8-KOther Events

BANK OF AMERICA CORP /DE/ 8-K Report, Corporate Update (Feb 12, 2021)

Filed February 12, 2021For 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 12, 2021, to disclose details regarding the 2020 compensation of its Chairman and CEO, Brian T. Moynihan. The Board of Directors approved a total compensation of $24.5 million for 2020, a decrease from $26.5 million in 2019. This decision was made after evaluating the company's performance amidst the COVID-19 pandemic, considering its impact on shareholders, employees, clients, and communities. Key to the compensation decision was Bank of America's strong financial performance despite pandemic challenges, including nearly $18 billion in net income, record capital and liquidity levels, and over $13 billion distributed to shareholders. The company also highlighted significant efforts in employee support, client assistance (including PPP loans), and community engagement, such as substantial philanthropic contributions and investments in CDFIs. The compensation structure remains focused on equity, with no cash bonus, and continues to emphasize long-term shareholder alignment through restricted stock units with performance-based vesting and clawback provisions.

Key Highlights

  • 1CEO Brian T. Moynihan's total 2020 compensation set at $24.5 million, down from $26.5 million in 2019.
  • 2Company earned nearly $18 billion in net income in 2020.
  • 3Bank of America strengthened capital and liquidity to record levels and distributed over $13 billion to shareholders.
  • 4Significant support provided to employees, including no COVID-related layoffs and a raised minimum wage to $20/hour for U.S. teammates.
  • 5Extensive client support initiatives, including processing loan deferrals and originating PPP loans to small businesses.
  • 6Substantial community contributions totaling $350 million in philanthropy, with a focus on pandemic relief and racial equity initiatives.
  • 7CEO compensation remains equity-based with no cash bonus, and includes performance-based restricted stock units (RSUs) with a three-year 're-earn' vesting period and clawback policies.

Frequently Asked Questions

The CEO's compensation was reduced from $26.5 million in 2019 to $24.5 million in 2020. The Board of Directors evaluated the company's performance in the context of the significant challenges presented by the COVID-19 pandemic. While the company achieved strong financial results and supported stakeholders, the reduction reflects a nuanced assessment of performance during an unprecedented year.

The CEO's compensation is entirely equity-based, consisting of base salary and restricted stock units (RSUs). There is no cash bonus. The equity awards include time-based and performance-based RSUs, with the performance-based awards subject to a three-year 're-earn' vesting period tied to specific financial performance standards. This structure is designed to align the CEO's interests with long-term shareholder value creation and includes provisions for stock ownership, retention, and clawbacks.

The filing provides several key metrics. The company reported nearly $18 billion in net income, strengthened its capital and liquidity to record levels, and improved its book value per common share. Furthermore, Bank of America distributed over $13 billion to shareholders through dividends and share repurchases, ending the year with $36 billion in excess capital. The company also highlighted extensive support for its employees, clients (including significant PPP loan origination), and communities through substantial philanthropic efforts and investments.

Yes, the performance RSUs awarded to the CEO are subject to a 're-earn' approach over a three-year period. The standards for these performance RSUs have been recalibrated due to the economic climate. For 2020 awards, the target for three-year average Return on Assets (ROA) is 0.80%. There are no changes to the standards for three-year average growth in adjusted tangible book value, and the standards for previously granted performance RSUs remain unchanged.