DEF 14A 1 ddef14a.htm DEFINITIVE NOTICE & PROXY STATEMENT Definitive Notice & Proxy Statement
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

 

INFORMATION REQUIRED IN PROXY STATEMENT

 

SCHEDULE 14A INFORMATION

 

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Exchange Act of 1934 (Amendment No.    )

 

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Bank of America Corporation


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LOGO

 

March 30, 2011

 

Dear Fellow Stockholders:

 

We are pleased to invite you to our 2011 Annual Meeting of Stockholders to be held at 10:00 a.m., local time, on May 11, 2011, in the auditorium of our offices in 1 Bank of America Center, Charlotte, North Carolina.

 

At our annual meeting, we will discuss and vote on the matters described in the accompanying notice of our annual meeting and proxy statement followed by a report on our businesses. Please read through the proxy statement and 2010 Annual Report carefully.

 

We hope that you will attend in person, but, if you are unable to attend, you will be able to listen to our annual meeting live and view our slide presentation over the Internet at http://investor.bankofamerica.com. Whether or not you plan to attend, we encourage you to promptly submit a proxy to vote your shares by the Internet, telephone, or mail to ensure that your shares are represented at our annual meeting.

 

Sincerely,

 

LOGO

Brian T. Moynihan

Chief Executive Officer


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Notice of 2011 Annual Meeting of Stockholders


 

Date:    May 11, 2011
Time:    10:00 a.m., local time
Place:   

1 Bank of America Center Auditorium

150 North College Street, Charlotte, North Carolina 28202

 

Matters to be voted on:

 

   

Election of the 13 directors named in the proxy statement for the ensuing year;

 

   

An advisory vote on executive compensation;

 

   

An advisory vote on the frequency of future advisory votes on executive compensation;

 

   

A proposal to ratify the selection of the registered independent public accounting firm for 2011;

 

   

Stockholder proposals set forth at pages 52 through 64 in the accompanying proxy statement, if they are properly presented at our annual meeting; and

 

   

Any other business that may properly come before our annual meeting.

 

Stockholders of record at the close of business on March 16, 2011 will be entitled to vote at our annual meeting and any adjournments or postponements thereof.

 

Your vote is very important. Please submit your proxy as soon as possible via either the Internet, telephone or mail. Complete instructions for voting are outlined in “Voting Instructions and Other Information” on page 64 in the accompanying proxy statement.

 

If you attend our annual meeting, you will need to bring photo identification and proof of stock ownership. Our admission and ownership verification procedures are described in “Attending our Annual Meeting” on page 66 in the accompanying proxy statement.

 

By order of the Board of Directors

 

LOGO

Lauren A. Mogensen

Corporate Secretary

March 30, 2011

 

Important Notice Regarding the Availability of Proxy Materials for the 2011

Annual Meeting to be held on May 11, 2011. Our Proxy Statement and 2010 Annual Report to Stockholders are available free of charge at http://investor.bankofamerica.com.


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CONTENTS

 

Proposal 1: Election of Directors

   1

Identifying and Evaluating Nominees for Director

   1

The Nominees

   2

Director Not Standing for Re-Election at the Annual Meeting

   6

Corporate Governance

   7

Commitment to Corporate Governance Best Practices

   7

Our Board of Directors

   7

Director Independence

   7

Board Leadership

   8

Board Meetings, Committee Membership and Attendance

   9

Board Oversight of Risk

   10

Compensation Governance and Risk Management

   11

Chief Executive Officer and Senior Management Succession Planning

   13

Board Executive Sessions

   13

Board Evaluation and Education

   13

Charitable Giving and Political Contributions

   13

Communications with our Board

   13

Additional Corporate Governance Information Available

   14

Director Compensation

   14

Review of Related Person and Certain Other Transactions

   17

•Proposal 2: An Advisory (Non-Binding) “Say on Pay” Vote to Approve Executive Compensation

   18

•Proposal 3: An Advisory (Non-Binding) Vote on the Frequency of Future Advisory “Say on Pay” Votes

  

19

Compensation and Benefits Committee Report

   20

Compensation Discussion and Analysis

   20

Executive Summary

   20

Overview of Our Executive Compensation Program

   22

Our 2010 Compensation Decisions

   24

Our Other Compensation Practices

   29

Executive Compensation

   32

Summary Compensation Table

   32

Grants of Plan-Based Awards

   35

Year-End Equity Values and Equity Exercised or Vested

   38

Pension Benefits

   40

Nonqualified Deferred Compensation

   42

Potential Payments Upon Termination or Change in Control

   45

Stock Ownership of Directors and Executive Officers

   48

Section 16(a) Beneficial Ownership Reporting Compliance

   49

Audit Committee Report

   50

Proposal 4: Ratification of the Registered Independent Public Accounting Firm for 2011

   51

PwC’s 2010 and 2009 Fees

   51

Audit Committee Pre-Approval Policies and Procedures

   51

Proposals 5 through 12: Stockholder Proposals

   52

Voting Instructions and Other Information

   64

General Information

   67

Appendix A: Bank of America Corporation Director Independence Categorical Standards

   A-1

•To be voted on at the annual meeting

    


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Proxy Statement


 

We are providing this proxy statement for the purpose of soliciting your proxy. The Board of Directors of Bank of America Corporation (Bank of America or our company) requests that you submit your proxy via either the Internet, telephone or mail to allow the representation and voting of your shares at our annual meeting. This proxy statement is being mailed and made available starting on or about March 30, 2011.

 

Proposal 1: Election of Directors

 

Identifying and Evaluating Nominees for Director

 

Our Board is pleased to present 13 nominees for election to the Board at our annual meeting, all of whom currently serve as directors on our Board. Each director elected will serve until our next annual meeting at which a successor is elected. If any nominee is unable to stand for election for any reason, the persons appointed to vote your proxy may vote at our annual meeting for another candidate proposed by the Board, or the Board may choose to reduce its size.

 

Our Board is responsible for identifying and evaluating candidates for Board membership. Our Board believes our directors should possess backgrounds, qualifications, attributes and skills that, when taken together, provide our company with a broad range of experience in large, complex organizations; regulated industries; consumer, commercial and corporate businesses; financial and regulatory oversight; strategic planning; and risk management. See “The Nominees” on page 2 for the qualifications that our Board considers important for our nominees.

 

Our director nomination standards are set forth in our Corporate Governance Guidelines and include the following:

 

   

candidates should be capable of working in a collegial manner with persons of diverse educational, business and cultural backgrounds and should possess skills and expertise that complement the attributes of the existing directors;

 

   

candidates should represent a diversity of viewpoints, backgrounds, experiences and other demographics;

 

   

candidates should demonstrate notable or significant achievement and possess senior-level business, management or regulatory experience that would benefit our company;

 

   

candidates shall be individuals of the highest character and integrity;

 

   

candidates shall be free of conflicts of interest that would interfere with their ability to discharge their duties or that would violate any applicable laws or regulations;

 

   

candidates shall be capable of devoting the necessary time to discharge their duties, taking into account memberships on other boards and other responsibilities; and

 

   

candidates shall have a desire to represent the interests of all stockholders.

 

Our Corporate Governance Committee is responsible for recommending to our Board candidates for nomination. When considering potential director nominees, the Committee reviews available information regarding each potential candidate including qualifications, experience, skills and integrity as well as race, gender and ethnicity. The Committee and our Board also consider past performance before nominating any director for re-election. Although we do not have a formal policy regarding diversity, our Board views its diversity as a priority and seeks diverse representation among its members. Of our 14 current directors, one is a citizen of India, one is African-American and two are women, one of whom is Hispanic.

 

Our Corporate Governance Committee will, in consultation with our Chairman of the Board, consider candidates proposed or suggested by Board members, management, third party search firms and our stockholders. The Committee follows the same process and uses the same criteria for evaluating candidates regardless of their source.

 

Any stockholder who wishes to recommend a candidate for consideration by the Corporate Governance Committee for nomination at our annual meeting must submit a written proposal recommending the candidate to the office of the Corporate Secretary, Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-20-05, Charlotte, North Carolina 28255 prior to October 15th of the preceding year. The information required to be included in the proposal is set forth in our Corporate Governance Guidelines found at http://investor.bankofamerica.com.


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The Nominees

 

To assist you in assessing our Board’s nominees, we have set forth below each nominee’s name, age as of our annual meeting date, principal occupation, business experience and public company directorships held during the past five years.

 

Our Board selected these nominees based on their experience, qualifications, attributes and skills and the belief that each can make unique and substantial contributions to our company. All of our nominees, the majority of whom have served as chief executive officers, are seasoned leaders who bring to our Board a vast array of public company, financial services, private company, public sector, non-profit and other business experience. Our nominees have held, or currently hold, leadership positions in complex financial services organizations; management roles in the areas of risk, operations, finance, technology and human resources; and positions within regulatory organizations with primary oversight of our industry. In addition, our nominees represent diverse viewpoints and a blend of historical and new perspectives as a result of their varied tenures as directors of our company. Our Board believes this mix among the nominees enhances our Board’s effectiveness in light of our company’s businesses and organizational complexities, our industry’s operating environment and our company’s long-term strategy.

 

Our Board recommends a vote “FOR” all of the nominees listed below for election as directors (Proposal 1 on the proxy card).

 

 
Mukesh D. Ambani; 53; Chairman and Managing Director, Reliance Industries Limited

LOGO

  

-   Independent Director since March 2011.

-   Chairman and Managing Director of Reliance Industries Limited, India’s largest private conglomerate engaging in the exploration and production of oil and gas; petroleum refining and marketing; and petrochemical and retail businesses, since 2002, where he has served in a variety of key leadership positions since 1981.

-   Member of the United Nations’ Advocacy Group supporting the implementation of the Millennium Development Goals since 2010.

-   Other Current Directorships: Reliance Industries Limited (India).

 

Mr. Ambani’s role as Chairman and Managing Director of Reliance Industries Limited provides him with broad experience in the management and oversight of large, complex international businesses, and expertise in risk management and strategic planning. Mr. Ambani has significant experience relevant to our company through building Reliance’s leadership positions in refining, petrochemical exploration and production as well as organized retail. Mr. Ambani’s membership on the UN Advocacy Group supporting the implementation of the Millennium Development Goals provides him further experience with large international organizations.

Susan S. Bies; 64; Former Member, Board of Governors of the Federal Reserve System

LOGO

  

-   Independent Director since June 2009.

-   Senior Advisory Board Member to Oliver Wyman Group, a management consulting subsidiary of Marsh & McLennan Companies, Inc., since February 2009.

-   Member of the Securities and Exchange Commission’s (SEC) Advisory Committee on Improving Financial Reporting and Chairman of that committee’s Substantive Complexity Subcommittee from 2007 to 2008.

-   Governor of the Federal Reserve System, the central bank of the U.S., from 2001 to 2007.

-   Chief Financial Officer; Chairman of the Asset-Liability Management Committee and Executive Risk Management Committee; and Executive Vice President of Risk Management of First Tennessee National Corporation, a regional bank holding company, where she was employed from 1979 to 2001.

-   Other Current Directorships: Zurich Financial Services Ltd. (Switzerland).

 

Both Ms. Bies’ role as a Federal Reserve System Governor and her tenure with First Tennessee National Corporation provide her with broad expertise in consumer banking, financial regulation and risk management. In particular, Ms. Bies focused on enterprise financial and risk management during her career with First Tennessee National Corporation and further expanded her regulatory expertise by serving on the SEC’s Advisory Committee on Improving Financial Reporting. Her experience with a primary regulator of our company, as well as her other regulatory and public policy experience, give her a unique and valuable perspective relevant to our company’s business, financial performance and risk oversight.

 

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Frank P. Bramble, Sr.; 62; Former Executive Officer, MBNA Corporation

LOGO

  

-   Independent Director since January 2006.

-   Advisor to the Executive Committee from April 2005 to December 2005 and Vice Chairman from July 2002 to April 2005 of MBNA Corporation, a financial services company acquired by Bank of America in January 2006.

-   Director from April 1994 to May 2002 and Chairman from December 1999 to May 2002 of Allfirst Financial, Inc. and Allfirst Bank, wholly owned U.S. subsidiaries of Allied Irish Banks, p.l.c.

-   Lecturer at Towson University since his retirement in 2006.

-   Prior Directorships: Constellation Energy Group, Inc.

 

Mr. Bramble brings broad ranging financial services expertise as well as historical insight to our Board, having held leadership positions at two financial service companies acquired by our company (MBNA Corporation, acquired in 2006, and MNC Financial, acquired in 1993). 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 of importance to our company, including credit cycles, sales and marketing of consumers, audit and financial reporting and risk management.

Virgis W. Colbert; 71; Senior Advisor, MillerCoors Company

LOGO

  

-   Independent Director since January 2009.

-   Senior Advisor to MillerCoors Company, a beverage manufacturing company, since his retirement from that company in 2006.

-   Executive Vice President of Worldwide Operations from 1997 to 2005 for Miller Brewing Company, a predecessor of MillerCoors Company, where he served in a variety of key leadership positions, including Senior Vice President of Worldwide Operations, Senior Vice President of Operations, Vice President of Plant Operations and Vice President of Materials Manufacturing, since 1979.

-   Chairman Emeritus of the Thurgood Marshall College Fund and former Chairman of the Board of Trustees of Fisk University.

-   Other Current Directorships: Lorillard, Inc.; The Manitowoc Company, Inc.; Sara Lee Corporation; Stanley Black & Decker, Inc.

-   Prior Directorships: Delphi Corporation; Merrill Lynch & Co., Inc.

 

Mr. Colbert has many years of experience in the management and oversight of international businesses through his professional service with MillerCoors Company. He brings significant expertise in domestic and international operations, logistics management, change management and strategic planning. Through his service on other public company boards, he has dealt with a broad array of issues, including risk management and corporate governance issues.

Charles K. Gifford; 68; Former Chairman, Bank of America Corporation

LOGO

  

-   Director since April 2004.

-   Chairman of Bank of America from April 2004 until his retirement in January 2005.

-   Chairman and Chief Executive Officer from 2002 to 2004 of FleetBoston Financial Corporation, a financial services company acquired by our company in April 2004.

-   President and Chief Executive Officer from 2001 to 2002 and President and Chief Operating Officer from 1999 to 2001 of FleetBoston Financial Corporation.

-   Other Current Directorships: CBS Corporation; NSTAR.

 

Mr. Gifford’s banking career with our company and one of our predecessor companies, FleetBoston Financial Corporation, brings in-depth knowledge of the financial services industry and significant financial expertise relevant to all activities of our company. Under his stewardship, Mr. Gifford transformed the strategic direction of a regional bank during a recessionary period to create one of the largest financial services companies in New England. His historical perspective and managerial and leadership experience through past economic cycles provide valuable insight on the issues facing our company’s businesses.

 

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Charles O. Holliday, Jr.; 63; Chairman, Bank of America Corporation

LOGO

  

-   Independent Director since September 2009; and Chairman of the Board since April 2010.

-   Chairman from January 1999 to December 2009 and Chief Executive Officer from January 1998 to December 2008 of DuPont de Nemours and Company (DuPont), a science-based products and services company.

-   Executive-in-Residence at Vanderbilt University, Owen Graduate School of Management since July 2009.

-   Other Current Directorships: CH2M HILL Companies, Ltd.; Deere & Company; Royal Dutch Shell plc (the Netherlands).

-   Prior Directorships: DuPont; HCA Inc.

 

Through his tenure with DuPont, Mr. Holliday gained extensive experience leading large, complex, multi-national operations, managing risk and strategic planning and marketing to a varied customer base. His continued service as Chairman of DuPont’s board following his retirement as Chief Executive Officer offers him a perspective relevant to his current role as our independent Board Chairman. Mr. Holliday was a founding member of the International Business Council furthering his leadership of and experience with large global organizations.

D. Paul Jones, Jr.; 68; Former Chairman, Chief Executive Officer and President, Compass Bancshares, Inc.

LOGO

  

-   Independent Director since June 2009.

-   Of Counsel to Balch & Bingham, LLP, a law firm, since April 2008.

-   Chairman, Chief Executive Officer and President from 1991 to January 2008 of Compass Bancshares, Inc., a commercial bank holding company, where he held various positions since 1978.

-   Member, Board of Directors of the Federal Reserve Bank of Atlanta from 1994 to 2000.

-   Prior Directorships: Compass Bancshares, Inc.

 

Mr. Jones has government and regulatory experience as well as experience leading a large bank holding company through growth and acquisition. Mr. Jones practiced as a financial institutions and regulatory attorney and was involved in the formulation of legislative policy for the banking industry as a Director of the Federal Reserve Bank of Atlanta and as a participant in several banking industry groups. His legal background and his work with the Federal Reserve Bank of Atlanta has given him a professional perspective and in-depth experience with the complex laws and regulations applicable to our company and to our businesses.

Monica C. Lozano; 54; Chief Executive Officer, ImpreMedia, LLC

LOGO

  

-   Independent Director since April 2006.

-   Chief Executive Officer of ImpreMedia, LLC, the largest Hispanic news and information company in the U.S., since May 2010; and Senior Vice President from January 2004 to May 2010.

-   Publisher and Chief Executive Officer of La Opinion, a subsidiary of ImpreMedia, since January 2004.

-   President and Chief Operating Officer of Lozano Enterprises from 2000 to 2004.

-   Member of the Board of Regents of the University of California since 2001 and Trustee of the University of Southern California since 1991.

-   Member of President Obama’s Economic Recovery Advisory Board since February 2009.

-   Commissioner on the State of California Commission on the 21st Century Economy since December 2008.

-   Other Current Directorships: The Walt Disney Company.

 

Ms. Lozano is the Chief Executive Officer of the largest Hispanic news and information company in the U.S. In this role she has dealt with a wide range of issues such as operations management, marketing and strategic planning. 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 experience with the issues our company faces, such as governance, risk management and financial reporting. Her experience as a member of President Obama’s Economic Recovery Advisory Board also gives her valuable perspective on important public policy, societal and economic issues relevant to our company.

 

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Thomas J. May; 64; Chairman, President and Chief Executive Officer, NSTAR

LOGO

  

-   Independent Director since April 2004.

-   President since 2002 and Chairman and Chief Executive Officer since 1999 of NSTAR, an energy utility company.

-   Other Current Directorships: NSTAR; Liberty Mutual Holding Company, Inc.

-   Prior Directorships: FleetBoston Financial Corporation.

