Document:

Exhibit

Exhibit 10.2.21
    
CAPITAL ONE FINANCIAL CORPORATION
2004 Stock Incentive Plan
Restricted Stock Unit Award Agreement

No. of Units: 20,675

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated February 2, 2017 (the “Date of Grant”), between CAPITAL ONE FINANCIAL CORPORATION, a Delaware corporation (“Capital One” or the “Company”), and Richard D. Fairbank (“you”), is made pursuant and subject to the provisions of the Company’s 2004 Stock Incentive Plan, as amended and restated (the “Plan”).  All capitalized terms used herein that are defined in the Plan shall have the same meaning given them in the Plan unless otherwise defined herein.

WHEREAS, Article 8 of the Plan provides for the award from time to time in the discretion of the Committee of Restricted Stock Units, representing shares of common stock of Capital One, $.01 par value per share (“Common Stock”), the vesting and issuance of which are subject to continued employment with Capital One or other conditions;

W I T N E S S E T H :

1.    Grant of Restricted Stock Units. Capital One hereby grants to you 20,675 Restricted Stock Units (the “Restricted Stock Units”). The Restricted Stock Units shall vest only in accordance with the provisions of this Agreement and of the Plan.  The Restricted Stock Units will not have voting rights.

2.    Non-Transferability.  Subject to the provisions of Section 3 hereof, the rights represented by the Restricted Stock Units shall not be assignable or transferable, or otherwise alienated or hypothecated, under any circumstances.  Any purported or attempted transfer of such units or such rights shall be null and void and shall result in the immediate forfeiture and cancellation of the Restricted Stock Units.  

3.    Payment of Restricted Stock Units.  

(a)Vesting.  Except as provided in Sections 3(b), 3(c), 3(d), 12(a) and 12(b) below, and to the extent not previously vested or forfeited as provided herein, the Restricted Stock Units shall vest in full on February 15, 2020 (the “Vesting Date”).  The period between January 1, 2017, and the Vesting Date shall be the “Performance Period.”  

Upon vesting, the Restricted Stock Units shall become payable in cash in an amount equal to the product of (i) the average Fair Market Value of the Common Stock for the 15 trading days preceding the Vesting Date and (ii) the number of Restricted Stock Units vesting on the Vesting Date (subject to Section 5 below).  

(b)    Effect of Termination of Employment.

(i)    Except as provided in Section 3(b)(ii), 3(b)(iii) and 3(d), upon your termination of employment with Capital One for any reason all Restricted Stock Units shall immediately be forfeited (to the extent not previously vested or forfeited as provided herein).

(ii)    Upon your termination of employment with Capital One as a result of your death or Disability, the Restricted Stock Units shall immediately vest, the date of such death or Disability shall be the Vesting Date and the cash shall become payable in full as described in Section 3(a) (to the extent not previously vested or forfeited as provided herein).  

 (iii)    Upon your termination of employment with Capital One as a result of Retirement, the Restricted Stock Units shall continue to vest on the Vesting Date (to the extent not previously 

vested or forfeited as provided herein) and remain subject to reduction pursuant to Sections 12(a) and 12(b).

(c)    Vesting Schedule Upon Becoming Subject to Withholding.

(i)    Unless otherwise determined by the Committee or the independent members of the Board of Directors, as applicable, and to the extent permitted or required by law, Capital One may determine, in its sole discretion, following you becoming subject to withholding under applicable tax laws  at a time when amounts are not otherwise vesting pursuant to this Section 3, that a portion of the Restricted Stock Units shall vest and become payable, only and to the extent sufficient on the date of such determination (the “Determination Date”), to provide for the payment of any tax liability in accordance with applicable tax laws, in an amount equal to the product of (i) the Fair Market Value of the Common Stock for the Determination Date and (ii) the number of Restricted Stock Units vesting on the Determination Date. The number of Restricted Stock Units vesting pursuant to the preceding sentence shall be rounded up to the nearest whole Restricted Stock Unit. It is understood that the remaining portion of the Restricted Stock Units shall continue to vest on the Vesting Date as provided herein (to the extent not previously vested or forfeited as provided herein).

(ii)    Notwithstanding any other provision of this Agreement to the contrary, Capital One will take all necessary steps to withhold the amount determined in accordance with the immediately foregoing paragraph in satisfaction of any applicable tax withholding liability, unless Capital One makes another method of payment available to you. 

(d)    Effect of Change of Control.  

(i)    Upon your termination of employment by Capital One without Cause or by you for Good Reason (each as defined below), in either case on or prior to the second anniversary of the occurrence of a Change of Control of Capital One, then, notwithstanding anything herein to the contrary, the Restricted Stock Units shall vest, the date of such termination shall be the Vesting Date and the Restricted Stock Units shall become payable in cash as described in Section 3(a) immediately following the occurrence of your termination of employment following such Change of Control (to the extent not previously vested or forfeited as provided herein); provided, however, that if the Restricted Stock Units are considered deferred compensation under Section 409A of the Code and not exempt from Section 409A of the Code as a short-term deferral or otherwise, and you are a “specified employee,” as defined in and pursuant to Reg. Section 1.409A 1(i) or any successor regulation, on the date of any such termination of employment without Cause or for Good Reason, you will not be entitled to such vesting earlier than the earlier of (i) the date which is six months from the date of your “separation from service” (as defined in Reg. Section 1.409A 1(h) or any successor regulation) as a result of such termination and (ii) your death.

(ii)    For purposes of this Section 3(d), “Cause” shall mean (1) the willful and continued failure to perform substantially your duties with the Company or any Affiliate (other than any such failure resulting from incapacity due to physical or mental illness or following your delivery of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to you by the Board or the Committee that specifically identifies the manner in which the Board or Committee believes that you have not substantially performed your duties, or (2) the willful engaging by you in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company. No act, or failure to act, on the part of you shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that your action or omission was in the best interests of the Company. Any act, or failure to act, based upon (A) authority given pursuant to a resolution duly adopted by the Board, or if the Company is not the ultimate parent corporation of the Affiliate and is not publicly-traded, the board of directors of the ultimate parent of the Company (the “Applicable Board”) or (B) the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests 

of the Company. The cessation of your employment shall not be deemed to be for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Applicable Board (excluding you, if you are a member of the Applicable Board) at a meeting of the Applicable Board called and held for such purpose (after reasonable notice is provided to you and you are given an opportunity, together with your counsel, to be heard before the Applicable Board), finding that, in the good faith opinion of the Applicable Board, you are guilty of the conduct described in this Section 3(d)(ii), and specifying the particulars thereof in detail.

(iii)    For purposes of this Section 3(d), “Good Reason” shall mean (1) the assignment to you of any duties inconsistent in any respect with your position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any action by the Company that results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you; (2) any failure by the Company to pay your compensation owed other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you; (3) the Company’s requiring you (I) to be based at any office or location more than 35 miles from the office or location at which you were required to work as of the date of this Agreement or (II) to travel on Company business to a substantially greater extent than required during the 120-day period immediately prior to the date the Change of Control occurs; or (4) any other action or inaction that constitutes a material breach by the Company of this Agreement or any employment agreement.  For purposes of this Section 3(d)(iii) of this Agreement, any good faith determination of Good Reason made by you shall be conclusive. Your mental or physical incapacity following the occurrence of an event described above in clauses (1) through (4) shall not affect your ability to terminate employment for Good Reason.

(iv)    Any termination by the Company for Cause, or by you for Good Reason, shall be communicated by Notice of Termination to the other party. “Notice of Termination” means a written notice that (1) indicates the specific termination provision in this Agreement relied upon, (2) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated, and (3) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice). The failure by you or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of you or the Company, respectively, hereunder or preclude you or the Company, respectively, from asserting such fact or circumstance in enforcing your or the Company’s respective rights hereunder.

(v)    “Date of Termination” means, if your employment is terminated by the Company for Cause, or by you for Good Reason, the date of receipt of the Notice of Termination or such later date specified in the Notice of Termination, as the case may be. You and the Company shall take all steps necessary to ensure that any termination described in this Section 3(d) constitutes a “separation from service” within the meaning of Section 409A of the Code, and notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place shall be the “Date of Termination.” 

4.    Modification and Waiver. Except as provided in the Plan with respect to determinations of the Committee and subject to the Committee’s right to amend the Plan, neither this Agreement nor any provision hereof can be changed, modified, amended, discharged, terminated or waived orally or by any course of dealing or purported course of dealing, but only by an agreement in writing signed by you and Capital One; provided that, changes, modifications and amendments not detrimental to you may be made in writing signed only by Capital One. No such agreement shall extend to or affect any provision of this Agreement not expressly changed, modified, amended, 

discharged, terminated or waived or impair any right consequent on such a provision. The waiver of or failure to enforce any breach of this Agreement shall not be deemed to be a waiver or acquiescence in any other breach thereof.

