<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CAPITAL ONE FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF CAPITAL ONE]
Capital One Financial Corporation
2980 Fairview Park Drive, Suite 1300
Falls Church, Virginia 22042-4500
NOTICE OF ANNUAL STOCKHOLDER MEETING
To be held April 27, 2000
Dear Stockholder:
It is our pleasure to invite you to the annual stockholder meeting of
Capital One Financial Corporation ("Capital One"). The meeting will be held at
10:00 a.m. on Thursday, April 27, 2000 at the Fairview Park Marriott Hotel,
3111 Fairview Park Drive, Falls Church, Virginia 22042-4525.
At our annual meeting you will be asked to:
. Elect two directors;
. Approve an amendment to Capital One's Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock from 300 million to one billion;
. Approve the appointment of Ernst & Young LLP as independent auditors for
2000; and
. Conduct any other business properly brought before the meeting.
We will discuss Capital One's business and financial results of 1999 and
answer any questions you may have. We have also enclosed the 1999 Annual
Report, including our financial statements, with this Notice and Proxy
Statement. You may also access the 1999 Annual Report and the Proxy Statement
at Capital One's website at www.capitalone.com.
If you were a stockholder of record at the close of business on March 1,
2000, you are entitled to vote at our annual meeting.
Your vote is important. Record holders of Capital One common stock can vote
their shares by sending in a signed and dated proxy card by mail, by using a
toll-free telephone number or via the Internet. Instructions for using these
services can be found on the enclosed proxy card. By following the
instructions on the proxy card, your shares will be voted even if you are
unable to attend the meeting. If you attend the meeting and prefer to vote in
person or change your proxy vote, you may of course do so.
We look forward to seeing you at the meeting.
By Order of the Board of Directors,
/s/ John G. Finneran, Jr.
John G. Finneran, Jr.
Corporate Secretary
March 21, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
VOTING MATTERS AND PROCEDURES............................................. 1
What is the purpose of the annual meeting?.............................. 1
Who can attend the annual meeting?...................................... 1
Who is requesting your vote?............................................ 1
Who is entitled to vote?................................................ 1
What is the impact of Capital One's June 1, 1999 stock split?........... 1
Will a list of stockholders be made available?.......................... 1
What constitutes a quorum?.............................................. 1
How can you vote?....................................................... 2
How can you vote by telephone or via the Internet?...................... 2
Can you get Capital One's annual meeting materials delivered to you
electronically next year?.............................................. 2
What vote is necessary to approve each item?............................ 2
What are the Board's recommendations?................................... 3
INFORMATION ABOUT CAPITAL ONE'S COMMON STOCK OWNERSHIP.................... 4
Certain Beneficial Owners............................................... 4
Directors and Named Executive Officers.................................. 4
Section 16(a) Beneficial Ownership Reporting Compliance................. 5
INFORMATION ABOUT OUR DIRECTORS AND EXECUTIVE OFFICERS.................... 6
Introductions........................................................... 6
Board Meetings.......................................................... 8
Committee Meetings...................................................... 8
Compensation of the Board............................................... 9
Related Party Transactions with Directors............................... 10
COMPENSATION OF EXECUTIVE OFFICERS........................................ 11
Summary Compensation Table.............................................. 11
Option Grant Table...................................................... 13
Option Exercise and Option Value Table.................................. 14
Company Arrangements with Executive Officers............................ 15
Pension Plans........................................................... 16
Performance Graph....................................................... 17
REPORT ON EXECUTIVE COMPENSATION OF THE COMPENSATION COMMITTEE............ 18
Compensation Philosophy................................................. 18
Methodology for Determining Compensation................................ 18
Components of the Executive Compensation Program........................ 19
Deductibility of Compensation Expenses.................................. 22
ELECTION OF DIRECTORS..................................................... 23
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION........................ 24
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS......................... 25
OTHER BUSINESS............................................................ 26
ANNUAL REPORT TO STOCKHOLDERS............................................. 26
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING............................. 26
INTERNET AND TELEPHONE VOTING............................................. 26
ELECTRONIC DELIVERY OF FUTURE ANNUAL MEETING MATERIALS.................... 27
</TABLE>
<PAGE>
[LOGO OF CAPITAL ONE]
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PROXY STATEMENT
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VOTING MATTERS AND PROCEDURES
What is the purpose of the annual meeting?
At Capital One's annual meeting, stockholders will act upon the matters
outlined in the accompanying notice of meeting. In addition, Capital One's
management will report on its performance during 1999 and respond to questions
from stockholders.
Who can attend the annual meeting?
There are no restrictions on who may attend the meeting or any formal
requirements to attend the meeting. The members of the Board of Directors and
senior management of Capital One, as well as representatives of Ernst & Young
LLP, Capital One's independent auditors during 1999, will attend the meeting.
Who is requesting your vote?
This proxy statement and the proxy card are being mailed and made available
on the Internet at Capital One's website (www.capitalone.com) on or about
March 20, 2000. The Board of Directors of Capital One is requesting your vote
on the matters presented in this proxy. The cost of preparing, assembling and
mailing the proxy card, this proxy statement, and other enclosed materials,
and all clerical and other expenses of solicitations will be at the expense of
Capital One. We have retained Georgeson Shareholder Communications, Inc. to
assist us in the solicitation of proxies for an aggregate fee of $10,000, plus
reasonable out-of-pocket expenses.
Who is entitled to vote?
All holders of record of Capital One's common stock at the close of business
on March 1, 2000 are entitled to vote. All stockholders are entitled to one
vote for each share held by them for all matters submitted for a vote at the
meeting. Cumulative voting for the election of directors is not permitted. On
March 1, 2000, there were 196,722,253 shares of Capital One's common stock
issued and outstanding.
What is the impact of Capital One's June 1, 1999 stock split?
Capital One's three-for-one stock split, effected on June 1, 1999, does not
affect your right to vote all shares you held as of the record date, March 1,
2000. All information presented in this proxy statement is on a post-split
basis unless otherwise specified.
Will a list of stockholders be made available?
We will make a list of stockholders available at the annual meeting and, for
ten days prior to the meeting, at our Northern Virginia offices located at
2980 Fairview Park Drive, Suite 1300, Falls Church, Virginia 22042-4525.
Please contact Capital One's Corporate Secretary at (703) 205-1000 if you wish
to inspect the stockholders list prior to the annual meeting.
What constitutes a quorum?
A quorum of stockholders is necessary to transact business at the annual
meeting. A quorum exists if the holders of a majority of the shares entitled
to vote are present in person or represented by proxy, including proxies on
which abstentions (withholding authority to vote) are indicated.
<PAGE>
How can you vote?
You can vote by either:
. Signing and returning the enclosed proxy card or following the
directions on the card for telephone or Internet voting (see below);
or
. Casting your vote in person at the annual meeting.
The individuals identified on the proxy card will vote your shares as you
designate when you cast your vote by signing and mailing the proxy card, by
telephone or via the Internet. If you submit a duly executed proxy card but do
not specify how you wish to vote your shares, the proxy holders will vote your
shares in favor of Items 1, 2 and 3 on the proxy card and at their discretion
for any other matters properly submitted to a vote at the meeting.
If you vote by proxy, you may revoke your proxy or change your vote at any
time prior to the final tallying of votes by (1) delivering a written notice
to Capital One's Corporate Secretary at the address on the front page of this
proxy statement, (2) executing and delivering a later-dated proxy or (3)
attending the meeting and voting in person.
If you hold Capital One stock in "street name" through a broker, bank or
other nominee, you will need to obtain a proxy form from the institution that
holds your shares if you wish to vote in person at the annual meeting.
How can you vote by telephone or via the Internet?
Instead of submitting your vote on the enclosed paper proxy card, you can
vote by telephone or electronically via the Internet. See "Internet and
Telephone Voting" on page 26 of this proxy statement for additional
information. The telephone and Internet voting procedures are designed to
authenticate your identity, to allow you to vote your shares or give voting
instructions, and to confirm that your instructions have been properly
recorded. Please note that there are separate telephone and Internet voting
arrangements depending upon whether your shares are registered in your own
name through Capital One's stock transfer agent, First Chicago Trust Company
of New York, a division of Equiserve, or held in "street name" through a
broker, bank or other nominee.
Can you get Capital One's annual meeting materials delivered to you
electronically next year?
If you vote electronically via the Internet, you can consent to electronic
delivery of future Capital One proxy statements, proxy cards and annual
reports by responding affirmatively to the request for your consent when
prompted. See "Electronic Delivery of Future Annual Meeting Materials" on page
27 of this proxy statement for additional information. If you consent and
Capital One delivers some or all of its future annual meeting materials to you
by electronic mail or by posting materials to the Internet, you will not
receive paper copies of these materials through the mail. Because electronic
delivery could save Capital One a significant portion of the costs associated
with printing and mailing materials, we encourage you to consent to electronic
delivery.
What vote is necessary to approve each item?
Votes will be tabulated by the Inspector of Elections. The Board of
Directors has appointed representatives of First Chicago Trust Company of New
York, a division of Equiserve, to serve as the Inspector of Elections.
Item 1 on the proxy card requests your vote for the two directors who are up
for re-election this year. You may cast or withhold your vote for each of the
nominees. The affirmative vote of a plurality of the votes cast at the meeting
is required to elect directors. An abstention, therefore, will not be voted
with respect to the director indicated, although it will be counted for
purposes of determining whether there is a quorum.
