UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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Invesco Ltd.
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A Letter to Our Shareholders from Our Chairperson of the Board and Chief Executive Officer | ||||
Ben Johnson has served as Chairperson since 2014 and as a non-executive director of our company since 2009.
Martin Flanagan has been a director and President and Chief Executive Officer of our company since 2005. |
Dear Fellow Shareholder,
First and foremost, we would like to express our sincere appreciation for your continued support as an Invesco shareholder. Our Board of Directors, our senior leadership and our employees worldwide are committed to further strengthening our global firm and providing a high level of value to you, our shareholders, over the long term.
A look back at 2018 2018 was a challenging year for the asset management industry. We saw volatile markets throughout 2018 and particularly during the fourth quarter. In fact, when you look across eight broad indices representing major equity, fixed income and commodity markets, 2018 was the worst year in several decades for broad asset returns1. The volatility in the markets impacted financial performance across the industry, particularly for global investment managers like Invesco. Shareholder returns for traditional asset managers as a group were down 26%,2 while Invesco was down 54% for the year.3
The Board of Directors and the executive management team believe the underperformance of Invescos stock price relative to our peer group reflects the following factors: ∎ Key investment capabilities that had helped produce nine consecutive years of positive net flows for the firm through 2017 underperformed materially in 2018, contributing to significant negative net flows in 2018. Net flows, positive or negative, are a key driver of short-term shareholder returns for traditional asset managers. ∎ As described in more detail below, for much of 2018, we opted to use our cash and credit resources to fund long-term investments to strengthen our business instead of conducting stock buybacks that may have provided greater near-term support for the firms stock price. ∎ Invesco has a larger global presence in key markets than most of our peers. As one of the leading investment managers in the UK and Europe, we were more impacted by continuing uncertainties surrounding Brexit. Additionally, our strong position in Asia Pacific meant that Invesco was more affected than others by market uncertainties over the trade issues between China and the US. We believe these factors led to additional negative sentiment on Invesco among investors in our shares.
Where we believe clients and the market are headed Its important to remember that global assets under management (AUM) currently exceed $88 trillion4, and total assets will continue to grow over the long term. More and more, clients are seeking to work with a smaller number of asset managers who can meet a comprehensive set of needs. They want money managers who can provide a robust set of capabilities and create investment solutions that deliver key outcomes aligned to their investment objectives. They also want greater value for their money, which, first and foremost, means competitively priced products, as well as investor education, thought leadership, digital platforms and other value adds that create an enhanced client experience. These dynamics are driving fundamental changes within our industry that are real, impactful and enduring, and that will create winners and losers at an accelerated rate. We believe the steps weve taken over the past decade and throughout 2018 strengthened our ability to meet client needs and will help ensure Invesco is among the winners within our industry over the long term. |
Although the markets are expected to remain volatile in 2019, Invesco continues to focus on developing an elite set of capabilities aligned to clients evolving needs. Our comprehensive range of investment capabilities has been built over many years to help clients weather various market cycles, and we believe the firm is better positioned than ever to provide the expert advice and key outcomes that will help clients navigate the challenging markets ahead.
Investing in the future of our business In late 2017 and throughout 2018, we made several long-term investments that are intended to help us to better meet client needs, further strengthen our global business and increase shareholder value over the long term.
The most significant of these commitments is our planned acquisition of MassMutuals asset management affiliate, OppenheimerFunds. The combination with OppenheimerFunds will accelerate Invescos growth initiatives, increase our scale and client relevance, and expand our comprehensive suite of differentiated investment capabilities. We will also be better positioned to deliver strong outcomes for clients, since overall performance rankings for US mutual funds are consistently stronger for the combined firm than for either firm independently.5 Substantial synergies make the transaction materially accretive to earnings and will help us improve shareholder returns in both the short and long term.
Additionally, in 2018 we: ∎ Completed the acquisitions of Guggenheim Investments ETF business in the US and Source in Europe, further expanding our comprehensive suite of ETFs. Invesco is now the #2 provider of smart beta AUM globally and has 60 ETFs with greater than $500 million in assets (as of December 31, 2018)6 ∎ Continued to make good progress in China. Sourced gross flows amounted to US$13.9 billion for the year, and total AUM sourced from China reached US$37 billion (as at December 31, 2018). Our China joint venture, Invesco Great Wall, also successfully onboarded a fund onto Ant Financials Yue Bao Money Market Fund platform. The fund reached over US$11 billion by the end of 2018 and continues to grow7; ∎ Launched some of the industrys first self-indexed, factor-based fixed income ETFs, building on more than 35 years of factor-based investment experience; ∎ Continued to enhance our culture and provide development opportunities for our talented professionals across the globe; ∎ Further strengthened our market-leading solutions capability, leveraging one of the industrys strongest, most experienced solutions teams to deliver customized outcomes for clients; and ∎ Expanded our digital wealth platform with the addition of Intelliflo, the No. 1 technology platform for financial advisors in the UK.
Taken together, this work further expanded the broad range of capabilities Invesco uses to create solutions that deliver the outcomes clients are seeking, all wrapped in a robust, value-added client experience. These initiatives also further strengthen the firms effectiveness and efficiency, providing greater economies of scale that will enable us to provide a higher level of value to clients and further improve our competitive position over the long term.
As noted above, we believe it is important to understand that, for much of 2018, we elected to use our cash and credit resources to fund these initiatives instead of conducting stock buybacks that may have provided greater near-term support for the firms stock price. However, were confident that the investments we made in 2018 will drive greater shareholder value over the long term, given the macro trends in our operating environment and the importance of positioning the firm ahead of where clients, the industry and the markets are headed. In conjunction with the OppenheimerFunds acquisition, we announced a two-year, $1.2 billion stock buyback program, and completed the first $300 million stock repurchase in the fourth quarter of 2018. |
The Board of Directors has been an active and engaged supporter of each of these initiatives and is highly supportive of the executive management team. Were confident that the investments made over the past year will materially improve Invescos competitive position and help ensure the firms long-term growth and success. Furthermore, the Board believes that these moves will drive improvements in long-term share value. We think that the market has not yet absorbed the long-term advantages that we believe will be achieved by these moves.
At the same time, the Board recognizes that shareholders have been affected by the combination of external forces and the short-term impact of several long-term investments that were made in 2018. Consistent with our practices and in view of the short-term impact to shareholders, weve aligned compensation among our executive team with the performance of the firm, the details of which can be viewed in the Compensation Discussion & Analysis section of this document.
Notwithstanding the results of an exceptionally volatile and challenging period in the markets, the Board remains highly confident in the leadership, strategy and direction of the firm. The investments we made in 2018 and will continue to make in 2019 are entirely focused on placing Invesco in the best position to meet client needs, compete in a dynamic operating environment and provide compelling returns for shareholders. We look forward to continuing to help our clients achieve their investment objectives regardless of where the markets take us, which will help us deliver a high level of value to our shareholders over the long term.
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Regards, | ||||
Ben F. Johnson III | Marty Flanagan | |||
Chairperson and Non-Executive Director | President and CEO | |||
Sourcing 1 Deutsche Bank Research, January 2019. 2 JP Morgan asset managers CEO forum, December 2018. 3 Invesco data as of December 31, 2018. 4 McKinsey research data, 2018. 5 Source: Lipper, Invesco estimates. Calculated on a three-year rolling basis since 2010 and based on US retail mutual funds only. 6 Invesco and Morningstar data as of December 31, 2018. 7 Invesco data as of December 31, 2018. |
Notice of 2019 Annual General Meeting of Shareholders
To our Shareholders:
The 2019 Annual General Meeting of Shareholders of Invesco Ltd. will be held at the following location and for the following purpose:
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When | Thursday, May 9, 2019, at [12:00] p.m., Central European Summer Time
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Where | The Peninsula Paris Le 19 avenue Kleber 75116 Paris, France
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Items of business |
1 | To elect eight (8) directors to the Board of Directors to hold office until the annual general meeting of shareholders in 2020;
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2 | To hold an advisory vote to approve the companys executive compensation;
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3 | To amend the Invesco Ltd. Third Amended and Restated Bye-Laws to eliminate certain super majority voting standards;
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4 | To amend the Invesco Ltd. 2016 Global Equity Incentive Plan to increase the number of shares authorized for issuance under the plan;
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5 | To appoint PricewaterhouseCoopers LLP as the companys independent registered public accounting firm for the fiscal year ending December 31, 2019; and
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6 | To consider and act upon such other business as may properly come before the meeting or any adjournment thereof.
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During the Annual General Meeting, the audited consolidated financial statements for the fiscal year ended December 31, 2018 of the company will be presented.
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Who can vote |
Only holders of record of Invesco Ltd. common shares on March 11, 2019 are entitled to notice of, to attend and vote at the Annual General Meeting and any adjournment or postponement thereof. | |||||
Review your Proxy Statement and vote in one of four ways:
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Via the Internet Visit the web site listed on your Notice |
By telephone Call the telephone number listed on your Notice |
By mail Sign, date and return a requested proxy card
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In person Attend the Annual General Meeting | |||
By order of the Board of Directors, | ||||||
Kevin M. Carome Company Secretary March [.], 2019 |
Our 2018 highlights | ||
Throughout 2018 we made solid progress in several areas of our multi-year strategic objectives that will help us better meet client needs, further strengthen our global business and increase shareholder value over the long term. The most significant achievement during the year was our announced acquisition of MassMutuals asset management affiliate, OppenheimerFunds, which is anticipated to close in the second quarter of 2019. The combination with OppenheimerFunds will help accelerate Invescos growth initiatives, increase our scale and client relevance, and expand our comprehensive suite of differentiated investment capabilities.
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At the same time, 2018 was a challenging year for the asset management industry and for Invesco. We saw volatile markets throughout the year and particularly during the fourth quarter. The volatility in the markets impacted financial performance across the industry, particularly for global investment managers like Invesco. Shareholder returns for traditional asset managers as a group were down 26%,1 while Invesco was down 54% for the year2. We believe the underperformance of Invescos stock price relative to our peer group reflects the following factors: | ||
∎ Key investment capabilities that had helped produce nine consecutive years of positive net flows for the firm through 2017 underperformed materially in 2018, contributing to significant negative net flows in 2018. Net flows, positive or negative, are a key driver of short-term shareholder returns for traditional asset managers. ∎ For much of 2018, we opted to use our cash and credit resources to fund long-term investments to strengthen our business instead of conducting stock buybacks that may have provided greater near-term support for the firms stock price. ∎ Invesco has a larger global presence in key markets than most of our peers. As one of the leading investment managers in the UK and Europe, we were more impacted by continuing uncertainties surrounding Brexit. Additionally, our strong position in Asia Pacific meant that Invesco was more affected than others by market uncertainties over the trade issues between China and the US. We believe these factors led to additional negative sentiment on Invesco among investors in our shares.
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After reviewing the substantial progress of the firm in respect of our multi-year strategic objectives as discussed below and having considered the companys challenging 2018 financial performance (including the underperformance of Invescos stock relative to our peers), the compensation committee decided, and Mr. Flanagan agreed, that his total incentive compensation should be lowered to $10.2 million, which is 78.5% of his 2018 incentive target of $13 million. Mr. Flanagans total 2018 compensation was down 20.1% from 2017. |
2018 Financial performance (year-over-year change)
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Annual adjusted operating incomea |
Annual adjusted operating margina |
Annual adjusted diluted EPSa |
Long-Term Organic Growth Rateb | |||
$1.4 billion |
36.5% |
$2.43 |
-5% | |||
(-6%)
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(-3 percentage points)
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(-10%)
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(-6.7 percentage points)
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a The adjusted financial measures are all non-GAAP financial measures. See the information in Appendix B of this Proxy Statement regarding Non-GAAP financial measures. b Annualized long-term organic growth rate is calculated using long-term net flows divided by opening long-term AUM for the period. Long-term AUM excludes institutional money market and non-management fee earning AUM. |
1 JP Morgan asset managers CEO forum, December 2018
1 2 Invesco data as of December 31, 2018
We continued to successfully execute our strategic objectives for the benefit of clients and shareholders We focus on four key multi-year strategic objectives set forth in the table below that are designed to maintain our focus on meeting client needs, strengthen our business over time and build shareholder value over the long-term. As described below, in 2018 we made significant progress against our strategic objectives and enhanced our ability to deliver strong outcomes to clients while further positioning the firm for long-term success.
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Our strategic objectives |
2018 achievements positioning the firm ahead of where our clients, the markets and our industry are heading | |
Achieve strong investment performance |
Percent of our actively managed assets in the top half of our peer group. See Appendix A for important disclosures regarding AUM ranking.
- Maintained strong, long-term investment performance, with 54% and 63% of measured actively managed ranked assets in the top half of peer groups on a three- and five-year basis, respectively. - Announced the acquisition of OppenheimerFunds, which will bring a highly complementary set of investment capabilities that strengthen investment performance and enable us to provide better outcomes for clients. - A number of our investment teams were recognized by leading financial publications and the industry. For example, in Asia Pacific, our China joint venture, Invesco Great Wall, won numerous industry awards sponsored by the Asset Management Association of China.
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Be instrumental to our clients success |
- Continued to build our comprehensive range of active, passive and alternative capabilities while strengthening our scale and relevance in key capabilities: - Completed the acquisition of Guggenheim Investments ETF business, further expanding our comprehensive suite of ETFs. Invesco is now the number two provider of smart beta ETFs and has 60 ETFs with greater than $500 million in assets.1 - Launched some of the industrys first self-indexed, factor-based fixed income ETFs, building on more than 35 years of factor-based investment experience. - Invesco Great Wall successfully on-boarded its money market fund onto Ant Financials Yue Bao Money Market Fund platform. The fund reached over US$11 billion by the end of 20182. - Further strengthened our market-leading solutions capabilities by further leveraging our solutions team - one of the industrys strongest and most experienced solutions teams to deliver customized outcomes for clients.
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Harness the power of our global platform |
- Further expanded and enhanced our ability to help our advisor clients engage with their clients and improve their investment experience through Jemstep, our advisor-focused technology solution. Expanded our digital wealth platform with the addition of Intelliflo, the number one technology platform for financial advisors in the UK3. - Continued to drive savings through our business optimization efforts, which delivered approximately $56 million in annualized run-rate savings as of the end of 2018. The savings are being reinvested in initiatives that strengthen our ability to meet client needs and key growth initiatives for future years.
