|
ITEM 4.
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PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
Pursuant to PCAOB Rule 3526, PricewaterhouseCoopers LLC (“PwC”) advised the Registrant’s Audit Committee of the following matters identified
between March 1, 2020 to April 28, 2021 that may be reasonably thought to bear on PwC’s independence. PwC advised the Audit Committee that one PwC Manager and one PwC Associate each held financial interests either directly or, in the
case of the PwC Manager, indirectly through their spouse’s brokerage account, in investment companies within the Invesco Fund Complex that were inconsistent with the requirements of Rule 2-01(c)(1) of
Regulation S-X. In reporting the matters to the Audit Committee, PwC noted, among other things, that the impermissible holdings were disposed of by the individuals, the individuals were not in the chain of
command of the audit or the audit partners of the Funds, the individuals either did not provide any audit services (or in the case of the PwC Associate, the individual did not have decision-making responsibility for matters that materially affected
the audit and their audit work was reviewed by team members at least two levels higher than the individual), or did not provide services of any kind to the Registrant or its affiliates, and the financial interests were not material to the net worth
of each individual or their respective immediate family members and senior leadership of the Funds’ audit engagement team was unaware of the impermissible holdings until after the matters were confirmed to be independence exceptions or
individuals ceased providing services. Based on the mitigating factors noted above, PwC advised the Audit Committee that it concluded that its objectivity and impartiality with respect to all issues encompassed within the audit engagement has not
been impaired and it believes that a reasonable investor with knowledge of all relevant facts and circumstances for the violations would conclude PwC is capable of exercising objective and impartial judgment on all issues encompassed within the
audits of the financial statements of the Funds in the Registrant for the impacted periods.
(a) to (d)
Fees Billed by PwC Related to the Registrant
PwC billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as shown in the following table.
The Audit Committee pre-approved all audit and non-audit services provided to the Registrant.
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|
|
|
|
|
|
|
|
|
|
|
|
Fees Billed for
Services Rendered
to the Registrant
for fiscal year end
2021
|
|
|
Fees Billed for
Services Rendered
to the Registrant
for fiscal year end
2020
|
|
|
Audit Fees
|
|
$
|
60,175
|
|
|
$
|
69,940
|
|
|
Audit-Related Fees
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Tax Fees(1)
|
|
$
|
14,398
|
|
|
$
|
24,077
|
|
|
All Other Fees
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
74,573
|
|
|
$
|
94,017
|
|
|
(1)
|
Tax Fees for the fiscal years ended February 28, 2021 and February 29, 2020 includes fees billed for
preparation of U.S. Tax Returns and Taxable Income calculations, including excise tax and year-to-date estimates for various book-to-tax differences.
|
Fees Billed by PwC Related to Invesco and Invesco Affiliates
PwC billed Invesco Advisers, Inc. (“Invesco”), the Registrant’s adviser, and any entity controlling, controlled by or
under common control with Invesco that provides ongoing services to the Registrant (“Invesco Affiliates”) aggregate fees for pre-approved non-audit services
rendered to Invesco and Invesco Affiliates for the last two fiscal years as shown in the following table. The Audit Committee pre-approved all non-audit services
provided to Invesco and Invesco Affiliates that were required to be pre-approved.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Billed for Non-
Audit Services
Rendered to Invesco
and Invesco
Affiliates for
fiscal
year end 2021 That
Were Required
to be Pre-Approved
by the Registrant’s
Audit Committee
|
|
|
Fees Billed for Non-
Audit Services
Rendered to
Invesco
and Invesco Affiliates
for fiscal year end 2020
That Were Required
to be Pre-Approved
by the Registrant’s
Audit Committee
|
|
|
Audit-Related Fees(1)
|
|
$
|
701,000
|
|
|
$
|
690,000
|
|
|
Tax Fees
|
|
$
|
0
|
|
|
$
|
0
|
|
|
All Other Fees
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
701,000
|
|
|
$
|
690,000
|
|
|
(1)
|
Audit-Related Fees for the fiscal years ended 2021 and 2020 include fees billed related to reviewing controls
at a service organization.
|
(e)(1)
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As
adopted by the Audit Committees
of the Invesco Funds (the “Funds”)
Last Amended March 29, 2017
|
|
I.
|
Statement of Principles
|
The Audit Committees (the “Audit Committee”) of the Boards of Trustees of the Funds (the “Board”) have adopted these policies and
procedures (the “Procedures”) with respect to the pre-approval of audit and non-audit services to be provided by the Funds’ independent auditor (the
“Auditor”) to the Funds, and to the Funds’ investment adviser(s) and any entity controlling, controlled by, or under common control with the investment adviser(s) that provides ongoing services to the Funds (collectively,
“Service Affiliates”).
Under Section 202 of the Sarbanes-Oxley Act of 2002, all audit and
non-audit services provided to the Funds by the Auditor must be preapproved by the Audit Committee. Rule 2-01 of Regulation S-X
requires that the Audit Committee also pre-approve a Service Affiliate’s engagement of the Auditor for non-audit services if the engagement relates directly to the
operations and financial reporting of the Funds (a “Service Affiliate’s Covered Engagement”).
These Procedures set forth the procedures
and the conditions pursuant to which the Audit Committee may pre-approve audit and non-audit services for the Funds and a Service Affiliate’s Covered Engagement
pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) and other organizations and regulatory bodies applicable to the Funds (“Applicable Rules”).1
They address both general pre-approvals without consideration of specific case-by-case services (“general
pre-approvals”) and pre-approvals on a case-by-case basis (“specific pre-approvals”). Any services requiring
pre-approval that are not within the scope of general pre-approvals hereunder are subject to specific pre-approval. These
Procedures also address the delegation by the Audit Committee of pre-approval authority to the Audit Committee Chair or Vice Chair.
|
|
II.
|
Pre-Approval of Fund Audit Services
|
The annual Fund audit services engagement, including terms and fees, is subject to specific pre-approval by the Audit
Committee. Audit services include the annual financial statement audit and other procedures required to be performed by an independent auditor to be able to form an opinion on the Funds’ financial statements. The Audit Committee will receive,
review and consider sufficient information concerning a proposed Fund audit engagement to make a reasonable evaluation of the Auditor’s qualifications and independence. The Audit Committee will oversee the Fund audit services engagement as
necessary, including approving any changes in terms, audit scope, conditions and fees.
In addition to approving the Fund audit services engagement at
least annually and specifically approving any changes, the Audit Committee may generally or specifically pre-approve engagements for other audit services, which are those services that only an independent
auditor reasonably can provide. Other audit services may include services associated with SEC registration statements, periodic reports and other documents filed with the SEC.
|
1
|
Applicable Rules include, for example, New York Stock Exchange (“NYSE”) rules applicable to closed-end funds managed by Invesco and listed on NYSE.
|
|
|
III.
|
General and Specific Pre-Approval of
Non-Audit Fund Services
|
The Audit Committee will consider, at least annually, the list of
General Pre-Approved Non-Audit Services which list may be terminated or modified at any time by the Audit Committee. To inform the Audit Committee’s review and
approval of General Pre-Approved Non-Audit Services, the Funds’ Treasurer (or his or her designee) and Auditor shall provide such information regarding independence
or other matters as the Audit Committee may request.
