UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Securities Exchange Act of 1934
Filed by the Registrant ☒ Filed by a party other than the Registrant ☐
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Soliciting Material |
Invesco Mortgage Capital Inc.
(Name of Registrant as Specified inIn Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
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Proxy
Statement
Notice of 20212024 Annual Meeting of Stockholders
Your vote is important: Please vote by using the Internet, the telephone or by signing, dating and returning a proxy card |
Jack HardinJohn S. Day
has served as Chair
since 20172023 and as a
non-executive director
since 20142009
A letter to our stockholders from the Chair of our Board of Directors
Dear Fellow Stockholder,
On behalf of the Board of Directors, I would like to express our sincere appreciation for your continued support as an investor in Invesco Mortgage Capital Inc. Our Board of Directors and management team are committed to strengthening our business and improving the return on your investment in our company.
A look back at 2020Company performance
As you know and as a result of the market disruption associated with the COVID-19 pandemic, we experienced illiquid markets and downward pressure on securities prices particularly non-agency holdings. We, were forced to sell a substantial portionlike many of our peers, continued to experience challenges in the Agency residential mortgage-backed securities and credit risk transfer securities portfolio(“RMBS”) market during the first ten months of 2023. Mortgage performance suffered in the first half of 2020the year due to generate liquiditythe regional banking crisis and reduce leverage. We resumed purchasing Agency residential mortgage-backed securitiesplummeted beginning in late September and early October as uncertainty with respect to the second half of 2020. We have reallocated our portfolioFederal Reserve’s monetary policy contributed to Agency RMBS and approximately 98% of our $8.2 billion investment portfolio was invested in Agency RMBS at year-end.
elevated interest rate volatility. Despite the volatile market conditions in 2020,2023, we were able to continue to pay a consistent dividend for each quarter. We also issued approximately 21.99.7 million shares of our common stock through our at-the-market program, during 2020 generating net proceeds of $73.7$109.1 million which allowed usand continued to rebuild scale, create aseek to better balance in our capital structure and invest in accretive assets. We subsequently raised proceedsby repurchasing over 422 thousand shares of approximately $103 million throughour Preferred Stock. In addition, our management team actively managed the issuance of additional common equityportfolio during the market volatility that began late in the firstthird quarter, which resulted in a favorable economic return for our stockholders for the 4th quarter of 20212023. While management remains cautious on mortgage valuations in the near-term, we believe that a potential reduction in interest rate volatility combined with compelling valuations and favorable funding conditions will support an attractive investment environment for Agency RMBS in 2024.
Our approach to create a better balance in our capital structure.
Diversitydirector recruitment and the Boardboard diversity
The Board remains committed to ensuring that it is composed of a highly capable diverse group of directors who are well-equipped to oversee the success of the company and effectively represent the interests of our stockholders. In 2020,During 2023, we amended our Corporate Governance Guidelinesadded two new members to formalize our practicethe Board, Katharine Kelley and Carolyn Gibbs. The addition of seeking out highly qualified candidates of diverse gender, race and ethnicity, as well as taking into account other factors that promote principles of diversity and ensuring that women and other underrepresented candidates are included in each pool of Board candidates. As evidence of our commitment to diversity representation on our Board, we recently added Beth A. Zayicek as a director and believe that she will providethese directors has provided the Board with valuablenew qualifications and perspectives and I am proud to report to you that our board is now comprised of a majority of diverse directors. We encourage you to review the qualifications, skills and perspective.
Communication with the Board
Asexperience that we conduct the activitieshave identified as important attributes for directors of the Board, a key priority is ensuring our company engages in robust engagement with you, the owners of the Company. Please continue to share your thoughts with us on any topic as we value your input, investment and support. The Board has established a process to facilitate communication by stockholders with the Board. Communications can be addressed to the Board of Directors in care of the Office of the Company Secretary, Invesco Mortgage Capital Inc., 1555 Peachtree Street NE, Atlanta, Georgia 30309 or by e-mail to company.secretary@invescomortgagecapital.com.
Your Board remains highly confident in the leadership, strategy and direction of the company.our director skills matrix.
Regards,
Jack HardinJohn S. Day
Chair and Non-Executive Director
20212024 Proxy Statement i
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Notice of 20212024 Annual Meeting of Stockholders
Date and time | Items of business | | Board voting recommendation |
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Tuesday, May at 2:00 p.m., Eastern Time | 1 | To elect seven (7) directors to the Board of Directors to hold office until the annual meeting of stockholders in
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| 2 | To hold an advisory vote to approve the company’s executive compensation
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3 | To approve the amendment and restatement of the Invesco Mortgage Capital Inc. 2009 Equity Incentive Plan to increase the number of shares authorized for issuance under the plan and make certain other revisions
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Voting methods | 4 | To appoint PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm for the fiscal year ending December 31,
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Internet Visit the web site listed on your Notice | ||||||||||||||||
Telephone Call the telephone number listed on your Notice | 5 | To consider and act upon such other business as may properly come before the meeting or any adjournment thereof | ||||||||||||||
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Who can vote Only holders of record of our common stock on March
By order of the Board of Directors,
Tina Carew, General Counsel and Company Secretary March |
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Proxy Statement
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Invesco Mortgage Capital Inc. (“Board” or “Board of Directors”) for the Annual Meeting of Stockholders to be held on Tuesday, May 7, 2024, at 2:00 p.m., Eastern Time. Please review the entire Proxy Statement and the company’s 2023 Annual Report on Form 10-K before voting. In this Proxy Statement, except where the context suggests otherwise, the terms “company,” “we,” “us,” and “our” refer to Invesco Mortgage Capital Inc., together with its consolidated subsidiaries, including IAS Operating Partnership LP, which we refer to as “our operating partnership”; “our manager” refers to Invesco Advisers, Inc., our external manager; and “Invesco” refers to Invesco Ltd., together with its consolidated subsidiaries, the indirect parent company of our manager.
Proxy statementStatement summary
This summary highlights selected information in this Proxy Statement. Please review the entire Proxy Statement and the company’s Annual Report on Form 10-K for the year ended December 31, 20202023 before voting.
Matters for stockholder voting
At this year’s Annual Meeting, we are asking our stockholders to vote on the following matters:
Proposal
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Our Directors and their qualifications The Board believes that all of the directors are highly qualified. As the chart below and biographies show, our directors have the significant leadership and professional experience, knowledge and skills necessary to provide effective oversight and guidance for the company’s strategy and operations. As a group, they represent diverse views, experiences and backgrounds. All the directors satisfy the criteria set forth in our Corporate Governance Guidelines and possess the characteristics that are essential for the proper functioning of our Board.
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Key: A – Audit C – Compensation NCG – Nomination and Corporate Governance M – Member Ch – Chair | ||||||||||||||||||||||||||||||||
Director qualifications | ||||||||||||||||||||||||||||||||
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John S. Day Former Partner, Deloitte & Touche LLP | 73 | 2009 | ✓ | 0 | Ch | M | M |
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Carolyn B. Handlon EVP Finance and Global Treasurer, Marriott International | 63 | 2017 | ✓ | 0 | M | Ch | M |
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Edward J. Hardin Partner, Rogers & Hardin LLP | 78 | 2014 | ✓ | 0 | M | M | M |
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James R. Lientz, Jr. Former COO, State of Georgia | 77 | 2012 | ✓ | 0 | M | M | Ch |
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Dennis P. Lockhart Former President and CEO of Federal Reserve Bank of Atlanta | 74 | 2017 | ✓ | 3 | M | M | M |
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Gregory G. McGreevey Senior Managing Director, Investments, Invesco Ltd. | 58 | 2016 | — | 0 | — | — | — |
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| Beth A. Zayicek Chief Operating Officer of Private Markets, Invesco Ltd. | 40 | 2021 | — | 0 | — | — | — |
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Our directors and their qualifications The Board believes that all of the directors are highly qualified. Our directors have the significant leadership and professional experience, knowledge and skills necessary to provide effective oversight and guidance for the company’s strategy and operations. All the directors satisfy the criteria set forth in our Corporate Governance Guidelines and possess the characteristics that are essential for the proper functioning of our Board. As a group, they represent diverse views, experiences and backgrounds. The matrix below is intended to depict notable competencies for each director in areas that our Board has identified as particularly valuable to the effective oversight of the company and the execution of our corporate strategy; not having a mark does not mean that a particular director does not possess that qualification or skill. Nominees have developed competencies in these skills through education, direct experience, and/or oversight responsibilities. Additional biographical information on each nominee is set out starting on page 6. |
2024 Proxy Statement 2 |
Governance highlights
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Independence • 5 out of our 7 current directors are independent. • All of our Board committees are composed exclusively of independent directors.
Independent Chair • We have an independent chair of our Board • The
Executive sessions • The independent directors regularly meet in private without management. • The Chair presides at these executive sessions.
Share ownership requirements • Board Refreshment • • | Board practices • Our Board annually reviews its effectiveness as a group, with directors participating in one-on-one interviews coordinated by an independent external advisor that reports the results of the annual review to the
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| Accountability • Directors must be elected annually by a majority of votes cast.
Insider trading restrictions • Our insider trading policy prohibits short selling, dealing in publicly-traded options, pledging and hedging or monetization transactions in our equity securities. 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. Diversity • Our Board seeks out highly qualified candidates of diverse gender, race and ethnicity, as well as taking into account other factors that promote principles of diversity. • Our Board ensures that women and underrepresented groups are included in each pool of candidates. Overboarding • All directors serve on the boards of three or fewer public companies. |
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Director nominees highlights
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Director tenure The tenure of our
As the Board considers new director nominees, it takes into account a number of factors, including nominees that have skills that will match the needs of the company’s long-term strategy and will bring diversity of thought, perspective, experience and background to our Board. Per our Corporate Governance Guidelines, the Board seeks out highly qualified candidates of diverse gender, race and ethnicity, as well as taking into account other factors that promote principles of diversity, and ensures that women and underrepresented candidates are included in each pool of candidates from which the Board nominees are chosen. For more information on our director nomination process, see Information about our Director Nominees — Director | ||
Stockholder engagement We value our stockholders’ perspectives and each year interact with stockholders through numerous engagement | ||
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FOR | Recommendation of the Board The | |||||
Vote required: This proposal requires the affirmative vote of a majority of votes cast at the Annual Meeting.
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Information about Director nominees
The Board believes that each of these nominees is qualified to serve as a director of the company and, in addition to the skills listed in the table on page 2, the specific qualifications of each nominee that were considered by the Board follow each nominee’s biographical description.
Director nominees for 2024
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John S. Day Chair, Non-executive director
Age Tenure
Current Committees: • Audit • Compensation • Nomination and Corporate Governance
Qualifications: • • • Executive Leadership • Risk Management • Accounting and Financial Reporting • Corporate Governance • Other Public | John S. Day John S. Day has served as
Director qualifications • • Public and private company board experience:Mr. Day served on the board of Lenbrook Square Foundation, Inc., from 2007 to 2019, where he was Chairman of the Board from 2012 to 2014 and was a member of the Finance and Governance and Nominating Committees. From September 2007 to December 2011, Mr. Day served on the board of directors of Force Protection, Inc., where he was the Chairman of the Audit Committee, and from 2010 to 2014, Mr. Day served on the board of Edens Investment Limited Partnership, where he was Chairman of the Audit Committee. |
Carolyn L. Gibbs Executive Director Age Tenure 62 >1 Year Qualifications: • Financial Services/Capital Markets • Mortgage Industry/MBS • Executive Leadership • Risk Management | Carolyn L. Gibbs Carolyn L. Gibbs has served as a director since September 2023. She has served as the Global Head of Investments Engagement and Services for Invesco since March 2023, with areas of responsibility including ESG, Global Thought Leadership and the Global Investors’ Forum, an initiative for Invesco’s multiple investment teams. She is a member of Invesco’s Global Investments Leadership team and a member of the Americas Executive Leadership team. Ms. Gibbs previously served as Head of Investments Engagement from 2017 to February 2023. Ms. Gibbs joined Invesco in 1992 as a fixed income analyst and has served in fixed income portfolio management and leadership roles during her tenure. She earned a BA degree in English, magna cum laude, from Texas Christian University, and an MBA in finance from the Wharton School of the University of Pennsylvania. Ms. Gibbs is a Chartered Financial Analyst. Director qualifications • Executive leadership, financial services/capital markets and mortgage industry/ MBS experience: Ms. Gibbs has over 30 years of fixed-income industry experience, including as an investment professional and in a series of senior management positions at Invesco. Ms. Gibbs’ deep experience with the fixed income and institutional investment products, including mortgage-backed securities, and her leadership of Invesco’s business in these areas provides the Board with great insight into issues facing the industry. |
2024 Proxy Statement 6 |
Carolyn B. Handlon Non-executive director
Age Tenure
Current Committees: • Audit (Chair) • Compensation • Nomination and Corporate Governance
Qualifications: • • • Executive Leadership • Risk Management • Accounting and • Corporate Governance • Other Public Company Board Experience | Carolyn B. Handlon Carolyn B. Handlon has served as a director since 2017 and as Chair of the Audit Committee since 2023, having previously served as Chair of the Compensation Committee since 2018. Ms. Handlon
Director qualifications • Financial services/capital markets and accounting and financial reporting expertise: Ms. Handlon • |
Katharine W. Kelley Non-executive director Age Tenure 60 1 Year Committees: • Audit • Compensation • Nomination and Corporate Governance Qualifications: • Corporate Governance • Mortgage Industry/MBS • Executive Leadership • Risk Management | Katharine W. Kelley Katharine W. Kelley is Owner and President of Green Street Properties, an Atlanta-based real estate development and consulting firm focused on creating urban infill, mixed-use properties. From 2016-2018, Ms. Kelley served as Executive Vice President-Development for Newport, an international private equity and real estate development firm. Prior to that, she served as Managing Director at Jamestown, an international real estate private equity firm, and Senior Vice President-Development at Post Apartment Development, a multifamily and mixed-use real estate development firm. Ms. Kelley received a Bachelor of Arts degree from the University of North Carolina at Chapel Hill, a Master of Science degree in Real Estate Development from Columbia University, and a Master of Business Administration from Harvard University. Director qualifications • Corporate governance, mortgage industry and executive leadership: Ms. Kelley has over 30 years of experience in urban infill, mixed-use and residential development, leading the development of more than $2 billion of properties while serving in senior positions, contributing multifamily residential and commercial real estate expertise to our board. She is nationally recognized for creative, catalytic development, product innovation and leadership of mixed-use projects. Ms. Kelley has served as a member of the Governance and Nominating Committee of The Westminster Schools since 2013, serving as its chair from 2013 through 2021. |
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Age Tenure
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Current Committees: • Audit • Compensation • Nomination and Corporate Governance (Chair)
Qualifications: • Executive leadership • • • Corporate Governance • Technical–Government, legal and regulatory |
Director qualifications •
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Dennis P. Lockhart Non-executive director
Age Tenure
Current Committees: • Audit • Compensation (Chair) • Nomination and Corporate Governance
Qualifications: • • • • Accounting and Financial Reporting • Other Public Company Board Experience | Dennis P. Lockhart Dennis P. Lockhart has served as a director since
Director qualifications • Executive leadership, • Civic and policy organization experience:Mr. Lockhart also brings valuable perspectives and experience to the Board given his service on various non-profit organizations, governance and advisory boards. | |
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Beth A. Zayicek Executive Director
Age Tenure
Qualifications: • Financial Services/Capital Markets • Mortgage Industry/MBS • Executive leadership • • Other Public Company Board Experience | Beth A. Zayicek Ms. Zayicek has served as a director since
Director qualifications • Executive leadership, |
Director independence
For a director to be considered independent, the Board must affirmatively determine that the director does not have any material relationships with the company either directly or as a partner, stockholder or officer of an organization that has a relationship with the company. Such determinations are made and disclosed pursuant to applicable 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: John S. Day, Carolyn B. Handlon, Edward J. Hardin, James R. Lientz, Jr.Katharine W. Kelley, Don H. Liu and Dennis P. Lockhart.
