisites. The cash-settled RSUs attributable to base salary are included in the table above for 2014, however the other equity-based awards for 2014 performance were granted in January 2015 and are not included in the table above. The stock options, performance shares, stock-settled RSUs and cash-settled RSUs granted in January 2014 for 2013 performance are included in the table above for 2014.(2) | For NEOs other than the CEO, compensation for 2016 consisted of cash base salary, stock options (other than Mr. Blackley), performance shares and three grants of RSUs (one representing a portion of base salary which settles in cash), in addition to certain perquisites. The cash-settled RSUs representing base salary are included in the table above for 2016, however the other equity-based awards for 2016 performance were granted in February 2017 and are not included in the table above. The stock options, performance shares, stock-settled RSUs and cash-settled RSUs granted in February 2016 for 2015 performance are included in the table above for 2016. See “NEO Compensation by Performance Year” in the “Compensation Discussion and Analysis” section on page 43 for more information on how the Compensation Committee views compensation actions and to which year the compensation awards relate. |
(3) | The amounts shown in this column represent the cash portion of base salary for NEOs. The remaining portion of base salary for 2014 was delivered in cash-settled RSUs, as described under “Base Salaries” in the “Compensation Discussion and Analysis” section on page 41, and is included in the “Stock Awards” column in the table above. |
(4) | The amount shown in this column reflects Mr. Fairbank’s deferred cash bonus for 2014 performance awarded in January 2015 as described under “Year-End Incentive Opportunity” in the “Compensation Discussion and Analysis” section on page 38. |
(5) | The amounts shown in this column for 2014 represent the grant date fair value of performance shares, stock-settled RSUs and cash-settled RSUs granted to the named executive officers in 2014, calculated in
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| accordance with FASB ASC Topic 718. The grant date fair 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 2014 represent the grant date fair value of stock options granted to the named executive officers in 2014, 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 Messrs. Fairbank and Finneran 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 (a) | | Travel and Aircraft | | Health Screening | | Driver and Security | | Company Contributions to Defined Contribution Plans (b) | | Insurance (c) | | Other (d) | | | | | | | | | Richard D. Fairbank | | $645 | | $0 | | $1,655 | | $79,596 (e) | | $0 | | $16,740 | | $828 | | | | | | | | | Stephen S. Crawford | | $31,124 | | $0 | | $0 | | $0 | | $237,600 | | $7,450 | | $828 | | | | | | | | | Ryan M. Schneider | | $18,745 | | $0 | | $3,636 | | $3,314 (f) | | $176,750 | | $4,650 | | $115 | | | | | | | | | John G. Finneran, Jr. | | $16,210 | | $0 | | $1,900 | | $4,589 (f) | | $155,850 | | $16,740 | | $192 | | | | | | | | | Sanjiv Yajnik | | $16,999 | | $0 | | $3,211 | | $5,204 (f) | | $146,820 | | $12,480 | | $1,592 |
| (a) | Represents the value attributable to personal use of Company-provided automobile benefits. The cost of automobile benefits is determined on an annual basis and includes, as applicable, annual car lease, automobile service fees, and other related miscellaneous expenses (such as fuel and maintenance). |
| (b) | Represents 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) | Represents incidental expenses incurred in connection with corporate events. |
| (e) | Includes cost attributable to personal use of a driver who also provides for Mr. Fairbank’s personal security ($70,752) and aggregate cost to the Company for home security services ($8,844) 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. |
| (f) | Includes aggregate cost to the Company for home security services. |
2014 Grants of Plan-Based Awards Table
The Grants of Plan-Based Awards table provides details on equity incentive plan awards granted in 2014 including stock options, performance shares, cash-settled RSUs and stock-settled RSUs.
The columns reporting “Estimated Future Payouts Under Equity Incentive Plan Awards,” “All Other Stock Awards” and “All Other Option Awards” relate to Capital One’s equity-based incentive awards to the named executive officers.
For the CEO in 2014, the awards are comprised of stock options, performance shares, and stock-settled RSUs granted in January 2014 as part of the CEO’s 2014 compensation program and cash-settled RSUs granted in January 2014 for 2013 performance.
The stock options become exercisable on February 15, 2017 and expire in ten years.
The performance shares will be issued based on the Company’s Adjusted ROA over the three-year period from January 1, 2014 through December 31, 2016, relative to the KBW Bank Sector index, excluding custody banks. The total value delivered at vesting will be reduced if for any of the years in the three-year performance period the Company does not achieve positive Adjusted ROA, regardless of how well the Company compares to its peers in the KBW Bank Sector index over the performance period. See “2014 CEO Compensation Decisions” in the “Compensation Discussion and Analysis” section beginning on page 3659 for more detailsinformation on how the performance share awards. Dividend equivalents are accrued onCompensation Committee views compensation actions and to which year the performance sharescompensation awards relate.
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(3) | Mr. Blackley was appointed to the position of Chief Financial Officer in May 2016. As a result, his 2016 compensation reflects the position he held at the same timebeginning of 2016: Executive Vice President and Controller of the Company. See below for more information regarding Mr. Blackley’s 2016 compensation. Beginning with performance year 2017, Mr. Blackley’s compensation program is consistent with the othernon-CEO named executive officers. |
| | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 69 |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
(4) | Mr. Crawford served as dividends are paid out to the Company’s other stockholdersChief Financial Officer from May 2013 until May 2016, when he became Head of Finance and are paid outBusiness Development. |
(5) | In November 2016, Mr. Schneider ceased to be an executive officer of the Company. He served as additional shares only onPresident, Card, from December 2007 to November 2016. |
(6) | The amounts shown in this column represent the performance shares that actually vest based oncash portion of base salary for the results certified by the Compensation Committee.NEOs. The remaining portion of base salary for 2016 was delivered in cash-settled RSUs, and stock-settled RSUs vest in full on February 15, 2017. The cash-settled RSUs settle in cash based on the average closing price of the Company’s common stock for the 15 trading days preceding the vesting date. Dividend equivalents are accrued on the cash-settled and stock-settled RSUs at the same time as dividends are paid to the Company’s other stockholders and are paid at the time of vesting, adjusted for performance-based vesting results. For the NEOs in 2014, the awards are comprised of stock options, performance shares, cash-settled RSUs, and stock-settled RSUs granted in January 2014 for the 2013 performance year and cash-settled RSUs granted in January 2014 as a portion of 2014 base salary (as described under “Base Salaries” in the “Compensation Discussion and Analysis” section on page 41). 57, and is included in the “Stock Awards” column in the table above. |
(7) | The stock options become exercisableamount shown in three equal annual installments, beginning onthis column for 2016 reflects Mr. Fairbank’s deferred cash bonus for 2016 performance awarded in February 15 of the year after the date of grant, and expire in ten years.The terms of the performance shares for the NEOs are substantially the same2017 as the terms of the CEO’s performance shares described above. Dividend equivalents are accrued on the performance shares at the same time as dividends are paid to the Company’s other stockholders and are paid out as additional shares only on the performance shares that actually vest based on the results certified by the Compensation Committee.
The stock-settled RSUs vest in three equal annual installments beginning on February 15 of the year after the date of grant. Dividend equivalents are accrued on the stock-settled RSUs at the same time as dividends are paid to the Company’s other stockholders and are paid at the time of vesting, adjusted for performance-based vesting results.
The cash-settled RSUs representing a portion of base salary vested in full on January 1, 2015 and settled in cash on February 15, 2015 (the “Payment Date”) based on the average closing price of the Company’s common stock for the 15 trading days preceding the payment date. The other cash-settled RSUs vest in three equal annual installments beginning on February 15 of the year after the date of grant and settle in cash based on the average closing price of the Company’s common stock for the 15 trading days preceding the vesting date. Dividend equivalents are paid on the cash-settled RSUs at the same rate and at approximately the same time as dividends are paid to the Company’s other stockholders.
Each award of stock-settled RSUs (as well as cash-settled RSUs for the CEO) and stock options reported below is also subject to performance-based vesting provisions tied to core earnings that will reduce the total number of shares delivered at vesting if the Company does not achieve certain performance thresholds during the three-year vesting period. See “Additional Performance Conditions and Recovery Provisions”under“Year-End Incentive Opportunity” in the “Compensation Discussion and Analysis” section beginning on page 4448.
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(8) | The amounts shown in this column for more details2016 represent the grant date fair value of performance shares, stock-settled RSUs and cash-settled RSUs granted to the named executive officers in 2016, calculated in accordance with FASB ASC Topic 718. The grant date fair value of performance shares included in this column assumes a payout at the target performance level. For additional information, including performance share awards at maximum performance on a per executive basis, refer to footnote 3 to the performance-based vesting provisions. 2014 Grants of Plan-Based Awards Table
below. |
| | | | | | | | | | | | | | | | | Name and Principal Position | | Award Type | | Date of Grant (1) | | Estimated Future Payouts Under Equity Incentive Plan Awards | | 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) | | Grant Date Fair Value of Stock and Option Awards (3) | | | | Target | | Maximum | | | | | Richard D. Fairbank Chairman, CEO and President | | Performance Shares (3) | | 1/30/2014 | | 123,309 | | 184,964 | | – | | – | | – | | $8,750,007 | | Stock Options | | 1/30/2014 | | – | | – | | – | | 108,944 | | $70.96 | | $1,750,000 | | Cash-Settled RSUs (4) | | 1/30/2014 | | – | | – | | 40,076 | | – | | – | | $2,843,793 | | Stock-Settled RSUs (5) | | 1/30/2014 | | – | | – | | 24,662 | | – | | – | | $1,750,016 | | | | | | | | | | | | | | | | | | Stephen S. Crawford Chief Financial Officer | | Performance Shares(3) | | 1/30/2014 | | 14,378 | | 21,567 | | – | | – | | – | | $1,020,263 | | Stock Options | | 1/30/2014 | | – | | – | | – | | 47,046 | | $70.96 | | $755,714 | | Cash-Settled RSUs | | 1/30/2014 | | – | | – | | 21,566 | | – | | – | | $1,530,323 | | Cash-Settled RSUs (6) | | 1/30/2014 | | – | | – | | 15,855 | | – | | – | | $1,125,071 | | Stock-Settled RSUs | | 1/30/2014 | | – | | – | | 23,962 | | – | | – | | $1,700,344 | | | | | | | | | | | | | | | | | | Ryan M. Schneider President, Card | | Performance Shares(3) | | 1/30/2014 | | 11,593 | | 17,390 | | – | | – | | – | | $822,639 | | Stock Options | | 1/30/2014 | | – | | – | | – | | 37,934 | | $70.96 | | $609,345 | | Cash-Settled RSUs | | 1/30/2014 | | – | | – | | 17,398 | | – | | – | | $1,234,562 | | Cash-Settled RSUs(6) | | 1/30/2014 | | – | | – | | 11,599 | | – | | – | | $823,065 | | Stock-Settled RSUs | | 1/30/2014 | | – | | – | | 19,321 | | – | | – | | $1,371,018 | | | | | | | | | | | | | | | | | | John G. Finneran, Jr. General Counsel and Corporate Secretary | | Performance Shares(3) | | 1/30/2014 | | 10,113 | | 15,170 | | – | | – | | – | | $717,618 | | Stock Options | | 1/30/2014 | | – | | – | | – | | 29,783 | | $70.96 | | $478,413 | | Cash-Settled RSUs | | 1/30/2014 | | – | | – | | 15,178 | | – | | – | | $1,077,031 | | Cash-Settled RSUs(6) | | 1/30/2014 | | – | | – | | 10,119 | | – | | – | | $718,044 | | Stock-Settled RSUs | | 1/30/2014 | | – | | – | | 16,855 | | – | | – | | $1,196,031 | | | | | | | | | | | | | | | | | | Sanjiv Yajnik President, Financial Services | | Performance Shares(3) | | 1/30/2014 | | 9,483 | | 14,225 | | – | | – | | – | | $672,914 | | Stock Options | | 1/30/2014 | | – | | – | | – | | 27,928 | | $70.96 | | $448,616 | | Cash-Settled RSUs | | 1/30/2014 | | – | | – | | 14,227 | | – | | – | | $1,009,548 | | Cash-Settled RSUs(6) | | 1/30/2014 | | – | | – | | 9,485 | | – | | – | | $673,056 | | Stock-Settled RSUs | | 1/30/2014 | | – | | – | | 15,805 | | – | | – | | $1,121,523 |
(1) | Date on which awards were approved by the Compensation Committee and independent directors and granted to the individuals.(9) | The amounts shown in this column for 2016 represent the grant date fair value of stock options granted to the named executive officers in 2016, calculated in accordance with FASB ASC Topic 718. For information on the valuation assumptions of these awards, refer to footnote 4 to the Grants of Plan-Based Awards Table below. |
(10) | The amounts shown in this column represent the change in the actuarial present value of the accumulated pension benefits for Messrs. Fairbank and Finneran 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 of5-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. Earnings under the VoluntaryNon-Qualified Deferred Compensation Plan were not above-market and therefore are not reported above. |
(11) | All other compensation consists of the following on a per executive basis: |
(2) | Equal to the fair market value of a share of Capital One’s common stock on the date of grant determined on the basis of the closing price as reported by the NYSE Composite Transaction Tape. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | | | Auto (a) | | | | Travel and Aircraft | | | | Health Screening | | | | Driver and Security | | | | Company Contributions to Defined Contribution Plans(b) | | | | Insurance (c) | | | | Other (d) | Richard D. Fairbank | | | | $— | | | | $— | | | | $1,654 | | | | $153,465(e) | | | | $— | | | | $19,320 | | | | $30,746 | R. Scott Blackley | | | | $22,756 | | | | $— | | | | $— | | | | $— | | | | $100,638 | | | | $3,652 | | | | $5,000 | Stephen S. Crawford | | | | $15,955 | | | | $— | | | | $— | | | | $— | | | | $251,595 | | | | $7,080 | | | | $6,046 | John G. Finneran, Jr. | | | | $17,107 | | | | $— | | | | $1,900 | | | | $10,987(f) | | | | $164,895 | | | | $19,320 | | | | $5,046 | Frank G. LaPrade, III | | | | $19,557 | | | | $— | | | | $— | | | | $6,908(f) | | | | $159,315 | | | | $5,855 | | | | $1,567 | Sanjiv Yajnik | | | | $25,772 | | | | $— | | | | $3,106 | | | | $265(f) | | | | $156,705 | | | | $11,280 | | | | $6,004 | Ryan M. Schneider | | | | $20,810 | | | | $— | | | | $3,537 | | | | $265(f) | | | | $194,925 | | | | $4,980 | | | | $5,046 |
(a) | Represents the value attributable to personal use of Company-provided automobile benefits. The cost of automobile benefits is determined on an annual basis and includes, as applicable, annual car lease, automobile service fees, and other related miscellaneous expenses (such as fuel and maintenance). Mr. Fairbank does not participate in the Company-provided automotive benefit. |
(b) | Represents Company contributions under qualified andnon-qualified deferred compensation programs and other supplemental executive retirement benefits. |
(c) | Represents life insurance premiums paid on behalf of the executives. |
(d) | Represents contributions made by Capital One to charitable organizations chosen by CEO (up to $30,000) and the other NEOs (up to $5,000), incidental expenses incurred in connection with corporate events. Additionally for Mr. Crawford, the total value includes a cash amount paid to him in connection with entering into an Amended and RestatedNon-Competition Agreement with the Company in May 2016. For additional details regarding Mr. Crawford’s Amended and RestatedNon-Competition Agreement, see “Non-Competition Agreements” beginning on page 80. |
(e) | Represents costs attributable to personal use of a driver who operates Mr. Fairbank’s personal vehicle and also provides for Mr. Fairbank’s personal security ($76,529). Amount shown also includes aggregate cost to the Company for home security services ($76,936) for Mr. Fairbank. The percent of personal use of the driver’s services is tracked throughout the calendar year and then applied to the full expense amount for personal security. |
(f) | Represents aggregate cost to the Company for home security services provided to executives. |
(3) | The grant date fair value for each option awarded on January 30, 2014, was calculated using the Black-Scholes method and was based on the following assumptions: 2016 Grants of Plan-Based Awards The Grants of Plan-Based Awards table provides details on equity incentive plan awards granted in 2016 including stock options, performance shares, cash-settled RSUs and stock-settled RSUs. The columns reporting “Estimated Future Payouts Under Equity Incentive Plan Awards,” “All Other Stock Awards” and “All Other Option Awards” relate to Capital One’s equity-based incentive awards to the named executive officers. | | | | | | | | | 70 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
2016 Grants to CEO For 2016, awards granted to the CEO are comprised of stock options, performance shares, and stock-settled RSUs granted in February 2016 as part of the CEO’s 2016 compensation program and cash-settled RSUs granted in February 2016 for 2015 performance. Stock Options. The stock options become exercisable on February 15, 2019 and expire in ten years from the grant date. Performance Shares.The performance shares will be issued based on the Company’s Adjusted ROA over the three-year period from January 1, 2016 through December 31, 2018, relative to the KBW Bank Sector index, excluding custody banks. The total value delivered at vesting will be reduced if for any of the years in the three-year performance period the Company does not achieve positive Adjusted ROA, regardless of how well the Company compares to its peers in the KBW Bank Sector index over the performance period. See “2016 CEO Compensation Program” in the “Compensation Discussion and Analysis” section beginning on page 46 for more details on the performance share awards. Dividend equivalents are accrued on the performance shares at the same time as dividends are paid out to the Company’s other stockholders and are paid out as additional shares only on the performance shares that actually vest based on the results certified by the Compensation Committee. Cash-Settled Restricted Stock Units.The cash-settled RSUs and stock-settled RSUs vest in full on February 15, 2019. The cash-settled RSUs settle in cash based on the average closing price of the Company’s common stock for the 15 trading days preceding the vesting date. Dividend equivalents are accrued on the cash-settled and stock-settled RSUs at the same time as dividends are paid to the Company’s other stockholders and are paid at the time of vesting, adjusted for performance-based vesting results. 2016 Grants to NEOs (other than the CEO) For 2016, the awards granted to NEOs other than the CEO are comprised of stock options, performance shares, cash-settled RSUs, and stock-settled RSUs granted in January 2016 for the 2015 performance year and cash-settled RSUs granted in January 2016 as a portion of 2016 base salary (as described under “Base Salaries” in the “Compensation Discussion and Analysis” section on page 57). Due to hismid-year promotion, Mr. Blackley did not receive stock options in 2016. Stock Options. The stock options become exercisable in three equal annual installments, beginning on February 15 of the year after the date of grant, and expire in ten years from the grant date. Performance Shares.The terms of the performance shares for the other NEOs are substantially the same as the terms of the CEO’s performance shares described above. Dividend equivalents are accrued on the performance shares at the same time as dividends are paid to the Company’s other stockholders and are paid out as additional shares only on the performance shares that actually vest based on the results certified by the Compensation Committee. Stock-Settled Restricted Stock Units.The stock-settled RSUs (excluding Mr. Blackley’s promotional award) vest in three equal annual installments beginning on February 15 of the year after the date of grant. Mr. Blackley’s promotional award vests in four equal annual installments beginning one year after the date of grant. Dividend equivalents are accrued on the stock-settled RSUs at the same time as dividends are paid to the Company’s other stockholders and are paid at the time of vesting, adjusted for performance-based vesting results. Cash-Settled Restricted Stock Units.The cash-settled RSUs representing a portion of base salary vested in full on January 1, 2017 and settled in cash on February 15, 2017 (“Payment Date”) based on the average closing price of the Company’s common stock for the 15 trading days preceding the payment date. The other cash-settled RSUs vest in three equal annual installments beginning on February 15 of the year after the date of grant and settle in cash based on the average closing price of the Company’s common stock for the 15 trading days preceding the vesting date. Dividend equivalents are paid on the cash-settled RSUs at the same rate and at approximately the same time as dividends are paid to the Company’s other stockholders. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 71 |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
The annual awards of stock-settled RSUs (as well as cash-settled RSUs for the CEO) and stock options reported below are also subject to performance-based vesting provisions that are associated with Core Earnings. As a result, the total number of shares delivered at vesting will be reduced if the Company does not achieve certain performance thresholds during the three-year vesting period. See “Additional Performance Conditions and Recovery Provisions” in the “Compensation Discussion and Analysis” section beginning on page 60 for more details on the performance-based vesting provisions. 2016 Grants of Plan-Based Awards Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | | | Award Type | | | | Date of Grant(1) | | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | | 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) | | | | Grant Date Fair Value of Stock and Option Awards | | | | | | | | | | Target | | | | Maximum | | | | | | | | | | | | | Richard D. Fairbank Chair, CEO and President | | | | Performance Shares (3) | | | | 2/4/2016 | | | | 137,298 | | | | 205,947 | | | | — | | | | — | | | | — | | | | $8,750,002 | | | Stock Options(4) | | | | 2/4/2016 | | | | — | | | | — | | | | — | | | | 106,973 | | | | $63.73 | | | | $1,750,003 | | | Cash-Settled RSUs(5) | | | 2/4/2016 | | | — | | | — | | | 28,009 | | | — | | | — | | | $1,785,014 | | | Stock-Settled RSUs(6) | | | 2/4/2016 | | | — | | | — | | | 27,460 | | | — | | | — | | | $1,750,026 | R. Scott Blackley Chief Financial Officer | | | | Performance Shares (3) | | | 2/4/2016 | | | 3,423 | | | 5,135 | | | — | | | | — | | | — | | | $218,148 | | | Cash-Settled RSUs | | | | 2/4/2016 | | | | — | | | | — | | | | 4,934 | | | | — | | | | — | | | | $314,444 | | | Cash-Settled RSUs(7) | | | 2/4/2016 | | | — | | | — | | | 6,434 | | | — | | | — | | | $410,039 | | | Stock-Settled RSUs | | | 2/4/2016 | | | — | | | — | | | 10,268 | | | — | | | — | | | $654,380 | | | Stock-Settled RSUs(8) | | | 5/9/2016 | | | — | | | — | | | 14,368 | | | — | | | — | | | $1,000,013 | Stephen S. Crawford Former CFO, Head of Finance and Corporate Development | | | | Performance Shares (3) | | | 2/4/2016 | | | 18,246 | | | 27,369 | | | — | | | — | | | | | | $1,162,818 | | | | Stock Options(4) | | | | 2/4/2016 | | | | — | | | | — | | | | — | | | | 52,651 | | | | $63.73 | | | | $861,334 | | | | Cash-Settled RSUs | | | | 2/4/2016 | | | | — | | | | — | | | | 18,265 | | | | — | | | | — | | | | $1,164,028 | | | | Cash-Settled RSUs(7) | | | | 2/4/2016 | | | | — | | | | — | | | | 18,814 | | | | — | | | | — | | | | $1,199,016 | | | | Stock-Settled RSUs | | | | 2/4/2016 | | | | — | | | | — | | | | 30,410 | | | | — | | | | — | | | | $1,938,029 | John G. Finneran, Jr. General Counsel and Corporate Secretary | | | | Performance Shares (3) | | | | 2/4/2016 | | | | 11,647 | | | | 17,471 | | | | — | | | | — | | | | | | | | $742,263 | | | Stock Options(4) | | | | 2/4/2016 | | | | — | | | | — | | | | — | | | | 30,246 | | | | $63.73 | | | | $494,803 | | | Cash-Settled RSUs | | | 2/4/2016 | | | — | | | — | | | 11,659 | | | — | | | — | | | $743,028 | | | Cash-Settled RSUs(7) | | | 2/4/2016 | | | — | | | — | | | 12,004 | | | — | | | — | | | $765,015 | | | Stock-Settled RSUs | | | 2/4/2016 | | | — | | | — | | | 19,411 | | | — | | | — | | | $1,237,063 | Frank G. LaPrade, III Chief Enterprise Services Officer | | | | Performance Shares (3) | | | 2/4/2016 | | | 11,235 | | | 16,853 | | | — | | | — | | | | | | $716,007 | | | | Stock Options(4) | | | | 2/4/2016 | | | | — | | | | — | | | | — | | | | 32,420 | | | | $63.73 | | | | $530,369 | | | | Cash-Settled RSUs | | | | 2/4/2016 | | | | — | | | | — | | | | 10,718 | | | | — | | | | — | | | | $683,058 | | | | Cash-Settled RSUs(7) | | | | 2/4/2016 | | | | — | | | | — | | | | 11,565 | | | | — | | | | — | | | | $737,037 | | | | Stock-Settled RSUs | | | | 2/4/2016 | | | | — | | | | — | | | | 18,725 | | | | — | | | | — | | | | $1,193,344 | Sanjiv Yajnik President, Financial Services | | | | Performance Shares (3) | | | | 2/4/2016 | | | | 11,025 | | | | 16,538 | | | | — | | | | — | | | | | | | | $702,623 | | | Stock Options(4) | | | | 2/4/2016 | | | | — | | | | — | | | | — | | | | 28,633 | | | | $63.73 | | | | $468,416 | | | Cash-Settled RSUs | | | 2/4/2016 | | | — | | | — | | | 11,031 | | | — | | | — | | | $703,006 | | | Cash-Settled RSUs(7) | | | 2/4/2016 | | | — | | | — | | | 11,361 | | | — | | | — | | | $724,037 | | | Stock-Settled RSUs | | | 2/4/2016 | | | — | | | — | | | 18,375 | | | — | | | — | | | $1,171,039 | Ryan M. Schneider Former President, Card | | | | Performance Shares (3) | | | 2/4/2016 | | | 15,494 | | | 23,241 | | | — | | | — | | | | | | $987,433 | | | | Stock Options(4) | | | | 2/4/2016 | | | | — | | | | — | | | | — | | | | 44,709 | | | | $63.73 | | | | $731,408 | | | | Cash-Settled RSUs | | | | 2/4/2016 | | | | — | | | | — | | | | 13,495 | | | | — | | | | — | | | | $860,036 | | | | Cash-Settled RSUs(7) | | | | 2/4/2016 | | | | — | | | | — | | | | 14,358 | | | | — | | | | — | | | | $915,035 | | | | Stock-Settled RSUs | | | | 2/4/2016 | | | | — | | | | — | | | | 25,823 | | | | — | | | | — | | | | $1,645,700 |
