Proxy statement summary
Responsible Growth: Grow in a Sustainable Manner(1)
To grow in a sustainable manner, we share our success with our communities, make our company a great place to work for our teammates, and drive Operational Excellence(2) so that we can eliminate inefficiencies, reduce costs, and continue to invest in our capabilities, our teammates, our communities, and our shareholders. Learn more at http://bankofamerica.com/responsiblegrowth.
Our Board actively oversees our focus on growing in a sustainable manner
Our commitment to being a great place to work
Central to Responsible Growth is being a great place to work for our teammates. We deliver on this commitment by fostering a diverse and inclusive workplace so our workforce reflects the communities we serve, attracting and developing exceptional talent, expanding our benefits and resources to support the physical, emotional, and financial wellness of our teammates and their families, recognizing and rewarding performance, and providing a competitive starting wage. To promote transparency, accountability, and continued progress, we hold ourselves accountable each year by using third-parties to validate equal pay for equal work and by asking our workforce to tell us how we are doing in our Employee Satisfaction Survey, which includes a diversity and inclusion component. Our focus on being a great place to work is highlighted in the Human Capital Management update in our 2022 Annual Report, which accompanies this proxy statement, and is described in further detail in “Being a great place to work,” starting on page 43.
Our commitment to sharing our success
Sharing success in our communities. For Responsible Growth to be sustainable, we must share our success with the communities in which we work and live. We do this in numerous ways. We help provide economic opportunities for diverse people and communities through access to lending and capital for homeowners, business owners, and entrepreneurs. Through our philanthropic partnerships, we focus on improving the lives of individuals and families by investing in basic needs, such as healthcare and hunger relief, workforce development, and education, while also strengthening broader community vitality by addressing needs related to affordable housing, small businesses, and neighborhood revitalization. Our commitment and how we share success with our communities is dynamic and multifaceted. Read about it in more detail in our 2022 Annual Report and under “Sharing success with our communities,” starting on page 39.
Helping reach a clean energy future. Consistent with our drive for Responsible Growth, we continue to make progress on our strategy to support and finance the just transition in every dimension to an environmentally sustainable, low-carbon economy. This includes setting and disclosing milestone targets, engaging with clients to support their transition, investing in climate solutions, developing and reporting decision-useful metrics to drive progress, leading industry collaborations, and following guidance for transparency. We strive to be transparent and accountable, reporting on our climate goals and progress, including in our Environmental and Social Risk Policy Framework, our Approach to Zero, and our 2022 Task Force on Climate-Related Financial Disclosures (TCFD) Report. More details on our approach to addressing the clean energy transition and managing risk in our financing activities can be found in our 2022 Annual Report and under “Driving progress through our focus on environmental sustainability,” starting on page 41 and in Proposals 8, 9, and 10 starting on page 98.
(1) |
For cautionary information and forward-looking statements regarding Sustainability Information, see the “Table of contents” page to this proxy statement. |
(2) |
See our 2022 Annual Report for additional information. |
Proposal 1: Electing directors
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Nominee(1) |
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Indep. |
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Principal occupation |
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Other U.S.-listed company boards |
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Committee membership (C = chair) |
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Key skills/qualifications |
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Race/ ethnicity and gender |
Clayton Rose Age 64 Director since 2018(2) |
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Yes |
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President, Bowdoin College |
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None |
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CHCC ERC (C) |
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• Financial Services Experience; Consumer, Corporate, and Investment Businesses • Risk Expert • Public Policy |
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White Male |
Michael White Age 71 Director since 2016 |
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Yes |
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Former Chairman, President, and CEO, DIRECTV; Lead Director, Kimberly-Clark Corporation |
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2 |
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AC CHCC |
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• Retired Chief Executive Officer • Strategic Planning; Global Operations • Consumer Businesses; Business Development and Marketing |
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White Male |
Thomas Woods Age 70 Director since 2016 |
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Yes |
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Former Vice Chairman and SEVP, Canadian Imperial Bank of Commerce; Former Chairman, Hydro One Limited |
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None |
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AC CGESC |
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• Financial Services Experience • Risk Management • Financial Expertise; Audit/Financial Reporting |
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White Male |
Maria Zuber Age 64 Director since 2017 |
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Yes |
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VP for Research and E.A. Griswold Professor of Geophysics, Massachusetts Institute of Technology |
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CGESC ERC |
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• Cybersecurity, Technology, and Information Security • Risk Management • Strategic Planning |
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White Female |
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(1) Age as of annual meeting date. (2) Dr. Rose previously served as a member of our Board from 2013 to 2015. |
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AC = Audit Committee CGESC = Corporate Governance, Sustainability, and ESG Committee CHCC = Compensation and Human Capital Committee ERC = Enterprise Risk Committee |
For information regarding the number of Board and Committee meetings held in 2022, please see page 28.
Identifying and evaluating director candidates
Board composition
Our Board oversees the business and affairs of the company. Our Board provides active and independent oversight of management. To carry out its responsibilities and set the appropriate tone at the top, our Board is keenly focused on the character, integrity, and qualifications of its members, and its leadership structure and composition.
Our Board believes our directors best serve our company and shareholders by possessing high personal integrity and character, demonstrated management and leadership ability, extensive experience within our industry and across sectors, and the ability to exercise their sound and independent judgment in a collegial manner.
Our Board seeks directors whose complementary knowledge, experience, and skills provide a broad range of perspectives and leadership expertise in financial services and other global, highly complex and regulated industries, strategic planning and business development, business operations, marketing and distribution, technology, cybersecurity, risk management and financial controls, human capital management, corporate governance, public policy, and other areas important to our company’s strategy and oversight. Our Board assesses directors’ age and tenure, and Board continuity; it strives to achieve a balance between the perspectives of new directors and those of longer-serving directors with industry and institutional insights. Our Board also evaluates whether directors are able to devote the time necessary to discharge their duties considering the time commitment involved in serving on the Board and its committees.
Our Board views diversity as a priority and seeks representation across a range of attributes. It regularly assesses our Board’s diversity when identifying and evaluating director candidates. In addition, our Corporate Governance, ESG, and Sustainability Committee follows applicable regulations in confirming that our Board includes members who are independent, possess financial literacy and expertise, an understanding of risk management principles, policies, and practices, and have experience in identifying, assessing, and managing risk exposures.
Our current Board, including the 14 director nominees, reflects the Board’s commitment to identify, evaluate, and nominate candidates who possess personal qualities, qualifications, skills, and diversity of backgrounds, and provide a mix of tenures that, when taken together, best serve our company and our shareholders. See “Electing Directors” on page 8 and “Our director nominees” on page 12.
Proposal 1: Electing directors
Succession planning and the director recruitment process
Our Board regularly reviews and renews its composition. Our Corporate Governance, ESG, and Sustainability Committee is responsible for identifying and recommending director candidates to our Board for nomination using a director selection process that has been reviewed and acknowledged by our primary bank regulators. The Board, in coordination with the Board committees, also regularly considers Board leadership succession planning and committee membership composition.
Assess. The Committee regularly reviews the mix of individual directors on our Board to assess the overall Board composition. Among other factors, the Committee considers our company’s strategy and needs; our directors’ experiences, diversity, tenure, and age; and the attributes and qualifications our Board identifies in its self-evaluations to develop criteria for potential candidates and assess whether these attributes and qualifications are additive to our overall Board composition.
To maintain a vibrant mixture of viewpoints, and benefit from the fresh perspectives brought by new directors and the institutional knowledge and industry insights of directors having longer experience on our Board, the Committee reviews measures that enhance the Board’s succession planning process, including the appropriate retirement age and related tenure limitations, and ability to commit the time necessary in service to our company.
For additional information on the average tenure of directors serving on our Board and each director’s tenure, see “Our director nominees” on page 12. For additional details on Board oversight of our directors’ time commitment, see “Director time commitment” on the next page.
Identify. To drive effective Board renewal and director and Board leadership succession planning, the Committee has a regularly recurring agenda item to develop and review a diverse group of potential director candidates. Based on the factors and criteria developed in the assessment phase, the Committee engages third-party search firms to identify potential candidates for review. It considers and provides feedback on the then- current pool of director talent identified by search firms. The search firms periodically update the list of potential director candidates based on Committee and Board input.
In 2022, the Committee continued to develop the pool of potential director candidates using multiple external search firms. In its work with the external search firms, the Committee emphasizes the importance of diversity by requesting the inclusion of diverse candidates in its consideration of potential directors. Potential director candidates possess professional experiences and racial, ethnic, gender, nationality, and other relevant attributes aligned with Committee-specified criteria and with the qualities identified by our Board in recent self-evaluations. See “Board evaluation” on page 26 for additional information on our Board’s self-evaluation process. The Committee also considers candidates proposed by management and by our shareholders.
In 2022, Mr. Almeida was identified by an external search firm for inclusion in the pool of potential director candidates, and was appointed to the Board following Committee evaluation and nomination.
Corporate Governance
Focus. Our Board and committees consider their effectiveness in performing key oversight responsibilities in a number of areas, including: strategy; risk; environmental and social sustainability; and management talent and succession planning. They continuously evaluate the sufficiency of information received and the time spent in these areas. They regularly reassess their oversight focus by engaging in dialogue with management, soliciting feedback from shareholders and other stakeholders, and receiving third-party perspectives on the competitive environment, opportunities for growth, macroeconomic trends, and geopolitics.
Process. As part of the formal self-evaluation process, directors review overall Board and committee structure, the allocation of meeting time, cadence of meetings, and other meeting processes. In addition, outside of our formal self-evaluation process, each of our directors also meets with management and with our Lead Independent Director through a combination of executive sessions, smaller group sessions, and one-on-one meetings. Directors are focused on Board and committee meeting structure so as to allow ample time for discussion, debate, and in-depth review of key topics and trends, and to facilitate focus on strategic topics.
Information and resources. Through the self-evaluation process, our Board and committees evaluate the quality of meeting materials and presentations and the overall amount and type of information, education, and training opportunities they receive both from management and outside advisors and experts. Our directors continue to highlight the need for clear, comprehensive, and concise information to effectively support their oversight responsibilities, including understandable and streamlined materials that identify key issues.
Our Corporate Governance, ESG, and Sustainability Committee considered industry trends, practices of our peers, feedback from shareholders, and regulatory developments in creating the formal 2022 self-evaluation. The formal 2022 self-evaluation solicited directors’ views on topics in each of the five key areas of board effectiveness, including topics covering our company’s current operating environment, input from shareholders learned during engagement discussions, and areas of opportunity. As part of its ongoing review of Board and committee composition, the Corporate Governance, ESG, and Sustainability Committee also continued to seek input on the Board’s director succession planning process, including Board and committee leadership succession planning. Results are shared with management, as appropriate, to assist the Board and committees in making enhancements to address opportunities identified.
Enhancements made in response to formal Board self-evaluations
In response to feedback solicited from our Board and committees in 2022, we continue to:
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Adapt meeting structure and cadence to enhance our Board’s ability to perform its oversight responsibilities and to promote Board engagement, including through a mix of in-person and virtual meetings, and by providing ample time during Board and committee meetings for discussion, debate, in-depth reviews, and executive sessions |
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Prepare meeting materials that are streamlined and allow for an understanding of key issues, while maintaining completeness, and providing timely updates, as needed |
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Enhance presentations for Board and committee meetings so that they complement and add insight beyond written meeting materials, while leaving ample time for question and answer sessions and other discussion |
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Provide more opportunities for our Board to interact with employees throughout the organization, both formally and informally, as the operating environment normalizes, and for one-on-one and smaller group discussions between directors and management on critical issues |
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Support directors’ discussion and decision-making on Board leadership succession planning and committee membership, including a focus on future needs |
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Enhance discussion about areas of emerging risk at Board and Enterprise Risk Committee meetings, including in-depth reviews of key topics including climate risk, operational resilience, and risks arising from the economic environment |
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Provide additional information on topics identified by directors as desired areas of increased focus for the development of board strategic planning sessions, including information related to technology and operations, the regulatory landscape and the economic outlook |
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Present deep dives on environmental and human capital management-related topics at the Board and committee level, including regular updates on implementation of the company’s sustainability initiatives and climate activities |
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Enhance information provided to support the Board’s management talent and succession planning responsibilities, including information on how specific performance goals factor into executive management’s performance evaluations |
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Provide educational opportunities during regularly scheduled meetings, with an emphasis on topics requested by directors and current events and trends |
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Provide third-party perspectives on the company, peers, the industry, and the economy, and on shareholder and stakeholder feedback in Board and committee materials and presentations and through additional resources |
Corporate Governance
Director education
Our director education is vital to the ability of directors to fulfill their roles, and supports Board members in their continuous learning. The Board encourages directors to participate annually in external continuing director education programs, and our company reimburses directors for their expenses associated with this participation. Our directors also attend forums and conferences convened by our primary banking regulators.
Continuing director education is also provided during Board meetings and other Board discussions as part of the formal meetings, and as stand- alone information sessions outside of meetings. Among other topics, during 2022, our Board heard from our primary banking regulators, research academics, an economist and former cabinet-level member of the U.S. government’s executive branch, and from management on numerous subjects, including cybersecurity, climate risk, human capital management and diversity and inclusion, geopolitical events, the macroeconomic environment, and many related considerations.
All new directors also participate in our director orientation program during their first six months on our Board. New directors have a series of meetings over time with management representatives from all of our business and staff areas to review and discuss, with increasing detail, information about our company, industry, and regulatory framework, as well as compliance training. Based on input from our directors, we believe this gradual on-boarding approach over the first six months of Board service, coupled with participation in regular Board and committee meetings, provides new directors with a strong foundation in our company’s businesses, connects directors with members of management with whom they will interact and oversee, and accelerates their effectiveness to engage fully in Board deliberations. Directors have access to additional orientation and educational opportunities upon acceptance of new or additional responsibilities on the Board and in committees.
CEO and senior management succession planning
Our Board oversees CEO and senior management succession planning, which is formally reviewed at least annually; two such planning sessions were held in 2022. Our CEO and our Chief Human Resources Officer provide our Board with recommendations and evaluations of potential CEO successors, and review their development progress. Our Board reviews potential internal senior management candidates with our CEO and our Chief Human Resources Officer, including the qualifications, experience, and development priorities for these individuals. Directors engage with potential CEO and senior management successors at Board and committee meetings and in less formal settings to allow directors to personally assess candidates. Further, our Board periodically reviews the overall composition of our senior management’s qualifications, tenure, and experience. In 2022, the Board also reviewed strategies for enhancing representation of diverse teammates at senior levels of the company and professional development for managers and senior leaders, including in each of our eight lines of business and staff areas.
Our Board also establishes steps to address emergency CEO 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.
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Board meetings and attendance Directors are expected to attend our annual meetings of shareholders and our Board and committee meetings. Each of our incumbent directors and nominees attended at least 75% of the aggregate meetings of our Board and the committees on which they served during 2022. In addition, all of the directors serving on our Board at the time of our 2022 annual meeting attended the meeting. Our independent directors regularly meet privately in executive session without our Chair and CEO or other members of management present, and held 13 such executive sessions in connection with Board meetings in 2022. Our Lead Independent Director leads these Board executive sessions. |
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Committees and membership
Our Board has four committees. Charters describing the responsibilities of each of the Audit Committee, Compensation and Human Capital Committee, Corporate Governance, ESG, and Sustainability Committee, and Enterprise Risk Committee can be found at http://investor.bankofamerica.com, and their membership is set forth on the next page.
Our Board committees regularly make recommendations and report on their activities to the entire Board. Each committee may obtain advice from internal or external financial, legal, accounting, or other advisors at their discretion. Our Board, in considering the recommendations of our Corporate Governance, ESG, and Sustainability Committee, reviews our committee charters and committee membership at least annually. In 2022, the Board, with input from the Corporate Governance, ESG, and Sustainability Committee, reassessed the committees’ composition in consideration of director retirements and Mr. Almeida’s appointment to the Board. In that context, in April 2022, the Board appointed Mr. Bramble to chair the Corporate Governance, ESG and Sustainability Committee and Dr. Rose to chair the Enterprise Risk Committee. Current committee chairs and membership composition and the duties of our committees are highlighted on the next page:
Corporate Governance
Board oversight of risk
At Bank of America, we are guided by a common purpose to make financial lives better by connecting those we serve with the resources they need to be successful. Our purpose and values form the foundation of our culture—a culture that is rooted in accountability, disciplined risk management, and delivering together as a team to better serve our clients, strengthen our communities, and deliver value to our shareholders. This all comes together as an engine for Responsible Growth. Our culture comes from how we operate the company every day, by acting responsibly and managing risk well, which includes our commitments to ethical behavior, acting with integrity, and complying with laws, rules, regulations, and policies that reinforce such behavior. Managing risk is central to everything we do.
Conduct and culture
Our Board and its committees play a key role in establishing and maintaining our culture, setting the “tone at the top,” and holding management accountable for its maintenance of high ethical standards and effective policies and practices to protect our reputation, assets, and business. Our Board and its committees do this in a number of ways, including by:
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prioritizing the importance of the character, integrity, and qualifications of each individual member, and the overall Board and committee leadership structures and composition; |
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overseeing management’s identification, measurement, monitoring, and control of our material risks, including operational risk and conduct risk; |
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regularly requesting and receiving briefings from senior management on matters relating to compliance and business conduct risk; |
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holding management accountable for the timely escalation of issues for review with the Board and its committees; and |
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overseeing our incentive plan design and governance processes to provide for an appropriate balance of risk and compensation outcomes. |
Our risk governance documents
Risk is inherent in all of our business activities. One of the tenets of Responsible Growth is: “we must grow within our risk framework.” We execute on that mandate through our commitment to responsible and rigorous risk management and through a comprehensive approach with a defined Risk Framework and an articulated Risk Appetite Statement, which are approved annually by the Enterprise Risk Committee and the Board. The Board and management regularly review the Risk Framework and Risk Appetite Statement for enhancements and improvements. The Risk Framework serves as the foundation for consistent and effective risk management by setting forth clear roles, responsibilities, and accountability for the management of risk and describing how our Board oversees the establishment of our risk appetite, which indicates the amount and type of risk our Board and management believe appropriate to achieve our strategic objectives and business plans. This framework of objective, independent Board oversight and management’s robust risk management better enables us to serve our clients, deliver long-term value for our shareholders and achieve our strategic objectives, and helps make our company a great place to work.
Our Risk Framework outlines the seven key types of risk that our company faces—strategic risk, credit risk, market risk, liquidity risk, operational risk (including third-party, model, conduct, technology, information security, and data risks), compliance risk, and reputational risk. It also addresses climate risk and legal risk. It describes the components of our risk management approach, including our culture of managing risk well, risk appetite, and risk management processes, highlighting the responsibilities of all employees in managing risk. It also outlines our risk management governance structure, including the roles of our Board, management, lines of business, independent risk management, and Corporate Audit within the governance structure.
Our Risk Appetite Statement formally articulates our company’s risk appetite and includes both qualitative components and quantitative limits. The qualitative components describe our company’s approach to managing risks in a manner consistent with Responsible Growth and the quantitative limits indicate the aggregate amount of risk our company is willing to take.
Corporate Governance
Board oversight of cybersecurity and information security risk
Our Board recognizes the importance of maintaining the trust and confidence of our clients and employees. As a part of its objective, independent oversight of the key risks facing our company, the Board devotes significant time and attention to data and systems protection, including cybersecurity and information security risk.
The Board, which includes members with technology, cybersecurity, and information security experience, oversees management’s approach to staffing, policies, processes, and practices to gauge and address cybersecurity and information security risk. Our Board and Enterprise Risk Committee each receive regular presentations and reports throughout the year on cybersecurity and information security risk. These presentations and reports address a broad range of topics, including updates on technology trends, regulatory developments, legal issues, policies and practices, information security resources and organization, the threat environment and vulnerability assessments, and specific and ongoing efforts to prevent, detect, and respond to internal and external incidents and critical threats. At least twice each year, the Board discusses cybersecurity and information security risks with our Chief Technology Officer and our Chief Information Security Officer.
The Board receives prompt and timely information from management on any cybersecurity or information security incident that may pose significant risk to our company and continues to receive regular reports on the incident until its conclusion.
Additionally, our Board receives timely reports from management on key developments and incidents involving large global corporations, as well as specific information about financial services peers and vendors.
Our Enterprise Risk Committee also annually reviews and approves our Global Information Security Program and our Information Security Policy, which establish administrative, technical, and physical safeguards designed to protect the security, confidentiality, and integrity of client information in accordance with the Gramm-Leach-Bliley Act and the interagency guidelines issued thereunder, and applicable laws globally. Our Enterprise Risk Committee’s charter makes explicit that the Committee is responsible for reviewing cybersecurity and information security risk and the steps taken by management to understand and mitigate such risk.
Cybersecurity governance highlights
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Comprehensive reporting (including performance metrics which allow for quantitative assessment) to our Board and Enterprise Risk Committees (both scheduled and real-time) in response to key developments. |
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Multi-format reporting approach, with presentations to Board as well as memoranda addressing key issues. |
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Cross-functional approach to addressing cybersecurity risk, with Global Technology, Risk, Legal, and Corporate Audit functions presenting on key topics. |
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Global presence, with employees and 24/7 cyber threat operations centers around the world. |
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Collaborative approach, working with a wide range of key stakeholders to manage risk, and share and respond to intelligence. |
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Under the Board’s oversight, management works closely with key stakeholders, including regulators, government agencies, law enforcement, peer institutions, and industry groups, and develops and invests in talent and innovative technology in order to manage cybersecurity and information security risk. Our company has information security employees across the globe, enabling us to monitor and promptly respond to threats and incidents, maintain oversight of third parties, innovate and adopt new technologies, as appropriate, and drive industry efforts to address shared cybersecurity risks. Employees, contractors, and those with access to our company’s systems receive education on responsible information security, data security, and cybersecurity practices and how to protect data against cyber threats through our Security Awareness For Everyone program.
Compensation governance and risk management
Key practices in compensation governance and risk management
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The independent members of the Board approve CEO compensation, and the Compensation and Human Capital Committee approves compensation for all other executive officers. |
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The Enterprise Risk Committee and Audit Committee further review and approve compensation for the Chief Risk Officer and Chief Audit Executive, respectively. |
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Independent control functions—including Corporate Audit, Risk and Compliance, Finance, Human Resources, and Legal—provide direct feedback to the Compensation and Human Capital Committee on executive officer performance and the pay-for-performance process. |
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Our incentive plan design and governance processes appropriately balance risks with compensation outcomes. |
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Senior management and independent control functions, including risk, annually review and certify our incentive plans. |
Corporate Governance
Compensation governance
Our Compensation and Human Capital Committee follows processes intended to promote strong governance of our pay-for-performance philosophy. The Committee regularly reviews: (i) company performance; (ii) our executive compensation strategy, approach, trends, and regulatory developments; and (iii) other related topics, as appropriate. Each year, the Committee reviews, and makes available to our Board, an executive compensation statement, or “tally sheet,” for each executive officer. The tally sheets reflect each executive officer’s total compensation, including base salary, cash and equity-based incentive awards, the value of prior restricted stock unit 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 compensation and benefits provided to an executive officer. The Committee also annually reviews market pay practices, including compensation benchmarks at our primary competitor group, to evaluate market trends and competitive pay levels for our executive officers. For additional information, see “Competitor groups” section on page 66.
Annually, the Committee reviews with our Board its compensation decisions (including cash and equity-based incentive awards, if applicable) for executives who report directly to our CEO. With respect to the CEO’s compensation, the Committee makes a recommendation that is further reviewed and approved by the independent members of the Board. The CEO does not participate in Committee or Board deliberations about his compensation. Additionally, for our Chief Risk Officer and Chief Audit Executive, the Committee’s pay recommendations are further reviewed and approved by our Board’s Enterprise Risk Committee and Audit Committee, respectively.
Executive officers do not engage with the Committee in setting the amount of their own individual compensation. During annual performance reviews for executive officers other than our CEO, the Committee considers our CEO’s perspective and incentive award recommendations before approving compensation for each of these executive officers. In addition, the Committee considers the performance of our various lines of business, business segments and functions, as well as performance feedback from our Chief Human Resources Officer and our independent control functions (Corporate Audit, Risk and Compliance, Finance, Human Resources, and Legal).
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 Advisors) as its 2022 independent compensation consultant. Farient Advisors’ business with us is limited to providing independent executive and director compensation consulting services. Farient Advisors does not provide any other services to our company. For 2022, Farient Advisors provided the Committee external market and performance comparisons, advised the Committee on senior executive, CEO, and director compensation, assisted in evaluating program design, and assisted with other executive and director compensation-related matters. In performing these services, Farient Advisors met regularly with the Committee without management and privately with the Chair of the Committee.
The Committee may delegate to management certain duties and responsibilities regarding our benefit plans. Significant Committee delegations to management include authority to: (i) the Management Compensation Committee to direct the compensation for all of our employees except for our CEO and his direct reports; and (ii) the Corporate Benefits Committee to oversee substantially all of our employee benefit plans. See “Compensation governance structure” on the next page.
Compensation risk management policies and practices
Our Compensation and Human Capital Committee is committed to a compensation governance structure that effectively contributes to our company’s overall risk management policies.
Compensation Governance Policy. The Committee has adopted and annually reviews our Compensation Governance Policy, which governs our incentive compensation decisions and defines the framework for oversight of enterprise-wide incentive compensation program design. Consistent with global regulatory initiatives, our Compensation Governance Policy requires that our incentive compensation plans do not encourage excessive risk-taking.
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Our Compensation Governance Policy addresses... |
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• Definition and process for identifying “risk-taking” employees • Key goals and process for incentive compensation plan design and governance to appropriately balance risks with compensation outcomes, including: • funding incentive compensation pools • determining individual incentive compensation awards • use of discretion as part of those processes |
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• Policies on incentive compensation plan effectiveness through testing and monitoring to confirm that the plans appropriately balance risks with compensation outcomes, including developing processes to administer cancellations and clawbacks • Policies that provide for the independence of our company’s independent control functions and their appropriate input to the Committee |
Corporate Governance
Compensation governance structure. Our compensation governance structure allocates responsibility so that our Board, Compensation and Human Capital Committee, or the appropriate management-level governing body makes compensation decisions with documented input from the independent control functions. This approach promotes effective oversight and review and facilitates the appropriate governance to balance risk and reward. Below is an illustration of our compensation governance structure, which is influenced by internal considerations and external factors:
Incentive plan certification process. Pursuant to our Compensation Governance Policy, our annual incentive plan certification and review process provides for a comprehensive review, analysis, and discussion of incentive design and operation. As part of the governance for 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 the incentive programs they review: (i) are aligned with the applicable lines of business and our company’s business strategy and performance objectives; (ii) do not encourage excessive or imprudent risk-taking beyond our company’s ability to effectively identify and manage risk; (iii) are compatible with effective controls and risk management; and (iv) do not incentivize impermissible proprietary trading. Our Chief Risk Officer also certifies all incentive plans across our company as part of the Management Compensation Committee’s governance process. Farient Advisors and the Compensation and Human Capital Committee review these management certifications.
