<PAGE>
================================================================================
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:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BANKAMERICA CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LOGO OF BANKAMERICA CORPORATION(R)]
David A. Coulter
Chairman and Chief Executive Officer
March 23, 1998
Dear Shareholder:
I am pleased to invite you to attend the Annual Meeting of Shareholders of
BankAmerica Corporation (BAC) to be held at 2:00 p.m. (Pacific Time) on
Thursday, May 21, 1998, at the Doubletree Hotel-Jantzen Beach, 909 N. Hayden
Island Drive, Portland, Oregon.
At this year's meeting, you are being asked to elect directors and to ratify
the appointment of independent auditors. The notice of meeting and proxy
statement that follow this letter describe these items. I urge you to read
this information carefully.
Your Board of Directors unanimously believes that the two items proposed by
the board are in the best interests of BAC and its shareholders, and
recommends you vote FOR Item Nos. 1 and 2 on the enclosed proxy card.
In addition to these business items, I will report to you on BAC's
operations and plans, respond to comments, and answer questions of general
interest to shareholders.
I hope you are able to attend. 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,
/s/ David A. Coulter
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Corporate Leadership and Governance....................................... 1
. Leadership--The Board of Directors................................... 1
. Corporate Governance Guidelines...................................... 2
. Board Committees..................................................... 2
. Functions of Committees and Number of Meetings Held in 1997.......... 3
. Director Compensation, Stock Ownership Guidelines, Retirement and
Meeting Attendance................................................... 4
. How to Nominate Directors or Raise Business at Shareholders'
Meetings............................................................. 5
Executive Compensation, Benefits and Related Matters...................... 6
. Report of the Executive Personnel and Compensation Committee......... 6
. Shareholder Return Performance Graph................................. 15
. Summary Compensation Table........................................... 16
. Option/SAR Grants in Last Fiscal Year................................ 18
. Aggregated Option/SAR Exercises in the Last Fiscal Year and Fiscal
Year-End Option/SAR Values......................................... 20
. Pension Plans........................................................ 20
. Change in Control Arrangements....................................... 21
. Contracts with Directors and Executive Officers...................... 22
. Banking and Other Transactions....................................... 23
. Compensation Committee Interlocks and Insider Participation.......... 24
. Certain Business Relationships and Legal Proceedings................. 24
Ownership of BAC Stock.................................................... 27
. Security Ownership of Certain Beneficial Owners...................... 27
. Section 16(a) Beneficial Ownership Reporting Compliance.............. 28
Matters to Be Considered at the Meeting................................... 29
. Board Proposals:
Item No. 1: Election of Directors.................................... 29
Item No. 2: Ratification of Appointment of Ernst & Young LLP as
Independent Auditors........................................ 32
Voting By Proxy and Voting at the Meeting................................. 33
Other Matters............................................................. 34
. Other Business for Meeting........................................... 34
. Proxy Solicitation................................................... 35
. Annual Report on Form 10-K and Annual Report to Shareholders......... 35
. Submission of Shareholder Proposals for 1999 Meeting................. 35
</TABLE>
<PAGE>
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 will be held
at the Doubletree Hotel--Jantzen Beach, 909 N. Hayden Island Drive, Portland,
Oregon at 2:00 p.m. (Pacific Time) on Thursday, May 21, 1998, for the
following purposes:
1. To elect 14 directors to serve until the 1999 Annual Meeting of
Shareholders or until their earlier retirement, resignation or removal;
2. To ratify the appointment of Ernst & Young LLP as independent auditors;
and
3. To transact such other business as may properly come before the meeting.
The Board of Directors has chosen March 23, 1998 as the "record date" to
identify those shareholders who are entitled to notice of the Annual Meeting
and to vote at the Meeting. A list of those shareholders will be available at
the meeting and for ten days prior to the meeting at Bank of America, 121
Southwest Morrison Street, 17th Floor-Corporate Affairs Department, Portland,
Oregon 97204, Attention: Mr. Peter Gray. This notice, the attached proxy
statement and the enclosed form of proxy for the Meeting are first being
mailed on March 23, 1998.
By Order of the Board of Directors
/s/ Cheryl Sorokin
Cheryl Sorokin
Executive Vice President and Secretary
March 23, 1998
--------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN
THE ENCLOSED RETURN ENVELOPE. OR, IF YOU OWN YOUR SHARES "OF RECORD"
(I.E., NOT THROUGH A BANK OR BROKER), CALL THE TOLL-FREE TELEPHONE NUMBER
ON THE PROXY CARD TO AUTHORIZE THE BOARD'S PROXIES TO VOTE YOUR SHARES.
THIS WILL REDUCE OUR PROXY EXPENSES. TELEPHONE VOTING IS NOT AVAILABLE IF
YOU OWN YOUR SHARES IN "STREET NAME" THROUGH A BROKER OR BANK, UNLESS YOUR
BROKER OR BANK OFFERS IT.
--------------------------------------------------------------------------
<PAGE>
--------------
MAILING DATE:
MARCH 23, 1998
--------------
CORPORATE LEADERSHIP AND GOVERNANCE
LEADERSHIP--THE BOARD OF DIRECTORS
The Board of Directors of BankAmerica Corporation (BAC) supervises the
management of BAC's business and sets corporate policies for BAC and its
subsidiaries, including its principal subsidiary, Bank of America NT&SA
(Bank). We oversee the affairs of BAC for the benefit of you, the shareholder.
The ultimate authority and responsibility for BAC's progress lies with us. We
accept that responsibility and take it seriously.
Your Board of Directors is made up of 14 individuals, who act collectively as
a group to direct the affairs of BAC. Each director brings unique perspectives
and experiences to the task, but it is the board as a whole which leads the
organization. Here is some general information about the composition of the
board as it will be constituted assuming you elect the board's slate of
nominees. We have provided specific information on each individual director
standing for election or re-election on page 29.
The total number of directors is 14, in keeping with our view that the board
should, in most circumstances, be comprised of approximately 13-15 directors.
This is a smaller number of directors than we have targeted in prior years,
based on our belief that it is easier for a smaller board to operate
effectively. Eleven of the directors are "outside" directors as we define that
term under BAC's Corporate Governance Principles. Under those Principles,
which we describe later, we treat David Coulter, BAC's chairman and CEO, and
directors Richard Rosenberg and Sanford Robertson as "inside" directors,
because they currently hold officer positions with BAC or a subsidiary, or
have within the last ten years. However, neither Mr. Rosenberg nor Mr.
Robertson is an executive officer of BAC or an active officer of the Bank.
Your directors have a wide array of professional and personal experiences.
Many lead or have led complex business organizations. Several have academic
backgrounds and two of these have significant administrative responsibilities
in major universities. Several are entrepreneurs who are running or have run
their own businesses. One is of Hispanic origin, one is African American and
the nominee standing for election for the first time at the Annual Meeting is
Asian. Two are women. No director represents a specific constituency.
John Richman, who has served as a director since 1994, will retire from the
board at the Annual Meeting and is not standing for reelection. Mr. Richman's
background as an attorney and former chairman and chief executive officer of
major business organizations provided valuable input to the board's
activities. We thank him for his dedicated service and wise counsel and wish
him well in the years ahead. We regret that time commitments related to her
duties as CEO of Mattel, Inc. prevented Jill Barad from continuing to serve as
a director, and she resigned from the board in September of 1997. We
appreciated Ms. Barad's contributions to our discussions during her tenure and
wish her well.
Annually, we conduct a self-evaluation of our individual performance as
directors. We believe this process helps each director to be thoughtfully
self-critical and to consider opportunities for improving his or her
commitment to the role of BAC director.
We also conduct a yearly review of the overall effectiveness of the board.
This process helps the board assess its own performance and facilitates
changes in board process and structure on an ongoing basis.
The board met ten times in 1997. All meetings were held jointly with the board
of the Bank.
1
<PAGE>
CORPORATE GOVERNANCE GUIDELINES
We have adopted a set of corporate governance principles. They state our views
about our role as directors, board structure, committee meetings and other
governance issues. You can find highlights on page 95 of the 1997 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 board's standing committees are the Auditing and Examining, Executive,
Executive Personnel and Compensation, Nominating, and Public Policy
committees. Current members of these committees are listed below. No BAC
officer or former officer was a member of these committees except for the
Executive Committee. Richard Rosenberg served on that committee while he was
Chief Executive Officer and was appointed chair of that committee in May,
1995. On January 8, 1996 David Coulter, who succeeded Richard Rosenberg as
Chief Executive Officer on January 1, 1996, joined the Executive Committee.
<TABLE>
<CAPTION>
Auditing and Executive Personnel
Examining(/1/) Executive and Compensation
<S> <C> <C>
Donald Guinn, Chair Richard Rosenberg, Chair Timm Crull, Chair
Richard Clarke Joseph Alibrandi Joseph Alibrandi
Walter Massey Peter Bedford Kathleen Feldstein
John Richman David Coulter Frank Hope, Jr.
Solomon Trujillo Timm Crull Michael Spence
Kathleen Feldstein
Michael Spence
Nominating Public Policy
Joseph Alibrandi, Chair Peter Bedford, Chair
Peter Bedford Frank Hope, Jr.
Frank Hope, Jr. John Richman
John Richman Sanford Robertson
</TABLE>
- --------
(1) Glenhall Taylor, Jr., a former BAC officer, is a consultant to the
committee.
2
<PAGE>
FUNCTIONS OF COMMITTEES AND NUMBER OF MEETINGS HELD IN 1997
The following describes the functions of the board's standing committees
which advise and assist the board in overseeing the affairs of BAC. Committees
report the actions they take to the full board, usually at the next board
meeting:
Auditing and Examining Committee 8 meetings in 1997
. Monitors compliance and areas of significant risk (including credit,
market, liquidity, cross border and operational risk);
. Monitors the adequacy of internal controls;
. Reviews principal financial reports and significant accounting policy
and reporting issues;
. Approves the scope of the audit and credit examination functions and
monitors their performance;
. Recommends selection of independent auditors and monitors their
performance and independence;
. Reviews reports on fiduciary activities of BAC's subsidiaries; and
. Assists the board in meeting its fiduciary responsibilities regarding
certain employee benefit plans.
Executive Committee 5 meetings in 1997
. Acts for the board between board meetings (except that the committee
can't appoint or remove the chairman of the board or the president,
declare dividends, or take certain other actions that the bylaws reserve
to the board); and
. Oversees the annual board effectiveness review.
Executive Personnel and Compensation Committee 5 meetings in 1997
. Approves compensation (including salary and perquisites) of executive
officers and other key senior management officers of BAC and its
subsidiaries;
. Administers incentive and deferred compensation programs for executive
officers and other key senior management 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 and other key senior management officers of BAC and
its subsidiaries.
Nominating Committee 5 meetings in 1997
. Recommends director candidates;
. Evaluates the size and composition of the board, and recommends criteria
for director selection; and
. Reviews and advises on director compensation.
Public Policy Committee 5 meetings in 1997
. Identifies and monitors political, social and environmental trends that
could affect BAC's performance and the related interests of employees,
shareholders, customers and the general public and advises the board and
management on long-range plans to adjust operations to those trends;
. Oversees compliance with the Community Reinvestment Act; and
. Recommends action on specific public policy issues and advises as to the
committee's evaluation of related policies, practices and procedures.
3
<PAGE>
DIRECTOR COMPENSATION, STOCK OWNERSHIP GUIDELINES, RETIREMENT AND MEETING
ATTENDANCE
Director Compensation
A director who is also an officer of BAC or a subsidiary receives compensation
as an officer but no additional pay for serving on the board. Other directors
receive an annual retainer and meeting fees for board service.