5.    Tax Withholding.  If you become subject to withholding under applicable tax laws other than as described in Section 3(c), you agree to pay Capital One the amount required to be withheld by one or more of the following methods:

(a)automatically through payroll withholding; or

		
	(b)
	by such other methods as Capital One may make available from time to time.

6.    Dividend Equivalents.  With respect to the Restricted Stock Units, you shall be credited with dividend equivalents as and when dividends are paid to the Company’s other stockholders.  By accepting this Award, you agree that such dividend equivalents shall accumulate and be paid to you in cash (without interest) as and when you receive payment under Section 3 with respect to the Restricted Stock Units from which such dividend equivalents are derived.  You further agree that all such dividend equivalents shall be subject to the same vesting requirements that apply to the Restricted Stock Units from which such dividend equivalents are derived.

7.    Governing Law.  This Agreement shall be governed by United States federal law and, to the extent not preempted thereby, by the laws of the State of Delaware. Capital One and you hereby consent and submit to the personal jurisdiction and venue of any state or federal court located in any city or county of Delaware for resolution of any and all claims, causes of action or disputes arising out of this Agreement.  You and Capital One agree that the court shall not set aside the Committee’s determinations unless there is clear and convincing evidence of bad faith or fraud.

8.    Conflicts.  In the event of any conflict between the provisions of the Plan as in effect on the Date of Grant and the provisions of this Agreement, except terms otherwise defined herein, the provisions of the Plan shall govern.  All references herein to the Plan shall mean the Plan as in effect on the date hereof.

9.    Bound by Plan.  In consideration of the grant of the Restricted Stock Units, you agree that you will comply with such conditions as the Committee may impose on the Restricted Stock Units and be bound by the terms of the Plan.

10.       Employment Status.  This Agreement does not constitute a contract of employment nor does it alter your terminable at will status or otherwise guarantee future employment.

11.      Binding Effect.  This Agreement shall be binding upon, enforceable against, and inure to the benefit of you and your legatees, distributees and personal representatives, and Capital One and its successors and assigns.

12.    Performance-Based Adjustments, Clawbacks and Other Forfeiture Events.  

(a)    Performance-Based Adjustment. The number of Restricted Stock Units vesting on the Vesting Date shall be subject to reduction as follows: 
(i)     For each fiscal year of the Company ending during the Performance Period, if any, that the Core Earnings for the Company for such fiscal year, as certified by the Committee, are not positive (i.e., Core Earnings are not greater than zero):
(A)    The number of Restricted Stock Units scheduled to vest on the Vesting Date shall be reduced by 3,445;
(B)    The Committee shall determine the extent, if any, to which you are accountable for such outcome, and, based on such determination, the Committee shall determine (I) whether the number of Restricted Stock Units scheduled to vest on the Vesting 

Date shall be reduced by up to an additional 3,445 and (II) whether the Vesting Date shall be delayed for all or any portion of such Restricted Stock Units that are not so reduced.
The Committee shall make the determinations referenced in Section 12(a)(i)(B) in its sole discretion, taking into account the factors set forth on Appendix A hereto.
 (ii)    For purposes of this Section 12(a), “Core Earnings” means the Company’s net income available to common stockholders, excluding, on a tax-adjusted basis, the impact of (A) impairment or amortization of intangible assets, (B) the build or release of the allowance for loan and lease losses, calculated as the difference between the provision for loan and lease losses and charge-offs, net of recoveries, and (C) the change in the combined uncollectible finance charge and fee reserve.
(iii)    In the event of any change to U.S. generally accepted accounting principles affecting the treatment or classification of any component of Core Earnings, such metric shall be calculated in a manner consistent with the definitions herein to the extent practicable. 
Notwithstanding anything to the contrary in this Agreement and for the avoidance of doubt, in the event of a Change of Control of Capital One, there shall be no reduction pursuant to this Section 12(a) for any fiscal year ending after the date of such Change of Control.
(b)    Clawback.  The number of Restricted Stock Units vesting on the Vesting Date shall be subject to reduction in an amount as determined by the Committee in its sole discretion in the event that prior to the Vesting Date the Committee in its sole discretion determines that (i) there has been misconduct resulting in either a violation of law or of Capital One policy or procedures, including but not limited to Capital One’s Code of Business Conduct and Ethics, that in either case causes significant financial or reputational harm to Capital One and (ii) either you committed the misconduct or failed in your responsibility to manage or monitor the applicable conduct or risks.
(c)    Forfeiture Event.  You agree to reimburse the Company with respect to the Restricted Stock Units to the extent required under Section 304 of the Sarbanes-Oxley Act of 2002 or as otherwise required by law.
13.    Data Protection.  You consent to the collection, processing and transfer (including international transfer) of your personally identifiable data in connection with the grant of the Restricted Stock Units and participation in the Plan.  
14.    Severability.  This Agreement shall be enforceable to the fullest extent allowed by law.  In the event that any provision of this Agreement is determined to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, then that provision shall be reduced, modified or otherwise conformed to the relevant law, judgment or determination to the degree necessary to render it valid and enforceable without affecting the validity, legality or enforceability of any other provision of this Agreement or the validity, legality or enforceability of such provision in any other jurisdiction.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed severable from the remainder of this Agreement, and the remaining provisions contained in this Agreement shall be construed to preserve to the maximum permissible extent the intent and purposes of this Agreement.
15.    Miscellaneous.  In accepting the grant, you acknowledge and agree that:
(a)    this Agreement is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in a manner so as to comply therewith;

(b)    your obligations under this Agreement shall survive any termination of your employment with the Company for any reason;

(c)    any of the Company’s rights or remedies under this Agreement shall be cumulative and in addition to whatever other remedies the Company may have under law or equity;

(d)    any recovery by the Company under this Agreement will be a recovery of Restricted Stock Units to which you were not entitled under this Agreement and is not to be construed in any manner as a penalty;

(e)    the Company may, to the maximum extent permitted by applicable law and Section 409A of the Code, retain for itself funds or securities otherwise payable to you pursuant to this Agreement to satisfy any obligation or debt that you owe the Company, including any obligations hereunder.  The Company may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with this Agreement;

(f)    the Company reserves the right to impose other requirements on the Restricted Stock Units, any Shares acquired pursuant to the Restricted Stock Units, and your participation in the Plan, to the extent Capital One determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the administration of the Restricted Stock Units and the Plan.  Such requirements may include (but are not limited to) requiring you to sign any agreements or undertakings that may be necessary to accomplish the foregoing; and
(g)    Capital One from time to time distributes and makes available to associates disclosure documents, including a prospectus, relating to the Plan.  You may also contact the HR Help Center to obtain copies of the Plan disclosure documents and the Plan.  You should carefully read the Plan disclosure documents and the Plan.  By accepting the benefits of this Agreement you acknowledge receipt of the Plan and the Plan disclosure documents and agree to be bound by the terms of this Agreement and the Plan.  You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Capital One or a third-party designated by Capital One.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed on their behalf.    
	
			
	 
	CAPITAL ONE FINANCIAL CORPORATION

	 
	 
	 

	 
	By:
	 

	 
	 
	/s/ Mayo A. Shattuck III

	 
	 
	Mayo A. Shattuck III

	 
	 
	Chair, Compensation Committee

	 
	 
	 

	 
	PARTICIPANT

	 
	By:
	 

	 
	 
	/s/ Richard D. Fairbank

	 
	 
	Richard D. Fairbank

	 
	 
	Chair of the Board, Chief Executive Officer and President

    
                    

APPENDIX A

PERFORMANCE-BASED ADJUSTMENT DETERMINATION FACTORS

The Committee shall take into account the following factors for purposes of making any determinations referenced in Section 12(a)(i)(B) of the Agreement in its sole discretion:

		
	•
	The extent to which Core Earnings were negative;

		
	•
	Whether the outcome was the result of the performance of a line of business, control function or staff group for which you exercised direct or indirect responsibility;

		
	•
	The extent to which your performance contributed to the outcome, including your performance with respect to risk management and oversight; and

		
	•
	Such other factors as the Committee deems appropriate.

CAPITAL ONE FINANCIAL CORPORATION
2004 Stock Incentive Plan
Restricted Stock Unit Award Agreement

No. of Units: %%TOTAL_SHARES_GRANTED%-%

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated %%OPTION_DATE,'Month DD, YYYY'%-% (the “Date of Grant”), between CAPITAL ONE FINANCIAL CORPORATION, a Delaware corporation (“Capital One” or the “Company”), and %%FIRST_NAME%-% %%LAST_NAME%-% (“you”), is made pursuant and subject to the provisions of the Company’s 2004 Stock Incentive Plan, as amended and restated (the “Plan”), and all capitalized terms used herein that are defined in the Plan shall have the same meaning given them in the Plan unless otherwise defined herein.

