Proposal | Board Vote Recommendation | Proposal 2: | For More Information, see: | 1 Election of Directors |
The Board recommends a voteFOR the election of the director nominees named in this Proxy Statement. See further below in this summary and pages 6 through 12 for further information on the nominees.
| FOR | Proposal 3: | See further below in this summary and pages 5 through 11 for information on the nominees | 2 Advisory Vote onto Approve the Company’s Executive Compensation |
The Board recommends a voteFOR this proposal. See page 53 for details.
| FOR | Proposal 4: | See page 58 for details | 3 Appointment of PricewaterhouseCoopers LLP for 20142015 | | FOR | | See page 59 for details |
The Board recommends a voteFOR this proposal. See page 54 for details.
Amendment to Our Bye-Laws to Declassify Our Board Of Directors
Currently, our Board of Directors is divided into three classes and members of our Board are elected for staggered terms of three years. Our Board has adopted an amendment to the Invesco Ltd. Amended and Restated Bye-Laws (the “Bye-Laws”) that, if approved by the shareholders at this year’s Annual General Meeting, will provide for annual elections of our directors as follows. Commencing with the class of directors standing for election at the 2015 Annual General Meeting, directors will stand for election for one-year terms, expiring at the next succeeding Annual General Meeting. The directors who were elected at the 2013 Annual General Meeting, whose terms will expire in 2016, and the directors who are elected at the 2014 Annual General Meeting under Proposal No. 2 whose terms will expire in 2017, will continue to hold office until the end of the terms for which they were elected. Therefore, if this proposal is approved, all directors will be elected on an annual basis beginning with the 2017 Annual General Meeting. In all cases, each director will hold office until his or her successor has been elected and qualified or until the director’s earlier resignation or removal. If the amendment to the Bye-Laws is not approved by our shareholders, our Board will remain classified. This proposal requires the affirmative vote of at least 75% of the issued and outstanding shares of the company.
Proxy Statement Summary (cont’d)
Election Of Directorsof directors You are being asked to cast votes for twofour directors, Messrs. Denis KesslerMartin L. Flanagan, C. Robert Henrikson, Ben F. Johnson III and G. Richard Wagoner, Jr.,Sir Nigel Sheinwald, each for a three yearone-year term expiring in 2017. As previously announced, neither Mr. Rex Adams nor Sir John Banham has been nominated for re-election to the Board because each has reached the mandatory retirement age.2016. This proposal requires the affirmative vote of a majority of votes cast at the Annual General Meeting. Immediately below is information regarding the directors standing for election, and Board membersdirectors continuing in office.office and our retiring director. | | | | | | | | | | | | | | | | | | | | | Name | | Age | | Director Since | | Occupation | | Independent | | Other Public Boards | | Committee Memberships | | | | | | | | A | | C | | NCG | Directors standing for election | | Denis Kessler | | 62 | | 2002 | | Chairman and CEO, SCOR SE | | X | | 2(a) | | M | | M | | M | | G. Richard Wagoner, Jr. | | 61 | | 2013 | | Former Chairman and CEO, General Motors Corporation | | X | | 1 | | M | | M | | M | Directors continuing in office | | Joseph R. Canion | | 69 | | 1997 | | Former CEO, Compaq Computer Corporation; Former Chairman Insource Technology Group | | X | | 1 | | — | | — | | Ch(b) | | Martin L. Flanagan | | 53 | | 2005 | | President and CEO, Invesco Ltd. | | — | | 0 | | — | | — | | — | | C. Robert Henrikson | | 66 | | 2012 | | Former President and CEO, MetLife, Inc. and Metropolitan Life Insurance Company | | X | | 1 | | M | | Ch(b) | | M | | Ben F. Johnson III | | 70 | | 2009 | | Former Managing Partner, Alston & Bird LLP | | X | | 0 | | M | | M | | M | | Edward P. Lawrence | | 72 | | 2004 | | Former Partner, Ropes & Gray LLP | | X | | 0 | | M | | M | | M | | J. Thomas Presby | | 74 | | 2005 | | Former Partner, Deloitte & Touche LLP | | X | | 3 | | Ch | | — | | M | | Phoebe A. Wood | | 60 | | 2010 | | Principal, CompaniesWood, Former Vice Chairman and CFO, Brown-Forman Corporation | | X | | 3 | | M | | M | | M | Retiring Directors | | Rex D. Adams | | 73 | | 2001 | | Former Vice President of Administration, Mobil Corporation | | X | | 1 | | — | | M | | Ch | | Sir John Banham | | 73 | | 1999 | | Former Chairman of Johnson Mathey plc | | X | | 1 | | M | | Ch | | M |
| | | | | | | | | | | (a) Mr. Kessler currently servesKey: A -Audit
| | C - Compensation | | NCG - Nomination and Corporate Governance | | M - Member | | Ch - Chairperson |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Committee Memberships | | | | | | | Name | | Age | | Director Since | | Independent | | Other Public Boards | | A | | C | | NCG | | Occupation and Director Qualifications | | | Martin L. Flanagan | | 54 | | 2005 | | – | | 0 | | – | | – | | – | | – | | President and CEO, Invesco Ltd. | | | | | | | | | | | | | | | | | | – | | Relevant industry experience | | | | | | | | | | | | | | | | | | – | | Financial and accounting expertise | | C. Robert Henrikson | | 67 | | 2012 | | ü | | 1 | | M | | Ch | | M | | – | | Former President and CEO, MetLife, Inc. and Metropolitan Life Insurance Company | | | | | | | | | | | | | | | | | | – | | Relevant industry experience | | | | | | | | | | | | | | | | | | – | | Public company board experience | | Ben F. Johnson III | | 71 | | 2009 | | ü | | 0 | | M | | M | | M | | – | | Former Managing Partner, Alston & Bird LLP | | | | | | | | | | | | | | | | | | – | | Executive leadership | | | | | | | | | | | | | | | | | | – | | Corporate governance and legal expertise | | | | | | | | | | | | | | | | | | – | | Civic and private company board leadership | | Sir Nigel Sheinwald1 | | 61 | | – | | ü | | 1 | | – | | – | | – | | – | | Former Senior Diplomat, Her Majesty’s Diplomatic Service | | | | | | | | | | | | | | | | | | – | | Global and governmental experience | | | | | | | | | | | | | | | | | | – | | Public company board experience | | | Joseph R. Canion | | 70 | | 1997 | | ü | | 0 | | – | | – | | Ch | | – | | Former CEO, Compaq Computer Corporation; Former Chairman Insource Technology Group | | | | | | | | | | | | | | | | | | – | | Global business experience | | | | | | | | | | | | | | | | | | – | | Relevant industry experience | | | | | | | | | | | | | | | | | | – | | Information technology industry experience | | Denis Kessler | | 63 | | 2002 | | ü | | 2 | | M | | M | | M | | – | | Chairman and CEO, SCOR SE | | | | | | | | | | | | | | | | | | – | | Relevant industry experience | | | | | | | | | | | | | | | | | | – | | Global business experience | | | | | | | | | | | | | | | | | | – | | Public company board experience | | Edward P. Lawrence | | 73 | | 2004 | | ü | | 0 | | M | | M | | M | | – | | Former Partner, Ropes & Gray LLP | | | | | | | | | | | | | | | | | | – | | Legal and regulatory expertise | | | | | | | | | | | | | | | | | | – | | Relevant industry experience | | G. Richard Wagoner, Jr. | | 62 | | 2013 | | ü | | 1 | | M | | M | | M | | – | | Former Chairman and CEO, General Motors Corporation | | | | | | | | | | | | | | | | | | – | | Global business experience | | | | | | | | | | | | | | | | | | – | | Financial and accounting expertise | | | | | | | | | | | | | | | | | | – | | Public company board experience | | Phoebe A. Wood | | 61 | | 2010 | | ü | | 3 | | Ch2 | | M | | M | | – | | Principal, Companies Wood, Former Vice Chairman and CFO, Brown-Forman Corporation | | | | | | | | | | | | | | | | | | – | | Executive leadership | | | | | | | | | | | | | | | | | | – | | Financial and accounting expertise | | | | | | | | | | | | | | | | | | – | | Public company board experience | | | J. Thomas Presby | | 75 | | 2005 | | ü | | 3 | | Ch | | – | | M | | – | | Former Partner, Deloitte LLP | | | | | | | | | | | | | | | | | | – | | Executive leadership | | | | | | | | | | | | | | | | | | – | | Financial and accounting expertise | | | | | | | | | | | | | | | | | | – | | Public company board experience | | Mr. Presby has not been nominated for re-election to the Board because he has reached the mandatory retirement age. |
1 | Sir Nigel Sheinwald is a new nominee to the Board of Directors, and his service on the boardBoard and each of directors of SCOR SE, BNP Paribas SA and Dassault Aviation. Effective as ofits committees will commence upon his election at the date of the 20142015 Annual General Meeting Mr. Kessler’s service on the Dassault Aviation board will end.(b) As of Shareholders.
|
2 | Commencing at the conclusion of the 20142015 Annual General Meeting. | | | | | | | | A – Audit | | | | | | | | | | C – Compensation | | | | | | | | | | NCG– Nomination and Corporate | | | | | | | | | | Governance | | | | | | | | | | M – Member | | | | | | | | | | | Ch – Chairman | | Meeting of Shareholders |
3
Proxy Statement Summary (cont’d)
Governance Highlightshighlights | | | | | | | Independence | | • 10 out–
| | 8 of our 11 current9 directors are independent.•
| | | | | – | | Our CEOchief executive officer is the only management director. | | | | | – | | • All of our Board committees are composed exclusively of independent directors.
| | | Independent ChairmanChairperson | | • –
| | We have an independent ChairmanChairperson of our Board of Directors, selected by the independent directors. | | | | | – | | • The ChairmanChairperson serves as liaison between management and the other independent directors.
| | | Executive Sessions | | • –
| | The independent directors regularly meet in private without management. | | | | | – | | • The ChairmanChairperson presides at these executive sessions.
| | | Board Oversight of Risk Management | | – | | • Our Board has principal responsibility for oversight of the company’s risk management process and understanding of the overall risk profile of the company.
| | | Share Ownership Requirements
| | • –
| | Our non-executive directors must hold at least 18,000 shares of Invesco common stock within seven years of joining the Board. •
| | | | | – | | Our CEOchief executive officer must hold at least 250,000 shares of Invesco common stock. | | | | | – | | • All other executive officers must hold at least 100,000 shares of Invesco common stock.
| | | Board Practices | | • –
| | Our Board annually reviews its effectiveness as a group.• group, responding to a questionnaire and one-on-one interviews coordinated by an independent external legal advisor that reports results of the annual review to the Board.
| | | | | – | | Nomination policies are adjusted as needed to ensure that our Board as a whole continues to reflect the appropriate mix of skills and experience. | | | | | – | | • Directors may not stand for election after age 73.75.
| | | Accountability | | • –
| | Directors must be elected by a majority of votes cast. | | | | | – | | In 2014, shareholders approved a phased-in declassification for our Board, which will be completed by the 2017 Annual General Meeting of Shareholders. Beginning with the 2015 Annual General Meeting, upon the expiration of each director’s term, additional terms served by the director or his or her successor will be one-year terms. • The Board is presenting for shareholder approval a resolution to declassify the Board of Directors.
| | |
Additional information regarding the annual general meeting Please seeGeneral Information Regarding the Annual General Meeting Please see “General Information Regarding the Annual General Meeting” beginning on page 5762 for important additional information regarding the Annual General Meeting.
Please review the entire Proxy Statement and the company’s 2014 Annual Report onForm 10-K before voting. 4
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 15, 2014,14, 2015, at 1:00 p.m. Eastern Time. In this Proxy Statement, we may refer to Invesco Ltd. as the “company,” “Invesco,” “we,” “us” or “our.”
Proposal No. 1 Amendment to the Company’s Amended and RestatedBye-Laws to Declassify our Board
– Election of Directors The Board of Directorscurrently has unanimously adoptednine directors and is submitting for shareholder approval an amendment (the “Amendment”) to the Bye-Laws that would phase in the declassification of our Board of Directors and provide instead for the annual election of directors. The Board believes that its classified structure has helped assure continuity of the company’s business strategies and has reinforced a commitment to long-term shareholder value. Although these are important benefits, the Board recognized the growing sentiment among shareholders and the investment community in favor of annual elections. After careful consideration, the Board determined that it is appropriate to propose declassifying the Board.
Currently, our Board of Directors is divided into three classes and members of the Board are elected(see below for staggered terms of three years. If the Amendment is approved, commencing with the class of directors standing for election at the 2015 Annual General Meeting, directors will stand for election for a one-year term, expiring at the next succeeding annual general meeting. The directors who were elected at the 2013 Annual General Meeting, whose terms will expire in 2016, and the directors who are elected at the 2014 Annual General Meeting under Proposal No. 2, whose terms will expire in 2017, will continue to hold office until the end of the terms for which they were recently elected. Therefore, if the Amendment is approved all directors will be electedinformation on an annual basis beginning with the 2017 Annual General Meeting. The shaded blocks in the table below illustrates the years in which members of our Board would stand for annual elections if the proposal is approved by our shareholders.
| | | | | | | | | Election Year | Director | | 2015 | | 2016 | | 2017 | Flanagan, Henrikson, Johnson | | | | | | | Canion, Wood | | | | | | | Kessler, Wagoner | | | | | | |
In all cases, each director will hold office until his or her successor has been elected and qualified or until the director’s earlier resignation or removal. If the Amendment is not approved, the Board of Directors will remain classified. Appendix A shows the proposed changes to Bye-Laws 8, 11 and 12, with deletions indicated by strikeouts and additions indicated by underlining.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE BYE-LAWS. This proposal requires the affirmative vote of at least 75% of the issued and outstanding shares of the company. Abstentions will have the same effect as votes “against” the proposal.
Proposal No. 2
Election of Directors
The Board is divided into three classes,declassification), and our Class III directors are serving a term of office expiring at the 20142015 Annual General Meeting. A director holds office until the annual general meeting of shareholders for the year in which his or her term expires, and until such director’s successor has been duly elected and qualified or until such director is removed from office under our Bye-Laws or such director’s office is otherwise earlier vacated. At each annual general meeting, successors to the class2014 Annual General Meeting of directors whose term expires at such annual general meetingShareholders, our shareholders approved a phased-in declassification of our Board of Directors, which will be elected for a three-year term. However, if shareholders approve Proposal No. 1 providing for annual electioncompleted by the 2017 Annual General Meeting of directors, beginningShareholders. Beginning with the 2015 Annual General Meeting, successors toupon the classexpiration of directors whoseeach director’s term, expires at such annual general meetingadditional terms served by the director or his or her successor will be elected for a one-year term.
As previously announced, neither Mr. Rex Adams nor Sir John Banham has been nominated for re-election at the 2014 Annual General Meeting because each has reached the mandatory retirement age. Following the completion of the terms of Mr. Adams and Sir John Banham at the conclusion of the 2014 Annual General Meeting, the Board intends to reduce its size to nine (9) members.terms.
The Board has nominated Messrs. Denis KesslerMartin L. Flanagan, C. Robert Henrikson, Ben F. Johnson III and G. Richard Wagoner, Jr.Sir Nigel Sheinwald for election as directors of the company for a term ending at the 20172016 Annual General Meeting. Mr. Thomas Presby has not been nominated for re-election because he has reached the mandatory retirement age. Messrs. KesslerFlanagan, Henrikson and WagonerJohnson are current directors of the companycompany. Sir Nigel Sheinwald, a former senior British diplomat in Her Majesty’s Diplomatic Service, is a new director nominee. The Board is excited to welcome Sir Nigel to its membership following the 2015 Annual General Meeting and furtherbelieves Sir Nigel possesses the skills and qualifications to make a significant contribution to our Board. Further information regarding each of themthe nominees is shown on the following page.pages. Each nominee has indicated to the company that he would serve if elected. We do not anticipate that Messrs. KesslerFlanagan, Henrikson, Johnson or WagonerSheinwald would be unable to stand for election, but if that were to happen, the Board may reduce the size of the Board, designate a substitute or leave a vacancy unfilled. If a substitute is designated, proxies voting on the original director candidate will be cast for the substituted candidate. Under our Bye-Laws, at any general meeting held for the purpose of electing directors at which a quorum is present, each director nominee receiving a majority of the votes cast at the meeting will be elected as a director. If a nominee for director who is an incumbent director is not elected and no successor has been elected at the meeting, the director is required under our Bye-Laws to submit his or her resignation as a director. Our Nomination and Corporate Governance Committee would then make a recommendation to the full Board on whether to accept or reject the resignation. If the resignation is not accepted by the Board, the director will continue to serve until the next annual general meeting and until his or her successor is duly elected, or his or her earlier resignation or removal. If the director’s resignation is accepted by the Board, then the Board may fill the vacancy. However, if the number of nominees exceeds the number of positions available for the election of directors, the directors so elected shall be those nominees who have received the greatest number of votes and at least a majority of the votes cast in person or by proxy. Recommendation of the Boardboard THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”“FOR” THE ELECTION TO THE BOARD OF EACH OF THE DIRECTOR NOMINEESNOMINEES.. This proposal requires the affirmative vote of a majority of votes cast at the Annual General Meeting. Information about Director Nominees
and Directors Continuing in Office5
Director Nominees
Listed below are the names, ages as of March 31, 2014,
| | | | | Information about Director Nominees and Directors Continuing in Office | | | Listed below are the names, ages as of March 27, 2015, and principal occupations for the past five years of the director nominees and directors continuing in office. | | | Director nominees for 2015 | Martin L. Flanagan Director, President and Chief Executive Officer Age 54 Director since 2005 | | Martin L Flanagan | | Martin Flanagan has been a director and President and Chief Executive Officer of Invesco since August 2005. He is also a trustee and vice-chairperson of the Invesco Funds. Mr. Flanagan joined Invesco from Franklin Resources, Inc., where he was president and co-chief executive officer from January 2004 to July 2005. Previously he had been Franklin’s co-president from May 2003 to January 2004, chief operating officer and chief financial officer from November 1999 to May 2003, and senior vice president and chief financial officer from 1993 until November 1999. 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. Mr. Flanagan earned a B.A. and BBA from Southern Methodist University (SMU). He serves on the Board of Governors and as a member of the Executive Committee for the Investment Company Institute, and is a former chairperson. He also serves as a member of the executive board at the SMU Cox School of Business and is involved in a number of civic activities in Atlanta. | | | Director qualifications: | | | nPublic company CEO, relevant industry experience: Mr. Flanagan has spent over 30 years in the investment management industry, including roles as an investment professional and a series of executive management positions in business integration, strategic planning, investment operations, shareholder services and finance, with over eleven years spent as a chief executive officer. Through his decades of involvement, including as former chairperson of our industry’s principal trade association, the Investment Company Institute, he has amassed a broad understanding of the larger context of investment management that has guided the Board during many critical junctures. | | | nFinancial and accounting expertise: Mr. Flanagan obtained extensive financial accounting experience with a major international accounting firm and serving as chief financial officer of Franklin Resources. He is a chartered financial analyst and certified public accountant. | C. Robert Henrikson Non-Executive Director Age 67 Director since 2012 | | C. Robert Henrikson | | Robert Henrikson has served as a non-executive director of our company since January 2012. Mr. Henrikson was president and chief executive officer of MetLife, Inc. and Metropolitan Life Insurance Company from March 2006 through May 2011, and he served as a director of MetLife, Inc. from April 2005, and as chairman from April 2006 through December 31, 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. Mr. Henrikson is a former chairman of the American Council of Life Insurers, a former chairman of the Financial Services Forum, a director emeritus of the American Benefits Council and a former member of the President’s Export Council. Mr. Henrikson also serves as chairman of the board of the S.S. Huebner Foundation for Insurance Education, as a member of the boards of trustees of Emory University and Indian Springs School and a member of the board of directors of Americares. Mr. Henrikson earned a bachelor’s degree from the University of Pennsylvania and a law degree from Emory University School of Law. In addition, he is a graduate of the Wharton School’s Advanced Management Program. | | | Board committees | | | Audit, Compensation (chairperson) and Nomination and Corporate Governance |
| | | | | Director qualifications | | | nFormer public company CEO, relevant industry experience: Mr. Henrikson’s more than 39 years of experience in the financial services industry, which includes diverse positions of increasing responsibility leading to his role as chief executive officer of MetLife, Inc., have provided him with an in-depth understanding of our industry. | | | nPublic company board experience: Mr. Henrikson currently serves on the Board of Directors of Swiss Re (chairman of the compensation committee, member of the chairman’s and governance committee and the finance and risk committee). Until 2011, Mr. Henrikson served as the chairperson of the board of MetLife, Inc. | Ben F. Johnson III Chairperson and Non-Executive Director Age 71 Director since 2009 | | Ben F. Johnson III | | Ben Johnson has served as Chairperson of our company since May 2014 and as a non-executive director of our company since January 2009. Mr. Johnson served as the managing partner at Alston & Bird LLP from 1997 to 2008. He was named a partner at Alston & Bird in 1976, having joined the firm in 1971. He received his B.A. degree from Emory University and his J.D. degree from Harvard Law School. | | Board committees | | Audit, Compensation and Nomination and Corporate Governance | | | | Director qualifications: | | nExecutive leadership, corporate governance, legal expertise: Mr. Johnson brings to the Board more than a decade of experience leading one of the largest law firms in Atlanta, Georgia, where Invesco was founded and grew to prominence. His more than 30-year career as one of the region’s leading business litigators has given Mr. Johnson deep experience of the types of business and legal issues that are regularly faced by large public companies such as Invesco. | | | nCivic and private company board leadership: Mr. Johnson currently serves as chair of the board of trustees of Atlanta’s Woodward Academy and is the immediate past chair of the board of trustees of Emory University, a position he held from 2000-2013. Mr. Johnson also serves as a trustee of The Carter Center and the Charles Loridans Foundation. He is the chairperson and a non-executive director of Summit Industries, Inc. | Sir Nigel Sheinwald Non-Executive Director Nominee Age 61 | | Sir Nigel Sheinwald | | Sir Nigel Sheinwald 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. Prior to this, he served as Foreign Policy and Defence Adviser to the Prime Minister from 2003 to 2007. He served 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. In 2014, Sir Nigel was appointed by the Prime Minister as Special Envoy on intelligence and law enforcement data sharing, to lead the effort to improve access to and sharing of law enforcement and intelligence data across international jurisdictions. Sir Nigel also serves as a senior advisor to the Universal Music Group, a non-executive director of the Innovia Group and a visiting professor and member of the Council at King’s College, London. In addition, Sir Nigel serves on the Advisory Boards of the Ditchley Foundation, BritishAmerican Business, Business for New Europe and the Campaign for British Influence in Europe. He is an Honorary Bencher of the Middle Temple. Sir Nigel received his M.A. degree from Balliol College, University of Oxford, where he is now an Honorary Fellow. | | | Director qualifications: | | | nGlobal and governmental experience: Sir Nigel will bring unique global and governmental perspectives to the Board’s deliberations through his more than 35 years of service in Her Majesty’s Diplomatic Service. His extensive experience leading key international negotiations and policy initiatives, advising senior members of government and working closely with international businesses positions him well to counsel our Board and senior management on a wide range of issues facing Invesco. In particular, Sir Nigel’s experience in the British Government will be an invaluable resource for advising the Board with respect to the many challenges and opportunities relating to regulatory affairs and government relations. | | | nPublic company board experience: Sir Nigel currently serves on the Board of Directors of Royal Dutch Shell plc (member of the Corporate and Social Responsibility Committee). |
| | | | | Directors continuing in office - Term expiring in 2016 | Joseph R. Canion Non-Executive Director Age 70 Director since 1997 | | Joseph R. Canion | | Joseph Canion has served as a non-executive director of our company since 1997 and was a director of a predecessor constituent company (AIM Investments) from 1993 to 1997, when Invesco acquired that entity. Mr. Canion has been a leading figure in the technology industry after co-founding Compaq Computer Corporation in 1982 and serving as its chief executive officer from 1982 to 1991. He also founded Insource Technology Group in 1992 and served as its chairman until September 2006. Mr. Canion received a B.S. and M.S. in electrical engineering from the University of Houston. He is on the board of directors of ChaCha Search, Inc. and Houston Methodist Research Institute. From 2008 to 2011 he was a member of the board of Auditude. | | | | Board committees | | | Nomination and Corporate Governance (chairperson) | | | Director qualifications: | | | nFormer public company CEO, global business experience: Mr. Canion has notable experience as an entrepreneur, having co-founded a business that grew into a major international technology company. We believe that his experience guiding a company throughout the entirety of its business lifecycle has given him a wide-ranging understanding of the types of issues faced by public companies. | | | nRelevant industry experience: Mr. Canion has extensive service as a board member within the investment management industry, having also served as a director of AIM Investments, a leading U.S. mutual fund manager, from 1991 through 1997 when Invesco acquired AIM. | | | nInformation technology industry experience: Mr. Canion has been a leading figure in the technology industry after co-founding Compaq Computer Corporation and founding Insource Technology Group. | Edward P. Lawrence Non-Executive Director Age 73 Director since 2004 | | Edward P. Lawrence | | Edward Lawrence has served as a non-executive director of our company since October 2004. He was a partner of Ropes & Gray, a Boston law firm, from 1976 through 2007. He currently is a retired partner of Ropes & Gray and a member of the investment committee of the firm’s trust department. Mr. Lawrence is a graduate of Harvard College and earned a J.D. from Columbia University Law School. He is chairman of Partners Health Care System, Inc. and chairman of Dana-Farber Partners Cancer Center. From 1995 to 2011 he was a trustee (and chairman from 1999 to 2008) of the Board of the Massachusetts General Hospital and was a trustee of McLean Hospital in Belmont, Massachusetts from 2000 to 2011. | | | | Board committees | | Audit, Compensation and Nomination and Corporate Governance | | | Director qualifications: | | | nLegal and regulatory expertise: Mr. Lawrence has over thirty years of experience as a corporate and business lawyer in a major Boston law firm, which has given him a very substantial understanding of the business issues facing large financial services companies such as Invesco. In particular, Mr. Lawrence specialized in issues arising under the Investment Company Act of 1940 and the Investment Advisers Act of 1940 which provide the Federal legal framework for the company’s U.S. investment management business. This background gives Mr. Lawrence an understanding of the potential legal ramifications of Board decisions which is particularly valuable to the Board’s functioning on many of the decisions it is called upon to take. | | | nRelevant industry experience: As a member of his law firm’s trust investment practice and as member of investment committees of numerous entities, Mr. Lawrence also has had frequent interaction with investment advisers located throughout the country, giving him an opportunity to view a wide range of investment styles and practices. |
| | |
Non-ExecutivePhoebe A. Wood
Non-Executive Director Age 61 Director since 2010 | | Phoebe A. Wood | | Phoebe Wood has served as a non-executive director of our company since January 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 on the boards of trustees for the University of Louisville, the Gheens Foundation and the American Printing House for the Blind. From 2001 to 2011 Ms. Wood was a member of the board of trustees for Smith College. Ms. Wood received her A.B. degree from Smith College and her M.B.A. from University of California Los Angeles. | | | Board committees | | | Audit (chairperson effective as of the close of the 2015 Annual General Meeting of Shareholders), Compensation and Nomination and Corporate Governance | | | Director qualifications: | | | nExecutive leadership: Ms. Wood has extensive experience as both a director and a member of senior financial management of public companies in a variety of industries. | | | nFinancial and accounting expertise: Ms. Wood has significant accounting, financial and business expertise, making her a particularly valuable addition to our directors’ mix of skills, and she has been designated as one of our audit committee’s financial experts, as defined under rules of the Securities and Exchange Commission (“SEC”). | | | nPublic company board experience: Ms. Wood serves on the following boards: Leggett & Platt, Incorporated (compensation committee), Coca-Cola Enterprises Inc. (audit, corporate responsibility and sustainability, and affiliated transaction committees) and Pioneer Natural Resources Company (audit and nominating and corporate governance committees). | | | Directors continuing in office - Term expiring in 2017 | Denis Kessler Non-Executive Director Age 63 Director since 2002 Committees:
Audit,
Compensation,
Nomination and
Corporate
Governance
| | Denis Kessler (62) | | Denis Kessler has served as a non-executive director of our company since March 2002. Mr. Kessler is chairman and chief executive officer of SCOR SE, and he also serves as a member of the board of directors of BNP Paribas SA. Mr. Kessler previously served on the boards of directors of Bollore from 1999 until 2013, Fonds Strategique d’Investissement from 2008 until 2013 and Dassault Aviation from 2003 until 2014. He is member of the supervisory board of Yam Invest N.V., a privately-held company, and a global counsellor of The Conference Board.SE. Prior to joining the SCOR group, Mr. Kessler was chairman of the French Insurance Federation, senior executive vice president of the AXA Group and executive vice chairman of the French Business Confederation. Mr. Kessler is a graduate of École des Hautes Études Commerciales (HEC Paris). He holds a Doctorat d’Etat of the University of Paris. He is a Doctor Honoris Causa from the Moscow Academy of Finance and the University of Montreal.Montreal and is a member of the “Insurance Hall of Fame” of the International Insurance Society. He previously served as a member of the supervisory board of Yam Invest N.V. from 2008 until 2014, a privately-held company, and currently serves as a global counsellor of The Conference Board. | | | Board committees | | | Audit, Compensation and Nomination and Corporate Governance | | | Director qualifications: | | | Skills and Expertisen
DenisPublic company CEO, relevant industry experience: Mr. Kessler’s experience as an economist and chief executive of a major global reinsurance company have combined to give him valuable insight into both the investment management industry’s macro-economic positioning over the long term as well as our company’s particular challenges within that industry. Further, his
| | | nGlobal business experience: Mr. Kessler’s experience as a director of a variety of international public companies in several industries has enabled him to provide effective counsel to our Board on many issues of concern to our management. | | | nPublic company board experience: Mr. Kessler currently serves on the boards of SCOR SE and BNP Paribas SA. He previously served on the boards of directors of Bollore from 1999 until 2013, Fonds Strategique d’Investissement from 2008 until 2013 and Dassault Aviation from 2003 until 2014. |
| | |
Non-ExecutiveG. Richard Wagoner, Jr.
