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NOTICE OF CAPITAL ONE FINANCIAL CORPORATION’S
Important Notice Regarding the Availability of Proxy Materials for
The Stockholder Meeting To Be Held On May 11, 2011
The Proxy Statement and Annual Report to Stockholders are available atwww.proxyvote.com
The Annual Stockholder Meeting of Capital One Financial Corporation (“Capital One” or the “Company”) will be held at Capital One’s headquarters, 1680 Capital One Drive, McLean, Virginia 22102, on May 11, 2011,8, 2012, at 10:00 a.m.
| Items of Business |
As a stockholder you will be asked to:
| 1. | Elect | |
| 2. | Ratify the Audit and Risk Committee’s selection of Ernst & Young LLP as independent auditors of Capital One for | |
| 3. | ||
| Approve, on a non-binding advisory basis, Capital One’s | ||
| Approve | ||
| Transact such other business as may properly come before the meeting. | ||
| Record Date |
You may vote if you held shares of Capital One common stock as of the close of business on March 16, 2011.
| Proxy Voting |
Your vote is important. You may vote your shares in person at the Annual Stockholder Meeting, via the Internet, by telephone or by mail. Please refer to the section “How do I vote?” for detailed voting instructions. If you choose to vote in person at the Annual Stockholder Meeting, via the Internet or by telephone, you do not need to mail in a proxy card.
| Annual Meeting Admission |
Due to space limitations, attendance is limited to stockholders and one guest each. Admission to the meeting is on a first-come, first-served basis. Registration begins at 9:00 a.m. A valid picture identification and proof of stock ownership as of the record date must be presented in order to attend the meeting. If you hold Capital One stock through a broker, bank, trust or other nominee, you must bring a copy of a statement reflecting your stock ownership as of the record date. If you plan to attend as the proxy of a stockholder, you must present a legal proxy.proxy (described below). Cameras, recording devices and other electronic devices are not permitted.
We look forward to seeing you at the meeting.
On behalf of the Board of Directors,
John G. Finneran, Jr.
Corporate Secretary
Capital One Financial Corporation
1680 Capital One Drive
McLean, VA 22102
March 25, 2011
| TABLE OF CONTENTS |
| SECTION I – ABOUT THIS PROXY STATEMENT | 1 | |
| SECTION II – GOVERNANCE OF CAPITAL ONE | ||
| SECTION III – SECURITY OWNERSHIP | ||
| SECTION IV – DIRECTOR COMPENSATION | ||
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS | ||
| SECTION VI – NAMED EXECUTIVE OFFICER COMPENSATION | ||
| SECTION VII – EQUITY COMPENSATION PLANS | ||
| SECTION VIII – COMPENSATION COMMITTEE REPORT | ||
| SECTION IX – AUDIT AND RISK COMMITTEE REPORT | ||
| SECTION X – ELECTION OF DIRECTORS (ITEM 1 ON PROXY CARD) | ||
| SECTION XI – RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS (ITEM 2 ON PROXY CARD) | ||
| SECTION XII – ADVISORY APPROVAL OF | ||
OFFICER COMPENSATION (ITEM 3 ON PROXY CARD) | ||
| SECTION XIII – | ||
AND RESTATED ASSOCIATE STOCK PURCHASE PLAN (ITEM 4 ON PROXY CARD) | ||
| SECTION XIV – | ||
| APPENDIX A – AMENDED AND RESTATED CAPITAL ONE FINANCIAL ASSOCIATE STOCK PURCHASE PLAN | ||
| A-1 |
| SECTION I – ABOUT THIS PROXY STATEMENT |
| Why did I receive a Notice Regarding the Internet Availability of Proxy Materials? |
In accordance with rules of the Securities and Exchange Commission (“SEC”), instead of mailing printed copies of our proxy materials, we are furnishing the proxy materials to our stockholders via the Internet. This process will save the Company the cost of printing and mailing documents and will reduce the impact of our annual stockholder meetings on the environment. Accordingly, on or about March 25, 201123, 2012, we mailed to our stockholders a Notice Regarding the Internet Availability of Proxy Materials (the “Notice”). If you received a Notice, you will not receive a printed copy of the proxy materials unless you request one. The Notice provides instructions on how to access the proxy materials for Capital One’s 20112012 Annual Stockholder Meeting (the “Annual Meeting”) via the Internet, how to request a printed set of proxy materials and how to vote your shares.
| What is the purpose of the proxy materials? |
The Board of Directors of Capital One is providing you these materials in connection with the solicitation by Capital One’s Board of Directors of proxies to be voted at the Annual Meeting. All stockholders who held shares as of the close of business on March 16, 201113, 2012 (the “record date”), are entitled to attend the Annual Meeting and to vote on the items of business outlined in this proxy statement. If you choose not to attend the Annual Meeting, you may vote your shares via the Internet, by telephone or by mail.
| How do I access the proxy materials? |
The Notice provides instructions regarding how to view our proxy materials for the Annual Meeting online. As explained in greater detail in the Notice, to view the proxy materials and vote, you will need to visitwww.proxyvote.com and have available your 12-digit control number(s) contained on your Notice.
| How do I request paper copies of the proxy materials? |
You may request paper copies of the 20112012 proxy materials by following the instructions listed atwww.proxyvote.com, by telephoning 1-800-579-1639 or by sending an e-mail tosendmaterial@proxyvote.com.
| What is the difference between a record holder and a holder of shares in street name? |
You are a record holder if you hold shares of Capital One common stock directly in your name through Capital One’s transfer agent, Computershare Trust Company, N.A. (“Computershare”), as a stockholder of record.
If you hold shares of Capital One common stock through a broker, bank, trust or other nominee, then you are a holder of shares in street name. As a result, you must instruct the broker, bank, trust or other nominee about how to vote your shares. Under the rules of the New York Stock Exchange ( “NYSE”(“NYSE”), if you do not provide such instructions, the firm that holds your shares will have discretionary authority to vote your shares with respect to “routine” matters.
| Can I attend the Annual Meeting? |
If you held shares of Capital One common stock as of the close of business on March 16, 2011,13, 2012, you may attend the Annual Meeting. Because seating is limited, only you and a guest may attend the meeting. Admission to the meeting is on a first-come, first-served basis. Registration begins at 9:00 a.m. You must present a valid picture identification and proof of Capital One stock ownership as of the record date. If you hold Capital One stock in street name, you must also bring a copy of a brokerage statement reflecting your stock ownership as of the record date. If you plan to attend as the proxy of a stockholder, you must present a legal proxy (described below). Cameras, recording devices and other electronic devices are not permitted at the meeting.
| Am I entitled to vote? |
You are entitled to vote if you were the record holder of shares of Capital One common stock as of the close of business on March 16, 2011.13, 2012. All stockholders of record are entitled to one vote per share of common stock held for each matter submitted for a vote at the meeting.
If you hold your shares of Capital One common stock in street name, you may instruct your broker regarding voting your shares using the same methods described below under “How do I vote?”
On March 16, 2011,13, 2012, there were 458,664,149555,629,222 shares of Capital One’s common stock issued and outstanding.
| How do I vote? |
By Internet
You may vote via the Internet by going towww.proxyvote.com and following the instructions on the screen. Have your Notice or proxy card available when you access the web page.
By Telephone
You may vote by telephone by calling the toll-free telephone number on your Notice or yourproxy card (1-800-690-6903)card(1-800-690-6903), which is available 24 hours a day, and following the prerecorded instructions. Have your Notice or proxy card available when you call. If you hold your shares in street name, your broker, bank, trustee or other nominee may provide additional instructions to you regarding voting your shares by telephone.
By Mail
If you received your proxy materials by mail, you may vote by mail by marking the enclosed proxy card, dating and signing it, and returning it in the postage-paid envelope provided, or returning it to Capital One Financial Corporation, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
Time for Voting Your Shares By Internet, By Telephone or By Mail
You may vote via the Internet or by telephone up until 11:59 PM Eastern Daylight Time on May 10, 2011.7, 2012. If you vote by mail, your proxy card must be received by May 10, 2011.
In Person
If you are a record holder of shares of Capital One common stock, you may vote in person at the Annual Meeting. A valid picture identification and proof of stock ownership as of the record date must be presented in order to attend the meeting. Stockholders of record also may be represented by another person at the Annual Meeting by executing a legal proxy designating that person. See “Can I attend the Annual Meeting?” above for more information regarding attending the Annual Meeting.
If you hold your shares of Capital One common stock in street name, you must bring a copy of a statement reflecting your stock ownership as of the record date in order to attend the meeting. You must also obtain a legal proxy from your broker, bank, trust or other nominee and present it to the inspector of elections with your ballot to be able to vote at the Annual Meeting. To request a legal proxy, please follow the instructions atwww.proxyvote.com.
What if I hold my shares in street name and I do not provide my broker, bank, trustee or other nominee with instructions about how to vote my shares?
You may instruct your broker, bank, trustee or other nominee on how to vote your shares using the methods described above. If you do not give voting instructions to the firm that holds your shares prior to the Annual Meeting, the firm has discretion to vote your shares only with respect to ItemsItem 2 and 3 on the proxy card, which areis considered a “routine” matters.matter. The election of members of the Board of Directors is not considered a “routine” matter, and therefore, the firm that holds your shares will not have discretionary authority to vote your shares for Item 1
if you do not provide instructions using one of the methods described above. Therefore, you are encouraged to participate in electing directors by returning voting instructions. Likewise, the firm that holds your shares does not have discretionary authority to vote your shares with respect to Items 43 and 5.
| How do I vote my 401(k) shares? |
If you participate in the Capital One Associate Savings Plan, you may vote the number of shares equivalent to your interest in the Capital One Pooled Stock Fund as credited to your account on the record date. You will receive instructions on how to vote your shares via e-mail from Broadridge. The trustee of the Associate Savings Plan will vote your shares in accordance with your duly executed instructions if they are received by May 6, 2011.2, 2012. If you do not send instructions, the trustee will not vote the share equivalents credited to your account.
| Can I revoke my |
Yes, you may revoke any proxy that you previously granted or change your vote by:
Your new vote or revocation must be submitted in accordance with the timeframes above under “Time for Voting Your Shares By Internet, By Telephone or By Mail.”
| What constitutes a quorum? |
A quorum of stockholders is necessary to transact business at the Annual Meeting. A quorum exists if the holders of a majority of the voting power of Capital One’s outstanding shares entitled to vote generally in the election of directors are present in person or represented by proxy, including proxies on which abstentions (withholding authority to vote) are indicated.proxy. Abstentions and broker non-votes will be counted in determining if there is a quorum, but neither will be counted as votes cast.
| What is a broker non-vote? |
As described above, under NYSE rules, if you hold your shares in street name and you do not submit voting instructions to the firm that holds your shares, the firm may havehas discretionary authority to vote your shares only with respect to “routine” matters. For non-routine matters, which include the election of directors and matters relating to executive compensation, if you do not submit voting instructions, the firm that holds your shares will not have discretion to vote your shares. This is called a “broker non-vote.”
| Who will count the vote? |
Votes will be tabulated by Broadridge. The Board of Directors has appointed a representative of American Elections Services, LLC to serve as the Inspector of Elections.
| Will a list of stockholders be made available? |
Capital One will make a list of stockholders available at the Annual Meeting and for ten days prior to the meeting, at our offices located at 1680 Capital One Drive in McLean, Virginia. Please contact Capital One’s Corporate Secretary at (703) 720-1000 if you wish to inspect the stockholders list prior to the Annual Meeting.
| How much did the solicitation cost? |
Capital One will pay the costs of the solicitation. We have retained Innisfree M&A Incorporated to assist us in the solicitation of proxies for an aggregate fee of $15,000, plus reasonable out-of-pocket expenses. In addition to Capital One soliciting proxies via the Internet, by telephone and by mail, our directors, officers and employees may solicit proxies on our behalf, without additional compensation.
| What is “householding?” |
Under SEC rules, a single package of Notices may be sent to any household at which two or more stockholders reside if they appear to be members of the same family unless contrary instructions have been received. Each stockholder continues to receive a separate Notice within the package. This procedure, referred to as householding, reduces the volume of duplicate materials stockholders receive and reduces mailing expenses. Stockholders may revoke their consent to future householding mailings or enroll in householding by contacting Broadridge toll free at 1-800-542-1061, or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Stockholders who wish to receive a separate set of proxy materials now should contact Broadridge at the same phone number or mailing address.
| What are the Board of Directors’ recommendations? |
If you properly submit a proxy without giving specific voting instructions, the individuals named as proxy holders will vote in accordance with the recommendations of the Board of Directors as follows:
ForFOR the election of Patrick W. Gross, Ann Fritz HackettRichard D. Fairbank, Peter E. Raskind and Pierre E. LeroyBradford H. Warner, as directors of Capital One (see page 62)75);
ForFOR the ratification of the Audit and Risk Committee’s selection of Ernst & Young LLP as independent auditors of the Company for 20112012 (see page 63)76);
ForFOR the approval of amendments to Capital One’s Restated Certificate of Incorporation to provide for the annual election of directors (see page 64);
66FOR);
The Board of Directors is not aware of any other matter that will be presented at the Annual Meeting. If any other matter is properly presented at the Annual Meeting, the persons named on the accompanying proxy card will, in the absence of stockholder instructions to the contrary, vote such proxy at their discretion.
| What vote is necessary to approve each item? |
All stockholders of record are entitled to one vote per share of common stock held for each nominee for director and for each other matter presented for a vote at the meeting.
Item 1 requests your vote for the election of three candidates for director. Patrick W. Gross, Ann Fritz HackettRichard D. Fairbank, Peter E. Raskind and Pierre E. LeroyBradford H. Warner will each be elected as a director of Capital One if a majority of the votes cast in his or her election is voted in favor of such election. Capital One also maintains a “majority voting” policy, which requires that any director who fails to receive a majority of votes cast in favor of his or her election submittender a resignation for the Board’s consideration. Cumulative voting for the election of directors is not permitted. For more information regarding Capital One’s director electionnomination process see page 1115..
Item 2, the ratification of the Audit and Risk Committee’s selection of Ernst & Young LLP as independent auditors of the Company for 2011,2012, will be approved if a majority of the votes cast on the proposal are voted in favor of the proposal.
Item 3the approval of amendments to Capital One’s Restated Certificate of Incorporation to provide for the annual election of directors, will be approved if the holders of at least 80% of Capital One's outstanding capital stock entitled to vote generally in the election of directors, voting together as a single class, vote in favor of the proposal.
Item 5, 4,the advisory vote to determine the frequency with whichapproval and adoption of Capital One will hold a stockholder vote to approve its Named Executive Officer compensation,One’s Amended and Restated Associate Stock Purchase Plan, will be determined based on which option (every year, every two years, or every three years) receivesapproved if a majority of the votes cast.cast on the proposal are voted in favor of the proposal. In addition, NYSE rules require that the total votes cast represent over 50% of all shares entitled to vote on the proposal.
As described under “How do I vote?” on page 2,, under NYSE rules, if you hold your shares in street name and you do not submit voting instructions to the broker, bank, trust or other nominee that holds your shares, the firm will have discretionary authority to vote your shares with respect to ItemsItem 2 and 3.only. If you do not submit voting instructions, the firm that holds your shares will not have discretion to vote your shares with respect to Items 1, 43 and 5.4. Abstentions and broker non-votes are not considered “votes cast” and thus do not have an effect on the outcome of the vote as to Items 1, 2, 43 or 5. With respect to Item 3, abstentions and broker non-votes will have the same effect as a vote against the proposal.
| SECTION II – GOVERNANCE OF CAPITAL ONE |
| Corporate Governance |
Capital One is committed to strong corporate governance. Our governance practices not only comply with applicable laws, rules and regulations, including the Sarbanes-Oxley Act of 2002 and NYSE listing standards, but they also incorporate many emerging trends as key components of Capital One’s established controls and governance program. The Board of Directors believes that these practices are important to the future success and growth of Capital One.
| Corporate Governance Principles |
We believe that sound corporate governance creates a foundation for the ethical and effective functioning of the Board of Directors, its Committees and Capital One as a whole. It is also critical to preserving the trust of our stakeholders, including stockholders, associates, customers, suppliers, governmental entities and the general public.
The Board of Directors has adopted Corporate Governance Principles to formalize the Board’s governance practices and its view of effective governance. The Board of Directors monitorsreceives regular updates on external governance developments and practices and reviews the Corporate Governance Principles periodically to see that Capital One continues to implement effective governance practices. Capital One’s Corporate Governance Principles are available free of charge on the corporate governance page of Capital One’s Internet site atwww.capitalone.com under “Investors.”
| Code of Business Conduct and Ethics |
Capital One is committed to honesty, fair dealing and integrity. This can only be achieved if the Board of Directors and all associates conduct their business affairs with the utmost integrity and ethical commitment. The Board of Directors has therefore adopted the Capital One Code of Business Conduct and Ethics (the “Code of Conduct”), which applies to all Capital One directors and associates, including Capital One’s Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and other persons performing similar functions. The purpose of the Code of Conduct is to guide ethical actions and working relationships by Capital One’s directors, officers and associates with investors, current and potential customers, fellow associates, competitors, governmental entities, the media and other third parties with whom Capital One has contact.
The Code of Conduct, as amended from time to time, is available free of charge on the corporate governance page of Capital One’s Internet site atwww.capitalone.com under “Investors.” Capital One will disclose on its website any amendment to the Code of Conduct or any waiver under the Code of Conduct granted to any of its directors or executive officers.
| Composition and Meetings of the Board of Directors |
The Board of Directors oversees Capital One’s business and directs its management. The Board of Directors does not involve itself with the day-to-day operations and implementation of Capital One’s business. Instead, the Board of Directors meets periodically with management to review Capital One’s performance, risks and business strategy. Directors also regularly consult with management outside of formal meetings to keep themselves informed about Capital One’s progress. The Board of Directors met tenfourteen times during 2010.2011. Each incumbent director attended at least 75% of the aggregate of the meetings of the Board of Directors and the committees on which the director served during the year. The independent directors meet in executive session (without the presence of management) on a regularly scheduled basis, at least three times each year and at least annually to conduct the Chief Executive Officer’s evaluation.
Capital One expects all of its directors to attend the Annual Meeting. In 2010,2011, all directors then serving attended the Annual Meeting.
Leadership Structure of the Board of Directors
Capital One is led by Mr. Richard Fairbank, who has served as Chief Executive Officer of Capital One since July 26, 1994, and as Chairman of the Board of Directors of Capital One since February 28, 1995. Capital One’s Board of Directors is comprised of Mr. Fairbank and eightnine independent directors. The Corporate Governance Principles provide for a presiding independent directorLead Independent Director (the “Presiding“Lead Director”), to be appointed by the Board of Directors, who aids and assists the Chairman and the remainder of the Board in promotingassuring effective governance in managing the affairs of the Board and Capital One. The PresidingLead Director is currently Ms. Hackett.
In addition to other duties more fully described in the Corporate Governance Principles, the PresidingLead Director:
The Board of Directors has four standing Committees: Audit and Risk; Compensation; Governance and Nominating; and Finance and Trust Oversight. Each of these committees is composed of independent directors and has a separate independent chair. Detailed information on each Committee is contained below under “Committees of the Board of Directors.”
We believe that a combined Chairman of the Board of Directors and Chief Executive Officer position, together with an independent Lead Director, independent Board committees each with an independent chair an independent Presiding Director and regularly-scheduled executive sessions of the Board and independent directors, is the most appropriate Board leadership structure for Capital One at this time. This structure demonstrates for our associates, customers, stockholders, investors, regulators and other stakeholders that Capital One’s Board of Directors is committed to engaged, independent leadership and performance of its responsibilities. Experienced and independent directors, sitting on various committees with independent chairs, oversee the Company’s operations, risks, performance and business strategy, and have appointed the PresidingLead Director with the duties described above. The Board of Directors believes that combining the Chairman and Chief Executive Officer positions takes advantage of the talent and knowledge of Mr. Fairbank as the founder of Capital One and effectively combines the responsibilities for strategy development and execution with management of day-to-day operations. It also reduces the potential for confusion or duplication of efforts and provides clear leadership for Capital One. The Board of Directors believes that the combination of the Chairman and the Chief Executive Officer roles, together with its strong governance practices, including its supermajority of independent directors and its clearly defined PresidingLead Director responsibilities, provide an appropriate balance among strategy development, operational execution and independent oversight of Capital One.
Board’s Role in Risk Oversight
The Board of Directors believes that effective risk management and control processes are critical to Capital One’s safety and soundness, our ability to predict and manage the challenges that Capital One and the financial services industry face and, ultimately, Capital One’s long-term corporate success. Management is responsible for implementing Capital One’s risk assessment and management functions and for reporting to the Board of Directors on its processes and assessments with respect to the management of risk. The Board of Directors, in
turn, both directly and through its committees, is responsible for overseeing management’s risk functions. We evaluate risks in terms of eight risk categories: strategic, compliance, operational, reputational, legal, credit, market and liquidity. Capital One’s Enterprise Risk Management policy, approved by the Board of Directors, summarizes Capital One’s risk appetite for each risk category and its governance of the amount of risk the Company takes.
The Audit and Risk Committee monitors the processes by which management assesses and manages risk in the eight risk categories identified above, as set forth in its charter. In addition, the Finance and Trust Oversight Committee oversees the guidelines and policies that govern the process by which the Company assesses and manages market and liquidity risks. The Compensation Committee assesses the risks that Capital One’s overall compensation goals and objectives, as well as its senior executive, corporate incentive and other material incentive compensation programs, may pose.
The Chief Risk Officer, Chief Financial Officer, Chief Internal Auditor, Chief Compliance Officer, Chief Credit Review Officer and General Counsel each meet with, or provide reports to, Capital One’s Audit and Risk Committee at least once per quarter as well as separately with the Committee throughout the year on a periodic basis without other members of management present. The Chief Risk Officer also meets at least once per quarter with the Audit and Risk Committee and the full Board of Directors, and periodically with the Chair of the Audit and Risk Committee, the full Board or individual members of the Board, as appropriate, to review the Company’s enterprise risk profile, credit risk or other risk topics. In addition, the Chief Financial Officer meets at least quarterly with the Audit and Risk Committee, the Finance and Trust Oversight Committee or the full Board of Directors to discuss Capital One’s market risk, liquidity risk, financial results and financial forecasts. Throughout the year, strategic presentations and line of business updates to the Board of Directors or its Committees typically include reports on risk management.
Corporate Audit Services provides independent and objective assurance services and advice and counsel regarding risk management and control practices to provide that risk management, internal controls and governance systems are adequate and functioning on a consistent and reliable basis. The Chief Internal Auditor reports organizationally to the Audit and Risk Committee of the Board of Directors, which has the authority to hire fire and compensate him.
Risk Assessment of Compensation Policies and Practices
The Compensation Committee actively oversees all of our compensation policies and practices, including our incentive compensation policies and practices, to monitor that they do not encourage inappropriate risk-taking, beyond our ability to manage risk, are compatible with effective controls and risk management and align with our business strategy. Throughout 2011, the Company continued to participate in the horizontal review of incentive compensation practices that the Federal Reserve Board began in 2010 with respect to the incentive compensation practices at 25 large banking organizations. The purpose of the review has been to assess the incentive compensation practices at these organizations and their compliance with the interagency guidance on sound incentive compensation practices issued by the Federal Reserve Board and other bank regulators in June 2010. We believe that the Compensation Committee’s active oversight, together with the Company’s interactions and discussions with its regulators, has further enhanced the Company’s risk management and control processes with respect to incentive compensation at the Company. In January 2012, the Compensation Committee adopted an Incentive Compensation Governance Policy applicable to all Company employees that governs incentive compensation decisions and provides the framework for oversight of the design of incentive compensation programs. In the context of setting executive compensation, the Compensation Committee assessed each of the named executive officers against one or more performance objectives specifically designed to evaluate the degree to which the executive balanced risks inherent in his or her role and also implemented additional risk-balancing features for certain equity awards, as described in more detail in the “Compensation Discussion and Analysis” on page 30.
The Compensation Committee annually reviews and approves the overall goals and purposes of Capital One'sthe Company’s corporate incentive program, the named executive officer and other senior executive compensation programs and any other material incentive compensation programs. During the course of these reviews,
the Compensation Committee discusses Capital One'sthe Company’s most significant risks, including Capital One'sthe Company’s status with respect to managing those risks and the relationship of those risks to applicable compensation programs. The review includes discussion and analysis of risk-balancing features embedded in these incentive compensation programs and other actions taken by the Company designed to achieve conformance with regulatory guidance and appropriately balance risk. The Compensation Committee also discusses these programs with Capital One'sthe Company’s Chief Risk Officer, Chief Human Resources Officer and the Compensation Committee'sCommittee’s independent compensation consultant, as appropriate. Based on these discussions, the Compensation Committee believes that these compensation programs are consistent with Safetysafety and Soundnesssoundness and do not contain material incentivesoperate in a manner that the Compensation Committee would expect to drive excessive risk taking.
| Director Independence |
The Board of Directors has assessed whether each of its non-management members is “independent” under Capital One’s Director Independence Standards. These standards, which have been adopted by the Board of Directors as part of Capital One’s Corporate Governance Principles, reflect, among other things, the director independence requirements set forth in the listing standards of the NYSE and other applicable legal and regulatory rules, and describe certain relationships that the Board has determined to be immaterial for purposes of determining director independence. As noted above, Capital One’s Corporate Governance Principles, including the Director Independence Standards, are available on the corporate governance page of Capital One’s Internet site atwww.capitalone.com under “Investors.” The Board of Directors has determined that each of Mr. Campbell, Mr. Dietz, Mr. Gross, Ms. Hackett, Mr. Hay, Mr. Leroy, Mr. Raskind, Mr. Shattuck and Mr. Warner are independent under these standards. With respect toWhen determining Mr. Westreich, who resigned from the Board of Directors in May 2010,Leroy’s independence, the Board considered his association with a loanprivate company that has a minority, unconsolidated interest in another private company from Capital One, National Association, indirectly connected to Mr. Westreich and certainwhich the Company purchased less than $1 million in products in the ordinary course of his family members, as described below under “Related Person Transactions,” and determined that Mr. Westreich was not independentbusiness during his service as a member of the Board of Directors in 2010.
| Related Person Transactions |
Capital One’s policies and procedures for the review, approval or ratification of related person transactions are set forth in the Charter of the Governance and Nominating Committee, Capital One’s Code of Conduct and internal written procedures. The Charter of the Governance and Nominating Committee requires the Committee to review on an annual basis any transactions involving Capital One and any of its directors, executive officers or their immediate family members and, as appropriate, to consider potential conflicts of interest or the appearance of potential conflicts of interest, as well as issues relating to director independence. The Governance and Nominating Committee performs this review each year based on the information provided by each director and executive officer on an annual questionnaire and through a review of Capital One’s internal systems for payments or other transactions that could indicate the presence of a related person transaction. In developing its assessment and recommendation regarding related person transactions to the Board of Directors, the Governance and Nominating Committee relies upon criteria set forth in the Code of Conduct to evaluate activities or relationships that may create a conflict of interest, including potential related person transactions. In addition to specific prohibitions, these criteria include the extent to which the proposed relationship would be legal, authorized and permitted (or prohibited) by Capital One policies, as well as the potential perspective of third parties regarding such relationships.
