Capital One 2011 Annual Report Download - page 234

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED STATEMENTS—(Continued)
Stock option expense is based on the fair value per stock option, estimated at the grant date using implied
volatility with a Black-Scholes option-pricing model. The fair value of stock options granted during 2011, 2010
and 2009 was estimated using the weighted average assumptions summarized below:
Year Ended December 31,
Assumptions 2011 2010 2009
Dividend yield(1) ......................................................... 2.34% 1.49% 4.79%
Volatility factors of stock’s expected market price .............................. 36 38 43
Risk-free interest rate ..................................................... 2.04 2.49 1.79
Expected option lives (in years) ............................................. 5.0 5.0 5.0
(1) In 2011, 2010 and 2009, we paid dividends at the annual rate of $0.20, $0.20 and $0.53 per common share, respectively.
Restricted Stock Awards and Units
Generally, the value of restricted stock awards will equal the fair market value of our common stock on the date
of grant. For restricted stock granted before 2010, the vesting was primarily 25 percent on the first and second
anniversaries of the grant date and 50 percent on the third anniversary date. For restricted stock granted in 2010
and 2011, the vesting is primarily 33 1/3 percent per year beginning with the first anniversary of the grant date.
A summary of 2011 activity for restricted stock awards and units is presented below:
Shares
(in thousands)
Weighted-
Average
Grant Date
Fair Value
Unvested as of January 1, 2011 ........................................... 4,646 $29.20
Granted .............................................................. 1,686 47.36
Vested ............................................................... (1,928) 30.99
Forfeited and expired ................................................... (188) 31.50
Unvested as of December 31, 2011 ........................................ 4,216 $35.55
The weighted-average grant date fair value of restricted stock granted for 2011, 2010 and 2009 was $47.36,
$36.84 and $17.33, respectively. The total fair value of restricted stock vesting was $95 million, $62 million and
$41 million in 2011, 2010 and 2009, respectively. We expect to recognize the unrecognized compensation cost
for unvested restricted stock awards and units of $59 million as of December 31, 2011 over the next three years.
Performance Share Units
Generally, the value of performance share units will equal the fair market value of our common stock on the date
of grant. The performance share unit awards include an opportunity to receive from 0% to 200% of the target
number of common shares. The number of performance share units that will ultimately vest is contingent upon
meeting specific performance goals over a three year period. The awards generally vest at the end of the three
year period.
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