2
<PAGE>
Item 2, the approval of an amendment to Capital One's Restated Certificate
of Incorporation to increase the number of authorized shares of Capital One's
common stock from 300 million to one billion, will be approved if the holders
of a majority of the outstanding shares of common stock vote in favor of Item
2.
Item 3, the ratification of the appointment of Ernst & Young LLP as
independent auditors for 2000, will be approved if the holders of a majority
of the shares present at the annual meeting in person or represented by proxy
vote in favor of Item 3.
If you hold your shares through a broker and you do not submit a proxy, the
broker is authorized to vote your shares according to the recommendations of
Capital One's Board of Directors for each Item presented at the annual
meeting. This is known as a "broker non-vote". For Items 2 and 3, abstentions
have the same effect as a vote "against" the proposal.
What are the Board's recommendations?
Unless you give other instructions on your proxy card, the people named as
proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors as follows:
. for election of the nominated slate of directors (see page 23);
. for the amendment to Capital One's Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock from 300 million to one billion (see page 24); and
. for ratification of the appointment of Ernst & Young LLP as Capital
One's independent auditors for 2000 (see page 25).
With respect to any other matter that properly comes before the meeting, the
proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, at their own discretion.
3
<PAGE>
INFORMATION ABOUT CAPITAL ONE'S COMMON STOCK OWNERSHIP
Certain Beneficial Owners
Capital One knows of no single person or group that beneficially owns more
than 5% of Capital One's common stock based on filings with the Securities and
Exchange Commission as of February 29, 2000.
Directors and Named Executive Officers
The following table lists the beneficial ownership of Capital One's common
stock, as of February 29, 2000, by our directors and the Named Executive
Officers (as defined herein).
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Name and Address* Ownership(1) Class(2)
----------------- ----------------- ----------
<S> <C> <C>
Richard D. Fairbank...................... 8,870,416(3)(4) 4.32%
Nigel W. Morris.......................... 5,096,684(3)(5) 2.52%
Matthew J. Cooper........................ 600,126(6) **
John G. Finneran, Jr..................... 429,671(7) **
William J. McDonald...................... 40,122(8)(9) **
W. Ronald Dietz.......................... 92,740(10) **
James A. Flick, Jr....................... 97,500(10) **
Patrick W. Gross......................... 91,692(10) **
James V. Kimsey.......................... 154,633(10) **
Stanley I. Westreich..................... 1,330,570(10)(11) .68%
All directors and executive officers as a
group (15 persons)...................... 17,624,841(12) 8.29%
</TABLE>
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* All addresses are c/o Capital One Financial Corporation, 2980 Fairview Park
Drive, Suite 1300, Falls Church, Virginia 22042-4525.
** Less than .5% of the outstanding shares of common stock.
(1) To Capital One's knowledge, all executive officers and directors
beneficially own the shares shown next to their names either in their sole
names or jointly with their spouses, unless we have indicated otherwise.
The totals include shares of common stock (i) subject to options held by
each person granted under Capital One's 1994 Stock Incentive Plan (the
"1994 Stock Incentive Plan"), Capital One's 1999 Stock Incentive Plan (the
"1999 Stock Incentive Plan") or Capital One's 1995 Non-Employee Directors
Stock Incentive Plan (the "1995 Directors Plan"), that are or will become
exercisable within 60 days of February 29, 2000, (ii) held by the
executive officer through a pooled stock fund under Capital One's
Associate Savings Plan (the "Savings Plan") and (iii) held by the
executive officer under Capital One's 1994 Associate Stock Purchase Plan
(the "Stock Purchase Plan").
(2) All percentage calculations are based on the number of shares of common
stock issued and outstanding on February 29, 2000, which was 196,988,353.
(3) Includes 107,502 shares owned by Fairbank Morris, Inc. Messrs. Fairbank
and Morris share voting and investment power for these shares.
(4) Includes 8,407,386 shares issuable upon the exercise of options.
(5) Includes 4,987,317 shares issuable upon the exercise of options.
(6) Includes 538,217 shares issuable upon the exercise of options.
(7) Includes 417,671 shares issuable upon the exercise of options.
(8) Includes 29,300 shares issuable upon the exercise of options.
(9) Includes 108 shares held in custodial accounts controlled by Mr. McDonald
for the benefit of various family members.
(10) Includes 84,000 shares issuable upon the exercise of options.
(11) Includes 156,000 shares held in a trust, for which Mr. Westreich is the
trustee and ultimate beneficiary.
(12) Includes 15,622,753 shares issuable upon the exercise of options for all
directors and executive officers as a group.
4
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that Capital
One's executive officers and directors, and persons that beneficially own more
than 10% of Capital One's common stock, file certain reports of beneficial
ownership of the common stock and changes in such ownership with the SEC and
provide copies of these reports to Capital One. Based solely on our review of
these reports and written representations furnished to us, we believe that in
1999 each of the reporting persons complied with these filing requirements,
except for David M. Willey, Senior Vice President, Corporate Financial
Management, who filed three late reports over the past two years covering two
stock option exercises, a stock option grant to Mr. Willey's spouse, who also
works for Capital One, and two transfers of shares from Mr. Willey to his
spouse.
5
<PAGE>
INFORMATION ABOUT OUR DIRECTORS AND EXECUTIVE OFFICERS
Introductions
Capital One's directors and current executive officers are listed with a
brief description of their business experience for the past five years.
Richard D. Fairbank Chairman and Chief Executive Officer Age 49
Mr. Fairbank has been Chairman of the Board of Directors of Capital One
since February 28, 1995. He has been Chief Executive Officer and a director
since July 26, 1994. Prior to November 22, 1994, he was Executive Vice
President of Signet Bank's credit card division in charge of credit card
operations. Mr. Fairbank is a director of MasterCard International, Inc. He is
also a director of Capital One's two principal subsidiaries, Capital One Bank
(the "Bank") and Capital One, F.S.B. (the "Savings Bank"). Mr. Fairbank is
also Chief Executive Officer of the Bank.
Nigel W. Morris President, Chief Operating Officer and Director Age 41
Mr. Morris has been a director of Capital One since February 28, 1995. He
has been President and Chief Operating Officer since July 26, 1994. Prior to
November 22, 1994, he was Executive Vice President of Signet Bank's credit
card division. Mr. Morris is a member of Visa U.S.A. Inc.'s Marketing
Committee and is a director of Covance Inc. He is also a director of the Bank
and the Savings Bank.
Marjorie M. Connelly Senior Vice President, Credit Card Operations Age 38
Ms. Connelly joined Capital One in March 1994. She is Senior Vice President
of Credit Card Operations, and is responsible for management of the inbound
and outbound call centers, including customer service, telemarketing and
retention, cardholder correspondence processing, chargebacks and retrievals,
credit operations, payment processing, embossing, image operations and
statement rendition. Ms. Connelly is also responsible for computer operations,
telecommunications and applications software in support of Capital One's
activities. Ms. Connelly is currently a member of the VISA USA Card Operations
Advisors Committee.
Matthew J. Cooper Senior Vice President Age 33
Mr. Cooper has been a Senior Vice President of Capital One since January
1995. He has been employed in various capacities by Capital One and its
predecessor since October 1989. Mr. Cooper is responsible for managing Capital
One's financial services business in the United Kingdom.
John G. Finneran, Jr. Senior Vice President, General Counsel Age 50
and Corporate Secretary
Mr. Finneran joined Capital One in September 1994 as Senior Vice President,
General Counsel and Corporate Secretary. Mr. Finneran is responsible for
overseeing Capital One's legal and governmental affairs and compliance
programs.
Dennis H. Liberson Senior Vice President, Human Resources Age 44
Mr. Liberson joined Capital One in February 1995. He is Senior Vice
President in charge of Human Resources and Corporate Real Estate and is
responsible for the development and implementation of human resources
programs, including programs related to compensation, benefits, recruitment,
employee development, corporate real estate and corporate planning.
6
<PAGE>
William J. McDonald Senior Vice President, Brand Management Age 43
Mr. McDonald joined Capital One in September 1998. He is Senior Vice
President for Brand Management, responsible for the marketing, advertising and
global brand positioning of Capital One's businesses. Prior to joining Capital
One, Mr. McDonald took a 15-month sabbatical. From March 1993 to June 1997,
Mr. McDonald served as Executive Vice President and Chief Marketing Officer at
Boston Chicken, Inc., where he was responsible for marketing and research and
new product development functions, including brand growth strategies for
Boston Market.
Peter A. Schnall Senior Vice President, Marketing and Analysis Age 36
Mr. Schnall joined Capital One in August 1996 and has been Senior Vice
President, Marketing and Analysis, since January 1999. He is responsible for
the marketing, credit policy and portfolio management of Capital One's credit
card business in the United States. From August 1994 to July 1996, Mr. Schnall
served as a Senior Vice President at the Advisory Board Company, an advisory
firm with practices in financial services and health care.
Michael J. Shrader Senior Vice President, Sales Age 48
Mr. Shrader joined Capital One in April 1999. He is Senior Vice President
for Sales and is responsible for Capital One's sales organization as well as
operational oversight of Capital One's e-commerce initiatives. From March 1997
to April 1999, Mr. Shrader served as Vice President, Consumer Sales, at Sprint
Corporation, where he was responsible for distribution channel strategy,
development and management in Sprint's consumer sales department. From January
1994 to March 1997, Mr. Shrader served as Vice President and General Manager
of the Americas at Gateway 2000 Inc., where he was responsible for the
consumer, small and medium business markets.
