Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
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Preliminary Proxy
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy
Statement
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Definitive Additional
Materials
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Soliciting Material Pursuant to §240.14a-12
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ANNALY CAPITAL MANAGEMENT, INC.
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(Name of Registrant as
Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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the appropriate box):
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table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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securities to which transaction applies:
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Aggregate number of securities to
which transaction applies:
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Per unit price or other underlying
value of transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state how it
was determined):
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Table of Contents
Notice of
2016
Annual Meeting of
Stockholders
and Proxy Statement
May 26, 2016, at 9:00
a.m.
The Warwick Hotel
65 West 54th Street
New York, NY
10019
Table of Contents
Dear Fellow
Shareholders,
Amidst a challenging
macroeconomic environment marked by unprecedented volatility across all asset
classes, Annaly delivered strong financial results in 2015, declaring over $1.2
billion in dividends and producing an attractive return on equity while
maintaining a low leverage ratio relative to the industry. In addition to our
dividend program, in August of last year, we authorized a repurchase plan of up
to $1 billion of our common shares through December 31, 2016. As of March 31,
2016, we have cumulatively repurchased $614 million of stock under both our
current program and our previous share repurchase program, which was initiated
in 2012.
Annaly delivered strong financial results in
2015, declaring over
$1.2
billion
in
dividends
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Throughout 2015, we
continued to execute on our strategic plan to diversify our investments in
assets with complementary cash flows. During the year, we expanded our
allocation of capital into lower-levered, largely floating rate credit
businesses from 11% to 23% of our total equity capital. We invested $1.3 billion
in growing our commercial real estate business, launching our own residential
credit platform and nearly tripling the size of our middle market lending
portfolio. On a stand-alone basis of roughly $3 billion of equity capital, these
three businesses would amount to one of the largest hybrid mortgage REITs in the
world and three times the size of the average market capitalization for the 40
other mortgage REITs in the industry.
As of March 31,
2016, we have cumulatively repurchased
$614 million
of
stock
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As we look ahead
through 2016 and beyond, we remain focused both on returning value to our
stockholders and enhancing our corporate governance, compensation and management
structures. The Board of Directors continually evaluates these structures to
further align the interests of our management with those of shareholders. Among
numerous other initiatives, we announced the expansion of our stock ownership
guidelines in the first quarter of 2016. Pursuant to these guidelines, more than
40% of the Annaly team (including our executive officers) will be asked to
purchase predetermined amounts of shares in the open market. These guidelines
reflect our desire to establish an ownership culture throughout the firm, which
is also evidenced by the fact that senior management has purchased nearly 1.9
million common shares with an aggregate purchase price of $22.0 million since
2011.
We expanded
our allocation of capital into lower-levered, largely floating
rate credit businesses from 11% to
23%
of our total
equity capital
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We are proud of our
attention and focus on our shareholders over the years and our industry best
practices are exemplified by what I believe is one of the most shareholder
friendly management agreements in the asset management industry. Our management
contract is structured without termination or incentive fees, has one of the
lowest fixed management fee percentages in the industry and a two-year term that
provides our Board and shareholders with the opportunity to actively monitor and
assess our performance over reasonable time frames. In addition to the stock
ownership guidelines discussed above, other recent enhancements include the
adoption of a robust clawback policy for the management fee, increased stock
ownership guidelines for our
Senior management has
purchased nearly
1.9 million
common shares since
2011
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I
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Table of Contents
Independent Directors,
a four-year stock holding period requirement, an anti-pledging policy (which is
complementary to our existing anti-hedging policy) and the creation of the role
of Lead Independent Director, which is currently held by Jon
Green.
Also, given the
various changes to the market, our industry and our business, we have dedicated
tremendous focus and resources to enhancing our financial disclosure and risk
management practices. Over the past year, we provided increased transparency
into our amended capital allocation policy and more granular portfolio detail on
our growing credit businesses. This years proxy statement, which includes an
updated format and graphics, also reflects our continued focus on accuracy and
transparency. Our paramount responsibility, as long term stewards of capital, is
to ensure that we have appropriate clarity within our financial statements,
strong risk management practices and the comprehensive operational
infrastructure needed to support our evolving businesses. In 2015, significant
achievements were made within our operating strategies including: attracting
numerous key hires into our risk, legal, accounting, human resources and
information technology teams; implementing enhanced asset, portfolio and risk
management systems, including a comprehensive risk rating system across the
various investment businesses; and restructuring our internal management
reporting lines and governance committees to more appropriately monitor and
manage our evolving strategies.
I look forward to
welcoming many of you to our 2016 Annual Meeting of
Stockholders.
Sincerely,
Kevin G.
Keyes
Chief
Executive Officer and President
April 12,
2016
Creation of the role of
Lead
Independent Director
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Enhancing
our financial
disclosure and risk
management practices
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Scaling our operating platform to support growth
and
diversification
of
our portfolio
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II
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Annaly Capital
Management, Inc.
►
2016 Proxy
Statement
|
Table of Contents
>
Notice of Annual Meeting of Stockholders
To Be
Held May 26, 2016
at 9:00 a.m. (Eastern Time)
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The
Warwick Hotel, 65 West 54th Street,
New York, NY
10019
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To the Stockholders of
Annaly Capital Management, Inc.:
We will hold the
annual meeting of the stockholders of Annaly on May 26, 2016, at 9:00 a.m.
(Eastern Time) at the Warwick Hotel, 65 West 54th Street, New York, NY 10019,
to:
We will also transact
any other business as may properly come before our annual meeting or any
adjournment or postponement thereof. Only our common stockholders of record at
the close of business on March 29, 2016, the record date for the annual meeting,
may vote at the annual meeting and any adjournments or postponements
thereof.
Your vote is very
important. Please exercise your right to vote.
To view the Proxy
Statement and other materials about the annual meeting, go to
www.annalyannualmeeting.com.
If you attend the
annual meeting in person, you will need to present proof of your ownership of
our common stock as of the record date, and valid government-issued photo
identification.
By Order of the Board
of Directors,
R. Nicholas
Singh
Secretary
April 12, 2016
Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting to Be Held on May 26, 2016. Our
Proxy Statement and 2015 Annual Report to Stockholders are available at
www.proxyvote.com.
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III
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Table of Contents
IV
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Annaly Capital
Management, Inc.
►
2016 Proxy
Statement
|
Table of Contents
>
Proxy Statement
The Board of Directors
(the Board) of Annaly Capital Management, Inc. (Annaly, the Company, we,
our or us) is soliciting proxies in connection with our 2016 annual meeting
of stockholders (the Annual Meeting). We are sending the Notice of Internet
Availability of Proxy Materials, or a printed copy of the proxy materials, as
applicable, commencing on or about April 12, 2016.
>
Proxy Summary
This summary contains
highlights about the Company and the Annual Meeting. This summary does not
contain all of the information that you should consider in advance of the Annual
Meeting, and we encourage you to read the entire proxy statement and our 2015
Annual Report on Form 10-K carefully before voting.
2016 Annual Meeting of
Stockholders
Time
and
Date:
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Thursday, May 26, 2016 at 9:00 a.m. (Eastern
Time)
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Place:
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The
Warwick Hotel, 65 West 54th Street,
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New York, NY 10019
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Record Date:
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March 29, 2016
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Voting:
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Stockholders are able to vote by
Internet at
www.proxyvote.com
;
telephone at 1-800-690-6903; completing and returning their proxy card; or
in person at the Annual Meeting
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Voting
Matters
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Board Vote
Recommendation
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Page
Number
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Proposal No. 1:
Election of
Directors
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FOR
each
Director
nominee
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1
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Proposal No. 2:
Approval, on
an advisory basis, of
our executive
compensation
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FOR
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20
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Proposal No. 3:
Ratification
of the appointment of
Ernst & Young
LLP
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FOR
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25
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Time and Date
Thursday, May 26, 2016
at 9:00 a.m. (Eastern
Time)
Place
The Warwick Hotel,
65 West 54th Street,
New York, NY
10019
Record Date
March 29, 2016
Voting
Stockholders are entitled
to vote by
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Internet
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Telephone
1-800-690-6903
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Mail
completing and returning
their proxy
card
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In
Person
at the Annual Meeting
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Information
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www.annalyannualmeeting.com
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V
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Table of Contents
Annaly at a
Glance
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New York Stock Exchange (NYSE):
NLY
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Founded in 1997
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Largest mortgage REIT in the
world
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Diversified investment
strategy
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16.5% economic return (change in book value plus dividends
paid) from the beginning of 2014 through the end of
2015
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Share repurchase authorization of up to $1.0 billion of
common shares through the end of
2016
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605% total return since inception
(including reinvestment of dividends) as of March 31,
2016
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Paid out $13.7 billion in dividends since
inception
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Conservative leverage ratios relative to specified
peers
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Management agreement aligns interests of our manager and our
stockholders
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Our management team has purchased nearly 1.9 million common
shares since 2011
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We have been
externally managed by Annaly Management Company, LLC (our Manager) since 2013.
Our Manager is responsible for managing our affairs pursuant to a management
agreement. Our Manager pays all of the compensation, including benefits, to our
executive officers (who are employees of our Manager) and our Managers other
employees. Although limited personnel (but none of our executive officers) are
employed by our subsidiaries for regulatory or corporate efficiency reasons, all
compensation and benefits paid to such personnel by our subsidiaries reduce, on
a dollar-for-dollar basis, the management fee we pay to our Manager. For ease of
reference, throughout this proxy statement, the employees of our Manager
(including our executive officers) and our subsidiaries are sometimes referred to
as our employees.
Key
Accomplishments
Despite challenging
market conditions for mortgage real estate investment trusts ("REITs") during
2015, we performed strongly and achieved a number of significant accomplishments
that are discussed below.
Transitioned
Leadership
Kevin G. Keyes was
appointed Annalys Chief Executive Officer effective September 30, 2015. On the
same date, Wellington J. Denahan, our former Chief Executive Officer, transitioned
to the position of Executive Chairman. Ms. Denahan continues to serve as
Chairman of the Board and Jonathan D. Green continues to serve as our Lead
Independent Director.
Diversified Investment
Strategy
Over the last few
years, we have diversified our investment strategy by investing in credit assets
with complementary cash flows to achieve superior risk-adjusted returns over the
long term. During 2015, we invested $1.3 billion by growing our commercial real
estate business, launching our own residential credit platform and nearly
tripling the size of our middle market lending portfolio. On a standalone basis
of roughly $3 billion of equity capital, these three businesses would amount to
one of the largest hybrid mortgage REITs in the world, and three times the size
of the average market capitalization for the 40 other mortgage REITs in the
industry. The majority of our credit assets tend to have shorter-term maturities
and floating interest rates. We expect that combining these credit assets with
our core agency strategy should lead to a smoother earnings profile over various
interest rate cycles. Given the relatively low price correlation between credit
and agency-backed assets, we also expect that our diversified strategy will lead
to lower book value volatility as markets
fluctuate.
VI
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Annaly Capital
Management, Inc.
►
2016 Proxy
Statement
|
Table of Contents
Our diversification
strategy is reflected in the following allocation of our capital across four
businesses agency, commercial real estate, residential credit and middle
market lending as of December 31, 2015.
Dividends
From our inception in
1997 through December 31, 2015, we have paid over $13 billion in dividends to
our stockholders, as set forth in the table below. In 2015, we declared over
$1.2 billion in dividends.
www.annalyannualmeeting.com
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VII
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Table of Contents
Delivering Significant
Value for Stockholders
In August 2015, the
Board authorized a $1 billion share repurchase program, which gives us another
avenue to return capital to our stockholders alongside our quarterly dividend
program.
Returns to Stockholders in 2015
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$114.3
million
Shares
repurchased
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$1.2
billion
Common and
preferred
stock dividends declared
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$1.32
billion
Returns to
stockholders
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From January 1, 2016
through March 31, 2016, we have repurchased an additional $102.7 million of
common stock and have $783 million remaining authorization under the share
repurchase program.
Total Common Stock
Return Performance
Since 2014 (the first
full year we were externally-managed, as more fully described in
Management
Structure
below), we have performed well against what we consider to be our
relevant benchmarks. As illustrated by the graph below, shares of our common
stock (including the reinvestment of dividends) have returned significant value
to our stockholders over the long term relative to both our mortgage REIT peers
and other yield-focused investments.
Since 2014, Annaly has
generated a total return of 33.1% to our
stockholders
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Note: Graph reflects
daily market data from December 31, 2013 through March 31, 2016. For the share
performance graph required by the Securities and Exchange Commission (SEC) in
accordance with Item 201(c) of Regulation S-K for the five-year period ended
December 31, 2015, please see page 42 of our Annual Report on Form 10-K for the
year ended December 31, 2015 filed with the SEC on February 26,
2016.
Source:
Bloomberg. mREITs represent the members of the Bloomberg mREIT (BBREMTG)
Index; Utilities represent the members of the Russell 3000 Utility Index; MLPs
represent the members of the Alerian MLP Index; Asset Managers represent the
members of the S&P 500 Asset Management and Custody Bank Index; Banks
represent the members of the KBW Bank Index; and S&P represents the members
of the S&P 500 Index.
VIII
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Annaly Capital
Management, Inc.
►
2016 Proxy
Statement
|
Table of
Contents
Economic Return
Performance
Since we are organized as a REIT and
therefore must distribute at least 90% of our taxable income to our stockholders
annually, we believe that economic return, comprised of dividends
paid
and
changes in book value measured over a specified period, is an especially
meaningful performance metric for the Company. Concerns over increases in
interest rates led us to maintain this relatively conservative leverage over the
period compared to our Agency mREIT peers. Our Agency mREIT Peers consist of
American Capital Agency Corp. (AGNC), Hatteras Financial Corp. (HTS), CYS
Investments, Inc. (CYS), Capstead Mortgage Corp. (CMO), Armour Residential
REIT, Inc. (ARR), and Anworth Mortgage Asset Corp. (ANH) (collectively, the
Agency mREIT Peers), and represent the agency mortgage REITs included in the
BBREMTG Index as of March 31, 2016 with market capitalization above $200
million. From the beginning of 2014 through the end of 2015, we generated an
economic return of 16.5% and operated at 30% less leverage than this peer group.
From the beginning
of 2014 through
the end of
2015,
we generated an
economic return of
16.5% and operated
at 30%
less leverage
then our Agency
mREIT Peers
Stockholder Outreach and
Engagement
Since September 2015, we have had a
renewed focus on developing and maintaining relationships with both our retail
and institutional stockholders. As of March 31, 2016, our outreach has included
six non-deal roadshows with institutional investors, encompassing eight cities
and meetings with 42 different investors. Over the same period, we held an
additional 37 one-on-one meetings with investors to gain and share valuable
insights on a variety of topics, including the Companys diversified investment
strategy and our corporate governance, compensation and management structures.
In addition, we have enhanced our efforts to personalize our interaction with
retail investors, providing high-touch responses to all
requests for information.
Members of our Board may participate in investor outreach when appropriate.
Stockholders are invited to communicate with the Board as described under
Communications with the Board
as described
below.
Members of
the Board may
participate
in
investor outreach
when appropriate
www.annalyannualmeeting.com
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IX
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Table of
Contents
Our Manager and Our Management Agreement
Highlights of our management
agreement
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All of our executive officers are
employees of our Manager
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Our Manager is responsible for the
compensation of its employees (including our executive officers) who
provide services to the Company. We do not pay any cash or equity
compensation to our executive officers, do not provide pension benefits,
perquisites or other personal benefits, and have no employment agreements
or arrangements to pay any cash severance upon their termination or a
change in control of the Company
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Our Manager receives a flat
management fee equal to 1.05% of our stockholders equity, which is used
to pay the compensation and benefits of its employees (including our
executive officers). However, no specific portion of the management fee is
allocated to the compensation of our executive officers
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For 2015, the management fee was
approximately $150.3 million
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Over the past several years, our Manager
has made significant investments in our personnel corresponding to the
diversification of our investment strategy into more people-intensive asset
classes (including residential credit, commercial real estate and middle market
lending assets), as well as to the enhancement of our corporate infrastructure.
These investments include the build out of teams for our agency, residential
credit, commercial real estate and middle market lending businesses, and
significant hires in our risk, legal, accounting, capital markets, middle
office, regulatory, licensing, modeling, project management, forecasting and
information technology departments.
The costs of these personnel expansions
and improvements have been paid by our Manager rather than by us. Unlike a
number of other externally-managed REITs, we do not reimburse our Manager for
any portion or subset of employment costs, all of which are borne by our
Manager. An increase to these costs does not result in any increase to the
management fee, which is a fixed percentage of our stockholders equity as
described above.
The independent members of our Board
review the efforts of our Manager to ensure that it continues to invest in our
personnel. The Board has concluded that the efforts of our Manager to
develop
and
enhance
our
personnel
have resulted in the establishment of a robust and high quality
management team having a full complement of human capital to drive our business
performance. We believe our management team compares very favorably in terms of
size, scope and experience with our mortgage REIT peers.
For additional information about our
Manager, our management agreement and executive compensation, see
Certain
Relationships and Related Party Transactions
,
Our Management Structure
and
Compensation Discussion and Analysis.
X
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Annaly
Capital Management, Inc.
►
2016 Proxy
Statement
|
Table of
Contents
Recent Enhancements to our Corporate
Governance, Compensation and Management Structures
We regularly review and update our
practices related to our corporate governance, compensation and management
structures to align the interests of our management team with those of our
stockholders and to respond to changes in applicable laws, regulations, stock
exchange requirements and best practices and the evolving needs of our
business. Over the last two years, we have made a number of enhancements to
these structures, which include the following:
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Year
of
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Action
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How It
Works
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Adoption
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Adopted a
Clawback
Policy for the
Management Fee
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The Company will seek, and be entitled
to receive, reimbursement from our Manager if the Board determines that a
computation error (regardless of the reason for or amount of such error)
resulted in the overpayment of a management fee to our Manager
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2016
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Enhanced
Stock
Ownership
Guidelines for Directors
and Employees
to
Support Our Ownership
Culture
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►
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Expanded application of stock ownership
guidelines to more than 40% of our employees and Manager personnel
(including our executive officers)
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2016
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Increased stock ownership guidelines for our
Chief Executive Officer
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Increased stock ownership guidelines for our
Independent Directors to five times the annual cash retainer
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Four-Year Stock
Holding
Period
Requirement
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Requires our employees and Manager
Personnel (including our executive officers) to hold for a period of four
years the net after-tax shares of Company stock they receive through stock
option exercises or vesting of equity incentive awards
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2016
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Adopted an Anti-
Pledging
Policy
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Prohibits
our employees and Manager Personnel (including our executive officers)
from holding Company securities in a margin account or pledging Company
securities as collateral for a loan
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2016
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We also have in place an anti-hedging
policy with respect to our equity securities, which is discussed on page
23
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Updated Governing
Documents
and
Committee Charters
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►
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Revised and updated the Corporate
Governance Guidelines, Code of Business Conduct and Ethics, and the
charters of our four standing Board committees to reflect best
practices
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2015 2016
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Created the Role of
Lead
Independent
Director
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►
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Lead Independent Director serves as link
between our management, the Board and our stockholders
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2015
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Robust responsibilities, including the ability
to retain outside consultants who report directly to the
Board
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www.annalyannualmeeting.com
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XI
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Table of
Contents
>
Table of Contents
XII
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Annaly Capital Management, Inc.
► 2016 Proxy
Statement
|
Table of
Contents
>
Corporate Governance at
Annaly
|
Proposal
1
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Election of
Directors
We have three Classes
of Directors. At the Annual Meeting, our stockholders will vote to elect
three Class II Directors, whose terms will expire at our annual meeting of
stockholders in 2019, subject to the election and qualification of their
successors or to their earlier death, resignation or removal. The Class
III and Class I Directors have one year and two years, respectively,
remaining on their terms of office and will not be voted upon at the
Annual Meeting. The
table below provides summary information about each of
our Directors.
OUR BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR KEVIN G. KEYES, KEVIN P. BRADY AND E. WAYNE NORDBERG
AS DIRECTORS TO HOLD OFFICE UNTIL OUR ANNUAL MEETING OF STOCKHOLDERS IN
2019 AND UNTIL THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
THE PERSONS NAMED IN THE ENCLOSED PROXY WILL VOTE YOUR PROXY IN FAVOR OF
THESE NOMINEES UNLESS YOU SPECIFY A CONTRARY CHOICE IN YOUR
PROXY.
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Name
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Age
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Principal Occupation
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Independent
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Committees
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CLASS II DIRECTORS (NOMINATED
TO SERVE FOR THREE-YEAR TERMS EXPIRING IN 2019)
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Kevin
G. Keyes
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48
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Chief Executive
Officer
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No
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and
President
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Annaly Capital Management, Inc.
|
|
|
|
|
|
Kevin
P. Brady
|
|
60
|
|
Chief Executive
Officer
|
|
Yes
|
|
►
|
Audit (Chair)
|
|
|
|
|
ARMtech, LLC
|
|
|
|
►
|
NCG
|
|
|
|
|
|
|
|
|
►
|
Risk
|
E.
Wayne Nordberg
|
|
77
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|
Chairman
|
|
Yes
|
|
►
|
NCG (Chair)
|
|
|
|
|
Hollow Brook Wealth Management,
|
|
|
|
►
|
Compensation
|
|
|
|
|
LLC
|
|
|
|
|
|
CLASS III DIRECTORS (TERMS EXPIRE IN
2017)
|
Francine J. Bovich
|
|
64
|
|
Former Managing
Director
|
|
Yes
|
|
►
|
Audit
|
|
|
|
|
Morgan Stanley Investment
|
|
|
|
►
|
NCG
|
|
|
|
|
Management
|
|
|
|
|
|
Jonathan D. Green
*
|
|
69
|
|
Former Vice
Chairman
|
|
Yes
|
|
►
|
Risk (Chair)
|
|
|
|
|
The
Rockefeller Group
|
|
|
|
►
|
Compensation
|
John
H. Schaefer
|
|
64
|
|
Former President and
Chief
|
|
Yes
|
|
►
|
Audit
|
|
|
|
|
Operating
Officer
|
|
|
|
►
|
Compensation
|
|
|
|
|
Morgan Stanley Global Wealth
|
|
|
|
►
|
Risk
|
|
|
|
|
Management
|
|
|
|
|
|
CLASS I DIRECTORS (TERMS EXPIRE IN
2018)
|
Wellington J. Denahan
|
|
52
|
|
Executive
Chairman
|
|
No
|
|
|
|
|
|
|
|
Annaly Capital Management, Inc.
|
|
|
|
|
|
Michael Haylon
|
|
58
|
|
Managing
Director
|
|
Yes
|
|
►
|
Audit
|
|
|
|
|
Conning Asset Management
|
|
|
|
►
|
Risk
|
Donnell A. Segalas
|
|
58
|
|
Chief Executive Officer
and
|
|
Yes
|
|
►
|
Compensation
|
|
|
|
|
Managing
Partner
|
|
|
|
|
(Chair)
|
|
|
|
|
Pinnacle Asset Management, L.P.
|
|
|
|
►
|
NCG
|
* Lead Independent Director. For more
details, see page
10
.
www.annalyannualmeeting.com
|
|
1
|
Table of
Contents
Corporate Governance at Annaly
|
Nominees to Serve for a Three-Year Term
Expiring in 2019 (Class II Directors)
|
|
|
Kevin G. Keyes
Director
since
November
2012
|
|
Mr. Keyes has served as Chief
Executive Officer
of Annaly since September 2015 and as its President
since October 2012. Previously, Mr. Keyes served as Chief Strategy Officer
and Head of Capital Markets of Annaly
from September 2010 until October 2012.
Prior to joining Annaly as a Managing Director in 2009, Mr. Keyes worked
for 20
years in senior Investment Banking and Capital Markets roles. From
2005-2009, Mr. Keyes served in senior management and business origination
roles
in the Global Capital Markets and Banking Group at Bank of America
Merrill Lynch. Prior to that, he
worked at Credit Suisse First Boston
from 1997 until 2005 in various Capital Markets Origination roles and
Morgan Stanley Dean Witter from 1990 until 1997 in the Mergers and
Acquisitions Group and Real Estate Investment Banking Group. Mr. Keyes
holds a B.A. in Economics and a B.S. in Business Administration (ALPA
Program) from the University of Notre Dame.
|
|
|
|
Director Qualification
Highlights
Mr. Keyes is our Chief Executive
Officer and brings to our Board a deep understanding of issues that are
important to the Companys growth. Through his role as our Chief Executive
Officer and other senior management positions at the Company, Mr. Keyes
has demonstrated leadership qualities, management capability, business and
industry knowledge and a long-term strategic perspective. In addition, Mr.
Keyes
qualifications include over 20 years of experience in investment
banking and as an equity capital markets professional.
|
|
|
|
|
Kevin P.
Brady
Director
since
1997
Committees
Audit (Chair), NCG, Risk
|
|
Mr. Brady is the Chief Executive
Officer of ARMtech, LLC, a venture capital firm that invests and incubates
technology start-ups, which he founded in 2007. ARMtechs current
portfolio includes companies in the financial reporting and data spaces.
Prior to ARMtech, Mr. Brady founded TaxStream, a software company that
specialized in financial reporting, tax and internal controls for
multi-national corporations. Mr. Brady served as Chief Executive Officer
of TaxStream from 2002 to 2008, when the company was sold to
Thomson-Reuters. Mr. Brady previously worked for eight years at
PricewaterhouseCoopers in New York City, where he consulted on M&A
transactions and international tax issues. Mr. Brady holds a B.A. from
McGill University, an M.B.A. from New York University and is a Certified
Public Accountant (inactive). He was awarded a patent from the U.S. Patent
and Trademark Office for the invention of the TaxStream
product.
|
|
|
|
Director Qualification
Highlights
The Board believes that Mr. Bradys
qualifications include his expertise in financial and accounting matters
as well as his significant experience managing systems and companies
focusing on the financial accounting market.
|
|
2
|
|
Annaly
Capital Management, Inc.
►
2016 Proxy
Statement
|
Table of
Contents
Corporate Governance at Annaly
|
|
|
|
E. Wayne Nordberg
Director
since
May 2004
Committees
NCG (Chair), Compensation
|
|
Mr. Nordberg has served as Chairman
of Hollow Brook Wealth Management, LLC, an SEC-registered investment
advisor which manages or advises $1.4 billion of investment assets, since
2008. From January 2003 to November 2008, Mr. Nordberg served as a senior
director of Ingalls & Snyder LLC, a NYSE member and registered
investment advisor. From 1998 to June 2002, Mr. Nordberg served as Vice
Chairman of the board of KBW Asset Management, Inc., an affiliate of
Keefe, Bruyette, & Woods, Inc., a registered investment advisor. From
1988 to 1998, he served in various capacities for Lord Abbett & Co., a
mutual fund company, including partner and director of its family of
funds. Mr. Nordberg received his B.A. from Lafayette College, where he is
a trustee emeritus. He is a member of the Financial Analysts Federation
and The New York Society of Security Analysts and is a Trustee of the
Atlantic Salmon Federation, The American Museum of Fly Fishing and the
National Wildlife Federation Endowment Fund. Mr. Nordberg is also a
director of PetroQuest Energy, Inc. and Reaves Utility Income Fund, both
NYSE-listed companies.
|
|
|
|
Director Qualification
Highlights
The Board believes that Mr.
Nordbergs qualifications include his significant experience in serving at
a senior executive level with a SEC-registered investment advisor, his
experience as a director of an asset management company and his service as
a board member of other public companies.
|
|
Class III Directors (Terms Expire in
2017)
|
|
|
Francine J. Bovich
Director
since
May 2014
Committees
Audit, NCG
|
|
Ms. Bovich has over 30 years of
investment management experience lastly serving as a Managing Director of
Morgan Stanley Investment Management from 1993-2010. Since 2011, Ms.
Bovich has been a trustee of The Bradley Trusts. Ms. Bovich has also
served as a board member of The Dreyfus Family of Funds since 2012, and
serves as a board member of a number of registered investment companies
within the fund complex. These funds represent a broad scope of investment
strategies including equities (US, non-US, global, and emerging markets),
taxable fixed income (US, non-US, global and emerging markets), municipal
bonds, and cash management. From 1991 through 2005, Ms. Bovich served as
the U.S. Representative to the United Nations Investment Committee, which
advised a global portfolio of approximately $30 billion. Ms. Bovich is a
member of The Economic Club of New York and an emeritus trustee of
Connecticut College and chair of the Investment Sub-Committee for its
endowment. Ms. Bovich has a B.A. in Economics from Connecticut
College
and an M.B.A. in Finance from New York University.
|
|
|
|
Director Qualification
Highlights
The Board believes that Ms. Bovichs
qualifications include her significant investment management experience
and her experience serving as a trustee and board member.
|
|
www.annalyannualmeeting.com
|
|
3
|
Table of
Contents
Corporate
Governance at Annaly
|
|
|
|
Jonathan D. Green
Director
since
January 1997
Committees
Risk
(Chair), Compensation
Lead
Independent Director
|
|
Mr. Green served as a special
advisor to Rockefeller Group International, Inc., a wholly owned
subsidiary of Mitsubishi Estate Company, Ltd., operating under the brand
of The Rockefeller Group, from January 2011 until December 2014. He joined
The Rockefeller Group in 1980 as Assistant Vice President and Real Estate
Counsel. In 1983, he was appointed Vice President, Secretary and General
Counsel, and in 1990 was elected Chief Corporate Officer. In 1995, he was
named President and Chief Executive Officer of Rockefeller Group
Development Corporation and Rockefeller Center Management Corporation,
both subsidiaries of The Rockefeller Group. In
2002, Mr. Green was named
President and Chief Executive Officer of Rockefeller Group International,
Inc., becoming Vice Chairman in January 2009. He served as Vice Chairman
until December 2010. In his role as Vice Chairman, Mr. Green was active in
formulating the strategic planning for the company and its subsidiaries,
which include Rockefeller Group Development Corporation, Rockefeller Group
Investment Management, Rockefeller Group Technology Solutions, Inc. and
Rockefeller Group Business Centers. Before joining The Rockefeller Group,
Mr. Green was associated with the New York City law firm of Thacher,
Proffitt & Wood. He also serves on the board of trustees of the
Wildlife Conservation Society. Mr. Green graduated from Lafayette College
and the New York University School of Law.
|
|
|
|
Director Qualification
Highlights
The Board believes that Mr. Greens
qualifications include his significant experience as a chief executive,
his diverse and significant background in the real estate industry and his
legal expertise.
|
|
|
|
|
John H. Schaefer
Director
since
March 2013
Committees
Audit, Compensation and Risk
|
|
Mr. Schaefer has over 40 years of
financial services experience including serving as a member of the
management committee of Morgan Stanley from 1998 through 2005 and as
President and Chief Operating Officer of the Global Wealth Management
division of Morgan Stanley. Mr. Schaefer retired in February 2006 and from
2008 through 2012 served as a board member and chair of the audit
committee of USI Holdings Corporation. Mr. Schaefer has a B.B.A. in
Accounting from the University of Notre Dame and an M.B.A. from the
Harvard Graduate School of Business.
|
|
|
|
Director Qualification
Highlights
The Board believes that Mr.
Schaefers qualifications include his broad financial services management
experience, including management of strategic planning, capital
management, human resources, internal audit and corporate communications,
as well as his board and audit committee experience.
|
|
4
|
|
Annaly Capital
Management, Inc.
►
2016 Proxy
Statement
|
Table of
Contents
Corporate
Governance at Annaly
|
Class I Directors (Terms Expire in
2018)
|
|
|
Wellington J. Denahan
Director
since
1997
Chairman of the
Board
|
|
Ms. Denahan has served as Chairman
of the Board since November 2012 and Executive Chairman of Annaly since
September 2015. Previously, Ms. Denahan served as Chief Executive Officer
of Annaly from November 2012 to September 2015 and as Co-Chief Executive
Officer of Annaly from October 2012 to November 2012. Ms. Denahan was
elected in December 1996 to serve as Vice Chairman of the Board. Ms.
Denahan was Annalys Chief Operating Officer from January 2006 to October
2012 and Chief Investment Officer from 2000 to November 2012. She was a
co-founder of Annaly. Ms. Denahan has a B.A. in Finance from Florida State
University.
|
|
|
|
Director Qualification
Highlights
The Board believes that Ms.
Denahans qualifications include her significant oversight experience
related to fixed income trading operations through years of serving as our
Chief Operating Officer and Chief Investment Officer, her industry
experience and expertise in the mortgage-backed securities markets, and
her operational expertise, including her service as our former Chief
Executive Officer.
|
|
|
|
|
Michael Haylon
Director
since
June 2008
Committees
Audit, Risk
|
|
Mr. Haylon has served as Managing
Director and Head of Asset Management Sales, Products and Marketing at
Conning, Inc., a global provider of investment management solutions,
services and research to the insurance industry, since December 2014. Mr.
Haylon previously served as Managing Director and Head of Investment
Products at Conning, Inc. from January 2012 until December 2014. From
September 2010 to December 2011, Mr. Haylon served as Head of Investment
Product Management at General Re New England Asset Management. He was
Chief Financial Officer of the Phoenix Companies, Inc. from 2004 until
2007, and Executive Vice President and Chief Investment Officer of the
Phoenix Companies in 2002 and 2003. From 1995 until 2002, he held the
position of Executive Vice President of Phoenix Investment Partners, Ltd.,
a NYSE-listed company, and President of Phoenix Investment Counsel, where
he was responsible for the management and oversight of $25 billion in
closed-end and open-end mutual funds, corporate pension funds and
insurance company portfolios. From 1990 until 1994, he was Senior Vice
President of Fixed-Income at Phoenix Home Life Insurance Company. From
1986 until 1990, he was Managing Director at Aetna Bond Investors where he
was responsible for management of insurance company and pension fund
portfolios. From 1980 until 1984 he was Senior Financial Analyst at
Travelers Insurance Companies. He began his career in 1979 in the
commercial lending program at Philadelphia National Bank. Mr. Haylon has
previously served on the boards of Aberdeen Asset Management and Phoenix
Investment Partners. He has a B.A. from Bowdoin College and a M.B.A. from
the University of Connecticut.
|
|
|
|
Director Qualification
Highlights
The Board believes that Mr. Haylons
qualifications include his significant leadership and management
experience from his years of management and oversight of large financial
asset portfolios, his prior board experience with other companies and his
expertise in financial matters.
|
|
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|
|
5
|
Table of Contents
Corporate Governance at Annaly
|
|
|
|
Donnell A. Segalas
Director since
January
1997
Committees
Compensation (Chair),
NCG
|
|
Mr. Segalas is the Chief Executive
Officer and a Managing Partner of Pinnacle Asset Management L.P., a New
York-based alternative asset management firm. Additionally, Mr. Segalas is
a member of Pinnacles Investment Committee and sits on the boards of its
offshore funds. Prior to joining Pinnacle in 2003, Mr. Segalas was
Executive Vice President for Alternative
Investment Products (AIP) at
Phoenix Investment Partners. Mr. Segalas is a member of the Nantucket
Historical Society. He received a B.A. from Denison
University.
|
|
|
|
Director
Qualification Highlights
The Board believes that Mr.
Segalas
qualifications include his significant experience from his years of
investing and managing private and public investment vehicles and his
experience serving on investment and executive committees of other
companies.
|
|
Independence of Our
Directors
Our Corporate Governance Guidelines and
NYSE rules require that at least a majority of our Board members are Independent
Directors. We have adopted the definition of independent director set forth in
Section 303A of the NYSE rules and have affirmatively determined that each
Director (other than Ms. Denahan and Mr. Keyes) has no material relationships
with us (either directly or as partner, stockholder or officer of an
organization that has a relationship with us) and is therefore independent in
accordance with the standards set forth in the NYSE rules and our Corporate
Governance Guidelines.
Director Nomination
Process
The Nominating/Corporate Governance
(NCG) Committee is responsible for identifying and screening nominees for
Director and for recommending to the Board candidates for nomination for
election or re-election to the Board and to fill Board vacancies. Nominees may
be suggested by Directors, members of management, stockholders or professional
search firms. In evaluating a Director nomination, the NCG Committee may review
materials provided by the nominator, a professional search firm or other
party.
The NCG Committee seeks to achieve a
balance of knowledge, experience and capability on the Board and considers a
wide range of factors when assessing potential Director nominees, including
a candidates background, skills, expertise, diversity, accessibility and
availability to serve effectively on the Board. All candidates should (i)
possess the highest personal and professional ethics, integrity and values,
exercise good business judgment and be committed to representing the long-term
interests of the Company and its stockholders, and (ii) have an inquisitive and
objective perspective, practical wisdom and mature judgment. It is expected that
all Directors will develop an understanding of the Companys business and be
willing to devote sufficient time and effort to carrying out their duties and
responsibilities effectively.
Although the NCG Committee does not have a
formal diversity policy, it believes that diversity is an important factor in
determining the composition of the Board. Additionally, the Company endeavors to
have a Board representing diverse experiences at policy-making levels in
business, finance, government, education, law and technology, and in other areas
that are relevant to the Companys business and its status as a public company,
as this contributes to our success and is in the best interests of our
stockholders.
Two new,
highly
qualified
Independent
Directors have
joined the Annaly
Board
over the last
three years
|
6
|
|
Annaly Capital Management, Inc.
► 2016 Proxy Statement
|
Table of Contents
Corporate Governance at Annaly
|
Stockholder
Recommendation of Director Candidates
Stockholders who wish the NCG Committee to
consider their recommendations for Director candidates should submit their
recommendations in writing to our Secretary at our principal executive offices.
Following verification of the stockholder status of persons proposing
candidates, recommendations are aggregated and considered by our NCG Committee
at a regularly scheduled or special meeting. If any materials are provided by a
stockholder in connection with the nomination of a Director candidate, such
materials are forwarded to our NCG Committee. Properly submitted recommendations
by stockholders will receive the same consideration by the NCG Committee as
other suggested nominees.
The Boards Role and
Responsibilities
We are committed to maintaining a strong
ethical culture and robust governance practices that benefit the long-term
interests of stockholders. Our corporate governance practices
include:
|
|
|
|
|
|
|
Board
Structure
►
7 of 9 Directors are Independent
►
Lead Independent Director
►
Regular executive sessions of Independent
Directors
►
Independent Board committees
►
2 women Directors (including the Executive
Chairman)
|
|
Director Qualifications
►
Annual Board and committee self-evaluations
►
Over-boarding policy limits the number of outside boards
on which our Directors can serve
►
2 audit committee financial experts
|
|
Stockholder Rights and Engagement
►
Majority vote standard for uncontested
elections
►
Annual stockholder advisory vote on executive
compensation
►
Active stockholder engagement program
|
|
Recent
Governance Enhancements
►
Clawback policy
►
Anti-pledging policy
►
Stock ownership guidelines for our Directors and
employees
►
Four-year stock holding period requirement for
employees
|
|
|
|
|
|
|
|
Board Oversight of
Risk
Risk management begins with our Board,
through the review and oversight of the risk management framework, and continues
with executive management, through the ongoing formulation of risk management
practices and related execution in managing risk. The Board exercises its
oversight of risk management primarily through its Risk Committee and Audit
Committee. The Risk Committee is
responsible for
assisting the Board in its oversight of our risk governance structure, our risk
management and risk assessment guidelines and policies, our risk tolerance, and
our capital, liquidity, and funding. The Audit Committee assists the Board in
its oversight of the quality and integrity of our accounting, internal controls
and financial reporting practices, including independent auditor selection,
evaluation and review, and oversight of the internal audit function. At least
annually, the full Board reviews our risk management program, which identifies
and quantifies a broad spectrum of enterprise-wide risks and related action
plans, with management. For additional information on the responsibilities of
the Risk Committee and the Audit Committee, please see the
Board Committees
section of this proxy statement.
The Audit
and
Risk Committees
have primary
Board
oversight
of the Companys
risk management
framework
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7
|
Table of Contents
Corporate Governance at Annaly
|
Risk assessment and risk management are
the responsibility of our management. A series of management committees have
oversight or decision-making responsibilities for risk management activities.
The management committees responsible for our risk management include the
Operating Committee, Enterprise Risk Committee, the Asset and Liability
Committee, the Investment Committee and the Financial Reporting and Disclosure
Committee.
In addition to the risk oversight
processes outlined above, the Board reviews its risk assessment of the Companys
compensation policies and practices applicable to the Companys equity incentive
plans with the Compensation Committee. For additional information on this
review, please see the
Risks Related to Compensation Policies and Practices
section of this proxy statement.
Management Succession
Planning
The Board approves and maintains a
succession plan for the Chief Executive Officer and other senior executives. In
carrying out this function, the Board endeavors to ensure that the Companys
management has the capabilities to cause the Company to operate in an efficient
and business-like fashion in the event of a vacancy in senior management,
whether anticipated or sudden.
Other
Directorships
In order to provide sufficient time for
informed participation in their Board responsibilities:
►
|
Directors who also serve as chief executive officers or hold
equivalent positions at other companies should not serve on more than two
other boards of public companies in addition to the Companys
Board;
|
►
|
Other Directors should not serve on more than four other
boards of public companies in addition to the Companys Board;
and
|
►
|
A member of the Audit Committee should not serve on the
audit committee of more than two other public
companies.
|
Directors are required to notify the
Chairman of the Board and the chair of the NCG Committee in advance of accepting
an invitation to serve on another public company board.
Communications with
the Board
Stockholders and other persons interested
in communicating with an individual Director (including the Lead Independent
Director), the Independent Directors as a group, any committee of the Board or
the Board as a whole, may do so by submitting such communication to:
Annaly Capital Management,
Inc.
[Addressee]
1211 Avenue of the Americas
New York, NY
10036
Phone: 1-888-8 ANNALY
Facsimile:
(212) 696-9809
Email:
investor@annaly.com
The Legal Department
reviews communications to
the Directors and forwards those communications related to the duties and
responsibilities of the Board. Certain items such as business solicitation or
advertisements; product-related inquiries; junk mail or mass mailings; resumes
or other job-related inquiries; spam and unduly hostile, threatening,
potentially illegal or similarly unsuitable communications will not be
forwarded.
Stockholders
may
communicate with
any of our Directors,
including the Lead
Indepent
Director
|
8
|
|
Annaly Capital Management, Inc.
► 2016 Proxy Statement
|
Table of Contents
Corporate Governance at Annaly
|
Certain Relationships
and Related Party Transactions
Approval of Related Party
Transactions
Each of our Directors, Director nominees
and executive officers is required to report all transactions with us in which
they or their immediate family member had or will have a direct or indirect
material interest with respect to us in an annual disclosure questionnaire and
on an on-going basis. We review these annual questionnaires and any interim
reports and, if we determine it to be necessary, discuss any reported
transactions with the entire Board. Other than as discussed in this section,
there were no reported transactions for 2015 and there is no transaction currently
pending for 2016. We do not, however, have a formal written policy for approval
or ratification of such transactions, and all such transactions are evaluated on
a case-by-case basis. If we believe a transaction is significant to us and
raises particular conflict of interest issues, we will discuss it with our legal
counsel, and if necessary, we will form an independent Board committee which has
the right to engage its own legal and financial counsel to evaluate, approve or
ratify the transaction.
Management
Agreement
We have entered into a management
agreement (the Management Agreement) with Annaly
Management Company
LLC (our Manager). Our management is conducted by our
Manager through the authority delegated to it in the Management Agreement and
pursuant to the policies established by our Board. The Management Agreement was
effective as of July 1, 2013 and was amended in November 2014 and then amended
and restated in April 2016, and may be further amended by agreement between us
and our Manager.
The Management Agreement provides for a
two-year term ending December 31, 2016 with automatic two-year renewals unless
at least two-thirds of our Independent Directors or the holders of a majority of
our outstanding shares of common stock elect to terminate the agreement in their
sole discretion and for any or no reason. At any time during the term or any
renewal term, either party may deliver to the other party prior written notice
of its intention to terminate the Management Agreement no less than one year
prior to its proposed termination date or, but only in the event our Manager is
the terminating party, such earlier date as determined by us in our sole
discretion. There is no termination fee for a termination of the Management
Agreement by either us or our Manager.
The Management Agreement provides that
during its term and, in the event of termination of the Management Agreement by
our Manager without cause, for a period of one year following such termination,
our Manager will not, without our prior written consent, manage any REIT which
engages in the management of mortgage-backed securities in any geographical
region in which we operate.
Pursuant to the terms of the Management
Agreement, we pay our Manager a monthly management fee equal to
1/12
th
of 1.05% of our stockholders equity, as defined in the
Management Agreement, for its management services. We incurred approximately
$150.3 million in management fees under the Management Agreement during the year
ended December 31, 2015.
Our
management
fee of 1.05% of
stockholders equity
compares
favorably
to the industry
average
|
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9
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Table of Contents
>
Board Structure and Processes
Board Leadership
Structure
We carefully considered the leadership
structure of the Board in 2015. While we consider the appropriateness of this
structure regularly, the deliberation is never more critical than in the context
of a leadership transition. Effective September 30, 2015, Ms. Denahan
transitioned from the role of Chief Executive Officer to the newly-created
position of Executive Chairman and Mr. Keyes assumed the role of Chief Executive
Officer. Ms. Denahan continues to serve as Chairman of the Board and Mr. Green
continues to serve as our Lead Independent Director.
We believe that our current leadership
structure, which comprises a separate Chairman of the Board and Chief Executive
Officer, with Mr. Green serving as Lead Independent Director, is effective and
serves the best interests of our stockholders. This structure allows Mr. Keyes
to focus on his duties in managing the day-to-day operations of the Company,
while benefitting from Ms. Denahans invaluable knowledge and expertise
regarding the Companys business. The Lead Independent Director has the
following responsibilities:
Our Lead
Independent
Director
has
significant authority
and
responsibilities
|
►
|
Presides at all meetings of the Board in the absence of or
at the request of the Chairman of the Board, including executive sessions
of Independent Directors
|
►
|
Facilitates communication between
the Independent Directors and the Chairman of the Board and the Chief
Executive Officer
|
►
|
Advises on the selection of
committee chairs
|
►
|
Approves the quality, quantity and
timeliness of information sent to the Board
|
►
|
Approves Board meeting
agendas
|
►
|
Approves Board meeting schedules to
assure there is sufficient time for discussion of all agenda
items
|
►
|
Has authority to call meetings of
the Independent Directors
|
►
|
Authorizes the retention of outside
advisors and consultants who report directly to the
Board
|
►
|
If requested by stockholders,
ensures that he is available, when appropriate, for consultation and
direct communication with major
stockholders
|
We believe that the Boards independent
oversight function is further enhanced by our policy to hold regular executive
sessions of the Independent Directors without management present and the fact
that our four standing committees are comprised entirely of Independent
Directors.
Executive Sessions of
Independent Directors
Our Corporate Governance Guidelines
require that the Board have at least two regularly scheduled meetings each year
for our Independent Directors. These meetings, which are designed to promote
unfettered discussions among our Independent Directors, are presided over by our
Lead Independent Director. During 2015, our Independent Directors, without the
participation of Board members who are members of management, held five
meetings.
Board and Committee
Evaluations
The Lead Independent
Director
and the NCG Committee are responsible for overseeing an annual
self-evaluation process for the Board. The self-evaluation process seeks to
identify specific areas, if any, that need improvement or strengthening in order
to increase the effectiveness of the Board as a whole
10
|
|
Annaly Capital Management, Inc.
► 2016 Proxy Statement
|
Table of Contents
Board Structure and Processes
|
and its committees. Each standing
committee of the Board evaluates its performance on an annual basis and reports
to the Board on such evaluation.
Governing
Documents
Code of Business Conduct and
Ethics
We have adopted a Code of Business Conduct
and Ethics, which sets forth the basic principles and guidelines for resolving
various legal and ethical questions that may arise in the workplace and in the
conduct of our business. This code is applicable to our Directors, executive
officers and employees.
Corporate Governance Guidelines
We have adopted Corporate Governance
Guidelines which, in conjunction with the charters of our Board committees,
provide the framework for the governance of our Company.
Where You Can Find Our Governing
Documents
Our Code of Business Conduct and Ethics,
Corporate Governance Guidelines, Compensation Committee Charter, Audit Committee
Charter, NCG Committee Charter and Risk Committee Charter are available on our
website (
www.annaly.com
). We will provide copies of these documents free of
charge to any stockholder who sends a written request to Investor Relations,
Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York,
NY 10036.
Board
Committees
The Board has four standing committees:
the Audit Committee, the Compensation Committee, the NCG Committee, and the Risk
Committee. Each committee is governed by a written charter approved by the Board
and is comprised entirely of Independent Directors, as required under the
existing rules of the Securities Exchange Act of 1934, as amended (the Exchange
Act) and the NYSE. In addition, each member of the Audit Committee and the
Compensation Committee meets the additional independence criteria applicable to
directors serving on these committees under the NYSE listing rules.
All Board
committees are
composed
entirely
of Independent
Directors
|
The table below shows the current
membership of each Board committee and number of meetings of each committee held
in 2015.
Director
|
|
Audit
Committee
|
|
Compensation
Committee
|
|
NCG
Committee
|
|
Risk Committee
|
Francine J. Bovich
(1)
|
|
M
|
|
|
|
M
|
|
|
Kevin P. Brady
|
|
C
|
|
|
|
M
|
|
M
|
Jonathan D. Green
(2)
|
|
|
|
M
|
|
|
|
C
|
Michael Haylon
|
|
M
|
|
|
|
|
|
M
|
E. Wayne Nordberg
|
|
|
|
M
|
|
C
|
|
|
John H. Schaefer
|
|
M
|
|
M
|
|
|
|
M
|
Donnell A. Segalas
|
|
|
|
C
|
|
M
|
|
|
2015 Meetings:
|
|
5
|
|
4
|
|
2
|
|
4
|
M = Member
C = Chairperson
(1)
Ms. Bovich was appointed to
the NCG Committee in March 2016.
(2)
Mr. Green serves as the
Lead Independent Director. For more details, see page
10
.
www.annalyannualmeeting.com
|
|
11
|
Table of Contents
Board Structure and Processes
|
Committee
|
|
|
Key
Responsibilities
|
Audit
|
|
|
►
Recommends to our Board the engagement or termination of
independent registered public accountants
►
Reviews the plan and results of the auditing engagement
with our Chief Financial Officer and our independent registered public
accountants
►
Oversees internal audit activities
►
Oversees the quality and integrity of our financial
statements and financial reporting process
►
Oversees the adequacy and effectiveness of internal
control over financial reporting
|
The Board has determined that each
member of the committee is financially literate, and that Messrs. Brady
and Haylon are audit committee financial experts under applicable SEC
rules. For more information on the responsibilities and activities of the
committee, see the
Board Oversight of Risk
and
Report of the Audit Committee
sections of this proxy statement.
|
Compensation
|
|
|
►
Evaluates the performance of our Manager and the terms
of the Management Agreement in light thereof
►
Reviews the fees payable to our Manager
►
Administers the Companys equity incentive plans and
other equity compensation programs
►
Reviews the form and amount of Director
compensation
►
Evaluates the performance of our
officers
|
For more information on the
responsibilities and activities of the committee, see the
Compensation of Directors
and
Compensation Discussion and Analysis
sections of this
proxy statement.
|
NCG
|
|
|
►
Develops and recommends criteria for considering
potential Board candidates
►
Identifies and screens individuals qualified to become
Board members, and recommends to the Board candidates for nomination for
election or re-election to the Board and to fill Board
vacancies
►
Develops and recommends to the Board a set of corporate
governance guidelines and recommends modifications as
appropriate
►
Provides oversight of the evaluation of the Board and
management
►
Considers other corporate governance matters, such as
director retirement policies, management succession plans and potential
conflicts of interest of Board members and senior management, and
recommends changes as appropriate
|
For more information on the
responsibilities and activities of the committee, see the
Director Nomination Process
section of this proxy statement.
|
Risk
|
|
Assists the Board in its oversight
of the Companys:
|
|
|
|
►
risk governance structure
►
risk management and risk assessment guidelines and
policies regarding market, credit, operational, liquidity, funding and
reputational risk and such other risks as necessary to fulfill the
committees duties and responsibilities
►
risk tolerance, including risk tolerance levels and
capital targets and limits
►
capital, liquidity, and funding
|
For more
information on the responsibilities and activities of the committee, see
the
Board Oversight of Risk
section of this proxy
statement.
|
12
|
|
Annaly Capital Management, Inc.
► 2016 Proxy Statement
|
Table of Contents
Board Structure and Processes
|
Director
Attendance
During 2015, our Board held 14 meetings.
Each Director attended at least 75% of the aggregate number of meetings held by
our Board and 75% of the aggregate number of meetings of each committee on which
the Director served.
We expect each member of the Board to
attend our annual meeting of stockholders. All of our Directors attended our
2015 annual meeting of stockholders.
Compensation of
Directors
We compensate our Independent Directors.
Any Director who is also an employee of our Manager does not receive
compensation for serving on our Board. Our Compensation Committee is responsible
for reviewing, and recommending to the Board, the form and amount of
compensation paid to our Independent Directors.
The compensation elements paid to our
Independent Directors for service on the Board and its committees for 2015 is
set forth below:
Annual Compensation
Element
|
|
Amount
|
Annual Cash
Retainer
|
|
$100,000
|
Deferred Stock Unit
(DSU) Grant
|
|
$135,000 in
DSUs
|
Lead Independent Director
Retainer
|
|
$10,000
|
Audit Committee Chair
Retainer
|
|
$15,000
|
Compensation Committee
Chair Retainer
|
|
$10,000
|
NCG Committee Chair
Retainer
|
|
$10,000
|
Risk Committee Chair
Retainer
|
|
$10,000
|
Committee Meeting
Fees
|
|
$1,500 per committee
meeting
|
Each DSU is equivalent in value to one
share of our common stock. DSUs are granted on the date of the annual
stockholder meeting and vest immediately. DSUs convert to shares of our common stock
one year after the date of grant unless the Director elects to defer the
settlement of the DSUs to a later date. DSUs do not have voting rights. DSUs pay
dividend equivalents in either cash or additional DSUs at the election of the
Director. Our Independent Directors are also eligible to receive other
stock-based awards under our equity incentive plan.
We reimburse our Directors for their
reasonable out-of-pocket travel expenses incurred in connection with their
attendance at full Board and committee meetings.
www.annalyannualmeeting.com
|
|
13
|
Table of Contents
Board Structure and Processes
|
Director Stock Ownership
Guideline
In 2016, we increased the stock ownership
guideline for our Independent Directors to provide that each Independent
Director should strive to own an amount of our common stock equal to
five times
the annual cash retainer. Shares counting toward the guideline include shares
that are owned outright, DSUs, and any other shares held in deferral accounts.
To facilitate achievement of the guideline, we have adopted and implemented a
retention ratio that requires Independent Directors to retain and hold 50% of
the net profit shares from DSUs until the specified ownership level is achieved.
Net profit shares are shares remaining after payment of income taxes upon
settlement of the DSUs.
During 2016,
we
increased the stock
ownership guideline
for
Independent
Directors to 5x
the annual cash
retainer,
which is
currently
$100,000
|
No Conflicts of Interest for
Compensation Consultant
During 2015, our Compensation Committee
retained Frederic W. Cook & Co., a nationally-recognized compensation
consulting firm (F. W. Cook), to assist the Compensation Committee in its
review of the compensation arrangements provided to our Independent Directors.
The Compensation Committee considered F. W. Cooks independence in light of SEC
regulations and NYSE listing standards. The Compensation Committee discussed all
relevant factors and concluded that the continued engagement of F. W. Cook does
not raise any conflicts of interest.
Director
Compensation
The table below summarizes the
compensation paid by us to our Independent Directors for the fiscal year ended
December 31, 2015.
Name
|
|
Fees Earned or Paid in Cash
|
|
Stock Awards
(1)
|
|
Total
|
|
Francine J. Bovich
|
|
$106,000
|
|
$135,000
|
|
$241,000
|
|
Kevin
P. Brady
|
|
$131,500
|
|
$135,000
|
|
$266,500
|
|
Jonathan D. Green
|
|
$133,500
|
|
$135,000
|
|
$268,500
|
|
Michael Haylon
|
|
$113,500
|
|
$135,000
|
|
$248,500
|
|
E.
Wayne Nordberg
|
|
$119,000
|
|
$135,000
|
|
$254,000
|
|
Donnell A. Segalas
|
|
$119,000
|
|
$135,000
|
|
$254,000
|
|
John
H. Schaefer
|
|
$119,500
|
|
$135,000
|
|
$254,500
|
|
(1)
|
The amounts in this
column represent the aggregate grant date fair value of the DSU awards,
computed in accordance with FASB ASC Topic 718 and based on the closing
price of our common stock on the date of grant. DSUs are vested at grant
and accrue dividend equivalents as additional DSUs or cash at the election
of the Director.
|
The following table sets forth information
with respect to the aggregate outstanding option awards at December 31, 2015 of
each of our Independent Directors.
Name
|
|
Outstanding Option
Awards at
12/31/15
|
|
Francine J. Bovich
|
|
|
|
Kevin
P. Brady
|
|
45,000
|
|
Jonathan D. Green
|
|
107,500
|
|
Michael Haylon
|
|
77,500
|
|
E.
Wayne Nordberg
|
|
107,500
|
|
Donnell A. Segalas
|
|
80,000
|
|
John
H. Schaefer
|
|
|
|
14
|
|
Annaly Capital Management, Inc.
► 2016 Proxy Statement
|
Table of Contents
>
Management
The following table sets
forth certain information with respect to our executive officers, all of whom are
employees of our Manager:
Name
|
|
Age
|
|
Title
|
Kevin G. Keyes
|
|
48
|
|
Chief Executive Officer, President and
Director
|
Wellington J. Denahan
|
|
52
|
|
Chairman of the Board and Executive Chairman
|
Glenn A. Votek
|
|
57
|
|
Chief Financial Officer
|
R. Nicholas Singh
|
|
57
|
|
Chief Legal Officer and
Secretary
|
Biographical information on
Mr. Keyes and Ms. Denahan is provided above under the heading
Election of Directors.
Certain biographical information for Mr. Votek and Mr. Singh is set
forth below.
Glenn A. Votek
has served as Chief Financial Officer of
Annaly since August 2013. Mr. Votek served as Chief Financial Officer of Fixed
Income Discount Advisory Company (FIDAC) from August 2013 until October 2015.
Mr. Votek joined Annaly in May 2013 from CIT Group where he was an Executive
Vice President and Treasurer since 1999 and President of Consumer Finance since
2012. Prior to that, Mr. Votek worked at AT&T and its finance subsidiary
from 1986 until 1999 in various financial management roles. Mr. Votek has a B.S.
in Finance and Economics from the University of Arizona/Kean College and a
M.B.A. in Finance from Rutgers University.
R. Nicholas
Singh
is Chief Legal Officer and
Secretary of Annaly. Mr. Singh joined Annaly in February 2005. Mr. Singh also
served as Chief Legal Officer and Secretary of FIDAC from February 2005 until
October 2015. From 2001 until he joined Annaly, he was a partner in the law firm
of McKee Nelson LLP. Mr. Singh has a B.A. from Carleton College, a M.A. from
Columbia University and a J.D. from American University.
Stock Purchases by Executive Officers
Since 2011, our executive officers have purchased nearly 1.9 million shares of our common stock (including
open market purchases and option exercises) with an aggregate purchase price of
over $22 million as set forth in the table below.
Executive
Officer
|
|
Shares
Purchased
|
|
Purchase
Price
|
Kevin G.
Keyes
|
|
550,000
|
|
$
|
6,313,500
|
Wellington J.
Denahan
|
|
1,059,871
|
|
$
|
12,311,251
|
R. Nicholas
Singh
|
|
235,284
|
|
$
|
2,897,730
|
Glenn A.
Votek
|
|
50,000
|
|
$
|
525,250
|
TOTAL
|
|
1,895,155
|
|
$
|
22,047,731
|
None
of our
executive officers
has ever sold shares
of our
common
stock
|
www.annalyannualmeeting.com
|
|
15
|
Table of Contents
>
Our Management Structure
Overview
Following our management
externalization transaction (the
Externalization), which was approved by our stockholders on May 23,
2013, we are externally managed by our Manager. Pursuant to the terms of the
Management Agreement, we pay our Manager a management fee and our Manager pays
all of the compensation to our management personnel (including our executive
officers). The Compensation Committee annually reviews the management fee and the
performance of our Manager, including the key accomplishments discussed
beginning on page 2. The independent members of the Board then consider the
Compensation Committees recommendations when determining whether to renew or
amend the terms of the Management Agreement. Based on the review and factors described in more detail
below, the independent members of the Board have determined that the Management
Agreement continues to be in the best interests of the Company and our
stockholders. For additional information, see
Certain Relationships and Related Party Transactions
and
Compensation Discussion and Analysis.
Our
Management
Agreement compares
favorably to
the
management
agreements of
our
externally-managed
peers
|
Management Agreement Terms
We believe that the terms
and conditions of the Management Agreement compare favorably to the terms and
conditions that exist between our externally-managed mortgage REIT peers and
their respective managers. In particular, as illustrated by the table below,
when compared to the median for the peer comparison, (i) the management fee paid
to our Manager is lower as a percentage of stockholders equity, (ii) the term
of the Management Agreement was of a shorter duration, and (iii) the Management
Agreement has no termination fee, which is expressed in the table below as a
multiple of trailing average annual management fees.
|
|
Mean
|
|
Median
|
|
Min
|
|
Max
|
|
|
ANNALY
|
|
Agency Residential REITs
|
|
|
|
|
|
|
|
|
|
|
|
|
Base management
fee
(1)
|
|
1.13%
|
|
1.23%
|
|
0.72%
|
|
1.36%
|
|
|
1.05%
|
|
Initial term in years
|
|
4.5
|
|
3.0
|
|
2.0
|
|
10.0
|
|
|
1.5
|
|
Termination fee
multiple
(2)
|
|
3.3x
|
|
3.0x
|
|
3.0x
|
|
4.0x
|
|
|
None
|
|
Commercial REITs
|
|
|
|
|
|
|
|
|
|
|
|
|
Base management fee
|
|
1.50%
|
|
1.50%
|
|
1.50%
|
|
1.50%
|
|
|
|
|
Initial term in
years
(3)
|
|
5.0
|
|
3.0
|
|
1.0
|
|
20.0
|
|
|
|
|
Termination fee
multiple
(3)
|
|
2.8x
|
|
3.0x
|
|
1.0x
|
|
4.0x
|
|
|
|
|
Non-Agency Residential/Hybrid
REITs
|
|
|
|
|
|
|
|
|
|
|
|
|
Base management fee
|
|
1.50%
|
|
1.50%
|
|
1.50%
|
|
1.50%
|
|
|
|
|
Initial term in years
|
|
2.8
|
|
3.0
|
|
1.0
|
|
3.0
|
|
|
|
|
Termination fee
multiple
(4)
|
|
3.0x
|
|
3.0x
|
|
1.0x
|
|
3.0x
|
|
|
|
|
Source: Public filings
as of year ended December 31, 2015. All base management fees are calculated as a
percentage of stockholders equity and all termination fees are calculated as a
multiple of the average annual base management fee during the prior 24-month
period, except as otherwise specified below. Agency Residential REITs represents
the Agency mREIT Peers, with the exception of CYS and CMO, which are
internally-managed companies; Commercial REITs represents the externally-managed
commercial mortgage REITs included in the BBREMTG Index as of March 31, 2016
with market capitalization above $200mm and includes Northstar Realty Finance
Corp., Blackstone Mortgage Trust, Inc., Ares Commercial Real Estate Corp.,
Resource Capital Corp., Apollo Commercial Real Estate Finance, Inc., Starwood
Property Trust, Inc. and Newcastle Investment Corp. (NCT); Non-Agency
Residential/Hybrid REITs represents the externally-managed non-agency
residential and hybrid mortgage REITs included in the BBREMTG Index as of March
31, 2016 with market capitalization above $200mm and includes New Residential
Investment Corp. (NRZ), Western Asset Mortgage Capital Corp., American Capital
Mortgage Investment Corp., Apollo Residential Mortgage, Inc., AG Mortgage
Investment Trust, Inc., PennyMac Mortgage Investment Trust (PMT), Invesco
Mortgage Capital Inc. and Two Harbors Investment Corp.
(1)
|
For HTS and ARR, base management fees of 0.72% and 1.36%,
respectively, are implied based on a sliding scale structure disclosed in
their respective management agreements and Q415 balance
sheets.
|
(2)
|
ARRs termination fee is calculated using the prior 12-month
period.
|
(3)
|
NCTs termination fee is calculated using the prior 12-month
period.
|
(4)
|
NRZs termination fee is calculated using the prior 12-month
period. Pursuant to the terms of its management agreement, PMTs
termination fee is calculated as a multiple of the base management fee and
a performance incentive fee. For purposes of this table, we have
disregarded any impact from this performance incentive fee on PMTs
termination fee multiple.
|
16
|
|
Annaly Capital Management, Inc.
► 2016 Proxy
Statement
|
Table of Contents
Structure and Amount of the Management
Fee
The Compensation Committee
annually reviews both the structure of the management fee as well as the amount
of such fee to determine whether they incentivize the management team to work
towards the Companys desired goals to the benefit of long-term stockholder
interests. The Compensation Committee has determined that the use of a
management fee
formulated as a
percentage of stockholders equity represents a responsible and prudent method
of compensating the management team. In particular, in the context of a mortgage
REIT that uses leverage as a key component of its business strategy, the
Compensation Committee considers that providing for a contractually required
payment structured as an incentive fee may misalign the goals of the
management team from those of the stockholders. For example, an incentive fee
based on the achievement of return thresholds may encourage the management team
to seek the targeted returns by employing an excessive amount of leverage that
constitutes an unacceptable risk to the Company and its capital base.
Contractually required
incentive fees
may
misalign the goals of
management from
those of stockholders
especially at a
mortgage REIT
where leverage is a
key
component of
business
strategy
|
Moreover, the Compensation
Committee believes that a management fee that is based upon stockholders
equity, along with the stock ownership guidelines discussed on page 22, align
the management team to the goals of the Company. We believe that focusing the
management
fee on the preservation
and growth of the Companys book value incentivizes our Manager to achieve
long-term performance that protects our stockholders equity as realized losses
decrease such equity and, ultimately, the management fee.
Additionally, for our
Manager to earn a larger management fee, the stockholders equity of the Company
would need to increase. As a result, the growth of the stockholders equity is
an alignment between the interests of our stockholders and the management team.
Further, this alignment is stronger in the REIT industry than in other
businesses. REIT regulations require us to pay at least 90% of our earnings to
stockholders as dividends. As a result, unlike most companies, we cannot grow
our business and our book value by reinvesting our earnings. Rather, our growth
in book value depends on sequential access to the capital markets. This places a
unique market discipline on us since we are able to access the capital markets
only if the markets believe our performance warrants it.
We also believe that our
management fee structure is more favorable to our stockholders than if it were
based on total assets under management, which could potentially incentivize an
external manager to excessively leverage assets under management in an attempt
to increase short term incentive payouts.
Continued Cost Savings Related to the
Externalization
We believe that the
Externalization has materially reduced the Companys compensation-related costs.
When comparing the management fees we paid for the fiscal years ended December
31, 2013,
2014, and 2015
against the estimated compensation costs (including tax costs) we would have
paid for the same period if those costs remained what they were in 2012, we
estimate that the Externalization has resulted in total compensation savings
(calculated in accordance with GAAP) of approximately $100 million.
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|
|
17
|
Table of Contents
As illustrated by the table
below, the management fee for each of 2013
(1)
, 2014 and 2015 is
significantly lower than our 2012 compensation expenses (which is represented by
the dashed blue line):
(1)
|
Although our Manager commenced management of Annaly on July 1,
2013, our stockholders received the benefit of the compensation savings
created by the Externalization for the entire 2013 calendar year pursuant
to a pro forma adjustment to the 2013 management fee. We calculated a pro
forma management fee, which was the management fee as if we were managed
by our Manager from January 1, 2013 until July 1, 2013, and the actual
amount of cash compensation paid to all of our employees from January 1,
2013 until July 1, 2013 reduced the amount of the management fee owed to
our Manager.
|
(2)
|
Assumes compensation costs for each of 2013, 2014 and 2015 would
have remained what they were in 2012 (the last full year prior to the
Externalization).
|
Annual Review of Manager Performance and Management Fee
Considerations
The Compensation Committee
annually reviews our performance and management fee against both our historical
results and our mortgage REIT peers, based on a number of metrics, including
those discussed above in the
Proxy Summary
and the expense ratios discussed
below.
Our
Management Fee as a Percentage of Our Average Stockholders
Equity
The Compensation Committee
reviews (i) the management fee and (ii) our total operating expenses (including
the management fee), as a percentage of our average stockholders equity. The
Compensation
Committee believes
this ratio is an important indicator of the performance of our Manager as it
measures the extent to which we operate in an economically efficient manner.
As illustrated by the
following table, as a percentage of average stockholders equity, the management
fee for 2015 is lower than the Companys pre-Externalization peak expense
ratio.
We
annually review
both our performance
and the terms
and conditions
of
our
Management
Agreement
|
18
|
|
Annaly Capital Management, Inc.
► 2016 Proxy
Statement
|
Table of Contents
We believe this analysis
indicates that our Manager continued to preserve our capital in an economically
efficient manner in 2015.
Peer
Comparison of Operating Expenses as a Percentage of Average Stockholders
Equity
Reviewing our annual total
operating expenses as a percentage of average stockholders equity allows the
Compensation Committee to compare the performance of our Manager to both our
internally- and externally-managed mortgage REIT peers.
|
|
|
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
Average
|
|
|
|
|
|
ANNALY
|
|
1.45
|
%
|
|
1.66
|
%
|
|
1.61
|
%
|
|
1.58
|
%
|
|
1.58
|
%
|
|
|
|
Internally-Managed Peers
|
|
2.72
|
%
|
|
3.83
|
%
|
|
4.13
|
%
|
|
3.84
|
%
|
|
3.63
|
%
|
|
|
|
Externally-Managed Peers
|
|
2.20
|
%
|
|
2.88
|
%
|
|
3.57
|
%
|
|
3.75
|
%
|
|
3.10
|
%
|
Source: Company
Filings, SNL and Bloomberg. Averages are market weighted based on market
capitalization as of December 31st of each respective
year.
Note:
Internally-Managed Peers and Externally-Managed Peers represent the respective
internally- and externally-managed members of the BBREMTG Index with market
capitalization above $200mm as of December 31st of each respective year. The
average for each excludes Annaly and companies during years in which they became
public or first listed. Operating Expense is defined as: (i) for
Internally-Managed Peers, the sum of compensation & benefits, general &
administrative expenses and other operating expenses, and (ii) for
Externally-Managed Peers, the sum of net management fees, compensation &
benefits (if any), general & administrative expenses and other operating
expenses.
In its review of these
operating expense ratios, the Compensation Committee noted that the Company has
outperformed both our internally- and externally-managed mortgage REIT peers
over the last four fiscal years. In this regard, the Compensation Committee has
viewed the Companys performance as an indicator that, among other things, our
Manager has managed the Company in an efficient manner with appropriately scaled
operating costs (including the management fee).
We
believe the
Companys
performance
demonstrates
that our
Manager
has managed the
Company
efficiently
|
www.annalyannualmeeting.com
|
|
19
|
Table of Contents
>
Executive Compensation
|
Proposal
2
|
|
Advisory Approval of Our Executive
Compensation
Our Board is committed to corporate governance
best practices and recognizes the significant interest of stockholders in
executive compensation matters. We are providing this advisory vote
pursuant to Section 14A of the Exchange Act.
As described in
detail under the headings
Our Management Structure
above and
Compensation Discussion and Analysis
below, we are externally managed by
our Manager pursuant to the Management Agreement between our Manager and
us. Our Manager is responsible for paying all compensation expense
associated with managing us and our subsidiaries. We pay our Manager a
management fee, and our Manager uses the proceeds from the management fee
to pay compensation to its officers and personnel, including our executive
officers. Our Manager makes all decisions relating to the compensation of
our officers and personnel, including our executive officers, based on such
factors as our Manager may determine are appropriate. Our Compensation
Committee has no authority to influence or determine how our Manager
compensates our executive officers. Our Manager does not consult with or
disclose to the Compensation Committee any determinations made regarding
the compensation of our named executive officers, including how much such
officers are paid.
Our NEOs are
eligible to receive equity awards pursuant to our equity incentive plan,
which is administered by the Compensation Committee. No equity awards were
made to any of our NEOs in 2015. In 2015, we did not pay any compensation
to our NEOs.
The Board
recommends that the stockholders vote in favor of the following
resolution:
RESOLVED, that
the compensation paid to the Companys named executive officers, as
disclosed pursuant to Item 402 of Regulation S-K, including the
Compensation Discussion and Analysis, compensation tables and narrative
discussion, is hereby APPROVED.
While this vote
is advisory and not binding on us, our Board and Compensation Committee
value the views of our stockholders and will consider the voting results
when making compensation decisions regarding our equity incentive
plans.
THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THIS
RESOLUTION.
|
|
|
|
|
|
Compensation Committee Report
The Compensation Committee
of the Company has reviewed and discussed the Compensation Discussion and
Analysis required by Item 402(b) of Regulation S-K with management and, based on
such review and discussions, the Compensation Committee recommended to the Board
that the Compensation Discussion and Analysis be included in this proxy
statement.
Donnell A. Segalas
(Chair) John H.
Schaefer Jonathan D.
Green E. Wayne Nordberg
20
|
|
Annaly Capital Management, Inc.
► 2016 Proxy
Statement
|
Table of Contents
Compensation Committee Interlocks and Insider
Participation
Our Compensation Committee
is comprised solely of the following Independent Directors: Messrs. Segalas
(Chair), Green, Schaefer and Nordberg. None of them is serving or has served as
an officer or employee of us or any affiliate or has any other business
relationship or affiliation with us, except his service as a Director, and there
are no other Compensation Committee interlocks that are required to be reported
under the rules and regulations of the Exchange Act.
Named Executive Officers
Our named executive officers
(NEOs) for 2015 are:
Name
|
|
Title
|
Kevin G. Keyes
|
|
Chief Executive Officer (CEO), President and
Director
|
Wellington J. Denahan
|
|
Chairman of the Board and Executive Chairman
(Former CEO)
|
Glenn A. Votek
|
|
Chief Financial Officer
(CFO)
|
Compensation Discussion and Analysis
As discussed above, our
Manager pays all of the compensation, including benefits, to our executive
officers (who are employees of our Manager) and our Managers other employees.
Although limited personnel (but none of our executive officers) are employed by
our subsidiaries for regulatory or corporate efficiency reasons, all compensation
and benefits paid to such personnel by our subsidiaries reduce, on a
dollar-for-dollar basis, the management fee we pay to our Manager.
Accordingly, we did not pay
any cash compensation to our executive officers, nor did we grant them any
plan-based awards, for 2015. We do not provide our executive officers with
pension benefits, perquisites or other personal benefits. We do not have any
employment agreements with our executive officers and do not have arrangements
to pay them any cash severance upon their termination or a change in control of
the Company. As a result, no compensation is includable in the Summary
Compensation Table for the NEOs for 2015.
Pursuant to the terms of the
Management Agreement, we pay our Manager a monthly management fee equal to
1/12
th
of 1.05% of our stockholders equity, as defined in the
Management Agreement, for its management services, which was approximately
$150.3 million during the year ended December 31, 2015. No specific portion of
the management fee is allocated to the compensation of our NEOs.
Our Manager, which is a
private company that is not subject to the disclosure requirements of the SEC,
has sole discretion to determine the compensation it pays to its employees,
including our executive officers. Our Compensation Committee has no authority to
influence or determine how our Manager compensates its employees, some of whom
are our executive officers. Our Manager does not consult with or disclose to the
Compensation Committee any determinations made regarding the compensation of our
executive officers, including how much such officers are paid. Rather, as
discussed above, the Compensation Committee is responsible for annually
reviewing the performance of, and fees paid to, our Manager under the Management
Agreement and for making recommendations to the independent members of the
Board. For additional information, please see
Certain Relationships and Related Party Transactions
and
Our Management Structure
above.
We
did not pay any
cash compensation to
our executive officers,
nor
did we grant
them any plan-based
awards, for 2015. We
do not
provide them
with pension benefits,
perquisites or other
personal
benefits.
|
www.annalyannualmeeting.com
|
|
21
|
Table of Contents
Consideration of Say-on-Pay Voting
Results
At our 2015 annual meeting
of stockholders, we submitted a non-binding advisory vote on the fiscal year
2014 compensation of our NEOs (commonly known as a Say-on-Pay vote) for the
consideration of our stockholders. The Compensation Committee reviewed the
results of this Say-on-Pay vote, which received support from approximately 94%
of the votes cast.
As discussed
above, in 2015, we paid our Manager a management fee, and the Manager paid all
of the compensation of our NEOs. Although our NEOs are eligible to receive
equity awards pursuant to our equity incentive plan administered by the
Compensation Committee, no such awards were granted to any of our NEOs in 2015.
The Compensation Committee
and the rest of our Board will continue to consider the outcome of future
Say-on-Pay votes, as well as stockholder feedback received throughout the year,
when making compensation decisions regarding any plan-based awards under our
equity incentive plan. Stockholders are invited to express their views to the
Compensation Committee as described under
Communications with the Board.
Executive Compensation Policies
Clawback for the Management Fee
Pursuant to the 2016
amendment and restatement of the management agreement, the Company will seek,
and be entitled to receive, reimbursement from our Manager if the Board
determines that a computation error (regardless of the reason for or amount of
such error) resulted in the overpayment of a management fee to our
Manager.
Stock Ownership Guidelines for Certain
Employees
To align the interests of
the employees of our Manager with those of our stockholders, the Board has
instituted expanded stock ownership guidelines for certain employees and Manager
personnel, including our NEOs. In 2016, our Board approved revising our existing
stock ownership guidelines to require stock ownership as follows:
Position
|
|
Number
of
Individuals
|
|
Required Ownership of
Annaly Stock
|
|
Timeframe to
Meet
Guideline
|
Chief Executive Officer
|
|
1
|
|
$10,000,000
|
|
3 years
|
Executive Chairman
|
|
1
|
|
Maintain current
holdings
(1)
|
|
N/A
|
Chief Legal Officer
|
|
1
|
|
$4,500,000
|
|
July 1, 2016
|
Other
Operating
Committee Members
|
|
7
|
|
30% of
Annual Total Compensation
|
|
5
years
|
Managing Directors
|
|
20
|
|
20% of Annual Total
Compensation
|
|
5 years
|
Director-Level Employees
|
|
33
|
|
10% of Annual Total
Compensation
|
|
5 years
|
Total
|
|
63
|
|
|
|
|
(1)
|
Ms. Denahan held 1,673,134 shares of our common stock as of March
31, 2016.
|
These stock ownership
guidelines apply to more than 40% of our employees and Manager personnel. As of
March 31, 2016, all such individuals either met or, within the applicable
period, are expected to meet the stock ownership guidelines.
In
2016, we adopted
a clawback policy,
expansive stock
ownership
guidelines
and a four-year
stock holding period
requirement
|
22
|
|
Annaly Capital Management, Inc.
► 2016 Proxy
Statement
|
Table of Contents
Stock Holding Period
Under a policy adopted by
the Compensation Committee in 2016, our employees and Manager personnel
(including our executive officers) are required to hold for a period of four years
the net after-tax shares of Company stock they receive through stock option
exercises or vesting of equity incentive awards.
Prohibition on Hedging Company
Securities
We have a policy prohibiting
our employees and Manager personnel (including our executive officers) from
engaging in any hedging transactions with respect to our equity securities held
by them, which includes the purchase of any financial instrument (including
forward contracts and zero cost collars) designed to hedge or offset any decrease
in the market value of our equity securities.
Prohibition on Pledging Company
Securities
In 2016, we adopted a policy
prohibiting our employees and Manager personnel (including our executive officers)
from holding Company securities in a margin account or pledging Company
securities as collateral for a loan.
Risks Related to Compensation Policies and
Practices
In 2015, the Board reviewed
its risk assessment of the Companys compensation policies and practices
applicable to the Companys equity incentive plans with the Compensation
Committee. Following this annual review, the Compensation Committee determined
that these compensation policies and practices do not create risks that are
reasonably likely to have a material adverse effect on us.
In 2016, we
adopted
a policy prohibiting the
pledging of Company
securities.
We also
have an anti-hedging
policy in
place.
|
Executive Compensation Tables
Summary Compensation Table
The table below sets forth
the total compensation we paid to our NEOs with respect to the years ended
December 31, 2015, December 31, 2014 and December 31, 2013.
|
|
|
|
|
|
All Other
|
|
|
Name and
Principal Position
(1)
|
|
Year
|
|
Salary($)
|
|
Compensation($)
|
|
Total($)
|
Kevin G.
Keyes
Chief Executive Officer
and President
|
|
2015
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
2013
|
|
375,000
|
|
3,448
|
|
378,448
|
Glenn A.
Votek
Chief Financial
Officer
|
|
2015
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
2013
|
|
91,346
|
|
48
|
|
91,394
|
Wellington J. Denahan
Executive Chairman and
former Chief Executive Officer
|
|
2015
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
2013
|
|
1,500,000
|
|
5,148
|
|
1,505,148
|
Grants of Plan-Based Awards
We did not grant our NEOs
any plan based awards in 2015.
www.annalyannualmeeting.com
|
|
23
|
Table of
Contents
Outstanding Equity Awards at
Fiscal Year-End
The following table provides information
about Ms. Denahans outstanding equity awards at December 31, 2015. Neither Mr.
Keyes nor Mr. Votek had outstanding equity awards at December 31,
2015.
|
|
Number
of
|
|
|
|
Equity
Incentive Plan
|
|
|
|
|
|
|
Securities
|
|
|
|
Awards:
Number of
|
|
|
|
|
|
|
Underlying
|
|
Number
of Securities
|
|
Securities
Underlying
|
|
|
|
|
|
|
Unexercised
|
|
Underlying
|
|
Unexercised
|
|
Option
|
|
Option
|
|
|
Options
|
|
Unexercised
Options
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
Name
|
|
Exercisable(#)
(1)
|
|
Unexercisable(#)
|
|
Options(#)
|
|
Price($)
|
|
Date
|
Wellington J.
Denahan
|
|
150,000
|
|
|
|
|
|
15.70
|
|
5/17/17
|
|
|
200,000
|
|
|
|
|
|
16.46
|
|
5/8/18
|
|
|
200,000
|
|
|
|
|
|
15.61
|
|
9/19/18
|
(1)
|
All options listed above vested beginning on the first
anniversary of date of grant at a rate of 25% per year over the first four
years of the ten-year option term.
|
Options Exercised and Stock
Vested
No options were exercised and no stock
vested for our NEOs during
2015.
Pension Benefits and Nonqualified
Deferred Compensation
We do not provide our NEOs any benefits
pursuant to defined benefit plans and nonqualified deferred compensation
plans.
Potential Payments upon
Termination or Change in Control
We are not responsible for any amounts
payable or any additional vesting of outstanding equity awards for any
termination of service by any of our NEOs. No amounts would have been payable by
us to any of our NEOs upon a change in control as of December 31,
2015.
24
|
|
Annaly Capital Management, Inc.
► 2016 Proxy Statement
|
Table of
Contents
>
Audit Committee Matters
|
Proposal
3
|
|
Ratification of Appointment
of Independent Registered Public Accounting Firm
The Audit Committee is responsible for the appointment,
compensation, retention, and oversight of the Companys independent
registered public accounting firm. Our Audit Committee has appointed Ernst
& Young LLP ("Ernst & Young" or "E&Y") to serve as our
independent registered public accounting firm for the fiscal year ending
December 31, 2016, and stockholders are asked to ratify the selection at
the Annual Meeting. Ernst & Young has served as our independent
registered public accounting firm since 2012. In appointing Ernst &
Young, the Audit Committee considered a number of factors, including Ernst
& Youngs independence, objectivity, level of service, industry
knowledge, technical expertise, and tenure as our independent auditor. We
expect that representatives of Ernst & Young will be present at the
Annual Meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
If the appointment of Ernst & Young is not ratified, our Audit
Committee will reconsider the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR
2016.
|
|
|
|
|
|
Report
of The Audit Committee
The Audit Committee has reviewed and
discussed our audited financial statements with management and with Ernst &
Young, our independent auditors for 2015.
The Audit Committee has discussed with
Ernst & Young the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended.
The Audit Committee has received from
Ernst & Young the written statements required by Public Company Accounting
Oversight Board (PCAOB) Rule No. 3526, Communications with Audit Committees
Concerning Independence, and has discussed Ernst & Youngs independence
with Ernst & Young.
In reliance on these reviews and
discussions, and the report of the independent registered public accounting
firm, the Audit Committee has recommended to our Board, and our Board has
approved, that the audited financial statements be included in our Annual Report
on Form 10-K for the year ended December 31, 2015 for filing with the
SEC.
The Audit Committee
is responsible
for
the appointment,
compensation,
retention and
oversight of
our
independent auditors
|
The foregoing report has been furnished by
the Audit Committee:
Kevin P. Brady (Chair)
Francine J. Bovich
Michael Haylon
John H. Schaefer
www.annalyannualmeeting.com
|
|
25
|
Table of
Contents
Relationship with Independent Registered
Public Accounting Firm
The aggregate fees billed for 2015 and
2014 by E&Y for each of the following categories of services are set forth
below:
Service Category
|
2015
|
|
2014
(1)
|
Audit
|
$
|
2,129,350
|
|
$
|
2,081,800
|
|
Audit-Related
|
|
127,500
|
|
|
75,000
|
|
Tax
|
|
238,310
|
|
|
96,070
|
|
All
Other
|
|
|
|
|
|
|
Total
|
$
|
2,495,160
|
|
$
|
2,252,870
|
|
(1)
|
For
2014, $232,300 that was included in Audit-Related fees and $23,000 that
was included in All Other fees previously disclosed in our 2015 proxy
statement have been reclassified to Audit fees. Also for 2014, $75,000
that was included in All Other fees has been reclassified to
Audit-Related fees. In addition, Audit fees for 2014 have been revised
to include additional fees billed by E&Y related to our 2014
audit.
|
Audit fees primarily relate to integrated
audits of our annual consolidated financial statements and internal control over
financial reporting under Sarbanes-Oxley Section 404, reviews of our quarterly
consolidated financial statements, audits of our subsidiaries financial
statements and comfort letters and consents related to SEC registration
statements.
Audit-Related fees are primarily for
assurance and related services that are traditionally performed by the
independent registered public accounting firm and include due diligence and
accounting consultations.
Tax fees are primarily for preparation of
tax returns and compliance services and tax consultations.
All Other fees are for those services not
described in one of the other categories.
The Audit Committee has also adopted
policies and procedures for pre-approving all non-audit work performed by our
independent registered public accounting firm. The Audit Committee retained
E&Y to provide certain non-audit services in 2015. Specifically, the Audit
Committee pre-approved the use of E&Y for the following categories of
non-audit services:
►
|
SEC filings, including comfort letters, consents and comment
letters
|
►
|
accounting consultations on matters addressed during the audit or
interim reviews
|
►
|
review,
including the issuance of a comfort letter, relating to commercial asset
securitizations
|
►
|
tax
compliance and
consultations
|
We understand the need for E&Y to
maintain objectivity and independence as the auditor of our financial statements
and our internal control over financial reporting. The Audit Committee requires
the lead E&Y partner assigned to our audit to be rotated at least every five
years, and we expect that the Audit Committee and its chair will be involved in
selecting each new lead audit partner. Our Audit Committee approved the hiring
of E&Y to provide all of the services detailed above prior to such
independent registered public accounting firms engagement. None of the services
related to the
Audit-Related
Fees
described above was approved by the
Audit Committee pursuant to a waiver of pre-approval provisions set forth in
applicable rules of the SEC.
The Audit Committee
requires the
lead
audit partner to be
rotated every five
years and will
be
involved in selecting
each new lead
audit
partner
|
26
|
|
Annaly Capital Management, Inc.
► 2016 Proxy Statement
|
Table of
Contents
>
Stock Ownership Information
Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth certain
information as of March 29, 2016 relating to the beneficial ownership of our
common stock by (i) each NEO, (ii) each Director, (iii) all of our executive
officers and Directors as a group, and (iv) all persons that we know
beneficially own more than 5% of our outstanding common stock. Knowledge of the
beneficial ownership of our common stock is drawn from statements filed with the
SEC pursuant to Section 13(d) or 13(g) of the Exchange Act.
|
Amount and Nature of
|
|
|
Beneficial
Owner
(1)
|
Beneficial
Ownership
(2)
|
|
Percent of
Class
(3)
|
|
Kevin G.
Keyes
|
|
609,080
|
|
|
*
|
|
Wellington J.
Denahan
|
|
2,223,134
|
|
|
*
|
|
Glenn A.
Votek
|
|
53,059
|
|
|
*
|
|
Kevin P.
Brady
(4)
|
|
228,810
|
|
|
*
|
|
Jonathan D.
Green
|
|
179,643
|
|
|
*
|
|
Michael
Haylon
|
|
118,893
|
|
|
*
|
|
Donnell A.
Segalas
|
|
194,060
|
|
|
*
|
|
E. Wayne
Nordberg
(5)
|
|
196,143
|
|
|
*
|
|
John H.
Schaefer
|
|
75,171
|
|
|
*
|
|
Francine J.
Bovich
|
|
28,548
|
|
|
*
|
|
All executive
officers and Directors as a group (11 people)
|
|
4,375,640
|
|
|
*
|
|
BlackRock,
Inc.
(6)
|
|
73,835,633
|
|
|
8.0%
|
|
The Vanguard
Group, Inc.
(7)
|
|
63,028,900
|
|
|
6.8%
|
|
*Represents beneficial ownership of less than one percent
of the common stock.
|
(1)
|
The business address of each Director
and NEO is c/o Annaly Capital Management, Inc., 1211 Avenue of the
Americas, New York, NY 10036. To the best of our knowledge, each
stockholder listed has sole voting and investment power with respect to
the shares beneficially owned by the stockholder.
|
(2)
|
For purposes of this table,
beneficial ownership is determined in accordance with Rule 13d-3 under
the Exchange Act, pursuant to which a person or group of persons is deemed
to have beneficial ownership of any shares of common stock that such
person, or such group of persons, has the right to acquire within 60 days
of the date of determination. In light of the nature of vested options, we
have also included shares of common stock underlying vested options. The
shares of common stock underlying vested options included in the above
table are as follows: Wellington J. Denahan 550,000 shares; Kevin P. Brady
45,000 shares; Jonathan D. Green 92,500 shares; Michael Haylon 77,500
shares; Donnell A. Segalas 80,000 shares; E. Wayne Nordberg 92,500 shares;
and all executive officers and Directors as a group (11 persons) 1,083,500
shares. In addition, we have included DSUs in the above table, which are
as follows: Kevin P. Brady 37,910 DSUs; Jonathan D. Green 41,393 DSUs;
Michael Haylon 41,393 DSUs; Donnell A. Segalas 37,910 DSUs; E. Wayne
Nordberg 41,393 DSUs; John H. Schaefer 27,293 DSUs; and Francine J. Bovich
28,548 DSUs.
|
(3)
|
For purposes of computing the
percentage of outstanding shares of common stock held by each person or
group of persons named above, any shares which such person or group of
persons has the right to acquire within 60 days, including vested options,
are deemed to be outstanding for the purpose of computing the percentage
of outstanding shares of the class owned by such person or group of
persons, but are not deemed to be outstanding for the purpose of computing
the percentage of outstanding shares owned by any other person or group of
persons.
|
(4)
|
Includes: (i) 48,750 shares owned by
the Kevin P. Brady Family Trust, (ii) 42,500 shares owned by Mr. Bradys
wife, (iii) 1,500 shares owned by Mr. Bradys daughter, and (iv) 9,000
shares owned by Mr. Bradys mother. Mr. Brady disclaims beneficial
ownership of these 101,750 shares.
|
(5)
|
Includes: (i) 10,000 shares owned by
the Olivia Nordberg Trust and (ii) 9,000 shares owned by Mr. Nordbergs
spouse.
|
(6)
|
BlackRock, Inc., 55 East 52nd Street,
New York, NY 10022, as a parent holding company or control person of
certain named funds (BlackRock), filed a Schedule 13G/A on February 10,
2016 reporting, as of December 31, 2015, beneficially owning 73,835,633
shares of common stock with the sole power to vote or to direct the vote
of 66,970,019 shares of common stock, the shared power to vote or to
direct the vote of zero shares of common stock, the sole power to dispose
or to direct the disposition of 73,835,633 shares of common stock and the
shared power to dispose or to direct the disposition of zero shares of
common stock. This information is based solely on information contained in
the Schedule 13G/A filed by Blackrock.
|
(7)
|
The Vanguard Group, Inc., 100
Vanguard Blvd., Malvern, PA 19355, as a parent holding company or control
person of certain named funds (Vanguard), filed a Schedule 13G/A on
February 12, 2016 reporting, as of December 31, 2015, beneficially owning
63,028,900 shares of common stock with the sole power to vote or to direct
the vote of 940,554 shares of common stock, the shared power to vote or to
direct the vote of zero shares of common stock, the sole power to dispose
or to direct the disposition of 62,033,919 shares of common stock and the
shared power to dispose or to direct the disposition of 994,981 shares of
common stock. This information is based solely on information contained in
the Schedule 13G/A filed by Vanguard.
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www.annalyannualmeeting.com
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27
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Table of
Contents
Stock Ownership
Information
|
Section 16(a) Beneficial Ownership
Reporting Compliance
We believe that based solely on our review
of the reports filed during the fiscal year ended December 31, 2015 and on the
written representations of those filing reports, all filing requirements under
Section 16(a) of the Exchange Act, as amended, applicable to our executive
officers, Directors and beneficial owners of more than ten percent of our common
stock were complied with on a timely basis, except that the Statements of
Changes in Beneficial Ownership of Securities on Form 4 were not timely filed to
report the acquisition of DSUs on May 21, 2015 by each of our Independent
Directors (and, in the case of Mr. Brady only, the conversion of previously
granted DSUs into common shares and the acquisition of such common shares by Mr.
Brady on May 22, 2015) and were filed on June 2, 2015. The Company files the
required reports on behalf of its executive officers and Directors.
28
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Annaly Capital Management, Inc.
► 2016 Proxy Statement
|
Table of
Contents
>
Other Information
Access to Form 10-K
On written request, we will
provide without charge to each record or beneficial holder of our common stock
as of March 29, 2016 (the Record Date) a copy of our annual report on
Form 10-K for the year ended December 31, 2015, as filed with the SEC. You
should address your request to Investor Relations, Annaly Capital Management,
Inc., 1211 Avenue of the Americas, New York, NY
10036 or email your request to us at
investor@annaly.com.
You may also access such report on our
website,
www.annaly.com
, under Investors
- SEC Filings.
Stockholder Proposals
Any stockholder intending to present a
proposal at our 2017 annual meeting of stockholders and have the proposal
included in the proxy statement for such meeting must, in addition to complying
with the applicable laws and regulations governing submissions of such
proposals, submit the proposal in writing to us no later than December 13,
2016.
Pursuant to our Amended and Restated
Bylaws ("Bylaws"), any stockholder intending to nominate a Director or present a
proposal at an annual meeting of our stockholders, that is not intended to be
included in the proxy statement for such annual meeting, must notify us in
writing not less than 120 days nor more than 150 days prior to the first
anniversary of the date of the proxy statement for the preceding years annual
meeting. Accordingly, any stockholder who intends to submit such a nomination or
such a proposal at our 2017 annual meeting of stockholders must notify us in
writing of such proposal by December 13, 2016, but in no event earlier than
November 13, 2016.
Any such nomination or proposal should be
sent to Secretary, Annaly Capital Management, Inc., 1211 Avenue of the Americas,
New York, NY 10036 and, to the extent applicable, must include the information
required by our Bylaws.
Other Matters
As of the date of this proxy statement,
the Board does not know of any matter that will be presented for consideration
at the Annual Meeting other than as described in this proxy
statement.
