8-KOther Events

BANK OF AMERICA CORP /DE/ 8-K Report (May 24, 2004)

Filed May 24, 2004For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) announced on May 24, 2004, the resignation of Eugene M. McQuade from his roles as President and a director, effective June 30, 2004. This departure is largely influenced by employment agreements made prior to and following the FleetBoston merger. Mr. McQuade is set to receive significant severance and retirement benefits, detailed in previous filings. These benefits stem from a pre-existing agreement with FleetBoston and a subsequent agreement with Bank of America, designed to compensate him upon his departure and account for his tenure. The company is also providing transition support and potential excise tax coverage related to these payments. Investors should note that this 8-K primarily focuses on the executive transition and the financial implications of Mr. McQuade's departure. While the severance package is substantial, it is presented as a consequence of prior agreements and merger-related terms. The company is adhering to its contractual obligations, and the details provided are intended to ensure transparency regarding these executive compensation arrangements. The filing also notes the inclusion of the related press release as an exhibit.

Key Highlights

  • 1Eugene M. McQuade is resigning as President and a director of Bank of America, effective June 30, 2004.
  • 2Mr. McQuade's departure is related to employment agreements entered into before and after the FleetBoston merger.
  • 3Severance package includes cash, restricted stock units, retirement plan benefits, and continued welfare coverage.
  • 4Total cash severance from FleetBoston agreement is $7,850,000, structured as deferred cash and restricted stock units.
  • 5Bank of America agreement provides for a pro-rata bonus and a separation payment of $10,500,000.
  • 6The company will offer office space and administrative support through December 31, 2004, for a smooth transition.
  • 7Potential excise tax payments under Section 4999 of the IRS Code are addressed to ensure Mr. McQuade's net after-tax position is maintained.

Frequently Asked Questions

Eugene M. McQuade is resigning as President and a director due to the terms of employment agreements negotiated in connection with the FleetBoston merger. These agreements outline his compensation and benefits upon departure.

The filing details significant severance and retirement benefits for Mr. McQuade totaling approximately $7.85 million in cash and stock equivalents from the FleetBoston agreement, plus a $2 million pro-rata bonus and a $10.5 million separation payment from the Bank of America agreement. Additional retirement benefits and transition support costs are also involved. The exact net impact will depend on the timing and settlement of these various components.

The filing indicates that these terms were previously disclosed in the joint proxy statement-prospectus relating to the FleetBoston merger. The payments are a result of pre-existing contractual obligations and merger-related agreements, designed to compensate Mr. McQuade based on his prior role and the terms of the merger.

This refers to an excise tax on certain excess parachute payments. Bank of America has agreed to make an additional payment to Mr. McQuade if any of the benefits he receives are subject to this excise tax. This ensures that Mr. McQuade receives the intended net after-tax amount of his compensation, as if the tax had not been imposed.