Incentive plan audit reviews. Corporate Audit annually reviews the operational effectiveness of the incentive compensation program, using a risk-based approach to evaluate plan design, pay execution, program governance, and conformity with regulatory requirements.
Conduct reviews. As part of our compensation governance practices, management reviews the results of the conduct review process so that conduct is consistently and appropriately considered in performance assessments and pay decisions across the company. These performance and pay outcomes are reviewed at least annually by the Committee.
Independent control function feedback. 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 reviews the outcomes of our control function feedback process and individual incentive compensation awards for certain highly compensated employees. As part of its governance process, the Committee meets with the heads of our independent control functions and business lines to discuss their feedback on the pay-for-performance process, including how risk management and conduct matters were factored into compensation decisions.
These processes and reviews, in combination with risk management and clawback features, are key components of our compensation programs. These programs are designed to appropriately hold employees accountable, while balancing risks and rewards in a way that does not encourage excessive or imprudent risk-taking or create risks that are reasonably likely to have a material adverse effect on our company.
Hedging policy. Under our Code of Conduct and other policies, all Bank of America directors, executive officers, and certain other designated insiders are prohibited from hedging and speculative trading of Bank of America securities. They may not engage in short sales or trading in puts, calls, and other options or derivatives with respect to our securities. All other employees may not engage in any such transactions other than transactions that hedge against an existing long position in our securities if the shares underlying the position are readily available for sale or delivery. No employee may hedge the value of outstanding restricted stock units or other equity-based awards, and such awards may be forfeited or recouped for violation of our anti-hedging and derivative transactions policies.
Additional corporate governance information
More information about our corporate governance can be found on our website at http://investor.bankofamerica.com under the heading “Governance,” including our: (i) Certificate of Incorporation; (ii) Bylaws; (iii) Corporate Governance Guidelines (including our related person transactions policy and our Director Independence Categorical Standards); (iv) Code of Conduct (that applies to the required individuals associated with the company for purposes of the respective rules of the SEC and NYSE) and related materials; and (v) composition and charters of each of our Board committees. This information is also available in print, free of charge, upon written request addressed to our Corporate Secretary at Bank of America Corporation, Bank of America Corporate Center, 100 North Tryon Street, NC1-007-56-06, Charlotte, North Carolina 28255.
Shareholder engagement
Shareholder engagement
We interact with our investors in a variety of ways. Our Investor Relations team regularly meets with shareholders, prospective investors, and investment analysts. These meetings often include participation by our Chair and CEO, Chief Financial Officer, or line of business leaders, and they generally are focused on company performance, strategy, and Responsible Growth. Our Lead Independent Director and senior management, including our Chief Human Resources Officer and Chief Administrative Officer, also regularly engage with our shareholders to solicit their views and input on company performance, corporate governance, sustainability, and other topics of interest to them, such as environmental initiatives, climate risk management, human capital management, and executive compensation. The combination of information received in Investor Relations meetings and shareholder engagement meetings provides the Board and management with insights into a comprehensive scope of topics important to our shareholders.
Our shareholder engagement program
Board-driven engagement. Our Corporate Governance, ESG, and Sustainability Committee oversees the shareholder engagement process and regularly reviews and assesses shareholders’ input. Our Compensation and Human Capital Management Committee receives regular reports on shareholders’ input on compensation and human capital management topics. Both our Chair and our Lead Independent Director play a central role in our Board’s shareholder engagement efforts. Our other directors may also participate in meetings with shareholders.
Commitment codified in governing documents. Our Corporate Governance Guidelines and our Corporate Governance, ESG, and Sustainability Committee’s charter codify our Board’s oversight of shareholder engagement; they reflect our Board’s understanding of the critical role shareholder engagement has as a routine part of our governance.
Year-round engagement and Board reporting. Our Investor Relations and Corporate Secretary teams provide periodic company updates throughout the year to our institutional shareholders, driving awareness of our company performance, significant corporate governance matters, sustainability initiatives, and stakeholder impacts, and changes in our Board and executive management. Our Corporate Secretary, Corporate Social Responsibility, Human Resources, Investor Relations, and Public Policy teams, together with executive management members and our Lead Independent Director, conduct regular, year-round outreach to shareholders to obtain their input on key matters and hear from them on the issues that matter most to them. We also continue to focus our engagement and communications with our retail shareholders, including our employee shareholders.
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Our information-driven process • Prior to each meeting, we solicit input from shareholders on the topics of interest to them, conduct advance research on their voting policies and their historical voting record, and provide them with updates about our company. • During meetings, we provide shareholders with access to appropriate internal subject matter experts to facilitate rich discussion. • After each meeting, we catalogue the input from shareholders and provide their perspective to our Board and its committees for assessment and responses, as appropriate. |
Transparent and informed governance enhancements. Our Board routinely reviews and improves our governance practices and policies, including our shareholder engagement practices. Shareholder input is regularly shared with our Board, its committees, and management, facilitating a dialogue that provides shareholders with transparency into our governance practices and considerations, and informs our company’s enhancement of those practices. In addition to shareholder sentiments, our Board considers trends in governance practices and regularly reviews the voting results of our shareholders’ meetings, the governance practices of our peers and other large companies, and current trends in governance. See page 37 for additional detail on recent governance enhancements our Board implemented.
Our 2022 and early 2023 shareholder engagement initiatives
Throughout 2022 and in early 2023, our Lead Independent Director, Mr. Nowell, and senior management met with key stakeholders and shareholders holding approximately 52% of our outstanding institutional shares. As part of these discussions, Mr. Nowell described the Board’s process in identifying, evaluating, and appointing Mr. Almeida to the Board in 2022. We obtained these shareholders’ input and discussed their views on, among other things, our Board’s independent oversight of management, its composition and director succession planning and recruitment process, its oversight of senior management succession planning, and our company’s sustainability initiatives, including our long-standing focus on equality and economic opportunity, and our human capital management practices. More broadly, we sent periodic company updates to our largest 250 shareholders representing approximately 61% of our shares outstanding in 2022.
To further our engagement with all shareholders, including retail and employee shareholders, we significantly enhanced our annual meeting webpage in 2019 and continue to refine the webpage to provide shareholders with a platform to easily access information about our annual meeting, our director nominees, and the matters for shareholder vote. This dedicated retail shareholder annual meeting webpage also includes resources such as our Human Capital Management updates from our 2022 Annual Report. To access the 2023 annual meeting webpage, please go to https://investor.bankofamerica.com/events-and-presentations/annual-shareholder-meeting.
Responsible Growth: Growth that is Sustainable
Responsible Growth: Growth that is Sustainable(1)
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Responsible Growth has four straightforward tenets: • We have to grow—no excuses • We have to be client focused in our growth • We have to grow within our risk appetite • We must grow in a sustainable manner To drive Responsible Growth, our growth must be sustainable. This includes: (1) sharing our success with our communities; (2) being a great place to work; and (3) driving operational excellence(2) so that we can continue to invest in our employees and our capabilities. By focusing on Responsible Growth, we deliver for our teammates, clients, and shareholders AND help address society’s biggest challenges. |
Board oversight of our drive for Responsible Growth
Our Board actively oversees our drive to grow in a sustainable manner through comprehensive governance and oversight practices directly, and through its committees.
In 2022, the Board and its committees discussed with management our work to drive growth in a sustainable manner. For example, the Board received updates on our climate initiatives, including our climate risk management practices and our sustainable finance activities, the results of our annual Employee Satisfaction Survey and our internal Diversity & Inclusion Index, and progress on our commitment to promote diversity and inclusion. The Corporate Governance, ESG, and Sustainability Committee’s discussions included our charitable giving and philanthropic investments activities, the health equity initiative established under our $1.25 billion racial equality and economic opportunity commitment, our community banking initiatives, our sustainable finance activities, our 2030 targets for reducing financed emissions and our 2022 TCFD Report. The Compensation and Human Capital Committee received updates, including our equal pay for equal work commitment, our new employee sabbatical program, and disclosures about our human capital management practices. The Audit Committee received updates, including regulatory developments on sustainability-related financial disclosure requirements. And the Enterprise Risk Committee, among other things, amended its charter to clarify that its oversight encompasses climate risk.
Listening to external perspectives
To better understand the needs of our clients and communities, we seek advice from a wide range of experts. We actively consult with independent third parties who bring diverse perspectives to help us better serve our clients, make our company a great place to work, and share success with our communities and our stakeholders. We convene with shareholders, industry leaders, consumer advocates, community advisors, thought leaders, and other stakeholders for their advice and guidance in shaping our policies and practices, and engage with our stakeholders in important assessments that identify and promote progress.
Because we are an active participant in each local community in which we operate, we understand its economy, culture, strengths, and challenges. Our efforts to deliver effective solutions and service by matching the right resources to each community’s individual needs are informed by input received from community leaders, consumer advocates, and other local stakeholders. See our 2022 Annual Report for information about how we deliver for our clients and communities through our market presidents.
(1) |
For cautionary information and forward-looking statements regarding Sustainability Information, see the “Table of contents” page to this proxy statement. |
(2) |
See our 2022 Annual Report for additional information. |
Responsible Growth: Growth that is Sustainable
Being a great place to work
Responsible Growth that is sustainable includes being a great place to work. We do that strategically and holistically.
Building a diverse and inclusive workplace
We believe that our diversity makes us stronger, and our leaders embrace diversity and inclusion as integral to our business success.
Our commitment to a diverse and inclusive environment starts at the top with our Board and CEO and extends to all teammates. Our CEO and management team set the diversity and inclusion goals of the company. Each management team member has business-specific, action-oriented diversity goals, which are subject to our quarterly business review process, used as part of talent planning, and included in scorecards reviewed by the Board. Management team members cascade these goals across their organizations to support commitment and accountability across the company. We hold all managers responsible for driving a diverse workforce and an inclusive work environment. We also provide opportunities for managers to sponsor and support rising talent to continue building our diverse workforce.
Our Global Diversity & Inclusion Council, established nearly 30 years ago, continues to promote diversity goal setting, which is embedded in our performance management process at all levels of the organization. The global council sponsors and supports business, operating unit, and regional diversity and inclusion councils to provide alignment to enterprise diversity strategies and goals. Membership on the council consists of senior executives from every line of business, every region, our local markets, and has been chaired by Mr. Moynihan since 2007.
Our Chief Diversity & Inclusion and Corporate Social Responsibility Officer partners with our CEO and management team to drive our diversity and inclusion strategy, initiatives, programs, and policies.
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Transparency and accountability. We hold ourselves accountable for increasing diverse representation, including by disclosing our employment metrics and measuring progress across top management levels. We have built robust analytics and put processes in place at all levels of the company, including our top three management levels, to drive progress and accountability. And we report on our progress. • In November 2019, we published our first Human Capital Management Report with details on all we do to support our employees and their families and on our workforce diversity metrics over time. In October 2020, we followed up with an updated report to provide information on the steps we have taken during the global health crisis, our focus on hiring, developing, and retaining diverse talent and the additional steps we are taking to continue to build on our progress. • In our 2021 Annual Report and again in our 2022 Annual Report, we include a Human Capital Management update section to continue to provide key information on our progress in being a great place to work. • We routinely disclose our company’s EEO diversity statistics in order to publicly hold ourselves accountable and to confirm whether we are delivering on our commitment to increase diverse representation across the company wherever possible. See our 2022 Annual Report for our 2022 EEO diversity statistics. |
Our company has built a diverse pipeline of candidates for positions at all levels of the company, including leadership positions, as demonstrated in our published workforce diversity metrics. For over a decade, our company has had a long-standing practice of utilizing diverse slates in order to grow diversity at senior levels of the company. To further demonstrate our commitment to this long-standing practice, we have formalized the use of diverse candidate slates into a policy. The use of diverse slates at senior levels, among other broad based diversity practices, has helped to drive strong progress against our aspirational goal for our workforce to mirror the clients and communities we serve at all levels of the company.
Our latest measures show improvement in the diversity of our leadership, management and global workforce, including:
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57% of our Board’s director nominees are diverse, including 36% women. |
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55% of our management team
is diverse(1), including 32% women. |
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50% of our global workforce are women and 50% of our U.S. workforce are people of color.(2) |
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People of color in executive/senior level individual and management positions have increased by 67% since 2015. |
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Since 2015, our representation of people of color in the top three management levels increased 73%. |
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Since 2009, representation of people of color in our Campus classes increased 64%. |
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(1) |
Includes women and people of color; CEO included with Board nominees |
Responsible Growth: Growth that is Sustainable
To help drive a culture of inclusion, we have developed and provide employees with access to a range of programs and resources focused on building understanding and driving progress in the workplace, including our series of courageous conversations and inclusion learning and development programs that provide teammates with opportunities to discuss topics central to who we are as individuals, including racial equality, economic opportunity, gender, sexual orientation, disability status, military service, mental health, and more.
Recruiting and developing talented teammates. A key aspect of Responsible Growth is attracting and retaining exceptional talent from around the world to our company. This starts with how we recruit new employees and extends to the many ways we support their professional development and career growth. We partner with more than 450 universities across the globe to provide entry-level opportunities through our campus program, including nearly 30 Hispanic-Serving Institutions and Historically Black Colleges and Universities, as well as 30 community colleges. In 2022, we onboarded 1,800 fulltime campus hires, 44% women and 59% people of color; contributed $9.6 million to 50 national workforce training partners and nearly $31 million to date toward programs focused on increasing diverse talent in high-growth areas; and hired more than 5,100 U.S. teammates with a military background. We are making progress on our commitment to hire an additional 10,000 LMI hires by 2025, bringing our total to 20,000 LMI hires. We surpassed our initial goal of 10,000 hires three years early. We also focus on recruiting diverse talent, including military and veterans, LGBTQ+ individuals, and people with disabilities.
We are investing in teammates’ career growth and success through The Academy at Bank of America, our award-winning onboarding, education, and professional development organization established in 2017. For our leaders and managers, we offer a range of development programs that provide assessments, professional coaching, strategies, and tactics to help leaders progress in their careers and strengthen our leader pipeline for future roles.
Promoting physical, emotional, and financial wellness
We provide employees with access to leading benefits and programs that help teammates be well—physically, emotionally, and financially. This is core to our values and to Responsible Growth, and we continue to evolve our benefits and programs over time to meet teammates where they are in their career and personal lives. Below are recent highlights of our benefits and programs that support the physical, emotional, and financial wellness of our teammates. See our 2022 Annual Report for more details.
Physical wellness. To help our employees be physically well, we offer health insurance plans that provide access to virtual care, condition management, and specialty programs and tools that help employees know how to prevent illness and maintain wellness. We have held medical premiums flat for U.S. employees earning less than $50,000 for the 10th year in a row. For the sixth straight year, employees earning between $50,000 and less than $100,000 saw premium increases below the national average.
Emotional wellness. Helping our teammates be emotionally well means providing resources to help handle stress, manage conflicts and adversity, and deal with grief in positive, healthy ways.
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We expanded in-person confidential counseling through our Employee Assistance Program by adding onsite benefits counselors in some of our large office locations, doubled the number of free in-person confidential counseling sessions to 12, and expanded virtual options to provide free unlimited, confidential 24/7 phone access to specialists for counseling. |
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Our Life Events Services team helps provide teammates with personalized connections to resources, by tapping experts inside and outside the company for significant events like domestic violence, natural disasters, terminal illness, retiring from the company, survivor support, and more. |
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We continued to provide 50 days of back-up childcare and eldercare when regular arrangements are unavailable. We provide 26 weeks of parental leave for birth or adoption of a child, 16 weeks of which are fully paid for eligible teammates. We continued to provide additional resources from Thrive Global, including digital programs, in-person training, and daily guided mindfulness to teammates navigating evolving work and home routines. |
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Announced in 2022, our industry-leading sabbatical program provides employees the opportunity to take 4-6 weeks additional paid time off beginning at 15 years of continuous service to recharge and refocus as they best see fit. |
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Financial wellness. Having financial wellness means developing and maintaining good money habits, planning for short-term and long-term expenses, and setting aside savings for goals or emergencies. We support teammates in reaching financial wellness with retirement savings plans and other programs, along with access to self-guided financial planning tools and expert advice. |
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5% matching 401(K) contribution, plus 2–3% annual contribution |
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$17M in tuition assistance for more than 5,000 teammates in 2022 |
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Note: Specific programs vary by region. U.S. programs shown. |
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Related person and certain other transactions
Related person and certain other transactions
The 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, shareholders holding 5% or more of our voting securities, or any of their immediate family members or affiliated entities). Our policy covers any transactions where the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, our company is a participant, and a related person has or will have a direct or indirect material interest.
Under our related person transactions policy, our Corporate Governance, ESG, and Sustainability Committee must approve or ratify any related person transactions, and when doing so, consider: the related person’s interest in the transaction; whether the transaction involves arm’s-length bids or market prices and terms; the transaction’s materiality to each party; the availability of the product or services through other sources; the implications of our Code of Conduct or reputational risk; whether the transaction would impair a director’s or executive officer’s judgment to act in our company’s best interest; the transaction’s acceptability to our regulators; and in the case of an independent director, whether the transaction would impair his or her independence or status as an “outside” or “non-employee” director.
Our Board has determined that certain types of transactions do not create or involve a direct or indirect material interest on the part of the related person and therefore do not require review or approval under the policy. These include transactions involving financial services, including: loans and brokerage; banking, insurance, investment advisory, or asset management services; and other financial services we provide to any related person, if the services are provided in the ordinary course of business, on substantially the same terms as those prevailing at the time for comparable services provided to non-affiliates, and comply with applicable law, including the Sarbanes-Oxley Act of 2002 and Federal Reserve Board Regulation O.
A number of our directors, director nominees, and executive officers, their family members, and certain business organizations associated with them are or have been clients 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.
Occasionally, we may have employees who are related to our executive officers, directors, or director nominees. The son of Mr. D. Steve Boland, an executive officer, and the brother of Dr. Zuber, a director and nominee, are each employed by the company in non-executive, non-strategic positions, and each received compensation in 2022 of approximately $145,000 and $420,000, respectively. Dr. Zuber’s brother’s compensation is primarily commissions based. The methodology through which his compensation is calculated is consistent with that used for other financial advisors in similar roles. The compensation and other terms of employment of both Mr. Boland’s son and Dr. Zuber’s brother are determined on a basis consistent with the company’s human resources policies.
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, ESG, and Sustainability Committee in December 2010. In addition, the company and each of our executive officers have entered into nonexclusive aircraft time-sharing agreements. These agreements provide a means under Federal Aviation Administration regulations for our executive officers to reimburse the company for incremental costs of permitted personal travel on our company’s aircraft. To the extent such aircraft usage exceeds the dollar threshold in our related person transactions policy, it will be reviewed for approval or ratification by our Corporate Governance, ESG, and Sustainability Committee.
Based on information contained in separate Schedule 13G filings with the SEC, each of Warren E. Buffett/Berkshire Hathaway Inc. (Berkshire Hathaway), BlackRock, Inc. (BlackRock), and The Vanguard Group (Vanguard) reported that it beneficially owned more than 5% of the outstanding shares of our common stock as of December 31, 2022 (see “Stock ownership of directors, executive officers, and certain beneficial owners” on the next page). In the ordinary course of our business during 2022, our subsidiaries provided and are expected to continue to provide financial advisory, sales and trading, treasury, and other financial or administrative services to Berkshire Hathaway, BlackRock, and Vanguard and their subsidiaries.
These and other routine business transactions between the companies were entered into on an arm’s-length basis and contain customary terms and conditions. Our company and its 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.
Director compensation
Director compensation
Our director compensation philosophy is to appropriately compensate our non-management directors for the time, expertise, and effort required to serve as a director of a large, complex, and highly regulated global company, and to align the interests of directors and long-term shareholders.
Annual payments are made after the directors are elected by shareholders. Directors who begin their Board or committee chair service other than at the annual meeting of shareholders receive a prorated amount of annual compensation. Mr. Moynihan receives no compensation for his services as a management director.
2022 Director pay components
The primary elements of annual compensation and incremental awards for our non-management directors for 2022, all of whom are independent, are provided in the table below. Incremental awards recognize additional responsibilities and the time commitment of these critical Board leadership roles.
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Incremental awards for board leadership |
Annual award components |
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Non- management directors ($) |
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Lead Independent Director ($) |
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Audit & Enterprise Risk Committee chairs ($) |
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Compensation and Human Capital & Corporate Governance, ESG, and Sustainability Committee chairs ($) |
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Cash Award |
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100,000 |
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50,000 |
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40,000 |
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30,000 |
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Restricted Stock Award |
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250,000 |
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100,000 |
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N/A |
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N/A |
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The annual restricted stock award in 2022 was made pursuant to the Bank of America Corporation Equity Plan (BACEP). The number of restricted shares awarded is equal to the dollar value of the award divided by the closing price of our common stock on the NYSE on the grant date, rounded down to the next whole share, with cash paid for any fractional share. Dividends are paid on the award when they are paid on shares of our common stock. The annual restricted stock award is subject to a one-year vesting requirement. If a director retires before the one-year vesting date, a prorated 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.
2022 Director compensation review
Our Compensation and Human Capital Committee annually reviews and periodically recommends updates to the director compensation program to our Board for approval. The Committee’s recommendation takes into account our director compensation philosophy, changes in market practices, and consultation with the Committee’s independent compensation consultant, Farient Advisors.
In 2022, the Committee reviewed director compensation, taking into account multiple factors, including pay practices at publicly traded companies, continued expansion of non-management director and Lead Independent Director responsibilities, and growing time commitments. Based on that review and the Committee’s recommendation, our Board approved: for all non-management directors, a $20,000 annual cash award increase to $120,000 and a $20,000 annual restricted stock award increase to $270,000; for our Lead Independent Director, a $25,000 incremental annual cash award increase to $75,000 and a $25,000 incremental annual restricted stock award increase to $125,000. These changes will take effect as of our 2023 annual meeting of shareholders and will be payable to our non-management director nominees who are successfully elected at that meeting. No changes were made to incremental annual cash awards for committee chair service.
Director deferral plan
Non-management directors may elect to defer all or a portion of their annual restricted stock or cash awards through the Bank of America Corporation Director Deferral Plan (Director Deferral Plan). When directors elect to defer their restricted stock award, their “stock account” is credited with “stock units” equal in value to the restricted stock award and subject to the same vesting requirement applicable to restricted stock awards to directors. 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, 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 and depending on the director’s selection, 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 a series of cash installment payments.
Compensation discussion and analysis
6. Other compensation topics
a. Results for performance restricted stock units
PRSUs have been a component of our executive compensation program since 2011. PRSUs require recipients to re-earn awards over the performance period based on achievement of established performance standards and help align management with shareholder interests. Since 2013, PRSUs have been based 50% on three-year average ROA and 50% on three-year average growth in adjusted TBV standards. Our practice is not to make discretionary adjustments to PRSU results for the impact of legacy litigation, fines, and penalties, the Tax Cuts and Jobs Act, or impairment charges, which has contributed to outcomes for PRSU payouts since their introduction.
The 2020 PRSUs completed in 2022 were re-earned at 89% of the target opportunity based on ROA results of 87 bps and adjusted TBV results of 10.44% (compared to 100% target opportunity based on 2020 PRSU performance standards set at ROA results of ≥ 100 bps and TBV results of ≥ 8.5%)(1). We did not make adjustments to those awards in response to the COVID-19 pandemic and related effects. See the description of the 2020 PRSUs and vesting terms following the “Grants of plan-based awards table” on page 65 of our 2021 proxy statement.
The maximum payout opportunity is 100% for all outstanding awards.
The award terms for these PRSUs provide for the calculation of performance results at the conclusion of each calendar year in the performance period. As a result, the performance results above may differ from the results reported under GAAP in our company’s audited financial statements.
(1) |
The three-year average ROA and three-year average growth in adjusted TBV results were calculated as follows: |
Three-year Average ROA was the average “return on assets” for the three calendar years in the performance period. For this purpose, “return on assets” was based on generally accepted accounting principles (GAAP) at the conclusion of each year.
Three-year Average Growth in Adjusted TBV was the average year-over-year percentage change in “adjusted tangible book value” for the three calendar years in the performance period. For this purpose, “adjusted tangible book value” for each year equaled our total common shareholders’ equity, less (a) the impact of any capital actions approved (or not objected to) by the Federal Reserve Board and/or approved by our company’s Board, and less (b) the sum of the carrying value of: (i) goodwill and (ii) intangible assets excluding mortgage servicing rights; adjusted for (iii) deferred tax liabilities directly related to: (i) and (ii). Each year-over-year percentage change was measured after the conclusion of each calendar year using the beginning balance as of January 1 and the ending balance as of December 31 of that year.
b. Competitor groups
Our Compensation and Human Capital Committee periodically reviews compensation practices of two competitor groups:
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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 |
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Leading international financial institutions for perspectives on the global financial services industry |
The Committee used the following 2022 competitor groups to periodically evaluate market trends, pay levels, and relative performance in executive compensation, but without any formulaic benchmarking.
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Primary competitor group |
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Leading international financial institutions |
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• Citigroup |
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• Morgan Stanley |
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• Barclays |
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• HSBC |
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• Goldman Sachs |
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• Wells Fargo |
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• BNP Paribas |
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• Royal Bank of Canada |
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• JPMorgan Chase |
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• Credit Suisse |
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• UBS |
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• Deutsche Bank |
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From time to time, the Committee also reviews executive compensation for a leading group of global companies headquartered in the U.S. spanning all industries to get a general perspective on compensation practices for companies of similar size and global scope. For 2022, these companies were: Abbott Laboratories, AT&T, Chevron, Cisco, Coca-Cola, ConocoPhillips, Exxon Mobil, General Electric, IBM, Intel, Johnson & Johnson, PepsiCo, Pfizer, Philip Morris International, Procter & Gamble, Verizon, and Wal-Mart.
