UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
 
(Rule 14a-101)
 
INFORMATION REQUIRED IN PROXY STATEMENT
 
SCHEDULE 14A INFORMATION
 
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Capital One Financial Corporation
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NOTICE OF CAPITAL ONE FINANCIAL CORPORATION’S
2010
2011 ANNUAL STOCKHOLDER MEETING
 
Important Notice Regarding the Availability of Proxy Materials for
The Stockholder Meeting To Be Held On April 29, 2010May 11, 2011
 
The Proxy Statement and Annual Report to Stockholders are available at www.proxyvote.com
 
The Annual Stockholder Meeting of Capital One Financial Corporation (“Capital One” or the “Company”) will be held at Capital One’s headquarters, 1680 Capital One Drive, McLean, Virginia 22102, on April 29, 2010,May 11, 2011, at 10:00 a.m.
 
Items of Business

As a stockholder you will be asked to:
 
1.     Elect Patrick W. Ronald Dietz, Lewis Hay IIIGross, Ann Fritz Hackett and Mayo A. Shattuck IIIPierre E. Leroy as directors of Capital One;
 
2.Ratify the Audit and Risk Committee’s selection of Ernst & Young LLP as independent auditors of Capital One for 2010;2011;
 
3.Approve amendments to Capital One’s Restated Certificate of Incorporation to provide for the annual election of directors;
4.Approve, on a non-binding advisory basis, Capital One’s 2009 named executive officer2010 Named Executive Officer compensation;
4.Consider a stockholder proposal regarding senior executive stock retention requirements, if presented at the meeting;
 
5.ConsiderApprove, on a non-binding advisory basis, the frequency with which Capital One will hold a stockholder proposal regarding board declassification, if presented at the meeting; vote to approve Capital One’s Named Executive Officer compensation; and
 
6.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 1, 2010.16, 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. 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     ___, 2010, 2011
 

TABLE OF CONTENTS
 
SECTION I – ABOUT THIS PROXY STATEMENT1
SECTION II – GOVERNANCE OF CAPITAL ONE5
SECTION III – SECURITY OWNERSHIP1817
SECTION IV – DIRECTOR COMPENSATION2120
SECTION V – COMPENSATION DISCUSSION AND ANALYSIS2423
SECTION VI – NAMED EXECUTIVE OFFICERSOFFICER COMPENSATION3638
SECTION VII – EQUITY COMPENSATION PLANS5556
SECTION VIII – COMPENSATION COMMITTEE REPORT58
SECTION IX – AUDIT AND RISK COMMITTEE REPORT59
SECTION X – ELECTION OF DIRECTORS (ITEM 1 ON PROXY CARD)60
SECTION XI – RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS (ITEM 2 ON PROXY CARD)61
SECTION XII – APPROVAL OF AMENDMENTS TO CAPITAL ONE’S RESTATED CERTIFICATE OF
INCORPORATION TO PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS (ITEM 3 ON PROXY CARD)62
SECTION XIII – ADVISORY APPROVAL OF CAPITAL ONE’S 20092010 NAMED EXECUTIVE OFFICER COMPENSATION
(ITEM 3 ON PROXY CARD)62
SECTION XIII – STOCKHOLDER PROPOSAL REGARDING SENIOR EXECUTIVE STOCK RETENTION
REQUIREMENTSCOMPENSATION (ITEM 4 ON PROXY CARD)6364
SECTION XIV – CAPITAL ONE STATEMENT IN OPPOSITION TO THE STOCKHOLDER PROPOSAL REGARDINGADVISORY VOTE ON FREQUENCY OF HOLDING AN ADVISORY VOTE ON NAMED
SENIOR EXECUTIVE STOCK RETENTION REQUIREMENTS64
SECTION XV – STOCKHOLDER PROPOSAL REGARDING BOARD DECLASSIFICATIONOFFICER COMPENSATION (ITEM 5 ON PROXY CARD) 65
SECTION XVIXV – OTHER BUSINESS66
APPENDIX A – CAPITAL ONE STATEMENT IN OPPOSITION TO THE STOCKHOLDER PROPOSAL REGARDINGFINANCIAL CORPORATION’S RESTATED CERTIFICATE OF 
BOARD DECLASSIFICATIONINCORPORATION66
SECTION XVII – OTHER BUSINESS67A-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”) rules,, 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     ___, 2010,, 2011 we mailed to our stockholders a Notice ofRegarding 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 ourthe proxy materials for Capital One’s 20102011 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 2010 Annual Meeting. All stockholders who held shares as of the close of business on March 1, 201016, 2011 (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?proxy materials?

The Notice provides instructions regarding how to view our proxy materials for the 2010 Annual Meeting online. As explained in greater detail in the Notice, to view the proxy materials and vote, you will need to visit www.proxyvote.com and have available your 12-digit Controlcontrol number(s) contained on your Notice.
 
How do I request paper copies of the proxy materials?

You may request paper copies of the 20102011 proxy materials by following the instructions listed at www.proxyvote.com, by telephoning 1-800-579-1639 or by sending an e-mail to sendmaterial@proxyvote.com.
 
What is the difference between a record holder and a holder of shares in street name?

You are a record holder if you hold shares of Capital One sharescommon 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 (the( “NYSE”) rules,, 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 1, 2010,16, 2011, 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 1, 2010.16, 2011. 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 Dodo I Vote?vote?”
On March 1, 2010,16, 2011, there were 456,373,968                     shares of Capital One’s common stock issued and outstanding.
 
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How do I vote?

By Internet
 
You may vote via the Internet by going to www.proxyvote.com and following the instructions on the screen. Have your Notice or proxy card available when you access the web page.
 


By Telephone
 
You may vote by telephone by calling the toll-free telephone number on theyour Notice or your proxy card (1-800-690-6903), which is available 24 hours a day, and following 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 April 28, 2010; ifMay 10, 2011. If you vote by mail, your proxy card must be received by April 28, 2010.May 10, 2011.
 
In Person
 
If you are a record holder of shares of Capital One shares,common stock, you may vote in person at the Annual Meeting. A valid picture identification and proof of stock ownership as of the record date must be presented in order to attend the meeting. Stockholders of record also may be represented by another person at the Annual Meeting by executing a legal proxy designating that person. See “Can I attend the Annual Meeting?” above for more information regarding attending the Annual Meeting.
 
If you hold your shares of Capital One common stock in street name, you must bring a copy of a statement reflecting your stock ownership as of the record date in order to attend the meeting. You must also obtain a legal proxy from your broker, bank, trust or other nominee and present it to the inspector of elections with your ballot to be able to vote at the Annual Meeting. To request a legal proxy, please follow the instructions at www.proxyvote.com.
 
What if I hold my shares in street name and I do not provide my broker, bank, trustee or other nominee with instructions about how to vote my shares?
 
You may instruct your broker, bank, trustee or other nominee on how to vote your shares using the methods described above. If you do not give voting instructions to the firm that holds your shares prior to the Annual Meeting, the firm has discretion to vote your shares according to the Board of Directors’ recommendations as shown below under “What are the Board of Directors’ recommendations?” with respect to Items 2 and 3 on the proxy card, both of which are considered “routine” matters. As a result of recent changes to NYSE rules, theThe election of members of the Board of Directors is no longernot 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 4 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 emaile-mail from Broadridge. The Trusteetrustee of the Associate Savings Plan will vote your shares in accordance with your duly executed instructions if they are received by April 26, 2010.May 6, 2011. If you do not send instructions, the trustee will not vote the share equivalents credited to your account.
 
Can I revoke my proxy?

Yes. YouYes, you may revoke any proxy that you previously granted or change your vote by:
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Your new vote must be submitted in accordance with the timeframes above under “Time“Time for Voting Your Shares By Internet, By Telephone or By Mail.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 Capital One’s shares entitled to vote are present in person or represented by proxy, including proxies on which abstentions (withholding authority to vote) are indicated. 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 have discretionary authority to vote your shares according to the recommendations of the Board of Directors with respect to “routine” matters. For non-routine matters, which includesinclude 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 the Inspector of Elections.Broadridge. The Board of Directors has appointed a representative of ComputershareAmerican 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 board members,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.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 (the “Board”) as follows:
 
For the election of Patrick W. Ronald Dietz, Lewis Hay IIIGross, Ann Fritz Hackett and Mayo A. Shattuck IIIPierre E. Leroy as directors of Capital One (see page 60)60);
 
For the ratification of the Audit and Risk Committee’s selection of Ernst & Young LLP as independent auditors of the Company for 20102011 (see page 61)61);
For the approval of amendments to Capital One’s Restated Certificate of Incorporation to provide for the annual election of directors (see page 62);
 
For the advisory approval of Capital One’s 2009 named executive officer2010 Named Executive Officer compensation (see page 62)64);
 
AgainstEvery Year for the frequency with which Capital One should hold a stockholder proposal regarding senior executive stock retention requirementsvote to approve its Named Executive Officer compensation (see page 63); and65
Against the stockholder proposal regarding board declassification (see page 65)).
 
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The Board of Directors is not aware of any other matter that will be presented at the Annual Meeting. If any other matter is 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. Ronald Dietz, Lewis Hay IIIGross, Ann Fritz Hackett and Mayo A. Shattuck IIIPierre E. Leroy will each be elected as a director of Capital One if a majority of the votes cast onin his or her election areis 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 submit 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 election process see page 60.11.
 
Item 2, the ratification of the Audit and Risk Committee’s selection of Ernst & Young LLP as independent auditors of the Company for 2010,2011, will be approved if a majority of the votes cast on the proposal are voted in favor of the proposal.
 
Item 3,, the advisory approval of amendments to Capital One’s 2009 named executive officer compensation,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 majority of the votes cast on the proposal are votedsingle class, vote in favor of the proposal.
 
Item 4, thestockholder proposal regarding senior executive stock retention requirements, advisory approval of Capital One’s 2010 Named Executive Officer compensation, will be approved if a majority of the votes cast on the proposal are voted in favor of the proposal.
 
Item 5, the advisory vote to determine the frequency with which Capital One will hold a stockholder proposal regarding board declassification,vote to approve its Named Executive Officer compensation, will be approved ifdetermined based on which option (every year, every two years, or every three years) receives a majority of the votes cast on the proposal are voted in favor of the proposal.cast.
 
As described under “How Dodo I Vote?vote?” on page 1,2, 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 according to the recommendations of the Board of Directors with respect to Items 2 and 3. 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, 4 and 5. 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 any ofItems 1, 2, 4 or 5. With respect to Item 3, abstentions and broker non-votes will have the items presented above.same effect as a vote against the proposal.
 

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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 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 investors,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 monitors external governance developments and practices and reviews the Corporate Governance Principles periodically to ensuresee 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 at www.capitalone.comunder “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, ChiefPrincipal 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’sOne’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 at www.capitalone.com under “Investors.” Capital One will disclose on its website any amendment to the Code of Conduct or any waiver under the Code of Conduct granted to any of its directors or executive officers.
 
Board 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 fourteenten times during 2009, including meetings comprising only the independent directors.2010. 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 non-managementindependent directors meet in executive session (without the presence of management) on a regularly scheduled basis, at least three times each year. The independent members of the Board meetyear, and at least annually in executive session to conduct the Chief Executive Officer’sOfficer’s evaluation.
 
Capital One expects all of its directors to attend the Annual Meeting. In 2009,2010, all directors then serving attended the Annual Meeting.
 
Board 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’sOne’s Board of Directors is comprised of Mr. Fairbank and nine non-managementeight independent directors. The Corporate Governance Principles provide for a presiding independent director (the “Presiding Director”), to be appointed by the Board of Directors, who aids and assists the Chairman and the remainder of the Board in ensuringpromoting effective governance in managing the affairs of the Board and Capital One. The Presiding Director is currently Ms. Hackett.
 
In addition to other duties more fully described in the Corporate Governance Principles, the presiding director, currently Ms. Hackett:Presiding Director:
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Detailed information on how to contact the Presiding Director is contained in the section entitled “How to Contact theThe Board and the Presiding Director.” Additional information on the Company’s succession planning process is located in Capital One’s Corporate Governance Principles.
The Boardof Directors has four standing committees:Committees: Audit and Risk, Compensation,Risk; Compensation; Governance and Nominating,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 Board committeeCommittee is contained in the sectionbelow under “Committees of the Board.Board of Directors.”
 
We believe that a combined Chairman of the Board of Directors and Chief Executive Officer position, together with independent chairs for each of our Board committees each with an independent presiding directorchair, 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 a presiding directorthe Presiding Director with the duties described above. The Board of Directors believes that combining the ChairChairman and CEOChief 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 members, the combination of the Chairman and Chief Executive Officer roles,directors and its clearly defined presiding directorPresiding 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. WeWe evaluate risks in terms of eight risk categories: strategic, compliance, operational, reputation,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 Finance and Trust Oversight Committee oversees the guidelines and policies that govern the process by which the Corporation 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 any other programs that are reasonably likely to create a material risk to the Company, may encourage.

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 ensureprovide 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.
 

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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 ensuremonitor that they do not encourage risk-taking beyond our ability to manage risk, are compatible with effective controls and risk management and align with our business strategy. From early 2009 through early 2010, partially in response to EESA and, later, the Federal Reserve Board of Governors' October 2009 “Proposed Guidance on Sound Incentive Compensation Policies” (the "Guidance"), theThe Compensation Committee reviewedannually reviews and approvedapproves the overall goals and purposes of Capital One's corporate incentive program, the NEO (including the CEO)named executive officer and other senior executive compensation programs and any other programs that are reasonably likely to create a material risk to the Company for 2009 and 2010.incentive compensation programs. During the course of these reviews, the Compensation Committee discusseddiscusses Capital One's most significant risks, including Capital One's status with respect to those risks and the relationship of those risks to the corporate incentive program and the NEO (including the CEO) and other senior executiveapplicable compensation programs. The Compensation Committee also discusseddiscusses these programs with Capital One's Chief Risk Officer, Chief Financial Officer and Chief Human Resources Officer and the Compensation Committee's independent compensation consultant, as appropriate. Based on these discussions, the Compensation Committee believes that these incentivecompensation programs are consistent with Safety and Soundness and do not contain material incentives that the Compensation Committee would expect to drive excessive risk taking.
 
Director Independence

The Board of Directors has assessed whether each of its non-employeenon-management members is “independent” under Capital One’s Director Independence Standards, as described below.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. The Board of Directors has determined that each of Mr. Campbell, Mr. Dietz, Mr. Gross, Ms. Hackett, Mr. Hay, Mr. Leroy, Mr. Shattuck and Mr. Warner are independent under these standards. With respect to Mr. Westreich, who resigned from the Board of Directors in May 2010, the Board considered a loan from Capital One, National Association, indirectly connected to Mr. Westreich and certain of his family members, as described below under “Related Person Transactions,” and determined that Mr. Westreich iswas not independent.independent 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 itthe 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, and/or any personincluding persons sharing the household of such director, executive officer or director nominee (other than a tenant or employee). Such loans wereare 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 diddo 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 one related person transaction since January 1, 2009.2010. 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 company of which a son of
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Stanley Westreich, one of Capital One’s former directors, servesserved at the relevant times as manager through a separate entity and, together with other family members and third parties, iswas an investor. A family trust for which Mr. Westreich iswas at the relevant times the trustee and residual beneficiary hashad indirectly invested $22.2 million in the borrower, comprising a 49% indirect ownership interest and a $3.8 million indirect loan. The trust hashad no voting rights or other legal ability to control the borrower. The Bank’s loan had an original principal amount of $37.5 million, which has beenwas the amount outstanding at all times since May 2005; matureshad an interest rate of 5.5% per annum; was scheduled to mature in May 2010; and iswas secured by commercial real estate property in New York, New York. The borrower made all required loan payments in 2009, totaling $2.1 million at a rate of 5.5% per annum. At December 31, 2009, the Bank considered this loan “classified”“classified” under applicable regulatory guidelines and as a “potential problem”“potential problem” under applicable financial accounting guidelines. The borrower did not deliver the loan's interest payment due on January 1, 2010, as contractually agreed, and the loan entered past due status. TheNo principal or interest was paid by the borrower after that date. On March 31, 2010, the Bank is currently proceeding towards a judicial foreclosure of the underlying property or other resolution ofsold the loan and does not expect to take a substantial loss with respect thereto.third party in an arms-length transaction for total proceeds of $34.5 million.
 


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 non-managementindependent 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.Board of Directors. In January 2010,2011, 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 at www.capitalone.comunder “Investors.” Below is a description of each Committee: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 Securities and Exchange CommissionSEC and the NYSE promulgated thereunder, the Board of Directors has designated Mr. Dietz as its “audit committee financial expert.”
 
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.
 
20092010 Meetings
 
During 2009,2010, the Audit and Risk Committee met twelve times.
 
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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.
 


20092010 Meetings
 
During 2009,2010, the Governance and Nominating Committee met fourfive times.
 
Compensation Committee
 
Description
 
TheIn accordance with its charter, 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 to the Board’s independent directors;directors or the full Board, as provided in its charter; 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.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
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relationship existed in the past. No member of the Compensation Committee is or was formerly an officer or an employee of Capital One.
 
Compensation Committee Consultant
 
The Compensation Committee has the authority to retain and terminate legal counsel and other consultants and to approve such consultants’ fees and other retention terms. The Committee has retained the services of Frederic W. Cook & Co., Inc., an independent executive compensation consulting firm (the “Consultant”). The Consultant reports to the Chair of the Committee, and its engagement may be terminated by the Committee at any time.
 
The Committee determines the scope and nature of the Consultant’s assignments. In 2009,2010, 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 Chief Executive Officer’s, the other executive officers’ and the directors’ compensation.
The Consultant may also be present for Committee meetings during which compensation for senior executives other than the Chief Executive Officer, is discussedthe 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.above.
 
20092010 Meetings
 
During 2009,2010, the Compensation Committee met eightseven 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.
 
20092010 Meetings
 
During 2009,2010, the Finance and Trust Oversight Committee met five times.
 
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Committee Membership

The table below provides a summary of the Board’s current Committee structure, membership and related information.

  Chair  Member  Audit Committee Financial
Expert
Audit and Risk
Committee		     Compensation
Committee		     Finance and Trust
Oversight
Committee		     Governance and
Nominating
Committee
  
E.R. Campbell
 
W. Ronald Dietz 
 
Patrick W. Gross      
        
Ann Fritz Hackett     
 
Lewis Hay, III 
 
Pierre E. Leroy      
 
Mayo A. Shattuck III 
 
Bradford H. Warner     
Stanley Westreich 

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 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.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.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
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Board periodically review the Board’s membership in light of Capital One’s business model and strategic objectives, consider whether the directors possess the requisite skills, experience and perspectives to oversee the Company in achieving those goals, and may seek additional directors from time to time as a result of its considerations.
 


How to Contact the Board of Directors and the Presiding Director
 
Interested parties may make their concerns known to the Board of Directors or non-managementindependent directors as a group by contacting the Presiding Director, care of the Corporate Secretary, at the address below:
 
Presiding 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 non-managementindependent 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 Presiding Director, the Chair of the appropriate Committee and/or the specified director, as applicable.
 
Information about our Directors and Executive Officers

Each of Capital One’s current executive officers, and directors,each director who areis nominated for election or who areis continuing to serve their termshis 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.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, 60
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 and Capital One, National Association.
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 MasterCard's U.S. Region Board.
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, 70
Director
Mr. Campbell 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.
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He has been a director of Capital One Financial Corporation since November 16, 2005, and is also a director of Capital One, National Association. He has served on the Finance and Trust Oversight Committee since November 2005 and on the Compensation Committee since April 2006.
As the former Chief Executive Officer of a community bank in Louisiana and former Chairman of a national bank, Mr. Campbell brings valuable experience to the Board of Directors in overseeing, among other matters, Capital One’s banking business.
W. Ronald Dietz, 68
Director
In 2010, Mr. Dietz retired as President, Chief Executive Officer and a director of W.M. Putnam Company (“Putnam”), a nationwide provider of outsourced facilities management services to companies with networks of offices or retail stores, and was appointed Vice Chairman of the board of directors of Putnam. Mr. Dietz joined Putnam in January 2001 as President and a director and became President, Chief Executive Officer and director in 2004. Previously, he was a Managing Partner of Customer Contact Solutions, LLC (“CCS”), an advisory firm offering services in a broad range of customer treatment and call center performance and risk management areas.
Mr. Dietz has been a director of Capital One Financial Corporation since February 28, 1995 and is also a director of Capital One Bank (USA), National Association and Capital One, National Association. He has been Chair of the Audit and Risk Committee since 1995 and has been a member of the Finance and Trust Oversight Committee since July 2003. He qualifies as an “audit committee financial expert” under SEC guidelines and has been Capital One’s designated “audit committee financial expert” since January 2003.
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, 66
Director
Mr. Gross is Chairman of The Lovell Group, a private business and technology advisory and investment firm he founded in 2002 to work with private venture-funded technology companies on a range of business, management and financial strategies. Prior to his role with Lovell, he was a founder, and served as a principal executive officer from 1970 to 2002, of American Management Systems, Inc. (“AMS”), an information technology, consulting, software development and systems integration firm.
He has been a director of Capital One Financial Corporation since February 28, 1995 and is also a director of Capital One, National Association. He has been a member of the Audit and Risk Committee since March 1995 and the Compensation Committee since April 2005. He served as Chair of the Governance and Nominating Committee from September 2002 through April 2007 and as a member of the Governance and Nominating Committee since April 2008. He previously served on the Finance and Trust Oversight Committee from April 2007 to April 2008 and as Presiding Director from September 2003 to April 2007.
Mr. Gross is currently a director of the following publicly-held companies: Career Education Corporation; Liquidity Services, Inc.; Taleo Corporation; Waste Management, Inc.; and Rosetta Stone. In addition to Capital One, he serves on four other public company audit committees. Mr. Gross also served on the boards of Mobius Management Systems, Inc. from 2002 through 2007 and of Computer Network Technology Corporation from 1997 through 2006.
Mr. 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, 57
Director
Ms. Hackett has been President of Horizon Consulting Group, LLC since she founded the company in 1996. Horizon Consulting Group provides strategic, organizational and human resources advice to clients worldwide. She has worked with boards of directors, chief executive officers and senior executives to identify strategic opportunities and execute solutions during periods of business and financial challenges. Prior to Horizon Consulting, Ms. Hackett was Vice President and Partner of a leading national strategy consulting firm where she served on the Management Committee and, among other assignments, led Human Resources and developed her expertise in managing cultural change, creating performance management processes and a performance-based culture, nurturing leadership talent and planning for executive succession.
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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 Presiding Director in April 2007. She also is a director of Fortune Brands, Inc. and sits on Fortune’s Nominating and Corporate Governance and Compensation and Stock Option Committees. Ms. Hackett was also a director of Woodhead Industries, Inc. from 1996 through 2006, where she chaired the Human Resources Committee and served on the Governance and Audit Committees.
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, 55
Director
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 One Financial Corporation since October 31, 2003, and is also a director of Capital One Bank (USA), National Association. He has served on the Compensation Committee since April 2004, the Finance and Trust Oversight Committee, of which he has served as Chair, since April 2005, and the Governance and Nominating Committee since April 2007. He is also a director of Harris Corporation where he is a member of the Audit Committee and chairs the Corporate Governance Committee. He also serves as the Chair of FPL Group’s Executive Committee.
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, 62
Director
Mr. Leroy retired in 2005 from Deere & Company as President of both the Worldwide Construction & Forestry Division and the Global Parts Division. Deere & Company is a world leader in providing advanced products and services for agriculture, forestry, construction, lawn and turf care, landscaping and irrigation, and also provides financial services worldwide and manufactures and markets engines used in heavy equipment. During his professional career with Deere, Mr. Leroy served in a number of positions in Finance, including Treasurer, Vice-President and Treasurer, and Senior Vice-President and Chief Financial Officer.
Mr. Leroy has been a director of Capital One Financial Corporation since September 1, 2005, and is also a director of Capital One, National Association. He joined Capital One’s Audit and Risk, Compensation, and Governance and Nominating Committees in September 2005, July 2006 and April 2006, respectively.
Mr. Leroy has been a director of Fortune Brands, Inc. since September 2003, where he serves on the Audit and Compensation and Stock Option Committees. He has been a director of RSC Holdings, Inc. since May 2008, where he serves on the Audit and Risk Committee and chairs the Compensation Committee. Mr. Leroy also served on the Board of Directors of ACCO Brands August 2005 to April 2009 and of Nuveen Investments, Inc. from March 2006 to April 2007.
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.
Mayo A. Shattuck III, 56
Director
Mr. Shattuck has been President and Chief Executive Officer of Constellation Energy Group, a leading supplier of electricity to large commercial and industrial customers, since November 2001 and was elected Chairman of the Board of Directors in July
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2002. Previously, Mr. Shattuck was Co-Chairman and Co-Chief Executive Officer of DB Alex. Brown, LLC and Deutsche Banc Securities, Inc., was an investment analyst at Morgan Guaranty Trust Company, and was a strategy consultant at Bain & Company where he gained experience in corporate finance, capital markets, risk management and private banking.
Mr. Shattuck has been a director of Capital One Financial Corporation since October 31, 2003. He has served on the Compensation Committee since April 2004 and became its Chairman in April 2005. He has also served on the Finance and Trust Oversight Committee since December 2003 and was its Chair from April 2004 through April 2005. Mr. Shattuck is also a director of Gap, Inc. where he serves on the Governance and Nominating Committee and chairs the Audit and Finance Committee. He also serves as the Chair of Constellation’s Executive Committee.
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, 59
Director
Mr. Warner served in a variety of positions at BankBoston, FleetBoston and Bank of America from 1975 until his retirement in 2004. These positions included President of Premier and Small Business Banking, Executive Vice President of Personal Financial Services and Vice Chairman of the Investment Services and Consumer Business Group.
Throughout his banking career, Mr. Warner served in leadership roles for many of the major business lines and functional disciplines that constitute commercial banking, including leadership of retail and branch banking, consumer lending (credit cards, mortgage and home equity), student lending and small business; various corporate banking functions, including community banking and capital markets businesses, such as underwriting, trading and sales of domestic and international fixed income securities, foreign exchange and derivatives; international banking businesses in northern Latin America and Mexico; and several investment related businesses, including private banking, asset management and brokerage. He also served on the senior most management policy and governance committees at BankBoston, FleetBoston and Bank of America.
Mr. Warner has been a director of Capital One Financial Corporation since April 24, 2008, and also serves as a director of Capital One, National Association. He has been a member of the Audit and Risk and Finance and Trust Oversight Committees since April 2008.
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.
 
Richard D. Fairbank, 59
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 and Capital One, National Association.

Mr. Fairbank was appointed as the Fifth Federal Reserve District’Officerss representative on the Federal Advisory Council, effective January 1, 2010. As a member of the Council, he will confer 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 MasterCard's U.S. Region Board.

Mr. Fairbank’s experience in leading the business as founder and CEO 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.
Edward R. “Bo” Campbell, 69
Director
Mr. Campbell is an active investor primarily in oil and gas, land and timber, and banking.  He had an extensive banking career at Pioneer Bancshares, a Louisiana-based bank holding company, where he was President and CEO before becoming Chairman of the Board of Directors, and 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.
He has been a director of Capital One Financial Corporation since November 16, 2005, and is also a director of Capital One, National Association.  He has served on the Finance and Trust Oversight Committee since November 2005 and on the Compensation Committee since April 2006.
As the former chief executive officer of a community bank and former Chairman of a national bank, Mr. Campbell brings valuable experience to the Board in overseeing, among other matters, Capital One’s banking business.
W. Ronald Dietz, 67
Director
Mr. Dietz has held a variety of positions at W.M. Putnam Company (“Putnam”), a nationwide provider of outsourced facilities management services to companies with networks of offices or retail facilities since joining in January 2001, including President, Chief Executive Officer and Director. Previously, he was a Managing Partner of Customer Contact Solutions, LLC (“CCS”), an advisory firm offering services in a broad range of customer treatment and call center performance and risk management areas.
Mr. Dietz has been a director of Capital One since February 28, 1995 and is also a director of Capital One Bank (USA), National Association and Capital One, National Association.  He has been Chair of the Audit and Risk Committee since 1995 and is also a member of the Finance and Trust Oversight Committee. He qualifies as an “audit committee financial expert” under SEC guidelines and has been Capital One’s designated “audit committee financial expert” since January 2003.
Mr. Dietz’s experience in financial services, 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 on these and other matters.
Patrick W. Gross, 65
Director
Mr. Gross is Chairman of The Lovell Group, a private business and technology advisory and investment firm he founded in 2002 to work with private venture-funded technology companies on a range of business, management and financial strategies. Prior to his role with Lovell, he was a founder, and served as a principal executive officer from 1970 to 2003, of American Management Systems, Inc. (“AMS”), an information technology, consulting, software development and systems integration firm.
He has been a director of Capital One Financial Corporation since February 28, 1995 and is also a director of Capital One, National Association.  He has been a member of the Audit and Risk Committee since March 1995 and the Compensation Committee since April 1995.  He served as Chair of the Governance and Nominating Committee from December 2002 through April 2007 and as a member of the Governance and Nominating Committee since April 2008.
Mr. Gross is currently a director of the following publicly-held companies: Career Education Corporation; Liquidity Services, Inc.; Taleo Corporation; Waste Management, Inc.; and Rosetta Stone.  In addition to Capital One, he serves on four other public company Audit Committees. Mr. Gross also served on the boards of Mobius Management Systems, Inc. from 2002 through 2007 and of Computer Network Technology Corporation from 1997 through 2006.
Mr. 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 in overseeing, among other matters, Capital One’s entrepreneurial innovations and information systems.