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Perpetuate a high-performance organization |
- Further strengthened our investment, distribution and support teams through new hires and our efforts to attract, develop, motivate and retain the best talent in the industry. - Continued to make progress toward our commitment to improve diversity at all levels and in all functions across our global business. - Was named one of the best places to work in money management by Pensions and Investments®. |
1 Invesco and Morningstar data as of December 31, 2018.
2 Invesco data as of December 31, 2018.
3 Platform - Adviser Market: Fintech and Digital, January 2018 report
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2018 Meaningful enhancements to our executive compensation program In response to our 2018 say-on-pay vote, we expanded our shareholder outreach to include our top 30 shareholders representing approximately 55% of our outstanding shares1 to engage with us regarding, among other topics, our executive compensation program. In the fall and winter of 2018, we held telephonic meetings with all shareholders who accepted our invitation 11 of our shareholders representing approximately 19% of our outstanding shares.1 Based upon these productive discussions: ∎ These shareholders affirmed their support for our compensation philosophy, programs and pay outcomes. They validated the disciplined approach of our compensation programs that utilize multiple performance measures, ∎ While none of these shareholders advocated that we make significant changes to our executive compensation program, they identified opportunities to meaningfully enhance the effectiveness of the pay-for-performance component of our executive compensation program by providing greater rigor with respect to our performance-based awards and adding a second performance measure, ∎ We provided for greater alignment of executive compensation with relative shareholder returns, and ∎ We provided more transparency regarding our compensation program and pay outcomes.
Set forth below are the enhancements to our executive compensation program.
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1 |
Incentive targets for CEO and senior managing directors Established incentive targets for our CEO and senior managing directors, which include our NEOs Incentive compensation payouts (cash bonus + stock deferral + long-term equity) to range from 0% to 130% of target | |||||
2 |
Incentive awards scorecard of quantitative measures for company performance Established a framework that combines a scorecard of quantitative measures for assessing company performance and a qualitative assessment for determining incentive awards for our CEO and each of our senior managing directors Scorecard of quantitative company performance is based on 3 objective categories: financial performance 50%; delivering to clients 30%; and organizational strength 20%
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3 |
Greater rigor for performance-based awards Adopted two measures for performance-based awards - adjusted operating margin (current) and relative total shareholder return based on the three-year average TSR of the company and the constituents in the S&P 500 asset management sub-index (new) A performance vesting matrix that demonstrates rigorous vesting hurdles. As an example, applying the 2018 performance results on a three-year average basis would result in a vesting percentage of 33% a meaningful impact on the compensation outcomes for our NEOs. | |||||
4 |
Improved transparency regarding our robust compensation timeline Enhanced disclosure regarding our 4-step timeline of the committees year-long compensation responsibilities and decisions that demonstrates the compensation committees disciplined approach to aligning pay with performance
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3 1 As of October 31, 2018
Our Directors and their qualifications The Board believes that all of the directors are highly qualified. As the biographies below show, the directors have the significant leadership and professional experience, knowledge and skills necessary to provide effective oversight and guidance for Invescos global strategy and operations. As a group, they represent diverse views, experiences and backgrounds. All the directors possess the characteristics that are essential for the proper functioning of our Board. All the directors are independent with the exception of our chief executive officer. |
Director qualifications | ||||||||||||||||||||||||||||||||||
Director |
Other public |
Committee memberships |
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Name | Age | since | boards | A | C | NCG | ||||||||||||||||||||||||||||
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Sarah E. Beshar | 60 | 2017 |
| M | M | M | ∎ | ∎ | |||||||||||||||||||||||||
Former Partner, Davis Polk
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Joseph R. Canion | 74 | 1997 | | | | Ch | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||
Former CEO, Compaq Computer Corporation
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Martin L. Flanagan | 58 | 2005 | | | | | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||
President and CEO, Invesco Ltd.
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C. Robert Henrikson | 71 | 2012 | | M | Ch | M | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||
Former President and CEO, MetLife, Inc. and Metropolitan |
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Life Insurance Company
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Denis Kessler | 65 | 2002 | 2 | M | M | M | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||
Chairman and CEO, SCOR SE
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Sir Nigel Sheinwald | 66 | 2015 | 1 | M | M | M | ∎ | ∎ | ∎ | |||||||||||||||||||||||||
Former United Kingdom Senior Diplomat
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G. Richard Wagoner, Jr. | 66 | 2013 | 1 | M | M | M | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||
Former Chairman and CEO, | ||||||||||||||||||||||||||||||||||
General Motors Corporation
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Phoebe A. Wood | 65 | 2010 | 3 | Ch | M | M | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||||
Former Vice Chairman and CFO, | ||||||||||||||||||||||||||||||||||
Brown-Forman Corporation
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Ben F. Johnson III1 | 75 | 2009 | | M | M | M | ∎ | ∎ | ||||||||||||||||||||||||||
Former Managing Partner, | ||||||||||||||||||||||||||||||||||
Alston & Bird LLP | ||||||||||||||||||||||||||||||||||
Key: A Audit C Compensation NCG Nomination and Corporate Governance M Member Ch Chairperson
1 Mr. Johnson has not been nominated for re-election to the Board because he has reached the mandatory retirement age.
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Governance highlights
Board refreshment ∎ Directors may not stand for election after age 75. ∎ Added 3 new directors to the Board since 2013. ∎ Increased Board diversity over the past 6 years.
Independence ∎ 8 of our 9 directors are independent. ∎ Our chief executive officer is the only management director. ∎ All of our Board committees are composed exclusively of independent directors.
Independent Chairperson ∎ We have an independent Chairperson of our Board of Directors, selected by the independent directors. ∎ The Chairperson serves as liaison between management and the other independent directors.
Board oversight of risk management ∎ Our Board has principal responsibility for oversight of the companys risk management process and understanding of the overall risk profile of the company.
Executive sessions ∎ The independent directors regularly meet in private without management. ∎ The Chairperson presides at these executive sessions.
Accountability ∎ Directors are elected for a one-year term. ∎ A meeting of shareholders may be called by shareholders representing at least 10% of our outstanding shares.
Board practices ∎ Our Board annually reviews its effectiveness as a group with a questionnaire and confidential and private one-on-one interviews coordinated by an independent external advisor specializing in corporate governance that reports results of the annual review in person to the Board. ∎ Nomination criteria are adjusted as needed to ensure that our Board as a whole continues to reflect the appropriate mix of skills and experience.
Share ownership requirements ∎ Require directors and executives to maintain an ownership level of our stock. |
Board member highlights | ||
Non-Executive Directors
Average tenure 10 years
Average age 68 |
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Director tenure Our directors contribute a wide range of knowledge, skills and experience. We believe the tenure of the members of our Board of Directors provides the appropriate balance of expertise, experience, continuity and perspective to our board to serve the best interests of our shareholders.
We believe providing our Board with new perspectives and ideas is an important component to a well-functioning board. 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 companys long-term global strategy and will bring diversity of thought, global perspective, experience and background to our Board. For more information on our director nomination process, see Information about Director Nominees Director Recruitment. |
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Joseph R. Canion Joseph Canion has served as a non-executive director of our company since 1997 and was a director of a predecessor constituent company (AIM Investments) from 1993 to 1997, when Invesco acquired that entity. Mr. Canion co-founded Compaq Computer Corporation in 1982 and served as its chief executive officer from 1982 to 1991. He also founded Insource Technology Group in 1992 and served as its Chairman until September 2006 and is a current director of Azevtec, Inc. He is on the board of directors of Houston Methodist Research Institute. Mr. Canion received a B.S. and M.S. in electrical engineering from the University of Houston.
Director qualifications ∎ Former public company CEO, global business experience: Mr. Canion has notable experience as an entrepreneur, having co-founded a business that grew into a major international technology company. We believe that his experience guiding a company throughout its business lifecycle has given him a wide-ranging understanding of the types of issues faced by public companies. ∎ Relevant industry experience: Mr. Canion has extensive service as a board member within the investment management industry, having also served as a director of AIM Investments, a leading U.S. mutual fund manager, from 1993 through 1997 when Invesco acquired AIM. ∎ Information technology industry experience: Mr. Canion has been involved in the technology industry since co-founding Compaq Computer Corporation and founding Insource Technology Group. | ||
Joseph R. Canion Non-executive director
Age Tenure 74 22 Years
Committees: - Nomination and Corporate Governance (Chair)
Qualifications: - Public company CEO - Executive leadership - Industry experience - Global business experience - IT industry experience - Public company board experience | ||
Martin L. Flanagan, CFA & CPA Martin Flanagan has been a director and President and Chief Executive Officer of Invesco since 2005. He is also a trustee and vice-chairperson of the Invesco Funds (the companys U.S. open- and closed-end funds). Mr. Flanagan joined Invesco from Franklin Resources, Inc., where he was president and co-chief executive officer from 2004 to 2005. Previously, he held numerous positions of increasing responsibility at Franklin co-president, chief operating officer, chief financial officer and senior vice president from 1993 - 2003. Mr. Flanagan served as director, executive vice president and chief operating officer of Templeton, Galbraith & Hansberger, Ltd. before its acquisition by Franklin in 1992. Before joining Templeton in 1983, he worked with Arthur Andersen & Co. He serves on the Board of Governors and as a member of the Executive Committee for the Investment Company Institute, and is a former Chairperson of the association. He also serves as a member of the executive board at the SMU Cox School of Business and is involved in a number of civic activities in Atlanta. Mr. Flanagan is a CFA charterholder and a certified public accountant. Mr. Flanagan earned a B.A. and B.B.A. from Southern Methodist University (SMU).
Director qualifications ∎ Public company CEO, relevant industry experience: Mr. Flanagan has spent over 30 years in the investment management industry, including roles as an | ||
Martin L. Flanagan President and CEO
Age Tenure 58 14 Years
Qualifications: - Public company CEO - Executive leadership - Industry experience - Global business experience - Financial and accounting experience
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investment professional and a series of executive management positions in business integration, strategic planning, investment operations, shareholder services and finance. Through his decades of involvement, including as former Chairperson of our industrys principal trade association, the Investment Company Institute, he has amassed a broad understanding of the larger context of investment management. ∎ Financial and accounting expertise: Mr. Flanagan obtained extensive financial accounting experience with a major international accounting firm and serving as chief financial officer of Franklin Resources. He is a chartered financial analyst and certified public accountant. |
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C. Robert Henrikson Robert Henrikson has served as a non-executive director of our company since 2012. Mr. Henrikson was president and chief executive officer of MetLife, Inc. and Metropolitan Life Insurance Company from 2006 through 2011, and he served as a director of MetLife, Inc. from 2005, and as Chairman from 2006 through 2011. During his more than 39-year career with MetLife, Inc., Mr. Henrikson held a number of senior positions in that companys individual, group and pension businesses. He currently serves on the Bipartisan Policy Centers Commission on Retirement Security and Personal Savings and the Board of Directors of the Bipartisan Center. Mr. Henrikson is a former Chairman of the American Council of Life Insurers, a former Chairman of the Financial Services Forum and a director emeritus of the American Benefits Council. Mr. Henrikson also serves as Chairman of the board of the S.S. Huebner Foundation for Insurance Education, as a trustee emeritus of Emory University and a member of the board of directors of Americares. Mr. Henrikson earned a bachelors degree from the University of Pennsylvania and a J.D. degree from Emory University School of Law. In addition, he is a graduate of the Wharton Schools Advanced Management Program.
Director qualifications ∎ Former public company CEO, relevant industry experience: Mr. Henriksons more than 39 years of experience in the financial services industry, which includes diverse positions of increasing responsibility leading to his role as chief executive officer of MetLife, Inc., have provided him with an in-depth understanding of our industry. ∎ Public company board experience: Mr. Henrikson served on the Board of Directors of Swiss Re from 2012 to 2018. Until 2011, Mr. Henrikson served as the chairperson of the board of MetLife, Inc. | ||
C. Robert Henrikson Non-executive director
Age Tenure 71 7 Years
Committees: - Audit - Compensation (Chair) - Nomination and Corporate Governance
Qualifications: - Public company CEO - Executive leadership - Industry experience - Global business experience - Public company board experience | ||
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Denis Kessler Denis Kessler has served as a non-executive director of our company since 2002. Mr. Kessler is Chairman and chief executive officer of SCOR SE. Prior to joining SCOR, Mr. Kessler was Chairman of the French Insurance Federation, senior executive vice president and member of the executive committee of the AXA Group and executive vice chairman of the French Business Confederation. Mr. Kessler previously served as a member of the supervisory board of Yam Invest N.V. from 2008 until 2014, a privately-held company. Mr. Kessler is a professor with advanced degrees in economics and social sciences, and a Fellow of the French Institute of Actuaries. He holds a PhD in economics and is a graduate of Ecole des Hautes Etudes Commerciales (HEC Paris). He holds honorary degrees from the Moscow Academy of Finance and the University of Montreal.
While Mr. Kessler is currently the CEO and Chairperson of a public company and serves as an outside director of two public companies (Invesco and BNP Paribas), he has demonstrated a continued commitment to Invesco, which is reflected, in part, by his attendance at all but one of Invescos Board of Directors meetings and all but one of the Boards Committees meetings during 2018. Mr. Kesslers unique perspective, fueled by his experience as an economist, his diverse international business experience and current position with a major global reinsurance company, significantly enhances the skill set of our Board of Directors by providing, among other things, valuable insight into both the investment management industrys macro-economic positioning over the long term across multi-geographies as well as our companys particular challenges within that industry. The fact that his current position and experience is in a similar industry as the company, | ||
Denis Kessler Non-executive director
Age Tenure 66 17 Years
Committees: - Audit - Compensation - Nomination and Corporate Governance
Qualifications: - Public company CEO - Executive leadership - Industry experience - Global business experience - Public company board experience
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combined with his 17 years of service on our Board, allows Mr. Kessler to quickly achieve a sophisticated understanding of the issues to be addressed by the company and its industry. | ||
Director qualifications ∎ Public company CEO, relevant industry experience: Mr. Kesslers experience as an economist and chief executive of a major global reinsurance company have combined to give him valuable insight into both the investment management industrys macro-economic positioning over the long term as well as our companys particular challenges within that industry. ∎ Global business experience: Mr. Kesslers experience as a director of a variety of international public companies in several industries over the years enables him to provide effective counsel to our Board on many issues of concern to our management. ∎ Public company board experience: Mr. Kessler currently serves on the boards of SCOR SE and BNP Paribas SA (accounts committee (president)). He previously served on the boards of directors of Bollore from 1999 until 2013, Fonds Strategique dInvestissement from 2008 until 2013 and Dassault Aviation from 2003 until 2014. |
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Sir Nigel Sheinwald Sir Nigel Sheinwald has served as a non-executive director of our company since 2015. Sir Nigel was a senior British diplomat who served as British Ambassador to the United States from 2007 to 2012, before retiring from Her Majestys Diplomatic Service. Previously, he served as Foreign Policy and Defence Adviser to the Prime Minister from 2003 to 2007 and as British Ambassador and Permanent Representative to the European Union in Brussels from 2000 to 2003. Sir Nigel joined the Diplomatic Service in 1976 and served in Brussels, Washington, Moscow, and in a wide range of policy roles in London. From 2014 to 2015, Sir Nigel served as the Prime Ministers Special Envoy on intelligence and law enforcement data sharing. Sir Nigel also serves as a non-executive director of Raytheon UK and a senior advisor to the Universal Music Group and Tanium, Inc. He is also a visiting professor and member of the Council at Kings College, London. In addition, Sir Nigel is the Chairperson of the U.S.-U.K. Fulbright Education Commission and serves on the Advisory Boards of the Ditchley Foundation, BritishAmerican Business and the Centre for European Reform. He is an Honorary Bencher of the Middle Temple, one of Londons legal inns of court. Sir Nigel received his M.A. degree from Balliol College, University of Oxford, where he is now an Honorary Fellow.