Retainer
We pay outside directors a $40,000 annual combined retainer for service on the
BAC and Bank boards. We require directors to defer one-half of this retainer
into restricted stock units under our Deferred Compensation Plan for
Directors. The withheld amount is converted into stock units based on the fair
market value of BAC common stock. These units fluctuate in value with changes
in the market price of BAC stock. Dividend equivalent credits, equal to the
value of each dividend, accumulate in the account as dividends are paid on our
stock. Directors may also choose to defer more than half of the retainer if
they wish. These additional amounts can either be placed into stock units or
into an interest bearing account in the Plan at the director's choice. The
director is paid in cash upon leaving the board. Or, the director may choose
to be paid at the time of retirement from the director's principal occupation
if that occurs after the director has left our board. Directors may choose
payment in a lump sum or installments.
We pay BAC and Bank board committee chairs an additional annual combined
retainer for their service ($15,000 for the Chair of the Auditing and
Examining Committee, $8,000 for the Chair of the Executive Personnel and
Compensation Committee, $5,000 for other committee Chairs). We pay members of
the Auditing and Examining Committee (other than the Chair) an additional
combined retainer of $7,500 to reflect the considerable demands of service on
that committee.
Meeting Fees
We pay outside directors $1,500 for each day they attend a board meeting or
certain business events approved by the Chairman of the Board, and for each
committee meeting attended. These fees may be deferred just like annual
retainers, if the director chooses. BAC reimburses directors for the expense
of attending meetings.
Stock Ownership Guidelines
Our guidelines require outside directors to own $120,000 worth of BAC stock
(three times the annual board retainer). Directors must own this much stock
within five years of joining the board. Both common shares and stock units
under the Deferred Compensation Plan count towards the requirement. All of our
current outside directors are in compliance. Shirley Young, a nominee for
director, must comply within five years after she is elected. We have similar
guidelines for executive officers and certain other senior management
officers. These officer guidelines are explained later in this proxy statement
in the section titled "Executive Compensation, Benefits and Related Matters"--
"Report of the Executive Personnel and Compensation Committee"--"Stock
Ownership Guidelines."
Retirement
Elimination of Directors' Retirement Plan
As part of our annual review of corporate governance, we decided to drop the
directors retirement plan effective March 31, 1996. We did so because we
thought that a pension plan for outside directors was not needed. Directors
joining the board after March 31, 1996 receive no retirement payments. The
directors in office when this change was made elected to have their accrued
retirement benefits converted into stock units under the
4
<PAGE>
Deferred Compensation Plan. We continue to pay benefits under the Plan to
directors who retired before we eliminated the plan. These former directors
with at least ten years of service (five years, for those who reached
mandatory retirement age) get payments for ten years (or the number of years
of service, whichever is less). The annual payment is generally equal to the
annual board retainer from time to time in effect.
Mandatory Retirement Policy
Under board policy, outside directors may not stand for election after
reaching age 70. An officer may not serve as a director after retirement from
officer status, except for the CEO, who may continue to stand for election
until reaching age 70.
Meeting Attendance
All directors attended 75% or more of the combined meetings of the BAC board
and board committees on which they served during 1997. Directors also
discharge their responsibilities throughout the year by personal meetings and
telephone contact with other directors and management regarding the business
and affairs of BAC.
HOW TO NOMINATE DIRECTORS OR RAISE BUSINESS AT SHAREHOLDERS' MEETINGS
BAC's bylaws contain the requirements that must be met before a shareholder
may recommend someone as a director or raise business from the floor of a
shareholders' meeting. The bylaws say that only a "shareholder of record" may
make a nomination. This means you must hold shares in your own name rather
than through a bank, broker or other person. You must also give our Corporate
Secretary 90 to 120 days' prior notice of the nomination or business you
intend to raise at the meeting. Send your notice to the address on page 2. To
be considered at our 1998 meeting, the earliest date for receipt of notice was
January 21, 1998 and the last day for receipt of notice was February 20, 1998.
The bylaw requirements are in addition to any SEC requirements that pertain to
your nomination or proposal. It is too late to submit notice of a floor
proposal or nomination for this year's meeting. However, if you wish to submit
a nomination or make a proposal from the floor of future shareholders'
meetings, please obtain a copy of our bylaws from the Corporate Secretary and
read the requirements so you can comply with them fully in future years. The
notice of business you intend to raise at the meeting must include the
following information: (1) a brief description of the business and the reasons
behind it; (2) your name and address, as they appear on our records; (3) the
class and number of shares of BAC stock which you own; (4) any material
interest you have in the business you wish to raise; and (5) whether you will
solicit your own proxies in support of your proposal. If you wish to submit a
proposal to be included in our proxy statement for next year's annual meeting,
see page 35.
Nominations
At any time if you wish to recommend that the Nominating Committee consider
someone as a possible director candidate, please submit the name to the
Corporate Secretary. She will submit your recommendations to our Nominating
Committee. Your recommendation must include the following information about
your candidate: (a) name, age, business and residence addresses; (b) principal
occupation; (c) the class and number of shares of BAC stock owned directly or
beneficially; (d) citizenship; and (e) the candidate's written consent to
serve if elected. You must also tell us: (a) your name and address, as they
appear on our books; (b) the class and number of shares of BAC stock which you
own; and (c) whether you will solicit your own proxies in support of your
candidate.
A candidate should be a leader in his or her field, have broad experience and
sound business judgment, and be willing to attend directors' meetings. In
selecting directors we generally seek a combination of active or former chief
executive officers of major complex businesses, and leading academics and
entrepreneurs, including women and minorities. The process of director
selection is an ongoing one which involves many considerations, including
company business strategy, current board size, upcoming retirements, the
overall composition of the board, and the individual backgrounds of current
and prospective directors.
5
<PAGE>
EXECUTIVE COMPENSATION, BENEFITS AND RELATED MATTERS
REPORT OF THE EXECUTIVE PERSONNEL AND COMPENSATION COMMITTEE
Composition and Responsibilities of the Committee
This is a report of the Executive Personnel and Compensation Committee. We are
a committee of five directors, and our names appear at the end of this report
on page 14. We are responsible for (1) establishing compensation programs for
executive and other key senior management officers of BAC and its subsidiaries
designed to attract, motivate and retain key senior management officers
responsible for the success of the corporation as a whole, (2) administering
and maintaining these 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 and other key senior management officers. We also advise on
succession planning (including the selection of the chief executive officer)
and the selection, development and performance of executive and other key
senior management officers of BAC and its subsidiaries. The Board of Directors
adopted our committee's charter. No member of our committee has ever served as
an officer of BAC.
Compensation Philosophy and Objectives
We believe that compensation for our executive and other key senior management
officers 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, our specific objectives are to:
. Align the financial interests of executive and other key senior
management 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 described below and (2) are based on
individual contributions, teamwork, and business unit results that help
create value for BAC's shareholders.
. 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 officer
level increases. In particular, as officer level increases, we (1) focus
more on overall BAC performance, teamwork, individual contributions, and
business unit results and less on Peer Group marketplace compensation
comparisons, (2) emphasize variable, performance-based compensation
versus fixed compensation, and (3) significantly increase the proportion
of total compensation that is equity-based. As a result, higher level
senior management 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. We select various
groupings of these 15 companies as we believe appropriate for different
compensation and financial performance comparisons. All 15 of these companies
are included in the Standard & Poor's (S&P) Bank Composite Index, which is the
performance peer group used for the shareholder return performance graph on
page 15.
Compensation Components and Process
There are three major components of compensation for our executive and other
key senior management officers: (1) base salary, (2) annual incentive awards
and (3) long-term incentive awards.
6
<PAGE>
We use subjective judgment in determining officer compensation levels for all
of these components and take into account both qualitative and quantitative
factors. We do not assign specific weights to these factors. Among the factors
we consider are the recommendations of the chief executive officer regarding
the compensation of our other key senior management officers. However, we make
the final compensation decisions concerning these officers.
In making compensation decisions, we consider compensation practices and
financial performance of the Peer Group, but we do not target total officer
compensation or any component thereof to any particular point within, or
outside, the range of Peer Group results. However, we believe 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 a generally appropriate framework for our
compensation decisions, provided BAC attains competitive performance
objectives. We also review compensation data to obtain a perspective on what
compensation levels are commensurate with BAC's size relative to the sizes of
the Peer Group companies. Specific compensation for individual officers will
vary from these percentiles and levels because we also consider subjective
factors unrelated to compensation practices of, or the size of companies in,
the Peer Group.
In addition, in 1997, we reviewed the compensation practices of a broader
array of diversified financial and industrial firms to assess how BAC's
compensation practices compared to those of U.S. corporations generally. We
will periodically conduct similar reviews in the future for the same purpose.
In making compensation decisions, we also periodically receive assessments and
advice regarding the compensation practices of BAC and other companies 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
under plans and programs 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
our committee qualify as "outside directors."
In BAC's opinion, except as noted below, 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 BAC stock plans continues
to be deductible. All other forms of stock-based awards under BAC stock plans
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, we evaluate that impact in light of our overall compensation
philosophy. Generally, we establish executive officer compensation programs
under which the compensation will be deductible by BAC. However, sometimes we
may award compensation that is not fully deductible if we determine that such
award is consistent with our philosophy and in the best interests of BAC and
its shareholders.
In BAC's opinion, the payouts of compensation for 1997 to executive officers
are fully deductible by BAC, except as noted below.
In 1997, Eugene Lockhart, President, Global Retail Bank, received $897,877 in
reportable compensation resulting from BAC's payment of Mr. Lockhart's
relocation expenses. (For a discussion of Mr. Lockhart's relocation expenses,
see footnote (3) of the Summary Compensation Table.) In addition, Mr. Lockhart
was guaranteed a bonus of at least $1,500,000 for 1997 as part of the
negotiated compensation package that was necessary to provide sufficient
incentive to him to leave his executive position with MasterCard International
and bring his considerable retail expertise to BAC to head the newly created
Global Retail Bank. Because these compensation amounts were not performance-
based, BAC may not deduct them to the extent they, combined with his salary
and other
7
<PAGE>
compensation that is not performance-based under Section 162(m), exceeded
$1,000,000 for 1997. Thus, for 1997, BAC may not deduct approximately
$2,012,000 of Mr. Lockhart's compensation.
Michael Murray, President, Global Wholesale Bank, and Michael O'Neill, Vice
Chairman, each held 16,000 impact share units (adjusted for the June 2, 1997
two-for-one stock split of BAC common stock) that vested in November, 1997.
Each unit consisted of 0.6 of a share of restricted common stock of BAC and
0.4 of a cash-paid stock unit (a right to receive a cash payment equal to the
fair market value of a share of BAC common stock on the vesting date). These
units were awarded in November, 1994, before Mr. Murray and Mr. O'Neill became
executive officers of BAC. Because the vesting of these units was not subject
to performance-based conditions, BAC may not deduct the payout to either of
these officers from the vesting of these units to the extent the payout,
combined with the salary and other nonperformance-based compensation paid to
each of these officers, exceeded $1,000,000 for 1997. Thus, for 1997, BAC may
not deduct approximately $975,000 of Mr. Murray's compensation and
approximately $843,000 of Mr. O'Neill's compensation.
In addition, because David Coulter, Chief Executive Officer, received $987,500
in base salary payments in 1997, his perquisites, which are nonperformance-
based compensation, caused the $1,000,000 limit under Section 162(m) to be
exceeded by approximately $16,000. Thus, for 1997, BAC may not deduct
approximately that amount of Mr. Coulter's compensation.
Base Salary
In establishing base salaries for executive officers for 1997, we considered
(1) the reorganization of BAC's lines of business into two primary business
groups, the Global Retail Bank and the Global Wholesale Bank, and the
appointment of presidents for these two groups, (2) the increase and change in
duties and responsibilities for certain executive officers as the result of
the new organizational structure, (3) 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, (4)
individual contributions and business unit results, (5) the increased
experience level gained over the past year by those executive officers holding
relatively new positions, (6) BAC's positive financial results, (7) our
overall philosophy of paying executive officers according to a competitive
framework, and (8) Peer Group compensation practices based on findings in
competitive reviews performed in 1997 by an independent compensation
consulting firm retained by BAC.
