UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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(Rule 14a-101)
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Bank of America Corporation
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 April 2015
2015 Corporate Governance
and Compensation Practices
Highlights |
 •
Serves
48M
consumer and small business relationships
Business Overview & Performance Highlights
2
Premier Financial Institution Focused
on
Three Groups of Customers
2014
Revenue
Across
Our
Five
Reported
Segments
($B)
1
Reflects
reclassification
of
reporting
segments
as
of
January
1,
2015
2
Primary competitor group includes Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and
Wells Fargo 2014 Performance Highlights
Achieved “Project New BAC”
cost savings goal
Reduced costs by $2B per quarter nine months ahead of original plan
Improved levels of capital and liquidity
Tier 1 capital increased more than 7% from 12/31/13 to $169B;
achieved record Global Excess Liquidity Sources of $439B
Improved / increased client and customer activity
4M business referrals in 2014
Increased quarterly common stock dividend
From $0.01 to $0.05 per share
15.7% total return to investors in 2014
Surpassed both peer and S&P average
Strong One-Year TSR Performance Relative to Peers
2
Institutional
Investors.
Support
research
processes,
risk
management and portfolio performance goals
Companies.
Expertise
and
customized
products
and
services
delivered through our global banking platform
Consumer
Banking
$30.8
Global Wealth
& Investment
Mgmt
$18.4
Global
Banking
$17.7
Global
Markets
$16.1
Legacy Assets
& Servicing
$2.7
15.7%
14.8%
14.4%
13.7%
3.8%
BAC
Primary
Competitor
Group Average
USG-SIFI Average
S&P 500 Index
AIIG-SIFI Average
People.
Banking
and
wealth
management
solutions
•
Serve
1
in
3
companies
with
$50M
-
$2B
in
annual
sales
•
More than
200,000
unique institutional and retail clients access our
research and analysis
1 |
 Governance
Enhancements Informed by Shareholder Feedback 3
Board implemented special meeting right at 10% ownership threshold
Annual election of directors
Majority vote standard for director elections
•
Business Standards report
1
•
Political activities disclosure
•
Sustainability and greenhouse gas emission disclosure
Shareholder
Rights
Reporting
& Disclosure
Director
Accountability
1
Expected to be produced by March 31, 2016.
Our Board has implemented market-leading governance practices in direct response to our
shareholders’
feedback, including proxy access with 3%/3 year threshold
Board proactively adopted proxy access right at a 3% / 3 year ownership threshold with
market-leading aggregation terms
•
At time of adoption, Bank of America was one of only 10 US companies to establish
proxy access at 3%/3 year threshold
•
Demonstrates Bank of America’s commitment to constructive engagement with investors
and the evolving landscape of shareholder rights
Proxy Access
Enhanced business and sustainability reporting, including: |
 Highly Engaged,
Independent Board with Deep Expertise •
Our 13 member Board includes 11 independent directors,
8 of whom have been elected since 2009, including 7 in the
last 3 years
4
We maintain strong board evaluation and succession planning practices to ensure we have the
right skills and experiences on the Board to oversee our business and strategy
2013:
De
Weck,
Donald
&
Nowell
2012:
Allen,
Bovender,
Hudson
&
Yost
Independent
85%
Risk Management
Cybersecurity
Risk
Consumer Banking
International
Perspective
Audit / Financial
Reporting
Corporate
Governance
Financial Services
Industry Experience
Strategic Planning
Business
Development
Regulated Business
Expertise
Operational Risk
Social Responsibility
and Diversity
1 –
4
years
5 –
8
years
9 –
12
years
Balance of Institutional Knowledge and Fresh Perspectives
Directors Contribute Valuable Range of Expertise
Gender Diversity
Director Independence
Female
31%
Male
69%
Inside
15% |
 Commitment to
Strong, Independent Board Leadership •
Bank of America has evolved significantly since 2009, when separate Chairman and CEO roles
were established. We have made significant changes to our Board
composition and Executive Management Team, and our shareholder base has evolved
considerably •
Decision to appoint Mr. Moynihan as Chairman reflected his demonstrated leadership, management
capability, knowledge of our business and industry, and the long-term, strategic
perspective he has demonstrated as CEO over the last 5 years •
Under Mr. Moynihan’s leadership, we have rebuilt capital, streamlined operations,
stabilized performance, increased capital return to shareholders, and made key
governance changes to enhance disclosure and shareholder engagement •
Creation of a Lead Independent Director role with robust and transparent duties comparable to
that of an Independent Chair was a critical component of the Board’s decision to
change the independent leadership structure •
Shareholder feedback from prior engagement and investor voting policies was also an important