 

As Chairman, Chief Executive Officer and President and the former Chief Financial Officer and Chief Operating Officer of NSTAR, a regulated investor-owned electric and gas utility, Mr. May has experience with operations, risk management, international growth and business development, strategic planning and corporate governance matters, which give him a unique insight into the issues facing our company’s businesses today. In addition, as a Certified Public Accountant, Mr. May brings strong accounting and financial skills, which give him a professional perspective on financial reporting and enterprise and operational risk management.

Brian T. Moynihan; 51; President and Chief Executive Officer, Bank of America Corporation

LOGO

  

-   Director since January 2010.

-   President and Chief Executive Officer of Bank of America since January 2010.

-   Prior to his appointment as Chief Executive Officer and President, he served in various leadership positions at our company: President, Consumer and Small Business Banking (August 2009 to December 2009); President, Global Banking and Global Wealth Management (January 2009 to August 2009); General Counsel (December 2008 to January 2009); President, Global Corporate and Investment Banking (October 2007 to December 2008); and President, Global Wealth and Investment Management (April 2004 to October 2007).

-   Prior to Bank of America’s acquisition of FleetBoston Financial Corporation, he served as Executive Vice President of FleetBoston from 1999 to April 2004, with responsibility for Brokerage and Wealth Management from 2000 and Regional Commercial Financial Services and Investment Management from May 2003.

-   Other Current Directorships: Merrill Lynch & Co., Inc.

-   Prior Directorships: BlackRock, Inc.

 

Mr. Moynihan has many years of broad financial services experience, including wholesale and retail businesses, as well as international and domestic experience. As CEO, he has a deep understanding of all aspects of our company’s business. In 2009, he led our company in its acquisition and integration of Merrill Lynch & Co., Inc. His experience leading our consumer banking, commercial banking, investment banking and wealth management businesses, as well as sales and trading operations and our legal department at various times gives him a valuable perspective on our company.

Donald E. Powell; 70; Former Chairman, Federal Deposit Insurance Corporation (FDIC)

LOGO

  

-   Independent Director since June 2009.

-   Federal Coordinator for the Office of Gulf Coast Rebuilding from November 2005 to March 2008.

-   Chairman of the FDIC, an independent agency of the U.S. federal government, from August 2001 to November 2005.

-   Chairman, Chief Executive Officer and President of The First National Bank of Amarillo from 1997 to 2001.

-   Recipient of Presidential Citizens Medal in December 2008.

-   Member of the Board of Regents of the Texas A&M University System from 1995 to 2001, during which he served two terms as Chairman.

-   Other Current Directorships: Stone Energy Corporation; QR Energy L.P.

 

Mr. Powell has vast financial services expertise, having worked in our industry for over 40 years. As the former Chairman of the FDIC, Mr. Powell provides a unique perspective on the regulatory process and in dealing with regulators and government agencies. In addition, he brings large-scale operations and risk management expertise to our Board through his work as the Federal coordinator tasked with rebuilding plans in the aftermath of Hurricane Katrina and his service on the Board of Regents of the Texas A&M University System.

 

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Charles O. Rossotti; 70; Senior Advisor, The Carlyle Group

LOGO

  

-   Independent Director since January 2009.

-   Senior Advisor to The Carlyle Group, a private global investment firm, since 2003.

-   Commissioner of Internal Revenue of the Internal Revenue Service (IRS) from 1997 to 2002.

-   Co-founded American Management Systems, Inc., an international business and information technology consulting firm in 1970, where he served at various times as President, Chief Executive Officer and Chairman of the Board until 1997.

-   Other Current Directorships: Booz Allen Hamilton Holding Corporation; The AES Corporation.

-   Prior Directorships: Merrill Lynch & Co., Inc.

 

Mr. Rossotti combines corporate and regulatory experience to provide relevant expertise in audit, financial reporting, operations and risk management. He co-founded, led and grew an international business systems/systems integration consulting firm and subsequently significantly reformed the IRS’s organization, service, enforcement strategy and technology. His board service for Booz Allen Hamilton Holding Corporation and The AES Corporation give him experience with the issues our company faces, such as financial reporting, risk management and global operations.

Robert W. Scully; 61; Former Member of the Office of the Chairman, Morgan Stanley

LOGO

  

-   Independent Director since August 2009.

-   Member, Office of the Chairman of Morgan Stanley, a financial services company, from December 2007 until his retirement in January 2009.

-   Co-President of Morgan Stanley from February 2006 to December 2007, Chairman of Global Capital Markets from December 2004 to February 2006 and Vice Chairman of Investment Banking from September 1999 to February 2006.

-   Prior to joining Morgan Stanley in 1996, he served as a Managing Director at Lehman Brothers and at Salomon Brothers.

-   Other Current Directorships: Kohlberg Kravis Roberts & Co.

-   Prior Directorships: GMAC LLC; MSCI Inc.

 

Mr. Scully’s career in the financial services industry brings critical expertise to oversight of our investment banking, capital markets, wealth management, card services and commercial lending businesses. His leadership experience with a global financial services company brings an industry perspective to our business development outside the U.S. as well as issues such as executive compensation, risk management and audit and financial reporting.

Director Not Standing for Re-Election at the Annual Meeting

 

In accordance with SEC rules, below is information regarding William P. Boardman, who is not standing for re-election.

 

William P. Boardman; 69; Retired Vice Chairman, Bank One Corporation;

    Retired Chairman of the Board, Visa International Service Association

   

-   Independent Director from June 2009 to May 2011.

-   Chairman of Visa International Service Association from 1996 until his retirement in 2005; Chairman of Visa U.S.A. Inc. prior to 2006. Visa is a global payment technology company.

-   Senior advisor to The Goldman Sachs Group, Inc. from 2001 through 2003.

-   Vice Chairman and Director of Bank One Corporation and Chairman and Chief Executive Officer of First USA, a credit card subsidiary of Bank One Corporation, from 1984 to 2001.

-   Prior Directorships: CheckFree Corporation.

 

Mr. Boardman built a career in the financial services industry through service at Visa International Service Association, The Goldman Sachs Group, Inc. and Bank One Corporation. As a result, Mr. Boardman contributes investment banking and domestic and international consumer banking experience to our Board, with a significant focus on credit card services. These experiences, together with his background as an attorney, also enhance his contribution to regulatory, strategic planning and operations management oversight by our Board. Mr. Boardman is retiring as of May 11, 2011.

 

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Corporate Governance

 

Commitment to Corporate Governance Best Practices

 

Our Board strongly believes that good corporate governance practices are important for successful business performance. Our Board has adopted Bylaws, Corporate Governance Guidelines and committee charters (found at http://investor.bankofamerica.com), which provide the foundation for the governance of our company. Over the past year, we have enhanced our corporate governance practices in important ways, including amending our Bylaws to allow the holders of at least 10% of our common stock to call a special meeting of our stockholders. In addition, we amended our Corporate Governance Guidelines to discuss in greater detail our succession planning practices. We also amended the Charters of our Audit, Enterprise Risk and Credit Committees to further enhance their various roles in the oversight of risk management. We also agreed to other corporate governance enhancements as part of our previously disclosed February 2010 settlement agreement with the SEC. Our Board continues to monitor corporate governance best practices to promote a high level of performance in its oversight of our company and will adopt amendments to our Corporate Governance Guidelines and our Bylaws from time to time to implement those governance practices it considers evolving best practices.

 

Our Board of Directors

 

Our Board is responsible for the oversight of the management of our company. Key responsibilities of our Board, performed with or through its committees, include the following:

 

   

Oversight of management’s identification of, management of and planning for our company’s material risks, including operational risk, credit risk, market risk, interest rate risk, liquidity risk, reputational risk, legal risk and regulatory compliance risk as well as risks related to capital management and liquidity planning;

 

   

Oversight of our company’s maintenance of high ethical standards and effective policies and practices to protect our company’s reputation, assets and business;

 

   

Oversight of and approval of management’s development and implementation of an annual financial plan and oversight of strategic business plans for our company;

 

   

Oversight of our corporate audit functions, our registered independent public accounting firm and the integrity of the consolidated financial statements of our company;

 

   

Reviewing the performance of our Chief Executive Officer and approval of the total annual compensation awards for our Chief Executive Officer and our other executive officers;

 

   

Oversight of the establishment, maintenance and administration of our company’s compensation programs and employee benefits plans;

 

   

Reviewing, monitoring and approving the succession plan for our Chief Executive Officer and other key executives to provide for continuity in senior management;

 

   

Conducting an annual performance evaluation of our Board and its committees; and

 

   

Periodically reviewing the form and amount of director compensation to attract and retain the highest quality individuals and to further align our directors’ interests with those of our stockholders.

 

Director Independence

 

Our Board is composed at all times of at least a majority of directors who are independent. Our Board has determined that 12 of our 14 current directors and 11 of our 13 nominees, or approximately 86% and 85%, respectively, are independent directors. To assist it in making the annual affirmative determination of each director’s independence status, our Board has adopted Director Independence Categorical Standards, which are attached as Appendix A to this proxy statement and are also posted on our website at http://investor.bankofamerica.com. A director is considered “independent” if he or she meets both the criteria for independence in the New York Stock Exchange (NYSE) listing standards and our Categorical Standards.

 

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Our Board has evaluated the relationships between each current director (and his or her immediate family members and affiliates) and Bank of America and its subsidiaries. Our Board has affirmatively determined, upon the recommendation of our Corporate Governance Committee, that each of the following non-management directors is independent under the NYSE listing standards and our Categorical Standards: Mr. Ambani, Ms. Bies, Mr. Boardman, Mr. Bramble, Mr. Colbert, Mr. Holliday, Mr. Jones, Ms. Lozano, Mr. May, Mr. Powell, Mr. Rossotti and Mr. Scully. In addition, Walter E. Massey and Thomas M. Ryan, former directors, were independent directors prior to the expiration of their terms at our 2010 annual meeting.

 

Our Board has determined that Charles K. Gifford and Brian T. Moynihan do not meet the independence standards. Mr. Gifford entered into a retirement agreement with us in connection with his retirement as a Bank of America employee effective January 31, 2005. The agreement remained in effect through January 31, 2010 and, under the agreement, Mr. Gifford received compensation from us which exceeds the threshold set forth in the NYSE listing standards and our Categorical Standards. As the Chief Executive Officer, Mr. Moynihan is not independent.

 

In making its independence determinations, our Board considered the following ordinary course, non-preferential relationships that existed during the preceding three years between our company and its subsidiaries, and our directors, director nominees, their immediate family members and the business organizations and individuals associated with them:

 

   

The company’s banking and other lending subsidiaries had ordinary course banking and financial services relationships with all of our directors, some of their respective immediate family members and some of the entities affiliated with our directors and their immediate family members.

 

   

The company or its subsidiaries purchased products or services in the ordinary course from Reliance Industries Limited (telecommunication services), ImpreMedia, LLC (advertising and marketing) and NSTAR (the local energy utility provider where our Massachusetts offices are located) where Mr. Ambani, Ms. Lozano and Mr. May are executive officers, respectively. The fees paid to each of Reliance Industries Limited, ImpreMedia, LLC and NSTAR fell below the thresholds in the NYSE listing standards and our Categorical Standards.

 

   

The company or its subsidiaries provided banking products or services, including deposit, credit, treasury, capital markets, investment banking and trade services, in the ordinary course to Reliance Industries Limited and NSTAR where Mr. Ambani and Mr. May are executive officers, respectively. The fees paid by each of Reliance Industries Limited and NSTAR fell below the thresholds in the NYSE listing standards and our Categorical Standards.

 

   

The company or its subsidiaries provided banking products or services, including deposit, credit, treasury, capital markets, investment banking and trade services, in the ordinary course to, and purchased products or services, including utilities and marketing-webcast services, in the ordinary course from, Reliance ADA Group or its subsidiaries where Mr. Ambani’s immediate family member is an executive officer. The fees paid by or to Reliance ADA Group or its subsidiaries fell below the thresholds in the NYSE listing standards and our Categorical Standards.

 

   

The company or its subsidiaries received legal services in the ordinary course from a law firm where Mr. Rossotti’s immediate family member is a partner. The fees paid to the law firm fell below the thresholds in the NYSE listing standards and our Categorical Standards.

 

Our Board has determined that, based on the information available to it, none of these relationships constituted a material relationship between the director and our company or its subsidiaries for the purposes of the NYSE listing standards and our Categorical Standards.

 

Board Leadership

 

Our Board is committed to strong, independent Board leadership and believes that objective oversight of management’s performance is a critical aspect of effective Board leadership. Our Board’s current leadership structure includes an independent Chairman of the Board and the Audit, Compensation and Benefits and Corporate Governance Committees, each chaired by and comprised solely of independent directors. At least annually, our Board deliberates and discusses its appropriate leadership structure and the role and responsibilities of our Chairman of the Board and our Board’s committees, based upon the needs of our company, to facilitate our Board’s independent oversight of management.

 

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Our Board has determined that currently the positions of Chief Executive Officer and Chairman of the Board should be held by two different individuals. Our Board, upon the recommendation of our Corporate Governance Committee, appointed Mr. Holliday as our independent Chairman of the Board on April 28, 2010.

 

Our Board believes that its current leadership structure is appropriate for our company at this time because our Chief Executive Officer and our Chairman of the Board fulfill separate and distinct roles. Our Chief Executive Officer is responsible for the day-to-day management of our company while our Chairman of the Board presides over meetings of our Board and acts as liaison between the independent directors and our Chief Executive Officer. The reconstitution of our Board during 2009 resulted in eight new independent directors, and our Board believes that an independent Chairman is important at this time as our Board and management team continue to build relationships to work together effectively. Our Bylaws currently reflect this leadership model.

 

Board Meetings, Committee Membership and Attendance

 

Directors are expected to attend our annual meeting of stockholders, all regular and special meetings of our Board and all meetings of the committees on which they serve. In 2010, there were ten meetings of our Board, and each of the current directors attended at least 75% of the meetings of both our Board and committees on which they served. In addition, all of the directors then serving on our Board attended our 2010 annual meeting.

 

Our Board has six standing committees: Audit, Compensation and Benefits, Corporate Governance, Credit, Enterprise Risk and Executive. The charter for each committee, more fully describing their responsibilities, can be found at http://investor.bankofamerica.com. The table below indicates our current committee membership and the number of times each committee met in 2010. Our Board will consider committee membership for the 2011 term following our annual meeting. Mr. Ambani did not join our Board or serve on any committee until March 16, 2011.

 

Director Name  

Audit

Committee

 

Compensation
and Benefits

Committee

 

Corporate
Governance

Committee

  Credit
Committee
  Enterprise
Risk
Committee
 

Executive

Committee

Mukesh D. Ambani

      Member       Member        

Susan S. Bies

  Member               Member    

William P. Boardman

      Member       Member        

Frank P. Bramble, Sr.

                  Chair    

Virgis W. Colbert

          Member       Member    

Charles K. Gifford

              Chair       Member

Charles O. Holliday, Jr.
(Chairman of the Board)

                      Chair

D. Paul Jones, Jr.

  Member       Member            

Monica C. Lozano

          Member   Member       Member

Thomas J. May

          Chair       Member    

Brian T. Moynihan

                      Member

Donald E. Powell

  Member   Member               Member

Charles O. Rossotti

  Chair                    

Robert W. Scully

  Member   Chair                

Number of Meetings in 2010

  21   11   9   13   11   0

 

Our committees make recommendations to our Board as appropriate and regularly report on their activities to the entire Board.

 

Audit Committee. Our Audit Committee approves and provides direct oversight of our company’s registered independent public accounting firm, including such firm’s assessment of management’s assertion of the effectiveness of our company’s disclosure controls and procedures and our company’s internal control over financial reporting; exercises oversight of the integrity of our company’s consolidated financial statements and the effectiveness of our company’s system of internal controls and policies and procedures for managing and assessing risk; and oversees our corporate audit function. Our Board has determined that all Audit Committee members are independent under the NYSE listing standards, the Categorical Standards and the SEC rules and regulations applicable to audit committees. 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.

 

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Compensation and Benefits Committee. Our Compensation and Benefits Committee oversees the establishment, maintenance and administration of our compensation and benefits programs; reviews our company’s performance and approves and recommends the compensation of our Chief Executive Officer to our Board for its approval; and approves the compensation of all management direct reports to our Chief Executive Officer (including our executive officers). In addition, the Committee makes recommendations to our Board on director compensation. The Committee engaged Frederic W. Cook & Company (Cook) as its independent compensation consultant for 2010. Cook meets regularly with the Committee without the presence of management and alone with the Committee chairman (see “Compensation Discussion and Analysis” beginning on page 20 and “Compensation Governance and Risk Management” below for more details). All Committee members are independent under the NYSE listing standards, our Categorical Standards, and the heightened independence requirements we adopted in 2010 for members of the Committee under our February 2010 settlement agreement with the SEC. Those additional requirements are the same as the heightened independence requirements applicable to audit committees under SEC rules and regulations.

 

Corporate Governance Committee. Our Corporate Governance Committee exercises oversight of our Board’s governance processes; identifies and reviews the qualifications of, and recommends to our Board, nominees for election to our Board; recommends committee appointments to our Board; and sees that proper succession and management development plans are in place (see “Chief Executive Officer and Senior Management Succession Planning” on page 13). All Committee members are independent under the NYSE listing standards and our Categorical Standards.

 

Credit Committee. Our Credit Committee exercises oversight of senior management’s identification and management of our company’s credit exposures on an enterprise-wide basis and our company’s response to trends affecting those exposures. The Committee also oversees senior management’s actions relating to the adequacy of the allowance for credit losses and our company’s credit-related policies. All Committee members are non-management directors.

 

Enterprise Risk Committee. Our Enterprise Risk Committee exercises oversight of senior management’s responsibility to identify the material risks facing our company and senior management’s planning for, and management of, our company’s material risks, including market risk, interest rate risk, liquidity risk, operational risk and reputational risk. The Committee also oversees senior management’s establishment of policies and guidelines articulating our company’s risk tolerances for material categories of risk, the performance and functioning of our company’s overall risk management function, and senior management’s establishment of appropriate systems that support control of market risk, interest rate risk and liquidity risk. All Committee members are independent under the NYSE listing standards and our Categorical Standards.

 

Executive Committee. Our Executive Committee is authorized to act only on an emergency basis on matters requiring immediate approval or other action by our Board to provide for continuity in the oversight of our company’s management and must report all actions taken to the full Board no later than the next regularly scheduled meeting of our Board. The Committee currently consists of five directors, including our Chairman of the Board and our Chief Executive Officer.