WHEREAS, Article 8 of the Plan provides for the award from time to time in the discretion of the Committee of Restricted Stock Units, representing shares of common stock of Capital One, $.01 par value per share (“Common Stock”), the vesting and issuance of which is subject to continued employment with Capital One or other conditions;

W I T N E S S E T H :

1.    Grant of Restricted Stock Units. Capital One hereby grants to you %%TOTAL_SHARES_GRANTED%-% Restricted Stock Units (the “Restricted Stock Units”).  The Restricted Stock Units shall vest, and the underlying shares of Common Stock (such underlying shares, the “Shares”) shall be issuable, only in accordance with the provisions of this Agreement and of the Plan.  The Restricted Stock Units will not have voting rights.

2.    Non-Transferability.  Subject to the provisions of Sections 3 and 12 hereof, the rights represented by the Restricted Stock Units shall not be assignable or transferable, or otherwise alienated or hypothecated, under any circumstances.  Any purported or attempted transfer of such Restricted Stock Units or such rights shall be null and void and shall result in the immediate forfeiture and cancellation of the Restricted Stock Units.  

3.    Issuance of Common Stock.  

(a)     Vesting.  Except as provided in Sections 3(b), 3(c), 3(d), 13(a) and 13(b) below and to the extent not previously vested or forfeited as provided herein, the Restricted Stock Units shall vest, and the Shares shall be issuable in full without restrictions on transferability, other than the restrictions contained in Section 12 below, according to the following schedule:
    
One-third of the Restricted Stock Units on February 15, 2018
One-third of the Restricted Stock Units on February 15, 2019
One-third of the Restricted Stock Units on February 15, 2020

Each of the immediately above dates shall be a “Scheduled Vesting Date.”

(b)    Effect of Termination of Employment.

(i)    Except as provided in Section 3(b)(ii), 3(b)(iii), 3(b)(iv) and 3(d), upon your termination of employment with Capital One for any reason all Restricted Stock Units shall immediately be forfeited (to the extent not previously vested or forfeited as provided herein).

(ii)    Upon your termination of employment with Capital One as a result of your death or Disability, the Restricted Stock Units shall immediately vest, and the Shares shall be issuable in full without restrictions on transferability upon such termination of employment (to the extent not previously vested or forfeited as provided herein).  

(iii)    Upon your termination of employment with Capital One as a result of Retirement, the Restricted Stock Units shall continue to vest on the Scheduled Vesting Dates (to the extent not previously vested or forfeited as provided herein) and remain subject to reduction pursuant to Section 13(a) and 13(b).

(iv)    Upon your termination of employment by Capital One in a manner that makes you eligible for severance compensation or benefits, you will receive continued vesting of the Restricted Stock Units scheduled to vest on each of the Scheduled Vesting Dates as if a termination of employment had not occurred subject to (A) your execution of a separation agreement and/or general release of claims within a period of time as required by Capital One (in a form as prescribed by Capital One, a “Release”), (B) such Release becoming effective and irrevocable in accordance with its terms and (C) your continued compliance with the terms of such Release through each Scheduled Vesting Date. To the extent a Scheduled Vesting Date occurs prior to the expiration of the period of time Capital One provides you to sign the Release, you shall be entitled to vesting of the applicable portion of your Restricted Stock Units on such Scheduled Vesting Date even if you have not yet executed the Release.  For avoidance of doubt, such continued vesting shall remain subject to reduction pursuant to Section 13(a) and 13(b) and shall immediately cease (and any then-unvested Restricted Stock Units shall be immediately forfeited) in the event that you violate the terms and conditions of the Release.  For purposes of this Section 3(b)(iv), you will be considered to have experienced a termination of employment by Capital One in a manner that makes you eligible for severance compensation or benefits if (X) you are a U.S. associate and you are eligible to receive benefits under any applicable U.S. Capital One severance plan in place at the time of your termination of employment, (Y) you are a U.K. associate and experience a termination by mutual agreement or redundancy, or (Z) you are a Canadian associate and experience an involuntary termination of employment that qualifies for severance payments under local law.

(c)    Vesting Schedule Upon Eligibility for Retirement or following certain severance-eligible terminations by Capital One.

(i)    Unless otherwise determined by the Committee or the independent members of the Board of Directors, as applicable, and to the extent permitted or required by law, a portion of the Restricted Stock  Units shall vest, and the Shares shall be issuable in full without restrictions on transferability, following you becoming eligible for Retirement, or following you becoming entitled to continued vesting pursuant to Section 3(b)(iv), at a time determined by Capital One, only and to the extent sufficient, if sold at Fair Market Value, on the date of such determination, to provide for the payment of any tax liability caused as a consequence of such eligibility condition or entitlement in accordance with applicable tax laws. It is understood that the remaining portion of the Restricted Stock Units shall continue to vest on the Scheduled Vesting Dates as provided herein (to the extent not previously vested or forfeited as provided herein). 

(ii)    Notwithstanding any other provision of this Agreement to the contrary, Capital One will take all necessary steps to withhold the amount determined pursuant to the immediately foregoing paragraph in satisfaction of any applicable tax withholding liability.

(d)    Effect of Change of Control.  

(i)    Upon your termination of employment by Capital One without Cause or by you for Good Reason (each as defined below), in either case on or prior to the second anniversary of the occurrence of a Change of Control of Capital One, then, notwithstanding anything herein to the 

contrary, the Restricted Stock Units shall vest and the Shares shall be issuable in full without restrictions on transferability immediately upon the occurrence of your termination of employment following such Change of Control (to the extent not previously vested or forfeited as provided herein); provided, however, that if the Restricted Stock Units are considered deferred compensation under Section 409A of the Code and not exempt from Section 409A of the Code as a short-term deferral or otherwise, and you are a “specified employee,” as defined in and pursuant to Reg. Section 1.409A 1(i) or any successor regulation, on the date of any such termination of employment without Cause or for Good Reason, you will not be entitled to such vesting earlier than the earlier of (i) the date which is six months from the date of your “separation from service” (as defined in Reg. Section 1.409A 1(h) or any successor regulation) as a result of such termination and (ii) your death.

(ii)    For purposes of this Section 3(d), “Cause” shall mean (1) the willful and continued failure to perform substantially your duties with the Company or any Affiliate (other than any such failure resulting from incapacity due to physical or mental illness or following your delivery of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to you by the Board or the Chief Executive Officer of the Company that specifically identifies the manner in which the Board or the Chief Executive Officer of the Company believes that you have not substantially performed your duties, or (2) the willful engaging by you in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company.  No act, or failure to act, on the part of you shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that your action or omission was in the best interests of the Company. Any act, or failure to act, based upon (A) authority given pursuant to a resolution duly adopted by the Board, or if the Company is not the ultimate parent corporation of the Affiliate and is not publicly-traded, the board of directors of the ultimate parent of the Company (the “Applicable Board”), (B) the instructions of the Chief Executive Officer of the Company (unless you are the Chief Executive Officer at the time of any such instruction) or (C) the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. The cessation of your employment shall not be deemed to be for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Applicable Board (excluding you, if you are a member of the Applicable Board) at a meeting of the Applicable Board called and held for such purpose (after reasonable notice is provided to you and you are given an opportunity, together with your counsel, to be heard before the Applicable Board), finding that, in the good faith opinion of the Applicable Board, you are guilty of the conduct described in this Section 3(d)(ii), and specifying the particulars thereof in detail.

(iii)    For purposes of this Section 3(d), “Good Reason” shall mean (1) the assignment to you of any duties inconsistent in any respect with your position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any action by the Company that results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you; (2) any failure by the Company to pay your compensation owed other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you; (3) the Company’s requiring you (I) to be based at any office or location more than 35 miles from the office or location at which you were required to work as of the date of this Agreement or (II) to travel on Company business to a substantially greater extent than required during the 120-day period immediately prior to the date the Change of Control occurs; or (4) any other action or inaction that constitutes a material breach by the Company of this Agreement or any employment agreement.  For purposes of this Section 3(d)(iii) of this Agreement, any good faith determination of Good Reason made by you shall be conclusive. Your mental or physical incapacity following the occurrence of an event described above in clauses (1) through (4) shall not affect your ability to terminate employment for Good Reason.

(iv)    Any termination by the Company for Cause, or by you for Good Reason, shall be communicated by Notice of Termination to the other party. “Notice of Termination” means a written notice that (1) indicates the specific termination provision in this Agreement relied upon, (2) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated, and (3) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice). The failure by you or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of you or the Company, respectively, hereunder or preclude you or the Company, respectively, from asserting such fact or circumstance in enforcing your or the Company’s respective rights hereunder.

(v)    “Date of Termination” means, if your employment is terminated by the Company for Cause, or by you for Good Reason, the date of receipt of the Notice of Termination or such later date specified in the Notice of Termination, as the case may be. You and the Company shall take all steps necessary to ensure that any termination described in this Section 3(d) constitutes a “separation from service” within the meaning of Section 409A of the Code, and notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place shall be the “Date of Termination.” 

