The Capital One CEO salary is quite a unique one. Despite its standing and reputation as one of the most successful American holding companies, it’s one of the few companies (if at all others exist) that do not pay their CEOs a base salary. Richard Dana Fairbank is the Chairman, CEO, and President of the board of Capital One, a position he has held since 1995 after leading the company from a start-up to a multi-billion dollar conglomerate. Unlike many of his peers and against industry standards, he doesn’t get any base salary only remunerated by company stocks and performance-based incentives.
This method of determining the Capital One CEO salary, according to securities reports, depends largely on how well the bank’s stocks perform generally in a fiscal year. Being one of the largest shareholders, an impressive outing for the year would mean an increase in stock prices and dividends which would, in turn, favor the CEO. The billionaire is also guaranteed to earn more when the company does well in other spheres of business. An increase in business transactions would lead to an increase in deposits thus increasing revenue and profits for the Virginia-based firm. In the end, Fairbank gets a chunk of this as performance-related bonuses.
However, this method isn’t without its demerits. The CEO was fined by the Federal Trade Commission (FTC) in September 2021 for failing to report stock compensations. The regulators slapped Fairbank with a fine of $637,950 for breaking the US antitrust laws. According to the Hart-Scott-Rodino (HSR) Act of 1976, CEOs and other top business executives must notify the FTC and the Ministry of Justice when they acquire new shareholdings exceeding $100 million in the company they manage. This act aimed to checkmate the issues of antitrust infringements. Sadly, Fairbanks defaulted in this area. The agency stated that Fairbank obtained 101,148 new units of shares in the mega lender in 2018 without the agency’s knowledge. This increased his holdings to well above $168.8 million at the time. When he noticed his mistake, Fairbank quickly rushed to make a correction filling in 2019 after almost two years.
This isn’t the first time the CEO would do this. The regulatory body states that the Capital One CEO had on two other occasions, in 1999 and 2004, failed to comply with the HSR Act. He was pardoned and given a free pass after pledging to do the right thing going forward. However, the regulators are having none of it this time. The body’s spokesperson says that powerful CEOs and Wall Street top executives aren’t exempted from adhering to the antitrust laws. The company on the other hand apologized whilst citing “administrative errors” on the part of the law firm responsible for making the filling. The bank however agreed to pay the $637,950 fine.
Aside from the scandal, 2021 was a good year for Capital One and the CEO. The top-rated bank, with more than $72 billion in market capitalization, posted $26 million in revenues for the year. This company’s stock prices also saw a boost as 2021 was a year of recovery from the economic woes of 2020 caused by the COVID-19 pandemic. The total compensation for 2021 was the biggest Capital One CEO salary reported yet.
Richard Fairbank has been the CEO of Capital One since 1994
Richard Dana Fairbank stirred Capital One from just a start-up to its position amongst the big 10 banks and top 100 companies in the US. He and Nigel Morris founded the bank in 1988 some years after the former obtained his MBA from the Stanford Graduate School of Business. Fairbank has remained the CEO of the company since it went public in November 1994. He became the Chairman and CEO in 2003. He subsequently assumed the position of Chairman, President, and CEO in February 2005 leading it to become a holding company operating under the name Capital One Financial Corporation N.A. Amongst the subsidiaries of the Maclean, Virginia-based Capital One Financial Corporation N.A. is Capital One bank (its major subsidiary), Chevy Chase Funding LLC, Capital One Municipal Funding, Capital One Asset Management LLC, BlueTarp Financial LLC, Capital One Services LLC, TripleTree LLC, Jewel Commerce LLC, Unitranche Loan Transaction li LLC, and Chevy Chase Funding LLC amongst others.
The CEO is responsible for the daily operations of the bank and its other subsidiaries. As the highest shareholder of the company, Fairbank receives the highest remuneration largely due to its shareholdings. As of the 2nd of August 2022, his net worth is about $523 million. He holds 3,771,401 units of shares in Capital One whose value reached about $1.1 billion in January 2018 when the bank’s share price reached an all-time high price.
The Capital CEO’s salary depends on shares and other incentives
Despite not receiving any base pay, the Citibank CEO’s salary remains one of the highest in the financial industry in the Virginia area. He last received any base salary in 1997 but still ranks well in the industry. As stated earlier, his pay depends largely on his shareholdings and compensations and performance-related bonuses.
The Capital One CEO salary for 2009 was $6.076 million in total. This figure consisted of $2 million in stock awards, $4 million in option awards, and $76,785 in other compensations. He received no cash bonuses or base salary for the year. Capital One’s fortunes improved and the CEO earned a total of $22.6 million as compensation in 2012.
Moving to recent years, the CEO received a total of $19.75 million in 2019. Poor performance due to the coronavirus outbreak saw the value reduce to $18.75 in 2020. Stock options awards accounted for $7.7 million in 2019. He received lesser stock awards in 2019 when Capital One introduced a new payment plan where incentive awards would be pushed to the next year.
Last year, 2021, was indeed a year of recovery. Fairbank’s compensation experienced a big boost. He received a total of $20.1 million ($20,454,013 actually) as performance-based compensation for 2021. The securities reports filled by proxies showed that Fairbank received $0 as base salary, $15,817,843 as a stock award, $4,550,000 in performance-related bonus, and $86,170 in other types of compensations. He wasn’t awarded any form of stock options award for the year. With the way things are going this year in terms of stock prices and Capital One’s financial performance, Fairbank’s pay is sure to rise again this year.
Capital One is listed amongst the best places to work in the US
Aside from Fairbank and his compensation, Capital One is a good place to work. Career growth is assured and the pay is in line with industry standards, Richard Fairbank makes it a point of duty that employees must be satisfied. Despite the huge returns he makes, the median pay of the average Capital One employee is rising to match that of the CEO at a fast rate. The company also rewards loyalty and competence no matter the age. Pierre Leroy, the bank’s oldest executive remains an independent director in the Virginia-based mega lender.