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Robert M. Alexander, 46
Ann Fritz Hackett, 56
Director
Ms. Hackett has been President of Horizon Consulting Group, LLC since she founded the company in 1996. Horizon Chief Information OfficerConsulting 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 Presiding Director in April 2007. She also is a director of Fortune Brands, Inc. and sits on Fortune’s Nominating and Corporate Governance and Compensation and Stock Option Committees. Ms. Hackett was also a director of Woodhead Industries, Inc. from 1996-2006, where she chaired the Human Resources Committee and served on the Governance and Audit Committees.
Ms. Hackett has experience in leading change initiatives, talent management, 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 in its discussions on these and other matters.
Lewis Hay, III, 54
Director
Mr. Hay has been Chairman and Chief Executive Officer of FPL Group, Inc., an organization focused on energy related products and services, since January 2002. He joined FPL Group, Inc. in 1999 as Vice President, Finance and Chief Financial Officer and became President of FPL Energy, LLC in March 2000. He became a director, president and chief executive officer of FPL Group in June 2001. Prior to joining FPL Group, Mr. Hay was Executive Vice President and Chief Financial Officer of US Food Service, where he was responsible for finance and accounting, treasury, credit, investor relations, mergers and acquisitions, and information systems.
Mr. Hay has been a director of Capital One Financial Corporation since October 31, 2003, and is also a director of Capital One Bank (USA), National Association.  He has served on the Compensation Committee since April 2004, the Finance and Trust Oversight Committee, of which he is Chair, since April 2005, and the Governance and Nominating Committee since April 2007. He is also a director of Harris Corporation where he is a member of the Audit Committee and chairs the Governance and Nominating Committee.
Mr. Hay’s experience in leading finance and accounting, treasury, credit, investor relations, mergers and acquisitions, and information systems functions, as well as his experience in leading a large, publicly-held company and serving on other public company boards, provides the Board with valuable insight on these and other matters.

14
 
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, 40
Chief Human Resources Officer
Mr. Berson joined Capital One in July 1992. From July 1992 to June 2009, Mr. Berson held a variety of roles at Capital One, including President, Financial Services and President, U.S. Card. In June 2009, Mr. Berson became Chief Human Resources Officer, and in this role Mr. Berson is responsible for overseeing Capital One’s Human Resources strategy, recruitment efforts, development programs and corporate real estate portfolio.
Lynn A. Carter, 54
President, Banking
Ms. Carter joined Capital One in April 2007 as Chief Operating Officer for the Banking Segment and became President, Banking in August 2007. Ms. Carter has over 30 years of banking and community development expertise. She joined Capital One from Bank of America Corporation, where she served from April 2004 to April 2007 as president of Business Banking and as president of Bank of America California. Ms. Carter also serves as a director of Capital One, National Association.
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John G. Finneran, Jr., 61
General Counsel and Corporate Secretary
Mr. Finneran joined Capital One in September 1994. Since that time, he has served as General Counsel and Corporate Secretary and is responsible for managing Capital 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, 44
Chief Enterprise Services Officer
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, 59
Chief Financial Officer, Principal Accounting Officer
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 and Capital One Bank (USA), National Association.
Peter A. Schnall, 47
Chief Risk Officer
Mr. Schnall joined Capital One in August 1996. From August 1996 to October 2002, Mr. Schnall served in a variety of roles at Capital One. From October 2002 until June 2006, he served as Chief Credit Officer. Mr. Schnall has been Chief Risk Officer since June 2006, and in this role he is responsible for overseeing Capital One’s credit, compliance, operational and enterprise risk management functions.
Ryan M. Schneider, 41
President, Card
Mr. Schneider joined Capital One in December 2001. From December 2001 to December 2007, Mr. Schneider held a variety of positions within Capital One, including Executive Vice President, Auto Finance and Executive Vice President, US Card. Mr. Schneider became President, Card in December 2007, and in this role he is responsible for all of Capital One’s consumer and small business credit card lines of business, including those in the United States, the United Kingdom and Canada. Mr. Schneider also serves as a director of Capital One Bank (USA), National Association.
Sanjiv Yajnik, 54
President, Financial Services
Mr. Yajnik joined Capital One in July 1998. From July 1998 to June 2009, Mr. Yajnik held a number of positions within Capital 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, small business, mortgage businesses and consumer lines and loans. Prior to joining Capital One, Mr. Yajnik held a broad range of positions, including General Manager at Circuit City Stores (USA), Market Manager at PepsiCo (Canada), and Chief Engineer at Mobil Oil (International).
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Pierre E. Leroy, 61
Director
Mr. Leroy retired in 2005 from Deere & Company, a global provider of products and services for the agriculture and forestry industries, as President of both the Worldwide Construction & Forestry Division and the Worldwide Parts Division. During his professional career with Deere, he served in a number of positions in Finance, including Treasurer, Vice-President and Treasurer, and Senior Vice-President and Chief Financial Officer.
Mr. Leroy has been a director of Capital One Financial Corporation since September 1, 2005, and is also a director of Capital One, National Association. He joined Capital One’s Audit and Risk, Compensation, and Governance and Nominating Committees in September 2005, July 2006 and April 2006, respectively.
Mr. Leroy is also a director of Fortune Brands, Inc. and RSC Holdings, Inc.  He is a member of Fortune’s Audit and Compensation Committees and RSC’s Audit and Compensation Committees. At RSC, he serves as Chair of the Compensation Committee. Mr. Leroy also served on the Board of ACCO Brands from August 2005 to April 2009 and of Nuveen Investments, Inc. from March 2006 to April 2007.
Mr. Leroy’s experience in capital markets and asset-liability management, as well as leading and re-engineering large complex international marketing, engineering and manufacturing organizations and serving on other public company boards, provides the Board with valuable insight on these and other matters.
Mayo A. Shattuck, III, 55
Director
Mr. Shattuck has been President and Chief Executive Officer of Constellation Energy Group, a leading supplier of electricity to large commercial and industrial customers, since November 2001 and was elected Chairman of the Board in July 2002. Previously, Mr. Shattuck was Co-Chairman and Co-Chief Executive Officer of DB Alex. Brown, LLC and Deutsche Banc Securities, Inc. and was an investment analyst at Morgan Guaranty Trust Company and a strategy consultant at Bain & Company, where he gained experience in corporate finance, capital markets, risk management and private banking.
He has been a director of Capital One Financial Corporation since October 31, 2003. He has served on the Compensation Committee since April 2004 and became its Chairman in April 2005. He has also served on the Finance and Trust Oversight Committee since December 2003 and was its Chair from April 2004 through April 2005. Mr. Shattuck is also a director of Gap, Inc. where he serves on the Governance and Nominating Committee and chairs the Audit Committee.
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 with valuable insight on these and other matters.



Bradford H. Warner, 58
Director
Mr. Warner served in a variety of positions at BankBoston, FleetBoston and Bank of America from 1975 until his retirement in 2004. These positions included President of Premier and Small Business Banking, Executive Vice President of Personal Financial Services, and Vice Chairman of the Investment Services and Consumer Business Group.
Throughout his banking career, Mr. Warner served in leadership roles for many of the major business lines and functional disciplines that constitute commercial banking, including leadership of retail and branch banking, consumer lending (credit cards, mortgage and home equity), student lending and small business; various corporate banking functions, including community banking and capital markets businesses, such as underwriting, trading and sales of domestic and international fixed income securities, foreign exchange and derivatives; and 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 became a director of Capital One Financial Corporation in April 2008 and also serves as a director of Capital One, National Association. He has been a member of the Audit and Risk and Finance and Trust Oversight Committees since April 2008.
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 in overseeing, among other matters, a broad range of matters critical to Capital One’s banking business.
Stanley Westreich, 72
Director
Mr. Westreich was President of Westfield Realty, Inc., a real estate development and construction company, from 1965 to 2005.
He has been a director of Capital One Financial Corporation since July 26, 1994 and is also a director of Capital One Bank (USA), National Association.  He served as a member of the Compensation Committee from 1995 through 2009 and was its Chairman from March 1995 through April 2005. He has also served on the Finance and Trust Oversight Committee since April 2004.
Mr. Westreich’s experience with Capital One and in leading a large commercial real estate firm brings valuable insight to the Board in overseeing, among other matters, a wide range of banking and business matters from both a leadership and a customer perspective.
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Executive Officers
Robert M. Alexander, 45
Chief Information Officer
Mr. Alexander joined Capital One in April 1998. From April 1998 to May 2007, Mr. Alexander had responsibility at various times for a number of Capital 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, 39
Chief Human Resources Officer
Mr. Berson joined Capital One in 1992. From 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.
John G. Finneran, Jr., 60
General Counsel and Corporate Secretary
Mr. Finneran joined Capital One in September 1994. Since that time, he has served as General Counsel and Corporate Secretary and is responsible for managing Capital One’s legal, governmental affairs, corporate governance, brand, regulatory relations and corporate affairs departments. He also manages Capital One’s internal audit department for administrative purposes.
Gary L. Perlin, 58
Chief Financial Officer, Principal Accounting Officer
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 and Capital One Bank (USA), National Association.
Lynn A. Pike, 53
President, Banking
Ms. Pike joined Capital One in April 2007 as Chief Operating Officer for the Banking Segment and became President, Banking in August 2007. Ms. Pike 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. Pike also serves as a director of Capital One, National Association.
Peter A. Schnall, 46
Chief Risk Officer
Mr. Schnall joined Capital One in August 1996. From August 1996 to October 2002, Mr. Schnall served in a variety of roles at Capital One. From October 2002 until June 2006, he served as Chief Credit Officer. Mr. Schnall has been Chief Risk Officer since June 2006, and in this role he is responsible for overseeing Capital One’s credit, compliance, operational and enterprise risk management functions.
Ryan M. Schneider, 40
President, Card
Mr. Schneider joined Capital One in December 2001. From December 2001 to December 2007, Mr. Schneider held a variety of positions within Capital One including President, Auto Finance and Executive Vice President, US Card. Mr. Schneider became President, Card in December 2007, and in this role he is responsible for all of Capital One’s consumer credit card lines of business, including those in the United States, the United Kingdom and Canada. Mr. Schneider also serves as a director of Capital One Bank (USA), National Association.
Sanjiv Yajnik, 53
President, Financial Services
Mr. Yajnik joined Capital One in 1998. From 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, small business and mortgage businesses. Prior to joining Capital One, Mr. Yajnik held a broad range of positions, including General Manager at Circuit City Stores (USA), Market Manager at PepsiCo (Canada), and Chief Engineer at Mobile Oil (International).
17

SECTION III – SECURITY OWNERSHIP
 
Security Ownership of Certain Beneficial Owners
 
Based on Schedule 13G filings submitted to the SEC, Capital One wasis aware of the following beneficial ownerowners of more than 5% of Capital One’s outstanding common stock.
 
Name and AddressAmount and Nature of Beneficial Ownership (1)Percent of ClassAmount and Nature of
Beneficial Ownership (1)		Percent of
Class
Dodge & Cox (2)
555 California Street, 40th Floor
San Francisco, CA 94104
56,953,76612.7%
Dodge & Cox (2)  
555 California Street, 40th Floor55,933,55912.2%
San Francisco, CA 94104  
  
BlackRock, Inc. (3)  
40 East 52nd Street28,563,2436.25%
New York, NY 10022  

(1)     Beneficial ownership is determined under SEC Rule 13d-3(d)(1). The information contained in this table is based on Schedule 13G reports filed with the SEC and the ownership interests indicated are current only as of the dates of filing with the SEC, as indicated below.
 
(2)On a Schedule 13G (Amendment No. 6)7) filed on February 12, 2010,10, 2011, Dodge & Cox reported beneficial ownership as of December 31, 20092010, of 56,953,76655,933,559 shares of Capital One’s common stock, which positions in the aggregate represented 12.7%12.2% of Capital One’s outstanding common stock as of December 31, 2009.2010. According to this Schedule 13G, Dodge & Cox has sole voting power with respect to 54,229,71653,132,609 shares, shared voting power with respect to 107,600no shares, sole investment power with respect to 56,953,76655,933,559 shares and shared investment power with respect to no shares. The securities reported on this Schedule 13G are beneficially owned by clients of Dodge & Cox, which clients may include investment companies registered under the Investment Company Act and/of 1940 and other managed accounts, and which clients have the right to receive or employee benefit plans, pension funds, endowment fundsthe power to direct the receipt of dividends from, and the proceeds from the sale of, the common stock of Capital One. The Dodge & Cox Stock Fund, an investment company registered under the Investment Company Act of 1940, has an interest in 31,947,811 shares, or other institutional clients.7.0%, of the class of securities reported in the Schedule 13G. Dodge & Cox certified in its Schedule 13G (Amendment No. 6) that the securities referred to above were acquired in the ordinary course of business and were not acquired for the purpose of and do not have the effect of changing or influencing the control of the issuer of such securitiesCapital One and were not acquired in connection with or as a participant in any transaction having such purpose or effect.
(3)On a Schedule 13G filed on February 3, 2011, BlackRock, Inc., reported beneficial ownership as of December 31, 2010 of 28,563,243 shares of Capital One’s common stock, which positions in the aggregate represented 6.25% of Capital One’s outstanding common stock as of December 31, 2010. According to this Schedule 13G, BlackRock, Inc. has sole voting power with respect to 28,563,243 shares, shared voting power with respect to no shares, sole investment power with respect to 28,563,243 shares and shared investment power with respect to no shares. One or more clients of BlackRock, Inc., have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of the common stock of Capital One, and that no one person’s interest in the common stock of Capital One is more than five percent of the total outstanding common shares. BlackRock, Inc. certified in its Schedule 13G that the securities referred to above were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of Capital One and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect.
 
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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, 2010,2011, by our directors, the Named Executive Officers (the “NEOs”)named executive officers in this proxy statement and all directors and executive officers as a group.
 
Number of Shares or UnitsNumber of Shares or Units 
NameCommon Stock (1)Unvested
Restricted Stock		Stock Issuable Upon
Exercise of Options
Within 60 days (2)		Total Amount and
Nature of
Beneficial
Ownership (3)		Percent of Class
(4)		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)
Percent of
Class (4)
Richard D. Fairbank2,250,09104,375,8206,625,911(5)1.44%2,250,09606,852,280 9,102,376(5) 1.94%
Gary L. Perlin31,127174,193681,873887,193*132,204126,337818,881 1,077,422  *
Lynn A. Pike30,052129,411220,942380,405*
John G. Finneran, Jr.102,75375,550431,751610,054 *
Lynn A. Carter59,41992,590376,713 528,722  *
Peter A. Schnall93,962122,239506,511722,712*120,23189,303459,121 668,655  *
Ryan M. Schneider50,47081,601204,297 336,368  *
E. R. Campbell33,01901,010404,865(6)*631,526037,729 669,255(6) *
W. Ronald Dietz5,2220126,205131,427(7)*5,245099,908 105,153(7) *
Patrick W. Gross7,5390143,703151,242(8)*7,5390186,701 194,240(8) *
Ann Fritz Hackett15,650012,89528,545(9)*15,650057,459 73,109(9) *
Lewis Hay, III922027,11529,843(10)*2,728067,764 70,492(10) *
Pierre E. Leroy4,900020,70325,603(11)*4,900062,701 67,601(11) *
Mayo A. Shattuck, III1,589026,71928,308(12)*
Mayo A. Shattuck III1,589066,585 68,174(12) *
Bradford H. Warner11,500014,640(13)*14,640034,656 49,296(13) *
Stanley Westreich84,9290134,328675,257(14)*
All directors and executive
officers as a group (18
persons)		2,840,371864,9477,560,90712,104,654(15)2.63%
All directors and       
executive officers as a3,685,932719,31410,769,681 15,174,927(14) 3.24%
group (18 persons)       

*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 thesethose 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, 2010.2011.
 
(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 common stock subject to stock options (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 Non-Employee Directors Stock Incentive Plan (the “1995 Directors Plan”), Capital One’s 1999 Non-Employee Directors Stock Incentive Plan (the “1999 Directors Plan”) and Capital One’s 2004 Stock Incentive Plan (the “2004 Stock Incentive Plan”), each as amended or restated from time to time, that are or will become exercisable or that are or will be vested within 60 days of January 31, 2009;2011; and (iii) shares of common stock held by the executive officers under Capital One’s 1994 Associate Stock Purchase Plan or 2002 Associate Stock Purchase Plan (the “Stock Purchase Plans”), each as amended or restated from time to time. Shares of restricted stock have voting rights but are not transferable until the end of the period of restriction.

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(4)     
All percentage calculations are based on the number of shares of common stock issued and outstanding on January 31, 2010,2011, which was 455,293,746.457,346,953. In addition, for the purpose of calculating each director’s or officer’s percentage of shares outstanding, any shares of common stock subject to outstanding stock options held by such person that are exercisable on or within 60 days after January 31, 2010 held by such person2011 are deemed to be outstanding shares of common stock.
 
(5) Does not include 241,680 restricted stock units for which Mr. Fairbank disclaims beneficial ownership of the underlying shares until their delivery date. Delivery of any shares of common stock underlying these restricted stock units is deferred until Mr. Fairbank’s employment with the Company ends.
 
(6) Includes 181,486 shares owned by Campbell Capital, LLC, 181,486 shares owned by Campbell Capital II, LLC and 7,864 shares owned by the E.R. Campbell Family Foundation for which Mr. Campbell holds voting and investment power. Also includes 22,623 restricted stock units for which delivery of the shares of common stock underlying the restricted stock units is deferred until Mr. Campbell’s service with the Board of Directors ends. Does not include 500,000268,179 shares held in a Grantor Retained Annuity Trust, of which Mr. Campbell is not a trustee, and 18,834 restricted stock units for which Mr. Campbell disclaims beneficial ownership of the underlyingownership.



 shares until their
(7)Includes 24,203 restricted stock units for which delivery date. Delivery of anythe shares of common stock underlying a director’sthe restricted stock units is deferred until the director’sMr. Dietz’s service with the Board ends.
(7)Does not include 20,414 restricted stock units for which Mr. Dietz disclaims beneficial ownership of the underlying shares until their delivery date. Delivery of any shares of common stock underlying a director’s restricted stock units is deferred until the director’s service with the BoardDirectors ends.
 
(8)Does not include 20,414Includes 24,203 restricted stock units for which Mr. Gross disclaims beneficial ownershipdelivery of the underlying shares until their delivery date. Delivery of any shares of common stock underlying a director’sthe restricted stock units is deferred until the director’sMr. Gross’s service with the Board of Directors ends.
 
(9)Includes 24,203 restricted stock units for which delivery of the shares of common stock underlying the restricted stock units is deferred until Ms. Hackett’s service with the Board of Directors ends. Does not include 20,414 restricted stock units5,006 shares held by Ms. Hackett’s spouse for which Ms. Hackett disclaims beneficial ownership of the underlying shares until their delivery date, and 5,000 shares held by Ms. Hackett’s spouse. Delivery of any shares of common stock underlying a director’s restricted stock units is deferred until the director’s service with the Board ends.ownership.
 
(10)Includes 1,806 shares held by the Hay Family Limited Partnership, for which Mr. Hay holds voting and investment power. Does not include 20,414Also includes 24,203 restricted stock units for which Mr. Hay disclaims beneficial ownershipdelivery of the underlying shares until their delivery date. Delivery of any shares of common stock underlying a director’sthe restricted stock units is deferred until the director’sMr. Hay’s service with the Board of Directors ends.
 
(11)Does not include 19,414Includes 23,203 restricted stock units for which Mr. Leroy disclaims beneficial ownershipdelivery of the underlying shares until their delivery date. Delivery of any shares of common stock underlying a director’sthe restricted stock units is deferred until the director’sMr. Leroy’s service with the Board of Directors ends.
 
(12)Does not include 20,414Includes 24,203 restricted stock units for which Mr. Shattuck disclaims beneficial ownershipdelivery of the underlying shares until their delivery date. Delivery of any shares of common stock underlying a director’sthe restricted stock units is deferred until the director’sMr. Shattuck’s service with the Board of Directors ends.
 
(13)Includes 3,000 shares held in two Grantor Retained Annuity Trusts, of which Mr. Warner is the trustee, and 140 shares held by Mr. Warner’s spouse. Does not include 13,638Also includes 17,427 restricted stock units for which Mr. Warner disclaims beneficial ownershipdelivery of the underlying shares until their delivery date. Delivery of any shares of common stock underlying a director’sthe restricted stock units is deferred until the director’sMr. Warner’s service with the Board of Directors ends.
 
(14)Includes 156,000 shares held in trust for which Mr. Westreich is the trustee and ultimate beneficiary and 300,000 shares held in a Grantor Retained Annuity Trust, of which Mr. Westreich is the trustee. Does not include 20,414 restricted stock units for which Mr. Westreich disclaims beneficial ownership of the underlying shares until their delivery date and 67,590 shares held by Mr. Westreich’s spouse and for which Mr. Westreich disclaims beneficial ownership. Delivery of any shares of common stock underlying a director’s restricted stock units is deferred until the director’s service with the Board ends.
(15)Includes 871,3321,444,886 shares issuable upon the exercise of options and 147,116329,483 shares of common stock subject to trading restrictions for all other executive officers as a group. Does not include the shares set forth in footnotes (3) through (12)(5), (6) and (9) above for which the NEOsnamed executive officer and directors disclaim beneficial ownership or a total of 572,590and 1,002 shares held by or in trust for various family members and 102 shares of other executive officers and for which such executive officers disclaim beneficial ownership.
 
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 20092010 each of the reporting persons complied with these filing requirements except for a transaction that was omitted from a timely filed report for Mr. Warner, who filed one late report relating to a single acquisition of Capital One common stockSchneider as a result of an administrative error by the Company and Mr. Schneider, who filed two late reports, each relating to a single disposition of Capital One common stock, as a result of administrative errorswhich was subsequently corrected by the Company.an amended filing.
 

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SECTION IV – DIRECTOR COMPENSATION
 
Director Compensation Objectives
 
Compensation for non-employeenon-management directors (each a “director”) is approved by the Board of Directors, based on recommendations made by the Compensation Committee. Capital One’s director compensation program is designed to achieve four primary objectives:
  • Attract and retain talented directors with the skills and capabilities to perpetuate Capital One’s success;
  • Fairly compensate directors for the work required in a company of Capital One’s size and scope;
  • Recognize the individual roles and responsibilities of the directors; and
  • Align directors’ interests with the long-term interests of Capital One stockholders.
EmployeeManagement directors do not receive compensation for their service on the Board.Board of Directors. In 2009,2010, Mr. Fairbank was Capital One’s only employeemanagement director.
 
Director Compensation Procedures
 
The Compensation Committee reviews the compensation program for Capital One’s directors on an annual basis. The Committee’s Consultant provides competitive compensation data and program recommendations to the Committee for review. (PleasePlease see the discussion under the heading “Compensation Committee” in the “Governance of Capital One” section on page 9 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-employeenon-management directors within our comparator group. (PleasePlease see the discussion under the heading “Market Data” in the “Compensation Discussion and Analysis” section on page 2633 for further information on the development of the comparator group.) The 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 of each year.
 
Based on their review of competitive market data and guidance from the Consultant in the second quarter of 2009,2010, the Committee determined that the director compensation program described below continues to meet the objectives listed above.
 
Director Compensation Structure

Each director serving on the Board of Directors on April 23, 2009,29, 2010, received an annual cash retainer of $70,000.$70,000 as well as fees 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 $170,011$170,012 in the form of restricted stock units (“RSUs”) of Capital One common stock, granted on April 23, 2009.29, 2010. Lastly, the Presiding 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 20092010 through April 20102011 in exchange for a one-time grant of non-qualified stock options with an equivalent Black-Scholes value, granted on April 23, 2009.29, 2010. Mr. Campbell, Mr. Gross, Ms. Hackett, Mr. Hay, Mr. Leroy, Mr. Shattuck, Mr. Warner and Mr. WestreichWarner each elected to forego their cash compensation in favor of such stock options.
 
Other Benefits
 
In 2009,2010, directors did not receive any additional compensation beyond what is disclosed below other than reimbursement of expenses in connection with attending the Board’s annual strategic meeting. 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 2009.below.
 
Under the Capital One Financial Corporation Non-Employee Directors Deferred Compensation Plan, 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 made available by the plan. Directors that elected a deferral will begin to receive their deferred income benefits in cash when they cease to serve 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 2009,2010, no directors elected to defer any compensation.compensation under this plan.
 
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.
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Stock Ownership Requirements
 
Directors are expected 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. The Board of Directors evaluates whether exceptions should be made for any case where this requirement would impose a financial hardship on a director. All directors are currently in compliance with this requirement.
 



Compensation of Directors
 
Directors of Capital One received the following compensation for 2009:2010:
 
NameFees Earned or
Paid in Cash (1)		Stock Awards (2)Option Awards
(3)		All Other
Compensation (4)		TotalFees Earned or
Paid in Cash (1)		Stock Awards (2)Option Awards
(3)		All Other
Compensation (4)		Total
Total
E. R. Campbell--td70,011$90,000td0,000td70,011--td70,012$90,009td0,000td70,023
      
W. Ronald Dietz$120,000$170,011--$10,000$300,011$120,000$170,012--$10,000$300,012
      
Richard D. Fairbank (*)------------
      
Patrick Gross--$170,011$120,002$10,000$300,013
Patrick W. Gross$120,000$170,012--$10,000$300,012
      
Ann Fritz Hackett--$170,011$130,001$10,000$310,012$155,000$170,012--$10,000$335,012
      
Lewis Hay, III--$170,011$105,004$10,000$285,015--$170,012$110,011$10,000$290,023
      
Pierre Leroy--$170,011$120,002$10,000$300,013
Pierre E. Leroy--$170,012$120,012$10,000$300,024
      
Mayo Shattuck, III--$170,011$100,005$10,000$280,016
Mayo A. Shattuck III--$170,012$100,010$10,000$280,022
      
Bradford Warner--$170,011$110,004$10,000$290,015
     
Stanley Westreich--$170,011$90,000$10,000$270,011
Bradford H. Warner--$170,012$110,011$10,000$290,023

(*)
In 2009,2010, Mr. Fairbank was Capital One’s only employeemanagement director.
 
(1) 
Each non-employee director is eligible to receive an annual cash retainer of $70,000. Compensation for committee service includes retainers for service as chairperson and/or as a member of the committees as described under the heading “Committee Membership” in the “Governance of Capital One” section of this proxy statement. In 2009,2010, retainers were paid as follows:
    • Presiding Director Retainer: $25,000
    • Chair of the Audit and Risk Committee: $40,000
    • Chair of the Compensation Committee, or Chair of the Governance and Nominating Committee: $20,000
    • Chair of theCommittee or Finance and Trust Oversight Committee: $15,000$20,000
    • Member of the Audit and Risk Committee (other than the chair): $30,000
    • Member of the Compensation Committee, Governance and Nominating Committee or Finance and Trust Oversight Committee (other than the chair): $10,000
(2)
Directors serving on the Board of Directors on April 23, 200929, 2010 received a grant of 10,0423,789 RSUs of Capital One common stock with a grant date fair value of $170,011$170,012 under the 2004 Stock Incentive Plan. The RSUs were valued at $16.93,$44.87 per share, which was the common stock’s fair market value on the date of grant, and vest one year from the date of grant. Delivery of the underlying shares is deferred until a director’s service with the Board of Directors ends. The following table shows the number of RSUs outstanding for each director as of December 31, 2010:

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Director NameOutstanding
Restricted Stock Units for each director:
Director
Outstanding
Restricted Stock Units
E. R. Campbell18,83422,623
W. Ronald Dietz20,41424,203
Patrick W. Gross20,41424,203
Ann Fritz Hackett20,41424,203
Lewis Hay, III20,41424,203
Pierre E. Leroy19,41423,203
Mayo A. Shattuck III20,41424,203
Bradford H. Warner13,638
Stanley Westreich20,41417,427

(3)
     
Each director is given the opportunity to elect to forego his or her cash compensation each year in exchange for a grant of nonqualified stock options under the 2004 Stock Incentive Plan with an equivalent Black-Scholes value. In 2009,2010, Mr. Campbell, Mr. Gross, Ms. Hackett, Mr. Hay, Mr. Leroy, Mr. Shattuck Mr. Warner and Mr. Westreich eachWarner elected to forego their cash compensation in favor of stock options as set forth in the table below. These options have an exercise price of $16.93.
$44.87.
The grant date fairBlack-Scholes value for each option award granted on April 23, 2009,29, 2010, was calculateddetermined using the Black-Scholes method and was based on the following assumptions:
 
VolatilityRisk-Free Interest RateDividend YieldExpected TermRisk-Free Interest RateDividend YieldExpected Term
46%1.97%1.32%5 years
37%2.55%1.49%5 Years

          
The compensation amounts reflected in the table above do not include a reduction for risk of forfeiture.


  
The options vest on the earliestfirst anniversary of one year from the grant date or, if earlier, upon a change of control of Capital One or upon the director’s termination of service (other than by removal for cause)cause, as defined in their respective award agreements). The options expire ten years from the date of grant. Upon termination from Board service (other than by removal for cause), a director has five years orwill have the remainder of the full option term whichever is shorter, to exercise the vested stock options.
Stock options awarded in 20092010 to each director and the number of stock options outstanding as of December 31, 2010 were as follows:
DirectorGrant DateNumber of Stock Options
Number of Outstanding
Stock Options
Grant DateNumber of
Stock Options		Number of Outstanding
Stock Options
E. R. Campbell4/23/200914,09615,1064/29/20106,36321,469
 
W. Ronald Dietz--126,205-75,705
 
Patrick Gross4/23/200918,795162,498
Patrick W. Gross-162,498
 
Ann Fritz Hackett4/23/200920,36133,256-33,256
 
Lewis Hay, III4/23/200916,44643,5614/29/20107,77751,338
 
Pierre Leroy4/23/200918,79539,498
Pierre E. Leroy4/29/20108,48447,982
 
Mayo Shattuck, III4/23/200915,66342,382
Mayo A. Shattuck III4/29/20107,07049,452
 
Bradford Warner4/23/200917,229
Stanley Westreich4/23/200914,096148,424
Bradford H. Warner4/29/20107,77725,006

(4)In 2010, each director elected to direct a contribution from Capital One of $10,000 to a charitable organization of his or her choice.
 
(4)
All directors elected to make a charitable contribution of $10,000 in 2009.

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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 ensurepromote 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 our Named Executive Officers (the “NEOs”).the named executive officers. Final decisions regarding the compensation of our executive officers, including the Chief Executive Officer and the other NEOs(“CEO”), are made by all of our independent directors. This Compensation Discussion and Analysis will review the compensation of the CEO, Richard D. Fairbank, and the following executive officers:
  • Gary L. Perlin, Chief Financial Officer
  • Lynn A. Carter, President, Banking
  • Peter A. Schnall, Chief Risk Officer
  • Ryan M. Schneider, President, Card
As used throughout this section, “NEO” means each executive officer named in this proxy statement, other than the CEO.
“NEOs” means the four executive officers listed above, and references to “named executive officers” refer to the CEO and the NEOs, collectively.
 
