DEF 14A 1 d825862ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

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Exchange Act of 1934 (Amendment No.    )

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Bank of America Corporation

 

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Table of Contents

LOGO

Bank of America Corporation
Bank of America
2015
Proxy Statement
Annual Meeting of Stockholders


Table of Contents

LOGO

March 26, 2015

Dear Fellow Stockholders:

We cordially invite you to attend the 2015 Annual Meeting of Stockholders, to be held May 6, 2015 at 10:00 a.m., local time, at the Charlotte Marriott SouthPark, 2200 Rexford Road, Charlotte, North Carolina.

At the meeting we will discuss and vote on the matters described in the notice and proxy statement. I also will provide a report on our company’s strategy and performance.

Your vote is important; please read the documents with care and follow the voting instructions to ensure your shares are represented. We look forward to your participation.

As a final note, on behalf of the Board, I would like to thank directors Chad Holliday and Clayton Rose, who are not standing for re-election for another term, for their counsel and guidance. Their services benefitted the Board and our company.

Sincerely,

 

LOGO

Brian T. Moynihan

Chairman and Chief Executive Officer

 

LOGO


Table of Contents

Notice of 2015 Annual Meeting of Stockholders

 

Date:    May 6, 2015
Time:    10:00 a.m., local time
Place:   

Charlotte Marriott SouthPark,

2200 Rexford Road, Charlotte, North Carolina 28211

Matters to be voted on:

 

  Ÿ  

Electing the 13 directors named in the attached proxy statement

 

  Ÿ  

A proposal approving our executive compensation (an advisory, non-binding “Say on Pay” resolution)

 

  Ÿ  

A proposal ratifying the appointment of our registered independent public accounting firm for 2015

 

  Ÿ  

A proposal approving the amendment and restatement of the Bank of America Corporation 2003 Key Associate Stock Plan

 

  Ÿ  

Stockholder proposals set forth on pages 62 through 69, if they are properly presented at our annual meeting

 

  Ÿ  

Any other business that may properly come before our annual meeting

Record date: Bank of America stockholders as of the close of business on March 11, 2015, will be entitled to vote at our annual meeting and any adjournments or postponements of the meeting.

Your vote is very important. Please submit your proxy as soon as possible by the Internet, telephone or mail. Submitting your proxy by one of these methods will ensure your representation at the annual meeting regardless of whether you attend the meeting. Please refer to the following page for information on how to vote your shares and attend our annual meeting.

By order of the Board of Directors,

 

LOGO

Ross E. Jeffries, Jr.

Corporate Secretary

March 26, 2015

 

Important Notice Regarding the Availability of Proxy Materials for the

Annual Meeting of Stockholders to be Held on May 6, 2015:

Our Proxy Statement and 2014 Annual Report to Stockholders are available at

http://investor.bankofamerica.com

 

LOGO


Table of Contents

SUMMARY

 

SUMMARY

This summary highlights information contained elsewhere in this proxy statement or in our corporate governance documents published on our website at http://investor.bankofamerica.com. We encourage you to read this proxy statement in its entirety before voting.

VOTING YOUR SHARES

Your vote is important. Please exercise your right as a stockholder and submit your proxy as soon as possible.

You may vote if you were a stockholder as of the close of business on March 11, 2015. Stockholders may vote in person at the meeting or submit a proxy by the Internet, telephone or mail as follows:

 

LOGO   

VIA THE INTERNET

www.proxyvote.com

   LOGO   

BY MAIL

Complete, sign, date and return your proxy card in the envelope provided

LOGO   

BY TELEPHONE

Call the phone number located on the top of your proxy card

   LOGO   

IN PERSON

Attend our annual meeting and vote by ballot

If you submit your proxy by telephone or over the Internet, you do not need to return your proxy card by mail.

Stockholder Action

 

Proposals for Your Vote   Board Voting
Recommendation
  Votes
Required
  Page

Proposal 1: Electing Directors

  FOR each nominee  

Majority

of votes cast

  1

Proposal 2: Approving Our Executive

Compensation (an advisory, non-binding “Say on Pay” resolution)

  FOR  

Majority

of votes cast

  25

Proposal 3: Ratifying the Appointment of

Our Registered Independent Public Accounting

Firm for 2015

  FOR  

Majority

of votes cast

  51
Proposal 4: Approving the Amendment and Restatement of the Bank of America Corporation 2003 Key Associate Stock Plan   FOR  

Majority

of votes cast

  54

Proposals 5 to 8: Stockholder Proposals

 

AGAINST

each proposal

 

Majority

of votes cast

  62

 

Annual Meeting Admission

Annual meeting admission is limited to our registered and beneficial stockholders as of the record date and persons holding valid proxies from stockholders. Admission to our annual meeting requires proof of your stock ownership as of the record date and valid, government-issued photo identification. Security measures may include bag, metal detector and hand-wand searches. The use of cameras (including cell phones with photographic capabilities), recording devices, smart phones and other electronic devices is strictly prohibited. For further details, see “Attending our Annual Meeting” on page 71.

 

         
 

 

BANK OF AMERICA CORPORATION  

 

 

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  2015 PROXY STATEMENT

   

 

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Table of Contents

SUMMARY

 

WE’RE BETTER WHEN WE’RE CONNECTED

Operating, Governance and Compensation Highlights

2014 FINANCIAL AND OPERATING PERFORMANCE

Our company is one of the world’s largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations and institutions with a full range of banking, investing, asset management and other financial and risk management products and services. We continued to focus on our core business performance during 2014, reflecting our ongoing efforts to stabilize revenue, decrease costs, strengthen the balance sheet and manage risk, while improving future risk management efforts by resolving our most significant remaining legacy mortgage-related litigation matters.

See “Compensation Discussion and Analysis” on page 25 and our 2014 annual report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited financial statements.

GOVERNANCE HIGHLIGHTS

Director Independence. Our directors are seasoned leaders with diverse experiences, possessing sound judgment and the necessary skills that allow them to effectively oversee our company. Our directors are elected annually and we have adopted a majority vote standard in uncontested elections. A substantial majority of our directors are independent.

Board Leadership. We have strong independent Board leadership. During 2014, following a deliberate and diligent process, the Board determined to elect a Lead Independent Director with specified duties and responsibilities to serve for a minimum of one year and elected our Chief Executive Officer (CEO) to be Chairman of the Board. The Board believes that this is the most appropriate leadership structure for our Board at this time. See “Board Leadership” on page 11.

Board Oversight of Risk. Our Board oversees our company’s management of risk primarily through regular risk management updates and updates from its Enterprise Risk Committee and other Board committees. Each of these committees regularly receives risk management updates on risk-related matters within the committee’s responsibilities and reports to our Board. In addition, our Board’s Compensation and Benefits Committee oversees our compensation policies and practices so that they do not encourage employees to take unnecessary and excessive risks. Our Enterprise Risk Committee members understand our company’s risk management policies and framework and the risk management practices relevant to our company and at least one member has experience in identifying, assessing and managing risk exposures of large, complex financial firms. See “Board Oversight of Risk” on page 15.

Stockholder Rights. We provide the following stockholder rights:

 

  Ÿ  

We permit stockholders owning 3% or more of our stock continuously for at least 3 years to nominate directors constituting up to 20% of our Board

 

  Ÿ  

There are no supermajority amendment provisions in our Certificate of Incorporation or our bylaws

 

  Ÿ  

Our directors are elected annually by a majority voting standard in uncontested elections

 

  Ÿ  

Our Corporate Governance Committee considers director candidates recommended by stockholders

 

  Ÿ  

Stockholders holding at least 10% of our outstanding common shares may convene a special meeting as provided in our bylaws

 

  Ÿ  

We do not have a “poison pill” in effect

Stockholder Engagement. Our management meets with our largest stockholders throughout the year to discuss the issues that matter most to them. We share the feedback received with our Board and its committees to enhance our governance practices and transparency of those practices to our stockholders. See “Stockholder Engagement” on page 18 for a description of the governance enhancements we made in response to our stockholder feedback.

Stock Ownership and Retention Requirements. Our executive officers and non-management directors are subject to stock ownership and retention requirements.

Hedging Prohibition. Our Code of Conduct prohibits our directors and executive officers from hedging and speculative trading of company securities, including short sales and trading in options and derivatives.

 

       

 

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BANK OF AMERICA CORPORATION  

 

 

  

 

 

 

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  2015 PROXY STATEMENT

 

       


Table of Contents

SUMMARY

 

COMPENSATION HIGHLIGHTS

Pay-for-Performance Compensation. Our compensation philosophy ties our executive officers’ pay to company, line of business and individual performance over the short and long term. In addition, our executive compensation program provides a mix of salary, incentives and benefits paid over time that we believe aligns executive officer and stockholder interests. A majority of total variable compensation granted to named executive officers is deferred equity-based awards, further encouraging long-term focus on generating sustainable results for our stockholders.

Compensation Risk Management. Our executive compensation program also supports our enterprise risk management goals through these checks and balances:

 

  Ÿ  

Mix of fixed and variable pay

 

  Ÿ  

Balanced, risk-adjusted performance measures

 

  Ÿ  

Pay-for-performance process that allocates individual awards based on actual results and how results were achieved

 

  Ÿ  

Review of feedback from independent control functions in performance evaluations and compensation decisions

 

  Ÿ  

Deferral of a significant portion of variable pay as equity-based awards

 

  Ÿ  

Use of multiple clawback and cancellation features for equity-based awards

Our Compensation Practices. For a list of “what we do” and “what we don’t do,” see page 30.

2014 Compensation Decisions for CEO. For performance year 2014, the Compensation and Benefits Committee and the Board’s independent directors determined the following compensation for our CEO, in recognition of his individual performance and the overall performance of our company:

 

  Ÿ  

Total compensation, inclusive of base salary and equity-based incentives, for performance year 2014 of $13 million

 

  Ÿ  

Half of the CEO’s variable pay for performance year 2014 was awarded in the form of performance restricted stock units that are earned, if at all, by achieving specific performance goals over a three-year period (2015-2017)

Prior Say on Pay Votes. At last year’s annual meeting of stockholders, over 93% of the votes cast approved our named executive officers’ 2013 compensation as described in the 2014 proxy statement. The Compensation and Benefits Committee believes these results affirmed our stockholders’ support of our company’s executive compensation program; and, as a result, we did not materially change our overall approach in setting executive compensation for 2014.

We encourage you to read the more detailed information in “Compensation Discussion and Analysis” on page 25 before voting on Proposal 2: Approving Our Executive Compensation (an advisory, non-binding “Say on Pay” resolution).

 

         
 

 

BANK OF AMERICA CORPORATION  

 

 

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Table of Contents

TABLE OF CONTENTS

 

TABLE OF CONTENTS

 

Proposal 2: Approving Our Executive Compensation (an advisory, non-binding “Say on Pay” resolution)   25
Compensation Discussion and Analysis   25

Executive Summary

 

26

2014 Company & Line of Business  Performance

  27

Executive Compensation Program Features

  29

Compensation Decisions and Rationale

  32

Other Compensation Topics

  36

Compensation and Benefits Committee Report

 

37

Executive Compensation   38

Summary Compensation Table

  38

Grants of Plan-Based Awards Table

  41

Year-End Equity Values and Equity Exercised or Vested Table

  44

Pension Benefits Table

  45

Nonqualified Deferred Compensation Table

  47

Potential Payments Upon Termination or Change in Control Tables

  49
Proposal 3: Ratifying the Appointment of Our Registered Independent Public Accounting Firm for 2015   51

Audit Committee Pre-Approval Policies and Procedures

  52

Audit Committee Report

  53
Proposal 4: Approving the Amendment and Restatement of the Bank of America Corporation 2003 Key Associate Stock Plan   54
Proposals 5 through 8: Stockholder Proposals   62
Voting and Other Information   69
 

 

 

PROXY STATEMENT

We are providing or making available this proxy statement starting on or about March 26, 2015 to solicit your proxy to vote on the matters presented at our annual meeting. Our Board requests that you submit your proxy by the Internet, telephone or mail so that your shares will be represented and voted at our annual meeting.

INTERNET AVAILABILITY OF PROXY MATERIALS

We mailed or e-mailed to most of our stockholders a Notice of Internet Availability of our proxy materials with instructions on how to access our proxy materials over the Internet and how to vote. If you are a registered stockholder and would like to change the method of delivery of your proxy materials, please contact our transfer agent, Computershare Trust Company, N.A., P.O. Box 43078, Providence, Rhode Island 02940-3078; Toll free: 800-642-9855; or www.computershare.com/bac. You may do the same as a beneficial stockholder by calling the bank, broker or other nominee where your shares are held.


Table of Contents

PROPOSAL 1: ELECTING DIRECTORS

 

PROPOSAL 1: ELECTING DIRECTORS

Our Board is presenting 13 nominees for election as directors at our annual meeting. Directors Charles O. Holliday, Jr. and Clayton S. Rose are not standing for reelection. Effective as of the date of our 2015 annual meeting, the size of our Board will be reduced from 15 to 13 members. All nominees currently serve as directors on our Board and were elected by you at our 2014 annual meeting. Each director elected at the meeting will serve until our 2016 annual meeting or until a successor is duly elected and qualified. Each director nominee has consented to being named in this proxy statement and to serve as a director if elected. If any nominee is unable to stand for election for any reason, the shares represented at our annual meeting may be voted for another candidate proposed by our Board, or our Board may choose to reduce its size.

 

Name (1)   Age   Director
Since
  Independent   Principal Occupation   Number
of Other
Public
Company
Boards
  Audit
Committee
  Corporate
Governance
Committee
  Compensation
and Benefits
Committee
  Credit
Committee
  Enterprise
Risk
Committee
Sharon L. Allen   63   2012   Yes  

Former Chairman,

Deloitte LLP

  1   C   M            
Susan S. Bies   68   2009   Yes  

Former Member, Board

of Governors of the

Federal Reserve System

  None   M               M
Jack O. Bovender, Jr.   69   2012   Yes   Lead Independent Director, Bank of America Corporation; Former Chairman and CEO, HCA Inc.   None                    
Frank P. Bramble, Sr.   66   2006   Yes   Former Executive Officer, MBNA Corporation   None       M           C
Pierre J. P. de Weck   64   2013   Yes   Former Chairman and Global Head of Private Wealth Management, Deutsche Bank AG   None   M       M        
Arnold W. Donald   60   2013   Yes   President and CEO, Carnival Corporation and Carnival plc   2           M   M    
Charles K. Gifford   72   2004   No   Former Chairman of the Board, Bank of America Corporation   2               C    
Linda P. Hudson   64   2012   Yes   Chairman and CEO, The Cardea Group, LLC; Former President and CEO, BAE Systems, Inc.   1           M   M    
Monica C. Lozano   58   2006   Yes   Chair of the Board, US Hispanic Media Inc.   1           C   M    
Thomas J. May   68   2004   Yes   Chairman, President and CEO, Northeast Utilities   1       C           M
Brian T. Moynihan   55   2010   No   Chairman of the Board and CEO, Bank of America Corporation   None                    
Lionel L. Nowell, III   60   2013   Yes   Former SVP and Treasurer, PepsiCo, Inc.   3   M   M            
R. David Yost   67   2012   Yes   Former CEO, AmerisourceBergen Corporation   3   M       M        
             

 

 

Number of Meetings Held in 2014    

 

  Board: 26     19   11   9   10   14

C = Chair; M = Member

 

(1) Prior to his election as Lead Independent Director, Mr. Bovender served on the Credit Committee and the Enterprise Risk Committee. Mr. Holliday serves on the Audit Committee and the Corporate Governance Committee and Dr. Rose serves on the Corporate Governance Committee, the Credit Committee and the Enterprise Risk Committee.