 

Board Oversight of Risk

 

Risk is inherent in every activity that our company undertakes, and our company’s risk management is described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2010 Annual Report on Form 10-K starting at page 23. In choosing when and how to take risks, we evaluate our capacity for risk and seek to protect our brand and reputation, our financial flexibility, the value of our assets and the strategic potential of our company. To achieve this goal, our company has built a comprehensive risk management culture and has implemented governance and control measures to enforce that culture.

 

We maintain a governance structure that delineates the responsibilities for risk management activities, as well as governance and oversight of those activities, by management and our Board. We have a defined risk framework. Additionally, our Board has a formal process for approving our company’s articulation of its risk appetite, which is used internally to help our Board and management understand our company’s tolerance for risk in each of the major risk categories, the way those risks are measured and the key controls that influence our company’s level of risk-taking.

 

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Our Board’s Audit, Credit and Enterprise Risk Committees provide enterprise-wide oversight of Bank of America’s management and handling of risk. Our Audit Committee oversees, among other things, the integrity of our consolidated financial statements; compliance, regulatory and legal risk; and the overall effectiveness of our system of internal controls and our policies and procedures for managing and assessing risk. Our Credit Committee oversees, among other things, the management of our credit exposures on an enterprise-wide basis, our response to trends affecting those exposures, the adequacy of the allowance for credit losses and our credit related policies. Our Enterprise Risk Committee, among other things, oversees our management of and policies and procedures with respect to material risks on an enterprise-wide basis, including market risk, interest rate risk, liquidity risk, operational risk and reputational risk. Our Enterprise Risk Committee also oversees our capital management and liquidity planning. In addition to these three committees, the Compensation and Benefits Committee oversees our company’s compensation policies and practices to see that they do not encourage unnecessary and excessive risk taking by our associates. See “Compensation Governance and Risk Management” below. Each of these committees regularly reports to our Board on risk-related matters within the Committee’s responsibilities, which collectively provides our Board with integrated, thorough insight about our management of strategic, credit, market, liquidity, compliance, legal, operational and reputational risks. At meetings of each Board committee and our Board, directors receive updates from management regarding all aspects of enterprise risk management, including our performance against our risk appetite. Our Board leadership structure is consistent with our approach to risk oversight, as the Chief Executive Officer is involved directly in risk management as a member of the management, while our independent Chairman maintains an oversight role as part of the non-management directors of the Board.

 

Compensation Governance and Risk Management

 

Compensation Governance. Our Compensation and Benefits Committee actively engages in its duties and follows procedures intended to promote excellence in the governance of our pay-for-performance philosophy. At its meetings throughout the year, the Committee regularly reviews: (i) company performance; (ii) executive compensation strategy, approach, trends and regulatory developments; and (iii) other topics as appropriate. Throughout the year, the Committee reviews each executive officer’s total compensation package, including base salary, cash and stock incentive awards, accumulated realized and unrealized stock option and restricted stock gains, qualified and nonqualified retirement and deferred compensation benefit accruals and the incremental cost of all perquisites. Our Committee uses, and makes available to the full Board, an executive compensation statement, or “tally sheet,” for each executive officer for this purpose. The Committee uses this tool to make sure it evaluates any impacts its compensation decisions have on all elements of executive officer compensation and benefits. Annually, our Committee reviews its compensation decisions for all of the Chief Executive Officer’s management direct reports with our Board, including all cash and equity awards.

 

Our executive officers are generally not engaged directly with our Committee in setting the amount or form of executive officer or director compensation. However, as part of the annual performance review for our executive officers other than the Chief Executive Officer, our Committee considers the Chief Executive Officer’s perspective on each executive officer’s individual performance and compensation as well as the performance of our various business segments and lines of business.

 

The Committee has the sole authority and responsibility under its charter to approve the engagement of any compensation consultant it uses and the aggregate fees permitted for those services. Our Committee retained Cook as its independent compensation consultant for 2010. Cook’s business is limited to providing independent executive and director compensation consulting services to its clients. Cook does not provide any other management or human resources-related services to our company. Throughout the period our Committee has engaged Cook’s services, Cook has not received any other work or payment from our company. For 2010, Cook assisted our Committee by providing external market and performance comparisons, advising our Committee on executive, Chief Executive Officer and director compensation, and assisting with other executive and director compensation-related matters from time to time.

 

In addition, the Committee may delegate to management certain of its duties and responsibilities, including the adoption, amendment, modification or termination of benefit plans. Significant delegations made by the Committee include delegation of authority to (1) the Management Compensation Committee to direct the compensation for all of our associates and officers except for our Chief Executive Officer and those persons serving as management direct reports to our Chief Executive Officer, and (2) the Management Corporate Benefits Committee to oversee substantially all of our employee benefit plans.

 

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The Committee also reviews the form and amount of compensation paid to our non-management directors from time to time. The Committee recommends any changes to director compensation to our Board for approval.

 

Compensation Risk Management Policies and Practices. We believe that Bank of America applies prudent risk management practices to its incentive compensation programs across the enterprise. Our Compensation and Benefits Committee is committed to a compensation governance structure that effectively contributes to our company’s broader risk management policies.

 

During 2010, the Committee formally adopted our Compensation Governance Policy to govern our incentive compensation decisions and define the framework for oversight of the design of incentive compensation programs across our company. The Compensation Governance Policy is designed to be consistent with global regulatory initiatives so that incentive compensation plans do not encourage imprudent risk-taking. It specifically addresses the following:

 

   

The definition and process for identification of “risk-taking” associates;

 

   

The process and policies for the design and governance of incentive compensation plans to appropriately balance risks with compensation outcomes, including:

 

  -   The funding of incentive compensation pools,

 

  -   The determination of individual incentive compensation awards, and

 

  -   The use of discretion as part of those processes;

 

   

Policies on the effectiveness of incentive compensation plans through testing and monitoring at the appropriate level to confirm they appropriately balance risks with compensation outcomes, including the development of processes to administer clawback features of incentive compensation awards; and

 

   

Policies providing for the independence of the “independent control functions” (audit, finance, human resources, compliance, legal and risk) as well as appropriate input from those independent control functions to the Committee.

 

Our compensation governance structure allocates oversight to the appropriate level within our company so that the most relevant level of management or our Board, as applicable, makes compensation decisions, with documented input from the independent control functions. We have the following four levels of governance, each with identified roles and responsibilities in our compensation decisions: (i) our Board, (ii) our Compensation and Benefits Committee, (iii) our Management Compensation Committee and (iv) our Line of Business Compensation Committees.

 

Consistent with our Compensation Governance Policy, we conduct a comprehensive review, analysis and discussion of incentive design and operation annually through our incentive certification and review process. In support of this process, each of the Chief Executive Officer’s management direct reports, along with their management teams and independent control functions, meet throughout the year to discuss business strategy, performance, and risk with respect to compensation. The process includes a comprehensive review, analysis and discussion of incentive design and operation. All participants in the process certify that their incentive programs (i) are aligned with their line of business’ and our company’s business strategy and performance objectives, (ii) do not encourage excessive risk-taking beyond our company’s ability to effectively identify and manage risk and (iii) are compatible with effective controls and risk management.

 

The Compensation and Benefits Committee receives, from time to time, direct feedback from our independent control functions on our compensation programs. The Committee also holds regular periodic meetings with senior risk officers, including the Chief Risk Officer, to review and evaluate employee compensation programs to assess any risk posed by the programs so that the programs appropriately balance risks and rewards in a manner that does not encourage imprudent risk-taking and are otherwise consistent with our Compensation Governance Policy.

 

These management certifications are reviewed by Cook and shared and reviewed with the Committee. For performance year 2010, the Committee also reviewed individual incentive compensation awards for certain top paid associates beyond the Chief Executive Officer’s management direct reports, as well as aggregate information about awards to other groups of associates.

 

As a result of these 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 imprudent risk-taking and does not create risks that are reasonably likely to have a material adverse effect on our company.

 

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Chief Executive Officer and Senior Management Succession Planning

 

Our Board, with the assistance of our Corporate Governance Committee, oversees Chief Executive Officer and senior management succession planning. As set forth in our Corporate Governance Guidelines, our Board, in coordination with the Committee, also sees that our company has in place appropriate steps to address emergency Chief Executive Officer and executive officer succession planning in the event of extraordinary circumstances.

 

As part of the Chief Executive Officer continuity succession planning, our Chief Executive Officer, in coordination with our Global Human Resources Officer, periodically provides recommendations and evaluations to our Corporate Governance Committee of potential successors to the Chief Executive Officer position, including a review of any development plans recommended for such individuals. Our Board reviews potential internal candidates with our Chief Executive Officer and our Global Human Resources Officer, and other members of senior management as our Board considers appropriate, which review includes development needs, creation of development programs and developmental progress with respect to specific individuals. Directors engage with potential internal candidates at Board and committee meetings and periodically in less formal settings to allow personal assessment of candidates by our directors. Further, our Board periodically reviews the overall composition of the qualifications, tenure and experience of our senior management.

 

Our Corporate Governance Committee reports on its succession planning efforts to the full Board, and the full Board reviews succession planning at least annually at a regularly scheduled Board meeting.

 

Our emergency Chief Executive Officer succession planning enables our company to respond to an unexpected vacancy in the Chief Executive Officer position while continuing the safe and sound operation of our company and minimizing any potential disruption or loss of continuity to our company’s business and operations, including in the case of a major catastrophe.

 

Board Executive Sessions

 

Our non-management directors meet in executive session at each regularly scheduled Board meeting. Separately, our independent directors meet in executive session at least once a year. These executive sessions are led by Mr. Holliday, our Chairman of the Board.

 

Board Evaluation and Education

 

Each year, our Board and our Audit, Compensation and Benefits, Corporate Governance, Credit and Enterprise Risk Committees evaluate their effectiveness. Our Board views self-evaluation as an ongoing process designed to achieve high levels of Board and committee performance.

 

During 2010, our Board encouraged directors to participate in periodic telephonic Board information sessions. During these sessions, which were conducted by our Chief Executive Officer, directors received business updates from senior management, risk executives and our General Counsel. Six information sessions were held in 2010.

 

All current Audit Committee members also participated in two half-day sessions regarding accounting, financial reporting and Committee responsibilities that are specific to our company. Our Board also encourages directors to participate in continuing director education programs and our company reimburses directors for the expenses of participation. All new directors also participate in our director orientation program in their first six months as a director. This orientation includes presentations by senior management designed to familiarize new directors with our management; lines of business; strategic plans; significant financial, accounting and risk management matters; compliance programs; conflict policies; Code of Ethics and insider trading; and other policies.

 

Charitable Giving and Political Contributions

 

Our Board annually reviews a report on our charitable giving and political contribution programs. Information regarding our policy on political contributions and activities can be found in the “Corporate Political Contributions Policy Statement” on our website at http://investor.bankofamerica.com.

 

Communications with our Board

 

Our Board has established a process for stockholders and other parties to communicate with our Board, any director (including our Chairman of the Board), non-management members of our Board as a group or any committee.

 

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To do so, you may send a letter addressed to Attention: Corporate Secretary, Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-20-05, Charlotte, North Carolina 28255. For further information, refer to the “Contact the Board” section on our website at http://investor.bankofamerica.com. All communications will be kept confidential and promptly forwarded to the director(s) named. Items that are not from stockholders or are unrelated to a director’s duties and responsibilities as a Board member may be excluded by the Corporate Secretary, including, without limitation, solicitations and advertisements; junk mail; product-related communications; routine customer complaints; job referral materials such as resumes; surveys; and material that is determined to be illegal or otherwise inappropriate.

 

Additional Corporate Governance Information Available

 

More information about our corporate governance practices can be found on our website at http://investor.bankofamerica.com under the heading “Corporate Governance,” including our: (i) Certificate of Incorporation; (ii) Bylaws; (iii) Corporate Governance Guidelines (including the Related Person Transactions Policy); (iv) Code of Ethics and related materials; (v) composition of each of our Board committees, including the committee charters; and (vi) Categorical Standards. This information is also available in print, free of charge upon written request addressed to: Attention: Corporate Secretary, Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-20-05, Charlotte, North Carolina 28255.

 

Director Compensation

 

Our director compensation program is designed to compensate our non-management directors appropriately for the time and effort required to serve as a director of a large, complex and highly regulated global company and to align our directors’ interests with the long-term interests of our stockholders.

 

The primary elements of annual compensation for our non-management directors are:

 

   

cash award of $80,000 ($167,000 for the independent Chairman of the Board);

 

   

restricted stock award of $160,000 ($333,000 for the independent Chairman of the Board); and

 

   

cash retainer of $30,000 for the chairman of the Audit Committee and $20,000 for the chairman of each of the Compensation and Benefits, Corporate Governance, Credit and Enterprise Risk Committees.

 

Non-management directors who begin their Board service or committee chairmanship mid-year receive a pro-rated amount of annual compensation.

 

We grant the annual restricted stock award under the Bank of America Corporation Directors’ Stock Plan. The award is subject to a one-year vesting requirement. Dividends are paid on the award at the same time as dividends are paid on shares of our common stock. The number of shares awarded equals the dollar value of the award divided by the closing price of our common stock on the grant date, rounded down to the next whole share, with cash payable for any fractional share. 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.

 

Non-management directors can elect to defer all or part of their cash or equity compensation through the Bank of America Corporation Director Deferral Plan. If a director elects to defer the annual restricted stock award, we credit a “stock account” with a number of whole and fractional “stock units” of equal value. Each stock unit has the same value as a share of our common stock. These stock units are subject to the same one-year vesting requirement that applies under the Directors’ Stock Plan. Directors also can choose to defer their annual cash award, as well as any committee chairman retainers, into the stock account or a “cash account.” We credit the stock account with dividend equivalents in the form of additional stock units and credit the cash account with interest at a long-term bond rate. Following retirement from our Board, a non-management director receives the balances of his or her stock account (to the extent vested) and cash account in a single lump sum cash payment or in 5 or 10 annual cash installments per the director’s prior election. Because stock units are not actual shares of our common stock, they do not have any voting rights.

 

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During 2010, Mr. Moynihan was our sole management director, and he does not receive any compensation for his services as a director. The following table shows the compensation we awarded our non-management directors for their services in 2010:

 

2010 Director Compensation

 

Director   Fees Earned
or Paid in
Cash
($) (1)
    Stock
Awards
($) (2)
   

All Other
Compensation

($)

    Total
($)
 

Susan S. Bies

    80,000        160,000        0        240,000   

William P. Boardman

    80,000        160,000        0        240,000   

Frank P. Bramble, Sr.

    100,000        160,000        0        260,000   

Virgis W. Colbert

    80,000        160,000        0        240,000   

Charles K. Gifford (3)

    100,000        160,000        386,229        646,229   

Charles O. Holliday, Jr.

    167,000        333,000        0        500,000   

D. Paul Jones, Jr.

    80,000        160,000        0        240,000   

Monica C. Lozano

    80,000        160,000        0        240,000   

Walter E. Massey (retired)

    0        0        0        0   

Thomas J. May

    100,000        160,000        0        260,000   

Donald E. Powell (4)

    80,000        160,000        57,533        297,533   

Charles O. Rossotti

    110,000        160,000        0        270,000   

Thomas M. Ryan (retired)

    0        0        0        0   

Robert W. Scully

    100,000        160,000        0        260,000   

(1)   The amounts in this column represent the annual cash award plus any committee chairman cash retainers for 2010, including amounts deferred under the Director Deferral Plan. The following table shows the number of stock units credited to our non-management directors under the Director Deferral Plan for deferrals of 2010 cash compensation and the grant date fair value of those stock units based on the closing price of our common stock on the applicable date of deferral:

 

Director  

Stock Units

(#)

   

Grant Date
Fair Value

($)

 

Thomas J. May

    5,624.30        100,000   

Donald E. Powell

    899.89        16,000   

Charles O. Rossotti

    6,186.73        110,000   

 

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(2)   The amounts in this column represent the aggregate grant date fair value of restricted stock awards granted during 2010, whether or not those awards were deferred under the Director Deferral Plan. The grant date fair value was based on the closing price of our common stock on the applicable grant date. As of December 31, 2010, our non-management directors held the following number of unexercised stock options and the following number of unvested shares of restricted stock or unvested stock units:

 

Director   Unexercised
Options
(#)
   

Unvested

Shares of
Restricted Stock or
Stock Units
(#)

 

Susan S. Bies

    0        8,998   

William P. Boardman

    0        8,998   

Frank P. Bramble, Sr.

    0        8,998   

Virgis W. Colbert

    0        8,998   

Charles K. Gifford

    0        8,998   

Charles O. Holliday, Jr.

    0        18,728   

D. Paul Jones, Jr.

    0        8,998   

Monica C. Lozano

    0        8,998   

Walter E. Massey (retired)

    8,000        0   

Thomas J. May

    0        8,998   

Donald E. Powell

    0        8,998   

Charles O. Rossotti

    0        8,998   

Thomas M. Ryan (retired)

    0        0   

Robert W. Scully

    0        8,998   

 

(3)   Mr. Gifford’s Retirement Agreement effective January 31, 2005 terminated on January 31, 2010. Mr. Gifford received the following amounts under the Retirement Agreement for January 2010: (i) $4,167 in consulting fees and (ii) $66,189 in aircraft usage. We also paid Mr. Gifford a tax gross-up in the amount of $57,469 related to his use of company-provided aircraft which represents the difference in the taxes Mr. Gifford is required to pay using third-party “charter” values versus the more common IRS-approved Standard Industry Fare Level (SIFL) values, due to our decision to use charter value for purposes of imputing income for personal use unrelated to our company business. Mr. Gifford also receives office space and secretarial support, which for 2010 had an aggregate incremental cost to our company of $258,404, and we expect that he will continue to receive those benefits in the future.

 

(4)   On July 21, 2010, Mr. Powell was appointed, subject to regulatory confirmation, as a non-management director of Merrill Lynch International, a United Kingdom subsidiary of Bank of America. Non-management directors serving on this subsidiary’s board of directors receive an annual cash retainer in the amount of $75,000. The amount payable to Mr. Powell in 2010 for this service is shown in the “All Other Compensation” column above. The amount was pro-rated because he served for less than a full year.

 

Stock Ownership and Retention Requirements for Directors. We have formal stock ownership requirements that apply to our non-management directors. Under these 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.