Annual Incentive Awards
The Senior Management Incentive Plan (SMIP) is the primary annual incentive
award program for executive and other senior management officers. SMIP awards
are paid in cash.
The SMIP contains a formula for calculating the maximum amount of annual
incentive awards payable to executive officers and certain other senior
management officers under the SMIP. The formula sets a fixed percentage of
adjusted income before tax expense (pre-tax income) as the maximum aggregate
annual SMIP incentive award amount available to be paid to executive officers
(including those named in the Summary Compensation Table) and certain other
senior management officers. The formula also limits the SMIP award amount
payable to any one executive officer to 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. We do 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. We do, however, have
discretion to grant SMIP awards which are less than the amounts permitted by
the formula, based on quantitative and qualitative factors which we determine
are appropriate. We exercised this discretion for the 1997 awards.
8
<PAGE>
Long-Term Incentive Awards
1992 Management Stock Plan (MSP) Description, Process and Practice
The MSP authorizes us 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 stock splits or conversions which affect all
shareholders. It has been our practice to grant stock options to both
executive officers and other senior management officers. Until 1997, we
generally granted stock-based awards on an annual basis. In 1997, however,
officers in the top two levels of senior management received awards under the
Performance Equity Program, which was approved at last year's Annual Meeting
of Shareholders. The initial stock option grants under the Performance Equity
Program had a grant value calculated to deliver three years' worth of
competitive long-term compensation. Therefore, we do not currently expect to
make additional grants under the MSP or the Performance Equity Program to the
recipients of the initial grant before the year 2000, except to reward
promotions. (See "Performance Equity Program" below.)
The aggregate number of shares that may be granted to all MSP participants in
any one year is limited by the MSP to 1.5% of the number of shares of BAC
common stock outstanding as of the end of the previous year, plus any shares
available for issuance but remaining unissued from the previous year.
Performance Equity Program
(a) Overview
The Performance Equity Program became effective upon shareholder approval at
the 1997 Annual Meeting.
In 1997, we granted stock options under the program to officers in the top two
levels of senior management. All of the options granted under the program were
premium price options. In previous years we granted market price options under
the MSP to officers at these levels. Market price options have exercise prices
equal to the average of the high and low sales prices of a share of BAC common
stock on the grant date. Unlike a market price option, 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, and before officers will begin to obtain any
financial benefit from the option. Therefore, officers will not realize a
significant gain from exercising a premium price option unless BAC's stock
price increases well above that threshold level.
Because we have granted significantly more options under the program than we
would have granted if only market price options were used, officers have the
opportunity to obtain significantly greater rewards for achieving well above
average stock price growth. We have granted significantly more premium price
options because of their higher exercise price and the associated greater risk
of forfeiture.
(b) Program Objectives
The objectives of the Performance Equity Program are to:
. Enhance shareholder value by tying senior management officers' long-term
incentive compensation to significant increases in BAC's common stock
price.
. Attract key senior management officers of the highest quality by
providing opportunities for greater long-term incentive awards and
competitive total compensation in relation to the Peer Group.
. Promote teamwork among senior management officers by establishing common
performance goals.
9
<PAGE>
(c) 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 Performance Equity Program, as described later
in paragraphs (d) and (e):
INITIAL GRANT OF PREMIUM PRICE OPTIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
AVERAGE
CLOSING PRICE
FOR 10 CUTOFF DATE
TRADING DAYS SHAREHOLDER FOR ACHIEVING
BEFORE 2/3/97 APPROVAL PREMIUM EARLIEST DATE STOCK PRICE
BOARD APPROVAL AND EXERCISE OPTIONS BECOME EQUAL TO
PART OF GRANT DATE(/1/) AWARD DATE PRICE(/1/) EXERCISABLE EXERCISE PRICE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First $54.04 05/22/97 $ 72 05/22/2000 05/22/2001
- ----------------------------------------------------------------------------------
Second 54.04 05/22/97 81 05/22/2000 05/22/2003
- ----------------------------------------------------------------------------------
Third 54.04 05/22/97 108 05/22/2000 05/22/2005
- ----------------------------------------------------------------------------------
</TABLE>
(1) Adjusted for the June 2, 1997 two-for-one stock split of BAC common stock.
(d) Description of Initial Grant
In the initial grant, we granted to the seven officers in the top level of
senior management, including the executive officers named in the Summary
Compensation Table, 100% of the grant value of their awards in premium price
options. We granted the approximately 40 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. We also granted limited stock appreciation
rights in conjunction with the premium price options. (See (h) below.) We
granted the market price options under the MSP. (See "Long-Term Incentive
Awards--1992 Management Stock Plan (MSP) Description, Process and Practice"
above.)
As noted earlier, for the initial grant we determined a total grant value
calculated to deliver three years' worth of competitive long-term
compensation. Therefore, we do not currently expect to make additional grants
under the Performance Equity Program or the MSP to recipients of the initial
grant for a three-year period after the May 22, 1997 grant date, except to
reward promotions. Compared to spreading the grant value over three annual
grants, we believe the single up-front grant provides greater incentive
because it allows officers to benefit from appreciation over a base stock
price on a larger number of shares.
(e) Description of Premium Price Options Awarded in Initial Grant
1. Exercise Price
Under the Performance Equity Program, we divided the initial grant of
premium price options to each covered officer into three equal parts based
on the grant value of those options as of February 3, 1997 (the date the
Board of Directors approved the program). To determine the grant value, we
used a variation of the Black-Scholes option pricing model. With respect to
one-third of the grant value, the exercise price is $72, or 33 1/3% above
the $54.04 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 is $81,
or 50% above that average closing price; and with respect to the final one-
third of the grant value, the exercise price is $108, or 100% above that
average closing price. In each case the exercise price was rounded down to
the nearest whole dollar in accordance with program provisions.
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 $72 exercise
price ($72 options), that period was four years from the grant date; for
options with an $81 exercise price ($81 options), that period is
10
<PAGE>
six years from the grant date; and for options with a $108 exercise price
($108 options), that period is eight years from the grant date. Generally,
however, officers cannot exercise any premium price option until May 22,
2000 (three years from the grant date), except under limited circumstances
involving a change in control of BAC. During August and September, 1997,
the BAC common stock price reached the $72 exercise price and was
maintained at or above that level for the required period. Thus, beginning
May 22, 2000, officers can exercise the $72 options.
Even if the BAC common stock price fails to reach $81 within the six-year
performance period or $108 within the eight-year performance period, we
may, in our sole discretion, permit all or a portion of the $81 options or
$108 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 S&P Financial Index. In
that case, however, the exercise prices for those options would remain $81
and $108. Therefore, officers would not realize significant gain from
exercising those options unless BAC's stock price increased well above the
$81 and $108 stock price thresholds.
(f) Market Price Options Awarded in Connection with Initial Grant
The market price options awarded under the MSP in connection with the initial
grant under the Performance Equity Program 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.
(g) 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. 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
performance target is reached (see paragraph (e) 2 above) and we permit all or
a portion of the option to become exercisable.
(h) Limited Stock Appreciation Rights (LSARs)
We granted LSARs in conjunction with the initial grant of premium price
options. Officers will be able to exercise the LSARs only upon a change in
control.
Each LSAR gives officers a right to receive payment equal to the amount by
which the fair market value of a share of BAC common stock on the date of
exercise exceeds the exercise price of the LSAR.
The exercise price of these LSARs is $57.375, which was the average of the
high and low sales prices of a share of BAC common stock on the May 22, 1997
grant date of the premium price options.
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 considering
a potential business combination.
The exercise of an LSAR cancels the related premium price option (and vice
versa).
11
<PAGE>
(i) Authorized Shares
The board authorized up to 11,400,000 shares of common stock (adjusted for the
June 2, 1997 two-for-one stock split) to be issued under the Performance
Equity Program. Market price options issued under the MSP in connection with
awards under the program are not counted against this number. The number of
shares of common stock covered by the premium price options granted under the
program was 10,876,250 at December 31, 1997. The total number of shares of
common stock held at December 31, 1997 by all shareholders of BAC was
688,056,859.
(j) Factors in Determining Size of Initial Grant of Premium Price Options
In determining the size of the initial grant of premium price options under
the Performance Equity Program, we considered the following factors: (1) the
results of competitive reviews of long-term compensation and total
compensation performed in 1997 by an independent consulting firm; (2) our
objective to attain long-term incentive compensation levels we believe
appropriate as compared to Peer Group compensation levels; (3) the increase
and change in duties and responsibilities of certain senior management
officers resulting from the reorganization of BAC's lines of business into two
primary business groups, the Global Retail Bank and the Global Wholesale Bank;
(4) the objective to provide officers with three years' worth of competitive
long-term compensation under the program and the likelihood that market values
of long-term incentive compensation would increase over the three-year period
following the grant date; and (5) past stock option awards. We also took into
account the chief executive officer's option award recommendations for the
other executive officers. With respect to Eugene Lockhart, who became
president of the Global Retail Bank in May, 1997, we considered the
commitments concerning long-term incentive compensation contained in the
hiring agreement with Mr. Lockhart.
Further, in determining the value of the long-term incentive compensation to
be provided through the option grants, we used a variation of the Black-
Scholes option pricing model.
Stock Ownership Guidelines
We established stock ownership guidelines in 1994 for executive and certain
other senior management officers as a way to better align the financial
interests of these officers with those of shareholders. The shares of BAC
common stock that are counted in determining compliance with the guidelines
include shares held directly by officers, shares of restricted stock, shares
held in the BAC 401(k) Investment Plan, and shares acquired through the
dividend reinvestment feature of BAC's Shareholder Investment Plan. Shares
obtainable in the future under unexercised options, as well as stock-based
awards which derive their value from the value of BAC common stock but do not
result in actual stock holdings, are not counted. We expected these officers
to make continuing progress towards compliance with the guidelines during the
three-year period that began on November 7, 1994 and generally expected them
to comply with the guidelines by December 31, 1997. 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:
. Chief Executive Officer: 5 times base salary.
. Six other executive officers, including those other officers named in
the Summary Compensation Table: 3 times base salary.
. Certain other senior management officers (approximately 40 officers): 1
times base salary.
All officers subject to these guidelines, other than some of those appointed
or promoted since the guidelines were established, have met these guidelines.
12
<PAGE>
Chief Executive Officer Compensation
We took the following actions with respect to compensation for services
rendered in 1997 by David Coulter as the Chairman of the Board and Chief
Executive Officer of BAC. Effective February 1, 1997, we increased his annual
base salary from $850,000 to $1,000,000. In January, 1998, we approved a cash
incentive award to Mr. Coulter for 1997 of $4,250,000. This incentive
compensation was awarded under the Senior Management Incentive Plan and, in
BAC's opinion, is tax deductible by BAC. The 1997 annual incentive award
constituted approximately 81% of Mr. Coulter's total salary and annual
incentive compensation. On May 22, 1997, we also authorized a grant to Mr.
Coulter of a long-term incentive award under the new BAC Performance Equity
Program consisting solely of premium price options. (See "Long-Term Incentive
Awards--Performance Equity Program" above.) The number of shares covered by
these options is 1,941,500 (adjusted for the June 2, 1997 two-for-one stock
split of BAC common stock).
The board ratified all of our decisions relating to Mr. Coulter's
compensation.
In taking these actions with respect to Mr. Coulter's compensation, we
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. We also considered the
competitive reviews performed in 1997 by an independent compensation
consulting firm. We increased Mr. Coulter's base salary in order to recognize
his performance and bring his salary in line with market levels for chief
executive officers of the largest bank holding companies in the Peer Group. We
also took into account the factors considered in establishing base salary
levels for executive officers (which we discussed earlier under "Base
Salaries"). With respect to his long-term incentive award, we took into
account the factors considered in determining the size of the initial grant of
premium price options (which we discussed earlier under "Long-Term Incentive
Awards--Performance Equity Program" (paragraph (j)).
