Proxy
Statement
Notice of 20232024 Annual Meeting of Stockholders
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| Your vote is important: Please vote by using the Internet, the telephone or by signing, dating and returning a proxy card |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒ Filed by a party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material Under Rule 240.14a-12 | |
Invesco Mortgage Capital Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ☒ | No fee required. | |||
| ☐ | Fee paid previously with preliminary materials. | |||
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
Proxy
Statement
Notice of 20232024 Annual Meeting of Stockholders
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| Your vote is important: Please vote by using the Internet, the telephone or by signing, dating and returning a proxy card |
Jack HardinJohn S. Day
has served as Chair
since 20172023 and as a
non-executive director
since 20142009
A letter to our stockholders from the Chair of our Board of Directors
Dear Fellow Stockholder,
On behalf of the Board of Directors, I would like to express our sincere appreciation for your continued support as an investor in Invesco Mortgage Capital Inc. Our Board of Directors and management team are committed to strengthening our business and improving the return on your investment in our company.
Company performance
We, like many of our peers, continued to experience challenges in the Agency residential mortgage-backed securities (“RMBS”) market as Agency RMBS underperformed Treasuries overduring the coursefirst ten months of 2022, ending the year with one of the worst total returns for the sector on record.2023. Mortgage performance suffered in the first half of the year due to the regional banking crisis and plummeted beginning in late September and early October as uncertainty with respect to the Federal Reserve’s effortsmonetary policy contributed to control decades high levels of inflation resulted in higher interest rates and elevated interest rate volatility. Despite the volatile market conditions in 2023, we were able to continue to pay a consistent dividend each quarter. We also issued approximately 9.7 million shares of our common stock through our at-the-market program, generating net proceeds of $109.1 million and continued to seek to better balance our capital structure by repurchasing over 422 thousand shares of our Preferred Stock. In addition, our management team actively managed the portfolio during the market volatility that began late in the third quarter, which resulted in a favorable economic return for our stockholders for the 4th quarter of 2023. While management remains cautious on mortgage valuations in the near-term, we believe that a potential reduction in interest rate volatility combined with compelling valuations and favorable funding conditions will support an attractive investment environment for Agency RMBS in 2023.2024.
Despite the volatile market conditions in 2022, we were ableOur approach to continue to pay a consistent dividend each quarter. We also issued approximately 5.69 million shares of our common stock through our at-the-market program generating net proceeds of $81.6 million, continuing to seek to better balance our capital structuredirector recruitment and invest in accretive assets. As we rotated our portfolio into higher yielding Agency RMBS, attractive spreads, along with favorable funding and a relatively low-cost legacy swap portfolio, continued to support the earnings power of the portfolio.
A farewell and a future rich inboard diversity
Effective withThe Board remains committed to ensuring that it is composed of a highly capable group of directors who are well-equipped to oversee the conclusion of the upcoming Annual Meeting, Jim Lientz, who has chaired our Nominating and Governance Committee since 2018, and I will be stepping down from board service, after serving on your board for eleven and nine years, respectively. We would like to thank our stockholders for their engaged support as we have helped navigate the company through a series of unprecedented events including the global pandemic crisis, and a sharply rising interest rate environment. While we will miss engaging with you and our colleagues, we are leaving a Board rich in diverse talent, perspectives, and experiences. Under the leadership of the Board’s next chair, John Day, and with the addition of our newest director, Katharine Kelley, our Board will comprise diverse perspectives of gender, ethnicity, age, tenure, skills and experiences, which will help contribute to the future success of the company. Jimcompany and effectively represent the interests of our stockholders. During 2023, we added two new members to the Board, Katharine Kelley and Carolyn Gibbs. The addition of these directors has provided the Board with new qualifications and perspectives and I aream proud to report to you that our board is now comprised of a majority of diverse directors. We encourage you to review the qualifications, skills and experience that we have contributed to building this diverse futureidentified as important attributes for directors of our Board.
Your Board remains highly confident in,company and supportive of, the management team of the company.our director skills matrix.
Regards,
Jack HardinJohn S. Day
Chair and Non-Executive Director
20232024 Proxy Statement i
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Notice of 20232024 Annual Meeting of Stockholders
Date and time
| Items of business | | Board voting recommendation |
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at 2:00 p.m., Eastern Time | 1 | To elect seven (7) directors to the Board of Directors to hold office until the annual meeting of stockholders in
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Kimpton Shane Hotel 1340 W Peachtree St NW Atlanta, GA 30309 |
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To appoint PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm for the fiscal year ending December 31,
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Internet Visit the web site listed on your Notice
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To consider and act upon such other business as may properly come before the meeting or any adjournment thereof | |||||||||
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| Sign, date and return
In person Attend the Annual Meeting in Atlanta Georgia |
Who can vote Only holders of record of our common stock on March
By order of the Board of Directors,
Tina Carew, General Counsel and Company Secretary March
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Proxy Statement
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Invesco Mortgage Capital Inc. (“Board” or “Board of Directors”) for the Annual Meeting of Stockholders to be held on Monday,Tuesday, May 8, 2023,7, 2024, at 2:00 p.m., Eastern Time. Please review the entire Proxy Statement and the company’s 20222023 Annual Report on Form 10-K before voting. In this Proxy Statement, except where the context suggests otherwise, the terms “company,” “we,” “us,” and “our” refer to Invesco Mortgage Capital Inc., together with its consolidated subsidiaries, including IAS Operating Partnership LP, which we refer to as “our operating partnership”; “our manager” refers to Invesco Advisers, Inc., our external manager; and “Invesco” refers to Invesco Ltd., together with its consolidated subsidiaries, the indirect parent company of our manager.
This summary highlights selected information in this Proxy Statement. Please review the entire Proxy Statement and the company’s Annual Report on Form 10-K for the year ended December 31, 20222023 before voting.
Matters for stockholder voting
At this year’s Annual Meeting, we are asking our stockholders to vote on the following matters:
Proposal
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Board vote recommendation
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Our directors and their qualifications The Board believes that all of the directors are highly qualified. Our directors have the significant leadership and professional experience, knowledge and skills necessary to provide effective oversight and guidance for the company’s strategy and operations. All the directors satisfy the criteria set forth in our Corporate Governance Guidelines and possess the characteristics that are essential for the proper functioning of our Board. As a group, they represent diverse views, experiences and backgrounds. The matrix below is intended to depict notable competencies for each director in areas that our Board has identified as particularly valuable to the effective oversight of the company and the execution of our corporate strategy; not having a mark does not mean that a particular director does not possess that qualification or skill. Nominees have developed competencies in these skills through education, direct experience, and/or oversight responsibilities. Additional biographical information on each nominee is set out starting on page 6.
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Governance highlights
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| Independence • • All of our Board committees are composed exclusively of independent directors.
Independent Chair • We have an independent chair of our Board (the “Chair”), selected by the independent directors. • The Chair serves as liaison between management and the other independent directors.
Executive sessions • The independent directors regularly meet in private without management. • The Chair presides at these executive sessions.
Share ownership requirements • Board Refreshment • Added two new diverse directors to the •
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| Board practices • Our Board annually reviews its effectiveness as a group, with directors participating in one-on-one interviews coordinated by an independent external advisor that reports the results of the annual review to the Board in person. |
| Accountability • Directors must be elected annually by a majority of votes cast.
Insider trading restrictions • Our insider trading policy prohibits short selling, dealing in publicly-traded options, pledging and hedging or monetization transactions in our equity securities.
Board oversight of risk management • Our Board has principal responsibility for oversight of the company’s risk management process and understanding of the overall risk profile of the company.
Diversity • Our Board seeks out highly qualified candidates of diverse gender, race and ethnicity, as well as taking into account other factors that promote principles of diversity. • Our Board ensures that women and underrepresented groups are included in each pool of candidates.
Overboarding • All directors serve on the boards of three or fewer public companies. | |||||||||
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Director tenure The tenure of our nominated directors ranges from less than one to
As the Board considers new director nominees, it takes into account a number of factors, including nominees that have skills that will match the needs of the company’s long-term strategy and will bring diversity of thought, perspective, experience and background to our Board. Per our Corporate Governance Guidelines, the Board seeks out highly qualified candidates of diverse gender, race and ethnicity, as well as taking into account other factors that promote principles of diversity, and ensures that women and underrepresented candidates are included in each pool of candidates from which the Board nominees are chosen. For more information on our director nomination process, see Information about our Director Nominees — Director | ||
Stockholder engagement We value our stockholders’ perspectives and each year interact with stockholders through numerous engagement activities including through our quarterly earnings calls, investor conferences and via our Investor Relations department. These activities and the feedback we receive assist our ongoing efforts to ensure that our disclosures are transparent and accessible. Stockholders may contact our Investor Relations department at contactus@invescomortgagecapital.com. | ||
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FOR | Recommendation of the Board The Board unanimously recommends a vote “FOR” the election to the Board of each of the director nominees. | ||||
Vote required: This proposal requires the affirmative vote of a majority of votes cast at the Annual Meeting.
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Information about Director nominees
The Board believes that each of these nominees is qualified to serve as a director of the company and, in addition to the skills listed in the table on page 2, the specific qualifications of each nominee that were considered by the Board follow each nominee’s biographical description.
Director nominees for 20232024
John S. Day Chair, Non-executive director
Age Tenure 75
Current Committees: • Audit • Compensation • Nomination and Corporate Governance
Qualifications: • Financial Services/Capital Markets • Mortgage Industry/MBS • Executive Leadership • Risk Management • Accounting and Financial Reporting • Corporate Governance • Other Public Company Board Experience | John S. Day John S. Day has served as
Director qualifications • Accounting and financial reporting expertise: Mr. Day has amassed extensive experience in finance and accounting, having served for nearly three decades at two of the world’s largest accounting firms. In keeping with his experience, Mr. Day is recognized by the Board as an audit committee financial expert under the Securities and Exchange Commission (“SEC”) rules. • Public and private company board experience: Mr. Day served on the board of Lenbrook Square Foundation, Inc., from 2007 to 2019, where he was Chairman of the Board from 2012 to 2014 and was a member of the Finance and Governance and Nominating Committees. From September 2007 to December 2011, Mr. Day served on the board of directors of Force Protection, Inc., where he was the Chairman of the Audit Committee, and from 2010 to 2014, Mr. Day served on the board of Edens Investment Limited Partnership, where he was Chairman of the Audit Committee. |
Carolyn L. Gibbs Executive Director Age Tenure 62 >1 Year Qualifications: • Financial Services/Capital Markets • Mortgage Industry/MBS • Executive Leadership • Risk Management | Carolyn L. Gibbs Carolyn L. Gibbs has served as a director since September 2023. She has served as the Global Head of Investments Engagement and Services for Invesco since March 2023, with areas of responsibility including ESG, Global Thought Leadership and the Global Investors’ Forum, an initiative for Invesco’s multiple investment teams. She is a member of Invesco’s Global Investments Leadership team and a member of the Americas Executive Leadership team. Ms. Gibbs previously served as Head of Investments Engagement from 2017 to February 2023. Ms. Gibbs joined Invesco in 1992 as a fixed income analyst and has served in fixed income portfolio management and leadership roles during her tenure. She earned a BA degree in English, magna cum laude, from Texas Christian University, and an MBA in finance from the Wharton School of the University of Pennsylvania. Ms. Gibbs is a Chartered Financial Analyst. Director qualifications • Executive leadership, financial services/capital markets and mortgage industry/ MBS experience: Ms. Gibbs has over 30 years of fixed-income industry experience, including as an investment professional and in a series of senior management positions at Invesco. Ms. Gibbs’ deep experience with the fixed income and institutional investment products, including mortgage-backed securities, and her leadership of Invesco’s business in these areas provides the Board with great insight into issues facing the industry. |
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Carolyn B. Handlon Non-executive director
Age Tenure
Current Committees: • Audit (Chair) • Compensation • Nomination and Corporate Governance
Qualifications: • Financial Services/Capital Markets • Mortgage Industry/MBS • Executive Leadership • Risk Management • Accounting and Financial Reporting • Corporate Governance • Other Public Company Board Experience | Carolyn B. Handlon Carolyn B. Handlon has served as a director since 2017 and as Chair of the Audit Committee since 2023, having previously served as Chair of the Compensation Committee since 2018. Ms. Handlon retired from Marriott International (“Marriott”) in April 2022 where she held several leadership roles during her 35 years with the company, including serving as EVP & Global Treasurer for the last 17 years with areas of responsibility including financial strategy, financial risk management, global capital markets, hotel finance and mortgage banking. In that role, Ms. Handlon oversaw the financial health and strategy of Marriott, global investing and deal evaluations, ensuring the financial integrity of global investment opportunities. Prior to joining Marriott in 1987, Ms. Handlon worked for the Overseas Private Investment Corporation and Continental Illinois Bank. She holds a B.A. from Virginia Polytechnic Institute and State University and a M.B.A. from Indiana University.
Director qualifications • Financial services/capital markets and accounting and financial reporting expertise:Ms. Handlon was one of the key leaders at Marriott in the structuring of business combinations, spin-offs and joint ventures. Her record of successfully navigating turbulent economic recessions and capital market crises, preserving liquidity and financial stability for Marriott demonstrates her financial acumen and expertise. Ms. Handlon is recognized by the Board as an audit committee financial expert under the SEC rules. • Public and private company board experience:Ms. Handlon has served on the board of Science Applications International Corporation (“SAIC”) since 2022 and is a member of SAIC’s Audit and Nominating/Governance Committees. She was appointed to the board of directors of Apple Hospitality REIT, Inc. (“APLE”) effective March 1, |
Katharine W. Kelley Non-executive director
Age Tenure
Committees: • Audit • Compensation • Nomination and Corporate Governance
Qualifications: • Corporate Governance • Mortgage Industry/MBS • Executive Leadership • Risk Management | Katharine W. Kelley Katharine W. Kelley is Owner and President of Green Street Properties, an Atlanta-based real estate development and consulting firm focused on creating urban infill, mixed-use properties. From 2016-2018, Ms. Kelley served as Executive Vice President-Development for Newport, an international private equity and real estate development firm. Prior to that, she served as Managing Director at Jamestown, an international real estate private equity firm, and Senior Vice President-Development at Post Apartment Development, a multifamily and mixed-use real estate development firm. Ms. Kelley received a Bachelor of Arts degree from the University of North Carolina at Chapel Hill, a Master of Science degree in Real Estate Development from Columbia University, and a Master of Business Administration from Harvard University.
Director qualifications • |
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Don H. Liu Non-executive director
Age Tenure
Current Committees: • Audit • Compensation • Nomination and Corporate Governance (Chair)
Qualifications: • Executive leadership • Risk Management • Accounting and Financial Reporting • Corporate Governance • Technical–Government, legal and regulatory | Don H. Liu Don H. Liu has served as a director since
Director qualifications • Corporate governance, executive leadership and technical expertise: Mr. Liu serves on the Executive Leadership Team at Target and is accountable for all of Target’s legal, |
Dennis P. Lockhart Non-executive director
Age Tenure
Current Committees: • Audit • Compensation (Chair) • Nomination and Corporate Governance
Qualifications: • Financial Services/Capital Markets • Executive Leadership • Risk Management • Accounting and Financial Reporting • Other Public Company Board Experience | Dennis P. Lockhart Dennis P. Lockhart has served as a director since
Director qualifications • Executive leadership, financial services/capital markets and economic policy experience:Mr. Lockhart brings a wealth of finance and economic policy experience to the Board given his 10 years of service with the U.S. Federal Reserve Bank system, including monetary policy and economic • Civic and policy organization experience:Mr. Lockhart also brings valuable perspectives and experience to the Board given his service on various non-profit organizations, governance and advisory boards. |
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Beth A. Zayicek Executive Director
Age Tenure
Qualifications: • Financial Services/Capital Markets • Mortgage Industry/MBS • Executive leadership • Risk Management • Other Public Company Board Experience | Beth A. Zayicek Ms. Zayicek has served as a director since 2021. Ms. Zayicek has served as the Chief Operating Officer of Private Markets for Invesco since 2019 and has worked in Invesco Real Estate, the real estate investment center of Invesco, since 2008. She is a member of Invesco Real Estate’s Global Executive Committee and Asia Investment Committee. Ms. Zayicek previously served as Invesco Real Estate’s Chief Operating Officer from 2017 to 2019 and senior director of investment analytics from 2013 to 2016. She has also served on Invesco Real Estate’s portfolio management and acquisition teams and as a member of its North American Investment Committee. Prior to joining Invesco Real Estate, Ms. Zayicek served as a member of the corporate and investment banking analyst program and real estate private equity group at KeyBank. Ms. Zayicek also currently serves as Chief Operating Officer and a director of Invesco Real Estate Income Trust Inc. and Invesco Commercial Real Estate Finance Trust, Inc., both non-listed REITS. Ms. Zayicek earned a B.S. in Management with a concentration in Finance from Case Western Reserve University.
