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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BankAmerica Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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Notes:
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LOGO
David A. Coulter
Chairman and Chief Executive Officer
March 24, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
BankAmerica Corporation (BAC) to be held at 2:00 p.m. (Pacific Time) on
Thursday, May 22, 1997, at the Sheraton Grande Hotel Los Angeles, 333 South
Figueroa Street, Los Angeles, California.
At this year's meeting, you are being asked to (1) elect directors, (2)
ratify the appointment of independent auditors, (3) approve an amendment to
BAC's Certificate of Incorporation to increase the number of authorized shares
of common stock and to effect a two-for-one stock split of BAC common stock,
(4) approve the BAC Performance Equity Program, and (5) act on two shareholder
proposals. The accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement describes these items. I urge you to read this information
carefully.
Your Board of Directors unanimously believes that the four items proposed by
the board are in the best interests of BAC and its shareholders, and
accordingly recommends a vote FOR Item Nos. 1, 2, 3 and 4 on the enclosed
proxy card.
In addition to the formal business to be transacted, management will present
a report on BAC's operations and plans and will respond to comments and
questions of general interest to shareholders.
I hope you will find it convenient to be present at the meeting. However, it
is important that your shares be represented and voted whether or not you plan
to be present. Therefore, please promptly vote and deliver your proxy.
Thank you.
Sincerely,
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
To the Holders of Common Stock
of BankAmerica Corporation:
The Annual Meeting of Shareholders of BankAmerica Corporation (BAC) will be
held at the Sheraton Grande Hotel Los Angeles, 333 South Figueroa Street, Los
Angeles, California, 2:00 p.m. (Pacific Time) on Thursday, May 22, 1997, for
the following purposes:
1. To elect 14 directors to serve until the 1998 Annual Meeting of
Shareholders or until their earlier retirement, resignation or removal;
2. To ratify the appointment of Ernst & Young LLP as independent auditors;
3. To approve an amendment to BAC's Certificate of Incorporation to
increase the number of authorized shares of common stock and to effect a
two-for-one stock split of BAC common stock;
4. To approve the BAC Performance Equity Program;
5. To act on a shareholder proposal concerning cumulative voting;
6. To act on a shareholder proposal concerning directors' compensation; and
7. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed March 24, 1997 as the record date for the
determination of the shareholders entitled to notice of and to vote at the
Annual Meeting. A list of shareholders of record will be available at the
meeting and for ten days prior to the meeting at Bank of America National
Trust and Savings Association, Legal Department, 555 South Flower Street, 8th
Floor, Los Angeles, California. The Proxy Statement and form of proxy for the
Annual Meeting are first being mailed with and on the date of this notice.
By Order of the Board of Directors
/s/ Cheryl Sorokin
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Cheryl Sorokin
Executive Vice President and Secretary
March 24, 1997
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN
THE ENCLOSED RETURN ENVELOPE. ALTERNATIVELY, IF YOU ARE A SHAREHOLDER OF
RECORD, USE THE TOLL-FREE TELEPHONE NUMBER SET FORTH ON THE PROXY CARD TO
AUTHORIZE THE PROXYHOLDERS TO VOTE YOUR SHARES. USING THE TELEPHONE TO
GRANT A PROXY WILL REDUCE THE COMPANY'S EXPENSE IN SOLICITING PROXIES.
TELEPHONE PROCEDURES FOR GRANTING PROXIES ARE NOT AVAILABLE TO
SHAREHOLDERS WHO OWN SHARES IN "STREET NAME" THROUGH A BROKER.
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PROXY STATEMENT
TABLE OF CONTENTS
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Corporate Governance...................................................... 1
. Board of Directors and Board Committees.............................. 1
. Nominating Procedures for BAC's Board................................ 3
. Director Remuneration, Stock Ownership Guidelines, Retirement and
Director Attendance.................................................. 4
Executive Compensation, Benefits and Related Matters...................... 6
. Report of the Executive Personnel and Compensation Committee......... 6
. Shareholder Return Performance Graph................................. 13
. Summary Compensation Table........................................... 14
. Option/SAR Grants in Last Fiscal Year................................ 15
. Aggregated Option/SAR Exercises in the Last Fiscal Year and Fiscal
Year-End Options/SAR Values........................................ 16
. Pension Plans........................................................ 16
. Termination of Employment Arrangements............................... 17
. Change in Control Arrangements....................................... 17
. Contracts with Directors and Executive Officers...................... 19
. Banking and Other Transactions....................................... 19
. Compensation Committee Interlocks and Insider Participation.......... 19
. Certain Business Relationships and Legal Proceedings................. 19
Ownership of BAC Stock.................................................... 21
. Security Ownership of Certain Beneficial Owners...................... 21
. Section 16(a) Beneficial Ownership Reporting Compliance.............. 22
Matters to Be Considered at the Meeting................................... 23
. Board Proposals:
Item No. 1: Election of Directors.................................... 23
Item No. 2: Ratification of Appointment of Ernst & Young LLP as
Independent Auditors..................................... 28
Item No. 3: Approve an Amendment to BankAmerica Corporation
Certificate of Incorporation to Increase the Number of
Authorized Shares of Common Stock and to Effect a Two-
For-One Stock Split of BAC Common Stock ................. 28
Item No. 4: Approve the BankAmerica Corporation Performance Equity
Program.................................................. 31
. Shareholder Proposals:
Item No. 5: Shareholder Proposal Concerning Cumulative Voting........ 38
Item No. 6: Shareholder Proposal Concerning Directors' Compensation.. 40
Proxies and Voting at the Meeting......................................... 41
Other Matters............................................................. 43
. Other Business for Meeting........................................... 43
. Proxy Solicitation................................................... 44
. Annual Report on Form 10-K and Annual Report to Shareholders......... 44
. Submission of Shareholder Proposals for 1998 Meeting................. 44
. Your Vote Is Important............................................... 44
</TABLE>
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| MAILING DATE: |
| MARCH 24, 1997 |
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CORPORATE GOVERNANCE
BOARD OF DIRECTORS AND BOARD COMMITTEES
Board of Directors
The BAC board oversees the management of the business of BAC and its
subsidiaries and determines overall corporate policies; the board is also
responsible for the declaration of dividends and appoints the chief executive
officer and other BAC officers. The board held ten meetings in 1996, all of
which were held jointly with the board of Bank of America National Trust and
Savings Association (Bank), BAC's principal subsidiary. The board has adopted
a set of corporate governance principles which state the board's view on the
role of the board, board structure, committee meetings and other corporate
governance issues. You can find highlights of some of the major points from
the principles on page 89 of the 1996 Annual Report to Shareholders. If you
would like the complete text of the principles, please write the Corporate
Secretary at the following address:
BankAmerica Corporation
Corporate Secretary's Office #13018
Bank of America Center
555 California Street
San Francisco, CA 94104
Board Committees
The standing committees of the BAC Board of Directors are the Auditing and
Examining, Executive, Executive Personnel and Compensation, Nominating, and
Public Policy committees. Members of these committees on the record date are
listed below. No BAC officer or former officer was a member of these
committees except for the Executive Committee. Richard Rosenberg served as a
member of the committee during his tenure as Chief Executive Officer and was
appointed chairman of the Executive Committee in May, 1995. On January 8, 1996
David Coulter, who succeeded Richard Rosenberg as Chief Executive Officer of
BAC on January 1, 1996, was appointed a member of the Executive Committee.
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Auditing and Executive Personnel
Examining(/1/) Executive and Compensation
Donald Guinn, Chair Richard Rosenberg, Chair Timm Crull, Chair
Andrew Brimmer Joseph Alibrandi Joseph Alibrandi
Richard Clarke Peter Bedford Jill Barad
Ignacio Lozano, Jr. David Coulter Kathleen Feldstein
Walter Massey Timm Crull Frank Hope, Jr.
Solomon Trujillo Kathleen Feldstein A. Michael Spence
Michael Spence
Nominating Public Policy
Joseph Alibrandi, Chair Peter Bedford, Chair
Peter Bedford Jill Barad
Frank Hope, Jr. Frank Hope, Jr.
John Richman John Richman
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(1) Glenhall Taylor, Jr., a former BAC officer, serves as a consultant to the
committee.
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The functions of each standing committee and the number of meetings held by
each in 1996 follow.
Auditing and Examining Committee 9 meetings in 1996
. Monitors areas of significant risk, including credit risk, market risk,
liquidity risk, cross border risk, operational risk, and compliance;
. Monitors the adequacy of BAC's internal controls through reviewing
reports of regulatory examinations of BAC and its subsidiaries,
management letters, and other assessments of the adequacy of internal
controls from the independent auditors and internal auditors, together
with any proposed responses by management;
. Reviews BAC's principal financial reports and significant accounting
policy and reporting issues;
. Annually reviews and approves the scope of the auditing and credit
examination functions of BAC and monitors their performance;
. Recommends to the board the firm to be employed by BAC as its
independent auditors and monitors the firm's performance and
independence;
. Reviews reports related to the fiduciary activities of BAC's
subsidiaries and makes recommendations to the board with respect to
fiduciary activities of the subsidiaries based on those audit and
examination reviews; and
. Assists the board in meeting its fiduciary responsibilities with respect
to certain employee benefit plans of BAC.
Executive Committee 5 meetings in 1996
. Between meetings of the board, exercises all powers and authority of the
board to manage BAC's business and affairs, except the appointment or
removal of the chairman of the board or the president, dividend
declarations, and certain other basic board duties specifically reserved
to the full board in the By-laws.
Executive Personnel and Compensation Committee 5 meetings in 1996
. Approves the compensation of BAC's executive officers, including salary
and perquisites;
. Administers BAC's short-term and long-term incentive plans and deferred
compensation programs established for executive officers of BAC and its
subsidiaries; and
. Advises on succession planning (including the selection of the chief
executive officer) and the selection, development and performance of
executive officers of BAC and its subsidiaries.
Nominating Committee 5 meetings in 1996
. Recommends candidates to fill vacancies on the board and a slate of
directors for election at the Annual Meeting;
. Evaluates the size and composition of the board, and recommends to the
board criteria for selection of directors; and
. Periodically reviews and makes recommendations to the board with respect
to BAC's overall compensation program for directors.
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Public Policy Committee 4 meetings in 1996
. Identifies and monitors broad political, social and environmental trends
that could affect BAC's or its subsidiaries' performance and the related
interests of employees, shareholders and customers, and the general
public;
. Advises the board and management on long-range plans and programs for
adjusting operations to those trends and issues;
. Provides Community Reinvestment Act (CRA) oversight;
. Recommends to the board and management, as appropriate, action on
specific public policy issues; and
. Advises the board and management as to its evaluation of related
policies, practices and procedures.
Actions taken by committees are reported to the board, usually at the board's
next meeting.
NOMINATING PROCEDURES FOR BAC'S BOARD
You may submit recommendations for new directors to the BAC Nominating
Committee through the Corporate Secretary. Recommendations should include
detailed biographical information and the nominee's consent to serve. The
Corporate Secretary will submit the recommendation to the Nominating
Committee. The Nominating Committee reviews candidates to fill vacancies and
recommends the slate for the next Annual Meeting to the Board of Directors. A
candidate should show evidence of leadership in the candidate's field, have
broad experience and the ability to exercise sound business judgment, and be
willing to attend board and committee meetings. In selecting directors the
board generally seeks a combination of active or former chief executive
officers of major complex businesses, leading academics and entrepreneurs,
including women and ethnic minority individuals.
Shareholders of record of BAC common stock wishing to nominate directors from
the floor of the 1997 Annual Meeting must do so in accordance with BAC's By-
laws. The By-laws provide that only a shareholder of record is entitled to
nominate a director from the floor of the meeting and the shareholder must
give BAC's Corporate Secretary 30 to 60 days' prior notice of the nomination
to be made at the Annual Meeting. To be considered at BAC's 1997 meeting, the
earliest date for receipt of notice was March 23, 1997 and the last day for
receipt of notice is April 22, 1997. The address for mailing is listed on page
1. The notice must include the following information: (1) with respect to each
person the shareholder wishes to nominate, all information relating to the
person required to be disclosed in solicitations of proxies for election
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (Securities Exchange Act); (2) the name and address of the shareholder
making the nomination, as they appear in BAC's stock records; and (3) the
class and number of shares of BAC stock the shareholder owns. If you wish to
make a nomination for a director for the BAC 1997 Annual Meeting, please
obtain a copy of BAC's By-laws from the Corporate Secretary and familiarize
yourself with the director nomination requirements.
In 1997 BAC amended its By-law provisions for director nominations made from
the floor of the Annual Meeting. Shareholders of record of BAC common stock
wishing to nominate directors from the floor of the 1998 Annual Meeting and
future shareholder meetings must do so in accordance with BAC's amended By-
laws. The Amended By-laws provide that only a shareholder of record is
entitled to nominate a director and the shareholder must give BAC's Corporate
Secretary 90 to 120 days' prior notice of the nomination to be made at a
shareholder meeting. The address for mailing is listed on page 1. The notice
must include the following information: (1) with respect to each person the
shareholder proposes to nominate (a) the name, age, business address and
residence address of the person, (b) the principal occupation of the person,
(c) the class and number of shares of BAC stock which are owned directly or
beneficially by the person, (d) a statement as to the person's citizenship,
and (e) such person's written consent to serve as a director if elected; (2)
as to the shareholder giving the notice (a) the name and address, as they
appear on BAC's books, of such shareholder and (b) the class and number of
shares of BAC's stock which are owned by such shareholder; and (3) if the
shareholder intends to solicit proxies in support of such shareholder's
nominee(s), a representation to that effect. If you wish to make a nomination
for a director for the BAC 1998 Annual Meeting and future shareholder
meetings, please obtain a copy of BAC's Amended By-laws from the Corporate
Secretary and familiarize yourself with the director nomination requirements.
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DIRECTOR REMUNERATION, STOCK OWNERSHIP GUIDELINES, RETIREMENT AND DIRECTOR
ATTENDANCE
Director Remuneration
BAC compensates directors who are officers of BAC as officers, and does not
pay these officers additional compensation for their service as BAC directors.
BAC compensates non-officer directors for their service in the form of an
annual retainer and meeting fees, and until April 1, 1996, made payments to
non-officer directors following retirement under the BAC Retirement Plan for
Non-officer Directors (Retirement Plan). Effective March 31, 1996 the Board
terminated the Retirement Plan. (See "Retirement"--"Retirement Plan for Non-
officer Directors and Elimination of Retirement Plan" later.) The board
expects non-officer and officer directors to meet board-established guidelines
for BAC stock ownership. (See "Stock Ownership Guidelines" later.) BAC pays
honorary directors the same annual retainer and meeting fees in the amounts
specified later for non-officer directors.
Retainer
BAC pays non-officer BAC and Bank directors a $40,000 annual combined retainer
for service on the BAC and Bank boards. The Board requires that fifty percent
of this retainer be deferred into restricted stock equivalent units under the
BAC Deferred Compensation Plan for Directors. This deferred amount is
converted into restricted stock equivalent units on the basis of the fair
market value of BAC common stock at the time payment is deferred. The value of
these restricted stock equivalent units fluctuates with changes in the market
price of BAC common stock, thereby tying this portion of directors'
compensation to changes in BAC's common stock price. The Deferred Compensation
Plan for Directors provides for dividend equivalent credits to be added to the
restricted stock equivalent units as dividends are paid on BAC common stock.
Directors may also elect to defer more than 50% of the retainer into
restricted stock equivalent units or to defer up to 50% of the retainer into
an interest bearing account. All deferred amounts are paid in cash following
termination of service as a director or, at the director's option, upon
retirement from the director's principal occupation if later than termination
of board service. Directors may elect to be paid amounts due under the
Deferred Compensation Plan for Directors in a lump sum or in a series of
payments in each case commencing January 1 of the year immediately following
either (1) the year a director retires from the board, or (2) the later of the
year a director retires from the board or retires from his or her principal
occupation.
BAC pays committee chairs an additional annual combined retainer for their
service as BAC and Bank board committee chairs. The retainer for the Chair of
the BAC and Bank Auditing and Examining Committees is $15,000 and the retainer
for each of the other committee Chairs is $3,000. BAC pays members of the
Auditing and Examining Committees other than the Chair an additional combined
retainer of $7,500 for their service on these committees.
Meeting Fees
BAC pays non-officer directors $1,200 for each day they attend a BAC or Bank
board meeting, or for each day they attend a joint meeting of the BAC and Bank
boards. BAC pays non-officer committee members $1,200 for each committee or
joint committee meeting attended. Non-officer directors may also be paid the
equivalent of a board meeting fee for attendance at certain qualifying
business events as determined by the Chairman of the Board. Directors may
elect to defer receipt of fees into a restricted stock equivalent unit account
or an interest bearing cash account under the Deferred Compensation Plan for
Directors. BAC reimburses all directors for the expense of attending meetings.
Stock Ownership Guidelines
The board has adopted a BAC stock ownership guideline for non-officer
directors of three times the annual retainer, to be achieved within five years
of joining the board (for directors at the time of the adoption of the
guidelines, five years from adoption in early 1995). Directors may meet the
guideline with either or both BAC common shares or restricted stock equivalent
units under the Deferred Compensation Plan for Directors. All of
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BAC's current non-officer directors have met the BAC stock ownership guideline
for non-officer directors, except for its newest director (elected May, 1996),
based on BAC's closing common stock price of $113.75 per share on February 28,
1997. Additionally, in 1994, the Executive Personnel and Compensation
Committee adopted BAC stock ownership guidelines for executive officers and
certain other senior management officers. (See "Executive Compensation,
Benefits and Related Matters"--"Report of the Executive Personnel and
Compensation Committee"--"Stock Ownership Guidelines" later in this Proxy
Statement.)