 

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Review of Related Person and Certain Other Transactions

 

Our Related Person Transactions Policy, in our Corporate Governance Guidelines, sets forth our policies and procedures for the review, approval, or ratification of 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). 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.

 

On a semi-annual basis, each of our company’s directors and executive officers is required to complete a questionnaire that requests information regarding our directors and executive officers, their immediate family members and their transactions or relationships with our company. Our Legal and Compliance departments conduct a review to determine if there are any transactions subject to our policy that have not previously been approved or ratified by the Corporate Governance Committee. Each of our company’s directors and executive officers is required to promptly notify the Office of the Corporate Secretary of any change to information in his or her previously completed questionnaires for further review by the Legal and Compliance departments and, where appropriate, by the Committee.

 

The Committee must approve or ratify any related person transactions, and when doing so, considers the nature of the related person’s interest in the transaction; whether the transaction involves arms-length bids or market prices and terms; the materiality of the transaction to each party; the availability of the product or services through other sources; whether our company’s Code of Ethics could be implicated or our company’s reputation put at risk; whether the transaction would impair the judgment of a director or executive officer to act in the best interest of our company; the acceptability of the transaction to our company’s 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-management” 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 brokerage services, banking services, loans, insurance services and other financial services provided by our company to any related person, so long as 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 in compliance with applicable law, including the Sarbanes-Oxley Act of 2002 and Federal Reserve Board Regulation O.

 

A number of our directors 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 Bank of America and did not involve more than the normal risk of collectability.

 

To ensure the safe and efficient travel of our Chief Executive Officer, Mr. Moynihan and our company entered into a non-exclusive aircraft time sharing agreement, dated February 24, 2011, which permits Mr. Moynihan to lease our company’s aircraft for his use. Mr. Moynihan will pay our company for such use of the aircraft pursuant to the terms of the agreement. The transaction was approved by our Corporate Governance Committee in December 2010. When approving this transaction, the Committee considered the amount related to Mr. Moynihan’s use of the corporate aircraft, as disclosed in the 2010 All Other Compensation Table on page 34.

 

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Proposal 2: An Advisory (Non-Binding) “Say on Pay” Vote to Approve Executive Compensation

 

Section 14A of the Securities Exchange Act of 1934 (Exchange Act) added by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Financial Reform Act) provides our stockholders with an advisory “say on pay” vote to approve our executive compensation. In addition, we will provide our stockholders with an advisory “say on pay” vote on executive compensation in 2011 and 2012 under our previously disclosed settlement agreement with the SEC. Although the “say on pay” vote is advisory and is not binding on our Board, the Compensation and Benefits Committee will take into consideration the outcome of the vote when making future executive compensation decisions.

 

This advisory “say on pay” vote gives our stockholders the opportunity to express their views on the compensation of our named executive officers. The Board believes that our current executive compensation program directly links executive compensation to our performance and properly aligns the interests of our executive officers with those of our stockholders. For example:

 

   

For 2010, the Compensation and Benefits Committee applied our pay-for-performance philosophy and followed our compensation principles in deciding to make year-end compensation awards to our named executive officers generally below target levels for the year. In addition, the year-end awards did not include any immediate cash incentive payments to our executive officers. The majority of year-end incentives were delivered in the form of long-term equity awards tied to pre-established performance goals in order to focus our named executive officers on future sustainable performance. Our Compensation Discussion and Analysis contains additional information about the compensation decisions for our named executive officers for 2010.

 

   

We do not have any agreements with our executive officers that provide for cash severance payments upon termination of employment or in connection with a change in control.

 

   

We have a policy that prohibits future employment or severance agreements with executive officers that provide severance benefits exceeding two times base salary and bonus unless approved by our stockholders.

 

   

Our executive officers do not accrue additional retirement benefits under any supplemental executive retirement plan.

 

   

We have responsible stock ownership requirements that apply to our executive officers, including the Chief Executive Officer. In 2011, the Board amended the stock ownership requirements for our executive officers to require (a) the Chief Executive Officer to hold at least 500,000 shares of our common stock and retain at least 50% of the net after-tax shares from future equity awards until retirement and (b) our other executive officers to hold at least 300,000 shares (increased from 150,000 shares) of our common stock and retain at least 50% of the net after-tax shares from future equity awards until the increased ownership guideline is achieved. New executive officers have up to five years to meet these requirements.

 

   

Our named executive officers are subject to three different clawback requirements:

 

  O  

Since performance year 2009, equity awards to executive officers are subject to a “performance-based clawback” to encourage sustainable profitability over the vesting period. If during the vesting period our company or the executive officer’s line of business (if applicable) experiences a loss, the Compensation and Benefits Committee will assess the executive officer’s accountability for the loss. This assessment will take into account factors such as the magnitude of the loss, the executive officer’s decisions that may have led to the loss, the executive officer’s overall performance and other factors. Based on this assessment, all or part of the award may be cancelled.

 

  O  

Since performance year 2009, equity awards are subject to a detrimental conduct clawback to encourage compliance with policies and appropriate behaviors. If an executive officer engages in detrimental conduct, unvested awards are subject to cancellation and previously vested awards may be recouped.

 

  O  

Since October 2007, we have had a recoupment policy under which our 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.

 

See pages 20 to 47 of this proxy statement for more information on these elements of our executive compensation program.

 

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For these reasons, the 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.”

 

The Board recommends a vote “FOR” approval of this resolution (Proposal 2 on the proxy card).

 

Proposal 3: An Advisory (Non-Binding) Vote on the Frequency of Future Advisory “Say on Pay” Votes

 

In Proposal 2 above, we ask our stockholders to vote on an advisory basis to approve the compensation of our named executive officers. Section 14A of the Exchange Act also provides our stockholders with the opportunity to recommend on an advisory basis how frequently we should provide future advisory “say on pay” votes. By voting on this Proposal 3, stockholders may tell us whether they would prefer to have an advisory “say on pay” vote each year, every two years, or every three years.

 

Our Board has determined that having an advisory “say on pay” vote annually is the most appropriate policy for our company at this time and, therefore, recommends that you vote to have future advisory “say on pay” votes each year. While our executive compensation program is designed to promote a long-term connection between pay and performance, our Board recognizes that executive compensation disclosures are made annually. An annual advisory vote on executive compensation also is consistent with our practice of having all directors elected annually and providing stockholders the opportunity to ratify the Audit Committee’s selection of independent auditors annually. However, our stockholders should note that because the advisory vote on executive compensation occurs well after the beginning of the performance year, and because the different elements of our executive compensation program are designed to operate in an integrated manner and complement one another, in many cases it may not be appropriate or feasible to change our executive compensation program in consideration of any one year’s advisory vote on executive compensation before our next annual meeting of stockholders.

 

Although our Board believes that holding an advisory “say on pay” vote on executive compensation each year currently reflects the appropriate balance, our Board may reassess this issue periodically and may decide that it is in the best interests of our stockholders and our company to hold an advisory “say on pay” vote more or less frequently than the option preferred by our stockholders and may vary our practice based on factors such as discussions with our stockholders and the adoption of any material changes to our compensation programs.

 

Because this is an advisory vote, the voting results will not be binding on our Board. Although the vote is advisory, our Board will consider the frequency receiving the most votes when deciding how often to have advisory “say on pay” votes in the future. Stockholders can choose one of four choices for this Proposal on the proxy card: one year, two years, three years, or abstain. Stockholders are not voting to approve or disapprove our Board’s recommendation.

 

The Board recommends that stockholders vote to have future advisory votes on executive compensation each year (Proposal 3 on the proxy card).

 

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Compensation and Benefits Committee Report

 

The Compensation and Benefits Committee has reviewed and discussed with management the Compensation Discussion and Analysis that immediately follows this report. Based on this review and discussion, the 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, 2010.

 

Submitted by the Compensation and Benefits Committee of the Board:

 

Robert W. Scully, Chairman

William P. Boardman

Donald E. Powell

 

Compensation Discussion and Analysis

 

Our Compensation Discussion and Analysis discusses the key features of our executive compensation program and the approach taken by the Compensation and Benefits Committee in setting 2010 compensation for our named executive officers. Our named executive officers are:

 

   

Brian T. Moynihan, Chief Executive Officer;

 

   

Charles H. Noski, Chief Financial Officer;

 

   

Joe L. Price, Chief Financial Officer during part of 2010 and current President, Consumer and Small Business Banking;

 

   

Neil A. Cotty, interim Chief Financial Officer during part of 2010 and current Chief Accounting Officer;

 

   

Sallie L. Krawcheck, President, Global Wealth and Investment Management;

 

   

Edward P. O’Keefe, General Counsel; and

 

   

Bruce R. Thompson, Chief Risk Officer.

 

In addition, we are providing voluntary disclosure for Thomas K. Montag, President, Global Banking and Markets, because of the significant contributions of that line of business to the financial results of our company in 2010. For purposes of the Compensation Discussion and Analysis and other compensation disclosures in this proxy statement, and unless otherwise noted, references to our named executive officers include Mr. Montag even though he is not considered a named executive officer of our company under the SEC’s compensation disclosures rules.

 

Executive Summary

 

We design our executive compensation program to tie pay to the performance of our company, lines of business and individual executive officers over the short- and long-term. In addition, consistent with our compensation principles, our executive compensation program provides a mix of salary, benefits and incentives paid over time that we believe properly aligns the interests of our executive officers with the interests of our stockholders. We also take into account the manner in which results are achieved, including an evaluation of adherence to risk and compliance policies and other core values of our company.

 

While we believe that our compensation programs reflect our pay-for-performance philosophy, throughout 2010 we conducted extensive internal reviews of our compensation programs and practices in light of proposed and enacted legislation and regulations, global regulatory initiatives, and the current global economic environment. As a result, in 2010, we adopted our Compensation Governance Policy which outlines our company-wide governance structure for incentive compensation decisions and defines the framework for oversight of the design of incentive compensation programs across our company.

 

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Management’s Assessment of 2010 Performance

 

We saw certain economic improvements in 2010 which contributed to our 2010 results as we also worked to position our company for the future. Following is a summary of certain of our key results and achievements in 2010:

 

   

For 2010, we reported goodwill impairment charges of $12.4 billion, which resulted in a net loss of $2.2 billion. Excluding the goodwill impairment charges, our net income was $10.2 billion.1

 

   

Global excess liquidity rose $122 billion year over year to a record $336 billion at year-end 2010.

 

   

Risk-weighted assets were reduced by $87 billion compared to year-end 2009 through the sale of non-core positions, reductions in legacy positions and balance sheet management.

 

   

Deposit balances rose to a record $1 trillion at year-end 2010.

 

   

We continued to build capital and strengthen our balance sheet.

 

   

Credit costs declined significantly in 2010 as the economy continued to improve.

 

   

We maintained our market-leading positions in key segments, including deposits, payment products, consumer lending, wealth management, small business and middle-market lending, treasury services, investment banking, and sales and trading.

 

   

Approximately 281,000 loan and deposit products were sold to customers who had an investment relationship with Merrill Lynch.

 

   

Global Wealth and Investment Management continued to drive a strong client focus bringing together the investment products and the banking products of legacy entities.

 

   

Global Banking and Markets ranked No. 2 in global investment banking revenues for 2010, according to Dealogic, and ended the year with No. 1 positions in both global and U.S. rankings in leveraged loans and asset-backed securities.

 

   

During 2010, we made significant progress addressing legacy issues.

 

Our 2010 Compensation Decisions

 

As discussed in more detail beginning on page 24, the Committee set conservative total target compensation opportunities for each named executive officer based, in part, on the Committee’s view that 2010 would be a challenging transitional year for our company.

 

In making its compensation decisions for the 2010 performance year, the Committee recognized our company’s 2010 results, but also considered that 2010 was an important transition year for our company during which senior management built a solid foundation for the future of our company with a focus on long-term sustainable growth. The Committee viewed the accomplishments of senior management to improve our balance sheet, enhance our company’s risk and compliance culture and programs as well as regulatory relationships, further develop our customer-relationship strategy and complete a comprehensive three-year strategic plan as substantial and important progress in 2010. As a result, the Committee determined that the most appropriate way to pay our named executive officers for 2010 performance was to align compensation with the short- and long-term interests of our stockholders and our company’s future results.

 

Given these 2010 business results, performance considerations and goals, the Committee took the following key actions on compensation for our named executive officers for the 2010 performance year:

 

   

We made year-end compensation awards in February 2011 generally below the target levels established. These decisions were a result of the Committee’s application of our pay-for-performance philosophy consistent with our compensation principles.

 

   

The year-end awards did not include any immediate cash incentive payments to our executive officers and were comprised primarily of compensation subject to vesting based on performance hurdles.

 

   

The majority of year-end incentives were delivered through long-term equity awards intended to focus our named executive officers on future sustainable performance.


1   Net income, excluding goodwill impairment charges, is a non-GAAP financial measure. For reconciliation to a GAAP measure, refer to Table XIII in the 2010 Financial Review section of the 2010 Annual Report.

 

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Overview of Our Executive Compensation Program

 

Total Compensation. The total direct compensation for each of our executive officers is comprised of the executive’s incentive opportunity and a base salary. Our practice for 2010 and prior performance years has been to establish a target total direct compensation package for each executive officer at the beginning of each year. In January 2011, the Committee decided not to establish target total direct compensation opportunities for our executive officers for 2011. Instead, the Committee will determine 2011 year-end incentive compensation after its review of the 2011 performance of our company, lines of business and the individual members of our senior management team on a year-over-year basis. Consistent with our pay-for-performance philosophy, we believe that our executive officers should be able to provide for their retirement needs from the compensation they earn based on our performance. As a result, our current executive officers do not accrue additional retirement benefits under any supplemental executive retirement plans.

 

Base Salary. Base salary forms a relatively small part of the total compensation opportunity and is designed to provide a level of predictable income. The Compensation and Benefits Committee establishes the base salary levels for our executive officers to be part of a competitive total compensation package.

 

Incentive Opportunity. The primary compensation element for our executive officers is an incentive opportunity that is designed to balance both near-term and longer-term results by providing year-end incentive award opportunities based on our financial performance as well as non-financial measures and other factors.

 

   

The Committee determines the year-end incentive awards in the exercise of its informed discretion without applying any formulas or weightings to any particular factors or metrics considered. The Committee reviews the performance of our company, lines of business, and individual executive officers as well as other factors such as quality and sustainability of earnings, successful implementation of strategic initiatives and adherence to risk and compliance policies and other core values of our company.

 

   

The Committee believes that stock ownership is the most effective way to align the interests of our executive officers with those of our stockholders and focus our executive team on delivering sustainable returns to our stockholders over time. The Committee uses a balanced mix of fixed and variable compensation with a significant portion of total variable compensation delivered in the form of equity awards. Generally, approximately 70% of the total incentive opportunity for our Chief Executive Officer and approximately 60% of the total incentive opportunity for our other named executive officers is in the form of equity awards. Equity awards may include any combination of time-vesting restricted stock, performance-vesting restricted stock, stock options or other equity-based compensation. The Committee establishes vesting and other conditions for equity awards to encourage a long-term focus on generating sustainable results. Our Stock Plan includes a three-year minimum vesting period for awards that vest over time and a one-year minimum performance period for awards that vest based on performance.

 

   

Each year, the Committee considers the types of equity awards to make from a portfolio of award types. The types of awards used each year depend on our specific circumstances and the Committee’s view of what best supports our strategic goals and is aligned with sound risk management practices. The combination of delivering a significant amount of annual pay in the form of stock awards combined with stock ownership and retention requirements balances the goals of encouraging sustainable results over time and rewarding those results with appropriate levels of realized compensation.

 

Risk Management and Clawback Features. The Committee believes that the design and governance of our executive compensation program is consistent with the highest standards of risk management. The design of our executive compensation program supports our risk management goals through a set of checks and balances.

 

   

Rather than determining incentive compensation awards based on a single metric, the Committee applies a principles-based framework that considers multiple key performance metrics that collectively best indicate successful management and sustainable long-term performance.

 

   

In addition to financial metrics, the Committee applies its informed judgment taking into account factors such as quality and sustainability of earnings, successful implementation of strategic initiatives and adherence to risk and compliance policies and other core values of our company.

 

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We use long-term equity awards that vest and pay over time to align our executive officers’ interests with the interests of our stockholders. Our significant stock ownership requirements further enhance this alignment. See “Other Pay-for-Performance Features of Our Program” below.

 

   

Beginning with performance year 2009, equity awards to executive officers are subject to three separate and distinct “clawback” requirements that can result in the awards being canceled or prior payments recouped. These clawback requirements work together so that rewards realized over time appropriately reflect the time horizon of the risks taken and encourage proper conduct.

 

Our three clawback requirements are as follows:

 

  O  

The equity awards are subject to a “performance-based clawback” to encourage sustainable profitability. If during the vesting period our company or the executive officer’s line of business (if applicable) experiences a loss, the Committee will assess the executive officer’s accountability for the loss. This assessment will take into account factors such as the magnitude of the loss, the executive officer’s decisions that may have led to the loss, the executive officer’s overall performance and other factors. Based on this assessment, the Committee may determine to cancel all or part of the award.

 

  O  

The equity awards are also subject to a “detrimental conduct clawback.” If an executive officer engages in certain “detrimental conduct,”2 the equity award will be canceled to the extent not yet vested. In addition, the equity awards to our executive officers authorize our company to reduce or recover from the awards any losses if it is determined that the executive officer has engaged in detrimental conduct.

 

  O  

We have an Incentive Compensation Recoupment Policy covering all of our executive officers and under which our 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. This Policy goes beyond the clawback requirements under the Sarbanes-Oxley Act that are limited to our Chief Executive Officer and Chief Financial Officer. The Board or Committee will take, in its sole discretion, action it determines necessary under the policy to remedy the misconduct and prevent its recurrence. The Board or Committee may recover the amount of compensation paid or awarded that exceeds any lower amount that would have been paid or awarded based on the restated financial results, including through reimbursement of any bonus or incentive compensation awarded or cancellation of any unvested restricted stock or outstanding stock option awards.

 

  O  

In addition, we will fully comply with the clawback requirements under the Financial Reform Act following the issuance of final rules and regulations.

 

The “Compensation Governance and Risk Management” section beginning on page 11 contains more information about our Compensation Governance Policy, our compensation risk management practices and the extent to which our executive officers participate in setting the amount or form of executive officer and director compensation.