Director qualifications • Executive leadership, financial services/capital markets and mortgage industry/MBS experience: Ms. Zayicek has extensive experience in the real estate and private markets industries. Her in-depth understanding of the asset management business as it specifically relates to real estate that she has obtained throughout her career and particularly as serving as the Chief Operating Officer of Invesco Private Markets is an invaluable resource for the company and the Board. |
Retiring Directors
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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 relationships with the company either directly or as a partner, stockholder or officer of an organization that has a relationship with the company. Such determinations are made and disclosed pursuant to applicable New York Stock Exchange (“NYSE”) or other rules. In accordance with the rules of the NYSE, the Board has affirmatively determined that it is currently composed of a majority of independent directors, and that the following directors are independent and do not have a material relationship with the company: John S. Day, Carolyn B. Handlon, Edward J. Hardin, Katharine W. Kelley, James R. Lientz, Jr., Don H. Liu and Dennis P. Lockhart.
Board evaluation process
| The Board engages an independent external advisor specializing in corporate governance to coordinate the Board’s self assessment by its members. The advisor provides each director with a questionnaire and then performs one-on-one confidential interviews with directors. | |
| The advisor prepares and presents a report in person to the Board, which discusses the findings of the advisor based upon its reviews. The report also discusses governance trends which the Board may want to take into consideration. | |
| The Board then discusses the evaluation to determine what actions, if any, could further enhance the operations of the Board and its committees. |
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Director recruitment
The Nomination and Corporate Governance Committee identifies and adds new directors using the following process:
| The Nomination and Corporate Governance Committee reviews and updates its criteria for prospective directors based on succession planning for directors, to
We are committed to having our Board represent diverse backgrounds and a wide range of professional experience in areas that are relevant to our business and status as a public company. Our Corporate Governance Guidelines require that the Board seek out highly qualified candidates of diverse gender, race and ethnicity and take into account other factors that promote principles of diversity and ensure that women and underrepresented candidates are included in each pool of candidates from which the Board nominees are chosen.
Candidates meet with members of the Nomination and Corporate Governance Committee, the Board Chair and the other Board members who assess candidates based on several factors, including whether the nominee has skills that will meet the needs of the company’s objectives and will bring diversity of thought, perspective, experience and background to our 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.
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The Nomination and Corporate Governance Committee believes there are certain minimum qualifications that each director nominee must satisfy in order to be suitable for a position on the Board, including:
The Nomination and Corporate Governance Committee will consider candidates recommended for nomination to the Board by stockholders of the company. Stockholders may nominate candidates for election to the Board under Maryland law and our Bylaws. Our Bylaws provide that, with respect to an annual meeting of stockholders, nominations of individuals for election to our Board of Directors and the proposal of business to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by or at the direction of our Board of Directors or (3) by a stockholder who is a stockholder of record both at the time of giving the notice required by our Bylaws and at the time of the meeting, who is entitled to vote at the meeting and who has complied with the advance notice provisions set forth in our Bylaws. The manner in which the Committee evaluates candidates recommended by stockholders is generally the same as any other candidate. However, the Committee will also seek and consider information concerning any relationship between a stockholder recommending a candidate and the candidate to determine if the candidate can represent the interests of all of the stockholders. The Committee will not evaluate a candidate recommended by a stockholder unless the stockholder’s proposal provides that the potential candidate has indicated a willingness to serve as a director, to comply with the expectations and requirements for Board service as publicly disclosed by the company
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and to provide all of the information necessary to conduct an evaluation. For further information regarding deadlines for stockholder proposals, please see the section of this proxy statement below entitled Important Additional Information — Stockholder Proposals for the 20242025 Annual Meeting.
Communications with the Chair and non-executive directors
Any interested party may communicate with the Chair of our Board or with our non-executive directors as a group at the following addresses:
E-mail: company.secretary@invescomortgagecapital.com
Mail: Invesco Mortgage Capital Inc.
1331 Spring Street NW
Atlanta, Georgia 30309
Attn: Office of the Company Secretary
Communications will be distributed to the Board, or to any of the Board’s committees or individual directors as appropriate, depending on the facts and circumstances of the communication. In that regard, the Board does not receive certain items which are unrelated to the duties and responsibilities of the Board.
In addition, our manager maintains a Whistleblower Hotline for its employees or affiliates or individuals outside the company to report complaints or concerns on an anonymous and confidential basis regarding questionable accounting, internal accounting controls or auditing matters and possible violations of the company’s Code of Conduct or law.
Persons may submit any complaint regarding accounting, internal accounting controls or auditing matters directly to the Audit Committee of the Board of Directors by sending a written communication appropriately addressed to:
Audit Committee
Invesco Mortgage Capital Inc.
1331 Spring Street NW
Atlanta, Georgia 30309
Attn: Office of the Company Secretary
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| The Board has adopted Corporate Governance Guidelines. | Corporate governance guidelines The Board has adopted Corporate Governance Guidelines (“Guidelines”) which are available in the corporate governance section of the company’s website at www.invescomortgagecapital.com (the “company’s website”). The information on the company’s website is not intended to form a part of, and is not incorporated by reference into, this Proxy Statement. The Guidelines set forth the practices the Board follows with respect to, among other matters, the composition of the Board, director responsibilities, Board committees, director access to officers and independent advisors, director compensation and the performance evaluation of the Board.
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The Board is elected by stockholders to oversee our management team and to seek to assure that the long-term interests of the stockholders are being served.
The company has chosen to separate the chief executive officer and Board Chair positions. | Board leadership structure As described in the Guidelines, our business is conducted day-to-day by our officers and our manager, under the direction of the chief executive officer and the oversight of the Board, to enhance the long-term value of the company for its stockholders. The Board is elected by the stockholders to oversee the officers of the company and our manager and to seek to assure that the long-term interests of the stockholders are being served. In light of these differences in the fundamental roles of the Board and management, the company has chosen to separate the chief executive officer and Board Chair positions. The Board believes separation of these roles: (i) allows the Board to more effectively monitor and evaluate objectively the performance of the chief executive officer, such that the chief executive officer is more likely to be held accountable for his performance, (ii) allows the non-executive Chair to control the Board’s agenda and information flow, and (iii) creates an atmosphere in which other directors are more likely to challenge the chief executive officer and other members of our senior management team. For these reasons, the company believes that this Board leadership structure is currently the most appropriate structure for the company. Nevertheless, the Board may reassess the appropriateness of the existing structure at any time, including following changes in Board composition, in management, or in the character of the company’s business and operations.
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| Our Board has established a code of conduct. | Code of conduct Our Board of Directors has established a code of | |
• honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; | ||
• full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications; | ||
• compliance with applicable governmental laws, rules and regulations; | ||
• prompt internal reporting of violations of the code of conduct to appropriate persons identified in the code of conduct; and | ||
• accountability for adherence to the code of conduct.
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Any waiver of the code of conduct for our executive officers or directors may be made only by our Board of Directors or one of our Board committees. The code of conduct is posted on the company’s website. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of the code of conduct by posting such information on the company’s website.
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| Our insider trading policy contains our Hedging Policy, which is described in detail on page |
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Board’s role in risk oversight
We believe that risk oversight responsibility rests with the full Board of Directors. Therefore, the Board has principal responsibility for oversight of the company’s risk management processes and for understanding the overall risk profile of the company. Though Board committees routinely address specific risks and risk processes within their purview, the Board has not delegated primary risk oversight responsibility to a committee.
The company has in place an enterprise risk management committee consisting of executive and senior management. The committee meets regularly and maintains dialogue with the Board of Directors regarding the top risks of the company and mitigating actions to address them. By receiving quarterly reports, the Board maintains a practical understanding of the risk philosophy and risk appetite of the company.
In addition, since the company is externally managed, we also rely upon the operational and investment risk oversight functions of our manager and its affiliates. Invesco’s risk management framework provides the basis for consistent and meaningful risk dialogue. Our manager’s global performanceinvestment risk and riskperformance committee oversees the management of core investment risks, while our manager’s enterprise risk management committee oversees the management of all other business and strategic related risks. A network of regional, business unit and specific risk management committees, under the guidance and standardswith oversight of theour manager’s enterprise risk management committee, provides ongoing identification, assessment, management and monitoring of risk that ensures both broad as well as in-depth, multi-layered coverage of the risks that provides a bottom-up perspective onexisting and emerging in the specific risk areas existing in various domains of our manager’s business.
Oversight
Cyber security risk
Our Board of technologyDirectors oversees cybersecurity risk and cyber security risk: The Globalreceives updates, at a minimum, twice a year from our manager’s Chief Information Security Oversight Committee, oneOfficer (or designee) (“CISO”) regarding cybersecurity, which updates include a review of our manager’s global security program and cybersecurity, including risks and protections for us and our manager. Our manager’s global operational risk management committees,committee provides executive levelexecutive-level oversight and monitoring of the end-to-end programs dedicated to managing information security and cyber related risk. ImportantIn addition, the CISO serves as a member of and provides quarterly updates to these programs isour company’s enterprise risk management committee, which in turn provides quarterly updates to our Board of Directors, and members of our management team are included in our manager’s investmentincident response process in threat-intelligence, its active engagement in industry and government security-related forums and its utilization of external experts to challenge our manager’s program maturity, assess its controls and routinely test its capabilities as discussed in more detail below under Cyberthe event a cyber security. Our board receives an annual update on our manager’s global security program, with a focus on cyber security. incident occurs that could materially impact us.
Through this regular and consistent risk communication, the Board seeks to maintain reasonable assurance that all material risks of the company are being addressed and that the company is fostering a risk-aware culture in which effective risk management is embedded in the business.
Environmental, social and governance matters
We are primarily focused on investing in, financing and managing mortgage-backed securities and other mortgage-related assets. These investments provide capital to the housing market and help support home ownership, which can advance the important social impacts of individual wealth creation and community development.
Our manager believes that its workforce should reflect the diversity of peoplelong-term success depends on its ability to retain, develop, engage and perspectives of the communities it serves,attract top talent. Our manager invests significantly in talent development, health and welfare programs, technology and other resources that diversitysupport its employees in developing their full potential both personally and inclusion are both moralprofessionally. Our manager believes that an employee community that is diverse and business imperatives.inclusive, engaged in community involvement and invested in employee well-being will drive positive outcomes for its clients and shareholders. Our manager also values corporate stewardship and actively partners with non-profits, start-ups and other organizations to strengthen its communities.
Cyber security
Cyber threats are considered one of the most significant risks facing financial institutions. To mitigate that risk, our manager and its Invesco affiliates have a designated Global Chief Security Officer and have a global security program that brings together key components of Operating environmentally responsibly is fundamental to our manager’s and its Invesco affiliates’ security, privacy and business continuity functions. The structure supports a more comprehensive, holistic approach to keeping our manager’s clients, employees, and critical assets safe, upholding their privacy rights, while enabling a secure and resilient business.
Our manager’s and its Invesco affiliates’ information security program, led by its Chief Information Security Officer, is designed to oversee, and maintain all aspects of information security risk and seeks to ensure the confidentiality, integrity, and availability of information assets. This includes the implementation of controls aligned with industry guidelines and applicable statutes and regulations to identify threats, detect attacks and protect these information assets. Our manager and its Invesco affiliates have an incident response program that includes periodic testing and is designed to restore business operations as quickly and as orderly as possible in the event of a breach or third-party incident. Our manager and its Invesco affiliates conduct mandatory annual employee security awareness training, which focuses on cyber threats and security in general. Our manager and its Invesco affiliates also conduct regular cyber phishing tests throughout the year to measure and raise employee awareness against cyber phishing threats.corporate stewardship.
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Information about the Board and its committees
Board of directors and committees
Our Board of Directors has formed an Audit Committee, a Compensation Committee and a Nomination and Corporate Governance Committee and has adopted charters for each of these committees. Each of these committees currently has sevenfive directors, and the Board has affirmatively determined that each committee consists entirely of independent directors pursuant to rules established by the NYSE and rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the heightened independence standards for compensation committee and audit committee members. Moreover, the Compensation Committee is composed exclusively of individuals intended to be, to the extent provided by Rule 16b-3 of the Exchange Act, non-employee directors.
Board meetings and annual meeting of stockholders
During the calendar year ended December 31, 2022,2023, the Board held 8 meetings (not including committee meetings). Each then-serving director attended at least seventy-five percent (75%) of the aggregate of the total number of meetings held by the Board and the total number of meetings held by all committees of the Board on which he or she served during 2022.2023. The Board does not have a formal policy regarding Board member attendance at stockholder meetings. All but one of our then-serving directors attended the Annual Meeting of Stockholders in 2022.2023. The non-executive directors (those directors who are not officers or employees of Invesco and who are classified as independent directors under applicable NYSE standards) meet in executive session at least quarterly each year. Edward J. Hardin, ourThe Chair andwho is an independent director, has presided at the executive sessions of the non-executive directors.
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Members: Carolyn B. Handlon (Chair) John S. Day
Katharine W. Kelley
Don H. Liu Dennis P. Lockhart
Independence: Each member of the committee is independent under SEC and NYSE rules and financially literate
Audit Committee Financial Experts: Mr. Day and Ms. Handlon qualify under SEC rules and regulations
Meetings held in 4 | Under its charter, the committee: • is comprised of at least three members of the Board and each is “independent” under the NYSE and SEC rules and is also “financially literate,” as defined under NYSE rules; • members are appointed and removed by the Board; • is required to meet at least quarterly; • periodically meets with the internal auditor and the independent auditor in separate executive sessions without members of senior management present; • has the authority to retain independent advisors, at the company’s expense, whenever it deems appropriate to fulfill its duties; and • reports to the Board regularly.
The committee’s charter is available on the company’s website. The charter sets forth the committee’s responsibilities, which include assisting the Board in fulfilling its responsibility to oversee (i) the company’s financial reporting, auditing and internal control activities, including the integrity of the company’s financial statements, (ii) the independent auditor’s qualifications and independence, (iii) the performance of the company’s internal audit function and independent auditor, and (iv) the company’s compliance with legal and regulatory requirements. |
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A member of our Board of Directors who is also an employee of Invesco is referred to as an executive director. Executive directors do not receive compensation for serving on our Board of Directors. Under the terms of its charter, the Compensation Committee annually reviews and determines the compensation paid to non-executive directors. In reviewing and making recommendations on non-executive director compensation, the Compensation Committee considers, among other things, the following policies and principles:
As a part of its annual review, the Compensation Committee engaged Ferguson Partners Consulting L.P. as anits independent third-party consultant to report on comparable non-executive director compensation practices and levels. ThisTheir report included a review of director compensation at peer company mortgage REITs with an investment focus in the company’s target assets.
Non-executive director compensation for the 20222023 service period is set forth below.
| Base fee | The annual base fee was set at $85,000 and was paid in quarterly installments in arrears. | |
| Equity award | Each non-executive director received an annual equity award in the amount of $95,000, payable in shares of our common stock. This award is granted on an annual basis in advance of service in the form of restricted shares of common stock that vest | |
| Chair fee | The Chair of the Board received an additional annual cash fee of $45,000. | |
Audit Committee Chair fee | The Chair of the Audit Committee received an additional annual cash fee of $20,000. | |
| Compensation Committee Chair fee | The Chair of the Compensation Committee received an additional annual cash fee of $10,000. | |
| Nomination and Corporate Governance Committee Chair fee | The Chair of the Nomination and Corporate Governance Committee received an additional annual cash fee of $10,000. | |
We also reimburse each of our non-executive directors for their travel expenses incurred in connection with attendance at Board of Directors and committee meetings. Non-executive directors do not receive any meeting or attendance fees.