Director qualifications ∎ Global and governmental experience, executive leadership: Sir Nigel brings unique global and governmental perspectives to the Boards deliberations through his more than 35 years of service in Her Majestys Diplomatic Service. His extensive experience leading key international negotiations and policy initiatives, advising senior members of government and working closely with international businesses positions him well to counsel our Board and senior management on a wide range of issues facing Invesco. In particular, Sir Nigels experience in the British government is a valuable resource for advising the Board with respect to the challenges and opportunities relating to regulatory affairs and government relations. ∎ Public company board experience: Sir Nigel currently serves on the Board of Directors of Royal Dutch Shell plc (Chair of the Corporate and Social Responsibility Committee and member of the Remuneration Committee). | ||
Sir Nigel Sheinwald Non-executive director
Age Tenure 65 4 Years
Committees: - Audit - Compensation - Nomination and Corporate Governance
Qualifications: - Executive leadership - Government experience - Public company board experience
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G. Richard Wagoner, Jr. G. Richard (Rick) Wagoner, Jr. has served as a non-executive director of our company since 2013. Upon Mr. Johnsons retirement from the Board in May 2019, Mr. Wagoner will serve as Chairperson of the Board. Mr. Wagoner served as Chairman and chief executive officer of General Motors Corporation (GM) from 2003 through March 2009, and had been president and chief executive officer since 2000. Prior positions held at GM during his 32-year career with that company include president and chief operating officer, executive vice president and president of North American operations, executive vice president, chief financial officer and head of worldwide purchasing, and president and managing director of General Motors do Brasil. On June 1, 2009, GM and its affiliates filed voluntary petitions in the United States Bankruptcy Court for the Southern District of New York, seeking relief under Chapter 11 of the U.S. Bankruptcy Code. Mr. Wagoner was not an executive officer or director of GM at the time of that filing. Mr. Wagoner is a member of the board of directors of several privately-held companies. In addition, he advises several financial firms, start-ups and early-stage ventures. Mr. Wagoner is a member of the Virginia Commonwealth University Board of Visitors, the Duke Kunshan University Advisory Board and the Duke Universitys Health System Board of Directors. He is also a member of the Leapfrog Group Board of Directors, a nonprofit organization. In addition, he is a honorary member of the mayor of Shanghai, Chinas International Business Leaders Advisory Council. Mr. Wagoner received his B.A. from Duke University and his M.B.A. from Harvard University.
Director qualifications ∎ Former public company CEO, global business experience: Mr. Wagoner brings to the Board valuable business, leadership and management insights into strategic direction and international operations gained from his 32-year career with GM. ∎ Financial and accounting expertise: Mr. Wagoner also brings significant experience in public company financial reporting and corporate governance matters gained through his service with other public companies. He has been designated as one of our audit committees financial experts, as defined under rules of the Securities and Exchange Commission (SEC). ∎ Public company board experience: Mr. Wagoner has served on the Board of Graham Holdings Company (audit committee) since 2010. | ||
G. Richard Wagoner, Jr. Non-executive director and Chairperson Elect
Age Tenure 66 6 Years
Committees: - Audit - Compensation - Nomination and Corporate Governance
Qualifications: - Public company CEO - Executive leadership - Global business experience - Financial and accounting experience - Public company board experience
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Phoebe A. Wood Phoebe Wood has served as a non-executive director of our company since 2010. She is currently a principal at CompaniesWood and served as vice chairman, chief financial officer and in other capacities at Brown-Forman Corporation from 2001 until her retirement in 2008. Prior to Brown-Forman, Ms. Wood was vice president, chief financial officer and a director of Propel Corporation (a subsidiary of Motorola) from 2000 to 2001. Previously, Ms. Wood served in various capacities during her tenure at Atlantic Richfield Company (ARCO) from 1976 to 2000. Ms. Wood currently serves on the boards of trustees for the Gheens Foundation, the American Printing House for the Blind, and Pitzer College. Ms. Wood received her A.B. degree from Smith College and her M.B.A. from University of California Los Angeles.
Director qualifications ∎ Executive leadership, global business experience: Ms. Wood has extensive experience as both a director and a member of senior financial management of public companies in a variety of industries. ∎ Financial and accounting expertise: Ms. Wood has significant accounting, financial and business expertise, which is valuable to our directors mix of skills, and she has been designated as one of our audit committees financial experts, as defined under rules of the SEC. ∎ Public company board experience: Ms. Wood serves on the following boards: Leggett & Platt, Incorporated (compensation (Chair)), Pioneer Natural Resources Company (audit, nominating and corporate governance committees (Chair)) and PPL Corporation (compensation, governance and nominating committees). | |
Phoebe A. Wood Non-executive director
Age Tenure 65 9 Years
Committees: - Audit (Chair) - Compensation - Nomination and Corporate Governance
Qualifications: - Executive leadership - Global business experience - Financial and accounting expertise - Public company board experience
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Retiring director
Ben F. Johnson III Ben Johnson has served as Chairperson of our company since 2014 and as a non-executive director of our company since 2009. Mr. Johnson served as the managing partner at Alston & Bird LLP from 1997 to 2008. He was named a partner at Alston & Bird in 1976, having joined the firm in 1971. He earned his B.A. degree from Emory University and his J.D. degree from Harvard Law School.
Director qualifications ∎ Executive leadership, legal expertise: Mr. Johnson possesses more than a decade of experience leading one of the largest law firms in Atlanta, Georgia, where Invesco was founded and grew to prominence. His more than 30-year career as one of the regions leading business litigators has given Mr. Johnson deep experience of the types of business and legal issues that are regularly faced by large public companies such as Invesco. ∎ Civic and private company board leadership: Mr. Johnson serves on the Executive Committee of the Atlanta Symphony Orchestra and as a Trustee of The Carter Center and the Charles Loridans Foundation. Mr. Johnson is Chair Emeritus of Atlantas Woodward Academy, having served as Chair from 1983 to 2018, and served as Chair of the Board of Trustees of Emory University from 2000-2013. | ||
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Ben F. Johnson III Chairperson of the Board
Age Tenure 75 10 Years
Committees: - Audit - Compensation - Nomination and Corporate Governance
Qualifications: - Executive leadership - Legal expertise | ||
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Director independence | ||||||
For a director to be considered independent, the Board must affirmatively determine that the director does not have any material relationship with the company either directly or as a partner, shareholder or officer of an organization that has a relationship with the company. Such determinations are made and disclosed according to applicable rules established by the New York Stock Exchange (NYSE) or other applicable rules. As part of its independence determinations, the Board considers any direct or indirect relationship between a director (or an immediate family member of such director) and the company or any third party involved with the company. As part of its independence determinations with respect to director Sarah E. Beshar, the Board considered (i) a real estate lease by the company of certain office space located in New York, New York from Marsh & McLennan (MMC) which employs Ms. Beshars spouse as an executive officer (Executive Vice President and General Counsel); and (ii) various human resources-related transactional and administration services (e.g., third-party benefits administration and benchmarking market data) which are non-professional and nonadvisory in nature provided by subsidiaries of MMC. The total amount paid to MMC in 2018 for all such items was less than one percent (1%) of MMCs 2018 publicly reported revenue. In accordance with the rules of the NYSE, the Board has affirmatively determined that it is currently composed of a majority of independent directors, and that the following current directors are independent and do not have a material relationship with the company: Sarah E. Beshar, Joseph R. Canion, C. Robert Henrikson, Ben F. Johnson III, Denis Kessler, Sir Nigel Sheinwald, G. Richard Wagoner, Jr. and Phoebe A. Wood. | ||||||
Board evaluation process | ||||||
1 Annual board and committee evaluations |
The Board engages an independent external advisor specializing in corporate governance to coordinate the Boards self assessment by its members. The advisor has each director review a questionnaire and then performs one-on-one confidential interviews with directors. In addition to the questionnaires and interviews of each director, interviews are also conducted with those members of executive management who attend Board meetings on a regular basis. | |||||
2 Report to board |
The advisor prepares and presents in person a report 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. | |||||
3 Board and committee review |
The Board then discusses the evaluation to determine what action, 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: | ||||||||
1 Determine candidate pool |
The nomination and corporate governance committee reviews and updates its criteria for prospective directors based on succession planning for directors, to fill gaps in skill sets among current directors and to address new or evolving needs of the company. The company utilizes each of the following recommendations to aid in this process: - Directors - Independent search firms | |||||||
2 Review recommendations |
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 companys long-term strategic objectives and will bring diversity of thought, global perspective, experience and background to our Board. While the Committee routinely considers diversity as a part of its deliberations, it has no formal policy regarding diversity. | |||||||
3 Make recommendations to the board |
Due diligence is conducted, including soliciting feedback on potential candidates from persons outside the Company. Qualified candidates are presented to the Board of Directors. | |||||||
4 Outcome |
Three new directors since 2013 adding the following skills and traits to our Board:
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- Gender Diversity - Public Company CEO - Global business leadership - Government experience - Financial and accounting expertise |
- Industry experience - Non-U.S. Directors - Legal Experience - Executive leadership | |||||||
The nomination and corporate governance committee believes there are certain minimum qualifications that each director nominee must satisfy in order to be suitable for a position on the Board, including that such nominee: ∎ be an individual of the highest integrity and have an inquiring mind, a willingness to ask hard questions and the ability to work well with others; ∎ be free of any conflict of interest that would violate any applicable law or regulation or interfere with the proper performance of the responsibilities of a director; ∎ be willing and able to devote sufficient time to the affairs of the company and be diligent in fulfilling the responsibilities of a director and Board committee member; and ∎ have the capacity and desire to represent the best interests of the shareholders as a whole. |
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Communications with the Chairperson and other non-executive directors | ||
Any interested party may communicate with the Chairperson of our Board or to our non-executive directors as a group at the following address: | ||
Invesco Ltd. 1555 Peachtree Street N.E. | ||
Atlanta, Georgia 30309 | ||
Attn: Office of the Secretary | ||
Communications will be distributed to the Board, or to any of the Boards committees or individual directors as appropriate, depending on the facts and circumstances of the communication. In that regard, the Invesco Board does not receive certain items which are unrelated to the duties and responsibilities of the Board. | ||
In addition, the company maintains the Invesco Compliance Reporting Line for its employees or individuals outside the company to report complaints or concerns on an anonymous and confidential basis regarding questionable accounting, internal accounting controls or auditing matters and possible violations of the companys Code of Conduct or law. Further information about the Invesco Compliance Reporting Line is available at www.invesco.com (the companys website). | ||
Non-employees may submit any complaint regarding accounting, internal accounting controls or auditing matters directly to the audit committee of the Board of Directors by sending a written communication to the address given below: | ||
Audit Committee | ||
Invesco Ltd. 1555 Peachtree Street N.E. | ||
Atlanta, Georgia 30309 | ||
Attn: Office of the Secretary |
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down and across the company. Broadly, our approach includes two governance structures: (i) our Global Performance and Risk Committee assesses core investment risks; and (ii) our Corporate Risk Management Committee assesses strategic, operational and all other business risks. A network of business unit, geographic and specific risk management committees, under the auspices of the Corporate Risk Management Committee, maintains an ongoing risk assessment, management and monitoring process that provides a bottom-up perspective on the specific risks existing in various domains of our business.
At each Board meeting, the Board reviews and discusses with senior management information pertaining to risk provided by the Global Performance and Risk Committee and the Corporate Risk Management Committee. In these sessions senior management reviews and discusses with the Board the most significant risks facing the company. The Board also reviews and approves the companys risk appetite statement and crisis management framework. By receiving these regular reports, the Board maintains a practical understanding of the risk philosophy, culture and risk appetite of the company. In addition, Board and committee agenda items on various topics regarding our business include discussion on risks inherent in our business as well as those introduced by new business developments. Through this regular and consistent risk communication, the Board has reasonable assurance that all material risks of the company are being addressed and that the company is propagating a risk-aware culture in which effective risk management is built into the fabric of the business.
In addition, the compensation committee annually assesses the risks of our compensation policies and practices for all employees. The compensation committee has concluded our policies and practices do not create risks that are reasonably likely to have a material adverse effect on the company. In reaching this conclusion, the compensation committee considered the input of a working group comprised of representatives from our human resources and finance departments that reviewed each of Invescos compensation plans.
Invescos compensation programs are designed to reward success over the long-term, promote a longer term view of risk and return in decision making and protect against incentives for inappropriate risk taking. Examples of risk mitigation in our compensation program design include: ∎ The compensation committee considers multiple performance metrics in establishing the company-wide annual incentive pool each year, so no one metric creates an undue reward that might encourage excessive risk taking. The Committee does not attempt to rank or assign relative weight to any factor, but instead applies its judgment in considering them in their entirety; ∎ The vast majority of investment professional bonus plans have multi-year measurement periods, caps on earnings and discretionary components; ∎ Sales and commission plans generally contain multiple performance measures and discretionary elements; and ∎ Executives receive a substantial portion of compensation in the form of long-term equity that vests over multi-year periods. Time-based equity awards vest ratably over a four-year period. Performance-based equity awards are subject to |
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a three-year performance period and three-year cliff vesting. As in the past, the achievement of financial performance for the performance-based equity awards must be certified by the compensation committee and the awards are subject to a clawback. Executives are also subject to our stock ownership policy.
