CAPITAL ONE FINANCIAL CORPCOF
CAPITAL ONE FINANCIAL CORP Stock Compensation Disclosure
NOTE 14—STOCK-BASED COMPENSATION PLANS | ||
Stock Plans
We have two active stock-based compensation plans available for the issuance of shares to employees and directors. As of December 31, 2025, under the Amended and Restated 2004 Stock Incentive plan (“2004 Plan”), we are authorized to issue 81 million common shares in various forms, primarily share-settled RSUs, PSUs and non-qualified stock options. Of this amount, approximately 15 million shares remain available for future issuance as of December 31, 2025. The 2004 Plan permits the use of newly issued shares or treasury shares upon the settlement of options and stock-based incentive awards, and we generally settle by issuing new shares. Additionally, as a result of the Transaction, we assumed the Discover Financial Services Omnibus Incentive Plan, under which approximately 17 million shares remain available for future issuance as of December 31, 2025.
We also issue cash-settled RSUs. These cash-settled units are not counted against the common shares authorized for issuance or available for issuance under the 2004 Plan. Cash-settled units vesting during 2025, 2024 and 2023 resulted in cash payments to associates of $8 million, $5 million and $4 million, respectively. There was no unrecognized compensation cost for unvested cash-settled units as of December 31, 2025.
Total stock-based compensation expense recognized during 2025, 2024 and 2023 was $776 million, $569 million and $513 million, respectively. The total income tax benefit for stock-based compensation recognized during 2025, 2024 and 2023 was $151 million, $109 million and $99 million, respectively.
In addition, we maintain an Associate Stock Purchase Plan (“Purchase Plan”), which is a compensatory plan under the accounting guidance for stock-based compensation. Related to the Purchase Plan, we recognized compensation expense of $53 million, $42 million and $39 million for 2025, 2024 and 2023, respectively. We also maintain a Dividend Reinvestment and Stock Purchase Plan, which allows participating stockholders to purchase additional shares of our common stock through automatic reinvestment of dividends or optional cash investments.
Restricted Stock Units and Performance Share Units
RSUs represent share-settled awards that do not contain performance conditions and are granted to certain employees at no cost to the recipient. RSUs generally vest over three years from the date of grant; however, some RSUs cliff vest on or shortly after the first or third anniversary of the grant date. RSUs are subject to forfeiture until certain restrictions have lapsed, including continued employment for a specified period of time.
PSUs represent share-settled awards that contain performance conditions and are granted to certain employees at no cost to the recipient. PSUs generally vest over three years from the date of grant; however, some PSUs cliff vest on or shortly after the third anniversary of the grant date. The number of PSUs that vest over three years can be reduced by 50% or 100% depending on whether specific performance goals are met during the vesting period. The number of three-year cliff vesting PSUs that will ultimately vest is contingent upon meeting specific performance goals over a three-year period. These PSUs also include an opportunity to receive from 0% to 150% of the target number of common shares.
A recipient of an RSU or PSU is entitled to receive a share of common stock after the applicable restrictions lapse and is generally entitled to receive cash payments or additional shares of common stock equivalent to any dividends paid on the underlying common stock during the period the RSU or PSU is outstanding, but is not entitled to voting rights. Generally, the value of RSUs and PSUs will equal the fair value of our common stock on the date of grant and the expense is recognized over the vesting period. Certain PSUs have discretionary vesting conditions and are remeasured at fair value each reporting period.
The following table presents a summary of 2025 activity for RSUs and PSUs.
Table 14.1: Summary of Restricted Stock Units and Performance Share Units
| Restricted Stock Units | Performance Share Units(1) | |||||||||||||||||||||||||
| (Shares/units in thousands) | Units | Weighted-Average Grant Date Fair Value per Unit | Units | Weighted-Average Grant Date Fair Value per Unit | ||||||||||||||||||||||
Unvested as of January 1, 2025 | 6,583 | $ | 109.56 | 2,126 | $ | 131.73 | ||||||||||||||||||||
Granted(2)(3) | 4,180 | 199.01 | 721 | 198.32 | ||||||||||||||||||||||
| Vested | (3,486) | 203.14 | (745) | 190.14 | ||||||||||||||||||||||
| Forfeited | (212) | 160.60 | (81) | 148.70 | ||||||||||||||||||||||
Unvested as of December 31, 2025 | 7,065 | $ | 114.71 | 2,021 | $ | 133.34 | ||||||||||||||||||||
(1)Granted and vested include adjustments for achievement of specific performance goals for PSUs granted in prior periods.
(2)The weighted-average grant date fair value of RSUs was $136.69 and $113.08 in 2024 and 2023, respectively. The weighted-average grant date fair value of PSUs was $132.71 and $115.09 in 2024 and 2023, respectively.
(3)Includes RSUs converted as a result of the Transaction.
The total fair value of RSUs that vested during 2025, 2024 and 2023 was $708 million, $376 million and $233 million, respectively. The total fair value of PSUs that vested during 2025, 2024 and 2023 was $142 million, $119 million and $91 million, respectively. As of December 31, 2025, the unrecognized compensation expense related to unvested RSUs is $606 million, which is expected to be amortized over a weighted-average period of approximately 1.5 years and the unrecognized compensation expense related to unvested PSUs was $63 million, which is expected to be amortized over a weighted-average period of approximately 1 year.
Stock Options
Stock options have a maximum contractual term of 10 years. Generally, the exercise price of stock options will equal the fair market value of our common stock on the date of grant. Option vesting is determined at the time of grant and may be subject to the achievement of any applicable performance conditions. Options generally become exercisable over three years beginning on the first anniversary of the date of grant; however, some option grants cliff vest on or shortly after the first or third anniversary of the grant date. 2025 activity for stock options and the balance of stock options exercisable as of December 31, 2025 are not material.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 23, 2017 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.