2018 Guide to Effective Proxies

2.17.11 Shareholder engagement | 485 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES CorporateGovernance What We Learned from our Meetings with Stockholders ‰ StockholdersweresupportiveofourapproachtoBoardcompositionandrefreshmentandourdeliberateprocessfor directorsuccessionplanning ‰ StockholdersunderstandourapproachtoResponsibleGrowthandtherolethatourESGpracticesplayinthat.They appreciatedthebreadthanddepthofourdisclosuresintheseareas ‰ AstrongmajorityoftheinstitutionalstockholderswespokewithbelievethatourBoardshouldretaintheflexibilityto determineitsleadershipstructureandthatourcurrentBoardleadershipstructureandpracticesprovideappropriate independentoversightofmanagement ‰ StockholdersappreciatedmeetingwithourLeadIndependentDirectorandhearingdirectlyfromhimregardingourBoard’s oversightofthecompany’sstrategy,riskmanagementpractices,ourESGinitiatives,andourdriveforResponsibleGrowth ‰ StockholderswereinterestedinthecultureofourBoardandhowdirectorsinfluencemanagement’sexecutionofour company’svaluesandriskmanagementpractices Governance Enhancements Informed by Stockholder Input OurBoardevaluatesandreviewsinputfromourstockholdersinconsideringtheirindependentoversightofmanagementand ourlong-termstrategy.Aspartofourcommitmenttoconstructiveengagementwithinvestors,weevaluateandrespondto theviewsvoicedbyourstockholders.Ourdialoguehasledtoenhancementsinourcorporategovernance,ESG,and executivecompensationactivities,whichourBoardbelievesareinthebestinterestofourcompanyandourstockholders. Forexample,afterconsideringinputfromstockholdersandotherstakeholders,ourcompany: ‰ Continuedtorefineourstockholderengagementprocess toconnectstockholderswithourLeadIndependentDirector, Chairman,otherdirectors,andexecutivemanagement ‰ EnhancedourESGdisclosure in2017bypublishingour2016Environmental,Social&GovernanceHighlightsand includingadditionalESGinformationinourotherdisclosuredocuments ‰ Continuedouractiveparticipation intheSustainabilityAccountingStandardsBoard(SASB)andourworkwiththeTask ForceonClimate-relatedFinancialDisclosure,includingthroughtheserviceofourChiefAccountingOfficerontheSASB FoundationBoardofDirectors ‰ Providedadditionaldisclosure regardingourcommitmenttoequalpayforequalwork,includingratiosoffemale-to-male employeecompensationandminority-to-non-minorityemployeecompensation(seepage26),andourotherhumancapital managementpractices ‰ IncorporatedanemergencysuccessionplanforourLeadIndependentDirector andChairmaninourCorporate GovernanceGuidelinestoprovideforanorderly,interimsuccessionprocessintheeventofextraordinarycircumstances ‰ Increasedtheretirementageofdirectors to75from72toexpandtheavailablepoolofpotentialdirectorcandidatesand maintainabalancedmixinthelengthofdirectortenures ‰ Addedtoourcorporategovernancedisclosure regardingourBoard’spractices,includingregardingourdirectors’skills, theirself-evaluationprocess,andoversightofrisk ‰ Furtherexpandedourpoliticalactivitiesandlobbyingdisclosures in2017toincludeamoredetaileddiscussionofour participationinthepoliticalprocess.Seethe“PoliticalActivities”pageofourwebsiteat http://investor.bankofamerica.com Alsosee“StockholderEngagement&SayonPayResults”onpage38foradiscussionofourcompensation-related stockholderengagementandourhistoricalSayonPayvoteresults. Communicating with our Board StockholdersandotherpartiesmaycommunicatewithourBoard,anydirector(includingourChairmanoftheBoardorLead IndependentDirector),independentmembersofourBoardasagroup,oranycommittee.Communicationsshouldbe addressedtoourCorporateSecretaryatBankofAmericaCorporation,HearstTower,214NorthTryonStreet,NC1-027-18-05, Charlotte,NorthCarolina28255.Dependingonthenatureofthecommunication,thecorrespondenceeitherwillbeforwarded tothedirector(s)namedorthematterswillbepresentedperiodicallytoourBoard.TheCorporateSecretaryorthesecretaryof thedesignatedcommitteemaysortorsummarizethecommunicationsasappropriate.Communicationsthatarepersonal grievances,commercialsolicitations,customercomplaints,incoherent,orobscenewillnotbecommunicatedtoourBoardor anydirectororcommitteeofourBoard.Forfurtherinformation,refertothe“ContacttheBoardofDirectors”sectiononour websiteat http://investor.bankofamerica.com . 