factor in our decision 5
Key Elements of 2014 Board Leadership Review
Key Considerations in Board Leadership Decision
When Mr. Holliday
advised the Board of
his intention to step
out of Independent
Chairman role,
formal succession
review commenced
Board conducted
external review
of
board leadership
structures including
investor voting
policies and past
feedback, benchmark
data, and peer data
Board conducted
internal
review
of
current governance
structure, needs of
the business, and
Board leadership
candidates
Board appointed CEO
Brian Moynihan as
Chairman of the
Board, and elected
Jack Bovender to
newly established
Lead Independent
Director role
Our Board believes that an executive Chairman, working in tandem with a Lead Independent
Director with meaningful leadership responsibilities, provides the right Board
leadership structure at this time Corporate
Governance
Committee
deliberates annually
on Board leadership
structure,
in part by questions
on topic in annual
shareholder
engagement
informed |
 Lead Independent
Director with Significant Board Leadership Responsibilities
Jack Bovender, Lead Independent Director
•
Respected
among
the
directors
and
has
the
qualities
and
experience
desired
for
the
role
–
high
personal
integrity,
a
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
•
Brings
strategic
insights
and
relevant
knowledge
as
former
Chairman,
CEO
and
COO
of
HCA
Inc.,
a
highly regulated company
Duties of the Lead Independent Director Establish Strong Independent Leadership in the
Boardroom Board Leadership
Presides at all meetings when Chairman is not present
Calls meetings of independent directors
Provides leadership if CEO / Chairman’s role may be in conflict
Board Culture
Serves as a liaison between CEO and independent directors
Establishes relationship with CEO, providing support, advice and feedback
Board Focus
Helps ensure Board focuses on key issues facing Bank of America
Assists in promoting corporate governance best practices
Board Meetings
Advises CEO of Board information needs, and approves information sent to Board
Develops discussion topics for Board executive sessions
Board Performance & Development
Helps ensure efficient and effective Board performance and functioning
Consults with Governance Committee on annual Board self assessment
Provides guidance on ongoing director development
Consults in identification and evaluation of director candidates, committee
members and committee chairs
Shareholders & Other Stakeholders
Available for consultation and direct communication, to the extent requested by
major shareholders
6
Our
Governance
Committee
will
continue
to
regularly
review
and
assess
the
best
Board
leadership
structure
for
Bank of America’s evolving needs
Acts as a “sounding board”and advisor to CEO
Plans, reviews and approves Board meeting agendas and schedules in coordination
with CEO
Contributes to annual performance review of CEO and participates in CEO
succession planning
,
,
Board’s oversight of management and company Regularly
communicates with primary bank regulators to discuss appropriateness of
|
 Effective,
Independent Corporate Governance Committee 7
•
Committee takes a proactive, disciplined approach to Board refreshment and director
self-assessments as well as CEO evaluation and succession planning
•
Track record of promoting market-leading corporate governance best practices, including
proxy access adoption and enhanced reporting disclosure
Our Corporate Governance Committee is made up of experienced, skilled Board members who
contribute crucial strategic perspectives and drive independent oversight of management
Thomas May, Committee Chair
Sharon Allen, Committee Member
Other Committees: Enterprise Risk
Frank Bramble, Sr., Committee Member
Other Committees: Enterprise Risk (Chair)
•
Brings broad-ranging financial services experience and
historical insight from leadership positions at two
•
Experience on a wide range of issues including risk management, credit
cycles, consumer sales and marketing, and audit and financial reporting
Other Committees: Audit (Chair)
•
Prior positions give broad management experience of large, complex
businesses and an international perspective on risk management and
strategic planning
•
Public company board service gives further perspective into large,
complex, regulated organizations and financial reporting and
accounting
•
Strong accounting and financial skills from experience as a Certified
Public Accountant, as well as a professional perspective on financial
reporting and enterprise and operational risk management
Other Committees: Audit
•
Experience with regulated businesses, operations, risk
management, business development, strategic planning
and corporate governance matters as Chairman and CEO
of Northeast Utilities dba Eversource Energy
Lionel Nowell, III, Committee Member
•
Audit committee financial expert
•
Extensive experience in risk management and strategic
planning as well as strong financial skills as former
Treasurer of PepsiCo, Inc.