In 2009,2010, Capital One, along with many financial institutions, including Capital One, continued to feel the impactoperate in an environment of a majorelevated economic recession.and regulatory uncertainty. The unemployment rate roseremained close to over 10%, and declines in home prices persisted.the housing market remained volatile due to increased foreclosures and a high rate of delinquent loans. Capital One continuedhas remained strong and resilient during these challenging times and continues to managedeliver value to its businesses in light of the external economic pressures and returned to profitability beginning in the second quarter.   For the full year 2009, Capital One’s net income was $883.8 million or net income of $0.75 per common share (fully diluted), compared to a net loss for 2008 of $46.0 million, or a net loss of $0.21 per common share (fully diluted). In addition, Capital One’sstockholders. The Company’s total shareholderstockholder return for 2009 of 23.9%2010 was in11.6%, which outperformed the top quartileS&P Financials Index for the year relative to peers.third consecutive year. The Committee believes that the actions taken by the Company’s CEO and the NEOs throughout 20092010 contributed greatly to the Company’s results and set a foundation forhelped position the Company’s success whenCompany to take advantage of emerging opportunities and deliver stockholder value over the recession abates.long-term. These actionsaccomplishments included:
  • “Passing” the Federal Reserve and U.S. Treasury Department’s Supervisory Capital Assessment Program (the “Stress Test”)Delivering $2.7 billion in May with no additional capital requirements. Capital One was onenet income for 2010, or $6.01 per common share (fully diluted), compared to net income for 2009 of only four lending institutions to do so;
    $883.8 million, or $0.75 per common share (fully diluted), an increase in net income of 210.5% year over year;
  • Repurchasing in June 2009 all $3.55 billion of the preferred stock issued to the U.S. Treasury under the Capital Purchase Program (the “CPP”) under the Emergency Economic Stabilization Act of 2008 (the “EESA”). Capital One wasRemaining one of the firstfew banks that have not significantly diluted stockholders with additional equity issuances during the financial institutions permitted to do so;crisis;
  • Delivering 26% return on tangible equity and 1.58% cash return on tangible assets;
  • Continuing to maintain a highly liquid and high quality investment portfolio that avoided the market volatility experienced by many financial institutions in their portfolios;
  • Maintaining a strong and flexible balance sheet and increasing capital levelsratios in a challenging environment for equity and debt issuances, including issuing $1.5advance of changing regulatory requirements, notwithstanding the consolidation of $41.9 billion of securitized assets onto our balance sheet under newly effective accounting standards;
  • Earning $1.9 billion in common equitynet income from the Company’s Domestic Card business while fully implementing the changes required by the CARD Act, and $1.0 billiondelivering strong results in unsecured debt in May 2009the auto finance business;
  • Continuing to focus on customer service initiatives and issuing a combined $2.0 billion in trust preferred securities in Julyproviding an excellent customer experience to foster customer loyalty and November 2009;help drive down delinquencies and charge-offs;
  • Aggressively managing credit risk and augmenting loss mitigation strategies to enhancedramatically reduce charge-offs, enhancing the Company’s resilience during the recession and positionpositioning the Company for success whenas the economy improves;
  • Actively managing the Company’s asset mix to focus on the most resilient businesses, assets and portfolios;
  • Delivering $977 million in net income in the Company’s credit card business while many of the Company’s major competitors suffered losses in their credit card businesses;
  • Positioning the Company’s credit card business for continued success after complying with the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the “CARD Act”);
  • Closing the acquisition ofRebranding all Chevy Chase Bank F.S.B. thereby adding local scale inbranches to strengthen the Company’s banking businessbrand and position in the Washington, D.C. metro area, one of the country’s best banking markets;
  • Continuing to integrate Chevy Chase Bank to buildSubstantially completing the build-out of a scalable bank and risk management infrastructure to ensureso that the Company is well-positioned to take advantage of opportunities to grow its consumer and commercial banking businesses;
  • Repositioning the Company’s auto finance business to deliver strong profitability, including originating new loans with improved credit quality, increased margins and higher returns; and
  • Assisting our customers and communities in this challenging economic environment by extending billions of dollars of new loans, commitments and renewals to our mid-market, small business and consumer banking customers and investing substantial philanthropic, community development and volunteer resources to improve our communities.
Important Aspects of our Executive Compensation Programs

In 2010, Capital One was no longer subject to the compensation provisions of the Emergency Economic Stabilization Act of 2008 (“EESA”), and when designing compensation programs, the Committee was not restricted to compensating our executives with only specified portions of base salary and restricted stock 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 
Furthermore, throughout 2009,
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performance of the Company benefited fromover multiple time horizons. For the strategic choices made over the past decade.  In addition to the Company’s deep heritage of rigorous credit and balance sheet management practices, these strategic decisions positioned the Company to succeed during the economic recession: (i) pursuing the most resilient lines of business; (ii) transforming from a capital markets-funded lending institution to a deposits-funded diversified financial institution prior to the crisis in the capital markets; and (iii) avoiding or proactively changing common industry practices which the Company believed compromised customer loyalty over the long-term, many of which ultimately were prohibited under the CARD Act.
Executive compensation decisions were greatly influenced by several factors unique to 2009.  Early in the2010 performance year, the Committee andalso maintained the independent directors sought to design aCEO compensation program for our CEO that would take into account the turbulent external environment, including the heightened stockholder and public interestwas developed in executive pay, but also continue to
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reflect the Company’s long-standing philosophy that he receive only equity awards, in lieuJanuary 2009, consisting of cash compensation, to ensure the continued strong alignment between his awards and the value he delivers to stockholders. After considering these factors, as well as the significant transformation of the Company from a single line of business to a diversified consumer and commercial bank, the Committee and the independent directors shifted Mr. Fairbank’s compensation mix from 100% stock options to a mix of equity-based vehicles. As with Mr. Fairbank’s prior awards, this mix of equity vehicles createswhich create a direct link between Mr. Fairbank’s compensation and the Company’s performance over short- and long-termvarious time horizons. Furthermore, Mr. Fairbank’s compensation plan specifically providedThe Committee believes that he could not sell or otherwise transfer any ofboth programs balance risk and financial results, reward the equity granted to him until the Company repaid the U.S. Treasury’s investment under the CPP. The Company repurchased the preferred stock it issued under the CPP in June 2009. Overall, the plan represented a 35% decrease in Mr. Fairbank’s compensation for 2009 as compared to his 2008 compensation.
Subsequent to the adoption of the CEO compensation plan, on February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009, which amended EESA to require the U.S. Treasury to adopt new compensation standards to be applicable to any institution participating in the CPP or otherwise receiving financial assistance under EESA. Although the U.S Treasury did not issue these new compensation standards until June 2009, the CommitteeNEOs and the independent directors sought to design a compensation program for the NEOs (other than the CEO) that would meet any such standards, but also reward the NEOsCEO for their achievements, promote the overall objectives of our executive compensation program and encourage appropriate, but not excessive, risk-taking. As a result,
In addition, the Committee adopted revised terms for the equity awards granted to the CEO and the NEOs (other thanin January 2011 to include the CEO), total target compensation was shifted tofollowing provisions:
  • Recoupment or “clawback” provisions for performance share awards that are triggered in the event of a combination of salaryfinancial restatement;
  • Clawback provisions for performance share, stock option and restricted stock as defined by andawards that are triggered in the proportions set forthevent of misconduct by EESA. The NEOs’ 2009 compensation plan did not include cash bonusesthe executive; and
  • Stock retention provisions for stock option and restricted stock awards that require each executive to hold a certain amount of the shares acquired under the awards for one full year after vesting or other formsexercise, as applicable.
See “Other Aspects of equity incentive compensation.Executive Compensation” on page 35 for more details on these provisions.
 
In June 2009,As of March 1, 2011, Capital One also changed its practice relating to excise tax gross-ups to which the CEO and NEOs may be entitled if terminated after a change of control. All change of control agreements providing for a potential excise tax gross-up will expire at the U.S. Treasury announcedend 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 35 for more information.
The Federal Reserve has been focusing on incentive compensation programs at large financial institutions. The Company has cooperated with the new compensation standards under EESA, the Company repurchased the $3.55 billionFederal Reserve’s review of preferred stock it issuedour incentive plan arrangements, including by responding to requests for data and other information relating to the U.S. Treasury under the CPP,Company’s incentive compensation policies, processes and therefore, the provisions of EESA ceasedprograms. The Company has worked with, and will continue to apply to the Company. As a result, in January 2010, the independent directors approved an NEO compensation program that is more consistentwork with, the Company’s pay-for-performance philosophy. Under this program, 80%Federal Reserve and other federal bank regulators so that our incentive compensation programs are structured such that they do not encourage excessive risk-taking.
The Company also continues to annually perform a risk assessment of NEO total targetits compensation is payablepolicies and practices as discussed under “Risk Assessment of Compensation Policies and Practices” in formsthe “Governance of compensation that are directly tied to the performance of the Company over multiple time horizons.Capital One” section on page 7.
 
Objectives of our Executive Compensation Programs

Capital One’s executive compensation program has four primary objectives. While expected limitations under EESA impacted our 2009 NEO (excluding the CEO) compensation plan design, the Committee and the independent members strived to keep these objectives in mind when designing this program.
 
Strongly link rewards with both business and individual performance without encouraging excessive risk-taking
 
Capital One emphasizes pay-for-performance at all organizational levels. Traditionally,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, ourthe CEO and otherthe NEOs historically have had the highest relative portion of their pay directly linked to performance, as compared to other associates. While our 2009 compensation program for our NEOs (other than the CEO) was designed with limited incentive compensation to comply with EESA, the awardsAwards made in early 2011 for the 2010 performance year were still tied tobased on the achievementperformance of the Company and the individual, performance objectives, as well as toon the demonstration of specific leadership competencies that are assessed through a comprehensive performance management process. In addition, we design our compensation programs to align with our risk management practices to ensureso that our programs do not encourage excessive risk-taking but reward appropriate risk-taking.that could jeopardize long-term value.
 
Ensure that total compensation emphasizes a balance of both short- and long-termrewards 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. OurThe CEO’s compensation is all equity,equity-based, all at-risk and all performance-based. For ourthe NEOs other than the CEO, in 2009,2010, approximately two-thirds80% of total target compensation was provided through base salary, with the remaining one-third provided through restricted stock with multi-year vesting terms. The equity awarded to our CEO and the other NEOs in 2009 would not have vested before the Company repurchased the preferred stock issuedequity-based vehicles which were all at-risk to the U.S. Treasury under the CPP; the Company repurchased all $3.55 billionperformance of the preferred shares in June 2009.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 helps to ensure thatadvances our goal of aligning the ultimate value realized by ourthe CEO and the other NEOs is directly linked towith the performance of the Company’s stock over time. Thetime because the value of these deferred equity-basedcompensation vehicles increases and decreases based on 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 our marketplace for talent. For 2009,The Committee and the independent directors approved employment agreements withstrive to preserve a competitive pay mix and total target compensation values in the NEOs (other than the CEO) reflecting the 2009executive compensation plan. The employment agreements were designed toprogram, as well as provide competitive total rewards based on our selected peer group.
 


comply with the compensation provisions of EESA and were intended to ensure that the Company retained its most senior executives in this challenging economic and regulatory environment.24
 

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. By traditionally awardingBecause the majority of CEO and NEO compensation is delivered through deferred, equity-based vehicles that vest over multiple time horizons, we ensure that ourthe CEO and the other NEOs have a significant stake in the success of the Company. In addition, we have established specific stock holding requirementsownership policies that ourthe CEO and the other NEOs must meet on an annual basis.basis and stock retention provisions for certain equity awards beginning in January 2011. 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 and the expense taken by the Company.
 
Compensation Components

Equity-Based Focus
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 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 has 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 2010 performance year for the CEO.
Compensation ElementTiming of Award
Determination		Basis for AwardApproximate % of
CEO Total Target
Compensation		Vesting Schedule
Base SalaryNot applicableNot applicable0%Not applicable
Cash BonusNot applicableNot applicable0%Not applicable
Stock OptionsJanuary 2010Incentive for Future
Company Performance		50%3-year cliff vesting; expire in 10 years
Performance SharesJanuary 2010Incentive 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 UnitsJanuary 2011Reward for Contributions to
2010 Company Performance		25%3-year cliff vesting; settle in cash

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The NEOs traditionally receive a mix of cash and equity-based compensation. We do not pay cash bonuses to the NEOs for annual performance. Instead, following the end of the year the Committee may grant a variety of equity-based awards based on the Committee's evaluation of Company and individual performance during the past year. All of these equity-based awards are subject to deferred vesting over a three-year period.
The table below summarizes the elements of compensation that the Committee approved for the 2010 performance year for the NEOs.
Compensation ElementTiming of Award
Determination		Basis for AwardApproximate % of
NEO Total Target
Compensation		Vesting Schedule
Base Salary -
Cash		January 2010Overall experience, skills,
performance, and knowledge		20%Paid in cash throughout the performance year
Base Salary -
Restricted Stock Units		January 2010Incentive for Current
Year Company Performance		15%Awarded as restricted stock units which settle in cash at the end of the performance year
Cash BonusNot applicableNot applicable0%Not applicable
Restricted Stock UnitsJanuary 2011Reward for 2010
Company Performance		15%3-year ratable vesting; settle in cash
Stock OptionsJanuary 2011Reward for 2010
Individual Performance and
Incentive for Long-Term
Performance		50%3-year ratable vesting; expire in 10 years
Performance SharesVest at the end of the 3-year performance period; the number of shares vesting depends on achievement of performance factors
Restricted Stock3-year ratable 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 also directly linking his awards with his performance and that of the Company’s 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. 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.
2010 CEO Compensation Decisions
The Committee determined that the compensation structure adopted in 2009 remained appropriate for Mr. Fairbank in 2010 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 design 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, 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:
  • Mr. Fairbank’s and the Company’s performance during 2009 relative to the financial, operating, safety and soundness and strategic performance factors described below under “Restricted Stock Unit Award;”
  • The economic environment and the Company’s overall performance in 2009 relative to its objectives;
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  • The Company’s performance in 2009 relative to the peer comparator companies’ performance in 2009;
  • The structure and amount of compensation awarded to the chief executive officers of the peer comparator companies;
  • The fact that the Company was among the first financial institutions permitted by regulators to repurchase the preferred shares it issued to the U.S. Treasury under the Capital Purchase Program;
  • The structure and amount of Mr. Fairbank’s compensation awards in prior years, as well as his historical compensation value realized, existing stock holdings and remaining unexercised options;
  • The Company’s risk profile and the time horizon over which the deferred, equity-based vehicles will vest;
  • Mr. Fairbank’s expected leadership of the Company’s strategic initiatives in 2010, including building a scalable banking infrastructure and guiding the Company’s credit card business for continued success in the changing regulatory environment; and
  • The fact that the ultimate value of Mr. Fairbank’s deferred, equity-based awards will depend on the Company and Mr. Fairbank’s performance over time.
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 million was appropriate for Mr. Fairbank’s 2010 compensation program.
Performance Share Award
In January 2010, 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 88,920 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 2010 through December 31, 2012. The Company’s performance will be assessed on the basis of relative cash return on average tangible assets (“CROATA”) against 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 measure of a financial institution’s returns on its respective businesses while not incenting choices that may not be in the institution’s best interest. In addition, 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 million; however, the number of shares that Mr. Fairbank ultimately receives, if any, will be solely dependent on the Company’s performance over time according to 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 Above755020Below 20
Final Award (Percent of Target Shares)200%150%100%40%0%

Stock Option Award
In January 2010, Mr. Fairbank also received a grant of 559,333 nonstatutory stock options at an exercise price of $36.55 per share (which was the fair market value of the Company’s common stock on the grant date). The benefits to Mr. Fairbank of the stock options are deferred; the options cannot be exercised until three years after the grant date and will expire ten years after the grant date. The option grant had a fixed grant date value of $6.5 million; however, the ultimate value Mr. Fairbank realizes, if any, is solely dependent on the long-term appreciation in Capital One’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 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.
Restricted Stock Unit Award
A portion of Mr. Fairbank’s 2010 compensation award consisted of an opportunity to be awarded restricted stock units in early 2011. The award had a target value of $3.25 million, but the ultimate value of the award was determined based on the Committee’s evaluation of the Company’s performance and Mr. Fairbank’s contributions to that performance during 2010 relative to the following financial, operating, safety and soundness and strategic factors (which were evaluated on a qualitative basis without specific targets in mind):
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Financial PerformanceOperating PerformanceSafety and SoundnessStrategic Performance
•  Operating earnings
•  Earnings per share
•  Return on tangible capital
•  Revenue generation
•  Expense management
•  Operating effectiveness
•  Customer satisfaction
���  Capital adequacy
•  Risk management and Compliance
•  Credit loss management
•  Underwriting quality
•  Balance sheet management
•  CEO leadership and performance of executive team
•  Capital management
•  Progress toward achievement of long-term strategy
•  Execution against corporate imperatives
•  Recruitment and development of world class talent
•  Disciplined investment in infrastructure
•  Corporate reputation and community engagement
•  Preservation of corporate culture and values

The Committee considered the Company’s performance as described under “Introduction” on page 23. In particular, the Committee considered: Capital One’s delivery of strong results in 2010, driven by strong core earnings and improving credit; 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; the strong performance of the auto finance business; the transformation of the bank and risk management infrastructure; and the Company’s strong liquidity 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 2010 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 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 2011 to award Mr. Fairbank $6.5 million in restricted stock units for the Company’s and his performance in 2010.
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, 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
2010$0$0$9,750,026$6,500,009$16,250,035
2009$0$0$7,000,022$4,000,001$11,000,023
2008$0$0$0$17,000,000$17,000,000

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 required for purposes of this proxy statement and is therefore not a substitute for the information required in the Summary Compensation Table on page 39.
There are two principal differences between the Summary Compensation Table and the table above:
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  • The table above reports equity-based awards as compensation for the performance year for which they were awarded, even if the award was granted in one year based on performance for the prior year. As a result, the restricted stock unit award granted to the CEO in January 2011 for the 2010 performance year, for example, is shown in the table above as 2010 compensation. The Summary Compensation Table reports equity-based awards only in the year in which they were granted.
  • The Summary Compensation Table reports the change in pension value and nonqualified deferred compensation earnings and all other compensation. These amounts are not a result of current year compensation determinations and are not shown above.
Additional Pay Elements
As part of the CEO compensation program, the Committee and the independent directors also approved certain other programs intended to support Mr. Fairbank’s productivity and well-being. These include:
  • Executive term life insurance with a benefit level of $5,000,000;
  • The ability to participate in a comprehensive voluntary annual health screening;
  • Office supplies and other maintenance for Mr. Fairbank’s home office;
  • The use of a driver who also provides for Mr. Fairbank’s personal security; and
  • The monitoring and maintenance of an electronic home security system.
Additional details on these programs can be found in the “Named Executive Officer Compensation” section beginning on page 38. There are no other perquisites provided to Mr. Fairbank by the Company that constitute additional compensation.
2011 CEO Compensation Decisions
The Committee and the independent directors determined that the compensation structure utilized in 2009 and 2010 remained appropriate for Mr. Fairbank in 2011 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.
In January 2011, 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 82,851 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 2011 through December 31, 2013. Mr. Fairbank also received a grant of 608,366 nonstatutory stock options at an exercise price of $48.28 per share (which was the fair market value of the 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 2012 based on the Committee’s evaluation of the Company’s performance in 2011 relative to the same financial, operating, safety and soundness and strategic factors described above under “Restricted Stock Unit Award.” The Committee and the independent directors will have absolute discretion to determine whether to make this grant, as well as to determine the value of the grant relative to the target value of $4.0 million.
The terms of each of these awards are substantially similar to the terms described above under “2010 Compensation Decisions,” except for the following updates for 2011:
  • The performance share and stock option awards are subject to clawback provisions as described below under “Clawbacks” on page 36;
  • The stock option award is also subject to stock retention requirements as described below under “Stock Ownership and Retention Requirements” on page 35; and
  • The number of shares issued under any performance share award will generally be reduced by 50% if the Company’s CROATA is less than or equal to zero, no matter how well it compares against our peers in the KBW index, according to the chart below.
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   Relative CROATA 
  ≥ 80th
Percentile
50th
Percentile
< 20th
Percentile
Capital One CROATA> 0%200%100%0%
≤ 0%100%50%0%

Named Executive Officer Compensation

Goals and Principles
As with the CEO, the Committee seeks to compensate the NEOs in a manner that encourages the creation of long-term stockholder value as well as the delivery of consistent, strong short-term results. 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 2010 NEO compensation, the Committee also considered the specific factors discussed below. Final decisions regarding NEO compensation are made by the independent directors.
2010 NEO Compensation Decisions
As noted above, in 2010 the Committee designed the NEO compensation program to be more in line with the Company’s pay-for-performance philosophy than was permitted under EESA. The pay mix was shifted from the elements and proportions prescribed by EESA for our 2009 compensation program to make base salary a smaller portion of total target compensation for 2010, with a higher proportion of pay provided in various equity-based vehicles. The Committee believes the new 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 2010 total target compensation for each NEO by considering the following factors:
  • Each NEO’s performance relative to the Company’s strategic objectives;
  • Capital One’s historical performance;
  • The role and qualifications of each NEO (for example, the NEO’s scope of responsibility, experience and tenure, and the demonstration of competencies consistent with the Company’s values and the ability to deliver strong, sustainable business results);
  • Appropriate internal pay differentials and the desire to foster teamwork and collaboration;
  • Historical pay levels and compensation realized;
  • Available role-specific market compensation data from peer comparator companies;
  • Available information on the structure of compensation packages for senior executives at peer comparator companies;
  • Market trends in executive compensation (for example, current rates of pay and the prevalence and types of incentive vehicles); and
  • The overall structure of the compensation program.
Base Salaries
For the 2010 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 2010 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, 2010 (approximately 15% of total target compensation). In this way, the 2010 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.
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In January 2010, the Committee and the independent directors approved 2010 base salaries for the NEOs, including the portion of base salary delivered as restricted stock units, ranging from $1,540,000 to $2,268,000. 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 2011 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, the Committee and the independent directors approved awards of restricted stock units for the NEOs ranging from $1,155,000 to $1,701,000, representing a payout at 175% of the target award values established by the Committee in January 2010. 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 23 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, the Committee and the independent directors awarded various equity incentive awards to the NEOs for the 2010 performance year. At Capital One, equity incentive awards are linked to performance in two ways:
  • The size of the award is based on each NEO’s individual performance rating for the year just completed; and
  • The ultimate value of the award is dependent on Capital One’s performance over time.
Equity incentive awards are designed to emphasize elements that are of particular importance to Capital One given the Company’s unique goals and continually evolving business strategies and objectives. In determining the actual amounts to be awarded to each NEO, the Committee considered each NEO’s contribution to the Company’s strategic accomplishments as described under “Introduction” on page 23 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 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 the 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. The restricted stock awards are also subject to clawbacks and holding requirements as discussed below under “Other Aspects of Executive Compensation” on page 35.
Mr. Perlin, the Company’s Chief Financial Officer, was awarded 93,080 nonstatutory stock options, 33,555 shares of restricted stock and a target amount of 10,738 performance shares with a total grant date value for all three awards of $3,240,000. This amount was at the target award value established by the Committee in January 2010. The Committee determined to grant these awards based in part upon Mr. Perlin’s management of the Company’s balance sheet throughout 2010. The Committee specifically considered the Company’s capital ratios and funding levels throughout 2010.
Ms. Carter, President, Banking, was awarded 71,821 nonstatutory stock options, 25,891 shares of restricted stock and a target amount of 8,286 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, Ms. Carter was responsible for managing the Company’s banking business and has been devoted to building Capital One’s national bank while maintaining 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 position the Company for further success in its consumer and commercial banking businesses.
Mr. Schnall, the Company’s Chief Risk Officer, was awarded 64,352 nonstatutory stock options, 23,199 shares of restricted stock and a target amount of 7,424 performance shares with a total grant date value for all three awards of $2,240,000. This amount was at the target award value established by the Committee in January 2010. Mr. Schnall was essential to developing the Company’s rigorous credit risk management strategies, which resulted in the overall superior performance of the Company’s credit card business in 2010 and significant reductions in charge-offs across the Company’s businesses.
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Mr. Schneider, President, Card, was awarded 72,683 nonstatutory stock options, 26,202 shares of restricted stock and a target amount of 8,385 performance shares with a total grant date value for all three awards of $2,530,000. This amount was slightly above the target award value established by the Committee in January 2010. 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 by the credit card business in 2010 as well as 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.
NamePerformanceCashCashStockOptionTotal Base and Equity
YearSalaryBonusAwards (1)AwardsCompensation
 2010$1,000,000$0$5,107,429$1,101,600$7,209,029
Gary L. Perlin2009$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. Carter2009$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. Schnall2009$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. Schneider2010$1,000,000$0$3,364,826$860,200$5,225,026

(1)For 2010, amounts shown include restricted stock unit portion of base salary granted in January 2010 and restricted stock unit, restricted stock, and performance share awards granted in January 2011.
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 required for purposes of this proxy statement and is therefore not a substitute for the information required in the Summary Compensation Table at page 39.
There are two principal differences between the Summary Compensation Table and the above table:
  • The table above reports equity-based awards as compensation for the performance year for which they were awarded, even if the award was granted in one year based on performance for the prior year. As a result, the restricted stock units, stock options, restricted stock and performance shares granted in January 2011 for the 2010 performance year, for example, are shown in the above table as 2010 compensation. The Summary Compensation Table reports equity-based awards only in the year in which they were granted.
  • The Summary Compensation Table reports the change in pension value and nonqualified deferred compensation earnings and all other compensation. These amounts are not a result of current year compensation determinations and are not shown above.
Additional Pay Elements
The Committee provides certain other programs intended to support the NEOs’ productivity, well-being and security. These programs provide some level of personal benefit and are not generally available to all associates. For 2010, these included the following:
  • The ability to participate in a comprehensive voluntary annual health screening;
  • Executive term life insurance with a benefit level of approximately $5 million;
  • An automobile lease; and
  • The monitoring and maintenance of an electronic home security system.
In addition, Mr. Perlin and Ms. Carter each occasionally has been provided limited personal use of the corporate aircraft.
The Committee has determined that the nature and value of these programs are comparable to those offered to similarly situated executives at our peers. Additional details on these programs can be found in the “Named Executive Officer Compensation” section beginning on page 38.
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2011 NEO Compensation Decisions
For 2011, the Committee and the independent directors approved an NEO compensation program that is substantially similar to the 2010 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.
Criteria and Process for Compensation Decisions

The Committee considers a number of factors in making compensation decisions with respect to the CEO and the other NEOs. 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 CompensationPerformance Share Award
 
The Committee engages an independent consultant from Frederic W. Cook & Co. (the “Consultant”) to assist inIn January 2010, based on the design of the CEO compensation plan. The Consultant assists the Committee in a number of ways, including proposing and evaluating a comparator group, gathering relevant compensation data from the comparator organizations, discussing relevant market trends and context, and developing recommendations on possible plan designs. The Consultant has no other engagement with, and performs no other services for, Capital One. Please see the discussion under the heading “Compensation Committee” in the “Governance of Capital One” section on page 9 for additional information about the Consultant.
Use of Outside Consultants for Other NEO Compensation
The Chief Human Resources Officer and other members of the Company’s Human Resources department assist the CEO in developing compensation recommendations for the NEOs other than the CEO. The Human Resources department typically uses multiple surveys as sources of market compensation data. Outside consultants (other than the Consultant) 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 consultants and presenting it to the CEO. The CEO then considers all of the information providedabove determination by the Human Resources department and the Chief Human Resources Officer and makes his compensation recommendations 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 our NEOs. The Committee’s Consultant is present at Committee meetings during which NEO compensation is discussed and provides market data as well as an outsider’s perspective regarding NEO compensation practices.
Market Data
The Committee reviews pertinent data from a group of 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 Committee’s Consultant plays a lead role in evaluating and adjusting the comparator group on an annual basis. The Consultant presents a comprehensive report to the Committee that highlights size, scope and performance information from the comparator companies across a variety of metrics. The Committee specifically considers the Company’s percentile rank versus comparator companies across the following metrics:
  • Revenue;
  • Assets;
  • Market capitalization;
  • Net income;
  • Diluted earnings per share growth;


  • Return on average assets;
  • Return on average equity;
  • Asset growth; and
  • Total shareholder return.
After reviewing this information, the Committee recommends a final comparator group to the independent directors for approval. The comparator group is adjusted each year, as appropriate, to ensure the size, scope, performance, and business focus of the comparator companies reflect Capital One’s competitive environment. Significant turmoil in the financial sector over the past year and a half has resulted in considerable consolidation within the 17-company comparator group that the Committee approved in 2008. More specifically, three of the companies from the 2008 comparator group—National City Corporation, Wachovia Corporation and Washington Mutual—were acquired by other financial institutions.  In addition, Freddie Mac has been placed under federal government conservatorship and is now being run by the Federal Housing Finance Agency.  Furthermore, the Committee determined that SLM Corporation may no longer be appropriate for the Corporation’s comparator group given its continued focus solely on student lending.  As a result, the current comparator group, approved in July 2009, consists of the following 12 companies:
American ExpressFifth Third BancorpRegions Financial
Bank of America CorporationJ.P. Morgan ChaseSunTrust Bank
BB&T CorporationKeyCorpU.S. Bancorp
CitigroupPNC Financial ServicesWells Fargo & Company

As of December 31, 2009, Capital One was positioned at or near the median of the 12-company comparator group in terms of total assets, revenues and net income. For 2009, the Company’s diluted earnings per share growth was above the 90th percentile relative to the comparator group.
Typically, compensation data from the comparator group are used to develop compensation targets for the CEO and the other NEOs that are at or slightly above median for each element of compensation and total compensation. In 2009, due to the economic and regulatory environments, reliable market data were not available at the time that the Committee and the independent directors, set CEO and NEO total compensation amounts.Mr. Fairbank was granted an award of performance shares under which he may receive from 0% to 200% of a target number of 88,920 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 2010 through December 31, 2012. The Company’s performance will be assessed on the basis of relative cash return on average tangible assets (“CROATA”) against 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 measure of a financial institution’s returns on its respective businesses while not incenting choices that may not be in the institution’s best interest. In addition, 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 million; however, the number of shares that Mr. Fairbank ultimately receives, if any, will be solely dependent on the Company’s performance over time according to 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 Above755020Below 20
Final Award (Percent of Target Shares)200%150%100%40%0%

Tally SheetsStock Option Award
 
In addition to consideringJanuary 2010, Mr. Fairbank also received a grant of 559,333 nonstatutory stock options at an exercise price of $36.55 per share (which was the fair market data from our 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 Company’s common stock on the grant date). The tally sheetsbenefits to Mr. Fairbank of the stock options are just onedeferred; the options cannot be exercised until three years after the grant date and will expire ten years after the grant date. The option grant had a fixed grant date value of $6.5 million; however, the ultimate value Mr. Fairbank realizes, if any, is solely dependent on the long-term appreciation in Capital One’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 grant date and the market value of the stock exceeds the exercise price at some point of information used byafter the Committee inthree-year vesting period when the process of determining CEO and NEO compensation. They help to ensure that the Committee understands 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 to ensure that the Committee understands the potential downstream consequences of their decisions, such as the potential value to be received by the CEO and each NEO upon separation due to a change of control, normal retirement or other termination scenario.options are exercised.
 