 

         
 

 

BANK OF AMERICA CORPORATION  

 

 

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  2015 PROXY STATEMENT

   

 

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Table of Contents

PROPOSAL 1: ELECTING DIRECTORS

 

IDENTIFYING AND EVALUATING NOMINEES FOR DIRECTOR

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; and international organizations. Our directors also have experience in financial and regulatory oversight; risk management; strategic planning; and technology. See “The Nominees” on page 3 for the qualifications, attributes and skills our Board considers important for our nominees.

 

Our Corporate Governance Guidelines provide director nomination standards, including that director candidates:

 

  Ÿ  

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

 
  Ÿ  

represent a diversity of viewpoints, backgrounds, experiences and other demographics

 
  Ÿ  

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

 
  Ÿ  

be individuals of the highest character and integrity

 
  Ÿ  

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

 
  Ÿ  

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

 
  Ÿ  

have the desire to represent the interests of all stockholders

 

Our Corporate Governance Committee recommends candidates to our Board for nomination. When considering potential director nominees, the Committee has an established process that our primary bank regulators have reviewed and acknowledged. In that process, the Committee reviews available information regarding each potential candidate, including qualifications, experience, skills and integrity, as well as race, gender and ethnicity. Although we do not have a formal policy regarding diversity, our Board views diversity as a priority and seeks diverse representation among its members. Our Board, through our Corporate Governance Committee, assesses our Board’s diversity when identifying and evaluating director candidates. Of our 13 nominees, seven have international experience, nine have CEO experience, two are African-American and four are women, one of whom is Hispanic.

Our Corporate Governance Committee considers director candidates proposed by Board members, management, third-party search firms and our stockholders. The Committee follows the same director selection process and the same criteria for evaluating candidates regardless of who proposed their candidacy.

Any stockholder who wishes to recommend a candidate for consideration by our Corporate Governance Committee must submit a written recommendation to the Corporate Secretary, Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-18-05, Charlotte, North Carolina 28255. For our 2016 annual meeting of stockholders, the Committee will consider recommendations received by October 15, 2015. The recommendation must include the information set forth in our Corporate Governance Guidelines, which are published on our website at http://investor.bankofamerica.com.

 

       

 

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  2015 PROXY STATEMENT

 

       


Table of Contents

PROPOSAL 1: ELECTING DIRECTORS

 

THE NOMINEES

Our Board selected the 13 nominees based on their experience, qualifications, attributes and skills and the belief that each can make substantial contributions to our company.

 

  Ÿ  

Our nominees are seasoned leaders, and the majority serve or have served as chief executive officers

 

  Ÿ  

Our nominees bring to our Board a vast depth and diversity of public company, financial services, private company, public sector, academic, nonprofit and other domestic and international business experience

 

  Ÿ  

Our nominees held leadership positions in complex financial services organizations and with our primary regulator, and management roles in the areas of risk, operations, finance, technology and human resources

 

  Ÿ  

Our nominees represent diverse viewpoints and bring a blend of historical and new perspectives about our company as a result of their varied lengths of tenure as our directors

Our Board believes, in totality, this mix of attributes among the nominees enhances our Board’s independent leadership and effectiveness in light of our company’s businesses and organizational complexities, our industry’s operating environment and our company’s long-term strategy.

Our Corporate Governance Guidelines provide that a director who has reached the age of 72 shall not be nominated for initial election to our Board, although our Board may approve the nomination for re-election of a director at or after the age of 72 if, in light of the circumstances, it is in the best interests of our company and its stockholders. Our Board requested that Charles K. Gifford, a director of our company since 2004 whose age is 72, stand for nomination for re-election to our Board at our annual meeting. Mr. Gifford is a former Chairman of our Board and serves as chair of our Board’s Credit Committee. He has also been the CEO of a bank holding company, and has approximately 50 years of experience in the financial services industry.

 

 

Our Board recommends a vote “FOR” each of the nominees listed below for election as a director (Proposal 1).

 

Set forth below are each nominee’s name, age as of our annual meeting date, principal occupation, business experience and public company directorships held during the past five years. We also discuss the qualifications, attributes and skills that led our Board to decide the nominee should be elected a Bank of America director.

LOGO

QUALIFICATIONS, ATTRIBUTES AND SKILLS:

Ms. Allen’s responsibility for audit and consulting services in various positions with Deloitte LLP (Deloitte) provide her with extensive audit, financial reporting and corporate governance experience. Her leadership positions with Deloitte give her broad management experience of large, complex businesses and an international perspective on risk management and strategic planning.

Professional Highlights:

Ÿ 

From 2003 until her retirement in May 2011, Ms. Allen served as Chairman of Deloitte, a firm that provides audit, consulting, financial advisory, risk management and tax services as the U.S. member firm of Deloitte Touche Tohmatsu Limited

Ÿ 

She worked at Deloitte for nearly 40 years in various leadership roles at the firm, including partner and regional managing partner, and

 

was previously responsible for audit and consulting services for a number of Fortune 500 and large private companies

Ÿ 

Ms. Allen was also a member of the Global Board of Directors, Chair of the Global Risk Committee and U.S. representative on the Global Governance Committee of Deloitte Touche Tohmatsu Limited from 2003 to May 2011

 

 

Other Leadership Experience and Service:

Ÿ 

Ms. Allen is a past Chair of the National Board of Directors of the YMCA of the USA, a leading nonprofit organization for youth development, healthy living and social responsibility

Ÿ 

She served as Chair of the Audit Committee and as a board member of Catalyst Inc.,

 

a leading nonprofit organization dedicated to expanding opportunities for women and business

Ÿ 

Ms. Allen was appointed by President George W. Bush to the President’s Export Council

 
 

 

         
 

 

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  2015 PROXY STATEMENT

   

 

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Table of Contents

PROPOSAL 1: ELECTING DIRECTORS

 

LOGO

QUALIFICATIONS, ATTRIBUTES AND SKILLS:

Ms. Bies’ role as a Federal Reserve System Governor and her tenure with First Tennessee National Corporation (First Tennessee) provide her with deep experience in risk management, consumer banking and financial regulation. In particular, Ms. Bies focused on enterprise financial and risk management during her career with First Tennessee and further expanded her regulatory expertise by serving on the Financial Accounting Standards Board’s (FASB) Emerging Issues Task Force. Her experience with a primary regulator of our company, along with 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.

Professional Highlights:

Ÿ 

Ms. Bies has served as a Senior Advisory Board Member to Oliver Wyman Group, a management consulting subsidiary of Marsh & McLennan Companies, Inc., since February 2009

Ÿ 

She served as a member of the Board of Governors of the Federal Reserve System from 2001 to 2007

Ÿ 

Ms. Bies served as a member of the FASB Emerging Issues Task Force from 1996 to 2001

Ÿ 

Ms. Bies previously held various leadership roles, including Executive Vice President of

  Risk Management, Auditor and Chief Financial Officer, at First Tennessee, a regional bank holding company, where she was employed from 1979 to 2001. At First Tennessee, she also served as chair of the Asset Liability Management Committee and Executive Risk Management Committee
Ÿ 

Ms. Bies currently serves as a director of Zurich Insurance Group Ltd, where she chairs the Risk Committee

Ÿ 

She began her career as a regional and banking structure economist at the Federal Reserve Bank of St. Louis

 
 

LOGO

QUALIFICATIONS, ATTRIBUTES AND SKILLS:

As a former Chairman, Chief Executive Officer, President and Chief Operating Officer of HCA Inc. (HCA), Mr. Bovender has extensive experience leading a large, regulated, complex business. Mr. Bovender’s experience with HCA and service on the Board of Trustees of Duke University and as former chair of its Audit Committee provide him with insight into risk management, operational risk and strategic planning and valuable perspective on corporate governance issues.

Professional Highlights:

Ÿ 

Mr. Bovender served as Chairman of HCA, one of the largest for-profit U.S. hospital operators, from January 2002 to December 2009 and was Chief Executive Officer from January 2001 to January 2009. During his tenure at HCA, he

  also served as President and Chief Operating Officer
Ÿ 

Mr. Bovender began his career in hospital administration in the U.S. Navy

 

 

Other Leadership Experience and Service:

Ÿ 

Mr. Bovender is Vice Chair of the Duke University Board of Trustees and previously served as chair of its Audit Committee

Ÿ 

He also serves on the Duke University Healthcare System’s Board of Directors

 
 

 

       

 

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PROPOSAL 1: ELECTING DIRECTORS

 

LOGO

QUALIFICATIONS, ATTRIBUTES AND SKILLS:

Mr. Bramble brings broad ranging financial services experience and historical insight to our Board, having held leadership positions at two financial services companies acquired by our company (MBNA Corporation, acquired in 2006, and MNC Financial Inc., acquired in 1993). As a former executive officer of one of the largest credit card issuers in the U.S. and a major regional bank, he has dealt with a wide range of issues important to our company, including risk management; credit cycles; sales and marketing to consumers; and audit and financial reporting.

Professional Highlights:

Ÿ 

Since July 2014 Mr. Bramble has served as Chairman of the Board of Trustees of Calvert Hall College High School (Baltimore, MD), where he served as Interim President from July 2013 to June 2014

Ÿ 

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

Ÿ 

He previously served as the Chairman, President and Chief Executive Officer at Allfirst Financial, Inc., MNC Financial Inc., Maryland National Bank, American Security Bank and Virginia Federal Savings Bank

Ÿ 

Mr. Bramble also served as a director, from April 1994 to May 2002, and Chairman, from December 1999 to May 2002, of Allfirst Financial, Inc. and Allfirst Bank, U.S. subsidiaries of Allied Irish Banks, p.l.c.

Ÿ 

He began his career as an audit clerk at the First National Bank of Maryland

 

 

Other Leadership Experience and Service:

Ÿ 

He is an emeritus member of the Board of Visitors of Towson University, where he was also a lecturer from 2006 to 2008

 
 

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QUALIFICATIONS, ATTRIBUTES AND SKILLS:

Mr. de Weck’s experience as an executive with UBS AG (UBS) and Deutsche Bank AG (Deutsche Bank) provides him with extensive knowledge of the financial services industry. As a former Chairman and Global Head of Private Wealth Management and member of the Group Executive Committee of Deutsche Bank, Mr. de Weck has broad experience in risk management and strategic planning that brings valuable international perspective to our company’s business activities. Mr. de Weck’s service as Chief Credit Officer of UBS provides him with further risk management experience.

Professional Highlights:

Ÿ 

Mr. de Weck served as the Chairman and Global Head of Private Wealth Management and a member of the Group Executive Committee of Deutsche Bank from 2002 to May 2012

Ÿ 

Prior to joining Deutsche Bank, Mr. de Weck served on the Management Board of UBS from 1994 to 2001, as Head of Institutional

  Banking from 1994 to 1997, as Chief Credit Officer and Head of Private Equity from 1998 to 1999 and as Head of Private Equity from 2000 to 2001
Ÿ 

He also held various senior management positions at Union Bank of Switzerland from 1985 to 1994

 
 

 

         
 

 

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LOGO

QUALIFICATIONS, ATTRIBUTES AND SKILLS:

As President and Chief Executive Officer of Carnival Corporation and Carnival plc (Carnival), a former senior executive at Monsanto Company (Monsanto) and the former Chairman and Chief Executive Officer of Merisant Company (Merisant), Mr. Donald has extensive experience in strategic planning and operations in consumer, retail and distribution businesses. In addition, his board service with public companies gives him experience with risk management, global operations and regulated businesses. His experience heading The Executive Leadership Council and the Juvenile Diabetes Research Foundation International gives him a distinct perspective on governance matters, social responsibility and diversity.

Professional Highlights:

Ÿ 

Mr. Donald has been President and Chief Executive Officer of Carnival, a cruise and vacation company, since July 2013

Ÿ 

Mr. Donald previously served as President and Chief Executive Officer from November 2010 to June 2012 of The Executive Leadership Council, a nonprofit organization providing a professional network and business forum to African-American executives at major U.S. companies

Ÿ 

Mr. Donald was President and Chief Executive Officer of the Juvenile Diabetes Research

  Foundation International from January 2006 to February 2008
Ÿ 

From 2000 to 2003, Mr. Donald served as Chairman and Chief Executive Officer of Merisant, a privately held global manufacturer of tabletop sweeteners, and he remained Chairman until 2005

Ÿ 

He joined Monsanto in 1977, where over his 20-year tenure he held several senior leadership positions with global responsibilities including President of its Agricultural Group and President of its Nutrition and Consumer Sector

 

 

Other Leadership Experience and Service:

Ÿ 

Mr. Donald was appointed by President Clinton and re-appointed by President George W. Bush to the President’s Export Council

   
 
 

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QUALIFICATIONS, ATTRIBUTES AND SKILLS:

Mr. Gifford’s banking career with our company and predecessor companies, including First National Bank of Boston (Bank of Boston) and FleetBoston Financial Corporation (FleetBoston), brings in-depth knowledge of the financial services industry and significant financial experience 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 country’s major financial services companies. His historical perspective and managerial and leadership experience through past economic cycles provide valuable insight on the issues facing our company’s businesses.

Professional Highlights:

Ÿ 

Mr. Gifford served as Chairman of the Board of Bank of America Corporation from April 2004 until his retirement in January 2005

Ÿ 

He became President and Chief Executive Officer of FleetBoston in 2001 and served as Chairman and Chief Executive Officer from 2002 to April 2004, when FleetBoston was acquired by our company

Ÿ 

Prior to Mr. Gifford’s service as President and Chief Executive Officer of FleetBoston, he served as Chief Executive Officer of Bank of Boston and then President of FleetBoston

Ÿ 

Mr. Gifford began his career in financial services at the Bank of Boston in 1966

 
 

 

       

 

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QUALIFICATIONS, ATTRIBUTES AND SKILLS:

As a former President and Chief Executive Officer of BAE Systems, Inc. (BAE), Ms. Hudson has broad experience in strategic planning and risk management. Together with her service as an executive director of BAE Systems plc (BAE Systems), Ms. Hudson’s experience provides her with international perspective and skill as a leader of a large, international, highly-regulated, complex business. Ms. Hudson’s career in the defense and aerospace industry gives her knowledge of technology risks such as cyber security risk.

Professional Highlights:

Ÿ 

Ms. Hudson has served as Chairman and Chief Executive Officer of The Cardea Group, LLC, a management consulting business, since May 2014

Ÿ 

Ms. Hudson served as CEO Emeritus of BAE, a U.S.-based subsidiary of BAE Systems, a global defense, aerospace and security company headquartered in London, from February 2014 to May 2014, and as President and Chief Executive Officer of BAE from October 2009 until January 2014

Ÿ 

Ms. Hudson served as President of BAE Systems’ Land and Armaments operating group, the world’s largest military vehicle and

  equipment business, from October 2006 to October 2009
Ÿ 

Prior to joining BAE, Ms. Hudson worked at General Dynamics Corporation and was President of its Armament and Technical Products business. During her career, she has held various positions in engineering, production operations, program management and business development for defense and aerospace companies

Ÿ 

She served as a member of the Executive Committee and as an executive director of BAE Systems from 2009 until January 2014. She has also been a member of the Board of Directors of BAE since 2009

 

Other Leadership Experience and Service:

Ÿ 

Ms. Hudson is a member of the Board of Directors of the University of Florida Foundation, Inc. and the University of Florida Engineering Leadership Institute

Ÿ 

She also is a member of the Board of Directors of the Center for a New American Security, a non-partisan research institute that develops national security and defense policies

 
 

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QUALIFICATIONS, ATTRIBUTES AND SKILLS:

Ms. Lozano is the Chairman and served as Chief Executive Officer of a leading Hispanic news and information company. In this role, she has provided broad leadership management over areas such as operations, marketing and strategic planning. Ms. Lozano has a deep understanding of issues that are important to Hispanics, a growing U.S. demographic. Her public company board service for The Walt Disney Company and her roles with the University of California and the University of Southern California give her board-level experience overseeing large organizations with diversified operations on matters such as governance, risk management and financial reporting. Ms. Lozano’s experience as a member of President Obama’s Council on Jobs and Competitiveness also gives her valuable perspective on important public policy, societal and economic issues relevant to our company.

