Capital One 1999 Annual Report Download - page 57

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date equals or exceeds the market price of the Company’s stock
on the date of grant. Each option’s maximum term is ten years.
The number of shares available for future grants was 2,191,884,
2,178,669 and 293,442 as of December 31, 1999, 1998 and
1997, respectively. Other than the performance-based options
discussed below, options generally vest annually over three to
five years and expire beginning November 2004.
In April 1999, the Company established the 1999 Stock
Incentive Plan. Under the plan, the Company has reserved
600,000 common shares for issuance in the form of nonstatu-
tory stock options. The exercise price of each stock option
equals or exceeds the market price of the Company’s stock on
the date of grant. The maximum term of each option is ten
years. The number of shares available for future grant was
283,800 as of December 31, 1999. All options granted under
the plan to date were granted on April 29, 1999 and expire on
April 29, 2009. These options vested immediately upon the
optionee’s execution of an intellectual property protection agree-
ment with the Company.
In April 1999, the Company’s Board of Directors approved
a stock option grant to senior management (“EntrepreneurGrant
IV”). This grant was composed of 7,636,107 options to certain
key managers (including 1,884,435 options to the Company’s
Chief Executive Officer [“CEO”] and Chief Operating Officer
[“COO”]) with an exercise price equal to the fair market value
on the date of grant. The CEO and COO gave up their salaries for
the year 2001 and their annual cash incentives, annual option
grants and Senior Executive Retirement Plan contributions for
the years 2000 and 2001 in exchange for their Entrepreneur-
Grant IV options. Other members of senior management gave
up all potential annual stock option grants for 1999 and 2000
in exchange for this one-time grant. All options under this grant
will vest on April 29, 2008, or earlier if the common stock’s fair
market value is at or above $100 per share for at least ten
trading days in any thirty consecutive calendar day period on or
before June 15, 2002, or upon a change of control of the Com-
pany. These options will expire on April 29, 2009.
In April 1998, upon stockholder approval, a 1997 stock
option grant to senior management (“EntrepreneurGrant II”)
became effective at the December 18, 1997 market price of
$16.25 per share. This grant included 3,429,663 performance-
based options granted to certain key managers (including
2,057,265 options to the Company’s CEO and COO), which
vested in April 1998 when the market price of the Company’s
stock remained at or above $28.00 for at least ten trading days
in a thirty consecutive calendar day period. The grant also
included 671,700 options which vest in full, regardless of the
stock price, on December 18, 2000, or immediately upon a
change in control of the Company.
In April 1999 and 1998, the Company granted 1,045,362
and 1,335,252 options, respectively, to all associates not
granted options in the EntrepreneurGrant II or Entrepreneur-
Grant IV. Certain associates were granted options in exchange
for giving up future compensation. Other associates were
granted a set number of options. These options were granted
at the then market price of $56.46 and $31.71 per share,
respectively, and vest, in full, on April 29, 2002 and April 30,
2001, respectively, or immediately upon a change in control of
the Company.
In June 1998, the Company’s Board of Directors approved
a grant to executive officers (“EntrepreneurGrant III”). This grant
consisted of 2,611,896 performance-based options granted to
certain key managers (including 2,000,040 options to the Com-
pany’s CEO and COO), which were approved by the stockholders
in April 1999, at the then market price of $33.77 per share. The
Company’s CEO and COO gave up 300,000 and 200,010 vested
options (valued at $8,760 in total), respectively, in exchange for
their EntrepreneurGrant III options. Other executive officers gave
up future cash compensation for each of the next three years in
exchange for the options. All options made under this grant will
vest if the Company’s stock reaches $58.33 per share for at
least ten trading days in a thirty consecutive calendar day period
by June 11, 2001, or immediately upon a change in control of
the Company.
In April 1996, upon stockholder approval, a 1995 stock
option grant to the Company’s CEO and COO became effective.
This grant was for performance-based options to purchase
7,500,000 common shares at the September 15, 1995, mar-
ket price of $9.73 per share. Vesting of the options was depend-
ent on the fair market value of the common stock remaining at
or above specified levels for at least ten trading days in any
thirty consecutive calendar day period. Fifty percent of the
options vested in January 1997 when the Company’s stock
reached $12.50 per share; 25% vested in October 1997 when
the stock reached $14.58 per share; and the remaining 25%
vested in January 1998 when the stock reached $16.67
per share.