Capital One 2005 Annual Report Download - page 93

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The following table summarizes information about options outstanding as of December 31, 2005:
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
$ 7.50-$ 9.63 23 0.35 $ 8.81 23 $ 8.81
$ 9.64-$14.46 94 1.35 $12.08 94 $12.08
$14.47-$21.70 984 1.96 $16.22 984 $16.22
$21.71-$32.56 512 5.27 $30.71 512 $30.71
$32.57-$48.85 12,128 5.12 $44.02 12,081 $44.02
$48.86-$73.29 10,240 5.84 $56.76 6,944 $56.90
$73.30-$88.09 2,804 8.91 $81.43 132 $79.06
The Company recognized $157.2 million, $126.1 million and $29.4 million of tax benefits from the exercise of stock options
by its associates during 2005, 2004 and 2003, respectively.
The Company granted 0.8 million, 6.4 thousand and 3.1 million restricted stock awards with a weighted average grant date
value of $78.68, $67.68 and $56.07 per share for 2005, 2004 and 2003, respectively. Restrictions generally expire in 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 that has been recognized for the Company’ s
restricted stock awards was $89.8 million, $87.4 million and $40.7 million for 2005, 2004 and 2003, respectively.
2
006 CEO Grant
In December 2005, the Company’ s Board of Directors approved a compensation package for the Company’ s Chief Executive
Officer (CEO). This package included 573,000 stock options which were granted at the fair market value at the grant date.
These options will vest upon the fifth anniversary date of the grant or upon departure from employment with Capital One for
reasons other than retirement. Upon retirement, these options will continue to vest in accordance with the original vesting
hedule. Compensation expense was recorded in accordance with SFAS 123. sc
2
005 CEO Grant
In December 2004, the Company’ s Board of Directors approved a compensation package for the Company’ s 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 date of the grant or upon his retirement or other departure from employment with Capital One.
Compensation expense was recorded in accordance with SFAS 123.
2
004 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 shareholder’ s 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 IV
In April 1999, the Company’ s Board of Directors approved a stock option grant to senior management (“Entrepreneur Grant
IV”). This grant was originally composed of 7,636,107 options to certain key managers (including 1,884,435 options to the
Company’ s CEO and former COO) with an exercise price equal to the fair market value on the date of grant. The CEO and
former 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.
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