Professional Highlights:

Ÿ 

Ms. Lozano has served as Chair of the Board of US Hispanic Media Inc., the parent company of ImpreMedia, LLC (ImpreMedia), a leading Hispanic news and information company, since June 2014. For ImpreMedia, she has served as Chairman since July 2012 and served as Chief Executive Officer from May 2010 to May 2014. She was also Senior Vice President of ImpreMedia from January 2004 to May 2010

Ÿ 

Ms. Lozano served as Publisher of La Opinion, a subsidiary of ImpreMedia, from 2004 to May 2014 and was Chief Executive Officer from 2004 to July 2012

 

 

Other Leadership Experience and Service:

Ÿ 

She served as a member of President Obama’s Council on Jobs and Competitiveness from 2011 to 2012 and President Obama’s Economic Recovery Advisory Board from 2009 to 2011

Ÿ 

Ms. Lozano serves as a member of the Board of Trustees of the University of Southern California and the Board of Regents of the University of California, and served as a member of the State of California Commission on the 21st Century Economy

 
 

 

         
 

 

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LOGO

QUALIFICATIONS, ATTRIBUTES AND SKILLS:

As Chairman, President and Chief Executive Officer of Northeast Utilities dba Eversource Energy (Northeast Utilities), and the former Chairman, Chief Executive Officer, President, Chief Financial Officer and Chief Operating Officer of Northeast Utilities’ predecessor companies, Mr. May has experience with regulated businesses, operations, risk management, business development, strategic planning and corporate governance matters, which gives him insight into the current issues facing our company’s businesses. In addition, having experience as a Certified Public Accountant, Mr. May brings strong accounting and financial skills, and a professional perspective on financial reporting and enterprise and operational risk management.

Professional Highlights:

Ÿ 

Mr. May became President and Chief Executive Officer of Northeast Utilities, one of the nation’s largest utilities serving 3.6 million customers in three states, in April 2012, and has been Chairman since October 2013

Ÿ 

He was the Chairman and Chief Executive Officer of NSTAR, a Northeast Utilities’

  predecessor, from 1999 to April 2012 and President from 2002 to April 2012. He also served as Chief Financial Officer and Chief Operating Officer during his tenure at Northeast Utilities’ predecessor companies
Ÿ 

Mr. May currently serves as a director of Liberty Mutual Holding Company, Inc.

 
 

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QUALIFICATIONS, ATTRIBUTES AND SKILLS:

As our Chief Executive Officer, Mr. Moynihan has led the transformation of our company by rebuilding capital and liquidity, streamlining and simplifying our business model to focus on three core customer and client groups, divesting non-core businesses and products, resolving mortgage-related issues from the financial crisis and reducing core expenses. Mr. Moynihan has demonstrated leadership qualities, management capability, knowledge of our business and industry, and a long-term strategic perspective. In addition, he has many years of broad international and domestic financial services experience, including wholesale and retail businesses.

Professional Highlights:

Ÿ 

Mr. Moynihan was appointed Chairman of the Board of Bank of America Corporation in October 2014 and President and Chief Executive Officer in January 2010. Prior to becoming Chief Executive Officer, Mr. Moynihan ran each of our company’s operating units

 
 

 

       

 

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QUALIFICATIONS, ATTRIBUTES AND SKILLS:

Mr. Nowell’s role as former Treasurer of PepsiCo, Inc. (Pepsi) provides him with extensive experience in risk management and strategic planning, as well as strong financial skills. His public company board service gives him experience in financial reporting and accounting with large international and regulated businesses. Mr. Nowell’s experience on the advisory board at a large, public university provides him with further experience with large, complex organizations.

Professional Highlights:

Ÿ 

Mr. Nowell served as Senior Vice President and Treasurer of Pepsi, a leading global food, snack and beverage company, from 2001 to May 2009. He previously served as Chief Financial Officer of The Pepsi Bottling Group and as Controller of Pepsi

Ÿ 

Prior to joining Pepsi, Mr. Nowell served as Senior Vice President, Strategy and Business Development at RJR Nabisco, Inc. from 1998 to 1999

Ÿ 

He held various senior financial roles at the Pillsbury division of Diageo Plc, including Chief Financial Officer of its Pillsbury North America, Pillsbury Foodservice and Haagen-Dazs divisions, and also served as Controller and Vice President of Internal Audit of the Pillsbury Company

 

 

Other Leadership Experience and Service:

Ÿ 

Mr. Nowell serves on the Dean’s Advisory Council at The Ohio State University Fisher College of Business

   
 
 

LOGO

QUALIFICATIONS, ATTRIBUTES AND SKILLS:

As the former Chief Executive Officer of AmerisourceBergen Corporation (AmerisourceBergen) and its predecessor company, Mr. Yost has broad experience in strategic planning, risk management and operational risk. Mr. Yost has experience leading a large, complex business. And, through his experience on public company boards, he has board-level experience overseeing large, complex public companies in various industries, which provides him with valuable insights on corporate governance and risk management.

Professional Highlights:

Ÿ 

Mr. Yost served as Chief Executive Officer of AmerisourceBergen, a pharmaceutical services company providing drug distribution and related services to healthcare providers and pharmaceutical manufacturers, from 2001 until his retirement in July 2011 and as President from 2001 to 2002 and again from September 2007 to November 2010

Ÿ 

He has held various positions at AmerisourceBergen and predecessor companies, including Chief Executive Officer from 1997 to 2001 and Chairman from 2000 to 2001 of Amerisource Health Corporation, during a nearly 40-year career

 
 

 

         
 

 

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CORPORATE GOVERNANCE

 

OUR BOARD OF DIRECTORS

Our Board is responsible for overseeing our company’s management. Our Board and its committees oversee:

 

  Ÿ  

management’s identification of, management of and planning for our company’s material risks, including operational, credit, market, interest rate, liquidity, reputational, capital management, liquidity planning and legal and regulatory compliance risks

 
  Ÿ  

our company maintaining high ethical standards and effective policies and practices to protect our reputation, assets and business

 
  Ÿ  

management’s development and implementation of an annual financial plan and strategic business plans and monitoring our progress against these financial and strategic plans

 
  Ÿ  

our corporate audit function, our registered independent public accounting firm and the integrity of our consolidated financial statements

 
  Ÿ  

our company establishing, maintaining and administering appropriately designed compensation programs and plans

 

Our Board is also responsible for:

 

  Ÿ  

reviewing, monitoring and approving succession plans for its Chairman, Lead Independent Director, and our CEO and other key executives to promote senior management continuity

 
  Ÿ  

conducting an annual self-evaluation of our Board and its committees

 
  Ÿ  

identifying and evaluating director nominees and nominating qualified individuals for election to serve on our Board

 
  Ÿ  

reviewing our CEO’s performance and approving the total annual compensation for our CEO and other executive officers

 

DIRECTOR INDEPENDENCE

The New York Stock Exchange (NYSE) listing standards require a majority of our directors and each member of our Audit, Compensation and Benefits, and Corporate Governance Committees to be independent. The Federal Reserve Board Enhanced Prudential Standards require the chair of our Enterprise Risk Committee to be independent. In addition, our Corporate Governance Guidelines require a substantial majority of our directors to be independent. Our Board has adopted Director Independence Categorical Standards, published on our website at http://investor.bankofamerica.com, to assist it with determining each director’s independence. Our Board considers a director “independent” if he or she meets the criteria for independence in both the NYSE listing standards and our Categorical Standards.

Our Board, in coordination with our Corporate Governance Committee, evaluated the relevant relationships between each current director (and his or her immediate family members and affiliates) and Bank of America Corporation and its subsidiaries and affirmatively determined that 13 of our 15 directors are independent. Specifically, the following directors are independent under the NYSE listing standards and our Categorical Standards: Ms. Allen, Ms. Bies, Mr. Bovender, Mr. Bramble, Mr. de Weck, Mr. Donald, Mr. Holliday, Ms. Hudson, Ms. Lozano, Mr. May, Mr. Nowell, Dr. Rose and Mr. Yost.

In making its independence determinations, our Board considered the following ordinary course, non-preferential relationships that existed during the preceding three years and determined that none of the relationships constituted a material relationship between the director and our company:

 

  Ÿ  

Our company or its subsidiaries provided ordinary course financial products and services to all of our directors. Our company or its subsidiaries also provided ordinary course financial products and services to some of their immediate family members and entities affiliated with some of our directors or their immediate family members (Mr. Donald, Mr. May and Dr. Rose). In each case, the fees we received for these products and services were below the thresholds of the NYSE listing standards and our Categorical Standards, and were less than 2% of the consolidated gross annual revenues of both our company and the other entity

 

 

       

 

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  Ÿ  

Our company or its subsidiaries purchased products or services in the ordinary course from entities where some of our directors are executive officers or employees or their immediate family members serve as executive officers (Mr. Donald, Mr. May and Dr. Rose). In each case, the fees paid to each of these entities were below the thresholds of the NYSE listing standards and our Categorical Standards, and were less than 2% of the consolidated gross annual revenues of both our company and the other entity

 

Mr. Gifford and Mr. Moynihan are not independent directors. Mr. Gifford, former Chairman of Bank of America Corporation, receives office space and secretarial support from our company with an aggregate incremental cost exceeding the thresholds of the NYSE listing standards and our Categorical Standards. Mr. Moynihan is not independent due to his employment with our company.

BOARD LEADERSHIP

Our Board is responsible for overseeing our company’s businesses and affairs and for exercising reasonable business judgment on behalf of our company. In discharging this obligation, our Board relies on the judgment, business acumen, and experience of the company’s management. Our Board is committed to strong, independent Board and Committee leadership and the objective oversight of management as a critical aspect of effective Board leadership. Our directors believe that the appropriate leadership structure for our Board will vary depending on the strategy and environment in which our company operates. Our independent Corporate Governance Committee’s charter provides that it shall “[e]nsure that a proper succession planning process is in place to select a Chairman of the Board, and assure that such process is effectively administered.” Accordingly, at least annually, the Corporate Governance Committee deliberates on and discusses the appropriate leadership structure for the Board based on the needs of our company. Since the annual stockholders’ meeting in 2009, these deliberations and discussions have considered the results of the stockholder vote in 2009 to amend our bylaws to require an independent Chairman, in which 50.3% of the votes cast or approximately 29% of the then-outstanding shares supported that amendment.

Our Board’s Audit, Compensation and Benefits, Corporate Governance and Enterprise Risk Committees are each chaired by and composed solely of independent directors. In October 2014, our Board appointed Mr. Moynihan, the CEO, as Chairman of the Board, and the independent directors of the Board elected Mr. Bovender, a seasoned leader and independent director, to serve in the newly established Lead Independent Director role. Our Board determined that this leadership structure is appropriate given Bank of America’s present characteristics and circumstances.

In implementing our Board’s current leadership structure, our Board amended our bylaws to require the Chairman either to be independent or, if not, to be complemented by a Lead Independent Director. Amending our bylaws to remove the provision requiring an independent Chairman was a decision our Board considered carefully, in particular in view of the 2009 stockholder vote referenced above, and followed months of thorough deliberation by our Corporate Governance Committee and Board. A critical element for our Board in supporting this determination is the simultaneous adoption of robust and transparent duties for the independent director who leads our Board. These duties help facilitate our Board’s independent, objective, effective and efficient oversight of our company. They are codified in our Corporate Governance Guidelines, extend beyond those of a traditional lead director and, depending on the board leadership structure in place at the time, apply to either an independent Chairman or a Lead Independent Director.

 

It is our Board’s commitment to stockholders that it will establish a board leadership structure, whether in the form of an independent Chairman or a Lead Independent Director, that is in the best interests of our company and stockholders at that point in time. Our Board believes that an executive Chairman working in tandem with a Lead Independent Director who has strong, well defined duties gives our Board a strong leadership and corporate governance structure that best serves the needs of Bank of America today.

Our Board appointed Mr. Moynihan to serve as Chairman of the Board based on the leadership qualities, management capability, knowledge of the business and industry, and a long-term, strategic perspective he has demonstrated as CEO over a period of nearly five years after running each of our company’s operating units. The independent directors unanimously supported Mr. Bovender’s appointment as our Lead Independent Director. They believe Mr. Bovender possesses the characteristics and qualities critical for a Lead Independent Director. As the former chairman, chief executive officer, and chief operating officer of a highly regulated company, Mr. Bovender is respected among the directors and has the qualities and experience desired for a Lead Independent Director – high personal integrity, a

 

         
 

 

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breadth of knowledge in management, operations, and corporate governance, a willingness to listen and to engage with substance and impact, and a readiness to challenge management. The Corporate Governance Committee and our Board believe that Mr. Bovender’s Lead Independent Director role, tasked with duties consistent with those of an independent Chairman, creates a strong independent voice in the boardroom and serves our stockholders’ best interests.

The Committee’s recommendation to appoint Mr. Moynihan as Chairman of the Board and Mr. Bovender as Lead Independent Director culminated from an orderly, well-researched, and probing independent review and deliberation by our Board and the Corporate Governance Committee. In considering the most suitable leadership structure for our Board, the Committee assessed the appropriateness of leadership by an executive Chairman and a Lead Independent Director, completed its review, and made its recommendation to our Board in sufficient time to allow for public announcement of our Board’s decision and our engagement with stockholders regarding the decision in advance of the 2015 annual meeting.

In its review, the Committee examined relevant stockholder voting policies and voting practices, empirical studies regarding performance of companies having executive and independent board chairs, and other benchmarking data, and sought the counsel of corporate governance advisors. The Committee recognizes that there is a variety of viewpoints concerning a board’s optimal leadership structure. The Committee concluded that empirical data concerning the impact of board leadership on stockholder value is inconclusive and does not prove any correlation between a board having an independent chair and superior corporate governance or performance. The Committee also analyzed the historical Board leadership structure at our company, the stockholders’ vote of 2009 and the developments at our company since 2009, including enhancements to the Board’s governance and composition, the company’s management team, business and performance. Our Board and the Committee believe the 2009 stockholder vote for an independent Chairman reflected concerns particular to the Bank of America of 2009, in the midst of the financial crisis. Specifically, we understand the 2009 stockholder support for separating the roles of the Chairman and CEO to have been due primarily to dissatisfaction with the then Board’s governance and oversight, the company’s performance, and management decisions at that time. Our Board and the Committee recognize some stockholders who supported the 2009 proposal believe that the Chairman and CEO roles should always be separated.

Our company today, compared with 2009, has evolved significantly. The company’s own transformation has been accompanied by a significant evolution in our Board’s composition, notably the presence today of strong independent leadership among its members and committees. Our Board has made significant advances in its processes, systems and structures. Our 15-member board includes 13 independent directors, eight of whom joined our Board in the last three years. The directors bring significant depth and breadth of financial, operational, risk, and other areas of expertise relevant to our company and, through their varied lengths of tenure, a blend of historical and new perspectives about our company. Together, they have demonstrated a record of independent oversight, actively engaging with and challenging management. The composition of the Executive Management Team has also changed significantly since the beginning of 2009. Under this Board oversight and management leadership structure with Mr. Moynihan as CEO, the company has rebuilt capital and liquidity, streamlined and simplified its operations, reduced the scope of activities by exiting non-core businesses and products, stabilized performance, increased the return of capital to stockholders, settled its most significant legacy mortgage-related litigation matters, and reduced expenses. The company has also made other governance changes, including providing additional information to our Board regarding significant investors’ voting policies and procedures on key governance matters and a more robust stockholder engagement program. Our Board believes the strength and record of this team enables Mr. Moynihan to take on the additional responsibilities of Chairman and return our Board to a leadership structure in line with most peers.

