UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Securities Exchange Act of 1934
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Invesco Ltd.
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Proxy Statement Notice of 2022 Annual General Meeting of Shareholders |
Please vote by using the Internet, the telephone or by signing, dating and returning a proxy card |
Invesco
A leading independent global investment management firm
Founded in | Proudly manages | Over | Serving clients in | On the ground in | ||||||||||||
1935 | $1.6T | 8,500 | 110+ | 20+ | ||||||||||||
and headquartered | in assets for retail | employees to better | countries | countries to leverage | ||||||||||||
in Atlanta, Georgia | and institutional | serve all clients | local presence | |||||||||||||
investors1 |
Our single focus is to help clients achieve their investment objectives
We direct all of our intellectual capital, global strength and operational stability toward helping our clients
We have a broad and deep presence in key markets across the globe
We have a strong track record of financial stability and possess the resources to continue our long-term investment in the business
Our purpose
Delivering an investment experience that helps people get more out of life
Our multi-year strategic objectives | ||
• Achieve strong investment performance | ||
• Be instrumental to our clients’ success | ||
• Harness the power of our global platform | ||
• Perpetuate a high-performance organization | ||
Our beliefs put clients at the center of everything we do | ||
• Pure focus on investing | ||
• Passion to exceed | ||
• Diversity of thought and a collaborative culture | ||
• A comprehensive range of capabilities enables us to meet the unique needs of clients | ||
• A high-conviction approach is more impactful | ||
• Patience leads to better results over time | ||
Our beliefs enable us to | ||
• Inspire the consistent behaviors and discipline that help generate strong, long-term investment performance for our clients | ||
• Maintain an engaging work environment that helps us attract, develop, motivate and retain the best talent in the industry | ||
1. December 31, 2021.
G. Richard Wagoner, Jr.
has served as Chair of our Board since 2019 and as a non-executive director of our company since 2013
A letter to our shareholders from the Chairperson of Our Board
Dear Fellow Shareholder,
The Invesco Ltd. Board of Directors continues to appreciate the trust that you place in us as stewards of your investment in the company and takes our responsibilities in that regard very seriously.
Let me start by saying that the Board worked closely with management as CEO Marty Flanagan and his team continued to implement their long-term strategy to compete and win in the rapidly evolving asset management industry. We were pleased to see that strategy help the company deliver record operating results in 2021 across a broad range of operating and financial metrics, and make significant progress in strengthening our balance sheet, cash position and financial flexibility, as well as improved stock price performance.
In addition to reporting record net long-term inflows, the company also generated record gross inflows of $427 billion, a 37% increase over the prior year.1 Net long-term inflows of more than $81.4 billion represented a 7% organic growth rate for the year, one of the highest growth rates in the industry. Additionally, strong cash flows in our business improved the firm’s cash position to a level where we are resuming share repurchases, reflecting our continued confidence in the long-term prospects of the business.
We were equally pleased with how the firm continued to handle the challenges presented by COVID-19 and its variants, with a dedicated focus on ensuring the health and safety of our employees, while continuing to innovate in engaging with our clients. We are especially appreciative of all Invesco employees’ continuing commitment to our clients and overall business throughout the prolonged pandemic.
We also were pleased to see the firm’s progress in achieving its ambitious goals in the important areas of diversity, equity and inclusion. For example, the progress made in increasing the gender diversity of our senior managers – up from 27% in 2018 to 35% currently – reflects the organization’s strong commitment, thoughtful planning and significant effort. Of course, there’s much more to be done in this important area, and the Board will continue to work with management to build on this progress.
The Board has also strongly supported Invesco’s commitment to ESG and was pleased to see further progress last year. Currently, approximately 75% of the AUM managed by Invesco’s investment teams have attained the ESG integration level as minimal but systematic integration, placing the firm well down the path of achieving its goal of ensuring all of Invesco’s teams have fully embedded ESG considerations into their investment processes by the end of 2023. The firm launched dozens of new ESG products in 2021 across North America and Europe, contributing to a growing range of investment products that enable clients to express their values while saving for the future. The Board is pleased with this progress, but of course much remains to be done to achieve our ESG aspirations.
In 2021 we had several important changes in Board composition. We continue to focus on recommending to shareholders a slate of directors that can support management in all key areas and functions, and represents a good balance of expertise, experience, diversity and continuity, while adding fresh perspectives as appropriate.
We welcomed Paula Tolliver to the Board following her election at the May 2021 Annual General Meeting. As a former Chief Information Officer and Chief Digital Officer for Intel Corporation, Paula has a depth of experience in global business and technology – two especially important areas for Invesco. We will leverage Paula’s extensive expertise as we work to further expand the digital possibilities for client engagement and more effectively use data to improve every aspect of our business. In the fall, we were pleased to add Chris Womack, Chair, President and CEO of Georgia Power Company, to the Board. Chris brings a wealth of experience in public policy, leadership and innovation to Invesco, all of which will prove invaluable to the firm.
2022 Proxy Statement ii |
Earlier this year, we announced that Nelson Peltz and Ed Garden of Trian were stepping down from the Invesco Ltd. Board in light of their appointment to the Board of Janus Henderson Group. While Nelson’s and Ed’s tenure on our Board was fairly brief, they each made significant contributions to the company and Board and were sincerely appreciated as Board colleagues. We are pleased that Trian remains a significant shareholder in Invesco, and wish Nelson and Ed the best.
Annual General Meeting. You are cordially invited to attend the 2022 Annual General Meeting of Shareholders of Invesco Ltd., which will be held on May 12, 2022 at 1:00 p.m. Eastern Time at 1555 Peachtree Street NE, Atlanta, Georgia 30309. Your vote is important, and we encourage you to vote promptly. Regardless of whether you can attend the Annual General Meeting, please follow the instructions contained in the Notice of Internet Availability of Proxy Materials on how to vote via the Internet or the toll-free telephone number, |
In closing, your Board will continue to closely engage with Invesco’s management team. We have a very constructive view on the outlook for Invesco to succeed in the global asset management industry, and a high degree of confidence in the firm’s leadership team. On behalf of the Invesco Board of Directors, I thank you for your continued support.
Yours sincerely, |
G. Richard Wagoner, Jr. |
Chairperson |
1. All data Invesco data as of December 31, 2021.
iii Invesco Ltd. |
Martin Flanagan
has been President and Chief Executive Officer of our company and a director since 2005
A letter to our shareholders from our President and CEO
Dear Fellow Shareholder,
2021 was an extraordinary year on several levels. None of us predicted that we would endure another full year of the global pandemic. We also saw supply disruptions globally, continued social unrest and increased intensity in climate-related disasters. Within the asset management industry, investors experienced volatility related to a recovery from the challenging markets of 2020, the further rise of blockchain-related technologies and a continued trend toward passive, alternative and ESG-related products.
In challenging times, I’ve always found that the best course is to focus on what you can control. At Invesco, we placed a priority on taking care of the health and well-being of our employees. This enabled us to stay sharply focused on meeting the needs of our clients across the globe, seeking new ways to engage with them and helping them achieve their investment objectives. Building on more than a decade of efforts to shape our firm ahead of key client demand trends, Invesco was very well positioned to deliver robust investment performance and a high level of value to clients.
As a result of these efforts, I’m pleased to report that Invesco achieved record operating results in 2021. Growth throughout the year was driven by continued demand for our key capability areas, including ETFs, active fixed income, China, solutions, private markets and active global equities. Net long-term inflows of $81.4 billion represented a 7% organic growth rate for the year – our strongest organic growth in decades and one of the highest growth rates in our industry.
Investment performance strengthened as well, which helped Invesco end 2021 with $1.6 trillion in assets under management, up 19.3% for the year. Additionally, net revenues, adjusted operating income and adjusted operating margin all improved meaningfully year over year.1 Invesco has now achieved six consecutive quarters of strong growth – a direct outcome of the investments we’ve made over time to enhance and evolve our business to better meet the needs of clients.
We also continued to enhance our balance sheet while maintaining a disciplined approach to our business. The growth in our business drove positive operating leverage, leading to a 450 basis point increase in our adjusted operating margin1 to 41.5%. We also exceeded our target of achieving $150 million in annualized net savings after investments by the end of
2022 Proxy Statement iv |
2021 and are well on track to meet our goal of $200 million in annualized net savings after investments by the end of 2022. Combined, these factors drove a 60% increase in our full-year adjusted diluted earnings per share1 to $3.09.
The momentum in our business generated strong cash flows and further strengthened our cash position, which enhances our financial flexibility for the future. As a result, we resumed share repurchases early in 2022, reflecting confidence in our business and our view that Invesco stock represents an excellent investment opportunity.
Although 2021 was a record year for Invesco in a number of areas, we recognize that there is still much work ahead of us. The strong results over last year will enable us to continue investing in our people, our capabilities and our technology, which are essential to meeting client needs and further differentiating our firm in a highly dynamic and competitive industry.
The industry and the needs of investors are evolving – rapidly
The ongoing pandemic continues to accelerate many of the trends impacting our industry. These trends favor larger, better scaled firms like Invesco, which has the resources to continuously invest in the business for the benefit of clients while advancing our competitive position. Specifically, we believe:
Clients value deeper relationships with fewer trusted managers, seeking a comprehensive range of capabilities to meet the totality of their desired investment outcomes
Clients are increasingly “barbelling” their portfolios, with larger allocations to passive assets on one end and alternative assets on the other
China and emerging markets will drive the growth of global wealth and untapped investment opportunities
ETFs and indexing will remain core to portfolios and continue to drive flows, while assets with durable alpha propositions will drive revenue opportunities
“Digital everything” will continue to expand the possibilities for new client engagement approaches while changing the relationship between investment managers, intermediaries and end-clients
Interest in ESG (environment, social, governance) capabilities will continue to grow and evolve
Increased regulatory activity and oversight will continue to influence competitive dynamics
We’ll continue to see the democratization of investment opportunities for individual investors into private markets and the advancement of tokenization and digital assets.
Shaping our business for clients and for the future
Invesco has a long history of shaping our business ahead of client demand and industry trends, with pioneering investments in China, ETFs and solutions. We operate in a $100 trillion industry that we fully expect will continue to grow – by some estimates expanding to $145 trillion over the next three years.2 We have a clear understanding of how client demand is evolving and where it’s headed. Over the past decade, we’ve been highly focused on investing ahead of shifts in client demand, which helped us achieve strong operating results in 2021 and positions us very well for the future.
Our purpose is to deliver an investment experience that helps people get more out of life. In a highly dynamic operating environment and a world of sometimes competing priorities, we are guided by this purpose, which enables us to deliver a high level of value to clients, invest in our people and build our business while providing long-term returns for shareholders. We’re proud that the outcomes we deliver help individuals and institutions across the globe invest in their futures, which inspires our 8,500 employees in the work they do every day.
Over the past decade, we’ve invested meaningfully in our people, our business and the capabilities that align with client demand. This strong foundation gives us confidence that we can continue to help people get more out of life as they save for retirement, their children’s education and more. To help you better understand the drivers of our success for 2021 and the years ahead, I want to highlight a few key aspects of our business that position Invesco well ahead of key trends in our industry.
Fostering a culture where diverse people and perspectives thrive
Helping to ensure health and well-being of our employees and providing a flexible work model through the pandemic are key priorities for Invesco. In fact, 91% of our employee felt that senior leadership prioritized their health and safety through the pandemic, according to our employee opinion survey. Our commitment to their well-being helps employees stay focused on the needs of our clients and our business, and it is a primary reason why Invesco is able to retain, engage, motivate and attract some of the best and brightest in the industry.
We work hard every day to create a diverse, equitable and inclusive (“DEI”) workplace for all our employees. Our commitment to DEI spans every level of our organization, and Invesco leaders have annual performance goals that drive DEI priorities within their business units and across the firm. Notable accomplishments in 2021 include achieving 35% female representation at the senior manager level (up from 27% in 2018), increasing the diversity of the Invesco Ltd. Board to 36% and requiring unconscious bias training for all employees across the globe.
v Invesco Ltd. |
Additionally, we further expanded our business resource groups “BRGs” across the globe. These employee-led BRGs comprise an internal support network of individuals representing the expanding diversity of our firm, enabling us to promote understanding, support the needs of our diverse communities and connect our employees. We now have 11 BRGs, including representation for women, Hispanics, veterans, neurodiversity, LGBTQ+ and others. Combined, these groups hosted more than 70 events over the past year.
Although we’re pleased with our progress in these areas, we recognize there is more to do, and we are committed to further expanding our DEI efforts in 2022 and beyond.
Innovating our way to success in ETFs and Indexed Strategies
In line with our strong track record of investing in key capabilities ahead of client demand, we began building our ETF and Indexed Strategies business with approximately $3.5 billion in assets in 2006. Over the past 15 years, we’ve pioneered new possibilities and launched a number of innovative products to help clients across the globe meet their desired investment objectives. Through Invesco’s product offerings, clients continue to obtain access to new investments and asset classes and participate in the growth of financial markets. Invesco’s innovative products encompass smart beta ETFs, crypto ETFs, blockchain technologies ETFs, commodities, factor-based equity ETFs and smart beta fixed income ETFs. Most of these strategies are being launched in the market as “first of their kind.”
More recently, we expanded our broad suite of ETF capabilities with new offerings aligned one of our most popular ETFs that is aligned to the Nasdaq-100 Index. We also launched a number of ETFs that provide direct or indirect exposure to digital assets. Lastly, we increased our presence in the institutional space by offering indexed institutional mandates, which further solidifies Invesco’s reputation as a leading provider of passive solutions.
Our long-standing focus on innovation has helped Invesco become the fourth-largest provider of ETFs globally.3 In the past three years, Invesco ETFs and Indexed Strategies has more than doubled in size, reaching $558 billion4 in AUM by launching new ETFs and elevating existing products to help clients across the globe solve their specific needs.
In 2021, we achieved record growth in our global ETF and Indexed Strategies business, with $85 billion in net inflows through year-end and a meaningful improvement in global ETF market share.5
Building on our strong alternatives foundation
Alternatives are investments that provide strong benefits to clients by seeking to exploit market inefficiencies through focusing on non-traditional assets and private market investment strategies. Alternatives represented roughly 15% or $15.4 trillion of the $103 trillion global market in 2020 and the asset category is expected to grow more than 10% over the next three years.6 The phenomenal growth and increasing client demand for alternatives represent a tremendous opportunity for differentiated, high-quality investment managers like Invesco.
We are well-positioned to capitalize on the barbelling of portfolios as clients increasingly seek alternatives on one end of the spectrum and passive strategies on the other. With $197 billion in alternatives AUM, Invesco is the 8th largest alternatives provider globally.7 Our alternatives business is anchored by our $71 billion real estate platform and our $41 billion private credit business (AUM as of December 31, 2021). Each of these businesses competes in all channels and regions of the world, and both platforms have established client bases and longstanding track records that distinguish them in the marketplace.
The combination of these two important businesses strengthens Invesco’s profile in the global marketplace and enables us to meet the expanding client demand for alternatives capabilities while helping us grow our global business. For 2022, we are focused on further building our alternatives business by enhancing the capabilities we deliver to clients and expanding the scale, capabilities and reach of our real estate and private credit platforms.
Our China advantage
In 2003, Invesco undertook the first China-US joint venture, Invesco Great Wall. Our presence in China builds on our 50-year legacy of success in the Asia Pacific region. Over the past 20 years, the Chinese mutual fund management industry has grown from zero to more than $4 trillion8, and it’s expected to become the second-largest fund management market in the world by 2025, with more than $6 trillion in assets.9 Through 2024, China is expected to account for more than 40% of global net flows.10 As an early entrant in China, we’ve worked steadily to develop a strong and comprehensive platform covering a broad range of business activities, including robust domestic investment capabilities with strong performance.11
Our China business is multidimensional and includes retail, on-shore, off-shore and institutional, and we have very strong relationships with banks and insurance companies. In addition, we have a meaningful presence on China’s digital platforms, which are highly attractive in the market and meaningfully impactful to our business. Our long history in China, our joint venture management being led by Invesco since its inception and our strong platform in the region
2022 Proxy Statement vi |
give us a significant advantage over other global firms. Invesco is ranked #1 for its China onshore business12 and the #3 foreign asset management firm overall.13 With our strong active investment performance, our China business has grown at a 43% CAGR since 2018, and we now have more than $112 billion of assets sourced from onshore Chinese clients as of the end of the year.14
Although there is uncertainty with the current state of relations between China and the US, everything we’ve seen indicates that China remains committed to opening its markets further. We believe China will continue to provide tremendous opportunities for investment and a more level playing field to global fund managers, which is good news for investors everywhere.
The trend toward ESG investing
Growing concerns about climate change and social issues are driving an increased client interest in ESG investing. According to Morningstar, 72% of US investors have expressed interest in sustainable investing15, and we’re seeing increased interest in ESG capabilities across the globe.
As noted above, Invesco’s purpose is to deliver an investment experience that helps people get more out of life. Sustainable value creation and effective risk mitigation are fundamental to achieving our purpose. As a result, our focus is on integrating ESG into the heart of our investment process, with our investment teams taking decisions every day on how to manage this integration and how to use our leverage in important areas such as client engagement and proxy voting. Approximately 75% of the AUM managed by Invesco’s investment teams have attained the ESG integration level as minimal but systematic integration, and our goal is for all teams to have fully embedded ESG considerations by the end of 2023.
We also focus our efforts on specific client needs, using skills such as our self-indexing capabilities to provide helpful ESG solutions. Invesco offers a growing range of investment capabilities that enable our clients to express their values in ways that can drive portfolio alpha. With Invesco’s comprehensive range of capabilities, clients can incorporate ESG-aligned ETFs, mutual funds, separately managed accounts and custom indexes into their portfolios.
More specifically, to reinforce our commitment to ESG in 2021, Invesco:
Increased its ESG AUM (i.e., assets under management in dedicated sustainable investing strategies) to $96 billion as of December 31, 2021.
Signed the Net Zero Asset Managers initiative, joining other asset managers to support the global goal of reaching net-zero greenhouse gas emissions by 2050 or sooner.
Launched 22 ESG ETFs across North American and Europe, including both thematic (solar, clean energy, green building) and comprehensive (Nasdaq ESG, S&P 500 equal weight ESG) capabilities. Several new products were pioneers in their space, such as the first green building ETF in the US and the first Nasdaq 100 ESG ETF in the US, Canada and Europe.
At Invesco, ESG is investment led, supported by our dedicated global ESG team. We are making good progress in integrating ESG into our business but remain focused on further expanding our ability to meet the growing ESG needs of our clients.
Building resilient portfolios with Invesco Solutions
Institutional investors are often tasked with constructing sophisticated multi-asset portfolios designed to deliver predictable outcomes while navigating market volatility for their clients. As markets evolve, many investors face challenges meeting their objectives in a lower-return, lower-yield environment.
Invesco Solutions comprises 80 investment professionals combining an outcome-based approach with deep expertise in asset allocation, portfolio construction and risk management. The team delivers Invesco’s capabilities in a manner that is agnostic to asset-class, style, strategy or vehicle type. By listening to our clients and drawing on the diversity of the firm’s extensive investment platform, Invesco Solutions provides multi-asset expertise and proprietary analytics to help clients create durable portfolios based on specific goals and constraints.
As a result of our focus on meeting client needs and the expertise we’ve put in place to meet those needs, our Solutions business grew meaningfully in 2021. It has been a key part of our client engagement efforts and now accounts for approximately 35% of our institutional pipeline as of December 31, 2021.
Well-positioned for 2022 and beyond
Our success in 2021 didn’t happen overnight. It’s the result of a relentless focus over the past decade to better understand our clients’ needs and shape our firm ahead of their evolving expectations.
vii Invesco Ltd. |
We continue to believe that the $103 trillion asset management industry offers tremendous opportunities for growth. At the same time, the industry is highly dynamic and undergoing fundamental changes that require us to be very strategic about where we invest for the future. As always, the work we’re doing to better understand the needs of our clients and where the industry is headed serve as the foundation for further investment in our business.
Over the past decade, we’ve worked hard to shape Invesco and align the firm with the needs of our clients and ahead of key industry trends. That gives us a tremendous foundation from which we can better anticipate and meet evolving client needs, further strengthen our business and deliver strong outcomes for all our stakeholders. We will continue to invest in key growth areas of our business – e.g., ETFs, China, Solutions, ESG and others – areas where we see strong momentum and where we are well positioned to win. More importantly, our world-class talent across the globe remains a competitive differentiator that will help us execute our long-term strategy and further separate us from others as a winner in the industry.
Let me close by expressing our deep appreciation to you, as shareholders, for your continued support. We are also grateful to our clients and our employees for their continued support in these extraordinary times. Although 2021 was a record year for Invesco in a number of areas, we remain focused on further strengthening our ability to meet client needs, making continuous improvements across our global firm and running a disciplined business. The strength of our results over the past year and the work we’re doing to further align Invesco with the needs of our clients give us confidence in our long-term strategy and enable us to further invest in our business for the benefit of our clients, employees, shareholders and others.
Sincerely, |
Marty Flanagan |
President and CEO |
2. Asset & Wealth Management Revolution: Embracing Exponential Change, copyright PwC, December 2021. 3. Invesco ETFs and Indexed Strategies data as of December. 31, 2021. 4. Invesco ETFs and Indexed Strategies data as of December 31, 2021. 5. Invesco ETFs and Indexed Strategies data as of December 31, 2021. 6. Source: Invesco data and data from the 7. Invesco data as of December 31, 2021, including private and 8. Asset Management Association of China, as of December 31, 2021. 9. KPMG. |
10. McKinsey.
11. Invesco data. 75% and 88% of our China joint venture AUM was above peers on a 3- and 5-year basis as at December 31, 2021.
12. Z-Ben Advisors, 2021 China Rankings – The Top Foreign Firms in China, April 2021.
13. Z-Ben Advisors, 2021 China Rankings – The Top Foreign Firms in China, April 2021
14. Invesco data as of December 31, 2021.
15. Morningstar. Are Your Clients ESG Investors? April 22, 2019. Based on a nationally representative sample of 948 respondents.
2022 Proxy Statement viii |
Notice of 2022 Annual Meeting of Shareholders
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Thursday, May 12, 2022, at 1:00 p.m., Eastern Time | |||||
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| Invesco Headquarters 1555 Peachtree Street NE
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| Internet Visit the web site listed on your Notice | |||||
Telephone Call the telephone number listed on your Notice | ||||||
Sign, date and
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| 1 | To elect | FOR
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2 | To hold an advisory vote to approve the company’s executive | FOR
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3 | To amend and restate the Invesco Ltd. | FOR
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To appoint PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm for the | FOR
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5 | To consider and act upon such other business as may properly come before the meeting or any adjournment thereof |
Who can vote
Only holders of record of Invesco Ltd. common shares on March 14, 2022 are entitled to notice of, to attend and vote at the Annual General Meeting and any adjournment or postponement thereof. Beginning on March 25, 2022, we mailed a Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access this Proxy Statement and our Annual Report via the Internet to eligible shareholders.
During the Annual General Meeting, the audited consolidated financial statements for the year ended December 31, 2021 of the company will be presented.
By order of the Board of Directors,
Kevin M. Carome
Company Secretary
March 25, 2022
ix Invesco Ltd. |
Proxy statement
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Invesco Ltd. (“Board” or “Board of Directors”) for the Annual General Meeting to be held on Thursday, May 12, 2022, at 1:00 p.m. Eastern Time. Please review the entire Proxy Statement and the company’s 2021 Annual Report on Form 10-K before voting. In this Proxy Statement, we may refer to Invesco Ltd. as the “company,” “Invesco,” “we,” “us” or “our.”
Voting roadmap
Proposal Election of directors
1 | Diversity and tenure of our directors: | • 10 of our 11 directors are independent • We have an independent chair of the Board • Our independent directors meet regularly without management present • All of our Board committees are composed exclusively of independent directors • Directors are elected for a 1-year term |
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Qualifications, skills and experience of our directors: | ||||||||||||
4 Public company CEO | 10 Executive strategy and execution | 9 International experience | ||||||||||
6 Industry Experience | 3 Accounting and financial reporting | 4 Technical - government, legal, regulatory, and technology |
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| FOR | Recommendation of The Board of Directors unanimously recommends a vote “FOR” the election to | ||||||
2022 Proxy Statement x |
Proposal 2 | Advisory vote on the compensation paid to our named executive officers | |||
Invesco’s executive compensation program is designed to align executive compensation with the long-term interests of our shareholders. Our compensation program uses a company scorecard to measure our financial performance and our organizational strength. Our compensation committee assesses the company’s quantitative performance through the company scorecard and qualitative individual achievements to determine each executive’s incentive compensation. The pay determination process reinforces our shareholder value framework. Pay for 2021 is aligned with performance. | ||||
2021 Financial performance1 |
Long-term net flows $81.4B 7% organic growth rate | Net revenue2 $5,261M +17% | Adjusted operating income2 $2,183M +31% | Adjusted operating margin2 41.5% +450 basis points | Adjusted diluted EPS2 $3.09 +60% | ||||||||||||||
Martin L. Flanagan President and CEO | 2021 CEO Compensation Mr. Flanagan is President and CEO. He develops, guides and oversees execution of Invesco’s long-term strategic priorities to deliver value for clients and shareholders over the long-term. Mr. Flanagan’s total compensation is aligned with strong company performance. The committee decided that Mr. Flanagan’s total incentive compensation should be $16 million, which is 118% of his 2021 incentive target. |
Total CEO incentive pay is | 95% | 60% | ||||||||
118% of target | of CEO’s 2021 pay is variable | of CEO’s 2021 equity is performance-based | ||||||||
Further information regarding executive compensation begins on page 39 of this Proxy Statement. |
| Recommendation of the Board of Directors The Board of Directors unanimously recommends a vote “FOR” the approval of the compensation of our named executive officers. | |||||
1. Comparisons are year-over-year. 2. Adjusted financial measures are all non-GAAP financial measures. See the information in
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Why we support the proposal | ||||||||
The Employee Stock Purchase Plan, as amended and restated: | ||||||||
• Enables us to further align the long-term interests of our employees with those of our shareholders | ||||||||
• Encourages employee retention | ||||||||
FOR | Recommendation of the Board | |||||||
The Board of Directors unanimously recommends a vote “FOR” the approval of the amended and restated Invesco Ltd. Employee Stock Purchase Plan. | ||||||||
| Ratification of the appointment of PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm for 2022 | |||||||
The audit committee and the Board believe that the continued retention of PwC as our independent registered public accounting firm is in the best interest of the company and our shareholders. | ||||||||
Recommendation of the Board | ||||||||
FOR | The Board of Directors unanimously recommends a vote “FOR” the appointment of PwC as the company’s independent registered public accounting firm for the year ending December 31, 2022. | |||||||
2022 Proxy Statement xii |
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a The adjusted financial measures are all non-GAAP financial measures. See the information in Appendix B of this Proxy Statement regardingNon-GAAP financial measures. b Annualized long-term organic growth rate is calculated using long-term net flows divided by opening long-term AUM for the period. Long-term AUM excludes institutional money market and non-management fee earning AUM. |
2021 Financial performance1
Long-term |
Adjusted | Adjusted | Adjusted | |||||||||||||
net flows | Net revenue2 | operating income2 | operating margin2 | diluted EPS2 | ||||||||||||
$81.4B | $5,261M | $2,183M | 41.5% | $3.09 | ||||||||||||
7% organic | +17% | +31% | +450 basis points | +60% | ||||||||||||
growth rate
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1 JP Morgan asset managers CEO forum, December 2018
1 2 Invesco data as of December 31, 2018
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1 Invesco and Morningstar data as of December 31, 2018.