From time to time in the ordinary course of its business, Capital One issues loans to directors, executive officers and/or nominees for director, or to a director’s, executive officer’s or director nominee’s immediate family member, including persons sharing the household of such director, executive officer or director nominee (other than a tenant or employee). Such loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company and do not involve more than the normal risk of collectability or present other unfavorable features.
Internal written procedures require that any potential conflict of interest, including related person transactions involving any of Capital One’s directors or executive officers, be reviewed by the General Counsel (in the case of a director) and by either the General Counsel or Chief Human Resources Officer (in the case of an executive officer). If the reviewer believes that such relationship could create a conflict of interest or require disclosure as a related person transaction, a second review is conducted by the disinterested members of the Governance and Nominating Committee and, ultimately, by the disinterested members of the Board of Directors (in the case of a director), or by the Chief Executive Officer (in the case of an executive officer).
Capital One has had oneno reportable related person transactiontransactions since January 1, 2010. Prior to its acquisition by Capital One in 2006, North Fork Bank (now Capital One, National Association, or the “Bank”) extended an interest-only, non-recourse commercial real estate acquisition loan (with limited capital involvement obligations by the borrower) to a limited liability companybeginning of which a son of
| Committees of the Board of Directors |
In order to assist it in fulfilling its functions, the Board of Directors conducts business through four Committees: the Audit and Risk Committee, the Compensation Committee, the Governance and Nominating Committee and the Finance and Trust Oversight Committee. Pursuant to Capital One’s Corporate Governance Principles and applicable law, the Audit and Risk, Compensation, and Governance and Nominating Committees are comprised solely of independent directors. Currently, the Finance and Trust Oversight Committee is also comprised solely of independent directors. The Chair of each Committee determines the frequency, length and agenda of meetings for his or her Committee in accordance with such Committee’s charter, in consultation with other members of the Committee and with appropriate members of management, and establishes an annual calendar of topics for consideration by the Committee. The Chair of each Committee may also seek comments on key issues from other directors who are not part of the Committee and reports Committee activities to the full Board of Directors. In January 2011,2012, each Committee and the Board of Directors approved the respective Committee’s amended and restated charter. Copies of the charter of each Committee are available free of charge on the Corporate Governance page of Capital One’s Internet site atwww.capitalone.com under “Investors.” Below is a description of each Committee.
Audit and Risk Committee
Description
The Audit and Risk Committee is generally responsible for overseeing Capital One’s accounting, financial reporting, internal controls and risk assessment and management processes.
Key Responsibilities
The Committee may delegate authority for certain responsibilities to subcommittees or members of management as the Committee deems appropriate and as permitted by law.
Financial Expert
Although other members of the Audit and Risk Committee may qualify as “audit committee financial experts” under the Sarbanes-Oxley Act of 2002 and the rules of the SEC and the NYSE promulgated thereunder, the Board of Directors has designated Mr. Dietz and Mr. Warner as its “audit committee financial expert.experts.”
Service
No member of the Audit and Risk Committee simultaneously serves on the audit committees of more than three public companies, including that of Capital One, except for Mr. Gross. The Board of Directors has determined, in accordance with NYSE rules, that Mr. Gross’ simultaneous service does not impair his ability to effectively serve on Capital One’s Audit and Risk Committee.
2011 Meetings
During 2010,2011, the Audit and Risk Committee met twelve times.
Governance and Nominating Committee
Description
The Governance and Nominating Committee assists the Board of Directors with respect to a variety of corporate governance matters and practices.
Key Responsibilities
The Committee may delegate authority for certain responsibilities to subcommittees or members of management as the Committee deems appropriate and as permitted by law.
2011 Meetings
During 2010,2011, the Governance and Nominating Committee met fivefour times.
Compensation Committee
Description
The Compensation Committee assists the Board of Directors by reviewing and recommending officer titles and roles to the Board; overseeing and recommending benefit plans for Capital One associates to the Board; recommending compensation and benefit plans for the directors, the Chief Executive Officer, and senior management and the directors to the independent directors or the full Board, as provided in its charter;Board; reviewing and approving the Committee’s report, and reviewing and recommending Capital One’s Compensation Discussion and Analysis disclosure for inclusion in this proxy statement; and carrying out such other responsibilities and activities as may be required by law or regulation.
Key Responsibilities
The independent directors of the Board may meet concurrently with the Compensation Committee, as appropriate, to review and approve compensation for the Chief Executive Officer and other executive officers.
The Committee may also delegate authority for certain responsibilities to subcommittees or members of management as the Committee deems appropriate and as permitted by law and applicable plan documents.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship exists between any member of Capital One’s Board of Directors or Compensation Committee and any member of the board of directors or compensation committee of any other company, nor has any such interlocking
Compensation Committee Consultant
The Compensation Committee has the authority to retain and terminate legal counsel and other consultants and to approve such consultants’ fees and other retention terms. The Committee has retained the services of Frederic W. Cook & Co., Inc., an independent executive compensation consulting firm (the “Consultant”). The Consultant reports to the Chair of the Committee, and its engagement may be terminated by the Committee at any time.
The Committee determines the scope and nature of the Consultant’s assignments. In 2010,2011, the Consultant:
The Consultant generally attends Committee meetings and executive sessions upon the Chair of the Committee’s request, including meetings held jointly with the independent directors to review or approve the compensation for the Chief Executive Officer, the other executive officers and the directors’ compensation, to provide an independent perspective regarding such compensation practices.
The services provided by the Consultant are limited in scope as described above. The Consultant does not provide any services to the Company or its management other than the services provided to the Compensation Committee as described above.
20102011 Meetings
During 2010,2011, the Compensation Committee met sevensix times.
Finance and Trust Oversight Committee
Description
The Finance and Trust Oversight Committee assists the Board of Directors in overseeing Capital One’s management of liquidity, capital and financial (or market) risks, as well as the trust activities of Capital One, National Association, a subsidiary of Capital One.
Key Responsibilities
The Committee may delegate authority for certain responsibilities to subcommittees or members of management as the Committee deems appropriate and as permitted by law.
2011 Meetings
During 2010,2011, the Finance and Trust Oversight Committee met five times.
| Committee Membership |
The table below provides a summary of the Board’s current Committee structure, membership and related information.
  Chair |   Member |   Audit Committee FinancialExpert | |||||
| Audit and Risk Committee | Compensation Committee | Finance and Trust Oversight Committee | Governance and Nominating Committee | ||||
| E.R. Campbell | | | |||||
| W. Ronald Dietz |  | | |||||
| Patrick W. Gross | | | | ||||
| Ann Fritz Hackett | | | | ||||
| Lewis Hay, III | | | | ||||
| Pierre E. Leroy | | | | ||||
| Peter E. Raskind | | ||||||
| Mayo A. Shattuck III | | | |||||
| Bradford H. Warner |  | | |||||
| How to Contact the Board of Directors and the Lead Director |
Interested parties may make their concerns known to the Board of Directors or independent directors as a group by contacting the Lead Director, care of the Corporate Secretary, at the address below:
Lead Director
Board of Directors
c/o Corporate Secretary’s Office
Capital One Financial Corporation
1680 Capital One Drive
McLean, Virginia 22102
Communications may also be sent to individual directors at the same address.
The Corporate Secretary reviews all communications sent to the Board of Directors, Committees or individual directors and forwards all substantive communications to the appropriate parties. Communications to the Board of Directors, the independent directors or any individual director that relate to Capital One’s accounting, internal accounting controls or auditing matters are referred to the Chair of the Audit and Risk Committee and Capital One’s Chief Internal Auditor. Other communications are referred to the Lead Director, the Chair of the appropriate Committee and/or the specified director, as applicable.
| Director Nomination Process |
The Governance and Nominating Committee considers and makes recommendations to the Board of Directors concerning nominees to create or fill open positions within the Board. Stockholders may propose nominees for consideration by the Committee by submitting the names and other relevant information as required by Capital One’s Amended and Restated Bylaws (the “Bylaws”) to the Corporate Secretary, with a copy to the Chair of the Committee, at the address set forth on the Notice of Annual Stockholder Meeting.
Director candidates, other than current directors, may be interviewed by the Chair of the Governance and Nominating Committee, other directors, the Chief Executive Officer and/or other members of senior management. The Committee considers the criteria described below, as well as the results of interviews and any background checks the Committee deems appropriate, in making its recommendation to the Board of Directors. The Committee also considers current directors for re-nomination in light of the criteria described below and their past and potential contributions to the Board of Directors.
Consideration of Director Nominees
All director candidates, including incumbent directors and those recommended by stockholders, are evaluated using the same criteria. These criteria are as follows:
The Governance and Nominating Committee and the Board of Directors believe that diversity along multiple dimensions, including opinions, skills, perspectives, personal and professional experiences and other differentiating characteristics, is an important element of its nomination recommendations. The Board of Directors considers each nominee in the context of the Board as a whole, with the objective of assembling a Board that can best maintain the success of Capital One’s business. Although the Board of Directors does not have a formal diversity policy, the Governance and Nominating Committee and the
In 2011, Capital One Financial Corporation1680 Capital One DriveMcLean, Virginia 22102
Information about our Directors and Executive Officers |
Each of Capital One’s current executive officers, and each director who is nominated for election or who is continuing to serve his or her term after the Annual Meeting, are listed below with a brief description of their business experience.
Directors |
All of our directors have demonstrated business acumen, the ability to exercise sound judgment and a commitment of service to Capital One and the Board of Directors. Our directors also bring to our Board of Directors a wealth of executive leadership experience derived from their service as executives and, in many cases, chief executive officers, of large corporations. We also believe that all of our directors have a reputation for integrity, honesty and adherence to high ethical standards. Set forth below is each director’s biographical information and a description of the nature of each director’s experience that the Board of Directors believes supports his or her continuing service as a director.
Richard D. Fairbank, Chairman, Chief Executive Officer and President Mr. Fairbank is founder, Chairman, Chief Executive Officer and President of Capital One Financial Corporation. Mr. Fairbank also serves as Chairman of Capital One Bank (USA), National Association, Association and ING Bank, fsb. Mr. Fairbank has been a director of Capital One since July 26, 1994. Mr. Fairbank was appointed as the Fifth Federal Reserve District’s representative on the Federal Advisory Council, effective January 1, 2010. As a member of the Council, he confers periodically with the Board of Governors of the Federal Reserve System on business conditions and issues related to the banking industry. Mr. Fairbank also served on MasterCard International’s Global Board of Directors from February 2004 until May 2006 and, prior to that, as Chairman of Mr. Fairbank’s experience in leading the business as founder and Chief Executive Officer of Capital One, his responsibilities for the strategic direction and management of Capital One’s day-to-day operations and his roles with the Federal Advisory Council and MasterCard International bring broad industry and specific institutional knowledge and experience to the Board of Directors. | Edward R. “Bo” Campbell, Mr. Campbell, a director of Capital One Financial Corporation since November 16, 2005, is not eligible to stand for re-election as a director at the Annual Meeting because of the age restriction in the Bylaws. He is also a director of Capital One, National Association and has served on the Finance and Trust Oversight Committee since November 2005 and on the Compensation Committee since April 2006. He has been an active investor primarily in oil and gas, land and timber, and banking since 1970. He had an extensive banking career at Pioneer Bancshares, a Louisiana-based bank holding company, where he was President and Chief Executive Officer before becoming Chairman of the Board of Directors, and at Hibernia National Bank, headquartered in Louisiana, where he also served as Director and Chairman of the Board of Directors from 2003 until its acquisition by Capital One in 2005. As the former Chief Executive Officer of a community bank in Louisiana and |
W. Ronald Dietz, Mr. Dietz Mr. Dietz has been a director of Capital One Financial Corporation since February 28, 1995 and is also a director of Capital One Bank (USA), National Association, Mr. Dietz is also a member of the NACD National Audit Chair Advisory Council as well as the PRMIA Blue Ribbon Advisory Panel. He has written several articles on various aspects of risk management. Mr. Dietz’s experience in financial services, financial reporting, risk management, consulting, venture management, customer experience and call center performance, developed during his positions with Putnam and CCS as well as earlier roles with Citigroup and American Savings Bank, helps him bring valuable knowledge to the Board of Directors on these and other matters. | Patrick W. Gross, Mr. Gross is Chairman of The Lovell Group, a private business and technology advisory and investment firm he founded in 2002 to work with private venture-funded technology companies on a range of business, management and financial strategies. Prior to his role with Lovell, he was a founder, and served as a principal executive officer from 1970 to 2002, of American Management Systems, Inc. (“AMS”), an information technology, consulting, software development and systems integration firm. He has been a director of Capital One Financial Corporation since February 28, 1995 and is also a director of Capital One, National Mr. Gross is currently a director of the following publicly-held companies: Career Education Corporation; Liquidity Services, Inc.; Rosetta Stone, Inc.; Taleo Corporation; and Waste Management, Inc. Mr. Gross’s experience in applying information technology, advanced data analytics and risk management analytics within global financial services firms, as well as his roles in founding and leading AMS and with other public company boards, assists the Board of Directors in overseeing, among other matters, Capital One’s entrepreneurial innovations and information systems. |
Ann Fritz Hackett, Ms. Hackett has been President of Horizon Consulting Group, LLC since she founded the company in 1996. Horizon Consulting Group provides strategic, organizational and human resources advice to clients worldwide. She has worked with boards of directors, chief executive officers and senior executives to identify strategic opportunities and execute solutions during periods of business and financial challenges. Prior to Horizon Consulting, Ms. Hackett was Vice President and Partner of a leading national strategy consulting firm where she served on the Management Committee and, among other assignments, led Human Resources and developed her expertise in managing cultural change, creating performance management processes and a performance-based culture, nurturing leadership talent and planning for executive succession. Ms. Hackett has been a director of Capital One Financial Corporation since October 27, 2004, and is also a director of Capital One Bank (USA), National Association. She has served on the Audit and Risk and Governance and Nominating Committees since October 2004 and on the Compensation Committee since April 2005. Ms. Hackett became the Chair of the Governance and Nominating Committee and the matters regarding board leadership. Ms. Hackett has experience in leading change initiatives, talent management and succession planning and in creating performance management processes and performance-based compensation. She also has experience in corporate governance and risk matters as a result of her participation with public company boards of directors and related governance committees, non-profit boards and consulting engagements. This combination of skills assists the Board of Directors in its discussions on these and other matters. | Lewis Hay, III, Mr. Hay has been Chairman and Chief Executive Officer of NextEra Energy, Inc. (formerly FPL Group, Inc.), one of the nation’s leading electricity-related services companies and the largest renewable energy generator in North America, since January 2002. He joined NextEra Energy in 1999 as Vice President, Finance and Chief Financial Officer and became President of NextEra Energy Resources, LLC (formerly FPL Energy, LLC) in March 2000. He became a director and the President and Chief Executive Officer of NextEra Energy in June 2001. Prior to joining NextEra Energy, Mr. Hay was Executive Vice President and Chief Financial Officer of US Food Service where he was responsible for finance and accounting, treasury, credit, investor relations, mergers and acquisitions, and information systems. Mr. Hay has been a director of Capital Competitiveness. Mr. Hay has extensive knowledge of complex strategic, operational, management, regulatory, financial and governance issues faced by a large public company. His background in leading finance and accounting, treasury, credit, investor relations, mergers and acquisitions and information systems functions, as well as his understanding of enterprise risk management, executive compensation and public company governance, provides the Board of Directors with valuable insight on these and other matters. |
Pierre E. Leroy, Mr. Leroy was appointed Executive Chairman of Vigilant Video, Inc., a leading provider of video analytics software and systems, on March 1, 2012. Mr. Leroy retired in 2005 from Deere & Company as President of both the Worldwide Construction & Forestry Division and the Global Parts Division. Deere & Company is a world leader in providing advanced products and services for agriculture, forestry, construction, lawn and turf care, landscaping and irrigation, and also provides financial services worldwide and manufactures and markets engines used in heavy equipment. During his professional career with Deere, Mr. Leroy served in a number of positions in Finance, including Treasurer, Vice-President and Treasurer, and Senior Vice-President and Chief Financial Officer. Mr. Leroy has been a director of Capital One Financial Corporation since September 1, 2005, and is also a director of Capital One, National 2006. Mr. Leroy Mr. Leroy’s experience in capital markets and asset-liability management, as well as leading and managing large complex international marketing, engineering and manufacturing organizations and serving on other public company boards, provides the Board of Directors with valuable insight on these and other matters. | Peter E. Raskind, 55 Mr. Raskind is the owner of JMB Consulting, LLC, which he established in February 2009 to provide consulting services to financial services firms. In 2011, he served as Interim Chief Executive Officer of the Cleveland Metropolitan School District, and in 2010, he served as Interim President and Chief Executive Officer of the Cleveland-Cuyahoga County Port Authority. Until its merger with PNC Financial Services Group in December 2008, Mr. Raskind served as Chairman, President and Chief Executive Officer of National City Corporation, one of the largest banks in the United States, where he was appointed as a Director in January 2007 and Chief Executive Officer in July 2007. He also became Chairman of the Board in December 2007. Mr. Raskind joined National City in 2000 as the Manager of the Consumer Finance Division and served in a number of executive positions throughout his tenure. Prior to National City, Mr. Raskind had a 20-year career with U.S. Bancorp/First Bank System and Harris Bank, holding positions of successively greater responsibility in a broad range of disciplines, including cash management services, corporate finance, international banking, corporate trust, retail banking, operations and strategic planning. Appointed to the Board on January 31, 2012, Mr. Raskind was first identified by a third-party search firm and was recommended as a director nominee by the Governance and Nominating Committee. He is a member of the Company’s Audit and Risk Committee. In January 2012, Mr. Raskind was appointed a director of Omek Interactive, Inc., which provides tools and technology to enable manufacturers and software developers to add gesture-based interfaces to their products. He also served as a director of United Community Banks, Inc. from May 2011 to January 2012. Mr. Raskind previously served as a director of Visa USA and Visa International, served on the Board of Directors of the Consumer Bankers Association and was a member of the Financial Services Roundtable. Mr. Raskind is experienced in corporate banking, retail banking, wealth management/trust, mortgage, operations, technology, strategy, asset/liability management, risk management and acquisition integration from his extensive career in banking. He provides the Board with valuable insight on these and other matters. |
Mayo A. Shattuck III, Mr. Shattuck Mr. Shattuck has been a director of Capital One Financial Corporation since October 31, 2003. He has served on the Compensation Committee since April 2004 and became its Chairman in April 2005. He has also served on the Finance and Trust Oversight Committee since December Mr. Shattuck’s experience in corporate finance, capital markets, risk management and private banking, as well as his experience in leading a large, publicly-held company and serving on other public company boards, provides the Board of Directors with valuable insight on these and other matters. |
Bradford H. Warner, Mr. Warner served in a variety of positions at BankBoston, FleetBoston and Bank of America from 1975 until his retirement in 2004. These positions included President of Premier and Small Business Banking, Executive Vice President of Personal Financial Services, and Vice Chairman of the Investment Services and Consumer Business Group. Throughout his banking career, Mr. Warner served in leadership roles for many of the major business lines and functional disciplines that constitute commercial banking, including leadership of retail and branch banking, consumer lending (credit cards, mortgage and home equity), student lending and small business; various corporate banking functions, including community banking and capital markets businesses, such as underwriting, trading and sales of domestic and international fixed income securities, foreign exchange and derivatives; international banking businesses in northern Latin America and Mexico; and several investment related businesses, including private banking, asset management and brokerage. He also served on the senior most management policy and governance committees at BankBoston, FleetBoston and Bank of America. Mr. Warner has been a director of Capital One Financial Corporation since April 24, 2008, He qualifies as an “audit committee financial expert” under SEC guidelines and was designated an “audit committee financial expert” for Capital One in 2012. Mr. Warner’s experience in a broad range of commercial, consumer, investment and international banking leadership roles, as well as his experience in corporate banking functions, customer relationships and corporate culture change management, bring valuable insight to the Board of Directors in overseeing, among other matters, a broad range of matters critical to Capital One’s banking business. |
Executive Officers |
Robert M. Alexander, Mr. Alexander joined Capital One in April 1998. From April 1998 to May 2007, Mr. Alexander had responsibility at various times for a number of Capital One’s lending businesses, including the U.S. consumer credit card and installment loan businesses. Mr. Alexander became Chief Information Officer in May 2007, and in this role he is responsible for overseeing all technology activities for Capital One. | Jory A. Berson, Mr. Berson joined Capital One in July 1992. From July 1992 to June 2009, Mr. Berson held a variety of roles at Capital One, including President, Financial Services and President, U.S. Card. In June 2009, Mr. Berson became Chief Human Resources Officer, and in this role Mr. Berson is responsible for overseeing Capital One’s Human Resources strategy, recruitment efforts, development programs and corporate real estate portfolio. |
Lynn A. Carter, Ms. Carter joined Capital One in April 2007 as Chief Operating Officer for the Banking Segment and became President, Banking in August 2007. Ms. Carter has over 30 years of banking and community development expertise. She joined Capital One from Bank of America Corporation, where she served from April 2004 to April 2007 as president of Business Banking and as president of Bank of America California. Ms. Carter | John G. Finneran, Jr., Mr. Finneran joined Capital One in September 1994. Since that time, he has served as General Counsel and Corporate Secretary and is responsible for managing Capital One’s legal, governmental affairs, corporate governance, regulatory relations and corporate affairs departments. He also manages Capital One’s internal audit department for administrative purposes. |
Frank G. LaPrade, III, Mr. LaPrade joined Capital One in January 1996. Since that time he has served in various positions, including as Capital One’s Deputy General Counsel responsible for managing the company’s litigation, employment, intellectual property and transactional practice areas. In 2004, Mr. LaPrade became Chief of Staff to the Chief Executive Officer. In 2010, Mr. LaPrade added responsibilities as Chief Enterprise Services Officer. In that capacity, Mr. LaPrade manages Information Technology, Brand Marketing, Corporate Development and Digital Banking for the company. | Gary L. Perlin, Mr. Perlin joined Capital One in July 2003, and since that time he has served as Capital One’s Chief Financial Officer. Mr. Perlin is responsible for Capital One’s corporate finance, corporate accounting and reporting, planning and financial risk management, treasury and investor relations functions. Mr. Perlin also serves as a director of Capital One, National Association, |
Peter A. Schnall, Mr. Schnall joined Capital One in August 1996. From August 1996 to October 2002, Mr. Schnall served in a variety of roles at Capital One. From October 2002 until June 2006, he served as Chief Credit Officer. Mr. Schnall has been Chief Risk Officer since June 2006, and in this role he is responsible for overseeing Capital One’s credit, compliance, operational and enterprise risk management functions. | Ryan M. Schneider, Mr. Schneider joined Capital One in December 2001. From December 2001 to December 2007, Mr. Schneider held a variety of positions within Capital One |
Michael C. Slocum, 58 Mr. Slocum joined Capital One in August 2007. From August 2007 to September 2011, Mr. Slocum was Executive Vice President of Capital One’s Banking Business, leading the company’s Commercial Banking business including asset-based lending, leasing and private banking. Mr. Slocum became President, Commercial Banking in September 2011 and in this role he is responsible for leading multiple broad lines of business, including Commercial Real Estate, Middle Market Banking, Commercial & Specialty Finance and Treasury Services. Before joining Capital One, Mr. Slocum served in various leadership roles at Wachovia Bank (now Wells Fargo), a provider of consumer and commercial financial services, including as the Regional Chief Executive Officer for Northeastern US. | Jonathan W. Witter, 42 Mr. Witter joined Capital One in December 2010 as an Executive Vice President in Retail Banking. In September 2011, Mr. Witter became President, Retail and Small Business Banking and in this role, he provides strategic direction for the Retail and Small Business Banking organization and is responsible for more than 13,000 associates, nearly 1,000 branch locations and 2,200 ATMs in New York, New Jersey, Connecticut, Delaware, Virginia, Washington, D.C., Maryland, Louisiana and Texas. In February 2012, Mr. Witter became President, Retail and Direct Banking and a director of ING Bank, fsb. Prior to joining Capital One, Mr. Witter held various positions, including executive vice president and head of general Bank Distribution at Wachovia, managing director and president of Morgan Stanley Private Bank NA, a global financial services firm, and Chief Operating Officer of Morgan Stanley’s Retail Banking Group. |
Sanjiv Yajnik, Mr. Yajnik joined Capital One in July 1998. From July 1998 to June 2009, Mr. Yajnik held a number of positions within Capital One’s European credit card business, Canadian credit card business and small business services organization. Mr. Yajnik became President, Financial Services in June 2009, and in this role he is responsible for overseeing Capital One’s auto finance, |
SECTION III – SECURITY OWNERSHIP |
Security Ownership of Certain Beneficial Owners |
Based on Schedule 13D and 13G filings submitted to the SEC, Capital One is aware of the following beneficial owners of more than 5% of Capital One’s outstanding common stock.
| Name and Address | Amount and Nature of Beneficial Ownership (1) | Percent of Class |
| Dodge & Cox (2) | ||
| 555 California Street, 40th Floor | 55,933,559 | 12.2% |
| San Francisco, CA 94104 | ||
| BlackRock, Inc. (3) | ||
| 40 East 52nd Street | 28,563,243 | 6.25% |
| New York, NY 10022 |
| Name and Address | Amount and Nature of Beneficial Ownership (1) | Percent of Class (2) |
| ING Groep N.V.(3) | ||
| Bijlmerplein 888 | 54,753,377 | 9.9% |
| 1102 MG Amsterdam | ||
| The Netherlands | ||
| Dodge & Cox(4) | ||
| 555 California Street, 40th Floor | 52,049,563 | 9.4% |
| San Francisco, CA 94104 |
| (1) | Beneficial ownership is determined under SEC Rule 13d-3(d)(1). The information contained in this table is based on Schedule 13D and 13G reports filed with the SEC, and the amount and nature of beneficial ownership | |
| (2) | Percentages calculated based on 555,374,853 shares of Capital One’s common stock outstanding as of February 29, 2012, which includes the issuance of 40,000,000 shares on February 16, 2012, in connection with the settlement of the forward sale agreements that we entered into with certain counterparties acting as forward purchasers in connection with a public offering of shares of our common stock in July 2011 and the issuance of 54,028,086 shares to ING Bank N.V. on February 17, 2012, as consideration for our purchase of the ING Direct business. | |
| (3) | On a Schedule 13D filed on February 27, 2012, ING Groep N.V. reported beneficial ownership as of February 17, 2012, of 54,753,377 shares of Capital One’s common stock, which beneficial ownership in the aggregate represented 9.9% of Capital One’s outstanding common stock as of February 17, 2012. According to its Schedule 13D, ING Groep has sole voting power with respect to no shares, shared voting power with respect to 54,753,377 shares and sole dispositive power with respect to no shares and shared dispositive power with respect to 54,753,377. Indirect subsidiaries of ING Groep hold 725,291 shares in their role as a discretionary manager of client portfolios. Certain of these shares may be managed by third-party sub-managers over which ING Groep and its subsidiaries do not have the ability to either direct the vote or the disposition of such shares. ING Groep disclaims beneficial ownership of such shares. | |
| (4) | On a Schedule 13G (Amendment No. | |
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, 2011,2012, by our directors, the named executive officers in this proxy statement and all directors and executive officers as a group.
