8-KLeadership Changes

CAPITAL ONE FINANCIAL CORP 8-K Report, Executive Changes (Jan 28, 2011)

Filed January 28, 2011For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

This 8-K filing from Capital One Financial Corporation details the compensation plans approved for its CEO, Richard D. Fairbank, and other named executive officers for 2011. The core theme is a strong alignment of executive pay with company performance and shareholder interests, emphasizing equity-based and at-risk compensation with deferred payouts. Notably, CEO Richard D. Fairbank's compensation is entirely equity-based, with no salary or bonus. His performance-based award is tied to the company's cash return on average tangible assets over a three-year period, with payouts ranging from 0% to 200% of a target number of shares, subject to certification. Additionally, he received stock options with a three-year vesting period and a substantial opportunity for restricted stock units based on 2011 performance. For other Named Executive Officers, compensation is a mix of base salary, restricted stock units vesting in 2011, and longer-term equity incentives also contingent on performance and subject to executive discretion.

Key Highlights

  • 1CEO Richard D. Fairbank's compensation is entirely at-risk and equity-based, with no salary or bonus.
  • 2Mr. Fairbank's primary performance award is contingent on Capital One's cash return on average tangible assets over a three-year period, with a 0%-200% payout range of target shares.
  • 3Mr. Fairbank received 608,366 nonstatutory stock options with a three-year vesting period, exercisable only if the stock price appreciates.
  • 4Executive compensation is structured with multi-year performance horizons and deferred payouts to align with shareholder interests.
  • 5Compensation for other Named Executive Officers includes base salary, short-term restricted stock units vesting in 2011, and performance-based long-term equity incentives.
  • 6The compensation plans for all named executive officers are substantially similar to those approved for 2010.

Frequently Asked Questions

Mr. Fairbank's compensation for 2011 is entirely equity-based and at-risk, meaning he receives no base salary or bonus. His pay is directly tied to the company's performance over multiple time horizons.

The award is based on Capital One's cash return on average tangible assets compared to a peer group over a three-year period starting January 1, 2011. The payout can range from 0% to 200% of a target number of 82,851 shares, contingent on the Committee certifying the company's performance.

He was granted 608,366 nonstatutory stock options with an exercise price of $48.28. These options will become fully exercisable after three years and expire ten years from the grant date. He also has an opportunity for restricted stock units in late 2011 or early 2012, based on 2011 performance, which will vest and settle in cash after three years.

The total compensation for the other Named Executive Officers is expected to fall between $4.51 million and $6.68 million for 2011. This compensation is a mix of base salary, restricted stock units, and long-term incentive awards, all tied to performance and subject to discretion.