Retirement
Retirement Plan for Non-Officer Directors and Elimination of Retirement Plan
As part of BAC's annual review of corporate governance issues, the Board of
Directors voluntarily eliminated the Retirement Plan effective March 31, 1996.
The board took this action based on the belief that a pension plan for
directors was not currently needed for BAC to attract and retain excellent
directors and that the elimination could be accomplished in a manner
consistent with the board's goal of continuing to align director compensation
more closely with shareholder interests. As a result of the board's
elimination of the plan, non-officer directors joining the board after March
31, 1996 will not receive retirement payments from BAC. During 1996, all of
the board's then current directors elected to have the present value of
accrued benefits under the Retirement Plan converted to restricted stock
equivalent units under the Deferred Compensation Plan for Directors based on
the average fair market value of BAC common stock during the first ten trading
days of April, 1996. As described earlier under "Director Remuneration"--
"Retainer", the value of restricted stock equivalent units fluctuates with the
fair market value of BAC common stock.
BAC continues to make payments under the Retirement Plan to non-officer
directors who retired after the plan's adoption and prior to the plan's
elimination in March 1996. Under the Retirement Plan, BAC pays these former
directors with at least ten years of service (or who reached the board's
mandatory retirement age with at least five years of service) an annual
retirement payment for the lesser of ten years or the number of years the
director served on the board. The annual payment is generally equal to the
annual board retainer from time to time in effect.
Mandatory Retirement Policy
The board has a mandatory retirement policy provides that directors will not
stand for election after reaching age 70 and that an officer may not serve as
a director after retirement from officer status, except that a retiring chief
executive officer or chief executive officer who relinquishes the title in
anticipation of retirement from officer status may continue to stand for
election as a director after retirement until reaching the board's mandatory
retirement age of 70.
Director Attendance
All incumbent BAC directors attended 75% or more of the combined meetings of
the BAC board and board committees on which they served during 1996. In
addition to attendance at board and committee meetings, directors discharge
their responsibilities throughout the year by personal meetings and telephone
contact with BAC executive officers and others regarding the business and
affairs of BAC and its subsidiaries.
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EXECUTIVE COMPENSATION, BENEFITS AND RELATED MATTERS
REPORT OF THE EXECUTIVE PERSONNEL AND COMPENSATION COMMITTEE
Responsibilities and Composition of the Committee
The Executive Personnel and Compensation Committee (Committee) is responsible
for (1) establishing compensation programs for executive officers of BAC and
its subsidiaries designed to attract, motivate and retain key executives
responsible for the success of the corporation as a whole, (2) administering
and maintaining such programs in a manner that will benefit the long-term
interests of BAC and its shareholders, and (3) determining the compensation of
BAC's executive officers. The Committee also advises on succession planning
(including the selection of the chief executive officer) and the selection,
development and performance of executive officers of BAC and its subsidiaries.
The Committee serves pursuant to a charter adopted by the Board of Directors.
The Committee is composed entirely of directors who have never served as
officers of BAC.
Compensation Philosophy and Objectives
The Committee believes that BAC's executive officer compensation should be
determined according to a competitive framework based on overall financial
results, individual contributions, teamwork and business unit results that
help build value for BAC's shareholders. Within this overall philosophy, the
Committee's specific objectives are to:
. Align the financial interests of executive officers with those of
shareholders by providing significant BAC equity-based long-term
incentives.
. Provide annual variable compensation awards that (1) take into account
BAC's overall performance relative to corporate objectives and
performance of the Peer Group and (2) are based on individual
contributions, teamwork and business unit results that help create value
for BAC's shareholders. (Peer Group is defined after this list of
objectives.)
. Offer a total compensation program that takes into account the
compensation practices and financial performance of the Peer Group.
. Emphasize performance-based and equity-based compensation as executive
officer level increases. In particular, as officer level increases, the
Committee (1) focuses more on overall BAC performance, teamwork,
individual contributions and business unit results and less on Peer
Group marketplace compensation comparisons, (2) emphasizes variable,
performance-based compensation versus fixed compensation, and (3)
provides a significantly greater proportion of total compensation which
is equity-based. As a result, executive officers have a greater
proportion of total compensation at risk, meaning that payment will vary
depending upon overall BAC performance, teamwork and individual and
business unit contributions.
The Peer Group is composed of companies that are among the 15 largest United
States bank holding companies by asset size, including BAC. The Committee
selects various groupings of these 15 companies as it deems appropriate for
different compensation and financial performance comparisons. All 15 of these
companies are included in the performance peer group (i.e., the companies
covered by the Standard & Poor's (S&P) Bank Composite Index) used for the
shareholder return performance graph set forth later.
Compensation Components and Process
There are three major components of BAC's executive officer compensation:
(1) base salary, (2) annual incentive awards and (3) long-term incentive
awards.
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The Committee uses subjective judgment in determining executive officer
compensation levels for all of these components and takes into account both
qualitative and quantitative factors. The Committee does not assign specific
weights to these factors. Among the factors considered by the Committee are
the recommendations of the chief executive officer with respect to the
compensation of BAC's other key executive officers. However, the Committee
makes the final compensation decisions concerning these officers.
In making compensation decisions, the Committee considers compensation
practices and financial performance of the Peer Group. This information
provides guidance to the Committee, but the Committee does not target total
executive compensation or any component thereof to any particular point
within, or outside, the range of Peer Group results. However, the Committee
believes that compensation at or near the 50th percentile of the Peer Group
for base salaries and at or near the 75th percentile for total cash
compensation and long-term incentive awards is generally appropriate for the
Committee to use as a framework for compensation decisions. The Committee
considers specified percentiles on both an absolute basis and a size-adjusted
basis (i.e., reflecting compensation levels that are commensurate with BAC's
size relative to the sizes of the Peer Group companies). Specific compensation
for individual officers will vary from these levels as the result of
subjective factors considered by the Committee unrelated to compensation
practices of the Peer Group. (See "Compensation Philosophy and Objectives"
above.)
In making compensation decisions, the Committee also from time to time
receives assessments and advice regarding the compensation practices of BAC
and others from independent compensation consultants.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax deductibility by a
company of compensation in excess of $1,000,000 paid to any of its five most
highly compensated executive officers. However, performance-based compensation
that has been approved by shareholders is excluded from the $1,000,000 limit
if, among other requirements, the compensation is payable only upon attainment
of pre-established, objective performance goals and the board committee that
establishes such goals consists only of "outside directors" (as defined for
purposes of Section 162(m)). All of the members of the Committee qualify as
"outside directors."
In BAC's opinion, the full amount of compensation (1) paid under the Senior
Management Incentive Plan and (2) resulting from the grant of options and
stock appreciation rights under the 1992 Management Stock Plan continues to be
deductible. All other forms of awards under the 1992 Management Stock Plan
must meet the general requirements described in the previous paragraph in
order to avoid the deduction limitations of Section 162(m).
While the tax impact of any compensation arrangement is one factor to be
considered, the Committee evaluates such impact in light of its overall
compensation philosophy. The Committee intends to establish executive officer
compensation programs which will maximize BAC's deduction if the Committee
determines that such actions are consistent with its philosophy and in the
best interests of BAC and its shareholders. However, from time to time the
Committee may award compensation which is not fully deductible if the
Committee determines that such award is consistent with its philosophy and in
the best interests of BAC and its shareholders. In BAC's opinion, the payouts
of compensation in 1996 to executive officers other than Vice Chairman Michael
Murray are fully deductible by BAC. As indicated below under "Performance
Share Program--Vesting Summary", approximately $918,750 of the compensation
paid to Mr. Murray in 1996 is not tax deductible by BAC.
Base Salary
In establishing base salaries for executive officers for 1996, the Committee
considered (1) the significant scope of the duties and responsibilities of
each officer's position, which is attributable in part to the diversity of
BAC's lines of business, products and geographic base, (2) individual
contributions and business unit results, (3) the increased experience level
gained over the past year by those executive officers holding new positions,
(4) BAC's generally positive financial results, (5) the Committee's overall
philosophy of paying executive officers according to a competitive framework,
and (6) Peer Group compensation practices based on findings in a competitive
review performed in 1996 by an independent compensation consulting firm
retained by BAC.
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Annual Incentive Awards
BAC has two incentive award programs for executive and other officers under
which annual incentive awards may be made. Executive officers may receive cash
bonuses under the Senior Management Incentive Plan (SMIP) and restricted stock
or options under the 1992 Management Stock Plan (MSP). The Committee also has
discretion to make awards in a combination of cash under the SMIP and
restricted stock under the MSP.
The SMIP contains a formula for calculating the maximum amount of annual
incentive awards payable to certain executive officers under the SMIP. The
formula establishes a fixed percentage of adjusted income before tax expense
(pre-tax income) as the maximum aggregate amount available to be paid to
executive officers named in the Summary Compensation Table and certain other
executive officers as annual incentive awards under the SMIP. The formula also
sets the maximum percentage payable to any one executive officer at 0.20% of
pre-tax income. Under the formula, pre-tax income is adjusted to exclude the
effects of extraordinary items and the cumulative effect of certain accounting
changes.
This fixed percentage will decrease to the extent BAC's return on average
stockholders' equity in any given year falls below the target level set forth
in the SMIP. The Committee does not have the authority to increase the
percentage of pre-tax income available for aggregate or individual SMIP awards
or to adjust the return on average stockholders' equity target level. The
Committee does, however, have discretion to grant SMIP awards which are less
than the amounts called for by the formula on an aggregate or individual
basis, based on quantitative and qualitative factors which the Committee
determines are appropriate. The Committee exercised this discretion for the
1996 awards.
Long-Term Incentive Awards
MSP Description, Process and Practice
The MSP authorizes the Committee to make grants of stock options, stock
appreciation rights, restricted stock, restricted stock equivalent units and
other stock-based awards. Stock option awards under the MSP cannot be issued
with an exercise price below the market price of BAC common stock at the time
of the award and the exercise price cannot be changed after the award is
issued, except to accommodate any stock splits or conversions which would
affect all shareholders. It has been the practice of the Committee to grant
stock options to both executive officers and other members of senior
management. It also generally has been the practice of the Committee to grant
stock-based awards on an annual basis. However, the Committee will not
continue that practice if the shareholders approve the BAC Performance Equity
Program discussed later under "Performance Equity Program" and in Item No. 4
beginning on page 31.
The aggregate number of shares that may be granted to all MSP participants in
any one year is presently limited by the MSP to 1.5% of the number of BAC
common shares outstanding as of the end of the previous year, plus any shares
available for issuance but remaining unissued from the previous year.
In determining the size of each executive officer's stock option award made in
August, 1996, the Committee considered the results of the competitive review
performed in 1996 by an independent compensation consulting firm, as that
review pertained to long-term incentive compensation and total compensation.
The Committee also considered its objective of attaining long-term incentive
compensation levels deemed appropriate by the Committee as compared to Peer
Group compensation levels on a size-adjusted and an absolute basis. In
determining the value of the long-term incentive compensation to be provided
through option grants, the Committee used a variation of the Black-Scholes
option pricing model. (See footnote 2 of the table captioned "Option/SAR
Grants in Last Fiscal Year" for a discussion of the Black-Scholes option
pricing model.) The Committee also considered past stock option awards. The
Committee also took into account the vesting by February, 1996 of all three
installments of performance share units under the Performance Share Program
that was adopted in 1994. (The Performance Share Program is discussed later
under "Performance Share Program.") Further, the Committee took into account
the chief executive officer's award recommendations for the other key
executive officers.
8
<PAGE>
Performance Share Program
(a) Description
The Committee approved a Performance Share Program in 1994 covering nine
executive officers, including those named in the Summary Compensation Table
(other than Michael Murray and Michael O'Neill who were not then executive
officers of BAC). Under the Performance Share Program, which was adopted
pursuant to the MSP, the Committee awarded these nine executive officers an
aggregate of 695,000 performance share units on November 7, 1994. Each
performance share unit consisted of 0.6 of a share of BAC restricted common
stock and a cash component equal to 0.4 of the value of a share of BAC common
stock on the vesting date. On October 2, 1995, 20,000 performance share units
were awarded to Michael Murray following his appointment as a Vice Chairman of
BAC. All units granted under the Performance Share Program have vested (as
discussed later under "Vesting Summary").
Under the Performance Share Program, the vesting of the performance share
units was based on BAC's common stock price performance over a maximum three-
year period, with one-third of the units vesting upon the attainment of each
of three respective target stock prices for 10 trading days in a period of
20 consecutive trading days. The target stock prices for the vesting of the
three installments were set at $49.29, $56.69 and $65.19, respectively.
Relative to the stock price on the award date, the attainment of each of the
successive stock price targets represented a compound return of 15% to the
shareholders and the attainment of all three stock price targets represented a
total return to shareholders in excess of 52%.
(b) Objectives
The Performance Share Program was adopted based on the following objectives:
. To promote the creation of shareholder value by conditioning the vesting
of performance share units upon actual increases in BAC's common stock
price or superior relative total shareholder return;
. To attain more appropriate levels of long-term incentive awards;
. To promote teamwork and a common focus among executives by making the
vesting of performance share units dependent upon the effect of overall
BAC performance on BAC's stock price, or total shareholder return,
rather than upon individual and business unit contributions; and
. To facilitate increased stock ownership by executive officers by
including a cash component in each performance share unit that may be
used to pay income taxes when the units vest, thereby enabling the
executive officers to retain substantially all the stock underlying the
units.
(c) Vesting Summary
In 1995, the first and second target stock prices were attained. Accordingly,
the first and second installments of performance share units vested, resulting
in payouts in 1995 consisting of the release of the restricted stock portions
of such units and the payment of the cash portions of such units. In February,
1996, the third and final target stock price was attained. Consequently, the
final one-third of the performance share units vested, resulting in payouts in
February, 1996 consisting of the release of the restricted stock portions of
such units and the payment of the cash portions of such units. All of Mr.
Murray's performance share units, which were awarded after the vesting of the
first two installments of performance share units, were subject to the same
vesting requirements as the third and final installment of performance share
units held by the nine executive officers originally covered by the
Performance Share Program. Therefore, all of Mr. Murray's performance share
units also vested in February, 1996.
Pursuant to regulations adopted under Section 162(m) of the Internal Revenue
Code, the payout from the performance share units granted on November 7, 1994
were tax deductible by BAC at the time of vesting of each installment.
However, as discussed below, BAC may not deduct the payout resulting from the
vesting of Mr. Murray's performance share units.
9
<PAGE>
At the Annual Meeting held on May 25, 1995, BAC's shareholders approved
material amendments to the MSP. Pursuant to a transition rule under Internal
Revenue Code Section 162(m), once those amendments took effect on May 25,
1995, it became necessary for new awards of performance share units to be
approved by BAC's shareholders in order for resulting payouts to constitute
tax deductible performance-based compensation within the meaning of Section
162(m). (See "Policy on Deductibility of Compensation" above.) The Committee
awarded Mr. Murray performance share units after the effective date of the MSP
amendments. However, BAC determined that, consistent with its policy set forth
under "Policy on Deductibility of Compensation," it would not seek shareholder
approval of this single award because any nondeductible compensation would not
be a material amount to BAC. Because Mr. Murray is one of BAC's five most
highly compensated officers for 1996, BAC may not deduct the payout to him in
1996 resulting from the vesting of his performance share units to the extent
that the payout, combined with his salary and other compensation that is not
performance-based under Section 162(m), exceeded $1,000,000 for 1996. Thus,
BAC will not be able to deduct approximately $918,750.
The dollar value of the 1995 and 1996 payouts are reported under the "LTIP
Payouts" column of the Summary Compensation Table.
Prior to the vesting of the performance share units, the executive officers
received dividends and had voting rights with respect to the restricted stock
component of such units.
Performance Equity Program
On February 3, 1997, the Board of Directors, upon the Committee's
recommendation, approved the BAC Performance Equity Program, subject to
shareholder approval. This program is designed to replace the Performance
Share Program discussed earlier under "Performance Share Program." The
Performance Share Program was designed to cover the 1994-1997 performance
period and was supplementary to annual grants under the MSP. Under the
Performance Equity Program, the Committee plans to make an initial grant of
stock options on May 22, 1997 that will have a grant value calculated to
deliver three years' worth of competitive long-term incentive compensation.
Thus, the Committee does not currently intend for executives who receive this
initial grant under the Performance Equity Program to receive annual grants
under this program or the MSP during the three-year period after the grant,
except to reward promotions. No awards may be made under the Performance
Equity Program after May 22, 2000. (See Item No. 4 beginning at Page 31 for a
detailed description of the Performance Equity Program.)
Stock Ownership Guidelines
The Committee established stock ownership guidelines in 1994 for executive
officers and certain other senior management officers as a way to help better
align the financial interests of these officers with those of shareholders.