•
Audit committee financial expert
•
Extensive audit, financial reporting and corporate
governance experience from audit and consulting
services responsibilities as former Chairman at Deloitte
financial services companies acquired by BAC |
 Best-in-Class Corporate Governance Practices
Substantial majority of independent directors; 11 of 13 members are independent
Annual election of directors with a majority vote standard
Robust Lead Independent Director role with clearly defined leadership responsibilities
Proxy access right at a 3% / 3 year ownership threshold
Special meeting right at a 10% ownership threshold
No supermajority provisions
Strong board oversight of risk management
Detailed business and sustainability reporting
Robust, proactive management succession planning
Annual Board and Committee self-evaluations
Corporate Governance Committee considers director candidates recommended by shareholders
Directors
may
not
sell
restricted
stock
received
as
compensation
(except
as
necessary
to
pay
taxes
upon
vesting)
until
termination of service
Regular engagement with shareholders and consideration of shareholder feedback
8 |
 Executive
Compensation Program Strongly Aligns Pay and Performance
9
•
Our Board believes equity-based awards are the most direct way
to align employee and investor interests
•
We are requesting authorization for 125 million additional shares
this year, for a total pool of 450 million shares
-
We expect this pool to last three to four years, assuming we
settle awards in stock
•
We carefully manage potential dilution and with the additional
shares, our overhang will total 5.1%
•
Our plan has features that protect investor interests, including
double-trigger vesting, prohibition of re-pricing and no liberal
share recycling
CEO Variable Pay Mix for 2014
2014 Compensation Elements
Equity Plan Aligns Employee and Investor Interests
PRSUs
50%
TRSUs
20%
CRSUs
30%
Long-
Term
Incentive
Short-
Term
Incentive
For
CEO
For all
other
NEOs
Base
Salary
Cash-Settled Restricted Stock Units (CRSUs)
Stock price performance measured over 1-
year vesting period
Annual Cash Incentive
Provides short-term variable pay for
applicable performance year
Performance Restricted Stock Units (PRSUs)
Fully performance based. Measures Return on Assets and
adjusted Tangible Book Value growth, with full payout at
3-year Average ROA of 100bps and 3-year adjusted TBV
growth of 11.5%
3-year
performance
measurement
period
PRSUs are forfeited if results are below minimum goals
(minimum set at 3-year average ROA at 50bps and 3-year
average adjusted TBV growth of 5.25%)
Time-Based Restricted Stock Units (TRSUs)
Vest ratably over three years
Aligned with long-term stock price performance
Reflects job scope, experience and market comparable
positions |
 Effective
Compensation Practices Aligned with Investor Interests What We Do
What We Don’t Do
Pay
for
performance
and
allocate
individual
awards
based
on
actual results and how results were achieved
Use balanced,
risk-adjusted performance measures
Review feedback
from independent control functions in performance evaluations and
compensation decisions Provide appropriate mix of fixed and variable pay to reward
company, line of business and individual performance
Defer
a
significant
portion
of
variable
pay
as
equity-based
awards
Strong
risk
management
practices
including
multiple
clawback
and
cancellation
features
for
equity
awards
including
detrimental conduct clawback and performance-based clawback
Require stock
ownership and retention of a portion of equity- based awards
•
500,000 shares for CEO
•
300,000 shares for other NEOs
Prohibit
hedging
and
speculative
trading
of
company
stock,
including short sales and trading in options and derivatives
x
No severance or change in control agreements for executive
officers
x
No
severance
benefits
to
our
executive
officers
>
2x
base
salary
and bonus without shareholder approval (per our policy limiting
future severance agreements)
x
No accrual of additional retirement benefits under supplemental
executive retirement plans (SERPs)
x
No excise tax gross-ups upon change in control
x
No discounting, reloading or re-pricing stock options without
shareholder approval
x
No single-trigger vesting of equity based awards upon change in
control
x
No multi-year guaranteed incentive awards
x
No fixed-duration employment contracts with executive officers
10
, |
 Robust
Sustainability Initiatives and Reporting Our Board believes management is best suited to
address potential climate change impacts by supporting key environmental initiatives, continuing to
develop innovative solutions, and regularly communicating progress to our shareholders
1.
Bank of America Has Robust Disclosure Currently in Place
•
We are an industry leader in publicly disclosing the greenhouse gas emissions related to
operations and business activities •
We report publicly on 10 of 11 categories of Scope 3 emissions relevant to our business, and
provide detailed disclosure relating to the emissions profile of the U.S. electric
power utilities to which we extend credit •
In 2014, the Carbon Disclosure Project gave our Company a perfect disclosure score, and
ranked us in Performance Band A (the highest possible)
2.