Based on extensive review and consideration by our Corporate Governance Committee and Board, our Board believes a Board leadership structure comprised of an executive Chairman and CEO, balanced with a strong Lead Independent Director role tasked with significant specified duties, is in the best interests of our company and stockholders at this time. In line with its commitment to best practices and its charter responsibilities, the Committee will continue to review and assess Chairman succession planning, including the best leadership structure for our Board to account for Bank of America’s evolving needs and business environment circumstances.

 

       

 

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CORPORATE GOVERNANCE

 

 

DUTIES OF THE LEAD INDEPENDENT DIRECTOR OR INDEPENDENT CHAIRMAN

Board Leadership

  Ÿ  

In the case of the Chairman, presiding at all meetings of our Board and, in the case of the Lead Independent Director, presiding at all meetings of our Board at which the Chairman is not present, including at executive sessions of the independent directors

 
  Ÿ  

Calling meetings of the independent directors, as appropriate

 
  Ÿ  

In the case of the Lead Independent Director, if the CEO of our company is also Chairman, providing Board leadership if the CEO/Chairman’s role may be (or may be perceived to be) in conflict

 

Board Culture

  Ÿ  

Serving as a liaison between the CEO and the independent directors

 
  Ÿ  

Establishing a close relationship and trust with the CEO, providing support, advice and feedback from our Board while respecting executive responsibility

 
  Ÿ  

Acting as a “sounding board” and advisor to the CEO

 

Board Focus

  Ÿ  

Board Focus: In consultation with our Board and executive management, ensuring that our Board focuses on key issues and tasks facing our company and on topics of interest to our Board

 
  Ÿ  

Corporate Governance: Assisting our Board, the Corporate Governance Committee and management in complying with our Corporate Governance Guidelines and promoting corporate governance best practices

 
  Ÿ  

CEO Performance Review and Succession Planning: Working with the Corporate Governance Committee, the Compensation and Benefits Committee and members of our Board, contributing to the annual performance review of the CEO and participating in CEO succession planning

 

Board Meetings

  Ÿ  

In coordination with the CEO and the other members of our Board, planning, reviewing and approving meeting agendas for our Board

 
  Ÿ  

In coordination with the CEO and the other members of our Board, approving meeting schedules to assure that there is sufficient time for discussion of all agenda items

 
  Ÿ  

Advising the CEO of the information needs of our Board and approving information sent to our Board

 
  Ÿ  

Developing topics of discussion for executive sessions of our Board

 

Board Performance and Development

  Ÿ  

Board Performance: Together with the CEO and the other members of our Board, ensuring the efficient and effective performance and functioning of our Board

 
  Ÿ  

Board Assessment: Consulting with the Corporate Governance Committee on our Board’s annual self assessment

 
  Ÿ  

Director Development: Providing guidance on the ongoing development of directors

 
  Ÿ  

Director Assessment/Nomination: With the Corporate Governance Committee and the CEO, consulting in the identification and evaluation of director candidates’ qualifications (including candidates recommended by directors, management, third party search firms and stockholders) and consulting on committee membership and committee chairs

 

Stockholders and Other Stakeholders

  Ÿ  

Being available for consultation and direct communication, to the extent requested by major stockholders

 
  Ÿ  

Having regular communication with primary bank regulators (with or without management present) to discuss the appropriateness of our Board’s oversight of management and our company

 

 

         
 

 

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BOARD MEETINGS, COMMITTEE MEMBERSHIP AND ATTENDANCE

Directors are expected to attend our annual meetings of stockholders and our Board and committee meetings. Each of our directors who served on our Board during 2014 (including Mr. Holliday and Dr. Rose) attended at least 75% of the aggregate meetings of our Board and the committees on which they served during 2014. In addition, 14 of the 15 directors serving on our Board at the time of our 2014 annual meeting attended the meeting.

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. Our Lead Independent Director leads Board executive sessions.

Our Board has six committees, including Audit, Compensation and Benefits, Corporate Governance, Credit and Enterprise Risk. Our Board’s sixth committee, Corporate Development, was formed by our Board in 2013 as the result of a litigation settlement and did not hold any meetings in 2014. The duties of each of these committees are summarized below. Charters describing the responsibilities of each of the Audit, Compensation and Benefits, Corporate Governance, Credit and Enterprise Risk Committees can be found at http://investor.bankofamerica.com. Our Board, considering the recommendations of the Corporate Governance Committee, reviews committee membership at least annually. Committee membership is set forth above under the heading “Proposal 1: Electing Directors” on page 1.

Our committees regularly make recommendations and report on their activities to the entire Board. Each committee may obtain advice from internal or external financial, legal, accounting or other advisors as desired.

 

Audit Committee. Our Audit Committee oversees the qualifications, performance and independence of our company’s registered independent public accounting firm; the performance of our company’s corporate audit function; the integrity of our company’s consolidated financial statements; and our compliance with legal and regulatory requirements; and makes inquiries of management or the Corporate General Auditor to determine whether there are scope or resource limitations that may impede the ability of Corporate Audit in executing its responsibilities. Our Board has determined that all Committee members are independent under the NYSE listing standards, our Categorical Standards and the heightened independence requirements applicable to audit committee members under SEC rules. 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.

Compensation and Benefits Committee. Our Compensation and Benefits Committee oversees establishing, maintaining and administering our compensation programs and employee benefit plans, including approving and recommending our CEO’s compensation to our Board for further approval by all independent directors, and reviewing and approving all of our executive officers’ compensation. In addition, the Committee recommends director compensation for Board approval. All Committee members are independent under the NYSE listing standards, our Categorical Standards, independence requirements applicable to compensation committee members under NYSE rules and the heightened Committee independence requirements we adopted in 2010, which are the same as the heightened independence requirements audit committee members are subject to under SEC rules.

Corporate Governance Committee. Our Corporate Governance Committee oversees our Board’s governance processes; identifies and reviews the qualifications of potential Board members; recommends nominees for election to our Board; recommends committee appointments for Board approval; reviews and reports to our Board on senior management talent planning and succession; and leads our Board and its committees in annual self-assessments. All Committee members are independent under the NYSE listing standards and our Categorical Standards.

Credit Committee. Our Credit Committee provides oversight of senior management’s responsibilities for the identification and management of enterprise-wide credit exposures. The Committee oversees, among other things, senior management’s identification and management of credit exposures on an enterprise-wide basis and our company’s responses to trends affecting those exposures, the adequacy of the allowance for credit losses and the administration of credit-related policies. All Committee members are non-management directors.

 

       

 

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Enterprise Risk Committee. Our Enterprise Risk Committee has primary responsibility for oversight of our company’s overall risk framework and material risks facing our company. The Committee oversees senior management’s establishment and operation of our risk framework and management’s alignment of our risk profile with our strategic and financial plans. The Committee approves the risk framework and risk appetite statement and further recommends these documents to our Board for approval. The Committee also oversees senior management’s responsibilities for the identification, measurement, monitoring and control of all key risks facing our company. The Committee may consult with other Board committees on risk-related matters. All Committee members are independent under the NYSE listing standards and our Categorical Standards.

Corporate Development Committee. Our Corporate Development Committee’s purpose is to assist our Board in overseeing our company’s consideration of potential mergers and acquisitions valued at greater than $2 billion. Mr. Bovender chairs the Committee and Mr. Nowell and Mr. Yost are members. All Committee members are independent under the NYSE listing standards and our Categorical Standards.

BOARD OVERSIGHT OF RISK

Risk is inherent in every material business activity that we undertake. Our business exposes us to strategic, credit, market, liquidity, compliance, operational and reputational risks. To support our corporate goals and objectives, risk appetite, and business and risk strategies, we maintain a governance structure that delineates the responsibilities for risk management activities, and the governance and oversight of those activities, by management and our Board. The Board is committed to strong, independent oversight of management and risk through a governance structure that includes the Enterprise Risk Committee and other Board committees. Annually as part of our risk governance process, the Enterprise Risk Committee and the Board approve our Risk Framework and Risk Appetite Statement. Our Risk Framework serves as the foundation for consistent and effective risk management and our Risk Appetite Statement defines the parameters under which we plan to undertake risk. Our Risk Framework outlines our risk management activities, including employees’ roles and accountabilities. It also defines how risk management is integrated into our core business processes, and it defines the risk management governance structure. Our Chief Risk Officer, our senior-most risk manager, reports jointly to the CEO and Enterprise Risk Committee and participates in Board, Credit Committee and Enterprise Risk Committee meetings. The governance structure is designed to align Board and management interests with those of our stockholders and to foster integrity over risk management throughout the company. (Details of our company’s risk management policies and practices are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2014 annual report.)

Senior management develops for Board and Enterprise Risk Committee approval our Risk Framework, described above, our Risk Appetite Statement, and our capital, strategic and financial operating plans. Management monitors, and our Board oversees directly and through its committees, our financial performance, execution against the capital, strategic and financial operating plans, compliance with the risk appetite parameters and the adequacy of internal controls.

As described above, our Enterprise Risk Committee, Audit Committee and Credit Committee have the principal responsibility for enterprise-wide oversight of our company’s risk management. Each of these committees regularly receives risk management updates on risk-related matters within the committee’s responsibilities and reports on these updates to our Board to provide our Board with integrated, thorough insight about our enterprise risk management. We believe this holistic Board and committee risk oversight process complements and remains consistent with our Board’s commitment to maintaining a strong independent Board and committee leadership structure. In addition, our Compensation and Benefits Committee oversees, among other things, our compensation policies and practices so that they do not encourage unnecessary and excessive risk-taking by our employees.

COMPENSATION GOVERNANCE AND RISK MANAGEMENT

Compensation Governance. Our Compensation and Benefits Committee follows procedures intended to promote strong governance of our pay-for-performance philosophy. The Committee regularly reviews: (i) company performance; (ii) executive compensation strategy, approach, trends and regulatory developments; and (iii) other related topics as appropriate. Each year, the Committee reviews, and makes available to the Board, an executive compensation statement, or “tally sheet,” for each executive officer. The tally sheets include each executive officer’s total

 

         
 

 

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compensation, including base salary, cash and equity-based incentive awards, accumulated realized and unrealized stock option gains and the value of prior restricted stock awards (including the status of achieving any performance goals), qualified and nonqualified retirement and deferred compensation benefit accruals, and the incremental cost to our company of the executive’s perquisites. The Committee uses this information to evaluate all elements of executive officer compensation and benefits. Annually, the Committee reviews its compensation decisions (including cash and equity-based awards, if applicable) with our Board for executive officers and other senior executives who report directly to our CEO.

Generally, our executive officers do not engage directly with the Committee in setting the amount or form of executive officer or director compensation. As part of the annual performance reviews for our named executive officers (other than our CEO), the Committee sets the compensation for our named executive officers after considering our CEO’s perspective and recommendations of our CEO for each individual’s incentive awards. In addition, the Committee considers the performance of our various lines of business, business segments and functions, as well as performance feedback from our Global Head of Human Resources and our independent control functions (audit, compliance, finance, human resources, legal and risk).

The Committee has the sole authority and responsibility under its charter to approve engaging any compensation consultant it uses and the fees for those services. The Committee retained Farient Advisors LLC (Farient) as its 2014 independent compensation consultant. Farient’s business is limited to providing independent executive and director compensation consulting services. Farient does not provide any other services to our company. For 2014, Farient provided the Committee external market and performance comparisons, advised the Committee on senior executive, CEO and director compensation and assisted with other executive and director compensation-related matters. In performing these services, Farient met regularly with the Committee without management present and alone with the Committee chair.

In addition, the Committee may delegate to management certain duties and responsibilities, including adopting, amending, modifying or terminating benefit plans. Significant Committee delegations to management include authority to (i) the Management Compensation Committee to direct the compensation for all of our employees except for our CEO and his direct reports and (ii) the Corporate Benefits Committee to oversee substantially all of our employee benefit plans.

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

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

The Committee has adopted and annually reviews our Compensation Governance Policy that governs our incentive compensation decisions and defines the framework for company-wide incentive compensation program design oversight. The Compensation Governance Policy is consistent with global regulatory initiatives so that our incentive compensation plans do not encourage excessive risk-taking. It specifically addresses the:

 

  Ÿ  

Definition and process for identifying “risk-taking” employees

  Ÿ  

Process and policies for incentive compensation plan design and governance to appropriately balance risks with compensation outcomes, including:

O funding incentive compensation pools

O determining individual incentive compensation awards

O use of discretion as part of those processes

  Ÿ  

Policies on incentive compensation plan effectiveness through testing and monitoring to confirm the plans appropriately balance risks with compensation outcomes, including developing processes to administer incentive compensation clawback features

  Ÿ  

Policies that provide for the independence of our company’s independent control functions and their appropriate input to the Committee

 

       

 

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Our compensation governance structure allocates oversight, review and responsibility to the appropriate management level, so that the most relevant management level or our Board, as applicable, makes compensation decisions, with documented input from the independent control functions. Our following four levels of governance each have 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 Lines of Business Compensation Committees.

Consistent with our Compensation Governance Policy, our annual incentive plan certification and review process provides a comprehensive review, analysis and discussion of incentive design and operation. As part of the governance for these incentive plans, each of the CEO’s direct reports, along with their management teams and independent control functions (including their respective risk officers), meet periodically to discuss how business strategy, performance and risk align to compensation. The relevant participants certify that their respective incentive programs (i) are aligned with the applicable business line 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. Farient and the Committee review these management certifications. The Committee also meets with our Chief Risk Officer to review and assess any risks posed by our incentive compensation programs so that the programs appropriately balance risks and rewards in a manner that does not encourage excessive risk-taking.

Corporate Audit reviews all incentive plans at least every three years, using a risk-based approach that includes reviewing governance, payment and processing against each incentive plan’s design, and validating incentive plan design and operation against regulatory requirements. Since 2010, Corporate Audit has reviewed all incentive plans at least once, and reviewed incentive plans with higher risk-rankings more frequently.

For performance year 2014, in addition to reviewing the individual incentive compensation awards for executive officers and other senior executives who report directly to the CEO, the Committee also reviewed the individual incentive compensation awards for certain highly compensated employees. The Committee met with our independent control function heads, Vice Chairman of Global Wealth & Investment Management, Co-Heads of Consumer Banking and Chief Operating Officer before making its 2014 incentive compensation decisions.

As a result of these reviews and processes, and in combination with the risk management and clawback features of our compensation programs, we believe that our compensation policies and practices appropriately balance risks and rewards in a way that does not encourage excessive risk-taking or create risks that are reasonably likely to have a material adverse effect on our company.

CEO AND SENIOR MANAGEMENT SUCCESSION PLANNING

Our Board, in coordination with our Corporate Governance Committee, oversees CEO and senior management succession planning, which is reviewed at least annually. Our CEO and our Global Head of Human Resources provide the Board with recommendations on, and evaluations of, potential CEO successors, including reviewing development plans recommended for potential successors. Our Board reviews potential internal senior management candidates with our CEO and our Global Head of Human Resources, including the qualifications, experience and development priorities for these individuals. Directors engage with potential CEO and senior management successors at Board and committee meetings and in less formal settings to allow directors to personally assess candidates. Further, our Board periodically reviews the overall composition of our senior management’s qualifications, tenure and experience.

Our Board, in coordination with our Corporate Governance Committee, also establishes steps to address emergency CEO and senior management succession planning in extraordinary circumstances. Our emergency CEO succession planning is intended to enable our company to respond to unexpected position vacancies, including those resulting from a major catastrophe, by continuing our company’s safe and sound operation and minimizing potential disruption or loss of continuity to our company’s business and operations.

BOARD EVALUATION AND EDUCATION

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

 

         
 

 

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achieve high levels of Board and committee effectiveness, independence, performance and engagement. Our Board also encourages directors to annually participate in continuing director education programs, and our company reimburses directors for their expenses associated with this participation.

During 2014, our Audit Committee held several continuing education sessions focused on key financial processes, general audit topics and certain company-specific matters. All new directors also participate in our director orientation program during their first six months on our Board.