The Committee expects these officers to make continuing progress towards
compliance with the guidelines during the three-year period that began on
November 7, 1994 and generally expects them to comply with the guidelines by
December 31, 1997. However, executives appointed or promoted since the
guidelines were established are generally expected to achieve the applicable
level of ownership specified in the guidelines within three years from the
date of appointment or promotion. The guidelines are as follows:
. Chief Executive Officer: Five times base salary.
. Five other executive officers, including those other officers named in
the Summary Compensation Table (other than Vice Chairman Thomas Peterson
who is no longer subject to the guidelines because he is leaving the
company): 3 times base salary.
. Certain other senior management officers (approximately 45 officers): 1
times base salary.
All officers subject to these guidelines have either met or made substantial
progress towards meeting these guidelines.
10
<PAGE>
Chief Executive Officer Compensation
On January 1, 1996, the board appointed David Coulter the Chief Executive
Officer of BAC. The board appointed Mr. Coulter the Chairman of the Board of
BAC on May 23, 1996. The Committee took the following actions with respect to
Mr. Coulter's compensation. Effective August 1, 1996, the Committee increased
Mr. Coulter's annual base salary from $750,000 to $850,000 (and effective
February 1, 1997, the Committee further increased his salary to $1,000,000) in
order to recognize his performance and bring his salary closer to market
levels for chief executive officers of the largest bank holding companies in
the Peer Group. In January, 1997, the Committee approved a cash incentive
award to Mr. Coulter for 1996 of $2,750,000. This incentive compensation was
awarded under the SMIP and, in BAC's opinion, is tax deductible by BAC. The
1996 annual incentive award constituted approximately 78% of Mr. Coulter's
total salary and annual incentive compensation. In August, 1996, the Committee
also authorized a grant to Mr. Coulter of a long-term incentive award in the
form of options to acquire 125,000 shares of BAC common stock under the MSP.
The board ratified all of the Committee's decisions relating to Mr. Coulter's
compensation.
In taking these actions with respect to Mr. Coulter's compensation, the
Committee examined the quantitative and qualitative factors set forth below
and discussed with each of the other members of the board his or her
evaluation of Mr. Coulter's performance based on such factors. The Committee
also considered the competitive review performed in 1996 by an independent
compensation consulting firm, the factors considered in establishing base
salary levels (which are discussed above under "Base Salaries"), and the
factors considered in determining the sizes of stock option awards (which are
discussed above under "Long-Term Incentive Awards--MSP Description, Process
and Practice").
In looking at quantitative factors, the Committee reviewed BAC's 1996
financial results and compared them with those of the Peer Group and with
BAC's financial results for 1995. The Committee reviewed net earnings of
$2.873 billion, an increase of 7.8% from 1995; earnings per share of $7.31, an
increase of 12.6% from 1995; a return on average common equity of 15%, an
increase of 42 basis points from 1995; a year-end BAC common stock price of
$99.75, a 54% increase from 1995; total shareholder return for 1996 of 58.1%,
ranking BAC first for 1996 among the ten largest United States bank holding
companies by asset size; an improvement in the ratio of nonaccrual assets to
total loans during 1996, reflecting sound risk management; and other
quantitative factors. The Committee did not apply any specific quantitative
formula which would assign weights to these performance measures or establish
numerical targets for any given factor.
In addition to the above quantitative accomplishments, the Committee
considered the following accomplishments which are qualitative in nature. The
Committee recognized Mr. Coulter's success in achieving an orderly and
effective management transition following his appointment as the Chief
Executive Officer. The Committee also considered his leadership in firmly
establishing the building of shareholder value as BAC's primary financial
objective. In relation to that objective, the Committee recognized the
direction he provided in the implementation of Take Ownership!(TM) The
BankAmerica Global Stock Option Program, which provides for the grant of stock
options to nearly all employees. The primary objectives of the program are (1)
to motivate employees to act more like owners and take greater responsibility
for the company's performance, thereby helping to increase shareholder value
through greater teamwork and superior customer service, and (2) to provide
employees with an opportunity to share directly in the value created through
their efforts.
The Committee considered other qualitative factors, including Mr. Coulter's
leadership with respect to the continued emphasis on the effective allocation
of capital, which resulted in the redeployment of capital through, among other
activities, (1) the initial public offering of a portion of the common stock
of BA Merchant Services, Inc., (2) the sale of less profitable branches in
Texas, (3) the acquisition of a $1.8 billion leasing portfolio from
subsidiaries of Ford Motor Co., and (4) the repurchase of 17,000,000 shares of
common stock in order to return excess capital to shareholders. The Committee
also considered Mr. Coulter's emphasis on improving operating leverage through
actions that increase revenue to expense ratios. The Committee also
acknowledged his leadership in maintaining BAC's commitment to the
environment, community reinvestment and high ethical
11
<PAGE>
standards. The Business Ethics magazine recognized this commitment by naming
BAC the 1996 Corporate Social Responsibility and Ethics Award Winner. The
commitment to community reinvestment was also evidenced by the last Community
Reinvestment Act (CRA) ratings received by BAC subsidiary bank units. All
those units received "satisfactory" or better CRA ratings, with seven units
having received "outstanding" CRA ratings, including BAC's principal
subsidiary, Bank of America National Trust and Savings Association. The
Committee also recognized Mr. Coulter's support for employees' community
volunteer programs for which the company received an Award of Excellence in
Corporate Community Service from the Points of Light Foundation.
The Committee approved the compensation of BAC's other executive officers for
1996 following the principles and procedures outlined in this report.
EXECUTIVE PERSONNEL AND COMPENSATION
COMMITTEE
Joseph Alibrandi
Jill Barad
Timm Crull
Kathleen Feldstein
Frank Hope, Jr.
A. Michael Spence
12
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on BAC common stock against the cumulative
return on the S&P 500 Stock Index as well as the S&P Bank Composite Index for
the five-year period from December 31, 1991 through December 31, 1996. The
graph assumes that $100 was invested on December 31, 1991 in BAC common stock
and in each of the indices, and that all dividends were reinvested quarterly.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
BAC COMMON STOCK, S&P 500, S&P BANK COMPOSITE
(YEAR-END DECEMBER 31)
[PERFORMANCE GRAPH APPEARS HERE]
TOTAL SHAREHOLDER RETURN
<TABLE>
<CAPTION>
S&P BANK
YEAR S&P 500 COMPOSITE BAC
---- ------- --------- ------
<S> <C> <C> <C>
1991............................................ 100.00 100.00 100.00
1992............................................ 107.61 136.20 133.45
1993............................................ 118.41 150.91 137.15
1994............................................ 120.01 142.26 121.33
1995............................................ 164.95 224.74 205.55
1996............................................ 202.75 327.06 325.00
</TABLE>
13
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------------------------------
AWARDS PAYOUTS
--------------------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS AWARD(S) OPTIONS/SAR PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(/1/) (#) ($)(/2/) ($)(/3/)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DAVID COULTER 1996 $791,667 $2,750,000 -0- 125,000 $1,412,500 $104,278
Chairman and Chief 1995 530,985 1,250,000 -0- 125,000 2,193,750 64,049
Executive Officer 1994 341,667 750,000 (/1/) 45,000 -0- 36,333
- -------------------------------------------------------------------------------------------------
THOMAS PETERSON 1996 600,000 1,100,000 -0- 47,500 1,412,500 60,195
Vice Chairman 1995 537,500 850,000 -0- 60,000 2,193,750 45,500
1994 425,000 600,000 (/1/) 50,000 -0- 36,000
- -------------------------------------------------------------------------------------------------
MICHAEL MURRAY(/4/) 1996 506,250 1,050,000 -0- 47,500 1,412,500 70,007
Vice Chairman 1995 418,750 850,000 (/1/) 45,000 -0- 50,938
- -------------------------------------------------------------------------------------------------
MARTIN STEIN 1996 554,167 1,000,000 -0- 50,000 1,412,500 54,361
Vice Chairman 1995 457,917 750,000 -0- 50,000 2,193,750 46,317
1994 322,500 700,000 (/1/) 40,000 -0- 32,900
- -------------------------------------------------------------------------------------------------
MICHAEL O'NEILL(/4/) 1996 441,666 1,050,000 -0- 55,000 -0- 54,278
Vice Chairman 1995 308,333 600,000 (/1/) 40,000 -0- 35,417
</TABLE>
(1) No restricted stock was awarded to the named executive officers in 1996;
nor was any restricted stock awarded to them in 1995 other than the
restricted stock portion of 20,000 performance share units awarded to
Michael Murray under BAC's Performance Share Program. (For a discussion of
the Performance Share Program see "Long-Term Incentive Awards--Performance
Share Program" in the "Report of the Executive Personnel and Compensation
Committee.") The only restricted stock awarded in 1994 to the named
executive officers consisted of (i) the restricted stock portion of
performance share units awarded under the Performance Share Program to
such officers (other than Michael Murray and Michael O'Neill who were not
executive officers in 1994) and (ii) the restricted stock portion of
awards of impact share units made to Messrs. Murray and O'Neill under a
separate Impact Share Program for certain senior management officers who
were then below the executive officer level.
The dollar value of all shares of restricted stock held on December 31, 1996
was as follows, based on the number of shares of restricted stock multiplied
by $99.75, the closing price of BAC common stock on that date: each of
Michael Murray and Michael O'Neill--4,800 shares ($478,800). These shares of
restricted stock consist of the restricted stock portion of the impact share
units awarded to Messrs. Murray and O'Neill in 1994. (See the preceding
paragraph.) These shares vest in full on November 7, 1997. Dividends are
paid on all shares of restricted stock.
(2) On February 13, 1996, the third of three possible equal installments of
performance share units vested. Such vesting resulted in payouts
consisting of the release of the restricted stock portions of such units
and the payment of the cash portions of such units. (See "Long-Term
Incentive Awards--Performance Share Program--Vesting Summary" in the
"Report of the Executive Personnel and Compensation Committee.") The
payouts for the third installment of performance share units were as
follows, based on the BAC common stock price of $70.625 on such vesting
date: each of David Coulter, Thomas Peterson, Michael Murray and Martin
Stein--12,000 shares ($847,500) and 8,000 cash-paid stock units
($565,000). Michael O'Neill did not hold any performance share units.
(3) The amounts shown consist of employer matching contributions and pay-based
credits under the BankAmerica 401(k) Investment Plan and the employer
matching contribution amount under the BankAmerica Supplemental Retirement
Plan, which provides additional benefits equal to the employer provided
benefits that plan participants do not receive under the BankAmerica
401(k) Investment Plan because of Internal Revenue Code limits.
(4) Michael Murray and Michael O'Neill became BAC executive officers in 1995
and, in accordance with SEC regulations, information is provided only for
1995 and 1996.
14
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS GRANT
UNDERLYING GRANTED TO EXERCISE OR DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#)(/1/) FISCAL YEAR ($/SH) DATE VALUE ($)(/2/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David Coulter 125,000 3.02% $83.062 08/05/2006 $2,085,250
- --------------------------------------------------------------------------------------
Thomas Peterson 47,500 1.15% 83.062 08/05/2006 792,775
- --------------------------------------------------------------------------------------
Michael Murray 47,500 1.15% 83.062 08/05/2006 792,775
- --------------------------------------------------------------------------------------
Martin Stein 50,000 1.21% 83.062 08/05/2006 834,500
- --------------------------------------------------------------------------------------
Michael O'Neill 55,000 1.33% 83.062 08/05/2006 917,950
- --------------------------------------------------------------------------------------
</TABLE>
(1) Options were granted to each of the named executive officers on August 5,
1996. One-third of the options granted become exercisable on each of the
first, second and third anniversaries of the date of grant.
(2) The estimated "grant date present values" of options granted in 1996 are
based on a variation of the Black-Scholes option pricing model, a model
that reflects certain arbitrary assumptions regarding variable factors
such as interest rates, stock price volatility and dividend yield. Stock
options have value only as a result of appreciation in the price of BAC
common stock, which benefits all shareholders. If, at the time of
exercise, the price of BAC common stock is the same as or lower than the
option exercise price, there will be no gain to the option holder. For the
purposes of establishing the "grant date present values" shown in the
table, the model assumed: (1) an expected option term of 4.5 years, which
reflects the historical distribution of options exercised and cancelled
for the grants from 1982 through 1991; (2) a risk free interest rate of
6.22%, which reflects the zero coupon U.S. Treasury bond interest rate for
that term; (3) a return volatility of 21.2%, which reflects the monthly
stock volatility for BAC for the 4.5 years prior to the grant date; and
(4) a dividend yield of 3.20%, which reflects average historical dividend
yields for BAC over the 4.5 years prior to the grant date.
There are many methods of attributing hypothetical value to options. An
alternative to the Black-Scholes model is to determine future realizable
values (in contrast to the "grant date present values" shown in the table),
assuming a fixed annual rate of stock price appreciation over the term of
the option. Using this alternative and assuming that BAC's common stock
price appreciated at the rate of 5% per year, compounded annually over the
10-year term of the options, the aggregate gain accruing to the named
executive officers would be approximately $17.0 million. Assuming the same
rate of appreciation, the gain to all shareholders would be approximately
$18.6 billion (based on 355,266,895 shares outstanding at December 31,
1996). If the common stock price appreciated at a 10% annual rate, total
gain for the named executive officers would be approximately $43.0 million,
compared with a gain of over $47.0 billion for all shareholders. Thus, in
each example, 99.91% of the hypothetical gain would be realized by other
shareholders and 0.09% would accrue to the named executive officers.
Neither the "grant date present values" shown in the table nor the price
appreciation figures in this footnote should be considered predictions of
future BAC stock prices.
15
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF VALUE OF
SECURITIES SECURITIES UNEXERCISED VALUE OF
UNDERLYING UNDERLYING IN-THE- UNEXERCISED
UNEXERCISED UNEXERCISED MONEY(/2/) IN-THE-
OPTIONS/SARS OPTIONS/SARS OPTIONS/SARS MONEY(/2/)
AT FISCAL AT FISCAL AT FISCAL OPTIONS/SARS
SHARES YEAR- YEAR- YEAR- AT FISCAL
ACQUIRED ON VALUE END(#)(/1/) END(#)(/1/) END($)(/1/) YEAR-END($)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David Coulter -0- $ -0- 179,312 223,332 $10,849,604 $6,723,774
- --------------------------------------------------------------------------------------------------
Thomas Peterson -0- -0- 149,133 104,166 8,317,640 3,616,976
- --------------------------------------------------------------------------------------------------
Michael Murray 8,791 215,500 316,081 84,166 24,580,168 2,520,093
- --------------------------------------------------------------------------------------------------
Martin Stein 61,667 1,959,084 104,748 96,666 6,507,830 3,170,832
- --------------------------------------------------------------------------------------------------
Michael O'Neill 63,606 3,021,257 63,299 86,666 3,810,867 2,315,015
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the value of dividend equivalent credits.
(2) In-the-money options are options for which the option exercise price (the
fair market value on the date of grant) was lower than the market price of
BAC common stock on December 31, 1996. The values in the last two columns
have not been, and may never be, received by the officers. Actual gains,
if any, on option exercises will depend on the value of BAC common stock
on the exercise dates. Accordingly, there can be no assurance that the
values shown in the last two columns will be realized. The closing price
of BAC common stock on February 28, 1997 was $113.75.
PENSION PLANS
BAC pays pension benefits to executive officers under the BankAmerica Pension
Plan, a "cash balance" defined benefit pension plan, and the BankAmerica
Supplemental Retirement Plan. The Supplemental Retirement Plan provides
additional benefits equal to the employer-provided benefits that plan
participants do not receive under the BankAmerica Pension Plan because of
Internal Revenue Code limits. Participants in the plans accrue benefits equal
to 7% of qualified earnings in excess of one-half of the Social Security wage
base each year. (Participants receive contributions to the BankAmerica 401(k)
Investment Plan on qualified earnings up to one-half of the Social Security
wage base each year.) Qualified earnings include salary and most cash
incentive and bonus payments. Participants' benefits are adjusted each year by
an interest factor. Employees who accrued benefits under final average pay
defined benefit plans which were converted to the cash balance plan also
receive transition benefits. Estimated annual retirement benefits under the
BankAmerica Pension and Supplemental Retirement Plans for the BAC executive
officers named below at age 65 are as follows:
<TABLE>
<CAPTION>
AMOUNT OF
YEAR REACHING LEVEL
NAME AGE 65 ANNUITY(/1/)
---------------------------------------------
<S> <C> <C>
David Coulter 2012 $631,497
---------------------------------------------
Thomas Peterson 2000 58,267(2)
---------------------------------------------
Michael Murray 2009 454,048
---------------------------------------------
Martin Stein 2005 175,995(3)
---------------------------------------------
Michael O'Neill 2011 343,575
---------------------------------------------
</TABLE>
(1) The estimated annual retirement benefits shown assume annual bonuses equal
to the average percentage bonus (as a percentage of year-end salary)
received for the last three years, a 5% interest factor, retirement at age
65 and no increase in current salary.
(2) Mr. Peterson is leaving the company this year. (See "Termination of
Employment Arrangements" set forth later.) The level annuity shown for him
was calculated as if his last day of employment will be June 30, 1997, and
assumes a 5% interest factor and commencement of benefits at age 65.
(3) This table does not include certain supplemental pension payments to which
Mr. Stein is entitled. (See "Contracts with Executive Officers" below.)
The amount of such supplemental pension payments would increase the amount
of the level annuity by $20,000.
