UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement | |||
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||
x | Definitive Proxy Statement | |||
¨ | Definitive Additional Materials | |||
¨ | Soliciting Material Pursuant to §240.14a-12 |
Bank of America Corporation
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
x | No fee required. |
¨ | Fee computed on table below per Exchange Act Rules14a-6(i)(1) and0-11. |
1) | Title of each class of securities to which transaction applies: |
2) | Aggregate number of securities to which transaction applies: |
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
4) | Proposed maximum aggregate value of transaction: |
5) | Total fee paid: |
¨ | Fee paid previously with preliminary materials. |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) | Amount Previously Paid: |
2) | Form, Schedule or Registration Statement No.: |
3) | Filing Party: |
4) | Date Filed: |
Bank of America
Bank of America Corporation
2016
Proxy Statement
Annual Meeting of Stockholders
August 13, 2015March 17, 2016
Dear Fellow Stockholders:
On behalf of the Board of Directors, weWe cordially invite you to attend a Specialthe 2016 Annual Meeting of Stockholders, to be held on September 22, 2015,April 27, 2016 at 10:00 a.m., local time, inat the auditorium at 1 Bank of AmericaHilton Charlotte Center City, 222 East Third Street, Charlotte, North Carolina.
At the meeting we will discuss and vote on the mattermatters described in the notice and proxy statement. I also will provide a report on our company’s strategy and performance.
PleaseOn behalf of our Board of Directors, I would like to thank Charles K. Gifford, who is retiring as a director, for his years of service and contributions. Mr. Gifford is the former Chairman of our Board and serves as chair of our Board’s Credit Committee. We have greatly benefited from his judgment and experience.
Your vote is important; please read the enclosed proxy materialsdocuments with care and follow the voting instructions to ensure your views and shares are represented.represented at the meeting. We encourage you to vote and look forward to your participation.
On behalf of the Board, I would like to thank all of you for your continued investment and interest in our company.
Sincerely,
Brian T. Moynihan
Chairman and Chief Executive Officer
August 13, 2015
Dear Bank of America Stockholders:
On behalf of your Board and as fellow stockholders, we encourage your participation in the upcoming Bank of America Corporation Special Meeting of Stockholders. We are calling this Special Meeting to follow through promptly on the commitment the Board made prior to the 2015 Annual Meeting of Stockholders to seek input from all of you and ask you to ratify our ability to select a leadership structure that best serves the company’s needs and your interests.
In October 2014, we amended the company’s Bylaws to provide flexibility in considering the appropriate leadership structure for the Board as facts and circumstances may require. As discussed in the proxy statement for the 2015 Annual Meeting of Stockholders and in the enclosed proxy materials, we determined it currently is in the company’s and stockholders’ best interests to have Brian Moynihan serve as Chairman and Jack Bovender serve as Lead Independent Director—a new Board leadership role with robust powers and responsibilities to facilitate strong independent Board leadership. Since we established this governance structure, the Board has continued its diligent and active oversight of management, and we are confident this Board’s leadership structure serves the best interests of the company and all of us as stockholders by providing effective and efficient Board leadership while maintaining strong, independent oversight of management.
We undertook a thorough and thoughtful process before changing the company’s Bylaws, and, through our engagement with you, we have heard your desire to vote on this action. We now seek your support of our decision. We encourage you to read the attached proxy materials to understand why we believe you should ratify the Bylaw change.
We appreciate the candor with which you have shared your insights and perspectives with us and unanimously recommend that you vote “FOR” the proposal to ratify the October 2014 amendments to the company’s Bylaws. We will follow your voting decision.
Sincerely,
The Independent and Non-management Members of the Board
Jack O. Bovender, Jr.
Lead Independent Director
|
| |||||
|
| |||||
|
|
|
Notice of Special2016 Annual Meeting of Stockholders
Date: | ||
Time: | 10:00 a.m., local time | |
Place: |
|
Item of Business: To vote on a proposalMatters to approve the following resolution:
Resolved, that the Bank of America Corporation stockholders hereby ratify the October 1, 2014 amendments to the company’s Bylaws that permit the company’s Board of Directors the discretion to determine the Board’s leadership structure, including appointing an independent Chairman, or appointing a Lead Independent Director when the Chairman is not an independent director.be voted on:
l | Electing the 13 directors named in the proxy statement | ||
|
l | A proposal approving our executive compensation (an advisory, non-binding “Say on Pay” resolution) |
l | A proposal ratifying the appointment of our independent registered public accounting firm for 2016 |
l | A stockholder proposal, if it is properly presented at our annual meeting |
l | Any other business that may properly come before our annual meeting |
Record Date:date:Bank of America stockholders as of the close of business on August 10, 2015March 2, 2016 will be entitled to vote at this Special Meetingour annual meeting and any adjournments or postponements of the meeting.
Voting:Your vote is very important. Please submit your proxy as soon as possible by the Internet, telephone, or mail. Submitting your proxy by one of these methods will ensure your representation at the Special Meetingannual meeting regardless of whether you attend the meeting. Please refer to the following pagespage for information on how to vote your shares and attend our annual meeting.
By order of the Board of Directors:Directors,
Ross E. Jeffries, Jr.
Deputy General Counsel and Corporate Secretary
August 13, 2015March 17, 2016
Important Notice Regarding the Availability of Proxy Materials for the
Our Proxy Statement http://investor.bankofamerica.com |
Proxy StatementPROXY STATEMENT SUMMARY
We are providing or making available these proxy materials on or about August 13, 2015 to solicit your proxy to vote at a Special Meeting of Stockholders (the “Special Meeting”) to be held on September 22, 2015 at 10:00 a.m., local time,
PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in the auditorium at 1 Bank of America Center, 150 North College Street, Charlotte, North Carolina 28202. In this proxy statement we referor in our corporate governance documents published on our website at http://investor.bankofamerica.com. We encourage you to Bank of America Corporation as “we,” “us,” “Bank of America” orread the “company” and the company’s Board of Directors as the “Board.”
The Board called this Special Meeting for stockholders to vote on a proposal (the “Proposal”) to approve the following resolution:proxy statement in its entirety before voting.
Resolved, that the Bank of America Corporation stockholders hereby ratify the October 1, 2014 amendments to the company’s Bylaws that permit the company’s Board of Directors the discretion to determine the Board’s leadership structure, including appointing an independent Chairman, or appointing a Lead Independent Director when the Chairman is not an independent director.
|
VOTING YOUR SHARES
Your vote is important. Please exercise your right as a stockholder and submit your proxy as soon as possible.
You may vote if you were a stockholder as of the close of business on August 10, 2015.March 2, 2016. Stockholders may vote in person at the meeting or submit a proxy by the Internet, telephone, or mail as follows:
VIA THE INTERNET www.investorvote.com/bac (for registered holders) www.proxyvote.com (for beneficial owners) | BY MAIL Complete, sign, date, and return your proxy card in the envelope provided | |||||
BY TELEPHONE Call the phone number located on the top of your proxy card | IN PERSON Attend our |
If you submit your proxy via the Internet or by telephone, or over the Internet, you do not need to return your proxy card by mail.
If your shares are held beneficially through a bank, broker or other nominee in street name, you should follow the voting instructions provided to you by that entity or person.
Proposals for Your Vote | Board Voting Recommendation | Page | ||
Proposal 1: Electing Directors | FOR each nominee | 1 | ||
Proposal 2: Approving Our Executive Compensation (an advisory, non-binding “Say on Pay” resolution) | FOR | 29 | ||
Proposal 3: Ratifying the Appointment of Our Independent Registered Public Accounting Firm for 2016 | FOR | 58 | ||
Proposal 4: Stockholder Proposal | AGAINST | 60 |
See “Voting and Other Information” on page 63 for more information on voting your shares.
ANNUAL MEETING ADMISSION
Annual meeting admission is limited to our registered and beneficial stockholders as of the record date and persons holding valid proxies from stockholders. Admission to our annual meeting requires proof of your stock ownership as of the record date and valid, government-issued photo identification. Security measures may include bag, metal detector, and hand-wand searches. The use of cameras, recording devices, phones, and other electronic devices is strictly prohibited. See “Attending our Annual Meeting” on page 65.
| BANK OF AMERICA CORPORATION |
| 2016 PROXY STATEMENT
|
i |
PROXY STATEMENT SUMMARY
2015 FINANCIAL AND OPERATING PERFORMANCE
Over the past several years, our company has undergone a strategic transformation. We have followed a strategy to simplify the company, rebuild our capital and liquidity, and invest in our company and our capabilities.
At the core of our strategy is the commitment we made to a clear purpose: to make financial lives better by connecting those we serve to the resources and expertise they need to achieve their goals. This is what drives us.
Bank of America has a straightforward model serving individual consumers, businesses of all sizes, and institutions. We made almost $16 billion in 2015 and returned nearly $4.5 billion to stockholders. We must build on that by growing within our stated risk limits, sustained by disciplined business practices and governance, by investing in our communities, and by being the best place to work for our employees.
– Brian Moynihan, Chairman and CEO
2015 Company Performance
Earned net income of $15.9 billion in 2015, versus $4.9 billion in 2014
Achieved record capital and liquidity levels
Tangible Common Equity of $162 billion, increased by $10.4 billion(1); Global Excess Liquidity Sources at $504 billion
Tangible book value per share increased8% to $15.62(1)
Continued focus on expenses while investing in growth
Excluding litigation, noninterest expense down 5%(1)
Improved/increased client and customer activity in all areas, including: business referrals (increased 19% to 5 million); total loans (grew nearly $22 billion); and deposits (increased $78 billion)
Strong asset quality discipline drove continued low levels of net charge-offs and declines in delinquencies and nonperforming loans
$4.5 billion returned to common stockholders through repurchases and dividends
Consumer Banking | Best U.S. Consumer Franchise #1 retail deposit market share(2) | |||||
Global Wealth & Investment Management | Top Wealth Management Brands #1 U.S. wealth management market position across client assets, deposits, and loans(3) | |||||
Global Banking | Strong Global Banking Presence #3 in Global Investment Banking fees(4) | |||||
Global Markets | Leader in Research #1 global research team five years in a row(5) |
Total Stockholder Return(6)
1-year | 3-year | 5-year | ||
SUMMARY QUESTIONS & ANSWERSSee “Compensation Discussion and Analysis” on page 29 and our 2015 annual report.
SUMMARY QUESTIONS AND ANSWERS
This summary highlights information contained elsewhere in this proxy statement or in our corporate governance documents published on our website athttp://investor.bankofamerica.com. We encourage you to read this proxy statement in its entirety before voting.
The Board called this Special Meeting to ask stockholders to ratify the amendments made to our Bylaws in October 2014, which removed the requirement that the Chairman of the Board be an independent director and added provisions contemplating a Lead Independent Director (these amendments, as collectively set forth in Appendix A, the “Bylaw Amendment”). Shortly before our 2015 Annual Meeting of Stockholders (the “2015 Annual Meeting”), the Board committed to holding this ratification vote.
The Board’s leadership structure is critical to the proper functioning of the Board and its independent oversight of management and the company. In May 2015, the Board committed to hold this vote by the next annual meeting. The Board believes it is important to seek stockholders’ ratification of the Bylaw Amendment as soon as possible and not wait until the company’s 2016 Annual Meeting of Stockholders (the “2016 Annual Meeting”).
The Board believes that the optimal Board leadership structure for the company can and should change over time based on the company’s evolving needs, strategy and operating environment, the Board’s leadership needs and composition, and other factors, including the perspectives of stockholders and other stakeholders. The Board also believes that to best uphold its responsibility to the company and our stockholders, it should retain the flexibility to determine the Board leadership structure best suited to the company’s and Board’s then-existing circumstances and personnel.
Prior to 2009, our Bylaws did not require an independent Chairman of the Board. At our 2009 Annual Meeting of Stockholders, in the midst of the financial crisis and by a very close vote, stockholders voted to amend our Bylaws to require an independent director serve as the Board’s Chairman. Based on feedback from stockholders at that time and subsequently, the Board believes the 2009 vote for an independent Chairman primarily reflected concerns particular to Bank of America’s circumstances at that time, including dissatisfaction with the then Board’s governance and oversight, the company’s performance, and the then management’s strategic decisions prior to the 2009 stockholder vote, including the acquisitions of Countrywide and Merrill Lynch.
In 2014 the Board and its Corporate Governance Committee conducted an extensive review of Chairman succession planning as part of their ongoing consideration of the Board’s succession planning and leadership structure. The analysis included a review of the Board leadership structure that they believed would be the most effective for the Board at that time, and of the company’s then-current circumstances, which were quite different from those in 2009. In particular, the Board considered the company’s leadership needs and the positive developments at the company since 2009, including enhancements to the Board’s governance, significant changes to the Board’s composition (80% of the directors were not serving on the Board in 2009), changes to the company’s executive management team, and improvements in the company’s business and performance.
Based on that review, the Board determined to amend the Bylaws to remove the absoluterequirement for an independent Board Chairman and to permit the Board the flexibility in exercising its fiduciary duties and implementing a Board leadership structure that is most appropriate for the company at any given time, as circumstances may warrant. Equally important, the Board concurrently amended our Corporate Governance Guidelines to provide for a Lead Independent Director role with responsibilities that are more robust than industry norms to facilitate strong independent Board leadership. As part of these changes and in light of the then Chairman’s desire to transition out of that role, the Board implemented the leadership structure that it believes is most appropriate at this time and elected our CEO, Brian T. Moynihan, as Chairman, and the independent directors elected Jack O. Bovender, Jr. as Lead Independent Director.
(4) | Source: Dealogic, as of January 5, 2016, for the quarter ended December 31, 2015. |
(5) | Source: Institutional Investor magazine. |
(6) | As of December 31, 2015. See page 42 for a list of the companies in our primary competitor group. “G-SIBs” are global systematically important banks designated by the Financial Stability Board as of November 3, 2015. |
ii | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
PROXY STATEMENT SUMMARY
COMPENSATION HIGHLIGHTS
Pay-for-Performance Compensation Philosophy
Our compensation philosophy ties our executive officers’ pay to company, line of business, and individual performance over the short and long term. Our executive compensation program provides a mix of salary, incentives, and benefits paid over time that we believe aligns executive officer and stockholder interests. A majority of total variable compensation granted to named executive officers is deferred equity-based awards, further encouraging long-term focus on generating sustainable results for our stockholders.
Our Compensation and Benefits Committee oversees a robust compensation risk management process that supports our enterprise risk management objectives through multiple checks and balances. We are focused on pay-for-performance, guided by our company’s strategy of responsible growth.
– Monica Lozano, Chair
Compensation and Benefits Committee
2015 Compensation Decisions for the CEO
For performance year 2015, the Compensation and Benefits Committee and the Board’s independent directors determined the following compensation for our CEO, in recognition of his individual performance and the overall performance of our company:
l Total compensation, inclusive of base salary and equity-based incentives, of $16 million l All CEO variable compensation awarded in equity (as it has been since 2010). Half of the CEO’s variable compensation was awarded in the form of performance restricted stock units (PRSUs). For PRSUs to have value, they must be re-earned by our company achieving specific performance goals overa three-year period (2016-2018) l The remainder of the CEO’s variable pay was awarded as 30% cash-settled restricted stock units (CRSUs) and 20% time-based restricted stock units (TRSUs) |
Compensation Risk Management | Historical Say on Pay Votes | |||
l Mix of fixed and variable pay l Balanced, risk-adjusted performance measures l Pay-for-performance process that allocates individual awards based on actual results and how results were achieved l Review of feedback from independent control functions in performance evaluations and compensation decisions l Deferral of a majority of variable pay through equity-based awards l Use of multiple clawback and cancellation features for equity-based awards | Our Compensation and Benefits Committee believes the results of last year’s Say on Pay vote affirmed our stockholders’ support of our company’s executive compensation program. This informed our decision to maintain a consistent overall approach in setting executive compensation for 2015. |
See “Compensation Discussion and Analysis” on page 29 and “Executive Compensation” on page 44.
BANK OF AMERICA CORPORATION |
| 2016 PROXY STATEMENT
|
| |||||||
PROXY STATEMENT SUMMARY QUESTIONS & ANSWERS
CORPORATE GOVERNANCE HIGHLIGHTS
Thoughtful, Interconnected Practices
Strengthen Our Board’s Effectiveness
In adopting these changes,recent years, the Board concluded that an executive Chairman working togetherhas implemented a number of measures to improve Board composition, oversight, and effectiveness.
Our Board regularly reviews management’s strategy to create long-term value for stockholders and the progress our company is making. I’ve spent a great deal of time in 2015 and 2016 meeting with a Lead Independent Director empowered with strong, well-defined duties; amany of our investors. This engagement has been instructive to our Board consisting of experiencedas we continue to drive our company’s progress and committed directors, all but two of whomadd value to your investment. You are independent (except Mr. Moynihan and Charles K. Gifford); and Board committees that have strong independent committee chairs and members all provide forrepresented by a strong, independent Board leadership, effective engagement with diversity of experience and oversight of management,perspective, and a corporate governance structure that best serves the needs of the company, its stockholders and other stakeholders today.we welcome further dialogue with you.
–Jack Bovender, Lead Independent Director
Governance Enhancements Informed by Stockholder Input
Our Board and management are committed to engaging with our stockholders. In 2015, our Board and management met with many of |
The Bylaw Amendment will be ratified, which will permit the Board the flexibility to determine the Board’s leadership structure that it believes will serve the company’s and stockholders’ best interests at any given time by providing effective and efficient Board leadership while maintaining strong, active and independent oversight of management. At least annually, the Board and the Corporate Governance Committee deliberates on and discusses the appropriate leadership structure of our Board based on the company’s needs. Until such time as the Board determines otherwise, it is expected that Mr. Moynihan will continue to serve as Chairman of the Board and Mr. Bovender as Lead Independent Director.
Unlike the 2009 amendment, the 2014 Bylaw Amendment does not impose a static Board leadership structure. The Board recognizes that leadership needs and its own composition will change over time. The Board will have the flexibility to assess the Board’s leadership needs in light of the then-existing facts and circumstances. At least annually, the Board and Corporate Governance Committee will evaluate our Board leadership structure and may appoint an independent Chairman depending on the company’s needs and circumstances, the Board’s leadership needs and composition, and the best interests of stockholders, the company and other stakeholders at that time.
The Board intends to promptly implement a plan to transition from the current Board leadership structure to an independent Chairman structure and reverse the 2014 Bylaw Amendment and the related 2014 amendments to the company’s Corporate Governance Guidelines. For the reasons stated in this proxy statement, the Board does not believe this outcome will be in the company’s or stockholders’ best interests.
The Board strongly believes that the Bylaw Amendment is in the best interests of the company and our stockholders. The Board unanimously recommends that stockholders vote “FOR” the Proposal to ratify the Bylaw Amendment. The Board believes that the Bylaw Amendment is in stockholders’ best interests because (a) it provides the Board flexibility to determine the best leadership structure for the company and its stockholders as needs and circumstances change, (b) there is no conclusive empirical evidence proving that a particular Board leadership structure produces superior corporate performance or best Board governance, (c) only a small minority of S&P 500 companies require the separation of the Chairman and CEO roles in all cases, (d) there are many successful and well managed U.S. public companies that do not have an independent chairman, and (e) a “one-size-fits-all” approach to Board leadership is excessively restrictive and does not take into account the differences among companies in board composition and changing needs of the company and the Board over time.
The Board believes that the company and its stockholders benefit from the Board’s adoption of strong corporate governance practices. These include:
|
|
|
|
iv | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
PROXY STATEMENT SUMMARY
RESPONSIBLE SUSTAINABLE GROWTH:
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE HIGHLIGHTS
We define sustainable growth through an environmental, social, and governance (ESG) framework, ensuring that we are growing the right way—from business policies and practices, to the way we treat our employees and manage our company.
Our ESG Committee, which is composed of members of senior management from every business line and support function, oversees our efforts in this area and routinely provides ESG reports to our Board’s Corporate Governance Committee. In 2015, our ESG performance was recognized by the Dow Jones Sustainability Index, where we were named to the World and North American Indices.
Our Corporate Governance Committee oversees our company’s ESG activities. We are very proud of the way the company integrates ESG into our business operations. It is not just an add-on or solely philanthropic—it is core to our company’s values, it is profitable, and it makes tremendous sense for our stockholders. – Tom May, Chair Corporate Governance Committee |
In addition to the corporate governance highlights summarized on the prior page, our recent ESG accomplishments include:
l Continued to foster a diverse and inclusive environment—more than 50% of our global workforce is female and more than 40% of our U.S.-based workforce is from a racially or ethnically diverse background l Began offering free FICO credit scores for online banking customers who have a Bank of America credit card. This further strengthens our existing suite of responsible financial products l Continued our leadership as the largest investor in Community Development Financial Institutions, with over $1.2 billion in credit extended l Continued to deliver local economic growth and development through more than $2 billion in spending with diverse suppliers |
l Increased our environmental business initiative to provide $125 billion to low-carbon and other environmental businesses by 2025, including the continued growth of our Catalytic Finance Initiative and investments in clean energy projects around the globe l Issued our second Green Bond in a $600 million offering, and continued our role as the leading underwriter of Green Bonds in the industry l Reduced our greenhouse gas emissions by roughly one-third and our water consumption by more than 25% since 2010, as part of our overall focus on reducing the environmental impact of our operations |
In 2016, we will continue to demonstrate our commitment to transparency by:
l | Publishing a Business Standards Report about our corporate governance, our risk management and control functions, and how our relationships with customers and key stakeholders are deepening in ways that are unique to Bank of America |
l | Publishing an Environmental and Social Risk Framework that details how we identify, measure, monitor, and control risks related to environmental and social issues |
See “ESG Initiatives: Focus on Responsible, Sustainable Growth” on page 17.
| BANK OF AMERICA CORPORATION |
| 2016 PROXY STATEMENT
|
v | ||||||
SUMMARY QUESTIONS & ANSWERSTABLE OF CONTENTS
29 | Proposal 2: Approving Our Executive Compensation (an advisory, non-binding “Say on Pay” resolution) | |
29 | ||
30 | ||
31 | ||
33 | ||
36 | ||
41 | ||
43 | ||
44 | ||
44 | ||
47 | ||
50 | ||
52 | ||
54 | ||
55 | ||
58 | Proposal 3: Ratifying the Appointment of Our Independent Registered Public Accounting Firm for 2016 | |
59 | ||
59 | ||
60 | Proposal 4: Stockholder Proposal | |
63 | ||
A-1 |
|
|
|
|
|
|
|
|
|
|
|
|
The record date forPROXY STATEMENT
We are providing or making available this proxy statement to solicit your proxy to vote on the Special Meeting is August 10, 2015 (the “record date”). Accordingly,matters presented at our annual meeting. We commenced providing and making available this proxy statement on March 17, 2016. Our Board requests that you may vote atsubmit your proxy by the Special Meeting if you were a stockholder of record,Internet, telephone, or heldmail so that your shares beneficially throughwill be represented and voted at our annual meeting.
INTERNET AVAILABILITY OF PROXY MATERIALS
We mailed or emailed to most of our stockholders a Notice of Internet Availability of our proxy materials with instructions on how to access our proxy materials over the Internet and how to vote. If you are a registered stockholder and would like to change the method of delivery of your proxy materials, please contact our transfer agent, Computershare Trust Company, N.A., P.O. Box 43078, Providence, Rhode Island 02940-3078; Toll free: 800-642-9855; or atwww.computershare.com/bac. You may do the same as a beneficial stockholder by calling the bank, broker, or other nominee in street name as of the close of business on August 10, 2015.where your shares are held.
| 2016 PROXY STATEMENT |
In order
PROPOSAL 1: ELECTING DIRECTORS
PROPOSAL 1: ELECTING DIRECTORS
Our Board is presenting 13 nominees for election as directors at our annual meeting. Other than Mr. Woods, who is a new nominee identified by a third-party search firm, all nominees currently serve as directors on our Board and were elected by you at our 2015 annual meeting. After more than a decade of valuable service, Charles K. Gifford will retire at our annual meeting. Each director elected at the meeting will serve until our 2017 annual meeting or until a successor is duly elected and qualified. Each director nominee has consented to holdbeing named in this proxy statement and to serve as a director if elected. If any nominee is unable to stand for election for any reason, the shares represented at our Special Meeting, a quorum representing holders of a majority of the voting power ofannual meeting may be voted for another candidate proposed by our common stock, the Series B Preferred Stock and the Series 1Board, or our Board may choose to 5 Preferred Stock must be present in person or represented by proxy. We will count as present shares present in person but not voting and shares for which we have received proxies but for which holders thereof have abstained from voting. Broker non-votes, if any, will not be counted as shares present.reduce its size.
Nominee/Principal Occupation | Age | Director Since | Independent | Other Public Company | Bank of America Corporation Board Committee | |||||||||||||
Audit | Compensation and Benefits | Corporate Governance | Credit | Enterprise Risk | ||||||||||||||
Sharon L. Allen
Former Chairman, Deloitte LLP | 64 | 2012 | Yes | 1 | C | M | ||||||||||||
Susan S. Bies
Former Member, Board of Governors of the Federal Reserve System | 68 | 2009 | Yes | None | M | M | ||||||||||||
Jack O. Bovender, Jr.
Lead Independent Director, Bank of America Corporation; Former Chairman and CEO, HCA Inc. | 70 | 2012 | Yes | None | M | |||||||||||||
Frank P. Bramble, Sr.
Former Executive Officer, MBNA Corporation | 67 | 2006 | Yes | None | M | C | ||||||||||||
Pierre J.P. de Weck
Former Chairman and Global Head of Private Wealth Management, Deutsche Bank AG | 65 | 2013 | Yes | None | M | M | ||||||||||||
Arnold W. Donald
President and CEO, Carnival Corporation and Carnival plc | 61 | 2013 | Yes | 2 | M | M | ||||||||||||
Linda P. Hudson
Chairman and CEO, The Cardea Group, LLC; Former President and CEO, BAE Systems, Inc. | 65 | 2012 | Yes | 2 | M | M | ||||||||||||
Monica C. Lozano
Former Chairman, US Hispanic Media Inc. | 59 | 2006 | Yes | 1 | C | M | ||||||||||||
Thomas J. May
Chairman, President, and CEO, Eversource Energy | 69 | 2004 | Yes | 1 | C | M | ||||||||||||
Brian T. Moynihan
Chairman of the Board and CEO, Bank of America Corporation | 56 | 2010 | No | None | ||||||||||||||
Lionel L. Nowell, III
Former SVP and Treasurer, PepsiCo, Inc. | 61 | 2013 | Yes | 3 | M | M | ||||||||||||
Thomas D. Woods
Former Vice Chairman and SEVP, Canadian Imperial Bank of Commerce | 63 | — | Yes | None | ||||||||||||||
R. David Yost
Former CEO, AmerisourceBergen Corporation | 68 | 2012 | Yes | 2 | M | M | ||||||||||||
Number of Meetings Held in 2015(1)
| Board: 21 | 14 | 7 | 9 | 10 | 13 |
C = Chair; M = Member
BANK OF AMERICA CORPORATION |
| |||||||
|
You may vote in person at our Special Meeting or by submitting your proxy by:PROPOSAL 1: ELECTING DIRECTORS
|
|
|
To be counted, your proxy must be received before the polls close at our Special Meeting. If your shares are held beneficially through a bank, broker or other nominee in street name, you should follow the voting instructions provided to you by that entity or person.
An overviewIDENTIFYING AND EVALUATING DIRECTOR CANDIDATES
Our Board believes our directors should have the qualifications, skills, personal qualities, and diversity of backgrounds that, when taken together, best serve our corporate governance practices cancompany and our stockholders. These individuals should possess personal integrity and character, demonstrated management and leadership ability, have extensive experience within our industry and across sectors, and be foundable to exercise their sound and independent judgment in the definitive proxy statement for our 2015 Annual Meeting, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 26, 2015. More information about our corporate governance can be found on our website athttp://investor.bankofamerica.coma collegial manner.
Our Board views diversity as a priority and seeks representation across a range of attributes, including race, gender, ethnicity, and professional experience, and regularly assesses our Board’s diversity when identifying and evaluating director candidates. Our Corporate Governance Committee follows applicable regulations in ensuring our Board includes members who are independent, possess financial literacy and expertise, and have experience in identifying, assessing, and managing risk exposures and/or understanding of risk management principles, policies, and practices. | Core Attributes | |||||||||
|
|
|
| |||||||
l Strong Business Judgment | ||||||||||
l Demonstrated Achievement in Public or Private Sectors | ||||||||||
l Proven Leadership and Management Ability | ||||||||||
l Dedicated; Able to Devote Necessary Time to Oversight Duties and Represent Stockholders’ Interests | ||||||||||
l Free of Potential Conflicts of Interests | ||||||||||
l Collegial Manner |
BACKGROUND OF THE PROPOSALOur Board seeks directors whose complementary knowledge, experience, and skills provide our company with a broad range of perspectives and leadership expertise in financial services and other highly complex and regulated industries, strategic planning and business development, business operations, marketing and distribution, risk management and financial controls, corporate governance and public policy, and other areas important to our company’s strategy and oversight. This effort is embodied in our current Board composition and by our 13 director nominees. See “Our Director Nominees” on the following page.
As part of this director recruitment process, the Committee has developed and is regularly reviewing a “pipeline” of director talent to consider for Board renewal and refreshment. The pool of candidates identified by the search firms is periodically refreshed to reflect currently available director talent and the Committee’s review and feedback. In 2015, the Committee used two external search firms to present candidates having professional experience aligned with criteria the Committee specified and with the experiential diversity needs our Board identified in its 2014 and 2015 self-assessments. See “Board Evaluation” on page 14 for additional information on our Board’s self-evaluation process.
underThe Committee has an established process for evaluating director candidates that it follows regardless of who recommends a candidate for consideration. Through its process, the heading “Corporate Governance,”Committee reviews available information regarding each candidate, including our: (a) Certificatequalifications, experience, skills, and integrity, as well as race, gender, and ethnicity. The Committee also confirms the candidate’s independence and absence of Incorporation; (b) Bylaws; (c)conflicts. In addition, the Committee adheres to our Corporate Governance Guidelines, (includingwhich provide that a director who has reached the age of 72 shall not be nominated for initial election to our Related Person Transactions Policy) and Director Independence Categorical Standards; (d) CodeBoard. However, the Board may nominate such an individual for re-election if, in light of Conduct and related materials; and (e) composition of eachcircumstances at the time, it finds such nomination to be in the best interests of our Audit, Compensationcompany and Benefits,its stockholders. Our director selection process has been reviewed and acknowledged by our primary bank regulators.
Any stockholder who wishes to recommend a director candidate for consideration by our Corporate Governance Credit and Enterprise Risk Committees, includingCommittee must submit a written recommendation to the committee charters, and in other materials found on our website. This information is also available in print, free of charge, upon written request addressed to our Corporate Secretary at Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-18-05, Charlotte, North Carolina 28255. For our 2017 annual meeting of stockholders, the Committee will consider recommendations received by October 15, 2016. The recommendation must include the information set forth in our Corporate Governance Guidelines, which are published on our website athttp://investor.bankofamerica.com.
BACKGROUND OF THE
2 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
PROPOSAL 1: ELECTING DIRECTORS
OCTOBER 1, 2014 BYLAW AMENDMENTOUR DIRECTOR NOMINEES
As previously disclosed,Our Board selected our 13 director nominees based on October 1, 2014, after careful deliberation,their high caliber and in lightdiverse array of our prior Chairman’s desire to transition out of the Chairman role, to allow for a smoothexpertise, experience, and timely transition of Board leadership and minimize disruption to investors, employees, and other stakeholders, the Board took prompt and decisive action to amend our Bylaws to remove the requirement that the Chairman of the Board be an independent director and adopt governance provisions contemplating a Lead Independent Director. In connection with the Bylaw Amendment, the Board elected Brian T. Moynihan, our CEO, to succeed Charles O. Holliday, Jr. as Chairman of the Board,skills, and the independent directors of the Board elected Jack O. Bovender, Jr.belief that each can make substantial contributions to serve in the newly established Lead Independent Director role. The Board determined at that time and continues to believe that the leadership structure of Mr. Moynihan as Chairman and CEO and Mr. Bovender as Lead Independent Director is in the best interests of Bank of America and its stockholders based on the company’s present needs and circumstances.
The Bylaw Amendment is summarized in more detail below.
our company.
Range of Qualifications and Skills Represented by Our Nominees | ||
l Financial Services Experience l Strategic Planning l Operational Risk Management l Marketing and Retail Distribution l Leadership of Complex, Highly Regulated Businesses l Consumer, Corporate, and Investment Banking l Corporate Governance | l Cybersecurity Risk Management l Succession Planning l Business Development l Risk Management l Global Perspective l Public Company Board Service l Government, Public Policy, and Regulatory Affairs l Environmental, Social, and Governance (ESG) |
Our nominees:
l | are seasoned leaders who have held leadership positions in complex, highly regulated businesses (including banks and other financial services organizations) and with our primary regulator, and management roles as chief executives and in the areas of risk, operations, finance, technology, and human resources |
l | bring deep and diverse experience in public and private companies, financial services, the public sector, nonprofit organizations, and other domestic and international businesses |
l | are experienced in regulated, non-financial services industries, adding to our Board’s understanding of overseeing a business subject to governmental oversight, and enhancing the diversity of our Board with valuable insights and fresh perspectives that complement those of our directors with specific experience in banking or financial services |
l | represent diverse viewpoints |
l | strengthen our Board’s oversight capabilities by having varied lengths of tenure that provide historical and new perspectives about our company |
Of our 13 nominees:
l |
Hispanic, and | |||
The descriptionOur Board believes, in totality, that this mix of attributes among the Bylaw Amendment set forth above is qualifiednominees strengthens our Board’s independent leadership and effectiveness in its entirety by reference to the textlight of the Bylaw Amendment, which is attached as Appendix A to this proxy statement.our company’s businesses, our industry’s operating environment, and our company’s long-term strategy.
| BANK OF AMERICA CORPORATION |
| 2016 PROXY STATEMENT
| 3 |
PROPOSAL 1: ELECTING DIRECTORS
Our Board recommends a vote “FOR” each of the nominees
listed below for election as a director (Proposal 1).
Set forth below are each nominee’s name, age as of our annual meeting date, principal occupation, business experience, and U.S. public company directorships held during the past five years. We also discuss the qualifications, attributes, and skills that led our Board to nominate each for election as a Bank of America director.
