Capital One 1997 Annual Report Download - page 52

Notes to Consolidated Financial Statements (continued)
(Currencies in Thousands, Except Per Share Data)
Under the Company’s Purchase Plan, associates of the Company
are eligible to purchase common stock through monthly salary
deductions of a maximum of 15% and a minimum of 1% of
monthly base pay.The amounts deducted are applied to the pur-
chase of unissued common or treasury stock of the Company at
85% of the current market price. An aggregate of 1,000,000 com-
mon shares have been authorized for issuance under the Purchase
Plan, of which 682,427; 822,001 and 934,355 shares were avail-
able for issuance as of December 31, 1997, 1996 and 1995, respec-
tively.
Pursuant to a Marketing and Management Services Agreement
between Signet Bank (which has since been acquired by First Union
Bank on November 30, 1997) and Fairbank Morris, Inc. (“FMI”),
a corporation controlled by members of the Company’s executive
management, 464,400 shares of restricted stock, at the then fair
value of $16.00 per share, were awarded to FMI for services ren-
dered for the period from January 1, 1994 to December 31, 1995. In
connection with this award, $3,715 in compensation cost was recog-
nized in 1995.The restrictions on this stock expired on November
15, 1995, one year after the grant date.
On November 16, 1995, the Board of Directors of the Company
declared a dividend distribution of one Right for each outstanding
share of common stock. Each Right entitles a registered holder to
purchase from the Company one one-hundredth of a share of the
Company’s authorized Cumulative Participating Junior Preferred
Stock (the “Junior Preferred Shares”) at a price of $150, subject
to adjustment.The Company has reserved 1,000,000 shares of its
authorized preferred stock for the Junior Preferred Shares.
Because of the nature of the Junior Preferred Shares’ dividend and
liquidation rights, the value of the one one-hundredth interest in a
Junior Preferred Share purchasable upon exercise of each Right
should approximate the value of one share of common stock. Ini-
tially, the Rights are not exercisable and trade automatically with
the common stock. However, the Rights generally become exercis-
able and separate certificates representing the Rights will be dis-
tributed, if any person or group acquires 15% or more of the
Company’s outstanding common stock or a tender offer or
exchange offer is announced for the Company’s common stock.The
Rights expire on November 29, 2005, unless earlier redeemed by
the Company at $0.01 per Right prior to the time any person or
group acquires 15% of the outstanding common stock. Until the
Rights become exercisable, the Rights have no dilutive effect on
earnings per share.
In July 1997, the Company’s Board of Directors voted to repur-
chase up to two million shares of the Company’s common stock
over the next two years in order to mitigate the dilutive impact of
shares issuable under its benefit plans, including its Purchase Plan,
dividend reinvestment and stock purchase plans and other incentive
plans. During 1997, the Company repurchased 1,318,641 shares
under this program. Certain treasury shares were reissued in con-
nection with the Company’s benefit plans.
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A summary of the status of the Company’s options as of December 31, 1997, 1996 and 1995, and changes for the years then ended is
presented below (excluding the December 1997 grants subject to stockholder approval):
1997 1996 1995
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 at beginning of year 5,894 $23.92 3,315 $19.67 2,036 $16.00
Granted 1,590 40.88 2,694 29.04 1,361 25.08
Exercised (215) 20.76 (12) 16.40 (6) 16.00
Canceled (144) 30.16 (103) 21.82 (76) 18.25
Outstanding at end of year 7,125 $27.67 5,894 $23.92 3,315 $19.67
Exercisable at end of year 3,815 $24.43 1,196 $18.98 454 $16.00
Weighted-average fair value of options
granted during the year $16.03 $11.22 $ 8.19
The following table summarizes information about options outstanding as of December 31, 1997:
Options Outstanding Options Exercisable
Number Weighted-Average Weighted-Average Number Weighted-Average
Range of Outstanding Remaining Exercise Price Exercisable Exercise Price
Exercise Prices (000s) Contractual Life Per Share (000s) Per Share
$16.00–$24.99 2,240 6.93 years $16.52 1,406 $16.38
$25.00–$33.99 3,352 7.73 29.08 2,409 29.13
$34.00–$47.99 1,533 9.52 40.90