The company does not have a deferred compensation plan for its directors.
In November 2022,2023, the Compensation Committee approved an increase in the same amounts as set forth abovebase fee from $85,000 to $95,000 per year for the 2024 service period. There were no other changes to the non-executive director compensation for the 20232024 service period.
Stock ownership policy for non-executive directors — All shares awarded to our Our non-executive directors are subject to the Non-Executive Director Stock Ownership Policy, which was amended in 2022 to reflect the Company’s reverse stock split in June 2022.Policy. The policy requires that within five years of the later of the effective date of the policy or the date of such director’s first appointment as a non-executive director, each non-executive director achieve and thereafter maintain an ownership level of at least the lesser of (i) a number of shares equal to the fair market value of three times the annual cash retainer paid to the non-executive director or (ii) 8,000 shares. Until such ownership level is achieved, each non-executive director is required to hold 100% of the shares received as compensation from the company.
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IVR DirectorNon-executive director stock ownership policy table for 20221
Shares held as of December 31, 202222023
Ownership requirement
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Ms. Kelley |
Based on current compensation levels, it is anticipated that |
| Director compensation table1 |
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The following table sets forth the compensation paid to our non-executive directors during 2022.
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| Director compensation table | Director compensation table |
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The following table sets forth the compensation paid to our non-executive directors during 2023.
| The following table sets forth the compensation paid to our non-executive directors during 2023.
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| Name | Fees earned or paid in cash ($)2 | Share awards ($)3 | Total ($) | Fees earned or paid in cash ($)1 | Share awards ($)2 | Total ($) | ||||||||||||||||||
John S. Day | 101,250 | 94,999 | 196,249 | 114,873 | 94,997 | 209,870 | ||||||||||||||||||
Carolyn Handlon | 91,250 | 94,999 | 186,249 | |||||||||||||||||||||
Carolyn B. Handlon | 98,949 | 94,997 | 193,946 | |||||||||||||||||||||
Katharine W. Kelley | 49,583 | 112,581 | 162,164 | |||||||||||||||||||||
Don H. Liu | 88,949 | 94,997 | 183,945 | |||||||||||||||||||||
Dennis P. Lockhart | 88,949 | 94,997 | 183,945 | |||||||||||||||||||||
Retired Directors3 | ||||||||||||||||||||||||
Edward J. Hardin | 125,000 | 94,999 | 219,999 | 116,812 | - | 116,812 | ||||||||||||||||||
James R. Lientz, Jr. | 91,250 | 94,999 | 186,249 | 85,362 | - | 85,362 | ||||||||||||||||||
Don H. Liu | 52,063 | 116,847 | 168,909 | |||||||||||||||||||||
Dennis Lockhart | 81,250 | 94,999 | 176,249 | |||||||||||||||||||||
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Includes the annual base fee and, as applicable, additional Chair of the Board fee and commitee Chair fees. |
Reflects (i) with respect to |
| 3. | Messrs. Hardin and Lientz retired from the board in May 2023. |
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Information about the Executive Officers of the company
The following is a list of individuals serving as executive officers of the company as of the date of this Proxy Statement. All company executive officers are elected annually by the Board and serve at the discretion of the Board or our Chief Executive Officer.
  | John M. Anzalone Mr. Anzalone has served as our Chief Executive Officer since 2017. Prior to becoming CEO, Mr. Anzalone served as our Chief Investment Officer since the company’s inception in 2009. Mr. Anzalone joined Invesco’s Fixed Income Division (“IFI”) in 2002, where until the end of 2023, he | |||
John M. Anzalone Chief Executive Officer
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| Age | Tenure | |||
| 14 Years | ||||
  | Kevin M. Collins Mr. Collins has served as our President since 2017. Previously, he served as our Executive Vice President Commercial Mortgage Credit from March 2017 to October 2017 and as a Managing Director and our Head of Commercial Mortgage Credit from 2011 to March 2017. He is also the Co-Head of Structured Investments and Head of Commercial Mortgage Credit for Invesco Fixed Income. Mr. Collins graduated with a B.S. in accounting from Florida State University and earned an M.B.A. from the Kellogg School of Management at Northwestern University. | |||
Kevin M. Collins President
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| Age | Tenure | |||
| 14 Years | ||||
  | Brian P. Norris Mr. Norris has served as our Chief Investment Officer since 2019. Prior to his role as CIO, Mr. Norris served as Director, Portfolio Management since 2011 and has worked on behalf of the company since its inception in 2009. He is also a Senior Portfolio Manager on Invesco’s Structured Securities team, a position he has held since 2014. Mr. Norris joined Invesco in 2001, serving as a portfolio manager from 2006 to 2014 and an account manager from 2001 to 2006. Prior to joining Invesco, Mr. Norris worked as a securities trader with Todd Investment Advisors. He earned a BS degree in Business Administration with a concentration in finance from the University of Louisville and is a Chartered Financial Analyst (CFA) charterholder. | |||
Brian P. Norris Chief Investment Officer
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| Age | Tenure | |||
| 14 Years | ||||
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  | R. Lee Phegley, Jr. Mr. Phegley has served as our Chief Financial Officer since 2014. Mr. Phegley also serves as the Chief Financial Officer for Invesco Real Estate Income Trust Inc., | |||
| R. Lee Phegley, Jr. | ||||
| Chief Financial Officer | ||||
| Age | Tenure | |||
| 9 Years | ||||
  | David B. Lyle Mr. Lyle has served as our Chief Operating Officer since 2017. Previously, he served as our Executive Vice President Residential Credit from March 2017 to October 2017 and as our Head of Residential Mortgage Credit from 2011 to March 2017. He is also the Co-Head of the Structured Investment Team and Head of Residential Mortgage-Backed Securities (“RMBS”) Credit for Invesco Fixed Income. | |||
David B. Lyle Chief Operating Officer | ||||
Age 45 |
Tenure | |||
14 Years | ||||
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| Our manager makes all decisions relating to the compensation of our executive officers based upon a number of objectives and principles. | Overview of our manager’s compensation program and philosophy Our manager makes all decisions relating to the compensation of our executive officers based on such factors as our manager may determine are appropriate. However, our manager consults with the members of the Compensation Committee concerning the compensation policy of our manager that is applied to the individuals that serve as our executive officers. Our manager has structured its compensation programs to support its multi-year strategic objectives and the behaviors and discipline that generate strong performance for its clients and shareholders by: • Aligning the interests of senior level employees with clients and shareholders through long- term equity awards and accumulation of meaningful share ownership; • Balancing pay-for-performance with economic outcomes; • Reinforcing its commercial viability by closely linking rewards to company, business unit and individual results and performance; • Attracting, recognizing and retaining talent by ensuring a meaningful mix of cash and deferred compensation; and • Discouraging excessive risk-taking that would have a material adverse impact on its clients, shareholders or company. |
With respect to investment professionals, which includes some of our executive officers, our manager applies the following compensation principles in making compensation decisions:
• Investment performance | • Qualitative assessment | |
Measure investment performance against indicators of client success on products for which the investment team is responsible | Ensure sufficient flexibility for management to exercise judgment over bonus funding outcomes, to ensure results make sense for Invesco and the team/individual | |
• Financial results Provide appropriate linkage to our manager’s financial results related to the investment team
• Balance Balance pay for investment performance with economic outcomes |
• Risk management Design plans that do not create risks that are reasonably likely to have a material adverse impact on Invesco |
Components of our executive officers’ compensation and their purpose
Our manager utilizes a variety of compensation components to achieve its objectives. Our manager’s compensation program that applies to our executive officers consists of base salary and variable incentive compensation. The following table further describes each pay component, as well as its purpose and key measures.
| Component | Purpose | Description | ||
Fixed compensation | ||||
Base salary Cash | • Provides fixed pay for the performance of day-to-day job duties • Sole source of fixed cash compensation
| • Based on knowledge, skills, experience, and scope of responsibility • Small portion of total annual compensation • Generally, remains static unless there is a promotion or adjustment needed due to industry trends | ||
| Variable compensation | ||||
| Annual cash bonus | • Recognizes current year achievement of goals and objectives • Aligns with company, business unit and individual performance | • Reflects assessment of annual investment performance and financial results of the investment products for which the investment team is responsible | ||
| Invesco annual deferral award (time-based vesting) | • Along with annual cash bonus, provides a competitive annual incentive opportunity • Aligns with Invesco client and shareholder interests • Encourages retention by vesting | • Reflects assessment of annual investment performance and financial results of the investment products for which the investment team is responsible • Award is denominated in Invesco’s product fund offerings and settled in cash | ||
| Invesco | • Recognizes potential for future contributions to Invesco’s long-term strategic objectives • Aligns with Invesco client and shareholder interests and encourages retention by vesting | • Reflects assessment of company and individual performance • Award is denominated in a combination of Invesco equity awards and cash-settled Invesco product fund offerings | ||
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| Our executive officers’ incentive compensation is funded from an incentive pool which is the source of incentive compensation of all employees of Invesco. | Our executive officers’ annual incentive compensation is funded from an annual incentive pool which is the source of incentive compensation of all employees of Invesco and its affiliates. Each year, the Invesco Compensation Committee examines Invesco’s
For
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| We have an executive officer stock ownership policy | Executive officer stock ownership policy In order to encourage the alignment of interests between our executive officers and our stockholders, we maintain an Executive Officer Stock Ownership | |
• the chief executive officer achieve an ownership level of at least 7,000 shares, and • the chief financial officer, the president, chief investment officer, and chief operating officer achieve an ownership level of at least 3,500 shares.
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| All of our executive officers are expected to attain their respective ownership requirements within the time period prescribed by the policy. | ||
Insider Trading Policy and Procedures To promote compliance with applicable insider trading
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Hedging policy As part of our insider trading policy, we have a hedging policy in place for all of our directors, officers and employees of our manager who provided services to us, and any of their respective (i) family members that reside in the same household as the individual (including a child away at college), (ii) anyone else who lives in the household, and (iii) family members outside of the household whose transactions in the company’s securities are directed by such individual or are subject to such individual’s influence or control and (iv) any entities, including any corporations, partnerships or trusts that the individual influences or controls. Our policy prohibits hedging or monetization transactions, such as zero-cost collars and forward sale contracts, involving our securities; however, limited exceptions are allowed. To date, no exceptions have been made. | ||
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Clawback policy As required by the SEC, we have adopted and maintain a clawback policy. Because we do not pay incentive compensation to our executive officers, the scope of the policy does not impact our executive officers. | ||
| Under the terms of the clawback policy, all incentive-based compensation that is awarded based wholly, or in part, upon attaining a financial measure received from our executive officers by the company is subject (if any) to the company’s Policy for Recoupment of Incentive Compensation (the “Clawback Policy”). The Clawback Policy provides for the forfeiture or “clawback” of incentive-based compensation to the extent practicable in the event that: | ||
1. the company issues a restatement of financial results to correct a material error: OR 2. the company experiences a little “r” restatement where an error occurs that is immaterial to the prior period financial statements; however, correcting the error, or the lack of correcting the error, in the current period would materially misstate the current period financial statements; AND the amount of incentive compensation that would have been awarded to the executive office (if any) had the financial results been properly reported would have been lower than the amount actually awarded. | ||
| We believe the structure of the management fee does not create an incentive for excessive or unnecessary risk-taking by our management team and reduces the risk of conflicts of interest with our manager. | Certain risks related to our management fee Because our management fee is calculated as a percent of stockholders’ equity, subject to specified adjustments, we believe the structure of the management fee does not create an incentive for management to take excessive or unnecessary risks and reduces the risk of conflicts of interests with our manager. Stockholders’ equity as the basis for the calculation does not result in leveraged pay-out curves, steep pay-out cliffs or set unreasonable goals and thresholds, each of which can promote excessive and unnecessary risks. In addition, the management fee may not be increased or revised without the approval of our independent directors. | |
Consideration of prior advisory vote Our Compensation Committee noted the significant support received in the
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The Compensation Committee of the company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. | ||
Respectfully submitted by the Compensation Committee:
John S. Day
Don H. Liu
Katharine W. Kelley
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Equity compensation plan information
As of December 31, 2022
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1. Represents the Invesco Mortgage Capital Inc. 2009 Equity Incentive Plan, as amended and restated
Compensation Committee interlocks and insider participation
During 2022,2023, the following directors served as members of the Compensation Committee: Mr. Day, Ms. Handlon, Mr. Hardin, Mr. Lientz, Mr. Liu, Ms. Kelley and Mr. Lockhart. No member of the Compensation Committee was an officer or employee of the company or any of its subsidiaries during 2022,2023, and no member of the Compensation Committee was formerly an officer of the company or any of its subsidiaries or was a party to any disclosable related person transaction involving the company. During 2022,2023, none of the executive officers of the company served on the Board of Directors or on the Compensation Committee of any other entity that has or had executive officers that served as a member of the Board of Directors or Compensation Committee of the company.
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Security ownership of management
The following table lists the shares of common stock beneficially owned as of February 17, 2023March 8, 2024 by (1) each director, (2) each executive officer, and (3) all current directors and executive officers as a group. The percentage of ownership indicated below is based on 38,710,91648,665,196 shares of the company’s common stock outstanding on February 17, 2023.March 8, 2024.
Beneficial ownership reported in the below table has been determined according to SEC regulations and includes common stock that may be acquired within 60 days after February 17, 2023.March 8, 2024. Unless otherwise indicated, all directors and executive officers have sole voting and investment power with respect to the shares shown. No shares are pledged as security. Individual directors and executive officers, as well as directors and executive officers as a group, beneficially own less than 1% of our common stock.
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| Name | Shares owned | |||
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John M. Anzalone | 8,317 | |||
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Kevin M. Collins | 3,498 | |||
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John S. Day1 | ||||
Carolyn L. Gibbs | - | |||
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Carolyn B. Handlon | ||||
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Don H. Liu | ||||
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Dennis P. Lockhart | ||||
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David B. Lyle2 | 3,591 | |||
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Brian Norris3 | 3,867 | |||
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Richard Lee Phegley, Jr. | 2,830 | |||
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Beth A. | 323 | |||
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All directors and executive officers as a group | ||||
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| 1. | Mr. Day also owns 5,300 shares of the company’s 7.75% Fixed-to-Floating Series B Cumulative Redeemable Preferred Stock. |
| 2. | Includes 54 shares held by the spouse of Mr. Lyle. |
| 3. | Includes 82 shares held by the spouse of Mr. Norris. |
| 4. | For Ms. |
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  | FOR | Recommendation of the Board The Board unanimously recommends a vote “FOR” the approval of the compensation of our | ||||
Vote required: This proposal requires the affirmative vote of a majority of votes cast at the Annual Meeting.
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| 2024 Proxy Statement 28 | ||
our belief that equity compensation is a critical means of aligning the interests with those of our stockholders. All equity awards granted to employees of our manager vest over a four-year period. Equity awards for our non-executive directors vest on the one-year anniversary of the date of grant. We believe that this is the best and simplest way to align the interests of our non-executive directors and employees of our manager who receive such awards with the interests of our stockholders, thus giving a significant incentive to appropriately increase stockholder value. | ||||
• Equity compensation is an important tool to recruit and retain talent. Our competitors in the industry routinely use equity awards to compensate employees, and our manager’s employees who have significant company-related job responsibilities place a high value on equity compensation. Our equity awards are an important component of our manager’s compensation program.
