Richard Fairbank
About Richard Fairbank
Founder, Chairman and Chief Executive Officer of Capital One since the IPO in 1994 (Chairman since Feb 1995); age 74; BA and MBA from Stanford University . Capital One delivered 2024 net revenue of $39.1B (+6% YoY), adjusted diluted EPS of $13.96 (+12% YoY), and one-year TSR of 38.3% (three-year 30.4%, five-year 89.4%) under Fairbank’s leadership; ROTCE was 11.2% and tangible book value per share rose to $106.97 (+7% YoY) . He is a founder-CEO with a tech/data operating model, no cash salary, and 100% deferred, predominantly equity-based pay tied to multi-year financial and relative TSR metrics .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Capital One Financial Corporation | Founder; CEO since IPO; Chairman since Feb 1995 | 1994–present | Built a data/technology-led bank; positioned COF as an innovation leader; drives strategy, risk, and long-term investments . |
| Strategy consulting (pre-Capital One) | Strategy consultant | Pre-1994 | Advised leading companies on long-term strategy and growth; background informs COF’s strategic planning . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| — | No current public company directorships | — | Focused on Capital One; no external public board obligations . |
Fixed Compensation
- Base salary: $0; CEO receives no cash salary .
- Perquisites/useful programs: executive term life insurance ($5M benefit), comprehensive annual health screening, home office maintenance, electronic home security monitoring, personal use of corporate aircraft; committee deems these comparable to peers . CEO “All Other Compensation” for 2024 totaled $110,218 (security, insurance, charitable, etc.) .
Performance Compensation
CEO compensation is entirely at-risk and 100% deferred for at least three years. For performance year 2024 (granted across Feb 2024 and Feb 2025):
| Component | Grant date | Amount / Shares | Vesting / Terms |
|---|---|---|---|
| Cash-settled RSUs | Feb 2024 | 18,580 RSUs; $2,500,125 grant-date value | Cliff vest Feb 15, 2027; cash-settled on 15-day avg price; subject to performance-based vesting and clawback . |
| Performance Share Units (Financial) | Feb 2025 | Target 91,196 of 102,440 total target PSUs; $18.25M value | 3-year performance (2025–2027); metrics: D+TBV and Adjusted ROTCE (equal weight for 2025 grants); payout 0–150% vs KBW peers, with absolute ROTCE reduction if not positive in any year . |
| Performance Share Units (TSR) | Feb 2025 | Target 11,244 of 102,440 total target PSUs; ~$2.25M value | 3-year relative TSR vs KBW peers; payout 0–150% . |
| Year-end RSUs (cash-settled) | Feb 2025 | 24,986 RSUs; $5,000,198 value | Cliff vest Feb 15, 2028; cash-settled; performance-based vesting and clawback . |
| Deferred Cash Bonus | Feb 2025 | $5,500,000 | Mandatorily deferred 3 years into VNQDCP; pays in 1Q 2028; subject to clawback . |
Program features and metrics:
- Majority of year-end incentive delivered in formulaic PSUs tied to 3-year D+TBV, Adjusted ROTCE, and relative TSR vs KBW Bank Index peers; target at 55th percentile; maximum at ≥80th percentile; no vesting below 25th percentile .
- Absolute performance safeguard: if Adjusted ROTCE is not positive in a performance year, 1/6 reduction (two years not positive: 1/3 reduction; three years: forfeit entire award) .
- Recovery: misconduct clawback and Dodd-Frank restatement clawback apply to incentive awards .
Recent realized PSU outcomes (for context): 2022 grant settled in 2025 at 70% (Financial PSUs: D+TBV 35th percentile; Adjusted ROTCE 50th percentile; no absolute reduction) and TSR PSUs settled at 150% (80th percentile) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 4,201,689 shares (includes 430,139 acquirable within 60 days via options/RSUs); 1.10% of outstanding common shares as of Feb 4, 2025 . |
| Stock options outstanding | 106,973 options @ $63.73 exp. 2/3/2026; 81,486 options @ $86.34 exp. 2/2/2027 (exercisable) . |
| Unvested awards (select) | Cash-settled RSUs: 34,929 and 18,580 unvested (2024 grants); Performance shares max opportunities include 140,459 (2024 grant) and 46,820 (TSR, 2024) and prior cycles (see Outstanding Equity Awards) . |
| Ownership guidelines | CEO must hold $10.5M of COF stock; post-termination hold 50% of requirement for one year (except death/disability/CoC); all executives currently in compliance . |
| Retention/holding | Executives must hold 50% of net shares from vesting for one year and until in compliance with guidelines . |
| Hedging/pledging | Strict prohibition on short sales, hedging and pledging of COF securities for directors and officers . |
Insider selling pressure takeaway: sizable unvested RSUs (2027/2028 vests) and 3-year PSU cycles concentrate realizations in 2027–2028; ownership/retention rules plus hedging/pledging bans and performance/ROTCE reduction features mitigate near-term selling incentives .
Employment Terms
- Employment agreement: None for CEO; “no cash salary” structure maintained .
- Change-of-control: CEO has a double-trigger agreement; severance equals 2.5× sum of notional salary ($1M for 2024) plus “Highest Annual Bonus,” plus pro‑rated bonus; continued benefits and service credits; no excise tax gross-ups .