David M. Willey Senior Vice President, Corporate Financial Management Age 39
Mr. Willey is Capital One's Senior Vice President, Corporate Financial
Management. He has been employed in various capacities by Capital One and its
predecessor since September 1989. Mr. Willey is responsible for various staff
functions, including treasury, corporate finance, corporate accounting and
reporting, and planning and risk management. Mr. Willey is also a director of
the Bank and a director and President of the Savings Bank.
W. Ronald Dietz Director Age 57
Mr. Dietz has been Managing Partner of Customer Contact Solutions, LLC, an
advisory firm offering services in a broad range of customer handling and call
center performance areas, since January 1999. He has been a director of
Capital One since February 28, 1995. From September 1996 to September 1997 and
from May 1998 to December 1998, he was President of Charter Associates, Ltd.,
a firm engaged in a variety of consulting and venture management activities.
From September 1997 to May 1998, Mr. Dietz was the Chief Executive Officer of
Technical Assistance Research Program in Rosslyn, Virginia, a call center and
customer service advisory firm. From April 1993 to July 1996, he was President
and Chief Executive Officer of Anthem Financial, Inc., an Indianapolis-based
financial services company. He also served as a director of Anthem Financial
and as an Executive Vice President of Anthem's parent company, the Associated
Insurance Companies, Inc. Mr. Dietz is also a director of the Savings Bank.
James A. Flick, Jr. Director Age 65
Mr. Flick has been President and Chief Executive Officer of Dome
Corporation, Baltimore, Maryland, a real estate development and management
services company, since May 1994. He has been a director of Capital One since
February 28, 1995. Mr. Flick is also a director of the Ryland Group, Inc.,
Bethlehem Steel Credit Affiliate One, Inc., Bethlehem Steel Credit Affiliate
Two, Inc. and FTI Consulting, Inc. Mr. Flick is also a director of the Bank
and the Savings Bank.
7
<PAGE>
Patrick W. Gross Director Age 55
Mr. Gross is a founder of American Management Systems, Inc., Fairfax,
Virginia, an information technology consulting, software development, and
systems integration firm, and is currently Chairman of its Executive
Committee. He has served as a Principal Executive Officer and Managing
Director of AMS since its incorporation in 1970. Mr. Gross is also Chairman of
the board of directors of Baker and Taylor Holdings, Inc., Charlotte, North
Carolina, a private company, and a director of Computer Network Technology
Corporation, Minneapolis, Minnesota and of Landmark Systems Corporation,
McLean, Virginia, both public companies. He has been a director of Capital One
since February 28, 1995. Mr. Gross is also a director of the Savings Bank.
James V. Kimsey Director Age 60
Mr. Kimsey is the founding Chief Executive Officer and is currently Chairman
Emeritus of America Online, Inc., Dulles, Virginia ("America Online"). He
served as Chairman of the board of directors of America Online from 1985 to
1995. He was also President of America Online from 1985 to January 1991 and
Chief Executive Officer from 1985 to April 1993. Mr. Kimsey is currently
Chairman of the AOL Foundation. He is a director of Batterson Venture Partners
and is on the Board of Advisors of Carousel Capital Partners. He has been a
director of Capital One since February 28, 1995. Mr. Kimsey is also a director
of the Bank.
Stanley I. Westreich Director Age 63
Mr. Westreich has been President of Westfield Realty, Inc., Arlington,
Virginia, a real estate development and construction company, since 1965. He
has been a director of Capital One since July 26, 1994. Mr. Westreich is also
a director of the Bank.
Board Meetings
The Board of Directors oversees Capital One's business and directs its
management. The Board does not involve itself with the day-to-day operations
and implementation of the business. Instead, the Board meets periodically with
management to review Capital One's performance and its future business
strategy. Members of the Board also continually consult with management to
keep informed about Capital One's progress. The full Board of Directors met
five times during 1999. Each director attended at least 75% of the meetings of
the Board and the committees on which he served during the year, and all but
one attended 100% of such meetings.
Committee Meetings
The Board also conducts business through two committees: the Audit Committee
and the Compensation Committee. Each committee met five times during 1999.
The Audit Members: Messrs. Dietz (Chairman), Flick and Gross. The
Committee Audit Committee recommends the selection of independent
auditors, approves the scope of the audits by the
independent auditors and our internal auditors, and
reviews audit findings, accounting policies and compliance
matters. The Audit Committee investigates any audit or
compliance matter brought to its attention. The Audit
Committee also reviews all reports of examination and
management's responses and any transactions between
Capital One and any of its directors, executive officers
or their affiliates. The Audit Committee is composed
entirely of directors who are not employees of Capital One
and who are free from any relationships that in the
opinion of the Board of Directors would interfere with
their exercise of independent judgment.
The Compensation
Committee Members: Messrs. Westreich (Chairman) and Kimsey. The
Compensation Committee recommends officers for election or
re-election and approves all salary
8
<PAGE>
levels and incentive awards for senior management, subject
to the Board's approval of compensation for Messrs.
Fairbank and Morris. The Compensation Committee also
administers Capital One's 1994 Stock Incentive Plan, 1999
Stock Incentive Plan and Stock Purchase Plan. The
Compensation Committee is composed entirely of directors
who are not employees of Capital One and who are free from
any relationships that in the opinion of the Board of
Directors would interfere with their exercise of
independent judgment.
Compensation of the Board
Annual Fees and
Option Grants Directors who are not employees of Capital One receive
$35,000 annually, options to purchase 21,900 shares and
reimbursement of their expenses to attend meetings. They
do not receive any additional fees for attending meetings
or for being members of the Audit Committee or the
Compensation Committee.
In 1999, each non-employee director had the opportunity to
give up the $35,000 retainer and 21,900 options for each
of the years 1999, 2000 and 2001 in exchange for a one-
time grant of performance-based options to purchase 99,498
shares of Capital One's common stock under Capital One's
1999 Non-Employee Directors Stock Incentive Plan (the
"1999 Directors Plan"). These options were granted on
April 29, 1999 and have an exercise price of $56.4583,
which was the common stock's fair market value on that
date (determined on the basis of the average of the high
and low sales prices as reported by the New York Stock
Exchange Composite Transaction Tape). These options will
vest if Capital One's stock price reaches and remains at
or above $100 for at least 10 trading days in any 30
calendar-day period on or before June 15, 2002. If the
options do not reach this vesting target, they will
terminate. The options will also vest immediately upon a
change of control of Capital One on or before June 15,
2002. If a director ceases to serve as a director before
the annual stockholder meeting in 2002, he will relinquish
a pro rata portion of any unvested options based on the
number of full years he has served as a director since
April 1999. The options are generally exercisable until
the earlier of April 29, 2009 or three years after the
director ceases to serve as a director, but may terminate
sooner if the director dies or ceases to serve as a
director before the options become exercisable. Each of
our non-employee directors elected to give up his retainer
and options for the next three years in exchange for these
performance-based options.
Directors who are employees of Capital One receive no
additional compensation for their service as directors.
Other Benefits Under our 1994 Deferred Compensation Plan, directors who
are not employees of Capital One may voluntarily defer all
of their annual fees and receive deferred income benefits.
Director's accounts are credited monthly with an interest
equivalent in an amount determined from time to time by
Capital One. Directors electing this deferral will begin
to receive their deferred income benefits in cash when
they cease to be directors, or earlier if authorized by
the Compensation Committee. Benefits are generally payable
in monthly installments beginning within 90 days after
retirement and extending no later than the date the
individual reaches age 80. If a director dies before he
receives these benefits, they will be paid to his
beneficiaries or estates. Upon a change of control of
Capital One and unless otherwise directed by a director,
Capital One shall pay to each director within thirty days
of the change of control, a lump sum cash payment equal to
such director's account balance as of the date of the
change of control.
9
<PAGE>
Related Party Transactions with Directors
American
Management
Systems, Inc.
Transactions From time to time, Capital One has retained American
Management Systems, Inc., a consulting company
specializing in information technology, applications and
systems integration, to provide certain services. Mr.
Gross, a director of Capital One, is also a director and
principal executive officer of AMS. Capital One and its
subsidiaries entered into an agreement with AMS on April
5, 1995. Under this agreement, AMS agreed to perform
general consulting and other tasks agreed to through work
orders.
During 1999, Capital One paid AMS a total of $18,692,739
for services under this agreement. Capital One intends to
continue its relationship with AMS in the future and
believes that the terms of existing AMS agreements are,
and that any future arrangements will be, fair and
reasonable and no less favorable to Capital One than those
we could obtain from unrelated third parties.