In looking at quantitative factors, we reviewed BAC's 1997 financial results
and compared them with those of the Peer Group and with BAC's financial
results for 1996. We reviewed net income of $3.21 billion, an increase of 12%
from 1996; earnings per share of $4.32, an increase of 18% from 1996; a return
on average common equity of 16.69%, an increase of 169 basis points from 1996;
a year-end BAC common stock closing price of $73, a 46% increase from 1996;
total shareholder return for 1997 of 49.2%, ranking BAC second for 1997 among
the ten largest United States bank holding companies by asset size; total
shareholder return over 1996 and 1997 of 135.9%, the highest return of those
ten companies over that two-year period; and other quantitative factors. We
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, we considered the
following accomplishments which are qualitative in nature. We recognized Mr.
Coulter's success in reorganizing BAC's lines of business into two primary
groups, the Global Retail Bank and the Global Wholesale Bank. We noted, too,
his effective handling of transitions in the executive officer group and his
promotion of teamwork within that group. We also took into account the people
management process he is instituting, which serves as an excellent tool for
developing his management team. In addition, we rated him highly on his
interpersonal and communication skills in interacting with people at all
levels, both within and outside the company, including the Board of Directors,
employees, retirees, the media, government officials and regulators. We also
considered his continued emphasis on and commitment to BAC's primary financial
objective of maximizing shareholder value. We noted the shareholder value-
oriented strategic management process he has developed to help carry out that
objective. Relative to that objective, we recognized that Take Ownership!(TM)
The BankAmerica Global Stock Option Program, which Mr. Coulter was
instrumental in implementing in 1996, was expanded to cover virtually every
employee around the world. The primary purposes 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 give
employees a stake in the company's success created through their efforts. In
addition, we acknowledged the direction provided by Mr. Coulter in
establishing a client focus initiative in an effort to make customer service a
means of differentiating BAC from other competitors, which should, in turn,
increase shareholder value.
13
<PAGE>
We considered other qualitative factors, including Mr. Coulter's leadership
with respect to BAC's continued strategic management of its capital through,
among other activities, (1) the acquisition of Robertson Stephens & Company,
an investment banking firm, in order to strengthen BAC's global financial
services organization, (2) the formation of a strategic alliance with D.E.
Shaw & Co., a private investment banking group, resulting in access by BAC's
global corporate clients to an expanded range of equity-related products, (3)
the sale of retail banking operations in Hawaii, (4) the sale of BAC's
consumer finance subsidiary, Security Pacific Financial Services, Inc., (5)
the decision to exit Midwest supermarket retail facilities, (6) the decision
to sell BA Housing Services, through which the company conducts a manufactured
housing lending business, and (7) the repurchase of 31.7 million shares of
common stock in order to return excess capital to shareholders. We also
considered his continued emphasis on effectively managing operating leverage,
which is achieved when revenues increase significantly faster than expenses,
and on prudently managing credit and operational risks. BAC's successful 1997
financial results, despite volatile market conditions in Asia in the fourth
quarter, reflect disciplined risk management.
We also rated Mr. Coulter highly on his strategy for the future and vision for
the company. We recognized, too, his ability to set priorities, such as the
high priority given to ensuring BAC's readiness for handling the universal
year 2000 computer problem. We also noted his growing favorable reputation and
leadership in the industry. For example, he demonstrated leadership in
promoting the payments business as critical to the banking industry and in
advocating the development of strategies to enhance the competitive position
of banks, relative to non-banks, in the payments business.
We also acknowledged Mr. Coulter's leadership in maintaining BAC's commitment
to the environment, community reinvestment, high ethical standards and good
citizenship, as the result of which the company received recognition from a
number of organizations in 1997, including the following:
. The Business Ethics magazine bestowed on BAC the Award for General
Excellence in Ethics.
. Franklin Research and Development Corp., an investment management and
research firm specializing in socially responsible investing, honored
Bank of America NT&SA, BAC's principal subsidiary, with an overall
rating of excellent--the only major U.S. bank to be so recognized--and
gave the bank an excellent rating in several key categories, including
environment, employee relations and citizenship.
. As it had also done in 1996, the Points of Light Foundation presented
the company with an Award for Excellence in Corporate Community Service
in recognition of the company's employee community volunteer programs.
. The U.S. Environmental Protection Agency gave the company the Green
Lights Partner of the Year Award for reduction of carbon dioxide
emissions into the atmosphere.
. The National Office Recycling Project's Grand Challenge Award and
National Buying Recycled Leadership Award was given to the company for
its conservation and recycling commitment.
The commitment to community reinvestment is 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 Bank of
America NT&SA. (Since the last CRA ratings, four of these bank units have been
merged into Bank of America NT&SA.) The commitment to community reinvestment
is further demonstrated by the company's new community lending goal of $140
billion over ten years.
We approved the compensation of BAC's other executive officers for 1997
following the principles and procedures outlined in this report.
EXECUTIVE PERSONNEL
AND COMPENSATION COMMITTEE
Joseph Alibrandi
Timm Crull
Kathleen Feldstein
Frank Hope, Jr.
Michael Spence
14
<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, 1992 through December 31, 1997. The
graph assumes that $100 was invested on December 31, 1992 in BAC common stock
and in each of the indices, and that all dividends were reinvested quarterly.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
BAC COMMON STOCK, S&P 500, S&P BANK COMPOSITE
(YEAR-END DECEMBER 31)
[PERFORMANCE GRAPH APPEARS HERE]
TOTAL SHAREHOLDER RETURN
<TABLE>
<CAPTION>
S&P S&P BANK
YEAR 500 COMPOSITE BAC
---- ------ --------- ------
<S> <C> <C> <C>
1992............................................. 100.00 100.00 100.00
1993............................................. 110.03 110.80 102.78
1994............................................. 111.53 104.44 90.92
1995............................................. 153.29 165.00 154.03
1996............................................. 188.39 240.16 243.55
1997............................................. 251.11 338.23 363.33
</TABLE>
15
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------------------
OTHER
ANNUAL RESTRICTED SECURITIES
COMPEN- STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS SATION AWARD(S) OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(/2/) ($)(/4/)(/5/)(/6/) (#)(/4/) ($)(/7/)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DAVID COULTER 1997 $987,500 $4,250,000 -- -0- 1,941,500 $439,589
Chairman and Chief 1996 791,667 2,750,000 -- -0- 250,000 104,278
Executive Officer 1995 530,985 1,250,000 -- -0- 250,000 64,049
- -----------------------------------------------------------------------------------------------------------
MICHAEL MURRAY 1997 725,000 1,850,000 -- -0- 1,019,300 204,089
President, Global 1996 506,250 1,050,000 -- -0- 95,000 70,007
Wholesale Bank 1995 418,750 850,000 -- --(/5/) 95,000 50,938
- -----------------------------------------------------------------------------------------------------------
MICHAEL O'NEILL 1997 616,667 1,750,000 -- -0- 849,500 191,089
Vice Chairman 1996 441,666 1,050,000 -- -0- 110,000 54,278
1995 308,333 600,000 -- -0- 80,000 35,417
- -----------------------------------------------------------------------------------------------------------
EUGENE LOCKHART 1997 560,227 1,750,000 $934,782(/3/) $1,185,954(/6/) 1,382,654 -0-
President, Global
Retail Bank(/1/)
- -----------------------------------------------------------------------------------------------------------
MARTIN STEIN 1997 600,000 1,350,000 -- -0- 776,700 167,089
Vice Chairman 1996 554,167 1,000,000 -- -0- 100,000 54,361
1995 457,917 750,000 -- -0- 100,000 46,317
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Lockhart became a BAC executive officer in 1997 and, in accordance
with SEC regulations, we provide information regarding him for 1997 only.
(2) SEC regulations exclude from proxy reporting requirements perquisites and
other personal benefits that (a) have a value below a specified threshold
($50,000 in the case of each of our named executive officers) or (b) are
provided under a generally available, nondiscriminatory plan. In
accordance with these regulations, we report "other annual compensation,"
consisting of perquisites, for Mr. Lockhart only.
(3) $897,877 of the "other annual compensation" amount relates to (a) the
payment of expenses for Mr. Lockhart's relocation from Greenwich,
Connecticut to San Francisco, California (including broker's fees and
other closing costs associated with the sale of his Greenwich home, costs
of moving household and office furniture and other property and the
accompanying insurance costs, temporary housing expenses, house hunting
expenses, and closing costs associated with the purchase of his San
Francisco home) and (b) tax gross-up payments in respect of the
compensation attributable to these relocation expenses. $36,905 of the
"other annual compensation" amount consists of the other perquisites
provided to Mr. Lockhart.
(4) Adjusted for the June 2, 1997 two-for-one stock split of BAC common stock.
(5) In 1996, the board's compensation committee did not award any restricted
stock to our named executive officers. The committee also did not award
any restricted stock to them in 1995 other than the restricted stock
portion of 40,000 performance share units awarded to Mr. Murray under
BAC's Performance Share Program, a long-term incentive program that the
committee implemented in 1994. Each performance share unit consisted of
0.6 of a share of BAC restricted common stock and 0.4 of a cash-paid stock
unit (right to receive a cash payment equal to the fair market value of a
share of BAC common stock on the vesting date). All of Mr. Murray's
performance share units vested in February, 1996 when the BAC common stock
price reached the applicable target price. (As permitted by SEC
regulations, we reported the grant of the restricted stock portion of
these units in a long-term incentive plan table, rather than in the
restricted stock awards column of the Summary Compensation Table, in the
1996 BAC Proxy Statement relating to compensation for 1995.)
(6) Under the terms of the hiring agreement with Mr. Lockhart, the board's
compensation committee granted 19,932 shares of restricted stock to Mr.
Lockhart on May 5, 1997, Mr. Lockhart's first day of employment with BAC.
The dollar value of the restricted stock was $1,185,954, based on the
number of shares of restricted stock multiplied by $59.50, the closing
price of BAC common stock on the May 5, 1997 grant date. On October 6,
1997, the committee, with Mr. Lockhart's consent, exchanged the restricted
stock for restricted stock units on a one-for-one basis. The committee
effected this exchange by cancelling the restricted stock award and
replacing it with an award of restricted stock units representing the same
number of shares and subject to the same vesting schedule. The restricted
stock units vest as follows: 9,024 units on February 28, 1998; 3,198 units
on March 23, 1998; 4,512 units on February 28, 1999; and 3,198 units on
March 23, 1999. If certain events occur that affect Mr. Lockhart's
executive position with BAC, as described later in "Contracts with
Directors and Executive Officers--Eugene Lockhart," the restricted stock
units would vest sooner. In any event, however, delivery of shares of BAC
common stock in payment of the restricted stock units will be deferred
until Mr. Lockhart's death, retirement
16
<PAGE>
or other termination of service with the company. While the restricted stock
units are outstanding, each unit will be credited with a dollar amount equal
to the dividends payable on a share of BAC common stock. These dividend
equivalent amounts for the period before January 1, 1998 were paid to Mr.
Lockhart in cash. All subsequent dividend equivalent amounts are converted
into additional restricted stock units and are payable on the same deferred
basis.
The only restricted stock or restricted stock units held by our named
executive officers as of December 31, 1997 were the 19,932 restricted stock
units held by Mr. Lockhart. The dollar value of these restricted stock units
on December 31, 1997 was $1,455,036, based on the 19,932 shares of BAC
common stock represented by these units multiplied by $73, the closing price
of BAC common stock on that date.
(7) The amounts shown consist of employer matching and pay-based credits under
the BankAmerica 401(k) Investment Plan and the employer matching
contribution amount under the BankAmerica Supplemental Retirement Plan,
which provides additional benefits equal to the employer-provided benefits
that plan participants do not receive under the BankAmerica 401(k)
Investment Plan because of Internal Revenue Code limits.