(1) | Date on which awards were approved by the Compensation Committee and independent directors and granted to the executives. |
| | | | | | | | | | | Volatility | | Risk-Free Interest Rate | | Dividend Yield | | Expected Life | 25.53% | | 1.92% | | 1.74% | | 6.1 Years |
(2) | Equal to the fair market value of a share of Capital One’s common stock on the date of grant determined on the basis of the closing price as reported by the NYSE Composite Transaction Tape. |
| | | | | | | | | 72 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
(3) | The grant date fair values for the performance shares if the maximum level of performance is achieved are as follows: $13,125,010$13,125,002 for Mr. Fairbank, $1,530,394$327,254 for Mr. Blackley, $1,744,226 for Mr. Crawford, $1,233,959 for Mr. Schneider, $1,076,428$1,113,427 for Mr. Finneran, and $1,009,371$1,074,042 for Mr. Yajnik.LaPrade, $1,053,967 for Mr. Yajnik, and $1,481,149 for Mr. Schneider. |
(4) | Grant of cash-settled RSUs representing a portion of Mr. Fairbank’s 2013 (4) | The grant date fair value for each option awarded on February 4, 2016, was calculated using the Black-Scholes method and was based on the following assumptions: (i) volatility of 30.00%; (ii) risk-free interest rate of 1.64%; (iii) dividend yield of 2.07% and (iv) expected life of 6.6 years. |
(5) | Grant of cash-settled RSUs representing a portion of Mr. Fairbank’s 2015year-end incentive opportunity. |
(6) | Grant of stock-settled RSUs representing 10% of the CEO’s 2016 total target compensation. |
(7) | Grant of cash-settled RSUs representing a portion of base salary for 2016. |
(8) | One-time grant of stock-settled RSUs awarded in connection with Mr. Blackley’s promotion to Chief Financial Officer in May 2016. |
(5) | Grant of stock-settled RSUs representing 10% of the CEO’s 2014 total target compensation, introduced in 2014 to account for the reduction of the stock option component of the CEO’s total target compensation. 2016 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 Chair, CEO and President | | | | 1,143,238 | | | | $14,643,006 | | | | 287,031 | | | | $19,428,031 | R. Scott Blackley Chief Financial Officer | | | | 0 | | | | $0 | | | | 12,899 | | | | $806,045 | Stephen S. Crawford Former CFO, Head of Finance and Corporate Development | | | | 0 | | | | $0 | | | | 121,100 | | | | $7,669,453 | John G. Finneran, Jr. General Counsel and Corporate Secretary | | | | 88,510 | | | | $359,351 | | | | 61,480 | | | | $3,960,573 | Frank G. LaPrade, III Chief Enterprise Services Officer | | | | 20,000 | | | | $241,008 | | | | 53,120 | | | | $3,420,099 | Sanjiv Yajnik President, Financial Services | | | | 23,560 | | | | $320,044 | | | | 57,724 | | | | $3,718,400 | Ryan M. Schneider Former President, Card | | | | 0 | | | | $0 | | | | 65,432 | | | | $4,198,333 |
(1) | The value realized is thepre-tax value of the shares (market price less the exercise price) received. |
(2) | The value realized for awards other than certain cash-settled RSUs and performance shares is the number of shares multiplied by the closing price of the Company’s common stock on the vesting date, as reported by the NYSE Composite Transaction Tape. For Mr. Crawford, the value includes shares that were withheld by the Company to satisfy the tax obligation associated with his signing of an Amended and RestatedNon-Competition Agreement. For additional information regarding Mr. Crawford’s Amended and RestatedNon-Competition Agreement, see “Non-Competition Agreements” beginning on page 80. For performance shares, the value also reflects the accrued dividends paid out as additional shares on the date the performance share award results are certified by the Compensation Committee. Except for cash-settled RSUs that were vested and released in connection with tax withholding on February 4, 2016, the value realized for all other cash-settled RSUs and amount paid is the number of shares multiplied by the closing price of the Company’s common stock for the 20 trading days preceding the vesting date for grants made prior to 2014 and 15 trading days preceding the vesting date for grants made in or after 2014, in accordance with the terms of the applicable awards. The value included in the table above that was realized from cash-settled RSUs was as follows: $2,502,222 for Mr. Fairbank, $316,821 for Mr. Blackley, $1,880,333 for Mr. Crawford, $1,503,592 for Mr. Finneran, $1,297,104 for Mr. LaPrade, $1,414,747 for Mr. Yajnik, and $1,731,173 for Mr. Schneider. |
| | | (6) | Grant of cash-settled RSUs representing a portion of base salary for 2014. |
CAPITAL ONE FINANCIAL CORPORATION 2014 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 Chairman, CEO and President | | 566,000 | | $163,785 | | 303,979 | | $22,912,886 | | | | | | | | | | Stephen S. Crawford Chief Financial Officer | | 0 | | $0 | | 35,571 | | $2,446,166 | | | | | | | | | | Ryan M. Schneider President, Card | | 72,683 | | $2,596,741 | | 65,192 | | $4,757,336 | | | | | | | | | | John G. Finneran, Jr. General Counsel and Corporate Secretary | | 0 | | $0 | | 57,136 | | $4,176,124 | | | | | | | | | | Sanjiv Yajnik President, Financial Services | | 7,630 | | $28,696 | | 51,805 | | $3,782,929 |
| | 2017 PROXY STATEMENT (1) | The value realized is the pre-tax value of the shares (market price less the exercise price) received. | | 73 |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
(2) | The value realized for awards other than certain cash-settled RSUs and performance shares is the number of shares multiplied by the closing price of the Company’s common stock on the vesting date, as reported by the NYSE Composite Transaction Tape. For performance shares, the value also reflects the accrued dividends paid out as additional shares on the date the performance share award results are certified by the Compensation Committee. Except for cash-settled RSUs that were vested and released in connection with tax withholding on January 30, 2014, the value realized for all other cash-settled RSUs and amount paid is the number of shares multiplied by the closing price of the Company’s common stock for the 15 trading days preceding the vesting date, in accordance with the terms of the applicable awards. The value included in the table above that was realized from cash-settled RSUs was as follows: $10,186,459 for Mr. Fairbank, $54,710 for Mr. Crawford, $1,710,848 for Mr. Schneider, $1,607,667 for Mr. Finneran, and $1,424,777 for Mr. Yajnik. |
2014 Outstanding Equity Awards at Fiscal
2016 Outstanding Equity Awards at FiscalYear-End Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards(1) | | | | Stock Awards | Name and Principal Position | | | | Grant Date | | | | Number of Securities Underlying Unexercised Options Exercisable | | | | Number of Securities Underlying Unexercised Options Unexercisable | | | | Option Exercise Price(2) | | | | 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(3) | | | | 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(3) | Richard D. Fairbank Chair, CEO and President | | | | 12/10/2007 | | | | 1,113,393(4) | | | | 0 | | | | $50.99 | | | | 12/09/2017 | | | | | | | | | | | | | | | | | | | | 01/29/2009 | | | | 970,403(4) | | | | 0 | | | | $18.28 | | | | 01/28/2019 | | | | | | | | | | | | | | | | | | | | 01/27/2010 | | | | 559,333(4) | | | | 0 | | | | $36.55 | | | | 01/26/2020 | | | | | | | | | | | | | | | | | | | | 01/26/2011 | | | | 608,366(4) | | | | 0 | | | | $48.28 | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | 01/31/2012 | | | | 360,009(4) | | | | 0 | | | | $45.75 | | | | 01/30/2022 | | | | | | | | | | | | | | | | | | | | 01/31/2013 | | | | 325,985(4) | | | | 0 | | | | $56.32 | | | | 01/30/2023 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | 0 | | | | 108,944(5) | | | | $70.96 | | | | 01/29/2024 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 184,964(7) | | | | $16,136,259 | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 38,935(6) | | | | $3,396,689 | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 24,103(6) | | | | $2,102,746 | | | | | | | | | | | | 01/29/2015 | | | | 0 | | | | 115,812(5) | | | | $74.96 | | | | 01/28/2025 | | | | | | | | | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 175,094(8) | | | | $15,275,201 | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 38,777(6) | | | | $3,382,905 | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 23,081(6) | | | | $2,013,586 | | | | | | | | | | | | 02/04/2016 | | | | 0 | | | | 106,973(5) | | | | $63.73 | | | | 02/03/2026 | | | | | | | | | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 205,947(8) | | | | $17,966,816 | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 28,009(6) | | | | $2,443,505 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 27,460(6) | | | | $2,395,610 | | | | | | | | | R. Scott Blackley Chief Financial Officer | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 2,713(9) | | | | $236,682 | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,798(8) | | | | $331,338 | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 5,063(9) | | | | $441,696 | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 2,690(10) | | | | $234,676 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,135(8) | | | | $447,977 | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 10,268(9) | | | | $895,780 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 4,712(10) | | | | $411,075 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 6,434(11) | | | | $561,302 | | | | | | | | | | | | 05/09/2016 | | | | | | | | | | | | | | | | | | | | 14,368(12) | | | | $1,253,464 | | | | | | | | | Stephen S. Crawford Former CFO, Head of Finance and Corporate Development | | | | 02/04/2013 | | | | | | | | | | | | | | | | | | | | 30,523(14) | | | | $2,662,827 | | | | | | | | | | | | 01/30/2014 | | | | 31,363(13) | | | | 15,683(13) | | | | $70.96 | | | | 01/29/2024 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,567(7) | | | | $1,881,505 | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 7,987(9) | | | | $696,786 | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 6,931(10) | | | | $604,660 | | | | | | | | | | | | 01/29/2015 | | | | 20,221(13) | | | | 40,443(13) | | | | $74.96 | | | | 01/28/2025 | | | | | | | | | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,764(8) | | | | $2,160,411 | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 18,343(9) | | | | $1,600,243 | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 13,513(10) | | | | $1,178,874 | | | | | | | | | | | | 02/04/2016 | | | | 0 | | | | 52,651(13) | | | | $63.73 | | | | 02/03/2026 | | | | | | | | | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 27,369(8) | | | | $2,387,672 | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 30,410(9) | | | | $2,652,968 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 17,419(10) | | | | $1,519,634 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 18,814(11) | | | | $1,641,333 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 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 | | | | | | | | | | 260,957 (6) | | $21,542,000 | | 813,219 (7) | | $67,131,228 | | 573,000 (5) | | 0 | | $87.28 | | 12/19/2015 | | | | | | | | | | 594,851 (5) | | 0 | | $76.45 | | 12/10/2016 | | | | | | | | | | 1,661,780 (5) | | 0 | | $50.99 | | 12/09/2017 | | | | | | | | | | 970,403 (5) | | 0 | | $18.28 | | 1/28/2019 | | | | | | | | | | 559,333 (5) | | 0 | | $36.55 | | 1/26/2020 | | | | | | | | | | 608,366 (5) | | 0 | | $48.28 | | 1/25/2021 | | | | | | | | | | 0 | | 360,009 (5) | | $45.75 | | 1/30/2022 | | | | | | | | | | 0 | | 325,985 (5) | | $56.32 | | 1/30/2023 | | | | | | | | | | 0 | | 108,944 (5) | | $70.96 | | 1/29/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen S. Crawford Chief Financial Officer | | | | | | | | | | 199,812 (9) | | $16,494,481 | | 21,567 (7) | | $1,780,356 | | 0 | | 47,046 (8) | | $70.96 | | 1/29/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | Ryan M. Schneider President, Card | | | | | | | | | | 89,924 (10) | | $7,423,226 | | 70,480 (7) | | $5,818,083 | | 15,650 (8) | | 0 | | $78.71 | | 3/14/2015 | | | | | | | | | | 17,890 (8) | | 0 | | $88.81 | | 3/2/2016 | | | | | | | | | | 26,250 (8) | | 0 | | $76.79 | | 3/1/2017 | | | | | | | | | | 63,700 (8) | | 0 | | $48.95 | | 2/20/2018 | | | | | | | | | | 32,451 (8) | | 16,227 (8) | | $45.75 | | 1/30/2022 | | | | | | | | | | 11,756 (8) | | 23,513 (8) | | $56.32 | | 1/30/2023 | | | | | | | | | | 0 | | 37,934 (8) | | $70.96 | | 1/29/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | John G. Finneran, Jr. General Counsel and Corporate Secretary | | | | | | | | | | 82,749 (10) | | $6,830,930 | | 68,867 (7) | | $5,684,930 | | 57,760 (8) | | 0 | | $78.71 | | 3/14/2015 | | | | | | | | | | 63,650 (8) | | 0 | | $88.81 | | 3/2/2016 | | | | | | | | | | 88,510 (8) | | 0 | | $76.79 | | 3/1/2017 | | | | | | | | | | 149,890 (8) | | 0 | | $48.95 | | 2/20/2018 | | | | | | | | | | 56,624 (8) | | 0 | | $48.28 | | 1/25/2021 | | | | | | | | | | 28,452 (8) | | 14,227 (8) | | $45.75 | | 1/30/2022 | | | | | | | | | | 11,536 (8) | | 23,075 (8) | | $56.32 | | 1/30/2023 | | | | | | | | | | 0 | | 29,783 (8) | | $70.96 | | 1/29/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | Sanjiv Yajnik President, Financial Services | | | | | | | | | | 76,997 (10) | | $6,356,102 | | 63,334 (7) | | $5,228,222 | | 11,670 (8) | | 0 | | $88.81 | | 3/2/2016 | | | | | | | | | | 23,560 (8) | | 0 | | $76.79 | | 3/1/2017 | | | | | | | | | | 37,204 (8) | | 0 | | $48.28 | | 1/25/2021 | | | | | | | | | | 25,676 (8) | | 12,839 (8) | | $45.75 | | 1/30/2022 | | | | | | | | | | 10,816 (8) | | 21,634 (8) | | $56.32 | | 1/30/2023 | | | | | | | | | | 0 | | 27,928 (8) | | $70.96 | | 1/29/2024 | | | | | | | | |
| | | | | | | | | 74 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
(1) | Stock options granted generally have time-based vesting schedules, are exercisable upon vesting and vest earlier upon the optionee’s termination of employment for death, disability, or upon a change of control of Capital One. Certain stock options, as noted in the footnotes below, are also subject to performance-based vesting requirements. They are transferable only to or for the benefit of immediate family members. For the treatment of stock options after the optionee’s retirement, see “Payments upon Retirement” in the “Potential Payments Upon Termination or Change of Control” section on page 67 for details. | SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
(2) | The following table details vesting dates for all outstanding equity awards; the date listed as the vesting date for performance shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards(1) | | | | Stock Awards | Name and Principal Position | | | | Grant Date | | | | Number of Securities Underlying Unexercised Options Exercisable | | | | Number of Securities Underlying Unexercised Options Unexercisable | | | | Option Exercise Price(2) | | | | 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(3) | | | | 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(3) | John G. Finneran, Jr. General Counsel and Corporate Secretary | | | | 01/26/2011 | | | | 56,624(4) | | | | 0 | | | | $48.28 | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | 01/31/2012 | | | | 42,679(4) | | | | 0 | | | | $45.75 | | | | 01/30/2022 | | | | | | | | | | | | | | | | | | | | 01/31/2013 | | | | 34,611(4) | | | | 0 | | | | $56.32 | | | | 01/30/2023 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | 19,855(13) | | | | 9,928(13) | | | | $70.96 | | | | 01/29/2024 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,170(7) | | | | $1,323,431 | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 5,618(9) | | | | $490,114 | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 4,879(10) | | | | $425,644 | | | | | | | | | | | | 01/29/2015 | | | | 10,553(13) | | | | 21,107(13) | | | | $74.96 | | | | 01/28/2025 | | | | | | | | | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 14,361(8) | | | | $1,252,854 | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 10,637(9) | | | | $927,972 | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 8,604(10) | | | | $750,613 | | | | | | | | | | | | 02/04/2016 | | | | 0 | | | | 30,246(13) | | | | $63.73 | | | | 02/03/2026 | | | | | | | | | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,471(8) | | | | $1,524,170 | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 19,411(9) | | | | $1,693,416 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 11,260(10) | | | | $982,322 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 12,004(11) | | | | $1,047,229 | | | | | | | | | Frank G. LaPrade, III Chief Enterprise Services Officer | | | | 02/21/2008 | | | | 45,810(4) | | | | 0 | | | | $48.95 | | | | 02/20/2018 | | | | | | | | | | | | | | | | | | | | 01/29/2009 | | | | 30,647(4) | | | | 0 | | | | $18.28 | | | | 01/28/2019 | | | | | | | | | | | | | | | | | | | | 01/26/2011 | | | | 18,666(4) | | | | 0 | | | | $48.28 | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | 01/26/2011 | | | | 15,460(4) | | | | 0 | | | | $48.28 | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | 01/31/2012 | | | | 31,178(4) | | | | 0 | | | | $45.75 | | | | 01/30/2022 | | | | | | | | | | | | | | | | | | | | 01/31/2013 | | | | 32,603(4) | | | | 0 | | | | $56.32 | | | | 01/30/2023 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | 19,975(13) | | | | 9,989(13) | | | | $70.96 | | | | 01/29/2024 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,736(7) | | | | $1,198,329 | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 5,087(9) | | | | $443,790 | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 4,022(10) | | | | $350,879 | | | | | | | | | | | | 01/29/2015 | | | | 10,634(13) | | | | 21,269(13) | | | | $74.96 | | | | 01/28/2025 | | | | | | | | | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,023(8) | | | | $1,136,127 | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 9,646(9) | | | | $841,517 | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 7,442(10) | | | | $649,240 | | | | | | | | | | | | 02/04/2016 | | | | 0 | | | | 32,420(13) | | | | $63.73 | | | | 02/03/2026 | | | | | | | | | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 16,853(8) | | | | $1,470,256 | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 18,725(9) | | | | $1,633,569 | | | | | | | | | | | | 02/04/2016 | | | �� | | | | | | | | | | | | | | | | | 10,341(10) | | | | $902,149 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 11,565(11) | | | | $1,008,931 | | | | | | | | | Sanjiv Yajnik President, Financial Services | | | | 01/26/2011 | | | | 37,204(4) | | | | 0 | | | | $48.28 | | | | 01/25/2021 | | | | | | | | | | | | | | | | | | | | 01/31/2012 | | | | 38,515(4) | | | | 0 | | | | $45.75 | | | | 01/30/2022 | | | | | | | | | | | | | | | | | | | | 01/31/2013 | | | | 32,450(4) | | | | 0 | | | | $56.32 | | | | 01/30/2023 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | 18,618(13) | | | | 9,310(13) | | | | $70.96 | | | | 01/29/2024 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 14,225(7) | | | | $1,240,989 | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 5,268(9) | | | | $459,580 | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 4,593(10) | | | | $400,693 | | | | | | | | | | | | 01/29/2015 | | | | 9,895(13) | | | | 19,793(13) | | | | $74.96 | | | | 01/28/2025 | | | | | | | | | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,466(8) | | | | $1,174,774 | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 9,974(9) | | | | $870,132 | | | | | | | | |
| | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 75 |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards(1) | | | | Stock Awards | Name and Principal Position | | | | Grant Date | | | | Number of Securities Underlying Unexercised Options Exercisable | | | | Number of Securities Underlying Unexercised Options Unexercisable | | | | Option Exercise Price(2) | | | | 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(3) | | | | 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(3) | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 8,097(10) | | | | $706,382 | | | | | | | | | | | | | 02/04/2016 | | | | 0 | | | | 28,633(13) | | | | $63.73 | | | | 02/03/2026 | | | | | | | | | | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 16,538(8) | | | | $1,442,775 | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 18,375(9) | | | | $1,603,035 | | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 10,696(10) | | | | $933,119 | | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 11,361(11) | | | | $991,134 | | | | | | | | | Ryan M. Schneider Former President, Card | | | | 03/02/2007 | | | | 26,250(4) | | | | 0 | | | | $76.79 | | | | 03/01/2017 | | | | | | | | | | | | | | | | | | | | 02/21/2008 | | | | 100(4) | | | | 0 | | | | $48.95 | | | | 02/20/2018 | | | | | | | | | | | | | | | | | | | | 01/31/2013 | | | | 35,269(4) | | | | 0 | | | | $56.32 | | | | 01/30/2023 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | 25,289(13) | | | | 12,645(13) | | | | $70.96 | | | | 01/29/2024 | | | | | | | | | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,390(7) | | | | $1,517,104 | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 6,440(9) | | | | $561,826 | | | | | | | | | | | | 01/30/2014 | | | | | | | | | | | | | | | | | | | | 5,592(10) | | | | $487,846 | | | | | | | | | | | | 01/29/2015 | | | | 15,457(13) | | | | 30,917(13) | | | | $74.96 | | | | 01/28/2025 | | | | | | | | | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 18,930(8) | | | | $1,651,453 | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 14,022(9) | | | | $1,223,279 | | | | | | | | | | | | 01/29/2015 | | | | | | | | | | | | | | | | | | | | 9,870(10) | | | | $861,059 | | | | | | | | | | | | 02/04/2016 | | | | 0 | | | | 44,709(13) | | | | $63.73 | | | | 02/03/2026 | | | | | | | | | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 23,241(8) | | | | $2,027,545 | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 25,823(9) | | | | $2,252,799 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 13,032(10) | | | | $1,136,912 | | | | | | | | | | | | 02/04/2016 | | | | | | | | | | | | | | | | | | | | 14,358(11) | | | | $1,252,592 | | | | | | | | |
(1) | Stock options granted generally have time-based vesting schedules, are exercisable upon vesting and vest earlier upon the optionee’s termination of employment for death, disability, or, beginning with awards granted in 2015, termination by Capital One without cause or by the individual for “good reason” within two years following (or in anticipation of) a change of control of Capital One. Certain stock options, as noted in the footnotes below, are also subject to performance-based vesting requirements. These options are transferable only to or for the benefit of immediate family members. For the treatment of stock options after the optionee’s retirement, see “Payments upon Retirement” in the “Potential Payments Upon Termination or Change of Control” section on page 82 for details. |
(2) | 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 NYSE 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 the NYSE Composite Transaction Tape. |
(3) | Market value based on the closing price of a share of Capital One’s common stock on the last trading day of 2016 as reported by the NYSE Composite Transaction Tape. |
(4) | Stock options granted to NEOs prior to 2014 are fully vested. |
(5) | Stock options granted to the CEO in 2014, 2015 and 2016 vest in full on February 15 after the third anniversary of the date of grant (subject to performance-based vesting provisions. See “Performance-Based Vesting Provisions” in the “Compensation Discussion and Analysis” section on page 60 for details. |
(6) | A portion of the award is subject to vest following the first and second anniversary of the grant date in connection with requiredtax-related withholdings made by which the Compensation Committee must certify the performance of the Company on behalf of the executive; the remaining shares vest in full on February 15 after the third anniversary of the date of grant. The awards are subject to performance-based vesting provisions (see “Performance-Based Vesting Provisions” in the “Compensation Discussion and Analysis” section on page 60 for details). |