10
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table summarizes compensation awarded to, earned by or paid to
our Chief Executive Officer and the other four most highly compensated
executive officers for the year ended December 31, 1999 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------------- ------------
Awards
Securities
Name and Underlying All Other
Principal Position Year Salary Bonus(1) Options Compensation
------------------ ---- ------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
RICHARD D. FAIRBANK 1999 $ 0(2) $ 0(3) 1,130,661(4) $ 0
Chairman of the Board 1998 0(2) 0(3) 1,200,000(5) 0
and Chief Executive
Officer................ 1997 676,250 0(3) 934,359(2) 38,190
NIGEL W. MORRIS 1999 0(2) 0(3) 753,774(4) 0
President, Chief
Operating 1998 0(2) 0(3) 917,853(5) 0
Officer and Director.... 1997 497,083 0(3) 622,896(2) 28,072
1999 264,333 271,056(6) 133,095(7) 46,357(8)
MATTHEW J. COOPER 1998 237,083 128,795(6) 65,757(9) 31,027
Senior Vice President... 1997 207,500 86,985(10) 209,292(6) 14,042
JOHN G. FINNERAN, JR. 1999 284,667 252,360(6) 133,906(7) 11,702(8)
Senior Vice President, 1998 252,500 100,750(6) 101,142(9) 30,018
General Counsel and
Corporate Secretary.... 1997 236,250 127,252(10) 222,924(6) 15,648
WILLIAM J. MCDONALD 1999 284,333 250,854(6) 133,008(7) 14,717(8)
Senior Vice President,
Brand Management....... 1998(11) 82,907 46,195(6) 141,222(9) 50,200
</TABLE>
- --------
(1) Bonuses earned and reported for each calendar year are paid during the
following calendar year.
(2) Under a compensation package approved by the Board of Directors on
December 18, 1997 (EntrepreneurGrant II), Messrs. Fairbank and Morris
agreed to give up their entire salary and all benefits under the Stock
Purchase Plan, the Savings Plan and Capital One's Unfunded Excess Savings
Plan (the "Excess Savings Plan") through 2000 in exchange for an award of
performance-based options. Under this agreement, Messrs. Fairbank and
Morris were granted 1,234,359 and 822,906 options, respectively. The base
salaries that Messrs. Fairbank and Morris would otherwise have received in
1999 were $759,000 and $572,000, respectively. Capital One achieved the
performance targets in 1998 and all of these options became exercisable.
As more fully described in footnote (5) below, Mr. Fairbank and Mr. Morris
subsequently agreed to surrender a portion of these vested options as
consideration for new performance-based options (EntrepreneurGrant III).
Under this agreement, Mr. Fairbank surrendered 300,000 options and Mr.
Morris surrendered 200,010 options. The securities underlying options
shown in this table reflect options granted, net of options surrendered.
(3) Under a compensation package approved by the Board of Directors on
September 15, 1995 (Entrepeneur Grant I), Messrs. Fairbank and Morris
agreed to give up all incentive compensation (other than salary and
contributions under the Stock Purchase Plan, the Savings Plan and the
Excess Savings Plan) for a period of five years beginning with the 1995
calendar year in exchange for performance-based options. Capital One
achieved the performance targets and all of these options are exercisable.
11
<PAGE>
(4) Under a compensation package approved by the Board of Directors on April
29, 1999 (EntrepreneurGrant IV), Messrs. Fairbank and Morris agreed to
forgo all salary and any benefits under the Stock Purchase Plan, the
Savings Plan and the Excess Savings Plan for the year 2001 and all
potential annual cash incentives, annual stock option grants and Senior
Executive Retirement Plan contributions for the years 2000 and 2001 in
exchange for an award of options. Under this agreement, Messrs. Fairbank
and Morris were granted 1,130,661 and 753,774 options, respectively. These
awards are more fully described on pages 20-21 of the "Report on Executive
Compensation of the Compensation Committee."
(5) Includes new stock options and reload options granted under the 1994 Stock
Incentive Plan. On June 11, 1998, under Capital One's EntrepreneurGrant
III program, the Board of Directors approved an award of 1,200,000 and
800,040 performance-based options to Messrs. Fairbank and Morris,
respectively, in exchange for the surrender of previously vested options,
as more fully described in footnote (2) above and on pages 20-21 of the
"Report on Executive Compensation of the Compensation Committee."
(6) Under Capital One's EntrepreneurGrant II program, Messrs. Cooper and
Finneran elected to forgo a portion of their cash bonuses for three years
beginning 1998, in amounts equal to up to 50% of their annual target
bonuses, in exchange for options granted in 1997, as more fully described
on pages 20-21 of the "Report on Executive Compensation of the
Compensation Committee." The number of options indicated next to their
names includes 104,082 options for Mr. Cooper and 110,724 options for Mr.
Finneran under EntrepreneurGrant II. Capital One achieved the performance
targets in 1998 and all of these performance-based options are
exercisable. Under Capital One's EntrepreneurGrant III, Messrs. Cooper,
Finneran and McDonald elected to forgo an additional part of their cash
bonuses for three years beginning 1998, in amounts equal to up to the 50%
of their annual target bonuses (in addition to amounts previously forgone
under EntrepreneurGrant II) in exchange for performance-based options, as
more fully described in footnote (9) below. Cash bonuses otherwise payable
to Messrs. Cooper, Finneran and McDonald were reduced for 1998 and 1999,
respectively, by the following amounts: Mr. Cooper $85,705 and $89,304,
Mr. Finneran $130,250 and $135,720, and Mr. McDonald $71,638 and $74,646.
The amounts shown in this table are cash bonuses awarded, net of amounts
forgone.
(7) Includes new stock options and reload options under the 1994 Stock
Incentive Plan and the 1999 Stock Incentive Plan. Under Capital One's
EntrepreneurGrant IV program, Messrs. Cooper, Finneran and McDonald
elected to forgo all potential annual stock option grants from Capital One
for compensation years 1999 and 2000 in exchange for an award of options.
The number of options indicated next to their names includes 132,708
options awarded pursuant to EntrepreneurGrant IV, which is more fully
described on pages 20-21 of the "Report on Executive Compensation of the
Compensation Committee."
(8) All other compensation consists of the amount of contributions Capital One
made under the Stock Purchase Plan and the Savings Plan and credits to the
account of the associate under the Excess Savings Plan. For 1999, matching
company contributions equal to 17.65% of the associate contributions under
the Stock Purchase Plan were as follows: Mr. Cooper $7,285, Mr. Finneran
$0 and Mr. McDonald $7,528. For 1999, Capital One contributed $4,800 under
the Savings Plan for Messrs. Cooper and Finneran and $3,379 under the
Savings Plan for Mr. McDonald. For 1999, the amounts of matching credits
under the Excess Savings Plan were: Mr. Cooper $7,449, Mr. Finneran $6,903
and Mr. McDonald $3,811. All other compensation also includes $26,822 in
foreign allowances and relocation expenses paid by Capital One to Mr.
Cooper in 1999.
(9) Includes new stock options and reload options granted under the 1994 Stock
Incentive Plan. Under Capital One's EntrepreneurGrant III program, Messrs.
Cooper, Finneran and McDonald received the following option grants: Mr.
Cooper 18,534, Mr. Finneran 49,293 and Mr. McDonald 54,222.
(10) Under EntrepreneurGrant I, Messrs. Cooper and Finneran elected to forgo a
portion of their cash bonuses for three years beginning October 1995, in
amounts equal to 25% of their 1995 base salaries, in exchange for options
granted in 1995. Cash bonuses otherwise payable to Mr. Cooper and Mr.
Finneran were reduced in 1997 by the following amounts: Mr. Cooper
$42,500 and Mr. Finneran $49,998. The amounts shown in this table are
cash bonuses awarded, net of amounts forgone.
(11) Mr. McDonald joined Capital One in September 1998. The amounts shown
reflect his compensation for September through December 1998. Mr.
McDonald's 1998 bonus includes a one-time signing bonus of $45,833; his
other compensation includes $48,005 in relocation expenses paid by
Capital One.
12
<PAGE>
Option Grant Table
The following table sets forth information concerning grants of stock
options made to the Named Executive Officers in 1999.
1999 OPTION GRANTS
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants Value
---------------------------------------------------- at Assumed Annual Rates
Number of % of Total of
Securities Options Exercise Stock Price Appreciation
Underlying Granted to Price For Option Term(1)
Options Associates for the per Expiration ------------------------
Name Granted 1999 Fiscal Year Share(2) Date 5% 10%
---- ---------- ------------------ -------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Fairbank..... 1,130,661(3) 10.66% $56.4583 4/29/09 $40,145,613 $101,736,865
Nigel W. Morris......... 753,774(3) 7.11 56.4583 4/29/09 26,763,742 67,824,577
Matthew J. Cooper....... 300(4) * 56.4583 4/29/09 10,652 26,994
132,708(3) 1.25 56.4583 4/29/09 4,711,973 11,941,065
87(5) * 51.4380 9/15/05 1,190 2,619
John G. Finneran, Jr.... 132,708(3) 1.25 56.4583 4/29/09 4,711,973 11,941,065
1,198(5) .01 51.1250 9/15/05 16,289 35,837
William J. McDonald..... 300(4) * 56.4583 4/29/09 10,652 26,994
132,708(3) 1.25 56.4583 4/29/09 4,711,973 11,941,065
</TABLE>
- --------
* Less than .01% of total options granted to associates in 1999.
(1) The dollar amounts under these columns are calculated based on assumed
rates of stock appreciation prescribed by the SEC and are not intended to
be a forecast of possible future stock price appreciation.
(2) Equal to the fair market value of the common stock on the date of grant
determined on the basis of the average of the high and low sales prices as
reported by the New York Stock Exchange Composite Transaction Tape.