17
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS GRANT
UNDERLYING GRANTED TO EXERCISE OR DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#)(/1/)(/2/)(/3/) FISCAL YEAR(/4/) ($/SH)(/1/) DATE VALUE ($)(/5/)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
527,100 1.29% $ 72.00 05/22/2007 $4,353,846
David Coulter 561,500 1.37% 81.00 05/22/2007 4,958,045
852,900 2.09% 108.00 05/22/2007 6,243,228
- ----------------------------------------------------------------------------------------------------
276,700 0.68% 72.00 05/22/2007 2,285,542
Michael Murray 294,800 0.72% 81.00 05/22/2007 2,603,084
447,800 1.09% 108.00 05/22/2007 3,277,896
- ----------------------------------------------------------------------------------------------------
230,600 0.56% 72.00 05/22/2007 1,904,756
Michael O'Neill 245,700 0.60% 81.00 05/22/2007 2,169,531
373,200 0.91% 108.00 05/22/2007 2,731,824
- ----------------------------------------------------------------------------------------------------
276,700 0.68% 72.00 05/22/2007 2,285,542
Eugene Lockhart 294,800 0.72% 81.00 05/22/2007 2,603,084
447,800 1.09% 108.00 05/22/2007 3,277,896
363,354 0.89% 59.25 05/05/2007 4,694,534
- ----------------------------------------------------------------------------------------------------
210,900 0.52% 72.00 05/22/2007 1,742,034
Martin Stein 224,600 0.55% 81.00 05/22/2007 1,983,218
341,200 0.83% 108.00 05/22/2007 2,497,584
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Adjusted for the June 2, 1997 two-for-one stock split of BAC common stock.
(2) On May 22, 1997, each of our named executive officers received a three-
part grant of premium price options. (For a description of premium price
options, see "Long-Term Incentive Awards--Performance Equity Program" in
the Report of the Executive Personnel and Compensation Committee.) On May
5, 1997, Mr. Lockhart also received an award of market price options under
the 1992 Management Stock Plan. These market price options have an
exercise price of $59.25, which was the average of the high and low sales
prices of a share of BAC common stock on the May 5, 1997 grant date. These
market price options vest in five equal annual installments beginning on
December 31, 1997 and ending on December 31, 2001.
(3) In conjunction with the grant of premium price options, our named
executive officers received the following number of limited stock
appreciation rights (LSARs): Mr. Coulter--719,898; Mr. Murray--377,948;
Mr. O'Neill--314,990; Mr. Lockhart--377,948; and Mr. Stein--288,000. (For
a description of LSARs, see "Long-Term Incentive Awards--Performance
Equity Program" (paragraph (h)) in the Report of the Executive Personnel
and Compensation Committee.)
(4) These percentages reflect a grant value calculated to deliver three years'
worth of competitive long-term compensation. The board's compensation
committee does not currently expect to make additional grants of options
to recipients of the initial grant, including our named executive
officers, for a three-year period after the May 22, 1997 grant date,
except to reward promotions. (See "Long-Term Incentive Awards--Performance
Equity Program" (paragraph (d)) in the Report of the Executive Personnel
and Compensation Committee.)
(5) These 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 higher than the option
exercise price, there will be a gain to the option holder.
The estimated "grant date present values" of options granted in 1997 are
based on a variation of the Black-Scholes option pricing model, a model that
uses certain assumptions based on historical experience regarding variable
factors such as stock price volatility and dividend yield. For each of the
assumptions in (a) through (d) below, the first figure that appears refers
to the market price options; the second refers to the premium price options
with an exercise price of $72; the third refers to the premium price options
with an exercise price of $81; and the fourth refers to the premium price
options with an exercise price of $108. The assumptions are: (a) an expected
option term of 4.3, 6.1, 6.6 and 7.6 years, respectively, which reflects
expectations concerning employee turnover and projected exercise patterns;
(b) a risk free interest rate of 6.48%, 6.65%, 6.67% and 6.77%,
respectively, which reflects the zero coupon U.S. Treasury bond interest
rate for the respective option terms; (c) a return volatility of 23.4%,
27.1%, 28.6% and 29.9%, respectively, which reflects the average historical
monthly stock volatility for BAC over the respective option terms; and (d) a
dividend yield of 3.09%, 3.08%, 3.15% and 3.17%, respectively, which
reflects the average historical dividend yields for BAC over the respective
option terms. With respect to the three-part grant of premium price options,
the option values that resulted from the application of these assumptions
were then adjusted to reflect the assumption that the probability of BAC
common stock reaching the $72, $81 and $108 exercise prices within the
specified performance period of four, six and eight years, respectively, was
80%, 91% and 94%, respectively. Although the probability of BAC common stock
reaching the $72 stock price threshold was 80% under these assumptions, the
stock price did in fact reach that threshold in the third quarter of 1997.
18
<PAGE>
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 $13.5 million. Assuming the same
rate of appreciation, the gain to all shareholders would be approximately
$24.8 billion (based on 688,056,859 shares outstanding at December 31,
1997). If the common stock price appreciated at a 10% annual rate, total
gain for the named executive officers would be approximately $312.6 million,
compared with a gain of approximately $62.9 billion for all shareholders.
Thus, using the 5% assumption, the other shareholders would realize 99.95%
of the hypothetical gain and the named executive officers would realize
0.05% of that gain; while using the 10% assumption, the other shareholders
would realize 99.5% of the hypothetical gain and the named executive
officers would realize 0.5% of that gain.
You should not consider the "grant date present values" shown in the table
or the price appreciation figures in this footnote as predictions of future
BAC stock prices.
19
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE OF
SECURITIES NUMBER OF UNEXERCISED VALUE OF
UNDERLYING SECURITIES IN-THE- UNEXERCISED
UNEXERCISED UNDERLYING MONEY(/2/) IN-THE-
OPTIONS/SARS UNEXERCISED OPTIONS/SARS MONEY(/2/)
AT FISCAL OPTIONS/SARS AT FISCAL OPTIONS/SARS
SHARES YEAR- AT FISCAL YEAR- AT FISCAL
ACQUIRED ON VALUE END(#)(/1/) YEAR-END(#) END($)(/1/) YEAR-END($)
NAME EXERCISE (#)(/1/) REALIZED ($)(/1/) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David Coulter 20,000 $1,443,700 536,662 2,191,498 $25,190,286 $9,082,880
- ------------------------------------------------------------------------------------------------------------
Michael Murray 103,908 4,697,518 603,254 1,112,632 35,220,178 3,393,740
- ------------------------------------------------------------------------------------------------------------
Michael O'Neill 30,000 1,115,775 169,932 949,498 7,666,945 3,486,278
- ------------------------------------------------------------------------------------------------------------
Eugene Lockhart -0- -0- 78,428 1,304,226 1,036,720 3,896,069
- ------------------------------------------------------------------------------------------------------------
Martin Stein 79,999 3,280,854 224,584 876,698 11,157,797 3,679,003
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the value of dividend equivalent credits.
(2) In-the-money options are options for which the option exercise price was
lower than the market price of BAC common stock on December 31, 1997. The
market price (average of the high and low sales prices) of BAC common
stock was $72.46875 on that date. 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.
PENSION PLANS
BAC provides 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 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 $810,153
-----------------------------------------------
Michael Murray 2009 558,501
-----------------------------------------------
Michael O'Neill 2011 442,746
-----------------------------------------------
Eugene Lockhart 2014 444,613
-----------------------------------------------
Martin Stein 2005 186,143(/2/)
</TABLE>
(1) The estimated annual retirement benefits shown assume: (a) annual bonuses
for all our named executive officers, except Mr. Lockhart, equal to the
average percentage bonus (as a percentage of year-end salary) received for
the last three years, and annual bonuses for Mr. Lockhart, who became a
BAC employee in 1997, equal to his bonus for 1997; (b) a 5% interest
factor; (c) retirement at age 65; and (d) no increase in current salary.
(2) This table does not include certain supplemental pension payments to which
Mr. Stein is entitled. (See "Contracts with Executive Officers--Martin
Stein" below.) The amount of such supplemental pension payments would
increase the amount of the level annuity by $20,000.
20
<PAGE>
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 management
officers, including the five executive officers named in the Summary
Compensation Table and the two other executive officers in the top level of
senior management. The program consists of (1) individual change in control
agreements (Agreements) for these seven executive officers and approximately
40 other senior management officers and (2) a general change in control
severance policy for all other covered officers.
The principal purposes of the severance pay program are as follows:
. To help assure that senior management officers 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
senior management officers in a very uncertain, rapidly consolidating
banking industry environment.
. To provide security and ensure that key senior management officers 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. BAC has not given any
termination notice.
21
<PAGE>
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 seven
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 management 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.
CONTRACTS WITH DIRECTORS AND EXECUTIVE OFFICERS
Richard Rosenberg
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 employed by the former employer.
Martin Stein
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 by that employer. These payments are in addition to the estimated
payments set forth earlier in the table under "Pension Plans."
Eugene Lockhart
Eugene Lockhart became BAC's President, Global Retail Bank on May 5, 1997. In
order to provide Mr. Lockhart with sufficient incentive to leave his executive
position with MasterCard International and bring his considerable retail
experience to BAC, BAC agreed to provide Mr. Lockhart the following
compensation package:
. Annual base salary of $850,000;
. A guaranteed minimum bonus of $1,500,000 for 1997;
. An award of premium price options, which would be calculated to deliver
three year's worth of competitive long-term compensation, having a
minimum annualized value of $2,085,000 for the 1997 portion of the
three-year award (for a discussion of the award of premium price options
to senior management officers, see "Long-Term Incentive Awards--
Performance Equity Program" in the Report of the Executive Personnel and
Compensation Committee);
22
<PAGE>
. As replacement for part of the value resulting from Mr. Lockhart's
participation in the MasterCard International compensation programs, an
award of 19,932 shares of restricted stock (adjusted for the June 2,
1997 two-for-one stock split of BAC common stock). The board's
compensation committee, with Mr. Lockhart's consent, later exchanged
this award for restricted stock units representing the same number of
shares of BAC common stock and subject to the same vesting schedule (see
footnote 6 of the Summary Compensation Table for a discussion of the
vesting of the restricted stock units and the deferred delivery of
shares of BAC common stock in payment of the restricted stock units);
. As replacement for another part of the value resulting from Mr.
Lockhart's participation in the MasterCard International compensation
programs, an award of 363,354 market price options (adjusted for the
two-for-one stock split), having 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, and vesting in five equal annual installments beginning on
December 31, 1997 and ending on December 31, 2001; and
. Relocation benefits.
In addition, BAC agreed that if any of the following events occur within two
years of Mr. Lockhart's date of hire, Mr. Lockhart would be entitled to (1)
termination pay equal to the greater of (a) $5,000,000 or (b) 200% of his base
salary plus his most recent annual bonus, and (2) full vesting of all of the
restricted stock and stock options granted as replacement for the value
resulting from Mr. Lockhart's participation in the MasterCard International
compensation programs:
. The board appoints a new chief executive officer and Mr. Lockhart is
involuntarily terminated without cause;
. Mr. Lockhart's responsibilities are reduced and he voluntarily
terminates employment within one year after the reduction in
responsibilities occurs; or
. Mr. Lockhart's reporting relationship to the chief executive officer
ends and he voluntarily terminates employment within one year of the
change in that reporting relationship.
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 1997 and additional transactions are expected. These transactions could
include deposits, repurchase agreements, other usual money market
transactions, letters of credit, loans and commitments. Extensions 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 generally requires that such
extensions of credit must be comparable in certain respects to terms
prevailing for comparable transactions with unaffiliated persons having
comparable credit and other characteristics. They must (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 collectability or present other
unfavorable features in comparison with, the comparable transactions. 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 generally 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 1% at December 31, 1997.