| Number of Shares or Units | ||||||||
| Name | Common Stock (1) | Unvested Restricted Stock | Stock That May Be Acquired Within 60 days (2) | Total Amount and Nature of Beneficial Ownership (3) | Percent of Class (4) | |||
| Richard D. Fairbank | 2,250,096 | 0 | 6,852,280 | 9,102,376 | (5) | 1.94% | ||
| Gary L. Perlin | 132,204 | 126,337 | 818,881 | 1,077,422 | * | |||
| Lynn A. Carter | 59,419 | 92,590 | 376,713 | 528,722 | * | |||
| Peter A. Schnall | 120,231 | 89,303 | 459,121 | 668,655 | * | |||
| Ryan M. Schneider | 50,470 | 81,601 | 204,297 | 336,368 | * | |||
| E. R. Campbell | 631,526 | 0 | 37,729 | 669,255 | (6) | * | ||
| W. Ronald Dietz | 5,245 | 0 | 99,908 | 105,153 | (7) | * | ||
| Patrick W. Gross | 7,539 | 0 | 186,701 | 194,240 | (8) | * | ||
| Ann Fritz Hackett | 15,650 | 0 | 57,459 | 73,109 | (9) | * | ||
| Lewis Hay, III | 2,728 | 0 | 67,764 | 70,492 | (10) | * | ||
| Pierre E. Leroy | 4,900 | 0 | 62,701 | 67,601 | (11) | * | ||
| Mayo A. Shattuck III | 1,589 | 0 | 66,585 | 68,174 | (12) | * | ||
| Bradford H. Warner | 14,640 | 0 | 34,656 | 49,296 | (13) | * | ||
| All directors and | ||||||||
| executive officers as a | 3,685,932 | 719,314 | 10,769,681 | 15,174,927 | (14) | 3.24% | ||
| group (18 persons) | ||||||||
| Number of Shares or Units | |||||
| Name | Common Stock (1) | Unvested Restricted Stock | Stock That May Be Acquired Within 60 days (2) | Total Amount and Nature of Beneficial Ownership (3) | Percent of Class (4) |
| Richard D. Fairbank | 2,325,095 | 0 | 4,967,714 (5) | 7,292,809 | 1.57% |
| Gary L. Perlin | 78,982 | 71,257 | 796,096 | 946,335 | * |
| Lynn A. Carter | 92,019 | 46,026 | 400,656 | 538,701 | * |
| Peter A. Schnall | 144,215 | 51,696 | 441,091 | 637,002 | * |
| Ryan M. Schneider | 96,716 | 57,064 | 279,758 | 433,538 | * |
| E. R. Campbell | 631,526 | 0 | 53,936 | 685,462 (6) | * |
| W. Ronald Dietz | 5,251 | 0 | 72,614 (7) | 77,865 | * |
| Patrick W. Gross | 7,539 | 0 | 137,758 (8) | 145,297 | * |
| Ann Fritz Hackett | 15,650 | 0 | 60,665 (9) | 76,315 | * |
| Lewis Hay, III | 2,728 | 0 | 86,860 | 89,588 (10) | * |
| Pierre E. Leroy | 4,900 | 0 | 74,391 (11) | 79,291 | * |
| Peter E. Raskind | 0 | 0 | 3,956 (12) | 3,956 | * |
| Mayo A. Shattuck III | 1,589 | 0 | 84,237 (13) | 85,826 | * |
| Bradford H. Warner | 14,640 | 0 | 53,752 | 68,392 (14) | * |
| All directors and executive officers as a group (21 persons) | 3,943,918 | 484,956 | 9,192,886 | 13,621,760 (15) | 2.91% |
| * | Less than 1% of the outstanding shares of common stock. | ||
| (1) | The inclusion of any shares of common stock deemed beneficially owned does not constitute an admission of beneficial ownership of those shares. | ||
| (2) | In accordance with the rules of the SEC, each stockholder is deemed to beneficially own any shares subject to stock options that are exercisable on or within 60 days after January 31, | ||
| (3) | To Capital One’s knowledge, all executive officers and directors beneficially own the shares shown next to their names either in their sole names or jointly with their spouses, unless indicated otherwise. The column “Total Amount and Nature of Beneficial Ownership” includes: (i) shares of common stock; (ii) shares of unvested restricted stock; (iii) shares of common stock subject to stock options and shares of restricted stock and restricted stock units granted under Capital One’s 1994 Stock Incentive Plan (the “1994 Stock Incentive Plan”), Capital One’s 1999 Stock Incentive Plan (the “1999 Stock Incentive Plan”), Capital One’s 1995 | ||
| (4) | All percentage calculations are based on the number of shares of common stock issued and outstanding on January 31, | ||
| (5) | |||
| (6) | Includes 181,486 shares owned by Campbell Capital, LLC, 181,486 shares owned by Campbell Capital II, LLC, 238,533 shares owned by Campbell Holdings, LP and 7,864 shares owned by the E.R. Campbell Family Foundation for which Mr. Campbell holds voting and investment power. Also includes | ||
| (7) | Includes | ||
| (8) | Includes | ||
| (9) | Includes | ||
| (10) | Includes 1,806 shares held by the Hay Family Limited Partnership, for which Mr. Hay holds voting and investment power. Also includes | ||
| (11) | Includes | ||
| (12) | Includes 1,240 restricted stock units for which delivery of the shares of common stock underlying the restricted stock units is deferred until Mr. Raskind’s service with the Board of Directors ends. | ||
| (13) | Includes | ||
| (14) | Includes 140 shares held by Mr. Warner’s spouse. Also includes | ||
| (15) | Includes | ||
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 20102011 each of the reporting persons complied with these filing requirements except for a transaction that was omitted from a timely filed report for Mr. Schneider as a result of an administrative error by the Company which was subsequently corrected by an amended filing.
SECTION IV – DIRECTOR COMPENSATION |
Director Compensation Objectives |
The Board of Directors approves the compensation for non-management directors, (each a “director”) is approved by the Board of Directors, based on recommendations made by the Compensation Committee. Capital One’sThe Board of Directors has designed the director compensation program is designed to achieve four primary objectives:
Management directors do not receive compensation for their service on the Board of Directors. In 2010,2011, 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. The ConsultantFrederic W. Cook & Co., Inc. (the “Consultant”), provides competitive compensation data and program recommendations to the Compensation Committee for review. Please see the discussion under “Compensation Committee”Committee – Compensation Committee Consultant” in the “Governance of Capital One” section on page 912 for further information on the role and responsibilities of the Consultant. The competitive compensation data includes the compensation (cash, equity and other benefits) of non-management directors within ourCapital One’s peer comparator group. Please see the discussion under “Market Data” in the “Compensation Discussion and Analysis” section on page 3545 for further information on the developmentselection of the peer comparator group. The Compensation Committee considers this information, as well as the Consultant’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 the Consultant in the second quarter of 2010,2011, the Compensation Committee determined that the director compensation program described below continues to meetmeets the objectives listed above.
Director Compensation Structure |
Each non-management director serving on the Board of Directors on April 29, 2010,May 11, 2011, received an annual cash retainer of $70,000 as well as feescash retainers for committee and leadership service detailed in the notes to the table below. In addition, cash retainers were provided for service on a committee (see details and amounts in the footnotes to the table below). Each director also received an annual award of $170,012 in restricted stock units (“RSUs”) of Capital One common stock (“RSUs”), valued at $170,014, granted on April 29, 2010.May 11, 2011. Lastly, the PresidingLead Director received a cash retainer of $25,000.
Each director was offered the opportunity to elect to forego his or her cash compensation from April 2010 through April 2011retainer in exchange for a one-time grant of non-qualified stock options, with an equivalent Black-Scholes value, granted on April 29, 2010. Mr.May 11, 2011. Messrs. Campbell, Mr.Gross, Hay, Mr. Leroy, Mr. Shattuck, and Mr. Warner each elected to forego their cash compensation in favor of such stock options.
Other Benefits |
Under the Capital One Financial Corporation Non-Employee Directors Deferred Compensation Plan, non-management directors who are not employees of Capital One may voluntarily defer all or a portion of their cash compensation and receive deferred income benefits. Participants in the plan have the option to direct their individual deferrals among thirteen different investment offerings madeinvestments available bythrough the plan. Directors that elected a deferral will begin to receive their deferred income benefits in cash when they cease to serveserving as directors, or earlier if authorized by the Compensation Committee. Upon a change of control, of Capital One, 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 2010,2011, no directors elected to defer any cash compensation under this plan.
Capital One offered directors the opportunity to direct a contribution of up to $10,000 annually from Capital One to a charitable organization of their choice. All directors elected to make charitable contributions in 2011.
Directors also receive reimbursements for certain board-related expenses including, among other things, external educational seminars and travel-related costs incurred to attend Board meetings. Such reimbursements are not included as compensation for the directors in the table below.
In 2011, directors did not receive any additional compensation beyond what is described above and disclosed in the table below.
Stock Ownership Requirements |
Capital One requires non-management directors to retain all shares of restricted stock and all shares underlying restricted stock units granted to them by Capital One until their service with the Board of Directors ends.ends, pursuant to the terms of their respective grant agreements. The Board of Directors evaluates whether exceptions should be mademay grant an exception for any case where this requirement would impose a financial hardship on a director. AllNo directors are currently in compliance withhave been granted an exception to this requirement.
Compensation of Directors |
Directors of Capital One received the following compensation for 2010:
| Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) | Option Awards (3) | All Other Compensation (4) | Total |
| E. R. Campbell | -- | $170,012 | $90,009 | $10,000 | $270,023 |
| W. Ronald Dietz | $120,000 | $170,012 | -- | $10,000 | $300,012 |
| Richard D. Fairbank (*) | -- | -- | -- | -- | -- |
| Patrick W. Gross | $120,000 | $170,012 | -- | $10,000 | $300,012 |
| Ann Fritz Hackett | $155,000 | $170,012 | -- | $10,000 | $335,012 |
| Lewis Hay, III | -- | $170,012 | $110,011 | $10,000 | $290,023 |
| Pierre E. Leroy | -- | $170,012 | $120,012 | $10,000 | $300,024 |
| Mayo A. Shattuck III | -- | $170,012 | $100,010 | $10,000 | $280,022 |
| Bradford H. Warner | -- | $170,012 | $110,011 | $10,000 | $290,023 |
| Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) | Option Awards (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation (4) | Total |
| E. R. Campbell | $90,006 | $170,014 | — | — | $10,000 | $270,020 |
| W. Ronald Dietz | $120,000 | $170,014 | — | — | $10,000 | $300,014 |
| Richard D. Fairbank* | — | — | — | — | — | — |
| Patrick W. Gross | $120,013 | $170,014 | — | — | $10,000 | $300,027 |
| Ann Fritz Hackett | $155,000 | $170,014 | — | — | $10,000 | $335,014 |
| Lewis Hay, III | $110,006 | $170,014 | — | — | $10,000 | $290,020 |
| Pierre E. Leroy | $120,000 | $170,014 | — | — | $10,000 | $300,014 |
| Mayo A. Shattuck III | $100,013 | $170,014 | — | — | $10,000 | $280,027 |
| Bradford H. Warner | $110,006 | $170,014 | — | — | $10,000 | $290,020 |
* | In | |
| (1) | Each
|
| (2) | ||
| Director Name | Number of Outstanding Restricted Stock Units |
| E. R. Campbell | |
| W. Ronald Dietz | |
| Patrick W. Gross | |
| Ann Fritz Hackett | |
| Lewis Hay, III | |
| Pierre E. Leroy | |
| Mayo A. Shattuck III | |
| Bradford H. Warner |
| (3) | ||
| The Black-Scholes value for |
| Volatility | Risk-Free Interest Rate | Dividend Yield | Expected Term | Risk-Free Interest Rate | Dividend Yield | Expected Term |
| 37% | 2.55% | 1.49% | 5 Years | |||
| 34% | 1.87% | 2.34% | 5 years | |||
The compensation amounts reflected in the table above do not include a reduction for risk of forfeiture. | ||
The stock options vest on the first anniversary of the date of grant | ||
The following table sets forth the number of stock options awarded in 2011, the date of grant and the grant date fair value of those awards, and the total number of stock options outstanding for each director as of December 31, |
| Director | Grant Date | Number of Stock Options | Number of Outstanding Stock Options |
| E. R. Campbell | 4/29/2010 | 6,363 | 21,469 |
| W. Ronald Dietz | - | - | 75,705 |
| Patrick W. Gross | - | - | 162,498 |
| Ann Fritz Hackett | - | - | 33,256 |
| Lewis Hay, III | 4/29/2010 | 7,777 | 51,338 |
| Pierre E. Leroy | 4/29/2010 | 8,484 | 47,982 |
| Mayo A. Shattuck III | 4/29/2010 | 7,070 | 49,452 |
| Bradford H. Warner | 4/29/2010 | 7,777 | 25,006 |
| Director | Number of Stock Options | Date of Grant | Grant Date Fair Value | Total Number of Outstanding Stock Options | |
| E. R. Campbell | 6,638 | 5/11/2011 | $90,006 | 28,107 | |
| W. Ronald Dietz | — | — | — | 75,705 | |
| Patrick W. Gross | 8,851 | 5/11/2011 | $120,013 | 171,349 | |
| Ann Fritz Hackett | — | — | — | 33,256 | |
| Lewis Hay, III | 8,113 | 5/11/2011 | $110,006 | 59,451 | |
| Pierre E. Leroy | — | — | — | 47,982 | |
| Mayo A. Shattuck III | 7,376 | 5/11/2011 | $100,013 | 56,828 | |
| Bradford H. Warner | 8,113 | 5/11/2011 | $110,006 | 33,119 |
| (4) | In |
| SECTION V – COMPENSATION DISCUSSION AND ANALYSIS |
| Introduction |
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, monitoring and managing the compensation of all of our executive officers, including the named executive officers. Final decisions regarding the compensation of our executive officers, including theour Chief Executive Officer (“CEO”), are made by our independent directors. This Compensation Discussion and Analysis will review the compensation of the CEO, Richard D. Fairbank, and the following executive officers:
As used throughout this proxy statement, the “NEOs” means the four executive officers listed above, and references to “named executive officers” refer to the CEO and the NEOs, collectively.
In 2010,2011, Capital One along with manydelivered strong financial results and solid growth despite prolonged economic uncertainty. After weathering the Great Recession, the sweeping legislative financial reform of the CARD Act and the Dodd-Frank Act and the balance sheet consolidation of FAS 166/167, Capital One emerged as one of the few financial institutions continuedable to operate in an environmentcapitalize on the market disruption caused by those forces and announce the acquisitions of elevated economic and regulatory uncertainty. The unemployment rate remained close to 10%,both ING Direct and the housing market remained volatile due to increased foreclosures and a high rateU.S. credit card business of delinquent loans. Capital One has remained strong and resilient during these challenging times and continues to deliver value to its stockholders. The Company’s total stockholder return for 2010 was 11.6%, which outperformed the S&P Financials Index for the third consecutive year.HSBC. The Committee believes that the actions taken by the CEO and the NEOs throughout 20102011 contributed greatly to the Company’s results and helped position the Company to take advantage of emerging opportunities and to deliver stockholder value over the long-term. These accomplishments included:
| Important Aspects of |
Capital One’s executive compensation programs are implemented primarily through a variety of equity-based compensation vehicles. Since 1997, the compensation structure for the CEO has consisted entirely of equity-based awards in lieu of any salary, bonus, retirement plan contributions or other traditional forms of compensation. In 2010, Capital One was no longer subjectaddition, we do not pay cash bonuses to the compensation provisionsNEOs for annual performance and instead grant them a variety of equity-based awards following the end of the Emergency Economic Stabilization Actyear, based on the Committee’s evaluation of 2008 (“EESA”),Company and when designing compensationindividual performance during the year. The Committee annually reviews and assesses these programs the Committee was not restricted to compensating our executives with only specified portions of base salary and restricted stockadjusts them as prescribed by EESA. Therefore, in January 2010, the Committee sought to develop an NEO compensation program that is more consistent with the Company’s historical pay-for-performance philosophy. It approved a program under which 80% of NEO total target compensation is equity-based and directly tied to the
For the 20102011 performance year, the Committee also maintained the components of the CEO compensation program that wasit first developed in January 2009, consisting of a mix of equity-based vehicles whichstock option and performance share awards granted at the beginning of the year and the opportunity for restricted stock units that may be awarded after the end of the year. This structure is designed to create a direct link between Mr. Fairbank’s compensation and the Company’s performance over various time horizons. In January 2011, the Committee developed an NEO compensation program under which, consistent with the Company’s historical pay-for-performance philosophy, 80% of NEO total target compensation is equity-based and directly tied to the performance of the Company over multiple time horizons. The Committee believes that both programs balance risk and financial results, reward the NEOs and the CEOnamed executive officers for their achievements, promote the overall objectives of our executive compensation program and encourage appropriate, but not excessive, risk-taking.
The Committee adopted revised termsadditional performance conditions for the equity awards granted to the named executive officers in January 2012 to further enhance the connection between the compensation of the CEO and each NEO and the performance of the Company as follows:
In this manner, each long-term equity incentive award granted to the named executive officers in January 2012 is at risk of complete forfeiture over the event of a financial restatement;
As of March 1, 2011, Capital One also changed its practice relating to excise tax gross-ups to which the CEO and NEOsnamed executive officers may be entitled if terminated afterin connection with a change of control. All current change of control agreements providing for a potential excise tax gross-up will expire at the end of their terms and will be replaced with agreements that do not provide for an excise tax gross-up. See below under “Change of Control Agreements” on page 3747 for more information.
The Company continued to participate in the horizontal review of incentive compensation practices that the Federal Reserve has been focusing onBoard conducted in 2010 and 2011 with respect to the incentive compensation programspractices at 25 large financial institutions. The Companybanking organizations. Capital One has cooperated with the Federal Reserve’s review of our incentive plan arrangements, including by responding to requests for data and other information relating to the Company’s incentive compensation policies, processes and programs. The Company has worked with, and will continue to work with, the Federal Reserve and other federal bank regulators so that our incentive compensation programs are structured such that they continue to appropriately balance risk and do not encourage excessive risk-taking.
The Company also continues to annually perform a risk assessment of its compensation policies and practices as discussed under “Risk Assessment of Compensation Policies and Practices” in the “Governance of Capital One” section on page 7.
| Objectives of |
Capital One’s executive compensation program has four primary objectives.
Strongly link rewards with both business and individual performance without encouraging excessive risk-takingwhile 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 CEO and the NEOsnamed 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 early 2011January 2012 for the 20102011 performance year were based on the performance of both the Company and the individual, as well as on the demonstration of specific leadership competencies that are assessed through a comprehensive performance management process. In addition, we design ourAs part of the performance management process, each of the named executive officers was assessed against one or more performance objectives specifically designed to evaluate the degree to which the executive balanced risks inherent in his or her role. The Chief Human Resources Officer and the Chief Risk Officer reviewed these assessments, and the Committee considered the assessments in making its determinations regarding individual performance and compensation programs to align with our risk management practices so that our programs do not encourage excessive risk-taking that could jeopardize long-term value.
Ensure that total compensation rewards performance over multiple time horizons
Our compensation programs are structured to encourage our executives to deliver strong results over the short-term while making decisions that create sustained value for our stockholders over the long-term. The CEO’s compensation is all equity-based, all at-risk and all performance-based. For the NEOs in 2010,2011, approximately 80% of total target compensation was provided through equity-based vehicles which were all at-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 CEO and the NEOsnamed 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 performance.
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 respect to ourthe 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 Compensation 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.long-term. Because the majority of CEO and NEO compensation is delivered through deferred, equity-based vehicles that vest over multiple time horizons, the CEO and the NEOsnamed executive officers have a significant stake in the success of the Company. In addition, we have established specific stock ownership policies that the CEO and the NEOsnamed executive officers must meet on an annual basis and stock retention provisions forapplicable to certain equity awards beginning in January 2011.awards. Finally, in an effort to manage the financial impact of our compensation programs and to use our resources most efficiently, the Committee and the independent directors focus on making awards that have an appropriate correlation between the value of the award to the executive officer and the expense taken by the Company.
| Compensation Components |
Equity-Based Focus
In 20102011, as in past years, the Committee granted to the CEO equity-based awards at the beginning of the year that are designed to provide an incentive to focus on longer term performance. Following the end of the year, the CEO hashad the opportunity to receive an additional equity-based award based on the Committee’s evaluation of the Company’s performance and the CEO’s contributions over the past year.
The table below summarizes the elements of compensation that the Committee approved for the 20102011 performance year for the CEO.
| Compensation Element | Timing of Award Determination | Basis for Award | Approximate % of CEO Total Target Compensation | Vesting Schedule |
| Base Salary | Not applicable | Not applicable | 0% | Not applicable |
| Cash Bonus | Not applicable | Not applicable | 0% | Not applicable |
| Stock Options | January | Incentive for Future Company Performance | 50% | 3-year cliff vesting; expire in 10 years |
| Performance Shares | January | Incentive for Future Company Performance | 25% | Vest at the end of the 3-year performance period; the number of shares vesting depends on achievement of performance factors |
| Restricted Stock Units | January | Reward for Contributions to | 25% | 3-year cliff vesting; subject to performance based vesting; settle in cash |
Components of NEO Compensation
The NEOs traditionally receive a mix of cash and equity-based compensation. WeAs 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'sCommittee’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 20102011 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 | Overall experience, skills, performance, and knowledge | 20% | Paid in cash throughout the performance year |
| Base Salary - Restricted Stock Units | January | Incentive for Current Year | 15% | Awarded as restricted stock units which settle in cash |
| Cash Bonus | Not applicable | Not applicable | 0% | Not applicable |
| Restricted Stock Units | January | Reward for | 15% | 3-year ratable vesting; settle in cash |
| Stock Options | January | Reward for Incentive for Long-Term Performance | 50% | 3-year ratable vesting; expire in 10 |
| Performance Shares | Vest at the end of the 3-year performance period; the number of shares vesting depends on achievement of performance factors | |||
| Restricted Stock | 3-year ratable vesting; subject to performance-based vesting |
| 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 while alsoby directly linking his awards with histhe Company’s performance and that of the Company’shis contributions thereto 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 makes recommendations to the independent directors regarding the form, timing and amount of CEO compensation. 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 encourage appropriate risk-taking.appropriately balance risk. Final decisions regarding CEO compensation are made by the independent directors. The Committee and the independent directors have the flexibility to adjust compensation decisions from year to year to take into account the Company’s performance and evolving market practices.
20102011 CEO Compensation Decisions
The Committee determined that the compensation structure first adopted in 2009 remained appropriate for Mr. Fairbank in 20102011 given that the compensation program consists entirely of equity-based vehicles and is at-risk based on the Company’s and Mr. Fairbank’s performance. In particular, the Committee determined that a compensation designprogram that includes three different equity-based vehicles continued to be appropriate because it aligns Mr. Fairbank’s compensation with the Company’s performance over the appropriate time horizons and supports the goals and principles described above.
In January 2010,2011, when determining the value for each component of the award, the Committee considered the prior performance of the Company and the CEO’s individual contributions to that performance. In particular, the Committee considered the following:
After considering all of these factors together, without giving particular weight to any specific factor, the Committee and the independent directors determined that a total target compensation amount of $13$16 million was appropriate for Mr. Fairbank’s 20102011 compensation program.
Performance Share Award
In January 2010,2011, based on the above determination by the Committee and the independent directors, Mr. Fairbank was granted an award of performance shares under which he may receive from 0% to 200% of a target number of 88,92082,851 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 20102011, through December 31, 2012.2013. The Company’s performance will be
assessed on the basis of relativeAdjusted ROA, which we previously referred to as cash return on average tangible assets (“CROATA”) againstor CROATA, relative to a comparator group consisting of companies in the KBW Bank Sector index, excluding custody banks (the “KBW index”). The Committee believes that CROATA provides an objective measurenumber of a financial institution’s returnsshares issued under the award will generally be reduced by 50% if the Company’s Adjusted ROA for the three-year performance period is not positive, no matter how well it compares against the peer group. See “Additional Performance Conditions and Risk Adjustments – Performance Shares” on its respective businesses while not incenting choices that may not be in the institution’s best interest. In addition, thepage 44 for more information on Adjusted ROA. 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, as is the Company. The award had a grant date value of $3.25$4 million; however, the number of shares that Mr. Fairbank ultimately receives, if any, will be solely dependent on the Company’s performance over time accordingthe performance period. The performance share award is also subject to clawback provisions in the chart below.
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.
| Percentage of Target Shares Based on Capital One's Cash Return on Average Tangible Assets from 2010-2012 | |||||
| Three-Year CROATA Relative to Comparator Group (Percentile Achievement) | 80 and Above | 75 | 50 | 20 | Below 20 |
| Final Award (Percent of Target Shares) | 200% | 150% | 100% | 40% | 0% |
| Relative Adjusted ROA / CROATA | ||||
| ≥80th Percentile | 50th Percentile | < 20th Percentile | ||
| Capital One Adjusted ROA / CROATA | > 0% | 200% | 100% | 0% |
| ≤0% | 100% | 50% | 0% | |
Stock Option Award
In January 2010,2011, Mr. Fairbank also received a grant of 559,333608,366 nonstatutory stock options at an exercise price of $36.55$48.28 per share (which was the fair market value of the Company’s common stock on the grant date)date of grant). The benefits to Mr. Fairbank of the stock options are deferred;deferred, as the options cannot be exercised until three years after the date of grant date and will expire ten years after the grant date.date of grant. The option grant had a fixed grant date value of $6.5$8 million; however, the ultimate value Mr. Fairbank realizes, if any, is solely dependent on the long-term appreciation in Capital One’sthe 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 date and the market value of the stock exceeds the exercise price at some point after the three-year vesting period when the options are exercised. The stock option award is also subject to stock retention requirements and clawback provisions in the event of misconduct, each as described in more detail under “Other Aspects of Executive Compensation” beginning on page 48.
Restricted Stock Unit Award
A portion of Mr. Fairbank’s 20102011 compensation award consisted of an opportunity to be awarded restricted stock units in early 2011.2012. The award had a target value of $3.25$4 million, but the ultimate value of the award was determined based on the Committee’s evaluation of the Company’s performance during 2011 and Mr. Fairbank’s contributions to that performance during 2010 relative to the financial, operating, safety and soundness and strategic factors shown below (which were evaluated on a qualitative basis without any specific targets in mind)pre-established targets).
| Financial Performance | Operating Performance | Safety and Soundness | Strategic Performance |
|
|
|
|
The Committee considered the Company’s performance as described under “Introduction” on page 25.30. In particular, the Committee considered: Capital One’s delivery of strong financial results in 2010,2011, driven by strong core earnings and improving credit; the Company’s ability to capitalize on the compelling strategic opportunities provided by the acquisition of ING Direct and the pending acquisition of the U.S. credit card business of HSBC; the Company’s strong liquidity and capital position and its strategic positioning of the balance sheet ahead of the acquisitions; the Company’s sound credit management practices and the business choices that it made in the credit card business which resulted in net income for the Domestic Card business of $1.9 billion in 2010;business; the strong performance of the auto financeAuto Finance business; the transformation of the bank and management’s continued focus on risk management infrastructure; and compliance, including the progress on enhancing the Company’s strong liquidityrisk and capital position and its flexible balance sheet. In addition, the Committee considered the CEO’s leadership in making the strategic choices over many years that provided the foundation for the Company’s stable performance through the economic crisis and strong strategic position coming out the crisis. The Committee also noted the Company’s strong financial results in 2010 relative to its peers, which included net income of $2.7 billion, or $6.01 per common share (fully diluted), a 210.5% increase in net income over 2009.