16
<PAGE>
TERMINATION OF EMPLOYMENT ARRANGEMENTS
BAC is entering into an agreement with Vice Chairman Thomas Peterson pursuant
to which Mr. Peterson will resign from all his officer positions and his
employment with BAC and its subsidiaries. The resignation will be effective
June 30, 1997, or a later date designated by BAC, but no later than December
31, 1997. He will also resign from all his directorships with subsidiaries of
BAC by the last day of his employment. In addition, by that date, he will
resign from all his directorships held with other companies on behalf of BAC.
Under the agreement, the payment of Mr. Peterson's monthly salary will end on
the last day of his employment. He will, however, be considered for a bonus
for 1997 performance in accordance with the terms of the Senior Management
Incentive Plan. He will also receive a single payment of $45,000 following his
last day of employment.
Under the agreement, Mr. Peterson will continue to receive dividend equivalent
credits related to certain outstanding performance stock options through his
last day of employment. In addition, all of his unvested outstanding stock
options covering up to 104,166 shares of BAC common stock will vest on the day
after his last day of employment. He will be able to exercise all his options
for up to three years after his employment ends, but in no event later than
the expiration of the original option term.
The agreement also allows Mr. Peterson to continue to receive standard
executive financial counseling services for 1997, including the preparation of
1997 tax returns in 1998.
The agreement requires Mr. Peterson to (1) keep confidential all non-public
information acquired while employed within the company; (2) make himself
available and cooperate in connection with investigations, lawsuits or
administrative proceedings involving the company; (3) agree that his change in
control agreement (as described later under "Change in Control Arrangements")
will terminate on the day he signs the agreement relating to his resignation;
(4) not solicit for employment, on his or anyone else's behalf, any employee
within the company during the period through December 31, 2000; and (5) in
accordance with BAC's standard severance pay practices, sign a release of any
claims he may have against BAC and its subsidiaries.
CHANGE IN CONTROL ARRANGEMENTS
In August, 1995 and February, 1996, the BAC Board of Directors adopted
amendments to the 1992 Management Stock Plan (MSP) and most of the other BAC
stock plans providing that upon a "change in control" (as defined in the
following paragraph) options would immediately vest and restricted stock would
be immediately released. These amendments apply to all employees within the
BAC organization who hold options and restricted stock, including the
executive officers named in the Summary Compensation Table.
Generally, a "change in control" means any of the following:
. The acquisition by a third party of 20% or more of the outstanding shares
of BAC common stock.
. A majority of the Board of Directors ceases to consist of the current
board members or their nominees.
. BAC shareholders own 70% or less of a newly-merged entity (except that
for purposes of the acceleration of the vesting of options, or the
release of restricted stock, awarded prior to February 5, 1996 under the
MSP and most of the other BAC stock plans, the threshold is 80%).
. A complete liquidation or dissolution of BAC.
In February, 1996, the Board of Directors adopted a severance pay program
which would be triggered by a change in control. As of the printing of this
Proxy Statement, the program covers approximately 1,000 senior officers,
including eight executive officers (i.e., those named in the Summary
Compensation Table and three other executive officers). The program consists
of (1) individual change in control agreements (Agreements) for the eight
covered executive officers and approximately 45 other senior management
officers and (2) a general change in control severance policy for all other
covered officers.
17
<PAGE>
The principal purposes of the severance pay program are as follows:
. To help assure that executives give impartial consideration to evaluating
and negotiating a potential business combination which is in the best
interest of BAC's shareholders, but which may result in the loss of, or
reduction in, the executive's job.
. To make BAC's plans more competitive with severance plans of other
financial institutions and Fortune 500 industrial and service companies
to facilitate BAC's ability to attract, retain and motivate talented
executives in a very uncertain, rapidly consolidating banking industry
environment.
. To provide security and ensure that key executives are retained during
critical negotiations prior to and throughout a change in control.
. To avoid the legal expense and reduce the management time associated with
contested terminations, to allow for better forecasts of amounts due to
executives terminated after a change in control, and to provide for a
general release of legal claims associated with such terminations.
The benefits under the Agreements are triggered if, within one year following
a change in control, a covered officer's employment is terminated without
cause or the covered officer resigns for good reason (e.g., due to a
substantial reduction in the covered officer's responsibilities, an assignment
of such officer to responsibilities substantially inconsistent with such
officer's former responsibilities, or a job relocation of more than 35 miles).
In addition, benefits under the Agreements would, under certain circumstances,
be triggered if a covered officer's employment ends in anticipation of a
change in control.
Each Agreement is effective for two years from the February 1, 1996
commencement date, and will automatically be extended for additional one-year
periods unless BAC gives a termination notice prior to the first anniversary
or any subsequent anniversary of the Agreement.
Severance benefits payable to officers covered by Agreements are determined by
multiplying base salary and a bonus component by 3 in the case of the eight
executive officers and by 2 in the case of the other officers (although a
multiplier of up to 3 may be used for some senior officers at the discretion
of the chief executive officer). In addition, officers covered by Agreements
are entitled to the following: a prorated bonus for the year of termination; a
payment to compensate for the loss of employer contributions to medical and
dental, long-term disability, life and accidental death and dismemberment
insurance for the same number of years as the number used for the pay
multiplier; a payment equal to the value, if any, of the covered officer's
unvested benefits under BAC's retirement programs; outplacement assistance;
and financial counseling services. The entitlement to severance benefits is,
however, contingent upon the covered officers releasing all claims against BAC
and its subsidiaries.
The general severance policy contains many of the same terms and conditions
contained in the Agreements (such as the period in which the covered officers'
employment must end to receive severance benefits, the definition of change in
control and the requirement of a general release of claims by the covered
officers). The general severance policy also contains provisions similar to
those in the Agreements with respect to circumstances constituting termination
for cause and resignation for good reason. The severance benefits payable
under the severance policy are of the same nature as those payable under the
Agreements, but the multiplier for severance pay is 1.5. Generally, BAC may
cancel the severance policy prior to a change in control.
If a covered officer becomes subject to the 20% excise tax on excess parachute
payments under Internal Revenue Code Section 4999, BAC will make an additional
payment in an amount such that the officer will be in the same after-tax
position as though the 20% excise tax had not been imposed.
18
<PAGE>
CONTRACTS WITH DIRECTORS AND EXECUTIVE OFFICERS
Director Richard Rosenberg, formerly Chairman and Chief Executive Officer of
BAC, was previously employed by Seafirst Corporation (Seafirst), a subsidiary
of BAC that was merged into BAC. In 1987, when Mr. Rosenberg joined BAC, the
company agreed to make certain supplemental pension payments to him as agreed
to originally by Seafirst and Mr. Rosenberg on the date he joined Seafirst.
Under the supplemental pension agreement, Mr. Rosenberg is entitled to
payments based on those to which he would have been entitled under the terms
of the pension plan and defined contribution plan of a former employer, as if
he had remained with the former employer.
In 1990, BAC agreed to make certain supplemental pension payments to Martin
Stein, now a Vice Chairman of BAC, as agreed to originally by Mr. Stein and a
former employer. Under the supplemental pension agreement, Mr. Stein is
entitled to payments based on those to which he would have been entitled under
the terms of a retirement plan of the former employer, as if he had remained
employed with them. These payments are in addition to the estimated payments
set forth in the table under "Pension Plans" above.
BANKING AND OTHER TRANSACTIONS
Directors and executive officers of BAC and their associates were customers
of, and had ordinary business transactions with, BAC banks and subsidiaries
during 1996; additional transactions are expected. These transactions include
deposits, repurchase agreements, other usual money market transactions,
letters of credit, loans and commitments. Extension of credit by BAC banks and
their subsidiaries to directors and executive officers and entities controlled
by them are subject to limitations imposed by the Federal Reserve Board's
Regulation O. Regulation O requires that such extensions of credit (1) be made
on substantially the same terms (including interest rates and collateral) as,
(2) follow credit underwriting procedures not less stringent than, and (3) not
involve more than the normal risk of collectibility or present other
unfavorable features in comparison with, terms prevailing for comparable
transactions with unaffiliated persons having comparable credit and other
characteristics. BAC believes that each such extension of credit by BAC banks
and their subsidiaries, when made or renewed, complied with the requirements
of Regulation O. From time to time loans are made to officers by a nonbank
subsidiary not subject to Regulation O requirements. Such extensions of credit
are made on terms not more favorable than those provided to other BAC
employees under standard loan or relocation programs of the corporation. The
percentage of BAC's stockholders' equity represented by all of these
extensions of credit to directors and executive officers is not material and
was less than 0.8% at December 31, 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no compensation committee interlocks.
CERTAIN BUSINESS RELATIONSHIPS AND LEGAL PROCEEDINGS
No director of BAC has been involved in any material business relationship
with BAC requiring disclosure under Securities and Exchange Commission rules,
except for Peter Bedford. Mr. Bedford, a director of BAC and the Bank, serves
as chairman and chief executive officer of Bedford Property Investors, Inc., a
California-based real estate investment trust (BPI). As of December 31, 1996,
Mr. Bedford beneficially owned approximately 14% of BPI's capital. The Bank
has a lending relationship with BPI and Mr. Bedford and the major terms of
these relationships follow.
In September, 1995, the Bank entered into a $60,000,000 amended and restated
credit agreement with BPI, which is secured by a collateral pool of real
properties. In June, 1996, the Bank entered into a second amended and restated
credit agreement with BPI, which matures in July, 1999 and which has increased
the line of credit by $40,000,000 to $100,000,000. As of December 31, 1996,
the amount outstanding on this line of credit was $46,097,100. As of December
31, 1996, the terms of this line of credit provided that, at the option of
BPI, interest is paid to the Bank at either (1) the Reference Rate plus 25
basis points or (2) LIBOR plus 200 basis points (as both interest rate terms
are defined in the second amended and restated credit agreement). During 1996,
BPI
19
<PAGE>
made principal payments to the Bank of $99,047,800 on its line of credit.
During this same period and in connection with its credit arrangements with
the Bank, BPI made interest payments, and fee and other expense payments to
the Bank of $2,087,700 and $901,700, respectively. In March, 1997 the Bank
board approved an increase in the size of the line of credit, however, the
terms and conditions of any increase to the credit are subject to negotiation
between the Bank and BPI. During 1996, the Bank entered into a syndication
arrangement with certain other banks in connection with the line of credit.
The Bank has agreed to act as agent for the bank syndicate group. BPI had
three separate letters of credit issued by the Bank in connection with the
line of credit. As of December 31, 1996, there were no outstanding letters of
credit.
In August, 1995, the Bank extended a personal line of credit to Mr. Bedford.
As of December 31, 1996, the credit limit under this personal line was
$4,000,000. The line of credit is unsecured, and provides for interest to be
paid to the Bank at the Reference Rate plus 75 basis points, and a maturity
date of August, 1998. As of December 31, 1996, the amount outstanding on the
personal line of credit was $1,395,000. During 1996, total loan advances to
Mr. Bedford were $3,840,000 and total principal payments to the Bank were
$3,170,000 on the line of credit. During the same period, in connection with
this credit arrangement with the Bank, Mr. Bedford made interest payments, and
fee and other expense payments to the Bank of $74,100 and $9,400,
respectively.
No director of BAC has been involved in any legal proceeding requiring
disclosure during the past five years under Securities and Exchange Commission
rules, except for Peter Bedford and Frank Hope. On June 8, 1994, Kingswood
Realty Advisors, Inc. (Kingswood) filed a petition in the United States
Bankruptcy for the Northern District of California for protection from its
creditors under Chapter 11 of the United States Bankruptcy Code (Bankruptcy
Code). On September 8, 1994, Kingswood converted its case to an action under
Chapter 7 of the Bankruptcy Code. The Kingswood's case was closed and a final
decree entered by the Court on February 21, 1996. Mr. Bedford was president,
director and sole shareholder of Kingswood. On August 31, 1993, Hope Design
Group (Hope Design) filed a petition in the United States Bankruptcy Court for
the Southern District of California for protection from its creditors under
Chapter 7 of the Bankruptcy Code. The liquidation of the bankruptcy estate is
ongoing. Mr. Hope was chairman and 50% shareholder of Hope Design through
January 14, 1993. Prior to Hope Design's bankruptcy, Mr. Hope resigned as
chairman and sold his equity interest in the corporation. He has not been
active in the management of Hope Design since January, 1987. BAC had no
relationship with Kingswood or Hope Design other than BAC's relationship with
Peter Bedford and Frank Hope as its directors.
20
<PAGE>
OWNERSHIP OF BAC STOCK
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Directors and Executive Officers Ownership of BAC Stock
Information concerning beneficial ownership of BAC's stock by directors and
executive officers set forth in the table which follows is as of February 28,
1997. All of BAC's current non-officer directors have met the BAC stock
ownership guideline for non-officer directors, except for its newest director
(elected May, 1996), based on BAC's closing stock price of $113.75 per share
on February 28, 1997. (This stock guideline is described earlier under
"Corporate Governance"--"Director Remuneration, Stock Ownership Guidelines,
Retirement and Director Attendance"--"Stock Ownership Guidelines." Also, BAC's
ownership guidelines for executive officers and certain other senior
management officers are described earlier under "Executive Compensation,
Benefits and Related Matters"--"Report of the Executive Personnel and
Compensation Committee"--"Stock Ownership Guidelines".) Shareholdings set
forth in the table which follows include shares of common stock beneficially
owned (i.e., shares over which the owner had sole or shared voting or
investment power), and (i) in the case of directors, restricted stock
equivalent units and (ii) in the case of David Coulter and the other executive
officers, restricted stock, option shares and dividend equivalent credits
which the owner has the right to acquire within sixty days after February 28,
1997 by exercise of any option, warrant or right, through conversion of any
security; or by automatic termination or power of revocation of a trust,
discretionary account or similar arrangement; or by the lapse of restrictions
on shares of restricted stock. Except as set forth in the table, no director
or officer reported ownership of any shares of any series of BAC's preferred
stock. Each individual owns less than 1% of BAC common stock and each has sole
investment or voting power with respect to the shares set forth in the table
that follows unless otherwise noted:
<TABLE>
<CAPTION>
AGGREGATE NUMBER
OF SHARES
NAME BENEFICIALLY OWNED(/1/)
-------------------------------------------------------------------------
<S> <C>
DIRECTORS:
-------------------------------------------------------------------------
Joseph Alibrandi 14,141
-------------------------------------------------------------------------
Jill Barad 3,210
-------------------------------------------------------------------------
Peter Bedford(/2/) 6,675
-------------------------------------------------------------------------
Andrew Brimmer 5,158
-------------------------------------------------------------------------
Richard Clarke 5,749
-------------------------------------------------------------------------
David Coulter(/3/) 217,977
-------------------------------------------------------------------------
Timm Crull 11,819
-------------------------------------------------------------------------
Kathleen Feldstein(/4/) 7,447
-------------------------------------------------------------------------
Donald Guinn 11,019
-------------------------------------------------------------------------
Frank Hope, Jr. 7,778
-------------------------------------------------------------------------
Ignacio Lozano, Jr. 5,670
-------------------------------------------------------------------------
Walter Massey 1,330
-------------------------------------------------------------------------
John Richman 10,446
-------------------------------------------------------------------------
Richard Rosenberg(/3/) 361,589
-------------------------------------------------------------------------
A. Michael Spence 3,237
-------------------------------------------------------------------------
Solomon Trujillo 509
-------------------------------------------------------------------------
OTHER NAMED EXECUTIVE OFFICERS:
-------------------------------------------------------------------------
Michael Murray(/3/) 354,947
-------------------------------------------------------------------------
Michael O'Neill(/3/) 81,479
-------------------------------------------------------------------------
Thomas Peterson(/3/) 116,005
-------------------------------------------------------------------------
Martin Stein(/3/) 135,982
-------------------------------------------------------------------------
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(24 PERSONS)(/5/) 1,714,572
-------------------------------------------------------------------------
</TABLE>
(FOOTNOTES ARE LISTED ON NEXT PAGE)
21
<PAGE>
(1) For directors other than Mr. Coulter, included in the amounts listed are
each director's restricted stock equivalent units as follows: Mr.
Alibrandi--8,015 units; Ms. Barad--2,210 units; Mr. Bedford--3,675 units;
Mr. Brimmer--4,148 units; Mr. Clarke--2,500 units; Mr. Crull--7,895 units;
Ms. Feldstein--3,447 units; Mr. Guinn--4,628 units; Mr. Hope--4,173 units;
Mr. Lozano--4,141 units; Mr. Massey--1,227 units; Mr. Richman--2,618
units; Mr. Rosenberg--130 units; Mr. Spence--3,137 units; Mr. Trujillo--
409 units. As described on pages 3 and 4 of this Proxy Statement, the
value of the restricted stock equivalent units fluctuates with changes in
the value of BAC common stock, although the value of the units is paid in
cash following retirement.
(2) In addition, Mr. Bedford indirectly owns 2,000 shares of BAC common stock
and 2,000 shares of BAC 8.16% Cumulative Preferred Stock, Series L, as to
both of which he disclaims beneficial ownership.
(3) Includes BAC common stock shares held by executive officers as follows:
Mr. Coulter--38,564 shares; Mr. Murray--28,935 shares; Mr. O'Neill--4,000
shares; Mr. Peterson--44,600 shares; Mr. Stein--41,603 shares.