Board evaluation process
The Board engages an independent external advisor specializing in corporate governance to coordinate the Board’s self assessment by its members. The advisor provides each director with a questionnaire and then performs one-on-one confidential interviews with directors. | ||
The advisor prepares and presents a report in person to the Board, which discusses the findings of the advisor based upon its reviews. The report also discusses governance trends which the Board may want to take into consideration. | ||
The Board then discusses the evaluation to determine what actions, if any, could further enhance the operations of the Board and its committees. |
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Director recruitment
The Nomination and Corporate Governance Committee identifies and adds new directors using the following process:
The Nomination and Corporate Governance Committee reviews and updates its criteria for prospective directors based on succession planning for directors, to
We are committed to
Candidates meet with members of the Nomination and Corporate Governance Committee, the Board Chair and the other Board members who assess candidates based on several factors, including whether the nominee has skills that will meet the needs of the company’s objectives and will bring diversity of thought,
Due diligence is conducted, including soliciting feedback on potential candidates from persons outside the
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The Nomination and Corporate Governance Committee believes there are certain minimum qualifications that each director nominee must satisfy in order to be suitable for a position on the Board, including:
The Nomination and Corporate Governance Committee will consider candidates recommended for nomination to the Board by stockholders of the company. Stockholders may nominate candidates for election to the Board under Maryland law and our Bylaws. Our Bylaws provide that, with respect to an annual meeting of stockholders, nominations of individuals for election to our Board of Directors and the proposal of business to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by or at the direction of our Board of Directors or (3) by a stockholder who is a stockholder of record both at the time of giving the notice required by our Bylaws and at the time of the meeting, who is entitled to vote at the meeting and who has complied with the advance notice provisions set forth in our Bylaws. The manner in which the committeeCommittee evaluates candidates recommended by stockholders is generally the same as any other candidate. However, the committeeCommittee will also seek and consider information concerning any relationship between a stockholder recommending a candidate and the candidate to determine if the candidate can represent the interests of all of the stockholders. The committeeCommittee will not evaluate a candidate recommended by a stockholder unless the stockholder’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
2024 Proxy Statement 10 |
and to provide all of the information necessary to conduct an evaluation. For further information regarding deadlines for stockholder proposals, please see the section of this proxy statement below entitled Important Additional Information — Stockholder Proposals for the 20222025 Annual Meeting.
Communications with the Chair and non-executive directors
Any interested party may communicate with the Chair of our Board or towith our non-executive directors as a group at the following addresses:
E-mail: company.secretary@invescomortgagecapital.com
Mail: Invesco Mortgage Capital Inc.
1555 Peachtree1331 Spring Street N.E.NW
Atlanta, Georgia 30309
Attn: Office of the Company Secretary
Communications will be distributed to the Board, or to any of the Board’s committees or individual directors as appropriate, depending on the facts and circumstances of the communication. In that regard, the Board does not receive certain items which are unrelated to the duties and responsibilities of the Board.
In addition, our manager maintains the Invesco Mortgage Capital Compliance Reporting Linea Whistleblower Hotline for its employees of the manager or its affiliates or individuals outside the company to report complaints or concerns on an anonymous and confidential basis regarding questionable accounting, internal accounting controls or auditing matters and possible violations of the company’s Code of Conduct or law.
Persons may submit any complaint regarding accounting, internal accounting controls or auditing matters directly to the Audit Committee of the Board of Directors by sending a written communication appropriately addressed to:
Audit Committee
Invesco Mortgage Capital Inc.
1555 Peachtree1331 Spring Street N.E.NW
Atlanta, Georgia 30309
Attn: Office of the Company Secretary
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Board’s role in risk oversight
We believe that risk oversight responsibility rests with the full Board of Directors. Therefore, 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.
The company has in place an enterprise risk management committee consisting of executive and senior management. The committee meets regularly and maintains dialogue with the Board of Directors regarding the top risks of the company and mitigating actions to address them. By receiving quarterly reports, the Board maintains a practical understanding of the risk philosophy and risk appetite of the company.
In addition, since the company is externally managed, we also rely upon the operational and investment risk oversight functions of our manager and its Invesco affiliates. Our manager’sInvesco’s risk management framework provides the basis for consistent and meaningful risk dialogue up, down and across our manager and the company.dialogue. Our manager’s Global Performanceglobal investment risk and Risk Committee assessesperformance committee oversees the management of core investment risks, while our manager’s Corporate Risk Management Committee assesses strategic, operational andenterprise risk management committee oversees the management of all other business and strategic related risks. A network of regional, business unit specific and geographicspecific risk management committees, under the guidance and standardswith oversight of the Corporate Risk Management Committee, maintains anour manager’s enterprise risk management committee, provides ongoing riskidentification, assessment, management and monitoring processof risk that provides aensures both broad as well as bottom-upin-depth, perspective onmulti-layered coverage of the specific risk areasrisks existing and emerging in the various domains of our manager’s business.
Cyber security risk
Our Board of Directors oversees cybersecurity risk and receives updates, at a minimum, twice a year from our manager’s Chief Information Security Officer (or designee) (“CISO”) regarding cybersecurity, which updates include a review of our manager’s global security program and cybersecurity, including risks and protections for us and our manager. Our manager’s global operational risk management committee provides executive-level oversight and monitoring of the end-to-end programs dedicated to managing information security and cyber related risk. In addition, the CISO serves as a member of and provides quarterly updates to our company’s enterprise risk management committee, which in turn provides quarterly updates to our Board of Directors, and members of our management team are included in our manager’s incident response process in the event a cyber security incident occurs that could materially impact us.
Through this regular and consistent risk communication, the Board hasseeks to maintain reasonable assurance that all material risks of the company are being addressed and that the company is propagatingfostering a risk-aware culture in which effective risk management is built into the fabric ofembedded in the business.
Environmental, social and governance matters
We are primarily focused on investing in, financing and managing mortgage-backed securities and other mortgage-related assets. These investments provide capital to the housing market and help support home ownership, which can advance the important social impacts of individual wealth creation and community development.
Our manager believes that its long-term success depends on its ability to retain, develop, engage and attract top talent. Our manager invests significantly in talent development, health and welfare programs, technology and other resources that support its employees in developing their full potential both personally and professionally. Our manager believes that an employee community that is committed to environmental, socialdiverse and governance (“ESG”) investment stewardshipinclusive, engaged in community involvement and believes ESG investing is an essential part of the solution to a sustainable future. Invesco has been implementing ESG investment strategiesinvested in employee well-being will drive positive outcomes for over 30 yearsits clients and has received an A+ rating from PRI (Principles for Responsible Investment) for four consecutive years.shareholders. Our Mangermanager also values corporate stewardship and actively partners with non-profits, start-ups and other organizations to strengthen its communities. Our Manager believes its workforce should reflect the diversity of people and perspectives of the communities it serves, and that diversity and inclusion are both moral and business imperatives.
Cyber security
At a time when cyber threats are considered one of the most significant risks facing financial institutions,Operating environmentally responsibly is fundamental to our manager continues to invest in its security capabilities to keep its clients, employees, and critical assets safe, uphold privacy rights, and enable a secure and resilient business. Our manager has a designated Global Chief Security Officer and has a global security program that combines information (including cyber) security, physical security, privacy, business recovery and operational resilience, and strategy and reporting under a single umbrella supported by an intelligence function that provides timely threat information. Our manager’s information security program, led by its Chief Information Security Officer, is designed to oversee and maintain all aspects of information security risk and seeks to ensure the confidentiality, integrity and availability of information assets. This includes the implementation of controls aligned with industry guidelines and applicable statutes and regulations to identify threats, detect attacks and protect these information assets. Our manager has an incident response program that includes periodic testing and is designed to restore business operations as quickly and as orderly as possible in the event of a breach.corporate stewardship.
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Information about the Board and its committees
Board of directors and committees
Our Board of Directors has formed an Audit Committee, a Compensation Committee and a Nomination and Corporate Governance Committee and has adopted charters for each of these committees. Each of these committees currently has five directors, and the Board has affirmatively determined that each committee consists entirely of independent directors pursuant to rules established by the NYSE and rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the heightened independence standards for compensation committee and audit committee members. Moreover, the Compensation Committee is composed exclusively of individuals intended to be, to the extent provided by Rule 16b-3 of the Exchange Act, non-employee directors.
Board meetings and annual meeting of stockholders
During the calendar year ended December 31, 2020,2023, the Board held 128 meetings (not including committee meetings). Each then-serving 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 2020.2023. The Board does not have a formal policy regarding Board member attendance at stockholder meetings. Each directorAll but one of our then-serving directors attended the Annual Meeting of Stockholders in 2020.2023. The non-executive directors (those directors who are not officers or employees of Invesco and who are classified as independent directors under applicable NYSE standards) meet in executive session at least quarterly each year. Edward J. Hardin, ourThe Chair andwho is an independent director, presideshas presided at the executive sessions of the non-executive directors.
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Members:
Katharine W. Kelley Don H. Liu Dennis P. Lockhart
Independence: Each member of the committee is independent under SEC and NYSE rules and financially literate
Audit CommitteeFinancial Experts: Mr. Day and Ms. Handlon qualify under SEC rules and regulations
Meetings held in
| Under its charter, the committee: • is comprised of at least three members of the Board and each is “independent” under the NYSE and SEC rules and is also “financially literate,” as defined under NYSE rules; • members are appointed and removed by the Board; • is required to meet at least quarterly; • periodically meets with the internal auditor 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, whenever it deems appropriate to fulfill its duties; and • reports to the Board regularly.
The committee’s charter is available on the company’s website. The charter sets forth the committee’s responsibilities, which include assisting the Board 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. |
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15 IVR | Invesco Mortgage Capital Inc. |
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A member of our Board of Directors who is also an employee of Invesco is referred to as an executive director. Executive directors do not receive compensation for serving on our Board of Directors. Under the terms of its charter, the Compensation Committee annually reviews and determines the compensation paid to non-executive directors. In reviewing and making recommendations on non-executive director compensation, the Compensation Committee considers, among other things, the following policies and principles:
As a part of its annual review, the Compensation Committee engaged FTIFerguson Partners Consulting Inc.L.P. as aits independent third-party consultant to report on comparable non-executive director compensation practices and levels. ThisTheir report included a review of director compensation at peer company mortgage REITs with an investment focus in the company’s target assets.
In June 2020, following its review of current market practices for directors of peer public companies, the Compensation Committee determined to temporarily reduce the base fee by 25%Non-executive director compensation for the last three quarters of 2020 and, for the purposes of calculating equity awards for the remainder of 2020, to2023 service period is set the minimum share price at the greater of (i) $5 or (ii) the closing stock price on the grant date. Each compensation component is paid in quarterly installments in arrears.forth below.
Base fee | The annual base fee was | |
Equity award | Each non-executive director received an annual equity award in the amount of | |
Chair fee | The Chair of the Board received an additional annual cash fee of | |
Audit Committee Chair fee | The Chair of the Audit Committee received an additional annual cash fee of $20,000. | |
Compensation Committee Chair fee | The Chair of the Compensation Committee received an additional annual cash fee of $10,000. | |
Nomination and Corporate Governance Committee Chair fee | The Chair of the Nomination and Corporate Governance Committee received an additional annual cash fee of $10,000. |
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. Non-executive directors do not receive any meeting or attendance fees.
The company does not have a deferred compensation plan for its directors.
In November 2020,2023, the Compensation Committee approved a one-year vesting requirement for equity awards grantedan increase in the base fee from $85,000 to $95,000 per year for the 20212024 service period. The Compensation Committee also approvedThere were no other changes to the transition of granting equity awards on a quarterly basisnon-executive director compensation for services in arrears to an annual basis in payment for services in advance.the 2024 service period.
Stock ownership policy for non-executive directors — All shares awarded to ourOur non-executive directors are subject to the Non-Executive Director Stock Ownership Policy. The policy requires that within five years of the later of the effective date of the policy andor the date of such director’s first appointment as a non-executive director, each non-executive director achieve and thereafter maintain an ownership level of at least 17,500the lesser of (i) a number of shares equal to the fair market value of three times the annual cash retainer paid to the non-executive director or (ii) 8,000 shares. Until such ownership level is achieved, each non-executive director is required to continue to hold 100% of the shares received as compensation from the company.
The following table shows that, as of December 31, 2020, all of our non-executive directors met the requirements of the policy.
2024 Proxy Statement 16 |
IVR DirectorNon-executive director stock ownership policy table for 2020
Shares held as of December 31, 20202023
Ownership requirement: 17,500 sharesrequirement
Director compensation table |
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The following table sets forth the compensation paid to our non-executive directors during 2020.
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Name | Fees earned or paid in cash ($)1 | Share awards ($)2 | Total ($) | |||||||||
John S. Day | 81,250 | 69,116 | 150,366 | |||||||||
Carolyn B. Handlon | 71,250 | 69,116 | 140,366 | |||||||||
Edward J. Hardin | 101,250 | 69,116 | 170,366 | |||||||||
James R. Lientz, Jr. | 71,250 | 69,116 | 140,366 | |||||||||
Dennis P. Lockhart | 61,250 | 69,116 | 130,366 |
Ms. Kelley joined our board in March 2023. Based on current compensation levels, it is anticipated that Ms. Kelley will attain the share ownership requirement within the time period required by the policy. |
Director compensation table |
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The following table sets forth the compensation paid to our non-executive directors during 2023.
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Name | Fees earned or paid in cash ($)1 | Share awards ($)2 | Total ($) | |||||||||
John S. Day | 114,873 | 94,997 | 209,870 | |||||||||
Carolyn B. Handlon | 98,949 | 94,997 | 193,946 | |||||||||
Katharine W. Kelley | 49,583 | 112,581 | 162,164 | |||||||||
Don H. Liu | 88,949 | 94,997 | 183,945 | |||||||||
Dennis P. Lockhart | 88,949 | 94,997 | 183,945 | |||||||||
Retired Directors3 | ||||||||||||
Edward J. Hardin | 116,812 | - | 116,812 | |||||||||
James R. Lientz, Jr. | 85,362 | - | 85,362 |
1. | Includes the annual base fee and, as applicable, additional Chair of the Board fee and commitee Chair |
Reflects (i) with respect to Ms. Kelley, a grant as of March 15, 2023 of an equity award in the amount of 1,587 shares of common stock reflecting her service for the period March to May 2023; and (ii) with respect to each non-executive director (including Ms. Kelley), the grant as of May 15, 2023 of an annual equity award in the amount of 8,796 shares of common stock for the service period May 2023 to May 2024. The equity awards vest on the anniversary of the date of grant. The values in the table reflect the full grant date fair value of such equity awards, determined in accordance with U.S. generally accepted accounting |
The following table presents the grant date fair value for each equity award made to each non-executive director during 2020.
Name | Date of grant 2/21/20 ($) | Date of grant 6/24/20 ($) | Date of grant 8/10/20 ($) | Date of grant 11/10/20 ($) | Total grant date fair value ($) | |||||||||||||||
John S. Day | 22,496 | 17,190 | 14,805 | 14,625 | 69,116 | |||||||||||||||
Carolyn B. Handlon | 22,496 | 17,190 | 14,805 | 14,625 | 69,116 | |||||||||||||||
Edward J. Hardin | 22,496 | 17,190 | 14,805 | 14,625 | 69,116 | |||||||||||||||
James R. Lientz, Jr. | 22,496 | 17,190 | 14,805 | 14,625 | 69,116 | |||||||||||||||
Dennis P. Lockhart | 22,496 | 17,190 | 14,805 | 14,625 | 69,116 |
3. | Messrs. Hardin and Lientz retired from the board in May 2023. |
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Information about the Executive Officers of the company
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.