Chief Executive Officer Compensation

Goals and Principles
The Committee’s top priority is to align the interests of our CEO with the interests of our stockholders over the short- and long-term while also directly linking his awards with his performance over appropriate time horizons. The Committee believes that the CEO should have a high relative proportion of pay 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 our CEO’s interests with the interests of our stockholders over the short-and long-term, support safety and soundness and encourage appropriate risk-taking. Final decisions regarding CEO compensation are made by all of the independent directors.
Equity-Based Focus
From 1997 through 2009, the compensation structure for the CEO consisted entirely of equity awards (typically stock options) in lieu of any salary, bonus, retirement plan contributions or other traditional forms of compensation. In 2009, the CEO’s compensation plan was delivered through a mix of three equity-based vehicles: performance shares, stock options, and the opportunity to earn restricted shares or units in early 2010 based on his and the Company’s performance in 2009. Because the CEO’s compensation plan consists solely of equity-based vehicles, with no base salary or other form of cash compensation, the independent directors approve his compensation plan and typically grant some or all equity awards early in the performance year to which the compensation relates. Mr. Fairbank’s 2009 compensation plan was described in detail in the 2009 proxy statement.


Restricted Stock Unit Award
 
As noted above, aA portion of Mr. Fairbank’s 20092010 compensation award consisted of an opportunity to receive an award ofbe awarded restricted shares orstock units in early 2010.2011. The award had a target value of $2$3.25 million, but the ultimate value of the award was determined based on among other things, Mr. Fairbank’s andthe Committee’s evaluation of the Company’s performance and Mr. Fairbank’s contributions to that performance during 20092010 relative to the following financial, operating, safety and soundness and strategic performance factors (which arewere evaluated on a qualitative basis without specific targets in mind):
 
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Financial PerformanceOperating PerformanceSafety and SoundnessStrategic Performance
  • •  Operating earnings
  • •  Earnings per share
  • •  Return on tangible capital
  • •  Revenue generation
  • •  Expense management
  • •  Operating effectiveness
  • •  Customer satisfaction
  • ���  Capital adequacy
  • •  Risk management and complianceCompliance
  • •  Credit loss management
  • •  Underwriting quality
  • •  Balance sheet management
  • •  CEO leadership and performance of executive team
  • •  Capital management
  • •  Progress toward achievement of long-term strategy
  • •  Execution against corporate imperatives
  • •  Recruitment and development of world class talent
  • •  Disciplined investment in infrastructure
  • •  Corporate reputation and community engagement
  • •  Preservation of corporate culture and values

The Committee and the independent directors considered the Company’s performance as described in the Introduction of this sectionunder “Introduction” on page 24. 23. In particular, the Committee considered: Capital One’s delivery of strong results in 2010, driven by strong core earnings and improving credit; 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 excess2010; the strong performance of $975 million for that business in 2009 when many major credit card businesses were substantially unprofitable;the auto finance business; the transformation of the bank and risk management infrastructure; and the Company’s strong liquidity and capital position and its flexible balance sheet; and the many steps taken to position the Company for success after complying with the CARD Act. sheet. In addition, the Committee considered the CEO’s leadership in making the strategic choices over many years that ensuredprovided 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 20092010 relative to its peers, which included operating earningsnet income of $986.7 million$2.7 billion, or $0.99$6.01 per common share and GAAP earnings of $883.8 million or $0.75 per share. (fully diluted), a 210.5% increase in net income over 2009.
The Committee and the independent directors also discussed Mr. Fairbank’s effective, disciplined leadership in guiding the Company in all of these areas throughout 20092010 as well as the progress and results achieved by a wide range of business and staff units as the Company faced some of the greatestcontinued to face significant economic, credit, legislative and infrastructure challenges in its history.
challenges. The Committee and the independent directors also considered evolving external market conditions and the level of government assistance received by the Company as compared to other financial institutions, including the fact that the Company did not participate in any financial institution government assistance programs other than the CPP. Finally, the independent directors took into account peer comparator group CEO compensation levels, although the availabilitycomparability of such information was limited due to the evolving market conditions.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 2011 to award Mr. Fairbank $5$6.5 million in restricted stock units in January 2010 for the Company’s and his performance in 2009. The units will vest in full in three years and settle in cash based on the Company’s average stock price over the twenty trading days preceding the vesting date. The Committee determined that an award of 2.5 times the target award was appropriate given the Company and Mr. Fairbank’s steady performance in 2009, especially as noted above.2010.
 
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, 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
2010$0$0$9,750,026$6,500,009$16,250,035
2009$0$0$7,000,022$4,000,001$11,000,023
2008$0$0$0$17,000,000$17,000,000

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 required for purposes of this proxy statement and is therefore not a substitute for the information required in the Summary Compensation Table on page 39.
There are two principal differences between the Summary Compensation Table and the table above:
28

  • The table above reports equity-based awards as compensation for the performance year for which they were awarded, even if the award was granted in one year based on performance for the prior year. As a result, the restricted stock unit award granted to the CEO in January 2011 for the 2010 performance year, for example, is shown in the table above as 2010 compensation. The Summary Compensation Table reports equity-based awards only in the year in which they were granted.
  • The Summary Compensation Table reports the change in pension value and nonqualified deferred compensation earnings and all other compensation. These amounts are not a result of current year compensation determinations and are not shown above.
Additional Pay Elements
As part of the CEO compensation program, the Committee and the independent directors also approved certain other programs intended to support Mr. Fairbank’s productivity and well-being. These include:
  • Executive term life insurance with a benefit level of $5,000,000;
  • The ability to participate in a comprehensive voluntary annual health screening;
  • Office supplies and other maintenance for Mr. Fairbank’s home office;
  • The use of a driver who also provides for Mr. Fairbank’s personal security; and
  • The monitoring and maintenance of an electronic home security system.
Additional details on these programs can be found in the “Named Executive Officer Compensation” section beginning on page 38. There are no other perquisites provided to Mr. Fairbank by the Company that constitute additional compensation.
2011 CEO Compensation Decisions
 
The Committee and the independent directors determined that the compensation framework adoptedstructure utilized in 2009 and 2010 remained appropriate for Mr. Fairbank in 20102011 given that the compensation plan comprisesprogram is comprised entirely of equity-based vehicles, and is at-risk based on the Company’s and Mr. Fairbank’s individual performance. In particular, the Committee and the independent directors determined that a compensation design that includes three different equity-based vehicles continued to be appropriate because it performance, aligns Mr. Fairbank’s compensation with the Company’s performance over short- and long-termthe appropriate time horizons and supports the Company’s executive compensation goals and principles.
In January 2011, 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 82,851 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 2011 through December 31, 2013. Mr. Fairbank also received a grant of 608,366 nonstatutory stock options at an exercise price of $48.28 per share (which was the fair market value of the 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 2012 based on the Committee’s evaluation of the Company’s performance in 2011 relative to the same financial, operating, safety and soundness and strategic factors described above under “Restricted Stock Unit Award.” The Committee and the independent directors will have absolute discretion to determine whether to make this grant, as well as to determine the value of the grant relative to the target value of $4.0 million.
The terms of each of these awards are substantially similar to the terms described above under “2010 Compensation Decisions,” except for the following updates for 2011:
  • The performance share and stock option awards are subject to clawback provisions as described below under “Clawbacks” on page 36;
  • The stock option award is also subject to stock retention requirements as described below under “Stock Ownership and Retention Requirements” on page 35; and
  • The number of shares issued under any performance share award will generally be reduced by 50% if the Company’s CROATA is less than or equal to zero, no matter how well it compares against our peers in the KBW index, according to the chart below.
29


   Relative CROATA 
  ≥ 80th
Percentile
50th
Percentile
< 20th
Percentile
Capital One CROATA> 0%200%100%0%
≤ 0%100%50%0%

Named Executive Officer Compensation

Goals and Principles
As with the CEO, the Committee seeks to compensate the NEOs in a manner that encourages appropriate risk-taking.the creation of long-term stockholder value as well as the delivery of consistent, strong short-term results. 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 2010 NEO compensation, the Committee also considered the specific factors discussed below. Final decisions regarding NEO compensation are made by the independent directors.
2010 NEO Compensation Decisions
As noted above, in 2010 the Committee designed the NEO compensation program to be more in line with the Company’s pay-for-performance philosophy than was permitted under EESA. The pay mix was shifted from the elements and proportions prescribed by EESA for our 2009 compensation program to make base salary a smaller portion of total target compensation for 2010, with a higher proportion of pay provided in various equity-based vehicles. The Committee believes the new 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 2010 total target compensation for each NEO by considering the following factors:
  • Each NEO’s performance relative to the Company’s strategic objectives;
  • Capital One’s historical performance;
  • The role and qualifications of each NEO (for example, the NEO’s scope of responsibility, experience and tenure, and the demonstration of competencies consistent with the Company’s values and the ability to deliver strong, sustainable business results);
  • Appropriate internal pay differentials and the desire to foster teamwork and collaboration;
  • Historical pay levels and compensation realized;
  • Available role-specific market compensation data from peer comparator companies;
  • Available information on the structure of compensation packages for senior executives at peer comparator companies;
  • Market trends in executive compensation (for example, current rates of pay and the prevalence and types of incentive vehicles); and
  • The overall structure of the compensation program.
Base Salaries
For the 2010 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 2010 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, 2010 (approximately 15% of total target compensation). In this way, the 2010 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.
30

In January 2010, the Committee and the independent directors approved 2010 base salaries for the NEOs, including the portion of base salary delivered as restricted stock units, ranging from $1,540,000 to $2,268,000. Individual details for each NEO are provided in the table below showing compensation by performance year.
Incentive Awards
 
In determiningaddition to base salary, in January 2011 the valueCommittee 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, the Committee and the independent directors approved awards of restricted stock units for the NEOs ranging from $1,155,000 to $1,701,000, representing a payout at 175% of the target award values established by the Committee in January 2010. Individual details for each componentNEO 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 23 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, the Committee and the independent directors awarded various equity incentive awards to the NEOs for the 2010 performance year. At Capital One, equity incentive awards are linked to performance in two ways:
  • The size of the award is based on each NEO’s individual performance rating for the year just completed; and
  • The ultimate value of the award is dependent on Capital One’s performance over time.
Equity incentive awards are designed to emphasize elements that are of particular importance to Capital One given the Company’s unique goals and continually evolving business strategies and objectives. In determining the actual amounts to be awarded to each NEO, the Committee considered each NEO’s contribution to the factors noted aboveCompany’s strategic accomplishments as described under “Introduction” on page 23 as well as in the Introductionindividual performance of this section on page 24.each NEO. The Committee also considered:received input from the CEO on his assessment of each NEO’s individual performance and his recommendations for compensation of the NEOs.
  • The economic environmentequity 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 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 the 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. The restricted stock awards are also subject to clawbacks and holding requirements as discussed below under “Other Aspects of Executive Compensation” on page 35.
    Mr. Perlin, the Company’s overall performance in 2009 relative to its objectives;


  • The Company’s performance in 2009 relative to the comparator companies’ performance in 2009;
  • The fact that the CompanyChief Financial Officer, was among the first financial institutions’ permitted by regulators to repurchase the preferredawarded 93,080 nonstatutory stock options, 33,555 shares issued to the U.S. Treasury under the CPP;
  • The structureof restricted stock and a target amount of 10,738 performance shares with a total grant date value for all three awards of $3,240,000. This amount was at the target award value established by the Committee in January 2010. The Committee determined to grant these awards based in part upon Mr. Fairbank’s compensation awards in prior years, as well as his historical compensation value realized, existing stock holdings and remaining unexercised options;
  • The Company’s risk profile and the time horizon over which the deferred, equity-based vehicles will vest;
  • Mr. Fairbank’s expected leadershipPerlin’s management of the Company’s strategicbalance sheet throughout 2010. The Committee specifically considered the Company’s capital ratios and funding levels throughout 2010.
    Ms. Carter, President, Banking, was awarded 71,821 nonstatutory stock options, 25,891 shares of restricted stock and a target amount of 8,286 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, Ms. Carter was responsible for managing the Company’s banking business and has been devoted to building Capital One’s national bank while maintaining 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 in 2010, including building a scalableto improve the Company’s banking infrastructure and guidingthe rebranding of Chevy Chase Bank branches to Capital One Bank to position the Company for further success in its consumer and commercial banking businesses.
    Mr. Schnall, the Company’s Chief Risk Officer, was awarded 64,352 nonstatutory stock options, 23,199 shares of restricted stock and a target amount of 7,424 performance shares with a total grant date value for all three awards of $2,240,000. This amount was at the target award value established by the Committee in January 2010. Mr. Schnall was essential to developing the Company’s rigorous credit risk management strategies, which resulted in the overall superior performance of the Company’s credit card business in 2010 and significant reductions in charge-offs across the Company’s businesses.
    31

    Mr. Schneider, President, Card, was awarded 72,683 nonstatutory stock options, 26,202 shares of restricted stock and a target amount of 8,385 performance shares with a total grant date value for continued successall three awards of $2,530,000. This amount was slightly above the target award value established by the Committee in January 2010. 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 by the credit card business in 2010 as well as 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.
    NamePerformanceCashCashStockOptionTotal Base and Equity
    YearSalaryBonusAwards (1)AwardsCompensation
     2010$1,000,000$0$5,107,429$1,101,600$7,209,029
    Gary L. Perlin2009$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. Carter2009$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. Schnall2009$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. Schneider2010$1,000,000$0$3,364,826$860,200$5,225,026

    (1)For 2010, amounts shown include restricted stock unit portion of base salary granted in January 2010 and restricted stock unit, restricted stock, and performance share awards granted in January 2011.
    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 required for purposes of this proxy statement and is therefore not a substitute for the information required in the changed regulatory environment;Summary Compensation Table at page 39.
    There are two principal differences between the Summary Compensation Table and the above table:
    • The table above reports equity-based awards as compensation for the performance year for which they were awarded, even if the award was granted in one year based on performance for the prior year. As a result, the restricted stock units, stock options, restricted stock and performance shares granted in January 2011 for the 2010 performance year, for example, are shown in the above table as 2010 compensation. The Summary Compensation Table reports equity-based awards only in the year in which they were granted.
    • The Summary Compensation Table reports the change in pension value and nonqualified deferred compensation earnings and all other compensation. These amounts are not a result of current year compensation determinations and are not shown above.
    Additional Pay Elements
    The Committee provides certain other programs intended to support the NEOs’ productivity, well-being and security. These programs provide some level of personal benefit and are not generally available to all associates. For 2010, these included the following:
    • The ability to participate in a comprehensive voluntary annual health screening;
    • Executive term life insurance with a benefit level of approximately $5 million;
    • An automobile lease; and
    • The factmonitoring and maintenance of an electronic home security system.
    In addition, Mr. Perlin and Ms. Carter each occasionally has been provided limited personal use of the corporate aircraft.
    The Committee has determined that the ultimatenature and value of a deferred, equity-based award will dependthese programs are comparable to those offered to similarly situated executives at our peers. Additional details on these programs can be found in the Company“Named Executive Officer Compensation” section beginning on page 38.
    32

    2011 NEO Compensation Decisions
    For 2011, the Committee and Mr. Fairbank’sthe independent directors approved an NEO compensation program that is substantially similar to the 2010 program. The plan consists of multiple compensation vehicles that directly link the NEOs’ compensation with the Company’s performance over time.
After considering allmultiple time and risk horizons, align the NEOs’ interests with the interests of the above factors together, without giving particular weight to any specific factor, the committee determined that a target award of $13 million was appropriate.Company’s stockholders, support safety and soundness and encourage appropriate risk-taking.
 
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. 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.
Performance Share Award
 
After considering all ofIn January 2010, based on the above factors,determination by the Committee and the independent directors, Mr. Fairbank was awardedgranted an opportunity toaward of performance shares under which he may receive from 0% to 200% of a target number of 88,920 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 2010 through December 31, 2012. The Company’s performance will be assessed on the basis of relative cash return on average tangible assets (“CROATA”) against a comparator group consisting of companies in the KBW Philadelphia Bank Sector index, excluding custody banks (the(the “KBW index”). The independent directors believeCommittee believes that cash return on average tangible assetsCROATA provides an objective measure of a bank’sfinancial institution’s returns on its respective businesses while not incenting choices that may not be in the bank’sinstitution’s best interest. In addition, the independent directors believeCommittee 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.
Mr. Fairbank will receive The award had a grant date value of $3.25 million; however, the target number of shares that Mr. Fairbank ultimately receives, if any, will be solely dependent on the Company’s performance is at the 50th percentile relativeover time according to the comparator group, the maximum number of shares if the Company’s performance is at the 80th percentile or above, and no shares if the Company’s performance is below the 20th percentile relative to the comparator group. chart below.
After the end of the three-year performance period, the Committee will certify the Company’s performance and issue the appropriatecorresponding number of shares of the Company’s common stock, if any. The award has a fixed grant date value of $3.25 million; however,any, in accordance with the number of shares that Mr. Fairbank ultimately receives, if any, as well as the value of those shares, will be solely dependent on the Company’s performance over time.table below.
 
Percentage of Target Shares Based on Capital One’s Cash Return on Average Tangible Assets from 2010-2012
Three-Year TSR Relative to Comparator Group
(Percentile Achievement)		80 and Above755020Below 20
Final Award (Percent of Target Shares)200%150%100%40%0%
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 Above755020Below 20
Final Award (Percent of Target Shares)200%150%100%40%0%

Stock Option Award
 
In January 2010, Mr. Fairbank also received a grant of 559,333 nonstatutory stock options at an exercise price of $36.55 per share (which was the fair market value of the Company’s common stock on the grant date). The benefits to Mr. Fairbank of the stock options are deferred; the options cannot be exercised until three years after the grant date and will expire ten years after the grant date. The option grant hashad a fixed grant date value of $6.5 million; however, the ultimate value Mr. Fairbank realizes, if any, is solely dependent on the long-term appreciation in Capital One’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 grant date and the market value of the stock exceeds the exercise price at some point after the three yearthree-year vesting period when the options are exercised.
Restricted Stock Unit Award
A portion of Mr. Fairbank’s 2010 compensation award consisted of an opportunity to be awarded restricted stock units in early 2011. The award had a target value of $3.25 million, but the ultimate value of the award was determined based on the Committee’s evaluation of the Company’s performance and Mr. Fairbank’s contributions to that performance during 2010 relative to the following financial, operating, safety and soundness and strategic factors (which were evaluated on a qualitative basis without specific targets in mind):
27

Financial PerformanceOperating PerformanceSafety and SoundnessStrategic Performance
•  Operating earnings
•  Earnings per share
•  Return on tangible capital
•  Revenue generation
•  Expense management
•  Operating effectiveness
•  Customer satisfaction
���  Capital adequacy
•  Risk management and Compliance
•  Credit loss management
•  Underwriting quality
•  Balance sheet management
•  CEO leadership and performance of executive team
•  Capital management
•  Progress toward achievement of long-term strategy
•  Execution against corporate imperatives
•  Recruitment and development of world class talent
•  Disciplined investment in infrastructure
•  Corporate reputation and community engagement
•  Preservation of corporate culture and values

The Committee considered the Company’s performance as described under “Introduction” on page 23. In particular, the Committee considered: Capital One’s delivery of strong results in 2010, driven by strong core earnings and improving credit; 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; the strong performance of the auto finance business; the transformation of the bank and risk management infrastructure; and the Company’s strong liquidity 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 2010 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 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 2011 to award Mr. Fairbank $6.5 million in restricted stock units for the Company’s and his performance in 2010.
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, 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
2010$0$0$9,750,026$6,500,009$16,250,035
2009$0$0$7,000,022$4,000,001$11,000,023
2008$0$0$0$17,000,000$17,000,000

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 required for purposes of this proxy statement and is therefore not a substitute for the information required in the Summary Compensation Table on page 39.
There are two principal differences between the Summary Compensation Table and the table above:
28

  • The table above reports equity-based awards as compensation for the performance year for which they were awarded, even if the award was granted in one year based on performance for the prior year. As a result, the restricted stock unit award granted to the CEO in January 2011 for the 2010 performance year, for example, is shown in the table above as 2010 compensation. The Summary Compensation Table reports equity-based awards only in the year in which they were granted.
  • The Summary Compensation Table reports the change in pension value and nonqualified deferred compensation earnings and all other compensation. These amounts are not a result of current year compensation determinations and are not shown above.
Additional Pay Elements
As part of the CEO compensation program, the Committee and the independent directors also approved certain other programs intended to support Mr. Fairbank’s productivity and well-being. These include:
  • Executive term life insurance with a benefit level of $5,000,000;
  • The ability to participate in a comprehensive voluntary annual health screening;
  • Office supplies and other maintenance for Mr. Fairbank’s home office;
  • The use of a driver who also provides for Mr. Fairbank’s personal security; and
  • The monitoring and maintenance of an electronic home security system.
Additional details on these programs can be found in the “Named Executive Officer Compensation” section beginning on page 38. There are no other perquisites provided to Mr. Fairbank by the Company that constitute additional compensation.
 
Opportunity for Additional Equity Award2011 CEO Compensation Decisions
 
The Committee and the independent directors determined that the compensation structure utilized in 2009 and 2010 remained appropriate for Mr. Fairbank in 2011 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.
In January 2011, 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 82,851 shares of the Company’s common stock based on the Company’s performance over the three-year period from January 1, 2011 through December 31, 2013. Mr. Fairbank also hasreceived a grant of 608,366 nonstatutory stock options at an exercise price of $48.28 per share (which was the fair market value of the 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 20102011 or early 20112012 based on the Committee’s and the independent directors’qualitative evaluation of the Company’s performance in 2011 relative to the same financial, operating, safety and soundness and strategic factors described above during 2010. The Committee and the independent directors will also consider evolving external market conditions and comparator company CEO pay levels. All of these factors will be considered together, and the Committee and the independent directors will determine the weight and impact of each factor as they conduct their assessment of 2010 Company and CEO performance.under “Restricted Stock Unit Award.” The Committee and the independent directors will have absolute discretion to determine whether to make this grant, as well as to determine the value of the grant relative to the target amountvalue of $3.25$4.0 million. The award, if any, would vest in full in three years and settle in cash based on the Company’s average stock price over the twenty trading days preceding the vesting date.
 
The terms of each of these awards are substantially similar to the terms described above under “2010 Compensation Decisions,” except for the following updates for 2011:
  • Additional Pay ElementsThe performance share and stock option awards are subject to clawback provisions as described below under “Clawbacks” on page 36;
  • The stock option award is also subject to stock retention requirements as described below under “Stock Ownership and Retention Requirements” on page 35; and
  • The number of shares issued under any performance share award will generally be reduced by 50% if the Company’s CROATA is less than or equal to zero, no matter how well it compares against our peers in the KBW index, according to the chart below.
29
 
As part of the CEO compensation package, the independent directors also approved certain other programs intended to support Mr. Fairbank’s productivity and well-being. These include:
  • Executive term life insurance with a benefit level of $5,000,000;
  • The ability to participate in a comprehensive voluntary annual health screening;


  • The use of a driver who also provides for Mr. Fairbank’s personal security; and
  • The monitoring and maintenance of an electronic home security system.
There are no other perquisites provided to Mr. Fairbank by the Company that constitute additional compensation.
 


   Relative CROATA 
  ≥ 80th
Percentile
50th
Percentile
< 20th
Percentile
Capital One CROATA> 0%200%100%0%
≤ 0%100%50%0%

Named Executive Officers’Officer Compensation

Goals and Principles
 
As with ourthe CEO, the Committee seeks to compensate our otherthe NEOs in a manner that encourages the creation of long-term stockholder value as well as the delivery of consistent, strong short-term results. The Committee annually reviews and recommends to the independent directors for approval 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.future as well as the recommendations of the CEO, including his assessment of each NEO’s performance. In determining 20092010 NEO compensation, the Committee also considered the specific factors disclosed under “NEO Compensation Decisions”discussed below. Final decisions regarding NEO compensation are made by the independent directors.
 
Impact of EESA
In early 2009, the Committee endeavored to design a compensation program for the year that would comply with rules not then issued but expected to be implemented under EESA while also satisfying the Company’s compensation program objectives. Under the provisions of EESA, incentive compensation in the form of restricted stock could not exceed one-half of the executive’s base salary, and cash bonuses and all other forms of equity incentive compensation were prohibited. As a result, as noted above, the NEOs’ 2009 compensation plan comprised a combination of salary and restricted stock, as defined by and in the proportions set forth by EESA.
Given the uncertain and turbulent economic environment and the compensation restrictions expected to be implemented under EESA, the Committee and the independent directors endeavored to ensure that the Company’s most senior executive talent remained committed to Capital One and focused on the Company’s business objectives. To this end, the Committee and the independent directors entered into employment agreements with each NEO in March 2009 documenting the terms of the 2009 compensation plan and outlining each NEO’s base salary and restricted stock award opportunity. These agreements originally were intended to cover the period during which the U.S. Treasury held the preferred stock that Capital One issued under the CPP. In June 2009, after the Company repurchased the preferred stock, the Committee and the independent directors extended these employment agreements to ensure the NEOs’ continued focus on the Company’s business objectives, to provide continuity for the remainder of 2009 given the turbulent environment, and to have the opportunity to further consider an appropriate compensation plan going forward given the lack of available relevant market data. The agreements terminated on February 28, 2010.
2010 NEO Compensation Decisions
 
As noted above, in 2010 the Committee designed the NEO compensation program to be more in line with the Company’s pay-for-performance philosophy than was permitted under EESA. The pay mix was shifted from the elements and proportions prescribed by EESA for our 2009 compensation program to make base salary a smaller portion of total target compensation for 2010, with a higher proportion of pay provided in various equity-based vehicles. The Committee believes the new 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 designed the 2009 NEO compensation plan to comply with the provisions of EESA. The Committee and the independent directorsthen determined the 2010 total target compensation opportunity for each NEO by considering the following factors:
  • Each NEO’s performance relative to the Company’s strategic objectives;
  • Capital One’s historical performance;
  • The role and qualifications of each NEO (for example, the NEO’s scope of responsibility, experience and tenure, and the demonstration of competencies consistent with the Company’s Company’s values and the ability to deliver strong, sustainable business results);
  • Appropriate internal pay differentials and the desire to foster teamwork and collaboration;
  • Historical pay levels and compensation realized;
  • Available role-specific market compensation data from peer comparator companies;
  • Available information on the structure of compensation packages for senior executives at peer comparator companies;
  • Market trends in executive compensation (for example, current rates of pay and the prevalence and types of short- and long-term incentive vehicles); and
  • The Company’s participation in the CPP; and
  • The overall structure of the compensation plan, which providedprogram.
Base Salaries
For the 2010 performance year, NEO base salaries were reduced from their 2009 levels. In addition, for at least two-thirds2010 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 2010 base salary for NEOs was delivered in a mix of cash (approximately 20% of total target compensation to be delivered as base salary.
As noted above, the NEO’s 2009 compensation design was intended to comply with the provisions of EESA at the time. Under EESA, at least two-thirds of total compensation had to be paid in the form of base salary and up to one-third could be paid as incentive compensation but only in the form of restricted stock. Because this structure had a considerably lower percentage of total compensation at risk and subject to the long-term performancea $1 million cap) and restricted stock units that settled in cash on December 31, 2010 (approximately 15% of the Company than previously provided under the Company’s compensation principles, the Committee significantly reduced the


total amount of compensation that each NEO was eligible to receive in 2009. Compared to the target levels of compensation for 2008, the total target compensation). In this way, the 2010 compensation program further deferred cash compensation for each NEO and placed it at risk to the performance of the Company’s stock price for 2009 was reduced by 20% to 33%.the entire performance year.
 
After analyzing all of the above factors,30

In January 2010, the Committee and the independent directors approved 2010 base salaries for the following 2009NEOs, including the portion of base salary amountsdelivered as restricted stock units, ranging from $1,540,000 to $2,268,000. Individual details for the NEOs:
Named Executive Officer2009 Base
Salary
Gary L. Perlin$3,175,000
Lynn A. Pike$2,625,000
John G. Finneran, Jr.$2,300,000
Peter A. Schnall$2,350,000

In addition, each NEO was awarded an opportunity to receive restricted stockare provided in early 2010 valued at up to 50% of each NEO’s base salary based on the NEO’stable below showing compensation by performance in 2009.year.
 
Annual Long-Term Incentive Awards
 
OnIn addition to base salary, in January 27, 2010,2011 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, the Committee and the independent directors approved awards of restricted stock units for the NEOs ranging from $1,155,000 to $1,701,000, representing a payout at 175% of the target award values established by the Committee in January 2010. 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 23 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, the Committee and the independent directors awarded restricted stock grantsvarious equity incentive awards to the NEOs underfor the 2009 compensation plan.2010 performance year. At Capital One, long-termequity incentive (“LTI”) awards are linked to performance in two ways:ways:
  • The size of the award is based on each NEO’s individual performance rating for the year just completed; and
  • The ultimate value of the award is dependent on Capital One’s performance over time.
LTIEquity 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 CEO, the Committee and the independent directors considered each NEO’s contribution to the Company’s strategic accomplishments as described in the Introduction of this sectionunder “Introduction” on page 2423 as well as specificthe individual performance factors forof each NEO. These awards would not have vested whileThe Committee also received input from the U.S. Treasury heldCEO on his assessment of each NEO’s individual performance and his recommendations for compensation of the Company’s preferred stock under the CPP, but because the Company repurchased the preferred stock in June 2009, the awards will vest in equal annual installments over the three year period beginning on the date of grant.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 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 the 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. The restricted stock awards are also subject to clawbacks and holding requirements as discussed below under “Other Aspects of Executive Compensation” on page 35.
Mr. Perlin, the Company’s Chief Financial Officer, was awarded 37,22993,080 nonstatutory stock options, 33,555 shares of restricted stock and a target amount of 10,738 performance shares with a total grant date value for all three awards of $1,360,720.$3,240,000. This amount was at the target award value established by the Committee in January 2010. The Committee and the independent directors determined to awardgrant these sharesawards based in part upon Mr. Perlin’s management of the Company’s balance sheet throughout 2009.2010. The Committee and the independent directors specifically considered the Company’s capital ratios and funding levels throughout 2009, which the Company maintained even after repurchasing the preferred stock issued to the U.S. Treasury under the CPP.2010.
 
