2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 352 Compensation Discussion and Analysis 3. Executive Compensation Program Features a. Executive Pay Components & Variable Pay Mix For each performance year, our Compensation and Benefits Committee determines the pay for our named executive officers. A portion of the compensation is delivered as base salary and the remainder as annual cash incentive (except for the CEO) and restricted stock units. The restricted stock units are divided into two components: time-based and performance-based. Our time-based awards vest ratably over three years (except for the CEO’s cash-settled restricted stock units that vest over one year). Our performance-based awards are re-earned only by the sustained three-year average achievement of performance metrics. Consequently, for our named executive officers to realize the full value of their performance-based awards, the future performance of our company must be at or above the goals set for this award. This pay-for-performance structure, which emphasizes variable pay, helps motivate our executives to deliver sustained stockholder value and Responsible Growth. The following chart provides an overview of the 2017 pay components for our named executive officers: Performance Year 2017 Pay Components Description How it Pays Base Salary ‰ Determined based on job scope, experience, and market comparable positions; provides fixed income to attract and retain executives and balance risk-taking ‰ Semi-monthly cash payment through 2017 Annual Cash Incentive—except CEO ‰ Provides short-term variable pay for the performance year for non-CEO executives ‰ Single cash payment in February 2018 Cash-Settled Restricted Stock Units (CRSUs)—CEO only ‰ Track stock price performance over 1-year vesting period ‰ Vest in 12 equal installments from March 2018 – February 2019 ‰ Cash-settled upon vesting Performance Restricted Stock Units (PRSUs) ‰ Vest based on achievement of specific return on assets and growth in adjusted tangible book value goals over 3-year performance period ‰ Track company and stock price performance ‰ Encourage sustained earnings during the performance period ‰ If performance goals are achieved, the amount granted for 2017 will be re-earned at the end of the performance period (2020) ‰ 100% is the maximum that can be re-earned ‰ If both threshold goals are not achieved, the entire award is forfeited ‰ Stock-settled to the extent re-earned ‰ See “Results for Performance Restricted Stock Units” on page 49 for the vesting and value of prior awards Time-Based Restricted Stock Units (TRSUs) ‰ Track stock price performance over 3-year vesting period ‰ Align with sustained longer-term stock price performance ‰ Vest in three equal annual installments beginning in February 2019 ‰ Stock-settled upon vesting Performance Year 2017 Variable Pay Mix ‰ A majority of variable pay is delivered as equity-based awards that balance short-term and long-term results ‰ The charts below illustrate the variable pay mix for our CEO and other named executive officers 30% CRSUs 20% TRSUs 50% PRSUs 2017 CEO Variable Pay Mix 40% Annual Cash 30% TRSUs 30% PRSUs 2017 Other NEOs Variable Pay Mix Bank of America Corporation 2018 Proxy Statement 41 BANK OF AMERICA CORPORATION