John M. Anzalone Mr. Anzalone has served as our Chief Executive Officer since 2017. Prior to becoming CEO, Mr. Anzalone served as our Chief Investment Officer since the company’s inception in 2009. Mr. Anzalone joined Invesco’s Fixed Income Division (“IFI”) in 2002, where until the end of 2023, he | ||||
John M. Anzalone Chief Executive Officer
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Age | Tenure | |||
Kevin M. Collins Mr. Collins has served as our President since 2017. Previously, he served as our Executive Vice President Commercial Mortgage Credit from March 2017 to October 2017 and as a Managing Director and our Head of Commercial Mortgage Credit from 2011 to March 2017. He is also the Co-Head of Structured Investments and Head of Commercial Mortgage Credit for Invesco Fixed Income. Mr. Collins graduated with a B.S. in accounting from Florida State University and earned an M.B.A. from the Kellogg School of Management at Northwestern University. | ||||
Kevin M. Collins President
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Age | Tenure | |||
Brian P. Norris Mr. Norris has served as our Chief Investment Officer since | ||||
Brian P. Norris Chief Investment Officer
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Age | Tenure | |||
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R. Lee Phegley, Jr. Mr. Phegley has served as our Chief Financial Officer since 2014. Mr. Phegley also serves as the Chief Financial Officer for Invesco Real Estate Income Trust Inc., | ||||
R. Lee Phegley, Jr. | ||||
Chief Financial Officer | ||||
Age | Tenure | |||
David B. Lyle Mr. Lyle has served as our Chief Operating Officer since 2017. Previously, he served as our Executive Vice President Residential Credit from March 2017 to October 2017 and as our Head of Residential Mortgage Credit from 2011 to March 2017. He is also the Co-Head of the Structured Investment Team and Head of Residential Mortgage-Backed Securities | ||||
David B. Lyle Chief Operating Officer | ||||
Age | ||||
45 |
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14 Years |
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Our manager makes all decisions relating to the compensation of our executive officers based upon a number of objectives and principles. | Overview of our manager’s compensation program and philosophy Our manager makes all decisions relating to the compensation of our executive officers based on such factors as our manager may determine are appropriate. However, our manager consults with the members of the Compensation Committee concerning the compensation policy of our manager that is applied to the individuals that serve as our executive officers. Our manager has structured its compensation programs • • • Reinforcing its commercial viability by closely linking rewards to •
• Discouraging excessive risk-taking that would have a material adverse impact on its clients, shareholders or company. |
With respect to investment professionals, which includes some of our executive officers, our manager applies the following compensation principles in making compensation decisions:
• Investment performance | • Qualitative assessment | |
Measure investment performance against indicators of client success on products for which the investment team is responsible | Ensure sufficient flexibility for management to exercise judgment over bonus funding outcomes, to ensure results make sense for Invesco and the team/individual | |
• Financial results Provide appropriate linkage to our manager’s financial results related to the investment team
• Balance Balance pay for investment performance with economic outcomes |
• Risk management Design plans that do not create risks that are reasonably likely to have a material adverse impact on Invesco |
Components of our executive officers’ compensation and their purpose
Our manager utilizes a variety of compensation components to achieve its objectives. Our manager’s compensation program that applies to our executive officers consists of base salary and variable incentive compensation. The following table further describes each pay component, as well as its purpose and key measures.
Fixed | ||||
Base salary Cash | • Provides •
| • • • Generally, remains static unless there is a promotion or adjustment needed due to industry trends | ||
Variable | ||||
Annual cash bonus | • • Aligns with company, business unit and individual performance | • | ||
Invesco annual deferral award (time-based vesting) | • Along with annual cash bonus, provides a competitive annual incentive opportunity • Aligns with Invesco client and • Encourages retention by vesting time | • • Award is denominated in Invesco’s product fund offerings and settled in cash | ||
Invesco long-term awards | • Recognizes • Aligns with Invesco client and
time | • • Award is denominated in a combination of Invesco equity awards and |
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Our executive officers’ incentive compensation is funded from an incentive pool which is the source of incentive compensation of all employees of | Our executive officers’ annual incentive compensation is funded from an annual incentive pool which is the source of incentive compensation of all employees of Invesco
For
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⬛ Incentive compensation | ||||||||||||
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⬛ Fixed compensation | ||||||||||||
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We have an executive officer stock ownership policy | Executive officer stock ownership policy In order to encourage the alignment of interests between our executive officers and our stockholders, we maintain an Executive Officer Stock Ownership Policy. The policy requires that, within five years of the date of the later of (i) the effective date of the policy or (ii) such executive officer’s first appointment: • the chief executive officer • the chief financial officer, the president, chief investment officer, and chief operating officer achieve an ownership level of at least
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All of our | ||
Insider Trading Policy and Procedures To promote compliance with applicable insider trading
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Hedging policy
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Clawback policy As required by the SEC, we have adopted and maintain a clawback policy. Because we do not pay incentive compensation to our executive officers, the scope of the policy does not impact our executive officers. | ||
Under the terms of the clawback policy, all incentive-based compensation that is awarded based wholly, or in part, upon attaining a financial measure received from our executive officers by the company is subject (if any) to the company’s Policy for Recoupment of Incentive Compensation (the “Clawback Policy”). The Clawback Policy provides for the forfeiture or “clawback” of incentive-based compensation to the extent practicable in the event that: | ||
1. the company issues a restatement of financial results to correct a material error: OR 2. the company experiences a little “r” restatement where an error occurs that is immaterial to the prior period financial statements; however, correcting the error, or the lack of correcting the error, in the current period would materially misstate the current period financial statements; AND the amount of incentive compensation that would have been awarded to the executive office (if any) had the financial results been properly reported would have been lower than the amount actually awarded. | ||
We believe the structure of the management fee does not create an incentive for excessive or unnecessary risk-taking by our management team and reduces the risk of conflicts of interest with our manager. | Certain risks related to our management fee Because our management fee is calculated as a percent of stockholders’ equity, subject to specified adjustments, we believe the structure of the management fee does not create an incentive for management to take excessive or unnecessary risks and reduces the risk of conflicts of interests with our manager. Stockholders’ equity as the basis for the calculation does not result in leveraged pay-out curves, steep pay-out cliffs or set unreasonable goals and thresholds, each of which can promote excessive and unnecessary risks. In addition, the management fee may not be increased or revised without the approval of our independent directors. | |
Consideration of prior advisory vote Our Compensation Committee noted the significant support received in the | ||
The Compensation Committee of the company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the committee recommended to the | ||
Respectfully submitted by the Compensation Committee: | ||
Dennis P. Lockhart (Chair) John S. Day
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Compensation Committee interlocks and insider participation
During 2020,2023, the following directors served as members of the Compensation Committee: Mr. Day, Ms. Handlon, Mr. Hardin, Mr. LientzLiu, Ms. Kelley and Mr. Lockhart. No member of the Compensation Committee was an officer or employee of the company or any of its subsidiaries during 2020,2023, 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 2020,2023, none of the executive officers of the company served on the boardBoard of directorsDirectors or on the Compensation Committee of any other entity that has or had executive officers that served as a member of the Board of Directors or Compensation Committee of the company.
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Security ownership of management
The following table lists the shares of common stock beneficially owned as of March 4, 20218, 2024 by (1) each director, (2) each executive officer, and (3) all current directors and executive officers as a group. The percentage of ownership indicated below is based on 230,847,71048,665,196 shares of the company’s common stock outstanding on March 4, 2021.8, 2024.
Beneficial ownership reported in the below table has been determined according to SEC regulations and includes common stock that may be acquired within 60 days after March 4, 2021.8, 2024. Unless otherwise indicated, all directors and executive officers have sole voting and investment power with respect to the shares shown. No shares are pledged as security. Individual directors and executive officers, as well as directors and executive officers as a group, beneficially own less than 1% of our common stock.
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Name | Shares owned | |||
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John M. Anzalone | ||||
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Kevin M. Collins | ||||
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John S. Day1 | ||||
Carolyn L. Gibbs | - | |||
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Carolyn B. Handlon | ||||
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Dennis P. Lockhart | ||||
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David B. Lyle2 | ||||
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Brian Norris3 | ||||
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Richard Lee Phegley, Jr. | ||||
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Beth A. | ||||
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All directors and executive officers as a group | ||||
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Mr. Day also owns |
2 Includes 548
2. | Includes 54 shares held by the spouse of Mr. Lyle. |
3. | Includes 82 shares held by the spouse of Mr. Norris. |
4. | For Ms. Zayicek, reflects shares held in trust. Ms. Zayicek has shared voting and investment power with respect to these shares. |
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FOR | Recommendation of the Board The | |||||
Vote required:This proposal requires the affirmative vote of a majority of votes cast at the Annual Meeting. | ||||||
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our belief that equity compensation is a critical means of aligning the interests with those of our stockholders. All equity awards granted to employees of our manager vest over a four-year period. Equity awards for our non-executive directors vest on the one-year anniversary of the date of grant. We believe that this is the best and simplest way to align the interests of our non-executive directors and employees of our manager who receive such awards with the interests of our stockholders, thus giving a significant incentive to appropriately increase stockholder value. | ||
• Equity compensation is an important tool to recruit and retain talent. Our competitors in the industry routinely use equity awards to compensate employees, and our manager’s employees who have significant company-related job responsibilities place a high value on equity compensation. Our equity awards are an important component of our manager’s compensation program. | ||
• Use of “full-value” awards. Our equity compensation program favors the use of “full- value” awards (as opposed to “appreciation” awards, such as stock options or stock appreciation rights). This can mitigate the potential dilutive effect of equity compensation, because the same value can be delivered in the form of a stock award using fewer shares than would be needed if delivered in the form of a stock option. | ||
Although the Amended Equity Plan provides for stock options and stock appreciation rights, the company has never granted stock options or stock appreciation rights, and it does not intend to do so in the foreseeable future. | ||
• The Amended Equity Plan has key features that serve stockholder interests. The Amended Equity Plan includes best practices with respect to governance and administration of equity compensation programs described in more detail below in Key Features. | ||
If this proposal is not approved, the Equity Plan will remain in effect although the remaining shares will not be sufficient to maintain our current approach to non-executive director compensation and our manager’s approach to compensation for its employees who devote substantial time and effort to the company. We believe that this change would adversely affect stockholders and stockholder value and negatively impact the alignment between non-executive directors and stockholder interests. Without an equity plan under which the company can issue additional shares, we would need to reduce significantly, or eliminate entirely, compensation that is paid in a form other than cash. |
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consistent with our stockholders’ interests. Material termsKey features of the Amended Equity Plan are described below. The complete text of the Amended Equity Plan is attached as Appendix A to this Proxy Statement.
Although the Equity Plan provides for stock options and stock appreciation rights, the company has never granted stock options or stock appreciation rights, and it does not intend to do so in the foreseeable future.
As of February 26, 2021, 81,248 shares were available for grant under the Equity Plan. If this proposal is not approved, the Equity Plan will remain in effect although the remaining shares will not be sufficient to maintain our current approach to employee and director compensation. We believe that this change would adversely affect stockholders and stockholder value and negatively impact the alignment between employee and stockholder interests. Without an equity plan under which Invesco can issue additional shares, we would need to reduce significantly, or eliminate entirely, compensation that is paid in a form other than cash. In addition, if our stockholders do not approve the Amended Equity Plan, we believe such action will impair our ability to compete for and retain our employees.
Key features of the Equity Plan
The Amended Equity Plan includes a number of features that promote best practices and protect Amended stockholder interests, including:
Administered by the Compensation Committee, which is composed entirely of independent directors who meet the SEC and NYSE standards for independence.
Fixed number of shares available for grant that will not automatically increase because of an “evergreen” feature.
Includes a double-trigger change-in-control provision that provides for the accelerated vesting of awards assumed following a change in control if a participant’s employment is terminated by the
Prohibits participants from borrowing against or transferring awards.
All incentive-based awards granted by the company to our executive officers are subject to forfeiture or “clawback.” See Clawback Policy for more information. Prohibits tax gross ups on awards.
Provides a minimum vesting period of one year for time-based awards.
awards are subject to
Provides a minimum vesting period of one-year for stock options and SARs.
Prohibits share recycling for stock options and stock appreciation rights. | ||||
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Material changes, including a material increase in authorized shares, require stockholder approval. |
Historic Useuse of Equityequity and Outstanding Awardsoutstanding awards
When considering the number of shares to add to the Amended Equity Plan, the Compensation Committee reviewed, among other things, the potential dilution to current stockholders as measured by run rate and overhang, and projected future share usage.
We recognize the dilutive impact of our equity compensation programs on our stockholders. We believe that our historical share usage and proposed Amended Equity Plan are prudent and in the best interests of our stockholders.
Run rate
“Run rate” provides a measure of our annual share utilization relative to the number of shares outstanding. As shown in the following table, the company’s three-year average run rate was less than 1%.
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2020 | 2019 | 2018 | 2023 | 2022 | 2021 | |||||||||||||||||||
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Granted during the year | 77,666 | 33,854 | 34,742 | 50,153 | 36,479 | 19,313 | ||||||||||||||||||
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Weighted average shares outstanding (basic ) (in millions) | 173.7 | 132.3 | 111.6 | 44,073,815 | 34,160,080 | 27,513,223 | ||||||||||||||||||
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Run rate | <1% | <1% | <1% | <1% | <1% | <1% | ||||||||||||||||||
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2024 Proxy Statement 30 |
Overhang and unvested share awards
“Overhang” refers to potential stockholder dilution represented by outstanding employee equity awards and shares available for future grant. Overhang is equal to the sum of outstanding awards plus shares available for grant, divided by common shares outstanding.
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Outstanding awards1 | Shares available for grant2 | Common shares outstanding3 | Overhang | |||||||||||||
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As of December 31, 2020 | 10,672 | 103,748 | 173.7 | <1% | ||||||||||||
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1. The company has no outstanding stock options or stock appreciation rights. 2. Assuming that our stockholders approve the Amended Equity Plan, 325,000 shares will be available for issuance. 3. Represents basic weighted average shares outstanding. |
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Information regarding equity compensation plans
The following table sets forth information about common shares that may be issued under our existing Equity Plan as of December 31, 2020.2023.
Equity compensation plan information
As of December 31, 2023
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plan | |||||||||||||
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Equity compensation plans not approved by stockholders | - | |||||||||||||||
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Total | ||||||||||||||||
48,816 |
1. Represents the Invesco Mortgage Capital Inc. 2009 Equity Incentive Plan, as amended and restated
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Impact on dilution
As noted above, if our stockholders approve the Amended Equity Plan, the maximum number ofan additional 325,000 shares will be available for issuance will be 400,000 shares.issuance. The Board believes that the potential dilution resulting from these shares is reasonable and that the issuance of these shares will provide an appropriate incentive for our non-executive directors and employees of our manager who devote substantial time and effort to the company to increase the value of the company for stockholders.
If our stockholders approve the Amended Equity Plan, based on historical grant levels and the company’s current stock price, the company anticipates that the shares will be sufficient to provide projected equity incentives until our 2023 Annual Meeting of Stockholders.2026 annual meeting. We believe that it is in the best interests of our stockholders to limit potential dilution from incentive share issuances and to seek stockholder approval for additional shares on a more frequent basis as necessary in the future.
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Summary of terms of the Amended Equity Plan
The following summary of the material features of the Amended Equity Plan is not intended to be complete and is qualified in its entirety by reference to the Amended Equity Plan, a copy of which is attached as Appendix A to this Proxy Statement. Capitalized terms used and not otherwise defined herein have the meanings set forth in the Amended Equity Plan.
General. Under the terms of the Amended Equity Plan, the Compensation Committee has the authority to grant restricted stock, restricted stock units, stock options, stock appreciation rights (“SARs”) and other stock-based awards. We anticipate that we will continue our current equity compensation practice of granting full value awards. We have never granted stock options or SARs.
Eligibility. Eligible individuals means non-employee directors, officers, employees and consultants of the company or any of its Affiliates, including a Participating Company, and prospective officers, employees and consultants who have accepted offers of employment or consultancy from a Company Affiliate or a Participating Company.
As of December 31, 2020,2023, there were twelveten employees of our manager who held equity awards under the Equity2009 Plan. In addition, each of our five non-executive directors receive stock-basedhold equity awards under the Equity2009 Plan.
Shares subject to the Amended Equity Plan. We are asking our stockholders to approve the Amended Equity Plan which will authorize up to 400,000325,000 shares. As noted above, as of February 26, 2021, 81,248 common shares remained available for grant.
Shares delivered in connection with awards under the Amended Equity Plan may be shares that are authorized but unissued shares or, if required by local law, shares delivered from a trust established pursuant to applicable law.
The number of common shares authorized for issuance under the Amended Equity Plan, as well as the number of shares subject to outstanding awards and the annual limitation on grants to any single individual, are subject to equitable adjustment upon the occurrence of any stock dividend or other distribution, recapitalization, stock split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange or other similar corporate transaction or event.
Share counting. Shares that are subject to awards granted under the Amended Equity Plan shall not be counted for purposes of the limits on the total number of shares that can be issued under the Amended Equity Plan or the number of shares that can be issued as incentive stock options in the following circumstances:
Shares tendered or withheld by the company in payment of the exercise price of stock options or SARs or to satisfy all or part of any tax withholding obligation related to such stock option or SAR shall be counted as shares that were issued under the Amended Equity Plan.
