Good morning, everyone. Good morning, everyone. I think we'll get started right on time here. First off, I want to some people found it convenient, some people found it less convenient, but I want to tell you why we're here. We're here because the place we had last year is under construction and we couldn't get them to open the place back up for us.
So we're here at the Marriott and South Park and thank all of you for joining us for the 2015 Annual Meeting of Shareholders of Bank of America Corporation. I want to thank everyone for being here in person and I want to thank those that joined us on the webcast and for joining us today.
In your packet materials you'll
receive the agenda for our meeting and the rules of the meeting which are now in effect. So it's my privilege to call the 2015 Bank of America Corporation Annual Meeting of Shareholders open for business. First, I want to introduce our Board of Directors and I'd ask them to stand, they're here in the front, To my Board of colleagues, Stan. This is your Board of Directors shareholders and then next thank you. And next I'd like to introduce Jack Bovind, our Lead and Pennant Director and ask Jack to say a few comments.
So Jack come on.
Thank you, everyone. It's a great honor to serve as the Lead Independent Director. I will try my best to do a really good job for all of you shareholders. I found that this job consumes a lot more time than I thought it was going to when I was elected. And I guess it's a good thing that I'm retired from my previous employment.
But I also want to extend my welcome to all of you on behalf of the independent directors tell you how much we appreciate you being investors in this great company.
Thanks. Thanks, Jack. So now to get started with Form Part of the meeting, I would like to introduce Ross Jeffries, our Corporate Secretary. Before I make a few comments, I'm going to ask Ross to review some rules of meeting. Ross?
Thank you, Brian. There are 7 items that we'll consider today for shareholder votes. Each one of those items will be presented and you'll have a chance to comment on those items at that point in time. Brian will take us through the proposals and the process for comments. When that portion of the meeting is completed, we will tabulate the votes.
When the vote tabulation is complete, the preliminary results for the vote will be announced and the formal meeting will be adjourned. Financial matters to discuss, we have customer service representatives available at the back of the room to assist you with those matters. Anyone not following these rules of conduct will be asked to leave the meeting. Gary Lynch, our General Counsel, has joined us today to assist with
I was going to make a few comments about the company and where we stand. So your management team continues to deliver on the strategy we laid out a few years ago to make the company simple, stronger and more customer driven. So today I'm going to hit 3 points. First, where we started in front of the economic crisis. 2nd, what we did to change our company.
And third, where we are today and why we believe the future is bright. So let's look first at where we we put the team together in the spring of January 2010 and we met with you in 2010 and we told you we would drive this company from a product company to a customer focused company. We committed to getting out of non core businesses across the board in order to simplify our company to make it easier to manage. We're committed to dealing with the remaining issues in the crisis, specifically the mortgage issues inherited mainly from Country Law. We also committed to reduce our expense base.
We focused on strengthening the balance sheet, building capital and the capital return. And since that time we completed some of these tasks and we continue to work on others. And we've done all this even as an operating environment and economic environment was much different
than we'd have said if we were sitting
here 5 years ago. We've done it during a slow recovery and low interest rates, neither of which are great for banks. Let's talk about what we did to change our company. So first, we simplified the company. We did that by exiting a lot of businesses, reducing the geographic scope of business that remained in the United States and selling or liquidating assets that do not fit the customer focused strategy.
Now let me give you a couple of examples. Coming out of the crisis, we exited the correspondent mortgage banking and a broker mortgage business. Why? Because those enterprises sold us we didn't deal directly with the CUP. The vast majority of our issues in mortgage came from people who sold us loans.
In other examples what we did in our global markets business. In our global markets business we got our proprietary trading I think 4 years ago this quarter. We gave up revenue, position ourselves to new rules, but more importantly we did it because we believe what our market business does for us is integrate between our corporate customers, our investor customers. And by the way, the reduction in risk that we took forth at that time is one of the reasons why we have less required than people with the same array of business. All these decisions are consistent with the goal of building a great sustainable and growing company, one who's less susceptible to issues in the crisis.
So let's take a look at what we did by our number. 1st, we've got a much stronger foundation. This is our balance sheet at the end of 2009, its size was $2,300,000,000,000 in assets. We've reduced it today to about $2,100,000,000,000 a reduction of $200,000,000,000 or 10%. And this was done also will replace non core assets with core assets.
We go to the capital which is a core of the banking system. You can see here at the end of 2,009 our change of common equity ratio was 5%. And today it stands at 7.5%, up people and times are priced at your liquidity. And so in people and times of crisis to your liquidity. And so in 2009, our liquidity was around $214,000,000,000 that's cash on hand to take care of whatever happens on a given day.
And now it's up to $480,000,000,000 that's nearly 2.5 times. And by the way, we comply with the rules that are going to apply to our company in 2 years. We also reduced risk in the company, whether trading, credit or operating risk. I'll give you an example of that. You can look at our credit card.
These were our charge offs for the calendar year 1009. Today charge offs are the lowest they've been in a decade, they're down by a factor of 90 percent. Now the key here is to recognize how we did this. We didn't do it just by shutting down businesses as time got better. We did it by changing and reordering our customer So example in our credit card business, during this period of time we've grown our credit card originations from $2,000,000 a year in 2010 to $4,500,000 in 2014.
We did this by reducing charge offs and improving credit costs. Then we had to work on our expenses and we've done a lot of work to improve the way we operate. In 2010, we had a total expense base of $83,000,000,000 $70,000,000,000 in expense on operating base. When we look during the year of 2010, we knew we had to take action. First, we had to keep investing in our business because we couldn't invest stop investing for the future.
2nd, we had to deal with building the capacity to handle the flat fetches of mortgage prices. 3rd, we had to continue to integrate our company, bring the system together from all the mergers and acquisitions leading up to the crisis. And the 4th, the expense just simply had to come down because economy was predicted to be more slowly recovering than people thought. So in the fall of 2011, we started new BAC and you can see here we had about $7,000,000,000 in cost that year. And the LAS cost we had, the bad asset mortgage servicing costs were still climbing.
So we said we're going to do new BHC and we committed to achieving $8,000,000,000 of annualized savings and last year we completed it. So here you can see the costs over the ensuing 4 years or 3 years. Now if you look at it, they move around a lot. But what's that driven is largely by the litigation charge given the quarter and it's clear as the progress made on the core costs. But here's a view of just our operating expenses.
If you can see here, the expenses have come down $13,000,000,000 or 18% since 2011. In fact, operating expenses have declined for 17th great quarters in our company. Even with that work, we continue to push ahead. In the Q1 of this year, operating expenses were down 6% from last year and our employee count was down 19% We We continue to work for the program we call simplified and improved to continue to make our company more efficient and more effective so we can not only bring the expenses in mind where they should be, but also to create money for investment. So how did your shares performed in those times?
If you look here in 2011 we struggled. The share price struggled against the peers and relevant benchmarks. And the reason why is we had litigation with Phil and Nicky around this company, liquidity, capital and those things are flowing around our stock. But since we stabilized the company, you can see we started outperforming the industry in the various index. We have one job which is continue to drive the share price.
This year we started off a little slow, but a year ago to now we're up about 11%. So we continue to drive 4. When you move to the other way to measure the value in our company, one of the things we look at is a thing called change of book value per share, factor hard equity over the number of shares. When you look at that across the last 5 years, you can see its risk. Each year we view our investments, your hard asset investment in our company has grown even while we've returned capital of about $8,000,000,000 And our goal is to continue to drive that tangible value per share because that's one of the key investment standards we have.
Now achieving this growth was difficult because we are absorbing a lot of charge in the crisis at that same time. We had $84,000,000,000 charge offs during this period of time. Those charge offs from credit cards and home equity, mortgages and other loan areas. We had $36,000,000,000 in litigation expense paid to settlement and other matters. We had $46,000,000,000 to help collect and modify and amend the mortgages of the borrowers that we helped through crisis.
We had $28,000,000,000 representation of warranty expense to put back risk from mortgages. We now add that all up to $200,000,000,000 $12 a share, but during that entire time we continue to drive the investment company up. The good news that these are behind us and if you look forward you can see more of this fall of the bottom line. So let me go to the revenue side and how we're doing on revenue. We've been focused on building this company's revenue base the right way.
The way we use this is a term we use called responsible growth. We have to grow no excuses, but we have to do it the right way, right customers, right risk. We've reduced exposures involved in consumer unsecured credit businesses. We changed our market position as I described earlier. We've also shifted more sustainable revenue stream, less reliant on one time items.
So you can see here an adjusted for rate marks as interest rate movements, you can see the revenue is down. That's reported revenue and then you can see adjusted interest. But the way we think about it is how much risk is there to get that revenue. And what we've done for here is just take a revenueized charge off, the consumer charge off driving that across a period of time. So we've got a lot of work to do to continue to drive the revenue growth in this company.
So as you can see, by taking down the risk, we have a much higher quality revenue stream today than we did 5 years ago. It's higher quality and more sustainable and we can grow it through the recovery even if we hit not the best time to hit and that will serve you better in the long run. Let me back up a little bit and talk about a quick overview of our industry and what's going on. Today, not only is our company more simple, less complex, bigger capital, more liquidity, but whole industry is. Despite the progress we've made, there are always discussions that go on about the banking industry.
Are we more risky than we were before the crisis? Have we gotten bigger? Are we trying to repeal the legislation that's changed the terms of which we offer? And believe me, that just isn't the case. First, size doesn't necessarily mean more risk because we have a lot of to take a lot of steps to simplify, narrow to operations, so geographically and scope.
Since the crisis capital has doubled in our industry and doubled in our company thoroughly. And every year we participate in stress test, whether stress test tells all of us that we can go through a very severe situation and basically have more capital than we entered the last crisis, evenly and when we continue to pay dividends and buyback stock. When you think about Dodd Frank and the question about what does that stand for and how our industry feels about, we want to get Dodd Frank right, isn't it? Because we want it to work. The goal of the regulation is to strengthen our industry and protect the customers and clients we serve.
And we believe that's an absolutely good thing. Now simply put, U. S. Shareholders and we are as management are absolutely self interested in the outcome to have a strong financial service. Why?
1st, it's good for our economy. It helps growth occur both in the U. S. And around the world. 2nd, this is a very straightforward point, when a bank fails in the U.