We Continue to Develop Innovative Environmental Solutions
•
In 2012, we exceeded our original 10-year, $20B environmental business initiative to
address climate change through lending, investments, capital markets activity,
philanthropy and our Company’s own operations •
We renewed our commitment by embarking on a new 10-year, $50B initiative, bringing our
goal to $70 billion, and have delivered more than $39B under the combined goals to
date Proposal 5 is a shareholder proposal requesting a report on greenhouse gas emissions;
the report is unnecessary given our current strong practices in environmental
projects and disclosure 11
The
Board
encourages
a
vote
AGAINST
Proposal
5
•
The requested additional report would focus on greenhouse gas emissions of our customers and
climate change risk exposure in all of our lending, investing and financing
activities, and would require considerable resources without conveying useful information
•
In 2014, we announced a Catalytic Finance Initiative designed to stimulate at least $10B of
new investment into high-impact, clean energy projects |
 Robust Disclosure
of Political Activities, and No Company Grassroots Lobbying
12
Proposal 6 is a shareholder proposal that requests a report on lobbying; the report is
unnecessary due to Company’s current disclosure on political activities and
contributions, and on trade associations The
Board
encourages
a
vote
AGAINST
Proposal
6
•
Our company does not engage in grassroots lobbying communications, or advocate with respect
to specific legislation with the general public
•
When we engage with policymakers or monitor legislative activities, we comply with all
federal and state laws and reporting requirements, and our feedback is readily
available to the public
2.
No Grassroots Lobbying
•
Our Company currently discloses policies and procedures on political activities and
contributions on our website •
Our Board Corporate Governance Committee has oversight of political activities, and Public
Policy Executive reports at least annually to the Committee on significant policies
and practices •
Further, we currently disclose our trade association memberships
on our website, and restrict organizations from
using any payments (including membership fees and dues) for any election-related
activity 1.
Robust Disclosure Currently in Place |
 1.
Shareholders Have Multiple Avenues for Voicing Concerns
•
Annually elected board, with a majority voting standard
•
Holders of 3% of shares continuously for 3 years can nominate up
to 20% of the board, on the company’s proxy
card, through market-leading proxy access rights
•
No supermajority voting provisions
•
No shareholder rights plan
2.
Matters Requiring Vote Should be Presented to and Voted on by All Shareholders
13
Proposal 7 is a shareholder proposal that requests written consent rights; the proposal is
unnecessary in light of existing strong shareholder rights
The Board encourages a vote AGAINST
Proposal 7
Written Consent Rights are Unnecessary In Light of Strong Special
Meeting and Proxy Access Provisions
•
Our shareholders can call a special meeting at a 10% ownership threshold
•
Shareholder meeting process provides procedural safeguards and advantages over action taken
by a limited number of shareholders by written consent |
 Our Integrated
Business Approach Benefits our Customers and Shareholders
Divestment of operations along the lines the proposal appears to
contemplate (i.e., divestiture of businesses conducted
outside of Bank of America, N.A.) would not enhance shareholder value and would negatively
impact our shareholders 1.
Customers Benefit from Our Integrated Approach
2.
We Already Have Narrowed the Company’s Focus and Streamlined Operations
3.
Our Board is Actively Involved in Oversight of Initiatives
Proposal 8 is a shareholder proposal requesting a Board committee to develop a plan to divest
what the proposal refers
to
as
“non-core
banking
operations”;
the
proposal
is
not
in
the
best
interest
of
shareholders
14
The Board encourages a vote AGAINST Proposal 8
•
We serve our customers (individuals, companies and institutional
investors) on an integrated basis, which we
believe is a competitive advantage. Many customers are served by
entities in addition to Bank of America, N.A.
Implementing the proposal would disrupt the flow of credit and services
•
We see continued improvement in our customer scores, market rankings, and penetration of
products per customer as a result of our approach
•
At the core of our integrated strategy are the combined competencies of Bank of America and
Merrill Lynch •
Since 2010, we have reduced our size, scope of activity and risk, trimming hundreds of
billions of dollars in assets from our balance sheet and eliminating dozens of
non-core businesses, while increasing our capital and liquidity
•
Our entire Board, as part of its regular process, is engaged in development and
implementation of our strategic plan,
which considers dispositions and other initiatives, including streamlining our operations,
and has active oversight of strategic initiatives |
 |