UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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Bank of America Corporation
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 September 2015
Board Leadership and
Corporate Governance Practices |
 We
Are Holding This Vote in Response to Investor Feedback
2 • The Board believes the flexibility afforded by the current bylaws continues to assure independent oversight by
the Board and is in the best interests of Bank of America and its
shareholders •
Through engagement with shareholders, the Board heard a clear desire for
shareholders to have a vote on the bylaw amendment, and the Board
has called a Special Meeting for September 22 to promptly follow through on its commitment to shareholders • The amended bylaws provide the same flexibility that 97 percent of the S&P 500 companies 1 already have in determining their leadership structure • Bank of America’s current structure includes a newly established Lead Independent Director role, with
authority, duties and responsibilities that extend beyond industry practice and
exceed industry norms. In addition, the Board continues to adopt
corporate governance enhancements through engagement with
shareholders and in direct response to feedback
• The Board recognizes and respects that investor views on the appropriate board leadership structure vary,
which is why the Board committed to putting the matter to a vote and acting in
accordance with the vote outcome
___________________
Note: This presentation may also include quotations from or citations to
third-parties; permission was neither sought nor obtained for use of such quotes or references. 1 Source: Spencer Stuart Board Index, November 2014. The Board recommends that shareholders vote FOR the bylaw amendment |
 • Product-focused company • Range of non-core activities • Legacy mortgage issues • High expense base • Bloated balance sheet • Capital challenges • Challenging operating and economic environment • Reorganized around eight client- focused lines of business • Simplified corporate structure – eliminated >1,000 legal entities • Divested / exited $73B of non-core businesses and assets • Achieved $8B in annualized cost savings through New BAC • Distributed $~10 of capital through common share repurchases and dividends • Customer-focused company • Growing in our core businesses • Addressed significant legacy issues • Reduced expenses and enhancing culture of efficiency • Strengthened balance sheet and financial foundation • Returning capital • Improving economic environment • Of 31 sell-side analysts covering BAC, 25 rate the company a “Buy,” five rate it a “Hold” and one rates it a “Sell” 1 Our Progress Where We Are Today Where We Started (2010) 3 Since 2010 We Have Undergone a Strategic Transformation ____________________ 1 As of September 9, 2015. 2 Business Insider, Jonathan Marino, “Warren Buffett just gave the CEO of Bank of America a vote of confidence at a critical
time,” September 2, 2015. 3
CNBC, September 8, 2015.
http://video.cnbc.com/gallery/?video=3000418189&play=1 On
September 2,
one of our largest investors, Warren Buffett, was quoted on his views regarding Bank of America’s progress and transformation, indicating that he is: “100% in support of Mr. Moynihan and believes he is doing an outstanding job for Bank of America shareholders.
When [Mr. Moynihan] took over as CEO, he was handed one of the toughest jobs in
the history of American banking.” 2
CLICK HERE: Warren Buffett Speaks in Favor of Bylaw Amendment 3 |
 $256 $55 4Q09 2Q15 4 ____________________ 1 4Q09 reflects 12/31/09 information adjusted to include the 1/1/10 adoption of FAS 166/167 as reported in our SEC filings, which represent non-GAAP financial measures. On a GAAP basis, long-term debt was $439B, total assets were $2,230B and quarterly net charge-offs were $8.4B in 4Q09. See reconciliations to GAAP financial measures on pages
13-16. 2
Tangible common equity ratio represents a non-GAAP financial measure.
