Capital One 2001 Annual Report Download - page 56

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 Company'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. These options vested
in September 2000 when the market price of the Company's stock
remained at or above $58.33 for at least ten trading days in a 30
consecutive calendar day period.
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 30 consecutive calendar day period. The grant also included
671,700 options that vested in full on December 18, 2000.
In April 1999 and 1998, the Company granted 1,045,362 and 1,335,252
options, respectively, to all associates not granted options in
EntrepreneurGrant II or EntrepreneurGrant 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.
The Company maintains two non-associate directors stock incentive
plans: the 1995 Non-Employee Directors Stock Incentive Plan and the
1999 Non-Employee Directors Stock Incentive Plan. The 1995 plan
originally authorized 1,500,000 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. However, in
April 1999, the Company terminated the ability to make grants from
the 1995 plan. Options granted prior to termination vest after one year
and their maximum term is ten years. The exercise price of each option
equals the market price of the Company's stock on the date of grant.
As of December 31, 2001, there was no outstanding restricted stock
under this plan.
In April 1999, the Company established the 1999 Non-Employee
Directors Stock Incentive Plan. The plan authorizes a maximum of
825,000 shares of the Company's common stock for the grant of
nonstatutory stock options to eligible members of the Company's
Board of Directors. In April 1999, all non-employee directors of the
Company were given the option to receive performance-based options
under this plan in lieu of their annual cash retainer and their time-
vesting options for each of 1999, 2000 and 2001. As a result, 497,490
performance-based options were granted to certain non-employee
directors of the Company. The options vest in full if, on or before June
15, 2002, the market value of the Company's stock equals or exceeds
$100 per share for ten trading days in a 30 consecutive calendar day
period. All options vest immediately upon a change of control of the
Company on or before June 15, 2002. As of December 31, 2001 and
2000, 22,510 and 27,510 shares, respectively, were available for grant
under this plan. All options under this plan have a maximum term of
ten years. The exercise price of each option equals or exceeds the
market price of the Company's stock on the date of grant.
In October 2001, the Company granted 305,000 options to the non-
executive members of the Board of Directors for director
compensation for the years 2002, 2003 and 2004. These options were
granted at the fair market value on the date of grant and vest on
October 18, 2010. Vesting will be accelerated if the stock’s fair market
value is at or above $83.87 per share, $100.64 per share, $120.77 per
share, $144.92 per share, $173.91 per share, $208.70 per share or
$250.43 per share for at least five days during the performance period
on or before October 18, 2004, 2005, 2006, 2007, 2008, 2009 or 2010,
respectively. In addition, the options under this grant will vest upon
the achievement of at least $5.03 cumulative diluted earnings per share
for any four consecutive quarters ending in the fourth quarter 2004, or
upon a change in control of the Company.
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