S, the FDIC cleans it up. Then the FDIC assesses the banking system to keep the FDIC funds stable. So inherently, we all pay the cost that we have. So it's our interest to have a strong system both from pure economic interest and also from itself. None of us want other people to fail, none of us want taxpayer bail.
So last thing gets lost in discussion is why do we why are we there? Why are the large banks just to serve our companies. We serve small and medium sized companies that in the world that they face today, they have to be global and understand the global economy, access to capital markets and access to things that they never thought about a couple decades ago. Some big companies can bring them in. So the companies are already large, large corporate clients around the world.
We have to be able to serve them and help them raise capital throughout their market and we can do that. So that's where the company stands today, but that's also where our industry stands today. Lots of hard work to simplify, lots of hard work to build capital, lots of hard work to get risk out of the industry. And that brings me to 3rd place with what's the future of Bank of America. So we started where we started and now we can see where we are today.
We have a company that we have positioned to be customer focused and is growing its core business lines. We have the lion's share of legacy issues behind us and keeping track and tight rein on the cost structure. We have a strong financial condition whether it's by capital liquidity or the other measures. We continue to weather slowest on record in a low interest rates relative. And we still have work to do.
We fully admit that, get it back to where it could be. But even as you see this, the earnings power continues to become more evident every day. So what have we done to grow and position the company? We built a simple operating. We talked to a lot of people and make it clear that we serve 3 types of customers, people, companies and investors.
We report them through 5 operating P and Ls we see here. But how do we go to market? We go to market at 8 businesses. Each of these businesses has very strong positions at a near the top end of businesses and we continue to leverage those capabilities to grow. Let's first look at our consumer franchise.
We believe we have the best consumer franchise in the country. We serve 1 and 2 households. Holes. We have the number one footprint for the most efficient deposit gathering franchise relative to our peers. We have a number one online and banking platform with 30,000,000 computer banking customers and 17,000,000 mobile banking customers growing every day.
Now as more customers want to transact that way, we continue to reshape our physical branches to make that happen. But happen. But importantly, our brains are critical to what we do and we keep investing in sales work in those branches at the same time. Just over the last 12 months, we added 500 financial advisors and small business bankers and many more personal bankers in these banks. We're making good progress on the client activity and generating good deposit balances.
Our core deposits are growing. We're the number one home equity service in here, up three times over the last several years. We're number 2 in direct to consumer mortgage, number 1 investment asset growth of Merrill Edge. But importantly for you as shareholders, the consumer business is much more In 2014, dollars 160,000,000,000 have the tax and returned 20% of Saks. When we go to our Wealth Management business, we have the 2 best brands in the business, Merrill Lynch and U.
S. Trust. Number 1 in market position across assets, deposits and loans and number 1 in Averance Top 1200 financial advisor. 2014 was another record for U. S.
Shareholders for our asset management fees, our strong client market flows and increased loan balances. This business earned $3,000,000,000 after tax with capital of 25%. We see the power of connecting us together for our company. A simple example is 40% of all the clients Merrill Lynch got last year, the new client came from other parts of our franchise referring in. We continue to add more people here, more financial advisors to serve our clients.
We added over 120 so far this year and we'll continue to add. If we go to our corporate business, our Global Banking business, we serve companies from small businesses to largest companies in the world. We are one of the largest lenders to middle market and small business companies with $150,000,000,000 in outstanding commercial loans. We have a top tier investment bank. In 2014, we were number 2 in investment banking fees in the world.
As more companies continue to operate globally, the value of this model is to integrate our capabilities both domestic, international and markets and land, whether that's for cash management, for trade financing, the hedge of currency risks, local currencies around the world. We do this by helping these companies achieve their goals. Now we continue to invest in this business too. This year we're up about 4% so far in commercial bankers covering the middle market clients. By the end of the year, we expect to be up 15%.
It's a great stable earnings business for us. In 2014, your Global Banking business earned $5,800,000,000 after tax and had a 17% return on cash. Then we go to our Markets business. It's one of the top tier platforms in the world. This business helps our investor clients, Sovereign Wealth Fund, asset management firms invest in companies in markets to grow.
These activities drive the real economy around the world and in the United States and we provide these clients great expertise. The research team has been number 1 ranked in the world 4 years in a row. When we think about our position here, that strong success drives success $3,000,000,000 and a return to cost of capitalized. So as you look at the model, we believe the integrated model leads to significant benefit for us to shareholders. The reason why we think this model makes sense is because it provides both client benefits and shareholder benefits.
Our client benefits is because they can officially access capital and arrange the services unprecedented in our industry. Midsize companies as they globalize as I said before can use our geographic and research expertise around the world. Clients also benefit access to broad delivery networks and full banking capabilities. Nearly half of our wealth management companies use our banking services in branches in a given period of time. Another example is in our retirement services business.
We've gone number 10 to number 8 in the business the last few years and continue to drive it because we have companies at the retirement line. When you get to the shareholder side, you as shareholders also benefit. You benefit from diversification in the earnings stream. You benefit from the expense synergies that we share for the infrastructure. You benefit by the Investment Banking and Capital Markets activities that funding advances compared to operating standards.
When people talk about breaking this up they forget something. If we broke it up we lose $13,000,000,000 of market revenue a year. We lose $6,000,000,000 in investment banking revenue a year. We lose all the market access and expertise and geographic expertise we have to serve our customers and So even if you broke it up though, if each of the entities left over would still be a fit and still have the capital. So the other way we try to extract the benefits for you as shareholders from this great franchise is deliver 1 company.
And so here you can see what a lot of people talk about what we make happen and don't leave the team. We drive an integrated model with a market presence, Charles Feldman here in Charlotte that drives an integrated model across all our businesses that generate referral feedback. We have 90 markets, we measure it every month, we stole it and we drive it forward. And as you can see here, you can see some of the success. We're doing all we can for every customer.
That's the question we ask. We won't be satisfied until we answer full. From nearly 300,000 referrals, we're on a pace this year to do 5,000,000 and we closed 20% of those within a short period of time and the revenue continues to build from them. So we believe this is a competitive advantage and we're driving. If you look at the earnings stream and you can look at the business performance for 2014, we earned 4,800,000,000 dollars What drove that?
On the far right of the slide you can see that losses from the mortgage business do the litigation. And take that away the 4th core business earned about $18,000,000,000 and that's our path, eliminate what's on the right hand side of the page and let the left hand side come through. As LIS costs continue to come out, we continue to make good progress. And think of a step back and think about our earnings recovery. You can see here the $18,000,000,000 before LIS in 2014.
As those hits from LIS have subsided in the recent quarters, you see the recovery. Let's go through that fair set. In 2014 and the Q2 of 2014, our company earned $0.14 per share. In the Q3, we lost $0.05 because we had adjusted the harvest settlement. In the Q4 of 2014, we earned $0.25 in the Q1 this year, we earned $0.27 And if you look at what the Street expects in the Q1, dollars 0.36 dollars If you take that Q1 and adjust out a couple of items, which I'll show you in a second, which don't return in other quarters, it's about $0.36 to run our way to get there.
This is a progression we're after as we move the cost of the crisis behind us and let the rest of the earnings come through. We also focus on a goal of having 100 basis point return on assets over the near term. In the Q1, you can see here we had a few adjustments, interest rate adjustments and the compensation expense we only incur once a year. Just for that, we go from 60 to 80 basis points halfway to 160. If you further adjust the litigation, it's still outsized in the first quarter and the cost of collecting bad mortgage will continue to come down.
We're at 90 basis points. So how do we hit the 100 basis points? It's just hard for us. Us.
We're for
business, we're expense efficiency and with rising rates and it's an improving economy we should benefit. The last I want to talk about the most important thing which is what our 220,000 teammates do for us every day carefully. They go to work to improve our clients and improve our communities and they do it every day. Through our corporate social responsibility network, we continue to focus on improving those communities and as core to the business strategy we have. This year we have a separate governance committee and Faduuk and my teammate runs to help make sure these priorities stay front to them.
One of the ways we support our communities is to provide programs called Better Money Hat. Habit. Better Money Habit is a proprietary program we do with Falcom. 10,000,000 people have used these tools so far. It's about a year into it.
It's the work we've done with the military through home donations, job skills training and hiring. Last year, we announced the goal to hire 10,000 veterans over the next over the 5 years including this year that builds on the 7,000 we hired in the last 5 years. In attribute to the service these veterans had for our country, we have donated nearly 2,000 homes over the last few years to them as they return from service. It's the work we do on your behalf on the environment. We had a $70,000,000,000 environmental commitment.
We're driving that forward. It's the work we do in our charitable and volunteer work, something makes me very proud of Bank of America. Last month, we like everyone else celebrated Global Service Month. But what we celebrated Bank of America was 2,000,000 hours in 2014 of service given to communities, 2,000,000 hours for our communities. Right now we have a special partnership, so I'm to ask all of your help.
In your packet there's a special partnership with the Special Olympics and the Unified Relay which starts relatively soon. Hold out some help us raise some money for a great cause. So as you think about 2015 beyond, let's see what we covered. We worked hard to change the company. We have a strong foundation.
We have a strategy that's focused solely on the customers we serve and that strategy is just driving growth. We have a dedicated team that goes to work every day on behalf of the clients and the community and all that continues to drive value to the shareholders. As we look forward, it comes down to $0.03 to drive responsible growth, growth that is real, growth that's within our risk parameters and growth for the right customers that will hold good in time to strip. 2nd, continue to simplify the cost structure to the company and continue to bring that cost structure down. And 3rd, continue to increase shareholder return to you.
We think this company has extremely bright future and you can see why we think that. Thank you for your support. Now let's move to the rest of the meeting. I'd like to ask Ross to bring the Secretary's report. Ross?
Thank you, Brian. Notice of today's meeting and the related proxy statements or a notice of Internet availability of these materials were mailed beginning March 26, 2015 to all stockholders of record as of March 11, 2015. Proof of the mailing will be filed with the record of this meeting. Rebecca Fincher of Computer Share Trust Company has been appointed Inspector of Elections. She has advised me that holders of shares representing at least 81% of the shares entitled to vote are present in person or represented by proxy, which constitutes a quorum.