Includes restricted stock, option shares and dividend equivalent credits
(all of which the owner has the right to exercise within sixty days),
respectively, held by executive officers as follows: Mr. Coulter--0, 172,668
and 6,664 shares; Mr. Murray--0, 316,081 and 0 shares; Mr. O'Neill--0,
63,299 and 0 shares; Mr. Peterson--0, 66,667 and 2,466 shares; Mr. Stein--0,
83,334 and 8,081 shares.
Also, includes shares held through the BankAmerica 401(k) Investment Plan
and cash equivalent units of BAC common stock held through the BankAmerica
Deferred Compensation Plan as follows: Mr. Coulter--101 shares and 0 units;
Mr. Rosenberg--399 shares and 0 units; Mr. Murray--9,549 shares and 382
units; Mr. O'Neill--5,198 shares and 9,044 units; Mr. Peterson--868 shares
and 1,404 units; Mr. Stein--788 shares and 2,176 units.
(4) In addition, Ms. Feldstein indirectly owns 1,000 shares of BAC common
stock, as to which she disclaims beneficial ownership.
(5) As a group, beneficially owns less than 1% of BAC common stock.
Certain Beneficial Owners of BAC Stock
Based on a Schedule 13G filing as of December 31, 1996, FMR Corp. and certain
of its affiliates, 82 Devonshire Street, Boston, Massachusetts 02109, reported
beneficial ownership of 18,998,921 shares of BAC common stock or 5.29% of
shares outstanding. FMR Corp. reported that it had sole power to vote or
direct the vote with respect to 1,529,040 of such shares and sole power to
dispose or to direct the disposition with respect to 18,998,921 of such shares
as of December 31, 1996. FMR Corp. reported no shared voting or investment
powers. BAC knows of no other person who beneficially owned more than five
percent of any class of BAC's voting securities as of March 1, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires BAC's officers and
directors, and persons who own more than ten percent of a registered class of
BAC's equity securities, to file reports of ownership and changes in ownership
with the SEC and the New York Stock Exchange. Officers, directors and greater
than ten percent shareholders are required by SEC regulation to furnish BAC
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that all required forms
were filed, BAC believes that, during 1996, its officers and directors
complied with all applicable Section 16 filing requirements.
22
<PAGE>
MATTERS TO BE CONSIDERED AT THE MEETING
BOARD PROPOSALS
ITEM NO. 1: Election of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES NAMED IN THIS
PROPOSAL
The Board of Directors' has nominated the slate of directors set forth below.
Each of the nominees currently serves as a director and was elected by the
shareholders at the 1996 Annual Meeting. Persons elected at the meeting will
hold office until the 1998 Annual Meeting of Shareholders or until earlier
retirement, resignation or removal. Two current directors, Andrew Brimmer and
Ignacio Lozano, are not standing for re-election in accordance with the
Board's retirement policy.
As of February 28, 1997, each nominee owned the number of BAC common shares
set forth earlier in the table under "Ownership of BAC Stock"--"Security
Ownership of Certain Beneficial Owners"--"Directors and Executive Officers
Ownership of BAC Stock." As of that date, no director, nominee, or officer of
BAC owned as much as 1% of BAC's outstanding common stock. BAC believes no one
person "controls" its management policies, but under Securities and Exchange
Commission interpretations one or more of BAC's directors and executive
officers could be presumed to be "control" persons.
In the event that any of the board's director nominees becomes unavailable to
serve, the board may direct that proxies be voted for the election of persons
recommended by the board. The board may also vote to reduce the number of
directors to be elected. Certain information concerning the board nominees as
of February 28, 1997 follows:
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION
OF EMPLOYMENT
(2) OTHER BUSINESS DIRECTOR
NAME AND TITLE AFFILIATION(S) AGE SINCE
-------------- ------------------------ --- --------
<C> <C> <S> <C> <C>
[PHOTO OF JOSEPH ALIBRANDI (1) Mr. Alibrandi is 68 1992(/1/)
JOSEPH Chairman of the Board, chairman, chief
ALIBRANDI] Chief Executive Officer executive officer and
and President president of Whittaker
Whittaker Corporation Corporation, a
manufacturer of
aerospace and
communications products.
He became chairman in
1985, was CEO from 1974
until 1994 and then
resumed that title in
September 1996 at which
time he also was named
president. In 1991, he
assumed the additional
post of chairman of
BioWhittaker, Inc., a
manufacturer of
biotechnology products
and a former subsidiary
of Whittaker
Corporation.
(2) Director of
Burlington Northern
Santa Fe Corporation,
Catellus Development
Corporation and Jacobs
Engineering Group, Inc.
</TABLE>
- --------
(1) Mr. Alibrandi served as a director of Security Pacific Corporation (SPC)
from 1981 until 1992, when he became a BAC director.
23
<PAGE>
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION
OF EMPLOYMENT
(2) OTHER BUSINESS DIRECTOR
NAME AND TITLE AFFILIATION(S) AGE SINCE
-------------- ------------------------ --- --------
<C> <C> <S> <C> <C>
[PHOTO OF JILL BARAD (1) Ms. Barad is 45 1994
DAVID A. President and Chief president, chief
COULTER] Executive Officer executive officer and a
Mattel, Inc. director of Mattel,
Inc., a major
manufacturer and
distributor of toy
products. She assumed
the position of chief
executive officer in
January, 1997 and has
served as president
since 1992. Prior to her
appointment as chief
executive officer she
was the chief operating
officer for Mattel, Inc.
She served as president
of Mattel, USA, from
1990 to 1992.
(2) Director of
Microsoft Corporation.
[PHOTO OF PETER BEDFORD (1) Mr. Bedford is the 58 1987
PETER Chairman of the Board and chairman of the board
BEDFORD] Chief Executive Officer, and chief executive
Bedford Property officer of Bedford
Investors, Inc. Property Investors,
Inc., a California-based
real estate investment
trust. He is also the
president of Bedford
Properties Holdings,
Ltd., a California-based
real estate development
and investment firm he
founded in 1962.
(2) Director of Bixby
Ranch Company.
[PHOTO OF RICHARD CLARKE (1) Before his 66 1990
RICHARD Retired Chairman of the retirement in 1995, Mr.
CLARKE] Board and Chief Executive Clarke served as
Officer, Pacific Gas chairman of the board of
and Electric Company Pacific Gas and Electric
Company, a San
Francisco-based utility
company. He assumed that
post in 1986 after being
named a director the
prior year. He served as
chief executive officer
of the company from 1986
until 1994.
(2) Director of
Consolidated
Freightways, Inc.,
Pacific Gas and Electric
Company and Potlatch
Corporation.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION
OF EMPLOYMENT
(2) OTHER BUSINESS DIRECTOR
NAME AND TITLE AFFILIATION(S) AGE SINCE
-------------- ------------------------ --- --------
<C> <C> <S> <C> <C>
[PHOTO OF DAVID COULTER (1) Mr. Coulter became 49 1995
DAVID Chairman of the Board, chief executive officer
COULTER] President and Chief of BAC and the Bank in
Executive Officer, January, 1996 and was
BankAmerica Corporation named chairman of the
and Bank of America NT&SA board at the conclusion
of the May, 1996
Shareholder Meeting. He
became president of BAC
and the Bank in August,
1995 and a director in
October, 1995.
Immediately prior to his
appointment as
president, Mr. Coulter
was vice chairman of BAC
and the Bank, and his
responsibilities
encompassed the U.S.
Corporate and
International Banking
Groups, which provide
credit, trade finance,
cash management,
investment banking and
capital-raising
services, capital
markets products, and
financial advisory
services to large
domestic and foreign
institutions.
(2) Director of Pacific
Gas and Electric
Company.
[PHOTO OF TIMM CRULL (1) Mr. Crull served as 66 1992(/1/)
TIM CRULL] Retired Chairman, chairman and chief
Nestle USA, Inc. executive officer of
Nestle USA, Inc., a
processor of food and
related products, until
1994. He assumed that
post in 1991, after
having served since 1985
as president and chief
executive officer of
Carnation Company, a
Nestle subsidiary.
(2) Director of Dreyer's
Grand Ice Cream, Inc.
and Smart & Final Inc.
[PHOTO OF KATHLEEN FELDSTEIN (1) Dr. Feldstein is 56 1987
KATHLEEN President, president of Economics
FELDSTEIN] Economics Studies, Inc. Studies, Inc., a
Massachusetts-based
private consulting firm.
Her newspaper columns on
economic affairs,
written with her
husband, Martin
Feldstein, appear
regularly in newspapers
in the United States and
abroad.
(2) Director of
Consolidated Rail
Corporation and Digital
Equipment Corporation.
</TABLE>
- --------
(1) Mr. Crull served as a director of SPC from 1984 until 1992, when he became
a BAC director.
25
<PAGE>
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION
OF EMPLOYMENT
(2) OTHER BUSINESS DIRECTOR
NAME AND TITLE AFFILIATIONS AGE SINCE
-------------- ------------------------ --- --------
<C> <C> <S> <C> <C>
[PHOTO OF DONALD GUINN (1) Mr. Guinn was 64 1992(/1/)
DONALD Chairman Emeritus, chairman of the board
GUINN] Pacific Telesis Group and chief executive
officer of Pacific
Telesis Group, a tele-
communications holding
company, before his
retirement in 1988.
(2) Director to The Dial
Corporation.
[PHOTO OF FRANK HOPE, JR. (1) Mr. Hope was 66 1992(/2/)
FRANK Consulting Architect chairman of Hope Design
HOPE, JR.] Group, an architectural
and engineering firm,
until 1993. He joined
that firm in 1955 and
was named chairman in
1964.
[PHOTO OF WALTER MASSEY (1) In 1995, Dr. Massey 58 1993
WALTER President, Morehouse College became president of
MASSEY] Morehouse College.
Before joining
Morehouse, he was
provost and senior vice
president, academic
affairs, University of
California since 1993.
He joined the University
of California after
serving for two years as
director of the National
Science Foundation, a
federal agency that
supports research and
education in
mathematics, science and
engineering.
(2) Director of Amoco
Corporation and Motorola
Inc.
[PHOTO OF JOHN RICHMAN (1) Mr. Richman became 69 1994(/3/)
JOHN Of Counsel, of counsel to the law
RICHMAN] Wachtell, Lipton, firm of Wachtell,
Rosen & Katz and Lipton, Rosen & Katz in
Currently Serving as 1990, after retiring in
Acting Chairman and 1989 from the management
Chief Executive Officer of Philip Morris
of R.R. Donnelley & Sons Companies, Inc. and
Company Kraft General Foods,
Inc., a subsidiary of
Philip Morris. He is
also currently serving
as acting chairman and
chief executive officer
of R.R. Donnelley & Sons
Company, where he is
also a director.
(2) Director of Security
Capital Atlantic
Incorporated and USX
Corporation.
</TABLE>
- --------
(1) Mr. Guinn served as a director of SPC from 1980 until 1992, when he became
a BAC director.
(2) Mr. Hope served as a director of SPC from 1978 until 1992, when he became a
BAC director.
(3) Mr. Richman served as a director of Continental Bank Corporation from 1980
until 1994, when he became a BAC director.
26
<PAGE>
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION
OF EMPLOYMENT
(2) OTHER BUSINESS DIRECTOR
NAME AND TITLE AFFILIATION(S) AGE SINCE
-------------- ------------------------ --- --------
<C> <C> <S> <C> <C>
[PHOTO OF RICHARD ROSENBERG (1) Before his 66 1987
RICHARD Retired Chairman of the retirement in May, 1996,
ROSENBERG] Board and Chief Executive Mr. Rosenberg had served
Officer, BankAmerica as chairman of BAC and
Corporation and Bank of the Bank since 1990.
America NT&SA Effective December 31,
1995, he relinquished
his position as chief
executive officer of BAC
and the Bank, which he
held since 1990. He held
the position of
president of BAC and the
Bank from February, 1990
to April 1992, resumed
that position in
October, 1992, and
relinquished that
position in August,
1995.
(2) Director of Airborne
Freight Corporation, K-2
Incorporated, Northrop
Corporation, Pacific
Telesis Group and
Potlatch Corporation.
[PHOTO OF A. MICHAEL SPENCE (1) Dr. Spence became 53 1990
A. MICHAEL Dean of the Graduate School dean of the graduate
SPENCE] of Business, school of business at
Stanford University Stanford University in
1990. Before joining
Stanford, he was
professor of Economics
and Business
Administration and dean
of the Faculty of Arts
and Sciences at Harvard
University.
(2) Director of General
Mills Company, NIKE,
Inc., Siebel Systems,
Inc., Sun Microsystems
Inc. and VeriFone Corp.
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
(1) PRINCIPAL
OCCUPATION OF
EMPLOYMENT
(2) OTHER BUSINESS DIRECTOR
NAME AND TITLE AFFILIATION(S) AGE SINCE
-------------- ------------------ --- --------
<C> <C> <S> <C> <C>
[PHOTO OF SOLOMON TRUJILLO (1) Mr. Trujillo became 45 1996
SOLOMON President and Chief president and chief
TRUJILLO] Executive Officer, executive officer of
US West Communications Group USWest Communications
Group, a provider of
telecommunications
services, in 1995. He
held the position of
president and chief
executive officer of
USWest Marketing
Resources Group from
1992 to 1995. He served
as vice president and
general manager of the
Small Business Group of
USWest Communications
Group from 1987 until
1992.
(2) Director of Dayton
Hudson Corporation.
</TABLE>
ITEM NO. 2: Ratification of Appointment of Ernst & Young LLP as Independent
Auditors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
The board has appointed Ernst & Young LLP, Certified Public Accountants, as
BAC's independent auditors for 1997. BAC's Auditing and Examining Committee
recommended the appointment, which is subject to shareholder ratification. The
firm or its predecessors has audited the accounts of BAC since 1970 and has
offices in, or convenient to, most of the localities where BAC and its
subsidiaries operate. Ernst & Young performed audit services in connection
with the examination of the financial statements of BAC and its subsidiaries
for the year ended December 31, 1996. In addition, the firm rendered other
audit services which included the review of financial statements and related
information contained in various registration statements and filings with the
SEC and limited reviews of financial statements and related information
contained in quarterly reports provided to shareholders and the SEC.
In the event the selection of Ernst & Young as independent auditors is not
ratified by the shareholders, the Auditing and Examining Committee will seek
other independent auditors. Because of the difficulty and expense of making
any change in independent auditors so long after the beginning of the current
year, it is likely the board would allow the appointment to stand for 1997
unless it found other good reason for making a change sooner.
Representatives of Ernst & Young will be present at the Annual Meeting and
available to answer appropriate questions.
ITEM NO. 3: Approve an Amendment to BankAmerica Corporation Certificate of
Incorporation to Increase the Number of Authorized Shares of
Common Stock and to Effect a Two-For-One Stock Split of BAC Common
Stock
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
(a) Overview
On March 3, 1997, the board approved a proposal to amend BAC's Certificate of
Incorporation in order to:
. Increase the number of shares of common stock which BAC is authorized to
issue from 700,000,000 to 1,400,000,000; and
28
<PAGE>
. Split the common stock of BAC by changing each issued share of common
stock into two shares of common stock.
There would be no change in the par value of each share of common stock, which
would be $1.5625 both before and after the stock split. If adopted, the
amendment and the stock split will be effective at the close of business on
June 2, 1997.
The full text of the proposed amendment to the Certificate of Incorporation is
set forth in Appendix A to this Proxy Statement. The amendment will not affect
the number of shares of preferred stock authorized, which is 70,000,000
shares, without par value.
(b) Purposes and Effects of Increasing the Number of Authorized Shares of
Common Stock
The increase in authorized shares is necessary to enable BAC to issue a number
of shares sufficient to effect the split and to reserve a sufficient number to
meet all known requirements and to provide flexibility for the future.
The proposed amendment would increase the number of shares of common stock
which BAC is authorized to issue from 700,000,000 to 1,400,000,000. The
additional 700,000,000 shares would be a part of the existing class of common
stock and, if and when issued, would have the same rights and privileges as
the shares of common stock presently issued and outstanding. The holders of
common stock of BAC are not entitled to preemptive rights or cumulative
voting.
As of March 3, 1997, BAC had 387,329,917 shares of common stock issued, of
which 33,313,881 were held in the treasury of BAC, and 312,670,083 shares of
common stock authorized but unissued, of which approximately 69,022,513 shares
were reserved for issuance under the BankAmerica 401(k) Investment Plan, stock
compensation plans and Shareholder Investment Plan, and upon exercise of
outstanding common stock warrants. If the proposed amendment is adopted, the
effect will be to double each of these amounts. Except for the proposed stock
split, there are no plans, agreements, commitments or understandings for the
issuance of the newly authorized shares.
(c) Purposes and Effects of Proposed Two-For-One Stock Split
1. General
The board anticipates that a two-for-one stock split of common stock of BAC
will place the market price of the common stock in a range more attractive
to investors, particularly individuals, and may result in a broader market
for the shares. BAC will apply to list the additional shares of common stock
to be issued with the stock exchanges on which BAC's common stock is
currently listed, i.e., the New York Stock Exchange, the Pacific Stock
Exchange, the Chicago Stock Exchange and the London Stock Exchange.
If the proposed amendment is adopted, each common shareholder of record at
the close of business on June 2, 1997, would become the record owner of, and
entitled to receive a certificate representing, one additional share of
common stock for each share of common stock then owned of record by such
common shareholder. BAC anticipates that certificates representing
additional shares will be mailed on or about June 16, 1997.