Any services or fee ranges that are not within the scope of General
Pre-Approved Non-Audit Services have not received general pre-approval and require specific
pre-approval. Each request for specific pre-approval by the Audit Committee for services to be provided by the Auditor to the Funds must be submitted to the Audit
Committee by the Funds’ Treasurer (or his or her designee) and must include detailed information about the services to be provided, the fees or fee ranges to be charged, and other relevant information sufficient to allow the Audit Committee to
consider whether to pre-approve such engagement, including evaluating whether the provision of such services will impair the independence of the Auditor and is otherwise consistent with Applicable Rules.
|
|
IV.
|
Non-Audit Service Types
|
The Audit Committee may provide either general or specific pre-approval of audit-related, tax or other services, each
as described in more detail below.
|
|
a.
|
Audit-Related Services
|
“Audit-related services” are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s
financial statements or that are traditionally performed by an independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit
services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; services related to mergers, acquisitions or dispositions; compliance with ratings agency requirements and
interfund lending activities; and assistance with internal control reporting requirements.
“Tax services” include, but are not limited to, the review and signing of the Funds’ federal tax returns, the review of required distributions
by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committee will not approve proposed services of the Auditor which the Audit Committee believes are to be
provided in connection with a service or transaction initially recommended by the Auditor, the sole business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related
regulations. The Audit Committee will consult with the Funds’ Treasurer (or his or her designee) and may consult with outside counsel or advisers as necessary to ensure the consistency of tax services rendered by the Auditor with the foregoing
policy. The Auditor shall not represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims.
Each request to
provide tax services under either the general or specific pre-approval of the Audit Committee will include a description from the Auditor in writing of (i) the scope of the service, the fee structure for
the engagement, and any side letter or other amendment to the engagement letter, or any other agreement (whether oral, written, or otherwise) between the Auditor and the Funds, relating to the service; and (ii) any compensation arrangement or
other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the Auditor (or an affiliate of the Auditor) and any person (other than the Funds or Service Affiliates
receiving the services) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will also discuss with the Audit
Committee the potential effects of the services on the independence of the Auditor and document the substance of its discussion with the Audit Committee.
The Audit Committee may pre-approve other non-audit services so long as the Audit Committee believes that the service
will not impair the independence of the Auditor. Appendix I includes a list of services that the Auditor is prohibited from performing by the SEC rules. Appendix I also includes a list of services that would impair the Auditor’s
independence unless the Audit Committee reasonably concludes that the results of the services will not be subject to audit procedures during an audit of the Funds’ financial statements.
|
|
V.
|
Pre-Approval of Service Affiliate’s Covered Engagements
|
Pre-approved fee levels or ranges for audit and
non-audit services to be provided by the Auditor to the Funds, and for a Service Affiliate’s Covered Engagement, under general pre-approval or specific pre-approval will be set periodically by the Audit Committee. Any proposed fees exceeding 110% of the maximum pre-approved fee levels or ranges for such services or
engagements will be promptly presented to the Audit Committee and will require specific pre-approval by the Audit Committee before payment of any additional fees is made.
The Audit Committee hereby delegates, subject to the dollar limitations set forth below, specific authority to its Chair, or in his or her absence, Vice Chair,
to pre-approve audit and non-audit services proposed to be provided by the Auditor to the Funds and/or a Service Affiliate’s Covered Engagement, between Audit
Committee meetings. Such delegation does not preclude the Chair or Vice Chair from declining, on a case by case basis, to exercise his or her delegated authority and instead convening the Audit Committee to consider and pre-approve any proposed services or engagements.
Notwithstanding the foregoing, the Audit Committee must pre-approve: (a) any non-audit services to be provided to the Funds for which the fees are estimated to exceed $500,000; (b) any Service Affiliate’s Covered
Engagement for which the fees are estimated to exceed $500,000; or (c) any cost increase to any previously approved service or engagement that exceeds the greater of $250,000 or 50% of the previously approved fees up to a maximum increase of
$500,000.
|
|
VII.
|
Compliance with Procedures
|
Notwithstanding anything herein to the contrary, failure to pre-approve any services or engagements that are not
required to be pre-approved pursuant to the de minimis exception provided for in Rule 2-01(c)(7)(i)(C) of Regulation S-X shall
not constitute a violation of these Procedures. The Audit Committee has designated the Funds’ Treasurer to ensure services and engagements are pre-approved in compliance with these Procedures. The
Funds’ Treasurer will immediately report to the Chair of the Audit Committee, or the Vice Chair in his or her absence, any breach of these Procedures that comes to the attention of the Funds’ Treasurer or any services or engagements that
are not required to be pre-approved pursuant to the de minimis exception provided for in Rule 2-01(c)(7)(i)(C) of Regulation S-X.
On at least an annual basis, the Auditor will provide the Audit Committee with a summary of all non-audit
services provided to any entity in the investment company complex (as defined in section 2-01(f)(14) of Regulation S-X, including the Funds and Service Affiliates) that
were not pre-approved, including the nature of services provided and the associated fees.
|
|
VIII.
|
Amendments to Procedures
|
All material amendments to these Procedures must be approved in advance by the Audit Committee. Non-material amendments
to these Procedures may be made by the Legal and Compliance Departments and will be reported to the Audit Committee at the next regularly scheduled meeting of the Audit Committee.
Appendix I
Non-Audit Services That May Impair the Auditor’s Independence
The Auditor is not independent if, at any
point during the audit and professional engagement, the Auditor provides the following non-audit services:
|
|
•
|
|
Broker-dealer, investment adviser, or investment banking services ;
|
|
|
•
|
|
Expert services unrelated to the audit;
|
|
|
•
|
|
Any service or product provided for a contingent fee or a commission;
|
|
|
•
|
|
Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or
aggressive tax position transactions, a significant purpose of which is tax avoidance;
|
|
|
•
|
|
Tax services for persons in financial reporting oversight roles at the Fund; and
|
|
|
•
|
|
Any other service that the Public Company Oversight Board determines by regulation is impermissible.
|
An Auditor is not independent if, at any point during the audit and professional engagement, the Auditor provides the following non-audit services unless it is reasonable to conclude that the results of the services will not be subject to audit procedures during an audit of the Funds’ financial statements:
|
|
•
|
|
Bookkeeping or other services related to the accounting records or financial statements of the audit
client;
|
|
|
•
|
|
Financial information systems design and implementation;
|
|
|
•
|
|
Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;
|
|
|
•
|
|
Actuarial services; and
|
|
|
•
|
|
Internal audit outsourcing services.
|
(e)(2) There were no amounts that were pre-approved by the Audit Committee pursuant to the de minimus exception under
Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) In addition to the amounts shown in the tables above, PwC billed Invesco and Invesco Affiliates aggregate fees of $6,219,000 for the fiscal year ended
February 28, 2021 and $4,089,000 for the fiscal year ended February 29, 2020. In total, PwC billed the Registrant, Invesco and Invesco Affiliates aggregate non-audit fees of $6,934,398 for the fiscal
year ended February 28, 2021 and $4,803,077 for the fiscal year ended February 29, 2020.
PwC provided audit services to the Investment Company
complex of approximately $32 million.
(h) The Audit Committee also has considered whether the provision of
non-audit services that were rendered to Invesco and Invesco Affiliates that were not required to be pre-approved pursuant to SEC regulations, if any, is compatible with
maintaining PwC’s independence.
|
ITEM 7.
|
DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
|
|
|
|
|
|
Invesco’s Policy Statement on Global Corporate Governance and Proxy Voting
|
|
|
Invesco Ltd. and its affiliated investment advisers (collectively, “Invesco”, the “Company”, “our” or “we”) has adopted
and implemented this Policy Statement on Global Corporate Governance and Proxy Voting (“Policy”) which it believes describes policies and procedures reasonably designed to ensure that proxies are voted in the best interests of its clients.