(7) | Represents the number of shares expected to be issued for the January 30, 2014 performance share awards as of December 31, 2016. Shares were issued on March 8, 2017 with the following issuance date values (including accrued dividends paid out as additional shares): $17,956,092 for Mr. Fairbank; $2,093,784 for Mr. Crawford; $1,472,764 for Mr. Finneran; $1,333,517 for Mr. LaPrade; $1,381,010 for Mr. Yajnik; and $1,688,240 for Mr. Schneider. The number of shares an executive receives under a performance share award is dependent on the Company’s performance over the applicable three-year performance period. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | First Vesting | | Second Vesting | | Third Vesting | | Fourth Vesting | | Fifth Vesting | Name | | Grant Date | | Grant Type | | Vesting Date | | # of Shares | | Vesting Date | | # of Shares | | Vesting Date | | # of Shares | | Vesting Date | | # of Shares | | Vesting Date | | # of Shares | Richard D. Fairbank | | 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 | | | | | | | | | | | | | | | | | | 1/29/2009 | | Option Award | | 1/29/2012 | | 970,403 | | | | | | | | | | | | | | | | | | 1/27/2010 | | Option Award | | 1/27/2013 | | 559,333 | | | | | | | | | | | | | | | | | | 1/26/2011 | | Option Award | | 1/26/2014 | | 608,366 | | | | | | | | | | | | | | | | | | 1/31/2012 | | Perf Share Award | | 3/15/2015 | | 191,257 | | | | | | | | | | | | | | | | | | 1/31/2012 | | Restricted Stock Unit Award | | 2/10/2015 | | 157,378 | | | | | | | | | | | | | | | | | | 1/31/2012 | | Option Award | | 2/10/2015 | | 360,009 | | | | | | | | | | | | | | | | | | 1/31/2013 | | Perf Share Award | | 3/15/2016 | | 155,363 | | | | | | | | | | | | | | | | | | 1/31/2013 | | Restricted Stock Unit Award | | 2/10/2016 | | 38,841 | | | | | | | | | | | | | | | | | | 1/31/2013 | | Option Award | | 2/10/2016 | | 325,985 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Perf Share Award | | 3/15/2017 | | 123,309 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 2/15/2017 | | 40,076 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 2/15/2017 | | 24,662 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Option Award | | 2/15/2017 | | 108,944 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen S. Crawford | | 2/4/2013 | | Restricted Stock Award | | 2/4/2014 | | 34,800 | | 2/4/2015 | | 34,800 | | 2/4/2016 | | 34,800 | | 2/4/2017 | | 34,800 | | 2/4/2018 | | 34,800 | | 1/30/2014 | | Perf Share Award | | 3/15/2017 | | 14,378 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 2/15/2015 | | 7,988 | | 2/15/2016 | | 7,987 | | 2/15/2017 | | 7,987 | | | | | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 1/30/2014 | | 771 | | 2/15/2015 | | 6,932 | | 2/15/2016 | | 6,932 | | 2/15/2017 | | 6,931 | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 1/1/2015 | | 15,855 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Option Award | | 2/15/2015 | | 15,681 | | 2/15/2016 | | 15,682 | | 2/15/2017 | | 15,683 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ryan M. Schneider | | 3/15/2005 | | Option Award | | 3/15/2006 | | 5,216 | | 3/15/2007 | | 5,217 | | 3/15/2008 | | 5,217 | | | | | | | | | | 3/3/2006 | | Option Award | | 3/3/2007 | | 5,957 | | 3/3/2008 | | 5,957 | | 3/3/2009 | | 5,976 | | | | | | | | | | 3/2/2007 | | Option Award | | 3/2/2008 | | 8,749 | | 3/2/2009 | | 8,750 | | 3/2/2010 | | 8,751 | | | | | | | | | | 2/21/2008 | | Option Award | | 2/21/2009 | | 21,233 | | 2/21/2010 | | 21,233 | | 2/21/2011 | | 21,234 | | | | | | | | | | 1/31/2012 | | Perf Share Award | | 3/15/2015 | | 17,456 | | | | | | | | | | | | | | | | | | 1/31/2012 | | Restricted Stock Award | | 2/10/2013 | | 9,698 | | 2/10/2014 | | 9,698 | | 2/10/2015 | | 9,697 | | | | | | | | | | 1/31/2012 | | Restricted Stock Unit Award | | 2/10/2013 | | 9,521 | | 2/10/2014 | | 9,521 | | 2/10/2015 | | 9,522 | | | | | | | | | | 1/31/2012 | | Option Award | | 2/10/2013 | | 16,225 | | 2/10/2014 | | 16,226 | | 2/10/2015 | | 16,227 | | | | | | | | | | 1/31/2013 | | Perf Share Award | | 3/15/2016 | | 11,346 | | | | | | | | | | | | | | | | | | 1/31/2013 | | Restricted Stock Award | | 2/10/2014 | | 6,304 | | 2/10/2015 | | 6,303 | | 2/10/2016 | | 6,303 | | | | | | | | | | 1/31/2013 | | Restricted Stock Unit Award | | 2/10/2014 | | 5,200 | | 2/10/2015 | | 5,200 | | 2/10/2016 | | 5,201 | | | | | | | | | | 1/31/2013 | | Option Award | | 2/10/2014 | | 11,756 | | 2/10/2015 | | 11,756 | | 2/10/2016 | | 11,757 | | | | | | | | | | 1/30/2014 | | Perf Share Award | | 3/15/2017 | | 11,593 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 2/15/2015 | | 6,441 | | 2/15/2016 | | 6,440 | | 2/15/2017 | | 6,440 | | | | | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 1/30/2014 | | 620 | | 2/15/2015 | | 5,593 | | 2/15/2016 | | 5,593 | | 2/15/2017 | | 5,592 | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 1/1/2015 | | 11,599 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Option Award | | 2/15/2015 | | 12,644 | | 2/15/2016 | | 12,645 | | 2/15/2017 | | 12,645 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | John G. Finneran, Jr. | | 3/15/2005 | | Option Award | | 3/15/2006 | | 19,253 | | 3/15/2007 | | 19,253 | | 3/15/2008 | | 19,254 | | | | | | | | | | 3/3/2006 | | Option Award | | 3/3/2007 | | 21,195 | | 3/3/2008 | | 21,195 | | 3/3/2009 | | 21,260 | | | | | | | | | | 3/2/2007 | | Option Award | | 3/2/2008 | | 29,503 | | 3/2/2009 | | 29,503 | | 3/2/2010 | | 29,504 | | | | | | | | | | 2/21/2008 | | Option Award | | 2/21/2009 | | 49,962 | | 2/21/2010 | | 49,963 | | 2/21/2011 | | 49,965 | | | | | | | | | | 1/26/2011 | | Option Award | | 1/26/2012 | | 18,874 | | 1/26/2013 | | 18,874 | | 1/26/2014 | | 18,876 | | | | | | | | | | 1/31/2012 | | Perf Share Award | | 3/15/2015 | | 17,005 | | | | | | | | | | | | | | | | | | 1/31/2012 | | Restricted Stock Award | | 2/10/2013 | | 9,448 | | 2/10/2014 | | 9,448 | | 2/10/2015 | | 9,446 | | | | | | | | | | 1/31/2012 | | Restricted Stock Unit Award | | 2/10/2013 | | 8,872 | | 2/10/2014 | | 8,872 | | 2/10/2015 | | 8,873 | | | | | | | | | | 1/31/2012 | | Option Award | | 2/10/2013 | | 14,226 | | 2/10/2014 | | 14,226 | | 2/10/2015 | | 14,227 | | | | | | | | | | 1/31/2013 | | Perf Share Award | | 3/15/2016 | | 12,372 | | | | | | | | | | | | | | | | | | 1/31/2013 | | Restricted Stock Award | | 2/10/2014 | | 6,873 | | 2/10/2015 | | 6,872 | | 2/10/2016 | | 6,874 | | | | | | | | | | 1/31/2013 | | Restricted Stock Unit Award | | 2/10/2014 | | 4,536 | | 2/10/2015 | | 4,536 | | 2/10/2016 | | 4,537 | | | | | | | | | | 1/31/2013 | | Option Award | | 2/10/2014 | | 11,536 | | 2/10/2015 | | 11,537 | | 2/10/2016 | | 11,538 | | | | | | | | | | 1/30/2014 | | Perf Share Award | | 3/15/2017 | | 10,113 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 2/15/2015 | | 5,619 | | 2/15/2016 | | 5,618 | | 2/15/2017 | | 5,618 | | | | | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 1/30/2014 | | 541 | | 2/15/2015 | | 4,879 | | 2/15/2016 | | 4,879 | | 2/15/2017 | | 4,879 | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 1/1/2015 | | 10,119 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Option Award | | 2/15/2015 | | 9,927 | | 2/15/2016 | | 9,928 | | 2/15/2017 | | 9,928 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sanjiv Yajnik | | 3/3/2006 | | Option Award | | 3/3/2007 | | 3,886 | | 3/3/2008 | | 3,886 | | 3/3/2009 | | 3,898 | | | | | | | | | | 3/2/2007 | | Option Award | | 3/2/2008 | | 7,853 | | 3/2/2009 | | 7,853 | | 3/2/2010 | | 7,854 | | | | | | | | | | 1/26/2011 | | Option Award | | 1/26/2012 | | 18,601 | | 1/26/2013 | | 18,601 | | 1/26/2014 | | 18,603 | | | | | | | | | | 1/31/2012 | | Perf Share Award | | 3/15/2015 | | 15,346 | | | | | | | | | | | | | | | | | | 1/31/2012 | | Restricted Stock Award | | 2/10/2013 | | 8,526 | | 2/10/2014 | | 8,526 | | 2/10/2015 | | 8,525 | | | | | | | | | | 1/31/2012 | | Restricted Stock Unit Award | | 2/10/2013 | | 8,006 | | 2/10/2014 | | 8,007 | | 2/10/2015 | | 8,007 | | | | | | | | | | 1/31/2012 | | Option Award | | 2/10/2013 | | 12,838 | | 2/10/2014 | | 12,838 | | 2/10/2015 | | 12,839 | | | | | | | | | | 1/31/2013 | | Perf Share Award | | 3/15/2016 | | 11,599 | | | | | | | | | | | | | | | | | | 1/31/2013 | | Restricted Stock Award | | 2/10/2014 | | 6,444 | | 2/10/2015 | | 6,443 | | 2/10/2016 | | 6,445 | | | | | | | | | | 1/31/2013 | | Restricted Stock Unit Award | | 2/10/2014 | | 4,252 | | 2/10/2015 | | 4,253 | | 2/10/2016 | | 4,254 | | | | | | | | | | 1/31/2013 | | Option Award | | 2/10/2014 | | 10,816 | | 2/10/2015 | | 10,817 | | 2/10/2016 | | 10,817 | | | | | | | | | | 1/30/2014 | | Perf Share Award | | 3/15/2017 | | 9,483 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 2/15/2015 | | 5,269 | | 2/15/2016 | | 5,268 | | 2/15/2017 | | 5,268 | | | | | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 1/30/2014 | | 447 | | 2/15/2015 | | 4,594 | | 2/15/2016 | | 4,593 | | 2/15/2017 | | 4,593 | | | | | | 1/30/2014 | | Restricted Stock Unit Award | | 1/1/2015 | | 9,485 | | | | | | | | | | | | | | | | | | 1/30/2014 | | Option Award | | 2/15/2015 | | 9,309 | | 2/15/2016 | | 9,309 | | 2/15/2017 | | 9,310 | | | | | | | | |
| | | | | | | | | 76 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
(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 NYSE 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 the NYSE Composite Transaction Tape. |
(4) | Market value based on the closing price of a share of Capital One’s common stock on the last trading day of 2014 as reported by the NYSE Composite Transaction Tape. | SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
(5) | Stock options granted to the CEO prior to 2012 are fully vested. Stock options granted to the CEO in 2012-2013 vest in full on February 10 after the third anniversary of the date of grant (subject to performance-based vesting provisions), and the grant made in 2014 vests in full on February 15 after the third anniversary of the date of grant (subject to performance-based vesting provisions). See “Performance-Based Vesting Provisions” in the “Compensation Discussion and Analysis” section on page 44(8) | Represents the maximum number of shares the executive may receive under the performance share awards granted. The actual number of shares an executive receives under a performance share award is dependent on the Company’s performance over the applicable three-year performance period. The actual number of performance shares awarded may range from 0% to 150% of target and the value reported excludes dividend equivalents accrued with respect to performance shares which are paid in shares at the time the underlying performance shares are issued, and only with respect to the number of shares that actually vest. The Compensation Committee will certify the performance of the Company over the applicable performance period by March 15th after the third anniversary of the grant. |
(9) | Awards vest 33% annually beginning on February 15 after the first anniversary of the date of grant. Awards are subject to performance-based vesting provisions (see “Performance-Based Vesting Provisions” in the “Compensation Discussion and Analysis” section on page 60 for details). |
(10) | Awards vest 33% annually beginning on February 15 after the first anniversary of the date of grant. For awards granted on February 4, 2016, a portion of the award vested on the grant date in connection with requiredtax-related withholdings made by the Company on behalf of the individuals. |
(11) | Cash-settled RSUs representing a portion of 2016 base salary which vested in full on January 1, 2017, and were paid February 15, 2017. |
(12) | Vests 25% annually beginning on the first anniversary of the date of grant. |
(13) | Stock options vest 33% annually beginning on February 15 after the first anniversary of the date of grant (subject to performance-based vesting provisions). See “Performance-Based Vesting Provisions” in the “Compensation Discussion and Analysis” section on page 60 for details. |
(14) | Award vests 20% annually beginning on the first anniversary of the date of grant; a portion of the remaining award vested in June 2016 in connection with requiredtax-related withholdings made by the Company on behalf of the executive. |
(6) | For grants awarded prior to 2014, vest in full on February 10 after the third anniversary of the date of grant. For grants awarded after January 1, 2014, vest in full on February 15 after the third anniversary of the date of grant. All shares are subject to performance-based vesting provisions (see “Performance-Based Vesting Provisions” in the “Compensation Discussion and Analysis” section on page 44 for details). |
(7) | Represents the maximum number of shares the executive may receive under the performance share awards granted on January 31, 2013 and January 30, 2014, and the actual shares awarded (including accrued dividends paid out as additional shares) for the January 31, 2012 performance share awards, which were issued on March 10, 2015 with the following issuance date values: $30,715,799 for Mr. Fairbank; $2,803,438 for Mr. Schneider; $2,731,003 for Mr. Finneran; and $2,464,579 for Mr. Yajnik. The actual number of shares an executive receives under a performance share award is dependent on the Company’s performance over the applicable three-year performance period. For the grants made in 2013 and 2014, the actual number of performance shares awarded may range from 0% to 150% of target and the value reported excludes dividend equivalents accrued with respect to performance shares which are paid in shares at the time the underlying performance shares are issued, and only with respect to the number of performance shares that actually vest. |
(8) | Stock options granted to the NEOs prior to 2011 are fully vested. Stock options granted to the NEOs in 2012-2013 vest 33% annually beginning on February 10 after the first anniversary of the date of grant (subject to performance-based vesting provisions), and grants in 2014 vest 33% annually beginning on February 15 after the first anniversary of the date of grant (subject to performance-based vesting provisions). See “Performance-Based Vesting Provisions” in the “Compensation Discussion and Analysis” section on page 44 for details. |
(9) | For the award granted prior to 2014, vests 20% annually beginning on the first anniversary of the date of grant. For the awards granted after January 1, 2014, vest 33% annually beginning on February 15 after the first anniversary of the date of grant, except for the cash-settled RSUs representing a portion of 2014 base salary which vested in full on January 1, 2015, and were paid February 15, 2015. For the cash-settled RSUs granted on January 30, 2014 that vest 33% annually, a portion of the award vested on the grant date in connection with withholdings made by the Company on behalf of the individuals. The stock-settled RSU award is subject to performance-based vesting provisions (see “Performance-Based Vesting Provisions” in the “Compensation Discussion and Analysis” section on page 44 for details). |
(10) | For awards granted prior to 2014, vest 33% annually beginning on February 10 after the first anniversary of the date of grant. For awards granted after January 1, 2014, vest 33% annually beginning on February 15 after the first anniversary of the date of grant, except for the cash-settled RSUs representing a portion of 2014 base salary which vested in full on January 1, 2015, and were paid February 15, 2015. For the cash-settled RSUs granted on January 30, 2014 that vest 33% annually, a portion of the award vested on the grant date in connection with withholdings made by the Company on behalf of the individuals. Restricted stock grants and stock-settled RSU awards are subject to performance-based vesting provisions (see “Performance-Based Vesting Provisions” in the “Compensation Discussion and Analysis” section on page 44 for details). |
Pension Benefits 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 of5-year Treasury Securities for the preceding 12 months ending October of the prior year (1.04%(1.53% annual average for 2014)2016). The Excess CBPP interest crediting rate changes monthly based on the Wall Street Journal Prime Rate (3.3%(3.56% annual average for 2014)2016). Messrs. Fairbank and Finneran participated in these programs. The estimated annual payouts upon retirement in the CBPP and the Excess CBPP as of December 31, 2014,2016, are $1,950$2,114 and $5,996,$6,667, respectively, for Mr. Fairbank, and $1,371$1,545 and $945,$1,102, respectively, for Mr. Finneran. These projected benefits assume interest creditsAs of December 31, 2016, the “Value of Accumulated Benefit” for both plans is equal to the account balance for each participant. This is because they both have attained their normal retirement age of 65 and so are assumed to retire immediately under the CBPPactuarial valuation assumptions. Since both participants are assumed to be 2.65% credited quarterly and underretire as of the Excess CBPP to be 3.85% credited monthly.measurement date, the future interest-crediting rate does not apply. Accounts in either plan are distributed after separation from service. Distribution options from the CBPP plan are lump sum (eligible for 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 (not eligible for rollover) or as an annuity. Since the CBPP and Excess CBPP are account-based defined benefit plans, years of service are not tracked. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 77 |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
2014 2016 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 Chairman, CEO and President | | Cash Balance Pension Plan | | $26,485 | | $0 | | Excess Cash Balance Plan | | $81,418 | | $0 | | | | | | | | | | | | Stephen S. Crawford Chief Financial Officer | | - | | - | | - | | | | | | | | | | | | Ryan M. Schneider President, Card | | - | | - | | - | | | | | | | | | | | | John G. Finneran, Jr. General Counsel and Corporate Secretary | | Cash Balance Pension Plan | | $19,036 | | $0 | | Excess Cash Balance Plan | | $13,127 | | $0 | | | | | | | | | | | | Sanjiv Yajnik President, Financial Services | | - | | - | | - |
| | | | | | | | | | | | | | | | | Name and Principal Position | | | | Plan Name(1) | | | | Present Value of Accumulated Benefit (2)(3) | | | | Payments During Last Fiscal Year | | | Richard D. Fairbank Chair, CEO and President | | | | Cash Balance Pension Plan | | | | $27,572 | | | | $— | | | | Excess Cash Balance Plan | | | | $87,095 | | | | $— | | R. Scott Blackley Chief Financial Officer | | | | — | | | | $0 | | | | — | | | Stephen S. Crawford Former CFO, Head of Finance and Corporate Development | | | | — | | | | $0 | | | | — | | | John G. Finneran, Jr. General Counsel and Corporate Secretary | | | | Cash Balance Pension Plan | | | | $19,684 | | | | $— | | | | Excess Cash Balance Plan | | | | $14,042 | | | | — | | | Frank G. LaPrade, III Chief Enterprise Services Officer | | | | — | | | | $0 | | | | — | | | Sanjiv Yajnik President, Financial Services | | | | — | | | | $0 | | | | — | | | Ryan M. Schneider Former President, Card | | | | — | | | | $0 | | | | — |
(1) | In November 1995, Capital One amended the CBPP and the Excess CBPP to eliminate furtherpay-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 basedBased on updated SEC guidance on the average annual yield of 5-year Treasury Securitiespreferred disclosure method to use for cash balance plans, the preceding 12 months ending October of the prior year. The average annual interest rate for 2014 was 1.04%. 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 2014 was 3.3%. |
(3) | 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)(3) | 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, 20142016 measurement date. |
Capital One’s VoluntaryNon-Qualified Deferred Compensation Programs Capital One offers its VoluntaryNon-Qualified Deferred Compensation Plan (“VNQDCP”) to eligible associates. In 2014,2016, our NEOs excluding our CEO, 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 atax-deferred basis. Messrs. Blackley, Crawford, Schneider, Finneran, LaPrade, Yajnik and YajnikSchneider participated in the program in 2014. 2016. In 2014,2016, 100% of the CEO’s deferred cash bonus was mandatorily deferred for three years under the VNQDCP and will pay outbe paid in lump sum in the first quarter of 2016. The CEO does not receive company contributions under the VNQDCP. 2019. 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 seventeen different investment offerings made available by the plan: Fidelity RetirementInstitutional Money Market Government Portfolio Blackrock– Institutional Class, BlackRock U.S. Total Bond Index Fund PIMCOK Shares, Prudential Total Return Bond Fund Institutional,Class Q, Dodge &and Cox Balanced Fund, Dodge &and Cox Stock Fund, T. Rowe Price Institutional Large Fund Cap Value Fund, Northern Small Cap Value Fund, Fidelity Spartan S&P 500 Index Fund – Institutional Premium Class, Blackrock Small Cap Index Fund Class K Shares, Fidelity Capital Appreciation Fund – Class K, T. Rowe Price Institutional Large Cap Growth Fund, The Hartford Mid Cap Fund, The Hartford Small Company Fund Class Y, Blackrock ACWI ex-USTotal International ex U.S. Index Fund Class K Shares, Dodge &and Cox International Stock Fund, Vanguard Total World Stock Index Fund International Shares, and Lazard Emerging Markets Equity.Market Equity Portfolio Institutional Shares. Individual investment returns experienced in 20142016 were as follows: Mr. Fairbank 4.95%7.8% or $182,199,$857,512.36, Mr. Blackley 9.6% or $45,102.46, Mr. Crawford 1.71% %13.6% or $5,743, Mr. Schneider 0.01% or $22,$97,435.64, Mr. Finneran 4.85%5.9% or $120,768$167,162.53, Mr. LaPrade 9.8% or $174,439.08 and Mr. Yajnik 7.22%10.4% or $64,323. $100,161.37 and Mr. Schneider 0.3% or $661.58. 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, death, disability,in-service distribution election or change of control. | | | | | | | | | 78 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
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, Schneider, Finneran, LaPrade, Yajnik and YajnikSchneider participated in the ESP and, as such, returns on these investments are reported for 2014.2016. 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 associated with the ESP experienced in 20142016 were as follows: Mr. Fairbank 13.66%12% or $51,878,$52,386.18, Mr. Finneran 12% or $159,614.73, Mr. LaPrade 12% or $39,956.93, Mr. Yajnik 4.8% or $14,150.47 and Mr. Schneider 0.01%0.3% or $13, Mr. Finneran 13.66% or $158,066, and Mr. Yajnik 4.69% or $13,088. $374.13. 2014 2016Non-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 | | $2,843,750 | | $0 | | $182,199 | | $0 | | | $5,284,955 | | | Excess Saving Plan | | $0 | | $0 | | $51,878 | | $0 | | | $431,724 | | | 2003 Performance Share Award (5) | | $0 | | $0 | | $1,435,579 | | $0 | | | $19,950,684 | | | | | | | | | | | | | | | | Stephen S. Crawford Chief Financial Officer | | Voluntary Non-Qualified Deferred Compensation Plan | | $15,265 | | $218,100 | | $5,743 | | $0 | | | $457,076 | | | Excess Saving Plan | | - | | - | | - | | - | | | - | | | | | | | | | | | | | | | | Ryan M. Schneider President, Card | | Voluntary Non-Qualified Deferred Compensation Plan | | $11,165 | | $157,410 | | $22 | | $162,286 | | | $336,843 | | | Excess Saving Plan | | $0 | | $0 | | $13 | | $0 | | | $129,346 | | | | | | | | | | | | | | | | John G. Finneran, Jr. General Counsel and Corporate Secretary | | Voluntary Non-Qualified Deferred Compensation Plan | | $9,747 | | $136,350 | | $120,768 | | $0 | | | $2,682,913 | | | Excess Saving Plan | | $0 | | $0 | | $158,066 | | $0 | | | $1,315,417 | | | | | | | | | | | | | | | | Sanjiv Yajnik President, Financial Services | | Voluntary Non-Qualified Deferred Compensation Plan | | $9,129 | | $127,320 | | $64,323 | | $0 | | | $1,023,100 | | | Excess Saving Plan | | $0 | | $0 | | $13,088 | | $0 | | | $292,188 | |
| | | | | | | | | | | | | | | | | | | | | | | | | 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 Chair, CEO and President | | | | VoluntaryNon-Qualified Deferred Compensation Plan | | | | $2,677,500 | | | | $0 | | | | $857,512 | | | | $(2,344,378) | | | | $10,954,141 | | | | Excess Saving Plan | | | | $0 | | | | $0 | | | | $52,386 | | | | $0 | | | | $490,089 | | | | 2003 Performance Share Award(5) | | | | $0 | | | | $0 | | | | $3,639,701 | | | | $0 | | | | $21,084,163 | R. Scott Blackley Chief Financial Officer | | | | VoluntaryNon-Qualified Deferred Compensation Plan | | | | $72,704 | | | | $80,763 | | | | $45,102 | | | | $— | | | | $565,435 | | | | Excess Saving Plan | | | | — | | | | — | | | | — | | | | — | | | | — | Stephen S. Crawford Former CFO, Head of Finance and Corporate Development | | | | VoluntaryNon-Qualified Deferred Compensation Plan | | | | $15,927 | | | | $231,720 | | | | $97,436 | | | | $— | | | | $945,912 | | | | Excess Saving Plan | | | | — | | | | — | | | | — | | | | — | | | | — | John G. Finneran, Jr. General Counsel and Corporate Secretary | | | | VoluntaryNon-Qualified Deferred Compensation Plan | | | | $10,165 | | | | $145,020 | | | | $167,163 | | | | $0 | | | | $3,128,459 | | | | Excess Saving Plan | | | | $0 | | | | $0 | | | | $159,615 | | | | $0 | | | | $1,493,248 | Frank G. LaPrade, III Chief Enterprise Services Officer | | | | VoluntaryNon-Qualified Deferred Compensation Plan | | | | $9,746 | | | | $139,440 | | | | $174,439 | | | | $0 | | | | $2,012,143 | | | | Excess Saving Plan | | | | $0 | | | | $0 | | | | $0 | | | | $0 | | | | $0 | Sanjiv Yajnik President, Financial Services | | | | VoluntaryNon-Qualified Deferred Compensation Plan | | | | $9,627 | | | | $136,830 | | | | $100,161 | | | | $(116,979) | | | | $1,227,254 | | | | Excess Saving Plan | | | | $0 | | | | $0 | | | | $14,150 | | | | $0 | | | | $307,394 | Ryan M. Schneider Former President, Card | | | | VoluntaryNon-Qualified Deferred Compensation Plan | | | | $12,115 | | | | $175,050 | | | | $662 | | | | $(168,628) | | | | $320,187 | | | | Excess Saving Plan | | | | $0 | | | | $0 | | | | $374 | | | | $0 | | | | $129,746 |