2   “Detrimental conduct” for this purpose is defined in detail in the award agreements but generally refers to serious misconduct in the performance of duties, such as (i) fraud, unethical conduct or falsification of records, (ii) improper disclosure of confidential information, (iii) intentional violation or negligent disregard for company policies, rules and procedures, (iv) gross negligence in performance of duties and (v) acts that give rise to termination for cause.

 

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Our 2010 Compensation Decisions

 

Setting 2010 Target Total Compensation. During the first quarter of 2010, or in the case of Mr. Noski at the time of his employment, the Compensation and Benefits Committee established a target total compensation opportunity for 2010 for each named executive officer, other than Mr. Cotty whose target total compensation opportunity was established when he was not an executive officer, as follows:

 

2010 Target Compensation

 

Name  

Base
Salary

($)

   

Cash

Incentive

($)

   

Equity-Based
Incentive

($)

   

Total

($)

 

Brian T. Moynihan

    950,000        3,550,000        10,500,000        15,000,000   

Charles H. Noski

    800,000        2,400,000        4,800,000        8,000,000   

Joe L. Price

    800,000        2,800,000        5,400,000        9,000,000   

Neil A. Cotty

    650,000        1,350,000        3,000,000        5,000,000   

Sallie L. Krawcheck

    800,000        4,570,000        6,630,000        12,000,000   

Edward P. O’Keefe

    600,000        800,000        2,100,000        3,500,000   

Bruce R. Thompson

    800,000        2,800,000        5,400,000        9,000,000   

Thomas K. Montag

    800,000        7,200,000        12,000,000        20,000,000   

 

In determining the target total compensation opportunities for 2010, the Committee considered that 2010 would be an important transition year for our company. In addition, the Committee generally took into account market trends in executive compensation among certain comparable companies as referenced below under “Competitor Groups,” but without any formulaic benchmarking. As a result, the Committee set the 2010 targets conservatively with the view that target compensation opportunities should increase in future years as our performance improves. The Committee also received advice from its independent executive compensation consultant.

 

Consistent with our pay-for-performance philosophy and our compensation principles, the Committee believed that the focus of the target total compensation opportunity should be on longer-term equity-based compensation that aligns the interests of our executive officers with the interests of our stockholders. Therefore, the mix of each target total compensation package shown above was heavily weighted towards performance year incentive awards with the majority of incentive awards in the form of year-end equity awards.

 

Mr. Moynihan’s target total compensation opportunity was set based on his responsibilities for the management and strategic direction of all of our lines of business and our company as a whole, as well as substantial obligations as the voice of our company. In establishing relative levels of target total compensation opportunities among the named executive officers, the Committee considered market trends in executive compensation applicable to different lines of business and the differences in the relative size and scope of each of our lines of business.

 

2010 Performance Review. During January 2011, the Committee evaluated the performance of our company, business units and the named executive officers. The Committee considered the following as key to its compensation decisions:

 

   

Company Performance. The Committee evaluated our company’s 2010 performance on a year-over-year basis taking into account a combination of our financial performance and non-financial measures and other factors, which the Committee believes collectively best indicate successful management of our business. The Committee considered performance of our company and lines of business in light of the fact that 2010 was an important transition year for our company with a new senior management team focused on delivering long-term sustainable growth, improving core operations and addressing legacy issues. The Committee also considered our named executive officers’ accountability for bolstering our strong risk management culture as well as our company’s year-over-year performance relative to various risk metrics established for 2010 consistent with our risk appetite and risk framework. In general, with respect to our company’s financial performance and performance relative to various risk metrics, the Committee reviewed growth in tangible book value per share,

 

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improvement in our company’s Tier 1 common and tangible common equity ratios, our improved liquidity position, the decline in risk-weighted assets, the strengthening of capital and liquidity positions without dilution to stockholders, the results from the sale of non-core businesses and assets, our long-term credit rating, and various market risk indicators. The Committee also considered the performance of each line of business relative to 2010 plan and on a year-over-year basis taking into account our company’s financial performance as well as non-financial measures and other factors.

 

The Committee considered our company’s financial results both including and excluding the effect of goodwill impairment charges. The Committee also considered the fact that, including the goodwill impairment charges and other charges during 2010, our company reported a net loss for 2010. The Committee does not normally back out non-recurring gains or losses from its financial performance review for purposes of incentive compensation decisions. The Committee felt it was appropriate, however, to consider financial performance results excluding goodwill charges because they were non-cash items resulting from unanticipated changes required by the Financial Reform Act and other regulatory initiatives and business decisions made a number of years ago by a prior management team.

 

   

Individual Performance. For the 2010 performance year, the Committee, and also our Board for our Chief Executive Officer, considered a number of financial and non-financial performance measures in determining the appropriate incentives for the Chief Executive Officer and the other named executive officers in the context of a recovering economy and changing regulatory environment. Generally, the Committee, and also our Board for our Chief Executive Officer, assessed the leadership, contributions and accountability of the Chief Executive Officer and the other named executive officers in the areas of creating sustainable stockholder value, risk management, and customer and associate engagement, all in the context of our company’s core values.

 

  O  

CEO Performance. The Committee considered Mr. Moynihan’s strong leadership in 2010, including his successful efforts to create a solid foundation for the future success of our company, despite the challenges facing our industry and business. Mr. Moynihan’s accomplishments included:

 

    Focused our Senior Leadership Team. Mr. Moynihan established a new senior leadership team of executives in 2010 to drive positive changes in our company’s culture and operations.

 

    Strengthened our Balance Sheet. Under Mr. Moynihan’s leadership and direction, our company significantly strengthened its balance sheet in key risk areas compared to 2009, including improved capital and liquidity levels. These and other balance sheet improvements further aligned our company’s performance with our risk appetite.

 

    Addressed Legacy Issues. Our company entered 2010 with a focus on our core operations, our customers and legacy issues. During 2010, Mr. Moynihan made progress in each of these areas, substantially increasing the focus and resources of our company to address substantial legacy issues in the Countrywide residential mortgage loan portfolio and completing the integration work on Merrill Lynch and Countrywide. In addition, our company fulfilled its commitment to increase equity by $3.0 billion through asset sales completed by December 31, 2010 related to its participation in the Troubled Asset Relief Program.

 

    Enhanced our Risk Culture. Under a renewed focus, our company (a) established the bank’s new risk appetite and risk framework, (b) reduced market and credit risk across our company and (c) improved asset quality.

 

    Implemented Enhanced Customer-Relationship Strategy. Mr. Moynihan laid a strong foundation for an enhanced customer-relationship strategy across all lines of business, with demonstrated progress across sectors in terms of relationship-driven products, cross-business referrals and dual coverage.

 

    Increased Associate Engagement. Mr. Moynihan’s continued focus on the importance of associate inclusion and engagement was demonstrated in 2010 through his participation in a variety of global Live Associate Meetings, Town Halls, line of business meetings and location visits throughout 2010. Through these forums, Mr. Moynihan kept our company and our associates focused on our core values, operating goals and business opportunities.

 

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    Completed a Comprehensive Three-Year Strategic Plan. Mr. Moynihan successfully completed a comprehensive three-year strategic plan for our company, which included (a) the development and introduction of a new company vision, values and operating principles and (b) the identification of company and line of business long-term sustainable growth targets and opportunities.

 

  O  

Other Executive Performance. As part of the annual performance review for our other executive officers, the Committee considered the perspectives of our Chief Executive Officer and the Global Human Resources Executive on each individual’s performance and incentive recommendations, as well as the performance of our various lines of business, business segments and functions. In particular, the Committee considered the following:

 

    Mr. Noski, Chief Financial Officer (CFO). Mr. Noski joined our company as its CFO in May 2010. During his first six months, Mr. Noski achieved a number of key results, including stabilizing the CFO organization and leadership, establishing critical relationships with internal and external stakeholders, and building-out our comprehensive three-year strategic plan. Under Mr. Noski’s leadership in 2010, we benefited from increased capital and liquidity levels, focus on enterprise expense management, and progress in addressing audit-related issues.

 

    Mr. Price, CFO for a portion of 2010 and currently President, Consumer and Small Business Banking. In 2010, Mr. Price demonstrated his versatility as a leader by moving from the CFO role to the role of President of Consumer and Small Business Banking with minimal disruption to either organization. By leveraging his strong command of consumer financials, Mr. Price exercised a balanced perspective in meeting customer and stockholder needs, while enhancing the operation of his division through our new customer-centric business model. Mr. Price made significant progress in responding to regulatory changes and remediating issues in the consumer division.

 

    Mr. Cotty, interim CFO for a portion of 2010 and currently Chief Accounting Officer. Mr. Cotty currently serves as our Chief Accounting Officer, but assumed the role of interim CFO during a portion of 2010. Mr. Cotty’s leadership during this time was critical to the continuity of the CFO organization.

 

    Ms. Krawcheck, President, Global Wealth and Investment Management (GWIM). Under Ms. Krawcheck’s leadership, GWIM produced solid profits for 2010 and set the foundation for future opportunities. Ms. Krawcheck led GWIM’s client-centric business model and stabilized the level of associate attrition. GWIM completed key platform conversion and other transition milestones with virtually no client or associate disruption. Ms. Krawcheck made foundational progress on delivering full enterprise capabilities to GWIM clients, particularly through the Global Commercial Banking partnership. Ms. Krawcheck also demonstrated a disciplined and proactive management of the company’s risk exposure related to the euro-zone financial services sector.

 

    Mr. O’Keefe, General Counsel. Mr. O’Keefe effectively managed and achieved positive resolution of significant litigation matters and other legal risks during 2010. Mr. O’Keefe realigned expertise and leadership within the legal department during a critical transition year for our company through strategic assignments, internal promotions and key external hires. Mr. O’Keefe successfully delivered our risk framework message across our company, while counseling senior leaders on both reputational risk issues and the complex regulatory process.

 

    Mr. Thompson, Chief Risk Officer. Under Mr. Thompson’s leadership as our Chief Risk Officer, we successfully created and implemented our new enterprise risk framework and further expanded our international risk governance programs. He also established specific risk appetite standards for each line of business. Mr. Thompson repositioned our global risk agenda, priorities and focus, which enabled our company to successfully navigate the complex regulatory landscape in 2010. He established relationships with our global regulators and oversaw the resolution of numerous open legacy regulatory issues.

 

    Mr. Montag, President, Global Banking and Markets (GBAM). Under Mr. Montag’s leadership, GBAM contributed strongly to our company’s performance, gaining market share while reducing market risk and improving its operational risk compared to the prior year period. GBAM maintained our #2 global ranking and achieved a #1 U.S. ranking in net investment banking revenues for 2010 according to Dealogic. In 2010, Mr. Montag stabilized the GBAM platform and led the business into a leading global franchise, despite high volatility in the markets.

 

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2010 Base Salary Increases. The Committee set the 2010 annual rates of base salary for Mr. Moynihan to $950,000 and for Messrs. Price, Thompson and Montag to $800,000 effective January 1, 2010. The base salary rates were set at a level that the Committee believed reflected the size and scope of their jobs and were consistent with broader market practices. The Committee also adjusted the mix of fixed and variable compensation for Ms. Krawcheck effective January 1, 2010 to reflect a level of base salary consistent with that of the heads of our other lines of business. Mr. Cotty’s base salary was increased to $650,000 effective June 1, 2010 following his service as our interim Chief Financial Officer and re-assumption of the position of Chief Accounting Officer.

 

2011 Base Salary Increases. The Committee increased the base salary for each of the named executive officers, other than Mr. Moynihan and Mr. Cotty, to $850,000 effective January 1, 2011. The base salaries were increased to a level that the Committee determined appropriate for internal consistency and that is reflective of the broader market trend of delivering base salary as a higher percentage, but still a relatively small portion, of total compensation.

 

2010 Performance Year Incentive Awards. Based on its review, the Committee concluded that our named executive officers performed well during 2010 and made significant progress in moving our company forward. However, the Committee also recognized that we did not have reported net income during 2010 and that our total stockholder return for the last several years has lagged behind our key competitors. As a result, no amounts were paid under the Executive Incentive Compensation Plan (EIC Plan) for performance year 2010. The Committee made the following decisions regarding year-end incentive awards:

 

   

No Cash Incentives for our Executive Officers. No cash incentive awards were made to any of our executive officers. Mr. Cotty, who is no longer an executive officer, received a cash incentive award consistent with the form of incentive compensation awarded to our senior management below the executive officer level.

 

   

Long-Term Incentive Awards. The Committee granted long-term incentive awards to our named executive officers to focus them on our future sustainable performance.

 

  O  

Cash-Settled Stock Unit Awards. Our named executive officers, other than Mr. Moynihan and Mr. Cotty, received a limited award of cash-settled stock units that vest and pay monthly over 12 months through March 2012. The Committee intends these awards to be part of a balanced mix of fixed and variable compensation, given that no cash incentive awards were paid for 2010, and to tie the actual amount received to stock price performance and continued service over the 12 months following the award.

 

  O  

Performance Contingent Restricted Stock Unit Awards. Our named executive officers, other than Mr. Cotty, received the vast majority of their 2010 performance year incentive awards in the form of performance contingent restricted stock units (PRSUs). For the PRSUs, the Committee established performance goals based on our return on assets measured each quarter based on the prior 12 month period. Each performance period is comprised of four calendar quarters and occurs on a rolling quarterly basis. The first performance period is the four calendar quarters ending December 31, 2011 and the last performance period is the four calendar quarters ending December 31, 2015. Return on assets for these awards means our “return on assets” as defined under the Stock Plan calculated for the applicable performance period in accordance with generally accepted accounting principles in effect as of January 1, 2011. The portion of the PRSUs earned for a performance period depends on the level of our return on assets for the performance period, as follows:

 

Return on Assets for the Performance Period   Percentage of PRSUs  Earned
Less than 50 basis points   0%
50 basis points   33-1/3%
65 basis points   66-2/3%
80 basis points or higher   100%

 

The percentage earned for performance between 50 basis points and 65 basis points or between 65 basis points and 80 basis points in any performance period will be interpolated on a straight-line basis. The number of PRSUs earned for a period will be offset by any PRSUs earned for any prior performance periods. Any portion of the PRSUs not earned in any performance period will be carried forward to each subsequent performance period. Any PRSUs not earned by December 31, 2015 will be cancelled.

 

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PRSUs earned for performance periods in a given calendar year are settled on March 1 of the following year. To the extent earned, PRSUs will be settled 40% in cash and 60% in shares. The earliest settlement date, however, for the stock-settled portion of the PRSUs will be March 1, 2014.

 

As noted above, the PRSUs are subject to (i) a “performance-based clawback” (to encourage sustainable profitability in the calendar year prior to the applicable settlement date for any portion of the award earned based on performance), (ii) a “detrimental conduct clawback” (to encourage proper conduct, including compliance with our risk policies) and (iii) our Incentive Compensation Recoupment Policy.

 

  O  

Time-Vesting Restricted Stock. Mr. Cotty’s long-term incentive award for performance year 2010 was delivered in the form of a restricted stock award which vests in equal installments over three years. The form of that award is consistent with the long-term incentive awards granted to senior management below the executive officer level. In addition, Ms. Krawcheck received a restricted stock award in January 2010 which vests on the third anniversary of the grant under the terms of her offer letter dated August 3, 2009. The Committee took that award into account in determining the amount of her PRSU award for 2010.

 

The award levels decided by the Committee for 2010 performance resulted in total compensation awards for the named executive officers below the target levels established during the year, other than Mr. Thompson who was paid at target as a result of his performance. The actual amounts realized by the named executive officers from these awards will largely depend on the future performance of our business and stock price growth.

 

The following table summarizes the compensation decisions made for the named executive officers for the 2010 performance year:

 

2010 Compensation Decisions

 

Name  

Base
Salary

($)

   

Year-End

Cash
Incentive

($)

   

Cash-
Settled
Stock
Units

($)

   

Performance

Contingent

Restricted
Stock Units

($)

   

Time
Vesting

Restricted
Stock

($)

   

Total

($)

 

Brian T. Moynihan

    950,000        0        0        9,050,000        0        10,000,000   

Charles H. Noski

    800,000        0        900,000        4,800,000        0        6,500,000   

Joe L. Price

    800,000        0        900,000        4,800,000        0        6,500,000   

Neil A. Cotty

    650,000        1,540,000        0        0        2,310,000        4,500,000   

Sallie L. Krawcheck

    800,000        0        900,000        3,800,000        3,000,000        8,500,000   

Edward P. O’Keefe

    600,000        0        900,000        1,500,000        0        3,000,000   

Bruce R. Thompson

    800,000        0        900,000        7,300,000        0        9,000,000   

Thomas K. Montag

    800,000        0        900,000        14,300,000        0        16,000,000   

 

Some of these 2010 compensation decisions are not reflected in the Summary Compensation Table on page 32. The table above differs from the Summary Compensation Table in two ways. First, we determine incentive compensation amounts after the performance year concludes, while SEC rules require that the Summary Compensation Table include equity compensation in the year granted. Therefore, equity incentive compensation granted in 2010 for 2009 performance is shown in the Summary Compensation Table as 2010 compensation. Second, the Summary Compensation Table includes changes in pension value, certain nonqualified deferred compensation earnings and other elements of compensation (such as 401(k) matching contributions and perquisites) as part of total compensation. Those amounts are not shown in the table above.

 

The Committee’s compensation decisions for 2010 are not necessarily reflective of decisions for future performance years. For future years, the Committee will continue to evaluate each year the performance of our company,

 

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our lines of business, and our individual executive officers, including their accountability for strong risk management practices, and other factors it determines appropriate consistent with our pay-for-performance philosophy and our compensation principles. In deciding the appropriate mix and form of compensation for our named executive officers, the Committee will evaluate the balance between fixed and variable compensation and, for variable compensation, will choose the form of equity awards from a portfolio of award types, including time-vesting restricted stock.

 

Our Other Compensation Practices

 

Other Pay-for-Performance Features of Our Program

 

Many of our program’s other unique features further demonstrate the commitment to our pay-for-performance philosophy.

 

Conditions of Stock Ownership

 

   

We promote long-term stock ownership by our executive officers, with award features such as deferred settlement of performance-based awards and holding requirements described below. The value our named executive officers realize from equity compensation awards is dependent on future sustainable performance of our company.