2 Invesco data as of December 31, 2018.
3 Platform - Adviser Market: Fintech and Digital, January 2018 report
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We maintained focus on our
Invesco achieved a 7% organic growth rate for 2021 – the strongest organic growth in our
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We generated over $81 billion of net long-term inflows, resulting in over $1.6 trillion in assets under management at the end of 2021. |
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Net revenues grew 17% in 2021, helping us achieve adjusted operating income of nearly $2.2 billion, 31% higher than the previous year. Revenue growth, coupled with strong expense discipline, led to a 450 basis point increase in our adjusted operating margin to 41.5%. These factors contributed to a 60% increase in our full-year adjusted diluted EPS to $3.09. | ||||||
The strength in our business has generated strong cash flows, improving the company’s cash position. We remained focused on continuing to build a stronger balance sheet and improving financial flexibility for the future. | ||||||
The company’s global ETF platform generated a record $62 billion in net inflows, and we increased market share in both ETF assets under management and revenues. Invesco’s QQQ ETF ended 2021 with over $21 billion in net inflows, growing to $215 billion at year-end. Invesco QQQ has become the 5th largest ETF globally. |
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1. | Comparisons are year-over-year. |
2. | Adjusted financial measures are all non-GAAP financial measures. See the information in Appendix A regarding non-GAAP financial measures. |
2022 Proxy Statement 1 |
Clients increased their asset allocation in alternative strategies seeking diversification and higher returns. Invesco has a broad product platform across real estate and private credit to meet client demand. Invesco’s private real estate business generated net long-term inflows of Invesco’s active fixed income business remained strong, generating net long-term inflows of $35 billion for We have seen challenged performance in specific pockets of active global equities, but we remain strong believers in active management and are confident that high quality active management will drive strong performance across market cycles. We continue to focus on sales efforts as well as managing redemption rates. For example, our $45 billion Developing Markets Fund generated net long-term inflows of $1.2 billion in 2021, an improvement of $4.3 billion over 2020.
Invesco’s solutions-enabled capabilities experienced a
The company’s greater China business continued to be a source of strength and differentiation in 2021 – net long-term inflows were $28.7 billion, representing organic growth of 32%. |
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| Increasing diverse talent has been a focus since we formally launched our diversity, equity and inclusion initiatives. We set a target of 35% of female representation of senior managers, which we have achieved as of December 31, 2021. | |||||||
We have an 86%1 completion rate of unconscious bias training for | ||||||||||
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Improved transparency regarding our robust compensation timeline
– Enhanced disclosure regarding our4-step timeline of the committee’s year-long compensation responsibilities and decisions that demonstrates the compensation committee’s disciplined approach to aligning pay with performance
Looking forward
We remain focused on executing our strategy that aligns with our key areas of focus and continuing to invest ahead of client demand in these areas. At the same time, we are focused on optimizing our organizational model and disciplined expense management. This approach has resulted in strong organic growth, driving positive operating leverage and operating margin improvement. This has also facilitated stronger cash flows, further strengthening our balance sheet, and driving the improvement in our leverage profile. As we look toward the future, Invesco is in a very strong position to deliver value over the long run to all our clients and shareholders.
1. | Percentage is a rolling completion rate that includes new employees who are assigned training. |
3 1 As of October 31, 2018
2 Invesco Ltd. |
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Governance highlights
Director qualifications | ||||||||||||||||||||||||||||||||||
Director | Other public |
Committee memberships | ||||||||||||||||||||||||||||||||
Name | Age | since | boards | A | C | NCG | ||||||||||||||||||||||||||||
Sarah E. Beshar | 60 | 2017 | – | M | M | M | ∎ | ∎ | ||||||||||||||||||||||||||
Former Partner, Davis Polk
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Joseph R. Canion | 74 | 1997 | – | – | – | Ch | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||
Former CEO, Compaq Computer Corporation
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Martin L. Flanagan | 58 | 2005 | – | – | – | – | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||
President and CEO, Invesco Ltd.
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C. Robert Henrikson | 71 | 2012 | – | M | Ch | M | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||
Former President and CEO, MetLife, Inc. and Metropolitan | ||||||||||||||||||||||||||||||||||
Life Insurance Company
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Denis Kessler | 67 | 2002 | 2 | M | M | M | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||
Chairman and CEO, SCOR SE
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Sir Nigel Sheinwald | 65 | 2015 | 1 | M | M | M | ∎ | ∎ | ∎ | |||||||||||||||||||||||||
Former United Kingdom Senior Diplomat
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G. Richard Wagoner, Jr. | 66 | 2013 | 1 | M | M | M | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||
Former Chairman and CEO, | ||||||||||||||||||||||||||||||||||
General Motors Corporation
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Phoebe A. Wood | 65 | 2010 | 3 | Ch | M | M | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||||
Former Vice Chairman and CFO, | ||||||||||||||||||||||||||||||||||
Brown-Forman Corporation
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Ben F. Johnson III1 | ||||||||||||||||||||||||||||||||||
Former Managing Partner, | 75 | 2009 | – | M | M | M | ∎ | ∎ | ||||||||||||||||||||||||||
Alston & Bird LLP
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Key: A– Audit C– Compensation NCG– Nomination and Corporate Governance M– Member Ch– Chairperson
1 Mr. Johnson has not been nominated forre-election to the Board because he has reached the mandatory retirement age.
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• Added 2 new directors to the Board in 2021, both of whom further increased Board diversity. | ||||||
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Independence | ||||||
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• The Chair presides at these executive sessions. | ||||
Share ownership requirements | ||||
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2022 Proxy Statement 3 |
Our Directors and their qualifications
• | Directors are highly qualified and have the significant leadership and professional experience, knowledge and skills necessary to provide effective oversight and guidance for Invesco’s global strategy and operations.
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• | Board diversity: The Board’s overall diversity is an important consideration in the director recruitment and nomination process. |
– | The Board has adopted a Board-level diversity policy that recognizes that it benefits from the contribution of different perspectives, experiences and characteristics which promote better corporate governance. |
– | The Board seeks to maintain a Board with a range of experiences, knowledge, skills, backgrounds, viewpoints, and characteristics that collectively address the needs of the company. |
– | The Board believes diversity allows the Board to make more informed judgments. With respect to diversity characteristics, the Board and its nomination and corporate governance committee considers gender, race, ethnicity, country of origin, nationality or cultural background, and other personal characteristics. |
– | In assessing nominees, the committee will consider how a prospective candidate would affect the diversity of the Board. |
For more information on our director nomination process, see Information about Director Nominees—Director Recruitment.
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Average tenure 8 years | Director nominees composition | |||||||
Average age 65 years | ||||||||
New directors in 2021 | Director tenure Director independence | |||||||
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4 Invesco Ltd. |
Qualifications, skills and experience of directors Our Board strives to maintain a well-rounded Board and recognizes the value of industry experience and institutional knowledge as well as new ideas and perspectives. We consider candidates with diverse capabilities across a broad range of industries, including one or more of those listed below. | ||||||||||||||||
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Public company CEO
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International experience | 9 | |||||||||||||
Directors with public company chief executive officer backgrounds bring valuable practical experience to our Board, providing insights into challenging issues while remaining focused on our strategic initiatives
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Industry experience
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Executive strategy and execution | 10 | |||||||||||||
A key to our success is our ability to provide asset management excellence and directors with backgrounds in the financial services industry and capital markets help provide oversight of our strategy
| Directors with experience developing and executing a strategic direction for an entity assist the Board in providing oversight of the company’s strategy in a rapidly evolving business environment | |||||||||||||||
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Accounting and financial reporting
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Technical - government, legal, regulatory and technology | 4 | ||||||||||
We are subject to complex financial reporting obligations and we benefit from having directors with strong accounting and financial reporting experience | Substantive government, legal, regulatory and technology experience on our Board offers us valuable insights into the environment in which we operate and the implications to our business
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2022 Proxy Statement 5 |
Diversity, equity and inclusion Fundamentally, we believe that in order to best help our clients and employees get more out of life, our workforce should reflect the diversity of people and perspectives of the communities we serve. We believe that diversity, equity and inclusion (“DEI”) are both moral and business imperatives. At Invesco, we are committed to improving diversity and inclusion across our global business. Below is a snapshot of our key demographics and DEI programs. |
Our employees’ diversity by the numbers for 2021 | ||||||||||
35% Female senior managers | 8,500+ Employees across the globe | |||||||||
From 2018 to 2021, we have increased female representation of senior managers from 27% to 35% globally. | 50+ cities in 27 countries | |||||||||
61% of candidate slates are diverse | 80% of interview panels are diverse | 86%1 of employees have completed unconscious bias training | ||||||||
11 Business Resource Groups hosted over 70 events globally | ||||||||||
Target is 95% diverse candidate slates and interview panels | ||||||||||
1. Percentage is a rolling completion rate that includes new employees who are assigned training.
You are being asked to cast votes for eight directors: Sarah E. Beshar, Joseph R. Canion, Martin L. Flanagan, C. Robert Henrikson, Denis Kessler, Sir Nigel Sheinwald, G. Richard Wagoner, Jr. and Phoebe A. Wood. Mr. Johnson has not been nominated forre-election to the Board because he has reached the mandatory retirement age.
A director holds office until such director’s successor has been duly elected and qualified or until such director’s death, resignation or removal from office under ourBye-Laws. Each director is elected for aone-year term ending at the 2020 Annual General Meeting.
6 Invesco Ltd. |
Election of directors
You are being asked to cast votes for eleven director nominees: Sarah E. Beshar, Thomas M. Finke, Martin L. Flanagan, William F. Glavin, Jr., C. Robert Henrikson, Denis Kessler, Sir Nigel Sheinwald, Paula C. Tolliver, G. Richard Wagoner, Jr., Christopher C. Womack and Phoebe A. Wood.
FOR |
Recommendation of the
Vote required: This proposal requires the affirmative vote of a majority of votes cast at the Annual General Meeting. |
2022 Proxy Statement 7 |
7
Sarah E. Beshar Sarah Beshar has served as anon-executive director of our company since 2017 and has been an attorney with Davis Polk & Wardwell LLP for over 30 years. She joined the firm in 1986 and was named a partner in the Corporate Department in 1994. During more than three decades as a corporate lawyer, Ms. Beshar has advised Fortune 500 companies on an array of legal and governance issues. She also served in a number of management roles at the firm, including as the lead partner of one of the firm’s largest financial services clients from 2008 to 2015. She presently serves as Senior Counsel at the firm.
Ms. Beshar is a member of the corporate | ||
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Director qualifications
• Industry experience: Mr. Finke’s 34-year financial career has included roles in both the
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8 Invesco Ltd.
Martin L. Flanagan
President and CEO
Age Tenure
61 17 Years
Qualifications:
William F. Glavin, Jr.
Non-executive director
Age Tenure
63 3 Years
Committees:
Qualifications:
Martin L. Flanagan
Martin Flanagan has been a director and President and Chief Executive Officer of Invesco since 2005. He is also a trustee and vice-Chair of the Invesco Funds (the company’s U.S. open- and closed-end funds). Mr. Flanagan joined Invesco from Franklin Resources, Inc., where he was president and co-chief executive officer from 2004 to 2005. Previously, he held numerous positions of increasing responsibility at Franklin — co-president, chief operating officer, chief financial officer and senior vice president – from 1993 to 2003. Mr. Flanagan served as director, executive vice president and chief operating officer of Templeton, Galbraith & Hansberger, Ltd., before its acquisition by Franklin in 1992. Before joining Templeton in 1983, he worked with Arthur Andersen & Co. He serves as Trustee of Southern Methodist University (SMU) and as a member of the executive Board at the SMU Cox School of Business. Mr. Flanagan is a member of the International Advisory Council of China Securities Regulatory Commission. He serves as Chair of Engage Ventures, an innovation platform bringing together Atlanta-based corporations to support startups. He sits on the Executive Council for the Metro Atlanta Chamber and served as 2020 MAC Chair. Mr. Flanagan formerly served as chair and vice chair on the executive committee and on the Board of Governors for the Investment Company Institute. He serves as a Board member of the Atlanta Committee for Progress and is a former ACP Chair. Mr. Flanagan is a CFA charterholder and a certified public accountant. He earned a B.A. and B.B.A. from Southern Methodist University (SMU).
Director qualifications
William F. Glavin, Jr.
William (“Bill”) F. Glavin, Jr. has served as a non-executive director of our company since 2019 and is nominated pursuant to a shareholder agreement with Massachusetts Mutual Life Insurance Company described on pages 30 - 32. Mr. Glavin served as vice chairman of MM Asset Management Holding LLC from 2015 until his retirement in 2017. Previously, Mr. Glavin served as chair of OppenheimerFunds Inc., (“OppenheimerFunds”), from 2009 to 2015, as chief executive officer from 2009 to 2014, and as president from 2009 to 2013. Prior to joining OppenheimerFunds, Mr. Glavin held several senior executive positions at MassMutual Financial Group, including co-chief operating officer from 2007 to 2008 and executive vice president, U.S. Insurance Group from 2006 to 2008. He served as president and chief executive officer of Babson Capital Management LLC (“Babson”), now known as Barings, LLC, a wholly owned indirect subsidiary of MassMutual, from 2005 to 2006, and chief operating officer of Babson from 2003 to 2005. Prior to joining MassMutual, Mr. Glavin was president and chief operating officer of Scudder Investments from 2000 to 2003. Mr. Glavin held senior positions at the Dreyfus Corporation, the Boston Company, State Street Bank and Trust Company, and Procter & Gamble. Mr. Glavin earned a B.A. from the College of the Holy Cross.
Director qualifications
2022 Proxy Statement 9 |
C. Robert Henrikson
Non-executive director
Age Tenure
74 10 Years
Committees:
Qualifications:
Denis Kessler
Non-executive director
Age Tenure
70 20 Years
Committees:
Qualifications:
C. Robert Henrikson
Robert Henrikson has served as a non-executive director of our company since 2012. Mr. Henrikson was president and chief executive officer of MetLife, Inc. and Metropolitan Life Insurance Company from 2006 through 2011. During his more than 39-year career with MetLife, Inc., Mr. Henrikson held a number of senior positions in that company’s individual, group and pension businesses. He currently serves on the Bipartisan Policy Center’s Commission on Retirement Security and Personal Savings and the Board of Directors of the Bipartisan Center. Mr. Henrikson is a former Chairman of the American Council of Life Insurers, a former Chairman of the Financial Services Forum and a director emeritus of the American Benefits Council. Mr. Henrikson also serves as Chairman of the Board of the S.S. Huebner Foundation for Insurance Education, as a trustee emeritus of Emory University and of Americares. Mr. Henrikson earned a bachelor’s degree from the University of Pennsylvania and a J.D. degree from Emory University School of Law. In addition, he is a graduate of the Wharton School’s Advanced Management Program.
Director qualifications
Denis Kessler
Denis Kessler has served as a non-executive director of our company since 2002. Mr. Kessler currently serves as the non-executive chair of the board of SCOR SE and served as its chief executive officer and chair from 2002 through June 2021. Prior to joining SCOR, Mr. Kessler was Chairman of the French Insurance Federation, senior executive vice president and member of the executive committee of the AXA Group and executive vice chairman of the French Business Confederation. He is a member of the French Institute’s Academy of Moral and Political Sciences. Mr. Kessler is a Fellow of the French Institute of Actuaries and holds a PhD in economics and is a graduate of Ecole des Hautes Etudes Commerciales (HEC Paris). In addition, he holds honorary degrees from the Moscow Academy of Finance and the University of Montreal.
Director qualifications
10 Invesco Ltd.
Sir Nigel Sheinwald
Non-executive director
Age Tenure
68 7 Years
Committees:
Qualifications:
Paula C. Tolliver
Non-executive director
Age Tenure
57 1 Year
Committees:
Qualifications:
Sir Nigel Sheinwald
Sir Nigel Sheinwald has served as a non-executive director of our company since 2015. Sir Nigel was a senior British diplomat who served as British Ambassador to the United States from 2007 to 2012, before retiring from Her Majesty’s Diplomatic Service. Previously, he served as Foreign Policy and Defence Adviser to the Prime Minister from 2003 to 2007 and as British Ambassador and Permanent Representative to the European Union in Brussels from 2000 to 2003. Sir Nigel joined the Diplomatic Service in 1976 and served in Brussels, Washington, Moscow, and in a wide range of policy roles in London. From 2014 to 2015, Sir Nigel served as the Prime Minister’s Special Envoy on intelligence and law enforcement data sharing. Sir Nigel also serves as a senior advisor to the Universal Music Group and Tanium, Inc. He is the Chair of the Royal Institute of International Affairs (Chatham House) and a visiting professor at King’s College, London. In addition, Sir Nigel serves on the Advisory Boards of the Ditchley Foundation, BritishAmerican Business and the Centre for European Reform. He is an Honorary Bencher of the Middle Temple, one of London’s legal inns of court. Sir Nigel received his M.A. degree from Balliol College, University of Oxford, where he is now an Honorary Fellow.
Director qualifications
Paula C. Tolliver
Paula C. Tolliver has served as a non-executive director of our company since May 2021. She is the founder and principal of TechEdge, a consulting firm specializing in advising executive leadership on information technology strategies. Ms. Tolliver previously served as corporate vice president and chief information officer at Intel Corporation, a technology company, from 2016 to 2019. Prior to joining Intel, Ms. Tolliver served as corporate vice president of Business Services and chief information officer at The Dow Chemical Company (a wholly owned subsidiary of Dow, Inc.) from 2012 to 2016. Ms. Tolliver also led a services business for Dow Chemical, in addition to holding a variety of other roles in her 20 plus years with the company. She has served as a director of Syniti, a private company, since and currently serves on its technology committee. Ms. Tolliver earned a bachelor’s degree in Business Information Systems and Computer Science from Ohio University.
Director qualifications
2022 Proxy Statement 11 |
G. Richard Wagoner, Jr.
Chair of the Board
Age Tenure
69 9 Years
Committees:
Qualifications:
Christopher C. Womack
Non-executive director
Age Tenure
64 <1 Year
Committees:
Qualifications:
G. Richard Wagoner, Jr.
G. Richard (“Rick”) Wagoner, Jr. has served as Chair of our company since May 2019 and as a non-executive director of our company since 2013. Mr. Wagoner served as Chairman and chief executive officer of General Motors Corporation (“GM”) from 2003 through March 2009, and had been president and chief executive officer since 2000. Prior positions held at GM during his 32-year career with that company include president and chief operating officer, executive vice president and president of North American operations, executive vice president, chief financial officer and head of worldwide purchasing, and president and managing director of General Motors do Brasil. Mr. Wagoner is a member of the Board of Directors of Excelitas Technologies, a privately-held company. In addition, he advises several financial firms, start-ups and early-stage ventures. Mr. Wagoner is a member of the Duke University’s Health System Board of Directors and chair of the Duke Kunshan University Advisory Board. He previously chaired the Duke University Board of Trustees and served on the Virginia Commonwealth University Board of Visitors. In addition, he is a honorary member of the mayor of Shanghai, China’s International Business Leaders Advisory Council and the Catalyst Board of Directors. Mr. Wagoner received his B.A. from Duke University and his M.B.A. from Harvard University.
Director qualifications
Christopher C. Womack
Christopher C. Womack has served as a non-executive director of our company since October 2021 and is the chairman, president and CEO of Georgia Power Company, a subsidiary of The Southern Company, one of the nation’s leading energy providers. Prior to being named to his current role in 2021, he served as executive vice president and president of external affairs for The Southern Company where he led overall external positioning and branding efforts. Mr. Womack joined The Southern Company in 1988 and has held several leadership positions within The Southern Company and its subsidiaries. He has served as executive vice president of external affairs at Georgia Power Company and senior vice president and senior production officer of Southern Company Generation, where he was responsible for coal, gas, and hydro generation for Georgia Power Company and Savannah Electric. He also served as senior vice president of human resources and chief people officer at The Southern Company, as well as senior vice president of public relations and corporate services at Alabama Power Company. Prior to joining The Southern Company, Mr. Womack worked for the US House of Representatives for then-Congressman Leon E. Panetta. He holds a bachelor’s degree from Western Michigan University and a master’s degree from The American University. Mr. Womack is currently pursuing his doctorate degree in political science at Clark Atlanta University.
Director qualifications
12 Invesco Ltd.
Phoebe A. Wood Non-executive director
Age Tenure
Committees:
• Nomination and Corporate Governance
Qualifications:
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• Executive strategy and
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| Phoebe A. Wood Phoebe Wood has served as anon-executive director of our company since 2010. She is currently a principal at CompaniesWood and served as vice chairman, chief financial officer and in other capacities at Brown-Forman Corporation from 2001 until her retirement in 2008. Prior to Brown-Forman, Ms. Wood was vice president, chief financial officer and a director of Propel Corporation (a subsidiary of Motorola) from 2000 to 2001. Previously, Ms. Wood served in various capacities during her tenure at Atlantic Richfield Company (ARCO) from 1976 to 2000. Ms. Wood currently serves
Director qualifications
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In accordance with the rules of the New York Stock Exchange (“NYSE”), the Board has affirmatively determined that it is currently composed of a majority of independent directors, and that the following directors are independent and do not have a material relationship with the company: Sarah E. Beshar, Thomas M. Finke, William F. Glavin, Jr., C. Robert Henrikson, Denis Kessler, Sir Nigel Sheinwald, Paula C. Tolliver, G. Richard Wagoner, Jr., Christopher C. Womack and Phoebe A. Wood.
For a director to be considered independent, the Board must affirmatively determine that the director does not have any material relationship with the company either directly or as a partner, shareholder or officer of an organization that has a relationship with the company. Such determinations are made and disclosed according to applicable rules established by the NYSE or other applicable rules.
As part of its independence determinations, the Board considers any direct or indirect relationship between a director (or an immediate family member of such director) and the company or any third party involved with the company.
Board meetings and annual general meeting of shareholders
During the calendar year ended December 31, 2021, the Board held 10 meetings (not including committee meetings).
Each director attended at least seventy-five percent (75%) of the aggregate of the total number of meetings held by the Board and all committees of the Board on which he or she served during 2021.
All of our then-serving directors attended the 2021 Annual General Meeting. The Board does not have a formal policy regarding Board member attendance at shareholder meetings.
The non-executive directors (those directors who are not officers or employees of the company and who are classified as independent directors under applicable NYSE standards) meet in executive session each quarter at a minimum.
G. Richard Wagoner, Jr., our Chair and a non-executive director, presides at the executive sessions of the non-executive directors.
2022 Proxy Statement 13 |
Committee membership and meetings
The current committees of the Board are the audit committee, the compensation committee and the nomination and corporate governance committee.
The Board has affirmatively determined that each committee consists entirely of independent directors according to applicable NYSE rules and rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the heightened independence standards for compensation committee and audit committee members.
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Under its charter, the committee:
The committee’s charter sets forth its responsibilities, including:
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The committee’s charter is available on the company’s website. 1. Ms. Tolliver joined the audit and compensation committees effective as of May 13, 2021. 2. Mr. Womack joined the audit and compensation committees effective as of October 13, 2021. |
14 Invesco Ltd.
Members:
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Sarah E. Beshar (Chair) Thomas M. Finke William F. Glavin, Jr. C. Robert Henrikson Denis Kessler Sir Nigel Sheinwald Paula C. Tolliver1 G. Richard Wagoner, Jr. Christopher C. Womack2 Phoebe A. Wood Independence: Each member of the committee is independent Meetings held in 2021: 4 | Under its charter, the committee:
The committee’s charter sets forth its responsibilities, including:
The committee’s charter is available on the company’s website. For more information regarding the director recruitment process, seeInformation aboutDirector Nominees - Director recruitment. | |
The compensation committee annually reviews and determines the compensation paid to non-executive directors. No executive officer of the company is involved in recommending or determining non-executive director compensation levels. Mr. Flanagan does not receive compensation for his service as a director. The committee considers, among other things, the following policies and principles:
that compensation should fairly pay the non-executive directors for the work, time commitment and efforts required by directors of an organization of the company’s size and scope of business activities, including service on Board committees;
that a component of the compensation should be designed to align the non-executive directors’ interests with the long-term interests of the company’s shareholders; and
that non-executive directors’ independence may be compromised or impaired if director compensation exceeds customary levels.
As a part of its annual review, the committee engaged Johnson Associates, Inc. (“Johnson Associates”), the committee’s independent compensation consultant, to report on comparable non-executive director compensation practices and levels. Their report included a review of director compensation at the same peer companies the committee considers for executive compensation practices. See page 62 for a list of our 2021 peers.
In December 2020, following its annual review, the compensation committee determined that no changes would be made to the levels of non-executive director compensation that have been in place since 2014. The committee did, however, approve the transition of equity awards from quarterly grants for service in arrears to annual grants for service in advance. The one-year vesting requirement for equity awards remains in place.
1. | Ms. Tolliver joined the nomination and corporate governance committee effective as of May 13, 2021. |
2. | Mr. Womack joined the nomination and corporate governance committee effective as of October 13, 2021. |
2022 Proxy Statement 15 |
The compensation for non-executive directors for the 2021 service period was as follows. Each component other than the equity award is paid in quarterly installments in arrears:
Basic cash fee | ||
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Chair fee |
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Chair fee | The Chair of the audit committee received an additional annual cash fee of $50,000 | |
Compensation Committee and Nomination and Corporate Governance Committee Chair fee | The Chair of the compensation committee and the Chair of the nomination and corporate governance committee each received an additional annual cash fee of $15,000 | |
Basic shares fee | Non-executive directors also received an annual award of shares in the aggregate amount of $145,000. Equity awards are paid for service in advance and subject to a one-year vesting requirement |
In February 2022, the compensation committee approved the following changes to the non-executive director compensation for the 2022 service period: (i) decreasing the value of the annual chair cash fee from $280,000 to $230,000; (ii) increasing the value of the annual compensation committee chair and nomination and corporate governance committee chair cash fee from $15,000 to $20,000 and (iii) increasing the value of the annual equity award from $145,000 to $195,000.
We also reimburse each of our non-executive directors for their travel expenses incurred in connection with attendance at Board of Directors and committee meetings. Directors do not receive any meeting or attendance fees. Invesco does not have a deferred compensation plan for its directors.
Stock ownership policy for non-executive directors — All shares granted to our non-executive directors are subject to the Non-Executive Director Stock Ownership Policy. The policy in 2021 required each non-executive director to achieve and thereafter maintain an ownership level of at least 18,000 shares within seven years of such director’s first appointment as a non-executive director. Until such ownership level was achieved, each non-executive director was required to (i) continue to hold 100% of the shares previously granted by the company and (ii) continue to retain at least 50% of all shares received as compensation from the company. The following table shows the status of our non-executive directors meeting the requirements of the policy as of December 31, 2021.
