8-KLeadership Changes

CAPITAL ONE FINANCIAL CORP 8-K Report, Executive Changes (Feb 4, 2013)

Filed February 4, 2013For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

This 8-K filing by Capital One Financial Corporation details executive compensation for 2013, focusing on CEO Richard D. Fairbank and other Named Executive Officers (NEOs). A key aspect is the implementation of new, robust clawback provisions designed to recover incentive compensation in cases of misconduct leading to significant harm to the company. These provisions apply to awards granted on January 31, 2013, and future awards, linking executive pay directly to company performance and aligning executive interests with shareholder value. The filing also outlines specific compensation structures for 2013, emphasizing performance-based awards and deferred compensation. For the CEO, a significant portion of compensation is tied to a three-year performance share award based on Adjusted Return on Assets (ROA) relative to a peer group, with forfeiture possible if the company has negative ROA for any year. Stock options are also performance-vested. For NEOs, compensation is a mix of base salary, restricted stock units, cash awards, and equity incentive awards, with a substantial portion deferred and at-risk. The overall compensation philosophy aims to link pay directly to company performance over multiple time horizons.

Key Highlights

  • 1Effective January 31, 2013, Peter Schnall departed as Chief Risk Officer, succeeded by Kevin Borgmann.
  • 2New clawback provisions were approved and implemented for all incentive awards granted on January 31, 2013, to the CEO, NEOs, and other executive officers, and will apply to future awards.
  • 3CEO Richard D. Fairbank's 2012 incentive award totaled $4,375,000, paid via restricted stock units (RSUs) and a deferred cash bonus, with both subject to three-year vesting and new clawback provisions.
  • 4The CEO's 2013 compensation plan includes performance-based equity grants (performance shares and stock options) tied to Adjusted ROA and Base ROA/Core Earnings metrics over a three-year period, with potential forfeiture.
  • 5NEOs' 2013 compensation is structured with base salary, RSUs, cash awards, and equity incentives, with a significant portion deferred and subject to performance-based vesting and clawback provisions.
  • 6The target total compensation for NEOs for 2013 is expected to range between $4.8 million and $6.7 million.

Frequently Asked Questions

The new clawback provisions allow the Compensation Committee to recover incentive compensation if an executive engages in misconduct resulting in significant financial or reputational harm to the company, or fails to adequately manage risks. These provisions apply to all incentive awards granted on January 31, 2013, to the CEO, Named Executive Officers, and other executive officers, and will also apply to future incentive awards.

Mr. Fairbank's 2013 compensation is heavily performance-based and at-risk. It includes a performance share award for up to 150% of 155,363 shares, based on the company's Adjusted ROA relative to a peer group over three years. He also received stock options with a three-year vesting period that are subject to performance thresholds. Payouts for these awards are deferred for three years and are subject to clawback provisions.

The primary performance metric for the CEO's performance share award is the company's Adjusted ROA relative to a peer group of companies in the KBW Bank Sector index (excluding custody banks) over a three-year period. For stock options, the performance metrics are Base ROA or Core Earnings for each fiscal year during the three-year vesting period.

The total compensation for the Named Executive Officers in 2013 is expected to be between $4.8 million and $6.7 million. This compensation is a mix of base salary, restricted stock units, cash or cash-settled awards, and equity incentive awards, with a significant portion subject to deferral, performance-based vesting, and clawback provisions.