STOCKHOLDER ENGAGEMENT

Our Stockholder Engagement Program

We conduct stockholder outreach throughout the year to inform our management and our Board about the issues that our stockholders tell us matter most to them. Our management meets with our stockholders to discuss the governance and compensation practices that are a priority for our stockholders. We share stockholder feedback with our Board and its committees to enhance our governance practices, and transparency of those practices to our stockholders. We review the voting results of our most recent annual meeting of stockholders, the stockholder feedback received through our engagement process, the governance practices of our peers and other large companies, and current trends in governance as we consistently consider enhancements to our governance practices and disclosure.

Governance Enhancements in Response to Stockholder Feedback

After considering feedback received from our stockholders, our company:

 

  Ÿ  

Adopted a proxy access right to permit a stockholder, or a group of up to 20 stockholders, owning continuously for at least 3 years shares of our company representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, to nominate and include in our proxy materials director nominees constituting up to 20% of our Board, provided that the stockholder(s) and the nominee(s) satisfy the requirements in our bylaws

  Ÿ  

Announced that we will produce a Business Standards report by March 31, 2016 to increase transparency around our processes and standards, corporate culture, governance and business practices

  Ÿ  

Agreed to develop an incentive compensation recoupment and forfeiture disclosure policy during 2015 to be effective beginning January 1, 2016

  Ÿ  

Enhanced our political activities disclosure to include a more detailed discussion of our participation in the political process; current and historical reports of our PACs contributions; a list of trade associations to which we paid more than a de minimis amount; a list of tax exempt organizations organized under Section 527 of the U.S. Internal Revenue Code to which we made contributions; and included information regarding the management, compliance and monitoring of our political activities, including our Corporate Governance Committee’s oversight of our significant policies and practices. See the “Political Activities” page of our Investor Relations website at http://investor.bankofamerica.com

  Ÿ  

Enhanced our proxy statement disclosure regarding our Board leadership structure, including a discussion of the robust and transparent independent board leader duties. See “Board Leadership” beginning on page 11 for a detailed discussion

  Ÿ  

Enhanced our greenhouse gas emissions disclosure related to our operations and our business activities by reporting Scope 1 and 2 emissions and reporting on 10 of the 11 categories of Scope 3 emissions that are relevant to our business. Also we provide detailed disclosure relating to the emissions profile of the U.S. electric power utilities to which we extend credit. See our Corporate Social Responsibility (CSR) Report on our website at http://about.bankofamerica.com. In addition, in 2014, the Carbon Disclosure Project acknowledged our company’s leadership and transparency on climate change with a score of 100 (out of 100) on its disclosure score and ranked us in Performance Band A (the highest possible)

Also see “Stockholder Outreach & Say on Pay Results” on page 26 for a discussion of our compensation related stockholder engagement and our historical say-on-pay vote results.

 

       

 

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COMMUNICATIONS WITH OUR BOARD

Stockholders and other parties may communicate with our Board, any director (including our Chairman of the Board or Lead Independent Director), non-management members of our Board as a group or any committee. Communications should be addressed to our Corporate Secretary, Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-18-05, Charlotte, North Carolina 28255. Depending on the nature of the communication, the correspondence either will be forwarded to the director(s) named or the matters will be presented periodically to our Board. The Corporate Secretary or the secretary of the designated committee may sort or summarize the communications as appropriate. Communications that are commercial solicitations, customer complaints, incoherent or obscene will not be communicated to our Board or any director or committee of our Board. For further information, refer to the “Contact the Board of Directors” section on our website at http://investor.bankofamerica.com.

 

ADDITIONAL CORPORATE GOVERNANCE INFORMATION

More information about our corporate governance 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 our Related Person Transactions Policy) and Director Independence Categorical Standards; (iv) Code of Conduct and related materials; and (v) composition of each of our Audit, Compensation and Benefits, Corporate Governance, Credit and Enterprise Risk Committees, including the committee charters, and in other materials found on our website. This information is also available in print, free of charge, upon written request addressed to our Corporate Secretary, Bank of America Corporation, Hearst Tower, 214 North Tryon Street, NC1-027-18-05, Charlotte, North Carolina 28255.

 

         
 

 

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RELATED PERSON AND CERTAIN OTHER TRANSACTIONS

 

RELATED PERSON AND CERTAIN OTHER TRANSACTIONS

Our Related Person Transactions Policy in our Corporate Governance Guidelines sets forth our policies and procedures for reviewing, and approving or ratifying any transaction with related persons (directors, director nominees, executive officers, stockholders holding 5% or more of our voting securities or any of their immediate family members or affiliated entities). Our policy covers any transactions where the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, our company is a participant and a related person has or will have a direct or indirect material interest.

Under our Related Person Transaction Policy, our Corporate Governance Committee must approve or ratify any related person transactions, and when doing so, considers the related person’s interest in the transaction; whether the transaction involves arm’s-length bids or market prices and terms; the transaction’s materiality to each party; the availability of the product or services through other sources; the implications of our Code of Conduct or reputational risk; whether the transaction would impair a director or executive officer’s judgment to act in the company’s best interest; the transaction’s acceptability to our regulators; and in the case of a non-management director, whether the transaction would impair his or her independence or status as an “outside” or “non-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 loans and brokerage, banking, insurance and investment advisory or asset management services, and other financial services we provide to any related person, if the services are provided in the ordinary course of business, on substantially the same terms as those prevailing at the time for comparable services provided to non-affiliates and comply with applicable law, including the Sarbanes-Oxley Act of 2002 and Federal Reserve Board Regulation O.

A number of our directors and executive officers, their family members and certain business organizations associated with them are or have been customers of our banking subsidiaries. All extensions of credit to these persons have been made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time in comparable transactions with persons not related to our company and did not involve more than the normal risk of collectability.

Our company and Mr. Moynihan are parties to an aircraft time-sharing agreement, as disclosed in prior proxy statements and approved by our Corporate Governance Committee in December 2010.

Based on information contained in separate Schedule 13G filings with the SEC, each of BlackRock, Inc. (BlackRock), The Vanguard Group (Vanguard) and Berkshire Hathaway Inc. (Berkshire Hathaway), each through certain of its subsidiaries, believed that it beneficially owned 5% or more of the outstanding shares of our common stock as of December 31, 2014 (see “Stock Ownership of Directors, Executive Officers and Certain Beneficial Owners” on page 21).

In the ordinary course of our business during 2014, our subsidiaries provided and are expected to continue to provide financial advisory, sales and trading, treasury and other financial or administrative services to BlackRock and its affiliates and clients, Vanguard and its affiliates and Berkshire Hathaway and its affiliates. These transactions were entered into on an arm’s-length basis and contain customary terms and conditions. We and our subsidiaries may also, in the ordinary course, invest in BlackRock or Vanguard funds or other products or buy or sell assets to or from BlackRock or Vanguard funds and separate accounts.

In addition, before BlackRock became a beneficial owner of 5% or more of our outstanding common stock, it entered into a global distribution agreement on September 29, 2006 with our former subsidiary, Merrill Lynch & Co., Inc. (which merged into Bank of America Corporation on October 1, 2013) in connection with its purchase of Merrill’s investment management business. The agreement provides a framework under which our company distributes BlackRock’s investment advisory products and includes certain pricing, sales incentive restriction and product availability provisions that offer economic terms to each party that are at least as favorable as those offered to its competitors. It was negotiated at arm’s length and was amended and restated on July 16, 2008 and again on November 15, 2010. The agreement’s initial term expired on January 1, 2014, was renewed pursuant to its terms for one additional three-year term and may be renewed thereafter as the parties may agree. In accordance with our Related Person Transactions Policy, the agreement, as amended and restated, was reviewed and ratified by our Corporate Governance Committee in March 2013.

During 2014, payment from BlackRock to our company relating to our distribution and servicing of products covered by the global distribution agreement was approximately $187.4 million and payment from our company to BlackRock for certain products pursuant to the agreement was approximately $3.2 million.

 

       

 

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STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS

 

STOCK OWNERSHIP OF DIRECTORS,

EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS

Our voting securities are our common stock, Series B Preferred Stock and Series 1-5 Preferred Stock. The following table shows the number of shares of our common stock beneficially owned as of March 11, 2015 by (i) each director, (ii) each named executive officer, (iii) all directors and executive officers as a group and (iv) beneficial owners of more than 5% of any class of our voting securities (as determined under SEC rules). As of that date, none of our directors and executive officers owned any shares of any class of our voting securities, other than as reported in the table below. Each director, each named executive officer and all directors and 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 executive officers.

 

  Name   Beneficial Ownership          Stock     
Units 
(1)(2)
        Total      
 

Shares

and
  Restricted  
Shares

    Options/
Warrants
Exercisable
  within 60 days  
of 3/11/2015
    Total
Beneficial
  Ownership  
     

Directors and Executive Officers

                                       

Sharon L. Allen(3)

    38,251        —          38,251        —          38,251   

Susan S. Bies

    126,839        —          126,839        —          126,839   

Jack O. Bovender, Jr.

    49,199        —          49,199        —          49,199   

Frank P. Bramble, Sr.

    111,680        —          111,680        98,071        209,751   

David C. Darnell

    432,672        288,750        721,422        1,390,135        2,111,557   

Pierre J. P. de Weck

    17,962        —          17,962        —          17,962   

Arnold W. Donald

    27,028        —          27,028        —          27,028   

Charles K. Gifford(4)

    232,907        —          232,907        107,644        340,551   

Charles O. Holliday, Jr.

    169,272        —          169,272        —          169,272   

Linda P. Hudson

    19,507        —          19,507        10,879        30,386   

Monica C. Lozano

    3,000        —          3,000        98,633        101,633   

Gary G. Lynch

    478,400        —          478,400        721,470        1,199,870   

Thomas J. May(5)

    2,142        —          2,142        205,173        207,315   

Thomas K. Montag(6)

    1,905,010        2,102,216        4,007,226        2,590,552        6,597,778   

Brian T. Moynihan

    774,284        546,667        1,320,951        2,402,561        3,723,512   

Lionel L. Nowell, III

    3,930        —          3,930        23,280        27,210   

Clayton S. Rose(7)

    25,515        —          25,515        10,879        36,394   

Bruce R. Thompson

    905,244        127,400        1,032,644        1,756,778        2,789,422   

R. David Yost

    64,153        —          64,153        34,921        99,074   

All directors and executive officers as a group (23 persons)(8)

    6,334,691        3,315,374        9,650,065        11,332,324        20,982,389   
         
   Name   Beneficial Ownership           Stock     
Units 
(1)(2)
         Total      
  Shares and
  Restricted  
Shares
    Options/
Warrants
Exercisable
  within 60 days  
of 3/11/2015
    Total
Beneficial
  Ownership  
     

Certain Beneficial Owners

                                       

Warren E. Buffett /Berkshire Hathaway Inc.(9)

    —          700,000,000        700,000,000        —          700,000,000 6.2%   

BlackRock, Inc.(10)

    599,692,793        —          599,692,793        —          599,692,793 5.7%   

The Vanguard Group(11)

    539,166,283        —          539,166,283        —            539,166,283 5.1%   

 

         
 

 

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(1) For non-management directors, includes stock units credited to their accounts pursuant to deferrals made under the terms of the Director Deferral Plan. These stock units do not have voting rights and are not considered beneficially owned under SEC rules. Each unit has a value equal to the fair market value of a share of our common stock. These units, which are held in individual accounts in each director’s name, will be paid in cash upon the director’s retirement if vested at that time.
(2) Includes the following stock units, which are not treated as beneficially owned under SEC rules because the holder does not have the right to acquire the underlying stock within 60 days of March 11, 2015 and/or the stock units will be paid in cash and therefore do not represent the right to acquire stock:

 

Name   Time-Based
RSUs (TRSUs)
    Cash-Settled
RSUs (CRSUs)
    Performance
RSUs (PRSUs)
    Total  Stock
Units
 

Brian T. Moynihan

    303,887        212,963        1,885,711        2,402,561   

Bruce R. Thompson

    402,429        —          1,354,349        1,756,778   

David C. Darnell

    324,200        —          1,065,935        1,390,135   

Gary G. Lynch

    284,695        —          436,775        721,470   

Thomas K. Montag

    491,300        —          2,099,252        2,590,552   

All executive officers as a group

    2,769,073        212,963        7,760,808        10,742,844   

 

     Each stock unit has a value equal to the fair market value of a share of our common stock, but does not confer voting rights. Time-based restricted stock units (TRSUs) include the right to receive dividend equivalents and will be paid in shares of our common stock at vesting or, in certain circumstances, after termination of employment. Cash-settled restricted stock units (CRSUs) do not include the right to receive dividend equivalents and will be paid in cash as described in “Compensation Discussion and Analysis” on page 25. Performance restricted stock units (PRSUs) include the right to receive dividend equivalents and vest subject to attaining pre-established performance goals. To the extent earned, (i) PRSUs granted in February 2011 will be settled 40% in cash and 60% in shares of our common stock, (ii) PRSUs granted in February 2012 will be settled 100% in shares of our common stock, and (iii) PRSUs granted in February 2013, February 2014 and February 2015 will be settled 100% in cash. The stock units shown include the number of PRSUs granted assuming 100% of the award will be earned; however, the actual number of stock units earned may vary depending upon achieving performance goals. Because they are economically comparable to owning shares of our common stock, certain of these stock units currently qualify for purposes of compliance with our stock ownership and retention requirements, except for PRSUs, which qualify only when earned. The reported stock units do not include any stock units held in the 401(k) Restoration Plan.
(3) Includes 1,000 shares of our common stock for which Ms. Allen shares investment power with her spouse.
(4) Includes 1,090 shares of our common stock held by Mr. Gifford as a custodian for two of his children, and 77,840 shares of our common stock, for which Mr. Gifford shares investment power with BAC, as trustee.
(5) Includes 22,548 stock units held by Mr. May under the FleetBoston Director Stock Unit Plan, 3,130 stock units held under the Bank Boston Director Retirement Benefits Exchange Program, and 5,499 stock units held under the Bank Boston Director Stock Award Plan.
(6) Includes 470,724 shares of our common stock held by Mr. Montag in a family trust for which Mr. Montag shares investment power with his wife, who is trustee.
(7) Includes 17,100 shares of our common stock for which Dr. Rose shares investment power with his wife.
(8) Such persons had sole voting and investment power over 8,758,310 shares of our common stock and shared voting or investment power or both over 891,755 shares of our common stock.
(9) Consists of warrants exercisable within 60 days for 700,000,000 shares of our common stock, held indirectly by Warren E. Buffett, 3555 Farnam Street, Omaha, NE 68131 and Berkshire Hathaway Inc., 3555 Farnam Street, Omaha, NE 68131, including through the following entities, which are deemed to share beneficial ownership of greater than 5% of a class of our voting securities (as determined under SEC rules) as follows: OBH LLC, 3555 Farnam Street, Omaha, NE 68131 (666,960,000 of the warrants); and National Indemnity Company, 3024 Harney Street, Omaha, NE 68131 (621,040,000 of the warrants). According to a Schedule 13G filed with the SEC on September 12, 2011, Mr. Buffett and Berkshire Hathaway Inc. had shared voting and investment power with respect to all 700,000,000 shares. Information about other entities deemed to share beneficial ownership of the shares, including their voting and investment power, is disclosed in the Schedule 13G.
(10) Consists of common stock held by Blackrock, Inc., 40 East 52nd Street, New York, NY 10022. According to a Schedule 13G/A filed with the SEC on February 9, 2015, BlackRock, Inc. had sole voting power with respect to 509,702,675 shares, sole investment power with respect to 599,520,176 shares and shared voting power and shared investment power with respect to 172,617 shares.
(11) Consists of common stock held by The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355. According to a Schedule 13G filed with the SEC on February 10, 2015, The Vanguard Group had sole voting power with respect to 18,102,517 shares, sole investment power with respect to 521,981,446 shares and shared investment power with respect to 17,184,837 shares.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers and anyone holding 10% or more of a registered class of our equity securities (reporting persons) to file reports with the SEC showing their holdings of, and transactions in, these securities. Based solely on a review of copies of such reports, and written representations from each reporting person that no other reports are required, we believe that for 2014 all reporting persons filed the required reports on a timely basis under Section 16(a).