(3) On April 29, 1999, the Board of Directors approved awards of options to
Messrs. Fairbank, Morris, Cooper, Finneran and McDonald under
EntrepreneurGrant IV. Messrs. Fairbank and Morris were granted these
awards in exchange for their agreement to forgo all salary and any
benefits under the Stock Purchase Plan, the Savings Plan and the Excess
Savings Plan for the year 2001 and all potential annual cash incentives,
annual stock option grants and Senior Executive Retirement Plan
contributions for the years 2000 and 2001. Messrs. Cooper, Finneran and
McDonald were granted these awards in exchange for their election to forgo
all potential annual stock option grants for compensation years 1999 and
2000. All of these options vest on April 29, 2008. Vesting will be
accelerated if (i) the fair market value of Capital One's common stock
reaches and remains at or above $100.00 for at least 10 trading days in
any 30 calendar-day period on or before June 15, 2002 or (ii) Capital One
has a change of control on or before April 29, 2008. These options are
transferable only to or for the benefit of immediate family members.
EntrepreneurGrant IV is more fully described on pages 20-21 of the "Report
on Executive Compensation of the Compensation Committee."
(4) These options were granted under the 1994 Stock Incentive Plan or the 1999
Stock Incentive Plan as consideration for the executive's agreement to
execute an intellectual property protection agreement with Capital One.
(5) These options are reload options that were granted under the 1994 Stock
Incentive Plan. Reload options are granted at the time an executive
officer surrenders already owned shares of common stock as payment for the
exercise price of a previously granted option. One reload option with an
exercise price equal to the fair market value on the date of grant is
issued for each such share surrendered. Rather than enhance his or her
holdings, reload options are intended to enable an associate who exercises
an option by tendering previously owned shares to remain in the same
economic position, or "equity position," with respect to potential
13
<PAGE>
appreciation in the common stock as if he or she had continued to hold the
original option unexercised. As such, reload options meet Capital One's
objective of fostering continued stock ownership by our associates, but the
receipt of reload options by an associate does not result in a net increase
in his or her equity position. Reload options are exercisable, in full, six
months after their grant date and immediately upon a change of control.
Option Exercise and Option Value Table
The following table sets forth information concerning exercises of stock
options made by the Named Executive Officers in 1999 and the values of
unexercised options held by the Named Executive Officers at 1999 year end.
1999 OPTION EXERCISES AND OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at 1999 In-the-Money Options
Year End at 1999 Year End
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized(1) Unexercisable Unexercisable(2)
---- --------------- ----------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
Richard D. Fairbank..... 0 $ 0 8,407,386/2,330,661 $328,733,749/17,075,040
Nigel W. Morris......... 0 0 4,987,317/1,553,814 189,510,827/11,383,929
Matthew J. Cooper....... 460 19,186 511,817/242,331 18,432,900/2,658,252
John G. Finneran, Jr.... 36,300 1,288,919 385,271/284,201 12,897,761/3,432,469
William J. McDonald..... 0 0 29,300/244,930 480,313/1,858,677
</TABLE>
- --------
(1) The value realized is the net value of the shares (market price less the
exercise price) received.
(2) In-the-Money Options are those for which the 1999 year-end market price of
the underlying shares of common stock exceeded the exercise price of the
option. The value of the In-the-Money Options is the difference between
the market price (determined on the basis of the average of the high and
low sales prices as reported by the New York Stock Exchange Composite
Transaction Tape on the last business day of 1999) of the common stock
($48.00 per share) and the exercise price of the option multiplied by the
number of shares underlying the option.
14
<PAGE>
Company Arrangements with Executive Officers
Employment
Agreements Capital One does not have employment agreements with any
of its executive officers. The compensation arrangements
with these officers, however, encourage their continued
employment with Capital One.
Change of Control
Employment
Agreements
All of the executive officers identified on pages 6-7 of
"Information About Our Directors and Executive Officers"
have change of control employment agreements. The
agreements are designed to assure that if a change of
control of Capital One occurs, our business will continue
with minimal disruption because these agreements provide
greater employment security to key operational and
management executives. A change of control will occur if
one or more of the following events take place: (i) an
acquisition of 20% (or, if shares are purchased from
Capital One, 40%) or more of Capital One's common stock or
the combined voting power of the voting securities by a
person or group, (ii) certain changes in the majority of
the Board of Directors, (iii) certain mergers involving
Capital One, or (iv) the liquidation, dissolution or sale
of all or substantially all of Capital One's assets.
The agreements with Messrs. Fairbank, Morris and Finneran
entitle them to receive (i) their base salary and a pro
rata bonus through the date of termination, (ii) a lump
sum payment of three times their current annual salary and
highest recent bonus, (iii) any deferred compensation and
accrued vacation not yet paid and (iv) certain retirement
and welfare benefits, if within three years of the change
of control they are terminated without cause, or if they
voluntarily leave for good reason (which includes leaving
for any reason during the 30-day period beginning one year
after a change in control). Any cash payments attributable
to salary or bonus will be net of amounts previously
foregone (if any) in exchange for Capital One stock
options. The agreements also provide a tax gross-up
feature to cover excise or similar taxes (including excise
taxes and income taxes imposed upon the gross-up payment)
that the officer may have to pay resulting from payments
received or options that vest due to a change of control.
All other executive officers identified on pages 6-7 of
"Information About Our Directors and Executive Officers"
have change of control agreements that entitle them to
receive (i) their base salary and a pro rata bonus through
the date of termination, (ii) a lump sum payment of two
times their current annual salary and highest recent
bonus, (iii) any deferred compensation and accrued
vacation not yet paid and (iv) certain retirement and
welfare benefits, if within two years of the change of
control they are terminated without cause, or if they
voluntarily leave for good reason. Any cash payments
attributable to salary or bonus will be net of amounts
previously foregone (if any) in exchange for Capital One
stock options. The agreements also provide a tax gross-up
feature to cover excise or similar taxes (including excise
taxes and income taxes imposed upon the gross-up payment)
that the officer may have to pay resulting from payments
received or options that vest due to a change of control.
15
<PAGE>
Pension Plans
General In 1995, Capital One made a number of changes to its
pension and deferred compensation plans. Among the changes
were that we stopped making further pay-based
contributions to Capital One's cash balance pension plan
(the "Cash Balance Pension Plan") and the related excess
cash balance pension plan (the "Excess Cash Balance
Plan"). Capital One also eliminated the Executive
Employees Supplemental Retirement Plan and the ability of
executive officers to defer compensation under the 1994
Deferred Compensation Plan.
Cash Balance
Pension Plan and
Excess Cash
Balance Plan Before each was amended in November 1995, Capital One
offered a Cash Balance Pension Plan and an Excess Cash
Balance Pension Plan to all full-time salaried associates
and certain executive officers, respectively, of Capital
One and its subsidiaries. The Cash Balance Pension Plan is
a type of defined benefit plan intended to qualify under
Section 401(a) of the Internal Revenue Code, under which
participants were credited with certain pay-based credits
for all annual paid compensation up to $150,000, as
indexed for cost of living increases. The Excess Cash
Balance Plan provided additional benefits to participants
to the extent benefits under the Cash Balance Pension Plan
were restricted because of limitations imposed by
provisions of the Internal Revenue Code.
In November 1995, Capital One amended the Cash Balance
Pension Plan and the Excess Cash Balance Plan to eliminate
further pay-based credits to participants as of December
31, 1995, and to provide that there would be no new
participants in such plans on or after January 1, 1996.
Interest credits continue to be credited on plan balances
on a quarterly basis. Based on account balances as of
January 1, 2000, the projected annual retirement benefits
under the Cash Balance Pension Plan and the Excess Cash
Balance Plan, respectively, are $284 and $1,113 for Mr.
Fairbank, $426 and $1,144 for Mr. Morris, $1,367 and
$1,010 for Mr. Cooper and $197 and $171 for Mr. Finneran.
Mr. McDonald has no account balance in either the Cash
Balance Pension Plan or the Excess Cash Balance Plan.
Messrs. Fairbank and Morris are currently credited with
eleven years of service under the plans; Mr. Cooper is
currently credited with ten years of service under the
plans; and Mr. Finneran is currently credited with five
years of service under the plans. These projected benefits
assume interest credits under the Cash Balance Plan to be
5.28% per annum and under the Excess Cash Balance Plan to
be 8.50% per annum.
In lieu of the pay-based credits under the Cash Balance
Pension Plan and the Excess Cash Balance Plan, beginning
January 1, 1996, Capital One began making automatic
contributions equal to 3% of an associate's eligible
compensation to the associate's account in the Savings
Plan and, if applicable, the Excess Savings Plan.
16
<PAGE>
Performance Graph
The following graph compares cumulative total stockholder return on our
common stock with the S&P Composite 500 Stock Index and an industry index, the
S&P Financial Composite Index, for the period from December 31, 1994 to
December 31, 1999. The graph assumes that the value of the investment in the
common stock and each index was $100 at December 31, 1994 and that all
dividends were reinvested. The stock price performance on the graph below is
not necessarily indicative of future performance.
[GRAPH]
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
COF $100 $150.73 $229.70 $348.61 $742.54 $935.75
S&P 500 $100 $137.55 $169.12 $225.52 $289.97 $350.98
S&P Financials $100 $154.05 $208.15 $308.27 $343.51 $357.15
</TABLE>
17
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
OF THE COMPENSATION COMMITTEE
As the Compensation Committee of the Board of Directors, we offer this
report to describe the compensation philosophy and policies underlying our
recommendations to the Board of Directors for the 1999 compensation package of
Capital One's executive officers generally and the Chief Executive Officer and
the President and Chief Operating Officer more specifically.
