Bank of America 2015 Annual Report Download - page 222

220 Bank of America 2015
Defined Contribution Plans
The Corporation maintains qualified defined contribution
retirement plans and nonqualified defined contribution retirement
plans. The Corporation recorded expense of $1.0 billion, $1.0
billion and $1.1 billion in 2015, 2014 and 2013, respectively,
related to the qualified defined contribution plans. At December
31, 2015 and 2014, 236 million and 238 million shares of the
Corporation’s common stock were held by these plans. Payments
to the plans for dividends on common stock were $48 million, $29
million and $10 million in 2015, 2014 and 2013, 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 Bank of
America Corporation 2003 Key Associate Stock Plan (KASP).
Grants in 2015 from the KASP included restricted stock units
(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 criteria. During
2015, the Corporation issued 131 million RSUs to certain
employees under the KASP. RSUs may be settled in cash or in
shares of common stock depending on the terms of the applicable
award. In 2015, two million of these RSUs were authorized to be
settled in shares of common stock with the remainder in cash.
Certain awards contain cancellation and clawback provisions which
permit the Corporation to cancel or recoup all or a portion of the
award under specified circumstances. The compensation cost for
these awards is accrued over the vesting period and adjusted to
fair value based upon changes in the share price of the
Corporation’s common stock.
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 $2.17 billion, $2.30 billion and $2.28 billion in 2015,
2014 and 2013, respectively. The related income tax benefit was
$824 million, $854 million and $842 million for 2015, 2014 and
2013, respectively.
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 in order 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.
On May 6, 2015, Bank of America shareholders approved the
amendment and restatement of the KASP, and renamed it the Bank
of America Corporation Key Employee Equity Plan (KEEP). Under
the amendment and restatement of the KEEP, 450 million shares
of the Corporation’s common stock and any shares that were
subject to an award as of December 31, 2014 under the KASP, if
such award is canceled, terminates, expires, lapses or is settled
in cash for any reason from and after January 1, 2015, are
authorized to be used for grants of awards.
Restricted Stock/Units
The table below presents the status at December 31, 2015 of the
share-settled restricted stock/units and changes during 2015.
Stock-settled Restricted Stock/Units
Shares/Units
Weighted-
average Grant
Date Fair Value
Outstanding at January 1, 2015 29,882,769 $ 9.30
Granted 2,079,667 16.60
Vested (8,750,921) 11.43
Canceled (655,497) 9.52
Outstanding at December 31, 2015 22,556,018 $ 9.14