DEF 14A of Invesco Mortgage Capital Inc.
Filed Mar 24, 20250001193125-25-061380
Statement
Statement Notice of 2025 Annual Meeting of Stockholders
Statement
| | | Your vote is important: Please vote by using the Internet, the telephone or by signing, dating and returning a proxy card |
Statement
| John S. Day has served as Chair since 2023 and as a non-executive director since 2009 | A letter to our stockholders from the Chair of our Board of Directors Dear 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 Mortgage investors continued to face a number of headwinds in 2024, as evolving market expectations for fiscal and monetary policy resulted in elevated volatility and sharply higher interest rates. Despite this environment, Agency residential mortgage-backed securities produced modestly positive performance during the year, allowing us to maintain a consistent dividend while producing a positive economic return of 5.2%. We made strides in balancing our capital structure by issuing 13.2 million shares of our common stock through our at-the-market program, generating net proceeds of $116.2 million. In addition, we reduced our preferred shares by repurchasing 477 thousand shares of preferred stock throughout the year before redeeming the remaining 4.2 million shares of our Series B preferred stock when they became callable in December. These actions decreased the relative percentage of our preferred stock from 37% of our capital structure at December 31, 2023, to 24% at December 31, 2024. While management remains cautious on mortgage valuations in the near-term, our long-term outlook for Agency RMBS is favorable. We believe that attractive valuations, an eventual decline in interest rate volatility, and a steeper yield curve will support an attractive investment environment for Agency RMBS in 2025. A Farewell and our Continued Approach to Director Recruitment We end by saying goodbye to Dennis Lockhart, who has served as a director since 2017. He has provided excellent guidance and counsel to our Board and management team during a challenging and difficult-to-predict interest rate environment. Dennis provided invaluable experience and insights to us based on his experience as President and CEO of the Federal Reserve Bank of Atlanta, and he will be missed. We made two excellent additions to the board this year. Wes McMullan joined the Board in June 2024 having served a 33-year career at the FHLBank Atlanta where he had been CEO for 11 years, bringing financial and capital market, mortgage-related asset and executive leadership skills to our board. Rob Fleshman joined our Board in November 2024 following a 40-year career in public accounting, recently retired as an audit partner at Deloitte & Touche LLP. He served as an engagement partner on a diverse group of clients primarily in the real estate and financial services industries and held several leadership positions in the firm’s audit and real estate practice. We are proud that we continue to have a majority of diverse directors. We encourage you to review the qualifications, skills and experience that we have identified as important attributes for directors of our company. Regards, John S. Day Chair and Non-Executive Director |
Information about Director nominees
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 2025
Director nominees for 2025
Director nominees for 2025
| John S. Day Chair, Non-executive director Age Tenure 76 16 Years 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 Chair of the board since May 2023, having previously served as Chair of the Audit Committee from 2009-2023. Mr. Day was previously with Deloitte & Touche LLP from 2002 until his retirement in 2005. Prior to joining Deloitte & Touche LLP, Mr. Day was with Arthur Andersen LLP from 1976 to 2002. Mr. Day received a B.A. degree from the University of North Carolina and an M.B.A. from Harvard Business School. 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. |
Director nominees for 2025
| Robert L. Fleshman Non-executive director Age Tenure 63 <1 Year Qualifications: • Financial Services/Capital Markets • Mortgage Industry/MBS • Executive Leadership • Risk Management • Accounting and Financial Reporting • Technical–Government, legal and regulatory | Robert L. Fleshman Robert L. Fleshman was appointed as a director on November 8, 2024. Mr. Fleshman served as a Partner at Deloitte & Touche LLP from 2002-June 2024, leading and advising on complex audit engagements across diverse sectors, particularly in real estate and financial services. During his tenure at Deloitte, he served for six years as the Real Estate Practice Leader for Deloitte’s Southeastern Real Estate Practice and for seven years as the Audit Practice Leader for Deloitte’s Georgia and Alabama operation. Prior to joining Deloitte, Mr. Fleshman was a Partner at Arthur Andersen LLP. Mr. Fleshman is a member of NAREIT and a former Deloitte representative on the Best Financial Practices Committee. He holds a B.S. in Accounting from Virginia Tech and is a Certified Public Accountant (CPA). Director qualifications • Accounting and financial reporting expertise: Mr. Fleshman brings extensive experience in finance and accounting in the REIT and financial services space, serving in leadership positions in Deloitte’s real estate practice and audit practice. His experience as lead audit partner for operating and mortgage REITs will contribute significantly to the company’s Audit Committee. Mr. Fleshman is recognized by the Board as an audit committee financial expert under SEC rules. |