22 BankofAmericaCorporation2018ProxyStatement Total of 02 pages in section PROXYSUMMARY 2014-2017 • Revisions to peer group to reflect appropriate comparators for our evolving global business (p.47-49) NEW • IncludedamemberoftheCompensationCommitteeinshareholderoutreach(p.iiiandv) • Otherrecentshareholder-drivenchanges: • Addedproxyaccessprovisionstoourby-laws • Increased the weight of corporate performance goals from 50% to 60% in determining compensation of ourNamedExecutiveOfficers(“NEOs”)undertheAnnualIncentiveProgram • Strengthened disclosure to reflect that we once again set target goal for Company performance (net income)undertheAnnualIncentivePlanatlevelshigherthanprioryearactualCompanyperformance • Memorialized our general practice of granting equity awards subject to vesting periods greaterthanone yearbyaddingminimumvestinglanguagetoour2016Plan • Engagedanewindependentcompensationconsultant,PayGovernance,in2016 • Addedenhanceddisclosureregardingourenvironmental,socialandgovernancepractices • Adopted limits on Director service on other boards in keeping with market best practices and investor inputregardingaDirector’stimecommitment • Refreshedourboardmembership(onenew2017director,twonewdirectorselectedin2016),withaview towardsincreasingdiversityandboardskillsandexpertise(p.vii) • OurCEO’sbasesalaryhasnotbeenincreasedinthepastfiveyears,hisbonusopportunityhasnotbeen increased since 2010 and his long-term incentive opportunity was decreased from a 4.75 multiple of salarytoa3.75multipleofsalaryin2014tobebetteralignedwithpeergrouplevels • AdoptedmajorityvotingtoelectDirectorsinuncontestedelections We regularly conduct ongoing reviews of both our governance and executive compensation practices to ensure that we maintain best practices and enhanceddisclosure in our proxy statement and other SEC filings. Wehave alsoworkedtoexpandandenhanceourpublicdisclosurearoundthetopicsofinteresttoourshareholdersduring thesediscussions. In general, our outreach program over the past two years has targeted shareholders representing approximately 75%ofouroutstandingshares,withinvestordiscussionsoccurringthroughouttheyearonrelevanttopicsandon theevolvinggovernancelandscapeintheoff-season,aswellasourannualmeetingballotitems. • In-Season Engagement . In 2017, prior to our annual meeting, we reached out to shareholders representing approximately 75% of our outstanding shares (including each of our 35 largest holders) and helddiscussionswithallavailableshareholders. • Off-Season Engagement . After our 2017 annual meeting, we reached out to shareholders representing approximately 75% of our outstanding shares and held discussions with all interested holders, with a member of our Compensation Committee participating in many meetings, representing approximately one-half of our outstanding shares, to obtain additional feedback on our corporate governance and executive compensation practices. Specific shareholder feedback has directly resulted in changes and enhancementstoourexecutivecompensationandcorporategovernanceprograms. v Total of 04 pages in section PROXYSUMMARY 2017-2018 SummaryofKeyMessagesandActionsRelatedtoShareholderOutreachandResponseto2017Say-on-PayVote Topic WhatWeHeardFromOurShareholders AmazonaccelerationofCEO LTIawardsduetoretirement eligibility • Strongpreferenceforstrictdouble-triggerawards • Helpful to receive clarification that the CEO received no incremental CIC paymentsandthattheCEOreceivednoLTIpaymentsin2017 FavorabilityofrelativeLTI metrics • Strong support for the addition of a TSR metric with a thoughtful broad comparatorgroup LTI-goalsettingdisclosure • An enhancement of disclosure regarding the process of long-term incentive goal setting would be helpful. Understand concerns about providing long-term market guidance were AAWW to explicitly disclose long-termincentivemetrics. ShareOwnershipGuidelines • While current 5x CEO requirement is on market, further enhancement of CEOstockownershipwouldbeviewedfavorably PeerGroup • Weunderstandyourcontinuedsignificantrevenuegrowthandyourbusiness