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Although the Amended Equity Plan provides for stock options and stock appreciation rights, the company has never granted stock options or stock appreciation rights, and it does not intend to do so in the foreseeable future. | ||||
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If this proposal
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| 29 IVR | Invesco Mortgage Capital Inc. | ||
Key features of the Amended Equity Plan
The Amended Equity Plan includes a number of features that promote best practices and protect Amended stockholder interests, including:
 | Administered by the Compensation Committee, which is composed entirely of independent directors who meet the SEC and NYSE standards for independence. Fixed number of shares available for grant that will not automatically increase because of an “evergreen” feature. Includes a double-trigger change-in-control provision that provides for the accelerated vesting of awards assumed following a change in control if a participant’s employment is terminated by the manager involuntarily (other than for cause or unsatisfactory performance) or by the participant for good reason within a prescribed period of time. Prohibits participants from borrowing against or transferring awards. All incentive-based awards granted by the company to our executive officers are subject to forfeiture or “clawback.” See Clawback Policy for more information. Prohibits tax gross ups on awards. Provides a minimum vesting period of one year for time-based awards. Equity awards granted to employees of our manager vest over a period of four years. Non-executive director equity awards are subject to one-year cliff vesting. Provides a minimum vesting period of one-year for stock options and SARs. Prohibits share recycling for stock options and stock appreciation rights. No grants of discounted options or stock appreciation rights No use of reload options No repricing of stock options or stock appreciation rights without stockholder approval Material changes, including a material increase in authorized shares, require stockholder approval. | |||
Historic use of equity and outstanding awards
When considering the number of shares to add to the Amended Equity Plan, the Compensation Committee reviewed, among other things, the potential dilution to current stockholders as measured by run rate and overhang, and projected future share usage.
We recognize the dilutive impact of our equity compensation programs on our stockholders. We believe that our historical share usage and proposed Amended Equity Plan are prudent and in the best interests of our stockholders.
Run rate
“Run rate” provides a measure of our annual share utilization relative to the number of shares outstanding. As shown in the following table, the company’s three-year average run rate was less than 1%.
| 2023 | 2022 | 2021 | ||||||||||
Granted during the year | 50,153 | 36,479 | 19,313 | |||||||||
Weighted average shares outstanding (basic ) (in millions) | 44,073,815 | 34,160,080 | 27,513,223 | |||||||||
Run rate | <1% | <1% | <1% | |||||||||
| 2024 Proxy Statement 30 | ||
Overhang and unvested share awards
“Overhang” refers to potential stockholder dilution represented by outstanding equity awards and shares available for future grant. Overhang is equal to the sum of outstanding awards plus shares available for grant, divided by common shares outstanding.
| Outstanding awards1 | Shares available for grant2 | Common shares outstanding3 | Overhang | |||||||||||||
As of December 31, 2023 | 52,397 | 48,816 | 44,073,815 | 0.2% | ||||||||||||
1. The company has no outstanding stock options or stock appreciation rights.
2. Assuming that our stockholders approve the Amended Equity Plan, 325,000 shares will be available for issuance.
3. Represents basic weighted average shares outstanding.
Information regarding equity compensation plans
The following table sets forth information about common shares that may be issued under our existing Equity Plan as of December 31, 2023.
Equity compensation plan information
As of December 31, 2023
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plan | |||||||||
Equity compensation plans approved by stockholders1 | - | - | 48,816 | |||||||||
Equity compensation plans not approved by stockholders | - | - | - | |||||||||
Total | - | - | 48,816 | |||||||||
1. Represents the Invesco Mortgage Capital Inc. 2009 Equity Incentive Plan, as amended and restated
Impact on dilution
As noted above, if our stockholders approve the Amended Equity Plan, an additional 325,000 shares will be available for issuance. The Board believes that the potential dilution resulting from these shares is reasonable and that the issuance of these shares will provide an appropriate incentive for our non-executive directors and employees of our manager who devote substantial time and effort to the company to increase the value of the company for stockholders.
If our stockholders approve the Amended Equity Plan, based on historical grant levels and the company’s current stock price, the company anticipates that the shares will be sufficient to provide projected equity incentives until our 2026 annual meeting. We believe that it is in the best interests of our stockholders to limit potential dilution from incentive share issuances and to seek stockholder approval for additional shares on a more frequent basis as necessary in the future.
| 31 IVR | Invesco Mortgage Capital Inc. | ||
Summary of terms of the Amended Equity Plan
The following summary of the material features of the Amended Equity Plan is not intended to be complete and is qualified in its entirety by reference to the Amended Equity Plan, a copy of which is attached as Appendix A to this Proxy Statement. Capitalized terms used and not otherwise defined herein have the meanings set forth in the Amended Equity Plan.
General. Under the terms of the Amended Equity Plan, the Compensation Committee has the authority to grant restricted stock, restricted stock units, stock options, stock appreciation rights (“SARs”) and other stock-based awards. We anticipate that we will continue our current equity compensation practice of granting full value awards. We have never granted stock options or SARs.
Eligibility. Eligible individuals means non-employee directors, officers, employees and consultants of the company or any of its Affiliates, including a Participating Company, and prospective officers, employees and consultants who have accepted offers of employment or consultancy from a Company Affiliate or a Participating Company.
As of December 31, 2023, there were ten employees of our manager who held equity awards under the 2009 Plan. In addition, each of our five non-executive directors hold equity awards under the 2009 Plan.
Shares subject to the Amended Equity Plan. We are asking our stockholders to approve the Amended Equity Plan which will authorize up to 325,000 shares.
Shares delivered in connection with awards under the Amended Equity Plan may be shares that are authorized but unissued shares or, if required by local law, shares delivered from a trust established pursuant to applicable law.
The number of common shares authorized for issuance under the Amended Equity Plan, as well as the number of shares subject to outstanding awards and the annual limitation on grants to any single individual, are subject to equitable adjustment upon the occurrence of any stock dividend or other distribution, recapitalization, stock split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange or other similar corporate transaction or event.
Share counting. Shares that are subject to awards granted under the Amended Equity Plan shall not be counted for purposes of the limits on the total number of shares that can be issued under the Amended Equity Plan or the number of shares that can be issued as incentive stock options in the following circumstances:
Shares tendered or withheld by the company in payment of the exercise price of stock options or SARs or to satisfy all or part of any tax withholding obligation related to such stock option or SAR shall be counted as shares that were issued under the Amended Equity Plan.
| 2024 Proxy Statement 32 | ||
Types of awards. The Amended Equity Plan authorizes awards in the form of restricted stock, restricted stock units, stock options, SARs and other stock-based awards.
As noted above, the Amended Equity Plan provides for stock options and SARs although the company has never granted stock options or SARs. If stock options or SARs are granted under the Amended Equity Plan, they will be subject to the following limitations:
Minimum vesting requirements
Restricted stock and restricted stock units. Except with respect to the death, disability or involuntary termination (other than for cause or unsatisfactory performance) of a participant or the occurrence of a corporate transaction (including a change of control) or special circumstances determined by the committee, an award of restricted stock or restricted stock units subject solely to continued services shall have a minimum vesting period of not less than one year from the date of grant. Equity awards granted to employees of the manager vest over a four-year period. Equity awards granted to non-executive directors vest on the one year anniversary of the date of grant.
Stock options and SARs. Stock options and SARs are subject to a one-year minimum vesting period. The company has never granted stock options or SARs.
Termination of employment/services. With respect to employees of our manager, except as otherwise provided in an award agreement, all unvested awards under the Amended Equity Plan are forfeited when a participant terminates employment with, or ceases performing services for, the manager of the company.
With respect to non-executive directors, except as otherwise provided in an award agreement, in the event of voluntary termination of service due to resignation or retirement, a prorated number of restricted shares (based on the time served during the restriction period) will be converted to unrestricted shares as of the first anniversary of the grant date, and the remaining shares will be forfeited.
| 33 IVR | Invesco Mortgage Capital Inc. | ||
Effect of a change of control. Awards that are not assumed in connection with a change of control will immediately vest at 100 percent. In the event of a change of control, with respect to awards that are assumed by the acquirer, then upon the participant’s termination of employment during the 24 months following a change in control (i) by the company (other than for cause or unsatisfactory performance) or (ii) by the participant for Good Reason, awards will vest at 100 percent unless otherwise provided in an award agreement.
Changes in capitalization and other corporate events. In the case of events affecting the capital structure of the company or certain corporate events such as a merger, the committee shall make adjustments and substitutions to shares reserved for issuance, awards limits, the number of shares subject to outstanding awards and the exercise price of outstanding awards under the Amended Equity Plan as it deems equitable and appropriate. The committee may also adjust performance goals to reflect unusual or non-recurring events and extraordinary items and for other similar reasons.
Non-transferability. Awards under the Amended Equity Plan cannot be sold, assigned, transferred, pledged or otherwise encumbered, except by will and the laws of descent and distribution.
Tax withholding; no gross ups. The participant is responsible for all taxes legally due from a participant. Except as otherwise provided in an award agreement, employee withholding obligations may be settled in shares.
Administration. The Amended Equity Plan will continue to be administered by the Compensation Committee of the Board, unless the Board appoints a different committee. The committee will consist of two or more “non-employee directors” as defined in Rule 16b-3 under the Exchange Act. The committee is authorized to establish administrative rules and procedures, select the eligible individuals to whom awards will be granted, determine the types of awards and the number of shares covered by the awards and establish the terms and conditions for awards.
The committee may delegate its authority to administer the Amended Equity Plan to one or more persons, subject to applicable law. All decisions made by the committee with respect to the Amended Equity Plan will be final and binding on all persons.
Plan amendments and changes. The Board or the Compensation Committee may amend, alter or discontinue the Amended Equity Plan, but no change is permitted without a participant’s consent to the extent that it would materially impair the participant’s rights under an outstanding award unless the change is made to comply with applicable law or stock exchange rules or to prevent adverse tax consequences to the company or a participant. In addition, no amendment will be made without the approval of the company’s stockholders if approval is required by applicable law or the listing standards of an applicable exchange.
Effective date. The Amended Equity Plan will be effective as of the date that it is approved by our stockholders, as requested herein, and will terminate on the tenth anniversary of the effective date of the Amended Equity Plan.
Securities registration. We intend to file with the SEC an amendment to our registration statement on Form S-8 to cover the number of shares of common stock authorized for issuance under the Amended Equity Plan.
Certain U.S. federal income tax consequences
The following discussion is intended only as a general summary of the material U.S. federal income tax consequences of awards issued to employees of our manager under the Amended Equity Plan for the purposes of stockholders considering how to vote on this proposal. It is not intended as tax guidance to participants in the Amended Equity Plan. This summary does not take into account certain circumstances that may change the income tax treatment of awards for individual participants, and it does not describe the state or local income tax consequences of any award or the taxation of awards in jurisdictions outside of the U.S.
Restricted stock awards and restricted stock units. The fair market value of stock granted under a restricted stock award is generally includable by the participant as ordinary income when the award vests. In the case of restricted stock unit awards, any cash and the fair market value of any stock issued as payment under the awards is includible as ordinary income when paid. Any dividends or dividend equivalents paid on unvested restricted stock and restricted stock units are treated as ordinary income when paid.
| 2024 Proxy Statement 34 | ||
Stock options and SARs. The grant of a stock option or SAR generally has no tax consequences for a participant or the company. The exercise of an incentive stock option generally does not have tax consequences for a participant or the company, except that it may result in an item of adjustment for alternative minimum tax purposes for the participant. If a participant holds the shares acquired through the exercise of an incentive stock option for the time specified in the Code, any gain or loss arising from a subsequent disposition of the shares will be taxed as long- term capital gain or loss. If the shares are disposed of before the holding period is satisfied, the participant will recognize ordinary income equal to the lesser of (1) the amount realized upon the disposition and (2) the fair market value of such shares on the date of exercise minus the exercise price paid for the shares.
A participant recognizes ordinary income upon the exercise of a nonqualified stock option equal to the fair market value of the shares minus the exercise price for the shares. Upon the exercise of a SAR, the participant recognizes ordinary income equal to the amount paid to the participant, in cash and shares that represents the excess of the fair market value of a SAR over its exercise price. Any subsequent disposition of shares acquired through the exercise of a nonqualified stock option or a SAR will generally result in capital gain or loss, which may be short- or long-term, depending upon the holding period for the shares.
Deductions by the company. Except as explained below, the company generally is entitled to a deduction equal to the amount included in the ordinary income of participants and does not receive a deduction for amounts that are taxable to participants as capital gain.
Section 409A. The grant of certain types of incentive awards under the Amended Equity Plan, may be subject to the requirements of Section 409A of the Code. If an award is subject to Section 409A, and if the requirements of Section 409A are not met, a participant may be subject to tax on all or a portion of the award earlier than the times described above, and additional taxes, penalties and interest could apply. Stock options, SARs and restricted stock awards that comply with the terms of the Amended Equity Plan are intended to be exempt from the requirements of Section 409A. Restricted stock units granted under the Amended Equity Plan may be subject to the requirements of Section 409A but are intended to comply with those requirements to avoid early taxation, additional taxes, penalties and interest. Notwithstanding the foregoing, the company is not responsible for any taxes, penalties or interest imposed with respect to any awards granted under the Amended Equity Plan, including taxes, penalties or interest imposed under Section 409A.
New plan benefits. We currently expect that, if the Amended Equity Plan is approved by our stockholders, the first grants made under the Amended Equity Plan will be to our non-executive directors in May 2024 in connection with the payment of their annual stock award. See Director Compensation above for more information about compensation for our non-executive directors. The committee has not yet determined, and we cannot now anticipate, what other grants will be made under the Amended Equity Plan if it is approved. It is likely that amounts under the Amended Equity Plan will be made during the next annual incentive compensation cycle to select employees of the manager.
The closing price of our shares on the New York Stock Exchange on March 8, 2024 was $9.14 per share.
| FOR | Recommendation of the Board The Board unanimously recommends a vote “FOR” the approval of the Amended Equity Plan. | ||
| Vote required: This proposal requires the affirmative vote of a majority of votes cast at the Annual General Meeting. | ||||
| 35 IVR | Invesco Mortgage Capital Inc. | ||
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Fees paid to independent registered public accounting firm
The Audit Committee of the Board of Directors, with the approval of the stockholders, engaged PwC to perform an annual audit of the company’s consolidated financial statements for fiscal year 2022.2023. The following table sets forth the approximate aggregate fees billed or expected to be billed to the company by PwC for fiscal years 20222023 and 20212022 for the audit of the company’s annual consolidated financial statements and for other services rendered by PwC.
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Year ($ in thousands) | Year ($ in thousands) | |||||||||||
| 2022 | 2021 | 2023 | 2022 | |||||||||
Audit fees1 | $1,034 | $1,128 | $1,058 | $1,034 | ||||||||
Audit-related fees2 | $18 | — | — | $18 | ||||||||
Tax fees3 | — | — | — | — | ||||||||
All other fees4 | $1 | $1 | $1 | $1 | ||||||||
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Total fees | $1,053 | $1,129 | $1,059 | $1,053 | ||||||||
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| 1. | Audit fees consist of fees and related expenses billed for the audit of the consolidated financial statements and services provided by PwC in connection with statutory and regulatory filings or engagements. The audit fees include fees and expenses in connection with quarterly and annual reports and the issuance of consents by PwC to be named in, and the use of their audit report in, our registration statements. |
| 2. | Audit-related fees consist of fees and expenses billed for assurance and related professional services. |
| 3. | Tax fees consist of professional services related to federal and state tax compliance and tax planning. PwC did not perform any tax services. |
| 4. | All other fees consist of any fees and expenses for professional services not included in one of the other categories. All other fees for |
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Membership and role of the Audit Committee
The Audit Committee consists of Ms. Handlon (Chair), Mr. Day, (Chair), Ms. Handlon, Mr. Hardin, Ms. Kelley, Mr. Lientz, Mr. Liu and Mr. Lockhart. Each of the members of the Audit Committee is independent as such term is defined under the NYSE listing standards and applicable law. The primary purpose of the Audit Committee is to assist the Board of Directors in fulfilling its responsibility to oversee (i) the company’s financial reporting, auditing and internal control activities, including the integrity of the company’s financial statements, (ii) the independent auditor’s qualifications and independence, (iii) the performance of the company’s internal audit function and independent auditor, and (iv) the company’s compliance with legal and regulatory requirements. The Audit Committee’s function is more fully described in its written charter, which is available on the company’s website.
