Capital One CEO Richard Fairbank Just Became a Billionaire

January 5, 2018, 7:27 PM UTC

Richard Fairbank spent three decades building Capital One Financial Corp. into a credit-card powerhouse, using catchy television ads with celebrities asking viewers “What’s in your wallet?” Today, there’s more than $1 billion in his.

Fairbank, 67, among the longest-serving bank CEOs in the U.S., has reaped about $500 million from share sales and cash compensation since 2004. His net worth, including current equity holdings, is about $1.1 billion, according to the Bloomberg Billionaires Index. The stock has returned more than 2,200 percent since its 1994 initial public offering, including reinvested dividends, compared with about 650 percent for the S&P 500 Financials Index.

Capital One, the third-biggest U.S. credit-card lender, stands to benefit along with competitors including Discover Financial Services as President Donald Trump eased financial regulations and signed legislation that cut the corporate tax rate to 21 percent from 35 percent.

“The best is yet to come” for U.S. banks, Gerard Cassidy, an analyst at RBC Capital Markets, said in a note to clients last month. “There is the potential for the industry to experience higher profitability and earnings growth against a backdrop of improved economic conditions, continued strong credit quality, a more constructive regulatory environment and further increases in interest rates.”

Fairbank is the fourth U.S. bank CEO to be identified as a billionaire by the Bloomberg index, joining JPMorgan Chase & Co.’s Jamie Dimon, Goldman Sachs Group Inc.’s Lloyd Blankfein and M&T Bancorp’s Bob Wilmers, who died last month.

Shares of Capital One rose 1.9 percent this year through Thursday, to a record $101.42, fueled by a stronger economic outlook and corporate tax cuts.

Fairbank and Nigel Morris, his colleague at a Washington-area consulting firm, started tinkering with new ways of parsing data to assess credit-card risk in the 1980s. They were hired in 1988 by Signet Bank, where they pioneered concepts such as tailored interest rates and created offers that enticed borrowers to transfer balances from other cards.

The business prospered and Signet spun off Capital One in the 1994 IPO, making Fairbank CEO. The company, based in McLean, Virginia, is now the seventh-biggest commercial bank by assets in the U.S. The firm also targets subprime borrowers, a fee-rich business that helped Fairbank double annual profit since 2005 to $3.75 billion in 2016.

While Fairbank doesn’t collect a salary, over the past three years he has averaged more than $18 million in cash bonuses and stock and options awards from Capital One, according to the Bloomberg Pay Index. He declined to comment through a company spokeswoman.

Fairbank, a father of eight, is one of about a dozen minority owners of Monumental Sports & Entertainment, the group that owns five sports teams including the National Hockey League’s Washington Capitals, the Washington Wizards of the National Basketball Association, as well as the Capital One Arena, where both teams play.

Capital One has been a prolific advertiser, pouring $13 billion into marketing since 2008, featuring celebrities including Jennifer Garner, Spike Lee, Charles Barkley, Alec Baldwin and Samuel L. Jackson.

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