On a GAAP basis, the common equity ratio was 8.7% and 10.7% at 4Q09 and 2Q15. See reconciliations to GAAP financial measures on pages 13-16. 3 Value at Risk (VaR) model uses historical simulation approach based on three years of historical data and an expected shortfall methodology equivalent to a 99% confidence level. 5.0% 7.6% 4Q09 2Q15 $2,324 $2,149 4Q09 2Q15 $11.3 $1.1 4Q09 2Q15 $992 $1,150 $523 $243 4Q09 2Q15 Deposits Long-term debt $214 $484 4Q09 2Q15 Strengthened Capital Tangible Common Equity Ratio 1, 2 Improved Credit Quality Quarterly Net Charge-offs ($B) 1 Reduced Balance Sheet Total Assets ($B) 1 Average VaR ($MM) 3 Enhanced Funding Structure Deposits and LT Debt ($B) Built Record Liquidity Global Excess Liquidity Sources ($B) Today We Are a Leaner, Stronger and Simpler Company 1 |
 $90.1
$92.3
$90.2 $86.4 $69.3 $77.4 $82.3 $82.1 2011 2012 2013 2014 Revenue excluding net DVA/FVA and market-related NII adjustments Less net charge-offs (excl. net DVA/FVA and market-related NII adjustments)
Focused on Improving Shareholder Returns
Shift to a More Sustainable Revenue Stream
Revenue (FTE, $B)
$77.1 $72.1 $69.2 $75.1 $71.5 $66.8 $63.1 $58.7 2011 2012 2013 2014 Grew TBV While Absorbing Significant Legacy Costs Tangible Book Value per Share Share Price Performance $11.31 $12.98 $12.95 $13.36 $13.79 $14.43 2009 2010 2011 2012 2013 2014 3 ___________________ 1 Represents a non-GAAP financial measure. On a GAAP basis, revenue was $93.5B, $83.3B, $88.9B and $84.2B for 2011, 2012, 2013 and 2014,
respectively. On a GAAP basis, noninterest expense was $80.3B, $72.1B, $69.2B and $75.1B for 2011, 2012, 2013 and 2014, respectively. On a GAAP basis, book value per share was $21.48, $20.99, $20.09, $20.24, $20.71 and $21.32 for 2009, 2010, 2011, 2012, 2013 and 2014, respectively. See reconciliations to GAAP financial measures on pages 13-16. 2 Includes $1.1B of provision for the Independent Foreclosure Review (IFR) Acceleration Agreement in 4Q12 that we entered into with the
Office of the Comptroller of the Currency (OCC) and the Federal Reserve to cease the IFR that had commenced pursuant to a consent order entered into by Bank of America with the Federal Reserve and by BANA with the OCC in 2011 and
replace it with an accelerated remediation process. 3
Tangible Book Value per Share (TBVPS) reflects the 12/31/09 information adjusted
to include the 1/1/10 adoption of FAS 166/167 as reported in our SEC filings, which represents a non-GAAP financial measure. See reconciliations to GAAP financial measures on pages 13-16. Lowered Expenses Noninterest Expense, Excl. Goodwill ($B) 13% 0% 13% 30% 11% 11% (27%) 35% 37% 12% (11%) (58%) 109% 34% 15% 2010 2011 2012 2013 2014 S&P 500 US G-SIFI Peer Average BAC 1 1 5 DVA=Debit Valuation Adjustment FVA=Funding Valuation Adjustment NII=Net Interest Income
Noninterest expense excl. goodwill
Noninterest expense excl. goodwill and litigation
² 1 1 |
 ____________________
1 Source: SNL branch data. U.S. deposit market share (retail domestic deposits) based on June 2014 FDIC deposit data, adjusted to remove commercial balances. 2 Source: Keynote, 4Q14 Mobile Banking Scorecard, November 2014. 3 Competitor 1Q15 earnings releases. 4 Source: Dealogic as of March 31, 2015. 5 Source: Institutional Investor 2014. Industry Leading Positions Across Our Businesses • #1 retail deposit market share in our footprint • #1 in mobile banking with 17.6MM mobile users • #3 in U.S. credit card balances • #1 Home Equity Lender • #1 wealth management market position across client assets, deposits, loans, and net income before taxes • Top tier middle market advisor with #2 ranking in US/Canada • #2 in 2014 Global Investment Banking fees 4 • #1 leading global research firm for 4 consecutive years 5 6 Top Tier Ranked Businesses in Every Segment in Which We Compete We Serve Three Groups of Customers Through Eight Lines of Business People. Institutions. Companies. Retail Preferred & Small Business Merrill Lynch U.S. Trust Business Banking Commercial Banking Global Corporate & Investment Banking Global Markets 1 3 3 3 2 |
 7 • In October 2014, the Board amended our bylaws to provide for Board leadership flexibility. On the
same date, the Board named Brian Moynihan Chairman, established the Lead
Independent Director position and the independent members elected
Jack Bovender to the role •
Jack Bovender represented the Board in our shareholder engagement efforts
regarding our Board leadership structure leading up to the 2015
annual meeting •
During that engagement, a number of investors voiced the opinion that
shareholders should be given
the opportunity to vote on the bylaw change. In May 2015, Jack Bovender and Brian Moynihan sent a letter to shareholders on the Board’s behalf and committed to holding a
shareholder vote to ratify the bylaw amendment no later than the 2016 annual
