8-KOther Events

BANK OF AMERICA CORP /DE/ 8-K Report, Corporate Update (Feb 9, 2018)

Filed February 9, 2018For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) filed an 8-K on February 9, 2018, to announce the approval of 2017 incentive compensation for its executive officers, including CEO Brian T. Moynihan. The filing highlights the company's strong performance in 2017, characterized by a "responsible growth" strategy that resulted in net income of $18.2 billion, or $21.1 billion adjusted for the Tax Cuts and Jobs Act. This growth translated into significant shareholder returns, with total shareholder return at 35.7% and a market capitalization reaching an all-time high of $304 billion by year-end 2017. The approved compensation for CEO Brian T. Moynihan emphasizes a pay-for-performance structure. His annual base salary remains at $1.5 million, and he received no cash bonus for 2017. The total equity incentive award for 2017 is valued at $21.5 million, with 50% comprising performance-based Restricted Stock Units (RSUs) that are contingent upon the company achieving specific three-year financial goals. The remaining 50% is in time-based RSUs, with both types subject to stock ownership and clawback policies, aligning executive compensation with long-term company performance and shareholder interests.

Key Highlights

  • 1Bank of America's Board of Directors approved 2017 incentive compensation for executive officers, including CEO Brian T. Moynihan.
  • 2The company reported net income of $18.2 billion for 2017, which increased to $21.1 billion after adjusting for the Tax Cuts and Jobs Act.
  • 3Total shareholder return for 2017 was 35.7%, and market capitalization reached an all-time high of $304 billion.
  • 4The quarterly common stock dividend was increased by 60% in 2017, and total capital returned to shareholders exceeded $17 billion.
  • 5CEO Brian T. Moynihan's 2017 equity incentive award is valued at $21.5 million, with 50% as performance-based RSUs tied to specific financial goals.
  • 6Performance RSUs are subject to a three-year performance and vesting period with defined targets for adjusted tangible book value growth and return on assets.
  • 7Moynihan's equity awards are subject to stock ownership and retention requirements, as well as clawback policies.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce the Bank of America Corporation's Board of Directors' approval of the 2017 incentive compensation for its executive officers, including CEO Brian T. Moynihan. It also provides an update on the company's financial performance in 2017 that underpinned these compensation decisions.

CEO Brian T. Moynihan's compensation for 2017 consists of a $1.5 million base salary and an equity incentive award valued at $21.5 million. This equity award is split equally: 50% are performance-based Restricted Stock Units (RSUs) tied to specific financial performance metrics over a three-year period, and 50% are time-based RSUs that vest over time. He did not receive a cash bonus.

In 2017, Bank of America achieved net income of $18.2 billion (or $21.1 billion adjusted for the tax act), delivered a total shareholder return of 35.7%, and saw its market capitalization reach an all-time high of $304 billion. The company also significantly increased its dividend by 60% and returned nearly $17 billion to shareholders, demonstrating strong financial performance and shareholder value creation.

The performance-based RSUs for CEO Brian T. Moynihan are tied to a three-year average growth of adjusted tangible book value of 8.5% and a three-year average return on assets (ROA) of 0.90%. Full re-earning of these RSUs requires meeting or exceeding both targets, with no upside beyond the maximum and no re-earning if minimum goals are not met.