Review of the company’s audited consolidated financial statements for the fiscal year ended December 31, 20222023
The Audit Committee has reviewed and discussed the audited financial statements of the company for the fiscal year ended December 31, 20222023 with the company’s management. The Audit Committee has discussed with PwC, the company’s independent registered public accounting firm, the matters required to be discussed by professional auditing standards. The Audit Committee has also received the written disclosures and the letter from PwC required by applicable requirements of the PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence and has discussed the independence of PwC with that firm. Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to the Board of Directors that the company’s audited consolidated financial statements be included in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20222023 for filing with the Securities and Exchange Commission.
Respectfully submitted by the Audit Committee:
Carolyn B. Handlon (Chair)
John S. Day (Chair)
Carolyn B. Handlon
Edward J. Hardin
Katharine W. Kelley1
James R. Lientz, Jr.
Don H. Liu
Dennis P. Lockhart
1. Ms. Kelley was not a member of the Audit Committee during the period covered by this report. She joined the Audit Committee on March 1, 2023,
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General information regarding the annual meeting
Questions and answers about voting your common shares
Q. Why did I receive this Proxy Statement?
You have received these proxy materials because the company’s Board of Directors is soliciting your proxy to vote your shares at the Annual Meeting on May 8, 2023.7, 2024. This proxy statement includes information that is designed to assist you in voting your shares and information that we are required to provide to you under the rules of the SEC.
Q. What is a proxy?
A “proxy” is a written authorization from you to another person that allows such person (the “proxy holder”) to vote your shares on your behalf. The Board of Directors is asking you to allow any of the following persons to vote your shares at the Annual Meeting: Edward J. Hardin,John S. Day, Chair of the Board of Directors; John M. Anzalone, Chief Executive Officer; Kevin Collins, President; R. Lee Phegley, Jr., Chief Financial Officer and Tina Carew, Vice President, General Counsel and and Secretary.
Q. Why did I not receive my proxy materials in the mail?
As permitted by rules of the SEC, we are making this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 20222023 (“Annual Report”) available to our stockholders electronically via the Internet. The “e-proxy”“e-proxy” process expedites stockholders’ receipt of proxy materials and lowers the costs and reduces the environmental impact of our Annual Meeting.
Beginning on March 21, 2023,22, 2024, we mailed to stockholders of record as of the close of business on March 9, 20238, 2024 (“Record Date”) a Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access this Proxy Statement, our Annual Report and other soliciting materials via the Internet. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions included in the Notice for requesting such materials.
Q. Who is entitled to vote?
Each holder of record of company common stock on the Record Date is entitled to attend and vote at the Annual Meeting.
Q. What is the difference between holding shares as a “stockholder of record” and as a “beneficial owner”?
Q. How many votes do I have?
Every holder of a share of common stock on the Record Date will be entitled to one vote per share for each Director to be elected at the Annual Meeting and to one vote per share on each other matter presented at the Annual Meeting. On the Record Date, there were 41,474,01548,665,196 shares of common stock outstanding and entitled to vote at the Annual Meeting.
Q. What proposals are being presented at the Annual Meeting?
The company intends to present proposals numbered one through four for stockholder consideration and voting at the Annual Meeting. These proposals are:
1. Election of seven (7) members of the Board of Directors;
2. Advisory vote to approve the company’s executive compensation;
3. Advisory vote onAmendment and Restatement of the frequency of holding future advisory votes on the Company’s executive compensation;Invesco Mortgage Capital Inc. 2009 Equity Incentive Plan; and
4. Appointment of PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm.
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Other than the matters set forth in this Proxy Statement and matters incident to the conduct of the Annual Meeting, the company does not know of any business or proposals to be considered at the Annual Meeting. If any other business is proposed and properly presented at the Annual Meeting, the proxies received from our stockholders give the proxy holders the authority to vote on such matter in their discretion.
Q. How does the Board of Directors recommend that I vote?
The Board of Directors recommends that you vote:
Q. How do I attend the Annual Meeting?
All stockholders are invited to attend the Annual Meeting. An admission ticket (or other proof of share ownership) and some form of government-issued photo identification (such as a valid driver’s license or passport) will be required for admission to the Annual Meeting. Only stockholders who own company common stock as of the close of business on the Record Date and invited guests will be entitled to attend the meeting. An admission ticket will serve as verification of your stock ownership. We will be following COVID protocols for the Annual Meeting, which will be published on the company website prior to the meeting date. Registration will begin at 1:00 p.m. Eastern Time and the Annual Meeting will begin at 2:00 p.m. Eastern Time.
You may submit your proxy in advance of the Annual Meeting via the Internet, phone or mail by following the instructions included on your proxy card or Notice of Internet Availability of Proxy Materials. Whether or not you plan to attend the Annual Meeting, we urge you to vote and submit your proxy in advance of the meeting using one of the methods described in the proxy materials.
Q. How do I vote and what are the voting deadlines?
You may vote your shares at the Annual Meeting or by proxy. There are three ways to vote by proxy:
Even if you plan to participate in the Annual Meeting, we encourage you to vote your common stock by proxy using one of the methods described above. Stockholders of record, and beneficial holders who obtain a legal proxy from their bank or broker, who attend the Annual Meeting may vote their common stock during the meeting, even though they have sent in proxies.
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Q. May I change or revoke my vote?
Yes. You may change your vote in one of several ways at any time before it is cast at the Annual Meeting:
Q. What will happen if I do not vote my shares?
Q. What if I return a signed proxy or voting instruction card, but do not specify how my shares are to be voted?
Q. What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials?
It means you own company common stock in more than one account, such as individually and jointly with another person. Please vote all of your common stock.Please see the section entitled Householding of Proxy Materials below for information on how you may elect to receive only one Notice.
Q. What is a quorum?
A quorum is necessary to hold a valid meeting. The presence, in person or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum for the conduct of business.
Q. What vote is required in order to approve each proposal?
For each proposal, other than Proposal No. 3, the affirmative vote of a majority of the votes cast on such proposal at the Annual Meeting is required. Votes “cast” include only votes cast with respect to shares present at the Annual Meeting or represented by proxy and excludes abstentions and broker non-votes.
For Proposal No. 3, the option of one year, two years or three years that receives the highest number of votes cast by stockholders (a “plurality”) will be the frequency for the advisory vote on executive compensation that has been selected by the stockholders. However, because this vote is advisory and not binding on the Board of Directors, the Board may decide that it is in the best interests of our stockholders and the company to hold an advisory vote on executive compensation more or less frequently than the choice approved by a plurality of our stockholders.
Q. How will voting on any other business be conducted?
Other than the matters set forth in this Proxy Statement and matters incident to the conduct of the Annual Meeting, we do not know of any business or proposals to be considered at the Annual Meeting. If any other business is proposed and properly presented at the Annual Meeting, the persons named as proxies will vote on the matter in their discretion.
Q. What happens if the Annual Meeting is adjourned or postponed?
Your proxy will still be effective and will be voted at the rescheduled Annual Meeting. You will still be able to change or revoke your proxy until it is voted.
Q. Who will count the votes?
A representative of Computershare, our transfer agent, will act as the inspector of election and will tabulate the votes.
Q. How can I find the results of the Annual Meeting?
Preliminary results will be announced at the Annual Meeting. Final results will be published in a Current Report on Form 8-K that we will file with the SEC within four (4) business days after the Annual Meeting.
| 41 IVR | Invesco Mortgage Capital Inc. | ||
Important additional information
Costs of solicitation
The cost of solicitation of proxies will be paid by the company. We have retained Alliance Advisors LLC to solicit proxies for a fee of approximately $10,000 plus a reasonable amount to cover expenses. Proxies may also be solicited in person, by telephone or electronically by Invesco personnel who will not receive additional compensation for such solicitation. Copies of proxy materials and our Annual Report on Form 10-K will be supplied to brokers and other nominees for the purpose of soliciting proxies from beneficial owners, and we will reimburse such brokers or other nominees for their reasonable expenses.
Principal executive offices
Our principal executive office is located at 1331 Spring Street NW, Atlanta, Georgia 30309. Our telephone number is (404) 892-0896.
Stockholder proposals for the 20242025 annual meeting
In accordance with the rules established by the SEC, any stockholder proposal submitted pursuant to Rule 14a-8 under the Exchange Act intended for inclusion in the proxy statement for next year’s annual meeting of stockholders must be received by us no later than 120 days before the anniversary of the date of this Proxy Statement (e.g. not later than November 22, 2023)2024). Such proposals should be sent to our Company Secretary in writing to Invesco Mortgage Capital Inc., Attn: Office of the Company Secretary, 1331 Spring Street NW, Atlanta, Georgia 30309. To be included in the Proxy Statement, the proposal must comply with the requirements as to form and substance established by the SEC and our Bylaws, and must be a proper subject for stockholder action under Maryland law.
A stockholder may otherwise propose business for consideration or nominate persons for election to the Board in compliance with SEC proxy rules, Maryland law, our Bylaws and other legal requirements, without seeking to have the proposal included in the company’s proxy statement pursuant to Rule 14a-8 under the Exchange Act. Under our Bylaws, notice of such a proposal must generally be provided to our Company Secretary not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting. The period under our Bylaws for receipt of such proposals for next year’s meeting is thus from October 23, 20232024 to November 22, 2023.2024. (However, if the date of the annual meeting is advanced or delayed by more than 30 days from such anniversary date, any notice by a stockholder of business or the nomination of directors for election or reelection to be brought before the annual meeting to be timely must be so delivered (i) not earlier than the 150th day prior to such annual meeting and (ii) not later than 5:00 p.m., Eastern Time on the later of (A) the 120th day prior to such annual meeting and (B) the 10th day following the day on which public announcement of the date of such meeting is first made.) SEC rules permit proxyholders to vote proxies in their discretion in certain cases if the stockholder does not comply with these deadlines, and in certain other cases notwithstanding compliance with these deadlines.
In addition to the notice and information requirements contained in our Bylaws, and consistent with the universal proxy rules, stockholders who, in connection with next year’s annual meeting intend to solicit proxies in support of director nominees other than our company’s nominees must provide notice that sets forth the information required by Rule 14a-19 no later than March 9, 2025, unless the date of next year’s annual meeting has changed by more than 30 calendar days from the anniversary date of the Annual Meeting, in which case such notice must be provided by the later of 60 calendar days prior to the date of the Annual Meeting or the 10th calendar day following the day on which public announcement of the date of next year’s annual meeting is first made by our company.
United States Securities and Exchange Commission reports
A copy of the company’s Annual Report on Form 10-K, including financial statements, for the fiscal year ended December 31, 20222023 (the “Annual Report”), is being furnished concurrently herewith to all stockholders as of the Record Date. Please read it carefully.
Stockholders may obtain a copy of the Annual Report, without charge, by visiting the company’s website or by submitting a request to our Company Secretary at: company.secretary@invescomortgagecapital.com or by writing Invesco Mortgage Capital Inc., Attn: Office of the Company Secretary, 1331 Spring Street NW, Atlanta, Georgia 30309 or by phone at (404) 892-0896. Upon request to our Company Secretary, the exhibits set forth on the exhibit index of the Annual Report may be made available at a reasonable charge (which will be limited to our reasonable expenses in furnishing such exhibits).
| 2024 Proxy Statement 42 | ||
Householding of proxy materials
The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for Proxy Statements and Annual Reports with respect to two or more stockholders sharing the same address by delivering a single Proxy Statement and Annual Report addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
A number of banks and brokers with account holders who are beneficial holders of the company’s common stock will be householding the company’s proxy materials or the Notice. Accordingly, a single copy of the proxy materials or Notice will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive separate proxy materials or copies of the Notice, please notify your bank or broker, or contact our Company Secretary at: company.secretary@invescomortgagecapital.com, or by mail to Invesco Mortgage Capital Inc., Attn: Office of the Company Secretary, 1331 Spring Street NW, Atlanta, Georgia 30309, or by telephone to 404-892-0896. The company undertakes, upon oral or written request to the address or telephone number above, to deliver promptly a separate copy of the company’s proxy materials or the Notice to a stockholder at a shared address to which a single copy of the applicable document was delivered. Stockholders who currently receive multiple copies of the proxy materials or the Notice at their address and would like to request householding of their communications should contact their bank or broker or the Company Secretary at the contact address and telephone number provided above.
Appendix A - Amended and Restated Invesco
Mortgage Capital Inc. 2009 Equity Incentive Plan
1. Purpose
The purpose of the Invesco Mortgage Capital Inc. 2009 Equity Incentive Plan (the “Plan”) is to give Invesco Mortgage Capital, Inc., a Maryland corporation (the “Company”) a competitive advantage in attracting, retaining and motivating officers, employees, directors and/or consultants and to provide the Company, Participating Companies, and any Affiliates with a long-term incentive plan providing incentives directly linked to Stockholder value.
2. Effective Date and Term of Plan
Plan was initially effective as of June 30, 2009 and was most recently amended and restated May 3, 2022. This amendment and restatement was adopted by the Board on February 21, 2024 and, pending Stockholder approval, is effective as of May 7, 2024 (the “Effective Date”). This amendment and restatement is effective with respect to Awards made on or after May 7, 2024. Awards may be granted under the Plan until the date that is ten years after the Effective Date, unless the Plan is discontinued earlier pursuant to Section 14.
3. Types of Awards
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and Other Stock-Based Awards may be granted under the Plan.
4. Definitions
Except as otherwise specifically provided in an Award Agreement, each capitalized word, term or phrase used in the Plan shall have the meaning set forth in this Section 4 or, if not defined in this Section, the first place that it appears in the Plan.
“Affiliate” means a corporation or other entity controlled by, controlling or under common control with, the Company; provided, however, that solely for purposes of determining whether a Participant has a Termination of Service that is a “separation from service” within the meaning of Section 409A of the Code, an “Affiliate” of a corporation or other entity means all other entities with which such corporation or other entity would be considered a single employer under Sections 414(b) or 414(c) of the Code.
“Applicable Exchange” means the New York Stock Exchange or such other securities exchange as may at the applicable time be the principal market for the Shares.
“Award” means an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Other Stock-Based Award granted pursuant to the terms of the Plan.
“Award Agreement” means the person(s) or trust(s) entitled by will or the laws of descent and distribution to receive any amounts payable or exercise any applicable rights under the Participant’s Awards after the Participant’s death. “Board” means the Board of Directors of the Company.
“Cause”means, with respect to a Participant, (i) if such Participant is a party to an Individual Agreement at the time of the Termination of Service that defines such term (or word(s) of similar meaning), the meaning given in such Individual Agreement or (ii) if there is no such Individual Agreement or if it does not define Cause (or word(s) of similar meaning): (A) the Participant’s plea of guilty or nolo contendere to, or conviction of, (1) a felony (or its equivalent in a non-United States jurisdiction) or (2) other conduct of a criminal nature that has or is likely to have an adverse effect on the reputation or standing in the community of the Company, Participating Company, or any Affiliates, as determined by the Committee in its sole discretion, or that legally prohibits the Participant from working for the Company, Participating Company, or any Affiliates; (B) a breach by the Participant of a regulatory rule that adversely affects the Participant’s ability to perform the Participant’s employment duties to the Company, Participating Company, or any Affiliates in any material respect; (C) the Participant’s failure, in each case in any material respect, to (1) perform the Participant’s employment duties, (2) comply with the applicable policies, codes of conduct or employee manuals of the Company, Participating Company, or any Affiliates, (3) follow reasonable directions received from the Company, Participating Company, or any Affiliates or (4) comply with covenants contained in any Individual Agreement or Award Agreement to which the Participant is a party; or (D) with respect to Participants employed outside of the United States, such other definition as may be codified under local laws, rules and regulations. With respect to a Participant’s termination of directorship, “Cause” shall include only an act or failure to act that constitutes cause for removal of a director under the Company’s bylaws.
| 2024 Proxy Statement 44 | ||
“Change in Control” means any of the following events:
(i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty-five percent (25%) or more of either (A) the then outstanding shares of the Company (the “Outstanding Company Shares”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) below; or
(ii) during any period of twelve (12) consecutive months, individuals who, as of January 1, 2024, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to January 1, 2024 whose election, or nomination for election by the Company’s Stockholders, was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (each, a “Corporate Transaction”), in each case, unless, following such Corporate Transaction, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Shares and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or other entity resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction of the Outstanding Company Shares and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan or related trust of the Company or of such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of, respectively, the then outstanding shares of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (C) at least a majority of the members of the board of directors of the corporation (or other governing board of a non-corporate entity) resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or
(iv) approval by the Stockholders of the Company of a complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, an event described above shall be a Change in Control with respect to an Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code only if such event is also a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A of the Code to the extent necessary to avoid the imposition of any tax or interest or the inclusion of any amount in income thereunder.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto, the Treasury Regulations thereunder and other relevant interpretive guidance issued by the Internal Revenue Service or the Treasury Department. Reference to any specific section of the Code shall be deemed to include such regulations and guidance, as well as any successor section, regulations and guidance.