QUALIFICATIONS, ATTRIBUTES, AND SKILLS: l Ms. Allen’s responsibility for audit and consulting services in various positions with Deloitte LLP (Deloitte) provide her with extensiveaudit, financial reporting, and corporate governance experience l Her leadership positions with Deloitte give herbroad management experience with large, complex businesses and an international perspective on risk management and strategic planning Professional Highlights: l From 2003 until her retirement in 2011, Ms. Allen served as Chairman of Deloitte, a firm that provides audit, consulting, financial advisory, risk management, and tax services as the U.S. member firm of Deloitte Touche Tohmatsu Limited O She worked at Deloitte for nearly 40 years in various leadership roles, including partner and regional managing partner O She was responsible for audit and consulting services for a number of Fortune 500 and large private companies O She was also a member of the Global Board of Directors, Chair of the Global Risk Committee, and U.S. representative on the Global Governance Committee of Deloitte Touche Tohmatsu Limited from 2003 to 2011 l Ms. Allen serves on the board of a food and drug retailer seeking to become a public company under the name Albertsons Companies, Inc. Other Leadership Experience and Service: l Ms. Allen is a current director and former Chair of the National Board of Directors of the YMCA of the USA, a leading nonprofit organization for youth development, healthy living, and social responsibility l She served as Chair of the Audit Committee and as a board member of Catalyst Inc., a leading nonprofit organization dedicated to expanding opportunities for women and business l She was appointed by President George W. Bush to the President’s Export Council |
4 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT
|
PROPOSAL 1: ELECTING DIRECTORS
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | Ms. Bies’s role as a Federal Reserve System Governor and her tenure with First Tennessee National Corporation (First Tennessee) provide her with deep experience inrisk management, consumer banking, and financial regulation. In particular, Ms. Bies focused onenterprise financial and risk management during her career with First Tennessee and further developed herregulatory expertise by serving on the Financial Accounting Standards Board (FASB) Emerging Issues Task Force |
l | Herexperience working at a primary regulator of our industry, along with her other regulatory and public policy experience, gives her a unique and valuable perspective relevant to our company’s business,financial performance, andrisk oversight |
l | She brings aninternational perspective through her service on the boards of Zurich Insurance Group Ltd. (Zurich Insurance) and Merrill Lynch International (MLI) |
Professional Highlights:
l | Ms. Bies has served as a Senior Advisory Board Member to Oliver Wyman Group, a management consulting subsidiary of Marsh & McLennan Companies, Inc., since February 2009 |
l | She served as a member of the Board of Governors of the Federal Reserve System from 2001 to 2007. During her service, Ms. Bies was Chairwoman of the Committee on Supervisory and Regulatory Affairs; she also represented the Federal Reserve Board on the Financial Stability Board and led the Federal Reserve Board’s efforts to modernize the Basel capital accord |
l | Ms. Bies served as a member of the FASB Emerging Issues Task Force from 1996 to 2001 |
l | Ms. Bies held various leadership roles, including Executive Vice President of Risk Management, Auditor, and Chief Financial Officer at First Tennessee, a regional bank holding company where she was employed from 1979 to 2001. At First Tennessee, she also served as Chair of the Asset Liability Management and the Executive Risk Management Committees |
l | Ms. Bies currently serves as a director of Zurich Insurance, where she chairs the Risk Committee |
l | Ms. Bies chairs the board of our U.K. broker-dealer, MLI |
l | She began her career as a regional and banking structure economist at the Federal Reserve Bank of St. Louis |
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | As a former Chairman, Chief Executive Officer, President, and Chief Operating Officer of HCA Inc. (HCA), Mr. Bovender hasextensive experience leading a large, regulated, complex business |
l | Mr. Bovender’s experience with HCA and service on the Board of Trustees of Duke University, including as former Chair of its Audit Committee, provide him with insight intorisk management, operational risk, and strategic planning, and valuable perspective oncorporate governance issues |
Professional Highlights:
l | Mr. Bovender served as Chairman of HCA, the largest investor-owned hospital, and a Fortune 100 company owning and operating hospitals and surgery centers, from January 2002 to December 2009, and was Chief Executive Officer from January 2001 to January 2009. During his tenure at HCA, he also served as President and Chief Operating Officer |
l | Mr. Bovender began his career in hospital administration in the U.S. Navy |
Other Leadership Experience and Service:
l | Mr. Bovender is Vice Chair of the Duke University Board of Trustees and previously served as Chair of its Audit Committee |
l | He also serves on the Duke University Healthcare System’s Board of Directors |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 5 |
PROPOSAL 1: ELECTING DIRECTORS
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | Mr. Bramble bringsbroad-ranging financial services experience, international experience, and historical insight to our Board, having held leadership positions at two financial services companies acquired by our company (MBNA Corporation, acquired in 2006, and MNC Financial Inc., acquired in 1993) |
l | As a former executive officer of one of the largest credit card issuers in the U.S. and a major regional bank, he has dealt with a wide range of issues important to our company, includingrisk management, credit cycles, sales and marketing to consumers, and audit and financial reporting |
Professional Highlights:
l | Since July 2014, Mr. Bramble has served as Chairman of the Board of Trustees of Calvert Hall College High School (Baltimore, MD), where he served as Interim President from July 2013 to June 2014 |
l | Mr. Bramble served as Vice Chairman, from July 2002 to April 2005, and advisor to the Executive Committee, from April 2005 to December 2005, of MBNA Corporation, a financial services company acquired by Bank of America in January 2006 |
l | He previously served as the Chairman, President, and Chief Executive Officer at Allfirst Financial, Inc., MNC Financial Inc., Maryland National Bank, American Security Bank, and Virginia Federal Savings Bank |
l | Mr. Bramble also served as a director, from April 1994 to May 2002, and Chairman, from December 1999 to May 2002, of Allfirst Financial, Inc. and Allfirst Bank, U.S. subsidiaries of Allied Irish Banks, p.l.c. |
l | He began his career as an audit clerk at the First National Bank of Maryland |
Other Leadership Experience and Service:
l | He is an emeritus member of the Board of Visitors of Towson University, where he was also a lecturer in accounting from 2006 to 2008 |
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | Mr. de Weck’s experience as an executive with UBS AG (UBS) and Deutsche Bank AG (Deutsche Bank) provides him withextensive knowledge of the global financial services industry |
l | As a former Chairman and Global Head of Private Wealth Management and member of the Group Executive Committee of Deutsche Bank, Mr. de Weck has broad experience inrisk management and strategic planning and brings a valuableinternational perspective to our company’s business activities |
l | Mr. de Weck’s service as Chief Credit Officer of UBS provides him with furthercredit risk management experience |
Professional Highlights:
l | Mr. de Weck served as the Chairman and Global Head of Private Wealth Management and as a member of the Group Executive Committee of Deutsche Bank from 2002 to May 2012 |
l | Prior to joining Deutsche Bank, Mr. de Weck served on the Management Board of UBS from 1994 to 2001, as Head of Institutional Banking from 1994 to 1997, as Chief Credit Officer and Head of Private Equity from 1998 to 1999, and as Head of Private Equity from 2000 to 2001 |
l | He also held various senior management positions at Union Bank of Switzerland, a predecessor firm of UBS, from 1985 to 1994 |
6 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
PROPOSAL 1: ELECTING DIRECTORS
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | As President and Chief Executive Officer of Carnival Corporation and Carnival plc (Carnival), as a former senior executive at Monsanto Company (Monsanto), and as the former Chairman and Chief Executive Officer of Merisant Company (Merisant), Mr. Donald has extensive experience instrategic planning and operations in regulated, consumer, retail, and distribution businesses |
l | His board service with public companies gives him experience withrisk management, global operations, and regulated businesses |
l | His experience heading The Executive Leadership Council and the Juvenile Diabetes Research Foundation International gives him a distinct perspective ongovernance matters, social responsibility, and diversity |
Professional Highlights:
l | Mr. Donald has been President and Chief Executive Officer of Carnival, a cruise and vacation company, since July 2013 |
l | Mr. Donald previously served as President and Chief Executive Officer from November 2010 to June 2012 of The Executive Leadership Council, a nonprofit organization providing a professional network and business forum to African-American executives at major U.S. companies |
l | Mr. Donald was President and Chief Executive Officer of the Juvenile Diabetes Research Foundation International from January 2006 to February 2008 |
l | From 2000 to 2003, Mr. Donald served as Chairman and Chief Executive Officer of Merisant, a privately held global manufacturer of tabletop sweeteners, and he remained Chairman until 2005 |
l | He joined Monsanto in 1977, where over his 20-year tenure he held several senior leadership positions with global responsibilities including President of its Agricultural Group and President of its Nutrition and Consumer Sector |
Other Leadership Experience and Service:
l | Mr. Donald was appointed by President Clinton and re-appointed by President George W. Bush to the President’s Export Council |
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | As a former President and Chief Executive Officer of BAE Systems, Inc. (BAE), Ms. Hudson has broad experience instrategic planning and risk management |
l | Further, with her service as an executive director of BAE Systems plc (BAE Systems), Ms. Hudson’s experience provides her withinternational perspective, geopolitical insights, and skill as aleader of a large, international, highly regulated, complex business |
l | Ms. Hudson’s career in the defense and aerospace industry gives her knowledge oftechnology risks such ascybersecurity risk |
Professional Highlights:
l | Ms. Hudson has served as Chairman and Chief Executive Officer of The Cardea Group, LLC, a management consulting business, since May 2014 |
l | Ms. Hudson served as CEO Emeritus of BAE, a U.S.-based subsidiary of BAE Systems, a global defense, aerospace, and security company headquartered in London, from February 2014 to May 2014, and as President and Chief Executive Officer of BAE from October 2009 until January 2014 |
l | Ms. Hudson served as President of BAE Systems’ Land and Armaments operating group, the world’s largest military vehicle and equipment business, from October 2006 to October 2009 |
l | Prior to joining BAE, Ms. Hudson worked at General Dynamics Corporation and was President of its Armament and Technical Products business. During her career, she has held various positions in engineering, production operations, program management, and business development for defense and aerospace companies |
l | She served as a member of the Executive Committee and as an executive director of BAE Systems from 2009 until January 2014. She also served as a member of the Board of Directors of BAE from 2009 to April 2015 |
l | As a director of The Southern Company, Ms. Hudson is a member of the Nuclear/Operations Committee and its Business Security Subcommittee |
Other Leadership Experience and Service:
l | Ms. Hudson is a member of the Board of Directors of the University of Florida Foundation, Inc. and the University of Florida Engineering Leadership Institute, and a member of the Charlotte Center Executive Board for the Wake Forest University School of Business |
l | She also is a member of the Board of Directors of the Center for a New American Security, a non-partisan research institute that develops national security and defense policies |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 7 |
PROPOSAL 1: ELECTING DIRECTORS
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | As the former Chairman and Chief Executive Officer of ImpreMedia LLC (ImpreMedia), a leading Hispanic news and information company, Ms. Lozano provided broad leadership management over areas such asoperations, marketing, and strategic planning. Ms. Lozano has adeep understanding of issues that are importantto the Hispanic community, a growing U.S. demographic |
l | Her public company board service for The Walt Disney Company and her roles with the University of California and the University of Southern California give her board-level experience overseeing large organizations with diversified operations on matters such asgovernance, executive compensation, risk management, and financial reporting |
l | Ms. Lozano’s experience as a member of President Obama’s Council on Jobs and Competitiveness also gives hervaluable perspective on important public policy, societal, and economic issues relevant to our company |
Professional Highlights:
l | Ms. Lozano served as Chair of the Board of US Hispanic Media Inc., the parent company of ImpreMedia, from June 2014 to January 2016. For ImpreMedia, she served as Chairman from July 2012 to January 2016 and served as Chief Executive Officer from May 2010 to May 2014. She was also Senior Vice President of ImpreMedia from January 2004 to May 2010 |
l | Ms. Lozano served as Publisher of La Opinion, a subsidiary of ImpreMedia and the leading Spanish-language daily newspaper in the country, reaching 2 million readers monthly in print and online, from 2004 to May 2014, and was Chief Executive Officer from 2004 to July 2012 |
Other Leadership Experience and Service:
l | She served as a member of President Obama’s Council on Jobs and Competitiveness from 2011 to 2012 and served on President Obama’s Economic Recovery Advisory Board from 2009 to 2011 |
l | Ms. Lozano serves as a member of the Board of Regents of the University of California and a member of the US Partnership on Mobility from Poverty, and served as a member of the Board of Trustees of the University of Southern California and as a member of the State of California Commission on the 21st Century Economy |
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | As Chairman, President, and Chief Executive Officer of Eversource Energy, Mr. May has experience with regulated businesses, operations, risk management, business development, strategic planning, and corporate governance matters, which gives him insight into the issues facing our company’s businesses |
l | Having experience as a Certified Public Accountant, Mr. May brings strong accounting and financial skills, and a professional perspective onfinancial reportingand enterprise and operational risk management |
Professional Highlights:
l | Mr. May became President and Chief Executive Officer of Eversource Energy, one of the nation’s largest utilities, serving 3.6 million customers in three states, in April 2012, and has been Chairman since October 2013 |
l | He was the Chairman and Chief Executive Officer of NSTAR, which merged with Northeast Utilities (now known as Eversource Energy), from 1999 to April 2012, and was President from 2002 to April 2012. He also served as Chief Financial Officer and Chief Operating Officer during his tenure at NSTAR |
l | Mr. May currently serves as a director of Liberty Mutual Holding Company, Inc. |
8 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
PROPOSAL 1: ELECTING DIRECTORS
BACKGROUNDQUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | As our Chief Executive Officer, Mr. Moynihan hasled the transformation of our company by rebuilding capital and liquidity, streamlining and simplifying our business model to focus on three core customer and client groups, divesting non-core businesses and products, resolving mortgage-related issues from the financial crisis, and reducing core expenses |
l | Mr. Moynihan hasdemonstrated leadership qualities, management capability, knowledge of our business and industry, and a long-term strategic perspective |
l | In addition, he has many years ofbroad international and domestic financial services experience, including wholesale and retail businesses |
Professional Highlights:
l | Mr. Moynihan was appointed Chairman of the Board of Bank of America Corporation in October 2014 and President and Chief Executive Officer in January 2010. Prior to becoming Chief Executive Officer, Mr. Moynihan ran each of our company’s operating units |
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | As former Treasurer of PepsiCo, Inc. (Pepsi), Mr. Nowell hasstrong financial expertise andextensive global perspective in risk management and strategic planning |
l | Through his public company board service, he has experience ingovernance, financial reporting, and accounting with large international and regulated businesses |
l | Mr. Nowell’s experience on the advisory board at a large, public university provides him with furtherexperience with large, complex organizations |
Professional Highlights:
l | Mr. Nowell served as Senior Vice President and Treasurer of Pepsi, a leading global food, snack, and beverage company, from 2001 to May 2009. He previously served as Chief Financial Officer of The Pepsi Bottling Group and as Controller of Pepsi |
l | Prior to joining Pepsi, Mr. Nowell served as Senior Vice President, Strategy and Business Development at RJR Nabisco, Inc. from 1998 to 1999 |
l | He held various senior financial roles at the Pillsbury division of Diageo Plc, including Chief Financial Officer of its Pillsbury North America, Pillsbury Foodservice, and Haagen-Dazs divisions, and also served as Controller and Vice President of Internal Audit of the Pillsbury Company |
Other Leadership Experience and Service:
l | Mr. Nowell serves on the Dean’s Advisory Council at The Ohio State University Fisher College of Business |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 9 |
PROPOSAL 1: ELECTING DIRECTORS
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | Mr. Woods’s career at Canadian Imperial Bank of Commerce (CIBC) provides him with deep experience inrisk management, corporate strategy, finance, and thecorporate and investment banking businesses |
l | As Senior Executive Vice President (SEVP) and Chief Risk Officer of CIBC during the financial crisis, Mr. Woodsfocused on risk management and CIBC’srisk culture |
l | Mr. Woods chaired CIBC’s Asset Liability Committee, served as CIBC’slead liaison with regulators, and was an active member of CIBC’sbusiness strategy group |
Professional Highlights:
l | Mr. Woods served as a Vice Chairman and SEVP of CIBC, a leading Canada-based global financial institution, from July 2013 until his retirement in December 2014 |
l | He served as SEVP and Chief Risk Officer of CIBC from 2008 to July 2013, and SEVP and Chief Financial Officer of CIBC from 2000 to 2008 |
l | Mr. Woods joined Wood Gundy, a CIBC predecessor firm, in 1977. During his tenure, Mr. Woods served in various senior leadership positions, including as Controller of CIBC, as CFO of CIBC World Markets (CIBC’s investment banking division), and as the Head of CIBC’s Canadian Corporate Banking division |
Other Leadership Experience and Service:
l | Mr. Woods serves as a member of the boards of DBRS Limited and DBRS Inc., an international credit rating agency, and previously served as a member of the board of TMX Group Inc., a Canada-based financial services company, from 2012 to 2014 |
l | He serves on the board of advisors of the University of Toronto’s Department of Mechanical and Industrial Engineering |
l | Mr. Woods also serves as a member of the board of Alberta Investment Management Corporation (AIMCo), a Canadian institutional investment fund manager, and on the investment committee of Cordiant Capital Inc., a fund manager specializing in emerging markets |
QUALIFICATIONS, ATTRIBUTES, AND SKILLS:
l | As the former Chief Executive Officer of AmerisourceBergen Corporation (AmerisourceBergen) and its predecessor company, Mr. Yost has broad experience instrategic planning, risk management, and operational risk. Mr. Yost has experience leading a large, complex business |
l | Through his service on public company boards, he has board-levelexperience overseeing large, complex public companies in various industries, which provides him with valuable insights oncorporate governance and risk management |
Professional Highlights:
l | Mr. Yost served as Chief Executive Officer of AmerisourceBergen, a pharmaceutical services company providing drug distribution and related services to healthcare providers and pharmaceutical manufacturers, from 2001 until his retirement in July 2011, and as President from 2001 to 2002 and again from September 2007 to November 2010 |
l | He has held various positions at AmerisourceBergen and its predecessor companies during a nearly 40-year career, including Chief Executive Officer from 1997 to 2001 and Chairman from 2000 to 2001 of Amerisource Health Corporation |
10 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
CORPORATE GOVERNANCE
OUR BOARD OF THE PROPOSALDIRECTORS
Our Board is responsible for overseeing our company’s management. Our Board and its committees oversee:
l | management’s identification, measurement, monitoring, and control of our company’s material risks, including operational, credit, market, liquidity, compliance, strategic, and reputational risks |
l | our company’s maintenance of high ethical standards and effective policies and practices to protect our reputation, assets, and business |
l | management’s development and implementation of an annual financial operating plan and a multi-year strategic business plan, and our progress meeting these financial and strategic plans |
l | our corporate audit function, our independent registered public accounting firm, and the integrity of our consolidated financial statements |
l | our company’s establishment, maintenance, and administration of appropriately designed compensation programs and plans |
Our Board is also responsible for:
l | reviewing, monitoring, and approving succession plans for its Chairman and Lead Independent Director, and for our CEO and other key executives to promote senior management continuity |
l | conducting an annual self-evaluation of our Board and its committees |
l | identifying and evaluating director candidates and nominating qualified individuals for election to serve on our Board |
l | reviewing our CEO’s performance and approving the total annual compensation for our CEO and other executive officers |
The New York Stock Exchange (NYSE) listing standards require a majority of our directors and each member of our Audit, Compensation and Benefits, and Corporate Governance Committees to be independent. The Federal Reserve Board’s Enhanced Prudential Standards require the chair of our Enterprise Risk Committee to be independent. In addition, our Corporate Governance Guidelines require a substantial majority of our directors to be independent. Our Board has adopted Director Independence Categorical Standards (Categorical Standards), published on our website athttp://investor.bankofamerica.com, to assist it in determining each director’s independence. Our Board considers a director “independent” if he or she meets the criteria for independence in both the NYSE listing standards and our Categorical Standards.
In early 2016, our Board, in coordination with our Corporate Governance Committee, evaluated the relevant relationships between each director nominee (and his or her immediate family members and affiliates) and Bank of America Corporation and its subsidiaries and affirmatively determined that all of our director nominees are independent, except for Mr. Moynihan due to his employment by our company. Specifically, the following 12 of our 13 director nominees are independent under the NYSE listing standards and our Categorical Standards: Ms. Allen, Ms. Bies, Mr. Bovender, Mr. Bramble, Mr. de Weck, Mr. Donald, Ms. Hudson, Ms. Lozano, Mr. May, Mr. Nowell, Mr. Woods, and Mr. Yost. In addition, in 2015 our Board affirmatively determined that our former directors Charles O. Holliday, Jr. and Clayton S. Rose were independent under the NYSE listing standards and our Categorical Standards prior to their retirement from our Board at our 2015 annual meeting. Mr. Gifford, who will retire as a director at the annual meeting, is not an independent director. He is a former Chairman of Bank of America Corporation and receives office space and secretarial support from our company with an aggregate incremental cost exceeding the thresholds of the NYSE listing standards and our Categorical Standards.
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 11 |
CORPORATE GOVERNANCE
In making its independence determinations, our Board considered the following ordinary course, non-preferential relationships that existed during the preceding three years and determined that none of the relationships constituted a material relationship between the applicable director or nominee and our company:
l | Our company or its subsidiaries provided ordinary course financial products and services to all of our directors. Our company or its subsidiaries also provided ordinary course financial products and services to some of their immediate family members and entities affiliated with some of our directors or their immediate family members (Mr. Donald, Mr. May, and Dr. Rose). In each case, the fees we received for these products and services were below the thresholds of the NYSE listing standards and our Categorical Standards, and were less than 2% of the consolidated gross annual revenues of our company and of the other entity |
l | Our company or its subsidiaries purchased products or services in the ordinary course from entities where some of our directors or our director nominees are executive officers or employees or their immediate family members serve as executive officers (Mr. Donald, Mr. May, Mr. Woods, and Dr. Rose). In each case, the fees paid to each of these entities were below the thresholds of the NYSE listing standards and our Categorical Standards |
Under our Board’s current leadership structure, we have an executive Chairman and a Lead Independent Director. Our Lead Independent Director is empowered with robust, well-defined duties. Our Board is composed of experienced and committed independent directors (with all non-management nominees being independent), and our Board committees have strong, experienced chairs and members. Our Board believes that these factors, taken together, provide for strong, independent Board leadership, and effective engagement with and oversight of management.
Our Board is committed to strong, independent leadership for our Board and its committees. Our Board views the independent, objective oversight of management as central to effective Board governance, and to serving the best interests of our company and our stockholders. This commitment is reflected in our company’s governing documents, our Bylaws, and Corporate Governance Guidelines.
Our Board believes that its optimal leadership structure can and should change over time to reflect our company’s evolving needs, strategy, and operating environment; changes in our Board’s composition and leadership needs; and other factors, including the perspectives of stockholders and other stakeholders. In accordance with a 2014 amendment to our Bylaws, which our stockholders ratified at a special meeting in 2015, our Board has the flexibility to determine the Board leadership structure best suited to the circumstances of our company and our Board.
At least annually, our Board, in coordination with our Corporate Governance Committee, deliberates on and discusses the appropriate Board leadership structure, including the considerations described above. Based on that assessment and input from stockholders, our Board believes that the existing structure, with Mr. Moynihan as executive Chairman and Mr. Bovender as Lead Independent Director, is the optimal leadership framework at this time. As a highly regulated global financial services company, we benefit from an executive Chairman with deep experience in and knowledge of the financial services industry, our company, and its businesses, and a Lead Independent Director with robust, well-defined duties. Our Lead Independent Director, together with the other independent directors, instills objective independent Board leadership, and effectively engages and oversees management.
Our Board unanimously elected Mr. Moynihan as Chairman of our Board based on his leadership qualities, management capability, knowledge of the business and industry, and the long-term, strategic perspective he has demonstrated as CEO for the past five years, and in running our company’s operating units in previous years. Mr. Moynihan has led the transformation of our company out of the financial crisis and is focused on driving growth. The independent directors unanimously elected Mr. Bovender as Lead Independent Director. As the former chairman, chief executive officer, and chief operating officer of a complex, highly regulated company, Mr. Bovender has the qualities and experience the independent directors desired for a Lead Independent Director—high personal integrity, a breadth of knowledge in management, operations, and corporate governance, and a willingness to engage management. The independent directors believe Mr. Bovender, as Lead Independent Director, effectively leads the Board’s management oversight responsibilities.
12 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
CORPORATE GOVERNANCE
OCTOBER 1, 2014 CORPORATE GOVERNANCE GUIDELINES AMENDMENTRobust and Well-defined Lead Director Duties
In tandem with adopting the Bylaw Amendment, on October 1, 2014, the Board amended the company’sOur Corporate Governance Guidelines (the “Governance Guidelines Amendment”), to (a) require that a Lead Independent Director be elected by a majority ofestablish robust and well-defined duties for the independent directors (to serve a minimum one year term) when the Chairman of the Board is not independent and (b) codify an expansive set of duties and responsibilities that will be fulfilled by an independent director leading thewho leads our Board, regardless of whether that individualindividual’s title is an independent Chairman of the Board or Lead Independent Director. Our Board’s support of the current leadership structure is premised on these duties being transparently disclosed and comprehensive in nature, extending well beyond those of a traditional lead director.
The articulated Lead Independent Director duties do not fully capture Mr. Bovender’s active role in serving as our independent directors’ Board leader. For example, Mr. Bovender holds monthly calls with our primary bank regulators to discuss any issues of concern. He regularly speaks with Mr. Moynihan and holds bi-weekly calls to discuss Board meeting agendas and discussion topics, schedules, and other Board governance matters. He is a member of the Corporate Governance Committee and he also attends meetings of all of the other Board committees. He speaks with each Board member at least quarterly to receive input on Board agendas, Board planning matters, and other related topics of management oversight. He also meets at least quarterly with management members, including the Chief Administrative Officer, Chief Financial Officer, Chief Risk Officer, Global Compliance Executive, and Global Human Resources Executive. Mr. Bovender also plays a leading role in our stockholder engagement process, representing our Board and independent directors in investor meetings. In 2015 and early 2016, Mr. Bovender met with many of our largest stockholders, often in person; in aggregate, Mr. Bovender met with investors who own approximately 28% of our outstanding shares.
Duties of the Lead Independent Director including the following:or Independent Chairman
Board Leadership
In the case of the Chairman, presiding at all meetings of our Board and, in the case of the Lead Independent Director, presiding at all meetings of our Board at which the Chairman is not present, including at executive sessions of the independent directors |
Calling meetings of the independent directors, as appropriate |
In the case of the Lead Independent Director, if the CEO of our company is also Chairman, providing Board leadership if the CEO/Chairman’s role may be (or may be perceived to be) in conflict |
Board Culture
Serving as a liaison between the CEO and the independent directors |
Establishing a close relationship and trust with the CEO, providing support, advice, and feedback from our Board while respecting executive responsibility |
Acting as a “sounding board” and advisor to the CEO |
Board Focus
Board Focus: In consultation with our Board and executive management, ensuring that our Board focuses on key issues and tasks facing our company, and on topics of interest to our Board |
Corporate Governance: Assisting our Board, |
CEO Performance Review and Succession Planning: Working with |
Board Meetings
In coordination with the CEO and the other members of our Board, planning, reviewing, and approving meeting agendas for our Board |
In coordination with the CEO and the other members of our Board, approving meeting schedules to assure |
Advising the CEO of the information needs of our Board and approving information sent to our Board |
Developing topics of discussion for executive sessions of our Board |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 13 |
CORPORATE GOVERNANCE
Board Performance and Development
Board Performance: Together with the CEO and the other members of our Board, ensuring the efficient and effective performance and functioning of our Board |
Board Assessment: Consulting with |
Director Development: Providing guidance on the ongoing development of directors |
Director Assessment/Nomination: With |
Stockholders and Other Stakeholders
Being available for consultation and direct communication, to the extent requested by major stockholders |
Having regular communication with primary bank regulators (with or without management present) to discuss the appropriateness of our Board’s oversight of management and our company |
Each year, our Board and our Board’s Audit, Compensation and Benefits, Corporate Governance, Credit, and Enterprise Risk Committees evaluate their own effectiveness. This self-assessment may be in the form of written or oral questionnaires, administered by Board members, management, or third parties. Directors respond to questions designed to elicit information to be used in improving Board and committee effectiveness. Director feedback solicited from the self-evaluation process is discussed during Board and committee executive sessions and, where appropriate, addressed with management.
In 2014, our Board commissioned research into the characteristics of effective and efficient boards. Using that research, our Corporate Governance Committee developed the 2014 self-evaluation to solicit director feedback on the five key areas where the research suggested high functioning boards and committees excelled: board and committee composition; board culture; board and committee focus; board process; and information and resources. For the 2015 self-assessment, our Corporate Governance Committee solicited director views on actions taken in response to the prior year’s feedback, and sought additional input on our Board composition, our committee composition and structure, and our Board’s implementation of the Federal Reserve Board’s new Enhanced Prudential Standards related to risk management.
Our Board encourages directors to annually participate in continuing director education programs outside of the Boardroom, and our company reimburses directors for their expenses associated with this participation. Continuing director education is also provided during Board meetings and other Board discussions as part of the formal meetings and as standalone presentations outside of meetings. During 2015, our Board heard from: our key banking regulators, including senior officials of the Federal Reserve Board and the Office of the Comptroller of the Currency, on regulatory developments; third-party advisors on topics ranging from current global macroeconomic trends to social justice issues; and management on, among other things, payments systems, mobile technology, and cybersecurity.
All new directors also participate in our director orientation program during their first six months on our Board. New directors have a series of meetings with management representatives from all of our business and staff areas to review and discuss, with increasing detail, information about our company, industry, and regulatory framework. Based on input from our directors, we believe this graduated on-boarding approach over the first six months of Board service, coupled with participation in regular Board and committee meetings, provides new directors a strong foundation in our company’s businesses and accelerates their effectiveness to fully engage in Board deliberations.
14 | ||||||||||
| BANK OF AMERICA CORPORATION |
|
|
| ||||||
BACKGROUND OF THE PROPOSALCORPORATE GOVERNANCE
Our Corporate Governance Guidelines require that the non-management directors meet in executive session at each regularly scheduled Board meeting at the direction of the Lead Independent Director (when the Chairman is not independent), with the Lead Independent Director presiding. As noted above, the Lead Independent Director also plays a central role in the Board’s stockholder engagement program and is available to communicate with stockholders and other parties. In addition, the Lead Independent Director may serve on committees of the Board, and Mr. Bovender currently serves on the Board’s Corporate Governance Committee.
Amending our Bylaws to eliminate the requirement for an independent Chairman was a decision the Board considered carefully, particularly in light of the 2009 stockholders’ vote that amended our then-existing Bylaws to require an independent Chairman. The decision to appoint Mr. Moynihan as Chairman of the Board and Mr. Bovender as Lead Independent Director culminated from an orderly, well-researched, in-depth and independent review and deliberative process by the Board and the Corporate Governance Committee that took into account the considerations described below under “Reasons for the Board’s Recommendation,” including the significantly different circumstances and condition of the company and the Board at that time.
STOCKHOLDER ENGAGEMENT AND THE CHANGE IN BOARD LEADERSHIP STRUCTURE
TheOur Board and management are committed to engaging with the company’sour stockholders and soliciting their views and feedbackinput on important performance, governance, environmental, social, executive compensation, and other matters.
Commitment Codified in Governing Documents. Reflecting our Board’s understanding of the critical role stockholder engagement plays in our governance, this commitment and our Board’s oversight of stockholder engagement is codified in our Corporate Governance Guidelines and our Corporate Governance Committee’s charter.
Board-Driven Engagement. Our Corporate SecretaryGovernance Committee is responsible for overseeing the stockholder engagement process and Investor Relationsthe periodic review and assessment of stockholder input. Our Lead Independent Director plays a central role in our Board’s stockholder engagement efforts, and our directors regularly participate in meetings with stockholders.
Year-Round Engagement and Board Reporting. Our corporate secretary and investor relations teams, together with relevant executive management members and directors, conduct stockholder outreach throughout the year and inform our management and theour Board about the issues that our stockholders tell us matter most to them.
Transparency and Informed Governance Enhancements. Our Board regularly reviews our governance practices and policies, including our stockholder engagement practices, with an eye towards continual improvement. Stockholder feedbackinput is shared with theour Board and its committees, to enhancefacilitating a dialogue that provides stockholders with insight into our governance practices facilitate a dialogue between stockholders and the Board, and to provide transparencyinforms our company’s enhancement of those practicespractices. In addition to considering stockholder sentiments, our stockholders through enhanced disclosure. We reviewBoard regularly reviews the voting results of our most recent annual meeting of stockholders, the stockholder feedback received through our engagement process,stockholders’ meetings, the governance practices of our peers and other large companies, and current trends in governance as we consistently consider enhancements togovernance.
The Board-Driven Stockholder Engagement Process
Throughout 2015 into early 2016, our governance practicesdirectors and disclosure. We also reviewmanagement met with our stockholder engagement practices regularly with an eye towards continual improvement.
Although ratifying the Bylaw Amendment was not on the ballot for our 2015 Annual Meeting, we engaged with manymajor stockholders, who collectively own approximately 37% of our stockholders to solicit their views regarding our Board leadership structure in connection with soliciting proxies for that meeting. A number of stockholders voiced the opinion that stockholders should be given the opportunity to formally express their views on the Bylaw Amendment. Based on this feedback and the Board’s belief that flexibility in determining its appropriate leadership structure has significant implications on the exercise of its fiduciary duties and effective operations, the Board announced its commitment to hold a stockholder vote to ratify the Bylaw Amendment no later than the 2016 Annual Meeting.
Since the 2015 Annual Meeting, we have further engaged with many of our significant stockholdersoutstanding shares, to discuss their views on theour Board’s leadership structure, the Lead Independent Director’s roleindependent oversight of management, our Board’s composition, director and responsibilities, the process the Board undertookmanagement succession planning, risk management, ESG activities, and other issues important to effect the Bylaw Amendment, and the process and timing for seeking stockholder ratification of the Bylaw Amendment.our stockholders. These stockholder views were shared with theour Board and Corporate Governance Committee prior to calling the Special Meeting.
REASONS FOR CALLING THE SPECIAL MEETING
The Board is calling the Special Meeting and submitting the Proposal to the company’s stockholders for approval to follow through promptly on its commitment to provide our stockholders with an opportunity to express their views on the Bylaw Amendment. Because the Board’s leadership structure is critical to the proper functioning of the Board and its independent oversight of management and the company, the Board concluded that it was advisable to solicit the views of stockholders on this matter now and not wait until the 2016 Annual Meeting. In addition, the Board determined that submitting the Proposal to stockholders on a standalone basis at a special meeting, at which no other business will be conducted, would enable stockholders to focus solely on this important matter. In calling the Special Meeting now, the Board also considered that the company would benefit from the voting results of the Proposal as the Board and Corporate Governance Committee conduct the annual review of the company’s current Board leadership structure.consideration.
| BANK OF AMERICA CORPORATION |
|
|
| ||||||
REASONS FOR THE BOARD’S RECOMMENDATION
REASONS FOR THE BOARD’S RECOMMENDATION
BYLAW AMENDMENT PROVIDES THE BOARD WITH FLEXIBILITY TO DETERMINE THE OPTIMAL INDEPENDENT LEADERSHIP STRUCTURE BASED ON CURRENT CIRCUMSTANCES AND NEEDS
The Board is committed to strong, independent leadership for the Board and its committees and views the independent, objective oversight of management as central to effective Board governance. The Bylaw Amendment and the Governance Guidelines Amendment reflect the Board’s commitment to maintaining an independent Board leadership structure that is in the company’s and stockholders’ best interests, whether through an independent Chairman or a Lead Independent Director.