The Committee also discussed Mr. Fairbank’s effective, disciplined leadership in guiding the Company in all of these areas throughout 20102011 as well as the progress and results achieved by a wide range of business and staff units as the Company continued to face significant economic, credit, legislative, regulatory and infrastructure challenges. The Committee also took into account peer comparator group CEO compensation levels, although the comparability of such information was limited due to evolving market conditions, the different tenures of each of the peer companies’ CEOs as compared to Mr. 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, the Committee and the independent directors determined in January 20112012 to award Mr. Fairbank $6.5$7.2 million in restricted stock units. The award of restricted stock units foris subject to the Company’sperformance-based vesting provisions described in more detail under “Additional Performance Conditions and his performance in 2010.Risk Adjustments – Performance-Based Vesting” beginning on page 43.
CEO Compensation by Performance Year
Below is a table showing Mr. Fairbank’s equity awards as they are attributable to the performance years indicated. For 2010,2011, the performance share and the restricted stock unit awards described above are included in the “Stock Awards” column, and the stock option award described above is included in the “Option Awards” column.
| Performance Year | Cash Salary | Cash Bonus | Stock Awards | Option Awards | Total Equity Compensation | Cash Salary | Cash Bonus | Stock Awards | Option Awards | Total Equity Compensation |
| 2011 | $0 | $11,200,090 | $8,003,906 | $19,203,996 | ||||||
| 2010 | $0 | $0 | $9,750,026 | $6,500,009 | $16,250,035 | $0 | $9,750,059 | $6,500,009 | $16,250,068 | |
| 2009 | $0 | $0 | $7,000,022 | $4,000,001 | $11,000,023 | $0 | $7,000,022 | $4,000,001 | $11,000,023 | |
| 2008 | $0 | $0 | $0 | $17,000,000 | $17,000,000 | |||||
The table above is presented to show how the Committee views compensation actions and to which year the compensation awards relate, but it differs substantially from the Summary Compensation Table on page 52 required for purposes of this proxy statement and is therefore not a substitute for the information required in the Summary Compensation Table on page 41
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:
Additional details on these programs can be found in the “Named Executive Officer Compensation” section beginning on page 40.51. There are no other perquisites provided to Mr. Fairbank by the Company that constitute additional compensation.
20112012 CEO Compensation Decisions
The Committee and the independent directors determined thatreviewed the compensation structure utilized in 20092011 for Mr. Fairbank and 2010determined that for 2012 the compensation program would continue to consist entirely of equity-based vehicles. The Committee and independent directors determined that the compensation program remained appropriate for Mr. Fairbank in 20112012 given that the compensation program is comprised entirely of equity-based vehicles, is at-risk based on the Company’s and Mr. Fairbank’s performance, 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.
However, after careful consideration of a number of different factors, the Committee and independent directors determined that changing the mix of the equity vehicles for the CEO compensation plan would further align the interests of the CEO and the interests of our stockholders and enhance the link between his equity awards and the Company’s performance. Therefore, for the 2012 CEO compensation plan, the Committee and the
independent directors shifted the mix of equity vehicles so that the performance share award represents 50% of the CEO’s total target compensation for 2012 and the stock option award represents 25% of total target compensation. The CEO’s opportunity for an award of restricted stock units at the end of 2012 remains at 25% of total target compensation. In this manner, the percentage of the CEO’s total target compensation for 2012 represented by performance shares is twice the percentage represented by performance shares in the 2011 CEO compensation package. The Committee and the independent directors made these decisions after taking into account the perspectives of shareholders and proxy advisory firms on the benefits provided through various forms of equity-based compensation. Furthermore, the Committee and the independent directors believe that this change in mix, together with the imposition of additional performance conditions on these awards, would further strengthen the risk-balancing features of the CEO compensation program in a manner consistent with guidance from the Federal Reserve regarding the role of incentive compensation in balancing risks to a financial institution such as the Company.
Based on the above framework, in January 2011,2012 the Committee and the independent directors granted to Mr. Fairbank a performance share award under which he may receive from 0% to 200% of a target number of 82,851191,257 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 20112012, through December 31, 2013.2014. Mr. Fairbank also received a grant of 608,366360,009 nonstatutory stock options at an exercise price of $48.28$45.75 per share (which was the fair market value of the Company’s common stock on the grant date). The Committee also determined that Mr. Fairbank will have an opportunity to be awarded restricted stock units in late 2011 or early 20122013 based on the Committee’s evaluation of the Company’s performance in 20112012 relative to the same financial, operating, safety and soundness and strategic factors described above under “Restricted“2011 CEO Compensation Decisions—Restricted Stock Unit Award.” The Committee and the independent directors will have absolute discretion to determine whether to make this grant of restricted stock units, as well as to determine the value of the grant relative to the target value of $4.0$4.375 million.
The terms of each of these awards are substantially similar to the terms described above under “2010“2011 CEO Compensation Decisions,”Decisions” except for the following updatesadditional performance conditions imposed on the awards for 2011:
| Relative CROATA | ||||
| ≥ 80th Percentile | 50th Percentile | < 20th Percentile | ||
| Capital One CROATA | > 0% | 200% | 100% | 0% |
| ≤ 0% | 100% | 50% | 0% |
| Relative Metric: Adjusted ROA | ||||
| ≥80th Percentile | 50th Percentile | < 20th Percentile | ||
| Three | 200% | 100% | 0% | |
| Number of years with | Two | 167% | 83% | 0% |
| positive Adjusted ROA: | One | 133% | 67% | 0% |
| None | 0% | 0% | 0% | |
Goals and Principles
As with the CEO, the Committee seeks to compensatealign the interests of the NEOs in a manner that encourageswith the creationinterests of long-term stockholder value as well asour stockholders by directly linking compensation to performance over the delivery of consistent, strong short-term results.appropriate time horizons while supporting safety and soundness and appropriately balancing risk. The Committee annually reviews and recommends to the independent directors the compensation structure for all of our executive officers, including those who are ultimately reported as NEOs. The Committee takes into account each 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 20102011 NEO compensation, the Committee also considered the specific factors discussed below. Final decisions regarding NEO compensation are made by the independent directors.
20102011 NEO Compensation Decisions
The 2011 NEO compensation program approved by the Committee and the independent directors was designed to be more in lineconsistent with the Company’s pay-for-performance philosophy than was permitted under EESA. The pay mix was shifted fromand is consistent with the elements and proportions prescribed by EESA for our 20092010 compensation program to make baseprogram. Base salary remains a smaller portion of total target compensation for 2010, with a higher proportion of pay providedthan equity based vehicles, and cash bonuses are not included in various equity-based vehicles.the 2011 NEO compensation program. The Committee believes the newthat this pay mix serves to balance stockholder interests while effectively rewarding and motivating key talent. Cash bonuses are not included in the 2010 NEO compensation program.
Based on the above framework, the Committee and the independent directors then determined the 20102011 total target compensation for each NEO by considering the following factors:
Base Salaries
For the 20102011 performance year, NEO base salaries were reduced from their 2009 levels. In addition, for 2010 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 20102011 base salary for NEOs was delivered in a mix of cash (approximately 20% of total target compensation and subject to a $1 million cap) and restricted stock units that settled in cash on December 31, 201015, 2011 (approximately 15% of total target compensation). In this way, the 20102011 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 2010,2011, the Committee and the independent directors approved 20102011 base salaries for the NEOs, including the portion of base salary delivered as restricted stock units, ranging from $1,540,000$1,780,000 to $2,268,000.$2,596,000. Individual details for each NEO are provided in the table below showing compensation by performance year.
Incentive Awards
In addition to base salary, in January 20112012 the Committee determined to award each NEO various equity-based incentive awards as a reward for Company and individual performance in 2010.
Restricted Stock Unit Awards
In January 2011,2012, the Committee and the independent directors approved awards of restricted stock units for the NEOs ranging from $1,155,000$1,246,050 to $1,701,000,$1,802,250, representing a payout at 175%180% of the target award values established by the Committee in January 2010.2011. Individual details for each NEO are provided in the table below showing compensation by performance year. The Committee and the independent directors determined that these awards were appropriate in light of the Company’s performance as described under “Introduction” on page 2530 and the other Company performance factors described above in connection with the CEO’s award of restricted stock units.
Equity Incentive Awards
In January 2011,2012, the Committee and the independent directors awarded various equity incentive awards to the NEOs for the 20102011 performance year. At Capital One, equity incentive awards are linked to performance in two ways:
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 strategic accomplishments as described under “Introduction” on page 2530 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 equity incentive awards consisted of stock option, restricted stock and performance share awards. The terms of the stock option and performance share awards are substantially similar to the terms of the CEO’s stock option and performance share awards described under “2011“2012 CEO Compensation Decisions,” except that the NEO stock options vest ratably in one-third increments starting on the first anniversary of the grant date. Shares subject to theof restricted stock awards cannot be sold or transferred until the first anniversary of the grant date and continue to vest in one-third increments until the third anniversary. TheLike the stock option awards, the restricted stock awards are also subject to clawbacksperformance-based vesting provisions as discussed below under “Additional Performance Conditions and Risk Adjustments – Performance-Based Vesting” on page 43 and to clawback and holding requirements as discussed below under “Other Aspects of Executive Compensation” beginning on page 37.
Mr. Perlin, the Company’s Chief Financial Officer, was awarded 93,08061,030 nonstatutory stock options, 33,55536,476 shares of restricted stock and a target amount of 10,73821,886 performance shares with a total grant date value for all three awards of $3,240,000.$3,337,500. This amount was at the target award value established by the Committee in January 2010.2011. The Committee determined to grant these awards based in part upon Mr. Perlin’s management of the Company’s balance sheet throughout 2010.2011. The Committee specifically considered the Company’s capital ratios and funding levels throughout 2010.2011 and the Company’s ability to be in a position to announce the acquisitions of ING Direct and the U.S. credit card business of HSBC.
Ms. Carter, President, Banking, was awarded 71,82145,716 nonstatutory stock options, 25,89127,323 shares of restricted stock and a target amount of 8,28616,394 performance shares with a total grant date value for all three awards of $2,500,000. This amount was at the target award value established by the Committee in January 2010. Throughout 2010,2011. In addition, in January 2012, in connection with Ms. Carter’s previously announced separation from the Company, which is expected to occur on March 31, 2012, the Committee approved additional vesting on her outstanding restricted stock awards scheduled to vest in January and February 2013, including her award granted in January 2012, that she would otherwise forfeit upon her separation. Ms. Carter was responsible for managingcontinued progress on the Company’s banking businessbank’s infrastructure in early 2011 and has been devoted to building Capital One’s national bank while maintainingassisted with the Company’s commitment to local banking and serving the communities in which we do business. In 2010, Ms. Carter was particularly focused on overseeing initiatives to improve the Company’s banking infrastructure and the rebranding of Chevy Chase Bank branches to Capital One Bank to positionmanagement transition announced by the Company for further success in its consumer and commercial banking businesses.
Mr. Schnall, the Company’s Chief Risk Officer, was awarded 64,35242,196 nonstatutory stock options, 23,19925,219 shares of restricted stock and a target amount of 7,42415,132 performance shares with a total grant date value for all three awards of $2,240,000.$2,307,500. This amount was at the target award value established by the Committee in January 2010.2011. Mr. Schnall was essential to developing and implementing the Company’s rigorous credit risk management strategies, which resulted in the overall superior performance of the Company’scontinued improvement in credit card business in 2010 and significant reductions in charge-offs2011 across the Company’s businesses.
Mr. Schneider, President, Card, was awarded 72,68348,678 nonstatutory stock options, 26,20225,219 shares of restricted stock and a target amount of 8,38517,456 performance shares with a total grant date value for all three awards of $2,530,000.$2,662,000. This amount was slightly above the target award value established by the Committee in January 2010.2011. The Committee determined that an award above the target value was appropriate given the superior performance of the Company’s credit card business. In particular, the Committee noted the industry-leading return on assets delivered byintroduction of three flagship products in 2011, the creditsuccessful addition and integration of the Hudson Bay Company and Kohl’s Department Stores card business in 2010 as well aspartnerships and progress made on partnerships and achievements in servicing.
NEO Compensation by Performance Year
The table below shows actual NEO compensation as it is attributable to the performance year indicated.
| Name | Performance | Cash | Cash | Stock | Option | Total Base and Equity |
| Year | Salary | Bonus | Awards (1) | Awards | Compensation | |
| 2010 | $1,000,000 | $0 | $5,107,429 | $1,101,600 | $7,209,029 | |
| Gary L. Perlin | 2009 | $3,175,000 | $0 | $1,360,720 | $0 | $4,535,720 |
| 2008 | $900,000 | $0 | $4,210,038 | $1,333,265 | $6,443,303 | |
| 2010 | $1,000,000 | $0 | $3,712,506 | $850,000 | $5,562,506 | |
| Lynn A. Carter | 2009 | $2,625,000 | $0 | $1,125,009 | $0 | $3,750,009 |
| 2008 | $662,500 | $0 | $3,374,183 | $1,120,310 | $5,156,993 | |
| 2010 | $1,000,000 | $0 | $3,222,424 | $761,600 | $4,984,024 | |
| Peter A. Schnall | 2009 | $2,350,000 | $0 | $1,207,173 | $0 | $3,557,173 |
| 2008 | $615,833 | $0 | $2,893,193 | $953,654 | $4,462,680 | |
| Ryan M. Schneider | 2010 | $1,000,000 | $0 | $3,364,826 | $860,200 | $5,225,026 |
| Name | Performance Year | Cash Salary | Cash Bonus | Stock Awards (1) | Option Awards | Total Base Compensation |
| 2011 | $1,000,000 | $0 | $6,068,619 | $741,667 | $7,810,286 | |
| Gary L. Perlin | 2010 | $1,000,000 | $0 | $5,107,496 | $1,224,598 | $7,332,094 |
| 2009 | $3,175,000 | $0 | $1,360,720 | $0 | $4,535,720 | |
| 2011 | $1,000,000 | $0 | $4,275,134 | $555,564 | $5,830,698 | |
| Lynn A. Carter | 2010 | $1,000,000 | $0 | $3,712,612 | $944,906 | $5,657,517 |
| 2009 | $2,625,000 | $0 | $1,125,009 | $0 | $3,750,009 | |
| 2011 | $923,000 | $0 | $3,949,411 | $512,787 | $5,385,198 | |
| Peter A. Schnall | 2010 | $1,000,000 | $0 | $3,222,506 | $846,641 | $5,069,147 |
| 2009 | $2,350,000 | $0 | $1,207,173 | $0 | $3,557,173 | |
| Ryan M. Schneider | 2011 | $968,000 | $0 | $4,292,424 | $591,559 | $5,851,984 |
| 2010 | $1,000,000 | $0 | $3,364,889 | $956,247 | $5,321,136 |
| (1) | For |
This table is presented to show how the Committee views compensation actions and to which year the compensation awards relate, but it differs substantially from the Summary Compensation Table on page 52 required for purposes of this proxy statement and is therefore not a substitute for the information required in the Summary Compensation Table at page 41.
Additional Pay Elements
The Committee provides certain other programs intended to support the NEOs’ productivity, well-being and security. These programs provide some level of personal benefit and are not generally available to all associates. For 2010,2011, these included the following:
In addition, Mr. Perlin and Ms. Carter each occasionally has been provided limited personal use of the corporate aircraft.
The Committee has determined that the nature and value of these programs are comparable to those offered to similarly situated executives at our peers. Additional details on these programs can be found in the “Named Executive Officer Compensation” section beginning on page 40.
20112012 NEO Compensation Decisions
For 2011,2012, the Committee and the independent directors approved an NEO compensation program that is substantially similar to the 20102011 program. The plan consists of multiple compensation vehicles that directly link the NEOs’ compensation with the Company’s performance over multiple time and risk horizons, align the NEOs’ interests with the interests of the Company’s stockholders, support safety and soundness and encourage appropriate risk-taking. After considering market data, cash compensation delivered to comparable executives at our peers and other factors, the Committee determined to remove the $1 million cap on cash base salary, which means that base salary in the form of cash and restricted stock units for 2012 represents 20% and 15%, respectively, of total target compensation without the application of a cap that would convert any portion of that cash salary over $1 million into restricted stock unit salary.
| Additional Performance Conditions and Risk Adjustments |
The equity awards approved by the Committee for our named executive officers in January 2012 include additional performance-based vesting terms designed to further enhance alignment between pay and performance and balance the risks that our incentive compensation programs might otherwise encourage. Each award of the restricted stock (restricted stock units for the CEO) and stock options granted to the named executive officers in January 2012 include performance-based vesting provisions tied to core earnings and return on assets that will reduce the total value delivered to the executive at vesting if the Company does not meet certain performance thresholds during the three-year vesting period. Furthermore, in addition to the relative Adjusted ROA metric applicable to performance share awards granted to the named executive
officers in January 2012, the terms of the performance share awards reduce the total value delivered to the executive at vesting if for any of the years in the three-year performance period the Company does not achieve positive Adjusted ROA, regardless how well the Company compares to its peers in the KBW index over the performance period.
The ultimate value that our named executive officers receive from these awards is tied to our stock price performance over the vesting period. The Committee nevertheless determined that these awards should be subject to additional performance conditions so that the value received by the executives when the awards vest is also conditioned upon the Company continuing to meet certain operating performance thresholds. In setting these threshold operating performance conditions, the Company took into account discussions with federal bank regulators. These new performance conditions do not present any upside potential for the named executive officers’ compensation but instead create an additional at-risk element to the compensation that has been awarded to them, since the entire value of each award could be forfeited over its three-year vesting period unless the Company achieves the minimum thresholds.
Performance-Based Vesting
The performance-based vesting provisions applicable to awards of stock options, restricted stock and restricted stock units condition the vesting of those awards upon the Company meeting the following performance thresholds for each and every fiscal year ending in the three-year vesting period:
For any year Core Earnings are not positive, the named executive officer will forfeit 50% of one-year’s worth of vesting (i.e., one-sixth of the total award). For any year in which Base ROA is not better than or equal to negative two percent, the executive will forfeit one full year’s worth of vesting (i.e., one-third of the total award), regardless whether the Company’s Core Earnings for that fiscal year are positive. These performance conditions were selected to reflect two standards for assessing the earnings performance of our business. Core Earnings focuses on whether profits are being generated by our basic business, as opposed to other factors that may not reflect business fundamentals. Base ROA excludes only the effect of impairments in goodwill or other intangible assets in assessing how effectively we are utilizing our assets to generate income. Imposing these additional performance conditions is designed to further reflect our approach of balancing risk and performance over the long-term. Any forfeitures will be cumulative over the three-year vesting period. In this manner, regardless of our executives’ past performance and of our stock price performance, both the stock option and restricted stock unit awards granted to the CEO in January 2012, and all of the stock option and restricted stock awards granted to the NEOs in January 2012, are at risk of complete forfeiture over the three-year vesting period.
The terms of the applicable award agreements define “Core Earnings” to mean the 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 credit portion of other than temporary impairment of the securities portfolio, (iii) the build or release of the allowance for loan and lease losses, calculated as the difference between the provision for loan and lease losses and charge-offs, net of recoveries, and (iv) the change in the combined uncollectible finance charge and fee reserve. The Committee believes that Core Earnings is an appropriate performance metric to employ for these performance-based vesting provisions because the metric captures major operational costs and risks to the 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.
“Base ROA” is defined as the ratio, expressed as a percentage, of (i) the Company’s net income available to common stockholders, excluding, on a tax-adjusted basis, the impact of any impairment of intangible assets, to (ii) the Company’s average total assets for the period. The Committee believes that measuring profitability in
this way assesses the operational and strategic choices of our named executive officers. Base ROA includes the impact of intangible asset amortization and therefore reflects the impact of items such as purchase accounting amortization related to acquisitions. Base ROA also includes the impact of more judgmental components such as the allowance for loan and lease losses, the finance charge and fee reserve and other than temporary impairment of the credit portfolio.
With these performance-based vesting provisions, the Committee has set a minimum expectation that the Company’s Core Earnings for each fiscal year ending in the three-year vesting period will be positive, or the named executive officer will forfeit part of the corresponding equity awards vesting for that fiscal year. The Committee believes that a Base ROA worse than negative two percent for any fiscal year would represent material losses to the Company, and therefore the corresponding equity awards vesting for such fiscal year would be completely forfeited.
Performance Shares
As described above, the performance share awards granted in January 2012 to the named executive officers employ Adjusted ROA as the performance metric. This metric is intended to reflect our earnings capacity by focusing on a component of our net income relative to our tangible assets. “Adjusted ROA” means the ratio, expressed as a percentage, of (a) the Company’s net income available to common stockholders, excluding, on a tax-adjusted basis, the impact of (i) impairment or amortization of intangible assets and (ii) the credit portion of other than temporary impairment of the securities portfolio, to (b) the Company’s average tangible assets for the period. We previously referred to Adjusted ROA as cash return on average tangible assets, or CROATA, and Adjusted ROA is calculated in the same manner as the CROATA metric used in the performance share awards granted to the named executive officers in January 2011 and to the CEO in January 2010.
Each of the performance share awards granted in January 2012 is subject to reduction in the event that the Company’s Adjusted ROA for any fiscal year in the three-year performance period is not positive. These reductions will occur regardless 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 peers in the KBW index, the performance share awards are subject to forfeiture if we do not achieve a threshold level of performance on an absolute basis.
| Criteria and Process for Compensation Decisions |
The Committee considers a number of factors in making compensation decisions with respect to the CEO and the NEOs.named executive officers. The Committee relies on a range of objective data including Company performance data, peer comparator group performance data, historical pay information, data on specific market practices and trends and other relevant points of information to inform its business judgment.
Use of Outside Consultants for CEO Compensation
The Committee engages a consultant from Frederic W. Cook & Co., Inc. (the “Consultant”) to assist in the design of the CEO compensation program. The Consultant assists the Committee in a number of ways, including proposing and evaluating a peer comparator group, gathering relevant compensation data from the peer comparator companies, discussing relevant market trends and context and developing recommendations on possible plan designs. Please see the discussion under “Compensation Committee”Committee – Compensation Committee Consultant” in the “Governance of Capital One” section on page 912 for additional information about the Consultant.
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. The Consultant also provides additional market reference points that the Committee and the independent directors use when evaluating NEO compensation. Other outside consultants provide information to the Human Resources department regarding market practices and trends and research reports and provide subject matter expertise on specific concepts and technical issues related to executive compensation. However, these outside consultants do not recommend either the form or amount of compensation that is to be paid to the NEOs. The Human Resources department is responsible for analyzing the information obtained from the outside consultants and presenting it to the CEO. The CEO then considers all of the information provided by the Human Resources department and the Chief Human Resources Officer and makes his compensation recommendations for the NEOs to the Committee and the independent directors.
Neither the CEO nor the Human Resources department has a contractual arrangement with any compensation consultant to determine or recommend compensation programs for the NEOs. The Consultant is present at Committee meetings during which CEO and NEO compensation is discussed and provides market data as well as an outsider’s perspective regarding CEO and NEO compensation practices. The Consultant has no other engagement with, and performs no other services for, Capital One besides the services described above.
Market Data
The Committee reviews pertinent data from a group of peer comparator companies within the financial services industry. These organizations are intended to represent the marketplace of companies with whom Capital One competes for business and for executive talent.
The Consultant plays a lead role in evaluating the peer comparator group on an annual basis. Each year, the Consultant presents a comprehensive report to the Committee that highlights size, scope and performance information from the peer comparator companies across a variety of metrics. The Committee specifically considers the Company’s percentile rank versus peer comparator companies across the following financial metrics:
After reviewing this information, the Committee recommends a final peer comparator group to the independent directors for approval. The peer comparator group is adjusted each year, as appropriate, so that the size, scope, performance and business focus of the peer comparator companies reflect Capital One’s competitive environment. TheAfter the peer comparator group was significantly adjusted in 2009 due to considerable consolidation within the previous peer comparator group caused by the recent turmoil in the
financial sector, and this group wasit has been used for benchmarking and analysis when the Committee approved the 2010 and 2011 compensation programs and target award values. With consolidation and economic turmoil subsiding in 2010, theThe Committee determined to maintain the same peer comparator group for purposes of designing the 20112012 compensation programs. Theprograms, and approved the following peer comparator group was approved in July 2010:
| American Express | Fifth Third Bancorp | Regions Financial |
| Bank of America Corporation | J.P. Morgan Chase | SunTrust Bank |
| BB&T Corporation | KeyCorp | U.S. Bancorp |
| Citigroup | PNC Financial Services | Wells Fargo & Company |
Typically, compensation data from the peer comparator group is used to inform the Committee’s determination of the total compensation target values for the CEO and the NEOs,named executive officers, although peer comparator group information has been of limited utility in recent years due to changing practices during and after the time that peers were subject to restrictions under the Troubled Asset Relief Program.
As of December 31, 2011, the Company ranked third among the peer comparator group in both one-year and three-year total stockholder return and second in return on tangible equity. Capital One was positioned at or near the median of the peer comparator group in terms of total assets, revenues and net income.
Tally Sheets
In addition to considering market data from our peer comparator group (when available), the Committee also considers information contained on total compensation tally sheets for the CEO and each NEO. The tally sheets summarize multiple components of current and historical compensation, as well as the potential value of post-termination arrangements. The tally sheets are just one point of information used by the Committee in the process of determining CEO and NEO compensation. They help the Committee to understand the historical context that is relevant to current compensation decisions, such as the CEO and each NEO’s accumulated equity value. The tally sheets also help the Committee to assess the potential downstream consequences of its decisions, such as the potential value to be received by the CEO and each NEO upon separation due to a change of control, retirement or other termination scenarios.
Consideration of 2011 Say on Pay Vote
At our 2011 Annual Meeting of Stockholders, our stockholders supported our executive compensation program by approving our non-binding advisory vote on executive compensation (“2011 Say on Pay”) with over 87% of the votes cast. Since this vote, the Committee has continued to review our executive compensation program, policies and practices in light of our business results and our stockholder support. As described above, the Committee and the independent directors approved certain changes to the 2012 compensation programs for the named executive officers, based in part on the consideration of perspectives from shareholders and proxy advisory firms that the Committee assessed following our 2011 Say on Pay vote, with the expectation that these changes would further advance the objectives of our executive compensation program that shareholders supported through the 2011 Say on Pay vote. The Committee continues to believe that our executive compensation programs support the objectives outlined above.
| Other Compensation Arrangements |
Pension and Non-Qualified Deferred Compensation Plans
Capital One does not currently have any active pension plans for the CEO or the NEOs. We offer a voluntary, non-qualified deferred compensation plan that restores participating NEOs to the level of savings they would have achieved if they had not been impacted by IRS limits governing our qualified 401(k) plan. It also allows the NEOs to defer additional pre-tax compensation in order to save for retirement.
Capital One annually reviews programs and practices at our peer comparator companies and across the financial services industry. We also review changes in the legal and regulatory environment pertaining to retirement programs. Mr. Perlin, Ms. Carter, Mr. Schnall and Mr. Schneider each participated in Capital One’s Voluntary Non-Qualified Deferred Compensation Plan (the “Plan”) in 2010.2011. Details of the Plan can be found under “Capital One’s“Capital One’s Voluntary Non-Qualified Deferred Compensation Programs” in the “Named Executive Officer Compensation” sectionPrograms” on page 51.