 

       

 

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DIRECTOR COMPENSATION

 

DIRECTOR COMPENSATION

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

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

 

  Ÿ  

cash award of $80,000 ($150,000 for the Lead Independent Director)

  Ÿ  

restricted stock award of $160,000 ($300,000 for the Lead Independent Director)

  Ÿ  

cash retainer of $40,000 for the chairs of the Audit and Enterprise Risk Committees and $20,000 for the chair of each of the Compensation and Benefits, Corporate Governance and Credit Committees

The annual payments are made after the non-management directors are elected by stockholders. Non-management directors who begin their Board or committee chair service other than at the annual meeting of stockholders receive a pro-rated amount of annual compensation.

The annual restricted stock award is made pursuant to the Bank of America Corporation Directors’ Stock Plan. The number of restricted shares awarded is equal to the dollar value of the award divided by the closing price of our common stock on the NYSE on the grant date, rounded down to the next whole share, with cash paid for any fractional share. Dividends are paid on the award when they are paid on shares of our common stock. The annual award is subject to a one-year vesting requirement. If a director retires before the one-year vesting date, a pro-rated amount of the award vests based on the number of days the director served during the vesting period before retirement. Any unvested amount of the award is forfeited.

Non-management directors may elect to defer all or a portion of their annual restricted stock or cash compensation through the Bank of America Corporation Director Deferral Plan. When directors elect to defer their restricted stock award, their “stock account” is credited with a number of whole and fractional “stock units” that are equal in value to the restricted stock award and subject to the one-year vesting requirement applicable to restricted stock awards under the Directors’ Stock Plan. Each stock unit is equal in value to a share of our common stock but because it is not an actual share of our common stock it does not have any voting rights. When directors elect to defer their cash award or any committee chair retainers, they may choose to defer into either a stock account or a “cash account.” Deferrals into a stock account are credited with dividend equivalents in the form of additional stock units and deferrals into the cash account are credited with interest at a long-term bond rate. Following retirement from our Board, a non-management director may receive the stock account balance (to the extent vested) and cash account balance in a single lump sum cash payment or in five or 10 annual cash installments, depending on the director’s prior election.

Stock Ownership and Retention Requirements for Non-management 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. All non-management directors are in compliance with these requirements.

Hedging Prohibition. Our Code of Conduct prohibits our directors from hedging and speculative trading of company securities, including short sales and trading in options and derivatives.

During 2014, Mr. Moynihan was our sole management director. As a management director, he received no compensation for his services as a director. The following table shows the compensation our non-management directors earned for their services in 2014:

 

         
 

 

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DIRECTOR COMPENSATION

 

2014 DIRECTOR COMPENSATION

 

  Director  

 

  Fees Earned or   
  Paid in Cash ($)
(1)  

   

 

Stock
  Awards ($)
(2)  

   

 

All Other
  Compensation  ($)
(3)  

   

    Total    

($)

 

Sharon L. Allen(4)

    114,603        160,000        0        274,603   

Susan S. Bies

    80,000        160,000        169,095        409,095   

Jack O. Bovender, Jr.(5)

    121,615        243,230        0        364,845   

Frank P. Bramble, Sr.(4)

    109,206        160,000        0        269,206   

Pierre J. P. de Weck

    80,000        160,000        5,000        245,000   

Arnold W. Donald

    80,000        160,000        0        240,000   

Charles K. Gifford

    100,000        160,000        272,526        532,526   

Charles O. Holliday, Jr.(2)

    167,000        333,000        0        500,000   

Linda P. Hudson

    80,000        160,000        0        240,000   

Monica C. Lozano

    100,000        160,000        0        260,000   

Thomas J. May

    100,000        160,000        0        260,000   

Lionel L. Nowell, III

    80,000        160,000        0        240,000   

Clayton S. Rose

    80,000        160,000        0        240,000   

R. David Yost

    80,000        160,000        0        240,000   

 

(1) The amounts in this column represent the annual cash award plus any committee chair cash retainers paid in 2014, including amounts deferred under the Director Deferral Plan. For 2014 cash awards deferred under the Director Deferral Plan, Mr. May was credited 6,756.76 stock units with a grant date fair value of $100,000 and Mr. Yost was credited 5,405.41 stock units with a grant date fair value of $80,000. The grant date fair value is based on the closing price of our common stock on the NYSE on the date of deferral.
(2) The amounts in this column represent the aggregate grant date fair value of restricted stock awards granted during 2014, whether or not those awards were deferred under the Director Deferral Plan. The grant date fair value is based on the closing price of our common stock on the NYSE on the grant date. As of December 31, 2014, our non-management directors held the number of unvested shares of restricted stock or, if deferred, unvested stock units shown in the table below. For Mr. Holliday, the amount in the Stock Awards column, as well as the number of units shown in the table below, includes 3,715 unvested restricted shares which were subsequently forfeited in February 2015 in connection with the cessation of his service as Chairman of the Board.

 

  Director  

 

Unvested Shares of

  Restricted Stock or  

Stock Units (#)

    Director  

 

  Unvested Shares of  
Restricted Stock or
Stock Units  (#)

 

Sharon L. Allen

    10,810     

Charles O. Holliday, Jr.

    22,500   

Susan S. Bies

    10,810     

Linda P. Hudson

    10,810   

Jack O. Bovender, Jr.

    15,758     

Monica C. Lozano

    10,810   

Frank P. Bramble, Sr.

    10,810     

Thomas J. May

    10,810   

Pierre J. P. de Weck

    10,810     

Lionel L. Nowell, III

    10,810   

Arnold W. Donald

    10,810     

Clayton S. Rose

    10,810   

Charles K. Gifford

    10,810     

R. David Yost

    10,810   

 

(3) Our directors are eligible to participate in our matching gifts program, under which our charitable foundation matches up to $5,000 in donations made by our employees and active directors to approved charitable organizations. This program is also available to all U.S.-based, benefits eligible employees. The values above reflect that $5,000 was donated to charities on behalf of Mr. Gifford and Mr. de Weck, respectively, under the matching gifts program.

 

     In connection with our company’s Board meeting in September 2014, spouses and guests of directors were invited. Pursuant to SEC rules, which do not require disclosure of perquisites for any director that in the aggregate are less than $10,000, the value of the spouse business-related travel expenses, including ground transportation, commercial or third-party vendor aircraft travel (if any), meals and any other incidental meeting-related expenses, is not included in the table above, except in the case of Mr. Gifford.

 

     Ms. Bies serves as chair of the board of directors of Merrill Lynch International (MLI), a United Kingdom subsidiary of Bank of America Corporation. For her services as a non-management director of MLI in 2014, Ms. Bies received annual cash retainers totaling £100,000. These retainers are reported in the table above based on an exchange rate of 0.59 pounds sterling to one dollar, which was the exchange rate in effect on the date that the retainers were earned.

 

     Mr. Gifford receives office space and secretarial support, which for 2014 had an aggregate incremental cost to our company of $267,483; we expect that he will continue to receive such office space and secretarial support in the future.

 

(4) In November 2014, the level of annual cash retainer for the chairs of the Audit and Enterprise Risk Committees was increased to $40,000. Previously, the annual cash retainer had been $30,000 for the chair of the Audit Committee and $20,000 for the chair of the Enterprise Risk Committee. The amount in the cash award column for Ms. Allen and Mr. Bramble includes the additional chair retainer prorated for the portion of the year following the approval of that increase.

 

(5) In October 2014, the level of annual compensation for the Lead Independent Director was established at the time Mr. Bovender was appointed to this position. Mr. Bovender received additional cash and restricted stock awards at that time to reflect the higher level of annual compensation for the position, prorated for the portion of the year following his appointment.

 

       

 

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PROPOSAL 2: APPROVING OUR EXECUTIVE COMPENSATION (AN ADVISORY, NON-BINDING “SAY ON PAY” RESOLUTION)

 

PROPOSAL 2: APPROVING OUR EXECUTIVE COMPENSATION (AN ADVISORY, NON-BINDING “SAY ON PAY” RESOLUTION)

We are seeking an advisory vote to approve our executive compensation for 2014. At our 2011 annual meeting of stockholders, a majority of stockholders voted to have a say on pay vote each year. As a result, we will conduct an advisory vote on executive compensation annually at least until the next stockholder advisory vote on the frequency of such votes.

Although the say on pay vote is advisory and is not binding on our Board, the Compensation and Benefits Committee will take into consideration the outcome of the vote when making future executive compensation decisions. At the 2014 annual meeting of stockholders, more than 93% of the votes cast favored our say on pay proposal. The Committee considered this result, and, in light of the strong support, maintained a consistent overall approach for 2014.

Our Board believes that our current executive compensation program appropriately links compensation realized by our executive officers to our performance and properly aligns the interests of our executive officers with those of our stockholders. The details of this compensation for 2014, and the reasons that we awarded it, are described in “Compensation Discussion and Analysis,” starting below.

Our Board recommends that our stockholders vote in favor of the following resolution:

“Resolved, that our stockholders approve, on an advisory basis, the compensation of our company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables, and any related material disclosed in this proxy statement.”

 

 

Our Board recommends a vote “FOR” approving our executive compensation
(an advisory, non-binding “say on pay” resolution) (Proposal 2).

COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

         
 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

1. EXECUTIVE SUMMARY

a. Executive Compensation Philosophy

Our compensation philosophy ties our executive officers’ pay to company, line of business and individual performance over the short and long term. In addition, our executive compensation program provides a mix of salary, incentives and benefits paid over time that we believe aligns executive officer and stockholder interests. The Compensation and Benefits Committee has the primary responsibility for approving our compensation strategy and philosophy and the compensation programs applicable to our named executive officers listed below. With respect to Mr. Moynihan’s compensation, the Compensation and Benefits Committee makes a recommendation that is further reviewed and approved by the independent members of the Board.

 

 

Named Executive Officers

 

Brian T. Moynihan

   Chairman & Chief Executive Officer

Bruce R. Thompson

   Chief Financial Officer

David C. Darnell

   Vice Chairman, Global Wealth & Investment Management

Gary G. Lynch

   Global General Counsel

Thomas K. Montag

   Chief Operating Officer

b. 2014 Executive Compensation Highlights

 

Ÿ  

2014 design consistent with 2013, which received over 93% stockholder support at our 2014 annual meeting

 

Ÿ  

Mix of fixed and variable pay; majority of variable pay consisted of equity-based incentives

 

Ÿ  

Strong risk management practices, including clawback features that encourage sustainable performance over time

 

Ÿ  

Comprehensive Committee review of performance against financial and non-financial goals

 

Ÿ  

Mr. Moynihan was awarded $13 million of total compensation for 2014, compared to $14 million for 2013

 

Ÿ  

50% of Mr. Moynihan’s variable pay awarded as performance restricted stock units

c. Stockholder Outreach & Say on Pay Results

We conduct stockholder outreach throughout the year and provide stockholders with an annual opportunity to cast an advisory say on pay vote. We heard strong support for our 2013 compensation program and maintained a consistent overall approach for 2014.

 

Ÿ  

Over 93% of the votes cast at our 2014 annual meeting of stockholders favored our say on pay proposal, which we believe affirms our stockholders’ support of our company’s 2013 executive compensation program

 

Ÿ  

Stockholder feedback and the outcome of say on pay vote results will continue to inform future compensation decisions

 

Say on Pay Results

2011   2012   2013   2014
92.9%   92.9%   93.8%   93.5%

 

       

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

2. 2014 COMPANY & LINE OF BUSINESS PERFORMANCE

In 2014, we remained focused on streamlining and simplifying our company to serve the financial needs of people, companies and institutional investors. Our core businesses continued to make progress or show stability in a challenging environment. We also resolved the most significant remaining legacy mortgage-related litigation matters that were overshadowing the underlying progress the company has made. For the year, we earned $4.8 billion. This reflects the costs of resolving those legacy issues. Furthermore, we continued to connect all of our capabilities across our businesses by focusing on our operating principles, which serve as guideposts for achieving our goals.

Following are financial highlights and key measures of company and line of business performance that the Compensation and Benefits Committee considered in evaluating the performance of our named executive officers.

Company Performance

 

-  Achieved “Project New BAC” cost savings goal

 

-  Reduced costs by $2 billion per quarter nine months ahead of original plan

-  Improved levels of capital and liquidity

 

-  Tier 1 capital increased 7.1% to $169 billion

-  Improved/increased client and customer activity

 

-  4 million business referrals in 2014

-  Increased quarterly common stock dividend from $0.01 to $0.05 per share

-  Delivered a 15.7% total return to stockholders in 2014

LOGO

 

Line of Business Performance

 

2014 Business Performance   

Business

($ in Millions)

  Total Revenue(1)     Provision for Credit
Losses
    Noninterest
Expense
    Net Income (Loss)  
  2014     2013       2014          2013       2014     2013     2014     2013  
Consumer & Business Banking     29,862        29,864        2,633        3,107        15,911        16,260        7,096        6,647   
Global Wealth & Investment Management     18,404        17,790        14        56        13,647        13,033        2,974        2,977   
Global Banking     16,598        16,479        336        1,075        7,681        7,551        5,435        4,973   
Global Markets     16,119        15,390        110        140        11,771        11,996        2,719        1,153   
Consumer Real Estate Services     4,848        7,715        160        (156     23,226        15,815        (13,395     (5,031
Total Corporation(2)     85,116        89,801        2,275        3,556        75,117        69,214        4,833        11,431   

 

(1) Revenue reported on fully taxable-equivalent basis.
(2) Includes “All Other,” which consists of Assets Liability Management activities, equity investments, the international consumer card business, liquidating businesses, residual expense allocations and other items not shown in the table above.

 

         
 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Consumer & Business Banking (CBB)

  Ÿ  

Revenue increased 5% for Deposits and decreased 4% for Consumer Lending

  Ÿ  

Average deposits increased by 5% and client brokerage assets increased 18%

 

  Ÿ  

Mobile banking customers increased while the number of banking centers and ATMs declined as we continue to optimize our network and lower the cost-to-serve

 

  Ÿ  

4.5 million new credit cards were issued in 2014; 65% to customers with an existing banking relationship

 

  Ÿ  

U.S. credit and debit card purchase volumes increased 3% and 2%, respectively

Global Wealth & Investment Management (GWIM)

  Ÿ  

Maintained industry leading profit margins of more than 25%

 

  Ÿ  

Revenue increased 3% for Merrill Lynch Global Wealth Management and 4% for U.S. Trust

 

  Ÿ  

Client balances increased 6% due to higher market levels and net inflows

 

  Ÿ  

Record long-term assets under management (AUM) flows of $49.8 billion in 2014

Global Banking

  Ÿ  

Business Lending revenue remained relatively steady compared to 2013

 

  Ÿ  

Global Transaction Services revenue increased by over 3% driven by growth in deposit balances

 

  Ÿ  

Average loans and leases increased 5%; average deposits increased 10%

 

  Ÿ  

Total Corporation investment banking fees, including self-led deals, remained steady at $6.3 billion

Global Markets

  Ÿ  

Net income was relatively stable, excluding the adoption of funding valuation adjustments (FVA) in 2014, charges in 2013 related to the U.K. corporate income tax rate, and net debit valuation adjustments (DVA) in both periods

 

  Ÿ  

Fixed-income, currency and commodities (FICC) sales and trading revenue, excluding net DVA/FVA, decreased by 4% in a challenging trading environment

 

  Ÿ  

Equities sales and trading revenue, excluding net DVA/FVA, decreased by 2% over a strong 2013 period of growth

 

  Ÿ  

Average trading related assets decreased 4% as we continued to optimize our balance sheet

Consumer Real Estate Services (CRES)

  Ÿ  

Department of Justice settlement and the settlement with Federal Housing Finance Agency (FHFA) resulted in an $11.4 billion increase in litigation expense

 

  Ÿ  

Excluding litigation, noninterest expense decreased as a result of reducing costs of servicing delinquent loans as well as lower production costs

 

  Ÿ  

The number of 60+ day delinquent first mortgage loans serviced by Legacy Assets and Servicing declined 42% to 189,000 loans

 

  Ÿ  

Core production revenue decreased 54% due to lower origination volumes and industry-wide margin compression

The Committee believes the company and line of business performance highlights discussed above, as well as other company and business results, reflect management’s progress in reducing complexity and making our company stronger. Although financial results were decreased by the cost of settling legacy mortgage-related litigation matters, the Committee believes that management has built a stable foundation and platform for growth.