2021 Non-executive director stock ownership (based on policy for 2021) | ||||||||||||
Shares held as of December 31, 2021
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Name
| Shares held1
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| Name
| Shares held1
| Requirement met
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Beshar | 58,602 | Sheinwald | 45,423 | |||||||||
Finke2 | 7,693 | Tolliver2,3 | 9,522 | |||||||||
Glavin | 24,539 | Wagoner | 66,325 | |||||||||
Henrikson | 70,334 | Womack2,3 | 3,372 | |||||||||
Kessler | 81,940 | Wood | 53,566 |
| 1. |
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deferred share awards. |
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27
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In February 2022, the compensation committee approved changes to the Non-Executive Director Stock Ownership Policy. Under the terms of the updated policy, each non-executive director is required to (i) achieve and thereafter maintain an ownership level that is equal to four times the value of the annual cash retainer and (ii) meet the policy requirement within five years of the later of the effective date of the new policy or first appointment as a non-executive director. Until such ownership level is achieved, each non-executive director is required to (i) continue to hold 100% of the shares previously granted by the company, and (ii) retain at least fifty percent (50%) of all future shares to be granted by the company.
2816 Invesco Ltd.
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Name | Fees earned or paid in cash ($)1 | Share awards ($)2 | Total ($) | |||||||||
Sarah E. Beshar | 120,000 | 144,967 | 264,967 | |||||||||
Joseph R. Canion | 135,000 | 144,967 | 279,967 | |||||||||
C. Robert Henrikson | 135,000 | 144,967 | 279,967 | |||||||||
Ben F. Johnson, III | 400,000 | 144,967 | 544,967 | |||||||||
Denis Kessler | 120,000 | 144,967 | 264,967 | |||||||||
Sir Nigel Sheinwald | 120,000 | 144,967 | 264,967 | |||||||||
G. Richard Wagoner, Jr. | 120,000 | 144,967 | 264,967 | |||||||||
Phoebe A. Wood
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| 170,000
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| 144,967
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| 314,967
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Director compensation table
The following table sets forth the compensation paid to our non-executive directors during 2021.
Name | Fees earned or paid in cash ($)1 | Share awards ($)2 | Total ($) | |||||||||
Sarah E. Beshar | 140,660 | 234,827 | 375,487 | |||||||||
Thomas M. Finke | 100,000 | 210,535 | 310,535 | |||||||||
Edward P. Garden3 | 109,048 | 221,403 | 330,451 | |||||||||
William F. Glavin, Jr. | 120,000 | 234,827 | 354,827 | |||||||||
C. Robert Henrikson | 135,000 | 234,827 | 369,827 | |||||||||
Denis Kessler | 120,000 | 234,827 | 354,827 | |||||||||
Nelson Peltz3 | 109,048 | 221,403 | 330,451 | |||||||||
Sir Nigel Sheinwald | 120,000 | 234,827 | 354,827 | |||||||||
Paula C. Tolliver4 | 46,190 | 144,973 | 191,163 | |||||||||
G. Richard Wagoner, Jr. | 400,000 | 234,827 | 634,827 | |||||||||
Christopher C. Womack4 | — | 84,570 | 84,570 | |||||||||
Phoebe A. Wood | 170,000 | 234,827 | 404,827 |
Includes the annual basic cash fee and, as applicable, |
Reflects the grant date fair value for each share award. |
3. | Mr. Garden and Mr. Peltz resigned from the |
4. | Ms. Tolliver was elected to the Board effective May 13, 2021. Mr. Womack was elected to the Board effective October 13, 2021. |
The following table presents the grant date fair value for each share award made to eachnon-executive director during 2018.
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2018 Director grant date fair value | ||||||||||||||||||||
Name | Date of grant 2/1/18 ($) | Date of grant 4/27/18 ($) | Date of grant 7/27/18 ($) | Date of grant 10/19/18 ($) | Total grant date fair value ($) | |||||||||||||||
Sarah E. Beshar | 36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
Joseph R. Canion | 36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
C. Robert Henrikson | 36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
Ben F. Johnson III | 36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
Denis Kessler | 36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
Sir Nigel Sheinwald | 36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
G. Richard Wagoner, Jr. | 36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
Phoebe A. Wood
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| 36,246
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| 36,248
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| 36,228
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| 36,245
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| 144,967
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Name | Date of grant 1/27/21 ($) | Date of grant 4/29/21 ($) | Date of grant 5/15/21 ($)1 | Date of grant 10/15/21 ($) | Total grant date fair value ($) | |||||||||||||||
Sarah E. Beshar | 36,240 | 36,223 | 162,364 | — | 234,827 | |||||||||||||||
Thomas M. Finke | 11,949 | 36,223 | 162,364 | — | 210,535 | |||||||||||||||
Edward P. Garden2 | 22,816 | 36,223 | 162,364 | — | 221,403 | |||||||||||||||
William F. Glavin, Jr. | 36,240 | 36,223 | 162,364 | — | 234,827 | |||||||||||||||
C. Robert Henrikson | 36,240 | 36,223 | 162,364 | — | 234,827 | |||||||||||||||
Denis Kessler | 36,240 | 36,223 | 162,364 | — | 234,827 | |||||||||||||||
Nelson Peltz2 | 22,816 | 36,223 | 162,364 | — | 221,403 | |||||||||||||||
Sir Nigel Sheinwald | 36,240 | 36,223 | 162,364 | — | 234,827 | |||||||||||||||
Paula C. Tolliver3 | — | — | 144,973 | — | 144,973 | |||||||||||||||
G. Richard Wagoner, Jr. | 36,240 | 36,223 | 162,364 | — | 234,827 | |||||||||||||||
Christopher C. Womack3 | — | — | — | 84,570 | 84,570 | |||||||||||||||
Phoebe A. Wood | 36,240 | 36,223 | 162,364 | — | 234,827 |
34
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Director outstanding awards table
The following table provides information about outstanding equity awards held by our non-executive directors as of December 31, 2021.
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2018 NEO total compensation
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Name | Base salary ($) | Cash bonus ($) | Stock deferral ($) | Long-term equity ($) | Total compensation ($) | YOY % change | Performance- based ($) | |||||||||||||||||||
Martin L. Flanagan | 790,000 | 3,300,000 | 1,350,000 | 5,560,000 | 11,000,000 | -20.1% | 3,455,000 | |||||||||||||||||||
Loren M. Starr | 450,000 | 911,976 | 396,879 | 1,641,000 | 3,399,855 | -3.3% | 1,018,940 | |||||||||||||||||||
Andrew T. S. Lo | 457,978 | 1,337,213 | 529,197 | 2,200,000 | 4,524,387 | 1.4% | 1,364,598 | |||||||||||||||||||
Gregory G. McGreevey | 450,000 | 1,800,610 | 674,390 | 2,075,000 | 5,000,000 | 0.0% | 1,374,695 | |||||||||||||||||||
Philip A. Taylor | 492,444 | 2,234,856 | 945,516 | 3,337,960 | 7,010,776 | -2.3% | 2,141,738 |
Name |
2018 Incentive target | 2018 Final incentive compensation (in millions $)1 | Outcome | |||||
Martin L. Flanagan | 13.00 | 10.21 | Below target | |||||
Loren M. Starr | 3.10 | 2.95 | Below target | |||||
Andrew T.S. Lo | 4.00 | 4.07 | Above target | |||||
Gregory M. McGreevey | 4.60 | 4.55 | Below target | |||||
Philip A. Taylor | 6.70 | 6.52 | Below target |
1 Incentive compensation includes bonus + short-term deferral + long-term equity.
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Performance award vesting matrix |
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In response to shareholder feedback, the committee added a second performance measure for performance-based equity awards. The number of shares that vest will equal the target amount multiplied by the vesting percentage associated with the Average AOM and Relative TSR ranking on the chart below. Vesting to range from 0% to 150%. We believe that the linked vesting performance thresholds adds to the significant rigor of our incentive program as payouts are not a range of outcomes but represent specific performance levels.
The company’s adjusted operating margin for 2018 was 36.5% and its Relative TSR was in the bottom quartile. Applying the 2018 performance results on a three-year average basis would result in a vesting percentage of 33% in respect to the 2018 performance-based awards – a meaningful impact on the compensation outcomes for our NEOs. |
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Relative TSR | ||||||||||||||||||||||||
Average AOM (%) | £ 25th%ile | | > 25th%ile and < 55th%ile |
| 55th%ile | | > 55th%ile and < 75th%ile |
| ³ 75th%ile | |||||||||||||||
< 44.5 | 100 | 113 | 125 | 138 | 150 | |||||||||||||||||||
42.5 | 83 | 101 | 117 | 129 | 142 | |||||||||||||||||||
40.5 | 67 | 88 | 108 | 121 | 133 | |||||||||||||||||||
38.5 | 50 | 75 | 100 | 113 | 125 | |||||||||||||||||||
36.5 | 33 | 58 | 83 | 101 | 117 | |||||||||||||||||||
34.5 | 17 | 42 | 68 | 88 | 108 | |||||||||||||||||||
£ 28.0 | 0 | 25 | 50 | 75 | 100 | |||||||||||||||||||
As noted above, if Invesco’s Relative TSR is equal to or below the 25th percentile and average adjusted operating margin is 28.0% or less, then our CEO and each of our senior managing directors will not be entitled to a distribution of any shares or accrued dividends. | ||||||||||||||||||||||||
The rigor of the thresholds, as well as the partial vesting of awards for failure to meet the target range and an upside opportunity for performance beyond the target range, align with the committee’s belief that the company’s performance-based awards demonstrate our pay-for-performance philosophy. | ||||||||||||||||||||||||
Below is a summary of the features of our performance awards: | ||||||||||||||||||||||||
Performance-based award features | ||||||||||||||||||||||||
Performance period |
| Three years | ||||||||||||||||||||||
Performance metrics |
| Adjusted operating margin and Relative TSR | ||||||||||||||||||||||
Performance vesting range |
| 0% - 150%; straight line interpolation used for actual result | ||||||||||||||||||||||
Vesting |
| 3-year cliff | ||||||||||||||||||||||
Dividends |
| Deferred and paid only to the extent an award vests | ||||||||||||||||||||||
Settlement |
| Shares | ||||||||||||||||||||||
Clawback |
| Subject to clawback policy in the event of fraudulent or willful misconduct |
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2014 |
2015 |
2016 |
2017 |
2018 | ||||||||||||||||||||||||||||||||||||
Adjusted operating income1 | +16% | -0.5% | -13% | +14% | -6% | |||||||||||||||||||||||||||||||||||
Adjusted operating margin1 | +4 | -1 | -6 | +3 | -8% | |||||||||||||||||||||||||||||||||||
CEO total incentive compensation2 | +7% | -6% | -11% | +3% | -21% | |||||||||||||||||||||||||||||||||||
1 The adjusted financial measures are allnon-GAAP financial measures. See the information in Appendix B of this Proxy Statement regardingNon-GAAP financial measures. 2 Consists of annual cash bonuses, annual stock deferral awards and long-term equity awards. |
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incentive plan | compensation | |||||||||||||||||||||||
Name and Principal Position | Year | Salary ($)1 | Share awards ($)2 | compensation ($)3 | ($)4 | Total ($) | ||||||||||||||||||
Martin L. Flanagan | 2018 | 790,000 | 8,714,708 | 3,300,000 | 116,901 | 12,921,609 | ||||||||||||||||||
President and Chief | 2017 | 790,000 | 8,622,702 | 4,268,003 | 124,490 | 13,805,195 | ||||||||||||||||||
Executive Officer | 2016 | 790,000 | 9,644,970 | 4,045,500 | 126,585 | 14,607,055 | ||||||||||||||||||
Loren M. Starr | 2018 | 450,000 | 2,072,928 | 911,976 | 30,830 | 3,465,734 | ||||||||||||||||||
Senior Managing Director | 2017 | 450,000 | 2,050,470 | 991,278 | 29,709 | 3,521,457 | ||||||||||||||||||
and Chief Financial Officer | 2016 | 450,000 | 2,293,987 | 939,600 | 28,374 | 3,711,961 | ||||||||||||||||||
Andrew T.S. Lo | 2018 | 457,978 | 2,628,842 | 1,337,213 | 63,570 | 4,487,603 | ||||||||||||||||||
Senior Managing Director | 2017 | 460,419 | 2,549,447 | 1,371,500 | 66,011 | 4,447,377 | ||||||||||||||||||
and Head of Invesco Asia Pacific | 2016 | 462,062 | 2,782,980 | 1,300,000 | 68,656 | 4,613,698 | ||||||||||||||||||
Gregory G. McGreevey5 | 2018 | 450,000 | 2,632,942 | 1,800,610 | 29,349 | 4,912,901 | ||||||||||||||||||
Senior Managing Director, | 2017 | 450,000 | 3,274,988 | 1,917,000 | 27,861 | 5,669,849 | ||||||||||||||||||
Investments | ||||||||||||||||||||||||
Philip A. Taylor | 2018 | 492,444 | 4,333,222 | 2,234,856 | 18,617 | 7,079,139 | ||||||||||||||||||
Vice Chair | 2017 | 491,458 | 4,034,918 | 2,352,480 | 16,579 | 6,895,435 | ||||||||||||||||||
2016 | 481,346 | 4,519,953 | 2,262,000 | 17,494 | 7,280,793 | |||||||||||||||||||
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Estimated future payout under | ||||||||||||||||||||||||||||||||||||||||
equity incentive plan awards | ||||||||||||||||||||||||||||||||||||||||
Closing | ||||||||||||||||||||||||||||||||||||||||
All | market | |||||||||||||||||||||||||||||||||||||||
other | price on | Grant date | ||||||||||||||||||||||||||||||||||||||
share | date of | fair value | ||||||||||||||||||||||||||||||||||||||
Committee | Type of | Threshold | Target | Maximum | awards | grant | of share | |||||||||||||||||||||||||||||||||
Name | Grant date | action date | award1 | Vesting2 | (#)3 | (#)3 | (#)3 | (#)4 | ($/Share) | awards ($)5 | ||||||||||||||||||||||||||||||
Martin L. | 02/28/18 | 02/08/18 | Time | 4-year ratable | – | – | – | 133,909 | 32.54 | 4,357,399 | ||||||||||||||||||||||||||||||
Flanagan | 02/28/18 | 02/08/18 | Performance | 36-month cliff | – | 133,909 | 200,864 | – | 32.54 | 4,357,399 | ||||||||||||||||||||||||||||||
Loren M. Starr | 02/28/18 | 02/08/18 | Time | 4-year ratable | – | – | – | 31,852 | 32.54 | 1,036,464 | ||||||||||||||||||||||||||||||
02/28/18 | 02/08/18 | Performance | 36-month cliff | – | 31,852 | 47,778 | – | 32.54 | 1,036,464 | |||||||||||||||||||||||||||||||
Andrew T.S. Lo | 02/28/18 | 02/08/18 | Time | 4-year ratable | – | – | – | 40,394 | 32.54 | 1,314,421 | ||||||||||||||||||||||||||||||
02/28/18 | 02/08/18 | Performance | 36-month cliff | – | 40,394 | 60,591 | – | 32.54 | 1,314,421 | |||||||||||||||||||||||||||||||
Gregory G. | 02/28/18 | 02/08/18 | Time | 4-year ratable | – | – | – | 40,457 | 32.54 | 1,316,471 | ||||||||||||||||||||||||||||||
McGreevey | 02/28/18 | 02/08/18 | Performance | 36-month cliff | – | 40,457 | 60,686 | – | 32.54 | 1,316,471 | ||||||||||||||||||||||||||||||
Philip A. Taylor | 02/28/18 | 02/08/18 | Time | 3-year ratable | – | – | – | 49,937 | 32.54 | 1,624,950 | ||||||||||||||||||||||||||||||
02/28/18 | 02/08/18 | Time | 4-year cliff | – | – | – | 16,646 | 32.54 | 541,661 | |||||||||||||||||||||||||||||||
02/28/18 | 02/08/18 | Performance | 33-month cliff | – | 66,583 | 99,875 | – | 32.54 | 2,166,611 | |||||||||||||||||||||||||||||||
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8,862 | ||||||||
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Thomas M. Finke | 575 | |||||||
04/29/21 | 1,311 | |||||||
05/15/21 | 5,807 | |||||||
Total | 7,693 | |||||||
| ||||||||
Edward P. Garden3 | 1,098 | |||||||
04/29/21 | 1,311 | |||||||
05/15/21 | 5,807 | |||||||
Total | 8,216 | |||||||
| ||||||||
William F. Glavin, Jr. | 1,744 | |||||||
04/29/21 | 1,311 | |||||||
05/15/21 | 5,807 | |||||||
Total | 8,862 | |||||||
C. Robert Henrikson | 01/27/21 | 1,744 | ||||||
04/29/21 | 1,311 | |||||||
05/15/21 | 5,807 | |||||||
Total | 8,862 | |||||||
Denis Kessler | 01/27/21 | 1,744 | ||||||
04/29/21 | 1,311 | |||||||
05/15/21 | 5,807 | |||||||
Total | 8,862 | |||||||
Nelson Peltz3 | 01/27/21 | 1,098 | ||||||
04/29/21 | 1,311 | |||||||
05/15/21 | 5,807 | |||||||
Total | 8,216 | |||||||
Sir Nigel Sheinwald | 01/27/21 | 1,744 | ||||||
04/29/21 | 1,311 | |||||||
05/15/21 | 5,807 | |||||||
Total | 8,862 | |||||||
Paula C. Tolliver4 | 05/15/21 | 5,185 | ||||||
Total | 5,185 | |||||||
G. Richard Wagoner, Jr. | 01/27/21 | 1,744 | ||||||
04/29/21 | 1,311 | |||||||
05/15/21 | 5,807 | |||||||
Total | 8,862 | |||||||
Christopher C. Womack4 | 10/15/21 | 3,372 | ||||||
Total | 3,372 | |||||||
Phoebe A. Wood | 01/27/21 | 1,744 | ||||||
04/29/21 | 1,311 | |||||||
05/15/21 | 5,807 | |||||||
Total | 8,862 |
1. |
|
Dividends and dividend equivalents on unvested |
|
4. | Ms. Tolliver was |
18 Invesco Ltd.
60
The Board has adopted Corporate Governance Guidelines (“Guidelines”) and Terms of Reference for our Chair and for our Chief Executive Officer, each of which is available in the corporate governance section of the company’s website. The Guidelines set forth the practices the Board follows with respect to, among other matters, the composition of the Board, director responsibilities, Board committees, director access to officers, employees and independent advisors, director compensation and performance evaluation of the Board.
Code of conduct and directors’ code of conduct
As part of our ethics and compliance program, our Board has approved a code of ethics (the “Code of Conduct”) that applies to our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions, as well as to our other officers and employees. The Code of Conduct is posted on the company’s website. In addition, we have adopted a separate Directors’ Code of Conduct that applies to all members of the Board. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of the Code of Conduct for our directors and executive officers by posting such information on the company’s website. The company maintains a compliance reporting line, where employees and individuals outside the company can anonymously submit a complaint or concern regarding compliance with applicable laws, rules or regulations, the Code of Conduct, as well as accounting, auditing, ethical or other concerns.
As described in the Guidelines, the company’s business is conducted day-to-day by its officers, managers and employees, under the direction of the Chief Executive Officer and the oversight of the Board, to serve the interest of our clients and enhance the long-term value of the company for its shareholders. The Board is elected by the shareholders to oversee our management team and to seek to assure that the long-term interests of the shareholders are being served. In light of these differences in the fundamental roles of the Board and management, the company has chosen to separate the Chief Executive Officer and Board Chair positions. The Board believes separation of these roles: (i) allows the Board to more effectively monitor and evaluate objectively the performance of the Chief Executive Officer, such that the Chief Executive Officer is more likely to be held accountable for his performance; (ii) allows the non-executive Chair to control the Board’s agenda and information flow; and (iii) creates an atmosphere in which other directors are more likely to challenge the Chief Executive Officer and other members of our senior management team. For these reasons, the company believes that this Board leadership structure is currently the most appropriate structure for the company. Nevertheless, the Board may reassess the appropriateness of the existing structure at any time, including following changes in Board composition, in management or in the character of the company’s business and operations.
The nomination and corporate governance committee identifies new directors using the following process:
The committee reviews and updates its criteria for prospective directors based on succession planning for directors, to fill gaps in skill sets among current directors and to address new or evolving needs of the company. The committee then utilizes each of the following recommendations to determine the candidates for consideration: • Directors • Independent search firms Candidates meet with the committee members, the Board Chair, the other Board members and the CEO who assess candidates based on several factors, including whether the candidate has skills that will assist the company in seeking to meet its long-term strategic objectives and will bring diversity of thought and the desired qualifications to our Board. The Board has adopted a Board-level diversity policy that recognizes that it benefits from the contribution of different perspectives, experiences and characteristics which promote better corporate governance. The Board believes diversity allows the Board to make more informed judgments. With respect to diversity characteristics, the Board and its nomination and corporate governance committee considers gender, race, ethnicity, country of origin, nationality or cultural background, and other personal characteristics. | ||
2022 Proxy Statement 19 |
The nomination and corporate governance committee believes there are certain minimum qualifications that each director nominee must satisfy in order to be suitable for a position on the Board, including that such nominee:
Number of shares or | Market value of | Equity incentive plan | Equity incentive plan | |||||||||||||||||||||
units that have not | shares or units that | awards that have | awards that have | |||||||||||||||||||||
Name | Footnotes | Date of grant | vested (#) | have not vested ($) | not vested (#) | not vested ($) | ||||||||||||||||||
Martin L. Flanagan | 1 | 02/28/15 | 38,227 | 639,920 | – | – | ||||||||||||||||||
2 | 02/28/15 | – | – | 25,624 | 428,946 | |||||||||||||||||||
3 | 02/28/16 | 106,734 | 1,786,727 | – | – | |||||||||||||||||||
4 | 02/28/16 | – | – | 71,218 | 1,192,189 | |||||||||||||||||||
5 | 02/28/17 | 119,961 | 2,008,147 | – | – | |||||||||||||||||||
6 | 02/28/17 | – | – | 107,921 | 1,806,598 | |||||||||||||||||||
7 | 02/28/18 | 133,909 | 2,241,637 | – | – | |||||||||||||||||||
8 | 02/28/18 | – | – | 133,909 | 2,241,637 | |||||||||||||||||||
Loren M. Starr | 1 | 02/28/15 | 9,033 | 151,212 | – | – | ||||||||||||||||||
2 | 02/28/15 | – | – | 5,960 | 99,770 | |||||||||||||||||||
3 | 02/28/16 | 25,498 | 426,837 | – | – | |||||||||||||||||||
4 | 02/28/16 | – | – | 16,827 | 281,684 | |||||||||||||||||||
5 | 02/28/17 | 28,651 | 479,618 | – | – | |||||||||||||||||||
6 | 02/28/17 | – | – | 25,498 | 426,837 | |||||||||||||||||||
7 | 02/28/18 | 31,852 | 533,202 | – | – | |||||||||||||||||||
8 | 02/28/18 | – | – | 31,852 | 533,202 | |||||||||||||||||||
Andrew T.S. Lo | 1 | 02/28/15 | 10,448 | 174,900 | – | – | ||||||||||||||||||
2 | 02/28/15 | – | – | 6,829 | 114,317 | |||||||||||||||||||
3 | 02/28/16 | 31,052 | 519,810 | – | – | |||||||||||||||||||
4 | 02/28/16 | – | – | 20,295 | 339,738 | |||||||||||||||||||
5 | 02/28/17 | 35,694 | 597,518 | – | – | |||||||||||||||||||
6 | 02/28/17 | – | – | 31,609 | 529,135 | |||||||||||||||||||
7 | 02/28/18 | 40,394 | 676,196 | – | – | |||||||||||||||||||
8 | 02/28/18 | – | – | 40,394 | 676,196 | |||||||||||||||||||
Gregory G.McGreevey | 1 | 02/28/15 | 9,623 | 161,089 | – | – | ||||||||||||||||||
9 | 12/15/15 | 7,977 | 133,535 | – | – | |||||||||||||||||||
3 | 02/28/16 | 47,048 | 787,584 | – | – | |||||||||||||||||||
5 | 02/28/17 | 53,006 | 887,320 | – | – | |||||||||||||||||||
10 | 03/15/17 | – | – | 30,769 | 515,073 | |||||||||||||||||||
7 | 02/28/18 | 40,457 | 677,250 | – | – | |||||||||||||||||||
8 | 02/28/18 | – | – | 40,457 | 677,250 | |||||||||||||||||||
Philip A. Taylor | 1 | 02/28/15 | 18,186 | 304,434 | – | – | ||||||||||||||||||
2 | 02/28/15 | – | – | 11,050 | 184,977 | |||||||||||||||||||
11 | 02/28/16 | 25,922 | 433,934 | – | – | |||||||||||||||||||
5 | 02/28/17 | 58,154 | 973,498 | – | – | |||||||||||||||||||
6 | 02/28/17 | – | – | 47,809 | 800,323 | |||||||||||||||||||
7 | 02/28/18 | 66,583 | 1,114,599 | – | – | |||||||||||||||||||
8 | 02/28/18 | – | – | 66,583 | 1,114,599 | |||||||||||||||||||
be an individual of the highest integrity and have an inquiring mind, a willingness to ask hard questions and the ability to work well with others;
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be free of any conflict of interest that would violate any applicable law or regulation or interfere with the proper performance of the responsibilities of a director;
be willing and able to devote sufficient time to the affairs of the company and be diligent in fulfilling the responsibilities of a director; and
have the capacity and desire to represent the best interests of the shareholders as a whole.
The committee will consider candidates recommended for nomination to the Board by shareholders of the company. Shareholders may nominate candidates for election to the Board under Bermuda law and our Bye-Laws. The manner in which the committee evaluates candidates recommended by shareholders would be generally the same as any other candidate. However, the committee would also seek and consider information concerning any relationship between a shareholder recommending a candidate and the candidate to determine if the candidate can represent the interests of all of the shareholders. For further information regarding deadlines for shareholder proposals, see Important additional information — Shareholder proposals for the 2023 annual general meeting on page 85.
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When a new independent director joins the Board, we provide an orientation program for the purpose of providing the new director with an understanding of the strategy and operations of the company. To assist the directors in understanding the company and its industry and maintaining the level of expertise required for our directors, the company‘s management team makes presentations during Board meetings relating to the competitive and industry environment and the company’s goals and strategies. In addition, at most meetings the Board receives presentations on various topics related to key industry trends, topical business issues and governance.
Each director is encouraged to participate in continuing education programs for public company directors sponsored by nationally recognized educational organizations not affiliated with the company. The cost of all such continuing education is paid for by the company.