Employment Agreements
Capital One typically does not enter into employment agreements with the NEOsnamed 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. For example, the Committee and the independent directors approved employment agreements for the NEOs documenting the 2009 NEO compensation program because such agreements were appropriate and desirable under EESA. These agreements terminated on February 28, 2010.
Change of Control Agreements
Each of the NEOs and the CEOnamed 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 the CEO and the NEOsnamed 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 CEO and the NEOsnamed 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 the CEO and each NEOnamed executive officer with an incentive to remain in their leadership roles up to and beyond the transaction date. The CEO and the NEOsnamed 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 CEO and the NEOsnamed executive officers under these agreements are included in the total compensation tally sheets reviewed by the Committee on an annual basis. WhileAlthough the potential change of control payouts do not necessarily impact annual decisions on CEO and NEO pay, reviewing this information allows the Committee to fully understand the downstream implications of its decisions and the resulting impact to the Company and its stockholders.
Our change of control agreements for the CEO and the NEOsnamed executive officers currently provide for excise tax “gross-up” payments in certain circumstances. On March 1, 2011, Capital One delivered notice to the CEO and the NEOsnamed executive officers, that their current change of control agreements would not be renewed. The Committee and the independent directors also approved a new form of change of control agreement to be used after March 1, 2011, for new hires, promotions and renewals which does not provide for an excise tax gross-up. Accordingly, all change of control agreements providing for a potential excise tax gross-up after a change of control will expire by April 2014, to be replaced with the new form of agreement that does not provide for an excise tax gross-up.
Post-Employment Compensation Practices
The CEO has no employment or severance arrangement with the Company other than athe 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'sCompany’s Executive Severance Plan, which provides for a payment of up to 30% of the NEO’s current target total compensation plus standard health, welfaredental 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. For example, in January 2012, in connection with Ms. Carter’s previously announced separation from the Company, which is expected to occur on March 31, 2012, the Committee approved additional vesting on restricted stock awards scheduled to vest in January and February 2013 that she otherwise would have forfeited upon her separation. Capital One has asked certain NEOs to enter into various agreements that contain restrictive covenants related to confidentiality, non-competition, non-solicitation of employees and ownership of work product. For additional information, please see “Restrictive Covenants” in the “Named Executive Officer Compensation” section on page 53.64. Each of the NEOs also has a change of control agreement as described above. Upon retiring from the Company, all employees are entitled to receive certain retiree medical benefits.
| Other Aspects of Executive Compensation |
Clawbacks
Beginning in January 2011, the Company included recoupment, or “clawback,” provisions in certain equity awards made to the named executive officers. The clawback provisions allow the Company to recover equity compensation in the event of a financial restatement or executive misconduct as follows:
The clawback provisions are designed to recoup the shares awarded to the executive or, in the event the executive has sold or otherwise transferred the shares, the net proceeds from that sale or transfer.
Stock Ownership and Retention Requirements
Consistent with their responsibilities to our stockholders, the CEO and the NEOs are required to maintain a significant financial stake in the Company. To this end, the CEO and the NEOs must own shares of Capital One stock with a fair market value of at least the following annual cash salary multiples:
| Role | Salary Multiple |
| CEO | 5X |
| Other NEOs and Executive Officers | 3X |
Given that the 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:
The Committee annually reviews the guidelines and monitors the CEO’s and the NEOs’ compliance with them. New executive officers are given two years from the date of promotion to or appointment as an executive officer to comply with these requirements. In the event that an executive officer is not in compliance with these requirements, the Committee has the right to take action, including reducing the executive officer’s compensation. The CEO and the NEOs are currently in compliance with this requirement.
In addition, beginning in January 2011, the Company implemented stock retention requirements for certain equity awards made to the CEO and the NEOs.named executive officers. 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 the stock option and restricted stock awards for one year. These stock ownership and retention requirements apply to all of our executive officers.
All of Capital 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 as collateral for margin loans.
Equity Grant Practices
Capital One strives to maintain equity grant practices that demonstrate high standards of corporate governance. Annual incentive awards are approved by the Committee and the independent directors at regularly scheduled meetings in the first quarter of each year. The date of grant is the actual date on which the Committee approves the awards. The Committee may grant awards of restricted stock, or stock options or other thanequity awards outside of the annual incentive awards,cycle, usually in connection with hiring a new executive officer.executive. For a newly hired executive, officer, the date of grant is the later of the date of Committee approval or the executive’s start date. The Committee has delegated authority to the CEO to award restricted stock (but not options or other equity awards) to newly hired executivesassociates who are not executive officers, unless the target value of such award is in excesssubject to a maximum amount of $1 million.million for any employee in any one year. These awards are granted quarterly indesigned to be used for new hires and for special programs designed by management to incentivize and reward current employees of the first month following the end of each fiscal quarter (January, April, July and October), and the grant date must be after the executive’s start date.Company. The Committee reviews all grants made by the CEO in each quarter at the next regularly scheduled meeting following the grant date.
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, as amended and restated, Fair“Fair Market ValueValue” 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 Committee approval.
Tax, Accounting and Regulatory Considerations
The Committee carefully considers the tax and regulatory impact of its compensation programs on the Company, as well as on its executives. To maintain flexibility in compensating executive officers, the Committee does not require all compensation to be awarded in a tax-deductible manner. However, it is the 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 philosophy.
With respect to the CEO and the NEOsnamed executive officers (other than the Chief Financial Officer), Section 162(m) of the Internal Revenue Code allowed a federal tax deduction for compensation paid to the executive that is $1 million or less. For amounts in excess of $1 million, a deduction is allowed if that compensation could
be classified as “performance-based.” The Company’s 2004 Stock Incentive Plan, (the “Plan”), as amended and restated, provides for the establishment of specific performance thresholds to be tied to equity-based awards in order to qualify these incentive awards as “performance-based.” Historically, the Committee would establish annual performance thresholds to provide for deductibility over the $1 million limit for incentive compensation paid to the CEO and the NEOs.
The award of stock options and performance shares to the CEO and NEOs in 20102011 were deductible as “performance-based”as“performance-based” compensation. Restricted stock granted to the NEOs inIn January 2010 was not deductible as “performance-based” compensation, as no additional performance thresholds were applied to the awards as criteria for vesting. However, in January 2010,2011, the Committee and the independent members did establishdirectors established a performance threshold that the Company had to meet in order to award restricted stock and restricted stock units in January 2012 that arewere part of the 20102011 NEO and CEO compensation programs awarded in January 2011.programs. The Company had to achieve positive earnings per share (“EPS”) on continuing operations, less extraordinary items, for the 20102011 fiscal year, or the CEO would not receive his restricted stock unit award and the NEOs would not receive their restricted stock and restricted stock unit awards. The 2004 Stock Incentive Plan allows for certain extraordinary items to be excluded from the EPS calculation, including, among other things, asset write-downs, reorganization and restructuring programs, mergers, acquisitions or divestitures, and the effect of changes in tax laws, accounting principles or regulations, or other laws or provisions affecting reported results. The Company’s EPS on continuing operations for 20102011 was positive, and therefore the awards were made in January 20112012 and are expected to be 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, 2011, 2010 2009 and 20082009 for the CEO and the NEOs.
As discussed under “Chief Executive Officer Compensation” in the “Compensation Discussion and Analysis” section on page 28,34, the CEO receives 100% of his compensation in equity-based awards. Amounts shown in the table below for the CEO for 20102011 represent stock optionoptions and performance share awardsshares granted in January 2010 that are designed to provide an incentive to focus on longer term performance.2011. Amounts shown in the “Stock Awards” column for 20102011 also include an award of restricted stock units granted to the CEO in January 20102011 for the 20092010 performance year.
As discussed under “Named Executive Officer“NEO Compensation” in the “Compensation Discussion and Analysis” section on page 32,39, under the Committee and the independent directors adopted a new compensation program for the NEOs in January 2010. Under the 2010NEOs’ 2011 compensation program, base salary comprised approximately 35% of NEO total target compensation. Each NEO received a portion of his or her 20102011 base salary paid in cash that was paid throughout the year and a portion delivered in restricted stock units that were granted in January 20102011 and settled in cash atin December 2011. These restricted stock units are included in the end of 2010. For the NEOs, amounts showntable below in the “Stock Awards” column for 20102011. For the NEOs, amounts shown for 2011 in the table below also include stock options, performance shares, shares of restricted stock, awardsand restricted stock units that were granted in January 20102011 for the 20092010 performance year. These restricted stock awards were granted under the 2009 compensation program and designed to comply with the requirements of EESA. The NEOs were not eligible for annual cash bonuses in 2010.
Amounts paid to the CEO and the NEOs in 20102011 for other compensation and benefit programs are listed under the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” and “All Other Compensation.” The details of these program amounts are provided in the footnotes.
Please see the footnotes to the table below for an additional explanation regarding compensation attributable to each performance year. Further information on the timing of awards under the 20102011 compensation programs for the CEO and the NEO can be found under “Compensation Components” in the “Compensation Discussion and Analysis” section on page 27.
| Name and Principal Position | Year | Salary (3) | Bonus (4) | Stock Awards (5) | Option Awards (6) | Non-Equity Incentive Plan Compensation (4) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings (7) | All Other Compensation (8) | Total |
| Richard D. Fairbank (1) Chairman, CEO and President | 2010 | $0 | $0 | $8,250,029 | $6,500,009 | $0 | $9,013 | $100,637 | $14,859,688 |
| 2009 | $0 | $0 | $2,000,019 | $4,000,001 | $0 | $10,560 | $76,785 | $6,087,365 | |
| 2008 | $0 | $0 | $0 | $0 | $0 | $0 | $68,344 | $68,344 | |
| Gary L. Perlin (2) Chief Financial Officer | 2010 | $1,000,000 | $0 | $2,628,749 | $0 | $0 | -- | $292,402 | $3,921,151 |
| 2009 | $3,175,000 | $0 | $4,210,038 | $1,333,265 | $0 | -- | $222,807 | $8,941,110 | |
| 2008 | $900,000 | $0 | $1,819,775 | $2,470,743 | $0 | -- | $258,194 | $5,448,712 | |
| Lynn A. Carter (2) President, Banking | 2010 | $1,000,000 | $0 | $1,875,015 | $0 | $0 | -- | $255,001 | $3,130,016 |
| 2009 | $2,625,000 | $0 | $3,374,183 | $1,120,310 | $0 | -- | $659,304 | $7,778,797 | |
| 2008 | $662,500 | $0 | $677,888 | $920,106 | $0 | -- | $778,655 | $3,039,149 | |
| Peter A. Schnall (2) Chief Risk Officer | 2010 | $1,000,000 | $0 | $1,775,197 | $0 | $0 | -- | $201,415 | $2,976,612 |
| 2009 | $2,350,000 | $0 | $2,893,193 | $953,654 | $0 | -- | $156,015 | $6,352,862 | |
| 2008 | $615,833 | $0 | $1,016,588 | $1,379,961 | $0 | -- | $185,372 | $3,197,754 | |
| Ryan M. Schneider (2) President, Card | 2010 | $1,000,000 | $0 | $1,750,745 | $0 | $0 | -- | $200,352 | $2,951,097 |
| Name and Principal Position | Year | Salary (3) | Bonus (4) | Stock Awards (5) | Option Awards (6) | Non-Equity Incentive Plan Compensation (4) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings (7) | All Other Compensation (8) | Total |
| Richard D. | 2011 | $0 | $0 | $10,500,079 | $8,003,906 | $0 | $4,608 | $159,465 | $18,668,058 |
| Fairbank (1) | 2010 | $0 | $0 | $8,250,029 | $6,500,009 | $0 | $9,013 | $100,637 | $14,859,688 |
| Chairman, CEO and President | 2009 | $0 | $0 | $2,000,019 | $4,000,001 | $0 | $10,560 | $76,785 | $6,087,365 |
| Gary L. | 2011 | $1,000,000 | $0 | $5,435,749 | $1,224,598 | $0 | — | $288,392 | $7,948,739 |
| Perlin (2) | 2010 | $1,000,000 | $0 | $2,628,749 | $0 | $0 | — | $292,402 | $3,921,151 |
| Chief Financial Officer | 2009 | $3,175,000 | $0 | $4,210,038 | $1,333,265 | $0 | — | $222,807 | $8,941,110 |
| Lynn A. | 2011 | $1,000,000 | $0 | $3,887,650 | $944,906 | $0 | — | $251,002 | $6,083,558 |
| Carter (2) | 2010 | $1,000,000 | $0 | $1,875,015 | $0 | $0 | — | $255,001 | $3,130,016 |
| President, Banking | 2009 | $2,625,000 | $0 | $3,374,183 | $1,120,310 | $0 | — | $659,304 | $7,778,797 |
| Ryan M. | 2011 | $953,333 | $0 | $3,680,867 | $956,247 | $0 | — | $203,526 | $5,793,973 |
| Schneider (2) President, Card | 2010 | $1,000,000 | $0 | $1,750,745 | $0 | $0 | — | $200,352 | $2,951,097 |
| Peter A. | 2011 | $918,500 | $0 | $3,511,742 | $846,641 | $0 | — | $204,448 | $5,481,331 |
| Schnall (2) | 2010 | $1,000,000 | $0 | $1,775,197 | $0 | $0 | — | $201,415 | $2,976,612 |
| Chief Risk Officer | 2009 | $2,350,000 | $0 | $2,893,193 | $953,654 | $0 | — | $156,015 | $6,352,862 |
| (1) | Mr. Fairbank’s compensation for | |||
| (2) | NEO compensation for | |||
| (3) | ||||
| (4) | ||||
| (5) | The amounts shown in this column for |
| (6) | The amounts shown in this column for | ||
| (7) | The amounts shown in this column represent the change in the actuarial present value of the accumulated pension benefits for Mr. Fairbank under the Cash Balance Pension Plan and the Excess Cash Balance Plan. The interest crediting rate for the Cash Balance Pension Plan changes annually based on the average yield of | ||
| (8) | All other compensation consists of the following on a per executive basis: | ||
| Named Executive Officer | Auto Allowance (a) | Corporate Aircraft | Health Screening | Driver and Security | Dividends on Unvested Restricted Stock | Defined Contribution Company Contribution (b) | Insurance (c) | Auto Allowance (a) | Travel and Aircraft | Health Screening | Driver and Security | Dividends on Unvested Restricted Stock | Company Contributions to Defined Contribution Plans (b) | Insurance (c) | ||||
| Richard D. Fairbank | $0 | $0 | $2,341 | $48,886 | (d) | $27,360 | $0 | $22,050 | $0 | $0 | $2,685 | $85,754 | (d) | $54,286 | $0 | $16,740 | ||
| Gary L. Perlin | $14,973 | $3,606 | $0 | $0 | $38,833 | $215,250 | $19,740 | $13,675 | $5,851 | $0 | $0 | $36,138 | $215,988 | $16,740 | ||||
| Lynn A. Carter | $6,176 | $39,950 | $4,200 | $6,419 | (e) | $28,006 | $156,450 | $13,800 | $14,769 | $14,979 | $4,200 | $27,826 | (e) | $26,748 | $150,000 | $12,480 | ||
| Ryan M. Schneider | $12,013 | $0 | $2,321 | $232 | (f) | $23,587 | $161,173 | $4,200 | ||||||||||
| Peter A. Schnall | $17,002 | $0 | $0 | $1,621 | (f) | $25,842 | $151,125 | $5,825 | $18,621 | $0 | $0 | $610 | (f) | $24,726 | $154,491 | $6,000 | ||
| Ryan M. Schneider | $15,321 | $0 | $4,300 | $8,160 | (f) | $21,831 | $146,582 | $4,158 | ||||||||||
| (a) | The value attributable to personal use of a Company-provided automobile. | ||||
| (b) | Company contributions under qualified and non-qualified deferred compensation programs and other supplemental executive retirement benefits. | ||||
| (c) | Represents life insurance premiums paid on behalf of the executives. | ||||
| (d) | Includes cost attributable to personal use of a driver who also provides for Mr. Fairbank’s personal security ($ | ||||
| (e) | Includes cost attributable to personal use of a driver ($ | ||||
| (f) | Includes aggregate cost to the Company for home security services. | ||||
The Grants of Plan-Based Awards table provides details on equity incentive plan awards granted in 2011, including stock options, performance shares, shares of restricted stock and restricted stock unit awards granted in 2010.
In 2010,2011, the CEO and the NEOsnamed executive officers were not eligible for annual cash incentive awards or other non-equity incentive plan awards.
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 CEO and the NEOs.
For the CEO in 2010,2011, these awards are comprised of performance shareshares and stock option awards made in January 2010 that are designed to provide an incentive to focus on longer term performance and a restricted stock unit awardoptions granted in January 2011 and restricted stock units granted in January 2011 for 2010 for 2009 performance.
For the NEOs in 2011, the awards are comprised of stock options, performance shares, shares of restricted stock, and restricted stock units granted in January 2011 for the 2010 performance year and restricted stock units granted in January 2011 as a portion of 2011 base salary (as described under “Base Salaries” in the “Compensation Discussion and Analysis” section on page 39).
| Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||
| Name and Principal Position | Grant Date (1) | Target | Maximum | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards (2) ($/Sh) | Grant Date Fair Value of Stock and Option Awards (3) |
| Richard D. Fairbank Chairman, CEO and President | 1/27/2010 | 88,920 | 177,840 | -- | -- | -- | $3,250,026 |
| 1/27/2010 | -- | -- | -- | 559,333 | $36.55 | $6,500,009 | |
| 1/27/2010 | -- | -- | 136,799 | -- | -- | $5,000,003 | |
| Gary L. Perlin Chief Financial Officer | 1/27/2010 | -- | -- | 37,229 | -- | -- | $1,360,720 |
| 1/27/2010 | -- | -- | 34,693 | -- | -- | $1,268,029 | |
| Lynn A. Carter President, Banking | 1/27/2010 | -- | -- | 30,780 | -- | -- | $1,125,009 |
| 1/27/2010 | -- | -- | 20,520 | -- | -- | $750,006 | |
| Peter A. Schnall Chief Risk Officer | 1/27/2010 | -- | -- | 33,028 | -- | -- | $1,207,173 |
| 1/27/2010 | -- | -- | 15,541 | -- | -- | $568,024 | |
| Ryan M. Schneider President, Card | 1/27/2010 | -- | -- | 33,125 | -- | -- | $1,210,719 |
| 1/27/2010 | -- | -- | 14,775 | -- | -- | $540,026 | |
| Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||
| Name and Principal Position | Date of Grant (1) | Target | Maximum | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards (2) ($/Sh) | Grand Date Fair Value of Stock and Option Awards (3) |
| Richard D. Fairbank Chairman, CEO and President | 1/26/2011 | 82,851 | 165,702 | — | — | — | $4,000,046 |
| 1/26/2011 | — | — | — | 608,366 | $48.28 | $8,003,906 | |
| 1/26/2011 | — | — | 134,632 | — | — | $6,500,033 | |
| Gary L. Perlin Chief Financial Officer | 1/26/2011 | 10,738 | 21,476 | — | — | — | $518,431 |
| 1/26/2011 | — | — | — | 93,080 | $48.28 | $1,224,598 | |
| 1/26/2011 | — | — | 35,232 | — | — | $1,701,001 | |
| 1/26/2011 | — | — | 33,063(4) | — | — | $1,596,282 | |
| 1/26/2011 | — | — | 33,555 | — | — | $1,620,035 | |
| Lynn A. Carter President, Banking | 1/26/2011 | 8,286 | 16,572 | — | — | — | $400,048 |
| 1/26/2011 | — | — | — | 71,821 | $48.28 | $944,906 | |
| 1/26/2011 | — | — | 27,186 | — | — | $1,312,540 | |
| 1/26/2011 | — | — | 19,160(4) | — | — | $925,045 | |
| 1/26/2011 | — | — | 25,891 | — | — | $1,250,017 | |
| Ryan M. Schneider President, Card | 1/26/2011 | 8,385 | 16,770 | — | — | — | $404,828 |
| 1/26/2011 | — | — | — | 72,683 | $48.28 | $956,247 | |
| 1/26/2011 | — | — | 23,923 | — | — | $1,155,002 | |
| 1/26/2011 | — | — | 17,730(4) | — | — | $856,004 | |
| 1/26/2011 | — | — | 26,202 | — | — | $1,265,033 | |
| Peter A. Schnall Chief Risk Officer | 1/26/2011 | 7,424 | 14,848 | — | — | — | $358,431 |
| 1/26/2011 | — | — | — | 64,352 | $48.28 | $846,641 | |
| 1/26/2011 | — | — | 24,358 | — | — | $1,176,004 | |
| 1/26/2011 | — | — | 17,756(4) | — | — | $857,260 | |
| 1/26/2011 | — | — | 23,199 | — | — | $1,120,048 | |
| (1) | Date on which awards were approved by the independent directors. | |||
| (2) | Equal to the fair market value of a share of Capital One’s common stock on the date of grant determined on the basis of the closing price as reported by the New York Stock Exchange Composite Transaction Tape. | |||
| (3) | The grant date value for each option awarded on January | |||
| Volatility | Risk-Free Interest Rate | Dividend Yield | Expected Life | |
| January 26, 2011 | 35.78% | 2.04% | 2.34% | 5 Years |
| Volatility | Risk-Free Interest Rate | Dividend Yield | Expected Life |
| 37.60% | 2.48% | 1.49% | 5 Years |
The grant date fair values for the performance shares if the maximum level of performance is achieved are as follows: $8,000,093 for Mr. Fairbank, $1,036,861 for Mr. Perlin, $800,096 for Ms. Carter, $809,656 for Mr. Schneider, and $716,861 for Mr. Schnall.
