Bank of America 2014 Annual Report Download - page 237

Bank of America 2014 235
Defined Contribution Plans
The Corporation maintains qualified defined contribution
retirement plans and nonqualified defined contribution retirement
plans. The Corporation contributed $1.0 billion, $1.1 billion and
$886 million in 2014, 2013 and 2012, respectively, to the qualified
defined contribution plans. At December 31, 2014 and 2013, 238
million and 235 million shares of the Corporation’s common stock
were held by these plans. Payments to the plans for dividends on
common stock were $29 million, $10 million and $10 million in
2014, 2013 and 2012, 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, with awards being granted predominantly from the
Corporation’s Key Associate Stock Plan. Under the Key Associate
Stock Plan, the Corporation grants stock-based awards, including
stock options, restricted stock and restricted stock units (RSUs).
Grants in 2014 included 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 $2.30 billion, $2.28 billion and $2.27 billion in 2014,
2013 and 2012, respectively. The related income tax benefit was
$854 million, $842 million and $839 million for 2014, 2013 and
2012, 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, 2014, 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 2014, the Corporation issued 133 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 2014, 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 represented substantially all of the awards in 2014, 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. For information on amounts recognized on
equity total return swaps used to hedge the Corporation’s
outstanding RSUs, see Note 2 – Derivatives.
Other Stock Plans
The Corporation assumed the obligations of certain stock
compensation plans with the acquisition of Merrill Lynch. These
plans are no longer active and no awards were granted in 2014,
2013 or 2012. At December 31, 2014, five million unvested RSUs
remained outstanding under the Merrill Lynch Financial Advisor
Capital Accumulation Award Plan. These awards were granted in
2003 and thereafter and are generally payable eight years from
the grant date in a fixed number of the Corporation’s common
shares.
Restricted Stock/Units
The table below presents the status at December 31, 2014 of the
share-settled restricted stock/units and changes during 2014.
Stock-settled Restricted Stock/Units
Shares/Units
Weighted-
average Grant
Date Fair Value
Outstanding at January 1, 2014 71,202,751 $ 12.05
Granted 2,064,195 16.63
Vested (42,209,408) 14.27
Canceled (1,174,769) 10.45
Outstanding at December 31, 2014 29,882,769 $ 9.30