The Board engages an independent external advisor to coordinate the Board’s self- assessment by its members. The advisor has each director review a questionnaire and then performs one-on-one confidential interviews with directors. In addition to the questionnaires and interviews of each director, interviews are also conducted with those members of executive management who attend Board meetings on a regular basis. The The Board then discusses the evaluation to determine what action, if any, could further enhance the operations of the Board and its committees. | ||
20 Invesco Ltd.
Share awards | ||||||||
Number of shares | Value realized | |||||||
Name | acquired on vesting | on vesting ($) | ||||||
Martin L. Flanagan | 299,376 | 9,451,379 | ||||||
Loren M. Starr | 70,518 | 2,294,656 | ||||||
Andrew T.S. Lo | 84,165 | 2,738,729 | ||||||
Gregory G. McGreevey | 70,089 | 2,156,335 | ||||||
Philip A. Taylor
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Why we engage
One of our key priorities is ensuring robust outreach and engagement with our shareholders in order to:
Provide transparency into our business, governance practices and compensation programs
Determine which issues are important to our shareholders and share our views on those issues
Identify emerging trends or issues that may impact our business and influence our practices
How we engage
62
Potential payments upon termination or change in control of the company
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Termination | ||||||||||||||||||||
by executive | ||||||||||||||||||||
for good reason | ||||||||||||||||||||
or involuntary | ||||||||||||||||||||
termination | ||||||||||||||||||||
Voluntary termination | by the company | Qualified termination | ||||||||||||||||||
Benefit and payments | without good reason | without | Death | Change | following change in | |||||||||||||||
upon termination1 | ($) | cause ($) | or disability ($) | in control ($)2 | control ($)3 | |||||||||||||||
Martin L. Flanagan | ||||||||||||||||||||
Annual cash bonus4 | 4,750,000 | 4,750,000 | 4,750,000 | 4,750,000 | 4,750,000 | |||||||||||||||
Cash severance5 | – | 14,254,798 | – | – | 14,254,798 | |||||||||||||||
Value of equity acceleration | – | 12,345,800 | 12,345,800 | 12,345,800 | 12,345,800 | |||||||||||||||
Value of benefits6 | – | 66,415 | – | – | 66,415 | |||||||||||||||
Loren M. Starr | ||||||||||||||||||||
Value of equity acceleration | – | 2,932,363 | 2,932,363 | 2,932,363 | 2,932,363 | |||||||||||||||
Andrew T.S. Lo | ||||||||||||||||||||
Value of equity acceleration | – | 3,627,809 | 3,627,809 | 3,627,809 | 3,627,809 | |||||||||||||||
Gregory G. McGreevey | ||||||||||||||||||||
Value of equity acceleration | – | 3,839,101 | 3,839,101 | 3,839,101 | 3,839,101 | |||||||||||||||
Philip A. Taylor | ||||||||||||||||||||
Value of equity acceleration | – | 4,926,364 | 4,926,364 | 4,926,364 | 4,926,364 | |||||||||||||||
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Under the terms of an agreement with Mr. Taylor, Mr. Taylor is entitled to certain benefits to be paid in 2019 or 2020 in connection with his termination of employment. SeeEmployment agreements and Potential payments upon termination or a change in control above.
Each of Messrs. Starr, Lo, McGreevey and Taylor is a party to an agreement that provides for a termination notice period of either six or twelve months. Following any notice of termination, the employee would continue to receive salary and benefits compensation, and the vesting periods with respect to any outstanding share awards would continue to run, in the normal course until the date of termination.
In accordance with SEC rules, the information presented in this table assumes a termination date of December 31, 2018 and that the applicable notice had been given prior to such date.
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In addition to our year-round shareholder engagement, we also conduct a targeted shareholder and proxy adviser outreach in the Fall of each year. See Shareholder and proxy advisory engagement and feedback for more information on this outreach and related findings.
2022 Proxy Statement 21 |
Communications with the Chair and other non-executive directors
Any interested party may communicate with the Chair of our Board or our non-executive directors as a group at the following address:
Invesco Ltd.
1555 Peachtree Street NE
Atlanta, Georgia 30309
Attn: Office of the Company Secretary, Legal Department
Communications will be distributed to the Board, or to any of the Board’s committees or individual directors as appropriate, depending on the facts and circumstances of the communication. In that regard, the Invesco Board does not receive certain items which are unrelated to the duties and responsibilities of the Board.
In addition, the company maintains the Invesco Whistleblower Hotline for its employees or individuals outside the company to report complaints or concerns on an anonymous and confidential basis regarding questionable accounting, internal accounting controls or auditing matters and possible violations of the company’s Code of Conduct or law. Further information about the Invesco Whistleblower Hotline is available at the company’s website.
Non-employees may submit any complaint regarding accounting, internal accounting controls or auditing matters directly to the audit committee of the Board of Directors by sending a written communication addressed to the audit committee at the address set forth above.
Board’s role in risk oversight
The Board has oversight responsibility for the company’s risk management processes including the monitoring of the company’s overall risk profile. Though Board committees address specific risks and risk processes within their purview, the Board has not delegated risk oversight to a committee as full Board engagement supports appropriate consideration of risk in strategy setting and a more holistic understanding of risk across the enterprise.
Invesco is committed to continually strengthening and evolving our risk management activities to ensure they keep pace with business change and client expectations. We believe a key factor in our ability to manage through challenging market conditions and significant business change is our integrated and global approach to risk management. Risk management is embedded in our day-to-day decision-making as well as our strategic planning process while our global risk management framework enables consistent and meaningful risk dialogue up, down and across the company. Our framework leverages two governance structures: (i) our Global Performance and Risk Committee oversees the management of core investment risks; and (ii) our Corporate Risk Management Committee oversees the management of all other business and strategy related risks. A network of regional, business unit and specific risk management committees, with oversight of the Corporate Risk Management Committee, provides ongoing identification, assessment, management and monitoring of risk that ensures both broad as well as in-depth, multilayered coverage of the risks existing and emerging in the various domains of our business.
One of these risk management committees, the Global Security Oversight Committee, provides executive level oversight and monitoring of the end-to-end programs dedicated to managing information security and cyber related risk. Important to these programs is our investment in threat-intelligence, our active engagement in industry and government security-related forums and our utilization of external experts to challenge our program maturity, assess our controls and routinely test our capabilities.
The Board reviews and discusses with executive and senior management risk management information and reporting provided, at least quarterly, by the Global Performance and Risk Committee and the Corporate Risk Management Committee. The Board also reviews and approves the company’s risk appetite statement and crisis management framework. By receiving these reports, the Board maintains a practical understanding of the company’s risk management processes, overall risk profile and risk culture. In addition, Board and committee agenda business-related topics include discussion of the risks in our ongoing business as well as those introduced by new business developments. Through this regular and consistent risk communication and dialogue, the Board seeks to maintain reasonable assurance that all material risks of the company are being addressed and that the company is fostering a risk-aware culture in which effective risk management is embedded in the business.
22 Invesco Ltd.
In addition, the compensation committee annually assesses the risks of our compensation policies and practices. The compensation committee has concluded our policies and practices do not create risks that are reasonably likely to have a material adverse effect on the company. In reaching this conclusion, the compensation committee considered the input of a working group comprised of representatives from our human resources and finance departments that reviewed each of Invesco’s compensation plans.
Invesco’s compensation programs are designed to reward success over the long-term, promote a longer-term view of risk and return in decision making and seek to protect against incentives for inappropriate risk taking. Examples of risk mitigation in our compensation program design include:
Consideration of multiple performance metrics in establishing the company-wide annual incentive pool each year, so no one metric creates an undue reward that might encourage excessive risk taking;
The vast majority of investment professional bonus plans have multi-year measurement periods and are weighted to longer-term performance, caps on earnings and discretionary components;
Sales and commission plans generally contain multiple performance measures and discretionary elements; and
Executives receive a substantial portion of compensation in the form of long-term equity that vests over multi-year periods. Time-based equity awards vest ratably over a four-year period. Performance-based equity awards for executive officers are subject to a three-year performance period and three-year cliff vesting. The achievement of financial performance for the performance-based equity awards must be certified by the compensation committee and the awards are subject to a clawback. Executive officers are also subject to our stock ownership policy.
The audit committee routinely receives reports from the control functions of finance, legal, compliance and internal audit. The Chief Risk and Audit Officer reports to the Chair of the audit committee. The audit committee oversees the internal audit function’s planning and resource allocation in a manner designed to ensure testing of controls and other internal audit activities are appropriately prioritized in a risk-based manner. The audit committee also seeks to assure that appropriate risk-based inputs from management and internal audit are communicated to the company’s independent public auditors.
Cyber security
Cyber threats are considered one of the most significant risks facing financial institutions. To mitigate that risk, we have a designated Global Chief Security Officer and have a global security program that brings together Information Security, Global Privacy, Business Continuity & Crisis Management, Operational Resilience, Corporate Security, Business Security Officers and Strategy, Projects & Governance in collaboration with Global Intelligence & Threat Analysis. This structure supports a more comprehensive, holistic approach to keeping Invesco clients, employees, and critical assets safe, upholding their privacy rights, while enabling a secure and resilient business.
Our information security program, led by our Chief Information Security Officer, is designed to oversee, and maintain all aspects of information security risk and seeks to ensure the confidentiality, integrity, and availability of information assets. This includes the implementation of controls aligned with industry guidelines and applicable statutes and regulations to identify threats, detect attacks and protect these information assets. We have an incident response program that includes periodic testing and is designed to restore business operations as quickly and as orderly as possible in the event of a breach or third-party incident.
2022 Proxy Statement 23 |
Invesco is putting ESG at the forefront of our role as investors
For more information regarding Invesco’s ESG investment stewardship, please see our most recent ESG Investment Stewardship Report on the company’s website.
1. | As of 12/31/2021. |
2. | Invesco uses an internal framework to measure the level of ESG considerations as an influence in investment decision making. We are working towards all of Invesco’s investment teams attaining the ESG integration level defined as minimal but systematic integration by 2023. |
24 Invesco Ltd.
Commitment to Principles for Responsible Investment (PRI) Invesco is a strong advocate of responsible investing practices, formalizing our commitment globally in 2013 when we became a signatory of the PRI. We believe that our policies, processes and overall company approach value the spirit of the PRI and demonstrate Invesco’s commitment to stewardship. | Seven Invesco Real Estate-managed funds received five out of five Green Stars from GRESB Placing these funds in the top 20% of all global submissions in 2021. Three funds received four out of five Green Stars.
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Industry engagement
We are involved with several external organizations and various industry advocacy groups through membership and other means of support. Invesco believes that ESG investing is an essential part of the solution to creating a sustainable future and by being part of the industry dialogue, we reconfirm our commitment to ESG investing for the long term.
Invesco is a member and supporter of numerous external organizations largely via the different investment centers, including: | ||||
• PRI Investor Signatory • Task Force for Climate Related Disclosure (TCFD) (Supporter and Discloser) • Carbon Disclosure Project (CDP) (Investor Member and Discloser) • Sustainability Accounting Standards Board (SASB) • Global Real Estate Sustainability Benchmark (GRESB) • Climate Bonds Initiative (Partner) • Confluence Philanthropy Associate Advisor Member • Farm Animal Investment Risk & Return Initiative (FAIRR) • UK Stewardship Code | • Japanese Stewardship Code (Signatory) • Quoted Companies Alliance (QCA) • UK Sustainable Investment and Finance Association (UKSIF) • Investment Association (UK) • Asian Corporate Governance Association (ACGA) • Italian Sustainable Forum (ItaSIF) • Council of Institutional Investors (CII) (US) • Responsible Investment Association (RIA) (Canada) • Responsible Investment Association Australia (RIAA) (Australia) | |||
Invesco serves in an advocacy role for the industry through participation in the following groups: | ||||
• Climate Action 100+ (Leader and Participant) • Coalition for Climate Resilient Investment (CCRI) (Founding Member) • World Economic Forum Financing the Transition to a Net-Zero Future Working Group • Sustainability Accounting Standards Board (SASB) Standards Advisory Group • One Planet Asset Managers Initiative (OPAM) • Transition Pathway Initiative (TPI) • UKSIF Board of Directors • ICI Global ESG Task Force | • Quoted Companies Alliance (QCA) Financial Reporting Expert Group (UK) • Investor Forum (UK) • Asia Investor Group on Climate Change (AIGCC) • Institutional Investors Group on Climate Change (IIGCC) • IIGCC Net Zero Framework Working Groups • Active participation in PRI advisory committees and working groups |
2022 Proxy Statement 25 |
Invesco’s corporate stewardship
At Invesco, corporate stewardship matters. Our efforts are motivated by the belief that doing what is right for the environment, our people and the communities in which we have a presence helps us deliver positive outcomes for our shareholders. Our senior leaders and employees are committed to the communities where we live, work and volunteer. We actively partner with non-profits, start-ups and other organizations to strengthen our communities. Our areas of focus are:
• improving financial education • protecting the environment • promoting environmental sustainability | • championing diversity and inclusion in our industry and our company • supporting and collaborating with local civic and community organizations | |
Through Invesco Cares and Environmental Green Teams, local Invesco offices identify areas of need that are unique to each specific community. Our Environmental Green Teams focus on preserving and improving the environment by focusing on reducing carbon emissions, eliminating plastic consumption, promoting waste awareness and recycling electronic computers and laptops. These groups also volunteer to clean up local community parks, plant trees and clean up marine areas. The Invesco culture encourages employees to go beyond their work responsibilities, and join with like-minded colleagues, to make an impact in communities we serve. Invesco Cares partners with local charitable organizations around the globe through volunteering, sharing our skills, and raising funds to improve the local communities where we work.
Invesco strives to align with the Global Reporting Initiative (GRI) standard reporting guidelines and Sustainability Accounting Standards Board (SASB) metrics for Asset Management & Custody Activities as further detailed in our Corporate Social Responsibility Report, which is available on the company website.
For 2020, Invesco offset 8,6491 tonnes of carbon dioxide emissions through our partnership with ClimateCare, representing all of our air and rail travel purchased through our third-party travel agency, which represents the majority of our air and rail travel for 2020. | Invesco’s commitment to the natural environment Operating environmentally responsibly is fundamental to our corporate stewardship. Invesco seeks to help protect our natural environment by implementing and maintaining environmental management processes – for example, at Invesco offices we aim to reduce utility consumption and carbon emissions, promote energy efficiency and utilize appropriate waste management practices. Invesco has a structured program that monitors our environmental impact, gathers ideas and suggestions for improving our global environmental management practices and approves initiatives. Invesco maintains global objectives and regional targets which are monitored to seek to ensure the continual improvement of our impact on the environment. Our commitments and objectives are detailed in our Global Corporate Carbon Emissions and Environmental Policy Statement which is available on the company’s website. | |
Our 4 pillar approach to diversity, equity and inclusion At Invesco, there are four key components to our DEI strategy: |
Number of shares | Aggregate | |||||||
Name and current title | repurchased (#) | consideration ($) | ||||||
Kevin M. Carome | 24,431 | 794,985 | ||||||
Senior Managing Director and General Counsel | ||||||||
Gregory M. McGreevey | 31,788 | 977,977 | ||||||
Senior Managing Director, Investments | ||||||||
Colin D. Meadows | 34,526 | 1,123,476 | ||||||
Senior Managing Director and Head of Private Markets and Global Institutional | ||||||||
Andrew R. Schlossberg | 15,386 | 451,931 | ||||||
Senior Managing Director and Head of the Americas | ||||||||
Loren M. Starr | 31,948 | 1,039,588 | ||||||
Senior Managing Director and Chief Financial Officer | ||||||||
Philip A. Taylor | 89,374 | 2,428,419 | ||||||
Vice Chair | ||||||||
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Purpose and priorities Ensuring DEI is a key part of who we are and how we operate | 2
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Talent Enhancing diversity and representation by focusing on the recruitment and advancement of diverse colleagues | 3
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Belonging Ensuring an inclusive culture where all colleagues feel safe and supported | 4 |
Client and community Moving our industry and our communities forward |
We know that success requires the participation of all Invesco colleagues, and these guiding principles allow us to coordinate efforts across the organization, in every region in which we operate. | ||
1. 2020 is the latest data available at the date of this proxy. |
26 Invesco Ltd.
Purpose and priorities
Ensuring that every Invesco colleague has a clear role to play in our DEI efforts is critical to our success. This begins at the top, where our CEO and each one of our Senior Managing Directors continue to have DEI embedded in their annual performance goals. Executives also lead and sit on our Diversity and Inclusion Executive Committee, helping to push our agenda further and drive accountability into the organization.
From 2018 to 2021, we have increased female representation of senior managers from 27% to 35%globally. | Talent
• We set a target of 35% female representation of senior managers, which we have achieved as of December 31, 2021. • We continued our pursuit of reaching our set target of 95% diverse candidate slates and interview panels for new hires. During 2021, 61% of candidate slates and 80% of interview panels were diverse. For the year 2021, 51% of all US-based new hires were racially diverse, and 40% were women. | |
Belonging While representation of diverse colleagues is a key focus, we know that success goes hand in
• Business Resource Groups: Invesco supports a variety of BRGs — grassroots employee networks that represent the diversity of our employees. BRGs build partnerships and networks internally and drive a sense of belonging across the company. In 2021 we launched two new BRGs, bringing us to a total of 11, and our employees | ||
Client and community We actively engage with external partners to inform our | ||
Measuring success All of these efforts are sponsored by our CEO and senior managing directors, supported by our senior leaders across the business, cascaded to our employees and captured in the firm’s business plans and leadership objectives. We continue to track inclusion through employee surveys. We find a high level of engagement across groups and utilize the results of these surveys to drive our inclusion goals and strategy. In 2021, Invesco continued to conduct pulse surveys to monitor, among other factors, our inclusion efforts and employee engagement. These surveys are evaluated along the lines of gender, race, and their | ||
Count Me In In 2020, Invesco introduced a voluntary self-ID campaign, #CountMeIn, to |
2022 Proxy Statement 27 |
Unconscious Bias training for all employees 86%1 completion at December 31, 2021 | Business Resource Groups Eleven active BRGs hosted over 70 BRG events globally | Public Goal To have 35-40% Women in Senior Leadership by 2022. Currently 35%. |
Human Rights Campaign Invesco achieved a score of 100 on the 2020 and 2021 HRC Corporate Equality Index and was named a top employer for LGBTQ+ Inclusion. | Global Data Collection In 2020, Invesco launched its first demographic data capture campaign to collect voluntary data across several dimensions such as race and ethnicity, sexual orientation, gender identity, disability, neurodiversity, caregivers, military service, workplace returners, and first-generation college graduates. | Public Pledges Invesco signed new public pledges in 2020 such as the Corporate Call to Action Coalition for Equity, Confluence Belonging Pledge, and CEO Action for D&I. |
External DEI Partners | ||||||
• Diversity Project UK • NICSA Diversity Project • InterInvest • FordFoundation Coalition for Equity and Opportunity • Confluence Philanthropy | • PFLAG • The Return Hub • The Equity Collective • Investment 20/20 • The Prince’s Responsible Business Network | • CEO Action for Diversity and Inclusion • Atlanta Committee for Progress • Human Rights Campaign |
Race and ethnicity of US colleagues (%)2 | ||||||||||||||||||||||||||
• American Indian | 0.09 | • Hispanic/Latino | 7.20 | • White | 60.46 | |||||||||||||||||||||
• Asian | 15.76 | • Pacific Islander | 0.03 | • Any other ethnicity | 4.01 | |||||||||||||||||||||
• Black
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1. | Percentage is a rolling completion rate that includes new employees who are assigned training. |
2. | All race and ethnicity data covers US-based employees and is a disclosure of EEO-1 data that was self-disclosed by Invesco employees. |
28 Invesco Ltd.
Compensation committee interlocks and insider participation
During year 2021, the following directors served as members of the compensation committee: C. Robert Henrikson (Chair), Sarah E. Beshar, Thomas M. Finke, Edward P. Garden, William F. Glavin, Jr., Denis Kessler, Sir Nigel Sheinwald, Paula C. Tolliver, G. Richard Wagoner, Jr., Christopher C. Womack and Phoebe A. Wood. No member of the compensation committee was an officer or employee of the company or any of its subsidiaries during 2021, and no member of the compensation committee was formerly an officer of the company or any of its subsidiaries or was a party to any disclosable related person transaction involving the company. During 2021, none of the executive officers of the company has served on the Board of Directors or on the compensation committee of any other entity that has or had executive officers serving as a member of the Board of Directors or compensation committee of the company.
Certain relationships and related transactions
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Share repurchases
In order to pay withholding or other similar taxes due in connection with the vesting of equity awards granted under our equity incentive plans, our executive officers are required to “net shares” whereby the company purchases from the participant shares equal in value to an approximation of the tax withholding liability. Under the “net shares” method, the price per share paid by the company for repurchases is the closing price of the company’s common shares on the NYSE on the vesting date. During 2021, the company repurchased common shares from the executive officers for the aggregate consideration shown in the following table.
Name and current title | Number of shares repurchased (#) | Aggregate consideration ($) | ||||||
Kevin M. Carome Senior Managing Director and General Counsel | 27,805 | $623,388 | ||||||
L. Allison Dukes Senior Managing Director and Chief Financial Officer | 24,895 | $696,064 | ||||||
Martin L. Flanagan President and Chief Executive Officer | 125,662 | $2,817,342 | ||||||
Mark Giuliano Senior Managing Director and Chief Administrative Officer | 6,055 | $135,753 | ||||||
Gregory M. McGreevey Senior Managing Director, Investments | 52,491 | $1,176,848 | ||||||
Andrew R. Schlossberg Senior Managing Director and Head of the Americas | 39,226 | $941,865 | ||||||
Doug Sharp Senior Managing Director and Head of EMEA | 15,242 | $362,313 |
Interests in or alongside certain Invesco-sponsored or managed investment products
Some of our employees, including our executive officers, their spouses, related charitable foundations or entities they own or control, are provided the opportunity to invest in or alongside certain Invesco-sponsored private funds that we offer to our clients. Employees who make such investments usually do not pay management or performance fees charged to our clients. Messrs. Flanagan, Carome, Schlossberg, Sharp and Ms. Dukes have made investments in or alongside Invesco-sponsored private and other funds. Other than Mr. Flanagan who received $218,190, there were no distributions exceeding $120,000 from Invesco sponsored private and other funds during the year ended December 31, 2021 made to our executive officers (or persons or entities affiliated with them) consisting of profits and other income.
2022 Proxy Statement 29 |
In the ordinary course of our business, we may conduct transactions or make investments on behalf of funds or client accounts we manage in securities and other financial assets offered or managed by Massachusetts Mutual Life Insurance Company (“MassMutual”) and its subsidiaries. Likewise in the ordinary course of business MassMutual, its subsidiaries and affiliates may invest in funds we manage. The amount of compensation or other value received (or in some cases not charged) by MassMutual or Invesco in connection with those transactions may exceed $120,000 individually or in the aggregate per year. Mr. Glavin is nominated pursuant to the MassMutual Shareholder Agreement and was employed by certain subsidiaries of MassMutual prior to his retirement in 2017.
Further, in the ordinary course of our business, subsidiaries of the company may from time to time (i) invest client assets in companies for which investment funds managed by Trian Fund Management (“Trian”), owner of 9.9% of our common stock, and/or its affiliates may be significant shareholders or (ii) invest client assets in investment funds or other investment vehicles managed by Trian and/or its affiliates. Investment management, performance and other fees paid to Trian, its subsidiaries or affiliates may exceed $120,000 individually or in the aggregate per year.
MassMutual and its subsidiaries
As of February 18, 2022, MassMutual owned approximately 16.6% of our outstanding common stock. MassMutual owns substantially all of the issued and outstanding shares of our preferred stock, the terms of which are set forth in the certificate of designation of the preferred stock, a copy of which is filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on May 24, 2019.
MassMutual shareholder agreement
In connection with Invesco’s acquisition of OppenheimerFunds, an investment management subsidiary of MassMutual, Invesco entered into the MassMutual Shareholder Agreement, which governs the ongoing relationship between MassMutual and Invesco.
See below for a summary of key provisions of the MassMutual Shareholder Agreement. It does not purport to be complete and is qualified in its entirety by the full text of the MassMutual Shareholder Agreement, a copy of which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on May 24, 2019.
Share ownership: Subject to certain exceptions, MassMutual and its controlled affiliates are prohibited from acquiring any additional Invesco capital stock such that if after giving effect to such acquisition, MassMutual together with its controlled affiliates would beneficially own more than 22.5% of the total voting power of Invesco capital stock (which we refer to as the “ownership cap”).
MassMutual is subject to the ownership cap until the date (which we refer to as the “governance termination date”) on which MassMutual and its controlled affiliates cease to beneficially own at least (i) 10% of the issued and outstanding Invesco common shares or (ii) 5% of the issued and outstanding Invesco common shares and $2.0 billion in aggregate liquidation preference of Invesco Series A preferred shares.
Prohibited actions: Until the governance termination date, MassMutual and its controlled affiliates are generally prohibited from soliciting, knowingly encouraging, acting in concert or assisting third parties, negotiating or making any public announcement with respect to:
any acquisition the purpose or result of which would be that MassMutual and its controlled affiliates beneficially own (i) Invesco capital stock in excess of the ownership cap or (ii) any equity securities of any subsidiary of Invesco;
any form of business combination or similar or other extraordinary transaction involving Invesco or any subsidiary of Invesco;
any form of restructuring, recapitalization or similar transaction with respect to Invesco or any subsidiary of Invesco;
agreeing with any third party with respect to the voting of any shares of Invesco capital stock or the capital stock of any subsidiary of Invesco, or otherwise entering into any voting trust or voting agreement with any third party;
selling any share of Invesco capital stock in a tender or exchange offer that either (i) is unanimously opposed by the Invesco Board or (ii) arises out of a breach by MassMutual of its obligations under the MassMutual Shareholder Agreement to not engage in certain prohibited actions;
any proposal to seek representation on the Invesco Board or any proposal to control or influence management, the Invesco Board, Invesco or its subsidiaries (except as expressly permitted by the MassMutual Shareholder Agreement and the certificate of designation for the Series A preferred shares); and
calling any special meeting of shareholders of Invesco or engaging in any written consent of shareholders regarding any of the foregoing.
30 Invesco Ltd. |
Additional purchase of voting securities: Until the governance termination date, except in certain cases, if at any time Invesco issues voting securities (or securities convertible into voting securities), MassMutual will have the right to purchase directly from Invesco additional securities of the same class or series being issued up to an amount that would result in MassMutual and its controlled affiliates beneficially owning the lesser of (i) the ownership cap and (ii) the same ownership percentage as they owned immediately prior to such stock issuance.
Share repurchases: If Invesco engages in any share repurchase program or self tender that (i) will, or would reasonably be expected to, cause Invesco capital stock beneficially owned by MassMutual and its controlled affiliates to exceed 24.5% or (ii) would otherwise reasonably be likely to result in a deemed “assignment” of any investment advisory agreement of Invesco or its affiliates under the Investment Advisers Act or Investment Company Act, then Invesco may require, subject to certain exceptions, MassMutual and its controlled affiliates to promptly sell or self-tender such number of shares of Invesco capital stock to Invesco as would be necessary to prevent the occurrence of either of the foregoing events.
Transfer restrictions: In the case of Invesco Series A preferred shares, until the earliest to occur of May 24, 2024, certain credit rating downgrades of Invesco Series A preferred shares or the consummation of a change of control transaction of Invesco (which date we refer to as the “transfer restriction termination date”), MassMutual and its controlled affiliates are generally prohibited from transferring or agreeing to transfer, directly or indirectly, any such preferred stock beneficially owned by them to anyone other than to a controlled affiliate of MassMutual which agrees in writing with Invesco to be bound by the MassMutual Shareholder Agreement or to Invesco directly. In the case of Invesco common shares, until the governance termination date, MassMutual is permitted to transfer its Invesco common shares in certain specified categories of transactions.
Right of first offer: If MassMutual and/or any of its controlled affiliates intend to transfer any Series A preferred shares to a non-affiliate, MassMutual must provide written notice to Invesco. Upon receipt of such notice, Invesco will have the right to purchase all, but not less than all, of the shares proposed to be transferred, at the price and terms described in the notice.
Registration rights: MassMutual has certain customary shelf, demand and “piggyback” registration rights with respect to the Invesco common shares and the Invesco Series A preferred shares.