The Board believes that its optimal leadership structure can and should change over time, in keeping with the evolving needs, strategy and operating environment of the company, the composition of the Board, and other relevant factors. In addition, the Board believes that to best uphold its responsibility to the company and stockholders, it should retain the flexibility to determine the most appropriate Board leadership structure at any given time in light of the then-present circumstances. The Board is uniquely qualified to evaluate its leadership needs and how best to organize the capabilities of directors to meet those needs. It has extensive experience with, and deep knowledge of, the company’s culture, strategy, business operations, and the capabilities, strengths, and leadership styles of the directors and executive management. It also possesses first-hand experience in addressing the Board’s effective operations and dynamics and the interactions among its members. With this experience, knowledge and insight, taken together with feedback from stockholders, the Board can make well-informed decisions regarding its leadership structure on behalf of the company and our stockholders.
In adopting the Bylaw Amendment and the Governance Guidelines Amendment, and electing Mr. Moynihan and Mr. Bovender to their roles, the Board concluded that having Mr. Moynihan serve as executive Chairman and work together with Mr. Bovender as a Lead Independent Director, who has robust, well defined duties, gives the Board a strong leadership and governance structure that best serves the needs of our company today. The Bylaw Amendment gives the Board the flexibility to periodically reassess its optimal independent leadership structure—whether through an independent Chairman or a Lead Independent Director—and who the most qualified individuals are to serve in those leadership positions based on the then-current circumstances and needs of the company and the Board.
BOARD CREATED A LEAD INDEPENDENT DIRECTOR POSITION WITH ROBUST AND TRANSPARENT DUTIES
A critical factor for the Board in supporting the Bylaw Amendment and its current leadership structure, and in recommending that stockholders approve the Proposal, is the contemporaneous adoption of robust, well defined and transparent duties for the independent director who leads the Board, regardless of whether that individual is an independent Chairman of the Board or the Lead Independent Director. These comprehensive duties were codified in the Governance Guidelines Amendment as described above and help facilitate the independent directors’ objective and effective oversight of the company and extend well beyond those of a traditional lead director. Among other things, the Lead Independent Director approves Board meeting agendas and schedules, calls meetings of the independent directors and provides Board leadership where the CEO/Chairman’s role may be in conflict, including reviewing the CEO’s performance and participating in CEO succession planning. By tasking the Lead Independent Director with robust duties to facilitate strong independent Board leadership, the Board’s current leadership structure provides for effective independent oversight in the boardroom.
BYLAWS MANDATING INDEPENDENT CHAIRS ARE NOT COMMON, AND THERE IS NO CONCLUSIVE EMPIRICAL CORRELATION BETWEEN AN INDEPENDENT CHAIR AND SUPERIOR CORPORATE GOVERNANCE OR PERFORMANCE
In adopting the Bylaw Amendment and the Governance Guidelines Amendment, in implementing the current Board leadership structure, and in recommending that stockholders approve the Proposal, the Board and the Corporate Governance Committee examined relevant stockholder voting policies and voting practices, empirical studies regarding the performance of companies having executive and independent board chairs, and other benchmarking data, and sought the counsel of corporate governance advisors. According to theSpencer Stuart Board Index 2014, only 14 companies in the S&P 500 (approximately three percent) have adopted a formal policyrequiring separation of the chairman and CEO roles, which represents a decline from the 21 companies (approximately four percent) that mandated a split as of 2013, and only 138 S&P 500 companies (approximately 28%) have named an independent chairman.
The Board and the Corporate Governance Committee recognize that there is a variety of viewpoints concerning a board’s optimal leadership structure and that there are many successful and well-managed U.S. public companies that do not
|
|
|
| |||||||
REASONS FOR THE BOARD’S RECOMMENDATION
have an independent chair. One factor cited for the lack of a formal policy requiring separation of Chairman and CEO is that it reflects a “one-size-fits-all” approach to board governance that does not allow a board to consider leadership options and may prevent a board from appointing leaders who it believes would serve the company’s and stockholders’ best interests. The Board concluded that empirical data concerning the impact of board leadership on stockholder value are inconclusive and do not prove any correlation between a board having an independent Chairman and superior corporate governance or performance. The Board recognizes that some stockholders who supported the 2009 proposal may feel that the Chairman and CEO roles should always be separated. While the Board believes there is room for disagreement in the debate about which leadership structure leads to the best operational or governance results, in its oversight function for the company, it believes that the appropriate leadership structure for our Board should vary depending on our strategy and operating environment. One-size does not fit all in board leadership structures, and the size and fit of board leadership structures may change over time. A well-functioning and independent board should have, as part of its responsibility, the task of determining the appropriate leadership structure as the Board and the company evolve.
BANK OF AMERICA, OUR BOARD AND OUR GOVERNANCE PRACTICES HAVE CHANGED DRAMATICALLY SINCE THE FINANCIAL CRISIS AND THE STOCKHOLDER VOTE IN 2009
The Board and the Corporate Governance Committee also analyzed the historical Board leadership structure at our company, the stockholders’ vote of 2009 to require an independent Chairman, and the developments at our company since 2009 under Mr. Moynihan’s stewardship, including enhancements to the Board’s governance and composition, and the company’s management team, business and performance. While stockholders may have voted for the 2009 proposal for a number of different reasons, based on stockholders’ feedback, the Board and the Corporate Governance Committee believe the most significant reason reflected concerns particular to the company in 2009, in the midst of the financial crisis—specifically, the stockholders’ dissatisfaction with the then Board’s governance and oversight, and the company’s performance and the then management’s strategic decisions prior to 2009, including the acquisitions of Countrywide and Merrill Lynch. The Board believes the aggravating conditions from 2009 are no longer present and that the limitations on the Board’s flexibility resulting from the 2009 stockholder vote are no longer warranted as a result of the company’s changed circumstances.
Since 2009, when a narrow majority of the votes cast (50.3%, representing approximately 29% of the then-outstanding shares) supported an independent Chairman requirement, the company has evolved significantly in ways that support the Bylaw Amendment. The company’s transformation has been accompanied by considerable change in the process for enhancing experiential diversity and independence in the Board’s composition. This enhanced recruitment and selection process has resulted in the presence today of strong independent leadership among its members and committees. These changes, in addition to the robust duties of the Lead Independent Director set forth in the Governance Guidelines Amendment and other enhancements to the Board’s governance structure, help assure the Board’s effective independent oversight of the CEO and management.
The company’s Corporate Governance Guidelines require that a substantial majority of the Board consist of directors who are independent under both the Director Independent Categorical Standards adopted by the Board and the criteria contained in the NYSE’s listing standards. Of the 13 directors currently serving on the Board, 11 meet these independence requirements, and seven of those 11 joined the Board in the last three years. Mr. Moynihan is the only member of the company’s management who serves on the Board. The non-management directors of the Board meet in executive session at each regularly scheduled Board meeting (14 such executive sessions since October 1, 2014), with the Lead Independent Director presiding at such executive sessions, and the Lead Independent Director may call an executive session of independent directors at any time. Mr. Moynihan does not serve on any of the Board’s committees, and three of those committees—the Audit Committee, Corporate Governance Committee, and Compensation and Benefits Committee—are composed entirely of independent directors.
The Board believes the company’s directors should possess backgrounds, qualifications, attributes and skills that, when taken together, provide the company with a broad range of experience in large, complex organizations; regulated industries; consumer, commercial and corporate businesses; and international organizations. Our directors also have experience in financial and regulatory oversight; risk management; strategic planning; and technology, among other areas. When considering potential director nominees, the Corporate Governance Committee has an established process that the company’s primary bank regulators have reviewed and acknowledged. In that process, the Corporate Governance Committee reviews available information regarding each potential candidate, including qualifications, experience, skills and integrity, as well as race, gender and ethnicity. Although we do not have a formal policy regarding
|
|
|
|
15 | ||||||
REASONS FOR THE BOARD’S RECOMMENDATIONCORPORATE GOVERNANCE
diversity, the Board views diversity as a priority and seeks diverse representation among its members. The Board, through the Corporate Governance Committee, assesses the Board’s diversity when identifying and evaluating director candidates. Of
GOVERNANCE ENHANCEMENTS INFORMED BY STOCKHOLDER INPUT
As part of our 13 directors, seven have international experience, nine have CEO experience, two are African-American and four are women, one of whom is Hispanic.
The independent and non-management directors bring an unparalleled caliber and diversity of expertise, experience and leadership, and are a testamentcommitment to constructive engagement with investors, we listen to the Board’s commitmentviews voiced by our stockholders. Our dialogue has led to self-evaluations, continuous refreshmentenhancements in our corporate governance, environmental, social, and rigorous, independent oversight. They bring depth and breadthexecutive compensation work, which our Board believes are in the best interest of financial, operational, risk, and other areas of expertise relevant to our company and through their varied lengths of tenure, provide a blend of historical and new perspectives about our company.
The Board’s commitment to independent oversight of management is augmented by federal banking regulatory supervision, including the Federal Reserve Board and the Office of the Comptroller of the Currency. Our company is strenuously regulated, and our Board must contain members who have experience that meets certain regulatory requirements, including: independence; financial literacy and expertise; experience in identifying, assessing and managing risk exposures of large, complex financial firms, and/or understanding of risk management principles, policies and practices relevant to our company or a comparably sized company. In furtherance of thosestockholders. After considering input from stockholders and other regulatory requirements, members ofstakeholders, our Board and the independent committee chairs (including our Lead Independent Director) frequently meet with our regulatory authorities without management present.
The Board has demonstrated a record of independent oversight, actively engaging and maintaining a robust and regular dialogue with management. That record is evident in the significant governance changes that the Board has enacted since 2009, which include:company:
| Enhanced our stockholder engagement |
Also see “Stockholder Outreach & Say on Pay Results” on page 30 for a discussion of our compensation-related stockholder engagement and our historical Say on Pay vote results.•l AdoptingAdopted a proxy access rightBylaw provision to permit a stockholder, or a group of up to 20 stockholders owningwho, in aggregate, own continuously for at least three years, shares of our company representing an aggregate of at least three percent3% of the voting power entitled to vote in the election of directors, to nominate and include in our proxy materials director nominees constituting up to 20% of theour Board, provided that the stockholder(s) and the nominee(s) satisfy the requirements in our BylawsBylaws. At the time of adoption in 2015, our company was one of the first U.S. public companies to establish this right•l ProducingDeveloped an Incentive Compensation Forfeiture & Recoupment Disclosure Policy that became effective in 2016. See page 35 l Expanded our political activities disclosures to include a more detailed discussion of our participation in the political process; current and historical reports of our political action committee contributions; a list of trade associations to which we paid more than ade minimis amount; and a list of the U.S. Internal Revenue Code (IRC) Section 527 tax exempt organizations to which we made contributions. In 2016, we will begin disclosing the contribution amounts to these Section 527 tax exempt organizations. We will also begin disclosing the IRC Section 504(c)(1) tax exempt organizations and ballot initiatives to which we made contributions and the amounts of such contributions. Our political activities disclosures also provide information regarding the management, compliance, and monitoring of our political activities, including our Corporate Governance Committee’s oversight of our significant policies and practices. See the “Political Activities” page of our website athttp://investor.bankofamerica.com l Will publish a Business Standards report by March 31,Report in 2016 to increaseprovide increased transparency intoabout our processes and standards, corporate culture, governance, risk management, and business practices,• Permitting stockholders holding at least 10% of our outstanding common shares to convene a special meeting, provided that the stockholders satisfy the requirements in our Bylaws• Implementing leading incentive compensation recoupment policies and committing to disclose certain forfeitures under these policies• Seeking additional information regarding significant investors’ voting policies and procedures on key governance matters and sharing that information with the Board and Corporate Governance Committee• Enhancing our disclosures relating to a number of matters, including political activities and greenhouse gas emissions, and publishing a new coal policy• Implementing other enhancements to our corporate governance and compensation practices, which are described in greater detail in the definitive proxy statement for our 2015 Annual Meeting filed with the SEC and in our principal corporate governance documentswill be available on our website athttp://investor.bankofamerica.com underabout.bankofamerica.coml Expanded our 2016 proxy statement disclosures regarding our Board leadership structure, including a discussion of the heading “Corporate Governance”robust and transparent independent Board leader duties, our director selection and succession planning, our Board self-assessment process, our commitment to engage with stockholders, our ESG initiatives, and our position on equity vesting for employees who leave our company to enter government service. See “Identifying and Evaluating Director Candidates,” “Board Leadership,” “Board Evaluation,” “Stockholder Engagement,” “ESG Initiatives,” and “Compensation Discussion and Analysis,” beginning on pages 2, 12, 14, 15, 17, and 29, respectively, for a detailed discussion
TheCOMMUNICATIONS WITH OUR BOARD
Stockholders and other parties may communicate with our Board, does not believeany director (including our Chairman of the Board or Lead Independent Director), non-management members of our Board as a vote “against” the Proposal wouldgroup, or any committee. Communications should be an appropriate answeraddressed to issues the company currently must address, which are vastly different from those faced in 2009.our Corporate Secretary at Bank of America has evolved significantly since 2009, including electing a Board with a composition, independence, and leadership structure that provides for objective and effective oversight of management, and adopting strong governance practices. In addition, the company operates global, complex, highly regulated and rapidly changing businesses, the oversight of which does not lend itself to restrictive limitsCorporation, Hearst Tower, 214 North Tryon Street, NC1-027-18-05, Charlotte, North Carolina 28255. Depending on the Board’s decision-making capabilities.
MR. MOYNIHAN AS CHAIRMAN AND CEO AND MR. BOVENDER AS LEAD INDEPENDENT DIRECTOR CURRENTLY PROVIDE THE OPTIMAL LEADERSHIP STRUCTURE FOR THE BOARD
The Board determined that implementing the current Board structure, with Mr. Moynihan as executive Chairman and Mr. Bovender as Lead Independent Director, provides an optimal framework and leadership structure for the current operationnature of the Board andcommunication, the company’s present needs, strategy and operating environment, and does not believe further changecorrespondence either will be forwarded to the Board’s leadership structure is warranteddirector(s) named or the matters will be presented periodically to our Board. The Corporate Secretary or the secretary of the designated committee may sort or summarize the communications as appropriate. Communications that are commercial solicitations, customer complaints, incoherent, or obscene will not be communicated to our Board or any director or committee of our Board. For further information, refer to the “Contact the Board of Directors” section on our website at this time.http://investor.bankofamerica.com.
16 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
CORPORATE GOVERNANCE
ESG INITIATIVES: FOCUS ON RESPONSIBLE, SUSTAINABLE GROWTH
Our commitment to responsible, sustainable growth can be seen in the way we run our company, the inclusive and supportive workplace we create for our employees, the responsible products and services we offer our customers, and the impact we make around the world in helping local economies thrive.
We measure our progress in these areas through an environmental, social, and governance (ESG) framework. The ESG Committee, composed of members of senior management from across every line of business and support function, provides oversight and governance in these areas and continues to strengthen this framework. The ESG Committee regularly reports on these efforts to our Board’s Corporate Governance Committee.
In addition to the governance enhancements informed by stockholder input described on the prior page, highlights of our ESG efforts include:
An Inclusive and Supportive Workplace
l | We are a diverse and inclusive company where our employees are actively encouraged to bring their full selves to work. Currently, more than 50% of our global workforce is female and more than 40% of our U.S.-based workforce is from a racially or ethnically diverse background. Our senior leadership is also diverse, with six of our CEO’s 14 direct reports and six of our 13 Board members being female and/or persons of color. |
l | We support the professional growth of our employees through programs like Manager Excellence, providing more than 35,000 employees with practical tips on professional topics, and through broadly accessible tools such as the myCareer site, where approximately 90,000 employees have researched opportunities to develop their skills and advance their careers |
l | We are focused on supporting our employees’ physical, financial, and emotional well-being. In 2015, we offered U.S.-based employees additional medical coverage options. We continue to offer health insurance benefits to U.S.-based employees who regularly work 20 or more hours per week |
l | We have helped our employees become more knowledgeable about their health. In 2015, nearly 90% of our employees completed voluntary health screenings and assessments, and approximately 80,000 employees enrolled in our Get Active! program |
Responsible Products and Services
l | We began offering free FICO credit scores to our online banking customers who have a Bank of America credit card. This further strengthens our suite of responsible products, such as SafeBalance Banking® accounts |
l | We continued to build our social impact investing options in 2015, with ESG assets under management of $10 billion, an 11% increase from 2014 |
l | ThroughBetterMoneyHabits.com, we provide simple, easy to understand personal finance content that is available to anyone, anywhere through our partnership with non-profit online education innovator Khan Academy. In 2015, based on user and partner feedback, we added content to address topics relevant to those living paycheck to paycheck, transitioning from the military to civilian life, and preparing to talk to their children about money. Since its launch in 2013, this content has been viewed over 90 million times throughBetterMoneyHabits.com and other distribution channels |
Our Impact on Communities
l | We have continued our leadership as the largest investor in Community Development Financial Institution (CDFI) lending, with the extension of more than $1.2 billion in credit to over 240 CDFIs |
l | Through the ongoing promotion, support, and advancement of minority- and women-owned businesses, we continue to support economic growth and development in local communities. In 2015, our supplier diversity and development team continued to collaborate with external and internal constituents to support the inclusion of diverse suppliers in our supplier portfolio, which resulted in over $2 billion of procurement spending with these businesses |
BANK OF AMERICA CORPORATION |
| 2016 PROXY STATEMENT
|
| |||||||
REASONS FOR THE BOARD’S RECOMMENDATIONCORPORATE GOVERNANCE
l | We provided more than $180 million in global philanthropic investments to address needs in communities around the world. In addition, our employees donated approximately two million volunteer hours, gave approximately $30 million in philanthropic donations, which were matched by our company, and pledged more than $17 million to non-profit organizations through our Employee Giving Campaign |
TheEnvironmental Initiatives
l | We announced an industry-leading initiative to provide $125 billion to low-carbon and other environmental businesses and projects by 2025 through lending, investing, capital raising, advisory services, and financing solutions for clients around the world |
l | We continued to demonstrate our leadership in cross-sector engagement efforts, including being one of the first companies to sign the White House’s American Business Act on Climate Pledge, and taking an active role in the U.N. Climate Change Summit in Paris (COP21) |
l | We continued our leadership in the Green Bond market. In 2015, we issued our second Green Bond in a $600 million offering. We were the top underwriter of Green Bond issuances in 2014, and remained so in 2015 |
l | We are focused on reducing the environmental impact of our operations, and have reduced our greenhouse gas emissions by roughly one third and our water consumption by more than 25% since 2010 |
In 2016, we continue to demonstrate our commitment to sustainable growth through our ESG efforts, and will:
l | Publish an Environmental and Social Risk Framework, which details how we identify, measure, monitor, and control risks related to environmental and social issues |
l | Announce a new suite of aggressive goals to ensure our operations are environmentally sustainable |
CEO AND SENIOR MANAGEMENT SUCCESSION PLANNING
Our Board unanimously elected Mr. Moynihan asoversees CEO and senior management succession planning, which is formally reviewed at least annually; two such planning sessions were held in 2015. Our CEO and our Global Human Resources Executive provide our Board with recommendations and evaluations of potential CEO successors, and review their development plans. Our Board reviews potential internal senior management candidates with our CEO and our Global Human Resources Executive, including the qualifications, experience, and development priorities for these individuals. Directors engage with potential CEO and senior management successors at Board and committee meetings and in less formal settings to allow directors to personally assess candidates. Further, our Board periodically reviews the overall composition of our senior management’s qualifications, tenure, and experience. In 2015, we followed this process when implementing succession plans for our executive officers, including when appointing a new Chief Financial Officer, Chief Administrative Officer, Global Human Resources Executive, and Vice Chairman and Head of theGlobal Wealth & Investment Management.
Our Board based on the leadership qualities,also establishes steps to address emergency CEO and senior management capability, knowledgesuccession planning in extraordinary circumstances. Our emergency CEO succession planning is intended to enable our company to respond to unexpected position vacancies, including those resulting from a major catastrophe, by continuing our company’s safe and sound operation and minimizing potential disruption or loss of thecontinuity to our company’s business and industry,operations.
Risk is inherent in all of our business activities. Our business exposes us to strategic, credit, market, liquidity, compliance, operational, and reputational risks. Our company takes a long-term, strategic perspective he has demonstrated as CEO overcomprehensive approach to risk management with a perioddefined Risk Framework and an articulated Risk Appetite Statement. The Risk Framework sets forth clear roles, responsibilities, and accountability for the management of five years after running eachrisk and describes how our Board oversees the establishment of the company’s operating units. Mr. Moynihan has led the transformationour risk appetite and associated limits for our activities. This framework of Bank of America out of the financial crisis and is focused on driving future growth. Under the Board’sstrong, independent Board oversight and with Mr. Moynihan’s leadership and an executiverobust risk management team whose composition has changed significantly since 2009, the company has rebuilt capital and liquidity, streamlined and simplified its operations, reduced the scope of activities by exiting non-core businesses and products, stabilized performance, reduced expenses, increased the return of capitalenables us to stockholders, and settled its most significant legacy mortgage-related litigation matters. Mr. Moynihan has also been instrumental in the company’s efforts to work with regulators to resolve issues stemming from the financial crisis, including navigating an increasingly complex regulatory regime, a role for which he is exceptionally suited given his significant expertise in the financial industry and many years of experience across all of the company’s operations.
The Board believes that Mr. Moynihan possesses the experience, leadership qualities, vision and intimate knowledge of the company’s operations to lead the Board, and that electing Mr. Moynihan tobetter serve as both Chairman and CEO creates a bridge between the Board and management that best enables the company to execute on its strategy. In his combined Chairman and CEO role, Mr. Moynihan’s unparalleled depth of understanding of the company and its businesses allows him to clearly articulate the company’s position and speak fluently with a unified voice in its dealings with clients, regulators and other constituencies in an increasingly complex business and regulatory environment—quintessential qualities for the Chairman of a systemically important financial institution. The Board believes that having Mr. Moynihan serve in this manner advances the company’s ability to achieve its long-term strategic goals, facilitate communications with regulatory authorities, and enhance confidence in the company fromour customers and employees, all of which benefitsdeliver for our stockholders.
The independent directors unanimously supported Mr. Bovender’s appointment as Lead Independent Director because they believe Mr. Bovender possessesgovernance structure outlined in our Risk Framework includes our Board, our Enterprise Risk Committee, and other Board committees. Our Enterprise Risk Committee has primary committee responsibility for overseeing the characteristicsRisk Framework and qualities critical for the independent leadership position. As the former chairman, chief executive officer, and chief operating officer of a highly regulatedmaterial risks facing our company, Mr. Bovender is respected among the directors and has the qualities and experience desired for a Lead Independent Director—high personal integrity, a breadth of knowledge in management, operations, and corporate governance, and a willingness to engage management.
The Board believes the combined strengths and records of Mr. Moynihan and Mr. Bovender, together with the objective oversight of and engagement with management by all independent directors, and the independent leadership provided by all Board committee chairs, enables Mr. Moynihan to take on the additional responsibilities of Chairman and allows the Board to effectively oversee and control management and to operate having a leadership structure consistent with nearly all financial institution peers. An executive Chairman gives us a united presence and better enables us and our BoardAudit Committee and Credit Committee provide additional risk management oversight for compliance and credit risks, respectively. Also, our Compensation and Benefits Committeeoversees the development of compensation policies and practices, which are designed to speak with a unified voice with our clients, regulatorsbalance risk and other third parties. A Lead Independent Director who fulfills the robust duties embodied in the Governance Guidelines Amendment that go beyond the norm instills a powerful independent presencerewards in a position of leadership on the Board. Based on extensive review and consideration by the Corporate Governance Committee and the Board, the Board believes the current Board leadership structure comprised of Mr. Moynihan as Chairman and CEO, balanced with Mr. Bovender serving as a strong Lead Independent Director tasked with robust duties and authority, is in the best interests of the company and stockholders at this time.
The Board believesway that the right Board leadership structure is in place for the company to continue towards achieving its long-term strategic objectives. Following the settlement with the U.S. Department of Justice and concurrent with the Board’s implementation of this leadership structure, the company earned an aggregate of $11.7 billion, or $1.02 per share, in the three quarters ending June 30, 2015, including $5.3 billion, or $0.45 per share, in the second quarter of 2015. The Board is pleased with the company’s recent progress and management’s efforts to continue to realize the company’s full earnings power.
As demonstrated through the changes that the company and the Board have undergone since 2009 and the financial crisis, the Board believes that the optimal Board leadership structure can and should evolve over time as the circumstances and needs of the company and the leadership needs and composition of the Board and executive management team change. The Bylaw Amendment provides the Board with that flexibility. In that regard, the Board is committed to regularly reviewing its leadership structure, including the individuals serving as Chairman (and Lead Independent Director if the Chairman is not an independent director), and will adapt the Board leadership structure to evolve with the company’s needs, strategy, operating environment, the Board’s needs, our stockholders’ feedback and other relevant factors.
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE PROPOSAL.does
18 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
CORPORATE GOVERNANCE
not encourage unnecessary or excessive risk-taking by our employees. Our Chief Risk Officer, the company’s senior-most risk manager, reports jointly to the CEO and Enterprise Risk Committee, and participates in Board, Credit Committee, and Enterprise Risk Committee meetings. This governance structure is designed to complement our Board’s commitment to maintaining a strong, independent Board and committee leadership structure, and to fostering integrity over risk management throughout our company.
Each of our Audit, Credit, and Enterprise Risk Committees regularly receives updates from management on risk-related matters within each committee’s responsibilities and reports on these updates to our Board. These committee reports provide our Board with integrated, thorough insight about how our company manages risk. In addition, our Board and our Enterprise Risk Committee receive regular risk reporting from management, including a report that addresses and provides updates on key and emerging risks. At each in-person Board meeting, our Board has a standalone session to discuss the risks that are considered prevailing or urgent, including those identified in our report on key risks. Our Risk Framework, our Risk Appetite Statement, and our capital, strategic, and financial operating plans are developed by senior management under the oversight of our Board and Enterprise Risk Committee. Annually, as part of our risk governance process, our Enterprise Risk Committee and our Board approve our Risk Framework and Risk Appetite Statement. Throughout the year, management monitors and our Board oversees directly and through its committees our: financial performance; execution against capital, strategic, and financial operating plans; compliance with risk appetite parameters; and the adequacy of internal controls. We believe our holistic and on-going Board and committee risk oversight process provides the foundation for consistent and effective management of risks facing our company. Details of our company’s risk management policies and practices are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2015 annual report. | OurRisk Framework serves as the foundation for consistent and effective risk management. It describes components of our risk management approach, including our risk culture, risk appetite, and risk management processes, and employees’ responsibilities for managing risk. It also outlines our risk management governance structure, including the roles of our Board, management, lines of business, independent risk management, and corporate audit within the governance structure. OurRisk Appetite Statement defines the aggregate levels and types of risk our Board and management believe appropriate to achieve our company’s strategic objectives and business plans. |
COMPENSATION GOVERNANCE AND RISK MANAGEMENT
Compensation Governance
Our Compensation and Benefits Committee follows procedures intended to promote strong governance of our pay-for-performance philosophy. The Committee regularly reviews: (i) company performance; (ii) our executive compensation strategy, approach, trends, and regulatory developments; and (iii) other related topics, as appropriate. Each year, the Committee reviews, and makes available to our Board, an executive compensation statement, or “tally sheet,” for each executive officer. The tally sheets include each executive officer’s total compensation, including base salary, cash and equity-based incentive awards, accumulated realized and unrealized stock option gains, the value of prior restricted stock awards (including the status of achieving any performance goals), qualified and nonqualified retirement and deferred compensation benefit accruals, and the incremental cost to our company of the executive’s perquisites. The Committee uses this information to evaluate all elements of executive officer compensation and benefits. Annually, the Committee reviews with our Board its compensation decisions (including cash and equity-based awards, if applicable) for executive officers and other senior executives who report directly to our CEO. Additionally, for our Chief Risk Officer and Corporate General Auditor, the Committee’s pay recommendations are further reviewed and approved by our Board’s Enterprise Risk Committee and Audit Committee, respectively.
| BANK OF AMERICA CORPORATION |
| 2016 PROXY STATEMENT
|
19 | ||||||
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPONCORPORATE GOVERNANCE
EFFECT OF STOCKHOLDER APPROVAL OR DISAPPROVAL OF PROPOSALGenerally, our executive officers do not engage directly with the Committee in setting the amount or form of executive officer or director compensation. As part of the annual performance reviews for our named executive officers (other than our CEO), the Committee sets the compensation for our named executive officers after considering our CEO’s perspective and recommendations for each individual’s incentive awards. In addition, the Committee considers the performance of our various lines of business, business segments and functions, as well as performance feedback from our Global Human Resources Executive and our independent control functions (audit, compliance, finance, human resources, legal, and risk).
The Board believes that stockholders should haveCommittee has the opportunitysole authority and responsibility under its charter to express their viewsapprove engaging any compensation consultant it uses and the fees for those services. The Committee retained Farient Advisors LLC (Farient) as its 2015 independent compensation consultant. Farient’s business is limited to providing independent executive and director compensation consulting services. Farient does not provide any other services to our company. For 2015, Farient provided the Committee external market and performance comparisons, advised the Committee on senior executive, CEO, and director compensation, and assisted with other executive and director compensation-related matters. In performing these services, Farient met regularly with the Bylaw Amendment, especially as it changedCommittee without management present and alone with the provisions of the Bylaws that stockholders approved in 2009 providing for an independent Chairman as the only form of Board leadership structure regardless of circumstances.Committee chair.
The Committee may delegate to management certain duties and responsibilities regarding our benefit plans. Significant Committee delegations to management include authority to (i) the Management Compensation Committee to direct the compensation for all of our employees except for our CEO and his direct reports, and (ii) the Corporate Benefits Committee to oversee substantially all of our employee benefit plans.
The Committee also reviews the form and amount of compensation paid to our non-management directors and recommends any director compensation changes to our Board for approval.
Compensation Risk Management Policies and Practices
We believe that our company applies prudent risk management practices to its incentive compensation programs across the enterprise. Our Compensation and Benefits Committee is also committed to continuing engagementa compensation governance structure that effectively contributes to our company’s overall risk management policies.
The Committee has adopted and annually reviews our Compensation Governance Policy, which governs our incentive compensation decisions and defines the framework for oversight of company-wide incentive compensation program design. Consistent with stockholdersglobal regulatory initiatives, our Compensation Governance Policy requires that our incentive compensation plans do not encourage excessive risk-taking, and ensuring that the Board’s leadership structure remains suited to the needsspecifically addresses the:
l | Definition and process for identifying “risk-taking” employees |
l | Process and policies for incentive compensation plan design and governance to appropriately balance risks with compensation outcomes, including: |
O funding incentive compensation pools
O determining individual incentive compensation awards
O use of the company as they may develop over time. To that end, if stockholders approve the Proposal at the Special Meeting, the Bylaw Amendment will remain unchanged and the Board will retain the flexibility to exercise its fiduciary duties and implement the most appropriate leadership structure as circumstances warrant. Further, the Board and the Corporate Governance Committee will annually assess the appropriateness of its leadership structure, including the duties of the Lead Independent Director in light of the circumstances and needs of the company. This assessment will include feedback received from stockholdersdiscretion as part of our ongoing engagement efforts. In addition, the Board believes that stockholders deserve transparency with respectthose processes
l | Policies on incentive compensation plan effectiveness through testing and monitoring to confirm the plans appropriately balance risks with compensation outcomes, including developing processes to administer incentive compensation clawback features |
l | Policies that provide for the independence of our company’s independent control functions and their appropriate input to the Committee |
Our compensation governance structure allocates oversight, review, and responsibility to the Board’s perspective on these important matters and intends to continue to update stockholders regularly on its viewsappropriate management level, so that the most relevant management level or our Board, as to why the Board leadership structure in place at the time remains in the best interests of the company and our stockholders through the annual meeting proxy statement, engagement efforts, or other appropriate means. Until such time as the Board determines otherwise, it is expected that Mr. Moynihan will continue to serve as Chairman of the Board and Mr. Bovender as Lead Independent Director.
If the company’s stockholders do not approve the Proposal at the Special Meeting, the Board intends to promptly implement a plan to transitionapplicable, makes compensation decisions, with documented input from the current Board leadership structure to an independent Chairman structure, including to amend the company’s Bylaws to repeal the Bylaw Amendment and to revise the Corporate Governance Guidelines accordingly. For the reasons stated above, the Board does not believe this outcome will be in the company’s or stockholders’ best interests.
INTERESTS OF CERTAIN PERSONS IN THE MATTER TO BE ACTED UPON
In considering the recommendationcontrol functions. The following four levels of the Board with respect to the Proposal, and in deciding whether to vote “FOR” the Proposal, Bank of America stockholders should be aware that certain of our directors maygovernance each have interests in the Proposal that are different from, or in addition to, the interests of stockholders generally.
Mr. Moynihan is not entitled to any additional compensation for his service as Chairman of the Board beyond the compensation he receives as CEO, which is described in the company’s proxy statement for the 2015 Annual Meeting.
The Board’s non-management directors are compensated for the time and effort required to serve as directors of a large, complex and highly regulated global company. Committee Chairs receive additional compensation for the incremental responsibilities and time commitments attached to those roles. The Lead Independent Director receives $450,000 in total annual compensation, greater than other non-management directors or Committee Chairs, given the additional demands, expectationsidentified roles and responsibilities that come with that role. While the Board has not established specificin our compensation for andecisions: (i) our Board; (ii) our Compensation and Benefits Committee; (iii) our Management Compensation Committee; and (iv) our lines of business, management, and independent Chairman in the event the Proposal is not approved, a future independent Chairman may receive annual compensation comparable to the compensation received by the previous independent Chairman, or approximately $500,000.
In the event the Proposal is not approved at the Special Meeting, the Board has not determined who would be elected to succeed Mr. Moynihan as Chairman. It is possible that the director compensation paid to one or more independent directors on the Board may change in the event the Proposal is not approved and current Board leadership roles change.
Additional information regarding the interests of the company’s directors and executive officers, by security holdings or otherwise, is described in the definitive proxy statement for our 2015 Annual Meeting and under the section titled “Stock Ownership of Directors, Executive Officers and Certain Beneficial Owners” in this proxy statement.control functions.
20 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
CORPORATE GOVERNANCE
Pursuant to our Compensation Governance Policy, our annual incentive plan certification and review process provides a comprehensive review, analysis, and discussion of incentive design and operation. As part of the governance for these incentive plans, each of the CEO’s direct reports, along with their management teams and independent control functions (including their respective risk officers), meet periodically to discuss how business strategy, performance, and risk align to compensation. The relevant participants certify that their respective incentive programs (i) are aligned with the applicable business line’s and our company’s business strategy and performance objectives, (ii) do not encourage excessive or imprudent risk-taking beyond our company’s ability to effectively identify and manage risk, (iii) are compatible with effective controls and risk management, and (iv) do not incentivize impermissible proprietary trading. Farient and the Committee review these management certifications. Our Chief Risk Officer also certifies incentive plans across our company as part of the Management Compensation Committee’s governance process.
Corporate Audit reviews all incentive plans at least every three to five years, using a risk-based approach that includes reviewing governance, payment, and processing against each incentive plan’s design, and validating incentive plan design and operation against regulatory requirements. Since 2010, Corporate Audit has reviewed all incentive plans at least once, and reviewed incentive plans with higher risk-rankings more frequently.