This Policy is intended to help Invesco’s clients understand our commitment to responsible investing and proxy voting, as well as the good governance principles that inform our approach to engagement and voting at shareholder meetings.
|
|
A.
|
Our Commitment to Environmental, Social and Governance Investment Stewardship and Proxy Voting
|
Our commitment to environmental, social and governance (ESG) principles is a core element of our ambition to be the
most client centric asset manager. We aspire to incorporate ESG considerations into all of our investment capabilities in the context of financial materiality and in the best interest of our clients. Our Global ESG team functions as a center of
excellence, providing specialist insights on research, engagement, voting, integration, tools, and client and product solutions with investment teams implementing ESG approaches appropriate to asset class and investment style. Much of our work is
rooted in fundamental research and frequent dialogue with companies.
Invesco views proxy voting as an integral part of its investment
management responsibilities. The proxy voting process at Invesco focuses on protecting clients’ rights and promoting governance structures and practices that reinforce the accountability of corporate management and boards of directors to
shareholders. The voting decision lies with our portfolio managers and analysts with input and support from our Global ESG team and Proxy Operations functions. Our proprietary proxy voting platform (“PROXYintel”) facilitates implementation
of voting decisions and rationales across global investment teams. Our good governance principles, governance structure and processes are designed to ensure that proxy votes are cast in accordance with clients’ best interests.
As a large active investor, Invesco is well placed to use our ESG expertise and beliefs to engage with portfolio companies in ways which drive
corporate change that we believe will enhance shareholder value. We take our responsibility as active owners very seriously and see engagement as an opportunity to encourage continual improvement and ensure that our clients’ interests are
represented and protected. Dialogue with portfolio companies is a core part of the investment process. Invesco may engage with investee companies to discuss environmental, social and governance issues throughout the year or on specific ballot items
to be voted on.
Our passive strategies and certain other client accounts managed in accordance with fixed income, money market and index
strategies (including exchange traded funds) will typically vote in line with the majority holder of the active-equity shares held by Invesco outside of those strategies. Invesco refers to this approach as “Majority Voting”. This process
of Majority Voting ensures that our passive strategies benefit from the engagement and deep dialogue of our active investors, which Invesco believes benefits shareholders in passively-managed accounts. In the absence of overlap between the active
and passive holders, the passive holders vote in line with our internally developed voting guidelines (as defined below). Portfolio managers and analysts for accounts employing Majority Voting retain full discretion to override Majority Voting and
to vote the shares as they determine to be in the best interest of those accounts, absent certain types of conflicts of interest, which are discussed elsewhere in this Policy.
|
|
B.
|
Applicability of Policy
|
Invesco may be granted by its clients the authority to vote the proxies of securities held in client portfolios. Invesco’s investment
teams vote proxies on behalf of Invesco-sponsored funds and both fund and non-fund advisory clients that have explicitly granted Invesco authority in writing to vote proxies on their behalf. In the case of
institutional or sub-advised clients, Invesco will vote the proxies in accordance with this Policy unless the client agreement specifies that the client retains the right to vote or has designated a named
fiduciary to direct voting.
This Policy applies to all entities in Exhibit A. Due to regional or asset class specific considerations,
there may be certain entities that have local proxy voting guidelines or policies
and procedures that differ from this Policy. In the
event that local policies and the Global Policy differ, the local policy will apply. These entities are also listed in Exhibit A and include proxy voting guidelines specific to; Invesco Asset Management (Japan) Limited, Invesco Asset Management
(India) Pvt. Ltd, Invesco Taiwan Ltd and Invesco Capital Markets, Inc. for Invesco Unit Investment Trusts. In Europe, we comply with the Shareholder Rights Directive and publish our disclosures and voting practices in this regard.
|
II.
|
Global Proxy Voting Operational Procedures
|
Invesco’s global proxy voting operational procedures are in place to implement the provisions of this Policy (the “Procedures”). At Invesco,
proxy voting is conducted by our investment teams through PROXYintel. Our investment teams globally are supported by Invesco’s centralized team of ESG professionals and proxy voting specialists. Invesco’s Global ESG team oversees the proxy
policy, operational procedures, inputs to analysis and research and leads the Global Invesco Proxy Advisory Committee (“Global IPAC”). Invesco’s global proxy administration team is responsible for operational implementation including
vote execution oversight.
Invesco aims to vote all proxies where we have been granted voting authority in accordance with this Policy as implemented by
the Procedures. Our portfolio managers and analysts review voting items based on their individual merits and retain full discretion on vote execution conducted through our proprietary proxy voting platform. Invesco may supplement its internal
research with information from independent third-parties, such as proxy advisory firms.
|
|
A.
|
Proprietary Proxy Voting Platform
|
Invesco’s proprietary proxy voting platform is supported by a dedicated team of internal proxy specialists. PROXYintel streamlines the
proxy voting process by providing our investment teams globally with direct access to meeting information and proxies, external proxy research and ESG ratings, as well as related functions, such as management of conflicts of interest issues,
significant votes, global reporting and record-keeping capabilities. Managing these processes internally, as opposed to relying on third parties, is designed to provide Invesco greater quality control, oversight and independence in the proxy
administration process.
Historical proxy voting information is stored to build institutional knowledge across the Invesco complex with
respect to individual companies and proxy issues. Certain investment teams also use PROXYintel to access third-party proxy research and ESG ratings.
Our proprietary systems facilitate internal control and oversight of the voting process. Invesco may choose to leverage this capability to
automatically vote proxies based on its internally developed voting guidelines and in circumstances where Majority Voting applies.
|
|
B.
|
Oversight of Voting Operations
|
Invesco’s Proxy Governance and Voting Manager provides oversight of the proxy voting verification processes facilitated by a dedicated
proxy administration team which include; (i) the monthly global vote audit review of votes cast containing documented rationales of conflicts of interest votes, market and operational limitations; (ii) the quarterly sampling of proxy votes
cast to determine that (a) Invesco is voting consistently with this Policy and (b) third-party proxy
advisory firms’ methodologies in formulating the vote recommendation are consistent with
their publicly disclosed guidelines; and (iii) quarterly review of rationales with the Global IPAC of occasions where a portfolio manager may take a position that may not be in accordance with Invesco’s good governance principles and our
internally developed voting guidelines.
To the extent material errors are identified in the proxy voting process, such errors are reviewed
and reported to, as appropriate, the Global Head of ESG, Global Proxy Governance and Voting Manager, legal and compliance, the Global IPAC and relevant boards and clients, where applicable. Invesco’s Global Head of ESG and Proxy Governance and
Voting Manager provide proxy voting updates and reporting to the Global IPAC, various boards and clients. Invesco’s proxy voting administration and operations are subject to periodic review by Internal Audit and Compliance groups.
|
|
C.
|
Disclosures and Record Keeping
|
Unless otherwise required by local or regional requirements, Invesco maintains voting records in either electronic format or hard copy for at
least 6 years. Invesco makes available its proxy voting records publicly in compliance with regulatory requirements and industry best practices in the regions below:
|
|
•
|
|
In accordance with the US Securities and Exchange Commission regulations, Invesco will file a record of all proxy
voting activity for the prior 12 months ending June 30th for each U.S. registered fund. That filing is made on or before August 31st of each
year. Each year, the proxy voting records are made available on Invesco’s website here. Moreover, and to the extent applicable, the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including
Department of Labor regulations and guidance thereunder, provide that the named fiduciary generally should be able to review not only the investment manager’s voting procedure with respect to plan-owned stock, but also to review the actions
taken in individual proxy voting situations. In the case of institutional and sub-advised Clients, Clients may contact their client service representative to request information about how Invesco voted proxies
on their behalf. Absent specific contractual guidelines, such requests may be made on a semi-annual basis.