The audit committee routinely receives reports from the control functions of finance, legal, compliance and internal audit. The Global Head of Internal Audit reports to the Chairperson of the audit committee. The audit committee oversees the internal audit functions planning and resource allocation in a manner designed to ensure testing of controls and other internal audit activities are appropriately prioritized in a risk-based manner. The audit committee also seeks to assure that appropriate risk-based inputs from management and internal audit are communicated to the companys independent public auditors.
Investment and corporate stewardship - environmental, social and governance (ESG) responsibility Invescos distinct and differentiated approach to investment and corporate stewardship is guided by our purpose - to deliver an investment experience that helps people get more out of life. We are rooted in the belief that our role as one of the worlds leading independent investment management organizations is to serve as a trusted partner to our clients, shareholders and communities. Our progress in strengthening our stewardship across both investment and corporate lines continues to underscore Invescos commitment to responsible investing. Invesco is committed to fostering greater transparency and continuous improvement with regard to responsible investment and corporate stewardship within our business. Below are some of the actions Invesco is taking to meet these commitments.
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Invescos Investment Stewardship ∎ In June 2013, Invesco became a signatory to the United Nations Principles for Responsible Investment (PRI), which is the leading global responsible investment network of investment managers. Invesco has received an annual rating from PRI on Strategy and Governance of an A+, representing a score of 95% or higher, for two consecutive years. In all eight categories tracked by PRI, Invesco matched or outperformed its peer group, reflecting our commitment and success in this area. Invescos PRI transparency report is publicly available at www.unpri.org. Invesco is also a signatory to the UK Stewardship Code and Japan Stewardship Code, which, like PRI, promote active engagement in corporate governance. Additional information about Invescos commitment to Principles for Responsible Investment is available under the About Us tab on the companys website. ∎ Invesco believes the voting of proxies should be managed with the same care as all other elements of the investment process. The proxy voting process at Invesco, which is driven by investment professionals, focuses on maximizing long-term value for our clients, protecting clients rights and promoting governance structures and practices that reinforce the accountability of corporate management and boards of directors to shareholders. Invescos Investment Stewardship and Proxy Voting Annual Report is also available under the About Us tab on the companys website. ∎ Our company is a constituent of the FTSE4Good Index Series, which seeks to help investors identify organizations with good track records of corporate social responsibility. | ||
Invescos Corporate Stewardship ∎ The Invesco Corporate Responsibility Committee (CRC), which includes executive management sponsorship and representation, oversees and drives the companys global corporate and investment stewardship programs and policy. The committee, working in coordination with global workstreams, drives the strategy, oversight and governance of our internal programs and demonstrates Invescos broad executive leadership commitment to responsible investment. The CRC provides direction to Invescos investment and corporate stewardship leaders on core ESG topics, participation in industry advocacy and policy efforts and participation in charitable and community organizations to enhance our impact in sustainable global efforts. |
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∎ Invesco has also made significant progress in reducing our impact on the environment at a number of our global locations. Our Atlanta, Dublin, Frankfurt, Henley, Houston, Hyderabad, London, New York, Prince Edward Island and Toronto locations, which comprise approximately 80% of Invescos employees around the world, are ISO 14001 registered a certification that Invesco has the framework in place to effectively manage its environmental responsibilities. ∎ Invesco has received certification in the Leadership in Energy and Environmental Design (LEED) program. Our Hyderabad office achieved the highest platinum standard, while our New York office achieved the gold standard and our Atlanta headquarters and Houston office achieved the silver standard. LEED certification is globally recognized as the premier mark of achievement in green building. ∎ Invesco participates in the Carbon Disclosure Project, reporting on carbon emissions and reduction management processes and our commitment to sound environmental practices is summarized in our Global Carbon Emissions and Environmental Corporate Policy Statement found under the About Us tab on the companys website. ∎ We are a member of the Clean Seas campaign and removed 4.05 tons of single use plastic across our corporate properties and participate in the PRI Plastics Advisory Committee committed to raising investor awareness and to develop and support engagement on plastics. ∎ We achieved the quadruple rating for the Carbon Trust Standard in the UK reducing carbon by 36%, waste by 11% and water by 29.6%. Invesco is the only asset manager to achieve the quadruple rating in the UK. ∎ In 2018, our company was named one of the best places to work in money management by Pensions and Investments®. ∎ Our company provides equal opportunity in its employment and promotion practices and encourages employees to play active roles in the growth and development of the communities in which they live and work. Invesco conducts regular employee surveys to monitor employee satisfaction with results showing consistently high levels of employee engagement driven by many positive factors including employees perspectives regarding ethics and values at the company, the companys strategy and direction, and opportunity for personal development. ∎ Invesco has also demonstrated its commitment to improving diversity across our global business as discussed in greater detail below. ∎ Employees are provided with a variety of elements to enable them to stay healthy, maintain a work-life balance and plan for retirement. These rewards include: Comprehensive health and wellness programs Retirement savings plans Life insurance and income-protection benefits Holiday and time-off benefits Flexibility to help balance work and family responsibilities Opportunities to develop professional skills and knowledge Opportunities to contribute to their community Opportunities to become an Invesco shareholder through our employee stock purchase plan |
A+
PRI rating for Strategy and Governance and Fixed Income for two consecutive years1 |
$67 Billion
in sustainability offerings2 |
32%
Of all of Invescos listed funds rated High/Above Average for Sustainability3 |
2018
Global ESG Innovation Asset Manager of the Year4
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1 2018 Assessment Report for Invesco Ltd., PRI
2 As of December 31, 2018
3 Morningstar Sustainability ratings 280 of 882 as of October 31, 2018
4 Strategic Insights Chief Investment Officer Industry Innovation Awards
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We believe in the power of diversity Fundamentally, we believe that in order to best help our clients and employees get more out of life, our workforce should reflect the diversity of people and perspectives of todays evolving society.
Our business success relies on engaging a highly diverse team of people across the globe who are client-focused, innovative and draw on a range of backgrounds and experiences to contribute their unique perspective. Ensuring a broad range of different experiences and backgrounds helps us create the diversity of thought needed to deliver a compelling investment experience for clients and ensure an engaging work environment for our people. This approach is a core attribute of our firms culture, which actively encourages our people to collaborate to find the best ideas and solutions for clients, leveraging the tremendous diversity of thought that exists across our global organization.
At Invesco, were committed to improving diversity at all levels and in all functions across our global business. Although diversity is very country and culturally specific, the need for greater gender diversity is a constant across the globe, which is why we are focusing on gender at the enterprise level. Today we have a diverse, talented pool of women across our global firm, but we aspire to have more women at senior levels and across all functions within our firm.
The CEO and senior managing directors of Invesco the most senior leaders for key parts of our business have adopted several principles for achieving our gender diversity targets. To demonstrate our commitment to senior-level accountability globally, the firm has adopted a four-point pledge (modelled on the UK Women in Finance charter). Specifically, the CEO and senior managing directors have pledged that: ∎ We are supportive of this initiative and will apply the initiative to Invesco globally with the CEO and each senior managing director responsible and accountable for gender diversity and inclusion; ∎ Globally, we have set a target for female representation of senior managers to be between 30% - 40% by 2020 (27% as of December 31, 2018); ∎ We will share high-level diversity and inclusion activities that will aid our achievement of the target and support having greater diversity across the globe; and ∎ Goals on gender diversity will be included for our CEO and the senior managing directors, as part of their overall performance goals, and to be in support of gender diversity and inclusion activities. | ||
In support of our wider diversity and inclusion aspirations beyond gender, we have a variety of activities focused on engaging and developing the many talented people who work for Invesco, while also ensuring that we attract new talent from a broad range of backgrounds. These initiatives include programs focused on developing the next generation of leaders, training efforts intended to strengthen our inclusive culture and more robust recruitment practices to attract diverse talent into the firm.
All of these efforts are sponsored by the senior managing directors, supported by our senior leaders across the business, cascaded to our employees and captured in the firms business plans and leadership objectives. | ||
Across the globe, we continue to build our partnerships and networks to optimize our diversity and inclusion activity. We are leveraging the efforts and success of our Invesco Womens Network, which provides development and mentorship opportunities, creates networking events for women and men and partners with the business on its broader diversity and inclusion efforts.
Additionally, we work with a variety of external partners with the goal of improving diversity and inclusion within Invesco and across our industry, for example, we are active members in a number of local or regional public or industry initiatives such as the UK and North America Asset Management Diversity Project. |
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Invesco named one of the best places to work in asset management in 2018 by Pensions and Investments® |
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Invesco values our employees and their diverse perspectives. Our company provides equal opportunities in its employment and promotion practices, and encourages employees to play an active role in the growth and development of the communities in which they live and work. | ||
To measure our progress in a number of areas and provide input that helps us further strengthen our culture, Invesco conducts regular internal surveys to measure and monitor employee engagement. The most recent results in 2017 showed continued high levels of employee engagement exceeding the global high performing organizations norm, a relevant benchmark provided by our employee survey provider, Willis Towers Watson. In 2017, the drivers of engagement included employees perspectives regarding ethics and values at the company, the companys strategy and direction, and the degree to which employees feel empowered and involved in decisions.
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Cyber Security | ||
At a time when cyber threats are considered one of the most significant risks facing financial institutions, we continue to invest in our security capabilities to keep clients, employees, and critical assets safe, while enabling a secure and resilient business. We have designated a Chief Global Security Officer and have a global security program that combines information (including cyber) security, physical security, privacy, business security and recovery, and strategy and reporting under a single umbrella supported by an intelligence function that provides timely threat information. | ||
Our information security program, led by our Chief Information Security Officer, is designed to oversee and maintain all aspects of information security risk to seek to ensure the confidentiality, integrity and availability of information assets. This includes the implementation of controls aligned with industry guidelines and applicable statutes and regulations to identify threats, detect attacks and protect these information assets. We have an incident response program that includes periodic testing and is designed to restore business operations as quickly and as orderly as possible in the event of a breach. | ||
Our Board is responsible for overseeing the global security and information security programs and holding senior management accountable for its actions. This includes understanding our business needs and associated risks, providing management direction, reviewing periodic reports on program effectiveness and discussing managements strategy and recommendations for managing risk. |
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Directors who are Invesco employees do not receive compensation for their services as directors. The compensation committee annually reviews and determines the compensation paid to non-executive directors. The committee considers, among other things, the following policies and principles: | ||
∎ that compensation should fairly pay the non-executive directors for the work, time commitment and efforts required by directors of an organization of the companys size and scope of business activities, including service on Board committees; | ||
∎ that a component of the compensation should be designed to align the non- executive directors interests with the long-term interests of the companys shareholders; and | ||
∎ that non-executive directors independence may be compromised or impaired if director compensation exceeds customary levels. | ||
As a part of its annual review, the committee engaged Johnson Associates, Inc. (Johnson Associates) as a third-party consultant to report on comparable non- executive director compensation practices and levels. This report includes a review of director compensation at the same peer companies the committee considers for executive compensation practices. See page 47 for a list of our peers. Following the review of current market practices for directors of peer public companies, the compensation committee determined in December 2017 that the compensation for non-executives directors would remain the same for 2018. The compensation for non-executive directors for 2018 was as follows, with each fee component paid in quarterly installments in arrears: |
Basic cash fee |
Non-executive directors (other than the Chairperson of the Board) received an annual basic fee paid in cash in the amount of $120,000.
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Chairperson fee |
In lieu of the above basic cash fee, the Chairperson of the Board received an annual cash fee of $400,000.
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Basic shares fee |
Non-executive directors also received an annual award of shares in the aggregate amount of $145,000.
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Audit Committee |
The Chairperson of the audit committee received an additional annual cash fee of $50,000.
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Compensation and Nomination and Corporate Governance Committee Chairpersons fee
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The Chairperson of the compensation committee and the Chairperson of the nomination and corporate governance committee each received an additional annual cash fee of $15,000.
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We also reimburse each of our non-executive directors for their travel expenses incurred in connection with attendance at Board of Directors and committee meetings. Directors do not receive any meeting or attendance fees. Following its annual review of current market practices for directors of peer public companies in December 2018, the compensation committee determined that the compensation for non-executive directors will remain the same for 2019. |
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Stock ownership policy for non-executive directors All shares granted to our non-executive directors are subject to the Non-Executive Director Stock Ownership Policy. The policy generally requires each non-executive director to achieve and thereafter maintain an ownership level of at least 18,000 shares within seven years of such directors first appointment as a non-executive director. Until such ownership level is achieved, each non-executive director is generally required to continue to retain at least 50% of all shares received as compensation from the company. | ||
The following table shows the status of our non-executive directors meeting the requirements of the policy as of December 31, 2018. | ||
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1 Based on current compensation levels, it is anticipated that Ms. Beshar and Sir Nigel will each attain the share ownership goal within the period required by the policy. 2 Includes deferred shares awarded under our legacy Deferred Fees Share Plan. |
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Director compensation table for 2018 The following table sets forth the compensation paid to our non-executive directors for services during 2018. |
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Name | Fees earned or paid in cash ($)1 |
Share awards ($)2 | Total ($) | |||||||||
Sarah E. Beshar |
120,000 | 144,967 | 264,967 | |||||||||
Joseph R. Canion |
135,000 | 144,967 | 279,967 | |||||||||
C. Robert Henrikson |
135,000 | 144,967 | 279,967 | |||||||||
Ben F. Johnson, III |
400,000 | 144,967 | 544,967 | |||||||||
Denis Kessler |
120,000 | 144,967 | 264,967 | |||||||||
Sir Nigel Sheinwald |
120,000 | 144,967 | 264,967 | |||||||||
G. Richard Wagoner, Jr. |
120,000 | 144,967 | 264,967 | |||||||||
Phoebe A. Wood |
170,000 | 144,967 | 314,967 |
1 | Includes the annual basic cash fee and, as applicable, Chairperson of the Board fee and committee Chairperson fees. |
2 | Reflects the grant date fair value for each share award. Share awards are 100% vested as of the date of grant. |
The following table presents the grant date fair value for each share award made to each non-executive director during 2018.