meeting •
Jack Bovender and members of management subsequently re-engaged our
significant shareholders to gather additional feedback on our
Board leadership structure and potential timing of the
ratification vote The Board has committed to act in accordance with
the shareholders’ voting decision and to continue to engage
with shareholders Shareholder Engagement
Has Informed This Special Meeting Vote |
 Since 2009, the Board has
implemented considerable changes in
its recruiting and selection process to
enhance the Board’s experiential
diversity and independence to align
with its transformation
As part of the nomination process,
director candidates are reviewed by
Bank of America’s primary bank
regulators Of the 13 directors, seven have international experience, nine have CEO experience (including two who previously served as CEOs of financial institutions), nine have served on another U.S. public company board in the last five years, two are African- American and four are women, one of whom is Hispanic Board composition features a substantial majority of independent directors • 11 of 13 members are independent • Seven of those 11 independent members joined the Board in the last three years • A substantial majority of independent members have had leadership roles at a financial institution or have experience in a highly regulated industry The Board is refreshed on a regular basis. Average Board tenure at 5 years is below the 8.4 year market average 1 Lead Independent Director role with responsibilities beyond industry norms Regular Board assessment of optimal leadership structure Independent and non-management directors meet in executive session at each regularly scheduled Board meeting • 14 executive sessions have occurred over the past 11 months • Lead Independent Director presides at each meeting • Lead Independent Director has authority to call an executive session of independent directors at any time 8 Bank of America’s Board has undergone a significant transformation in the past five years and has
implemented practices that enhance independent oversight of
management Strong Board Independence
Enhanced Board Recruitment
Active Independent Oversight
Practices Independent Oversight through Current Leadership Structure ___________________ 1 Source: Spencer Stuart Board Index, November 2014. |
 9 The Corporate Governance Committee regularly assesses the needs of the Board and the company
to recruit directors who meet increasing regulatory requirements, and
have the right skills and experiences to oversee our businesses
and strategy Directors Contribute Valuable Range of Expertise,
Diversity and Perspectives to the Boardroom Five of our Board
members (including Mr. Moynihan), or 39%, have served as senior
executives at financial institutions
Four directors, or 31% have served as senior
executives at banks
Our three closest peer companies average 4.7
directors, or 36%, who have served as senior
executives of financial institutions, and 2.0
directors, or 16%, who have served as senior
executives of banks
Directors with experience in regulated industries
other than financial services have managed
businesses subject to governmental oversight,
bringing insight that complements our directors
who have specific experience in banking or
financial services, and enhance the diversity of the
Board Board Composition Provides Balance of Skill Sets, Including Financial Expertise and Other Experience Relevant to Our Business Gender Diversity ___________________ 1 Source: Based on review of public SEC filings. 8 New independent directors elected since 2009 Fresh Perspectives 7 New independent directors elected in the last 3 years Independent 85% Director Independence Insider 15% • Audit/Financial Reporting • Risk Management • Strategic Planning • Operational Risk • Consumer Banking • Regulated Business Expertise • Corporate Governance • Cybersecurity Risk • Business Development • Financial Services Industry Experience • International Perspective • Social Responsibility and Diversity Female 31% Male 69% 1 |
 Lead
Independent Director with Responsibilities Beyond Industry Norms
Jack Bovender, Lead Independent Director
• Jack’s breadth of knowledge in management, operations, and corporate governance led independent directors to appoint him
to this Board leadership role
• Former long-time Chairman, CEO and COO of HCA Inc., which operates over 200 hospitals and surgery centers throughout the
United States and England, with 169,000 employees; HCA is a
complex organization in a highly regulated industry subject to
substantial regulatory and government oversight
The authority, duties and responsibilities of our
Lead Independent Director extend beyond industry practice
and expectations and exceed ISS criteria for determining
