Capital One 2004 Annual Report Download - page 100

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The following table summarizes information about options outstanding as of December 31, 2004:
Options Outstanding Options Exercisable
Range Of
Exercise Prices
Number
Outstanding
(000s)
Weighted Average
Remaining
Contractual Life
(in years)
Weighted Average
Exercise Price
Number
Exercisable
(000s)
Weighted Average
Exercise Price
$6.42-$9.63 113 0.89 $ 7.92 113 $ 7.92
$9.64-$14.46 3,826 0.78 $ 9.85 3,826 $ 9.85
$14.47-$21.70 1,053 2.96 $16.19 1,053 $16.19
$21.71-$32.56 489 6.14 $31.69 388 $31.67
$32.57-$48.85 15,328 5.97 $43.25 13,709 $44.23
$48.86-$73.29 10,639 5.95 $55.07 4,977 $53.32
$73.30-$84.21 639 9.68 $81.96 13 $74.97
The Company recognized $126.1 million, $29.4 million and $22.0 million of tax benefits from the exercise of
stock options by its associates during 2004, 2003 and 2002, respectively.
During 2004, the Company changed its annual long term incentive grant date to associates from December to
March resulting in a significant reduction in stock-based compensation issued during 2004. The Company
granted 6.4 thousand and 3.1 million restricted stock awards with a weighted average grant date value of $67.68
and $56.07 per share for 2004 and 2003, respectively. Restrictions generally expire three years from the date of
grant or 25 percent of the grant vests on the first and second anniversary of the grant date and 50 percent of the
grant on the third anniversary date. The compensation cost recognized for the Company’s restricted stock awards
was $87.4 million, $40.7 million and $27.7 million in 2004, 2003 and 2002, respectively.
2005 CEO Grant
In December 2004, the Company’s Board of Directors approved a compensation package for the Company’s
Chief Executive Officer (CEO). This package included 566,000 stock options which were granted at the fair
market value at the date of grant. These options will vest upon the fifth anniversary of the date of grant, upon his
retirement or other departure from employment with Capital One. Compensation expense was recorded in
accordance with SFAS 123.
2004 CEO Grant
In December 2003, the Company’s Board of Directors approved a compensation package for the Company’s
CEO. This package was originally comprised of stock options and incentive stock. 360,000 options were granted
at the fair market value at the date of grant and will vest in one-third increments over three years. Based on the
original grant agreement, the CEO’s incentive stock was replaced with restricted stock units in May 2004 after
shareholders approved the 2004 Stock Incentive Plan. The target amount for the restricted stock is 236,940 units
but could vary from a minimum amount of zero to the maximum amount of 355,410 units. The amount of
restricted stock units issued will be based on the Company’s three year cumulative earnings per share growth
ending in December 2006 compared to the earnings per share growth of a peer group that includes thirty-three
companies. The restricted stock units will vest and be paid in Capital One common stock upon his retirement or
other departure from employment with Capital One. Compensation expense was recorded for the options and
restricted stock units in accordance with SFAS 123.
Accelerated Vesting Option Grants
EntrepreneurGrant V
In October 2001, the Company’s Board of Directors approved a stock option 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
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