For performance year 2015, in addition to reviewing the individual incentive compensation awards for executive officers and other senior executives who report directly to the CEO, the Committee also reviewed the individual incentive compensation awards for certain highly compensated employees. The Committee met with the heads of our independent control functions and business lines before making its 2015 incentive compensation decisions.
As a result of these processes and reviews, and in combination with the risk management and clawback features of our compensation programs, we believe that our compensation policies and practices appropriately balance risks and rewards in a way that does not encourage excessive or imprudent risk-taking or create risks that are reasonably likely to have a material adverse effect on our company.
BOARD MEETINGS, COMMITTEE MEMBERSHIP, AND ATTENDANCE
Directors are expected to attend our annual meetings of stockholders and our Board and committee meetings. Each of our incumbent directors attended at least 75% of the aggregate meetings of our Board and the committees on which they served during 2015. In addition, all of the directors serving on our Board at the time of our 2015 annual meeting attended the meeting, except for Mr. Holliday and Dr. Rose, who did not stand for election at that meeting.
Our non-management directors meet in executive session at each regularly scheduled Board meeting and held 13 such executive sessions in 2015. Separately, our independent directors meet in executive session at least once a year. Our Lead Independent Director leads these Board executive sessions.
Our Board has six committees. Charters describing the responsibilities of each of the Audit, Compensation and Benefits, Corporate Governance, Credit, and Enterprise Risk Committees can be found athttp://investor.bankofamerica.com, and their membership is set forth under the heading “Proposal 1: Electing Directors” on page 1. Our Board’s sixth committee, the Corporate Development Committee, was formed by our Board in 2013 as the result of a litigation settlement to oversee certain transactions.
Our committees regularly make recommendations and report on their activities to the entire Board. Each committee may obtain advice from internal or external financial, legal, accounting, or other advisors at their discretion. Our Board, considering the recommendations of our Corporate Governance Committee, reviews committee membership at least annually. The duties of each of the six committees are summarized on the next page.
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 21 |
CORPORATE GOVERNANCE
OurAudit Committee oversees the qualifications, performance, and independence of our company’s independent registered public accounting firm; the performance of our company’s corporate audit function; the integrity of our company’s consolidated financial statements; and our compliance with legal and regulatory requirements. It also makes inquiries of management or the Corporate General Auditor to determine whether there are scope or resource limitations that may impede the ability of the corporate audit function to execute its responsibilities. Our Board has determined that all Committee members are independent under the NYSE listing standards, our Categorical Standards, and the heightened independence requirements applicable to audit committee members under the rules of the U.S. Securities and Exchange Commission (SEC). Our Board has also determined that all Committee members are financially literate in accordance with the NYSE listing standards and qualify as audit committee financial experts under SEC rules. The Committee held 14 meetings in 2015.
OurCompensation and Benefits Committee oversees establishing, maintaining, and administering our compensation programs and employee benefit plans, including approving and recommending our CEO’s compensation to our Board for further approval by all independent directors, and reviewing and approving all of our executive officers’ compensation. In addition, the Committee recommends director compensation for Board approval. All Committee members are independent under the NYSE listing standards, our Categorical Standards, independence requirements applicable to compensation committee members under NYSE rules, and the heightened Committee independence requirements we adopted in 2010, which are the same as the heightened independence requirements audit committee members are subject to under SEC rules. The Committee held seven meetings in 2015.
OurCorporate Governance Committee oversees our Board’s governance processes; identifies and reviews the qualifications of potential Board members; recommends nominees for election to our Board; and recommends committee appointments for Board approval. The Committee also leads our Board and its committees in annual self-assessments; reviews and reports to our Board on our ESG activities; and reviews and assesses stockholder input and our stockholder engagement process. All Committee members are independent under the NYSE listing standards and our Categorical Standards. The Committee held nine meetings in 2015.
OurCredit Committee oversees senior management’s identification and management of enterprise-wide credit exposures and our company’s responses to trends affecting those exposures. The Committee also reviews and assesses the process for establishing our company’s allowance for credit losses and oversees management’s administration of our company’s credit-related policies. All Committee members are non-management directors. The Committee held 10 meetings in 2015.
OurEnterprise Risk Committee oversees our company’s overall risk framework, risk appetite, and management of key risks facing our company. The Committee approves the Risk Framework and Risk Appetite Statement and further recommends these documents to our Board for approval. The Committee oversees management’s alignment of our company’s risk profile to our strategic and financial plans. The Committee oversees management’s progress in developing our company’s Comprehensive Capital Analysis and Review submission to the Federal Reserve Board and reviews and recommends to our Board for approval our company’s Capital Plan. The Committee also reviews and recommends to our Board for approval our company’s Resolution and Recovery Plans. The Committee may consult with other Board committees on risk-related matters. All Committee members are non-management directors and satisfy the risk management requirements for directors of a risk committee under the Federal Reserve Board’s Enhanced Prudential Standards. The Committee held 13 meetings in 2015.
OurCorporate Development Committee assists our Board in overseeing our company’s consideration of potential mergers and acquisitions valued at greater than $2 billion. Mr. Bovender chairs the Committee and Mr. Nowell and Mr. Yost are members. All Committee members are independent under the NYSE listing standards and our Categorical Standards. The Committee did not meet in 2015.
More information about our corporate governance can be found on our website athttp://investor.bankofamerica.com under the heading “Corporate Governance,” including our: (i) Certificate of Incorporation; (ii) Bylaws; (iii) Corporate Governance Guidelines (including our related person transactions policy and our Director Independence Categorical Standards); (iv) Code of Conduct and related materials; and (v) composition and charters of each of our Audit, Compensation and Benefits, Corporate Governance, Credit, and Enterprise Risk Committees, and in other materials found on our website. This information is also available in print, free of charge, upon written request addressed to our Corporate Secretary at Bank of America Corporation, Hearst Tower, 214 North Tryon Street,NC1-027-18-05, Charlotte, North Carolina 28255.
22 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
RELATED PERSON AND CERTAIN OTHER TRANSACTIONS
RELATED PERSON AND CERTAIN OTHER TRANSACTIONS
Our related person transactions policy in our Corporate Governance Guidelines sets forth our policies and procedures for reviewing, and approving or ratifying any transaction with related persons (directors, director nominees, executive officers, stockholders holding 5% or more of our voting securities, or any of their immediate family members or affiliated entities). Our policy covers any transactions where the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, our company is a participant, and a related person has or will have a direct or indirect material interest.
Under our related person transactions policy, our Corporate Governance Committee must approve or ratify any related person transactions, and when doing so, consider: the related person’s interest in the transaction; whether the transaction involves arm’s-length bids or market prices and terms; the transaction’s materiality to each party; the availability of the product or services through other sources; the implications of our Code of Conduct or reputational risk; whether the transaction would impair a director or executive officer’s judgment to act in our company’s best interest; the transaction’s acceptability to our regulators; and in the case of a non-management director, whether the transaction would impair his or her independence or status as an “outside” or “non-employee” director.
Our Board has determined that certain types of transactions do not create or involve a direct or indirect material interest on the part of the related person and therefore do not require review or approval under the policy. These include transactions involving financial services, including loans and brokerage, banking, insurance, investment advisory or asset management services, and other financial services we provide to any related person, if the services are provided in the ordinary course of business, on substantially the same terms as those prevailing at the time for comparable services provided to non-affiliates and comply with applicable law, including the Sarbanes-Oxley Act of 2002 and Federal Reserve Board Regulation O.
A number of our directors, director nominees, and executive officers, their family members, and certain business organizations associated with them are or have been customers of our banking subsidiaries. All extensions of credit to these persons have been made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time in comparable transactions with persons not related to our company and did not involve more than the normal risk of collectability.
Our company and Mr. Moynihan are parties to an aircraft time-sharing agreement, as disclosed in prior proxy statements and approved by our Corporate Governance Committee in December 2010.
Based on information contained in separate Schedule 13G filings with the SEC, each of BlackRock, Inc. (BlackRock), The Vanguard Group (Vanguard), and Berkshire Hathaway Inc. (Berkshire Hathaway), through certain subsidiaries, believed that it beneficially owned 5% or more of the outstanding shares of our common stock as of December 31, 2015 (see “Stock Ownership of Directors, Executive Officers, and Certain Beneficial Owners” on page 24).
In the ordinary course of our business during 2015, our subsidiaries provided and are expected to continue to provide financial advisory, sales and trading, treasury, and other financial or administrative services to BlackRock and its affiliates and clients, Vanguard and its affiliates, and Berkshire Hathaway and its affiliates. These transactions were entered into on an arm’s-length basis and contain customary terms and conditions. We and our subsidiaries may also, in the ordinary course, invest in BlackRock or Vanguard funds or other products or buy or sell assets to or from BlackRock or Vanguard funds and separate accounts.
In addition, before BlackRock became a beneficial owner of 5% or more of our outstanding common stock, it entered into a global distribution agreement on September 29, 2006 with our former subsidiary, Merrill Lynch & Co., Inc. (which merged into Bank of America Corporation on October 1, 2013) in connection with its purchase of Merrill’s investment management business. The agreement provides a framework under which our company distributes BlackRock’s investment advisory products and includes certain pricing, sales incentive restrictions, and product availability provisions that offer economic terms to each party that are at least as favorable as those offered to its competitors. It was negotiated at arm’s length and was amended and restated on July 16, 2008 and again on November 15, 2010. The agreement’s initial term expired on January 1, 2014, was renewed pursuant to its terms for one additional three-year term and may be renewed thereafter as the parties may agree. In accordance with our related person transactions policy, the agreement, as amended and restated, was reviewed and ratified by our Corporate Governance Committee in March 2013.
During 2015, payment from BlackRock to our company relating to our distribution and servicing of products covered by the global distribution agreement was approximately $204.5 million and payment from our company to BlackRock for certain products pursuant to the agreement was approximately $1.2 million.
BANK OF AMERICA CORPORATION |
| 2016 PROXY STATEMENT
|
| ||||||
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS, AND CERTAIN BENEFICIAL OWNERS
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS, AND CERTAIN BENEFICIAL OWNERS
Our voting securities are our common stock, Series B Preferred Stock, and Series 1 to 51-5 Preferred Stock. The following table shows the number of shares of our common stock beneficially owned as of August 3, 2015March 2, 2016 by (a)(i) each director (b)(and by our new director nominee, Mr. Woods), (ii) each named executive officer, (c)(iii) all directors and executive officers as a group, and (d)(iv) beneficial owners of more than five percent5% of any class of our voting securities (as determined under SEC rules). As of that date, none of our directors, nominee, and executive officers owned any shares of any class of our voting securities, other than as reported in the table below. Each director and nominee, each named executive officer, and all directors and executive officers as a group beneficially owned less than one percent1% of our outstanding common stock. Unless otherwise noted, all shares of our common stock are subject to the sole voting and investment power of the directors, nominee, and executive officers.
Name | Beneficial Ownership | Stock Units(1)(2) | Total | |||||||||||||||||
Shares and | Options/ Warrants Exercisable within 60 days of 8/3/2015 | Total Beneficial Ownership | ||||||||||||||||||
Directors and Executive Officers | ||||||||||||||||||||
Sharon L. Allen(3) | 50,153 | 0 | 50,153 | 0 | 50,153 | |||||||||||||||
Susan S. Bies | 138,741 | 0 | 138,741 | 0 | 138,741 | |||||||||||||||
Jack O. Bovender, Jr. | 67,615 | 0 | 67,615 | 0 | 67,615 | |||||||||||||||
Frank P. Bramble, Sr. | 111,680 | 0 | 111,680 | 110,606 | 222,286 | |||||||||||||||
David C. Darnell | 432,672 | 288,750 | 721,422 | 1,390,135 | 2,111,557 | |||||||||||||||
Pierre J. P. de Weck | 28,242 | 0 | 28,242 | 0 | 28,242 | |||||||||||||||
Arnold W. Donald | 38,930 | 0 | 38,930 | 5,966 | 44,896 | |||||||||||||||
Charles K. Gifford(4) | 232,907 | 0 | 232,907 | 120,238 | 353,145 | |||||||||||||||
Linda P. Hudson | 19,507 | 0 | 19,507 | 22,878 | 42,385 | |||||||||||||||
Monica C. Lozano | 3,000 | 0 | 3,000 | 111,171 | 114,171 | |||||||||||||||
Gary G. Lynch | 478,400 | 0 | 478,400 | 721,470 | 1,199,870 | |||||||||||||||
Thomas J. May(5) | 2,142 | 0 | 2,142 | 225,564 | 227,706 | |||||||||||||||
Thomas K. Montag(6) | 1,905,010 | 2,102,216 | 4,007,226 | 2,590,552 | 6,597,778 | |||||||||||||||
Brian T. Moynihan | 774,302 | 546,667 | 1,320,969 | 2,313,827 | 3,634,796 | |||||||||||||||
Lionel L. Nowell, III | 3,930 | 0 | 3,930 | 41,322 | 45,252 | |||||||||||||||
Bruce R. Thompson | 905,244 | 127,400 | 1,032,644 | 1,756,778 | 2,789,422 | |||||||||||||||
R. David Yost | 64,153 | 0 | 64,153 | 53,034 | 117,187 | |||||||||||||||
All directors and executive officers as a group | 6,311,955 | 3,668,104 | 9,980,059 | 11,624,649 | 21,604,708 | |||||||||||||||
Name | Beneficial Ownership | Stock Units(1)(2) | Total | |||||||||||||||||
Shares and Restricted Shares | Options/ Warrants Exercisable within 60 days of 8/3/2015 | Total Beneficial Ownership | ||||||||||||||||||
Certain Beneficial Owners | ||||||||||||||||||||
Warren E. Buffett /Berkshire Hathaway Inc.(8) | — | 700,000,000 | 700,000,000 | — | 700,000,000 | |||||||||||||||
BlackRock, Inc.(9) | 599,692,793 | 0 | 599,692,793 | — | 599,692,793 | |||||||||||||||
The Vanguard Group(10) | 539,166,283 | 0 | 539,166,283 | — | 539,166,283 |
Name | Beneficial Ownership | Stock Units (1)(2) | Total | |||||||||||||||||
Shares and Restricted Shares | Options/ Warrants Exercisable within 60 days of 3/2/2016 | Total Beneficial Ownership | ||||||||||||||||||
Directors and Executive Officers |
| |||||||||||||||||||
Sharon L. Allen(3) | 50,153 | — | 50,153 | — | 50,153 | |||||||||||||||
Susan S. Bies | 138,741 | — | 138,741 | — | 138,741 | |||||||||||||||
Jack O. Bovender, Jr. | 67,615 | — | 67,615 | — | 67,615 | |||||||||||||||
Frank P. Bramble, Sr.(4) | 186,680 | — | 186,680 | 111,275 | 297,955 | |||||||||||||||
David C. Darnell | 737,928 | 183,750 | 921,678 | 885,179 | 1,806,857 | |||||||||||||||
Pierre J.P. de Weck | 28,242 | — | 28,242 | — | 28,242 | |||||||||||||||
Arnold W. Donald | 38,930 | — | 38,930 | 6,002 | 44,932 | |||||||||||||||
Paul M. Donofrio | 363,648 | 91,350 | 454,998 | 810,902 | 1,265,900 | |||||||||||||||
Charles K. Gifford(5) | 232,907 | — | 232,907 | 120,966 | 353,873 | |||||||||||||||
Geoffrey S. Greener | 452,348 | — | 452,348 | 701,810 | 1,154,158 | |||||||||||||||
Linda P. Hudson | 19,507 | — | 19,507 | 23,017 | 42,524 | |||||||||||||||
Terrence P. Laughlin(6) | 633,814 | — | 633,814 | 860,086 | 1,493,900 | |||||||||||||||
Monica C. Lozano | 3,000 | — | 3,000 | 111,844 | 114,844 | |||||||||||||||
Thomas J. May(7) | 2,142 | — | 2,142 | 226,929 | 229,071 | |||||||||||||||
Thomas K. Montag(8) | 2,352,150 | 2,102,216 | 4,454,366 | 1,522,914 | 5,977,280 | |||||||||||||||
Brian T. Moynihan(9) | 1,104,896 | 366,667 | 1,471,563 | 2,074,011 | 3,545,574 | |||||||||||||||
Lionel L. Nowell, III | 3,930 | — | 3,930 | 41,572 | 45,502 | |||||||||||||||
Bruce R. Thompson | 1,096,596 | 106,400 | 1,202,996 | 1,107,169 | 2,310,165 | |||||||||||||||
Thomas D. Woods(10) | 5,003 | — | 5,003 | — | 5,003 | |||||||||||||||
R. David Yost | 64,153 | — | 64,153 | 53,355 | 117,508 | |||||||||||||||
All directors and executive officers as a group (22 persons)(11) | 6,672,799 | 2,922,574 | 9,595,373 | 8,541,967 | 18,137,339 | |||||||||||||||
Name | Beneficial Ownership | Stock Units (1)(2) | Total | |||||||||||||||||
Shares and Restricted Shares | Options/ Warrants Exercisable within 60 days of 3/2/2016 | Total Beneficial Ownership | ||||||||||||||||||
Certain Beneficial Owners |
| |||||||||||||||||||
Warren E. Buffett/Berkshire Hathaway Inc.(12) | — | 700,000,000 | 700,000,000 | — | 700,000,000 6.3% | |||||||||||||||
BlackRock, Inc.(13) | 585,668,469 | — | 585,668,469 | — | 585,668,469 5.7% | |||||||||||||||
The Vanguard Group(14) | 585,080,310 | — | 585,080,310 | — | 585,080,310 5.7% |
|
| BANK OF AMERICA CORPORATION
|
|
|
| |||||
STOCKSECTION 16(A) BENEFICIAL OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERSREPORTING COMPLIANCE
(1) | For non-management directors, includes stock units credited to their accounts pursuant to deferrals made under the terms of the Director Deferral Plan. These stock units do not have voting rights and are not considered beneficially owned under SEC rules. Each unit has a value equal to the fair market value of a share of our common stock. These units, which are held in individual accounts in each director’s name, will be paid in cash upon the director’s retirement if vested at that time. |
(2) | Includes the following stock units, which are not treated as beneficially owned under SEC rules because the holder does not have the right to acquire the underlying stock within 60 days of |
Name | Time-Based RSUs (TRSUs) | Cash-Settled RSUs (CRSUs) | Performance RSUs (PRSUs) | Total Stock Units | Time-Based RSUs (TRSUs) | Cash-Settled RSUs (CRSUs) | Performance RSUs (PRSUs) | Total Stock Units | ||||||||||||||||||||||||
Brian T. Moynihan | 303,887 | 124,229 | 1,885,711 | 2,313,827 | 374,891 | 345,239 | 1,353,881 | 2,074,011 | ||||||||||||||||||||||||
Paul M. Donofrio | 581,140 | — | 229,762 | 810,902 | ||||||||||||||||||||||||||||
Geoffrey S. Greener | 369,402 | — | 332,408 | 701,810 | ||||||||||||||||||||||||||||
Terrence P. Laughlin | 343,204 | — | 516,882 | 860,086 | ||||||||||||||||||||||||||||
Thomas K. Montag | 592,873 | — | 930,041 | 1,522,914 | ||||||||||||||||||||||||||||
Bruce R. Thompson | 402,429 | — | 1,354,349 | 1,756,778 | 424,946 | — | 682,223 | 1,107,169 | ||||||||||||||||||||||||
David C. Darnell | 324,200 | — | 1,065,935 | 1,390,135 | 530,720 | — | 354,459 | 885,179 | ||||||||||||||||||||||||
Gary G. Lynch | 284,695 | — | 436,775 | 721,470 | ||||||||||||||||||||||||||||
Thomas K. Montag | 491,300 | — | 2,099,252 | 2,590,552 | ||||||||||||||||||||||||||||
All executive officers as a group(7) | 3,622,734 | 124,229 | 7,186,907 | 10,933,870 | ||||||||||||||||||||||||||||
All executive officers as a group(11) | 3,114,996 | 345,239 | 4,386,770 | 7,847,005 |
Each stock unit has a value equal to the fair market value of a share of our common stock, but does not confer voting rights. Time-based restricted stock units |
(3) | Includes 1,000 shares of our common stock for which Ms. Allen shares voting and investment power with her spouse. |
(4) | Includes 75,000 shares of our common stock for which Mr. Bramble shares voting and investment power with his spouse. |
(5) | Includes 1,090 shares of our common stock held by Mr. Gifford as a custodian for two of his children, and |
Includes |
(7) | Includes 22,824 stock units held by Mr. May under the FleetBoston Director Stock Unit Plan, |
Includes 470,724 shares of our common stock held by Mr. Montag in a family trust for which Mr. Montag shares investment power with his wife, who is trustee. |
Includes 78,376 shares of our common stock for which Mr. Moynihan shares voting and investment power with his spouse. |
(10) | Includes 5,000 shares of our common stock held by Mr. Woods in an investment partnership for which Mr. Woods shares voting and investment power with the other members of the partnership. |
(11) | Such persons had sole voting and investment power over |
Consists of warrants exercisable within 60 days for 700,000,000 shares of our common stock, held indirectly by Warren E. Buffett, 3555 Farnam Street, Omaha, NE 68131 and Berkshire Hathaway Inc., 3555 Farnam Street, Omaha, NE 68131, including through the following entities, which are deemed to share beneficial ownership of greater than |
Consists of common stock held by |
Consists of common stock held by |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (Exchange Act) requires our directors, executive officers, and anyone holding 10% or more of a registered class of our equity securities (reporting persons) to file reports with the SEC showing their holdings of, and transactions in, these securities. Based solely on a review of copies of such reports, and written representations from each reporting person that no other reports are required, we believe that for 2015 all reporting persons (including Mr. Holliday and Dr. Rose) filed the required reports on a timely basis under Section 16(a), except that a late Form 4 was filed on behalf of Mr. Greener to report a disposition of 1,734 shares in connection with a reallocation of his 401(k) plan portfolio.
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 25 |
DIRECTOR COMPENSATION
Our director compensation philosophy is implemented through a program designed to appropriately compensate our non-management directors for the time and effort required to serve as a director of a large, complex, and highly regulated global company and to align directors’ and long-term stockholders’ interests.
Annual payments are made after the non-management directors are elected by stockholders. Non-management directors who begin their Board or committee chair service other than at the annual meeting of stockholders receive a pro-rated amount of annual compensation. Mr. Moynihan receives no compensation for his services as our sole management director.
2015 Review and Changes
Our Compensation and Benefits Committee periodically reviews and recommends updates to our director compensation program, taking into account our director compensation philosophy and changes in market practices. During 2015, with assistance from Farient Advisors LLC (the Committee’s independent compensation consultant), the Committee reviewed the annual director compensation and determined that our compensation level had fallen below a competitive level. Prior to this review, the annual cash award and restricted stock award amounts for non-management directors had not changed since 2006. This review took into account the pay practices at publicly traded companies including our primary competitor group of leading U.S. financial institutions. (See “Compensation Discussion and Analysis—Competitor Groups” at page 42 for more information about our competitor groups.) The Committee also considered the expansion of director responsibilities, including active involvement in our enhanced stockholder engagement program.
Based on that review, in June 2015 our Board approved an increase to the annual non-management director cash award from $80,000 to $100,000 and an increase to the annual restricted stock award from $160,000 to $200,000 (as shown in “Director Pay Components” below). The increase was applied on a pro-rated basis for the 2015-2016 director compensation cycle. No change was made to the Lead Independent Director compensation or the cash awards for the committee chairs in 2015.
Director Pay Components
The primary elements of annual compensation and incremental awards for our non-management directors are provided in the table below. Incremental awards recognize additional responsibilities and the time commitment of these critical board leadership roles.
Incremental Awards for Board Leadership | ||||||||
Annual Award Components | Non- management Directors ($) | Lead Independent Director ($) | Audit & Enterprise Risk Committee Chairs ($) | Compensation and Benefits, Corporate Governance, & Credit Committee Chairs ($) | ||||
Cash Award | 100,000 | 50,000 | 40,000 | 20,000 | ||||
Restricted Stock Award | 200,000 | 100,000 | N/A | N/A |
The annual restricted stock award is made pursuant to the Bank of America Corporation Directors’ Stock Plan. The number of restricted shares awarded is equal to the dollar value of the award divided by the closing price of our common stock on the NYSE on the grant date, rounded down to the next whole share, with cash paid for any fractional share. Dividends are paid on the award when they are paid on shares of our common stock. The annual restricted stock award is subject to a one-year vesting requirement. If a director retires before the one-year vesting date, a pro-rated amount of the award vests based on the number of days the director served during the vesting period before retirement. Any unvested amount of the award is forfeited.
26 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
DIRECTOR COMPENSATION
Director Deferral Plan
Non-management directors may elect to defer all or a portion of their annual restricted stock or cash awards through the Bank of America Corporation Director Deferral Plan. When directors elect to defer their restricted stock award, their “stock account” is credited with a number of whole and fractional “stock units” that are equal in value to the restricted stock award and subject to the one-year vesting requirement applicable to restricted stock awards under the Directors’ Stock Plan. Each stock unit is equal in value to a share of our common stock but because it is not an actual share of our common stock it does not have any voting rights. When directors elect to defer their cash award or any committee chair cash awards, they may choose to defer into either a stock account or a “cash account.” Deferrals into a stock account are credited with dividend equivalents in the form of additional stock units and deferrals into the cash account are credited with interest at a long-term bond rate. Following retirement from our Board, a non-management director may receive the stock account balance (to the extent vested) and cash account balance in a single lump sum cash payment or in five or 10 annual cash installments, depending on the director’s election.
Stock Retention Requirements and Hedging Prohibition for Non-management Directors
l | Under our stock retention requirements, each non-management director is required to hold and cannot sell the restricted stock they receive as compensation (except as necessary to pay taxes upon vesting) until termination of their service. All non-management directors are in compliance with these requirements |
l | Our Code of Conduct prohibits our directors from hedging and speculative trading of company securities, including short sales and trading in options and derivatives |
The following table shows the compensation our non-management directors earned for their services in 2015:
Director |
Fees Earned or ($)(1) |
Stock Awards ($)(2) |
All Other ($)(3) | Total ($) | ||||||||||||||||
Sharon L. Allen | 138,082 | 196,164 | 0 | 334,246 | ||||||||||||||||
Susan S. Bies | 98,082 | 196,164 | 102,423 | 396,669 | ||||||||||||||||
Jack O. Bovender, Jr. | 150,000 | 300,000 | 0 | 450,000 | ||||||||||||||||
Frank P. Bramble, Sr. | 138,082 | 196,164 | 0 | 334,246 | ||||||||||||||||
Pierre J.P. de Weck | 98,082 | 196,164 | 22,658 | 316,904 | ||||||||||||||||
Arnold W. Donald | 98,082 | 196,164 | 0 | 294,246 | ||||||||||||||||
Charles K. Gifford | 118,082 | 196,164 | 293,464 | 607,710 | ||||||||||||||||
Charles O. Holliday, Jr. (retired) | 0 | 0 | 0 | 0 | ||||||||||||||||
Linda P. Hudson | 98,082 | 196,164 | 0 | 294,246 | ||||||||||||||||
Monica C. Lozano | 118,082 | 196,164 | 0 | 314,246 | ||||||||||||||||
Thomas J. May | 118,082 | 196,164 | 0 | 314,246 | ||||||||||||||||
Lionel L. Nowell, III | 98,082 | 196,164 | 0 | 294,246 | ||||||||||||||||
Clayton S. Rose (retired) | 0 | 0 | 0 | 0 | ||||||||||||||||
R. David Yost | 98,082 | 196,164 | 5,000 | 299,246 |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 27 |
DIRECTOR COMPENSATION
(1) | The amounts in this column represent the annual cash award plus any committee chair cash retainers paid in 2015, including amounts deferred under the Director Deferral Plan. For 2015 cash awards deferred under the Director Deferral Plan, our directors were credited with the stock units shown in the table below based on the closing price of our common stock on the NYSE on the date of deferral: |
Director | Stock Units (#) | Value of Deferred Stock Units ($) | ||
Arnold W. Donald | 5,951.98 | 98,082 | ||
Thomas J. May | 7,179.73 | 118,082 | ||
Lionel L. Nowell, III | 5,951.98 | 98,082 | ||
R. David Yost | 5,951.98 | 98,082 |
(2) | The amounts in this column represent the aggregate grant date fair value of restricted stock awards granted during 2015, whether or not those awards were deferred under the Director Deferral Plan. The grant date fair value is based on the closing price of our common stock on the NYSE on the grant date. As of December 31, 2015, our non-management directors held the number of unvested shares of restricted stock or, if deferred, unvested stock units shown in the table below: |
Director | Unvested Shares of Restricted Stock or Stock Units (#) | |
Sharon L. Allen | 11,902 | |
Susan S. Bies | 11,902 | |
Jack O. Bovender, Jr. | 18,416 | |
Frank P. Bramble, Sr. | 11,904 | |
Pierre J.P. de Weck | 11,902 | |
Arnold W. Donald | 11,902 | |
Charles K. Gifford | 11,904 | |
Charles O. Holliday, Jr. (retired) | 0 | |
Linda P. Hudson | 11,904 | |
Monica C. Lozano | 11,904 | |
Thomas J. May | 11,904 | |
Lionel L. Nowell, III | 11,904 | |
Clayton S. Rose (retired) | 0 | |
R. David Yost | 11,904 |
(3) | Our directors are eligible to participate in our matching gifts program, under which our charitable foundation matches up to $5,000 in donations made by our employees and active directors to approved charitable organizations. This program is also available to all U.S.-based, benefits eligible employees. The values above reflect that $5,000 was donated to charities on behalf of each of Mr. de Weck, Mr. Gifford, and Mr. Yost under the matching gifts program. |
In connection with our company’s annual strategic planning meeting in November 2015, spouses and guests of directors were invited. Pursuant to SEC rules, which do not require disclosure of perquisites for any director that in the aggregate are less than $10,000, the value of the spouse business-related travel expenses, or other business-related travel expenses, including ground transportation, commercial or third-party vendor aircraft travel (if any), meals, and any other incidental meeting-related expenses, is not included in the table above, except in the case of Mr. de Weck and Mr. Gifford. |
Ms. Bies serves as chair of the board of directors of Merrill Lynch International (MLI), a United Kingdom subsidiary of Bank of America Corporation. For her services as a non-management director of MLI in 2015, Ms. Bies receives an annual cash retainer totaling £100,000 which is paid monthly. She received £66,667 in 2015 and will receive the remaining £33,333 in 2016. The retainers paid in 2015 are reported in the table above based on a weighted average exchange rate of 0.65 pounds sterling to one dollar. The exchange rate used for each payment was based on the average exchange rate for the month prior to the month of payment. |
Mr. Gifford receives office space and secretarial support, which for 2015 had an aggregate incremental cost to our company of $288,286. |
28 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
PROPOSAL 2: APPROVING OUR EXECUTIVE COMPENSATION (AN ADVISORY, NON-BINDING “SAY ON PAY” RESOLUTION)
PROPOSAL 2: APPROVING OUR EXECUTIVE COMPENSATION (AN ADVISORY, NON-BINDING “SAY ON PAY” RESOLUTION)
We are seeking an advisory vote to approve our executive compensation for 2015. At our 2011 annual meeting of stockholders, a majority of stockholders voted to have a Say on Pay vote each year. As a result, we will conduct an advisory vote on executive compensation annually at least until the next stockholder advisory vote on the frequency of such votes.
Although the Say on Pay vote is advisory and is not binding on our Board, our Compensation and Benefits Committee will take into consideration the outcome of the vote when making future executive compensation decisions. At the 2015 annual meeting of stockholders, almost 95% of the votes cast favored our Say on Pay proposal. The Committee considered this result, and, in light of the strong support, maintained a consistent overall approach for 2015.
Our Board believes that our current executive compensation program appropriately links compensation realized by our executive officers to our performance and properly aligns the interests of our executive officers with those of our stockholders. The details of this compensation for 2015, and the reasons we awarded it, are described in “Compensation Discussion and Analysis,” starting below.
Our Board recommends that our stockholders vote in favor of the following resolution:
“Resolved, that our stockholders approve, on an advisory basis, the compensation of our company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables, and any related material disclosed in this proxy statement.”
Our Board recommends a vote “FOR” approving our executive compensation
(an advisory, non-binding “Say on Pay” resolution) (Proposal 2).
COMPENSATION DISCUSSION AND ANALYSIS
1. | Executive Summary | 30 | ||||||||
a. | Executive Compensation Philosophy | |||||||||
b. | 2015 Executive Compensation Highlights | |||||||||
c. | Stockholder Outreach & Say on Pay Results | |||||||||
2. | 2015 Company & Line of Business Performance | 31 | ||||||||
3. | Executive Compensation Program Features | 33 | ||||||||
a. | Executive Pay Components & Variable Pay Mix | |||||||||
b. | Compensation Risk Management Features | |||||||||
i. | Pay Practices | |||||||||
ii. | Multiple Clawback & Cancellation Features | |||||||||
iii. | Stock Ownership & Retention Requirements | |||||||||
iv. | Equity Grant Timing |
4. | Compensation Decisions and Rationale | 36 | ||||||||
a. | Pay Evaluation & Decision Process | |||||||||
b. | Individual Performance | |||||||||
c. | 2015 Compensation Decisions | |||||||||
d. | Goals for Performance Restricted Stock Units | |||||||||
5. | Other Compensation Topics | 41 | ||||||||
a. | Results for Performance Restricted Stock Units | |||||||||
b. | Competitor Groups | |||||||||
c. | Retirement Benefits | |||||||||
d. | Health and Welfare Benefits & Perquisites | |||||||||
e. | Tax Deductibility of Compensation |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 29 |
COMPENSATION DISCUSSION AND ANALYSIS
a. Executive Compensation Philosophy
Our compensation philosophy ties our executive officers’ pay to company, line of business, and individual performance over the short and long term. In addition, our executive compensation program provides a mix of salary, incentives, and benefits paid over time that we believe aligns executive officer and stockholder interests. Our Compensation and Benefits Committee has the primary responsibility for approving our compensation strategy and philosophy and the compensation programs applicable to our named executive officers listed below. With respect to Mr. Moynihan’s compensation, our Compensation and Benefits Committee makes a recommendation that is further reviewed and approved by the independent members of the Board.
Named Executive Officers | ||
Brian T. Moynihan | Chairman and Chief Executive Officer | |
Paul M. Donofrio | Chief Financial Officer | |
Geoffrey S. Greener | Chief Risk Officer | |
Terrence P. Laughlin | Vice Chairman and Head of Global Wealth & Investment Management | |
Thomas K. Montag | Chief Operating Officer | |
Bruce R. Thompson | Former Chief Financial Officer | |
David C. Darnell | Former Vice Chairman and Head of Global Wealth & Investment Management |
b. 2015 Executive Compensation Highlights
l | 2015 design is consistent with 2014, which received almost 95% stockholder support at our 2015 annual meeting |
O Mix of fixed and variable pay
O Deferral of majority of variable pay through equity-based incentives
O Clawback and cancellation features in all equity-based incentives
l | Strong risk management practices that encourage sustainable performance over time |
l | Comprehensive Committee review of performance against financial and non-financial goals |
l | Total compensation awarded to Mr. Moynihan of $16 million for 2015, compared to $13 million for 2014 |
l | 100% of Mr. Moynihan’s variable pay awarded as equity-based awards; 50% as performance restricted stock units |
c. Stockholder Outreach & Say on Pay Results
We conduct stockholder outreach throughout the year and provide stockholders with an annual opportunity to cast an advisory Say on Pay vote. We heard strong support for our 2014 compensation program and maintained a consistent overall approach for 2015.Almost 95% of the votes cast at our 2015 annual meeting of stockholders favored our Say on Pay proposal, which we believe affirms our stockholders’ support of our company’s 2015 executive compensation program. Stockholder input and the outcome of Say on Pay vote results will continue to influence future compensation decisions.