model are unique and global. Taking into account GICS codes along with otherrelevantfactorswhenreviewingyourpeergroupmakessense. BoardComposition& Refreshment • InquiriesmadeaboutBoarddiversity,inparticular,genderdiversity,annual Director evaluation process and use of an external advisor to conduct annualevaluation • Certain investors specifically asked about Board succession planning, particular skills the Board is seeking, the process of identifying Director candidatesandCommitteerefreshmentandrotation ESG/Sustainability • Investors asked about certain Environmental, Social and Governance (“ESG”) factors that may materially impact our business and/or create reputationalrisks • Investorinterestinsustainabilitycontinuestogainmomentumasinvestors seek to gain a deeper understanding of the Company’s focus on and commitmenttoESGmatters CHANGESMADEIN DIRECTRESPONSETOFEEDBACK • Changessinceourlastannualshareholdermeeting: 2017-2018 • Transitiontostrictdouble-triggerstandardforallawards,requiringactualseparationfromservice forsecondtrigger(p.58-60) NEW • Addition of relative TSR performance measure to LTI awards to further strengthen pay-for-performancelink(p.43-45) NEW • EnhanceddisclosureregardingLTIperformancetargetsetting(p.44) NEW • Increased CEO stock ownership guidelines to 6x base salary to further align CEO interest with shareholders(p.50) NEW • The naming of two new nominees to the 2018 Board slate with a focus on gender diversity, cybersecurity,bankingandfinancialskillsaswellasotherskillsinourboardmatrix(seepagesvii, viii,6,7,14and15).AlsorotatedChairsofBoardandNominating&GovernanceCommitteein2017 (p.7,11and13) NEW iv ATLAS AIR WORLDWIDE HOLDINGS, INC. BANK OF AMERICA CORPORATION PROXYSUMMARY • Focusedonmaintainingahealthycashposition—$305.5million 2 atyear-end2017 • Maintainedauthoritytorepurchasesharesupto$25million In May 2017, we issued $289.0 million aggregate principal amount of convertible senior notes that mature on June 1, 2024. The net proceeds of the offering were used to repay higher-cost revolving credit facility borrowings; enhance business and financial flexibility; support long-term growth; fund the cost of convertible note hedge transactions (after such cost was partially offset by proceeds to the Company from the sale of warrants); and for generalcorporatepurposes. Shareholder Outreach, Engagement and Say-on-Pay Responsiveness We have engaged in extensive ongoing shareholder outreach over the past seven years to better understand shareholderperspectivesandconsiderideasforimprovementsto,amongotherthings,ourcorporategovernance, sustainability and executive compensation practices, as well as our business strategy and performance, capital allocation strategy and public disclosures. This year, we again engaged in a particularly robust shareholder outreach program, reaching out to shareholders representing approximately 75% of our outstanding shares and engaging in discussions with those representing about one-half of our outstanding shares. We have made significantrecentchangestoourgovernanceandexecutivecompensationpracticesinresponsetoinsightsgained duringthesediscussions. In response to our 2017 Say-on-Pay result, the Board and its Compensation Committee undertook a particularly robust and multifaceted outreach program during the balance of 2017. These extra efforts included participation by a member of our Compensation Committee in multiple in-person and telephonic meetings with shareholders and resulted in specific shareholder feedback prompting tangible compensation and governance enhancements. All committee members also convened in a number of extra, non-regularly-scheduled meetings and discussions and considered and provided analysis focused onSay-on-Payresponsiveness. During all shareholder outreach meetings, AAWW sought input on proactively developed changes to our pay program, as well as emerging topics of expressed shareholder interest, such as environmental, social and governance issues (“ESG”). We received many supportive and positive comments on the Company’s direction (both from a business growth and governance perspective), the proposed pay program changes and our board rotation/refreshment and outlook, even from several shareholders who voted against Say-on-Pay or individual directorsin2017. As a result of specific feedback from shareholders, we implemented a number of key changes to our compensation program and practices to specifically address our recent Say-on-Pay outcomes, and made changes to our governance practices in response to topics of importance raised by shareholders. Examplesoffeedbackreceivedarealsoincludedbelow. 