8-KLeadership ChangesExhibits & Filings

CAPITAL ONE FINANCIAL CORP 8-K Report, Executive Changes (Feb 8, 2021)

Filed February 8, 2021For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

This 8-K filing by Capital One Financial Corp (COF) on February 8, 2021, details the compensation plans and awards for its Chief Executive Officer, Richard D. Fairbank, and other Named Executive Officers (NEOs) for the 2020 performance year and the initial structure for 2021. The key takeaway for investors is the significant portion of executive compensation that is performance-based and "at-risk," directly linking pay to the company's financial and stock performance over multiple time horizons. Specifically, Mr. Fairbank received a $17.0 million incentive award for the 2020 performance year, comprised of performance shares tied to Total Shareholder Return (TSR) and financial metrics (Growth of Tangible Book Value per share and Adjusted Return on Tangible Common Equity), a deferred cash bonus, and restricted stock units (RSUs). The 2021 compensation plans for both Mr. Fairbank and the NEOs continue this performance-driven approach, with a substantial majority of their pay contingent on company results and subject to deferred vesting periods. This structure aims to align executive interests with those of shareholders.

Key Highlights

  • 1Executive compensation for CEO Richard D. Fairbank and Named Executive Officers (NEOs) for the 2020 performance year has been finalized.
  • 2CEO Richard D. Fairbank received a $17.0 million incentive award for 2020 performance, composed of performance shares ($12.0M), deferred cash ($3.0M), and RSUs ($2.0M).
  • 3Performance shares for Mr. Fairbank's 2020 award are tied to Total Shareholder Return (TSR) and financial metrics (Growth of Tangible Book Value per share and Adjusted Return on Tangible Common Equity) over a three-year period.
  • 4The 2021 compensation plans for both Mr. Fairbank and NEOs continue a performance-based structure, with a significant portion of pay being 'at-risk' and contingent on company performance.
  • 5Mr. Fairbank's 2021 compensation will not include a cash salary; it will consist of RSUs and an opportunity for a year-end incentive award based on 2021 performance.
  • 6NEOs' total target compensation for 2021 ranges from $5.4 million to $6.0 million, with approximately 55% allocated to equity incentives (RSUs and performance shares).

Frequently Asked Questions

Capital One's compensation plans for its CEO and Named Executive Officers heavily emphasize performance-based pay. A significant portion of their compensation is structured as performance shares, restricted stock units (RSUs), and incentive awards that are contingent on achieving specific financial and total shareholder return metrics over multi-year periods. This structure is designed to align executive interests with those of the company's shareholders.

For the 2020 performance year, CEO Richard D. Fairbank received a total incentive award valued at $17.0 million. This award is comprised of $12.0 million in performance share awards, a $3.0 million deferred cash bonus, and $2.0 million in restricted stock units (RSUs).

The structure for the 2021 compensation plans for both CEO Richard D. Fairbank and the Named Executive Officers is substantially similar to their 2020 plans. These plans continue to feature a significant 'at-risk' component tied to company performance, with deferred payout opportunities and a focus on equity-based awards rather than base cash salary for the CEO.

The performance shares awarded to executives are tied to metrics such as the Company's Total Shareholder Return (TSR) relative to peers, Growth of Tangible Book Value per share (combined with dividends), and Adjusted Return on Tangible Common Equity (Adjusted ROTCE). These metrics are assessed over a three-year performance period.