Director nominees for 2025
| Carolyn L. Gibbs Executive Director Age Tenure 63 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 Global Thought Leadership, Proxy Voting, Global Sustainable Investing Services and the Global Investors’ Forum, an initiative for Invesco’s multiple investment teams. 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 CFA charter holder. 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. |
Director nominees for 2025
| Carolyn B. Handlon Non-executive director Age Tenure 67 8 Years 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 from 2018-2023. 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 Tech 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, 2023 and is a member of APLE’s Audit and Nominating/Governance Committees. She is a member of the Economic Club of Washington, National Association of Corporate Directors and Women Corporate Directors. |
Director nominees for 2025
| Katharine W. Kelley Non-executive director Age Tenure 61 2 years Committees: • Audit • Compensation • Nomination and Corporate Governance Qualifications: • Mortgage Industry/MBS • Executive Leadership • Risk Management • Corporate Governance | Katharine W. Kelley Katharine W. Kelley is Owner and President of Green Street Properties, an Atlanta-based real estate development and consulting firm focused on creating urban infill, mixed-use properties. From 2016-2018, Ms. Kelley served as Executive Vice President-Development for Newport, an international private equity and real estate development firm. Prior to that, she served as Managing Director at Jamestown, an international real estate private equity firm, and Senior Vice President-Development at Post Apartment Development, a multifamily and mixed-use real estate development firm. Ms. Kelley received a Bachelor of Arts degree from the University of North Carolina at Chapel Hill, a Master of Science degree in Real Estate Development from Columbia University, and a Master of Business Administration from Harvard University. Director qualifications • Corporate governance, mortgage industry and executive leadership: Ms. Kelley has over 30 years of experience in urban infill, mixed-use and residential development, leading the development of more than $2 billion of properties while serving in senior positions, contributing multifamily residential and commercial real estate expertise to our board. She is nationally recognized for creative, catalytic development, product innovation and leadership of mixed-use projects. Ms. Kelley has served as a member of the Governance and Nominating Committee of The Westminster Schools since 2013, serving as its chair from 2013 through 2021. Ms. Kelley’s real estate industry and executive leadership experience provide valuable insights to the Board. If elected, Ms. Kelley will serve as Chair of our Compensation Committee. |
Director nominees for 2025
| Don H. Liu Non-executive director Age Tenure 63 3 Years 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 2022 and as Chair of the Nomination and Corporate Governance Committee since 2023. Mr. Liu served as the Executive Vice President, Chief Legal and Compliance Officer and Corporate Secretary of Target Corporation (“Target”) from 2016 through August 2024 and has been a Special Advisor to Target since August 2024. Prior to joining Target in 2016, Mr. Liu served in diverse leadership roles working across multiple business sectors and functional areas at Xerox as Executive Vice President, General Counsel and Corporate Secretary; Toll Brothers as Senior Vice President, General Counsel and Chief Compliance Officer; IKON Office Solutions as Corporate Compliance Officer and Chair of IKON Diversity Council; and Aetna U.S. Healthcare as Deputy Chief Legal Officer. Prior to becoming in-house counsel, he served as an associate at two New York City law firms specializing in securities and mergers and acquisitions. Mr. Liu received his B.A. degree from Haverford College and earned his J.D. from Columbia University School of Law. Director qualifications • Corporate governance, executive leadership and technical expertise: Mr. Liu served on the Executive Leadership Team at Target and was accountable for all of Target’s legal, compliance, ethics and corporate security functions. Throughout his career, he has advised his board of directors on global strategic matters such as mergers and acquisitions, business development and risk management. He has been a consistent key player in the development of Diversity, Equity and Inclusion and Environmental, Social and Governance (“ESG”) strategies and governance protocols for his companies, including the establishment and becoming the first chair of the IKON Diversity Council and the formation of the Target board’s ESG and related governance framework. Mr. Liu’s depth and breadth of corporate governance, board and executive experience uniquely qualify him to provide guidance to our company. |