Compensation discussion and analysis
c. Retirement benefits
We provide our named executive officers the opportunity to save for their retirement via employee and employer contributions to qualified and nonqualified defined contribution plans on the same terms as other U.S.-based salaried employees. These plans help us attract and retain key people by providing a means to save for retirement.
Certain named executive officers also participate in various frozen qualified and nonqualified defined benefit pension plans. For more information about these plans, see “Pension benefits table” and “Nonqualified deferred compensation table” on pages 74 and 75, respectively.
d. Health and welfare benefits & perquisites
Our named executive officers receive health and welfare benefits, such as medical, life, and long-term disability coverage, under plans generally available to all other U.S.-based salaried employees; in addition, our named executive officers are eligible to receive an annual physical exam. Because we have internal expertise on financial advisory matters, we do not charge fees to our named executive officers for their use of our financial advisory services for personal needs. We also may provide certain named executive officers with secured parking. For information security purposes and efficiency, certain named executive officers are permitted to use a car service when commuting to and from our offices or business- related events; participating named executive officers reimburse the company for incremental costs incurred. In limited circumstances, we may occasionally provide meals and allow spouses or guests 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 travel. For reasons of security, personal safety, and efficiency, we require our CEO to use corporate aircraft for all air travel (business, commuting, and personal). Pursuant to his aircraft time-sharing agreement, our CEO reimburses our company for costs related to his use of our aircraft for commuting. Our executive officers, including our named executive officers, other than our CEO, are permitted to use corporate aircraft for limited personal travel with reimbursement to the company for incremental costs, pursuant to their aircraft time-sharing agreements.
e. Tax deductibility of compensation
U.S. tax law limits a public company’s deductions to $1 million per year for compensation paid to its CEO, chief financial officer, and each of its three other most highly compensated executive officers, as well as to any individual who was subject to the $1 million deduction limitation in 2017 or any later year. The Committee continues to retain the discretion to make awards and pay amounts that do not qualify as deductible.
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Accordingly, our Board recommends a vote “FOR” this proposal (Proposal 2). |
Compensation and Human Capital Committee Report
Our Compensation and Human Capital Committee has reviewed and discussed with management the Compensation Discussion and Analysis that immediately precedes this report. Based on this review and discussion, our Compensation and Human Capital Committee has recommended to our Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our annual report on Form 10-K for the year ended December 31, 2022.
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Submitted by the Compensation and Human Capital Committee of the Board: Monica C. Lozano, Chair José E. Almeida Pierre J.P. de Weck Arnold W. Donald Linda P. Hudson Clayton S. Rose Michael D. White R. David Yost |
Executive compensation
(2) |
The following table identifies amounts that have already been reported as compensation in our “Summary compensation table” for the current or prior years: |
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Name |
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Amount of 2022 contributions and earnings reported as compensation in our “2022 Summary compensation table” ($) |
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Amounts in “Aggregate balance at December 31, 2022” column reported as compensation in our “Summary compensation tables” for prior years ($) |
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Brian T. Moynihan |
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124,222 |
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1,135,480 |
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Alastair M. Borthwick |
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0 |
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0 |
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Dean C. Athanasia |
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0 |
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220,000 |
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Paul M. Donofrio |
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0 |
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0 |
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Geoffrey S. Greener |
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0 |
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0 |
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The following describes the material features of our nonqualified deferred compensation plans in which the named executive officers participate.
Deferred compensation plan. Each of our named executive officers is eligible to participate in the Bank of America Deferred Compensation Plan (Deferred Compensation Plan), which is a nonqualified retirement savings plan that allows for deferrals above the IRS limits on qualified plans.
Participants may elect to defer up to 50% of base salary and up to 75% of certain eligible incentive awards. Employer contributions made under the plan, if any, when combined with the employer contributions under the 401(k) plan, will not exceed the maximum employer contributions allowable under the 401(k) Plan—$12,500 for matching contributions and $7,500 for annual company contributions. Participants may generally elect to receive their distribution in a lump-sum payment or installments payable up to 15 years. Participants are not subject to U.S. federal income tax on amounts that they deferred or any notional investment earnings (based on elections of the same investment options as under the 401(k) Plan) until those amounts are distributed to them, and we do not take a tax deduction on these amounts until they are distributed.
Legacy deferred compensation plan. Messrs. Moynihan and Athanasia each have an account under the FleetBoston Financial Corporation Executive Deferred Compensation Plan No. 2 (Legacy Deferred Compensation Plan), which is a nonqualified retirement savings plan. Prior to being closed to deferrals in 2002, participants could defer base salary and certain bonuses under the plan. Participants can elect payments in a lump-sum or up to 15 annual installments either on or after termination of employment, but not beyond the year in which the participant turns 65.
Legacy supplemental plan. Messrs. Moynihan and Athanasia each have an account under the FleetBoston Financial Corporation Executive Supplemental Plan (Legacy Supplemental Plan), which is a nonqualified retirement savings plan that allowed deferrals above the IRS limits on qualified plans. This plan was closed to contributions in 2004. Payments are made in a lump-sum or up to 15 annual installments beginning in the year of termination of employment or any later year elected by the participant, but not beyond the year in which the participant turns 65.
Legacy ESA plan. Mr. Athanasia has a nonqualified deferred compensation account that was established prior to FleetBoston’s merger with Bank of America Corporation and funded by employer contributions (Legacy ESA Plan). This plan was closed to contributions in 2004. Upon his termination of employment, Mr. Athanasia will be paid in equal installments over a one-year restrictive covenant period, unless he terminates due to death or disability.
Potential payments upon termination or change in control
We do not have any agreements with our named executive officers that provide for cash severance payments upon termination of employment or a change in control. In addition, since 2002, we have maintained the Bank of America Corporation Corporate Policy Regarding Seeking Stockholder Approval of Future Severance Agreements (the Severance Agreement Approval Policy). Under our Severance Agreement Approval Policy, we will not enter into employment or severance agreements with our executive officers that provide severance benefits exceeding two times base salary and bonus (as defined under the Severance Agreement Approval Policy), unless the agreement has been approved by our shareholders. See also Proposal 7.
Potential payments from equity-based awards
Our equity-based awards to our named executive officers include standard provisions that cause awards to vest or be forfeited upon termination of employment, depending on the reason for termination. These provisions for awards granted in 2022 are described in more detail on page 70, and those details can be found for awards granted in prior years in our prior proxy statements.
In general, our awards provide for continued payments on the original schedule after certain types of termination of employment, subject to the following conditions, as applicable in individual award agreements:
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In case of a “Qualifying Termination”, the award continues to be paid according to the award’s payment schedule if the executive complies with certain covenants, including not working for a competitive business. A Qualifying Termination means any voluntary or involuntary termination (other than for death, disability, or cause) after the executive has met certain specified age and/or service requirements. For awards granted before February 15, 2022, the named executive officers must have at least 10 years of service and his or her age and years of service must add up to at |
Proposal 4: Ratifying the appointment of our independent registered public accounting firm for 2023
Proposal 4: Ratifying the appointment of our independent registered public accounting firm for 2023
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Our Board recommends a vote “FOR” ratifying the appointment of our independent registered public accounting firm for 2023 (Proposal 4). |
Our Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent registered public accounting firm, and is involved in the selection of the firm’s lead engagement partner who is subject to a mandatory, regular rotation and who may provide services to our company for a maximum of five consecutive years. In selecting and approving a lead engagement partner, the Committee relies on relevant succession criteria established by management and the Committee, interactions with prospective candidates, assessments of their professional experience, and input from our company’s independent registered public accounting firm. The Committee also engages in an annual evaluation of the independent registered public accounting firm. It considers, in particular, whether the retention of the firm is in the best interests of our company and its shareholders, taking into account the firm’s quality of service, the firm’s institutional knowledge and experience, the firm’s international capabilities, the firm’s sufficiency of resources, the quality of the communication and interaction with the firm, and the firm’s independence, objectivity, and professional skepticism. The Committee also considers the advisability and potential impact of selecting a different independent registered public accounting firm.
After assessing the qualifications, performance, and independence of PricewaterhouseCoopers LLP (PwC), which has served as our company’s independent registered public accounting firm since 1958, the Committee believes that retaining PwC is in the best interests of our company. The Committee has appointed PwC as our independent registered public accounting firm to audit the 2023 consolidated financial statements of Bank of America Corporation and its subsidiaries. Although it is not required to do so, our Board is asking shareholders to ratify PwC’s appointment. If our shareholders do not ratify PwC’s appointment, the Committee will consider changing our independent registered public accounting firm for 2024. Whether or not shareholders ratify PwC’s appointment, the Committee may appoint a different independent registered public accounting firm at any time if it determines that such a change is appropriate.
PwC has advised the Committee that it is an independent accounting firm with respect to our company and its affiliates in accordance with the requirements of the SEC and the Public Company Accounting Oversight Board.
Representatives of PwC are expected to be present at our annual meeting, will have an opportunity to make a statement if they choose, and are expected to be available to respond to appropriate shareholder questions.
PwC’s 2022 and 2021 fees. PwC’s aggregate fees for professional services rendered in or provided for 2022 and 2021, as applicable, were:
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2022 |
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2021 |
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($ in millions) |
Audit fees |
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55.5 |
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55.2 |
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Audit-Related fees |
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7.0 |
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7.4 |
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Tax fees |
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5.9 |
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5.7 |
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All other fees |
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0.0 |
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0.0 |
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Total fees |
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68.4 |
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68.3 |
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Audit fees. Audit fees relate to the integrated audit of our consolidated financial statements, and internal control over financial reporting, including disclosures presented in the footnotes to our company’s financial statements (for example, regulatory capital, among other disclosures). Audit fees also relate to the audit of domestic and international statutory and subsidiary financial statements, the review of our interim consolidated financial statements, the issuance of comfort letters and SEC consents, and services provided in connection with certain agreed-upon procedures and other attestation reports. Audit fees are those billed or expected to be billed for audit services related to each fiscal year.
Audit-related fees. Audit-related fees cover other audit and attest services, services provided in connection with certain agreed-upon procedures and other attestation reports, financial accounting, reporting and compliance matters, benefit plan audits, and risk and control reviews. Fees for audit-related services are those billed or expected to be billed for services rendered during each fiscal year.
Tax fees. Tax fees cover tax compliance, advisory, and planning services and are those billed or expected to be billed for services rendered during each fiscal year.
All other fees. During 2022 and 2021, all other fees consisted primarily of amounts billed or expected to be billed for the company’s engagement of PwC to technical subscription services rendered during each fiscal year.
Proposal 4: Ratifying the appointment of our independent registered public accounting firm for 2023
Audit committee pre-approval policies and procedures
Our Audit Committee annually pre-approves a list of services that PwC may provide without obtaining the Committee’s engagement-specific pre-approval and sets pre-approved fee levels for such services. The pre-approved list of services consists of audit services, audit-related services, tax services, and all other services. All requests or applications for PwC services must be submitted to members of our corporate audit function or tax function to determine if they are included within the Committee’s pre-approved list of services. The Committee or the Committee chair must specifically approve any type of service that has not been pre-approved. The Committee or the Committee chair must also approve any proposed service that has been pre-approved but has fees that will exceed the pre-approved level. All pre-approvals by the Committee chair must be presented to the full Committee at its next meeting. The Committee or the Committee chair pre-approved all of PwC’s 2022 fees and services.
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Accordingly, our Board recommends a vote “FOR” this proposal (Proposal 4). |
Audit Committee Report
Our Audit Committee is composed of seven Board members. Our Board has determined that all Committee members are independent under the NYSE listing standards, our Categorical Standards, and applicable SEC rules and regulations. Our Board has also determined that all Committee members are financially literate in accordance with NYSE listing standards and qualify as “audit committee financial experts” as defined by SEC rules. The Committee’s responsibilities are stated in a written charter adopted by our Board.
Management is responsible for preparing and the overall reporting process with respect to our company’s consolidated financial statements, and, with the assistance of our company’s internal corporate auditors, for establishing, maintaining, and assessing the effectiveness of our internal control over financial reporting. PricewaterhouseCoopers LLP (PwC), our company’s independent registered public accounting firm, is responsible for planning and conducting an independent audit of our company’s consolidated financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board (PCAOB) and for expressing an opinion as to the conformity of these financial statements with accounting principles generally accepted in the United States of America and as to the effectiveness of our internal controls over financial reporting. The Committee’s responsibility is to monitor and oversee these processes.
The Committee annually evaluates PwC’s qualifications, performance, and independence. The Committee also oversees the performance of the corporate audit function managed by our Chief Audit Executive. The Committee has reviewed and discussed with management and with PwC our company’s audited financial statements for the year ended December 31, 2022, management’s assessment of the effectiveness of our company’s internal control over financial reporting, and PwC’s evaluation of our company’s internal control over financial reporting. In addition, the Committee has discussed with PwC the matters that independent registered public accounting firms must communicate to audit committees under applicable PCAOB standards.
The Committee has also discussed and confirmed with PwC its independence from our company, and received all required written disclosures and correspondence required by the PCAOB Ethics and Independence requirements. The Committee has evaluated and concluded the non-audit services provided by PwC to our company do not impair PwC’s independence.
Based on the reviews and discussions referred to above, and discussions with the Committee’s independent disclosure counsel, the Committee recommended to our Board that the audited financial statements for the year ended December 31, 2022 and the related footnotes be included in our company’s annual report on Form 10-K for the year ended December 31, 2022.
Submitted by the Audit Committee of the Board:
Sharon L. Allen, Chair
José E. Almeida
Arnold W. Donald
Denise L. Ramos
Michael D. White
Thomas D. Woods
R. David Yost
Proposal 5: Proposal to amend and restate the Bank of America Corporation Equity Plan
(1) |
Includes 5,903,902 vested restricted stock units subject to a required six- or twelve-month holding period and 9,747,076 vested restricted stock units that are expected to be issued/ delivered within 30 days of the record date. Also includes 485,821 vested restricted stock units and stock option gain deferrals that were assumed by the company in connection with prior acquisitions under whose plans the awards were originally granted. |
(2) |
The total number of non-compensatory warrants and convertible instruments as of March 1, 2023 was 61,603,640, and is not reflected in the table above. |
(3) |
Includes 78,478,349 shares of common stock available for future issuance under the BACEP. |
(4) |
To determine the sum of (e) plus (f) for this calculation, 29,194 restricted stock shares included in both (e) and (f) are counted only once to prevent duplicative aggregation. |
Based on data available as of December 31, 2022, our level of overhang was lower than the average for our primary competitor group. Additionally, our rate at which we grant equity awards relative to shares of our common stock outstanding (sometimes referred to as “run rate”) was below the average run rate for our primary competitor group on a one-year and three-year average basis. If the proposed amendment and restatement is approved, we expect the pool of requested shares to last approximately one year, assuming we maintain similar grant practices as over the past two years and assuming hypothetically our current stock price remains constant.
The number of shares remaining available for grant under the BACEP as noted in the previous table differs from those reported as of December 31, 2022 because that information does not take into account year-to-date grants during 2023 for the 2022 performance year.
Information regarding the number of shares remaining available for grant as required by SEC disclosure rules are discussed in detail in this proposal under “Additional information” on page 92.
The list of companies included in our primary competitor group are detailed under “Competitor groups” on page 66.
Purpose of the Plan
The Plan, and the proposed amendment and restatement of it, is intended to serve a critical role in our pay-for-performance compensation program and is necessary for us to comply with the regulatory landscape in certain jurisdictions. In addition, our Board believes that equity-based awards aid in our ability to attract, retain and motivate our employees and are the most direct way to align employee interests with those of shareholders. As part of our pay-for-performance practices, more than 100,000 employees receive variable incentives. More highly compensated employees receive a portion of their variable incentive as deferred restricted stock units (RSUs). The portion of the variable incentive deferred as equity-based awards generally increases with compensation levels according to a predetermined deferral grid. RSUs are also a significant component of the Sharing Success stock awards that will be made to approximately 96% of employees in March 2023. Most Sharing Success awards are in the form of company common stock, providing the opportunity to further share in our company’s long-term success. The RSU awards are a key part of our pay-for-performance philosophy, and in many cases are required by law, rule, and regulation. In addition, our executive officers receive PRSUs that must be re-earned by meeting specific performance criteria, as described on page 63 for awards granted in February 2023. Equity awards granted to employees are subject to cancellation and clawback features which encourage appropriate behavior and manage risk in our compensation program; these features are described on page 65. Granting RSU awards that include deferral, cancellation, and clawback features is a key risk-balancing mechanism in our pay-for-performance compensation program, and serves to align employee interests with shareholder interests while complying with regulatory requirements.
The value of RSUs tracks the price of our common shares. Compensation expense is in the compensation and benefits expense line of the income statement.
The Plan, and the proposed amendment and restatement of it, is intended to be the company’s vehicle for delivering deferred equity-based awards. Since additional shares to the Plan were last approved by shareholders in 2021, the amount of common stock awarded has averaged approximately 106 million shares each year, which includes approximately 23 million shares to be granted in March 2023 under the Sharing Success award program, leaving approximately 55 million shares remaining for awards. The Board has determined to increase the shares of our common stock available for awards under the Plan by 75 million shares to enable the granting of Plan awards in the future. The alternative would be to increase the use of deferred cash awards, which we believe would be less aligned with shareholder interests. Therefore, the Board recommends the amendment and restatement to increase the number of shares of common stock available for awards under the Plan.
In addition, the company has and continues to repurchase shares of common stock in an amount at least equal to the value of stock-settled equity awards as they are recognized into capital. These share repurchases offset the net new shares of common stock delivered under the BACEP. The company currently intends to continue this repurchase practice. The company’s common stock repurchases are subject to required regulatory and Board approvals.
The additional 75 million shares to be authorized under the BACEP would allow our company to continue current grant practices for approximately one year.
Proposal 5: Proposal to amend and restate the Bank of America Corporation Equity Plan
Number of shares
The BACEP, as last approved by shareholders in 2021, provides that the aggregate number of shares of our common stock available for grants of awards under the Plan from and after January 1, 2015 will not exceed the sum of (i) 450 million shares plus (ii) any shares that were subject to an award as of December 31, 2014 under the BACEP, if such award is cancelled, terminates, expires, lapses or is settled in cash for any reason from and after January 1, 2015 plus (iii) effective upon April 24, 2019, 150 million shares plus (iv) effective upon April 20, 2021, 115 million shares. As of March 1, 2023 there were approximately 78 million common shares available for future awards under the BACEP. The amendment and restatement, if approved by shareholders, would increase the number of shares available for awards by 75 million shares, to approximately 153 million shares estimated based on information available on March 1, 2023.
Under the BACEP, each award, whether granted as a stock option, SAR, restricted stock share or restricted stock unit, counts against the available share pool as one share for each share awarded.
The share re-use provisions under the BACEP do not include any “liberal share counting” features for stock options or SARs. Shares used to cover the exercise price of stock options or to cover any tax withholding obligations in connection with awards of stock options or SARs will continue to be unavailable for awards under the BACEP. In addition, the total number of shares covering stock-settled SARs or net-settled options will be counted against the pool of available shares, not just the net shares issued upon exercise. However, as amended, the BACEP will allow shares withheld to cover any tax withholding obligations in connection with awards of restricted stock or restricted stock units to again be available for future awards under the BACEP. Shares covered by awards will also continue to be available for awards if and to the extent (a) the award is cancelled or forfeited or (b) the award is settled in cash.
Administration
The Compensation and Human Capital Committee administers the BACEP. To the extent permitted by law, the Compensation and Human Capital Committee may designate an individual or committee (which need not consist of directors) to act as the appropriate committee under the BACEP for granting awards to employees who are not “officers” under Section 16 of the Exchange Act. Under the BACEP, the Compensation and Human Capital Committee has authority with respect to the following:
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the selection of the employees to receive awards from time to time |
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the granting of awards in amounts as it determines |
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the imposition of limitations, restrictions and conditions upon awards |
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the certification of the attainment of performance goals, if applicable |
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the interpretation of the BACEP and the adoption, amendment and rescission of administrative guidelines and other rules and regulations relating to the BACEP |
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the correction of any defect or omission or reconciliation of any inconsistency in the BACEP or any award granted under the BACEP |
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the making of all other determinations and taking of all other actions necessary or advisable for the implementation and administration of the BACEP |
The Board will continue to administer grants of restricted stock under the BACEP to non-employee directors.
Eligibility
Employees of Bank of America and its subsidiaries may participate in the BACEP, as selected by the Compensation and Human Capital Committee. Eligible employees are those employees of Bank of America and its subsidiaries who have made, or are expected to make, important contributions to our business, as determined by the Compensation and Human Capital Committee, including persons employed outside the United States. Approximately 200,000 employees are expected to be eligible to participate. However, as mentioned above, the Compensation and Human Capital Committee in its discretion selects which employees will receive any awards. The BACEP also provides for awards of restricted stock to non-employee directors as part of our director compensation program. All 13 of the non-employee directors nominated for election at the annual meeting are eligible to receive these restricted stock awards. As noted elsewhere in this proxy statement, as part of our director compensation program, our Board grants restricted stock to directors on the day of their election or appointment as a director. Any director nominee that receives at least a majority of votes cast at the annual meeting will be elected at the annual meeting and will be eligible to receive the restricted stock award as part of their 2023-2024 director compensation. In the event this proposed amendment and restatement does not receive at least a majority of the votes cast at the annual meeting, and the amendment and restatement does not become effective, there are enough common shares remaining for issuance to grant directors elected at the annual meeting the 2023-2024 restricted stock award.
Proposal 5: Proposal to amend and restate the Bank of America Corporation Equity Plan
Types of awards
The BACEP permits awards of stock options, SARs, restricted stock shares and restricted stock units to employees and restricted stock shares to non-employee directors, all of which are described in more detail below.
Awards of stock options and SARs. The BACEP provides for the grant of options to purchase shares of our common stock at option prices which are not less than the fair market value of a share of our common stock at the close of business on the date of grant. (The fair market value of a share of our common stock as of March 1, 2023, was $34.14.) The BACEP also provides for the grant of SARs to employees. SARs entitle the holder upon exercise to receive either cash or shares of our common stock or a combination of the two, as the Compensation and Human Capital Committee in its discretion may determine, with a value equal to the difference between: (i) the fair market value on the exercise date of the shares with respect to which a SAR is exercised; and (ii) the fair market value of the shares on the date of grant.
Awards of options under the BACEP, which may be either incentive stock options (which qualify for special tax treatment) or nonqualified stock options, are determined by the Compensation and Human Capital Committee. No more than an aggregate of 450 million shares may be awarded as incentive stock options under the BACEP. The terms and conditions of each option and SAR are to be determined by the Compensation and Human Capital Committee (or its designees) at the time of grant.
Options and SARs granted under the BACEP will expire not more than 10 years from the date of grant, and the award agreements entered into with each participant will specify the extent to which options and SARs may be exercised during their respective terms, including in the event of the participant’s death, disability or termination of employment.
The BACEP includes two additional limitations on stock option and SAR grants.
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The BACEP expressly prohibits dividend equivalents with respect to stock options and SARs. |
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Unless otherwise provided in an award agreement, the BACEP prohibits the sale, transfer, pledge, assignment, or other alienation or hypothecation (including to, for the avoidance of doubt and without limiting the foregoing restrictions, third-party financial institutions) of nonqualified stock options and SARS. |
Our Board has not granted stock options or SARs since 2008.
Awards of restricted stock shares and restricted stock units. Under the BACEP, the Compensation and Human Capital Committee may award employees restricted shares of our common stock or restricted stock units which represent the right to receive shares of our common stock (or cash equal to the fair market value of those shares). Each award agreement will contain the terms of the award, including any applicable conditions, which may include continued service of the participant, the attainment of specified performance goals or any other conditions deemed appropriate by the Compensation and Human Capital Committee.
Restricted stock shares will be held in our custody until the applicable restrictions have been satisfied. The participant cannot sell, transfer, pledge, assign or otherwise alienate or hypothecate (including to, for the avoidance of doubt and without limiting the foregoing restrictions, third-party financial institutions) restricted stock shares until the applicable restrictions are satisfied. Once the restrictions are satisfied, the shares will be delivered to the participant’s account, free of restrictions. During the period of restriction, the participant may exercise full voting rights with respect to the restricted stock shares.
The award agreement for any restricted stock units will specify whether units that become earned and payable will be settled in shares of our common stock (with one share of common stock to be delivered for each earned and payable restricted stock unit), in cash (equal to the aggregate fair market value of the restricted stock units that are earned and payable), or in a combination of shares and cash. Shares of our common stock used to pay earned restricted stock units may have additional restrictions, as determined by the Compensation and Human Capital Committee.
The BACEP also provides for awards of restricted stock shares to our non-employee directors as part of our director compensation program. These awards vest one year after the date of grant or, if earlier, at the date of the next annual meeting. However, awards that are scheduled to vest in less than 50 weeks after the date of grant will count against the 5% exception pool for the minimum vesting requirements described below. The awards vest earlier in case of death or a change in control. If a non-employee director retires before the one-year vesting date, a prorated amount of the award vests based on the number of days the non-employee director served during the vesting period before retirement. Awards may be deferred under the Bank of America Corporation Director Deferral Plan. See “Director compensation” on page 50 for additional details about our director compensation program.
Subject to the terms of the BACEP and any applicable award agreement, a participant may be entitled to receive dividends or dividend equivalents with respect to an award of restricted stock or restricted stock units. Dividends or dividend equivalents may be credited as cash or as additional shares or units. However, under the amended terms of the BACEP, in no event will dividends or dividend equivalents vest or otherwise be paid out prior to the time that the underlying award (or portion thereof) has vested and, accordingly, any such dividends or dividend equivalents will be subject to cancellation and forfeiture if the underlying award does not vest (including both time-based and performance-based awards).
Proposal 5: Proposal to amend and restate the Bank of America Corporation Equity Plan
Minimum vesting conditions
The BACEP provides that generally all stock-settled awards will vest no more quickly than ratably annually as of each anniversary over a three-year period beginning on the grant date of the award. This requirement does not apply to (i) certain substitute awards arising from acquisitions; (ii) shares delivered in lieu of fully vested cash incentive awards; (iii) awards to non-employee directors that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of shareholders (but not sooner than 50 weeks after the grant date); or (iv) awards that vest based on the achievement of performance goals over a period of at least one year. Also, the Compensation and Human Capital Committee may grant equity-based awards without regard to the minimum vesting requirement with respect to a maximum of 5% of the available share reserve authorized for issuance under the BACEP. In addition, the minimum vesting requirement does not apply to the Compensation and Human Capital Committee’s discretion to provide for accelerated exercisability or vesting of any award, including in cases of retirement, workforce reduction, death, disability, or a change in control, in the terms of the award or otherwise.