4.    Modification and Waiver.  Except as provided in the Plan with respect to determinations of the Committee and subject to the Committee’s right to amend the Plan, neither this Agreement nor any provision hereof can be changed, modified, amended, discharged, terminated or waived orally or by any course of dealing or purported course of dealing, but only by an agreement in writing signed by you and Capital One; provided that, changes, modifications and amendments not detrimental to you may be made in writing signed only by Capital One.  No such agreement shall extend to or affect any provision of this Agreement not expressly changed, modified, amended, discharged, terminated or waived or impair any right consequent on such a provision.  The waiver of or failure to enforce any breach of this Agreement shall not be deemed to be a waiver or acquiescence in any other breach thereof.

 5.    Tax Withholding.  If you become subject to withholding under applicable tax laws, you agree to pay Capital One the amount required to be withheld by one or more of the following methods:

(a) Capital One will automatically withhold the number of shares having a Fair Market Value on the date the tax withholding obligation is to be determined equal to the amount required to be withheld (as determined pursuant to the Plan) ; or

(b) by such other methods as Capital One may make available from time to time.

6.    Dividend Equivalents.  With respect to the Restricted Stock Units, you shall be credited with dividend equivalents as and when dividends are paid to the Company’s other stockholders.  By accepting this Award, you agree that such dividend equivalents shall accumulate and be paid to you in cash (without interest) as and when the Restricted Stock Units from which such dividend equivalents are derived vest pursuant to Section 3.  You further agree that all such dividend equivalents shall be subject to the same vesting requirements that apply to the Restricted Stock Units from which such dividend equivalents are derived.

 7.    Governing Law.  This Agreement shall be governed by United States federal law and, to the extent not preempted thereby, by the laws of the State of Delaware. Capital One and you hereby consent and submit to the personal jurisdiction and venue of any state or federal court located in any city or county of Delaware for resolution of any and all claims, causes of action or disputes arising out of this Agreement.  You and Capital One agree that the court shall not set aside the Committee’s determinations unless there is clear and convincing evidence of bad faith or fraud.

 8.    Conflicts.  In the event of any conflict between the provisions of the Plan as in effect on the Date of Grant and the provisions of this Agreement, except terms otherwise defined herein, the provisions of the Plan shall govern.  All references herein to the Plan shall mean the Plan as in effect on the date hereof.

 9.    Bound by Plan.  In consideration of the grant of the Restricted Stock Units, you agree that you will comply with such conditions as the Committee may impose on the Restricted Stock Units and be bound by the terms of the Plan.

 10.       Employment Status.  This Agreement does not constitute a contract of employment nor does it alter your terminable at will status or otherwise guarantee future employment.

 11.      Binding Effect.  This Agreement shall be binding upon, enforceable against, and inure to the benefit of you and your legatees, distributees and personal representatives, and Capital One and its successors and assigns.

 12.     Mandatory Holding Requirement. 

(a)    You agree that with respect to the Applicable Holding Shares you may not transfer, sell, pledge, hypothecate or otherwise dispose of such Applicable Holding Shares until the Holding Date; provided that the requirements set forth in this Section 12 shall immediately lapse and be of no further force and effect upon your death, Disability or termination of employment by Capital One without Cause or for Good Reason following a Change of Control, pursuant to Section 3(d). 

(b)    For purposes of this Section 12:

(i)    “Applicable Holding Shares” means 50% of the Shares acquired hereunder (not including any Shares sold or retained by the Company or its designated agent to fund the payment of any tax withholding obligation, brokerage commission or fees payable in connection with the Shares) during your term of employment with the Company and during the one-year period after termination of your employment for any reason; and

(ii)    “Holding Date” means the first anniversary of the date of acquisition of any Applicable Holding Shares.

13.    Performance-Based Adjustments, Clawbacks and Other Forfeiture Events.

		
	(a)
	Performance-Based Adjustment.  The number of Restricted Stock Units vesting on the Scheduled Vesting Date shall be subject to reduction as follows:

(i)    In the event that the Core Earnings of the Company for the Company’s fiscal year ended immediately prior to such Scheduled Vesting Date, as certified by the Committee, are not positive (i.e., Core Earnings are not greater than zero):
(A)    The number of Restricted Stock Units scheduled to vest on such Scheduled Vesting Date shall be reduced by 50%, rounding up to the nearest whole share; and
(B)    the Committee shall determine the extent, if any, to which you are accountable for such outcome and, based on such determination, the Committee shall determine (I) whether all or any portion of the remaining Restricted Stock Units scheduled to vest on such Scheduled Vesting Date shall be forfeited and (II) whether the Scheduled Vesting Date shall be delayed for all or any portion of such Restricted Stock Units that are not so forfeited.
The Committee shall make the determinations referenced in Section 13(a)(i)(B) in its sole discretion, taking into account the factors set forth on Appendix A hereto.

 (ii)     For purposes of this Section 13(a), “Core Earnings” means the Company’s net income available to common stockholders, excluding, on a tax-adjusted basis, the impact of (A) impairment or amortization of intangible assets, (B) the build or release of the allowance for loan and lease losses, calculated as the difference between the provision for loan and lease losses and charge-offs, net of recoveries, and (C) the change in the combined uncollectible finance charge and fee reserve.
(iii)    In the event of any change to U.S. generally accepted accounting principles affecting the treatment or classification of any component of Core Earnings, such metric shall be calculated in a manner consistent with the definitions herein to the extent practicable.
Notwithstanding anything to the contrary in this Agreement and for the avoidance of doubt, in the event of a Change of Control of Capital One, there shall be no reduction pursuant to this Section 13(a) for any fiscal year ending after the date of such Change of Control. 
(b)    Clawback.  All unvested Restricted Stock Units granted hereunder shall be subject to forfeiture in the event that the Committee in its sole discretion determines that (i) there has been misconduct resulting in either a violation of law or of Capital One policy or procedures, including but not limited to Capital One’s Code of Business Conduct and Ethics, that in either case causes significant financial or reputational harm to Capital One and (ii) either you committed the misconduct or failed in your responsibility to manage or monitor the applicable conduct or risks.  In the event that the Committee makes a determination as provided in the preceding sentence, all or any portion of the Restricted Stock Units that have not yet vested under this Agreement as of the date of such determination shall be forfeited in an amount as determined by the Committee in its sole discretion.
(c)    Forfeiture Event.  You agree to reimburse the Company with respect to the Restricted Stock Units to the extent required under Section 304 of the Sarbanes-Oxley Act of 2002 or as otherwise required by law.
14.    Data Protection.  You consent to the collection, processing and transfer (including international transfer) of your personally identifiable data in connection with the grant of the Restricted Stock Units and participation in the Plan.  
15.     Severability.  This Agreement shall be enforceable to the fullest extent allowed by law.  In the event that any provision of this Agreement is determined to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, then that provision shall be reduced, modified or otherwise conformed to the relevant law, judgment or determination to the degree necessary to render it valid and enforceable without affecting the validity, legality or enforceability of any other provision of this Agreement or the validity, legality or enforceability of such provision in any other jurisdiction.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed severable from the remainder of this Agreement, and the remaining provisions contained in this Agreement shall be construed to preserve to the maximum permissible extent the intent and purposes of this Agreement.

16.    Miscellaneous.  In accepting the grant, you acknowledge and agree that:

(a)    this Agreement is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in a manner so as to comply therewith;

(b)    your obligations under this Agreement shall survive any termination of your employment with the Company for any reason;

(c)    any of the Company’s rights or remedies under this Agreement shall be cumulative and in addition to whatever other remedies the Company may have under law or equity;

(d)    any recovery by the Company under this Agreement will be a recovery of Restricted Stock Units to which you were not entitled under this Agreement and is not to be construed in any manner as a penalty;

(e)    the Company may, to the maximum extent permitted by applicable law and Section 409A of the Code, retain for itself funds or securities otherwise payable to you pursuant to this Agreement to satisfy any obligation or debt that you owe the Company, including any obligations hereunder.  The Company may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with this Agreement;

(f)    the Company reserves the right to impose other requirements on the Restricted Stock Units, any Shares acquired pursuant to the Restricted Stock Units, and your participation in the Plan, to the extent Capital One determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the administration of the Restricted Stock Units and the Plan.  Such requirements may include (but are not limited to) requiring you to sign any agreements or undertakings that may be necessary to accomplish the foregoing; and
(g)    Capital One from time to time distributes and makes available to associates disclosure documents, including a prospectus, relating to the Plan.  You may also contact the HR Help Center to obtain copies of the Plan disclosure documents and the Plan.  You should carefully read the Plan disclosure documents and the Plan.  By accepting the benefits of this Agreement you acknowledge receipt of the Plan and the Plan disclosure documents and agree to be bound by the terms of this Agreement and the Plan.  You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Capital One or a third-party designated by Capital One.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed on their behalf.