(1) | Reflects executive contributions made for 2014.2016. Mr. Fairbank’s executive contribution under the VNQDCP was a mandatory deferral of the deferred cash bonus awarded in January 2014February 2016 for 20132015 performance, which was reported in the 20132015 Summary Compensation Table. For Messrs. Blackley, Crawford, Schneider, Finneran, LaPrade, Yajnik and Yajnik,Schneider, all executive contributions under the VNQDCP were made in the form of base salary deferrals, and are reported in the 20142016 Summary Compensation Table. |
(2) | RegistrantCompany 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 included in compensation amounts reported in the Summary Compensation Tables in prior year proxy statements beginning with(to the 2007 proxy statement:extent that the named executive officer was a named executive officer in the applicable year): Mr. Fairbank $2,187,500;$9,441,250; Mr. Crawford $210,138;$683,728; Mr. Finneran $1,938,995; and Mr. Yajnik $278,394 and Mr. Schneider $617,715; and Mr. Finneran $1,642,463.$961,909. |
(5) | Includes the value of restricted stock units that were granted to Mr. Fairbank in December 2003, subject to Capital One’s earnings per share performance relative to its comparator group over a three-year period from January 1, 2004 through December 31, 2006 (the “Performance(“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 One’s common stock on March 31, 2007. Delivery of these shares is deferred until the end of Mr. Fairbank’s employment with the Company. Similar to other deferred compensation, Mr. Fairbank neither acquired these shares nor realized any value from these shares in 2014.2016. |
| | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 79 |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
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 Company’s interests in the event of an acquisition as well as to provide competitive benefits to senior executives. The Compensation Committee reviews each executive officer’s 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 executive’s tenure and contributions to the Company’s success;
The executive’s willingness to provide legal waivers and/or enter into agreements not to compete with the Company or to solicit the Company’s employees or customers; and
The resulting impact of the separation terms on the Company and its stockholders.
∎ | | 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 executive’s tenure and contributions to the Company’s success; |
∎ | | The executive’s willingness to provide legal waivers and/or enter into agreements not to compete with the Company or to solicit the Company’s 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 and ownership of work product, as described below. Standard Non-Competition Agreement Agreements
Under Capital One’s standard Certain NEOs have entered intonon-competition agreement program, NEOs agreements with the Company pursuant to which they may be restricted as to what competitive services they may provide to an entity following separation from Capital One, typicallyOne. Messrs. Blackley, Schneider, and Yajnik have entered intonon-competition agreements with the Company which provide for a period ofthe following in exchange for the NEO complying withnon-competition restrictions for up to two years. In recognition of these restrictions, the agreement callsyears following an involuntary termination, other than for paymentscause, death or disability: payment equal to be made to the NEO during periods of enforcement of the non-competition restrictions, subject to certain circumstances and conditions. Messrs. Crawford, Schneider, and Yajnik are parties to standard non-competition agreements.
For 2014, potential payments following termination under the standard non-competition agreement are 15% of the NEO’s target total compensation for each year of enforcement and up to eighteen months of subsidized health insurance premiums and administrative fees under COBRA if the NEO is eligible and 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 NEO’s involuntary termination for any reason other than death, disability or cause, theThe payments are made in two lump sums, the first following termination and the second upon completion of the enforcement period. However,In the event of a voluntary termination, the previously described payments are typically made for the second year of enforcement only for agreements with a two year enforcement period; and no payments are made for agreements with a one year enforcement period.
In May 2016, Mr. Crawford entered into an Amended and RestatedNon-Competition Agreement with the Company in connection with his appointment to Head of Finance and Corporate Development which provides for the following in exchange for Mr. Crawford complying withnon-competition restrictions for up to three years following a termination without cause: 15% of total target compensation for each year of enforcement, and certain continued benefits during each year of thenon-competition restriction, subject to certain terms and conditions. The payments are made in two lump sums, the first following termination and the second upon completion of the enforcement period. In addition, pursuant to thenon-competition agreement and the terms of his equity awards, Mr. Crawford’s unvested equity awards, other than the restricted stock units granted as part of his base salary (which will vest in accordance with the terms of their respective agreements), will continue to vest in full through | | | | | | | | | 80 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
the original vesting schedule upon a voluntary or involuntary termination for any reason other than cause. All vested unexercised options will remain exercisable through original expiration date. For allnon-competition agreements entered into between the Company and the NEOs, there are no payments under the non-competition agreement if benefits are payable under a change of control agreement. PaymentsIn addition, payments related to thenon-competition agreement are separate from any severance payments that may be made upon the NEO’s departure. However, severance payments are typically offset in part by payments related to thenon-competition agreement so that total payment amounts are consistent with the severance program’s intent. Confidentiality, Work Product andNon-Solicitation of Employee Agreement Messrs. Blackley, Crawford, Schneider, and Yajnik are parties to confidentiality, work product andnon-solicitation of employee agreements. The confidentiality provisions of these agreements 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 One’s confidential information, except as expressly authorized by Capital One or required by legal process. Further, the NEO, upon separation from Capital One, shall return any and all of Capital One’s confidential information to Capital One.
Generally, under the non-solicitation of employee provisions of these These agreements also provide that for a period of two yearstwo-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, hire or engage any associate of Capital One to provide services to a competitor or directlydirector or indirectly solicit or induce any associateemployee of Capital One to end his or her employment based on confidential information the NEO learned about the employee while they were employed by Capital One.
Payments underUnder Certain Termination Scenarios Upon separation from the Company, the named executive officers, regardless of the reason for termination, receive certain earned, but previously unpaid, payments, such as accrued but unused vacation pay and amounts earned and vested under the Company’s qualified andnon-qualified retirement programs. In addition, cash-settled RSUs granted to NEOs other than the CEO after the end of a performance year continue to vest according to the original provisions upon separation for any reason other than cause or as soon as practicable following a “double trigger” change of control (as discussed in further detail below), 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, other than the CEO, who voluntarily terminates employment with Capital One may receive payments related tonon-competition covenants (described above, if applicable) and any contractual payments to which the NEO may otherwise be entitled. Cash-settled RSUs granted to NEOs at the beginning of a performance year representing a portion of base salary arepro-rated and continue to vest according to their original terms upon voluntary termination. In addition, an NEO has the ability following separation to exercise vested but unexercised options for 3three months following voluntary termination. Involuntary Termination Without Cause An NEO, other than the CEO, whose employment with Capital One is terminated involuntarily, for performance or job elimination, is entitled to receive the amounts set forth in the Company’s Executive Severance Plan.Plan in exchange for executing a release of claims against the Company. For 2014,2016, potential payments under the Executive Severance Plan were 30% of total target compensation. If an NEO’s Non-Competition Agreement is enforced, paymentscompensation, healthcare continuation subsidy 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)COBRA, 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. If an NEO’sNon-Competition Agreement is enforced, cash payments under the Executive Severance Plan will be offset by any cash amounts paid under theNon-Competition Agreement and the NEO will be eligible for an additional payment of up to 90% of the severance payments in exchange for executing a release of claims against the Company. Cash-settled RSUs granted to NEOs at the beginning of the performance year representing a portion of base salary arepro-rated and continue to vest according to their original terms upon an involuntary termination. PerformanceGenerally, performance shares | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 81 |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
granted to NEOs will vest on apro-rata basis based on actual Company performance during the performance period if an involuntary termination without cause occurs during the performance period. Stock-settled restricted stock units granted to NEOs in 2015 and 2016 will continue to vest if an involuntary termination without cause occurs, subject to the NEO executing a release of claims against the Company. In addition, named executive officers have the ability following separation to exercise vested but unexercised options for two years. If a named executive officer’s employment with Capital One is terminated as a result of death or disability, histhe named executive officer’s unvested stock options, restricted stock, and restricted stock units and performance shares granted in 2016, based on target Company performance, will vest in full, and his performance shares granted prior to 2016 will vest on apro-rata basis based on actualtarget Company performance during the performance period.performance. Termination for Cause Generally, 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 or customers, and ownership of work product, as described above. Cash-settled RSUs granted to NEOs at the beginning of the performance year representing a portion of base-salary arepro-rated and continue to vest according to their original terms upon a termination for cause because these are deferred awards representing base salary that would otherwise already have been paid to an executive. In addition, if terminated for cause, named executive officers have the ability following separation to exercise vested but unexercised options for 3three months. Payments uponUpon 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 tonon-competition covenants as if they had terminated voluntarily (described above); partially subsidized participation in retiree medical coverage (including dependents as applicable), provided that the executivefor Messrs. Fairbank, Finneran, and Yajnik, who became eligible to retire on or before December 31, 2012; coverage through the executive life insurance program (at a reduced benefit); and any contractual payments to which he or she may otherwise be entitled. Upon retirement, shares of restricted stock, all restricted stock units (other than cash-settled RSUs representing a portion of base-salary, which vestpro-rata) and stock options continue to vest according to their original terms, which, for shares of restricted stock, stock-settled restricted stock units (all restricted stock units for the CEO) and stock options granted on or after 2012, also includes performance-based vesting provisions.provisions, which vest based on actual performance. In addition, performance shares granted to named executive officers will continue to vest after retirement, except the 20142016 performance share grant to the CEO which would be forfeited if he retired on or before December 31, 2014. For stock options granted on or before December 1, 2005, the executive has one year from the date of retirement to exercise vested but unexercised options.2016. For stock options granted after December 1, 2005 and prior to January 1, 2010 the executive has the earlier of five years from the date of retirement or the expiration of the option term to exercise vested but unexercised options. For stock options granted on or after January 1, 2010 the executive has until the expiration of the option term to exercise vested but unexercised options. 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 One’s 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 Capital One’s 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. All named executive officer Change of Control Agreements providing for a potential excise tax gross-up after a change of control have expired and have been replaced with new Change of Control Agreements that
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| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
We do not provide for an excise tax gross-up.gross up payments. Involuntary Termination Forfor Cause Named executive officers terminated involuntarily for cause following a change of control receive no additional benefits.benefits except in regards to options, which allow named executive officers to exercise vested but unexercised options for three months following a termination for cause. Voluntary Termination Withwith Good Reason or Involuntary Termination Without Cause For 2014, theThe 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 and cash bonus (as described below).bonus. As of December 31, 2014,2016, 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: | ¡∎ | | Alump-sum payment of 2.5 times the sum of his current notional salary and the “Highest Annual Bonus,” which is the highest of (i) the target annual bonus for the year in which the change of |
| control occurs (or themid-point if no target is established), (ii) the target annual bonus for the year immediately before the year the change of control occurs (or midpoint if no target is established), or (iii) the annual bonus paid or payable for the most recently completed fiscal year; and |
| ¡∎ | | The cash value, prorated through the date of termination, of the Highest Annual Bonus. |
An NEO will be entitled to receive: | ¡∎ | | The cash value, prorated through the date of termination, of the current year’s target annual incentive award, whether in the form of cash or equity-based compensation; and |
| ¡ | | Between 110% to 112.5% of the highest of (i) the NEO’s current target total compensation, (ii) the NEO’s target total compensation for the prior year, or (iii) the NEO’s actual total compensation for the prior year. |
The CEO or an NEO will also be entitled to receive:
| ∎ | | The cash value, prorated through the date of termination, of the current year’s target annual incentive award, whether in the form of cash or equity-based compensation; and |
| ¡∎ | | The CEO or an NEO will also be entitled to receive: |
| ∎ | | An amount equal to the employer contributions under the Company’s qualified andnon-qualified retirement, healthcare and life insurance programs for 2 to 2.5 years as well as access to such healthcare and life insurance plans for the named executive officer (and dependents as applicable); |
| ¡∎ | | Service credit offrom 2 to 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);$30,000; and |
| ¡∎ | | Any contractual payments to which the named executive officer may otherwise have been entitled. |
Beginning in January 2015, allAll equity awards granted to named executive officers in or after January 2015 will require aso-called “double trigger” for accelerated vesting in connection with a change of control. Upon a change of control, all equity awards continue to vest according to their original schedule. The vesting of such awards will only accelerate if a named executive officer is involuntarily terminated without cause or voluntarily terminates for good reason within the two years following a change of control. All outstanding equity grants awarded prior to January 2015 vest in full immediately upon a change of control.
Richard D. Fairbank
| | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 83 |
Mr. Fairbank receives no regular base salary. In light of this, for 2014, Mr. Fairbank’s payment in the event of a termination following a change of control was based on a notional salary of $1 million and his Highest Annual Bonus. The Committee reviews and establishes the notional salary amount on an annual basis, based on market trends related to CEO compensation and recommendations provided by F.W. Cook. Mr. Fairbank is a party to a Change of Control Agreement.
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
Stephen S. Crawford, Ryan M. Schneider, John G. Finneran, Jr., and Sanjiv Yajnik
Messrs. Crawford, Schneider, Finneran, and Yajnik are generally eligible for the same payments upon termination, and are all party to a Change of Control Agreement. For 2014, these payments were calculated based on their 2014 target total compensation values. Messrs. Crawford, Schneider and Yajnik are party to a standard Non-Competition Agreement and a Confidentiality, Work Product and Non-Solicitation of Employee Agreement.
20142016 Potential Payments and Benefits Upon Termination or Change of Control Tables by Named Executive OfficerTable
| | | | | | | | | | | | | | | 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 | | $0 | | $0 | | $73,217,060 | | $462,000 | | NA | | $73,679,060 | | For Cause Termination | | $0 | | $0 | | $0 | | $0 | | NA | | $0 | | CIC* | | $12,253,417 | | $0 | | $83,396,218 (6) | | $242,267 | | NA | | $95,891,902 | | | | | | | | | | | | | | | | Stephen S. Crawford Chief Financial Officer | | Voluntary Termination | | $1,129,500 | | $0 | | $3,025,458 | | $0 | | NA | | $4,154,958 | | Involuntary Termination | | $4,292,100 | | $0 | | $14,911,691 | | $17,433 | | NA | | $19,221,224 | | Retirement | | NA | | NA | | NA | | NA | | NA | | NA | | For Cause Termination | | $0 | | $0 | | $1,308,830 | | $0 | | NA | | $1,308,830 | | CIC* | | $9,611,826 | | $595,012 | | $18,226,648 (6) | | $180,685 | | NA | | $28,614,171 | | | | | | | | | | | | | | | | Ryan M. Schneider President, Card | | Voluntary Termination | | $826,050 | | $0 | | $3,987,165 | | $0 | | NA | | $4,813,215 | | Involuntary Termination | | $3,138,990 | | $0 | | $6,371,276 | | $14,640 | | NA | | $9,524,906 | | Retirement | | NA | | NA | | NA | | NA | | NA | | NA | | For Cause Termination | | $0 | | $0 | | $957,497 | | $0 | | NA | | $957,497 | | CIC* | | $7,350,212 | | $442,628 | | $12,411,388 (6) | | $84,984 | | NA | | $20,289,212 | | | | | | | | | | | | | | | | John G. Finneran, Jr. General Counsel and Corporate Secretary | | Voluntary Termination | | $0 | | $0 | | $11,564,825 | | $0 | | NA | | $11,564,825 | | Involuntary Termination | | $1,441,500 | | $0 | | $11,564,825 | | $10,000 | | NA | | $13,016,325 | | Retirement | | $0 | | $0 | | $11,564,825 | | $450,000 | | NA | | $12,014,825 | | For Cause Termination | | $0 | | $0 | | $835,323 | | $0 | | NA | | $835,323 | | CIC* | | $6,515,721 | | $390,289 | | $11,564,825 (6) | | $196,372 | | NA | | $18,667,207 | | | | | | | | | | | | | | | | Sanjiv Yajnik President, Financial Services | | Voluntary Termination | | $675,600 | | $0 | | $10,726,854 | | $0 | | NA | | $11,402,454 | | Involuntary Termination | | $2,567,280 | | $0 | | $10,726,854 | | $10,000 | | NA | | $13,304,134 | | Retirement | | $675,600 | | $0 | | $10,726,854 | | $313,000 | | NA | | $11,715,454 | | For Cause Termination | | $0 | | $0 | | $782,987 | | $0 | | NA | | $782,987 | | CIC* | | $4,033,306 | | $367,675 | | $10,726,854 (6) | | $154,392 | | NA | | $15,282,227 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 Chair, CEO and President(6) | | | | Voluntary Termination | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | Involuntary Termination | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | Retirement | | | | $— | | | | $— | | | | $42,386,673 | | | | $479,000 | | | | — | | | | $42,865,673 | | | | For Cause Termination | | | | $— | | | | $— | | | | $— | | | | $— | | | | — | | | | $— | | | | Change of Control(7) | | | | $3,089,201 | | | | $— | | | | $54,364,550(8) | | | | $270,406 | | | | — | | | | $57,724,317 | R. Scott Blackley Chief Financial Officer | | | | Voluntary Termination | | | | $— | | | | $— | | | | $1,207,053 | | | | $— | | | | — | | | | $1,207,053 | | | | Involuntary Termination | | | | $825,000 | | | | $— | | | | $3,971,007 | | | | $13,635 | | | | — | | | | $4,809,645 | | | | Retirement | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | For Cause Termination | | | | $— | | | | $— | | | | $561,302 | | | | $— | | | | — | | | | $561,302 | | | | Change of Control(7) | | | | $3,451,096 | | | | $202,021 | | | | $4,554,190(8) | | | | $125,607 | | | | — | | | | $8,332,914 | Stephen S. Crawford Former CFO, Head of Finance and Corporate Development | | | | Voluntary Termination | | | | $— | | | | $— | | | | $18,833,473 | | | | $— | | | | — | | | | $18,833,473 | | | | Involuntary Termination | | | | $5,752,080 | | | | $— | | | | $18,833,473 | | | | $17,046 | | | | — | | | | $24,602,599 | | | | Retirement | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | For Cause Termination | | | | $— | | | | $— | | | | $1,641,333 | | | | $— | | | | — | | | | $1,641,333 | | | | Change of Control(7) | | | | $10,226,211 | | | | $631,320 | | | | $18,833,473(8) | | | | $187,384 | | | | — | | | | $29,878,388 | John G. Finneran, Jr. General Counsel and Corporate Secretary | | | | Voluntary Termination | | | | $— | | | | $— | | | | $10,182,794 | | | | $— | | | | — | | | | $10,182,794 | | | | Involuntary Termination | | | | $1,529,700 | | | | $— | | | | $10,182,794 | | | | $10,000 | | | | — | | | | $11,722,494 | | | | Retirement | | | | $— | | | | $— | | | | $10,182,794 | | | | $371,000 | | | | — | | | | $10,553,794 | | | | For Cause Termination | | | | $— | | | | $— | | | | $1,047,229 | | | | $— | | | | — | | | | $1,047,229 | | | | Change of Control(7) | | | | $6,526,905 | | | | $413,766 | | | | $10,182,794(8) | | | | $179,336 | | | | — | | | | $17,302,801 | Frank G. LaPrade, III Chief Enterprise Services Officer | | | | Voluntary Termination | | | | $— | | | | $— | | | | $2,911,199 | | | | $— | | | | — | | | | $2,911,199 | | | | Involuntary Termination | | | | $1,473,900 | | | | $— | | | | $6,497,028 | | | | $15,827 | | | | — | | | | $7,986,755 | | | | Retirement | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | For Cause Termination | | | | $— | | | | $— | | | | $1,008,931 | | | | $— | | | | — | | | | $1,008,931 | | | | Change of Control(7) | | | | $4,854,788 | | | | $399,764 | | | | $9,552,489(8) | | | | $147,475 | | | | — | | | | $14,954,516 | Sanjiv Yajnik President, Financial Services | | | | Voluntary Termination | | | | $723,900 | | | | $— | | | | $9,604,133 | | | | $— | | | | — | | | | $10,328,033 | | | | Involuntary Termination | | | | $2,750,820 | | | | $— | | | | $9,604,133 | | | | $10,000 | | | | — | | | | $12,364,953 | | | | Retirement | | | | $723,900 | | | | $— | | | | $9,604,133 | | | | $297,000 | | | | — | | | | $10,625,033 | | | | For Cause Termination | | | | $— | | | | $— | | | | $991,134 | | | | $— | | | | — | | | | $991,134 | | | | Change of Control(7) | | | | $6,177,456 | | | | $393,215 | | | | $9,604,133(8) | | | | $162,220 | | | | — | | | | $16,337,024 | Ryan M. Schneider President, Card | | | | Voluntary Termination | | | | $915,000 | | | | $— | | | | $3,738,408 | | | | $— | | | | — | | | | $4,653,408 | | | | Involuntary Termination | | | | $3,477,000 | | | | $— | | | | $8,704,929 | | | | $14,956 | | | | — | | | | $12,196,889 | | | | Retirement | | | | — | | | | — | | | | — | | | | $— | | | | — | | | | — | | | | For Cause Termination | | | | $— | | | | $— | | | | $1,252,592 | | | | $— | | | | — | | | | $1,252,592 | | | | Change of Control(7) | | | | $7,869,578 | | | | $489,120 | | | | $12,876,981(8) | | | | $86,799 | | | | — | | | | $21,322,478 |
* | 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, assuming, where applicable, that all performance metrics have been achieved at their target level. |
The table above is intended to reflect potential payments to named executive officers across a range of potential separation scenarios, assuming the change of control or separation occurred on December 31, 2014.
