UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A
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SCHEDULE 14A INFORMATION

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MFA Financial, Inc.

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General Information			1
Annual Report			1
Voting Information			21
Corporate Governance			34
Board and Committee Matters			89
Report of the Audit Committee			910
Compensation of Non-Employee Directors			1112
Proposal 1 — Election of Directors			1415
Proposal 2 — Ratification of Appointment of Independent Registered Public Accounting Firm			1820
Management			1921
Executive Compensation			2123
Compensation Discussion and Analysis			2123
Report of the Compensation Committee			4045
Summary Compensation Table			4146
Grants of Plan-Based Awards			4248
Outstanding Equity Awards			4450
Options Exercised and Stock Vested			4651
Employment Contracts			4652
Potential Payments Uponupon Termination of Employment or Change in Control			5056
Pay Ratio Disclosure			59
Securities Authorized for Issuance under Equity Compensation Plans			5460
Proposal 3 — Advisory (Non-Binding) Resolution to Approve Executive Compensation			5460
Section 16(a) Beneficial Ownership Reporting Compliance			5561
Certain Relationships and Related Transactions			5561
Security Ownership of Certain Beneficial Owners and Management			5662
Other Matters			5864
Submission of Stockholder Proposals			5864
Householding of Proxy Materials			5864
Miscellaneous			5965

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During 2015,2018, the Audit Committee held eightseven meetings. The meetings were designed, among other things, to facilitate and encourage communication among the Audit Committee, management, KPMG LLP, our independent registered public accounting firm, and Grant Thornton LLP, our internal auditing firm.

The Audit Committee reviewed and discussed the audited consolidated financial statements for the fiscal year ended December 31, 2015,2018, and the related report prepared by KPMG LLP, with management and KPMG LLP. The Audit Committee discussed with KPMG LLP and Grant Thornton LLP the overall scope and plans for their respective audits, including internal control testing under Section 404 of the Sarbanes-Oxley Act of 2002. The Audit Committee also reviewed and discussed with management, KPMG LLP and Grant Thornton LLP management’s annual report on MFA’s internal control over financial reporting and the reportsreport prepared by KPMG LLP with respect to its audit of MFA’s internal control over financial reporting. The Audit Committee met with KPMG LLP and Grant Thornton LLP, with and without management present, to discuss the results of their examinations, their evaluations of MFA’s internal control environment and the overall quality of our financial reporting.

The Audit Committee reviewed and discussed with KPMG LLP its audit plan for MFA and their proposed implementation of this plan. The Audit Committee also discussed with KPMG LLP matters that independent accounting firms must discuss withare required to communicate to audit committees under generally accepted auditing standards and standards of the Public Company Accounting Oversight Board (“PCAOB”), including, among other things, matters related to the conduct of the audit of MFA’s consolidated financial statements and the matters required to be discussed by Auditing Standard No. 16, as adopted by the PCAOB, which included a discussion of KPMG LLP’s judgments about the quality (not just the acceptability) of MFA’s accounting principles as applied to financial reporting.

The Audit Committee also discussed with KPMG LLP its independence from the Company. KPMG LLP provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence and represented that it is independent from MFA. When considering the independence of KPMG LLP, the Audit Committee considered whether services provided by KPMG LLP, beyond those rendered in connection with its audit of MFA’s consolidated financial statements, its reviews of MFA’s interim condensed consolidated financial statements included in MFA’s quarterly reports on Form 10-Q and its audit of the effectiveness of MFA’s internal control over financial reporting, were compatible with maintaining its independence. The Audit Committee reviewed and approved the audit and other professional services performed by, and the amount of fees paid for such services to, KPMG LLP. The Audit Committee has adopted policies and procedures for the pre-approval of auditauditing and non-auditnon-auditing services for the purpose of maintaining the independence of our independent registered public accounting firm. The Audit Committee received periodic updates on the amount of fees and scope of audit and other professional services provided.

Based on the Audit Committee’s review and the outcome of these meetings, discussions and reports, and subject to the limitations on the Audit Committee’s role and responsibilities referred to above and in its written charter, the Audit Committee recommended to the Board, and the Board has approved, that MFA’s audited consolidated financial statements for the fiscal year ended December 31, 2015,2018, be included in the Company’s Annual Report on Form 10-K filed with the SEC and 20152018 Annual Report to Stockholders. The Audit Committee has also selected and appointed KPMG LLP as MFA’s independent registered public accounting firm for the fiscal year ending December 31, 2016,2019, and is presenting this appointment to the Company’s stockholders for ratification.

AUDIT COMMITTEE

Stephen R. Blank,Laurie S. Goodman, Chair		Richard J. Byrne
Stephen R. Blank		Laurie Goodman Robin Josephs

The foregoing Report of the Audit Committee shall not be deemed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, to be (i) “soliciting material” or “filed” or (ii) incorporated by reference by any general statement into any filing made by us with the SEC, except to the extent that we specifically incorporate such report by reference.

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The following table summarizes the compensation of our Non-Employee Directors for the year ended December 31, 2015.2018.

20152018 Non-Employee Director Compensation

Name		Fees Earned or Paid in Cash ($)(1)				Stock/RSU Awards ($)(2)				Total ($)(3)				Fees Earned or Paid in Cash ($)(1)				Stock/RSU Awards ($)(2)				Total ($)(3)
Stephen R. Blank			150,000				100,000				250,000				130,000				150,000				280,000
James A. Brodsky			120,000				100,000				220,000				120,000				150,000				270,000
Richard J. Byrne			120,000				100,000				220,000				120,000				150,000				270,000
Laurie Goodman			118,125				100,000				218,125
Laurie S. Goodman															140,000				150,000				290,000
Alan L. Gosule			120,000				100,000				220,000				120,000				150,000				270,000
Robin Josephs			150,000				100,000				250,000				150,000				150,000				300,000
George H. Krauss			112,500				185,000				297,500				115,000				265,000				380,000

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The following table summarizes certain additional information regarding cash amounts deferred by our Non-Employee Directors participating in the Non-Employee Directors Plan as of December 31, 2015.2018.

Name		Total Amount Deferred(1) as of Jan. 1, 2015 ($)				Cash Distribution Jan. 15, 2015 ($)				Remaining Deferred Amount After Jan. 2015 Distribution(2) ($)				Fair Market Value of Deferred Amounts at Dec. 31, 2015(3) ($)				Fair Market Value of Deferred Amounts at Jan. 1, 2018(1) ($)				Cash Distribution Jan. 15, 2018 ($)				Remaining Deferred Amount after Jan. 15, 2018 Distribution(2) ($)				Fair Market Value of Deferred Amounts at Dec. 31, 2018(3) ($)
James A. Brodsky			204,767				—				—				270,202				677,784				123,700				554,084				632,353
Richard J. Byrne			—				—				—				81,968				399,138				—				399,138				485,836
Laurie Goodman			—				—				—				40,142
Laurie S. Goodman																			247,857				—				247,857				362,394
Alan L. Gosule																			231,894				—				231,894				328,874
Robin Josephs			—				—				—				102,460				498,923				—				498,923				607,295
George H. Krauss			241,094				108,660				132,434				119,659

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1. ELECTION OF DIRECTORS

Board of Directors

In accordance with our Charter and Bylaws, the Board is currently comprised of eight (8) directors, Stephen R. Blank, James A. Brodsky, Richard J. Byrne, Laurie Goodman, William S. Gorin,Goodman, Alan L. Gosule, Robin Josephs, Craig L. Knutson and George H. Krauss, and it is divided into three classes, with Mr. Blank, Ms. Goodman and Mr. GorinKnutson constituting the Class I directors, Ms. Josephs and Mr. Krauss constituting the Class II directors and Messrs. Brodsky, Byrne and Gosule constituting the Class III directors.

One class of directors is elected at each annual meeting of our stockholders for a term of three (3) years. Each director holds office until his or her successor has been duly elected and qualified or the director’s earlier resignation, death or removal. The term of the Board’s Class III directors expires at the Annual Meeting. The terms of the other two classes of directors expire at MFA’s 20172020 annual meeting of stockholders (Class I directors) and MFA’s 20182021 annual meeting of stockholders (Class II directors).

Upon the recommendation of the Nominating and Corporate Governance Committee of the Board, Messrs.Mr. Brodsky, Mr. Byrne and GosuleFrancis J. Oelerich III have been nominated by the Board to stand for re-electionelection as Class III directors by the stockholders at the Annual Meeting to serve a term until our 20192022 annual meeting of stockholders and until their respective successors are duly elected and qualify. Mr. Brodsky and Mr. Byrne are currently directors of MFA, and Mr. Oelerich was recommended for consideration as a nominee by a non-management director, as well as by our CEO. Mr. Gosule, a current Class III director, is not permitted to stand for re-election and is retiring from the Board following the Annual Meeting in accordance with the Director Retirement Policy set forth in our Governance Guidelines (see page 5 of this Proxy Statement), unless his intended successor, Mr. Oelerich, is not elected at the Annual Meeting. As a result of Mr. Gosule’s intended retirement, the number of nominees for director to be elected at the Annual Meeting has not been increased.