Ms. Pike,Carter, President, Banking, was awarded 30,78071,821 nonstatutory stock options, 25,891 shares of restricted stock and a target amount of 8,286 performance shares with a total grant date value for all three awards of $1,125,009.$2,500,000. This amount was at the target award value established by the Committee in January 2010. Throughout 2009,2010, Ms. PikeCarter was responsible for managing the Company’s banking business and has been devoted to building Capital One’s national bank while maintaining the Company’s commitment to local banking and serving the communities in which we do business. In 2009,2010, Ms. PikeCarter 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 position the Company for further success in its consumer and commercial banking businesses.
 
Mr. Finneran, General Counsel and Corporate Secretary, was awarded 26,969 shares of restricted stock, with a grant date value of $985,717. Among other things, Mr. Finneran led the Company’s Regulatory Relations and Policy Affairs teams, which were critical to the Company’s ability to deal with the changing regulatory and legislative environments.
Mr. Schnall, the Company’s Chief Risk Officer, was awarded 33,02864,352 nonstatutory stock options, 23,199 shares of restricted stock and a target amount of 7,424 performance shares with a total grant date value for all three awards of $1,207,173, which$2,240,000. This amount was slightly more than 50% of his 2009 base salary. Theat the target award value established by the Committee and the independent directors determined that an award slightly in excess of 50% of Mr. Schnall’s base salary was appropriate given the increased prominence of the risk management function in 2009. In particular,January 2010. Mr. Schnall was essential to developing the Company’s rigorous credit risk management strategies, which resulted in the overall superior performance of the Company’s credit card business in 2009. Mr. Schnall also led2010 and significant reductions in charge-offs across the Company’s response to the Stress Test, which was a necessary precondition to the Company being able to repurchase the preferred stock it issued to the U.S. Treasury under the CPP in June 2009.businesses.
 
Total actual compensation amounts31

Mr. Schneider, President, Card, was awarded 72,683 nonstatutory stock options, 26,202 shares of restricted stock and a target amount of 8,385 performance shares with a total grant date value for 2009 represent a 20% to 30% decrease from total actual compensation amounts awarded for 2008.all three awards of $2,530,000. This amount was slightly above the target award value established by the Committee in January 2010. The Committee anddetermined that an award above the independent directors believe this decrease in total compensationtarget value was appropriate given the overall economic environmentsuperior performance of the Company’s credit card business. In particular, the Committee noted the industry-leading return on assets delivered by the credit card business in 2010 as well as 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.
NamePerformanceCashCashStockOptionTotal Base and Equity
YearSalaryBonusAwards (1)AwardsCompensation
 2010$1,000,000$0$5,107,429$1,101,600$7,209,029
Gary L. Perlin2009$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. Carter2009$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. Schnall2009$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. Schneider2010$1,000,000$0$3,364,826$860,200$5,225,026

(1)For 2010, amounts shown include restricted stock unit portion of base salary granted in January 2010 and restricted stock unit, restricted stock, and performance share awards granted in January 2011.
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 required for purposes of this proxy statement and is therefore not a substitute for the information required in the Summary Compensation Table at page 39.
There are two principal differences between the Summary Compensation Table and the amountabove table:
  • The table above reports equity-based awards as compensation for the performance year for which they were awarded, even if the award was granted in one year based on performance for the prior year. As a result, the restricted stock units, stock options, restricted stock and performance shares granted in January 2011 for the 2010 performance year, for example, are shown in the above table as 2010 compensation. The Summary Compensation Table reports equity-based awards only in the year in which they were granted.
  • The Summary Compensation Table reports the change in pension value and nonqualified deferred compensation earnings and all other compensation. These amounts are not a result of 2009 pay-certain compensation.


current year compensation determinations and are not shown above.
Additional Pay Elements
 
The Committee provides certain other programs intended to support the NEOs’ productivity, well-being and security. These programs provide some level of personal benefit and are not generally available to all associates. For 2009,2010, these included the following:
  • The ability to participate in a comprehensive voluntary annual health screening;
  • Executive term life insurance with a benefit level of approximately $5 million;
  • An automobile lease; and
  • The monitoring and maintenance of an electronic home security system.
In addition, under the terms of an employment agreement, the Company has providedMr. Perlin and Ms. Pike with a housing allowance. This arrangement was intended to assist in Ms. Pike’s transition from California to New York to become head of the Company’s banking businesses.  Ms. Pike’s employment agreement expired on December 31, 2009. In addition, Ms. PikeCarter 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.executives at our peers. Additional details on these programs can be found in the “Named Executive OfficersOfficer Compensation” section beginning on page 36.38.
 
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20102011 NEO Compensation ProgramDecisions
 
For 2010,2011, the Committee and the independent directors approved an NEO compensation planprogram that is more consistent withsubstantially similar to the Company’s pay-for-performance philosophy.2010 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.
 
Under
Criteria and Process for Compensation Decisions

The Committee considers a number of factors in making compensation decisions with respect to the plan, approximately 35% of each NEO’s total compensation will be paid as base salary, with approximately 20% of such total compensation paid as regular salary throughout the performance yearCEO and the remaining 15%NEOs. The Committee relies on a range of such total compensation paidobjective 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 formdesign of restricted stock units grantedthe 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 January 27, 2010. possible plan designs. Please see the discussion under “Compensation Committee” in the “Governance of Capital One” section on page 9 for additional information about the Consultant.
Use of Outside Consultants for NEO Compensation
The restricted stock units will vest on December 31, 2010Chief Human Resources Officer and will be settled in cash based onother members of the Company’s average stock priceHuman Resources department assist the CEO in developing compensation recommendations to the Committee for the twenty trading days precedingNEOs. The Human Resources department typically uses multiple surveys as sources of market compensation data. The Consultant also provides additional market reference points that the vesting date.
Approximately 15% of each NEO’s compensation is expected to be delivered in the form of restricted stock units that will vest over a period of three years and will be settled in cash based on the Company’s stock price for the twenty trading days preceding the vesting date. The units, if any, will be awarded at the end of 2010 or in early 2011 at the discretion of the Compensation Committee and the independent directors baseduse 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 Company’s actualform 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 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 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 in 2010 relative toinformation from the peer comparator companies across a variety of individualmetrics. The Committee specifically considers the Company’s percentile rank versus peer comparator companies across the following metrics:
  • Revenue;
  • Assets;
  • Market capitalization;
  • Net income;
  • Diluted earnings per share growth;
  • Return on average assets;
  • Return on average equity;
  • Asset growth; and
  • Total stockholder return.
33

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. 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 was used for benchmarking and analysis when the Committee approved the 2010 compensation programs and target award values. With consolidation and economic turmoil subsiding in 2010, the Committee determined to maintain the same peer comparator group for purposes of designing the 2011 compensation programs. The following peer comparator group was approved in July 2010:
American ExpressFifth Third BancorpRegions Financial
Bank of America CorporationJ.P. Morgan ChaseSunTrust Bank
BB&T CorporationKeyCorpU.S. Bancorp
CitigroupPNC Financial ServicesWells Fargo & Company

As of December 31, 2010, Capital One was positioned at or near the median of the 12-company peer comparator group in terms of total assets, revenues and net income. For 2010, the Company performance factors.ranked second among the peer comparator group in return on tangible equity and cash return on tangible assets.
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, 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.
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.
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. Details of the Plan can be found under “Capital One’s Voluntary Non-Qualified Deferred Compensation Programs” in the “Named Executive Officer Compensation” section on page 49.
Employment Agreements
Capital One typically does not enter into employment agreements with the NEOs 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.
34

Change of Control Agreements
Each of the NEOs and the CEO 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 remaining 50%change of control agreements define compensation and benefits payable to the CEO and the NEOs 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 NEOs 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 NEO’sNEO with an incentive to remain in their leadership roles up to and beyond the transaction date. The CEO and the NEOs 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 NEOs under these agreements are included in the total compensation is expectedtally sheets reviewed by the Committee on an annual basis. While the potential change of control payouts do not necessarily impact annual decisions on CEO and NEO pay, reviewing this information allows the Committee to consistfully understand the downstream implications of long-term incentive awards that will be grantedits decisions and the resulting impact to the Company and its stockholders.
Our change of control agreements for the CEO and the NEOs atprovide for excise tax “gross-up” payments in certain circumstances. On March 1, 2011, Capital One delivered notice to the endCEO and the NEOs that their current change of 2010 or early in 2011control agreements would not be renewed. The Committee and will vest in full a minimum of three years following the grant date. These equity awards, if any, will be granted to each NEO solely at the discretion of 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 completely at-risk based on each NEO’s performance in 2010.replaced with the new form of agreement that does not provide for an excise tax gross-up.
 
Post-Employment Compensation Practices
The independent directors believe that this mix of equity-based vehicles, some of which ultimately pay out in cash, is appropriate because it aligns the NEOs’ compensationCEO has no employment or severance arrangement with the Company’s performance over short-Company other than a change of control agreement as described above. If an NEO separates from Capital One, he or she is entitled to receive the amounts set forth in the Company's Executive Severance Plan, which provides for a payment of up to 30% of the NEO’s current target total compensation plus standard health, welfare and long-term time horizons, supportsoutplacement 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 safetycustomers or employees. 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 soundness and encourages appropriate risk-taking.
ownership of work product. For additional information, please see “Restrictive Covenants” in the “Named Executive Officer Compensation” section on page 51. 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

Stock Ownership Policiesand Retention Requirements
 
Consistent with their responsibilities to our stockholders, Capital One’s NEOs, including 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:
 
RoleSalary Multiple
CEO5X
Other NEOs and
Executive
Officers		3X

35

Given that the CEO’s compensation packageprogram 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. For the other NEOs, the 2009


ownership requirements also were based on a notional salary of approximately 26% to 32% of actual base salary in light of the temporary increased salaries paid to each NEO under the 2009 compensation program.
 
Ownership requirements may be fulfilled using the following shares:
  • Shares owned without restriction;
  • Unvested restricted stock;
  • Shares acquired through the Associate Stock Purchase Plan (“ASPP”); and
  • Shares owned through Capital One’s 401(k) Plan.
The Committee annually reviews the guidelines and monitors the CEOCEO’s and the NEOs’ compliance with them. New executive officers are given two years from the date of appointment, promotion to or designation as an executive officer, or commencement of employmentappointment 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. 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 hedging transactions in Capital One stock and from using their Capital One stock as collateral for margin loans.
 
Clawbacks
Beginning in January 2011, the Company included recoupment, or “clawback,” provisions in certain equity awards made to the CEO and the NEOs. The clawback provisions allow the Company to recover equity compensation in the event of a financial restatement or executive misconduct as follows:
  • Each of the performance share awards to the NEOs for 2010 performance, as well as to the CEO for 2011 performance, includes a clawback that is triggered in the event of a financial restatement by the Company within three years of the vesting of the award if the executive would have been entitled to fewer shares on the vesting date as a result of the restatement; and
  • Each of the restricted stock, stock option and performance share awards to the NEOs for 2010 performance, as well as stock option and performance share awards to the CEO for 2011 performance, includes a clawback that is triggered if the executive commits misconduct applicable to all shares or options that vested within the year prior to the misconduct.
The clawback provisions are designed to recoup the shares awarded to the executive or, in the event the executive has sold or otherwise transferred the shares, the net proceeds from that sale or transfer.
Equity Grant Practices
 
Capital One strives to maintain equity grant practices that demonstrate high standards of corporate governance. Annual long-term 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 other than annual long-term incentive awards, usually in connection with hiring a new executive officer. 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 to newly hired executives who are not executive officers, unless the target value of such award is in excess of $1 million. These awards are granted quarterly in 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. 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 Market Value is equal to the closing price of the Company’s common stock on the date of grant.
 
The Company does not seek to time equity grants to take advantage of material non-public information and in no event is the grant date set to a date that is prior to the date of Committee approval.
 
Post-Employment Compensation Practices36
 
The CEO has no employment or severance arrangement other than a Change of Control Employment Agreement. If another NEO separates from Capital One, he or she is entitled to receive the amounts set forth in the Company’s Executive Severance Plan, which provides for a payment of up to two times the NEO’s current base salary plus standard health, welfare and outplacement services. For 2009, these payments were instead calculated against a “notional” salary that adjusted for the temporarily increased base salary each NEO received under the 2009 compensation program. The Committee may exercise its business judgment in approving additional amounts in light of all relevant circumstances, including the NEO’s term of employment, past accomplishments, reasons for separation from the Company, potential risks, and the NEO’s willingness to restrict his or her future action(s), such as through an agreement not to compete or solicit the Company’s customers or employees. Capital One has asked certain NEOs to enter into various agreements that contain restrictive covenants related to confidentiality, non-competition, non-solicitation of employees and ownership of work product. For additional information, please see “Restrictive Covenants” on page 50. Each NEO (including the CEO) also has a Change of Control Employment Agreement as described below.
Change of Control Agreements
Each of the NEOs (including the CEO) is a party to a Change of Control Employment Agreement with the Company. 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 NEOs (including the CEO) 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 NEOs (including the CEO) 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 NEOs with an incentive to remain in their leadership roles up to and beyond the transaction date. The NEOs (including the CEO) 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 norms in the banking and financial services industry. This ensures 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 market-competitive level of benefit.
Projections of potential payouts to NEOs under these agreements are included in the total compensation tally sheets reviewed by the Committee on an annual basis. While the potential change of control payouts do not necessarily impact annual decisions on CEO and NEO pay, reviewing this information ensures the Committee fully understands the downstream implications of its decisions and the resulting impact to the Company and its stockholders.
Our change of control agreements for NEOs provide for excise tax and “gross up” payments in certain circumstances. These payments are only intended to place the NEO in the same after-tax position that they would have been in if they had received their severance payments for reasons other than a change of control, and are not intended to pay the NEO’s normal income tax amounts. If severance payments made to an NEO following a change of control termination exceed a certain threshold, those amounts are not tax deductible by the Company, and the NEO may be subject to a 20% excise tax on the payments in addition to the NEO’s normal payroll and income taxes. In this scenario, Capital One will make payments to reimburse the NEO for this excise tax, as well as additional amounts to cover the tax imposed on the reimbursement itself (commonly called a “gross up”).
 

Our change of control agreements contain a feature intended to minimize the additional cost to the Company of these excise taxTax, Accounting and gross up payments. If the value of the payments exceed the safe harbor amount by 10% or less, the agreements call for the payments to be reduced by an amount that would result in the payment value being exactly equal to the safe harbor, thereby eliminating the need for excise tax or gross up payments.
Pension and Nonqualified Deferred Compensation PlansRegulatory Considerations
Capital One does not currently have any active pension plans for the CEO or the other 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 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. Pike, Mr. Finneran and Mr. Schnall each participated in Capital One’s Voluntary Non-Qualified Deferred Compensation Plan (the “Plan”) in 2009. Details of the Plan can be found  in the “Named Executive Officers Compensation” section beginning of page 36.
Other Compensation Arrangements
Employment Agreements
Capital One typically does not enter into employment agreements with our NEOs in order to maintain maximum flexibility in establishing separation terms at the appropriate time considering the current circumstances. The Committee retains full discretion to approve employment agreements on an exception basis and has done so in the past. As discussed above in “Named Executive Officer Compensation,” the Committee and the independent directors approved employment agreements for the NEOs (other than the CEO) documenting the 2009 NEO compensation program. These agreements terminated on February 28, 2010.
The Company also entered into an employment agreement with Ms. Pike in April 2007 when she joined the Company. The Agreement defined the terms of her compensation package until its termination date and the amounts that she would be entitled to receive upon the termination of her employment. The general terms and compensation provisions of the agreement expired on April 23, 2009. Under an amendment to the agreement, Ms. Pike also received a monthly housing allowance through December 31, 2009, to maintain her residence in New York.
Tax Accounting and Regulatory Considerations
 
The Committee carefully considers the tax and regulatory impact of its Compensationcompensation 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 NEOs (other than the CFO)Chief Financial Officer), in the past, Section 162(m) of the Internal Revenue Code allowed a federal tax deduction for compensation paid to an NEOthe executive that wasis $1 million or less. For amounts in excess of $1 million, a deduction wasis 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 NEO annual cash incentive awards and LTIequity-based awards in order to qualify these incentive awards as “performance-based.” Historically, the Committee would establish annual performance thresholds to ensureprovide for deductibility over the $1 million limit for incentive compensation paid to ourthe CEO and the NEOs.
 
For the periods during which the Company participated in the CPP, the Company’s ability to deduct amounts paid in respect of CEO and NEO compensation was limited to $500,000 per executive, and the circumstances under which restricted stock could qualify as performance-based compensation were also limited. The award of stock options and performance shares to the CEO continuedin 2010 were deductible as “performance-based” compensation. Restricted stock granted to the NEOs in 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, the Committee and the independent members did establish a performance threshold that the Company had to meet in order to award restricted stock and restricted stock units that are part of the 2010 NEO and CEO compensation programs awarded in January 2011. The Company had to achieve positive earnings per share (“EPS”) on continuing operations, less extraordinary items, for the 2010 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 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 2010 was positive, and therefore the awards were made in January 2011 and are deductible as “performance-based” compensation.
 

37

SECTION VI – NAMED EXECUTIVE OFFICERSOFFICER COMPENSATION

General
The Summary Compensation Table below provides information concerning compensation for the fiscal years ended December 31, 2010, 2009 and 2008 and 2007 for ourthe CEO and our otherthe NEOs.
 
As discussed under “Chief Executive Officer Compensation” in the “Compensation Discussion and Analysis” section on page 26, the CEO receives 100% of his compensation in equity-based awards. Amounts shown in the table below for the CEO for 2010 represent stock option and performance share awards granted in January 2010 that are designed to provide an incentive to focus on longer term performance. Amounts shown in the “Stock Awards” column for 2010 also include an award of restricted stock units granted to the CEO in January 2010 for the 2009 performance year.
As discussed under “Named Executive Officers’Officer Compensation” in the “Compensation Discussion and Analysis” section on page 30 for 2009, the provisions of EESA, although not yet effective, determined the structure that, the Committee and the independent directors adopted a new compensation program for the NEOs’ (other thanNEOs in January 2010. Under the CEO)2010 compensation program, base salary comprised approximately 35% of NEO total target compensation. Each NEO received a portion of his or her 2010 base salary paid in cash throughout the year and a portion delivered in restricted stock units that were granted in January 2010 and settled in cash at the end of 2010. For the NEOs, amounts shown in the “Stock Awards” column for 2010 in the table below also include restricted stock awards that were granted in January 2010 for the 2009 performance year. These restricted stock awards were granted under the 2009 compensation design. Underprogram and designed to comply with the NEOs’ compensation plan, at least two-thirdsrequirements of total compensation was paid in the form of base salary and up to one-third could be paid as equity incentive compensation in the form of restricted stock.EESA. The NEOs were not eligible for annual cash bonuses or other forms of equity incentive compensation for 2009. For the year 2009, the table below includes the increased base salaries paid to the NEOs (other than the CEO) under the 2009 compensation plan. The restricted stock component of the 2009 compensation plan was awarded in January 2010 and will be included in the 2010 Summary Compensation Table next year.
The table below also includes, as 2009 compensation, the long-term incentives (in the form of stock options, restricted stock and performance shares) that were awarded to the NEOs (other than the CEO) in January 2009 based on performance for the fiscal year ended December 31, 2008 under a plan that more heavily emphasized pay-for-performance through long-term incentives than did the 2009 plan. These long-term incentives comprised approximately 85% of the value of total compensation for each of the NEOs (other than the CEO) under the 2008 compensation plan. The stock options granted in 2009 become exercisable in three equal annual installments beginning one year after the date of grant, generally contingent on continued employment. Most restricted stock vests in three annual installments beginning one year after the date of grant, generally contingent on continued employment; but a portion of the restricted stock granted in 2009 vested six months after the date of grant, generally contingent on continued employment. For the CEO, amounts shown for 2009 represent awards granted in the beginning of 2009 for 2009 performance. An additional grant of restricted stock units was awarded to the CEO in January 2010 based on his and the Company’s 2009 performance and will be included in the 2010 Summary Compensation Table in the Company’s 2011 proxy statement. The stock options granted to the CEO in 2009 become exercisable after three years.2010.
 
The performance shares grantedAmounts paid to the CEO and the other NEOs in 2009 will be paid based on the Company’s total shareholder return over the 3-year period from January 1, 2009 through December 31, 2011 relative to the S&P Financials (less insurance companies and Real Estate Investment Trusts).
Amounts paid to NEOs in 20092010 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 2010 compensation programs for the CEO and the NEO can be found under “Compensation Components” in the “Compensation Discussion and Analysis” section on page 25.
38

20092010 Summary Compensation Table

Name and Principal
Position		YearSalary (6)Bonus (7)Stock
Awards (8)		Option
Awards (9)		Non-Equity
Incentive Plan
Compensation (7)		Change in Pension
Value and Non-
Qualified Deferred
Compensation
Earnings (10)		All Other
Compensation (11)		Total
 
 
Richard D. Fairbank (1)2009$0$0$2,000,019$4,000,001$0$10,560$76,785$6,087,365
Chairman, CEO and2008$0$0$0$0$0$0$68,344$68,344
President2007$0$0$0$17,000,000$0$15,294$69,585$17,084,879
 
Gary L. Perlin (2)
Chief Financial Officer		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
2007$850,000$1,225,000$4,587,509$2,645,336$0--$195,024$9,502,869
 
Lynn A. Pike (3)2009$2,625,000$0$3,374,183$1,120,310$0--$659,304$7,778,797
President, Banking2008$662,500$0$677,888$920,106$0--$778,655$3,039,149
 
John G. Finneran, Jr. (4)2009$2,300,000$0$3,140,871$891,667$0$3,080$143,395$6,479,013
General Counsel and2008$719,167$0$1,214,325$1,483,911$0$0$178,491$3,595,894
Corporate Secretary2007$666,667$690,000$3,447,568$1,912,117$0$1,661$191,616$6,909,629
  
Peter A. Schnall (5)
Chief Risk Officer		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
2007$545,833$1,070,000$2,857,934$1,595,411$0--$143,153$6,212,331
Name and Principal
Position		YearSalary (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

(1)     Due to the adoption of a new compensation framework for 2009 and the Committee’s and the independent directors’ decision to shift the timing of Mr. Fairbank’s awards from the December prior to the performance year to January of the performance year, 2008 total compensation as reported above does not represent the intended compensation for Mr. Fairbank’s 2008 performance.2010 consisted of stock option, performance share and restricted stock unit awards, in addition to certain perquisites. Mr. Fairbank received his compensation for 2008 performance in December 2007, resulting in no compensation other than certain perquisites reported for 2008. Mr. Fairbank received a portion of his total compensation for 2009 performance2010 in January 2009,2010 (stock option and performance share grants), which is reflected in the table above in 2009.
The table below provides greater detail regarding pay attributable to Mr. Fairbank’s performance in 2008 and 2009.for 2010. Mr. Fairbank received the final portion of his compensation for 2010 in January 2011 (restricted stock unit grant), which is not included in the table above. His compensation for 2009 performanceincluded a restricted stock unit award granted in January 2010, as shown below.which is included in the table above for 2010. See “CEO Compensation by Performance Year” in the “Compensation Discussion and Analysis” section on page 28 for more information.

Name and Principal
Position		Performance
Year		SalaryBonusStock
Awards		Option
Awards		Non-Equity
Incentive Plan
Compensation		Change in Pension
Value and Non-
Qualified Deferred
Compensation
Earnings		All Other
Compensation		TotalPercent
Difference
2008 vs. 2009
         Richard D. Fairbank
Chairman, CEO and
President		2009$0$0$7,000,022$4,000,001$0$10,560$76,785$11,087,368-35%
2008$0$0$0$17,000,000$0$0$68,344$17,068,344

(2) The table below provides greater detail regarding Mr. Perlin’sNEO compensation attributable to performance years 2009 and 2008. For 2009 performance, Mr. Perlin received afor 2010 consisted of base salary, of $3,175,000 and restricted stock, withstock options, performance shares and two grants of restricted stock units (one representing a grant date valueportion of $1,360,720base salary), in addition to certain perquisites,perquisites. The restricted stock units attributable to base salary are included in the table above for total compensation of $4,758,527, as shown below.2010, however the other equity-based awards for 2010 performance were granted in January 2011 and are not included in the table above. The restricted stock awarded to each NEO for Mr. Perlin’s 2009 performance was granted in January 2010 and as a result, the value of this restricted stock will be included in the 2010 Summary Compensation Table in the Company’s next proxy statement. For 2008 performance, Mr. Perlin received a base salary of $900,000, restricted stock and performance shares with an aggregate grant date value of $4,210,038 and stock options with a grant date value of $1,333,265, in additional to certain perquisites, for total compensation of $6,701,497, as shown below. The restricted stock, performance shares and stock options for Mr. Perlin’s 2008 performance were granted in January 2009 and, as a result, the value of these awards is included in the 2009 yeartable above for 2010. See “NEO Compensation by Performance Year” in the Summary Compensation Table above.“Compensation Discussion and Analysis” section on page 32 for more information.

Name and Principal
Position		Performance
Year		SalaryBonusStock
Awards		Option
Awards		Non-Equity
Incentive Plan
Compensation		Change in Pension
Value and Non-
Qualified Deferred
Compensation
Earnings		All Other
Compensation		TotalPercent
Difference
2008 vs. 2009
         Gary L. Perlin
Chief Financial
Officer		2009$3,175,000$0$1,360,720$0$0--$222,807$4,758,527-29%
2008$900,000$0$4,210,038$1,333,265$0--$258,194$6,701,497

(3) The table below provides greater detail regarding Ms. Pike’s compensation attributable to performance years 2009 and 2008. For 2009 performance, Ms. Pike received aBecause changes for the 2010 base salary were effective as of $2,625,000March 1, 2010, a portion of the Salary for 2010 reflected in this column represents salary paid at the higher 2009 rate. The cash portion of base salary for any NEO in 2010 was limited to $1 million, and the remaining portion of base salary for 2010 was delivered in restricted stock with a grant date value of $1,125,009 in addition to certain perquisites, for total compensation of $4,409,313,units as shown below. The restricted stock awarded for Ms. Pike’s 2009 performance was granted in January 2010 and, as a result, the value of this restricted stock will be includeddescribed under “Base Salaries” in the 2010 Summary Compensation Table in the Company’s next proxy statement. For 2008 performance, Ms. Pike received a base salary of $662,500, restricted stock“Compensation Discussion and performance shares with an aggregate grant date value of $3,374,183 and stock options with a grant date value of $1,120,310, in additional to certain perquisites, for total compensation of $5,935,648, as shown below. The restricted stock, performance shares and stock options for Ms. Pike’s 2008 performance were granted in January 2009 and, as a result, the value of these awards is included in the 2009 year in the Summary Compensation Table above.


Name and Principal
Position		Performance
Year		SalaryBonusStock
Awards		Option
Awards		Non-Equity
Incentive Plan
Compensation		Change in Pension
Value and Non-
Qualified Deferred
Compensation
Earnings		All Other
Compensation		TotalPercent
Difference
2008 vs. 2009
           Lynn A. Pike2009$2,625,000$0$1,125,009$0$0--$659,304$4,409,313-26%
President, Banking2008$662,500$0$3,374,183$1,120,310$0--$778,655$5,935,648 

(4)The table below provides greater detail regarding Mr. Finneran’s compensation attributable to performance years 2009 and 2008. For 2009 performance, Mr. Finneran received a base salary of $2,300,000 and restricted stock with a grant date value of $985,717 in addition to earnings on deferred compensation and certain perquisites, for total compensation of $3,432,192, as shown below. The restricted stock awarded for Mr. Finneran’s 2009 performance was granted in January 2010 and, as a result, the value of this restricted stock will be included in the 2010 Summary Compensation Table in the Company’s next proxy statement. For 2008 performance, Mr. Finneran received a base salary of $719,167, restricted stock and performance shares with an aggregate grant date value of $3,140,871 and stock options with a grant date value of $891,667, in additional to certain perquisites, for total compensation of $4,930,196, as shown below. The restricted stock, performance shares and stock options for Mr. Finneran's 2008 performance were granted in January 2009 and, as a result, the value of these awards is included in the 2009 year in the Summary Compensation Table above.

Name and Principal
Position		Performance
Year		SalaryBonusStock
Awards		Option
Awards		Non-Equity
Incentive Plan
Compensation		Change in Pension
Value and Non-
Qualified Deferred
Compensation
Earnings		All Other
Compensation		TotalPercent
Difference
2008 vs. 2009
           John G. Finneran, Jr.
General Counsel and
Corporate Secretary		2009$2,300,000$0$985,717$0$0$3,080$143,395$3,432,192-30%
2008$719,167$0$3,140,871$891,667$0$0$178,491$4,930,196 

(5)The table below provides greater detail regarding Mr. Schnall’s compensation attributable to performance years 2009 and 2008. For 2009 performance, Mr. Schnall received a base salary of $2,350,000 and restricted stock with a grant date value of $1,207,173 in addition to certain perquisites, for total compensation of $3,713,188, as shown below. The restricted stock awarded for Mr. Schnall’s 2009 performance was granted in January 2010 and, as a result, the value of this restricted stock will be included in the 2010 Summary Compensation Table in the Company's next proxy statement. For 2008 performance, Mr. Schnall received a base salary of $615,833, restricted stock and performance shares with an aggregate grant date value of $2,893,193 and stock options with a grant date value of $953,654, in additional to certain perquisites, for total compensation of $4,648,052, as shown below. The restricted stock, performance shares and stock options for Mr. Schnall’s 2008 performance were granted in January 2009 and, as a result, the value of these awards is included in the 2009 year in the Summary Compensation Table above.

