Bank of America 2011 Annual Report Download - page 245

Bank of America 2011 243
Defined Contribution Plans
The Corporation maintains qualified defined contribution
retirement plans and nonqualified defined contribution retirement
plans. As a result of the Merrill Lynch acquisition, the Corporation
also maintains the defined contribution plans of Merrill Lynch which
include the 401(k) Savings & Investment Plan, the Retirement and
Accumulation Plan (RAP) and the Employee Stock Ownership Plan
(ESOP). The Corporation contributed approximately $723 million,
$670 million and $605 million in 2011, 2010 and 2009,
respectively, in cash to the qualified defined contribution plans. At
December 31, 2011 and 2010, 232 million shares and 208 million
shares of the Corporation’s common stock were held by these
plans. Payments to the plans for dividends on common stock were
$9 million, $8 million and $8 million in 2011, 2010 and 2009,
respectively.
In addition, certain non-U.S. employees within the Corporation
are covered under defined contribution pension plans that are
separately administered in accordance with local laws.
NOTE 20 Stock-based Compensation Plans
The Corporation administers a number of equity compensation
plans, including the Key Employee Stock Plan, the Key Associate
Stock Plan and the Merrill Lynch Employee Stock Compensation
Plan. Descriptions of the significant features of the equity
compensation plans are below. Under these plans, the Corporation
grants stock-based awards, including stock options, restricted
stock shares and RSUs. For grants in 2011, restricted stock
awards generally vest in three equal annual installments beginning
one year from the grant date.
For most awards, expense is generally recognized ratably over
the vesting period net of estimated forfeitures, unless the
employee meets certain retirement eligibility criteria. For awards
to employees that meet retirement eligibility criteria, the
Corporation records the expense upon grant. For employees that
become retirement eligible during the vesting period, the
Corporation recognizes expense from the grant date to the date
on which the employee becomes retirement eligible, net of
estimated forfeitures. The compensation cost for the stock-based
plans was $2.6 billion, $2.0 billion and $2.4 billion in 2011, 2010
and 2009, respectively. The related income tax benefit was $969
million, $727 million and $892 million for 2011, 2010 and 2009,
respectively.
For capital purposes, the Corporation issued approximately
122 million of immediately tradable shares of common stock, or
approximately $1.0 billion (after-tax) to certain employees in
February 2012 in lieu of a portion of their 2011 year-end cash
incentive.
Key Employee Stock Plan
The Key Employee Stock Plan, as amended and restated, provided
for different types of awards including stock options, restricted
stock shares and RSUs. Under the plan, 10-year options to
purchase approximately 260 million shares of common stock were
granted through December 31, 2002 to certain employees at the
closing market price on the respective grant dates. At
December 31, 2011, approximately 21 million fully vested options
were outstanding under this plan. No further awards may be
granted.
Key Associate Stock Plan
The Key Associate Stock Plan became effective January 1, 2003.
It provides for different types of awards, including stock options,
restricted stock shares and RSUs. As of December 31, 2011, the
shareholders had authorized approximately 1.1 billion shares for
grant under this plan. Additionally, any shares covered by awards
under the Key Employee Stock Plan or certain legacy company
plans that cancel, terminate, expire, lapse or settle in cash after
a specified date may be re-granted under the Key Associate Stock
Plan.
During 2011, the Corporation issued approximately 193 million
RSUs to certain employees under the Key Associate Stock Plan.
Certain awards are earned based on the achievement of specified
performance criteria. Vested RSUs may be settled in cash or in
shares of common stock depending on the terms of the applicable
award. In 2011, approximately 126 million of these RSUs were
authorized to be settled in shares of common stock. Certain
awards contain clawback provisions which permit the Corporation
to cancel all or a portion of the award under specified
circumstances. The compensation cost for cash-settled awards
and awards subject to certain clawback provisions is accrued over
the vesting period and is adjusted to fair value based upon changes
in the share price of the Corporation’s common stock. The
compensation cost for the remaining awards is fixed and based
on the share price of the Corporation’s common stock on the date
of grant. The Corporation hedges a portion of its exposure to
variability in the expected cash flows for certain unvested awards
using a combination of economic and cash flow hedges as
described in Note 4 – Derivatives.
At December 31, 2011, approximately 135 million options were
outstanding under this plan. There were no options granted under
this plan during 2011 or 2010.
Merrill Lynch Employee Stock Compensation Plan
The Corporation assumed the Merrill Lynch Employee Stock
Compensation Plan with the acquisition of Merrill Lynch.
Approximately 8 million RSUs were granted in 2011 which generally
vest in three equal annual installments beginning one year from
the grant date. There were no shares granted under this plan during
2010. Awards granted in 2009 generally vest in three equal annual
installments beginning one year from the grant date, and awards
granted prior to 2009 generally vest in four equal annual
installments beginning one year from the grant date. At
December 31, 2011, there were approximately 20 million shares
outstanding.
Other Stock Plans
As a result of the Merrill Lynch acquisition, the Corporation
assumed the obligations of outstanding awards granted under the
Merrill Lynch Financial Advisor Capital Accumulation Award Plan
(FACAAP) and the Merrill Lynch Employee Stock Purchase Plan
(ESPP). The FACAAP is no longer an active plan and no awards
were granted in 2011 or 2010. Awards granted in 2003 and
thereafter are generally payable eight years from the grant date in
a fixed number of the Corporation’s common shares. For
outstanding awards granted prior to 2003, payment is generally
made ten years from the grant date in a fixed number of the
Corporation’s common shares unless the fair value of such shares
is less than a specified minimum value, in which case the minimum
value is paid in cash. At December 31, 2011, there were 12 million
shares outstanding under this plan.