Board designation: The MassMutual Shareholder Agreement requires Invesco to elect an individual designated by MassMutual to the Invesco Board (whom we refer to as the “MassMutual designee”). The current MassMutual designee serving on the Invesco Board is William F. Glavin Jr. Until the governance termination date, Invesco is required to use reasonable best efforts to cause the election of the MassMutual designee at each meeting of Invesco shareholders. Except in connection with succession planning, until the governance termination date, the size of the Invesco Board of Directors cannot exceed 12 members without the prior approval of the MassMutual designee. The MassMutual designee is entitled to be a member of each standing committee of the Invesco Board or, if not permitted by applicable law, to be an observer on such committee.
Approval rights of MassMutual: Until the governance termination date, Invesco may not generally enter into or effect the following transactions without the prior written approval of MassMutual:
change its capital structure in a manner that would be reasonably likely to result in certain corporate credit rating downgrades;
amend its Memorandum of Association or Bye-Laws such that the rights of MassMutual would be adversely affected compared to those of the holders of Invesco capital stock generally;
adopt a shareholder rights plan;
make (or permit any of its material subsidiaries to make) any voluntary bankruptcy or similar filing or declaration;
subject to certain exceptions, engage in any acquisition, exchange or purchase of equity interests or other similar transaction that involves the issuance of more than 10% of the total voting power of Invesco capital stock;
make any changes in accounting principles that are disproportionately adverse to MassMutual and its affiliates compared to other holders of Invesco capital stock, except to the extent required by changes in GAAP or applicable law;
materially alter Invesco’s principal line of business; or
adopt any director qualifications to be imposed upon the MassMutual designee, other than those required by the Bye-Laws as of October 17, 2018 or those generally applicable to all directors.
Voting agreements: Until the governance termination date, MassMutual and its controlled affiliates are generally required to vote (i) in favor of each matter required to effectuate any provision of the MassMutual Shareholder Agreement and against any matter the approval of which would be inconsistent with any provision of the MassMutual Shareholder Agreement, and (ii) to the extent consistent with the preceding clause (i), in accordance with the recommendation of the Invesco Board on all matters approved by the Invesco Board relating to (a) the elections of directors, (b) matters that have been approved or recommended by the compensation committee of the Invesco Board,
(c) any change of control transaction of Invesco that the Invesco Board has unanimously recommended in favor of or against, and (d) any transaction that arises out of a breach by MassMutual of its obligations under the MassMutual Shareholder Agreement to not engage in certain prohibited actions. Additionally, if MassMutual and its controlled affiliates beneficially own at least 20% of the issued and outstanding Invesco common shares as of the record date for a vote on any matter, they must, subject to some exceptions, vote on such matter as recommended by the Invesco Board to the extent that such matter does not conflict with any provision of the MassMutual Shareholder Agreement.
Termination of the MassMutual shareholder agreement: The MassMutual Shareholder Agreement will terminate upon the later to occur of the governance termination date and the transfer restriction termination date, although certain provisions of the MassMutual Shareholder Agreement may survive for a certain period of time beyond the termination of the MassMutual Shareholder Agreement.
66
Delinquent Section 16(a) Reports
Sections 16(a) of the Exchange Act requires certain officers, directors and persons who beneficially own more than 10% of the company’s common shares to file reports of ownership and reports of changes in ownership with the SEC. The reporting officers, directors and 10% shareholders are also required by SEC rules to furnish the company with copies of all Section 16(a) reports they file. Based solely on its review of copies of such reports, the company believes that all Section 16(a) filing requirements applicable to its directors, reporting officers and 10% shareholders were complied with during 2021 with the exception of one late Form 4 filing on behalf of Massachusetts Mutual Life Insurance Company for one purchase of 7,582 common shares of the company on November 1, 2021, which was reported on a subsequent Form 4 filed on March 8, 2022.
Security ownership of principal shareholders
The following table sets forth the common shares beneficially owned as of February 18, 2022 by each shareholder known to us to beneficially own more than five percent of the company’s outstanding common shares. The percentage of ownership indicated in the following table is based on 454,831,764 common shares outstanding as of February 18, 2022.
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Name and address of beneficial owner | Amount and nature of beneficial ownership1 | Percent of class (%) | |||||||||||||
Massachusetts Mutual Life Insurance Company 1295 State Street, Springfield, MA 01111 | 75,665,6662 | 16.6 | |||||||||||||
The Vanguard Group | |||||||||||||||
100 Vanguard Boulevard, Malvern, Pennsylvania 19355 | |||||||||||||||
46,138,3773 | 10.1 | ||||||||||||||
Trian Fund Management, L.P. 280 Park Avenue, 41st Floor, New York, New York 10017 | 45,473,8594 | 10.0 | |||||||||||||
BlackRock, Inc. | |||||||||||||||
55 East 52nd Street, New York, NY 10055 | 35,682,9835 | ||||||||||||||
7.8 | |||||||||||||||
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5. | On February |
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Common shares | Deferred share | |||||||||||
Name | beneficially owned | awards1 | Total | |||||||||
Sarah E. Beshar | 15,331 | – | 15,331 | |||||||||
Joseph R. Canion | 64,451 | 5,925 | 70,376 | |||||||||
Martin L. Flanagan2 | 3,614,959 | 313,048 | 3,928,007 | |||||||||
C. Robert Henrikson | 30,332 | – | 30,332 | |||||||||
Ben F. Johnson III | 42,953 | – | 42,953 | |||||||||
Denis Kessler | 54,598 | – | 54,598 | |||||||||
Sir Nigel Sheinwald | 18,081 | – | 18,081 | |||||||||
G. Richard Wagoner, Jr.3 | 33,983 | – | 33,983 | |||||||||
Phoebe A. Wood | 35,108 | – | 35,108 | |||||||||
Andrew T. S. Lo | 408,192 | 216,715 | 624,907 | |||||||||
Gregorgy G. McGreevey | 390,717 | 71,226 | 461,943 | |||||||||
Loren M. Starr | 545,640 | 74,177 | 619,817 | |||||||||
Philip A. Taylor | 237,385 | 294,287 | 531,672 | |||||||||
All Directors and Executive | 6,358,666 | 1,198,721 | 7,557,387 | |||||||||
Officers as a Group (17 persons)4 |
2022 Proxy Statement 33 |
Security ownership of management
The following table lists the common shares beneficially owned as of February 18, 2022 by (i) each director; (ii) each executive officer named in the Summary Compensation Table below and (iii) all directors and executive officers as a group. The percentage of ownership indicated below is based on 454,831,764 of the company’s common shares outstanding on February 18, 2022.
Beneficial ownership reported in the below table has been determined according to SEC regulations and includes common shares that may be acquired within 60 days after February 18, 2022, but excludes deferred shares which are disclosed in a separate column. Unless otherwise indicated, all directors and executive officers have sole voting and investment power with respect to the shares shown. No shares are pledged as security. As of February 18, 2022, no individual director or named executive officer owned beneficially 1% or more of our common shares other than Mr. Flanagan, who owns 1.1% of our outstanding common shares. Our directors and executive officers as a group owned approximately 1.9% of our outstanding common shares.
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Name | Common shares beneficially owned | Deferred share awards | Total | |||||||||
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Sarah E. Beshar | 58,602 | — | 58,602 | |||||||||
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Thomas M. Finke | 7,693 | — | 7,693 | |||||||||
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Martin L. Flanagan1 | 4,547,461 | 640,997 | 5,188,458 | |||||||||
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William F. Glavin, Jr. | 24,539 | — | 24,539 | |||||||||
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C. Robert Henrikson | 70,334 | — | 70,334 | |||||||||
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Denis Kessler | 74,822 | 7,118 | 81,940 | |||||||||
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Sir Nigel Sheinwald | 45,423 | — | 45,423 | |||||||||
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Paula C. Tolliver | 9,522 | — | 9,522 | |||||||||
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G. Robert Wagoner, Jr.2 | 66,325 | — | 66,325 | |||||||||
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Christopher C. Womack | 3,372 | — | 3,372 | |||||||||
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Phoebe A. Wood | 53,566 | — | 53,566 | |||||||||
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L. Allison Dukes | 231,099 | 48,171 | 279,270 | |||||||||
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Andrew T.S. Lo | 225,605 | 425,862 | 651,467 | |||||||||
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Gregory G. McGreevey | 381,941 | 276,869 | 658,810 | |||||||||
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Andrew R. Schlossberg | 248,579 | 324,280 | 572,859 | |||||||||
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All Directors, Director Nominee and Executive Officers as a Group (19 persons) | 6,750,382 | 2,087,252 | 8,837,634 | |||||||||
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34 Invesco Ltd. |
In addition to Martin L. Flanagan, whose information is set forth under Information about Director Nominees, the following is a list of individuals serving as executive officers of the company as of the date of this Proxy Statement. All company executive officers are elected annually by the Board and serve at the discretion of the Board or our Chief Executive Officer.
Kevin M. Carome Senior Managing Director and General Counsel Age Tenure 65 19 Years | Kevin M. Carome Kevin Carome has served as senior managing director and general counsel of our company since 2006. Previously, he was senior vice president and general counsel of Invesco’s U.S. retail business from 2003 to 2005. Prior to joining Invesco, Mr. Carome worked with Liberty Financial Companies, Inc. (LFC) where he was senior vice president and general counsel from 2000 through 2001. He joined LFC in 1993 as associate general counsel and, from 1998 through 2000, was general counsel of certain of its investment management subsidiaries. Mr. Carome began his career at Ropes & Gray. He earned two degrees, a B.S. in political science and a J.D., from Boston College. | |
L. Allison Dukes Senior Managing Director and Chief Financial Officer Age Tenure 47 2 Years | L. Allison Dukes Allison Dukes has served as senior managing director and chief financial officer of our company since 2020. In this role, she leads all global corporate finance functions, including strategic and financial planning, investor relations, corporate development, accounting, corporate tax and treasury. Prior to joining Invesco, Ms. Dukes served as chief financial officer of SunTrust Banks (now Truist Financial Corporation) from 2018 to 2019. Prior to becoming chief financial officer, Ms. Dukes served in a series of leadership roles throughout her 20 years of service with SunTrust, including head of Commercial & Business Banking for SunTrust from 2017 to 2018, which included delivery of SunTrust’s investment banking and capital markets capabilities, president and chief executive officer of the | |
Mark Giuliano Senior Managing Director and Chief Administrative Officer Age Tenure 60 6 Years | Mark Giuliano Mark Giuliano has served as a senior managing director since 2019 and has served as chief administrative officer since 2018. Previously he served as Invesco’s Chief Security Officer and Managing Director and Global Head of Security, Technology and Operations from 2016 to 2018. His responsibilities include overseeing Technology, Investment Services, North America Transfer Agency, Global Security, Hyderabad Operations, Internal Consulting Office, Strategic Intelligence team and Global Data Office. Mr. Giuliano joined Invesco in 2016 after serving over 28 years with the Federal Bureau of Investigation (FBI). While at the FBI, Mr. Giuliano served in a number of leadership roles, including Special Agent in charge of the Atlanta division and executive assistant director of the National Security Branch, before retiring as the Deputy Director and Chief Operating Officer. Mr. Giuliano earned a degree in business economics from the College of Wooster. |
2022 Proxy Statement 35 |
Jennifer Krevitt Senior Managing Director and Chief Human Resources Officer Age Tenure 58 <1 Year | Jennifer Krevitt Jennifer Krevitt has served as Senior Managing Director and Chief Human Resources Officer since January 2022. In this role, she works collaboratively with senior leadership and others to lead HR activities for Invesco employees worldwide. Prior to joining the firm, she was a managing director, global head of Human Capital Management (HCM) for the Asset Management Division and head of Global Ventures at Goldman Sachs. During her nearly 25-year tenure at Goldman Sachs, she served in several other leadership roles within HCM, including global head of Legal, Compliance and Internal Audit and chief administrative officer. Before Goldman Sachs, Ms. Krevitt was general counsel and head of Human Resources at CRC, Inc. She has been in the industry since 1995. Ms. Krevitt is Chair of the Trustee’s Council of Penn Women, a member of the Dean’s Council for Penn Law Women and the Penn Law Alumni Society Board of Managers. Additionally, she is on the board of the non-profit organization the Women’s Rights Information Center and serves on the Executive Committee of The Pipeline Crisis. Ms. Krevitt earned a BA degree in economics from the University of Pennsylvania and a JD from the University of Pennsylvania Carey Law School. | |
Andrew T.S. Lo Senior Managing Director and Head of Asia Pacific Age Tenure 60 28 Years | Andrew T.S. Lo Andrew T. S. Lo has served as head of Invesco Asia Pacific since 2001. He joined our company as managing director for Invesco Asia in 1994. Mr. Lo began his career as a credit analyst at Chase Manhattan Bank in 1984. He became vice president of the investment management group at Citicorp in 1988 and was managing director of Capital House Asia from 1990 to 1994. Mr. Lo was Chair of the Hong Kong Investment Funds Association from 1996 to 1997 and a member of the Council to the Stock Exchange of Hong Kong and the Advisory Committee to the Securities and Futures Commission in Hong Kong from 1997 to 2001. He earned a B.S. and an MBA from Babson College in Wellesley, Massachusetts. | |
Gregory G. McGreevey Senior Managing Director, Investments Age Tenure 59 11 Years | Gregory G. McGreevey Greg McGreevey has served as senior managing director, Investments, since 2017, with responsibility for certain of Invesco’s global equity investment teams, equity trading, fixed income, Global Performance and Risk Group and investment administration. Previously, he was chief executive officer |
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36 Invesco Ltd. |
Andrew R. Schlossberg Senior Managing Director and Head of the Americas Age Tenure 48 21 Years | Andrew R. Schlossberg Andrew Schlossberg has served as senior managing director and head of the Americas since 2019. In addition, Mr. Schlossberg has responsibility for the firm’s exchange-traded funds capabilities globally, corporate communications and government affairs. Previously, he was senior managing director and head of EMEA (which includes the UK, continental Europe and the Middle East) from 2016 to 2019. Mr. Schlossberg joined Invesco in 2001 and has served in multiple leadership roles across the company, including his previous position as Head of US Retail Distribution and global exchange-traded funds for Invesco. He has also served as U.S. chief marketing officer, head of Global Corporate Development (overseeing business strategy and mergers and acquisitions), and in leadership roles in strategy and product development in the company’s North American Institutional and Retirement divisions. Mr. Schlossberg currently serves on the Board of Governors and the Executive Committee of the Investment Company Institute. Prior to joining Invesco, Mr. Schlossberg worked with Citigroup Asset Management and its predecessors from 1996 to 2000. He earned a B.S. in finance and international business from the University of Delaware and an M.B.A. from the Kellogg School of Management at Northwestern University. | |
Douglas J. Sharp Senior Managing Director and Head of EMEA Age Tenure 47 14 Years | Douglas J. Sharp Douglas Sharp has served as senior managing director and head of EMEA since 2019 and is the Chair of the Board of Invesco UK (Invesco’s European Subsidiary Board). He has 15 years’ experience in the asset management industry. Mr. Sharp joined Invesco in 2008 and has served in multiple leadership roles across the company, including his previous role as the Head of EMEA Retail. Prior to that, he ran Invesco’s Cross Border retail business, as well as serving as the global Head of Strategy and Business Planning and as Chief Administrative Officer for Invesco’s US institutional business. Mr. Sharp joined Invesco from the strategy consulting firm McKinsey & Company, where he served clients in the financial services, energy and logistics sectors. Mr. Sharp earned an M.B.A. from the Tuck School of Business at Dartmouth College, a master’s degree in accounting from Georgia State University and a B.A. in economics from McGill University. |
2022 Proxy Statement 37 |
38 Invesco Ltd. |
69
Invesco’s executive compensation program is designed to align executive compensation with the long-term interests of our shareholders. This Compensation Discussion and Analysis (“CD&A”) provides shareholders with information about our business, 2021 performance, our disciplined approach to compensation and 2021 compensation decisions for our Named Executive Officers (“NEOs”) listed below. We refer to certain non-GAAP measures throughout this section that are used in compensation decisions. Please refer to Appendix A of this Proxy Statement for information regarding these measures.
Contents
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| 40 | |||||
Introduction | 42 | |||||
Invesco shareholder value framework |
| 42 | ||||
Shareholder and proxy advisory engagement and feedback | 42 | |||||
Our compensation | 45 | |||||
How the committee uses its judgment in making incentive compensation decisions | 45 | |||||
Invesco 2021 performance | 47 | |||||
Company scorecard results for 2021 – aligning pay with results | 48 | |||||
2021 NEO total annual compensation summary – aligning pay to results | 49 | |||||
NEO variable pay is at risk | 50 | |||||
NEO pay outcomes and performance summaries | 51 | |||||
We link pay and performance | 51 | |||||
CEO pay is aligned to financial performance | ||||||
52 | ||||||
Other NEO pay and performance |
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53 |
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| Our compensation components | 59 |
(share amounts in millions) | 2018 | 2017 | 2016 | |||||||||||||
Granted during the year1 | 6.1 | 5.6 | 6.9 | |||||||||||||
Weighted average shares outstanding | 412.4 | 409.4 | 414.7 | |||||||||||||
(basic) | ||||||||||||||||
Run rate | 1.5% | 1.4% | 1.7% | |||||||||||||
Our compensation philosophy and objectives | 60 | |||||
| 60 | |||||
Performance-based equity awards | 60 | |||||
Market data | 62 | |||||
Our compensation policies and practices | 63 |
(share amounts in millions) | Outstanding awards1 | Shares available for grant2 | Common shares outstanding3 | Overhang | ||||||||||||||||
As of December 31, 2018 | 13.5 | 15.2 | 412.4 | 7.0% | ||||||||||||||||
As of March 1, 2019 | 18.4 | 7.1 | 412.4 | 6.2% | ||||||||||||||||
| 63 | |||||||
Stock ownership policy | 63 | |||||||
Hedging policy | 63 | |||||||
Clawback policy | 64 | |||||||
Benefits | 64 | |||||||
Perquisites | 64 | |||||||
Tax reimbursements | 64 | |||||||
Tax deductibility of compensation | 64 | |||||||
Employment agreements | 64 | |||||||
Forfeiture appeal policy | 65 | |||||||
Potential payments upon termination or change in control | 65 |
2022 Proxy Statement 39 |
Pay for 2021 is aligned with our strong financial performance and organizational strength – we exceeded our targets on our company scorecard which informed executive compensation. In 2021, the company experienced some of its strongest financial performance in its history as we focused on our clients and employees in a continuing COVID operating environment.
2021 Financial performance1
Long-term net flows $81.4B 7% organic growth rate | Net revenue2 $5,261M +17% | Adjusted operating income2 $2,183M +31% | Adjusted operating margin2 41.5% +450 basis points | Adjusted diluted EPS2 $3.09 +60% |
• | Invesco achieved a 7% organic growth rate for 2021 – the strongest organic growth in our history and one of the best growth rates in the industry for 2021. |
• | We generated over $81 billion of net long-term inflows, resulting in over $1.6 trillion in assets under management at the end of 2021. |
• | Net revenues grew 17% in 2021, helping us achieve adjusted operating income of nearly $2.2 billion, 31% higher than the previous year. Revenue growth, coupled with strong expense discipline, led to a 450 basis point increase in our adjusted operating margin to 41.5%. These factors contributed to a 60% increase in our full-year adjusted diluted EPS to $3.09. |
Total CEO incentive pay is 118% of target | 95% of CEO’s 2021 pay is variable | 60% of CEO’s 2021 equity is performance-based |
Invesco’s responsiveness in 2021 | Progress on corporate strategy | |||||
• Continued to prioritize the health and safety of our employees through the ongoing COVID-19 pandemic • Continued in a work from home environment while preparing for a “new normal” model that encourages colleagues being together both virtually and in person • Continued to ramp up contact with our clients through both in person and virtual engagement, which further strengthened our relationships and our business • Continued to amplify our focus on Corporate and Social Responsibility as well as ESG efforts, with diversity, climate and financial education initiatives | • A high level of engagement with clients and robust performance in capabilities aligned with market demand contributed to positive results for the year • Continued to offer our clients diverse solutions to ensure they can remain financially resilient • Further strengthened our balance sheet and financial flexibility; we exceeded the $150 million cost savings target we set for 2021 as part of our strategic evaluation • Added depth, experience and further diversity (gender and racial) to our Board • Continued to strengthen our DEI efforts, adding two new BRGs, with increased engagement across all diversity groups and at senior levels | |||||
Company scorecard links performance to pay | We have sound compensation practices | |||||
• Further refined our company scorecard by focusing on the most relevant metrics and providing more transparency on the financial goals and actual scorecard results • Based on feedback, our 2021 company scorecard reflects fewer and more focused measures as well as results for each of the performance measures | • Pay practices align with shareholder interests • 95% of our CEO pay is variable and 89 - 94% of our other NEO pay is variable • Increased vesting rigor for performance-based awards • Throughout the year, our compensation committee assessed performance against our goals and peer performance | |||||
1. | Comparisons are year-over-year. |
2. | Adjusted financial measures are all non-GAAP financial measures. See the information in Appendix A regarding non-GAAP financial measures. |
40 Invesco Ltd. |
How we supported our employees
• | Our top priority in 2020 was the health and wellbeing of our employees. |
• | As the pandemic continued, our priority in 2021 likewise continued to be the health and well being of our employees and to prepare the organization for what the “new normal” would be at the firm. |
• | The first quarter of the year, prior to authorization of vaccinations, our employees primarily continued to work remotely. As vaccinations became widely available, we encouraged our employees who were able, to begin the vaccination process. In some countries, due to supply, vaccinations took quite some time. |
• | In preparation for more individuals being vaccinated in the second half of the year, the global Return to Office task force, supported by senior leadership, rolled out the global return to office hybrid work model. |
• | The hybrid work model was ready to be implemented by the end of third quarter; however, due to the delta and omicron variants, the model has not yet been fully implemented across the globe. When it is safe for workers to return to the office, the model and framework is now in place to accommodate our hybrid workforce. |
• | Leadership continued on-going communications with staff members through various channels, including regular pulse surveys, townhalls and videos. Educational events were sponsored by various BRGs and a virtual speaker series began and will continue in 2022 on what we expect the new normal work environment will entail. |
Summary of enhancements to our executive compensation program
During the course of 2020 and 2021, we made significant enhancements to our executive compensation program. We believe that these enhancements demonstrate that our executive compensation program clearly links pay to company and executive performance. As reported in the supplemental proxy material that we filed in May 2021, we made the following additional enhancements in 2021:
Increased company scorecard transparency. We reduced the number of performance categories and increased the weighting for financial performance. The company scorecard discloses the target set for each measure, end of year result for each measure and the average percent achieved for each category. We continue to include category assessments and overall weighted assessment. | ||
Performance-based equity award vesting matrix. Beginning with awards granted in 2021, we updated the vesting matrix to require relative Total Shareholder Return (“TSR”) to equal the 55% percentile to achieve 100% vesting (assuming absolute 3-year Average AOM is 37.5%). Vesting continues to range from 0% to 150%; provided, however, if the company’s 3-year absolute TSR is negative, vesting will be capped at 100%. We believe that the linked vesting performance thresholds provide significant rigor to our incentive program, as payouts are not a range of outcomes but represent specific performance levels. |
In addition to the 2021 enhancements, we continue the below-described features of our executive compensation program.
• | 4-step process to determine executive pay. We continue to use our 4-step process that aligns pay with performance. Our 4-step process relies on assessing company performance based on our company scorecard and individual executive performance. See pages 57 - 58 for more information about our 4-step process. |
• | CEO pay calculation graphic. We continue to use a graphic that illustrates how CEO pay was determined. We believe the graphic clearly communicates how the committee determined CEO pay. It includes a step-by-step description that follows the quantitative assessment of company performance using the company scorecard and a qualitative assessment of CEO achievements. |
• | CEO compensation cap. CEO cash bonus is capped at the lesser of $10 million or 30% of the CEO’s incentive pay. |
• | Performance-based equity awards. 60% of equity awards are performance-based. |
• | Updated peer groups. In 2021, we implemented a new compensation peer group as well as a new peer group for our performance-based equity awards. These peer groups emphasize pure asset management firms with significant business overlap and similar scale. See page 62 for a discussion about our peer groups. |
2022 Proxy Statement 41 |
Invesco shareholder value framework
Invesco is committed to serving our clients and delivering long-term shareholder value. Our executives are able to directly influence key business drivers that create long-term shareholder value. Invesco’s framework for long-term shareholder value creation is based primarily on:
Our focus on delivering the outcomes our clients seek enables us to grow our business by attracting and retaining new assets under management (“AUM”), resulting in positive long-term organic growth. Our strong global operating platform allows us to operate effectively and efficiently and is an important driver of our operating leverage that benefits clients and shareholders. The creation of operating leverage allows us to meet current client demands, invest for future growth and create value for our shareholders. We strive to maintain our financial strength through disciplined capital management and return capital to shareholders on a consistent and predictable basis. Our focus on driving greater efficiency and effectiveness, combined with our work to build a global business with a comprehensive range of capabilities, puts Invesco in a strong position to meet client needs, run a disciplined business, continue to invest in and grow our business over the long term, and deliver long-term value to our clients, shareholders and other stakeholders. |
Invesco’s commitment to delivering shareholder value is aligned with the purpose-driven way we manage our business. To meet the needs of our clients, we focus on:
delivering strong, long-term investment performance; and
providing a comprehensive range of investment capabilities and technology solutions seeking to ensure deep and stable investment teams.
Investing for the long-term is an important element of our strategy. Our diversified investment capabilities in terms of investment objectives, styles, client types, and geographies enable us to meet client needs through differing market cycles across the globe. We also strive to give clients greater value for their money, which means competitively priced products, as well as investor education, thought leadership, digital platforms and other value adds that create an enhanced client experience.
42 Invesco Ltd. |
In 2021, we contacted or engaged with shareholders representing 63% of our common stock — MassMutual, our largest shareholder, which holds 16% of our common stock; Trian, owner of 9.9% of our common stock; and 30 other shareholders representing 39% of our outstanding shares of common stock.1 MassMutual and Trian were both represented on our Board and its Compensation Committee in 2021 and provided feedback in those forums. The other 39% of our shareholders were contacted as part of our Fall outreach campaign that included invitations to shareholders owning 0.5% or more of our common stock and courtesy invitations to certain other shareholders and the major proxy advisory firms to discuss our executive compensation program, governance matters, sustainability topics and our ESPP proposal.
We held meetings with all shareholders who accepted our invitation – eight of our shareholders representing 12% of our outstanding shares1, including shareholders who voted against our Say-on-Pay proposal in 2021. We also met with two major proxy advisory firms. Our Board chair and compensation committee chair attended the proxy advisory meetings to provide the Board’s perspective and gain insights. During each of the meetings, we asked specific questions about the design of our current executive compensation program and upcoming ESPP proposal and gave our meeting attendees the opportunity to provide feedback. Both the participating directors and management provided feedback to the committee based on these meetings.
The table below shows key topics or themes that were raised during our recent outreach and actions taken or proposed to be taken in response. The committee, in conjunction with its independent consultant and senior management, integrated aspects of the feedback into our compensation program.