| Grant of restricted stock units representing a portion of base salary for 2011. |
| 2011 Option Exercises and Stock Vested Table |
| Option Awards | Stock Awards | |||
| Name & Principal Position | Number of Shares Acquired on Exercise | Value Realized on Exercise (1) | Number of Shares Acquired on Vesting | Value Realized on Vesting (2) |
| Richard D. Fairbank Chairman, CEO and President | 0 | $0 | 0 | $0 |
| Gary L. Perlin Chief Financial Officer | 54,000 | $1,388,880 | 103,694 | $3,994,025 |
| Lynn A. Carter President, Banking | 0 | $0 | 72,973 | $2,864,327 |
| Peter A. Schnall Chief Risk Officer | 77,118 | $1,584,172 | 60,666 | $2,315,891 |
| Ryan M. Schneider President, Card | 60,646 | $1,353,782 | 47,869 | $1,836,055 |
| Option Awards | Stock Awards | |||
| Name & Principal Position | Number of Shares Acquired on Exercise | Value Realized on Exercise (1) | Number of Shares Acquired on Vesting | Value Realized on Vesting (2) |
| Richard D. Fairbank | 0 | $0 | 0 | $0 |
| Chairman, CEO and President | ||||
| Gary L. Perlin | 161,631 | $5,151,948 | 204,026 | $9,771,003 |
| Chief Financial Officer | ||||
| Lynn A. Carter | 90,595 | $3,373,942 | 135,996 | $6,502,869 |
| President, Banking | ||||
| Ryan M. Schneider | 0 | $0 | 107,390 | $5,130,067 |
| President, Card | ||||
| Peter A. Schnall | 79,156 | $2,393,746 | 130,231 | $6,246,936 |
| Chief Risk Officer | ||||
| (1) | The value realized is the | |
| (2) | The value realized is the number of shares multiplied by the fair market value of the Company’s common stock on vesting date, which is the closing price as reported by the New York Stock Exchange Composite Transaction Tape. |
| 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 | 136,799 | (8) | $5,822,165 | 368,318 (10) | $15,675,614 | ||||||
| 3,449,820 | (5) | 0 | $48.54 | 10/17/2011 | |||||||
| 360,000 | (6) | 0 | $56.28 | 12/14/2013 | |||||||
| 566,000 | (7) | 0 | $82.39 | 12/19/2014 | |||||||
| 573,000 | (7) | 0 | $87.28 | 12/19/2015 | |||||||
| 0 | 594,851 | (7) | $76.45 | 12/10/2016 | |||||||
| 1,661,780 | (8) | 0 | $50.99 | 12/9/2017 | |||||||
| 0 | 970,403 | (8) | $18.28 | 1/28/2019 | |||||||
| 0 | 559,333 | (8) | $36.55 | 1/26/2020 | |||||||
| Gary L. Perlin Chief Financial Officer | 154,562 | (9) | $6,578,159 | 147,737 (13) | $6,287,687 | ||||||
| 100,000 | (6) | 0 | $48.73 | 7/28/2013 | |||||||
| 24,500 | (6) | 0 | $56.28 | 12/14/2013 | |||||||
| 77,220 | (6) | 0 | $78.71 | 3/14/2015 | |||||||
| 83,510 | (6) | 0 | $88.81 | 3/2/2016 | |||||||
| 122,450 | (6) | 0 | $76.79 | 3/1/2017 | |||||||
| 166,378 | (6) | 83,192 | (6) | $48.95 | 2/20/2018 | ||||||
| 53,815 | (6) | 215,636 | (6) | $18.28 | 1/28/2019 | ||||||
| Lynn A. Carter President, Banking | 116,208 | (9) | $4,945,812 | 108,417 (14) | $4,614,228 | ||||||
| 102,583 | (6) | 0 | $74.72 | 4/25/2017 | |||||||
| 61,959 | (6) | 30,981 | (6) | $48.95 | 2/20/2018 | ||||||
| 90,595 | (6) | 181,193 | (6) | $18.28 | 1/28/2019 | ||||||
| Peter A. Schnall Chief Risk Officer | 110,811 | (9) | $4,716,116 | 98,256 (15) | $4,181,775 | ||||||
| 38,046 | (5) | 0 | $48.54 | 10/17/2011 | |||||||
| 75,824 | (12) | 0 | $49.07 | 12/12/2011 | |||||||
| 1,463 | (11) | 0 | $68.33 | 12/12/2011 | |||||||
| 1,268 | (11) | 0 | $78.82 | 12/12/2011 | |||||||
| 1,158 | (11) | 0 | $86.27 | 12/5/2012 | |||||||
| 32,724 | (6) | 0 | $56.28 | 12/14/2013 | |||||||
| 1,298 | (11) | 0 | $76.96 | 12/14/2013 | |||||||
| 45,760 | (6) | 0 | $78.71 | 3/14/2015 | |||||||
| 48,340 | (6) | 0 | $88.81 | 3/2/2016 | |||||||
| 73,850 | (6) | 0 | $76.79 | 3/1/2017 | |||||||
| 92,925 | (6) | 46,465 | (6) | $48.95 | 2/20/2018 | ||||||
| 0 | 154,239 | (6) | $18.28 | 1/28/2019 | |||||||
| Ryan M. Schneider President, Card | 92,664 | (9) | $3,943,780 | 77,449 (16) | $3,296,229 | ||||||
| 6,013 | (11) | 0 | $77.28 | 12/12/2011 | |||||||
| 971 | (11) | 0 | $82.84 | 12/12/2011 | |||||||
| 1,597 | (11) | 0 | $83.96 | 12/12/2011 | |||||||
| 834 | (11) | 0 | $84.62 | 12/12/2011 | |||||||
| 142 | (11) | 0 | $83.96 | 12/5/2012 | |||||||
| 1,238 | (6) | 0 | $84.62 | 12/5/2012 | |||||||
| 1,155 | (6) | 0 | $77.28 | 12/14/2013 | |||||||
| 5,056 | (6) | 0 | $78.24 | 12/14/2013 | |||||||
| 2,210 | (6) | 0 | $82.10 | 12/14/2013 | |||||||
| 945 | (11) | 0 | $82.30 | 12/14/2013 | |||||||
| 15,650 | (6) | 0 | $78.71 | 3/14/2015 | |||||||
| 17,890 | (6) | 0 | $88.81 | 3/2/2016 | |||||||
| 26,250 | (6) | 0 | $76.79 | 3/1/2017 | |||||||
| 42,466 | (6) | 21,234 | (6) | $48.95 | 2/20/2018 | ||||||
| 0 | 121,295 | (6) | $18.28 | 1/28/2019 | |||||||
| Option Awards (1), (2) | Stock Awards (2) | |||||||
| Name and Principal Position | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price (3) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested | Market Value of Shares or Units of Stock that Have Not Vested (4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that Have Not Vested (4) |
| Richard D. Fairbank Chairman, CEO and President | 271,431 (7) | $11,478,817 | 491,295 (8) | $20,776,866 | ||||
| 360,000 (5) | 0 | $56.28 | 12/14/2013 | |||||
| 566,000 (6) | 0 | $82.39 | 12/19/2014 | |||||
| 573,000 (6) | 0 | $87.28 | 12/19/2015 | |||||
| 594,851 (6) | 0 | $76.45 | 12/10/2016 | |||||
| 1,661,780 (7) | 0 | $50.99 | 12/09/2017 | |||||
| 0 | 970,403 (7) | $18.28 | 1/28/2019 | |||||
| 0 | 559,333 (7) | $36.55 | 1/26/2020 | |||||
| 0 | 608,366 (7) | $48.28 | 1/25/2021 | |||||
| Gary L. Perlin Chief Financial Officer | 142,979 (9) | $6,046,582 | 65,803 (11) | $2,782,809 | ||||
| 100,000 (9) | 0 | $48.73 | 7/28/2013 | |||||
| 24,500 (9) | 0 | $56.28 | 12/14/2013 | |||||
| 77,220 (9) | 0 | $78.71 | 3/14/2015 | |||||
| 83,510 (9) | 0 | $88.81 | 3/2/2016 | |||||
| 122,450 (9) | 0 | $76.79 | 3/1/2017 | |||||
| 249,570 (9) | 0 | $48.95 | 2/20/2018 | |||||
| 0 | 107,820 (9) | $18.28 | 1/28/2019 | |||||
| 0 | 93,080 (9) | $48.28 | 1/25/2021 | |||||
| Lynn A. Carter President, Banking | 112,850 (9) | $4,772,427 | 53,819 (12) | $2,276,006 | ||||
| 102,583 (9) | 0 | $74.72 | 4/25/2017 | |||||
| 92,940 (9) | 0 | $48.95 | 2/20/2018 | |||||
| 90,595 (9) | 90,598 (9) | $18.28 | 1/28/2019 | |||||
| 0 | 71,821 (9) | $48.28 | 1/25/2021 | |||||
| Ryan M. Schneider President, Card | 98,434 (9) | $4,162,774 | 41,705 (13) | $1,763,704 | ||||
| 142 (10) | 0 | $83.96 | 12/05/2012 | |||||
| 1,238 (10) | 0 | $84.62 | 12/05/2012 | |||||
| 1,155 (10) | 0 | $77.28 | 12/14/2013 | |||||
| 5,056 (10) | 0 | $78.24 | 12/14/2013 | |||||
| 2,210 (10) | 0 | $82.10 | 12/14/2013 | |||||
| 945 (10) | 0 | $82.30 | 12/14/2013 | |||||
| 15,650 (9) | 0 | $78.71 | 3/14/2015 | |||||
| 17,890 (9) | 0 | $88.81 | 3/2/2016 | |||||
| 26,250 (9) | 0 | $76.79 | 3/1/2017 | |||||
| 63,700 (9) | 0 | $48.95 | 2/20/2018 | |||||
| 60,646 (9) | 60,649 (9) | $18.28 | 1/28/2019 | |||||
| 0 | 72,683 (9) | $48.28 | 1/25/2021 | |||||
| Peter A. Schnall Chief Risk Officer | 103,275 (9) | $4,367,500 | 46,555 (14) | $1,968,811 | ||||
| 1,158 (10) | 0 | $86.27 | 12/05/2012 | |||||
| 32,724 (9) | 0 | $56.28 | 12/14/2013 | |||||
| 1,298 (10) | 0 | $76.96 | 12/14/2013 | |||||
| 45,760 (9) | 0 | $78.71 | 3/14/2015 | |||||
| 48,340 (9) | 0 | $88.81 | 3/2/2016 | |||||
| 73,850 (9) | 0 | $76.79 | 3/1/2017 | |||||
| 139,390 (9) | 0 | $48.95 | 2/20/2018 | |||||
| 0 | 77,121 (9) | $18.28 | 1/28/2019 | |||||
| 0 | 64,352 (9) | $48.28 | 1/25/2021 | |||||
| (1) |
| (2) | The following table details vesting dates for all outstanding |
| First Vesting | Second Vesting | Third Vesting | ||||||||||||||
| Name | Grant Date | Grant Type | First Vesting | Second Vesting | Third Vesting | |||||||||||
| Grant Date | Grant Type | Vesting Date | # of Shares | Vesting Date | # of Shares | Vesting Date | # of Shares | Vesting Date | # of Shares | Vesting Date | # of Shares | Vesting Date | # of Shares | |||
| Richard D. Fairbank | 10/18/2001 | Option Award | 10/18/2002 | 442,935 | 10/18/2003 | 442,936 | 10/18/2004 | 442,949 | 12/15/2003 | Option Award | 12/15/2004 | 120,000 | 12/15/2005 | 118,224 | 12/15/2006 | 118,224 |
| 12/15/2003 | Option Award | 12/15/2005 | 1,776 | 12/15/2006 | 1,776 | |||||||||||
| 10/18/2001 | Option Award | 4/22/2004 | 2,121,000 | 12/20/2004 | Option Award | 12/20/2009 | 566,000 | |||||||||
| 12/15/2003 | Option Award | 12/15/2005 | 1,776 | 12/15/2006 | 1,776 | 12/20/2005 | Option Award | 12/20/2010 | 573,000 | |||||||
| 12/15/2003 | Option Award | 12/15/2004 | 120,000 | 12/15/2005 | 118,224 | 12/15/2006 | 118,224 | 12/11/2006 | Option Award | 12/11/2011 | 594,851 | |||||
| 12/20/2004 | Option Award | 12/20/2009 | 566,000 | 12/10/2007 | Option Award | 12/10/2010 | 1,661,780 | |||||||||
| 12/20/2005 | Option Award | 12/20/2010 | 573,000 | 01/29/2009 | Perf Share Award | 3/15/2012 | 95,239 | |||||||||
| 12/11/2006 | Option Award | 12/11/2011 | 594,851 | 01/29/2009 | Option Award | 1/29/2012 | 970,403 | |||||||||
| 12/10/2007 | Option Award | 12/10/2010 | 1,661,780 | 01/27/2010 | Perf Share Award | 3/15/2013 | 88,920 | |||||||||
| 1/29/2009 | Perf Share Award | 3/15/2012 | 95,239 | 01/27/2010 | Restricted Stock Unit Award | 1/27/2013 | 136,799 | |||||||||
| 1/29/2009 | Option Award | 1/29/2012 | 970,403 | 01/27/2010 | Option Award | 1/27/2013 | 559,333 | |||||||||
| 1/27/2010 | Perf Share Award | 3/15/2013 | 88,920 | 01/26/2011 | Perf Share Award | 3/15/2014 | 82,851 | |||||||||
| 1/27/2010 | Restricted Stock Unit Award | 1/27/2013 | 136,799 | 01/26/2011 | Restricted Stock Unit Award | 1/26/2014 | 134,632 | |||||||||
| 1/27/2010 | Option Award | 1/27/2013 | 559,333 | 01/26/2011 | Option Award | 1/26/2014 | 608,366 | |||||||||
| Gary L. Perlin | 7/29/2003 | Option Award | 7/29/2004 | 2,052 | 7/29/2005 | 2,052 | 7/29/2006 | 2,052 | 07/29/2003 | Option Award | 7/29/2004 | 2,052 | 7/29/2005 | 2,052 | 7/29/2006 | 2,052 |
| 7/29/2003 | Option Award | 7/29/2004 | 31,281 | 7/29/2005 | 31,281 | 7/29/2006 | 31,282 | 07/29/2003 | Option Award | 7/29/2004 | 31,281 | 07/29/2005 | 31,281 | 7/29/2006 | 31,282 | |
| 12/15/2003 | Option Award | 12/15/2004 | 8,166 | 12/15/2005 | 8,167 | 12/15/2006 | 8,167 | 12/15/2003 | Option Award | 12/15/2004 | 8,166 | 12/15/2005 | 8,167 | 12/15/2006 | 8,167 | |
| 3/15/2005 | Option Award | 3/15/2006 | 25,739 | 3/15/2007 | 25,740 | 3/15/2008 | 25,741 | 03/15/2005 | Option Award | 3/15/2006 | 25,739 | 3/15/2007 | 25,740 | 3/15/2008 | 25,741 | |
| 3/3/2006 | Option Award | 3/3/2007 | 27,808 | 3/3/2008 | 27,809 | 3/3/2009 | 27,893 | 03/03/2006 | Option Award | 3/3/2007 | 27,808 | 3/3/2008 | 27,809 | 3/3/2009 | 27,893 | |
| 3/2/2007 | Option Award | 3/2/2008 | 40,816 | 3/2/2009 | 40,816 | 3/2/2010 | 40,818 | 03/02/2007 | Option Award | 3/2/2008 | 40,816 | 3/2/2009 | 40,816 | 3/2/2010 | 40,818 | |
| 12/10/2007 | Perf Share Award | 1/26/2011 | 55,510 | 02/21/2008 | Option Award | 2/21/2009 | 83,189 | 2/21/2010 | 83,189 | 2/21/2011 | 83,192 | |||||
| 2/21/2008 | Restricted Stock Award | 2/21/2009 | 9,295 | 2/21/2010 | 9,295 | 2/21/2011 | 18,590 | 01/29/2009 | Perf Share Award | 3/15/2012 | 28,572 | |||||
| 2/21/2008 | Option Award | 2/21/2009 | 83,189 | 2/21/2010 | 83,189 | 2/21/2011 | 83,192 | 01/29/2009 | Restricted Stock Award | 1/29/2010 | 49,370 | 1/29/2011 | 49,371 | 1/29/2012 | 49,372 | |
| 1/29/2009 | Perf Share Award | 3/15/2012 | 28,572 | 01/29/2009 | Option Award | 1/29/2010 | 107,815 | 1/29/2011 | 107,816 | 1/29/2012 | 107,820 | |||||
| 1/29/2009 | Restricted Stock Award | 1/29/2010 | 49,370 | 1/29/2011 | 49,371 | 1/29/2012 | 49,372 | 01/27/2010 | Restricted Stock Award | 1/27/2011 | 12,409 | 1/27/2012 | 12,410 | 1/27/2013 | 12,410 | |
| 1/29/2009 | Option Award | 1/29/2010 | 107,815 | 1/29/2011 | 107,816 | 1/29/2012 | 107,820 | 01/26/2011 | Perf Share Award | 3/15/2014 | 10,738 | |||||
| 1/27/2010 | Restricted Stock Award | 1/27/2011 | 12,409 | 1/27/2012 | 12,410 | 1/27/2013 | 12,410 | 01/26/2011 | Restricted Stock Award | 1/26/2012 | 11,184 | 1/26/2013 | 11,185 | 1/26/2014 | 11,186 | |
| 01/26/2011 | Restricted Stock Unit Award | 1/26/2012 | 11,743 | 1/26/2013 | 11,744 | 1/26/2014 | 11,745 | |||||||||
| Lynn A. Carter | 4/26/2007 | Option Award | 4/26/2008 | 34,194 | 4/26/2009 | 34,194 | 4/26/2010 | 34,195 | ||||||||
| 12/10/2007 | Perf Share Award | 1/26/2011 | 37,010 | 01/26/2011 | Option Award | 1/26/2012 | 31,026 | 1/26/2013 | 31,026 | 1/26/2014 | 31,028 | |||||
| 2/21/2008 | Restricted Stock Award | 2/21/2009 | 3,462 | 2/21/2010 | 3,462 | 2/21/2011 | 6,926 | |||||||||
| 2/21/2008 | Option Award | 2/21/2009 | 30,979 | 2/21/2010 | 30,980 | 2/21/2011 | 30,981 | |||||||||
| 1/29/2009 | Perf Share Award | 3/15/2012 | 24,008 | |||||||||||||
| 1/29/2009 | Restricted Stock Award | 1/29/2010 | 39,250 | 1/29/2011 | 39,250 | 1/29/2012 | 39,252 | |||||||||
| 1/29/2009 | Option Award | 1/29/2010 | 90,595 | 1/29/2011 | 90,595 | 1/29/2012 | 90,598 | |||||||||
| 1/27/2010 | Restricted Stock Award | 1/27/2011 | 10,259 | 1/27/2012 | 10,260 | 1/27/2013 | 10,261 | |||||||||
| Peter A. Schnall | 10/18/2001 | Option Award | 4/22/2004 | 78,046 | ||||||||||||
| 12/13/2001 | Option Award | 12/13/2002 | 2,038 | |||||||||||||
| 12/13/2001 | Option Award | 12/13/2002 | 24,595 | 12/13/2003 | 24,595 | 12/13/2004 | 24,596 | |||||||||
| 12/15/2003 | Option Award | 12/15/2004 | 11,500 | 12/15/2005 | 11,500 | 12/15/2006 | 9,724 | |||||||||
| 7/28/2004 | Option Award | 1/28/2005 | 1,463 | |||||||||||||
| 2/1/2005 | Option Award | 8/1/2005 | 1,268 | |||||||||||||
| 3/15/2005 | Option Award | 3/15/2006 | 15,253 | 3/15/2007 | 15,253 | 3/15/2008 | 15,254 | |||||||||
| 2/14/2006 | Option Award | 8/14/2006 | 1,158 | |||||||||||||
| 3/3/2006 | Option Award | 3/3/2007 | 16,097 | 3/3/2008 | 16,097 | 3/3/2009 | 16,146 | |||||||||
| Lynn A. Carter | 04/26/2007 | Option Award | 4/26/2008 | 34,194 | 4/26/2009 | 34,194 | 4/26/2010 | 34,195 | ||||||||
| 12/20/2006 | Option Award | 6/20/2007 | 1,298 | 02/21/2008 | Option Award | 2/21/2009 | 30,979 | 2/21/2010 | 30,980 | 2/21/2011 | 30,981 | |||||
| 3/2/2007 | Option Award | 3/2/2008 | 24,616 | 3/2/2009 | 24,616 | 3/2/2010 | 24,618 | 01/29/2009 | Perf Share Award | 3/15/2012 | 24,008 | |||||
| 12/10/2007 | Perf Share Award | 1/26/2011 | 35,160 | 01/29/2009 | Restricted Stock Award | 1/29/2010 | 39,250 | 1/29/2011 | 39,250 | 1/29/2012 | 39,252 | |||||
| 2/21/2008 | Restricted Stock Award | 2/21/2009 | 5,192 | 2/21/2010 | 5,192 | 2/21/2011 | 10,386 | 01/29/2009 | Option Award | 1/29/2010 | 90,595 | 1/29/2011 | 90,595 | 1/29/2012 | 90,598 | |
| 2/21/2008 | Option Award | 2/21/2009 | 46,462 | 2/21/2010 | 46,463 | 2/21/2011 | 46,465 | 01/27/2010 | Restricted Stock Award | 1/27/2011 | 10,259 | 1/27/2012 | 10,260 | 1/27/2013 | 10,261 | |
| 1/29/2009 | Perf Share Award | 3/15/2012 | 20,437 | 01/26/2011 | Perf Share Award | 3/15/2014 | 8,286 | |||||||||
| 1/29/2009 | Restricted Stock Award | 1/29/2010 | 33,697 | 1/29/2011 | 33,698 | 1/29/2012 | 33,699 | 01/26/2011 | Restricted Stock Award | 1/26/2012 | 8,630 | 1/26/2013 | 8,630 | 1/26/2014 | 8,631 | |
| 1/29/2009 | Option Award | 1/29/2010 | 77,118 | 1/29/2011 | 77,118 | 1/29/2012 | 77,121 | 01/26/2011 | Restricted Stock Unit Award | 1/26/2012 | 9,061 | 1/26/2013 | 9,062 | 1/26/2014 | 9,063 | |
| 1/27/2010 | Restricted Stock Award | 1/27/2011 | 11,009 | 1/27/2012 | 11,009 | 1/27/2013 | 11,010 | 01/26/2011 | Option Award | 1/26/2012 | 23,940 | 1/26/2013 | 23,940 | 1/26/2014 | 23,941 | |
| Ryan M. Schneider | 3/15/2005 | Option Award | 3/15/2006 | 5,216 | 3/15/2007 | 5,217 | 3/15/2008 | 5,217 | 03/15/2005 | Option Award | 3/15/2006 | 5,216 | 3/15/2007 | 5,217 | 3/15/2008 | 5,217 |
| 7/25/2005 | Option Award | 1/25/2006 | 142 | 07/25/2005 | Option Award | 1/25/2006 | 142 | |||||||||
| 7/25/2005 | Option Award | 1/25/2006 | 1,597 | 01/26/2006 | Option Award | 7/26/2006 | 1,238 | |||||||||
| 1/26/2006 | Option Award | 7/26/2006 | 834 | 03/03/2006 | Option Award | 3/3/2007 | 5,957 | 3/3/2008 | 5,957 | 3/3/2009 | 5,976 | |||||
| 1/26/2006 | Option Award | 7/26/2006 | 1,238 | 07/27/2006 | Option Award | 1/27/2007 | 1,155 | |||||||||
| 2/2/2006 | Option Award | 8/2/2006 | 971 | 08/07/2006 | Option Award | 2/7/2007 | 5,056 | |||||||||
| 3/3/2006 | Option Award | 3/3/2007 | 5,957 | 3/3/2008 | 5,957 | 3/3/2009 | 5,976 | 10/26/2006 | Option Award | 4/26/2007 | 945 | |||||
| 7/27/2006 | Option Award | 1/27/2007 | 1,155 | 02/08/2007 | Option Award | 8/8/2007 | 2,210 | |||||||||
| 7/27/2006 | Option Award | 1/27/2007 | 2,915 | 03/02/2007 | Option Award | 3/2/2008 | 8,749 | 3/2/2009 | 8,750 | 3/2/2010 | 8,751 | |||||
| 7/27/2006 | Option Award | 1/27/2007 | 3,098 | 02/21/2008 | Option Award | 2/21/2009 | 21,233 | 2/21/2010 | 21,233 | 2/21/2011 | 21,234 | |||||
| 8/7/2006 | Option Award | 2/7/2007 | 5,056 | 01/29/2009 | Perf Share Award | 3/15/2012 | 16,072 | |||||||||
| 10/26/2006 | Option Award | 4/26/2007 | 945 | 01/29/2009 | Restricted Stock Award | 1/29/2010 | 26,223 | 1/29/2011 | 26,224 | 1/29/2012 | 26,225 | |||||
| 2/8/2007 | Option Award | 8/8/2007 | 2,210 | 01/29/2009 | Option Award | 1/29/2010 | 60,646 | 1/29/2011 | 60,646 | 1/29/2012 | 60,649 | |||||
| 3/2/2007 | Option Award | 3/2/2008 | 8,749 | 3/2/2009 | 8,750 | 3/2/2010 | 8,751 | 01/27/2010 | Restricted Stock Award | 1/27/2011 | 11,041 | 1/27/2012 | 11,042 | 1/27/2013 | 11,042 | |
| 12/10/2007 | Perf Share Award | 1/26/2011 | 27,760 | 01/26/2011 | Perf Share Award | 3/15/2014 | 8,385 | |||||||||
| 2/21/2008 | Restricted Stock Award | 2/21/2009 | 3,545 | 2/21/2010 | 3,545 | 2/21/2011 | 7,090 | 01/26/2011 | Restricted Stock Award | 1/26/2012 | 8,733 | 1/26/2013 | 8,734 | 1/26/2014 | 8,735 | |
| 2/21/2008 | Option Award | 2/21/2009 | 21,233 | 2/21/2010 | 21,233 | 2/21/2011 | 21,234 | 01/26/2011 | Restricted Stock Unit Award | 1/26/2012 | 7,974 | 1/26/2013 | 7,974 | 1/26/2014 | 7,975 | |
| 1/29/2009 | Perf Share Award | 3/15/2012 | 16,072 | 01/26/2011 | Option Award | 1/26/2012 | 24,227 | 1/26/2013 | 24,227 | 1/26/2014 | 24,229 | |||||
| 1/29/2009 | Restricted Stock Award | 1/29/2010 | 26,223 | 1/29/2011 | 26,224 | 1/29/2012 | 26,225 | |||||||||
| Peter A. Schnall | 12/15/2003 | Option Award | 12/15/2004 | 11,500 | 12/15/2005 | 11,500 | 12/15/2006 | 9,724 | ||||||||
| 1/29/2009 | Option Award | 1/29/2010 | 60,646 | 1/29/2011 | 60,646 | 1/29/2012 | 60,649 | 03/15/2005 | Option Award | 3/15/2006 | 15,253 | 3/15/2007 | 15,253 | 3/15/2008 | 15,254 | |
| 1/27/2010 | Restricted Stock Award | 1/27/2011 | 11,041 | 1/27/2012 | 11,042 | 1/27/2013 | 11,042 | 02/14/2006 | Option Award | 8/14/2006 | 1,158 | |||||
| 03/03/2006 | Option Award | 3/3/2007 | 16,097 | 3/3/2008 | 16,097 | 3/3/2009 | 16,146 | |||||||||
| 12/20/2006 | Option Award | 6/20/2007 | 1,298 | |||||||||||||
| 03/02/2007 | Option Award | 3/2/2008 | 24,616 | 3/2/2009 | 24,616 | 3/2/2010 | 24,618 | |||||||||
| 02/21/2008 | Option Award | 2/21/2009 | 46,462 | 2/21/2010 | 46,463 | 2/21/2011 | 46,465 | |||||||||
| 01/29/2009 | Perf Share Award | 3/15/2012 | 20,437 | |||||||||||||
| 01/29/2009 | Restricted Stock Award | 1/29/2010 | 33,697 | 1/29/2011 | 33,698 | 1/29/2012 | 33,699 | |||||||||
| 01/29/2009 | Option Award | 1/29/2010 | 77,118 | 1/29/2011 | 77,118 | 1/29/2012 | 77,121 | |||||||||
| 01/27/2010 | Restricted Stock Award | 1/27/2011 | 11,009 | 1/27/2012 | 11,009 | 1/27/2013 | 11,010 | |||||||||
| 01/26/2011 | Perf Share Award | 3/15/2014 | 7,424 | |||||||||||||
| 01/26/2011 | Restricted Stock Award | 1/26/2012 | 7,732 | 1/26/2013 | 7,733 | 1/26/2014 | 7,734 | |||||||||
| 01/26/2011 | Restricted Stock Unit Award | 1/26/2012 | 8,119 | 1/26/2013 | 8,119 | 1/26/2014 | 8,120 | |||||||||
| 01/26/2011 | Option Award | 1/26/2012 | 21,450 | 1/26/2013 | 21,450 | 1/26/2014 | 21,452 | |||||||||
| (3) | For | |
| (4) | Market value based on the closing price of a share of Capital One’s common stock on the last trading day of | |
| (5) | ||
| Vested | ||
| Vested or vests in full on the third anniversary of the | ||
| Represents the maximum number of performance shares awarded on January 27, 2010, and January 26, 2011, and the actual shares awarded (including accrued dividends paid out as additional shares) for the January 29, 2009, | ||
| Vested or vests 33% annually beginning on the first anniversary of the date of grant. | ||
| (10) | Reload grant that vested in full six months following the | |
| (11) | Represents the maximum number of performance shares awarded on January 26, 2011, and the actual shares awarded (including accrued dividends paid out as additional shares) for the January 29, 2009, performance share award which was certified by the Compensation Committee on January 31, 2012, with a value of $2,027,960 on such date. | |
| (12) | ||
| (13) | Represents the maximum number of performance shares awarded on January | |
| (14) | Represents the maximum number of performance shares awarded on January | |
| 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 of 5-year Treasury Securities for the preceding 12 months ending October of the prior year (2.1% annual average for 2010)2011). The Excess CBPP interest crediting rate changes monthly based on the Wall Street Journal Prime Rate (3.3% annual average for 2010)2011).
Mr. Fairbank participated in these programs. Mr. Fairbank’s estimated annual payouts upon retirement in the CBPP and the Excess CBPP as of December 31, 20102011 are $2,417$2,174 and $7,201.$6,176. These projected benefits assume interest credits under the CBPP to be 3.08%3.75% credited quarterly and under the Excess CBPP to be 3.25%4.50% credited monthly. Accounts in either plan are distributed after separation from service. Distribution options from the CBPP plan are lump sum, rollover to another qualified plan or personal IRA or an annuity option. The Excess CBPP will be distributed in the same form as the CBPP, as a lump sum or as an annuity. Since the CBPP and Excess CBPP are account-based defined benefit plans, years of service are not tracked.
| 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 | $23,671 | $0 |
| Excess Cash Balance Plan | $70,702 | $0 | |
| Gary L. Perlin Chief Financial Officer | - | - | - |
| Lynn A. Carter President, Banking | - | - | - |
| Peter A. Schnall Chief Risk Officer | - | - | - |
| Ryan M. Schneider | - | - | - |
| President, Card |
| Name and Principal Position | Plan Name (1) | Present Value of Accumulated Benefit (2), (3), (4) | Payments During Last Fiscal Year |
| Richard D. Fairbank | Cash Balance Pension Plan | $25,116 | $0 |
| Chairman, CEO and President | Excess Cash Balance Plan | $73,865 | $0 |
| Gary Perlin | — | — | — |
| Chief Financial Officer | |||
| Lynn A. Carter | — | — | — |
| President, Banking | |||
| Ryan M. Schneider | — | — | — |
| President, Card | |||
| Peter A. Schnall | — | — | — |
| Chief Risk Officer |
| (1) | In November 1995, Capital One amended the | |
| (2) | For the | |
| (3) | Based on | |
| (4) | Consistent with the measurement date used for financial disclosure for the pension plans, the amounts for each year are determined as of a December 31, | |
| Capital One’s Voluntary Non-Qualified Deferred Compensation Programs |
Capital One offers its Voluntary Non-Qualified Deferred Compensation Plan (“VNQDCP”) to eligible associates. In 2010, the2011, our NEOs could elect to contribute up to 50% of the cash portion of their respective base salaries and up to 100% of the restricted stock unit portion of their respective base salaries on a tax-deferred basis. Mr. Perlin, Ms. Carter, Mr. SchnallSchneider and Mr. SchneiderSchnall participated in the program in 2010.
In addition to participant deferrals, Capital One makes matching contributions under the VNQDCP. Company contribution credits are vestedcontributions vest immediately when posted to the VNQDCP.