Thank you, Russ. I declare the quorum as present and this meeting is officially convened. We are now ready to consider the 7 items of the stockholders listed in the proxy statement. Most of you
have submitted your proxy to vote in these
matters and you don't need to do that again. In your proxy to vote in these matters and you don't need to do that again unless you want to change your vote. If you want a ballot to cast your vote please raise your hand now. There's a ballot over here. Anywhere else?
You got a ballot here? There's one here in the front too, sorry, and one back there. Let's get the ballots out. As we're doing that, I'd like to recognize the Bank of America teammates for serving as proxy and absent the fan. Sherry Braunstein, our Senior Vice President, Human Resources Executive, that does a great job for us covering our Global Banking and Markets business and David Reilly, our Chief Technology Officer, who helps keep our company running every day and does a great job.
Thank you for serving for us, Sherry and David. As Ross told you, you have copies of the rules of the meeting. Let me remind you of a couple of things. Stockholders presenting proposals are going to have 4 minutes to discuss those proposals. Stockholders wishing to comment on those proposals will be limited to 2 minutes for stockholders.
Stockholders. When your time is up, you're going to hear a time and that will be your signal if time has expired. Please address your comments or questions to me and I'll answer ask one of my colleagues to respond. We're going to have 2 sessions where we take the share of the comments. The first session is on the proposal.
If you have a concern on proposal, we'll hear from that in the first section. It's about the company generally or about issues related to your accounts and stuff, please wait for the 2nd session. With that, I'll now present the items for stockholder consideration. The management proposals are as follows. Proposal number 1, elect the director nominee.
Proposal number 2, adopt an advisory vote, approve executive compensation. Proposal number 3, to ratify the appointment of PricewaterhouseCoopers and propose number 4 to approve the amendment and restatement of the Bank of America Corporation 2000 and 3 key associate stock fund. Now let's move to stock proposal Mr. Davitt, just hold on one second. Let's get all the other proposals in and then you can make your comments.
We'll get it in one second. Okay. Thank you. Proposal related lobbying was withdrawn by the proponents and will not be voted on today. The other 3 stockholder proposals will now be presented.
The first stockholder proposal relates to climate change and was submitted by the Sisters of Holy Names of Jesus of Mary. Gabriel Toomey is here to present the proposal on behalf of the Sisters of holy names of Jesus of Mary. We'll have comments about all the proposals in a minute. We're just going to put the other 3 into the rec. Yes, that's all the comments, that's all the 7 proposals.
Thank you. Mr. Toomey. Mr. Pumi, okay, you ready?
Yes. There you go.
Good morning, Mr. Moya and members of the Board and I'm Gabriel Tsume, Senior Sustainability Analyst, Calvert Investments. I co filer of Proposal 5, which I'm here to move on behalf of the primary filer, Sisters of the Holy Names of Jesus, Mary, U. S. Ontario Province and 11 other co filers.
I'm both a chartered financial analyst and a certified ecologist at Calvert Investments that cover carbon asset risk for our investments on behalf of our institutional investors. The resolution requests that the Board of Directors report to shareholders the bank's assessment of the greenhouse gas emissions resulting from its financing portfolio and its exposure to climate change risk in its lending, investing and financing activities, also known as finance emissions. Like other financial institutions, Bank of America contributes to climate change through
to finance
emissions, which dwarf the bank's other climate change impacts and poses a significant financial reputational risks. For example, in 2014, Bank of America reported to the carbon disclosure project that reputational risk could arise if we are not developing appropriate balance of carbon and low carbon reliant customers or sources of energy in our business mix. Through Bank of America's environmental financial commitments, it has demonstrated that it's opportunities and risks for banks. Through its corporate lending and underwriting businesses, Bank of America remains highly exposed to both reputational and financial risk from carbon intensive clients in the fossil fuel and electric power sector. The resolution's filers are concerned that a lack of strategic response to climate change is undermining the bank's reputation and closing to its shareholders unnecessary risks associated with financing carbon intensive industries.
Further, as members of the global society, we take seriously the intergovernmental panel on climate changes. 2014 warning how extreme climate change is likely to disrupt the global economy and pose others both systematic for risk, especially for people in the world's poorest countries. Bank of America concludes its statement of opposition as follows. Our Board believes that management is best suited to address the climate change impact by supporting key environmental initiatives, continuing to develop innovative solutions for addressing climate change and regularly communicating our progress to our shareholders. Last year at the Annual Meeting, 1 quarter of Bank of America's shareholders gave the Board a clear and strong message.
You're not giving us sufficient information to assess how the bank is managing its exposure to climate change and its financing portfolios. Globally, as I turn to the Paris Climate Change Conference later this fall in 2015 and the potential for a new global climate Conference later this fall in 2015 and the potential for a new global climate policy framework we call in Bank of America to be a leader in the financial industry and to assess and report on its exposure to climate risk in a transparent and comprehensive manner. Finally, on a personal note, I have led Calvert's ability to address and report internally on greenhouse gas emissions from our own asset management portfolios. And in this role, we have assessed our fossil fuel reserve exposure and our Piaoniazka submissions on our investments. As an asset manager with a little more than 180 employees, not quite 220,000, If we can do this, I'm sure you can do it too.
Thank you very much.
Thank you. Thank you, Mr. Toomey. We now have 2 proposals that are going to be presented by Bart Naylor, one related to written consent on behalf of Mr. Steiner and his own proposal related to stockholder value.
Mr. Naylor?
Thank you, Mr. Chairman. My name is Bart Naylor and I'm here to advance the proposal as provided in your proxy statement. I believe this is good corporate governance, but endorsed by leading corporate governance authorities and I urge the Board to reconsider its position and adopt it. Thank you.
We'll now accept question or comments on these. You need the second one too, sir.
Yes. Mr. Chairman, I am currently the financial policy advocate for public citizen where I'm roughly one of about 12 people in Washington that is on the opposite side of some of your I should say our advocates. Formerly, I was the Chief of Investigation for the U. S.
Senate Banking Committee at the time when we were trying to rationalize the financial services sector. Current trajectory of your implementation of the strategy, Bank of America is on target to make $0.36 a share, dollars 1.20 $0.30 at a price earnings multiple of something like $20 you're talking about a share price of still well below the $50 this company traded at for the financial crisis. You have said in response to my proposal to study the breakup that you would have in fact analyzed some of the potentials for what the company would be like if it did not have these sectors, these businesses in conjunction. And I would say that my proposal do have a grade that is administered to your company and that is the share price. And that share price is the 4th or a 5th of what it was before you put the major bank together.
You say that you are serving customers, but as you well know, J. D. Power ranked you last in the markets where you're the biggest. You say that it's necessary to be big because that's necessary to serve big customers. Well, you well know that when you engage in a large loan, it's in a syndicate.
You saw that when Heinz was sold to Berkshire Hathaway, it was not done with the help of a mega bank. It was helped with a boutique
firm.
So I think it's inaccurate. Now at the core of this resolution is the observation that you are literally too big to manage. You have more than 1,000 affiliates. You misstated your regulatory capital by $4,000,000,000 for several years. You've had hundreds of operating statements.
You engaged in fraud. I happen to be a pissed of failure that we invented euphemism, but I am charmed to see that you call that litigation expense. When Attorney General Holder testified before Senator Grassley, he confided that we cannot administer real penalties against banks because it would cause financial tsunamis, which unfortunately invites a new moral hazard in addition to too big to jail, it's too big to jail. That means the bankers who are well compensated understand that if they engage in fraud or reckless activity, they're actually not going to be punished. So Mr.
Chairman, I ask not specifically that the bank be broken up, so I think shareholders would be serviced by that, but that you engage in a rigorous study as some other banks have done to see what would happen and report that. As you know, there's a case example just in the last month where GE announced the spin off of GE Capital and the shareholders were rewarded by a 10% increase. I think the trajectory that you shareholders to support this. This boat will do relatively it will win far less than the majority, but I have to observe that among the largest shareholders are the other mega packs. Among the largest shareholders are firms that are conflicted by the fact that their vote is going to be seen in a few months when they report it.
And I think that if you
Thank you. We'll now accept questions or comments on the 7 proposals. Now please hold other questions for the general nature of the meeting to the end of the meeting. A few housekeeping questions here. You do not need to form a line to ask questions.
Simply raise your number card that's in your packet. Once I recognize you, you can move out the aisle and a team will be holding a microphone. Please then state your name and the proposal about which you want to speak. Please limit your mark to 2 minutes. Time is going to sound and remind you when the time is up.
With that, are there any questions or comments on the 7 items? Number 260.
Yes, sir. As you know, on repeat of the 2014 Annual Report, I contacted the Audit Committee of the Board of Directors to arrange for a meeting in advance of this meeting. As I was disturbed with the obvious miss of management in that report and outright distortion of the reporting and misleading information contained therein. I met last evening with Mrs. Allen and sad to say there was nothing forthcoming out of 4 pages of detail requested.
And as you know, the shareholders depend upon independent directors. And I would have to report that the Board has been derelict in their duty for many years stemming back to years of exchange, one of which I'll read briefly here. In response to my questions about compliance with Fannie Mae's guidelines, Ken Lewis said in 2,005 at the annual meeting and the committee has looked into every single issue and have looked at them in-depth and have what we feel that we are complying with all of the issues and would arise around Fannie Mae and Freddie Mac compliance. Now it's obvious since that day, the Motley Fuel of Full printed a article last week that said it has cost shareholders $91,000,000,000 in equity at this bank. And I for 1 would demand this information from the Board and I'd like to have their responses.
Thank you, Mr. Davis. I'm glad you had a chance to meet with the Chair of the Audit Committee yesterday. Number 309, if you could state which proposal you're speaking to and if please have your question on proposal. Thank you.
Your name and please.
Please verify, sir.
Your name and which proposal you're speaking to please?
I have a before you turn
it down, I have tried to get them clarified. If I want to speak on multiple ones, I then each time come up here to speak on each one. Yes.
Because we've got a chance for other people to speak.
Okay.
Well, I'm going to be speaking on all. My comment, can we start this at the beginning since I asked? I oppose any member of the Board of Directors. I do so because I do not believe that you are serving our best interest. When the price of the stock was $55 a share and the dividend was $2.50 you get up here and say how great we're doing when it went down to $3 is now what $14 and the dividend rate is $2.02 a pair or $0.03 a pair.