Limits on incentive stock options. The total number of shares that can be issued pursuant to incentive stock options cannot exceed 2,000 under the Amended Equity Plan.
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Types of awards. The Amended Equity Plan authorizes awards in the form of restricted stock, restricted stock units, stock options, SARs and other stock-based awards.
As noted above, the Amended Equity Plan provides for stock options even though the company has not granted stock options since 2005. The Amended Equity Plan also provides forand SARs although the company has never granted stock options or SARs. If stock options or SARs are granted under the Amended Equity Plan, they will be subject to the following limitations:
Minimum vesting requirements
Restricted stock and restricted stock units. Except with respect to the death, disability or involuntary termination (other than for cause or unsatisfactory performance) of a participant or the occurrence of a corporate transaction (including a change of control) or special circumstances determined by the committee, an award of restricted stock or restricted stock units subject solely to continued services shall have a minimum vesting period of not less than one year from the date of grant. In recent years, restricted stockEquity awards and restricted stock units granted to employees of the manager vest over a four-year period. Beginning in 2021, equityEquity awards granted to non-executive directors vest on the one year anniversary of the date of grant.
Stock options and SARs. Stock options and SARs are subject to a one-year minimum vesting period. The company has never granted stock options or SARs.
Termination of employment/services. ExceptWith respect to employees of our manager, except as otherwise provided in an award agreement, all unvested awards under the Amended Equity Plan are forfeited when a participant terminates employment with, or ceases performing services for, the manager of the company.
With respect to non-executive directors, except as otherwise provided in an award agreement, in the event of voluntary termination of service due to resignation or retirement, a prorated number of restricted shares (based on the time served during the restriction period) will be converted to unrestricted shares as of the first anniversary of the grant date, and the remaining shares will be forfeited.
33 IVR | Invesco Mortgage Capital Inc. |
Effect of a change of control. Awards that are not assumed in connection with a change of control will immediately vest at 100 percent. In the event of a change of control, with respect to awards that are assumed by the acquirer, then upon the participant’s termination of employment during the 24 months following a change in control (i) by the company (other than for cause or unsatisfactory performance) or (ii) by the participant for Good Reason, awards will vest at 100 percent unless otherwise provided in an award agreement.
Changes in capitalization and other corporate events. In the case of events affecting the capital structure of the company or certain corporate events such as a merger, the committee shall make adjustments and substitutions to shares reserved for issuance, awards limits, the number of shares subject to outstanding awards and the exercise price of outstanding awards under the Amended Equity Plan as it deems equitable and appropriate. The committee may also adjust performance goals to reflect unusual or non-recurring events and extraordinary items and for other similar reasons, but only to the extent that such adjustments would not cause awards that are intended to be exempt from Section 162(m) of the Internal Revenue Code (the “Code”) to lose that exemption.reasons.
Non-transferability. Awards under the Amended Equity Plan cannot be sold, assigned, transferred, pledged or otherwise encumbered, except by will and the laws of descent and distribution.
Tax withholding; no gross ups. The participant is responsible for all taxes legally due from a participant. Except as otherwise provided in an award agreement, employee withholding obligations may be settled in shares.
Administration. The Amended Equity Plan will continue to be administered by the Compensation Committee of the Board, unless the Board appoints a different committee. The committee will consist of two or more “non-employee directors” as defined in Rule 16b-3 under the Exchange Act. The committee is authorized to establish administrative rules and procedures, select the eligible individuals to whom awards will be granted, determine the types of awards and the number of shares covered by the awards and establish the terms and conditions for awards.
The committee may delegate its authority to administer the Amended Equity Plan to one or more persons, subject to applicable law. All decisions made by the committee with respect to the Amended Equity Plan will be final and binding on all persons.
Plan amendments and changes. The boardBoard or the Compensation Committee may amend, alter or discontinue the Amended Equity Plan, but no change is permitted without a participant’s consent to the extent that it would materially impair the participant’s rights under an outstanding award unless the change is made to comply with applicable law or stock exchange rules or to prevent adverse tax consequences to the company or a participant. In addition, no amendment will be made without the approval of the company’s stockholders if approval is required by applicable law or the listing standards of an applicable exchange.
Effective date. The Amended Equity Plan will be effective onas of the date that it is approved by our stockholders, as requested herein, and will terminate on the tenth anniversary of the effective date of the Amended Equity Plan.
Securities registration. We intend to file with the SEC an amendment to our registration statement on Form S-8 to cover the number of shares of common stock authorized for issuance under the Amended Equity Plan.
Certain U.S. federal income tax consequences
The following discussion is intended only as a general summary of the material U.S. federal income tax consequences of awards issued to employees of our manager under the Amended Equity Plan for the purposes of stockholders considering how to vote on this proposal. It is not intended as tax guidance to participants in the Amended Equity Plan. This summary does not take into account certain circumstances that may change the income tax treatment of awards for individual participants, and it does not describe the state or local income tax consequences of any award or the taxation of awards in jurisdictions outside of the U.S.
Restricted stock awards and restricted stock units. The fair market value of stock granted under a restricted stock award is generally includable by the participant as ordinary income when the award vests. In the case of restricted stock unit awards, any cash and the fair market value of any stock issued as payment under the awards is includible as ordinary income when paid. Any dividends or dividend equivalents paid on unvested restricted stock and restricted stock units are treated as ordinary income when paid.
2024 Proxy Statement 34 |
Stock options and SARs. The grant of a stock option or SAR generally has no tax consequences for a participant or the company. The exercise of an incentive stock option generally does not have tax consequences for a participant or the company, except that it may result in an item of adjustment for alternative minimum tax purposes for the participant. If a participant holds the shares acquired through the exercise of an incentive stock option for the time specified in the Code, any gain or loss arising from a subsequent disposition of the shares will be taxed as long- term capital gain or loss. If the shares are disposed of before the holding period is satisfied, the participant will recognize ordinary income equal to the lesser of (1) the amount realized upon the disposition and (2) the fair market value of such shares on the date of exercise minus the exercise price paid for the shares.
A participant recognizes ordinary income upon the exercise of a nonqualified stock option equal to the fair market value of the shares minus the exercise price for the shares. Upon the exercise of a SAR, the participant recognizes ordinary income equal to the amount paid to the participant, in cash and shares that represents the excess of the fair market value of a SAR over its exercise price. Any subsequent disposition of shares acquired through the exercise of a nonqualified stock option or a SAR will generally result in capital gain or loss, which may be short- or long-term, depending upon the holding period for the shares.
Deductions by the company. Except as explained below, the company generally is entitled to a deduction equal to the amount included in the ordinary income of participants and does not receive a deduction for amounts that are taxable to participants as capital gain.
Section 409A. The grant of certain types of incentive awards under the Amended Equity Plan, may be subject to the requirements of Section 409A of the Code. If an award is subject to Section 409A, and if the requirements of Section 409A are not met, a participant may be subject to tax on all or a portion of the award earlier than the times described above, and additional taxes, penalties and interest could apply. Stock options, SARs and restricted stock awards that comply with the terms of the Amended Equity Plan are intended to be exempt from the requirements of Section 409A. Restricted stock units granted under the Amended Equity Plan may be subject to the requirements of Section 409A but are intended to comply with those requirements to avoid early taxation, additional taxes, penalties and interest. Notwithstanding the foregoing, the company is not responsible for any taxes, penalties or interest imposed with respect to any awards granted under the Amended Equity Plan, including taxes, penalties or interest imposed under Section 409A.
New plan benefitsbenefits.. We currently expect that, if the Amended Equity Plan is approved by our stockholders, the first grants made under the Amended Equity Plan will be to our non-executive directors in May 20212024 in connection with the payment of their annual stock award. See Director Compensation above for more information about compensation paid tofor ournon-executive directors. The committee has not yet determined, and we cannot now anticipate, what other grants will be made under the Amended Equity Plan if it is approved. It is likely that amounts under the Amended Equity Plan will be made during the next annual incentive compensation cycle to select employees of the manager.
The closing price of our shares on the New York Stock Exchange on February 26, 2021March 8, 2024 was $3.89$9.14 per share.
FOR | Recommendation of the Board | |||
The | ||||
Vote required: This proposal requires the affirmative vote of a majority of votes cast at the Annual General Meeting. |
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Fees paid to independent registered public
accounting firm
The Audit Committee of the Board of Directors, with the approval of the stockholders, engaged PwC to perform an annual audit of the company’s consolidated financial statements for fiscal year 2020.2023. The following table sets forth the approximate aggregate fees billed or expected to be billed to the company by PwC for fiscal years 20202023 and 20192022 for the audit of the company’s annual consolidated financial statements and for other services rendered by PwC.
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Year ($ in thousands) | Year ($ in thousands) | |||||||||||
2020 | 2019 | 2023 | 2022 | |||||||||
Audit fees1 | $1,260 | $1,663 | $1,058 | $1,034 | ||||||||
Audit-related fees2 | — | — | — | $18 | ||||||||
Tax fees3 | — | — | — | — | ||||||||
All other fees4 | $1 | $1 | $1 | $1 | ||||||||
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Total fees | $1,261 | $1,664 | $1,059 | $1,053 | ||||||||
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Audit |
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Tax |
All |
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Membership and role of the Audit Committee
The Audit Committee consists of Ms. Handlon (Chair), Mr. Day, (Chair), Ms. Handlon,Kelley, Mr. Hardin, Mr. LientzLiu and Mr. Lockhart. 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 company’s website.
Review of the company’s audited consolidated financial statements for the fiscal year ended December 31, 20202023
The Audit Committee has reviewed and discussed the audited financial statements of the company for the fiscal year ended December 31, 20202023 with the company’s management. The Audit Committee has discussed with 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 PCAOB regarding the independent auditor’s communications with the Audit 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 on Form 10-K for the fiscal year ended December 31, 20202023 for filing with the Securities and Exchange Commission.
Respectfully submitted by the Audit Committee:
Carolyn B. Handlon (Chair)
John S. Day (Chair)
Carolyn B. HandlonKatharine W. Kelley
Edward J. Hardin
James R. Lientz, Jr.Don H. Liu
Dennis P. Lockhart
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General information regarding the annual meeting
Questions and answers about voting your common shares
Q. Why did I receive this Proxy Statement?
You have received these proxy materials because the company’s Board of Directors is soliciting your proxy to vote your shares at the Annual Meeting on May 4, 2021.7, 2024. 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 the rules of the SEC.
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 Meeting: Edward J. Hardin,John S. Day, Chair of the Board of Directors; John M. Anzalone, Chief Executive Officer; Kevin Collins, President; R. Lee Phegley, Jr., Chief Financial Officer and Rebecca S. Smith,Tina Carew, Vice President, General Counsel and and Secretary.
Q. Why did I not receive my proxy materials in the mail?
As permitted by rules of the SEC, we are making this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 20202023 (“Annual Report”) available to our stockholders electronically via the Internet. The “e-proxy” process expedites stockholders’ receipt of proxy materials and lowers the costs and reduces the environmental impact of our Annual Meeting.
Beginning on March 18, 2021,22, 2024, we mailed to stockholders of record as of the close of business on March 4, 20218, 2024 (“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. Who is entitled to vote?
Each holder of record of company common stock on the Record Date is entitled to attend and vote at the Annual Meeting.
Q. What is the difference between holding shares as a “stockholder of record” and as a “beneficial owner”?
Q. How many votes do I have?
Every holder of a share of common stock on the Record Date will be entitled to one vote per share for each Director to be elected at the Annual Meeting and to one vote per share on each other matter presented at the Annual Meeting. On the Record Date, there were 230,847,71048,665,196 shares of common stock outstanding and entitled to vote at the Annual Meeting.
Q. What proposals are being presented at the Annual Meeting?
The company intends to present proposals numbered one two, three andthrough four for stockholder consideration and voting at the Annual Meeting. These proposals are:
1. Election of seven (7) members of the Board of Directors;
2. Advisory vote to approve the company’s executive compensation;
3. Amendment and Restatement of the Invesco Mortgage Capital Inc. 2009 Equity Incentive Plan; and
4. Appointment of PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm.
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Other than the matters set forth in this Proxy Statement and matters incident to the conduct of the Annual Meeting, the company does not know of any business or proposals to be considered at the Annual Meeting. If any other business is proposed and properly presented at the Annual Meeting, the proxies received from our stockholders 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:
Q. How do I attend the Annual Meeting?
DueAll stockholders are invited to attend the Annual Meeting. An admission ticket (or other proof of share ownership) and some form of government-issued photo identification (such as a valid driver’s license or passport) will be required for admission to the public health impactAnnual Meeting. Only stockholders who own company common stock as of the COVID-19 pandemic and to support the health and well-being of our stockholders, employees, and our community, the Annual Meeting will be held over the Internet in a virtual meeting format only, with no in-person access. Stockholders attending the Annual Meeting remotely will have the same opportunities they have had at past annual meetings to participate, vote, ask questions, and provide feedback to the company’s management team and the Board of Directors.
If you were a stockholders of record at the close of business on the record date of March 4, 2021, you are eligible to access, participate inRecord Date and vote at the virtual meeting.
The meetinginvited guests will be hosted at www.meetingcenter.io/292373556. The meetingentitled to attend the meeting. An admission ticket will serve as verification of your stock ownership. Registration will begin promptlyat 1:00 p.m. Eastern Time and the Annual Meeting will begin at 2:00 p.m., Eastern TimeTime.
brokerage account, contact your bank or broker to obtain a written legal proxy in order to vote your shares at the meeting. If you holddo not obtain a legal proxy from your shares in “street name” or through an intermediary other than ComputerShare, such as a bank or broker, you must register in advance with Computersharewill not be entitled to vote your shares at the Annual Meeting, but you can still attend the Annual Meeting. To registerMeeting if you must submit proof of your proxy power (legal proxy) reflecting your Invesco Mortgage Capital Inc. holdings along with your name and email address to Computershare. Requests for registrationbring a recent bank or brokerage statement showing that you owned our common stock on the Record Date. You should include an email from your broker or an image of your legal proxy and be directed to Computershare via email at legalproxy@computershare.com. You may also mail your request to ComputerShare, Invesco Mortgage Capital Inc. Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001 Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on April 28, 2021. You will receive a confirmation email from Computershare of your registration, which will include your voter control number. If you not receive a control number from Computershare, you will not be able to access the virtual Annual Meeting as a stockholder. Guests will be able to listenreport to the virtualcheck-in area for admission to the Annual Meeting as well and may access the meeting without registering in advance.
You may submit your proxy in advance of the Annual Meeting via the Internet, phone or mail by following the instructions included on your proxy card or noticeNotice of Internet availabilityAvailability of proxy materials.Proxy Materials. Whether or not you plan to attend the Annual Meeting, we urge you to vote and submit your proxy in advance of the meeting using one of the methods described in the proxy materials.
Q. How do I vote and what are the voting deadlines?
You may vote your shares at the virtual Annual Meeting or by proxy. There are three ways to vote by proxy:
Even if you plan to participate in the virtual Annual Meeting, we encourage you to vote your common stock by proxy using one of the methods described above. Stockholders of record, and beneficial holders who register in advance with Computershare,obtain a legal proxy from their bank or broker, who attend the virtual Annual Meeting may vote their common stock during the meeting, even though they have sent in proxies.
2024 Proxy Statement 40 |
Q. May I change or revoke my vote?
Yes. You may change your vote in one of several ways at any time before it is cast at the Annual Meeting:
Q. What will happen if I do not vote my shares?
Q. What if I return a signed proxy or voting instruction card, but do not specify how my shares are to be voted?
Q. What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials?
It means you own company common stock in more than one account, such as individually and jointly with another person. Please vote all of your common stock.Please see the section entitled Householding of Proxy Materials below for information on how you may elect to receive only one Notice.
Q. What is a quorum?
A quorum is necessary to hold a valid meeting. The presence, virtuallyin person or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum for the conduct of business.
Q. What vote is required in order to approve each proposal?
For each proposal, the affirmative vote of a majority of the votes cast on such proposal at the Annual Meeting is required. Votes “cast” include only votes cast with respect to shares present at the virtual Annual Meeting or represented by proxy and excludes abstentions and broker non-votes.