|
||||||||||||||||||||
2018 Director grant date fair value | ||||||||||||||||||||
Name | Date of grant 2/1/18 ($) |
Date of grant 4/27/18 ($) |
Date of grant 7/27/18 ($) |
Date of grant 10/19/18 ($) |
Total grant date fair value ($) |
|||||||||||||||
Sarah E. Beshar |
36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
Joseph R. Canion |
36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
C. Robert Henrikson |
36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
Ben F. Johnson III |
36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
Denis Kessler |
36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
Sir Nigel Sheinwald |
36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
G. Richard Wagoner, Jr. |
36,246 | 36,248 | 36,228 | 36,245 | 144,967 | |||||||||||||||
Phoebe A. Wood |
36,246 | 36,248 | 36,228 | 36,245 | 144,967 |
29
30
Colin D. Meadows Colin Meadows has served as senior managing director and head of Private Markets and Global Institutional platforms since 2015. Mr. Meadows is also responsible for our digital wealth efforts, including Jemstep and Intelliflo and directs the firms corporate development strategy. Previously, he also served as chief administrative officer of Invesco from 2006 to November 2018. In September 2008, he expanded his role with responsibilities for operations and technology. In April 2014, his role further expanded to head alternative investments for the company. Mr. Meadows came to Invesco from GE Consumer Finance where he was senior vice president of business development and mergers and acquisitions. Prior to that role, he served as senior vice president of strategic planning and technology at Wells Fargo Bank. From 1996 to 2003, Mr. Meadows was an associate principal with McKinsey & Company, focusing on the financial services and venture capital industries, with an emphasis in the banking and asset management sectors. Mr. Meadows earned a B.A. in economics and English literature from Andrews University and a J.D. from Harvard Law School. | ||
Colin D. Meadows Senior Managing Director and Head of Private Markets and Global Institutional
Age Tenure 48 13 Years | ||
| ||
Andrew R. Schlossberg Andrew Schlossberg has served as senior managing director and head of the Americas since March 2019. In addition, Mr. Schlossberg has responsibility for the firms exchange-traded funds capabilities globally and for human resources. Previously, he was senior managing director and head of EMEA (which includes the UK, continental Europe and the Middle East) from 2016 to March 2019. Mr. Schlossberg joined Invesco in 2001 and has served in multiple leadership roles across the company, including his previous position as Head of US Retail Distribution and global exchange-traded funds for Invesco. He has also served as U.S. chief marketing officer, head of Global Corporate Development (overseeing business strategy and mergers and acquisitions), and in leadership roles in strategy and product development in the companys North American Institutional and Retirement divisions. Prior to joining Invesco, Mr. Schlossberg worked with Citigroup Asset Management and its predecessors from 1996 to 2000. He earned a B.S. in finance and international business from the University of Delaware and an M.B.A. from the Kellogg School of Management at Northwestern University. | ||
Andrew R. Schlossberg Senior Managing Director and Head of the Americas
Age Tenure 45 18 Years | ||
| ||
Doug J. Sharp Doug Sharp has served as senior managing director and head of EMEA since March 2019 and is the Chair of the Board of Invesco UK (Invescos European Subsidiary Board). He has 14 years experience in the asset management industry. Mr. Sharp joined Invesco in 2008 and has served in multiple leadership roles across the company, including his previous role as the Head of EMEA Retail. Prior to that, he ran Invescos Cross Border retail business, as well as serving as the Head of Strategy and Business Planning and as Chief Administrative Officer for Invescos US institutional business. Mr. Sharp joined Invesco from the strategy consulting firm McKinsey & Company, where he served clients in the financial services, energy and logistics sectors. Mr. Sharp earned an M.B.A. from the Tuck School of Business at Dartmouth College, a masters degree in accounting from Georgia State University and a B.A. in economics from McGill University. | ||
Doug J. Sharp Senior Managing Director and Head of EMEA
Age Tenure 44 11 Years | ||
31
Loren M. Starr Loren Starr has served as senior managing director and chief financial officer of our company since 2005. His current responsibilities include finance, accounting, tax, investor relations, corporate strategy and Invescos private markets platform. Prior to joining Invesco, he served from 2001 to 2005 as senior vice president and chief financial officer of Janus Capital Group Inc., after working as head of corporate finance from 1998 to 2001 at Putnam Investments. Prior to these positions, Mr. Starr held senior corporate finance roles with Lehman Brothers and Morgan Stanley & Co. He served as a past Chairperson of the Association for Financial Professionals and is the Chairman of the Georgia Leadership Institute for School Improvement. Mr. Starr also serves on the boards of the Atlanta Track Club and the Woodruff Arts Center. Mr. Starr was named one of the best US CFOs by Institutional Investor magazine. He earned a B.A. in chemistry and B.S. in industrial engineering from Columbia University, as well as an M.B.A. from Columbia and an M.S. in operations research from Carnegie Mellon University. | ||
Loren M. Starr Senior Managing Director and Chief Financial Officer
Age Tenure 57 14 Years | ||
| ||
Mark Giuliano Mark Giuliano has served as chief administrative officer since November 2018 and has served as Invescos Chief Security Officer since 2016. He was previously Managing Director and Global Head of Security, Technology and Operations. His responsibilities include overseeing Technology, Investment Operations, North America Transfer Agency, Global Security, Global Corporate Services and Invesco Trust Company Departments. Mr. Giuliano joined Invesco in 2016 after serving over 28 years with the Federal Bureau of Investigation (FBI). While at the FBI, Mr. Giuliano served in a number of leadership roles, including Special Agent in charge of the Atlanta division and executive assistant director of the National Security Branch, before retiring as the Deputy Director and Chief Operating Officer. Mr. Giuliano earned a degree in business economics from the College of Wooster. | ||
Mark Giuliano Chief Administrative Officer
Age Tenure 57 3 Years | ||
Departing Executive Officer | ||
Philip A. Taylor Philip Taylor has served as vice chair since March 2019. In his role as vice chair, Mr. Taylor continues to oversee activities in connection with the planned acquisition of Oppenheimer Funds and the succession of Mr. Schlossberg into Mr. Taylors former role with the company. Previously, he served as senior managing director and head of Invescos Americas business from 2012 to March 2019 and had responsibility for the firms exchange-traded funds capabilities globally and for human resources. Prior to becoming Head of Americas, Mr. Taylor served as Head of Invescos North American Retail business since 2006. He joined Invesco Canada in 1999 as senior vice president of operations and client services and later became executive vice president and chief operating officer. He was named chief executive officer of Invesco Canada in 2002. Mr. Taylor is a member of the deans advisory council of the Schulich School of Business and is involved in a number of music, arts and cultural activities in Canada. Mr. Taylor received a Bachelor of Commerce degree from Carleton University and an M.B.A. from the Schulich School of Business at York University. | ||
Philip A. Taylor Vice Chair (formerly Senior Managing Director and Head of the Americas)
Age Tenure 64 20 Years | ||
32
Martin L. Flanagan | Loren M. Starr | Andrew T.S. Lo | ||
President and Chief | Senior Managing Director | Senior Managing Director | ||
Executive Officer (CEO) | and Chief Financial Officer | and Head of Asia Pacific | ||
Gregory G. McGreevey | Philip A. Taylor | |||
Senior Managing Director, | Senior Managing Director | |||
Investments | and Head of the Americas |
Table of Contents | ||||||
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54 | ||||||
Stock ownership policy, clawback policy, benefits, and perquisites |
54 | |||||
55 | ||||||
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57 |
33
34
35 1 As of October 31, 2018
Scorecoard for assessing company performance |
||||||
Weighting | ||||||
Category |
Objective | Quantitative measures | (%) | |||
Financial performance
Alignment with long-term shareholder interests |
Deliver strong operating results and financial outcomes Cash management Drive efficiency and effectiveness Increase shareholder returns |
Adjusted diluted earnings per share1 Adjusted operating income1 Credit ratings (Moodys, S&P and Fitch) Leverage ratio (adjusted debt/EBITDA) Adjusted operating margin1 Net revenue yield1 Dividend growth; stock repurchasses Cumulative capital returned to shareholders (5 year period) Total shareholder return vs. total returns of S&P 500 and our peer group over various time frames |
50 | |||
Delivering to clients
Alignment with long-term client interests |
Achieve strong investment performance and advocate responsible investment practices |
Quality and breadth of investment capabilities on a 3- and 5-year basis Sustainable responsible investment and corporate stewardship commitment (Principles for Responsible Investment (PRI) rating) |
30 | |||
Organizational strength
Ensuring sustainability of shareholder and client outcomes and creating alignment with employee interests |
Ensure organizational health and high performance culture Promote sound risk management practices |
Thoroughness of talent management and development Foster and build a diverse and inclusive culture Succession planning Sustainable employee engagement scores Employee retention (employee turnover rate) Leadership and management practices Diligence and mitigation of risks, including cyber-risk |
20 |
1 | The adjusted financial measures are all non-GAAP financial measures. See the information in Appendix B of this Proxy Statement regarding Non-GAAP financial measures. |
These enhancements to our executive compensation program further align executive compensation outcomes with our shareholder interests. We continue to support our purpose-driven commitment to deliver an investment experience that helps people get more out of life and our multi-year strategic objectives to drive meaningful growth. | ||
The committee applies its qualitative assessment in setting final compensation in order to ensure that outcomes are sound and align with shareholder interests. | ||
We do not rely heavily on measures of return on equity (ROE) or return on assets (ROA), which are not as relevant in the success of a pure asset manager like Invesco. Our business relies on client assets under management (or AUM), which are held in custody by third parties and are not owned by the company, to generate revenue. We believe that AUM along with adjusted operating income, adjusted operating margin, adjusted diluted earnings-per-share and long-term organic growth are more reflective of our performance. Furthermore, US GAAP rules on consolidation requires us to consolidate certain investment product assets and liabilities which significantly distort our balance sheet and the associated financial metrics of ROE and ROA. As a result, several of the key indicators of our performance are non-GAAP measures. See Appendix B for additional information regarding Non-GAAP financial measures. |
36
Name | Current title | 2018 Incentive target | ||
Martin L. Flanagan | President and CEO | $13,000,000 | ||
Loren M. Starr | Senior Managing Director and Chief Financial Officer | $3,100,000 | ||
Andrew T. S. Lo | Senior Managing Director and Head of Invesco Asia Pacific | $4,000,000 | ||
Gregory G. McGreevey | Senior Managing Director, Investments | $4,600,000 | ||
Philip A. Taylor | Vice Chair | $6,700,000 |
37
Throughout 2018 we made solid progress in several areas of our multi-year strategic objectives that will help us better meet client needs, further strengthen our global business and increase shareholder value over the long term. The most significant achievement during the year was our announced acquisition of MassMutuals asset management affiliate, OppenheimerFunds, which is anticipated to close in the second quarter of 2019. The combination with OppenheimerFunds will help accelerate Invescos growth initiatives, increase our scale and client relevance, and expand our comprehensive suite of differentiated investment capabilities.
At the same time, 2018 was a challenging year for the asset management industry and for Invesco. We saw volatile markets throughout the year and particularly during the fourth quarter. The volatility in the markets impacted financial performance across the industry, particularly for global investment managers like Invesco. Shareholder returns for traditional asset managers as a group were down 26%,1 while Invesco was down 54% for the year.2 We believe the underperformance of Invescos stock price relative to our peer group reflects the following factors: ∎ Key investment capabilities that had helped produce nine consecutive years of positive net flows for the firm through 2017 underperformed materially in 2018, contributing to significant negative net flows in 2018. Net flows, positive or negative, are a key driver of short-term shareholder returns for traditional asset managers. ∎ For much of 2018, we opted to use our cash and credit resources to fund long-term investments to strengthen our business instead of conducting stock buybacks that may have provided greater near-term support for the firms stock price. ∎ Invesco has a larger global presence in key markets than most of our peers. As one of the leading investment managers in the UK and Europe, we were more impacted by continuing uncertainties surrounding Brexit. Additionally, our strong position in Asia Pacific meant that Invesco was more affected than others by market uncertainties over the trade issues between China and the US. We believe these factors led to additional negative sentiment on Invesco among investors in our shares.
| ||
| ||
1 JP Morgan asset managers CEO forum, December 2018 2 Invesco data as of December 31, 2018 38 |
Organic growth | Earnings growth | |||||
Assets under management declined by 5% in 2018 due to net outflows and market declines
- Total net outflows were -$29.0B - Total net revenue1 increased 2% from 2017 due to higher average assets under management throughout the year |
Adjusted diluted earnings1 per share of $2.43 declined 10% from 2017
- Despite the decline from a record high in 2017, adjusted diluted earnings per share1 in 2018 was 8% higher than in 2016 | |||||
|
| |||||
Operating leverage | Capital management | |||||
Adjusted operating income1 and adjusted operating margin1 declined from 2017 as growth in operating expenses of 7% outpaced a 2% increase in net revenue |
Cash dividends increased 3% versus 2017 to $1.19 per share | |||||
1 The adjusted financial measures are all non-GAAP financial measures. See the information in Appendix B of this Proxy Statement regarding Non-GAAP financial measures. |
39
Category | Weighting (%) | Outcome | ||||||
Financial performance |
50 | Effective | ||||||
Delivering to clients |
30 | Effective | ||||||
Organizational strength |
20 | Effective | ||||||
Overall Score |
100 | Effective |
|
In determining Mr. Flanagans compensation, the committee took into consideration ∎ the positive achievements with respect to the companys multi-year strategic objectives as discussed on page 2 (including the CEOs leadership of the successful integration of Guggenheim and Intelliflo and the announced Oppenheimer transaction) and the effective rating of the companys quantitative measures as discussed on page 36 and immediately above, ∎ the companys disappointing 2018 financial performance and short-term financial impact to shareholders (including the underperformance of Invescos stock relative to our peers) as discussed in the letter from the Chairperson and CEO and further on page 1, and ∎ overall market dynamics.
The committee decided, and Mr. Flanagan agreed, that his total incentive compensation should be lowered to $10.2 million, which is 78.5% of his 2018 incentive target of $13 million. Mr. Flanagans total 2018 compensation was down 20.1% from 2017.