And you were an official at the original thing when Ken Lewis got up here and lied to us and the stock plummeted. It has not gone back up. I don't know how you can say we're doing good when the stock price is still paint down in the bottom and it's cost people dividend income and their assets cost me almost $1,500,000 So I do not vote for any member of this Board of Directors. And I specifically don't vote for you. I think you are part of the problem and it's time for you to retire.
Thank you for your comments. Next, 317, which proposal you're speaking on?
Proposal 1, I'm Mike Mayo. I own stock and also an analyst at Wall Street. I'm against the Board member of the governance committee. And I want to agree with you, Brian, with your comment. There are positives here, better credit, better capital, a stronger, more resilient balance sheet.
But there's 3 issues with target, scorecard and process. The target, there's no time frame for any financial target. There's no target if rates don't increase and there's no way to hold management accountable to specific financial targets. 2nd, with regard to the scorecard, last year there were some bad items, missed targets, dollars 4,000,000,000 accounting error, debt stress test issue and a 2% ROE. In fact, the ROE has not exceeded 5% for the last 5 years.
And there's no mention of that in the annual report or the proxy or even today. You mentioned the new BAC expense savings, but without a context of the revenue decline, But I appreciate you bringing that up today, but that's out of step with money center peers that use the efficiency rate. And third, the process, the CEO is promoted, but they ignored the bad news and it's not clear why the Board okays the promotion without checking with shareholders first. So again, this relates to governance committee. It's not clear that they're holding management sufficiently accountable given the past where some bad items were ignored.
In the future, it's not clear which metrics they're going to use to hold management accountable. The last thing I'd say about governance, I was hoping we get some questions and answers in this part of the meeting. Last week, Citigroup allowed questions and answers during this part of the meeting. And so I'll just the peers. I see the governance of Bank of America out of step with the money with the peers.
I see the governance of Bank of America out of step with the Money Center peers and I will come back for the other proposals. Thank you. Any other questions on the severance proposals? Number 259, please.
My comment is with regards to
the stock of proposal for
breaking up for the company. Thought it was proposal
8 that I guess We had one drop out, so it's number 8 in your product. Okay.
My comment is there are probably some time when
a
company because it's diverse and businesses are unrelated, it makes sense to break it up, but you laid out a lot of reasons why bank and if you break up almost any company, one thing that will happen every time, we're going have separate corporations, which means more overhead, more expense, and ultimately having that. I personally oppose
that. Thank you. Any other comments on the proposal? 316 here, sir.
Mr. Monahan and Board, I'm curious given the extreme weather in California and the current drought, how much that is impacting your business from a climate perspective? Have you done any financial analysis looking at water risk in the U. S. Going forward in a market where you do business?
Because obviously we're seeing greater water stress, not linearly and model it linearly. Thank you. We
did, in fact, we just discussed I guess the drought California impact as part of the because we did that. Other comments, 2 60 percent please. Please state which proposal you're speaking to and then Election
of the award. Richard Davitt. Last evening, my meeting with Ms. Allen, I have a question for her and specifically, Jan Alyssi, the Chief of Litigation attended that meeting and did at least 50% of the talking there. And I'd like to know who Ms.
Litsky was representing. And I'd like
to hear that from Mrs. Allen. It's his employee of the company. I mean, he's a lawyer that works for us.
Well, we're talking about corporate governance issues. And as you know, in the SEC settlement in the people of New York, they entered into the bank entered into stipulated judgment that calls for independent counsel to assure the transparency involved with issues like mischief of management. And I in advance of my meeting, I invited Mr. Cheek to attend that meeting. And why was he not there?
I think you asked to meet with Darren Allen as the Head of Audit Committee. Next comment. 309.
This is on item 2, just for the record, sir. I would not throw this simply because I don't have the ability, I wouldn't do it anyhow because it would be a waste of my time. So I think I should be able to hold it. Compensation, you claimed that the expenses have been lowered, But when they combined your office to both of them in contrast to the proposal and the vote of the shareholders not to do so without giving the shareholders at this point a chance to vote on that is wrong. Your compensation or any compensation for the executive between the $0.50 or $0.55 or $2.50 from what it is now.
None of you should be earning or getting any raises until you can make the stock back up to where or even close to where it is. And as the dividend rate goes from a paltry penny or 2 to back up to the $2 or some cents. Again, you've cost me a significant amount of income. I'm sure that there are people here who aren't here who lost sense of prices and assets because of the mismanagement that this company did and alive by Mr. Lewis and I believe you were employed at that time.
So that means that you must have approved them because you never spoke out against any of it. And again, I vote for any increase or any compensation to any member of the executive committee until with time the stock has gone up to a minimum of 50% of what it was before you all lied to us about the merger.
Thank you. Other comments or questions on any of the specifically on any of the proposals?
Not clear what the scorecard is for compensation. Again, the bad items weren't mentioned, the expense savings were mentioned without any mention of a revenue decline. The second issue is in the compensation section, the proxy where it says executives were paid based on 4,000,000 business referrals. Clearly, business referrals are great. It just seems out of context without also mentioning customer satisfaction and suitability.
And then the third thing is the performance stock units, the PSUs go in the money at a lowly 50 basis points when you identify your ROA target at 100 basis points. So again, I was hoping to have a give and take during this part of the session. Hopefully, I can during the general Q and A.
We'll get to that. You want to ask a question? Any other proposal questions?
309?
My first question is how long has this company that's been your independent public accounting firm been employed by the bank? And what is the name of that company?
What name is it's in the proxy, PricewaterhouseCoopers. Sorry, what? PricewaterhouseCoopers. Okay.
How long
have they been employed by this company to act?
How long have they been our auditor? Many years.
Anyone answer that question?
Many years.
Many years. So in other words, the people who keep claiming that this is doing great, great were all part of the process back in 2008 and 2009 when the price of the stock tanked from around the $55 share to $3 a share. They were all part of that. Don't you think it's time and I'd like you to respond to find someone who is truly independent and not someone who I was going to say flunky, but that may not be appropriate comment at this time, but who sits here and says, yes, everything is fine, everything is fine, everything is fine. And in fact, it isn't.
And I don't think they should be proved. I think you need to find someone who might be truly independent and not in your back pocket.
Well, let's see. I think you think about the approval rates by your fellow shareholders. You think about your approval rates by your fellow shareholders over the last several years and a little later we'll find out when we post election results, the approval rate this year and I think it's been extremely strong. Next comment. 2.60.
Richard Davitt.
We heard several times in this morning's presentation about we're putting this behind us to paraphrase a little bit. And you previously referred to it as the mortgage stuff behind us. And as you know, the vast majority of your mortgages go on a daily basis to one of the government sponsored enterprises. And that business model has been called by every credible If I understand the statement correctly, dollars 56,000,000,000 last year. And what has been done to repair that?
The fact that you are originating most of the mortgages today, are we to be consoled with that or shareholders to be consoled with that, That George Burrows, I believe said it best, all of the players in the GSE business model are hopelessly Board in all this? Watching the mischief of management several years ago Ken Lewis referred to it, we do it for the cash flow. Is that what's happening here? The cash flow in a mortgage, the fatally flawed mortgage business?
That's my question. Thank you for your comment on proposal. 3.17?
Proposal 8 requiring an analysis of the breakup. And first, I just want to back up. Brian, you inherited a mess when you became CEO. The balance sheet was weak, recovering from the handset prices. You've done a lot of good in strengthening and creating a more resilient franchise.
But as it relates to this proposal, some of the issues pre date you. And just to keep the context great, this company has not generated returns above its cost of capital in about 1995. That's when Hugh McCall was buying a bank south, a Florida Nations Bank. And also since it's not clear where what the financial targets are for this firm, since there's no specific time frame for any financial target. Looking ahead and I appreciate the 1% ROA, but we still don't have a time frame when you're committing to that and ideally have compensation linked to that.
But given all these considerations, my thought is simply why not simply include an analysis of the trade off of your business model. And that's all that this proposal number 8 requires. And I'm holding in my hand a couple of slides from JPMorgan's Investor Day in February and they give some slides about the trade off of their business model. So once again, it seems as though Bank of America is a little bit out of step with regards to the transparency in the process and that's the main reason why I support Proposal 8. Thank you.
Any other comments on the proposal? Just why don't we conclude the proposal Q and A and then we'll get broader Q and A in a few minutes. I now declare the polls open. If you have a ballot, please raise your hand. We'll collect them.
Okay, fair enough. Number 309, if you have your ballots ready, if anybody voted please give the ballot to the people collecting so we can
Okay. May I ask a question? Has there been any comment on number 4? I don't think so. I live in an area where the dust is so great it permeates the houses.
When it rains the mud chills goes into the creek and into the Potomac and into the bay. Anything that would help with the environment, I would support. Anything you do against the environment, I would condemn. We are raising a generation of people who will not be able to breathe in the air. They have difficulty now.
You get people who try to go out and go jogging or walking in our neighborhood and they have to wear a mask because the dense, the dust and the pollution coming out. And you seem to think that doing anything to protect climate is counterproductive. You need to support any effort to protect the environment. You have an obligation to do it not only to past generations but the future generations and the generations who will live in this country in 10, 20, 30, 40 years. And that point you probably won't have to worry about me because it's or hopefully you.
So anything that has to do with climate change, you have an obligation to be at forefront in it and not dragging your feet.
Well, I go to visit my father who's 30 years plus my age. I hope I'm alive at his age. But we obviously take very serious environmental matters. We talked about the program for $70,000,000,000 of work earlier. So I think we can touch on that later on.
But the polls are now closed and this concludes the official business of today's meeting.
Preliminary results for
the voting are available. Ross, could you please report the preliminary results?
Our Inspector of Election reports the following preliminary results. All of the management proposals received the required majority support and been approved. For these proposals, all 13 director nominees have been duly elected to the Board of Directors. The advisory vote on executive compensation has been approved with approximately 94% of votes cast in favor. The appointment of PricewaterhouseCoopers has been ratified and the amendment and restatement of the Bank of America Corporation 2000 and 3 key associate stock plan has been approved.
None of the stockholder proposals received the required majority support. Final voting results will be reported in a Form 8 ks filing with the Securities and Exchange Commission within 4 days of today's meeting.
