Bank of America 2013 Annual Report Download - page 250

248 Bank of America 2013
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 Merrill Lynch 401(k) Savings & Investment Plan,
which is closed to new participants, with certain exceptions. The
Corporation contributed $1.1 billion, $886 million and $723
million in 2013, 2012 and 2011, respectively, to the qualified
defined contribution plans. In connection with the 2012 redesign
of the Corporation’s retirement plans, an additional contribution
is being made annually to certain of these plans. The expense in
2013 and 2012 related to the additional annual contribution was
$410 million and $174 million. At December 31, 2013 and 2012,
235 million shares of the Corporation’s common stock were held
by these plans. Payments to the plans for dividends on common
stock were $10 million, $10 million and $9 million in 2013, 2012
and 2011, respectively.
Certain non-U.S. employees are covered under defined
contribution pension plans that are separately administered in
accordance with local laws.
NOTE 18 Stock-based Compensation Plans
The Corporation administers a number of equity compensation
plans, including 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 and restricted stock units
(RSUs). Grants in 2013 include RSUs which generally vest in three
equal annual installments beginning one year from the grant date,
and awards which will vest subject to the attainment of specified
performance goals.
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 $2.3 billion, $2.3 billion and $2.6 billion in 2013, 2012
and 2011, respectively. The related income tax benefit was $842
million, $839 million and $969 million for 2013, 2012 and 2011,
respectively.
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 and RSUs. As of December 31, 2013, the
shareholders had authorized approximately 1.1 billion shares for
grant under this plan. Additionally, any shares covered by awards
under certain legacy 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 2013, the Corporation issued 183 million RSUs to
certain employees under the Key Associate Stock Plan. Certain
awards are earned based on the achievement of specified
performance criteria. RSUs may be settled in cash or in shares of
common stock depending on the terms of the applicable award.
In 2013, two million of these RSUs were authorized to be settled
in shares of common stock with the remainder in cash. 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, which in the
aggregate represent substantially all of the awards in 2013, is
accrued over the vesting period and adjusted to fair value based
upon changes in the share price of the Corporation’s common
stock.
From time to time, the Corporation enters into equity total return
swaps to hedge a portion of RSUs granted to certain employees
as part of their compensation in prior periods to minimize the
change in the expense to the Corporation driven by fluctuations
in the fair value of the RSUs. Certain of these derivatives are
designated as cash flow hedges of unrecognized unvested awards
with the changes in fair value of the hedge recorded in accumulated
OCI and reclassified into earnings in the same period as the RSUs
affect earnings. The remaining derivatives are used to hedge the
price risk of cash-settled awards with changes in fair value recorded
in personnel expense.
At December 31, 2013, approximately 108 million options were
outstanding under this plan. There were no options granted under
this plan during 2013, 2012 or 2011.
Other Stock Plans
The Corporation assumed the Merrill Lynch Employee Stock
Compensation Plan with the acquisition of Merrill Lynch.
Approximately eight 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 2013 or 2012. At December 31, 2013, there were
approximately two million unvested shares outstanding. The
Corporation also assumed, with the acquisition of Merrill Lynch,
the obligations of outstanding awards granted under the Merrill
Lynch Financial Advisor Capital Accumulation Award Plan (FACAAP).
The FACAAP is no longer an active plan and no awards were granted
in 2013, 2012 or 2011. Awards still outstanding which were
granted in 2003 and thereafter, are generally payable eight years
from the grant date in a fixed number of the Corporation’s common
shares. At December 31, 2013, there were seven million shares
outstanding under this plan.
Restricted Stock/Units
The table below presents the status at December 31, 2013 of the
share-settled restricted stock/units and changes during 2013.
Stock-settled Restricted Stock/Units
Shares/Units
Weighted-
average Grant
Date Fair Value
Outstanding at January 1, 2013 147,570,397 $ 13.18
Granted 2,405,568 11.80
Vested (75,422,919) 14.24
Canceled (3,350,295) 12.22
Outstanding at December 31, 2013 71,202,751 $ 12.05