8-KOther Events

BANK OF AMERICA CORP /DE/ 8-K Report, Corporate Update (Feb 17, 2017)

Filed February 17, 2017For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

This 8-K filing from Bank of America (BAC) on February 17, 2017, primarily announces the Board of Directors' award of 2016 incentive compensation for executive officers, including CEO Brian T. Moynihan. The report highlights the company's strong financial performance in 2016, with earnings of $17.9 billion, a 13% increase from the previous year, marking the second-highest earnings in company history. Significant achievements include revenue growth, expense reduction, historically low credit losses, and a total shareholder return of 33.3%. Bank of America also returned $6.6 billion in capital to common shareholders. The compensation structure for Mr. Moynihan emphasizes a pay-for-performance model. His 2016 incentive award totals $18.5 million, with 50% in performance-based restricted stock units (RSUs) contingent on meeting specific three-year financial goals (0.80% average ROA and 8.5% average tangible book value growth). The remaining 50% consists of time-based RSUs vesting over 12 to 36 months. Importantly, his base salary remains unchanged at $1.5 million, and he received no cash bonus, with equity awards subject to stock ownership, retention, and clawback policies.

Key Highlights

  • 1Bank of America reported 2016 earnings of $17.9 billion, a 13% increase year-over-year and the second-highest in company history.
  • 2Total shareholder return for 2016 was 33.3%, exceeding the primary peer group on multiple time horizons.
  • 3The company returned $6.6 billion in capital to common shareholders during 2016.
  • 4CEO Brian T. Moynihan's 2016 incentive compensation award totaled $18.5 million, with 50% tied to performance-based RSUs.
  • 5Performance RSUs are subject to a three-year vesting period and require achievement of specific financial metrics (0.80% average ROA, 8.5% average tangible book value growth) to be re-earned.
  • 6Mr. Moynihan's base salary remained unchanged at $1.5 million, and he received no cash bonus for 2016.
  • 7All equity awards are subject to Bank of America's stock ownership, retention, and clawback policies.

Frequently Asked Questions

The report highlighted strong 2016 financial performance, including earnings of $17.9 billion (up 13% year-over-year), historically low credit losses, and a total shareholder return of 33.3%. The company also returned $6.6 billion to common shareholders.

Mr. Moynihan's 2016 incentive compensation award was valued at $18.5 million. It consists of 50% performance-based RSUs tied to three-year financial goals, and 50% time-based RSUs vesting over one to three years. His base salary of $1.5 million remained unchanged, and he received no cash bonus.

The performance RSUs are contingent on Bank of America achieving specific financial goals over a three-year period. The target for 2017 performance RSUs requires a three-year average return on assets of 0.80% and a three-year average growth of adjusted tangible book value of 8.5%. Meeting or exceeding these targets is necessary to re-earn the awarded performance RSUs.

Yes, Mr. Moynihan's equity awards are subject to Bank of America's stock ownership and retention requirements, including retaining 50% of net after-tax shares until one year after retirement. Additionally, all equity awards are subject to the company's clawback policies.