|
|
|
•
|
|
In the UK and Europe, Invesco publicly discloses our proxy votes monthly in compliance with the UK Stewardship
Code and for the European Shareholder Rights Directive annually here.
|
|
|
•
|
|
In Canada, Invesco publicly discloses our annual proxy votes each year here by August 31st, covering the 12-month period ending June 30th in compliance with the National Instrument 81-106 Investment Fund Continuous Disclosure.
|
|
|
•
|
|
In Japan, Invesco publicly discloses our proxy votes annually in compliance with the Japan Stewardship Code.
|
|
|
•
|
|
In India, Invesco publicly discloses our proxy votes quarterly in compliance with The Securities and Exchange
Board of India (“SEBI”) Circular on stewardship code for all mutual funds and all categories of Alternative Investment Funds in relation to their investment in listed equities. SEBI has implemented principles on voting for Mutual Funds
through circulars dated March 15, 2010 and March 24, 2014, which prescribed detailed mandatory requirements for Mutual Funds in India to disclose their voting policies and actual voting by Mutual Funds on different resolutions of investee
companies.
|
|
|
•
|
|
In Hong Kong, Invesco Hong Kong Limited will provide proxy voting records upon request in compliance with the
Securities and Futures Commission (“SFC”) Principles of Responsible Ownership.
|
|
|
•
|
|
In Taiwan, Invesco publicly discloses our proxy voting policy and proxy votes annually in compliance with
Taiwan’s Stewardship Principles for Institutional Investors.
|
|
|
D.
|
Global Invesco Proxy Advisory Committee
|
Guided by its philosophy that investment teams should manage proxy voting, Invesco has created the Global IPAC. The Global IPAC is an
investments-driven committee comprised of representatives from various investment management teams globally, Invesco’s Global Head of ESG and chaired by its Global Proxy Governance and Voting Manager. The Global IPAC provides a forum for
investment teams to monitor, understand and discuss key proxy issues and voting trends within the Invesco complex, to assist Invesco in meeting regulatory obligations, to review votes not aligned with our good governance principles and to consider
conflicts of interest in the proxy voting process, all in accordance with this Policy.
In fulfilling its responsibilities, the Global IPAC
meets as necessary, but no less than semi-annually, and has the following responsibilities and functions: (i) acts as a key liaison between the Global ESG team and local proxy voting practices to ensure compliance with this Policy; (ii)
provides insight on market trends as it relates to stewardship practices; (iii) monitors proxy votes that present potential conflicts of
interest; (iv) the Conflict of Interest sub-committee will make voting decisions on submissions made by portfolio managers on conflict of interest issues to override the Policy; and (v) reviews and
provides input, at least annually, on this Policy and related internal procedures and recommends any changes to the Policy based on, but not limited to, Invesco’s experience, evolving industry practices, or developments in applicable laws or
regulations.
In addition to the Global IPAC, for some clients, third parties (e.g., U.S. fund boards) provide oversight of the proxy
voting process.
|
|
E.
|
Market and Operational Limitations
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In the great majority of instances, Invesco will vote proxies. However, in certain circumstances, Invesco may refrain from voting where the
economic or other opportunity costs of voting exceeds any benefit to clients. Moreover, ERISA fiduciaries, in voting proxies or exercising other shareholder rights, must not subordinate the economic interests of plan participants and beneficiaries
to unrelated objectives. These matters are left to the discretion of the relevant portfolio manager. Such circumstances could include, for example:
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In some countries the exercise of voting rights imposes temporary transfer restrictions on the related securities
(“share blocking”). Invesco generally refrains from voting proxies in share blocking countries unless Invesco determines that the benefit to the client(s) of voting a specific proxy outweighs the client’s temporary inability to sell
the security.
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Some companies require a representative to attend meetings in person to vote a proxy, additional documentation or
the disclosure of beneficial owner details to vote. Invesco may determine that the costs of sending a representative, signing a power-of-attorney or submitting
additional disclosures outweigh the benefit of voting a particular proxy.
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Invesco may not receive proxy materials from the relevant fund or client custodian with sufficient time and
information to make an informed independent voting decision.
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Invesco held shares on the record date but has sold them prior to the meeting date.
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In some non-U.S. jurisdictions, although Invesco uses reasonable efforts to vote a proxy, proxies may
not be accepted or rejected due to changes in the agenda for a shareholder meeting for which Invesco does not have sufficient notice, a proxy voting service may not be offered by the custodian in the local market or due to operational issues
experienced by third-parties involved in the process or by the issuer or sub-custodian. In addition, despite the best efforts of Invesco and its proxy voting agent, there may be instances where our votes may
not be received or properly tabulated by an issuer or the issuer’s agent.
Invesco’s funds may occasionally participate in a securities lending program. In circumstances where shares are on loan, the voting rights
of those shares are transferred to the borrower. If the security in question is on loan as part of a securities lending program, Invesco may determine that the benefit to the client of voting a particular proxy outweighs the benefits of securities
lending. In those instances, Invesco may determine to recall securities that are on loan prior to the meeting record date, so that we will be entitled to vote those shares. There may be instances where Invesco may be unable to recall shares or may
choose not to recall shares. The relevant portfolio manager will make these determinations.
There may be occasions where voting proxies may present a perceived or actual conflict of interest between Invesco, as investment manager, and
one or more of Invesco’s clients or vendors.
Firm-Level Conflicts of interest
A conflict of interest may exist if Invesco has a material business relationship with either the company soliciting a proxy or a third party
that has a material interest in the outcome of a proxy vote or that is actively lobbying for a particular outcome of a proxy vote. Such relationships may include, among others, a client relationship, serving as a vendor whose products / services are
material or significant to Invesco, serving as a distributor of Invesco’s products, a significant research provider or broker to Invesco.
Invesco identifies potential conflicts of interest based on a variety of factors, including but not limited to the materiality of the
relationship between the issuer or its affiliates to Invesco.
Invesco’s proxy administration team maintains a list of all such
issuers for which a conflict of interest exists (“Global Conflicts List”). Material firm-level conflicts of interests are identified by individuals and groups within Invesco globally based on criteria established by the proxy
administration team. The Global Conflicts List is updated periodically by the proxy administration
team so as to seek to ensure an updated
view is available when conducting conflicts checks. Operating procedures and associated governance are designed to seek to ensure conflicts of interest are appropriately considered ahead of voting proxies. The Global IPAC Conflict of Interest Sub-committee maintains oversight of the process. Companies on the Global Conflicts List will be voted in line with the principles below as implemented by Invesco’s internally developed voting guidelines. To
the extent a portfolio manager disagrees with the Policy, our processes and procedures seek to ensure justification and rationales are fully documented and presented to the Global IPAC Sub-committee for a
majority vote of its members.
As an additional safeguard, persons from Invesco’s marketing, distribution and other customer-facing
functions may not serve on the Global IPAC. For the avoidance of doubt, Invesco may not consider Invesco Ltd.’s pecuniary interest when voting proxies on behalf of clients. To avoid any appearance of a conflict of interest, Invesco will not
vote proxies issued by Invesco Ltd. that may be held in client accounts.
Personal Conflicts of Interest
A conflict also may exist where an Invesco employee has a known personal or business relationship with other proponents of proxy proposals,
participants in proxy contests, corporate directors, or candidates for directorships. Under Invesco’s Global Code of Conduct, Invesco entities and individuals must act in the best interests of clients and must avoid any situation that gives
rise to an actual or perceived conflict of interest.
All Invesco personnel with proxy voting responsibilities are required to report any
known personal or business conflicts of interest regarding proxy issues with which they are involved. In such instances, the individual(s) with the conflict will be excluded from the decision-making process relating to such issues.