If the candidacy of Mr. Brodsky, Mr. Byrne or Mr. GosuleOelerich should, for any reason, be withdrawn prior to the Annual Meeting, the proxies will be voted by the proxy holders in favor of such substituted candidate or candidates (if any) as shall be nominated by the Board.Board or the Board may determine to reduce its size.

The Board has no reason to believe that Messrs.Mr. Brodsky, Mr. Byrne and Gosuleor Mr. Oelerich would be unable or unwilling to serve as Class III directors.

The Board has determined that all of our current directors are qualified to serve as directors of the Company. The biographies of each of the Board’s nominees standing for re-election and our continuing directors set forth below contain information regarding each person’s service as a director, business experience and education, director positions held currently or at any time during the last five years information regarding certain legal or administrative proceedings, if applicable, and the experiences,experience, qualifications, attributes or skills that caused the Board and the Nominating and Corporate Governance Committee to determine that the person should serve as a director.

In addition to the specific information set forth in their respective biographies, we believe that each of our directors also possesses the tangible and intangible attributes and skills that are important to being an effective director on the Board, including experience in areas of expertise relevant and beneficial to our business and industry, a willingness and commitment to assume the responsibilities required of a director of the Company and the character and integrity we expect of directors of the Company.

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Nominees for Re-Election as Class III Directors

The following information is furnished regarding the nominees for re-electionelection as our Class III directors by the holders of Common Stock.

James A. Brodsky, 70,73, has served as a director of MFA since 2004. Mr. Brodsky is a partner in, and a founding member of, the law firm of Weiner Brodsky Kider PC in Washington, D.C., and has practiced law

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with that firm and its predecessor since 1977. Mr. Brodsky provides legal advice and business counsel to publicly-traded and privately-held national and regional residential mortgage lenders on secondary mortgage market transactions (including those involving Fannie Mae, Freddie Mac and Ginnie Mae), mergers and acquisitions, asset purchases and sales, mortgage compliance issues and strategic business initiatives. Prior to 1977, Mr. Brodsky was a Deputy Assistant Secretary with the U.S. Department of Housing and Urban Development. He also currently serves as General Counsel of the National Reverse Mortgage Lenders Association. Mr. Brodsky also is a director of Enterprise Community Investment, Inc., which invests in affordable housing and community development projects nationwide through public-private investments, as well as raises and invests private investor capital, develops affordable housing and provides lending products for the Community Preservationcommercial and Development Corporation, a not-for-profitmultifamily real estate developer of multiple affordable housing communities in the mid-Atlantic region, where he serves as a member of its governance and real estate

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Continuing Class I Directors

The following information is furnished regarding our Class I directors (who will continue to serve on the Board until our 20172020 Annual Meeting of Stockholders and until their respective successors are duly elected and qualify).

Stephen R. Blank, 70,73, has served as a director of MFA since 2002. From 1998 to 2014, Mr. Blank was a Senior Resident Fellow, Finance, at the Urban Land Institute (“ULI”), a non-profit education and

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Boston Corporation (later Credit Suisse), Smith Barney and Morgan Stanley. From 1981 to that position,1984, Mr. Gorin was Senior Vice PresidentKnutson served as an Analyst and then Associate in the Special Products Group. From 1982 to 1988, Mr. Gorin was employed by Shearson Lehman Hutton, Inc./Investment Banking Department of E.F. Hutton & Company Inc. in various positions in corporate finance and direct investments. Mr. Gorin is a graduate of Brandeis University and receivedKnutson holds an M.B.A. from Stanford University.Harvard University and an A.B. (magna cum laude) from Hamilton College.

We believe that Mr. Gorin’sKnutson’s qualifications to serve on the Board include his position as our Chief Executive Officer as well as his prior senior-level positions with MFA, his extensive knowledge of mortgage-backed securities, residential mortgage loans and capital markets, his substantial knowledge of our business operations and investment strategies and his overall experience in the investment banking industry, including his expertise in corporate finance.

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In accordance with our Charter and Bylaws, vacancies occurring on the Board as a result of death, resignation, retirement, disqualification, removal from office or other cause may be filled only by a majority of the remaining directors in office.

There is no familial relationship among any of the members of our Board or executive officers, except that William S. Gorin, our CEO and a director, and Ronald A. Freydberg, an Executive Vice President of MFA, are brothers-in-law.officers.

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2. RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

On March 3, 2016,6, 2019, the Audit Committee of the Board appointed KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2016.2019.

The Board is asking stockholders to ratify the Audit Committee’s appointment of KPMG LLP for 2016.2019. In the event that stockholders fail to ratify the appointment, the Audit Committee will consider it a direction to consider other accounting firms for the subsequent year. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company.

KPMG LLP first audited our financial statements beginning with the year ended December 31, 2011.

One or more representatives of KPMG LLP are expected to be present at the Annual Meeting and will be provided with an opportunity to make a statement if so desired and to respond to appropriate inquiries from stockholders.

Independent Registered Public Accounting Firm Fees

The following table summarizes the aggregate fees (including related expenses) billed to us for professional services provided by KPMG LLP and Ernst & Young LLP in respect of the fiscal years ended December 31, 20152018 and 2014.2017.

		Fiscal Year Ended December 31,								Fiscal Year Ended December 31,
		2015				2014				2018				2017
Audit Fees(1)		$	1,260,000			$	947,635			$	1,574,300			$	1,462,000
Audit-Related Fees(2)			—				—				—				—
Tax Fees(3)			175,000				52,030				—				—
All Other Fees(4)			1,796				1,650				271,769				1,938
Total		$	1,436,796			$	1,001,315			$	1,846,069			$	1,463,938

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MANAGEMENT

The following table sets forth certain information with respect to each of our executive officers at December 31, 2015.officers. The Board appoints or annually reaffirms the appointment of all of our executive officers:

Officer		Age		Position Held
William S. GorinCraig L. Knutson		5759		Chief Executive Officer and DirectorPresident
Craig L. KnutsonGudmundur Kristjansson		5639		President and Chief OperatingCo-Chief Investment Officer
Bryan Wulfsohn		35		Co-Chief Investment Officer
Ronald A. Freydberg		5558		Executive Vice President
Stephen D. Yarad		4649		Chief Financial Officer
Kathleen A. Hanrahan		5053		Senior Vice President and Chief Accounting Officer
Gudmundur Kristjansson		36		Senior Vice President
Terence B. Meyers		6164		Senior Vice President — Tax
Harold E. Schwartz		5154		Senior Vice President, General Counsel and Secretary
Bryan Wulfsohn		32		Senior Vice President
Sunil Yadav		4649		Senior Vice President

Biographical information on Mr. GorinKnutson is provided in “Election of Directors” of this Proxy Statement.

Craig L. Knutsonserves as our President and Chief Operating Officer, the positions to which he was elected effective January 1, 2014. Mr. Knutson served as our Executive Vice President from 2008 to 2013. From 2004 to 2007, Mr. Knutson served as Senior Executive Vice President of CBA Commercial, LLC, an acquirer and securitizer of small balance commercial mortgages. From 2001 to 2004, Mr. Knutson served as President and Chief Operating Officer of ARIASYS Inc., a software development company specializing in custom solutions for small to midsize businesses. From 1986 to 1999, Mr. Knutson held various progressive positions in the mortgage trading and mortgage finance departments of First Boston Corporation (later Credit Suisse), Smith Barney and Morgan Stanley. From 1981 to 1984, Mr. Knutson served as an Analyst and then Associate in the Investment Banking Department of E.F. Hutton & Company Inc. Mr. Knutson holds an M.B.A. from Harvard University and an A.B. (magna cum laude) from Hamilton College.

Ronald A. Freydbergserves as Executive Vice President. Mr. Freydberg joined MFA in 1997. From 1995 to 1997, Mr. Freydberg served as a Vice President of Pentalpha Capital, in Greenwich, Connecticut, where he was a fixed-income quantitative analysis and structuring specialist. From 1988 to 1995, Mr. Freydberg held various positions with J.P. Morgan & Co. From 1994 to 1995, he was in J.P. Morgan’s Global Markets Group, where he was involved in commercial mortgage-backed securitization and sale of distressed commercial real estate, including structuring, due diligence and marketing. From 1985 to 1988, Mr. Freydberg was employed by Citicorp. Mr. Freydberg holds an M.B.A. from George Washington University and a B.A. from Muhlenberg College.

Stephen D. Yaradserves as our Chief Financial Officer. Mr. Yarad joined MFA in 2010. Prior to joining MFA, Mr. Yarad was a partner in the financial services audit practice of KPMG LLP, having been admitted to the partnership of the firm in 2005. He commenced his career with KPMG LLP in Australia in 1991 and held various progressive positions before relocating to the United States at the end of 2001. In addition to being a Chartered Accountant and Associate Member of the Institute of Chartered Accountants in Australia, he is also a Certified Public Accountant licensed in New York and New Jersey. Mr. Yarad holds a Bachelor of Commerce (Accounting and Finance) with merit from the University of New South Wales (Sydney, Australia) and a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia.

Kathleen A. Hanrahanserves as Senior Vice President and Chief Accounting Officer. Ms. Hanrahan joined MFA in 2008 as Senior Vice President — Finance and was appointed Chief Accounting Officer effective October 2011. From 2007 to 2008, Ms. Hanrahan was Vice President — Financial Reporting with Arbor Commercial Mortgage LLC. From 1997 to 2006, she held progressive positions, was the First Vice

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Arbor Commercial Mortgage LLC. From 1997 to 2006, she held progressive positions, was the First Vice President of Financial Reporting and served on the Disclosure, Corporate Benefits and Sarbanes-Oxley Committees for Independence Community Bank Corp. From 1992 to 1997, Ms. Hanrahan held various positions with North Side Savings Bank and was Controller from 1996 to 1997. Ms. Hanrahan began her career in public accounting in 1987 with KPMG Peat Marwick (predecessor to KPMG LLP). Ms. Hanrahan is a Certified Public Accountant and has a B.B.A. from Pace University.

Terence B. Meyersserves as Senior Vice President and Director of Tax. Mr. Meyers joined MFA in May 2013. Prior to joining MFA, Mr. Meyers was most recently a Director in the financial services tax practice of Deloitte Tax, LLP, where he held various positions from 1983 to 2013. While at Deloitte Tax, Mr. Meyers provided advice to clients regarding the tax and accounting treatment of mortgage loans, mortgage-backed securities and other debt instruments, mortgage banking activities and asset securitization, derivative and hedging transactions. Mr. Meyers is a Certified Public Accountant and holds an M.B.A. in Taxation and a B.S. from St. John’s University College of Business Administration. Mr. Meyers also has a J.D. from St. John’s University School of Law.

Harold E. Schwartzserves as Senior Vice President, General Counsel and Secretary. Mr. Schwartz joined MFA in August 2011. From 2001 to July 2011, Mr. Schwartz served as a Vice President and Senior Counsel for American Express Company, where he specialized in corporate, securities, corporate governance and mergers and acquisitions matters. From 1996 to 2000, Mr. Schwartz served as Senior Vice President, General Counsel and Secretary of Caribiner International, Inc., a business communications services and audio visual equipment rental company. Mr. Schwartz began his career working for the law firm of Schulte Roth & Zabel LLP. Mr. Schwartz has a J.D. from Georgetown University and an A.B. from Duke University.

Bryan Wulfsohnserves as Senior Vice President. Mr. Wulfsohn joined MFA in 2010. From 2008 to 2010, Mr. Wulfsohn served as a Senior Financial Analyst at Inland Western Real Estate Trust, Inc., where he focused on corporate strategy. From 2005 to 2007, Mr. Wulfsohn served as an associate in the capital markets group at CBA Commercial, LLC, an acquirer and securitizer of small balance commercial mortgages. Mr. Wulfsohn holds a B.A. from Franklin and Marshall College, and he is a CFA charterholder.

Sunil Yadavserves as Senior Vice President. Mr. Yadav joined MFA in 2008. From 2005 to 2007, Mr. Yadav served as a residential mortgage-backed securities trading strategist at Banc of America Securities. From 1998 to 2003, Mr. Yadav was employed as an engineer at Fermi National Accelerator Laboratory (Fermilab). From 1996 to 1998, Mr. Yadav served as a post-doctoral research scholar at the California Institute of Technology. Mr. Yadav holds an M.B.A. from The Wharton School of the University of Pennsylvania. Mr. Yadav also holds a master’s and Ph.D. in mechanical engineering from The Johns Hopkins University and an undergraduate degree in mechanical engineering from the Indian Institute of Technology (Kanpur, India).

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis (“CD&A”)

Introduction

The following section discusses the key features of our executive compensation program and the approach taken by the Compensation Committee of the Board in setting and determining compensation for 20152018 for:

The Compensation Committee oversees the design and administration of our compensation programs and makes decisions relating to the compensation of our Named Executive Officers. The Compensation Committee intends that the compensation paid to the Named Executive Officers be consistent with our overall compensation philosophy and competitive with market practices.

The sections that follow describe:

Summary2018 Compensation Highlights

It is the Compensation Committee’s role to review the Company’s executive compensation plans and programs and, after taking into accountnoting the outcome of the most recent stockholder advisory vote on executive compensation, make compensation decisions it believes are appropriate. Among other things, below is a summary of certain of the determinations made by the Compensation Committee with respect to 20152018 compensation matters, and in particular with respect to Mr. GorinKnutson, Mr. Kristjansson and Mr. Knutson,Wulfsohn, our twothree most senior and most highly-compensated employees. These items are discussed further within this CD&A and in the executive compensation tables and notes to the tables and other narratives regarding compensation matters, all of which follow.

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In March 2018, MFA entered into an amendment to Mr. Knutson’s employment agreement to reflect his appointment to CEO. Pursuant to the terms of the March 2018 amendment, Mr. Knutson’s annual bonus target and long-term incentive award levels were increased beginning with the 2018 performance period to reflect his promotion as well as the commensurate increase in his responsibilities and duties. As modified by the amendment, Mr. Knutson’s annual bonus targets and long-term incentive award levels are consistent with those that had been in effect for our prior CEO under the terms of his employment agreement with the Company at the time of his passing.

Accordingly, pursuant to the terms of March 2018 amendment, Mr. Knutson’s overall “target” bonus was increased from $1,575,000 to $2,000,000 for the remainder of his employment agreement, which covered the 2018 compensation performance period (and will also cover the 2019 performance period). In addition, pursuant to the terms of the March 2018 amendment, the number of time-based restricted stock units (“TRSUs”) to which Mr. Knutson was entitled to receive in each of 2018 and 2019 was increased from 70,000 to 82,500 and the “target” number of performance-based restricted stock units (“PRSUs”) to which he was entitled to receive in each such year was increased from an aggregate 105,000 to an aggregate 122,500. Mr. Knutson’s base salary was not modified, and it remains $700,000 per annum.

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The table on page 3439 of this Proxy Statement sets forth the portionsportion of Mr. Gorin’sKnutson, Mr. Kristjansson and Mr. Knutson’sWulfsohn’s total 20152018 annual bonusesbonus that werewas paid in cash and fully-vested shares of our Common Stock with a mandatory three-year holding period from the date of grant.

In summary and as further described below, for 2018 Mr. Knutson received base salary in the amount of $700,000, an ROAE Bonus in the amount of $2,289,300, an IRM Bonus in the amount of $750,000, TRSUs with an aggregate grant date value of $629,475 and PRSUs with an aggregate grant date value of

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$845,862. Of the total compensation received by Mr. Knutson for 2018, approximately 49.4% was paid in cash and 50.6% was paid in the form of TRSUs, PRSUs and shares of our Common Stock (which was used to pay a portion of his ROAE Bonus and IRM Bonus).

Consideration of 20152018 Advisory Vote on Executive Compensation

At our Annual Meeting of Stockholders held in May 2015, approximately 96.3%2018, 96% of the votes cast with respect to the say-on-pay proposal voted to approve our executive compensation for 2014.2017. The Compensation Committee has consideredreviewed the results of the 20152018 say-on-pay vote and believes that the significant support of MFA stockholders in this vote reflects support for MFA’s approach to executive compensation and the changes in the compensation program that were implemented in connection with the Company’s CEO succession at the end of 2013. compensation.

The Compensation Committee will continue to consider the outcome of future Say-on-Pay votes and other stockholder input, as well as available market data, in making future decisions regarding executive compensation.

Compensation Philosophy and Objectives

Through our executive compensation programs, we seek to retain,attract, motivate and attractretain top quality senior executives who are committed to our core values of excellence and integrity. The Compensation Committee’s fundamental philosophy is to closely align these compensation programs with the achievement of annual and long-term performance goals tied to our financial success and the creation of stockholder value.

The Compensation Committee’s principal objectives in developing and administering the executive compensation programs are to:

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Company and individual performance and that are competitive within industry standards, the Compensation Committee has not established, nor does it seek to establish, a specific target market percentile for executive officer pay levels, as pay practices and compensation levels among participants in our industry can vary significantly from one year to the next such that the use of a specific target market position would not necessarily reflect the Compensation Committee’s assessment of performance as the primary driver of pay levels.

For each of the past several years, the Compensation Committee has, with the assistance of FPL Associates, and a prior compensation consultant, has undertaken a review of MFA’s peer group methodology. The Compensation Committee has engaged in these reviews in part because during the past several years it has become morecontinues to be difficult to develop a peer group for executive compensation purposes in the residential mortgage REIT sector because adue to the large number of companies in the sector that are or have become, externally advised. As a result, these companies have few, if any, employees that are compensated directly and/or fully by the REIT. Rather, such persons’ compensation is paid by the external manager of the REIT, and as a result, the REIT itself is required to disclose publicly little to no compensation information regarding its executives. Furthermore, the Compensation Committee believes that any peer group for compensation purposes that is comprised solely of internally-advised residential mortgage REITs would not be too small a large enough group to provide meaningful comparative information.

Because of the limited compensation information available for mortgage REITs, the Compensation Committee has, in consultation with FPL Associates, and its prior compensation consultant, developed a peer group that extends beyond mortgage REITs. This peer group also includes a number of other real estate-focused finance companies in both the residential and commercial sectors, the executives of which are required to have similar skills and experience as the executives of MFA, including the evaluation of credit risk, interest rate risk, credit risk and allocation of capital (which are skills required in connection with the evaluation of Agency and Non-Agency residential mortgage-backed securities, residential whole loans and other residential mortgagemortgage-related assets). In addition, the peer group includes companies that have, in prior years, been identified by the proxy advisory firms as comparable to MFA in their evaluation of MFA in connection with developing their annual Say-on-Pay vote recommendation.

In considering the peer group analysis provided by FPL Associates, the Compensation Committee recognized that the peer group did not include externally-managed mortgage REIT’s because comprehensive compensation data for their executives are generally not publicly available. In addition, the Compensation Committee did not include generally higher paying private equity firms and hedge funds with which MFA must compete for executive talent. These organizations were not included in the peer group because they have different business economics and pay models than MFAfrom ours and due to the fact that data regarding their compensation of their executives are also are generally not publicly available.

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As compared to the group of companies used by the Compensation Committee to inform 2017 compensation decisions, the group of companies identified above, which the Compensation Committee used in 2015, is largely identical to2018, reflects the group used in 2014, with the exceptionaddition of Highwoods Properties,Arbor Realty Trust, Inc., Essent Group Ltd. and New York Mortgage Trust, Inc., which the Compensation Committee determined to excludeinclude in 2015 because such company’slight of their reasonably comparable business focus and size. In addition, the group of companies used by Compensation Committee in informing its 2018 compensation decisions reflects the removal from the group of CYS Investments, Inc., which was acquired during 2018, and TFS Financial Corporation, which is principally involved in the acquisition, sale, lease, management and developmenta bank holding company with a business that is not particularly comparable to that of commercial properties rather than the financing of residential real estate.MFA’s.

Components of Compensation

The Compensation Committee believes that it is important to create compensation programs that appropriately balance short-term, cash-based compensation with long-term, equity-based compensation. Our executive officer compensation program includes the following primary components:

In addition to the primary components of the executive officer compensation program, we maintain our Senior Officers Deferred Bonus Plan (the “Senior Officers Plan”). The Senior Officers Plan (a description of which can be found on pages 3641 and 4651 of this Proxy Statement) permits our executive officers to defer, at their election, up to 100% of their annual bonus compensation in the form of deferred stock units. The performance of the deferred stock units is tied to the performance of our Common Stock. At present, none of our executive officers havehas any amounts deferred under the Senior Officers Plan.

Other than the opportunity to participate in the Senior Officers Plan, we do not provide perquisites or other benefits to our Named Executive Officers beyond those provided to all of our other salaried employees.

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The discussion below regarding our primary elements of compensation and the Compensation Committee’s decisions for 2018 reflects the terms and conditions of Mr. Knutson’s, Mr. Kristjansson’s and Mr. Wulfsohn’s employment agreements. Likewise, the discussion regarding Mr. Yadav and Mr. Yarad reflects their compensation arrangements with the Company for 2018.

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Key Elements of Compensation

As indicated above, the compensation of our Named Executive Officers is comprised of three principal elements, summarized in the following chart:

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(other than in the case of Mr. Yarad, who does not have management responsibility for investment strategy, asset selection or other “top line” functions). However, the Compensation Committee does not have a pre-set mix or target of base salary to incentive compensation awards for the Named Executive Officers.

Annual Incentives.  For 2015,2018, we had the following types of annual incentive programs for our Named Executive Officers:

For Messrs.Mr. Yadav Wulfsohn and Mr. Yarad, no pre-set “target” level for their respective annual incentive award was established. TheFor 2018, the Compensation Committee believesbelieved that a discretionary incentive opportunity for these Named Executive Officers providesprovided it with flexibility in assessing and rewarding individual performance and individual contributions in light of prevailing market conditions.contributions. Nonetheless, in determining the annual incentive award for Messrs.Mr. Yadav and Wulfsohn 2015,for 2018, the Compensation Committee used as a guide an approach and methodology similar to that used to determine the annual incentive awards for Messrs. GorinKnutson, Kristjansson and Knutson.Wulfsohn.

Pursuant to the terms of the employment agreementsagreement that we entered into with each of Mr. Gorin and Mr. Knutson in January 2014, each such executiveNovember 2016 (as amended in March 2018 to reflect his promotion to Chief Executive Officer), he is eligible to receive an annual performance-based bonus based on the Company’s and each executive’shis individual performance during the 12-month periods beginning on each of December 1, 2013, 20142016, 2017 and 20152018 and ending on November 30 of the next succeeding year (each 12-month period being a “Performance Period”). Under the terms of the employment agreement that we entered into with each of Mr. Kristjansson and Mr. Wulfsohn in March 2018, each executive is eligible to receive an annual performance bonus based on Company and individual performance for the Performance Periods beginning on each of December 1, 2017 and 2018. As indicated above, under the terms of his respective employment agreement Mr. Gorin’sKnutson’s “target” annual bonus (the “Overall Target Bonus”) during eachfor the 2018 Performance Period is approximately 2.81 times his then-current annual base salary (i.e., $2,250,000 based on his current base salarywas $2,000,000, and each of $800,000),Mr. Kristjansson and Mr. Knutson’sWulfsohn’s Overall Target Bonus during eachfor the 2018 Performance Period is approximately 2.57 timeswas $800,000.

Each of Mr. Knutson Mr. Kristjansson and Mr. Wulfsohn’s employment agreement provides that his then-current annual base salary (i.e., $1,800,000 based on his current base salary of $700,000).

The executives’ employment agreements provide that each executive’s annual bonus is comprised of two components:

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his Overall Target Bonus. Based on his current Overall Target Bonus, Mr. Gorin’s Target ROAE Bonus is $1,687,500, andfor the 2018 Performance Period Mr. Knutson’s Target ROAE Bonus is $1,350,000. Each executive’s respectivewas $1,500,000 (as compared to his Target ROAE Bonus of $1,181,250 for the 2017 Performance Period, which reflected his being compensated as President and Chief Operating Officer), and each of Mr. Kristjansson and Mr. Wulfsohn’s Target ROAE Bonus was $600,000. Mr. Knutson, Mr. Kristjansson and Mr. Wulfsohn’s employment agreement provides that he is eligible to receive from zero to 200% of his respective Target ROAE Bonus.

Calculation of Adjusted ROAE.  The determination of the ROAE Bonus is based on a methodology that is set forth in each of Mr. Gorin’sKnutson, Mr. Kristjansson and Mr. Knutson’sWulfsohn’s employment agreementsagreement and reflects certain adjustments to GAAP net income and GAAP stockholders’ equity. For purposes of determining the ROAE Bonus, return on average stockholders’ equity is calculated by dividing (i) our net income for the applicable Performance Period as determined in accordance with GAAP (but excluding non-cash, non-operating expense items such as depreciation and amortization expense) by (ii) our average total stockholders’ equity (based on stockholders’ equity as of the last day of each month during the Performance Period) as determined in accordance with GAAP (but excluding accumulated other comprehensive income or loss, stockholdersstockholders’ equity attributable to preferred stock and such other items as may be determined by the Compensation Committee of the Board). We refer to such calculation in this Proxy Statement as our “Adjusted ROAE.”

The actual amount of ROAE Bonus to be paid to each of Mr. GorinMessrs. Knutson, Kristjansson and Mr. KnutsonWulfsohn is based on our Adjusted ROAE for the applicable Performance Period relative to a target (the “ROAE Target”) that is the greater of (A) the sum of (i) the average weekly interest rate on the 2-year U.S. Treasury note (the “2-Year Treasury Rate”) and (ii) 400 basis points or (B) 8%;provided that the ROAE Target shall not exceed 10%.

To the extent that our Adjusted ROAE for a Performance Period is (x) less than the ROAE Target for such Performance Period and (y) less than or equal to the 2-Year Treasury Rate during such Performance Period, then no ROAE Bonus will be paid to the executive (the “Zero Bonus Factor”). To the extent that MFA’s ROAE for a Performance Period is 16% or greater, then the executive will be paid two (2) times his Target ROAE Bonus. To the extent that MFA’s Adjusted ROAE for a Performance Period is greater than the Zero Bonus Factor but less than 16%, then the executive will, based on a formula more particularly described in his respective employment agreement, be paid a multiple of between zero and two (2) times his Target ROAE Bonus, with the executive being paid the Target ROAE Bonus to the extent that MFA’s Adjusted ROAE for a Performance Period equals the ROAE Target for such Performance Period.

Determination of ROAE Target Hurdles under ROAE Bonus.  In connection with the management succession planning process to prepare for the then-expected retirement of our former CEO and the promotions of Mr. Gorin and Mr. Knutson to their current positions effective January 1, 2014, during the latter half of 2013, theThe Compensation Committee undertook a review of our compensation program. Among other matters, the Compensation Committeehas, from time to time, reviewed the continued appropriateness of the use of return on common equity as a principal financial metric upon which to evaluate Company performance and, in turn, on which to determine the size of the annual bonuses for our two mostCEO and certain other senior executives. As part of such review, theThe Compensation Committee reviewed the then-existing annual bonus structure for Mr. Gorin (at the time, our President) and our then-CEO, which was based on discretionary allocations

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reflected in stockholders’ equity through changes in accumulated other comprehensive income (loss)), it reflects the return on the amount of equity capital we have invested in our real estate-related debt investments.

As partThe Compensation Committee, with the assistance of its review,FPL Associates, most recently reviewed the structure of the annual incentive component of our most senior executives’ compensation in the fall of 2016 in connection with the negotiation of a new employment agreement for our former CEO and Mr. Knutson, who was serving as our President and Chief Operating Officer at the time. Using publicly available information, as well as other information provided by FPL Associates, the Compensation Committee (in consultation with, and taking into account input from, management, the Compensation Committee’s independent consultant and the Board of Directors) undertook an evaluation of the methodology that would be used in determining the company performance component of annual bonuses for Messrs. Gorin and Knutson. This included a review of the amount of the bonus pool used in 2013 and prior years for our then-two most senior executives at given levels of return on common equity during an applicable performance period. The Compensation Committee also reviewed the amount of the annual bonus payments that were discretionarily allocated to such executives by the Compensation Committee in recent years against available market data to assist it in establishing appropriate payout levels. The Compensation Committee also considered the appropriateness, in light of the information that it reviewed as well as general trends in the structure and design of annual incentive awards,MFA’s and other companies’ executive compensation programs and the compensation levels and forms of using a process for determining individual bonus levels that was wholly discretionary (as had been used for 2013compensation then being paid to Mr. Knutson and prior years) rather than one that took a more formulaic approach.our former CEO, as well as to other executives in comparable positions at comparable companies.

As a result of its review, the Compensation Committee decideddetermined that it continued to design an annual bonus process that would,be appropriate to use, in large part, use a formulaic approach for the determination of our most senior executives’ bonus with a methodology continuing to be based on the greater of (i) an absolute minimum return and (ii) a risk-free interest rate plus an appropriate incremental premium. This decision was premised in large part on the nature of MFA’s business model, which has had acontinued to focus on investing in residential mortgages and mortgage-related debt instruments. Returns that MFA can earn on new real estate-related debt investments are, to a certain extent, correlated with the market-driven interest rates for these and other types of debt instruments (which rates depend, among other factors, on the perceived risk of these investments). These market-driven interest rates are typically analyzed as the risk-free interest rate for investment in U.S. Treasury obligations (or other debt backed by the full faith and credit of the United States) with a comparable duration (which is a measure of the price sensitivity of an asset to changes in interest rates) plus an incremental risk premium above the risk-free rate. The decision to use a threshold based on a risk-free interest rate plus an incremental premium was alsois premised on the fact that our Board and management believe that investors focused on investing in companies like MFA also often compare return on equity to risk-free rates of return in evaluating MFA’s financial performance. In the case of the Company, the Board determinedcontinues to usebelieve that using a two-year risk-free interest rate (i.e., the 2-Year Treasury Rate) remains appropriate because it generally corresponds to the weighted average duration (which is a measure of interest rate sensitivity) of investments historically made by MFA.

The Compensation Committee believescontinues to believe that setting a target Adjusted ROAE performance threshold at an appropriate level as the greater of (i) an absolute minimum return (i.e., 8%) or (ii) above the risk-free interest rate (by adding the incremental premium of 4% to the risk-free interest rate (i.e., the 2-Year Treasury Rate)) establishes an incentive for executives to achieve attractive financial performance for MFA (and aligns the interests of executives and stockholders in seeking this level of financial performance), without exposing MFA to inappropriate risk. The Compensation Committee structured the ROAE Target so that it would be flexible and could vary from year to year depending on the prevailing interest rate environment. At the same time, the Compensation Committee believedcontinues to believe that it was appropriate to establish a minimum ROAE Target (8%) that management could reasonably strive to achieve even in an

Following the Compensation Committee’s review, MFA entered into employment agreements with Messrs. Gorin and Knutson in January 2014, which agreements embodied the results of its review. TABLE OF CONTENTS

Applying the methodology described above used to determine the ROAE Bonus, the following data points were used in determining Mr. Gorin’sMessrs. Knutson, Kristjansson and Mr. Knutson’sWulfsohn’s respective ROAE BonusesBonus for 2015:2018:

As a result of the Compensation Committee’s decisions, including those described above, the ROAE Bonus formula used in 20152018 for Messrs. Gorin andMr. Knutson was as follows:

Using a formula for 20152018 that would result in a pro-rated portion of the ROAE Bonus being earned for Adjusted ROAE between the ROAE Target and the Zero Bonus Factor was determined as appropriate

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Bonus (the “Target IRM Bonus”) of each executive isremained equal to 25% of such executive’shis Overall Target Bonus. Based on his current Overall Target Bonus, Mr. Gorin’s Target IRM Bonus is $562,500, andFor the 2018 Performance Period, Mr. Knutson’s Target IRM Bonus is $450,000. The executives’was $500,000 (as compared to a Target IRM Bonus of $393,750 for the 2017 Performance Period, which reflected his being compensated as President and Chief Operating Officer). Mr. Knutson’s employment agreements provideagreement provides that each executivehe will be eligible to receive from zero to 200% of his respective Target IRM Bonus.

The actual amount of the IRM Bonus to be paid to the executiveMr. Knutson is determined by the Compensation Committee in its discretion based upon factors it deems relevant and appropriate, including, without limitation, MFA’s leverage strategy relative to other similarly situated companies as well as relative to its own business plan, MFA’s total stockholder return (both on an absolute basis, as well as relative to relevant indices and other similarly situated companies), overall management of risk and asset selection in generating our returns and the executive’shis individual performance.

Form of Payment of Annual Incentive Awards to Mr. Knutson.Under the terms of Mr. Gorin’s and Mr. Knutson’s employment agreements,agreement, payment of each executive’shis annual bonus is made in cash up to an amount of his then-current base salary. ToFor the 2018 Performance Period, to the extent that the amount of the executive’shis annual bonus is greater than his then-current annual base salary, 50% of such excess amount iswas paid in cash and 50% iswas paid in the form of fully-vested shares of Common Stock that are generally restricted from sale or transfer for the three-year period following their grant.

Long-Term Incentive Awards (LTIAs).  Under our Equity Compensation Plan the Compensation Committee has available to it a portfolio of equity compensation vehicles, including shares of Common Stock, restricted stock units (RSUs), dividend equivalent rights, stock options and other stock-based awards. The Compensation Committee has useduses this incentive compensation program periodically in the past to award Named Executive Officers with long-term incentives, including in connection with entering into or extending the term of employment agreements or other employment arrangements. The Compensation Committee makes these awards in its discretion without any pre-set target levels; however, in determining LTIAs, the Compensation Committee may consider the advice of its compensation consultant.

Under the terms of their respectivehis employment agreements,agreement, Mr. GorinKnutson is entitled to annual grantsa grant of RSUs, consisting of 82,500 time-based RSUs (“TRSUs”) and a “target” amount of 82,500 performance-based RSUs (“PRSUs”) and. As indicated above, for 2018 the number of TRSUs granted to Mr. Knutson is entitledand the target amount of PRSUs granted to receivehim were increased to reflect his promotion to Chief Executive Officer. More specifically, for 2018, Mr. Knutson was granted 82,500 TRSUs (as compared to 70,000 TRSUsfor 2017) and a “target” amount of 70,000122,500 PRSUs in each of 2014, 2015 and 2016.(as compared to 105,000 for 2017).

TRSUs.  Subject to exceptions in certain circumstances described below in “Potential Payments and Other Benefits upon Termination of Employment or Change in Control,” found on pages 5056 to 5359 of this Proxy Statement, each grant of TRSUs to be granted to Messrs. Gorin andMr. Knutson will vest on the third December 31st to occur following the date of grant, subject to the executive’shis continued employment with the Company. In addition, subject to exceptions in certain circumstances, unvested TRSUs will be forfeited as of the date of the executive’shis termination of employment with the Company. Upon vesting, each executiveMr. Knutson will receive one share of our Common Stock for each TRSU that vests. To the extent that dividends are paid on our Common Stock during the period in which the TRSUs are outstanding, each executivehe will receive a dividend equivalent in the form of a cash payment in respect of the outstanding TRSUs.

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period relative to the TSR of a peer group of companies designated by the Compensation Committee at the time of each grant (such PRSUs referred to as the “Relative TSR PRSUs”).

With respect to the Absolute TSR PRSUs, the actual number of PRSUs that will be earned and that will vest will be based on the level of our cumulative total stockholder return (i.e., share price appreciation or depreciation, as the case may be, plus dividends divided by initial share price) relative to an 8% per annum simple TSR (assuming no reinvestment of dividends) for the three-year performance period beginning on January 1st of the year of grant (e.g., the performance period for the PRSUs granted in 20152018 is January 1, 20152018 through December 31, 2017)2020). To determine the actual number of PRSUs that will be earned and will vest, the “target” amount of each grant of PRSUs (82,500 in the case of Mr. Gorin; 70,000 in the case of Mr. Knutson) will be adjusted up or down at the end of the applicable three-year performance period based on the Company’s cumulative TSR relative to an 8% per annum simple TSR objective from 0% of the target amount (reflecting 0% per annum TSR during the performance period) to 200% of the target amount (reflecting 16% per annum (or higher) TSR during the performance period), with 100% of the target amount being earned and vesting if TSR of 8% per annum is achieved during the performance period.

With respect to the Relative TSR PRSUs, the actual number of PRSUs that will be earned and that will vest will be based on the Company’s cumulative TSR during the applicable three-year performance period beginning on January 1^st of the year of grant as compared to the cumulative TSR of designated peer group companies for such performance period. To the extent that the Company’s TSR rank is less than or equal to the 25^th percentile when compared to the TSR of the members of the peer group, Mr. Knutson will vest in 0% of the target number of Relative TSR PRSUs awarded to him in respect of the applicable performance period. To the extent that the Company’s TSR rank is in the 50^th percentile, Mr. Knutson will vest in 100% of the target number of Relative TSR PRSUs awarded to him in respect of the applicable performance period. To the extent that the Company’s TSR rank is greater than or equal to the 80^th percentile, Mr. Knutson will vest in 200% of the target number of Relative TSR PRSUs awarded to him in respect of the applicable performance period. To the extent that the Company’s TSR ranking falls in between the percentiles identified above, the number of Relative TSR PRSUs that vest will be interpolated.

PRSUs that do not vest at the end of an applicable performance period will be forfeited. Upon vesting, the executiveMr. Knutson will receive one share of the Company’s common stock for each PRSU that vests.

Dividend equivalents are not paid in respect of the PRSUs during the performance period. Rather, dividend equivalents accrue with respect to the PRSUs during the performance period, and to the extent that the underlying PRSUs vest, an amount equal to the accrued dividend equivalents related to the vested PRSUs will be paid to the executiveMr. Knutson in the form of additional shares of our Common Stock based on the closing price of the Common Stock on the vesting date.

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20152018 Compensation Decisions.Decisions  

The following discussion addresses the actions taken by the Compensation Committee during 20152018 regarding the base salary,salaries, annual incentives and long-term equity awards for the Named Executive Officers.

Base Salary

The Compensation Committee believes that the annual base salary paid in 20152018 to each of the Named Executive Officers appropriately reflected the scope of the role and responsibilities of the applicable position, individual performance and experience and competitive market practices. The annual base salary for each of the Named Executive Officers during 20152018 was as follows:

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Executive		2015 Base Salary				2018 Base Salary
William S. Gorin		$	800,000
Craig L. Knutson		$	700,000			$	700,000
Gudmundur Kristjansson						$	350,000
Bryan Wulfsohn						$	350,000
Sunil Yadav		$	300,000			$	300,000
Bryan Wulfsohn		$	275,000
Stephen D. Yarad		$	460,000			$	475,000

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performance. In considering these factors, the Compensation Committee did not assign specific weightings to each, but instead considered them together as part of a comprehensive review.

Based on the above-described review, the Compensation Committee determined thethat an IRM BonusesBonus for each executive for 2015.that was in excess of the Target IRM Bonus was merited. The target amount of this component of annual bonus, the percentage of that target amount earned and the total amount of the 20152018 IRM BonusesBonus earned by each executiveMessrs. Knutson, Kristjansson and Wulfsohn is set forth in the following table:

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Mr. Wulfsohn’s employment agreements provideagreement provided that for the 2018 Performance Period any annual performance bonusesbonus in an amount up to their respectivehis current base salariessalary would be paid in cash, and the bonus amountsamount in excess of their currenthis base salariessalary would be paid 50% in cash and 50% in the form of fully vested shares of Common Stock with a mandatory three-year holding period. The table below sets forth the application of this formula to the 20152018 annual bonus amountsamount for Messrs. Gorineach of Mr. Knutson, Mr. Kristjansson and KnutsonMr. Wulfsohn and shows the portion of each executive’shis total 20152018 annual bonus that was paid in cash and in the form of Common Stock.

Executive		Total 2015 Bonus Earned ($)				Portion of 2015 Bonus Paid in Cash ($/%)				Portion of 2015 Bonus Paid in Common Stock ($/%)(1)
Mr. Gorin		$	3,225,000			$	2,012,500/62.4	%		$	1,212,500/37.6	%
Mr. Knutson		$	2,580,000			$	1,640,000/63.6	%		$	940,000/36.4	%

		Total 2018 Bonus Earned ($)				Portion of 2018 Bonus Paid in Cash ($/%)				Portion of 2018 Bonus Paid in Common Stock ($/%)(1)
Mr. Knutson		$	3,039,300			$	1,869,650/61.5	%		$	1,169,650/38.5	%
Mr. Kristjansson		$	1,215,720			$	782,860/64.4	%		$	432,860/35.6	%
Mr. Wulfsohn		$	1,215,720			$	782,860/64.4	%		$	432,860/35.6	%

Messrs.Mr. Yadav.  Mr. Yadav and Wulfsohn.  Pursuant to the terms of their respective employment agreements, Messrs. Yadav and Wulfsohn areis eligible to receive an annual performance bonus in such amount as approved by the Compensation Committee in its discretion. For 2015,2018, the Compensation Committee, with the input of Mr. Gorin and Mr. Knutson, awarded the following bonuses to each ofapproved an annual incentive bonus for Mr. Yadav of $759,109, of which $531,376 was paid in cash and Mr. Wulfsohn:$227,733 was paid in the form of fully-vested shares of our Common Stock that are subject to a mandatory three-year holding period.

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Committee also made awards of TRSUs and PRSUs to Messrs. Kristjansson, Wulfsohn, Yadav Wulfsohn and Yarad.Yarad in March 2018. For each Named Executive Officer, with respect to the target number of PRSUs, one-half of such target amount is comprised of Absolute TSR PRSUs and one-half is comprised of Relative TSR PRSUs.

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PRSUs that do not vest at the end of the performance period will be forfeited. Upon vesting, the executive will receive one share of the Company’s Common Stock for each PRSU that vests.

Dividend equivalents will not be paid in respect of the PRSUs during the performance period. Rather, dividend equivalents will accrue with respect to the PRSUs during the performance period, and to the extent that the underlying PRSUs vest, an amount equal to the accrued dividend equivalents related to the vested PRSUs will be paid to the executive in the form of additional shares of Common Stock based on the closing price of the Common Stock on the vesting date.

The number and grant date fair value of TRSUs and PRSUs comprising the 20152018 long-term equity-based awards granted to each of the Named Executive Officers are set forth in the table below:

		TRSUs								PRSUs								TRSUs								PRSUs
Executive		#				Aggregate Grant Date Fair Value(1) $				#				Aggregate Grant Date Fair Value(1) $				#				Aggregate Grant Date Fair Value(1) $				#				Aggregate Grant Date Fair Value(1) $
Mr. Gorin			82,500			$	657,616				82,500			$	472,387
Mr. Knutson			70,000			$	557,977				70,000			$	400,813				82,500			$	629,475				122,500			$	845,862
Mr. Kristjansson																			30,000			$	228,900				45,000			$	310,725
Mr. Wulfsohn																			30,000			$	228,900				45,000			$	310,725
Mr. Yadav			17,500			$	139,494				17,500			$	100,203				16,000			$	122,080				24,000			$	165,720
Mr. Wulfsohn			17,500			$	139,494				17,500			$	100,203
Mr. Yarad			10,000			$	79,711				10,000			$	57,259				12,000			$	91,560				18,000			$	124,290

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individual executive’s particular facts and circumstances and within the context of the total compensation program. No actions were taken during 20152018 regarding perquisites.

The Named Executive Officers are eligible to participate in our employee health and welfare benefit programs that are generally available to all employees. Further, in accordance with the Code of Conduct, we do not make any loans to, or guarantee any personal loans of, the Named Executive Officers.

Other Features of Our Executive Compensation Program

Use of Employment Agreements.  We have historically used written employment agreements with certain of our executive officers to evidence our mutual understanding regarding the key terms of employment, including the employment term, level of base salary, other elements of compensation, reasons for termination of employment before the end of the term, severance payments and post-employment covenants. At present, we have written employment agreements with four executive officers (Messrs. Gorin,(Mr. Knutson, Mr. Kristjansson, Mr. Wulfsohn and Yadav, as well as with Gudmundur Kristjansson, one of our Senior Vice Presidents); however, only Messrs. Gorin’s and Knutson’s employment agreements have terms that extend beyond one year.Mr. Yadav). The Compensation Committee believes that the use of employment agreements for each of Messrs. Gorin, Knutson, Yadav and Kristjanssonin certain instances helps the Company to retain key personnel responsible for the execution of MFA’s strategies and the management of its operations and provides certain protections for MFA in the form of covenants restricting post-termination employment and solicitation of our employees. Although the Compensation Committee has used written employment agreements to provide the Company and certain of its executives with certainty regarding the terms of employment and to encourage stability of key management, the Compensation Committee periodically discusses their merit in achieving these objectives and may, in its discretion, determine not to use written employment agreements in the future for certain or all of our employees. For additional details regarding the employment agreements of Messrs. Gorin, Knutson, Kristjansson, Wulfsohn and Yadav, including the circumstances in which severance is payable and the amount of such severance benefits, see “Employment Contracts” on pages 4652 to 5055 and “Potential Payments upon Termination of Employment or Change in Control” on pages 5056 to 5459 of this Proxy Statement.

The Compensation Committee believes that the written employment agreements have been responsibly structured, including as follows:

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We also have included in Messrs. Gorin’sKnutson’s, Krisjansson’s and Knutson’sWulfsohn’s respective employment agreements, as well as in the RSUTRSU and PRSU award agreements relating to awards made to certain employees (including Messrs. Yadav Wulfsohn and Yarad)Yarad and our other executive officers) in January 2014, January 20152017, 2018 and January 2016,2019, provisions requiring the forfeiture of unvested awards and permitting the recoupment of the after-tax value of vested awards in the event that that employee breaches certain covenants regarding, among other matters, confidentiality of Company information and solicitation of employees for a period of time after termination of employment.

Stock Retention and Ownership Requirements.  Equity awards received by certain of our Named Executive Officers are subject to a stock retention and ownership policy intended to further encourage significant long-term share ownership. Messrs. GorinKnutson, Kristjansson and KnutsonWulfsohn are not permitted to sell or otherwise transfer shares received from equity awards granted pursuant to their employment agreements during the executive’s employment or for a period of six months following the termination of the executive’s employment, unless the value of the executive’s stock holdings in MFA exceeds a specifiedfour times multiple of the executive’s annual base compensation (five times in the case of Mr. Gorin; four times in the case of Mr. Knutson).compensation. In addition, the shares of Common Stock granted as a component of each Named Executive Officer’s annual incentive compensation for, 20142016, 2017 and 20152018 are prohibited from being sold or otherwise transferred for a period of three years from the date of grant.

Anti-Hedging Policy.  Our Insider Trading Policy prohibits our employees from engaging in short sales or in transactions in puts, calls or other derivative securities in respect of MFA’s equity and debt securities, whether on an exchange or in any other organized market. In addition, we prohibit our employees from engaging in other forms of hedging transactions involving MFA’s equity and debt securities, such as zero cost collars and forward sale contracts.

Advice from Independent Compensation Consultant.  Periodically since 2005, the Compensation Committee has retained an independent compensation consultant to assist the Compensation Committee in reviewing the competitiveness of its executive compensation program, considering the overall design of the compensation program and providing compensation advice independent of company management. DuringSince 2015, the Compensation Committee directly retained FPL Associates, a nationally-recognized compensation consulting firm, in this role. One or more representatives from FPL Associates meet, from time to time, with the Compensation Committee and provide assistance to the Compensation Committee with respect to various matters, including the following:including: (i) a benchmarking review of peer company executive compensation; (ii) the awards of annual incentive compensation; (iii) evaluating the elements and design of various aspects of our compensation program in light of current executive compensation practices for companies in our industry and public companies more generally; and (iv) assisting in the development of an appropriate peer group.group; and (v) assisting in the design and review of employment agreements and other employment arrangements for certain of our senior executives.

Under the terms of its engagement, FPL Associates does not provide any other services to us, except as may be pre-approved by the Chair of the Compensation Committee.

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Role of Executive Officers in Compensation Decisions.  The Compensation Committee, which is comprised entirely of independent directors, makes recommendations to the independent directors of the Board on all compensation decisions relating to our CEO, and it determines and approves all compensation decisions related to our other Named Executive Officers. When making compensation recommendations for Named Executive Officers other than the CEO, the Compensation Committee will typically seek and consider the advice and counsel of the CEO and, in certain instances, our President and Chief Operating Officer, given theirlight of his direct day-to-day working relationship with these senior executives. Taking this feedback into consideration, the Compensation Committee engages in discussions and makes final determinations related to compensation paid to the Named Executive Officers. All decisions regarding the compensation of our CEO are ratified and confirmed independently by the independent directors of the Board.

Deductibility of Executive Compensation.  Section 162(m) of the Code generally provides that, compensation paid tofor federal tax purposes, a public company’scompany may not deduct compensation in excess of $1 million paid in any fiscal year to any of certain executive officers (who are referred to as “covered employees” in Section 162(m)). For taxable years commencing before January 1, 2018, (i) the Company’s “covered employees” subject to Section 162(m) included our chief executive officer and to itsour other three most highly compensated officers, excludingexecutives (other than our chief financial officer) and (ii) compensation paid pursuant to a stockholder-approved plan that qualified as “performance-based compensation” under Section 162(m) was exempt from the annual $1 million deduction limitation.

The Tax Cut and Jobs Act of 2017 (“Tax Reform”) made significant changes to Section 162(m). Subject to a transition or “grandfather” rule for certain compensation provided under written binding contracts in effect on November 2, 2017, Section 162(m), as amended, now provides that (i) the Company’s “covered employees” are our chief executive officer, chief financial officer and our three other most highly compensated executives, (ii) an individual who is a “covered employee” in any year after 2016 will be deductibleremain a “covered employee” under Section 162(m) regardless of the individual’s officer status or level of compensation and (iii) the exception for tax purposes up to $1 million, unless the compensation that qualifies as “performance-based compensation.” “performance-based” is eliminated.

The Compensation Committee hasconsiders the authoritySection 162(m) deduction limit and the transition or “grandfather” rule when it assesses the Company’s executive compensation practices. However, in order to structure PRSUsmaintain flexibility in compensating the Company’s executive officers in a manner designed to promote our corporate goals, including retaining and other awards underproviding incentives to the 2010 Plan with performance-based conditions that may qualifyexecutive officers, the awards as “performance-based compensation.” The Compensation Committee has not adopted a policy that all compensation must be deductible and may, however, and typically does,as it has in prior years (including 2018), authorize payments to executives that may not be fully deductible if itthe Compensation Committee believes that such payments are in the Company’s interests.

Compensation Risk Considerations

The Compensation Committee monitors the risks and rewards associated with our compensation programs and considers, in establishing our compensation programs, whether they encourage unnecessary or excessive risk taking.

The Compensation Committee designs our compensation programs with features that are intended to mitigate risk without diminishing the incentive nature of the compensation. We believe our compensation programs encourage and reward prudent business judgment and appropriate risk taking over the long term.

With respect to the primary elements of our compensation programs, we use a number of practices designed to help mitigate unnecessary risk taking, including:

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With respect to the IRM-determined bonus used in 20152018 for our two most senior executive officers,CEO, mitigating factors included in the use of this element of compensation consisted of the Compensation Committee’s right to apply, in any given year, a discretionary adjustment to adjust this component of such executives’ annual incentive award based upon the Compensation Committee’s assessment of certain company-related, market-related and individual performance factors.

Based on the foregoing, we believe that our compensation programs for 20152018 were appropriately balanced, did not motivate or encourage unnecessary or excessive risk taking and did not create risks that were reasonably likely to have a material adverse effect on the Company.

*****

Report of the Compensation Committee

While MFA’s management has the primary responsibility for our financial reporting process, including the disclosure of executive compensation, the Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Proxy Statement. Based on such review and discussions, the Compensation Committee is satisfied that the Compensation Discussion and Analysis fairly represents the philosophy, intent and actions of the Compensation Committee with regard to executive compensation. The Compensation Committee recommended to the Board, and the Board approved, that the Compensation Discussion and Analysis be included in this Proxy Statement.

COMPENSATION COMMITTEE

Robin Josephs, Chair
Stephen R. Blank
James A. Brodsky
Alan L. Gosule

The foregoing Compensation Committee Report shall not be deemed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, to be (i) “soliciting material” or “filed” or (ii) incorporated by reference by any general statement into any filing made by us with the Securities and Exchange Commission, except to the extent that we specifically incorporate such report by reference.

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Compensation of Named Executive Officers

The following table summarizes the compensation of our Named Executive Officers for the years ended December 31, 2015, 20142018, 2017 and 2013 (other than for Mr. Yadav, who was not a Named Executive Officer in 2013, and Mr. Wulfsohn, who was not a Named Executive Officer in 2014 or 2013).2016.

Summary Compensation Table⁽¹⁾

Name and Principal Position		Year				Salary ($)				Bonus ($)(3)				Stock Awards ($)(4)(5)				Non-equity Incentive Plan Compensation ($)(6)				All Other Compensation ($)(7)				Total ($)				Year				Salary ($)				Bonus ($)(3)				Stock Awards ($)(4)(5)				Non-equity Incentive Plan Compensation ($)(6)				All Other Compensation ($)(7)				Total ($)
W. S. Gorin Chief Executive Officer(2)			2015				800,000				233,048				2,342,503				1,779,452				10,600				5,165,603
			2014				800,000				348,447				2,860,720				1,726,879				10,400				5,746,446
			2013				800,000				1,125,000				523,741				—				152,000				2,600,741
C. L. Knutson President and Chief Operating Officer(2)			2015				700,000				189,912				1,898,790				1,450,088				10,600				4,249,390
			2014				700,000				283,795				1,904,609				1,406,466				10,400				4,305,270
			2013				450,000				1,350,000				549,129				—				10,000				2,359,129
C. L. Knutson(2) Chief Executive Officer and President																															2018				700,000				461,430				2,644,987				1,408,220				11,000				5,225,637
																															2017				700,000				458,581				1,804,860				1,415,472				10,800				4,389,713
																															2016				700,000				392,645				1,872,089				1,376,824				10,600				4,352,158
G. Kristjansson Co-Chief Investment Officer and Senior Vice President																															2018				350,000				193,210				972,485				589,650				11,000				2,116,345
																															2017				300,000				659,885				475,303				—				10,800				1,445,988
																															2016				300,000				553,612				437,918				—				10,600				1,302,130
B. Wulfsohn Co-Chief Investment Officer and Senior Vice President																															2018				350,000				193,210				972,485				589,650				11,000				2,116,345
																															2017				300,000				659,885				475,303				—				10,800				1,445,988
																															2016				300,000				574,612				446,918				—				10,600				1,332,130
S. Yadav Senior Vice President			2015				300,000				532,200				467,817				—				10,600				1,310,617				2018				300,000				531,376				515,533				—				11,000				1,357,909
			2014				300,000				561,384				469,180				—				10,400				1,340,964				2017				300,000				602,184				432,896				—				10,800				1,345,880
B. Wulfsohn Senior Vice President			2015				275,000				507,719				457,291				—				10,600				1,250,610
S. Yadav Senior Vice President																															2016				300,000				536,106				430,424				—				10,600				1,277,130
			2015				460,000				224,000				192,975				—				10,600				887,575				2018				475,000				252,000				278,850				—				11,000				1,016,850
			2014				450,000				224,000				186,624				—				10,400				871,024				2017				475,000				252,000				238,229				—				10,800				976,029
S. D. Yarad Chief Financial Officer			2013				440,000				216,000				52,004				—				10,000				718,004				2016				460,000				240,000				174,660				—				10,600				885,260

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As indicated above, the amounts in this column for 20152018 include the grant date fair value of, among other awards, performance-based RSUs (“PRSUs”) granted to each of the Named Executive Officers during the year. For purposes of the Summary Compensation Table, the grant date fair value of these PRSUs that is included in the amount reported in this column is based upon performance against the

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Grants of Plan-Based Awards

The following table summarizes certain information regarding all plan-based awards granted to the Named Executive Officers during the year ended December 31, 2015.2018.

Grants of Plan-Based Awards for 2015

		Type of Award(1)				Grant Date				Estimated Future Payouts Under Equity Incentive Plan Awards Target(2) (#)				All Other Stock Awards: Number of Shares of Stock or Units (#)				Grant Date Fair Value of Stock and Option Awards(3) ($)
W.S. Gorin			TRSU				01/12/2015	(4)			—				82,500				657,616
			PRSU				01/12/2015	(5)			82,500				—				472,387
			RS				12/09/2015	(6)			—				178,309				1,212,500
C.L. Knutson			TRSU				01/12/2015	(4)			—				70,000				557,977
			PRSU				01/12/2015	(5)			70,000				—				400,813
			RS				12/09/2015	(6)			—				138,236				940,000

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With respect to the Relative TSR PRSUs, to the extent that our TSR rank is less than or equal to the 25th percentile when compared to the TSR of the members of the peer group, 0% of the target number of Relative TSR PRSUs will vest. To the extent that our TSR rank is in the 50th percentile, 100% of the target number of Relative TSR PRSUs will vest, and to the extent that our TSR rank is greater than or equal to the 80th percentile, 200% of the target number of Relative TSR PRSUs will vest. PRSUs that do not vest at the end of the performance period will be forfeited.

Dividend equivalents will not be paid in respect of the PRSUs during the performance period. Rather, dividend equivalents will accrue with respect to the PRSUs during the performance period, and to the extent that the underlying PRSUs vest, an amount equal to the accrued dividend equivalents related to the vested PRSUs will be paid to the Named Executive Officer in the form of additional shares of Common Stock based on the closing price of the Common Stock on the vesting date.

The PRSUs will be settled in an equivalent number of shares of our Common Stock within 30 days following the vesting date.

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Outstanding Equity Awards

The following table summarizes all outstanding equity awards held by the Named Executive Officers on December 31, 2015:2018:

Outstanding Equity Awards at Fiscal 2015 Year End
Outstanding Equity Awards at Fiscal 2018 Year End																																	Outstanding Equity Awards at Fiscal 2018 Year End
		Option Awards																Stock Awards																Stock Awards
Name		Number of Securities Underlying Unexercised Options Exercisable (#)				Number of Securities Underlying Unexercised Options Unexercisable (#)				Option Exercise Price ($)				Option Expiration Date				Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)(1)				Equity Incentive Plan Awards: Number of Shares or Units of Stock That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1)				Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)(1)				Equity Incentive Plan Awards: Number of Shares or Units of Stock That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1)
W. S. Gorin
			—				—				—				—				14,724	(2)			97,178				—				—
			—				—				—				—				26,335	(3)			173,811				—				—
			—				—				—				—				4,250	(4)			28,050				—				—
			—				—				—				—				4,250	(5)			2,550				—				—
			—				—				—				—				82,500	(7)			544,500				—				—
			—				—				—				—				—				—				82,500	(9)			544,500
			—				—				—				—				82,500	(8)			544,500				—				—
			—				—				—				—				—				—				82,500	(10)			544,500
C. L. Knutson			—				—				—				—				16,904	(2)			111.566				—				—				70,000	(2)			467,600				—				—
			—				—				—				—				31,601	(3)			208,567				—				—				—				—				105,000	(4)			701,400
																																			82,500	(3)			551,100				—				—
			—				—				—				—				2,831	(4)			18,685				—				—				—				—				122,500	(5)			818,300
G. Kristjansson																																			17,500	(2)			116,900				—				—
			—				—				—				—				2,831	(5)			1,699				—				—				—				—				27,500	(4)			183,700
			—				—				—				—				70,000	(7)			462,000				—				—				30,000	(3)			200,400				—				—
																																			—				—				45,000	(5)			300,600
B. Wulfsohn																																			17,500	(2)			116,900				—				—
			—				—				—				—				—				—				70,000	(9)			462,000				—				—				27,500	(4)			183,700
			—				—				—				—				70,000	(8)			462,000				—				—				30,000	(3)			200,400				—				—
			—				—				—				—				—				—				70,000	(10)			462,000				—				—				45,000	(5)			300,600
S. Yadav																																			17,500	(2)			116,900				—				—
			—				—				—				—				4,389	(6)			28,967				—				—				—				—				22,500	(4)			150,300
			—				—				—				—				17,500	(7)			115,500				—				—				16,000	(3)			106,880				—				—
			—				—				—				—				—				—				17,500	(9)			115,500				—				—				24,000	(5)			160,320
			—				—				—				—				17,500	(8)			115,500				—				—
			—				—				—				—				—				—				17,500	(10)			115,500
B. Wulfsohn
			—				—				—				—				2,212	(6)			14,599				—				—
			—				—				—				—				15,000	(7)			99,000				—				—
			—				—				—				—				—				—				15,000	(9)			99,000
			—				—				—				—				17,500	(8)			115,500				—				—
			—				—				—				—				—				—				17,500	(10)			115,500
S. D. Yarad																																			10,000	(2)			66,800				—				—
			—				—				—				—				1,826	(6)			12,052				—				—				—				—				15,000	(4)			100,200
			—				—				—				—				10,000	(7)			66,000				—				—				12,000	(3)			80,160				—				—
			—				—				—				—				—				—				10,000	(9)			66,000				—				—				18,000	(5)			120,240
			—				—				—				—				10,000	(8)			66,000				—				—
			—				—				—				—				—				—				10,000	(10)			66,000