2. Federal Income Tax Consequences
BAC has been advised by tax counsel that the proposed stock split would
result in no gain or loss or realization of taxable income to owners of
common stock under existing United States federal income tax laws. The cost
basis for federal tax purposes of each new share and each retained share of
common stock would be equal to one-half of the cost basis for tax purposes
of the corresponding share immediately preceding the stock split, and the
holding period for the additional share issued pursuant to the stock split
would be deemed to be the same as the holding period for the original share
of common stock.
However, on February 6, 1997, the Clinton Administration announced a
proposal which, if enacted, would require a shareholder who has engaged or
engages in multiple purchases of BAC common stock to determine such
shareholder's tax basis for any given purchase by using the average cost of
all holdings of
29
<PAGE>
BAC common stock. If the proposal is enacted, the cost basis for tax
purposes for each new share and each retained share of common stock
immediately after the stock split would be equal to one-half of the average
cost per share of all shares of common stock held immediately preceding the
stock split. For purposes of determining whether the gain or loss on the
sale of common stock is short-term or long-term capital gain, a shareholder
would generally be treated as selling or disposing of common stock on a
first-in, first-out basis. The proposal would apply to common stock sold 30
days or more after the date of legislative enactment. It is currently
uncertain (1) whether the Clinton Administration proposal will be enacted,
or (2) if enacted, whether it will be enacted in its current form. In any
event, the stock split does not change the amount of federal tax that would
otherwise be payable as the result of a sale of a shareholder's investment
in BAC common stock.
The laws of jurisdictions other than the United States may impose income
taxes on the issuance of the additional shares and shareholders are urged to
consult their tax advisors.
3. Brokerage Commissions
Because the stock split will effectively double the number of shares of
common stock representing a shareholder's investment in BAC, the
shareholders may have to pay a higher brokerage commission to sell their
investment after the stock split. Shareholders may wish to consult their
respective brokers to ascertain the brokerage commission that would be
charged for disposing of the greater number of shares.
4. Effects on Compensation Plans
In accordance with BAC's plans under which stock options and restricted
stock are awarded, it will be necessary to make appropriate adjustments to
the number of shares covered and, where applicable, the exercise prices.
From the effective date of the proposed amendment, shares covered by
outstanding stock options will be doubled and the exercise price per share
will be divided by two. Shares of restricted stock awarded will be doubled.
In addition, for plans under which stock appreciation rights, phantom stock
units and similar stock-based awards are made, the number of rights or units
covered will also be doubled and, where applicable, the exercise price will
be divided by two. Shares reserved for issuance under the BankAmerica 401(k)
Investment Plan and stock compensation plans will be doubled.
If the proposed amendment and the Performance Equity Program described in
Item No. 4 are both adopted, adjustments to the shares covered by options
awarded under the program and the exercise prices of the options will be
made as described in paragraphs (p) and (r) of Item No. 4.
5. Effects on Rights Agreement
Under BAC's Rights Agreement dated April 11, 1988, as amended, the proposed
stock split would trigger adjustments in order to avoid dilution of the
benefits under the Rights Agreement.
6. Accounting Treatment
If the proposed amendment is adopted, there will be no change in total
shareholders' equity, but BAC's common stock capital account will be
increased to reflect the $1.5625 per share par value of the additional
shares issued and the additional paid-in capital account will be reduced by
a like amount. The number of shares issued and outstanding, reserved for
issuance and held in the treasury would double.
(d) Effective Date of Proposed Amendment and Issuance of Shares for Stock
Split
If the proposed amendment to the Certificate of Incorporation of BAC is
adopted by the required vote of shareholders, it will become effective on June
2, 1997, which will become the record date for the determination of the owners
of common stock entitled to certificates representing the additional shares.
Please do not destroy your present stock certificates or send them to BAC or
the transfer agent. If the proposed amendment is adopted, your certificates
will remain valid for the number of shares shown on them, and should
30
<PAGE>
be carefully preserved by you. BAC anticipates that the additional shares to
which you are entitled will be distributed on or about June 16, 1997 either by
delivery of physical certificates through the mail or by book-entry in the
records of BAC, a procedure that BAC is currently contemplating. If the
additional shares are distributed by book-entry, you will be entitled to
receive physical stock certificates upon request.
ITEM NO. 4: Approval of BankAmerica Corporation Performance Equity Program
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
(a) Overview
On February 3, 1997, the board approved the BankAmerica Corporation
Performance Equity Program, subject to shareholder approval.
Under the program senior officers will receive stock options, many of which
will be premium price options. Unlike options granted under BAC's existing
1992 Management Stock Plan, a premium price option requires BAC's common stock
price to increase significantly to a specified threshold level, within a given
time frame, before officers will have the right to exercise the option.
Furthermore, officers will not realize a significant gain from exercising a
premium price option until BAC's stock price increases well above that
threshold level.
Because of these factors, creating gain under the program requires a
substantially greater increase in BAC's stock price than is necessary to
create gain under the 1992 Management Stock Plan.
Although officers will receive only minimal gain under the program for average
BAC stock price growth, the program provides significantly greater rewards to
officers for achieving well above average stock price growth. The reason is
that the number of shares covered by options granted under the program will be
significantly greater than the number of shares covered by options currently
granted under the 1992 Management Stock Plan due to the higher exercise price
for premium price options and the associated greater risk of forfeiture. The
program will, therefore, focus officers' attention on increasing shareholder
value.
If approved by the shareholders, the program will become effective on May 22,
1997. The board's Executive Personnel and Compensation Committee, which will
administer the program, plans to make the initial grant under the program on
May 22, 1997. The Committee may not make awards under the program after May
22, 2000.
A detailed description of the program follows.
(b) Program Objectives
The objectives of the program are to:
. Enhance shareholder value by tying senior officers' long-term incentive
compensation to significant increases in BAC's common stock price.
. Attract key executives of the highest quality by providing opportunities
for greater long-term incentive awards and competitive total
compensation in relation to BAC's peer bank holding companies.
. Promote teamwork among executives by establishing common performance
goals.
(c) Types of Awards
The program authorizes the following types of awards:
. Premium price options, which allow senior officers to purchase BAC
common stock at exercise prices (1) in the case of the initial grant,
significantly above $108.08, the average closing price of BAC common
stock for the ten consecutive trading days immediately preceding
February 3, 1997 (the date the board approved the program), or (2) in
the case of any subsequent grant, above the closing price of a share of
BAC common stock on the grant date.
. Market price options, which allow senior officers to purchase BAC common
stock at exercise prices equal to the average of the high and low sales
prices of a share of BAC common stock on the grant date.
. Limited stock appreciation rights, which may be granted in conjunction
with premium price options and which become exercisable only upon a
"change in control" (as defined in the following paragraph).
31
<PAGE>
(d) Change in Control
Generally, a "change in control" means any of the followings:
. The acquisition by a third party of 20% or more of the outstanding shares
of BAC common stock.
. A majority of the board ceases to consist of the current board members or
their nominees.
. BAC shareholders own 70% or less of a newly-merged entity.
. A complete liquidation or dissolution of BAC.
(e) Table Illustrating Key Features of Initial Grant of Premium Price Options
The following table illustrates certain key features of the initial grant of
premium price options under the program, as described later in paragraphs (h)
and (i):
INITIAL GRANT OF PREMIUM PRICE OPTIONS
<TABLE>
<CAPTION>
AVERAGE
CLOSING PRICE
FOR 10 CUTOFF DATE
TRADING DAYS FOR ACHIEVING
BEFORE 2/3/97 EARLIEST DATE STOCK PRICE
BOARD APPROVAL PREMIUM OPTIONS BECOME EQUAL TO
PART OF GRANT DATE AWARD DATE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First $108.08 05/22/97 $144 05/22/2000 05/22/2001
- -------------------------------------------------------------------------------------
Second 108.08 05/22/97 162 05/22/2000 05/22/2003
- -------------------------------------------------------------------------------------
Third 108.08 05/22/97 216 05/22/2000 05/22/2005
- -------------------------------------------------------------------------------------
</TABLE>
(f) Eligible Officers
The following officers are eligible to participate in the program:
. Officers in the top level of senior management. (There are eight
officers at this level, but two of them are leaving the company and will
not receive an award under the program.)
. Officers in the next level of senior management (approximately 45
officers).
. Any other senior officers designated by the Committee.
(g) Program Administration
The board's Executive Personnel and Compensation Committee (Committee) will
administer the program. The members of the Committee are "non-employee
directors" and "outside directors" for purposes of certain governmental
regulations. The Committee will have complete discretion to select eligible
executives to receive awards under the program. The Committee has sole
discretion to make determinations and interpretations with respect to the
program and they are binding on all interested parties. However, the board
must ratify all awards under the program to BAC's chief executive officer.
(h) Description of Initial Grant
While the Committee has not yet determined the number of options it will grant
under the program to senior officers, the program specifies the types of
options that will be awarded in the initial grant that the Committee plans to
make on May 22, 1997. In the initial grant, the Committee will grant to the
officers in the top level of senior management 100% of the grant value of
their awards in premium price options. The Committee will grant to the
officers in the next level of senior management 50% of the grant value of
their awards in market price options and 50% in premium price options. The
Committee may also grant limited stock appreciation rights in conjunction with
the premium price options initially granted to these officers. Although the
program allows the
32
<PAGE>
Committee to grant market price options, the Committee intends to use the 1992
Management Stock Plan to make the initial grant of market price options. (See
"Long-Term Incentive Awards--MSP Description, Process and Practice" under the
"Report of the Executive Personnel and Compensation Committee" for a
description of the 1992 Management Stock Plan.) In anticipation of this use of
the 1992 Management Stock Plan, the board was able to reduce the number of
shares of BAC common stock that it otherwise would have had to authorize for
issuance under the program.
The Committee intends to make an initial grant of options that will have a
grant value calculated to deliver three years' worth of competitive long-term
compensation. The Committee does not currently intend for officers who receive
the initial grant under the program to receive subsequent grants under the
program or the 1992 Management Stock Plan during the three-year period after
the grant, except to reward promotions. Compared to spreading the grant value
over three annual grants, the Committee believes that a single upfront grant
provides greater incentive because it allows officers to benefit from
appreciation over the current stock price on a larger number of shares.
(i) Description of Premium Price Options to Be Awarded in Initial Grant
1. Exercise Price
Under the program, the initial grant of premium price options to each
covered officer will be divided into three equal parts based on the grant
value of those options as of February 3, 1997 (the date the board approved
the program). To determine the grant value, the Committee will use a
variation of the Black-Scholes option pricing model, which is discussed
earlier under the table captioned "Options/SAR Grants in Last Fiscal Year."
With respect to one-third of the grant value, the exercise price will be
$144, or 33 1/3% above the $108.08 average closing price of BAC common stock
for the ten consecutive trading days immediately preceding February 3, 1997;
with respect to another one-third of the grant value, the exercise price
will be $162, or 50% above that average closing price; and with respect to
the final one-third of the grant value, the exercise price will be $216, or
100% above that average closing price. In each case the exercise price was
rounded down to the nearest whole dollar as required by program provisions.
If on the grant date (which the Committee plans to be on May 22, 1997) the
average of the high and low sales prices of a share of BAC common stock
exceeds the exercise price of any premium price option, the option will
instead be granted at that average price. As of February 28, 1997, the
average of the high and low sales prices of a share of BAC Common Stock was
$114.0625.
2. Exercisability
Officers will have the right to exercise premium price options only if the
BAC common stock price reaches the exercise price and is maintained at or
above the exercise price for ten trading days out of twenty consecutive
trading days within a specified period. For options with a 33 1/3% price
premium, that period is four years from the grant date; for options with a
50% price premium, that period is six years from the grant date; and for
options with a 100% price premium, that period is eight years from the grant
date. Generally, no premium price option may be exercised within three years
of the grant date, except under the limited circumstances described in
paragraph 3 below.
Alternatively, if the premium price options fail to become exercisable
within the applicable performance period of four, six or eight years, the
Committee may, in its sole discretion, permit all or a portion of the
premium price options to become exercisable on or after the last day of the
applicable performance period, but only if BAC's total shareholder return
over the applicable performance period is at or above the 75th percentile
performance level of the companies comprising the Standard & Poor's
Financial Index. Over the five-year period from December 31, 1991 through
December 31, 1996 BAC's total shareholder return was at the 78th percentile
performance level of the companies currently comprising the Standard &
Poor's Financial Index.
33
<PAGE>
3. Change in Control
The Committee may add provisions to each premium price option award
agreement stating that if a change in control occurs prior to the officer's
termination of employment, (1) the option will become fully exercisable
(with no change in the exercise price) upon the change in control without
regard to whether the BAC common stock price reaches the option exercise
price by the applicable cutoff date (see paragraph (i) 2 above and the table
under paragraph (e) above; (2) the officers may exercise the option within
three years of the grant date; and (3) if an officer's employment is
terminated following a change in control, the option will expire ten years
from the grant date, provided the Committee so specifies in the award
agreement.
(j) Market Price Options to be Awarded in Initial Grant
The program provides that market price options awarded in the initial grant
will become exercisable in three equal installments on the first, second and
third anniversaries of the grant date, provided the officer remains employed
by BAC or one of its subsidiaries on the applicable anniversary date.
(k) Expiration of Options Awarded in Initial Grant
Premium price options and market price options generally expire ten years after
the grant date, but they will expire sooner if an officer's employment
terminates in certain situations described in the following Initial Grant
Expiration Table. In addition, a premium price option expires if the BAC common
stock price fails to reach the exercise price for the option by the applicable
cutoff date, unless BAC's relative total shareholder return is reached (see
paragraph (i) 2 above) and the Committee permits all or a portion of the option
to become exercisable. Therefore, premium price options could expire even
earlier than the time of expiration indicated in the following table.
The Committee may specify in a premium price option award agreement that if a
change in control occurs, premium price options will remain effective even if an
officer's employment terminates or BAC's stock price fails to reach the exercise
prices by the applicable cutoff dates.
The program provisions relating to the early expiration of market price
options granted under the program are similar to the provisions in the 1992
Management Stock Plan concerning early expiration of options.
34
<PAGE>
INITIAL GRANT OPTION EXPIRATION TABLE
<TABLE>
<CAPTION>
REASON WHEN WHEN OPTION EXPIRES
EMPLOYMENT ENDS EMPLOYMENT ENDS ---------------------------------------------
PREMIUM PRICE OPTIONS MARKET PRICE OPTIONS
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Voluntary Within 6 months of Date employment ends Date employment ends
termination grant date
-or-
Termination with
cause
6 months or more Date employment Date employment
after grant date ends(/1/) ends(/1/)
- ---------------------------------------------------------------------------------------
Disability Within 6 months of Date employment ends Date employment ends
grant date
6 months or more 10 years from grant Date employment
after grant date date ends(/1/)
- ---------------------------------------------------------------------------------------
Death Within 6 months of Date of death(/1/) Date of death(/1/)
grant date
6 months or more 10 years from grant 3 years from date of
after grant date date death
(Only options that are
already exercisable at
death remain
effective(/2/))
- ---------------------------------------------------------------------------------------
Involuntary Within 6 months of Date employment ends Date employment ends
termination grant date
without cause
Between 6 months 5 years from date Date employment
and 3 years employment ends ends(/1/)
after grant date (Unless BAC stock
price has reached
exercise price, only
pro rata portion
remains
effective(/2/))
3 years or more 10 years from grant Date employment
after grant date date ends(/1/)
- ---------------------------------------------------------------------------------------
Early retirement Within 6 months of Date employment ends Date employment ends
-or- grant date
Normal retirement
Between 6 months 5 years from date 3 years from date
and 3 years employment ends employment ends
after grant date (Unless BAC stock (On early retirement,
price has reached only options that are
exercise price, only already exercisable
pro rata portion remain effective(/2/))
remains
effective(/2/))
3 years or more 10 years from grant 3 years from date
after grant date date employment ends
(On early retirement,
only options that are
already exercisable
remain effective(/2/))
- ---------------------------------------------------------------------------------------
For any reason After change in 10 years from grant 3 years from date
after change in control date employment ends
control
(If Committee so
specifies in award
agreement)
</TABLE>
(1)The Committee may permit all or a part of the options to remain effective
for a specified period.
(2) The Committee may permit all or a part of the options that have not become
exercisable to remain effective for the period indicated in the table.
35
<PAGE>
(l) Limited Stock Appreciation Rights (LSARs)
The Committee may grant LSARs in conjunction with premium price options. If
LSARs are granted, and have not otherwise expired due to the expiration of the
related premium price options, officers will be able to exercise the LSARs
only upon a change in control to the extent specified by the Committee in the
award agreement. The Committee has the discretion to determine when each LSAR
granted will expire or be cancelled, provided that (i) no LSAR may have a term
longer than would be permitted by applying the rules governing the expiration
of the related premium price option, and (ii) each LSAR will terminate no
later than the last day of the period of 60 consecutive days which begins on
the date of the change in control.
LSARs will have an exercise price equal to the average of the high and low
sales prices of a share of BAC common stock on the grant date of the related
premium price option.