 

   

Our Corporate Governance Guidelines include enhanced stock ownership and retention requirements for our executive officers. The Guidelines currently require (a) the Chief Executive Officer to hold at least 500,000 shares of our common stock and retain at least 50% of the net after-tax shares from future equity awards until retirement and (b) our other executive officers to hold at least 300,000 shares (increased from 150,000 shares) of our common stock and retain at least 50% of the net after-tax shares from future equity awards until the increased ownership guideline is achieved. New executive officers have up to five years to meet these requirements. The Committee believes the updated stock retention and ownership requirements for our executive officers create an appropriate level of required long-term stock holdings by our executive officers.

 

   

The PRSU awards for performance during 2010 also require us to attain pre-established return on asset goals measured on a rolling four quarter basis over the five-year period of the award. These performance-based vesting requirements further tie the ultimate value of the awards to our sustainable performance over time.

 

   

Our Stock Plan, which is the plan under which we make equity awards to our executive officers and other key associates, prohibits discounted stock options, reload stock options or stock option re-pricing.

 

Severance and SERPs

 

   

We do not have any agreements with our executive officers that provide for cash severance payments upon termination of employment or in connection with a change in control.

 

   

We also have a policy prohibiting future employment or severance agreements with our executive officers that provide severance benefits exceeding two times base salary and bonus, unless the agreement has been approved by our stockholders.

 

   

Our current executive officers do not accrue additional retirement benefits under any supplemental executive retirement plans (SERPs).

 

Other Elements of Compensation

 

The other elements of our executive compensation program are as follows:

 

Retirement Benefits

 

Executive officers participate in our various employee benefit plans designed to provide retirement income. Our qualified and nonqualified pension plans provide a retirement income base, and our qualified and nonqualified 401(k) plans permit additional retirement savings. To encourage retirement savings under the qualified and nonqualified 401(k) plans, we provide an employer matching contribution.

 

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We limit eligible compensation for earning benefits under the qualified and nonqualified pension plans and for employer matching contributions under the qualified and nonqualified 401(k) plans to the first $250,000 in annual cash compensation. As a result, the Committee’s decisions to grant annual performance-based cash incentive, restricted stock and stock option awards do not create any additional retirement benefits under these plans.

 

We believe that our executive officers should be able to provide for their retirement needs from the compensation they earn based on our performance. At the request of Mr. Moynihan, his participation in the FleetBoston Financial Corporation Supplemental Executive Retirement Plan (Fleet SERP) was frozen effective December 31, 2005, and he therefore earns no further benefits under that plan for compensation or periods of service after that date.

 

For more information about these plans, see “Pension Benefits” and “Nonqualified Deferred Compensation” on pages 40 and 42, respectively.

 

Perquisites and Other Fringe Benefits

 

Our named executive officers receive health and welfare benefits, such as group medical, group life and long-term disability coverage, under plans generally available to all other U.S.-based salaried associates. Consistent with our pay-for-performance philosophy, we provide very limited executive fringe benefits. Because we have internal expertise on benefit, tax and financial advisory matters, we make those services available at no cost to our executive officers for their personal benefit, tax and financial planning needs. We also provide our executive officers with secured parking, home security systems and certain technology provided for business use. Our Excessive or Luxury Expenditures Policy provides for the use of corporate aircraft by senior management for conducting business on behalf of our company, including use related to reasonable business development, and approved emergency travel. In February 2011, the Board amended our Excessive or Luxury Expenditures Policy to allow the Chief Executive Officer limited personal use of our aircraft, provided that he reimburses us for the incremental operating costs.

 

Competitor Groups

 

The Committee uses a group of five leading U.S. financial services companies as the primary competitor group for periodic review of compensation levels in order to evaluate relative performance. We use these banks as our primary competitor group because we are in direct competition with them for customers, associates and investors. Also, these banks follow similar economic cycles to our own, making relative performance measurements more meaningful. These banks are: Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo. In addition, given our growing global scope, the Committee periodically reviews executive compensation for a group of leading international financial institutions for a general perspective on compensation practices across the global financial services industry: Banco Santander, Barclays, BNP Paribas, Credit Suisse, Deutsche Bank, HSBC and UBS.

 

From time to time, the Committee also reviews executive compensation for a leading group of global companies headquartered in the U.S. spanning all industries to get a general perspective on compensation practices for companies of similar size and global scope. For 2010, these companies were: Abbott Laboratories, AT&T, Chevron, Cisco, Coca-Cola, ConocoPhillips, Exxon Mobil, General Electric, Hewlett-Packard, IBM, Intel, Johnson & Johnson, PepsiCo, Pfizer, Philip Morris, Procter & Gamble, Verizon and Wal-Mart.

 

The Committee uses these groups periodically to get perspective on market trends in executive compensation and evaluate relative performance, but without any formulaic benchmarking.

 

Timing of Equity Grants

 

Awards of restricted stock and stock options to executive officers and other eligible key associates are made on a regular award date each year shortly after the end of the applicable performance year. This is the same date that we pay cash incentive awards for the performance year, and is scheduled to give us sufficient time to complete all performance reviews and obtain all necessary approvals. For the past few years, the award date has been February 15, or the immediately preceding business day if February 15 is not a business day.

 

We occasionally make awards of restricted stock or stock options other than on the regular annual award date, usually in connection with hiring a new key associate or awards under annual performance plans that follow a different timing cycle. We make these awards on the first day of the calendar month following approval, which for newly hired associates is on or after their actual hire date.

 

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Formal approval for awards is obtained prior to the grant dates. We do not coordinate the timing of our awards with the release of material non-public information. The exercise price for the stock options equals the closing price of our common stock for the grant date.

 

Section 162(m)

 

Section 162(m) of the Internal Revenue Code limits the deductibility of compensation paid to certain executive officers in excess of $1,000,000, but excludes “performance-based compensation” from this limit.

 

Cash incentive compensation and restricted stock awards may be provided under the stockholder-approved EIC Plan. Under the EIC Plan’s compensation formula, participating executive officers may receive maximum deductible incentive compensation for a year up to 0.20% of our net income for that year. Under the EIC Plan, the Committee can determine to make all or any portion of the annual incentive award in the form of a restricted stock award under our Stock Plan. For performance year 2010, no amounts were paid under the EIC Plan.

 

Under our Stock Plan, awards in the form of PRSUs and stock options may be made which qualify as “performance-based compensation” under Section 162(m). Compensation realized by our executive officers through the exercise of stock options awarded in prior years should be fully deductible to us as “performance-based compensation” under Section 162(m). In addition, for performance year 2010, the PRSUs granted to our executive officers should be fully deductible to us as “performance-based compensation” under Section 162(m). The cash-settled stock units awarded for performance year 2010 to our named executive officers (other than Mr. Moynihan and Mr. Cotty) are not “performance-based compensation” under Section 162(m), and as a result may not be fully deductible when paid.

 

Some compensation paid to our executive officers during 2010 exceeds the applicable Section 162(m) deduction limit. While the Committee retains discretion to make compensation decisions in light of a variety of considerations, all compensation decisions for our executive officers are made after consideration of the Section 162(m) implications.

 

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Executive Compensation

 

Summary Compensation Table

 

The following table shows compensation paid, accrued or awarded with respect to our named executive officers during the years indicated:

 

2010 Summary Compensation Table (1)

 

Name and

Principal Position (2)

  Year     Salary
($) (3)
    Bonus
($) (4)
    Stock
Awards
($) (5)
    Option
Awards
($)
    Non Equity
Incentive Plan
Compensation
($) (3) (6)
   

Change in
Pension Value
and

Nonqualified
Deferred
Compensation
Earnings
($) (7)

    All Other
Compensation
($) (8)
    Total
($)
 

Brian T. Moynihan

Chief Executive Officer

    2010        950,000        0        0        0        0        719,835        270,234        1,940,069   
    2009        800,000        0        5,200,000        0        0        475,220        36,248        6,511,468   
    2008        800,000        0        2,032,392        1,486,670        0        291,677        261,130        4,871,869   

Charles H. Noski

Chief Financial Officer

    2010        513,333        500,000        0        0        0        0        115,001        1,128,334   

Joe L. Price

President, Consumer and Small Business Banking

    2010        800,000        0        0        0        0        76,592        40,435        917,027   
    2009        750,000        0        5,250,000        0        0        81,358        37,250        6,118,608   
    2008        800,000        0        1,646,939        1,486,670        0        0        41,037        3,974,646   

Neil A. Cotty

Chief Accounting Officer

    2010        587,500        0        1,879,483        0        1,540,000        43,702        73,608        4,124,293   

Sallie L. Krawcheck

President, Global Wealth and Investment Management

    2010        800,000        0        5,363,064        0        0        8,578        36,598        6,208,240   
    2009        391,875        1,470,000        0        0        0        0        23,998        1,885,873   

Edward P. O’Keefe

General Counsel

    2010        600,000        0        1,105,584        0        4,856        12,939        75,758        1,799,137   

Bruce R. Thompson

Chief Risk Officer

    2010        800,000        1,500,000        8,802,637        0        234,158        36,623        63,645        11,437,063   

Thomas K. Montag

President, Global Banking and Markets

    2010        800,000        0        0        0        0        0        31,248        831,248   
    2009        586,539        0        29,313,469        0        0        0        30,423        29,930,431   

(1)   The SEC disclosure rules require the Summary Compensation Table to include in each year’s amount the aggregate grant date fair value of stock and option awards granted during the year. Typically, we grant stock and option awards early in the year as part of total year-end compensation awards made for prior year performance. As a result, the amounts for stock and option awards generally appear in the Summary Compensation Table for the year after the performance year to which they relate, and therefore the 2010 Summary Compensation Table does not fully reflect the Compensation and Benefits Committee’s view of its pay-for-performance executive compensation program for a particular performance year. See the Compensation Discussion and Analysis for a discussion about how the Committee viewed its 2010 compensation decisions for executive officers.

 

(2)   The listed positions are those held as of December 31, 2010. Mr. Moynihan began his service as Chief Executive Officer effective January 1, 2010. Mr. Price served as Chief Financial Officer during 2008, 2009 and through February 1, 2010, at which time he accepted the position of President, Consumer and Small Business Banking. From February 1 through May 11, 2010, Mr. Cotty served as Interim Chief Financial Officer, but before and after those dates he did not serve as an executive officer of our company. Mr. Noski was hired as Chief Financial Officer effective as of May 11, 2010. Messrs. Cotty, O’Keefe and Thompson were not executive officers of our company prior to 2010. Ms. Krawcheck was hired in 2009. Mr. Montag was not an executive officer of our company prior to 2009.

 

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(3)   Includes any amounts deferred under our qualified and nonqualified 401(k) plans. See “Nonqualified Deferred Compensation” on page 42.

 

(4)   For Mr. Noski, the amount represents the signing bonus he received under his offer letter dated April 13, 2010. The signing bonus must be repaid by Mr. Noski if he voluntarily terminates his employment on or before May 28, 2011. For Ms. Krawcheck for 2009, the amount represents the signing bonus she received in September 2009 under her offer letter dated August 3, 2009. For Mr. Thompson, the amount represents a cash retention payment he received in January 2010 under his Retention Award Letter Agreement dated January 26, 2009.

 

(5)   Amounts shown are the aggregate grant date fair value of restricted stock awards (or for 2009, stock salary awards) granted in the year indicated. In general, the grant date fair value is based on the closing price of our common stock on the applicable grant date. However, for the stock salary awards made in 2009, the grant date fair value was the expensed amount used to determine the number of vested stock units granted. See “Nonqualified Deferred Compensation” on page 42 for a description of the 2009 stock salary awards.

 

The amount for 2010 for Ms. Krawcheck includes (i) $2,938,556, which is the grant date fair value of a restricted stock award granted in January 2010 in connection with her offer letter dated August 3, 2009, plus (ii) $2,424,508, which is the grant date fair value of a restricted stock award granted in February 2010 for performance during 2009.

 

The amount for 2009 for Mr. Montag includes (i) $20,000,008, which is the grant date fair value of a restricted stock award granted in January 2009 and required by a contractual commitment entered into by Merrill Lynch in May 2008 in connection with hiring Mr. Montag, well before the Bank of America acquisition of Merrill Lynch, plus (ii) $9,313,461, which is the grant date fair value of stock salary awards made in November and December of 2009.

 

Grants of restricted stock (but not stock salary) include the right to receive cash dividends only if and when the underlying award becomes vested.

 

(6)   For Mr. Cotty, the amount reflects the annual cash incentive award received for performance during 2010. For Mr. O’Keefe, the amount includes the portion of a 2009 long-term cash award that was paid upon vesting during 2010. For Mr. Thompson, the amount includes the portion of a 2009 long-term cash award that was paid upon vesting during 2010 plus the unpaid balance of the award as of the date during 2010 that Mr. Thompson met the eligibility requirements for Rule of 60 treatment under the award. See “Nonqualified Deferred Compensation” on page 42.

 

(7)   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
($)
     Above-
Market
Earnings on
Nonqualified
Deferred
Compensation
($)
 

Brian T. Moynihan

     687,950         31,885   

Charles H. Noski

     0         0   

Joe L. Price

     76,592         0   

Neil A. Cotty

     43,702         0   

Sallie L. Krawcheck  

     8,578         0   

Edward P. O’Keefe

     12,939         0   

Bruce R. Thompson

     36,623         0   

Thomas K. Montag

     0         0   

 

The “Change in Pension Value” equals the change in the actuarial present value of all pension benefits from December 31, 2009 to December 31, 2010. 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” on page 40.

 

Consistent with our pay-for-performance philosophy, the named executive officers are not accruing significant additional pension benefits. This is because pension benefits accrue on no more than the first $250,000 of compensation.

 

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For Mr. Moynihan, the amount listed above under “Change in Pension Value” results primarily because he has a frozen annuity benefit under the Fleet SERP. This frozen benefit is an annual annuity payment beginning at age 60. The amount of this annuity payment has been unchanged since December 31, 2005, the date this benefit was frozen. However, the lump sum value of the frozen annuity amount will increase each year based on the passage of time (i.e., the time-value of money) because Mr. Moynihan is one year closer to his retirement age when payment of the annuity is scheduled to commence.

 

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” on page 42.

 

(8)   The following table lists all amounts included in the “All Other Compensation” column for each named executive officer in 2010:

 

2010 All Other Compensation Table

 

Name  

Benefit, Tax
& Financial
Advisory
Services

($)

    Use of
Corporate
Aircraft
($)
    Matching
and  Other
Employer
Contributions
($)
    Relocation
Benefits
($)
    Tax Gross
Up
($)
    Home
Security /
Technology
& Secured
Parking
($)
    Total
($)
 

Brian T. Moynihan

    23,547        233,386        12,500        0        0        801        270,234   

Charles H. Noski

    23,547        67,722        0        13,284        6,887        3,561        115,001   

Joe L. Price

    23,547        0        12,500        0        0        4,388        40,435   

Neil A. Cotty

    23,547        0        12,500        0        0        37,561        73,608   

Sallie L. Krawcheck

    23,547        0        12,250        0        0        801        36,598   

Edward P. O’Keefe

    23,547        0        12,250        0        0        39,961        75,758   

Bruce R. Thompson

    23,547        0        12,500        14,841        9,196        3,561        63,645   

Thomas K. Montag

    23,547        0        6,900        0        0        801        31,248   

 

For certain of the amounts reported in this table, the incremental cost to us in providing the benefits differs from the out-of-pocket cost as follows:

 

Benefit    Determination of Incremental Cost
Benefit, Tax & 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 associates 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.
Home Security    Determined based upon amounts paid by us to third parties for installation, servicing and monitoring of home security and related systems.
Secured Parking    Determined based upon the monthly rental that we charge to third parties for parking in the same corporate-owned parking structure.

 

The amounts for Mr. Moynihan and Mr. Noski for use of corporate aircraft reflect the aggregate incremental cost to our company for elements of business and business development related flights taken by the executive officer that are consistent with our Expenditure Policy. While we generally do not consider those amounts compensation to the executive officers, SEC disclosure rules require that we include in the Summary Compensation Table the value of certain flights or portions of certain flights as a perquisite.

 

The relocation benefit for Mr. Noski represents certain costs we have incurred in connection with Mr. Noski’s relocation to Charlotte, North Carolina to serve as our Chief Financial Officer. Those costs were comprised of

 

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$13,284 related to relocation costs, including duplicate housing and other costs and a $6,887 tax gross-up on applicable amounts. Any additional relocation benefits for Mr. Noski under the terms of his Offer Letter dated April 13, 2010 are subject to the approval of the Committee.

 

The relocation benefit for Mr. Thompson represents the costs we incurred in connection with Mr. Thompson’s relocation to Charlotte, North Carolina to serve as our Chief Risk Officer. These costs were comprised of $14,841 related to relocation costs, including household goods shipment and storage and other costs and a $9,196 tax gross-up on applicable amounts.

 

The amounts for Mr. Cotty and Mr. O’Keefe for home security include $34,000 and $36,400, respectively, for the purchase and installation of an emergency home generator for business continuity purposes.

 

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.

 

Grants of Plan-Based Awards

 

The following table shows additional information regarding: (i) the target level of annual cash incentive awards for our named executive officers for performance during 2010, as established by the Compensation and Benefits Committee during 2010; (ii) restricted stock awards granted to certain named executive officers in February 2010 that were awarded for performance during 2009; and (iii) a restricted stock award granted to Ms. Krawcheck in January 2010 in connection with her offer letter dated August 3, 2009. The actual amount of the annual cash incentive award received by Mr. Cotty for performance during 2010 is shown in the Summary Compensation Table. No other named executive officers received cash incentive awards for 2010 performance. The Compensation Discussion and Analysis includes information about equity-based awards granted in February 2011 for performance during 2010.

 

Grants of Plan-Based Awards in 2010

 

Name   Grant Date     Stock & Option
Award Approval
Date
    Estimated
Possible Payouts
Under Non-Equity
Incentive Plan
Awards Target
($) (1)
    All Other Stock
Awards:
Number of
Shares of
Stock or Units
(#)
    Grant Date
Fair Value of
Stock and
Option
Awards
($) (2)
 
           

Brian T. Moynihan

                  3,550,000                 
           

Charles H. Noski

                  2,400,000                 
           

Joe L. Price

                  2,800,000                 
           

Neil A. Cotty

                  1,350,000                 
           
      2/12/2010        1/27/2010               130,068        1,879,483   
           

Sallie L. Krawcheck

                  4,570,000                 
           
      1/15/2010        8/3/2009               180,723        2,938,556   
           
      2/12/2010        1/27/2010               167,786        2,424,508   
           

Edward P. O’Keefe

                  800,000                 
           
      2/12/2010        1/27/2010               76,511        1,105,584   
           

Bruce R. Thompson

                  2,800,000                 
    2/12/2010        1/27/2010               609,179        8,802,637   
           

Thomas K. Montag

                  7,200,000                 

(1)  

The amounts reflected under the “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” heading above represent target cash incentive compensation amounts established by the Committee for our named executive officers in 2010. The Committee typically establishes target total levels of annual incentive awards and has delivered the aggregate amount of the annual cash incentive award and the annual restricted stock award for

 

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our named executive officers under the terms of the stockholder-approved EIC Plan. As disclosed in our “Compensation Discussion and Analysis” above, no amounts were paid under the EIC Plan for performance year 2010. Mr. Cotty did not participate in the EIC Plan for 2010, but instead participated in the performance incentive program generally applicable to senior management below the executive officer level.