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 2014 Pension Benefits Table on page 62 and the 2014 Non-Qualified Deferred Compensation Table on page 64, 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; and
Welfare benefits generally available to all retirees, including retiree medical programs.
(1) | Represents cash amounts paid for severance or in relation to enforcement ofnon-competition covenants as described under “Restrictive Covenants” beginning on page 65.80. 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. Messrs. SchneiderFairbank and YajnikLaPrade would receive a reduction in CICchange of control severance payments in order to meet safe harbor limitations, which 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 thein-the-money value. value on December 31, 2016. For stock awards, this represents the fair market value of the shares on December 31, 2014.2016. Most currently unvested equity awards held by our retirement eligible executives will continue to vest according to their original terms following retirement, which includes a voluntary or involuntary termination not for cause after a named executive officer becomes eligible for retirement. Messrs. Fairbank, Finneran, and Yajnik were the only named executive officers eligible for retirement as of December 31, 2014.2016. |
| | | | | | | | | 84 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION |
(4) | Represents the value of potential payments made on the executive’s behalf for continuation of medical and welfare benefits during thenon-competition or severance period.period, as applicable. 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) | Named executive officers are not eligible for excise taxgross-ups. |
(6) | Mr. Fairbank receives no regular base salary. In light of this, for 2016, Mr. Fairbank’s payment in the event of a termination following a change of control was based on a notional salary of $1 million and his Highest Annual Bonus. The Committee reviews and establishes the notional salary amount on an annual basis, based on market trends related to CEO compensation and recommendations provided by FW Cook. Mr. Fairbank is a party to a Change of Control Agreement. |
(7) | Represents potential payments and benefits upon change of control for involuntary termination without cause or voluntary termination for good reason. “Acceleration and Continuation of Equity Awards” represents the value of equity where vesting is accelerated upon change of control, assuming, where applicable, that all performance metrics have been achieved at their target level. |
(8) | Most currently unvested equity awards will be treated in a similar manner following a named executive officer’s termination of employment for death or disability. Due to differences in the vesting provisions of performance shares, the value |
The table above is intended to reflect potential payments to named executive officers across a range of potential separation scenarios, assuming the change of control or separation occurred on December 31, 2016. The amounts shown in the table do not include payments and benefits that are provided on anon-discriminatory basis to salaried employees generally upon termination of employment. The NEOs also are eligible to receive certain pension benefits and certain qualified andnon-qualified deferred compensation amounts upon termination. These amounts are outlined in the 2016 Pension Benefits Table on page 78 and the 2016Non-Qualified Deferred Compensation Table on page 79, 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 accelerationdate of termination; and continuation of unvested equity awards for each named executive officer following the termination of his employment for death or disability on December 31, 2014 would have been: $72,331,945 for Mr. Fairbank, $17,435,017 for Mr. Crawford, $11,460,892 for Mr. Schneider, $10,667,583 for Mr. Finneran, and $9,885,569 for Mr. Yajnik. |
∎ | | Welfare benefits generally available to all retirees, including retiree medical programs. |
| | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 85 |
SECTIONSection VII – EQUITY COMPENSATION PLANSEquity Compensation Plans
Equity Compensation Plan Information The following table provides information as of December 31, 2014,2016, 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 (3) | | 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) | | 14,011,073 (4) | | $55.75 | | 29,787,036 (6) | | | | | Equity compensation plans not approved by security holders (2) | | 201,568 (5) | | $64.41 | | 0 (7) | | | | | Total | | 14,212,641 | | $55.87 | | 29,787,036 |
| | | | | | | | | | | | | | | | | | | | | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | | | | Weighted-average exercise price of outstanding options, warrants and rights (1) | | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | | Plan Category | | | | (a) | | | | (b) | | | | (c) | | | Equity compensation plans approved by security holders(2) | | | | 12,643,688(4) | | | | $47.99 | | | | 22,024,754(6) | | | Equity compensation plans not approved by security holders(3) | | | | 94,831(5) | | | | 55.17 | | | | 0(7) | | | Total | | | | 12,738,519 | | | | 48.03 | | | | 22,024,754 |
(1) | The following plans have been approved by Capital One stockholders and are currently in effect: the 2004 Stock Incentive Plan and the 2002 Associate Stock Purchase Plan. |
(2) | The 1999 Directors Plan, which is described below, was terminated in April 2009 and haswas not been approved by Capital One stockholders. 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. As of December 31, 2014, one Hibernia plan had options outstanding and two North Fork plans had options outstanding. All remaining Hibernia and North Fork options will expire by December 2015. There are no shares available for future issuance under the Hibernia or North Fork plans. |
(3) | Does not reflect restricted stock units and performance shares because they have no exercise price. |
(4) | Excludes purchase rights accruing under the 2002 Associate Stock Purchase Plan and 1,382,22972,258 issued and unvested outstanding shares of restricted stock under the 2004 Stock Incentive Plan. Includes 2,189,4431,259,323 shares, representing the maximum number of shares issuable pursuant to outstanding performance share awards under the 2004 Stock Incentive Plan and 1,431,0664,439,890 shares subject to outstanding restricted stock units, including outstanding restricted stock units subject to performance-based vesting provisions, under the 2004 Stock Incentive Plan. Excludes shares of restricted stock units, to be settled in cash, under the 2004 Stock Incentive Plan. Also excludes dividend equivalents accrued with respect to performance shares which are paid in shares at the time the underlying performance shares are issued, and only with respect to the number of performance shares that actually vest. |
(5) | Includes 54,456 outstanding restricted stock units under the 1999 Directors Plan. |
(6) | Represents 21,529,28917,086,362 shares available for future issuance under the 2004 Stock Incentive Plan; and 8,257,7474,938,392 shares available for future issuance under the 2002 Associate Stock Purchase Plan as shares purchased voluntarily by Capital One associates through regular payroll deductions and a companyCompany match. |
(7) | There are no shares available for future issuance under the equity compensation plans not approved by security holders. |
Description of Non-Security Holder 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 One’s security holders and that had grants outstanding or shares available for issuance as of December 31, 2014.
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 One’s common stock for the grant ofnon-qualified stock options, restricted stock and restricted stock units to members of the Board who were not otherwise employed by Capital One or any subsidiary of Capital One at the time an award was granted. The number of shares available for issuance under the plan included shares granted under the plan subject to options that expired or otherwise terminated unexercised and shares forfeited pursuant to restrictions on restricted stock or deferred stock. 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 cannot 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 | | | | | | | | | 86 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| SECTION VII – EQUITY COMPENSATION PLANS |
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 award’s 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. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 87 |
SECTIONSection VIII – COMPENSATION COMMITTEE REPORTCompensation 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) |
Patrick W. Gross Ann Fritz Hackett Lewis Hay, III Benjamin P. Jenkins, III Peter Thomas Killalea 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 One’s previous or future filings with the SEC, except as otherwise explicitly specified by Capital One in any such filing. | | | | | | | | | 88 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
SECTIONSection IX – AUDIT COMMITTEE REPORTAudit Committee Report
The charter of the Audit Committee was most recently approved by the Committee on February 1, 2017 and the full Board of Directors on January 28, 2015.February 3, 2017. In accordance with its charter, the Audit Committee assists the Board of Directors in the oversight of: The integrity of Capital One’s financial statements and internal controls;
The qualifications, independence and performance of Capital One’s independent auditor;
The performance of Capital One’s internal auditor; and
Capital One’s compliance with legal and regulatory requirements.
∎ | | The integrity of Capital One’s financial statements and internal controls; |
∎ | | The qualifications, independence and performance of Capital One’s independent auditor; |
∎ | | The performance of Capital One’s internal auditor; and |
∎ | | Capital One’s compliance with legal and regulatory requirements. |
The Audit 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 Committee met a total of twelvethirteen times during 2014.2016. Pursuant to Capital One’s Corporate Governance PrinciplesGuidelines and applicable law, the Audit Committee is comprised solely of independent directors. In discharging its oversight responsibility, the Audit Committee has reviewed and discussed Capital One’s audited financial statements for the fiscal year ended December 31, 2014,2016, and the assessment of the effectiveness of Capital One’s internal control over financial reporting, with management and Ernst & Young LLP (“Ernst & Young”), Capital One’s independent auditors. The Audit Committee has also discussed with Ernst & Young the matters required to be discussed under the rules adopted byapplicable standards of the Public Company Accounting Oversight Board. In addition, the Audit 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 & Young’s communications with the Audit 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 Committee has approved the inclusion of the audited financial statements in Capital One’s Annual Report on Form10-K for the fiscal year ending December 31, 2014,2016, for filing with the SEC. | | | The Audit Committee: | | Bradford H. Warner (Chair and “Audit Committee Financial Expert”) | | | Benjamin P. Jenkins, III | | | Pierre E. Leroy Peter E. Raskind (“Audit Committee Financial Expert”) | | | Catherine G. West |
The foregoing Report of the Audit Committee shall not be deemed to be soliciting material or filed with the SEC and is not incorporated by reference into any of Capital One’s previous or future filings with the SEC, except as otherwise explicitly specified by Capital One in any such filing. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 89 |
SECTIONSection X – ELECTION OF DIRECTORS (ITEMElection of Directors(Item 1 ON PROXY CARD)on Proxy Card)
All of Capital One’s directors are elected at each annual meeting of stockholders and hold such office until the next annual meeting of stockholders, and until their successors are duly elected and qualified. Each nominee has consented to serve aone-year term. Information about the proposed nominees for election as directors is set forth under “Information about our Directors and Executive Officers”“Director Nominees” in the “Corporate Governance at Capital One” section beginning on page 1613 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. Capital One’s Corporate Governance Guidelines provide that anon-management director shall not be eligible for election to the Board upon reaching the age of 72. The Board may waive this prohibition of eligibility if it determines that, in light of all the circumstances, doing so is in the best interests of Capital One and its stockholders. The Board has waived this requirement in respect of Mr. Jenkins, in light of his experience and performance during his tenure as a member of the Board, his relatively short tenure with Capital One, the quantity and quality of his experience in corporate banking, banking operations, investment banking, and management of customer relationships, spanning over 38 years, during which time he saw the industry undergo significant and rapid change, and his continuing value to Capital One and our stockholders as Capital One continues to evolve to match the pace of change in the banking industry. The nominees for election this year are: | | | | | | | | | Richard D. Fairbank | | Pierre E. Leroy | | | | | | | Ann Fritz Hackett | | Patrick W. Gross | | Peter E. Raskind | | | | | | | Lewis Hay, III | | Ann Fritz Hackett | | Mayo A. Shattuck III | | | | | | | | | Lewis Hay, III | | Bradford H. Warner | | | | | | | | | Benjamin P. Jenkins, III | | Bradford H. Warner | | | Peter Thomas Killalea | | Catherine G. West | | |
*** The Board of Directors unanimously recommends that you vote “FOR”“FOR” each of these director nominees. | | | | | | | | | 90 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
SECTIONSection XI – RATIFICATION OF SELECTION OF INDEPENDENT AUDITORSRatification of Selection of Independent Auditors(Item 2 on Proxy Card)
(ITEM 2 ON PROXY CARD)
The Audit Committee, pursuant to authority granted to it by the Board of Directors, is directly responsible for the appointment, compensation, retention and oversight of Capital One’s independent auditors. The Audit Committee evaluates the independent auditors’ qualifications, performance and independence at least annually and periodically considers whether to continue to retain our current independent auditor or engage another firm. In connection with applicable partner rotation requirements, the Audit Committee and its Chair are involved in considering the selection of Ernst & Young’sthe independent auditor’s new lead engagement partner. For 2015,2017, the Audit Committee has appointed the firm of Ernst & Young as independent auditors. Ernst & Young has served as Capital One’s independent auditors since 1994. The members of the Audit Committee and the Board believe that the continued retention of Ernst & Young as Capital One’s independent auditors is in the best interests of Capital One and its stockholders. 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, the Audit Committee will reconsider their appointment as our independent auditors. The fees billed for professional services provided by Ernst & Young for fiscal years 20142016 and 20132015 are shown in the following table: | | | | | Fees (dollars in millions) | | 2014 | | 2013 | | | | Audit Fees | | $10.14 | | $10.22 | | | | Audit-Related Fees | | $1.22 | | $1.49 | | | | Tax Fees | | $0.26 | | $0.32 | | | | All Other Fees | | $0.00 | | $0.00 |
| | | | | | | | | | | | | Fees (dollars in millions) | | | | 2016 | | | | 2015 | | | Audit Fees | | | | $11.38 | | | | $11.12 | | | Audit-Related Fees | | | | $1.23 | | | | $1.26 | | | Tax Fees | | | | $0.00 | | | | $0.00 | | | 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 Form10-Q and services that normally would be provided by the auditor 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 would 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 Committee is responsible for overseeing the amount of Audit fees paid to Ernst & Young. The Audit Committee has reviewed the fees paid to Ernst & Young and has considered whether the fees paid fornon-Audit services are compatible with maintaining Ernst & Young’s independence. The Audit Committee also adopted policies and procedures to approve services provided by Ernst & Young in accordance with the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) and rules of the SEC promulgated thereunder. These policies and procedures involve annualpre-approval by the Audit Committee of the types of services to be provided by Capital One’s independent auditor and fee limits for each type of service on both a per engagement and aggregate level. AdditionalAny service engagements that exceed thesepre-approved limits must be submitted to the Audit Committee for further specificpre-approval. Under the policy adopted by the Audit 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 One’s policy, for administrative ease, allows for a $25,000de minimis exceptionIn | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 91 |
| SECTION XI – RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS (ITEM 2 ON PROXY CARD) |
2016, all of the Audit and Audit-related services and related fees werepre-approved by the Audit Committee pursuant to the pre-approval procedures; however, any services provided pursuant to this exception must be approved at the next meeting of the Audit Committee.policies and procedures described above. Additionally, Capital One has established policies to provide for adherence to Sarbanes-Oxley Act requirements relating to the rotation of partners engaged in Capital One’s audit by the independent auditors.
Representatives of Ernst & Young 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” “FOR” the ratification of Ernst & Young LLP as Capital One’s independent auditors for 2015.2017. | | | | | | | | | 92 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
SECTIONSection XII – ADVISORY APPROVAL OF CAPITAL ONE’S 2014 NAMED EXECUTIVE OFFICER COMPENSATIONAdvisory Approval of Capital One’s 2016 Named Executive Officer Compensation(Item 3 on Proxy Card)
(ITEM 3 ON PROXY CARD)
We are offering to our stockholders anon-binding advisory vote onto approve our 2014 Named Executive Officer2016 named executive officer compensation, including the compensation of our Chief Executive Officer, pursuant to Section 14A of the Securities and Exchange Act of 1934.Act. While the vote isnon-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 31,40, our Board of Directors generally has provided compensation programs for the CEO and the other 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 NEOother NEOs 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 NEOsnamed executive officers is subject to Capital One’s sustained performance over time, both on an absolute basis and relative to our peers. For 2014,2016, approximately 78%84% of the CEO’s total compensation is equity-based andat-risk to the performance of the Company’s stock price, and 100% of his compensation is deferred for a three-year period. As discussed under “NEO Compensation” on page 34,54, under the 20142016 NEO compensation program applicable to our other NEOs approximately 80% of total target compensation was provided through equity-based vehicles which were allat-risk based on the performance of the Company’s 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 3140 to 5167 and in the “Named Executive Officer Compensation” section on pages 5268 to 70.85. We ask for your advisory vote onto approve the following resolution: “Resolved, that Capital One’s stockholders hereby provide their advisory approval of the 20142016 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 2014 Named Executive Officer compensation as disclosed in this proxy statement.
The Board of Directors has resolved to hold annual advisory votes onto approve executive compensation. Accordingly, the next advisory vote onto approve executive compensation will occur at the 20162018 Annual Meeting, unless the Board of Directors modifies its policy on the frequency of holding such advisory votes. SECTION XIII – APPROVAL OF AMENDMENT TO CAPITAL ONE’S RESTATED CERTIFICATE OF INCORPORATION TO ALLOW STOCKHOLDERS TO REQUEST SPECIAL MEETINGS OF THE STOCKHOLDERS
(ITEM 4 ON PROXY CARD)
Overview
The Board of Directors recommends that Capital One’s stockholders approve an amendment to Capital One’s Restated Certificate of Incorporation (the “Certificate”) to allow one or more stockholders who own at least 25% of the Company’s common stock and who satisfy certain procedures to require that the Company call a special meeting of the stockholders (the “Proposed Certificate Amendment”). Stockholders do not presently have the ability to require that the Company call a special meeting of the stockholders.
The Proposed Certificate Amendment
If the Proposed Certificate Amendment is approved by stockholders, the Certificate will provide that the Company is required to call a special meeting of the stockholders upon the written request of one or more stockholders who:
• | | own shares representing 25% or more of the voting power of the then outstanding Voting Stock1 entitled to vote on the matter or matters to be brought before the proposed special meeting, |
continue to satisfy that level of stock ownership for such period as set forth in the Amended and Restated Bylaws (the “Bylaws”), as amended from time to time, and
provide the information regarding the stockholder(s) requesting the special meeting and the proposed special meeting, and satisfy such additional procedures, as provided for in the Bylaws from time to time.
As discussed further below, the Proposed Certificate Amendment utilizes a “net long” definition of stock ownership for purposes of determining whether stockholders requesting a special meeting satisfy the 25% ownership threshold. Under the “net long” definition, a person will be deemed to “own” only those shares of outstanding Voting Stock as to which the person possesses both (i) full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares, which terms may be further defined in the Bylaws from time to time.***
The Board of Directors unanimously recommends that you vote “FOR” advisory approval of our 2016 Named Executive Officer compensation as disclosed in this proxy statement. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 93 |
“FOR”Section XIII – Advisory Vote on Frequency of Holding an Advisory Vote to Approve Named Executive Officer Compensation
(Item 4 on Proxy Card) Pursuant to the Proposed Certificate Amendment. PurposeDodd-Frank Wall Street Reform and EffectConsumer Protection Act and Section 14A of the Proposed Certificate AmendmentExchange Act, we are submitting to our stockholders an advisory vote as to whether future advisory votes to approve our named executive officer compensation should occur every one, two or three years or abstain from voting on this proposal.
The Proposed Certificate Amendment is a result of the Board of Directors’ ongoing review of our corporate governance principles andAfter careful consideration, of the stockholder proposal discussed below. In developing the Proposed Certificate Amendment, the Board of Directors (including all members ofrecommends that stockholders vote for future advisory votes to approve executive compensation every year. Our Board believes that holding a vote every year is the Governance and Nominating Committee) carefully consideredmost appropriate policy for Capital One at this time. While Capital One’s executive compensation programs are designed to reward performance over multiple time horizons, the implications of amending our Certificate to allow stockholders to request that the Company call a special meeting.
The Board of Directors recognizes that providing stockholders the ability to require that the Company call special meetings is viewed by some stockholders asexecutive compensation disclosures are an important corporate governance practice. However, special meetingsconsideration for stockholders on an annual basis. Although it may not be feasible to change the compensation program in consideration of any one year’s advisory vote on compensation, holding an annual advisory vote on executive compensation provides Capital One with more immediate feedback on our compensation practices to advance our goal of aligning our executives’ interests with those of our stockholders.
Stockholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. This advisory vote on the frequency of future advisory votes to approve executive compensation isnon-binding on the Board of Directors. Notwithstanding the Board’s recommendation and the outcome of the stockholders can cause the Company to incur substantial expenses and can be potentially disruptive to its business operations and to long-term stockholder interests. Accordingly,vote, the Board of Directors believes that special meetings of the stockholders should be extraordinary events that should not be held in close proximity to an annual meeting or when the matters to be addressed have been recently considered or are planned to be considered at another meeting. The Board of Directors would continue to have the ability to call special meetings of the stockholders in other instances when,may in the exercise of their fiduciary obligations, they determine appropriate. In light of these considerations, the Board of Directors believes that it strikes an appropriate balance between enhancing stockholder rightsfuture decide to conduct advisory votes on a more or less frequent basis and adequately protecting stockholder interests to provide thatmay vary its practice based on factors such as discussions with stockholders who
1 | References in this discussion to votes of the outstanding shares and to the “Voting Stock” mean the outstanding shares of capital stock of the Company entitled to vote generally in the election of directors. Currently, Capital One common stock is the only class or series of Voting Stock outstanding. |
satisfy a 25% “net long” ownership threshold and comply with certain additional procedures and limitations have the ability to request that the Company call a special meeting.
In determining to utilize a 25% ownership threshold, the Board of Directors noted that the 25% ownership standard is the most prevalent standard among its peer companies that allow stockholders to call special meetings, and that a number of the Company’s institutional stockholders have in the past expressed support for a 25% ownership standard for stockholders to be able to request a special meeting of the stockholders. The Board of Directors determined to adopt a “net long” definition of ownership because it believes that only stockholders with full and continuing economic interest and voting rights in our Voting Stock should be entitled to request that the Company call a special meeting.
As a result, the Board of Directors has considered the matter, and upon recommendation of the Governance and Nominating Committee, adopted resolutions setting forth the Proposed Certificate Amendment, declared such amendment advisable and unanimously resolved to submit such amendment to our stockholders for consideration and to recommend that stockholders vote“FOR” the Proposed Certificate Amendment.
Related Changes to the Bylaws
The Proposed Certificate Amendment authorizes the Bylaws (1) to specify the information required to be provided in connection with a stockholder’s request to call a special meeting, (2) to set forth continuing ownership requirements and additional procedures and conditions applicable to stockholders’ ability to request that the Company call a special meeting, and (3) to define ownership for purposes of the “net long” ownership standard under the Proposed Certificate Amendment. Accordingly, the Board of Directors has amended Article II of our Bylaws, contingent upon stockholder approval and implementation of the Proposed Certificate Amendment, to address these provisions.
Information Provisions.
The Bylaw amendment requires any special meeting request to set forth the same information regarding the business to be conducted at the meeting and regarding any director candidate to be nominated at the meeting that is required to be provided by a stockholder who proposes to introduce such business or to make director nominations at an annual meeting of stockholders. Any stockholder or beneficial owner who is seeking to call the special meeting or who solicits other stockholders to support calling the special meeting also must provide the same information as to its ownership of the Company’s stock and its interest in the matters proposed to be voted on at the special meeting that is required of a stockholder who proposes to introduce such business or to make director nominations at an annual meeting of stockholders. Each stockholder supporting the special meeting request must provide information as to the number of shares of the Company’s stock that it owns.
Ownership Provisions.
The Bylaw amendment elaborates on the “net long” ownership definition included in the Proposed Certificate Amendment by providing that borrowed or hedged shares do not count toward the 25% ownership threshold. However, holding shares through a nominee and the practiceadoption of share lending will not be deemedmaterial changes to interrupt ownership of shares that otherwise are deemed to be “owned” under this standard. Stockholders requesting a special meeting must hold the requisite number of shares through the date of the special meeting and provide updated ownership information at the record date and shortly before the date of the special meeting of stockholders.
Additional Provisions.
The Bylaw amendment sets forth certain procedural requirements that the Board believes are appropriate to avoid duplicative or unnecessary special meetings. Under these provisions, a special meeting request is not valid if:
the proposed meeting relates to an item of business that is not a matter on which stockholders are authorized to act under, or that involves a violation of, applicable law;
the proposed meeting relates to an item of business that is the same or substantially similar to any item of business that was voted on at a meeting of stockholders occurring within 90 days preceding the earliest dated request for a special meeting; or
an otherwise valid special meeting request is submitted within the 90 days preceding the anniversary of the prior year’s annual meeting.
Under the Bylaw amendment, if stockholders who requested a special meeting revoke the request or cease to own 25% of the Voting Stock, the Company is not required to hold the special meeting of the stockholders.
The Stockholder Proposal
As described below in Section XIV, Capital One has been notified that a stockholder intends to present a proposal for consideration at the Annual Meeting (the “Stockholder Proposal”) that also addresses stockholders’ ability to call special meetings of the stockholders. Although the Proposed Certificate Amendment and the Stockholder Proposal concern the same subject matter, the terms and effects of each proposal differ. Stockholders may vote on both the Proposed Certificate Amendment and the Stockholder Proposal, and approval of the Proposed Certificate Amendment is not conditioned on approval or disapproval of the Stockholder Proposal. Among the differences between the Proposed Certificate Amendment and the Stockholder Proposal are the following:
The Proposed Certificate Amendment is binding. If the Proposed Certificate Amendment is approved, our Certificate and Bylaws will be amended, thereby providing stockholders the ability to have the Company call a special meeting of the stockholders. In contrast, the Stockholder Proposal is not binding; approval of the Stockholder Proposal requests that the Board consider the matter but does not amend either the Certificate or the Bylaws.
For the reasons discussed above, the Board provided in the Proposed Certificate Amendment that one or more stockholders who hold in the aggregate at least 25% of the Company’s Voting Stock can request that the Company call a special meeting of the stockholders. The Stockholder Proposal requests that holders in the aggregate of 20% of our outstanding common stock be given the power to call a special meeting of the stockholders, but does not specifically address why it believes that a 20% threshold is appropriate.
The Proposed Certificate Amendment sets forth procedures for stockholders to request a special meeting of the stockholders which, as explained above, the Board has determined are in the interests of our stockholders. The Stockholder Proposal does not address such terms.
Neither the Proposed Certificate Amendment nor the Stockholder Proposal affect the Board of Directors’ existing authority to call special meetings of stockholders.
You should carefully read the descriptions of each proposal, and Capital One’s statement in opposition to the Stockholder Proposal, in considering the Proposed Certificate Amendment and the Stockholder Proposal.
Additional Information
The general description of the Proposed Certificate Amendment set forth above is qualified in its entirety by reference to the text of the Proposed Certificate Amendment, which is attached as Appendix A to these proxy materials. In addition, the text of the Bylaw amendment, which can be amended from time to time, is attached as Appendix B to these proxy materials. Additions to the Certificate and the Bylaws are indicated by double underlining and deletions to the Certificate and the Bylaws are indicated by strike outs. Complete copies of the current Certificate and Bylaws are available on the Corporate Governance page of Capital One’s Internet site at www.capitalone.com under “About Us/Investors.”
The Proposed Certificate Amendment is binding. If the Proposed Certificate Amendment is approved, the Company intends to file the Certificate of Amendment to Capital One’s Certificate with the Secretary of State of the State of Delaware, and the Proposed Certificate Amendment will become effective at the time of that filing. If the Proposed Certificate Amendment is not approved by the requisite vote, then the Proposed Certificate Amendment will not be filed with the Secretary of State of the State of Delaware, the Bylaw amendment will not become effective and our stockholders will not have the ability to request that the Company call a special meeting of stockholders. Approval of the Proposed Certificate Amendment is not conditioned on approval or disapproval of the Stockholder Proposal, which means that the foregoing effects of approval or disapproval of the Proposed Certificate Amendment are not affected by approval or disapproval of the Stockholder Proposal.compensation programs.
*** The Board of Directors unanimously recommends that you vote “FOR” the Proposed Certificate Amendment in order to amend ourconduct future advisory votes to approve executive compensation “EVERY YEAR.” | | | | | | | | | 94 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
Section XIV – Approval and Adoption of Capital One’s Amended and Restated Certificate of Incorporation to allow one or more stockholders who own at least 25%Associate Stock Purchase Plan (Item 5 on Proxy Card) The purpose of the Capital One 2002 Associate Stock Purchase Plan (the “ASPP”) is to secure for the Company and its stockholders the benefits of the incentive inherent in the ownership of Capital One’s 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. The Company maintains the ASPP. Under the ASPP, which was initially adopted by the Board effective on September 19, 2002, the Company reserved 3,000,000 shares of Capital One common stock for employee purchases. In February 2008, the Board of Directors approved an increase in the number of reserved shares to 8,000,000 shares in February 2008, which was approved by stockholders in April 2008. The Plan was most recently approved by the Company’s Voting Stockstockholders on May 8, 2012, at which time the Board of Directors and stockholders approved an increase in the number of shares to 18,000,000, and has been amended by the Board of Directors since then to address certain ministerial matters. The Board of Directors is recommending an amendment and restatement to the ASPP, as amended, to request approval of an additional 15,000,000 shares to be reserved under the ASPP, for a total of 33,000,000 reserve shares (the “Amended and Restated ASPP”). These shares may consist of newly issued shares, treasury shares, shares acquired on the open market or any combination thereof. 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 satisfy certain proceduresare actively employed by the Company or a subsidiary and are customarily paid through the Company’s regular payroll are eligible to requireparticipate in the ASPP. Purchase of Shares Each eligible employee may elect regular, monthly payroll deductions of up to 15% of the employee’s 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 alump-sum cash contribution (provided that the Company call a special meetingtotal of the stockholderspayroll deductions and such contributions for any calendar quarter do not exceed 15% of an employee’s base compensation for such period) to be used to purchase shares. The total amount of monthly payroll deductions and quarterlylump-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 employee’s matching andlump-sum contributions to the ASPP. This matching contribution is combined with the employee’s contributions and used to purchase common stock under the ASPP | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 95 |
| SECTION XIV – APPROVAL AND ADOPTION OF CAPITAL ONE’S AMENDED AND RESTATED ASSOCIATE STOCK PURCHASE PLAN |
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. Effect of Termination of Employment If an eligible employee’s 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 employee’s 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 employee’s 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. ASPP Benefits Future benefits available under the ASPP are subject to the participation level of our employees and to the Company’s stock price at the time of any purchases and therefore are not determinable at this time. During the year ended December 31, 2016, 1,813,480 shares of Company common stock were purchased by employees under the ASPP. As of March 13, 2017, the closing price of a share of our common stock on the New York Stock Exchange was $91.79. *** The Board of Directors unanimously recommends that you vote “FOR” the proposal to approve and adopt the Amended and Restated ASPP. | | | | | | | | | 96 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
SECTION XIVSection XV – STOCKHOLDER PROPOSAL REGARDING SPECIAL MEETINGS OF THE STOCKHOLDERSStockholder Proposal Requesting Stockholders’ Right to Act by Written Consent(Item 6 on Proxy Card)
(ITEM 5 ON PROXY CARD)
Capital One has been notified that John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, intends to present a proposal for consideration at the Annual Meeting (the “Stockholder Proposal”) that addresses stockholders’ ability to call special meetings of the stockholders.act by written consent. Mr. Chevedden has submitted documentation indicating that he is the beneficial owner of no fewer than 100 shares of Capital One common stock. The Stockholder Proposal will be voted on atresolution being submitted by Mr. Chevedden to the Annual Meeting onlystockholders for approval, if properly presented, is as follows: Proposal 6 – Right to Act by or on behalf of Mr. Chevedden. In a different proposal that is described above in Section XIII, the Board of Directors is recommending that Capital One’s stockholders approve an amendment to Capital One’s Certificate to allow one or more stockholders owning at least 25% of the Company’s Voting Stock to require that the Company call a special meeting of the stockholders, which we refer to as the Proposed Certificate Amendment.Although the Proposed Certificate Amendment and the Stockholder Proposal concern the same subject matter, the terms and effects of each proposal differ.
You should carefully read the descriptions of each proposal, and Capital One’s statement in opposition to the Stockholder Proposal, in considering the Proposed Certificate Amendment and the Stockholder Proposal.
Stockholders may vote on both the Proposed Certificate Amendment and the Stockholder Proposal, and approval of the Proposed Certificate Amendment is not conditioned on approval or disapproval of the Stockholder Proposal.
Although the Stockholder Proposal is not binding, as a matter of good corporate governance, if the Stockholder Proposal is approved, the Board expects to consider and to direct the Company to engage with stockholders regarding the Stockholder Proposal, regardless of whether the Proposed Certificate Amendment is approved by the stockholders.
• | | The Board of Directors is recommending a vote FOR the Proposed Certificate Amendment (Item 4) and AGAINST the Stockholder Proposal described below (Item 5). |
Mr. Chevedden has submitted the following resolution:
Special Shareowner MeetingsWritten Consent
Resolved, Shareowners askShareholders request that our board of directors undertake such steps as may be necessary to takepermit written consent by shareholders entitled to cast the stepsminimum number of votes that would be necessary (unilaterally if possible) to amend our bylawsauthorize the action at a meeting at which all shareholders entitled to vote thereon were present and each appropriate governing documentvoting. This written consent is to give holdersbe consistent with applicable law and consistent with giving shareholders the fullest power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any topic for written consent consistent with applicable law. This proposal topic won majority shareholder support at 13 major companies in a single year. This included 67%-support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent. Taking action by written consent in lieu of a meeting is a means shareholders can use to raise important matters outside the aggregate of 20% of our outstanding common stock the powernormal annual meeting cycle. A shareholder right to act by written consent and to call a special shareowner meeting. This proposal does not impact our board’s current power to call a special meeting. Special meetings allow shareowners to vote on important matters, such as electing new directors that can arise between annual meetings. Shareowner input on the timing of shareowner meetings is especially important when events unfold quickly and issues may become moot by the next annual meeting. This proposal topic won more than 70% support at Edwards Lifesciences and SunEdison in 2013. Vanguard sent letters to 350 of its portfolio companies asking them to consider providing the right for shareholders to call a special meeting.
A shareholder right to call a special meeting and to act by written consent are 2 complimentary ways to bring an important matter to the attention of both management and shareholders outside the annual meeting cycle. This is important because there could be 15 months between annual meetings. ATaking action by written consent saves the expense of holding a special shareholder rightmeeting. Also our company requires 25% of shareholders to aggregate their shares to call a special meeting is one method– a much higher hill to equalizeclimb than the absence10% of a shareholder right to actshareholders permitted by written consent at Capital One.Delaware law.
An added incentive to vote for this proposal is our clearly improvable corporate governance and performance as summarized in 2014:
GMI Ratings, an independent investment research firm, said Richard Fairbank received $26 million in 2013 Total Realized Pay. GM said Capital One had not disclosed specific, quantifiable performance target objectives for Mr. Fairbank. Capital One paid long-term incentives to executives without requiring the company to perform above the median of its peer group. GMI rated Capital One D for accounting. GMI said multiple related party transactions and other potential conflicts of interest involving our company’s board or senior managers should be reviewed in greater depth, as such practices raise concerns regarding potential self-dealing or abuse.
Director Patrick Gross received our highest negative votes again. Mr. Gross had 19-years long tenure which can result in low independence and served on 5 public boards which can be a sign of over-extension. Nonetheless Mr. Gross was on our executive pay and nomination committees. In August 2014, Capital One said it received subpoenas from the New York District Attorney’s Office as part of a money-laundering probe.
Returning to the core topic of this proposal from the context of our clearly improvable corporate governance, pleasePlease vote to protectenhance shareholder value:
Special Shareowner MeetingsRight to Act by Written Consent – Proposal 56
Statement in Opposition to the Stockholder Proposal TheCapital One already provides stockholders with the ability to act in between annual meetings, and accordingly the Board of Directors recommends that stockholders vote“AGAINST” “AGAINST” the Stockholder Proposal. The Board believes the proposed change requested by the Stockholder Proposal is not necessary in lightCapital One’s circumstances given our current governance practices and structures – including the ability of stockholders to call special meetings, our strong stockholder engagement practices year-around and our prior adoption of proxy access – and is not in the best interests of our stockholders. Capital One’s stockholder engagement program provides an open, transparent, and constructive forum for our stockholders to have atwo-way dialogue with us, including as to concerns they may have, and ensures that management and our Board of Directors understand and consider the issues that matter most to our stockholders.
Capital One’s existing stockholder-friendly governance practices and structures make implementation of this Stockholder Proposal unnecessary.Capital One’s robust corporate governance structures empower our stockholders, promote accountability and oversight and provide stockholders with an opportunity to express their views. These features include an annually elected Board; a majority voting standard for election of directors in uncontested elections; and independent Board leadership through a strong and active Lead Independent Director and independent committee chairs for key committees. In addition, in 2015, the Company proactively adopted proxy access bylaws that permit a stockholder or group of up to 20 stockholders who have owned at least 3% of the Proposed Certificate AmendmentCompany’s outstanding common shares or voting stock continuously for at least 3 years to nominate and | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 97 |
| SECTION XV – STOCKHOLDER PROPOSAL REQUESTING STOCKHOLDERS’ RIGHT TO ACT BY WRITTEN CONSENT (ITEM 6 ON PROXY CARD) |
include in the Company’s proxy materials a number of director candidates equal to the greater of two or 20% of the total Board. With respect to matters requiring stockholder action, either Capital One or its stockholders may present items for consideration at an annual or special meeting of the stockholders. Under our Articles of Incorporation and Bylaws, stockholders may propose business for a stockholder vote at our annual meeting by following the procedures set forth in Section XIII. The Boardour governing documents and stockholders owning at least 25% of Directors recognizes that providing stockholders the ability to request thatCompany’s Voting Stock may require the Company to call a special meetings is viewed by some stockholders as an important corporate governance practice. However, special meetingsmeeting of the stockholders can cause thein between annual meetings. The 25% threshold required to call a special meeting allows for stockholders who represent a significant financial stake in our Company to incur substantial expensescall a special meeting and can be potentially disruptive to the Company’s business operations and to long-term stockholder interests. Accordingly, the Board of Directors believes that special meetings of the stockholders should be extraordinary events. In addition, the Board of Directors believes thatprotects against a small minority of stockholders should not be entitled to utilizeutilizing the mechanism of a special meetingsmeeting for their own special interests, which may not be shared more broadly by stockholders of the Company. Likewise, In the Board’s view, action at a stockholder meeting (whether annual or special), supports stockholders’ interests more than action by written consent. The Board believes matters sufficiently important to require a stockholder vote should be the subject of a stockholder meeting, which provides all stockholders with advance notice, the benefits of a well-structured process and publicly filed proxy materials and the opportunity to consider and discuss the merits of a proposed action prior to a vote. Our governing documents ensure that all stockholders are provided with minimum advance notice and an opportunity to participate in determining any action subject to a stockholder vote. The Stockholder Proposal, however, does not provide for any of the protections that are provided stockholders in the context of an annual or special meeting of stockholders, meaning that short-term or special interest stockholders could use the written consent procedure without providing advance notice or information to all stockholders on important pending stockholder actions, depriving many stockholders of the opportunity to engage in a transparent discussion and to exchange views with the Board of Directors believes that only stockholdersand each other before stockholder action is taken. Further, actions by written consent can cause confusion with full and continuing economic interest in our Voting Stock and full voting rights shouldmultiple written consents being circulated which may be entitled to request that the Company call a special meeting.duplicative or contradictory. Capital One is dedicated to strong and effective corporate governance principles that promote the long-term interests of our stockholders, allow for responsible decision-making and accountability, and foster a culture that reflects the Company’s high standards of independence, transparency and stockholder rights. In recommending votes against the Stockholder Proposal, theThe Board believes that it is important to consider not only the Proposed Certificate Amendment but also the Company’s current governance practices including that: A majority voting standard applies for the election of directors in uncontested elections;
All directors stand for election annually;
The Board of Directors has empowered and elected a strong and active Lead Independent Director; and
Key governance committees of the Board of Directors are chaired by and comprised solely of independent directors.
In addition, in 2014,structures described above reflect our stockholders approved amendments to Capital One’s Certificate that had been recommended by the Board of Directors to adopt a majority voting standard in place of the supermajority voting standards applicable to certain stockholder actions. These practices reflect the Board of Directors’ commitment to carefully considered corporate governance standards that operate for the benefit of all stockholders.
InCapital One’s ongoing dialogue with stockholders provides an open, transparent, and constructive forum for our stockholders to raise their concerns.As described more fully in this proxy statement under “Stockholder Engagement Program” on page 31, we proactively engage with our investors, including their corporate governance representatives, who collectively own a significant percentage of our outstanding stock to ensure we are receiving feedback focused on important corporate governance matters and issues. This is in addition to our year-round engagement practices with our investors on business-related matters. Capital One values the Proposed Certificate Amendment,input and insights of our stockholders and is committed to continued engagement with our investors. The wide breadth of our stockholder engagement activities gives our stockholders a variety of methods for communicating with management and the Board, of Directors is recommendingand enables management and our Board to consider and effectively address the issues that matter most to our stockholders.
In sum, we believe that Capital One’s existing governance practices and structures combined with our ongoing dialogue with our stockholders approve an amendment to Capital One’s Certificate to allow one or more stockholders owning at least 25%make implementation of the Company’s Voting Stock to require that the Company call a special meeting of the stockholders. In determining to utilize a 25% ownership threshold in the Proposed Certificate Amendment, the Board noted that the 25% ownership standard is the most prevalent standard among its peer companies, and that a number of the Company’s institutional stockholders have in the past expressed support for a 25% ownership standard for stockholders to be able to request a special meeting of the stockholders. In light of these considerations, the Board of Directors believes that it strikes an appropriate balance between enhancing stockholder rights and adequately protecting stockholder interests to provide that stockholders who satisfy a 25% “net long” ownership standard and comply with certain additional procedures and limitations have the ability to request that the Company call a special meeting.this Stockholder Proposal unnecessary. *** The Board of Directors unanimously recommends that you vote “AGAINST” the Stockholder Proposal Regarding Special Meetings ofRequesting the StockholdersStockholders’ Right to Act by Written Consent. | | | | | | | | | 98 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
SECTION XVSection XVI – OTHER BUSINESSOther 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 One’s Annual Report to Stockholders for the fiscal year ended December 31, 2014,2016, including consolidated financial statements, is being furnished along with this proxy statement to Capital One’s 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 One’s Annual Report on Form10-K for the fiscal year ended December 31, 2014,2016 (“Form10-K”) may be obtained at the Annual Meeting, at our website atwww.capitalone.com under “About Us/Investors”Investors,” or by contacting our Investor Relations department at Capital One’s address set forth on the Notice of Annual Stockholder Meeting.Notice. The Form10-K, which is filed with the SEC, may also be obtained at the SEC’s website atwww.sec.gov. Stockholder Proposals for 20162018 Annual Stockholder Meeting Stockholders interested in submitting a proposalTo be considered for inclusion in the proxy materials atfor Capital One’s 20162018 Annual Stockholder Meeting (“Capital One’s 20162018 Annual Meeting”) may do so by following the rules prescribed in, stockholder proposals submitted pursuant to Rule14a-8 under the Securities Exchange Act and stockholder director nominations submitted pursuant to the proxy access provisions of 1934. To be eligible for inclusion, stockholder proposalsour Bylaws must be received by Capital One’s Corporate Secretary at the address on the Notice of Annual Stockholder Meeting no later than November 21, 2017 (and in the closecase of business on November 18, 2015.proxy access no earlier than October 22, 2017). Stockholders submitting proposals pursuant to Rule14a-8 or submitting proxy access director candidates must also satisfy other procedural and qualification requirements set forth in Rule14a-8 and our Bylaws, respectively. The submission of a stockholder proposal or proxy access nomination does not guarantee that it will be included in our proxy statement.