“Committee” means the Compensation Committee of the Board or such other committee or subcommittee of the Board as may be appointed by the Board to act as the Committee under the Plan. If at any time there is no such Compensation Committee or other committee or subcommittee appointed by the Board, the Board shall be the Committee. The Committee shall consist of two or more directors, each of whom is intended to be, to the extent required by Rule 16b-3 of the Exchange Act, a “non-employee director” as defined in Rule 16b-3 of the Exchange Act. Any member of the Committee who does not meet the foregoing requirements shall abstain from any decision regarding an Award and shall not be considered a member of the Committee to the extent required to comply with Rule 16b-3 of the Exchange Act.
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“Disability” means, with respect to a Participant, (i) a “disability” (or words of similar meaning) as defined in any Individual Agreement to which the Participant is a party at the relevant time or (ii) if there is no such Individual Agreement or it does not define “disability” (or words of similar meaning): (A) a permanent and total disability as determined under the long-term disability plan applicable to the Participant; (B) if there is no such plan applicable to the Participant, “Disability” as determined by the Committee in its sole discretion; or (C) with respect to Participants employed outside the United States, such other definition as may be codified under local laws, rules and regulations. The Committee may require such medical or other evidence as it deems necessary to judge the nature and permanency of the Participant’s condition. Notwithstanding the foregoing, with respect to an Incentive Stock Option, “Disability” shall mean a “Permanent and Total Disability” as defined in Section 22(e)(3) of the Code and, with respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, “Disability” shall mean a “disability” as defined under Section 409A of the Code to the extent necessary to avoid the imposition of any tax or interest or the inclusion of any amount in income thereunder.
“Disaffiliation” means an Affiliate’s or business division’s ceasing to be an Affiliate or business division for any reason (including, without limitation, as a result of a public offering, or a spinoff or sale by the Company, of the stock of the Affiliate or a sale of a business division of the Company).
“Eligible Individuals” means non-employee directors, officers, employees and consultants of the Company or any of its Affiliates, including a Participating Company, and prospective officers, employees and consultants who have accepted offers of employment or consultancy from a Company Affiliate or a Participating Company.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.Reference to any specific section of the Exchange Act shall be deemed to include such regulations and guidance issued thereunder, as well as any successor section, regulations and guidance.
“Fair Market Value” means, unless otherwise determined by the Committee, the closing price of a Share on the Applicable Exchange on the date of measurement or, if Shares are not traded on the Applicable Exchange on such measurement date, then on the next preceding date on which Shares are traded, all as reported by such source as the Committee may select. If the Shares are not listed on a national securities exchange, Fair Market Value shall be determined by the Committee in its good faith discretion.
“Good Reason” means, with respect to a Participant, (i) if such Participant is a party to an Individual Agreement at the time of the Termination of Service that defines such term (or word(s) of similar meaning), the meaning given in such Individual Agreement or (ii) if there is no such Individual Agreement or if it does not define Good Reason (or word(s) of similar meaning), during the 24-month period following a Change in Control, actions taken by the Company, Participating Company, or any Affiliates resulting in a material negative change in the employment relationship of the Participant who is an officer or an employee including, without limitation:
(i) the assignment to the Participant of duties materially inconsistent with the Participant’s position (including status, titles and reporting requirements), authority, duties or responsibilities, or a material diminution in such position, authority, duties or responsibilities, in each case from those in effect immediately prior to the Change in Control;
(ii) a material reduction of the Participant’s aggregate annual compensation, including, without limitation, base salary and annual bonus opportunity, from that in effect immediately prior to the Change in Control;
(iii) a change in the Participant’s principal place of employment that increases the Participant’s commute by 40 or more miles or materially increases the time of the Participant’s commute as compared to the Participant’s commute immediately prior to the Change in Control but excluding, for the avoidance of doubt, a change that requires a Participant to forego one or more days of remote work and perform such work in person at a Company office; or
(iv) any other action or inaction that constitutes a material breach by the Company, Participating Company, or any Affiliates of any Individual Agreement.
In order to invoke a Termination of Service for Good Reason, a Participant must provide written notice to the Company, Participating Company, or any Affiliates with respect to which the Participant is employed or providing services of the existence of one or more of the conditions constituting Good Reason within ninety (90) days following the Participant’s knowledge of the initial existence of such condition or conditions, specifying in reasonable detail the conditions constituting Good Reason, and the Company shall have thirty (30) days following receipt of such written notice (the “Cure Period”) during which it may remedy the condition. In the event that the Company, Participating Company, or any Affiliate fails to remedy the condition constituting Good Reason during the applicable Cure Period, the Participant’s Termination of Service must occur, if at all, within ninety (90) days following such Cure Period in order for such termination as a result of such condition to constitute a Termination of Service for Good Reason.
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“Grant Date” means (i) the date on which the Committee by resolution selects an Eligible Individual to receive a grant of an Award, establishes the number of Shares to be subject to such Award and, in the case of an Option or Stock Appreciation Right, establishes the exercise price of such Award or (ii) such later date as the Committee shall provide in such resolution.
“Incentive Stock Option” means any Option that is designated in the applicable Award Agreement as an “incentive stock option” within the meaning of Section 422 of the Code and otherwise meets the requirements to be an “incentive stock option” set forth in Section 422 of the Code. Each Option granted pursuant to the Plan will be treated as a Nonqualified Option unless, as of the Grant Date, it is expressly designated as an Incentive Stock Option in the applicable Award Agreement.
“Individual Agreement” means a written employment, consulting or similar agreement between a Participant and the Company, Participating Company, or any Affiliates.
“ISO Eligible Employees” means an employee of the Company, any subsidiary corporation (within the meaning of Section 424(f) of the Code) or parent corporation (within the meaning of Section 424(e) of the Code), or Participating Company.
“Manager” means Invesco Advisers, Inc. the Company’s manager.
“Nonqualified Option” means any Option that is not an Incentive Stock Option.
“Option” means an Incentive Stock Option or Nonqualified Option granted under Section 8.
“Other Stock-Based Award” means an Award of Shares or any other Award that is valued in whole or in part by reference to, or is otherwise based upon, Shares, including (without limitation) unrestricted stock, dividend equivalents and convertible debentures, granted under Section 11.
“Participant” means an Eligible Individual to whom an Award is or has been granted and who has accepted the terms and conditions of the Plan as set forth in Section 5(f) hereof.
“Participating Company” means the Company, the Subsidiaries, the Manager and any of their respective Affiliates, which with the consent of the Board participates in the Plan.
“Performance Goals” means specified goals, other than the mere continuation of employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award. A Performance Goal and any targets with respect thereto need not be based upon an increase, a positive or improved result or avoidance of loss and may be applied, without limitation, to a Participant individually, or to a business unit or division of the Company or an Affiliate or to the Company as a whole. A Performance Goal may also be based on individual performance and/or subjective performance goals (or any combination of any of the goals described in this definition). The Committee may provide that one or more of the Performance Goals applicable to an Award will be adjusted in a manner to reflect events (for example, but without limitation, acquisitions, dispositions or material financial market movements) occurring during the Performance Period that affect the applicable Performance Goal(s). “Performance Period” means that period established by the Committee during which any Performance Goals specified by the Committee with respect to such Award are to be measured.
“Restricted Stock” means an Award granted under Section 9.
“Restricted Stock Unit” means an Award granted under Section 10.
“Restriction Period” means, with respect to Restricted Stock and Restricted Stock Units, the period commencing on the date of such Award to which vesting restrictions apply and ending upon the expiration of the applicable vesting conditions and/or the achievement of the applicable Performance Goals (it being understood that the Committee may provide that restrictions shall lapse with respect to portions of the applicable Award during the Restriction Period).
“Retirement” means, subject to and in accordance with such rules as may be prescribed by the Committee, retirement from active employment with the Company (other than at a time when Cause exists or as a result of a termination for Cause) at or after satisfying an age and/or years of service requirement established by the Committee.
“Share” or “Shares” means common shares, par value $0.01 each, of the Company or such other equity securities that may become subject to an Award.
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“Stockholder” has the meaning set forth in the Maryland General Corporation Law.
“Stock Appreciation Right” means an Award granted under Section 8(b).
“Subsidiary” means any corporation, partnership, limited liability company or other entity at least 50% of the economic interest in the equity of which is owned, directly or indirectly, by the Company or by another subsidiary.
“Term” means the maximum period during which an Option, Stock Appreciation Right or, if applicable, Other Stock-Based Award may remain outstanding as specified in the applicable Award Agreement.
“Termination of Service” means the termination of the Participant’s employment or consultancy with, or performance of services (including as a director) for, the Company, a Participating Company, and any Affiliates or, in the case of a director, when a director no longer holds office as a director of the Company. For Participants employed outside the United States, the date on which such Participant incurs a Termination of Service shall be the earlier of (i) the last day of the Participant’s active service with the Company, a Participating Company, and any Affiliates or (ii) the last day on which the Participant is considered an employee of the Company, a Participating Company, and any Affiliates, as determined in each case without including any required advance notice period and irrespective of the status of the termination under local labor or employment laws. Temporary absences from employment because of illness, vacation or approved leave of absence and transfers among the Company, a Participating Company, and any Affiliates shall not be considered Terminations of Service. With respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, “Termination of Service” shall mean a “separation from service” as defined under Section 409A of the Code to the extent required by Section 409A of the Code to avoid the imposition of any tax or interest or the inclusion of any amount in income thereunder. A Participant has a separation from service within the meaning of Section 409A of the Code if the Participant terminates employment with the Company, Participating Company and any Affiliates for any reason. A Participant will generally be treated as having terminated employment with the Company, Participating Company, and any Affiliates as of a certain date if the Participant and the Company, Participating Company, or Affiliate that employs the Participant reasonably anticipate that the Participant will perform no further services for the Company, Participating Company, or any Affiliate after such date or that the level of bona fide services that the Participant will perform after such date (whether as an employee or an independent contractor) will permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services if the Participant has been providing services for fewer than 36 months); provided, however, that the employment relationship is treated as continuing while the Participant is on military leave, sick leave or other bona fide leave of absence if the period of leave does not exceed six months or, if longer, so long as the Participant retains the right to reemployment with the Company, Participating Company, or any Affiliate.
5. Administration
(a) Committee. The Plan shall be administered by the Committee. The Committee shall, subject to Section 13, have plenary authority to grant Awards pursuant to the terms of the Plan to Eligible Individuals. Among other things, the Committee in its sole discretion shall have the authority, subject to the terms and conditions of the Plan:
(i) to select the Eligible Individuals to whom Awards may from time to time be granted;
(ii) to determine whether and to what extent Awards are to be granted hereunder;
(iii) to determine the number of Shares to be covered by each Award granted hereunder;
(iv) to determine the terms and conditions of each Award granted hereunder, including but not limited to the form of settlement of Awards, based on such factors as the Committee shall determine, and to approve the form of Award Agreement and any related addendum;
(v) to adopt sub-plans and special provisions applicable to Awards granted to Participants employed outside of the United States, which sub-plans and special provisions may take precedence over other provisions of the Plan, and to approve the form of Award Agreement and any related addendum as may be applicable to such Awards;
(vi) subject to Sections 6(e), 8(e), 13 and 14, to modify, amend or adjust the terms and conditions of any Award;
(vii) to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable;
(viii) to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement relating thereto);
(ix) subject to Section 13, to accelerate the vesting or lapse of restrictions of any outstanding Award, based in each case on such considerations as the Committee determines;
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(x) to decide all other matters to be determined in connection with an Award;
(xi) to determine whether, to what extent and under what circumstances cash, Shares and other property and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the Participant;
(xii) to establish any “blackout” period that the Committee deems necessary or advisable; and
(xiii) to otherwise administer the Plan.
(b) Delegation of Authority. To the extent permitted under applicable law and Section 13, the Committee may delegate any of its authority to administer the Plan to any person or persons selected by the Committee, including one or more members of the Committee, and such person or persons shall be deemed to be the Committee with respect to, and to the extent of, its or their authority.
(c) Procedures.
(i) The Committee may act by a majority of its members and, except to the extent prohibited by applicable law or the listing standards of the Applicable Exchange and subject to Section 13, through any person or persons to whom it has delegated its authority pursuant to Section 5(b).
(ii) Any authority granted to the Committee may also be exercised by the independent directors of the full Board. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control.
(d) Discretion of Committee and Binding Effect. Any determination made by the Committee or an appropriately delegated person or persons with respect to the Plan or any Award shall be made in the sole discretion of the Committee or such delegate, including, without limitation, any determination involving the appropriateness or equitableness of any action, unless in contravention of any express term of the Plan. All decisions made by the Committee or any appropriately delegated person or persons shall be final and binding on all persons, including the Company, Participants and Eligible Individuals. Notwithstanding the foregoing, following a Change in Control, any determination by the Committee as to whether “Cause” or “Good Reason” exists shall be subject to de novo review.
(e) Cancellation or Suspension. Notwithstanding any other terms of the Plan (other than Section 8(e)), an Award Agreement or an Award, the Committee or an appropriately delegated person or persons, in its or their sole discretion, shall have full power and authority to determine whether, to what extent and under what circumstances any Award or any portion thereof shall be cancelled or suspended and may cancel or suspend any Award or any portion thereof. Without in any way limiting the generality of the preceding sentence, the following are examples, without limitation, of when all or any portion of an outstanding Award to any Participant may be canceled or suspended: (1) in the sole discretion of the Committee or any appropriately delegated person or persons, a Participant materially breaches (A) any duties of Participant’s employment (whether express or implied), including without limitation Participant’s duties of fidelity, good faith and exclusive service, (B) any general terms and conditions of Participant’s employment such as an employee handbook or guidelines, (C) any policies and procedures of the Company, Participating Company, or any Affiliates applicable to the Participant, or (D) any other agreement regarding Participant’s employment with the Company, Participating Company, or any Affiliates, (2) without the prior written explicit consent of the Committee or any appropriately delegated person or persons (which consent may be granted or denied in the sole discretion of the Committee or such person or persons), a Participant, while employed by, or providing services to, the Company, Participating Company, or any Affiliates, becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee or any appropriately delegated person or persons in its or their sole discretion), any business that is in competition with the Company, Participating Company, or any Affiliates or with any business in which the Company, Participating Company, or any Affiliates has a substantial interest, as determined by the Committee or any appropriately delegated person or persons in its or their sole discretion or (3) as a result of the application to an Award of any compensation recovery or recoupment policy or policies adopted by the Company, including but not limited to the Invesco Mortgage Capital Inc. Policy for Recoupment of Incentive Compensation.