Q. How will voting on any other business be conducted?
Other than the matters set forth in this Proxy Statement and matters incident to the conduct of the Annual Meeting, we do not know of any business or proposals to be considered at the Annual Meeting. If any other business is proposed and properly presented at the Annual Meeting, the persons named as proxies will vote on the matter in their discretion.
Q. What happens if the Annual Meeting is adjourned or postponed?
Your proxy will still be effective and will be voted at the rescheduled Annual Meeting. You will still be able to change or revoke your proxy until it is voted.voted.
Q. Who will count the votes?
A representative of Computershare, our transfer agent, will act as the inspector of election and will tabulate the votes.
Q. How can I find the results of the Annual Meeting?
Preliminary results will be announced at the Annual Meeting. Final results will be published in a Current Report on Form 8-K that we will file with the SEC within four (4) business days after the Annual Meeting.
41 IVR | Invesco Mortgage Capital Inc. |
Important additional information
Costs of solicitation
The cost of solicitation of proxies will be paid by the company. We have retained Alliance Advisors LLC to solicit proxies for a fee of approximately $6,500$10,000 plus a reasonable amount to cover expenses. Proxies may also be solicited in person, by telephone or electronically by Invesco personnel who will not receive additional compensation for such solicitation. Copies of proxy materials and our Annual Report on Form 10-K will be supplied to brokers and other nominees for the purpose of soliciting proxies from beneficial owners, and we will reimburse such brokers or other nominees for their reasonable expenses.
Principal executive offices
Our principal executive office is located at 1555 Peachtree1331 Spring Street NE,NW, Atlanta, Georgia 30309. Our telephone number is (404) 892-0896.
Stockholder proposals for the 20222025 annual meeting
In accordance with the rules established by the SEC, any stockholder proposal submitted pursuant to Rule 14a-8 under the Exchange Act intended for inclusion in the proxy statement for next year’s annual meeting of stockholders must be received by us no later than 120 days before the anniversary of the date of this Proxy Statement (e.g. not later than November 18, 2021)22, 2024). Such proposals should be sent to our Company Secretary in writing to Invesco Mortgage Capital Inc., Attn: Office of the Company Secretary, 1555 Peachtree1331 Spring Street N.E.,NW, Atlanta, Georgia 30309. To be included in the Proxy Statement, the proposal must comply with the requirements as to form and substance established by the SEC and our Bylaws, and must be a proper subject for stockholder action under Maryland law.
A stockholder may otherwise propose business for consideration or nominate persons for election to the Board in compliance with SEC proxy rules, Maryland law, our Bylaws and other legal requirements, without seeking to have the proposal included in the company’s proxy statement pursuant to Rule 14a-8 under the Exchange Act. Under our Bylaws, notice of such a proposal must generally be provided to our Company Secretary not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting. The period under our Bylaws for receipt of such proposals for next year’s meeting is thus from October 19, 202123, 2024 to November 18, 2021.22, 2024. (However, if the date of the annual meeting is advanced or delayed by more than 30 days from such anniversary date, any notice by a stockholder of business or the nomination of directors for election or reelection to be brought before the annual meeting to be timely must be so delivered (i) not earlier than the 150th day prior to such annual meeting and (ii) not later than 5:00 p.m., Eastern Time on the later of (A) the 120th day prior to such annual meeting and (B) the 10th day following the day on which public announcement of the date of such meeting is first made.) SEC rules permit proxyholders to vote proxies in their discretion in certain cases if the stockholder does not comply with these deadlines, and in certain other cases notwithstanding compliance with these deadlines.
In addition to the notice and information requirements contained in our Bylaws, and consistent with the universal proxy rules, stockholders who, in connection with next year’s annual meeting intend to solicit proxies in support of director nominees other than our company’s nominees must provide notice that sets forth the information required by Rule 14a-19 no later than March 9, 2025, unless the date of next year’s annual meeting has changed by more than 30 calendar days from the anniversary date of the Annual Meeting, in which case such notice must be provided by the later of 60 calendar days prior to the date of the Annual Meeting or the 10th calendar day following the day on which public announcement of the date of next year’s annual meeting is first made by our company.
United States Securities and Exchange Commission reports
A copy of the company’s Annual Report on Form 10-K, including financial statements, for the fiscal year ended December 31, 20202023 (the “Annual Report”), is being furnished concurrently herewith to all stockholders as of the Record Date. Please read it carefully.
Stockholders may obtain a copy of the Annual Report, without charge, by visiting the company’s website or by submitting a request to our Company Secretary at: company.secretary@invescomortgagecapital.com or by writing Invesco Mortgage Capital Inc., Attn: Office of the Company Secretary, 1555 Peachtree1331 Spring Street N.E.,NW, Atlanta, Georgia 30309 or by phone at (404) 892-0896. Upon request to our Company Secretary, the exhibits set forth on the exhibit index of the Annual Report may be made available at a reasonable charge (which will be limited to our reasonable expenses in furnishing such exhibits).
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Householding of proxy materials
The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for Proxy Statements and Annual Reports with respect to two or more stockholders sharing the same address by delivering a single Proxy Statement and Annual Report addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
A number of banks and brokers with account holders who are beneficial holders of the company’s common stock will be householding the company’s proxy materials or the Notice. Accordingly, a single copy of the proxy materials or Notice will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive separate proxy materials or copies of the Notice, please notify your bank or broker, or contact our Company Secretary at: company.secretary@invescomortgagecapital.com, or by mail to Invesco Mortgage Capital Inc., Attn: Office of the Company Secretary, 1555 Peachtree1331 Spring Street N.E.,NW, Atlanta, Georgia 30309, or by telephone to 404-892-0896. The company undertakes, upon oral or written request to the address or telephone number above, to deliver promptly a separate copy of the company’s proxy materials or the Notice to a stockholder at a shared address to which a single copy of the applicable document was delivered. Stockholders who currently receive multiple copies of the proxy materials or the Notice at their address and would like to request householding of their communications should contact their bank or broker or the Company Secretary at the contact address and telephone number provided above.
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Appendix A - Amended and restatedRestated Invesco
Mortgage Capital Inc. 2009 Equity Incentive Plan
1. Purpose |
The purpose of the Invesco Mortgage Capital Inc. 2009 Equity Incentive Plan (the “Plan”“Plan”) is to give Invesco Mortgage Capital, Inc., a Maryland corporation (the “Company”“Company”) a competitive advantage in attracting, retaining and motivating officers, employees, directors and/or consultants and to provide the Company, Participating Companies, and any Affiliates with a long-term incentive plan providing incentives directly linked to Stockholder value.
2. Effective Date and Term of Plan
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The Plan was initially effective as of June 30, 2009.2009 and was most recently amended and restated May 3, 2022. This amendment and restatement was adopted by the Board on February 19, 202121, 2024 and, pending Stockholder approval, is effective as of the date that it is approved by the Stockholders of the CompanyMay 7, 2024 (the “Effective Date”). This amendment and restatement is effective with respect to Awards made on or after May 4, 2021.7, 2024. Awards may be granted under the Plan until the date that is ten years after the Effective Date, unless the Plan is discontinued earlier pursuant to Section 14.
3. Types of Awards |
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and Other Stock-Based Awards may be granted under the Plan.
4. Definitions |
Except as otherwise specifically provided in an Award Agreement, each capitalized word, term or phrase used in the Plan shall have the meaning set forth in this Section 4 or, if not defined in this Section, the first place that it appears in the Plan.
“AffiliateAffiliate” ” means a corporation or other entity controlled by, controlling or under common control with, the Company; provided, however, that solely for purposes of determining whether a Participant has a Termination of Service that is a “separation from service” within the meaning of Section 409A of the Code, an “Affiliate” of a corporation or other entity means all other entities with which such corporation or other entity would be considered a single employer under Sections 414(b) or 414(c) of the Code.
“Applicable ExchangeExchange” ” means the New York Stock Exchange or such other securities exchange as may at the applicable time be the principal market for the Shares.
“AwardAward” ” means an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Other Stock-Based Award granted pursuant to the terms of the Plan.
“Award AgreementAgreement” ” means a written document or agreement setting forth the terms and conditions of a specific Award and any addendum thereto.
“Beneficiary” means the person(s) or trust(s) entitled by will or the laws of descent and distribution to receive any amounts payable or exercise any applicable rights under the Participant’s Awards after the Participant’s death.
“BoardBoard”” means the Board of Directors of the Company.
“Cause”Cause”means, with respect to a Participant, (i) if such Participant is a party to an Individual Agreement at the time of the Termination of Service that defines such term (or word(s) of similar meaning), the meaning given in such Individual Agreement or (ii) if there is no such Individual Agreement or if it does not define Cause (or word(s) of similar meaning): (A) the Participant’s plea of guilty or nolo contendere to, or conviction of, (1) a felony (or its equivalent in a non-United States jurisdiction) or (2) other conduct of a criminal nature that has or is likely to have a materialan adverse effect on the reputation or standing in the community of the Company, Participating Company, or any Affiliates, as determined by the Committee in its sole discretion, or that legally prohibits the Participant from working for the Company, Participating Company, or any Affiliates; (B) a breach by the Participant of a regulatory rule that adversely affects the Participant’s ability to perform the Participant’s employment duties to the Company, Participating Company, or any Affiliates in any material respect; (C) the Participant’s failure, in each case in any material respect, to (1) perform the Participant’s employment duties, (2) comply with the applicable policies, codes of conduct or employee manuals of the Company, Participating Company, or any Affiliates, (3) follow reasonable directions received from the Company, Participating Company, or any Affiliates or (4) comply with covenants contained in any Individual Agreement or Award Agreement to which the Participant is a party; or (D) with respect to Participants employed outside of the
United States, such other definition as may be codified under local laws, rules and regulations. With respect to a Participant’s termination of directorship, “Cause” shall include only an act or failure to act that constitutes cause for removal of a director under the Company’s bylaws.
2024 Proxy Statement 44 |
“Change in ControlControl”” means any of the following events:
(i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty-five percent (25%) or more of either (A) the then outstanding shares of the Company (the “Outstanding Company Shares”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) below; or
(ii) during any period of twelve (12) consecutive months, individuals who, as of January 1, 2021,2024, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to January 1, 20212024 whose election, or nomination for election by the Company’s Stockholders, was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (each, a “Corporate Transaction”), in each case, unless, following such Corporate Transaction, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Shares and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or other entity resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction of the Outstanding Company Shares and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan or related trust of the Company or of such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of, respectively, the then outstanding shares of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (C) at least a majority of the members of the board of directors of the corporation (or other governing board of a non-corporate entity) resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or
(iv) approval by the Stockholders of the Company of a complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, an event described above shall be a Change in Control with respect to an Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code only if such event is also a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A of the Code to the extent necessary to avoid the imposition of any tax or interest or the inclusion of any amount in income thereunder.
“CodeCode” ” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto, the Treasury Regulations thereunder and other relevant interpretive guidance issued by the Internal Revenue Service or the Treasury Department. Reference to any specific section of the Code shall be deemed to include such regulations and guidance, as well as any successor section, regulations and guidance.
“CommitteeCommittee” ” means the Compensation Committee of the Board or such other committee or subcommittee of the Board as may be appointed by the Board to act as the Committee under the Plan. If at any time there is no such Compensation Committee or other committee or subcommittee appointed by the Board, the Board shall be the Committee. The Committee shall consist of two or more directors, each of whom is intended to be, to the extent required by Rule 16b-3 of the Exchange Act, a “non-employee director” as defined in Rule 16b-3 of the Exchange Act and, to the extent required by Section 162(m) of the Code, an “outside director” as defined under Section 162(m) of the Code.Act. Any member of the Committee who does not meet the foregoing requirements shall abstain from any
decision regarding an Award and shall not be considered a member of the Committee to the extent required to comply with Rule 16b-3 of the Exchange Act or Section 162(m) of the Code.Act.
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“DisabilityDisability” ” means, with respect to a Participant, (i) a “disability” (or words of similar meaning) as defined in any Individual Agreement to which the Participant is a party at the relevant time or (ii) if there is no such Individual Agreement or it does not define “disability” (or words of similar meaning): (A) a permanent and total disability as determined under the long-term disability plan applicable to the Participant; (B) if there is no such plan applicable to the Participant, “Disability” as determined by the Committee in its sole discretion; or (C) with respect to Participants employed outside the United States, such other definition as may be codified under local laws, rules and regulations. The Committee may require such medical or other evidence as it deems necessary to judge the nature and permanency of the Participant’s condition. Notwithstanding the foregoing, with respect to an Incentive Stock Option, “Disability” shall mean a “Permanent and Total Disability” as defined in Section 22(e)(3) of the Code and, with respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, “Disability” shall mean a “disability” as defined under Section 409A of the Code to the extent necessary to avoid the imposition of any tax or interest or the inclusion of any amount in income thereunder.
“DisaffiliationDisaffiliation”” means an Affiliate’s or business division’s ceasing to be an Affiliate or business division for any reason (including, without limitation, as a result of a public offering, or a spinoff or sale by the Company, of the stock of the Affiliate or a sale of a business division of the Company).
“Eligible IndividualsIndividuals”” means non-employee directors, officers, employees and consultants of the Company or any of its Affiliates, including a Participating Company, and prospective officers, employees and consultants who have accepted offers of employment or consultancy from a Company Affiliate or a Participating Company.
“Exchange ActAct”” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.Reference to any specific section of the Exchange Act shall be deemed to include such regulations and guidance issued thereunder, as well as any successor section, regulations and guidance.
“Fair Market ValueValue”” means, unless otherwise determined by the Committee, the closing price of a Share on the Applicable Exchange on the date of measurement or, if Shares are not traded on the Applicable Exchange on such measurement date, then on the next preceding date on which Shares are traded, all as reported by such source as the Committee may select. If the Shares are not listed on a national securities exchange, Fair Market Value shall be determined by the Committee in its good faith discretion.
“Good ReasonReason”” means, with respect to a Participant, (i) if such Participant is a party to an Individual Agreement at the time of the Termination of Service that defines such term (or word(s) of similar meaning), the meaning given in such Individual Agreement or (ii) if there is no such Individual Agreement or if it does not define Good Reason (or word(s) of similar meaning), during the 24-month period following a Change in Control, actions taken by the Company, Participating Company, or any Affiliates resulting in a material negative change in the employment relationship of the Participant who is an officer or an employee including, without limitation:
(i) the assignment to the Participant of duties materially inconsistent with the Participant’s position (including status, titles and reporting requirements), authority, duties or responsibilities, or a material diminution in such position, authority, duties or responsibilities, in each case from those in effect immediately prior to the Change in Control;
(ii) a material reduction of the Participant’s aggregate annual compensation, including, without limitation, base salary and annual bonus opportunity, from that in effect immediately prior to the Change in Control;
(iii) a change in the Participant’s principal place of employment that increases the Participant’s commute by 40 or more miles or materially increases the time of the Participant’s commute as compared to the Participant’s commute immediately prior to the Change in Control;Control but excluding, for the avoidance of doubt, a change that requires a Participant to forego one or more days of remote work and perform such work in person at a Company office; or
(iv) any other action or inaction that constitutes a material breach by the Company, Participating Company, or any Affiliates of any Individual Agreement.
In order to invoke a Termination of Service for Good Reason, a Participant must provide written notice to the Company, Participating Company, or any Affiliates with respect to which the Participant is employed or providing services of the existence of one or more of the conditions constituting Good Reason within ninety (90) days following the Participant’s knowledge of the initial existence of such condition or conditions, specifying in reasonable detail the conditions constituting Good Reason, and the Company shall have thirty (30) days following receipt of such written notice (the “Cure Period”) during which it may remedy the condition. In the event that the Company, Participating Company, or any Affiliate fails to remedy the condition constituting Good Reason during the applicable Cure Period, the Participant’s Termination of Service must occur, if at all, within ninety (90) days following such Cure Period in order for such termination as a result of such condition to constitute a Termination of Service for Good Reason.
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“Grant DateDate” ” means (i) the date on which the Committee by resolution selects an Eligible Individual to receive a grant of an Award, establishes the number of Shares to be subject to such Award and, in the case of an Option or Stock Appreciation Right, establishes the exercise price of such Award or (ii) such later date as the Committee shall provide in such resolution.
“Incentive Stock OptionOption”” means any Option that is designated in the applicable Award Agreement as an “incentive stock option” within the meaning of Section 422 of the Code and otherwise meets the requirements to be an “incentive stock option” set forth in Section 422 of the Code. Each Option granted pursuant to the Plan will be treated as a Nonqualified Option unless, as of the Grant Date, it is expressly designated as an Incentive Stock Option in the applicable Award Agreement.