Section 162(m) award limits
Prior to 2018, awards under the BACEP could be designed to qualify as “performance-based compensation” that were intended to be exempt from the deduction limits under Section 162(m) of the Code. Under the pre-2018 Section 162(m) rules, the plan under which awards were granted had to include certain shareholder-approved individual award limits in order for awards to qualify as performance-based compensation. The BACEP included such individual award limits, which were limited to options/SARs and performance-based restricted stock and restricted stock unit awards that were intended to qualify for the Section 162(m) performance-based compensation exception. Although changes in the U.S. tax laws made by the Tax Cuts and Jobs Act of 2017 eliminated the “performance-based compensation” exception for grants made from and after January 1, 2018, the BACEP continues to include award limits, by which a participant may not be granted in any calendar year: (i) stock options or SARs for more than 4,000,000 shares, or (ii) performance-based restricted stock shares/units for more than 4,000,000 shares (assuming maximum performance).
Withholding for payment of taxes
The BACEP provides for the withholding and payment by a participant of any payroll or withholding taxes required by applicable law. The BACEP permits a participant to satisfy this requirement, with the approval of the Compensation and Human Capital Committee and subject to the terms of the BACEP, by withholding from the participant a number of shares of the company’s common stock otherwise issuable under the award having a fair market value equal to the amount of applicable payroll and withholding taxes. It also permits the company and the participant to withhold at rates up to the maximum statutory tax rates.
Adjustments for changes in capitalization
In the event of any change in the number of our outstanding shares of common stock by reason of any stock dividend, split, spin-off, recapitalization, merger, consolidation, combination, exchange of shares or otherwise, the aggregate number of shares of our common stock with respect to which awards may be made under the BACEP, the annual limit on individual awards, the limits on incentive stock options, restricted stock and restricted stock units and the terms, types of shares and number of shares of any outstanding awards under the BACEP will be equitably adjusted by the Compensation and Human Capital Committee in its discretion to preserve the benefit of the award for us and the participant.
No single trigger vesting upon a change in control for employees
The BACEP permits the Compensation and Human Capital Committee to provide for vesting of awards to employees in connection with a change in control of Bank of America if there is also a termination of employment in connection with the change in control. This is often referred to as “double trigger” vesting. For these purposes, a termination is considered to be in connection with a change in control if it occurs upon or within two years after the change in control and is for one of the following two reasons: (i) an involuntary termination by the company without “cause” or (ii) a termination by the participant for “good reason.” “Cause” and “good reason” will be as defined in the applicable award agreements. In addition, the Compensation and Human Capital Committee may provide for the assumption or substitution of awards by a surviving corporation. Awards to non-employee directors fully vest upon a change in control.
Amendment and termination of the Plan
Our Board has the power to amend, modify or terminate the BACEP on a prospective basis, provided that no termination, amendment or modification shall adversely affect in any material way any award previously granted under the Plan without the written consent of any affected participant. Shareholder approval will be obtained for any change to the material terms of the BACEP to the extent required by NYSE listing requirements or other applicable law. The BACEP, as amended, automatically terminates at the close of business on April 24, 2033 following which no awards may be made under the BACEP.
Proposal 5: Proposal to amend and restate the Bank of America Corporation Equity Plan
Option and SARs repricing prohibited
The BACEP specifically prohibits the repricing of stock options or SARs without shareholder approval. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (i) changing the terms of a stock option or SAR to lower its exercise price; (ii) any other action that is treated as a “repricing” under generally accepted accounting principles; and (iii) repurchasing for cash or canceling a stock option or SAR at a time when its exercise price is greater than the fair market value of the underlying stock in exchange for another award, unless the cancellation and exchange occurs in connection with change in capitalization or similar change. Such cancellation and exchange would be considered a “repricing” regardless of whether it is treated as a “repricing” under generally accepted accounting principles and regardless of whether it is voluntary on the part of the employee.
Federal income tax treatment
The following discussion summarizes certain U.S. federal income tax consequences of awards under the BACEP based on the law as in effect on the date of this document. The following discussion does not purport to cover federal employment taxes or other federal tax consequences that may be employed with awards, nor does it cover state, local or non-U.S. taxes.
Nonqualified stock options. A participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock option with an exercise price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the stock option on the date of exercise and the exercise price of the stock option. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the fair market value of the shares on the exercise date.
Incentive stock options. A participant generally will not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment or within three months after employment ends (12 months in the case of permanent and total disability), the participant will not recognize taxable income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes at that time as if the stock option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the option and (b) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the disposition and the exercise price of the stock option. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of exercise over the exercise price of the stock option (or, if less, the excess of the amount realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant’s gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be.
With respect to both nonqualified stock options and incentive stock options, special rules apply if a participant uses shares of common stock already held by the participant to pay the exercise price or if the shares received upon exercise of the stock option are subject to a substantial risk of forfeiture by the participant.
Stock appreciation rights. A participant generally will not recognize taxable income upon the grant or vesting of a SAR with a grant price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon the exercise of a SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the SAR on the date of exercise and the grant price of the SAR.
Restricted stock shares and restricted stock units. A participant generally will not have taxable income upon the grant of restricted stock or restricted stock units. Instead, the participant will recognize ordinary income at the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received minus any amount paid. For restricted stock only, a participant may instead elect to be taxed at the time of grant.
Tax consequences to Bank of America. In the foregoing cases, we generally will be entitled to a deduction at the same time, and in the same amount, as a participant recognizes ordinary income, subject to certain limitations imposed under the Code, including those imposed by Section 162(m) as applicable.
New stock plan benefits
Because awards under the BACEP are discretionary, awards are generally not determinable at this time. As stated previously, in the event the proposed amendment and restatement is not approved by shareholders at the annual meeting, there are enough shares remaining under the Plan for the Board to grant restricted stock awards to directors elected at the annual meeting as part of 2023-2024 director compensation.
Proposals 6-11: Shareholder proposals
Proposals 6-11: Shareholder proposals
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Our Board recommends a vote “AGAINST” these shareholder proposals (Proposals 6—11). |
As noted elsewhere in this proxy statement, we actively seek engagement with shareholders to solicit their views on different matters of importance to them. We encourage this dialogue and believe this engagement is beneficial to our company and Board. Of the six shareholder proposals set forth below, none of the proponents attempted to engage with our company prior to submitting their proposal. We sought to engage with the proponents after we received their proposals and engaged with all of the proponents or their representatives, other than the National Center for Public Policy, on the substance of their proposals,. We acknowledge the rights of shareholders to submit proposals for inclusion in our proxy statement in accordance with SEC rules. We also encourage shareholders that have questions or would like additional information about our practices or policies, or that are contemplating submitting a proposal for inclusion in our proxy statement, to contact us beforehand to allow for a constructive discussion of their concerns. See “Shareholder proposals for our 2024 annual meeting” on page 112.
Proposal 6: Independent board chair
National Legal and Policy Center, 107 Park Washington Court, Falls Church, Virginia 22046, the beneficial owner of 166 shares of the company’s common stock, has advised us that it intends to present the following resolution:
Shareholders request that the Board of Directors adopt as policy, and amend the governing documents as necessary, to require hereafter that that two separate people hold the office of the Chairman and the office of the CEO as follows:
Selection of the Chairman of the Board: The Board requires the separation of the offices of the Chairman of the Board and the Chief Executive Officer.
Whenever possible, the Chairman of the Board shall be an Independent Director.
The Board may select a Temporary Chairman of the Board who is not an Independent Director to serve while the Board seeks an Independent Chairman of the Board.
The Chairman shall not be a former CEO of the company.
Selection of the Chairman of the Board shall be consistent with applicable law and existing contracts.
SUPPORTING STATEMENT:
The Chief Executive Officer of Bank of America Corporation is also a Board Chairman. We believe these roles – each with separate, different responsibilities that are critical to the health of a successful corporation – are greatly diminished when held by a singular company official, thus weakening its governance structure.
Expert perspectives substantiate our position:
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According to the Council of Institutional Investors ( https://bit.ly/3pKrtJK ), “A CEO who also serves as chair can exert excessive influence on the board and its agenda, weakening the board’s oversight of management. Separating the chair and CEO positions reduces this conflict, and an independent chair provides the clearest separation of power between the CEO and the rest of the board.” |
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A 2014 report from Deloitte ( https://bit.ly/3vQGqel ) concluded, “The chairman should lead the board and there should be a clear division of responsibilities between the chairman and the chief executive officer (CEO).” |
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A pair of business law professors wrote for Harvard Business Review (https://bit.ly/3xvcIOA ) in March 2020 that “letting the CEO chair the board can compromise board discussion quality, weakening the corporation’s risk management ability… Splitting the CEO and board chair jobs between two people can help strengthen the quality of questions the corporation asks itself. When those questions remain weak, the organization is less likely to develop strategies that mitigate risk.” |
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Proxy adviser Glass Lewis advised ( https://bit.ly/3xwuJwa ) in 2021, “the presence of an independent chair fosters the creation of a thoughtful and dynamic board not dominated by the views of senior management. Further, we believe that the separation of those two key roles eliminates the conflict of interest that inevitably occurs when a CEO is responsible for self-oversight.” |
Our Board recommends a vote “AGAINST” Proposal 6 because:
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Our shareholders have repeatedly affirmed that the Board should retain the flexibility to determine the most effective Board leadership structure based on applicable circumstances and needs; |
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Our current Board leadership structure and governance practices provide robust and effective independent Board oversight; |
Proposals 6-11: Shareholder proposals
Providing the Board with flexibility to make these leadership decisions empowers the Board to do what is in the best interests of the company and our shareholders. If at any time the Board’s review of its leadership structure resulted in the conclusion that an independent Chair is in the best interests of our shareholders based on the company’s needs and circumstances at that time, the Board would appoint an independent Chair to address those needs and circumstances. The Board’s evaluation process is described in more detail on page 26 of this proxy statement.
The Board regularly seeks and considers input from shareholders. Our Board and management have a demonstrated record of engaging with our shareholders and soliciting their input on important matters, including their views on Board leadership and other topics of interest. Our Board engages in year-round communication with shareholders, and since being named the Lead Independent Director successor at the end of 2020, our Lead Independent Director has participated in over 110 meetings with institutional shareholders representing approximately 33% of our outstanding shares. At 6 meetings of the Board, 3 meetings of the Corporate Governance, ESG, and Sustainability Committee, and 5 meetings of the Compensation and Human Capital Committee in 2022, management and independent directors presented information about the company’s shareholder engagement activities, including input from shareholders. The Board, Corporate Governance, ESG, and Sustainability Committee, and Compensation and Human Capital Committee have used this input to inform reviews of, among other things, corporate governance policies and processes, ESG activities, executive compensation structure, and proxy statement disclosures.
The Board recognizes that certain shareholders prefer an independent Chair at all companies at all times and are therefore likely to support the Proposal. However, during our recent engagement meetings, far more shareholders have expressed their support for the Board’s continued flexibility to determine the Board’s leadership structure based on the company’s needs and circumstances at any given time.
There is no conclusive evidence demonstrating that an independent Chair ensures superior governance or performance, and Board flexibility to determine the optimal leadership structure is the norm at other large companies. While the Board recognizes and respects different points of view and philosophies about which leadership structure supports the best operational or governance results, existing empirical data concerning the impact of board leadership on shareholder value do not conclusively establish any correlation between the presence of an independent chair and superior corporate governance or performance. Even as the general empirical evidence remains inconclusive, under the current Board leadership structure:
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The Board has sharpened its focus on corporate governance and established leading governance and disclosure practices (see “Corporate Governance” beginning on page 23 of this proxy statement), with the Board’s Lead Independent Director named “Independent Director of the Year” by Corporate Board Member in 2022 in recognition “for his work helping to guide one of the world’s most important financial institutions” through a challenging environment, with superior results for the company and its stakeholders. |
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Our company continues to execute on our long-term strategy and focus on Responsible Growth—a strategy conceived under the vision of our current Chair and CEO, and developed with the evaluation and unanimous support of the Board’s independent directors—to propel our company’s operating and financial performance and deliver for our clients, employees, and the communities we serve—and for our shareholders. Under Responsible Growth, our current Chair and CEO’s leadership, and with independent oversight from our Lead Independent Directors and other independent Board members, the company has made continuous investments in people, technology, and facilities, and is consistently disciplined in its approach to risk management. We are one of four U.S. companies that has reported over $15 billion in net income for eight years in a row (2015-2022). |
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In 2022, the company continued to demonstrate how Responsible Growth enables us to deliver for our clients, teammates, communities, and shareholders in any environment. From 2017 to 2022, our annual earnings increased more than 50% to $27.5 billion, our customer deposit levels grew $621 billion to $1.9 trillion, our loans grew $109 billion to $1 trillion, and our Tier 1 capital increased to $208 billion, even after the company returned $117 billion in capital to shareholders over this time in common stock dividends and repurchases. In January 2023, the company was recognized as America’s Most JUST Company, ranking no. 1 on JUST Capital and CNBC’s 2023 Ranking of America’s Most Just Companies marking the first year a financial services company has led the list. |
According to the most recent surveys reported by the Spencer Stuart Board Index, only 36% of the chairs of S&P 500 companies are independent and 43% of the chairs of S&P 500 companies are also the current CEOs. Thus, the company’s existing Board leadership structure is consistent with the practice among S&P 500 companies.
The Board believes that a one-size-fits-all policy mandating an independent Chair is not in the best interest of our shareholders or our company. Our shareholders supported this view at the special meeting in 2015 and reaffirmed their support at both our 2017 and 2018 annual meetings of shareholders by voting to maintain the Board’s flexibility to determine the most effective and appropriate leadership structure. They continue to express support during our ongoing engagements. Although our shareholders continue to endorse the Board having the necessary flexibility, the Board is committed to regularly reviewing its leadership structure and Board practices and to responsibly determining its most appropriate structure based on then-current circumstances and needs.
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Accordingly, our Board recommends a vote “AGAINST” this proposal (Proposal 6). |
Proposals 6-11: Shareholder proposals
Proposal 7: Shareholder ratification of termination pay
John Chevedden, 2215 Nelson Avenue. No. 205, Redondo Beach, California 90278, the beneficial owner of 250 shares of the company’s common stock, has advised us that he intends to present the following resolution:
Proposal 7 - Shareholder Ratification of Termination Pay
Shareholders request that the Board seek shareholder approval of any senior manager’s new or renewed pay package that provides for severance or termination payments with an estimated value exceeding 2.99 times the sum of the executive’s base salary plus target short-term bonus.
“Severance or termination payments” include cash, equity or other pay that is paid out or vests due to a senior executive’s termination for any reason. Payments include those provided under employment agreements, severance plans, and change-in-control clauses in long-term equity plans, but not life insurance, pension benefits, or deferred pay earned and vested prior to termination.
“Estimated total value” includes: lump-sum payments; payments offsetting tax liabilities, perquisites or benefits not vested under a plan generally available to management employees, post-employment consulting fees or office expense and equity awards if vesting is accelerated, or a performance condition waived, due to termination.
The Board shall retain the option to seek shareholder approval after material terms are agreed upon.
Generous performance-based pay can sometimes be justified but shareholder ratification of “golden parachute” severance packages with a total cost exceeding 2.99 times base salary plus target short-term bonus better aligns management pay with shareholder interests.
For instance at one company, that does not have this policy, if the CEO is terminated he could receive $44 million in termination pay—over 10 times his base salary plus short-term bonus. In the event of a change in control, the same person could receive a whopping $124 million in accelerated equity payouts even if he remained employed.
It is in the best interest of Bank of America shareholders and the morale of Bank of America employees to be protected from such lavish management termination pay for one person.
It is important to have this policy in place so that Bank of America management stays focused on improving company performance as opposed to seeking a business combination simply to trigger a management golden parachute windfall.
This proposal topic received between 51 % and 65% support at:
FedEx (FDX)
Spirit AeroSystems (SPR)
Alaska Air (ALK)
Abb Vie (ABBV)
Fiserv (FISV)
Please vote yes:
Shareholder Ratification of Termination Pay - Proposal 7
Our Board recommends a vote “AGAINST” Proposal 7 because:
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We already have a long-standing policy to seek shareholder approval of termination payments, which we adopted in 2002 in response to a similar shareholder proposal, and none of our executive officers have any employment or severance arrangements; |
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Our equity compensation plan was approved by shareholders and expressly provides for acceleration of outstanding equity awards in the event of certain termination events following a change in control; |
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Shareholders already have opportunities to express their views about our post-termination compensation policies; and |
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Our executive compensation program effectively aligns executive and shareholders’ interests. |
We already have a long-standing policy to seek shareholder approval of termination payments, which we adopted in 2002 in response to a similar shareholder proposal, and none of our executive officers have any employment or severance arrangements. A vote “Against” this Proposal is warranted because the company has already implemented it through the Bank of America Corporation Corporate Policy Regarding Seeking Stockholder Approval of Future Severance Agreements (the “Severance Agreement Approval Policy”), which the company’s Board adopted in 2002 following the company’s 2002 annual meeting of shareholders. At that 2002 shareholders’ meeting, a majority of our shareholders voted in favor of a shareholder proposal virtually identical to the Proposal.(1) In response, the company adopted the Severance Agreement Approval Policy, which requires shareholder approval of employment or severance agreements with the
(1) |
The shareholder proposal included in the company’s 2002 proxy statement read: “RESOLVED: That the shareholders of Bank of America … urge the Board of Directors to seek shareholder approval for future severance agreements with senior executives that provide benefits in an amount exceeding two times the sum of the executive’s base salary plus bonus. ‘Future severance agreements’ include agreements renewing, modifying or extending existing severance agreements or employment agreements containing severance provisions.” |
Proposals 6-11: Shareholder proposals
company’s senior executives that provide severance benefits exceeding two times (“2x”) the sum of the executive’s base salary and bonus—a lower and more restrictive multiple than the 2.99 multiple requested by the Proposal—and has since regularly disclosed the policy requirements in the company’s annual proxy statement. A full copy of the Severance Agreement Approval Policy is available as an exhibit to the company’s Annual Report on Form 10-K for the year ended December 31, 2022 (www.sec.gov) and is on the company’s investor relations website at www.investor.bankofamerica.com.
The company adopted the Severance Agreement Approval Policy to align with our overall compensation philosophy and to preserve our competitive footing in attracting and retaining talented executive officers, while still subjecting termination pay to meaningful shareholder oversight and approval when appropriate.
The Proposal effectively requests that our Severance Agreement Approval Policy be amended to increase the multiple of severance benefits that do not require shareholder approval from 2x to 2.99 times base salary plus bonus. The Board believes the current Severance Agreement Approval Policy appropriately protects shareholders’ interests by providing shareholders an opportunity to express approval or disapproval of severance or termination payments, and reflects the expression of shareholders’ concerns as voiced at the 2002 annual shareholders meeting. The Board believes a vote in favor of the Proposal is not in shareholders’ best interests as it will operate to lessen shareholders’ abilities to voice their opinion on the same types of severance and termination payments as are currently covered by the Severance Agreement Approval Policy, by increasing the multiple from 2x to 2.99 times the severance or termination payments subject to shareholder approval.
Because the Severance Agreement Approval Policy was adopted in response to a virtually identical proposal, it, like the Proposal, encompasses a wide variety of compensation arrangements. The Severance Agreement Approval Policy applies to all employment and severance agreements entered into after April 24, 2002 with any of the company’s senior executives that provide for severance benefits, including any renewal, modification or extension of any existing employment agreement or severance agreement that was in effect as of the effective date of the policy (none of which are currently in effect). For purposes of determining whether the amount of severance benefits to be provided exceeds the 2x multiple under the Severance Agreement Approval Policy, severance benefits include: (i) severance benefits payable in cash (including cash amounts payable for the uncompleted portion of an employment agreement); (ii) special benefits or perquisites provided for periods following termination of employment; and (iii) accelerated vesting of outstanding equity awards in connection with such termination of employment, other than the accelerated vesting of equity awards that otherwise would have vested during the 24-month period following termination of employment. Agreements for future services (other than as an employee), such as consulting agreements, or agreements requiring the senior executive to refrain from certain conduct, such as restrictive covenant agreements, are not treated as employment or severance agreements under the Severance Agreement Approval Policy. In addition, compensation and benefits earned or accrued while employed, including equity vesting based on becoming retirement-eligible,(2) are not treated as severance benefits even if paid out following termination of employment.
The Severance Agreement Approval Policy enables the company to provide limited post-termination benefits in situations the Board believes are appropriate, such as continued equity vesting according to the award’s payment schedule in the event of retirement after attaining retirement eligibility and provided the executive complies with certain covenants including not working for a competitive business (a “Qualifying Termination”), or accelerated equity vesting upon death or a qualifying termination of employment in connection with a change of control. While the treatment of equity under our Severance Agreement Approval Policy differs slightly from the approach set forth in the Proposal, we believe our existing policy adopted in response to a virtually identical shareholder proposal, addresses the concerns underlying the Proposal. For example, in situations where the equity award continues to vest following a Qualifying Termination, the award does not continue to vest as a result of the executive’s employment termination, but continues to vest as a result of the executive being retirement-eligible. To protect the company’s and shareholder’s interests, continued vesting following a Qualifying Termination is also subject to the executive’s compliance with certain covenants (such as a promise not to work for a competitive business or to solicit the company’s employees for employment or clients for business). Our equity awards also are subject to multiple cancellation and clawback features that can apply after a Qualifying Termination, including for detrimental conduct, loss outside of the ordinary course of business, fraud or intentional misconduct causing a restatement of financial statements, and going forward, clawbacks consistent with the final rules of Section 954 of the Dodd-Frank Act for erroneously awarded incentive-based compensation related to an accounting restatement (regardless of misconduct or fault).
Currently none of our executive officers, including our CEO, have employment or severance agreements with the company.
Our equity compensation plan was approved by shareholders and expressly provides for acceleration of outstanding equity awards in the event of certain termination events in connection with a change in control. The Bank of America Corporation Equity Plan, which was approved by our shareholders with over 96% of the vote at our 2021 annual meeting of shareholders, permits the Board’s Compensation and Human Capital Committee to provide for accelerated vesting only if the participant’s employment is terminated in connection with a change in control. Our Board believes that this provision, which is often referred to as a “double-trigger” acceleration, encourages executive officers to remain with the company during a potential change in control, which further aligns their interests with those of our shareholders when evaluating any such potential transaction. Furthermore, due to existing U.S. legislation that restricts the ability of companies to acquire a bank holding company that has greater than 10% of U.S. deposits such as the company (i.e., the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994), and restrictions on non-financial services business activities imposed on bank holding companies under the Bank Holding Company Act of 1956 and
(2) |
As noted in the discussion in this proxy statement of “Potential payments upon termination or change in control” on page 76, each of the named executive officers meets the applicable age and years-of-service requirements to qualify for continued vesting of their equity awards following retirement. |
Proposals 6-11: Shareholder proposals
related regulations promulgated by the Board of Governors of the Federal Reserve System and Office of the Comptroller of the Currency, the likelihood of a change in control of the company is remote.
Shareholders already have opportunities to express their views about our post-termination compensation policies. In addition to opportunities to approve severance or termination payments as provided by the Severance Agreement Approval Policy, our Board and management team value shareholder input and proactively engaged with and solicited input from our shareholders regarding our executive compensation programs and philosophy. In 2022, we held 48 engagement meetings with 35 shareholders representing approximately 52% of our outstanding shares held by institutional shareholders, with our Lead Independent Director attending approximately 88% of these meeting, and, at the majority of these meetings, we discussed our executive compensation program, human capital management, and other related matters. At our 2022 annual meeting of shareholders, over 94% of the shareholder votes cast supported our annual “Say on Pay” vote—this represents the 12th consecutive year of “Say on Pay” approval of 92% or higher. Our Board’s Compensation and Human Capital Committee and management team routinely discuss the input from shareholders on our overall executive compensation program, including shareholder support levels for “Say on Pay”, and consider whether action should be taken in response. These ongoing efforts to solicit shareholder input on our compensation program allow for year-round shareholder input and provide additional support for why the approval requirements set forth in the Proposal are unnecessary.
Our executive compensation program effectively aligns executive and shareholders’ interests. Our compensation philosophy is to pay for performance over the long-term, as well as on an annual basis. Our Board has designed our current executive compensation program to appropriately link compensation realized by our executive officers to our performance and properly align the interests of our executive officers with those of our shareholders. Our executive compensation program provides a mix of salary, incentives, and benefits paid over time to align executive officer and shareholder interests. Our long-term equity-based awards, which are a fundamental component of our compensation program, further align executive officer and shareholder interests by linking a substantial portion of compensation to the achievement of sustainable, long-term corporate performance and operational efficiency.
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Accordingly, our Board recommends a vote “AGAINST” this proposal (Proposal 7). |
Proposal 8: Shareholder proposal requesting greenhouse gas reduction targets
The New York State Common Retirement Fund, 110 State Street, Albany, New York 12236, the beneficial owner of 14,418,951 shares of the company’s common stock, and one co-filer have advised us that they intend to present the following resolution:
Absolute Greenhouse Gas Reduction Targets
RESOLVED: Shareholders request Bank of America (“Company”) issue a report within a year, at reasonable expense and excluding confidential information, that discloses 2030 absolute greenhouse gas emissions reduction targets for the Company’s energy sector lending and underwriting, aligned with the Paris Agreement’s goal to limit warming to 1.5 degrees Celsius. These targets should be in addition to any emission intensity targets for the energy sector that the company has or will set, and be aligned with a science-based net zero pathway.
SUPPORTING STATEMENT: The Intergovernmental Panel on Climate Change (IPCC) has advised that greenhouse gas (GHG) emissions must be halved by 2030 and reach net zero by 2050 to limit global warming to 1.5°C.(1) Every incremental increase in temperature above 1.5°C will entail increasingly severe physical, transition, and systemic risks to companies, investors, the markets, and the economy as a whole. Climate change mitigation is therefore critical to address investment risks in order to avert the large economic losses projected to occur if insufficient action is taken.
Emissions from the oil and gas industry are responsible for over 40% of global GHG emissions and are therefore significant to Bank of America’s climate-risk mitigation strategy. The company should adopt absolute emission targets in this sector to protect the Company and its long-term investors. Though the Company has a commitment to reach net zero emissions by 2050 and a target to reduce its GHG emissions intensity for the energy sector, defined as upstream producers, refiners, and integrated companies within the oil and gas industry, by 2030, it does not yet have a science-based 2030 target to reduce GHG emissions on an absolute basis. Intensity targets will measure the reduction in emissions per unit or per dollar, however, by definition, they will not capture whether the Company’s total financed GHG emissions have decreased in the real world.
Rather, we believe the Company should consider target-setting approaches used by advisory groups such as the Science Based Targets initiative. Such an absolute reduction target aligned with a science-based net zero emissions pathway is critical for the Company to achieve its net-zero commitment and more fully address its climate risks.
(1) |
https://www.ipcc.ch/assessment-report/ar6/. |
Proposals 6-11: Shareholder proposals
Our Approach to Zero climate strategy, which is consistent with our NZBA and PCAF obligations, is based on five pillars that shape our work:
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Assist clients in the transition to net zero, including the development of products and services as well as investment in clean energy solutions; |
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Advocate for consistent industry and global standards to drive comparable commitments and disclosure; |
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Analyze data to develop decision useful metrics to drive progress, uncover business opportunities and manage the transition; |
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Align our strategy to the best available science by setting appropriate milestone targets to reach net zero before 2050; and |
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Attest annually following the TCFD and NZBA guidance for transparency. |
Our Approach to Net Zero, together with our Environmental and Social Risk Policy Framework (ESRP Framework),(2) articulate a comprehensive and pragmatic strategy for supporting the transition across economic sectors, including clients in energy and power systems industries. We are also focused on supporting and financing areas that are critical to the transition from a high-carbon to a low-carbon society. Our goal is to deploy and mobilize $1 trillion by 2030 to accelerate the transition to a low-carbon, sustainable economy, as part of a broader $1.5 trillion sustainable finance goal aligned to addressing the United Nation’s Sustainable Development Goals. In 2022, we mobilized and deployed approximately $158 billion in sustainable finance activity, of which approximately $78 billion was for climate and environmental transition. Our multi-year financing commitment provides financial capital, along with significant intellectual capital, to address the clean energy transition. It focuses on low-carbon energy, energy efficiency, and sustainable transportation, in addition to addressing other important related areas like water conservation, land use and waste.
As disclosed in our 2022 TCFD Report,(3) we also continue to make significant progress toward achieving our net zero commitment from our operations and supply chain. In our own operations, we have been carbon neutral with respect to Scope 1 and 2 emissions since 2019, and we purchase renewable energy to meet 100% of our needs to power our operations. In addition to achieving net zero in our operations, we are also working to reach net zero with respect to indirect emissions generated across our entire supply chain. In 2016, we set our first-ever public goals to address GHG emissions in our supply chain – those goals were focused on supplier engagement. In 2021, we set our second set of supplier engagement goals, to be achieved by 2030, shifting our focus from supplier engagement to driving specific supplier commitments. Our goal is to have 70% of global suppliers, by spend, set GHG emissions reduction or renewable energy targets.(4)
We have set and disclosed 2030 targets for reducing emissions related to three key sectors: auto manufacturing, energy and power generation; and we have committed to set and disclose financing activity emissions reduction targets for other key high-emitting sectors by April 2024. In April 2022, we announced our first set of emission reduction targets as part of our Approach to Zero clean energy transition strategy (our 2030 Financing Activity Targets). These targets build on our commitment to establish interim science-based emissions targets for high-emitting portfolios. Setting emission reduction targets on our financing activity involves evaluating decarbonization scenarios for each sector to determine the amount of emissions reductions required across relevant GHG emissions scopes to achieve net zero before 2050. We reviewed multiple scenarios to determine the GHG emissions reduction required for our 2030 Financing Activity Targets, including the Network for Greening the Financial System (NGFS) pathways, and two International Energy Agency (IEA) scenarios: the Sustainable Development Scenario Organization for Economic Cooperation and Development pathway and the IEA Net Zero Emissions 2050 (NZE2050) global pathway. We chose to align our 2030 Financing Activity Targets to the IEA NZE2050 global pathway as it is the only scenario that aligns with a 1.5° pathway to net zero before 2050 and outlines the percentage of emissions reduction needed from 2019 to 2030 for various sectors, sub-sectors and target types, providing the necessary detail to develop appropriate and relevant targets for our three selected sectors using 2019 as the baseline. We intend to continue using the IEA NZE2050 global scenario to inform our strategy with clients in these sectors. Our 2022 TCFD provides additional details about how we developed our 2030 Financing Activity Targets, the rationale for each target and how they align with our Approach to Zero transition strategy.
We have disclosed our financed emissions in our 2022 TCFD report, and in line with our commitment to NZBA, we plan to set financing activity emissions reduction targets for other key high-emitting sectors by April 2024. As set forth in the NZBA guidelines, we will regularly review our targets so they remain consistent with current climate science.
We are dedicated to supporting low-carbon energy sources through our lending, investments, products and services, and operations. As we work to achieve our net zero commitment, we are focused on financing the transition to net zero emissions by 2050. Reducing GHG emissions associated with our financing activity to net zero involves key steps outlined in our Approach to Zero transition strategy. We expect to achieve this shift through engaging with our clients and helping them make progress on their own low-carbon business models, and through partnering with our clients to finance the adoption of low-carbon solutions. We are developing innovative products that promote this transition, such as credit facilities that are structured to link pricing to a client’s carbon reduction efforts, and financial solutions for new and emerging clean energy technologies that will be critical to provide additional carbon reduction beyond traditional renewable energy sources.
(2) |
Our Environmental and Social Risk Policy Framework is available at https://about.bankofamerica.com/assets/pdf/Environmental-and-Social-Risk-Policy-Framework.pdf. |
(3) |
Our 2022 Task Force on Climate-Related Financial Disclosures (TCFD) Report is available at https://about.bankofamerica.com/content/dam/about/pdfs/BOA_TCFD_2022%209-22-2022-VOX220929%20split%20paragraph%20Secured.pdf. |
(4) |
See our 2022 TCFD Report. |
Proposals 6-11: Shareholder proposals
Our Approach to Zero transition strategy details how we intend to help our clients transition to a low-carbon economy and, as described in our 2022 TCFD Report, we continue to make progress in deploying our net zero strategy. Key to achieving the transition to a low-carbon economy is engaging with our clients. As discussed in our Approach to Zero transition strategy, we believe that our targeted financing policies and practices, and the related risk management practices, align with our net zero commitments. Further, we also believe that our energy, power and related policies, as outlined in our ESRP Framework, support our climate goals and promote the transition to a low-carbon economy.
As set out in our ESRP Framework, there are certain business activities that have increased investor, client, employee, and regulator scrutiny. These transactions are evaluated in alignment with our company’s Board-approved Risk Framework, which outlines our company’s approach to risk management, as are all transaction and client decisions, in the ordinary course of business. This process is client-specific, deal-specific, and subject to governance review. This process considers portfolio-level credit, operational, reputational, and other risks, including climate risk. As part of that process, we have determined not to engage in the following activities based on the appropriate application of our Risk Framework and enhanced due diligence standards:
• |
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Direct financing of petroleum exploration or production activities in the Arctic; |
• |
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Direct financing of the construction or expansion of new coal-fired power plants—unless those facilities employ technology that is focused on complete or near elimination of atmospheric carbon emissions; and |
• |
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Direct financing of new thermal coal mines or the expansion of existing mines. |
In addition, as disclosed in our 2022 TCFD Report, as part of our transition strategy, by 2025 we will phase out all financing (including facilitating capital markets transactions and advising on mergers and acquisitions) of companies deriving ≥ 25% of their revenue from thermal coal mining, unless the company has a public commitment to align its business (across Scope 1, 2 and 3 emissions) with the goals of the Paris Agreement and the transaction would be facilitating the diversification of the company’s business away from thermal coal. Over the past several years, we have reduced exposure to companies focused on coal extraction, with pure play coal extraction now representing only $42 million, or less than 0.01% of our total committed commercial credit exposure across all industries exposure, down more than 94% from $762 million at fiscal year-end 2015.
In light of our disclosures and declared strategy, the issuance of our 2030 Financing Activity Targets, and our carefully developed and well-articulated risk management framework, our Board believes that the report requested in Proposal 8, which would substantially duplicate our existing GHG target development and issuance, would not be a productive use of time or effort. Further, as disclosed in our TCFD Report, we continue to develop and issue GHG emission reduction targets. We are also transparent in disclosing these transition-related activities and risks in the ESRP Framework and our 2022 TCFD Report. Therefore, our Board believes the report requested by Proposal 8 would be duplicative and unnecessary.
|
Accordingly, our Board recommends a vote “AGAINST” this proposal (Proposal 8). |
Proposal 9: Shareholder proposal requesting report on transition planning
Debriana Berlin Rev Tr (S), c/o of As You Sow, 2020 Milvia St., Suite 500, Berkeley, CA 94704, the beneficial owner of 479 shares of the company’s common stock, and other co-filers have advised us that they intend to present the following resolution:
Transition Planning
RESOLVED: Shareholders request that Bank of America issue a report disclosing a transition plan that describes how it intends to align its financing activities with its 2030 sectoral greenhouse gas emissions reduction targets, including the specific measures and policies to be implemented, reductions to be achieved by such measures and policies, and timelines for implementation and associated emission reductions.
Whereas: The banking sector has a critical role to play in achieving global net zero by 2050 goals. The Net Zero Banking Alliance (NZBA) notes that 40 percent of global banking assets have committed to aligning lending and investment portfolios with net zero by 2050.(1) But targets alone are insufficient. Investors seek disclosures demonstrating banks’ concrete transition strategies to credibly achieve their disclosed emission reduction targets.
Guidelines are emerging to help financial institutions operationalize and translate net zero commitments into strategies “with specific objectives . . . against which progress can be assessed.”(2),(3)
(1) |
https://www.unepfi.org/net-zero-banking/. |
(2) |
https://www.iigcc.org/media/2022/07/An-investor-led-framework-of-pilot-indicators-to-assess-banks-on-thetransition-to-net-zero-28-July.pdf. |
(3) |
https://assets.bbhub.io/company/sites/63/2022/06/GFANZ_Recommendations-and-Guidance-on-Net-zero-Transition-Plans-for-the-Financial-Sector_June2022.pdf. |
Proposals 6-11: Shareholder proposals
Bank of America (“BofA”) is a member of the NZBA and is the fourth largest global lender and underwriter of fossil fuels, with $32 billion in fossil fuel financing in 2021, and over $232 billion between 2016 through 2021.(4)
An effective transition plan creates bank accountability by describing the strategies, indicators, milestones, metrics, and timelines to deliver on decarbonization targets and ensure investors that a bank is addressing and accountable for the risks associated with its financing of high carbon activities. BofA has set forth no such transition plan.
In its 2022 TCFD report, BofA identifies 2030 targets for reducing its operational emissions and highlights actions to achieve those outcomes.(5) BofA also sets 2030 intensity reduction targets for the financed emissions from its three highest carbon emitting business sectors. However, it does not disclose a transition plan for how it will achieve these intensity targets, despite their representing a far larger proportion of the company’s carbon footprint than operational emissions. Instead, BofA makes vague statements including that it will need to work with its clients to understand their commitments and transition plans, and that it will need to modify a number of its internal processes and routines.(6) It further states that it has begun capturing unspecified client data and that near term foundational steps will focus on “Processes and Routines,” “Data,” and “Reporting and Monitoring.” These vague statements do not constitute a transition plan likely to achieve BofA’s planned emissions reduction targets.
While BofA has committed to a notable $1 trillion in low-carbon sustainable business financing through 2030, it does not disclose any estimate of the emissions reductions such financing will contribute, on what timeline, or how this compares to its total financed emissions.
The disclosures requested in this proposal will help assure investors that BofA has an effective and accountable transition plan in place for achieving its 2030 intensity goals.
Our Board recommends a vote “AGAINST” Proposal 9 because:
• |
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Under our clean energy transition strategy, we are committed to achieving net zero emissions from our operations, supply chain and financing activities before 2050, and we are transparent about our progress; |
• |
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We have set and disclosed 2030 targets for reducing emissions associated with financing activities related to three key sectors: auto manufacturing, energy and power generation; and we have committed to set and disclose financing activity emission reduction targets for other key high-emitting sectors by April 2024; |
• |
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We are dedicated to supporting low-carbon energy sources through our lending, investments, products and services, and operations; and |
• |
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Our Approach to Zero transition strategy outlines how we intend to help our clients transition to a low-carbon economy and, as described in our 2022 Task Force on Climate-Related Financial Disclosures (TCFD) Report, we continue to make progress in deploying our net zero strategy. |
Proposal 9 requests that we issue a report disclosing a transition plan that describes how the company intends to align its financing activities with the 2030 sectoral greenhouse gas emissions reduction targets that we announced in April 2022. As the Proposal acknowledges, our company is committed to reducing the GHG emissions associated with our financing activities in alignment with the Paris Agreement’s 1.5°C goal, and to achieving net zero emissions. As part of that commitment, we have outlined our strategy to finance the transition to net zero emissions and issued our first emissions reduction targets for financing activities in April 2022. We are also transparent in reporting on how we plan to achieve the net zero transition, how we align our net zero commitment with the evolving needs of our clients and how we continue to develop and issue GHG reduction targets as part of our climate transition strategy. We disclose both our absolute financed emissions and economic intensities in our 2022 TCFD report so stakeholders can track our progress over time.
Under our clean energy transition strategy, we are committed to achieving net zero emissions from our operations, supply chain and financing activities before 2050, and we are transparent about our progress. Our Approach to Zero strategy,(1) released in April 2022, outlines the roles that we intend to play to help finance the transition to net zero GHG emissions. Consistent with our approach toward Responsible Growth, we are helping finance this transition by setting and achieving milestone targets, partnering with clients to support their own declared transitions, investing in clean energy innovation and other solutions, developing and reporting decision-useful metrics to drive progress, leading industry collaborations, and following guidance for transparency.
In April 2021, we agreed to participate in the Net Zero Banking Alliance (NZBA), which includes more than 100 members representing more than 40% of the world’s banking assets. The NZBA guidelines state that:
• |
|
Banks shall set and publicly disclose long-term and intermediate targets to support meeting the temperature goals of the Paris Agreement; |
• |
|
Banks shall establish an emissions baseline and annually measure and report the emissions profile of their lending portfolios and investment activities; |
• |
|
Banks shall use widely accepted science-based decarbonization scenarios to set both long-term and intermediate targets that are aligned with the temperature goals of the Paris Agreement; |
(4) |
https://www.ran.org/wp-content/uploads/2022/03/BOCC_2022_vSPREAD-1.pdf. |
(5) |
https://about.bankofamerica.com/content/dam/about/pdfs/BOA_TCFD_2022%209-22-2022-VOX220929%20split%20paragraph%20Secured.pdf. |
(6) |
https://about.bankofamerica.com/content/dam/about/pdfs/BOA_TCFD_2022%209-22-2022-VOX220929%20split%20paragraph%20Secured.pdf, p. 19. |
(1) |
Our Approach to Zero net zero transition strategy is available at https://about.bankofamerica.com/content/dam/about/pdfs/approach-to-zero-2022.pdf. |
Proposals 6-11: Shareholder proposals
• |
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Banks shall regularly review targets to ensure consistency with current climate science; |
• |
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Decarbonization scenarios shall: |
|
• |
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Be from credible and well recognized sources, |
|
• |
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Have no/low overshoot from the Paris Agreement’s 1.5° pathway, |
|
• |
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Make reasonable assumptions on carbon sequestration achieved through nature-based solutions and land use change, |
|
• |
|
Rely conservatively on negative emissions technologies, and |
|
• |
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Where possible, minimize misalignment with other United Nations’ Sustainable Development Goals; and |
• |
|
Banks shall disclose the scenarios used to develop the targets and provide the rationale for why those scenarios were chosen. |
Achieving the net zero commitment set forth in our Approach to Zero strategy and of the NZBA will require technological advances, clearly defined roadmaps for industry sectors, and better emissions data reporting. In July 2020, we joined the Partnership for Carbon Accounting Professionals (PCAF) to help develop a consistent methodology to assess and disclose emissions associated with our financing activities. We are working to collect data and implement methodologies to assess and disclose emissions associated with our financing activities.
Our Approach to Zero climate strategy, which is consistent with our NZBA and PCAF obligations, is based on five pillars that shape our work:
1) |
Assist clients in the transition to net zero, including the development of products and services as well as investment in clean energy solutions; |
2) |
Advocate for consistent industry and global standards to drive comparable commitments and disclosure; |
3) |
Analyze data to develop decision useful metrics to drive progress, uncover business opportunities and manage the transition; |
4) |
Align our strategy to the best available science by setting appropriate milestone targets to reach net zero before 2050; and |
5) |
Attest annually following the TCFD and NZBA guidance for transparency. |
Our Approach to Net Zero, together with our Environmental and Social Risk Policy Framework (ESRP Framework),(2) articulate a comprehensive and pragmatic strategy for supporting the transition across economic sectors, including clients in energy and power systems industries. We are also focused on supporting and financing areas that are critical to the transition from a high-carbon to a low-carbon society. Our goal is to deploy and mobilize $1 trillion by 2030 to accelerate the transition to a low-carbon, sustainable economy, as part of a broader $1.5 trillion sustainable finance goal aligned to addressing the United Nation’s Sustainable Development Goals. In 2022, we mobilized and deployed approximately $158 billion in sustainable finance activity, of which approximately $78 billion was for climate and environmental transition. Our multi-year financing commitment provides financial capital, along with significant intellectual capital, to address the clean energy transition. It focuses on low-carbon energy, energy efficiency, and sustainable transportation, in addition to addressing other important related areas like water conservation, land use and waste.
As disclosed in our 2022 TCFD Report,(3) we also continue to make significant progress toward achieving our net zero commitment from our operations and supply chain. In our own operations, we have been carbon neutral with respect to Scope 1 and 2 emissions since 2019, and we purchase renewable energy to meet 100%(1) of our needs to power our operations. In addition to achieving net zero in our operations, we are also working to reach net zero with respect to indirect emissions generated across our entire supply chain. In 2016, we set our first-ever public goals to address GHG emissions in our supply chain – those goals were focused on supplier engagement. In 2021, we set our second set of supplier engagement goals, to be achieved by 2030, shifting our focus from supplier engagement to driving specific supplier commitments. Our goal is to have 70% of global suppliers, by spend, set GHG emissions reduction or renewable energy targets.(4)
We have set and disclosed 2030 targets for reducing emissions related to three key sectors: auto manufacturing, energy and power generation; and we have committed to set and disclose financing activity emissions reduction targets for other key high-emitting sectors by April 2024. In April 2022, we announced our first set of emission reduction targets as part of our Approach to Zero clean energy transition strategy (our 2030 Financing Activity Targets). These targets build on our commitment to establish interim science-based emissions targets for high-emitting portfolios. Setting emission reduction targets on our financing activity involves evaluating decarbonization scenarios for each sector to determine the amount of emissions reductions required across relevant GHG emissions scopes to achieve net zero before 2050. We reviewed multiple scenarios to determine the GHG emissions reduction required for our 2030 Financing Activity Targets, including the Network for Greening the Financial System (NGFS) pathways, and two International Energy Agency (IEA) scenarios: the Sustainable Development Scenario Organization for Economic Cooperation and Development pathway and the IEA Net Zero Emissions 2050 (NZE2050) global pathway. We chose to align our 2030 Financing Activity Targets to the IEA NZE2050 global pathway as it is the only scenario that aligns with a 1.5° pathway to net zero before 2050 and outlines the percentage of emissions reduction needed from 2019 to 2030 for various sectors, sub-sectors and target types, providing the necessary detail to develop appropriate and relevant targets for our three selected sectors using 2019 as the baseline. We intend to continue using the IEA NZE2050 global scenario to inform our strategy with clients in these sectors. Our 2022 TCFD provides additional details about how we developed our 2030 Financing Activity Targets, the rationale for each target and how they align with our Approach to Zero transition strategy.
(2) |
Our Environmental and Social Risk Policy Framework is available at https://about.bankofamerica.com/assets/pdf/Environmental-and-Social-Risk-Policy-Framework.pdf. |
(3) |
Our 2022 Task Force on Climate-Related Financial Disclosures (TCFD) Report is available at https://about.bankofamerica.com/content/dam/about/pdfs/BOA_TCFD_2022%209-22-2022-VOX220929%20split%20paragraph%20Secured.pdf. |
(4) |
See our 2022 TCFD Report. |
Proposals 6-11: Shareholder proposals
We have disclosed our financed emissions in our 2022 TCFD report, and in line with our commitment to NZBA, we plan to set financing activity emissions reduction targets for other key high-emitting sectors by April 2024. As set forth in the NZBA guidelines, we will regularly review our targets so they remain consistent with current climate science.
We are dedicated to supporting low-carbon energy sources through our lending, investments, products and services, and operations. As we work to achieve our net zero commitment, we are focused on financing the transition to net zero emissions by 2050. Reducing GHG emissions associated with our financing activity to net zero involves key steps outlined in our Approach to Zero transition strategy. We expect to achieve this shift through engaging with our clients and helping them make progress on their own low-carbon business models, and through partnering with our clients to finance the adoption of low-carbon solutions. We are developing innovative products that promote this transition, such as credit facilities that are structured to link pricing to a client’s carbon reduction efforts, and financial solutions for new and emerging clean energy technologies that will be critical to provide additional carbon reduction beyond traditional renewable energy sources.
Our Approach to Zero transition strategy details how we intend to help our clients transition to a low-carbon economy and, as described in our 2022 TCFD Report, we continue to make progress in deploying our net zero strategy. Key to achieving the transition to a low-carbon economy is engaging with our clients. As discussed in our Approach to Zero transition strategy, we believe that our targeted financing policies and practices, and the related risk management practices, align with our net zero commitments. Further, we also believe that our energy, power and related policies, as outlined in our ESRP Framework, support our climate goals and promote the transition to a low-carbon economy.
As set out in our ESRP Framework, there are certain business activities that have increased investor, client, employee, and regulator scrutiny. These transactions are evaluated in alignment with our company’s Board-approved Risk Framework, which outlines our company’s approach to risk management, as are all transaction and client decisions, in the ordinary course of business. This process is client-specific, deal-specific, and subject to governance review. This process considers portfolio-level credit, operational, reputational, and other risks, including climate risk. As part of that process, we have determined not to engage in the following activities based on the appropriate application of our Risk Framework and enhanced due diligence standards:
• |
|
Direct financing of petroleum exploration or production activities in the Arctic; |
• |
|
Direct financing of the construction or expansion of new coal-fired power plants—unless those facilities employ technology that is focused on complete or near elimination of atmospheric carbon emissions; and |
• |
|
Direct financing of new thermal coal mines or the expansion of existing mines. |
In addition, as disclosed in our 2022 TCFD Report, as part of our transition strategy, by 2025 we will phase out all financing (including facilitating capital markets transactions and advising on mergers and acquisitions) of companies deriving ≥ 25% of their revenue from thermal coal mining, unless the company has a public commitment to align its business (across Scope 1, 2 and 3 emissions) with the goals of the Paris Agreement and the transaction would be facilitating the diversification of the company’s business away from thermal coal. Over the past several years, we have reduced exposure to companies focused on coal extraction, with pure play coal extraction now representing only $42 million, or less than 0.01% of our total committed commercial credit exposure across all industries exposure, down more than 94% from $762 million at fiscal year-end 2015.
In light of our disclosures and declared strategy, the issuance of our 2030 Financing Activity Targets, and our carefully developed and well-articulated risk management framework, our Board believes that the report requested in Proposal 9, which would substantially duplicate our existing transition planning, would not be a productive use of time or effort. Further, as disclosed in our TCFD Report, we continue to develop and issue GHG emission reduction targets. We are also transparent in disclosing these transition-related activities and risks in the ESRP Framework and our 2022 TCFD Report. Therefore, our Board believes the report requested by Proposal 9 would be duplicative and unnecessary.
|
Accordingly, our Board recommends a vote “AGAINST” this proposal (Proposal 9). |
Proposal 10: Shareholder proposal requesting adoption of policy to cease financing new fossil fuel supplies
Sada Geuss, c/o Trillium Asset Management, Two Financial Center, 60 South Street, Suite 1100, Boston, MA, 02111, has advised us that they intend to present the resolution below. The proponent confirmed that it is the beneficial owner of at least $2,000 in market value of the company’s common stock, but did not provide the number of shares owned.
Whereas: Climate change poses a systemic risk, with estimated global GDP loss of 11-14% by midcentury under current trajectories.(1) Climate change is primarily caused by fossil fuel production and combustion, facilitated by funding from financial institutions.
According to scientific consensus, limiting warming to 1.5°C means no development of new oil and gas fields or coal mines beyond those already approved.(2) Existing fossil fuel supplies are sufficient to satisfy global energy needs.(3) New supplies would not produce in time to mitigate current energy market turmoil resulting from the Ukraine War.(4)
(1) |
https://www.swissre.com/institute/research/topics-and-risk-dialogues/climate-and-natural-catastrophe-risk/expertise-publication-economics-of-climate-change.html. |
(2) |
https://www.iisd.org/system/files/2022-10/navigating-energy-transitions-mapping-road-to-1.5.pdf. |
(3) |
https://www.ipcc.ch/report/ar6/wg3/resources/spm-headline-statements/. |
(4) |
https://www.iea.org/commentaries/what-does-the-current-global-energy-crisis-mean-for-energy-investment. |
Proposals 6-11: Shareholder proposals
Bank of America (BAC) has committed to align its financing with the goals of the Paris Agreement, achieving net-zero emissions by 2050.
Although BAC has set 2030 Financing Activity Targets using the International Energy Agency’s (IEA) Net Zero Emissions by 2050 pathway (NZE2050), BAC continues financing and facilitating fossil fuel expansion, evidently contradicting the pathway.
We believe BAC’s statement that it “intend[s] to continue using the IEA NZE2050 global scenario to inform our strategy with clients” exposes it to accusations of greenwashing unless it adopts a policy that phases out financing for fossil fuel expansion.(5)
BAC is reportedly the world’s fourth largest funder of fossil fuels, providing more than $232 billion in lending and underwriting to fossil fuel companies during 2016-2021.(6)
Without a policy to phase out financing of new fossil fuel exploration and development, BAC is unlikely to meet its climate commitments and may draw scrutiny for material risks including:
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Greenwashing: Regulators are tightening and enforcing greenwashing rules, which could result in major fines.(7) |
• |
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Regulation: Central banks, including the Fed, are starting to implement climate stress tests(8) and scenario analyses,(9) and some have begun to propose increased capital requirements for banks’ climate risks.(10) |
• |
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Competition: Dozens of global banks have policies to phase out financial support for new oil and gas fields(11) and coal mines.(12) |
• |
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Reputation: Campaigns targeting BAC’s climate policies include hundreds of organizations with tens of millions of global members and supporters, including current and potential BAC customers.(13) |
We believe BAC’s approach is increasing systemic risk, which will likely have significant negative impacts – including physical risks and transition risks(14) – for itself and for diversified investors.