Voting Fund of Funds
There may be conflicts that can arise from Invesco voting on matters when shares of Invesco-sponsored funds are held by other Invesco funds or
entities. The scenarios below set out how Invesco votes in these instances.
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In the United States, as required by law, proportional voting applies.
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Shares of an Invesco-sponsored fund held by other Invesco funds will be voted in the same proportion as the votes
of external shareholders of the underlying fund, where required by law.
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Shares of an unaffiliated registered fund held by one or more Invesco funds will be voted in the same proportion
as the votes of external shareholders of the underlying fund where the thresholds are met as required by federal securities law or any exemption therefrom.
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To the extent proportional voting is required by law, but not operationally possible, Invesco will not vote the
shares.
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For US fund of funds where proportional voting is not required by law, Invesco will still apply proportional
voting. In the event this is not operationally possible, Invesco will vote in line with our internally developed voting guidelines (as defined below).
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For non-US fund of funds Invesco will vote in line with our
above-mentioned firm-level conflicts of interest process unless we have local policies in place as per Exhibit A.
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H.
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Use of Third-Party Proxy Advisory Services
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Invesco may supplement its internal research with information from independent third-parties, such as proxy advisory firms. Globally, Invesco
leverages research from Institutional Shareholder Services Inc. (“ISS”) and Glass Lewis (“GL”). Invesco generally retains full and independent discretion with respect to proxy voting decisions.
ISS and GL both provide research reports, including vote recommendations, to Invesco and its portfolio managers and analysts. Invesco retains
ISS to provide recommendations based on Invesco’s internally developed custom guidelines. Updates to previously issued proxy research reports may be provided to incorporate newly available information or additional disclosure provided by the
issuer regarding a matter to be voted on, or to correct factual errors which may result in the issuance of revised proxy vote recommendations. Invesco’s proxy administration team may periodically monitor for these research alerts issued by ISS
and GL that are shared with our investment teams. There may be instances where these updates may not be provided in a timely manner ahead of the vote deadline.
Invesco also retains ISS to assist with services that include receipt of proxy ballots, vote execution through PROXYintel and vote disclosure
in Canada, the UK and Europe to meet regulatory reporting obligations.
As part of its fiduciary obligation to clients, Invesco performs
extensive initial and ongoing due diligence on the proxy advisory firms it engages globally. This includes reviews of information regarding the capabilities of their research staff, methodologies for formulating voting recommendations, the adequacy
and quality of personnel and technology, as applicable, and internal controls, policies and procedures, including those relating to possible conflicts of interest.
The proxy advisory firms Invesco engages globally complete an annual due diligence questionnaire submitted by Invesco, and Invesco conducts
annual due diligence meetings in part to discuss their responses to the questionnaire. In addition, Invesco monitors and communicates with these firms and monitors their compliance with Invesco’s performance and policy standards. ISS and GL
disclose conflicts to Invesco through a review of their policies, procedures and practices regarding potential conflicts of interests (including inherent internal conflicts) as well as
disclosure of the work ISS and GL perform for corporate issuers and the payments they receive
from such issuers. Invesco conducts semi-annual roundtables with external proxy and governance experts and our Global IPAC to ensure transparency, dialogue and engagement with the firms. These meetings provide Invesco with an opportunity to assess
the firms’ capabilities, conflicts of interest and service levels, as well as provide investment professionals with direct insight into the advisory firms’ stances on key governance and proxy topics and their policy
framework/methodologies.
Invesco’s compliance function completes a review of the System and Organizational Controls (“SOC”)
Reports for each proxy advisory firm to ensure the related controls operated effectively to provide reasonable assurance.
In addition to
ISS and GL, Invesco may use regional third-party research providers to access regionally specific research.
The Global IPAC and Invesco’s Global ESG team, proxy administration team, compliance and legal teams annually communicate and review this
Policy and our internally developed voting guidelines to seek to ensure that they remain consistent with clients’ best interests, regulatory requirements, governance trends and industry best practices. At least annually, this Policy and our
internally developed voting guidelines are reviewed by various groups within Invesco to ensure that they remain consistent with Invesco’s views on best practice in corporate governance and long-term investment stewardship.
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III.
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Our Good Governance Principles
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Invesco’s good governance principles outline our views on best practice in corporate governance and long-term investment stewardship. These principles
have been developed by our global investment teams in collaboration with the Global ESG team. The broad philosophy and guiding principles in this section inform our approach to investment stewardship and proxy voting. These principles are not
intended to be exhaustive or prescriptive.
Our portfolio managers and analysts retain full discretion on vote execution except where otherwise specified
in this Policy. The final voting decisions may incorporate the unique circumstances affecting companies, regional best practices and any dialogue we have had with company management. To the extent a portfolio manager chooses to vote a proxy in a way
that is not aligned with the principles below, such manager’s rationales are fully documented.
The following guiding principles apply to operating
companies. We apply a separate approach to investment companies and unit investment trusts. Where appropriate, these guidelines are supplemented by additional internal guidance that considers regional variations in best practices, disclosure and
region-specific voting items.
The following are high-level governance principles that Invesco endorses:
Investors require accurate, timely and complete information in order to make informed investment decisions and effectively carry out their
stewardship obligations. Invesco supports the highest standards in corporate transparency, including but not limited to the following areas:
Financial reporting: Company accounts and reporting must accurately reflect the underlying economic position of a company.
Arrangements that may constitute an actual or perceived conflict with this objective should be avoided.
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We will generally vote against the incumbent audit committee chair, or nearest equivalent, where the non-audit fees paid to the independent auditor exceed audit fees for two consecutive years or other problematic accounting practices are identified such as fraud, misapplication of audit standards or persistent
material weaknesses/deficiencies in internal controls over financial reporting.
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We will generally not support the ratification of the independent auditor and/or ratification of their fees
payable if non-audit fees exceed audit and audit related fees or there are significant auditing controversies or questions regarding the independence of the external auditor. We will consider an auditor’s
length of service as a company’s independent auditor in applying this policy.
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Robust shareholder rights and strong board oversight help ensure that management adhere to the highest standards of ethical conduct, are held
to account for poor performance and responsibly deliver value creation for stakeholders over the long-term. We therefore encourage companies to adopt governance features that ensure board and management accountability. In particular, we consider the
following as key mechanisms for enhancing accountability to investors:
One share one vote: Voting rights are an important
tool for investors to hold boards and management teams accountable. Unequal voting rights may limit the ability of investors to exercise their stewardship obligations.
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We generally do not support proposals that establish or perpetuate dual classes of voting shares, double voting
rights or other means of differentiated voting or disproportionate board nomination rights.
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We generally support proposals to decommission differentiated voting rights.
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Where unequal voting rights are established, we expect these to be accompanied by reasonable safeguards to
protect minority shareholders’ interests.
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Anti-takeover devices: Mechanisms designed to prevent or
unduly delay takeover attempts may unduly limit the accountability of boards and management teams to shareholders.
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We generally will not support proposals to adopt antitakeover devices such as poison pills. Exceptions may be
warranted at entities without significant operations and to preserve the value of net operating losses carried forward or where the applicability of the pill is limited in scope and duration.
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In addition, we will generally not support capital authorizations or amendments to corporate articles or bylaws
at operating companies that may be utilized for antitakeover purposes, for example, the authorization of classes of shares of preferred stock with unspecified voting, dividend, conversion or other rights (“blank check” authorizations).
