Capital One 2010 Annual Report Download - page 171

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED STATEMENTS
151
In 2011, our Board of Directors also approved a grant of 134,632 restricted stock units as a portion of to the 2010 compensation
package for our CEO. The award will vest in full in three years and settle in cash based on our average stock price over the twenty
trading days preceding the vesting date. The compensation expense of $7 million related to this award will be recognized in 2011.
2009 CEO Grant
In January 2009, our Board of Directors approved a compensation package for our CEO. This package included an opportunity to
receive from 0% to 200% of the target number of 95,239 shares of our common stock based on our performance over the three-year
period beginning on January 1, 2009. The package also included a grant of 970,403 nonstatutory stock options at an exercise price of
$18.28 per share. The options will become fully exercisable on January 29, 2012. Both awards are subject to restrictions regarding sale
or transfer of the shares received until the earlier of the date on which the U.S. Treasury no longer holds any shares of the preferred
stock that we issued under the U.S. Treasury’s Troubled Asset Relief Program Capital Purchase Program (“CPP”) or one year after
retirement from our Company. We redeemed this preferred stock in June 2009 and therefore these restrictions have lapsed.
Compensation expense of $6 million related to these awards was recognized in 2009.
In 2010, our Board of Directors also approved a grant of 136,799 restricted stock units as a portion of the 2009 compensation package
for our CEO. The award will vest in full in three years and settle in cash based on our average stock price over the twenty trading days
preceding the vesting date. Compensation expense of $5 million related to this award was recognized in 2010.
Accelerated Vesting Option Grants
Associate Stock Purchase Plan
We maintain an Associate Stock Purchase Plan (the “Purchase Plan”) which is a compensatory plan under the accounting guidance for
stock-based compensation. We recognized $4 million in compensation expense for each of the years ended December 31, 2010, 2009
and 2008 under the Purchase Plan.
Under the Purchase Plan, our associates are eligible to purchase common stock through monthly salary deductions of a maximum of
15% and a minimum of 1% of monthly base pay. To date, the amounts deducted are applied to the purchase of our unissued common
or treasury stock at 85% of the current market price. Shares may also be acquired on the market. An aggregate of 8.0 million shares of
common stock have been authorized for issuance under the 2002 Associate Stock Purchase Plan, of which 2.6 million and 3.4 million
shares were available for issuance as of December 31, 2010 and 2009, respectively.
Dividend Reinvestment and Stock Purchase Plan
In 2002, we implemented our Dividend Reinvestment and Stock Purchase Plan (“2002 DRP”), which allows participating
stockholders to purchase additional shares of our common stock through automatic reinvestment of dividends or optional cash
investments. We had 7.4 million shares available for issuance under the 2002 DRP at both December 31, 2010 and 2009.
NOTE 17—EMPLOYEE BENEFIT PLANS
Retirement Plans
Defined Contribution Plan
We sponsor a contributory Associate Savings Plan (the “Plan”) in which substantially all full-time and certain part-time associates are
eligible to participate. We make contributions to each eligible associate’s account, match a portion of associate contributions and make
discretionary contributions based upon our meeting a certain earnings per share target or other performance metrics. In June 2010, we
announced that we were implementing a new company contribution structure and several administrative enhancements to the Plan that
were effective July 1, 2010. The new contribution structure provides a company contribution through a combination of basic and
matching company contributions. We transitioned to the new contribution structure on July 1, 2010, as such, any of our discretionary
contribution payout for 2010 was prorated for the period January 1, 2010 to June 30, 2010. Our contributions to this plan amounted to
$118 million, $79 million and $110 million for the years ended December 31, 2010, 2009 and 2008, respectively.
Effective December 31, 2009, the Hibernia Corporation Employee Stock Ownership Plan (“Hibernia ESOP”) was merged into the
Plan, and the Hibernia ESOP net assets of $34 million as of December 31, 2009 were transferred into the Plan. As a result, we had no
contributions of cash or shares of our common stock to this plan in 2010 or 2009. We recognized compensation expense of $4 million
in 2008 related to the ESOP.