Compensation for the other NEOs follows the same disciplined approach as applied to the CEO and considered individual achievements and new responsibilities. (For more information regarding the compensation outcomes for our CEO and other NEOs, please refer to pages 48 through 53.) |
2018 NEO total compensation
|
| |||||||||||||||||||||||||
Name | Base salary ($) |
Cash bonus ($) |
Stock deferral ($) |
Long-term equity ($) |
Total compensation ($) |
YOY % change |
Performance- based ($) |
|||||||||||||||||||
Martin L. Flanagan |
790,000 | 3,300,000 | 1,350,000 | 5,560,000 | 11,000,000 | -20.1% | 3,455,000 | |||||||||||||||||||
Loren M. Starr |
450,000 | 911,976 | 396,879 | 1,641,000 | 3,399,855 | -3.3% | 1,018,940 | |||||||||||||||||||
Andrew T. S. Lo |
457,978 | 1,337,213 | 529,197 | 2,200,000 | 4,524,387 | 1.4% | 1,364,598 | |||||||||||||||||||
Gregory G. McGreevey |
450,000 | 1,800,610 | 674,390 | 2,075,000 | 5,000,000 | 0.0% | 1,374,695 | |||||||||||||||||||
Philip A. Taylor |
492,444 | 2,234,856 | 945,516 | 3,337,960 | 7,010,776 | -2.3% | 2,141,738 |
|
As shown below, incentive compensation for the CEO and the other NEOs is within the range of 0% to 130% of each executives incentive target. |
Name |
2018 Incentive target |
2018 Final incentive compensation (in millions $)1 |
Outcome | |||||
Martin L. Flanagan |
13.00 | 10.21 | Below target | |||||
Loren M. Starr |
3.10 | 2.95 | Below target | |||||
Andrew T.S. Lo |
4.00 | 4.07 | Above target | |||||
Gregory M. McGreevey |
4.60 | 4.55 | Below target | |||||
Philip A. Taylor |
6.70 | 6.52 | Below target |
1 Incentive compensation includes bonus + short-term deferral + long-term equity.
40
For the CEO, the annual cash bonus is capped at $10.0M and annual total compensation is capped at $25.0M.
Fifty percent of the combined value of the annual stock deferral and long-term incentive awards is performance-based. New for performance-based equity awards granted in February 2019, vesting is tied to adjusted operating margin over a three-year period and three-year average of TSR of the company and the constituents of the S&P 500 asset management sub-index (Relative TSR). See page 47 for a current listing of Relative TSR peers. |
41
2 | Our Compensation Program | |||
Invescos compensation program is designed to support our multi-year strategic objectives and desire to reward the behaviors and discipline that generate strong, investment performance for our clients and shareholders over the long-term by: ∎ aligning the interests of our senior-level employees and NEOs with those of clients and shareholders through long-term awards and accumulation of meaningful share ownership positions; ∎ balancing pay-for-performance with economic outcomes such that compensation is affordable to Invesco and its shareholders while fair to employees; ∎ reinforcing our commercial viability by closely linking rewards to Invesco, business unit and individual results and performance; ∎ attracting, recognizing and retaining the best talent in the industry by ensuring a meaningful mix of cash and deferred compensation; and ∎ discouraging excessive risk-taking that would have a material adverse impact on our clients, shareholders or company.
We utilize the following compensation components in our executive compensation program to achieve our objectives: |
Component | Purpose | Description | ||
Base salary Cash |
Provides fixed pay for the performance of day-to-day job duties | Based on knowledge, skills, experience and scope of responsibility
Relatively small portion of total annual compensation
Evaluated on an annual basis; generally, remains static unless there is a promotion or adjustment needed due to economic trends in the industry
| ||
Annual incentive award Cash bonus and stock deferral |
Recognizes current year achievement of goals and objectives
Aligns with company, business unit and individual performance
Deferral portion aligns executive with client and shareholder interests and encourages retention by vesting over time
|
Based upon assessment of company performance and individual performance
When mandated by local regulatory requirements, we grant awards denominated in our product fund offerings in lieu of annual stock deferral awards
Our annual deferral awards generally vest over four years in equal annual increments of 25% per year | ||
Long-term incentive award Equity |
Recognizes potential for future contributions to the companys long-term strategic objectives
Aligns executive with client and shareholder interests and encourages retention by vesting over time
|
Based upon assessment of company performance and individual performance
Time-based and generally vest over four years in equal annual increments of 25% per year |
42
Component | Purpose | Description | ||
Performance shares Equity |
Aligns executive with client and shareholder interests
Encourages retention by vesting based on time and performance measures |
Fifty percent of the combined value of the annual stock deferral and long-term incentive awards is performance-based. For 2018 awards granted in February 2019, vesting is tied to adjusted operating margin and Relative TSR
Our performance-based equity awards have a three-year performance period and three-year cliff vesting |
43
Performance award vesting matrix |
|
|||||||||||||||||||||||
In response to shareholder feedback, the committee added a second performance measure for performance-based equity awards. The number of shares that vest will equal the target amount multiplied by the vesting percentage associated with the Average AOM and Relative TSR ranking on the chart below. Vesting to range from 0% to 150%. We believe that the linked vesting performance thresholds adds to the significant rigor of our incentive program as payouts are not a range of outcomes but represent specific performance levels.
The companys adjusted operating margin for 2018 was 36.5% and its Relative TSR was in the bottom quartile. Applying the 2018 performance results on a three-year average basis would result in a vesting percentage of 33% in respect to the 2018 performance-based awards a meaningful impact on the compensation outcomes for our NEOs. |
|
|||||||||||||||||||||||
Relative TSR | ||||||||||||||||||||||||
Average AOM (%) |
£ 25th%ile | |
> 25th%ile and < 55th%ile |
|
55th%ile | |
> 55th%ile and < 75th%ile |
|
³ 75th%ile | |||||||||||||||
< 44.5 |
100 | 113 | 125 | 138 | 150 |
| ||||||||||||||||||
42.5 |
83 | 101 | 117 | 129 | 142 | |||||||||||||||||||
40.5 |
67 | 88 | 108 | 121 | 133 | |||||||||||||||||||
38.5 |
50 | 75 | 100 | 113 | 125 | |||||||||||||||||||
36.5 |
33 | 58 | 83 | 101 | 117 | |||||||||||||||||||
34.5 |
17 | 42 | 68 | 88 | 108 | |||||||||||||||||||
£ 28.0 |
0 | 25 | 50 | 75 | 100 | |||||||||||||||||||
As noted above, if Invescos Relative TSR is equal to or below the 25th percentile and average adjusted operating margin is 28.0% or less, then our CEO and each of our senior managing directors will not be entitled to a distribution of any shares or accrued dividends. | ||||||||||||||||||||||||
The rigor of the thresholds, as well as the partial vesting of awards for failure to meet the target range and an upside opportunity for performance beyond the target range, align with the committees belief that the companys performance-based awards demonstrate our pay-for-performance philosophy. | ||||||||||||||||||||||||
Below is a summary of the features of our performance awards: | ||||||||||||||||||||||||
Performance-based award features | ||||||||||||||||||||||||
Performance period |
|
Three years | ||||||||||||||||||||||
Performance metrics |
|
Adjusted operating margin and Relative TSR | ||||||||||||||||||||||
Performance vesting range |
|
0% - 150%; straight line interpolation used for actual result | ||||||||||||||||||||||
Vesting |
|
3-year cliff | ||||||||||||||||||||||
Dividends |
|
Deferred and paid only to the extent an award vests | ||||||||||||||||||||||
Settlement |
|
Shares | ||||||||||||||||||||||
Clawback |
|
Subject to clawback policy in the event of fraudulent or willful misconduct |
44
3 | Compensation Determination Process |
Below is our 4-step timeline that describes the committees year-long compensation responsibilities and process for determining executive compensation, including individual NEO compensation. In making compensation decisions, the committee makes a quantitative assessment of company performance (as described on pages 35-36) and a qualitative assessment of individual performance. As noted, the committee reviews firm and peer financial data as well as progress against our annual operating plan. The committees philosophy demonstrates alignment with our executive compensation outcomes and our annual financial performance and multi-year strategic objectives. See NEO Compensation and Performance Summaries starting on page 48 for a description of NEO achievements in the context of quantitative company performance. |
1 | Step one | January - February Confirm strategic objectives and establish operating plan |
|||
Review annual plan and set CEO goals and objectives | ||||
The Board reviews and affirms the firms multi-year strategic objectives. The Board establishes an annual operating plan, including financial planning and operational performance based upon the multi-year-strategic objectives. The committee approves the CEOs performance goals, which are the firms annual operating plan. The Board and the committee are regularly updated on progress against our strategic objectives and operating plan which provides the context for performance evaluations at year-end.
|
||||
2 | Step two | March January of the following year Review financials and other firm data |
|||
Review company performance (financial performance, delivery to clients and organizational strength) and other firm data | ||||
The committee and executives review the firms performance against the annual operating plan within the context of the multi-year strategic objectives and projected financial information. Throughout the year, the Board reviews strategic plans, financial and business results, talent development and succession planning, as well as other areas relevant to the firms performance.
|
||||
3 | Step three | October January of the following year Assess preliminary performance |
|||
Review firm and peer market data | ||||
Management reports to the Board and the committee on absolute and relative performance metrics compared to its peers, including financial performance, delivering to clients and organizational strength. | ||||
Review consultants reports on compensation | ||||
During an executive session, the committees independent consultant reports on publicly disclosed financial and compensation information for the firms peers and provides general market trends and recommendations regarding the firms approach to compensation. | ||||
Discuss preliminary NEO performance and pay | ||||
During an executive session, the CEO and Head of Human Resources meet with the committee to discuss a preliminary assessment of the performance of each NEO (other than the CEO) against company performance. During a later part of this executive session that excludes the CEO, the committee and Head of Human Resources engage in a preliminary assessment of the performance of the CEO against the firms annual operating plan. Company performance is assessed on a scorecard of three quantitative measures (financial performance, delivery to clients and organizational strength). | ||||
45
4 | Step four I December February of the following year Establish annual incentive pool; assess final performance; and determine compensation | |
Establish annual incentive pool | ||
The committee establishes a company-wide annual incentive pool using a range of 34-48% of pre-tax bonus operating income (PCBOI). The committee may go outside the range in circumstances it deems exceptional. Linking the aggregate incentive compensation pool to a defined range of PCBOI ensures incentive compensation is paid only when the company is generating operating income. The final pool is based on a review of full year financial information as well as peer compensation data and input from the committees independent consultant. | ||
Determine executive compensation | ||
During an executive session attended by the committees independent consultant, the committee reviews each NEOs performance against individual goals and company performance and determines compensation based upon each NEOs compensation target. Company performance is assessed based on a scorecard of three quantitative measures (financial performance, delivery to clients and organizational strength). | ||
The committee reviews and confirms compensation targets for each NEO for the upcoming year as well as setting the terms of the time-based and performance-based equity awards. See pages 42-43 for information about each of Invescos elements of pay and their purpose.
|
46
47
4 | NEO Compensation and Performance Summaries | |||
Below is a summary of 2018 NEO compensation and material accomplishments the committee considered when determining compensation for 2018.
| ||||||
Martin L. Flanagan President and CEO |
2018 Compensation (in 000s)
|
Responsibilities Mr. Flanagan is President and CEO. He develops, guides and oversees execution of Invescos long-term strategic priorities to deliver value for clients and shareholders over the long-term.
Mr. Flanagan is responsible for senior leadership development and succession planning, defining and reinforcing Invescos purpose and engaging with key clients, industry leaders, regulators and policy makers.
| ||||
| ||||||
Base salary | $790 | |||||
| ||||||
Annual incentive award - Cash | $3,300 | |||||
| ||||||
Annual incentive award - Stock deferral | $1,350 | |||||
| ||||||
Long-term equity award | $5,560 | |||||
| ||||||
Total annual compensation | $11,000 | |||||
In determining Mr. Flanagans compensation, the committee took into consideration (i) the positive achievements with respect to the companys multi-year strategic objectives as discussed on page 2 and the effective rating of the companys quantitative measures as discussed on pages 36 and 40, (ii) the companys disappointing 2018 financial performance and short-term financial impact to shareholders (including the underperformance of Invescos stock relative to our peers) as discussed in the letter from the Chairperson and CEO and further on page 1, and (iii) overall market dynamics.
The committee decided, and Mr. Flanagan agreed, that his total incentive compensation should be lowered to $10.2 million, which is 78.5% of his 2018 incentive target of $13 million. Mr. Flanagans total 2018 compensation was down 20.1% from 2017.
| ||||||
2018 Key achievements
- Mr. Flanagan led the planned acquisition of MassMutuals asset management affiliate, OppenheimerFunds, which is expected to close in the second quarter of 2019. The combination with OppenheimerFunds will help accelerate Invescos growth initiatives, increase our scale and client relevance, and expand our comprehensive suite of differentiated investment products. This strategic transaction is expected to bring Invescos total AUM to more than $1.1 trillion.
- Further strengthened our market-leading solutions capability, leveraging one of the industrys strongest, most experienced solutions teams to deliver customized outcomes for clients.
- Under Mr. Flanagans leadership, the firm completed the acquisition of Guggenheim Investments exchange-traded funds (ETF) and Intelliflo, the No. 1 technology platform1 for financial advisors in the UK. The Guggenheim acquisition strengthened Invescos market-leading ETF capabilities as well as the firms efforts to meet the needs of institutional and retail clients in the U.S. and across the globe. Intelliflo builds on the 2016 acquisition of Jemstep to enable an advisor-focused digital platform that enhances the firms ability to meet evolving client needs. | ||||||
- Invesco launched a fixed income fund for investors to invest in Chinas Belt and Road (B&R) initiative.
- Invesco Great Wall experienced strong growth. In June, Invesco Great Walls Jingyi Money Market Fund was selected as one of seven money market funds to be included in the money market program, YuE Bao, administered by Ant Financial, an affiliate of Alibaba. In addition, Invesco Great Wall won numerous industry awards sponsored by the Asset Management Association of China.
- Invesco won the 2018 Multi Asset Manager of the year award sponsored by the LAPF Investment Awards and was named best-performing ETF in the U.S. Small Cap Healthcare and Software categories.
- Invesco earned an A+ rating in PRI (Principles for Responsible Investment) for its overall approach to responsible investment for the second consecutive year.
- Mr. Flanagan continued to champion our corporate culture and provide development opportunities for our talented professionals across the globe. We continued to make progress toward our commitment to improve diversity across our global business.
- In 2018, Invesco was named one of the best places to work in money management by Pensions and Investments®.
1 Platform - Adviser Market: Fintech and Digital, January 2018 report
|
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2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||||||||||||||||||||||||
Adjusted operating income1 | +16 | % | -0.5 | % | -13 | % | +14 | % | -6 | % | ||||||||||||||||||||||||||||||
Adjusted operating margin1 | +4 | -1 | -6 | +3 | -8 | % | ||||||||||||||||||||||||||||||||||
CEO total incentive compensation2 | +7 | % | -6 | % | -11 | % | +3 | % | -21 | % | ||||||||||||||||||||||||||||||
1 The adjusted financial measures are all non-GAAP financial measures. See the information in Appendix B of this Proxy Statement regarding Non-GAAP financial measures. 2 Consists of annual cash bonuses, annual stock deferral awards and long-term equity awards. |
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| ||||||
Loren M. Starr Senior Managing Director and Chief Financial Officer |
2018 Compensation (in 000s)
|
Responsibilities Mr. Starr serves as Senior Managing Director and Chief Financial Officer.
