8-KLeadership ChangesExhibits & Filings

CAPITAL ONE FINANCIAL CORP 8-K Report, Executive Changes (Oct 30, 2007)

Filed October 30, 2007For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

This 8-K filing from Capital One Financial Corporation (COF) reports on the approval of amended Change of Control Employment Agreements for its named executive officers (NEOs), including the CEO, Richard Fairbank. These agreements were approved on October 24 and 25, 2007. The key focus is on ensuring executive retention and stability in the event of a corporate change of control. The amended agreements provide for continued employment for two years post-change of control, with guaranteed salary and bonus levels, as well as continued participation in various benefit plans. Furthermore, these agreements outline specific severance packages for NEOs terminated without cause or who voluntarily leave for good reason within two years of a change of control. The severance package includes a payment of 2.5 times the sum of salary, bonus, and certain additional amounts, along with excise tax gross-ups to ensure executives receive the full intended compensation. The amendments also ensure compliance with Section 409A of the Internal Revenue Code.

Key Highlights

  • 1Capital One approved amended Change of Control Employment Agreements for its Named Executive Officers (NEOs) on October 24-25, 2007.
  • 2The agreements ensure continued employment for NEOs for 2 years following a Change of Control.
  • 3During the post-change of control employment period, NEOs will receive at least their pre-change salary and annual bonus.
  • 4Severance packages are provided if an NEO is terminated without cause or resigns for good reason within two years of a Change of Control.
  • 5Severance amounts are set at 2.5 times the sum of salary, bonus, and certain additional amounts for all NEOs.
  • 6The agreements include excise tax gross-ups for parachute payments exceeding safe harbor limits (Section 280G of the Code).
  • 7Amendments were made to ensure compliance with Section 409A of the Internal Revenue Code.

Frequently Asked Questions

The main purpose is to provide financial and employment security to Capital One's top executives in the event of a change of control of the company. This is intended to ensure executive focus on the company's performance and continuity during potentially uncertain periods.

If a change of control occurs, the executive will continue their employment for two years, receiving at least their current base salary and annual bonus. They will also continue to participate in existing long-term incentive, savings, retirement, and welfare plans.

If an executive is terminated without cause or voluntarily resigns for 'good reason' within two years after a change of control, they will receive a severance payment equal to 2.5 times the sum of their salary, bonus, and certain additional amounts. The company will also cover any excise taxes that may be imposed on these payments if they exceed safe harbor limits.

Yes, the agreements have been amended to ensure compliance with Section 409A of the Internal Revenue Code, which governs non-qualified deferred compensation. Additionally, they include provisions for grossing up excise taxes that might be incurred under Section 4999 of the Code related to parachute payments.