23
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the following persons served on our Executive Compensation and
Personnel Committee: Timm Crull (Chair), Joseph Alibrandi, Kathleen Feldstein,
Frank Hope, Jr. and Michael Spence.
SEC rules require us to inform you of certain types of "interlocks" between
BAC's executive officers and the companies where our directors are employed.
During 1997:
. none of BAC's executive officers served on the compensation committee
(or another board committee with similar functions or, in the absence of
any such committee, the entire board of directors) of another entity,
one of whose executive officers served on BAC's Executive Personnel and
Compensation Committee;
. none of BAC's executive officers was a director of another entity, one
of whose executive officers served on BAC's Executive Personnel and
Compensation Committee; and
. none of BAC's executive officers served on the compensation committee
(or another board committee with similar functions or, in the absence of
any such committee, the entire board of directors) of another entity one
of whose executive officers served as a BAC director.
CERTAIN BUSINESS RELATIONSHIPS AND LEGAL PROCEEDINGS
In 1990, Mr. Bedford purchased approximately 28% of the outstanding stock of
ICMPI, a real estate investment trust in New York City, and became its
Chairman and a director. Before the acquisition, ICMPI's assets had been
managed by an affiliated management company, ICMC (whose name was changed to
Kingswood Realty Advisors, Inc.), and concurrently with the ICMPI acquisition
Mr. Bedford acquired all of the stock of Kingswood. After the acquisition, Mr.
Bedford planned to liquidate Kingswood and make ICMPI internally managed. When
Mr. Bedford purchased Kingswood, he was not aware that it had entered into an
expensive, long-term lease for a large amount of space in New York City. When
the lease came to his attention, Mr. Bedford determined that, from a business
perspective, the most efficient way of winding up Kingswood's affairs was to
allow it to enter bankruptcy, rather than simply ceasing operations as had
been planned. In June 1994, Kingswood filed a bankruptcy petition seeking
protection from its creditors. The case was later converted into a liquidation
action and was closed on February 21, 1996.
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 does not believe that these matters reflect in any material way on the
integrity and competence of either Mr. Bedford or Mr. Hope, both of whom have
served with distinction as directors of BAC and have made valuable
contributions to the board. BAC had no relationship with Kingswood or Hope
Design other than having Peter Bedford and Frank Hope as its directors.
Whittaker Corporation, of which Mr. Alibrandi is chairman, chief executive
officer and president, entered into a syndicated credit agreement in May of
1996 for $170 million of which the Bank was one of several bank lenders. The
Bank committed to lend $20 million but sold its commitment in early 1997.
Whittaker Corporation was not in compliance with certain financial ratio
covenants under the credit agreement during 1997 and obtained from the bank
syndicate successive waivers of its obligations to comply with these
provisions.
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, 1997, Mr. Bedford
beneficially owned less than 10% of BPI's capital. The Bank has a lending
relationship with BPI and Mr. Bedford and the major terms of these
relationships follow.
24
<PAGE>
In September, 1995, the Bank entered into a $60,000,000 credit agreement with
BPI, which is secured by a collateral pool of real properties, to finance
BPI's real estate purchases. In June, 1996, the Bank increased the line of
credit to $100,000,000. During 1996, the Bank entered into a syndication
arrangement with certain other banks in connection with the line of credit
with the Bank serving as agent for the bank syndicate. The availability of
funds from which BPI may acquire new property was increased from $100 million
to $150 million in June 1997; the terms also included an unsecured sub-limit.
In September 1997, the credit limit was increased to $175,000,000, $25,000,000
of which may be unsecured. As of December 31, 1997, 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 or (2) LIBOR plus 150 basis points (as both
terms are defined in the second amended and restated credit agreement) for the
secured portion of the facility; or (3) the Reference Rate plus 25 basis
points or (4) LIBOR plus 175 basis points for the unsecured portion.
During 1997, BPI made principal payments to the Bank of $296,804,094 on its
line of credit. During this same period, BPI made interest payments, and fee
and other expense payments, to the Bank of $3,813,103 and $924,628,
respectively. The amount outstanding on December 31, 1997 was $8,216,010.
The largest aggregate amount (principal, interest and all other charges)
outstanding under this credit agreement from January 1997 to date was
$118,989,409. As of December 31, 1997, 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, 1997, 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, 1997, the amount outstanding on the
personal line of credit was $2,400,000. During 1997, total loan advances to
Mr. Bedford were $3,530,000 and total principal payments to the Bank were
$2,525,000. The largest aggregate amount (principal, interest and all other
charges) outstanding under this credit agreement from January 1997 to date was
approximately $2,653,567. 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 $193,684 and $0, respectively.
On December 17, 1997, BPI was the successful bidder for the purchase from the
Bank of foreclosed real estate in Tempe, Arizona. The property consists of
nine lots (a total of 5.5 acres) known as the Eaton Freeway Industrial Park.
The Bank listed this property with an independent real estate brokerage firm
in Phoenix. BPI was one of two parties which advised the brokerage firm of
their interest in acquiring the property. The parties were asked to submit
bids. The bid submitted by BPI--at $1,212,000--was the higher bid and was
above the independently appraised value of the property.
On October 1, 1997, BAC acquired Robertson Stephens & Company Group, L.L.C.
and Robertson, Stephens & Company, Inc. (collectively, "Robertson Stephens")
in a cash transaction involving total payments of up to $540 million. In 1997,
BPI paid approximately $1,594,243 to Robertson Stephens for investment banking
services, most of which was paid prior to the acquisition. The Robertson
Stephens division of BancAmerica Robertson Stephens, a securities brokerage
and trading subsidiary of BAC, may provide additional such services to BPI in
the future.
Mr. Robertson was chairman of Robertson Stephens at the time of the
acquisition and had a substantial ownership interest in the firm. As
contemplated by the acquisition transaction, Mr. Robertson became a director
of BAC and chairman of the Robertson Stephens division of BancAmerica
Robertson Stephens.
The transaction was structured so that a substantial portion of the total
payments would be used for the retention of more than 60 key officers for up
to four years after the company became part of BAC. In addition to an initial
payment of $245 million to the managing directors, $225 million is to be paid
as compensation over a three-year period to those managing directors who
remain with the company. The remaining $70 million comprises a retention pool
to be paid as compensation over a four-year period to certain managing
directors, and other key employees who remain with the company.
25
<PAGE>
Mr. Robertson is one of the individuals to be compensated over a three year
period. He will receive base salary of at least $175,000 (his salary is
currently $200,000) and an annual cash bonus of $4,825,000 for 1997 and 1998,
in addition to being eligible for employee benefits. He also received
$31,666,859 in 1997 as partial payment for his ownership interest in Robertson
Stephens. He will receive additional payments of $225,000 in each of 1998,
1999 and 2000 and a retention bonus of approximately $9,508,666, plus 2%
interest, for each of 1998, 1999 and 2000, which amounts are forfeitable if he
leaves the company or is terminated under certain circumstances. If BAC
terminates Mr. Robertson's employment other than for cause, or if he dies or
becomes disabled, or if Mr. Robertson leaves voluntarily under certain
circumstances, BAC would pay him prorated salary and bonus, and any deferred
compensation and accrued interest. Mr. Robertson also would receive the
greater of the discounted present value, or 1 1/2 times, his salary and bonus
payable through December 31, 1998 plus any unpaid retention bonus.
Mr. Robertson is eligible to participate in private funds and partnerships
established by Robertson Stephens prior to its acquisition by BAC and may
receive a portion of the incentive fees relating to those funds and
partnerships. He may be offered the opportunity to invest in private funds and
partnerships established by Robertson Stephens after the acquisition. He may
also receive a portion of the incentive fees relating to any private fund or
partnership in which he has a management role. Mr. Robertson is also eligible
to participate in savings and retirement plans, practices, policies and
programs of Robertson Stephens, as well as welfare and other benefit plans.
Robertson Stephens performed securities trading and brokerage activities on
behalf of BAC and its subsidiaries during 1997 for which it received
commissions amounting to less than 5% of Robertson Stephens' consolidated
revenues.
26
<PAGE>
OWNERSHIP OF BAC STOCK
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Directors, Nominees and Executive Officers' Ownership of BAC Stock
The information we are providing below concerning beneficial ownership of
BAC's stock by directors, nominees and executive officers is as of February
28, 1998. All our current directors comply with our stock ownership guidelines
described earlier under "CORPORATE LEADERSHIP AND GOVERNANCE"--"Director
Compensation, Stock Ownership Guidelines, Retirement and Meeting Attendance"--
"Stock Ownership Guidelines." Shirley Young, a director nominee, must comply
with our stock ownership guidelines within five years of joining the board.
Ownership guidelines for executive officers and senior management were
described earlier under "Executive Compensation, Benefits and Related
Matters"--"Report of the Executive Personnel and Compensation Committee"--
"Stock Ownership Guidelines."
The table shows common shares beneficially owned (i.e., shares over which the
owner had sole or shared voting or investment power), plus (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, 1998 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 or account or similar
arrangement; or by the lapse of restrictions on restricted stock awards. No
director or officer reported ownership of any BAC preferred stock. Each
individual owns less than 1% of BAC common stock and each holds sole
investment or voting power unless otherwise noted. All directors, nominees and
executive officers as a group own less than 1% of BAC 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:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
AGGREGATE NUMBER
OF COMMON SHARES
NAME BENEFICIALLY OWNED(1)
-----------------------------------------------------------------------
<S> <C>
DIRECTORS AND NOMINEE:
-----------------------------------------------------------------------
Joseph Alibrandi 29,725
-----------------------------------------------------------------------
Peter Bedford(/2/) 17,833
-----------------------------------------------------------------------
Richard Clarke 11,260
-----------------------------------------------------------------------
David Coulter(/3/) 623,406
-----------------------------------------------------------------------
Timm Crull 24,987
-----------------------------------------------------------------------
Kathleen Feldstein(/4/) 17,367
-----------------------------------------------------------------------
Donald Guinn 23,116
-----------------------------------------------------------------------
Frank Hope, Jr. 16,243
-----------------------------------------------------------------------
Walter Massey 3,332
-----------------------------------------------------------------------
John Richman 21,935
-----------------------------------------------------------------------
Sanford Robertson 5,000
-----------------------------------------------------------------------
Richard Rosenberg 956,035
-----------------------------------------------------------------------
Michael Spence 7,026
-----------------------------------------------------------------------
Solomon Trujillo(/5/) 2,233
-----------------------------------------------------------------------
Shirley Young(/6/) 0
-----------------------------------------------------------------------
OTHER NAMED EXECUTIVE OFFICERS:
-----------------------------------------------------------------------
Eugene Lockhart(/3/) 98,445
-----------------------------------------------------------------------
Michael Murray(/3/) 691,184
-----------------------------------------------------------------------
Michael O'Neill(/3/) 216,735
-----------------------------------------------------------------------
Martin Stein(/3/) 251,178
-----------------------------------------------------------------------
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(21 PERSONS)(/7/) 3,584,104
-----------------------------------------------------------------------
</TABLE>
(FOOTNOTES ARE LISTED ON NEXT PAGE)
27
<PAGE>
(1) For directors other than Mr. Coulter, included in the amounts listed are
each director's restricted stock equivalent units under the BAC Deferred
Compensation Plan for Directors as follows: Mr. Alibrandi--17,248 units;
Mr. Bedford--7,833 units; Mr. Clarke--5,745 units; Mr. Crull--17,139
units; Ms. Feldstein--7,367 units; Mr. Guinn--10,334 units; Mr. Hope--
9,021 units; Mr. Massey--3,118 units; Mr. Richman--6,279 units; Mr.
Robertson--0 units; Mr. Rosenberg--581 units; Mr. Spence--6,826 units; and
Mr. Trujillo--1,733 units.
(2) Includes 4,000 shares which Mr. Bedford indirectly owns and as to which
he disclaims beneficial ownership.
