Capital One 2001 Annual Report Download - page 55

In January 2002, the Company established the 2002 Non-Executive
Officer Stock Incentive Plan. Under the plan, the Company has
reserved 8,500,000 common shares for issuance in the form of
nonstatutory stock options, stock appreciation rights, restricted stock
awards, and incentive stock awards. The exercise price of each stock
option will equal or exceed the market price of the Company’s stock
on the date of grant, the maximum term will be ten years, and vesting
will be determined at the time of grant. All of the shares remain
available for future grants and all employees are eligible for awards
except for executive officers.
Under the 1994 Stock Incentive Plan, the Company has reserved
67,112,640 common shares as of December 31, 2001, 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 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 2,770,459, 1,221,281, and 2,191,884 as of December 31,
2001, 2000 and 1999, respectively. Other than the performance-based
options discussed below, options generally vest annually or on a fixed
date over three years and expire beginning November 2004. During
2001, 934,102 shares of restricted stock were issued under the plan.
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 nonstatutory 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. As of December 31, 2001, 2000 and 1999 the
number of shares available for future grant was 305,350, 294,800 and
283,800, respectively. 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 agreement with the Company.
In October 2001, the Company’s Board of Directors approved a stock
options grant to senior management (EntrepreneurGrant V). This
grant was composed of 6,502,318 options to certain key managers
(including 3,535,000 performance-based options to the Company’s
Chief Executive Officer (“CEO”) and Chief Operating Officer
(“COO”)) at the fair market value on the date of grant. The CEO and
COO gave up their salaries, annual cash incentives, annual option
grants and Senior Executive Retirement Plan contributions for the
years 2002 and 2003 in exchange for their EntrepreneurGrant V
options. Other members of senior management had the opportunity
to forego up to 50 percent of their expected annual cash incentives for
2002 through 2004 in exchange for performance-based options. All
performance-based options under this grant will vest on October 18,
2007. Vesting will be accelerated if the Company’s common stock’s fair
market value is at or above $83.87 per share, $100.64 per share, $120.77
per share or $144.92 per share in any five trading days during the
performance period on or before October 18, 2004, 2005, 2006 or
2007, respectively. In addition, the performance-based options under
this grant will also vest upon the achievement of at least $5.03
cumulative diluted earnings per share in any four consecutive quarters
ending in the fourth quarter of 2004, or upon a change of control of
the Company. In addition, all executives were granted standard options
under a retention grant (including 2,225,000 to the Company’s CEO
and COO) that will vest annually in equal installments over the next
three years.
In May 2000, the Company’s Board of Directors approved a stock
option grant of 1,690,380 options to all managers, excluding the
Company’s CEO and COO, at the fair market value on the date of
grant. All options under this grant will vest ratably over three years.
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 CEO and 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 EntrepreneurGrant IV options. Other members of senior
management had the opportunity to give 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 30 consecutive calendar day period on or
before June 15, 2002, or upon a change of control of the Company.
These options will expire on April 29, 2009.
In May 2001, the Company’s Board of Directors approved an
amendment to EntrepreneurGrant IV that provides additional vesting
criteria. As amended, EntrepreneurGrant IV will continue to vest
under its original terms, and will also vest if the Company's common
stock price reaches a fair market value of at least $120 per share or
$144 per share for ten trading days within 30 calendar days prior to
June 15, 2003 or June 15, 2004, respectively. In addition, 50% of the
EntrepreneurGrant IV stock options held by middle management as of
the grant date will vest on April 29, 2005, regardless of stock
performance.
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