With the announcement of preliminary voting results, there's no official business done before the meeting. So the meeting is adjourned and we're going to move to general Q and A session. Now that we completed the official meeting, please remember the guidelines we discussed at the beginning of the meeting are still in effect. Raise your numbers card, I'll recognize you, move the aisle, you can ask your question and we'll have the Bank of America member will be holding the microphone. You'll have 2 minutes and the time will go off.
And for the benefit of the other shareholders, let's remind you that if you have a personal financial matter discussed, we're happy to discuss it whether you have teammates here who will take care of that immediately for you. So let's start with any questions. 3,
10. Good morning. My name is Amanda Starbuck. I'm with RAN, the Rain Forest Action Network. And I came out here from my home state in California, where we are enduring our 4th consecutive year of drought.
This is just one example of extreme weather and climate change that is impacting communities across the nation around the world. Just this week, the International Energy Agency reported that we have only 5 years to take serious action if we are to avoid runaway climate change. It's the challenge of our generation to transition from a fossil fuel based economy to clean renewable energy. And in this context, I would like to thank the bank for this week announcing a significant shift to your coal mining policy. This policy represents a sea change, a commitment to reduce exposure to coal mining across the board.
And it is a model that we would like to see other financial institutions follow. I would like to thank the bank's executive team, environment team and members of the board for demonstrating leadership
on the issue of coal mining finance.
Please would you say a few words about the policy and what it means for the bank's environmental commitment?
Sure. Thank you for your comments. As a reference, we've continued to refine our coal policy. I'm going to have our teammates Andrew Fluffer talk about that. But to refresh what we talked about earlier, we have a $70,000,000,000 environmental program.
If you're watching the screens earlier, we created a $1,000,000,000 catalytic environmental fund. We work with various organizations around the world to continue to address the issues of the transition from fossil fuels to other means of power and electricity. And that's what we've been asked. So the $70,000,000,000 program allows us to finance alternative fuels, allows us to help finance buildings, lead buildings and make those happen. All our branches will be LEED Platinum certified as we rebuild them.
Our headquarters in for the Merrill businesses in New York is fleet platform certified and we continue to drive it. So Andrew wants to talk about the full policy.
Sure.
Thanks, Bren. Thanks for giving me a few moments to talk about how the environment fits into our broad corporate social responsibility efforts. As Brian mentioned, it's a key pillar of our CSR program at the company. As you know, the world is in transition to a lower carbon economy and we're playing an important role in helping to accelerate the transition. Our financial commitment, as Brian mentioned, is one of the largest in the industry.
We've made a $70,000,000,000 commitment and over the past 7 years we've raised or invested more than $39,000,000,000 for this multi year goal. Last year, we financed 8% of all solar or wind installations in the United States. We're also creating innovative new vehicles to speed progress. We issued the first ever green bond in late 2013, a $500,000,000 green bond to connect investors with projects to create a positive environmental impact. And we were the number one advisor to Green Bond issuers in 2014.
Our new catalytic finance initiative is designed to stimulate at least $10,000,000,000 of new investment into high impact clean energy projects. As Brian mentioned, we're also reducing the environmental impact of our own operations. In just 4 years, we've lowered our greenhouse gas emissions by 26% well beyond the UN IPCC recommendation. Working with partners like the UN Sustainable Energy For All Initiative and Stanford University's Global Climate Energy Project, we committed more than $15,000,000 in philanthropy and environmental philanthropy in 2014. With regard to coal, over the past several years, we have been gradually and consistently reducing our credit exposure to companies focused on coal mining.
Our new policy, which was posted on our website reflects our decision to continue to reduce our credit exposure over time to the coal mining sector globally. Today, our renewable energy portfolio is more than 3 times as large as our coal extraction portfolio. The transition from a high carbon to low carbon energy will the economy will continue. The Bank of America will continue to do our part to accelerate this transition for our customers, clients and community.
Thank you, Andrew. Other questions? Let's go to 3.19 here. Tom, just wait for the microphone if you would so we could all get a chance to hear you. Thanks.
I'm Tom Lockett. I have been the shareholder of this corporation for more than 40 years, beginning with our trust company. I don't understand a great deal of what you said, but I do understand that the shareholder in the queue of this company is basically or possibly 2 quarters in 2014. Wells Fargo paid $1.40 a check and they plan to pay $1.50 in 2015, that's 7.5 times the dividend that's being paid by Bank of America. This is not fair to the Bank of America shareholders who sit in the pew.
Your compensation of $1,500,000 is not objectionable to me. But the idea of a $11,500,000 stock bonus to you is, foreign. I don't understand it. Traditionally, a bonus is given on the basis of performance and return to the owner. The owners are not getting anything for their investment in you or in the company.
I don't think the you or Montag or Thompson, Donnell, Lynch or Baldwin are entitled to any bonus over and above your compensation. And until the company pays a respectable return
to the
shareholders, the bonus should be eliminated.
Thank you for your comments, sir. We continue to push the dividend. Last year we got approval to raise it from penny to nickel, the first time since back into the crisis, and we'll continue to pursue that. Last year, we earned about a little over $4,500,000,000 or so after tax and we paid out a significant amount of that. The dividends were $1,000,000,000 plus and the capital buyback was about almost $4,000,000,000 of that.
And so we'll continue to push capital back here. That's our goal too. My whole network is in this company and I get paid in stock where my interest lies with you. Next question, 306 please.
I want to talk about leadership. And what I want to say, I'm Bruce Marks, the CEO of NACDA. And when I talk about leadership, I want to really commend Brian and his team Andrew Kloepfler and Terry Laughlin and Antonukin and Ron Sturtzenegger and others who have really set the leadership. Let's talk about the specifics. Bank of America and Brian you've done something that's never been done in the mortgage industry before.
You are out there eliminating predatory lending by doing 2 major initiatives. 1 is the wealth builder model of a 15 year mortgage making that affordable for working people. So within 7 years people will have close to 50% equity in their home. That good lending that makes sense that's never been done before. In the city of Detroit as was said in the Detroit Free Press, it says mortgage program is key to Detroit's future.
You have agreed and no one's ever done this before to do 150% loan to value for working people in the city of Detroit. And that makes sense. Working people will be able to through your program and your mortgage with NACCA have a mortgage payment of less than $400 a month and that's much less than their rent. That's setting the standard and that's never been done before. And that's true leadership and we really appreciate that and we want to stand up and we want to give you something to recognize that we've never done before.
If I can come forward for a second, come up here
and get it from you.
So I got to say, so we've never done it. So we are giving Brian the back of the curve.
So when I
come back, he said predatory letters beware. So
the 2 Thank you, Bruce. Thank you. Other comments? 313.
Good morning, Mr. Chairman. I'm happy to be here. My name is Denise Scott. I'm the Executive Vice President for the Local Initiative Support Corporation, also known as LIFT.
We are the largest community development financial intermediary in the country. For the past 20 years, we've partnered with Bank of America to finance affordable housing, and schools, community space and needed facilities throughout very, needy communities across the country. Most recently, Bank of America and Lyft partnered with the City of Detroit on an innovative program assisting homeowners in the city to repair their homes, improve neighborhood stability and in markets where families are in desperate need of home repair. Through the bank's catalytic CDFI we have the flexibility to provide 0% loans to homeowners to make these repairs. That basically means that the homeowner will be paying back just what they borrow.
This is truly a best practice in innovation. Hundreds of families will helped by this partnership with Via Bay. So I stand here today and join my colleagues before me and say that we're really proud to be a partner with Via Bay and proud to have worked with your team with Andrew Klepler and the team. Thank you.
Thank you. Other questions? 314.
Thank you, Mr. Chairman. My name is Julian Martinez. I represent We would like to take this opportunity to thank Bank of America for the commitment to the Latino community. From your diverse Board of Directors to your financial leadership programs in Navarro, Bank of America has proven yourselves to be leading corporate America in diversity, especially in serving the Latino community.
Your selection of Monica Lozano to serve on your Board of Directors is especially significant. Not only does she have outstanding professional qualifications, but she has an intimate relationship with the Latino community. We appreciate your participation in the Hispanic Association on Corporate Responsibility's Corporate Inclusion Index. Bank of America has shown a positive increase in its ratings from 40 in 2009 to 75 in 2014. As you know, the Hispanic population in the United States has increased to 54,000,000 individuals.
This means companies must harness the power of both Hispanic consumer and Hispanic employee as a means of sustaining their competitive edge in an ever changing economy. The continued underrepresentation of Hispanics in key positions throughout Corporate America means the companies are not leveraging its talent to its fullest potential. Corporate America needs to understand the work that must be done to increase the pipeline of Hispanics into the upper ranks of Corporate America and to further develop the expanding entrepreneur and middle class. It is truly a pleasure to see Bank of America leading the way.
Thank you. Thank you for your comments and we recognize the need and continue to work on it. How about 194?
Good morning, Mr. Moynihan and Natalie Cook. I attended this meeting last year when I addressed you. One of my issues was the ones that dipped in, and I applaud the bank for increasing that supply chain. And I look forward to the continued growth.
The second issue was the bank sending our jobs offshore, which you denied, but it's happening and it's called Project BA. For your denial of this leads me to believe that you might be out of touch with the rank of plan. This year, I'd like to speak for all the women that work at Bank of America and address the gender gap. I don't really have a specific question, but I challenge you as the CEO of Bank of America to take an honest look at the gender gap of your company and if women are only paid $0.78 for every dollar a man has paid. So I challenge you to take a look and see what's happening with your company and exactly what the gender gap with equality is here.
Take the next step forward by closing that gap. Mr. Moynihan, please take this challenge.
Amanda, I remember you last year. Just to touch on your first point, we brought 4,500 consumer jobs that other companies had off shore onshore in the last 12 months and we continue to do that. So the second thing I think is on the question about the gender gap and when we pay, not only we take the count, we've taken it every day. And I applaud you for raising it again in this setting and hopefully you raise it over and over and again in other settings. If you look at our Board of Directors, we have all the Directors stand.
I think you'll see that we have more of the higher percentages of women board members of any company. If you look at my management team, I'll ask them to see. And believe me, these talented women that work for me would not let me not pay them fairly or pay our teammates. So I'm going to ask Andrea Smith to run our team to give you a little bit more detail. But before I do that, I'm going to give you 3 broad ways that we think about it.