(3) Includes shares held by named executive officers as follows: Mr. Coulter--
86,542 shares; Mr. Lockhart--85 shares; Mr. Murray--67,470 shares; Mr.
O'Neill--17,600 shares; Mr. Stein--83,206 shares. Includes restricted
stock, options and dividend equivalent credits (all of which the owner has
the right to exercise within sixty days), respectively, held by named
executive officers as follows: Mr. Coulter--0, 522,002 and 14,660 shares;
Mr. Lockhart--19,932, 78,428 and 0 shares; Mr. Murray--0, 603,254 and 0
shares; Mr. O'Neill--0, 169,932 and 0 shares; Mr. Stein--0, 140,002 and
17,915 shares. Mr. Murray disclaims beneficial interest in 40,958 option
shares included in his total shares held, which he transferred into an
irrevocable trust for the benefit of certain immediate family members.
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--202 shares and 0 units;
Mr. Lockhart--0 shares and 0 units; Mr. Murray--19,681 shares and 779
units; Mr. O'Neill--10,770 shares and 18,433 units; Mr. Stein--1,732 shares
and 8,324 units.
(4) Includes 2,000 shares which Ms. Feldstein indirectly owns and as to which
she disclaims beneficial ownership.
(5) Mr. Trujillo purchased an additional 500 shares on March 11, 1998.
(6) Ms. Young is standing for election for the first time. She will be
required to comply with BAC's stock ownership guidelines within five years
after she is elected.
(7) Less than 1% of BAC common stock.
Certain Beneficial Owners of BAC Stock
Based on a Schedule 13G filing as of December 31, 1997, FMR Corp. and certain
of its affiliates, 82 Devonshire Street, Boston, Massachusetts 02109, reported
beneficial ownership of 47,914,213 shares of BAC common stock or 6.91% of
shares outstanding. FMR Corp. reported that it had sole power to vote or
direct the vote with respect to 3,562,735 of such shares and sole power to
dispose or to direct the disposition with respect to 47,914,213 of such shares
as of December 31, 1997. 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, 1998.
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 1997, its officers and directors
complied with all applicable Section 16 filing requirements, except as noted
below.
In November 1996, BAC implemented Take Ownership!(TM) The BankAmerica Global
Stock Option Program, which covers virtually all employees, including Raymond
Peters, Executive Vice President and Treasurer of BAC, and John Higgins,
Executive Vice President, Controller and Chief Accounting Officer of BAC.
Records of the Take Ownership! option grants are maintained by an outside firm
rather than by the unit within the company that keeps records concerning
option grants under the BAC 1992 Management Stock Plan and the BAC Performance
Equity Program. In November, 1996, BAC granted a Take Ownership! option to
each of Mr. Peters and Mr. Higgins for 180 shares (adjusted for the June 2,
1997 two-for-one stock split of BAC common stock). The grant should have been
reported in February, 1997. However, because the grant was not included in the
internal unit's records, it was inadvertently reported late for each of these
officers.
In addition, in February 1997, Michael Rossi (who later that year resigned as
a Vice Chairman of BAC) timely filed a Section 16 report regarding certain
transactions. However, the report inadvertently did not include the sale in
January, 1997 by a trust created by Mr. Rossi, and for which he serves as a
co-trustee, of 94,960 shares of BAC common stock (adjusted for the two-for-one
stock split). However, under SEC regulations, the stock held by the trust was
attributed to Mr. Rossi and the sale by the trust was required to be reported
by him in February, 1997. Mr. Rossi filed an amended Section 16 report in
March, 1997 to report the sale.
28
<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
We have nominated the slate of directors set forth below. Each of the nominees
except for Shirley Young currently serves as a director and was elected by the
shareholders at the 1997 Annual Meeting. Persons elected at the 1998 meeting
will hold office until the 1999 Annual Meeting of Shareholders or until
earlier retirement, resignation or removal. If any nominee is unable to serve,
we may recommend that the persons holding your proxies vote for the election
of substitutes whom we will select. Or, we may simply reduce the number of
directors to be elected:
JOSEPH ALIBRANDI
Chairman of the board, chief executive officer and president
[PHOTO] of Whittaker Corporation, which manufactures 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 October
1991, he assumed the additional post of chairman of
BioWhittaker, Inc., a manufacturer of biotechnology products
and a former subsidiary of Whittaker Corporation, and
relinquished that title in October of 1997. Mr. Alibrandi also
became chairman, chief executive officer and president of
NewMed Corporation in September of 1996. He is a director of
Burlington Northern Santa Fe Corporation, Catellus Development
Corporation and Jacobs Engineering Group, Inc. Mr. Alibrandi
is a CEO of a complex business. He has aerospace and
communications experience and has a technology orientation. He
also brings general business management experience. Mr.
Alibrandi is 69. He has been a director since 1992. (He was a
director of Security Pacific from 1981 until its merger with
BAC in 1992.)
PETER BEDFORD
Mr. Bedford is chairman of the board and chief executive
[PHOTO] officer of Bedford 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. He
is also a director of the Bixby Ranch Company. Mr. Bedford
brings an entrepreneur's experience to the board. He has
knowledge of real estate and management experience in running
a middle market company. He also brings the viewpoint of a
customer to the board. Mr. Bedford is 59. He has been a
director since 1987.
RICHARD CLARKE
Mr. Clarke is retired chairman of the board and chief
[PHOTO] executive officer of Pacific Gas and Electric Company (PG&E),
a San Francisco-based utility company. He assumed that post in
1986 after being named a director of PG&E in 1985. He served
as chairman and chief executive officer of PG&E from 1986
until 1994 and as chairman from 1994 until retiring in 1995.
Mr. Clarke is a director of CNF Transportation, Inc. PG&E and
Potlatch Corporation. Mr. Clarke brings experience in running
a complex gas and electric business. He is familiar with
deregulation opportunities and challenges. Mr. Clarke is known
for his work on environmental issues and brings a knowledge of
public policy and social issues which BAC experiences in the
communities it serves. Mr. Clarke is 67. He has been a
director since 1990.
29
<PAGE>
DAVID COULTER
Mr. Coulter became chief executive officer of BAC and Bank of
[PHOTO] America in January, 1996, and was named chairman of the board
at the conclusion of the May 1996 Shareholders 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 provided a wide array
of financial services to large domestic and foreign
institutions. Mr. Coulter is a director of PG&E. He brings his
skills in developing people, his knowledge of the company and
the financial services industry, as well as his personal
experiences and interest in economic development. Mr. Coulter
draws on the diverse talents of individual board members to
help forge a consensus on strategic direction for the company.
Mr. Coulter is 50. He has been a director since 1995.
TIMM CRULL
[PHOTO] Mr. Crull served as chairman and chief executive officer of
Nestle USA, Inc., a processor of food and related products,
from January 1992 until December 1994. Mr. Crull had
previously served since 1985 as president and chief executive
officer of Carnation Company, a Nestle subsidiary. He is a
director of Beringer Wine Estates Holdings, Inc., Dreyer's
Grand Ice Cream, Inc. and Smart & Final Inc. Mr. Crull brings
operating experience in running a major complex business which
was part of an international conglomerate. He has strong
knowledge of U.S. and international marketing and of the
packaged goods business. Mr. Crull is 67. He has been a
director of BAC since 1992. (He was a director of Security
Pacific from 1984 until its merger with BAC in 1992.)
KATHLEEN FELDSTEIN
Dr. Feldstein is president of Economics Studies, Inc., a
[PHOTO] 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. She is a director of Conrail Corporation, Digital
Equipment Corporation and Ionics, Incorporated. Dr. Feldstein
brings her knowledge of the overall economy and macroeconomic
policy to the board. Her diverse board experiences in the
transportation and technology industries, also provide helpful
perspective. Dr. Feldstein is 57. She has been a director
since 1987.
DONALD GUINN
Mr. Guinn was chairman of the board and chief executive
officer of Pacific Telesis Group, a telecommunications holding
[PHOTO] company, until his retirement in 1988. He is a director of The
Dial Corporation, and Pacific Mutual Holding Company and its
affiliates Pacific Life Corp. and Pacific Life Insurance
Company. Mr. Guinn brings to the board his experience as a CEO
of a major, regulated public company. He also has strong
knowledge of the telecommunications industry. His service on
other boards also provides a useful perspective. Mr. Guinn is
65. He has been a director of BAC since 1992. (He was a
director of Security Pacific from 1984 until its merger with
BAC in 1992.)
30
<PAGE>
FRANK HOPE, JR.
Mr. Hope was chairman of Hope Design Group, an architectural
[PHOTO] and engineering firm, until 1993. He joined that firm in 1955
and was named chairman in 1964. Mr. Hope shares his experience
as an entrepreneur in the real estate development area. His
firm had both domestic and international experience. His many
public service experiences also provide useful perspective.
Mr. Hope is 67. He has been a director of BAC since 1992. (He
was a director of Security Pacific from 1984 until its merger
with BAC in 1992.)
WALTER MASSEY
In 1995, Dr. Massey became president of Morehouse College.
[PHOTO] Before joining Morehouse, he was provost and senior vice
president for academic affairs at the University of
California, a post he had held since 1993. Dr. Massey 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. He is a director of Amoco Corporation and
Motorola Inc. Dr. Massey has experience in the scientific and
technical area. He has acquired broad-based board experience
and he has extensive knowledge of government through his
federal posts. He brings knowledge of the energy and
telecommunications areas, higher education and issues
affecting minorities. Dr. Massey is 59. He has been a director
since 1993.
SANFORD ROBERTSON
Mr. Robertson became chairman of the Robertson Stephens
[PHOTO] division of BancAmerica Robertson Stephens, a securities
brokerage and trading subsidiary of BAC, on October 1, 1997.
He was a founding partner of Robertson Stephens & Company
(RS&Co.), and had served as chairman of that firm since 1995.
Mr. Robertson was elected a director of BAC on October 1,
1997, as contemplated in connection with the acquisition of
RS& Co. by BAC. He brings a knowledge of the equity markets
and the technology and healthcare industries. He is a director
of Technet, a California-based bipartisan political
organization formed to encourage the development of public and
private policy to assist technology enterprises, their
employees and the communities in which they operate. Mr.
Robertson is 66. As noted above, he joined the board in 1997.
RICHARD ROSENBERG
Before his retirement in May 1996, Mr. Rosenberg served as
[PHOTO] chairman of BAC and Bank of America, a position he assumed in
1990. He held the position of CEO from 1990 until December 31,
1995. He held the position of president of BAC and the Bank
from February, 1990 to April, 1992, and from October, 1992
until August of 1995. Mr. Rosenberg is a director of Airborne
Freight Corporation, Northrop Grumman Corporation, Pacific
Life Insurance Company, Potlatch Corporation and SBC
Communications. As retired CEO of BAC, Mr. Rosenberg brings an
in-depth understanding of virtually all of the complex
business issues that affect the company. In addition, outside
board experience has given him extensive knowledge of a number
of fields important to BAC. Mr. Rosenberg is 67. He has been a
director since 1987.
31
<PAGE>
MICHAEL SPENCE
Dr. Spence became dean of the graduate school of business at
[PHOTO] 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. Dr.
Spence is a director of General Mills Company, NIKE, Inc.,
Siebel Systems, Inc. and Sun Microsystems Inc. Dr. Spence sees
a broad spectrum of business practice as dean of a business
school. He has broad knowledge of information technology and
of the technical aspects of finance. Dr. Spence is 54. He has
been a director since 1990.
SOLOMON TRUJILLO
Mr. Trujillo became president and chief executive officer of
[PHOTO] 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 is a director of Dayton Hudson Corporation.
Mr. Trujillo is CEO of a major complex telecommunications
company. He brings general management experience as well as
knowledge of marketing and technology and issues related to
the rapid market changes that are occurring in American
industry. His Hispanic background also provides a useful
perspective. Mr. Trujillo is 46. He joined the board in 1996.