Best practices for banks to achieve net zero involve financing companies reducing scopes 1-3 absolute emissions and allocating capital in line with science-based, independently verified short, medium and long-term decarbonization targets. Organizations like Science Based Targets Initiative and Transition Pathway Initiative provide verification of decarbonization targets.
RESOLVED: Shareholders request that the Board of Directors adopt a policy for a time-bound phase-out of BAC’s lending and underwriting to projects and companies engaging in new fossil fuel exploration and development.
Supporting Statement: This proposal is intended, in the discretion of board and management, to enable support for BAC’s energy clients’ low-carbon transition.
Our Board recommends a vote “AGAINST” Proposal 10 because:
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Under our Approach to Zero strategy, we are committed to achieving net zero emissions from our operations, supply chain and financing activities before 2050, we have taken concrete action in support of that commitment, and we are transparent about our progress; |
• |
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We are dedicated to supporting low-carbon energy sources through our lending, investments, products and services, and operations; |
• |
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A key aspect of our Approach to Zero strategy is engagement and partnership with clients across energy, power, and other fossil fuel intensive sectors to share our expertise and perspectives, create positive and constructive dialogues with key stakeholders, and encourage and influence clients to consider their role in the transition to a low-carbon economy; |
• |
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We have implemented a well-considered environmental and social risk policy framework and mechanisms for managing environmental and social risks across our enterprise; and |
• |
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Our Board believes the business restriction and policy requested by the proposal is unnecessary in light of our commitment to help finance the transition to net zero emissions, our risk management programs and policies, and our broader net zero commitment. |
The proposal requests that our company adopt a policy for a time-bound phase-out of the company’s lending to, and underwriting of, projects and companies that engage in the exploration and development of fossil fuels. We understand and recognize our responsibility to help address and build resilience to climate change by using our expertise and resources, as well as our scale, to support our clients in their just transition(1) to a
(5) |
https://about.bankofamerica.com/content/dam/about/pdfs/BOA_TCFD_2022%209-22-2022-VOX220929%20split%20paragraph%20Secured.pdf. |
(6) |
http://bankingonclimatechaos.org/. |
(7) |
https://www.bankingsupervision.europa.eu/press/speeches/date/2022/html/ssm.sp220922~bb043aa0bd.en.html. |
(8) |
https://www.bankingsupervision.europa.eu/press/pr/date/2022/html/ssm.pr220708~565c38d18a.en.html. |
(9) |
https://www.federalreserve.gov/newsevents/pressreleases/other20220929a.htm. |
(10) |
https://www.bis.org/review/r220223e.htm. |
(11) |
https://oilgaspolicytracker.org/. |
(12) |
https://coalpolicytool.org/. |
(13) |
https://stopthemoneypipeline.com/. |
(14) |
https://www.bis.org/bcbs/publ/d517.pdf. |
(1) |
As described in our 2022 Task Force on Climate-related Financial Disclosures Report, just transition means greening the economy in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind. This involves maximizing the social and economic opportunities of climate action, ensuring affordable energy and energy security during the transition, while minimizing and carefully managing any challenges. See https://about.bankofamerica.com/content/dam/about/pdfs/task-force-climate-financial-disclosures-report.pdf. |
Proposals 6-11: Shareholder proposals
low-carbon economy. Building on our longstanding support for the Paris Agreement, we have a goal to achieve net zero greenhouse gas (GHG) emissions in our financing activities, operations, and supply chain before 2050, and in April 2022, we released our Approach to Zero strategy,(2) which outlines our commitment to helping finance the broader transition to net zero GHG emissions and our target setting process. The success of that transition will be dependent on the transformation of critical areas of the global economy, including energy, power, transportation, and real estate. As discussed below, in light of our ongoing efforts to finance the transition to a low-carbon environment, our environmental and social risk management programs, and our net zero commitment, our Board believes the business restriction and policy change requested by the proposal is unnecessary and that its implementation would unduly restrain our ability to pursue our carefully considered and tailored Approach to Zero strategy.
Under our Approach to Net Zero strategy, we are committed to achieving net zero emissions from our operations, supply chain and financing activities before 2050, we have taken concrete action in support of that commitment, and we are transparent about our progress. In April 2021, we agreed to participate in the Net Zero Banking Alliance (NZBA). The NZBA consists of more than 100 financial institution members representing more than 40% of the world’s banking assets. The NZBA guidelines state that:
• |
|
Banks shall set and publicly disclose long-term and intermediate targets to support meeting the temperature goals of the Paris Agreement; |
• |
|
Banks shall establish an emissions baseline and annually measure and report the emissions profile of their lending portfolios and investment activities; |
• |
|
Banks shall use widely accepted science-based decarbonization scenarios to set both long-term and intermediate targets that are aligned with the temperature goals of the Paris Agreement; |
• |
|
Banks shall regularly review targets to ensure consistency with current climate science; |
• |
|
Decarbonization scenarios shall: |
|
• |
|
Be from credible and well recognized sources, |
|
• |
|
Have no/low overshoot from the Paris Agreement’s 1.5° pathway, |
|
• |
|
Make reasonable assumptions on carbon sequestration achieved through nature-based solutions and land use change, |
|
• |
|
Rely conservatively on negative emissions technologies, |
|
• |
|
Where possible, minimize misalignment with other United Nations’ Sustainable Development Goals; and |
• |
|
Banks shall disclose the climate scenarios used to develop the targets and provide the rationale for why those scenarios were chosen. |
Our company also joined the Partnership for Carbon Accounting Financials (PCAF) as a member of the Global Core Team. The PCAF has developed the Global GHG Accounting and Reporting Standard for the Financial Industry, providing a consistent methodology to assess and disclose emissions associated with financing activities.
In April 2022, we released Approach to Zero, which outlines our commitment to helping finance the transition to net zero GHG emissions and details our target setting methodology, as informed by our PCAF and NZBA commitments. Integral to our Approach to Zero strategy are the emission reduction targets for financing activity in the auto manufacturing, energy, and power generation sectors that we announced in 2022. In line with our NZBA commitment, we plan to set financing activity emissions reduction targets for other key high-emitting sectors by April 2024. As set forth in the NZBA guidelines, we will regularly review our targets so they remain consistent with current climate science.
As discussed in detail in our 2022 Task Force for Climate-related Financial Disclosures (TFCD) Report, we continue to make progress towards achieving our net zero commitment. For more information on how we approach climate change-related risk and opportunities and the progress we have made, please see our 2022 TFCD Report available on our website.(3)
As our regulatory authorities adopt requirements for disclosures or related climate risk regulations, we will fully comply.
We are dedicated to supporting low-carbon energy sources through our lending, investments, products and services, and operations. As we work to achieve our net zero commitment, we are focused on financing the transition to net zero emissions by 2050. Reducing GHG emissions associated with our financing activity to net zero involves key steps, including:
• |
|
Assisting clients in the transition to net zero, including the development of products and services as well as investment in climate solutions; |
• |
|
Advocating for consistent industry and global standards to drive comparable commitments and disclosure; |
• |
|
Analyzing data to develop decision useful metrics to drive progress, uncover business opportunities and manage the transition; |
• |
|
Aligning our strategy to the best available science by setting appropriate milestone targets to reach net zero before 2050; and |
• |
|
Attesting annually following the TCFD and NZBA guidance for transparency. |
We expect to achieve this shift through engaging with our clients and helping them meet their own targets for low-carbon business models, and through partnering with our clients to finance the adoption of low-carbon solutions. We are exploring innovative products that promote this transition, such as credit facilities that are structured to link pricing to a client’s carbon reduction efforts.
(2) |
See Approach to Zero, our commitment to helping finance the transition to net zero before 2050, available at https://about.bankofamerica.com/content/dam/about/pdfs/approach-to-zero-2022.pdf. |
(3) |
See our Task Force on Climate-related Financial Disclosures Report, available at https://about.bankofamerica.com/content/dam/about/pdfs/task-force-climate-financial-disclosures-report.pdf. |
Proposals 6-11: Shareholder proposals
Our goal is to deploy and mobilize $1 trillion by 2030 to accelerate the transition to a low-carbon, sustainable economy, as part of a broader $1.5 trillion sustainable finance goal aligned to addressing the United Nations’ Sustainable Development Goals. In 2022, we mobilized and deployed approximately $158 billion in sustainable finance activity, of which approximately $78 billion was for climate and environmental transition. Our multi-year financing commitment provides financial capital, along with significant intellectual capital, to develop solutions to climate change and other environmental challenges. It focuses on low-carbon energy, energy efficiency, and sustainable transportation, in addition to addressing other important areas like water conservation, land use, and waste. We believe that our financing policies and practices strongly align with our net zero commitments. Further, we also believe that our policy positions prohibiting Arctic drilling, prohibiting the construction or expansion of coal-fired plants, and prohibiting the financing of new thermal coal and expansion of existing mines support our climate goals and promote the transition to a low-carbon economy.
A key aspect of our Approach to Zero strategy is engagement and partnership with clients across energy, power, and other fossil fuel intensive sectors to share our expertise and perspectives, create positive and constructive dialogues with key stakeholders, and encourage and influence clients to consider their role in the transition to a low-carbon economy. Our company is committed to improving the environment, and this commitment is integral to our global business model, the work we do with partners, and our focus on making our operations more sustainable, managing risks and governing our activities. Our work in these areas is also part of how we drive sustainable Responsible Growth. We have a well-considered and pragmatic strategy for supporting the transition of energy and power systems toward net zero emissions by 2050. As discussed above, our company is dedicated to supporting the net zero transition through our lending, investments, products and services, and operations.
A critical part of our strategy is ongoing engagement and partnership with clients across energy, power, and other sectors, including those that are fossil fuel intensive. To accelerate an orderly transition to net zero, we continue to support clients who are playing an active role in the energy transition. By sharing expertise and perspectives through regular engagement with key stakeholders on their transition plans, we are able to deliver traditional product solutions and develop new climate-transition specific solutions for low-carbon energy solutions to assist clients in their net zero transition. Because our clients will need our advice and our expertise across industry sectors to assist them in navigating the climate transition, we are undertaking an effort to educate and prepare relationship managers and bankers with training so they can actively engage with clients on the topic and provide a comprehensive client experience on the path to net zero.
A key element of this engagement is helping clients access the capital they need to affect this transition within their companies. Transitioning entire sectors of the economy before 2050 must be approached with urgency and yet thoughtfully. We acknowledge that some stakeholders desire this transition to occur much faster than others. We recognize this challenge but strive for a just transition in every dimension, including balancing the need to support traditional, affordable energy sources in the near-term with the recognition that emissions exacerbate risk in the longer term.
We have implemented a comprehensive environmental and social risk policy framework and mechanisms for managing environmental and social risks across our enterprise. To provide oversight and rigor to these climate-related activities, we have established strong governance and control mechanisms. Our Board exercises its climate-related risk oversight obligations and ESG oversight. Our Board’s Enterprise Risk Committee oversees our company’s risks, including climate and ESG risk. Further, our Board’s Corporate Governance, ESG, and Sustainability Committee (CGESC) oversees our climate-related and other ESG activities.
To further strengthen our oversight of these issues, we established our Global Responsible Growth Committee (Responsible Growth Committee), which is a management-level committee composed of senior leaders across every line of business and support function. The Responsible Growth Committee reports to our Board’s CGESC, and also reports to our Management Risk Committee and our Board’s Enterprise Risk Committee on matters related to environmental and social risk.
As part of our focus on these principles, we established our Environmental and Social Risk Policy Framework (ESRP Framework)(4) to provide additional clarity and transparency related to how our company approaches environmental and social risks. The ESRP Framework governs our approach to climate-related risk management and already limits, and in some cases prohibits, financing of certain fossil fuels (such as new thermal coal mines or expansions of existing coal mines). The ESRP Framework is aligned with our Board-approved Risk Framework, which outlines the company’s approach to risk management and each employee’s responsibilities for risk management across the enterprise. As part of their duties, the Responsible Growth Committee and Management Risk Committee review and approve the ESRP Framework at least every two years. Our Risk Framework outlines the seven key risk types that we face — strategic, credit, market, liquidity, operational, compliance and reputational —and also addresses climate risk. Increasingly, environmental and social issues impact many of the seven key risk areas, and our risk management program advances the use of climate risk factors across risk types to evaluate risk to climate change.
Managing environmental and social risks requires coordinated governance, clearly defined roles and responsibilities, and well-developed processes so these risks are identified, measured, monitored and controlled in a timely manner. As set out in our ESRP Framework, there are certain business activities that have increased investor, client, employee, and regulator scrutiny. These transactions are evaluated in alignment with our Risk Framework, as are all transaction and client decisions, in the ordinary course of business. This process is client-specific, deal-specific, and subject to governance review. This process considers portfolio-level credit, operational, reputational, and other risks, including climate risk.
(4) |
Our Environmental and Social Risk Policy Framework is available at https://about.bankofamerica.com/assets/pdf/Environmental-and-Social-Risk-Policy-Framework.pdf. |
Proposals 6-11: Shareholder proposals
As part of our commitment to Responsible Growth, we have not participated in project finance for oil and gas exploration in the Arctic. The ESRP Framework prohibits direct financing of new thermal coal mines or the expansion of existing coal mines. By 2025, we will phase out all financing, including facilitating capital markets transactions and advising on mergers and acquisitions, of companies deriving 25% or more of their revenue from thermal coal mining, unless the company has a public commitment to align its business (across Scope 1, 2, and 3 emissions) with the goals of the Paris Agreement, and the transaction facilitates the diversification of that client’s business away from thermal coal. Our ESRP Framework also prohibits providing lending or capital markets or advisory services to coal extraction companies involved in mountain top removal mining. In addition, any transactions involving coal extraction are subject to enhanced due diligence, which includes review of evolving market dynamics, specific risks and regulations related to coal extraction and the client’s commitment, capacity and track record on ESG performance. Over the past several years, we have reduced exposure to companies focused on coal extraction, with pure play coal extraction representing only $42 million as of 12/31/2022, or less than 0.01% of our total committed commercial credit exposure across all industries exposure, down more than 94% from $762 million at fiscal year-end 2015.
Our Board believes the business restriction and policy requested by the proposal is unnecessary in light of our commitment to help finance the transition to net zero emissions, our robust risk management programs and policies, and the progress we have made toward achieving our broader net zero commitment. To reiterate, as discussed above, our company is committed to improving the environment, and this commitment is integral to how we approach our global business strategy, work with partners, make our operations more sustainable, support our employees, manage risks and govern our activities.
Our Board believes our company, our shareholders, our community, and society are best served by our continued focus on executing our Approach to Zero climate strategy. We are transparent about our well-considered and pragmatic strategy for supporting the transition of our energy and power systems toward a low-carbon future, and we publicly discuss our strategy in many public disclosures, including our 2022 TCFD Report and ESRP Framework. We continue to make significant investments in financing the transition to net zero emissions by 2050 through our sustainable finance commitment and related programs and initiatives. In addition, as described above, we take a proactive approach to identifying and managing risks, which includes an ongoing and rigorous process for identifying the issues that are most significant to our company, and we have implemented well-considered risk oversight and management frameworks and policies with respect to environmental and social risks.
Our management, bankers and risk managers are well-positioned to analyze our overall exposures as well as individual transactions and react to the nuances and circumstances presented in each transaction, with overriding goals of achieving the net zero goals we have described above. Our Board is in the best position to provide oversight of our ESG commitments and progress toward achieving them.
Our Board believes that the policy change requested by the proposal is unnecessary and would unduly restrict our company’s ability to implement our Approach to Zero climate strategy, which we believe provides the most effective path for our company to address climate change and achieve our net zero commitments.
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Accordingly, our Board recommends a vote “AGAINST” this proposal (Proposal 10). |
Proposal 11: Shareholder proposal requesting a racial equity audit
The SOC Investment Group, 1900 L Street NW. Suite 900, Washington, DC 20036, advised us that it intends to present the resolution below. The proponent confirmed that it is the beneficial owner of at least $2,000 in market value of the company’s common stock, but did not provide the number of shares owned.
RESOLVED that shareholders of Bank of America Corporation (“BofA”) urge the Board of Directors to oversee a third-party racial equity audit analyzing BofA’s adverse impacts on nonwhite stakeholders and communities of color, above and beyond legal and regulatory matters. Input from civil rights organizations, employees, and customers should be considered in determining the specific matters to be analyzed. A report on the audit, prepared at reasonable cost and omitting confidential or proprietary information, should be publicly disclosed on the bank’s website.
SUPPORTING STATEMENT
Recently, the racial justice movement together with the disproportionate impacts of the COVID-19 pandemic on communities of color have focused the public’s and policy makers’ attention on racial equity issues. Following the June 2020 protests related to George Floyd’s murder, BofA announced it would commit $1 billion to racial equity initiatives with an additional $250 million in March 2021 “to address long-standing issues of inclusion and racial inequality…”
BofA has a conflicted history when it comes to racial equity issues. In 2018, the Treasury Department’s Office of the Comptroller of the Currency found that the bank offered disproportionately fewer home loans to minorities than to white applicants in Philadelphia. The bank also closed 29.1% of branches in majority-Black communities compared to 18.4% in non-majority Black areas from 2010-2018, despite the important role that branches play in supporting small businesses. From an employment perspective, as of 2021, executive/senior level officials and managers comprised only 5.7% of Black employees and 5.3% of Hispanic employees although 49% of its U.S. workforce are people of color.
Proposals 6-11: Shareholder proposals
leadership in being a great place to work, including our commitment on raising minimum wage. It also recognized our work to eliminate barriers for hiring, offer sustainable financing products, and prioritize board diversity and independence.
We have ongoing relationships with independent third parties, including our NCAC, that provide counsel and input on our equality, diversity and inclusion commitments and actions, including those that impact communities and stakeholders of color, and who provide accountability through review of our work. In addition to conducting an independent Responsible Growth Assessment, we consult with independent experts to guide, inform, and counsel our commitment and actions to make our company a great place to work and to share success with our stakeholders. There are complex and multifaceted considerations in promoting racial equality and economic opportunity, and we readily acknowledge we do not have all the answers. We seek the advice of, and listen to, experts offering diverse perspectives. We use our voice and our partnerships to convene and engage in important assessments that identify and promote meaningful progress on impactful aspects of our operations. Because we are an active participant in each local community in which we operate, we understand its economy, culture, strengths, and challenges. This engagement enables us to deliver effective solutions and service by matching the right resources to each community’s individual needs. And these efforts are informed by input received from community leaders, consumer advocates, and other local stakeholders.
For example, our NCAC is a diverse group of senior leaders from social justice, consumer advocacy, community development, environment organizations, and policy institutes that meet several times a year—including with our Board Chair and Lead Independent Director—to provide a range of external perspectives on our business policies, practices, and products. NCAC members’ depth of knowledge on the needs of lower income individuals contributed to our developing solutions and resources to help our clients manage their finances responsibly, including SafeBalance Banking®,(2) Community Affordable Loan Solution™, Better Money Habits®,(3) Balance Assist™,(4) and the sweeping changes to our overdraft policies announced in January 2022 to eliminate non-sufficient funds fees and reducing overdraft fees to empower clients to create long-term financial wellness.
We have engaged with investors to understand the types of information useful to them in assessing risks related to our impacts on equality, diversity and inclusion and economic opportunity. At our 2021 annual shareholders meeting, over 73% of our shareholders voted against a similar proposal.
In conversations with our institutional investors, they have voiced their preference for us to examine our commitments in the overall context of our risk management and strategy, and report on that assessment. We believe our approach will enable our investors to assess the progress of our commitments within the context of our overall operational focus on Responsible Growth.
Since that vote, management also continued to learn and receive input about racial equity audits, including: research about the components and scope of a racial equity audit; engaging with peers and other companies that have conducted or agreed to conduct racial equity audits; meeting with key stakeholders that have submitted such shareholder proposals, including the Interfaith Center on Corporate Responsibility, the New York State Comptroller, and SOC Investment Group; and meeting with key stakeholders that have published research about racial equity audits, such as the Ford Foundation. We also discussed racial equity audits with our Board and NCAC.
During our shareholder engagements since late 2021, we sought further perspectives about our ongoing efforts to advance equality, diversity and inclusion and economic opportunity, about racial equity audits more broadly, and specifically discussed the advisability of such audits at our company. Shareholders shared an overall belief that our company does not currently face issues of specific concern that an audit, like the one requested by the Proposal, would help address. A minority of shareholders expressed a belief that an audit might be useful as a risk management tool or to identify “blind-spots” in our current practices. However, overall, our shareholders were supportive of our approach of undertaking targeted reviews of our activities, transparency in our progress, and how our programs align with Responsible Growth, including the pillars to grow in a sustainable manner and within our risk framework.
In our shareholder engagements with investors in the second half of 2022, in which we met with holders of approximately 25% of our outstanding common stock, the investors rarely discussed our company undertaking a racial equity audit. In the few instances where it was a topic of discussion, the investors expressed satisfaction with our activity and commitments, and transparency in reporting. Some investors expressed that any review of the company’s racial equality and economic opportunity commitments should examine such commitments in the overall context of our strategy and our risk management so that the review may provide insights into the potential impact and risks of these commitments on the value of their ownership of our common stock.
Our shareholders, employees, customers, and communities are well served by our continuous and holistic pursuit of Responsible Growth that includes continued engagement and progress on equality, diversity and inclusion, and economic opportunity, including our ongoing Responsible Growth Assessment. Protecting and promoting equality, diversity and inclusion, and economic opportunity, both inside our company with employees and outside our company in our communities, are critical components of Responsible Growth. We recognize that addressing these issues will require continuing and iterative action. By continuing to pursue sustainable Responsible Growth that requires a focus on sharing our success, being a great place to work for our teammates, and driving operational excellence to invest in our employees and our communities, we believe we already are on the right path in our journey for continued improvement. Our ongoing efforts in these areas, including our Responsible Growth Assessment, our continuous engagement with shareholders, employees, and external experts and stakeholders
(2) |
Bank of America Advantage SafeBalance Banking® is an account that helps prevent overdraft fees. |
(3) |
Better Money Habits® is free financial education with resources, guidance, and tools on ways to save, plan and manage money. |
(4) |
Balance Assist™ is a low-cost solution for clients to manage their short-term liquidity needs. |
Proposals 6-11: Shareholder proposals
representing a wide range of perspectives, and our Board’s oversight and leadership of our efforts, demonstrate our commitment to understanding and improving our company’s impacts on all stakeholders, including communities and stakeholders of color. Our Board believes that Responsible Growth is the right path to making meaningful progress for our customers, communities, and teammates, and is best achieved through ongoing engagement and collaboration with experts on equality, diversity and inclusion, and economic opportunity. These ongoing engagements help drive progress and hold us accountable for our actions.
As a result, our Board believes our independent Responsible Growth Assessment, together with our numerous, evolving initiatives to advance economic opportunity for our customers, communities, and teammates; our ongoing engagement with outside experts and stakeholders to review, assess, and enhance our business; and the specific actions and demonstrable progress we have made with respect to those commitments renders the proposal’s requested audit unnecessary.
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Accordingly, our Board recommends a vote “AGAINST” this proposal (Proposal 11). |
Shareholder proposals for our 2024 annual meeting
Shareholder proposals submitted for inclusion in the proxy statement for our 2024 annual meeting must comply with applicable requirements and conditions established by the SEC, including Rule 14a-8 of the Exchange Act, and must be received by our Corporate Secretary no later than the close of business on November 8, 2023.
Pursuant to our proxy access Bylaw provision, one, or a group of up to 20 shareholders who, in aggregate, own continuously for at least three years, shares of our company representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, may nominate and include in our proxy materials director nominees constituting up to 20% of our Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements in our Bylaws. Notice of proxy access director nominees must be received by our Corporate Secretary at the address below no earlier than October 9, 2023 and no later than the close of business on November 8, 2023, assuming we do not change the date of our 2024 annual meeting by more than 30 days before or 70 days after the anniversary date of our 2023 annual meeting.
If you would like to submit a matter for consideration at our 2024 annual meeting (including any shareholder proposal not submitted under Rule 14a-8 or any director nomination) that will not be included in the proxy statement for that annual meeting, it must be received by our Corporate Secretary no earlier than the close of business on December 27, 2023 and no later than the close of business on February 10, 2024, assuming we do not change the date of our 2024 annual meeting by more than 30 days before or 70 days after the anniversary date of our 2023 annual meeting. Any matter must comply with our Bylaws, which includes information required under Rule 14a-19.
All shareholder proposals must be received by our Corporate Secretary at Bank of America Corporation, Bank of America Corporate Center, 100 North Tryon Street, NC1-007-56-06, Charlotte, North Carolina 28255 by the applicable dates specified above.
We encourage shareholders that are contemplating submitting a proposal for inclusion in our proxy statement to contact us beforehand at the address above to allow for a constructive discussion of their concerns and for additional information about our practices or policies.
Voting and other information
Voting and other information
Who may vote at the annual meeting?
You are entitled to vote at our annual meeting if, as of the close of business on March 1, 2023, you were a shareholder of record of the company’s common stock, Series B Preferred Stock, and Series 1, 2, 4, and 5 Preferred Stock (Series 1–5 Preferred Stock). As of March 1, 2023, the following shares were outstanding and entitled to vote:
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Number of shares outstanding and entitled to vote |
Common Stock |
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7,999,284,317 |
Series B Preferred Stock |
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7,076 |
Series 1 Preferred Stock |
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3,186 |
Series 2 Preferred Stock |
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9,967 |
Series 4 Preferred Stock |
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7,010 |
Series 5 Preferred Stock |
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13,331 |
Each share of our common stock and Series B Preferred Stock is entitled to one vote. Although each share of the Series 1–5 Preferred Stock is entitled to 150 votes, we do not have “dual-class” voting as all shareholders vote together without regard to class, except as otherwise required by law. Holders of the Series 1–5 Preferred Stock hold their shares through depositary receipts that each represent 1/1200th of a share of Series 1–5 Preferred Stock (or a vote representing 0.125 shares of our common stock). Therefore, the aggregate vote represented by the Series 1–5 Preferred Stock is de minimis. As of the record date, the Series 1–5 Preferred Stock represent 5,024,100 votes, or approximately 0.063% of the total eligible votes at the 2023 annual meeting of shareholders. We issued the Series 1–5 Preferred Stock as part of our merger with Merrill Lynch & Co., Inc., that became effective January 1, 2009, as required under Delaware law to holders of respective outstanding shares of Merrill Lynch series 1–5 preferred stock. Since the issuance of the Series 1–5 Preferred Stock in 2009, our company has not issued any additional shares of Series 1–5 Preferred Stock, does not have any current plans to issue any additional shares of Series 1–5 Preferred Stock, and redeemed the Series 3 Preferred Stock in 2018.