 

       

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

3. EXECUTIVE COMPENSATION PROGRAM FEATURES

a. Executive Pay Components & Variable Pay Mix

Each year the Compensation and Benefits Committee makes pay decisions for each named executive officer. The compensation is delivered as salary, annual cash incentive, cash-settled restricted stock units (CEO only) and restricted stock units. This pay structure, with an emphasis on variable pay, serves a role in motivating our executives to deliver sustained stockholder value and achieve long-term goals. The restricted stock units are divided into two components: time-based and performance-based. Our time-based component vests ratably over three years, and our performance based component is tied to achievement of performance metrics and is only earned if goals are achieved over the defined performance period. Consequently, under this structure, actions taken in the current year that may affect the future performance of the company will impact the amount of pay each named executive will earn in the future.

The following chart provides an overview of the 2014 pay components for our named executive officers:

Performance Year 2014 Pay Components

 

 

Base Salary

 

   

Ÿ  Base salary is based on job scope, experience and market comparable positions; provides fixed income to attract and retain executives and balance risk-taking

 

Ÿ  Semi-monthly cash payment made through 2014

 

Annual Cash Incentive

   

Ÿ  Granted to named executive officers other than the CEO: Cash incentives provide short-term variable pay for the applicable performance year

 

Ÿ  Single cash payment made in February 2015

Cash-Settled Restricted Stock Units (CRSUs)

 

   

Ÿ  Granted only to the CEO: CRSUs track stock price performance over 1-year vesting period

 

Ÿ  Vests in twelve equal installments over a 1-year period from March 2015 through February 2016

 

Ÿ  Cash-settled

 

Performance Restricted Stock Units (PRSUs)

   

Ÿ  Vesting requires achieving specific return on assets and growth in adjusted tangible book value goals over 3-year performance period

 

Ÿ  Track stock price performance

 

Ÿ  Encourage growth of earnings during the performance period

 

Ÿ  If performance goals are achieved, the amount granted for 2014 will be earned and vested at end of the 3-year performance period (2017)

 

Ÿ  If goals are not achieved, the entire award is forfeited

 

Ÿ  Cash-settled to the extent earned

 

Time-based Restricted Stock Units (TRSUs)

 

   

Ÿ  Track stock price performance over 3-year vesting period

 

Ÿ  Aligned with sustained longer-term earnings

 

Ÿ  Vests in three equal annual installments beginning in February 2016

 

Ÿ  Stock-settled

Performance Year 2014 Variable Pay Mix

 

Ÿ  

A majority of variable pay is delivered as equity-based awards that balance short-term and long-term results

Ÿ  

The charts illustrate the variable pay mix for our CEO and other named executive officers

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

b. Compensation Risk Management Features

The Compensation and Benefits Committee believes that the design and governance of our executive compensation program encourages executive performance consistent with the highest standards of risk management.

i. Pay Practices

Below we highlight the key features of our executive compensation program, including the pay practices we have implemented to drive sustainable results, encourage executive retention and align executive and stockholder interests. We also identify certain pay practices we have not implemented because we believe they do not serve our risk management goals or stockholders’ long-term interests.

 

LOGO   LOGO
What We Do   What We Don’t Do

 

Ÿ    Pay for performance and allocate individual awards based on actual results and how results were achieved

 

Ÿ    Use balanced, risk-adjusted performance measures

 

Ÿ    Review feedback from independent control functions in performance evaluations and compensation decisions

 

Ÿ    Provide appropriate mix of fixed and variable pay to reward company, line of business and individual performance

 

Ÿ    Defer a significant portion of variable pay as equity-based awards

 

Ÿ    Apply clawback features to all executive officer variable pay

 

Ÿ    Require stock ownership and retention of a portion of equity-based awards

 

Ÿ    Engage with stockholders on governance and compensation

 

Ÿ    Prohibit hedging and speculative trading of company stock, including short sales and trading in options and derivatives

 

 

 

Ÿ    No severance or change in control agreements for executive officers

 

Ÿ    No severance benefits to our executive officers exceeding two times base salary and bonus without stockholder approval (per our policy limiting future severance agreements)

 

Ÿ    No accrual of additional retirement benefits under any supplemental executive retirement plans (SERPs)

 

Ÿ    No excise tax gross-ups upon change in control

 

Ÿ    No discounting, reloading or re-pricing stock options without stockholder approval

 

Ÿ    No single-trigger vesting of equity-based awards upon change in control

 

Ÿ    No multi-year guaranteed incentive awards

 

Ÿ    No fixed-duration employment contracts with executive officers

 

Additionally, refer to the “Compensation Governance and Risk Management” discussion on page 15 for more information about our Compensation Governance Policy and our compensation risk management practices. This section describes our Chief Risk Officer’s review and assessment of any risks posed by our incentive compensation programs and our Corporate General Auditor’s risk-based review of our incentive plans. We also describe the extent to which our CEO participates in determining executive officer compensation, and the role of Farient Advisors LLC, the Committee’s independent compensation consultant.

 

       

 

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ii. Multiple Clawback & Cancellation Features

Our equity-based awards are subject to three separate and distinct “clawback” features that can result in the awards being canceled or prior payments being recouped in the event of certain detrimental conduct or financial losses. We believe these features encourage appropriate behavior. Our named executive officers are subject to all three clawback features.

 

     Detrimental Conduct
Clawback
  

Performance-Based

Clawback

   Incentive Compensation
Recoupment Policy
     

Who

 

  

Ÿ   Applies to approximately 22,000 employees who received equity-based awards as part of their 2014 compensation

  

Ÿ   Applies to approximately 4,500 employees who are deemed to be “risk takers” and received equity-based awards as part of their 2014 compensation

 

Ÿ   “Risk takers” defined according to banking regulations and company policies

 

  

Ÿ   Applies to all of our executive officers

 

Ÿ   Our policy covers a broader group of executives than required by the Sarbanes-Oxley Act, which covers only the CEO and Chief Financial Officer

        
        
        
        
        
        
        
              
     

 

When

 

  

Ÿ   An employee engages in certain “detrimental conduct,” including:

 

O   illegal activity

 

O   breach of a fiduciary duty

 

O   intentional violation or grossly negligent disregard of BAC’s policies, rules and procedures

 

O   trading positions that result in a need for restatement or significant loss, and

 

O   conduct constituting “cause”

 

  

Ÿ   Our company, a line of business, a business unit or an employee experiences a loss and the employee is found to be accountable based on:

 

O   the magnitude of the loss

 

O   the decisions that may have led to the loss

 

O   the employee’s overall performance

  

Ÿ   When fraud or intentional misconduct by an executive officer causes our company to restate its financial statements

        
        
        
        
        
        
        
        
        
        
        
            
     

 

What

 

 

  

Ÿ   All unvested equity awards will be canceled

 

Ÿ   Any previously vested award may be recouped, depending on the conduct

  

Ÿ   All or part of the next vesting tranche of the award may be canceled

  

Ÿ   Any incentive compensation may be recouped as determined by the Board or a Board committee

 

Ÿ   Any action necessary to remedy the misconduct and prevent its recurrence may be taken

 

        
        
        
        
        
        

Additionally, since 2011, all of our equity-based awards provide that they are subject to the compensation clawback provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and any implementing rules and regulations thereunder that the SEC and NYSE may adopt under that law. We intend to update our policies to reflect any final rules implementing the Dodd-Frank Act clawback requirements when those rules are finalized, released and become effective.

 

         
 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

iii. Stock Ownership & Retention Requirements

Our stock ownership and retention requirements align executive officer and stockholder interests by linking the value realized from equity-based awards to sustainable company performance. Beginning with awards granted for 2012, our Corporate Governance Guidelines require:

 

Minimum Shares of Common Stock Owned   Retention

 

Chief Executive Officer

 

 

 

500,000 shares

 

 

 

50% of net after-tax shares received from equity-based awards retained until one year after retirement

 

 

 

Other Executive Officers

 

 

 

300,000 shares

 

 

 

50% of net after-tax shares received from equity-based awards retained until retirement

 

 

For purposes of the stock ownership requirement:

 

  Ÿ  

New executive officers have up to five years to be in compliance

 

  Ÿ  

Full-value shares or units owned, awarded or shares deemed beneficially owned are included in the calculation; PRSUs are included in the calculation only when earned; stock options are not included

iv. Equity Grant Timing

We generally grant equity-based awards on a pre-established award date that coincides with the date we pay cash incentive awards for the performance year to avoid any coordination of the timing of our grants with the release of material non-public information.

4. COMPENSATION DECISIONS AND RATIONALE

a. Pay Evaluation & Decision Process

Each year, the Compensation and Benefits Committee uses a balanced and disciplined approach to review the performance of our named executive officers and determines their base salaries and may award variable compensation. The approach includes a full year assessment of financial results and the contributions of the executives to overall company and line of business performance, progress for delivering on the five operating principles, and driving a strong risk culture. The Committee considers various factors that collectively indicate successful management of our business, including:

 

  Ÿ  

Year-over-year company, line of business and individual performance, including financial and non-financial measures

 

  Ÿ  

The manner in which results are achieved, adherence to risk and compliance policies, and the quality of earnings

 

  Ÿ  

Accountability in driving a strong risk management culture and other core values of our company

 

  Ÿ  

Our company’s year-over-year performance relative to our established risk metrics

 

  Ÿ  

Our performance relative to our primary competitor group

The Committee’s evaluation includes a robust review of a performance scorecard aligned to the company’s operating principles:

 

Deliver for

Stockholders

 

Customer

Driven

 

Manage

Risk

 

Operational

Excellence

 

Great Place

to Work

For each operating principle, the scorecard includes metrics tailored for each named executive officer based on company, line of business, risk, financial and strategic priorities. The Committee evaluates individual performance without assigning weightings to these priorities.

The Committee also reviews market pay practices, compensation risk management and governance practices. In addition, feedback from our independent control functions (i.e., audit, compliance, finance, human resources, legal and risk) informs the Committee’s assessment. For named executive officers other than our CEO, the Committee also considers our CEO’s perspective. For 2014, the Committee also considered changes in role and scope of responsibility for some named executive officers.

The Committee’s assessment of the factors above informs its compensation decisions. Compensation decisions are generally determined on a year-over-year basis without pre-set target levels of total compensation and without formulaic benchmarking. For the CEO, the Committee’s pay recommendation is further reviewed and approved by the independent members of the Board.

 

       

 

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b. Individual Performance

Highlights of the Committee’s assessment of individual performance are included for each of our named executive officers.

 

BRIAN T. MOYNIHAN

 

 

 

Chairman and Chief

Executive Officer

 

Mr. Moynihan has served as the Chief Executive Officer of Bank of America Corporation since January 2010 and as Chairman of the Board since October 2014.

Performance Highlights:

Ÿ  

Core businesses progressed or showed stability year over year in a volatile rate and geopolitical environment

 

Ÿ  

Resolved several important litigation matters, putting the most significant remaining legacy mortgage-related litigation matters behind the company. Litigation expense for 2014 was $16.4B, compared to $6.1B in 2013

 

Ÿ  

Project New BAC goals of $8B annualized cost savings achieved ahead of plan

 

Ÿ  

Launched enterprise Simplify and Improve program to continue momentum in building a leaner, stronger and simpler company

 

Ÿ  

Continued focus on optimizing the balance sheet with record regulatory capital ratios and liquidity

 

Ÿ  

Increased capital distribution to stockholders with first common stock dividend increase since 2007

 

Ÿ  

Improved asset quality with net charge-offs at 0.49% compared to 0.87% in 2013; decrease due to credit quality improvement across all major portfolios

 

Ÿ  

Continued to reduce risk profile and drive a culture of strong risk management across the company, as evidenced by survey results in our inaugural Risk Culture Assessment and enterprise employee engagement survey

 

Ÿ  

Continued to execute our customer-driven strategy, doubling the number of referrals across businesses to more than 4 million

 

Ÿ  

Continued to drive and increase employee engagement and maintained commitment and focus on diversity and inclusion efforts across the company

 

Ÿ  

Continued investment in and implementation of enterprise technology roadmap; further simplified the operating platform while maintaining strong and stable core platform availability

For additional information on company performance, see “2014 Company & Line of Business Performance” on page 27.

 

 

 

 

BRUCE R. THOMPSON

 

 

 

Chief Financial Officer

 

Mr. Thompson has responsibility for all finance functions as well as Corporate Treasury, Investor Relations and Corporate Investments.

Performance Highlights:

Ÿ  

Continued progress building capital in excess of regulatory minimums; exceeded year-end target levels for U.S. supplementary leverage ratios, liquidity levels and time-to-required funding

 

Ÿ  

Drove balance sheet and liquidity improvements that enabled the increase of our quarterly common stock dividend

 

Ÿ  

Instilled greater confidence with investors and analysts through his role as primary spokesman for our company in quarterly earnings calls

 

Ÿ  

Led multiple enterprise and Chief Financial Officer strategic initiatives, including completion of streamlining the legal entity structure

 

Ÿ  

Increased leadership focus on bench-strength through targeted external hiring and internal movement

 

 

         
 

 

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DAVID C. DARNELL

 

 

 

Vice Chairman, Global

Wealth & Investment

Management

 

Mr. Darnell is responsible for the bank’s Global Wealth and Investment Management (GWIM) division, which includes Merrill Lynch Wealth Management and U.S. Trust. Mr. Darnell also works across the company to execute our customer strategy and develop relationships with key clients throughout the U.S.

Performance Highlights:

Ÿ  

In addition to GWIM responsibilities, served as the Co-Chief Operating Officer with responsibility for Consumer and Business Banking businesses until September 2014

 

Ÿ  

In GWIM, financial advisors delivered more banking products to investing clients, which resulted in record levels of loans and deposits

 

Ÿ  

Improved customer satisfaction scores in Retail and Preferred Consumer Banking

 

Ÿ  

Strategically increased the specialist sales force; offset the decrease in mortgage loan officers by increasing the number of new financial solution advisers and small business bankers

 

Ÿ  

In Business Banking, achieved core credit and treasury product revenue growth, while holding loans-to-deposits ratio stable

For additional details on Consumer and Business Banking and GWIM performance, see “2014 Company & Line of Business Performance” on page 27.

 

 

 

 

GARY G. LYNCH

 

 

 

Global General

Counsel

 

Mr. Lynch is responsible for our legal functions globally.

Performance Highlights:

Ÿ  

In addition to General Counsel responsibilities, served as head of Compliance and Regulatory Relations for all of 2014

 

Ÿ  

Leadership role in resolution of disputes and litigation, including the U.S. Department of Justice settlement and the Federal Housing Finance Agency settlement in 2014

 

Ÿ  

Maintained relationships with regulators and law enforcement authorities around the world

 

Ÿ  

Led efforts in strengthening of compliance risk management policies and improved risk transparency in reporting

 

Ÿ  

Key advisor to the lines of business in regulatory reform efforts and in resolving and remediating issues

 

 

 

 

THOMAS K. MONTAG

 

 

 

Chief Operating Officer

 

Mr. Montag is responsible for all of the businesses that serve companies and institutional investors in over 150 countries, including relationships with 99% of the U.S. Fortune 500 companies and nearly 96% of the Fortune Global 500. Mr. Montag also manages our global research and global markets sales and trading businesses.

