Capital One 2015 Annual Report Download - page 89

70 Capital One Financial Corporation (COF)
Dividend Policy and Stock Purchases
On February 3, 2016, our Board of Directors declared a quarterly common stock dividend of $0.40 per share, payable on February
26, 2016 to stockholders of record at the close of the business on February 16, 2016. Our Board of Directors also approved quarterly
dividends on our 6.00% fixed-rate non-cumulative perpetual preferred stock, Series B (the “Series B Preferred Stock”), our 6.25%
fixed-rate non-cumulative perpetual preferred stock, Series C (the “Series C Preferred Stock”), our 6.70% fixed-rate non-cumulative
perpetual preferred stock, Series D (the “Series D Preferred Stock”) and our Series F Preferred Stock, payable on March 1, 2016
to stockholders of record at the close of business on February 16, 2016. Based on these declarations, we will pay approximately
$211 million in common equity dividends and approximately $37 million in total preferred dividends in the first quarter of 2016.
Under the terms of our outstanding preferred stock, our ability to pay dividends on, make distributions with respect to, or to
repurchase, redeem or acquire its common stock or any preferred stock ranking on parity with or junior to the preferred stock, is
subject to restrictions in the event that we do not declare and either pay or set aside a sum sufficient for payment of dividends on
the preferred stock for the immediately preceding dividend period.
We paid common stock dividends of $0.30 per share in the first quarter and $0.40 per share in each subsequent quarter of 2015.
We paid preferred stock dividends of $15.00 per share on the outstanding shares of our Series B Preferred Stock and $15.625 per
share on the outstanding shares of our Series C Preferred Stock in each quarter of 2015. We paid preferred stock dividends of
$22.5194 per share on the outstanding shares of our Series D Preferred Stock in the first quarter and $16.75 per share in each
subsequent quarter of 2015. We also paid preferred stock dividends of $30.370833 per share on the outstanding shares of our Series
E Preferred Stock and $16.705556 per share on the outstanding shares of our Series F Preferred Stock during the fourth quarter
of 2015.
The declaration and payment of dividends to our stockholders, as well as the amount thereof, are subject to the discretion of our
Board of Directors and depend upon our results of operations, financial condition, capital levels, cash requirements, future prospects
and other factors deemed relevant by the Board of Directors. As a BHC, our ability to pay dividends is largely dependent upon
the receipt of dividends or other payments from our subsidiaries. Regulatory restrictions exist that limit the ability of the Banks
to transfer funds to our BHC. As of December 31, 2015, funds available for dividend payments from COBNA and CONA were
$2.9 billion and $359 million, respectively. There can be no assurance that we will declare and pay any dividends to stockholders.
In addition, consistent with our 2015 capital plan, our Board of Directors has authorized the repurchase of up to $3.125 billion of
shares of common stock beginning in the second quarter of 2015 through the end of the second quarter of 2016. On February 17,
2016, we announced that our Board of Directors had authorized the repurchase of up to an additional $300 million of shares of
common stock through the end of the second quarter of 2016 under the 2015 Stock Repurchase Program. We notified the Federal
Reserve of our intention to engage in additional share repurchases and the Federal Reserve did not object. Through the end of
2015, we repurchased approximately $1.875 billion of common stock as part of the 2015 Stock Repurchase Program.
The timing and exact amount of any future common stock repurchases will depend on various factors, including market conditions,
opportunities for growth, our capital position and amount of retained earnings. Our stock repurchase program does not include
specific price targets, may be executed through open market purchases or privately negotiated transactions, including utilizing
Rule 10b5-1 programs, and may be suspended at any time. For additional information on dividends and stock repurchases, see
“Part I—Item 1. Business—Supervision and Regulation—Dividends, Stock Repurchases and Transfer of Funds.”
RISK MANAGEMENT
Risk Framework
We use a risk framework to provide an overall enterprise-wide approach for effectively managing risk. We execute against our
risk framework with the “Three Lines of Defense” risk management model to demonstrate and structure the roles, responsibilities
and accountabilities in the organization for taking and managing risk.
The “First Line of Defense” is comprised of the business areas that through their day-to-day business activities take risk on our
behalf. As the business owner, the first line is responsible for identifying, assessing, managing and controlling that risk, and for
mitigating our overall risk exposure. The first line formulates strategy and operates within the risk appetite and framework. The
“Second Line of Defense,” which includes the risk management organization, provides oversight of first line risk taking and
management. The second line assists in determining risk capacity, risk appetite, and the strategies, policies and structure for
managing risks. The second line owns the risk framework. The second line is both an ‘expert advisor’ to the first line and an
‘effective challenger’ of first line risk activities. The “Third Line of Defense” is comprised of our Internal Audit and Credit Review