                    
	
			
	 
	CAPITAL ONE FINANCIAL CORPORATION

	 
	 
	 

	 
	By:
	 

	 
	 
	/s/ JORY BERSON

	 
	 
	Jory Berson

	 
	 
	Chief Human Resources Officer

                                

PARTICIPANT

By: SIGNED BY ELECTRONIC SIGNATURE
%%FIRST_NAME%-% %%LAST_NAME%-%

            
BY ELECTRONICALLY ACCEPTING THE AWARD, YOU AGREE THAT (i) SUCH ACCEPTANCE CONSTITUTES YOUR ELECTRONIC SIGNATURE IN EXECUTION OF THIS AGREEMENT; (ii) YOU AGREE TO BE BOUND BY THE PROVISIONS OF THE PLAN AND THE AGREEMENT; (iii) YOU HAVE REVIEWED THE PLAN AND THE AGREEMENT IN THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO ACCEPTING THE AWARD AND FULLY UNDERSTAND ALL OF THE PROVISIONS OF THE PLAN AND THE AGREEMENT; (iv) YOU HAVE BEEN PROVIDED WITH A COPY OR ELECTRONIC ACCESS TO A COPY OF THE U.S. PROSPECTUS FOR THE PLAN; AND (v) YOU HEREBY AGREE TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE COMMITTEE UPON ANY QUESTIONS ARISING UNDER THE PLAN AND THE AGREEMENT.

*****

APPENDIX A

PERFORMANCE-BASED ADJUSTMENT DETERMINATION FACTORS

The Committee shall take into account the following factors for purposes of making any determinations referenced in Section 13(a)(i)(B) of the Agreement in its sole discretion:

		
	•
	The extent to which Core Earnings were negative;

		
	•
	Whether the outcome was the result of the performance of a line of business, control function or staff group for which you exercised direct or indirect responsibility;

		
	•
	The extent to which your performance contributed to the outcome, including your performance with respect to risk management and oversight; and

		
	•
	Such other factors as the Committee deems appropriate.

CAPITAL ONE FINANCIAL CORPORATION
2004 Stock Incentive Plan
Restricted Stock Unit Award Agreement

No. of Units: %%TOTAL_SHARES_GRANTED%-%

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated %%OPTION_DATE,'Month DD, YYYY'%-% (the “Date of Grant”), between CAPITAL ONE FINANCIAL CORPORATION, a Delaware corporation (“Capital One” or the “Company”), and %%FIRST_NAME%-% %%LAST_NAME%-% (“you”), is made pursuant and subject to the provisions of the Company’s 2004 Stock Incentive Plan, as amended and restated (the “Plan”).  All capitalized terms used herein that are defined in the Plan shall have the same meaning given them in the Plan unless otherwise defined herein.

WHEREAS, Article 8 of the Plan provides for the award from time to time in the discretion of the Committee of Restricted Stock Units, representing shares of common stock of Capital One, $.01 par value per share (“Common Stock”), the vesting and issuance of which are subject to continued employment with Capital One or other conditions;

W I T N E S S E T H :

1.    Grant of Restricted Stock Units. Capital One hereby grants to you %%TOTAL_SHARES_GRANTED%-% Restricted Stock Units (the “Restricted Stock Units”).  The Restricted Stock Units shall vest only in accordance with the provisions of this Agreement and of the Plan.  The Restricted Stock Units will not have voting rights.

2.    Non-Transferability.  Subject to the provisions of Section 3 hereof, the rights represented by the Restricted Stock Units shall not be assignable or transferable, or otherwise alienated or hypothecated, under any circumstances.  Any purported or attempted transfer of such units or such rights shall be null and void and shall result in the immediate forfeiture and cancellation of the Restricted Stock Units.  

3.    Payment of Restricted Stock Units.  

(a)     Vesting.  Except as provided in Sections 3(b), 3(c), 3(d), 3(e) and 12(a) below, and to the extent not previously vested or forfeited as provided herein, the Restricted Stock Units shall vest as follows:
    
One-third of the Restricted Stock Units on February 15, 2018
One-third of the Restricted Stock Units on February 15, 2019
One-third of the Restricted Stock Units on February 15, 2020

Each of the immediately above dates shall be a “Scheduled Vesting Date.”  Notwithstanding the foregoing, the Restricted Stock Units shall vest in full upon the termination of your employment due to death or Disability and the date of such death or Disability shall be the Scheduled Vesting Date for all applicable Restricted Stock Units.

Upon vesting, the Restricted Stock Units shall become payable in cash in an amount equal to the product of (i) the average Fair Market Value of the Common Stock for the 15 trading days preceding the Scheduled Vesting Date and (ii) the number of Restricted Stock Units vesting on the Scheduled Vesting Date (subject to Section 5 below).  

(b)    Effect of Termination of Employment Not For Cause.  Upon your termination of employment with Capital One due to Retirement or for any reason other than for Cause (as defined herein), death, Disability or a Change of Control, the Units shall continue to vest on the Scheduled Vesting Dates specified herein (to the extent not previously vested or forfeited as provided herein) and remain subject to reduction pursuant to Section 12(a).

(c)    Effect of Termination of Employment For Cause.  Upon your termination of employment with the Company for Cause prior to any Scheduled Vesting Date, all Restricted Stock Units, as of such date of termination, shall be immediately forfeited (to the extent not previously vested as provided herein).

 (d)    Vesting Schedule Upon Becoming Subject to Withholding.

(i)    Unless otherwise determined by the Committee or the independent members of the Board of Directors, as applicable, and to the extent permitted or required by law, Capital One may determine, in its sole discretion, following you becoming subject to withholding under applicable tax laws at a time when amounts are not otherwise vesting pursuant to this Section 3, that a portion of the Restricted Stock Units shall vest and become payable, only and to the extent sufficient on the date of such determination (the “Determination Date”), to provide for the payment of any tax liability in accordance with applicable tax laws, in an amount equal to the product of (i) the Fair Market Value of the Common Stock for the Determination Date and (ii) the number of Restricted Stock Units vesting on the Determination Date. The number of Restricted Stock Units vesting pursuant to the preceding sentence shall be rounded up to the nearest whole Restricted Stock Unit. It is understood that the remaining portion of the Restricted Stock Units shall continue to vest on the Scheduled Vesting Dates as provided herein (to the extent not previously vested or forfeited as provided herein). 

(ii)    Notwithstanding any other provision of this Agreement to the contrary, Capital One will take all necessary steps to withhold the amount determined in accordance with the immediately foregoing paragraph in satisfaction of any applicable tax withholding liability. 

(e)    Effect of Change of Control.

(i)    Upon your termination of employment by Capital One without Cause or by you for Good Reason (each as defined below), in either case on or prior to the second anniversary of the occurrence of a Change of Control of Capital One, then, notwithstanding anything herein to the contrary, the Restricted Stock Units shall vest, the date of such termination shall be the Scheduled Vesting Date for all applicable Restricted Stock Units and the cash shall become payable as described in Section 3(a) immediately following  the occurrence of your termination of employment following such Change of Control (to the extent not previously vested or forfeited as provided herein); provided, however, that if the Restricted Stock Units are considered deferred compensation under Section 409A of the Code and not exempt from Section 409A of the Code as a short-term deferral or otherwise, and you are a “specified employee,” as defined in and pursuant to Reg. Section 1.409A 1(i) or any successor regulation, on the date of any such termination of employment without Cause or for Good Reason, you will not be entitled to such vesting earlier than the earlier of (i) the date which is six months from the date of your “separation from service” (as defined in Reg. Section 1.409A 1(h) or any successor regulation) as a result of such termination and (ii) your death.

(ii)    For purposes of this Agreement, “Cause” shall mean (1) the willful and continued failure to perform substantially your duties with the Company or any Affiliate (other than any such failure resulting from incapacity due to physical or mental illness or following your delivery of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to you by the Board or the Chief Executive Officer of the Company that specifically identifies the manner in which the Board or the Chief Executive Officer of the Company believes that you have not substantially performed your duties, or (2) the willful engaging by you in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company.  No act, or failure to act, on the part of you shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that your action or omission was in the best interests of the Company. Any act, or failure to act, based upon (A) authority given pursuant to a resolution duly adopted by the Board, or if the Company is not the ultimate parent corporation of the Affiliate and is not publicly-traded, the board of directors of the ultimate parent of the Company (the “Applicable Board”), (B) the instructions of the Chief Executive Officer of the Company (unless you are the Chief 

Executive Officer at the time of any such instruction) or (C) the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. The cessation of your employment shall not be deemed to be for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Applicable Board (excluding you, if you are a member of the Applicable Board) at a meeting of the Applicable Board called and held for such purpose (after reasonable notice is provided to you and you are given an opportunity, together with your counsel, to be heard before the Applicable Board), finding that, in the good faith opinion of the Applicable Board, you are guilty of the conduct described in this Section 3(e)(ii), and specifying the particulars thereof in detail.