In accordance with Delaware law, for the 10 days prior to our annual meeting, a list of registered holders entitled to vote at our annual meeting will be available for inspection in the Office of the Corporate Secretary, Bank of America Corporation, Bank of America Corporate Center, 100 North Tryon Street, NC1-007-56-06, Charlotte, North Carolina 28255.
When and how do I vote my shares?
You may vote prior to our annual meeting by submitting your proxy by internet, phone, or mail:
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Go to www.proxyvote.com and follow the online instructions. You will need information from your Notice of Internet Availability or proxy card, as applicable, to submit your proxy |
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Call the phone number located on the top of your proxy card or voting instruction form (VIF) and follow the voice prompts. You will need information from your proxy card to submit your proxy |
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Mark your vote on your proxy card or VIF, sign your name exactly as it appears on your proxy card, date your proxy card or VIF, and return it in the envelope provided |
You may also vote during our annual meeting by logging into the virtual annual meeting website and vote by following the instructions provided on the website. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted according to your voting instructions.
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Registered shareholders. If you are a registered shareholder and hold our stock directly (not through a bank, broker, or another nominee), your proxy must be received before the polls close at our annual meeting to be counted. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with our Board’s recommendations. If other matters properly come before our annual meeting, the proxies will vote on these matters as they determine appropriate. You may revoke your proxy and change your vote at any time before the voting polls close at our annual meeting by submitting a properly executed proxy of a later date, by sending a written notice of revocation of your previously executed proxy to our Corporate Secretary, or by voting at our virtual annual meeting (however, attending the meeting virtually, without voting, will not revoke a proxy). In addition, if you are a registered shareholder, you may vote by internet or phone no later than 11:59 p.m. Eastern time on April 24, 2023. |
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Beneficial shareholders. If you are a beneficial shareholder and hold our stock in the name of a bank, broker, or other nominee (commonly referred to as holding shares in “street name”), voting by telephone and internet ends at 11:59 p.m. Eastern time on April 24, 2023. In addition, if you are a beneficial shareholder, and receive a VIF from your bank, broker or other nominee, you may vote by following the instructions provided by your bank, |
Voting and other information
What other information do I need to know?
Cost of proxy solicitation. We will pay the cost of soliciting proxies. In addition to soliciting proxies by mail or electronic delivery, we also may use our directors or employees to solicit proxies either personally or by telephone, facsimile, mail, email, or other means. None of these directors or employees will receive any additional or special compensation for soliciting proxies. In addition, we have engaged Georgeson LLC and Morrow Sodali LLC to assist us in soliciting proxies from banks, brokers, and other nominees at an estimated cost of $19,500 and $22,500, respectively, plus expenses. We also will reimburse banks, brokers, and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners of our stock.
Eliminating duplicative proxy materials through “householding.” We deliver a single proxy statement and annual report with separate proxy cards or separate Notices of Internet Availability to multiple registered holders who share an address, unless we receive other instructions. If (i) you and another registered holder share an address and each receive paper copies of our proxy materials and wish to receive only one paper copy, or (ii) you share an address with another registered holder, received a single set of our proxy materials, and would like to receive separate copies, you may request a change in delivery preferences by contacting our transfer agent, Computershare Trust Company, N.A. , P.O. Box 43078, Providence, RI 02940; toll free: 800-642-9855; or at www.computershare.com/bac.
If you are a beneficial owner and receive multiple copies of our proxy materials and you would like to receive only one copy, or if you and another shareholder receive only one copy and would like to receive multiple copies, contact your bank, broker, or other nominee.
Attending our annual meeting
Why is this year’s annual meeting being held in a virtual-only format?
For the convenience of our shareholders and employees, our Board has determined to hold our annual meeting solely by means of remote communication via audio webcast. This is often referred to as a “virtual annual meeting.” The virtual shareholder meeting webcast, hosted by Broadridge, allows all shareholders to join the meeting, regardless of location. We aim to provide shareholders the same rights and comparable opportunities for participation that have been historically provided at our in-person annual meetings. As with an in-person meeting, you will be able to vote and ask questions during the meeting.
How can I participate in the annual meeting?
This year’s annual meeting will be conducted via audio live webcast. All holders of our common stock, Series B Preferred Stock, and Series 1–5 Preferred Stock as of the record date (March 1, 2023) are invited to attend our annual meeting.
Join the annual meeting by accessing the meeting website at www.virtualshareholdermeeting.com/BAC2023. You must enter the 16-digit control number found in the email or on the Notice of Internet Availability of Proxy Materials previously provided to notify you of the availability of our proxy materials, or on your proxy card or voting instruction form provided with our proxy materials. If the Notice of Internet Availability of Proxy Materials or voting instruction form that you received does not indicate that you may vote your shares through the http://www.proxyvote.com website, you should contact your bank, broker or other nominee (preferably at least 5 days before the meeting) and obtain a “legal proxy” (which will contain a 16-digit control number that will allow you to attend, participate in or vote at the meeting).
The annual meeting is scheduled to begin at 10:00 a.m., Eastern time, on April 25, 2023. Online access will begin at 9:45 a.m., Eastern time; we encourage you to access the meeting webcast prior to the start time. If you encounter difficulties joining the annual meeting webcast during check-in at the meeting time, please check your internet connectivity and contact our voting intermediary, Broadridge, at 844-983-0876 or 303-562-9303. Rules of conduct for the annual meeting will be available once you access the meeting webcast and will also be available on our annual meeting website at https://investor.bankofamerica.com/events-and-presentations/annual-shareholder-meeting. A replay of the meeting will be posted on our Investor Relations website at http://investor.bankofamerica.com/ following the meeting.
If you need special assistance participating in the meeting because of a disability, please send your request in writing to our Corporate Secretary at Bank of America Corporation, Bank of America Corporate Center, 100 North Tryon Street, NC1-007-56-06, Charlotte, North Carolina 28255, by April 3, 2023, so your request may receive appropriate attention.
How can I ask questions?
You can submit questions in writing to the virtual meeting website during the annual meeting. You must first join the meeting with your control number as described above in “How can I participate in the annual meeting?”, click on the “Q&A” tab, type the question into the “Submit a question” field, and click “Submit.”
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
Bank of America Corporation
Equity Plan
Article 1. Establishment, Duration and Purpose
1.1 Establishment and Duration of the Plan. The Company established this Plan, originally known as the “Bank of America Corporation Key Associate Stock Plan,” effective as of January 1, 2003, and the Plan as originally established was approved by the Company’s stockholders. The Plan, subsequently known as the “Bank of America Key Employee Equity Plan” and now known as the “Bank of America Corporation Equity Plan” was subsequently amended or amended and restated on several occasions, most recently with an amendment approved by the Company’s stockholders at the annual meeting of stockholders on April 20, 2021. The Plan is hereby being further amended and restated, subject to and effective upon the approval of the Company’s stockholders at the annual meeting of stockholders on April 25, 2023. The purposes of amending and restating the Plan are to (a) authorize additional Shares for Awards under the Plan, (b) extend the Plan’s term, (c) require that dividends or dividend equivalents credited with respect to Awards of Restricted Stock or Restricted Stock Units may not become payable unless and until vesting conditions for the Award are satisfied, and (d) allow Shares withheld by the Company to satisfy tax withholding requirements with respect to taxable events arising as a result of the Plan with respect to Awards of Restricted Stock or Restricted Stock Units to again be available under the number of shares available for future grant under the Plan. The Plan shall remain in effect until the earliest of (i) the date that no additional Shares are available for issuance under the Plan, (ii) the date that the Plan has been terminated in accordance with Article 14 or (iii) the close of business on April 24, 2033.
1.2 Purpose of the Plan. The Company believes that the compensation of its Employees should be linked to the Company’s business performance in order to enhance the long-term success and value of the Company. The Plan serves this compensation philosophy by providing a source of equity-based Awards for Employees that are intended to further motivate Employees to increase the value of the Company’s common stock, thereby aligning the interests of the Employees with those of the Company’s stockholders while maintaining an appropriate balance between risk and reward. The Plan also provides the Company with a means to attract, recruit and retain Employees who will create sustainable results consistent with the Company’s risk management policies and strategic plan for the long-term benefit of the Company’s stockholders. The Plan also enables the Company to attract and retain persons of exceptional ability to serve as Non-Employee Directors and to further align the interests of Non-Employee Directors and stockholders in enhancing the value of the Company’s Shares.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized:
“Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units.
“Award Agreement” means an agreement between the Company and each Participant setting forth the terms and provisions applicable to Awards granted under this Plan.
“Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
“Board” or “Board of Directors” means the Board of Directors of the Company.
“Change in Control” of the Company means, and shall be deemed to have occurred upon, any of the following events:
(a) The acquisition by any Person of Beneficial Ownership of twenty-five percent (25%) or more of either:
(i) The then-outstanding Shares (the “Outstanding Shares”); or
(ii) The combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of Directors (the “Outstanding Voting Securities”);
provided, however, that the following acquisitions shall not constitute a Change in Control for purposes of this subparagraph (a): (A) any acquisition directly from the Company, (B) any acquisition by the Company or any of its Subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subparagraph (c) below; or
(b) Individuals who, as of the Effective Date, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a Director subsequent to the Effective Date and whose election, or whose nomination for election by the Company’s stockholders, to the Board of Directors was either (i) approved by a
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
vote of at least a majority of the Directors then comprising the Incumbent Board or (ii) recommended by a corporate governance committee comprised entirely of Directors who are then Incumbent Board members shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest, other actual or threatened solicitation of proxies or consents or an actual or threatened tender offer; or
(c) Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless following such Business Combination, (i) all or substantially all of the Persons who were the Beneficial Owners, respectively, of the Outstanding Shares and Outstanding Voting Securities immediately prior to such Business Combination own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from the Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Shares and Outstanding Voting Securities, as the case may be (provided, however, that for purposes of this clause (i), any shares of common stock or voting securities of such resulting corporation received by such Beneficial Owners in such Business Combination other than as the result of such Beneficial Owners’ ownership of Outstanding Shares or Outstanding Voting Securities immediately prior to such Business Combination shall not be considered to be owned by such Beneficial Owners for the purposes of calculating their percentage of ownership of the outstanding common stock and voting power of the resulting corporation), (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from the Business Combination) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from the Business Combination or the combined voting power of the then outstanding voting securities of such corporation unless such Person owned twenty-five percent (25%) or more of the Outstanding Shares or Outstanding Voting Securities immediately prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or
(d) Approval by the Company’s stockholders of a complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, if it is determined that an Award hereunder is subject to the requirements of Section 409A of the Code and the Change in Control is a “payment event” under Section 409A of the Code for such Award, then for such purpose the Company will not be deemed to have undergone a Change in Control unless the Company is deemed to have undergone a “change in control event” pursuant to the definition of such term in Section 409A of the Code.
“Code” means the Internal Revenue Code of 1986, as amended from time to time. References to the Code shall include the valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder.
“Committee” means the Compensation and Human Capital Committee of the Board of Directors; provided, however, that with respect to Awards to any Employees who are Insiders, Committee means all of the members of the Compensation and Human Capital Committee who are “non-employee directors” within the meaning of Rule 16b-3 adopted under the Exchange Act. Committee may also mean any individual or committee of individuals (who need not be Directors) that the Compensation and Human Capital Committee may appoint from time to time to administer the Plan with respect to Awards to Employees who are not Insiders, in accordance with and subject to the requirements of Section 3.2.
“Company” means Bank of America Corporation, a Delaware corporation, and any successor as provided in Article 17 herein.
“Director” means any individual who is a member of the Board of Directors of the Company.
“Disability” with respect to a Participant, means “disability” as defined from time to time under any long-term disability plan of the Company or Subsidiary with which the Participant is employed. Notwithstanding the foregoing, for any Awards that constitute nonqualified deferred compensation within the meaning of Section 409A(d) of the Code and provide for an accelerated payment in connection with any Disability, Disability shall have the same meaning as set forth in any regulations, revenue procedure, revenue rulings or other pronouncements issued by the Secretary of the United States Treasury pursuant to Section 409A of the Code, applicable to such arrangements.
“Effective Date” means April 25, 2023.
“Employee” means an employee of the Company or any Subsidiary, including an officer of the Company or a Subsidiary, who, by virtue of such employee’s position, ability, qualifications and performance, has made, or is expected to make, important contributions to the Company or its Subsidiaries, all as determined by the Committee in its discretion.
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
“Fair Market Value” of a Share on any date means the closing price of a Share as reflected in the report of composite trading of New York Stock Exchange listed securities for that day (or, if no Shares were publicly traded on that day, the immediately preceding trading day that Shares were so traded) as published in The Wall Street Journal Eastern Edition or in any other publication selected by the Committee; provided, however, that if the Shares are misquoted or omitted by the selected publication(s), the Committee shall directly solicit the information from officials of the stock exchanges or from other informed independent market sources.
“Incentive Stock Option” or “ISO” means an option to purchase Shares granted to an Employee under Article 6 herein, and designated as an Incentive Stock Option which is intended to meet the requirements of Section 422 of the Code.
“Insider” shall mean an individual who is, on the relevant date, an officer, director or ten percent (10%) beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act and the rules thereunder.
“Non-Employee Director” means an individual who is a member of the Board, but who is not an employee of the Company or any of its Subsidiaries.
“Nonqualified Stock Option” or “NQSO” means an option to purchase Shares granted to an Employee under Article 6 herein, and which is not intended to meet the requirements of Code Section 422.
“Option” means an Incentive Stock Option or a Nonqualified Stock Option.
“Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.
“Participant” means an Employee, a former Employee or any permitted transferee under the Plan of an Employee or former Employee who has outstanding an Award granted under the Plan.
“Performance Award” means an Award of Shares of Restricted Stock or Restricted Stock Units made subject to the attainment of performance goals over a performance period established by the Committee as described in Article 9.
“Period of Restriction” means the period during which the transfer of Shares of Restricted Stock or an Award of Restricted Stock Units is limited in some way or during which such Award is subject to a risk of forfeiture (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, at its discretion), as provided in Article 8 herein and subject to Section 3.4.
“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” within the meaning of Section 13(d).
“Plan” means the incentive compensation plan set forth herein known as the “Bank of America Corporation Equity Plan,” as the same may be amended from time to time. Previously, the Plan was known as the “Bank of America Corporation Key Associate Stock Plan.”
“Restricted Stock” means an Award of Shares, subject to a Period of Restriction (except as set forth in Section 3.4), that is granted to an Employee under Article 8 herein or a Non-Employee Director under Article 19 herein.
“Restricted Stock Unit” means an Award, subject to a Period of Restriction (except as set forth in Section 3.4), that is granted to an Employee under Article 8 herein and is settled either (a) by the delivery of one (1) Share for each Restricted Stock Unit or (b) in cash in an amount equal to the Fair Market Value of one (1) Share for each Restricted Stock Unit, all as specified in the applicable Award Agreement. The Award of a Restricted Stock Unit represents the mere promise of the Company to deliver a Share or the appropriate amount of cash, as applicable, at the end of the Period of Restriction (or such later date as provided by the Award Agreement) in accordance with and subject to the terms and conditions of the applicable Award Agreement, and is not intended to constitute a transfer of “property” within the meaning of Section 83 of the Code.
“Shares” means the shares of common stock of the Company.
“Stock Appreciation Right” or “SAR” means an Award designated as an SAR that is granted to an Employee under Article 7 herein.
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
“Subsidiary” means any corporation, partnership, joint venture, affiliate, or other entity in which the Company owns more than fifty percent (50%) of the voting stock or voting ownership interest, as applicable, or any other business entity designated by the Committee as a Subsidiary for purposes of the Plan.
Article 3. Administration
3.1 Authority of the Committee. The Plan shall be administered by the Committee. Except as limited by law, or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions herein, the Committee shall have full power to select Employees who may receive an Award under the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement or instrument entered into under the Plan; establish, amend, or waive rules and regulations for the Plan’s administration; and (subject to the provisions of Article 14 herein), amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan.
3.2 Delegation. To the extent permitted by applicable law, the Committee may delegate its authority as identified herein to any individual or committee of individuals (who need not be Directors), including without limitation the authority to make Awards to Employees who are not Insiders. To the extent that the Committee delegates its authority to make Awards as provided by this Section 3.2, all references in the Plan to the Committee’s authority to make Awards and determinations with respect thereto shall be deemed to include the Committee’s delegate. Any such delegate shall serve at the pleasure of, and may be removed at any time by, the Committee.
3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on all persons, including the Company, its stockholders, employees, Participants, and their estates and beneficiaries.
3.4 Limitation on Vesting for Awards. Notwithstanding any other provision of the Plan to the contrary including but not limited to this Section 3.4, stock-settled Awards granted under the Plan shall not vest more quickly than ratably annually as of each anniversary over the three (3) year period beginning on the Award grant date, excluding, for this purpose, any (i) Awards granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who become Employees as a result of a merger, consolidation, acquisition or other corporate transaction involving the Company or any Subsidiary, (ii) Shares delivered in lieu of fully vested cash incentive compensation under any applicable plan or program of the Company, (iii) Awards to Non-Employee Directors that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of stockholders (provided that such vesting period under this clause (iii) may not be less than 50 weeks after grant), and (iv) Awards that become vested based on the achievement of performance goals over a period of at least one year; provided, that, the Board may grant stock-settled Awards without regard to the foregoing minimum vesting requirement with respect to a maximum of five percent (5%) of the available share reserve authorized for issuance under the Plan pursuant to Section 4.1 (subject to adjustment under Section 4.6); and, provided further, for the avoidance of doubt, that the foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award, including in cases of retirement, workforce reduction, death, disability or a Change in Control, in the terms of the Award or otherwise.
Article 4. Shares Subject to the Plan
4.1 Number of Shares Available for Grants. Subject to the provisions of this Article 4, the aggregate number of Shares available for grants of Awards under the Plan from and after January 1, 2015 shall not exceed the sum of (A) four hundred fifty million (450,000,000) Shares plus (B) any Shares that were subject to an award as of December 31, 2014 under this Plan, if such award is cancelled, terminates, expires, lapses or is settled in cash for any reason from and after January 1, 2015 plus (C) effective upon April 24, 2019, one hundred fifty million (150,000,000) Shares plus (D) effective upon April 20, 2021, one hundred fifteen million (115,000,000) Shares, plus (E) effective as of the date of stockholder approval during the 2023 annual meeting of the stockholders of the Company seventy-five million (75,000,000) Shares.
4.2 Lapsed Awards. If any Award is canceled, terminates, expires, or lapses for any reason, any Shares subject to such Award shall not count against the aggregate number of Shares available for grants under the Plan set forth in Section 4.1 above.
4.3 Stock Options and SARs: No Net Counting of Options or SARs; Counting of Shares Used to Pay Option Price and Withholding Taxes. The full number of Shares with respect to which an Option or SAR is granted shall count against the aggregate number of Shares available for grant under the Plan. Accordingly, if in accordance with the terms of the Plan, a Participant pays the Option Price for an Option by either tendering previously owned Shares or having the Company withhold Shares, then such Shares surrendered to pay the Option Price shall continue to count against the aggregate number of Shares available for grant under the Plan set forth in Section 4.1 above. In addition, if in accordance with the terms of the Plan, a Participant satisfies any tax withholding requirement with respect to any taxable event arising as a result of this Plan with
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
respect to an Award of Stock Options or SARs by either tendering previously owned Shares or having the Company withhold Shares, then such Shares surrendered to satisfy such tax withholding requirements shall continue to count against the aggregate number of Shares available for grant under the Plan set forth in Section 4.1 above.
4.4 Restricted Stock and Restricted Stock Units: Withholding Taxes. If in accordance with the terms of the Plan, a Participant satisfies any tax withholding requirement with respect to any taxable event arising as a result of this Plan with respect to an Award of Restricted Stock or Restricted Stock Units by having the Company withhold Shares, then such surrendered Shares shall again be available for the grant of future Awards under the Plan.
4.5 Items Not Included. The following items shall not count against the aggregate number of Shares available for grants under the Plan set forth in Section 4.1 above: (a) the payment in cash of dividends or dividend equivalents under any outstanding Award; (b) any Award that is settled in cash rather than by issuance of Shares; or (c) Awards granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who become Employees as a result of a merger, consolidation, acquisition or other corporate transaction involving the Company or any Subsidiary.
4.6 Award Limits. Notwithstanding any provision herein to the contrary, the following provisions shall apply (subject to adjustment in accordance with Section 4.7 below):
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(a) |
the maximum number of each type of Award granted to any Participant in any calendar year shall not exceed the following number of Shares: (i) Options and SARs: four million (4,000,000) Shares; and (ii) all Performance Awards (assuming maximum performance achievement): four million (4,000,000) Shares; and |
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(b) |
in no event shall there be granted during the term of the Plan Incentive Stock Options covering more than an aggregate of four hundred fifty million (450,000,000) Shares. |
4.7 Adjustments in Authorized Shares. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company (including a special cash dividend), any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, or other transactions with similar impacts, such adjustment shall be made in the number and class of Shares which may be issued under the Plan and in the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; provided, however, that (a) the number of Shares subject to any Award shall always be a whole number and (b) such adjustment shall be made in a manner consistent with the requirements of Code Section 409A in order for any Options or SARs to remain exempt from the requirements of Code Section 409A.
4.8 Source of Shares. Shares issued under the Plan may be original issue shares, treasury stock or shares purchased in the open market or otherwise, all as determined by the Chief Financial Officer of the Company (or the Chief Financial Officer’s designee) from time to time, unless otherwise determined by the Committee.
Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan are all Employees of the Company, as determined by the Committee, including Employees who are Directors.
5.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees those to whom Awards shall be granted and shall determine the nature and amount of each Award. The grant of any Award to an eligible Employee is voluntary and occasional and does not create any contractual or other right to receive future Awards or benefits in lieu of Awards, even if such Awards have been granted in the past.
5.3 Non-U.S. Employees. Notwithstanding any provision of the Plan to the contrary, in order to foster and promote achievement of the purposes of the Plan or to comply with provisions of laws in other countries in which the Company operates or has employees, the Committee, in its sole discretion, shall have the power and authority to (a) determine which Employees (if any) employed outside the United States are eligible to participate in the Plan, (b) modify the terms and conditions of any Awards made to such Employees and (c) establish subplans and modified Option exercise and other terms and procedures to the extent such actions may be necessary or advisable.
5.4 Non-Employee Directors. Non-Employee Directors may also participate in this Plan subject to the provisions set forth in Article 19 below.
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Employees in such number, and upon such terms (including any performance conditions under Section 9.1), and at any time and from time to time as shall be determined by the Committee.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Award Agreement also shall specify whether the Option is intended to be an ISO within the meaning of Section 422 of the Code, or an NQSO whose grant is intended not to fall under Code Section 422.
6.3 Option Price. The Option Price for each grant of an Option under this Plan shall be at least equal to one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted.
6.4 Duration of Options. Each Option shall expire at such time as the Committee shall determine at the time of grant; provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant.
6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve and which shall be set forth in the applicable Award Agreement, which need not be the same for each grant or for each Participant.
6.6 Payment. Options shall be exercised by the delivery of a notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. To be effective, notice of exercise must be made in accordance with procedures established by the Company from time to time.
The Option Price due upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent, or (b) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares which are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price unless such Shares had been acquired by the Participant on the open market), or (c) by a combination of (a) and (b).
As soon as practicable after notification of exercise and full payment, the Company shall deliver the Shares to the Participant in an appropriate amount based upon the number of Shares purchased under the Option(s).
Notwithstanding the foregoing, the Committee also may allow (a) cashless exercises as permitted under Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions, or (b) exercises by any other means which the Committee determines to be consistent with the Plan’s purpose and applicable law.
6.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable Federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares.
6.8 Termination of Employment. Each Participant’s Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination of employment. In that regard, if an Award Agreement permits exercise of an Option following the death of the Participant, the Award Agreement shall provide that such Option shall be exercisable to the extent provided therein by any person that may be empowered to do so under the Participant’s will, or if the Participant shall fail to make a testamentary disposition of the Option or shall have died intestate, by the Participant’s executor or other legal representative.
6.9 Nontransferability of Options.
(a) Incentive Stock Options. No ISO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated (including to, for the avoidance of doubt and without limiting the foregoing restrictions, third-party financial institutions), other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant except to the extent otherwise permitted by applicable law.
(b) Nonqualified Stock Options. Except as otherwise provided in a Participant’s Award Agreement, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated (including to, for the avoidance of doubt and without limiting the foregoing restrictions, third-party financial institutions), other than by will or by the laws of descent and distribution.
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
Further, except as otherwise provided in a Participant’s Award Agreement, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant. In no event may an NQSO be transferred for consideration.
6.10 No Rights. A Participant granted an Option shall have no rights as a stockholder of the Company with respect to the Shares covered by such Option except to the extent that Shares are issued to the Participant upon the due exercise of the Option.
6.11 No Dividend Equivalents. In no event shall any Award of Options granted under the Plan include any dividend equivalents with respect to such Award.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be granted to Employees at any time and from time to time as shall be determined by the Committee. The Committee shall have complete discretion in determining the number of SARs granted to each Participant (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs, including whether the SARs shall be subject to any performance conditions under Section 9.1. The grant price of an SAR shall be at least equal to the Fair Market Value of a Share on the date of grant of the SAR.
7.2 Exercise of SARs. SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them.
7.3 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine.
7.4 Term of SARs. The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion; provided, however, that such term shall not exceed ten (10) years.
7.5 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share on the date of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee or as otherwise provided in the applicable Award Agreement, the payment upon SAR exercise shall be in cash, in Shares of equivalent value, or in some combination thereof.