Highlights of 2020 - 2021 outreach feedback and actions | ||
Topics and themes raised | Invesco’s response | |
Company scorecard • We would like to see fewer measures and greater transparency into set targets and targets achieved | • We have enhanced our company scorecard to include goal set, end of year result and percent achieved for each measure. In addition, we reduced the number of scorecard measures and updated the category weightings to increase the impact of financial factors • We continue to include category assessments and overall weighted assessment | |
Performance-based equity awards • We believe that more than 50% of equity awards should be performance-based | • Beginning with awards granted in 2021, we updated the vesting matrix for performance-based equity awards to be more closely tied to the firm’s operating plan and thereby increasing the vesting rigor • Included a negative TSR vesting cap • Equity awards continue to be 60% performance-based with claw-back provisions | |
ESPP share replenishment + minor administrative changes • Provide proxy disclosure for historic plan share usage and reasons for administrative changes • Replenishment should target 3-5 years rather than 10 | • Proxy disclosure includes historic plan share usage • Administrative changes reflect our desire to increase employee participation and incorporate employee feedback, particularly with respect to shorter offering periods • Replenishment request estimated to be for five years |
1. As of October 1, 2021
2022 Proxy Statement 43 |
Board involvement In 2021, our Board chair and compensation committee chair participated in certain outreach meetings to provide the Board’s perspective and gain insights. Both the participating directors and management provided feedback to our compensation committee based on such meetings. | ||
Evolution of our executive compensation program The below timeline demonstrates Invesco’s continued responsiveness to shareholder feedback and the progression of our compensation program over the past several years. |
44 Invesco Ltd. |
Our compensation framework |
We achieve alignment | How we align performance and pay | |
of performance and pay by measuring company performance and individual achievements | Executive pay outcomes are aligned to both our company performance and individual achievements. At the beginning of the year, the committee approves the CEO objectives, the company scorecard and its weightings that measure the following key drivers of shareholder value creation: |
our financial performance | 66.7% | |||||
sustaining a high performing organization, since our people are the source of everything we do | 33.3% | |||||
Following completion of the year, the committee assesses company performance based on the company scorecard and individual achievements to determine each NEO’s annual and long-term incentives. |
2022 Proxy Statement 45 |
For all NEOs, at least 60%of their total incentive award is delivered through deferred equity. All incentives are paid from a company-wide incentive pool. | The committee’s well-defined process for making pay decisions The pay determination process reinforces our shareholder value framework. The committee’s 4-step process determines each NEO’s total incentive outcome, which includes all variable pay (annual cash award + time-based equity award + performance- based equity award). Based on quantitative and qualitative performance assessment, total incentive awards can range from 0% to 130% of each NEO’s incentive target. Once the total incentive award is determined, the pay mix between cash and equity is more heavily weighted to equity awards. See page 50 for the overall pay mix for the NEOs. See pages 57 through 58 for a detailed description regarding these steps | |
The table below shows NEO incentive targets for 2021.
2021 NEO incentive targets | ||||
2021 Incentive target | ||||
Name | (in millions)1 | |||
Martin L. Flanagan | $13.50 | |||
L. Allison Dukes | $3.40 | |||
Andrew T.S. Lo | $4.29 | |||
Gregory M. McGreevey | $5.80 | |||
Andrew R. Schlossberg | $4.55 | |||
1. Incentive compensation includes cash bonus, time-based equity and performance-based equity.
46 Invesco Ltd. |
In 2021, we generated over $81 billion of net long-term inflows, representing a 7% organic growth rate – the strongest organic growth in our history and one of the best growth rates in the industry. The foregoing resulted in us achieving over $1.6 trillion in assets under management at the end of 2021. Net revenues grew 17% in 2021, helping us achieve adjusted operating income of nearly $2.2 billion, 31% higher than the previous year. Revenue growth, coupled with strong expense discipline, led to a 450 basis point increase in our adjusted operating margin to 41.5%. These factors contributed to a 60% increase in our full-year adjusted diluted EPS to $3.09. The strength of our business in 2021 generated strong cash flows which improved our cash position. We remained focused on continuing to build a stronger balance sheet and improving our financial flexibility for the future.
Below are performance highlights for 2021 compared to the prior year. Many of these metrics are included in our company scorecard that we use to determine 2021 executive pay.
1. | The adjusted financial measures are all non-GAAP financial measures. See the information in Appendix A of this Proxy Statement regarding non-GAAP financial measures. |
2022 Proxy Statement 47 |
Company scorecard results for 2021 – aligning pay with results
The committee believes the scorecard is a good indicator of the overall health of the firm. In early 2022, using the company scorecard, the committee conducted its final quantitative assessment of company performance for 2021.
As discussed in the 2021 supplemental proxy materials, the firm has reduced the number of company scorecard metrics and now has two main catergories of measurement — Financial Performance (66.7% weight of overall outcome, with each financial metric equally weighted) and Organizational Health (33.3% weight of overall outcome). The committee has established a range (minimum to maximum) of anticipated outcomes around each target where the potential outcome of the scorecard will be between 0% to 130%. For 2021, the Financial Performance, the firm met or exceeded the maximum outcome of each measure and financial performance was rated at 130% and for Organizational Health, the overall outcome was 100%. This produced an overall company performance of 120%.
Financial performance | ||||||||||||||
Measure | | 2021 Target |
| | 2021 Performance |
| Score for achieving at or above the max of target |
| ||||||
Long-term net flows ($B) | $21.6 | $81.4 | 130% | |||||||||||
Net revenue ($M) | $4,853 | $5,261 | 130% | |||||||||||
Adjusted operating income ($M) | $1,850 | $2,183 | 130% | |||||||||||
Adjusted operating margin | 38.1% | 41.5% | 130% | |||||||||||
Adjusted earnings per share (diluted EPS) | $2.34 | $3.09 | 130% | |||||||||||
Financial outcome score |
|
| ||||||||||||
Organizational health |
| |||||||||||||
Measures | Year-end results | |||||||||||||
Deliver sustainable investment | ||||||||||||||
• Increase share of actively managed assets in the top quartile of peer group over 3-year performance period |
| |||||||||||||
• 60%+ of actively managed assets in top half of peer group over 3- and 5- year |
| |||||||||||||
Talent development | ||||||||||||||
• Develop a more diverse and inclusive culture (e.g., expanding female senior manager representation 35% - 40%+ by 2022) |
| |||||||||||||
• Foster culture of inclusion beyond gender (e.g., race, ethnicity, religion, sexual orientation, etc.) |
| |||||||||||||
• Attract and retain high performing talent and succession planning (e.g., investors, staff/technology, etc.) |
| |||||||||||||
Execute enterprise wide strategic objectives |
| |||||||||||||
• Expand ESG integration (e.g., 50%+ of total AUM by the end of 2021), while elevating the firm’s ESG reputation |
| |||||||||||||
• Continue buildout of Investment Solutions and Digital capabilities
|
| |||||||||||||
Organizational health score |
|
48 Invesco Ltd. |
2021 NEO total annual compensation summary – aligning pay to results
The CEO’s 2021 compensation is aligned with our strong financial performance and organizational strength – Invesco exceeded its targets on our company scorecard (as shown on pg 48) and achieved growth in our key capability areas as we continued our strategic investments in areas where we see client demand and have a competitive strength (as discussed on pages 1 and 2 of the proxy).
Pages 51 and 52 under the heading 2021 Key achievements further describe Mr. Flanagan’s achievements of this past year, as well as the outcomes of several metrics included in the company scorecard.
CEO pay determination
Based on company performance, the below table shows how the committee calculated Mr. Flanagan’s pay for 2021. The committee’s process for determining executive officer pay is applied to all incentive compensation (consisting of cash bonus + time-based equity + performance-based equity).
Step 1 – Quantitative assessment of company performance | ||||||
2021 incentive target | $13.5M | |||||
Quantitative score from scorecard | 120% | |||||
2021 incentive target, as adjusted | $16.2M | |||||
Step 2 – Qualitative assessment | ||||||
Committee applied rounding to arrive at total incentive | $16.0M | |||||
Percent of incentive target | 118% | |||||
NEO pay determinations. The NEOs compensation is based on the overall outcome of the financial performance and organizational strengths found in the scorecard, as well as success in their individual performance and achievement of goals.
The table below shows compensation decisions for each of the NEOs for 2021.
| ||||||||||||||||||||||||
2021 NEO total compensation |
| |||||||||||||||||||||||
Name | | Base salary ($) |
| | Cash bonus ($) |
| | Time-based equity ($) |
| | Performance- based equity ($)1 |
| | Total compensation ($) |
| | YOY % change |
| ||||||
| ||||||||||||||||||||||||
Martin L. Flanagan | 790,000 | 4,800,000 | 4,500,000 | 6,700,000 | 16,790,000 | 51.3% | ||||||||||||||||||
| ||||||||||||||||||||||||
L. Allison Dukes | 500,000 | 1,500,000 | 1,050,000 | 1,600,000 | 4,650,000 | 45.3%2 | ||||||||||||||||||
| ||||||||||||||||||||||||
Andrew T.S. Lo | 461,513 | 2,100,000 | 1,400,000 | 2,100,000 | 6,061,513 | 26.2% | ||||||||||||||||||
| ||||||||||||||||||||||||
Gregory M. McGreevey | 450,000 | 2,800,000 | 1,700,000 | 2,550,000 | 7,500,000 | 36.6% | ||||||||||||||||||
| ||||||||||||||||||||||||
Andrew R. Schlossberg | 450,000 | 2,100,000 | 1,375,000 | 2,075,000 | 6,000,000 | 32.0% | ||||||||||||||||||
|
1. Represents 60% of the combined value of time-based and performance based equity awards.
2. Ms. Dukes was appointed Senior Managing Director and Chief Financial Officer effective August 1, 2020.
2022 Proxy Statement 49 |
Caps
For the CEO, annual total compensation is capped at $25 million. The CEO annual cash bonus is capped at the lesser of $10 million or 30% of incentive pay.
For executives (other than the CEO), annual cash bonuses are capped at 50% of total pay.
Performance-based incentives
60% of equity awards is performance-based. Vesting of performance-based awards continues to be tied to adjusted operating margin over a three-year period and three-year average of TSR of the company. See Performance-based equity awards on pages 60 - 62 for additional details.
Our compensation structure reflects our commitment to pay for performance. As noted below, 95% of our CEO pay is variable and 89% - 94% of our other NEO compensation is variable. Compensation mix percentages reflect compensation decisions by the committee for 2021.
Cash bonus and equity awards were earned in 2021 and paid/granted in 2022. In accordance with SEC requirements, the Summary Compensation Table on page 66 reports equity in the year granted, but cash in the year earned. The Summary Compensation Table reports “All Other Compensation,” which is not part of the committee’s compensation determinations.
2021 CEO total annual compensation — $16.8M
2021 NEO total annual compensation (excluding CEO)
50 Invesco Ltd. |
NEO pay outcomes and performance summaries |
Below is a summary of 2021 NEO compensation and material accomplishments the committee considered when determining compensation for 2021.
Martin L. Flanagan President and CEO | 2021 Compensation (in 000s) | Responsibilities Mr. Flanagan is President and CEO. He develops, guides and oversees execution of Invesco’s long-term strategic priorities to deliver value for clients and shareholders over the long-term. Mr. Flanagan is responsible for senior leadership development and succession planning, defining and reinforcing Invesco’s purpose and engaging with key clients, industry leaders, regulators and policy makers. | ||||||||
Base salary | $790 | |||||||||
Annual incentive award - Cash | $4,800 | |||||||||
Time-based equity | $4,500 | |||||||||
Performanced-based equity | $6,700 | |||||||||
Total annual compensation | $16,790 | |||||||||
Total incentive compensation | $16,000 | |||||||||
2021 incentive target | $13,500 | |||||||||
Total incentive compensation as a % of 2021 incentive target | 118% |
For 2021, the committee decided that Mr. Flanagan’s total incentive compensation should be $16 million, which is 118% of his 2021 incentive target of $13.5 million. As noted above, the company’s process for determining executive officer pay is applied to all incentive compensation (consisting of cash bonus + time-based equity + performance-based equity).
2021 Key achievements1 • Led the firm’s efforts to maintain robust investment performance in a dynamic market environment, which helped drive strong results for the business and shareholders. Under Mr. Flanagan’s guidance, the firm achieved record high assets under management of $1.6 trillion (up 19.3% for the year), $81.4 billion in long-term net inflows (representing a 7% organic growth rate for the year) and a 450 basis points increase in our adjusted operating margin to 41.5%. • Oversaw efforts to enhance effectiveness and efficiency, further strengthen the firm’s balance sheet and exceed our target of $150 million in annualized net savings after investments by the end of 2021. Combined, these efforts drove a 60% increase in our full-year adjusted diluted earnings per share to $3.09 and supported our ability to resume share repurchases early in 2022. • Further built on our leadership position in Greater China, the world’s fastest-growing market, where Invesco has been managing Chinese investments for decades. Driven by strong active investment performance, our China business has grown at a 43% CAGR since 2018, and the firm now has more than $112 billion of assets sourced from onshore Chinese clients (as of December 31, 2021). Invesco ranked #1 among onshore providers in China, building on a legacy of success in the broader Asia-Pacific region. • Continued to strengthen the firm’s ETF and indexed strategies offerings to clients and build on our position as the world’s fourth-largest ETF provider. The firm’s ETFs and indexed strategies AUM have more than doubled in the past three years, totaling $558 billion at the end of 2021. In 2021, Invesco achieved record growth in our global ETFs and Indexed Strategies business, with $85 billion in net inflows and a meaningful improvement in global ETF market share. • Further strengthened the organization’s commitment to Environmental, Social and Governance (ESG) efforts by further driving ESG considerations into the firm’s investment processes and signing the Net Zero Asset Managers Initiative. During 2021 we made further progress toward our goal of ensuring all of Invesco’s investment teams have fully embedded ESG considerations into their investment processes. As of December 31, 2021, approximately 75% of the AUM managed by Invesco’s investment teams have attained the ESG integration level as minimal but systematic integration. • Oversaw the work of prioritizing employee health and well-being during the prolonged pandemic while further advancing the firm’s culture globally, as reflected by employee opinion survey results in 2021 in which 91% of employees felt that senior leadership prioritized their health and safety. |
1. Adjusted financial measures are all non-GAAP financial measures. See the information in Appendix A regarding non-GAAP financial measures.
2022 Proxy Statement 51 |
• Continued to drive efforts within the firm to create a more diverse, equitable and inclusive workplace, including: the further expansion of our BRGs representing and supporting the needs of diverse communities, including women, Hispanics, veterans, LGBTQ+ and others; ensuring links between diversity goals and compensation at senior levels; and requiring all employees to participate in unconscious bias training. • Oversaw continued progress toward the firm’s goal of having greater than 35% female representation at the senior manager level (up from 27% in 2018), which Invesco achieved a year ahead of schedule. Personally oversaw efforts to expand female senior leadership within the firm, including the addition of Paula Tolliver as an Invesco Ltd. Board member and Jennifer Krevitt as Senior Managing Director and Chief Human Resources Officer. |
Our compensation committee has demonstrated over multiple years that our CEO’s compensation is aligned with the company’s financial performance
CEO pay is aligned to financial performance
The below charts demonstrate that over the last five years the committee has ensured that the CEO’s compensation has aligned closely with the financial outcomes of the firm.
5-year Invesco CEO pay versus financial performance
| ||||||||||||||||||||
2017 | 2018 | 20193 | 20203 | 20213 | ||||||||||||||||
| ||||||||||||||||||||
⬛ CEO compensation ($mil) | 13.8 | 11.0 | 12.3 | 11.1 | 16.8 | |||||||||||||||
| ||||||||||||||||||||
⬛ Adjusted operating income2 ($mil) | 1,482 | 1,392 | 1,656 | 1,665 | 2,183 | |||||||||||||||
| ||||||||||||||||||||
⬛ Adjusted operating margin2 (%) | 39.5 | 36.5 | 37.5 | 37.0 | 41.5 | |||||||||||||||
| ||||||||||||||||||||
⬛ Adjusted diluted EPS2 ($) | 2.7 | 2.43 | 2.55 | 1.93 | 3.09 | |||||||||||||||
|
1. | For 2017 - 2020, consists of salary, annual cash bonus, annual stock deferral award and long-term equity award. For 2021, consists of salary, annual cash bonus, time-based equity and performance-based equity. For 2018 and 2019, 50% of the combined value of the annual stock deferral and long-term equity awards was performance-based. For 2020 and 2021, 60% of the equity awards was performance-based. See note on page 50 regarding differences from the summary compensation table. |
2. | The adjusted financial measures are all non-GAAP financial measures. See the information in Appendix A of this Proxy Statement regarding non-GAAP financial measures. |
3. | Financial results for 2019 include approximately 7 months of OppenheimerFunds financial results compared to 2020 and 2021, which include 12 months of OppenheimerFunds financial results. |
52 Invesco Ltd. |
L. Allison Dukes Senior Managing Director and Chief Financial Officer | 2021 Compensation | Responsibilities Ms. Dukes serves as Senior Managing Director and Chief Financial Officer. Ms. Dukes is responsible for planning, implementing, managing and controlling all corporate financial-related activities of the firm, including forecasting, strategic planning, capital allocations and expense management. She also oversees corporate finance, treasury, accounting, corporate development, investor relations and corporate strategy. | ||||||
(in 000s) | ||||||||
Base salary | $500 | |||||||
Annual incentive award - Cash | $1,500 | |||||||
Time-based equity | $1,050 | |||||||
Performanced-based equity | $1,600 | |||||||
Total annual compensation | $4,650 | |||||||
Total incentive compensation | $4,150 | |||||||
2021 incentive target | $3,400 | |||||||
Total incentive compensation as a % of 2021 incentive target | 122% |
Based on the quantitative outcome of Invesco’s performance and a qualitative review of Ms. Dukes’ individual performance, the committee determined that Ms. Dukes’ total incentive compensation should be $4.2 million, which is 122% of her 2021 incentive target of $3.4 million.
2021 Key achievements1 • In partnership with the executive management team and colleagues across the firm, achieved an adjusted operating margin of 41.5%, up 450 basis points from 2020, through disciplined expense management and continued execution of a strategic initiative launched in 2020. • Actively focused on strengthening Invesco’s balance sheet and liquidity position, which resulted in meaningful financial improvement with a leverage ratio below 1x, $1.9 billion in cash at December 31, 2021 and the extension of Invesco’s five-year credit facility at favorable terms. • Introduced a capital management framework and priorities to the Invesco Ltd. Board to keep them informed regarding ongoing capital allocation planning and decisions. Implemented consistent key performance indicators and profitability tools across the firm to better track performance outcomes and communicate progress to the investment community. • Played an active role in investor relations engagement, completing 12 conferences and non-deal roadshows, leading to five analyst upgrades and contributing to a 32% appreciation in Invesco’s share price at December 31, 2021. • Continued to serve as Executive Sponsor of the Invesco Women’s Network, working across the organization to advance progress on inclusion, allyship, executive presence and mentorship. Further strengthened talent and expanded diversity within the Finance organization. |
1. | Adjusted financial measures are all non-GAAP financial measures. See the information in Appendix A regarding non-GAAP financial measures. |
2022 Proxy Statement 53 |
Andrew T. S. Lo Senior Managing Director and Head of Asia Pacific | 2021 Compensation (in 000s) | Responsibilities Mr. Lo is Senior Managing Director and Head of Asia Pacific. Mr. Lo is responsible for the firm’s operation in the Asia Pacific region where he addresses the large and growing needs of our investors in the region. He works with clients to understand their issues and objectives and finding solutions for them. | ||||||
Base salary | $462 | |||||||
Annual incentive award - Cash | $2,100 | |||||||
Time-based equity | $1,400 | |||||||
Performanced-based equity | $2,100 | |||||||
Total annual compensation | $6,062 | |||||||
Total incentive compensation | $5,600 | |||||||
2021 incentive target | $4,292 | |||||||
Total incentive compensation as a % of 2021 incentive target | 130% |
Based on the quantitative outcome of Invesco’s performance and a qualitative review of Mr. Lo’s individual performance, the committee determined that Mr. Lo’s total incentive compensation should be $5.6 million, which is 130% of his 2021 incentive target of $4.3 million due to Mr. Lo’s exceptional performance in Asia Pacific.
2021 Key achievements • Led the firm’s efforts in the Asia Pacific region, which achieved record net inflows of $74 billion in 2021, a 219% increase over 2020, bringing total sourced AUM to $247 billion at year-end. Strong inflows led to record revenues of $855 million, up 42% year-over-year. • Oversaw the Asia Pacific team’s efforts to deliver positive outcomes to clients within the region and across the globe. Despite market headwinds and regulatory changes, Invesco’s China business achieved more than $112 billion in AUM sourced directly from onshore Chinese clients. As a result, Invesco retained its No. 1 leadership position in onshore China business among global players.1 • Oversaw efforts to maintain strong investment performance, with 57% and 76% of Asia Pacific-managed AUM above peers on a 3- and 5-year basis. For our China joint venture, 75% and 88% of equity AUM; and 78% and 87% of fixed income AUM, were above peers on a 3- and 5- year basis.2 • Continued to achieve strong momentum within the Asia Pacific region. In Japan and Australia, Invesco achieved more than $31 billion of net inflows in beta strategies from institutional clients and higher-fee alternative products. • Remained a strong supporter of enhancing diversity and inclusion across Asia Pacific, with women comprising more than 42% of the region’s workforce and 36% of senior leadership. Led the Mutual Mentoring and Speak Your Mind programs in the region to encourage diversity of thought across the organization. |
1. | Source: Z-Ben data as of December 31, 2021. |
2. | Invesco performance data as of December 31, 2021. |
54 Invesco Ltd. |
Gregory G. McGreevey Senior Managing Director,Investments | 2021 Compensation (in 000s) | Responsibilities Mr. McGreevey serves as Senior Managing Director, Investments. Mr. McGreevey is responsible for the firm’s private market groups, including real estate, certain of Invesco’s global investment teams, trading, Global Performance and Risk Group, Solutions, Indexing, ESG and investment thought leadership/investor engagement. | ||||||
Base salary | $450 | |||||||
Annual incentive award - Cash | $2,800 | |||||||
Time-based equity | $1,700 | |||||||
Performanced-based equity | $2,550 | |||||||
Total annual compensation | $7,500 | |||||||
Total incentive compensation | $7,050 | |||||||
2021 incentive target | $5,800 | |||||||
Total incentive compensation as a % of 2021 incentive target | 122% |
Based on the quantitative outcome of Invesco’s performance and a qualitative review of Mr. McGreevey’s individual performance, the committee determined that Mr. McGreevey’s total incentive compensation should be $7.1 million, which is 122% of his 2021 incentive target of $5.8 million.
2021 Key achievements1 • Led the firm’s investment teams which maintained their focus on delivering client and shareholder success, ending the year exceeding the firm’s 2021 operating projections for long-term net inflows in Private Markets, Real Estate, and Systematic and Factor Investing. • Oversaw the investment teams’ efforts to achieve continued strong performance, with 60%, 62%, and 62% of assets among the top half of peers for the 1-, 3-, and 5-year periods, respectively. Areas of strong demand that maintained strong long-term performance included Fixed Income and Private Credit. For the 1-, 3-, and 5-year periods, Fixed Income ended the year with 88%, 92%, and 94% of assets in the top half among peers, respectively, while Private Credit reached 100%, 68%, and 75%, respectively. • Continued to strengthen processes to drive alpha generation, overseeing efforts to develop tools and capabilities within investment risk, trading and securities lending to improve performance for clients. As examples, the firm decreased trading costs by adding machine learning to our global trading desk, developed a securities lending model that increased AUM on loan significantly and enhanced technology to provide better information to investors and improve decision-making. • Led efforts to develop growth and retention plans for investment professionals based on client demand and performance. Launched an initiative to grow our global equities business to improve gross sales in our non-US active equities suite and developed a robust Separate Managed Accounts (SMA) platform by expanding our SMA capabilities beyond fixed income to equities. Also expanded the Solutions platform across the “barbelling spectrum” by launching multi-alternative solutions and institutional indexing, which have collectively raised approximately $50 billion in assets on behalf of our institutional clients globally. • Furthered the firm’s commitment to building a leading ESG capability by helping oversee growth in the firm’s ESG AUM to approximately $96 billion, furthering the integration of ESG within our investment centers and investment processes, and developing a cross-functional ESG partnership across product, compliance, legal, risk and marketing. • Provided leadership in diversity and inclusion that advanced the firm and enabled us to exceed our goals. Sponsored the Invesco Proud network, which established a forum for LGBTQ+ employees and allies to collaborate and build a more inclusive environment across the firm. Worked to ensure that we maintain a diverse candidate pool, holding the Investments senior leaders accountable to the firm’s diversity and inclusion goals to ensure a better experience for our clients. Notably increased the hiring and promotion rates for women within Investments. |
1. | Invesco performance data as of December 31, 2021. Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary funds, unit investment trusts, fund of funds with defined Performance Measurement and Risk component funds managed by Invesco, stable value building block funds and CDOs. Peer group rankings are sourced from a widely-used third party ranking agency in each fund’s market (Morningstar, IA, Lipper, Galaxy, Mercer, eVestment, SITCA, Value Research) and asset-weighted in USD. |
2022 Proxy Statement 55 |
Andrew R. Schlossberg Senior Managing Director and Head of the Americas | 2021 Compensation (in 000s) | Responsibilities Mr. Schlossberg is senior managing director and Head of the Americas business. He has responsibilities for distribution, marketing, global exchange traded funds capabilities, corporate communications and human resources. | ||||||
Base salary | $450 | |||||||
Annual incentive award - Cash | $2,100 | |||||||
Time-based equity | $1,375 | |||||||
Performanced-based equity | $2,075 | |||||||
Total annual compensation | $6,000 | |||||||
Total incentive compensation | $5,550 | |||||||
2021 incentive target | $4,550 | |||||||
Total incentive compensation as a % of 2021 incentive target | 122% |
Based on the quantitative outcome of Invesco’s performance and a qualitative review of Mr. Schlossberg’s individual performance, the committee determined that Mr. Schlossberg’s total incentive compensation should be $5.6 million, which is 122% of his 2021 incentive target of $4.6 million.
2021 Key achievements • Led efforts within the Americas region to deliver positive outcomes for clients, which led to net flows of $15 billion in 2021, a $46 billion improvement over the prior year. • Oversaw the firm’s global ETF business, which delivered record flows in 2021. Net ETF inflows ended the year at $62 billion, up meaningfully from the prior year. • Led the firm’s efforts to strengthen its reputation, influence and visibility. Invesco maintained strong US ETF and Mutual Funds brand equity with advisors as measured by Cogent (#4 for ETFs and #11 for Mutual Funds). Oversaw efforts to enhance the firm’s profile in the Americas by reaching more than 25,000 clients through virtual and in-person events, earning 1,400 media placements, and achieving a 12% year-over-year increase in web traffic, in addition to a significant increase in social media activity. The firm also launched Invesco’s National Collegiate Athletic Association (NCAA) sponsorship, which helped build brand awareness; engage clients, employees, and our communities; and develop a financial education series targeting young adults. • Maintained leadership responsibility for the firm’s global human resources and communications functions, continuing to prioritize the health and well-being of our employees as the pandemic continued in 2021 and strengthening communications for employees across the globe. • Remained a strong supporter of promoting various diversity and inclusion priorities and training, improving gender balance within senior management roles (the firm met its threshold goal of 35% of women in senior leadership at the end of 2021). Oversaw efforts within the Americas to further expand diversity hires from 32% in 2020 to 47% in 2021 and increased the percentage of female hires from 40% to 51% during the same period. Served as executive sponsor for the Hispanic or Latino Association BRG, which aims to promote an inclusive culture with a commitment to connecting and supporting Hispanic and Latino professionals and allies. |
56 Invesco Ltd. |
The committee’s process for determining executive compensation |
We describe below a summary of the steps our committee takes in making its compensation decisions.