Participants in the VNQDCP have the option to direct their individual deferrals among thirteen different investment offerings made available by the plan: Fidelity Retirement Money Market Portfolio, PIMCO Total Return Fund Institutional, Dodge & Cox Balanced Fund, Dodge & Cox Stock Fund, Goldman Sachs Large Cap Value Fund, Northern Small Cap Value Fund, Fidelity Spartan S&P 500 Index Fund, Hartford Mid Cap Fund Y, Fidelity Capital Appreciation Fund, Wells Fargo Advantage Capital Growth Fund, The Hartford Small Company HLS IA Fund, Dodge & Cox International Stock Fund, and Lazard Emerging Markets Equity Portfolio IA. Individual investment returns experienced in 20102011 were as follows: Mr. Perlin 13.53%-4.35% or $228,221,-$90,695, Ms. Carter 11.62%-4.18% or $98,000,-$44,780, Mr. Schneider 0.01% or $18 and Mr. Schnall 6.20%0.33% or $24,202.85 and Mr. Schneider 0.02% or $22.99.$1,759. Distributions under the VNQDCP may be made to participants according to their respective elected schedule for distribution in accordance with Planplan 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, retirement, disability, death, in-service distribution election or change of control.
Prior to December 31, 2005, Capital One offered its executives an Excess Savings Plan (“ESP”). The plan was frozen as of December 31, 2005; no additional participants are permitted to enter the plan, and no compensation is taken into account after this date. Messrs. Fairbank, Perlin, SchnallSchneider and SchneiderSchnall participated in the ESP and, as such, returns on these investments are reported for 2010.2011. Effective January 1, 2008, the ESP was merged into the VNQDCP, and participants in the ESP have the option to direct their individual investments among the same offerings as the NVQDCP.VNQDCP. Individual investment returns experienced in 20102011 were as follows: Mr. Fairbank 15.01%2.08% or $31,632.53,$5,047, Mr. Perlin 8.83%4.16% or $7,270.47,$3,731, Mr. Schneider 0.01% or $13 and Mr. Schnall 7.64%0.92% or $43,731.84 and Mr. Schneider 0.02% or $24.40.
| 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 Balance at Last FYE (4) |
| Richard D. Fairbank | Voluntary Non-Qualified Deferred Compensation Plan | $0 | $0 | $0 | $0 |
| Chairman, CEO and | Excess Saving Plan | $0 | $0 | $31,633 | $242,346 |
| President | 2003 Performance Share Award (5) | $0 | $0 | $1,019,890 | $10,285,901 |
| Gary L. Perlin | Voluntary Non-Qualified Deferred Compensation Plan | $11,337 | $196,875 | $228,221 | $1,984,369 |
| Chief Financial Officer | Excess Saving Plan | $0 | $0 | $7,270 | $89,612 |
| Lynn A. Carter President, Banking | Voluntary Non-Qualified Deferred Compensation Plan | $11,026 | $149,100 | $98,000 | $994,126 |
| Peter A. Schnall | Voluntary Non-Qualified Deferred Compensation Plan | $10,864 | $132,750 | $24,203 | $461,988 |
| Chief Risk Officer | Excess Saving Plan | $0 | $0 | $43,732 | $615,981 |
| Ryan M. Schneider | Voluntary Non-Qualified Deferred Compensation Plan | $11,810 | $128,100 | $23 | $164,783 |
| President, Card | Excess Saving Plan | $0 | $0 | $24 | $129,294 |
| Name and Principal Position | Plan Name | Executive Contributions in Last FY (1) | Registrant Contributions in Last FY (2) | Aggregate Earnings in Last FY (3) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE (4) |
| Richard D. Fairbank Chairman, CEO and President | Voluntary Non-Qualified Deferred Compensation Plan | $0 | $0 | $0 | $0 | $0 |
| Excess Saving Plan | $0 | $0 | $5,047 | $0 | $247,393 | |
| 2003 Performance Share Award (5) | $0 | $0 | -$65,254 | $0 | $10,220,647 | |
| Gary Perlin Chief Financial Officer | Voluntary Non-Qualified Deferred Compensation Plan | $9,819 | $192,900 | -$90,695 | $0 | $2,094,931 |
| Excess Saving Plan | $0 | $0 | $3,731 | $0 | $93,343 | |
| Lynn A. Carter President, Banking | Voluntary Non-Qualified Deferred Compensation Plan | $9,865 | $142,650 | -$44,780 | $0 | $1,101,861 |
| Excess Saving Plan | $0 | $0 | $0 | $0 | $0 | |
| Ryan M. Schneider President, Card | Voluntary Non-Qualified Deferred Compensation Plan | $9,453 | $137,850 | $18 | $63,447 | $245,357 |
| Excess Saving Plan | $0 | $0 | $13 | $0 | $129,306 | |
| Peter A. Schnall Chief Risk Officer | Voluntary Non-Qualified Deferred Compensation Plan | $9,105 | $131,100 | $1,759 | $0 | $602,940 |
| Excess Saving Plan | $0 | $0 | $5,676 | $0 | $621,657 |
| (1) | Mr. Fairbank did not receive any cash salary or bonus and therefore did not defer any compensation in | |
| (2) | Registrant contributions are also included in the | |
| (3) | Includes earnings on total assets in the | |
| (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 | |
| (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 Period”). On March 2, 2007, the independent directors of the Board | |
| Potential Payments Upon Termination or Change of Control |
Overview
The disclosure in the table below illustrates payouts that the CEO and the NEOsnamed executive officers could receive under certain hypothetical termination scenarios. Actual circumstances resulting in the departure of the CEO or any NEOa 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 CEO and NEOnamed 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:
Restrictive Covenants
Capital One maintains a competitive advantage in part through the intellectual property developed and utilized by our senior executives. Capital One has asked certain NEOs to enter into various agreements that contain restrictive covenants related to confidentiality, non-competition, non-solicitation of employees and ownership of work product, as described below.
Non-Competition Agreement
Under Capital One’s Non-Competition Agreement program, NEOs may be restricted as to what competitive services they may provide for new employersto an entity following separation from Capital One, typically for a period of up to two years. In recognition of these restrictions, the agreement calls for payments to be made to the NEO whenduring periods of enforcement of the non-competition restrictions, are enforced undersubject to certain circumstances.
For 2010,2011, potential payments following termination under the Non-Competition Agreement are 15% of the NEO’s target total compensation for each year of enforcement and eighteen months of subsidized health insurance premiums under COBRA if the NEO elects such coverage.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, the payments are made in two lump sums, the first following termination and the second upon completion of the enforcement period. However, there are no payments under the Non-Competition Agreement if benefits are payable under a change of control agreement. Payments related to the Non-Competition Agreement are separate from any severance payments that may be made upon the NEO’s departure. However, severance payments are typically offset in part by payments related to the Non-Competition Agreement so that total payment amounts are consistent with programthe program’s intent.
Confidentiality, Work Product and Non-Solicitation of Employee Agreement
The confidentiality provisions of this agreement stategenerally 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 applicable law.legal process.
The work product provisions of this agreement stategenerally provide that Capital One shall generally own orand be assigned ownership of all work product of each NEO. The NEO, upon separation from Capital One, shall return any and all work product to Capital One.
Under the Non-Solicitation of Employee provisions of this agreement, for a period of two years following separation from Capital One, the NEO shall not directly or indirectly solicit or induce any associate of Capital One to leavebecome employed by any person or entity engaged in competition with Capital One, nor directly or indirectly solicit or induce any associate of Capital One to end their employment based on confidential information they learned about the Company. This agreement does not provide for any post-termination payments.
Payments under Certain Termination Scenarios
Upon separation from the Company, the NEOs,named executive officers, regardless of the reason for termination, receive certain payments, such as accrued but unused vacation pay and amounts earned and vested under the Company’s qualified and non-qualified retirement programs. In addition, all associates have the ability following separation to exercise vested but unexercised options for 90 days or, in limited circumstances, longer than 90 days. All unvestedcash-settled restricted stock awards are forfeited upon separation or, in limited
Voluntary Termination
An NEO who voluntarily terminates employment with Capital One may receive payments related to non-competition covenants (described above, if applicable) and any contractual payments to which the NEO may otherwise be entitled.
Involuntary Termination Without Cause
An NEO whose employment with Capital One is terminated involuntarily, for performance or job elimination, is entitled to receive the amounts set forth in the Company’s Executive Severance Plan. For 2010,2011, potential payments under the Executive Severance Plan arewere 30% of total target compensation. If an NEO’s Non-Competition Agreement is enforced, payments under the Executive Severance Plan will be offset by any amounts paid under the Non-Competition Agreement, and the NEO will be eligible for (i) an additional payment of up to 90% of the severance payments in exchange for executing a release of claims against the Company, as well as (ii) continued coverage through broad-based and executive life insurance programs, outplacement services and any contractual payments to which the NEO may otherwise have been entitled.
Termination for Cause
An NEO whose employment with Capital One is terminated for cause receives no additional benefits but is required to comply with any applicable restrictive covenants related to confidentiality, non-competition, covenantsnon-solicitation of employees and ownership of work product, as described above. In addition, if terminated for cause, named executive officers have the ability following separation to which he or she previously agreedexercise vested but unexercised options for 90 days.
.
As with all executives who are eligible for retirement, the CEO and any NEOnamed executive officers who retiresretire from Capital One once eligible may receive the following amounts: payments related to non-competition covenants as if they had terminated voluntarily (described above); partially subsidized participation in retiree medical coverage (including dependants as applicable); coverage through the executive life insurance program (at a reduced benefit); and any contractual payments to which the NEOhe or CEO, as applicable,she may otherwise be entitled.
Shares of restricted stock and stock options of named executive officers who are eligible forretire from Capital One continue to vest according to their original terms. In addition, performance shares granted to named executive officers will continue to vest after retirement, for allexcept the 2011 performance share grant to the CEO which would be forfeited if he retired prior to December 31, 2011. For stock options granted on or before December 1, 2005, the executive has one year from the date of separation to exercise vested but unexercised options. Unvested stockStock options and restricted stock granted after December 1, 2005 generally continue to vest according to their original terms, and all stock options must be exercised by the earlier of five years from the separation date of retirement or the expiration of the option term. Unvested stock options granted on or after January 27, 2010, will also continue to vest according to their original terms, and all stock options may be exercised until the expiration of the option term.
Change of Control
The CEO and each of the NEOsEach 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 the stockholders receive 50% or more of the stock of the resulting company, at least a majority of the board of directors of the resulting company were incumbent board members, and no person owns 20% or more of the resulting company who did not own such stock immediately before the business combination; or (iv) approval by stockholders of a complete liquidation or dissolution of Capital One.
Involuntary Termination For Cause
Named executive officers terminated involuntarily for cause following a change of control receivesreceive no additional benefits.
Voluntary Termination With Good Reason or Involuntary Termination Without Cause
For 2010,2011, the potential payments that the NEOsnamed executive officers could receive under certain termination scenarios are based on a percentage of target total compensation. For the CEO, the potential payments are based on a multiple of his notional salary (as described below). As of December 31, 2010,2011, if a change of control of Capital One occurs, then following a voluntary termination with good reason or involuntary termination without cause, the CEO or an NEOa named executive officer may receive certain benefits as outlined below:
In addition, as for all associates holding equity awards, all outstanding awards under Capital One’s stock incentive plans vest immediately upon a change of control.
On March 1, 2011, Capital One delivered notice to the CEO and the NEOsnamed executive officers that their current Change of Control Agreements would not be renewed. The Committee and the independent directors also approved a new form of Change of Control Agreement to be used after March 1, 2011, for new hires, promotions and renewals, and which does not provide for an excise tax gross-up. Accordingly, all Change of Control Agreements providing for a potential excise tax gross-up after a change of control will expire by April 2014, to be replaced with the new form of agreement that does not provide for an excise tax gross-up.
Richard D. Fairbank
Mr. Fairbank receives no regular base salary. In light of this, fact, for 2010,2011, Mr. Fairbank’s payment in the event of a termination following a change of control would have beenwas based on a notional salary of $1 million. The Committee reviews and establishes this amount on an annual basis, based on market trends related to CEO compensation and recommendations provided by the Committee’s independent consultant. Mr. Fairbank is a party to a Change of Control Agreement.
Gary L. Perlin
Mr. Perlin is generally eligible for the same payments upon termination as the other NEOs at Capital One. For 2010,2011, these payments were calculated against the 20102011 target total compensation value. Mr. Perlin is a party to a Non-Competition Agreement and a Confidentiality, Work Product and Non-Solicitation of Employee Agreement, as well as to a Change of Control Agreement.
Lynn A. Carter
Ms.
Carter is generally eligible for the same payments upon termination as the other NEOs at Capital One. ForRyan M. Schneider
Mr. Schneider is generally eligible for the same payments upon termination as the other NEOs at Capital One. For 2011, these payments were calculated against the 2011 target total compensation value. Mr. Schneider is a party to a Non-Competition Agreement and a Confidentiality, Work Product and Non-Solicitation of Employee Agreement, as well as to a Change of Control Agreement.
Peter A. Schnall
Mr. Schnall is generally eligible for the same payments upon termination as the other NEOs at Capital One. For 2010,2011, these payments were calculated against the 20102011 target total compensation value. Mr. Schnall is a party to a Non-Competition Agreement and a Confidentiality, Work Product and Non-Solicitation of Employee Agreement, as well as to a Change of Control Agreement.
| Name and Principal Position | Situation | Cash Severance (1) | Retirement Plan Contributions (2) | Acceleration and Continuation of Equity Awards (3) | Continuation of Medical/Welfare Benefits (4) | Excise Tax Gross-Up (5) | Total |
| Richard D. Fairbank Chairman, CEO and President | Voluntary Termination | NA | NA | NA | NA | NA | NA |
| Involuntary Termination | NA | NA | NA | NA | NA | NA | |
| Retirement (6) | $0 | $0 | $40,582,949 | $363,000 | $0 | $40,945,949 | |
| For Cause Termination | $0 | $0 | $0 | $0 | $0 | $0 | |
| CIC* | $2,499,250 | $0 | $40,582,949 | $265,725 | $0 | $43,347,924 | |
| Voluntary Termination | $972,000 | $0 | $0 | $0 | $0 | $972,000 | |
| Gary L. Perlin | Involuntary Termination | $3,693,600 | $0 | $4,666,321 | $49,699 | $0 | $8,409,620 |
| Chief Financial | Retirement (6) | NA | NA | NA | NA | NA | NA |
| Officer | For Cause Termination | $0 | $0 | $0 | $0 | $0 | $0 |
| CIC* | $7,287,813 | $537,964 | $16,885,463 | $172,467 | $5,226,962 | $30,110,669 | |
| Voluntary Termination | $0 | $0 | $0 | $0 | $0 | $0 | |
| Lynn A. Carter | Involuntary Termination | $1,500,000 | $0 | $3,251,854 | $43,772 | $0 | $4,795,626 |
| President, | Retirement (6) | NA | NA | NA | NA | NA | NA |
| Banking | For Cause Termination | $0 | $0 | $0 | $0 | $0 | $0 |
| CIC* | $5,623,312 | $391,007 | $12,937,626 | $161,678 | $3,976,902 | $23,090,525 | |
| Voluntary Termination | $672,000 | $0 | $0 | $0 | $0 | $672,000 | |
| Peter A. Schnall | Involuntary Termination | $2,553,600 | $0 | $3,022,044 | $35,813 | $0 | $5,611,457 |
| Chief Risk | Retirement (6) | NA | NA | NA | NA | NA | NA |
| Officer | For Cause Termination | $0 | $0 | $0 | $0 | $0 | $0 |
| CIC* | $5,038,488 | $377,699 | $11,773,016 | $125,252 | $0 | $17,314,455 | |
| Voluntary Termination | $660,000 | $0 | $0 | $0 | $0 | $660,000 | |
| Ryan M. | Involuntary Termination | $2,508,000 | $0 | $2,384,197 | $34,149 | $0 | $4,926,346 |
| Schneider | Retirement (6) | NA | NA | NA | NA | NA | NA |
| President, Card | For Cause Termination | $0 | $0 | $0 | $0 | $0 | $0 |
| CIC* | $4,948,515 | $368,594 | $11,718,300 | $79,322 | $3,365,047 | $20,479,778 |
| Name and Principal Position | Situation | Cash Severance (1) | Retirement Plan Contributions (2) | Acceleration and Continuation of Equity Awards (3) | Continuation of Medical/ Welfare Benefits (4) | Excise Tax Gross Up (5) | Total |
| Richard D.Fairbank Chairman,CEO and President | Voluntary Termination | NA | NA | NA | NA | NA | NA |
| Involuntary Termination | NA | NA | NA | NA | NA | NA | |
| Retirement (6) | $0 | $0 | $45,776,849 | $425,000 | $0 | $46,201,849 | |
| For Cause Termination | $0 | $0 | $0 | $0 | $0 | $0 | |
| CIC* | $2,502,519 | $0 | $49,280,617 | $216,061 | $0 | $51,999,197 | |
| Gary L.Perlin ChiefFinancialOfficer | Voluntary Termination | $1,001,250 | $0 | $1,489,961 | $0 | $0 | $2,491,211 |
| Involuntary Termination | $3,804,750 | $0 | $2,849,641 | $46,718 | $0 | $6,701,109 | |
| Retirement (6) | NA | NA | NA | NA | NA | NA | |
| For Cause Termination | $0 | $0 | $0 | $0 | $0 | $0 | |
| CIC* | $8,929,569 | $540,514 | $10,297,760 | $121,457 | $0 | $19,889,300 | |
| Lynn A.Carter President,Banking (7) | Voluntary Termination | $0 | $0 | $1,149,696 | $0 | $0 | $1,149,696 |
| Involuntary Termination | $1,500,000 | $0 | $2,281,799 | $42,464 | $0 | $3,824,263 | |
| Retirement (6) | NA | NA | NA | NA | NA | NA | |
| For Cause Termination | $0 | $0 | $0 | $0 | $0 | $0 | |
| CIC* | $6,790,529 | $375,378 | $8,313,398 | $145,997 | $0 | $15,625,302 | |
| Ryan M.Schneider President,Card | Voluntary Termination | $726,000 | $0 | $1,011,704 | $0 | $0 | $1,737,704 |
| Involuntary Termination | $2,758,800 | $0 | $1,809,589 | $34,195 | $0 | $4,602,584 | |
| Retirement (6) | NA | NA | N/A | NA | NA | NA | |
| For Cause Termination | $0 | $0 | $0 | $0 | $0 | $0 | |
| CIC* | $6,610,778 | $403,338 | $6,653,243 | $77,822 | $3,174,725 | $16,919,905 | |
| Peter A. Schnall Chief RiskOfficer | Voluntary Termination | $692,250 | $0 | $1,030,100 | $0 | $0 | $1,722,350 |
| Involuntary Termination | $2,630,550 | $0 | $1,999,034 | $35,992 | $0 | $4,665,576 | |
| Retirement (6) | NA | NA | NA | NA | NA | NA | |
| For Cause Termination | $0 | $0 | $0 | $0 | $0 | $0 | |
| CIC* | $6,305,596 | $386,616 | $7,397,417 | $121,582 | $0 | $14,211,211 |
The table above is intended to reflect projected payments to eachnamed executive officers across a range of potential separation scenarios, assuming the change of control or separation occurred on December 31, 2010.
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 CEO and the NEOsnamed executive officers also are eligible to receive certain pension benefits and certain qualified and non-qualified deferred compensation amounts upon termination. These amounts are outlined in the 2011 Pension Benefits Table on page 5061 and the 2011 Non-Qualified Deferred Compensation Table on page 52,63, respectively, and are not included in the table above
Other amounts not included in the table above are the following:
| (1) | Represents cash amounts paid for severance or in relation to enforcement of non-competition covenants. In cases where the executive is eligible for both types of payments, non-competition amounts typically offset severance amounts in whole or in part. Cash-settled restricted stock unit awards granted after the end of a performance year are included in the “Acceleration and Continuation of Equity Awards” column. Gary Perlin and Lynn Carter would both receive a reduction in CIC severance payments ($190,986 and $224,344, respectively) in order to meet safe harbor limitations. This reduction is reflected in the cash severance amounts reported above. | |
| (2) | Represents the value of projected contributions to retirement plans during the severance period. | |
| (3) | Represents the value of equity where vesting is accelerated or continued by the triggering event. For stock options, this represents the in-the-money value. For stock awards, this represents the fair market value of the shares. | |
| (4) | Represents the present value of payments made on the executive’s behalf for continuation of medical and welfare benefits during the severance period. Includes programs such as medical, dental, insurance, outplacement services and related benefits. Only includes programs that are specific to the | |
| (5) | Represents the value of projected excise tax and related gross-up payments made on | |
| (6) | Most currently unvested equity awards held by our retirement eligible executives will continue to vest according to their original terms following retirement. Mr. Fairbank is currently the only named executive officer eligible for retirement. | |
| (7) | As previously announced, Ms. Carter left her role as President, Banking, of the Company effective at the close of business on December 31, 2011, and will be separating from the Company on March 31, 2012. Upon separation, she will be entitled to the payments and benefits shown here for “Involuntary Termination.” In addition, in January 2012 the Committee approved additional vesting on her outstanding restricted stock awards scheduled to vest in January and February 2013, including her award granted in January 2012, that she would otherwise forfeit upon her separation. The total number of shares of restricted stock subject to this additional vesting is 27,999. | |
| SECTION VII – EQUITY COMPENSATION PLANS |
| Equity Compensation Plan Information |
The following table provides information as of December 31, 20102011, with respect to shares of Capital One common stock that may be issued under our existing compensation plans.
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| (a) | (b) | (c) | |
| Equity compensation plans approved by security holders (1) | 14,731,852 | $49.61 (3) | 16,225,304 (5) |
| Equity compensation plans not approved by security holders (2) | 7,186,266 (4) | $50.53 (4) | 0 (6) |
| Total | 21,918,118 | $49.91 | 16,225,304 |
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |
| (a) | (b) | (c) | ||
| Equity compensation plans approved | ||||
| by security holders (1) | 14,944,432 | $50.74 (3) | 15,073,972 (4) | |
| Equity compensation plans not | ||||
| approved by security holders (2) | 2,196,102 (5) | $53.38 (5) | 0 (6) | |
| Total | 17,140,534 | $51.08 | 15,073,972 | |
| (1) | The following plans have been approved by Capital One | |
| (2) | The following plans have not been approved by Capital One stockholders: the 1999 Directors Plan and the 2002 | |
| (3) | Excludes purchase rights accruing under the 2002 Associate Stock Purchase Plan and | |
| (4) | ||
| Represents shares available for future issuance under the 2004 Stock Incentive | ||
| (5) | Includes 73,620 outstanding restricted stock units under the 1999 Directors Plan that have an exercise price of $0.00. | |
| (6) | There are no shares available for future issuance under the equity compensation plans not approved by security holders. | |
| Description of Non-Stockholder Approved Equity Compensation Plans |
Set forth below is a brief description of the material features of each Capital One equity compensation plan that was adopted without the approval of Capital One’s stockholders and that had grants outstanding or shares available for issuance as of December 31, 2010.
| 1999 |
The 1999 DirectorDirectors Plan was adopted by the Board of Directors 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 of non-qualified stock options, restricted stock and restricted stock units to members of the Board of Directors who are not otherwise employed byat the time an award is granted as an employee of Capital One or any subsidiary of Capital One at the time an award is granted.One. The number of shares available for issuance under the plan included shares granted under the plan subject to options that expire or otherwise terminate unexercised and shares forfeited pursuant to restrictions on restricted stock or deferred stock. Shares issued pursuant to the plan are treasury shares. The plan is administered by the Board of Directors.
The exercise price of stock options granted under the plan could not be less than the fair market value, as defined in the 1999 DirectorDirectors Plan, of Capital One common stock on the date of grant. The maximum term of each stock option was ten years,, and thevesting schedule wasschedules were determined at the time of grant. The Board of Directors could, in its discretion, grant options that by their terms became fully exercisable upon a change of control, as defined in the 1999 DirectorDirectors Plan.
The Board of Directors could award restricted stock to eligible directors. During the restricted period, a director could not dispose of any restricted shares and must forfeit any restricted shares granted to such director if he or she ceases to be a member of the Board of Directors.Board. The Board of Directors had the authority to establish the terms and conditions upon which these restrictions will lapse. The Board of Directors 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 of Directors could award restricted stock units to eligible directors under the plan. The Board of Directors hadhas the authority to establish, in its discretion, the length of the vesting period,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 of Directors 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.
| 2002 Stock Incentive Plan |
The 2002 Stock Incentive Plan was terminated by the Board of Directors upon the approval by the stockholders of the Company of the 2004 Stock Incentive Plan at the annual stockholder meeting in April 2004. Nevertheless, pursuant to the resolution of the Board, of Directors, the rights or obligations of any person under any equity-based awards granted under the 2002 Stock Incentive Plan remained in full force and effect under the terms of thesuch plan.
The 2002 Stock Incentive Plan was adopted by the Board of Directors on January 17, 2002 and amended on September 19, 2002. Under the 2002 Stock Incentive Plan, 8,500,000 shares of Capital One common stock had been reserved for issuance with respect to the grant of non-qualified stock options, stock appreciation rights, restricted stock andor incentive stock. The number of shares that were available for issuance under the plan includes shares subject to options or stand-alone stock appreciation rights granted under the plan that expire or otherwise terminate unexercised, shares forfeited pursuant to restrictions on restricted stock or incentive
stock and shares surrendered by a participant or retained by Capital One in payment of the exercise price of an option or applicable tax withholding liabilities.
All employees of Capital One or its subsidiaries that the 2002 Plan Committee determined to have contributed to the profit and growth of Capital One were eligible to receive awards under the plan, except for Capital One’s “executive officers” (generally, those subject to Section 16 of the Securities Exchange Act of 1934, as amended).
Currently no shares are available for issuance under this plan other than shares subject to outstanding equity awards under the plan. As established in the proposal presented to the stockholders of the Company and approved in the 2004 annual meeting, any reload options that the Company is obligated to grant upon the exercise of awards from the 2002 Stock Incentive Plan will be granted under the 2004 Stock Incentive Plan,, and shares of common stock of the Company used to pay for the exercise price of
| SECTION VIII – COMPENSATION COMMITTEE REPORT |
All members of the Compensation Committee participated in the review and discussion of the Compensation Discussion and Analysis (“CD&A”) beginning on page 25 of this proxy statement with management. Based on that review and discussion, the Compensation Committee recommended to the Board of Directors that the CD&A be included in this proxy statement.
| The Compensation Committee | Mayo A. Shattuck III (Chair) | |
| E.R. Campbell | ||
| Patrick W. Gross | ||
| Ann Fritz Hackett | ||
| Lewis Hay, III | ||
| Pierre E. Leroy |
The foregoing Report of the Compensation Committee on Executive Compensation shall not be deemed to be soliciting material or filed with the SEC and is not incorporated by reference into any of Capital One’s previous or future filings with the SEC, except as otherwise explicitly specified by Capital One in any such filing.
| SECTION IX – AUDIT AND RISK COMMITTEE REPORT |
The Audit and Risk Committee’s amended and restated charter was approved by the Committee on January 26, 2011,30, 2012, and by the full Board of Directors on January 27, 2011.