- Potential payment example (as of 12/31/2024): CoC followed by qualifying termination = $20,426,177 cash, $93,663,472 equity acceleration/continuation, $346,318 benefits; total $114,435,967 .
- Executive Severance Plan: CEO does not participate; NEO plan provides up to 30% of total target comp plus pro‑rated severance bonus on involuntary termination without cause, with COBRA subsidy and outplacement .
- Clawbacks: misconduct and financial restatement clawbacks apply to incentive compensation .
- Deferred compensation: CEO’s deferred cash bonuses are mandatorily deferred into VNQDCP; 2024 VNQDCP balance $15,012,441; also deferred 2003 PSU delivery account $43,096,378 (delivered at termination) .
- Pension (frozen plans): CBPP and Excess CBPP present values at 12/31/2024 of $33,075 and $132,800; plans frozen since 1995 .
Board Governance
- Board service: Director since 1994; Chairman of the Board; not independent; no Board committee assignments .
- Dual-role implications: COF uses combined Chair/CEO model but maintains a robust Lead Independent Director (LID) with defined authorities (agenda approval, executive sessions, CEO evaluation, succession planning, investor engagement); all standing committees are fully independent with independent chairs .
- Board activity/attendance: 14 Board meetings in 2024; committees held 32 meetings; all current directors met ≥75% attendance except one (Mr. Williams at ~74.2% due to a family emergency) .
- Independence: 11 of 12 director nominees independent; CEO is the only management director .
Compensation & Incentives Analysis
- Pay-for-performance alignment: 84% of 2024 CEO compensation is equity-based; 100% deferred ≥3 years; majority in formula-vested PSUs tied to multi-year D+TBV, Adjusted ROTCE and relative TSR vs KBW peers, with absolute ROTCE “reduction” safeguard; no guaranteed incentive awards .
- Mix shift and rigor: Ongoing use of cash-settled RSUs subject to performance-based vesting on Core Earnings; no option repricing; robust clawbacks; hedging/pledging prohibited .
- Shareholder support and responsiveness: 95% Say‑on‑Pay approval in 2024; enhanced disclosures and added relative TSR component based on investor feedback .
- Benchmarking: Peer comparator group includes large banks, payments networks, and consumer finance peers (e.g., AXP, JPM, V, MA, BAC, DFS) to reflect competition for executive talent .
Company Performance Context (for 2024 compensation decisions)
| Metric | 2023 | 2024 |
|---|---|---|
| Net revenue ($B) | 36.8 | 39.1 |
| Diluted EPS (GAAP) | $11.95 | $11.59 |
| Adjusted diluted EPS | $12.52 | $13.96 |
| Operating efficiency ratio (GAAP) | 44.3% | 43.3% |
| ROTCE | 13.0% | 11.2% |
| Tangible book value per share | $99.78 | $106.97 |
| One-year TSR | 44.3% | 38.3% |
Notes: 2024 performance year also included signing of the pending Discover acquisition (announced Feb 2024), strong liquidity (CET1 13.5%), insured deposits ~82%, and disciplined credit risk management through post‑pandemic normalization .
Say‑on‑Pay & Shareholder Feedback
- 2024 Say-on-Pay approval: 95% .
- Actions in response to investors: clearer realized PSU disclosure; relative TSR tranche for CEO; expanded and diversified peer group; enhanced process transparency .
Risk Indicators & Red Flags
- Dual Chair/CEO mitigated by empowered LID, independent committees, and frequent executive sessions with risk leaders .
- Robust clawbacks (misconduct and restatement) and performance-based vesting guardrails (Core Earnings and Adjusted ROTCE absolute tests) reduce windfall risk .
- No excise tax gross-ups; no option repricing; hedging/pledging prohibited; double-trigger CoC equity vesting .
Equity Award Vesting Schedule (Forward)
- Cash-settled RSUs from Feb 2024 vest Feb 15, 2027; Feb 2025 RSUs vest Feb 15, 2028; both subject to performance-based vesting .
- 2024 year-end PSUs (granted Feb 2025) cliff-vest after three-year measurement (Jan 1, 2025–Dec 31, 2027) based on relative D+TBV, Adjusted ROTCE, and TSR formulas .
Investment Implications
- Alignment: The CEO’s no-salary, fully deferred, equity- and formula-heavy design closely ties outcomes to multi-year value creation and downside safeguards (Core Earnings and absolute ROTCE tests), reducing misalignment risk and limiting near-term selling pressure .
- Retention: Large unvested equity, strict ownership/holding rules, and deferred cash create substantial “golden handcuffs” through 2027–2028, supporting leadership continuity through the Discover integration window .
- Governance: Dual Chair/CEO structure is offset by a strong LID and fully independent committees; high Say-on-Pay support and no shareholder-unfriendly features (e.g., tax gross-ups) signal constructive pay governance .
- Catalyst/Risk: PSU outcomes are sensitive to relative D+TBV/ROTCE and TSR vs KBW banks and to absolute ROTCE; execution on credit normalization and Discover integration will be key drivers of realized compensation and insider sale timing post-vesting .