“comprehensive” lead director duties In determining
these responsibilities, the Board benchmarked against peers at leading S&P 500 financial services, consumer and industrial companies and the ISS criteria
Board Leadership
Presides at all meetings when Chairman is not present
Calls meetings of independent directors
Provides leadership if CEO / Chairman’s role may be in conflict
Board Culture Serves as a liaison between CEO and independent directors Establishes relationship with CEO, providing support, advice and feedback
Acts as a “sounding board”
and advisor to CEO
Board Focus Helps ensure Board focuses on key issues facing Bank of America Assists in promoting corporate governance best practices Contributes to annual performance review of CEO and participates in CEO succession planning Board Meetings Plans, reviews and approves Board meeting agendas and schedules in coordination with CEO Advises CEO of Board information needs, and approves information sent to
Board Develops discussion topics for Board executive sessions Board Performance & Development Helps ensure efficient and effective Board performance and functioning Consults with Corporate Governance Committee on annual Board self assessment Provides guidance on ongoing director development Consults in identification and evaluation of director candidates, committee members and committee chairs Stockholders & Other Stakeholders Available for consultation and direct communication, to the extent requested
by major stockholders
Regularly communicates with primary bank regulators to discuss
appropriateness of Board’s oversight of management and company
10 ____________________ Note: LID duties highlighted in blue are additional duties beyond ISS criteria. |
 Enhanced executive compensation governance and transparency
Enhanced business and sustainability reporting, including commitment to
provide: •
Business Standards Report
• Political activities disclosure • Sustainability and greenhouse gas emission disclosure, including a new coal policy
Board adopted proxy access right at a 3%/3 year ownership
threshold •
At time of adoption, Bank of America was one of only 10 US companies to establish proxy access at a 3%/3 year threshold • Demonstrates commitment to constructive engagement with investors and the evolving landscape of shareholder rights
Board implemented special meeting right at 10% ownership
threshold Majority vote standard for director
elections Annual election of directors
Annual Board and Committee self-evaluations
No supermajority provisions
Corporate Governance Committee considers director candidates recommended by
shareholders Enhanced executive compensation governance: 94.8%
shareholder support for “say on pay” at the 2015 annual meeting Clawback policy Adopted an enhanced shareholder engagement program that includes the active involvement of our Lead Independent Director
and other independent directors
11 Efforts to enhance engagement with shareholders and responsiveness to shareholder feedback as reflected by
the Board’s adoption of corporate governance changes and enhanced
disclosures Adoption of
Proxy Access Reporting & Disclosures Shareholder Rights & Director Accountability Enhanced Shareholder Engagement Governance Enhancements Informed by Shareholder Feedback |
 APPENDIX Reconciliation of Non-GAAP Financial Measures |
 13 Reconciliation of Non-GAAP Financial Measures $ in millions 4Q09 2Q15 Reconciliation of period-end long-term debt Long-term debt 438,521 $ 243,414 $ Adjustment related to 1/1/10 adoption of FAS 166/167 84,356 - Adjusted long-term debt 522,877 $ 243,414 $ Reconciliation of period-end assets Assets 2,230,232 $ 2,149,034 $ Adjustment related to 1/1/10 adoption of FAS 166/167 100,439 - Adjusted assets 2,330,671 $ 2,149,034 $ Reconciliation of net charge-offs Net charge-offs 8,421 $ 1,068 $ Adjustment related to 1/1/10 adoption of FAS 166/167 2,926 - Adjusted net charge-offs 11,347 $ 1,068 $ |
 14 ____________________ 1 In 2008, the U.S. Treasury created the TARP to invest in certain eligible financial institutions in the form of non-voting, senior preferred stock. We participated in TARP by issuing to the U.S. Treasury non-voting perpetual preferred stock (TARP Preferred Stock) and warrants. In 2009, we received approval to repay the investment. We then repurchased all shares of the TARP Preferred Stock by using excess liquidity and $19.2 billion in proceeds from the sales of 1.3 billion units of Common Equivalent Securities (CES). In 2010, the CES ceased to exist. Reconciliation of Non-GAAP Financial Measures (continued) • Tangible common equity ratio measures and utilizes an adjusted common shareholders’ equity amount which has been
reduced by goodwill and intangible assets (excluding MSRs), net of related
deferred tax liabilities. The company uses this measure to
