Capital One 1996 Annual Report Download - page 51

A summary of the status of the Company’s options as of December 31, 1996, 1995 and 1994, and changes for the years
then ended is presented below:
1996 1995 1994
Weighted- Weighted- Weighted-
Average Average Average
Options Exercise Price Options Exercise Price Options Exercise Price
(000s) Per Share (000s) Per Share (000s) Per Share
Outstanding - beginning of year 3,315 $19.67 2,036 $16.00
Granted 2,694 29.04 1,361 25.08 2,036 $16.00
Exercised (12) 16.40 (6) 16.00
Canceled (103) 21.82 (76) 18.25
Outstanding - end of year 5,894 $23.92 3,315 $19.67 2,036 $16.00
Exercisable - end of year 1,196 $18.98 454 $16.00
Weighted-average fair value of
options granted during the year $11.22 $ 8.19
The following table summarizes information about options outstanding as of December 31, 1996:
Options Outstanding Options Exercisable
Number Weighted-Average Number
Outstanding Remaining Weighted-Average Exercisable Weighted-Average
Range of Exercise Prices (000s) Contractual Life Exercise Price (000s) Exercise Price
$16.00 - $24.99 2,463 8.0 years $16.75 950 $16.33
$25.00 - $33.99 3,431 8.7 29.07 246 29.18
Capital One 49
its President and Chief Operating Officer became effective.
This grant was for performance-based options to purchase
2,500,000 common shares at the September 15, 1995
market price of $29.19 per share. Options vest if the fair
market value of the common stock remains at or above the
following specified levels for at least ten trading days in
any 30 consecutive calendar day period: Fifty percent of the
options vest if the Company’s stock reaches $37.50 per
share, 25% vest if the stock reaches $43.75 per share and
the remaining 25% vest if the stock reaches $50.00 per
share. If these price levels are not achieved within five
years from the date of grant, the portion of the options not
previously vested will expire. The Company recognized
$7,728 of compensation cost for the year ended
December 31, 1996.
On April 26, 1995, the Company adopted the 1995 Non-
Associate Directors Stock Incentive Plan. This plan
authorizes a maximum of 500,000 shares of the Company’s
common stock for the automatic grant of restricted stock
and stock options to eligible members of the Company’s
Board of Directors. As of December 31, 1996 and 1995,
respectively, 417,500 and 452,500 shares were available for
grant under this plan. The options vest after one year and
their maximum term is 10 years. Restrictions on the
restricted stock (of which 12,500 shares were issued in
1995 at the then fair value of $19.88 per share) expire after
one year. The exercise price of each option equals the
market price of the Company’s stock on the date of grant.
For the purpose of pro forma disclosures above, the fair
value of the options was estimated at the date of grant
using a Black-Scholes option-pricing model with the follow-
ing weighted-average assumptions for 1996 and 1995,
respectively: dividend yield of 0.90%, volatility factors of
the expected market price of the Company’s common stock
of 32% and 33%, risk-free interest rates of 5.90% and 6.30%
and expected option lives of six and four years.
Under the 1994 Stock Incentive Plan, the Company has
reserved 7,370,880 common shares as of December 31, 1996
(5,370,880 as of December 31, 1995 and 1994) for issuance
in the form of incentive stock options, nonstatutory stock
options, stock appreciation rights, restricted stock and
incentive stock. The exercise price of each stock option
issued to date equals the market price of the Company’s
stock on the date of grant, and an option’s maximum term
is 10 years. The number of shares available for future
grants were 1,508,352, 2,061,640 and 3,334,473 as of
December 31, 1996, 1995 and 1994, respectively. Other
than the performance-based options discussed below,
options generally vest annually over three to five years and
expire beginning November 2004. The restrictions on
restricted stock (of which 23,215 shares were issued in
1995 at the then fair value of $16.75 per share) expire
annually over three years.
On April 18, 1996, stockholders approved an increase of
2,000,000 in shares available for issuance under the 1994
Stock Incentive Plan. With this approval, a September 15,
1995 grant to the Company’s Chief Executive Officer and