7.6 Other Restrictions. Notwithstanding any other provision of the Plan, the Committee may impose such conditions on exercise of an SAR (including, without limitation, the right of the Committee to limit the time of exercise to specified periods) as may be required to satisfy the requirements of Section 16 (or any successor rule) of the Exchange Act or for any other purpose deemed appropriate by the Committee.
7.7 Termination of Employment. Each SAR Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment. In that regard, if an Award Agreement permits exercise of an SAR following the death of the Participant, the Award Agreement shall provide that such SAR shall be exercisable to the extent provided therein by any person that may be empowered to do so under the Participant’s will, or if the Participant shall fail to make a testamentary disposition of the SAR or shall have died intestate, by the Participant’s executor or other legal representative.
7.8 Nontransferability of SARs. Except as otherwise provided in a Participant’s Award Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated (including to, for the avoidance of doubt and without limiting the foregoing restrictions, third-party financial institutions), other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award Agreement, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. In no event may an SAR be transferred for consideration.
7.9 No Rights. A Participant granted an SAR shall have no rights as a stockholder of the Company with respect to the Shares covered by such SAR except to the extent that Shares are issued to the Participant upon the due exercise of the SAR.
7.10 No Dividend Equivalents. In no event shall any Award of SARs granted under the Plan include any dividend equivalents with respect to such Award.
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
Article 8. Restricted Stock and Restricted Stock Units
8.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock or Restricted Stock Units to eligible Employees in such amounts as the Committee shall determine.
8.2 Restricted Stock Agreement. Each grant of Restricted Stock or Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the Period or Periods of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.
8.3 Transferability. Except as provided in this Article 8, the Shares of Restricted Stock or Restricted Stock Units granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Award Agreement, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Award Agreement. All rights with respect to the Restricted Stock or Restricted Stock Units granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant.
8.4 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance conditions under Section 9.1, time-based restrictions on vesting following the attainment of the performance goals, and/or restrictions under applicable Federal or state securities laws. An Award of Shares of Restricted Stock or Restricted Stock Units may be intended to be a Performance Award that is subject to the provisions of Section 9.1.
The Company shall retain the Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the Period of Restriction.
8.5 Settlement of Restricted Stock Units. Any Restricted Stock Units that become payable in accordance with the terms and conditions of the applicable Award Agreement shall be settled in cash, Shares, or a combination of cash and Shares as determined by the Committee in its discretion or as otherwise provided for under the Award Agreement.
8.6 Voting Rights. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares. There shall be no voting rights with respect to Restricted Stock Units.
8.7 Dividends and Dividend Equivalents. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may receive regular cash dividends paid with respect to the underlying Shares while the Restricted Stock is held by the Company. The Committee, in its discretion, may also grant dividend equivalents rights with respect to earned but unpaid Restricted Stock Units as evidenced by the applicable Award Agreement. Dividends or dividend equivalents may be accrued as cash or reinvested in additional Shares or other securities of the Company at a price per unit equal to the Fair Market Value of a Share on the date that such dividend was paid to stockholders, as determined in the sole discretion of the Committee. Notwithstanding any provision herein to the contrary, in no event will a dividend or dividend equivalent become payable with respect to an Award that becomes vested (i) based on the satisfaction of performance criteria before the date, and only to the extent, that such performance criteria are satisfied, or (ii) based on continued service with the Company before the applicable vesting date.
8.8 Termination of Employment. Each Restricted Stock or Restricted Stock Unit Award Agreement shall set forth the extent to which the Participant shall have the right to receive unvested Restricted Shares or Restricted Stock Units following termination of the Participant’s employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment.
Article 9. Performance Measures
9.1 Performance Conditions. The right of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any such performance conditions.
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
9.2 Performance Goals Generally. The performance goals for Performance Awards shall consist of one or more business or other criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 9.2. The Committee may determine that such Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to grant, exercise, and/or settlement of such Performance Awards. Performance goals may, in the discretion of the Committee, be established on a Company-wide basis, or with respect to one or more business units, divisions, subsidiaries, or business segments, as applicable. Performance goals may be absolute or relative (to the performance of one or more comparable companies or indices). The Committee may determine the extent to which measurement of performance goals may exclude the impact of charges for restructuring, discontinued operations, extraordinary items, debt redemption or retirement, asset write downs, litigation or claim judgments or settlements, acquisitions or divestitures, foreign exchange gains and losses, and other unusual non-recurring items, and the cumulative effects of tax or accounting changes (each as defined by generally accepted accounting principles and as identified in the Company’s financial statements or other SEC filings). Performance goals may differ for Performance Awards granted to any one Participant or to different Participants.
9.3 Business Criteria. For purposes of Performance Awards, the Committee may select any business criteria for the Company, on a consolidated basis, and/or specified subsidiaries or business units of the Company, including any of the following:
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(iii) |
income or other earnings measures; |
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(iv) |
return on equity, capital, assets, revenue or investments; |
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(v) |
total stockholder return or other stock price performance measures; |
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(vi) |
stockholder value added; |
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(x) |
customer satisfaction; |
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(xiii) |
balance sheet metrics, including capital ratios, liquidity measures and book value; |
|
(xv) |
strategic initiatives; or |
|
(xvi) |
implementation, completion or attainment of measurable objectives with respect to recruitment or retention of personnel or employee satisfaction. |
The business criteria listed above shall include any derivations of such business criteria (e.g., income shall include pre-tax income, net income, operating income, etc.).
9.4. Written Determinations. All determinations by the Committee as to the establishment of performance goals, the amount of any potential individual Performance Awards and the achievement of performance goals relating to Performance Awards, shall be made in writing. The Committee may delegate any responsibility relating to such Performance Awards.
Article 10. Beneficiary Designation
Except as otherwise provided in an Award Agreement, each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form and pursuant to such procedures as may be prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
Article 11. Deferrals
The Committee may permit a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option or SAR or the lapse or waiver of restrictions with respect to Restricted Stock or Restricted Stock Units, to the extent permitted by Section 409A of the Code (if applicable). If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals.
Article 12. Rights of Employees
12.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment at any time, nor confer upon any Participant any right to continue in the employ of the Company.
For purposes of this Plan, a transfer of a Participant’s employment between the Company and a Subsidiary, or between Subsidiaries, shall not be deemed to be a termination of employment. Upon such a transfer, the Committee may make such adjustments to outstanding Awards as it deems appropriate to reflect the changed reporting relationships.
12.2 Participation. No Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award or a future Award in any specified amount.
Article 13. Change in Control
13.1 Treatment of Outstanding Awards. Unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges, the Committee may, in its sole discretion, at the time an Award is made hereunder or at any time prior to, coincident with or after the time of a Change in Control take any one or more of the following actions which shall apply only upon the occurrence of a Change in Control or, if later, upon the action being taken:
(a) provide for the acceleration of any time periods, or the waiver of any other conditions, relating to the vesting, exercise, payment or distribution of an Award so that any Award to a Participant whose employment has been terminated as a result of a Change in Control may be vested, exercised, paid or distributed in full on or before a date fixed by the Committee, and in connection therewith the Committee may (i) provide for an extended period to exercise Options (not to exceed the original Option term) and (ii) determine the level of attainment of any applicable performance goals;
(b) provide for the purchase of any Awards from a Participant whose employment has been terminated as a result of a Change in Control, upon the Participant’s request, for an amount of cash equal to the amount that could have been obtained upon the exercise, payment or distribution of such rights had such Award been currently exercisable or payable; or
(c) cause the Awards then outstanding to be assumed, or new rights substituted therefore, by the surviving corporation in such Change in Control.
For purposes of sub-paragraphs (a) and (b) above, any Participant whose employment is either (i) terminated by the Company other than for “cause,” or (ii) terminated by the Participant for “good reason” (each as defined in the applicable Award Agreement), in either case upon, or on or prior to the second anniversary of, a Change in Control, shall be deemed to have been terminated as a result of the Change in Control.
13.2 Limitation on Change-in-Control Benefits. It is the intention of the Company and the Participants to reduce the amounts payable or distributable to a Participant hereunder if the aggregate Net After Tax Receipts (as defined below) to the Participant would thereby be increased, as a result of the application of the excise tax provisions of Section 4999 of the Code. Accordingly, anything in this Plan to the contrary notwithstanding, in the event that the certified public accountants regularly employed by the Company immediately prior to any “change” described below (the “Accounting Firm”) shall determine that receipt of all Payments (as defined below) would subject the Participant to tax under Section 4999 of the Code, it shall determine whether some amount of Payments would meet the definition of a “Reduced Amount” (as defined below). If the Accounting Firm determines that there is a Reduced Amount, the aggregate Payments shall be reduced to such Reduced Amount in accordance with the provisions of Section 13.2(b) below.
(a) For purposes of this Section 13.2(a):
(i) A “Payment” shall mean any payment or distribution in the nature of compensation to or for the benefit of a Participant who is a “disqualified individual” within the meaning of Section 280G(c) of the Code and which is contingent on a “change” described in Section 280G(b)(2)(A)(i) of the Code with respect to the Company, whether paid or payable pursuant to this Plan or otherwise;
(ii) “Plan Payment” shall mean a Payment paid or payable pursuant to this Plan (disregarding this Section 13.2);
(iii) “Net After Tax Receipt” shall mean the Present Value of a Payment, net of all taxes imposed on the Participant with respect thereto under Sections 1 and 4999 of the Code, determined by applying the highest marginal rate under Section 1 of the Code which applied to the Participant’s Federal taxable income for the immediately preceding taxable year;
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2023 PROXY STATEMENT |
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B-11 |
|
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
(iv) “Present Value” shall mean such value determined in accordance with Section 280G(d)(4) of the Code; and
(v) “Reduced Amount” shall mean the smallest aggregate amount of Payments which (A) is less than the sum of all Payments and (B) results in aggregate Net After Tax Receipts which are equal to or greater than the Net After Tax Receipts which would result if all Payments were paid to or for the benefit of the Participant.
(b) If the Accounting Firm determines that aggregate Payments should be reduced to the Reduced Amount, the Committee shall promptly give the Participant notice to that effect and a copy of the detailed calculation thereof. The Company shall reduce or eliminate the Payments, by first reducing or eliminating the portion of the Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the determination, all as determined by the Accounting Firm. All determinations made by the Accounting Firm under this Section 13.2 shall be binding upon the Company and the Participant and shall be made within sixty (60) days immediately following the event constituting the “change” referred to above. As promptly as practicable following such determination, the Company shall pay to or distribute for the benefit of the Participant such Payments as are then due to the Participant under this Plan.
(c) At the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for the benefit of the Participant pursuant to this Plan which should not have been so paid or distributed (“Overpayment”) or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of the Participant pursuant to this Plan could have been so paid or distributed (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based either upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant which the Accounting Firm believes has a high probability of success or controlling precedent or other substantial authority, determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the Participant shall be treated for all purposes as a loan ab initio to the Participant which the Participant shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to have been made and no amount shall be payable by the Participant to the Company if and to the extent (i) such deemed loan and payment would not either reduce the amount on which the Participant is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes or (ii) the Participant is subject to the prohibition on personal loans under Section 402 of the Sarbanes-Oxley Act of 2002. In the event that the Accounting Firm, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Participant together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code.
13.3 Termination, Amendment, and Modifications of Change-in-Control Provisions. Notwithstanding any other provision of this Plan or any Award Agreement provision, the provisions of this Article 13 may not be terminated, amended, or modified on or after the date of a Change in Control to affect adversely any Award theretofore granted under the Plan without the prior written consent of the Participant with respect to said Participant’s outstanding Awards; provided, however, the Board of Directors, upon recommendation of the Committee, may terminate, amend, or modify this Article 13 at any time and from time to time prior to the date of a Change in Control.
Article 14. Amendment, Modification, and Termination
14.1 Amendment, Modification, and Termination. The Board may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part; provided, however, that an amendment to the Plan may be conditioned on the approval of the stockholders of the Company if and to the extent the Board determines that stockholder approval is necessary or appropriate.
14.2 Awards Previously Granted. No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award.
14.3 No Repricing. Notwithstanding any provision herein to the contrary, the repricing of Options or SARs is prohibited without prior approval of the Company’s stockholders. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (A) changing the terms of an Option or SAR to lower its Option Price or grant price; (B) any other action that is treated as a “repricing” under generally accepted accounting principles; and (C) repurchasing for cash or canceling an Option or SAR at a time when its Option Price or grant price is greater than the Fair Market Value of the underlying Shares in exchange for another Award, unless the cancellation and exchange occurs in connection with a change in capitalization or similar change under Section 4.7 above. Such cancellation and exchange would be considered a “repricing” regardless of whether it is treated as a “repricing” under generally accepted accounting principles and regardless of whether it is voluntary on the part of the Participant.
Article 15. Withholding
15.1 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, local, foreign or other taxes (including the Participant’s FICA or other applicable social tax obligation) required by law to be withheld with respect to any taxable event arising as a result of this Plan.
Appendix B: Amended and Restated Bank of America Corporation Equity Plan
15.2 Share Withholding. The Company may cause any tax withholding obligation described in Section 15.1 to be satisfied by the Company withholding Shares having a Fair Market Value on the date the tax is to be determined equal to the required tax withholding imposed on the transaction (not to exceed maximum statutory rates). In the alternative, the Company may permit Participants to elect to satisfy the tax withholding obligation, in whole or in part, by either (a) having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the required tax withholding imposed on the transaction (not to exceed maximum statutory rates) or (b) tendering previously acquired Shares having an aggregate Fair Market Value equal to the required tax withholding imposed on the transaction (not to exceed maximum statutory rates). All such elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
Article 16. Indemnification
Provisions for the indemnification of officers and directors of the Company in connection with the administration of the Plan shall be as set forth in the Company’s Certificate of Incorporation and Bylaws as in effect from time to time.
Article 17. Successors
All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
Article 18. Legal Construction
18.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.
18.2 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
18.3 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
18.4 Securities Law Compliance. With respect to Insiders, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.
18.5 No Conflict. Unless otherwise provided for by an Award Agreement, in the event of any conflict between the terms of the Plan and the terms of an Award Agreement, the terms of the Plan shall control.
18.6 Governing Law. To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware.
18.7 Compliance With Code Section 409A. The Plan is intended to comply with Code Section 409A, to the extent applicable. Notwithstanding any provision of the Plan to the contrary, the Plan shall be interpreted, operated and administered consistent with this intent. In that regard, and notwithstanding any provision of the Plan to the contrary, the Company reserves the right to amend the Plan or any Award granted under the Plan, by action of the Committee, without the consent of any affected Participant, to the extent deemed necessary or appropriate for purposes of maintaining compliance with Code Section 409A.
Article 19. Non-Employee Directors
19.1 Restricted Stock Awards. Subject to the terms and provisions of the Plan, the Board, at any time and from time to time, may grant Shares of Restricted Stock to Non-Employee Directors in such amounts as the Board shall determine. Notwithstanding the definition of “Participant” provided in Article 2 above, upon receipt of a grant of Shares of Restricted Stock, a Non-Employee Director shall be considered a Participant in the Plan. Each grant of Shares of Restricted Stock to a Non-Employee Director shall be evidenced by an Award Agreement that shall specify the Period or Periods of Restriction, the number of Shares of Restricted Stock granted, and such other provisions as the Board shall determine.
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2023 PROXY STATEMENT |
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|
B-13 |
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Pay vs Performance Disclosure Unit_pure in Millions |
12 Months Ended |
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Pay vs Performance Disclosure [Table] |
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Pay vs Performance [Table Text Block] |
2022 Pay versus performance table
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|
30,177,503 |
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|
|
11,009,642 |
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|
|
18,641,262 |
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|
|
|
11,731,112 |
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|
101 |
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|
98 |
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27,528 |
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|
|
|
94,950 |
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|
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|
23,729,169 |
|
|
|
|
49,888,896 |
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|
|
16,930,383 |
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|
|
29,568,709 |
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132 |
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|
|
124 |
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|
31,978 |
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|
89,113 |
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|
|
25,940,571 |
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|
|
15,682,323 |
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|
13,670,189 |
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10,639,620 |
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|
88 |
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|
90 |
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|
17,894 |
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|
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85,528 |
|
(1) |
The CEO for each year reported was Brian T. Moynihan. The other named executive officers, or NEOs, for each year reported are as follows: |
|
• |
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2022: Alastair M. Borthwick; Dean C. Athanasia; Paul M. Donofrio; and Geoffrey S. Greener |
|
• |
|
2021: Alastair M. Borthwick; Paul M. Donofrio; James P. DeMare; Matthew M. Koder; and Thomas K. Montag |
|
• |
|
2020: Paul M. Donofrio; Dean C. Athanasia; Geoffrey S. Greener; and Thomas K. Montag |
(2) |
SEC rules require certain adjustments be made to the “Summary compensation table” totals to determine “compensation actually paid” as reported in the “Pay versus performance table” above. For purposes of the pension valuation adjustments shown below, there was no pension service or prior service cost. In addition, for purposes of the equity award adjustments shown below, no equity awards were cancelled due to a failure to meet vesting conditions. The following table details the applicable adjustments that were made to determine “compensation actually paid” (all amounts are averages for the named executive officers other than the CEO): |
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CEO |
|
30,177,503 |
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(572,826) |
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(27,629,501) |
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13,900,974 |
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(10,315,434) |
|
(1,035,168) |
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5,555,781 |
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928,313 |
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Other NEOs |
|
18,641,262 |
|
(293) |
|
(12,769,837) |
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8,908,283 |
|
(3,606,049) |
|
68,116 |
|
0 |
|
489,632 |
|
|
CEO |
|
23,729,169 |
|
(565,990) |
|
(21,395,424) |
|
21,212,392 |
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15,360,138 |
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2,969,040 |
|
7,451,659 |
|
1,127,912 |
|
|
Other NEOs |
|
16,930,383 |
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(40,375) |
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(10,171,908) |
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13,027,592 |
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7,810,905 |
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1,025,744 |
|
332,216 |
|
654,152 |
|
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CEO |
|
25,940,571 |
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(673,974) |
|
(23,525,808) |
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14,573,892 |
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(3,497,139) |
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(2,794,934) |
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4,516,243 |
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1,143,472 |
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Other NEOs |
|
13,670,189 |
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(54,468) |
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(7,481,883) |
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6,415,373 |
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(1,406,086) |
|
(998,241) |
|
0 |
|
494,736 |
(3) |
TSR is determined based on the value of an initial fixed investment of $100 on December 31, 2019. The peer group TSR represents TSR of the KBW Bank Index. |
(4) |
Represents total revenue, net of interest expense. |
|
|
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Company Selected Measure Name |
revenue
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|
Named Executive Officers, Footnote [Text Block] |
The other named executive officers, or NEOs, for each year reported are as follows:
|
• |
|
2022: Alastair M. Borthwick; Dean C. Athanasia; Paul M. Donofrio; and Geoffrey S. Greener |
|
• |
|
2021: Alastair M. Borthwick; Paul M. Donofrio; James P. DeMare; Matthew M. Koder; and Thomas K. Montag |
|
• |
|
2020: Paul M. Donofrio; Dean C. Athanasia; Geoffrey S. Greener; and Thomas K. Montag |
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|
Peer Group Issuers, Footnote [Text Block] |
TSR is determined based on the value of an initial fixed investment of $100 on December 31, 2019. The peer group TSR represents TSR of the KBW Bank Index.
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|
PEO Total Compensation Amount |
$ 30,177,503
|
$ 23,729,169
|
$ 25,940,571
|
PEO Actually Paid Compensation Amount |
$ 11,009,642
|
49,888,896
|
15,682,323
|
Adjustment To PEO Compensation, Footnote [Text Block] |
SEC rules require certain adjustments be made to the “Summary compensation table” totals to determine “compensation actually paid” as reported in the “Pay versus performance table” above. For purposes of the pension valuation adjustments shown below, there was no pension service or prior service cost. In addition, for purposes of the equity award adjustments shown below, no equity awards were cancelled due to a failure to meet vesting conditions. The following table details the applicable adjustments that were made to determine “compensation actually paid” (all amounts are averages for the named executive officers other than the CEO):
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CEO |
|
30,177,503 |
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(572,826) |
|
(27,629,501) |
|
13,900,974 |
|
(10,315,434) |
|
(1,035,168) |
|
5,555,781 |
|
928,313 |
|
|
Other NEOs |
|
18,641,262 |
|
(293) |
|
(12,769,837) |
|
8,908,283 |
|
(3,606,049) |
|
68,116 |
|
0 |
|
489,632 |
|
|
CEO |
|
23,729,169 |
|
(565,990) |
|
(21,395,424) |
|
21,212,392 |
|
15,360,138 |
|
2,969,040 |
|
7,451,659 |
|
1,127,912 |
|
|
Other NEOs |
|
16,930,383 |
|
(40,375) |
|
(10,171,908) |
|
13,027,592 |
|
7,810,905 |
|
1,025,744 |
|
332,216 |
|
654,152 |
|
|
CEO |
|
25,940,571 |
|
(673,974) |
|
(23,525,808) |
|
14,573,892 |
|
(3,497,139) |
|
(2,794,934) |
|
4,516,243 |
|
1,143,472 |
|
|
Other NEOs |
|
13,670,189 |
|
(54,468) |
|
(7,481,883) |
|
6,415,373 |
|
(1,406,086) |
|
(998,241) |
|
0 |
|
494,736 |
|
|
|
Non-PEO NEO Average Total Compensation Amount |
$ 18,641,262
|
16,930,383
|
13,670,189
|
Non-PEO NEO Average Compensation Actually Paid Amount |
$ 11,731,112
|
29,568,709
|
10,639,620
|
Adjustment to Non-PEO NEO Compensation Footnote [Text Block] |
SEC rules require certain adjustments be made to the “Summary compensation table” totals to determine “compensation actually paid” as reported in the “Pay versus performance table” above. For purposes of the pension valuation adjustments shown below, there was no pension service or prior service cost. In addition, for purposes of the equity award adjustments shown below, no equity awards were cancelled due to a failure to meet vesting conditions. The following table details the applicable adjustments that were made to determine “compensation actually paid” (all amounts are averages for the named executive officers other than the CEO):
|
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|
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|
|
|
|
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|
CEO |
|
30,177,503 |
|
(572,826) |
|
(27,629,501) |
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13,900,974 |
|
(10,315,434) |
|
(1,035,168) |
|
5,555,781 |
|
928,313 |
|
|
Other NEOs |
|
18,641,262 |
|
(293) |
|
(12,769,837) |
|
8,908,283 |
|
(3,606,049) |
|
68,116 |
|
0 |
|
489,632 |
|
|
CEO |
|
23,729,169 |
|
(565,990) |
|
(21,395,424) |
|
21,212,392 |
|
15,360,138 |
|
2,969,040 |
|
7,451,659 |
|
1,127,912 |
|
|
Other NEOs |
|
16,930,383 |
|
(40,375) |
|
(10,171,908) |
|
13,027,592 |
|
7,810,905 |
|
1,025,744 |
|
332,216 |
|
654,152 |
|
|
CEO |
|
25,940,571 |
|
(673,974) |
|
(23,525,808) |
|
14,573,892 |
|
(3,497,139) |
|
(2,794,934) |
|
4,516,243 |
|
1,143,472 |
|
|
Other NEOs |
|
13,670,189 |
|
(54,468) |
|
(7,481,883) |
|
6,415,373 |
|
(1,406,086) |
|
(998,241) |
|
0 |
|
494,736 |
|
|
|
Compensation Actually Paid vs. Net Income [Text Block] |
The chart below highlights the alignment between “compensation actually paid” to our named executive officers and our TSR performance and net income for the past three fiscal years.
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Tabular List [Table Text Block] |
Net Income Revenue Total Shareholder Return Return on Assets Tangible Book Value
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Total Shareholder Return Amount |
$ 101
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132
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88
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Peer Group Total Shareholder Return Amount |
98
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124
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90
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Net Income (Loss) |
$ 27,528,000,000
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$ 31,978,000,000
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$ 17,894,000,000
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Company Selected Measure Amount |
94,950
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89,113
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85,528
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PEO Name |
Brian T. Moynihan
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Measure [Axis]: 1 |
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Pay vs Performance Disclosure [Table] |
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Measure Name |
Net Income
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Measure [Axis]: 2 |
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Pay vs Performance Disclosure [Table] |
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Measure Name |
Revenue
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Measure [Axis]: 3 |
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Pay vs Performance Disclosure [Table] |
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Measure Name |
Total Shareholder Return
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Measure [Axis]: 4 |
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Pay vs Performance Disclosure [Table] |
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Measure Name |
Return on Assets
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Measure [Axis]: 5 |
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Pay vs Performance Disclosure [Table] |
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Measure Name |
Tangible Book Value
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PEO [Member] | change in pension value [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
$ (572,826)
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$ (565,990)
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$ (673,974)
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PEO [Member] | stock awards [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
(27,629,501)
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(21,395,424)
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(23,525,808)
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PEO [Member] | yearend value of unvested equity awards granted in year [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
13,900,974
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21,212,392
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14,573,892
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PEO [Member] | Change in value of unvested equity awards granted in prior years [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
(10,315,434)
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15,360,138
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(3,497,139)
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PEO [Member] | Change in value of equity awards granted in prior years which vested in year [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
(1,035,168)
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2,969,040
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(2,794,934)
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PEO [Member] | Change in value of equity awards granted and vested in year [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
5,555,781
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7,451,659
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4,516,243
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PEO [Member] | dividends interest accrued [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
928,313
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1,127,912
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1,143,472
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Non-PEO NEO [Member] | change in pension value [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
(293)
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(40,375)
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(54,468)
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Non-PEO NEO [Member] | stock awards [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
(12,769,837)
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(10,171,908)
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(7,481,883)
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Non-PEO NEO [Member] | yearend value of unvested equity awards granted in year [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
8,908,283
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13,027,592
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6,415,373
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Non-PEO NEO [Member] | Change in value of unvested equity awards granted in prior years [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
(3,606,049)
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7,810,905
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(1,406,086)
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Non-PEO NEO [Member] | Change in value of equity awards granted in prior years which vested in year [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
68,116
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1,025,744
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(998,241)
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Non-PEO NEO [Member] | Change in value of equity awards granted and vested in year [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
0
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332,216
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0
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Non-PEO NEO [Member] | dividends interest accrued [Member] |
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Pay vs Performance Disclosure [Table] |
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Adjustment to Compensation Amount |
$ 489,632
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$ 654,152
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$ 494,736
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