(e) Award Agreements. The terms and conditions of each Award, as determined by the Committee, shall be set forth in a written (including electronic) Award Agreement, which shall be delivered to the Participant receiving such Award upon, or as promptly as is reasonably practicable following, the grant of such Award. Except (i) as otherwise specified by the Committee, in its sole discretion, (ii) as otherwise provided in the Award Agreement, or (iii) in the case of non-executive directors who may not be required to sign or accept an Award, an Award shall not be effective unless the Award Agreement is signed or otherwise accepted by the Participant receiving the Award (including by electronic signature or acceptance). The Committee, in its sole discretion, may deliver any documents related to
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an Award or Award Agreement by electronic means. Award Agreements may be amended only in accordance with Section 14.
6. Shares Subject to Plan
(a) Plan Maximums. Subject to adjustment as described in Section 6(e), the maximum number of Shares that may be issued pursuant to Awards under the Plan shall be 325,000 shares.
(b) Individual and Award Limits. Subject to adjustment as described in Section 6(e), the maximum number of Shares that may be issued pursuant to Options intended to be Incentive Stock Options shall be 2,000 Shares.
(c) Source of Shares. Shares subject to Awards under the Plan may be authorized but unissued Shares or, if required by local law, Shares delivered from a trust established pursuant to applicable law.
(d) Rules for Calculating Shares Issued; No “Share Recycling” for Options or Stock Appreciation Rights. Shares that are subject to Awards granted under the Plan shall be deemed not to have been issued for purposes of the Plan maximums set forth in Section 6(a) and 6(b)(ii) to the extent that:
i) the Award is forfeited or canceled, or the Award terminates, expires or lapses for any reason without Shares having been delivered;
(ii) the Award is settled in cash; or
(iii) the Shares are withheld by the Company to satisfy all or part of any tax withholding obligation related to an Award of Restricted Stock or an Award of a Restricted Stock Unit.
Shares that are tendered or withheld by the Company in payment of the exercise price of Options or Stock Appreciation Rights or to satisfy all or part of any tax withholding obligation related to such an Option or Stock Appreciation Right shall be counted as Shares that were issued. For the avoidance of doubt, Shares subject to an Option or a Stock Appreciation Right issued under the Plan that are not issued in connection with the stock settlement of that Option or Stock Appreciation Right upon its exercise shall not again become available for Awards or increase the number of Shares available for grant.
(e) Adjustment Provision.
(i) In the event of a merger, consolidation, stock rights offering, liquidation, or similar event affecting the Company, a Participating Company, or any Affiliates (each, a “Corporate Event”) or a stock dividend, stock split, reverse stock split, separation, spinoff, Disaffiliation, reorganization, extraordinary dividend of cash or other property, share combination, or recapitalization or similar event affecting the capital structure of the Company (each, a “Share Change”), the Committee or the Board shall make such equitable and appropriate substitutions or adjustments to (A) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under the Plan, (B) the various maximum limitations set forth in Sections 6(a) and 6(b) upon certain types of Awards and upon the grants to individuals of certain types of Awards, (C) the number and kind of Shares or other securities subject to outstanding Awards and (D) the exercise price of outstanding Awards.
(ii) In the case of Corporate Events, such adjustments may include, without limitation, (A) the cancellation of outstanding Awards in exchange for payments of cash, securities or other property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by the Committee or the Board in its sole discretion (it being understood that in the case of a Corporate Event with respect to which Stockholders receive consideration other than publicly traded equity securities of the ultimate surviving entity, any such determination by the Committee that the value of an Option or Stock Appreciation Right shall for this purpose be deemed to equal the excess, if any, of the value of the consideration being paid for each Share pursuant to such Corporate Event over the exercise price of such Option or Stock Appreciation Right shall conclusively be deemed valid), and (B) the substitution of securities or other property (including, without limitation, cash or other securities of the Company and securities of entities other than the Company) for the Shares subject to outstanding Awards.
(iii) In connection with any Disaffiliation, separation, spinoff, or other similar event, the Committee or the Board may arrange for the assumption of Awards, or replacement of Awards with new awards based on securities or other property (including, without limitation, other securities of the Company and securities of entities other than the Company), by the affected Affiliate (or Participating Company) or business division or by the entity that controls such Affiliate (or Participating Company) or business division following such event (as well as any corresponding adjustments to Awards that remain based upon Company securities). Such replacement with new awards may include revision of award terms reflective of circumstances associated with the Disaffiliation, separation, spinoff or other similar event.
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(iv) The Committee may, in its discretion, adjust the Performance Goals applicable to any Awards to reflect any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in the Company’s financial statements, notes to the financial statements, management’s discussion and analysis or other Company filings with the Securities and Exchange Commission. If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, Participating Company, or the applicable Affiliate, business division or other operational unit of, or the manner in which any of the foregoing conducts its business, or other events or circumstances render the Performance Goals to be unsuitable, the Committee may modify such Performance Goals or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable.
(e) Section 409A. Notwithstanding the foregoing: (i) any adjustments made pursuant to Section 6(e) to Awards that are considered “deferred compensation” within the meaning of Section 409A of the Code shall be made in compliance with the requirements of Section 409A of the Code; (ii) any adjustments made pursuant to Section 6(e) to Awards that are not considered “deferred compensation” subject to Section 409A of the Code shall be made in such a manner as to ensure that after such adjustment, the Awards either (A) continue not to be subject to Section 409A of the Code or (B) comply with the requirements of Section 409A of the Code; and (iii) in any event, neither the Committee nor the Board shall have the authority to make any adjustments pursuant to Section 6(e) to the extent the existence of such authority would cause an Award that is not intended to be subject to Section 409A of the Code at the Grant Date to be subject thereto.
7. Eligibility and Participation
Awards may be granted under the Plan to Eligible Individuals; provided, however, that Incentive Stock Options may be granted only to ISO Eligible Employees.
8. Options and Stock Appreciation Rights
(a) Options. An Option is a right to purchase a specified number of Shares at a specified price that continues for a stated period of time. Options granted under the Plan may be Incentive Stock Options or Nonqualified Options. The Award Agreement for an Option shall indicate whether the Option is intended to be an Incentive Stock Option or a Nonqualified Option.
(b) Stock Appreciation Rights. A Stock Appreciation Right is a right to receive upon exercise of the Stock Appreciation Right an amount in cash, Shares or both, in value equal to the product of (i) the excess of the Fair Market Value of one Share over the exercise price per Share subject to the applicable Stock Appreciation Right, multiplied by (ii) the number of Shares in respect of which the Stock Appreciation Right has been exercised. The applicable Award Agreement shall specify whether such payment is to be made in cash or Shares or both, or shall reserve to the Committee or the Participant the right to make that determination prior to or upon the exercise of the Stock Appreciation Right.
(c) Award Agreement. Each grant of an Option and Stock Appreciation Right shall be evidenced by an Award Agreement that shall specify Grant Date, the exercise price, the term, vesting schedule, and such other provisions as the Committee shall determine.
(d) Exercise Price; Not Less Than Fair Market Value. The exercise price per Share subject to an Option or Stock Appreciation Right shall be determined by the Committee and set forth in the applicable Award Agreement, and shall not be less than the Fair Market Value of a Share on the Grant Date, except as provided under Section 6(e) or with respect to Options or Stock Appreciation Rights that are granted in substitution of similar types of awards of a company acquired by the Company, Participating Company, or an Affiliate or with which the Company, Participating Company, or an Affiliate combines (whether in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, or otherwise) to preserve the intrinsic value of such awards.
(e) Prohibition on Repricing; No Cash Buyouts. Except as provided in Section 6(e) relating to adjustments due to certain corporate events, the exercise price of outstanding Options or Stock Appreciation Rights may not be amended to reduce the exercise price of such Options or Stock Appreciation Rights, nor may outstanding Options or Stock Appreciation Rights be canceled in exchange for (i) cash, (ii) Options or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original outstanding Options or Stock Appreciation Rights or (iii) other Awards, unless in each case such action is approved by the Company’s Stockholders.
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(f) Prohibition on Reloads. Options or Stock Appreciation Rights shall not be granted under the Plan that contain a reload or replenishment feature pursuant to which a new Option or Stock Appreciation Right would be granted upon receipt or delivery of Shares to the Company in payment of the exercise price or any tax withholding obligation under any other stock option, stock appreciation right or other Award.
(g) Term. The term of an Option or Stock Appreciation Right granted under the Plan shall be determined by the Committee, in its sole discretion; provided however, that such term shall not exceed ten (10) years.
(h) Accelerated Expiration Date. Unless the Committee specifies otherwise in the applicable Award Agreement, an Option or Stock Appreciation Right granted under the Plan will expire upon the earliest to occur of the following:
(i) The original expiration date of the Option or Stock Appreciation Right;
(ii) Death. The one-year anniversary of the Participant’s death;
(iii) Disability. The one-year anniversary of the Participant’s termination of employment with the Company and all Related Companies due to Disability;
(iv) Termination of Employment. The date of the Participant’s termination of employment with the Company and all Related Companies for any reason other than death or Disability; provided, however, that if the Participant is terminated by the Company other than for Cause or unsatisfactory performance, then 60 days following the Participant’s termination of employment.
(i) Vesting.
(i) Generally. Options and Stock Appreciation Rights shall have a vesting period of not less than one year from the date of grant except with respect to the death, Disability, involuntary termination (other than for Cause or unsatisfactory performance) of a Participant, the occurrence of a Change in Control as outlined in Section 12 of this Plan, or as may be required or otherwise be deemed advisable by the Committee, whether in connection with an Award granted through the assumption of, or substitution for, outstanding awards previously granted by a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines or otherwise. The Committee shall, prior to or at the time of grant, condition the grant or vesting of an Award of Options or Stock Appreciation Rights upon such terms as outlined in the Award Agreement, which may include terms regarding Retirement.
(j) Method of Exercise and Payment.
(i) Generally. Subject to the provisions of this Section 8 and the terms of the applicable Award Agreement, Options and Stock Appreciation Rights may be exercised, in whole or in part, by giving written (including electronic) notice of exercise specifying the number of Shares as to which such Options or Stock Appreciation Rights are being exercised and paying, or making arrangements satisfactory to the Company for the payment of, all applicable taxes pursuant to Section 16(d).
(ii) In the case of the exercise of an Option, such notice shall be accompanied by payment in full of the exercise price by (A) certified or bank check (B) delivery of unrestricted Shares of the same class as the Shares subject to the Option already owned by the Participant (based on the Fair Market Value of the Shares on the date the Option is exercised), provided that the Shares have been held by the Participant for such period as may established by the Committee to comply with applicable law or (C) such other method as the Committee shall permit in its sole discretion (including a broker-assisted cashless exercise or netting of Shares).
(k) No Stockholder Rights. A Participant shall have no right to dividends or any other rights as a Stockholder with respect to Shares subject to an Option or Stock Appreciation Right until such Shares are issued to the Participant pursuant to the terms of the Award Agreement.
9. Restricted Stock
(a) Nature of Awards and Certificates. Shares of Restricted Stock are actual Shares that are issued to a Participant subject to forfeiture under certain circumstances and shall be evidenced in such manner as the Committee may deem appropriate, including book-entry registration.
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(b) Award Agreement. Each grant of Restricted Stock shall be evidenced by an Award Agreement that shall specify the Grant Date, the period of restriction, the number of shares of Restricted Stock, vesting schedule, and such other provisions as the Committee shall determine. The Committee may, prior to or at the time of grant, condition the grant or vesting of an Award of Restricted Stock upon (A) the continued service of the Participant, (B) the attainment of Performance Goals or (C) the attainment of Performance Goals and the continued service of the Participant. The conditions for grant or vesting and the other provisions of Restricted Stock Awards (including, without limitation, any applicable Performance Goals) need not be the same with respect to each Participant.
(c) Vesting.
(i) Generally. Shares of Restricted Stock shall have a vesting period of not less than one year from the date of grant except with respect to the death, Disability, involuntary termination (other than for Cause or unsatisfactory performance) of a Participant, the occurrence of a Change in Control as outlined in Section 12 of this Plan, or as may be required or otherwise be deemed advisable by the Committee, whether in connection with an Award granted through the assumption of, or substitution for, outstanding awards previously granted by a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines, or otherwise. The Committee shall, prior to or at the time of grant, condition the grant or vesting of an Award of Restricted Stock upon such terms as outlined in the Award Agreement, which may include terms regarding Retirement.
For purposes of an Award to a non-executive director that is granted as of the date of the annual meeting of stockholders, a vesting period shall be deemed to be one year if it runs from the date of one annual meeting of stockholders to the next annual meeting of stockholders provided that such next meetings are at least 50 weeks apart.
(ii) Accelerated Vesting. Unless the Committee specifies otherwise in the applicable Award Agreement, in the event of the death, Disability or involuntary termination (other than for Cause or unsatisfactory performance) of a Participant, a Change in Control as outlined in Section 12 of this Plan, or special circumstances determined by the Committee, an Award of Restricted Stock shall vest as of the termination of employment.
(d) Restricted Shares Non-Transferrable. Subject to the provisions of the Plan and the applicable Award Agreement, during the Restriction Period, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Shares of Restricted Stock.
(e) Rights of a Stockholder. Except as otherwise provided in this Section 9 or in the applicable Award Agreement, the Participant shall have, with respect to the Shares of Restricted Stock, all of the rights of a Stockholder of the Company holding the class or series of Shares that is the subject of the Restricted Stock, including, if applicable, voting and dividend rights.
(f) Dividends. Except as otherwise provided in the applicable Award Agreement, cash dividends with respect to the Restricted Stock will be currently paid to the Participant and, subject to Section 16(e) of the Plan, dividends payable in Shares shall be paid in the form of Restricted Stock of the same class as the Shares with which such dividend was paid, held subject to the vesting of the underlying Restricted Stock; provided, however, that no dividends shall be paid with respect to Restricted Stock that is subject to one or more Performance Goals unless and until the Committee has certified that the applicable Performance Goals for such award have been met. Dividends shall accrue at the same rate as cash dividends paid on the Shares and applied to the number of shares that vest. Such dividend equivalents shall be paid to the Participant in cash at the time the Shares are delivered. If any Shares of Restricted Stock are forfeited, the Participant shall have no right to future cash dividends with respect to such Restricted Stock, withheld stock dividends or earnings with respect to such Shares of Restricted Stock.
(g) Delivery of Shares. If and when any applicable Performance Goals are satisfied and/or the Restriction Period expires without a prior forfeiture of the Shares of Restricted Stock, unrestricted Shares shall be delivered to the Participant as soon as administratively practicable.
(h) Termination of Service. Except as otherwise provided in the applicable Award Agreement as provided in subsection (c)(ii) above, a Participant’s Shares of Restricted Stock shall be forfeited upon his or her Termination of Service.
10. Restricted Stock Units
(a) Nature of Awards. Restricted Stock Units represent a contractual obligation by the Company to deliver a number of Shares, an amount in cash or a combination of Shares and cash equal to the specified number of Shares subject to
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the Award, or the Fair Market Value thereof, in accordance with the terms and conditions set forth in the Plan and any applicable Award Agreement.
(b) Award Agreement. Each grant of Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the Grant Date, the period of restriction, the number of Restricted Stock Units, vesting schedule, and such other provisions as the Committee shall determine. The Committee may, prior to or at the time of grant, condition the grant or vesting of an Award of Restricted Stock Units upon (A) the continued service of the Participant, (B) the attainment of Performance Goals or (C) the attainment of Performance Goals and the continued service of the Participant. The conditions for grant or vesting and the other provisions of Restricted Stock Units (including, without limitation, any applicable Performance Goals) need not be the same with respect to each Participant.
(c) Vesting.
(i) Generally. Restricted Stock Units shall have a vesting period of not less than one year from the date of grant except with respect to the death, Disability, involuntary termination (other than for Cause or unsatisfactory performance) of a Participant, the occurrence of a Change of Control as outlined in Section 12 of this Plan, or as may be required or otherwise be deemed advisable by the Committee, whether in connection with an Award granted through the assumption of, or substitution for, outstanding awards previously granted by a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines or otherwise. The Committee shall, prior to or at the time of grant, condition the grant or vesting of an Award of Restricted Stock Units upon such terms as outlined in the Award Agreement, which may include terms regarding Retirement.
