The Director Compensation Project: Bank of America Corp.

This post is part of an ongoing series that examines the way stock exchange independence rules relate to director compensation.  We are for the most part including companies from 2011’s Fortune 500 and using information found in their 2011 proxy statements.

Nasdaq and the NYSE have similar rules with respect to director independence.  NYSE Rule 303A.01 requires that each listed company’s board of directors be comprised of a majority of independent directors.  A director does not qualify as “independent” if he or she has a “material relationship with the company.”  NYSE Rule 303A.02(a).  In addition, the director is not considered independent under NYSE Rule 303A.02(b)(ii) if the director received more than $120,000 in direct compensation, other than director’s fees, during any of the previous three years.  NYSE Rule 303A.06 imposes a higher independence standard for directors serving on the company’s audit committee by requiring them to comport with Rule 10A-3 (C.F.R. §240.10A-3).

Independent directors are compensated for their service on the board.  The amount of compensation can be seen from examining the director compensation table from the Bank of America (NYSE:BAC) 2011 proxy statement.  According to the proxy statement, the company paid the directors the following amounts:

  

Name

Fees Earned or Paid in Cash
($)

Stock Awards
($)

Option Awards
($)

All Other Compensation
($)

Total
($)

Mukesh D. Ambani *

92,282

184,534

0

0

276,816

Susan S. Bies

80,000

160,000

0

0

240,000

William P. Boardman (retired)

0

0

0

0

0

Frank P. Bramble, Sr.

100,000

160,000

0

0

260,000

Virgis W. Colbert

80,000

160,000

0

0

240,000

Charles K. Gifford **

100,000

160,000

0

257,190

517,190

Charles O. Holliday, Jr.

167,000

333,000

0

0

500,000

D. Paul Jones, Jr.

80,000

160,000

0

0

240,000

Monica C. Lozano

80,000

160,000

0

0

240,000

Thomas J. May

100,000

160,000

0

0

260,000

Donald E. Powell ***

80,000

160,000

0

75,000

315,000

Charles O. Rossotti

110,000

160,000

0

0

270,000

Robert W. Scully

100,000

160,000

0

0

260,000

* Mr. Ambani was appointed in March, 2011 and the amounts provided reflect pro-rated awards for service prior to the 2011 annual meeting

** Mr. Gifford receives office space and secretarial support

*** Mr. Powell is a non-management director with an annual cash retainer of $75,000

 

Director Compensation.  During fiscal year 2011, Bank of America held 18 Board meetings and each of the current directors attended at least 75% of the meetings of the Board and Board Committee meetings collectively.  The five active (non-emergency) Committees met at least 9 times each and one Committee as many as 16 times during 2011.  Bank of America grants an annual restricted stock award to Directors.  After a one-year vesting period, dividends are paid simultaneously as those on common stock stares.  The shares awarded to each Director equals the dollar value of the award divided by the closing price of common stock as of the grant date and rounded down plus a cash payment for fractional shares.  Non-management directors are given the opportunity to defer these awards to a stock account. 

Director Tenure.  The two most senior members of the Board of Directors include Mr. May and Mr. Gifford, each holding his position since April 2004.  All directors currently serving are slated for re-election except for one, Mr. Jones.  Most directors sit on other boards.  Mr. Colbert, for example, sits on the boards of both Sara Lee Corporation and Stanley Black & Decker, Inc.  Ms. Lozano serves on the board for The Walt Disney Company and ImpreMedia. 

CEO Compensation.  Thomas K. Montag, the Co-Chief Operating Officer, received the highest executive compensation during the 2011 fiscal year, totaling $14,298,604.  The Chief Financial Officer, Bruce R. Thomson, received the next highest compensation at $11,114,046.  Bank of America advocates a “pay for performance” policy that limits executive fringe benefits but does provide home security systems and secure parking.  Furthermore, use of corporate aircraft when conducting business on behalf of the Company is permitted and personal use is also allowed so long as the officer reimburses the Company for operating costs. 

Lindsey Smith