8-KMaterial AgreementsRegulation FDExhibits & Filings

CAPITAL ONE FINANCIAL CORP 8-K Report, Material Agreement (Dec 23, 2005)

Filed December 23, 2005For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

This 8-K filing from Capital One Financial Corporation (COF) details a material definitive agreement regarding the 2006 compensation for its Chairman, CEO, and President, Richard D. Fairbank. In lieu of traditional salary, incentives, and retirement contributions for 2006, Mr. Fairbank was granted 573,000 nonstatutory stock options. This aligns executive compensation with long-term stockholder value creation and aims to retain a key executive. The stock options are granted at the fair market value of $87.275 per share, will vest in full on the fifth anniversary of the grant date, and have a ten-year expiration. Vesting acceleration is triggered by Mr. Fairbank's death, disability, or a change in control of the company. In the event of retirement, the options would continue to vest post-retirement with specific exercisability conditions. These options were issued under the Company's 2004 Stock Incentive Plan.

Key Highlights

  • 1Richard D. Fairbank, CEO, granted 573,000 nonstatutory stock options for 2006 compensation.
  • 2Option grant replaces salary, annual cash incentive, other long-term incentives, and retirement plan contributions for 2006.
  • 3Exercise price of $87.275 per share, reflecting fair market value on the grant date.
  • 4Options vest in full on the fifth anniversary of the grant date.
  • 5Vesting accelerates upon death, disability, or change in control.
  • 6Options expire ten years from the grant date.
  • 7Retirement provisions allow for continued vesting post-retirement.
  • 8Grant is part of an effort to align executive interests with stockholders and retain key talent.

Frequently Asked Questions

The primary purpose of this 8-K filing is to disclose a material definitive agreement related to the 2006 compensation package for Capital One's Chairman, CEO, and President, Richard D. Fairbank. This compensation is structured as a grant of stock options.

Instead of receiving a salary, annual cash incentive, other long-term incentives, or retirement plan contributions for 2006, Mr. Fairbank has been granted 573,000 nonstatutory stock options. This compensation strategy is designed to align his interests with those of the company's stockholders and incentivize long-term value creation.

The stock options have an exercise price of $87.275, which was the fair market value on the grant date. They will become fully exercisable on the fifth anniversary of the grant date and expire ten years from the grant date. Vesting can accelerate upon Mr. Fairbank's death, disability, or a change in control of the company. Specific provisions are in place for vesting and exercisability in the event of retirement.

Capital One stated that this compensation arrangement reflects their commitment to aligning the CEO's interests with stockholders through a program designed to drive long-term stockholder value. Additionally, the company believes this is an important component in retaining a highly talented senior executive.