Compensation Philosophy
We have designed and adopted a compensation program for Capital One's
executives based on three underlying principles: recruitment and retention of
top executive talent, value creation and flexibility. Although we believe that
executive compensation should be market based, the compensation package has to
provide the executive with an opportunity for compensation to exceed market
standards to enable us to recruit and retain top performers with the necessary
skills and talent. To this end, we have linked compensation to stockholder
value by using stock options as the principal vehicle to achieve an above-
market compensation opportunity. As a result, the compensation packages reward
the accomplishments of management only to the extent such accomplishments
create stockholder wealth. We believe that such a stock option-based program
best aligns the interests of management with the interests of stockholders and
is in the best interests of Capital One and its stockholders. Finally, we
believe that Capital One's compensation program must maintain the flexibility
to respond rapidly to market opportunities. Accordingly, we have avoided the
use of rigid performance criteria under the plans, as such criteria could
interfere with Capital One's business strategies.
We believe that Capital One's stock option plans have been very effective in
attracting, retaining, and motivating our executives and associates over time.
Because of Capital One's rapid growth, in November 1999 we recommended and the
Board of Directors approved an amendment to the 1994 Stock Incentive Plan to
increase the number of shares of common stock that may be issued pursuant to
the exercise of options and other incentive awards by 1,500,000. In addition,
in April 1999 we recommended and the Board of Directors approved the 1999
Stock Incentive Plan, which has 600,000 shares authorized for issuance. We
made grants under the 1999 Stock Incentive Plan last year primarily as
consideration for the agreement of some of our associates to enter into an
intellectual property protection agreement with Capital One.
Methodology for Determining Compensation
Compensation Comparators. In determining the overall amount of compensation
to be paid in 1999, we considered the compensation and benefits paid to
similar executives within (i) those organizations against whom Capital One
competes to recruit executive officers, (ii) companies in the financial
services sector generally and (iii) other credit card companies.
Surveys. We reviewed surveys, published by leading compensation and benefits
consulting firms, showing compensation levels for executives in the group of
comparable companies. In addition, with respect to the compensation of the
Chief Executive Officer and the President and Chief Operating Officer, we
reviewed information presented by our independent compensation consultants.
Entrepreneurial Approach. To support an entrepreneurial approach, we
developed a compensation package that emphasizes the use of stock-based
incentives. Stock options are currently the only form of long-term incentive
provided to our executives and, as a result, management can achieve
compensation that is above market levels for executives in comparable
companies only if the value of Capital One's common stock increases.
Tier Approach. Capital One uses management "Tiers" in determining the
overall compensation of its associates, including the executive officers, and
assigns each executive officer to a designated Tier based on job
responsibility and such officer's contribution to the management of Capital
One.
18
<PAGE>
Components of the Executive Compensation Program
Executives are eligible to receive compensation in three forms:
.base salary;
.annual cash incentive awards; and
.annual stock option awards.
Each compensation component is offered to executives in various
combinations, depending on the executive's Tier. The combined package provides
a total compensation opportunity that places executive compensation at
approximately the 75th percentile in the range of total compensation paid to
comparable executives at comparable companies.
Base Salary. Each management Tier has a salary band. The salary band defines
the minimum and maximum salary levels for the Tier. Targeted salaries are
based on the 50th percentile for executives at comparable companies.
Individual salaries within the band reflect the officer's scope of
responsibility, prior experience and accomplishments, and other individual
factors, as well as market data on salary levels for comparable positions.
Base salaries are adjusted annually within the salary bands depending on
individual performance, and are determined based on subjective evaluations of
various factors, including recent performance and time in the job. Capital One
expects to adhere rigorously to the 50th percentile level for executive
officers' salaries and therefore adjustments in targeted base salaries will be
limited only to amounts necessary to maintain such level.
Annual Cash Incentives. The compensation program also provides executive
officers with annual cash option incentive awards based on individual and
corporate performance criteria. Annual cash incentive targets in 1999 were a
specified percentage (between 40% and 70%) of the base salary amount for each
Tier such that total compensation (base salary and annual cash incentives) for
executive officers is at approximately the 65th percentile of comparable
companies. Actual cash incentive awards are determined based on a combination
of corporate and individual performance and may be greater or less than the
targeted annual incentive. Annual incentives can be as high as 200% of the
target levels when performance exceeds the targeted criteria. Performance
below the threshold level results in no award.
Individual performance is based on subjective evaluations of factors similar
to the criteria specified above for adjustments in base salaries. For
corporate performance, we maintain a flexible approach to performance
measurement so that we are able to respond appropriately to emerging and
evolving business opportunities. The corporate performance criteria for 1999
annual incentives included earnings per share, marketing expenses, loan and
account growth, credit quality, customer satisfaction, marketing innovation,
operating efficiency, associate management, technological innovation,
recruiting, flexibility, management integration and other factors.
Annual Stock Option Awards. Stock options provide executive officers with a
strong economic interest to maximize stockholder value, and align the
interests of the executive officers with those of stockholders. Stock option
grants compensate management only to the extent value in the form of stock
price appreciation has been created. Stock options are granted with an
exercise price equal to or greater than the market price on the grant date and
therefore have no economic value unless Capital One's stock price increases.
Given Capital One's emphasis on stock options in the overall compensation
package, an executive officer's total compensation will be highly dependent on
the performance of the common stock. This compensation component is intended
to encourage individual commitment to corporate business strategies and to
focus executives on improving stock performance.
Stock option targets are established for each Tier. Individual grants are
determined based on individual performance and can be increased or decreased
by as much as 50% from the target levels. In evaluating individual
performance, we consider an officer's responsibilities, recent performance and
accomplishments and the expected future contribution of the officer to Capital
One's performance. We determine individual
19
<PAGE>
performance based on a subjective evaluation of these factors. Annual option
grants have an exercise price not less than the fair market value of Capital
One's common stock on the date of grant, and generally become exercisable in
one-third increments on the first, second and third anniversaries of the grant
date.
As described below, most of Capital One's senior management was given the
opportunity to forgo their potential annual stock option awards for 1999 and
2000 in exchange for performance-based options granted in April 1999. As a
result, most of Capital One's senior management did not receive an annual
stock option award in 1999.
EntrepreneurGrants. To link management's interest more closely with that of
Capital One's stockholders and more importantly, to retain our management
team, we have developed a series of option grants to senior management under
which managers can elect to give up some form of compensation in exchange for
an additional option grant. These additional grants are generally referred to
as "EntrepreneurGrants." Beginning with the first EntrepreneurGrant in 1995,
these programs have been designed with the aid of our independent compensation
consultants to resemble the compensation structures of highly entrepreneurial
companies and are highly dependent on the performance of the common stock.
Capital One has conducted four separate EntrepreneurGrant programs for its
senior executives (Tiers 3 and above), three of which were offered to all
senior management (Tiers 4 and above), plus "catch-up" grants for newly hired
or promoted senior management. Each EntrepreneurGrant has the following
features:
. Eligible management may elect to give up a portion of their base
salary, incentive compensation (including an assumed amount of
forgone company match under Capital One's Associate Savings Plan),
or potential future stock option awards, for two to five years in
exchange for options.
. The exercise price of these options is not less than the fair market
value of Capital One's common stock on the date of the grant, as
determined by the average of the high and low sales prices of the
common stock on the New York Stock Exchange on the relevant date or
the last trading day prior to the grant.
. Depending on the program, options vest (i) in full upon Capital
One's stock price reaching a specified target prior to a specific
date, (ii) in full on a specific date and/or (iii) in annual
increments. For example, options may vest in full on a specific
date, with vesting accelerated if Capital One's stock price reaches
a specified target prior to a specific date. In addition, options
vest immediately upon a change of control of Capital One.
. If vesting occurs upon Capital One's stock reaching a specified
price, the target price represents an average increase of 20%
annually through the vesting deadline.
. Options are generally exercisable for a period of ten years from the
date of grant, but may expire earlier if the optionee terminates
employment, dies or suffers a disability. Optionees generally have
three months to exercise vested options following termination of
employment and up to one year to exercise vested options following
death or a termination due to disability.
. Options granted to senior executives are transferable only to
immediate family members, trusts established for the benefit of
immediate family members, or partnerships in which the optionee and
his or her immediate family members are the only partners, with
certain additional restrictions. Options granted to Tier 4 managers
are not transferable.
. All of the options are non-statutory stock options that do not
receive favorable tax treatment under the Internal Revenue Code.
Since 1995, we have offered three EntrepreneurGrant programs to our senior
management and an additional EntrepreneurGrant only to our senior executives.
We offered our first EntrepreneurGrant program on September 15, 1995 to
Capital One's senior management. All of the executive officers named in the
proxy statement that year (six at the time, all but two of whom are still with
Capital One) elected to forgo the maximum allowable amount in exchange for
options. Based on the success of EntrepreneurGrant I, on December 18, 1997, we
20
<PAGE>
offered a similar option program to our senior management, EntrepreneurGrant
II, which focused more on stock price performance and the retention benefits
to Capital One. The EntrepreneurGrant II options granted to our senior
executives vested when Capital One's stock price reached and remained at or
above $28.00 per share in 1998 and the options granted to Tier 4 managers will
vest in full on December 18, 2000, or immediately upon a change in control. On
June 11, 1998, we granted new performance-based options to our senior
executives under EntrepreneurGrant III. These options will vest if Capital
One's stock price reaches and remains at or above $58.33 per share for at
least ten trading days in a 30 calendar-day period prior to June 11, 2001, or
immediately upon a change of control, and will otherwise expire without
vesting. Finally, on April 29, 1999, we offered EntrepreneurGrant IV to our
senior management. The EntrepreneurGrant IV options will vest in full on
April 29, 2008, or earlier if Capital One's stock price reaches and remains at
$100.00 for at least ten trading days in a 30 calendar-day period prior to
June 15, 2002, or immediately upon a change of control.