“Individual AgreementAgreement”” means a written employment, consulting or similar agreement between a Participant and the Company, Participating Company, or any Affiliates.
“ISO Eligible EmployeesEmployees”” means an employee of the Company, any subsidiary corporation (within the meaning of Section 424(f) of the Code) or parent corporation (within the meaning of Section 424(e) of the Code), or Participating Company.
“ManagerManager”” means Invesco Advisers, Inc. the Company’s manager.
“Nonqualified OptionOption”” means any Option that is not an Incentive Stock Option.
“OptionOption”” means an Incentive Stock Option or Nonqualified Option granted under Section 8.
“Other Stock-Based AwardAward”” means an Award of Shares or any other Award that is valued in whole or in part by reference to, or is otherwise based upon, Shares, including (without limitation) unrestricted stock, dividend equivalents and convertible debentures, granted under Section 11.
“ParticipantParticipant”” means an Eligible Individual to whom an Award is or has been granted and who has accepted the terms and conditions of the Plan as set forth in Section 5(f) hereof.
“Participating CompanyCompany”” means the Company, the Subsidiaries, the Manager and any of their respective Affiliates, which with the consent of the Board participates in the Plan.
“Performance GoalsGoals”” means specified goals, other than the performance goals established bymere continuation of employment or the Committee in connection withmere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of Awards. Inan Award. A Performance Goal and any targets with respect thereto need not be based upon an increase, a positive or improved result or avoidance of loss and may be applied, without limitation, to a Participant individually, or to a business unit or division of the case of Qualified Performance-Based Awards, (i) such goals shallCompany or an Affiliate or to the Company as a whole. A Performance Goal may also be based on individual performance and/or subjective performance goals (or any combination of any of the attainment of specified levels ofgoals described in this definition). The Committee may provide that one or more of the following objective measures with regard to the Company (or an Affiliate, Participating Company, business division or other operational unit of the Company): operating revenues, annual revenues, net revenues, clients’ assets under management (“AUM”), gross sales, net sales, net asset flows, revenue weighted net asset flows, cross selling of investment products across regions and distribution channels, investment performance by account or weighted by AUM (relative and absolute performance), investment performance ratings as measured by recognized third parties, risk adjusted investment performance (information ratio, Sharpe ratio), expense efficiency ratios, expense management, operating margin, adjusted operating margin, net revenue yield on AUM, client redemption rates and new account wins and size of pipeline, market share, customer service measures or indices, success of new product launches as measured by revenues, asset flows, AUM and investment performance, profit margin, operating profit margin, earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization), earnings per share, adjusted earnings per share, diluted earnings per share, adjusted diluted earnings per share, earnings per share growth, adjusted earnings per share growth, diluted earnings per share growth, adjusted diluted earnings per share growth, operating income (including pre-cash bonus operating income or pre-incentive operating income), adjusted operating income (including pre-cash bonus adjusted operating income or pre-incentive adjusted operating income), cash bonus expense, incentive expense, pre- or after-tax income, net income, adjusted net income, free cash flow (operating cash flow less capital expenditures), cash flow per share, return on equity (or return on equity adjusted for goodwill), return on capital (including return on total capital or return on invested capital), return on investment, stock price appreciation, total Stockholder return (measured in terms of stock price appreciation and dividend growth), cost control, business expansion or consolidation, diversification of AUM by investment objectives, growth in global position(AUM domiciled outside of United States), diversified distribution channels, successful integration of acquisitions, market value of a business or group based on independent third-party valuation) or change in working capital, and (ii) such Performance Goals shallapplicable to an Award will be set byadjusted in a manner to reflect events (for example, but without limitation, acquisitions, dispositions or material financial market movements) occurring during the Committee withinPerformance Period that affect the time period prescribed by Section 162(m) of the Code.
“applicable Performance PeriodGoal(s). “Performance Period”” means that period established by the Committee during which any Performance Goals specified by the Committee with respect to such Award are to be measured.
“Qualified Performance-Based Award” means an Award intended to qualify for the Section 162(m) Exemption, as provided in Section 13.
“Restricted StockStock”” means an Award granted under Section 9.
“Restricted Stock UnitUnit”” means an Award granted under Section 10.
“Restriction PeriodPeriod”” means, with respect to Restricted Stock and Restricted Stock Units, the period commencing on the date of such Award to which vesting restrictions apply and ending upon the expiration of the applicable vesting conditions and/or the achievement of the applicable Performance Goals (it being understood that the Committee may provide that restrictions shall lapse with respect to portions of the applicable Award during the Restriction Period).
“SectionRetirement” 162(m) Exemption” means, subject to and in accordance with such rules as may be prescribed by the exemptionCommittee, retirement from active employment with the limitation on deductibility imposedCompany (other than at a time when Cause exists or as a result of a termination for Cause) at or after satisfying an age and/or years of service requirement established by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code.Committee.
“Share” or “Shares“Shares”” means common shares, par value $0.20$0.01 each, of the Company or such other equity securities that may become subject to an Award.
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“StockholderStockholder”” has the meaning set forth in the Maryland General Corporation Law.
“Stock Appreciation RightRight”” means an Award granted under Section 8(b).
“SubsidiarySubsidiary”” means any corporation, partnership, limited liability company or other entity at least 50% of the economic interest in the equity of which is owned, directly or indirectly, by the Company or by another subsidiary.
“TermTerm”” means the maximum period during which an Option, Stock Appreciation Right or, if applicable, Other Stock-Based Award may remain outstanding as specified in the applicable Award Agreement.
“Termination of ServiceService” ” means the termination of the Participant’s employment or consultancy with, or performance of services (including as a director) for, the Company, a Participating Company, and any Affiliates or, in the case of a director, when a director no longer holds office as a director of the Company. For Participants employed outside the United States, the date on which such Participant incurs a Termination of Service shall be the earlier of (i) the last day of the Participant’s active service with the Company, a Participating Company, and any Affiliates or (ii) the last day on which the Participant is considered an employee of the Company, a Participating Company, and any Affiliates, as determined in each case without including any required advance notice period and irrespective of the status of the termination under local labor or employment laws. Temporary absences from employment because of illness, vacation or approved leave of absence and transfers among the Company, a Participating Company, and any Affiliates shall not be considered Terminations of Service. With respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, “Termination of Service” shall mean a “separation from service” as defined under Section 409A of the Code to the extent required by Section 409A of the Code to avoid the imposition of any tax or interest or the inclusion of any amount in income thereunder. A Participant has a separation from service within the meaning of Section 409A of the Code if the Participant terminates employment with the Company, Participating Company and any Affiliates for any reason. A Participant will generally be treated as having terminated employment with the Company, Participating Company, and any Affiliates as of a certain date if the Participant and the Company, Participating Company, or Affiliate that employs the Participant reasonably anticipate that the Participant will perform no further services for the Company, Participating Company, or any Affiliate after such date or that the level of bona fide services that the Participant will perform after such date (whether as an employee or an independent contractor) will permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services if the Participant has been providing services for fewer than 36 months); provided, however, that the employment relationship is treated as continuing while the Participant is on military leave, sick leave or other bona fide leave of absence if the period of leave does not exceed six months or, if longer, so long as the Participant retains the right to reemployment with the Company, Participating Company, or any Affiliate.
5. Administration |
(a) Committee.Committee. The Plan shall be administered by the Committee. The Committee shall, subject to Section 13, have plenary authority to grant Awards pursuant to the terms of the Plan to Eligible Individuals. Among other things, the Committee in its sole discretion shall have the authority, subject to the terms and conditions of the Plan:
(i) to select the Eligible Individuals to whom Awards may from time to time be granted;
(ii) to determine whether and to what extent Awards are to be granted hereunder;
(iii) to determine the number of Shares to be covered by each Award granted hereunder;
(iv) to determine the terms and conditions of each Award granted hereunder, including but not limited to the form of settlement of Awards, based on such factors as the Committee shall determine, and to approve the form of Award Agreement and any related addendum;
(v) to adopt sub-plans and special provisions applicable to Awards granted to Participants employed outside of the United States, which sub-plans and special provisions may take precedence over other provisions of the Plan, and
to approve the form of Award Agreement and any related addendum as may be applicable to such Awards;
(vi) subject to Sections 6(e), 8(e), 13 and 14, to modify, amend or adjust the terms and conditions of any Award;
(vii) to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable;
(viii) to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement relating thereto);
(ix) subject to Section 13, to accelerate the vesting or lapse of restrictions of any outstanding Award, based in each case on such considerations as the Committee determines;
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(x) to decide all other matters to be determined in connection with an Award;
(xi) to determine whether, to what extent and under what circumstances cash, Shares and other property and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the Participant;
(xii) to establish any “blackout” period that the Committee deems necessary or advisable; and
(xiii) to otherwise administer the Plan.
(b) Delegation of Authority. To the extent permitted under applicable law and Section 13, the Committee may delegate any of its authority to administer the Plan to any person or persons selected by the Committee, including one or more members of the Committee, and such person or persons shall be deemed to be the Committee with respect to, and to the extent of, its or their authority.
(c)Procedures.
(i) The Committee may act by a majority of its members and, except to the extent prohibited by applicable law or the listing standards of the Applicable Exchange and subject to Section 13, through any person or persons to whom it has delegated its authority pursuant to Section 5(b).
(ii) Any authority granted to the Committee may also be exercised by the independent directors of the full Board. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control.
(d)Discretion of Committee and Binding Effect.Any determination made by the Committee or an appropriately delegated person or persons with respect to the Plan or any Award shall be made in the sole discretion of the Committee or such delegate, including, without limitation, any determination involving the appropriateness or equitableness of any action, unless in contravention of any express term of the Plan. All decisions made by the Committee or any appropriately delegated person or persons shall be final and binding on all persons, including the Company, Participants and Eligible Individuals. Notwithstanding the foregoing, following a Change in Control, any determination by the Committee as to whether “Cause” or “Good Reason” exists shall be subject to de novo review.
(e)Cancellation or Suspension.Notwithstanding any other terms of the Plan (other than Section 8(d)8(e)), an Award Agreement or an Award, the Committee or an appropriately delegated person or persons, in its or their sole discretion, shall have full power and authority to determine whether, to what extent and under what circumstances any Award or any portion thereof shall be cancelled or suspended and may cancel or suspend any Award or any portion thereof. Without in any way limiting the generality of the preceding sentence, the following are examples, without limitation, of when all or any portion of an outstanding Award to any Participant may be canceled or suspended: (1) in the sole discretion of the Committee or any appropriately delegated person or persons, a Participant materially breaches (A) any duties of Participant’s employment (whether express or implied), including without limitation Participant’s duties of fidelity, good faith and exclusive service, (B) any general terms and conditions of Participant’s employment such as an employee handbook or guidelines, (C) any policies and procedures of the Company, Participating Company, or any Affiliates applicable to the Participant, or (D) any other agreement regarding Participant’s employment with the Company, Participating Company, or any Affiliates, or (2) without the prior written explicit consent of the Committee or any appropriately delegated person or persons (which consent may be granted or denied in the sole discretion of the Committee or such person or persons), a Participant, while employed by, or providing services to, the Company, Participating Company, or any Affiliates, becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee or any appropriately delegated person or persons in its or their sole discretion), any business that is in competition with the Company, Participating Company, or any Affiliates or with any business in which the Company, Participating Company, or any Affiliates has a substantial interest, as determined by the Committee or any appropriately delegated person or persons in its or their sole discretion.discretion or (3) as a result of the application to an Award of any compensation recovery or recoupment policy or policies adopted by the Company, including but not limited to the Invesco Mortgage Capital Inc. Policy for Recoupment of Incentive Compensation.
(f) (e) Award Agreements.The terms and conditions of each Award, as determined by the Committee, shall be set forth in a written (including electronic) Award Agreement, which shall be delivered to the Participant receiving such Award upon, or as promptly as is reasonably practicable following, the grant of such Award. Except (i) as otherwise specified by the Committee, in its sole discretion, (ii) as otherwise provided in the Award Agreement, or (iii) in the case of non-executive directors who may not be required to sign or accept an Award, an Award shall not be effective unless the
Award Agreement is signed or otherwise accepted by the Participant receiving the Award (including by electronic signature or acceptance). The Committee, in its sole discretion, may deliver any documents related to
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an Award or Award Agreement by electronic means. Award Agreements may be amended only in accordance with Section 14.
6. Shares Subject to Plan
(a) Plan maximums.Maximums. Subject to adjustment as described in Section 6(e), the maximum number of Shares that may be issued pursuant to Awards under the Plan shall be 400,000.325,000 shares.
(b) Individual and Award Limits. Subject to adjustment as described in Section 6(e),
(i) no Participant shall be granted Qualified Performance Based-Awards covering more than 5,000 Shares during any calendar year; and
(ii) the maximum number of Shares that may be issued pursuant to Options intended to be Incentive Stock Options shall be 2,000 Shares.
(c) Source of Shares.Shares subject to Awards under the Plan may be authorized but unissued Shares or, if required by local law, Shares delivered from a trust established pursuant to applicable law.
(d) Rules for Calculating Shares Issued; No “Share Recycling” for Options or Stock Appreciation Rights.Shares that are subject to Awards granted under the Plan shall be deemed not to have been issued for purposes of the Plan maximums set forth in Section 6(a) and 6(b)(ii) to the extent that:
(i)i) the Award is forfeited or canceled, or the Award terminates, expires or lapses for any reason without Shares having been delivered;
(ii) the Award is settled in cash; or
(iii) the Shares are withheld by the Company to satisfy all or part of any tax withholding obligation related to an Award of Restricted Stock or an Award of a Restricted Stock Unit.
Shares that are tendered or withheld by the Company in payment of the exercise price of Options or Stock Appreciation Rights or to satisfy all or part of any tax withholding obligation related to such an Option or Stock Appreciation Right shall be counted as Shares that were issued. For the avoidance of doubt, Shares subject to an Option or a Stock Appreciation Right issued under the Plan that are not issued in connection with the stock settlement of that Option or Stock Appreciation Right upon its exercise shall not again become available for Awards or increase the number of Shares available for grant.
(e) Adjustment Provision.
(i) In the event of a merger, consolidation, stock rights offering, liquidation, or similar event affecting the Company, a Participating Company, or any Affiliates (each, a “Corporate Event”) or a stock dividend, stock split, reverse stock split, separation, spinoff, Disaffiliation, reorganization, extraordinary dividend of cash or other property, share combination, or recapitalization or similar event affecting the capital structure of the Company (each, a “Share Change”), the Committee or the Board shall make such equitable and appropriate substitutions or adjustments to (A) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under the Plan, (B) the various maximum limitations set forth in Sections 6(a) and 6(b) upon certain types of Awards and upon the grants to individuals of certain types of Awards, (C) the number and kind of Shares or other securities subject to outstanding Awards and (D) the exercise price of outstanding Awards.
(ii) In the case of Corporate Events, such adjustments may include, without limitation, (A) the cancellation of outstanding Awards in exchange for payments of cash, securities or other property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by the Committee or the Board in its sole discretion (it being understood that in the case of a Corporate Event with respect to which Stockholders receive consideration other than publicly traded equity securities of the ultimate surviving entity, any such determination by the Committee that the value of an Option or Stock Appreciation Right shall for this purpose be deemed to equal the excess, if any, of the value of the consideration being paid for each Share pursuant to such Corporate Event over the exercise price of such Option or Stock Appreciation Right shall conclusively be deemed valid), and (B) the substitution of securities or other property (including, without limitation, cash or other securities of the Company and securities of entities other than the Company) for the Shares subject to outstanding Awards.
(iii) In connection with any Disaffiliation, separation, spinoff, or other similar event, the Committee or the Board may arrange for the assumption of Awards, or replacement of Awards with new awards based on securities or other property (including, without limitation, other securities of the Company and securities of entities other than the Company), by the affected Affiliate (or Participating Company) or business division or by the entity that controls such Affiliate (or Participating Company) or business division following such event (as well as any corresponding adjustments to Awards that remain based upon Company securities). Such replacement with new awards may include revision of award terms reflective of circumstances associated with the Disaffiliation, separation, spinoff or other similar event.