Name and Principal
Position		Performance
Year		SalaryBonusStock
Awards		Option
Awards		Non-Equity
Incentive Plan
Compensation		Change in Pension
Value and Non-
Qualified Deferred
Compensation
Earnings		All Other
Compensation		TotalPercent
Difference
2008 vs. 2009
           Peter A. Schnall2009$2,350,000$0$1,207,173$0$0--$156,015$3,713,188-20%
Chief Risk Officer2008$615,833$0$2,893,193$953,654$0--$185,372$4,648,052 

(6)As described above and in the “Named Executive Officers’ Compensation”Analysis” section on page 30 2009 salary reflects the compensation proportions set forth by EESA..
 
(7)(4)NEOs were not eligible for annual cash bonus awards for 2009 performance under a compensation plan intended to comply with EESA.or 2010 performance. Prior to 2009, bonuses were awarded based on a combination of Company and individual performance factors. InFor 2008, the independent directors determined not to award annual cash bonuses despite Company and individual performance at or above the target level.bonuses.
 
(8)(5)The amounts shown in this column for 2010 represent the grant date value of stock awards (including restricted stock, awardsperformance shares, stock options and performance share awards)restricted stock units) granted to the CEO and the NEOs in 2009,2010, calculated in accordance with SEC rules.rules governing disclosure in the proxy statement. The CEO received only a performance share award, stock options and restricted stock units in 2009; however, each of2010, while the other NEOs received both a performance share award and one or more restricted stock awardsand restricted stock units (representing a portion of base salary) in 2009.2010. The grant date value of performance shares included in this column for Mr. Fairbank assumes a payout at the target performance level. For Mr. Fairbank, thelevel of $3,250,026. The grant date value of the performance

39

share award at target performance is $2,000,019 and at maximum performance is $4,000,038.would be $6,500,052. For Mr. Perlin,additional information, see the valueGrants of the performance share award at target performance is $600,012 and at maximum performance is $1,200,024. For Ms. Pike, the value of the performance share award at target performance is $504,168 and at maximum performance is $1,008,336. For Mr. Finneran, the value of the performance share award at target performance is $445,851 and at maximum performance is $891,702. For Mr. Schnall, the value of the performance share award at target performance is $429,177 and at maximum performance is $858,354.Plan-Based Awards Table below.
       
(9)(6) The amounts shown in this column for 2010 represent the grant date fair value of stock options granted to the CEO and NEOs in 2009,2010, calculated in accordance with SEC rules.rules governing disclosure in the proxy statement. For information on the valuation assumptions of these awards, refer to footnote 3 to the 2009 Grants of Plan-Based Awards Table in this proxy statement.
 
(10)(7)For Messrs.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 Finneran, the Excess Cash Balance Plan. The interest crediting rate for the Cash Balance Pension Plan changes annually based on the average yield of five-year Treasury Securities for the preceding 12 months. For the Excess Cash Balance Plan, the interest crediting rate changes monthly based on the Wall Street Journal Prime Rate.
 
(11)(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
RelocationOtherDividends
on Unvested
Restricted
Stock		Defined
Contribution
Company
Contribution (b)		Insurance
(c)		Auto
Allowance (a)		Corporate
Aircraft		Health
Screening		Driver and
Security		Dividends
on Unvested
Restricted
Stock		Defined
Contribution
Company
Contribution (b)		Insurance
(c)
Richard D. Fairbank--$1,691$55,354  (d)--   --$0$0$19,740$0$0$2,341$48,886(d)$27,360$0$22,050
        
Gary L. Perlin$13,829--$0$0--$603$127,541$61,094$19,740$14,973$3,606$0$0 $38,833$215,250$19,740
        
Lynn A. Pike$2,379$33,977$0$15,225(e)$462,757(g)$603$92,194$38,369$13,800
John G. Finneran, Jr.$15,341--$2,241$3,344(g)--$603$54,507$47,619$19,740
Lynn A. Carter$6,176$39,950$4,200$6,419(e)$28,006$156,450$13,800
        
Peter A. Schnall$21,587--$0$2,026(f)--$603$83,881$42,258$5,660$17,002$0$0$1,621(f)$25,842$151,125$5,825
        
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. The program was eliminated for Mr. Fairbank in 2007. The percent of personal use of the automobile is tracked throughout the calendar year and then applied to the full expense amount.
     
(b)Company contributions under qualified and nonqualifiednon-qualified deferred compensation programs and other supplemental executive retirement benefits.
 
(c)Represents life insurance premiums paid on behalf of the NEOs.executives.
 
(d)Includes cost attributable to personal use of a driver who also provides for Mr. Fairbank’s personal security ($45,326)46,417) and aggregate cost to the Company for home security services ($10,028)2,469) for Mr. Fairbank. The percent of personal use of the automobile is tracked throughout the calendar year and then applied to the full expense amount for personal security.
 
(e)Includes cost attributable to personal use of a driver ($5,681)3,898) and aggregate cost to the Company for home security services ($9,544)2,521) for Ms. Pike.Carter. The percent of personal use of the automobile is tracked throughout the calendar year and then applied to the full expense amount for the driver.
 
(f)Includes aggregate cost to the Company for home security services.
(g)Includes $230,157 in tax reimbursements.
 

40

20092010 Grants of Plan-Based Awards Table

The Grants of Plan-Based Awards table provides details on estimated equity incentive plan awards, stock options, restricted stock and restricted stock unit awards granted in 2009.2010.
 
In 2009,2010, the CEO and the NEOs were not eligible for annual cash incentive awards or other non-equity incentive plan awards, as defined by EESA.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 annual long-termequity-based incentive awards to the NEOs, other thanCEO and the CEO. TheseNEOs.
For the CEO in 2010, these awards are comprised of performance share 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 award granted in January 2010 for 2009 performance.
  • The stock options become exercisable after three years and expire in ten years.
  • The performance shares will be paid based on the Company’s relative cash return on average tangible assets over the 3-year period from January 1, 2010 through December 31, 2012 relative to the KBW Bank Sector index, excluding custody banks (see “2010 CEO Compensation Decisions” in the “Compensation Discussion and Analysis” section on page 26 for more details on the performance share award). Dividends accrued on the performance shares will be paid out as additional shares on the date the performance share award is settled.
  • The restricted stock units vest in full after three years and settle in cash based on the average closing price of the Company’s common stock for the 20 trading days preceding the vesting date. Dividend equivalents are paid on unvested restricted stock units at the same rate and at approximately the same time as dividends are paid to the Company’s other stockholders.
For the NEOs in 2010, the awards are comprised of restricted stock and stock option awards. Most restricted stock vestsunit awards. Restricted stock was awarded to each NEO in three annual installments beginning one year afterJanuary 2010 and was awarded for the date2009 performance year. Restricted stock units were awarded to each NEO in January 2010 as a portion of grant, contingentbase salary as described under “Base Salaries” in the “Compensation Discussion and Analysis” section on continued employment. Somepage 30.
  • The restricted stock awards vest six months after the date of grant. Stock options granted in 2009 become exercisable in three equal annual installments beginning one year after the date of grant, contingent on continued employment. For the CEO, stock options granted in 2009 become exercisable after three years, contingent on continued employment. For all NEOs, performance shares granted in 2009 will be paid based on the Company’s TSR performance over the 3-year period relative to the S&P Financials (less insurance companies and Real Estate Investment Trusts). Awards reported for NEOs (other than the CEO) were made in January 2009 for the 2008 performance year. Dividends are paid on unvested restricted stock awards. Dividendsat the same rate and at approximately the same time as dividends are accruedpaid to the Company’s other stockholders.
  • The restricted stock unit awards vested in full on unearned performance sharesDecember 31, 2010, and deliveredsettled in cash based on the formaverage closing price of additional shares upon vesting. the Company’s common stock for the 20 trading days preceding the vesting date.
41
 


20092010 Grants of Plan-Based Awards Table

Estimated Future
Payouts Under Equity
Incentive Plan Awards
Name and Principal PositionGrant Date
(1)		TargetMaximumAll 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. Fairbank1/29/2009------970,403$18.28$4,000,001
Chairman, CEO and President1/29/200995,239190,478------$2,000,019
 
Gary L. Perlin1/29/2009----197,485----$3,610,026
Chief Financial Officer1/29/2009------323,451$18.28$1,333,265
1/29/200928,57257,144------$600,012
 
Lynn A. Pike1/29/2009----157,003----$2,870,015
President, Banking1/29/2009------271,788$18.28$1,120,310
1/29/200924,00848,016------$504,168
 
John G. Finneran, Jr.1/29/2009----147,430----$2,695,020
General Counsel and Corporate1/29/2009------216,319$18.28$891,667
Secretary1/29/200921,23142,462------$445,851
 
Peter A. Schnall1/29/2009----134,793----$2,464,016
Chief Risk Officer1/29/2009------231,357$18.28$953,654
1/29/200920,43740,874------$429,177
  Estimated Future
Payouts Under Equity
Incentive Plan Awards		    
Name and Principal PositionGrant Date
(1)		TargetMaximumAll Other Stock
Awards: Number
of Shares of Stock
or Units		All Other Option
Awards: Number of
Securities Underlying
Options		Exercise or Base
Price of Option
Awards (2) ($/Sh)		Grant Date Fair
Value of Stock and
Option Awards (3)
Richard D. Fairbank
Chairman, CEO and President		1/27/201088,920177,840------$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

(1) Date on which awards arewere 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 average high and low sales pricesclosing price as reported by the New York Stock Exchange Composite Transaction Tape. This price was higher than the closing market price of a share of Capital One common stock on that date. 
 
(3)The grant date fair value for each option awarded on January 29, 200927, 2010 was calculated using the Black-Scholes method and was based on the following assumptions:

VolatilityRisk-Free Interest RateDividend YieldExpected Life
January 29, 200942.00%1.74%5.85%5 Years
VolatilityRisk-Free Interest RateDividend YieldExpected Life
37.60%2.48%1.49%5 Years


42

20092010 Option Exercises and Stock Vested Table

Option AwardsStock Awards
Name & Principal PositionNumber of Shares Acquired
on Exercise		Vested Realized on
Exercise (1)		Number of Shares Acquired
on Vesting		Value Realized on
Vesting (2)
Richard D. Fairbank0$00$0
Chairman, CEO and President
 
Gary L. Perlin0$072,660$1,702,390
Chief Financial Officer
 
Lynn A. Pike0$047,583$1,291,404
President, Banking
 
John G. Finneran, Jr.0$093,525$1,872,396
General Counsel and Corporate Secretary
 
Peter A. Schnall0$047,118$1,137,163
Chief Risk Officer
 Option AwardsStock Awards
Name & Principal PositionNumber 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$00$0
     
Gary L. Perlin
Chief Financial Officer		54,000$1,388,880103,694$3,994,025
     
Lynn A. Carter
President, Banking		0$072,973$2,864,327
     
Peter A. Schnall
Chief Risk Officer		77,118$1,584,17260,666$2,315,891
     
Ryan M. Schneider
President, Card		60,646$1,353,78247,869$1,836,055

(1) The value realized is the net pre-tax value of the shares (market price less the exercise price) received.
 
(2)The value realized is the number of shares vested multiplied by the fair market value of common stock on the vesting date, which is determined on the basis of the average high and low sales prices as reported by the New York Stock Exchange Composite Transaction Tape for stock vesting prior to April 23, 2009. As of April 23, 2009, the value realized is the number of shares multiplied by the fair market value of the Company’s common stock on the vesting date, which is the closing price as reported by the New York Stock Exchange Composite Transaction Tape.
 

43

20092010 Outstanding Equity Awards at Fiscal Year-End Table

Option Awards (1), (2)Stock Awards (2)
Name and Principal
Position		Number of
Securities
Underlying
Unexercised
Options
Exercisable		Number of
Securities
Underlying
Unexercised
Options
Unexercisable		Option Exercise
Price (3)		Option
Expiration Date		Number of Shares or
Units of Stock that
Have Not Vested		Market Value of
Shares or Units
of Stock that
Have Not
Vested (4)		Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units, or
Other Rights that
Have Not Vested
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units, or
Other Rights that
Have Not Vested
(4)
       190,478 (10)$7,302,927
3,449,820(5)0$48.5410/17/2011 
Richard D. Fairbank360,000(6)0$56.2812/14/2013 
Chairman, CEO and566,000 (7)0 $82.3912/19/2014
President0573,000(7)$87.2812/19/2015  
0 594,851 (7)$76.4512/10/2016   
0 1,661,780(8)$50.9912/9/2017  
0970,403(8)$18.281/28/2019
 
  186,334(9)$7,144,046168,164 (10)$6,447,408
100,000(6)0$48.737/28/2013 
Gary L. Perlin24,500(6)0$56.2812/14/2013
Chief Financial Officer77,220(6)0$78.713/14/2015
83,510(6)0$88.813/2/2016
81,632(6)40,818(6)$76.793/1/2017
83,189(6)166,381(6)$48.952/20/2018
0323,451(6)$18.281/28/2019
 
137,881(9)$5,286,358122,036 (10)$4,678,860
Lynn A. Pike68,388(6)34,195(6)$74.724/25/2017
President, Banking30,979(6)61,961(6)$48.952/20/2018
0271,788(6)$18.281/28/2019
 
79,531(9)$3,049,219127,582 (10)$4,891,494
2,934 (11)0$68.1612/12/2011
1,213 (11)0$82.3912/12/2011
1,180 (11)0$84.7012/5/2012
John G. Finneran, Jr.43,224(6)0$56.2812/14/2013
General Counsel and1,250 (11)0$79.9412/14/2013
Corporate Secretary57,760(6)0$78.713/14/2015
63,650(6)0$88.813/2/2016
59,006(6)29,504(6)$76.793/1/2017
49,962(6)99,928(6)$48.952/20/2018
0216,319(6)$18.281/28/2019
 
122,908(9)$4,712,293111,194 (10)$4,263,178
16,737 (11)0$60.145/29/2010
38,046(5)0$48.5410/17/2011
75,824 (12)0$49.0712/12/2011
1,463 (11)0$68.3312/12/2011
Peter A. Schnall1,268 (11)0$78.8212/12/2011
Chief Risk Officer1,158 (11)0$86.2712/5/2012
32,724(6)0$56.2812/14/2013
1,298 (11)0$76.9612/14/2013
45,760(6)0$78.713/14/2015
48,340(6)0$88.813/2/2016
49,232(6)24,618(6)$76.793/1/2017
46,462(6)92,928(6)$48.952/20/2018
0231,357(6)$18.281/28/2019 
 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		      136,799(8)$5,822,165368,318 (10)$15,675,614
3,449,820(5)0 $48.5410/17/2011     
360,000(6)0 $56.2812/14/2013     
566,000(7)0 $82.3912/19/2014     
573,000(7)0 $87.2812/19/2015     
0 594,851(7)$76.4512/10/2016     
1,661,780(8)0 $50.9912/9/2017     
0 970,403(8)$18.281/28/2019     
0 559,333(8)$36.551/26/2020     
            
Gary L. Perlin
Chief Financial Officer		      154,562(9)$6,578,159147,737 (13)$6,287,687
100,000(6)0 $48.737/28/2013     
24,500(6)0 $56.2812/14/2013     
77,220(6)0 $78.713/14/2015     
83,510(6)0 $88.813/2/2016     
122,450(6)0 $76.793/1/2017     
166,378(6)83,192(6)$48.952/20/2018     
53,815(6)215,636(6)$18.281/28/2019     
            
Lynn A. Carter
President, Banking		      116,208(9)$4,945,812108,417 (14)$4,614,228
102,583(6)0 $74.724/25/2017     
61,959(6)30,981(6)$48.952/20/2018     
90,595(6)181,193(6)$18.281/28/2019     
            
Peter A. Schnall
Chief Risk Officer		      110,811(9)$4,716,11698,256 (15)$4,181,775
38,046(5)0 $48.5410/17/2011     
75,824(12)0 $49.0712/12/2011     
1,463(11)0 $68.3312/12/2011     
1,268(11)0 $78.8212/12/2011     
1,158(11)0 $86.2712/5/2012     
32,724(6)0 $56.2812/14/2013     
1,298(11)0 $76.9612/14/2013     
45,760(6)0 $78.713/14/2015     
48,340(6)0 $88.813/2/2016     
73,850(6)0 $76.793/1/2017     
92,925(6)46,465(6)$48.952/20/2018     
0 154,239(6)$18.281/28/2019     
            
Ryan M. Schneider
President, Card		      92,664(9)$3,943,78077,449 (16)$3,296,229
6,013(11)0 $77.2812/12/2011     
971(11)0 $82.8412/12/2011     
1,597(11)0 $83.9612/12/2011     
834(11)0 $84.6212/12/2011     
142(11)0 $83.9612/5/2012     
1,238(6)0 $84.6212/5/2012     
1,155(6)0 $77.2812/14/2013     
5,056(6)0 $78.2412/14/2013     
2,210(6)0 $82.1012/14/2013     
945(11)0 $82.3012/14/2013     
15,650(6)0 $78.713/14/2015     
17,890(6)0 $88.813/2/2016     
26,250(6)0 $76.793/1/2017     
42,466(6)21,234(6)$48.952/20/2018     
0 121,295(6)$18.281/28/2019     

(1)      Option grants generally have time-based vesting schedules and are exercisable upon vesting or earlier upon the optionee’s death, disability, or retirement or upon a change in control of Capital One. They are transferable only to or for the benefit of immediate family members. Option grants awarded on or after December 1, 2005, stipulateprovide that the options continue to follow the original vesting schedule after the optionee’s retirementretirement.
 

44

(2)      The following table details vesting dates for all outstanding equity:
 
   First VestingSecond VestingThird Vesting
NameGrant DateGrant TypeVesting Date# of SharesVesting Date# of SharesVesting Date# of Shares
Richard D. Fairbank10/18/2001Option Award10/18/2002442,93510/18/2003442,93610/18/2004442,949
 10/18/2001Option Award4/22/20042,121,000    
 12/15/2003Option Award12/15/20051,77612/15/20061,776  
 12/15/2003Option Award12/15/2004120,00012/15/2005118,22412/15/2006118,224
 12/20/2004Option Award12/20/2009566,000    
 12/20/2005Option Award12/20/2010573,000    
 12/11/2006Option Award12/11/2011594,851    
 12/10/2007Option Award12/10/20101,661,780    
 1/29/2009Perf Share Award3/15/201295,239    
 1/29/2009Option Award1/29/2012970,403    
 1/27/2010Perf Share Award3/15/201388,920    
 1/27/2010Restricted Stock Unit Award1/27/2013136,799    
 1/27/2010Option Award1/27/2013559,333    
         
Gary L. Perlin7/29/2003Option Award7/29/20042,0527/29/20052,0527/29/20062,052
 7/29/2003Option Award7/29/200431,2817/29/200531,2817/29/200631,282
 12/15/2003Option Award12/15/20048,16612/15/20058,16712/15/20068,167
 3/15/2005Option Award3/15/200625,7393/15/200725,7403/15/200825,741
 3/3/2006Option Award3/3/200727,8083/3/200827,8093/3/200927,893
 3/2/2007Option Award3/2/200840,8163/2/200940,8163/2/201040,818
 12/10/2007Perf Share Award1/26/201155,510    
 2/21/2008Restricted Stock Award2/21/20099,2952/21/20109,2952/21/201118,590
 2/21/2008Option Award2/21/200983,1892/21/201083,1892/21/201183,192
 1/29/2009Perf Share Award3/15/201228,572    
 1/29/2009Restricted Stock Award1/29/201049,3701/29/201149,3711/29/201249,372
 1/29/2009Option Award1/29/2010107,8151/29/2011107,8161/29/2012107,820
 1/27/2010Restricted Stock Award1/27/201112,4091/27/201212,4101/27/201312,410
         
Lynn A. Carter4/26/2007Option Award4/26/200834,1944/26/200934,1944/26/201034,195
 12/10/2007Perf Share Award1/26/201137,010    
 2/21/2008Restricted Stock Award2/21/20093,4622/21/20103,4622/21/20116,926
 2/21/2008Option Award2/21/200930,9792/21/201030,9802/21/201130,981
 1/29/2009Perf Share Award3/15/201224,008    
 1/29/2009Restricted Stock Award1/29/201039,2501/29/201139,2501/29/201239,252
 1/29/2009Option Award1/29/201090,5951/29/201190,5951/29/201290,598
 1/27/2010Restricted Stock Award1/27/201110,2591/27/201210,2601/27/201310,261
         
Peter A. Schnall10/18/2001Option Award4/22/200478,046    
 12/13/2001Option Award12/13/20022,038    
 12/13/2001Option Award12/13/200224,59512/13/200324,59512/13/200424,596
 12/15/2003Option Award12/15/200411,50012/15/200511,50012/15/20069,724
 7/28/2004Option Award1/28/20051,463    
 2/1/2005Option Award8/1/20051,268    
 3/15/2005Option Award3/15/200615,2533/15/200715,2533/15/200815,254
 2/14/2006Option Award8/14/20061,158    
 3/3/2006Option Award3/3/200716,0973/3/200816,0973/3/200916,146
 12/20/2006Option Award6/20/20071,298    
 3/2/2007Option Award3/2/200824,6163/2/200924,6163/2/201024,618
 12/10/2007Perf Share Award1/26/201135,160    
 2/21/2008Restricted Stock Award2/21/20095,1922/21/20105,1922/21/201110,386
 2/21/2008Option Award2/21/200946,4622/21/201046,4632/21/201146,465
 1/29/2009Perf Share Award3/15/201220,437    
 1/29/2009Restricted Stock Award1/29/201033,6971/29/201133,6981/29/201233,699
 1/29/2009Option Award1/29/201077,1181/29/201177,1181/29/201277,121
 1/27/2010Restricted Stock Award1/27/201111,0091/27/201211,0091/27/201311,010
         
Ryan M. Schneider3/15/2005Option Award3/15/20065,2163/15/20075,2173/15/20085,217
 7/25/2005Option Award1/25/2006142    
 7/25/2005Option Award1/25/20061,597    
 1/26/2006Option Award7/26/2006834    
 1/26/2006Option Award7/26/20061,238    
 2/2/2006Option Award8/2/2006971    
 3/3/2006Option Award3/3/20075,9573/3/20085,9573/3/20095,976
 7/27/2006Option Award1/27/20071,155    
 7/27/2006Option Award1/27/20072,915    
 7/27/2006Option Award1/27/20073,098    
 8/7/2006Option Award2/7/20075,056    
 10/26/2006Option Award4/26/2007945    
 2/8/2007Option Award8/8/20072,210    
 3/2/2007Option Award3/2/20088,7493/2/20098,7503/2/20108,751
 12/10/2007Perf Share Award1/26/201127,760    
 2/21/2008Restricted Stock Award2/21/20093,5452/21/20103,5452/21/20117,090
 2/21/2008Option Award2/21/200921,2332/21/201021,2332/21/201121,234
 1/29/2009Perf Share Award3/15/201216,072    
 1/29/2009Restricted Stock Award1/29/201026,2231/29/201126,2241/29/201226,225
 1/29/2009Option Award1/29/201060,6461/29/201160,6461/29/201260,649
 1/27/2010Restricted Stock Award1/27/201111,0411/27/201211,0421/27/201311,042

NameGrant DateGrant TypeFirst VestingSecond Vesting Third Vesting
Vesting DateNumber of
Shares		Vesting DateNumber of
Shares		Vesting Date
Number of
Shares
Richard D. Fairbank10/18/2001Option Award4/22/20042,121,000    
10/18/2001Option Award10/18/2002442,93510/18/2003442,93610/18/2004442,949
12/15/2003Option Award12/15/2004120,00012/15/2005118,22412/15/2006118,224
12/15/2003Option Award12/15/20051,77612/15/20061,776  
12/20/2004Option Award12/20/2009566,000    
12/20/2005Option Award12/20/2010573,000    
12/11/2006Option Award12/11/2011594,851    
12/10/2007Option Award12/10/20101,661,780    
1/29/2009Option Award1/29/2012970,403    
1/29/2009Perf Share Award3/15/201295,239    
         
Gary L. Perlin7/29/2003Option Award7/29/20042,0527/29/20052,0527/29/20062,052
7/29/2003Option Award7/29/200431,2817/29/200531,2817/29/200631,282
12/15/2003Option Award12/15/20048,16612/15/20058,16712/15/20068,167
3/15/2005Option Award3/15/200625,7393/15/200725,7403/15/200825,741
3/3/2006Option Award3/3/200727,8083/3/200827,8093/3/200927,893
3/2/2007Restricted Stock Award3/2/20085,1673/2/20095,1673/2/201010,336
3/2/2007Option Award3/2/200840,8163/2/200940,8163/2/201040,818
12/10/2007Perf Share Award3/15/201155,510    
2/21/2008Option Award2/21/200983,1892/21/201083,1892/21/201183,192
2/21/2008Restricted Stock Award2/21/20099,2952/21/20109,2952/21/201118,590
1/29/2009Option Award1/29/2010107,8151/29/2011107,8161/29/2012107,820
1/29/2009Restricted Stock Award1/29/201049,3701/29/201149,3711/29/201249,372
1/29/2009Perf Share Award3/15/201228,572    
         
Lynn A. Pike4/26/2007Restricted Stock Award4/26/20084,8704/26/20094,8704/26/20109,741
4/26/2007Option Award4/26/200834,1944/26/200934,1944/26/201034,195
12/10/2007Perf Share Award3/15/201137,010    
2/21/2008Option Award2/21/200930,9792/21/201030,9802/21/201130,981
2/21/2008Restricted Stock Award2/21/20093,4622/21/20103,4622/21/20116,926
1/29/2009Option Award1/29/201090,5951/29/201190,5951/29/201290,598
1/29/2009Restricted Stock Award1/29/201039,2501/29/201139,2501/29/201239,252
1/29/2009Perf Share Award3/15/201224,008    
         
John G. Finneran, Jr.12/15/2003Option Award12/15/200415,00012/15/200515,00012/15/200613,224
4/26/2004Option Award10/26/20042,934    
12/20/2004Option Award6/20/20051,213    
3/15/2005Option Award3/15/200619,2533/15/200719,2533/15/200819,254
12/6/2005Option Award6/6/20061,180    
3/3/2006Option Award3/3/200721,1953/3/200821,1953/3/200921,260
2/1/2007Option Award8/1/20071,250    
3/2/2007Restricted Stock Award3/2/20082,4763/2/20092,4763/2/20104,955
3/2/2007Option Award3/2/200829,5033/2/200929,5033/2/201029,504
12/10/2007Perf Share Award3/15/201142,560    
2/21/2008Option Award2/21/200949,9622/21/201049,9632/21/201149,965
2/21/2008Restricted Stock Award2/21/20093,5892/21/20103,5892/21/20117,180
1/29/2009Option Award1/29/201072,1051/29/201172,1061/29/201272,108
1/29/2009Restricted Stock Award1/29/201021,2681/29/201121,2691/29/201221,270
1/29/2009Perf Share Award3/15/201221,231    
         
Peter A. Schnall10/18/2001Option Award4/22/200478,046    
12/13/2001Option Award12/13/20022,038    
12/13/2001Option Award12/13/200224,59512/13/200324,59512/13/200424,596
11/13/2003Option Award5/13/200416,737    
12/15/2003Option Award12/15/200411,50012/15/200511,50012/15/20069,724
7/28/2004Option Award1/28/20051,463    
2/1/2005Option Award8/1/20051,268    
3/15/2005Option Award3/15/200615,2533/15/200715,2533/15/200815,254
2/14/2006Option Award8/14/20061,158    
3/3/2006Option Award3/3/200716,0973/3/200816,0973/3/200916,146
12/20/2006Option Award6/20/20071,298    
3/2/2007Restricted Stock Award3/2/20083,1173/2/20093,1173/2/20106,236
3/2/2007Option Award3/2/200824,6163/2/200924,6163/2/201024,618
12/10/2007Perf Share Award3/15/201135,160    
2/21/2008Option Award2/21/200946,4622/21/201046,4632/21/201146,465
2/21/2008Restricted Stock Award2/21/20095,1922/21/20105,1922/21/201110,386
1/29/2009Option Award1/29/201077,1181/29/201177,1181/29/201277,121
1/29/2009Restricted Stock Award1/29/201033,6971/29/201133,6981/29/201233,699
1/29/2009Perf Share Award3/15/201220,437    
45
 

(3)EqualFor option grants made before April 23, 2009, equal to the fair market value of common stock on the date of grant determined on the basis of the average high and low sales prices as reported by the New York Stock Exchange Composite Transaction Tape. For option grants made on or after April 23, 2009, equal to the closing price of common stock on the date of grant as reported by New York Stock Exchange Composite Transaction Tape.
 
(4)Market value based on the closing price of a share of Capital One’s common stock on the last trading day of the year as reported by the New York Stock Exchange Composite Transaction Tape.


(5)A portion vested two and one half years following the grant date due to achievement of performance criteria that accelerated vesting. The remaining portion vested 33% annually beginning one year following the grant date.
 
(6)Vested or vests 33% annually beginning on the first anniversary of the grant date.
 
(7)Vested or vests in full on the fifth anniversary of the grant date.
 
(8)VestsVested or vests in full on the third anniversary of the grant date.
 
(9)Represents the unvested portions of restricted stock awards granted in 2007, 2008, 2009, and 2009.2010. The awards granted in 2007 and 2008 vest in three annual increments of 25%, 25% and 50% beginning on the first anniversary of the grant date, while the awards granted in 2009 and 2010 vest 33% annually beginning on the first anniversary of the grant date.
 
(10)Represents the maximum number of performance shares awarded on December 10, 2007 (for NEOs other than the CEO) and January 29, 2009 based on 2009 relative performance for both awards.and January 27, 2010.
 
(11)Reload grant that vested in full six months following the grant date.
 