1 is what we do as a company, obviously, and how we employ people. The second is we have our impact on Board as I showed you, our senior executives. And the third is doing programs within our diversity inclusion efforts in the company, which are critical to our success and our lead for women network, which is an informal network, which team runs itself to 25,000 people, 39 chapters around the world. And I'll give you one specific other thing we do with the benefit and if you have seen some of the slides, we do a program called the Global Ambassador Program with us in partnership with a group called Vital Voices. Global Ambassadors program effectively takes our leadership development techniques around the world, which we've done in Haiti, which I think we've done in India, we've done in a lot of sales development leaders across time.
There's nothing more critical than to make sure everyone feels that at hand. So, Andrea, do you want to hit a couple of the others?
Thanks, Brian. And just a couple of other points. Over 50% of our company is made up of women. And we've really focused on hiring. Brian has mentioned some of the internal developments that we do.
But in this year alone, over 33% of the people we've hired in senior positions have been. So the concerted effort that we have, we've got these enterprise resource groups in every line of business, over close to 5,000. So it's not just hiring, but it's also the development and the promotions that we're doing.
Thank you. Next question. Who else has a question? We'll go to 38. I think that's a new trying to hit the new voices.
Thank you very much. Armen Cohen, I'm the Executive Director of Clean Air Task Force, which is an environmental organization with offices in the U. S. And China, which we're focused on driving the world's energy system to a 0 carbon level, which is what the scientists think we need to do to prevent climate change. I want to recognize Bank of America for its whole policy as recently announced.
It's a huge step forward as my colleagues at the Rainforest Active Network indicated. It's going to change the conversation. We greatly appreciate that, particularly the focus on the worst practices of the global industry and specifically mountaintop removal. At the same time, we're pleased to be partnering with the Bank of America on looking at solutions beyond renewables as well. You're doing great work in developing the renewable energy economy, But it's also true that fossil fuels are going to be with us for a very long time, 85% of the world's energy system is powered by fossil.
So I also commend you for mentioning your policy of work on carbon capture and storage, which if we don't have that technology commercialized, we can pretty much forget most of our climate targets. You're also supporting work by my organization and others to look at a variety of low carbon energies, including advanced nuclear energy. It might be safer, cheaper and less prone to weaponization. It's clear that it completely decarbonized the world's economy, it's going to take everything we have. And the research that you've been supporting, some of which is not always popular, is huge and it's already painful conversation on the important topic.
Thank you very much. 3.17.
Well, first, I want to say thank you for the chance to ask you questions each quarter with the quarterly earnings. But just to make it crystal clear, the reason I'm asking questions today is let's get answers from you, but hopefully to hear from some other board members. I was at Bank of New York's annual meeting 2 weeks ago, you had multiple board members unlimited time. Last week, I was at Citigroup's annual meeting, multiple board members spoke unlimited time. So with that as a prelude, I'm hoping to get an answer from Thomas May, Head of the Governance Committee per my question before just to remind you at 3 points.
Target, which financial metrics will you use to hold management accountable? 2nd, the scorecard, why allow the company to avoid the bad items, 4,000,000,000 dollars accounting misstatement and it targets 2% ROE and exclude those in the AIN report and the proxy. And 3, the process, why did they promote you, Brian, from CEO to also Chairman without checking with shareholders first? Thank you. You.
Let me just hit the target because it's all in a proxy statement. Mike's in and I'm sure you've read it that targets we have are set based on a to achieve the stock that's awarded in the prior year which are set based on the future performance of the company, but therefore the stock is earning that year. And there's no exception, no deductions. And if you look at the disclosure, the targets we're awarded for the 2012 year when our stock was up 100%. In fact, we'll pay out at a very low rate 3 years later because of litigation expense and the thing that's the adjustment or for 13, 14 and 15 because we have to earn $40,000,000,000 or something that's not in your particular model at least Mike.
So it's a self correcting thing. And so it takes care of itself and we will not receive those awards. Let me have Jack Bovin, who is a lead and head director speak to the question of the Board's decision on the Chairman and CEO. Jack?
This process started with the process that led ultimately to the combining of the Chairman's job with the CEO's job. It started back the summer of last year and went into the fall, as you've read in the proxy, the governance committee spent a lot of time working on this, how this should evolve, what should happen with it. And I will tell you personally having been on this Board for 3 years, I was not here when the original shareholder vote was taken to split the CEO and the Chairman's job. But as I thought through this process, when we had a fulsome discussion at the Board level about what we should do, we had to for sure since Chad Holliday was leaving his Chairman's job, it was for sure that we had to make a decision about the Chairman or Lead Independent Director whatever he might entitle the independent director who would step into those queues. And I quite frankly, as I looked at that situation thought, well, when that vote was taken there was a different CEO and it was a badly broken company.
It was no longer a badly broken company. We had a high performing CEO and I felt personally that he deserved to have that combination of
Title Chairman and
CEO. I still feel that today. I spent a lot of the last 2 or 3 weeks on the telephone with a lot of our shareholders, our larger shareholders who expressed not that they did not like or most of them that they did not like the situation in which Brian was going to be Chairman and CEO, but quite frankly didn't like the process. And it became apparent to me through those conversations that they were right. They deserve the right, the shareholders, to vote yes or no on the ratification of the amendment that changed that whole process.
Brian called me. I can't remember if it was Friday or Saturday. He'd had deep discussions with his senior management team and others about this whole issue. And it was his suggestion to me, which I wholeheartedly endorse that we in fact put this proposition to the shareholders in as quick a time as we could possibly get the information together make the arrangements to do so. And so you saw the letter signed by both me and by Brian that promised that we would do that before next shareholders meeting next year.
And it is my feeling and I think the feeling that most of the independent directors or all of the independent directors that we should do there as soon as feasibly possible. Thanks, Jeff.
Other questions or comments? 225.
Good morning. My name is Ben and I'm here with Rainforest Action Network or RAM. At past shareholder meetings, my comments have urged Bank of America to cut its financing for the coal industry. Both coal mining and coal fired power generation have devastating impacts on the health of communities in the U. S.
And around the world. And the bottom line for the climate is that continued reliance on coal and other fossil fuels will lock in a future of extreme climate change. Today, the need to transition away from coal remains urgent, and I want to acknowledge the progress your institution has made in addressing its financing exposure to coal mining. As Mr. Plessler mentioned in his comments, this week Bank of America strengthened its policy on coal by committing to reduce its financing exposure to exposure to the global coal mining industry.
This commitment also pledges to cut financing for companies that engage in the devastating practice of mountaintop removal coal mining. This policy change is significant. As we note in our annual coal finance report card published this week, Bank of America's environmental rating for coal mining finance is now the highest of any of its global peers. However, the transition to low carbon sources of energy will require continued leadership by your bank. As the shareholder proposal on climate risk emphasizes, it will be critical for Bank of America to disclose and reduce the carbon footprint of its overall financing portfolio.
And your institution's continued financing for coal fired electric power production remains an ongoing climate and public health concern. That said, we greatly appreciate the time and hard work of your environmental and executive team in taking this significant step to address your bank financing exposure to coal mining? Thank you. Thank you.
Let's go to 309.
I don't want you to think, but I'm about to compliment you. So you want to get a chair anyway? Yes.
It's maybe I can only live 30 more years. So I might as well get a compliment between here and there. What the hell? Well, I'll If you give me exact date,
I can make that decision. I'll do it afterwards at the last part. The woman asked about compensation for women to say you have 1,000 women or all these people here. The issue is as far as she's concerned and far as I'm concerned is when you hire 2 people, one is a man, one is a woman, they have the same qualifications, do they get the same salary and benefit? Historically in most companies that doesn't happen.
So when you do this, you need to make sure you also need to go back and check people who have the same qualifications now and are employed here, are they getting the same compensation? I suspect that you'll be shocked won't be shocked to find out that it doesn't
happen. It doesn't happen. All
right. No problem.
We check it continuously. We check it as we upside, downside, higher jobs. Every job is scoped out for the market of all the senior levels and the other jobs are standard compensation for us no matter who builds. We do it already.
Secondly, I stopped using the Bank of America near me because it is not handicap accessible. I did this years ago. It's relatively simple to fix. No one is showing any interest in it. I don't see why someone using that bank with handicap parking has to walk outside in the snow, pouring rain, the 90 degree temperature from a distance of here all the way around there to get into the building.
It can be fixed easily, you don't do it. That's one of the reasons. That's the fact you guys screwed my mother. The compliment is that, wow, you're going to vote next year and whether or not you're going to get the book to see combined. It should have been done, it was done behind the door and it should not have been done.
Does that mean that you are only still only one officer, You're wearing one cap. Is that correct as of now?
I'm the Chairman and CEO of the company. And we're good. I'm the Chairman and CEO of the company. And what Jack described is we'll go to ratify that decision by the Board of Directors not later in the next annual meeting. Thank you for your comments.
Next, 178.
I'll
just take a minute and you can pass it along.
Good morning. Dalton, you can't isn't Congress. You can't speed your time to the great. All comes back to the House. We allocated, okay.
Just remember that.
Mike Coblett from Lake Lorne, North Carolina. How are you? Owned 5,000 shares first before the crash, been a rough ride. But I'm right here, right now. So my comment and question is about dividends.
All your competitors are paying higher rates of return on dividends than you are. It appears if the company is focusing on stock buyback to drive share price. In my opinion, the focus maybe should shift more toward dividend that drives share price and with more money in
the pockets
of the share price.
The discussion about whether to have dividends or share buybacks is one that we get various points of view from various investors, large and small. We first needed to get the dividend off a penny. We moved it to nickel and then we'll continue to look at the purchase the portion that we pay in dividends relative to share buyback. And that will be based in part on the valuation of stock at 1.2x or 1.3x. If we should combine the stock, it's better for shareholders, increases the investment in the company for the rest of the people.
But other times that might be a different answer. So we look at it all the time and the balance between this. And by the way, the rules of which bank holder covers are regulated as to what they could do as a percentage of their earnings and dividends and stock buybacks as part of the process. So believe me, you're interested in the interest in seeing this through the Board and mine are all mine. The idea is to get the capital back to the $8,000,000,000 we've done across the last 5 years even as we've taken a lot of things into account is a goal because it's one of the 4 ways that we're going to generate value for it.
Either way, it comes to the pure capital or it's going to be left on the balance sheet pending the chance to send it out to you. That's then your tangible value for us. So we're trying to drive all pretty fitting for it and we'll get to do it. Other questions? 335 is a new one I think.