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(iv) The Committee may, in its discretion, adjust the Performance Goals applicable to any Awards to reflect any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in the Company’s financial statements, notes to the financial statements, management’s discussion and analysis or other Company filings with the Securities and Exchange Commission; provided, however, that no such modification shall be made if the effect would be to cause an Award that is intended to be a Qualified Performance-Based Award to no longer constitute a Qualified Performance-Based Award.Commission. If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, Participating Company, or the applicable Affiliate, business division or other operational unit of, or the manner in which any of the foregoing conducts its business, or other events or circumstances render the Performance Goals to be unsuitable, the Committee may modify such Performance Goals or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable; provided, however, that no such modification shall be made if the effect would be to cause an Award that is intended to be a Qualified Performance-Based Award to no longer constitute a Qualified Performance-Based Award.equitable.
(f) (e) Section 409A.Notwithstanding the foregoing: (i) any adjustments made pursuant to Section 6(e) to Awards that are considered “deferred compensation” within the meaning of Section 409A of the Code shall be made in compliance with the requirements of Section 409A of the Code; (ii) any adjustments made pursuant to Section 6(e) to Awards that are not considered “deferred compensation” subject to Section 409A of the Code shall be made in such a manner as to ensure that after such adjustment, the Awards either (A) continue not to be subject to Section 409A of the Code or (B) comply with the requirements of Section 409A of the Code; and (iii) in any event, neither the Committee nor the Board shall have the authority to make any adjustments pursuant to Section 6(e) to the extent the existence of such authority would cause an Award that is not intended to be subject to Section 409A of the Code at the Grant Date to be subject thereto.
7. Eligibility and Participation
Awards may be granted under the Plan to Eligible Individuals; provided, however, that Incentive Stock Options may be granted only to ISO Eligible Employees.
8. Options and Stock Appreciation Rights
(a) Options. An Option is a right to purchase a specified number of Shares at a specified price that continues for a stated period of time. Options granted under the Plan may be Incentive Stock Options or Nonqualified Options. The Award Agreement for an Option shall indicate whether the Option is intended to be an Incentive Stock Option or a Nonqualified Option.
(b) Stock Appreciation Rights. A Stock Appreciation Right is a right to receive upon exercise of the Stock Appreciation Right an amount in cash, Shares or both, in value equal to the product of (i) the excess of the Fair Market Value of one Share over the exercise price per Share subject to the applicable Stock Appreciation Right, multiplied by (ii) the number of Shares in respect of which the Stock Appreciation Right has been exercised. The applicable Award Agreement shall specify whether such payment is to be made in cash or Shares or both, or shall reserve to the Committee or the Participant the right to make that determination prior to or upon the exercise of the Stock Appreciation Right.
(c) Award Agreement. Each grant of an Option and Stock Appreciation Right shall be evidenced by an Award Agreement that shall specify Grant Date, the exercise price, the term, vesting schedule, and such other provisions as the Committee shall determine.
(d) Exercise Price; Not Less thanThan Fair Market Value. The exercise price per Share subject to an Option or Stock Appreciation Right shall be determined by the Committee and set forth in the applicable Award Agreement, and shall not be less than the Fair Market Value of a Share on the Grant Date, except as provided under Section 6(e) or with respect to Options or Stock Appreciation Rights that are granted in substitution of similar types of awards of a company acquired by the Company, Participating Company, or an Affiliate or with which the Company, Participating Company, or an Affiliate combines (whether in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, or otherwise) to preserve the intrinsic value of such awards.
(e) Prohibition on Repricing; No Cash Buyouts. Except as provided in Section 6(e) relating to adjustments due to certain corporate events, the exercise price of outstanding Options or Stock Appreciation Rights may not be amended to reduce the exercise price of such Options or Stock Appreciation Rights, nor may outstanding Options or Stock Appreciation Rights be canceled in exchange for (i) cash, (ii) Options or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original outstanding Options or Stock Appreciation Rights or (iii) other Awards, unless in each case such action is approved by the Company’s Stockholders.
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(f) Prohibition on Reloads. Options or Stock Appreciation Rights shall not be granted under the Plan that contain a reload or replenishment feature pursuant to which a new Option or Stock Appreciation Right would be granted upon receipt or delivery of Shares to the Company in payment of the exercise price or any tax withholding obligation under any other stock option, stock appreciation right or other Award.
(g) Term. The term of an Option or Stock Appreciation Right granted under the Plan shall be determined by the Committee, in its sole discretion; provided however, that such term shall not exceed ten (10) years.
(h) Accelerated Expiration Date. Unless the Committee specifies otherwise in the applicable Award Agreement, an Option or Stock Appreciation Right granted under the Plan will expire upon the earliest to occur of the following:
(i) The original expiration date of the Option or Stock Appreciation Right;
(ii) Death. The one-year anniversary of the Participant’s death;
(iii)Disability. The one-year anniversary of the Participant’s termination of employment with the Company and all Related Companies due to Disability; or
(iv) Termination of Employment. The date of the Participant’s termination of employment with the Company and all Related Companies for any reason other than death or Disability. Provided,Disability; provided, however, that if the Participant is terminated by the Company other than for Cause or unsatisfactory performance, then 60 days following the Participant’s termination of employment.
(i) Vesting.
(i) Generally. Options and Stock Appreciation Rights shall have a vesting period of not less than one year from the date of grant except with respect to the death, Disability, involuntary termination (other than for Cause or unsatisfactory performance) of a Participant, the occurrence of a Change ofin Control as outlined in Section 12 of this Plan, or as may be required or otherwise be deemed advisable by the Committee, whether in connection with an Award granted through the assumption of, or substitution for, outstanding awards previously granted by a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines.combines or otherwise. The Committee shall, prior to or at the time of grant, condition the grant or vesting of an Award of Options or Stock Appreciation Rights upon such terms as outlined in the Award Agreement, which may include terms regarding Retirement.
(j) Method of Exercise and Payment.
(i) Generally. Subject to the provisions of this Section 8 and the terms of the applicable Award Agreement, Options and Stock Appreciation Rights may be exercised, in whole or in part, by giving written (including electronic) notice of exercise specifying the number of Shares as to which such Options or Stock Appreciation Rights are being exercised and paying, or making arrangements satisfactory to the Company for the payment of, all applicable taxes pursuant to Section 16(d).
(ii) In the case of the exercise of an Option, such notice shall be accompanied by payment in full of the exercise price by (i)(A) certified or bank check (ii)(B) delivery of unrestricted Shares of the same class as the Shares subject to the Option already owned by the Participant (based on the Fair Market Value of the Shares on the date the Option is exercised), provided that the Shares have been held by the Participant for such period as may established by the Committee to comply with applicable law or (iii)(C) such other method as the Committee shall permit in its sole discretion (including a broker-assisted cashless exercise or netting of Shares).
(k) No Stockholder Rights.A Participant shall have no right to dividends or any other rights as a Stockholder with respect to Shares subject to an Option or Stock Appreciation Right until such Shares are issued to the Participant pursuant to the terms of the Award Agreement.
9. Restricted Stock
(a) Nature of Awards and Certificates.Shares of Restricted Stock are actual Shares that are issued to a Participant subject to forfeiture under certain circumstances and shall be evidenced in such manner as the Committee may deem appropriate, including book-entry registration.
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(b) Award Agreement.Each grant of Restricted Stock shall be evidenced by an Award Agreement that shall specify the Grant Date, the period of restriction, the number of shares of Restricted Stock, vesting schedule, and such other provisions as the Committee shall determine. The Committee may, prior to or at the time of grant, condition the grant or vesting of an Award of Restricted Stock upon (A) the continued service of the Participant, (B) the attainment of Performance Goals or (C) the attainment of Performance Goals and the continued service of the Participant. In the event that the Committee conditions the grant or vesting of an Award of Restricted Stock upon the attainment of Performance Goals or the attainment of Performance Goals and the continued service of the Participant, the Committee may, prior to or at the time of grant, designate an Award of Restricted Stock as a Qualified Performance-Based Award. The conditions for grant or vesting and the other provisions of Restricted Stock Awards (including, without limitation, any applicable Performance Goals) need not be the same with respect to each Participant.
(c) Vesting.
(i) Generally. Shares of Restricted Stock shall have a vesting period of not less than one year from the date of grant except with respect to the death, Disability, involuntary termination (other than for Cause or unsatisfactory performance) of a Participant, the occurrence of a Change ofin Control as outlined in Section 12 of this Plan, or as may be required or otherwise be deemed advisable by the Committee, whether in connection with an Award granted through the assumption of, or substitution for, outstanding awards previously granted by a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines.combines, or otherwise. The Committee shall, prior to or at the time of grant, condition the grant or vesting of an Award of Restricted Stock upon such terms as outlined in the Award Agreement.Agreement, which may include terms regarding Retirement.
For purposes of an Award to a Non-Executivenon-executive Directordirector that is granted as of the date of the annual meeting of stockholders, a vesting period shall be deemed to be one year if it runs from the date of one annual meeting of stockholders to the next annual meeting of stockholders provided that such next meetings are at least 50 weeks apart.
(ii) Accelerated Vesting. Unless the Committee specifies otherwise in the applicable Award Agreement, in the event of the death, Disability or involuntary termination (other than for Cause or unsatisfactory performance) of a Participant, a Change ofin Control as outlined in Section 12 of this Plan, or special circumstances determined by the Committee, an Award of Restricted Stock shall vest as of the termination of employment.
(d) Restricted Shares Non-Transferrable. Subject to the provisions of the Plan and the applicable Award Agreement, during the Restriction Period, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Shares of Restricted Stock.
(e) Rights of a Stockholder.Except as otherwise provided in this Section 9 or in the applicable Award Agreement, the Participant shall have, with respect to the Shares of Restricted Stock, all of the rights of a Stockholder of the Company holding the class or series of Shares that is the subject of the Restricted Stock, including, if applicable, voting and dividend rights.
(f) Dividends.Except as otherwise provided in the applicable Award Agreement, cash dividends with respect to the Restricted Stock will be currently paid to the Participant and, subject to Section 16(e) of the Plan, dividends payable in Shares shall be paid in the form of Restricted Stock of the same class as the Shares with which such dividend was paid, held subject to the vesting of the underlying Restricted Stock; provided, however, that no dividends shall be paid with respect to Restricted Stock that is designated as a Qualified Performance-Based Awardsubject to one or more Performance Goals unless and until the Committee has certified that the applicable Performance Goals for such award have been met. Dividends shall accrue at the same rate as cash dividends paid on the Shares and applied to the number of shares that vest. Such dividend equivalents shall be paid to the Participant in cash at the time the Shares are delivered. If any Shares of Restricted Stock are forfeited, the Participant shall have no right to future cash dividends with respect to such Restricted Stock, withheld stock dividends or earnings with respect to such Shares of Restricted Stock.
(g) Delivery of Shares.If and when any applicable Performance Goals are satisfied and/or the Restriction Period expires without a prior forfeiture of the Shares of Restricted Stock, unrestricted Shares shall be delivered to the Participant as soon as administratively practicable.
(h) Termination of Service.Except as otherwise provided in the applicable Award Agreement as provided in subsection (c)(ii) above, a Participant’s Shares of Restricted Stock shall be forfeited upon his or her Termination of Service.
10. Restricted Stock Units
(a) Nature of Awards. Restricted Stock Units represent a contractual obligation by the Company to deliver a number of Shares, an amount in cash or a combination of Shares and cash equal to the specified number of Shares subject to |
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the Award, or the Fair Market Value thereof, in accordance with the terms and conditions set forth in the Plan and any applicable Award Agreement.
(b) Award Agreement. Each grant of Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the Grant Date, the period of restriction, the number of Restricted Stock Units, vesting schedule, and such other provisions as the Committee shall determine. The Committee may, prior to or at the time of grant, condition the grant or vesting of an Award of Restricted Stock Units upon (A) the continued service of the Participant, (B) the attainment of Performance Goals or (C) the attainment of Performance Goals and the continued service of the Participant. The conditions for grant or vesting and the other provisions of Restricted Stock Units (including, without limitation, any applicable Performance Goals) need not be the same with respect to each Participant.
(c) Vesting.
(i) Generally. Restricted Stock Units shall have a vesting period of not less than one year from the date of grant except with respect to the death, Disability, involuntary termination (other than for Cause or unsatisfactory performance) of a Participant, the occurrence of a Change of Control as outlined in Section 12 of this Plan, or as may be required or otherwise be deemed advisable by the Committee, whether in connection with an Award granted through the assumption of, or substitution for, outstanding awards previously granted by a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines.combines or otherwise. The Committee shall, prior to or at the time of grant, condition the grant or vesting of an Award of Restricted Stock Units upon such terms as outlined in the Award Agreement.Agreement, which may include terms regarding Retirement.
For purposes of an Award to a Non-Executive Director that is granted as of the date of the annual meeting of stockholders, a vesting period shall be deemed to be one year if it runs from the date of one annual meeting of stockholders to the next annual meeting of stockholders provided that such next meetings are at least 50 weeks apart.
(ii) Accelerated Vesting. Unless the Committee specifies otherwise in the applicable Award Agreement, in the event of the death, Disability or involuntary termination (other than for Cause or unsatisfactory performance) of a Participant, a Change ofin Control as outlined in Section 12 of this Plan, or special circumstances determined by the Committee, an Award of Restricted Stock Units shall vest as of the termination of employment.
(d) Dividend Equivalents.The Committee may, in its discretion, provide for current or deferred payments of cash, Shares or other property corresponding to the dividends payable on the Shares (subject to Section 16(e) below), as set forth in an applicable Award Agreement; provided, however, that no such dividend equivalents shall be paid with respect to Restricted Stock Units that are designated as a Qualified Performance-Based Awardssubject to one or more Performance Goals unless and until the Committee has certified that the applicable Performance Goals for such award have been met. Dividend equivalents shall accrue at the same rate as cash dividends paid on the Shares and applied to the number of Shares that vest. Such dividend equivalents shall be paid to the Participant in cash at the time the Shares are delivered. If a Participant’s Restricted Stock Units are forfeited, the Participant shall have no right to future dividend equivalents with respect to such Restricted Stock Units, withheld stock dividends or earnings with respect to such Restricted Stock Units.
(e) Termination of Service. Except as otherwise provided in the applicable Award Agreement or as provided in subsection (c)(ii) above, a Participant’s Restricted Stock Units shall be forfeited upon his or her Termination of Service.
(f) Payment. Except as otherwise provided in the applicable Award Agreement, Shares, cash or a combination of Shares and cash, as applicable, payable in settlement of Restricted Stock Units shall be delivered to the Participant as soon as administratively practicable after the date on which payment is due under the terms of an Award Agreement.
(g)No Stockholder Rights. Except as otherwise provided in the applicable Award Agreement, a Participant shall have no rights as a Stockholder with respect to Shares subject to Restricted Stock Units until such Shares are issued to the Participant pursuant to the terms of the Award Agreement.
11. Other Stock-Based Awards
Other Stock-Based Awards may be granted under the Plan; provided, that any Other Stock-Based Awards that are Awards of Shares that are unrestricted or with a minimum vesting schedule of less than one year shall only be granted in lieu of other compensation due and payable to the Participant. Notwithstanding the foregoing, no more than 5% of the Shares authorized to grant under Section 6 may be granted with a minimum vesting schedule of less than one year.
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12. Change in Control Provisions
The provisions of this Section 12 shall apply in the case of a Change in Control, unless otherwise provided in the applicable Award Agreement or any other provision of the Plan.
(a) Awards Not Assumed, etc.Etc. in Connection with Change ofin Control. Upon the occurrence of a transaction that constitutes a Change in Control, if any Awards are not assumed, converted or otherwise equitably converted or substituted in a manner approved by the Committee, then such Awards shall vest immediately at 100 percent before the Change in Control.