The following table illustrates the participation levels, aggregate
compensation forgone and number of options granted pursuant to our four
EntrepreneurGrant programs offered to senior management since 1995.
ENTREPRENEURGRANT PROGRAMS
<TABLE>
<CAPTION>
Percent of Compensation
Executives Forgone Options
Program Grant Date Participating (approximate) Granted
------- ---------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
EntrepreneurGrant I(1).. September 15, 1995 87% $10.1 million 8,368,896
EntrepreneurGrant
II(1).................. December 18, 1997 95 9.4 million 3,601,353(2)
EntrepreneurGrant
III(3)(4).............. June 11, 1998 96 11.7 million(5) 2,666,118
EntrepreneurGrant II
catch-up grant(6)...... December 17, 1998
and January 4, 1999 74 1.4 million 158,811
EntrepreneurGrant
IV(1).................. April 29, 1999 and May 1, 1999 99 N/A(7) 6,992,344
EntrepreneurGrant IV
catch-up grant(8)...... July 22, 1999 81 N/A(7) 713,763
</TABLE>
- --------
(1) Offered to senior management (Tiers 4 and above)
(2) Excludes 500,010 options subsequently surrendered by Messrs. Fairbank and
Morris.
(3) Offered to senior executives (Tiers 3 and above).
(4) Includes options granted to certain senior executives hired after June 11,
1998 with substantially identical terms to EntrepreneurGrant III but with
an exercise price equal to the fair market value of Capital One's common
stock on the actual date of grant.
(5) Includes value of 300,000 vested options surrendered by Mr. Fairbank and
200,010 vested options surrendered by Mr. Morris.
(6) Offered to senior management (Tiers 4 and above) promoted or hired since
EntrepreneurGrant II.
(7) Senior management who elected to participate gave up all potential annual
stock option awards according to their Tier level for 1999 and 2000.
(8) Offered to senior management (Tiers 4 and above) promoted or hired since
EntrepreneurGrant IV, including three employees hired prior to July 22,
1999 but granted options on November 18, 1999. All options have an
exercise price equal to the greater of the fair market value of Capital
One's common stock on April 29, 1999 or the date of grant.
21
<PAGE>
Deductibility of Compensation Expenses
Section 162(m) of the Internal Revenue Code provides that compensation that
is paid to the chief executive officer or to any of the four most highly
compensated executive officers (other than the chief executive officer) in
excess of $1 million is generally not deductible by Capital One for federal
income tax purposes unless it qualifies as "performance-based" compensation.
To qualify as "performance-based" under Section 162(m), compensation payments
must be made from a plan that is administered by a committee of outside
directors and must be based on the achievement of objective performance goals.
In addition, the material terms of the plan must be disclosed to and approved
by stockholders, and the Committee must certify that the performance goals
have been achieved. Committee certification is not required, however, if the
compensation is attributable solely to the increase in the value of Capital
One's stock.
The Committee has considered the impact of this tax code provision in
designing Capital One's compensation plans. While we believe it is more
important to have executive officers focused on the business opportunities
afforded by Capital One's information-based strategies than to use
inappropriate measures to capture the benefits of the tax deduction, the
Committee has and intends in the future to take such steps as it deems
reasonably practicable to minimize the impact of Section 162(m).
The Compensation Committee
Stanley I. Westreich (Chairman)
James V. Kimsey
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<PAGE>
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
The Board of Directors is divided into three classes. At each annual meeting
the term of one class expires. Directors in each class are elected to serve
for three-year terms. At the 1998 annual meeting, Nigel W. Morris and W.
Ronald Dietz were elected to serve on the Board of Directors for three-year
terms expiring at the annual meeting to be held in 2001. At the 1999 annual
meeting, James A. Flick, Patrick W. Gross and James V. Kimsey were elected to
serve on the Board of Directors for three-year terms expiring at the annual
meeting to be held in 2002. All of the current directors began serving as
directors as of the close of business on February 28, 1995, except Mr.
Fairbank and Mr. Westreich, who have served as directors since July 26, 1994.
The nominees for re-election this year are Richard D. Fairbank and Stanley
I. Westreich. Each has consented to serve a three-year term. Information about
the two proposed nominees for election as directors, and about each other
current director whose term will continue after the annual meeting, is set
forth under "Information About Our Directors and Executive Officers" starting
on page 6 of this proxy statement.
In the event a nominee should not continue to be available for election, the
Board may designate a substitute as a nominee. Proxies will be voted for the
election of such substitute. As of the date of this proxy statement, the Board
of Directors has no reason to believe that any of the nominees will be unable
or unwilling to serve.
Directors will be elected by a plurality of the votes cast for the election
of directors at the meeting. Cumulative voting is not permitted.
The Board recommends a vote "FOR" each of these director nominees.
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<PAGE>
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
(Item 2 on the Proxy Card)
General. Capital One's Restated Certificate of Incorporation currently
authorizes the issuance of up to 300 million shares of common stock and 50
million shares of preferred stock. As of the record date, 196,722,253 shares
of common stock were issued and outstanding and 36,846,504 shares were subject
to currently outstanding stock options, leaving 66,431,243 shares available
for other uses (including issuances under Capital One's stock-based employee
benefits plans). Capital One does not propose to amend its authorized shares
of preferred stock.
The Board of Directors is proposing an amendment to the Restated Certificate
of Incorporation to increase the number of authorized shares of common stock
from 300 million to one billion. If the stockholders approve this proposal,
Paragraph (A) of Article IV of Capital One's Restated Certificate of
Incorporation will be amended to read in its entirety as follows:
(A) Authorized Stock. The Corporation shall be authorized to issue
1,050,000,000 shares of capital stock, of which 1,000,000,000 shares shall
be shares of Common Stock, $.01 par value ("Common Stock") and 50,000,000
shares shall be shares of Preferred Stock, $.01 par value ("Preferred
Stock").
Purpose and Effect of the Proposed Amendment. As of March 1, 2000, Capital
One had 66,431,243 shares available for issuance. The Board believes that this
number does not give Capital One the flexibility to issue stock for
acquisitions or general corporate purposes that it had before Capital One's 3-
for-1 stock split on June 1, 1999. Furthermore, if the Board determines that
it would again be appropriate to effect a stock split, the current number of
authorized and available shares of common stock is not enough for us to
complete another stock split. Although we cannot guarantee that Capital One's
stock price will rise or that the Board would declare a stock split at any
specific price or at all, the Board believes that the proposed increase in the
number of authorized shares will provide us with the flexibility necessary to
maintain a reasonable stock price through future stock splits (effected in the
form of a stock dividend), or to issue shares in connection with an
acquisition or other corporate purpose, without the expense of a special
stockholders meeting or the delay of waiting until the next annual meeting.
If this proposal is approved, all authorized but unissued shares of common
stock will be available for issuance from time to time for any proper purpose
approved by the Board (including issuances in connection with stock-based
employee benefit plans, future stock splits or dividends and issuances to
raise capital or effect acquisitions). There are currently no arrangements,
agreements or understandings for the issuance or use of the additional shares
of authorized common stock (other than issuances permitted or required under
Capital One's stock-based employee benefit plans or awards made pursuant to
those plans). If this proposal is approved, all or any of the shares may be
issued without further stockholder action, unless stockholder approval is
required by law or the rules of The New York Stock Exchange.
Stockholders do not have any preemptive or similar rights to subscribe for
or purchase any additional shares of common stock that we may issue in the
future, and therefore, future issuances of common stock other than on a pro
rata basis to all stockholders would reduce each stockholder's proportionate
interest in Capital One.
An increase in the authorized number of shares of common stock could have an
anti-takeover effect. If we issue additional shares in the future, such
issuance could dilute the voting power of a person seeking control of Capital
One, thereby making an attempt to acquire control of Capital One more
difficult or more expensive. We are not aware of any attempt, or contemplated
attempt, to acquire control of Capital One, and we are not presenting this
proposal with the intent that it be used as an anti-takeover device.
Vote Necessary to Approve Proposal. The affirmative vote of the holders of a
majority of the outstanding shares of common stock entitled to vote at the
meeting is necessary for approval of Item 2. Therefore, abstentions
effectively count as votes against this proposal.
The Board of Directors recommends that you vote "FOR" the proposed amendment
to Capital One's Restated Certificate of Incorporation.
24
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(Item 3 on the Proxy Card)
The Board of Directors, upon the recommendation of the Audit Committee, has
selected the firm of Ernst & Young LLP as independent auditors for 2000. The
Board is submitting this proposal to the vote of the stockholders in order to
obtain their view on the Board's selection. If stockholders do not ratify the
selection of Ernst & Young LLP, the Board of Directors will reconsider the
selection of independent auditors.
Representatives of Ernst & Young LLP are expected to be present at the
annual meeting. They will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
The affirmative vote of a majority of the shares of common stock present in
person or represented by proxy and entitled to vote at the annual meeting is
required to ratify the selection of Ernst & Young LLP as independent auditors
for 2000. Therefore, abstentions effectively count as votes against this
proposal.
The Board recommends a vote "FOR" the ratification of Ernst & Young LLP as
the independent auditors for 2000.
25
<PAGE>
OTHER BUSINESS
We know of no other business that will be presented for consideration at the
annual meeting. If other matters are properly brought before the meeting, the
persons named in the accompanying proxy card will vote such proxy at their
discretion.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders for the fiscal year ended December 31,
1999, including consolidated financial statements, is being furnished along
with this proxy statement to stockholders of record on March 1, 2000. The
Annual Report to Stockholders does not constitute a part of the proxy
soliciting material. A copy of our Annual Report on Form 10-K, which is filed
with the Securities and Exchange Commission, may be obtained at the annual
meeting, at the Securities and Exchange Commission's website at www.sec.gov or
by contacting our Investor Relations Department at our address on the front
cover of this proxy statement.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
If you wish to present a stockholder proposal at the 2001 annual meeting and
wish to have such proposal considered for inclusion in our 2001 proxy
statement, you must send us the proposal, along with any supporting statement,
to the Corporate Secretary, so that it is received at the address on the front
cover of this proxy statement on or before November 26, 2000. All proposals
must comply with applicable Securities and Exchange Commission regulations.
Under our bylaws, if you wish to nominate directors for election, or present
other business before the stockholders at the annual meeting, you must give
proper written notice of any such nomination or business to the Corporate
Secretary not before January 29, 2001 and not after February 18, 2001. If the
annual meeting for 2001 is not within thirty days before or seventy days after
April 27, 2001, the anniversary date of this year's annual meeting, you must
send notice within ten days following any notice or publication of the
meeting. Your notice must include certain information specified in our bylaws
concerning the nomination or the business. A copy of our bylaws may be
obtained from the Corporate Secretary at Capital One's address on the front
cover of this proxy statement.
INTERNET AND TELEPHONE VOTING
Shares Directly Registered in the Name of the Stockholder
Stockholders with shares registered directly with Capital One's transfer
agent, First Chicago Trust Company of New York, a division of Equiserve, may
vote telephonically by calling EquiServe at 877-PRX-VOTE (877-779-8683) or
electronically via the Internet at the following address on the World Wide
Web:
www.eproxy.com/cof
Votes submitted via the Internet through EquiServe's program must be
received by 8:00 PM (EST) on April 26, 2000. The giving of a proxy by
telephone or via the Internet will not affect your right to vote in person if
you decide to attend the annual meeting.
Shares Registered in the Name of a Brokerage Firm or Bank
A number of brokerage firms and banks participate in a program provided
through ADP Investor Communication Services that offers telephone and Internet
voting options. This program is different from the program provided by
EquiServe for shares registered in the name of the stockholder. If your shares
are held in
26
<PAGE>
an account at a brokerage firm or bank participating in the ADP program, you
may vote those shares telephonically by calling the telephone number or via
the Internet as set forth on your voting form. Votes submitted via the
Internet through the ADP program must be received by 11:59 PM (EST) on April
26, 2000. The giving of a proxy by telephone or via the Internet will not
affect your right to vote in person if you decide to attend the annual
meeting.
Proxies given pursuant to Internet and telephone voting are permitted under
applicable law. These telephone and Internet voting procedures are designed to
authenticate a stockholder's identity, to allow a stockholder to give his or
her voting instructions and to confirm that a stockholder's instructions have
been recorded properly. Stockholders voting via the Internet through either
EquiServe or ADP should understand that there may be costs associated with
electronic access, such as usage charges from Internet access providers and
telephone companies, that must be borne by the stockholder.
ELECTRONIC DELIVERY OF FUTURE ANNUAL MEETING MATERIALS
Capital One is offering its stockholders the opportunity to consent to
receiving Capital One's future proxy materials and annual reports
electronically by providing the appropriate information when you vote via the
Internet. Electronic delivery could save Capital One a significant portion of
the costs associated with printing and mailing its annual meeting materials,
and we hope that our stockholders find this service convenient and useful. If
you consent and Capital One elects to deliver future proxy materials and/or
annual reports to you electronically, then Capital One will send you a notice
(either by electronic mail or regular mail) explaining how to access these
materials but will not send you paper copies of these materials unless you
request them. Capital One may also choose to send one or more items to you in
paper form despite your consent to receive them electronically. Your consent
will be effective until you revoke it by terminating your registration at the
website www.InvestorDelivery.com if you hold shares at a brokerage firm or
bank participating in the ADP program, by contacting EquiServe if you hold
shares in your own name, or by contacting Capital One.
By consenting to electronic delivery, you are stating to Capital One that
you currently have access to the Internet and expect to have access in the
future. If you do not have access to the Internet, or do not expect to have
access in the future, please do not consent to electronic delivery because
Capital One may rely on your consent and not deliver paper copies of future
annual meeting materials. In addition, if you consent to electronic delivery,
you will be responsible for your usual Internet charges (e.g., online fees) in
connection with the electronic delivery of the proxy materials and annual
report.
By Order of the Board of Directors,
/s/ John G. Finneran, Jr.
John G. Finneran, Jr.
Corporate Secretary
March 21, 2000
27
<PAGE>
[LOGO OF CAPITAL ONE]
<PAGE>
[FRONT OF CARD]
REVOCABLE PROXY
P CAPITAL ONE FINANCIAL CORPORATION
R
O Annual Meeting of Stockholders
X April 27, 2000
Y THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard D. Fairbank and John G. Finneran,
Jr., and either of them, proxies of the undersigned, with full power of
substitution, to vote all the shares of Common Stock of Capital One
Financial Corporation, a Delaware corporation (the "Corporation"), held of
record by the undersigned on March 1, 2000, at the Annual Meeting of
Stockholders to be held April 27, 2000, and at any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE
UNDERSIGNED STOCKHOLDER. IF NO CHOICE IS SPECIFIED BY THE STOCKHOLDER, THIS
PROXY WILL BE VOTED "FOR" ALL PORTIONS OF ITEMS (1), (2) AND (3), AND IN
THE PROXIES' DISCRETION ON ANY OTHER MATTERS COMING BEFORE THE MEETING.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such stock and hereby ratifies and
confirms all that said proxies, their substitutes or any of them may
lawfully do by virtue hereof.
Nominees for the Election of Directors are:
1. Richard D. Fairbank 2. Stanley I. Westreich
(Continued and to be dated and signed on reverse side)
- --------------------------------------------------------------------------------
Fold and Detach Here If You Are Returning Your Proxy
Solicitation/Voting Instruction Card By Mail
<PAGE>
[TOP BACK OF CARD]
[X] Please mark your
votes as in this example.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Directors recommend a vote FOR Items 1, 2 and 3.
- -----------------------------------------------------------------------------------------------------------------------
FOR WITHHOLD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
AUTHORITY
<S> <C> <C>
1. Election of 2. Approval of 3. Ratification
Directors Amendment to of Ernst &
(All nominees Capital One's Young LLP as
listed on reverse Restated independent
side.) Certificate of auditors of the
Incorporation Corporation for
to increase the 2000.
number of
authorized 4. In their
shares of discretion the
common stock proxies are
from 300 authorized to
million to one vote upon such
billion. other matters as
may come
before the
meeting or any
adjournment
thereof.
To withhold authority to vote for any individual nominee, write such nominee's name in the space provided below.
___________________________
-----------------------------------
All as more particularly described
in Capital One's Proxy Statement
for the Annual Meeting of
Stockholders to be held on April
27, 2000, receipt of which is
hereby acknowledged.
Please date this Proxy Card and
sign your name exactly as it
appears hereon. Where there is more
than one owner, each should sign.
When signing as an attorney,
administrator, executor, guardian
or trustee, please add your title
as such. If executed by a
corporation, this Proxy Card should
be signed by a duly authorized
officer indicating such officer's
authority. If executed by a
partnership, please sign in
partnership name by authorized
persons indicating such authority.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------------------
Fold And Detach Here If You Are Returning Your Proxy Solicitation/Voting
Instruction Card By Mail
[BOTTOM BACK OF CARD]
CAPITAL ONE FINANCIAL CORPORATION
Annual Meeting of Stockholders
Thursday, April 27, 2000
10:00 a.m.
Fairview Park Marriott Hotel
3111 Fairview Park Drive
Falls Church, VA 22042-4500
Capital One Financial Corporation offers three convenient ways to vote your
shares: by mail, by telephone or electronically via the Internet. Voting by
telephone or via the Internet will eliminate the need to mail voted cards. To
vote by telephone or via the Internet, please have this card and your social
security number available.
1. To vote by telephone:
. Using a touch-tone telephone, dial 1-877-PRX-VOTE (1-877-779-8683).
1. To vote by Internet:
. Log on to the Internet and go to the web site
http://www.eproxyvote.com/cof.
-----------------------------
Both the telephone and the Internet voting systems preserve the confidentiality
of your vote and will confirm your voting instructions with you before
submission. If you vote online, you will have the opportunity to consent to
electronic delivery of future annual meeting materials.
In order to receive future proxy materials and annual reports electronically,
please visit www.econsent.com/cof to register. To complete the enrollment, you
--------------------
will need your U.S. taxpayer identification number and the Account Number which
appears on your check stub/Dividend Reinvestment Plan statement.
YOUR VOTE IS IMPORTANT TO US. THANK YOU FOR VOTING.