I'm Tommy Norman. I'm Chairman of Shuttle Bridge Home. Thanks for having us here today. About three and a half years ago, we got a phone call from a friend that was in the Pentagon and he said, Tommy, would you and your wife be willing to help the family? This is a young Marine going through an amputation.
It's not going well. They want to move to Charlotte. We started doing that. Today, we are somewhere over 1700 families that we've worked with. Bank of America was one of our first call.
When you see Hugh McCall, he said, I need you to go see Charles Bowman. Do you know Bowman? I said, no, but I expect I can get to him. He said, if you can, I will?
Mr. McCall is actually that efficient.
This is how efficient it was. Today, you all have hired since that time some 7,000 veterans. Today, you committed some $14,000,000 of veterans efforts. Today, you have some 2,000,000 veterans accounts with the bank. Today, you've donated some 2,000 houses to Veterans.
All this has taken place over the past three and a half years. It doesn't happen without leadership, commitment, passion and all the things that make a difference in these young people's lives. We have sent nearly 3,000,000 I mean 3,000,000 young men and women since 9eleven the war. They're all starting to come home now, about 1,000 are coming home a day, about 100 of those 1,000 find jobs within 6 months. We got a long way to go.
50 have been unbelievably supportive, probably the leaders in the country. Keep it up. We're indelibly, really,
really grateful to you. Thank you. Thank you. As I said earlier, and thank you for your nice comments and I'm glad that Mr. McCall was able to get you to Charles a few years ago.
We started on this a number of years ago with a simple statistic you laid out is how many soldiers are coming back from war and what we owe them as a country. And we had 2 things. We had houses that were empty and we had veterans that needed and we paired it up. And if you watch that take place in the market that some of us have the privilege to go see and see it happen a couple of years ago. At the football game here, we were able to give away a house and you see reaction in the family space in that case was at the halftime at a game which made it a little bit more public.
But if you see the reaction in their face whether it's private or public, the recognition of what our teammates do for these families is tremendous. And I think it's been a great thing for us, but most importantly, it's been great for our teammates to see how much good they can do. Thank you for your time. 3.19. $4,000,000,000
stock buyback, but the Fed does not approve that. Has the Fed approved the $4,000,000,000 buyback last year? And if so, how much of that buyback has been accomplished?
The Fed last year we got approved for $4,000,000,000 buyback and the increase of the dividend from penny to nickel. We started in our buyback program. We found a mistake in our capital calculations. We took it to the Fed. We stopped the buyback.
So I think we ended up buying $2,000,000,000 and change. And then this year the approval conditional approval for the amount was to keep the nickel dividend and 8 $100,000,000 a quarter of stock buybacks. So we you go for this every year for this year was 5 quarters, typically 1 year ahead and we'll continue to
We did $2,000,000,000 last year.
So we had to shut down until we got those resubmission and the approval.
Well, how much was actually bought back in 2014?
And how about this year? This year, we started we got our approval in March and we've been buying since then and we can buy up $800,000,000 a quarter and you should assume that we're busy at work doing. So what's the total? Well, it'd be 3 quarters times $800,000,000 or $2,400,000,000 for 2015 and approval goes through the Q2 of next year. So there'd be $800,000,000 per quarter for 2 quarters in 2016
Good morning. My name is Brian Prins, I'm an investor. I admire the respect to challenge you face in keeping all these different stakeholders happy. It seems like that's a tough job. My question I'm just a regular investor and my question is about of the things that Bank of America can control, what are the biggest risks that you think that the company faces?
What are you doing to manage those risks? And then furthermore at that are there any competitors that you admire and respect that you think are doing a good job at managing these risks? Thanks.
I respect all our competitors because if they have one client we can get that's what we're up to do. Let me talk about the risk. When you look around the world, you can come up with a risk that could affect the financial services system, Greece,
Russia,
anything you can read about in the paper. So we assess all those, the drought in California we talked about yesterday. I'll finish up, sir. And just so we look at all the risks and you can't focus on anyone. But the largest risk any financial services company faces is the core risk of an economy, right?
If the economy doesn't grow, we transmit the economy from our customers, the economy to our customers. So they have more money, we have more deposits If they needed to borrow more to put up a plant to buy these equipment, we do that. If they have access to capital markets to buy a company, we can do that. It really is driven by the economy. And one of the things that inherent in your earnings stream of bank is the economy is going to drive it.
It's going to provide a framework of which you're working against. And secondly, the interest rate environment reflects the economy and therefore reflects how you do it. In this period of low interest rate is one of the most difficult for banking because frankly we have $500,000,000,000 of non interest bearing deposits that hit a floor as rates came down and that's where our margin and that's why we've
been able to hold it on a core basis 2 20 ish basis and been fighting to hold
it there. But as rates rise we better. But the core issue is economy, the economy in the United States, the economy in China, because we have some exposure in China, the economy in Brazil. And so we manage the economy, that's the number one risk. And so when you think about what's been slower to come back the U.
S. Economy and as it picks up steam and rates rise, we will earn more money, not because anything else other than some of the fundamentals have been hurting us will go out of the system. But more importantly, it isn't the interest rate environment, the fact that rates are rising because of a growing economy, there's a lot more opportunity for us. And that's what we really feel. Now what have we done to position ourselves?
And this is why it's critical to understand some of the stuff I was mentioning earlier. If you look at our stress test results, the charge offs expected by the stress test results are about 50% to 60% of the rates that we experienced in the last crisis in a scenario with the Steven last crisis. How do we do that? By how we position the business, what credit quality underwriting and things like that. That's how we actually manage risk, have a diversified set of businesses, manage the risk within those businesses as well, manage the client selection well and not let anything damage the company.
So you handle the economic risk, we don't control the economy, so we'll be resistant on what happens. By actually being diversified enough and structurally sound enough in your credit underwriting, that's a tough time, you'll do better than we did last time. We won't have to dilute the shares and that's effectively different. We have 11,000,000,000 plus shares in our share calculation. And a lot of time periods people are referencing, we had 4 0.5.
And so we got to get those shares back to stock purchase and other things. But on the other hand, what we can't do is ever issue shares again to grow this
Elkind with the UC Berkeley School of Law at our Center For Law, Energy and the Environment. Over the past 6 years with Bank of America's support, we've been working with clean technology leaders, business leaders from California and outside of the state, who are reducing greenhouse gas emissions through the business activities. So everyone from homebuilders and walkable transit oriented neighborhoods, farmers doing efficiency projects, rooftop solar installers. So there's 3 technology areas that are going to be critical to meeting our long term greenhouse gas emission reductions. And I would encourage I applaud the bank with investments and encourage them to continue the financing and other financial institutions as well.
So these three areas include number 1, energy efficiency. So not just local contractors who are going in to make buildings more efficient, saving the owners money, but also network appliances that can to renewable energy investments that's solar, wind and geothermal where available. And then the other big one is energy storage, including battery technologies, because a lot of that renewable energy is going to be intermittent. Windows doesn't always flow, sun isn't always shining at night. So we need to store that surplus energy and dispatch it when we need it.
That's going to be critical to reducing the carbon emissions and as Andrew Plepler said transition to that low carbon economy. There's also batteries not just for that kind of storage but for electric vehicles, which reduces our petroleum dependence and also provides a better drive if anyone said they had a chance to drive electric vehicles superior to internal combustion. I'm not making money on that, but it's true. So those are 3 critical investment areas and I just want to applaud the bank for their support, encourage more financial institutions like yours to continue in those investments. And hopefully with that kind of
comment. Other questions? Let's try 259 someone.
Brent Edwards, Investor. Hi, at this time for the shareholders' meeting, congrats on improving the operations again this back at least to this point. And I also want to congratulate you on from running a small business, you've got to have people that are very good at what they do in order to make the CEO or the person making the decision. So congratulations to everyone. My comment hopefully the stock price won't go a lot lower.
So I very much applaud the capital returns in being stock buyback. Even this year, we purchased 4,000,000,000 worth of 250,000,000 shares and the compensation for the retirement plan for the employees, that's going to take up another 100 and $5,000,000 out of
the year, which was
so
I thought that part of it. My question is about operations. You mentioned revenue of course is
a
stagnant fast because of all the many businesses and low interest rate environment. Eliminated. And that happened last year. You mentioned there was in the Q1 that was 6% less expenses in the prior year. I was wondering if you had a goal on that.
And also the consumer real estate services, the mortgage business, even if you eliminate the litigation expenses of 8,000,000,000 dollars it's still lost money. So can you talk about where you expect that to be set to go? And also what's your question? When do you think it will be possible? Thanks.
Sure. If you go look, we continue to work the efficiency ratio in the company as our cost of our revenue is still too high. And even pro form a basis taking out the charges, I think we're in the 70 range if we got to get it down and we'll continue to work on that. So that's a thin project. That's the continuation of new VAC rollover of getting the effect of that.
We finished that up in the latter part last year and then you get a full year's benefit and then you working on the new ideas coming in and it is many things. So an example, we've the high point of about 125,000,000 square feet real estate occupied, we're down in probably $85,000,000 $90,000,000 $90,000,000 now. We'll continue to drive that down by efficiency of the space we have continued changes. So we have we still have work to do ahead of us. So don't think that because we completed a new VAC and got the $8,000,000,000 out that we aren't continuing.
You put to another question, which is actually one of the critical things that we focus on, which is our mortgage servicing business, which is what see in LAS, which is both the difficult side of the business and working homeowners stay in their homes for modifications and other programs. But it's also the good side. And right now that still loses money on an offering pay. And we are not satisfied with that. We have to remember that business went from about 15,000 people, 10,000 people up to 58,000 people and is now down below 20,000 and kind of working with that.
That's been 3, 4 years now. Think about the size and change in scope. So once we've gotten the things settled down and got behind us a lot of the work, we had a 1,000,000 plus delinquent loans a few years ago when we were stood here. Now we have 150,000 where you had enough of it done that you could actually look forward. So we look forward to driving that down.