For purposes of an Award to a Non-Executive Director that is granted as of the date of the annual meeting of stockholders, a vesting period shall be deemed to be one year if it runs from the date of one annual meeting of stockholders to the next annual meeting of stockholders provided that such next meetings are at least 50 weeks apart.
(ii) Accelerated Vesting. Unless the Committee specifies otherwise in the applicable Award Agreement, in the event of the death, Disability or involuntary termination (other than for Cause or unsatisfactory performance) of a Participant, a Change in Control as outlined in Section 12 of this Plan, or special circumstances determined by the Committee, an Award of Restricted Stock Units shall vest as of the termination of employment.
(d) Dividend Equivalents. The Committee may, in its discretion, provide for current or deferred payments of cash, Shares or other property corresponding to the dividends payable on the Shares (subject to Section 16(e) below), as set forth in an applicable Award Agreement; provided, however, that no such dividend equivalents shall be paid with respect to Restricted Stock Units that are subject to one or more Performance Goals unless and until the Committee has certified that the applicable Performance Goals for such award have been met. Dividend equivalents shall accrue at the same rate as cash dividends paid on the Shares and applied to the number of Shares that vest. Such dividend equivalents shall be paid to the Participant in cash at the time the Shares are delivered. If a Participant’s Restricted Stock Units are forfeited, the Participant shall have no right to future dividend equivalents with respect to such Restricted Stock Units, withheld stock dividends or earnings with respect to such Restricted Stock Units.
(e) Termination of Service. Except as otherwise provided in the applicable Award Agreement or as provided in subsection (c)(ii) above, a Participant’s Restricted Stock Units shall be forfeited upon his or her Termination of Service.
(f) Payment. Except as otherwise provided in the applicable Award Agreement, Shares, cash or a combination of Shares and cash, as applicable, payable in settlement of Restricted Stock Units shall be delivered to the Participant as soon as administratively practicable after the date on which payment is due under the terms of an Award Agreement.
(g) No Stockholder Rights. Except as otherwise provided in the applicable Award Agreement, a Participant shall have no rights as a Stockholder with respect to Shares subject to Restricted Stock Units until such Shares are issued to the Participant pursuant to the terms of the Award Agreement.
11. Other Stock-Based Awards
Other Stock-Based Awards may be granted under the Plan; provided, that any Other Stock-Based Awards that are Awards of Shares that are unrestricted or with a minimum vesting schedule of less than one year shall only be granted in lieu of other compensation due and payable to the Participant. Notwithstanding the foregoing, no more than 5% of the Shares authorized to grant under Section 6 may be granted with a minimum vesting schedule of less than one year.
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12. Change in Control Provisions
The provisions of this Section 12 shall apply in the case of a Change in Control, unless otherwise provided in the applicable Award Agreement or any other provision of the Plan.
(a) Awards Not Assumed, Etc. in Connection with Change in Control. Upon the occurrence of a transaction that constitutes a Change in Control, if any Awards are not assumed, converted or otherwise equitably converted or substituted in a manner approved by the Committee, then such Awards shall vest immediately at 100 percent before the Change in Control.
(b) Awards Assumed, Etc. in Connection with Change in Control. Upon the occurrence of a transaction that constitutes a Change in Control, with respect to any Awards that are assumed, converted or otherwise equitably converted or substituted in a manner approved by the Committee, then, in the event of a Participant’s Termination of Service during the twenty-four (24) month period following such Change in Control, (x) by the Company other than for Cause or unsatisfactory performance, or (y) by the Participant for Good Reason:
(i) each outstanding Award shall be deemed to satisfy any applicable Performance Goals at 100 percent as set forth in the applicable Award Agreement;
(ii) any Options and Stock Appreciation Rights outstanding which are not then exercisable and vested shall become fully exercisable and vested. Any such Option or Stock Appreciation Right held by the Participant as of the date of the Change in Control that remain outstanding as of the date of such Termination of Service may thereafter be exercised until the earlier of the third anniversary of such Change in Control and the last date on which such Option or Stock Appreciation Right would have been exercisable in the absence of this Section 12(b) (ii) (taking into account the applicable terms of any Award Agreement);
(iii) the restrictions and deferral limitations applicable to any Shares of Restricted Stock shall lapse and such Shares of Restricted Stock shall become free of all restrictions and become fully vested and transferable;
(iv) all Restricted Stock Units shall be considered to be earned and payable in full, and any deferral or other restriction shall lapse, and any Restriction Period shall terminate, and such Restricted Stock Units shall be settled in cash or Shares (consistent with the terms of the Award Agreement after taking into account the effect of the Change in Control transaction on the Shares) as promptly as is practicable; and
(v) subject to Section 14, the Committee may also make additional adjustments and/or settlements of outstanding Awards as it deems appropriate and consistent with the Plan’s purposes.
(c) 409A Matters. Notwithstanding the foregoing, if any Award to a Participant who is subject to U.S. income tax is considered a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, this Section 12 shall apply to such Award only to the extent that its application would not result in the imposition of any tax or interest or the inclusion of any amount in income under Section 409A of the Code.
(d) Other. In the event of a Change in Control, the Committee may in its discretion and upon at least ten (10) days’ advance notice to the affected Participants, cancel any outstanding Awards and pay to the holders thereof, in cash or Shares, or any combination thereof, the value of such Awards based upon the price per Share received or to be received by other Stockholders of the Company as a result of the Change in Control.
13. Section 16(b); Section 409A
(a) Section 16(b). The provisions of the Plan are intended to ensure that transactions under the Plan are not subject to (or are exempt from) the short-swing recovery rules of Section 16(b) of the Exchange Act and shall be construed and interpreted in a manner so as to comply with such rules.
Notwithstanding any other provision of the Plan to the contrary, if for any reason the appointed Committee does not meet the requirements of Rule 16b-3 of the Exchange Act, such noncompliance with the requirements of Rule 16b-3 of the Exchange Act shall not affect the validity of Awards, grants, interpretations or other actions of the Committee.
(c) Section 409A. It is the intention of the Company that any Award to a Participant who is subject to U.S. income tax that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code shall comply in all respects with the requirements of Section 409A of the Code to avoid the imposition of any tax or interest or the inclusion of any amount in income thereunder, and the terms of each such Award shall be interpreted, administered and deemed amended, if applicable, in a manner consistent with this intention. Notwithstanding the foregoing, neither the Company, a Participating Company, nor any of its Affiliates nor any of its or their directors,
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officers, employees, agents or other service providers will be liable for any taxes, penalties or interest imposed on any Participant, Beneficiary or other person with respect to any amounts paid or payable (whether in cash, Shares or other property) under any Award, including any taxes, penalties or interest imposed under or as a result of Section 409A of the Code. Notwithstanding any other provision of the Plan to the contrary, with respect to any Award to any Participant who is subject to U.S. income tax that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code:
(i) any payments (whether in cash, Shares or other property) to be made with respect to the Award upon the Participant’s Termination of Service that would otherwise be paid within six months after the Participant’s Termination of Service shall be accumulated (without interest, to the extent applicable) and paid on the first day of the seventh month following the Participant’s Termination of Service if the Participant is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the uniform policy adopted by the Committee with respect to all of the arrangements subject to Section 409A of the Code maintained by the Company, a Participating Company and any Affiliates);
(ii) each payment made under the Plan shall be treated as a separate payment and the right to a series of installment payments under the Plan is to be treated as a right to a series of separate payments; and
(ii) unless otherwise determined by Committee, any payment to be made with respect to an Award of Restricted Stock Units shall be delivered no later than 60 days after the date on which payment is due under the Award or as otherwise permitted under Treasury Regulations section 1.409A-3(g) for any portion of the payment subject to a dispute.
14. Amendment and Discontinuance
(a) Amendment and Discontinuance of the Plan. The Board or the Committee may amend, alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would materially impair the rights of a Participant with respect to a previously granted Award without such Participant’s consent, except such an amendment made to comply with applicable law or Applicable Exchange rule or to prevent adverse tax or accounting consequences to the Company or Participants.
(b) Amendment of Awards. Subject to Section 8(d), the Committee may unilaterally amend the terms of any Award theretofore granted, but no such amendment shall materially impair the rights of any Participant with respect to an Award without the Participant’s consent, except such an amendment made to cause the Plan or Award to comply with applicable law, Applicable Exchange rule or to prevent adverse tax or accounting consequences for the Participant or the Company, a Participating Company, or any Affiliates.
15. Unfunded Status of Plan
It is currently intended that the Plan constitute an “unfunded” plan. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Shares or make payments; provided, however, that unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan.
16. General Provisions
(a) Conditions for Issuance. The Committee may require each person purchasing or receiving Shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to the distribution thereof. The certificates or book entry for such Shares may include any legend or appropriate notation that the Committee deems appropriate to reflect any restrictions on transfer, and the Committee may take such other steps as it deems necessary or desirable to restrict the transfer of Shares issuable under the Plan to comply with applicable law or Applicable Exchange rules. Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the Company shall not be required to issue or deliver Shares under the Plan unless such issuance or delivery complies with all applicable laws, rules and regulations, including the requirements of any Applicable Exchange or similar entity and the Company has obtained any consent, approval or permit from any federal, state or foreign governmental authority that the Committee determines to be necessary or advisable.
(b) Additional Compensation Arrangements. Nothing contained in the Plan shall prevent the Company, Participating Company, or any Affiliate from adopting other or additional compensation arrangements for its employees.
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(c) No Contract of Employment. Neither the Plan nor any Award Agreement shall constitute a contract of employment, and neither the adoption of the Plan nor the granting of any Award shall confer upon any employee any right to continued employment. Neither the Plan nor any Award Agreement shall interfere in any way with the right of the Company, a Participating Company, or any Affiliate to terminate the employment of any employee at any time.
(d) Required Taxes; No Tax Gross Ups. No later than the date as of which an amount first becomes includible in the gross income of a Participant for federal, state, local or foreign income or employment or other tax purposes with respect to any Award under the Plan, such Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Company, withholding obligations may be settled with Shares, including Shares that are part of the Award that gives rise to the withholding requirement, having a Fair Market Value on the date of withholding equal to the rate required to be withheld for tax purposes under applicable law, all in accordance with such procedures as the Committee establishes. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company, Participating Company, and any Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to such Participant. The Committee may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of withholding obligations with Shares. Regardless of any arrangements made by the Company, Participating Company, any Affiliate or the Committee with respect to the withholding or other payment of any federal, state, local or foreign taxes of any kind, the liability for all such taxes legally due from a Participant remains the responsibility of the Participant. By accepting an Award, a Participant consents to the methods of tax withholding established by the Committee or otherwise made or arranged by the Company.
(e) Limitation on Dividend Reinvestment and Dividend Equivalents. Reinvestment of dividends in additional Restricted Stock at the time of any dividend payment, and the payment of Shares with respect to dividend equivalents to Participants holding Awards of Restricted Stock Units, shall only be permissible if sufficient Shares are available under Section 6 for such reinvestment or payment (taking into account then outstanding Awards). In the event that sufficient Shares are not available for such reinvestment or payment, then in the Committee’s discretion such payment shall be made in cash.
(f) Rights of a Beneficiary. Any amounts payable and any rights exercisable under an Award after a Participant’s death shall be paid to and exercised by the Participant’s Beneficiary, except to the extent prohibited by applicable law, Applicable Exchange rule or the terms of an applicable Award Agreement.
(g) Affiliate Employees. In the case of a forfeiture or cancellation of an Award to an employee of any Affiliate, all Shares underlying such Awards shall revert to the Company.
(h) Governing Law and Interpretation. The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Georgia, without reference to principles of conflict of laws. The captions of the Plan are not part of the provisions hereof and shall have no force or effect.
(i) Non-Transferability. Awards under the Plan cannot be sold, assigned, transferred, pledged or otherwise encumbered other than by will or the laws of descent and distribution, except as provided in Section 6(e).
(j) Foreign Employees and Foreign Law Considerations. The Committee may grant Awards to Eligible Individuals who are foreign nationals, who are employed outside the United States or who are not compensated from a payroll maintained in the United States, or who are otherwise subject to (or could cause the Company to be subject to) tax, legal or regulatory provisions of countries or jurisdictions outside the United States, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan. Notwithstanding any other provision of the Plan, Awards to Participants who are employed and/or otherwise subject to the laws of a jurisdiction outside of the United States shall be subject to such terms and conditions as the Committee shall establish and set forth in an applicable Award Agreement, including any addendum thereto and the Committee may adopt such procedures, subplans and forms of Award Agreement as it determines to be necessary or appropriate to facilitated Plan administration with respect to Participants performing services in such jurisdictions.
(k) Use of English Language. The Plan, each Award Agreement, and all other documents, notices and legal proceedings entered into, given or instituted pursuant to an Award shall be written in English, unless otherwise determined by the Committee. If a Participant receives an Award Agreement, a copy of the Plan or any other documents related to an Award translated into a language other than English, and if the meaning of the translated version is different from the English version, the English version shall control.
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(l) Recovery of Amounts Paid. All Awards granted under the Plan, and any proceeds received therefrom, shall be subject to forfeiture and/or repayment to the Company under the terms of each compensation recovery or recoupment policy adopted by the Company, including but not limited to the Invesco Mortgage Capital Inc. Policy for Recoupment of Incentive Compensation. The Committee may apply each policy to Awards granted before such policy is adopted to the extent required by applicable law or Applicable Exchange rule or as otherwise provided by such policy.
(m) Notices. A notice or other communication to the Committee shall be valid only if given in the form and to the location specified by the Committee.
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invescomortgagecapital.com IVRPROXY-BRO-1 03/2324
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qYour vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 11:59 pm, (Eastern Time), on May 6, 2024 Online Go to www.envisionreports.com/IVR or scan the QR code — login details are located in the shaded bar below. PhoneCall toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/IVR Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2024 Annual Meeting Proxy Card IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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Proposals — The Board of Directors recommend a vote FOR all nominees & FOR Proposals 2, 3 and 4. 1. Election of Directors: 01—John S. Day 04—Katharine W. Kelley 07—Beth A. Zayicek For Against Abstain 02—Carolyn L. Gibbs 05—Don H. Liu For Against Abstain 03—Carolyn B. Handlon 06—Dennis P. Lockhart For Against Abstain 2. Advisory vote to approve the Company’s 2023 executive compensation 4. Appointment of PricewaterhouseCoopers as the Company’s independent registered public accounting firm for 2024 For Against Abstain 3. Approval of the amended and restated Invesco Mortgage Capital Inc. 2009 Equity Incentive Plan For Against Abstain Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
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03RURC Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
2024 Annual Meeting Admission Ticket 2024 Annual Meeting of Invesco Mortgage Capital Inc. Company Stockholders May, 7, 2024, 2:00pm ET Kimpton Shane Hotel 1340 W Peachtree St NW, Atlanta, Georgia 30309 Upon arrival, please present this admission ticket and photo identification at the registration desk. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders.
The material is available at: www.envisionreports.com/IVR
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Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/IVR | ||||
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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Invesco Mortgage Capital Inc. Notice of 20232024 Annual Meeting of Stockholders
Proxy Solicited by Board of Directors for Annual Meeting –— May 8, 2023
7, 2024 The undersigned hereby appoints Edward J. Hardin,John S. Day, John M. Anzalone, Kevin M. Collins, R. Lee Phegley, Jr. and Tina Carew, and each of them, with power to act without the others and with power of substitution, as proxies and attorneys-in-fact, and hereby authorizes them to represent and vote, as provided on the other side, all the common stock of Invesco Mortgage Capital Inc. which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the 20232024 Annual Meeting of Stockholders, or at any adjournment or postponement thereof, of Invesco Mortgage Capital Inc., to be held at Kimpton Shane Hotel located at 1340 W Peachtree Street NW, Atlanta, Georgia 30309, with all powers which the undersigned would possess if present at the meeting.
Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR the election of the Board of Directors & FOR items 2, 3 and 4 and for 1 YEAR for item 3.
4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items (Items to be voted appear on reverse side)Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below.
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FOR