In accordance with its charter, the Audit and Risk Committee assists the Board of Directors in fulfilling its responsibility for oversight of the quality and integrity of Capital One’s accounting, auditing, financial reporting, internal controls and risk assessment and management processes. The Audit and Risk Committee’s primary responsibilities can be classified as assisting the Board of Directors in monitoring four broad categories:
The Audit and Risk Committee has implemented procedures to enable it to devote the attention it deems appropriate to each of the matters assigned to it under its charter. In carrying out its responsibilities, the Audit and Risk Committee met twelve times during 2010.2011. Pursuant to Capital One’s Corporate Governance Principles and applicable law, the Audit and Risk Committee is comprised solely of independent directors.
In discharging its oversight responsibility, the Audit and Risk Committee has reviewed and discussed Capital One’s audited financial statements for the fiscal year ended December 31, 2010,2011, with management and Ernst & Young LLP (“Ernst & Young”), Capital One’s independent auditors. The Audit and Risk Committee has also discussed with Ernst & Young the matters required to be discussed under the rules adopted by the Public Company Accounting Oversight Board; has been timely briefed by Ernst & Young as required by Section 204 of the Sarbanes-Oxley Act of 2002 and SEC rules promulgated thereunder; and follows the mandates of the SEC’s rules regarding auditor independence. In addition, the Audit and Risk Committee has received the written disclosures and the letter from Ernst & Young required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communications with the Audit and Risk Committee concerning independence and has discussed with Ernst & Young their independence from Capital One. Based on its review and discussions with management and Ernst & Young, and pursuant to a delegation of authority from the Board of Directors, the Audit and Risk Committee has approved the inclusion of the audited financial statements in Capital One’s annual reportAnnual Report on Form 10-K for the fiscal year ending December 31, 20102011, for filing with the SEC.
| The Audit and Risk | W. Ronald Dietz (Chairman and “Audit Committee Financial Expert”) | |
| Patrick W. Gross | ||
| Ann Fritz Hackett | ||
| Pierre E. Leroy | ||
| Peter E. Raskind | ||
| Bradford H. Warner (“Audit Committee Financial Expert”) |
The foregoing Report of the Audit and Risk Committee shall not be deemed to be soliciting material or filed with the SEC and is not incorporated by reference into any of Capital One’s previous or future filings with the SEC, except as otherwise explicitly specified by Capital One in any such filing.
| SECTION X – ELECTION OF DIRECTORS (ITEM 1 ON PROXY CARD) |
In 2011, Capital One’s stockholders voted to phase out the classification of the Board and to provide instead for the annual election of directors. Commencing with the 2012 Annual Stockholder Meeting, directors will be elected annually for terms expiring at the next succeeding Annual Stockholder Meeting. Directors is divided into three classes. At each annual meeting the term of one class expires. Directors in each class arepreviously elected to serve three-year terms will serve the remainder of such terms before standing for three-year terms.re-election. The table below indicates when each director was last elected as well as the tenure of each director.
| Director | Tenure | Last Elected | Expiration of Term | Tenure | Last Elected | Expiration of Term |
| Richard D. Fairbank | Since July 26, 1994 | 2009 | 2012 | Since July 26, 1994 | 2009 | 2012 |
| E.R. Campbell | Since November 16, 2005 | 2009 | 2012 | |||
| E.R. Campbell * | Since November 16, 2005 | 2009 | 2012 | |||
| W. Ronald Dietz | Since February 28, 1995 | 2010 | 2013 | Since February 28, 1995 | 2010 | 2013 |
| Patrick W. Gross | Since February 28, 1995 | 2008 | 2011 | Since February 28, 1995 | 2011 | 2014 |
| Ann Fritz Hackett | Since October 28, 2004 | 2008 | 2011 | Since October 28, 2004 | 2011 | 2014 |
| Lewis Hay, III | Since October 31, 2003 | 2010 | 2013 | Since October 31, 2003 | 2010 | 2013 |
| Pierre E. Leroy | Since September 1, 2005 | 2008 | 2011 | Since September 1, 2005 | 2011 | 2014 |
| Peter E. Raskind | Since January 31, 2012 | N/A | 2012 | |||
| Mayo A. Shattuck III | Since October 31, 2003 | 2010 | 2013 | Since October 31, 2003 | 2010 | 2013 |
| Bradford H. Warner | Since April 24, 2008 | 2009 | 2012 | Since April 24, 2008 | 2009 | 2012 |
| * | Pursuant to the age restriction in the Company’s Bylaws, Mr. Campbell is not eligible to stand for re-election and will leave the Board when his current term expires at the Annual Meeting. |
The nominees for re-electionelection this year are:
Richard D. FairbankAnn Fritz HackettPierrePeter E. Leroy
Each nominee has consented to serve a three-yearone-year term. Information about the proposed nominees for election as directors, and about each other current director whose term will continue after the Annual Meeting, is set forth under “Information About Our Directors and Executive Officers” in the “Governance of Capital One” section on page 1215 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. Proxiesnominee or reduce the size of the Board. If the Board designates a substitute nominee, proxies will be voted for the election of such substitute. As of the date of this proxy statement, the Board of Directors has no reason to believe that any of the nominees will be unable or unwilling to serve as a director.
***
The Board of Directors unanimously recommends that you vote“FOR���FOR” each of these director nominees.
| SECTION XI – RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS (ITEM 2 ON PROXY CARD) |
The Audit and Risk Committee, pursuant to authority granted to it by the Board of Directors, has appointed the firm of Ernst & Young LLP as independent auditors for 2011.2012. The Board of Directors is submitting this proposal to the vote of the stockholders as a matter of good corporate governance. If stockholders do not ratify the selection of Ernst & Young LLP, the Audit and Risk Committee will reconsider their appointment as our independent auditors.
The fees shown in the following tablebilled for professional services provided by Ernst & Young LLP for fiscal years 2011 and 2010 and 2009:
| Fees (dollars in millions) | 2010 | 2009 | 2011 | 2010 |
| Audit Fees | $7.23 | $8.10 | $9.26 | $7.23 |
| Audit-Related Fees | $1.38 | $1.28 | $1.37 | $1.38 |
| Tax Fees | $0.04 | $0.00 | $0.00 | $0.04 |
| All Other Fees | $0.00 | $0.00 | ||
Audit fees include fees for the audit of our annual financial statements, the review of financial statements included in our quarterly reports on Form 10-Q and services that normally would be provided by the accountant in connection with statutory and regulatory filings or engagements and that generally only the independent accountantauditor 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 accountant,auditor, such as: employee benefit plan audits,audits; due diligence related to mergers and acquisitions,acquisitions; internal control reviews,reviews; attestation services that are not required by statute or regulationregulation; and consultation concerning financial accounting and reporting standards. Tax fees include corporate and subsidiary compliance, consulting, international and employee benefit services. All other fees would include fees for services that are not defined as Audit, Audit-related or Tax and are not specifically prohibited by the SEC.
The Audit and Risk Committee has reviewed the fees paid to Ernst & Young LLP and has considered whether the fees paid for non-Audit services are compatible with maintaining Ernst & Young LLP’s independence. The Audit and Risk Committee also adopted policies and procedures to approve services provided by Ernst & Young LLP in accordance with the Sarbanes-Oxley Act of 2002 and rules of the SEC promulgated thereunder. These policies and procedures involve annual pre-approval by the Audit and Risk Committee of the types of services to be provided by Capital One’s independent auditor and fee limits for each type of service on both a per engagement and aggregate level. Additional service engagements that exceed these pre-approved limits must be submitted to the Audit and Risk Committee for further pre-approval. Under the policy adopted by the Audit and Risk Committee, Tax fees are limited to 25% of combined Audit and Audit-related fees, and services that would fall under the category “All other fees”Other Fees” are prohibited. Capital One’s policy, for administrative ease, allows for a $25,000 de minimis exception to the pre-approval procedures; however, any services provided pursuant to this exception must be approved at the next meeting of the Audit and Risk Committee. Additionally, Capital One has established policies to provide for adherence to Sarbanes-Oxley Act requirements relating to the rotation of partners engaged in Capital One’s audit by the independent auditors.
Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
***
The Board of Directors unanimously recommends that you vote“FOR” the ratification of Ernst & Young LLP as Capital One’s independent auditors for 2011.2012.
| SECTION XII |
EXECUTIVE OFFICER COMPENSATION |
We are offering to our stockholders a non-binding advisory vote on our 20102011 Named Executive Officer compensation, including the compensation of our Chief Executive Officer, pursuant to Section 14A of the Securities and Exchange Act of 1934. While the vote is non-binding, the Board of Directors values the opinions that stockholders express through their votes and in any additional dialogue. The Board of Directors will consider the outcome of the vote when making future compensation decisions.
As discussed in the “Compensation Discussion and Analysis” section beginning on page 25,30, our Board of Directors generally has provided compensation programs for the CEO and the NEOs that are competitive with the market, performance-based and transparent and that align with our stockholders’ interests over multiple time horizons. Our CEO and NEO compensation programs generally have consisted primarily of performance-based incentive opportunities, including multiple types of equity instruments with multi-year vesting schedules. The ultimate value of the equity-based awards made to our CEO and the NEOs is subject to Capital One’s sustained performance over time, both on an absolute basis and relative to our peers.
For 2010,2011, the CEO’s compensation program remained entirely comprised of equity-based vehicles and is at-risk based on the Company’s and Mr. Fairbank’s performance. As discussed under “Named Executive Officer“NEO Compensation” in the
Additional information relevant to your vote can be found in the “Compensation Discussion and Analysis” section of this proxy statement on pages2530 to 3950 and in the “Named Executive Officer Compensation” section on pages 4051 to 57.69.
We ask for your advisory vote on the following resolution:
“Resolved, that Capital One’s stockholders hereby provide their advisory approval of the 20102011 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 20102011 Named Executive Officer compensation as disclosed in this proxy statement.
The Board of Directors has determined that holding anresolved to hold annual advisory votes on executive compensation. Accordingly, the next advisory vote on executive compensation every yearwill occur at the 2013 Annual Meeting, unless the Board of Directors modifies its policy on the frequency of holding such advisory votes.
| SECTION XIII – APPROVAL AND ADOPTION OF CAPITAL ONE’S AMENDED AND RESTATED ASSOCIATE STOCK PURCHASE PLAN (ITEM 4 ON PROXY CARD) |
On February 23, 2012, the Board of Directors amended the Capital One Financial Corporation 2002 Associate Stock Purchase Plan (the “ASPP”) to increase the number of shares available under the ASPP, subject to stockholder approval. Under the ASPP, which was initially adopted by the Board effective on September 19, 2002, the Company originally reserved 3,000,000 shares of Capital One common stock for the purpose of employee purchases. This amount was increased by the Board to 8,000,000 shares in February 2008, which increase was approved by stockholders in April 2008. This amendment and restatement of the ASPP, among other things, requests approval of an additional 10,000,000 shares, for a total reserve of 18,000,000 shares. These shares may consist of newly issued shares, treasury shares, shares acquired on the open market or any combination thereof.
The purpose of the ASPP is to secure for the Company and its stockholders the benefits of the incentive inherent in the ownership of Capital 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.
Summary of Material Provisions of the ASPP
Administration
The ASPP is administered by the Compensation Committee, which must consist of not less than two members appointed by the Board, unless the Board appoints another committee to administer the plan. Such committee has the authority to take any and all actions necessary to implement the ASPP and to interpret the ASPP, to prescribe, amend and rescind rules and regulations relating to the ASPP, and to make all other determinations necessary or advisable in administering the ASPP. All of such actions, interpretations and determinations shall be final and binding upon all persons.
Eligibility
All individuals who are actively employed by the Company or a subsidiary and are customarily paid through the Company’s regular payroll are eligible to participate in the ASPP.
Purchase of Shares
Each eligible employee may elect regular, monthly payroll deductions of up to 15% of the 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 a lump-sum cash contribution (provided that the total of the payroll deductions and such contributions for any calendar quarter do not exceed 15% of an employee’s base compensation for such period) to be used to purchase shares. The total amount of monthly payroll deductions and quarterly lump-sum cash contributions may not exceed $75,000 in any calendar year. A participating employee may elect once each calendar quarter to increase, decrease, or eliminate his or her regular payroll deduction. Shares of common stock are purchased under the ASPP at the end of each month (a “purchase date”), or at such other times as determined by the plan administrator.
Matching Contribution; Purchase Price
Each employee who participates in the ASPP will receive a matching contribution from the Company equal to 17.65% of the amount of such employee’s matching and lump-sum contributions to the ASPP. This matching contribution is combined with the employee’s contributions and used to purchase common stock under the ASPP at a purchase price equal to the fair market value of the common stock on the applicable purchase date. Taking in account the matching contributions, participants effectively purchase common stock under the ASPP at a 15% discount to the fair market value of the shares on the purchase date.
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 most appropriate policysurviving 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 Capital Onethe 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 thisany 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.
***
The Board of Directors recommends that stockholdersyou vote for future advisory votes on executive compensation to occur every year. While Capital One’s executive compensation programs are designed to reward performance over multiple time horizons,“FOR” the Board of Directors recognizes that executive compensation disclosures are an important consideration 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.
| SECTION |
| Other Business |
As of the date of this proxy statement, we know of no business that will be presented for consideration at the Annual Meeting other than the items referred to above. If other matters are properly brought before the meeting, the persons named in the accompanying proxy card will vote such proxy at their discretion.
| Annual Report to Stockholders |
Capital One’s Annual Report to Stockholders for the fiscal year ended December 31, 2010,2011, 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 Form 10-K for the fiscal year ended December 31, 2010,2011, may be obtained at the Annual Meeting, at our website atwww.capitalone.comunder “Investors” or by contacting our Investor Relations department at Capital One’s address set forth on the Notice of Annual Stockholder Meeting. The Form 10-K, which is filed with the SEC, may also be obtained at the SEC’s website atwww.sec.gov.
| Stockholder Proposals for |
Stockholders interested in submitting a proposal for inclusion in the proxy materials at Capital One’s 20122013 Annual Stockholder Meeting (“Capital One’s 20122013 Annual Meeting”) may do so by following the rules prescribed in Rule 14a-8 under the Securities Exchange Act of 1934. To be eligible for inclusion, stockholder proposals must be received by Capital One’s Corporate Secretary at the address on the Notice of Annual Stockholder Meeting no later than November 26, 2011.
Under our bylaws,Bylaws, if you wish to present other business before the stockholders at Capital One’s 20122013 Annual Meeting or nominate a director candidate, you must give proper written notice of any such business to the Corporate Secretary not before February 11, 20127, 2013, and not after March 2, 2012.February 27, 2013. If Capital One’s 20122013 Annual Meeting is not within thirty days before or seventy days after May 11, 2012,8, 2013, the anniversary date of this year’s Annual Meeting, notice must be delivered no earlier than the ninetieth day prior to such annual meeting and not later than the close of business on the later of the seventieth day prior to such meeting or ten days following any notice or publication of the meeting. Your notice must include the information specified in our bylawsBylaws concerning the business or nominee. Our bylawsBylaws 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 bylawsBylaws 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,
| APPENDIX A – |
CAPITAL ONE FINANCIAL CORPORATION
2002 ASSOCIATE STOCK PURCHASE PLAN
AMENDED AND RESTATED AS OF MAY 8, 2012
1. Purpose and Effect of Plan
The text below is the portionpurpose of the Plan is to secure for the Company’s Restated Certificate and its stockholders the benefits of Incorporation proposedthe incentive inherent in the ownership of Common Stock by present and future employees of the Company and its Subsidiaries. The Plan is hereby amended and restated effective as of February 23, 2012, subject to the approval of the Company’s stockholders at the Company’s 2012 annual meeting.
2. Shares Reserved for the Plan
There shall be amendedreserved for issuance and purchase by Item Participating Associates under the Plan an aggregate of 18,000,000 shares of Common Stock, subject to adjustment as provided in Section 12. Shares issued under the Plan may consist of newly issued shares acquired from the Company, treasury shares held by the Company, shares acquired on the open market or a combination of the above.
3. Proposed additions areDefinitions
Where indicated by underlining, and proposed deletions are indicated by strike-outs.
| a. | Act: The Securities Exchange Act of 1934, as amended. | ||
| b. | Base Compensation: The base salary and/or commissions of an Eligible Associate received from the Employer, including salary reduction contributions pursuant to elections under a plan subject to Code section 125 or 401(k), but excluding all other compensation such as overtime, bonuses, profit sharing awards and credits received under a plan subject to Code section 125. | ||
| c. | Beneficiary: The beneficiary designated by the Participating Associate in the beneficiary designation in effect under the 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 Subsidiaries who meets the eligibility requirements of Section 5. | ||
| k. | Employer: For purposes of Section 5, the Company or Subsidiary employing an Eligible Associate. | ||
| l. | Enrollment Form: The form filed with the 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 and lump-sum cash contributions pursuant to Section 6. | ||
| r. | Plan: The “Capital One Financial Corporation 2002 Associate Stock Purchase Plan,” as set forth herein and as amended from time to time. | ||
| s. | Purchase Price: The price for each whole and fractional share of Common Stock purchased under the Plan (after taking into account matching contributions pursuant to Section 7), other than those purchased by dividend reinvestment, shall be the Fair Market Value on the date in question. The price for each whole and fractional share of Common Stock purchased by dividend reinvestment shall be 85% (or such greater percentage determined by the Committee) of the Fair Market Value on the date in question. In the event matching contributions pursuant to Section 7 are eliminated, the price for each whole and fractional share of Common Stock purchased under the Plan shall be 85% (or such greater percentage determined by the Committee) of the Fair Market Value on the date in question. | ||
| t. | Section: A section of the Plan, unless otherwise required by the context. | ||
| u. | Subsidiary or Subsidiaries: Any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, as of an Investment Date, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. | ||
4. Administration of the holdersPlan
The Plan shall be administered by a committee, consisting of any series of Preferred Stock to elect additional directors under specific circumstances,not less than two members appointed by the number of directorsBoard. The Committee shall be the Compensation Committee of the CorporationBoard unless the Board shall be fixed byappoint another committee to administer the Bylaws of the Corporation and may be increased or decreasedPlan. 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 mannermajority of its members and the Committee may act by vote of a majority of its members at a meeting at which a quorum is present, or without a meeting by a written consent to its actions signed by all members of the Committee. The Committee may delegate all matters relating to the administration of the Plan to one or more of the Company’s officers. In addition, the Committee may request advice or assistance and employ such other persons as mayare necessary for proper administration of the Plan.
No member of the Committee or the Board shall be prescribedliable for any action, omission, or determination relating to the Plan, and the Company shall indemnify and hold harmless each member of the Committee and each other director, employee or consultant of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated against any cost or expense (including counsel fees) or liability arising out of any action, omission or determination relating to the Plan, to the maximum extent permitted by law.
5. Eligible Associates
Subject to the limitations of this Section, all employees of the Company or its Subsidiaries shall be eligible to participate in the Plan. To be an employee eligible to participate in the Plan, a person must be actively employed by the Bylaws.
6. Election to Participate
Each Eligible Associate may elect to become a Participating Associate by filing with the Company’s Human Resources Department (or third party plan administrator designated by the Company’s Human Resources Department) an Enrollment Form authorizing specified regular payroll deductions from his Base Compensation; provided however that, for purposes of this Section 6, the last Enrollment Form filed by a Participating Associate pursuant to the 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 1% and a maximum deduction of 15% (or such lower percentage determined by the Committee) of Base Compensation for that payroll period. A Participating Associate may also elect to make lump-sum cash contributions to the Plan, provided that the total of regular payroll deductions and lump-sum cash contributions in any calendar quarter shall not exceed 15% (or such lower percentage determined by the Committee) of the Participating Associate’s Base Compensation for the calendar quarter in which the lump-sum cash contribution is made. 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 and lump-sum cash contributions in any calendar year shall not exceed $75,000. All regular payroll deductions and lump-sum cash contributions shall be credited as soon as practicable to the Payroll Deduction Account that the Company has established with respect to the Participating Associate. A Participating Associate may elect once each calendar quarter to increase, decrease, or eliminate his regular payroll deduction by filing a new Enrollment Form.
All elections described in this Section 6 shall be filed in a form and manner established by the Company’s Human Resources Department. Except to the extent otherwise required to comply with the Act or any securities law compliance program established by the Company, elections with respect to regular payroll deductions shall become effective as soon as practicable on or after the first day of the first payroll period that begins following the date the election is duly filed.
7. Method of Purchase and Investment Accounts
Subject to Section 13, each Participating Associate shall receive a matching contribution to his Payroll Deduction Account as and when payroll deductions and/or lump sum contributions are made by the Participating Associate to his Payroll Deduction Account pursuant to Section 6 equal to 17.65% of the amount of such deductions and/or contributions. In addition, subject to Section 13, each Participating Associate having eligible funds in his Payroll Deduction Account on an Investment Date shall be deemed, without any further action, to have purchased the number of whole and fractional shares that the Bylaws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.
8. Stock Purchases
The Company shall issue (or direct the issuance of or the purchase on the open market of) shares of Common Stock to be credited to the Investment Accounts of the Participating Associates as of each Investment Date (or as soon as practicable thereafter) and each date as of which shares of Common Stock are purchased with reinvested cash dividends (or as soon as practicable thereafter).
9. Title of Accounts
The Company’s Human Resources Department or its delegate shall establish and maintain an Investment Account with respect to each Participating Associate. Each Investment Account shall be in the name of the Participating Associate.
10. Rights as a Shareholder
From and after the Investment Date on which shares of Common Stock are purchased by a Participating Associate under the Plan, such Participating Associate shall have all of the rights and privileges of a shareholder of the Company with respect to such shares of Common Stock. Subject to Section 18 herein, a Participating Associate shall have the right at any time (i) to obtain a certificate for the whole shares of Common Stock credited to his Investment Account or (ii) to direct that any whole shares in his Investment Account be sold and that the proceeds, less expenses of sale, be remitted to him.
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 or lump-sum cash contributions made by such Participating Associate during the period prior to the 2012 annual meeting of stockholders shall complete the
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 directors elected ata stock dividend, spin-off, stock split or combination of shares, recapitalization or merger in which the 2009
If the Company is a party to a consolidation or a merger in which the Company is not the surviving corporation, a transaction that results in the acquisition of substantially all of the holdersCompany’s outstanding stock by a single person or entity, or a sale or transfer of any series of Preferred Stock to elect additional directors under specific circumstances,
Notwithstanding anything contained in this Certificate of Incorporationthe Plan to the contrary, the affirmative voteCommittee may take the foregoing actions without the consent of any Participating Associate, and the Committee’s determination shall be conclusive and binding on all persons for all purposes.
13. Termination of Employment and 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 proceeds of the sale, less selling expenses, shall be remitted to the Participating Associate; and (iii) any amount in his Payroll Deduction Account shall be used to purchase shares as of the next following Investment Date, and such shares shall be distributed as soon as practicable thereafter in accordance with (a) (i) and (a) (ii) above; provided that, following the termination of his employment for any reason other than death, a Participating Associate may elect to receive a cash distribution from his Payroll Deduction Account before the next following Investment Date, if practicable. | ||
| (b) | If a Participating Associate dies: (i) certificates with respect to any whole shares in his Investment Account shall be delivered to his Beneficiary as soon as practicable following the next Investment Date; (ii) any fractional shares in his Investment Account shall be sold as soon as practicable following the next Investment Date, and the proceeds of the sale, less selling expenses, shall be remitted to his Beneficiary; and (iii) any amount in his Payroll Deduction Account shall be used to purchase shares as of the next following Investment Date, and such shares shall be distributed to his Beneficiary as soon as practicable thereafter in accordance with (b) (i) and (b) (ii) above; | ||
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 Participating 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 obligated to, withhold from the Participating Associate’s compensation the amount necessary for the Company to satisfy any applicable tax withholding obligations.
15. Amendment of the holdersPlan
The Board in its sole discretion may at any time amend the Plan in any respect; provided that such amendment is in compliance with all applicable laws and regulations and the requirements of at least 80 percentany national securities exchange on which shares of Common Stock are then traded. Any such amendment shall be subject to the approval of the voting powerCompany’s stockholders to the extent required by applicable law or the requirements of any national securities exchange on which shares of Common Stock are then traded.
16. Termination of the then outstanding Voting Stock, voting togetherPlan
The Plan and all rights of Eligible Associates hereunder shall terminate:
| (a) | on the Investment Date that Participating Associates become entitled to purchase a number of shares greater than the number of reserved shares remaining available for purchase; or | ||
| (b) | at any earlier date determined by the Board in its sole discretion. | ||
In the event that the Plan terminates under circumstances described in (a) above, reserved shares remaining as a single class,of the termination date shall be sold to Participating Associates at the applicable Purchase Price on a pro rata basis. Upon termination of the Plan, all amounts in a Participating 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 and became effective on September 19, 2002. This amendment and restatement of the Plan was adopted by the Board on February 23, 2012 and is subject to the approval of the Company’s stockholders at the Company’s 2012 annual meeting.
18. Government and Other Regulations
The Plan, and the grant and exercise of the rights to purchase shares hereunder, and the obligation to sell and deliver shares upon the exercise of rights to purchase shares, shall be subject to all applicable federal, state and foreign laws, rules and regulations, and to such approvals by any regulatory or government agency as may be required, in the opinion of counsel for the Company.
19. Gender and Number
Masculine pronouns shall refer to amend or repeal, or adopt any provision inconsistent with, this Article VIII.
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| CAPITAL ONE FINANCIAL CORPORATION 1680 CAPITAL ONE DR. MCLEAN, VA 22102-3491 |
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| DETACH AND RETURN THIS PORTION ONLY | ||||
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 | ||||||||||||||||
| The Board of Directors recommends you vote FOR the following: | ||||||||||||||||
| 1. | Election of Directors | For | Against | Abstain | ||||||||||||
| 01 | o | o | o | |||||||||||||
| 02 | o | o | o | |||||||||||||
| 03 | o | o | o | |||||||||||||
| The Board of Directors recommends you vote FOR proposals 2, 3 and 4. | For | Against | Abstain | |||||||||||||
| 2 | Ratification of selection of Ernst & Young LLP as independent auditors of Capital One for | o | o | o | ||||||||||||
| Advisory, non-binding approval of Capital One's | o | o | o | |||||||||||||
 | ||||||||
| 4 | Approval and adoption of Capital One's Amended and Restated Associate Stock Purchase Plan. | o | o | o | |||||||||||
| NOTE:Such other business as may properly come before the meeting or any adjournment thereof. | |||||||||||||||
| Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | |||||||||||||||
| Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice & Proxy Statement, Annual Report/10K is/are available atwww.proxyvote.com. | |
 | CAPITAL ONE FINANCIAL CORPORATION Annual Stockholder Meeting Tuesday, May 8, 2012 10:00 a.m. Capital One's Headquarters 1680 Capital One Drive Mclean, Virginia 22102 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Richard D. Fairbank and John G. Finneran, Jr., and either of them, proxies of the undersigned, with full power of substitution, to vote all the shares of Common Stock of Capital One Financial Corporation, a Delaware corporation, held of record by the undersigned on March 13, 2012, at the Annual Stockholder Meeting to be held on May 8, 2012 and at any postponement or adjournment thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED STOCKHOLDER. IF NO CHOICE IS SPECIFIED BY THE STOCKHOLDER, THIS PROXY WILL BE VOTED "FOR" ALL PORTIONS OF ITEMS (1), (2), (3) AND (4), AND IN THE PROXIES' DISCRETION ON ANY OTHER MATTERS COMING BEFORE THE MEETING. Continued and to be signed on reverse side | |