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Shareholder rights: We support the rights of shareholders to hold boards and management teams accountable
for company performance. We generally support best practice aligned proposals to enhance shareholder rights, including but not limited to the following:
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Adoption of proxy access rights
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Rights to call special meetings
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Rights to act by written consent
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Reduce supermajority vote requirements
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Remove antitakeover provisions
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Requirement that directors are elected by a majority vote
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In addition, we oppose practices that limit shareholders’ ability to express their views at a general meeting such as bundling unrelated
proposals or several significant article or bylaw amendments into a single voting item. We will generally vote against these proposals unless we are satisfied that all the underlying components are aligned with our views on best practice.
Director Indemnification: Invesco recognizes that individuals may be reluctant to
serve as corporate directors if they are personally liable for all related lawsuits and legal costs. As a result, reasonable limitations on directors’ liability can benefit a company and its shareholders by helping to attract and retain
qualified directors while preserving recourse for shareholders in the event of misconduct by directors. Accordingly, unless there is insufficient information to make a decision about the nature of the proposal, Invesco will generally support
proposals to limit directors’ liability and provide indemnification and/or exculpation, provided that the arrangements are reasonably limited in scope to directors acting in good faith and, in relation to criminal matters, limited in scope to
directors having reasonable grounds for believing the conduct was lawful.
Responsiveness: Boards should respond to investor
concerns in a timely fashion, including reasonable requests to engage with company representatives regarding such concerns, and address matters that receive significant voting dissent at general meetings of shareholders.
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We will generally vote against the lead independent director and/or the incumbent chair of the governance
committee, or nearest equivalent, in cases where the board has not adequately responded to items receiving significant voting opposition from shareholders at an annual or extraordinary general meeting.
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We will generally vote against the lead independent director and/or incumbent chair of the governance committee,
or nearest equivalent, where the board has not adequately responded to a shareholder proposal which has received significant support from shareholders.
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We will generally vote against the incumbent chair of the compensation committee if there are significant ongoing
concerns with a company’s compensation practices that
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have not been addressed by the committee or egregious
concerns with the company’s compensation practices for two years consecutively.
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In addition, we will generally vote against the incumbent compensation committee chair where there are ongoing
concerns with a company’s compensation practices and there is no opportunity to express dissatisfaction by voting against an advisory vote on executive compensation, remuneration report (or policy) or nearest equivalent.
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Annual director elections: Board members should generally stand for election annually and individually.
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We will generally support proposals requesting that directors stand for election annually.
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We will generally vote against the incumbent governance committee chair or lead independent director if a company
has a declassified board structure that is not being phased out. This policy will not apply in regions where market practice is for directors to stand for election on a staggered basis or for boards that do not oversee significant commercial
operations.
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When a board is presented for election as a slate (i.e., shareholders are unable to vote against individual
nominees and must vote for or against the entire nominated slate of directors) and this approach is not aligned with local market practice, we will generally vote against the slate in cases where we otherwise would vote against an individual
nominee.
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Where market practice is to elect directors as a slate we will generally support the nominated slate unless there
are governance concerns with several of the individuals included on the slate or we have broad concerns with the composition of the board such as a lack independence.
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Board size: We will generally defer to the board with respect to determining the optimal number of board members, provided that
the proposed board size is sufficiently large to represent
shareholder interests and sufficiently limited to remain effective.
Definition of independence: Invesco considers local market definitions of director independence but applies a proprietary
standard for assessing director independence considering a director’s status as a current or former employee of the business, any commercial or consulting relationships with the company, the level of shares beneficially owned or represented and
familial relationships, among others.
Board and committee independence: The board of directors, board committees and
regional equivalents should be sufficiently independent from management, substantial shareholders and conflicts of interest. We consider local market practices in this regard and in general we look for a balance across the board of directors. Above
all, we like to see signs of robust challenge and discussion in the boardroom.
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We will generally vote against one or more non-independent directors when
a board is less than majority independent, but we will take into account local market practice with regards to board independence in limited circumstances where this standard is not appropriate.
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We will generally vote against non-independent directors serving on the
audit committee.
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We will generally vote against non-independent directors serving on the
compensation committee.
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We will generally vote against non-independent directors serving on the
nominating committee.
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In relation to the board, compensation committee and nominating committee we will consider the appropriateness of
significant shareholder representation in applying this policy. This exception will generally not apply to the audit committee.
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Separation of Chair and CEO roles: We believe that independent board leadership generally enhances management accountability to
investors. Companies deviating from this best practice should provide a strong justification and establish safeguards to ensure that there is independent oversight of a board’s activities (e.g., by appointing a lead or senior independent
director with clearly defined powers and responsibilities).
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We will generally vote against the incumbent nominating committee chair where the board chair is not independent
unless a lead independent or senior director is appointed.
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We will generally support shareholder proposals requesting that the board chair be an independent director.
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We will generally not vote against a CEO or executive serving as board chair solely on the basis of this issue,
however, we may do so in instances where we have significant concerns regarding a company’s corporate governance, capital allocation decisions and/or compensation practices.
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Attendance and over boarding: Directors serving on the board should attend at least 75% of their board and committee meetings,
where applicable. In addition, directors should not have excessive external board or managerial commitments that may interfere with their ability to execute the duties of a director.
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We will generally vote against directors who do not attend 75% of their meetings unless there are extenuating
circumstances such as health matters or family emergencies.
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We will generally vote against directors who have more than four total mandates at public operating companies. We
apply a lower threshold for directors with significant commitments such as executive positions and chairmanships.
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Diversity: We encourage companies to continue to evolve diversity and inclusion practices. Boards should be comprised of
directors with a variety of relevant skills and industry expertise
together with a diverse profile of individuals of different genders, ethnicities, skills, tenures
and backgrounds in order to provide robust challenge and debate. We consider diversity at the board level, within the executive management team and in the succession pipeline.
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We will generally vote against the incumbent nominating committee chair of a board where women constitute less
than two board members or 25% of the board, whichever is lower, for two or more consecutive years, unless incremental improvements are being made to diversity practices.
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In addition, we will consider a company’s performance on broader types of diversity which may include
diversity of skills, non-executive director tenure, ethnicity or other factors where appropriate and reasonably determinable. We will generally vote against the incumbent nominating committee chair if there
are multiple concerns on diversity issues.
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We generally believe that an individual board’s nominating committee is best positioned to determine whether
director term limits would be an appropriate measure to help achieve these goals and, if so, the nature of such limits. Invesco generally opposes proposals to limit the tenure of outside directors through mandatory retirement ages.
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D.
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Long Term Stewardship of Capital
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Capital allocation: Invesco expects companies to responsibly raise and deploy capital towards the long-term, sustainable success
of the business. In addition, we expect capital allocation authorizations and decisions to be made with due regard to shareholder dilution, rights of shareholders to ratify significant corporate actions and
pre-emptive rights, where applicable.
Share issuance and repurchase authorizations:
We generally support authorizations to issue shares up to 20% of a company’s issued share capital for general corporate purposes. Shares should not be issued at a substantial discount to the market price or be repurchased at a substantial
premium to the market price.
Stock splits: We generally support management proposals to implement a forward or reverse stock
split, provided that a reverse stock split is not being used to take a company private. In addition, we will generally support requests to increase a company’s common stock authorization if requested in order to facilitate a stock split.
Increases in authorized share capital: We will generally support proposals to increase a company’s number of authorized
common and/or preferred shares, provided we have not identified concerns regarding a company’s historical share issuance activity or the potential to use these authorizations for antitakeover purposes. We will consider the amount of the request
in relation to the company’s current authorized share capital, any proposed corporate transactions contingent on approval of these requests and the cumulative impact on a company’s authorized share capital, for example, if a reverse stock
split is concurrently submitted for shareholder consideration.
