Bank of America Corporation (the "Corporation") filed a Current Report on Form 8-K with the U.S. Securities and Exchange Commission ("SEC") on February 12, 2016, announcing that its Board of Directors has approved 2015 incentive compensation for the Corporation's executive officers, including Chairman and Chief Executive Officer Brian T. Moynihan. The structure of Mr. Moynihan's compensation is unchanged, comprising base salary, time-based restricted stock units ("RSUs"), and performance RSUs that will be paid only if the Corporation meets specific financial goals.
Mr. Moynihan's annual base salary remains unchanged at $1.5 million. The aggregate value of his 2015 equity incentive award is $14.5 million 50% of which is performance RSUs. Consistent with prior years, he received no cash bonus for 2015.
Under the Corporation's pay-for-performance design, the performance RSUs have no value to the executive unless they are re-earned based on the Corporation's financial performance from 2016-2018. This means the Corporation must achieve specific return on assets ("ROA") and adjusted tangible book value ("TBV") growth goals during this period for the performance RSUs to be paid to the executive.
The target goals for the performance RSUs are a three-year average ROA of 0.80% and a three-year average growth of adjusted TBV of 8.5%. If the company meets both target goals, the performance RSUs will pay out at 100%. At December 31, 2015, the Corporation's total assets were $2.14 trillion. For illustrative purposes, a three-year average ROA of 0.80% on $2.14 trillion in assets would equal $50.4 billion in aggregate net income over the three-year performance period.
Mr. Moynihan's time-based RSUs consist of cash-settled RSUs that will vest monthly over the next 12 months, and stock-settled RSUs that will vest annually over the next three years.
Additionally, Mr. Moynihan's equity incentive awards are subject to the Corporation's stock ownership and retention requirements. Specifically, 50% of the net after-tax shares he receives from equity awards must be retained until one year after his retirement. These equity awards also are subject to the Corporation's clawback policies.
The Corporation in 2015 demonstrated continued progress as a result of its strategy of simplifying the Corporation, pursuing a straightforward business model focused upon responsible growth, resolving mortgage-related matters arising from the financial crisis, and rebuilding capital and liquidity.
For the year, the Corporation earned nearly $16 billion compared with $4.8 billion in 2014 and returned nearly $4.5 billion in capital to its common shareholders. Expenses were reduced $18 billion, including lower operating costs and decreased litigation-related costs as crisis-era issues were resolved. As the Corporation has rebuilt capital and earnings have improved, tangible book value per share an important measure of long-term shareholder value increased 8% in 2015.
Detail regarding Mr. Moynihan's equity incentive awards described herein will be presented in a Form 4 filing with the SEC. Additional important information about the Corporation's incentive compensation programs and governance, including an explanation of all material elements of the compensation for Mr. Moynihan and the other named executive officers, will be presented in the Corporation's proxy statement for the 2016 annual meeting of stockholders, expected to be filed with the SEC in March 2016.
Bank of America Corporation makes available all of its SEC filings on its website: http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-irhome.
The SEC maintains a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC's website at http://www.sec.gov. A copy of the document will also be available on the National Storage Mechanism's website at: http://www.morningstar.co.uk/uk/NSM.
Bank of America
Michael Pressman, +1-980-386-5083
Assistant General Counsel