Letter to the Board of BoA

December 15, 2009

 Via Fax 704-386-6699   2 pages

Members of the Board of Directors

Bank of America Corporation

c/o Corporate Secretary at Bank of American Corporation

101 South Tryon Street,  NC1-002-29-01

Charlotte, NC  28255

This is an open letter to the Board of Directors of the Bank of America Corporation.  It will be posted in the blog section of www.Lemonjuice.biz and in the Corporate Governance and Shareholder Rights group on the Wall Street Journal.  This letter may be distributed and/or posted in its entirety without additional permission.

Dear Directors:

I am a shareholder of the Bank of America Corporation.  I am also an editor of www.lemonjuice.biz, a website that provides analysis and commentary on corporate governance and proxy processes of US public companies.

In recognition of the difficult task that you are facing in recruiting the new CEO and the political debate surrounding executive compensation, I am writing to emphasize the shareholders’ best interests. Yes, perhaps you know all about it.  However, the history of public markets shows that corporate governance is not always conducted with the shareholder primacy in mind.

From the shareholder perspective, I do not believe that the absolute potential compensation figure is the key object of concern.  However, we focus on the structure.  Simply put, the entire compensation package needs to provide a proper set of incentives.  The number can be substantial, but it must be earned:

1.    Shareholders are looking for long-term compensation instruments, such as restricted shares, rather than short-term options that can be exercised following a hyped-up price increase.  To be sure, even one or two-year options are short-term in the context of executive compensation.

2.    While a modest severance package may be reasonable, the shareholders are looking for golden handcuffs; not golden parachutes.

3.    Compensation needs to reflect the true contribution of the CEO as closely as possible.  Traditionally, executive compensation packages have been packed with back-dating, but not clawbacks.  It’s time for clawbacks and indexations.  No backdating -- even the legal kind.

4.    Compensation consultants have proven to be useless and biased in structuring executive pay because they tend to focus on winning favor with executives instead of structuring value maximizing incentive packages. You now have an amazing opportunity to take the lead in structuring a truly economical and precedent-setting compensation package.  If, however, you do use compensation consultants, please use them wisely, and disclose any and all such engagements.

5.    A possible useful guide for you could be the “Say-on-pay Whitepaper” by The Corporate Library.  Unlike compensation consultant services, it is free and provides more details of what will increase the company value.

6.    Speaking of say-on-pay: now that Bank of America has repaid TARP, it is technically not obliged to ask shareholders what they think of the executive pay structure.  However, the Board should accept and permanently adopt a say-on-pay provision without any more demands from shareholders.  This provision will not only give you an opportunity to legitimize the compensation structure, it will present you an opportunity to communicate properly with shareholders.  The compensation consultants’ claim is that say-on-pay will give a voice to politically motivated marginal players.  However, this is nonsense.  The majority of shareholders are institutional investors who would simply seek proper economics.

7.    Finally, this is a great time to solidify the separation of the CEO and the Board Chairman.  It is a conflict of interests for the CEO to lead the board that decides his or her compensation.

I thank you for your attention.  As shareholders, we rely on your leadership at this critical time for the Bank of America and wish you good judgment and great success in this challenging task.

Kind Regards,

Alexander Krakovsky