(12)A portion vested in full one year following the grant date. The remaining portion vested 33% annually beginning one year following the grant date.
(13)Represents the maximum number of performance shares awarded on January 29, 2009 and the actual shares awarded (including accrued dividends paid out as additional shares) for the December 10, 2007 performance share award which was certified by the Compensation Committee in January 2011 with a value of $4,373,830.
(14)Represents the maximum number of performance shares awarded on January 29, 2009 and the actual shares awarded (including accrued dividends paid out as additional shares) for the December 10, 2007 performance share award which was certified by the Compensation Committee in January 2011 with a value of $2,916,160.
(15)Represents the maximum number of performance shares awarded on January 29, 2009 and the actual shares awarded (including accrued dividends paid out as additional shares) for the December 10, 2007 performance share award which was certified by the Compensation Committee in January 2011 with a value of $2,770,403.
(16)Represents the maximum number of performance shares awarded on January 29, 2009 and the actual shares awarded (including accrued dividends paid out as additional shares) for the December 10, 2007 performance share award which was certified by the Compensation Committee in January 2011 with a value of $2,187,325.
 

46

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 yield of 5-year Treasury Securities for the preceding 12 months (3.1%(2.1% for 2009)2010). The Excess CBPP interest crediting rate changes monthly based on the Wall Street Journal Prime Rate (3.3% annual average for 2009)2010).
 
Messrs.Mr. Fairbank and Finneran participated in these programs. TheMr. Fairbank’s estimated annual payouts upon retirement in the CBPP and the Excess CBPP as of December 31, 20092010 are $2,511$2,417 and $7,107 for Mr. Fairbank and $1,754 and $1,120 for Mr. Finneran.$7,201. These projected benefits assume interest credits under the CBPP to be 3.75%3.08% credited quarterly and under the Excess CBPP to be 3.95%3.25% 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.
 
4647
 

20092010 Pension Benefits Table

Name and Principal
Position		Plan Name (1)Present Value of
Accumulated Benefit
(2,3,4)		Payments During Last
Fiscal Year
Richard D. Fairbank
Chairman, CEO and
President		Cash Balance Pension Plan$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)		Payments During Last
Fiscal Year
Richard D. Fairbank
Chairman, CEO and
President		Cash Balance Pension Plan$22,302$0
Excess Cash Balance Plan$63,058$0
 
Gary Perlin---
Chief Financial Officer
  
Lynn A. Pike
President, Banking		---
 
John G. Finneran, Jr.
General Counsel and
Corporate Secretary		Cash Balance Pension Plan$16,091$0
Excess Cash Balance Plan$10,263$0
 
Peter A. Schnall---
Chief Risk Officer

(1)     In November 1995, Capital One amended the Cash Balance Plan and the Excess Cash Balance Plan to eliminate further pay-based credits to participants as of December 31, 1995, and to provide that there would be no new participants in such plans on or after January 1, 1996. Interest continues to be credited on plan balances on a quarterly (CBPP) or monthly (Excess CBPP) basis.
 
(2)Valuation is based on the present value of the accrued benefit determined at the financial accounting measurement date. For the Cash Balance Pension Plan, the interest crediting rate changes annually based on the average yield of 5-year Treasury Securities for the preceding 12 months. The effective annual interest rate for 20092010 was 3.1%2.1%. For the Excess Cash Balance Plan, the interest crediting rate changes monthly based on the Wall Street Journal Prime Rate. The effective annual interest rate for 20092010 was 3.3%.
(3)Based on updated SEC guidance on the preferred disclosure method to use for cash balance plans, the amounts shown are the present value of the accrued benefit under the same actuarial assumptions and measurement date used for financial accounting purposes.
(4)Consistent with the measurement date used for financial disclosure for the pension plans, the amounts for each year are determined as of a December 31, 2010 measurement date.

4748
 

Capital One’s Voluntary Non-Qualified Deferred Compensation Programs

Capital One offers its Voluntary Non-Qualified Deferred Compensation Plan (“VNQDCP”) to eligible associates. In 2009, our2010, the NEOs could elect to contribute up to 50% of their respective base salaries on a tax-deferred basis. Mr. Perlin, Ms. Pike,Carter, Mr. FinneranSchnall and Mr. SchnallSchneider participated in the program in 2009.2010.
 
In addition to participant deferrals, Capital One makes matching contributions under the VNQDCP. Company contribution credits are vested 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: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 U.S. EquityS&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 Portfolio. Equity Portfolio IA. Individual investment returns experienced in 20092010 were as follows: Mr. Perlin 21.5%13.53% or $273,260,$228,221, Ms. Pike 17.0%Carter 11.62% or $110,052,$98,000, Mr. Finneran 20.1%Schnall 6.20% or $210,205$24,202.85 and Mr. Schnall 10.6%Schneider 0.02% or $28,006.$22.99. Distributions under the VNQDCP may be made to participants according to their respective elected schedule for distribution.distribution in accordance with Plan terms. The distribution schedules available under the plan include lump sum and 5, 10 or 15 year annual installments. Distributions occur based upon the following events: termination of employment, 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, FinneranSchnall and SchnallSchneider participated in the ESP and, as such, returns on these investments are reported for 2009.2010. Effective January 1, 2008, the ESP was merged into the VNQDCP, and participants in the ESP have the option to direct their individual investments among the same offerings as the VNQDCP.NVQDCP. Individual investment returns experienced in 20092010 were as follows: Mr. Fairbank 26.5%15.01% or $44,206,$31,632.53, Mr. Perlin 13.8%8.83% or $10,006,$7,270.47, Mr. Finneran 25.3%Schnall 7.64% or $176,231$43,731.84 and Mr. Schnall 12.6%Schneider 0.02% or $64,041.$24.40.
 
4849
 

20092010 Non-Qualified Deferred Compensation Table

Name and Principal
Position		Plan NameExecutive 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
Chairman, CEO and
President		Voluntary Non-Qualified Deferred Compensation Plan$0$0$0$0
Excess Saving Plan$0$0$44,206$210,714
2003 Performance Share Award (5)$0$0$1,558,836$9,266,011
      
Gary Perlin
Chief Financial Officer		Voluntary Non-Qualified Deferred Compensation Plan$30,178$46,394$273,260$1,583,036
Excess Saving Plan$0$0$10,006$82,341
      
Lynn A. Pike
President, Banking		Voluntary Non-Qualified Deferred Compensation Plan$24,943$31,019$110,052$763,374
      
John G. Finneran, Jr.
General Counsel and
Corporate Secretary		Voluntary Non-Qualified Deferred Compensation Plan$218,690$32,919$210,205$1,376,644
Excess Saving Plan$0$0$176,231$872,592
      
Peter A. Schnall
Chief Risk Officer		Voluntary Non-Qualified Deferred Compensation Plan$22,332$27,558$28,006$318,396
Excess Saving Plan$0$0$64,041$572,249
Name and Principal
Position		Plan NameExecutive 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. FairbankVoluntary Non-Qualified Deferred Compensation Plan$0$0$0$0
Chairman, CEO andExcess Saving Plan$0$0$31,633$242,346
President2003 Performance Share Award (5)$0$0$1,019,890$10,285,901
      
Gary L. PerlinVoluntary Non-Qualified Deferred Compensation Plan$11,337$196,875$228,221$1,984,369
Chief Financial OfficerExcess 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. SchnallVoluntary Non-Qualified Deferred Compensation Plan$10,864$132,750$24,203$461,988
Chief Risk OfficerExcess Saving Plan$0$0$43,732$615,981
      
Ryan M. SchneiderVoluntary Non-Qualified Deferred Compensation Plan$11,810$128,100$23$164,783
President, CardExcess Saving Plan$0$0$24$129,294

(1)     Mr. Fairbank did not receive any cash salary or bonus and therefore did not defer any compensation in 20092010 under the VNQDCP. For Mr. Perlin, Ms. Pike,Carter, Mr. FinneranSchnall and Mr. Schnall,Schneider, all executive contributions under the VNQDCP were made in the form of base salary deferrals, and are included in the Summary Compensation Table.
 
(2)Registrant contributions are also included in the column “Defined Contribution Company Contribution” in footnote 4 to the Summary Compensation Table.
 
(3)Includes earnings on total assets in the VNQDC and the ESP.
 
(4)All the amounts shown in this column, other than earnings on deferred compensation, were included in compensation amounts reported in prior years for those executives that were NEOsnamed executive officers in such prior years and in the amounts required to be reported pursuant to the then applicable rules. In 2007 and 2008, respectively, the NEOs deferredOf these balances, the following amounts of compensation that arewere reported in the Summary Compensation Table:Tables in prior year proxy statements beginning with the 2007 proxy statement: Mr. Perlin - $418,750 and $27,750;$768,345; Ms. PikeCarter - $607,670 (2008 only); Mr. Finneran - $346,506 and $245,567;$632,613; Mr. Schnall - $5,398$34,156; and $6,396.Mr. Schneider - not applicable.
 
(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 of Directors certified, following the end of the Performance Period, the achievement of the performance target. Because the Company ranked in the 76th percentile for the Performance Period relative to the comparator group, Mr. Fairbank acquired the right to receive 241,680 shares of Capital One’s common stock on March 31, 2007. Delivery of these shares is deferred until the end of Mr. Fairbank’s employment with the Company. Similar to other deferred compensation, Mr. Fairbank neither acquired these shares nor realized any value from these shares in 2009.2010.
 
50


Potential Payments Upon Termination or Change of Control

Overview
 
The disclosure in the table below illustrates payouts that ourthe CEO and the NEOs could receive under certain hypothetical termination scenarios. Actual circumstances resulting in the departure of the NEOsCEO or any NEO cannot be predicted and may differ from the assumptions used in the information outlined below. The Company has adopted a planplans providing certain standards governing CEO and NEO separation payments (reflected in the table below) in order to protect the Company’s interests in the event of an acquisition as well as to provide competitive benefits to senior executives.
 
The Compensation Committee reviews each executive officer’s separation on a case by case basis and exercises its business judgment, with the approval of the independent directors, to customize the terms of such separations in consideration of the relevant circumstances, including:
  • The reasons for the separation;
  • Market competitive practices for comparable separation scenarios;
  • Potential benefits to the Company, such as retaining its competitive advantage, maintaining a positive reputation internally and externally and preserving its ability to recruit highly talented executives;
  • The executive’s tenure and contributions to the Company’s success;
  • The executive’s willingness to provide legal waivers and/or enter into agreements not to compete with the Company or to solicit the Company’s employees or customers; and
  • The resulting impact of the separation terms on the Company and its stockholders.
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 services they may provide for new employers 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 when restrictions are enforced under certain circumstances.
For 2009, in2010, potential payments following termination under the caseNon-Competition Agreement are 15% of the NEO’s voluntary termination from Capital One, the payment was typically onetarget total compensation for each year of base salaryenforcement and sixeighteen months of subsidized health insurance premiums under COBRA if the NEO elects such coverage, paid at the end of the second year of enforcement.coverage. In the case of the NEO’s involuntary termination, the payment was typically two years of base salary paidpayments are made in two lump sums, the first following termination and the second upon completion of the enforcement period, and up to 18 months of subsidized health insurance premiums under COBRA if the executive officer elects such coverage. Benefits were calculated according to a notional amount designed to adjust for the NEOs’ relatively higher 2009 salary levels.
period. 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 anypayments related to the Non-Competition payments to ensureAgreement so that total payment amounts are consistent with program intent.
 
Effective on March 1, 2010, potential payments following termination under the Non-Competition Agreement are 15% of the NEO’s target total compensation for each year of enforcement, rather than one times base salary for each year of enforcement. This change is intended to maintain consistent payment amounts in light of the NEOs 2010 compensation program.
Confidentiality, Work Product and Non-Solicitation of Employee Agreement
 
The confidentiality provisions of this agreement state that at all times during and following employment with the Company, the NEO may not use for personal benefit or divulge to others any of Capital One’s confidential information, except as expressly authorized by Capital One or required by applicable law.
 
The work product provisions of this agreement state that Capital One shall generally own or 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 leave the Company. This agreement does not provide for any post-termination payments.
 
Payments under Certain Termination Scenarios
 
Upon separation from the Company, the NEOs, 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 unvested restricted stock awards are forfeited upon separation or, in limited
51

circumstances, will continue to vest according to their original terms. Restricted stock units representing a portion of base salary granted to the NEOs will vest on a pro-rata basis for all separation reasons.
 
Voluntary Termination
 
An NEO (other than the CEO) 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. Restricted stock units granted to the NEOs (other than the CEO) on January 27, 2010 as a component of base salary will vest immediately on a pro-rata basis upon a voluntary termination.
 
Involuntary Termination Without Cause
 
AnAn NEO (other than the CEO) whose employment with Capital One is terminated involuntarily, without cause,for performance or job elimination, is entitled to receive the amounts set forth in the Company’s Executive Severance Plan. In 2009, the Executive Severance Plan for a payment of up to two times the NEO’s notional base salary, offset by any payments related to non-competition covenants (described above, if applicable), as well as continued coverage through broad-based and executive life insurance programs, outplacement services, and any contractual payments to which the NEO may otherwise have been entitled. If an NEO’s Non-Competition Agreement was enforced, an additional payment of 180% of base salary was made to the NEO in exchange for executing a release of claims against the Company.
Effective March 1,For 2010, potential payments under the Executive Severance Plan are 30% of total target compensation. If an NEO’s Non-Competition Agreement is enforced, payments under the Executive Severance Plan will be offset by 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.  Restricted stock units granted on January 27, 2010Company, as well as (ii) continued coverage through broad-based and all Performance share unit awards will vest immediately on a pro-rata basis upon an involuntary termination without cause.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 non-competition covenants to which he or she previously agreed.agreed.
Payments upon Retirement
 
Payments upon Retirement
As with all executives who are eligible for retirement, NEOsthe CEO and any NEO who are eligible and retireretires 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 NEO or CEO, as applicable, may otherwise be entitled.
 
As with all executives who are eligible for retirement, for all stock options granted on or before March 15,December 1, 2005, the executive has one year from the date of separation to exercise vested but unexercised options. Unvested stock options and restricted stock granted after March 18,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 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 may be exercised until the expiration of the option term.
 
Change of Control
 
EachThe CEO and each of ourthe NEOs is a party to a Changean agreement (a “Change of Control Employment Agreement Agreement”)that provides for certain payments in the event theirhis or her employment is terminated within two years following a change of control, involuntarily for cause,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
 
AnThe CEO or an NEO terminated involuntarily for cause following a change of control receives no additional benefits.
 
Voluntary Termination With Good Reason or Involuntary Termination Without Cause
 
For 2010, the potential payments that the NEOs 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, 2009, an NEO whose employment is terminated voluntarily2010, if a change of control of Capital One occurs, then following a voluntary termination with good reason or involuntarilyinvoluntary termination without cause, within two years following a change of control wasthe CEO or an NEO may receive certain benefits as outlined below:
52

  • The CEO will be entitled to receive the following amounts following his or her separation date:
  • A pro-rated annual incentive award, through the date of termination;
  • Aa lump-sum payment of 2.5 times his current notional salary.
  • An NEO will be entitled to receive:
    • The cash value, prorated through the NEO’s current annual salary and the higherdate of termination, of the current year’s target annual incentive award, whether in the form of cash or equity-based compensation; and
    • 112.5% of the highest of (i) the NEO’s most recentcurrent target total compensation, (ii) the NEO’s target total compensation for the prior year, or (iii) the NEO’s actual annual incentive;total compensation for the prior year.
  • The CEO or an NEO will also be entitled to receive:
    • An amount such that after the payment of all income and excise taxes, the CEO or NEO would have been in the same after-tax position as if no excise tax had been imposed, provided that the gross up results in an after-tax benefit of at least 110% of the applicable safe harbor amount (in the event the payments do not meet that threshold, payments are reduced so that no excise tax is imposed);
    • An amount equal to the employer contributions under the Company’s qualified and nonqualifiednon-qualified retirement, healthcare and life insurance programsand plans for 2.5 years as well as access to such healthcare and life insurance plans for the CEO or NEO (and dependants as applicable);


    • Service credit of 2.5 years for purposes of determining vesting under any supplemental or excess defined contribution plan and eligibility under any applicable retiree medical plan;
    • Outplacement services of up to $30,000 for one full year. Theyear (the CEO or NEO must begin to take advantage of the services within one year of the date of termination;termination);
    • Accrued but unused vacation pay; and
    • Any contractual payments to which the CEO or NEO may otherwise have been entitled.
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.
 
EffectiveAs described above, our Change of Control Agreements for the CEO and the NEOs provide for excise tax “gross-up” payments in certain circumstances. On March 1, 2010,2011, Capital One delivered notice to the CEO and the NEOs 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 payments that our NEOs (other than the CEO) could receive under certain termination scenarios are based on a percentage of target total compensation. Ifexcise tax gross-up after a change of control will expire by April 2014, to be replaced with the new form of Capital One occurs, then following a voluntary termination with good reason or involuntary termination without cause,agreement that does not provide for an NEO will be entitled to receive:
  • the cash value, prorated through the date of termination, of the current year’s target annual or mid-term incentive award; and
  • 112.5% of the highest of (i) the NEO’s current target total compensation, (ii) the NEO’s target total compensation for the prior year, or (iii) the NEO’s actual total compensation for the prior year.
Each other provision described above remains in effect.
excise tax gross-up.
 
Richard D. Fairbank
 
Mr. Fairbank receives no regular base salary. In light of this fact, for 2009,2010, Mr. Fairbank’s payment in the event of a termination following a change of control waswould have been 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 thea Change of Control Employment Agreement.
 
Gary L. Perlin
 
Mr. Perlin is generally eligible for the same payments upon termination as the other NEOs at Capital One. For 2009, pursuant to the employment agreement entered into in March,2010, these payments were calculated against a “notional” salary ($900,000) that adjusted for the temporarily increased base salary each NEO, other than the CEO, received under the 20092010 target total compensation program.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 Employment Agreement.
 
Lynn A. PikeCarter
 
Ms. Pike Carter is generally eligible for the same payments upon termination as the other NEOs at Capital One. For 2009, pursuant to the employment agreement entered into in March,2010, these payments were calculated against the 2010 target total compensation value. Ms. Carter is a “notional” salary ($675,000) that adjusted for the temporarily increased base salary each NEO, other than the CEO, received under the 2009 compensation program. Ms. Pike is covered underparty to a Change of Control Employment Agreement.
John G. Finneran, Jr.
Mr. Finneran is generally eligible for the same payments upon termination as other NEOs at Capital One. For 2009, pursuant to the employment agreement entered into in March, these payments were calculated against a “notional” salary ($725,000) that adjusted for the temporarily increased base salary each NEO, other than the CEO, received under the 2009 compensation program. Mr. Finneran is covered under a Change of Control Employment Agreement.
 
Peter A. Schnall
 
Mr. Schnall is generally eligible for the same payments upon termination as the other NEOs at Capital One. For 2009, pursuant to the employment agreement entered into in March,2010, these payments were calculated against a “notional” salary ($625,000) that adjusted for the temporarily increased base salary each NEO, other than the CEO, received under the 20092010 target total compensation program.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 Employment Agreement.
 

Ryan M. Schneider
Mr. Schneider is generally eligible for the same payments upon termination as the other NEOs at Capital One. For 2010, these payments were calculated against the 2010 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.
53

20092010 Potential Payments and Benefits Upon Termination or Change of Control Tables by NEO

Name and
Principal
Position		SituationCash Severance
(1)		Retirement Plan
Contributions (2)		Acceleration and
Continuation of Equity
Awards (3)		Continuation of
Medical/Welfare
Benefits (4)		Excise Tax Gross
Up (5)		TotalSituationCash 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 TerminationNANANANANAVoluntary TerminationNANANANANA
Involuntary TerminationNANANANANAInvoluntary TerminationNANANANANA
Retirement (6)$0$0td3,117,747$323,000$0td3,440,747Retirement (6)$0$0$40,582,949$363,000$0$40,945,949
For Cause Termination$0$0$0$0$0For Cause Termination$0$0$0$0$0
CIC*td,498,263$0td3,117,747td92,882$0td5,808,892CIC*td,499,250$0$40,582,949td65,725$0$43,347,924
      
Gary L. Perlin
Chief Financial
Officer		Voluntary Termination$900,000$0td,892,884$0td,792,884
Involuntary Termination$3,420,000$0$3,676,870$49,652$0$7,146,522
Retirement (6)NANANANANA
For Cause Termination$0$0$0$0$0
CIC*$7,244,963td70,866td6,856,177td33,623$6,261,405$30,667,034
Voluntary Termination$972,000$0$0$0$972,000
Lynn A. Pike
President,
Banking		Voluntary Termination$675,000$0td,878,341$0td,553,341
Involuntary Terminationtd,565,000$0$3,131,138$43,738$0$5,739,876
Retirement (6)NANANANANA
For Cause Termination$0$0$0$0$0
CIC*$5,433,722td32,456td3,077,855td37,599$4,713,308td3,494,940
Gary L. PerlinInvoluntary Termination$3,693,600$0$4,666,321$49,699$0$8,409,620
Chief FinancialRetirement (6)NANANANANA
OfficerFor Cause Termination$0$0$0$0$0
 CIC*$7,287,813$537,964$16,885,463$172,467$5,226,962$30,110,669
John G.
Finneran, Jr.
General Counsel
and Corporate
Secretary		Voluntary TerminationNANANANANA
Involuntary TerminationNANANANANA
Retirement (6)$0$0$8,202,574td41,000$0$8,443,574
For Cause Termination$0$0$0$0$0
CIC*$5,558,636td37,202$9,834,325td00,183$0td5,730,346
      
Peter A. Schnall
Chief Risk
Officer		Voluntary Termination$625,000$0td,291,981$0td,916,981
Involuntary Terminationtd,375,000$0td,451,856$35,635$0$4,862,491
Retirement (6)NANANANANA
For Cause Termination$0$0$0$0$0
CIC*$4,809,157td23,809td1,484,903td14,078$0td6,531,947
Voluntary Termination$0$0$0$0$0
Lynn A. CarterInvoluntary Termination$1,500,000$0$3,251,854$43,772$0$4,795,626
President,Retirement (6)NANANANANA
BankingFor Cause Termination$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$672,000
Peter A. SchnallInvoluntary Termination$2,553,600$0$3,022,044$35,813$0$5,611,457
Chief RiskRetirement (6)NANANANANA
OfficerFor Cause Termination$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$660,000
Ryan M.Involuntary Termination$2,508,000$0$2,384,197$34,149$0$4,926,346
SchneiderRetirement (6)NANANANANA
President, CardFor Cause Termination$0$0$0$0$0
CIC*$4,948,515$368,594$11,718,300$79,322$3,365,047$20,479,778

(*)      
(*)Involuntary Termination without Cause or Voluntary Termination for Good Reason
 
The table above is intended to reflect projected payments to NEOseach executive across a range of potential separation scenarios, assuming the separation occurred on December 31, 2009.2010.
 
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 NEOs also are eligible to receive certain pension benefits and certain qualified and non-qualified deferred compensation amounts and certain pension benefits upon termination. These amounts are outlined in the tablesPension Benefits Table on pages 49page 48 and 47,the Non-Qualified Deferred Compensation Table on page 50, respectively, and are not included in the table above.above
 
Other amounts not included in the table above are the following:
  • Accrued salary, bonus and vacation pay as of the date of termination
  • Welfare benefits generally available to all retirees, including retiree medical programs
(1)     Represents cash amounts paid for severance or in relation to enforcement of non-competition covenants. In cases where an NEOthe executive is eligible for both types of payments, non-competition amounts typically offset severance amounts in whole or in part.
 
(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.
 
5354
 

(4)     Represents the present value of payments made on an NEO’sthe 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 CEO or the NEOs; does not include the value of programs generally available to all associatesemployees upon separation from the Company.
 
(5)Represents the value of projected excise tax and related gross upgross-up payments made on an NEO’sexecutive’s behalf, provided that the gross upgross-up results in an after-tax benefit of at least 110% of the applicable safe harbor amount. As of March 1, 2011, Capital One changed its practice relating to excise tax gross-ups to which the CEO and NEOs may be entitled if terminated after a change of control. All change of control agreements providing for a potential excise tax gross-up will expire by April 2014 and will be replaced with agreements that do not provide for an excise tax gross-up. See “Change of Control Agreements” in the “Compensation Discussion and Analysis” section on page 35 for more information.
 
(6)Most currently unvested equity awards held by our retirement eligible NEOsexecutives will continue to vest according to their original terms following retirement.
Mr. Fairbank is currently the only named executive officer eligible for retirement.

55


SECTION VII – EQUITY COMPENSATION PLANS

Equity Compensation Plan Information

The following table provides information as of December 31, 20092010 with respect to shares of Capital One common stock that may be issued under our existing compensation plans.
 
Plan CategoryNumber 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 by14,580,345 (3)$50.72 (3)21,165,070 (5)
security holders (1)   
 
Equity compensation plans not approved8,372,964 (4)$51.86 (4)0 (6)
by security holders (2)   
  
Total (7)22,953,309$51.1421,165,070
Plan CategoryNumber 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)
    
Total21,918,118$49.9116,225,304

(1)     The following plans have been approved by Capital One stockholders: the Amended and Restated 2004 Stock Incentive Plan, the 1994 Stock Incentive Plan and the Amended and Restated 2002 Associate Stock Purchase Plan. In conjunction with their April 23, 2009 approval of the Amended and Restated 2004 Stock Incentive Plan, our stockholders also approved the addition of 20,000,000 shares to the Amended and Restated 2004 Stock Incentive Plan (the “2004 Plan”) Share Reserve.
 
(2)The following plans have not been approved by Capital One stockholders: the 1999 Stock Incentive Plan; the 1999 Directors Plan;Plan, and the 2002 Non-ExecutiveNon- Executive Officer Stock Incentive Plan (the “2002 Stock Incentive Plan”), allboth of which are described below. Two of these plans, the 1999 Stock Incentive Plan and theThe 2002 Stock Incentive Plan werewas terminated in April 2004, and the 1999 Directors Plan was terminated in April 2009. In addition, pursuant to the terms of the 1994 Stock Incentive Plan, as initially approved by Capital One’s stockholders on October 28, 1994 and most recently re-approved by Capital One’s stockholders on April 29, 1999, Capital One’s Board of Directors had the right, without further stockholder action, to amend the plan to increase the number of shares of common stock that may be issued under the plan, provided that such increase is not required to be approved by stockholders under the Code. Following stockholder approval of this Plan in 1999, the Board of Directors increased by 25,500,000, in the aggregate, the number of shares of common stock that may be issued with respect to awards granted pursuant to the plan. In conjunction with the acquisition of Hibernia in November 2005, Capital One assumed three existing Hibernia stock incentive plans. In conjunction with the acquisition of North Fork Bank in December 2006, Capital One assumed fifteen existing North Fork Bank stock incentive plans. Options outstanding under these plans were converted to Capital One options outstanding and are included in this section. There are no shares available for future issuance under the Hibernia or North Fork Bank Plans.plans.
 
(3)Excludes 4,761,497 issued and outstanding shares of restricted stock and includes 964,619 restricted stock units (which have an exercise price of $0.00) issued under the 2004 Plan.
(4)Excludes purchase rights accruing under the 2002 Associate Stock Purchase Plan; issuedPlan and 4,174,750 outstanding shares of restricted stock and stock appreciation rights to be settled in cashissued under the 2002 Stock Incentive Plan; and issued and outstanding shares of restricted stock and stock appreciation rights to be settled in cash under the Board-approved portion of the 19942004 Stock Incentive Plan. 83,992Includes 1,270,950 outstanding restricted stock units issued under the 2004 Stock Incentive Plan that have an exercise price of $0.00.
(4)Includes 73,620 outstanding restricted stock units under the 1999 Directors Plan are included, butthat have an exercise price of $0.00.
 
(5)Represents shares available for future issuance under the 2004 Stock Incentive Plan as either stock options, stock appreciation rights, restricted stock, restricted stock units or incentive stock awards;awards, and 3,375,971includes 2,622,947 shares available for future issuance under the 2002 Associate Stock Purchase Plan as discounted shares purchased voluntarily by Capital One associates through regular payroll deductions. The 1995 Directors Plan was terminated on April 29, 1999 and the 1994 Stock Incentive Plan was terminated upon stockholder approval of the 2004 Stock Incentive Plan, thus there are no shares available for future issuance under these plans.this plan.
 
55

(6) There are no shares available for future issuance under the equity compensation plans not approved by security holders.
(7)As of March 1, 2010, our equity compensation plan (excluding the 2002 Associate Stock Purchase Plan) reflects the following updated information: 22,250,101 outstanding options, with a weighted average price of $53.29 and a term of 5.31 years (none of the outstanding options include dividend equivalents); 4,921,078 shares of unvested restricted stock; and 15,781,566 shares available under our 2004 Stock Incentive Plan.
 
56

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, 2009.2010.
 
1999 Stock Incentive Plan
The 1999 Stock Incentive Plan was terminated by the Board per recommendation and previous approval of the Compensation Committee upon the approval by the stockholders of the Corporation of the 2004 Stock Incentive Plan at the annual meeting in April of 2004. Nevertheless, pursuant to the resolution of the Board, the rights or obligations of any person under any equity-based awards granted under the 1999 Stock Incentive Plan remained in full force and effect under the terms of such plan.
The 1999 Stock Incentive Plan was adopted by the Board on April 29, 1999. Under the plan, Capital One had reserved 600,000 shares of Capital One common stock for issuance in the form of non-qualified stock options. The number of shares that were available for issuance under the plan included shares granted under the plan subject to options that expire or otherwise terminate unexercised and shares surrendered by a participant or retained by Capital One in payment of applicable exercise price or tax withholding liabilities.
Stock options could be granted under the 1999 Stock Incentive Plan to all employees and consultants of Capital One. All options granted under the plan to date were granted on April 29, 1999 and expire on April 29, 2009. These options vested immediately upon the optionee’s execution of an intellectual property protection agreement with Capital One. The plan is administered by the Compensation Committee which must consist of two or more non-employee directors of Capital One as determined by the Board.
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 Corporation and approved in the 2004 annual meeting, any reload options that the Corporation is obligated to grant upon the exercise of awards from the 1999 Stock Incentive Plan will be granted under the 2004 Stock Incentive Plan and shares of common stock of the Corporation used to pay for the exercise price of options shall be added back to the total number of shares available for issuance of awards under the terms set forth in the 2004 Stock Incentive Plan.
1999 Director Plan

The 1999 Director 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 at the time an award is granted, as an employee ofby Capital One or any subsidiary of Capital One.One at the time an award is granted. 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.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 Director Plan, of Capital One common stock on the date of grant. The maximum term of each stock option was ten years, and thevesting schedules wereschedule was 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 Director 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.Board of Directors. 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 hasof Directors had 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 elapse.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 per recommendation and previous approval of the Compensation CommitteeDirectors upon the approval by the stockholders of the CorporationCompany of the 2004 Stock Incentive Plan at the annual meeting in April of 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 suchthe 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 orand 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. The plan is administered by a committee (the “Committee”) consisting solely of at least two non-employee directors of Capital One.
 