Non-Executive Director Age 62 Director since 2013 Committees:
Audit,
Compensation,
Nomination and
Corporate
Governance
| | G. Richard Wagoner, Jr. | | G. Richard (“Rick”) Wagoner, Jr. (61) has served as a non-executive director of our company since October 2013. Mr. Wagoner served as chairman and chief executive officer of General Motors Corporation (“GM”) from May 2003 through March 2009, and had been president and chief executive officer since June 2000. Prior positions held at GM during his 32-year career with that company include 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. On June 1, 2009, GM and its affiliates filed voluntary petitions in the United States Bankruptcy Court for the Southern District of New York, seeking relief under Chapter 11 of the U.S. Bankruptcy Code. Mr. Wagoner was not an executive officer or director of GM at the time of that filing. Mr. Wagoner is a member of the board of directors of Graham Holdings Company and several privately-held companies. In addition, he is a member of the advisory boards of AEA Investors and Jefferies Investment Banking and Capital Markets Group, and he advises a number of start-up and early-stage ventures. Mr. Wagoner is a member of the board of visitors of Virginia Commonwealth University, chair of the Duke Kunshan University Advisory Board and a member of Duke’sDuke University’s Fuqua School of Business Advisory Board. He is a member of the mayor of Shanghai, China’s International Business Leaders Advisory Council. Mr. Wagoner received his B.A. from Duke University and his M.B.A. from Harvard University. | | | Board committees | | | Audit, Compensation and Nomination and Corporate Governance | | | Director qualifications: | | | Skills and Expertisen
RickFormer public company CEO, global business experience: Mr. Wagoner brings to the Board valuable business, leadership and management insights into driving strategic direction and international operations gained from his32-year career with GM.
| | | nFinancial and accounting expertise: Mr. Wagoner also brings significant experience in public company financial reporting and corporate governance matters gained through his service with other public companies. |
Directors Continuing in Office – Term Expiring in 2015 He has been designated as one of our audit committee’s financial experts, as defined under rules of the SEC.
| | |
Director, President
and Chief Executive
Officer
Director since 2005
| | Martin Flanagan (53) has been a director and President and Chief Executive Officer of Invesco since August 2005. He is also a trustee and vice-chairman of the Invesco Family of Funds.nPublic company board experience: Mr. Flanagan joined Invesco from Franklin Resources, Inc., where he was president and co-chief executive officer from January 2004 to July 2005. Previously he had been Franklin’s co-president from May 2003 to January 2004, chief operating officer and chief financial officer from November 1999 to May 2003, and senior vice president and chief financial officer from 1993 until November 1999. 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. Mr. Flanagan received a B.A. and BBA from Southern Methodist University (SMU). He is a CFA charterholder and a certified public accountant. HeWagoner currently serves on the Board of Governors and as a member of the Executive Committee for the Investment Company Institute, and is a former chairman. He also serves as a member of the executive board at the SMU Cox School of Business and a member of various civic organizations in Atlanta.Graham Holdings Company.
Skills and Expertise
| | | Martin Flanagan has spent nearly 30 years in the investment management industry, including roles as an investment professional and a series of executive management positions in business integration, strategic planning, investment operations, shareholder services and finance, with over eight years spent as a CEO. Mr. Flanagan also obtained extensive financial accounting experience with a major international accounting firm. He also is a Chartered Financial Analyst. Through his decades of involvement, including as past chairman of our industry’s principal trade association, the Investment Company Institute, he has amassed a broad understanding of the larger context of investment management that has guided the Board during many critical junctures.Retiring director
|
Non-ExecutiveJ. Thomas Presby
Non-Executive Director Age 75 Director since 2012 Committees:
Audit,
Compensation,
and Nomination
and Corporate
Governance2005
| | Robert Henrikson (66) has served as a non-executive director of our company since January 2012. Mr. Henrikson was president and chief executive officer of MetLife, Inc. and Metropolitan Life Insurance Company from March 2006 through May 2011, and he served as a director of MetLife, Inc. from April 2005, and as chairman from April 2006, through December 31, 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. Mr. Henrikson is a former chairman of the American Council of Life Insurers, a former chairman of the Financial Services Forum, a director emeritus of the American Benefits Council, and a former member of the President’s Export Council. In 2012, Mr. Henrikson was elected to the board of directors of Swiss Re, where he serves as chairman of the compensation committee and is a member of the chairman’s and governance committee and the finance and risk committee. Mr. Henrikson also serves as chairman of the board of the S.S. Huebner Foundation for Insurance Education, as a member of the boards of trustees of Emory University and Indian Springs School and a member of the boards of directors of The New York Philharmonic and Americares. Mr. Henrikson earned a bachelor’s degree from the University of Pennsylvania and a law degree from Emory University School of Law. In addition, he is a graduate of the Wharton School’s Advanced Management Program.
Skills and ExpertiseJ. Thomas Presby
Robert Henrikson’s nearly 40 years of experience in the financial services industry, which includes diverse positions of increasing responsibility leading to his role as chief executive officer of MetLife, Inc., have provided him with an in-depth understanding of our industry.
|
| | |
Non-Executive
Director
Director since 2009
Committees:
Audit,
Compensation,
and Nomination
and Corporate
Governance
| | Ben Johnson (70) has served as a non-executive director of our company since January 2009. Mr. Johnson served as the managing partner at Alston & Bird LLP from 1997 to 2008. He was named a partner at Alston & Bird in 1976, having joined the firm in 1971. He received his B.A. degree from Emory University and his J.D. degree from Harvard Law School. He serves as chair of the board of trustees of Atlanta’s Woodward Academy and is the immediate past chair of the board of trustees of Emory University, a position he held from 2000-2013. Mr. Johnson also serves as a trustee of The Carter Center and the Charles Loridans Foundation. He is chair and a non-executive director of Summit Industries, Inc.
Skills and Expertise
Ben Johnson brings to the Board more than a decade of experience leading one of the largest law firms in Atlanta, Georgia, where Invesco was founded and grew to prominence. His career as one of the region’s leading business litigators has given Mr. Johnson deep experience of the types of business and legal issues that are regularly faced by large public companies such as Invesco.
|
Non-Executive
Director
Director since 2005
Committees:
Audit, and
Nomination and
Corporate
Governance
| | Thomas Presby (74) has served as a non-executive director of our company since November 2005 and as chairman of the Audit Committee since April 2006. Over a period of thirty years as a partner at Deloitte LLP, he held many positions in the U.S. and abroad, including global deputy chairman and chief operating officer. Currently he is a director of the following other public companies where he also chairs the audit committees: First Solar, Inc., World Fuel Services Corp. and ExamWorks Group Inc. From 2003 to 2009, Mr. Presby was a director of Turbochef Technologies, Inc., from 2005 to 2011 he was a director of American Eagle Outfitters, Inc., and from 2003 to 2012 he was a director of Tiffany & Co. He is a board member of the New York chapter of the National Association of Corporate Directors andDirectors. He previously served as a trustee of Montclair State University (N.J.). He previously served as a trustee ofand Rutgers University and as a director and chairman of the audit committee of The German Marshall Fund of the USA. He received a B.S. in electrical engineering from Rutgers University and an MBA degree from the Carnegie Mellon University Graduate School of Business. Mr. Presby is a certified public accountant in New York and Ohio and a holder of the NACD Certificate of Director Education. He was named by the National Association of Corporate Directors as one of the “Top 100” directors of 2011. | | | Board committees | | | Audit (chairperson) and Nomination and Corporate Governance |
| | | | | Director qualifications: | | | SkillsnFinancial and Expertise
Thomasaccounting expertise and executive leadership: Mr. Presby has amassed considerable experience at the highest levels of finance and accounting, having served for three decades as a partner, as well as in positions of senior management (including chief operating officer), at one of the world’s largest accounting firms. In keeping with his experience, Mr. Presby has been sought by leading companies in a variety of industries to chair the audit committee, a role which he also fulfills for Invesco, where he is additionally recognized by the Board as one of our audit committee financial experts as defined under rules of the SecuritiesSEC.
| | | nPublic company board experience: Mr. Presby currently serves on the following boards: First Solar, Inc., World Fuel Services Corp. and ExamWorks Group Inc. From 2003 to 2009, Mr. Presby was a director of Turbochef Technologies, Inc., from 2005 to 2011 he was a director of American Eagle Outfitters, Inc., and from 2003 to 2012 he was a director of Tiffany & Co. | | | Director independence | | | 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 New York Stock Exchange Commission.(“NYSE”) or other applicable rules. In accordance with the rules of the NYSE, the Board has affirmatively determined that it is currently composed of a majority of independent directors, and that the following current directors are independent and do not have a material relationship with the company: Joseph R. Canion, C. Robert Henrikson, Ben F. Johnson III, Denis Kessler, Edward P. Lawrence, J. Thomas Presby, G. Richard Wagoner, Jr. and Phoebe A. Wood. In addition, the Board has determined that upon his election, Sir Nigel Sheinwald will be an independent director. | | | Director tenure The tenure of our directors ranges from one to over seventeen years, and they contribute a wide range of knowledge, skills and experience as illustrated in their individual biographies. We believe the tenure of the members of our Board of Directors provides the appropriate balance of expertise, experience, continuity and perspective to our board to serve the best interests of our shareholders. | |
| | | | | Corporate Governance Directors Continuing in Office – Term Expiring in 2016
|
Non-Executive
Director
Director since 1997
Committees:
Nomination and
The Board has adopted Corporate Governance Guidelines | | Joseph Canion (69)Corporate governance guidelines
The Board has served as a non-executive directoradopted Corporate Governance Guidelines (“Guidelines”) and Terms of Reference for our company since 1997Chairperson and was a directorfor our Chief Executive Officer, each of a predecessor constituent company (AIM Investments) from 1993 to 1997, when Invesco acquired that entity. Mr. Canion has been a leading figurewhich is available in the technology industry after co-founding Compaq Computer Corporation in 1982 and serving as its chief executive officer from 1982 to 1991. He also founded Insource Technology Group in 1992 and served as its chairman until September 2006. Mr. Canion received a B.S. and M.S. in electrical engineering from the University of Houston. He is on the board of directors of ChaCha Search, Inc. and is an advisory director of Encore Health Resources and Dynamics, Inc. and Houston Methodist Research Institute. From 2008 to 2011 he was a membercorporate governance section of the board of Auditude. Skills and Expertise
Joseph Canion has extensive service as a board member withincompany’s Web site at www.invesco.com (the “company’s Web site”). The Guidelines set forth the investment management industry, having also served as a director of AIM Investments, a leading U.S. mutual fund manager, from 1991 through 1997 when Invesco acquired AIM. Mr. Canion additionally has notable experience as an entrepreneur, havingco-founded a business that grew into a major international technology company. We believe that his experience guiding a company throughoutpractices the entirety of its business lifecycle has given him a wide-ranging understandingBoard follows with respect to, among other matters, the composition of the typesBoard, director responsibilities, Board committees, director access to officers, employees and independent advisors, director compensation and performance evaluation of issues faced by private and public companies.the Board.
|
Non-Executive
Director
Director since 2004
Committees:
Audit
Compensation
The Board is elected by the shareholders to oversee our management team and Nomination and Corporate
Governance to assure that the long-term interests of the shareholders are being served. | | Edward Lawrence (72) has served as a non-executive director of our company since October 2004. He was a partner of Ropes & Gray, a Boston law firm, from 1976 to December 2007. He currentlyBoard leadership structure
As described in the Guidelines, the company’s business is a retired partner of Ropes & Grayconducted day-to-day by its officers, managers and a memberemployees, under the direction of the investment committee ofChief Executive Officer and the firm’s trust department. Mr. Lawrence is a graduate of Harvard College and earned a J.D. from Columbia University Law School. He is chairman of Partners Health Care System, Inc. and chairman of Dana-Farber Partners Cancer Center. From 1995 to 2011 he was a trustee (and chairman from 1999 to 2008)oversight of the Board, to enhance the long-term value of the Massachusetts General Hospitalcompany for its shareholders. The Board is elected by the shareholders to oversee our management team and was a trusteeto assure that the long-term interests of McLean Hospitalthe shareholders are being served. In light of these differences in Belmont, Massachusetts from 2000the fundamental roles of the Board and management, the company has chosen to 2011.separate the Chief Executive Officer and Board chairperson positions. The separation of these roles: (i) allows the Board to more effectively monitor and objectively evaluate 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 chairperson 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. Skills
| Our Board has approved a Code of Conduct and ExpertiseDirectors’ Code of Conduct | | Code of conduct and directors’ code of conduct Edward LawrenceAs part of our ethics and compliance program, our Board has over thirty years’ experienceapproved 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 Web site. In addition, we have adopted a corporate and business lawyer in a major Boston law firm, which has given him a very substantial understandingseparate 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 Web site. 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.
| | | Board’s role in risk oversight | | | The Board has principal responsibility for oversight of the company’s risk management processes and for understanding the overall risk profile of the company. Though Board committees routinely address specific risks and risk processes within their purview, the Board has not delegated primary risk oversight responsibility to a committee. | | | Our risk management framework provides the basis for consistent and meaningful risk dialogue up, down and across the company. Our Global Performance Measurement and Risk Group assesses core investment risks. Our Corporate Risk Management Committee assesses strategic, operational and all other business issues facing large financial services companies such as Invesco. In particular, Mr. Lawrence specialized in issues arisingrisks. A network of business unit, functional and geographic risk management committees under the Investment Company Act of 1940 and the Investment Advisers Act of 1940 which provide the Federal legal framework for the company’s U.S. investment management business. This background gives Mr. Lawrence an understandingauspices of the potential legal ramifications of Board decisions which is particularly valuable to the Board’s functioning on many of the decisions it is called upon to take. AsCorporate Risk Management Committee maintains an ongoing risk assessment process that provides a member of his law firm’s trust investment practice and as member of investment committees of numerous entities, he also has had frequent interaction with investment advisers located throughout the country, giving him an opportunity to view a wide range of investment styles and practices.bottom-up |
| | |
Non-Executive
Director
Director since 2010
Committees:
Audit,
Compensation,
and Nomination
and Corporate
Governance
| | Phoebe Wood (60) has served as a non-executive directorperspective on the specific risk areas existing in various domains of our company since January 2010. She is currentlybusiness. As 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 on the boards of directors of Leggett & Platt, Incorporated (compensation committee), Coca-Cola Enterprises Inc. (audit, corporate responsibility and sustainability and affiliated transaction committees) and Pioneer Natural Resources Company (audit and nominating and corporate governance committees), as well as on the boards of trustees for the University of Louisville, the Gheens Foundation and the American Printing House for the Blind. From 2001 to 2011 Ms. Wood was a member of the board of trustees for Smith College. Ms. Wood received her A.B. degree from Smith College and her M.B.A. from University of California Los Angeles.
Skills and Expertise
Phoebe Wood has extensive experience as both a director and a member of senior financial management of public companies in a variety of industries. Her significant accounting, financial, and business expertise have made her a particularly valuable addition to our directors’ mix of skills, and she has been designated as oneresult of our audit committee’s financial experts,efforts in this area, Standard & Poor’s Ratings Services has designated our enterprise risk management rating as defined under rules of the Securities and Exchange Commission.“strong.”
| Retiring Directors
|
Non-Executive
Director
Director since 2001
Committees:
Compensation,
At each Board meeting, the Board reviews and Nomination discusses with senior management information pertaining to risk provided by the Global Performance Measurement and Risk Group and the Corporate Governance Risk Management Committee. | | Rex Adams (73) became chairman
| | | At each Board meeting, the Board reviews and discusses with senior management information pertaining to risk provided by the Global Performance Measurement and Risk Group and the Corporate Risk Management Committee. In these sessions senior management reviews and discusses with the Board the most significant risks facing the company. The Board has also reviewed and approved risk tolerance guidelines. By receiving these regular reports, the Board maintains a practical understanding of the risk philosophy and risk tolerance of the company. In addition, Board and committee agenda items on various topics regarding our business include discussion on risks inherent in our business. Through this regular and consistent risk communication, the Board has reasonable assurance that all material risks of the company are being addressed and that the company is propagating a risk-aware culture in April 2006. He has served as a non-executive director of our company since November 2001 and as chairmanwhich effective risk management is built into the fabric of the Nomination and Corporate Governance Committee since January 2007. Mr. Adams was dean of the Fuqua School of Business at Duke University from 1996 to 2001 following a 30-year career with Mobil Corporation. He joined Mobil International in London in 1965 and served as vice president of administration for Mobil Corporation from 1988 to 1996. Mr. Adams was previously a director and member of the audit committee at Vintage Petroleum. Mr. Adams earned a B.A. from Duke University. He was selected as a Rhodes Scholar in 1962 and studied at Merton College, Oxford University. Mr. Adams serves on the Board of Directors of Alleghany Corporation and formerly served as chairman of the Public Broadcasting Service.business. Skills and Expertise
Rex Adams has broad international experience in senior management of one of the world’s largest public companies, as well as substantial insight on a variety of business management issues from an academic perspective. His nearly decade of service on our Board has given him a deep understanding of the variety of issues encountered by investment management companies throughout the business cycle.
|
| | |
Non-Executive
Director
Director since 1999
Committees:
Audit,
Compensation,
and Nomination
and Corporate
Governance
| | Sir John Banham (73) has served as a non-executive director of our company since 1999 and as chairman ofIn addition, the Compensation Committee since January 2007. Sir John was director general ofannually assesses the Confederation of British Industry from 1987 to 1992, a director of National Power and National Westminster Bank from 1992 to 1998, chairman of Tarmac PLC from 1994 to 2000, chairman of Kingfisher PLC from 1995 to 2001, chairman of Whitbread PLC from 2000 to 2005, chairman of Geest plc from 2002 to 2005 and chairman of Spacelabs Healthcare Inc. from 2005 to 2008. He was the chairman of Johnson Matthey plc from 2006 to 2011. He is currently chairman of Sultan Scientific Limited and of the UK Future Homes Commission, and an independent director of Cyclacel Pharmaceuticals Inc. Sir John is a graduate of Cambridge University and has been awarded honorary doctorates by four leading U.K. universities.
Skills and Expertise
Sir John Banham brings to the Board a very broad appreciation for international business issues garnered over an extraordinary career in a variety of industries, including financial services. From 2006 to 2011 he was chairman of a successful global manufacturing company. As past director general of the Confederation of British Industry, he represented the views of British business to relevant governments and regulators. Sir John’s experience across a substantial spectrum of industries and companies within the United Kingdom gives him unique insight into the needsrisks of our business in onecompensation policies and practices for all employees. 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 Invesco’s most significant and successful markets.
|
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 New York Stock Exchange (“NYSE”) or other rules. In accordance with the rules of the 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: Rex D. Adams, Sir John Banham, Joseph R. Canion, C. Robert Henrikson, Ben F. Johnson III, Denis Kessler, Edward P. Lawrence, J. Thomas Presby, G. Richard Wagoner, Jr. and Phoebe A. Wood.
Corporate Governance
Corporate Governance Guidelines. The Board has adopted Corporate Governance Guidelines (“Guidelines”) and Terms of Reference for our Chairman and for our Chief Executive Officer, each of which is available in the corporate governance section of the company’s Web site atwww.invesco.com(the “company’s Web site”). 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.
Board Leadership Structure. 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 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 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 chairman positions. The separation of these roles: (i) allows the Board to more effectively monitor and objectively evaluate 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 chairman 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.
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 our company’s Web site. 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 our Web site. 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.
Board’s Role in Risk Oversight. The Board has principal responsibility for oversight of the company’s risk management processes and for understanding the overall risk profile of the company. Though Board committees routinely address specific risks and risk processes within their purview, the Board has not delegated primary risk oversight responsibility to a committee.
Our risk management framework provides the basis for consistent and meaningful risk dialogue up, down and across the company. Our Global Performance Measurement and Risk group assesses core investment risks. Our Corporate Risk Management Committee assesses strategic, operational and all other business risks. A network of business unit, functional and geographic risk management committees under the auspices of the Corporate Risk Management Committee maintains an ongoing risk assessment process that provides a bottom-up perspective on the specific risk areas existing in various domains of our business.
At each Board meeting, the Board reviews and discusses with senior management information pertaining to risk provided by the Global Performance Measurement and Risk group and the Corporate Risk Management Committee. In these sessions senior management reviews and discusses with the Board the most significant risks facing the company. The Board has also reviewed and approved risk tolerance
guidelines. By receiving these regular reports, the Board maintains a practical understanding of the risk philosophy and risk tolerance of the company. Through this regular and consistent risk communication, the Board has reasonable assurance that all material risks of the company are being addressed and that the company is propagating a risk-aware culture in which effective risk management is built into the fabric of the business.
The Compensation Committee has evaluated our compensation policies and practices for all employees and has concluded that such policies and practices do not create risks that are reasonably likely to have a material adverse effect on the company. In reaching this conclusion, we undertook the following process to evaluate our compensation policies and practices:
| • | | A working group comprised of representatives from our human resources and risk management departments was established to review the potential risks associated withthat reviewed each of Invesco’s compensation plans who determined that none of our compensation policies or practices were reasonably likely to have a material adverse effect on the Company. | | | Invesco’s compensation programs are designed to reward success over the long-term and practices.protect against undue, short-term rewards and incentives for inappropriate risk taking. Examples of risk mitigation in compensation program design include: | | | n The group first createdCompensation Committee considers several 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; | | | nInvestment professional bonus plans generally have multi-year measurement periods, caps on earnings and discretionary components; | | | nSales and commission plans generally contain multiple performance measures and discretionary elements; and | | | nExecutives receive a frameworksubstantial portion of compensation in the form of long-term equity that vests over a four year period, and a significant portion of the long-term equity awards vest only upon the achievement of financial performance measures that must be certified by the Compensation Committee and are subject to a clawback. Executives are also subject to our stock ownership policy. |
| | | | | The Audit Committee routinely receives reports from the control functions of finance, legal and compliance and internal audit. The Head of Internal Audit reports to the Chairperson 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. | The Board, with the assistance of the Nomination and Corporate Governance Committee, annually reviews its own performance. | | Board’s annual performance evaluation As part of its annual performance evaluation, the Board engages independent external counsel to coordinate the Board’s self assessment by its members. External counsel prepares a questionnaire for our directors, performs one-on-one interviews with directors and prepares a report for the risk assessment that incorporated certain focus areas (e.g., performance measures, measurement period, etc.) that we had identified through internalBoard’s review. External counsel presents the report to the Board, and external sources.the Board discusses the evaluation to determine what action, if any, could improve Board and committee performance. |
Members of the group then reviewed each of Invesco’s compensation plans (formulaic bonus payment plans for investment professionals, equity-based plans, and sales commission plans), applying the established framework. Each item was assessed and classified as “low risk potential,” “medium risk potential” or “high risk potential.”
After reviewing each item and the cumulative assessment for each plan, the working group reported to Invesco’s Compensation Committee its findings that none of our compensation policies or practices were reasonably likely to have a material adverse effect on the Company.
The Compensation Committee reviewed these findings and concluded that none of Invesco’s compensation policies or practices were reasonably likely to have a material adverse effect on the Company.
The Audit Committee routinely receives reports from the control functions of finance, legal and compliance and internal audit. The Head of Internal Audit reports to the Chairman 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.
Information aboutAbout the Board and Its Committees Board Meetingsmeetings and Annual General Meetingannual general meeting of Shareholdersshareholders During the calendar year ended December 31, 2013,2014, the Board held teneleven (11) 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 the total number of meetings held by all committees of the Board on which he or she served during 2013.2014. The Board does not have a formal policy regarding Board member attendance at shareholder meetings. EightNine of our teneleven directors then in office attended the 20132014 Annual General Meeting. Those not attending the meeting were unable to be present due to travel schedules. The non-executive directors (those directors who are not officers or employees of the company) meet in executive session generally quarterly and at least once per year during a regularly scheduled Board meeting without management. Rex D. Adams,Ben F. Johnson III, our chairperson and a non-executive and independent director, presides at the executive sessions of the non-executive directors. As previously announced, the Board has elected Ben F. Johnson III to serve as Chairman of the Board following the expiration of the term of Mr. Adams at the conclusion of this year’s Annual General Meeting. Committee Membershipmembership and Meetingsmeetings The current committees of the Board are the Audit Committee, the Compensation Committee and the Nomination and Corporate Governance Committee. The table below provides current membership information. | | | | | | | Name | | Audit | | Compensation | | Nomination and
Corporate
Governance
| Rex D. Adams (1)
| | — | | M | | C | Sir John Banham (1)
| | M | | C | | M | Joseph R. Canion(1)
| | — | | — | | M | Martin L. Flanagan
| | — | | — | | — | C. Robert Henrikson(1)
| | M | | M | | M | Ben F. Johnson III(2)
| | M | | M | | M | Denis Kessler
| | M | | M | | M | Edward P. Lawrence
| | M | | M | | M | J. Thomas Presby
| | C | | — | | M | G. Richard Wagoner, Jr.
| | M | | M | | M | Phoebe A. Wood
| | M | | M | | M |
M — MemberC — Chairman
| | | | | | | | | | | | | Committee Membership | | | | | | | | | | | | | | M – Member Ch – Chairperson | | | | | | | | | | | | | | Name | | Audit | | | Compensation | | | Nomination and Corporate Governance | | Joseph R. Canion | | | – | | | | – | | | | Ch | | Martin L. Flanagan | | | – | | | | – | | | | – | | C. Robert Henrikson | | | M | | | | Ch | | | | M | | Ben F. Johnson III | | | M | | | | M | | | | M | | Denis Kessler | | | M | | | | M | | | | M | | Edward P. Lawrence | | | M | | | | M | | | | M | | J. Thomas Presby | | | Ch1 | | | | – | | | | M | | G. Richard Wagoner, Jr. | | | M | | | | M | | | | M | | Phoebe A. Wood | | | Ch1 | | | | M | | | | M | |
(1)1 | Neither Mr. Adams nor Sir John BanhamPresby has not been nominated for re-election at the 20142015 Annual General Meeting because eachhe has reached the mandatory retirement age. The Board has appointed Mr. CanionMs. Wood to serve as Chairmanchairperson of the Nomination and Corporate Governance Committee and Mr. Henrikson to serve as Chairman of the CompensationAudit Committee following the expiration of the terms of Mr. Adams and Sir John Banham at the conclusion of this year’s Annual General Meeting. |
(2) | The Board has appointed Mr. Johnson to serve as Chairman of the Board following the expiration of thePresby’s term of Mr. Adams at the conclusion of this year’s Annual General Meeting. |
Below is a description of each committee of the Board. 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”). The Audit Committee The Audit Committee is chaired by Mr. Presby and consists additionally of Messrs. Banham, Henrikson, Johnson, Kessler, Lawrence, Wagoner and Ms. Wood. The committee met twelveten (10) times during 2013.2014. (The frequency of the committee’s meetings is due to its practice of separately considering certain matters, such as pre-filing review of quarterly reports, among others, in order to devote ample time for discussion and consideration.) Ms. Wood has been appointed as chairperson of the committee, effective upon the close of the 2015 Annual General Meeting. Under its charter, the committee:
is comprised of at least three members of the Board, each of whom is “independent” of the company under the NYSE and rules of the Securities and Exchange Commission (“SEC”) and is also “financially literate,” as defined under NYSE rules;
n | | is comprised of at least three members of the Board, each of whom is “independent” of the company under the NYSE and rules of the SEC and is also “financially literate,” as defined under NYSE rules; |
members are appointed and removed by the Board;
n | | members are appointed and removed by the Board; |
is required to meet at least quarterly;
n | | is required to meet at least quarterly; |
periodically meets with the head of Internal Audit and the independent auditor in separate executive sessions without members of senior management present;
n | | periodically meets with the head of Internal Audit and the independent auditor in separate executive sessions without members of senior management present; |
has the authority to retain independent advisors, at the company’s expense, wherever it deems appropriate to fulfill its duties; and
n | | has the authority to retain independent advisors, at the company’s expense, whenever it deems appropriate to fulfill its duties; and |
reports to the Board regularly.
n | | reports to the Board regularly. |
The committee’s charter is available on the company’s Web site. The charter sets forth the committee’s responsibilities, which include among other items, assisting the Board in fulfilling its responsibility to oversee the company’s financial reporting, auditing and internal control activities, including the integrity of the company’s financial statements and assisting the Board in overseeing the company’s legal and regulatory compliance. The committee has adopted policies and procedures for pre-approving all audit and non-audit services provided by our independent auditors. The policy is designed to ensure that the auditor’s independence is not impaired. The policy provides that, before the company engages the independent auditor to render any service, the engagement must either be specifically approved by the Audit Committee or fall into one of the defined categories that have been pre-approved. (See “Pre-Approval Process and Policy” below.) The Board has determined that all committee members are financially literate under the NYSE listing standards. The Board has further determined that each of Mr. Presby, and Ms. Wood and Mr. Wagoner qualifies as an “audit committee financial expert” (as defined under the SEC’s rules and regulations), that each has “accounting or related financial management expertise” and that each is “independent” of the company under SEC rules and the NYSE listing rules. The Board has also determined that Mr. Presby’s service on the audit committees of more than three public companies doesdid not impair his ability to effectively serve on the Audit Committee. The Compensation Committee The Compensation Committee is chaired by Sir John BanhamMr. Henrikson and consists additionally of Messrs. Adams, Henrikson, Johnson, Kessler, Lawrence, Wagoner and Ms. Wood. Until his retirement at the 2014 Annual General Meeting of Shareholders, Sir John Banham served as the chairperson of the Compensation Committee. The committee met six (6) times during 2013. As previously discussed, Mr. Henrikson has been appointed as chairman of the committee effective upon the close of the 2014 Annual General Meeting.2014. Under its charter, the committee: is comprised of at least three members of the Board, each of whom is “independent” of the company under the NYSE and SEC rules;
n | | is comprised of at least three members of the Board, each of whom is “independent” of the company under the NYSE and SEC rules; |
members are appointed and removed by the Board;
n | | members are appointed and removed by the Board; |
is required to meet at least four times annually; and
n | | is required to meet at least four times annually; and |
has the authority to retain independent advisors, at the company’s expense, wherever it deems appropriate to fulfill its duties, including any compensation consulting firm.
n | | has the authority to retain independent advisors, at the company’s expense, whenever it deems appropriate to fulfill its duties, including any compensation consulting firm. |
The committee’s charter is available on the company’s Web site. The charter sets forth the committee’s responsibilities, which include among other items, annually approving the compensation structure for, and reviewing and approving the compensation of, senior officers and non-executive directors, and overseeing the annual process for evaluating senior officer performance, overseeing the administration of the company’s equity-based and other incentive compensation plans, and assisting the Board with executive succession planning. Each year the committee engages a third-party compensation consultant to provide an analysis of, and counsel on, the company’s executive compensation program and practices. The nature and scope of the consultant’s assignment is set by the committee. The committee currently engages Johnson Associates, Inc. (“Johnson Associates”) as its third-party consultant for this review. The committee has considered various factors as required by
NYSE rules as to whether the work of Johnson Associates with respect to executive and director compensation-related matters raised any conflict of interest. The committee has determined no conflict of interest was raised by the engagement of Johnson Associates. For a more detailed discussion of the determination of executive compensation and the role of the third-party compensation consultant, please see “Executive Compensation —– Compensation Discussiondiscussion and Analysis”analysis - Role of the independent compensation consultant below. The committee meets at least annually to review and determine the compensation of the company’s non-executive directors. In reviewing and determining non-executive director compensation, the committee considers, among other things, the following policies and principles: that the 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;
n | | that the 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
n | | 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 for Board or committee purposes if director compensation exceeds customary levels.
n | | that non-executive directors’ independence may be compromised or impaired for Board or committee purposes if director compensation exceeds customary levels. |
As a part of its review, the committee periodically engages Johnson Associates as a third-party consultant to report on comparable non-executive director compensation practices and levels. No executive officer of the company is involved in determiningrecommending or recommendingdetermining non-executive director compensation levels. See “Director Compensation”compensation below, for a more detailed discussion of compensation paid to the company’s directors during 2013.2014. The Nomination and Corporate Governance Committee The Nomination and Corporate Governance Committee is chaired by Mr. AdamsCanion and consists additionally of Messrs. Banham, Canion, Henrikson, Johnson, Kessler, Lawrence, Presby, Wagoner and Ms. Wood. As previously discussed, Mr. Canion has been appointed as chairman of the committee effective upon the close ofUntil his retirement at the 2014 Annual General Meeting.Meeting of Shareholders, Mr. Rex D. Adams served as the chairperson of the Nomination and Corporate Governance Committee. The committee met fivesix (6) times during 2013.2014. Under its charter, the committee: is comprised of at least three members of the Board, each of whom is “independent” of the company under the NYSE and SEC rules;
n | | is comprised of at least three members of the Board, each of whom is “independent” of the company under the NYSE and SEC rules; |
members are appointed and removed by the Board;
n | | members are appointed and removed by the Board; |
is required to meet at least quarterly; and
n | | is required to meet at least quarterly; and |
has the authority to retain independent advisors, at the company’s expense, whenever it deems appropriate to fulfill its duties.
n | | has the authority to retain independent advisors, at the company’s expense, whenever it deems appropriate to fulfill its duties. |
The committee’s charter is available on the company’s Web site. The charter sets forth the committee’s responsibilities, which include among other items, establishing procedures for identifying and evaluating potential nominees for director and for recommending to the Board potential nominees for election and periodically reviewing and reassessing the adequacy of the Guidelines to determine whether any changes are appropriate and recommending any such changes to the Board for its approval. The candidates proposed for election in Proposal No. 21 of this Proxy Statement were unanimously recommended by the committee to the Board. The 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: 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;
n | | 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; |
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;
n | | 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 Board committee member; and
n | | 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 Board committee member; and |
n | | have the capacity and desire to represent the best interests of the shareholders as a whole. |
have the capacity and desire to represent the best interests of the shareholders as a whole.
In considering candidates for director nominee, the committee generally assembles all information regarding a candidate’s background and qualifications, evaluates a candidate’s mix of skills and qualifications and determines the contribution that the candidate could be expected to make to the overall functioning of the Board, giving due consideration to the BoardBoard’s balance of diversity of perspectives, backgrounds and experiences. While the committee routinely considers diversity as a part of its deliberations, it has no formal policy regarding diversity. With respect to current directors, the committee considers past participation in and contributions to the activities of the Board. The committee recommends director nominees to the Board based on its assessment of overall suitability to serve in accordance with the company’s policy regarding nominations and qualifications of directors. 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. The committee would not evaluate a candidate recommended by a shareholder unless the shareholder’s proposal provides that the potential candidate has indicated a willingness to serve as a director, to comply with the expectations and requirements for Board service as publicly disclosed by the company and to provide all of the information necessary to conduct an evaluation. For further information regarding such deadlines for shareholder proposals, see “Important Additional Information —additional information – Shareholder Proposalsproposals for the 2015 Annual General Meeting”2016 annual general meeting below. Director Compensationcompensation Directors who are Invesco employees do not receive compensation for their services as directors. Under the terms of its charter, the Compensation Committee annually reviews and determines the compensation paid to non-executive directors. Directors do not receive any meeting or attendance fees. The Compensation Committee approved the following fee arrangements for non-executive directors for 2013,2014, with each fee component to be paid in quarterly installments in arrears: | | | | | Basic Cash Fee | | Non-executive directors (other than the ChairmanChairperson of the Board) receive an annual basic fee paid in cash in the amount of $120,000. Such fee is paid in arrears in four quarterly installments. | | | ChairmanChairperson Fee
| | In lieu of the above basic cash fee, the ChairmanChairperson of the Board receives an annual cash fee of $400,000. | | | Basic Shares Fee | | Non-executive directors also receive an annual award of shares in the aggregate amount of $95,000. Such shares are paid in arrears in four quarterly installments of $23,750. Each installment is issued on the second business day following the public announcement of the company’s quarterly earnings results. (By way of example, the installment for the fourth quarter is issued in the first quarter of the following year after publication of the earnings release for the fourth quarter.)$145,000. | | | Audit Committee Chairperson Chairman
| | The chairmanchairperson of the Audit Committee receives an additional annual cash fee of $50,000. | | | Compensation and Nomination and Corporate Governance Committee Chairperson Committee Chairmen
| | The chairmanchairperson of the Compensation Committee and the chairmanchairperson of the Nomination and Corporate Governance Committee each receive an additional annual cash fee of $15,000. | | |
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. Following a review of current market practices for directors of peer public companies, the Compensation Committee determined in December 20132014 that the basic shares feefees for non-executive directors will increase to an annual award amount of $145,000, with such shares to be issued in arrears in four quarterly installments of an amount equal to $36,250. All other fees will remain the same for 2014.2015. Stock Ownership Policyownership policy for Non-Executive Directors—non-executive directors – All shares granted to our non-executive directors are subject to the Non-Executive Director Stock Ownership Policy. The policy generally requires each non-executive director to achieve an ownership level of at least
18,000 shares within seven years of the later of the date of the enactment of the policy or such director’s first appointment as a non-executive director. Until such ownership level is achieved, each non-executive director is generally required to continue to retain at least 50% of all shares received as compensation from the company following enactment of the ownership policy.company. The following table shows as of December 31, 20132014 the status of our non-executive directors meeting the requirements of the policy. | | | | | | | | | | Name | | Year Service Commenced | | Total Shares Held (#) | | Share Ownership Goal Met (1) | | Year Service Commenced | | | Total Shares Held (#)1 | | | Share Ownership Goal Met2 | | Rex D. Adams | | 2001 | | 65,821 | | ü | | Sir John Banham | | 1999 | | 18,390 | | ü | | Joseph R. Canion | | 1997 | | 36,393 | | ü | | | 1997 | | | | 39,968 | | | | ü | | C. Robert Henrikson | | 2012 | | 6,349 | | | | | 2012 | | | | 9,924 | | | | Ben F. Johnson III | | 2009 | | 18,371 | | ü | | | 2009 | | | | 21,445 | | | | ü | | Denis Kessler | | 2002 | | 30,615 | | ü | | | 2002 | | | | 34,190 | | | | ü | | Edward P. Lawrence | | 2004 | | 28,868 | | ü | | | 2004 | | | | 31,048 | | | | ü | | J. Thomas Presby | | 2005 | | 22,091 | | ü | | | 2005 | | | | 21,666 | | | | ü | | G. Richard Wagoner, Jr. | | 2013 | | 5,000 | | | | | 2013 | | | | 8,575 | | | | Phoebe A. Wood | | 2010 | | 15,433 | | | | | 2010 | | | | 19,454 | | | | ü | |
1 | (1)Includes deferred shares awarded under our legacy Deferred Fees Share Plan. |
2 | Based on current compensation levels, it is anticipated that Messrs. Henrikson and Wagoner and Ms. Wood will attain their share ownership goal within the time period prescribed by the policy. |
Director Compensation Tablecompensation table for 20132014 The following table sets forth the compensation paid to our non-executive directors for services during 2013.2014. | | | | | | | Name | | Fees Earned or Paid in Cash ($)(1) | | Share Awards ($)(2) | | Total ($) | Rex D. Adams | | 415,000 | | 94,925 | | 509,925 | Sir John Banham | | 135,000 | | 94,925 | | 229,925 | Joseph R. Canion | | 120,000 | | 94,925 | | 214,925 | C. Robert Henrikson | | 120,000 | | 94,925 | | 214,925 | Ben F. Johnson III | | 120,000 | | 94,925 | | 214,925 | Denis Kessler | | 120,000 | | 94,925 | | 214,925 | Edward P. Lawrence | | 120,000 | | 94,925 | | 214,925 | J. Thomas Presby | | 170,000 | | 94,925 | | 264,925 | G. Richard Wagoner, Jr. (3) | | - | | - | | - | Phoebe A. Wood | | 120,000 | | 94,925 | | 214,925 |
| | | | | | | | | | | | | | | | | Name | | Fees Earned or Paid in Cash($)1 | | | Share Awards ($)2 | | | Total ($) | | Joseph R. Canion3 | | | 125,625 | | | | 132,438 | | | | 258,063 | | C. Robert Henrikson3 | | | 125,625 | | | | 132,438 | | | | 258,063 | | Ben F. Johnson III3 | | | 225,000 | | | | 132,438 | | | | 357,438 | | Denis Kessler | | | 120,000 | | | | 132,438 | | | | 252,438 | | Edward P. Lawrence | | | 120,000 | | | | 132,438 | | | | 252,438 | | J. Thomas Presby | | | 170,000 | | | | 132,438 | | | | 302,438 | | G. Richard Wagoner, Jr. | | | 120,000 | | | | 132,438 | | | | 252,438 | | Phoebe A. Wood | | | 120,000 | | | | 132,438 | | | | 252,438 | | Rex D. Adams4 | | | 259,375 | | | | 78,102 | | | | 337,477 | | Sir John Banham4 | | | 84,375 | | | | 78,102 | | | | 162,477 | |
(1)1 | Includes the annual basic cash fee and, as applicable, Chairmanchairperson of the Board fee and committee chairmanchairperson fees. |
(2)2 | Reflects the grant date fair value for each share award. Share awards are 100% vested as of the date of grant. |
(3)3 | Mr. Wagoner joined ourReflects proration of chairperson of the Board fee and committee chairperson fee for service beginning in October 2013 and did not receive any compensation in 2013.May 2014. |
The following table presents the grant date fair value for each share award made to each non-executive director during 2013.2014. | Name | | Date of Grant 2/1/13 ($) | | Date of Grant 5/1/13 ($) | | Date of Grant 8/1/13 ($) | | Date of Grant 11/1/13 ($) | | Total Grant Date Fair Value ($) | | Date of Grant 1/31/14 ($) | | | Date of Grant 5/2/14 ($) | | | Date of Grant 8/4/14 ($) | | | Date of Grant 10/31/14 ($) | | | Total Grant Date Fair Value ($) | | Rex D. Adams | | 23,743 | | 23,737 | | 23,723 | | 23,722 | | 94,925 | | Sir John Banham | | 23,743 | | 23,737 | | 23,723 | | 23,722 | | 94,925 | | Joseph R. Canion | | 23,743 | | 23,737 | | 23,723 | | 23,722 | | 94,925 | | | 23,740 | | | | 36,247 | | | | 36,231 | | | | 36,220 | | | | 132,438 | | C. Robert Henrikson | | 23,743 | | 23,737 | | 23,723 | | 23,722 | | 94,925 | | | 23,740 | | | | 36,247 | | | | 36,231 | | | | 36,220 | | | | 132,438 | | Ben F. Johnson III | | 23,743 | | 23,737 | | 23,723 | | 23,722 | | 94,925 | | | 23,740 | | | | 36,247 | | | | 36,231 | | | | 36,220 | | | | 132,438 | | Denis Kessler | | 23,743 | | 23,737 | | 23,723 | | 23,722 | | 94,925 | | | 23,740 | | | | 36,247 | | | | 36,231 | | | | 36,220 | | | | 132,438 | | Edward P. Lawrence | | 23,743 | | 23,737 | | 23,723 | | 23,722 | | 94,925 | | | 23,740 | | | | 36,247 | | | | 36,231 | | | | 36,220 | | | | 132,438 | | J. Thomas Presby | | 23,743 | | 23,737 | | 23,723 | | 23,722 | | 94,925 | | | 23,740 | | | | 36,247 | | | | 36,231 | | | | 36,220 | | | | 132,438 | | G. Richard Wagoner, Jr. (1) | | - | | - | | - | | - | | - | | G. Richard Wagoner, Jr. | | | | 23,740 | | | | 36,247 | | | | 36,231 | | | | 36,220 | | | | 132,438 | | Phoebe A. Wood | | 23,743 | | 23,737 | | 23,723 | | 23,722 | | 94,925 | | | 23,740 | | | | 36,247 | | | | 36,231 | | | | 36,220 | | | | 132,438 | | Rex D. Adams1 | | | | 23,740 | | | | 36,247 | | | | 18,115 | | | | – | | | | 78,102 | | Sir John Banham1 | | | | 23,740 | | | | 36,247 | | | | 18,115 | | | | – | | | | 78,102 | |
(1)1 | Mr. Wagoner joined our BoardRetired in October 2013 and did not receive any compensation in 2013.May 2014. |
The aggregate number of share awards outstanding as of December 31, 20132014 for each of our non-executive directors was as follows: | Name | | Shares Outstanding (#) | | Deferred Shares Outstanding (#) | | Total Share Awards Outstanding (#) | | Shares Outstanding (#) | | | Deferred Shares Outstanding (#) | | | Total Share Awards Outstanding (#) | | Rex D. Adams | | 29,536 | | | | 29,536 | | Sir John Banham | | 16,993 | | | | 16,993 | | Joseph R. Canion (1) | | 29,468 | | 5,925 | | 35,393 | | Joseph R. Canion1 | | | | 33,043 | | | | 5,925 | | | | 38,968 | | C. Robert Henrikson | | 6,021 | | | | 6,021 | | | 9,596 | | | | | | 9,596 | | Ben F. Johnson III | | 18,371 | | | | 18,371 | | | 21,455 | | | | | | 21,445 | | Denis Kessler | | 29,515 | | | | 29,515 | | | 33,090 | | | | | | 33,090 | | Edward P. Lawrence | | 28,868 | | | | 28,868 | | | 31,048 | | | | | | 31,048 | | J. Thomas Presby | | 22,091 | | | | 22,091 | | | 21,666 | | | | | | 21,666 | | G. Richard Wagoner, Jr. (2) | | - | | | | - | | G. Richard Wagoner, Jr. | | | | 3,575 | | | | | | 3,575 | | Phoebe A. Wood | | 14,590 | | | | 14,590 | | | 18,165 | | | | | | 18,165 | |
(1)1 | For Mr. Canion, represents deferred shares awarded under our legacy Deferred Fees Share Plan. |
(2) | Mr. Wagoner joined our Board in October 2013 and did not receive any compensation in 2013. |
Information about
the Executive Officers of the Company
In addition to Martin Flanagan, whose information is set forth above, 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.
| | | | | Information About the Executive Officers of the Company
| | | | | In addition to Martin Flanagan, whose information is set forth above, 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. | | | G. Mark Armour Senior Managing Director Director and Head
of EMEA | | G. Mark Armour Mark Armour (60)(61) has served as head of EMEA (which includes Europe, Middle East and Africa) since February 2013. Previously, Mr. Armour served as senior managing director and head of Invesco Institutional, a position he held since January 2007. Mr. Armour also has served as head of sales and service for Invesco’s institutional operations. He was chief executive officer of Invesco Australia from September 2002 to July 2006. Prior to joining Invesco, Mr. Armour held significant leadership roles in the funds management business in both Australia and Hong Kong. He previously served as chief investment officer for ANZ Investments and spent almost 20 years with the National Mutual/AXA Australia Group, where he was chief executive, Funds Management, from 1998 to 2000. Mr. Armour earned a bachelor of economics from La Trobe University in Melbourne, Australia. | | |
Kevin M. Carome Senior Managing Director Director and General
Counsel | | Kevin M. Carome Kevin Carome (57)(58) has served as general counsel of our company since January 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) in Boston where he was senior vice president and general counsel from August 2000 through December 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 as an associate at Ropes & Gray in Boston.Gray. He earned two degrees, a B.S. in political science and a J.D., from Boston College. He is a trustee of the U.S. Powershares ETFs and a director of ICI Mutual Insurance Company, the U.S. investment management industry captive insurer. | | |
Karen Dunn Kelly Senior Managing Director, Investments | | Karen Dunn Kelly Karen Dunn Kelley (53)(54) has served as senior managing director, Investments, since 2011.2011, with responsibility for Invesco’s fixed income business, global asset allocation, quantitative strategies, global equities investment teams, equity trading and investment administration. From 2007 until 2011, she served as CEO of Invesco’s fixed income and cash management team. Ms. Dunn Kelley joined Invesco in 1989 and has also served as a money market portfolio manager. In 1992, she was namedmanager and chief money market and government officer. In April 2007, she was named head of Invesco’s newly combined fixed income and cash management teams.Prior to joining Invesco, Ms. Dunn Kelley has beenworked at Federated Investors (Pittsburgh) from 1986 to 1989, where she was involved in the investmentasset management business since 1982 andaspect of the fixed income division. Ms. Dunn Kelley began her career at Drexel Burnham Lambert in 1982 on the Fixed Income High Grade Retail Desk.Desk where she served as vice president and assistant manager. Ms. Dunn Kelley graduated with a B.S. degree from the Villanova University College of Commerce and Finance. |
| | |
Andrew T.S. Lo Senior Managing Director Director and Head of Invesco
Invesco Asia Pacific
| | Andrew T.S. Lo Andrew T. S. Lo (52)(53) has served as head of Invesco Asia Pacific since February 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 chairmanchairperson 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. |
| | |
Colin D. Meadows Senior Managing Director and Chief Administrative Officer | | Colin D. Meadows Colin Meadows (43)(44) has served as chief administrative officer of Invesco since May 2006 with responsibility for business strategy, human resources and communications. In September 2008, he expanded his role with responsibilities for operations and technology. In April 2014, his role further expanded to head alternative investments for the company. Mr. Meadows came to Invesco from GE Consumer Finance where he was senior vice president of business development and mergers and acquisitions. Prior to that role, he served as senior vice president of strategic planning and technology at Wells Fargo Bank. From 1996 to 2003, Mr. Meadows was an associate principal with McKinsey & Company, focusing on the financial services and venture capital industries, with an emphasis in the banking and asset management sectors. Mr. Meadows earned a B.A. in economics and English literature from Andrews University and a J.D. from Harvard Law School. | | |
Loren M. Starr Senior Managing Director and Chief Financial Officer | | Loren M. Starr Loren Starr (52)(53) has served as senior managing director and chief financial officer of our company since October 2005. His current responsibilities include finance, accounting, investor relations and corporate services. Previously, he served from 2001 to 2005 as senior vice president and chief financial officer of Janus Capital Group Inc., after working as head of corporate finance from 1998 to 2001 at Putnam Investments. Prior to these positions, Mr. Starr held senior corporate finance roles with Lehman Brothers and Morgan Stanley & Co. He earned a B.A. in chemistry and B.S. in industrial engineering from Columbia University, as well as an MBA from Columbia and an M.S. in operations research from Carnegie Mellon University. Mr. Starr is a certified treasury professional. He is a past chairmanchairperson of the Association for Financial Professionals, and he currently serves on the boards of Georgia Leadership Institute for School Improvement (GLISI), the Georgia Council for Economic Education (GCEE) and the Woodruff Arts Center. | | |
Philip A. Taylor Senior Managing Director and Head of the Americas | | Philip A. Taylor Philip Taylor (59)(60) became head of Invesco’s Americas business in 2012. He had previously served as head of Invesco’s North American Retail business since 2006. He joined Invesco Canada in 1999 as senior vice president of operations and client services, and later became executive vice president and chief operating officer. He was named chief executive officer of Invesco Canada in 2002. Prior to joining Invesco, Mr. Taylor was president of Canadian retail broker Investors Group Securities and co-founder and managing partner of Meridian Securities, an execution and clearing broker. He held various management positions with Royal Trust, now part of Royal Bank of Canada. Mr. Taylor began his career in consumer brand management in the U.S. and Canada with Richardson-Vicks, now part of Procter & Gamble. He received a Bachelor of Commerce (honours)(honors) degree from Carleton University and an M.B.A. from the Schulich School of Business at York University. Mr. Taylor is a member of the dean’s advisory council of the Schulich School of Business. He serves on the board of overseers for the Curtis Institute of Music and on the boardMusic. He is an honorary fellow of the Royal Conservatory of Music.Music and has received the Royal Conservatory of Music medal in recognition of his commitment to music and the arts. Mr. Taylor is a member of the Conservatory’s Board. |
Executive Compensation
Compensation Discussion and Analysis
Executive Compensation Compensation discussion and analysis This section presents a discussion and analysis of the philosophy and objectives of our Board’s Compensation Committee (the “committee”) in designing and implementing compensation programs for our executive officers. In addition, this The presentation has two main sections – an executive summary and an in-depth discussion. The executive summary highlights our 2014 financial performance and achievements. The executive summary then discusses recent enhancements to our executive compensation program, followed by a brief discussion of the compensation of our chief executive officer. We then provide a summary of our compensation decision-making process and how the annual outcomes of company-wide compensation, including executive compensation, are greatly influenced by progress against our multi-year strategic imperatives, annual operating plan and annual financial performance. Included in the summary is a review of our solid financial results and related shareholder outcomes over the past five years to illustrate the positive results of our multi-year strategic imperatives. The summary then provides a discussion and illustrations of how our chief executive officer’s compensation is closely tied to our financial results and how our chief executive officer’s compensation compares to that of our peers. The second section describesof the presentation provides a more in-depth discussion of our compensation philosophy, design and analyzesprocess, including the 2013components of executive compensation and their respective purposes. We then provide a flowchart of our 2014 compensation decision-making process and discuss each element of the flowchart in-depth – including matters we briefly described in the executive summary. A detailed review of the 2014 accomplishments and compensation determinations relating toof our Chief Executive Officer, Chief Financial Officer,chief executive officer, chief financial officer and the next three most highly compensated executive officers (our “named executive officers” or “NEOs”). is then discussed. Lastly, the in-depth discussion sets forth our other compensation policies and practices. | | | | | | | | | 2014 Named Executive Officers | Martin L. Flanagan President and Chief Executive Officer | | Loren M. Starr Senior Managing Director and Chief Financial Officer | | G. Mark Armour Senior Managing Director and Head of EMEA | | Andrew T.S. Lo Senior Managing Director and Head of Asia Pacific | | Philip A. Taylor Senior Managing Director and Head of the Americas | |
Table of Contents
Executive Summary 2013 Performance Highlights
Our 2014 highlights Achievements throughout 2014 enhanced our ability to deliver better outcomes and service to clients while further positioning the firm for long-term success. Invesco continued to achieve solid progress against our strategic imperatives, which enabled us to deliver strong, long-term investment performance and better outcomes to clients during 2014 that contributed to robust organic growth. Our focus on investment performance, our clients, the breadth of our investment capabilities and our business resulted in solid financial results that benefited our shareholders while further strengthening our competitive position. | | | | | | | Financial Performance | Annual Adjusted Operating Income1 (y-o-y) | | Annual Adjusted Operating Margin1 | | Annual Adjusted Diluted EPS1 (y-o-y) | | Return of Capital to Shareholders2 | | | | | 15.7% | | 41.4% | | 17.8% | | $694 Million |
1 | Note regarding non-GAAP financial measures: The adjusted financial measures are all non-GAAP financial measures. See the information on pages 53 through 60 of our 2014 Annual Report on Form 10-K. |
2 | Return of capital to shareholders is calculated as dividends declared per share plus share repurchases during the year ended December 31, 2014. |
We continued to successfully execute our strategic imperatives for the benefit of clients and shareholders We focus on four key strategic imperatives that are designed to further sharpen our focus on meeting client needs and strengthen our business over time for the benefit of shareholders. We have a robust multi-year planning process, and in 2014 we made significant progress against our strategic imperatives. For more information on our multi-year strategic imperatives and annual financial planning process, seeDetermining the 2014 Compensation of Our Executive Officers – Our multi-year strategic imperatives and annual operating plan below. | | | | | Our Strategic Imperatives | | 2014 Achievements A strong focus on delivering better outcomes to clients | Achieve strong investment performance for the benefit of clients | | | | | – | | Delivered strong investment performance across our global franchise. Percent of actively managed ranked assets above benchmark over one, three and five years (as of Dec. 31, 2014) shown above (See Appendix A for important disclosures regarding AUM ranking) | Be instrumental to our clients’ success | | – | | Further expanded client access to our Invesco PowerShares offerings, with new ETFs launched in Canada and China | | – | | Expanded availability of our multi-asset capability, Global Targeted Return, which achieved strong flows in its initial year of offering | | | – | | Further enhanced our range of robust fixed income capabilities, anchored by an expanded global fixed income center and key hires | Harness the power of our global platform | | – | | Defined and began executing a strategy that will enhance our ability to market, distribute and grow key capabilities globally to meet client needs | | – | | Significantly increased our investment in technology to support our global platform | | – | | Further evolved our global trading platform to enhance our ability to deliver the best execution to clients | Perpetuate a high- performance organization | | – | | Improved employee engagement across the firm. Our employee engagement exceeds the “high-performing company” and “global financial services company” norms – relevant benchmarking provided by our employee survey provider, Towers Watson | | – | | Invesco named a “Best Places to Work in Money Management” by Pensions and Investments magazine for the third year in a row | | – | | Continued to broaden the use of our enterprise support centers to operate more effectively and efficiently across our global business |
24
Enhancements to our executive compensation program At the 2014 Annual General Meeting of Shareholders, 84.1% of the votes cast were in favor of the advisory proposal to approve our NEO compensation. During 2014 and early 2015, we actively sought feedback on our compensation programs from our largest shareholders. The committee made a number of enhancements to the executive compensation program in response to shareholder feedback and the committee’s review of the compensation market. | | | | | The portion of long-term equity awards granted for 2014 subject to achievement of performance measures was increased from 30% to 50%.The committee determined this continues to strengthen alignment of our executive officers’ compensation with client interests and shareholder success and is consistent with market practice. | | | More rigorous adjusted operating margin and adjusted diluted EPS performance objectives are applied to the performance-based awards granted for 2014.The committee made this enhancement in tandem with increasing the percentage of long-term equity awards subject to performance measures to continue to strengthen alignment of our executive officers’ compensation with client interests and shareholder success. See Our variable incentive compensation – Our long-term equity awards below for additional details. | | | The chief executive officer’s total compensation may not exceed $25 million for 2015, with actual pay expected to be below that level.The committee believes this enhancement supports best practices and is consistent with market practice. | | | Provide more clarity on executive compensation program in our proxy statement through disclosure focusing on multi-year strategic planning process and multi-year results versus peers.This provides further clarity on our compensation practices and the judicious use of discretion by our compensation committee, which benefits our shareholders. | | | The global equity incentive plan was amended to provide for a minimum vesting period of two years for equity awards.The committee believes this enhancement benefits our shareholders by ensuring the value of the award is tied to long-term price performance, supports best practices and is consistent with market practice. | | | The global equity incentive plan was amended to prohibit share recycling for future grants of stock options and stock appreciation rights.The committee believes this enhancement benefits our shareholders by limiting potential dilution, supports best practices and is consistent with market practice. |
Chief executive officer compensation Martin L. Flanagan led the company’s efforts to deliver better outcomes and service to clients and oversaw significant achievements related to our key strategic imperatives, as described above inOur 2014 highlights and briefly highlighted below. The efforts further strengthened the company’s financial position and enhanced our operating results. | | | | | | | Annual Adjusted Operating Income1 (y-o-y) | | Annual Adjusted Operating Margin1 | | Annual Adjusted Diluted EPS1 (y-o-y) | | Return of Capital to Shareholders2 | | | | | 15.7% | | 41.4% | | 17.8% | | $694 Million |
1 | See important note regarding non-GAAP financial measures on page 24. |
2 | Return of capital to shareholders is calculated as dividends declared per share plus share repurchases during the year ended December 31, 2014. |
Mr. Flanagan’s incentive compensation was positively impacted in 2014 as shown in the table. | | | | | | | | | | | | | | | | | | | | | CEO Compensation | | | | | | | | 2014 Total Compensation1 | | | Change from Prior Year | | | | | | | | | | | | $16,000,000 | | | | | | | | +6.7% | | | | | | | Base Salary | | | Annual Cash Bonus | | | Annual Stock Deferral Award | | | Long-Term Equity Award | | | | | 2014 | | | $790,000 | | | | $4,925,000 | | | | $2,030,000 | | | | $8,255,000 | | | | | y-o-y % Change | | | 0% | | | | +10.1% | | | | +10.0% | | | | +4.6% | | | | |
1 | Consists of salary, annual cash bonus, annual stock deferral award and long-term equity award (50% of which is performance based) earned in 2014. See note on page 37 regarding differences from the summary compensation table (“SCT”). |
Sixty-eight percent of Mr. Flanagan’s 2014 incentive compensation is deferred to align a significant portion of Mr. Flanagan’s compensation with client interests and shareholder success. SeeCompensation philosophy, design and process – Review of peer compensation for information on our chief executive officer’s deferred incentive compensation as a percentage of total incentive compensation versus our peers. For more information regarding annual compensation for our chief executive officer and each of the other NEOs, seeReview of 2014 NEO performance and compensation outcomes below.
| | | | | Our compensation decision-making process and outcomes within a multi-year context | Invesco utilizes multi-year strategic imperatives to deliver strong outcomes for clients and shareholders. | | Our multi-year strategic imperatives and annual operating plan Our mission – to help investors worldwide achieve their financial objectives - guides our strategic planning process, which has helped us deliver better outcomes for clients while achieving strong results for shareholders over a multi-year period. Management, with the guidance and input from the Board of Directors, annually reviews our multi-year strategic imperatives in the context of global trends and macro themes impacting the asset management industry, our position within key markets and the financial implication of our decisions. The outcome of the review is the establishment of an annual operating plan, composed, in part, of our business priorities and related projected financial outcomes. Throughout the year, the Board of Directors reviews with management the progress against the annual operating plan. | | | | | | Our Board and management review performance against our strategic imperatives and annual operating plan based on a number of factors, including those shown here. | | | |
| | | | | For additional detail, seeDetermining the 2014 Compensation of Our Executives Officers – Our multi-year strategic imperatives and annual operating plan below. | | | Financial performance over the past 5 years | | | By delivering better outcomes to clients, financial strength, stability and efficiencies have improved consistently over the past five years. The company has experienced, among other achievements, solid adjusted operating income and adjusted operating margin expansion, strong AUM and earnings growth, material return of capital to shareholders and significant total shareholder return. In addition, strong investment performance and continued focus on clients has helped us deliver exceptional growth while providing robust returns to shareholders. |
| | | | | | | | | | | | | | | | | Adjusted Operating Income1 | | Adjusted Operating Margin1 | | Ending AUM | | Adjusted Diluted EPS1 | | Return of Capital to Shareholders2 | | Total Shareholder Return3 | | | Percentage Points Change | | | | | | | | | | | | | | | 167.7% | | +11.4 | | 78.4% | | 191.9% | | $3.1 Billion | | 90% |
Measurement period from the year ended December 31, 2009 to the year ended December 31, 2014. 1 | See important note regarding non-GAAP financial measures on page 24. |
2 | Return of capital to shareholders is calculated as dividends declared per share plus share repurchases during the period January 1, 2010 to December 31, 2014. |
3 | Total shareholder return is calculated as the change in share price over the measurement period plus the sum of all dividends received during the measurement period, divided by the share price at the beginning of the measurement period. |
| | | Invesco’s executive compensation outcomes are based on operating results within the context of multi-year strategic imperatives. | | Determination of company-wide annual incentive pool based upon progress against strategic imperatives and annual operating plan Throughout the year, the committee examines our progress against the factors listed above inOur multi-year strategic imperatives and annual operating plan. Based on the company’s performance for the year, the committee establishes an overall company-wide incentive pool within well-established guidelines. The pool size is limited to a percentage of pre-cash bonus operating income (“PCBOI”) to ensure, at all times, the company-wide incentive pool is linked to Invesco’s operating results. SeeDetermining the 2014 Compensation of Our Executive Officers – Determination of company-wide incentive pool based upon progress against |
26
| | | | | strategic imperatives and annual operating plan below. All 2014 awards, including NEO awards, were paid out of this incentive pool. Our compensation committee makes holistic, rigorous and judicious decisions for overall pool funding in the context of Invesco’s multi-year performance. The committee does not attempt to rank or assign relative weight to any factor, but rather applies its judgment in considering them in their entirety. The committee is focused on the totality of organizational success without tying decisions to a specific formula. | Our executive compensation is highly correlated to our clients’ and shareholders’ long-term success and closely links rewards to results at every level. | | Executive officer compensation decisions | | Following the determination of the company-wide incentive pool, the committee considers the following factors in setting the compensation levels of our executive officers: | | n the company’s achievements in respect of our strategic imperatives and annual operating plan; | | n the competitive environment by reviewing performance against peers across numerous financial factors; and | | n each executive officer’s individual performance. | | | The committee makes its decisions based upon the totality of the results without tying decisions to a specific formula. The committee believes that this thoughtful, holistic approach, which incorporates fact-based qualitative judgments, is more effective than purely mechanical formula criteria. | | | A review of the committee’s process and determinations demonstrates that we closely tie pay to performance, and our executive compensation is appropriate when compared to the company’s performance. As illustrated in the following four charts, our chief executive officer’s total compensation over the past five years is closely aligned with company performance on key financial measures – including adjusted operating income, adjusted operating margin and adjusted diluted EPS – demonstrating our committee’s rigorous and judicious approach. | | | 27.7%
Increase in Annual
Adjusted Operating
Income* Our chief executive officer’s compensation over the past five years has aligned closely with company performance. | | | | | | | 39.7%
Annual Adjusted
Operating Margin*
| | | | $34.4
billion
Assets Under
Management Total Net Inflows
| | | | 29.1%
Increase in Annual Adjusted Diluted EPS*
| | | | $850
million
Total 2013 Return of Capital to Shareholders See important note regarding non-GAAP financial measures on page 24. |
*Note regarding Non-GAAP Financial Measures: The adjusted financial measures are all non-GAAP financial measures. See the information on page 53 through 58 of our Annual Report on Form 10-K for the fiscal year 2013 for a presentation of, and reconciliation to, the most directly comparable GAAP measures. All current and prior period references to consolidated Invesco Ltd. results, including PCBOI and AUM, exclude the operations of Atlantic Trust. The company closed the sale of Atlantic Trust on December 31, 2013.
2013 was a year of strong performance for Invesco. Invesco continued to provide strong, long-term investment performance to clients, which contributed to robust organic growth throughout the year. We delivered excellent results for our shareholders, continued to make progress against our long-term strategic objectives and continued to expand the company’s investment capabilities globally.27
2013 Executive Compensation Highlights
Our compensation programs are tied to the achievement of our financial and strategic results and our success in serving our clients’ and shareholders’ interests. Reflecting our strong financial results and significant achievements related to our long-term strategic objectives, the compensation of our executive officers was positively impacted in 2013 and paid from the aggregate incentive pool approved by the committee (see “Setting Annual Incentive Compensation Pool”). Below we highlight the results of the 2013 compensation decisions for our executive officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Our chief executive officer’s incentive compensation relative to the company’s adjusted operating income over the last five years demonstrates the committee’s judicious approach to executive compensation. | | | | 5-Year Invesco CEO Incentive Compensation versus Adjusted Operating Income | | | | | 2010 | | | | | 2011 | | | | | 2012 | | | | | 2013 | | | | | 2014 | | | | | | y-o-y change in adjusted operating income1 | | | +57% | | | | | | +19% | | | | | | -3% | | | | | | +28% | | | | | | +16% | | | | | | y-o-y change in Invesco CEO Incentive Compensation | | | +33% | | | | | | 0% | | | – | | | -3% | | | | | | +21% | | | | | | +7% | | | | | | | | | | | 1 See important note regarding non-GAAP financial measures on page 24. CEO pay and company financial performance versus peers As illustrated in the chart below, our chief executive officer’s average total compensation ranks at approximately the 67th percentile of our peer group for the 3-year period between 2011-2013 (the latest year for which public data was available). By comparison, our financial performance on the key financial measures noted below relative to our peer group ranged from approximately the 80th-87th percentile. Invesco is generally near the median of our peer group market capitalization and annual revenues. Based upon the foregoing, our chief executive officer’s average total compensation ranks lower than our peer group when compared to our rank in performance on key financial measures against our peers. See the table below for a list of companies we consider to be our peers. See alsoCompensation Philosophy, Design and Process - Review of peer compensation. 1 Note regarding non-GAAP financial measures: The above chart includes publicly reported adjusted financial measures of Invesco and its peer companies. The adjusted financial measures are all non-GAAP financial measures. Similarly titled measures of the peer companies may not be comparable to Invesco’s adjusted measures. 2 CEO total compensation percentile rank is based on a 3-year average of total compensation for each peer company CEO as publicly reported in the summary compensation table for each company. |
| | | | | | | | | | | | | | | | | | | 16% Peer Companiesyear-over-year increase
in aggregate total
compensation for our
executive officers*
| | | | | | | | | | | | | | 69% of incentive – Affiliated Managers Group
| | compensation is deferred – BNY Mellon
| | incentive compensation– Janus Capital Group
| | for our President– State Street
| | | | | | | – AB (formerly | | – Eaton Vance | | – Legg Mason | | – T. Rowe Price | | | | | | | AllianceBernstein) | | – Federated Investors | | – Northern Trust | | – Waddell & CEO*Reed | | | | | | | – Ameriprise Financial | | – Franklin Resources | | – SEI Investment Company | | | | | | | | | – BlackRock
Deferred Incentive
Compensation
| | | | | | 64% of incentive
|
compensation is deferred
incentive compensation
for our other executive
officers on average*
| | | | | | | Our compensation practices
Deferred Incentive
Compensation
Below we highlight certain executive compensation practices designed to align executive pay with performance, ensure good governance and serve our shareholders’ long-term interests. |
| * | Salaries for our executive officers were unchanged for 2013. Percentages are approximate. |
Executive Summary (cont’d)
Named Executive Officer Compensation Over A Five-Year Period
The below chart shows the compensation of our NEOs over a five-year period. The committee believes the chart illustrates the appropriate alignment of NEO compensation with the overall operating results of the company for the past five years. For 2013, total compensation for the NEOs increased 16% while adjusted operating income increased 27.7%.
2013 Chief Executive Officer Compensation
| | | Our President and Chief Executive Officer’s incentive compensation increased for 2013.
What we do | | | ü | |
| Mr. Flanagan led the company’s strong financial performance in 2013, which included a 27.7% increase in annual adjusted operating income, 39.7% annual adjusted operating margin (an increase of 4.0 percentage points over 2012), a 29.1% increase in annual adjusted diluted EPS, total net inflows of $34.4 billion and $850 million return of capital to our shareholders. In addition, Mr. Flanagan oversaw significant achievements related to our strategic objectives, as further described below. In light of the foregoing, the committee increased Mr. Flanagan's cash bonus by 33%, his annual stock deferral by 23%, and his long-term equity award by 15%. | | |
For more information regarding annual compensation for our Chief Executive Officer and each of the other named executive officers, see “2013 Named Executive Officer Compensation” below.
Executive Summary (cont’d)
Progress Against Our Strategic Objectives
Throughout the year, we continued to make substantial progress against our long-term strategic objectives set forth below. Significant achievements across all areas of our business that further positioned us for growth and long-term success included:
| | Achieve strong investment performance — Investment performance across the company remained strong throughout 2013. Delivering strong, long-term investment performance to clients contributed to strong organic growth throughout the year. |
| | Be instrumental in our clients’ success — Further strengthened and deepened client relationships through superior client engagement. The company made solid progress building world-class fixed income capabilities through the creation of a global fixed income capability, which contributed to record AUM levels in Bank Loans, Stable Value and Investment Grade portfolios. The company further expanded its Exchange-Traded Fund (“ETF”) franchise, which contributed to record AUM levels for its ETF portfolio. Additionally, the company continued to anticipate client demand by expanding its global investment strategies through the introduction of new multi-asset capabilities and liquid alternative products that we believe will benefit clients and our business over the long term. |
| | Harness the power of our global platform— As a demonstration of our ability to leverage our global platform, in 2013 Invesco launched a number of new capabilities globally that support the future growth of the firm. In fact, Invesco launched more funds during the fourth quarter than we did in any full calendar year over the past five years. |
| | Perpetuate a high-performance organization — Successfully implemented key organizational changes to better align us with future growth opportunities, increased collaboration across regions, and significantly reinvested in employee talent through additional focus on performance leadership and succession planning. Invesco’s employee engagement scores continued to exceed benchmarks set by high performing companies worldwide, as reflected in data from a third-party administered employee survey. |
Our Compensation Practices
Below we highlight certain executive compensation practices that are designed to align executive pay with performance, ensure good governance, and serve our shareholders’ long-term interests.
What We Do
| | Pay for performance.We tie pay to the performance of the company and the individual. The great majority of executive officer compensation is not guaranteed and is variable. |
| | ü | | Strong emphasis on deferred compensation.compensation with long vesting periods.Compensation for our executive officers is heavily weighted to deferred compensation (60-70%), consisting of annual stock deferral and long-term equity awards that vest over four years. Base salaries for our executive officers average approximately 10% of their total annual compensation. |
| | | ü | | Performance-based50% of long-term equity awards.awards are performance-based.30% Beginning in respect of 2014 compensation, 50% of long-term equity awards for executive officers isare tied to the achievement of specified levels of adjusted operating margin or adjusted diluted earnings per share. For more information regarding long-term equity awards made to our executive officers, including our named executive officers, see “Our Performance-Based Long-Term Equity Awards”variable incentive compensation – Our long-term equity awards below.
|
| | | ü | | Long vesting periods. Our equity awards generally vest in annual tranches over a four-year period. |
| | Linkage of incentive compensation pool to PCBOI.We have a history of disciplined decision-making over multiple years and through various economic cycles, including directly linking the |
Executive Summary (cont’d)
| | aggregate incentive compensation pool to a defined range of our pre-cash bonus operating income (“PCBOI”); thereby ensuring incentive compensation is paid only when the company is generating operating income. For more information regarding our incentive compensation pool seeDetermination of company-wide annual incentive pool based upon progress against strategic imperatives and annual operating plan below. |
| | ü | | “Clawback” policy.The company maintains a “clawback” policy applicable tofor our executive officers’ performance-based long-term equity awards which permits the company to recover compensation in the event of fraudulent or willful misconduct. For more information regarding our clawback policy, see “Other Compensation Policies and Practices – Clawback Policy”policy below. |
| | | ü | | ShareStock ownership guidelines.policy.We maintain robust share ownership guidelines for our executive officers, creating a further link between management interests, company performance and shareholder value. Shares must be held until sharethe stock ownership guidelinespolicy requirements are met. All of our executive officers have exceeded the ownership requirements. For more information regarding our sharestock ownership guidelines,policy, see “Share Ownership Guidelines”Other Compensation Policies and Practices – Stock ownership policy below.
|
| | | ü | | “Double triggers.”We maintain a “double trigger” requirement on the vesting of equity awards in the event of a change in control, meaning that an equity award holder must be terminated following the change in control before vesting will be accelerated. |
| | | ü | | Modest perquisites.We provide modest perquisites that provide a sound benefit to the company’s business. |
| | | ü | | Independent compensation committee consultant.Our independent compensation consultant, Johnson Associates, Inc., is retained directly by the committee and performs no other services for the company. |
What We Don’t Do
| | | ü | | Maintain a cap on CEO total compensation. Our compensation committee has set a cap of $25 million for our chief executive officer’s total compensation in respect to 2015, with actual pay expected to be below that level. | | | ü | | Annually perform risk analysis on executive compensation program. Our committee annually reviews our compensation programs to determine whether such polices and practices create risks that are reasonably likely to have a material adverse effect on the company. | | | ü | | Minimum vesting for equity awards. Commencing in 2014, our equity incentive plans provide a minimum vesting period of two years for future grants of equity. What we don’t do | | | x | | | No dividends or dividend equivalents on unearnedunvested performance-based awards.No dividends or dividend equivalents are paid on performance-based awards during the vesting period. Rather, dividends are deferred and are paid based on performance achieved, with no premiums. |
| | | x | | No gross ups.We do not generally provide excise tax “gross ups,” other than in the case of certain relocation expenses, consistent with our relocation policy. |
| | | x | | No short selling or hedging.Our insider trading policy strictly prohibits short selling, dealing in publicly-traded options and hedging or monetization transactions in our common shares. | | | x | | No share recycling. Commencing in 2014, our equity incentive plans contain provisions prohibiting share recycling for options and stock appreciation rights. |
| | No option re-pricing.Our equity incentive plans contain certain provisions prohibiting option repricing absent approval of our shareholders.29 |
Results of 2013 Say-on-Pay Vote and Our Investor Outreach Program
At the 2013 Annual General Meeting of Shareholders, 95.8% of the votes cast were in favor of the advisory proposal to approve our NEO compensation, (the “Say-on-Pay” advisory proposal). Although we believe that the 2013 vote conveyed our shareholders’ strong support of the committee’s decisions and the existing executive compensation programs, during the balance of 2013 and early 2014, we continued to actively seek investor feedback concerning our compensation programs by holding meetings with a significant number of our largest shareholders. While all of the shareholders we spoke with agree on the importance of pay and performance alignment, there was no consensus among these shareholders on how alignment should be measured. A number of the shareholders indicated that their Say-on-Pay decisions are made on a case-by-case basis and that they have not had any issues with Invesco’s compensation in prior years, some noting in particular that they believe appropriate decisions have been made for NEO compensation. Our largest shareholders do not share a consistent philosophy regarding the structure of compensation. That said, all shareholders affirmed the importance of clear disclosure and transparency regarding the decision making process undertaken by the committee. Based on this feedback the committee determined to continue our current compensation practices as described in this Compensation Discussion and Analysis.
Our Compensation Philosophy
To support our long-term strategic objectives, we have structured our compensation programs at every level to achieve the following objectives:
align individual awards with shareholder and client success;
reinforce our commercial viability by closely linking rewards to results at every level;
reinforce our meritocracy by differentially rewarding high-performers; and
recognize and retain top talent by ensuring a meaningful mix of cash and deferred compensation vehicles.
Determining Compensation of Our Executive Officers
Role of the Compensation Committee
The committee has, among other duties, responsibility for determining the components and amounts of compensation paid to our executive officers, including our named executive officers. The committee’s responsibilities include:
reviewing and making recommendations to the Board about the company’s overall compensation philosophy;
approving company-wide annual compensation;
evaluating the performance of, and setting the compensation for, the Chief Executive Officer; and
reviewing and overseeing management’s annual process for evaluating the performance of, and approving the compensation for, all other executive officers, including our other named executive officers.
The committee’s philosophy in practice delivers a significant portion of total pay through incentive compensation. The majority of incentive compensation is deferred and tied to financial and strategic performance in order to align individual rewards with client and shareholder success. In determining the compensation levels, the committee considers the achievement of strategic objectives, the success in executing annual objectives, year-over-year operating results, operating margin, year-over-year earnings per share and operating results versus peers. In addition, the committee considers the competitive environment and the economic cycle. All incentive compensation is constrained by the range of PCBOI to ensure, at all times, the incentive pool is linked to Invesco’s operating results. The committee makes its compensation decisions based upon the totality of the results without tying such decisions to a specific formula. The committee believes that this holistic approach, which incorporates fact-based qualitative judgments based upon the factors described above, is more effective than purely mechanical formula criteria.
Role of the Compensation Consultant
The committee’s charter gives it the authority to retain consultants and other advisors to assist it in performing its duties. The committee has engaged Johnson Associates, Inc., an independent consulting firm, to advise it on director and executive compensation matters. Johnson Associates:
attends certain meetings of the committee and periodically meets with the committee without members of management present;
assists the committee throughout the year in its analysis and evaluation of our overall executive compensation programs, including compensation paid to our directors and executive officers;
provides the committee with certain market data and analysis that compares executive compensation paid by the company with that paid by other firms in the financial services industry and certain investment management firms which we consider generally comparable to us; and
provides commentary regarding market conditions, market impressions and compensation trends.
The committee uses such data as reference material to assist it in gaining a general awareness of industry compensation standards and trends. The market data, including performance and pay practices of the peer group and broader investment management firms, do not directly affect the committee’s compensation determinations for our executive officers, including our named executive officers. Although we seek to offer to our executive officers a level of total compensation that is competitive, the committee does not target a particular percentile of market or the peer group with respect to total pay packages or any individual components thereof. The committee’s consideration of the market data constitutes only one of many factors reviewed and such market data is considered generally and not as a substitute for the committee’s independent judgment in making compensation decisions regarding our executive officers.
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 2013. The company uses other compensation and benefits consultants to provide market data, actuarial services and/or advice relating to broad management employee programs in which named executive officers may participate.
Review of Peer Compensation
| | | | | | | Compensation Philosophy, Design and Process | | | Our compensation philosophy | | | To support our strategic imperatives, we have structured our compensation programs at every level to achieve the following objectives: | | | n align individual awards with client and shareholder success; | | | n reinforce our commercial viability by closely linking rewards to results at every level; | | | n reinforce our meritocracy by differentially rewarding high-performers; and | | | n recognize and retain top talent by ensuring a meaningful mix of cash and deferred compensation. | The committee has, among other duties, responsibility for determining the components and amounts of compensation paid to our executive officers. | | Role of the compensation committee | | The committee’s responsibilities include: (i) reviewing and making recommendations to the Board about the company’s overall compensation philosophy; (ii) approving company-wide annual compensation; (iii) evaluating the performance of, and setting the compensation for, the Chief Executive Officer; and (iv) reviewing and overseeing management’s annual process for evaluating the performance of, and approving the compensation for, all other executive officers, including our other named executive officers. | | In determining the compensation levels, the committee considers the progress against our strategic imperatives, the success in executing annual objectives in a multi-year context, year-over-year operating results, and operating results versus peers. All non-executives directors regularly attend compensation committee meetings, highlighting the importance of executive officer compensation decisions for our Board. For additional detail on the company’s compensation alignment to its financial results, seeOur Compensation Decision-Making Process and Outcomes Within a Multi-Year Context above. | | Components of executive compensation and their purpose | | We utilize a variety of compensation components to achieve our objectives. The compensation program for our executive officers, including the NEOs, consists of base salary and variable incentive compensation. The committee believes the bulk of our executive officers’ pay should be incentive compensation – a combination of annual cash bonuses, annual stock deferral awards, and long-term equity awards. The following table further describes each pay component, as well as its purpose and key measures. |
| | | | | | | | | | | | | Pay Element | | What It Does | | Key Measures | | | Base salary | | – Provides competitive fixed pay – Reasonable base compensation for day-to-day performance of job responsibilities – Evaluated annually, generally remains static unless promotion or adjustment due to economic trends in industry | | – Experience, duties and scope of responsibility – Internal and external market factors | | | | Annual cash bonus | | – Provides a competitive annual cash incentive opportunity | | – Based upon annual financial results and progress against long-term strategic imperatives | | | Annual stock deferral award (time-based vesting) | | – Along with annual cash bonus, provides a competitive annual incentive opportunity – Aligns executive with shareholder interests – Encourages retention by vesting in annual increments over four years | | – Based upon annual financial results and progress against long-term strategic imperatives | | | Long-term equity awards (performance-based and time-based vesting) | | – Recognizes long-term potential for future contributions to company’slong-term strategic imperatives – Aligns executive with shareholder interests – Encourages retention by vesting in annual increments over four years | | – Based upon financial results and progress against long-term strategic imperatives – 50% performance-based vesting tied to adjusted diluted EPS and adjusted operating margin |
| | | | | Our variable incentive compensation | | | As noted above, each executive officer’s variable compensation is a combination of an annual cash bonus, an annual stock deferral award and a long-term equity award (including a performance-based award). Our executive officers’ incentive awards are funded from the company-wide incentive pool established annually by the compensation committee. For additional detail on the annual company-wide incentive pool, seeDetermining the 2014 Compensation of Our Executive Officers below. | Our executive officers’ annual variable compensation is comprised of cash and equity awards that vest over four years. | | Our annual awards We use our annual awards, which consist of cash and annual stock deferred awards, to recognize current year performance and closely align employees’ interests with those of clients and shareholders, differentially reward high performers and link compensation to financial results. Our annual stock deferral awards generally vest over four years in 25% increments each year and typically account for approximately 20-25% of an executive officer’s equity incentives. | We have increased the amount of long-term equity awards tied to the achievement of performance measures from 30% to 50%. | | Our long-term equity awards Long-term equity awards generally vest in 25% increments over four years. The committee believes long-term equity awards should align employee and shareholder interests and a portion of awards should be paid only upon achievement of targeted financial results. Prior to 2014, 30% of long-term equity awards were tied to the achievement of performance measures. Beginning with awards granted for 2014, 50% is tied to the achievement of targeted financial measures – adjusted operating margin or adjusted diluted EPS. | | | The committee believes tying the vesting of performance-based equity awards to the achievement of adjusted operating margin or adjusted diluted EPS targets achieves the following objectives: | | | | | n focuses our management on preserving value for our shareholders; | | | | | n holds our executives accountable for the sound management of the company; and | | | | | n ties a significant portion of our executive officers’ compensation to measures that management can most directly influence that will ultimately lead to shareholder value. | The rigor of the financial performance measures have increased to further align executive and shareholder interests. | | Based on feedback from our shareholders and a market review, the committee increased the rigor of the financial performance measures for awards granted for 2014. The adjusted operating margin minimum threshold and target for these awards are 26% and 30%, respectively, and the adjusted diluted EPS minimum threshold and target for these awards are $1.10 and $1.60, respectively. Full vesting of the performance-based long-term equity award occurs when either target financial measure is achieved. Partial vesting occurs on a pro-rated basis on straight-line interpolation between a minimum threshold and the target financial measure. The award will vest based upon the higher achieved financial measure for that year. In addition, dividend equivalents are deferred and will only be paid to the extent an award vests. The target financial measures and minimum thresholds for the performance-based portion of our long-term equity awards in respect of 2014 and granted in February 2015 are illustrated below. 1 Partial vesting of the award occurs on a pro-rated basis on straight-line interpolation between the minimum threshold and target financial measure. No vesting or dividends if failure to meet the minimum threshold. |
31
| | | The majority of executive officer incentive compensation is deferred and tied to financial and strategic performance in order to align individual rewards with long-term client and shareholder success. | | Our compensation mix To align our executive officers’ awards with client and shareholder success, the committee has designed our executive officers’ compensation so that executive officers receive a significant portion of their compensation in the form of deferred incentives. The committee believes this appropriately aligns our executive officers’ interests with our shareholders as it focuses on long- term shareholder value creation. The committee has no pre-established policy or target on the allocation between pay elements in order to be able to adjust practices to best meet the interest of our shareholders. For 2014, 68% of our chief executives officer’s incentive compensation was in the form of deferred incentive compensation. See the table below for a discussion and comparison of our chief executive officer’s deferred incentive compensation versus our peers. | | | Review of peer compensation | | | In determining executive compensation, the committee reviews the executive compensation programspractice and levels of our industry peer companies, as well as other comparable investment management reference companies. Our industry peers (see box to the right) consist of companies in the S&P 500 and S&P 400 that are also in the Asset Management and Custody Bank sub-index, plus AllianceBernstein L.P.AB (formerly AllianceBernstein), another global asset manager followed by industry analysts. | | Invesco’s deferred incentive compensation as a percentage of total incentive compensation for its chief executive officer, versus our peers, demonstrates our commitment to strong alignment of our chief executive officer’s compensation to the long-term interests of our shareholders. As shown in the table below, Invesco ranked high among its peer companies for 2013 (the latest year for which public data was available), paying 69% of incentive compensation in deferred compensation. Based on data for Invesco and peer companies as publicly reported in the summary compensation tables for 2013, excluding one peer company that did not grant incentive compensation for 2013. |
Role of Executive Officers in Determining Executive Compensation
Our Chief Executive Officer meets with the non-executive directors (including the members of the committee) throughout the year to discuss executive performance and compensation matters, including proposals relative to compensation for individual executive officers (other than the Chief Executive Officer). Our Chief Executive Officer and Chief Administrative Officer 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.
Setting Annual Incentive Compensation Pool
Based upon the above principles and processes, at regular intervals during the year, the committee examines the company’s progress on multiple operating measures, which include client success and financial measures, including PCBOI, adjusted operating margin, assets under management and adjusted
diluted earnings per share, as well as key measures, such as the company’s progress toward achieving its strategic objectives. While each of these items is considered by the committee, the committee does not attempt to rank or assign relative weight to any factor but rather applies its judgment in considering them in their entirety. The committee is focused on the totality of organizational success without tying compensation decisions to a specific formula.
Following the end of the fiscal year, the committee establishes an overall company-wide incentive pool within established guidelines described below to ensure that compensation is aligned with the financial and strategic results discussed above. The pool is comprised of a cash bonus pool and a deferred compensation pool (consisting of annual stock deferral and long-term equity awards that vest over four years). All 2013 awards, including NEO awards, were paid out of these incentive pools.
For more information regarding annual stock deferral awards and long-term equity awards, see “Components of Executive Compensation and Their Purpose” and “Our Performance-Based Long-Term Equity Awards” below.
The committee annually sets parameters, used consistently for many years, to guide the end-of-year decision-making process regarding the company-wide incentive pool size. These parameters are expressed as a percentage of PCBOI. The committee uses a range of 34-48% of PCBOI, in the aggregate, in setting the company-wide incentive pool, though it maintains the flexibility to go outside either end of this range in circumstances that it deems exceptional. The range includes the cash bonus and deferred compensation 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 concerning the practices of our peer group as analyzed by Johnson Associates and based on data obtained from the McLagan and CaseyQuirk Performance Intelligence Study.
Over the past five years, the aggregate incentive pool has averaged approximately 44% of PCBOI. Utilizing its judgment, and applying discretion based upon the company’s financial results and progress toward strategic objectives during 2013, the committee set the company-wide incentive pool for 2013 at approximately 41% of PCBOI (compared to 44% of PCBOI for 2012). The committee decided:
the cash bonus pool would increase this year as a result of the increase in operating income – although not at the same rate as the increase in operating income, given decisions made earlier in the year by the Board to return value to shareholders (through dividends and share buybacks) and to further invest in the long-term success of the company; and
with respect to the deferred compensation pool, annual stock deferral awards would increase consistent with the cash bonus pool and long-term equity awards would generally remain unchanged from last year (on an average per person basis) to continue to tie the interests of our employees to the long-term interests of our shareholders.
For more information regarding the company’s financial results and our achievement of strategic objectives for 2013, see “2013 Performance Highlights”and “Progress Against Our Strategic Objectives” above. 32Components of Executive Compensation and Their Purpose
The compensation program for our executive officers, including the NEOs, consists primarily of base salary and variable incentive compensation. The committee believes that a majority of our NEOs’ pay should be incentive compensation – consisting of a combination of annual cash bonuses, annual stock deferral awards, and long-term equity awards – all of which are linked to the achievement of the company’s financial and strategic objectives. The following table further describes each component of executive compensation, as well as its purpose and key measures.
| | | | | | | Incentive
Type
| | Pay Element | | What It Does | | Key Measures | FIXED
| | Base salaryThe committee’s compensation consultant assists the committee in its analysis of our executive compensation programs. | | •Provides competitive fixed pay
Role of the independent compensation consultant •LimitedThe committee’s charter gives it the authority to a reasonable baseretain consultants and other advisors to assist it in performing its duties. The committee has engaged Johnson Associates, Inc., an independent consulting firm, to advise it on director and executive compensation for day-to-day performance of job responsibilities
•Evaluated annually, generally remains static unless promotion or adjustment is necessary due to economic trends in industry
| | •Experience, duties and scope of responsibility
•Internal and external market factors
•Reviewed annually
| VARIABLE
| | Annual cash bonus | | •Provides a competitive annual incentive opportunity
| | •Based upon company’s annual financial results and progress against long-term strategic objectivesmatters. Johnson Associates:
| | | Annual stock deferral award
(time-based vesting)n
| | •Provides a competitive annual incentive opportunityassists the committee throughout the year in its analysis and evaluation of our overall executive compensation programs, including compensation paid to our directors and executive officers;
| | | •Aligns executive with shareholder interests
•Encourages retention by vesting in annual increments over four years
n | | •Based upon company’s annual financial resultsattends certain meetings of the committee and progress against long-term strategic objectivesperiodically meets with the committee without members of management present;
| | | Long-term equity awards
(performance-based and time-based vesting)n
| | •Recognizes long-term potential for future contributionsprovides the committee with certain market data and analysis that compares executive compensation paid by the company with that paid by other firms in the financial services industry and certain investment management firms which we consider generally comparable to company’slong-term strategic objectivesus; and
| | | •Aligns executive with shareholder interests
•Encourages retention by vesting in annual increments over four years
n | | •Based upon company’s annual financial resultsprovides commentary regarding market conditions, market impressions and progress against long-term strategic objectives compensation trends. | | | •30% performance-based vesting tiedThe committee uses such data as reference material to adjusted diluted EPSassist it in gaining a general awareness of industry compensation standards and adjusted operating margintrends. The market data, including performance and pay practices of the peer group and broader investment management firms, do not directly affect the committee’s compensation determinations for our executive officers, including our named executive officers. Although we seek to offer to our executive officers a level of total compensation that is competitive, the committee does not target a particular percentile of market or the peer group with respect to total pay packages or any individual components thereof. The committee’s consideration of the market data constitutes only one of many factors reviewed and such market data is considered generally and not as a substitute for the committee’s independent judgment in making compensation decisions regarding our executive officers.
| | | •70% time-based vestingUnder 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 2014. The company uses other compensation and benefits consultants to provide market data, actuarial services and/or advice relating to broad management employee programs in which named executive officers may participate.
| | | Role of executive officers in determining executive compensation | | | Our Chief Executive Officer meets with the non-executive directors (including committee members) 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 imperatives. Our Chief Financial Officer assists as needed in explaining specific aspects of the company’s financial performance. |
Our Performance-Based Long-Term Equity Awards
Long-term equity awards are four-year awards which generally vest in 25% increments each year. The committee believes that long-term equity awards should align employee and shareholder interests and that a portion of such awards should be paid only upon achievement of targeted company financial results. Therefore, the executive’s ability to realize 30% of the long-term equity award is tied to the achievement each year of at least one of two financial measures:
adjusted operating margin of the company for the fiscal year, as reported in the company’s SEC filings, must exceed certain thresholds; or
adjusted diluted earnings per share of the company for the fiscal year, as reported in the company’s SEC filings, must exceed certain thresholds.
Full vesting of the performance-based long-term equity award occurs in the event either target financial measure is achieved. Partial vesting of the award occurs on a pro-rated basis based on straight-line interpolation between a minimum threshold and the target financial measure. The award will vest based upon the higher achieved financial measure for that year. In addition, dividend equivalents are deferred for such performance awards and will only be paid if and to the extent an award vests. The target financial measures and minimum thresholds for the performance-based portion of our long-term equity awards granted in February 2013 are illustrated below.
| | | | | Determining the 2014 Compensation of Our Executive Officers | | | Flowchart of the compensation decision-making process The following flowchart depicts the committee’s compensation decision-making process and related judgments for 2014. A detailed review of each step follows the flowchart. |
2013 Compensation Decision Process
The following flowchart depicts the committee’s compensation decision process and related judgments in determining executive officers’ compensation for 2013.
| | | Invesco utilizes multi-year strategic imperatives to deliver strong outcomes for clients and shareholders. | |
2013 Named Executive Officer Compensation
For 2013, our named executive officers are:
Our multi-year strategic imperatives and annual operating plan Our mission – to help investors worldwide achieve their financial objectives – guides our strategic planning process, which has helped us deliver better outcomes for clients while achieving strong results for shareholders over a multi-year period. Management, with the guidance and input from the Board of Directors, annually reviews our multi-year strategic imperatives in the context of global trends and macro themes impacting the asset management industry, our position within key markets and the financial implications of our decisions. The outcome of the review is the establishment of an annual operating plan, composed, in part, of our business priorities and related projected financial outcomes. Throughout the year, the Board of Directors reviews with management the progress against the annual operating plan. | | | | | | Our Board and management review performance against our strategic imperatives and annual operating plan based on a number of factors, including those set forth below. Achievements against these measures drives strong outcomes for our clients and shareholders. | | | |
| | | | | NameEach year, the committee establishes a company- wide incentive pool that is a percentage of PCBOI. All 2014 awards, including NEO awards, were paid out of this pool. | | Title | Martin L. Flanagan
| | PresidentDetermination of company-wide annual incentive pool based upon progress against strategic imperatives and Chief Executive Officer | annual operating plan Loren M. Starr
| | Senior Managing DirectorThe committee examines the company’s progress on multiple operating measures, including those shown above, the company’s progress toward achieving its strategic imperatives and Chief Financial Officer | G. Mark Armour
| | Senior Managing Director and Headother factors, including PCBOI. While each of EMEA | Andrew T.S. Lo
| | Senior Managing Director and Headthese items is considered by the committee, the committee does not attempt to rank or assign relative weight to any factor but rather applies its judgment in considering them in their entirety. The committee is focused on the totality of Asia Pacific | Philip A. Taylororganizational success without tying compensation decisions to a specific formula.
| | Senior Managing Director and Head of the Americas |
Set forth below is a summary of the 2013 compensation for each named executive officer, as well as the 2013 material goals and accomplishments of each named executive officer that the committee considered in determining each such officer’s compensation for 2013. In addition, the following graphs show for each named executive officer the ratio of 2013 cash incentive compensation (annual cash bonus) to deferred incentive compensation (annual stock deferral award and long-term equity award). The tables set forth the elements of compensation paid to each such officer for 2013.
Note: The graphs and tables below depict how the committee viewed its compensation decisions for our NEOs, but they differ substantially from the Summary Compensation Table (“SCT”) on page 41 required by SEC rules and are not a substitute for the information presented in the SCT. There are two principal differences between the SCT and the presentations below:
| • | | | | Linking the aggregate incentive compensation pool to a defined range of our PCBOI ensures incentive compensation is paid only when the company is generating operating income. | | The committee established parameters, used consistently for many years, to guide the end- of-year decision-making process regarding the company-wide incentive pool size to ensure that compensation is aligned with the financial and strategic results discussed above. These parameters are expressed as a percentage of PCBOI. The committee uses a range of 34-48% of PCBOI, in the aggregate, in setting the company-wide incentive pool, though it maintains the flexibility to go outside either end of this range in circumstances that it deems exceptional. The range includes the cash bonus and deferred compensation 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 concerning the practices of asset management and other similar financial services firms as analyzed by Johnson Associates, our independent compensation consultant, and based on data obtained from the McLagan and CaseyQuirk Performance Intelligence Study. | | | Over the past five years, the incentive pool has averaged approximately 41% of PCBOI. Utilizing its judgment, and applying discretion based upon the company’s financial results and progress against strategic imperatives during 2014, the committee set the company-wide incentive pool for 2014 at approximately 39% of PCBOI (compared to 41% of PCBOI for 2013). | | | | | | The committee decided: | For 2014, the committee determined to increase the cash bonus pool and increase the annual stock deferral awards and leave long-term equity awards generally unchanged from last year (on an average per person basis). | | n | | the cash bonus pool would increase this year as a result of the increase in operating income – although not at the same rate as the increase in operating income, given decisions made earlier in the year by the Board to return value to shareholders (through dividends and share buybacks) and to further invest in the long-term success of the company; and | | n | | with respect to the deferred compensation pool, annual stock deferral awards would increase consistent with the cash bonus pool and long-term equity awards would generally remain unchanged from last year (on an average per person basis) to continue to tie the interests of our employees to the long-term interests of our shareholders. | | | For more information regarding the company’s financial results and our achievement of strategic imperatives for 2014, seeOur 2014 highlights above. |
| | | | | Our executive officers’ compensation is highly correlated to our clients’ and shareholders’ success and closely links rewards to results at every level. | | Review of 2014 NEO performance and compensation outcomes Incentive compensation for our named executive officers is paid from the annual company-wide incentive compensation pool described above. In making its determination for our executive officers’ compensation, the committee considers the 2014 material goals and accomplishments of each named executive officer, as well as the company’s overall performance. The committee makes its compensation decisions based upon the totality of the results without tying compensation decisions to a specific formula. The committee believes that this holistic approach, which incorporates fact-based qualitative judgments, is more effective than purely mechanical formula criteria. | | | Set forth below is a summary of the 2014 material accomplishments of each named executive officer that the committee considered in determining each such officer’s compensation for 2014, as well as their 2014 compensation. In addition, the following tables and graphs show for the chief executive officer and the other named executive officers the ratio of 2014 cash incentive compensation (annual cash bonus) to deferred incentive compensation (annual stock deferral award and long-term equity award). | | | Note: The graphs and tables below depict how the committee viewed its compensation decisions for our NEOs in respects of 2014, but they differ substantially from the Summary Compensation Table (“SCT”) on page 45 required by SEC rules and are not a substitute for the information presented in the SCT. There are two principal differences between the SCT and the presentations below: | | | n | | The company grants both cash and deferred incentive compensation after our earnings for the year have been announced. In both the presentations below and the SCT, cash incentive compensation granted in 20142015 for 20132014 performance is shown as 20132014 compensation. Our presentation below treats deferred incentive compensation similarly, so that equity awards granted in 20142015 are shown as 20132014 compensation. The SCT does not follow this treatment. Instead the SCT reports the value of equity awards in the year in which they are granted, rather than the year in which they were earned. As a result, equity awards granted in 20142015 for 20132014 performance are shown in our presentation below as 20132014 compensation, but the SCT reports for 20132014 the value of equity awards granted in 20132014 in respect of 20122013 performance. |
| • | | n | | The SCT reports “All Other Compensation.” These amounts are not part of the committee’s compensation determinations and are not shown in the presentation below. |
Martin L. Flanagan — President and Chief Executive Officer
Mr. Flanagan has been our President and Chief Executive Officer since August 2005. His achievements in 2013 in respect of the company’s strategic objectives set forth below include:
| • | | Achieve strong financial performance — Mr. Flanagan led the company’s strong financial performance in 2013, which included a 27.7% increase in annual adjusted operating income, 39.7% annual adjusted operating margin (an increase of 4.0 percentage points over 2012), a 29.1% increase in annual adjusted diluted EPS, total net inflows of $34.4 billion and $850 million return of capital to our shareholders.37 |
| • | | Achieve strong investment performance —Mr. Flanagan oversaw the company’s continued focus on delivering investment excellence to clients and further enhanced the firm’s strong investment culture. Investment performance across the company remained strong throughout 2013. Delivering strong, long-term investment performance to clients contributed to strong organic growth throughout the year. |
| • | | Be instrumental to our clients’ success — Mr. Flanagan continued to oversee the firm’s efforts to further strengthen and deepen client relationships through superior client engagement. Under
|
| his leadership, the firm made solid progress building world-class fixed income capabilities through the creation of a global fixed income capability, which contributed to record AUM levels in Bank Loans, Stable Value and Investment Grade portfolios. The firm further expanded its ETF franchise, which contributed to record AUM levels for its ETF portfolio. Additionally, the firm continued to anticipate client demand by expanding its global investment strategies through the introduction of new multi-asset capabilities and liquid alternative products that we believe will benefit clients and our business over the long term.
|
| • | | Harness the power of our global platform — Mr. Flanagan oversaw the company’s efforts to launch a number of new capabilities globally that support the future growth of the firm. The company launched more funds during the fourth quarter of 2013 than it did in any full calendar year over the past five years. |
| • | | Perpetuate a high-performance organization — Mr. Flanagan successfully managed changes within the organization to drive increased collaboration across regions and more effectively leverage our investment capabilities globally. As part of efforts to further enhance employee engagement, he oversaw efforts to significantly reinvest in talent through additional focus on performance leadership and succession planning. Invesco’s employee engagement scores continued to exceed benchmarks set by high-performing companies worldwide, as reflected in data from a third-party administered employee survey. |
Invesco generally is near the median of our peer group in terms of market capitalization and annual revenues. Our CEO’s total compensation earned in 2012 was at approximately the 60th percentile of 2012 CEO total disclosed compensation of our industry peer companies (the latest year for which data was available). When comparing performance on a variety of financial measures, Invesco generally ranges between the 50th and 70th percentiles. Further, our CEO’s total compensation is strongly aligned with shareholders, with approximately 69% of his total incentive compensation deferred into Invesco stock. Therefore, the committee believes that our Chief Executive Officer’s total compensation is well aligned with performance and our shareholder’s interests.
For 2013, the Committee determined that Mr. Flanagan should see an increase to total compensation of 20% in recognition of the strong 2013 operating results and Mr. Flanagan’s leadership in continuing to achieve the strategic objectives of the company. The changes to each component of Mr. Flanagan’s compensation are detailed in the table below.
| | | | | | | | | 2013 Total Compensation* | | Change from Prior Year | | | $ 15,000,000 | | +20% | | Base Salary | | 2013 Annual Cash Bonus | | 2013 Annual Stock Deferral Award | | 2013 Long-Term Equity Award | | $ 790,000 | | $ 4,475,000 | | $ 1,845,000 | | $ 7,890,000 | | Year-Over-Year Change from 2012 (%) | | 0% | | +33% | | +23% | | +15% | | *Consists of salary, annual cash bonus, annual stock deferral award and long- term equity award (30% of which is performance based) earned in 2013. See note on p. 33 regarding differences from the SCT. | | |
Loren M. Starr — Senior Managing Director and Chief Financial Officer
Mr. Starr has been our Chief Financial Officer since October 2005. His achievements in 2013 include:
| • | | Generated expense savings and improved margins — Mr. Starr oversaw efforts to expand the company’s operating margin through the course of 2013 by implementing cost saving programs to more effectively deploy existing resources and by allocating capital to high growth areas. |
| • | | Supported the continued investment in the business for future growth —Mr. Starr supported the continued growth of the business by leading the company in financing several important new product launches, with more than $250 million in seed capital. Mr. Starr also led the efforts to improve the firm’s liquidity in part through the issuance of $1 billion of long-term senior debt at favorable rates of interest and paying down the outstanding credit facility debt. |
| • | | Oversaw financial aspects of acquisitions and divestitures —Mr. Starr led the finance team in supporting the acquisition of an interest in Religare Asset Management, one of the top 15 asset managers in the growing India market, as well as the divestiture of Atlantic Trust, a private wealth unit which was not core to the firm’s asset management business. |
| • | | Improved leadership, people development and training —Mr. Starr continued to devote significant attention to people development in 2013 within the groups he manages, resulting in continued improvement in employees’ development, training and leadership skills. Employee survey results related to coordination, teamwork and empowerment exceeded high-performing company norms. |
| • | | Focused on core financial systems —Mr. Starr initiated the upgrade of the company’s general accounting and financial systems to significantly improve the efficiency and effectiveness of our global financial processes. |
| | | | | | | | | 2013 Total Compensation* | | Change from Prior Year | | | $ 3,730,000 | | +9% | | Base Salary | | 2013 Annual Cash Bonus | | 2013 Annual Stock Deferral Award | | 2013 Long-Term Equity Award | | $ 450,000 | | $ 1,030,000 | | $ 450,000 | | $ 1,800,000 | | Year-Over-Year Change from 2012 (%) | | 0% | | +20% | | +22% | | +3% | | *Consists of salary, annual cash bonus, annual stock deferral award and long- term equity award (30% of which is performance based) earned in 2013. See note on p. 33 regarding differences from the SCT. | | |
G. Mark Armour — Senior Managing Director and Head of EMEA
In early 2013, Mr. Armour assumed responsibility for Invesco’s EMEA business (which includes Europe, Middle East and Africa). His accomplishments in 2013 include:
| • | | Achieved strong investment performance —Mr. Armour further enhanced the robust investment culture in EMEA, which helped deliver strong investment performance to clients. As an example, the Invesco Perpetual investment team continued to build on its excellent long-term performance record. He oversaw the recruitment of additional investment talent, the establishment of a multi-asset team in the UK, and numerous fund launches, including the Global Targeted Returns fund in the UK market, which saw inflows of over $250 million in the first three months. Mr. Armour led the transition for the planned departure of a key investment professional announced in late 2013, while maintaining strong flows in the UK and across Europe. |
| • | | Improved governance processes in light of changes in European regulations —Mr. Armour oversaw efforts to position the firm ahead of changes in the regulatory environment within the UK and Europe, in part by increasing the frequency of Invesco governing body meetings and creating greater acceptance of the role of control functions across the organization. |
| • | | Revised the strategy for sales across continental Europe —Mr. Armour led the effort to further enhance our ability to serve clients across Europe. As a result, AUM for EMEA increased $34.6 billion to $171.9 billion, improved gross sales of $49.4 billion, and net sales of $8.6 billion, all significantly ahead of the prior year. |
As discussed in last year’s Proxy Statement, Mr. Armour’s compensation in 2012 was reduced due to a narrowing of the scope of his responsibilities for that year associated with the transition of an investment center to another executive officer, Karen Dunn Kelley, and the consolidation of North America retail and institutional sales under Philip Taylor. Mr. Armour’s total compensation was therefore reduced from $4.7M in 2011 to $3.6M in 2012. Upon assuming the role as the head of Invesco’s EMEA business in early 2013, the scope of Mr. Armour’s responsibilities were greatly expanded. The committee determined that the scope of his role in 2013 warranted an increase in compensation to levels at least as high as 2011 compensation. In addition, the committee agreed to recognize his leadership of the EMEA region in 2013, including the achievements described above.
| | | | | | | | | 2013 Total Compensation* | | Change from Prior Year** | | | $ 5,034,807 | | +38% | | Base Salary | | 2013 Annual Cash Bonus | | 2013 Annual Stock Deferral Award | | 2013 Long-Term Equity Award | | $ 469,790 | | $ 1,525,017 | | $ 690,000 | | $ 2,350,000 | | Year-Over-Year Change from 2012 (%) | | 7% | | +74% | | +20% | | +34% | | *Consists of salary, annual cash bonus, annual stock deferral award and long- term equity award (30% of which is performance based) earned in 2013. See note on p. 33 regarding differences from the SCT. **Changes in components involving cash compensation include the effect of foreign exchange rate differences. | | |
Andrew T.S. Lo — Senior Managing Director and Head of Asia Pacific
Mr. Lo has been head of the firm’s Asia Pacific business since 2001. His accomplishments in 2013 include:
| • | | Achieved strong investment performance and brought the best of Invesco to clients —Mr. Lo oversaw the improvement of relative performance of Asia Pacific managed assets, for the one-, three-, and five-year periods. Investment performance in Invesco’s Greater China business and its joint venture in China (Invesco Great Wall) was particularly strong, contributing to a robust growth in AUM. Invesco Great Wall maintained its leadership position and finished the year as the largest active manager overall in Chinese equities among the country’s approximately 90 fund management companies. The joint venture was awarded the “Most Respected Fund Management Company” for 2013 byMoneyweek. Mr. Lo also oversaw the successful launch of new ETFs in Greater China. |
| • | | Successfully integrated investment team in India — Mr. Lo led the acquisition of an interest in Religare Asset Management, expanding Invesco’s capabilities into the growing India market. |
| • | | Strengthened sales and marketing in Japan, Australia and Korea —Mr. Lo further enhanced the organizational structure in Japan to place greater emphasis on client engagement, marketing and product management. These efforts, combined with the improving investment performance, helped drive strong gains in retail sales for the business. Mr. Lo hired a new head of the Australian team and combined the market’s retail and institutional sales teams under unified leadership, which then achieved an increase in institutional sales with new and existing clients. Mr. Lo oversaw the implementation of a new sales office in Seoul, South Korea to begin serving this rapidly growing asset management market in 2014. |
| | | | | | | | | 2013 Total Compensation* | | Change from Prior Year** | | | $ 4,417,372 | | +20% | | Base Salary | | 2013 Annual Cash Bonus | | 2013 Annual Stock Deferral Award | | 2013 Long-Term Equity Award | | $ 462,389 | | $ 1,324,983 | | $ 530,000 | | $ 2,100,000 | | Year-Over-Year Change from 2012 (%) | | 0% | | +29% | | +20% | | +20% | | *Consists of salary, annual cash bonus, annual stock deferral award and long-term equity award (30% of which is performance based) earned in 2013. See note on p. 33 regarding differences from the SCT. **Changes in components involving cash compensation include the effect of foreign exchange rate differences. | |
Philip Taylor — Senior Managing Director and Head of the Americas
Mr. Taylor has been head of the firm’s Americas business since 2012. His achievements in 2013 include:
| • | | Increased overall sales and distribution effectiveness — Mr. Taylor increased overall retail and institutional distribution effectiveness in the U.S., Invesco’s largest market, by further strengthening the sales culture and leadership, including improved objective setting and monitoring, enhanced talent management, and increased collaboration with marketing, product management, product development and investments. This effort, coupled with the strong investment performance of the U.S.-based investment teams, led to an increase in net flows of 18% over the prior year. Independent research showed continued high levels of Invesco brand awareness. Additionally, Mr. Taylor’s leadership resulted in employee survey scores that showed further improved engagement across the sales organization, including customer service orientation and leadership metrics. |
| • | | Brought the best of Invesco to our clients around the world — Mr. Taylor directed continued growth of Invesco’s ETF franchise to record high asset levels. In the U.S., share of net flows increased to 7% of industry flows, a share that is higher than share of assets. Mr. Taylor also oversaw the expansion of Invesco PowerShares ETFs in Canada and Greater China. |
| • | | Built on positive momentum in Canada — Mr. Taylor directed efforts to further strengthen the effectiveness of Canada’s investment leadership, culture and reputation in the Canadian marketplace. As a result, investment performance improved versus peers, net sales increased and Invesco Canada was nominated as Morningstar Advisors’ Choice Fund Company of the Year. |
| | | | | | | | | 2013 Total Compensation* | | Change from Prior Year** | | | $ 7,425,174 | | +9% | | Base Salary | | 2013 Annual Cash Bonus | | 2013 Annual Stock Deferral Award | | 2013 Long-Term Equity Award | | $ 616,453 | | $ 2,463,721 | | $ 1,045,000 | | $ 3,300,000 | | Year-Over-Year Change from 2012 (%) | | -3% | | +17% | | +20% | | +3% | | *Consists of salary, annual cash bonus, annual stock deferral award and long-term equity award (30% of which is performance based) earned in 2013. See note on p. 33 regarding differences from the SCT. **Changes in components involving cash compensation include the effect of foreign exchange rate differences. | |
Other Compensation Policies and Practices
Share Ownership Guidelines
| | | | | | | | | Our chief executive officer’s 2014 compensation | | | Mr. Flanagan has been our President and Chief Executive Officer since August 2005. Mr. Flanagan’s performance is measured against the company’s achievements of its strategic imperatives and annual operating results. During 2014, Mr. Flanagan led the company’s efforts to deliver better outcomes and service to clients and oversaw significant achievements related to our key strategic imperatives. The efforts further strengthened the company’s financial position and enhanced our operating results. His achievements in 2014 include the following items. | Achieve strong financial performance | | Annual Adjusted Operating Income1 (y-o-y) | | | | Annual Adjusted Operating Margin1 | | Annual Adjusted Diluted EPS1 (y-o-y) | | Return of Capital to Shareholders2 | | | 15.7% | | | | 41.4% | | 17.8% | | $694 Million | | | 1 See important note regarding non-GAAP financial measures on page 24. | | | 2 Return of capital to shareholders is calculated as dividends declared per share plus repurchases during the year ended December 31, 2014. | Achieve strong investment performance for the benefit of clients | | | | | – Delivered strong investment performance across our global franchise. Percent of actively managed ranked assets above benchmark over one, three and five years (as of Dec. 31, 2014) shown above. (See Appendix A for important disclosures regarding AUM ranking) | Be instrumental to our clients’ success | | – Further expanded client access to our Invesco PowerShares offerings, with new ETFs launched in Canada and China | | | – Expanded availability of our multi-asset capability, Global Targeted Return, which achieved strong flows in its initial year of offering | | | – Further enhanced our range of robust fixed income capabilities, anchored by an expanded global fixed income center and key hires | Harness the power of our global platform | | – Defined and began executing a strategy that will enhance our ability to market, distribute and grow key capabilities globally to meet client needs | | | – Significantly increased our investment in technology to support our global platform | | | – Further evolved our global trading platform to enhance our ability to deliver the best execution to clients | Perpetuate a high- performance organization | | – Improved employee engagement across the firm. Our employee engagement exceeds the “high-performing company” and “global financial services company” norms – relevant benchmarking provided by our employee survey provider, Towers Watson | | | – Invesco named a “Best Places to Work in Money Management” by Pensions and Investments magazine for the third year in a row | | | – Continued to broaden the use of our enterprise support centers to operate more effectively and efficiently across our global business | | | For 2014, the Committee determined that Mr. Flanagan should see an increase in total compensation of 6.7% in recognition of the company’s strong 2014 operating results and Mr. Flanagan’s leadership of the company’s progress against its strategic imperatives. The changes to each component of Mr. Flanagan’s compensation are detailed in the table below. |
| | | | | | | | | | | | | | | | | | | | | | | CEO Compensation | | | | | 2014 Total Compensation1 | | | Change from Prior Year | | | | | | | | | | $16,000,000 | | | | | | | | +6.7% | | | | | Base Salary | | | Annual Cash Bonus | | | Annual Stock Deferral Award | | | Long-Term Equity Award | | | 2014 | | | $790,000 | | | | $4,925,000 | | | | $2,030,000 | | | | $8,255,000 | | | y-o-y % | | | 0% | | | | +10.1% | | | | +10.0% | | | | +4.6% | | | Change | | | | | | | | | | | | | | | | | | 1 Consists of salary, annual cash bonus, annual stock deferral award and long-term equity award (50% of which is performance based) earned in 2014. See note on page 37 regarding differences from the SCT. |
| | | | | Our chief executive officer’s average total compensation ranks at approximately the 67th percentile of our peer group for the 3-year period between 2011-2013 (the latest year for which public data was available). By comparison, our financial performance on key financial measures relative to our peer group ranged from approximately the 80th-87th percentile. Invesco is generally near the median of our peer group market capitalization and annual revenues. Based upon the foregoing, our chief executive officer’s average total compensation ranks lower than our peer group when compared to our rank in performance on key financial measures against our peers. For more information regarding our chief executive officer’s compensation compared to our peer group, seeOur Compensation Decision-Making Process and Outcomes Within a Multi-Year Context — CEO pay and company financial performance versus peers above. Further, our chief executive officer’s total compensation is strongly aligned with shareholders, with approximately 68% of his total incentive compensation deferred. Therefore, the committee believes that our chief executive officer’s total compensation is well aligned with performance and our shareholders’ interests. | | | Our other named executive officer’s 2014 compensation | | | The following information provides highlights of specific individual accomplishments and responsibilities considered in the pay determinations for the other NEOs. When approving pay decisions for the other NEOs, the committee also considered the company’s achievements of its strategic imperatives and annual operating results. | Loren M. Starr Senior Managing Director and Chief Financial Officer | | Mr. Starr has been our Chief Financial Officer since he joined Invesco in October 2005. His achievements in 2014 include: | | – During 2014, Mr. Starr continued to oversee efforts to increase Invesco’s long-term financial strength, and conducted a detailed review of Invesco’s capital priorities and excess cash requirements. In line with this goal, Invesco’s credit rating was upgraded to A/stable and A2/stable from A-/positive and A3/stable by S&P and Moody’s, respectively. | | | – As part of the company’s objective to take a disciplined approach to its business, Mr. Starr supported the effective creation and execution of Invesco’s 2014 financial plan, which resulted in year-over-year margin expansion and earnings growth. Mr. Starr directly contributed to these results in his oversight role of procurement and sourcing (achieving approximately $10 million in savings) and of facilities (achieving space efficiencies to offset escalating rents while building out the company’s capacity in its lower cost operational enterprise centers). | | | – Mr. Starr led the effort to upgrade and re-implement the company’s financial system in 2014, including standardizing financial processes globally. This project, as part of a broader transformation plan, delivered improved efficiencies and effectiveness in the finance and corporate services areas and will provide ongoing enhanced support and decision analytics to the business. | G. Mark Armour Senior Managing Director and Head of EMEA | | Mr. Armour joined Invesco in 2002 and has been head of Invesco’s EMEA business (which includes Europe, Middle East and Africa) since 2013. His accomplishments in 2014 include: | | – By delivering strong, long-term investment performance and focusing on client needs, Mr. Armour led the continued growth of our EMEA business in several areas, including cross-border retail, European equities, fixed income and institutional. | | | – Under Mr. Armour’s leadership, our EMEA business continued to grow and become more diversified, with significant flows into fixed income, non-U.K. equities, real estate and multi-asset capabilities. | | | – Mr. Armour oversaw the transition of our U.K. equity team. The team built on their strong client relationships and continued to deliver strong, long-term investment performance, contributing to a record year of gross sales for our U.K. retail business. | Andrew T.S. Lo | | Mr. Lo joined Invesco in 1994 and has been head of the firm’s Asia Pacific business since 2001. | Senior Managing Director and Head of Asia Pacific | | His accomplishments in 2014 include: | | – Mr. Lo continued to enhance and strengthen our Asia Pacific regional investment capabilities and made several key hires that will support our efforts to deliver strong, long-term investment performance to our clients. | | | – Under Mr. Lo’s leadership, our Asia Pacific business continued to grow in China, Japan and the rest of the region in both domestic managed assets and global products for traditional and alternative investment capabilities. The region saw strong inflows into our Japanese, Greater China, Asian and European equities, as well as real estate strategies. | | | – In China, our joint venture maintained its leadership position in active Chinese equities AUM among all 46 joint venture companies, and ranked second in active Chinese equities AUM among all 95 fund management companies in China. |
| | | | | | | | | | | Philip A. Taylor Senior Managing Director and Head of the Americas | | Mr. Taylor joined Invesco in 1999 and has been head of the firm’s Americas business since 2012. His achievements in 2014 include: – Under Mr. Taylor’s leadership, Invesco continued to deliver strong, long-term investment performance to our retail and institutional clients in the U.S. Solid net flows were produced across exchange-traded funds, unit investment trusts, separately managed accounts and our sub-advised businesses. We continued to build advocacy from influential consultants and engagement with top tier clients in the institutional market. | | | – Mr. Taylor oversaw further expansion of Invesco PowerShares’ presence both inside and outside the U.S. with the introduction of innovative products serving client needs. Invesco introduced a suite of liquid alternatives capabilities in the U.S. Strong investment performance and client engagement for these capabilities are helping the company gain awareness with key distributors. | | | – Our Canadian business gained momentum in the important full-service brokerage channel. Additionally, Invesco’s direct real estate capability fueled asset growth in the defined benefit segment. | | | The committee’s decisions for each NEO for 2014 are reflected in the table below. Overall, 2014 compensation was higher than 2013 compensation as a result of Invesco’s overall financial results and performance against strategic imperatives and each executive officer’s individual contributions discussed above. For each NEO, base salary is unchanged from 2013. Reported changes to base salary for Messrs. Armour, Lo and Taylor are due to foreign exchange rate differences. |
| | | | | | | | | | | | | | | | | | | | | | | NEO Compensation for 2014 | | | | | Loren M. Starr | | | G. Mark Armour | | | Andrew T. S. Lo | | | Philip Taylor | | | Base Salary ($) | | | 450,000 | | | | 493,585 | | | | 462,421 | | | | 576,339 | | | Annual Cash Bonus ($) | | | 1,135,000 | | | | 1,800,000 | | | | 1,475,000 | | | | 2,710,093 | | | Annual Stock Deferral Award ($) | | | 495,000 | | | | 810,000 | | | | 583,000 | | | | 1,149,500 | | | Long-Term Equity Award ($) | | | 1,920,000 | | | | 2,950,000 | | | | 2,200,000 | | | | 3,560,000 | | | Total Compensation ($) | | | 4,000,000 | | | | 6,053,585 | | | | 4,720,421 | | | | 7,995,932 | | | y-o-y % Change (%) | | | +7.2% | | | | +20.2 | | | | +6.9 | | | | +7.7 | | | See note on page 37 regarding differences from the SCT. |
| | | | | Other Compensation Policies and Practices | | | Stock ownership policy All equity awards made to our executive officers are subject to our Executive Officer Stock Ownership Policy.The policy requires executive officers to achieve a certain ownership level within three years. Until such level is achieved, each executive officer is required tomust retain 100% of the shares received from our share incentive plans.the company. All of our executive officers have achievedexceeded their respective ownership level requirements. |
| | | | | Stock Ownership Policy | | | | Stock Ownership Policy – Ownership level required
| | | Chief Executive Officer | | 250,000 shares | | | All other executive officers | | 100,000 shares | | | | Levels Required | | | | Shares (#) | | Chief executive officer | | | 250,000 | | All other executive officers | | | 100,000 | | Stock ownership level requirements have been achieved by each of our executive officers. | |
| | | | | Our executive officers’ performance-based long-term equity awards are subject to a “clawback” policy. | | Clawback policy All equity awards of our executive officers that are subject to achievement of target financial results are also subject to forfeiture or “clawback” provisions. The provisions provide that any shares received (whether vested or unvested), any dividends or other earnings thereon, and the proceeds from any sale of such shares, are subject to recovery by the company in the event that: | | | | | | n | | the company issues a restatement of financial results to correct a material error; | | | | | | n | | the committee determines, in good faith, that fraud or willful misconduct on the part of the employee was a significant contributing factor to the need to issue such restatement; and | | | | | | n | | some or all of the shares granted or received prior to such restatement would not have been granted or received, as determined by the committee in its sole discretion, based upon the restated financial results. | The company provides standard benefits and limited perquisites to executive officers. | | Benefits and perquisites | | As a general practice, the company provides no material benefits and limited perquisites to executive officers that it does not provide to other employees. All executive officers are entitled to receive medical, life and disability insurance coverage and other corporate benefits available to most of the company’s employees. Executive officers are also eligible to participate in the Employee Stock Purchase Plan on terms similar to the company’s other employees. In addition, all of the executive officers may participate in the 401(k) Plan or similar plans in the executive officer’s home country. | | | The company provides certain limited perquisites to its executive officers which it believes aid the executives in their execution of company business. The committee believes the value of perquisites and other benefits are reasonable in amount and consistent with its overall compensation plan. Personal use of leased aircraft may be provided to enable named executive officers to devote additional and efficient time to company business when traveling. For additional information on perquisites and other benefits, see theSummary Compensation Table below. | | | | | Award maximums for named executive officers | | | In determining compensation for the named executive officers, the committee considers the potential impact of Section 162(m) of the Internal Revenue Code. Section 162(m) generally disallows a tax deduction to public corporations for compensation greater than $1 million paid per fiscal year to each of the corporation’s “covered employees” (generally, the Chief Executive Officer and the next three most highly compensated executive officers as of the end of any fiscal year). However, compensation which qualifies as “performance-based” is |
Clawback Policy
Our executive officers’ long-term equity awards subject to achievement of target financial results are also subject to a “clawback” policy. All equity awards that are subject to achievement of target financial results in respect of our executive officers, including our named executive officers, are also subject to forfeiture or “clawback” provisions. The provisions provide that any shares received (whether vested or unvested), any dividends or other earnings thereon, 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, in good faith, that fraud or willful misconduct on the part of the employee was a significant contributing factor to the need to issue such restatement; and
some or all of the shares granted or received prior to such restatement would not have been granted or received, as determined by the committee in its sole discretion, based upon the restated financial results.