evaluate the amount and use of equity. $ in millions
4Q09 2Q15 Reconciliation of period-end common shareholders' equity to period-end
tangible common shareholders' equity
Common shareholders' equity
194,236 $ 229,386 $ Common Equivalent Securities 19,244 - Goodwill (86,314) (69,775) Intangible assets (excluding mortgage servicing rights) (12,026) (4,188) Related deferred tax liabilities 3,498 1,813 Adjustment related to 1/1/10 adoption of FAS 166/167 (6,270) - Tangible common shareholders' equity 112,368 $ 157,236 $ Reconciliation of period-end assets to period-end tangible assets Assets 2,230,232 $ 2,149,034 $ Goodwill (86,314) (69,775) Intangible assets (excluding mortgage servicing rights) (12,026) (4,188) Related deferred tax liabilities 3,498 1,813 Adjustment related to 1/1/10 adoption of FAS 166/167 100,439 - Tangible assets 2,235,829 $ 2,076,884 $ Common equity ratio 8.7% 10.7% Tangible common equity ratio 5.0% 7.6% 1 |
 15 $ in millions 2011 2012 2013 2014 Reconciliation of revenue Revenue 93,454 $ 83,334 $ 88,942 $ 84,247 $ FTE adjustment 972 901 859 869 DVA/FVA adjustment (4,320) 7,584 1,158 240 Market-related NII adjustments - 510 (766) 1,081 Revenue excluding net DVA/FVA and market-related NII adjustments (FTE basis) 90,106 $ 92,329 $ 90,193 $ 86,437 $ Net charge-offs (20,833) (14,908) (7,897) (4,383) Revenue excluding net DVA/FVA, market-related NII adjustments and net charge-offs (FTE basis) 69,273 $ 77,421 $ 82,296 $ 82,054 $ Reconciliation of noninterest expense Noninterest expense 80,274 $ 72,093 $ 69,214 $ 75,117 $ Goodwill (3,184) - - - Noninterest expense excluding goodwill 77,090 $ 72,093 $ 69,214 $ 75,117 $ Litigation (5,616) (4,228) (6,096) (16,370) Provision for IFR acceleration - (1,100) - - Noninterest expense excluding goodwill and litigation 71,474 $ 66,765 $ 63,118 $ 58,747 $ Reconciliation of Non-GAAP Financial Measures (continued) • The company believes managing the business with net interest income on an FTE basis provides a more accurate picture
of the interest margin for comparative purposes. We also believe the exclusion
of net DVA / FVA and market-related NII adjustments enhances
period-to-period comparability. Revenue less net charge-offs (excluding net DVA/FVA and market- related NII adjustments) is a measure the company uses to evaluate the level of risk embedded within the revenue
stream. • The company believes the exclusion of goodwill impairment and litigation expense provides additional clarity in
assessing the expenses of the company for comparative purposes.
|
 16 ____________________ 1 In 2008, the U.S. Treasury created the TARP to invest in certain eligible financial institutions in the form of non-voting, senior preferred stock. We participated in TARP by issuing to the U.S. Treasury non-voting perpetual preferred stock (TARP Preferred Stock) and warrants. In 2009, we received approval to repay the investment. We then repurchased all shares of the TARP Preferred Stock by using excess liquidity and $19.2 billion in proceeds from the sales of 1.3 billion units of Common Equivalent Securities (CES). In 2010, the CES ceased to exist. Reconciliation of Non-GAAP Financial Measures (continued) • Tangible Book Value per Share utilizes an adjusted common shareholders’ equity amount which has been reduced by
goodwill and intangible assets (excluding MSRs), net of related deferred tax
liabilities. The company uses this measure to evaluate the amount
and use of equity. $ in millions, except per share information;
shares in thousands 2009
2010 2011 2012 2013 2014 Reconciliation of period-end common shareholders' equity to period-end tangible common shareholders' equity Common shareholders' equity 194,236 $
211,686 $
211,704 $
218,188 $
219,333 $
224,162 $
Common Equivalent Securities 1 19,244 - - - - - Goodwill (86,314) (73,861) (69,967) (69,976) (69,844) (69,777) Intangible assets (excluding mortgage servicing rights) (12,026) (9,923) (8,021) (6,684) (5,574) (4,612) Related deferred tax liabilities 3,498 3,036 2,702 2,428 2,166 1,960 Adjustment related to 1/1/10 adoption of FAS 166/167 (6,270) - - - - - Tangible common shareholders' equity 112,368 $
130,938 $
136,418 $
143,956 $
146,081 $
151,733 $
Reconciliation of period-end common shares outstanding to
period-end tangible common shares outstanding
Ending common shares outstanding
8,650,244 10,085,155 10,535,938 10,778,264 10,591,808 10,516,542 Assumed conversion of common equivalent shares 1 1,286,000 - - - - - Tangible common shares outstanding 9,936,244 10,085,155 10,535,938 10,778,264 10,591,808 10,516,542 Book value per share of common stock 21.48 $
20.99 $
20.09 $
20.24 $
20.71 $
21.32 $
Tangible book value per share of common stock
11.31 $
12.98 $
12.95 $
13.36 $
13.79 $
14.43 $
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