(b)Awards Assumed, etc.Etc. in Connection with Change ofin Control. Upon the occurrence of a transaction that constitutes a Change in Control, with respect to any Awards that are assumed, converted or otherwise equitably converted or substituted in a manner approved by the Committee, then, in the event of a Participant’s Termination of Service during the twenty-four (24) month period following such Change in Control, (x) by the Company other than for Cause or unsatisfactory performance, or (y) by the Participant for Good Reason:
(i) each outstanding Award shall be deemed to satisfy any applicable Performance Goals at 100 percent as set forth in the applicable Award Agreement;
(ii) any Options and Stock Appreciation Rights outstanding which are not then exercisable and vested shall become fully exercisable and vested. Any such Option or Stock Appreciation Right held by the Participant as of the date of the Change in Control that remain outstanding as of the date of such Termination of Service may thereafter be exercised until the earlier of the third anniversary of such Change in Control and the last date on which such Option or Stock Appreciation Right would have been exercisable in the absence of this Section 12(b) (ii) (taking into account the applicable terms of any Award Agreement);
(iii) the restrictions and deferral limitations applicable to any Shares of Restricted Stock shall lapse and such Shares of Restricted Stock shall become free of all restrictions and become fully vested and transferable;
(iv) all Restricted Stock Units shall be considered to be earned and payable in full, and any deferral or other restriction shall lapse, and any Restriction Period shall terminate, and such Restricted Stock Units shall be settled in cash or Shares (consistent with the terms of the Award Agreement after taking into account the effect of the Change in Control transaction on the Shares) as promptly as is practicable; and
(v) subject to Section 14, the Committee may also make additional adjustments and/or settlements of outstanding Awards as it deems appropriate and consistent with the Plan’s purposes.
(c) 409A Matters. Notwithstanding the foregoing, if any Award to a Participant who is subject to U.S. income tax is considered a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, this Section 12 shall apply to such Award only to the extent that its application would not result in the imposition of any tax or interest or the inclusion of any amount in income under Section 409A of the Code.
(d) Other. In the event of a Change in Control, the Committee may in its discretion and upon at least ten (10) days’ advance notice to the affected Participants, cancel any outstanding Awards and pay to the holders thereof, in cash or Shares, or any combination thereof, the value of such Awards based upon the price per Share received or to be received by other Stockholders of the Company as a result of the Change in Control.
13. Qualified Performance-Based Awards; Section 16(b); Section 409A
(a) Qualified Performance-Based Awards.
(i) The provisions of the Plan are intended to ensure that all Options and Stock Appreciation Rights granted hereunder to any Participant who is or may be a “covered employee” (within the meaning of Section 162(m)(3) of the Code) in the tax year in which such Option or Stock Appreciation Right is expected to be deductible to the Company qualify for the Section 162(m) Exemption, that all such Awards shall therefore be considered Qualified Performance-Based Awards, and the Plan shall be interpreted and operated consistent with that intention. When granting any Award other than an Option or Stock Appreciation Right, the Committee may designate such Award as a Qualified Performance-Based Award, based upon a determination that (x) the recipient is or may be a “covered employee” (within the meaning of Section 162(m)(3) of the Code) with respect to such Award and (y) the Committee wishes such Award to qualify for the Section 162(m) Exemption, and the terms of any such Award (and of the grant thereof) shall be consistent with such designation (including, without limitation, that all such Awards be granted by a committee composed solely of “outside directors” (within the meaning of Section 162(m) of the Code)).
(ii) The Committee shall determine whether the applicable Performance Goals for a Qualified Performance-Based Award have been met with respect to a Participant for a Performance Period and, if they have been met, shall so certify and ascertain the amount of the applicable Qualified Performance-Based Award. No Qualified Performance-Based Awards will be paid or granted for a Performance Period until such certification is made by the Committee. The amount of such a Qualified Performance-Based Award designed to qualify for the Section 162(m) Exemption that is actually paid or granted to a Participant may be less than the amount determined by the applicable Performance Goal formula, at the discretion of the Committee, subject to the terms and conditions of the applicable Award Agreement, and shall be paid to the Participant at the time set forth in the applicable Award Agreement.
(iii) Performance Goals may be applied on a per share or absolute basis and relative to one or more peer group companies or indices, or any combination thereof, and may be measured pursuant to U.S. GAAP, non-GAAP or other objective standards in a manner consistent with the Company’s established accounting policies, all as the Committee shall determine at the time the Performance Goals for a Performance Period are established. In addition, to the extent consistent with the requirements of the Section 162(m) Exemption, the Committee may provide at the time Performance Goals are established for Qualified Performance-Based Awards that the manner in which such Performance Goals are to be calculated or measured may take into account, or ignore, capital costs, interest, taxes, depreciation and amortization and other factors over which the Participant has no (or limited) control including, but not limited to, restructurings, discontinued operations, impairments, changes in foreign currency exchange rates, extraordinary items, certain identified expenses (including cash bonus expenses, incentive expenses and acquisition-related transaction and integration expenses), the consolidation of investment products, other unusual non-recurring items, industry margins, general economic conditions, interest rate movements and the cumulative effects of tax or accounting changes.
(iv) No delegate of the Committee shall exercise authority granted to the Committee to the extent that the exercise of such authority would cause an Award designated as a Qualified Performance-Based Award not to qualify, or to cease to qualify, for the Section 162(m) Exemption.
(b) Section 16(b).
(i) The provisions of the Plan are intended to ensure that transactions under the Plan are not subject to (or are exempt from) the short-swing recovery rules of Section 16(b) of the Exchange Act and shall be construed and interpreted in a manner so as to comply with such rules.
(ii) Notwithstanding any other provision of the Plan to the contrary, if for any reason the appointed Committee does not meet the requirements of Rule 16b-3 of the Exchange Act, or Section 162(m) of the Code, such noncompliance with the requirements of Rule 16b-3 of the Exchange Act and Section 162(m) of the Code shall not affect the validity of Awards, grants, interpretations or other actions of the Committee.
(c)Section 409A. It is the intention of the Company that any Award to a Participant who is subject to U.S. income tax that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code shall comply in all respects with the requirements of Section 409A of the Code to avoid the imposition of any tax or interest or the inclusion of any amount in income thereunder, and the terms of each such Award shall be interpreted, administered and deemed amended, if applicable, in a manner consistent with this intention. Notwithstanding the foregoing, neither the Company, a Participating Company, nor any of its Affiliates nor any of its or their directors,
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officers, employees, agents or other service providers will be liable for any taxes, penalties or interest imposed on any Participant, Beneficiary or other person with respect to any amounts paid or payable (whether in cash, Shares or other property) under any Award, including any taxes, penalties or interest imposed under or as a result of Section 409A of the Code. Notwithstanding any other provision of the Plan to the contrary, with respect to any Award to any Participant who is subject to U.S. income tax that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code:
(i) any payments (whether in cash, Shares or other property) to be made with respect to the Award upon the Participant’s Termination of Service that would otherwise be paid within six months after the Participant’s Termination of Service shall be accumulated (without interest, to the extent applicable) and paid on the first day of the seventh month following the Participant’s Termination of Service if the Participant is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the uniform policy adopted by the Committee with respect to all of the arrangements subject to Section 409A of the Code maintained by the Company, a Participating Company and any Affiliates);
(ii) each payment made under the Plan shall be treated as a separate payment and the right to a series of installment payments under the Plan is to be treated as a right to a series of separate payments; and
(ii) unless otherwise determined by Committee, any payment to be made with respect to an Award of Restricted Stock Units shall be delivered no later than 60 days after the date on which payment is due under the Award or as otherwise permitted under Treasury Regulations section 1.409A-3(g) for any portion of the payment subject to a dispute.
14. Amendment and Discontinuance
(a) Amendment and Discontinuance of the Plan.The Board or the Committee may amend, alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would materially impair the rights of a Participant with respect to a previously granted Award without such Participant’s consent, except such an amendment made to comply with applicable law or Applicable Exchange rule or to prevent adverse tax or accounting consequences to the Company or Participants.
(b) Amendment of Awards.Subject to Section 8(d), the Committee may unilaterally amend the terms of any Award theretofore granted, but no such amendment shall materially impair the rights of any Participant with respect to an Award without the Participant’s consent, except such an amendment made to cause the Plan or Award to comply with applicable law, Applicable Exchange rule or to prevent adverse tax or accounting consequences for the Participant or the Company, a Participating Company, or any Affiliates.
15. Unfunded Status of Plan
It is currently intended that the Plan constitute an “unfunded” plan. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Shares or make payments; provided, however, that unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan.
16. General Provisions
(a) Conditions for Issuance.The Committee may require each person purchasing or receiving Shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to the distribution thereof. The certificates or book entry for such Shares may include any legend or appropriate notation that the Committee deems appropriate to reflect any restrictions on transfer, and the Committee may take such other steps as it deems necessary or desirable to restrict the transfer of Shares issuable under the Plan to comply with applicable law or Applicable Exchange rules. Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the Company shall not be required to issue or deliver Shares under
the Plan unless such issuance or delivery complies with all applicable laws, rules and regulations, including the requirements of any Applicable Exchange or similar entity and the Company has obtained any consent, approval or permit from any federal, state or foreign governmental authority that the Committee determines to be necessary or advisable.
(b) Additional Compensation Arrangements. Nothing contained in the Plan shall prevent the Company, Participating Company, or any Affiliate from adopting other or additional compensation arrangements for its employees.
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(c) No Contract of Employment. Neither the Plan nor any Award Agreement shall constitute a contract of employment, and neither the adoption of the Plan nor the granting of any Award shall confer upon any employee any right to continued employment. Neither the Plan nor any Award Agreement shall interfere in any way with the right of the Company, a Participating Company, or any Affiliate to terminate the employment of any employee at any time.
(d)Required Taxes; No Tax Gross Ups.No later than the date as of which an amount first becomes includible in the gross income of a Participant for federal, state, local or foreign income or employment or other tax purposes with respect to any Award under the Plan, such Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Company, withholding obligations may be settled with Shares, including Shares that are part of the Award that gives rise to the withholding requirement, having a Fair Market Value on the date of withholding equal to the minimum amountrate required to be withheld for tax purposes under applicable law, all in accordance with such procedures as the Committee establishes. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company, Participating Company, and any Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to such Participant. The Committee may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of withholding obligations with Shares. Regardless of any arrangements made by the Company, Participating Company, any Affiliate or the Committee with respect to the withholding or other payment of any federal, state, local or foreign taxes of any kind, the liability for all such taxes legally due from a Participant remains the responsibility of the Participant. By accepting an Award, a Participant consents to the methods of tax withholding established by the Committee or otherwise made or arranged by the Company.
(e) Limitation on Dividend Reinvestment and Dividend Equivalents.Reinvestment of dividends in additional Restricted Stock at the time of any dividend payment, and the payment of Shares with respect to dividendsdividend equivalents to Participants holding Awards of Restricted Stock Units, shall only be permissible if sufficient Shares are available under Section 6 for such reinvestment or payment (taking into account then outstanding Awards). In the event that sufficient Shares are not available for such reinvestment or payment, then in the Committee’s discretion such reinvestment or payment shall be made in the form of a grant of Restricted Stock Units equal in number to the Shares that would have been obtained by such payment or reinvestment, the terms of which Restricted Stock Units shall provide for settlement in cash and for dividend equivalent reinvestment in further Restricted Stock Units on the terms contemplated by this Section 16(e).cash.
(f) Rights of a Beneficiary. Any amounts payable and any rights exercisable under an Award after a Participant’s death shall be paid to and exercised by the Participant’s Beneficiary, except to the extent prohibited by applicable law, Applicable Exchange rule or the terms of an applicable Award Agreement.
(g)Affiliate Employees.In the case of a forfeiture or cancellation of an Award to an employee of any Affiliate, all Shares underlying such Awards shall revert to the Company.
(h) Governing Law and Interpretation.The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Georgia, without reference to principles of conflict of laws. The captions of the Plan are not part of the provisions hereof and shall have no force or effect.
(i) Non-Transferability. Awards under the Plan cannot be sold, assigned, transferred, pledged or otherwise encumbered other than by will or the laws of descent and distribution, except as provided in Section 6(e).
(j) Foreign Employees and Foreign Law Considerations.The Committee may grant Awards to Eligible Individuals who are foreign nationals, who are employed outside the United States or who are not compensated from a payroll maintained in the United States, or who are otherwise subject to (or could cause the Company to be subject to) tax, legal or regulatory provisions of countries or jurisdictions outside the United States, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan. Notwithstanding any other provision of the Plan, Awards to Participants who are employed and/or otherwise subject to the laws of a jurisdiction outside of the United States shall be subject to such terms and conditions as the Committee shall establish and set forth in an applicable Award Agreement, including any addendum thereto.thereto and the Committee may adopt such procedures, subplans and forms of Award Agreement as it determines to be necessary or appropriate to facilitated Plan administration with respect to Participants performing services in such jurisdictions.
(k) Use of English Language. The Plan, each Award Agreement, and all other documents, notices and legal proceedings entered into, given or instituted pursuant to an Award shall be written in English, unless otherwise determined by the Committee. If a Participant receives an Award Agreement, a copy of the Plan or any other documents related to an Award translated into a language other than English, and if the meaning of the translated version is different from the English version, the English version shall control.
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(l) Recovery of Amounts Paid. All Awards granted under the Plan, and any proceeds received therefrom, shall be subject to anyforfeiture and/or repayment to the Company under the terms of each compensation recovery or recoupment policy establishedadopted by the Committee under whichCompany, including but not limited to the Company may recover from current and former Participants any amounts paid or Shares issued under an Award and any proceeds therefrom.Invesco Mortgage Capital Inc. Policy for Recoupment of Incentive Compensation. The Committee may apply sucheach policy to Awards granted before thesuch policy is adopted to the extent required by applicable law or Applicable Exchange rule or as otherwise provided by such policy.
(m) Notices.A notice or other communication to the Committee shall be valid only if given in the form and to the location specified by the Committee.
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qYour vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 11:59 pm, (Eastern Time), on May 6, 2024 Online Go to www.envisionreports.com/IVR or scan the QR code — login details are located in the shaded bar below. PhoneCall toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/IVR Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2024 Annual Meeting Proxy Card IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. qProposals — The Board of Directors recommend a vote FOR all nominees & FOR Proposals 2, 3 and 4. 1. Election of Directors: 01—John S. Day 04—Katharine W. Kelley 07—Beth A. Zayicek For Against Abstain 02—Carolyn L. Gibbs 05—Don H. Liu For Against Abstain 03—Carolyn B. Handlon 06—Dennis P. Lockhart For Against Abstain 2. Advisory vote to approve the Company’s 2023 executive compensation 4. Appointment of PricewaterhouseCoopers as the Company’s independent registered public accounting firm for 2024 For Against Abstain 3. Approval of the amended and restated Invesco Mortgage Capital Inc. 2009 Equity Incentive Plan For Against Abstain Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
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03EIFB
The 2021
2024 Annual Meeting of StockholdersAdmission Ticket 2024 Annual Meeting of Invesco Mortgage Capital Inc. will be held on
Tuesday,Company Stockholders May, 4, 2021 at7, 2024, 2:00 p.m. Eastern Standard Time, virtually via the internet at www.meetingcenter.io/292373556.
All stockholders will need the password: IVR2021. Stockholders who hold shares through an intermediary, must register to attend the Annual Meeting by 5:00 p.m. Eastern Standard Time, on April 28, 2021. For additional information regarding how stockholders who hold shares through an intermediary, such as a bank or broker, may access, participate in, and/or vote00pm ET Kimpton Shane Hotel 1340 W Peachtree St NW, Atlanta, Georgia 30309 Upon arrival, please present this admission ticket and photo identification at the virtual Annual Meeting, please refer to the Company’s Proxy Statement.
registration desk. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders.
The material is available at: www.edocumentview.com/www.envisionreports.com/IVR
q Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/IVR IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Invesco Mortgage Capital Inc. Notice of 20212024 Annual Meeting of Stockholders
Proxy Solicited by Board of Directors for Annual Meeting –— May 4, 2021
7, 2024 The undersigned hereby appoints Edward J. Hardin,John S. Day, John M. Anzalone, Kevin M. Collins, R. Lee Phegley, Jr. and Rebecca S. Smith,Tina Carew, and each of them, with power to act without the others and with power of substitution, as proxies and attorneys-in-fact, and hereby authorizes them to represent and vote, as provided on the other side, all the common stock of Invesco Mortgage Capital Inc. which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the 20212024 Annual Meeting of Stockholders, or at any adjournment or postponement thereof, of Invesco Mortgage Capital Inc., to be held virtually via the internet,at Kimpton Shane Hotel located at 1340 W Peachtree Street NW, Atlanta, Georgia 30309, with all powers which the undersigned would possess if present at the meeting.
Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR the election of each director nominee andthe Board of Directors & FOR items 2, 3 and 4.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items (Items to be voted appear on reverse side)Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below.