Benefits and Perquisites
As a general practice, the company provides no material benefits and limited perquisites to executive officers that it does not provide to other employees. All executive officers are entitled to receive medical, life and disability insurance coverage and other corporate benefits available to most of the company’s employees. Executive officers are also eligible to participate in the Employee Stock Purchase Plan on similar terms to the company’s other employees. In addition, all of the executive officers may participate in the 401(k) Plan or similar plans in the executive officer’s home country.
The company provides certain limited perquisites to its executive officers which it believes aid the executives in their execution of company business. For example, personal use of company aircraft may be provided to enable named executive officers to devote additional and efficient time to company business when traveling. The committee believes the value of perquisites and other benefits are reasonable in amount and consistent with its overall compensation plan. For additional information on perquisites and other benefits, see the “Summary Compensation Table” in this Proxy Statement.
Award Maximums for Named Executive Officers
In determining compensation for the named executive officers, the committee considers the potential impact of Section 162(m) of the Internal Revenue Code. Section 162(m) generally disallows a tax deduction to public corporations for compensation greater than $1 million paid per fiscal year to each of the corporation’s “covered employees” (generally, the Chief Executive Officer and the next three most highly compensated executive officers as of the end of any fiscal year). However, compensation which
qualifies as “performance-based” is excluded from the $1 million per executive officer limit if, among other requirements, the compensation is payable only upon attainment of pre-established, objective performance goals under a plan approved by the company’s shareholders.
As part of our compensation program for executive officers, the company maintains the Executive Incentive Bonus Plan (“Bonus Plan”). The Bonus Plan provides for annual performance-based awards to eligible employees. For each executive officer, the committee determines on an annual basis an award maximum under the Bonus Plan. Award maximums are expressed as a percentage of PCBOI –- an objectively determined performance criteria that is intended to qualify for the performance-based exemption to the $1 million deduction limit under Section 162(m). Award maximums pertain to the cumulative value of an executive officer’s annual variable compensation –- consisting of the annual cash bonus, annual stock deferral award and long-term equity award. In the event the committee determines to grant additional compensation that is not performance-based compensation to an executive officer subject to the provisions of Section 162(m), the additional compensation will be subject to the $1 million deduction limitation. In February 2013,2014, the committee established three levels of award maximums in respect of our named executive officers –- one each for the Chief Executive Officer, Senior Managing Directors of business components, and Senior Managing Directors of staff functions. The three levels of award maximums were established after consideration of: n | | prior-year compensation levels in light of the company’s 2013 PCBOI; |
n | | projected maximum award levels based on the company’s estimated 2014 PCBOI; |
n | | market data for industry comparative compensation levels; and |
n | | comparisons for job roles and levels of responsibility. |
Employment agreements, post-employment compensation levels in light of the company’s 2012 PCBOI; projected maximum award levels based on the company’s estimated 2013 PCBOI;
market data for industry comparative compensation levels; and
comparisons for job roles and levels of responsibility. change-in- control arrangementsEmployment Agreements, Post-employment Compensation and Change-in-Control Arrangements Employment Agreementsagreements
Chief Executive Officerexecutive officer —– Our Chief Executive Officer has an employment agreement with the company that was amended and restated as of January 1, 2011. Under the second amended and restated employment agreement, Mr. Flanagan continues to be 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 $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 otherU.S.-based senior executives of the company;
post-employment compensation of one times the sum of base, bonus and share awards, subject to certain agreed minimums described below; and
n | | an annual base salary of $790,000; |
n | • | the opportunity to receive an annual cash bonus award based on the achievement of performance criteria; |
n | | the opportunity to receive share awards based on the achievement of performance criteria; |
n | | 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; |
n | | post-employment compensation of one times the sum of base, bonus and share awards, subject to certain agreed minimums described below; and |
n | | certain stipulations regarding termination of employment that are described in“Potential Payments Upon Terminationpayments upon termination or Changechange in Controlcontrol for 2013”2014 below. |
Post-employment Compensationcompensation Chief Executive Officerexecutive officer —– Pursuant to Mr. Flanagan’s amended and restated employment agreement, in the event of his termination without “cause” or resignation for “good reason” he is entitled to receive the following payments and benefits (provided that he has not breached certain restrictive covenants): his then-effective base salary through the date of termination;
n | | 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;
n | | a prorated portion of the greater of $4,750,000 or his most recent annual cash bonus; |
immediate vesting and exercisability of all outstanding share-based awards;
n | | immediate vesting and exercisability of all outstanding share-based awards; |
any compensation previously deferred under a deferred compensation plan (unless a later payout date is stipulated in his deferral arrangements);
n | | any compensation previously deferred under a deferred compensation plan (unless a later payout date is stipulated in his deferral arrangements); |
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) his most recently made annual equity grant (unless the value thereof is less than 50% of the previously-made grant, in which case the value of the previously-made grant will be used);
n | | 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) his most recently made 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.
n | | continuation of medical benefits for him, his spouse and his covered dependents for a period of up to 36 months following termination; |
n | | any accrued vacation; and |
n | | any other vested amounts or benefits under any other plan or program. |
Other Named Executive Officersnamed executive officers —– Our other named executive officers are parties to employment arrangements that create salary continuation periods of six or twelve months in the event of involuntary termination of service without cause.(See “Potential Payments Upon Terminationcause. (SeePotential payments upon termination or Changechange in Controlcontrol for 2013”2014below.) Change-In-Control ArrangementsChange-in-control arrangements
Generally, all participants who hold equity awards, including our named executive officers, 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 by voluntary termination for “good reason.” Chief executive officer total compensation cap In respect to 2015, our committee determined to cap our chief executive officer’s total compensation at $25 million, with actual pay expected to be below that level. The compensation subject to the 2015 compensation cap consists of 2015 base salary and annual cash bonus, annual stock deferral award and long-term equity award earned in 2015 and granted in 2016. The committee believes this enhancement supports best practices and is consistent with market practice.
Compensation Committee Reportreport The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Based on this review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2013.2014. Respectfully submitted by the Compensation Committee: Sir John Banham (Chairman)
Rex D. Adams
C. Robert Henrikson (Chairperson) Ben F. Johnson III Denis Kessler Edward P. Lawrence G. Richard Wagoner, Jr. Phoebe A. Wood
Summary Compensation Tablecompensation table for 20132014 The following table sets forth information about compensation earned by our named executive officers during 2011, 2012, 2013 and 20132014 in accordance with SEC rules. The information presented below may be different from compensation information presented in this Proxy Statement under the caption “Compensation DiscussionExecutive compensation – Compensation discussion and Analysis,”analysis, as such section describes compensation decisions made in respect of the indicated fiscal year, regardless of when such compensation was actually paid or granted. For an explanation of the principal differences between the presentation in theCompensation Discussiondiscussion and Analysis analysisand the table below, please see the note on page 33.37. | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary ($) (1) | | Share Awards ($) (2) | | Non-Equity Incentive Plan Compensation ($) (3) | | All Other Compensation ($) (4) | | Total ($) | Martin L. Flanagan | | 2013 | | 790,000 | | 8,349,960 | | 4,475,000 | | 766,802 | | 14,381,762 | President and Chief Executive Officer | | 2012 | | 790,000 | | 8,349,969 | | 3,375,000 | | 728,966 | | 13,243,935 | | | 2011 | | 790,000 | | 8,349,978 | | 3,750,000 | | 530,480 | | 13,420,458 | Loren M. Starr | | 2013 | | 450,000 | | 2,118,525 | | 1,030,000 | | 177,329 | | 3,775,854 | Senior Managing Director and | | 2012 | | 450,000 | | 2,154,972 | | 859,950 | | 149,516 | | 3,614,438 | Chief Financial Officer | | 2011 | | 450,000 | | 2,154,984 | | 945,000 | | 117,622 | | 3,667,606 | G. Mark Armour | | 2013 | | 469,790 | | 2,324,969 | | 1,525,017 | | 346,359 | | 4,666,135 | Senior Managing Director and | | 2012 | | 440,969 | | 2,849,983 | | 874,691 | | 223,981 | | 4,389,624 | Head of EMEA | | 2011 | | 443,670 | | 3,099,993 | | 1,350,000 | | 238,918 | | 5,132,581 | Andrew T.S. Lo (5) | | 2013 | | 462,389 | | 2,191,742 | | 1,324,983 | | 219,311 | | 4,198,425 | Senior Managing Director and | | 2012 | | — | | — | | — | | — | | — | Head of Invesco Asia Pacific | | 2011 | | — | | — | | — | | — | | — | Philip A. Taylor | | 2013 | | 616,453 | | 4,069,962 | | 2,463,721 | | 307,706 | | 7,457,842 | Senior Managing Director and | | 2012 | | 638,434 | | 4,069,953 | | 2,105,860 | | 311,576 | | 7,125,823 | Head of Americas | | 2011 | | 647,365 | | 4,069,964 | | 2,135,409 | | 257,391 | | 7,110,129 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($)1 | | | Share Awards ($)2 | | | Non-Equity Incentive Plan Compensation ($)3 | | | All Other Compensation ($)4,5 | | | Total ($)5 | | Martin L. Flanagan | | | 2014 | | | | 790,000 | | | | 9,734,957 | | | | 4,925,000 | | | | 172,045 | | | | 15,622,002 | | President and Chief | | | 2013 | | | | 790,000 | | | | 8,349,960 | | | | 4,475,000 | | | | 181,514 | | | | 13,796,474 | | Executive Officer | | | 2012 | | | | 790,000 | | | | 8,349,969 | | | | 3,375,000 | | | | 257,203 | | | | 12,772,172 | | Loren M. Starr | | | 2014 | | | | 450,000 | | | | 2,249,976 | | | | 1,135,000 | | | | 27,030 | | | | 3,862,006 | | Senior Managing Director | | | 2013 | | | | 450,000 | | | | 2,118,525 | | | | 1,030,000 | | | | 26,448 | | | | 3,624,973 | | and Chief Financial Officer | | | 2012 | | | | 450,000 | | | | 2,154,972 | | | | 859,950 | | | | 25,716 | | | | 3,490,638 | | G. Mark Armour | | | 2014 | | | | 493,585 | | | | 3,039,939 | | | | 1,800,000 | | | | 90,808 | | | | 5,424,332 | | Senior Managing Director | | | 2013 | | | | 469,790 | | | | 2,324,969 | | | | 1,525,017 | | | | 133,825 | | | | 4,453,601 | | and Head of EMEA | | | 2012 | | | | 440,969 | | | | 2,849,983 | | | | 874,691 | | | | 19,524 | | | | 4,185,167 | | Andrew T.S. Lo5 | | | 2014 | | | | 462,421 | | | | 2,629,986 | | | | 1,475,000 | | | | 66,327 | | | | 4,633,734 | | Senior Managing Director | | | 2013 | | | | 462,389 | | | | 2,191,742 | | | | 1,324,983 | | | | 60,027 | | | | 4,039,141 | | and Head of Invesco Asia Pacific | | | 2012 | | | | – | | | | – | | | | – | | | | – | | | | – | | Philip A. Taylor | | | 2014 | | | | 576,339 | | | | 4,344,951 | | | | 2,710,093 | | | | 25,718 | | | | 7,657,101 | | Senior Managing Director | | | 2013 | | | | 616,453 | | | | 4,069,962 | | | | 2,463,721 | | | | 22,377 | | | | 7,172,513 | | and Head of Americas | | | 2012 | | | | 638,434 | | | | 4,069,953 | | | | 2,105,860 | | | | 73,487 | | | | 6,887,734 | |
(1)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 plan in the named executive officer’s country. For each of the named executive officers, salary is unchanged from 2013. For Messrs. Armour, Lo and Taylor, base salary is converted to U.S. dollars using an average annual exchange rate. |
(2)2 | For share awards granted in 2013,2014, includes time-based and performance-based equity awards that generally vest in four equal annual installments on each anniversary of the date of grant. The value of performance-based awards is based on the grant date value and reflects the probable outcome of such conditions and represents the highest level of achievement. See, “Grants of Plan-Based Share Awardsplan-based share awards for 2013”2014 below for information about the number of shares underlying each of the time-based and performance-based 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 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 11 – “Share-Based Compensation” to the financial statements in our 2014 Annual Report form 10-K. | Grant date fair values were calculated in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 718 “Compensation — Stock Compensation.” The grant date fair value was calculated by multiplying the 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 11 — “Share-Based Compensation” to the financial statements in our Annual Report. |
(3)3 | Reflects annual cash bonus award earned for fiscal year by the named executive officers under the Executive Incentive Bonus Plan and paid in February of the following year. For 2013, for Messrs. Armour, Lo and Taylor,Mr. Armour’s 2014 annual cash bonus awards areaward is converted to U.S. dollars using an average annual exchange rate. |
(4)4 | The following table reflects the items that are included in the All Other Compensation column for 2013.2014. For 2014, excludes dividends paid on unvested stock awards, as those amounts are factored into grant date fair value. |
(5)5 | All Other Compensation excludes dividends paid on unvested stock awards, as share award values represent the aggregate grant date fair value for all grants made during each fiscal year in accordance with the requirements of ASC 718. All Other Compensation has been restated to exclude dividends paid on unvested stock awards as follows for 2013 and 2012, respectively: Flanagan ($585,288, $471,763), Starr ($150,881, $123,800), Armour ($212,534, $204,457), Lo ($159,284, n/a), and Taylor ($285,329, $238,089). For 2013 and 2012, Total compensation also has been adjusted to reflect the removal of dividends paid on unvested stock awards. |
6 | Mr. Lo was not an NEO in 2012 or 2011.2012. |
All Other Compensation Table for 2013
| | | | | | | | | | | | | Name | | Dividends Paid on Unvested Stock Awards ($) (1) | | Insurance Premiums ($) | | Company Contributions to Retirement and 401(k) Plans ($) (2) | | Tax Consultation ($) (3) | | Perquisites ($) (4) | | Total All Other Compensation ($) | Martin L. Flanagan | | 585,288 | | 4,680 | | 22,050 | | — | | 154,784 | | 766,802 | Loren M. Starr | | 150,881 | | 4,398 | | 22,050 | | — | | — | | 177,329 | G. Mark Armour | | 212,534 | | 2,043 | | 21,580 | | 110,202 | | — | | 346,359 | Andrew T.S. Lo | | 159,284 | | 6,604 | | 53,423 | | — | | — | | 219,311 | Philip A. Taylor | | 285,329 | | 2,003 | | 13,043 | | 7,331 | | — | | 307,706 |
(1) | Includes dividends and dividend equivalents paid at the same rate as on our other shares on (i) unvested time-based awards, and (ii) performance-based awards to the extent that the award vested.45 |
All other compensation table for 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Insurance Premiums ($) | | | Company Contributions to Retirement and 401(k) Plans ($)1 | | | Tax Consultation ($) | | | Perquisites ($)2 | | | Total All Other Compensation ($) | | Martin L. Flanagan | | | 5,166 | | | | 22,350 | | | | – | | | | 144,529 | | | | 172,045 | | Loren M. Starr | | | 4,680 | | | | 22,350 | | | | – | | | | – | | | | 27,030 | | G. Mark Armour | | | 3,210 | | | | 8,951 | | | | 37,090 | | | | 41,557 | | | | 90,808 | | Andrew T.S. Lo | | | 6,985 | | | | 53,428 | | | | 5,915 | | | | – | | | | 66,327 | | Philip A. Taylor | | | 4,253 | | | | 12,194 | | | | 9,270 | | | | – | | | | 25,718 | |
(2)1 | Amounts of matching contributions paid by the company to our retirement plans are calculated on the same basis for all plan participants, including the named executive officers. |
(3) | With respect to Mr. Armour, includes fees paid in 2013 for services provided in calendar years 2011, 2012 and 2013. |
(4)2 | Perquisites include the following: |
With respect to Mr. Flanagan, includes $139,384 for his personal use of company-provided aircraft. The company pays certain hourly, monthly and annual fees for its use of a fractionally-owned airplane. The company also 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 airplanes. 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 certain amounts for technology support and fees paid by the company for the officer’s and his spouse’s recreational activities in conjunction with a company-sponsored off-site business meeting. | With respect to Mr. Flanagan, includes $151,207 for his personal use of company-provided aircraft. With respect to the company-provided aircraft, the company pays direct operating expenses, monthly lease payments and management fees, as well as fees of a third-party supplier. We calculate the aggregate incremental cost to the company for personal use based on the average variable costs of operating the aircraft. 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. |
With respect to Mr. Armour, includes (i) $39,228 for relocation expenses paid for by the company; and (ii) fees paid by the company for the officer’s and his spouse’s recreational activities in conjunction with a company-sponsored off-site business meeting. | Mr. Flanagan’s total also includes certain amounts for technology support and amounts paid by the company for the officer’s and his spouse’s incidentals and recreational activities in conjunction with a company-sponsored off-site business meeting.46 |
Grants of Plan-Based Share Awardsplan-based share awards for 20132014 The Compensation Committee granted share awards to each of the named executive officers during 2013.2014. Share awards are subject to transfer restrictions and are generally subject to forfeiture prior to vesting upon a recipient’s termination of employment for any reason other than death, disability, involuntary termination other than for cause or unsatisfactory performance, or (in the case of Mr. Flanagan only) voluntary termination for “good reason.”employment. All share awards immediately become vested upon the recipient’s termination of employment during the 24-month period following a change in control (i) by the company other than for cause or disability, or (ii) by the recipient for good reason. The following table presents information concerning plan-based awards granted to each of the named executive officers during 2013.2014. | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payout Under Equity Incentive Plan Awards (1) | | All Other Share Awards (#) (2) | | Closing Market Price on Date of Grant ($/Share) | | Grant Date Fair Value of Share Awards ($) (3) | | Name | | Grant Date | | Committee Action Date | | Vesting | | Threshold (#) | | Maximum (#) | | | | Martin L. Flanagan | | 02/28/13 | | 02/14/13 | | 4-year ratable | | - | | 76,707 | | - | | 26.79 | | | 2,054,980 | | | | 02/28/13 | | 02/14/13 | | 4-year ratable | | - | | - | | 234,975 | | 26.79 | | | 6,294,980 | | Loren M. Starr | | 02/28/13 | | 02/14/13 | | 4-year ratable | | - | | 19,596 | | - | | 26.79 | | | 524,976 | | | | 02/28/13 | | 02/14/13 | | 4-year ratable | | - | | - | | 59,483 | | 26.79 | | | 1,593,549 | | G. Mark Armour | | 02/28/13 | | 02/14/13 | | 4-year ratable | | - | | 19,596 | | - | | 26.79 | | | 524,976 | | | | 02/28/13 | | 02/14/13 | | 4-year ratable | | - | | - | | 67,189 | | 26.79 | | | 1,799,993 | | Andrew T.S. Lo | | 02/28/13 | | 02/14/13 | | 4-year ratable | | - | | 19,596 | | - | | 26.79 | | | 524,976 | | | | 02/28/13 | | 02/14/13 | | 4-year ratable | | - | | - | | 62,216 | | 26.79 | | | 1,666,766 | | Philip A. Taylor | | 02/28/13 | | 02/14/13 | | 3-year ratable | | - | | 26,875 | | - | | 26.79 | | | 719,981 | | | | 02/28/13 | | 02/14/13 | | 4-year cliff | | - | | 8,958 | | - | | 26.79 | | | 239,984 | | | | 02/28/13 | | 02/14/13 | | 3-year ratable | | - | | - | | 87,066 | | 26.79 | | | 2,332,498 | | | | 02/28/13 | | 02/14/13 | | 4-year cliff | | - | | - | | 29,022 | | 26.79 | | | 777,499 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payout Under Equity Incentive Plan Awards1 | | | | | | | | | | | | Name | | Grant Date | | | | Committee Action Date | | | | Vesting | | Threshold (#) | | Maximum (#) | | | | All Other Share Awards (#)2 | | Closing Market Price on Date of Grant ($/Share) | | | | Grant Date Fair Value of Share Awards ($)3 | | Martin L. Flanagan | | 02/28/14 | | | | 02/13/14 | | | | 4-year ratable | | – | | 69,008 | | | | – | | 34.30 | | | | | 2,366,974 | | | | 02/28/14 | | | | 02/13/14 | | | | 4-year ratable | | – | | – | | | | 214,810 | | 34.30 | | | | | 7,367,983 | | Loren M. Starr | | 02/28/14 | | | | 02/13/14 | | | | 4-year ratable | | – | | 15,743 | | | | – | | 34.30 | | | | | 539,984 | | | | 02/28/14 | | | | 02/13/14 | | | | 4-year ratable | | – | | – | | | | 49,854 | | 34.30 | | | | | 1,709,992 | | G. Mark Armour | | 02/28/14 | | | | 02/13/14 | | | | 4-year ratable | | – | | 20,553 | | | | – | | 34.30 | | | | | 704,967 | | | | 02/28/14 | | | | 02/13/14 | | | | 4-year ratable | | – | | – | | | | 68,075 | | 34.30 | | | | | 2,334,972 | | Andrew T.S. Lo | | 02/28/14 | | | | 02/13/14 | | | | 4-year ratable | | – | | 18,367 | | | | – | | 34.30 | | | | | 629,988 | | | | 02/28/14 | | | | 02/13/14 | | | | 4-year ratable | | – | | – | | | | 58,309 | | 34.30 | | | | | 1,999,998 | | Philip A. Taylor | | 02/28/14 | | | | 02/13/14 | | | | 3-year ratable | | – | | 21,647 | | | | – | | 34.30 | | | | | 742,492 | | | | 02/28/14 | | | | 02/13/14 | | | | 4-year cliff | | – | | 7,215 | | | | – | | 34.30 | | | | | 247,474 | | | | 02/28/14 | | | | 02/13/14 | | | | 3-year ratable | | – | | – | | | | 73,360 | | 34.30 | | | | | 2,516,248 | | | | 02/28/14 | | | | 02/13/14 | | | | 4-year cliff | | – | | – | | | | 24,453 | | 34.30 | | | | | 838,737 | |
(1)1 | Performance-based Equity Awards. Performance-based equity awards were granted under the 2011 Global Equity Incentive Plan. For each of the named executive officers other than Mr. Taylor, performance-based equity awards are four-year awards that vest 25% each year.year on the anniversary of the date of grant. With respect to Mr. Taylor, performance-based equity awards are comprised of a 3-year award that vests ratably and a 4-year award that vests 100% on the fourth anniversary of the date of grant. Performance-based equity awards are tied to the achievement of specified levels of adjusted operating margin or adjusted diluted earnings per share. Full vesting of the performance-based equity award occurs in the event that either target financial measure is achieved. Partial vesting of the award occurs on a pro-rated basis based on straight-line interpolation between a minimum threshold and the target financial measure. The award will vest based upon the higher achieved financial measure for that year. Dividend equivalents are deferred for such performance-based equity awards and will only be paid at the same rate as on our shares if and to the extent an award vests. The target financial measures and minimum thresholds for the performance-based equity awards granted in 2014 are illustrated below. As noted above, our target financial measures and minimum thresholds for awards granted in 2015 have increased. SeeExecutive Compensation – Compensation Discussion and Analysis – Our variable incentive compensation for additional detail. | |
Performance-based equity awards are tied to the achievement of specified levels of adjusted operating margin or adjusted diluted earnings per share. Full vesting of the performance-based long-term equity award occurs in the event that either target financial measure is achieved. Partial vesting of the award occurs on a pro-rated basis based on straight-line interpolation between a minimum threshold and the target financial measure. The award will vest based upon the higher achieved financial measure for that year. Dividend equivalents are deferred for such performance-based equity awards and will only be paid at the same rate as on our shares if and to the extent an award vests. The target financial measures and minimum thresholds for the performance-based portion of our long-term equity awards are illustrated below.