Performance Highlights:

Ÿ  

In addition to Global Banking and Global Markets, assumed responsibility for Business Banking and became our Chief Operating Officer in September 2014

 

Ÿ  

Oversaw businesses serving as a primary dealer in 17 countries with access to 100+ exchanges, trading more than 145 currency pairs

 

Ÿ  

Recognized industry-wide for performance in his business

O Named “Top Global Research Firm” by Institutional Investor for the 4th straight year

O Named both Best Global Investment Bank and Best Global Transaction Services House by Euromoney

O #3 in reported Investment Banking revenues by Dealogic

 

Ÿ  

Risk measures improved as compared to 2013 levels; continued to reduce risk on legacy, non-core markets and loan positions

 

Ÿ  

Successfully instituted new routines and training programs to improve operational performance

For additional details on Global Banking and Global Markets performance see “2014 Company & Line of Business Performance” on Page 27.

 

 

       

 

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c. 2014 Compensation Decisions

For 2014, the Compensation and Benefits Committee continued to emphasize equity-based awards and did not change our named executive officers’ base salaries. The Committee determined 2014 variable compensation in February 2015 after completing its review of annual performance as described in “Pay Evaluation & Decision Process” on page 32. The following table summarizes performance year 2014 compensation:

 

Name   Base
Salary  ($)
    Annual
Cash
Incentive ($)
   

Cash-Settled
Restricted
Stock

Units ($)

   

Performance
Restricted
Stock

Units ($)

    Time-Based
Restricted
Stock Units ($)
    Total ($)  
Brian T. Moynihan     1,500,000        —          3,450,000        5,750,000        2,300,000        13,000,000   
Bruce R. Thompson     850,000        3,960,000        —          2,970,000        2,970,000        10,750,000   
David C. Darnell     1,000,000        3,100,000        —          2,325,000        2,325,000        8,750,000   
Gary G. Lynch     850,000        2,920,000        —          2,190,000        2,190,000        8,150,000   
Thomas K. Montag     1,000,000        5,200,000        —          3,900,000        3,900,000        14,000,000   

Note: Some of the 2014 compensation above differs from the Summary Compensation Table on page 38. SEC rules require that the Summary Compensation Table include equity compensation in the year granted, while the Committee awards equity compensation after the performance year. Therefore, equity-based incentives granted in 2014 for the 2013 performance year are shown in the Summary Compensation Table as 2014 compensation. The equity-based incentives above will be included in the Summary Compensation Table in next year’s proxy statement, assuming our named executive officers remain the same. The Summary Compensation Table also includes other elements of compensation not shown in the table above.

For a description of the pay components above, see “Executive Pay Components & Variable Pay Mix” on page 29.

d. Goals for Performance Restricted Stock Units

The PRSUs granted in February 2015 (based on 2014 performance) generally are not earned until the conclusion of a three-year performance period from 2015 to 2017. They are earned only if we meet certain return on assets (ROA) and adjusted tangible book value (TBV) growth goals. These metrics encourage focus on the efficient creation of net income for the long-term benefit of our stockholders.

The performance year 2014 PRSU goals are outlined in the chart below:

 

Three-year Average ROA(1)

(50% Weighting)

         Three-year Average Growth in Adjusted TBV(2)
(50% Weighting)
 
Goal     % Earned          Goal     % Earned  
                  Less than 50bps        0         Less than 5.25     0 %
  50bps        33 1/3         5.25     33 1/3 %
  65bps        66 2/3         7.00     66 2/3 %
  80bps        100         8.50     100 %
  100bps        125         11.50     125 %

 

(1) 

Three-year Average ROA means the average “return on assets” for the three calendar years in the performance period. For this purpose, “return on assets” means our return on average assets as reported in our Form 10-K, determined in accordance with generally accepted accounting principles (GAAP) in effect as of January 1, 2015.

 

(2) 

Three-year Average Growth in Adjusted TBV means the average for the three-year performance period of the year-over-year percentage change in “adjusted tangible book value” measured as of December 31 each year. For this purpose, “adjusted tangible book value” will equal our total common stockholders’ equity, less the impact of any capital actions approved by the Federal Reserve Board and our company’s Board and taken by our company during the performance period, and less the sum of the carrying value of (a) goodwill and (b) intangible assets excluding mortgage servicing rights, adjusted for (c) deferred tax liabilities directly related to (a) and (b). These amounts are to be measured using the ending balance as of December 31 each year and determined based on GAAP in effect as of January 1, 2015.

PRSUs are forfeited if results are below the minimum goals. Any portion of the PRSUs achieved above 33 1/3% will be interpolated on a straight-line basis between the two nearest goals. For any portion of the PRSU goals achieved up to 100%, payment will be at the end of the performance period. For any portion of the PRSU goals achieved above 100%, up to a maximum of 125%, payment will be deferred an additional two years.

 

         
 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

5. OTHER COMPENSATION TOPICS

a. Performance Results for Outstanding PRSU Awards

Our named executive officers had four outstanding Performance Restricted Stock Unit (PRSU) awards granted in February of each year from 2011 through 2014. Mr. Lynch received PRSU awards only for the 2013 and 2014 grants.

 

Ÿ  

The 2011 and 2012 PRSUs are earned based on return on assets, measured each quarter based on a rolling four-quarter performance period

 

Ÿ  

The 2013 and 2014 PRSUs are earned based on return on assets and adjusted tangible book value growth

O Results for 2013 and 2014 were below target and will factor into the 3-year average

O No amounts can be earned until the end of the three-year performance period

The key features of these outstanding PRSU awards by performance year (PY) are shown below:

 

PRSU

Award

   Performance
Period
  

Performance

Measure

   % Earned in
2014
  

Total %

Earned

2011 Grant

(For PY2010)

   Rolling four-quarters 2011 through 2015    Return on Assets    0%   

40%

(35% in 2012

& 5% in 2013)

2012 Grant

(For PY2011)

  

Rolling four-quarters

2012 through 2016

      0%   

40%

(40% in 2013)

     

2013 Grant

(For PY2012)

   2013 through 2015   

50% 3-year average Return

on Assets

 

50% 3-year average Growth in Adjusted Tangible Book Value

 

  

Not Applicable – award cannot

be earned until the conclusion of the

3-year performance period

2014 Grant

(For PY2013)

   2014 through 2016      

b. Competitor Groups

The Compensation and Benefits Committee periodically reviews compensation practices of three competitor groups:

  Ÿ  

Our primary competitor group includes five leading U.S financial institutions—we compete directly with them for customers, employees and investors, and they follow similar economic cycles to our own

  Ÿ  

Leading international financial institutions for perspectives on the global financial services industry

  Ÿ  

Leading U.S. headquartered companies of similar size and global scope for perspective across industries

The Committee uses the following 2014 competitor groups periodically to evaluate market trends in executive compensation and relative performance, but without any formulaic benchmarking.

 

Primary Competitor Group:

Leading U.S. Financial

Institutions

 

 

Leading International
Financial Institutions

  

Leading Group of Global Companies

Headquartered in the

U.S. Spanning all Industries

   
Citigroup   Banco Santander    Abbott Laboratories   IBM
Goldman Sachs   Barclays    AT&T   Intel
JPMorgan Chase   BNP Paribas    Chevron   Johnson & Johnson
Morgan Stanley   Credit Suisse    Cisco   PepsiCo
Wells Fargo   Deutsche Bank    Coca-Cola   Pfizer
    HSBC    ConocoPhillips   Philip Morris International
    Royal Bank of Scotland    Exxon Mobil   Procter & Gamble
    UBS    General Electric   Verizon
         Hewlett-Packard  

Wal-Mart

 

 

       

 

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c. Retirement Benefits

We provide our named executive officers the opportunity to save for their retirement via employee and employer contributions to qualified and nonqualified defined contribution plans on the same terms as other U.S.-based salaried employees. These plans help us attract and retain key personnel by providing a means to save for retirement.

Certain named executive officers also participate in various frozen qualified and nonqualified defined benefit pension plans. For more information about these plans, see “Pension Benefits Table” and “Nonqualified Deferred Compensation Table” on pages 45 and 47, respectively.

d. Welfare Benefits & Perquisites

Our named executive officers receive health and welfare benefits, such as medical, life and long-term disability coverage, under plans generally available to all other U.S.-based salaried employees. Because we have internal expertise on financial advisory matters, we make those services available at no cost to our named executive officers for their personal needs. We also may provide certain named executive officers with secured parking. In limited circumstances, we allow spouses to accompany executives traveling for a business-related purpose and pay for other incidental expenses. Our policy provides for the use of corporate aircraft by senior management for approved emergency travel. Our CEO is also allowed limited personal use of our aircraft, provided that he reimburses the company for certain costs, pursuant to his aircraft time-sharing agreement.

e. Tax Deductibility of Compensation

Under the Internal Revenue Code, a public company is limited to a $1 million deduction for compensation paid to its CEO or any of its three other most highly compensated executive officers (other than the Chief Financial Officer) who are employed at year-end. This limitation does not apply to compensation that meets the tax code requirements for qualifying performance-based compensation (compensation paid only if the individual’s performance meets pre-established objective goals based on performance criteria approved by stockholders). For 2014, payments of annual cash incentive awards and equity-based incentive awards under the Executive Incentive Compensation plan, and certain PRSUs under the Stock Plan, may satisfy the requirements for deductible compensation, but the Committee retains the discretion to make awards and pay our executives amounts that do not qualify as deductible compensation.

 

 

COMPENSATION AND BENEFITS COMMITTEE REPORT

The Compensation and Benefits Committee has reviewed and discussed with management the Compensation Discussion and Analysis that immediately precedes this report. Based on this review and discussion, 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, 2014.

Submitted by the

Compensation and Benefits Committee of the Board:

Monica C. Lozano, Chair

Pierre J. P. de Weck

Arnold W. Donald

Linda P. Hudson

R. David Yost

 

         
 

 

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EXECUTIVE COMPENSATION

 

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:

2014 Summary Compensation Table(1)

 

 Name and

 Principal Position(2)

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

Change in
Pension Value
and

Nonqualified
Deferred
  Compensation  
Earnings
($)
(7)

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

Brian T. Moynihan

               

Chairman and Chief

Executive Officer

    2014         1,500,000        0          12,545,091        0        764,849        532,459        15,342,399   
    2013        1,454,167        0        11,142,643        0        44,796        497,751        13,139,357   
   

 

2012

 

  

 

   

 

950,000

 

  

 

   

 

0

 

  

 

   

 

5,920,635

 

  

 

   

 

0

 

  

 

   

 

930,152

 

  

 

   

 

520,513

 

  

 

   

 

8,321,300

 

  

 

Bruce R. Thompson

               

Chief Financial Officer

    2014        850,000          3,960,000        6,714,134        0        18,997        56,914        11,600,045   
    2013        850,000        4,460,000        6,141,050        0        19,599        52,497        11,523,146   
   

 

2012

 

  

 

   

 

850,000

 

  

 

   

 

4,060,000

 

  

 

   

 

6,165,292

 

  

 

   

 

268,024

 

  

 

   

 

32,590

 

  

 

   

 

47,920

 

  

 

   

 

11,423,826

 

  

 

David C. Darnell

               

Vice Chairman, Global

Wealth & Investment

Management

    2014        1,000,000        3,100,000        5,419,484        0        408,690        56,164        9,984,338   
    2013        987,500        3,600,000        5,233,508        0        538,883        53,384        10,413,275   
   

 

2012

 

  

 

   

 

850,000

 

  

 

   

 

3,460,000

 

  

 

   

 

4,208,054

 

  

 

   

 

0

 

  

 

   

 

363,433

 

  

 

   

 

42,937

 

  

 

   

 

8,924,424

 

  

 

Gary G. Lynch

               

Global General Counsel

    2014        850,000        2,920,000        4,907,662        502,814        0        51,974        9,232,450   
    2013        850,000        3,260,000        3,720,952        1,346,840        0        48,366        9,226,158   
   

 

2012

 

  

 

   
850,000
  
   
2,460,000
  
   
3,611,095
  
   
1,750,854
  
   
0
  
   
34,656
  
   
8,706,605
  

Thomas K. Montag

               

Chief Operating Officer

    2014        1,000,000        5,200,000        8,731,394        0        0        17,500        14,948,894   
    2013        987,500        5,800,000        8,258,655        0        0        20,146        15,066,301   
   

 

2012

 

  

 

   
850,000
  
   
5,460,000
  
   
8,122,522
  
   
0
  
   
0
  
   
10,148
  
   
14,442,670
  

 

(1) SEC rules require the Summary Compensation Table to include in each year’s amount the aggregate grant date fair value of stock awards granted during the year. Typically, we grant stock awards early in the year as part of total year-end compensation awarded for prior year performance. As a result, the amounts for stock awards generally appear in the Summary Compensation Table for the year after the performance year upon which they were based, and therefore the Summary Compensation Table does not fully reflect the Compensation and Benefits Committee’s view of its pay-for-performance executive compensation program for a particular performance year. For example, amounts shown as 2014 compensation in the “Stock Awards” column reflect stock awards granted in February 2014 for 2013 performance. See “Compensation Discussion and Analysis” on page 25 for a discussion about how the Committee viewed its 2014 compensation decisions for the named executive officers.
(2) For all of 2014, Mr. Lynch served as the Global General Counsel and Head of Compliance and Regulatory Relations. In February 2015, Mr. Lynch became Global General Counsel. All other listed named executive officer positions are those held as of December 31, 2014. Mr. Darnell and Mr. Montag served as Co-Chief Operating Officers until September 2014, at which time they were appointed to their listed positions.
(3) Includes any amounts deferred under our qualified and nonqualified 401(k) plans. See “Nonqualified Deferred Compensation Table” on page 47.
(4) Amounts reflect annual cash incentive awards received by the named executive officers for performance in the applicable year.

 

       

 

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EXECUTIVE COMPENSATION

 

(5) Amounts shown are the aggregate grant date fair value of CRSUs, PRSUs and TRSUs granted in the year indicated. Grants of stock-based awards (including RSUs and PRSUs but not CRSUs) include the right to receive cash dividends only if and when the underlying award becomes vested. The grant date fair value is based on the closing price of our common stock on the applicable grant date. For the PRSUs granted in 2014, the actual number of PRSUs earned (0% up to the maximum level of 125%) will depend on our company’s future achievement of specific ROA and growth in adjusted TBV goals over a three-year performance period ending December 31, 2016. Values in the Stock Award column assume that 100% of the PRSUs granted would vest as the probable outcome for purposes of determining the grant date fair value. See “Grants of Plan-Based Awards Table” on page 41 for a description of the CRSUs, PRSUs and TRSUs granted in 2014. The following table shows the grant date fair value of the PRSUs included in the Stock Award column at the level assumed as the probable outcome (100%, or the target level). The value of the PRSUs assuming that the highest level of performance conditions will be achieved is 125% of the values shown below:

 

  Name  

Target
      PRSUs      

($)

 

Brian T. Moynihan

    6,272,537   

Bruce R. Thompson

    3,357,067   

David C. Darnell

    2,709,742   

Gary G. Lynch

    2,453,831   

Thomas K. Montag

    4,365,697   

 

(6) For Mr. Thompson, the amounts for 2012 include the portion of a 2009 long-term cash award that was paid upon vesting. For Mr. Lynch, the amounts for 2012, 2013 and 2014 include the portion of a long-term cash award that was paid upon vesting. This long-term cash award was granted to Mr. Lynch under the terms of his offer letter dated April 14, 2011, as part of a buy-out of the equity and other incentive awards from his prior employer that he forfeited in order to take an important leadership role in our company.
(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: