2018 Guide to Effective Proxies

2.17.10 Peer groups | 465 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 38 Performance-based award features are summarized below. Performance-based award components Performance period Three years Performance metric Adjusted operating margin Performance vesting range Vesting ranges from 0% - 150%; straight line interpolation to be used for actual result Vesting 3-year cliff Dividends Deferred and paid only to the extent an award vests Settlement Award settled in shares Clawback Award subject to clawback policy in the event of fraudulent or willful misconduct Our performance measures and the impact of GAAP We specifically do not rely heavily on measures of Return on Equity (“ROE”) or Return on Assets (“ROA”) as these are not as relevant in the success of a pure asset manager like Invesco. Generally speaking, asset managers do not rely on balance sheet assets to generate operating income and earnings. Our business relies on client assets under management (or AUM), which are held in custody by third parties and are not owned by the company, to generate revenue. We believe that AUM along with adjusted operating income, adjusted operating margin, adjusted EPS and long-term organic growth are more reflective of the company’s performance. Furthermore, US GAAP rules on consolidation require the company to consolidate certain investment product assets and liabilities which significantly distort our balance sheet and the associated financial metrics of ROE and ROA. As a result, several of our key indicators of our performance are non-GAAP measures. See Appendix B for additional information regarding Non-GAAP financial measures. Our compensation mix To align our executive officers’ awards with client and shareholder success, the committee has designed our executive officers’ compensation so that executive officers receive a significant portion of their compensation in the form of deferred incentives. The committee believes this appropriately aligns our executive officers’ interests with our shareholders as it focuses on long-term shareholder value creation. The committee has no pre-established policy or target on the allocation between pay elements in order to be able to adjust practices to best meet the interest of our shareholders. Review of peer compensation In determining executive compensation, the committee reviews the executive compensation practice and levels of our industry peer companies, as well as other comparable investment management companies. Our industry peers consist of the 16 companies listed below. US Focused 7 peers – Affiliated Managers Group – Ameriprise Financial – Charles Schwab – Eaton Vance – Federated Investors – TD Ameritrade – T. Rowe Price Global 6 peers – AB – BlackRock – Franklin Resources – Legg Mason – Lazard – Principal Financial Group Custody and Trust Bank 3 peers – Bank of New York Mellon – Northern Trust – State Street The majority of executive officer incentive compensation is deferred and tied to financial and strategic performance in order to align individual rewards with long- term client and shareholder success. PROXY-BRO-1 03-18.indd 38 3/20/18 4:13 PM INVESCO LTD