Step 1
Incentive awards may range from 0% to 130% of target
Step 2
Ensuring that our incentive pool and incentive awards are commercially viable
Step 3
The scorecard is a quantitative assessment of company performance
Step 1 – approving company scorecard and setting individual incentive targets and goals
In early 2021, the committee approved the company scorecard and established annual incentive targets (consisting of cash bonus + equity awards) for our CEO and our other executive officers. Actual incentive awards may range from 0% to 130% of the target amount based on company and individual performance. The committee also approved the company’s operating plan which is part of the annual goals for the company and CEO.
In consultation with Johnson Associates, the committee’s independent compensation consultant, the incentive targets are based on the executive’s role. See page 46 for the 2021 incentive targets.
Step 2 – setting our company-wide incentive pool
In early 2022, based on 2021 financial results and the company’s performance toward achieving its strategic objectives, the committee set the company-wide incentive pool for 2021 at 38.7% of pre-cash bonus operating income (“PCBOI”). Absolute incentive pools were up year-over-year from 2020. However, as a percentage, the 2021 pool was lower than our 5-year average and within our range (described below). All incentive awards, including NEO awards, are paid out of this pool.
The committee uses a range of 34%-48% of PCBOI in setting the company-wide incentive pool. The range includes the cash bonus, deferred and equity pools, as well as the amounts paid under sales commission plans (in which our NEOs do not participate). The range was determined based on historical data and practices of asset management and other similar financial services firms as analyzed by Johnson Associates and data obtained from the McLagan and CaseyQuirk Performance Intelligence Study.
Linking the aggregate incentive compensation pool to a defined range of our PCBOI ensures incentive compensation is commercially viable.
Step 3 – Using the scorecard to assess company performance
During the fourth quarter of 2021 and early in 2022, the committee conducted its final quantitative assessment of company performance for 2021. The scorecard is based on results achieved and related weightings in the following categories: financial performance 66.7% and organizational strength 33.3%. For 2021, the committee did not change the goals or targets set at the beginning of the year. The outcomes for our 2021 company scorecard have an overall company score of 120%. See page 48 for more information about our company scorecard results. The committee believes that each of the company performance measures supports the key indicators of company success.
2022 Proxy Statement 57 |
Step 4
The committee applies its qualitative assessment of executive achievements
Step 4 – qualitative assessment of individual performance and determining individual compensation
Aligning pay with performance
During the fourth quarter of 2021 and early in 2022, following the committee’s approval of the company-wide annual incentive pool, the committee assessed each executive’s performance within the context of:
After the quantitative assessment of company performance, the committee applied its qualitative assessment of each executive officer in setting final compensation in order to ensure that outcomes are aligned with company and individual performance and with shareholder interests.
Once the committee determined each executive’s total compensation, the committee determined the appropriate mix between cash and equity awards. For all NEOs, at least 60% of their total incentive is delivered in deferred equity, 60% of which is a performance-based equity award.
58 Invesco Ltd. |
Our compensation components |
Compensation components We utilize the following compensation components in our executive compensation program to achieve our objectives: | ||||
Component | Purpose | Description | ||
Base salary Cash | Provides fixed pay for the performance of day-to-day job duties Sole source of fixed cash compensation | Based on knowledge, skills, experience and scope of responsibility Small portion of total annual compensation Generally, remains static unless there is a promotion or adjustment needed due to industry trends | ||
Annual incentive award Cash bonus | Recognizes current year achievement of goals and objectives | Reflects assessment of company and individual performance | ||
Aligns with company, business unit and individual performance | When mandated by local regulatory requirements, we grant awards denominated in our product fund offerings in lieu of annual cash bonus. Such awards are settled in cash following a mandatory six-month deferral period | |||
Time-based equity award | Recognizes potential for future contributions to the company’s long-term strategic objectives Aligns executive with client and shareholder interests and encourages retention by vesting over time | Reflects assessment of company and individual performance 40% of equity awards for executive officers are time-based Our time-based equity awards vest over four years in equal annual increments | ||
Performance-based equity award | Aligns executive with client and shareholder interests Encourages retention by vesting based on time and performance measures | Reflects assessment of company and individual performance 60% of equity awards for executive officers are performance-based. Vesting is tied to adjusted operating margin and Relative TSR Our performance-based equity awards have a three-year performance period and three-year cliff vesting |
2022 Proxy Statement 59 |
Our compensation philosophy and objectives |
Invesco’s compensation program is designed to support our multi-year strategic objectives and the behaviors and discipline that generate strong performance for our clients and shareholders by:
aligning the interests of our senior-level employees and NEOs with clients and shareholders through long-term equity awards and accumulation of meaningful share ownership;
balancing pay-for-performance with economic outcomes;
reinforcing our commercial viability by closely linking rewards to Invesco, business unit and individual results and performance;
attracting, recognizing and retaining talent by ensuring a meaningful mix of cash and deferred compensation; and
discouraging excessive risk-taking that would have a material adverse impact on our clients, shareholders or company.
Emphasis on deferrals
The committee has designed our executive compensation program so that a significant portion of an executive’s compensation is in the form of deferred incentives. The committee believes this appropriately aligns our executive’s interests with our shareholders as it focuses on long-term shareholder value creation.
60% - 70% of incentive compensation of our CEO and other NEOs is deferred. The committee has no pre-established policy or target on the compensation mix between pay elements.
Performance-based equity awards
60% of equity awards is performance-based. Vesting is tied to the following two performance measures — adjusted operating margin and relative TSR over a three-year period.
The committee believes tying vesting to both adjusted operating margin and relative TSR over a multi-year period aligns with shareholder interests and the following goals with respect to performance-based awards:
Relative TSR
tracks value created for shareholders as a quantitative measure
aligns with shareholder interests
Adjusted operating margin (AOM)
focuses discipline in corporate investments, initiatives and capital allocation
is consistent with the way the business is managed
is an important measure of overall strength of an asset manager
aligns with Invesco’s shareholder value framework
is a primary measure of focus of industry analysts
is improved through effective management over the long-term
more effectively avoids conflicts of interest with clients
Performance award vesting matrix
The number of shares that vest will equal the target award amount multiplied by the vesting percentage associated with the Average AOM and Relative TSR ranking on the chart below. Vesting may range from 0% to 150%. We believe that the linked vesting performance thresholds provides significant rigor to our incentive program, as payouts are not a range of outcomes but represent specific performance levels.
60 Invesco Ltd. |
The below vesting matrix is for performance-based equity awards granted in February 2022 in connection with 2021 pay.
Absolute 3-year average AOM (%) | Relative TSR1 | |||||||||||||||||||
Lowest | 40% tile | 55% tile | 75% tile | Highest | ||||||||||||||||
≥ 41.0 | 100% | 116% | 133% | 142% | 150% | |||||||||||||||
40.0 | 83% | 103% | 122% | 133% | 142% | |||||||||||||||
39.0 | 67% | 90% | 111% | 123% | 133% | |||||||||||||||
37.5 | 50% | 75% | 100% | 113% | 125% | |||||||||||||||
36.0 | 33% | 58% | 83% | 100% | 117% | |||||||||||||||
34.5 | 17% | 42% | 68% | 88% | 108% | |||||||||||||||
≤ 33.0 | 0% | 25% | 50% | 75% | 100% |
1 | Points between the stated data points are determined by ratable straight line interpolation. |
If Invesco’s Relative TSR is the lowest percentile and absolute 3-year average adjusted operating margin is 33% or less, then our CEO and each of our executives will not be entitled to a distribution of any shares or accrued dividends. In addition, if the company’s 3-year absolute TSR is negative, vesting will be capped at 100%.
The rigor of the thresholds, as well as the partial vesting of awards for failure to meet the target range and an upside opportunity for performance beyond the target range, align with the company’s operating plan and committee’s belief that the company’s performance-based awards demonstrate our pay-for-performance philosophy.
Below is a summary of the features of our performance-based equity awards:
Performance-based equity award features | ||
Performance period | Three years | |
Performance metrics | Absolute adjusted operating margin and Relative TSR | |
Performance vesting range | 0% - 150%; straight line interpolation used for actual result | |
Vesting | 3-year cliff | |
Dividends | Deferred and paid only to the extent an award vests | |
Settlement | Shares | |
Clawback | Subject to clawback policy in the event of fraudulent or willful misconduct |
See page 62 for a list of peers that we use for our performance-based equity awards.
Role of the compensation committee
The committee’s responsibilities include:
reviewing and making recommendations to the Board about the company’s overall compensation philosophy;
approving the company-wide incentive pool;
evaluating the performance of, and setting the compensation for, the CEO; and
overseeing management’s annual process for evaluating the performance of, and approving the compensation for, each of the other executive officers.
Role of the independent compensation consultant
The committee has engaged Johnson Associates, an independent consulting firm, to advise it on director and executive compensation matters. Johnson Associates assists the committee throughout the year by:
providing analysis and evaluation of our overall executive compensation program, including compensation paid to our directors and executive officers;
attending certain meetings of the committee and periodically meeting with the committee without members of management present;
providing the committee with market data and analysis that compares executive compensation paid by the company with that paid by other firms in the financial services industry, which we consider generally comparable to us; and
providing commentary regarding market conditions, market impressions and compensation trends.
2022 Proxy Statement 61 |
Under the terms of its engagement with the committee, Johnson Associates does not provide any other services to the company unless the committee has approved such services. No such other services were provided in 2021. The committee has considered various factors as required by NYSE rules as to whether the work of Johnson Associates with respect to director and executive compensation-related matters raised any conflict of interest. The committee has determined no conflict of interest was raised by the engagement of Johnson Associates.
Role of the executive officers
Our chief executive officer meets with the non-executive directors throughout the year to discuss executive performance and compensation matters, including proposals on compensation for individual executive officers (other than himself). Our chief executive officer and head of human resources work with the committee to implement our compensation philosophy. They also provide to the committee information regarding financial and investment performance of the company as well as our progress toward our long-term strategic objectives. Our chief financial officer assists as needed in explaining specific aspects of the company’s financial performance.
The committee, with assistance from Johnson Associates, reviews the composition of our peer group to ensure that the group continues to serve as an appropriate market reference for executive compensation purposes. In considering the composition of our peer group, the committee considers a broad set of comparators firms from several perspectives. The committee evaluates business model and scope, historical pay ranges, and competitors with whom we compete for talent.
Recent industry consolidation and a corresponding decline in the number of relevant peer firms, have created challenges in identifying a meaningful peer group. During the committee’s peer group assessment in 2021, emphasis was given to a narrower, exclusively investment management focused peer group. The peer group emphasizes pure asset management firms supplemented by firms with significant business overlap and similar scale.
The company’s peer group does not solely determine executive pay outcomes but is a reasonable reference point and one of multiple perspectives considered when determining executive (including NEO) pay.
Below is the compensation peer group that was used for 2021 as well as for the performance-based awards that were granted in February 2021 and February 2022:
Peer group | ||||
• AllianceBernstein1 | • Goldman Sachs (Asset Management) | • Northern Trust1 | ||
• Bank of NY Mellon1 | • Janus Henderson1 | • State Street1 | ||
• BlackRock1 | • Lazard1 | • T. Rowe Price1 | ||
• Franklin Resources1 | • Morgan Stanley (Investment Management) |
1 | Vesting for performance-based equity awards is calculated based on absolute adjusted operating margin and the TSR of the company and its designated peer group. The above firms comprise the designated peer group for purposes of determining relative TSR for performance-based equity awards. |
62 Invesco Ltd. |
Compensation policies and practices |
Summary of executive compensation practices
Our executive compensation program reflects our commitment to responsible financial and risk management and is demonstrated by the following policies and practices:
What we do
✓ | Align pay with performance |
✓ | Link incentive compensation to the firm’s performance |
✓ | Emphasize deferred compensation with long vesting periods in order to align executives with client and shareholder interests |
✓ | Robust performance measures |
✓ | Require 60% of equity awards for executive officers to be performance-based |
✓ | Maintain a clawback policy for executive officers for performance-based compensation |
✓ | Conduct a robust outreach program to provide shareholders and major proxy advisory firms with opportunities for feedback and insights on our executive compensation program |
✓ | Maintain significant stock ownership guidelines for our executive officers and non-executive directors |
✓ | Maintain a cap on cash bonuses for our executive officers and total compensation cap for our CEO |
✓ | Utilize “double triggers” for vesting of equity awards in the event of a change in control |
✓ | Retain an independent compensation consultant to assess our executive compensation program |
✓ | Maintain a comprehensive risk management program designed to identify, evaluate and control risks within our compensation programs |
What we don’t do
× | No dividends or dividend equivalents on unvested performance-based awards |
× | No tax gross ups |
× | No short selling, hedging or pledging of company stock by insiders |
× | No share recycling on stock options and stock appreciation rights |
× | No reloads on stock options or SARs |
× | No supplemental retirement benefits or retirement arrangements |
× | No supplemental severance benefit arrangements outside of standard benefits |
× | No repricing of stock options without shareholder approval |
× | No excessive perquisites |
Our Executive Officer Stock Ownership Policy as in effect in 2021 requires the CEO to hold at least 250,000 shares of Invesco common stock. All other executives must hold at least 100,000 shares of Invesco common stock. As of December 31, 2021, all of our executives other than Mr. Giuliano have exceeded the stock ownership requirements. Based on current compensation levels, it is anticipated that Mr. Giuliano will attain the share ownership goals within the time period prescribed by the policy.
In February 2022, the compensation committee approved changes to the Executive Officer Stock Ownership Policy such that effective as of February 2022 (i) the CEO is required to achieve and thereafter maintain an ownership level that is equal to ten times the value of the current base salary of the CEO, and (ii) each executive other than the CEO is required to achieve and thereafter maintain an ownership level that is equal to five times the value of the current base salary of the executive. Executive officers are required to meet the new policy requirement within three years of the later of February 2022 or his or her first appointment as an executive officer. Until the ownership level is achieved, each executive officer is required to retain at least 100% of net vested shares.
As part of our Insider Trading Policy, our hedging policy prohibits hedging or monetization transactions, such as zero-cost collars and forward sale contracts, involving our securities; however, limited exceptions are allowed. To date, no exceptions have been made. The hedging policy is in place for all of our directors, officers, employees and any of their respective (i) family members that reside in the same household as the individual, (ii) anyone else who lives in the household, (iii) family members outside of the household that the individual directs or influences control and (iv) any entities, including any corporations, partnerships or trusts that the individual influences or controls.
2022 Proxy Statement 63 |
All performance-based equity awards held by our executive officers are subject to forfeiture or “clawback” provisions, which provide that any vested or unvested shares, any dividends and the proceeds from any sale of such shares, are subject to recovery by the company in the event that:
the company issues a restatement of financial results to correct a material error;
the committee determines that fraud or willful misconduct on the part of the employee was a significant contributing factor; and
some or all of the shares granted or received prior to such restatement would not have been granted or received based upon the restated financial results.
All NEOs are entitled to receive medical, life and disability insurance coverage and other corporate benefits available to most of the company’s employees working in the same country. NEOs also are eligible to participate in the Employee Stock Purchase Plan on the same terms as the company’s other employees. In addition, the NEOs may participate in the 401(k) plan or similar retirement savings plans in the NEO’s home country.
The company provides limited perquisites to its NEOs to aid the executives in their execution of company business. The committee believes the value of perquisites is reasonable in amount and consistent with its overall compensation plan. Mr. Flanagan has personal use of company-provided aircraft. The company leases an airplane for which it pays direct operating expenses, monthly lease payments and management fees. Compensation attributed to our NEOs for 2021 perquisites is included in the All Other Compensation Table for 2021 on page 67.
Invesco did not provide tax reimbursements for any perquisites or other compensation paid to our NEOs.
Tax deductibility of compensation
The committee considers the tax and accounting consequences of the compensation plans applicable to covered employees. Under Internal Revenue Code Section 162(m), compensation paid to certain covered employees of public companies in excess of $1 million in any tax year generally is not deductible. The performance-based pay exception to the deduction limit previously available under Section 162(m) is no longer available except with respect to certain grandfathered amounts which may continue to be deductible. No actions have been taken that were intended to impact the status of any grandfathered amounts.
Martin L. Flanagan — Our CEO has an employment agreement with the company. Under the employment agreement, Mr. Flanagan is employed as President and Chief Executive Officer of the company. The agreement terminates upon the earlier of December 31, 2025 (the year in which Mr. Flanagan reaches age 65) or the occurrence of certain events, including death, disability, termination by the company for “cause” or termination by Mr. Flanagan for “good reason.”
The terms of Mr. Flanagan’s amended employment agreement provide:
an annual base salary of not less than $790,000;
the opportunity to receive an annual cash bonus award based on the achievement of performance criteria;
the opportunity to receive share awards based on the achievement of performance criteria;
eligibility to participate in incentive, savings and retirement plans, deferred compensation programs, benefit plans, fringe benefits and perquisites and paid vacation, all as provided generally to other U.S.-based senior executives of the company; and
certain stipulations regarding termination of employment that are described in Potential Payments Upon Termination or Change in Control.
In the event of his termination without “cause” or resignation for “good reason”, Mr. Flanagan is entitled to receive the following payments and benefits (provided he has not breached certain restrictive covenants):
his then-effective base salary through the date of termination;
a prorated portion of the greater of $4,750,000 or his most recent annual cash bonus;
immediate vesting of all outstanding share-based awards (with performance-based awards vested at 100% of target);
any compensation previously deferred under a deferred compensation plan (unless a later payout date is stipulated in his deferral arrangements);
64 Invesco Ltd. |
a cash severance payment generally equal to the sum of (i) his base salary; (ii) the greater of $4,750,000 or his most recent annual cash bonus; and (iii) the amount of his most recent annual equity grant (unless the value thereof is less than 50% of the next previously-made grant, in which case the value of the next previously-made grant will be used);
continuation of medical benefits for him, his spouse and his covered dependents for a period of up to 36 months following termination;
any accrued vacation; and
any other vested amounts or benefits under any other plan or program.
Other NEOs — Our other NEOs are parties to employment arrangements that create salary continuation periods of six or twelve months in the event of involuntary termination of service other than for “cause” or unsatisfactory performance. See Potential payments upon termination or change in control.
The company maintains a forfeiture appeal policy which provides employees with a means to appeal the forfeiture of an incentive award that would otherwise be forfeited upon termination of employment – for retirement or any other reason – and a framework of guidelines for considering appeals made under the policy. The policy provides a process whereby “good leaver” and financial factors are considered in determining an appeal. In instances where an appeal is granted in part or in whole, the company will require that the employee agree to the following post-termination provisions: nondisclosure, non-recruitment, non-solicitation, non-disparagement, and noncompetition. The forfeiture appeal policy has been in place since 2011 and is administered by the compensation committee.
Potential payments upon termination or change in control
Generally, all participants in our global equity incentive plans who hold equity awards, including our NEOs, are eligible, under certain circumstances, for accelerated vesting in the event of a change of control of the company that is followed by involuntary termination of employment other than for “cause” or unsatisfactory performance or by voluntary termination for “good reason”.
The compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Based on this review and discussion, the compensation committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2021.
Respectfully submitted by the compensation committee:
C. Robert Henrikson (Chair)
Sarah E. Beshar
Thomas M. Finke
William F. Glavin, Jr.
Denis Kessler
Sir Nigel Sheinwald
Paula C. Tolliver1
G. Richard Wagoner, Jr.
Christopher C. Womack2
Phoebe A. Wood
1. | Ms. Tolliver joined the compensation committee effective May 13, 2021. |
2. | Mr. Womack joined the compensation committee effective October 13, 2021. |
2022 Proxy Statement 65 |
Summary compensation table for 2021
The following table sets forth information about compensation earned by our named executive officers during 2019, 2020 and 2021 in accordance with SEC rules. The information presented below may be different from compensation information presented in this Proxy Statement under the caption Executive compensation — Compensation discussion and analysis, as such section describes compensation decisions made in respect of the indicated year, regardless of when such compensation was actually paid or granted. For an explanation of the principal differences between the presentation in the Compensation discussion and analysis and the table below, please see the note on page 50.
Name and Principal Position | Year | Salary ($)1 | Share awards ($)2 | Non-equity incentive plan compensation | All other compensation ($)4 | Total ($) | ||||||||||||||||||
Martin L. Flanagan | 2021 | 790,000 | 7,216,998 | 4,800,000 | 90,754 | 12,897,752 | ||||||||||||||||||
President and Chief | 2020 | 790,000 | 7,755,984 | 3,093,000 | 108,118 | 11,747,102 | ||||||||||||||||||
Executive Officer | 2019 | 790,000 | 6,909,962 | 3,704,000 | 114,987 | 11,518,949 | ||||||||||||||||||
L. Allison Dukes | 2021 | 500,000 | 1,799,990 | 1,500,000 | 24,630 | 3,824,620 | ||||||||||||||||||
Senior Managing Director and Chief Financial Officer | 2020 | 500,000 | 1,499,996 | 900,000 | 7,550 | 2,907,546 | ||||||||||||||||||
Andrew T.S. Lo | 2021 | 461,513 | 2,941,908 | 2,100,000 | 68,683 | 5,572,104 | ||||||||||||||||||
Senior Managing Director | 2020 | 462,398 | 2,941,920 | 1,400,000 | 69,536 | 4,873,854 | ||||||||||||||||||
and Head of Asia Pacific | 2019 | 458,070 | 2,729,163 | 1,400,000 | 63,677 | 4,650,910 | ||||||||||||||||||
Gregory G. McGreevey | 2021 | 450,000 | 3,149,966 | 2,800,000 | 44,807 | 6,444,773 | ||||||||||||||||||
Senior Managing Director, | 2020 | 450,000 | 3,499,978 | 1,890,000 | 30,024 | 5,870,002 | ||||||||||||||||||
Investments | 2019 | 450,000 | 2,749,364 | 2,100,000 | 30,309 | 5,329,673 | ||||||||||||||||||
Andrew R. Schlossberg | 2021 | 450,000 | 2,456,963 | 2,100,000 | 67,322 | 5,074,285 | ||||||||||||||||||
Senior Managing Director, | 2020 | 450,000 | 2,729,981 | 1,638,000 | 63,676 | 4,881,657 | ||||||||||||||||||
Head of the Americas | 2019 | 450,000 | 2,186,395 | 1,820,000 | 87,966 | 4,544,361 |
1. | For each of the named executive officers, includes salary that was eligible for deferral, at the election of the named executive officer, under our 401(k) plan or similar retirement savings plan in the named executive officer’s country. For each of the named executive officers, salary is unchanged from 2020. For Mr. Lo, base salary is converted to U.S. dollars using an average annual exchange rate, which accounts for the different salary amounts shown despite the fact Mr. Lo’s salary has not charged during the periods shown. |
2. | For share awards granted in 2021, includes (i) time-based equity awards that vest in four equal annual installments on each anniversary of the date of grant; and (ii) performance-based awards, which are subject to a three-year performance period (2021-2023) and vest on February 28, 2024. The value of performance-based awards is based on the grant date value and reflects the probable outcome of such conditions and represents the target level (100%) of achievement. If maximum level of performance had been assumed, the grant date fair value of the performance-based awards would have been: (i) $6,495,298 for Mr. Flanagan; (ii) $1,619,991 for Ms. Dukes; (iii) $2,647,724 for Mr. Lo; (iv) $2,834,975 for Mr. McGreevey; and (v) $2,211,273 for Mr. Schlossberg. See Grants of plan-based share awards for 2021 below for information about the number of shares underlying each of the equity awards. Grant date fair values were calculated in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 718 “Compensation — Stock Compensation” (“ACS 718”). The grant date fair value was calculated by multiplying the target number of shares granted by the closing price of the company’s common shares on the date of grant. The amounts disclosed do not reflect the value actually realized by the named executive officers. For additional information, please see Note 12 — “Common Share-Based Compensation” to the financial statements in our 2021 Annual Report on Form 10-K. |
3. | Reflects annual cash bonus award earned for the year by the named executive officers and paid in February of the following year. |
4. | The table below reflects the items that are included in the All Other Compensation column for 2021. |
66 Invesco Ltd. |
1. | Amounts of matching contributions paid by the company to our retirement savings plans are calculated on the same basis for all plan participants, including the named executive officers. |
2. | Perquisites include the following: |
With respect to Mr. Flanagan, includes $56,361 for his personal use of company-provided aircraft. The company leases an airplane for which it pays direct operating expenses and monthly lease payments and management fees. We calculate the aggregate incremental cost to the company for personal use based on the average variable costs of operating the airplane. Variable costs include fuel, repairs, travel expenses for the flight crews and other miscellaneous expenses. This methodology excludes fixed costs that do not change based on usage, such as depreciation, maintenance, taxes and insurance. Mr. Flanagan’s total also includes company-logo apparel of de minimus value.
With respect to Mr. McGreevey, includes $13,096 for lodging and transportation paid for by the company and company-logo apparel of de minimus value.
2022 Proxy Statement 67 |
Grants of plan-based share awards for 2021
The compensation committee granted equity awards to each of the named executive officers in the calendar year 2021. Equity awards are subject to transfer restrictions and are generally subject to forfeiture prior to vesting upon a recipient’s termination of employment. During the 24-month period following a change in control, all equity awards immediately become vested upon the recipient’s termination of employment (i) by the company without cause, or (ii) by the recipient for good reason.
The following table presents information concerning plan-based awards granted to each of the named executive officers during 2021.
Estimated future payouts under non-equity incentive plan awards | Estimated future payout under equity incentive plan awards | All other share | Grant date | |||||||||||||||||||||||||||||||||||||
Grant | Type of | Threshold | Target | Maximum | Threshold | Target | Maximum | awards | of share | |||||||||||||||||||||||||||||||
Name | date1 | award2 | (#) 3 | (#) 3 | (#) 3 | (#)3 | (#)3 | (#)3 | (#)4 | awards ($)5 | ||||||||||||||||||||||||||||||
Martin L. | 02/28/21 | Time | — | — | — | — | — | — | 128,760 | 2,886,799 | ||||||||||||||||||||||||||||||
Flanagan | 02/28/21 | Performance | — | — | — | — | 193,140 | 289,710 | — | 4,330,199 | ||||||||||||||||||||||||||||||
L. Allison | 02/28/21 | Time | — | — | — | — | — | — | 32,114 | 719,996 | ||||||||||||||||||||||||||||||
Dukes | 02/28/21 | Performance | — | — | — | 48,171 | 72,257 | 1,079,994 | ||||||||||||||||||||||||||||||||
Andrew | 02/28/21 | Time | — | — | — | — | — | — | 52,487 | 1,176,759 | ||||||||||||||||||||||||||||||
T.S. Lo | 02/28/21 | Performance | — | — | — | — | 78,731 | 118,097 | — | 1,765,149 | ||||||||||||||||||||||||||||||
Gregory G. | 02/28/21 | Time | — | — | — | — | — | — | 56,199 | 1,259,982 | ||||||||||||||||||||||||||||||
McGreevey | 02/28/21 | Performance | — | — | — | — | 84,299 | 126,449 | — | 1,889,984 | ||||||||||||||||||||||||||||||
Andrew R. | 02/28/21 | Time | — | — | — | — | — | — | 43,835 | 982,781 | ||||||||||||||||||||||||||||||
Schlossberg | 02/28/21 | Performance | — | — | — | — | 65,753 | 98,630 | — | 1,474,182 |
1. | For equity awards granted on February 28, 2021, the compensation committee approved the awards on February 18, 2021. |
2. | Time-based equity awards and performance-based awards were granted under the 2016 Global Equity Incentive Plan. Time-based equity awards are four-year awards that vest 25% each year on the anniversary of the date of grant. Performance-based equity awards are subject to a three- year performance period (2021-2023) and are scheduled to vest on February 28, 2024. |
3. | NEO incentive compensation is based upon, among other things, the outcome of the company scorecard and the executive’s performance against his or her individual goals. The committee makes incentive pay decisions with respect to the executive’s annual cash bonus, subject to certain caps on the cash bonus portion, time-based equity and performance-based equity. For the cash bonus portion of the incentive award for our CEO, the maximum cash bonus is the lesser of $10 million or 30% of the CEO’s incentive compensation for the performance year. For the cash bonus portion of the incentive award for our NEOs other than our CEO, the maximum is 50% of total compensation for the performance year. Performance-based equity awards are tied to the achievement of specified levels of adjusted operating margin and Relative TSR. Vesting ranges from 0 to 150%; straight line interpolation to be used for actual results. Dividend equivalents are deferred for such performance-based equity awards and will be paid at the same rate as on our shares if and to the extent an award vests. |
4. | Dividends and dividend equivalents on unvested time-based equity awards are paid at the same time and rate as on our common shares to our shareholders. |
5. | The closing market price on the date of grant was $22.42. The grant date fair value is the total amount that the company will recognize as expense under applicable accounting requirements if the share awards fully vest. This amount is included in our Summary Compensation Table each year. Grant date fair values were calculated in accordance with ASC 718. The grant date fair value is calculated by multiplying the number of shares granted by the closing price of our common shares on the day the award was granted. With espect to the performance-based equity awards, the grant date fair value also represents the probable outcome of such performance conditions and represents the target (100%) level of achievement. |
68 Invesco Ltd. |
Outstanding share awards at year-end for 2021
The following table provides information as of December 31, 2021 about the outstanding equity awards held by our named executive officers.