Mergers, acquisitions, proxy contests, disposals and other corporate
transactions: Invesco’s investment teams will review proposed corporate transactions including mergers, acquisitions, reorganizations, proxy contests, private placements, dissolutions and divestitures based on a proposal’s
individual investment merits. In addition, we broadly approach voting on other corporate transactions as follows:
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We will generally support proposals to approve different types of restructurings that provide the necessary
financing to save the company from involuntary bankruptcy.
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We will generally support proposals to enact corporate name changes and other proposals related to corporate
transactions that we believe are in shareholders’ best interests.
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We will generally support reincorporation proposals, provided that management have provided a compelling
rationale for the change in legal jurisdiction and provided further that the proposal will not significantly adversely impact shareholders’ rights.
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With respect to contested director elections, we consider the following factors, among
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others, when evaluating the merits of each list of nominees: the long term performance of the
company relative to its industry, management’s track record, any relevant background information related to the contest, the qualifications of the respective lists of director nominees, the strategic merits of the approaches proposed by both
sides including the likelihood that the proposed goals can be met, positions of stock ownership in the company.
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E.
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Environmental, Social and Governance Risk Oversight
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Director responsibility for risk oversight: The board of directors are ultimately responsible for overseeing management and
ensuring that proper governance, oversight and control mechanisms are in place at the companies they oversee. Invesco may take voting action against director nominees in response to material governance or risk oversight failures that adversely
affect shareholder value.
Invesco considers the adequacy of a company’s response to material oversight failures when determining
whether any voting action is warranted. In addition, Invesco will consider the responsibilities delegated to board subcommittees when determining if it is appropriate to hold certain director nominees accountable for these material failures.
Material governance or risk oversight failures at a company may include, without limitation:
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significant bribery, corruption or ethics violations;
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ii.
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events causing significant environmental degradation;
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iii.
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significant health and safety incidents; or
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iv.
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failure to ensure the protection of human rights.
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Reporting of financially material ESG information: Companies should report on their environmental, social and governance
opportunities and risks where material to their business operations.
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Where Invesco finds significant gaps in terms of management and disclosure of environmental, social and
governance risk policies, we will generally vote against the annual reporting and accounts or an equivalent resolution.
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Shareholder proposals addressing environmental and social risks: Invesco may support shareholder resolutions requesting that
specific actions be taken to address environmental and social issues or mitigate exposure to material environmental and social risks, including reputational risk, related to these issues. When considering such proposals, we will consider a
company’s track record managing these risks, the efficacy of the proposal’s request and whether the requested action is unduly burdensome.
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We generally do not support resolutions where insufficient information has been provided in advance of the vote
or a lack of disclosure inhibits our ability to make fully informed voting decisions.
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We will generally support shareholder resolutions requesting that companies provide additional information on
material environmental, social and governance risks facing their businesses, provided that such requests are not unduly burdensome or duplicative with a company’s existing reporting. These may include but are not limited to the following:
gender pay gap reporting requests, political contributions and lobbying disclosure, information on data security, privacy, and internet practices, and reporting on climate change risks.
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Ratification of board and/or management acts: We will generally support proposals to ratify the actions of the board of
directors, supervisory board and/or executive decision-making bodies, provided there are no material oversight failures as described above. When such oversight concerns are identified, we will consider a company’s response to any issues raised
and may vote against ratification proposals instead of, or in addition to, director nominees.
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F.
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Executive Compensation and Alignment
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Invesco supports compensation polices and equity incentive plans that promote alignment between management incentives and shareholders’
long-term interests. We pay close attention to local market practice and may apply stricter or modified criteria where appropriate.
Advisory votes on executive compensation, remuneration policy and remuneration reports: We will generally not support
compensation related proposals where more than one of the following is present:
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there is an unmitigated misalignment between executive pay and company performance for at least two consecutive
years;
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ii.
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there are problematic compensation practices which may include among others incentivizing excessive risk taking
or circumventing alignment between management and shareholders’ interests via repricing of underwater options;
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iii.
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vesting periods for long term incentive awards are less than three years;
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iv.
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the company “front loads” equity awards;
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v.
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there are inadequate risk mitigating features in the program such as clawback provisions;
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vi.
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excessive, discretionary one-time equity grants are awarded to
executives;
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less than half of variable pay is linked to performance targets, except where prohibited by law.
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Invesco will consider company reporting on pay ratios as part of our evaluation of compensation proposals, where
relevant.
Equity plans: Invesco generally supports equity compensation plans that promote the proper alignment of incentives
with shareholders’ long-term interests, and generally votes against plans that are overly dilutive to existing shareholders, plans that contain objectionable structural features which may include provisions to reprice options without
shareholder approval, plans that include evergreen provisions or plans that provide for automatic accelerated vesting upon a change in control.
Employee stock purchase plans: We generally support employee stock purchase plans that are reasonably designed to provide proper
incentives to a broad base of employees, provided that the price at which employees may acquire stock represents a reasonable discount from the market price.
Severance Arrangements: Invesco considers proposed severance arrangements (sometimes known as “golden parachute”
arrangements) on a case-by-case basis due to the wide variety among their terms. Invesco acknowledges that in some cases such arrangements, if reasonable, may be in
shareholders’ best interests as a method of attracting and retaining high quality executive talent. We generally vote in favor of proposals requiring shareholder ratification of senior executives’ severance agreements where the proposed
terms and disclosure align with good market practice.
Exhibit
A
Invesco Advisers, Inc.
Invesco Asset Management (India) Pvt. Ltd*1
Invesco Asset Management (Japan) Limited*1
Invesco Asset Management (Schweiz) AG
Invesco Asset Management Deutschland GmbH
Invesco Asset Management Limited1
Invesco Asset Management Singapore Ltd
Invesco Asset Management Spain
Invesco Australia Ltd
Invesco
Canada Ltd.1
Invesco Capital Management LLC
Invesco Capital Markets, Inc.*1
Invesco Hong Kong Limited
Invesco Investment Advisers LLC
Invesco Investment Management (Shanghai) Limited
Invesco Investment Management Limited
Invesco Managed Accounts, LLC
Invesco Management S.A
Invesco
Overseas Investment Fund Management (Shanghai) Limited
Invesco Pensions Limited
Invesco Private Capital, Inc.
Invesco Real Estate Management S.a.r.l1
Invesco Senior Secured Management, Inc.
Invesco Taiwan Ltd*1
Invesco Trust Company
Oppenheimer Funds, Inc.
WL
Ross & Co. LLC
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*
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Invesco entities with specific proxy voting guidelines
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1
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Invesco entities with specific conflicts of interest policies
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ITEM 8.
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PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
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As of February 28, 2021, the following individuals are jointly and primarily responsible for the day-to-day management of the Trust:
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Mario Clemente, Portfolio Manager, who has been responsible for the Fund since 2016 and has been associated with
Invesco and/or its affiliates since 2014.
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•
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Kevin Collins, Portfolio Manager, who has been responsible for the Fund since 2016 and has been associated with
Invesco and/or its affiliates since 2007.
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Brian Norris, Portfolio Manager, who has been responsible for the Fund since 2016 and has been associated with
Invesco and/or its affiliates since 2001.
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•
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Dan Saylor, Portfolio Manager, who has been responsible for the Fund since 2016 and has been associated with
Invesco and/or its affiliates since 2010.