30 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS
2. 2015 COMPANY & LINE OF BUSINESS PERFORMANCE
In 2015 we earned net income of $15.9 billion, compared to $4.9 billion in 2014. We are doing more business with our customers and clients and continue to add clients consistent with our risk framework. We have simplified our company, we are managing risk, and we have rebuilt our financial foundation. We are making meaningful progress on a variety of measures and continue to connect all of our capabilities across our businesses by focusing on our five operating principles, which serve as guideposts for achieving our goals (for a discussion on our operating principles, see page 36). In a challenging environment, we delivered on promises to strengthen the balance sheet, lower expenses, maintain strong asset quality, and return more capital to stockholders.
Following are financial highlights and key measures of company and line of business performance that our Compensation and Benefits Committee considered in evaluating the performance of our named executive officers.
a. Company Performance
Earned net income of $15.9 billionin 2015, versus $4.9 billion in 2014 | ||||
Achieved record capital and liquidity levels Tangible Common Equity of $162 billion, increased by $10.4 billion(1) Global Excess Liquidity Sources at $504 billion | ||||
Tangible book value per share increased8% to $15.62(1) | ||||
Continued focus on expenses while investing in growth Excluding litigation, noninterest expense down 5%(1) | ||||
Improved/increased client and customer activity in all areas, including: business referrals (increased 19% to 5 million); total loans (grew nearly $22 billion); and deposits (increased $78 billion) | ||||
Strong asset quality discipline drove continued low levels of net charge-offs and declines in delinquencies and nonperforming loans | ||||
$4.5 billion returned to common stockholders through repurchases and dividends |
b. Line of Business Performance
Business ($ in Millions) | Total Revenue | Provision for Credit Losses | Noninterest Expense | Net Income (Loss) | ||||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||
Consumer Banking | 30,618 | 30,809 | 2,524 | 2,680 | 17,485 | 17,865 | 6,739 | 6,436 | ||||||||||||||||||||||||
Global Wealth & Investment Management | 18,001 | 18,404 | 51 | 14 | 13,843 | 13,654 | 2,609 | 2,969 | ||||||||||||||||||||||||
Global Banking | 16,919 | 17,607 | 685 | 322 | 7,888 | 8,170 | 5,273 | 5,769 | ||||||||||||||||||||||||
Global Markets | 15,067 | 16,188 | 99 | 110 | 11,310 | 11,862 | 2,496 | 2,705 | ||||||||||||||||||||||||
Legacy Assets Servicing | 3,430 | 2,676 | 144 | 127 | 4,451 | 20,633 | (740 | ) | (13,110 | ) | ||||||||||||||||||||||
Total Corporation(2) | 83,416 | (3) | 85,116 | (3) | 3,161 | 2,275 | 57,192 | 75,117 | 15,888 | 4,833 |
(1) | Not a financial measure under generally accepted accounting principles (GAAP). On a GAAP basis, common shareholders’ equity was $233.9 billion and increased by $9.8 billion; book value per share increased 6% to $22.54; and noninterest expense was down 24%. |
(2) | Includes “All Other,” which consists of Assets Liability Management activities, equity investments, the international consumer card business, liquidating businesses, residual expense allocations, and other items not shown in the table above. |
(3) | Revenue reported on fully taxable-equivalent (FTE) basis, which is a non-GAAP financial measure for the total corporation. Total revenue for the corporation on a GAAP basis was $82.507 billion for 2015 and $84.247 billion for 2014. |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 31 |
COMPENSATION DISCUSSION AND ANALYSIS
Consumer Banking | Consumer Banking offers a diversified range of credit, banking, and investment products and services to consumers and small businesses—includes Retail Banking and Preferred and Small Business Banking. l Average deposits increased 6%; 88% of checking accounts now considered primary l Average loans and leases increased 4% l 18.7 million mobile banking customers, up 13%, and deposits made with mobile devices now account for 15% of all deposit transactions l Total mortgage originations in Consumer Banking increased 24% to $53 billion l U.S. credit and debit card purchase volumes increased by 4% and 2%, respectively l Approximately 5 million new credit cards were issued in 2015 | |
Global Wealth & Investment Management | Global Wealth & Investment Management provides investment and wealth management solutions to our affluent and ultra-high net worth clients—includes Merrill Lynch Wealth Management and U.S. Trust. l Average deposits increased 2% l Average loans and leases increased 10%; 23rd consecutive quarter of loan balance growth l Client balances remained relatively steady at $2.5 trillion driven by market declines and partially offset by client balance flows l Positive long-term assets under management flows for 26 consecutive quarters; $34 billion in 2015 | |
Global Banking | Global Banking provides a wide range of lending-related products and services, integrated working capital management and treasury solutions to clients, and underwriting and advisory services—includes Global Corporate Banking, Global Commercial Banking, Business Banking, and Global Investment Banking. l Average deposits increased 2% l Average loans and leases increased 7% l Total Corporation investment banking fees, including self-led deals, of $5.8 billion l Relationships with 81% of Global Fortune 500 and 96% of U.S. Fortune 1000 | |
Global Markets | Global Markets offers sales and trading services, including research, to institutional clients across fixed-income, credit, currency, commodity, and equity businesses. l Net income increased nearly 5% to $3.0 billion in 2015, excluding net debit valuation adjustments (DVA), primarily driven by lower noninterest expense l Fixed-income, currency and commodities sales and trading revenue, excluding net DVA, decreased by 4% in a challenging trading environment l Equities sales and trading revenue, excluding net DVA, increased by almost 6% driven by strong performance in derivatives and increased client activity in the Asia-Pacific region l Average trading related assets decreased 4% as we continued to reduce risk and optimize our balance sheet | |
Legacy Assets Servicing | Legacy Assets Servicing (LAS) is responsible for our mortgage servicing activities related to residential first mortgage and home equity loans serviced for others and loans held by our company, including loans that have been designated for the LAS portfolio. l Excluding litigation, noninterest expense decreased 28% due to lower default-related staffing and other default-related servicing expenses l The number of 60+ day delinquent first mortgage loans declined 46% to 103,000 loans |
The Committee believes the company and line of business performance highlights discussed above, as well as other company and business results, reflect management’s progress in delivering responsible growth and continuing to streamline and simplify our company.
32 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS
3. EXECUTIVE COMPENSATION PROGRAM FEATURES
a. Executive Pay Components & Variable Pay Mix
For each performance year, our Compensation and Benefits Committee determines the pay for our named executive officers. A portion of the compensation is delivered as base salary and the remainder as annual cash incentive (except for the CEO) and restricted stock units. The restricted stock units are divided into two components: time-based and performance-based. Our time-based awards vest ratably over three years (except for the CEO’s cash-settled restricted stock units that vest over one year). Our performance-based awards are re-earned only by the achievement of performance metrics that require future core performance by our company over the defined three-year performance period. Consequently, the future performance of our company will impact the amount of pay our named executive officers will earn from the performance-based awards. This pay structure, with an emphasis on variable pay, serves a role in motivating our executives to deliver sustained stockholder value and achieve long-term goals.
The following chart provides an overview of the 2015 pay components for our named executive officers:
Performance Year 2015 Pay Components
Base Salary | ||
l Determined based on job scope, experience, and market comparable positions; provides fixed income to attract and retain executives and balance risk-taking | l Semi-monthly cash payment through 2015 | |
Annual Cash Incentive—except CEO | ||
l Provides short-term variable pay for the performance year for non-CEO executives | l Single cash payment in February 2016 | |
Cash-Settled Restricted Stock Units (CRSUs)—CEO only | ||
l Track stock price performance over 1-year vesting period l Vest in 12 equal installments from March 2016 – February 2017 | l Cash-settled | |
Performance Restricted Stock Units (PRSUs)(1) | ||
l Vest based on achievement of specific return on assets and growth in adjusted tangible book value goals over 3-year performance period l Track company and stock price performance l Encourage growth of earnings during the performance period | l If performance goals are achieved, the amount granted for 2015 will be earned and vest at the end of the performance period (2018) l If threshold goals are not achieved, the entire award is forfeited l Stock-settled to the extent earned l See “Results for Performance Restricted Stock Units” on page 41 for the impact of company performance on the vesting and value of prior awards | |
Time-Based Restricted Stock Units (TRSUs) | ||
l Track stock price performance over 3-year vesting period l Align with sustained longer-term stock price performance | l Vest in three equal annual installments beginning in February 2017 l Stock-settled |
Performance Year 2015 Variable Pay Mix
l | A majority of variable pay is delivered as equity-based awards that balance short-term and long-term results |
l | The charts below illustrate the variable pay mix for our CEO and other named executive officers(1) |
(1) | Does not apply to David C. Darnell, who is retiring in 2016. |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 33 |
COMPENSATION DISCUSSION AND ANALYSIS
b. Compensation Risk Management Features
Our Compensation and Benefits Committee believes that the design and governance of our executive compensation program encourages executive performance consistent with the highest standards of risk management.
i. Pay Practices
Below we highlight the key features of our executive compensation program, including the pay practices we have implemented to drive sustainable results, encourage executive retention, and align executive and stockholder interests. We also identify certain pay practices we have not implemented because we believe they do not serve our risk management goals or stockholders’ long-term interests.
WhatWe Do | WhatWe Don’t Do | |
üPay for performance and allocate individual awards based on actual results and how results were achieved | Ð Change in control agreements for executive officers | |
ü Usebalanced, risk-adjusted performance measures | Ð Severance agreements for executive officers | |
ü Reviewfeedback from independent control functions in performance evaluations and compensation decisions | Ð Severance benefits to our executive officers exceeding two times base salary and bonus without stockholder approval per our policy | |
ü Provideappropriate mix of fixed and variable pay to reward company, line of business, and individual performance | Ð Accrual of additional retirement benefits under any supplemental executive retirement plans (SERPs) | |
üDefer a majority of variable pay as equity-based awards | Ð Excise tax gross-ups upon change in control | |
ü Applyclawback features to all executive officer variable pay | Ð Discounting, reloading, or re-pricing stock options without stockholder approval | |
ü Requirestock ownership and retention of a significant portion of equity-based awards | Ð Single-trigger vesting of equity-based awards upon change in control | |
üEngage with stockholders on governance and compensation | Ð Multi-year guaranteed incentive awards | |
üProhibit hedging and speculative trading of company stock,including short sales and trading in options and derivatives | Ð Fixed-duration employment contracts with executive officers |
Additionally, the “Compensation Governance and Risk Management” discussion beginning on page 19 contains more information about our Compensation Governance Policy and our compensation risk management practices. That section describes our Chief Risk Officer’s review and certification of our incentive compensation programs and our Corporate General Auditor’s risk-based review of our incentive plans. We also describe the extent to which our CEO participates in determining executive officer compensation, and the role of Farient Advisors LLC, the Committee’s independent compensation consultant.
34 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS
ii. Multiple Clawback & Cancellation Features
Our equity-based awards are subject to three separate and distinct features that can result in the awards being cancelled or prior payments being clawed back in the event of certain detrimental conduct or financial losses. We believe these features encourage appropriate behavior and manage risk in our compensation program. Our named executive officers are subject to all three clawback and cancellation features.
Detrimental Conduct Clawback | Performance-Based Cancellation | Incentive Compensation Recoupment Policy | ||||
Who | l Applies to approximately 22,000 employees who received equity-based awards as part of their 2015 compensation | l Applies to approximately 4,200 employees who are deemed to be “risk takers” and received equity-based awards as part of their 2015 compensation l “Risk takers” defined according to banking regulations and company policies | l Applies to all of our executive officers | |||
l Our policy covers a broader group of executives than required by the Sarbanes-Oxley Act, which covers only the CEO and Chief Financial Officer | ||||||
When | l An employee engages in certain “detrimental conduct,” including: O illegal activity O breach of a fiduciary duty O intentional violation or grossly negligent disregard of our policies, rules, and procedures O trading positions that result in a need for restatement or significant loss O conduct constituting “cause” | l Our company, a line of business, a business unit, or an employee experiences a loss outside of the ordinary course of business and the employee is found to be accountable based on: O the magnitude of the loss O the decisions that may have led to the loss O the employee’s overall performance | l When fraud or intentional misconduct by an executive officer causes our company to restate its financial statements | |||
What | l All unvested equity awards will be cancelled l Any previously vested award may be recouped, depending on the conduct | l All or part of the outstanding award may be cancelled | l Any incentive compensation may be recouped as determined by the Board or a Board committee l Any action necessary to remedy the misconduct and prevent its recurrence may be taken | |||
Since 2011, all of our equity-based awards provide that they are subject to any final rules implementing the compensation clawback provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) that the SEC and NYSE may adopt. We intend to update our policies to reflect applicable rules implementing the Dodd-Frank Act clawback requirements once those rules are finalized, released, and become effective.
In response to input received in our stockholder engagement, in 2015 we agreed to adopt an Incentive Compensation Forfeiture & Recoupment Disclosure Policy. Pursuant to this policy (which applies to events occurring on or after January 1, 2016, regardless of the date of the related forfeiture or clawback), we will disclose publicly the incentive forfeitures or clawbacks recovered from certain senior executives in aggregate pursuant to our Detrimental Conduct and Incentive Compensation Recoupment policies described above, subject to certain privacy, privilege, and regulatory limitations.
In response to further dialogue with stockholders in 2016, we seek to clarify that it is not our policy to provide for the vesting of equity awards upon an employee’s voluntary resignation to enter government service. Employees who are not retirement eligible and who voluntarily resigned to enter government service have forfeited their unvested equity awards. We do not anticipate changing our approach.
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 35 |
COMPENSATION DISCUSSION AND ANALYSIS
iii. Stock Ownership & Retention Requirements
Our stock ownership and retention requirements align executive officer and stockholder interests by linking the value realized from equity-based awards to sustainable company performance. Beginning with awards granted for 2012, our Corporate Governance Guidelines require:
Minimum Shares of Common Stock Owned | Retention | |||
Chief Executive Officer | 500,000 shares | 50% of net after-tax shares received from equity-based awards retained until one year after retirement |
Other Executive Officers | 300,000 shares | 50% of net after-tax shares received from equity-based awards retained until retirement |
For purposes of the stock ownership requirement:
l | New executive officers have up to five years to be in compliance |
l | Full-value shares and units owned, awarded, or deemed beneficially owned are included in the calculation; PRSUs are included in the calculation only when they are earned; stock options are not included |
iv. Equity Grant Timing
We generally grant equity-based awards on a pre-established award date that coincides with the date we pay cash incentive awards for the performance year to avoid any appearance of coordination of the timing of our grants with the release of material non-public information.
4. COMPENSATION DECISIONS AND RATIONALE
a. Pay Evaluation & Decision Process
Each year, our Compensation and Benefits Committee reviews our named executive officers’ performance using a balanced and disciplined approach to determine their base salaries and variable compensation awards. The approach includes a full year assessment of financial results and the contributions of the executives to overall company and line of business performance, progress for delivering on our five operating principles (discussed below), and driving a strong risk culture. The Committee also considers various factors that collectively indicate successful management of our business, including:
l | Year-over-year company, line of business, and individual performance, including financial and non-financial measures |
l | The manner in which results are achieved, adherence to risk and compliance policies, and the quality of earnings |
l | Accountability in driving a strong risk management culture and other core values of our company |
l | Our year-over-year performance relative to our established risk metrics |
l | Our performance relative to our primary competitor group |
The Committee’s evaluation includes a robust review of a performance scorecard aligned to our company’s five operating principles:
Deliver for Stockholders | Customer Driven | Manage Risk | Operational Excellence | Great Place to Work |
For each operating principle, the scorecard includes metrics tailored for each named executive officer based on company, line of business, risk, financial, and strategic priorities. The Committee evaluates individual performance without assigning weightings to these priorities.
The Committee also reviews market pay practices, compensation risk management, and governance practices. In addition, feedback from our independent control functions (i.e., audit, compliance, finance, human resources, legal, and risk) influences the Committee’s assessment. For named executive officers other than our CEO, the Committee also considers our CEO’s perspective. For 2015, the Committee also considered changes in role and scope of responsibility for some named executive officers.
The Committee’s assessment of the factors above informs its compensation decisions. Compensation decisions are generally determined on a year-over-year basis without preset target levels of total compensation, without assigning weightings, and without formulaic benchmarking. For the CEO and the Chief Risk Officer, the Committee’s pay recommendations are further reviewed and approved by the independent members of our Board and the Enterprise Risk Committee, respectively.
36 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS
b. Individual Performance
Material factors considered in the Committee’s assessment of individual performance are included for each of our named executive officers.
BRIAN T. MOYNIHAN |
Chairman and Chief Executive Officer |
Mr. Moynihan has served as the Chief Executive Officer of Bank of America Corporation since January 2010 and as Chairman of our Board since October 2014.
Performance Highlights:
l | Continued tosimplify our company, fortify the balance sheet, and reduce risk and cost |
l | Stable total revenue and net income improvements year-over-year; $82.5 billion and $15.9 billion in 2015, respectively, compared to $84.2 billion and $4.8 billion in 2014 |
l | Maintained afortress balance sheet with strong capital and liquidity levels; exceeded supplementary leverage ratios, global excess liquidity sources at a record level of $504 billion and time-to-required funding of over three years |
l | Returnsexceeded our cost of capital in all core operating businesses, indicative of our focus onresponsible growth |
l | Drove improvements in operating leverage through progress on the Simplify and Improve initiative, cost reduction measures, and reduced litigation expenses |
l | Improved theglobal risk management operating model significantly to drive a culture of proactive identification and management of risks across our company |
l | Continued to drive improvements inglobal compliance processes, people, and technology to drive ownership of compliance risk management throughout our company |
l | Executedcustomer-driven strategy resulting in five million referrals across businesses in 2015, up from four million in 2014 |
l | Strengthened ourcommitment to customers through sustained momentum in company repositioning, resulting in improved brand favorability and highest customer satisfaction since 2005 |
l | Continued commitment and focus ondiversity and inclusion andemployee engagement efforts across our company |
l | Focused talent management efforts resulted in new members of the leadership team and development of key roles to continue driving leadership strength and succession depth |
l | Focused on implementation of enterprisetechnology roadmap; further simplified the operating platform while maintaining strong and stable core platform availability |
l | Named to the 2015Dow Jones Sustainability Indices (DJSI). Inclusion in the DJSI is a reflection of our ongoing work to embed responsible business practices across our company |
For additional information on company performance, see “2015 Company & Line of Business Performance” on page 31.
PAUL M. DONOFRIO |
Chief Financial Officer |
Mr. Donofrio was appointed Chief Financial Officer (CFO) in August 2015, prior to which he held several roles within our company. As our Chief Financial Officer, he is responsible for the overall financial management of our company, including accounting, balance sheet management, financial planning and analysis, corporate treasury, investor relations, corporate investments, and tax.
Performance Highlights:
l | Prior to his appointment as CFO, was the Head of Global Corporate Credit and Transaction Banking and then a Strategic Finance Executive in 2015 |
l | Successfully transitioned to our company’s management team and engaged and built relationships with investor communities and regulators |
l | Maintained a strong balance sheet with record capital and liquidity levels; exceeded targets for U.S. supplementary leverage ratios and time-to-required funding |
l | Aided upgrades in sell-side analysts’ rating of our company from “sell” to “buy” through valuation calls and improved company performance |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 37 |
COMPENSATION DISCUSSION AND ANALYSIS
GEOFFREY S. GREENER |
Chief Risk Officer |
Mr. Greener is responsible for overseeing the governance and strategy for global risk management for our company, including relationships with key regulators and supervisory institutions worldwide. In addition, Mr. Greener assumed responsibility for our global compliance function in January 2015.
Performance Highlights:
l | Enhanced risk management routines across our company through his leadership of the Management Risk Committee, as well as his dual reporting to the Board’s Enterprise Risk Committee |
l | Deepened and strengthened our culture of pro-active risk management through numerous improvements, including implementation of a new risk identification process, and improved model risk management and global compliance programs |
l | Realigned the risk management organization and increased talent resulting in more effective and efficient management of all types of risk across the company |
l | Supported the company’s responsible growth strategy by encouraging focus on strong client selection within our risk appetite |
l | Significant engagement with regulators to drive efficiency and effectiveness in managing risk |
TERRENCE P. LAUGHLIN |
Vice Chairman and Head of Global Wealth & Investment Management |
In late 2015, Mr. Laughlin transitioned to his current position of Vice Chairman and Head of Global Wealth & Investment Management. Prior to this, Mr. Laughlin was the President of Strategic Initiatives with responsibility for Global Corporate Strategy, LAS, and our company’s market engagement activities. Mr. Laughlin also is responsible for our U.K. credit card business.
Performance Highlights:
l | Successfully assumed responsibility for the wealth management business, ending the year with an increase in deposits, loans and leases, and maintaining relatively steady client balances despite market declines |
l | Drove integration across lines of business and control functions, resulting in successful resubmission of CCAR and improved process for the future |
l | Strengthened processes across lines of business to drive company referrals (up 19% in 2015) and enhanced risk management controls in local markets, resulting in improved customer satisfaction |
l | Streamlined the LAS organization, resulting in 33% reduction in noninterest expenses, excluding litigation,(1) and improved the strength of the balance sheet through the reduction of Criticized Assets/Nonperforming Loans |
l | Oversaw the divestiture of our international wealth management business, serves on the board for Bank of America Merchant Services, representing the firm on the joint venture, and has leadership over our U.K. Card business |
For additional details on LAS performance, see “2015 Company & Line of Business Performance” on page 31.
(1) | Not a financial measure under generally accepted accounting principles (GAAP). On a GAAP basis noninterest expense for LAS was down 78%. |
38 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS
THOMAS K. MONTAG |
Chief Operating Officer |
Mr. Montag is responsible for all of our businesses that serve large companies and institutional investors in over 100 countries, including relationships with 96% of the U.S. Fortune 1000 companies and nearly 81% of the Fortune Global 500. Mr. Montag also manages our business banking, global research, and global markets sales and trading businesses.
Performance Highlights:
l | Led businesses serving as a primary dealer in 17 countries with access to 100+ exchanges, trading more than 145 currency pairs |
l | Continued to receive industry-wide recognition for business performance |
O Named “Top Global Research Firm” by Institutional Investor for the 5th straight year
O #1 U.S. Large Corporate Banking market penetration by Greenwich
O #3 in reported Investment Banking fees by Dealogic
l | Continued to optimize client coverage across 90 markets and 10,000 accounts to align to our most strategic clients and prospects |
l | Deepened client relationships in Global Banking and Global Markets with a focus on responsible growth |
l | Championed focus on conduct to continue to build leadership accountability within his businesses |
For additional details on Global Banking and Global Markets performance, see “2015 Company & Line of Business Performance” on page 31.
BRUCE R. THOMPSON |
Former Chief Financial Officer |
Mr. Thompson was the Chief Financial Officer through July 2015, after which he continued as a key member of our company’s executive management team, and is currently serving as Vice Chairman in Global Banking and Global Markets.
Performance Highlights:
l | Built a strong balance sheet with record level of capital and liquidity levels; exceeded targets for U.S. supplementary leverage ratios and time-to-required funding |
l | Increased capital returned to stockholders to $4.5 billion via common stock repurchases and dividends |
l | Instilled greater confidence with investors and analysts through his role as primary spokesman for our company through July 2015 and his active engagement for the rest of the year |
l | Displayed strong leadership and fiduciary responsibility for our company and investors by ensuring a smooth transition to Mr. Donofrio |
DAVID C. DARNELL |
Former Vice Chairman and Head of Global Wealth & Investment Management |
In 2015, Mr. Darnell was responsible for the bank’s Global Wealth & Investment Management division, which includes Merrill Lynch Wealth Management and U.S. Trust. Mr. Darnell also worked across our company to execute our customer strategy and develop relationships with key clients throughout the United States. Mr. Darnell is retiring in 2016.
Performance Highlights:
l | Led the wealth management businesses with $2.5 trillion in total client balances and more than 18,000 Wealth Advisors |
l | Continued to drive focus on deepening customer relationships by increasing inbound and outbound referrals in his organization through strong leadership and accountability |
l | Continued focus on identifying and mitigating business risks |
l | Strategically invested in advisor development programs and recruitment, resulting in 5% increase in the number of Wealth Advisors and achieving near historically low advisor attrition |
For additional details on Global Wealth & Investment Management performance, see “2015 Company & Line of Business Performance” on page 31.
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 39 |
COMPENSATION DISCUSSION AND ANALYSIS
c. 2015 Compensation Decisions
For 2015, our Compensation and Benefits Committee continued to emphasize equity-based awards and did not change our named executive officers’ base salaries. The Committee determined 2015 variable compensation in February 2016 after completing its review of annual performance as described in “Pay Evaluation & Decision Process” on page 36. The following table summarizes performance year 2015 compensation:
Name | Base Salary ($) | Annual Cash Incentive ($) | Cash-Settled Units ($) | Performance Units ($) | Time-Based Restricted Stock Units ($) | Total ($) | ||||||||||||||||||
Brian T. Moynihan | 1,500,000 | — | 4,350,000 | 7,250,000 | 2,900,000 | 16,000,000 | ||||||||||||||||||
Paul M. Donofrio | 850,000 | 3,860,000 | — | 2,895,000 | 2,895,000 | 10,500,000 | ||||||||||||||||||
Geoffrey S. Greener | 850,000 | 3,360,000 | — | 2,520,000 | 2,520,000 | 9,250,000 | ||||||||||||||||||
Terrence P. Laughlin | 850,000 | 3,460,000 | — | 2,595,000 | 2,595,000 | 9,500,000 | ||||||||||||||||||
Thomas K. Montag | 1,000,000 | 5,800,000 | — | 4,350,000 | 4,350,000 | 15,500,000 | ||||||||||||||||||
Bruce R. Thompson | 850,000 | 3,960,000 | — | 2,970,000 | 2,970,000 | 10,750,000 | ||||||||||||||||||
David C. Darnell | 1,000,000 | 3,200,000 | — | — | 4,800,000 | 9,000,000 |
Note: Some of the 2015 compensation above differs from the Summary Compensation Table on page 44. SEC rules require that the Summary Compensation Table include equity compensation in the year granted, while the Committee awards equity compensation after the performance year. Therefore, equity-based incentives granted in 2015 for the 2014 performance year are shown in the Summary Compensation Table as 2015 compensation. The equity-based incentives above were granted in 2016 for the 2015 performance year. The Summary Compensation Table also includes other elements of compensation not shown in the table above.
For a description of the pay components above, see “Executive Pay Components & Variable Pay Mix” on page 33.
d. Goals for Performance Restricted Stock Units
The Performance Restricted Stock Units (PRSUs) granted in February 2016 (based on 2015 performance) may bere-earned by meeting certain return on assets (ROA) and adjusted tangible book value (TBV) growth goals over a three-year performance period from 2016 to 2018. If the minimum goals are not met at the end of the performance period, the PRSUs will be forfeited without making any payment.
The PRSUs’ performance metrics encourage focus on the efficient generation of net income for the long-term benefit of our stockholders. Under a hypothetical scenario, if our 2015 year-end assets of $2.14 trillion remained constant during the performance period, our company would need to earn $50.4 billion in aggregate net income from 2016-2018 to achieve the PRSUs’ 100% target goal of a three-year average ROA of 80 bps. To illustrate the impact of the company’s performance on the vesting and value of PRSUs, see the performance results for prior period awards under “Results for Performance Restricted Stock Units” on page 41.
The performance year 2015 PRSU goals are outlined in the chart below:
Three-year Average ROA(1) (50% Weighting) | Three-year Average Growth in Adjusted TBV(2) (50% Weighting) | |||||||||||||||||
Goal | % Earned | Goal | % Earned | |||||||||||||||
Less than 50bps | 0 | % | Less than 5.25 | % | 0 | % | ||||||||||||
50bps | 33 1⁄3 | % | 5.25 | % | 33 1⁄3 | % | ||||||||||||
65bps | 66 2⁄3 | % | 7.00 | % | 66 2⁄3 | % | ||||||||||||
80bps | 100 | % | 8.50 | % | 100 | % | ||||||||||||
100bps | 125 | % | 11.50 | % | 125 | % |
(1) | Three-year Average ROA means the average “return on assets” for the three calendar years in the performance period. For this purpose, “return on assets” means our return on average assets as reported in our Form 10-K, determined in accordance with GAAP in effect as of January 1, 2016. |
(2) | Three-year Average Growth in Adjusted TBV means the average for the three-year performance period of the year-over-year percentage change in “adjusted tangible book value” measured as of December 31 each year. For this purpose, “adjusted tangible book value” will equal our total common stockholders’ equity, less the impact of any capital actions approved by the Federal Reserve Board and our company’s Board and taken by our company during the performance period, and less the sum of the carrying value of (i) goodwill, and (ii) intangible assets excluding mortgage servicing rights, adjusted for (iii) deferred tax liabilities directly related to (i) and (ii). These amounts are to be measured using the ending balance as of December 31 each year and determined in accordance with GAAP in effect as of January 1, 2016. |
40 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS
PRSUs are forfeited if results are below the minimum goals. Any portion of the PRSUs achieved above 33 1⁄3% will be interpolated on a straight-line basis between the two nearest goals. For any portion of the PRSU goals achieved up to 100%, payment will be made at the end of the performance period. For any portion of the PRSU goals achieved above 100%, up to a maximum of 125%, payment will be deferred an additional two years.
a. Results for Performance Restricted Stock Units
Our named executive officers were granted Performance Restricted Stock Units (PRSUs) in February of each year from 2011 through 2015 as set forth in the table below, except for Mr. Donofrio, Mr. Greener, and Mr. Laughlin. Mr. Donofrio, appointed Chief Financial Officer in 2015, has none of the PRSUs shown in the table below. Mr. Greener, appointed Chief Risk Officer in 2014, received only the 2015 PRSUs. Mr. Laughlin, who was first appointed as an executive officer in 2011, was awarded all except the 2011 PRSUs.
l | At the end of 2015, the 2011, 2012, and 2013 PRSUs were paid based on the achievement of the applicable company performance goals |
O | The 2011 and 2013 PRSUs completed their performance periods at the end of 2015 and any unearned PRSUs have been forfeited. Results for the 2013 PRSUs were below target and are reflected in the final payout |
O | The PRSU results were mainly impacted by the financial effect of legacy issues from 2012 through 2014, resulting in substantial discounts to previously earned awards |
O | Our PRSUs must be re-earned over the performance period, and results are not adjusted for the impact of legacy litigation, fines, penalties, credit costs, and other unanticipated events. Therefore, the PRSU vesting results align management interests with those of stockholders |
The key features of these PRSUs by performance year (PY) are shown below:
PRSU Results | ||||||||||
PRSU Award | Performance Period | Performance Measure | % Earned through 2014 | % Earned in 2015 | Total % Earned | |||||
2011 PRSUs (for PY2010) |
2011 – 2015
(Completed) | Return on Assets (Rolling four-quarters) |
40% |
51% (76bps) |
91% (9% forfeited) | |||||
2012 PRSUs (for PY2011) | 2012 – 2016 | 40% |
51% (76bps) |
91% | ||||||
2013 PRSUs (for PY2012) | 2013 – 2015
(Completed) | 50% three-year average Return
| Not Applicable(1) | 42% (51bps ROA; 6% growth in | 42% (58% forfeited) | |||||
2014 PRSUs
(for PY2013) | 2014 – 2016 | 50% three-year average Growth in Adjusted Tangible Book Value (TBV) | Not Applicable(1) | |||||||
2015 PRSUs
(for PY2014) | 2015 – 2017 |
(1) | Award cannot be earned until the conclusion of the three-year performance period. |
The performance results above have been determined for the applicable performance period in accordance with the award terms, which provide for calculation under the GAAP standards in place as of January 1 of the year the award was granted. As a result, the performance results do not reflect any subsequent changes to GAAP, and may differ from the results reported under GAAP in our company’s audited financial statements.
BANK OF AMERICA CORPORATION
| 2016 PROXY STATEMENT
| 41 |
COMPENSATION DISCUSSION AND ANALYSIS
b. Competitor Groups
Our Compensation and Benefits Committee periodically reviews compensation practices of three competitor groups:
l | Our primary competitor group includes five leading U.S. financial institutions—we compete directly with them for customers, employees, and investors, and they follow similar economic cycles to our own |
l | Leading international financial institutions for perspectives on the global financial services industry |
l | Leading U.S.-headquartered companies of similar size and global scope for perspective across industries |
The Committee used the following 2015 competitor groups periodically to evaluate market trends in executive compensation and relative performance, but without any formulaic benchmarking.
Primary Competitor Group: Leading U.S. Financial Institutions | Leading International Financial Institutions | Leading Group of Global Companies Headquartered in the U.S. Spanning all Industries | ||||
Citigroup | Banco Santander | Abbott Laboratories | IBM | |||
Goldman Sachs | Barclays | AT&T | Intel | |||
JPMorgan Chase | BNP Paribas | Chevron | Johnson & Johnson | |||
Morgan Stanley | Credit Suisse | Cisco | PepsiCo | |||
Wells Fargo | Deutsche Bank | Coca-Cola | Pfizer | |||
HSBC | ConocoPhillips | Philip Morris International | ||||
Royal Bank of Scotland | Exxon Mobil | Procter & Gamble | ||||
UBS | General Electric | Verizon | ||||
Hewlett-Packard Company | Wal-Mart |
c. Retirement Benefits
We provide our named executive officers the opportunity to save for their retirement via employee and employer contributions to qualified and nonqualified defined contribution plans on the same terms as other U.S.-based salaried employees. These plans help us attract and retain key people by providing a means to save for retirement.
Certain named executive officers also participate in various frozen qualified and nonqualified defined benefit pension plans. For more information about these plans, see “Pension Benefits Table” and “Nonqualified Deferred Compensation Table” on pages 52 and 54, respectively.
d. Health and Welfare Benefits & Perquisites
Our named executive officers receive health and welfare benefits, such as medical, life, and long-term disability coverage, under plans generally available to all other U.S.-based salaried employees. Because we have internal expertise on financial advisory matters, we do not charge fees to our named executive officers for their use of our financial advisory services for personal needs. We also may provide certain named executive officers with secured parking. In limited circumstances, we allow spouses to accompany executives traveling for a business-related purpose and pay for other incidental expenses. Our policy provides for the use of corporate aircraft by senior management for approved emergency travel. Pursuant to his aircraft time-sharing agreement, our CEO reimburses our company for costs related to his use of our aircraft for commuting. Mr. Donofrio is covered by our Tax Equalization Program because of his temporary assignment during 2010-2011 to the United Kingdom. Under this program, our company is responsible for additional U.S. or foreign taxes due, if any, as a direct result of an employee’s international assignment, and the employee remains responsible for the amount of taxes incurred had the employee continued to live and work in his or her home country. In recognition of his many years of service, our company also presented Mr. Darnell with certain nonmonetary retirement gifts of company memorabilia.
e. Tax Deductibility of Compensation
Under the Internal Revenue Code, a public company is limited to a $1 million deduction for compensation paid to its CEO or any of its three other most highly compensated executive officers (other than the Chief Financial Officer) who are employed at year-end. This limitation does not apply to compensation that meets the tax code requirements for
42 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS
qualifying performance-based compensation (compensation paid only if the individual’s performance meets pre-established objective goals based on performance criteria approved by stockholders). For 2015, payments of annual cash incentive awards and equity-based incentive awards under the Executive Incentive Compensation Plan, and certain performance restricted stock units under the Bank of America Corporation Key Employee Equity Plan, may satisfy the requirements for deductible compensation, but the Committee retains the discretion to make awards and pay our executives amounts that do not qualify as deductible compensation.