Name | Footnote | Grant Date | Number of shares or vested (#) | Market value of shares or units that have not vested ($) | Equity incentive plan awards that have not vested (#) | Market value of equity incentive plan awards that have not vested ($) | ||||||||||||||||
Martin L. | 1 | 02/28/18 | 33,478 | 770,664 | — | — | ||||||||||||||||
Flanagan | 2 | 02/28/19 | 89,276 | 2,055,134 | — | — | ||||||||||||||||
3 | 02/28/19 | — | — | 178,552 | 4,110,267 | |||||||||||||||||
4 | 02/28/20 | 201,979 | 4,649,557 | — | — | |||||||||||||||||
3 | 02/28/20 | — | — | 269,305 | 6,199,401 | |||||||||||||||||
5 | 02/28/21 | 128,760 | 2,964,055 | — | — | |||||||||||||||||
3 | 02/28/21 | — | — | 193,140 | 4,446,083 | |||||||||||||||||
Total | 453,493 | 10,439,410 | 640,997 | 14,755,751 | ||||||||||||||||||
L. Allison Dukes | 4 | 05/15/20 | 167,910 | 3,865,288 | — | — | ||||||||||||||||
5 | 02/28/21 | 32,114 | 739,264 | — | — | |||||||||||||||||
3 | 02/28/21 | — | — | 48,171 | 1,108,896 | |||||||||||||||||
Total | 200,024 | 4,604,552 | 48,171 | 1,108,896 | ||||||||||||||||||
Andrew T.S. Lo | 1 | 02/28/18 | 10,099 | 232,479 | — | — | ||||||||||||||||
2 | 02/28/19 | 35,261 | 811,708 | — | — | |||||||||||||||||
3 | 02/28/19 | — | — | 70,521 | 1,623,393 | |||||||||||||||||
4 | 02/28/20 | 76,613 | 1,763,631 | — | — | |||||||||||||||||
3 | 02/28/20 | — | — | 102,150 | 2,351,493 | |||||||||||||||||
5 | 02/28/21 | 52,487 | 1,208,251 | — | — | |||||||||||||||||
3 | 02/28/21 | — | — | 78,731 | 1,812,388 | |||||||||||||||||
Total | 174,460 | 4,016,069 | 251,402 | 5,787,274 | ||||||||||||||||||
Gregory G. | 1 | 02/28/18 | 10,115 | 232,847 | — | — | ||||||||||||||||
McGreevey | 2 | 02/28/19 | 35,522 | 817,716 | — | — | ||||||||||||||||
3 | 02/28/19 | — | — | 71,043 | 1,635,410 | |||||||||||||||||
4 | 02/28/20 | 91,146 | 2,098,181 | — | — | |||||||||||||||||
3 | 02/28/20 | — | — | 121,527 | 2,797,552 | |||||||||||||||||
5 | 02/28/21 | 56,199 | 1,293,701 | — | — | |||||||||||||||||
3 | 02/28/21 | — | — | 84,299 | 1,940,563 | |||||||||||||||||
Total | 192,982 | 4,442,445 | 276,869 | 6,373,525 | ||||||||||||||||||
Andrew R. | 1 | 02/28/18 | 8,298 | 191,020 | — | — | ||||||||||||||||
Schlossberg | 2 | 02/28/19 | 28,248 | 650,269 | — | — | ||||||||||||||||
3 | 02/28/19 | — | — | 56,496 | 1,300,538 | |||||||||||||||||
4 | 02/28/20 | 71,094 | 1,636,584 | — | — | |||||||||||||||||
3 | 02/28/20 | — | — | 94,791 | 2,182,089 | |||||||||||||||||
5 | 02/28/21 | 43,835 | 1,009,082 | — | — | |||||||||||||||||
3 | 02/28/21 | — | — | 65,753 | 1,513,634 | |||||||||||||||||
Total | 151,475 | 3,486,955 | 217,040 | 4,996,261 |
1. | February 28, 2018. Time-based share award vests in four equal installments. As of December 31, 2021, the unvested share award represents 25% of the original grant. |
2. | February 28, 2019. Time-based share award vests in four equal installments. As of December 31, 2021, the unvested share award represents 50% of the original grant. |
3. | Performance-based share award vests in one installment. As of December 31, 2021, the unvested share award represents 100% of the target award. |
4. | February 28, 2020 and May 15, 2020. Time-based share award vests in four equal installments. As of December 31, 2021, the unvested share award represents 75% of the original grant. |
5. | February 28, 2021. Time-based share award vests in four equal installments. As of December 31, 2021, the unvested share award represents 100% of the original grant. |
2022 Proxy Statement 69 |
The following table provides information about equity awards held by our named executive officers that vested in 2021.
Share Awards | ||||||||||||||||||||
|
| |||||||||||||||||||
Name | Grant Date | Type of Award | Vesting Date | Number of shares acquired on vesting1 | Value realized on vesting ($) | |||||||||||||||
Martin L. Flanagan | 2/28/17 | Time | 2/28/21 | 39,987 | 896,509 | |||||||||||||||
2/28/18 | Time | 2/28/21 | 33,477 | 750,554 | ||||||||||||||||
2/28/19 | Time | 2/28/21 | 44,638 | 1,000,784 | ||||||||||||||||
2/28/20 | Time | 2/28/21 | 67,326 | 1,509,449 | ||||||||||||||||
2/28/18 | Performance | 2/28/21 | 133,909 | 3,002,240 | ||||||||||||||||
Total | 319,337 | 7,159,536 | ||||||||||||||||||
L. Allison Dukes | 5/15/20 | Time | 5/15/21 | 55,970 | 1,564,921 | |||||||||||||||
Total | 55,970 | 1,564,921 | ||||||||||||||||||
Andrew T.S. Lo | 2/28/17 | Time | 2/28/21 | 11,898 | 266,753 | |||||||||||||||
2/28/18 | Time | 2/28/21 | 10,098 | 226,397 | ||||||||||||||||
2/28/19 | Time | 2/28/21 | 17,630 | 395,265 | ||||||||||||||||
2/28/20 | Time | 2/28/21 | 25,537 | 572,540 | ||||||||||||||||
2/28/18 | Performance | 2/28/21 | 40,394 | 905,633 | ||||||||||||||||
Total | 105,557 | 2,366,588 | ||||||||||||||||||
Gregory G. | 2/28/17 | Time | 2/28/21 | 17,669 | 396,139 | |||||||||||||||
McGreevey | 2/28/18 | Time | 2/28/21 | 10,114 | 226,756 | |||||||||||||||
2/28/19 | Time | 2/28/21 | 17,761 | 398,202 | ||||||||||||||||
2/28/20 | Time | 2/28/21 | 30,381 | 681,142 | ||||||||||||||||
2/28/18 | Performance | 2/28/21 | 40,457 | 907,046 | ||||||||||||||||
Total | 116,382 | 2,609,285 | ||||||||||||||||||
Andrew R. | 2/28/17 | Time | 2/28/21 | 7,339 | 164,540 | |||||||||||||||
Schlossberg | 3/15/17 | Time | 3/15/21 | 1,385 | 36,010 | |||||||||||||||
2/28/20 | Time | 8/31/21 | 23,697 | 600,008 | ||||||||||||||||
2/28/18 | Time | 8/31/21 | 8,297 | 210,080 | ||||||||||||||||
2/28/19 | Time | 8/31/21 | 14,124 | 357,620 | ||||||||||||||||
2/28/18 | Performance | 2/28/21 | 33,189 | 744,097 | ||||||||||||||||
Total | 88,031 | 2,112,355 |
1. | Represents vesting at 100% for both time-based and performance-based awards. |
70 Invesco Ltd. |
Potential payments upon termination or change in control for 2021
The following table summarizes the estimated payments to be made under each agreement, plan or arrangement in effect as of December 31, 2021 which provides for payments to a named executive officer at, following or in connection with a termination of employment or a change in control. We do not report any amount to be provided to a named executive officer under any arrangement which does not discriminate in scope, terms or operation in favor of our named executive officers and which is available generally to all salaried employees. This analysis assumes that the named executive officer’s date of termination is December 31, 2021, and the price per share of our common shares on the date of termination is the closing price of our common shares on the NYSE on that date, which was $23.02.
Potential payments upon termination or change in control of the company
Benefit and payments upon termination 1 | Death or disability ($) | Voluntary termination without good reason ($) | Termination by executive for good reason or involuntary termination by the company without cause ($)2 | Change in control ($)3 | ||||||||||||
Martin L. Flanagan | ||||||||||||||||
Annual cash bonus4 | 4,750,000 | 4,750,000 | 4,750,000 | — | ||||||||||||
Cash severance5 | — | — | 12,756,998 | — | ||||||||||||
Value of equity acceleration | 25,195,160 | — | 25,195,160 | 25,195,160 | ||||||||||||
Value of benefits6 | — | — | 80,560 | — | ||||||||||||
L. Allison Dukes | ||||||||||||||||
Value of equity acceleration | 5,713,449 | — | 5,713,449 | 5,713,449 | ||||||||||||
Andrew T.S. Lo | ||||||||||||||||
Value of equity acceleration | 9,803,343 | — | 9,803,343 | 9,803,343 | ||||||||||||
Gregory G. McGreevey | ||||||||||||||||
Value of equity acceleration | 10,815,970 | — | 10,815,970 | 10,815,970 | ||||||||||||
Andrew R. Schlossberg | ||||||||||||||||
Value of equity acceleration | 8,483,215 | — | 8,483,215 | 8,483,215 |
1. | Under the terms of the employment agreement with Mr. Flanagan (the “Flanagan Agreement”), Mr. Flanagan is entitled to certain benefits upon termination of employment. Following any notice of termination, Mr. Flanagan would continue to receive salary and benefits compensation, and the vesting periods with respect to any outstanding share awards would continue to run, in the normal course until the date of termination. See Employment agreements and Potential payments upon termination or a change in control. |
Each of Ms. Dukes and Messrs. Lo, McGreevey, and Schlossberg is a party to an agreement that provides for a termination notice period of either six or twelve months. Following any notice of termination, the employee would continue to receive salary and benefits compensation, and the vesting periods with respect to any outstanding share awards would continue to run, in the normal course until the date of termination.
In accordance with SEC rules, the information presented in this table assumes a termination date of December 31, 2021 and that the applicable notice had been given prior to such date.
2. | Assumes termination for “good reason” or a termination by the company other than for cause or unsatisfactory performance following a change in control. We do not provide excise tax “gross up.” |
3. | Payment would only be made in the event that the share award was not assumed, converted or replaced in connection with a change in control. We do not provide excise tax “gross up.” |
4. | Under the Flanagan Agreement, Mr. Flanagan is entitled to an annual cash bonus that is equal to the greater of $4,750,000 or his most recent annual cash bonus upon certain terminations of employment and which is prorated based on the number of days that have elapsed in the year in which the termination occurs. |
5. | Under the Flanagan Agreement, Mr. Flanagan’s severance payment is equal to the sum of (i) his base salary; (ii) the greater of $4,750,000 or his most recent annual cash bonus; and (iii) the fair market value at grant of his most recent equity award. |
6. | Under the Flanagan Agreement, Mr. Flanagan and his covered dependents are entitled to medical benefits for a period of 36 months following termination. Represents cost to the company for reimbursement of such medical benefits. |
2022 Proxy Statement 71 |
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and Regulation S-K of the Exchange Act, we are providing the following information about the relationship of the annual total compensation of Mr. Martin L. Flanagan, our Chief Executive Officer (our “CEO”), and our employees (other than our CEO):
For 2021, our last completed year:
the annual total compensation of our median employee (other than our CEO), was $187,854, and
the annual total compensation of our CEO as reflected in the 2021 Summary Compensation Table was $12,897,752.
As a result for 2021, the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee (other than our CEO) was 69 to 1.
72 Invesco Ltd. |
3
We are asking our shareholders to make a total of 3,715,137 common shares available for purchase under our ESPP
Approval of the amended and restated Invesco Ltd. 2012 Employee Stock Purchase Plan
General
The Invesco Ltd. 2012 Employee Stock Purchase Plan (the “Current Plan”) is a non-qualified employee stock purchase plan that was originally approved by our shareholders in 2012.
We are asking our shareholders to vote in favor of the Invesco Ltd. 2012 Employee Stock Purchase Plan, as amended and restated (“ESPP”), to
The complete text of the ESPP is attached as Appendix B to this Proxy Statement.
Number of shares of common stock under the ESPP
If our shareholders approve the ESPP, the maximum number of shares available for purchase will be 3,715,137 common shares, which includes 715,137 shares available for purchase under the Current Plan as of March 1, 2022. The 3,715,137 common shares requested represents less than 1% of our common shares outstanding as of December 31, 2021.
We believe that it is in the best interests of our shareholders to limit potential dilution and seek shareholder approval for additional ESPP shares on a more frequent basis. See Participation; historic share usage; and run rate for more information about our Current Plan share usage.
Expected duration of requested shares; impact on dilution
We expect that the requested share replenishment will last for five years and that we will seek shareholder approval to replenish the plan reserves at our 2027 Annual General Meeting. The Board believes that the potential dilution resulting from the requested shares is reasonable and that the issuance of these shares will provide an incentive for our employees to increase their share ownership in the company.
Why we support the ESPP proposal
We believe that the ESPP aligns the long-term interests of our employees with those of our shareholders. Although a significant portion of our senior-level employees already own common shares of the company, the ESPP provides an incentive for other employees to purchase an equity interest in the company and increase that equity interest over time. We believe that the ownership of shares purchased under the ESPP aligns the interests of our employees with those of our shareholders and creates long-term shareholder value.
We believe that the ESPP encourages employee retention. If approved by shareholders, the ESPP will continue to enable employees to set aside a portion of their regular earnings through periodic payroll deductions over a specified period and use those amounts to purchase common shares of the company at a discount. Because employees generally need to be employed by the company at the end of the applicable period to obtain the benefit of the discount, we believe that the ESPP will provide an incentive for employees to continue their employment with the company and will promote a stable, motivated workforce that will benefit all shareholders.
Administrative amendments seek to bolster employee participation. We are seeking to increase shareholder participation in the ESPP. The Current Plan provides for annual offerings for consecutive 12-month periods with shares being purchased at a 15% discount.
2022 Proxy Statement 73 |
The ESPP is designed so that it will permit periodic offerings of less than 12 months at a discount of up to 20% as determined by the compensation committee. We believe that shorter offering periods and a potentially greater discount will encourage participation, especially among employee groups who currently do not hold any common shares.
Key features of the ESPP
The below table describes features of the ESPP.
Proposed Plan
Tax status | ||
Nonqualified | ||
Plan duration and authorized shares | ||
5 years; 3,715,137 shares | ||
Fixed number of shares – no evergreen provision | ||
Administration by independent compensation committee | ||
Administered by the compensation committee, which is composed entirely of independent directors who meet SEC and NYSE standards for independence, or its delegate | ||
Discount | ||
Not more than 20% (discount to be set by Compensation Committee) | ||
Offering period | ||
Potential for shorter offering periods | ||
Maximum contribution | ||
$6,000 per offering | ||
Maximum share purchase | ||
1,000 shares per offering | ||
No transferability of ESPP options | ||
Prohibits transfer of ESPP options or contributions other than by will or laws of descent and distribution | ||
No repricing of ESPP options | ||
No repricing of ESPP options without shareholder approval | ||
Change in control | ||
Accumulated contributions returned to employees |
Historic use of ESPP shares
When considering the number of shares to add to the ESPP, the compensation committee reviewed, among other things, historic ESPP share usage as well as projected future share usage.
We recognize the dilutive impact of our plan on our shareholders. However, we believe that our historic share usage is prudent and in the best interests of our shareholders.
Participation; historic share usage; and run rate
Participation.Since the inception of the Current Plan in 2012, participation in the plan has ranged from 16%–20% of our eligible employees. Our eligible employee population has grown from 5,900 eligible employees in 2012 to 7,100 eligible employees in 2021 (an increase of approximately 20%).
74 Invesco Ltd. |
Historic share usage.The Current Plan authorizes the issuance of a total of 3 million shares.As noted above, since the inception of the Current Plan, we have issued an aggregate of 2.3 million common shares.
Run rate.“Run rate” provides a measure of our annual plan share utilization relative to the number of shares outstanding. In each of the three years shown below, shares issued represent less than 1% of shares outstanding.
(share amounts in millions) | 2021 | 2020 | 2019 | |||||||||
Current Plan shares issued | 0.2 | 0.7 | 0.3 | |||||||||
Weighted average shares outstanding (basic) | 462.8 | 459.5 | 437.8 |
Information regarding equity compensation plans
The following table sets forth information, as of December 31, 2021, about common shares that may be issued under our existing equity compensation plans.
Name of plan | Approved by security holders1 | Number of be issued upon | Weighted average exercise price of outstanding | Number of | remaining available for future issuance under equity plans (excluding outstanding options)2 | |||||||||||||||
2016 Global equity incentive plan | ✓ | |||||||||||||||||||
| N/A | 16,347,455 | ||||||||||||||||||
2012 Employee stock purchase plan | N/A | N/A | 715,137 | |||||||||||||||||
2010 Global equity incentive plan (ST) | N/A | N/A | 3,243,089 | |||||||||||||||||
|
| |||||||||||||||||||
| ||||||||||||||||||||
Total | N/A | N/A | 20,305,681 |
1. | ||||||||||||||||
With respect to the 2010 Global Equity Incentive Plan (ST), shares are issued only as employment inducement awards in connection with a strategic transaction and, as a result, do not require shareholder approval under the rules of the New York Stock Exchange or otherwise. |
2. | Excludes unvested restricted stock awards and unvested restricted stock units. |
Summary of terms of the ESPP
The following is a summary of the material features of the ESPP. This summary is not intended to be complete and is qualified in its entirety by reference to the ESPP, a copy of which is attached as Appendix B to this Proxy Statement and which is incorporated herein by reference thereto.
General. The ESPP is not intended to qualify as an “employee stock purchase plan” within the meaning section 423 of the U.S. Internal Revenue Code (“Code”), and options granted under the ESPP are not intended to qualify for favorable tax treatment under the laws of any country.
Eligibility and participation.All individuals who are employees of the company (or any subsidiary or affiliate of the company that participates in the ESPP) on the last day of the period designated by the compensation committee for enrollment in the ESPP and who meet such other eligibility criteria established by the compensation committee will be eligible to participate in the ESPP.In May 2021 (as of the time of the most recent Current Plan enrollment), approximately 7,100 employees were eligible to participate in the ESPP.
2022 Proxy Statement 75 |
Offerings.Each offering will begin and end on dates that are specified by the compensation committee before the commencement of the offering period. Under the Current Plan, offerings are for a period of 12 months. Under the ESPP, we would like the flexibility to have periodic offerings of shorter duration.
Each participant will make an election before the offering commencement date to have the participant’s employer deduct a specified amount from the participant’s base salary or regular earnings on an after-tax basis during each payroll period during the offering. The maximum amount that may be credited to a participant’s account during any single offering period may not exceed US $6,000 (or an equivalent amount in the local currency in which the participant is normally paid) or such lesser amount as established by the committee. A participant’s election generally cannot be changed during an offering unless the participant withdraws from the ESPP or suspends deductions, as explained below.
On each offering commencement date, the company will grant to each participant an option to purchase the number of shares that can be purchased with the amounts credited to the participant’s account on the offering termination date at the applicable purchase price. Under the Current Plan, the purchase price is 85% of the fair market value on the offering termination date. Under the ESPP, we would like to have the flexibility to have the compensation committee set the purchase price to be not less than 80% of the fair market value of a common share of the company on the offering termination date. Under no circumstances, however, may a participant purchase more than 1,000 shares during any offering.
On the offering termination date, the option held by a participant will be exercised automatically to purchase the number of full shares that can be purchased at the applicable purchase price on that date. Shares acquired upon the exercise of an option will be delivered as soon as practicable. Any amounts remaining in the participant’s account after exercise will be returned to the participant.
Once the participant option is granted and the purchase price set, the company may not modify it except as provided in Section 7(c) of the ESPP.
Voluntary withdrawal; voluntary suspension. A participant may withdraw from the ESPP or suspend contributions by giving a notice of withdrawal or suspension. With respect to withdrawals, upon receipt of such notice, the participant’s option will be canceled immediately, and all amounts credited to the participant’s account will be returned to the participant. With respect to suspensions, upon receipt of such notice, the participant’s accumulated contributions will be used to purchase shares on the offering termination date. A participant who withdraws from the ESPP or suspends contributions during an offering will be prohibited from participating again in that offering and from making any further contributions during the offering. The participant may participate in future offerings by complying with enrollment procedures.
Termination of employment and leaves of absence. If a participant terminates employment with the company and all subsidiaries and affiliates due to death, disability or a reduction in force, the participant (or the participant’s beneficiary, if applicable) may choose either to (i) withdraw from the ESPP, as described above or (ii) permit the exercise of the participant’s option on the offering termination date. If a participant terminates employment for any other reason, the participant’s option will be canceled, and the amounts in the participant’s account will be returned to the participant.
If a participant takes an approved leave of absence, the participant may choose to (i) withdraw voluntarily from the ESPP, as described above, (ii) continue payroll deductions (or contributions, if applicable) with respect to the offering and exercise the participant’s option on the offering termination date or (iii) discontinue payroll deductions (or contributions) but exercise the participant’s option on the offering termination date with the amounts then credited to the participant’s account.
76 Invesco Ltd. |
Shares subject to the ESPP. We are asking our shareholders to approve the ESPP which will authorize up to 3,715,137 shares. As noted above, as of March 1, 2022, 715,137 common shares remained available for grant.
Shares issued under the ESPP may be shares that are authorized but unissued shares or shares held by the company as treasury shares.
The number of common shares authorized for issuance under the ESPP, as well as the number of shares subject to outstanding options and the annual limitation on grants to any single individual (if any), are subject to equitable adjustment upon the occurrence of any stock dividend or other distribution, recapitalization, stock split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange or other similar corporate transaction or event.
Change in Control. In the event of a change in control or disaffiliation, the option of each employee (in the case of a change in control) or each employee who is employed by the affiliate or business division that ceases to be an affiliate or business division (in all other instances), will be cancelled immediately and all contributions returned to the impacted employees as soon as administratively practicable.
Non-transferability. Awards under the ESPP cannot be sold, assigned, transferred or pledged or otherwise encumbered, except by will and laws of descent and distribution.
Administration. The ESPP will continue to be administered by the compensation committee of the Board (or its delegate) or a subcommittee of the Board that is appointed by the Board to be the committee for the ESPP. The compensation committee is authorized to determine the subsidiaries and affiliates of the company that will participate in the ESPP, the eligibility of employees to participate in the ESPP, the number of shares that participants may purchase under the ESPP and the terms and conditions under which such shares may be purchased. In addition, the compensation committee is authorized to take all other actions that are necessary or appropriate to administer the ESPP. To the extent permitted by applicable law, the compensation committee may delegate its administrative authority to any person or group of persons that it selects, and that person or group will be deemed to be the compensation committee to the extent of its authority.
Amendment and termination. The Board or the compensation committee may amend, terminate or cancel the ESPP or any option at any time, provided, however, that any amendment implementing a change for which shareholder approval is required will not be effective unless shareholder approval is obtained. Upon the termination or cancellation of the ESPP or any option, the Board or the compensation committee will have the discretion to determine whether to return amounts held in participants’ accounts or to accelerate the offering termination date and permit the exercise of the outstanding options to the extent that the acceleration would not result in unfavorable tax treatment.
Offerings outside of U.S. It is expected that the compensation committee will continue to permit employees who are located outside of the U.S. to participate in the ESPP under term and conditions substantially similar to those applicable to U.S. participants.
Term of the ESPP. If approved by shareholders, the ESPP will become effective as of the date that the shareholders give their approval, and no options will be granted under the ESPP after the five-year anniversary of that date.
U.S. Federal income tax consequences
The following discussion is intended only as a general summary of the material U.S. federal income tax consequences of options issued under the ESPP for the purposes of shareholders considering how to vote on this proposal. It is not intended as tax guidance to participants in the ESPP. This summary does not take into account certain circumstances that may change the income tax treatment of options for individual participants, and it does not describe the state income tax consequences of any option or the taxation of options in jurisdictions outside of the U.S.
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Income to participants. The grant of an option under the ESPP generally has no tax consequences for a participant or the company. Upon the exercise of an option, a participant will generally recognize ordinary income equal to the fair market value of the shares acquired on the date of exercise, less the amount paid for the shares. The ESPP is not intended to be an employee stock purchase plan within the meaning of Code section 423, and it is not intended to provide participants with favorable tax treatment under the tax laws of any other country.
Deductions by the company. The company will generally be entitled to a deduction equal to the amount included in the ordinary income of participants.
Anticipated grants
If the ESPP is approved by our shareholders, we expect that the first offering will commence, and options will be granted under the ESPP, in July 2022. Because the number of shares that participants in the ESPP will be permitted to purchase pursuant to options granted during this offering will depend on the amounts that the participants elect to contribute under the ESPP (not to exceed US $6,000 per participant) and the fair market value of our shares on the last day of the offering, we cannot now anticipate the aggregate number of shares that may be purchased during this offering, nor can we anticipate the number of shares, if any, that our named executive officers or other senior officers may purchase during this offering. For shares issued during our most recently completed offering under the Current Plan, please see Run Rate table above. The closing price of our shares on the New York Stock Exchange on March 10, 2022 was $20.06 per share.
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Recommendation of the Board |
74
FOR | The Board of Directors unanimously recommends a vote “FOR” the approval of the employee stock purchase plan, as amended and restated. | |||
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75
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76
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77
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78
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79