Summary
Capital One Financial Corporation (COF) filed an 8-K on March 11, 2009, to report changes in its executive compensation plan for named executive officers (NEOs), excluding the CEO. This adjustment was made to comply with Section 111(b) of the Emergency Economic Stabilization Act of 2008 (EESA), as amended, and pending Treasury guidelines. The new plan significantly alters how NEOs are compensated, moving away from cash bonuses and prohibited equity incentives. The primary change involves shifting compensation to a combination of base salary and restricted stock. Specifically, two-thirds of each NEO's maximum compensation opportunity will be in salary, with the remaining one-third as an opportunity for restricted stock awards, granted at the end of the year at the discretion of the Independent Directors. This move is expected to reduce total compensation for NEOs by 23% to 49% in 2009 compared to 2008 levels, depending on performance and any restricted stock awards granted. Importantly, any restricted stock awarded will not vest while the company has outstanding obligations under EESA.
Key Highlights
- 1Capital One is implementing a new executive compensation plan for NEOs (excluding CEO) to comply with EESA requirements.
- 2The new plan eliminates cash bonuses and other prohibited equity incentives for NEOs.
- 3Compensation will now consist of a combination of salary (two-thirds) and restricted stock opportunity (up to one-third).
- 4Restricted stock awards will be discretionary, based on company and individual performance, and awarded at the end of each year.
- 5Total compensation for NEOs is projected to decrease by 23% to 49% in 2009 compared to 2008.
- 6Any awarded restricted stock will have vesting restrictions tied to the company's outstanding obligations under EESA.
- 7Employment agreements reflecting the new plan are for a three-year term but can expire earlier if EESA obligations are repaid.