(iii)    For purposes of this Section 3(e), “Good Reason” shall mean (1) the assignment to you of any duties inconsistent in any respect with your position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any action by the Company that results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you; (2) any failure by the Company to pay your compensation owed other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you; (3) the Company’s requiring you (I) to be based at any office or location more than 35 miles from the office or location at which you were required to work as of the date of this Agreement or (II) to travel on Company business to a substantially greater extent than required during the 120-day period immediately prior to the date the Change of Control occurs; or (4) any other action or inaction that constitutes a material breach by the Company of this Agreement or any employment agreement.  For purposes of this Section 3(e)(iii) of this Agreement, any good faith determination of Good Reason made by you shall be conclusive. Your mental or physical incapacity following the occurrence of an event described above in clauses (1) through (4) shall not affect your ability to terminate employment for Good Reason.

(iv)    Any termination by the Company for Cause, or by you for Good Reason, shall be communicated by Notice of Termination to the other party. “Notice of Termination” means a written notice that (1) indicates the specific termination provision in this Agreement relied upon, (2) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated, and (3) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice). The failure by you or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of you or the Company, respectively, hereunder or preclude you or the Company, respectively, from asserting such fact or circumstance in enforcing your or the Company’s respective rights hereunder.

(v)    “Date of Termination” means, if your employment is terminated by the Company for Cause, or by you for Good Reason, the date of receipt of the Notice of Termination or such later date specified in the Notice of Termination, as the case may be. You and the Company shall take all steps necessary to ensure that any termination described in this Section 3(e) constitutes a “separation from service” within the meaning of Section 409A of the Code, and notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place shall be the “Date of Termination.” 

4.    Modification and Waiver. Except as provided in the Plan with respect to determinations of the Committee and subject to the Committee’s right to amend the Plan, neither this Agreement nor any provision hereof can be changed, modified, amended, discharged, terminated or waived orally or by any course of dealing or purported course of dealing, but only by an agreement in writing signed by you and Capital One; provided that, changes, modifications and amendments not detrimental to you may be made in writing signed only by Capital One. No such 

agreement shall extend to or affect any provision of this Agreement not expressly changed, modified, amended, discharged, terminated or waived or impair any right consequent on such a provision. The waiver of or failure to enforce any breach of this Agreement shall not be deemed to be a waiver or acquiescence in any other breach thereof.

5.    Tax Withholding.  If you become subject to withholding under applicable tax laws other than as described in Section 3(d), you agree to pay Capital One the amount required to be withheld by one or more of the following methods:

(a)automatically through payroll withholding; or

		
	(b)
	by such other methods as Capital One may make available from time to time.

6.    Dividend Equivalents.  With respect to the Restricted Stock Units, dividend equivalents shall be paid to you in cash as soon as is practicable after dividends are paid to the Company’s other stockholders. Dividend equivalent payments shall be based on the total number of unvested Restricted Stock Units held as of the applicable dividend record date. 

7.    Governing Law.  This Agreement shall be governed by United States federal law and, to the extent not preempted thereby, by the laws of the State of Delaware. Capital One and you hereby consent and submit to the personal jurisdiction and venue of any state or federal court located in any city or county of Delaware for resolution of any and all claims, causes of action or disputes arising out of this Agreement.  You and Capital One agree that the court shall not set aside the Committee’s determinations unless there is clear and convincing evidence of bad faith or fraud. 

8.    Conflicts.  In the event of any conflict between the provisions of the Plan as in effect on the Date of Grant and the provisions of this Agreement, except terms otherwise defined herein, the provisions of the Plan shall govern.  All references herein to the Plan shall mean the Plan as in effect on the date hereof.

9.    Bound by Plan.  In consideration of the grant of the Restricted Stock Units, you agree that you will comply with such conditions as the Committee may impose on the Restricted Stock Units and be bound by the terms of the Plan.

10.       Employment Status.  This Agreement does not constitute a contract of employment nor does it alter your terminable at will status or otherwise guarantee future employment.

11.      Binding Effect.  This Agreement shall be binding upon, enforceable against, and inure to the benefit of you and your legatees, distributees and personal representatives, and Capital One and its successors and assigns.

12.    Clawbacks and Other Forfeiture Events.

(a)    Clawback.  All unvested Restricted Stock Units granted hereunder shall be subject to forfeiture in the event that the Committee in its sole discretion determines that (i) there has been misconduct resulting in either a violation of law or of Capital One policy or procedures, including but not limited to Capital One’s Code of Business Conduct and Ethics, that in either case causes significant financial or reputational harm to Capital One and (ii) either you committed the misconduct or failed in your responsibility to manage or monitor the applicable conduct or risks.  In the event that the Committee makes a determination as provided in the preceding sentence, all or any portion of Restricted Stock Units that have not yet vested under this Agreement as of the date of such determination shall be forfeited in an amount as determined by the Committee in its sole discretion.

(b)    Forfeiture Event.  You agree to reimburse the Company with respect to the Restricted Stock Units to the extent required under Section 304 of the Sarbanes-Oxley Act of 2002 or as otherwise required by law.

13.Data Protection.  You consent to the collection, processing and transfer (including international transfer) of your personally identifiable data in connection with the grant of the Restricted Stock Units and participation in the Plan.  

14.Severability.  This Agreement shall be enforceable to the fullest extent allowed by law.  In the event that any provision of this Agreement is determined to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, then that provision shall be reduced, modified or otherwise conformed to the relevant law, judgment or determination to the degree necessary to render it valid and enforceable without affecting the validity, legality or enforceability of any other provision of this Agreement or the validity, legality or enforceability of such provision in any other jurisdiction.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed severable from the remainder of this Agreement, and the remaining provisions contained in this Agreement shall be construed to preserve to the maximum permissible extent the intent and purposes of this Agreement.

15.    Miscellaneous.  In accepting the grant, you acknowledge and agree that:
(a)    this Agreement is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in a manner so as to comply therewith;

(b)    your obligations under this Agreement shall survive any termination of your employment with the Company for any reason;

(c)    any of the Company’s rights or remedies under this Agreement shall be cumulative and in addition to whatever other remedies the Company may have under law or equity;

(d)    any recovery by the Company under this Agreement will be a recovery of Restricted Stock Units to which you were not entitled under this Agreement and is not to be construed in any manner as a penalty;

(e)    the Company may, to the maximum extent permitted by applicable law and Section 409A of the Code, retain for itself funds or securities otherwise payable to you pursuant to this Agreement to satisfy any obligation or debt that you owe the Company, including any obligations hereunder.  The Company may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with this Agreement;

(f)    the Company reserves the right to impose other requirements on the Restricted Stock Units, any Shares acquired pursuant to the Restricted Stock Units, and your participation in the Plan, to the extent Capital One determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the administration of the Restricted Stock Units and the Plan.  Such requirements may include (but are not limited to) requiring you to sign any agreements or undertakings that may be necessary to accomplish the foregoing; and
(g)     Capital One from time to time distributes and makes available to associates disclosure documents, including a prospectus, relating to the Plan.  You may also contact the HR Help Center to obtain copies of the Plan disclosure documents and the Plan.  You should carefully read the Plan disclosure documents and the Plan.  By accepting the benefits of this Agreement you acknowledge receipt of the Plan and the Plan disclosure documents and agree to be bound by the terms of this Agreement and the Plan.  You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Capital One or a third-party designated by Capital One. 

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed on their behalf.

	
			
	 
	CAPITAL ONE FINANCIAL CORPORATION

	 
	 
	 

	 
	By:
	 

	 
	 
	/s/ JORY BERSON

	 
	 
	Jory Berson

	 
	 
	Chief Human Resources Officer

        

PARTICIPANT

By: SIGNED BY ELECTRONIC SIGNATURE
%%FIRST_NAME%-% %%LAST_NAME%-%
                    
            
BY ELECTRONICALLY ACCEPTING THE AWARD, YOU AGREE THAT (i) SUCH ACCEPTANCE CONSTITUTES YOUR ELECTRONIC SIGNATURE IN EXECUTION OF THIS AGREEMENT; (ii) YOU AGREE TO BE BOUND BY THE PROVISIONS OF THE PLAN AND THE AGREEMENT; (iii) YOU HAVE REVIEWED THE PLAN AND THE AGREEMENT IN THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO ACCEPTING THE AWARD AND FULLY UNDERSTAND ALL OF THE PROVISIONS OF THE PLAN AND THE AGREEMENT; (iv) YOU HAVE BEEN PROVIDED WITH A COPY OR ELECTRONIC ACCESS TO A COPY OF THE U.S. PROSPECTUS FOR THE PLAN; AND (v) YOU HEREBY AGREE TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE COMMITTEE UPON ANY QUESTIONS ARISING UNDER THE PLAN AND THE AGREEMENT.