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Portfolio Manager Fund Holdings and Information on Other Managed
Accounts
Invesco’s portfolio managers develop investment models which are used in connection with the management of certain
Invesco Funds as well as other mutual funds for which Invesco or an affiliate acts as sub-adviser, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for
organizations and individuals. The ‘Investments’ chart reflects the portfolio managers’ investments in the Fund(s) that they manage and includes investments in the Fund’s shares beneficially owned by a portfolio manager, as
determined in accordance with Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as amended (beneficial ownership includes ownership by a portfolio manager’s immediate family members sharing the
same household). The ‘Assets Managed’ chart reflects information regarding accounts other than the Funds for which each portfolio manager has day-to-day
management responsibilities. Accounts are grouped into three categories: (i) other registered investment companies; (ii) other pooled investment vehicles; and (iii) other accounts. To the extent that any of these accounts pay advisory
fees that are based on account performance (performance-based fees), information on those accounts is specifically noted. In addition, any assets denominated in foreign currencies have been converted into U.S. dollars using the exchange rates as of
the applicable date.
Investments
The following information is as of February 28, 2021 (unless otherwise noted):
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Portfolio Manager
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Dollar Range
of Investments
in the Fund
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Invesco High Income 2023 Target Term Fund
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Mario Clemente
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None
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Kevin Collins
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$10,001 - $50,000
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Brian Norris
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$10,001 - $50,000
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Dan Saylor
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None
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Assets Managed
The following information is as of February 28, 2021 (unless otherwise noted):
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Portfolio Manager
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Other Registered
Investment Companies
Managed
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Other Pooled
Investment Vehicles
Managed
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Other
Accounts
Managed
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Number
of
Accounts
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Assets
(in millions)
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Number
of
Accounts
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Assets
(in millions)
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Number
of
Accounts
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Assets
(in millions)
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Invesco High Income 2023 Target Term Fund
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Mario Clemente
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4
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$
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2,298.8
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None
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None
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None
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None
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Kevin Collins
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2
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$
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726.2
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None
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None
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None
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None
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Brian Norris
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4
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$
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2,298.8
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None
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None
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None
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None
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Dan Saylor
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1
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$
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84.5
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None
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None
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None
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None
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Potential Conflicts of Interest
Actual or apparent conflicts of interest may arise when a portfolio manager has
day-to-day management responsibilities with respect to more than one Fund or other account. More specifically, portfolio managers who manage multiple Funds and/or other
accounts may be presented with one or more of the following potential conflicts:
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The management of multiple Funds and/or other accounts may result in a portfolio manager devoting unequal time
and attention to the management of each Fund and/or other account. The Adviser and each Sub-Adviser seek to manage such competing interests for the time and attention of portfolio managers by having portfolio
managers focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment models that are used in connection with the management of the Funds.
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If a portfolio manager identifies a limited investment opportunity which may be suitable for more than one Fund
or other account, a Fund may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible Funds and other accounts. To deal with these situations, the Adviser, each Sub-Adviser and the Funds have adopted procedures for allocating portfolio transactions across multiple accounts.
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The Adviser and each Sub-Adviser determine which broker to use to execute
each order for securities transactions for the Funds, consistent with its duty to seek best execution of the transaction. However, for certain other accounts (such as mutual funds for which Invesco or an affiliate acts as sub-adviser, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals), the Adviser and each
Sub-Adviser may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, trades for a Fund in a particular security
may be placed separately from, rather than aggregated with, such other accounts. Having separate transactions with respect to a security may temporarily affect the market price of the security or the execution of the transaction, or both, to the
possible detriment of the Fund or other account(s) involved.
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Finally, the appearance of a conflict of interest may arise where the Adviser or
Sub-Adviser has an incentive, such as a performance-based management fee, which relates to the management of one Fund or account but not all Funds and accounts for which a portfolio manager has day-to-day management responsibilities. None of the Invesco Fund accounts managed have a performance fee.
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The Adviser, each Sub-Adviser, and the Funds have adopted certain compliance procedures which are
designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
Description of Compensation Structure
For the Adviser and each Sub-Adviser
The Adviser and each Sub-Adviser seek to maintain a compensation program that is competitively
positioned to attract and retain high-caliber investment professionals. Portfolio managers receive a base salary, an incentive cash bonus opportunity and a deferred compensation opportunity. Portfolio manager compensation is reviewed and may be
modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote competitive Fund performance. The Adviser and each Sub-Adviser evaluate
competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager’s compensation consists of the following three elements:
Base Salary. Each portfolio manager is paid a base salary. In setting the base salary, the Adviser and each Sub-Adviser’s intention is to be competitive in light of the particular portfolio manager’s experience and responsibilities.
Annual Bonus. The portfolio managers are eligible, along with other employees of the Adviser and each
Sub-Adviser, to participate in a discretionary year-end bonus pool. The Compensation Committee of Invesco Ltd. reviews and approves the firm-wide bonus pool based upon
progress against strategic objectives and annual operating plan, including investment performance and financial results. In addition, while having no direct impact on individual bonuses, assets under management are considered when determining the
starting bonus funding levels. Each portfolio manager is eligible to receive an annual cash bonus which is based on quantitative (i.e. investment performance) and non-quantitative factors (which may include,
but are not limited to, individual performance, risk management and teamwork).
Each portfolio manager’s compensation is linked to
the pre-tax investment performance of the Funds/accounts managed by the portfolio manager as described in Table 1 below.
Table 1
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Sub-Adviser
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Performance time period1
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Invesco 2
Invesco Deutschland
Invesco Hong Kong2
Invesco Asset Management
Invesco India
Invesco Listed Real Assets Division2
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One-, Three- and Five-year performance against Fund peer group
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Invesco Senior Secured2, 3
Invesco Capital2, 4
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Not applicable
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Invesco Canada2
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One-year performance against Fund peer group
Three- and Five-year performance against entire universe of Canadian funds
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Invesco Japan
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One-, Three- and Five-year performance
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High investment performance (against applicable peer group and/or benchmarks) would deliver compensation
generally associated with top pay in the industry (determined by reference to the third-party provided compensation survey information) and poor investment performance (versus applicable peer group) would result in low bonus compared to the
applicable peer group or no bonus at all. These
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1
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Rolling time periods based on calendar year-end.
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2
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Portfolio Managers may be granted an annual deferral award that vests on a
pro-rata basis over a four-year period.
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3
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Invesco Senior Secured’s bonus is based on annual measures of equity return and standard tests of
collateralization performance.
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4
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Portfolio Managers for Invesco Capital base their bonus on Invesco results as well as overall performance of
Invesco Capital.
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decisions are reviewed and approved collectively by senior leadership which has responsibility for executing the compensation approach across the organization.
With respect to Invesco Capital, there is no policy regarding, or agreement with, the Portfolio Managers or any other senior executive of the
Adviser to receive bonuses or any other compensation in connection with the performance of any of the accounts managed by the Portfolio Managers.
Deferred / Long Term Compensation. Portfolio managers may be granted a deferred compensation award based on a firm-wide bonus pool
approved by the Compensation Committee of Invesco Ltd. Deferred compensation awards may take the form of annual deferral awards or long-term equity awards. Annual deferral awards may be granted as an annual stock deferral award or an annual fund
deferral award. Annual stock deferral awards are settled in Invesco Ltd. common shares. Annual fund deferral awards are notionally invested in certain Invesco Funds selected by the Portfolio Manager and are settled in cash. Long-term equity awards
are settled in Invesco Ltd. common shares. Both annual deferral awards and long-term equity awards have a four-year ratable vesting schedule. The vesting period aligns the interests of the Portfolio Managers with the long-term interests of clients
and shareholders and encourages retention.
Retirement and health and welfare arrangements. Portfolio managers are eligible to participate in
retirement and health and welfare plans and programs that are available generally to all employees.
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ITEM 9.
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PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
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Not applicable.
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ITEM 10.
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SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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None.