Under our Bylaws, if you wish to present a stockholder proposal other business before the stockholders at Capital One’s 2016 Annual Meetingthan pursuant to Rule14a-8 or nominate a director candidate other than pursuant to our proxy access Bylaw provision, then to be timely for consideration at Capital One’s 2018 Annual Meeting, you must give proper written notice of any such businessproposal and of such nomination to the Corporate Secretary not beforeno earlier than January 1, 2016,4, 2018, and not after January 31, 2016.no later than February 3, 2018. If Capital One’s 20162018 Annual Meeting is held on a date that is not within thirty days before or sixty days after April 30, 2016,May 4, 2018, the anniversary date of this year’s Annual Meeting, notice must be delivered no earlier than the one hundred twentieth day prior to such annual meeting and no later than the close of business on the later of the ninetieth day prior to such meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. Your notice must include the information specified in our Bylaws concerning the businessproposal 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 One’s address on the Notice of Annual Stockholder Meeting. On behalf of the Board of Directors, John G. Finneran, Jr. Corporate Secretary March 17, 201521, 2017 | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 99 |
APPENDIXAppendix A – PROPOSED AMENDMENTS TO Amended and Restated Capital One Financial Corporation 2002 Associate Stock Purchase Plan
CAPITAL ONE’SONE FINANCIAL CORPORATION 2002 ASSOCIATE STOCK PURCHASE PLAN AMENDED AND RESTATED CERTIFICATEAS OF INCORPORATION TO ALLOW STOCKHOLDERS TO REQUEST SPECIAL MEETINGS OF STOCKHOLDERSMAY 8, 2012MAY 4, 2017 Set forth below1. Purpose and Effect of Plan
The purpose of the Plan is to secure for the textCompany 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 ofFebruary 23, 201 2May 4, 2017, subject to the approval of the Company’s Restated Certificate of Incorporation proposed to be amended by Item 4. Proposed additions are indicated by double underlining, and proposed deletions are indicated by strike-outs.stockholders at the Company’s20122017 annual meeting. Proposed Amendments to Article IV:2. Shares Reserved for the Plan
(A) Authorized Stock. The CorporationThere shall be authorized to issue 1,050,000,000 sharesreserved for issuance and purchase by Participating Associates under the Plan an aggregate of capital stock, of which 1,000,000,000 shares shall be18,000,00033,000,000 shares of Common Stock, $.01 par value (“Common Stock”), and 50,000,000subject 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 com missions of an Eligible Associate received from the Employer, including salary reduction contributions pursuant to elections under a plan subject to Code section 125 or 40l(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 Company’s 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 Company’s 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 Associate’s designated beneficiary predeceases him, the Participating Associate’s 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 Company’s common stock, $.01 par value per share. |
| i. | Company: Capital One Financial Corporation and any successor by merger, consolidation or otherwise. |
| j. | Eligible Associate: Any employee of the Company or any of its Subsid iaries who meets the eligibility requirements of Section 5. |
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| APPENDIX A – AMENDED AND RESTATED CAPITAL ONE FINANCIAL CORPORATION 2002 ASSOCIATE STOCK PURCHASE PLAN |
| k. | Employer: For purposes of Section 5, the Company or Subsidiary employing an Eligible Associate. |
| l. | Enrollment Form: The form filed with the Company’s 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 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 sharesadministered by a committee, consisting of Preferred Stock, $.01 par value (“Preferred Stock”). (B) Preferred Stock. Sharesnot less than two members appointed by the Board. The Committee shall be the Compensation Committee of Preferred Stock may be issuedthe 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 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 series. Theof the Company’s officers. In addition, the Committee may request advice or assistance and employ such other persons as arc necessary for proper administration of the Plan. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 101 |
| APPENDIX A – AMENDED AND RESTATED CAPITAL ONE FINANCIAL CORPORATION 2002 ASSOCIATE STOCK PURCHASE PLAN |
No member of the Committee or the Board of Directors is hereby authorized to create and provideshall be liable for the issuance of shares of Preferred Stock in series and, by filing a certificate pursuantany action, omission, or determination relating to the applicable lawPlan, and the Company shall indemnify and hold harm less each member of the StateCommittee and each other director, employee or consultant of Delaware (hereinafter referredthe 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 Employer’s 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 “Preferred Stock Designation”),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 asnon-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 establishbe excluded from Plan participation even if a court or administrative agency determines that such persons are common law employees and not persons acting asnon-employee directors, independent contractors or “1eased employees” of the Employer. Notwithstanding anything else to the contrary stated herein, while employees of the Company or its Subsidiaries who are located in the United Kingdom from time to time are eligible to participate in the Plan, their eligibility is limited to the extent determined by the Committee from time to time which shall have the authority to: (i) impose a limitation on the number of sharessuch employees who may participate in the Plan; (ii) restrict eligibility to certain named employees; (iii) impose a limit on the value such employees may elect to have deducted from their payroll in order to purchase Common Stock in addition to the limits set out in Section 6; (iv) impose a fixed period during which such employees may elect for deductions from payroll to be includedmade; and (v) restrict the eligibility of any such employees to participate in each such series, andthe Plan. 6. Election to fixParticipate Each Eligible Associate may elect to become a Participating Associate by filing with the designations, powers, preferences and rightsCompany’s Human Resources Department (or third party plan administrator designated by the Company’s Human Resources Department) an Enrollment Fonn 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 Company’s 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 l% and a maximum deduction of 15% (or such lower percentage determined by the Committee) of Base Compensation for that payroll period. For purposes of the preceding sentence, a Participating Associate’s 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 in any calendar year shall not exceed $75,000. All regular payroll deductions 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 at any time to increase, decrease, or eliminate his regular payroll deduction by filing a new Enrollment Form, subject to any restrictions that may be imposed by the Company. 6A. Limitation on Consideration Payable in EU Member States and European Economic Area Treaty Adherent States | (a) | Notwithstanding any other provision in the Plan, in no event shall the total consideration payable through payroll deductions or other contributions authorized by Participating Associates resident in or otherwise located in the United Kingdom and other EU Member States and European Economic Area (“EEA”) treaty |
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| APPENDIX A – AMENDED AND RESTATED CAPITAL ONE FINANCIAL CORPORATION 2002 ASSOCIATE STOCK PURCHASE PLAN |
| adherent states for the purchase of Common Stock pursuant to an offer under this Plan, when combined with the total consideration of all other offers to the public by the Company of its Common Stock within the United Kingdom, any other EU Member State or EEA treaty adherent state exceed the amount of€ 4,999,999 in a12-month period. |
| (b) | In calculating the limit set out in (a) above at any particular time (the “Relevant Date”), there shall be included: |
| (i) | any payroll deductions or other contributions that can be made pursuant to any offer of participation in the Plan in the 12 months following the Relevant Date; |
| (ii) | any payroll deductions or other contributions that could be made pursuant to any offer of participation in the Plan within the period of 12 months ending with the Relevant Date; |
| (iii) | the consideration for any other offer of shares of Common Stock made by the Company within the period of 12 months ending with the Relevant Date, which constitutes an offer to the public. |
| (c) | A reference to an offer in this Section 6A is an offer of shares of Common Stock to persons resident in or otherwise located in the United Kingdom and other EU Member States and EEA treaty adherent states. Without limitation, an offer shall be considered to be made where an Eligible Associate is able to enroll into the Plan. |
| (d) | Application of the limit set out in (a) above may result in a reduction in the number of shares of Common Stock that may be purchased by Participating Associates. |
| (e) | Unless otherwise determined by the Committee, the limit imposed under this Plan will be applied to all Participating Associates on similar terms and on apro-rata basis. The Committee may, in its absolute discretion, determine to scale back any participation in any other manner that it so chooses. For instance, the Committee may scale back contributions over a threshold it chooses. |
| (f) | Notwithstanding the foregoing, this Section 6A shall automatically terminate without further action by the Board or the Committee if and when the Company can rely on another exemption under the EU Prospectus Directive 2003/71/ EC, as amended, that does not require the restrictions set forth in this section, as determined by the Committee in its sole discretion. |
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 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 Sections 6, 6A and 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. 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 eachCommon Stock held in a Participating Associate’s Investment Account shall be used as soon as practicable to purchase additional shares of Common Stock at the applicable Purchase Price. All such seriesadditional 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 Associate’s 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 qualifications, limitations or restrictions thereof.proceeds of sale, less selling expenses and other applicable charges, distributed to the Participating Associate. 8. Stock Purchases The authorityCompany 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 BoardParticipating Associates as of Directorseach Investment Date (or as | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 103 |
| APPENDIX A – AMENDED AND RESTATED CAPITAL ONE FINANCIAL CORPORATION 2002 ASSOCIATE STOCK PURCHASE PLAN |
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 Company’s Human Resources Department or its delegate shall establish and maintain an Investment Account with respect to each seriesParticipating Associate. Each Investment Account shall include,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. 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 Associate’s Base Compensation 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 Company’s capital stock (including, but not be limited to, determinationthe creation or issuance to shareholders generally of rights, options or warrants for the purchase of common stock or preferred stock of the following: (i) The designation ofCompany), the series, which may be by distinguishing number letter or title.
(ii) The numberand kind of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increasestock or decrease (but not below the number of shares thereof then outstanding).
(iii) Whether dividends, if any, shall be cumulative or noncumulative and the dividend ratesecurities of the series.
(iv) Dates at which dividends, if any, shall be payable.
(v) The redemption rights and price or prices, if any, for shares of the series.
(vi) The terms and amount of any sinking fund provided for the purchase or redemption of shares of the series.
(vii) The amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
(viii) Whether the shares of the series shall be convertible into shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series of such other security, the conversion price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible and all other terms and conditions upon which such conversion may be made.
(ix) Restrictions on the issuance of shares of the same series or of any other class or series.
(x) The voting rights, if any, of the holders of shares of the series.
(xi) Such other powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions thereof as the Board of Directors shall determine.
PursuantCompany to the authority conferred by this Article IV, Paragraph (B),athe followingseries of Preferred Stock has been designated as Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B, and is attached as Exhibit 1 hereto and incorporated herein by reference.series of Preferred Stock are hereby
provided for, with the number of shares to be included in each such series, and the designation, powers, preference and rights, and qualifications, limitations or restrictions thereof fixed as stated and expressed with respect to each such series in the respective exhibits specified below, which exhibits are attached hereto and incorporated herein by reference:
Exhibit 1 Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B
Exhibit 2 Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series C
Exhibit 3 Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series D
(C) The Common Stock. The Common Stock shall be subject to the express termsPlan, the maximum number of shares or securities that may be delivered under the Preferred StockPlan, the Purchase Price and any series thereof. Each share of Common Stockother relevant provisions shall havebe appropriately adjusted by the right to cast one vote for each share for the election of Directors andCommittee, whose determination shall be binding on all other matters uponpersons.
If the Company is a party to a consolidation or a merger in which stockholders are entitled to vote. (D) Vote. Except as otherwise provided in this Certificate of Incorporation or in a Preferred Stock Designation, or as may be required by applicable law, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes and holders of shares of Preferred Stock shall not be entitled to receive notice of any meeting of shareholders at which they are not entitled to vote. Each share of Common Stock shall have one vote, and the Common Stock shall vote together as a single class.
(E) Record Holders. The Corporation shall be entitled to treat the person in whose name any share of its stockCompany is registered as the owner thereof for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Corporation shall have notice thereof, except as expressly provided by applicable law.
Proposed Amendments to Article VI:
Section 2.2. Special Meeting.
(A) In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized and empowered:
(i) to adopt, amend or repeal the Bylaws of the Corporation,provided,however,surviving corporation, a transaction that the Bylaws adopted by the Board of Directors under the powers hereby conferred may be altered, amended or repealed by the Board of Directors or by the stockholders having voting power with respect thereto,provided further thanresults in the caseacquisition of amendments by stockholders, the affirmative vote of the holders of at least a majority of the voting power of the then outstanding Voting Stock, voting together as a single class, shall be required to alter, amend or repeal, the Bylaws; and
(ii) from time to time to determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation, or any of them, shall be open to inspection of stockholders; and, except as so determined, or as expressly provided in this Certificate of Incorporation or in any Preferred Stock Designation, no stockholder shall have any right to inspect any account, book or document of the Corporation other than such rights as may be conferred by law.
(B) The Corporation may in its Bylaws confer powers upon the Board of Directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon the Board of Directors by law.
(C) A special meeting of the stockholders of the Corporation: (a) may be called at any time by the Chair of the Board of Directors or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies; and (b) shall be called by the Chair of the Board of Directors or the Secretary of the Corporation upon the written request of one or more stockholders of record that (i) Own, or who are acting on behalf of persons who Own, shares representing 25% or more of the voting power of the then outstanding Voting
Stock entitled to vote on the matter or matters to be brought before the proposed special meeting, (ii) provide the information regarding such stockholder(s) (and the persons for whom the stockholders are acting, as applicable) and the proposed special meeting and comply with such procedures as shall be set forth in the Bylaws of the Corporation from time to time, (iii) continue to Own, or are acting on behalf of persons who continue to Own, shares representing 25% or more of the voting power of the then outstanding Voting Stock entitled to vote on the matter or matters to be brought before the proposed special meeting for such period as shall be set forth in the Bylaws, as amended from time to time, and (iv) satisfy such additional terms, conditions and limitations as may be set forth in the Bylaws of the Corporation from time to time. Except as provided for in the preceding sentence of this Article VI(C) or in the terms of any series of Preferred Stock, special meetings of the stockholders of the Corporation may not be called by any other person or persons. For purposes of this Article VI(C), a person shall be deemed to “Own” only those shares of outstanding Voting Stock as to which the person possesses both (i) full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares, which terms may be further defined in the Bylaws of the Corporation adopted from time to time. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting (or, in the case of nominations for directors to be elected at a special meeting, if such nominations are brought in accordance with the procedures set forth in the Bylaws from time to time).
(C)(D) For purposes of this Certificate of Incorporation, “Voting Stock” shall mean the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors.
APPENDIX B – PROPOSED AMENDMENTS TO CAPITAL ONE’S AMENDED AND RESTATED BYLAWS TO ALLOW STOCKHOLDERS TO REQUEST SPECIAL MEETINGS OF STOCKHOLDERS
Set forth below is the textsubstantially all of the Company’s Amended and Restated Bylaws proposed to be amendedoutstanding stock by Item 4. Proposed additions are indicated by double underlining, and proposed deletions are indicated by strike-outs.
Proposed Amendments to Article II:
Section 2.1. Annual Meeting. The annual meetingsa single person or entity, or a sale or transfer of stockholderssubstantially all of the Corporation shall be held atCompany’s assets, the Committee may take such place, either within or without the State of Delaware, and at such time and date as the Board of Directors, by resolution, shall determine and set forth in the notice of the meeting. If the Board of Directors fails so to determine the time, date and place of meeting, the annual meeting of stockholders shall be held at the Corporation’s principal executive offices on the first Tuesday in May. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day.
Section 2.2. Special Meeting.
(A)Subject to the rights of the holders of any series of preferred stock, par value $.01 per share, of the Corporation (the “Preferred Stock”) to elect additional directors under specified circumstances,aspecial meetings of the stockholdersof the Corporation: (i) may be called only by the Chair of the Board or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies (the “Whole Board”) and shall be held at such place, on such date, and at such time as the Chair of the Board or Board of Directors pursuant to a resolution adopted by a majority of the Whole Board, as the case may be, shall fix.; and (ii) shall be called by the Chair of the Board of Directors or the Secretary of the Corporation upon the written request of one or more stockholders of record that at the time a request is delivered, Own, or who are acting on behalf of persons who Own, shares representing 25% (the “Requisite Percent”) or more of the voting power of the then outstanding Voting Stock entitled to vote on the matter or matters to be brought before the proposed special meeting, provided that a special meeting called at the request of one or more stockholders (a “Stockholder Requested Special Meeting”) shall be called by the Chair of the Board or the Secretary of the Corporation only if the stockholder(s) requesting such meeting provide the information regarding such stockholder(s) (and regarding the persons for whom such stockholders are acting, as applicable) and the proposed special meeting and comply with such procedures set forth in Section 2.2(B) of these Bylaws. For the purposes of this Section 2.2 of these Bylaw, a person shall be deemed to “Own” only those shares of outstanding Voting Stock as to which the person possesses both (a) full voting and investment rights pertaining to the shares and (b) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (a) and (b) shall not include any shares (x) sold by such person or any of its affiliates in any transaction that has not been settled or closed, (y) borrowed by such person or any of its affiliates for any purposes or purchased by such person or any of its affiliates pursuant to an agreement to resell or (z) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such person or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of outstanding Voting Stock of the Corporation, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, such person’s or affiliates’ full right to vote or direct the voting of any such shares, and/or (2) hedging, offsetting or altering to any degree gain or loss arising from the full economic ownership of such shares by such person or affiliate. A person shall “own” shares held in the name of a nominee or other intermediary so long as the person retains the right to instruct how the shares are votedactions with respect to the election of directors and possessesPlan as the full economic interestCommittee deems appropriate.
Notwithstanding anything in the shares. A person’s ownershipPlan to the contrary, the Committee may take the foregoing actions without the consent of shares shall be deemed to continue during any period in whichParticipating Associate, and the person has loaned such shares provided that the person has the power to recall such loaned shares on less than three (3) business days’ notice and during any period in which the person has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any time by the person. The determination of the extent to which a person “Owns” any shares of Voting Stock for these purposes shall be made in good faith by the Board of Directors, whichCommittee’s determination shall be conclusive and binding on the Corporationall persons for all purposes. 13. Termination of Employment and the stockholders.Death | (a) | If a Participating Associate’s 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 |
| | | | | | | | | 104 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
| APPENDIX A – AMENDED AND RESTATED CAPITAL ONE FINANCIAL CORPORATION 2002 ASSOCIATE STOCK PURCHASE PLAN |
| 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) In order
| (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; provided that a Beneficiary may elect to receive the distributions from the Participating Associate’s Investment Account (as described in (b)(i) and (b)(ii), above) before the Investment Date next following the Participating Associate’s 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 Stockholder Requested Special MeetingParticipating Associate authorizes the Company to withhold from the Participating Associate’s compensation the amounts necessary to satisfy any such applicable tax withholding obligations. At any time, the Company may, but shall not be called byobligated to, withhold from the ChairParticipating Associate’s compensation the amount necessary for the Company to satisfy any applicable tax withholding obligations. 15. Amendment of the Plan The Board or the Secretary of the Corporation, one or more written requests for a special meeting (individually or collectively, a “Special Meeting Request”) signed and dated by the stockholders of record that Own, or who are acting on behalf of persons who Own, the Requisite Percent of Voting Stock of the Corporation (or their duly authorized agents), must be delivered to the Secretary at the principal executive offices of the Corporation and must be accompanied by: (1) in the case of any Stockholder Requested Special Meeting at which director nominations are proposed to be presented, the information required by Section 2.7(A)(4) and (5), including as to the person(s) seeking to propose such nominations at such meeting, the information required under Section 2.7(A)(4)(b), which notice shall be further updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct, as provided in the last sentence of Section 2.7(A)(2); and/or
(2) in the case of any Stockholder Requested Special Meeting at which any business other than nominations of persons for election to the Corporation’s Board of Directors is proposed to be presented, the information required by Section 2.7(B)(3) (which shall be in addition to the information required by Section 2.2(B)(1) if director nominations also are proposed to be considered), including as to the person(s) seeking to propose such business at such meeting, the information required under Section 2.7(B)(3)(d), which notice shall be further updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct, as provided in the last sentence of Section 2.7(B)(2); and
(3) as to each stockholder of the Corporation signing such request, or if such stockholder is a nominee or custodian, the beneficial owner(s) on whose behalf such request is signed, (i) an affidavit by each such person stating the number of shares of Voting Stock of the Corporation that it Owns (as defined in Section 2.2(A)) as of the date such request was signed and agreeing to continue to Own such number of shares of Voting Stock through the date of the Stockholder Requested Special Meeting and an agreement by such person to update and supplement such affidavit, if necessary, so that the information provided in such affidavit regarding the number of shares of Voting Stock of the Corporation that such person Owns shall be true and correct as of the record date for the Stockholder Requested Special Meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting or any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof; provided that in the event of any decrease in the number of shares of Voting Stock of the Corporation Owned by such personits sole discretion may at any time beforeamend the Stockholder Requested Special Meeting,Plan in any respect; provided that such person’s Special Meeting Requestamendment 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 deemedsubject to have been revoked with respect to such shares of Voting Stockthe approval of the Corporation comprising such reduction and shall not be counted towards the calculation of the Requisite Percent, and (ii) asCompany’s stockholders to the stockholder seeking to call the special meeting (or the person on whose behalf the stockholder is acting, as applicable) or any stockholder or beneficial owner who has solicited other stockholders to request the special meeting, the information as to such stockholder or beneficial ownerextent required under Section 2.7(A)(4)(b).
One or more written requests for a special meeting delivered to the Secretary shall constitute a valid Special Meeting Request only if each such written request satisfies the requirements set forth above and has been dated and delivered to the Secretary within sixty (60) days of the earliest dated of such requests. If the record holder is not the signatory to the Special Meeting Request, such Special Meeting Request will not be valid unless documentary evidence from the record holder is supplied to the Secretary at the time of delivery of such Special Meeting Request (or within ten (10) business days thereafter) of such signatory’s authority to execute the Special Meeting Request on behalf of the record holder. The determination of the validity of a Special Meeting Request
shall be made in good faith by the Board of Directors, which determination shall be conclusive and binding on the Corporation, and the stockholders and the date of such determination is referred to herein as the “Request Receipt Date.” A Special Meeting Request shall not be valid if: (i) such Special Meeting Request relates to an item of business that is not a matter on which stockholders are authorized to act under, or that involves a violation of, applicable law or (ii) such Special Meeting Request relates to an itemthe requirements of business that is the same or substantially similar to any itemnational securities exchange on which shares of business that was voted on at a meeting of stockholders occurring within ninety (90) days preceding the earliest dated request for a special meeting, or (iii) the Request Receipt Date occurs during the period commencing ninety (90) days prior to the first anniversaryCommon Stock are then traded.