Mr. Starr is responsible for planning, implementing, managing and controlling all corporate financial-related activities of the firm, including forecasting, strategic planning, capital allocations and expense management. He also oversees corporate finance, accounting, investor relations and corporate strategy. | ||||
Base salary | $450 | |||||
Annual incentive award - Cash | $912 | |||||
Annual incentive award - Stock deferral | $397 | |||||
Long-term equity award | $1,641 | |||||
Total annual compensation | $3,400 | |||||
Based on the quantitative outcome of Invescos performance and a qualitative review of Mr. Starrs individual performance, our committee determined that Mr. Starrs total incentive compensation should be $2.95 million, which is 95.2% of his incentive target of $3.1 million. Mr. Starrs total 2018 compensation was down 3.3% from 2017. | ||||||
2018 Key achievements
- Mr. Starr was responsible for identifying funding to support investments in long-term, strategic initiatives (the growth initiatives), which include ETFs, factor-based investing, solutions capabilities, expansion in China and our digital platforms.
- Mr. Starr assisted in the planning and execution of the Guggenheim and Intelliflo acquisitions. Mr. Starr was responsible for obtaining the funding, managing the synergies and delivering positive shareholder impacts for these transactions. Mr. Starr played a critical role in the planned acquisition of OppenheimerFunds, which is expected to close the second quarter of 2019.
- Under Mr. Starrs leadership, the firm saved approximately $35 million through the elective application of the US Tax Reform opportunities and VAT refunds.
- In 2018, Mr. Starr took on the responsibility of client reporting for the Private Markets Investment Services Platform thereby creating a centralized approach to reporting and servicing clients across the private markets, including direct real estate, Invesco private capital and collateralized loan obligations.
- Mr. Starr continued to drive savings through our business optimization efforts, which delivered approximately $56 million in annualized run-rate savings as of the end of 2018. The savings are being reinvested in initiatives that strengthen our ability to meet client needs and key growth initiatives for future years.
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50
Andrew T. S. Lo Senior Managing Director and Head of Asia Pacific |
2018 Compensation (in 000s) |
Responsibilities Mr. Lo is Senior Managing Director and Head of Asia Pacific.
Mr. Lo is responsible for the firms operation in the Asia Pacific region where he endeavors to address the large and growing needs of our investors in the region. He works with clients to understand their issues and objectives and finding solutions for them. | ||||
Base salary | $458 | |||||
Annual incentive award Cash | $1,337 | |||||
Annual incentive award Stock deferral | $529 | |||||
Long-term equity award | $2,200 | |||||
Total annual compensation | $4,524 | |||||
Based on the quantitative outcome of Invescos performance and a qualitative review of Mr. Los individual performance, our committee determined that Mr. Los total incentive compensation should be $4.1 million, which is 101.7% of his incentive target of $4.0 million. Mr. Los total 2018 compensation was up 1.4% from 2017.
| ||||||
2018 Key achievements
- Under Mr. Los leadership, the Asia-Pacific region experienced strong investment results with 66%, 79% and 78% of assets above peers on a 1-, 3- and 5-year basis, respectively. AUM exceeded $104.5 billion, a record high for the region, representing a year-over-year growth of 17.4%, with 2018 net inflows of $13.4 billion.
- Mr. Lo led the initiative to accelerate our China growth opportunities. China-sourced AUM grew from $28 billion to $36.8 billion and net inflows increased by $14.0 billion. Growth of Invesco Great Walls e-commerce business accelerated in 2018, with a 2014 - 2018 compound annual growth rate of 548% in money market funds, 48% in equity and 133% in fixed income. The e-commerce business has transformed the digital distribution engagement with key online platforms in China, accounting for 44% of total Invesco Great Wall AUM as of the end of 2018. Invesco Great Wall is ranked amongst the top fund management firms on Ant Financials E-commerce platform, in terms of growth and number of clients, with AUM of $11.1 billion. Additionally, Invescos investment performance in China was recognized by numerous awards, including Excellent FMC & Management Leadership and Excellent Portfolio Management & Team by Asset Management Association of China.
- Mr. Lo assisted with expanding the firms relevance in Australia by creating and launching specialized and differentiating strategies; AUM grew over 60% in 2018.
- Mr. Los continued success in delivering Invescos global capabilities to meet clients needs grew gross sales in the region by $29.6 billion.
- Under Mr. Los leadership, the firm has seen success with Invescos growth initiatives - winning the first factor mandate and assisting with positioning Invesco as the number one fixed maturity products provider in Taiwan.
- Mr. Lo received the Lifetime Achievement Award in 2018 by Asia Asset Management.
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51
Gregory G. McGreevey Senior Managing Director, Investments |
2018 Compensation (in 000s)
|
Responsibilities Mr. McGreevey serves as Senior Managing Director, Investments. He has responsibility for certain of Invescos global investment teams, trading, Global Performance and Risk Group and investment administration. | ||||
Base salary | $450 | |||||
Annual incentive award Cash | $1,801 | |||||
Annual incentive award Stock deferral | $674 | |||||
Long-term equity award | $2,075 | |||||
Total annual compensation | $5,000 | |||||
Based on the quantitative outcome of Invescos performance and a qualitative review of Mr. McGreeveys individual performance, our committee determined that Mr. McGreeveys total incentive compensation should be $4.55 million, which is 98.9% of his incentive target of $4.6 million. Mr. McGreeveys total 2018 compensation was unchanged from 2017.
| ||||||
2018 Key achievements
- The fixed income teams under his direction maintained strong investment performance with 64%, 72%, and 74% of assets in the top quartile of peer groups on a 1-, 3-, and 5-year basis, respectively.
- Mr. McGreevey advanced the firms global leadership in factor investing by creating the Office of Global Factor Investing. He reinitiated the Factor Research Forum to ensure Invesco maintains the highest quality factor research within the organization. He also grew the Invesco Solutions team globally, adding expertise in Advisory, Analytics, and Portfolio Management. He led the establishment of the Solutions client engagement model, developing capabilities to reach retail and institutional clients in all regions.
- Mr. McGreevey advanced our global ESG presence. He played a key role in accepting the CIO Industry Innovation Award by advancing Invescos global ESG presence. The award recognizes Invesco as a global advocate for sustainability and leadership in sustainability reporting.
- Mr. McGreevey played a key role in driving diversity of thought among investors by forming the Global Investments Council and holding Invescos first annual Global Investors Forum Summit to foster strong relationships among the various investment teams through collaboration. The council encourages greater connectivity and improved access to team research. In addition, Mr. McGreevey is leading the effort to innovate across investment teams by creating two investment-led innovation focus groups (Research and Implementation) to facilitate innovative capabilities that generate alpha and close technology gaps among current investment processes.
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Philip A. Taylor Vice Chair (formerly Senior Managing Director and Head of the Americas) |
2018 Compensation (in 000s)
|
Responsibilities Mr. Taylor has served as Vice Chair since March 2019. In his role as Vice Chair, Mr. Taylor continues to oversee activities in connection with the planned acquisition of Oppenheimer Funds and the succession of Mr. Schlossberg as senior managing director and head of the Americas.
Previously, Mr. Taylor served as senior managing director and head of Invescos Americas business and had responsibility for the firms exchange-traded funds capabilities globally, corporate communications and for human resources. | ||||
Base salary | $492 | |||||
Annual incentive award - Cash | $2,235 | |||||
Annual incentive award - Stock deferral | $946 | |||||
Long-term equity award | $3,338 | |||||
Total annual compensation | $7,011 | |||||
Mr. Taylors compensation is based on his separation agreement entered into with the company in 2018. See page 56 for further details regarding 2019 payments required pursuant to Canadian employment law. | ||||||
2018 Key achievements in prior role as Senior Managing Director and Head of the Americas
- Under Mr. Taylors leadership, the BulletShares ETFs line-up, acquired through the Guggenheim acquisition, saw $2.1 billion net inflows during 2018.
- Mr. Taylor played a key role in the expected acquisition of OppenheimerFunds, anticipated to close in second quarter 2019, which is expected to increase AUM by $213 billion and strengthen Invescos distribution capabilities.
- Mr. Taylors leadership increased distribution excellence in the Americas by creating a Distribution Lab to test and explore a variety of strategies utilizing data from the data analytics team created in 2017. The marketing team onboarded new automation capabilities to help increase recommendation lists, model placements and deepen platform intelligence. | ||||||
53
5 | Compensation Policies and Practices | |||
54
Benefits | ||
All NEOs are entitled to receive medical, life and disability insurance coverage and other corporate benefits available to most of the companys employees working in the same country. NEOs are also eligible to participate in the Employee Stock Purchase Plan on the same terms as the companys other employees. In addition, the NEOs may participate in the 401(k) plan or similar plans in the NEOs home country. | ||
Perquisites | ||
The company provides limited perquisites to its NEOs to aid the executives in their execution of company business. The committee believes the value of perquisites are reasonable in amount and consistent with its overall compensation plan. | ||
Mr. Flanagan has personal use of company-provided aircraft. The company leases an airplane for which it pays direct operating expenses, monthly lease payments and management fees. | ||
The compensation attributed to our NEOs for 2018 perquisites is included in the All Other Compensation Table for 2018 on page 59. | ||
Tax reimbursements | ||
Invesco did not provide tax reimbursements for any perquisites or other compensation paid to our NEOs. | ||
| ||
With respect to tax years prior to 2018, Section 162(m) of the Internal Revenue Code generally limited the deductibility of annual compensation paid in any tax year to covered employees of publicly held corporations to $1 million per executive, unless such compensation qualified as performance-based. Covered employees include the chief executive officer and chief financial officer and the next three highest paid executive officers. | ||
The Tax Cuts and Jobs Act, which was signed into law on December 22, 2017, substantially modified Section 162(m) and eliminated the performance-based exception to the $1 million deduction limit effective January 1, 2018. As a result, equity awards granted, or other compensation provided under arrangements entered into or materially modified after November 2, 2017 generally will not be deductible to the extent they result in compensation to certain executives that exceeds $1 million in any one year for such executive, whether or not it is performance-based. In addition, covered employees will include any individual who served as chief executive officer or chief financial officer at any time during the tax year and the three other most highly compensated officers (other than the chief executive officer and chief financial officer) for the tax year. Once an individual becomes a covered employee during any tax year beginning after December 31, 2016, that individual will remain a covered employee for all future tax years, including following any termination of employment. | ||
The Tax Cuts and Jobs Act includes a transition relief rule under which the changes to Section 162(m) described above will not apply to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and is not materially modified after that date. However, because of uncertainties as to the application and interpretation of the transition relief rule, no assurances can be given at this time that our existing contracts and awards, even if in place on November 2, 2017, will meet the requirements of the transition relief rule. |
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| ||
Martin L. Flanagan Our CEO has an employment agreement with the company. Under the employment agreement, Mr. Flanagan is employed as President and Chief Executive Officer of the company. The agreement terminates upon the earlier of December 31, 2025 (the year in which Mr. Flanagan reaches age 65) or the occurrence of certain events, including death, disability, termination by the company for cause or termination by Mr. Flanagan for good reason. | ||
The terms of Mr. Flanagans amended employment agreement provide: | ||
∎ an annual base salary of not less than $790,000; | ||
∎ the opportunity to receive an annual cash bonus award based on the achievement of performance criteria; | ||
∎ the opportunity to receive share awards based on the achievement of performance criteria; | ||
∎ eligibility to participate in incentive, savings and retirement plans, deferred compensation programs, benefit plans, fringe benefits and perquisites and paid vacation, all as provided generally to other U.S.-based senior executives of the company; | ||
∎ post-employment compensation of one times the sum of base, bonus and share awards, subject to certain agreed minimums described below; and | ||
∎ certain stipulations regarding termination of employment that are described in Potential Payments Upon Termination or Change in Control. | ||
In the event of his termination without cause or resignation for good reason he is entitled to receive the following payments and benefits (provided he has not breached certain restrictive covenants): | ||
∎ his then-effective base salary through the date of termination; | ||
∎ a prorated portion of the greater of $4,750,000 or his most recent annual cash bonus; | ||
∎ immediate vesting and exercisability of all outstanding share-based awards; | ||
∎ any compensation previously deferred under a deferred compensation plan (unless a later payout date is stipulated in his deferral arrangements); | ||
∎ a cash severance payment generally equal to the sum of (i) his base salary; (ii) the greater of $4,750,000 or his most recent annual cash bonus; and (iii) his most recently made annual equity grant (unless the value thereof is less than 50% of the next previously-made grant, in which case the value of the next previously-made grant will be used); | ||
∎ continuation of medical benefits for him, his spouse and his covered dependents for a period of up to 36 months following termination; | ||
∎ any accrued vacation; and | ||
∎ any other vested amounts or benefits under any other plan or program. | ||