Nominee Standing for Election for the First Time
SHIRLEY YOUNG
Ms. Young has served as Vice President of General Motors
[PHOTO] Corporation since 1988. From 1988 to 1996 her responsibilities
encompassed Consumer Market Development primarily in the North
Asia market. Her present responsibilities cover China
Strategic Development and Counselling for Asia Pacific. Ms.
Young is a director of Bell Atlantic Corporation and The
Bombay Company and is a Consultant Director of the Dayton
Hudson Corporation. She brings to the board a detailed
knowledge of the Pacific Rim market, one of BAC's most
important areas of focus for future growth, as well as
knowledge of the modern consumer's interests and commercial
preferences. Her Asian background also provides a useful
perspective. Ms. Young is 62.
ITEM NO. 2: Ratification of Appointment of Ernst & Young LLP as Independent
Auditors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
We have appointed Ernst & Young LLP, Certified Public Accountants, as
independent auditors for 1998. This firm or its predecessors have been our
auditors since 1970. The Auditing and Examining Committee recommended the
appointment, which is subject to shareholder ratification. The firm has also
provided other audit services (including reviewing financial statements and
related information in registration statements and SEC filings, and conducting
limited reviews of financial statements and related information in quarterly
reports to shareholders and the SEC).
If the selection of Ernst & Young 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, we probably would allow the
appointment to stand for 1998 unless we found other good reason to make a
change sooner.
Representatives of Ernst & Young will be present at the Annual Meeting and
available to answer appropriate questions.
32
<PAGE>
VOTING BY PROXY AND VOTING AT THE MEETING
General Information About Voting
Except for Item No. 1, under BAC's Certificate of Incorporation and bylaws,
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). On Item No. 1 (Election of Directors), shareholders can either
withhold authority to vote for all nominees or just for certain nominees.
Shares that are withheld and broker non-votes will have no effect on the
outcome of the election of directors because directors are elected by a
"plurality" of the shares voted. "Plurality" means that the nominees with the
largest number of votes are elected, up to the maximum number of directors to
be chosen.
Who Can Vote
Shareholders of record who own shares of BAC common stock on March 23, 1998,
at 5:00 p.m. (Pacific Time) are entitled to vote at the Meeting. As of
February 28, 1998, BAC had 682,985,923 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
1998.
Voting by Proxy
If you return the enclosed proxy properly executed or submit a proxy in any of
the various ways we describe below, and do not revoke your proxy, it will be
voted according to your instructions. If you return a signed proxy but do not
specify how you want your proxy voted on an item, your shares will be voted on
that item in accordance with the board's recommendations (except as we explain
later for participants in the BankAmerica 401(k) Investment Plan). The proxy
card and use of telephone or Intranet authorization procedures give authority
to the proxy holders 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.
Telephone Proxies--An Additional Voting Choice
We permit shareholders of record to use a toll-free telephone line to
authorize the proxyholders to vote their shares. The telephone procedures 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 these procedures comply with
Delaware law. We explain the specific instructions to be followed by any
shareholder of record interested in using telephone voting on the enclosed
proxy card. Our telephone procedures are not available to shareholders who own
shares in "street name" through a broker or in certain limited instances as
described below for participants in the BankAmerica 401(k) Investment Plan.
Intranet Voting
We have established an Intranet voting procedure for use by BAC employees who
hold common shares registered in their own name, restricted shares awarded but
not yet vested, or shares held in employees' 401(k) Investment Plan account.
Employees may use Intranet voting if they have access to the BAC Intranet and
as long as they registered online between January 12 and February 20, 1998.
Those who registered by February 20 will not be mailed a proxy card or proxy
statement. However, an electronic version of the proxy statement can be viewed
and printed from the Intranet. An employee may also request a printed copy of
the proxy statement. Voting begins March 23 and ends May 19, 1998. We will
remind employees in the BankAmerican newsletter when they may begin to vote
online. Only employees who registered by February 20 may vote online.
Participants in the 401(k) Investment Plan who wish to have their plan shares
voted differently than their shares held directly must do so by mail and may
not use Intranet voting. BAC has been advised by counsel that these procedures
comply with Delaware law.
33
<PAGE>
Voting and the BankAmerica 401(k) Investment Plan
If you are a participant in the BankAmerica 401(k) Investment Plan, you may
submit a proxy card (or use the Intranet or telephone proxy) to give voting
instructions to the Plan trustee, if you have BAC common stock in your Plan
account. If you hold shares directly in your name alone and have shares in
your Plan account too, your voting choices apply to both. If you wish to have
your plan shares voted differently than your shares held directly, you must
say so on your proxy card. In that case, you can't use the telephone proxy
procedure or the Intranet voting procedures to give or revoke a proxy.
The Plan trustee will vote only those shares for which voting instructions are
received. If you have questions about your instructions to the trustee or
about your Plan shares, contact Business Retirement Programs, Unit #9260, 315
Montgomery Street, Mezzanine Level, San Francisco, California 94104, 415/622-
3237.
How to Revoke a Proxy
If you want to revoke your proxy write to BAC's Corporate Secretary advising
us that you wish to do so. Use the address on page 2. Also, if you submit
another proxy, the later dated proxy will revoke the prior one. You may also
revoke a proxy through the telephone and Intranet proxy procedures discussed
previously. In all cases, the latest dated proxy revokes an earlier dated
proxy, regardless of which method you use (mail, telephone or Intranet) to
give or revoke a proxy, or if you used different methods to give and revoke
your proxy. You may also revoke a previously granted proxy by attending the
meeting and voting by ballot.
Confidential Voting
We have put in place procedures to maintain confidentiality of votes. We use a
single proxy card for all shareholder voting, including voting by participants
in the 401(k) Investment Plan. To protect the confidentiality of votes, we
direct the stock transfer agent to restrict BAC's access to proxy cards,
ballots and certain records relating to telephone and Intranet proxies and to
report voting results to BAC and the Plan trustee only in the aggregate.
For non-employees, confidentiality applies except in proxy contests, tender
offers and other change of control situations.
For employee shareholders who participate in the 401(k) Investment Plan,
confidentiality applies in all cases. Because we use a single card we do not
differentiate between Plan shareholders and non-Plan shareholders and
confidentiality procedures will apply to all employee shareholdings voted on
the card. However, some employees may hold shares jointly with others or in
trust name. These shares are voted on separate proxy cards and covered by the
same confidentiality procedures as those that apply to non-employee
shareholders.
OTHER MATTERS
OTHER BUSINESS FOR MEETING
By signing the enclosed proxy card or by using the other proxy procedures we
describe, you are authorizing the proxyholders to vote your shares on your
behalf. 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 matters listed on the
proxy card. The proxyholders intend to vote proxies in their discretion and in
accordance with their best judgment on any other matters that arise.
The board knows of no matters to be presented for action at the meeting other
than items listed on the proxy card except as indicated later in this
paragraph. Two shareholders submitted proposals which were not included in
this proxy statement because they did not meet the requirements of the SEC's
proxy rules. One requested that
34
<PAGE>
directors be compensated in BAC stock, and the other requested that increases
in director compensation be tied to the rate of increase in dividends. We have
asked the proxyholders to vote "AGAINST" them if either is raised at the
meeting. Also, a shareholder has advised us that he intends to raise three
proposals at the meeting having to do with supporting the Board's recent
decision to increase the dividend, seeking a report on BAC's exposure in
Southeast Asia, and limiting the number of other directorships that BAC board
members may have. Should any of these proposals be raised at the meeting, the
proxyholders presently intend to vote "AGAINST" them.
PROXY SOLICITATION
BAC is paying the cost of proxy solicitation. We have hired the proxy
soliciting firm D.F. King & Co., Inc. to help solicit proxies. D. F. King will
charge BAC about $15,000, plus out-of-pocket expenses. BAC will reimburse
banks, brokers and other nominees for their expenses in distributing our proxy
materials to their clients. Directors, officers and regular employees of BAC
and its subsidiaries may also solicit proxies by telephone, electronic means,
or in person but they won't be paid extra for doing so.
ANNUAL REPORT ON FORM 10-K AND ANNUAL REPORT TO SHAREHOLDERS
You are welcome to a free copy of our 1997 Annual Report on Form 10-K
(including any financial statements and schedules and a list of exhibits) by
writing to the address listed on page 2.
The 10-K exhibits are available too, if you reimburse us for photocopying.
Each person who receives this proxy statement is also receiving a copy of
BAC's 1997 Annual Report to Shareholders.
These documents are also available online at http://www.bankamerica.com.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR 1999 MEETING
If you wish to submit a shareholder proposal for inclusion in next year's
Proxy Statement we must receive your proposal on or before November 23, 1998.
Proposals should be mailed to us at the address listed on page 2. We will tell
you whether we intend to include the proposal.
Dated: March 23, 1998
By Order of the Board of Directors
/s/ Cheryl Sorokin
Cheryl Sorokin
Executive Vice President and
Secretary
35
<PAGE>
NOTICE TO SHAREHOLDERS
Keep current on BAC online on
the Internet. Visit our home
page on the World Wide Web
http://www.bankamerica.com
to view the latest information
about us and our products and
services, or apply for a loan
or credit card. You can get
documents we file with the SEC
from the SEC's home page
http://www.sec.gov. You can
reach our transfer agent and
registrar through
http://www.cmssonline.com.
[LOGO OF RECYCLED PAPER]
Printed on Recycled Paper
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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
DoubleTree Hotel - Jantzen Beach, 909 N. Hayden Island Drive, Portland, Oregon,
on Thursday, May 21, 1998, at 2:00 p.m. (Pacific Time) and at any adjournment or
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 their 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. (See Proxy Statement under "Voting by Proxy
and Voting at the Meeting - Confidential Voting").
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE OTHER SIDE OF THIS CARD.
OR, 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.
(Continued, and to be marked, dated and signed, on the other side)
--FOLD AND DETACH HERE--
[LOGO OF BANKAMERICA CORPORATION(R)]
BANKAMERICA CORPORATION
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.
<PAGE>
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Items 1 and 2
- --------------------------------------------------------------------------------
Please mark
your votes [X]
like this
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Withhold For all
Item 1. Election of Directors - Nominees: For For all Except Item 2. Ratification of appointment FOR AGAINST ABSTAIN
01 Joseph Alibrandi 02 Peter Bedford of Ernst & Young LLP as [_] [_] [_]
03 Richard Clarke 04 David Coulter Independent auditors
05 Timm Crull 06 Kathleen Feldstein
07 Donald Guinn 08 Frank Hope, Jr.
09 Walter Massey 10 Sanford Robertson
11 Richard Rosenberg 12 Michael Spence I/We plan to attend the annual
13 Solomon Trujillo 14 Shirley Young meeting in Portland, Oregon;
please send ticket (admits 2)
</TABLE>
- ----------------------------------------------------------------------------
Except Nominee(s) written above
Signature___________________________ Signature_______________________ Date______
NOTE: 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.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
[GRAPHIC APPEARS HERE] VOTE BY TELEPHONE [GRAPHIC APPEARS HERE]
QUICK *** EASY *** IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
CALL 1-800-840-1208 ON A TOUCH-TONE PHONE ANYTIME.
THERE IS NO CHARGE TO YOU FOR THIS CALL.
You will be asked to enter the Control Number (look below at
right).
- ---------
OPTION A: To vote as the Board of Directors recommends on All items, press 1.
- --------- Your vote will be confirmed.
- ---------
OPTION B: If you choose to vote on each item separately, press 0. You will hear
- --------- these instructions:
Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9.
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to
the Instructions.
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
When asked, you must confirm your vote by pressing 1.
Please have this card handy when you call. You'll need it in front of you in
order to complete the voting process.
BAC has been advised by counsel that these telephone voting procedures comply
with Delaware law.
FOR TELEPHONE VOTING: