ITEM 5.
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DELIVERING OUTSTANDING PERFORMANCE
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In 2020, the Company
was able to navigate unprecedented market and economic volatility to deliver outstanding performance, including:
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5.1% economic return in the fourth quarter of 2020, and 1.8% economic return for the full year 2020;
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$1.4 billion of common and preferred dividends declared in 2020;
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Reduced economic leverage to 6.2x from 7.2x in the prior year; and
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Repurchased $209 million of common stock in 2020 and authorized a new $1.5 billion common stock
repurchase program at the end of the year.
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ITEM 6.
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PLANNED DIVESTITURE OF THE
COMMERCIAL REAL ESTATE BUSINESS
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In March 2021, the Company signed a definitive agreement to sell our commercial real estate business to Slate Asset Management for $2.3 billion. We
believe the transaction provides compelling execution for our stockholders and will provide additional capacity to further expand our leadership and capabilities in the Companys core residential mortgage finance business. The transaction is
subject to customary closing conditions, including applicable regulatory approvals, and is expected to be completed by the third quarter of 2021.
ITEM 7.
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STOCKHOLDER ENGAGEMENT
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The Company is committed to year-round engagement
with retail and institutional stockholders. Since the beginning of 2020, the Companys outreach efforts have encompassed approximately 90% of our institutional investors, including 100% of the Companys 100 largest investors. During the
same time, the Company hosted over 120 meetings with investors across the globe. Annalys stockholder engagement efforts have generated significant feedback for both the Board and management, which informed a number of recent corporate
governance enhancements, including the decisions to internalize the Companys management function and the re-design the Companys executive compensation program.
ITEM 8.
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FOCUS ON CORPORATE GOVERNANCE
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The Board continually
enhances its corporate governance framework in response to evolving best practices, stockholder feedback and the results of the Boards annual self-evaluation and success planning processes. Over the last few years, the Board has implemented a
number of governance enhancements, which include:
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Completing the declassification of the Board with all directors standing for annual election commencing with the
2021 Annual Meeting of Stockholders;
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Separating the roles of CEO and Chair of the Board and appointing an Independent Chair of the Board; and
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Amending the Corporate Governance Guidelines to formalize the Boards commitment to seeking out highly
qualified candidates of diverse gender and race.
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ITEM 9.
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INAUGURAL CORPORATE RESPONSIBILITY
REPORT
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On the 23rd anniversary of our IPO, the Company published our inaugural Corporate Responsibility Report, demonstrating our commitment to transparency and
robust environmental, social and governance (ESG) practices. Among other things, the report introduced supplemental disclosures under the Sustainability Accounting Standards Board and Global Reporting Initiative frameworks. The report
also outlines the Companys goals and commitments across our five key ESG areas: corporate governance, human capital, responsible investments, risk management and the environment.
ITEM 10.
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VIRTUAL STOCKHOLDER MEETING
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Annaly will hold its
2021 Annual Meeting of Stockholders via an online (virtual) format on May 19, 2021 at 9:00 am EST. The Company believes that this format best protects the health and safety of our stockholders, employees, Directors and communities amidst the
continuing COVID-19 pandemic. The Company has successfully conducted virtual stockholder meetings since 2018 and designs our meetings to provide the same rights to participate as you would have at in-person meeting, including providing opportunities to vote, make statements and ask questions.
Annalys Board
of Directors unanimously recommends that you vote FOR each of the Director nominees (Proposal 1), FOR the advisory approval of the Companys executive compensation (Proposal 2) and FOR the ratification of the appointment of Ernst &
Young LLP as the Companys independent auditors (Proposal 3).