16. Termination of the datePlan The Plan and all rights of the most recent annual meeting of stockholders and ending on the date of the next annual meeting of stockholders.Eligible Associates hereunder shall terminate: (C) Any special meeting of stockholders shall be held at such date and time as may be fixed by the Board of Directors in accordance with these Bylaws; provided, however, that a Stockholder Requested Special Meeting shall be called for a date not later than the date that is (i) ninety (90) days after the Request Receipt Date (or, in the case of any litigation related to the validity of the requests for a Stockholder Requested Special Meeting, ninety (90) days after the resolution of such litigation), or (ii) fifty (50) days after the date the Corporation files definitive soliciting materials with respect to such meeting pursuant to Schedule 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whichever is latest.
| (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 |
(D) Business transacted at a Stockholder Requested Special Meeting shall be limited to (i) the business stated in the valid Special Meeting Request(s) received from the Requisite Percent of stockholders, (ii) any additional business that the Board of Directors determines to include in the Corporation’s notice of meeting. and (iii) in the case of nominees for director nominated by a stockholder who has not delivered, and has not directed the delivery of, a Special Meeting Request with respect to the Stockholder Requested Special Meeting, in accordance with Section 2.7(C). If none of the stockholders who submitted the Special Meeting Request(s) (or their qualified representatives, as defined in Section 2.7(D)(1)) appears at the Stockholder Requested Special Meeting to present the matter or matters to be brought before the special meeting that were specified in the Special Meeting Request(s), the Corporation need not present the matter or matters for a vote at the meeting, notwithstanding that proxies in respect of such vote may have been received by the Corporation.
| (b) | at any earlier date determined by the Board in its sole discretion. |
(E) The stockholder seeking to call the special meeting may revoke a Special Meeting Request by written revocation delivered to, or mailed and received by, the Secretary at any time prior to the special meeting and any stockholder signing a Special Meeting Request may revoke such request as to the shares that such person Owns (or Owned by the person on whose behalf the stockholder is acting, as applicable) and shall be deemed to revoke a Special Meeting Request as and to the extent provided in Section 2.2(B)(3); provided that if as a result of such revocation(s), there no longer are valid unrevoked Special Meeting Request(s) from stockholders who Own the Requisite Percent of the voting power of the then outstanding Voting Stock entitled to vote on the matter or matters to be brought before the proposed special meeting, there shall be no requirement to call a special meeting or to hold a special meeting regardless of whether notice of such special meeting has been sent and/or proxies solicited for such special meeting. Further, inIn the event that the stockholder requestingPlan terminates under circumstances described in (a) above reserved shares remaining as of the Stockholder Requested Special Meeting withdraws such Special Meeting Request, theretermination date shall be no requirementsold to call or hold such special meeting.
Section 2.3. Place of Meeting. The Board of Directors orParticipating Associates at the Chairapplicable Purchase Price on a pro rata basis. Upon termination of the Plan, all amounts in a Participating Associate’s 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 as the case may be, may designate the place of meeting for any meetingand became effective on September 19, 2002. This amendment and restatement of the stockholders. If no designationPlan was adopted by the Boardon February 23, 2012effective May 4, 2017 and is so made,subject to the placeapproval of meetingthe Company’s stockholders at the Company’s20122017 annual meeting. | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT | | 105 |
| APPENDIX A – AMENDED AND RESTATED CAPITAL ONE FINANCIAL CORPORATION 2002 ASSOCIATE STOCK PURCHASE PLAN |
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 the Corporation’s principal executive offices. Section 2.4. Notice of Meeting. Writtensubject to all applicable federal, state and foreign laws, rules and regulations, and to such approvals by any regulatory or printed notice, stating the place, day and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be prepared and delivered by the Corporation not less than ten (10) days nor more than sixty (60) days before the date of the meeting, either personally, or by mail, or otherwise sent electronically as permitted by law, including via electronic mail or the Internet to each stockholder of record entitled to vote at such meeting.In the case of a special meeting, the purpose or purposes for which the meeting is called also shall be set forth in the notice.If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at such stockholder’s address as it appears
on the stock transfer books of the Corporation. If sent electronically, such notice shall be deemed to be delivered at the times provided in the General Corporation Law of the State of Delaware. Such further notice shall be givengovernment agency as may be required by law. Meetings may be held without notice if all stockholders entitled to vote are present, or if notice is waived by those not present. Any previously scheduled meeting of the stockholders may be postponed, and any special meeting of the stockholders may be cancelled, by resolution of the Board of Directors or by the Chair of the Board (in the case of a special meeting called by the Chair), in each case upon public notice given prior to the time previously scheduled for such meeting of stockholders.
Section 2.5. Quorum and Adjournment. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the voting power of the outstanding shares of the Corporation entitled to vote generally in the electionopinion of directors (the “Voting Stock”), represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series voting as a class, the holders of a majority of the voting power of the shares of such class or series shall constitute a quorumcounsel for the transaction of such business.Company.
19. Gender and Number Masculine pronouns shall refer to both males and females. The chair ofsingular form shall include the meeting or a majority of the shares of Voting Stock so represented may adjourn the meeting from time to time, whether or not there is such a quorum (or, in the case of specified business to be voted on by a class or series, the chair or a majority of the shares of such class or series so represented may adjourn the meeting with respect to such specified business). No notice of the time and place of adjourned meetings need be given except as required by law. The Voting Stock (or, in the case of specified business to be voted on by a class or series, the shares of such class or series) present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.plural. Section 2.6. Proxies. At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or as may be permitted by law, or by his or her duly authorized attorney-in-fact. Such proxy must be filed with the Secretary of the Corporation or his or her representative at or before the time of the meeting.
Section 2.7. Notice of Stockholder Business and Nominations.
(A)Notice of Director Nominations atAnnualMeetings of Stockholders.
(1) At any annual meeting or Stockholder Requested Special Meeting of the stockholders, only such nominations of persons for election to the Board of Directors shall be made as shall have been properly brought before the meeting. For nominations to be properly made at an annual meeting, nominations must be (a) specified in the Corporation’s notice of meeting given by or at the direction of the Board of Directors delivered pursuant to Section 2.4 of these Bylaws, (b) otherwiseproperlymade at the annual meeting by or at the direction of the Chair of the Board or the Board of Directors or (c) otherwise properly requested to be brought before the annual meeting by any stockholder of the Corporation in accordance with this Section 2.7(A) of these Bylaws.For nominations to be properly made at a Stockholder Requested Special Meeting, nominations must be (a) specified in the Corporation’s notice of meeting given by or at the direction of the Board of Directors delivered pursuant to Section 2.4 of these Bylaws, (b) otherwise made at the special meeting by or at the direction of the Chair of the Board or the Board of Directors or (c) otherwise have been properly requested to be brought before the special meeting by the stockholder in accordance with this Section 2.2(B)(1) of these Bylaws or Section 2.7(C) of these Bylaws.For nominations of persons for election to the Board of Directors to be properly requested by a stockholder to be made at an annual meeting of stockholders, a stockholder must (i) be entitled to vote at the meeting, (ii) comply with the notice and other procedures set forth in this Bylaw as to such nomination and (iii) be a stockholder of record at the time such stockholder’s notice pursuant to this Bylaw is delivered to the Secretary of the Corporation and at the time of the annual meeting. The immediately preceding sentence shall be the exclusive means for a stockholder to make nominations before an annual meeting of stockholders.
(2) For nominations of persons for election to the Board of Directors of the Corporation to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of this Bylaw, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation (including the completed and signed questionnaire, representation and agreement required
by paragraph (A)(5) of this Bylaw), and timely updates and supplements thereof as required by this Bylaw, in writing to the Secretary. To be timely, a stockholder’s notice (including the questionnaire, representation and agreement) shall be delivered to the Secretary at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting;provided, however, that in the event that the date of an annual meeting is more than thirty(30) days before or more than sixty (60) days after such first anniversary date of the previous year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the one hundred twentieth (120th) day prior to the date of such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to the date of such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above. In addition, to be considered timely, a stockholder’s notice (including the questionnaire, representation and agreement) shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice (including the questionnaire, representation and agreement) shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting or any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased by the Board of Directors and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
(4) To be in proper form, a stockholder’s notice to the Secretary with respect to the nomination of directors (whether given pursuant to paragraph (A)(1) of this Bylaw with respect to an annual meeting, or Section 2.2(B)(1) of these Bylaws or paragraph (C) of this Bylaw with respect to a special meeting) shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director (i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election, in each case pursuant to Regulation 14A under theSecuritiesExchange Act of 1934, as amended (the “Exchange Act”), including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected, (ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner on whose behalf the nomination is made, if any, and their respective affiliates or associates or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K of the Exchange Act if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; (b) as to
the stockholder giving the notice and any beneficial owner of the Corporation’scommon stockVoting Stock on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, and of any such beneficial owner, as they appear on the Corporation’s books and of their respective affiliates or associates or others acting in concert therewith, (ii) the class and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder, any such beneficial owner and any of their respective affiliates or associates or others acting in concert therewith, (iii) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class of shares of the Corporation or with a value derived in whole or in part from the value of any class of shares of the Corporation and any other derivative positions or synthetic arrangements (including any position resulting from hedging, swap, securities lending or other similar transaction relating to the Corporation’s capital stock), whether or not such instrument or right shall be subject to settlement in the underlying class of capital stock of the Corporation or otherwise, (any of the foregoing, a “Derivative Position”) held or beneficially held by the stockholder, any such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith, including a description of the substantive terms thereof including the amount, value and/or number so held and the extent to which any such Derivative Position is intended to or has the effect of increasing or decreasing the actual or apparent voting power of such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith with respect to the Corporation’s securities, (iv) any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith has the sole or shared right to vote any class of shares of the Corporation, (v) any short interest in any security of the Corporation (for purposes of this Bylaw, a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from, or avoid, mitigate or offset in whole or in part any loss related to, any decrease in the value of the subject security), (a “Short Interest”) held by such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith, (vi) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith that are separated or separable from the underlying shares of the Corporation, (vii) any proportionate interest in securities of the Corporation or Derivative Positions held, directly or indirectly, by a general or limited partnership in which such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith is a general partner, or directly or indirectly, beneficially owns an interest in a general partner, (viii) any performance-related fees (other than an asset-based fee) that such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith is entitled to based on any increase or decrease in the value of securities of the Corporation or Derivative Positions, if any, including without limitation any such interests held by members of such person’s immediate family sharing the same household, and (ix) any other information relating to such stockholder, beneficial owner and their respective affiliates or associates or others acting in concert therewith, if any, that would be required to be disclosed in a proxy statement and form or proxy or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Regulation 14(A) of the Exchange Act.
(5) A stockholder’s notice to the Secretary with respect to the nomination of directors (whether given pursuant to paragraph (A)(1) of this Bylaw with respect to an annual meeting, or Section 2.2(B)(1) of these Bylaws or paragraph (C) of this Bylaw with respect to a special meeting) must also include a completed and signed written response to a questionnaire with respect to the background and qualification of the nominee for director and the background of any other person or entity on whose behalf the nomination is being made or who is reasonably expected to participate in the solicitation of proxies with respect to the election of such person (which questionnaire shall be provided by the Secretary of the Corporation upon written request) and a signed written representation and agreement
(in the form provided by the Secretary of the Corporation upon written request) that such nominee for director (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosedtherein,to the Corporation,and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.
(6) For nominations of persons for election to the Board of Directors of the Corporation pursuant to Section 2.7(A)(1)(a) or (b) of this Bylaw or paragraph (C) of this Bylaw with respect to a special meeting, the nominee must also provide a completed and signed questionnaire, representation and agreement with the same information, and delivered in accordance with the same time period that applies to nominations to be brought by a stockholder of the Corporation, required by Section 2.7(A)(5) of this Bylaw.
(B)Notice of Other Business atAnnual Meetings of Stockholders.
(1) At any annual meeting or Stockholder Requested Special Meeting of the stockholders, only such business to be considered by the stockholders, other than nominations of persons for election to the Corporation’s Board of Directors which is addressed by paragraph (A) of this Bylaw, (“Other Business”) shall be made at such annual meeting of stockholders as shall have been properly brought before the meeting. For proposals of Other Business to be properly brought before an annual meeting, proposals of Other Business must be: (a) specified in the Corporation’s notice of meeting given by or at the direction of the Board of Directors delivered pursuant to Section 2.4 of these Bylaws, (b) otherwise properly made at the annual meeting, by or at the direction of the Chair of the Board or the Board of Directors or (c) otherwise properly requested to be brought before the annual meeting by any stockholder of the Corporation in accordance with Section 2.7(B) of these Bylaws.For proposals of Other Business to be properly brought before a Stockholder Requested Special Meeting, proposals of Other Business must be: (a) specified in the Corporation’s notice of meeting given by or at the direction of the Board of Directors delivered pursuant to Section 2.4 of these Bylaws, (b) otherwise properly made at the Stockholder Requested Special Meeting, by or at the direction of the Chair of the Board or the Board of Directors or (c) otherwise have been properly requested to be brought before the Stockholder Requested Special Meeting by the stockholder in accordance with this Section 2.2(B)(2) of these Bylaws.For proposals of Other Business to be properly requested by a stockholder to be made at an annual meeting of stockholders, a stockholder must (i) be entitled to vote at the meeting, (ii) comply with the notice procedures and other procedures set forth in this Bylaw as to such proposal and (iii) be a stockholder of record at the time such stockholder’s notice pursuant to this Bylaw is delivered to the Secretary of the Corporation and at the time of the annual meeting. The immediately preceding sentence shall be the exclusive means for a stockholder to submit proposals for Other Business (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the Corporation’s notice of meeting) to be considered at an annual meeting of stockholders.
(2) For a proposal of Other Business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (B)(1) of this Bylaw, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such Other Business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting;provided, however, that in the event that the date of an annual meeting is more than thirty(30) days before or more than sixty (60) days after such first anniversary date of the previous year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the one hundred twentieth (120th) day prior to the date of such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to the date of such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above. In addition, to be considered timely, a stockholder’s notice shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting or any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof.
(3)Such stockholder’s noticeTo be in proper form, a stockholder’s notice to the Secretary with respect to the Other Business (whether given pursuant to paragraph (B)(1) of this Bylaw with respect to an annual meeting, or Section 2.2(B)(2) of these Bylaws with respect to a special meeting) shall set forth (a) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and any beneficial owner on whose behalf the proposal is made; (b) the text of the proposal of business (including the text of any resolutions proposed for consideration and, in the event that such proposal or business includes a proposal to amend the Bylaws, the text of the proposed amendment), (c) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any of their respective affiliates or associates or others acting in concert therewith and (d) as to the stockholder giving the notice and any beneficial owner of the Corporation’scapital stockVoting Stock on whose behalf the proposal is made (i) the name and address of such stockholder, and of such beneficial owner, as they appear on the Corporation’s books and of any of their respective affiliates or associates or others acting in concert therewith, (ii) the class and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder, any such beneficial owner and any of their respective affiliates or associates or others acting in concert therewith, (iii) any Derivative Position held or beneficially held by the stockholder, any such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith, including a description of the substantive terms thereof including the amount, value and/or number so held and the extent to which any such Derivative Position is intended to or has the effect of increasing or decreasing the actual or apparent voting power of such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith with respect to the Corporation’s securities, (iv) any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith has the sole or shared right to vote any class of shares of the Corporation, (v) any Short Interest held by such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith, (vi) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder, beneficial owner or any of their respective
affiliates or associates or others acting in concert therewith that are separated or separable from the underlying shares of the Corporation, (vii) any proportionate interest in securities of the Corporation or Derivative Positions held, directly or indirectly, by a general or limited partnership in which such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith is a general partner, or directly or indirectly, beneficially owns an interest in a general partner, (viii) any performance-related fees (other than an asset-based fee) that such stockholder, beneficial owner or any of their respective affiliates or associates or others acting in concert therewith is entitled to based on any increase or decrease in the value of securities of the Corporation or Derivative Positions, if any, including without limitation any such interests held by members of such stockholder’s immediate family sharing the same household, and (ix) any other information relating to such stockholder, beneficial owner and any of their respective affiliates or associates or others acting in concert therewith, if any, that would be required to be disclosed in a proxy statement and form or proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal pursuant to Regulation 14(A) of the Exchange Act.
(C)Special Meetings of Stockholders. At any special meeting of the stockholders, only such business shall be conducted or considered as shall have been properly brought before the meetingby the Board of Directorspursuant to the Corporation’s notice of meeting pursuant to Section 2.4 of these Bylaws. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at whichthe Board of Directors has determined thatdirectors are to be elected, as reflected in the Corporation’s notice of meeting pursuant to Section 2.4 of these Bylaws, (a) by or at the direction of the Board of Directors or (b) in the case of a special meeting other than a Stockholder Requested Special Meeting, or in the case of a special meeting that is a Stockholder Requested Special Meeting and the person wishing to make such nominations did not deliver, and did not otherwise direct the delivery of, a Special Meeting Request with request to such meeting,by any stockholder of the Corporation who (i) is entitled to vote at the meeting, (ii) complies with the notice and other procedures set forth in this Bylaw as to such nomination and (iii) is a stockholder of record at the time such stockholder’s notice is delivered pursuant to this Bylaw to the Secretary of the Corporation and at the time of the special meeting. The immediately preceding sentence shall be or (c) in theexclusive means forcase ofaStockholder Requested Special Meeting, by anystockholderof the Corporation pursuanttomake nominations before a special meeting of stockholdersSection 2.2.
(1)For any nominations of persons for election to the Board of Directors ofIn the event the Corporationto be properly brought beforecalls a special meetingbyof stockholders for the purpose of electing one or more directors to the Board of Directors, any stockholder entitled to vote in such election of directors (other thana stockholderpursuantwho has delivered, or who is acting on behalf of a person who directed the delivery of, a written request with respect toparagraph (C) of this Bylaw,such special meeting, in the case of a Stockholder Requested Special Meeting (an “Excluded Stockholder”)) may nominate a person or persons, as the case may be, for election to the Board of Directors of the Corporation as specified in the Corporation’s notice of meeting, by delivering the stockholder’s notice in the form required by paragraphs (A)(4) and (A)(5) of this Bylaw (including the completed and signed questionnaire, representation and agreement required by paragraph (A)(56) of this Bylaw), and timely updates and supplements thereof as required by this Bylaw,shall be deliveredto the Secretary at the principal executive offices of the Corporation not earlier than the one hundred twentieth (120th) prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above. In addition, to be considered timely, a stockholder’s notice (including the questionnaire, representation and agreement) shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice (including the questionnaire, representation and agreement) shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof,
and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting, or any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof.Notwithstanding any other provision of these Bylaws, in the case of a Stockholder Requested Special Meeting, no Excluded Stockholder may nominate a person for election to the Board of Directors at the meeting, except pursuant to the written request(s) delivered for such special meeting pursuant to Section 2.2(A). Notwithstanding any other provision of these Bylaws, in the case of a Stockholder Requested Special Meeting, no stockholder may propose any other business to be considered at the meeting, except pursuant to the written request(s) delivered for such special meeting pursuant to Section 2.2(A).
(D)General.
(1)OnlyExcept as otherwise required by law, only such persons who are nominated in accordance with the procedures set forth in this Bylaw and Section 2.2 (as applicable) shall be eligible to serve as director and only such Other Business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Bylawand Section 2.2 (as applicable). Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the chair of the meeting shall have the power and duty to determine whether a nomination or any Other Business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Bylaw and, if any proposed nomination or Other Business is not in compliance with this Bylaw, to declare that such defective proposal or nomination shall be disregarded.Notwithstanding the foregoing provisions of this Section 2.7, unless otherwise required by law, if the stockholder does not provide the information required under Section 2.2(B) and/or this Section 2.7 to the Corporation within the time frames specified herein, or if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or Other Business, such nomination shall be disregarded and such Other Business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of Section 2.2(B) and this Section 2.7, to be considered a qualified representative of a stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the Corporation prior to the making of such nomination or proposal at such meeting by such stockholder stating that such person is authorized to act for such stockholder as proxy at the meeting of stockholders.
(2) For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw;provided,however, that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the separate and additional requirements set forth in these Bylaws with respect to nominations or proposals as to any Other Business to be considered pursuant to this Bylaw.
(4) Nothing in this Bylaw shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Certificate of Incorporation or these Bylaws. Subject to Rule 14a-8 under the Exchange Act, nothing in these Bylaws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of director or directors or any Other Business proposal.
Section 2.8. Procedures; Required Vote.
(A)Procedures and Required Vote for Election of Directors. Election of directors at all meetings of stockholders at which directors are to be elected shall be by written ballot, and, except as otherwise set forth in the Certificate of Incorporation with respect to the right of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, each director shall be elected by a majority of the votes cast at any meeting for the election of directors at which a quorum is present with respect to such director’s election in elections of directors in which the number of nominees is equal to the number of positions available;provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for the election of directors at which a quorum is present for which (i) the Secretary of the Corporation receives a notice that a stockholder has or expects to nominate a person for election to the Board of Directors in compliance with the requirements set forth in Section 2.7 of these Bylaws, and (ii) such nomination has not been withdrawn by such stockholder on or prior to the business day next preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders. If directors are to be elected by a plurality vote, stockholders shall be provided with the option to withhold votes with respect to a nominee in lieu of the option to cast a vote against such nominee. The Board of Directors shall establish such procedures as it deems appropriate and advisable for the submission and consideration of resignations from the Board by incumbent directors who do not receive a majority of the votes cast for such director at any meeting of stockholders at which directors are to be elected and the number of nominees is equal to the number of positions available.
(B)Required Vote for Other Business. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, all matters submitted to the stockholders at any meeting other than election of directors (which is addressed in paragraph (A) of this Bylaw) shall be decided by a majority of the votes cast with respect thereto.
Section 2.9. Inspectors of Elections; Opening and Closing the Polls; Rules of Conduct.
(A) The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives of the Corporation, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act, or if all inspectors or alternates who have been appointed are unable to act at a meeting of stockholders, the chair of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by the General Corporation Law of the State of Delaware.
(B) The chair of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting.
(C) The Board of Directors and the chair of the meeting each shall have the authority to adopt and enforce such rules or regulations for the conduct of meetings of stockholders as they shall deem necessary or appropriate.
Section 2.10. No Stockholder Action by Written Consent. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specific circumstances, any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of stockholders of the Corporation and may not be affected by any consent in writing by such stockholders.
CAPITAL ONE FINANCIAL CORPORATION 1680 CAPITAL ONE DR.
MCLEAN, VA 22102-3491
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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:
M83952-P60101-Z64838 KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
cAPITAl ONE FINANcIAl cORPORATION
The Board of Directors recommends you vote FOR the following:
1. Election of Directors
Nominees: For Against Abstain
The Board of Directors recommends you vote FOR
1a. Richard D. Fairbank proposals 2, 3 and 4. For Against Abstain
1b. Patrick W. Gross 2. Ratification of selection of Ernst & Young LLP as
independent auditors of Capital One for 2015.
3. Advisory approval of Capital One’s 2014 Named Executive
1c. Ann Fritz Hackett Of?cer compensation.
4. Approval of amendments to Capital One’s Restated
1d. Lewis Hay, III Certi?cate of Incorporation to allow stockholders to
request special meetings of the stockholders.
1e. Benjamin P. Jenkins III The Board of Directors recommends you vote AGAINST For Against Abstain
proposal 5.
1f. Pierre E. Leroy 5. Stockholder proposal regarding special meetings of the
stockholders, if presented at the meeting.
1g. Peter E. Raskind NOTE: Such other business as may properly come before the
meeting or any adjournment thereof.
1h. Mayo A. Shattuck III
1i. Bradford H. Warner ! ! !
1j. Catherine G. West
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other ?duciary, 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 of?cer.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
| | | | | | | | | 106 | | | | | | CAPITAL ONE FINANCIAL CORPORATION | | 2017 PROXY STATEMENT |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on April 30, 2015:
The Notice & Proxy Statement and Annual Report/10-K are available at www.proxyvote.com.
M83953-P60101-Z64838
cAPITAl ONE FINANcIAl cORPORATION
Annual Stockholder Meeting
Thursday, April 30, 2015 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 5, 2015, at the Annual Stockholder Meeting to be
held on April 30, 2015 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), “AGAINST” ITEM (5), AND IN THE PROXIES’ DIScRETION ON ANY OTHER MATTERS
cOMING BEFORE THE MEETING.
continued and to be signed on reverse side
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