Capital One 2007 Annual Report Download - page 108

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86
A summary of 2007 activity for restricted stock awards and units is presented below:
Shares
(000)
Weighted-
Average
Grant
Date
Fair
Value
Unvested at January 1, 2007 2,346 $ 77.48
Granted 2,030 $ 64.63
Vested (1,141) $ 79.40
Cancelled (289) $ 79.74
Unvested December 31, 2007 2,946 $ 68.44
The weighted-average grant date fair value of restricted stock granted for the years 2007, 2006 and 2005 was $64.63, $82.54 and
$78.68, respectively. The total fair value of restricted stock vesting during the years 2007, 2006 and 2005 was $79.6 million, $100.9
million and $205.4 million, respectively. At December 31, 2007 there was unrecognized compensation cost for unvested restricted
awards of $125.0 million. That cost is expected to be recognized over the next 3 years.
Cash equity units vesting during the years end ended December 31, 2007 and 2006 resulted in cash payments to associates of $30.1
million and $18.7 million, respectively. These cash payments reflect the number of units vesting priced at the Companys stock price
as of the vest date. At December 31, 2007 there was unrecognized compensation cost for unvested cash equity units of $39.2 million,
based on the average quarterly stock price. That cost is expected to be recognized over the next 3 years.
2008 CEO Grant
In December 2007, the Companys Board of Directors approved a compensation package for the Companys CEO. This package
included 1,661,780 stock options which will vest upon the third 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 schedule. Compensation expense of $17.0 million for these options was recorded in 2007 in accordance with the retirement
eligibility provisions of SFAS 123R.
2007 CEO Grant
In December 2006, the Companys Board of Directors approved a compensation package for the Companys Chief Executive Officer
(CEO). This package included 595,000 stock options which 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 schedule. Compensation expense of $18.0 million for these options was recorded in 2006 in
accordance with the retirement eligibility provisions of SFAS 123R.
2006 CEO Grant
In December 2005, the Companys Board of Directors approved a compensation package for the Companys CEO. This package
included 573,000 stock options which 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 schedule. Compensation expense was recorded in accordance with SFAS 123.
Accelerated Vesting Option Grants
Entrepreneur Grant 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. 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
performance-based option accelerated vesting provisions lapsed during 2004; as such the options will now vest in accordance with the
ultimate vesting provisions. 50% of the stock options held by middle management vested on April 29, 2005, and the remainder will
vest on April 29, 2008, or upon a change in control of the Company. In 2003, the former COOs options associated with Entrepreneur
Grant IV were forfeited in accordance with the terms of the employment agreement between the former COO and the Corporation.
Options under this grant qualify as fixed as defined by APB 25, accordingly no compensation expense was recognized.