COMPENSATION AND BENEFITS COMMITTEE REPORT
Our Compensation and Benefits Committee has reviewed and discussed with management the Compensation Discussion and Analysis that immediately precedes this report. Based on this review and discussion, our Compensation and Benefits Committee has recommended to our Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our annual report on Form 10-K for the year ended December 31, 2015.
Submitted by the
Compensation and Benefits Committee of the Board:
Monica C. Lozano, Chair
Pierre J.P. de Weck
Arnold W. Donald
Linda P. Hudson
R. David Yost
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 43 |
EXECUTIVE COMPENSATION
The following table shows compensation paid, accrued, or awarded with respect to our named executive officers during the years indicated:
2015 Summary Compensation Table(1)
Name and Principal Position(2) | Year | Salary ($)(3) | Bonus ($)(3)(4) | Stock Awards ($)(5) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(7) | Total ($) | ||||||||||||||||||||||
Brian T. Moynihan | ||||||||||||||||||||||||||||||
Chairman and Chief Executive Officer | 2015 | 1,500,000 | 0 | 11,791,073 | 0 | 100,505 | 431,776 | 13,823,354 | ||||||||||||||||||||||
2014 | 1,500,000 | 0 | 12,545,091 | 0 | 764,849 | 532,459 | 15,342,399 | |||||||||||||||||||||||
2013
|
| 1,454,167
|
|
| 0
|
|
| 11,142,643
|
|
| 0
|
|
| 44,796
|
|
| 497,751
|
|
| 13,139,357
|
| |||||||||
Paul M. Donofrio | ||||||||||||||||||||||||||||||
Chief Financial Officer
| 2015
|
| 645,833
|
|
| 3,860,000
|
|
| 5,959,618
|
|
| 0
|
|
| 0
|
|
| 124,937
|
|
| 10,590,388
|
| ||||||||
Geoffrey S. Greener | ||||||||||||||||||||||||||||||
Chief Risk Officer | 2015
|
| 850,000
|
|
| 3,360,000
|
|
| 4,398,594
|
|
| 0
|
|
| 1,013
|
|
| 49,446
|
|
| 8,659,053
|
| ||||||||
Terrence P. Laughlin | ||||||||||||||||||||||||||||||
Vice Chairman and Head of Global Wealth & Investment Management | 2015
|
| 850,000
|
|
| 3,460,000
|
|
| 4,398,594
|
|
| 0
|
|
| 0
|
|
| 51,506
|
|
| 8,760,100
|
| ||||||||
Thomas K. Montag | ||||||||||||||||||||||||||||||
Chief Operating Officer | 2015 | 1,000,000 | 5,800,000 | 7,997,416 | 0 | 0 | 17,500 | 14,814,916 | ||||||||||||||||||||||
2014 | 1,000,000 | 5,200,000 | 8,731,394 | 0 | 0 | 17,500 | 14,948,894 | |||||||||||||||||||||||
2013
|
| 987,500
|
|
| 5,800,000
|
|
| 8,258,655
|
|
| 0
|
|
| 0
|
|
| 20,146
|
|
| 15,066,301
|
| |||||||||
Bruce R. Thompson | ||||||||||||||||||||||||||||||
Former Chief Financial Officer | 2015 | 850,000 | 3,960,000 | 6,090,356 | 0 | 19,545 | 53,011 | 10,972,912 | ||||||||||||||||||||||
2014 | 850,000 | 3,960,000 | 6,714,134 | 0 | 18,997 | 56,914 | 11,600,045 | |||||||||||||||||||||||
2013
|
| 850,000
|
|
| 4,460,000
|
|
| 6,141,050
|
|
| 0
|
|
| 19,599
|
|
| 52,497
|
|
| 11,523,146
|
| |||||||||
David C. Darnell | ||||||||||||||||||||||||||||||
Former Vice Chairman and Head of Global Wealth & Investment Management | 2015 | 1,000,000 | 3,200,000 | 4,767,702 | 0 | 331,910 | 54,671 | 9,354,283 | ||||||||||||||||||||||
2014 | 1,000,000 | 3,100,000 | 5,419,484 | 0 | 408,690 | 56,164 | 9,984,338 | |||||||||||||||||||||||
2013 | 987,500 | 3,600,000 | 5,233,508 | 0 | 538,883 | 53,384 | 10,413,275 | |||||||||||||||||||||||
(1) | SEC rules require the Summary Compensation Table to include in each year’s amount the aggregate grant date fair value of stock awards granted during the year. Typically, we grant stock awards early in the year as part of total year-end compensation awarded for prior year performance. As a result, the amounts for stock awards generally appear in the Summary Compensation Table for the year after the performance year upon which they were based, and therefore the Summary Compensation Table does not fully reflect our Compensation and Benefits Committee’s view of its pay-for-performance executive compensation program for a particular performance year. For example, amounts shown as 2015 compensation in the “Stock Awards” column reflect stock awards granted in February 2015 for 2014 performance. See “Compensation Discussion and Analysis” on page 29 for a discussion about how the Committee viewed its 2015 compensation decisions for the named executive officers. |
(2) | Mr. Thompson served as Chief Financial Officer until August 1, 2015, at which time Mr. Donofrio succeeded him. Prior to that time, Mr. Donofrio served as the Head of Global Corporate Credit and Transaction Banking and then as a Strategic Finance Executive in 2015. Mr. Laughlin served as President of Strategic Initiatives until July 23, 2015 and then as Vice Chairman during the remainder of 2015. Mr. Darnell served as Vice Chairman and Head of Global Wealth & Investment Management during all of 2015, and then retired from his executive officer position as of January 1, 2016. All other listed named executive officer positions are those held as of December 31, 2015. |
(3) | Includes any amounts deferred under our qualified and nonqualified 401(k) plans. See “Nonqualified Deferred Compensation Table” on page 54. |
(4) | Amounts reflect annual cash incentive awards received by the named executive officers for performance in the applicable year. |
44 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
EXECUTIVE COMPENSATION
(5) | Amounts shown are the aggregate grant date fair value of CRSUs, PRSUs, and TRSUs granted in the year indicated. Grants of stock-based awards (excluding CRSUs) include the right to receive cash dividends only if and when the underlying award becomes vested. The grant date fair value is based on the closing price of our common stock on the applicable grant date ($16.61). For the PRSUs granted in 2015, the actual number of PRSUs earned (0% up to the maximum level of 125%) will depend on our company’s future achievement of specific ROA and growth in adjusted TBV goals over a three-year performance period ending December 31, 2017. Values in the Stock Awards column assume that 100% (the target level) of the PRSUs granted would vest as the probable outcome for purposes of determining the grant date fair value. See “Grants of Plan-Based Awards Table” on page 47 for a description of the CRSUs, PRSUs, and TRSUs granted in 2015. The following table shows the grant date fair value of the PRSUs included in the Stock Awards column at the level assumed as the probable outcome (100%, or the target level) and at the maximum (125%) level: |
Name | Target PRSUs ($) | Maximum PRSUs ($) | ||||||||
Brian T. Moynihan | 5,895,537 | 7,369,409 | ||||||||
Paul M. Donofrio | — | — | ||||||||
Geoffrey S. Greener | 2,199,297 | 2,749,121 | ||||||||
Terrence P. Laughlin | 2,199,297 | 2,749,121 | ||||||||
Thomas K. Montag | 3,998,708 | 4,998,381 | ||||||||
Bruce R. Thompson | 3,045,178 | 3,806,464 | ||||||||
David C. Darnell | 2,383,851 | 2,979,801 |
(6) | The following table shows the change in pension value and the amount of any above-market earnings on nonqualified deferred compensation for the named executive officers: |
Name | Change in Pension Value ($) | Above-Market ($) | ||||||||
Brian T. Moynihan | 44,313 | 56,192 | ||||||||
Paul M. Donofrio | (4,856 | ) | 0 | |||||||
Geoffrey S. Greener | 1,013 | 0 | ||||||||
Terrence P. Laughlin | (20,176 | ) | 0 | |||||||
Thomas K. Montag | 0 | 0 | ||||||||
Bruce R. Thompson | 19,545 | 0 | ||||||||
David C. Darnell | 331,910 | 0 |
The “Change in Pension Value” equals the change in the actuarial present value of all pension benefits from December 31, 2014 to December 31, 2015. For this purpose, in accordance with SEC rules, the present value was determined using the same assumptions applicable for valuing pension benefits for purposes of our financial statements. See “Pension Benefits Table” on page 52. |
Effective June 30, 2012, Bank of America froze pension plan accruals under all of its U.S. pension plans for all employees. As a result, the named executive officers are not accruing any additional pension benefits with respect to any compensation or service after June 30, 2012. |
For Mr. Moynihan and Mr. Darnell, the amounts reported above under “Change in Pension Value” result primarily because each has frozen annuity benefits under legacy SERPs. The monthly annuity benefit amount for each has not changed since the SERPs were frozen. However, the present value of their benefits increases each year because each is a year closer to retirement age. |
The above-market earnings on nonqualified deferred compensation result from Mr. Moynihan’s participation in a legacy FleetBoston deferred compensation plan that includes a 12% annual interest crediting rate for certain prior year deferrals. See “Nonqualified Deferred Compensation Table” on page 54. |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 45 |
EXECUTIVE COMPENSATION
(7) | The following table shows all amounts included in the “All Other Compensation” column for each named executive officer in 2015: |
2015 All Other Compensation Table
Name | Benefit, Tax, ($) | Use of ($) | Matching & Other Employer Plans ($) | Tax Equalization ($) | Secured Parking/ Related Gifts & Guest Travel ($) | Total ($) | ||||||
Brian T. Moynihan | 29,763 | 380,323 | 20,000 | — | 1,690 | 431,776 | ||||||
Paul M. Donofrio | 29,763 | 0 | 20,000 | 74,926 | 248 | 124,937 | ||||||
Geoffrey S. Greener | 29,763 | 0 | 17,500 | — | 2,183 | 49,446 | ||||||
Terrence P. Laughlin | 29,763 | 0 | 20,000 | — | 1,743 | 51,506 | ||||||
Thomas K. Montag | 0 | 0 | 17,500 | — | 0 | 17,500 | ||||||
Bruce R. Thompson | 29,763 | 0 | 20,000 | — | 3,248 | 53,011 | ||||||
David C. Darnell | 29,763 | 0 | 20,000 | — | 4,908 | 54,671 |
For certain amounts reported in the table, the incremental cost to us in providing the benefits differs from the out-of-pocket cost and is determined as follows:
Benefit
|
| |
Benefit, Tax, and Financial Advisory Services | Determined using a method that takes into account our actual direct expenses (such as rent, compensation and benefits, and travel) paid with respect to our employees who provide benefit, tax, and financial advisory services to our executive officers and other eligible executives. | |
Use of Corporate Aircraft | For corporate-owned or leased aircraft, determined using a method that takes into account all variable costs such as landing fees, aircraft fuel expense, and plane repositioning costs. Since our aircraft are used primarily for business travel, we do not include the fixed costs that do not change based on usage, such as crew salaries and the acquisition costs of corporate-owned or leased aircraft. For aircraft provided by a third-party vendor, determined using a method that takes into account the contracted per-hour costs, fuel charges, segment fees, and taxes, as well as a proportional share of the monthly management fee and insurance costs. Aggregate incremental cost, if any, of travel by the executive officer’s spouse or guest when accompanying the executive officer for business-related purposes also is included. | |
Secured Parking | Determined based upon the monthly rental that we would charge to third parties for comparable parking in the same corporate-owned parking structure. |
All use of our corporate aircraft by our named executive officers in 2015 was consistent with our policy. The amount shown for Mr. Moynihan for use of corporate aircraft reflects the aggregate incremental cost to our company for elements of business and/or business development related flights. While we generally do not consider such amounts as compensation to Mr. Moynihan, SEC rules require that we include in the Summary Compensation Table the value of certain flights or portions of certain flights as a perquisite. Under his aircraft time-sharing agreement, during 2015 Mr. Moynihan reimbursed our company for the incremental cost of certain other flights on our corporate aircraft.
The amount shown for Mr. Donofrio as a Tax Equalization represents expatriate tax equalization payments from trailing income (e.g., previously granted TRSUs) related to his temporary assignment to the United Kingdom prior to becoming Chief Financial Officer. In accordance with our expatriate program, our company is responsible for foreign or additional U.S. taxes due, if any, as a direct result of an employee’s international assignment, and the employee remains responsible for the amount of taxes incurred had the employee continued to live and work in his or her home country.
The amount shown for Mr. Darnell includes the incremental cost to us of certain nonmonetary gifts of company memorabilia that were presented to him in recognition of his upcoming retirement.
Spouses and guests of named executive officers were invited to our company’s annual strategic planning meeting in November 2015. The table includes any incremental cost to us of any named executive officer’s spouse or guest business-related travel expenses and any other incidental meeting-related expenses.
The table does not include any amounts for personal benefits provided to our named executive officers for which we believe there is no aggregate incremental cost to us, including use of corporate-owned or -leased apartments and
46 |
| BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
EXECUTIVE COMPENSATION
vehicles, and travel by spouses or guests on corporate or third-party vendor aircraft and the use of ground transportation and shared lodging when accompanying an executive for a business-related purpose. Also, in connection with our ongoing support of colleges and universities and their scholarly pursuits on topics of importance to society and our industry, our company sponsored a gift of $1 million to endow a chair at Wake Forest University in business ethics and culture. In recognition of Mr. Darnell’s substantial service to our company, his upcoming retirement, and his affiliation with the university, the chair is to be named in his honor. Mr. Darnell did not have any prior awareness of this gift, and he will not receive any pecuniary benefit from it; therefore, we do not consider it to be reportable compensation to him.
GRANTS OF PLAN-BASED AWARDS TABLE
The following table shows additional information regarding CRSUs, PRSUs, and TRSUs granted to our named executive officers in February 2015 that were awarded for 2014 performance. For information about equity-based awards granted to our named executive officers in February 2016 for performance during 2015 see “Compensation Discussion and Analysis” beginning on page 29.
Grants of Plan-Based Awards in 2015
Name | Award Type | Grant Date | Approval Date | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards | ||||||||||||||||||||||||||||||||||
Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||
Brian T. Moynihan | CRSU | 2/13/2015 | 2/10/2015 | — | — | — | 212,963 | 3,537,315 | ||||||||||||||||||||||||||||||||
PRSU | 2/13/2015 | 2/10/2015 | 118,313 | 354,939 | 443,673 | — | 5,895,537 | |||||||||||||||||||||||||||||||||
TRSU | 2/13/2015 | 2/10/2015 | — | — | — | 141,976 | 2,358,221 | |||||||||||||||||||||||||||||||||
Paul M. Donofrio(2) | TRSU | 2/13/2015 | 1/28/2015 | — | — | — | 358,797 | 5,959,618 | ||||||||||||||||||||||||||||||||
Geoffrey S. Greener | PRSU | 2/13/2015 | 2/9/2015 | 44,136 | 132,408 | 165,510 | — | 2,199,297 | ||||||||||||||||||||||||||||||||
TRSU | 2/13/2015 | 2/9/2015 | — | — | — | 132,408 | 2,199,297 | |||||||||||||||||||||||||||||||||
Terrence P. Laughlin | PRSU | 2/13/2015 | 2/9/2015 | 44,136 | 132,408 | 165,510 | — | 2,199,297 | ||||||||||||||||||||||||||||||||
TRSU | 2/13/2015 | 2/9/2015 | — | — | — | 132,408 | 2,199,297 | |||||||||||||||||||||||||||||||||
Thomas K. Montag | PRSU | 2/13/2015 | 2/9/2015 | 80,247 | 240,741 | 300,926 | — | 3,998,708 | ||||||||||||||||||||||||||||||||
TRSU | 2/13/2015 | 2/9/2015 | — | — | — | 240,741 | 3,998,708 | |||||||||||||||||||||||||||||||||
Bruce R. Thompson | PRSU | 2/13/2015 | 2/9/2015 | 61,111 | 183,334 | 229,167 | — | 3,045,178 | ||||||||||||||||||||||||||||||||
TRSU | 2/13/2015 | 2/9/2015 | — | — | — | 183,334 | 3,045,178 | |||||||||||||||||||||||||||||||||
David C. Darnell | PRSU | 2/13/2015 | 2/9/2015 | 47,839 | 143,519 | 179,398 | — | 2,383,851 | ||||||||||||||||||||||||||||||||
TRSU | 2/13/2015 | 2/9/2015 | — | — | — | 143,519 | 2,383,851 |
(1) | The number of CRSUs, PRSUs, and TRSUs granted in 2015 was calculated by dividing the original award value determined by our Compensation and Benefits Committee by the average closing price of our common stock for the 10-day period ending on, and including, the grant date. Because the grant date fair value is based on the closing price of our common stock on the grant date ($16.61), the dollar amount of the grant date fair value will differ slightly from the original award value determined by our Compensation and Benefits Committee. For additional information about the applicable assumptions for determining the grant date fair value of restricted stock awards, see footnote 5 to the Summary Compensation Table. |
(2) | Mr. Donofrio was not yet an executive officer of our company when his equity-based awards for performance year 2014 were granted. Consistent with our compensation practices for similarly situated executives, his February 2015 equity-based awards consisted solely of cash-settled TRSUs. |
EIC Plan Awards. The Executive Incentive Compensation Plan (EIC Plan) allows us to provide annual incentive compensation to our named executive officers that may be deductible by our company without regard to the $1 million deduction limit under Section 162(m) of the Internal Revenue Code. Under the EIC Plan, our stockholders have authorized an annual award for each participant of up to 0.20% of our net income. The Committee selects the participants for each performance year, and can award participants any amount up to the maximum in any combination of cash, restricted stock, or restricted stock units.
The cash awards for performance year 2015 that are shown under the 2015 “Bonus” column in the Summary Compensation Table were made under the EIC Plan for participating named executive officers, which included each named executive officer except Mr. Donofrio. The CRSU and TRSU awards for performance year 2014 that are included under the 2015 “Stock Awards” column in the Summary Compensation Table also were made under the EIC Plan for participating named executive officers, which included each named executive officer except Mr. Donofrio and Mr. Greener.
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 47 |
EXECUTIVE COMPENSATION
Equity-based Awards Granted in 2015 for Performance in 2014. The following describes the material terms of the CRSUs, PRSUs, and TRSUs granted to our named executive officers in February 2015 for their performance in 2014:
Clawbacks and Covenants Applicable to All Equity-based Awards
l | Each equity-based award may be forfeited or recouped for detrimental conduct or the violation of anti-hedging/derivative transactions policies |
l | Awards also are subject to recoupment (i) under our Incentive Compensation Recoupment Policy, and (ii) under any policies we may adopt to implement final, released, and effective rules implementing Section 954 of the Dodd-Frank Act |
CRSUs (only for Mr. Moynihan)
l | This CRSU award granted in February 2015 vests and pays monthly in cash over 12 months from March 2015 through February 2016, based on the closing price of our common stock as of the 13th day of each month |
l | Any unpaid portion of the award is vested in full and immediately paid in case of termination of employment due to death or disability, and is forfeited for any other termination of employment during the vesting period |
PRSUs
l | The PRSUs granted in February 2015 are re-earned based on return on assets (ROA) and growth in adjusted tangible book value (TBV) goals over a three-year performance period from January 1, 2015 through December 31, 2017. The following highlights the performance metrics and goals of these PRSU awards: |
O | “Three-year Average ROA” means the average “return on assets” for the three calendar years in the performance period. For this purpose, “return on assets” means our return on average assets as reported in our Form 10-K, determined in accordance with GAAP in effect as of January 1, 2015 |
O | “Three-year Average Growth in Adjusted TBV” means the average for the three-year performance period of the year-over-year percentage change in “adjusted tangible book value” measured as of December 31 each year. For this purpose, “adjusted tangible book value” will equal our total common stockholders’ equity less the impact of any capital actions approved by the Federal Reserve Board and our company’s Board and taken by our company during the performance period, and less the sum of the carrying value of (i) goodwill, and (ii) intangible assets excluding mortgage servicing rights, adjusted for (iii) deferred tax liabilities directly related to (i) and (ii). These amounts are to be measured using the ending balance as of December 31 each year and determined in accordance with GAAP in effect as of January 1, 2015 |
O | The awards are equally weighted with 50% based on ROA goals and 50% based on adjusted TBV growth goals. The portion of the PRSUs earned for the performance period depends on the level of our average ROA and adjusted TBV growth. No PRSUs will be earned if results are below the minimum goals. Results above the 33 1⁄3% goal will be interpolated on a straight-line basis between the two nearest goals |
Three-year Average ROA (50% Weighting) | Three-year Average Growth in Adjusted TBV (50% Weighting) | |||||
Goal | % Earned | Goal | % Earned | |||
Less than 50bps | 0% | Less than 5.25% | 0% | |||
50bps (threshold) | 33 1⁄3% | 5.25% (threshold) | 33 1⁄3% | |||
65bps | 66 2⁄3% | 7.00% | 66 2⁄3% | |||
80bps (target) | 100% | 8.50% (target) | 100% | |||
100bps (maximum) | 125% | 11.50% (maximum) | 125% |
l | Any PRSUs earned for the performance period up to the 100% goal will be settled on March 1, 2018 in cash based on the closing price of our common stock on the settlement date. Any portion of the PRSUs earned above the 100% goal will be settled in cash on March 1, 2020 |
l | Cash dividend equivalents are accrued and paid only if and when the underlying units become vested and payable |
48 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
EXECUTIVE COMPENSATION
l | To encourage sustainable, long-term performance, PRSUs are subject to performance-based cancellation, and payment on a settlement date is specifically conditioned on our company or the applicable lines of business remaining profitable over the performance period. If a loss is determined to have occurred, our Compensation and Benefits Committee, together with key control functions, will review losses and the executive officer’s accountability. The Committee will then make a final determination to either take no action or to cancel all or a portion of the part of the executive officer’s award otherwise payable as of the applicable settlement date. All such determinations will be final and binding |
l | The following chart shows how the PRSUs are treated if a named executive officer terminates employment: |
Reason for Termination | Impact on Vesting and Payment Date | |
Death | Full vesting at the maximum level; immediate payment | |
Disability | Continue to earn and pay per schedule, subject to return on assets and adjusted TBV performance, covenants,(1) and performance-based cancellation | |
Involuntary for cause(2) | Cancelled | |
Involuntary without cause or voluntary | Cancelled, unless eligible for Qualifying Termination | |
Qualifying Termination(3) | Continue to earn and pay per schedule, provided the executive officer does not subsequently work for a competitive business and annually provides a written certification of compliance and subject to return on assets and adjusted TBV performance, covenants,(1) and performance-based cancellation |
(1) | Covenants for vesting purposes are nonsolicitation, detrimental conduct, and compliance with anti-hedging/derivative transactions policies. Awards also are subject to recoupment (i) under our Incentive Compensation Recoupment Policy, (ii) in case of violation of covenants regarding detrimental conduct and anti-hedging/derivative transactions policies, and (iii) any policies we may adopt to implement final, released, and effective rules implementing Section 954 of the Dodd-Frank Act. |
(2) | For purposes of these awards, “cause” is generally defined as a termination of an employee’s employment if it occurs in conjunction with a determination that the employee has (i) committed an act of fraud or dishonesty in the course of his employment; (ii) been convicted of (or pleaded no contest with respect to) a crime constituting a felony; (iii) failure to perform job function(s), which Bank of America views as being material to their position and the overall business of Bank of America Corporation and its subsidiaries under circumstances where such failure is detrimental to Bank of America Corporation or any subsidiary; (iv) materially breached any written policy applicable to employees of Bank of America Corporation and its subsidiaries, including, but not limited to, the Bank of America Corporation Code of Conduct and General Policy on Insider Trading; or (v) made an unauthorized disclosure of any confidential or proprietary information of Bank of America Corporation or its subsidiaries or has committed any other material violation of Bank of America’s written policy regarding Confidential and Proprietary Information. |
(3) | A Qualifying Termination means any voluntary or involuntary termination (other than for death, disability, or “cause”) after the executive has met certain specified age and/or service requirements. For most of the named executive officers, the executive must have at least 10 years of service and his or her age and years of service must add up to at least 60. Mr. Montag has a special eligibility standard set forth in his offer letter. Currently, each of the named executive officers, except Mr. Greener, meets the applicable requirements for a Qualifying Termination. |
TRSUs to All of the Named Executive Officers
l | The TRSUs granted in February 2015 vest ratably over three years and are, except in the case of the TRSUs granted to Mr. Donofrio, payable in shares of our common stock, net of applicable taxes. The TRSUs granted in February 2015 to Mr. Donofrio settle in cash based on the closing price of our common stock on the settlement date |
l | Cash dividend equivalents are accrued and paid only if and when the underlying units become vested and payable |
l | Treatment upon termination of employment is substantially the same as for the PRSUs noted above |
l | The TRSUs are subject to substantially the same performance-based cancellation as the PRSUs noted above in case of losses during the vesting period |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 49 |
EXECUTIVE COMPENSATION
YEAR-END EQUITY VALUES AND EQUITY EXERCISED OR VESTED TABLE
The following table shows certain information about unexercised options and unvested restricted stock awards as of December 31, 2015:
Outstanding Equity Awards as of December 31, 2015
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option ($) | Option Expiration Date | Number of Shares/ of Stock That Have Not Vested (#) | Market Value of Shares/ Not Vested ($)(1) |
Equity That Have Not Vested (#) |
Equity Incentive Plan Awards: Market of Unearned Shares/ of Stock That Have Not Vested ($)(1) | ||||||||||||||||||||||||
Brian T. Moynihan | 180,000 | — | 44.36 | 2/15/2016 | 316,564 | (2) | 5,327,772 | — | — | |||||||||||||||||||||||
200,000 | — | 53.85 | 2/15/2017 | 271,679 | (3) | 4,572,358 | 47,944 | (4) | 806,898 | |||||||||||||||||||||||
166,667 | — | 42.70 | 2/15/2018 | 194,509 | (5) | 3,273,586 | — | — | ||||||||||||||||||||||||
— | — | — | — | 61,750 | (6) | 1,039,253 | — | — | ||||||||||||||||||||||||
— | — | — | — | 100,161 | (7) | 1,685,710 | 375,601 | (8) | 6,321,365 | |||||||||||||||||||||||
— | — | — | — | 141,976 | (9) | 2,389,456 | 443,673 | (10) | 7,467,017 | |||||||||||||||||||||||
— | — | — | — | 35,494 | (11) | 597,364 | — | — | ||||||||||||||||||||||||
Paul M. Donofrio | 22,680 | — | 44.36 | 2/15/2016 | 166,248 | (6) | 2,797,954 | — | — | |||||||||||||||||||||||
65,100 | — | 53.85 | 2/15/2017 | 224,360 | (7) | 3,775,979 | — | — | ||||||||||||||||||||||||
26,250 | — | 42.70 | 2/15/2018 | 358,797 | (9) | 6,038,554 | — | — | ||||||||||||||||||||||||
Geoffrey S. Greener | — | — | — | — | 85,220 | (6) | 1,434,253 | — | — | |||||||||||||||||||||||
— | — | — | — | 162,260 | (7) | 2,730,836 | — | — | ||||||||||||||||||||||||
— | — | — | — | 132,408 | (9) | 2,228,427 | 165,510 | (10) | 2,785,533 | |||||||||||||||||||||||
Terrence P. Laughlin | — | — | — | — | 178,982 | (3) | 3,012,267 | 31,585 | (4) | 531,576 | ||||||||||||||||||||||
— | — | — | — | 75,515 | (5) | 1,270,917 | — | — | ||||||||||||||||||||||||
— | — | — | — | 59,933 | (6) | 1,008,672 | — | — | ||||||||||||||||||||||||
— | — | — | — | 97,958 | (7) | 1,648,633 | 146,936 | (8) | 2,472,933 | |||||||||||||||||||||||
— | — | — | — | 132,408 | (9) | 2,228,427 | 165,510 | (10) | 2,785,533 | |||||||||||||||||||||||
Thomas K. Montag | 2,102,216 | — | 30.71 | 8/4/2018 | 500,205 | (2) | 8,418,450 | — | — | |||||||||||||||||||||||
— | — | — | — | 468,302 | (3) | 7,881,523 | 82,642 | (4) | 1,390,865 | |||||||||||||||||||||||
— | — | — | — | 192,221 | (5) | 3,235,079 | — | — | ||||||||||||||||||||||||
— | — | — | — | 76,279 | (6) | 1,283,776 | — | — | ||||||||||||||||||||||||
— | — | — | — | 174,280 | (7) | 2,933,132 | 261,419 | (8) | 4,399,682 | |||||||||||||||||||||||
— | — | — | — | 240,741 | (9) | 4,051,671 | 300,926 | (10) | 5,064,585 | |||||||||||||||||||||||
Bruce R. Thompson | 21,000 | — | 44.36 | 2/15/2016 | 255,350 | (2) | 4,297,541 | — | — | |||||||||||||||||||||||
24,500 | — | 53.85 | 2/15/2017 | 352,189 | (3) | 5,927,341 | 62,152 | (4) | 1,046,018 | |||||||||||||||||||||||
81,900 | — | 42.70 | 2/15/2018 | 107,200 | (5) | 1,804,176 | — | — | ||||||||||||||||||||||||
— | — | — | — | 85,080 | (6) | 1,431,896 | — | — | ||||||||||||||||||||||||
— | — | — | — | 134,015 | (7) | 2,255,472 | 201,022 | (8) | 3,383,200 | |||||||||||||||||||||||
— | — | — | — | 183,334 | (9) | 3,085,511 | 229,167 | (10) | 3,856,881 | |||||||||||||||||||||||
David C. Darnell | 105,000 | — | 44.36 | 2/15/2016 | 185,391 | (2) | 3,120,131 | — | — | |||||||||||||||||||||||
105,000 | — | 53.85 | 2/15/2017 | 275,849 | (3) | 4,642,539 | 48,680 | (4) | 819,284 | |||||||||||||||||||||||
78,750 | — | 42.70 | 2/15/2018 | 91,357 | (5) | 1,537,538 | — | — | ||||||||||||||||||||||||
— | — | — | — | 72,507 | (6) | 1,220,293 | — | — | ||||||||||||||||||||||||
— | — | — | — | 108,174 | (7) | 1,820,568 | 162,260 | (8) | 2,730,836 | |||||||||||||||||||||||
— | — | — | — | 143,519 | (9) | 2,415,425 | 179,398 | (10) | 3,019,268 |
(1) | Value is based on the closing price of our common stock on December 31, 2015, which was $16.83 per share. |
(2) | 2011 PRSUs (Performance Achieved). Represents restricted stock units issued upon satisfaction of performance above threshold and that were outstanding as of December 31, 2015. These restricted stock units vested and were paid on March 1, 2016. See the description of our company’s performance and satisfaction of the performance measure for the 2011 PRSUs in “Compensation Discussion and Analysis” beginning on page 29. |
50 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
EXECUTIVE COMPENSATION
(3) | 2012 PRSUs (Performance Achieved). Represents restricted stock units issued upon satisfaction of performance above threshold and that were outstanding as of December 31, 2015. These restricted stock units vested and were paid on March 1, 2016. See the description of our company’s performance and satisfaction of the performance measure for the 2012 PRSUs in “Compensation Discussion and Analysis” beginning on page 29 and footnote 4 below. |
(4) | 2012 PRSUs (Performance Not Yet Achieved).Vesting is based on the attainment of pre-established performance goals over multiple performance periods, with the last performance period ending December 31, 2016. The number of PRSUs shown in the table above is based on achievement of maximum performance. See the description of the 2012 PRSUs and vesting terms in “Compensation Discussion and Analysis” beginning on page 29. |
(5) | 2013 PRSUs (Performance Achieved).Represents restricted stock units issued upon satisfaction of performance above threshold and that were outstanding as of December 31, 2015. These restricted stock units vested and were paid on March 1, 2016. See the description of our company’s performance and satisfaction of the performance measures for the 2013 PRSUs in “Compensation Discussion and Analysis” beginning on page 29. |
(6) | 2013 TRSUs. This award vested and was paid on February 15, 2016. For Mr. Donofrio and Mr. Greener only, this award was settled in cash. |
(7) | 2014 TRSUs. One-half of the outstanding award vested and was paid on February 14, 2016, and one-half is scheduled to vest and be paid on February 14, 2017. For Mr. Donofrio and Mr. Greener only, this award is settled in cash. |
(8) | 2014 PRSUs (Performance Not Yet Achieved).Vesting is based on our company’s achievement of specific ROA and growth in adjusted TBV goals over a three-year performance period ending December 31, 2016. The number of PRSUs shown in the table above is based on achievement of target performance. See the description of the 2014 PRSUs and vesting terms in “Compensation Discussion and Analysis” beginning on page 29. |
(9) | 2015 TRSUs. One-third of the outstanding award vested and was paid on February 13, 2016, one-third is scheduled to vest and be paid on February 13, 2017, and one-third is scheduled to vest and be paid on February 13, 2018. For Mr. Donofrio only, this award is settled in cash. |
(10) | 2015 PRSUs (Performance Not Yet Achieved).Vesting is based on our company’s achievement of specific ROA and growth in adjusted TBV goals over a three-year performance period ending December 31, 2017. The number of PRSUs shown in the table above is based on achievement of maximum performance. See the description of the 2015 PRSUs and vesting terms following “Grants of Plan-Based Awards Table” on page 47. |
(11) | 2015 CRSUs.These vested and were paid on January 13 and February 13, 2016. |
The following table shows information regarding the value of restricted stock vested during 2015:
Stock Vested in 2015
Name |
Stock Awards | |||||||||
Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | |||||||||
Brian T. Moynihan | 539,941 | 8,785,121 | ||||||||
Paul M. Donofrio | 477,590 | 8,069,878 | ||||||||
Geoffrey S. Greener | 271,172 | 4,504,167 | ||||||||
Terrence P. Laughlin | 249,288 | 4,028,372 | ||||||||
Thomas K. Montag | 530,712 | 8,521,290 | ||||||||
Bruce R. Thompson | 428,313 | 6,893,298 | ||||||||
David C. Darnell | 342,944 | 5,523,218 |
(1) | In addition to shares acquired on vesting, this column includes the following number of CRSUs (Mr. Moynihan only) and/or cash-settled TRSUs, which were settled and paid in cash during 2015: Mr. Moynihan, 215,030; Mr. Donofrio, 477,590; Mr. Greener, 271,172. |
(2) | The value represents the gross number of shares or units that vested, multiplied by the closing market value of our common stock on the applicable vesting date, and includes any amounts that were withheld for applicable taxes. Shares acquired by our named executive officers are subject to our stock ownership and retention requirements, as applicable. These requirements are discussed in “Compensation Discussion and Analysis” on page 29. |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 51 |
EXECUTIVE COMPENSATION
The following table provides information regarding the retirement benefits our named executive officers may receive under our defined benefit pension plans in which they participate, all of which have been frozen (meaning that benefits are no longer accruing for compensation or service after the plan freeze date).