At lower stock price levels, it is possible that officers could realize
significantly less gain upon a change in control with premium price options
than with market price options. This difference in gain could affect the
impartiality of an officer who holds premium price options in considering a
potential business combination. However, officers holding premium price
options and LSARs will, upon a change in control, be able to exercise the
LSARs and receive a cash payment equal in value to the gain that they would
have received had market price options, with a comparable grant value to
premium price options, been granted and exercised. Thus, LSARs help to ensure
that officers who hold premium price options will be impartial in their
consideration of a potential business combination.
The number of LSARs will be based on the ratio of the value of the related
premium price options to the value of market price options on the grant date
using a variation of the Black-Scholes option pricing model. Because premium
price options will have a lower Black-Scholes value than a market price option
granted on the same date (due to the higher exercise price and the associated
greater risk of forfeiture), LSARs will represent a lesser number of shares
than the related premium price options. For example, if a premium price option
has a Black-Scholes value of $15 per share and a corresponding market price
option has a $30 Black-Scholes value, the officer would receive up to one-half
of an LSAR for each premium price option granted.
The exercise of an LSAR results in the cancellation of the related premium
price option (and vice versa).
(m) Future Grants
In the case of any awards under the program after the initial grant, the
Committee will determine in its sole discretion the mix between premium price
options and market price options, the exercise prices of premium price
options, the periods of exercisability and the other terms and conditions of
any such awards.
(n) Payment of Exercise Price
An officer must pay the full exercise price for market price options and
premium price options. An officer may arrange for BAC to sell a portion of the
shares covered by the options and have the sale proceeds applied to the
exercise price. In addition, the officer may use already-owned shares of BAC
common stock as payment of the exercise price.
(o) Transferability of Options
Officers may not transfer the options except under limited circumstances,
primarily the following: (1) officers in the top level of senior management
may transfer any of their options to their children, grandchildren or spouses
or to trusts for the benefit of any of these family members; and (2) the
Committee may permit an officer to designate beneficiaries to whom options may
be transferred in the event of the officer's death.
(p) Adjustments to Prevent Dilution or Enlargement of Benefits (Stock Splits,
Etc.)
If a stock split, recapitalization, merger or other corporate event occurs
that affects BAC common stock, the Committee will, if determined by the
Committee to be appropriate to prevent dilution or enlargement of the
36
<PAGE>
benefits under the program, adjust (1) the number and type of shares of BAC
common stock which are subject to outstanding awards or which may thereafter
be made the subject of awards, (2) the grant, purchase or exercise price with
respect to any award, (3) the periods for attaining the exercise prices, and
(4) the relative total shareholder return performance requirements that the
Committee may use as an alternative means of allowing premium price options to
become exercisable in the event the exercise prices are not attained. If the
amendment to BAC's Certificate of Incorporation is approved and the two-for-
one stock split of BAC common stock is effected, as described earlier in Item
No. 3, the number of shares covered by any options granted under the program
prior to the stock split will be doubled and the exercise prices of the
options will be divided by two.
(q) Program Amendments
The board, upon the recommendation of the Committee, may amend, suspend or
terminate the program at any time so long as the officers' rights under the
program with respect to any award previously made are not adversely affected
in a material respect.
(r) Authorized Shares
The board has authorized up to 5,700,000 shares of common stock to be issued
under the program. Market price options issued under the 1992 Management Stock
Plan in connection with awards under the program will not be counted against
this number. If an option is cancelled, terminates, expires or lapses (except
due to failure of a premium price option to become exercisable because of the
failure of the BAC common stock price to reach the applicable exercise prices
and the failure to obtain the target relative total shareholder return), any
shares covered by that option will again be available for issuance under the
program.
The maximum number of shares of BAC common stock underlying options and
limited stock appreciation rights that may be awarded under the program to any
single officer during any calendar year is 1,000,000.
If the amendment to BAC's Certificate of Incorporation is approved and the
two-for-one stock split of BAC common stock is effected, as described earlier
in Item No. 3, the number of shares indicated in the preceding two paragraphs
will be doubled.
(s) Tax Deductibility
BAC believes that compensation received by officers in the exercise of options
and limited stock appreciation rights granted under the program will be
considered performance-based compensation and will not be subject to the
$1,000,000 limit on the tax deductibility of compensation under Section 162(m)
of the Internal Revenue Code. (See "Policy on Deductibility of Compensation"
under the "Report of the Executive Personnel and Compensation Committee.")
(t) Federal Income Tax Consequences Under the Program
1. Premium Price Options and Market Price Options
When the Committee grants a premium price option or a market price option,
the officer recognizes no taxable income and BAC can claim no tax
deduction. When the officer exercises a premium price option or a market
price option, the officer recognizes ordinary income to the extent of the
difference between the exercise price and the fair market value of BAC
common stock at exercise. BAC can claim a deduction for the same amount at
such time. Any appreciation or depreciation in the stock between exercise
of an option and sale of the stock is short-term or long-term capital gain
or loss depending on whether the shares have been held more than one year.
BAC cannot deduct any appreciation in the stock after exercise.
2. Limited Stock Appreciation Rights (LSARs)
The cash or the fair market value of BAC common stock received on exercise
of an LSAR is taxed to the officer at ordinary income rates. BAC can claim
a deduction in the same amount at such time. Any
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appreciation or depreciation in stock after exercise is short-term or long-
term capital gain or loss depending on whether the shares have been held
more than one year. BAC cannot deduct any appreciation in the stock after
it is issued pursuant to exercise of an LSAR.
3. Payments Upon a Change in Control
Paragraph (d) above describes the events which constitute a change in
control. In any such event, an officer's options and limited stock
appreciation rights (LSARs) may become immediately exercisable. Further, in
any such event, the amount equal to the value of the options at such time,
and all or a portion of the amounts paid upon exercise of LSARs, may be
treated as "parachute payments" under tax rules contained in the Internal
Revenue Code. The events that can trigger this treatment are similar but
not identical to the events that will cause the options and LSARs to be
exercisable. These amounts will be treated as parachute payments if the
amounts, when combined with the value of all other amounts that are paid or
accelerated as a result of the change in control, equal or exceed a
threshold amount equal to 300% of the officer's average annual compensation
over the five preceding years. In such case, the excess of the parachute
payments over the officer's average annual compensation will be subject to
a 20% nondeductible excise tax in addition to any income tax payable. The
amount subject to the excise tax may be reduced, however, if the officer
establishes that payments include compensation for personal services
rendered after the date of the change in control. To the extent payments
are subject to the excise tax, BAC will not be entitled to a deduction.
(u) Copy of Official Program Document
You may obtain a copy of the full text of the official program document from
BAC's Corporate Secretary's Office at the following address:
BankAmerica Corporation
Corporate Secretary's Office #13018
Bank of America Center
555 California Street
San Francisco, CA 94104
ITEM NO. 5: Shareholder Proposal Concerning Cumulative Voting
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL
"Resolved: That the shareholder of BankAmerica Corporation, assembled in
person and by proxy in an annual meeting, now request the Board of Directors
to take those steps necessary to provide for cumulative voting in the election
of directors, which means that each shareholder shall be entitled to as many
votes as shall equal the number of shares owned multiplied by the number of
directors to be elected, and the shareholder may cast all of the accumulated
votes for a single candidate, or for any two or more of them as the
shareholder may see fit."
PROPONENT'S STATEMENT
The shareholder proponent submitted the following statement in support of the
proposal:
"The National Bank Act provides for cumulative voting; however, holding
companies, such as BankAmerica which is incorporated in Delaware, have
escaped it.
"BankAmerica, and many banks acquired by it, had cumulative voting. It is
the proponent's opinion that the shareholders of these entities were not
compensated for the loss of these voting rights.
"The use of cumulative voting was present in the 1996 annual meeting of
Professional Bancorp where shareholders owning significant shares were able
to elect their nominees over the incumbents; however, the former directors,
because of their ownership, were able to elect some representatives of
their choice.
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"A California law requires that all state pension holdings and state
college funds invested in voting shares, must be voted in favor of
cumulative voting proposals which shows increasing recognition of the
importance of the democratic means of electing directors.
"In view of the large number of shares being allocated to management and
employees, it is essential that voting rights be proportionate. Also, it
appears that fewer acquisitions are being made by holding companies as the
market prices of shares have increased significantly denying shareholders a
meaningful premium. The proponent believes that enhanced voting rights
could be an attraction to shareholders seeking the best offer.
"Many successful corporations have cumulative voting. For example, Pennzoil
which defeated Texaco in most famous litigation. Ingersoll-Rand also has
cumulative voting and was recognized by FORTUNE magazine as second in its
industry as "America's Most Admired Corporations' and by the WALL STREET
TRANSCRIPT noted "on almost any criteria used to evaluate management,
Ingersoll-Rand excels.' During 1994, 1995 and 1996, it increased its
dividend greater than BankAmerica.
"Lockheed-Martin and VWR Corporation now have provisions that if any entity
acquires 40% of their shares, cumulative voting applies for all
shareholders. American Premier adopted cumulative voting rights in 1995.
"Allegheny Power System's board tried to take away cumulative voting and
put in a staggered system for electing directors. Its shareholders defeated
these proposals which confirms shareholders are interested in their voting
rights.
"If you agree, please mark your proxy "FOR'; if disagreeing, mark
"AGAINST'. NOTE: PROXIES NOT MARKED WILL BE VOTED FOR THIS RESOLUTION."
BOARD OF DIRECTORS RESPONSE TO SHAREHOLDER PROPOSAL
Cumulative voting for the election of directors has been proposed at past BAC
annual meetings and has been defeated each time by a substantial majority of
the votes cast by BAC shareholders. The Board of Directors continues to
believe that BAC's current method of electing directors is superior to
cumulative voting. Presently, directors at BAC (and at many other large public
corporations) are elected by plurality of shares represented and voting at an
annual meeting. Shareholders, who are entitled to one vote per share, may cast
their votes in favor of, or withhold their votes from, each director nominee.
Director candidates are nominated by the Board's Nominating Committee,
consisting entirely of independent directors, and approved by the board, a
majority of whose members are independent directors. This is the fairest
method for selecting directors who will represent all shareholders equally.
Cumulative voting, on the other hand, would permit relatively small groups of
shareholders to elect directors to represent their special interests or points
of view. Special interest directors tend to look after their own special
interests and not work together with other board members for the maximum
benefit of all shareholders. Cumulative voting introduces the possibility of
partisanship among board members, which would likely impair the members'
ability to work together as a team in support of the best interests of all
shareholders.
The board believes that each director should feel a responsibility to
represent all shareholders and not just a special constituency of shareholders
with their related special interests. Accordingly, your Board of Directors
believes cumulative voting in the election of directors is not in the best
interests of BAC and therefore recommends a vote against the proposal.
The board recommends a vote against this proposal for the reasons set forth
above. Contrary to the proponent's statement above and as stated in the
enclosed proxy card, if you do not vote by marking your proxy, your proxy will
be voted "against" this proposal as recommended by the board of directors.
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ITEM NO. 6: Shareholder Proposal Concerning Directors' Compensation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL
"The shareholders of BankAmerica Corporation request the Board of Directors
take the necessary steps to amend the company's governing instruments to adopt
the following: Beginning on the 1998 BankAmerica Corporation fiscal year, all
members of the Board of Director's total compensation will be solely in shares
of BankAmerica Corporation common stock each year. No other compensation of
any kind will be paid. Including, the elimination of retirement benefits to
directors, excluding existing contracts with directors."
PROPONENT'S STATEMENT
The shareholder proponent submitted the following statement in support of the
proposal:
"For many years the Rossi family have been submitting for shareholder vote,
at this corporation as well as other corporations, proposals aimed at
putting management on the same playing field as the shareholders. This
proposal would do just that.
"A few corporations have seen the wisdom in paying directors solely in
stock. Most notably, Scott Paper (now Kimberly Clark) and Travelers.
Ownership in the company is the American way. We feel that this method of
compensation should be welcomed by anyone who feels they have the ability
to direct a major corporation's fortunes.
"The directors would receive shares each year. If the corporation does
well, the directors will make more money in the value of the stock they
receive and the dividend that usually rise with more profits. If things go
bad, they will be much more inclined to correct things, because it will be
coming directly out of their pockets. Instead of the way it is done now,
where directors receive the same compensation for good or bad performance."
BOARD OF DIRECTORS RESPONSE TO SHAREHOLDER PROPOSAL
The BAC board shares the proponent's belief in the importance of equity-based
compensation for directors and believes that directors should have a financial
stake in the company. BAC has taken actions over the last several years to
place more emphasis on equity-based compensation for its directors. The board
believes that these actions have sufficiently strengthened the link between
directors' and shareholders' interest in BAC. It is, however, the board's
opinion that equity-based compensation should not be the sole form of
compensation of board members. Rather, the board believes a fair and
competitive total compensation package for directors combines stock-related
compensation and a certain amount of cash compensation at the option of each
board member. (See "Director Remuneration, Stock Ownership Guidelines,
Retirement and Attendance"--"Director Remuneration" earlier.) This philosophy
is reflected in BAC's Deferred Compensation Plan for Directors which requires
non-officer directors to defer at least 50%, and at their option up to 100%,
of their annual retainer in the form of restricted stock equivalent units,
which is generally payable only upon retirement. Amounts deferred are
converted into restricted stock equivalent units on the basis of the fair
market value of BAC common stock at the time of the deferral. The value of
these stock equivalent units fluctuates with changes in the market price of
BAC common stock.
The resolution proposes "the elimination of retirement benefits to directors,
excluding existing contracts with directors" of BAC. The board has already
voluntarily eliminated the Retirement Plan for Non-officer Directors
(Retirement Plan). In early 1996 the board eliminated the Retirement Plan in a
manner consistent with the board's goal of continuing to align director
compensation more closely with shareholder interests. At that time all active
non-officer directors who had accrued benefits under the Retirement Plan
converted the present value of these benefits into restricted stock equivalent
units under BAC's Deferred Compensation Plan for Directors. In early 1995 the
board adopted a BAC stock ownership guideline for non-officer directors of
three times the annual retainer, to be achieved within five years of joining
the board (for existing directors, five years from the
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date of adoption). The guideline may be met with either or both BAC common
shares or restricted stock equivalent units under the Deferred Compensation
Plan for Directors. All but one of the current non-officer directors have
already met the BAC stock ownership guideline for non-officer directors, based
on BAC's closing stock price of $113.75 per share on February 28, 1997.
The board believes the existing director compensation structure offers
directors the flexibility to balance stock-related and cash compensation in a
manner compatible with their individual financial circumstances. Further, BAC
seeks to have diverse representation on its board. The board believes that
eliminating all cash compensation to non-officer directors could discourage or
prevent highly qualified individuals from serving on the BAC board in the
future and, therefore, would not be in BAC's best interests.
The board recommends a vote against this proposal for the reasons set forth
above.
PROXIES AND VOTING AT THE MEETING
General Voting Information
Except as to Item No. 1 and Item No. 3, under BAC's Certificate of
Incorporation and By-laws, the affirmative vote of a simple majority of the
shares present or represented by proxy is required to approve any matter.
Abstentions are counted in determining the total number of votes present (or
represented). While not counted as votes for or against a proposal,
abstentions have the same effect as votes against a proposal. If a broker or
other nominee holding shares for a beneficial owner does not vote on a
proposal (broker non-votes), the shares will not be counted in determining the
number of votes present (or represented). With respect to Item No. 1 (Election
of Directors), shareholders can withhold authority to vote for all nominees
for director or can withhold authority to vote for certain nominees for
director. Shares that are withheld and broker non-votes will have no effect on
the outcome of the election of directors because they will be elected by a
plurality of the shares voted for directors. In order to be elected, a nominee
must receive the vote of a plurality of the outstanding shares of common stock
present or represented at the meeting and entitled to vote. Approval of Item
No. 3 (Approve an Amendment to BankAmerica Corporation's Certificate of
Incorporation) requires the affirmative vote of the holders of a majority of
the outstanding shares of common stock of BAC. Abstentions and broker non-
votes have the same effect as votes against this proposal. Shareholders of
record owning shares of BAC common stock on March 24, 1997, at 5:00 p.m.
(Pacific Time) are entitled to vote at the 1997 Annual Meeting. As of February
28, 1997, BAC had 353,996,701 common shares outstanding and entitled to vote.
A report of the votes on matters considered at the meeting will be included in
BAC's quarterly report on Form 10-Q for the second quarter of 1997.
Vote of Proxies
The board recommends a vote "FOR" Item Nos. 1, 2, 3 and 4 and "AGAINST" Item
Nos. 5 and 6, as discussed earlier.
A proxy in the accompanying form which is properly executed, returned and not
revoked will be voted in accordance with the instructions indicated. A proxy
authorized by telephone and not revoked will be voted in accordance with the
shareholder's instructions. If you return a properly signed and dated proxy
card but do not mark any choices on any item, your shares will be voted in
accordance with the recommendations of the Board of Directors as to such item,
except as described later for certain participants in the BankAmerica 401(k)
Investment Plan. Similarly, if you use the telephone procedures for granting
proxies to vote your shares but do not make a choice on any item, your shares
will be voted in accordance with the recommendations of the board as to such
item. The proxy card and use of the telephone authorization procedures give
authority to the proxies to vote your shares in their discretion on any other
matter that may be presented at the meeting. Your proxy also governs the
voting of shares held for your account under BAC's Shareholder Investment
Plan.