2 Includescash,cashequivalents,short-terminvestmentsandrestrictedcash. iii CorporateGovernance Stockholder Engagement OurBoardandmanagementarecommittedtoregularengagementwithourstockholdersandsolicitingtheirviewsandinputon importantperformance;corporategovernance;environmental,social,andgovernance,includinghumancapitalmanagement; andexecutivecompensationmatters;andothertopics. ‰ Board-DrivenEngagement. OurCorporateGovernanceCommitteeisresponsibleforoverseeingthestockholderengagement processandtheperiodicreviewandassessment ofstockholderinput.BothourChairmanandourLeadIndependentDirector playacentralroleinourBoard’sstockholderengagementefforts,andourdirectorsregularlyparticipateinmeetingswith stockholdersandconsiderinputreceivedfrominvestors. ‰ CommitmentCodifiedinGoverningDocuments. ReflectingourBoard’sunderstandingofthecriticalrolestockholder engagementplaysinourgovernance,thiscommitmentandourBoard’soversightofstockholderengagementwerecodifiedin 2016inourCorporateGovernanceGuidelinesandourCorporateGovernanceCommittee’s charter. ‰ Year-RoundEngagementandBoardReporting. OurCorporateSecretary,InvestorRelations,ESG,andHumanResources teams,togetherwithexecutivemanagementmembersanddirectors,conductoutreachtostockholdersthroughouttheyear toobtaintheirinputonkeymatters andtoinformourmanagementandourBoardabouttheissuesthatourstockholderstell usmattermosttothem. ‰ TransparencyandInformedGovernanceEnhancements. OurBoardroutinelyreviewsourgovernancepracticesandpolicies, includingourstockholderengagementpractices,withaneyetowardscontinualimprovementandenhancements.Stockholder inputisregularlysharedwithourBoard,itscommittees,andmanagement,facilitatingadialoguethatprovidesstockholders withtransparencyintoourgovernancepracticesandconsiderations,andinformsourcompany’senhancementofthose practices.Inadditiontostockholdersentiments,ourBoardconsiderstrendsingovernancepracticesandregularlyreviews thevotingresultsofourmeetingsofstockholders,thegovernancepracticesofourpeersandotherlargecompanies,and currenttrendsingovernance.SeethenextpageforadditionaldetailonrecentgovernanceenhancementsourBoard implemented. Ourdirectorsandmanagementcontinuedtomeetwithourmajorstockholdersandkeystakeholdersthroughout2017toobtain theirinputandtodiscusstheirviewson,amongotherthings,ourBoard’sindependentoversightofmanagement,ourBoard’s composition,directorsuccessionplanningandrecruitment,andself-evaluations,andourBoard’soversightofstrategic planning,riskmanagement,humancapitalmanagement,environmentalinitiatives,andotherissuesimportanttoour stockholders.TheseviewsweresharedwithourBoardanditscommittees,whereapplicable,fortheirconsideration. In addition to engaging with our institutional stockholders, in March 2018 we published video interviews with our directors to provide all stakeholders, including our retail stockholders, with the opportunity to hear directly from our Board. The videos address the Board’s governance practices, oversight of management, and our company’s Responsible Growth; they are availableatw ww.bankofamerica.com/annualmeeting . By the Numbers: Stockholder Engagement in 2017 and Early 2018 Representing over 50% of our shares outstanding,with updates about our company and invitations tomeetwith ourmanagement and/or independent directors We held in-person and telephonicmeetingswith stockholders representing approximately 38% of our shares outstanding... ... and independentmembers of ourBoardwere in attendance at approximately 96% of these in-person and telephonicmeeting We contacted our Top 100 Stockholders… and other key stakeholders BankofAmericaCorporation2018ProxyStatement 21