Pension Benefits in 2015
Name | Plan Name |
Number of Years Credited Service (#) |
Present Value of Accumulated Benefit ($)(1) |
Payments During Last Fiscal Year ($) | ||||||||||
Brian T. Moynihan | Fleet Legacy Pension Plan(2) | 19.25 | 329,498 | 0 | ||||||||||
Fleet Retirement Income Assurance Plan | 19.25 | 212,393 | 0 | |||||||||||
Fleet SERP | 12.75(3) | 7,776,942 | 0 | |||||||||||
Paul M. Donofrio | Bank of America Legacy Pension Plan(2) | 14.00 | 175,740 | 0 | ||||||||||
Pension Restoration Plan | 14.00 | 382,858 | 0 | |||||||||||
Geoffrey S. Greener | Bank of America Legacy Pension Plan(2) | 4.75 | 46,206 | 0 | ||||||||||
Pension Restoration Plan | 4.75 | 676 | 0 | |||||||||||
Terrence P. Laughlin | Fleet Legacy Pension Plan(2) | 14.08 | 152,079 | 0 | ||||||||||
Thomas K. Montag(4) | N/A | — | — | — | ||||||||||
Bruce R. Thompson | Bank of America Legacy Pension Plan(2) | 15.92 | 214,345 | 0 | ||||||||||
Pension Restoration Plan | 15.92 | 722,640 | 0 | |||||||||||
David C. Darnell | Bank of America Legacy Pension Plan(2) | 33.00 | 505,503 | 0 | ||||||||||
Pension Restoration Plan | 33.00 | 1,010,782 | 0 | |||||||||||
Bank of America SERP | 15.00(3) | 5,618,743 | 0 |
(1) | The value of plan benefits reflects the actuarial present value of each named executive officer’s accumulated benefits under the pension plans in which the named executive officer participates. The present value was determined using the same assumptions applicable for valuing pension benefits in our financial statements. See Note—Employee Benefit Plans to the Consolidated Financial Statements for the 2015 fiscal year included in our 2015 annual report on Form 10-K. |
(2) | The Bank of America Pension Plan includes the Fleet Legacy Pension Plan and the Bank of America Legacy Pension Plan as component plans. |
(3) | Mr. Moynihan’s and Mr. Darnell’s years of credited service under their SERPs are less than their credited service under the other pension plans and their actual service with us because the SERPs were frozen before the pension plans were frozen. In addition, the Bank of America SERP did not take into account more than 15 years of service in its benefit formula before it was frozen, and that limit is also reflected in the table. |
(4) | Mr. Montag does not participate in any tax-qualified pension plans or restoration or supplemental retirement plans. |
The following describes the material features of our pension plans in which the named executive officers participate.
Qualified Pension Plan. Certain named executive officers participate in the Bank of America Legacy Pension Plan or the Fleet Legacy Pension Plan. Both plans are cash balance pension plans and are component plans of The Bank of America Pension Plan, which is a frozen, tax-qualified pension plan. The following briefly describes key features of these plans:
l | Benefits under these plans are generally expressed as a hypothetical “cash balance account.” Before these plans were frozen (effective June 30, 2012), a participant’s cash balance account received “compensation credits.” Compensation credits were calculated as a percentage of eligible compensation, subject to IRS limits, and credited each pay period |
O | Under the Bank of America Legacy Pension Plan, eligible compensation was made up of base salary and bonus. The percentage of compensation credited ranged from 4% to 6% of eligible compensation, depending on age and years of service |
O | Under the Fleet Legacy Pension Plan, eligible compensation was made up of base salary only. The percentage of compensation credited ranged from 3% to 7.5% or 6% to 15% of eligible compensation, depending on age and years of service, with the higher range applying to compensation in excess of the Social Security wage base |
l | These plans also provide for adjustments to the cash balance accounts, in the form of hypothetical interest or investment credits, which continue to apply after the plan freeze |
O | Under the Bank of America Legacy Pension Plan, an account receives investment credits for pre-2008 accruals and interest credits for post-2007 accruals. Investment credits are based on hypothetical investment measures selected by the participant which correspond to investment options available under our 401(k) plan. The rate for the interest credits is based on the 10-year U.S. Treasury Note yield |
52 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
EXECUTIVE COMPENSATION
O | Under the Fleet Legacy Pension Plan, an account receives interest credits based on the one-year U.S. Treasury Note yield, subject to a minimum annual rate of 3.25% |
l | Each participating named executive officer’s cash balance account is fully vested. Upon retirement, the participating named executive officer may receive their vested cash balance account in a lump sum, or in an actuarially equivalent joint and survivor annuity (if married) or single life annuity (if not married). Other optional forms of benefit of equivalent value are permitted under the plans |
l | Both plans include certain protected minimum benefits generally related to pension formulas from prior merged pension plans or due to the conversion to a cash balance plan |
Nonqualified Pension Plans. Certain named executive officers participate in either the Bank of America Pension Restoration Plan (Pension Restoration Plan) or the Retirement Income Assurance Plan for Legacy Fleet (Fleet RIAP), which are unfunded nonqualified pension plans. The following briefly describes key features of these plans:
l | The Pension Restoration Plan and Fleet RIAP provide “make up” benefits for qualified pension plan participants whose benefits under the qualified pension plan are reduced due to either IRS limits or participation in other nonqualified deferred compensation plans |
l | Since 2005, the named executive officers have not earned benefits under these plans for compensation received over $250,000. These plans were frozen, along with the corresponding qualified pension plans, effective June 30, 2012 |
l | Each participating named executive officer’s nonqualified pension plan benefits are fully vested and payable as follows: |
O | Participants elected to receive payment of their benefits as either a lump sum or annual installments over a period of up to 10 years, beginning in the year following termination or any later year (up to the year in which the participant reaches age 75). For Fleet RIAP participants, this election only applied to benefits accrued after 2004, and other payment options may be available for benefits accrued prior to 2005 |
O | Participants may change their payment elections in limited circumstances |
Supplemental Executive Retirement Plans. Mr. Moynihan participates in the FleetBoston Financial Corporation Supplemental Executive Retirement Plan (Fleet SERP) and Mr. Darnell participates in the Bank of America Corporation and Designated Subsidiaries Supplemental Executive Retirement Plan for Senior Management Employees (Bank of America SERP), both unfunded nonqualified pension plans. The following briefly describes key features of these plans:
l | Mr. Moynihan’s participation in the Fleet SERP was frozen at his request effective December 31, 2005, and the Bank of America SERP was frozen effective December 31, 2002 |
l | The Fleet SERP provides a target retirement benefit equal to a percentage of final average compensation (based on base salary and incentive compensation frozen as of December 31, 2002) |
O | Mr. Moynihan’s target benefit was reduced by benefits from the Fleet Legacy Pension Plan and the Fleet RIAP. Mr. Moynihan’s Fleet SERP benefit is expressed as an annual benefit payable for his life beginning at age 60, with 75% of that amount payable to his spouse for her life if she survives him, and is actuarially adjusted if Mr. Moynihan’s retirement occurs either before or after age 60 |
O | Mr. Moynihan previously elected to receive this benefit in an actuarially equivalent lump sum payment determined using the actuarial assumptions in effect under the Fleet Legacy Pension Plan for 2005 |
l | The Bank of America SERP benefit is similar to the Fleet SERP benefit, except that Mr. Darnell’s benefit was reduced by benefits from the Bank of America Legacy Pension Plan, the Pension Restoration Plan, and Social Security |
O | The Bank of America SERP default benefit is expressed as a joint and 66 2⁄3% survivor annuity payable beginning at age 60 |
O | Before Mr. Darnell’s retirement, he also may elect from actuarially equivalent lump sum and installment payment options determined using the actuarial assumptions in effect under the Bank of America Legacy Pension Plan for 2002 |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 53 |
EXECUTIVE COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION TABLE
The following table shows information about the participation by each named executive officer in our nonqualified deferred compensation plans. In 2015, there were no contributions made by us or our named executive officers to these plans.
Nonqualified Deferred Compensation in 2015
Name | Plan Name | Aggregate Earnings in 2015 ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate 2015 ($)(2) | |||||||||||||
Brian T. Moynihan | Bank of America Deferred Compensation Plan | (1,394 | ) | 0 | 367,968 | ||||||||||||
Fleet Deferred Compensation Plan | 152,902 | 0 | 1,427,088 | ||||||||||||||
Fleet Executive Supplemental Plan | 47,831 | 0 | 588,651 | ||||||||||||||
Paul M. Donofrio | Bank of America Deferred Compensation Plan | (11,628 | ) | 0 | 3,851,444 | ||||||||||||
Geoffrey S. Greener | Bank of America Deferred Compensation Plan | (6 | ) | 0 | 381 | ||||||||||||
Terrence P. Laughlin | Bank of America Deferred Compensation Plan | 0 | 0 | 0 | |||||||||||||
Fleet Deferred Compensation Plan | 14,368 | 0 | 373,563 | ||||||||||||||
Thomas K. Montag | Bank of America Deferred Compensation Plan | 0 | 0 | 0 | |||||||||||||
Bruce R. Thompson | Bank of America Deferred Compensation Plan | 27,866 | 0 | 3,011,473 | |||||||||||||
David C. Darnell | Bank of America Deferred Compensation Plan | 117,285 | 0 | 7,019,916 |
(1) | The Bank of America Deferred Compensation Plan (formerly known as the Bank of America 401(k) Restoration Plan) allows participants to direct their deferrals among the same investment choices as available under The Bank of America 401(k) Plan. The Fleet Deferred Compensation Plan credits pre-1998 deferrals with interest at an annual rate of 12%, which cannot be changed due to the FleetBoston acquisition. Deferrals made under the plan between 1998 and 2001 are credited with interest at an annual rate of 4% and 2002 deferrals receive interest based on the return for the one-year Treasury Bill. The Fleet Executive Supplemental Plan offered participants the following investment options, which posted the corresponding returns for 2015: Columbia Core Bond Fund, 0.16%; Columbia Large Cap Growth Fund, 9.09%; Invesco Equity & Income Fund, -2.35%; and Stable Value Fund, 2.13%. |
(2) | The following table identifies amounts that have already been reported as compensation in our Summary Compensation Table for the current or prior years: |
Name | Amount of 2015 ($) | Amounts in “Aggregate ($) | ||||||||
Brian T. Moynihan | 56,192 | 568,561 | ||||||||
Paul M. Donofrio | 0 | 0 | ||||||||
Geoffrey S. Greener | 0 | 0 | ||||||||
Terrence P. Laughlin | 0 | 0 | ||||||||
Thomas K. Montag | 0 | 0 | ||||||||
Bruce R. Thompson | 0 | 250 | ||||||||
David C. Darnell | 0 | 0 |
The following describes the material features of our nonqualified deferred compensation plans in which the named executive officers participate.
Deferred Compensation Plan. Each of our named executive officers is eligible to participate in the Bank of America Deferred Compensation Plan (formerly known as the Bank of America 401(k) Restoration Plan prior to January 1, 2016), which is a nonqualified retirement savings plan. The following briefly describes key features of this plan:
l | This plan provides benefits for participants whose contributions to our 401(k) plans are limited by IRS rules fortax-qualified plans |
l | Participants may elect to defer up to 50% of base salary and up to 75% of certain eligible incentive awards |
54 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
EXECUTIVE COMPENSATION
l | Participants with at least 12 months of service who did not receive the full employer contributions under the 401(k) plan due to their deferrals under the Deferred Compensation Plan will receive additional employer contributions up to plan limits as follows: |
O | Total matching contributions on a combined basis under the 401(k) plan and the Deferred Compensation Plan are limited to $12,500 |
O | Total annual company contributions on a combined basis under the 401(k) plan and the Deferred Compensation Plan are limited to $7,500 |
l | Participants may elect to receive their distribution in a lump sum payment or installments payable up to 15 years, beginning in any year elected by the participant, subject to certain plan rules. Employer contributions for 2015 and later plan years are paid in a lump sum in the year following termination of employment. The plan permits payment election changes and emergency distributions in limited cases |
FleetBoston Financial Corporation Executive Deferred Compensation Plan No. 2. Mr. Moynihan and Mr. Laughlin have accounts under the FleetBoston Financial Corporation Executive Deferred Compensation Plan No. 2 (Fleet Deferred Compensation Plan), which is a nonqualified retirement savings plan. The following briefly describes key features of this plan:
l | Prior to being closed to deferrals in 2002, participants could defer base salary and certain bonuses under the plan. Mr. Moynihan deferred incentive awards from 1994 to 1997; Mr. Laughlin deferred incentive awards from 2000 to 2001 |
l | Participants could elect payments in a lump sum or up to 15 annual installments either on or after termination of employment, but not beyond the year in which the participant turns 65 |
l | Participants may elect to change time or form of payment at least 12 months before termination of employment |
l | In-service distributions are permitted according to original elections made, as well as limited emergency and hardship distributions and other in-service distributions subject to a withdrawal penalty |
FleetBoston Financial Corporation Executive Supplemental Plan. Mr. Moynihan has an account under the FleetBoston Financial Corporation Executive Supplemental Plan (Fleet Executive Supplemental Plan), which is a nonqualified retirement savings plan. The following briefly describes key features of this plan:
l | Prior to being closed to contributions (effective December 31, 2004), this plan provided benefits for certain participants in the legacy FleetBoston 401(k) plan whose benefits under the FleetBoston 401(k) Plan were limited by IRS rules for tax-qualified plans |
l | Payments are made in a lump sum or up to 15 annual installments beginning in the year of termination of employment or any later year elected by the participant, but not beyond the year in which the participant turns 65 |
l | Participants may elect to change the time or form of payment at least 12 months before termination of employment, and hardship distributions are permitted in limited emergency situations |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We do not have any agreements with our named executive officers that provide for cash severance payments upon termination of employment or a change in control. In addition, under our policy regarding executive severance agreements, we will not enter into employment or severance agreements with our executive officers that provide severance benefits exceeding two times base salary and bonus (as defined under our policy), unless the agreement has been approved by our stockholders.
Potential Payments from Equity-based Awards
Our equity-based awards to our named executive officers include standard provisions that cause awards to vest or be forfeited upon termination of employment, depending on the reason for termination. These provisions for awards granted in 2015 are described in more detail above, and those details can be found for awards granted in prior years in our prior proxy statements.
In general, our awards provide for continued payments on the original schedule after certain types of termination of employment, subject to the following conditions:
l | In case of a “Qualifying Termination” (sometimes referred to in prior years as “Rule of 60”), the award continues to be paid according to the award’s payment schedule if the executive complies with certain covenants, including |
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 55 |
EXECUTIVE COMPENSATION
not working for a competitive business. A Qualifying Termination means any voluntary or involuntary termination (other than for death, disability, or cause) after the executive has met certain specified age and/or service requirements. For most of the named executives officers, the executive must have at least 10 years of service and his or her age and years of service must add up to at least 60. Mr. Montag has a special eligibility standard set forth in his applicable offer letter. Currently, each of the named executive officers, except Mr. Greener, meets the applicable requirements for a Qualifying Termination |
l | Awards remain subject to performance-based cancellation prior to payment, and may be cancelled in whole or in part if losses occur. Awards also can be cancelled or recouped if the executive engages in detrimental conduct. Further, under our Incentive Compensation Recoupment Policy, the Board can require reimbursement of any incentive compensation paid to an executive officer whose fraud or intentional misconduct causes our company to restate its financial statements. Awards also will be subject to any policies we may adopt to implement final, released, and effective rules implementing Section 954 of the Dodd-Frank Act |
Awards to our named executive officers under our Bank of America Corporation Key Employee Equity Plan (KEEP) are generally designed to be paid per schedule if an executive’s employment is terminated without “cause” or for “good reason” within two years after a change in control. This change in control treatment is often referred to as “double trigger” vesting, because it requires both (i) a change in control and (ii) a subsequent involuntary termination (either by our company without “cause” or by the executive for “good reason”). Our KEEP does not provide for “single trigger” vesting upon a change in control.
If a named executive officer is terminated for “cause,” our equity-based awards provide that the awards will be forfeited.
The following table shows the value of equity awards that would have been payable, subject to the non-compete or compliance with covenants, as applicable, for a termination of employment as of December 31, 2015. For this purpose, restricted stock units were valued at our closing price as of December 31, 2015, which was $16.83 per share. Stock options were valued at $0 due to the difference between that closing price and the applicable exercise price of the stock options. Due to a number of factors that affect the nature and amount of any benefits provided upon termination of employment, any actual amounts paid or distributed may vary from the amounts listed below. Factors that could affect these amounts include the time during the year of any such event and the price of our common stock.
Name | Death | Disability | Termination with Good Reason or Without Cause Within 2 Years Following Change in Control(2) | All Other Terminations Except for Cause | ||||||||||||||||||
Payable Immediately ($) | Payable Immediately ($) | Payable per Award Schedule, Subject to Conditions ($)(1) | Payable per Award Schedule, Subject to Conditions ($) | Payable per Award to Conditions | ||||||||||||||||||
Brian T. Moynihan | 40,522,030 | 597,364 | 34,463,751 | 36,850,935 | 34,463,751 | |||||||||||||||||
Paul M. Donofrio | 12,612,487 | 0 | 12,612,487 | 12,612,487 | 12,612,487 | |||||||||||||||||
Geoffrey S. Greener | 9,179,049 | 0 | 9,179,049 | 8,621,943 | 0(3) | |||||||||||||||||
Terrence P. Laughlin | 17,332,291 | 0 | 15,577,191 | 16,156,952 | 15,577,191 | |||||||||||||||||
Thomas K. Montag(4) | 45,711,813 | 0 | 39,758,671 | 43,598,991 | 39,758,671 | |||||||||||||||||
Bruce R. Thompson | 31,183,734 | 0 | 27,933,827 | 29,566,572 | 27,933,827 | |||||||||||||||||
David C. Darnell | 24,682,525 | 0 | 22,008,590 | 23,395,973 | 22,008,590 |
(1) | The conditions for payment include (i) compliance with covenants regarding non-solicitation, detrimental conduct, and compliance with anti-hedging/derivative transactions policies, (ii) the performance-based cancellation described above, and (iii) compliance with the Qualifying Termination conditions described above (other than in case of Disability and excluding Mr. Greener, who does not yet meet the age and service standards required to be eligible for a Qualifying Termination). Where applicable, the table includes the value of PRSUs granted in 2012, 2014, and 2015, assuming the maximum number of units are earned, although actual payout is dependent upon the future achievement of specified performance goals. The value of the portions of the 2011 and 2013 PRSUs that were unearned as of December 31, 2015 is not included because these PRSUs had reached the end of their performance period. |
(2) | If, within two years following a change in control, the executive’s employment is terminated by our company without “cause” or by the executive for “good reason,” the executive’s PRSU awards will be immediately earned at the 100% goal level and paid per the original schedule. TRSUs will continue to be paid |
56 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
EXECUTIVE COMPENSATION
per the original schedule. Payment of the PRSUs is subject to performance-based cancellation. The definition of “cause” is described in more detail under the “Grants of Plan-Based Awards Table.” The definition of “good reason” for this purpose means (i) a material diminution in the executive’s responsibility, authority, or duty, (ii) a material reduction in the executive’s base salary (with certain exceptions), or (iii) a relocation greater than 50 miles. Certain notice and cure requirements apply in order to claim “good reason.” The definitions of “cause” and “good reason” applicable to Mr. Montag are described in footnote 4 to this table. |
(3) | Certain equity-based awards granted to Mr. Greener prior to his appointment as an executive officer provide that he is entitled to continue to be paid per the award schedule if his employment is terminated due to a workforce reduction or divestiture. In the event of such a termination, the value of the equity awards payable as of December 31, 2015 would have been $4,165,089, subject to conditions for payment including compliance with covenants regarding non-solicitation, detrimental conduct, and compliance with anti-hedging/derivative transactions policies. |
(4) | Under Mr. Montag’s 2008 offer letter with Merrill Lynch, his equity awards must continue to vest per the vesting schedule, subject to any conditions in the applicable award agreements (other than a non-compete) for any involuntary termination without “cause” or resignation for “good reason.” Mr. Montag’s offer letter defines “cause” as (i) his engagement in (A) willful misconduct resulting in material harm to our company or (B) gross negligence in connection with the performance of his duties; or (ii) his conviction of, or plea of nolo contendere to, a felony or any other crime involving fraud, financial misconduct, or misappropriation of company assets, or that would disqualify him from employment in the securities industry (other than a temporary disqualification). For Mr. Montag, “All Other Terminations Without Cause” includes a resignation by him for “good reason” under his 2008 employment agreement, defined as a resignation following: (i) a meaningful and detrimental alteration in the nature of the executive’s responsibilities or authority; or (ii) a material reduction in the executive’s total annual compensation that is not experienced generally by similarly situated employees. |
Other Potential Payments
Following termination of employment, our named executive officers receive payment of retirement benefits and non-qualified deferred compensation benefits under our various plans in which they participate. The value of those benefits as of December 31, 2015 is set forth in the sections above entitled “Pension Benefits Table” and “Nonqualified Deferred Compensation Table.” There are no special or enhanced benefits under those plans for our named executive officers, and all of our named executive officers are fully vested in the benefits discussed in those sections.
We make benefit, tax, and financial advisory services available to our named executive officers during their employment with us. This benefit continues through the end of the year in which they cease employment, including preparation of that year’s tax return. However, in the case of a termination for cause, the benefit stops immediately.
Bank of America employees who retire and meet the Rule of 60 have access to continued coverage under our group health plan, but the employee generally must pay for the full cost of that coverage on an after-tax basis without any employer subsidy. Under an agreement entered into with Merrill Lynch, Mr. Montag will be able to access non-subsidized retiree medical coverage if he retires, so long as he does not work for or accept another position with a competitor.
An employee who is a former NationsBank employee and who was hired before January 1, 2000 is eligible for an annual supplement to help cover the cost of retiree medical benefits if he or she meets the “Rule of 75” at termination. The amount of this supplement equals $30 per year of service. An employee meets the Rule of 75 if he or she retires after age 50, with at least 15 years of vesting service under our pension plan, and with a combined age and years of service of 75 or more. As of the end of the last fiscal year, the only named executive officer eligible for these benefits is Mr. Darnell. The amount of the annual retiree medical benefit supplement for Mr. Darnell based on his years of service through December 31, 2015 is $1,080. This supplement continues at a 50% rate for the life of the surviving spouse.
Also, all eligible employees hired before January 1, 2006 who meet the Rule of 75 when they terminate receive $5,000 of retiree life insurance coverage. As of December 31, 2015, Mr. Darnell was the only named executive officer who would have qualified for this benefit.
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 57 |
PROPOSAL 3: RATIFYING THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016
PROPOSAL 3: RATIFYING THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016
Our Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent registered public accounting firm, and is involved in the selection of the firm’s lead engagement partner. The Committee engages in an annual evaluation of the independent public accounting firm’s qualifications, assessing the firm’s quality of service, the firm’s sufficiency of resources, the quality of the communication and interaction with the firm, and the firm’s independence, objectivity, and professional skepticism. The Committee also considers the advisability and potential impact of selecting a different independent public accounting firm.
After assessing the performance and independence of the Committee’s current independent public accounting firm, PricewaterhouseCoopers LLP (PwC), the Committee believes that retaining PwC is in the best interests of our company. The Committee has appointed PwC as our independent registered public accounting firm to audit the 2016 consolidated financial statements of Bank of America Corporation and its subsidiaries. Although it is not required to do so, our Board is asking stockholders to ratify PwC’s appointment. If our stockholders do not ratify PwC’s appointment, the Committee will consider changing our independent registered public accounting firm for 2017. Whether or not stockholders ratify PwC’s appointment, the Committee may appoint a different independent registered public accounting firm at any time if it determines that such a change is appropriate.
PwC has advised the Committee that it is an independent accounting firm with respect to our company and its affiliates in accordance with the requirements of the SEC and the Public Company Accounting Oversight Board.
Representatives of PwC are expected to be present at our annual meeting, will have an opportunity to make a statement if they choose, and are expected to be available to respond to appropriate stockholder questions.
PwC’s 2015 and 2014 Fees.PwC’s aggregate fees for professional services rendered in or provided for 2015 and 2014, as applicable, were:
2015 | 2014 | |||
($ in millions) | ||||
Audit Fees | 76.7 | 82.2 | ||
Audit-Related Fees | 8.5 | 8.9 | ||
Tax Fees | 8.2 | 9.7 | ||
All Other Fees | 0.1 | 0.1 | ||
Total Fees | 93.5 | 100.9 |
Audit Fees. Audit fees relate to the integrated audit of our consolidated financial statements, and internal control over financial reporting, including disclosures presented in the footnotes to our company’s financial statements (for example, regulatory capital, among other disclosures). Audit fees also relate to the audit of domestic and international statutory and subsidiary financial statements, the review of our interim consolidated financial statements, the issuance of comfort letters and SEC consents, and services provided in connection with certain agreed-upon procedures and other attestation reports. Audit fees are those billed or expected to be billed for audit services related to each fiscal year.
Audit-Related Fees. Audit-related fees cover other audit and attest services, services provided in connection with certain agreed-upon procedures and other attestation reports, financial accounting, reporting and compliance matters, and risk and control reviews. Fees for audit-related services are those billed or expected to be billed for services rendered during each fiscal year.
Tax Fees.Tax fees cover tax compliance, advisory, and planning services and are those billed or expected to be billed for services rendered during each fiscal year.
All Other Fees. All other fees consist primarily of amounts billed or expected to be billed by PwC for technical subscription services rendered during each fiscal year.
58 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
PROPOSAL 3: RATIFYING THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
Our Audit Committee annually pre-approves a list of services that PwC may provide without obtaining the Committee’s engagement-specific pre-approval and sets pre-approved fee levels for such services. The pre-approved list of services consists of audit services, audit-related services, tax services, and all other services. All requests or applications for PwC services must be submitted to members of our corporate audit function or tax function to determine if they are included within the Committee’s pre-approved list of services. The Committee or the Committee chair must specifically approve any type of service that has not been pre-approved. The Committee or the Committee chair must also approve any proposed service that has been pre-approved but has fees that will exceed the pre-approved level. All pre-approvals by the Committee chair must be presented to the full Committee at its next meeting. The Committee or the Committee chair pre-approved all of PwC’s 2015 fees and services.
Our Board recommends a vote “FOR” ratifying the appointment of our
independent registered public accounting firm for 2016 (Proposal 3).
Our Audit Committee is composed of five Board members. Our Board has determined that all Committee members are independent under the NYSE listing standards, our Categorical Standards, and applicable SEC rules and regulations. Our Board has also determined that all Committee members are financially literate in accordance with NYSE listing standards and qualify as “audit committee financial experts” as defined by SEC rules. The Committee’s responsibilities are stated in a written charter adopted by our Board.
Management is responsible for preparing and the overall reporting process with respect to our company’s consolidated financial statements, and, with the assistance of our company’s internal corporate auditors, for establishing, maintaining, and assessing the effectiveness of our internal control over financial reporting. PricewaterhouseCoopers LLP (PwC), our company’s independent registered public accounting firm, is responsible for planning and conducting an independent audit of our company’s consolidated financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board (PCAOB) and for expressing an opinion as to the conformity of these financial statements with GAAP and as to the effectiveness of our internal controls over financial reporting. The Committee’s responsibility is to monitor and oversee these processes.
The Committee annually evaluates PwC’s qualifications, performance, and independence. The Committee also oversees the performance of the corporate audit function managed by our Corporate General Auditor. The Committee has reviewed and discussed with management and with PwC our company’s audited financial statements for the year ended December 31, 2015, management’s assessment of the effectiveness of our company’s internal control over financial reporting, and PwC’s evaluation of our company’s internal control over financial reporting. In addition, the Committee has discussed with PwC the matters that independent registered public accounting firms must communicate to audit committees under applicable PCAOB standards.
The Committee has also discussed and confirmed with PwC its independence from our company, and received all required written disclosures and correspondence required by the PCAOB Ethics and Independence requirements. The Committee has evaluated and concluded the non-audit services provided by PwC to our company do not impair PwC’s independence.
Based on the reviews and discussions referred to above, and discussions with the Committee’s independent disclosure counsel, the Committee recommended to our Board that the audited financial statements for the year ended December 31, 2015 and the related footnotes be included in our company’s annual report on Form 10-K for the year ended December 31, 2015.
Submitted by the Audit Committee of the Board:
Sharon L. Allen, Chair
Susan S. Bies
Pierre J.P. de Weck
Lionel L. Nowell, III
R. David Yost
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 59 |
PROPOSAL 4: STOCKHOLDER PROPOSAL
PROPOSAL 4: STOCKHOLDER PROPOSAL
Stockholders will vote on the following proposal, if properly presented at our annual meeting. The proposal may contain assertions about our company that we believe are incorrect. We have not attempted to refute any inaccuracies. Shareholdings of the stockholder proponent will be supplied promptly upon oral or written request to our Corporate Secretary.
Our Board has considered the stockholder proposal below and recommends a vote “AGAINST”
the proposal for the reasons set forth following the proposal.
PROPOSAL 4: CLAWBACK AMENDMENT
Mr. Kenneth Steiner, 14 Stoner Avenue, 2M, Great Neck, NY 11021, has advised us that he intends to introduce the following resolution:
RESOLVED, shareholders urge our Board of Directors to amend the General Clawback policy to provide that a substantial portion of annual total compensation of Executive Officers, identified by the board, shall be deferred and be forfeited in part or in whole, at the discretion of Board, to help satisfy any monetary penalty associated with any violation of law regardless of any determined responsibility by any individual officer; and that this annual deferred compensation be paid to the officers no sooner than 10 years after the absence of any monetary penalty; and that any forfeiture and relevant circumstances be reported to shareholders. These amendments should operate prospectively and be implemented in a way that does not violate any contract, compensation plan, law or regulation.
President William Dudley of the New York Federal Reserve outlined the utility of what he called a performance bond. “In the case of a large fine, the senior management . . . would forfeit their performance bond. . . . Each individual’s ability to realize their deferred debt compensation would depend not only on their own behavior, but also on the behavior of their colleagues. This would create a strong incentive for individuals to monitor the actions of their colleagues, and to call attention to any issues. . . . Importantly, individuals would not be able to “opt out” of the firm as a way of escaping the problem. If a person knew that something is amiss and decided to leave the firm, their deferred debt compensation would still be at risk.”
The statute of limitations under the FIRREA is 10 years, meaning that annual deferral period should be 10 years.
Please vote to protect shareholder value: Clawback Amendment—Proposal 4
Our Board recommends a vote “AGAINST” Proposal 4 because:
l | we have already implemented comprehensive policies and programs to encourage long-term, sustainable performance and appropriate conduct consistent with the highest standards of risk management and legal compliance; and |
l | adopting the proposal would inhibit our company’s ability to attract and retain talented executive officers. |
The proposal requests an amendment of what the proposal calls the “General Clawback policy” to provide for the deferment of our executive officers’ compensation for at least 10 years and the forfeiture of such compensation to pay monetary penalties associated with “any violation of law regardless of any determined responsibility by any individual officer.” Our Board believes that this approach is unnecessary in light of our company’s existing executive compensation program, which includes multiple “clawback” and cancellation features as well as stock ownership and “hold through retirement” stock retention requirements. Our Board also believes that the proposal is unnecessary in light of the ongoing focus by our company on compliance, and substantial efforts undertaken to further enhance our compliance program. Finally, if implemented, the proposal would inhibit our company’s ability to attract and retain talented executive officers.
Our company already encourages long-term performance through clawback and stock retention policies.Our existing compensation programs, which include clawback and cancellation features and stock ownership and retention requirements, are already designed to encourage appropriate behavior by our employees, including our executive officers. As discussed in “Compensation Discussion and Analysis” above, our Compensation and Benefits Committee provides compensation opportunities for our executive officers through a competitive, well-governed pay-for-performance
60 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
PROPOSAL 4: STOCKHOLDER PROPOSAL
program that rewards long-term, sustainable results aligned with our stockholder’s interests. Our stockholders have also shown support for our compensation programs through annual Say on Pay votes. At the 2015 annual meeting of stockholders, almost 95% of votes cast favored our say-on-pay proposal. The design of our executive compensation program includes strong risk management and clawback features consistent with regulatory requirements that support our risk management goals. Additionally, the program is designed so that incentive compensation realized over time appropriately reflects the time horizon of the risks taken, encouraging proper conduct and sustainable, long-term performance. These features already provide for the cancellation or recoupment of an employee’s equity awards if the employee engages in certain “detrimental conduct,” which includes, among other things, illegal activity, breach of a fiduciary duty and intentional violation or grossly negligent disregard of our company’s policies, rules and procedures. As such, this clawback feature applies to a broader range of behavior than is covered by the proposal, which focuses on monetary penalties associated with violations of law. Certain employees, including our executive officers, are also subject to a performance-based clawback and a policy under which an officer’s incentive compensation would be recouped if the officer’s fraud or intentional misconduct causes our company to restate its financial statements. Finally, since 2011, all of our equity-based awards have also stated that they are subject to the final compensation clawback rules adopted by the SEC and NYSE under the Dodd-Frank Act, further reinforcing our programs without the need for the provisions requested by this proposal.
Furthermore, our stock ownership and retention requirements already address the underlying objective of this proposal by requiring our chief executive officer to own at least 500,000 shares of company stock and to retain 50% of net after-tax shares received from equity-based awards until one year after retirement. Our other executive officers are required to own at least 300,000 shares of company stock and to retain 50% of net after-tax shares received from equity-based awards until retirement. Our Board believes that these significant deferral, ownership and retention requirements more effectively address the proposal’s stated objective and create a strong incentive for executive officers to monitor, promote and protect the long-term value and performance of the company by placing a significant portion of their compensation at risk.
Our company already places significant focus on compliance.Compliance is a key area of focus for our company, and we have implemented and continue to enhance our comprehensive company-wide policies and programs to promote and monitor compliance with applicable laws. Some of these policies and procedures can be found on our website athttp://investor.bankofamerica.com, including our anti-money laundering compliance program, our Servicemembers Civil Relief Act compliance program and our Corporate Political Contributions Policy. In addition, our Code of Conduct, which can also be found on our website, requires each of our employees to follow the spirit and letter of all applicable laws and regulations. Moreover, the day-to-day activities of our employees are governed by job-specific manuals, policies, and procedures designed to promote compliance at all levels of our company, and we have adopted rigorous employee training programs and internal reporting mechanisms designed to promote compliance with all applicable laws. Our company encourages oversight of its compliance efforts by conducting regular internal cross-functional reviews, and our company is subject to detailed regulatory examinations that review, among other things, our compliance with applicable laws and our adherence to applicable rules, regulations, and standards. In light of our existing clawback and cancellation features, stock ownership and retention requirements, and compliance program, we believe that adopting the requested policy would not contribute in any meaningful manner to our company’s compliance goals.