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PLEASE SIGN, DATE AND PROMPTLY RETURN YOUR PROXY CARD IN THE ENVELOPE
PROVIDED. ALTERNATIVELY, IF YOU ARE A SHAREHOLDER OF RECORD IN THE U.S., USE
THE TOLL-FREE TELEPHONE NUMBER SET FORTH ON THE PROXY CARD TO AUTHORIZE THE
PROXYHOLDERS TO VOTE YOUR SHARES.
Revocability of Proxies
You may revoke the board-solicited proxy before its exercise by written notice
of revocation or by a later proxy (in either case authorized using the
telephone procedures for granting proxies or delivered by mail at the address
listed on page 1), or by attending the meeting and voting by ballot.
Telephone Procedures for Granting Proxies
Shareholders of record may authorize the proxyholders to vote their shares via
toll-free telephone call procedures in the U.S. or by mailing their signed
proxy card. The telephone procedures for granting proxies are designed to
authenticate shareholders' identities, to allow shareholders to vote their
shares and to confirm that their instructions have been properly recorded. BAC
has been advised by counsel that the procedures which have been put in place
are consistent with the requirements of applicable law. Specific instructions
to be followed by any shareholder of record interested in authorizing the
proxyholders to vote his or her shares via telephone are set forth on the
enclosed proxy card. Telephone procedures for granting proxies are not
available to shareholders who own shares in "street name" through a broker and
in certain limited instances as described below for participants in the
BankAmerica 401(k) Investment Plan.
Voting and the BankAmerica 401(k) Investment Plan
The proxy card or use of the telephone procedures for granting proxies serves
as a voting instruction to the trustee of the BankAmerica 401(k) Investment
Plan for participants in the plan having shares of BAC common stock allocated
to their accounts in the plan. If the plan shares are held in the same names
as shares held directly by a shareholder, the proxy card represents the
combined total of plan shares and shares held directly for the individual.
Plan participants who wish to have their plan shares voted differently than
their shares held directly must do so by so stating on the proxy card and may
not then use the telephone voting procedures for granting proxies for any BAC
shares that they own. The trustee of the plan will only vote those plan shares
for which voting instructions are received. To protect the confidentiality of
individual ballot selections of such plan participants, the transfer agent
will tabulate these ballot selections and then report the results only in the
aggregate to the plan trustees and BAC, respectively. Plan participants having
questions regarding the voting of their plan shares should contact Business
Retirement Programs, Unit #9260, 315 Montgomery Street, Mezzanine Level, San
Francisco, California 94104.
Confidential Voting
BAC has instituted use of a single proxy card for all shareholder voting. To
protect the confidentiality of employee votes under the BankAmerica 401(k)
Investment Plan, BAC has directed its stock transfer agent to restrict BAC's
access to proxy cards, ballots and certain records for the granting of proxies
by telephone and to report voting results only in the aggregate. These
directions apply in all circumstances with respect to employee votes and
voting instructions. With respect to non-employee shareholders, the directions
also apply except in cases of proxy contests, tender offers and other change
of control situations.
BAC By-Laws for Prior Notice of Shareholder Business
Shareholders of record of BAC common stock wishing to bring business from the
floor of the 1997 Annual Meeting for a vote of the shareholders, must do so in
accordance with BAC's By-laws. The By-laws provide that only a shareholder of
record is entitled to bring business from the floor of the meeting and the
shareholder must give BAC's Corporate Secretary 30 to 60 days' prior notice of
any business the shareholder wishes to bring before the 1997 Annual Meeting
for a vote. The earliest date for receipt of notice was March 23, 1997, and
the
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last day for receipt of notice is April 22, 1997. The address for mailing is
listed on page 1. The notice must give the following information with respect
to any business the shareholder wishes to bring before the meeting: (1) the
name and address of the shareholder proposing the business, as they appear on
BAC's stock records; (2) the class and number of shares of BAC stock the
shareholder owns; and (3) any material interest of the shareholder in the
business. If you wish to bring shareholder business before the BAC 1997 Annual
Meeting, please obtain a copy of BAC's By-laws from the Corporate Secretary
and familiarize yourself with the shareholder business requirements.
In 1997 BAC amended its By-law provisions for shareholder business raised from
the floor of the Annual Meeting. Thus, shareholders of record of BAC common
stock wishing to bring business from the floor of the 1998 Annual Meeting and
future shareholder meetings for a vote of the shareholders, must do so in
accordance with BAC's amended By-laws. The Amended By-laws provide that only a
shareholder of record is entitled to bring business from the floor of the
meeting and the shareholder must give BAC's Corporate Secretary 90 to 120
days' prior notice of the business to be brought before an Annual Meeting for
a vote. The address for mailing is listed on page 1. The notice must include
the following information with respect to any business the shareholder wishes
to bring before a shareholder meeting: (1) a brief description of the business
desired to be brought before the annual meeting and the reasons for conducting
such business at the annual meeting; (2) the name and address, as they appear
on BAC's books, of the shareholder proposing such business; (3) the class and
number of shares of BAC's stock which are owned by the shareholder; (4) any
material interest of the shareholder in such business; and (5) if the
shareholder intends to solicit proxies in support of such shareholder's
proposal, a representation to that effect. If you wish to bring shareholder
business before the 1998 Annual Meeting and future shareholder meetings,
please obtain a copy of BAC's Amended By-laws from the Corporate Secretary and
familiarize yourself with the shareholder business requirements.
The BAC By-law requirements, including time periods for advance notice, for
business to be presented for a vote at a shareholder meeting are in addition
to the requirements and time periods specified in the Securities and Exchange
Commission rules for a shareholder to have a proposal included in the board's
proxy statement.
OTHER MATTERS
OTHER BUSINESS FOR MEETING
By signing the enclosed proxy card or by using the telephone procedures for
granting proxies you are conferring the authority to vote upon the persons
indicated on the card. This authority includes discretionary authority to vote
your shares in accordance with the proxyholders' judgment with respect to all
matters which properly come before the meeting in addition to the scheduled
items of business. The board intends to instruct its proxyholders to vote in
accordance with the recommendations of the Board of Directors.
In addition to the shareholder proposals submitted for and included in this
proxy statement, a shareholder has notified BAC's Corporate Secretary of his
intent to raise three proposals for consideration from the floor of the Annual
Meeting. These proposals relate to (1) calling for an investigation of whether
BAC's net profits were manipulated by misusing reserve accounts, (2) stopping
the deterioration of BAC's dividend yield, and (3) sending quarterly reports
to shareholders. Assuming the proposals are proper items of business for
shareholder action, they would be eligible to be voted upon at the meeting.
The persons named in the proxy card intend to vote the proxies, with respect
to any other matters, (1) with discretionary authority, and (2) in accordance
with their best judgment. The board will instruct the proxyholders to vote
"AGAINST" the three shareholder proposals discussed in this paragraph if
presented at the meeting.
As of the printing of this notice of annual meeting of shareholders and proxy
statement, the Board of Directors knows of no matters to be presented for
action at the meeting other than items listed on the proxy card and the three
shareholder proposals discussed in the above paragraph.
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PROXY SOLICITATION
BAC is paying the cost of proxy solicitation. In addition, BAC has retained
D.F. King & Co., Inc., to help solicit proxies at an estimated cost of
$15,000, plus out-of-pocket expenses. BAC reimburses banks, brokers and other
nominees for their customary expenses incurred in connection with the
forwarding of such materials. In addition, BAC may request that proxies be
solicited, without additional compensation, by directors, officers and other
regular employees of BAC and its subsidiaries by telephone, telegraph or in
person.
ANNUAL REPORT ON FORM 10-K AND ANNUAL REPORT TO SHAREHOLDERS
BAC will provide, without charge, a copy of the BankAmerica Corporation Annual
Report on Form 10-K for the year ended December 31, 1996, (including any
financial statements and schedules, and a list describing any exhibits not
contained therein) upon written request addressed to: Bank of America,
Corporate Public Relations #13124, P.O. Box 37000, San Francisco, California
94137. The exhibits to the 10-K are available upon payment of charges which
approximate BAC's cost of reproduction. BAC has provided a copy of its 1996
Annual Report to Shareholders to each person whose proxy is being solicited.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR 1998 MEETING
Proposals of shareholders for next year's Proxy Statement must be received on
or before November 24, 1997. Proposals should be mailed to BankAmerica
Corporation at the address listed on page 1.
YOUR VOTE IS IMPORTANT
It is important that your shares be represented and voted at the meeting.
Please vote as soon as possible whether or not you plan to attend the meeting.
Kindly mark, sign, date and return the accompanying proxy card in the envelope
provided, or alternatively, if you are a shareholder of record, use the toll-
free telephone procedures set forth on the proxy card to authorize the
proxyholders to vote your shares. Using the telephone to grant a proxy reduces
the company's expense in soliciting proxies.
Dated: March 24, 1997
By Order of the Board of Directors
/s/ Cheryl Sorokin
----------------------------------
Cheryl Sorokin
Executive Vice President and
Secretary
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APPENDIX A
PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION
The Certificate of Incorporation of the Corporation is amended by deleting the
current Section I of Article FOURTH thereof, and substituting the following:
"FOURTH. I. The Corporation may issue 1,470,000,000 shares of capital
stock, including 70,000,000 preferred shares, without par value, and
1,400,000,000 common shares, par value $1.5625 per share. Except as
otherwise expressly provided by this Certificate of Incorporation or
the resolution or resolutions of the Board of Directors providing for
the issue of a series of preferred stock, stock of any class or classes
may be increased or decreased by the affirmative vote of the holders of
a majority of the stock of the Corporation at the time entitled to
vote.
Each share of common stock of the Corporation issued and outstanding or
held in the treasury of the Corporation immediately prior to the close
of business on June 2, 1997, that being the time when the amendment of
this Article FOURTH of the Certificate of Incorporation shall have
become effective, shall be subdivided and changed and converted into
two fully paid and nonassessable shares of common stock, par value
$1.5625 per share, of the Corporation, and at the close of business on
such date, each holder of record of common stock shall, without further
action, be and become the holder of one additional share of common
stock for each share of common stock held of record immediately prior
thereto. Effective at the close of business on such date, each
certificate representing shares of common stock outstanding or held in
treasury immediately prior to such time shall continue to represent the
same number of shares of common stock and as promptly as practicable
thereafter, the Corporation shall issue and cause to be delivered to
each holder of record of shares of common stock at the close of
business on such date an additional certificate or certificates
representing one additional share of common stock for each share of
common stock held of record immediately prior thereto."
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NOTICE TO SHAREHOLDERS
Information Online--
Shareholders are invited to
keep current on BAC online via
the Internet. Visit BAC's home
page on the World Wide Web
http://www.bankamerica.com
to view the latest information
about the corporation and its
products and services, or
apply for a loan or credit
card. Corporate disclosure
documents filed with the
Securities and Exchange
Commission by BAC and other
companies can be obtained from
the SEC's home page on the
World Wide Web
http://www.sec.gov.
Shareholders can reach the
corporation's transfer agent
and registrar through
http://www.cms.com.
Electronic voting is not
available at this time.
LOGO
Printed on Recycled Paper
<PAGE>
BANKAMERICA CORPORATION
PROXY/VOTING INSTRUCTION CARD
I appoint David Coulter, James Roethe and Cheryl Sorokin, individually and
together, proxies with full power of substitution, to vote all of my
BankAmerica Corporation common stock at the Annual Meeting of Shareholders to
be held at the Sheraton Grande Hotel Los Angeles, 333 South Figueroa Street,
Los Angeles, California, on Thursday, May 22, 1997, at 2:00 p.m. (Pacific
Time) and at any adjournment of postponement of the meeting. In the absence of
instructions from me my proxies will vote in accordance with the Directors'
recommendations on the reverse side of this card. My proxies may vote
according to their discretion on any other matter which may properly come
before the meeting. I revoke any proxy previously given and acknowledge that I
may revoke this proxy prior to its exercise.
This card also provides voting instructions to the trustee of the
BankAmerica 401(k) Investment Plan (Plan) for participants with shares
allocated to their accounts. The trustee will only vote those Plan shares for
which voting instructions are received. Employee participants in the Plan may
authorize a proxy to vote your shares by telephone as described on the reverse
side of this proxy card unless they wish to provide different voting
instructions for the Plan shares versus shares held directly. Your directions
to vote shares held in the Plan will be kept confidential.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE OTHER SIDE OF THIS CARD.
ALTERNATIVELY, IF YOU ARE A SHAREHOLDER OF RECORD, USE THE TOLL-FREE TELEPHONE
NUMBER SET FORTH ON THE REVERSE SIDE OF THIS PROXY CARD TO AUTHORIZE A PROXY
TO VOTE YOUR SHARES. YOU WILL REDUCE BAC'S EXPENSE IN SOLICITING PROXIES IF
YOU AUTHORIZE A PROXY TO VOTE BY TELEPHONE.
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
. FOLD AND DETACH HERE .
<PAGE>
- --------------------------------------------------------------------------------
LOGO
As part of our efforts to reduce costs and conserve resources, we have
attempted to streamline the mailing of our Annual Report so that only one copy
will be received by each shareholder household. You will continue to receive
separate proxy statements and cards for each account. Please note that if you
also have accounts with a broker or financial institution you will continue to
receive an Annual Report and proxy materials for such accounts.
Recycled paper is used for all the materials you received with this package,
including the envelopes.
Printed on recycled paper
<PAGE>
- -------------------------------------------------------------------------------
[X]
Please mark
your votes
like this
The Board of Directors recommends a vote FOR proposals 1, 2, 3 and 4 and
AGAINST 5 and 6
1. Election of directors - Nominees
01 Joseph Alibrandi 02 Jill Barad Withhold For all
03 Peter Bedford 04 Richard Clarke For For All Except
05 David Coulter 06 Timm Crull
07 Kathleen Feldstein 08 Donald Guinn [_] [_] [_]
09 Frank Hope, Jr. 10 Walter Massey
11 John Richman 12 Richard Rosenberg
13 A. Michael Spence 14 Solomon Trujillo
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Except Nominee(s) written above
2. Ratification of appointment of Ernst & Young LLP as independent auditors
For Against Abstain
[_] [_] [_]
3. Approve an amendment to BAC's certificate of incorporation to increase the
number of authorized shares of common stock and to effect a two-for-one
stock split of BAC common stock
For Against Abstain
[_] [_] [_]
4. Approve the BAC performance equity program
For Against Abstain
[_] [_] [_]
5. Act on a shareholder proposal concerning cumulative voting
For Against Abstain
[_] [_] [_]
6. Act on a shareholder proposal concerning directors' compensation
For Against Abstain
[_] [_] [_]
I/We plan to attend the annual meeting in Los Angeles;
please send ticket (admits 2) [_]
Signature_________________ Signature___________________ Date ________________
Please sign exactly as name(s) appear(s) hereon. If acting as an executor,
administrator, trustee, custodian, guardian, etc., you should so indicate in
signing. If the shareholder is a corporation, please sign the full corporate
name, by duly authorized officer. If shares are held jointly, each shareholder
named should sign. Date and promptly return this card in the envelope
provided.
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***YOU WILL REDUCE BAC'S EXPENSE IF YOU AUTHORIZE A PROXY TO VOTE YOUR SHARES
BY TELEPHONE***
***IF YOU WISH TO AUTHORIZE A PROXY TO VOTE YOUR SHARES BY TELEPHONE, PLEASE
READ THE INSTRUCTIONS BELOW***
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YOUR TELEPHONE INSTRUCTION WILL AUTHORIZE THE NAMED PROXIES IN THE SAME MANNER
AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD
Have your proxy card in hand. Decide how you wish your shares to be voted.
. On a Touch Tone Telephone call Toll-Free 1-888-776-5662 24 hours per day--7
days a week.
. You will be asked to enter a Control Number.
You will hear these instructions:
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OPTION #1 To grant a proxy to vote as the Board of Directors recommends on ALL
proposals, press 1 now. If you wish to grant a proxy to vote on each
proposal separately, press 0 now.
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WHEN YOU PRESS 1, YOUR PROXY WILL BE CONFIRMED AND YOUR VOTE CAST AS YOU
DIRECTED.
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OPTION #2 If you selected to grant a proxy to vote on each proposal separately,
you will hear these instructions
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Proposal 1: To grant a proxy to vote FOR ALL nominees, press 1; to grant a
proxy to WITHHOLD AUTHORITY TO VOTE FOR ALL nominees, press 9; To
grant a proxy to WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL
nominee, press 0. Please make your selection now.
To grant a proxy to withhold authority to vote for individual
nominees please enter the two digit number that appears next to
the nominee you DO NOT wish to vote for. Once you have completed
entries for all Directors for which you wish to withhold
authority, press 0.
Proposal 2: You may make your selection any time: To grant a proxy to vote
For, press 1; Against, press 9; Abstain, press 0.
The instructions are the same for all remaining proposal(s). IF NO SELECTION
IS MADE, YOU AUTHORIZE YOUR SHARES TO BE CAST AS THE BOARD OF DIRECTORS
RECOMMENDS.
YOUR VOTE SELECTION WILL BE REPEATED AND YOU WILL HAVE AN OPPORTUNITY TO
CONFIRM IT.
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IF YOU AUTHORIZE A PROXY BY TELEPHONE, THERE IS NO NEED FOR YOU TO MAIL BACK
YOUR PROXY CARD.
THANK YOU FOR VOTING!
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