Philip Taylor - On November 20, 2018, the company announced the planned departure of Mr. Taylor at the end of 2019. Mr. Taylor and the company entered into a separation agreement, which provides for certain payments as outlined below: | ||
∎ Continuation of current monthly salary until Mr. Taylors departure date; | ||
∎ For 2018, a cash bonus of $2,117,232, annual deferral award of $895,752 and long-term equity of $3,337,960;1 | ||
∎ For 2019, a cash bonus of $1,459,090 as compensation for continuing to oversee activities in connection with the planned acquisition of Oppenheimer Funds and the succession of Mr. Schlossberg as senior managing director and head of the Americas; | ||
∎ Pursuant to applicable Canadian employment laws, required termination payments equal to (i) two years of salary and cash bonuses in the amount of $5,463,983; (ii) a cash payment of $1,058,428 equal to the amount of annual stock deferred awards and long-term restricted stock awards that would vest during a two-year term; and (iii) two years of group retirement savings plan benefits in the amount of $20,576; and | ||
∎ Acceleration of vesting of all unvested annual stock deferral awards and long-term equity awards given Mr. Taylors 20 years of valuable service to the company. | ||
1 For 2018, Mr. Taylors actual cash bonus, annual deferred award and long-term equity were nominally larger to reflect the size of the final incentive pool. See page 53 for Mr. Taylors 2018 compensation outcomes. |
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Other NEOs Our other NEOs are parties to employment arrangements that create salary continuation periods of six or twelve months in the event of voluntary termination of service or involuntary termination of service without cause or unsatisfactory performance. See Potential Payments Upon Termination or Change in Control below. | ||
| ||
Generally, all participants who hold equity awards, including our NEOs, are eligible, under certain circumstances, for accelerated vesting in the event of a change of control of the company that is followed by involuntary termination of employment other than for cause or unsatisfactory performance or by voluntary termination for good reason. Philip Taylor has entered into an agreement with the company regarding his departure from the company at the end of 2019. This agreement is described in detail above. | ||
| ||
The compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Based on this review and discussion, the compensation committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2018. | ||
Respectfully submitted by the compensation committee: | ||
C. Robert Henrikson (Chairperson) | ||
Sarah E. Beshar | ||
Ben F. Johnson III | ||
Denis Kessler | ||
Sir Nigel Sheinwald | ||
G. Richard Wagoner, Jr. | ||
Phoebe A. Wood |
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Non-equity | All other | |||||||||||||||||||||||
incentive plan | compensation | |||||||||||||||||||||||
Name and Principal Position | Year | Salary ($)1 | Share awards ($)2 | compensation ($)3 | ($)4 | Total ($) | ||||||||||||||||||
Martin L. Flanagan |
2018 | 790,000 | 8,714,708 | 3,300,000 | 116,901 | 12,921,609 | ||||||||||||||||||
President and Chief |
2017 | 790,000 | 8,622,702 | 4,268,003 | 124,490 | 13,805,195 | ||||||||||||||||||
Executive Officer |
2016 | 790,000 | 9,644,970 | 4,045,500 | 126,585 | 14,607,055 | ||||||||||||||||||
Loren M. Starr |
2018 | 450,000 | 2,072,928 | 911,976 | 30,830 | 3,465,734 | ||||||||||||||||||
Senior Managing Director |
2017 | 450,000 | 2,050,470 | 991,278 | 29,709 | 3,521,457 | ||||||||||||||||||
and Chief Financial Officer |
2016 | 450,000 | 2,293,987 | 939,600 | 28,374 | 3,711,961 | ||||||||||||||||||
Andrew T.S. Lo |
2018 | 457,978 | 2,628,842 | 1,337,213 | 63,570 | 4,487,603 | ||||||||||||||||||
Senior Managing Director |
2017 | 460,419 | 2,549,447 | 1,371,500 | 66,011 | 4,447,377 | ||||||||||||||||||
and Head of Invesco Asia Pacific |
2016 | 462,062 | 2,782,980 | 1,300,000 | 68,656 | 4,613,698 | ||||||||||||||||||
Gregory G. McGreevey5 |
2018 | 450,000 | 2,632,942 | 1,800,610 | 29,349 | 4,912,901 | ||||||||||||||||||
Senior Managing Director, |
2017 | 450,000 | 3,274,988 | 1,917,000 | 27,861 | 5,669,849 | ||||||||||||||||||
Investments |
||||||||||||||||||||||||
Philip A. Taylor |
2018 | 492,444 | 4,333,222 | 2,234,856 | 18,617 | 7,079,139 | ||||||||||||||||||
Vice Chair |
2017 | 491,458 | 4,034,918 | 2,352,480 | 16,579 | 6,895,435 | ||||||||||||||||||
2016 | 481,346 | 4,519,953 | 2,262,000 | 17,494 | 7,280,793 |
1 | For each of the named executive officers, includes salary that was eligible for deferral, at the election of the named executive officer, under our 401(k) plan or similar plan in the named executive officers country. For each of the named executive officers, salary is unchanged from 2017. |
For Messrs. Lo and Taylor, base salary is converted to U.S. dollars using an average annual exchange rate, which accounts for the different salary amounts shown despite the fact neither has experienced a salary change during the period shown. |
2 | For share awards granted in 2018, includes (i) time-based equity awards that generally vest in four equal annual installments on each anniversary of the date of grant; and (ii) performance-based awards, which are subject to a three-year performance period (2018-2020) and vest on February 28, 2021; except that, with respect to Mr. Taylor, the performance-based equity award is subject to a 33-month performance period (January 1, 2018 - September 30, 2020) and vests on December 15, 2020. The value of performance-based awards is based on the grant date value and reflects the probable outcome of such conditions and represents the target level (100%) of achievement. See Grants of plan-based share awards for 2018 below for information about the number of shares underlying each of the time-based equity awards. |
Grant date fair values were calculated in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 718 Compensation Stock Compensation (ACS 718). The grant date fair value was calculated by multiplying the target number of shares granted by the closing price of the companys common shares on the date of grant. The amounts disclosed do not reflect the value actually realized by the named executive officers. For additional information, please see Note 11 Share-Based Compensation to the financial statements in our 2018 Annual Report on Form 10-K. |
3 | Reflects annual cash bonus award earned for the fiscal year by the named executive officers and paid in February of the following year. |
4 | The table below reflects the items that are included in the All Other Compensation column for 2018. |
5 | Mr. McGreevey became an executive officer in 2017. |
58
1 Amounts of matching contributions paid by the company to our retirement plans are calculated on the same basis for all plan participants, including the named executive officers. 2 Perquisites include the following: With respect to Mr. Flanagan, includes $85,578 for his personal use of company-provided aircraft. The company leases an airplane for which it pays direct operating expenses and monthly lease payments and management fees. We calculate the aggregate incremental cost to the company for personal use based on the average variable costs of operating the airplanes. Variable costs include fuel, repairs, travel expenses for the flight crews and other miscellaneous expenses. This methodology excludes fixed costs that do not change based on usage, such as depreciation, maintenance, taxes and insurance. Mr. Flanagans total also includes certain amounts for technology support and fees paid by the company for his and his spouses recreational activities in conjunction with a company-sponsored off-site business meeting. |
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Estimated future payout under | ||||||||||||||||||||||||||||||||||||||||
equity incentive plan awards | ||||||||||||||||||||||||||||||||||||||||
Closing | ||||||||||||||||||||||||||||||||||||||||
All | market | |||||||||||||||||||||||||||||||||||||||
other | price on | Grant date | ||||||||||||||||||||||||||||||||||||||
share | date of | fair value | ||||||||||||||||||||||||||||||||||||||
Committee | Type of | Threshold | Target | Maximum | awards | grant | of share | |||||||||||||||||||||||||||||||||
Name | Grant date | action date | award1 | Vesting2 | (#)3 | (#)3 | (#)3 | (#)4 | ($/Share) | awards ($)5 | ||||||||||||||||||||||||||||||
Martin L. |
02/28/18 | 02/08/18 | Time | 4-year ratable | | | | 133,909 | 32.54 | 4,357,399 | ||||||||||||||||||||||||||||||
Flanagan |
02/28/18 | 02/08/18 | Performance | 36-month cliff | | 133,909 | 200,864 | | 32.54 | 4,357,399 | ||||||||||||||||||||||||||||||
Loren M. Starr |
02/28/18 | 02/08/18 | Time | 4-year ratable | | | | 31,852 | 32.54 | 1,036,464 | ||||||||||||||||||||||||||||||
02/28/18 | 02/08/18 | Performance | 36-month cliff | | 31,852 | 47,778 | | 32.54 | 1,036,464 | |||||||||||||||||||||||||||||||
Andrew T.S. Lo |
02/28/18 | 02/08/18 | Time | 4-year ratable | | | | 40,394 | 32.54 | 1,314,421 | ||||||||||||||||||||||||||||||
02/28/18 | 02/08/18 | Performance | 36-month cliff | | 40,394 | 60,591 | | 32.54 | 1,314,421 | |||||||||||||||||||||||||||||||
Gregory G. |
02/28/18 | 02/08/18 | Time | 4-year ratable | | | | 40,457 | 32.54 | 1,316,471 | ||||||||||||||||||||||||||||||
McGreevey |
02/28/18 | 02/08/18 | Performance | 36-month cliff | | 40,457 | 60,686 | | 32.54 | 1,316,471 | ||||||||||||||||||||||||||||||
Philip A. Taylor |
02/28/18 | 02/08/18 | Time | 3-year ratable | | | | 49,937 | 32.54 | 1,624,950 | ||||||||||||||||||||||||||||||
02/28/18 | 02/08/18 | Time | 4-year cliff | | | | 16,646 | 32.54 | 541,661 | |||||||||||||||||||||||||||||||
02/28/18 | 02/08/18 | Performance | 33-month cliff | | 66,583 | 99,875 | | 32.54 | 2,166,611 | |||||||||||||||||||||||||||||||
1 | Time-based equity awards and performance-based awards were granted under the 2016 Global Equity Incentive Plan. |
2 | Time-based equity awards. For each of the named executive officers other than Mr. Taylor, time-based equity awards are four-year awards that vest 25% each year on the anniversary of the date of grant. With respect to Mr. Taylor, time-based equity awards are comprised of (i) a 3-year award that vests ratably on the first and second anniversary of the grant date and on December 15 of the second calendar year after the grant date and (ii) a 4-year award that vests 100% on the fourth anniversary of the date of grant. |
Performance-based equity awards. For each of the named executive officers other than Mr. Taylor, performance-based equity awards are subject to a three-year performance period (2018-2020) and vest on February 28, 2021. With respect to Mr. Taylor, the performance-based equity award is subject to a 33-month performance period (January 1, 2018 - September 30, 2020) and vests on December 15, 2020. |
3 | Performance-based equity awards are tied to the achievement of specified levels of adjusted operating margin. Vesting ranges from 0 to 150%; straight line interpolation to be used for actual results. Dividend equivalents are deferred for such performance-based equity awards and will be paid at the same rate as on our shares if and to the extent an award vests. The threshold, target and maximum financial measures for the performance-based equity awards granted in 2018 are illustrated below. |
Adjusted operating margin | Vesting Name | Vesting% | ||||
Equal to or less than 28% |
Threshold | 0% | ||||
Between 36-44% |
Target | 100% | ||||
Equal to or greater than 54% |
Maximum | 150% | ||||
It should be noted that beginning in 2019, performance-based awards will have the following two performance measures: adjusted operating margin and relative TSR. See Performance-based awards above. |
4 | Dividends and dividend equivalents on unvested time-based equity awards are paid at the same time and rate as on our shares. |
5 | The grant date fair value is the total amount that the company will recognize as expense under applicable accounting requirements if the share awards fully vest.This amount is included in our Summary Compensation Table each year. Grant date fair values were calculated in accordance with ASC 718. The grant date fair value is calculated by multiplying the number of shares granted by the closing price of our common shares on the day the award was granted. With respect to the performance-based equity awards, the grant date fair value also represents the probable outcome of such performance conditions and represents the target (100%) level of achievement. |
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Outstanding share awards at fiscal year-end for 2018 The following table provides information as of December 31, 2018 about the outstanding equity awards held by our named executive officers. |
Number of shares or |
Market value of | Equity incentive plan | Equity incentive plan | |||||||||||||||||||||
units that have not | shares or units that | awards that have | awards that have | |||||||||||||||||||||
Name | Footnotes | Date of grant | vested (#) | have not vested ($) | not vested (#) | not vested ($) | ||||||||||||||||||
Martin L. Flanagan |
1 | 02/28/15 | 38,227 | 639,920 | | | ||||||||||||||||||
2 | 02/28/15 | | | 25,624 | 428,946 | |||||||||||||||||||
3 | 02/28/16 | 106,734 | 1,786,727 | | | |||||||||||||||||||
4 | 02/28/16 | | | 71,218 | 1,192,189 | |||||||||||||||||||
5 | 02/28/17 | 119,961 | 2,008,147 | | | |||||||||||||||||||
6 | 02/28/17 | | | 107,921 | 1,806,598 | |||||||||||||||||||
7 | 02/28/18 | 133,909 | 2,241,637 | | | |||||||||||||||||||
8 | 02/28/18 | | | 133,909 | 2,241,637 | |||||||||||||||||||
Loren M. Starr |
1 | 02/28/15 | 9,033 | 151,212 | | | ||||||||||||||||||
2 | 02/28/15 | | | 5,960 | 99,770 | |||||||||||||||||||
3 | 02/28/16 | 25,498 | 426,837 | | | |||||||||||||||||||
4 | 02/28/16 | | | 16,827 | 281,684 | |||||||||||||||||||
5 | 02/28/17 | 28,651 | 479,618 | | | |||||||||||||||||||
6 | 02/28/17 | | | 25,498 | 426,837 | |||||||||||||||||||
7 | 02/28/18 | 31,852 | 533,202 | | | |||||||||||||||||||
8 | 02/28/18 | | | 31,852 | 533,202 | |||||||||||||||||||
Andrew T.S. Lo |
1 | 02/28/15 | 10,448 | 174,900 | | | ||||||||||||||||||
2 | 02/28/15 | | | 6,829 | 114,317 | |||||||||||||||||||
3 | 02/28/16 | 31,052 | 519,810 | | | |||||||||||||||||||
4 | 02/28/16 | | | 20,295 | 339,738 | |||||||||||||||||||
5 | 02/28/17 | 35,694 | 597,518 | | | |||||||||||||||||||
6 | 02/28/17 | | | 31,609 | 529,135 | |||||||||||||||||||
7 | 02/28/18 | 40,394 | 676,196 | | | |||||||||||||||||||
8 | 02/28/18 | | | 40,394 | 676,196 | |||||||||||||||||||
Gregory G. |
1 | 02/28/15 | 9,623 | 161,089 | | | ||||||||||||||||||
McGreevey |
9 | 12/15/15 | 7,977 | 133,535 | | | ||||||||||||||||||
3 | 02/28/16 | 47,048 | 787,584 | | | |||||||||||||||||||
5 | 02/28/17 | 53,006 | 887,320 | | | |||||||||||||||||||
10 | 03/15/17 | | | 30,769 | 515,073 | |||||||||||||||||||
7 | 02/28/18 | 40,457 | 677,250 | | | |||||||||||||||||||
8 | 02/28/18 | | | 40,457 | 677,250 | |||||||||||||||||||
Philip A. Taylor |
1 | 02/28/15 | 18,186 | 304,434 | | | ||||||||||||||||||
2 | 02/28/15 | | | 11,050 | 184,977 | |||||||||||||||||||
11 | 02/28/16 | 25,922 | 433,934 | | | |||||||||||||||||||
5 | 02/28/17 | 58,154 | 973,498 | | | |||||||||||||||||||
6 | 02/28/17 | | | 47,809 | 800,323 | |||||||||||||||||||
7 | 02/28/18 | 66,583 | 1,114,599 | | | |||||||||||||||||||
8 | 02/28/18 | | | 66,583 | 1,114,599 |
1 | February 28, 2015. Share award vests in four equal installments. As of December 31, 2018, the unvested share award represents 25% of the original grant. < |