 

(2)   The applicable assumptions for determining the grant date fair value of restricted stock awards are described in footnote 5 to the Summary Compensation Table.

 

The following describes the material terms of the restricted stock awards granted to certain of our named executive officers in February 2010 for their performance in 2009:

 

   

These awards become vested and payable on the third anniversary of the grant date, and are payable, net of applicable taxes, in shares of our common stock;

 

   

Cash dividends are accrued with interest (at the 3-year T-bill rate) and paid only if and when the underlying award becomes vested; and

 

   

In order to encourage sustainable, long-term performance, payment of awards on the scheduled vesting date is specifically conditioned on our company or its lines of business remaining profitable over the vesting period. If a loss is determined to have occurred:

 

  (A)   with respect to our company, for the Chief Executive Officer, Chief Financial Officer, or any Chief Executive Officer direct report who does not lead a line of business who is part of a key control function (such as audit, compliance, human resources, legal, risk, etc.); or

 

  (B)   with respect to our company or applicable line of business, for executive officers who lead a line of business,

 

then the executive officer’s accountability for such loss will be determined, taking into account such factors as (i) the magnitude of the loss (including positive or negative variance from plan), (ii) the executive officer’s degree of involvement (including such factors as the executive officer’s current or former leadership role with respect to our company or line of business, and the degree to which the executive officer was involved in decisions that are determined to have contributed to the loss), (iii) the executive officer’s performance and (iv) such other factors as deemed appropriate. The 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 next scheduled vesting tranche of the executive officer’s award. All such determinations will be final and binding.

 

The following chart shows the impact on vesting of these restricted stock awards in the event of termination of employment:

 

Reason for Termination    Impact on Vesting
   
Death    Full vesting; immediate payment
   
Disability    Continue to earn and pay per schedule, subject to covenants (1)
   
Workforce reduction/ divesture    Continue to earn and pay per schedule, subject to covenants (1)
   
Involuntary for cause (2)    Canceled
   
Involuntary without cause (other than workforce reduction/divestiture) or voluntary    Canceled, unless eligible for rule of 60 (3)
   
Rule of 60    Continue to earn and pay per schedule, provided the associate does not subsequently work for a named competitor and annually provides a written certification of compliance and subject to covenants (1)

(1)   Covenants for vesting purposes are non-solicitation, detrimental conduct and compliance with anti-hedging/derivative transactions policies. Awards also are subject to recoupment (i) under our Incentive Compensation Recoupment Policy and (ii) in case of violation of covenants regarding detrimental conduct and anti-hedging/derivative transactions policies.

 

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(2)   For purposes of these awards, cause is generally defined as a termination of an associate’s employment if it occurs in conjunction with a determination that the associate has (i) committed an act of fraud or dishonesty in the course of his employment; (ii) been convicted of (or plead no contest with respect to) a crime constituting a felony; (iii) failed to perform his job function(s), which Bank of America views as being material to his position and the overall business of Bank of America and its subsidiaries under circumstances where such failure is detrimental to Bank of America or any subsidiary; (iv) materially breached any written policy applicable to associates of Bank of America and its subsidiaries including, but not limited to, the Bank of America Corporation Code of Ethics and General Policy on Insider Trading; or (v) made an unauthorized disclosure of any confidential or proprietary information of Bank of America or its subsidiaries or has committed any other material violation of Bank of America’s written policy regarding Confidential and Proprietary Information.

 

(3)   Rule of 60 is met when an associate has at least 10 years of vesting service under the pension plan in which he or she participates and his or her age and years of service add up to at least 60.

 

The following describes the material terms of the restricted stock award granted to Ms. Krawcheck in January 2010 in accordance with her offer letter dated August 3, 2009:

 

   

The award becomes vested and payable on the third anniversary of the grant date, and is payable, net of applicable taxes, in shares of our common stock; and

 

   

Cash dividends are accrued with interest (at the 3-year T-bill rate) and paid only if and when the underlying award becomes vested.

 

In the event of Ms. Krawcheck’s termination of employment, her award is subject to the same treatment described above in the case of death, disability and workforce reduction/divestiture. The following chart shows the impact on vesting of her award in cases that are different than described above:

 

Reason for Termination    Impact on Vesting
   

Involuntary without cause (other than workforce reduction/divestiture)

(see footnote 2 above)

   Continue to earn and pay per schedule, provided the associate does not subsequently work for a named competitor and annually provides a written certification of compliance and subject to covenants (see footnote 1 above)
   
Involuntary for cause or voluntary    Canceled

 

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Year-End Equity Values and Equity Exercised or Vested

 

The following table shows certain information about unexercised options and unvested restricted stock at December 31, 2010.

 

Outstanding Equity Awards as of December 31, 2010

 

Name

  Option Awards     Stock Awards  
  Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable
    Number of
Securities
Underlying
Unexercised
Options
(#) Unexercisable
    Option
Exercise
Price ($)
    Option
Expiration Date
    Number of
Shares/Units
of Stock That
Have Not Vested
(#)
    Market Value of
Shares/Units of
Stock That Have
Not Vested
($) (1)
 

Brian T. Moynihan

    138,826               29.68        10/15/2011        47,597  (2)      634,944   
    200,000               46.68        2/1/2015                 
    180,000               44.36        2/15/2016                 
    200,000               53.85        2/15/2017                 
           166,667  (2)      42.70        2/15/2018                 

Charles H. Noski (3)

                                         

Joe L. Price

    150,000               26.64        2/1/2011        38,570  (2)      514,524   
    150,000               30.68        2/1/2012                 
    150,000               35.02        2/3/2013                 
    120,000               40.78        2/2/2014                 
    105,000               46.68        2/1/2015                 
    94,500               44.36        2/15/2016                 
    112,000               53.85        2/15/2017                 
           166,667  (2)      42.70        2/15/2018                 

Neil A. Cotty

    20,000               30.68        2/1/2012        8,887  (2)      118,553   
    40,000               35.02        2/3/2013        4,500  (2)      60,030   
    80,000               40.78        2/2/2014        94,603  (4)      1,262,004   
    84,000               46.68        2/1/2015        130,068  (5)      1,735,107   
    84,000               44.36        2/15/2016                 
    84,000               53.85        2/15/2017                 
           63,000  (2)      42.70        2/15/2018                 

Sallie L. Krawcheck

                                180,723  (6)      2,410,845   
                                167,786  (5)      2,238,265   

Edward P. O’Keefe

    10,500               46.68        2/1/2015        524 (2)      6,990   
    16,800               44.36        2/15/2016        334 (2)      4,456   
    21,000               53.85        2/15/2017        22,260  (4)      296,948   
    9,333        4,667  (2)      42.70        2/15/2018        76,511  (5)      1,020,657   

Bruce R. Thompson

    15,557               46.68        2/1/2015        13,852  (2)      184,786   
    21,000               44.36        2/15/2016        31,807  (2)      424,305   
    24,500               53.85        2/15/2017        1,950  (2)      26,013   
    54,600        27,300  (2)      42.70        2/15/2018        91,820  (4)      1,224,879   
                                609,179  (5)      8,126,448   

Thomas K. Montag

    1,408,485        693,731  (7)      30.71        8/4/2018        297,815  (7)      3,972,852   
                                930,449  (8)      12,412,190   

(1)   Value is based on the market value of our common stock on December 31, 2010.
(2)   Award vested February 15, 2011.
(3)   Mr. Noski had no outstanding equity awards as of December 31, 2010.
(4)   Half of the award vested February 13, 2011 and half is scheduled to vest February 13, 2012.
(5)   Award is scheduled to vest February 12, 2013.
(6)   Award is scheduled to vest January 15, 2013.
(7)   Award vested January 1, 2011.
(8)   Half of the award vested January 2, 2011 and half is scheduled to vest January 2, 2012.

 

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The following table shows information regarding the value of options exercised and restricted stock vested during 2010.

 

Options Exercised and Stock Vested in 2010

 

    Option Awards     Stock Awards  
Name   Number of
Shares
Acquired on
Exercise
(#)
    Value
Realized on
Exercise
($)
    Number of
Shares
Acquired on
Vesting
(#)
    Value Realized
on Vesting
($) (1)
 

Brian T. Moynihan

    0        0        71,923        1,039,287   

Charles H. Noski

    0        0        0        0   

Joe L. Price

    0        0        44,336        640,655   

Neil A. Cotty

    0        0        62,735        906,521   

Sallie L. Krawcheck

    0        0        0        0   

Edward P. O’Keefe

    0        0        13,154        190,075   

Bruce R. Thompson

    0        0        108,315        1,565,152   

Thomas K. Montag

    0        0        763,041        11,510,756   

(1)   Value represents the market value of our common stock on the vesting date.

 

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Pension Benefits

 

The following table provides information regarding the actuarial present value of each named executive officer’s accumulated benefits under the pension plans in which the named executive officer participates. 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 Note 19—Employee Benefit Plans to the Consolidated Financial Statements for the 2010 fiscal year included in our Form 10-K filed with the SEC on February 25, 2011.

 

Pension Benefits in 2010

 

Name    Plan Name    Number
of Years
Credited
Service
(#)
    Present
Value of
Accumulated
Benefit
($)
    Payments
During
Last
Fiscal
Year
($)
 

Brian T. Moynihan

   Legacy Fleet Pension Plan      17.75        183,031        0   
   RIAP      17.75        150,290        0   
   Fleet SERP (frozen)      12.75  (1)      5,905,568        0   

Charles H. Noski (2)

   Bank of America Pension Plan      0        0        0   
   Pension Restoration Plan      0        0        0   

Joe L. Price

   Bank of America Pension Plan      18.00        183,902        0   
   Pension Restoration Plan      18.00        322,560        0   

Neil A. Cotty

   Bank of America Pension Plan      14.83        163,257        0   
   Pension Restoration Plan      14.83        210,408        0   

Sallie L. Krawcheck

   Bank of America Pension Plan      1.42        8,405        0   
                             
   Pension Restoration Plan      1.42        173        0   

Edward P. O’Keefe

   Bank of America Pension Plan      6.42        49,995        0   
   Pension Restoration Plan      6.42        5,873        0   

Bruce R. Thompson

   Bank of America Pension Plan      14.42        170,749        0   
   Pension Restoration Plan      14.42        640,695        0   

Thomas K. Montag (3)

   N/A                      

(1)   Mr. Moynihan’s years of credited service under the Fleet SERP is lower than his years of credited service under the other pension plans and his actual service with us because the Fleet SERP is a frozen plan. Mr. Moynihan requested that his participation in the Fleet SERP be frozen effective December 31, 2005; therefore, his years of credited service under the Fleet SERP reflect his service through December 31, 2005.

 

(2)   No amount is shown for Mr. Noski because he had not met the eligibility requirements for participation in the Bank of America Pension Plan and Pension Restoration Plan as of December 31, 2010.

 

(3)   Mr. Montag does not participate in any tax-qualified pension plans or restoration or supplemental retirement plans.

 

The following describes the material features of the pension plans presented in the table.

 

Qualified Pension Plans. We sponsor the Bank of America Pension Plan, a tax-qualified cash balance pension plan which is available to nearly all of our associates (subject to certain minimum service requirements), other than associates who are covered by The Bank of America Pension Plan for Legacy Companies (Legacy Companies Plan) or associates who work in business units not covered by a pension plan. The named executive officers participate in the Bank of America Pension Plan, other than (i) Mr. Moynihan, who participates in the Bank of America Pension Plan for Legacy Fleet, which is a component document of the Legacy Companies Plan (Legacy Fleet Pension Plan), (ii) Mr. Noski, who is not yet eligible to participate in a tax-qualified pension plan, and (iii) Mr. Montag, who does not participate in a tax-qualified pension plan.

 

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Both the Bank of America Pension Plan and the Legacy Fleet Pension Plan generally express benefits as a hypothetical cash balance account established in each participant’s name. A participant’s account receives two forms of credits: (i) “compensation credits” and (ii) “investment/interest credits” (for the Bank of America Pension Plan) or “interest credits” (for the Legacy Fleet Pension Plan).

 

Compensation credits equal a percentage of a participant’s compensation. “Compensation” for this purpose includes both salary and bonus under the Bank of America Pension Plan and salary only for Mr. Moynihan under the Legacy Fleet Pension Plan. Compensation for this purpose is subject to the compensation limit applicable to tax-qualified plans ($245,000 for 2010). The applicable compensation credit percentage ranges between 4% and 6% under the Bank of America Pension Plan and between 3% and 7.5% (or between 6% and 15% for eligible compensation in excess of the Social Security wage base) under the Legacy Fleet Pension Plan, in each case determined by a schedule based on years of service and age measured at certain points in time.

 

The amount of “investment/interest credits” under the Bank of America Pension Plan depends on when the related compensation credits were made. Compensation credits made before 2008 receive “investment credits” based on the performance of certain hypothetical investment measures selected by the participant from a menu of investment measures, which correspond to the investment funds available under the Bank of America 401(k) Plan. Compensation credits made after 2007 receive “interest credits” equal to the yield of the 10-year U.S. Treasury Note. All compensation credits made under the Legacy Fleet Pension Plan receive “interest credits,” based on the yield of the 1-year Treasury Bill, subject to a minimum annual rate of 3.25%.

 

Under either plan, at termination of employment after having completed at least three years of service, a participant is eligible to receive the amount then credited to the participant’s cash balance account in an actuarially equivalent joint and survivor annuity (if married) or single life annuity (if not married). The participant may also choose from other optional forms of benefit, including a lump sum payment in the amount of the cash balance account.

 

Both plans also include certain protected minimum benefits, some of which relate to pension formulas from prior pension plans that have merged into the plans and some of which relate to the conversion to a cash balance form of plan. One of these protected minimum benefits under the Bank of America Pension Plan guarantees that the cash balance account will not be less than the opening cash balance account at conversion plus subsequent compensation credits.

 

Pension Restoration Plan. The named executive officers participate in the Bank of America Pension Restoration Plan (Pension Restoration Plan) other than (i) Mr. Moynihan, who participates in the Retirement Income Assurance Plan for Legacy Fleet (RIAP), (ii) Mr. Noski, who is not yet eligible to participate in the Bank of America Pension Plan, and (iii) Mr. Montag, who does not participate in a comparable plan.

 

Both the Pension Restoration Plan and the RIAP are nonqualified deferred compensation plans that provide “make up” benefits for participants in the Bank of America Pension Plan or the Legacy Fleet Pension Plan (as applicable) whose plan benefits are reduced due to limits applicable to tax-qualified plans or due to participation in other nonqualified deferred compensation plans. However, since 2005, no benefits are accrued on a combined basis under the Bank of America Pension Plan and the Pension Restoration Plan, or under the Legacy Fleet Pension Plan and the RIAP, on any compensation for the year in excess of $250,000.

 

Under either plan, at termination of employment after having completed at least three years of service, a participant is eligible to receive the amount then credited to the participant’s Pension Restoration Plan or RIAP account, as applicable. As part of a design change to satisfy new federal tax laws affecting nonqualified deferred compensation plans, participants in the Pension Restoration Plan were given a one-time opportunity during 2006 to elect the form of payment as either a lump sum or annual installments over a period of up to 10 years, and were also allowed to elect the timing of payment to be either the year following termination of employment or any later year, not to exceed the year in which the participant reaches age 75. Participants in the RIAP with a benefit earned or vested after December 31, 2004 also were given a similar one-time opportunity during 2006 to elect the form and timing of payment of RIAP benefits earned and vested after December 31, 2004. Participants may make a separate payment election for RIAP benefits earned and vested on or before December 31, 2004 based on the provisions of the RIAP in effect on December 31, 2004. Pension Restoration Plan and RIAP participants may change their payment elections in limited circumstances.

 

Frozen Fleet SERP. At Mr. Moynihan’s request, we froze his participation in the Fleet SERP effective December 31, 2005. As a result, no further benefits accrue under the Fleet SERP for Mr. Moynihan.

 

Prior to being frozen, the Fleet SERP provided a target retirement benefit expressed as a percentage of final average compensation, offset by benefits from the Legacy Fleet Pension Plan and RIAP.

 

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The frozen Fleet SERP benefits are expressed as an annual joint and 75% survivor annuity commencing at age 60. The frozen annuity benefit is actuarially reduced for commencement prior to age 60 or actuarially increased for commencement after age 60. At the time his benefit was frozen, Mr. Moynihan elected to receive an actuarially equivalent lump sum payment of his plan benefits. Actuarial equivalency is based on the actuarial assumptions that were in effect under the Legacy Fleet Pension Plan for 2005, the year the Fleet SERP was frozen.

 

Nonqualified Deferred Compensation

 

The following table shows information about the participation by each named executive officer in our nonqualified deferred compensation plans:

 

Nonqualified Deferred Compensation in 2010

 

Name   Plan Name   Executive
Contributions
in 2010
($) (1)
    Registrant
Contributions
in 2010
($) (2)
    Aggregate
Earnings
in 2010
($)
    Aggregate
Withdrawals/
Distributions
($)
    Aggregate
Balance at
December 31,
2010
($) (3)
 

Brian T. Moynihan

  401(k) Restoration Plan     7,143        250        22,161        0        209,735   
  ESP     0        0        45,629        0        311,028   
  Fleet Deferred Compensation Plan     0        0        86,761        0        809,768   
  Stock Salary Award     0        0        (467,169     1,520,795        3,177,721   

Charles H. Noski

  401(k) Restoration Plan     0        0        0        0        0   

Joe L. Price

  401(k) Restoration Plan     37,100        10,050        255,281        0        1,897,539   
  Stock Salary Award     0        0        (460,251     1,498,447        3,130,618   

Neil A. Cotty

  401(k) Restoration Plan     3,455        250        112,235        0        2,923,976   
  Long-Term Cash Award     0        0        0        20,467        40,935   

Sallie L. Krawcheck

  401(k) Restoration Plan     0        0        0        0        0   

Edward P. O’Keefe

  401(k) Restoration Plan     0        0        64,096        0        701,299   

Bruce R. Thompson

  401(k) Restoration Plan     34,021        250        82,620        0        2,525,372   
  Long-Term Cash Award     0        156,106        0        0        156,106   

Thomas K. Montag

  Stock Salary Award     0        0        (816,489     2,658,159        5,553,762   

(1)   Amounts in this column represent named executive officer elective deferrals credited during 2010 under the Bank of America 401(k) Restoration Plan, comprised of the deferred portion of base salary otherwise payable in 2010.