All employees of Capital One or its subsidiaries that the 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 CorporationCompany and approved in the 2004 annual meeting, any reload options that the CorporationCompany 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 CorporationCompany used to pay for the exercise price of options shall be added back to the total number of shares available for issuance of awards under the terms set forth in the 2004 Stock Incentive Plan.
 

57

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 ___23 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.
 

58

SECTION IX – AUDIT AND RISK COMMITTEE REPORT
 
The Audit and Risk Committee’s amended and restated charter was approved by the Committee on January 27, 201026, 2011, and by the full Board of Directors on January 28, 2010.27, 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 integrity of Capital One’s financial statements and internal controls;
  • Capital One’s compliance with legal and regulatory requirements;
  • The appointment, qualifications, independence, performance and compensation of Capital One’s independent auditor and the performance of its internal auditor and Chief Credit Review Officer; and
  • The processes by which management assesses and manages risk.
The Audit and Risk Committee has implemented procedures to ensure thatenable it devotesto 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 2009.2010. 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, 20092010, 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 by Statement on Auditing Standards No. 61, as amended andunder 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 Securities and Exchange CommissionSEC rules promulgated thereunder; and follows the mandates of the Securities and Exchange Commission’sSEC’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 report on Form 10-K for the fiscal year ending December 31, 20092010 for filing with the Securities and Exchange Commission.SEC.
 
The Audit and Risk Committee         W. Ronald Dietz (Chairman and “Audit Committee Financial Expert”)
 Patrick W. Gross
 Ann Fritz Hackett
 Pierre E. Leroy
 Bradford H. Warner

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.

59

SECTION X – ELECTION OF DIRECTORS (ITEM 1 ON PROXY CARD)
 
The Board of Directors is divided into three classes. At each annual meeting the term of one class expires. Directors in each class are elected to serve for three-year terms. The table alsobelow indicates when theeach director was last elected as well as the tenure of each director.
 
DirectorTenureLast ElectedExpiration of TermTenureLast ElectedExpiration of Term
Richard D. FairbankSince July 26, 199420092012Since July 26, 199420092012
E.R. CampbellSince November 16, 200520092012Since November 16, 200520092012
W. Ronald DietzSince February 28, 199520072010Since February 28, 199520102013
Patrick W. GrossSince February 28, 199520082011Since February 28, 199520082011
Ann Fritz HackettSince October 28, 200420082011Since October 28, 200420082011
Lewis Hay, IIISince October 31, 200320072010Since October 31, 200320102013
Pierre E. LeroySince September 1, 200520082011Since September 1, 200520082011
Mayo A. Shattuck, IIISince October 31, 200320072010
Mayo A. Shattuck IIISince October 31, 200320102013
Bradford H. WarnerSince April 24, 200820092012Since April 24, 200820092012
Stanley WestreichSince July 26, 199420092012

The nominees for election or re-election this year are:
Patrick W. Ronald DietzGross
Lewis Hay IIIAnn Fritz Hackett
Mayo A. Shattuck IIIPierre E. Leroy
 
Each nominee has consented to serve a three-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 12 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. Proxies will be voted for the election of such substitute. As of the date of this proxy statement, the Board of Directors has no reason to believe that any of the nominees will be unable or unwilling to serve as a director.
 
***
 
The Board of Directors unanimously recommends that you vote “FOR” each of these director nominees.
 

60

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 2010.2011. 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.
 
Capital One has paid or expects to payWe incurred the fees shown in the following fees totable for professional services provided by Ernst & Young LLP for work performed in 2009fiscal years 2010 and 2008 attributable to Ernst & Young LLP’s audit of Capital One’s 2009 and 2008 financial statements:2009:
 
Fees (Amounts in millions)20092008
Fees (dollars in millions)20102009
Audit Fees$8.10$6.40$7.23$8.10
Audit-Related Fees$1.28$1.45$1.38$1.28
Tax Fees$0.00$0.04$0.00
All Other Fees$0.00$0.00

Audit fees include fees for the audit of our annual financial statements, the review of financial statements included in our quarterly reports on 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 accountant 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, such as: employee benefit plan audits, due diligence related to mergers and acquisitions, internal control reviews, attestation services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards. Tax fees would include corporate and subsidiary compliance, consulting, international and employee benefit services. All Otherother fees would include fees for services that are not defined as Audit, Audit-RelatedAudit-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, taxTax fees are limited to 25% of combined Audit and Audit-RelatedAudit-related fees, and services that would fall under the category “All Other Fees”“All 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 ensureprovide 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 2010.2011.
 

61

SECTION XII – APPROVAL OF AMENDMENTS TO CAPITAL ONE’S RESTATED CERTIFICATE OF
INCORPORATION TO PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS
(ITEM 3 ON PROXY CARD)
Overview
The Board of Directors recommends that Capital One's stockholders approve amendments to Capital One's Restated Certificate of Incorporation (the "Certificate") to phase out the classification of the Board of Directors and to provide instead for the annual election of directors, as well as to revise certain related provisions of the Certificate.
If approved by Capital One's stockholders, the amendments would first apply to directors standing for election beginning with the 2012 Annual Stockholder Meeting. The amendments, even if approved, would not affect directors elected to three-year terms either at this Annual Meeting or previously, each of whom will be entitled to complete the term to which he or she was elected.
Article VIII of the Certificate currently provides that the Board of Directors shall be divided into three classes, designated Class I, Class II and Class III, as nearly equal in number as possible, with the term of office of one class expiring each year and directors in each class being elected to three year terms. If the proposed amendments are approved by our stockholders, those directors previously elected to three-year terms of office by our stockholders, including those directors elected at this Annual Meeting, will complete their three-year terms, and thereafter they or their successors would be elected to one-year terms at each Annual Stockholder Meeting. Beginning at the 2014 Annual Stockholder Meeting, the declassification of the Board of Directors would be complete, and all directors would be subject to annual election to one-year terms.
Purpose and Effect of the Proposal
The Governance and Nominating Committee and the Board of Directors have considered the merits of annually elected and staggered boards, taking a variety of perspectives into account. The Board of Directors believes that in some circumstances classified boards may enhance stockholder value by forcing an entity seeking control of the company to initiate arms-length discussions with the company’s board since the entire board cannot be replaced in a single election. The Board of Directors also believes that its classified board structure has helped foster stability and continuity of Capital One's business strategies and policies and has reinforced a commitment to a long-term point of view rather than an excessive focus on short-term goals.
However, the Board of Directors acknowledges our stockholders’ growing sentiment in favor of annual elections and believes that the Board would be equally effective in protecting stockholder interests under an annual election system.
The Board of Directors recognizes that many investors and commentators believe that the election of directors is the primary means for stockholders to influence corporate governance policies and hold management accountable for implementing those policies. The Board of Directors also takes note of the fact that annual elections of directors are in line with current corporate governance practices, providing stockholders with the opportunity to register their views on the performance of the entire Board each year.
As a result, the Governance and Nominating Committee and the Board of Directors have considered this matter, adopted resolutions setting forth a proposed amendment to the Certificate, declared such amendment advisable and unanimously resolved to submit such amendment to Capital One’s stockholders for consideration.
The Declassification Amendment and Related Changes
If the amendments are approved, Section C of Article VIII of the Certificate would be amended to remove the designation of directors into classes and to provide that, commencing with the 2012 Annual Stockholder Meeting, the directors will be elected annually for terms expiring at the next succeeding Annual Stockholder Meeting. In addition, Delaware law provides that directors serving on declassified boards of directors may be removed with or without cause, whereas Capital One’s Board of Directors can be removed only with cause since it is classified. Thus, Section D of Article VIII of the Certificate would also be amended to permit the removal without cause of directors but will provide that the directors serving the remainder of a three-year term in office will be removable only for cause.
In addition, if stockholders approve the declassification amendment, the Board of Directors intends to amend Sections 3.2 and 3.7 of Capital One’s Bylaws to make corresponding changes.
The general description of the proposed amendments set forth above is qualified in its entirety by reference to the text of the proposed amendments, which are attached as Appendix A to these proxy materials. Additions to the Certificate are indicated by underlining and deletions to the Certificate are indicated by strike-outs.
62

Pursuant to Article VIII of the Certificate, the amendments to the Certificate of Incorporation proposed under this Item 3 require the affirmative vote of 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.
If the proposed amendments are approved, they will become effective upon the filing of a Certificate of Amendment to Capital One’s Restated Certificate of Incorporation with the Delaware Secretary of State. However, if Capital One’s stockholders approve these proposed amendments, the Board of Directors retains discretion under Delaware law not to implement the proposed amendments. If the Board of Directors exercises such discretion, it will publicly disclose that fact and the reason for its determination.
***
The Board of Directors unanimously recommends that you vote "FOR" approval of the amendments to the Certificate to provide for the annual election of directors.
63

SECTION XIII – ADVISORY APPROVAL OF CAPITAL ONE’S 20092010 NAMED EXECUTIVE OFFICER
COMPENSATION
(ITEM 34 ON PROXY CARD)
 
We are offering to our stockholders a non-binding, advisory vote on our 20092010 Named Executive Officer compensation, including the compensation of our Chief Executive Officer.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. The Board unanimously recommends that you vote “FOR” approval of our 2009 Named Executive Officer compensation as described in this Proxy Statement.
 
As discussed in the Compensation“Compensation Discussion and Analysis startingAnalysis” section beginning on page 24,23, our Board of Directors generally has provided compensation programs for the Company’s CEO and the other NEOs that are competitive with the market, performance-based and transparent and that align with our stockholders’ interests over short- and long-termmultiple time horizons. Our CEO and NEO compensation programs generally have comprisedconsisted primarily of performance-based incentive opportunities, including multiple types of equity instruments with varied performance metrics and multi-year vesting schedules. The ultimate value of the equityequity-based awards made to our CEO and the other NEOs are based onis subject to Capital One’s sustained performance over time, both on an absolute basis and relative to our peers.
 
For 2010, 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 Officers’Officer Compensation” in the “Compensation Discussion and Analysis” section on page 30, in 2010 the Company was able to return to a compensation program for 2009, the Compensation Committee and the independent directors designed the NEO’s (other than the CEO) compensation plan to complyNEOs more in line with the provisions ofCompany’s pay-for-performance philosophy than was permitted under EESA. The pay mix was shifted from the elements and proportions prescribed by EESA determined the structure that the Committee and the independent directors adopted for the NEOs’ (other than the CEO)our 2009 NEO compensation design. Under this plan, two-thirdsprogram to make base salary a smaller portion of total target compensation for 2010, with a higher proportion of pay provided in various equity-based vehicles. Under the 2010 NEO compensation program, approximately 80% of total target compensation was to be paid in the form of base salary and upprovided through equity-based vehicles which were all at-risk to the remaining one-third was to be paid as equity incentive compensation in the form of restricted stock. The NEOs were not eligible for annual cash bonuses or other forms of equity incentive compensation. For 2009, the Summary Compensation Table on page 37 includes the temporarily increased base salaries paid to the NEOs (other than the CEO) under their compensation plan. The Summary Compensation Table also includes as 2009 compensation any long-term incentives (in the form of stock options, restricted stock and performance shares) that were awarded to the NEOs (other than the CEO) in January 2009 based on performance for the fiscal year ended December 31, 2008. These long-term incentives comprised approximately 85% of the value of total compensation for each of the NEOs (other than the CEO) under their 2008 compensation plan. For the CEO, amounts shown in the Summary Compensation Table for 2009 represent awards granted in 2009 for 2009 performance.Company’s stock price and subject to vesting over multiple time horizons.
 
Additional information relevant to your vote can be found in the “Compensation Discussion and Analysis” section of this proxy statement on pages 2423 to 3537 and in the “Named Executive Officer Compensation” section on pages 3638 to 54 in the Named Executive Officers Compensation section.55.
 
We ask for your advisory vote on the following resolution:
 
“Resolved, that Capital One’s stockholders hereby provide their advisory approval of the 20092010 Named Executive Officer compensation as describeddisclosed pursuant to the rules of the SEC in the Compensation Discussion and Analysis, the Summary Compensation Table, the other compensation tables the Compensation Discussion and Analysis and the related disclosuresnotes and narratives in this Proxy Statement.proxy statement.”
***
The Board unanimously recommends that you vote “FOR” advisory approval of our 2009 Named Executive Officer compensation as disclosed in this Proxy Statement.


SECTION XIII – STOCKHOLDER PROPOSAL REGARDING SENIOR EXECUTIVE STOCK RETENTION
REQUIREMENTS
(ITEM 4 ON PROXY CARD)
Capital One has been notified that a representative of the AFSCME Employees Pension Fund, 1625 L Street, NW, Washington, DC 20036-5687, intends to present the following proposal for consideration at the Annual Meeting.  The AFSCME Employees Pension Fund has submitted documentation indicating that it is the beneficial owner of 16,563 shares of Capital One common stock.
RESOLVED, that shareholders of Capital One Financial Corporation (“Capital One”) urge the Compensation Committee of the Board of Directors (the “Committee”) to adopt a policy requiring that senior executives retain a significant percentage of shares acquired through equity compensation programs until two years following the termination of their employment (through retirement or otherwise), and to report to shareholders regarding the policy before Capital One’s 2011 annual meeting of the shareholders. The shareholders recommend that the Committee not adopt a percentage lower than 75% of net after-tax shares. The policy should address the permissibility of transactions such as hedging transactions which are not sales but reduce the risk of loss to the executive.
Supporting Statement
Equity-based compensation is an important component of senior executive compensation at Capital One. The compensation for our CEO is all equity, and stock and option awards made up approximately three-quarters of reported compensation for the other NEOs in 2008. In the last five years, Chairman and CEO Richard Fairbanks has realized more than $398 million in reported through the exercise of 6,806,467 options and vesting of 241,680 shares. As of January 1, 2009, Mr. Fairbanks held 2,191,727 shares outright, less than one-third of the options he has already exercised, but held another 4,940,481 options. We believe that the alignment benefits touted by Capital One are not being fully realized.
We believe there is a link between shareholder wealth and executive wealth that correlates to direct stock ownership by executives. According to an analysis conducted by Watson Wyatt Worldwide, companies whose CFOs held more shares generally showed higher stock returns and better operating performance. (Alix Stuart, “Skin in the Game,”CFO Magazine (March 1, 2008))
Requiring senior executives to hold a significant portion of shares obtained through compensation plans after the termination of employment would focus them on Capital One’s long-term success and would better align their interests with those of Capital One shareholders. In the context of the current financial crisis, we believe it is imperative that companies reshape their compensation policies and practices to discourage excessive risk-taking and promote long-term, sustainable value creation. A 2009 report by the Conference Board Task Force on Executive Compensation stated that hold-to-retirement requirements give executives “an evergrowing incentive to focus on long-term stock price performance.” (http://www.conference-board.org/pdf_free/ExecCompensation2009.pdf)
Capital One has a minimum stock ownership guideline requiring executives to own a number of shares of Capital One stock as a multiple of salary. We believe this policy does not go far enough to ensure that equity compensation builds executive ownership. We also view a retention requirement approach as superior to a stock ownership guideline because a guideline loses effectiveness once it has been satisfied.
We urge shareholders to vote for this proposal.


SECTION XIV – CAPITAL ONE STATEMENT IN OPPOSITION TO THE STOCKHOLDER PROPOSAL
REGARDING SENIOR EXECUTIVE STOCK RETENTION REQUIREMENTS
The Board of Directors has carefully considered this proposal and believes it is not in the best interest of Capital One’s stockholders. Consequently, the Board unanimously recommends that Capital One stockholders vote “AGAINST” this proposal.
The Board shares the proponent’s view that Capital One’s executive officers should hold a significant equity ownership interest in the Company in order to align their interests with the long-term interests of the Company’s stockholders. However, the Board strongly believes that the Company’s existing stock ownership guidelines, coupled with its carefully designed executive compensation programs, already ensure meaningful executive stock ownership, align management and stockholder interests and promote a focus on long-term, sustainable value creation. Imposing the proposal’s strict limits could undermine the objectives of our compensation program, in turn making it more difficult and costly to attract, motivate and retain executive talent.
The Board believes that stock ownership by executive officers helps to align their interests with the long-term interests of our stockholders and sends a positive message regarding management’s commitment to long-term stockholder value creation. Capital One has stock ownership guidelines in place for all of its executive officers, including all of its Named Executive Officers. Under the guidelines, as described on page 32 of this proxy statement, all executive officers must own shares of Capital One stock with a fair market value of at least a certain multiple of their base salaries. For our Chief Executive Officer, the multiple is five times a notional base salary approved by the Board each year, since he has not received a cash salary in 13 years. For our other executive officers, the multiple is three times base salary. Our executive officers are also prohibited from engaging in hedging transactions in Capital One stock. The Compensation Committee annually reviews the guidelines and monitors executive officers’ progress toward meeting them. As of January 31, 2010, the stock ownership of each of our executive officers was in excess of the guidelines, with our Chief Executive Officer owning stock valued at 83 times his notional base salary and each other executive officer owning stock valued at an average of 9.7 times their base salaries, adjusted to reflect the temporarily increased salary levels under their 2009 compensation plan. The Board believes that these guidelines ensure that our executive officers have a significant stake in Capital One’s future and fulfill the purpose of this stockholder proposal.
Furthermore, the Compensation Committee and the independent directors carefully design compensation programs that utilize equity-based compensation vehicles as a substantial component of overall executive compensation. Under our historic compensation programs, 100% of our Chief Executive Officer’s compensation is equity-based, while 80% or more of the compensation of our other executive officers generally is paid through equity-based vehicles. These equity-based vehicles, including restricted stock, restricted stock units, performance shares and stock options, generally vest over three years. We believe that the award of a substantial portion of our executive officers’ compensation in equity-based vehicles that vest over multiple years provides a strong incentive for our executive officers to improve Capital One’s long-term performance and deliver value to our stockholders.
The retention policy called for by the proposal could severely limit the effectiveness of our executive compensation program. The restrictive nature of the retention requirement may be viewed unfavorably by prospective and existing executive officers, inhibiting our ability to attract, motivate and retain top talent. The requested policy also could incent executive officers to leave the Company in order to realize the value of earned equity compensation. Such unintended consequences would ultimately be detrimental to the long-term interests of the Company and our stockholders.
The Board believes the Company’s stock ownership guidelines and equity-based compensation programs have been responsibly designed and implemented in order to successfully align the interests of our executive officers with the long-term interests of our stockholders. The Board strongly believes that adopting the proposal would not be in the best interests of Capital One or its stockholders.
 
***
 
The Board of Directors unanimously recommends that Capital One stockholdersyou vote “AGAINST”FOR” advisory approval of our 2010 Named Executive Officer compensation as disclosed in this stockholder proposal.proxy statement.
 

64

SECTION XVXIV – STOCKHOLDER PROPOSAL REGARDING BOARD DECLASSIFICATIONADVISORY VOTE ON FREQUENCY OF HOLDING AN ADVISORY VOTE ON NAMED
EXECUTIVE OFFICER COMPENSATION
(ITEM 5 ON PROXY CARD)
 
Capital One has been notified thatAs described in Section XIII, we are offering to our stockholders a representativenon-binding, advisory vote on our 2010 Named Executive Officer compensation, including the compensation of The City of New York Officeour Chief Executive Officer, pursuant to Section 14A of the Comptroller, 1 Centre Street, New York, NY  10007-2341, on behalfSecurities and Exchange Act of various employee pension funds, intends to present the following proposal for consideration at the Annual Meeting. This group has submitted documentation indicating that it is the beneficial owner of 1,108,042 shares of Capital One common stock.
BE IT RESOLVED, that the stockholders of Capital One Financial Corporation request that the Board of Directors take the necessary steps to declassify the Board of Directors and establish annual elections of directors, whereby directors would be elected annually and not by classes. This policy would take effect immediately, and be applicable1934. Also pursuant to the re-electionsame Section 14A, we are submitting to our stockholders an advisory vote as to whether future advisory votes on our Named Executive Officer compensation, including the compensation of any incumbent director whose term, under the current classified system, subsequently expires.
Supporting Statement
We believe that the ability to elect directors is the single most important use of the shareholder franchise. Accordingly, directorsour Chief Executive Officer, should be accountable to shareholders on an annual basis. The election of directors by classes, in our opinion, minimizes accountability and precludes the full exercise of the rights of shareholders to approveoccur every one, two or disapprove annually the performance of a director or directors.
In addition, since only a fraction of the Board of Directors is elected annually, we believe that classified boards could frustrate, to the detriment of long-term shareholder interest, the efforts of a bidder to acquire control or a challenger to engage successfully in a proxy contest.
We urge your support for the proposal to repeal the classified board and establish that all directors be elected annually.


SECTION XVI – CAPITAL ONE STATEMENT IN OPPOSITION TO THE STOCKHOLDER PROPOSAL
REGARDING BOARD DECLASSIFICATION
The Board of Directors has carefully considered this proposal and believes it is not in the best interest of Capital One’s stockholders. Consequently, the Board unanimously recommends that Capital One stockholders vote “AGAINST” this proposal.
Stability and Continuity
In accordance with Capital One’s Certificate of Incorporation, the Board is divided into three classes, each serving a staggered three-year term. This structure provides the Board stability, continuity and independence. This structure also enhances long-term planning and ensures that, at any given time, the Board is comprised of directors who are intimately familiar with Capital One’s business and strategic goals. A classified board also benefits Capital One and its stockholders because it helps attract and retain director candidates who are willing to make long-term commitments of their time and energy. This commitment is critical to achieve Capital One’s goals and one that will best be fulfilled by a stable and continuous Board.
Independence
Electing directors to three-year terms provides non-management directors with a longer term of office that enhances their independence from management, as well as from special interest groups who may have an agenda contrary to a majority of stockholders’ long-term goals and objectives. As a result, independent directors with three-year terms are better able to make decisions that are in the best interest of Capital One and all of its stockholders.
Accountability to Stockholders
Directors elected to three-year terms are required to uphold the same fiduciary duties to Capital One and its stockholders, and are equally accountable to stockholders, as directors elected annually. Capital One’s majority director voting policy, set forth in our Amended and Restated Bylaws and our Corporate Governance Principles, promotes further director accountability to stockholders. This policy provides that in any uncontested election of directors, any director nominee who receives a greater number of votes “against” his or her election than votes “for” such election will tender his or her resignation to the Chairman of the Board. The Governance and Nominating Committee will consider the resignation and recommend to the Board whether or not to accept the resignation. The Board will then make a decision regarding the resignation and Capital One will publicly disclose their decision. This majority voting policy gives stockholders a meaningful role in the election of directors and acts as a vehicle for holding directors accountable for their actions or failure to act.
Protection against Takeovers
A classified Board structure enhances the Board’s ability to negotiate the best results for stockholders in a potential takeover situation by safeguarding against the replacement of a majority of Capital One’s Directors with hostile nominees at a single annual meeting, which would allow an acquirer to gain control of Capital One and its assets without paying fair market value to Capital One’s stockholders. A classified board does not preclude a takeover, but rather provides the Board the time and flexibility necessary to evaluate the adequacy and fairness of any takeover proposal, negotiate on behalf of all stockholders and weigh alternative methods of maximizing stockholder value for all stockholders, without the threat of imminent removal of a majority of Board members.years.
 
After careful consideration, the Board of Directors has determined that holding an advisory vote on executive compensation every year is the most appropriate policy for Capital One at this time, and the Board of Directors recommends that stockholders 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, 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.
We understand that our stockholders may have different views as to what is an appropriate frequency for advisory votes on executive compensation, and we will carefully review the voting results on this proposal. Stockholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. This advisory vote on the frequency of future advisory votes on executive compensation is non-binding on the Board believes thatof Directors. Notwithstanding the retentionBoard’s recommendation and the outcome of a classified board structure remainsthe stockholder vote, the Board of Directors may in the best long-term interestsfuture decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of Capital One and its stockholders.material changes to compensation programs.
 
***
 
The Board of Directors unanimously recommends that Capital One stockholdersyou vote to conduct future advisory votes on executive compensation “AGAINST”EVERY YEAR this stockholder proposal..”
 

65

SECTION XVIIXV – OTHER BUSINESS

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, 2009,2010, 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, 2009,2010, may be obtained at the Annual Meeting, at our website at www.capitalone.com www.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 at www.sec.gov.
 
Stockholder Proposals for 20112012 Annual Stockholder Meeting
 
Stockholders interested in submitting a proposal for inclusion in the proxy materials at the 2011Capital One’s 2012 Annual Stockholder Meeting (“Capital One’s 2012 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 ___, 2010., 2011.
 
Under our bylaws, if you wish to present other business before the stockholders at Capital One’s 20112012 Annual Stockholder Meeting, (“Capital One’s 2011 Annual Meeting”), or nominate a director candidate, you must give proper written notice of any such business to the Corporate Secretary not before January 29, 2011February 11, 2012 and not after February 18, 2011.March 2, 2012. If Capital One’s 20112012 Annual Meeting is not within thirty days before or seventy days after April 29, 2011,May 11, 2012, the anniversary date of this year’s Annual Meeting, younotice must send notice withinbe delivered no earlier than the ninetieth day prior to such annual meeting and not later than the close of business on the later of the seventieth day prior to such meeting or ten days following any notice or publication of the meeting. Your notice must include the information specified in our bylaws concerning the business or nominee. Our bylaws set forth the information that must be furnished to the Corporate Secretary in order for any such notice to be proper. A copy of our bylaws may be obtained from the Corporate Secretary at Capital One’s address on the Notice of Annual Stockholder Meeting.
 
On behalf of the Board of Directors,
John G. Finneran, Jr.
Corporate Secretary
March    , 2011
66

APPENDIX A – PROPOSED AMENDMENTS TO CAPITAL ONE FINANCIAL CORPORATION’S
RESTATED CERTIFICATE OF INCORPORATION
     The text below is the portion of the Company’s Restated Certificate of Incorporation proposed to be amended by Item 3. Proposed additions are indicated by underlining, and proposed deletions are indicated by strike-outs.
Article VIII
     (A) Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specific circumstances, the number of directors of the Corporation shall be fixed by the Bylaws of the Corporation and may be increased or decreased from time to time in such a manner as may be prescribed by the Bylaws.
     (B) Unless and except to the extent that the Bylaws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.
     (C) TheCommencing with the annual meeting of stockholders held in 2012, directors,(other than those who may be elected by the holders of any series of Preferred Stock, shall be divided into three classes as nearly equal in numberas possible, and designated as Class I, Class II and Class III. Class I directors shall be initially elected for a term expiring at the1995 annual meeting of stockholders, Class II directors shall be initially elected for a term expiring at the 1996 annual meeting ofstockholders, and Class III directors shall be initially elected for a term expiring at the 1997 annual meeting of stockholders.Members of each class shall hold office until their successors are elected and qualified. At each) shall be elected annually by thestockholders entitled to vote thereon for terms expiring at the next succeeding annual meeting of the stockholders of theCorporation, the successors of the class of directors whose term expires at the meeting shall be elected to hold office for a termexpiring at the annual meeting of stockholders held in the third year following the year of their election, andstockholders,provided, however, that any director elected or appointed prior to the 2012 annual meeting of stockholders shall complete thethree-year term to which such director has been elected or appointed. The term for the class of directors elected at the 2009annual meeting of stockholders shall expire at the 2012 annual meeting of stockholders, the term for the class of directors electedat the 2010 annual meeting of stockholders shall expire at the 2013 annual meeting of stockholders, and the term for the class ofdirectors elected at the 2011 annual meeting of stockholders shall expire at the 2014 annual meeting of stockholders. Thedivision of directors into classes shall terminate at the 2014 annual meeting of stockholders. Directors shall hold office until their successors are elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office.
     (D) Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specific circumstances, (i) any director may be removed from office at any time, but only for cause and only byserving in a classof directors elected for a term expiring at the third annual meeting of stockholders following the election of such class shall beremovable only for cause and all other directors shall be removable either for or without cause, and (ii) the removal of anydirector, whether for or without cause, requires the affirmative vote of the holders of at least 80 percent of the voting power of the then outstanding Voting Stock, voting together as a single class.
     (E) Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80 percent of the voting power of the then outstanding Voting Stock, voting together as a single class, shall be required to amend or repeal, or adopt any provision inconsistent with, this Article VIII.
A-1









CAPITAL ONE FINANCIAL CORPORATION
1680 CAPITAL ONE DR.
MCLEAN, VA 22102-3491
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Daylight Time on May 10, 2011. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
 
John G. Finneran, Jr.ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
Corporate SecretaryIf you would like to reduce the costs incurred by Capital One in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Day Light Time on May 10, 2011. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.


TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
   x
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The Board of Directors recommends you vote FOR the following:
1.Election of DirectorsForAgainstAbstain
01  Patrick W. Grossooo
02Ann Fritz Hackettooo
03Pierre E. Leroyooo
The Board of Directors recommends you vote FOR proposals 2, 3 and 4.ForAgainstAbstain
2  Ratification of selection of Ernst & Young LLP as independent auditors of Capital One for 2011.ooo
3Approval of amendments to Capital One's Restated Certificate of Incorporation to provide for the annual election of directors.ooo
4Advisory, non-binding approval of Capital One's 2010 Named Executive Officer compensation.ooo



The Board of Directors recommends you vote 1 YEAR on the following proposal:1 year2 years3 yearsAbstain
5   Advisory, non-binding approval of the frequency with which Capital One will hold a stockholder vote to approve its Named Executive Officer compensation.oooo
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]DateSignature (Joint Owners)Date


Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Annual Report/10K is/are available at www.proxyvote.com.
March ___, 2010
CAPITAL ONE FINANCIAL CORPORATION
Annual Stockholder Meeting
Wednesday, May 11, 2011 10:00 a.m.
 
 
Capital One's Headquaters
1680 Capital One Drive
Mclean, Virginia 22102
67
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 (the "Corporation"), held of record by the undersigned on March 16, 2011, at the Annual Stockholder Meeting to be held on May 11, 2011 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), "ONE YEAR" IN ITEM (5), AND IN THE PROXIES' DISCRETION ON ANY OTHER MATTERS COMING BEFORE THE MEETING.
Continued and to be signed on reverse side