*****EXHIBIT 10.5

ANNUAL INCENTIVE PLAN

2017 Plan Year

Guidelines

KIRBY CORPORATION

January 2017

 

TABLE OF CONTENTS

	
Introduction

	
2

	 	 
	
The 2017 Annual Incentive Plan

	
3

	 	 
	
Plan Objectives

	
3

	 	 
	
Business Groups

	
3

	 	 
	
Performance Period

	
4

	 	 
	
Eligibility

	
4

	 	 
	
Individual Bonus Targets

	
4

	 	 
	
Aggregate Payment Amount

	
5

	 	 
	
Section 162(m) Performance Goal and Maximum Payments

	
5

	 	 
	
Performance Measures

	
5

	 	 
	
Business Group Weighting

	
6

	 	 
	
Performance Standards for Interim Incentive Payment Calculations

	
7

	 	 
	
Administration

	
9

 

1

Introduction

Kirby Corporation (together with its subsidiaries, “Kirby” or the “Company”) established the 2017 Annual Incentive Plan (the “Plan”) to focus employees of the Company on identifying and achieving business strategies that lead to increased stockholder value.  The Plan is also intended to reward superior performance by employees and their contribution to achieving Kirby’s objectives.

Certain aspects of this Plan are complex.  Although these Guidelines establish rules for Plan operation, those rules may not work in all circumstances.  Therefore, the Compensation Committee of the Kirby Board of Directors has discretion to interpret these Guidelines to assure the awards are consistent with the Plan’s purposes and the Company’s interests.  All decisions by the Compensation Committee shall be final and binding.

Unless resolutions of the Compensation Committee expressly provide otherwise, awards granted under the Plan shall constitute performance awards granted under Article IV of the Kirby Corporation 2005 Stock and Incentive Plan and are subject to the terms and provisions of such Plan that apply to performance awards.

The Plan may be amended, modified or terminated at any time without prior notice by written authorization of the Compensation Committee or the Board of Directors of Kirby Corporation; provided that the Plan may not be amended or modified in a manner that would cause an award that is intended to satisfy the performance-based compensation exception under Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), to fail to satisfy the exception.

 

2

The Annual Incentive Plan

Each award granted under the Plan is an award for Company performance or a combination of Company and Business Group performance.  Awards are generally based on achieving the Company Performance Goal as well as additional Company, Business Group and individual performance measures and objectives.  Once the Company Performance Goal is reached, participants in the Plan become eligible for an incentive bonus payment.

All amounts paid to participants pursuant to the Plan shall be subject to any policy relating to the recovery of erroneously awarded incentive compensation that may hereafter be adopted by the Company in order to comply with Securities and Exchange Commission rules or New York Stock Exchange listing standards.

Plan Objectives

The key objectives of the Plan are:

		·	
Provide an annual incentive plan that drives performance toward objectives critical to creating stockholder value.

		·	
Offer competitive cash compensation opportunities to key Kirby employees.

		·	
Reward outstanding achievement by employees who directly affect Kirby’s results.

		·	
Assist Kirby in attracting and retaining high quality employees.

		·	
Reflect both quantitative and qualitative performance factors in actual bonus payouts.

		·	
Ensure that incentive payments made by the Company are fully deductible by the Company.

Business Groups

The following Business Groups are designated for purposes of the Plan:

Kirby Inland Marine, LP (“KIM”)

Kirby Offshore Marine, LLC (“KOM”)

United Holdings LLC, excluding Thermo King (“United”)

Kirby Engine Systems, Inc., excluding United and Thermo King (“KES”)

Kirby Ocean Transport Company and Osprey Line, L.L.C. are considered part of the KIM Business Group for purposes of the Plan.

 

3

Performance Period

Performance is measured on a calendar year basis for the Plan.  The Performance Period begins on January 1, 2017 and ends on December 31, 2017.  Except as expressly provided in these Guidelines in the case of new employees or termination of employment, incentive compensation payments under the Plan are for the full year 2017 and shall not be reduced for the period between the commencement of the Performance Period and the date on which the Compensation Committee approves these Guidelines and the individual bonus targets for participants in the Plan are approved.

Eligibility

	·	
Generally, managerial employees and KIM wheelhouse employees classified as Captain, Relief Captain or Pilot, are eligible for participation.  Selection for participation in the Plan is based upon each position’s ability to impact long-term financial results of the Company and designation by management.  Some employees in managerial positions might not be included in the Plan.

	·	
In order to be eligible to receive an incentive payment under the Plan, participants must be employed on the last day of the Performance Period and on the date bonuses are actually paid for the Performance Period, unless their earlier termination is due to death, retirement or disability. If a participant’s employment is terminated prior to the last day of the Performance Period, or prior to the date of payment, for any reason other than death, retirement or disability, any bonus the participant may otherwise have received will be forfeited and the participant will have no right to any incentive payment under the Plan.  As used in the Plan, the terms “retirement” and “disability” have the same meanings as in the Kirby Profit Sharing Plan in the case of shore-based employees and in the Kirby Pension Plan in the case of vessel employees.

	·	
Participation in the Plan in 2017 does not guarantee participation in similar plans in future years.  Participants in the Plan or in similar plans in future years will be notified annually of their selection for participation.

Individual Bonus Targets

On or before March 31, 2017, each participant will be assigned a target bonus level defined as a percentage of base salary earned during the Performance Period.  This bonus target is based on competitive market practices, as well as the employee’s ability to impact long-term Company performance.  Market practices will be determined using data from either general industry, the marine transportation industry or the diesel engine services industry, depending upon the individual position being considered.

 

4

Aggregate Payment Amount

At the end of the year, an interim incentive payment amount will first be calculated for each participant in the Plan in order to determine the Aggregate Payment Amount for all participants for the year.  The interim incentive payment amount for each participant will be calculated as of December 31, 2017 based on the target incentive level for such participant and the calculation formulas described in these Guidelines.  The Aggregate Payment Amount under the Plan shall equal the sum of all of such interim incentive payment amounts.

The Company will be obligated to pay out the full Aggregate Payment Amount to eligible participants, subject to the discretion of the Compensation Committee with respect to the allocation of the Aggregate Payment Amount among individual participants.  Therefore, the Company’s obligation to pay out the Aggregate Payment Amount becomes fixed on the last day of the Performance Period.

The Compensation Committee may determine the amount of the bonus paid to any participant based on the performance measures described in the Plan or any other criteria deemed appropriate in its discretion, provided that in no event will the aggregate incentive payments made pursuant to the Plan exceed the Aggregate Payment Amount.

Section 162(m) Performance Goal and Maximum Payments

The Performance Goal that must be attained in order for any Plan participant to receive a bonus under the Plan is the achievement by the Company of net earnings attributable to Kirby for 2017 (as shown in Kirby’s audited Consolidated Statements of Earnings for 2017) greater than $1,000,000.  If the Company achieves the Performance Goal, the maximum bonus that any participant may receive under the Plan will be equal to 200% of the individual bonus target established for such participant (for each participant, the “Maximum Payment”).  The Compensation Committee in its discretion may reduce the bonus paid to any participant to an amount less than the Maximum Payment.

Performance Measures

If the Company Performance Goal is attained, the following additional performance measures will be used to calculate an interim incentive payment amount for each participant and the Aggregate Payment Amount for the year:

		·	
EBITDA

		·	
Return on total capital

		·	
Earnings per share

Annual performance targets will be established for each measure based on Kirby’s budget for the year and each of the performance measures will have equal weight in calculating the interim incentive payment amount for each participant, except that only EBITDA will be used to measure United’s performance.

 

5

	
Measure

	
Weight

	
EBITDA

	 
	 	 
	
(Earnings before interest, taxes, depreciation and amortization)

	
*33.33%

	
Return on Total Capital

	 
	 	 
	
(Earnings before interest and taxes divided by average beginning and ending stockholders' equity plus long-term debt)

	
**33.33%

	
Earnings per share

	
**33.33%

	 	
100%

	 	 
	
* 100% for United

** Not applicable to United

	 

 

Business Group Weighting

Calculation of the interim incentive payment amount for Business Group employees will be based primarily on Business Group performance with a defined portion based on Company performance.  Calculation of the interim incentive payment amount for employees of Kirby Corporation will be based on Company performance.  Specific weightings are set forth in the following table:

	 	
Calculation of Interim Incentive

Payment Amounts

	 
	 	 	
Kirby Corporation

	 	
Business Group(s)

	 
	 	
Eligible Corporate Employees 1

	
100%

	 	
0%

	 
	 	 	 	 	 	 
	 	
Business Group Presidents 2

	
50%

	 	
50%

	 
	 	 	 	 	 	 
	 	
Other officers of KIM with primary responsibilities for KIM and additional responsibilities for KOM

	
30%

 

	 	
50% KIM

20% KOM

	 
	 	 	 	 	 	 
	 	
Other officers of KOM with primary responsibilities for KOM and additional responsibilities for KIM

	
30%

	 	
50% KOM

20% KIM

	 
	 	 	 	 	 	 
	 	
Other Business Group Employees

	
30%

	 	
70%

	 

1 Calculation for the President-Marine Transportation Group will be based 50% on Kirby Corporation, 35% on KIM and 15% on KOM

2 Excluding the President – Marine Transportation Group of Kirby Corporation

 

6

Performance Standards for Incentive Payment Calculations

 

Kirby Corporation, KIM, KOM and KES

 

	
Performance

Level

	
Definition

	
Relationship to Budget

	
% of Target

Used for

Calculation

	
Below Threshold

	
Performance did not meet minimum metric

	
less than 80% of budget

	
0%

	
Threshold

	
Minimum acceptable performance for payout

	
80% of budget

	
50%

	
Target

	
Expected performance at stretch level

	
100% of budget

	
100%

	
Maximum

	
Outstanding performance

	
120% of budget

	
200%

 

		·	
Between 80% and 120% of budget achieved for each performance measure, there is a linear relationship between the percentage of budget achieved and the resulting percentage of the target payout percentage used in calculating payout amounts.  For example, 90% of budget would result in 75% of target used in the calculation of an interim payment amount and 105% of budget would result in 125% of target used for the calculation of an interim payment amount.