 

(2)   Amounts in this column represent matching contributions credited during 2011 under the Bank of America 401(k) Restoration Plan, which were determined based on 2010 deferrals. In addition, for Mr. Thompson, the table includes an amount representing the unpaid portion of his 2009 long-term cash award as of the date during 2010 that Mr. Thompson met the eligibility requirements for Rule of 60 treatment under the award.

 

(3)   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 2010 Contributions
and Earnings Reported As
Compensation in 2010

Summary Compensation
Table

    Amounts in “Aggregate Balance
at December 31, 2010” Column
Reported As Compensation in
Summary Compensation Tables
for Prior Years
 

Brian T. Moynihan

    39,278        5,544,145   

Charles H. Noski

    0        0   

Joe L. Price

    47,150        5,595,250   

Neil A. Cotty

    3,705        0   

Sallie L. Krawcheck

    0        0   

Edward P. O’Keefe

    0        0   

Bruce R. Thompson

    250        0   

Thomas K. Montag

    0        9,313,461   

 

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The following describes the material features of our nonqualified deferred compensation plans in which the named executive officers participate.

 

Stock Salary. Certain of the named executive officers received stock salary awards during 2009. These awards were granted in connection with our participation in the Troubled Asset Relief Program during 2009 in accordance with Treasury Department regulations and determinations by the Office of the Special Master of TARP Executive Compensation. The material terms of the awards are as follows:

 

   

The awards were vested upon grant.

 

   

The awards were payable in 36 monthly installments beginning January 2011, provided that payments would be accelerated by 12 months upon repayment of our TARP financing. As a result of our repayment of all TARP financing in December 2009, the payment schedule was accelerated to 36 monthly installments beginning January 2010.

 

   

The awards do not receive any dividends or dividend equivalents.

 

   

Payments are made in cash based on the closing price of our common stock on the last business day of each month during the payment period. Section 16 filings are made with the SEC on a monthly basis upon settlement of these units in cash because the value of these stock salary awards is linked to the value of our common stock.

 

   

Although vested, payments are not accelerated for termination of employment (except for death) and are subject to forfeiture (in whole or in part) in case of termination for cause or violation of certain covenants regarding detrimental conduct, solicitation and violation of anti-hedging or derivative transaction policies.

 

   

We retain the right to reduce or recover from the stock salary any losses if it is determined that a named executive officer engaged in certain detrimental conduct or engaged in certain hedging or derivative transactions involving our common stock.

 

   

The awards also specifically provide that they are subject to the Incentive Compensation Recoupment Policy and the recoupment requirements under TARP.

 

401(k) Restoration Plan. The named executive officers, other than Mr. Montag, are eligible to participate in the Bank of America 401(k) Restoration Plan (401(k) Restoration Plan). Mr. Noski and Ms. Krawcheck elected not to participate in the 401(k) Restoration Plan for 2010. Mr. Montag does not participate in a comparable plan.

 

The 401(k) Restoration Plan is available to certain associates with annual salary or total cash compensation in excess of the compensation limit applicable to tax-qualified plans (for participation in 2010, this was $245,000). The 401(k) Restoration Plan is a nonqualified retirement savings plan that provides “make up” benefits for participants in The Bank of America 401(k) Plan or The Bank of America 401(k) Plan for Legacy Companies (401(k) Plans) whose contributions are adversely affected due to limits applicable to tax-qualified plans.

 

Under the plan, participants may defer up to 30% of base salary after reaching the 401(k) Plans’ limits and up to 90% of commissions and most cash incentives. Participants who have completed at least 12 months of service are also eligible for a matching contribution. We match 100% of the first 5% of participant deferrals. However, no matching contributions are made on a combined basis under the 401(k) Plans and the 401(k) Restoration Plan on any compensation for the year in excess of $250,000, resulting in a maximum matching contribution on a combined basis of $12,500.

 

Accounts under the 401(k) Restoration Plan are adjusted for investment gains and losses based on the performance of certain hypothetical investment choices selected by the participant. These investment choices are the same investment choices available under the 401(k) Plans. Participants may change their investment elections at any time under the same rules that apply under the 401(k) Plans.

 

When participants make their deferral elections for a year, they also elect how those deferrals will ultimately be paid. Participants may elect a lump sum or installments of up to 10 years, and the timing may be the year following termination of employment or any other year, before or after termination of employment, as specified by the participant, but not beyond the year the participant turns age 75. As a result, planned in-service distributions are available. A separate distribution election is made for matching contributions, but payment for these amounts cannot begin before termination of employment. Changes to payment elections are permitted in limited circumstances. Participants may also request unplanned in-service distributions in limited emergency situations.

 

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FleetBoston Financial Corporation Executive Deferred Compensation Plan No. 2. Mr. Moynihan also participates in the FleetBoston Financial Corporation Executive Deferred Compensation Plan No. 2 (Fleet Deferred Compensation Plan), which is a nonqualified retirement savings plan intended to provide eligible associates with the ability to defer receipt of certain types of compensation. Mr. Moynihan deferred incentive awards under this plan during the period from 1994 to 1997. No deferrals have been permitted under this plan since 2002.

 

Deferrals made under the plan before 1998 are credited with interest at an annual rate of 12%. Under the terms of the plan, as a result of the FleetBoston acquisition, we cannot amend the plan to change this rate. Deferrals made under the plan between 1998 and 2001 are credited with interest at an annual rate of 4% and deferrals made under the plan in 2002 receive interest based on the return for 1 year T-bills.

 

Benefits are payable in a lump sum or annual installments of up to 15 years commencing in the year of employment termination or any later year as elected by the participant, but not beyond the year the participant turns age 65. Participants may change the time or form of payment with an election made at least 12 months before their employment ends. Participants were able to schedule an in-service payment at the time deferral elections were originally made. Participants may also request unplanned in-service distributions in limited emergency situations and in-service withdrawals in the absence of hardship also are permitted subject to a withdrawal penalty.

 

FleetBoston Financial Corporation Executive Supplemental Plan. Mr. Moynihan also participates in the FleetBoston Financial Corporation Executive Supplemental Plan (ESP). Similar to the 401(k) Restoration Plan, the ESP provided “make up” benefits for certain participants in The Bank of America 401(k) Plan for Legacy Companies whose contributions were adversely affected due to limits applicable to tax-qualified plans. However, no contributions have been made to the ESP since December 31, 2004.

 

Accounts under the ESP are adjusted for investment gains and losses based on the performance of four hypothetical investment choices selected by the participant. Participants may change their investment elections at any time under the same rules that apply under the 401(k) Plans. Investment returns in 2010 for the following investment choices were: Columbia Core Bond Fund, 6.65%; Columbia Large Cap Growth Fund, 17.45%; Invesco Basic Balance Fund, 7.33%; and Stable Value Fund, 3.4%. Benefits are payable in a lump sum or annual installments of up to 15 years commencing in the year of employment termination or any later year as elected by the participant, but not beyond the year the participant turns age 65. However, participants younger than age 55 may not elect installments. Participants may change the time or form of payment with an election made at least 12 months before their employment ends. Participants may also request unplanned in-service distributions in limited emergency situations.

 

Long-Term Cash Awards. Mr. Cotty and Mr. Thompson each received a long-term cash award in February 2009 related to performance during 2008 under a program applicable below the executive officer level. These awards provide payment of a stated cash amount not linked to the value of our common stock in three annual installments on the first, second and third anniversaries of the grant date. Interest was taken into account when the stated cash amount was initially determined, and no additional interest accrues on the award during the three-year payment period.

 

Generally, the executive must remain employed through each scheduled payment date to receive payment, and a voluntary termination by the executive or termination by our company for cause prior to the scheduled payment date results in forfeiture. However, for an executive who meets the Rule of 60 (see “Potential Payments Upon Termination or Change in Control” below for a definition of “Rule of 60”), the award continues to vest if the executive complies with certain covenants, does not go to work for a named competitor during the original payment period, and annually provides us with a written certification that he or she is in compliance with this requirement. For SEC disclosure rule purposes, we treat these long-term cash awards as “vested” and report the amounts as earned in the Summary Compensation Table as of the date the executive is eligible for Rule of 60 treatment, and therefore the portion of the award payable after that date is reported in the table above as nonqualified deferred compensation. Mr. Cotty met the eligibility requirements for Rule of 60 treatment at the date of grant of his long-term cash award, and Mr. Thompson met those requirements during 2010.

 

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Potential Payments Upon Termination or Change in Control

 

We do not have any agreements with our executive officers that provide for cash severance payments upon termination of employment or in connection with 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, unless the agreement has been approved by our stockholders.

 

Our restricted stock and stock option awards include standard provisions that result in the vesting or forfeiture of awards upon termination of employment, depending on the reason for termination. The awards include provisions that may permit continued vesting of the award per the original vesting schedule if the executive complies with certain covenants and subject to any applicable performance-based clawback provisions. In particular, for awards granted for performance year 2009 and later:

 

   

If the executive resigns or is terminated without cause after meeting the “Rule of 60,” the award continues to vest if the executive complies with certain covenants, does not go to work for a named competitor during the original vesting period and annually provides us with a written certification that he or she is in compliance with this requirement. Rule of 60 is met when an associate has at least 10 years of service and his or her age and years of service add up to at least 60. Currently, each of the named executive officers, other than Ms. Krawcheck, Mr. Montag, Mr. Noski and Mr. O’Keefe, meets the Rule of 60. As an inducement to Mr. Noski to accept his offer of employment, his April 2010 offer letter provides that he will be treated as meeting any retirement provisions for equity awards, such as Rule of 60, if he resigns or is terminated without cause after attaining age 60. To receive this treatment, Mr. Noski must comply with all applicable covenants in the equity award agreements and provide our company with a general release of claims. See below for additional information regarding Mr. Montag.

 

   

If the executive is terminated without cause in connection with a workforce reduction or divestiture, the award continues to vest if the executive complies with certain covenants and executes any required release of claims, but non-competition provisions do not apply.

 

   

In both cases above, the awards remain subject to the performance-based clawback, and as a result may be canceled in whole or in part if losses occur during the vesting period. The awards also remain subject to cancellation or recovery if the executive is found to have engaged in detrimental conduct.

 

Mr. Montag entered into an offer letter with Merrill Lynch in 2008 when he was first hired that includes special provisions related to his equity awards. Under his offer letter, Mr. Montag’s 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.” No additional cash severance payments are due under his offer letter. See the chart below for additional detail on the definition of “good reason” under his agreement. In addition, under his offer letter, Mr. Montag is deemed to meet any “career retirement” provisions for equity awards, such as Rule of 60, upon the third anniversary of his date of hire.

 

The following chart shows the value of restricted stock and stock option awards that would have become vested or forfeited, or that could have continued to vest subject to the non-compete or compliance with covenants, as applicable, for a termination of employment and/or a change in control as of December 31, 2010. For this purpose, restricted stock was valued at our closing price as of December 31, 2010, and stock options were valued as the difference between our closing price as of that date and the applicable exercise price of the stock options. On this basis, as of December 31, 2010 all of the unvested stock options had a value of $0. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed above, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the time during the year of any such event and the price of our common stock.

 

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Table of Contents

Potential Payments Upon Termination or Change in Control as of December 31, 2010

 

Name   For Cause     Death     Disability     Workforce Reduction / Divestiture  
  Forfeit
($)
    Immediate
Vesting
($)
    Fully Vested
($)
    Pay per
Schedule,
Subject to
Conditions
($) (1)
    Fully Vested
($)
    Pay per
Schedule,
Subject to
Conditions
($) (1)
    Forfeit
($)
 

Brian T. Moynihan

    634,944        634,944        634,944        0        634,944        0        0   

Charles H. Noski

    0        0        0        0        0        0        0   

Joe L. Price

    514,524        514,524        514,524        0        514,524        0        0   

Neil A. Cotty

    3,216,629        3,216,629        1,481,522        1,735,107        850,520        2,366,109        0   

Sallie L. Krawcheck

    4,649,110        4,649,110        0        4,649,110        0        4,649,110        0   

Edward P. O’Keefe

    1,338,765        1,338,765        318,108        1,020,657        169,634        1,020,657        148,474   

Bruce R. Thompson

    10,678,583        10,678,583        2,552,135        8,126,448        1,939,695        8,126,448        0   

Thomas K. Montag (2)

    16,385,042        16,385,042        16,385,042        0        16,385,042        0        0   

 

Name  

Any Other Involuntary
Termination Without Cause

   

Voluntary
Termination

   

Upon Change
in Control (3)

 
 

Fully Vested
($)

   

Pay per
Schedule,
Subject to
Conditions
($) (1)

   

Forfeit
($)

   

Pay per
Schedule,
Subject to
Conditions
($) (1)

   

Forfeit
($)

   

Immediate
Vesting
($)

   

No
Impact,
Vest per
Schedule
($)

 

Brian T. Moynihan

    634,944        0        0        634,944        0        634,944        0   

Charles H. Noski

    0        0        0        0        0        0        0   

Joe L. Price

    514,524        0        0        514,524        0        514,524        0   

Neil A. Cotty

    159,488        3,057,141        0        3,216,629        0        3,175,694        40,935   

Sallie L. Krawcheck

    0        2,410,845        2,238,265        0        4,649,110        4,649,110        0   

Edward P. O’Keefe

    16,704        0        1,322,061        0        1,338,765        1,329,051        9,714   

Bruce R. Thompson

    1,301,243        9,377,340        0        9,718,231        960,352        9,986,431        692,152   

Thomas K. Montag (2)

    16,385,042        0        0        3,972,852        12,412,190        12,412,190        3,972,852   

(1)   For awards granted for performance year 2008 included in this chart, the conditions to continued vesting per schedule generally relate to “Rule of 60” treatment, as described above. Beginning with awards granted for performance year 2009, the conditions to continued vesting include (i) compliance with covenants regarding non-solicitation, detrimental conduct and compliance with anti-hedging/derivative transactions policies and (ii) the performance-based clawback described above, and for “Any Other Involuntary Termination Without Cause” and “Voluntary Termination” also include the “Rule of 60” conditions described above.

 

(2)   Mr. Montag’s 2008 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, “Any Other Involuntary Termination 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, (ii) the executive’s reporting to an executive other than the CEO of Merrill Lynch & Co., Inc. during the three-year period beginning on August 4, 2008, or (iii) a material reduction in the executive’s total annual compensation that is not experienced generally by similarly situated associates.

 

(3)   For equity awards granted before April 2010, the terms of the Bank of America Corporation 2003 Key Associate Stock Plan provided for “single trigger” full vesting upon a change in control. The Key Associate Stock Plan was amended and approved by our stockholders at our 2010 annual meeting. For awards granted under the amended Key Associate Stock Plan after April 2010, “single trigger” vesting no longer applies. Instead, the Compensation and Benefits Committee may provide for vesting only if the participant’s employment is terminated in connection with a change in control (i.e., “double trigger” vesting).

 

 

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Following termination of employment, our named executive officers receive payment of retirement benefits and nonqualified deferred compensation benefits under our various plans in which they participate to the extent vested. The value of those benefits as of December 31, 2010 is set forth in the sections above entitled “Pension Benefits” and “Nonqualified Deferred Compensation.” (Please note that the “Nonqualified Deferred Compensation Table” includes the value of stock salary awards.) There are no special or enhanced benefits under those plans for our named executive officers, and all of our named executive officers, other than Ms. Krawcheck, are fully vested in those benefits. Ms. Krawcheck will become fully vested in her benefits under the Bank of America Pension Plan and Pension Restoration Plan after she completes three years of service. However, under the Bank of America Pension Plan and Pension Restoration Plan, participants can become fully vested in their benefits prior to completion of three years of service in case of death, disability, or termination due to workforce reduction, realignment, or similar measure. If Ms. Krawcheck had experienced any of those events as of December 31, 2010, she would have become vested in her Bank of America Pension Plan and Pension Restoration Plan benefits in the amounts set forth in the “Pension Benefits” section above.

 

Under the Retention Award Letter Agreement with Mr. Thompson dated January 26, 2009, he was due his final retention payment of $1,500,000 if he remained employed through January 1, 2011. The Retention Award Letter Agreement also provided that if Mr. Thompson’s employment had been terminated due to job elimination, death or disability during 2010, he would have remained eligible to receive that final payment. Any other termination of employment before that date would have resulted in forfeiture of the payment. These termination provisions were not applicable, however, because Mr. Thompson has remained employed. No further amounts are payable under the Retention Award Letter Agreement after January 1, 2011.

 

We make benefit, tax and financial advisory services available to our 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 associates who retire and meet the Rule of 60 have access to continued coverage under our group health plan, but the associate 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 before attaining the Rule of 60, so long as he does not work for or accept another position with a competitor.

 

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Stock Ownership of Directors and Executive Officers

 

As of March 16, 2011, we did not know of any person who beneficially owned 5% or more of any class of our voting securities. The following table shows the number of shares of our common stock beneficially owned as of March 16, 2011 by each director, each listed officer, and the directors, listed officers and other executive officers as a group. Each director, each listed officer and the directors, listed officers and other executive officers as a group beneficially owned less than 1% 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 and listed officers.

 

Name   Beneficial Ownership    

Stock Units

(1) (2)

    Total  
 

Shares and

Restricted Shares

   

Options
Exercisable

within 60 days
of 3/16/2011

   

Total

Beneficial
Ownership

     

Mukesh D. Ambani

                                  

Susan S. Bies

    19,982               19,982               19,982   

William P. Boardman (3)

    28,008               28,008               28,008   

Frank P. Bramble, Sr.

    111,680               111,680        39,740        151,420   

Virgis W. Colbert

    39,495               39,495        9,018  &nb