The proposal would hurt our ability to attract and retain talent.Our Board believes that the proposal, if adopted, could be harmful to our company because adding a program to defer paying an undefined “substantial portion” of an executive officer’s compensation through some indefinite future date (“no sooner than 10 years after the absence of any monetary penalty”), and authorizing the forfeiture of compensation regardless of the nature or extent of personal responsibility for any penalty that may be assessed would impair our ability to attract and retain talented executive officers. The uncertainty of the deferral term would not allow a potential executive to assess how long her compensation would be unavailable; it is nearly impossible to ascertain when “the absence of any monetary penalty” would commence or end. Also, such policies are not currently in place at peer companies. Adopting this type of an unnecessary and vague policy that inhibits our company’s ability to attract and retain talented executive officers would be detrimental to our company’s long-term business objectives and to our stockholders.
Accordingly, our Board recommends a vote “AGAINST” this proposal (Proposal 4).
BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT | 61 |
PROPOSAL 4: STOCKHOLDER PROPOSAL
Stockholder Proposals for our 2017 Annual Meeting.Stockholder proposals submitted for inclusion in the proxy statement for our 2017 annual meeting must comply with applicable requirements or conditions established by the SEC, including Rule 14a-8 of the Exchange Act, and must be received by our Corporate Secretary no later than the close of business on November 17, 2016.
Pursuant to our proxy access Bylaw provision, one, or a group of up to 20 stockholders who, in aggregate, own continuously for at least three years, shares of our company representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, may nominate and include in our proxy materials director nominees constituting up to 20% of our Board, provided that the stockholder(s) and the nominee(s) satisfy the requirements in our Bylaws. Notice of proxy access director nominees must be received by our Corporate Secretary at the address below no earlier than October 18, 2016 and no later than the close of business on November 17, 2016, assuming we do not change the date of our 2017 annual meeting by more than 30 days before or 70 days after the anniversary date of our 2016 annual meeting.
If you would like to submit a matter for consideration at our 2017 annual meeting (including any stockholder proposal not submitted under Rule 14a-8 or any director nomination) that will not be included in the proxy statement for that annual meeting, it must be received by our Corporate Secretary no earlier than the close of business on December 28, 2016 and no later than the close of business on February 11, 2017, assuming we do not change the date of our 2017 annual meeting by more than 30 days before or 70 days after the anniversary date of our 2016 annual meeting. Any matter must comply with our Bylaws.
All stockholder proposals must be received by our Corporate Secretary at Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-18-05, Charlotte, North Carolina 28255 by the applicable dates specified above.
62 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
VOTING AND OTHER INFORMATION
Item of Business. This Special Meeting is being called by the Board for stockholders of the company to vote on the Proposal, as described above. The Board unanimously recommends that stockholders vote “FOR” the Proposal.
According to our Bylaws, business to be conducted at a special meeting of stockholders may only be brought before a special meeting by our notice of meeting. No matters other than the Proposal will be presented for action by stockholders at the Special Meeting or at any adjournment or postponement of the meeting.
Who Can Vote.Only holders of record at the close of business on August 10, 2015March 2, 2016 (the record date) will be entitled to notice of and to vote at our Special Meeting.annual meeting. As of August 10, 2015,March 2, 2016, the following shares were outstanding and entitled to vote:
Shares | Number of Shares Outstanding and Entitled to Vote | Shares | Number of Shares Outstanding and Entitled to Vote | |||||||
Common Stock | 10,438,419,766 | Series 3 Preferred Stock | 21,773 | |||||||
Series B Preferred Stock | 7,571 | Series 4 Preferred Stock | 7,010 | |||||||
Series 1 Preferred Stock | 3,275 | Series 5 Preferred Stock | 14,056 | |||||||
Series 2 Preferred Stock | 9,967 | — | — |
Shares | Number of Shares Outstanding and | |
Common Stock | 10,325,675,290 | |
Series B Preferred Stock | 7,571 | |
Series 1 Preferred Stock | 3,275 | |
Series 2 Preferred Stock | 9,967 | |
Series 3 Preferred Stock | 21,773 | |
Series 4 Preferred Stock | 7,010 | |
Series 5 Preferred Stock | 14,056 |
Each share of our common stock and Series B Preferred Stock is entitled to one vote. Each share of the Series 1 to 5 Preferred Stock is entitled to 150 votes. All stockholders vote together without regard to class, except as otherwise required by law.
In accordance with Delaware law, for the 10 days prior to our Special Meeting,annual meeting, a list of registered stockholders entitled to vote at our Special Meetingannual meeting will be available for inspection in the Office of the Corporate Secretary, Bank of America Corporation, Hearst Tower, 214 North Tryon Street, Charlotte, North Carolina 28255. The list will also be available at our Special Meeting.annual meeting.
How to Vote.YouVoting Information for Registered Holders.If you are a registered holder, meaning that you hold our stock directly (not through a bank, broker, or other nominee), you may vote in person at our Special Meetingannual meeting or by submitting your proxy by:
Internet: going towww.investorvote.com/bac and following the online instructions. You will need information from your Notice of Internet Availability or proxy card, as applicable, to submit your proxy |
Telephone: calling the phone number located on the top of your proxy card and following the voice prompts. You will need information from your proxy card to submit your proxy |
Mail (if you received your proxy materials by mail): marking your vote on your proxy card, signing your name exactly as it appears on your proxy card, dating your proxy card, and returning it in the envelope provided |
To be counted, your proxy must be received before the polls close at our Special Meeting. If your shares are held beneficially through a bank, broker or other nominee in street name, you should follow the voting instructions provided to you by that entity or person.annual meeting.
You may revoke your proxy and change your vote at any time before the voting polls close at our Special Meetingannual meeting by submitting:
a properly executed proxy of a later date, or |
a written notice of revocation (of your previously executed proxy) sent to our Corporate Secretary, or |
a vote cast in person at our |
All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted according to your voting instructions. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with our Board’s recommendation to vote “FOR” the Proposal.recommendations. If other matters properly come before our Special Meeting,annual meeting, the proxies will vote on these matters in accordance with their best judgment.
| BANK OF AMERICA CORPORATION |
| 2016 PROXY STATEMENT
|
63 | ||||||
VOTING AND OTHER INFORMATION
Voting Information for Beneficial Owners.If you are a beneficial owner, meaning that you hold our stock in the name of a bank, broker, or other nominee (commonly referred to as holding shares in “street name”), you should have received these proxy materials from your bank, broker, or other nominee by mail or email with information on how to submit your voting instructions. You also may vote by going towww.proxyvote.com and following the online instructions. If you are a beneficial owner and you do not provide voting instructions to your bank, broker, or other nominee, your shares will be treated as a “broker non-vote,” with respect to Proposals 1, 2, and 4, and may be voted in the discretion of your bank, broker, or other nominee solely on Proposal 3 as described under “Votes Required” below. To change any of your previously provided voting instructions, or if you have questions about voting your shares, please contact your bank, broker, or other nominee directly.
Employee Voting.If you participate in The Bank of America 401(k) Plan, The Bank of America Transferred Savings Account Plan, the Merrill Lynch Employee Stock Purchase Plan (“ML ESPP”)(ML ESPP), or the Merrill Lynch & Co., Inc. 401(k) Savings & Investment Plan, and your plan account has investments in shares of our common stock, you must provide voting instructions to the plan trustee (by proxy card, the Internet, telephone, or telephone)proxy card) for your shares to be voted according to your instructions. Each plan participant’s voting instructions will also direct the trustee to vote any unvoted shares in the same ratio as the shares for which voting instructions have been received by the trustee, unless contrary to law and except for participants in the ML ESPP. If you participate in the ML ESPP, your shares cannot be voted unless you provide voting instructions to the ML ESPP trustee. Your voting instructions to the plan trustee will be held in strict confidence. The deadline to provide voting instructions for shares held in the foregoing plans is Monday, September 21, 2015,Tuesday, April 26, 2016, at 8:00 a.m., Eastern Daylight Time.local time. You will not be able to submit voting instructions or change prior voting instructions after this deadline.
QuorumShares Required to Hold our SpecialAnnual Meeting.In order to hold our Special Meeting,annual meeting, a quorum representing holders of a majority of the voting power of our common stock, the Series B Preferred Stock, and the Series 1 to 5 Preferred Stock must be present in person or represented by proxy. We will countintend to include as presentpresent: shares present in person but not voting andvoting; shares for which we have received proxies but for which holders thereof have abstained from voting. Broker non-votes, if any, will not be counted asvoting; and shares present.represented by proxies returned by a bank, broker, or other nominee holding the shares.
Adjournment, Postponement and Recess.Votes Required The Chairman of the Special Meeting may adjourn, postpone, or recess the Special Meeting to the fullest extent permitted by law and our Bylaws. The Chairman of the Board will preside at the Special Meeting.
Vote Required to Approve the Proposal.
Votes Required | Effect of | Effect of Broker Non-Votes | ||||||
Proposal 1: Electing Directors |
Majority of votes cast | No effect | No effect | |||||
Proposal 2: Approving Our Executive Compensation (an advisory, non-binding “Say on Pay” resolution) | Majority of votes cast | No effect | No effect | |||||
Proposal 3: Ratifying the Appointment of Our Independent Registered Public Accounting Firm for 2016 | Majority of votes cast | No effect | Brokers have discretion to vote | |||||
Proposal 4: Stockholder Proposal | Majority of votes cast | No effect | No effect |
The Board is committed to act in accordance with the vote results of the Proposal.
l | Proposal 1: Electing Directors. Our Bylaws provide that a nominee for director in an uncontested election will be elected to our Board if the votes cast for the nominee’s election exceed the votes cast against his or her election. Abstentions from voting and broker non-votes are not treated as votes cast and are not counted for purposes of determining the election of directors. If a nominee does not receive the required votes for election at our annual meeting, our Board, with the assistance of our Corporate Governance Committee, will consider whether to accept the director’s offer of resignation, which is required to be tendered under our Corporate Governance Guidelines. Our Board will publicly disclose its decision regarding the resignation and the basis for its decision within 90 days after election results are certified |
l | Other Proposals. Approval of Proposals 2 through 4 requires the votes cast in favor of each such proposal to exceed the votes cast against the proposal. Abstentions from voting and broker non-votes (excluding Proposal 3, for which brokers have discretion to vote) are not treated as votes cast and are not counted in determining the outcome of any of these proposals |
64 | BANK OF AMERICA CORPORATION | 2016 PROXY STATEMENT |
VOTING AND OTHER INFORMATION
Routine Versus Non-Routine Proposals. The NYSE will determine whether the Proposal is routine or not routine. If the Proposal is routine, a bank, broker, or other nominee holding shares for a beneficial owner in street name may vote in its discretion on the Proposal without receiving voting instructions from the beneficial owner. If the Proposal is not routine, the broker or other entity may vote on the Proposal only if the beneficial owner has provided timely voting instructions. A “broker non-vote” occurs when the broker or other entity is unable to vote on the Proposal because the proposal is not routine and the beneficial owner does not provide timely voting instructions.
If the NYSE determines that the Proposal is not routine, your bank, broker, or other nominee will not be able to vote your shares on the Proposal unless you direct them how to vote. Please follow the voting instructions provided by your bank, broker, or other nominee to ensure your vote is counted.
Attending our Special Meeting.Annual Meeting. All holders of our common stock, Series B Preferred Stock, and Series 1 to 5 Preferred Stock as of the close of business on the record date (August 10, 2015)(March 2, 2016) and persons holding valid proxies from such stockholders are invited to attend our Special Meeting.annual meeting. To gain entrance to the meeting, you must present valid, government-issued photo identification and the following:
Registered stockholders (one of the following): |
O | the admission ticket attached to the top of your proxy card or made available by |
O | your Notice of Internet Availability |
Beneficial/street name stockholders (one of the following): |
O | the admission ticket made available by visitingwww.proxyvote.com and following the instructions |
O |
|
a letter from your bank or broker or a brokerage statement evidencing ownership of shares of Bank of America stock as of the record date |
Persons holding valid proxies (one of the following): |
O | a proxy from a registered stockholder—a written legal proxy granted to you and signed by the registered |
|
|
|
| |||||||
VOTING AND OTHER INFORMATION
O | a proxy from a beneficial/street name stockholder—a written legal proxy granted by the brokerage firm or bank holding the shares to the beneficial stockholder, in assignable form, and a written legal proxy granted by the beneficial stockholder to you, together with a brokerage or bank statement or Notice of Internet Availability showing the beneficial stockholder’s shares |
If you are a beneficial/street name stockholder and you would like to vote in person at the meeting, you must also present a written legal proxy from the broker, bank, or other nominee.
Failure to follow these admissions procedures or failure to bring required documentation may delay your entry into, or prevent you from being admitted to, our Special Meeting.annual meeting.
To ensure that we can accommodate the greatest number of stockholders at our meeting, we reserve the right to limit the number of authorized proxyholders for any stockholder who may attend the meeting and to restrict the admission of guests or other attendees who are not stockholders.
Security measures may include bag, metal detector, and hand-wand searches. The use of cameras, (including cell phones with photographic capabilities), recording devices, smart phones, and other electronic devices is strictly prohibited.
We appreciate the opportunity to hear the views of our stockholders. In fairness to all stockholders and participants at our Special Meeting,annual meeting, and in the interest of an orderly and constructive meeting, stockholder comments at our Special Meetingannual meeting will be subject to rules of conduct that will be enforced. Copies of these rules will be available at our Special Meeting.annual meeting. Only stockholders, their valid proxy holdersproxyholders, or other previously authorized representatives may address our Special Meeting.annual meeting. Only proposals that meet the requirements of Rule 14a-8 of the Exchange Act or our Bylaws will be eligible for consideration at our annual meeting.
Cost of Proxy Solicitation.We will pay the cost of soliciting proxies. In addition to soliciting proxies by mail or electronic delivery, we also may use our directors or employees to solicit proxies either personally or by telephone, facsimile, mail, or e-mail.email. None of these directors or employees will receive any additional or special compensation for soliciting proxies. In addition, we have agreed to pay Georgeson Inc. and Innisfree M&A Incorporated (collectively, our “proxy solicitors”), in total, $150,000LLC $19,500 plus expenses to assist us in soliciting proxies from banks, brokers, and other nominees. We also will reimburse banks, brokers, and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners of our stock.
Eliminating Duplicative Proxy Materials.We deliver a single proxy statement and annual report with separate proxy cards, and/or separate Notices of Internet Availability, to multiple registered stockholders who share an address, unless we receive other instructions. If (a)(i) you and another registered stockholder share an address and each receive paper copies of our proxy materials and wish to receive only one paper copy or (b)(ii) you share an address with another registered stockholder, received a single set of our proxy materials, and would like to receive separate copies, you may request a change in delivery preferences by contacting our transfer agent, Computershare, N.A., at P.O. Box 43078, Providence, Rhode Island 02940-3078; toll-free 800-642-9855; orwww.computershare.com/bac. If you are a beneficial holder and receive multiple copies of our proxy materials and you would like to receive only one copy, contact your bank, broker, or other nominee.
Internet Availability Of Proxy Materials. We mailed or e-mailed to many of our stockholders a Notice of Internet Availability of our proxy materials with instructions on how to access our proxy materials over the Internet and how to vote. If you are a registered stockholder and would like to change the method of delivery of your proxy materials, please contact our transfer agent, Computershare Trust Company, N.A., P.O. Box 43078, Providence, Rhode Island 02940-3078; Toll free: 800-642-9855; orwww.computershare.com/bac. You may do the same as a beneficial stockholder by calling the bank, broker or other nominee where your shares are held.
Questions. If you would like additional copies of these proxy materials or have any questions or need assistance with your vote, please call our proxy solicitors at:
Georgeson, Inc.
All stockholders may call toll free: 866-413-5902
Email: bankofamerica@georgeson.com
Innisfree M&A Incorporated
Stockholders may call toll free: 877-687-1875
Banks and Brokers may call collect: 212-750-5833
| BANK OF AMERICA CORPORATION |
| 2016 PROXY STATEMENT
|
65 | ||||||
VOTING AND OTHER INFORMATIONAPPENDIX A
Additional Corporate Governance InformationAPPENDIX A: RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
Our company reports its financial results in accordance with generally accepted accounting principles (GAAP). If you would likeHowever, we believe that certain non-GAAP financial measures provide additional information regardingclarity in assessing the results of our corporate governance practices, you can read the definitive proxy statementcompany. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our 2015 Annual Meeting, which was filedcompany’s reported results prepared in accordance with the SEC. More information about our corporate governance can beGAAP.
Below is a reconciliation of GAAP and non-GAAP financial measures found on our website athttp://investor.bankofamerica.com under the heading “Corporate Governance,” including our: (a) Certificate of Incorporation; (b) Bylaws; (c) Corporate Governance Guidelines (including our Related Person Transactions Policy)pages ii, 31, and Director Independence Categorical Standards; (d) Code of Conduct and related materials; and (e) composition of each of our Audit, Compensation and Benefits, Corporate Governance, Credit and Enterprise Risk Committees, including the committee charters, and in other materials found on our website. This information is also available in print, free of charge, upon written request addressed to our Corporate Secretary, Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-18-05, Charlotte, North Carolina 28255.
In addition, we file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website atwww.sec.gov and our website athttp://investor.bankofamerica.com. The SEC’s website contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. You may also read and copy any document that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the operation of its Public Reference Room. You may also obtain a copy of any document that we file with the SEC free of charge by writing to our Corporate Secretary at Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-18-05, Charlotte, North Carolina 28255.
These proxy materials may quote or refer to third party research reports or analysis. To the extent that such a quote is included in these materials, the company has not sought or obtained the consent of the quoted source to the use of such quote as proxy soliciting material.
We are not incorporating by reference our website or any documents available on our website in this proxy statement.
Stockholder Proposals for our 2016 Annual Meeting.Stockholder proposals submitted for inclusion in the proxy statement for our 2016 Annual Meeting must comply with applicable requirements or conditions established by the SEC, including Rule 14a-8 under the Exchange Act of 1934, and must be received by our Corporate Secretary no later than the close of business on November 27, 2015.
We recently adopted a proxy access right to permit a stockholder, or a group of up to 20 stockholders, owning continuously for at least 3 years shares of our company representing an aggregate of at least three percent of the voting power entitled to vote in the election of directors, to nominate and include in our proxy materials director nominees constituting up to 20% of our Board, provided that the stockholder(s) and the nominee(s) satisfy the requirements in our Bylaws. Notice of proxy access director nominees must be received by our Corporate Secretary at the address below no earlier than October 28, 2015 and no later than the close of business on November 27, 2015.
If you would like to submit a matter for consideration at our 2016 Annual Meeting (including any stockholder proposal not submitted under Rule 14a-8 or any director nomination) that will not be included in the proxy statement for that annual meeting, it must be received by our Corporate Secretary no earlier than the close of business on January 7, 2016 and no later than close of business on February 21, 2016. Any matter must comply with our Bylaws.
All stockholder proposals must be received by our Corporate Secretary at Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-18-05, Charlotte, North Carolina 28255 by the applicable dates specified above, assuming we do not change the date of our 2016 Annual Meeting by more than 30 days before or 70 days after the anniversary date of our 2015 Annual Meeting.38.
December 31 | ||||||||
2015 ($ in millions) | 2014 ($ in millions) | |||||||
Total revenue, net of interest expense | 82,507 | 84,247 | ||||||
Fully taxable-equivalent adjustment | 909 | 869 | ||||||
Total revenue, net of interest expense on a fully taxable-equivalent basis | 83,416 | 85,116 | ||||||
Common shareholders’ equity | 233,932 | 224,162 | ||||||
Goodwill | (69,761 | ) | (69,777 | ) | ||||
Intangible assets (excluding mortgage servicing rights) | (3,768 | ) | (4,612 | ) | ||||
Related deferred tax liabilities | 1,716 | 1,960 | ||||||
Tangible common shareholders’ equity | 162,119 | 151,733 | ||||||
Noninterest expense | 57,192 | 75,117 | ||||||
Litigation expense | 1,204 | 16,371 | ||||||
Noninterest expense, excluding litigation | 55,988 | 58,746 | ||||||
Legacy Assets Servicing (LAS) noninterest expense | 4,451 | 20,633 | ||||||
LAS litigation expense | 819 | 15,201 | ||||||
LAS noninterest expense, excluding litigation | 3,632 | 5,432 | ||||||
December 31 | ||||||||
2015 | 2014 | |||||||
Ending common shares outstanding | 10,380,265 | 10,516,542 | ||||||
Book value per share of common stock | $ | 22.54 | $ | 21.32 | ||||
Tangible book value per share of common stock | $ | 15.62 | $ | 14.43 |
BANK OF AMERICA CORPORATION |
|
|
| |||||||
APPENDIX A
Article I, Section 1 of the company’s Bylaws was amended by inserting as clause (n) the definition of “Lead Independent Director” in alphabetical order:
(n) “Lead Independent Director” means the independent director appointed by the independent members of the Board of Directors in accordance with Article IV, Section 7 of these Bylaws.
Article III, Section 11 of the company’s Bylaws was amended and restated in its entirety as follows:
Section 11. Conduct of Meetings. The Chairman of the Board shall preside as chairman at each meeting of Stockholders or, in the Chairman of the Board’s absence, the Chief Executive Officer or President shall so preside. At the request of the Chairman of the Board or the Chief Executive Officer or President, in the event all are absent, such other officer as the Board of Directors shall designate shall so preside at any such meeting. In the absence of a presiding officer determined in accordance with the preceding sentence, any person may be designated to so preside at a Stockholders meeting by a plurality vote of the Shares represented and entitled to vote at the meeting. The Secretary or, in the absence or at the request of the Secretary, any person designated by the person presiding at a Stockholders meeting shall act as secretary of such meeting. The chairman of the meeting shall have the authority to adopt and enforce such rules or regulations for the conduct of meetings of Stockholders and the safety of those in attendance as deemed necessary, appropriate or convenient, including, without limitation, establishing: (a) an agenda or order of business for the meeting; (b) rules and procedures for maintaining order at the meeting and the safety of those present; (c) limitations on participation in the meeting to Stockholders entitled to vote at the meeting, their duly authorized and constituted proxies and such other persons as the chairman of the meeting shall permit; (d) restrictions on entry to the meeting after the time fixed for the commencement thereof; (e) limitations on the time allotted for consideration of each agenda item and for questions and discussion by participants; and (f) procedures requiring attendees to provide the Corporation advance notice of their intent to attend the meeting. The chairman of the meeting, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if the chairman should so determine, such chairman shall so declare to the meeting that any such matter or business not properly brought before the meeting shall not be transacted or considered. The chairman of the meeting may, for any reason, from time to time, adjourn any meeting of Stockholders pursuant to Article III, Section 7, or recess any meeting of Stockholders, without notice other than announcement at the meeting except as provided in Article III, Section 4. The date and time of the opening and closing of the polls for each matter upon which the Stockholders will vote at the meeting shall be announced at the meeting.
The company’s Bylaws were amended by adding a new Section 7 to Article IV as follows:
Section 7. Lead Independent Director. A majority of the independent members of the Board of Directors may elect from among the independent members of the Board of Directors a Lead Independent Director, but the election of a Lead Independent Director shall not be required. The Lead Independent Director may be removed as a Lead Independent Director by vote of a majority of the independent members of the Board of Directors. If a Lead Independent Director shall be elected, then the Lead Independent Director shall have such duties and authority as may be prescribed by the Board of Directors from time to time. For purposes of this Bylaw, “independent” has the meaning set forth in the New York Stock Exchange (“NYSE”) listing standards, unless the Corporation’s Common Stock ceases to be listed on the NYSE and is listed on another exchange, in which case such exchange’s definition of independence shall apply.
Article V, Section 2 of the company’s Bylaws was amended and restated in its entirety as follows:
Section 2. Special Meetings. Special meetings of the Board of Directors may be held at any date, time and place, within or without the State of Delaware, upon the call of the Chairman of the Board, the Lead Independent Director, the Chief Executive Officer, the President or of the Secretary acting under instructions from the Chairman of the Board, the Lead Independent Director, the Chief Executive Officer or the President, or upon the call of any three directors. Special meetings may be held at any date, time and place and without special notice by unanimous consent of the directors.
Article V, Section 7 of the company’s Bylaws was amended and restated in its entirety as follows:
Section 7. Conduct of Meetings. The Chairman of the Board shall preside at all meetings of the Board of Directors or, in the Chairman of the Board’s absence or at the Chairman of the Board’s request, the Lead Independent Director shall so
|
|
| 2016 PROXY STATEMENT
|
A-1 | ||||||
preside; provided, however, that
Bank of America
Bank of America Corporation
Responsible Growth
Grow and Win in the absence or at the request of both the Chairman of the Board and the Lead Independent Director, or if there shall not be persons holding such offices, the person selected to preside atMarket — No Excuses
Grow With Our Customer-Focused Strategy
Grow Within Our Risk Framework
Grow in a meeting of directors by a vote of a majority of the directors present shall preside at such meeting. The Secretary, or in the absence or at the request of the Secretary, any person designated by the person presiding at a meeting of the Board of Directors, shall act as secretary of such meeting.
Sustainable MannerArticle VI, Section 7 of the company’s Bylaws was amended by deleting in its entirety the following paragraph from such section:
The Chairman of the Board shall be a director who is independent from the Corporation. For purposes of this Bylaw, “independent” has the meaning set forth in the New York Stock Exchange (“NYSE”) listing standards, unless the Corporation’s common stock ceases to be listedPrinted on the NYSE and is listed on another exchange, in which case such exchange’s definition of independence shall apply. If the Board of Directors determines that a Chairman who was independent at the time he or she was selected is no longer independent, the Board of Directors shall select a new Chairman who satisfies the requirements of this Bylaw within 60 days of such determination. Compliance with this Bylaw shall be excused if no director who qualifies as independent is elected by the stockholders or if no director who is independent is willing to serve as Chairman of the Board. This Bylaw shall apply prospectively, so as not to violate any contractual obligation of the Corporation in effect when this Bylaw was adopted.
Article X, Section 2 of the company’s Bylaws was amended and restated in its entirety as follows:
Section 2. Meetings. During any Emergency, a meeting of the Board of Directors, or any committee thereof, may be called by any member of the Board of Directors, the Chairman of the Board, the Lead Independent Director, the Chief Executive Officer, President, a Vice Chairman, the Secretary or any officer reporting directly to the Chief Executive Officer. Notice of the time and place of the meeting shall be given by any available means of communication by the person calling the meeting to such of the directors and the members of the Corporation’s Management Operating Committee, or any successor committee thereto, (the “Designated Officers”) as it may be feasible to reach. Such notice shall be given at such time in advance of the meeting as, in the judgment of the person calling the meeting, circumstances permit. As a result of any Emergency, the Board of Directors may determine that a meeting of Stockholders not be held at any place, but instead be held solely by means of remote communication in accordance with the DGCL.recycled paper.
|
|
|
| |||||||||
Electronic Voting Instructions
| ||||||
Available 24 hours a day, 7 days a week!
| ||||||
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
| ||||||
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
| ||||||
| Vote by Internet | |||||
• Go towww.investorvote.com/ | ||||||
• Or scan the QR code with your smartphone | ||||||
• Follow the steps outlined on the secure website | ||||||
Vote by telephone | ||||||
• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone | ||||||
• Follow the instructions provided by the recorded message |
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
+
A | Election of Directors — The Board of Directors recommends | |
following |
1. Election of Directors: | For | Against | Abstain | For | Against | Abstain | For | Against | Abstain | |||||||||||||||||
01 - Sharon L. Allen | ¨ | ¨ | ¨ | 06 - Arnold W. Donald | ¨ | ¨ | ¨ | 11 - Lionel L. Nowell, III | ¨ | ¨ | ¨ | |||||||||||||||
02 - Susan S. Bies | ¨ | ¨ | ¨ | 12 - Thomas D. Woods | ¨ | ¨ | ¨ | |||||||||||||||||||
03 - Jack O. Bovender, Jr. | ¨ | ¨ | ¨ | 08 - Monica C. Lozano | ¨ | ¨ | ¨ | 13 - R. David Yost | ¨ | ¨ | ¨ | |||||||||||||||
04 - Frank P. Bramble, Sr. | ¨ | ¨ | ¨ | 09 - Thomas J. May | ¨ | ¨ | ¨ | |||||||||||||||||||
| ||||||||||||||||||||||||||
05 - Pierre J.P. de Weck | ¨ | 10 - Brian T. Moynihan | ||||||||||||||||||||||||
| ¨ | ¨ | ¨ |
B |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
For | Against | Abstain | Against | Abstain | ||||||||||||||||||||||
2. An Advisory (Non-Binding) Resolution to Approve Executive Compensation (Say on Pay) | ¨ | ¨ | ¨ | 3. Ratification of the Appointment of Our Independent Registered Public Accounting Firm for 2016 | ¨ | ¨ | ¨ |
C | Stockholder Proposal— |
For | Against | Abstain | ||||||||||||
4. Stockholder Proposal – Clawback Amendment | ¨ | ¨ | ¨ |
¢ | + |
028Z5K
Annual Meeting of Stockholders
Admission Ticket
Time: | Wednesday, April 27, 2016 | |||||
10:00 a.m., Local Time | ||||||
Place: | Hilton Charlotte Center City | |||||
222 East Third Street | ||||||
Charlotte, North Carolina 28202 | ||||||
Admission: | Valid admission ticket and valid | |||||
government-issued photo identification | ||||||
are required for attendance. |
|
Admission Ticket
Bank of America Corporation
Special Meeting of Stockholders
September 22, 2015
10:00 a.m., Local Time
1 Bank of America Center Auditorium
150 North College Street
Charlotte, NC 28202
Important Notice Regarding the Availability of Proxy Materials for the
Special Meeting of Stockholders To Be Held on September 22, 2015:
The Notice of Special Meeting and Proxy Statement
are available at www.investorvote.com/BAC.
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Bank of America Corporation
Proxy/Voting Instructions
This Proxy is Solicited on Behalf of the Board of Directors for the
Special Meeting of Stockholders To Be Held on September 22, 2015
Proxy/Voting Instructions This Proxy is Solicited on Behalf of the Bank of America Corporation Board of Directors for the 2016 Annual Meeting of Stockholders to be held on Wednesday, April 27, 2016 | + |
You, the undersigned stockholder, appoint each of AnneXuan (Karen) Fang and Andrew M. FinucaneSieg, severally and Gary G. Lynch,not jointly as attorney-in-fact and proxy, with full power of substitution, to vote on your behalf and with all powers you would possess if personally present all shares of Common Stock or Preferred Stock of Bank of America Corporation that you would be entitled to vote at the Special2016 Annual Meeting of Stockholders to be held on September 22, 2015 and any adjournment or postponement thereof.
The shares represented by this proxy will be voted as instructed by you and in the discretion of the proxiesproxy holders on all other matters that properly come before the Special2016 Annual Meeting of Stockholders to be held on September 22, 2015 and any adjournmentsadjournment or postponementspostponement thereof. If not otherwise specified, shares will be voted in accordance with the recommendations of the Board of Directors.
Bank of America employees.If you participate in The Bank of America 401(k) Plan, The Bank of America Transferred Savings Account Plan, the Merrill Lynch Employee Stock Purchase Plan (ML ESPP), or the Merrill Lynch & Co., Inc. 401(k) Savings & Investment Plan, and your plan account has investments in shares of our common stock, you must provide voting instructions to the plan trustee (by proxy card, the Internet, telephone or telephone)proxy card) for your shares to be voted according to your instructions. Each plan participant’s voting instructions will also direct the trustee to vote any unvoted shares in the same ratio as the shares for which voting instructions have been received by the trustee, unless contrary to law and except for participants in the ML ESPP. If you participate in the ML ESPP, your shares cannot be voted unless you provide voting instructions to the ML ESPP trustee. Your voting instructions to the plan trustee will be held in strict confidence. The deadline to provide voting instructions for shares held in the foregoing plans is Monday, September 21, 2015,Tuesday, April 26, 2016, at 8:00 a.m., Eastern DaylightLocal Time. You will not be able to submit voting instructions or change prior voting instructions after this deadline.
(Continued and to be marked, dated and signed,
D | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign | |
Below |
Please sign your name(s) exactly as they appear on the reverse side. Give your full title if you are signing for a corporation, partnership or other side)entity, or as attorney, administrator, executor, guardian, trustee, or in any other representative capacity.
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. |
/ / |
n | + |
002CS40125
BANK OF AMERICA 2016 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 27, 2016 Your vote is important. Thank you for voting. | ||||||||
Read the Proxy Statement and have the voting instruction form below at hand. Please note that voting by telephone and the Internet turns off at 11:59 p.m. Eastern Daylight Time on Tuesday, April 26, 2016. | ||||||||
Vote by Internet: | www.proxyvote.com, or scan the QR Barcode above. | |||||||
Vote by Phone: | 1-800-454-8683 | |||||||
Vote by Mail: | Use the envelope enclosed. | |||||||
STOCKHOLDER MEETING REGISTRATION: To vote and/or obtain an admission ticket to attend the meeting, go to the “stockholder meeting registration” link atwww.proxyvote.com. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | M99033-P73908 |
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting. The following materials are available at www.proxyvote.com: Meeting Notice, Proxy Statement, and Annual Report |
The Board of Directors recommends you vote FOR the election of each director: | ||||||||||
1. | Election of Directors: | |||||||||
Nominees: | For | Against | Abstain | |||||||
1a. | Sharon L. Allen | ¨ | ¨ | ¨ | ||||||
1b. | Susan S. Bies | ¨ | ¨ | ¨ | ||||||
1c. | Jack O. Bovender, Jr. | ¨ | ¨ | ¨ | ||||||
1d. | Frank P. Bramble, Sr. | ¨ | ¨ | ¨ | ||||||
1e. | Pierre J.P. de Weck | ¨ | ¨ | ¨ | ||||||
1f. | Arnold W. Donald | ¨ | ¨ | ¨ | ||||||
1g. | Linda P. Hudson | ¨ | ¨ | ¨ | ||||||
1h. | Monica C. Lozano | ¨ | ¨ | ¨ | ||||||
1i. | Thomas J. May | ¨ | ¨ | ¨ | ||||||
1j. | Brian T. Moynihan | ¨ | ¨ | ¨ | ||||||
1k. | Lionel L. Nowell, III | ¨ | ¨ | ¨ | ||||||
1l. | Thomas D. Woods | ¨ | ¨ | ¨ | ||||||
1m. | R. David Yost | ¨ | ¨ | ¨ |
Signature [PLEASE SIGN WITHIN BOX] Date |
PLEASE “X” HERE ONLY IF YOU PLAN TO ATTEND THE MEETING AND VOTE THESE SHARES IN PERSON | ¨ | |||||||
The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain | |||||
2. | Approving Our Executive Compensation (an Advisory, Non-binding “Say on Pay” Resolution) | ¨ | ¨ | ¨ | ||||
3. | Ratifying the Appointment of Our Independent Registered Public Accounting Firm for 2016 | ¨ | ¨ | ¨ | ||||
The Board of Directors recommends you vote AGAINST the following proposal: | For | Against | Abstain | |||||
4. | Stockholder Proposal – Clawback Amendment | ¨ | ¨ | ¨ |