And my colleague Terry Laughlin here and his teammates get the answer from me every week as to why it's not coming getting in line faster, but you're exactly right. So we've got to get that back to profitability at some point and mortgage servicing will be fine, will be much smaller. So there's no stopping. Then we think about as long term, the issue is keeping expense revenue equation online. So we keep bringing it down a little bit more, but the reality is as revenues rise, we have to be able to do things, continue to keep the expense as a couple of 100 basis points different than the revenue, below the revenue And also in that continuing to invest $3,000,000,000 we invest in new products and technology initiatives a year, continuing to invest in our cybersecurity, continuing to invest in our product capabilities, continuing to invest in the upgrade of our real estate and branches and things like that.
But most importantly, continue to invest in sales. So if you look at us during the time where we have gone from about 300,000 teammates down to 220, we have more salespeople today in the broadest context. People cover clients whether it's an all different business or different names than we had when we started. And that change is critical to build the growth engine we want going forward. So that's the science and I thank you for recognizing my management team who does all this hard work.
That's the science and discipline we have to have because in the end of day, if you want to give me an interest rate environment that's normalized relative to 30 year average America, I'd take it tomorrow morning. The economists don't predict that a few more years. So we got a hard work at this. 309.
For the record, I did a little calculation, had to go out and call in order to use my calculator to check. The approximate price of the stock now versus what it is is down 75%. It was down probably 98% when it crashed. So you could say it's come back up, but it's not even close to where it is. When you buy back stuff you're buying it back at a fair discount rather than what the price was before it crashed.
The dividend rate is less than 2% of what it was before the crash before you all lied to us about it and it's not saying, number 2. Number 3, if the proposals that combine the 2 has to go before the shareholders then you should not have both those hats or receiving the salary of both of those at this time. And I'm going to ask that you withhold doing that until the shareholders have had a chance to vote on it. I think the Board of Directors would be remiss if they did not recommend that to you behind closed doors at some point this noon or wherever to do that. And at this point, since my goal was to try to be out of here by noon, since I have at least
a 6 to 7 hour drive.
Thank you and good to see you again. 289.
My name is Robert Henry, and I'm from the Greensboro area. I worked for Bank of America for 48 years. I just retired in March 2015, started under Tom Stewart and up to now. My question is,
I visited after I retired,
I visited some of the branches and I went in one of our business branches. They had 1 pillar on the inside, 1 pillar on the drive in and the line was out of the door. And I asked the personal source, what's happening? They said they're cutting back. I went to another branch, same thing.
Is that what we're doing now? We're going to run all our customers away, send them over to the credit unions? That's me. Look, it's what's happening. Thank Sir,
your thank you first for working for our team for 48 years. And I had the pleasure when I first came to you to get to spend some time with Mr. Stores before he passed away and it was a privilege. If you think about the challenge in running 5,000 to 4,800 places, it's something we have to deal with every day because the nature of the business is shifting dramatically. And so Dongguin and Dina as an agent, his teammates have to make the decision every day.
And as they listen to the customers, they watch lines, we measure them in every branch at all times. We can see if we're going too fast or too slow and we continue to address that. The basic principle is we're trying to make sure that we stay with the clients who have changed their behavior dramatically. We didn't have mobile customers 10 years ago. We have 17,000,000 of them now.
They couldn't deposit a check for the summer of 2012. Now 13% of all the checks deposited at Bank of America by consumers, people take a check out of them. We had ATMs for 30 plus years, whatever it is, because you couldn't get a receipt back when you deposit there until 8, 10 years ago. When we did that, we now have more deposits made to ATMs. And so not all customers want do it one way or their way and that's fine and we continue to drive.
The sheer facts are our attrition is an all time low. Our customer scores as high as they were going back to before the crisis. We continue to end up with a better sales relationship with our clients And the teamwork is constantly at that. And so if you have specific brands that you're concerned about, Tong is right here. Believe me, when I get a complaint from a customer in the email, I make sure Tom gets it.
They go and look at every situation and we appreciate the feedback. But it's across the 60,000 teammates they have, they're managing real customers, they have real behavior changes and real people and they're trying to manage it the best way they can. So thank you for comments and we'll follow-up with you afterwards and make sure that we got that range lined
up. 261.
Almost afternoon, but good morning. My name is Dale Morrison, I'm an investor. My question deals with the litigation expense that Bank of America may incur for this year 2015 and for next year? We don't give a forecast in something like litigation because one is inherently profitable with timing of court cases. We settled 1 4 years ago and we're still finalizing that.
We thought it was done then. But if you look at it, let me flip that question to give you a sense. If you take the last 4, 5 years and take the litigation expense that I showed you and back out of it, transaction related litigation, I. E. In connection deals and mortgage related litigation type of thing, you get to about $250,000,000 a quarter of litigation.
That we see going back a fairly long time because it's a big enterprise. Now would it be below that in period? Yes, it was up to that, it was higher in that period. Last quarter we had $370,000,000 $380,000,000 And so the view is that the I wouldn't call it normalized because we try to aspire to get to 0. But I would tell you that it is a lot different than the average that you took the math earlier and divided by the 20 quarters, right?
And so we've seen a lot of that go behind, came right out of the numbers. 3rd quarter, we had litigation with Justice. 4th quarter, we didn't moved up. 1st quarter, we didn't have any major litigation settlement. And so we disclosed all the specific suits in 10 ks.
We called range of possible losses, which is out there that is what we think is embedded in the book today. But if you really to think about it more as an investor would when times are normal even in the tougher times more litigious times in America that we've seen outside of the couple specific issues related to companies that we've got. 3.17.
I wanted to follow-up on earlier question. Hopefully, we can hear from the Lead Independent Director again or even the Head of the Governance Committee about the process of adding the Chairman to CEO. So first, as far as shareholders being consulted before the Board made that decision, so it seems like there are maybe 4 months in the summer until October 1, when you had a chance to talk to investors. And with regard to proxy access, presumably you've reached out to investors for that. So why not an equal effort for the CEO, Chairman combination?
And as far as the new vote, will it be binding? And what assurances can the Board provide that if the shareholders vote against the combination that the Board won't nullify that decision again? And the third thing that the lead independent director just said, he said, A high performing CEO. And I'm not saying one way or another, but which financial metrics were used to reach that conclusion of high performing CEO. The 2010 annual report, I think it's the 3rd paragraph says return on equity is really important and the ROE for the last 5 years was under 0, 1, 5% and 2%.
So hopefully we can hear from 1 of those 2 Board members.
Sure. So let's refocus on return on tangible common equity. And in the Q1, as reported, it was 6% changeable to 8% excuse me, regular size change. We expect that to get to 12% to 13% level. If you pro form out a couple of adjustments, we you move it up to throughput near double digits in the Q1, intangible and we'll continue to drive that.
We don't think it's not important. It's just we based our pay plan on return on assets because at the time this plan goes for 5 years. At the time what the equity would be required in our company was subject to great debate and actually changed in those 5 years, right? And so the question when the Board is facing decision, I'm going to do something for 5 years now, I got to say, because I'm not allowed to change, not allowed to exclude anything from, not allowed to amend the terms. We had to pick something fixed ROA and tangible value per share, which I think is good.
The return on equity once you have an ROA is what your equity is and what your equity requirement is, if you will. On the questions of the resolution, it will be a resolution to ratify the joint. And if the fair was voted down, the Board will take that under consideration. I think that's the Jack Federer and it will have to be down by that resolution that they didn't agree to wrap. I think was there another question, Jack?
360.
Mr. Mohan, I first of all want to say thank you and congratulate you on your efforts with the Global Innovation Lab for Climate Finance. We were recently in your building and really appreciate the hard work that you're doing in leading that effort on behalf of the U. S. Government, the German government of the United Kingdom to create new climate finance instruments.
I also want to thank you on your efforts on coal. Mr. Judy, you want to me to thank you. He's not here today. And then I have a question that I think is a real opportunity.
Listening to you talk about 20 minutes ago, you're talking about economic risk embedded in banking and the banks are obviously are the translation mechanism as an economy to the public. If we accept the hypothesis, simply hypothesis that climate risk is systematic across all economies. Look at California's economy, for example, water risk elsewhere. My question for you is 2 parts. 1, would you consider incorporating climate risk into the Board Governance document at the Board level so that your Chief Risk Officer and throughout the firm would have from a risk appetite perspective, be able to incorporate climate risk and other environmental risks that fall underneath that within the risk appetite of the organization.
That might protect your shareholders and further from a risk perspective and from a return perspective by helping grow your assets over time. Secondly, it's a very specific question, coal versus renewable energy or renewable energy, I'm curious how much renewable energy financing is accretive to net income on a quarterly basis?
Andrew, we do the volume is, as Andrew said, what Andrew, what did you say the volume was 3 times. And so I don't know the exact math off the top of my head of what 3 times the number we do to coal is. On the risk, we take in account these types of risks and that we haven't taken down a quota of coal because of the fundamentals of the industry and all the things we spoke about today. I'm not sure that going to the earlier investors question, there's a lot of risks that are in a risk appetite and this is one of them because it affects different companies differently. In those companies there's battery manufacturers as fellows spoke about before in those companies.
There's alternative energy companies in those companies, mixed companies do a lot of different things around energy, some new, some old, and making the transition happen. So we take into account we integrate individual credits. And I think like we said on the California drought, we looked at the people would be affected by it based on estimation. Other question? 32.
My name is Vicky Perron. I am a shareholder. I am a Bank of America customer and I am an employee of Bank of America. I'm close to retirement and I say that so you all know that I'm comfortably going to speak my mind. And as I listen to neighbors, friends and other family members, I realized that we're all in the same situation.
It's been a tough few years for all of us. We've all lost money, whether it's through Bank of America stocks or other stocks. As a customer, I know that you value us
as customer. And as an employee, I know that we are always
told to value as customer. And as an employee, I know that we are always told to value our customers, to do what we can for our customers, and we do. And as an employee, I know that you, Mr. Moynihan, and our leadership team value us. You put tools in place to ask for our feedback, to ask for our input and then you act on it.
So before I retire, I want to thank you, Mr. Moynihan and the leadership team and Bank of America is a great place to be employed. Thank you.
Thank you, ma'am. And I will thank you on behalf of the leadership team and thank you for the many years to work for us and stay with the customer after you retire. Any other questions? All right. Seeing no other questions, we're going to adjourn the meeting on behalf of Jack Bovin, our Lead Independent Director and the rest of the Board of Directors, I thank you for being here today.
We look forward to seeing you next year.