| | | | | | | | | | | | | | | | | | Adjusted Diluted EPS | | Vesting | | | | | Adjusted Operating Margin | | Vesting | | Equal to or greater than $1.10 | | | 100% | | | or | | Equal to or greater than 25.5% | | | 100% | | Less than $0.75 | | | 0% | | | | | Less than 22% | | | 0% | |
| | | | | | | | | | | | | Adjusted Operating Margin | | Vesting | | | | | Adjusted Diluted EPS | | Vesting | | Equal to or greater than 25.5% | | | 100% | | | or | | Equal to or greater than $1.10 | | | 100% | | Less than 22% | | | 0% | | | | | Less than $0.75 | | | 0% | |
(2)2 | Time-based Equity Awards.Time-based equity awards were granted under the 2011 Global Equity Incentive Plan. For each of the named executive officers other than Mr. Taylor, time-based equity awards are four-year awards that vest 25% each year.year on the anniversary of the date of grant. With respect to Mr. Taylor, time-based equity awards are comprised of a 3-year award that vests ratably and a 4-year award that vests 100% on the fourth anniversary of the date of grant. Dividends and dividend equivalents are paid on unvested awards at the same time and rate as on our shares. | |
(3)3 | The grant date fair value is the total amount that the company will recognize as expense under applicable accounting requirements if the share awards fully vest. This amount is included in our Summary Compensation Table each year. Grant date fair values were calculated in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 718 “Compensation – Stock Compensation.”ASC 718. The grant date fair value is calculated by multiplying the number of shares granted by the closing price of our common shares on the day the award was granted. With respect to the performance-based equity awards, the grant date fair value also represents the probable outcome of such performance conditions and represents the highest level of achievement. | |
Outstanding Share Awardsshare awards at Fiscal Year-Endfiscal year-end for 20132014 The following table provides information as of December 31, 20132014 about the outstanding share awards held by our named executive officers. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | | | Date of Grant | | Number of Shares or Units that Have Not Vested (#) | | Market Value of Shares or Units that Have Not Vested ($) | | Equity Incentive Plan Awards that Have Not Vested (#) | | Equity Incentive Plan Awards that Have Not Vested ($) | Martin L. Flanagan | | | | (1 | ) | | | | 02/26/10 | | | | | 83,017 | | | | | 3,021,819 | | | | | - | | | | | - | | | | | | (2 | ) | | | | 02/28/11 | | | | | 155,551 | | | | | 5,662,056 | | | | | - | | | | | - | | | | | | (3 | ) | | | | 02/28/12 | | | | | 189,153 | | | | | 6,885,169 | | | | | - | | | | | - | | | | | | (4 | ) | | | | 02/28/12 | | | | | - | | | | | - | | | | | 61,749 | | | | | 2,247,664 | | | | | | (5 | ) | | | | 02/28/13 | | | | | 234,975 | | | | | 8,553,090 | | | | | - | | | | | - | | | | | | (6 | ) | | | | 02/28/13 | | | | | - | | | | | - | | | | | 76,707 | | | | | 2,792,135 | | Loren M. Starr | | | | (1 | ) | | | | 02/26/10 | | | | | 21,505 | | | | | 782,782 | | | | | - | | | | | - | | | | | | (2 | ) | | | | 02/28/11 | | | | | 40,145 | | | | | 1,461,278 | | | | | - | | | | | - | | | | | | (3 | ) | | | | 02/28/12 | | | | | 48,978 | | | | | 1,782,799 | | | | | - | | | | | - | | | | | | (4 | ) | | | | 02/28/12 | | | | | - | | | | | - | | | | | 15,775 | | | | | 574,210 | | | | | | (5 | ) | | | | 02/28/13 | | | | | 59,483 | | | | | 2,165,181 | | | | | - | | | | | - | | | | | | (6 | ) | | | | 02/28/13 | | | | | - | | | | | - | | | | | 19,595 | | | | | 713,258 | | G. Mark Armour | | | | (1 | ) | | | | 02/26/10 | | | | | 37,245 | | | | | 1,355,718 | | | | | - | | | | | - | | | | | | (2 | ) | | | | 02/28/11 | | | | | 57,750 | | | | | 2,102,100 | | | | | - | | | | | - | | | | | | (3 | ) | | | | 02/28/12 | | | | | 67,458 | | | | | 2,455,471 | | | | | - | | | | | - | | | | | | (4 | ) | | | | 02/28/12 | | | | | - | | | | | - | | | | | 21,184 | | | | | 771,098 | | | | | | (5 | ) | | | | 02/28/13 | | | | | 67,189 | | | | | 2,445,680 | | | | | - | | | | | - | | | | | | (6 | ) | | | | 02/28/13 | | | | | - | | | | | - | | | | | 19,596 | �� | | | | 713,294 | | Andrew T. S. Lo | | | | (1 | ) | | | | 02/26/10 | | | | | 24,133 | | | | | 878,441 | | | | | - | | | | | - | | | | | | (2 | ) | | | | 02/28/11 | | | | | 41,403 | | | | | 1,507,069 | | | | | - | | | | | - | | | | | | (3 | ) | | | | 02/28/12 | | | | | 51,006 | | | | | 1,856,618 | | | | | - | | | | | - | | | | | | (4 | ) | | | | 02/28/12 | | | | | - | | | | | - | | | | | 15,775 | | | | | 574,210 | | | | | | (5 | ) | | | | 02/28/13 | | | | | 62,216 | | | | | 2,264,662 | | | | | - | | | | | - | | | | | | (6 | ) | | | | 02/28/13 | | | | | - | | | | | - | | | | | 19,596 | | | | | 713,294 | | Philip A. Taylor | | | | (7 | ) | | | | 02/26/10 | | | | | 47,448 | | | | | 1,727,107 | | | | | - | | | | | - | | | | | | (7 | ) | | | | 02/28/11 | | | | | 37,909 | | | | | 1,379,888 | | | | | - | | | | | - | | | | | | (3 | ) | | | | 02/28/12 | | | | | 93,449 | | | | | 3,401,544 | | | | | - | | | | | - | | | | | | (4 | ) | | | | 02/28/12 | | | | | - | | | | | - | | | | | 28,846 | | | | | 1,049,994 | | | | | | (5 | ) | | | | 02/28/13 | | | | | 116,088 | | | | | 4,225,603 | | | | | - | | | | | - | | | | | | (6 | ) | | | | 02/28/13 | | | | | - | | | | | - | | | | | 35,833 | | | | | 1,304,321 | |
| | | | | | | | | | | | | | | | | | | | | | | | | Name | | Footnotes | | | Date of Grant | | | Number of Shares or Units that Have Not Vested (#) | | | Market Value of Shares or Units that Have Not Vested ($) | | | Equity Incentive Plan Awards that Have not Vested (#) | | | Equity Incentive Plan Awards that Have Not Vested ($) | | Martin L. Flanagan | | | 1 | | | | 02/28/11 | | | | 77,776 | | | | 3,073,708 | | | | – | | | | – | | | | | 2 | | | | 02/28/12 | | | | 126,102 | | | | 4,983,551 | | | | – | | | | – | | | | | 3 | | | | 02/28/12 | | | | – | | | | – | | | | 41,166 | | | | 1,626,880 | | | | | 4 | | | | 02/28/13 | | | | 176,232 | | | | 6,964,689 | | | | – | | | | – | | | | | 5 | | | | 02/28/13 | | | | – | | | | – | | | | 57,531 | | | | 2,273,625 | | | | | 6 | | | | 02/28/14 | | | | 214,810 | | | | 8,489,291 | | | | – | | | | – | | | | | 7 | | | | 02/28/14 | | | | – | | | | – | | | | 69,008 | | | | 2,727,196 | | Loren M. Starr | | | 1 | | | | 02/28/11 | | | | 20,073 | | | | 793,285 | | | | – | | | | – | | | | | 2 | | | | 02/28/12 | | | | 32,652 | | | | 1,290,407 | | | | – | | | | – | | | | | 3 | | | | 02/28/12 | | | | – | | | | – | | | | 10,517 | | | | 415,632 | | | | | 4 | | | | 02/28/13 | | | | 44,613 | | | | 1,763,106 | | | | – | | | | – | | | | | 5 | | | | 02/28/13 | | | | – | | | | – | | | | 14,697 | | | | 580,825 | | | | | 6 | | | | 02/28/14 | | | | 49,854 | | | | 1,970,230 | | | | – | | | | – | | | | | 7 | | | | 02/28/14 | | | | – | | | | – | | | | 15,743 | | | | 622,163 | | G. Mark Armour | | | 1 | | | | 02/28/11 | | | | 28,875 | | | | 1,141,140 | | | | – | | | | – | | | | | 2 | | | | 02/28/12 | | | | 44,972 | | | | 1,777,293 | | | | – | | | | – | | | | | 3 | | | | 02/28/12 | | | | – | | | | – | | | | 14,123 | | | | 558,141 | | | | | 4 | | | | 02/28/13 | | | | 50,392 | | | | 1,991,492 | | | | – | | | | – | | | | | 5 | | | | 02/28/13 | | | | – | | | | – | | | | 14,697 | | | | 580,825 | | | | | 6 | | | | 02/28/14 | | | | 68,075 | | | | 2,690,324 | | | | – | | | | – | | | | | 7 | | | | 02/28/14 | | | | – | | | | – | | | | 20,553 | | | | 812,255 | | Andrew T.S. Lo | | | 1 | | | | 02/28/11 | | | | 20,702 | | | | 818,143 | | | | – | | | | – | | | | | 2 | | | | 02/28/12 | | | | 34,004 | | | | 1,343,838 | | | | – | | | | – | | | | | 3 | | | | 02/28/12 | | | | – | | | | – | | | | 10,517 | | | | 415,632 | | | | | 4 | | | | 02/28/13 | | | | 46,662 | | | | 1,844,082 | | | | – | | | | – | | | | | 5 | | | | 02/28/13 | | | | – | | | | – | | | | 14,697 | | | | 580,825 | | | | | 6 | | | | 02/28/14 | | | | 58,309 | | | | 2,304,372 | | | | – | | | | – | | | | | 7 | | | | 02/28/14 | | | | – | | | | – | | | | 18,367 | | | | 725,864 | | Philip A. Taylor | | | 8 | | | | 02/28/11 | | | | 37,909 | | | | 1,498,164 | | | | – | | | | – | | | | | 8 | | | | 02/28/12 | | | | 31,149 | | | | 1,231,008 | | | | – | | | | – | | | | | 9 | | | | 02/28/12 | | | | – | | | | – | | | | 9,615 | | | | 379,985 | | | | | 4 | | | | 02/28/13 | | | | 87,066 | | | | 3,440,848 | | | | – | | | | – | | | | | 5 | | | | 02/28/13 | | | | – | | | | – | | | | 26,875 | | | | 1,062,100 | | | | | 6 | | | | 02/28/14 | | | | 97,813 | | | | 3,865,570 | | | | – | | | | – | | | |
| 7
|
| | | 02/28/14 | | | | | | | | – | | | | 28,862 | | | | 1,140,626 | |
| (1) | February 26, 2010. Share award vests in four equal installments. As of December 31, 2013, the unvested share award represents 25% of the original grant. |
| (2)1 | February 28, 2011. Share award vests in four equal installments. As of December 31, 2013,2014, the unvested share award represents 50%25% of the original grant. | |
| (3)2 | February 28, 2012. Share award vests in four equal installments. As of December 31, 2013,2014, the unvested share award represents 75%50% of the original grant. |
| (4)3 | February 28, 2012. Performance-based share award vests in four equal installments. As of December 31, 2013,2014, the unvested share award represents 75%50% of the maximum award. |
| (5)4 | February 28, 2013. Share award vests in four equal installments. As of December 31, 2013,2014, the unvested share award represents 100%75% of the original grant. |
| (6)5 | February 28, 2013. Performance-based share award vests in four equal installments. As of December 31, 2013,2014, the unvested share award represents 75% of the maximum award. |
6 | February 28, 2014. Share award vests in four equal installments. As of December 31, 2014, the unvested share award represents 100% of the original grant. |
7 | February 28, 2014. Performance-based share award vests in four equal installments. As of December 31, 2014, the unvested share award represents 100% of the maximum award. |
| (7)8 | February 26, 201028, 2011 and February 28, 20112012 awards. Share awards vest in one installment. As of December 31, 2013,2014, the unvested share award represents 100% of the original grant. |
9 | February 28, 2012. Performance-based share award vests in four equal installments. As of December 31, 2014, the unvested share award represents 25% of the maximum award. |
48
Option Exercises and Shares Vestedvested for 20132014
The following table provides information about share options exercised by the named executive officers during 2013 and equity awards held by our named executive officers that vested in 2013:2014: | | | Option Awards | | Share Awards | | Share Awards | | Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) | | Number of Shares Acquired on Vesting | | | Value Realized on Vesting ($) | | Martin L. Flanagan | | — | | — | | 330,929 | | 8,739,843 | | | 322,345 | | | | 10,957,643 | | Loren M. Starr | | — | | — | | 87,878 | | 2,320,870 | | | 82,930 | | | | 2,818,908 | | G. Mark Armour | | — | | — | | 156,909 | | 4,139,325 | | | 117,363 | | | | 3,981,229 | | Andrew T.S. Lo | | 50,000 | | 1,112,554 | | 96,840 | | 2,556,180 | | | 87,547 | | | | 2,974,144 | | Philip A. Taylor | | — | | — | | 153,766 | | 4,401,696 | | | 166,959 | | | | 5,844,709 | |
Potential Paymentspayments upon Terminationtermination or Changechange in Controlcontrol for 20132014 The following tables summarize the estimated payments to be made under each agreement, plan or arrangement in effect as of December 31, 20132014 which provides for payments to a named executive officer at, following or in connection with a termination of employment or a change in control. However, in accordance with SEC regulations, 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. In accordance with SEC regulations, this analysis assumes that the named executive officer’s date of termination is December 31, 2013,2014, 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 $36.40.$39.52. Martin L. Flanagan
| | | | | | | | | | | | | | | Benefit and Payments Upon Termination(1) | | Voluntary Termination without Good Reason ($) | | Termination by Executive for Good Reason or Involuntary Termination by the Company without Cause ($) | | Involuntary Termination for Cause ($) | | Retirement ($)(2) | | Death or Disability ($) | | Change in Control ($)(3) | | Qualified Termination Following Change in Control ($)(4) | Salary Continuation | | — | | — | | — | | — | | — | | — | | — | Annual Cash Bonus (5) | | 4,750,000 | | 4,750,000 | | — | | — | | 4,750,000 | | — | | 4,750,000 | Severance Payment (6) | | — | | 13,889,960 | | — | | — | | — | | — | | 13,889,960 | Share Awards | | — | | 29,161,933 | | — | | — | | 29,161,933 | | 29,161,933 | | 29,161,933 | Options | | — | | — | | — | | — | | — | | — | | — | Welfare Benefits (7) | | — | | 49,341 | | — | | — | | — | | — | | 49,341 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Martin L. Flanagan | | Benefit and Payments Upon Termination1 | | Voluntary Termination without Good Reason ($) | | | Termination by Executive for Good Reason or Involuntary Termination by the Company without Cause ($) | | | Involuntary Termination for Cause ($) | | | Retirement ($) | | | Death or Disability ($) | | | Change in Control ($)2 | | | Qualified Termination Following Change in Control ($)3 | | Salary Continuation | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Annual Cash Bonus4 | | | 4,750,000 | | | | 4,750,000 | | | | – | | | | – | | | | 4,750,000 | | | | – | | | | 4,750,000 | | Severance Payment5 | | | – | | | | 15,274,957 | | | | – | | | | – | | | | – | | | | – | | | | 15,274,957 | | Share Awards | | | – | | | | 30,138,940 | | | | – | | | | – | | | | 30,138,940 | | | | 30,138,940 | | | | 30,138,940 | | Welfare Benefits6 | | | – | | | | 53,665 | | | | – | | | | – | | | | – | | | | – | | | | 53,665 | |
(1)1 | Pursuant to the terms of the second amended and restated master employment agreement effective January 1, 2011 between the company and 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. In accordance with SEC rules, the information presented in this table assumes a termination date of December 31, 20132014 and that the applicable notice had been given prior to such date. | |
(2) | Pursuant to the terms of the 2008 Global Equity Incentive Plan, in the event of retirement, restricted stock units would continue to vest provided the age, years of service and holding period requirements are met. With respect to Mr. Flanagan’s share awards, no benefit would be payable in the event of retirement. |
(3)2 | 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. | |
(4)3 | Assumes termination by Mr. Flanagan for “good reason” or a termination by the company other than for cause or disability following a change in control. | |
(5)4 | Pursuant to the terms of 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. | |
(6)5 | Pursuant to the terms of the Flanagan Agreement, Mr. Flanagan’s severance payment is equal to the sum of (i) his base salary, (ii) the greater of $4,750,000 or his most recent annual cash bonus, and (iii) the fair market value at grant of his most recent equity award. | |
(7)6 | Pursuant to the terms of the Flanagan Agreement, Mr. Flanagan and his covered dependents are entitled to medical benefits for a period of 36 months following termination. Represents cost to the company for reimbursement of such medical benefits. | |
Loren M. Starr
| | | | | | | | | | | | | | | Benefit and Payments Upon Termination(1) | | Voluntary Termination without Good Reason ($) | | Termination by Executive for Good Reason or Involuntary Termination by the Company without Cause ($) | | Involuntary Termination for Cause ($) | | Retirement ($)(2) | | Death or Disability ($) | | Change in Control ($)(3) | | Qualified Termination Following Change in Control ($)(4) | Salary Continuation | | — | | — | | — | | — | | — | | — | | — | Annual Cash Bonus | | — | | — | | — | | — | | — | | — | | — | Severance Payment | | — | | — | | — | | — | | — | | — | | — | Share Awards | | — | | 7,479,508 | | — | | — | | 7,479,508 | | 7,479,508 | | 7,479,508 | Options | | — | | — | | — | | — | | — | | — | | — | Welfare Benefits | | — | | — | | — | | — | | — | | — | | — |
G. Mark Armour
| | | | | | | | | | | | | | | Benefit and Payments Upon Termination(1) | | Voluntary Termination without Good Reason ($) | | Termination by Executive for Good Reason or Involuntary Termination by the Company without Cause ($) | | Involuntary Termination for Cause ($) | | Retirement ($)(2) | | Death or Disability ($) | | Change in Control ($)(3) | | Qualified Termination Following Change in Control ($)(4) | Salary Continuation | | — | | — | | — | | — | | — | | — | | — | Annual Cash Bonus | | — | | — | | — | | — | | — | | — | | — | Severance Payment | | — | | — | | — | | — | | — | | — | | — | Share Awards | | — | | 9,843,361 | | | | 1,355,718 | | 9,843,361 | | 9,843,361 | | 9,843,361 | Options | | — | | — | | — | | — | | — | | — | | — | Welfare Benefits | | — | | — | | — | | — | | — | | — | | — | Andrew T.S. Lo | | | | | Benefit and Payments Upon Termination(1) | | Voluntary Termination without Good Reason ($) | | Termination by Executive for Good Reason or Involuntary Termination by the Company without Cause ($) | | Involuntary Termination for Cause ($) | | Retirement ($)(2) | | Death or Disability ($) | | Change in Control ($)(3) | | Qualified Termination Following Change in Control ($)(4) | Salary Continuation | | — | | — | | — | | — | | — | | — | | — | Annual Cash Bonus | | — | | — | | — | | — | | — | | — | | — | Severance Payment | | — | | — | | — | | — | | — | | — | | — | Share Awards | | — | | 7,794,296 | | — | | — | | 7,794,296 | | 7,794,296 | | 7,794,296 | Options | | — | | — | | — | | — | | — | | — | | — | Welfare Benefits | | — | | — | | — | | — | | — | | — | | — | Philip A. Taylor | | | | | Benefit and Payments Upon Termination(1) | | Voluntary Termination without Good Reason ($) | | Termination by Executive for Good Reason or Involuntary Termination by the Company without Cause ($) | | Involuntary Termination for Cause ($) | | Retirement ($)(2) | | Death or Disability ($) | | Change in Control ($)(3) | | Qualified Termination Following Change in Control ($)(4) | Salary Continuation | | — | | — | | — | | — | | — | | — | | — | Annual Cash Bonus | | — | | — | | — | | — | | — | | — | | — | Severance Payment | | — | | — | | — | | — | | — | | — | | — | Share Awards | | — | | 13,088,457 | | — | | 1,727,107 | | 13,088,457 | | 13,088,457 | | 13,088,457 | Options | | — | | — | | — | | — | | — | | — | | — | Welfare Benefits | | — | | — | | — | | — | | — | | — | | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loren M. Starr | | Benefit and Payments Upon Termination1 | | Voluntary Termination without Good Reason ($) | | | Termination by Executive for Good Reason or Involuntary Termination by the Company without Cause ($) | | | Involuntary Termination for Cause ($) | | | Retirement ($)2 | | | Death or Disability ($) | | | Change in Control ($)3 | | | Qualified Termination Following Change in Control ($)4 | | Salary Continuation | �� | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Annual Cash Bonus | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Severance Payment | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Share Awards | | | – | | | | 7,435,648 | | | | – | | | | – | | | | 7,435,648 | | | | 7,435,648 | | | | 7,435,648 | | Welfare Benefits | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | G. Mark Armour | | Benefit and Payments Upon Termination1 | | Voluntary Termination without Good Reason ($) | | | Termination by Executive for Good Reason or Involuntary Termination by the Company without Cause ($) | | | Involuntary Termination for Cause ($) | | | Retirement ($)2 | | | Death or Disability ($) | | | Change in Control ($)3 | | | Qualified Termination Following Change in Control ($)4 | | Salary Continuation | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Annual Cash Bonus | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Severance Payment | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Share Awards | | | – | | | | 9,551,470 | | | | – | | | | 1,141,140 | | | | 9,551,470 | | | | 9,551,470 | | | | 9,551,470 | | Welfare Benefits | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Andrew T.S. Lo | | Benefit and Payments Upon Termination1 | | Voluntary Termination without Good Reason ($) | | | Termination by Executive for Good Reason or Involuntary Termination by the Company without Cause ($) | | | Involuntary Termination for Cause ($) | | | Retirement ($)2 | | | Death or Disability ($) | | | Change in Control ($)3 | | | Qualified Termination Following Change in Control ($)4 | | Salary Continuation | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Annual Cash Bonus | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Severance Payment | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Share Awards | | | – | | | | 8,032,756 | | | | – | | | | – | | | | 8,032,756 | | | | 8,032,756 | | | | 8,032,756 | | Welfare Benefits | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Philip A. Taylor | | Benefit and Payments Upon Termination1 | | Voluntary Termination without Good Reason ($) | | | Termination by Executive for Good Reason or Involuntary Termination by the Company without Cause ($) | | | Involuntary Termination for Cause ($) | | | Retirement ($)2 | | | Death or Disability ($) | | | Change in Control ($)3 | | | Qualified Termination Following Change in Control ($)4 | | Salary Continuation | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Annual Cash Bonus | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Severance Payment | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Share Awards | | | – | | | | 12,618,301 | | | | – | | | | 1,498,164 | | | | 12,618,301 | | | | 12,618,301 | | | | 12,618,301 | | Welfare Benefits | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | |
1 | Each of Messrs. Starr, Armour, Lo 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, 20132014 and that the applicable notice had been given prior to such date. |
(2)2 | Pursuant to the terms of the 2008 Global Equity Incentive Plan, in the event of retirement, restricted stock units would continue to vest provided the age, years of service and holding period requirements arehad been met. This analysis assumes a retirement date of December 31, 20132014 and that the previously described requirementsholding period had been met. With respect to Messrs. Armour and Taylor, a benefit in the respective amount of $1,355,718$1,141,140 and $1,727,107$1,498,164 would be payable on the scheduled 20142015 vesting date with respect to their award that was granted in February 2010.2011. These values represent an assumed value of $36.40,$39.52, which wasis the closing price of our common shares on the NYSE on December 31, 2013.2014. Actual value to be received by the named executive officer will be the closing price of our common shares on the NYSE on the scheduled date of distribution. |
(3)3 | Payment would only be made in the event that the share award was not assumed, converted or replaced in connection with a change in control. |
(4)4 | Assumes termination for “good reason” or a termination by the company other than for cause or disability following a change in control. |
Information Regarding Equity Compensation Plansregarding equity compensation plans The following table sets forth information, as of December 31, 2013,2014, about common shares that may be issued under our existing equity compensation plans. | | | | | | | | | | | Name of Plan | | Approved by Security Holders(1) | | Active/ Inactive Plan(2) | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights ($)(3) | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Outstanding Options)(4) | 2011 Global Equity Incentive Plan | | ü | | Active | | — | | N/A | | 17,705,846 | 2000 Share Option Plan | | ü | | Inactive | | 1,125,622 | | | | — | Subtotal—Approved Plans | | | | | | 1,125,622 | | 12.15 | | 17,705,846 | 2010 Global Equity Incentive Plan (ST) | | | | Active | | — | | N/A | | 1,763,988 | Subtotal — Unapproved Plans | | | | | | — | | | | 1,763,988 | Total | | | | | | 1,125,622 | | | | 19,469,834 |
| | | | | | | | | | | | | | | | | Name of Plan | | Approved by Security Holders1 | | Active/ Inactive Plan2 | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights ($)3 | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Outstanding Options)4 | | Approved plans: | | | | | | | | | | | | | | | | | 2011 Global Equity Incentive Plan | | ü | | Active | | | – | | | | N/A | | | | 14,525,535 | | 2000 Share Option Plan | | ü | | Inactive | | | 271,164 | | | | 13.78 | | | | – | | Subtotal – Approved Plans | | | | | | | 271,164 | | | | | | | | 14,525,535 | | | | | | | | | | | | | | | | | | | Unapproved plans: | | | | | | | | | | | | | | | | | 2010 Global Equity Incentive | | | | Active | | | – | | | | N/A | | | | 1,853,407 | | Plan (ST) | | | | | | | | | | | | | | | | | Subtotal – Unapproved Plans | | | | | | | – | | | | | | | | 1,853,407 | | | | | | | | | | | | | | | | | | | Total | | | | | | | 271,164 | | | | | | | | 16,378,942 | |
(1)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)2 | With respect to the 2000 Share Option Plan, no further grants will be made under this plan. |
(3)3 | Share options were granted in Pounds Sterling (£) and in this table have been converted to U.S. dollars using the exchange rate of $1.66/$1.56/£1 as of December 31, 2013.2014. With respect to the 2000 Share Option Plan, outstanding stock options have a weighted average remaining contractual life of 1.4 years.one year. |
(4)4 | Excludes unvested restricted stock awards, unvested deferred share awards and unvested restricted stock units. |
Compensation Committee Interlocks and Insider Participation During fiscal year 2013,2014, the following directors served as members of the Compensation Committee: Sir John Banham (Chairman), Rex D. Adams, C. Robert Henrikson (Chairperson), Ben F. Johnson III, Denis Kessler, Edward P. Lawrence, G. Richard Wagoner, Jr. and Phoebe A. Wood. In addition, Sir John Banham and Rex D. Adams served on the Compensation Committee prior to their retirement at the 2014 Annual General Meeting of Shareholders. No member of the Compensation Committee was an officer or employee of the company or any of its subsidiaries during 2013,2014, 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 2013,2014, 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. * * *
Report of the Audit Committee Membership and Rolerole of the Audit Committee The Audit Committee of the Board consists of J. Thomas Presby (Chairman)(Chairperson), Sir John Banham, C. Robert Henrikson, Ben F. Johnson III, Denis Kessler, Edward P. Lawrence, G. Richard Wagoner, Jr. and Phoebe A. Wood. Each of the members of the Audit Committee is independent as such term is defined under the NYSE listing standards and applicable law. The primary purpose of the Audit Committee is to assist the Board of Directors in fulfilling its responsibility to oversee (i) the company’s financial reporting, auditing and internal control activities, including the integrity of the company’s financial statements, (ii) the independent auditor’s qualifications and independence, (iii) the performance of the company’s internal audit function and independent auditor, and (iv) the company’s compliance with legal and regulatory requirements. The Audit Committee’s function is more fully described in its written charter, which is available on the corporate governance section of the company’s Web site. Review of the Company’s Audited Consolidated Financial Statementscompany’s audited consolidated financial statements for the Fiscal Year Endedfiscal year ended December 31, 20132014 The Audit Committee has reviewed and discussed the audited financial statements of the company for the fiscal year ended December 31, 20132014 with the company’s management. The Audit Committee has also performed the other reviews and duties set forth in its charter. The Audit Committee has discussed with PricewaterhouseCoopers LLP (“PwC”), the company’s independent registered public accounting firm, the matters required to be discussed by professional auditing standards. The Audit Committee has also received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the audit committeeAudit Committee concerning independence, and has discussed the independence of PwC with that firm. Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to the Board of Directors that the company’s audited consolidated financial statements be included in the company’s Annual Report for filing with the Securities and Exchange Commission. SEC. Respectfully submitted by the Audit Committee: J. Thomas Presby (Chairman) Sir John Banham(Chairperson)
C. Robert Henrikson Ben F. Johnson III Denis Kessler Edward P. Lawrence G. Richard Wagoner, Jr. Phoebe A. Wood
Fees Paid to Independent Registered Public Accounting Firm The Audit Committee of the Board, with the approval of the shareholders, engaged PwC to perform an annual audit of the company’s consolidated financial statements for fiscal year 2013.2014. The following table sets forth the approximate aggregate fees billed or expected to be billed to the company by PwC for fiscal year 20132014 and by Ernst & Young LLP (“EY”), our former independent auditors, for fiscal year 20122013, for the audit of the company’s annual consolidated financial statements and for other services rendered by PwC in 20132014 and EY in 2012.2013. | | | | | | | Fiscal Year | | | 2013 | | 2012 | | | ($ in millions) | Audit Fees(1) | | 3.9 | | 4.8 | Audit-Related Fees(2) | | 1.4 | | 1.8 | Tax Fees(3) | | 0.3 | | 0.6 | All Other Fees(4) | | — | | — | TOTAL FEES | | 5.6 | | 7.2 |
| | | | | | | Fiscal Year ($ in millions) | | | | | 2014 | | 2013 | Audit Fees1 | | 4.2 | | 3.9 | Audit-Related Fees2 | | 2.1 | | 1.4 | Tax Fees3 | | 0.9 | | 0.3 | All Other Fees4 | | 0.6 | | – | TOTAL FEES | | 7.8 | | 5.6 | | | | | |
(1)1 | The 20132014 Audit Fees amount includes approximately $2.5$2.7 million (2012: $2.7(2013: $2.5 million) for audits of the company’s consolidated financial statements and $1.4 million (2012: $1.6(2013: $1.4 million) for statutory audits of subsidiaries. These amounts do not include fees paid to PwC in 2013 and EY in 2012 associated with audits conducted on certain of our affiliated mutual funds, unit trusts and partnerships. |
(2)2 | Audit-Related Fees consist of attest services not required by statute or regulation, audits of employee benefit plans and accounting consultations in connection with new accounting pronouncements and acquisitions. |
(3)3 | Tax Fees consist of compliance and advisory services. |
(4)4 | All Other Fees consist principally of transaction-related services. |
Pre-Approval Process and Policy The Audit Committee has adopted policies and procedures for pre-approving all audit and non-audit services provided by our independent auditors. The policy is designed to ensure that the auditor’s independence is not impaired. The policy sets forth the Audit Committee’s views on audit, audit-related, tax and other services. It provides that, before the company engages the independent auditor to render any service, the engagement must either be specifically approved by the Audit Committee or fall into one of the defined categories that have been pre-approved. The policy defines the services and the estimated range of fees for such services that the committee has pre-approved. The term of any such categorical approval is 12 months, unless the committee specifically provides otherwise, and the policy requires the related fee levels to be set annually. Where actual invoices in respect of any service are materially in excess of the estimated range, the committee must approve such excess amount prior to payment. The policy also prohibits the company from engaging the auditors to provide certain defined non-audit services that are prohibited under SEC rules. Under the policy, the Audit Committee may delegate pre-approval authority to one or more of its members, but may not delegate such authority to the company’s management. Under the policy, our management must inform the Audit Committee of each service performed by our independent auditor pursuant to the policy. Requests to the Audit Committee for separate approval must be submitted by both the independent auditor and our Chief Financial Officer and the request must include a joint statement as to whether it is deemed consistent with the SEC’s and PCAOB’s rules on auditor independence. All audit and non-audit services provided to the company and its subsidiaries by PwC during fiscal yearyears 2014 and 2013 and by EY during fiscal year 2012 were either specifically approved or pre-approved under the policy.