Questions and Answers about the Annual
Meeting
Q:
|
|
When and where is the
Annual Meeting?
|
A:
|
|
The Annual Meeting will be held
on Thursday, May 26, 2016 at 9:00 a.m. (Eastern Time) at the Warwick
Hotel, 65 West 54th Street, New York, NY 10019.
|
|
Q:
|
|
Who is entitled to vote
at the Annual Meeting?
|
A:
|
|
Only common stockholders of
record as of the close of business on the Record Date (March 29, 2016) are
entitled to vote at the Annual Meeting.
|
|
Q:
|
|
What quorum is required
for the Annual Meeting?
|
A:
|
|
A quorum will be present at the
Annual Meeting if a majority of the votes entitled to be cast are present,
in person or by proxy. Since there were 924,853,133 outstanding shares of
common stock, each entitled to one vote per share, as of the Record Date,
we will need at least 462,426,567 votes present in person or by proxy at
the Annual Meeting for a quorum to exist. If a quorum is not present at
the Annual Meeting, we expect that the Annual Meeting will be adjourned to
solicit additional proxies.
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www.annalyannualmeeting.com
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29
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Table of
Contents
Q:
|
|
What are the voting
requirements that apply to the proposals discussed in this proxy
statement?
|
A:
|
|
|
Majority means (a) with regard to an
uncontested election of Directors, the affirmative vote of a majority of all the
votes cast on the election of each Director; provided, however, that in a
contested election of Directors where the number of nominees exceeds the number
of Directors to be elected, the Directors shall be elected by a plurality of the
votes cast; and (b) with regard to the advisory approval of our executive
compensation and the ratification of the appointment of Ernst & Young, a
majority of the votes cast at the Annual Meeting.
Discretionary voting occurs when a bank,
broker, or other holder of record does not receive voting instructions from the
beneficial owner and votes those shares in its discretion on any proposal as to
which the rules of the NYSE permit such bank, broker, or other holder of record to vote.
When banks, brokers, and other holders of record are not permitted under the
NYSE rules to vote the beneficial owners shares on a proposal, and there is at
least one other proposal on which discretionary voting is allowed, the affected
shares are referred to as broker non-votes.
Q:
|
|
What is the
effect of abstentions and broker non-votes?
|
A:
|
|
Abstentions and broker non-votes will be
treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum.
Abstentions and broker non-votes, if any, will
have no effect on any of the proposals submitted at the Annual
Meeting.
|
|
Q:
|
|
How will my
shares be voted if I do not specify how they should be
voted?
|
A:
|
|
Properly executed
proxies that do not contain voting instructions will be voted as
follows:
|
|
|
|
(1)
|
Proposal No. 1:
FOR the election
of Directors;
|
|
|
|
(2)
|
Proposal No. 2:
FOR the approval,
on a non-binding basis, of our executive compensation; and
|
|
|
|
(3)
|
Proposal No. 3:
FOR the
ratification of Ernst & Young LLP as our independent registered public
accounting firm.
|
|
|
|
The Company officers
you appoint as proxies may vote for one or more adjournments of the Annual
Meeting, including adjournments to permit further solicitations of
proxies.
|
|
|
|
We do not expect that
any matter other than the proposals described above will be brought before
the Annual Meeting. If, however, other matters are properly presented at
the Annual Meeting, the Company officers appointed as proxies will vote in
accordance with the recommendation of our Board.
|
|
Q:
|
|
What do I do if
I want to change my vote?
|
A:
|
|
You may revoke a proxy
at any time before it is voted by filing with us a duly executed
revocation of proxy, by submitting a duly executed proxy to us with a
later date or by appearing at the Annual Meeting and voting in person. You
may revoke a proxy by any of these methods, regardless of the method used
to deliver your previous proxy. Attendance at the Annual Meeting without
voting will not itself revoke a proxy.
|
30
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Annaly Capital Management, Inc.
► 2016 Proxy Statement
|
Table of
Contents
Q:
|
|
How will voting on any
other business be conducted?
|
A:
|
|
Other than the three proposals
described in this proxy statement, we know of no other business to be
considered at the Annual Meeting. If any other matters are properly
presented at the meeting, your signed proxy card authorizes Kevin G.
Keyes, our Chief Executive Officer and President, and R. Nicholas Singh,
our Secretary, to vote on those matters according to their best
judgment.
|
|
Q:
|
|
Who will count the
vote?
|
A:
|
|
Representatives of Broadridge
Financial Solutions, Inc., the independent Inspector of Elections, will
count the votes.
|
|
Q:
|
|
Who can attend the Annual
Meeting?
|
A:
|
|
All stockholders of record as of
the Record Date can attend the Annual Meeting, although seating is
limited. If your shares are held through a broker and you would like to
attend, please either (1) write us at Investor Relations, Annaly Capital
Management, Inc., 1211 Avenue of the Americas, New York, NY 10036 or email
us at investor@annaly.com, or (2) bring a copy of your brokerage account
statement or an omnibus proxy (which you can get from your broker) to the
Annual Meeting.
|
|
|
|
In addition, you must bring a
valid, government-issued photo identification, such as a drivers license
or a passport. If you plan to attend the Annual Meeting, please check the
box on your proxy card when you return your proxy or follow the
instructions on your proxy card to vote and confirm your attendance by
telephone or Internet. In addition, if you are a record holder of common
stock, your name is subject to verification against the list of our record
holders on the Record Date prior to being admitted to the Annual Meeting.
If you are not a record holder but hold shares in street name, that is,
with a broker, dealer, bank or other financial institution that serves as
your nominee, you should be prepared to provide proof of beneficial
ownership on the Record Date, or similar evidence of ownership. If you do
not comply with the procedures outlined above, you will not be admitted to
the Annual Meeting.
|
|
|
|
Security measures will be in
place at the Annual Meeting to help ensure the safety of attendees. Metal
detectors similar to those used in airports may be located at the entrance
to the meeting room and briefcases, handbags and packages may be
inspected. No cameras or recording devices of any kind, or signs,
placards, banners or similar materials, may be brought into the Annual
Meeting. Anyone who refuses to comply with these requirements will not be
admitted.
|
|
Q:
|
|
How do I inspect the list
of stockholders of record?
|
A:
|
|
A complete list of our common
stockholders of record entitled to vote at the Annual Meeting will be
available for inspection during the 10 business days prior to the Annual
Meeting at our executive offices during ordinary business hours for proper
purposes.
|
|
Q:
|
|
How will we solicit
proxies for the Annual Meeting?
|
A:
|
|
The expense of soliciting proxies
will be borne by the Company. Proxies will be solicited principally
through the use of mail, but our Directors, executive officers and
employees, who will not be specially compensated, may solicit proxies from
our stockholders by telephone, facsimile or other electronic means or in
person. Also, the Company will reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for any reasonable expenses in
forwarding proxy materials to beneficial owners.
|
|
|
|
We have retained Innisfree
M&A Incorporated, a proxy solicitation firm, to assist us in the
solicitation of proxies in connection with the Annual Meeting. We will pay
Innisfree a fee of $15,000 for its services. In addition, we may pay
Innisfree additional fees depending on the extent of additional services
requested by us and will reimburse Innisfree for expenses Innisfree incurs
in connection with its engagement by us. In addition to the fees paid to
Innisfree, we will pay all other costs of soliciting proxies.
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|
|
|
Stockholders have the option to
vote over the Internet or by telephone. Please be aware that if you vote
over the Internet, you may incur costs such as telephone and access
charges for which you will be responsible.
|
www.annalyannualmeeting.com
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31
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Table of
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Q:
|
|
What is Householding
and does Annaly do this?
|
A:
|
|
"Householding" is a procedure
approved by the SEC under which stockholders who have the same address and
last name and do not participate in electronic delivery of proxy materials
receive only one copy of a companys proxy statement and annual report
from a company, bank, broker or other intermediary, unless one or more of
these stockholders notifies the company, bank, broker or other
intermediary that they wish to continue to receive individual copies. We
engage in this practice as it reduces our printing and postage costs. However, if a stockholder of record residing at such an address wishes to
receive a separate annual report or proxy statement, he or she may request
it orally or in writing by contacting us at Annaly Capital Management,
Inc., 1211 Avenue of the Americas, New York, NY 10036, Attention: Investor
Relations, by emailing us at investor@annaly.com, or by calling us at
212-696-0100, and we will promptly deliver the requested annual report or
proxy statement. If a stockholder of record residing at such an address
wishes to receive a separate annual report or proxy statement in the
future, he or she may contact us in the same manner. If you are an
eligible stockholder of record receiving multiple copies of our annual
report and proxy statement, you can request householding by contacting us
in the same manner. If you own your shares through a bank, broker or other
nominee, you can request householding by contacting the bank, broker or
other nominee.
|
|
Q:
|
|
Could the Annual Meeting
be postponed or adjourned?
|
A:
|
|
If a quorum is not present or
represented, our Bylaws permit the chairman of the meeting to postpone or
adjourn the Annual Meeting, without notice other than an
announcement.
|
|
Q:
|
|
Who can help answer my
questions?
|
A:
|
|
If you have any questions or need
assistance voting your shares or if you need copies of this proxy
statement or the proxy card, you should
contact:
|
Annaly Capital Management, Inc.
1211
Avenue of the Americas
New York, NY 10036
Phone: 1-888-8
ANNALY
Facsimile: (212) 696-9809
Email:
investor@annaly.com
Attention: Investor Relations
Our principal executive offices are
located at the address above.
Where You Can Find More
Information
We file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy any reports, statements or other information that we file with the SEC at
the SECs public reference room at Public Reference Room, 100 F Street, N.E.,
Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for
further information on the Public Reference Room. These SEC filings are also
available to the public from commercial document retrieval services and at the
Internet worldwide web site maintained by the SEC at http://www.sec.gov.
Reports, proxy statements and other information concerning us may also be
inspected at the offices of the NYSE, which is located at 20 Broad Street, New
York, NY
10005.
Our website is www.annaly.com. We make
available on this website under Investors - SEC Filings, free of charge, our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to those reports as soon as reasonably practicable after
we electronically file or furnish such materials to the SEC.
32
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Annaly Capital Management, Inc.
► 2016 Proxy Statement
|
Table of
Contents
Table of Contents
|
ANNALY
CAPITAL MANAGEMENT, INC.
1211 AVE. OF THE AMERICAS
NEW YORK, NY
10036
ATTN: GLENN A. VOTEK
|
VOTE BY
INTERNET - www.proxyvote.com
|
Use the Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the meeting date.
Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction
form.
|
|
ELECTRONIC DELIVERY OF FUTURE
PROXY MATERIALS
|
If you would like to reduce the costs incurred by our
company in mailing proxy materials, you can consent to receiving all
future proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery, please follow
the instructions above to vote using the Internet and, when prompted,
indicate that you agree to receive or access proxy materials
electronically in future years.
|
|
VOTE BY
PHONE - 1-800-690-6903
|
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the meeting date. Have your proxy card in hand
when you call and then follow the instructions.
|
|
VOTE BY
MAIL
|
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
DETACH AND RETURN THIS PORTION
ONLY
|
THIS PROXY CARD IS VALID ONLY
WHEN SIGNED AND DATED.
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors
recommends you vote FOR the following:
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Election of Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominees
|
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
1a
|
Kevin G. Keyes
|
|
⬜
|
⬜
|
⬜
|
|
|
|
|
|
|
|
|
1b
|
Kevin P. Brady
|
|
⬜
|
⬜
|
⬜
|
|
|
|
|
|
|
|
|
1c
|
E. Wayne Nordberg
|
|
⬜
|
⬜
|
⬜
|
|
|
|
|
|
|
|
|
The Board of Directors
recommends you vote FOR proposals 2 and 3:
|
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
2.
|
Advisory approval of the company's executive
compensation.
|
|
⬜
|
⬜
|
⬜
|
|
|
|
|
|
|
|
|
3.
|
Ratification of the appointment of Ernst
& Young LLP as our independent registered public accounting firm for
2016.
|
|
⬜
|
⬜
|
⬜
|
|
|
|
|
|
|
|
|
NOTE:
Such other
business as may properly come before the meeting or any adjournment
thereof.
|
|
|
|
|
|
|
|
Yes
|
No
|
|
|
|
|
|
|
|
|
Please indicate if you
plan to attend this meeting
|
|
⬜
|
⬜
|
|
|
|
|
|
|
|
|
|
Please sign exactly as
your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership
name, by authorized officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
Date
|
|
|
Signature (Joint Owners)
|
Date
|
|
Table of Contents
Annaly Capital Management,
Inc.
1211 Avenue of the Americas,
New York, NY 10036
|
|
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting:
The 2015 ANNUAL REPORT TO
STOCKHOLDERS and 2016 NOTICE & PROXY STATEMENT are available at www.proxyvote.com
|
|
|
Annaly Capital Management,
Inc.
Annual Meeting of Stockholders
May 26, 2016
This proxy is
solicited by the Board of Directors
Revoking all prior proxies, the
undersigned hereby appoints Kevin G. Keyes and R. Nicholas Singh, and
each of them, proxies, with full power of substitution, to appear on behalf of
the undersigned and to vote all shares of Common Stock, par value $.01 per
share, of Annaly Capital Management, Inc. (the Company) that the undersigned
is entitled to vote at the Annual Meeting of Stockholders of the Company to be
held at the Warwick Hotel, 65 West 54th Street, New York, New York 10019,
commencing at 9:00 a.m., New York time, on Thursday, May 26, 2016, and at any
adjournment thereof, as fully and effectively as the undersigned could do if
personally present and voting, hereby approving, ratifying and confirming all
that said attorneys and agents or their substitutes may lawfully do in place of
the undersigned as indicated below.
The Shares represented by this proxy when properly executed, will be voted as directed.
If no directions are given, this
proxy will be voted in accordance with the Board of Directors' recommendations as listed on the reverse side of this
card and at their discretion on any other matter that may properly come before the meeting.
Continued and to be signed on reverse
side
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