The Director Compensation Project: BANK OF AMERICA

This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation.  We are including companies from 2010’s Fortune 500 and using information found in their most recent proxy statements.  In addition to state standards and the requirements of SOX, the stock exchanges each have their own standards for independence.  

Under NYSE Rule 303A.01, all listed companies must have a majority of independent directors sitting on their boards.  Directors are not independent if they received over $120,000 in direct compensation, other than director’s fees, in any one year period over the last three years pursuant to Rule 303A.02(b)(ii).  This is a looser restriction than the equivalent NASDAQ Rule, 5605(a)(2), which includes "any compensation."  Rules 303A.06 and 5605 also require that, in addition to the general independence standards, audit committee members must comport with the requirements of  Rule 10A-3 (C.F.R. §240.10A-3).  See also IM-5605-4. Audit Committee Composition.

The table below shows the non-management director compensation for Bank of America (NYSE:BAC) from its 2011 proxy statement.  According to the proxy statement, all non-management directors are independent except for Mr. Gifford, whose compensation under his retirement agreement exceeds the threshold.

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	All Other Compensation ($)	Total ($)
Susan S. Bies	80,000	160,000	0	240,000
William P. Boardman**	80,000	160,000	0	240,000
Frank P. Bramble, Sr.	100,000	160,000	0	260,000
Virgis W. Colbert	80,000	160,000	0	240,000
Charles K. Gifford	100,000	160,000	386,229	646,229
Charles O. Holliday, Jr.	167,000	333,000	0	500,000
D. Paul Jones, Jr.	80,000	160,000	0	240,000
Monica C. Lozano	80,000	160,000	0	240,000
Walter E. Massey*	0	0	0	0
Thomas J. May	100,000	160,000	0	260,000
Donald E. Powell	80,000	160,000	57,533	297,533
Charles O. Rossotti	110,000	160,000	0	270,000
Thomas M. Ryan*	0	0	0	0
Robert W. Scully	100,000	160,000	0	260,000

*Retired in 2010

**Not standing for re-election 

Director Compensation.  During fiscal year 2010, Bank of America held 10 board meetings and 65 committee meetings. All directors attended at least 75% of the aggregate number of board meetings and committee meetings of which the director was a member. The Company’s director compensation program for non-management directors consists of three parts: a cash award of $80,000 ($167,000 for the independent Chairman of the board), a restricted stock award of $160,000 ($333,000 for the independent Chairman of the board), and a cash retainer of $30,000 for the chairman of the Audit Committee and $20,000 for the chairman of each of the remaining committees. Mr. Powell also received a pro-rated share of a $75,000 cash retainer after being named a director of Merrill Lynch International, a Bank of America subsidiary.

Director Tenure.  The board’s longest serving members are Mr. Gifford and Mr. May, who have both been directors since April of 2004.  Mr. Gifford is a former Chairman of the Board of Bank of America, and is also a current director of CBS Corporation and NSTAR. Mr. May is the President, CEO, and Chairman of NSTAR, and is also a current director of Liberty Mutual Holding Company, Inc.  In March of 2011, the board introduced Mukesh Ambani as its newest member.  Mr. Ambani is the current Chairman and Managing Director of Reliance Industries Limited.

Executive Compensation.  In January 2011, the Compensation and Benefits Committee decided not to establish target total direct compensation opportunities for executive officers, as had been standard practice. Instead, the Committee will determine 2011 year-end incentive compensation after reviewing the Company’s 2011 performance. In 2010, CEO Brian Moynihan received a base salary of $950,000 and total compensation of $15,000,000. The Company’s highest paid executive was Thomas Montag, President of Global Banking and Markets (GBAM). Mr. Montag earned total compensation of $20,000,000, including a cash incentive of $7,200,000.