		·	
The target amount determined for each performance measure is then multiplied by the weight for the performance measure (33.33%, except in the case of United) and the results are added together to produce a total Company or Business Group payout percentage of the target incentive that is applied to each individual participant (except United employees) in calculating the Aggregate Payout Amount under the Plan.

 

United

 

The Kirby Corporation component of incentive payment calculations for United employees shall follow the same approach described above.  The United component of incentive payment calculations for United employees shall be determined as follows:

	
Performance

Level

	
Definition

	
Relationship to Budget

	
% of Target

Used for

Calculation

	
Below Threshold

	
Performance did not meet minimum metric

	
less than 60% of budget

	
0%

	
Threshold

	
Minimum acceptable performance for payout

	
60% of budget

	
50%

	
Target

	
Expected performance at stretch level

	
100% of budget

	
100%

	
Maximum

	
Outstanding performance

	
140% of budget

	
200%

 

7

		·	
Between 60% and 140% of budget achieved for the United performance measure, there is a linear relationship between the percentage of budget achieved and the resulting percentage of the target payout percentage used in calculating payout amounts.  For example, 80% of budget would result in 75% of target used in the calculation of an interim payment amount and 110% of budget would result in 125% of target used for the calculation of an interim payment amount.

		·	
The target amount determined for the United performance measure is the Business Group payout percentage of the target incentive that is applied to each United employee who is a participant in calculating the Aggregate Payout Amount under the Plan.

 

General

 

		·	
The Compensation Committee and the Chief Executive Officer shall in their discretion allocate the Aggregate Payment Amount among eligible participants; provided that only the Compensation Committee shall have the authority to allocate payment amounts to eligible participants (i) who are Covered Employees (as defined below), (ii) who are “officers” for purposes of Section 16 of the Securities and Exchange Act of 1934, (iii) whose bonus target is 50% or more of base salary or (iv) whose base salary is $250,000 or more (collectively “Specified Participants”).  In allocating the Aggregate Payment Amount, the Compensation Committee and the Chief Executive Officer may consider, but shall not be bound by, the interim incentive payment amount calculated for each participant.

		·	
The Compensation Committee has discretion to modify the performance measures or adjust the calculation of the interim incentive payment amounts to adjust for acquisitions, divestures and other material business events.

		·	
The aggregate amount of incentive payments made to participants in the Plan must equal the Aggregate Payment Amount.

		·	
Notwithstanding the foregoing or any provision of the Plan to the contrary, no participant who is a covered employee as defined in the Section 162(m) (a "Covered Employee”) may receive an amount in excess of the participant’s Maximum Payment.

 

8

Administration

Incentive Payments

A participant’s final incentive bonus payment is paid out in cash within 90 days following the end of the Company’s fiscal year, based on audited financial statements of the Company.  No payment shall be made to a participant who is a Covered Employee until the Compensation Committee certifies that the Performance Goal and other material terms of the Plan resulting in such payment have been achieved.

Eligibility Limitation

Participants must be employed by the Company on the last day of the Performance Period and on the date bonuses are actually paid in order to receive a bonus, unless otherwise provided for in the Plan.

Special Circumstances

The Compensation Committee will have the sole authority to resolve disputes related to Plan administration.  Decisions made by the Compensation Committee will be final and binding on all participants.  The Chief Executive Officer shall determine the bonus targets for newly hired, terminated, transferred and promoted employees, except that the Compensation Committee shall have the sole authority to determine the bonus targets for any such employees who are Specified Participants.  Bonus targets for such employees will generally be based on the following provisions.

New Employees

New employees hired after the beginning of a Performance Period who are selected for participation in the Plan, will receive prorated bonuses for the current Performance Period, subject to the Termination of Employment restrictions.

Termination of Employment

If employment terminates prior to the last day of the Performance Period or prior to the date bonuses are actually paid for the Performance Period, for any reason other than death, retirement or disability, the participant will be ineligible to receive a bonus.

If employment terminates before the end of the full Performance Period or before the date bonuses are actually paid for the Performance Period as a result of death, retirement or disability, the participant (or the participant’s heirs) will be entitled to receive a prorated bonus at the end of the Performance Period based upon actual performance and base wages earned while employed during the Performance Period.

Transfer

A participant who is transferred between Business Groups during the year will be eligible to receive a weighted bonus based upon the time spent at each of the Business Groups.  In calculating a weighted bonus, relevant Company and Business Group performance measures will be calculated for the full Performance Period and then a blended bonus will be calculated based on the time spent at each Business Group.

 

9

Promotions

A participant who is promoted or reassigned during any Performance Period and whose bonus target is subsequently increased or decreased will be eligible to receive a weighted bonus, based on the service before and after the promotion or reassignment.

Compensation Committee

The Plan shall be administered by the Compensation Committee.  The Compensation Committee shall have the authority to interpret the provisions of the Plan and these Guidelines, to adopt such rules for carrying out the Plan as it may deem advisable, to decide conclusively all questions arising with respect to the Plan and to make all other determinations and take all other actions necessary or desirable for the administration of the Plan.  All decisions and acts of the Compensation Committee shall be final and binding upon all affected parties.

In administering the Plan the Compensation Committee will:

		·	
Approve the designation of Business Groups within the Company

 

		·	
Approve the Company Performance Goal

 

		·	
Approve other performance measures used and the Threshold, Target and Maximum budget performance levels for purposes of calculating interim incentive payment amounts and the Aggregate Payment Amount

 

		·	
Approve linkage for participants to Company and Business Group performance

 

		·	
Approve the individual bonus targets for all Specified Participants

 

		·	
Approve the Aggregate Payment Amount to be paid to participants in the Plan

 

		·	
Certify whether the Company Performance Goal and other material terms that result in payments under the Plan have been satisfied prior to any incentive payment to a Covered Employee

 

		·	
Determine in its discretion the final incentive payments for Specified Participants

 

The Compensation Committee may deviate from the Guidelines for the Plan, but in no event will a bonus paid pursuant to the Plan exceed the Maximum Payment for any Covered Employee.  The Compensation Committee may decrease the bonus to be paid to any participant below the Maximum Payment based on such objective or subjective criteria as the Compensation Committee deems appropriate.

The total amount of the incentive payments made to participants pursuant to the Plan must equal, and may not exceed, the Aggregate Payment Amount.

 

10

The performance objectives of Covered Employees may only be adjusted as permitted under Section 162(m) or the regulations thereunder.

Chief Executive Officer (CEO)

The CEO has primary responsibility for recommending Plan Guidelines to the Committee, for approving individual bonus targets and final incentive payments for participants other than Specified Participants and for delegating administrative duties associated with the Plan.  The Compensation Committee may delegate additional administrative duties to the CEO or any Company officer.  The CEO may make recommendations, subject to Compensation Committee approval, with respect to the incentive payment to any participant.

Chief Financial Officer (CFO)

The CFO is responsible for calculating performance under the Plan.  The CFO will:

		·	
Provide annual reports to the Compensation Committee and the CEO on each Business Group’s performance at the end of the fiscal year

 

		·	
Maintain a financial information system that reports results on an estimated quarterly and annual basis

 

		·	
Coordinate with the Company’s auditors to properly recognize any accounting expense associated with incentive payments under the Plan

 

		·	
Provide the VP – HR with the performance results of each Business Group as well as overall Company performance

Vice President – Human Resources (VP-HR)

The VP-HR has responsibility for administration of the Plan and will:

		·	
Develop and recommend eligible participants and target bonus guidelines

 

		·	
Coordinate communications with participants, including materials to facilitate understanding the Plan’s objectives and goals

 

		·	
Calculate participants’ interim incentive payment amounts, using the performance factors provided by the CFO

 

		·	
Process paperwork approving individual incentive payments

Business Group Presidents and Vice Presidents will:

 

		·	
Recommend participants in the Plan

 

		·	
Coordinate with the CFO to determine any significant changes in business conditions for purposes of reviewing the Threshold, Target and Maximum performance objectives

 

		·	
Assure that participants are informed of the actual incentive payment to be made for the Performance Period

 

 

11

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