Director nominees for 2025
| Wes McMullan Non-executive director Age Tenure 61 <1 Years Qualifications: • Financial Services/Capital Markets • Mortgage Industry/MBS • Executive Leadership • Risk Management • Corporate Governance • Accounting and Financial Reporting • Technical–Government, legal and regulatory | W. Wesley (“Wes”) McMullan Wes McMullan was appointed as a director on June 24, 2024. Mr. McMullan served as the President and CEO of the Federal Home Loan Bank of Atlanta (“FHLBank Atlanta”), a government-sponsored enterprise, from 2010 until his retirement in 2021, concluding a 33-year career at the FHLBank Atlanta in significant leadership capacities. His expertise encompasses a broad range of financial disciplines, including banking, MBS and mortgage-related assets, SEC regulatory compliance, asset and liability management, portfolio management, derivatives, and financial operations/systems integration. Mr. McMullan has served on the board of directors of TCB Corporation and Countybank since 2022, with previous board service as Vice Chair of FHLBank’s Office of Finance and Vice Chair of Pentegra, Inc. Mr. McMullan is a chartered financial analyst and earned a B.S. in finance from Clemson University. Director qualifications • Executive leadership, financial services/capital markets and mortgage industry/MBS experience: Mr. McMullan’s experience trading and managing mortgage-backed securities and mortgage-related assets and the related risk management and hedging strategies during various economic cycles, as well as his experience as CEO of a government sponsored enterprise, will bring significant contributions, oversight and perspectives to the Company’s board and its current strategic focus and core portfolio. |
Information about the Board and its committees
Information about the Board and its committees
Director compensation
Director compensation 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:
Director compensation
| • | that the compensation should fairly pay the directors for the work, time commitment and efforts required by directors of an organization of the company’s size and scope of business activities, including service on Board committees; |
Director compensation
| • | that a component of the compensation should be designed to align the directors’ interests with the long-term interests of the company’s stockholders; and |
Director compensation
| • | that directors’ independence may be compromised or impaired for Board or committee purposes if director compensation exceeds customary levels. |
Director compensation
As a part of its annual review, the Compensation Committee engaged Ferguson Partners Consulting L.P. as its independent third-party consultant to report on comparable non-executive director compensation practices and levels. Their 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 2024 service period is set forth below.
Director compensation
| Base fee | The annual base fee was set at $95,000 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 on the one year anniversary of the date of grant. | | 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. |
Director compensation
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 2024, the Compensation Committee approved an increase in the base fee from $95,000 to $105,000 per year, and an increase in the annual equity award from $95,000 to $105,000, for the 2025 service period. In addition, the Chair fee was increased to $50,000. There were no other changes to the non-executive director compensation for the 2025 service period. Stock ownership policy for non-executive directors — Our non-executive directors are subject to the Non-Executive Director Stock Ownership Policy. The policy requires that within five years of the later of the effective date of the policy or the date of such director’s first appointment as a non-executive director, each non-executive director achieve and thereafter maintain an ownership level of at least the lesser of (i) a number of shares equal to the fair market value of three times the annual cash retainer paid to the non-executive director or (ii) 8,000 shares. Until such ownership level is achieved, each non-executive director is required to hold 100% of the shares received as compensation from the company.
Non-executive director stock ownership
| Director compensation table | | | | | The following table sets forth the compensation paid to our non-executive directors during 2024. | | | | | Name | Fees earned or paid in cash ($)(1) | Share awards ($)(2) | Total ($) | | John S. Day | 137,500 | 94,997 | 232,497 | | Robert L. Fleshman | – | 45,666 | 45,666 | | Carolyn B. Handlon | 112,500 | 94,997 | 207,497 | | Katharine W. Kelley | 92,500 | 94,997 | 187,497 | | Don H. Liu | 102,500 | 94,997 | 197,497 | | Dennis P. Lockhart | 102,500 | 94,997 | 197,497 | | W. Wesley McMullen | 25,577 | 82,203 | 107,780 |