Certain Relationships and Related Transactions
Share Repurchases.repurchases In order to pay withholding or other similar taxes due in connection with the vesting of equity awards granted under the 2011 Global Equity Incentive Plan, the 2010 Global Equity Incentive Plan (ST), 2008 Global Equity Incentive Plan, and the Global Stock Plan,our incentive plans, employee participants, including our named executive officers, may elect the “net shares” method whereby the company purchases from the participant shares equal in value to the tax withholding liability in connection with vesting equity awards. 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 distributionvesting date. During fiscal 2013,2014, the company repurchased common shares from the executive officers for the aggregate consideration shown in the following table: | | | | | Name and Title | | Number of Shares Repurchased (#) | | Aggregate Consideration ($) | G. Mark Armour Senior Managing Director and Head of EMEA | | 27,727 | | 731,958 | Kevin M. Carome Senior Managing Director and General Counsel | | 28,925 | | 764,577 | Karen Dunn Kelley Senior Managing Director, Investments | | 38,042 | | 1,005,672 | Colin D. Meadows Senior Managing Director and Chief Administrative Officer | | 51,857 | | 1,368,351 | Loren M. Starr Senior Managing Director and Chief Financial Officer | | 41,347 | | 1,092,592 | Philip A. Taylor Senior Managing Director and Head of the Americas | | 76,162 | | 2,180,207 |
| | | | | | | | | Name and Title | | Number of Shares Repurchased (#) | | | Aggregate Consideration ($) | | G. Mark Armour | | | 32,783 | | | | 1,112,077 | | Senior Managing Director and Head of EMEA | | | | | | | | | Kevin M. Carome | | | 26,401 | | | | 897,693 | | Senior Managing Director and General Counsel | | | | | | | | | Martin L. Flanagan | | | 154,567 | | | | 5,254,278 | | President and Chief Executive Officer | | | | | | | | | Karen Dunn Kelley | | | 36,219 | | | | 1,231,833 | | Senior Managing Director, Investments | | | | | | | | | Colin D. Meadows | | | 46,025 | | | | 1,562,390 | | Senior Managing Director and Chief Administrative Officer | | | | | | | | | Loren M. Starr | | | 39,769 | | | | 1,351,805 | | Senior Managing Director and Chief Financial Officer | | | | | | | | | Philip A. Taylor | | | 82,693 | | | | 2,894,808 | | Senior Managing Director and Head of the Americas | | | | | | | | |
Interests in or Alongside Invesco-Sponsored Private Funds.alongside Invesco-sponsored private funds 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 Invesco-sponsored private funds that we offer to independent investors. We generally limit such investments to employees that meet certain accreditation requirements. Employees who make such investments usually do not pay management or performance fees charged to independent investors. Distributions exceeding $120,000 from Invesco-sponsored private funds during the fiscal year ended December 31, 2013 made to our executive officers (or persons or entities affiliated with them) or directors, consisting of profits, other income and return of capital (but excluding Profits Interests, as defined below) are as follows: Martin L. Flanagan — $229,839. CertainIn addition, certain of our employees, including some of our executive officers, receive the right to share in performance fees earned by Invesco (“Profits Interests”) in connection with our management of Invesco-sponsored private funds. Messrs. Flanagan, Armour, Carome, Lo, Starr and LoMs. Kelley have made investments in or alongside Invesco-sponsored private funds. Messrs. Armour, Carome and Lo have received Profits Interests in one of those funds. The Profits Interests vest in equal annual installments over a four-year period and are subject to forfeiture prior to vesting upon the occurrence of certain events. There were no distributionsDistributions exceeding $120,000 from Invesco-sponsored private funds during the fiscal year ended December 31, 20132014 made to our executive officers or directors (or persons or entities affiliated with them) consisting of profits, other income, return of capital and performance fees, as applicable, are as follows: Martin L. Flanagan – $389,179; Loren M. Starr – $147,394 and G. Mark Armour – $143,932.
Other A relative of Mr. Flanagan is an employee in respect of Profits Interests.our U.S. business and earned $266,562 in total compensation in 2014. His compensation was established in accordance with the company’s employment and compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions.
Related Person Transaction Policy The Board of Directors has adopted written Policies and Procedures with Respect to Related Person Transactions to address the review, approval, disapproval or ratification of related person transactions. “Related persons” include the company’s executive officers, directors, director nominees, holders of more than five percent (5%) of the company’s voting securities, immediate family members of the foregoing persons, and any entity in which any of the foregoing persons is employed, is a partner or is in a similar position, or in which such person has a 5% or greater ownership interest. A “related person transaction” means a transaction or series of transactions in which the company participates, the amount involved exceeds $120,000, and a related person has a direct or indirect interest (with certain exceptions permitted by SEC rules). Management is required to present for the approval or ratification of the Audit Committee all material information regarding an actual or potential related person transaction. The policy requires that, after reviewing such information, the disinterested members of the Audit Committee will approve or disapprove the transaction. Approval will be given only if the Audit Committee determines that such transaction is in, or is not inconsistent with, the best interests of the company and its shareholders. The policy further requires that in the event management becomes aware of a related person transaction that has not been previously approved or ratified, it must be submitted to the Audit Committee promptly. The policy also permits the chairmanchairperson of the Audit Committee to review and approve related person transactions in accordance with the terms of the policy between scheduled committee meetings. Any determination made pursuant to this delegated authority must be reported to the full Audit Committee at the next regularly-scheduledregularly scheduled meeting.
Section 16(a) Beneficial Ownership Reporting Compliance Section 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, executivereporting officers and 10% shareholders were complied with during fiscal year 2013.2014.
Proposal No. 3 2 - Advisory Vote onto Approve the Company’s Executive Compensation General The Dodd-Frank Act enables our shareholders to vote to approve, on an advisory (nonbinding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on our named executive officers’officer compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, weWe are asking our shareholders to vote “FOR” the following resolution at the Annual General Meeting:
“RESOLVED, that the Company’s shareholders approve, on an advisory (non-binding) basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 20142015 Annual General Meeting of Shareholders pursuant to the Securities and Exchange Commission’s compensation disclosure rules, including the Compensation Discussion and Analysis, the compensation tables and related narrative discussion.” Invesco’s compensation programs, particularly our annual incentive pools, are tied to the achievement of our strategic imperatives and financial results and our success in serving our clients’ and shareholders’ interests, as further described in “Executive Compensation” above above. In considering their vote, we urge shareholders to review the information included in this Proxy Statementproxy statement in “Executive Compensation.”Compensation. Our Board of Directors and our Compensation Committee value the opinions of our shareholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our shareholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. Under the Board’s current policy, shareholders are given an opportunity to cast an advisory vote on this topic annually, with the next opportunity occurring in connection with the 20152016 Annual General Meeting. At the 20132014 Annual General Meeting 95.8%of Shareholders, 84.1% of the votes cast were in favor of the advisory proposal to approve our named executive officer compensation. AlthoughDuring 2014 and early 2015, we believe thatactively sought feedback on our compensation programs from our largest shareholders. The committee made a number of enhancements to the 2013 vote conveyed our shareholders’ strong supportexecutive compensation program in response to shareholder feedback and the committee’s review of the Compensation Committee’s decisions andcompensation market. Please see the existingsection entitledExecutive Compensation for detail on enhancements to our executive compensation programs, during the balance of 2013 and early 2014, we continued to actively seek investor input to obtain ongoing feedback concerningprogram approved by our compensation programs. While all of the shareholders we spoke with agree on the importance of pay and performance alignment, there was no consensus among these shareholders on how alignment should be measured. A number of the shareholders indicated that their Say-on-Pay decisions are made on a case-by-case basis and that they have not had any issues with Invesco’s compensation in prior years, some noting in particular that they believe appropriate decisions have been made for NEO compensation. Our largest shareholders do not share a consistent philosophy regarding the structure of compensation. That said, all shareholders affirmed the importance of clear disclosure and transparency regarding the decision making process undertaken by the Compensation Committee. Based on this feedback the Compensation Committee determinedin response to continuefeedback from our currentshareholders and a market review of compensation practices as described in the “Compensation Discussion and Analysis” above.programs. Recommendation of the Boardboard THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.The board of directors unanimously recommends a vote “FOR” the approval of the compensation of our named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC.This proposal requires the affirmative vote of a majority of votes cast at the Annual General Meeting.
Proposal No. 4 3 - Appointment of Independent Registered Public Accounting Firm General The Audit Committee of the Board has proposed the appointment of PwC as the independent registered public accounting firm to audit the company’s consolidated financial statements for the fiscal year ending December 31, 20142015 and to audit the company’s internal control over financial reporting as of December 31, 2014.2015. During and for the fiscal year ended December 31, 2013,2014, PwC audited and rendered opinions on the financial statements of the company and certain of its subsidiaries. PwC also rendered an opinion on the company’s internal control over financial reporting as of December 31, 2013.2014. In addition, PwC provides the company with tax consulting and compliance services, accounting and financial reporting advice on transactions and regulatory filings and certain other services not prohibited by applicable auditor independence requirements. See “Fees Paid to Independent Registered Public Accounting Firm” above. Representatives of PwC are expected to be present at the Annual General Meeting and will have the opportunity to make a statement if they desire to do so. It is also expected that they will be available to respond to appropriate questions.
Previous Independent Registered Public Accounting Firmindependent registered public accounting firm During and for the fiscal year ended December 31, 2012, EYErnst & Young LLP (“EY”) audited and rendered opinions on the financial statements of the company and certain of its subsidiaries. EY also rendered an opinion on the company’s internal control over financial reporting as of December 31, 2012. In addition, EY provided the company with tax consulting and compliance services, accounting and financial reporting advice on transactions and regulatory filings and certain other services not prohibited by applicable auditor independence requirements as set forth above.requirements. On February 25, 2013, the company notified EY of its decision to dismiss EY, effective as of that date, and to appoint another independent registered public accounting firm. The decision to change independent registered public accounting firms was approved by Invesco’s Audit Committee. On February 28, 2013, Invesco engaged PwC as its new independent registered public accounting firm, effective immediately. The decision to engage PwC as Invesco’s independent registered public accounting firm was approved by Invesco’s Audit Committee. During the years ended December 31, 2012 and 2011, and through February 28, 2013, the date of PwC’s engagement, Invesco did not consult with PwC regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K. EY’s reports on Invesco’s financial statements for two fiscal years ended December 31, 2012 and 2011 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the two fiscal years ended December 31, 2012 and 2011, and in the subsequent period through February 25, 2013, the date of EY’s dismissal, there were no disagreements with EY on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of EY, would have caused EY to make reference to the subject matter of the disagreements in connection with their reports on our financial statements for such periods. There were no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K) during the two fiscal years ended December 31, 2012 and 2011, or in the subsequent period through February 25, 2013. Recommendation of the Boardboard THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPOINTMENT OF PWC AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBERThe board of directors unanimously recommends a vote “for” the appointment of PwC as the company’s independent registered public accounting firm for the fiscal year ending December 31, 20142015.. This proposal requires the affirmative vote of a majority of votes cast at the Annual General Meeting. If the appointment is not approved, the Audit Committee will reconsider the selection of PwC as the company’s independent registered public accounting firm.
Security Ownership of Principal Shareholders The following table sets forth the common shares beneficially owned as of February 15, 201417, 2015 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 431,527,336429,062,047 common shares outstanding as of February 15, 2014.17, 2015. | | | | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership(1) | | Percent of Class | T. Rowe Price Associates, Inc., 100 E. Pratt Street, Baltimore, Maryland 21202 | | 38,206,144(2) | | 8.9% | FMR LLC, 245 Summer Street, Boston, Massachusetts 02210 | | 30,721,160(3) | | 7.1% | BlackRock, Inc., 40 East 52nd Street, New York, NY 10022 | | 24,056,131(4) | | 5.6% | The Vanguard Group, 100 Vanguard Boulevard, Malvern, Pennsylvania 19355 | | 23,197,923(5) | | 5.4% | JPMorgan Chase & Co., 270 Park Avenue, New York, NY 10017 | | 23,158,117(6) | | 5.4% |
(1) | | | | | | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership1 | | Percent of Class (%) | | JPMorgan Chase & Co. | | 27,635,0742 | | | 6.4 | | 270 Park Avenue, New York, NY 10017 | | | | | | | The Vanguard Group | | 24,015,0543 | | | 5.6 | | 100 Vanguard Boulevard, Malvern, Pennsylvania 19355 | | | | | | | BlackRock, Inc. | | 23,472,3524 | | | 5.5 | | 40 East 52nd Street, New York, NY 10022 | | | | | | |
1 | Except as described otherwise in the footnotes to this table, each beneficial owner in the table has sole voting and investment power with regard to the shares beneficially owned by such owner. |
(2) | On February 11, 2014, T. Rowe Price Associates, Inc., on behalf of itself and certain of its affiliates (collectively, “Price Associates”) filed a Schedule 13G/A with the SEC indicating that T. Rowe Price had sole voting power with respect to 12,717,531 common shares, and sole investment power with respect to 38,167,344 common shares, of Invesco. These securities are owned by various individual and institutional investors for which Price Associates serves as an investment advisor with power to direct investments and/or sole power to vote the securities. For the purposes of the reporting requirements of the Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. |
(3) | On February 14, 2014, FMR LLC, on behalf of itself and certain of its affiliates (collectively, “Fidelity”) filed a Schedule 13G with the SEC indicating that Fidelity had sole voting power with respect to 6,760,242 common shares, and sole investment power with respect to 30,721,160 common shares, of Invesco. |
(4) | On February 3, 2014, BlackRock, Inc., on behalf of itself and certain of its affiliates (collectively, “BlackRock”) filed a Schedule 13G/A with the SEC indicating that BlackRock had sole voting power with respect to 19,880,850 common shares and sole investment power with respect to 24,056,131 common shares, of Invesco. |
(5) | On February 11, 2014, The Vanguard Group, on behalf of itself and certain of its affiliates (collectively, “Vanguard”) filed a Schedule 13G with the SEC indicating that Vanguard had sole voting power with respect to 722,894 common shares, sole investment power with respect to 22,520,831 common shares and shared investment power with respect to 677,092 shares, of Invesco. |
(6)2 | On January 28, 2014,15, 2015, JPMorgan Chase & Co. on behalf of itself and its wholly-owned subsidiaries (collectively, “JPMorgan Chase & Co.”) filed a Schedule 13G/A with the SEC indicating that they had sole voting power with respect to 21,237,47824,387,832 common shares, sole investment power with respect to 22,978, 24827,468,299 common shares, shared voting power with respect to 142,028114,247 common shares, and shared investment power with respect to 179,869166,775 common shares, of Invesco. |
3 | On February 10, 2015, The Vanguard Group, on behalf of itself and certain of its affiliates (collectively, “Vanguard”) filed a Schedule 13G/A with the SEC indicating that Vanguard had sole voting power with respect to 739,852 common shares, sole investment power with respect to 23,312,624 common shares and shared investment power with respect to 702,430 common shares, of Invesco. |
4 | On February 2, 2015, BlackRock, Inc., on behalf of itself and certain of its affiliates (collectively, “BlackRock”) filed a Schedule 13G/A with the SEC indicating that BlackRock had sole voting power with respect to 19,801,227 common shares and sole investment power with respect to 23,472,352 common shares, of Invesco. |
Security Ownership of Management The following table lists the common shares beneficially owned as of February 15, 201417, 2015 by (i)(1) each director and director nominee, (ii)(2) each executive officer named in the Summary Compensation Table below, and (iii)(3) all current directors, director nominees and executive officers as a group. The percentage of ownership indicated in the following table is based on 431,527,336429,062,047 of the company’s common shares outstanding on February 15, 2014.17, 2015. 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 15, 2014,17, 2015, upon the exercise of outstanding share options, but excludes deferred shares which are disclosed in a separate column. Unless otherwise indicated, all directors, director nominees and executive officers have sole voting and investment power with respect to the shares shown. No shares are pledged as security. As of February 15, 2014,17, 2015, no individual director, director nominee or named executive officer owned beneficially 1% or more of our common shares, and our directors, director nominees and executive officers as a group owned approximately 1.7%1.8% of our outstanding common shares. | Name | | Common Shares Beneficially Owned | | Deferred Share Awards(1) | | Total | | Common Shares Beneficially Owned | | | Deferred Share Awards1 | | | Total | | Rex D. Adams | | | | 66,534 | | | | | - | | | | | 66,534 | | | Sir John Banham | | | | 19,104 | | | | | - | | | | | 19,104 | | | Joseph R. Canion | | | | 31,182 | | | | | 5,925 | | | | | 37,107 | | | | 35,029 | | | | 5,925 | | | | 40,954 | | Martin L. Flanagan (2) | | | | 3,822,150 | | | | | - | | | | | 3,822,150 | | | Martin L. Flanagan2 | | | | 3,951,401 | | | | – | | | | 3,951,401 | | C. Robert Henrikson | | | | 7,063 | | | | | - | | | | | 7,063 | | | | 10,910 | | | | – | | | | 10,910 | | Ben F. Johnson III | | | | 19,085 | | | | | - | | | | | 19,085 | | | | 22,431 | | | | – | | | | 22,431 | | Denis Kessler | | | | 31,329 | | | | | - | | | | | 31,329 | | | | 35,176 | | | | – | | | | 35,176 | | Edward P. Lawrence | | | | 29,582 | | | | | - | | | | | 29,582 | | | | 32,034 | | | | – | | | | 32,034 | | J. Thomas Presby(3) | | | | 18,805 | | | | | | | | 18,805 | | | G. Richard Wagoner, Jr.(4) | | | | 5,714 | | | | | - | | | | | 5,714 | | | Phoebe A. Wood(5) | | | | 16,147 | | | | | - | | | | | 16,147 | | | J. Thomas Presby3 | | | | 22,652 | | | | – | | | | 22,652 | | Sir Nigel Sheinwald4 | | | | – | | | | – | | | | – | | G. Richard Wagoner, Jr.5 | | | | 9,561 | | | | – | | | | 9,561 | | Phoebe A. Wood6 | | | | 20,440 | | | | – | | | | 20,440 | | G. Mark Armour | | | | 255,539 | | | | | 162,453 | | | | | 417,992 | | | | 369,990 | | | | 73,847 | | | | 443,837 | | Andrew T. S. Lo | | | | 187,685 | | | | | 178,758 | | | | | 366,443 | | | | 283,442 | | | | 159,677 | | | | 443,119 | | Loren M. Starr | | | | 397,826 | | | | | - | | | | | 397,826 | | | | 423,837 | | | | | | 423,837 | | Philip A. Taylor | | | | 240,753 | | | | | 294,894 | | | | | 535,647 | | | | 231,927 | | | | 253,937 | | | | 485,864 | | All Directors and Executive Officers as a Group (18 persons) | | | | 6,811,775 | | | | | 681,225 | | | | | 7,493,000 | | | All Directors and Executive Officers as a Group (17 persons) | | | | 7,061,103 | | | | 509,096 | | | | 7,567,199 | |
(1)1 | For Mr. Canion, represents deferred shares awarded under our legacy Deferred Fees Share Plan. For the named executive officers, represents Restricted Stock Units under the 2008 Global Equity Incentive Plan and 2011 Global Equity Incentive Plan, as applicable. None of the shares subject to such awards may be voted or transferred by the participant. |
(2)2 | For Mr. Flanagan, includes an aggregate of 3,020,4983,188,276 shares held in trust and 400 shares held by Mr. Flanagan’s spouse. Mr. Flanagan has shared voting and investment power with respect to these shares. |
(3)3 | For Mr. Presby, includes 17,944 shares held in trust via a defined benefit account. Mr. Presby has sole voting and investment power with respect to these shares. |
(4)4 | Sir Nigel Sheinwald is a new nominee to the Board of Directors, and his service will commence upon his election at the 2015 Annual General Meeting of Shareholders. |
5 | For Mr. Wagoner, includes 5,000 shares held in trust via a defined benefit account. Mr. Wagoner has sole voting and investment power with respect to these shares. |
(5)6 | Ms. Wood has shared voting and investment power with respect to 64 shares. |
General Information Regarding
the Annual General Meeting
Questions and Answers About Voting Your Common Shares
| | | Why did I receive this Proxy61
|
General Information Regarding the Annual General Meeting Questions and answers about voting your common shares Q. Why did I receive this Proxy Statement? You have received these proxy materials because Invesco’s Board of Directors is soliciting your proxy to vote your shares at the Annual General Meeting on May 14, 2015. This proxy statement includes information that is designed to assist you in voting your shares and information that we are required to provide to you under SEC rules. Q. What is a proxy? A “proxy” is a written authorization from you to another person that allows such person (the “proxy holder”) to vote your shares on your behalf. The Board of Directors is asking you to allow any of the following persons to vote your shares at the Annual General Meeting: Ben F. Johnson III, Chairperson of the Board of Directors; Martin L. Flanagan, President and Chief Executive Officer; Loren M. Starr, Senior Managing Director and Chief Financial Officer; Colin D. Meadows, Senior Managing Director and Chief Administrative Officer and Kevin M. Carome, Senior Managing Director and General Counsel. Q. Why did I not receive my proxy materials in the mail? As permitted by rules of the SEC, Invesco is making this Proxy Statement and its Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (“Annual Report”) available to its shareholders electronically via the Internet. The “e-proxy” process expedites shareholders’ receipt of proxy materials and lowers the costs and reduces the environmental impact of our Annual General Meeting. On March 27, 2015, we mailed to shareholders of record as of the close of business on March 16, 2015 (“Record Date”) a Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access this Proxy Statement, our Annual Report and other soliciting materials via the Internet. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions included in the Notice for requesting such materials. Q. If you are delivering proxy materials via the Internet, why did I receive my proxy materials in the mail? Certain regulations that apply to the Invesco 401(k) Plan and the Invesco Money Purchase Plan require us to send copies of the proxy materials to persons who have interests in Invesco common shares through participation in those plans. These individuals are not eligible to vote directly at the Annual General Meeting. They may, however, instruct the trustees or plan administrators of these plans how to vote the common shares represented by their interests. Q. Who is entitled to vote? Each holder of record of Invesco common shares on the Record Date for the Annual General Meeting is entitled to attend and vote at the Annual General Meeting. Q. What is the difference between holding shares as a “shareholder of record” and as a “beneficial owner”? Statement?
n | | You have received these proxy materials because Invesco’s Board of Directors is soliciting your proxy to vote your shares at the Annual General Meeting on May 15, 2014. This proxy statement includes information that is designed to assist you in voting your shares and information that we are required to provide to you under SEC rules.
| What is a proxy?
| | A “proxy” is a written authorization from you to another person that allows such person (the “proxy holder”) to vote your shares on your behalf. The Board of Directors is asking you to allow any of the following persons to vote your shares at the Annual General Meeting: Rex D. Adams, Chairman of the Board of Directors; Martin L. Flanagan, President and Chief Executive Officer; Loren M. Starr, Senior Managing Director and Chief Financial Officer; Colin D. Meadows, Senior Managing Director and Chief Administrative Officer and Kevin M. Carome, Senior Managing Director and General Counsel.
| Why did I not receive my proxy
materials in the mail? | | As permitted by rules of the SEC, Invesco is making this Proxy Statement and its Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (“Annual Report”) available to its shareholders electronically via the Internet. The “e-proxy” process expedites shareholders’ receipt of proxy materials and lowers the costs and reduces the environmental impact of our Annual General Meeting.
| | | On March 31, 2014, we mailed to shareholders of record as of the close of business on March 17, 2014 (“Record Date”) a Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access this Proxy Statement, our Annual Report and other soliciting materials via the Internet. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions included in the Notice for requesting such materials.
| If you are delivering proxy
materials via the Internet,
why did I receive my proxy
materials in the mail?
| | Certain regulations that apply to the Invesco 401(k) Plan and the Invesco Money Purchase Plan require us to send copies of the proxy materials to persons who have interests in Invesco common shares through participation in those plans. These individuals are not eligible to vote directly at the Annual General Meeting. They may, however, instruct the trustees or plan administrators of these plans how to vote the common shares represented by their interests.
| Who is entitled to vote? | | Each holder of record of Invesco common shares on the Record Date for the Annual General Meeting is entitled to attend and vote at the Annual General Meeting. |
| | | What is the difference between
holding shares as a “shareholder
of record” and as a “beneficial
owner”?
| | • Shareholders of Record.Record. You are a shareholder of record if at the close of business on the Record Date your shares were registered directly in your name with Computershare, our transfer agent.
|
•
n | | Beneficial Owner.Owner. You are a beneficial owner if at the close of business on the Record Date your shares were held by a brokerage firm or other nominee and not in your name. Being a beneficial owner means that, like most of our shareholders, your shares are held in “street name.” As the beneficial owner, you have the right to direct your broker or nominee how to vote your shares by following the voting instructions your broker or other nominee provides. If you do not provide your broker or nominee with instructions on how to vote your shares, your broker or nominee will be able to vote your shares with respect to some of the proposals, but not all. Please see “What“What if I return a signed proxy or voting instruction card,,but do not specify how my shares are to be voted?voted?” below for additional information. |
•
n | | Invesco has requested banks, brokerage firms and other nominees who hold Invesco common shares on behalf of beneficial owners of the common shares as of the close of business on the Record Date to forward the Notice to those beneficial owners. Invesco has agreed to pay the reasonable expenses of the banks, brokerage firms and other nominees for forwarding these materials. | How many votes do I have?
| | Every holder of a common share on the Record Date will be entitled to one vote per share for each Director to be elected at the Annual General Meeting and to one vote per share on each other matter presented at the Annual General Meeting. On the Record Date there were 432,756,834 common shares outstanding and entitled to vote at the Annual General Meeting.
| What proposals are being
presented at the Annual
General Meeting?
| | Invesco intends to present proposals numbered one through four
|
Q. How many votes do I have? Every holder of a common share on the Record Date will be entitled to one vote per share for each Director to be elected at the Annual General Meeting and to one vote per share on each other matter presented at the Annual General Meeting. On the Record Date there were 431,064,514 common shares outstanding and entitled to vote at the Annual General Meeting. Q. What proposals are being presented at the Annual General Meeting? Invesco intends to present proposals numbered one through three for shareholder consideration and voting at the Annual General Meeting. These proposals are for: 1. Amendment to the Bye-Laws to declassify our Board of Directors;
2.
1 | Election of two (2)four (4) members of the Board of Directors; |
3.
2 | Advisory vote to approve the company’s executive compensation; and |
4.
3 | Appointment of PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm. |
Other than the matters set forth in this Proxy Statement and matters incident to the conduct of the Annual General Meeting, Invesco does not know of any business or proposals to be considered at the Annual General Meeting. If any other business is proposed and properly presented at the Annual General Meeting, the proxies received from our shareholders give the proxy holders the authority to vote on such matter in their discretion. Q. How does the Board of Directors recommend that I vote? The Board of Directors recommends that you vote: Other than the matters set forth in this Proxy Statement and matters incident to the conduct of the Annual General Meeting, Invesco does not know of any business or proposals to be considered at the Annual General Meeting. If any other business is proposed and properly presented at the Annual General Meeting, the proxies received from our shareholders give the proxy holders the authority to vote on such matter in their discretion.
| | |